Alabama Sales Tax Nexus – What You Need to Know
Alabama’s sales tax nexus rules and laws establish a seller’s obligation to collect and remit sales tax on taxable goods sold to Alabama residents.
Here’s a breakdown of the key points
Types of Nexus
Physical Nexus
This applies when a seller has a physical presence in Alabama.
Examples include:
- Owning or leasing a store, warehouse, or office in the state.
- Having employees, salespeople, or other representatives who solicit sales or deliver products in Alabama.
- Storing inventory within Alabama, even if through a fulfillment service like Amazon FBA.
If you have physical nexus, you’re required to register for a sales tax permit and collect sales tax on all taxable sales delivered to Alabama customers, regardless of your sales volume.
Economic Nexus
This applies when a seller’s out-of-state sales reach a specific threshold within Alabama. Alabama’s economic nexus threshold is currently **$250,000 of sales in a calendar year**. If your out-of-state business exceeds this amount in sales to Alabama customers, you’re considered to have economic nexus and must:
- Register for a sales tax permit.
- Collect and remit sales tax on taxable sales delivered to Alabama.
Important Considerations:
Marketplace Facilitators
Online marketplaces like Amazon and eBay may be responsible for collecting sales tax on behalf of sellers if their total marketplace sales in Alabama exceed $250,000 annually. This can lessen the burden on individual sellers using the platform.
Sales Tax Rates
Alabama has a base sales tax rate of 4%, but localities can add additional local taxes. The combined rate can vary depending on the specific location within the state.
We can help you determine if you have nexus in Alabama and even determine the combined sales tax rate for a specific address.
