Are all remote sellers required to register in Alabama?
All remote sellers directly selling over the $250,000 threshold of total retail sales delivered into Alabama the previous calendar year are required to collect and remit taxes on sales into Alabama beginning on October 1, 2018. New standards for administering simplified sellers use tax laws for remote sellers will be developed by rule, with a small seller exception for remote sellers who do not have annual sales of products and services into the state of more than $250,000. Any small seller exception adopted will not apply to sellers with a physical presence in Alabama. However, remote sellers with sales below the threshold may still apply to participate in the simplified sellers use tax program.
Calculating the $250,000 Threshold:
The calculation of the $250,000 sales threshold for out-of-state sellers and marketplace facilitators provided for in Rules 810-6-2-.90.03 and 810-6-2-.90.04 should only include retail sales made directly by the seller, whether taxable or non-taxable. Sales that should not be included in the calculation are wholesale sales for resale where the buyer presents an Alabama issued sales tax license/resale certificate and any sales taking place through a SSUT participating marketplace that is collecting Alabama taxes on behalf of the marketplace sellers.
Legislative Act 2015-448, entitled the “Simplified Seller Use Tax Remittance Act,” allows eligible sellers to participate in a program to collect, report and remit a flat eight percent (8%) sellers use tax on all sales made into Alabama. An eligible seller is one that sells tangible personal property or a service into the State of Alabama from an inventory or location outside the state but does not have a physical presence in the State of Alabama and who is not otherwise required by Sections 41-4-116 or 40-23-190, Code of Alabama 1975, to collect tax on sales made into the state. Learn more about this program.
If a Marketplace Facilitator is already an SSUT participant who has been reporting their own sales and intends to start collecting and remitting on behalf of their 3rd party sellers, they may indicate this on the monthly return that is filed in MAT by clicking “Yes” next to the question “Are you a Marketplace Facilitator and need to report sales tax collected from sales made by your Marketplace Sellers?” Once “Yes” is selected, additional fields will appear on the return where the sales of 3rd party marketplace sellers may be entered.
New applicants should complete the application process. An email notification will be sent either approving or denying the SSUT application and will include further information.
The SSUT 8% flat tax should be collected and remitted on all sales of taxable products and services into Alabama unless one of the following is presented to the seller or the marketplace facilitator (resale certificate, Alabama exemption certificate, Alabama direct pay permit). Also, the SSUT tax may not be collected and remitted in lieu of the sales and use tax collected by a licensing official. This applies to sales of automotive vehicles, motorboats, truck trailers, trailer, semitrailer, manufactured homes and travel trailers that must be licensed in this state by a local licensing official.
Effective January 1, 2019, any marketplace facilitator who does not collect and remit sales, use, or simplified sellers use tax on Alabama retail sale transactions of qualifying amounts shall be required to report such retail sales and provide customer notifications, within constitutional limitations, pursuant to Section 40-2-11(7)(b) and rules promulgated thereunder. MPFs electing to report should complete the SSUT application and indicate their choice beside the question pertaining to this.
Marketplace sellers making sales on or through a non-participating marketplace facilitator’s marketplace are not relieved of their obligation under the laws of this state to remit sales or use taxes on transactions made on or through a non-participating marketplace facilitator’s marketplace, on or through the marketplace seller’s own electronic sales platform, or at the marketplace seller’s retail location in this state.
Alabama requires remote sellers with the qualifying amount of retail sales into Alabama to begin collecting simplified sellers use tax on October 1, 2019. To ensure the remote seller’s registration is properly processed by October 1, 2019, the remote seller should complete the registration at least three weeks prior to October 1, 2019. The remote seller may indicate a first sales date of October 1, 2019 on the application. A remote seller may register and begin collecting tax at any time prior to October 1, 2019, but the first date of collection should be consistent with the first sales date indicated on its application.
The collection and remittance of simplified sellers use tax relieves the marketplace facilitator, the marketplace seller, and the purchaser from any additional state or local sales and use taxes on the transactions for which simplified sellers use tax was collected and remitted.