Can I collect sales tax from customers in different states without violating tax laws in Alabama? What are the requirements?

Collecting Sales Tax from Customers in Different States

If you are a business operating in Alabama and selling to customers in different states, you may be required to collect sales tax in those states. Each state has its own tax laws and regulations, so it is important to comply with the tax laws of each state in which you have customers ^[1.2].

One option for businesses is to participate in the Simplified Sellers Use Tax Remittance Program ^[4.2]. This program allows eligible sellers to collect, report, and remit the simplified sellers use tax authorized by Alabama law in lieu of the sales or use taxes otherwise due by or on behalf of Alabama customers who have purchased items from the eligible seller that were shipped or otherwise delivered into Alabama by the eligible seller. To participate in the program, an eligible seller must make an application with the Alabama Department of Revenue and agree to collect, report, and remit the simplified sellers use tax for all sales delivered into the state as long as they remain a participant in the program.

If a business chooses not to participate in the Simplified Sellers Use Tax Remittance Program, they must comply with the tax laws of each state in which they have customers. This may include registering for a sales tax permit in each state, collecting and remitting sales tax on taxable sales made in each state, and filing sales tax returns in each state ^[1.2].

It is important to note that Alabama law requires businesses to collect sales tax on sales made within the state, including sales made outside of the business’s physical location ^[1.2]. However, the law does not provide guidance on collecting sales tax from customers in different states.

Therefore, to ensure compliance with all applicable tax laws and regulations, it is recommended for businesses to consult with a tax professional ^[1.2].

Source(s):

• [1.2] Applicability of provisions of state excise or use tax law; collection of tax on vehicles sold by dealers not licensed in Alabama or by licensed dealers who fail to collect sales taxes; fees.
• [4.2] Collection and remittance of simplified sellers use tax; reporting; statement.

Jurisdiction

Alabama

• General