August 2024

Sales Tax Exemption for Hearing Instruments: On August 16, 2024, the Alabama Department of Revenue (Department) issued a publication addressing the sales and use tax exemption for hearing instruments including hearing aids, which commences on October 1, 2024 and ends on September 03, 2029. The Department states in this publication that hearing instruments are defined as any wearable instrument or device designed for or offered for the purpose of aiding or compensating for impaired human hearing. The Department also noted in this publication that the exemption shall not apply to county or municipal sales or use taxes unless approved by resolution or ordinance adopted by the local governing body. The Department's contact information is provided in this publication. More information can be found here.

July 2024

2024 Back-to-School Sales Tax Holiday: The Alabama Department of Revenue (Department) has recently posted a publication regarding the back-to-school sales tax holiday for the 2024 year. According to this publication, the 19th annual back-to-school sales tax holiday will begin Friday, July 19, and end Sunday, July 21. Also according to the publication, this event gives shoppers the opportunity to purchase certain school supplies, computers, and clothing free of state sales tax, although local sales tax may still apply. Set forth in this publication is a listing of types of clothing, school supplies, and books that are eligible for the sales tax holiday; as well as a listing of items that are not eligible. The publication also sets forth contacts within the Department for additional information. More information can be found here.

May 2024

PTEs Have More Time to File 2023 Entity Level Taxation Election: On May 1, 2024, the Alabama Department of Revenue (Department) issued a Press Release extending the due date for certain pass-through entities (PTE) to file the election to be taxed at the entity level for the 2023 tax year. The Department noted in this Release that in the spirit of recent legislation during the 2024 Legislative Session that moves the due date of the PTE election to coincide with the due date of the return for the 2024 tax year and beyond, the Department is extending the deadline for the 2023 tax year to help those taxpayers who showed an intention to make the election but erroneously failed to do so by the original due date. According to the Department, such taxpayers may have either made estimated payments or filed required returns as if the election had been made. As stated by the Department in this Release, the Department will recognize elections to be taxed at the entity level that are filed using MyAlabamaTaxes no later than the due date of the 2023 electing pass-through entity return with applicable extensions, as elections validly made by the due date for those pass-through entities who: (i) timely filed the required entity tax return, as if the election had been properly made for the year; (ii) timely made an electing pass-through entity extension payment; or (iii) made an entity-level tax payment prior to the due date of the respective return. The Department further noted that taxpayers meeting any of these requirements and wanting to make the election must access MyAlabamaTaxes to make the election for the 2023 year, and there is not a paper alternative for this online election. The Release provides sources for additional guidance and FAQs on pass-through entity elections. More information can be found here.

April 2024

Reduced Storage Tank Trust Fund Charge: The Alabama Department of Revenue (Department) has recently published a Notice stating that the Alabama Environmental Management Commission is decreasing the storage tank trust fund charge from $0.012 per gallon to $0.01 per gallon for each gallon of motor fuel first withdrawn from bulk in Alabama or delivered into Alabama. The effective date of this rate change is May 1, 2024. The Department stated in this Notice that this decrease in the charge shall be reflected on the May 2024 return which is due no later than June 20, 2024; and that taxpayers should ensure that the person responsible for preparing the taxpayer's monthly Storage Tank Trust Fund Charge return receives this Notice. The Department's contact information for this rate change was also set forth in the Notice. More information can be found here.

March 2024

Sales/Use Tax Certificate Exemption Projects: The Alabama Department of Revenue (Department) recently announced that as to Statutorily Exempt Entities, as defined in Code Section 40-23-1, contractors and subcontractors will be eligible to apply for a Sales and Use Tax Certificate of Exemption for Governmental/Statutorily Exempt Entity Projects that begin on or after January 1, 2024. The Department noted in this announcement that to obtain the Exemption Certificate, the taxpayer must have a My Alabama Taxes account; and must log in to My Alabama Taxes, click on the "Other Actions" tab, and locate the "Apply for a Certificate of Exemption for Government Entity/Statutorily Exempt Entity Project" link. Afterward, the Department stated that the taxpayer must follow the required steps and submit the required documentation. Further, the Department noted that effective February 12, 2024, which is the effective date of amended Rule 810-6-3-.77, contractors and subcontractors will be able to apply and request extensions electronically for each project through My Alabama Taxes; and no longer be required to submit a monthly consumer use tax return on exempt purchases. Contact information is provided in this announcement for additional information. More information can be found here.

February 2024

Temporary Suspension of IRP and IFTA Requirements: The Alabama Department of Revenue (Department) published an Order entered January 15, 2024, declaring that because there is a state of emergency resulting from the winter weather event, there is a temporary suspension of the requirements associated with the International Registration Plan and International Fuel Tax Agreement for any motor vehicle engaged in interstate disaster relief efforts which will be traveling through Alabama as part of the disaster relief. The Department states that nothing in the Order shall be construed to allow any vehicle to operate in Alabama without a valid registration and insurance from its base state, nor shall anything in the Order be construed to allow any vehicle to exceed weight limits posted for bridges and like structures, among other requirements which are not altered by the Order. This Order is effective until 30 days after the signing of the Order. More information can be found here.

January 2024

Debit Block Code to Change By January 31, 2024: The Alabama Department of Revenue (Department) recently published a Notice stating that if a taxpayer pays taxes through My Alabama Taxes using accounts that employ a debit block which requires an Originating Company ID (debit block code) to be approved for Automated Clearing House (ACH) debits, then the taxpayer must provide to the taxpayer's bank or financial institution an additional debit block code. The Department stated that this change is required because the Department is changing banks. While not all accounts will require this feature, the Department did state that if the taxpayer is unsure if the taxpayer's bank or financial institution account utilizes a debit block, then the taxpayer needs to contact them to verify. The Department then stated that the new Originating Company ID "MAT 6045055" must be added before January 31, 2024, to avoid interruption in processing future payments, but added that the taxpayer should not remove the current Originating Company ID "ADORCCD000" until after January 31, 2024, so that payments made before that date do not fail. The Department in the Notice also states that the Originating Company ID for local motor fuel taxes and non-state administrated local sales, use, rental, and lodging taxes filed through My Alabama Taxes/Single Point/ONE SPOT, will not change. Contact information is also included in this Notice for any questions. More information can be found here.

