When starting a business in Alabama, there are several registrations to take care of. The most common is the Alabama sales tax license, which is sometimes referred to as a retailer certificate, seller’s permit, sales tax permit, sales and use tax number, or sales tax registration.

Keep reading to learn who needs a sales tax permit, what kinds of products and services are taxable, how to register, and what you need to do for reporting.

Related: Guide to starting a business in Alabama

Who needs a sales tax license in Alabama?

A business must register for a sales tax license in Alabama when:

• A business has sales tax nexus in Alabama. Nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
• An Alabama business is selling taxable products or services to Alabama residents
• An out-of-state business having over $250,000 in sales to Alabama residents

What products and services are taxable in Alabama?

Physical Products

There are a few exceptions, but almost all physical products are taxable when sold at retail in Alabama.  Common examples include:

• General merchandise like furniture, appliances, and clothing
• Titled or registered items like vehicles
• Digital goods and services like downloaded movies

Sales of prescription medicine, gasoline, and certain manufacturing and agriculture are tax-exempt.

Digital Products

Digital products are taxable in Alabama.

Services

Most services aren’t taxable in Alabama, however, there are a few exceptions.

• Short-term lodging
• Automobile rentals
• Coin-operated amusement devices

The Department of Revenue’s Sales and Use Tax Rules guide provides a list of common sales tax exemptions.

How to register for an Alabama sales tax license

A sales tax license can be obtained by registering through the My Alabama Taxes website.

Information needed to register includes:

• Type of business entity: sole proprietorship, general partnership, corporation, Limited Liability Company (LLC)
• Entity name
• Physical location
• Contact information
• Officer/owner Information
• Federal Employer Identification Number (FEIN) from the IRS or owner’s Social Security Number if a sole proprietorship with no employees
• Date business formed
• North American Industry Classification System (NAICS) code
• Type of business entity (sole proprietorship, partnership, corporation, LLC)
• Date the business began operating

Sales tax reporting

How is sales tax collected?

When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer.  This tax is collected by the business. 

What gets a little confusing is that in addition to the state sales tax, the State of Alabama also administers over 200 different city and county sales taxes. However, the state does not collect sales taxes for all of the cities and counties. This means a business must contact all counties and municipality taxing agencies to determine whether it should register with them. 

Taxes are filed electronically using the My Alabama Taxes website.

How much is sales tax in Alabama?

If the purchase is made at a store or in a mobile location, the sales tax rate varies depending on where the sale took place in Alabama. In addition to the statewide tax, there are additional sales taxes that may be added by cities and municipalities. When shipping in-state, the sales tax is based on the purchaser’s address.

More information on state sales tax rates is available from the Alabama Department of Revenue.

When are Alabama sales tax returns due?

The Department of Revenue will determine a filing frequency based on the expected volume of annual sales, which will be monthly, quarterly, or annually.  A business with $10 or less in total sales tax liability during the previous calendar year will file on a calendar basis.   A business averaging less than $200 per month in the previous calendar year may pay quarterly but will have to contact the Department of Revenue in writing requesting this election by February 20^th of each year.

Filings are due on the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, in which case it would move to the next business day.

Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.

Alabama Sales Tax License FAQs

Questions

If you have questions about the sales tax license, the Alabama Department of Revenue can be contacted by calling 334-242-1584 or by visiting or calling a regional office.

Auburn/Opelika
3300 Skyway Drive
Auburn, AL 36830
334-887-9549
Counties served: Chambers, Clay, Coosa, Lee, Randolph, Russell, Talladega, Tallapoosa

Dothan
121 Adris Place
Dothan, AL 36303
334-793-5803
Counties served: Barbour, Coffee, Covington, Dale, Geneva, Henry, Houston

Gasden
701 Forrest Avenue
Gadsden, AL 35901
256-547-0544
Counties served: Blount, Calhoun, Cherokee, Cleburne, DeKalb, Etowah, Marshall, St. Clair

Huntsville
4920 Corporate Drive, Suite H
Huntsville, AL 35805
256-837-2319
Counties served: Cullman, Jackson, Lawrence, Limestone, Madison, Morgan

Jefferson/Shelby
2020 Valleydale Road, Suite 208
Hoover, AL 35244
205-733-2740
Counties served: Jefferson, Shelby

Mobile
851 East I-65 Service Road South, Suite 100
Mobile, AL 36606
251-344-4737
Counties served:  Baldwin, Choctaw, Clarke, Conecuh, Escambia, Mobile, Monroe, Washington, Wilcox

Montgomery
2545 Taylor Road
Montgomery, AL 36117
334-242-2677
Counties served: Autauga, Bullock, Buitler, Chilton, Crenshaw, Dallas, Elmore, Lowndes, Macon, Montgomery, Pike

Shoals
201 South Court Street, Suite 200
Florence, AL 35630
256-383-4631
Counties served: Colbert, Franklin, Lauderdale

Tuscaloosa
1434 22nd Avenue
Tuscaloosa, AL 35401
205-759-2571
Counties served: Bibb, Fayette, Greene, Hale, Lamar, Marengo, Marion, Perry, Pickens, Sumter, Tuscaloosa, Walker, Winston