Alabama Sales Tax License
A seller’s permit is commonly known as a sales tax permit, reseller permit, resale certificate, sales tax license, sales tax exemption certificate or sales and use tax permit. In the state of Alabama it is formally referred to as a sales tax license. This license will furnish a business with a unique Alabama sales tax number, otherwise referred to as an Alabama Tax ID number. It is essential to know that obtaining this permit is one of the first steps a business owner should take when starting a business. As the task of collecting sales tax falls on the business that makes the sales and not the consumer, any failure to remit sales tax may lead to interest charges, fines and/or criminal charges.
DO I NEED A SALES TAX LICENSE IN ALABAMA?
You need to get a sales tax license and comply with sales tax laws if you have nexus or a connection to the state of Alabama. Nexus can be triggered by either physical or economic presence.
ALABAMA SALES TAX NEXUS:
You will have to comply with the state of Alabama’s sales and use tax rules and apply for a seller’s permit if:
- The business’s primary location (online store, storefront, office etc.) where it conducts operations is located within Alabama
- The ownership or staff of the business (including sales people, contractors or agents) enter Alabama to conduct business activities
- Personal property owned or leased in Alabama is warehoused
- You sell taxable products or services in Alabama from out of State (remote sellers that sell in Alabama and meet economic nexus thresholds)
- You sell products for shipment within Alabama
- You want to hire employees or contractors in Alabama
- You own a wholesale company that sells products for resale use in Alabama (in most wholesale trade shows and markets it will be required to provide an Alabama Sales Tax License Number in order to participate)
The examples above establish the connection (nexus) between the state and the seller. This allows the state to impose a sales tax collection obligation on the seller.
Additionally, as of June 2018, the Supreme Court of the Unites States ruled that nexus can also be established by an entity conducting economic activity in a state. This is what is known as remote seller nexus. If a remote seller has above a certain amount of sales volume and/or transactions in another state, they are required to register for sales tax. This means that all online sellers on marketplaces (Amazon, Sears, Walmart, Etsy, Big Commerce, Shopify, eBay etc.) may have to potentially collect and pay sales tax.
ALABAMA RESALE CERTIFICATE
Another closely related permit is an Alabama resale certificate -also known as a sales tax exemption certificate- which grants your business the benefit of being able to buy goods without paying local sales tax on them. When doing this, you are the primary party responsible for collecting the tax from the customer when you sell the item. It is not required to complete a resale certificate form. Instead, it is only necessary to provide a copy of the Alabama Sales Tax License.
HOW TO GET A SELLER’S LICENSE IN ALABAMA
You can either fill out a paper application and file it in person or you can simply submit an online application. It is strongly recommended that all new businesses file for their sales tax l through an online tax registration application as it is the easiest and fastest way to apply. For the fastest processing time, please have the following information ready to complete the online application for an Alabama Sales Tax Number:
Business name, physical/ mailing address & phone number
A short description of the business
The owner or officer’s Information
ALABAMA SALES TAX LICENSE APPLICATION
Register for an Alabama Sales Tax License Online by filling out and submitting the “State Sales Tax Registration” form. This license will furnish your business with a unique sales tax number (Alabama Sales Tax ID Number). Once you complete the online process, you will receive a confirmation with all relevant important information within 1-2 business days. Shortly after that, you will receive your documents directly from the Alabama Department of Revenue and your “My Alabama Taxes” account will be ready for future use.