Alabama Offers Wayfair Guidance

Alabama has issued sales tax nexus guidance on its economic thresholds law after South Dakota v. Wayfair, Inc., U.S. Supreme Court, Dkt. No. 17-494. The decision struck down the physical presence standard for out-of-state seller sales and use tax registration and collection.

Economic Rule for Sales Tax Nexus

The department announced that its “economic nexus” rule applies to sales made on or after October 1, 2018. While the rule was effective January 1, 2016, its validity was in question until after the Wayfair decision. Because Wayfair removed the physical presence standard for nexus, the department will begin enforcing the rule.

Remote sellers with annual Alabama sales in excess of $250,000  should:

  • register for the Alabama Simplified Sellers Use Tax Program (SSUT); and
  • begin collecting tax as of October 1, 2018.

Remote sellers seeking to comply with the rule can find an application form and additional information about the SSUT program at https://revenue.alabama.gov/wp-content/uploads/2017/07/SSUT-Application.pdf.

Tax Collection in Online Marketplaces

Alabama requires “marketplace facilitators” with Alabama marketplace sales in excess of $250,000 to:

  • collect tax on sales made by or on behalf of its third-party sellers; or
  • to comply with reporting and customer notification requirements.

Marketplace facilitators must comply with the requirements on or before January 1, 2019.

In addition, marketplace facilitators that want to collect sales tax for their marketplace sellers can do that through the SSUT program

Remote sellers who can show that a marketplace facilitator is collecting tax on their Alabama sales will not have to collect tax.

Notice, Alabama Department of Revenue, July 3, 2018

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