Does Alabama Have Economic Nexus Sales Tax Requirements?

November 20, 2020

The South Dakota v. Wayfair, Inc. decision paved the way for many states to implement economic nexus requirements.  Prior to Wayfair, Alabama had its own “economic nexus” collection requirement under Rule 810-6-2-.90.03. With Wayfair, Alabama no longer has a constitutional obstacle to enforcing its rule. Below, we’ve highlighted the major points of the Alabama economic nexus requirements. 

Enforcement date:
October 1, 2018.

Sales/transactions threshold:

Measurement period:
Threshold applies to the previous calendar year.

Included transactions/sales:
Retail sales of tangible personal property delivered into the state.

When You Need to Register Once You Exceed the Threshold:
Next transaction.

Summary: The Alabama Department of Revenue (DOR) states that “remote sellers with annual Alabama sales in excess of the rule’s $250,000 small seller exception should register for the Alabama Simplified Sellers Use Tax Program (SSUT) and begin collecting no later than October 1, 2018.” 

Marketplace facilitators must collect tax on sales made by or on behalf of its third-party sellers or to comply with reporting and customer notification requirements. Alabama Act 2018-539 mandates compliance with reporting or remitting requirements on or before January 1, 2019.

Additionally, economic nexus rules are a hybrid of state and local administration. Select cities are locally administered, while counties, most districts and some cities are state administered. Marketplace facilitators may choose to collect and remit sales taxes on behalf of marketplace sellers or comply with reporting and customer notification requirements.

Alabama is just one example of various states’ differing economic nexus requirements. Businesses must ensure that they are compliant with all state and local requirements.

Alabama Sales Tax Resources: Reach out to our team for more information on the Alabama economic nexus sales tax requirements. Also check out our interactive sales tax nexus map to see real-time updates on every state.

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Sovos was built to solve the complexities of the digital transformation of tax, with complete, connected offerings for tax determination, continuous transaction controls, tax reporting and more. Sovos customers include half the Fortune 500, as well as businesses of every size operating in more than 70 countries. The company’s SaaS products and proprietary Sovos S1 Platform integrate with a wide variety of business applications and government compliance processes. Sovos has employees throughout the Americas and Europe, and is owned by Hg and TA Associates.
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