November 2023

Utility Gross Receipts Tax Exclusion: The Alabama Department of Revenue (Department) issued Revenue Ruling 2023-002 dealing with the question of whether a certain set of facts qualifies for the exclusion from utility gross receipts tax. According to this Ruling, a particular company manufactures pipe at a facility in Alabama, and the pipe is manufactured first by heating iron until it is molten. The molten iron is then poured into a rotating mold and undergoes centrifugal casting. After the pipe is cast, the pipe then undergoes various heat treatments, referred to as the annealing process to transform the cast pipe. The company uses a furnace to heat the iron into a molten state and uses natural gas to generate heat for the annealing ovens that are used to transform the cast pipe. The Ruling noted that the company plans to install electric induction melting holders and furnaces to replace the current furnace system, and the induction melting furnaces will utilize coils carrying alternating electric current to generate heat to melt the iron for casting the pipes. The question addressed by the Department in this Ruling is whether the electricity used for heating in the induction furnaces and the electricity used for heating in certain zones of the annealing ovens qualify for the exclusion from the utility gross receipts tax, provided that the electricity is separately metered. The Department reasoned in the Ruling that the electricity that will be used in the induction furnaces will directly heat the iron and transform it into a molten state, enabling the iron to be centrifugally cast into pipe; and that following the casting of the pipe, electricity will be used in those certain zones for annealing ovens to produce heat that is directly used to transform the cast pipe. According to the Ruling, which cannot be cited as precedent, the pipe product is manufactured by the application or direct use of electrically produced heat both in the induction melting furnaces and the annealing ovens. Consequently, the Department determined that electricity used for heating in the induction furnace and in annealing ovens to manufacture the pipe qualifies for the exclusion, provided the electricity is separately metered. More information can be found here.

October 2023

Nexus Questionnaire and Voluntary Disclosure Agreement Processes: The Alabama Department of Revenue (Department) recently announced an upgrading and relocation of the Department's Nexus Questionnaire and Voluntary Disclosure Agreement processes through the My Alabama portal at https://myalabamataxes.alabama.gov. In this Notice, the Department stated that the Questionnaire is designed to allow business taxpayers to provide information to the Department for use in determining the taxpayer's filing obligations with the State. The Voluntary Disclosure Program, as noted by the Department, is offered as a service to business taxpayers who want to become compliant with the tax laws of Alabama and limit their exposure to retroactive tax liability and penalties. The Department noted that beginning September 15, 2023, electronic questionnaires and applications must be submitted through the My Alabama Taxes portal. Further, the Department noted that third-party submitters/representatives who do not already have an Agent Account with the Department must register for a Bulk Filer/Agent Account before submitting applications or questionnaires for their clients in My Alabama Taxes. More information can be found here.

September 2023

Sales Tax Rate Reduction for Food: The Alabama Department of Revenue (Department) recently posted a reminder notice stating that, in accordance with Act 2023-554 signed by Governor Ivey on June 16, 2023, the state sales and use tax rates on food will be reduced from four percent to three percent effective September 1, 2023. This reminder notice also referenced that the state sales and use tax rates will be further reduced to two percent on September 1, 2024, if there is sufficient growth in the state Education Trust Fund. The notice also provided that city and county sales and use tax rates on food will be equal to their general sales tax rate in effect as of June 15, 2023; and that local governments can reduce their rate on food in 25 percent increments in any year when there is sufficient growth in their local General Fund. The notice further provided that the word "food" has the same meaning as defined in 7 U.S.C. Section 2011, for purposes of the federal Supplemental Nutrition Assistance Program (SNAP). Further, the Notice referenced that SNAP-eligible food items generally include any food or food product for home consumption, except alcoholic beverages, tobacco, hot foods, or food products ready for immediate consumption. Contact information is provided in this notice for additional information on SNAP-eligible and ineligible items. More information can be found here.

August 2023

Guidance Regarding Exempt Overtime Pay: On August 4, 2023, the Alabama Department of Revenue (Department) issued a press release regarding guidance published by the Department for reporting overtime pay that will be exempt from income tax for the upcoming tax year. Frequently asked questions and other relevant information were also included with that guidance. The press release noted that for the tax year beginning on or after January 1, 2024, overtime pay received by a full-time hourly wage paid employee for hours worked above 40 in any given week is excluded from gross income and therefore exempt from Alabama state income tax. The release also noted that tied with this exemption are employer reporting requirements to the Department, including a requirement to report the total aggregate amount of overtime pay and the total number of employees who received overtime pay. That exemption, Act No. 2023-421, was passed by the 2023 Alabama Legislature on June 6, 2023, and signed by the Governor on June 8, 2023. More information can be found here.

July 2023

Extension Provided for Making Pass-through Entity Election: By press release dated July 10, 2023, the Alabama Department of Revenue (Department) is extending the due date for certain pass-through entities to file the election to be taxed at the entity level for the 2022 tax year. In its release, the Department stated that the extension is being provided to help those taxpayers who showed an intention to make an election but erroneously failed to do so by the original due date. The Department also stated in the release that elections will be recognized to be taxed at the entity level that are filed using My Alabama Taxes no later than the due date of the 2022 electing pass-through entity return with applicable extensions, as elections validly made by the due date for those pass-through entities which: (i) timely filed the required entity tax return, as if the election had been properly made for the year; (ii) timely made an electing pass-through entity extension payment; or (iii) made an entity-level tax payment prior to the due date of the respective return. The Department also stated in the release that beginning July 10, 2023, taxpayers meeting any of the above requirements and wanting to make the election must access My Alabama Taxes to make the election for the 2022 year, and that there is not a paper alternative for this online election. The release provided information for additional guidance and FAQs on the pass-through entity election process. More information can be found here.

June 2023

Registration Fee Increase for Battery Electric Vehicles: By Memorandum dated June 8, 2023, the Alabama Department of Revenue (Department) announced that beginning July 1, 2023, the registration fee for each battery electric vehicle and each plug-in hybrid electric vehicle will increase by $3. The Department noted in this Memorandum that the Rebuild Alabama Act, enacted in 2019, imposed a registration fee of $200 for each battery electric vehicle and $100 for each plug-in hybrid electric vehicle operating on public highways in Alabama, such fees being effective January 1, 2020. With this increase as announced in the Memorandum, the registration fee for battery electric vehicles will be $203, and for plug-in hybrid electric vehicles will be $103. Contact information is provided in this Memorandum for any questions. More information can be found here.

May 2023

Gasoline/Diesel Fuel Excise Tax Will Be Increasing: In late February 2023, the Alabama Department of Revenue (Department) published a Notice advising that, effective October 1, 2023, the gasoline and undyed diesel excise taxes will increase by $0.01 per gallon to $0.29 per gallon for gasoline and $0.30 per gallon for undyed diesel. The Department noted in this Notice that effective October 1, 2023, and on July 1 of every other year thereafter, the gasoline and undyed diesel excise tax rate will be adjusted by the percentage change in the yearly average of the National Highway Construction Cost Index and rounded to the nearest whole cent with the increase or decrease of the excise tax rate not exceeding $0.01 per gallon pursuant to the Rebuild Alabama Act. The Department also stated in this Notice that any wholesale distributor holding motor fuel in inventory outside of the bulk transfer/terminal system on the effective date of the tax increase will be liable for the additional excise tax and must file the required floor-stock tax return and payment on or before January 31, 2024. More information can be found here.

