Alabama Sales Tax Return Procedures

The Alabama Department of Revenue has recently changed the way that taxpayers file sales tax refund requests. After recent changes, requesting a sales tax refund for erroneous or overpayments of an Alabama sales tax return has never been easier for taxpayers. Prior to March 8, 2018, a consumer or purchaser could only file for a sales tax refund in Alabama by filing jointly with the seller who collected and remitted the tax to the Alabama Department of Revenue. This required the consumer or purchaser to contact their vendor and procure a signature from an officer of that company before submitting a claim for refund of sales taxes paid on exempt items. This often led to disagreements between the parties as to whether or not Alabama sales taxes were appropriately charged in the first place. If the seller refused to sign the joint petition, the purchaser had no further recourse to pursue the Alabama sales tax return.

Effective March 8, 2018, Alabama Act 2018-180 (S.B. 63) repealed the original requirement that a consumer or purchaser must file for a sales tax refund jointly with the seller and allows the consumer or purchaser to file a sales tax refund claim directly with the Alabama Department of Revenue. Alabama Code 40-2A-7(c)(1) now states, “in the case of a petition for refund for…sales or use taxes pursuant to Chapter 23…a petition may be filed by the consumer/purchaser who paid the tax directly to the taxpayer that collected the tax, or by the taxpayer if the taxpayer remitted in excess of the tax due, however never collected the tax from the consumer/purchaser, or by the taxpayer if the consumer/purchaser paid the tax directly to the taxpayer, provided that a refund shall not be paid to the taxpayer until after the tax has been credited or repaid to the consumer/purchaser by the taxpayer.”

The consumer or purchaser can now complete form ST-6, Petition for Refund of Taxes Paid to Seller , which can be found on the Alabama Department of Revenue’s website. Although the ST-6 form does not need to be signed by an officer of the seller who collected and remitted the taxes, it does still require the seller’s legal name, Alabama sales and use tax account number, and FEIN before the consumer can file the sales tax refund claim with the Alabama Department of Revenue. It is important to note that this law change regarding sales tax refund petitions currently only applies for sales taxes that are administered by the Alabama Sales and Use Tax Division. Local jurisdictions who administer their own taxes may have different rules regarding refund claim filings. Agile’s sales tax consultants assume that these local jurisdictions will eventually revise their procedures to mirror that of the state, however as of May 2018 this has not yet happened.

The statute of limitations in Alabama allows the original consumer or purchaser to go back up to three years from the date the tax return was filed to recover overpaid Alabama sales and use taxes. The Alabama Department of Revenue then has six months from the date of the filing to either grant or deny the sales tax refund petition. The taxpayer will be notified via United States Postal Service of the Alabama Department of Revenue’s decision. If the taxpayer is not notified within six months, then the petition has been denied.

If the sales tax refund petition is granted, the taxpayer will receive a refund from the state, county, municipality, or other entity from which the overpayment was distributed, along with interest. If the taxpayer has any outstanding tax liabilities within those taxing jurisdictions, the refund will first go towards payment of that liability, otherwise a refund check will be sent directly to the taxpayer. If the petition is denied, the taxpayer can either file a notice of appeal with the Alabama Tax Tribunal or file a notice of appeal with the Circuit Court in whichever county the purchaser resides. The appeal must be filed within two years from the date the petition was denied. If no appeal is filed within two years of the denied petition, then any subsequent appeal will be dismissed for lack of jurisdiction.

As with all sales and use tax research, the specific circumstances of each case need to be considered. Additional advice from Agile Consulting Group’s sales tax consultants can be found on our page summarizing Alabama sales and use tax exemptions. If you have questions, comments or would like to discuss the specific circumstances you are encountering regarding this issue or any other sales and use tax issue, please contact our sales tax consultants at (888) 350-4TAX (4829) or via email at info@salesandusetax.com.

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Alabama Sales Tax Return Procedures