Sales Tax Obligations of Purchasers in Alabama

April 13, 2006

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Alabama imposes various requirements on purchasers doing business in Alabama. We recommend that you go through the items below to help you with the most frequently asked questions concerning purchasers and sales and use tax issues.

Tax exemption certificates. An exemption certificate may be issued by a purchaser of a nontaxable item. The exemption certificate may be based on the type of transaction (such as a resale exemption) or on the item itself.

Resale exemptions. Persons not required to have a sales tax license who are entitled to make tax-free purchases apply to the Department of Revenue for a certificate of exemption. The same certificate of exemption form (Form STE-1) is completed by resellers, resellers for sales to exempt customers, and manufacturers. Purchasers who have furnished certificates are liable for taxes if they're later found to be due. Holders of exemption certificates are required to maintain a list of all vendors to whom they furnish certificates.

Resale exemption certificate. Alabama has a form (Form STE-1) that must be completed for a proper exemption certificate. The exemption certificates are needed for tangible personal property purchased for resale, manufacturing, tax exempt customers, etc. The same certificate of exemption form (Form STE-1) is completed by resellers, resellers for sales to exempt customers, and manufacturers.

Blanket resale certificates. Certificate holders regularly engaged in making tax-exempt purchases may furnish a certificate to the seller specifying that all tangible personal property subsequently purchased will be for the purpose shown on the certificate. This blanket certificate will relieve the burden of executing a separate certificate for each individual tax-exempt purchase as long as there is no significant change in the operations. A blanket certificate describes the general nature of the property purchased for resale and remains in force until revoked in writing.

Purchases from out-of-state vendors. Alabama use tax is due on the use, storage, or consumption of tangible personal property in Alabama that is purchased out-of-state. Use tax complements the sales tax and is not levied when the sales tax is imposed.