April 2023

Proposed Property Tax Exemption Rule for Local Government Guidance: On February 28, 2022, Governor Ivey signed the Small Business Relief and Revitalization Act of 2022 into law, which provided immediate tax relief for Alabama small businesses. Among such relief is an exemption of up to $40,000 of market value for the state business personal property tax, which was publicized to effectively exempt 75 percent of Alabama businesses from payment of the state portion of this tax. As a follow-up to that enactment, and in accordance with the Governor's Executive Order No. 735 dated March 8, 2023, the purpose of which is to reduce Red Tape on citizens and businesses in Alabama, the Alabama Department of Revenue (Department) on March 20, 2023, filed New Rule Number 810-4-1-.14 which, once promulgated, would provide guidance to counties and municipalities with respect to establishing a mirror exemption at the local level to the extent of $40,000 in market value if those local governments elect to do so. A public hearing on this proposed promulgation is scheduled for May 9, 2023, and the Department announced that participation in this public hearing will be conducted via web conference. The Department also provided contact information regarding its Tax Policy and Governmental Affairs Division for those intending to participate in that public hearing. More information can be found here.

March 2023

Extended Filing Deadline for Taxpayers in Declared Disaster Areas: On February 28, 2023, the Alabama Department of Revenue (Department) published an announcement that the Department is offering tax relief to Alabama taxpayers who reside or who have a business in federally declared disaster areas in Alabama where damage was caused by severe weather in January 2023. According to this announcement, the Department will grant filing and payment extensions directly affected by the severe storms. As noted in this announcement, Alabama taxpayers residing in such disaster areas have until October 16, 2023, to file tax returns and make tax payments due on or after January 12, 2023, and before October 16, 2023. The announcement also states that taxpayers in these areas who file and pay on or before October 16, 2023, will be eligible for penalty and interest relief during the extension period. This extension, according to the announcement, applies to all taxes administered by the Department other than taxes and registration fees due under the International Fuel Tax Agreement and the International Registration Plan. Affected taxpayers filing for Individual Income Tax, Corporate Income Tax, Pass-Through Entities, Business Privilege Tax, or Withholding Tax may submit a penalty waiver request using the Department's form PWR, which can be accessed at the link set forth in this announcement. Further, the announcement set forth various telephone contact information for additional guidance. More information can be found here.

February 2023

Extension of Time for Motor Vehicle Registration/Property Tax Payments Due to Storms: On January 25, 2023, the Commissioner of the Alabama Department of Revenue (Department) issued an Executive Order providing residents of Autauga, Chambers, Coosa, Dallas, Elmore, and Tallapoosa Counties additional time to obtain motor vehicle registrations and pay property taxes on motor vehicles. This extension applies to registrants in those counties declared to be under a state of emergency. It would relate to both motor vehicle registration laws and property tax laws for registration of vehicles purchased or otherwise required that are subject to the 20-day registration requirement, as well as for motor vehicle registration laws and property tax laws for motor vehicle registrations and renewals for vehicles pursuant to the International Registration Plan, when the ad valorem tax was due in a county declared be under a state of emergency. The extension is to the last business day of the subsequent month that registration was otherwise due in those counties. The Executive Order also stated that penalties associated with motor vehicle registrations and renewals extended under the Order will not be charged until after the last business day of the subsequent month. Penalty charges associated with motor vehicle property tax payments so extended will not be charged until after such date. More information can be found here.

January 2023

Revised Interest Chart Effective January 1, 2023: On December 12, 2022, the Alabama Department of Revenue (Department) provided a certain Memorandum to various license issuing officials in the state regarding the revised interest chart effective January 1, 2023. The Department stated in that Memorandum that the updated interest rate chart was issued consistent with Section 40-1-44, Code of Alabama, 1975, interest on delinquent taxes and overpayments. Further, the Department noted in that Memorandum that the underpayment rate for the second quarter of the fiscal year, established by the Secretary of Treasury under 26 U.S.C. Section 6621, is 7 percent. The updated interest chart can be found at the link set forth in the Memorandum. That chart states in part that it may be used through September 2023 or until further notice. More information can be found here.

October 2022

Suspension of Certain Requirements Resulting from Hurricane Ian: On September 28, 2022, the Alabama Department of Revenue (Department) issued two Executive Orders temporarily suspending certain requirements because of the state of emergency resulting from Hurricane Ian. The first Order temporarily suspended the requirements associated with the International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA) for any motor vehicle engaged in interstate disaster relief efforts which will be traveling through the State of Alabama as part of the disaster relief. The Department made it clear that nothing should be construed to allow a vehicle to operate in Alabama without valid registration and insurance from its base state, nor should it be construed to allow any vehicle to exceed weight limits posted for bridges and like structures, among other requirements. The second Executive Order temporarily suspended the licensing requirements associated with the Alabama Terminal Excise Tax for motor fuel exporters, importers, or transporters supporting disaster relief efforts by engaging in the export of motor fuel from Alabama to other states impacted by Hurricane Ian. The Department states in this Order that nothing shall be construed to permit any waiver of additional requirements under the Alabama Terminal Excise Tax, including the requirement for suppliers to collect and remit the destination state tax, among other requirements. Both Orders are effective until 30 days after signing. More information can be found here and here.

September 2022

Annual Wholesale Oil License Fee Return: On September 6, 2022, the Alabama Department of Revenue (Department) posted an announcement that the annual wholesale oil license fee return is due October 14, 2022, for the periods of October 1, 2021, through September 30, 2022. The Department noted in this announcement that if a company was issued a Supplier License, a Permissive Supplier License, or an Importer License by the Department, then the Return must be submitted. The Department also noted that electronic filing is mandatory, and that all Returns must be filed through My Alabama Taxes at https://myalabamataxes.alabama.gov. Further, the announcement noted that any wholesale or license fee liability exceeding $750 must be paid electronically and that the company must log into its account between October 1, 2022, and October 14, 2022, to submit the required Return and payment. More information can be found here.

August 2022

August Rule Hearing Public Notice: The Alabama Department of Revenue (Department) recently published a Public Notice announcing that the Department will hold rule hearings on August 9, 2022, via web conference. The hearings will begin at 1:30 p.m. CST and will cover a wide variety of Alabama taxes and related issues, including an amendment to: Rule 810-3-39-.02, dealing with the extension of time for filing a corporation return; Rule 810-3-43-.01, dealing with the availability, claiming, and transferability of the rail credits; Rule 810-6-2-.27, dealing with gold, coin, and bullion; Rule 810-6-3-.42.02, dealing with sales to nonresidents; among various other Rules to be addressed at the hearing. The Notice states that to participate in the upcoming web conference public hearing, interested parties should contact the Department’s Tax Policy and Governmental Affairs Division at taxpolicy@revenue.alabama.gov or 334-242-1380 to obtain the appropriate sign-in information. The Notice further stated that rule actions are needed to comply with recent law changes, new guidelines, or procedures. Further, the Notice provides that copies of a proposed rule may be downloaded from the website, where all rulemaking hearings conducted by the Department are posted. More information can be found here.

