If you sell goods or services in Alabama, getting an Alabama sales tax permit is a legal requirement—not just a formality. Whether you’re a local business or a remote seller crossing economic thresholds, you’ll need to register with the state, navigate local privilege licenses, and stay on top of renewal deadlines to remain compliant. With complex city- and county-level rules layered on top of state filing, it’s easy to get lost in the details.
That’s why businesses of all sizes trust Hands Off Sales Tax (HOST) to handle their Alabama registration and compliance from start to finish.
Do You Need an Alabama Sales Tax Permit?
Determining whether you need an Alabama sales tax permit starts with understanding nexus, and whether you meet thresholds for simplified use tax (SSUT).
Physical Nexus — In-State Presence
You have physical nexus if you operate within Alabama—such as having a warehouse, office, inventory stored in-state, or employees working there. That presence requires a traditional Sales Tax Permit, allowing you to collect both state and local city/county taxes.
Economic Nexus — Remote Sellers Threshold
Out-of-state sellers must register if they exceed $250,000 in annual sales into Alabama in the prior calendar year. Reaching this threshold requires enrolling either in the Sellers Use Tax Permit program (with full state/local rates) or the Simplified Sellers Use Tax (SSUT) program, which imposes a flat 8% tax rate and bypasses local taxes.
Permit Options at a Glance:
| Seller Type | Permit Needed | Tax Structure |
| In-state seller with physical presence | Sales Tax Permit | Collects state + local tax via MAT portal |
| Out-of-state seller exceeding threshold | SSUT or Sellers Use Tax Permit | SSUT = flat 8% statewide; regular permit collects full local rates |
Why the Distinction Matters
While both permit types authorize tax collection, SSUT simplifies reporting—no local tax lines, straightforward remittance, and monthly reporting. In contrast, a standard Sales Tax Permit requires locale-by-locale reporting and is mandatory if you’ve established physical presence.
Understanding which type applies to your setup (remote vs in-state) ensures correct registration and compliance from the outset—avoiding back taxes, penalties, and audit risk.
Step‑by‑Step Registration via My Alabama Taxes
Getting your Alabama Sales Tax Permit starts with careful preparation and completing registration through the official My Alabama Taxes (MAT) portal.
Required Information Before You Begin
Ensure you have the following details ready to avoid delays or incomplete submissions:
- Federal Employer Identification Number (EIN) or your Social Security Number (for sole proprietors)
- NAICS code corresponding to your primary business activity
- Business commencement date (the date you first started operating in Alabama)
- Legal entity type (LLC, corporation, sole proprietor, etc.) and, if applicable, IRS Form 8832 election
- Physical address, contact information, and owner/officer details
Registration Process — What to Expect
- Create or log into your MAT account
- Select “Register a business / Obtain a new tax account number” from the dashboard
- Choose applicable tax types, such as:
- SLS: Sales Tax (in-state)
- SLU: Sellers Use Tax (remote seller with nexus)
- SSU: Simplified Sellers Use Tax
- Enter your business information and review carefully
- Submit your application and save the confirmation number shown
You should receive your Alabama Tax Account Number within 3–5 business days, and a physical license will follow via mail.
Checklist Summary
| Task | Notes |
| Gather EIN / SSN, NAICS, start date | Mandatory for application |
| Choose correct tax account types | SLS, SLU, or SSU |
| Validate zip code for local taxes | Avoid misallocation issues |
| Save confirmation and license mail | Required for verification |
After Registration
- Your MAT confirmation email is proof that your application was submitted successfully.
- Within a few days, you’ll receive a physical permit/license and taxpayer ID letter via mail—keep both for your records and resale certificate use.
By tackling registration thoroughly through MAT, you’ll be ready to collect the correct state and local taxes—and avoid common pitfalls like choosing the wrong permit type or misreporting your business’s zip code, which can delay your approval.
Local Business Privilege License & Certificate of Compliance
Whether you’re based in Birmingham, Mobile, or another city in Alabama, securing local licenses and demonstrating tax compliance is essential—paired with your state sales tax permit.
Business Privilege License (State & Local)
Alabama mandates a Business Privilege License, administered by the county probate judge or license commissioner. Cities like Mobile, Birmingham, or Huntsville may also require additional city-specific licenses. Even if your sales tax permit is issued at the state level, you still need the appropriate county and city licenses for legal operations.
In Mobile County, for example, you’ll need a state/county Business Privilege License issued by the Mobile County License Commission – a city of Mobile business license if you operate within city limits.
Certificate of Compliance
A Certificate of Compliance confirms that your business has filed all required returns and paid all taxes owed to Alabama. It costs $14 (a $10 certificate fee plus a $4 processing charge), and is typically processed in 3–5 business days after application.
Why It Matters
- The privilege license authorizes business operations in a specific county or city—it’s separate from your sales tax permit.
- The Certificate of Compliance may be required for contracts, loans, state filings, or to prove your business is in good standing.
Summary Snapshot
| Requirement | Purpose | Typical Jurisdictions |
| Business Privilege License | Authorizes business operation locally | County & city levels (e.g., Mobile, Birmingham) |
| Certificate of Compliance | Verifies state tax compliance | Alabama Department of Revenue (statewide fee) |
Before starting operations in any Alabama city or county, make sure both the appropriate privilege license and certificate are in place. This ensures you’re legally recognized at both local and state levels.
Filing, Renewal & SSUT Election
Compliance in Alabama hinges on timely filings, permit renewals, and choosing the right tax structure. Here’s how to stay current.
Sales tax returns are due on the 20th day of each month following the reporting period. Alabama requires monthly filings by default for most businesses via My Alabama Taxes (MAT), administered by the Department of Revenue.
