The Internet Tax Freedom Act of 1998 implemented a moratorium preventing state and local governments from taxing internet access, or imposing multiple or discriminatory taxes on electronic commerce. Following the initial moratorium, a number of laws amended and extended the moratorium until it became permanent on February 24, 2016, as part of the Trade and Facilitation and Trade Enforcement Act of 2015.
The definition of “internet access” includes:
(a) a service that enables users to connect to the internet to access content, information, or other services offered over the internet;
(b) the purchase, use, or sale of telecommunications by a provider of a service described in (a) to the extent those telecommunications are purchased, used, or sold to provide that service; or to otherwise enable users to access content, information or other services offered over the internet;
(c) services that are incidental to the provision of the service described in (a) when furnished to users as part of that service, such as a home page, email and instant messaging (including voice and video capable email and instant messaging), video clips, and personal electronic storage capacity; and
(d) a home page, email, and instant messaging (including voice and video capable email mail and instant messaging), video clips, and personal electronic storage capacity, that are provided independently or not packaged with internet access.
Internet access does not include voice, audio or video programming, or other products and services (except services described in (a), (b), (c), or (d)) that utilize internet protocol or any successor protocol and for which there is a charge that is either separately stated or aggregated with the charge for services in (a), (b), (c), or (d).
Sections 40-21-80 and 40-21-100, Code of Ala. 1975, exempt internet access charges from the Utility Gross Receipts Tax and the Utility Service Use Tax.
Telecommunications services such as telephone services, cellular services, paging services, and fax services that are not used to provide access to the internet are subject to tax.
Section 40-21-82, Code of Ala. 1975, levies a privilege or license tax against every utility furnishing telegraph or telephone services in Alabama. The amount of the tax is determined by the application of rates against gross sales or gross receipts from the furnishing of such services in the state. Alabama code provides no exemption or exclusion for telephone services provided by the internet.
Section 40-21-82, Code of Ala. 1975, also allows providers of telephone services to combine or bundle taxable and nontaxable services on one invoice and charge the customer tax on the taxable charges.
Voice over Internet Protocol (VoIP) and any other form of telephony and similar services that utilize internet protocol are not included in the federal moratorium. These types of telephony and telecommunications services continue to be subject to the Alabama Utility Telecommunications Services Tax.
As of November 30, 2018, the federal government updated its credit card program. The General Services Administration (GSA) has entered into contracts with Citibank and US Bank under the program named GSA SmartPay® 3. (www.gsa.gov/gsasmartpay) The following information is provided to assist Alabama vendors in determining whether or not tax applies to transactions paid by GSA SmartPay® 3 cards.
The GSA SmartPay® 3 program provides four business lines (card types): Purchase, Travel, Fleet, and Integrated (includes fleet, travel and/or purchase functionality and offers a single card for all purchases.) These cards/accounts can be Centrally Billed Accounts (CBAs) or Individually Billed Accounts (IBAs).
Centrally Billed Accounts (CBAs) are charge card accounts in which all charges are billed directly to the federal government and paid directly by the federal government to the issuing bank. (Sales tax is not due on credit card purchases which are centrally billed to and paid by the federal government. Lodgings tax is not due on charges for lodgings which are centrally billed to and paid by the federal government.)
Individually Billed Accounts (IBAs) are charge card accounts in which charges are paid directly by the cardholder/federal employee to the issuing bank; the federal employee is then reimbursed by the government. (Sales tax and lodgings tax are due on credit card transactions where the purchases or charges for lodgings are billed to and paid by federal employees, who are then reimbursed by the federal government.)
Tax Advantage Travel Accounts (CBA/IBA) are charge card accounts in which charges for rental cars and lodging are paid directly by the federal government to the issuing bank and charges for travel-related purchases such as meals and incidentals are paid directly by the cardholder/federal employee to the issuing bank; the federal employee is then reimbursed by the government. (Sales tax and lodgings tax are due on credit card transactions where the purchases or charges are billed to and paid by federal employees, who are then reimbursed by the federal government.)
Purchase Cards are for purchasing general supplies and services. All federal government GSA SmartPay® 3 Purchase cards are centrally billed. Therefore, transactions paid for with this card are tax-exempt.
Fleet Cards are for purchasing fuel and supplies for government vehicles. All federal government GSA SmartPay® 3 Fleet cards are centrally billed. Purchases of tangible personal property paid for with this card are exempt from sales taxes. However, purchases of fuel paid for by this card are not exempt from state fuel excise taxes.
Travel Cards are for paying travel expenses related to official government travel (airline, hotel, meals, incidentals). Federal government GSA SmartPay® 3 Travel cards may be centrally billed or individually billed. The Travel card uses the 6th digit of the account number to identify whether the account is a Centrally Billed Account or an Individually Billed Account. If the sixth digit is 1, 2, 3, or 4, the transactions against the Travel card are individually billed to the federal employee, and, therefore, the transactions are subject to applicable taxes. See the chart below.
Integrated Cards – Two or more business lines (card types) whose processes are integrated into one card.
All Fleet and Purchase type transactions on a GSA SmartPay® 3 integrated card are centrally billed. Purchases of tangible personal property paid for with this card are exempt from sales taxes. However, purchases of fuel paid for by this card are not exempt from state fuel excise taxes.
Travel functionality on a GSA SmartPay® 3 integrated card may be centrally billed or individually billed. The numbering structure for Integrated Cards to differentiate between centrally and/or individually billed transactions will be specific to each agency / organization using the integrated card. This information will be provided on the GSA SmartPay® website (www.gsa.gov/gsasmartpay) as it becomes available.
Department of the Interior: With the exception of the purchase of meals and incidental travel expenses which are individually billed and subject to sales tax, transactions paid for with the Department of the Interior’s integrated card are centrally billed and exempt from sales and lodgings tax. Purchases of fuel paid for by this card are not exempt from state fuel excise taxes.
The Department of the Interior GSA SmartPay® 3 charge cards can be identified by their unique prefixes and account numbers, government-designed artwork, and wording that indicates that the card is for official transactions for the U. S. Government. The Department of the Interior Integrated Card account numbers begin with 5568 26.
Prefix (1st four digits)
4614 – Visa
4715 – Visa
4716 – Visa
5565 – MasterCard
5568 – MasterCard
4614 – Visa
4615 – Visa
4716 – Visa
4486 – Visa
5565 – MasterCard
5568 – MasterCard
The Bulk Upload method allows you to create a comma delimited text file for each tax type that contains your client’s return and payment information to upload to the system. These files can be created using a spreadsheet program (i.e., Excel) and saved as a comma delimited text file with either a .txt or .csv file extension. A separate file is required for each tax type using the following layouts. Note: If a header row is used during the creation of the file it should be removed prior to uploading since the system will begin importing with the first row of the file. Learn more about Bulk Filing
Before you can enter your client’s return information using the tax return form your client must first set their account to allow third party logons. Then you must add your client’s account to your Account List by logging on to MAT and clicking the “Add Access to Another Account” link on the left side of the Home screen. Then you will need to enter your client’s tax account number, E-file Sign on ID, E-file Access Code and the third party password that your client created when setting their MAT profile to allow third party logons. Once the account is added you can access it by clicking the account number link on the accounts list.