Alabama Tax Tribunal Ruling on Add-Back Statute: In Pfizer, Inc. v. Department of Revenue (Ala. Tax Trib. Docket No 18-236-JP, July 28, 2022), the Alabama Tax Tribunal ruled in favor of the taxpayer regarding the deductibility of interest paid to a foreign affiliate. Under Alabama's "add-back" statute, Alabama Code Section 40-18-35(b), certain intangible expenses and interest payments paid to a related person are not deductible for Alabama corporate income tax purposes. However, an exception permits the deduction "to the extent the corporation shows … that the corresponding item of income was in the same taxable year … subject to a tax based on or measured by the related member's net income by a foreign nation which has in force an income tax treaty with the United States, if the recipient was a 'resident' of the foreign nation." In Pfizer, the Alabama Department of Revenue disallowed the deduction for interest paid to an affiliate based in Ireland, arguing that the amount was not "subject to a tax" in Ireland due to a similar payment and deduction of interest by the Irish affiliate to a Luxembourg affiliate. The Tribunal found that the subsequent payment and deduction of the interest to the Luxembourg affiliate did not cause the add-back of the interest paid to the Irish affiliate. In doing so, the Tribunal distinguished the decision of the Alabama Court of Civil Appeals in Surtees v. VFJ Ventures, Inc., 8 So.3d 950 (Ala. Civ. App. 2008). A link to the Pfizer decision is here.

June 2022

Extension of Time for Election to be Taxed at Entity Level: On June 17, 2022, the Alabama Department of Revenue (Department) issued a press release extending the due date for the filing of the election to be taxed at the entity level for certain pass-through entities to August 15, 2022. The Department stated in this release that this extension is being provided because a number of taxpayers failed to file the required election by the original due date but either made estimated payments or filed required returns as if the election had been made. This entity-level tax election, according to the release, is being implemented for the first time for the 2021 tax year, so the Department wanted to help those who showed an intention to make the election but erroneously failed to do so. Accordingly, the release stated that the Department will recognize elections to be taxed at the entity level that are filed using My Alabama Taxes no later than August 15, 2022, as elections validly made by the due date for those pass-through entities, provided that: (i) the entity timely files the required entity and member tax returns; (ii) the entity timely makes the electing pass-through entity extension payment; or (iii) the entity made an entity-level tax payment prior to the due date of the respective return. The release further states that taxpayers meeting these requirements may access My Alabama Taxes to make the election for the 2021 tax year from July 1, 2022, until August 15, 2022. Contact information is provided in the release for those seeking guidance. More information can be found here.

May 2022

Sales Tax Exemption Extended for Certain Aircraft Refurbishing Parts: On May 12, 2022, the Alabama Department of Revenue (Department) published a Notice advising the tax exemption for the gross receipts from the sale of parts, components, and systems for refurbishing certain aircraft, which was scheduled to expire May 30, 2022, was extended by a 2021 legislative Act without an expiration date; however, the Department also noted that certain legislation in 2022 reinstated the expiration date such that the exemption is available to sales made through May 30, 2030, on contracts or projects entered into on or before May 30, 2027. More information can be found here.

April 2022

New 1099-K Filing Requirement: The Alabama Department of Revenue (Department) published a news release on April 6, 2022, entitled "New 1099-K Filing Requirement." In this release, the Department stated reporting that entities required to file form 1099-K Information Returns with the Internal Revenue Service must also file with the Department a duplicate of the Information Returns or a duplicate of all Information Returns related to taxpayers or participating payees with an Alabama address. The release goes on to state that, pursuant to a certain 2017 legislative enactment in Alabama, those settlement entities, third-party settlement organizations, electronic payment facilitators, and third parties acting on behalf of payment settlement entities are required to file duplicate federal form 1099-K Information Returns with the Department within 30 days of the IRS filing due date. The release goes on to state that 2021 1099-K Information Returns will be due on or before May 2, 2022. Further, the release provides that interested parties can visit the Department's website in order to file the Form 1099-K electronically; and such parties can contact the Department with questions regarding this requirement. More information can be found here.

March 2022

Further Guidance as to Pass-Through Entity Elections: The Alabama Department of Revenue (Department) has adopted Rule 810-3-36-.01, effective February 13, 2022, providing more guidance with respect to the election available for Alabama S-corporations and Subchapter K entities for purposes of paying the Alabama income tax at the entity level (Electing PTEs). The statutory authorization for this election was enacted during 2021 and the Department previously issued certain guidance regarding the election's availability (see our April 13, 2021 publication). Rule 810-3-36-.01 provides that an Electing PTE does not include a single member limited liability company, estates, trusts, a business trust, and disregarded entities, except in the capacity as an owner, member, partner, or shareholder of the Electing PTE. Further, the Rule addresses the determination of taxable income for purposes of the Electing PTE, as well as the requirements for such an election. With respect to the requirements, the Rule provides the Electing PTE must make the election on Form PTE-E, Pass-Through Entity Election Form, and must submit the Form electronically to the Department via My Alabama Taxes (MAT) on or before the 15th day of the third month following the close of the tax year for which the entity elects to be taxed as an Electing PTE. The Rule states such election is binding for the year on which it is approved and all subsequent tax years until a request to revoke the election is made. The Rule also sets forth certain transition requirements when an entity is transitioning to an Electing PTE.

February 2022

Motor Vehicle Registration Deadlines Extended Due to COVID-19: The Alabama Department of Revenue (Department) published a notification on January 12, 2022 that relief was being provided to those who cannot register their vehicles or renew registrations because of license issuing office closures resulting from the spread of COVID-19. The Department stated registrants in counties where the county license issuing office closure during normal business results in the registrants having no access to make transactions, the deadlines to renew 2022 motor vehicle registrations on vehicles are extended to the last business day of the subsequent month that registrations are otherwise due. Further, the Department stated this extension applies to vehicle owners in all counties where the county courthouse or other license plate issuing offices and tax collection offices are closed for the entire month the registrations are originally due. More information can be found here.

January 2022

Sales Tax Account Renewals: The Alabama Department of Revenue (Department) issued an announcement reminding taxpayers that Administrative Rule 810-6-5-.01.01 requires annual renewals of the following tax account licenses: sales tax, rental tax, sellers use tax, lodging tax, utility gross receipts tax, and simplified sellers use tax. The Department stated that the renewal process must be completed on an annual basis in order to generate a new tax license for the upcoming year. The business information must be verified and updated as necessary on an annual basis each November-December. A link to renew the tax account license is set forth in the announcement. More information can be found here.

October 2021

Guidance Regarding Pass-Through Entity Tax Election: On October 19, 2021, the Alabama Department of Revenue (Department) issued guidance regarding the Alabama Electing Pass-Through Entity Tax Act which allows Alabama S-Corporations and Subchapter K entities to elect to pay Alabama income tax at the entity level. According to this guidance, entities making this election must submit Form PTE-E via My Alabama Taxes (MAT) at myalabamataxes.alabama.gov; and that Form PTE-E is expected to go live in January. Further, this guidance states that to prepare for this new process, all pass-through entities that choose this election must be registered to use MAT and must submit the Form PTE-E through MAT prior to the 15th day of the third month following the close of that tax year for which the entity elects to be treated as an electing pass-through entity. The guidance then sets forth information that is available to sign up for MAT. Further, and with respect to a new entity without a Department taxpayer account, the guidance provides that a new taxpayer/account registration application is required to be completed using MAT, and provides some guidance with respect to such registration process. The guidance also provides contact information if assistance is needed. More information can be found here.