Filing Frequency & Election Options
Alabama permits reduced filing frequencies based on prior-year tax liability:
- Quarterly if liability was less than $2,400
- Semi‑annual if less than $1,200 or sales occurred during only two 30‑day periods
- Annual if liability was under $600 or sales occurred during one 30‑day window
Requests for reduced frequency must be submitted by February 20 each year
License Renewal Requirement
Since November 2020, Alabama tax licenses—including sales tax, sellers use, and Simplified Sellers Use Tax (SSUT)—must be renewed annually by December 31. Failure to renew cancels the permit, voiding resale certificates and tax privileges.
SSUT Election: Is it Right for You?
Qualified remote sellers may opt into the SSUT program, collecting a simplified flat 8% tax rate on Alabama sales instead of standard state and local rates.
Pros:
- Simplified compliance (single tax rate, single return via MAT)
- No local jurisdiction reporting
Cons:
- Possible over-collection if local combined rates are under 8%—customers can request a refund
- Not available if you have physical nexus in Alabama
Summary Table
| Election Type | Filing Frequency Options | Tax Rate Structure |
| Standard Permit | Monthly (default), Qtrly, Semi‑annually, Annual | State + local rates by address |
| SSUT | Must file monthly via MAT | Flat 8% statewide |
Choosing the right filing frequency and permit type helps avoid unnecessary complexity—and penalties.
Common Compliance Pitfalls in Alabama
Even with a valid permit, Alabama businesses often stumble on a few recurring issues. Here’s how to avoid those traps and stay compliant.
Missing Local License Elections
Securing an Alabama sales tax permit through the state doesn’t satisfy all local jurisdiction requirements. You may also need a county or city business privilege license—for example in Birmingham or Mobile—which must be applied for separately to avoid fines or operation restrictions.
Incorrect Zip-Code Validation in MAT
Choosing the wrong ZIP code—or not validating it properly in the My Alabama Taxes (MAT) portal—can lead to tax misallocation between state, county, and city jurisdictions. This may result in collection mistakes and audit liability.
Failing to File Zero Returns
Even if no taxable sales occurred during a reporting period, you’re still required to file a zero return by the due date. Omitting these filings can trigger late penalties, interest, and potential account suspension—even without actual tax due.
Not Closing Your Permit After Business Cessation
If you stop operations in Alabama, you must formally close your sales tax account through MAT. That involves filing a final return and submitting a closure request—with an effective closure date—for your account to be formally deactivated. Failing to do this may leave your permit active, risking unexpected reporting obligations or audit inquiries.
Avoiding these mistakes ensures your permit remains in good standing—not only with the state—but across Alabama’s multiple jurisdictions.
Let HOST Handle Your Alabama Sales Tax Compliance
Managing sales tax in Alabama isn’t just about registering once—it’s about maintaining ongoing compliance across state, county, and city levels. That’s where Hands Off Sales Tax (HOST) comes in.
HOST provides end-to-end support for businesses that want to stay compliant without getting bogged down in paperwork or confusing government portals.
Here’s how HOST can help in Alabama:
- Sales Tax Permit Registration through the My Alabama Taxes (MAT) portal, including correct permit type (Sales Tax, Sellers Use, or SSUT)
- Filing & Remittance on your behalf, with guaranteed on-time submissions to avoid penalties
- Annual Renewal Monitoring so you never miss Alabama’s strict November 30 renewal deadline
- Zero-Return Filing Management, ensuring all filing requirements are met—even during slow months
- Nexus Exposure Reviews and SSUT election support to help you pick the right tax strategy
Whether you’re a remote seller crossing the $250,000 threshold or an in-state business expanding operations, HOST takes the guesswork out of Alabama sales tax compliance—so you can focus on growth, not government filings.
Conclusion – Get It Right from the Start
Registering for an Alabama sales tax permit is just the beginning. To stay compliant, you’ll also need to manage local license obligations, file returns on time, renew annually, and avoid common pitfalls like zero-return failures or incorrect ZIP code mapping in MAT. With overlapping rules at the state, city, and county levels, even small mistakes can lead to costly penalties. That’s why businesses across the U.S. trust Hands Off Sales Tax (HOST) to simplify compliance and handle it all. Reach out to HOST today to register, file, and stay compliant—without the stress.
Frequently Asked Questions
1. Do I need an Alabama sales tax permit if I only sell online?
Yes. If you’re a remote seller and your total sales into Alabama exceed $250,000 annually, you’re required to register—either through the Sellers Use Tax Permit or the Simplified Sellers Use Tax (SSUT) program, depending on your business setup.
2. What’s the difference between a Sales Tax Permit and SSUT in Alabama?
A Sales Tax Permit requires you to collect both state and local taxes and report them by jurisdiction. The SSUT program, available to eligible remote sellers, allows you to collect a flat 8% tax statewide and file simplified monthly returns via MAT.
3. Do I need local licenses in addition to my Alabama sales tax permit?
Yes. The state permit only covers state-level compliance. Most counties and cities—like Mobile or Birmingham—require a separate Business Privilege License to legally operate within their jurisdiction. These must be obtained individually from local offices.
4. When is the Alabama sales tax permit renewal due?
All Alabama sales tax-related licenses must be renewed annually by December 31. Failure to renew on time may cancel your permit and disqualify your ability to issue resale certificates or legally collect tax.
5. What happens if I stop doing business in Alabama?
If you cease operations in Alabama, you must formally close your tax account through the MAT portal. This includes filing a final return and submitting a closure request. Leaving an account open may trigger unexpected filing obligations or audits.
