Alabama DOR Issues User-Friendly Guidance on Annual Tax License Renewals

SALT ALERT: Alabama Edition

Firm Alert

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As we noted in our previous SALT Alert, on October 1 the Alabama Department of Revenue (ADOR) quietly posted a notice on its website and shared it with media outlets that received little notoriety – at least initially. The notice decreed that taxpayers holding a variety of ADOR-issued licenses had a period of 60 days, from November 1 through December 31, 2020, in which to renew those licenses or else they automatically expired. Or in some cases, a new license will be required if the tax classification of the business has changed, e.g., an LLC has elected to be taxed as an "S" or "C" corporation, or a single member LLC acquired one or more new members and is now classified as a partnership. Those licenses included sales tax, rental tax, lodgings tax, sellers use tax, utility gross receipts tax, and Simplified Sellers Use Tax licenses. However, the list does not include either consumers use tax licenses or so-called direct pay permits.  

The business community and certain professional and trade associations, such as the Alabama Society of CPAs, the Alabama Retail Association, and the Council On State Taxation (COST), quickly spread the word to their members. ASCPA President Jeannine Birmingham said "the Alabama Society of CPAs supports the (ADOR) license renewal project and has helped educate CPAs and the public about the November 1, 2020 renewal date and the ability to renew licenses at the My Alabama Taxes (MAT) website." However, a number of retailers and manufacturers complained regarding the narrow window of time for renewals and their obligation to verify that all their customers holding sales tax licenses (also known as resale permits) indeed timely renewed their licenses. Otherwise, effective January 1, they either (a) must begin charging those customers state and local sales tax (or sellers use tax or rental tax, if applicable) for the first time or (b) risk personal liability for that tax if not collected and timely remitted.

To its credit, on October 28 the ADOR responded by issuing helpful guidance, including step-by-step instructions and FAQs, as well as telephone contact information if taxpayers have questions or difficulty accessing the ADOR’s website, My Alabama Taxes (MAT). We urge our readers who hold one or more of these licenses, or whose customers hold one or more of these licenses, to review this new guidance as soon as possible. We also urge our readers not to wait until the last minute either to renew your own licenses or to urge your customers to renew theirs. The ADOR website is now open.

In Other News….

Bradley SALT Practice Team Chair Jimmy Long was selected last week by the Birmingham Business Journal as one of its 2020 Emerging Law Leaders. We congratulate Jimmy for this well-deserved honor.

Despite all major tax conferences going virtual, several members of our SALT Practice Team will nevertheless make their scheduled presentations. Those include a presentation at the 74th annual University of Alabama Federal Tax Clinic on November 19 by Bruce Ely; a presentation to the annual meeting of the Alabama State Bar Tax Section on December 1 by Bruce, Jimmy Long and Will Thistle; and a presentation at the 39th annual NYU Institute on State & Local Taxation on December 2-4 by Bruce (along with friends Steve Wlodychak of EY, Todd Hyman of Deloitte Tax, and Kelvin Lawrence of the Dinsmore law firm). The first two presentations will focus on recent Alabama tax developments and prognostications for upcoming legislation, while the NYU presentation focuses on current developments in the state taxation of pass-through entities and their owners. For more information about any of these conferences, please contact Sherry Barber at sbarber@bradley.com.