September 2021

Proposed Guidance on SALT Cap Workaround: Alabama is among a number of states that have legislated a workaround of the state and local tax (SALT) cap contained in the 2017 federal tax act for pass-through business entities. The Alabama Department of Revenue (Department) has proposed guidance for the Alabama SALT cap workaround, Proposed Regulation 810-3-36-.01, Electing Pass-Through Entity Returns. The Department has scheduled the Proposed Regulation for a public hearing in early October. The Proposed Regulation provides, among many other things, that eligible S Corporations and Subchapter K Entities, a “Pass-Through Entity,” may electronically elect the workaround by filing Form PTE-E, Pass-Through Entity Election Form, on or before the fifteenth day of the third month following the close of the tax year for which the election is to be effective. The election is binding for the year it becomes effective and all subsequent tax years, until revoked by the taxpayer using the same method as electing such treatment. The election is available for taxable years beginning on or after January 1, 2021. The effect of the election is to provide a tax credit, not subject to the SALT cap, as calculated per the prescribed methodology in the Proposed Regulation, to the owners of a Pass-Through Entity, in exchange for an entity-level tax payment. The owners of the Pass-Through Entity, of course, must file an Alabama income tax return to report their pro rata or distributive share of the Pass-Through Entity's income and claim the tax credit for their pro rata or distributive share of the Alabama income tax paid by the Pass-Through Entity. The election may not eliminate or exempt any owner from the elective treatment.

August 2021

Exclusion for Sales Tax on IT Services Delivered In State: In Revenue Ruling 2021-001, the Alabama Department of Revenue (Department) ruled that additional information technology services related to manufacturing software which is delivered remotely by a company with no physical presence in the United States to a customer located in Alabama is not subject to sales tax on invoices for the services so long as the nontaxable services are separately stated on all invoices and do not involve the transfer of computer software. Those requested additional information technology services consisted of hot line support in case of malfunctions or functional questions, suggestion/handouts for additional training, error analysis, weak point analysis, MS Windows update pre-tests, and hosting of test facilities, all of which would be provided from the provider's remote location outside the United States. The provider would conduct regular in-person meetings within Alabama every six months. Revenue Ruling 2021-001 is consistent with the Department's previous positions about separately invoiced services, as opposed to software.

Excise Tax on Financial Institutions: On August 5, 2021, the Department issued a press release addressing the 2019 law imposing a requirement on financial institutions for making quarterly estimated payments of the annual tax liability for the tax years beginning after December 31, 2019. As stated in this release, to account for the transition from the previous post-payment system for financial institutions, the Department was authorized to wave both penalties and interest linked to unintentional underpayments of estimated tax occurring within the first two applicable tax years. If a financial institution suspects that it may have been or may be billed for underpaying the 2020 estimated tax payments, that financial institution should file a Request for Waiver of Penalty (Form PWR) with the Department. That Form PWR, as noted in the release, may be included within the 2020 Financial Institution Excise Tax Return that has yet to be filed, because of the extended due date, as well as the 2021 Return. The Department noted in the release that penalties and interest will be waived resulting from underpayments of estimated tax payments that were not attributed to an intentional disregard of the law. More information can be found here.

July 2021

Sales Tax On Aircraft Parts: On June 16, 2021, the Alabama Department of Revenue (Department) issued a Notice to all sellers making retail sales of aircraft parts, stating in essence that the exemption enacted in 2012 which was set to expire May 30, 2022, has been extended as a result of the 2021 Legislature removing that sunset provision. This sales and use tax exemption applies to aircraft parts, components, and systems for refurbishing certain aircraft according to Alabama law. The Department states in this Notice that questions regarding the Notice or the sale of aircraft parts should be directed to the Sales and Use Tax Division at the address set forth in the Notice. More information can be found here.

June 2021

Single Sales Factor: Earlier this year, Governor Ivey signed Act 2021-1 into law, which provides in part that "All business income shall be apportioned to this state by multiplying the income by the sales factor". This Act removes both the property factor and the payroll factor from the formula used to apportion business income to Alabama. The "sales factor" is defined as a fraction, the numerator of which is the total sales of the taxpayer in Alabama during the tax period, and the denominator of which is the total sales of the taxpayer everywhere during the tax period. This change to use a single sales factor is effective for tax years beginning on or after January 1, 2021. The Alabama Department of Revenue updated its frequently asked questions to address this new single sales factor. More information can be found here.

May 2021

Coal Severance Tax Extended: The Alabama Department of Revenue (Department) published a Notice dated April 19, 2021 stating that Governor Ivey signed Act Number 2021-120 on April 1, 2021, pursuant to which the coal severance tax which was due to expire on October 1, 2021, is extended until October 1, 2031. The Notice states that the total tax levied on coal severed in Alabama remains at $0.335 per ton. Further, and pursuant to the provisions of this Act, the Notice states that the term "loaded for shipping" was included related to coal severance, and that such term means coal that is severed from a mine located in one county and then loaded for shipping in another county. According to the Notice, and effective with the September 2021 coal severance tax return, which is due no later than October 20, 2021, indication must be made as to whether coal is being severed in one county and loaded for shipping in another county. The Department's Notice also directed that the MyAlabamaTaxes account is to be used in filing the coal severance tax return and remitting the tax by the due date. More information may be found here.

April 2021

Extension to May 17: On March 18, 2021, the Alabama Department of Revenue (Department) issued guidance with respect to the income tax filing deadlines in light of the IRS issuing IR-2021-59, which provided that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. The Department's guidance stated that Alabama provides an automatic extension of up to six months to file Alabama income tax returns wherever there is a corresponding federal extension, and that Alabama taxpayers will not need to request an extension to file Alabama returns without a late-filing penalty through the extended federal due date. The guidance then stated that the Department will automatically waive, without request, late-payment penalties for payments remitted by May 17, 2021; however, the Department is not authorized to waive interest, and any interest accruing from April 15 through the actual payment date will be due. In this guidance, the Department encourages taxpayers to make their payments for the 2020 tax year as soon as possible to avoid the accrual of interest beyond April 15. More information can be found here.

Estimated Payment Guidance for Electing PTEs: On April 2, 2021, the Department issued guidance relative to the Alabama Electing Pass-Through Entity Tax Act (Act). The purpose of this Act is to allow Alabama S-Corporations and Subchapter K entities to elect to pay Alabama income tax at the entity level (Electing PTEs). As noted in this guidance, Electing PTEs must notify the Department any time during the tax year but no later than the 15th day of the third month following the close of the tax year for which the entity elects to be taxed as an Electing PTE. Entities making this election, according to the guidance, including those that anticipate making this election for 2021 tax year, may be required to begin making estimated payments on April 15, 2021. The guidance then provides information as to whether, when and how estimated payments should be made by the Electing PTEs. The Departments stated that additional guidance regarding the election process, returns, and related matters will be issued prior to the 2021 filing season. More information can be found here.

