Authorizes the Commissioner to issue Revenue Rulings to taxpayers or to county and municipal governing bodies with self-administered local taxes regarding the application of self-administered local sales, use, rental, or lodging taxes except that such rulings (i) may not interpret a self-administered gross receipts tax which was in effect on or before February 25, 1997, or is an amendment to a gross receipts tax in effect on that date and (ii) may not establish a rule of nexus relative to any self-administered local tax.

Prohibits contingent fee arrangements for appeals or hearings officers.

Prohibits government entities, including the Department of Revenue, from charging a taxpayer with certain costs (including lodgings, meals, or mileage charges) associated with performing examinations of a taxpayer's books and records. Certain exceptions (none of which apply to sales, use, rental, or lodgings tax examinations performed by the Department) are provided.

Authorizes the Department of Revenue to charge self-administered counties and municipalities a reasonable fee for providing information or documents pursuant to an exchange of information agreement and authorizes self-administered counties and municipalities to charge the Department a fee for providing information or documents pursuant to an exchange of information agreement.

Adds the term "prospective purchaser" to the enumerated list of persons to whom the Department may divulge the outstanding sales, use, or rental tax liability of the seller for which a person may be liable pursuant to Sections 40-23-25, 40-23-82, or 40-12-224 and provides that the term is to be defined by rules promulgated by the Department.

Places certain limitations on contracts between self-administered counties and municipalities and private examining or collecting firms in new Section 40-2A-12.

Limits examinations or investigations of a taxpayer's books and records for state and local sales, use, rental, or lodgings taxes to no more than one examination by each respective taxing entity relating to each type of tax every three years unless the taxpayer requests otherwise or unless the Commissioner, or the corresponding governing body of a self-administered county or municipality, notifies the taxpayer in writing that an additional examination is necessary and provides the basis or bases for the additional examination. In new Section 40-2A-13(c) a list of exceptions is provided for which an examination may be conducted and which shall not constitute an unnecessary examination.

Provides that persons examining a taxpayer's books and records on behalf of a self-administered municipality or county shall disclose in writing upon first contact with the taxpayer the identity of the self-administered municipalities and counties represented and provide written authorization from each entity represented.

Provides that on or before January 15 of each year, beginning in 1999, each private examining or collecting firm shall disclose in writing to the Department and to the self-administered municipalities and counties it represents, the identity of all municipalities and counties for which it at any time during the preceding calendar year performed examinations for or collected sales, use, rental, or lodgings taxes.

Places certain restrictions on private examining or collecting firms relative to local tax examinations in subsections (f), (g), and (h) of Section 40-2A-13.

Establishes a certification program for examiners employed by private examining or collecting firms and requires that each private examining or collecting firm maintain fidelity bonds for each of its examiners.

Creates the Alabama Local Tax Institute of Standards and Training to develop (i) an examiner certification program which includes minimum qualifications and continuing professional education requirements for examiners employed by private examining or collecting firms and (ii) a minimum standard examination program to be followed with respect to all examinations for self-administered sales, use, rental, and lodgings taxes.

Levies an annual state license fee of twenty-five dollars on each private examining or collecting firm.