Effective July 1, 2022, sales of automobiles, motorcycles, trucks, truck trailers, travel trailers, campers, housecars, or semitrailers that will be:
- registered or titled outside Alabama, and
- are exported or removed from Alabama within 72 hours by the purchaser or purchaser’s agent for first use outside Alabama,
are subject to the Alabama sales tax in an amount equal to the state automotive sales tax rate of 2%, unless the sales tax laws of the state in which the purchaser will title or register the vehicle allow an Alabama resident to purchase a motor vehicle for first titling and registering in Alabama without the payment of tax to that state (Act 2022-346).
However, in no case will the amount of Alabama sales tax due on a motor vehicle that will be registered or titled for use in another state exceed the amount of sales tax that would have otherwise been due in the state where the vehicle will be registered or titled for first use. To qualify as a travel trailer, camper, or housecar that will be registered or titled for use in another state, the purchaser must provide documentation of a valid state-issued identification card, state-issued driver’s license, or U.S. passport; or for entities, a copy of the same for the individual signing for the purchase. An entity must also provide a copy of the same for a member of an LLC or a member of the board of directors for a corporation, as well as the location that the travel trailer, camper, or housecar will be housed upon export from Alabama. Therefore, the seller’s record requirements for such a sale will include maintaining a valid copy of the documentation with the Alabama Department of Revenue Automotive Vehicle Drive-Out Certificate for Nonresidents Form DOC-1 and the bill of sale to substantiate the tax-exempt sale.
The chart below, updated annually, provides an all-inclusive list of states that do not allow Alabama residents to purchase a vehicle without the payment of tax to that state for first titling and registration in Alabama. Persons purchasing vehicles to be registered in these states are only allowed a partial exemption of sales tax on the purchase of automotive vehiclesthat will be removed from Alabama within 72 hours from the date and time of purchase. The partial tax due will be the state sales tax of 2%, not to exceed the amount of tax that would have otherwise been due on the vehicle in the state in which the nonresident will title or register the vehicle for first use. Local sales and use taxes will not apply to these purchases.
A properly executed Drive-Out Certificate must be completed and secured by the seller to take advantage of the drive-out provision, regardless of the tax laws of the state in which the vehicle will be titled or registered for first use. The seller will be liable for the Alabama sales tax on any sales for which the Form DOC-1 has been claimed but for which a properly executed certificate, sales invoice and additional documentation (when applicable) are not maintained.
See Sales and Use Tax Rules 810-6-3-.42.02 and 810-6-3-.42.03 for more information concerning sales to nonresidents.
States requiring tax payment, titling, and registration for Alabama Residents
|State||Abbreviation||Sales Tax Rate|
|South Carolina||SC||2% (with tax due capped at $500 effective 7/1/17)|