March 2021

Updates Reported – On February 24, 2021, the Alabama Department of Revenue issued a press release offering tax relief to Alabama taxpayers who reside in or have a business located within a federally declared disaster area where damage was caused by recent winter storms. According to the release, the tax relief measures offered by the Department mirror the IRS measures in the same declared disaster areas. Also according to the release, Alabama taxpayers residing in these areas designated as disaster areas by the federal government have until June 15, 2021, to file tax returns due on or after February 11, 2021 and before June 15, 2021; and that penalty relief will be provided during the extension period. Affected taxpayers filing for Individual Income Tax, Corporate Income Tax, Pass-through Entities, Business Privilege Tax, or Withholding Tax may submit a penalty waiver request using the Department's applicable form. The release also provided that a list of the eligible localities can be found on the IRS link within the press release. More information can be found here.

February 2021

Updates Reported – On February 5, 2021, the Alabama Department of Revenue posted certain 2021 Tax Filing Tips for the upcoming Tax Season 2021. According to this posting, that season begins on February 12, and the filing deadline is April 15, 2021. The tips and suggestions in this posting are designed to help taxpayers file returns safely and get refunds as quickly as possible. Those tips and suggestions within this posting include various security topics for taxpayers and employers, as well as several topics pertinent to seeking refunds.

Additionally, on February 12, 2021, Governor Ivey signed House Bill 170 which continues for the 2021 tax year the exclusion from Alabama individual income taxation any tax credits or advance refund amounts received under certain COVID-related relief measures enacted by the U.S. Congress; and House Bill 192 which allows a jobs tax credit against utility taxes under certain conditions for incentivized companies engaged in pharmaceutical, biomedical, medical technology or medical supply manufacturing or related activities. More information can be found here and here.

January 2021

Updates Reported – On January 6, 2021, the Alabama Department of Revenue issued guidance to implement the tax relief measures included in the December 11, 2020 Supplemental Emergency Proclamation of Governor Ivey. The guidance addresses many areas of Alabama income taxation relating to the federal CARES Act and related federal legislation, including state grants funded by the federal legislation. It includes guidance for Alabama individual income tax, employers, corporate income tax and financial institution taxpayers.

In part, the guidance provides that, in calculating their 2020 Alabama income tax liability, taxpayers may deduct expenses paid with PPP loan amounts that have been forgiven or for which the taxpayer reasonably expects to receive forgiveness even if the taxpayer has not applied for forgiveness of the loan by the end of the 2020 tax year.

The full text of the guidance can be found here.

December 2020

Updates Reported – On December 11, 2020, Governor Ivey signed a Proclamation stating that the current conditions warrant implementation of additional extraordinary measures and relief during the State public health emergency now in effect so as to guard public health and protect human life. Based on the foregoing, the Governor proclaimed and directed various actions, such as:

1. Determining that even though Congress excluded various benefits under the CARES Act from taxation at the federal level, these benefits could become taxable for some Alabama taxpayers under existing Alabama tax law, and, as a result, the Proclamation provides that tax credits, advance refund amounts, or other direct benefits a taxpayer receives under the federal CARES Act, as it now exists, are hereby deemed excluded from Alabama income taxation as well as from all calculations in determining a taxpayer's federal income tax deduction for Alabama income tax purposes, and also providing that the Commissioner of the Alabama Department of Revenue shall use all available legal authorities to revise those portions of the applicable tax return forms and instructions in a way necessary to effectuate this relief.
    
2. Any amount of cancellation-of-indebtedness income resulting from a loan forgiven pursuant to Section 1106 of the CARES Act, as it now exists, is hereby deemed excluded from the calculation of Alabama income taxes and the calculation of financial institution excise taxes to the same extent as such amount is exempted from federal income taxes by the CARES Act, and from all calculations in determining a taxpayer's federal income tax deduction under Alabama law, and the Commissioner shall revise those portions of the applicable tax returns and forms in a way necessary to effectuate the foregoing relief.
    
3. The amount of any cancellation-of-indebtedness income resulting from a loan forgiven pursuant to Section 1106 of the CARES Act shall only be considered for Alabama tax purposes in determining the deductibility of otherwise deductible expenses, such as payroll, utilities, mortgage interest and rent, allowed to be paid with exempt funds to the same extent as such expenses are deductible in calculating federal income tax.
    
4. For reasons similar to those referenced above justifying the proclaimed actions relative to the Alabama income tax, the sunset date for the Alabama Jobs Act Tax Credit is extended from December 31, 2020 to the earlier of (1) the enactment of a bill to extend the tax credits under that Act or (2) the last day of the first regular session of the Legislature following the issuance of this Proclamation, and that the sunset date for the Growing Alabama Tax Credit shall be the earlier of (1) enactment of a bill to extend the Growing Alabama Tax Credit or (2) the last day of the first regular session of the Legislature following the issuance of this Proclamation.

More information can be found here.

November 2020

Updates Reported – The Alabama Department of Revenue has announced that beginning November 1, 2020, businesses that hold Alabama Sales Tax, Rental Tax, Sellers Use Tax, Lodgings Tax, Simplified Sellers Use Tax and/or Utility Gross Receipts Tax account(s) will be required to renew those tax licenses annually for the next year. The Department states that one renewal process will update all the required licenses for an entity. The Department notes several FAQs regarding this tax license renewal process, addressing various issues. For example, the Department states that the link to renew a tax license will be available in the My Alabama Taxes (MAT) account where tax returns are filed, beginning on November 1 of each year; and a taxpayer will have until December 31, within which to renew the tax license for the following year. Also, by way of example, the Department notes that a tax license is separate from a business license. Further, the Department states that there is no cost for the renewal of the Alabama Tax License. More information can be found here.

October 2020

Updates Reported – On October 7, 2020, the Alabama Department of Revenue issued Memorandum 2020-007 addressing the assigned renewal month for new International Registration Plan (IRP) registrations. The Memorandum states that in order to ensure that IRP registrations are evenly staggered throughout the registration year, all new IRP accounts will be assigned the renewal month of February and ad valorem taxes for these accounts should be collected through February 28 of each year. Further, the Memorandum noted that ad valorem tax must be collected for each IRP registered vehicle through the end of the renewal month assigned to the IRP account, and referred to Memorandum 2014-19 for more related information. According to this newly issued Memorandum, the month of February will be the default assigned renewal month for new IRP accounts during the period November 1, 2020 through October 31, 2021. The Memorandum states that if there are questions, contact may be made with the Department as set forth in the Memorandum. More information can be found here.

