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View All Business Privilege Tax FAQs

What is a Determination Period?

The relationship between a taxpayer’s Determination Period and the taxpayer’s taxable year is, at first, confusing. But, to understand how to properly compute the Alabama Business Privilege Tax, one must first understand the terms

DETERMINATION PERIOD. The taxpayer’s taxable year next preceding or, if different, the fiscal year next preceding the taxpayer’s current taxable year. If the constitutional amendment proposed by Act 99-600 is ratified by the qualified electors of the state and proclaimed by the Governor as provided in Sections 284 and 285 of the Constitution of Alabama 1901, then for all tax years beginning after December 31, 2000, the term “determination period” means the taxpayer’s taxable year next preceding the taxpayer’s current taxable year.

TAXABLE YEAR. The calendar year for which a tax levied by this chapter is being determined. For all tax years beginning after December 31, 2000, the term “taxable year” means the fiscal year used by the taxpayer to file returns required under the income tax levied by Chapter 18 or the financial institution excise tax levied by Chapter 16, or, in the case of an insurance company subject to the premium tax levied by Chapter 4A of Title 27, the calendar year.

The relationship between a taxpayer’s Determination Period and the taxpayer’s taxable year is, at first, confusing. But, to understand how to properly compute the Alabama Business Privilege Tax, one must first understand the terms

DETERMINATION PERIOD. The taxpayer’s taxable year next preceding or, if different, the fiscal year next preceding the taxpayer’s current taxable year. If the constitutional amendment proposed by Act 99-600 is ratified by the qualified electors of the state and proclaimed by the Governor as provided in Sections 284 and 285 of the Constitution of Alabama 1901, then for all tax years beginning after December 31, 2000, the term “determination period” means the taxpayer’s taxable year next preceding the taxpayer’s current taxable year.

TAXABLE YEAR. The calendar year for which a tax levied by this chapter is being determined. For all tax years beginning after December 31, 2000, the term “taxable year” means the fiscal year used by the taxpayer to file returns required under the income tax levied by Chapter 18 or the financial institution excise tax levied by Chapter 16, or, in the case of an insurance company subject to the premium tax levied by Chapter 4A of Title 27, the calendar year.

Related FAQs in Business Privilege Tax

https://www.alabamainteractive.org/sos/

Go to our website, www.revenue.alabama.gov. Click on Forms. Enter Business Privilege into the Search box. Sort the forms by Year by clicking on the box “Year” to find the needed Form. Click on the needed Form. Instructions, Forms with calculations, Printable Forms, and our Voucher (BPT-V) are located here.

What is a Certificate of Compliance

A Certificate of Compliance confirms that an entity has met its filing and payment requirements for taxes administered by the Alabama Department of Revenue.

How to Obtain a Certificate of Compliance

Certificates of Compliance must be requested online.

Request a Certificate of Compliance

Cost: $13.30 per request ($10 fee + $3.30 service charge)

Payment methods: American Express, Discover, Mastercard, or Visa

Before You Apply

Have the entity’s Federal Employer Identification Number (FEIN) and Alabama Secretary of State (SOS) ID ready. Accurate identifying information helps ALDOR verify the correct entity and prevents unnecessary delays or denials.

If You Do Not Have an FEIN or SOS ID

You must provide at least one correct identifying number — the entity’s FEIN or SOS ID.

If you do not have one of the identifying numbers, enter the following placeholder in that field:

  • SOS ID: Enter 999-999-999
  • FEIN: Enter 99-9999999

Do not use placeholders for both fields. Either the correct FEIN or the correct SOS ID must be provided.

Requirements for Issuance

A Certificate of Compliance will be issued after ALDOR confirms the entity has:

  • Filed all required tax returns; and
  • Paid all tax shown as due and payable on those returns.

If these requirements have not been met, the request will be denied.

Applicants should also review the Business Privilege Tax Affidavit Requirement and Special Instructions for Disregarded Entity to ensure all necessary information is provided.

Business Privilege Tax – Special Affidavit Requirement

Under Act 2022-252, entities whose calculated Business Privilege Tax (BPT) is $100 or less will be exempt from filing a BPT return.

If an entity did not file a BPT return for any taxable year beginning after December 31, 2023, ALDOR may require the submission of Form BPT-Exempt Affidavit of Minimum Tax Exemption before issuing a Certificate of Compliance.

The affidavit is to certify that the entity’s calculated tax met the $100 exemption threshold and must be signed and made under penalty of perjury by an authorized representative of the entity.

Form BPT-NFR Affidavit of Minimum Tax Exemption

For questions about the affidavit requirement, contact the Certificate of Compliance Unit at 334-242-1189.

Special Instructions for Disregarded Entities

If requesting a Certificate of Compliance for a disregarded entity, you must provide the following information for the entity’s owner:

  • Owner’s name
  • Owner’s FEIN

For Alabama income tax purposes, the income of a disregarded entity is reported on its owner’s return. ALDOR needs the owner’s information to verify that the disregarded entity’s income tax filing requirements have been met.

Important: Failure to provide the owner’s name and FEIN may result in the Certificate of Compliance request being denied.

Forms and information needed can be accessed through one of the following websites provided by the Office of the Secretary of State or Atlas Alabama.

https://www.sos.alabama.gov/ Main page for Office of the Secretary of State

https://www.sos.alabama.gov/business-entities Business Entities main page

https://www.sos.alabama.gov/business-entities/business-downloads Business downloads/ forms

https://atlasalabama.gov/ – Atlas Alabama

All fees associated with the Office of Secretary of State business entities can be found at the following website:

Business Entity Fees

https://www.sos.alabama.gov/sites/default/files/2020-12/2021FeeSchedule.pdf

The steps for withdrawals and dissolutions are outline below:

Dissolutions- Domestic entity

Complete Articles of Dissolutions Form based on the entity type.
https://www.alabamainteractive.org/sos/welcome.action
Follow the instructions on the form pertaining to the type of entity you are dissolving.
DOMESTIC BUSINESS CORPORATION ARTICLES OF DISSOLUTION
https://www.sos.alabama.gov/sites/default/files/2020-12/DomesticBusinessCorporationDissolution.pdf

DOMESTIC LIMITED LIABILITY COMPANY (LLC) ARTICLES OF DISSOLUTION
https://www.sos.alabama.gov/sites/default/files/2020-12/DomesticLLCDissolution.pdf

DOMESTIC LIMITED PARTNERSHIP (LP) STATEMENT OF DISSOLUTION
https://www.sos.alabama.gov/sites/default/files/2020-12/DomesticLPDissolution.pdf
Withdrawals- Foreign entity

Complete a Request for Certificate of Compliance from ADOR. https://www.alabamainteractive.org/ador_tax_compliance/welcome.action
Provide any missing returns and payments as determined by ADOR staff, if found not to be in compliance to ADOR.
Receive Certificate of Compliance from ADOR.
Complete Certificate of Withdrawal Form https://www.alabamainteractive.org/sos/welcome.action
Submit two (2) signed completed Certificate of Withdrawals with Certificate of Compliance (from ADOR) and filing fee to Secretary of State’s address on the form.
Certificate of Compliance cannot be more than 6 months old to be accepted by SOS.

Office of the Judge of Probate- County Offices contact link page- https://www.sos.alabama.gov/city-county-lookup/probate-judges