This is a reminder to all businesses registered in Alabama for sales, rental, sellers use, lodgings, utility gross receipts, or simplified sellers use tax purposes and who are required under current law to obtain a corresponding license from the Alabama Department of Revenue (ADOR) that you are now required to renew these licenses annually beginning November 1, 2020, according to the Notice of Annual Renewal of Alabama Tax Licenses issued by the ADOR on October 1, 2020.
The ADOR has implemented this new process pursuant to Alabama Administrative Rule 810-6-5-.01.01, which became effective February 2020.
The ADOR also issued a subsequent press release on October 28, 2020 regarding this issue.
Beginning November 1, 2020, each calendar year a business entity must apply for a new tax license, which will be generated by the ADOR when the business applies for renewal during the applicable annual renewal period (November 1–December 31 of each year). Thus, beginning this year, the tax licenses will only be valid for one year and must be renewed again each year.
The new Notice was quietly issued by the ADOR, but it should not be ignored. Beginning November 1, taxpayers will have two months (until December 31) to provide the applicable information to the ADOR and request renewal of any current tax licenses.
Businesses can utilize the My Alabama Taxes (MAT) portal/website to verify or update their applicable business information in order to generate a new tax license for the upcoming year.
The ADOR has also now published a detailed set of Step by Step Instructions for License Renewal to assist impacted taxpayers with their respective tax license renewals via the MAT portal/website.
In addition, the ADOR has published FAQs addressing this issue.
According to the ADOR’s Notice, the purpose for such annual tax license renewals is so that the ADOR can verify the business is continuing to operate in the same business entity type for which the existing tax license was issued. If the business’ entity type has changed, then the business will need to apply for a new tax license.
If a tax license is not renewed, the license will expire (and be canceled) after December 31 of that year, and the business will no longer be able to engage in transactions permitted under the previous license (such as the use of the tax license to make tax-exempt purchases for resale or rental purposes).
The ADOR will require the following information to be reviewed and/or updated for purposes of the tax license renewal (and will not renew the business’ tax license until the required information has been provided to the ADOR):
- Current legal name – must be reviewed
- Owner/officer/member information – must be reviewed and/or updated
- Phone number(s) – must be reviewed and/or updated
- Social security security numbers/FEINs – must be reviewed
- Location address(es) including d/b/a names for each location – must be reviewed and/or updated
- Main address must be reviewed
- Location address(es) must be reviewed and/or updated
To reiterate, businesses will be required to renew Alabama tax licenses for the following tax types:
- Sales tax
- Rental tax
- Sellers use tax
- Lodgings tax
- Utility gross receipts tax
- Simplified sellers use tax
The Jones Walker State and Local Tax team will continue to monitor this new tax license renewal process in Alabama, and we will provide updates as any new issues arise.
Jones Walker LLP Authors:
Matt Mantle, Partner
Walt Terry, Associate