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The Sales, Use and Business Tax Division of the Alabama Department of Revenue is made up of five (5) Sections:
Each section administers and collects several taxes. Next to each section name below is the web site address. These sites provide references to Alabama Code Sections and specifics on each tax.
http://www.ador.state.al.us/salestax/menu.html provides links to each section and provides specific information on each tax.
Any person desiring to conduct a retail business in Alabama must submit an “Application For Sales Tax License” to the Department of Revenue. A percentage tax, which includes manufacturing, machinery and equipment, and motor vehicles, is applied to all retail sales of tangible personal property, except for those organizations specifically exempt by action of the legislature. For more information on state sales taxes contact:
Alabama Revenue Department
Sales Tax Division
50 North Ripley Street
Gordon Persons Building
Montgomery, AL 36132
(334) 242-1490
Note: (For Federal Express mail to Zip 36104)
For information on county sales taxes, contact your county sales tax division.
For information on city sales taxes, contact your city clerk’s office.
1. Sales and Use Section
http://www.ador.state.al.us/salestax/index.html
Taxes administered include:
- Sales Tax
- Seller’s Use Tax
- Consumer’s Use Tax
- Lodgings Tax
- Rental or Leasing Tax
- Contractor’s Gross Receipts Tax
- Utility Gross Receipts Tax
- Local Sales & Use, Rental & Lodging Tax
- Mobile Communications Services Tax
- Contractor’s Gross Receipts Tax
- Nursing Facilities Privilege Tax
- Pharmaceuticals Providers Tax
- 2.2% Utility License Tax
- Dry Cleaning Registration Fees
Sales Tax
This tax is imposed on the retail sales of all tangible personal property sold in Alabama by businesses located in Alabama who have inventory for sale in the state. The tax is remitted by the 20th of each month for the previous month’s sales. Vendors filing timely sales tax returns are entitled to a discount of 5% on the first $100 of tax and 2% on all tax over $100.
The tax rate is 4% of the gross receipts of sales of tangible personal property and the retail market value of any property bought at wholesale but withdrawn from stock and used or consumed (except sales of all new and used automotive vehicles, truck trailers, semi-trailer, and house trailers which are taxed at 2% of the net difference paid, farm machinery which is taxed at 1.5% of the net difference paid, and all sales of machines, parts, and attachments for machines used in manufacturing, processing, compounding, mining, and quarrying tangible personal property which are taxed at 1.5%), 4% of the gross receipts from places of entertainment or amusement, and 3% of the total cost price of food products sold through coin-operated vending machines. Local taxing authorities may also impose a sales tax; these rates vary.
Seller’s Use Tax
This tax is imposed on the retail sales of all tangible personal property sold in Alabama by businesses located outside Alabama that have no inventory for sale in Alabama but only a sales office or agents soliciting retail sales in Alabama. This tax is due on a monthly basis and is to be remitted by the 20th of the month following the close of a month. Businesses filing timely reports are entitled to a 3% discount on Seller’s Use Tax Return. The tax rate is 4% on sales price of tangible personal property; 1.5% on machinery used in mining, quarrying, and manufacturing; 2% of the sales price of automotive vehicles or on the net difference of such sales when a trade-in is involved. In addition to the state rate, there may be city and/or county use taxes due; these rates vary.
Consumer’s Use Tax
This tax is imposed on the tangible personal property brought into Alabama for its storage, use or consumption in the state when the supplier did not collect seller’s use tax on the sale of the property. This tax is due on a monthly basis and is to be remitted by the 20th of the month following the close of a month. No discounts apply. The rates are the same as shown above.
Lodgings Tax
This is a privilege tax upon every person or firm that rents or furnishes lodgings or accommodations to transients for a fee. The tax is remitted on the 20th of each month following the month the tax accrues. The tax rate is 5% of the charges for accommodations in counties of the geographic region comprising the Alabama Mountain Lakes area. 4% of the charges for accommodations in all other Alabama counties.
Rental or Leasing Tax
This is a privilege tax levied on the lessor for the leasing or renting of tangible personal property. Leasing tax is due on “true” leases. “True” leases are those in which the title to the property is retained by the lessor at the end of the lease agreement. “Conditional sale” leases, leases in which the title to the property is transferred to the lessee at the end of the lease agreement, are subject to sales tax. This tax, in both cases, should be remitted by the 20th of each month following the month that the tax accrues. No discounts apply. The tax rate is 1.5% of the gross proceeds from renting or leasing automotive vehicles trucks, semi-trailers, or house trailers; 2% of the gross proceeds from renting or leasing linens and garments; 4% of the gross proceeds from leasing or renting of all other tangible personal property.
Any questions regarding any of the above-mentioned taxes, or any taxes not outlined above, should be directed to the Sales and Use Tax Section at (334) 242-1490.
2. Privilege/Business License Section
http://www.ador.state.al.us/licenses/taxes.html
Taxes administered by the Privilege Tax Section are:
Automotive Dismantler and Recycler License
This license is required of all persons engaged in the business of purchasing, dismantling, disassembling, or repairing wrecked, abandoned or repairable motor vehicles and selling the usable parts. This tax also applies when selling these vehicles as a unit at wholesale, or selling the hull after the parts have been removed.
Privilege License Tax
A privilege license is a license requirement of every person, firm, company or
corporation engaged in any business, vocation, occupation or profession
described in Title 40-12 Code of Alabama 1975.
The annual license covers the period of October 1 through September 30. The
license will be delinquent on November 1. The State and County license(s) is
issued by the county Probate Judge or License Commissioner in the county where
the business is located. Unless otherwise provided, a license is required in
every county where the business is conducted.