September 2020

Coronavirus Tax Payment and Return Filing Responsibilities (September 30) – Updates Reported: The Alabama Department of Revenue issued a Notice, dated on August 26, 2020, addressing a secondary supplemental privilege assessment to be imposed monthly for each bed in a nursing facility. According to the Notice, the Alabama Legislature passed, and the Governor signed, Act No. 2020-147, which imposes this supplemental privilege assessment at an annual rate of $327.48, or $27.29 a month, for each bed in such a facility. This amount will increase the total annual nursing facility rate from $4,429.32 to $4,756.80, or $396.40 per month per bed. This change was effective September 1, 2020. The Notice also states that the first tax return on which such changes will be applicable will be the nursing facility tax return for the month of September 2020, which is due on or before October 20, 2020. These returns are required to be filed and paid electronically using the My Alabama Taxes Filing System. According to the Notice, questions regarding this supplemental privilege assessment should be addressed to Ms. Nichelle Norris at the Alabama Department of Revenue, Sales and Use Tax Division, P.O. Box 327790, Montgomery, AL 36132-7790. More information can be found here.

August 2020

Coronavirus Tax Payment and Return Filing Responsibilities (August 20) – Updates Reported: On August 3, 2020, the Alabama Department of Revenue issued a Notice entitled Gasoline and Undyed Diesel Fuel Excise Tax Law Changes. As stated in this Notice, Governor Ivey signed on March 12, 2019 a law known as the Rebuild Alabama Act (Act). That Act contains various fuel tax rate changes and filing requirements that take place on October 1, 2020. As also referenced in the Notice, and effective October 1, the gasoline and undyed diesel excise taxes will be increased pursuant to the Act by 2¢ per gallon to 26¢ per gallon for gasoline and 27¢ per gallon for undyed diesel. Further, any wholesale distributor holding motor fuel in inventory outside of the bulk transfer/terminal system on the effective date of each tax increase under the Act will be liable for the additional excise tax. The foregoing does not include product located at a retail service station. The Notice provides that a floor-stocks tax return must be filed and the tax paid on or before the last day of the third month following the tax increase. A new floor-stocks return can be accessed on the Department's forms webpage. According to the Notice, this form must be filed manually with the Department at the address in the Notice, and the floor-stocks tax return and payment for the tax increase effective October 1 is due on or before February 1, 2021. More information can be found here.

July 2020

Coronavirus Tax Payment and Return Filing Responsibilities (July 27) – Updates Reported: The July 17, 2020 deadline as announced by the Alabama Department of Revenue in its June 9 Order for purposes of obtaining annual registration and renewal of vehicles with respect to the months of March through June 2020, where the county license plate issuing official's office was closed at any time during that period, has now been extended to July 31, 2020. That same July 31 extension also applies to motor vehicle registrations and renewals for vehicles registered pursuant to the International Registration Plan where the official's office was closed any time during that period; and, further, penalties associated with the motor vehicle registration and renewals extended to July 31, 2020 will not be charged until August 3, 2020. More information can be found here.

June 2020

Coronavirus Tax Payment and Return Filing Responsibilities (June 25) – Updates Reported: The Alabama Department of Revenue issued an order on June 9, 2020 extending the deadline until July 17, 2020 for purposes of obtaining annual registration and renewal of vehicles with respect to the months of March through June for registrants in counties where the county license plate issuing official's office was closed at any time during the month of May or June 2020 due to COVID-19. The order states that this extension includes the registration of vehicles purchased or otherwise acquired where the registration requirement imposed by Alabama law falls during the period of March 17 through July 17, 2020. Further, the order states that this extension applies to motor vehicle registrations and renewals for vehicles registered pursuant to the International Registration Plan when the ad valorem tax was due in a county where the issuing official's office was closed anytime during May or June 2020 because of the virus. Further, penalty charges associated with motor vehicle registrations and renewals extended to July 17 will not be charged until July 20, 2020; and penalty charges associated with motor vehicle property tax payments extended to July 17 will not be charged until July 20. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (June 2) – Updates Reported: The Alabama Department of Revenue has announced, pursuant to an ADOR Operational Update as of May 12, 2020, that the Department will not change withholding requirements for businesses based on an employee's temporary telework location within Alabama that is necessitated by the pandemic and related federal or state measures to control the COVID-19 spread. In that regard, the Update stated that the Department will not consider temporary changes in an employee's physical work location during periods in which temporary telework requirements are in place due to the pandemic to impose nexus or alter apportionment income for any business. More information can be found here.

May 2020

Coronavirus Tax Payment and Return Filing Responsibilities (May 8) – Further Updates Reported: On May 4, 2020, the Commissioner of the Alabama Department of Revenue issued an Order extending through June 19, 2020 the time for obtaining March, April and May 2020 motor vehicle registrations and paying property taxes on vehicles. Further, the Order states that this extension includes the registration of vehicles purchased or otherwise acquired whereby the 20-day registration requirement falls during the period of March 17 through June 19, 2020. This extension also applies to motor vehicle registration and renewals for vehicles registered pursuant to the International Registration Plan. According to the Order, penalty charges associated with motor vehicle registrations and renewals and motor vehicle property tax payments extended to June 19, 2020 will not be charged until June 22, 2020. More information can be found here.

April 2020

Coronavirus Tax Payment and Return Filing Responsibilities (April 16) – Further Updates Reported: On April 10, 2020, the Alabama Department of Revenue announced that the period for certain tax relief related to income and other taxes has been updated. Taxpayers can defer state income tax payments due on or after April 1, 2020 and before July 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including individuals, trusts and estates, corporations, and other non-corporate tax filers.

Other taxes included in the deadline extension are corporate income tax, the Financial Institution Excise Tax (FIET), and the Business Privilege Tax (BPT).

Taxpayers do not need to file any additional forms or call the Alabama Department of Revenue to qualify for this automatic state tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension through the usual methods.

A copy of the updated order of the Commissioner of Revenue can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (April 3) – Further Updates Reported: In a press release updated April 1, the Alabama Department of Revenue made several announcements regarding taxpayer relief orders previously issued. For instance, the Department reiterated that it is: (i) waving state sales tax late payment penalties both for small retail businesses (monthly retail sales during the previous calendar year averaged $62,500 or less) and taxpayers currently registered with the Department as engaging in NAICS Sector 72 business activities (which includes businesses preparing meals, snacks and beverages for immediate consumption); and (ii) waiving state late payment penalties for lodgings taxes. The Department noted that this relief applies to state sales and lodging taxpayers who are unable to timely pay their February, March and April 2020 sales and lodging tax liabilities, but does not provide a waiver or extend normal filing requirements. The Department stated that these taxpayers may file their monthly sales and lodging tax returns for February, March and April 2020 reporting periods without paying the state sales and lodging taxes reported as due and late payment penalties will be waived for these taxpayers through June 1, 2020. The Department noted that this relief only applies to state sales and lodging tax liabilities, and that this relief is automatic for small retailers and Section 72 businesses who file their February, March and April 2020 sales tax returns. The Department did note, however, that similar sales tax relief may be available on a case-by-case basis to other businesses significantly impacted by COVID-19 and the preventative measures taken to prevent its spread within Alabama. The Department set forth various FAQs and other information within this updated press release. More information can be found here.

