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View All Consolidated Taxpayers, Financial Institution Excise Tax FAQs

Who may file consolidated returns?

Qualified corporate groups, shall have the option to file one excise tax return on a consolidated basis or to file separate returns. Each financial institution included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due.

In order for financial institution members of a controlled group to be eligible to elect to file on a consolidated basis, the members would have to meet the following two tests:

Ownership test: Includable financial institutions will be connected through stock ownership with a common parent corporation. Financial institutions are includable corporations if:
Stock possessing at least 80 percent of the voting power of all classes of stock and at least 80 percent of each class of the nonvoting stock of each of the includable corporations (except the common parent corporation) is owned directly by one or more of the other includable corporations; and
The common parent owns directly stock possessing at least 80 percent of the voting power of all classes of stock and at least 80 percent of each class of the nonvoting stock of at least one of the other includable corporations.
Filing test: In order to be eligible for this election, each member must be a financial institution as defined in Section 40-16-1 and be required to file an excise tax return.
For tax periods beginning after December 31, 2019 – Act 2019-284(HB) revised the Consolidated filing requirements in Alabama Code Section 40-16-3(e). For tax periods beginning on or after January 1, 2020, the election is binding for 120 consecutive months (10 years).

Qualified corporate groups, shall have the option to file one excise tax return on a consolidated basis or to file separate returns. Each financial institution included in the Alabama consolidated return must compute their Alabama taxable income on a separate company basis. Then, the taxable income of the Alabama group is combined to determine the tax due.

In order for financial institution members of a controlled group to be eligible to elect to file on a consolidated basis, the members would have to meet the following two tests:

  • Ownership test: Includable financial institutions will be connected through stock ownership with a common parent corporation. Financial institutions are includable corporations if:
  • Stock possessing at least 80 percent of the voting power of all classes of stock and at least 80 percent of each class of the nonvoting stock of each of the includable corporations (except the common parent corporation) is owned directly by one or more of the other includable corporations; and
  • The common parent owns directly stock possessing at least 80 percent of the voting power of all classes of stock and at least 80 percent of each class of the nonvoting stock of at least one of the other includable corporations.
  • Filing test: In order to be eligible for this election, each member must be a financial institution as defined in Section 40-16-1 and be required to file an excise tax return.

 

For tax periods beginning after December 31, 2019 – Act 2019-284(HB) revised the Consolidated filing requirements in Alabama Code Section 40-16-3(e). For tax periods beginning on or after January 1, 2020, the election is binding for 120 consecutive months (10 years).

Related FAQs in Consolidated Taxpayers, Financial Institution Excise 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.