Motor Vehicle Dealer Regulatory License - This license is required of all
persons engaged in the business of buying, selling, exchanging, reconditioning,
rebuilding, etc. motor vehicles in the State of Alabama.
Store Licenses
Any person, firm, corporation, association or co-partnership, either foreign or domestic, is required to obtain a license to operate, maintain, open or establish any store in this state in which goods, wares, or merchandise of any kind are sold, at either retail or wholesale. A check with city and county officials will determine what local licenses and permits are necessary.
Scrap Tire Handlers License
Any person who receives, collects, or transports scrap tires must obtain a license.
3. Severance Tax Section
http://www.ador.state.al.us/severancetax/index.html
The taxes administered by the Severance Tax Section are:
Oil and Gas Tax
This is a privilege tax on all persons engaged in the business of producing or severing oil or gas from beneath the soil or water. The tax rate varies.
Coal severance Tax
This is a privilege tax levied on every person mining coal in Alabama.
Forest Products Tax
This is a tax on the harvesting of timber or other forest products from the soil. The tax rate varies according to the measurement specifications and types of forest products harvested
Iron Ore Severance Tax
A license or privilege tax required for anyone engaged in the business of mining iron ore or operating an iron ore mine in the State of Alabama.
4. Motor Fuels Section
http://www.ador.state.al.us/motorfuels/index.html
Taxes administered by the Motor Fuels Section include:
Gasoline and Motor Fuels Tax
This is an excise tax on the sale, consumption, distribution, storage, or withdrawal from storage of gasoline. There are two tax levied. Local rates vary.
Aviation Gasoline and Jet Fuel Tax
This tax is based on fuel used to propel aircraft powered by reciprocating engines and/or jet or turbine engines
Motor Carrier Mileage Tax
Motor carrier transportation of persons or property for hire on highways of Alabama.
Wholesale Oil License
Wholesale sales of illuminating, lubricating or fuel oils.
Lubricating Oil Tax
Selling, distributing or withdrawing from storage in Alabama, for any use, lubricating oils or greases.
Scrap Tire Environmental Fee
Act 2003-332, effective September 1, 2003, provides for a "Scrap Tire Environmental Fee" of one dollar ($1) per tire to be collected at the point of sale from the consumer on replacement tires (new, used, and retread), whether or not the tires are mounted on a rim or wheel. The Alabama Department of Revenue has been authorized to collect this fee. A tax form and any remittance due should be filed on or before the twentieth day of the month following each month's activity. The first report will be for the month of September 2003 and must be filed on or before October 20, 2003.
5. Tobacco Tax Section
http://www.ador.state.al.us/tobaccotax/taxes.html
Taxes administered by the Tobacco Tax Section include:
Tobacco Products Tax
Alabama's tax rate on cigarettes is based on 8.25 mills for each cigarette. This converts to $0.00825 for one stick, $0.165 for a package of twenty cigarettes and $0.20625 for a package of twenty-five cigarettes.
State tax on cigarettes is paid by purchasing and affixing revenue stamps to the package of cigarettes. Distributors can only purchase stamps from the Alabama Department of Revenue. State taxes on tobacco products other than cigarettes are paid by tax return. Tobacco wholesalers normally pay the taxes. However, if a retailer receives untaxed products, it is their responsibility to remit the tax to the Department.
There is not a stamp for cigars, snuff, chewing tobacco, or smoking tobacco. These products are referred to as "other tobacco products". The state tax rates vary, and taxes are paid by filing a monthly state tobacco tax return that is due by the twentieth of the month for the previous calendar month's activity. The tax for regular cigars is based on the retail-selling price, whereas the tax for little cigars, snuff, chewing tobacco and smoking tobacco is based on weight.
Pari-mutuel Pool Tax and Horse Wagering Fee
This is a tax fee levied on operators of dog and horse race tracks in Alabama. Pari-mutuel is a system of betting on races whereby the winners divide the total amount bet, after deducting authorized taxes, fees and management expenses, in proportion to the sums wagered individually. The total amount wagered in any particular race is the pari-mutuel pool.
Playing Cards Tax
Playing cards containing not more than fifty-four (54) cards are taxed at $0.10 per deck. A revenue stamp must be affixed to each deck of playing cards. The revenue stamp can only be purchased from the Department of Revenue. In addition, each retailer must obtain a playing card privilege license.
Hazardous Waste Disposal Fees
This is a fee on operators of commercial sites for the disposal of hazardous waste or hazardous substance for each ton of waste or substance received for disposal and disposed of at such sites.
$41.60 per ton on hazardous waste identified or listed under Section 3001 of the Resource Conservation and Recovery Act of 1976 as amended (RCRA), and on PCB wastes.
$103.60 per ton on acute hazardous waste listed in 40 CFR261.33 (e) and having an EPA Hazardous Waste Number designation beginning with "P", except residuals from incineration of such waste.
$66.60 per ton on toxic hazardous waste listed in 40 CFR 261.33(f) and having an EPA Hazardous Waste Number designation beginning with the letter "U", except residuals from incineration of such waste.
$11.60 per ton on all other waste not referenced above. An additional $1.00 per ton is imposed on all waste received for disposal.
Underground and Aboveground Storage Tank Trust Fund Charge
The charge is collected and remitted by operators of bulk facilities from which a first withdrawal of motor fuels from bulk is made. When fuel is withdrawn from bulk outside this state, the owner of the fuel when it is delivered into Alabama is responsible for collecting and remitting the charge.
The charge is based on invoiced gallons. The charge is $1.50 for each 500-gallon increment with the maximum fee being $27.00 for loads of 8,501 gallons or more
The monthly return and payment is due by the twentieth of each month.