March 2020

Coronavirus Tax Payment and Return Filing Responsibilities (March 25) - Due Date Changes Reported: On March 23, 2020, the Governor of the State of Alabama signed a supplemental State of Emergency Order allowing the Alabama Department of Revenue to extend state filings until July 15, 2020. Thereafter, the Commissioner posted and later updated an Executive Order providing that any person with a state individual income tax or corporate income tax payment, a financial institution excise tax payment, or a business privilege tax payment due on April 15, 2020, or a return for any of the foregoing taxes due on April 15, such payment and return due date shall be automatically postponed to July 15. The Order further states that there is no limitation on the amount of the payment that may be so postponed. This relief is available only with respect to payments due on April 15 for the state income tax (including payments of tax on self-employment income), for estimated state income tax for the taxpayer's 2020 taxable year, for the financial institution excise tax for the 2020 form year, and for the business privilege tax for the 2020 form year, and with respect to returns due on April 15 for the foregoing taxes. The Order states that no extension is provided for the payment or deposit for any other type of state tax, or for the filing of any other state informational return. The relief granted under the Order essentially provides that there will be no interest, penalty, or additions to tax for the failure to file these identified taxes by July 15, 2020, but that interest, penalties and additions to tax will begin to accrue on July 16, 2020. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (March 19) - No Broad Changes Reported: Pursuant to an Order of the Commissioner issued March 16, the Department is suspending temporarily the requirements associated with the International Registration Plan (IRP) and the International Fuel Tax Agreement (IFTA) for motor vehicles engaged in any interstate emergency relief efforts which will be traveling through the State of Alabama as a part of the emergency relief. Further, pursuant to a separate Order also issued March 16, the Commissioner stated that with respect to Alabama's motor vehicle registration laws and property tax laws regarding the annual registration and renewal of vehicles during the month of March, the registration deadline has been extended through April 15. More information can be found here and here.

Tax Relief/Flood Victims: The Alabama Department of Revenue is offering tax relief to Alabama taxpayers who have been affected by recent flooding across Alabama. The relief comes in response to the emergency declaration made by Governor Kay Ivey on February 18, 2020. ADOR will grant filing extensions to taxpayers directly affected by flooding caused by February 2020 storms. Affected Alabama taxpayers in all 67 counties have until April 30, 2020 to file tax returns due on or after February 18, 2020, and before April 30, 2020. Penalty relief will be provided during the extension period. Taxpayers seeking this Alabama tax relief should write "Flooding Relief – 2020" in red ink on any state paper return/report which relies on this filing extension relief. Affected taxpayers filing electronically should contact ADOR for filing guidance.

The Order of the Commissioner of Revenue describing these actions can be found here.

February 2020

Tax Impact from Federal Legislation: The Joint Legislative Task Force on the Tax Cuts and Jobs Act co-chaired by state Senator Daniel J. Roberts and State representative J. Daniel Garrett has issued a report dated February 18, 2020. The Task Force was charged with studying the fiscal impact of the TJCA on corporate income tax in the state. The Task Force found that multiple changes in the TJCA have the net effect of increasing corporate taxable income of Alabama businesses. Among other issues, the report specifically addresses and makes recommendations relating to the TJCA's provisions regarding limits on business interest deductions, global intangible low-taxed income, taxation of state and local economic development incentives, the state and local tax deduction cap, and the effects of the federal corporate rate changes and Alabama's federal income tax deduction. Implementing legislation was not included with the report, however, but will need to be drafted and introduced.

November 2019

Sales and Use Taxes: Alabama's Simplified Seller's Use Tax (SSUT) system has reportedly been quite successful with more than 1,900 remote sellers participating in the program. The SSUT provides remote sellers with one return for state and local jurisdictions and one overall eight percent tax rate. As of January) 1, 2019, the related Marketplace Facilitator law went into effect, which stipulated that the responsibility for collecting and remitting simplified sellers use tax, or reporting such sales, for online purchases by customers in Alabama falls on the company supporting the marketplace rather than on the individual sellers. According to the Department of Revenue's published Monthly Abstract, collections under the SSUT were approximately $203 million for the fiscal year ending September 30, 2019. For more information regarding the collections, see the following.

October 2019

Sales Tax: Under the Alabama Simplified Sellers Use Tax Remittance Act, eligible remote sellers can collect, report and remit a flat eight percent sellers use tax, regardless of the actual combined state, county and local tax rate that might otherwise be applicable. The regulations under the Simplified Sellers Use Tax have recently been amended to expand the ways a remote seller can inform a purchaser that the tax had been collected and was to be remitted on the purchaser's behalf to include confirmation by email, a notice on a seller's website or other means approved by the Department of Revenue to provide reasonable notice to the customer. Click here for more information on the foregoing amendment.

September 2019

Business Income Tax: On September 4, 2019, the Alabama Department of Revenue announced that it is providing relief from late-filing penalties for certain corporate taxpayers who are encountering difficulties meeting October state filing deadlines for Alabama corporate income tax returns while trying to also file their federal returns by the October federal deadline. The Department cited as the reason for such relief as taxpayer challenges in compliance resulting from the complexity associated with the continued implementation of the Tax Cuts and Jobs Act.

Relief is not automatic, however. Requests for relief must be submitted in writing and will be considered on a case-by-case basis. The Department will consider whether the circumstances described by taxpayers sufficiently establish reasonable cause to grant penalty relief for late filing. Affected returns must be filed by November 15, 2019. Refer to the Department's press release for more details.

August 2019

Online Filing Option for Local Fuel Excise Taxes: To help alleviate compliance burdens for local fuel excise taxes, beginning September 3, 2019, taxpayers who are required to file and remit payment for local gasoline and diesel fuel excise taxes may gain access to a new online service provided by the Alabama Department of Revenue: the voluntary Motor Fuel Single Point System. Any local gasoline and diesel fuel excise taxpayer that would like to use the voluntary system must register for a Motor Fuel Single Point account. Account registration begins in September and taxpayers will be able to use the system to file returns and remit payments beginning November 1, 2019.

July 2019

Sales Tax: The Alabama Department of Revenue announced on June 19, 2019 that it is undertaking a review of its sales tax regulations regarding the taxability of computer software in light of the recent decision of the Alabama Supreme Court in Ex parte Russell County Community Hospital, LLC, decided on May 17, 2019. This case concludes that software is taxable under the Alabama sales tax, but also states that payments for the separately stated services that may attend the sale of software are not taxable.

June 2019

Incentives: On June 6, 2019, the Alabama Incentives Modernization Act was enacted. The Act updates the existing tax incentive regime for rural portions of the state by extending benefits to rural projects generating at least five jobs and extending the investment tax credit under the Alabama Jobs Act to 15 years without qualification. The Act also allows banks and insurance companies to purchase and use tax credits created under the Alabama Jobs Act; enhances the incentives available to high-tech companies under the Alabama Jobs Act to companies creating at least five jobs and allows the investment tax credit calculation to include operating costs as well as capital costs; and provides for reductions in capital gain taxes for investments in opportunity zone funds investing predominantly in Alabama in a manner similar to federal opportunity zones.