The 10 Basics Every Alabama Business Should Know About Sales Tax
What is the Sales Tax Rate in Alabama?
The state general sales tax rate in Alabama is 4%. Cities and municipalities of Alabama are allowed to collect their own rate of up to 5% in city sales tax.
What is Sales Tax in Alabama?
Sales tax in Alabama is a tax paid to a governing body (state or local) for the sale of certain goods and services.
Are All Goods and Services Taxable?
How Do I Know What’s Taxable and What’s Not?
This link can help you determine what is taxable and what isn’t in Alabama. https://revenue.alabama.gov/sales-use/sales-use-tax-laws/
Who Pays Sales Tax?
Consumers pay sales tax. Merchants do not pay sales tax out of their own pockets. It’s commonly referred to as a pass through tax.
What Am I Responsible For?
You are required to collect sales tax, hold it secure and send it to the State on-time and in-full.
When Is My Sales Tax Payment Due in Alabama?
In Alabama your tax filing frequency is determined by your revenue. You may be a quarterly or monthly filer. Contact the state to determine your sales tax due date. Click here for a list of due dates.
How Do I Know How Much Sales Tax to Charge?
Sales tax rates in Alabama are a combination of the State and City/Municipality taxes. Find more information here. The final and definitive answer is always the sales tax rate posted on the State Department of Revenue website. Rates posted on the web are often not up-to-date and incorrect. It’s always the merchant’s responsibility to charge the correct sales tax rate.
Who Gets the Sales Tax Money?
In Alabama all sales tax, State, City, and/or Municipality gets paid directly to the State.
How Do I Manage Tax Exempt Sales?
Tax-exempt organizations such as schools and religious organizations are often exempt from sales tax. They are required to give you copy of their “TAX EXEMPT CERTIFICATE” at the time of the sale and you are required to keep this certificate on file. Failing to do so may result in you paying the sales tax out of your own pocket if you have a sales tax audit.
What if I Forget to Pay or Spend the Money and Can’t Pay?
Alabama has severe penalties for missing tax payments. You can find the penalties for late payments here. If sales tax goes unpaid, states will seize the assets of the business or owner and auction them off to pay the debt. In extreme cases owners will be prosecuted and sent to jail. Even if the business closes, sales tax is a personal liability that will follow the owner until paid.
Alabama Sales and Use TAX HELP: