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View All Business Privilege Tax FAQs

What is an Electing Family Limited Liability Entity?

An Electing Family Limited Liability Entity is defined in Section 40-14A-1, Code of Alabama 1975. Upon meeting certain requirements, an Electing Family Limited Liability Entity would qualify for a maximum Alabama Business Privilege Tax of $500.

To qualify the LLE must be more than 80 percent owned, directly or indirectly, by an individual and the members of the individual’s family (See 40-14A-1(h)(4), Code of Alabama 1975, for attribution rules to follow in determining ownership).

The LLE must have more than 90% of its gross receipts from interest, dividends, rents, and certain other passive income. At least 90% of the adjusted basis of the assets owned by the LLE must consist of cash, stock, securities, timber, annuities, and certain other “non-business” type assets. Again, see Section 40-14A-1, Code of Alabama 1975, for a more thorough explanation of the Electing Family Limited Liability Entity ownership, income, and asset requirements.

A qualifying LLE would make the election to be treated as an Electing Family Limited Liability Entity by completing Schedule BPT-E, Family Limited Liability Entity Election Form, and attaching the completed Schedule to the Alabama Form PPT being filed for the LLE. Page 1, line 17 must be checked to indicate that the election form is attached to the Form PPT. Single-member LLCs that are treated as a disregarded entity for federal income tax purposes do not qualify as an electing family limited liability entity, in accordance with Section 40-14A-1(h), Code of Alabama, 1975.

An Electing Family Limited Liability Entity is defined in Section 40-14A-1, Code of Alabama 1975. Upon meeting certain requirements, an Electing Family Limited Liability Entity would qualify for a maximum Alabama Business Privilege Tax of $500.

To qualify the LLE must be more than 80 percent owned, directly or indirectly, by an individual and the members of the individual’s family (See 40-14A-1(h)(4), Code of Alabama 1975, for attribution rules to follow in determining ownership).

The LLE must have more than 90% of its gross receipts from interest, dividends, rents, and certain other passive income. At least 90% of the adjusted basis of the assets owned by the LLE must consist of cash, stock, securities, timber, annuities, and certain other “non-business” type assets. Again, see Section 40-14A-1, Code of Alabama 1975, for a more thorough explanation of the Electing Family Limited Liability Entity ownership, income, and asset requirements.

A qualifying LLE would make the election to be treated as an Electing Family Limited Liability Entity by completing Schedule BPT-E, Family Limited Liability Entity Election Form, and attaching the completed Schedule to the Alabama Form PPT being filed for the LLE. Page 1, line 17 must be checked to indicate that the election form is attached to the Form PPT. Single-member LLCs that are treated as a disregarded entity for federal income tax purposes do not qualify as an electing family limited liability entity, in accordance with Section 40-14A-1(h), Code of Alabama, 1975.

Related FAQs in Business Privilege Tax

In Alabama, a resale certificate is officially called a “Sales Tax License”. To get a copy of your Alabama resale certificate or Sales Tax License, you should:

Login to MAT, locate the appropriate tax account, locate and click “Print tax account license” link. If you need help or cannot access your certificate online contact the Alabama Department of Revenue Sales and Use Tax Division for assistance.

Step by Step Instructions for License Renewal

Yes. In accordance with Rule 810-6-1-.144.03: All buyers of property for resale purposes are entitled to purchase at wholesale, tax-free, the property they resell as regular course of business when they have secured the sales tax license required by law. This rule also applies to retailers located outside Alabama when they have secured the sales tax license required by law in the state in which they are located.

A credit card transaction fee is a charge added to the regular price of an item by a retailer when the purchaser pays for the item using a credit card. Other names for this fee include swipe fee, credit card surcharge, processing fee, service charge, or convenience fee.

These fees are subject to sales and use tax and should be included in the seller’s gross sales on retail transactions when calculating tax due. Example: A sale of tangible personal property totals $100. The customer pays with a credit card and is charged a $3 credit card transaction fee. The total price of $103, including the credit card transaction fee, is subject to sales and use taxes.

A credit card fee, even if separately stated, is part of the retailer’s cost of doing business, and the entire consideration for the sale of tangible personal property is subject to sales and use taxes.

If a transaction consists of only non-taxable goods or services, the credit card transaction fee is not subject to sales and use taxes. Example: A customer is charged $50 for a haircut. The customer pays with a credit card and is charged a $3 credit card transaction fee. Since the haircut is not subject to sales and use taxes, the corresponding credit card transaction fee is not subject to sales and use taxes.

When trying to complete title applications for vessels that have inches listed on the MSO, please use this Vessel Length Chart for conversion purposes.

Vessel Length Chart

Yes, Alabama allows resident individuals to claim a tax credit for income taxes imposed by other states. This credit is claimed on Form 40, Schedule CR. A copy of the other state’s return and a copy of the state Schedule K-1 should be included as documentation of this credit.

If the individual does not file an individual income tax return in the other state or the state provides an exclusion of income, include a proforma return calculating the tax at the other state’s rate and a copy of the state Schedule K-1 as documentation of this credit.

Note: Any Pass-Through Entity tax deducted on the Pass-Through Entity’s federal return, which reduces the taxable income reported on the owner’s K-1, should be added back to compute Alabama taxable income.

No, if the current title is an Alabama ELT there is no cost to print a physical title.

However, once an ELT is printed on physical title paper it can not be printed again. A replacement title application must be applied for if a replacement is needed.