If you are a small business owner who sells online to customers in the US or have an e-commerce store and sell to customers in the US, you may be wondering about the sales tax rules and regulations in Mobile, Alabama. In this blog post, we will cover the following topics:
- What is the sales tax rate in Mobile, Alabama?
- Mobile Alabama sales tax rate, county, special and combined sales tax rate by zip codes
- How to establish (or determine if you have) sales tax nexus in Mobile, Alabama
- What is Mobile Alabama economic sales threshold?
- Mobile Alabama sales tax returns filing due dates
- Mobile Alabama sales tax returns reporting periods and thresholds
- Mobile Alabama sales tax penalties and interests for late or non compliance
- The sales tax exemptions and refunds in Mobile, Alabama
- How to qualify and apply for Mobile Alabama sales tax exemption
- How to claim Mobile Alabama sales tax refunds
- How to Comply with Sales Tax Laws in Mobile, Alabama: A Step-by-Step Guide
- Conclusion
By the end of this blog post, you will have a better understanding of the sales tax requirements and obligations in Mobile, Alabama, and how to comply with them.
What is the sales tax rate in Mobile Alabama?
The sales tax rate in Mobile Alabama is 10% as of 2023, according to the sales and use tax report from city of mobile. This is the total of the state, county, and city sales tax rates.
The Alabama state sales tax rate is 4%, the Mobile County sales tax rate is 1%, and the Mobile sales tax rate is 5%. The sales tax rate may vary depending on the type of product or service sold, such as automotive vehicles, food, or lodging.
What are the special sales tax rates in Mobile Alabama
Here is a table that shows the special sales tax rates in Mobile Alabama:
| Product or Service | State Sales Tax Rate | County Sales Tax Rate | City Sales Tax Rate | Total Sales Tax Rate |
|---|---|---|---|---|
| Automotive vehicles, trailers, and semitrailers | 2% | 1% | 1% | 4% |
| Food and food ingredients for human consumption | 4% | 0% | 0% | 4% |
| Lodging | 4% | 1% | 7% | 12% |
| Machinery and equipment used in manufacturing or farming | 1.5% | 0% | 0% | 1.5% |
Mobile Alabama sales tax jurisdiction breakdown for 2024
| Jurisdiction | Sales Tax Rate | Portion of Total |
|---|---|---|
| State | 4% | 40% |
| County | 1% | 10% |
| City | 5% | 50% |
| Total | 10% | 100% |
Mobile Alabama sales tax rate, county, special and combined sales tax rate by zip codes
| ZIP Code | Sales Tax Rate | County | Special | Combined Sales Tax Rate |
|---|---|---|---|---|
| 36601 | 10% | Mobile | 0% | 10% |
| 36602 | 10% | Mobile | 0% | 10% |
| 36603 | 10% | Mobile | 0% | 10% |
| 36604 | 10% | Mobile | 0% | 10% |
| 36605 | 10% | Mobile | 0% | 10% |
| 36606 | 10% | Mobile | 0% | 10% |
| 36607 | 10% | Mobile | 0% | 10% |
| 36608 | 10% | Mobile | 0% | 10% |
| 36609 | 10% | Mobile | 0% | 10% |
| 36610 | 10% | Mobile | 0% | 10% |
| 36611 | 10% | Mobile | 0% | 10% |
| 36612 | 10% | Mobile | 0% | 10% |
| 36613 | 10% | Mobile | 0% | 10% |
| 36615 | 10% | Mobile | 0% | 10% |
| 36616 | 10% | Mobile | 0% | 10% |
| 36617 | 10% | Mobile | 0% | 10% |
| 36618 | 10% | Mobile | 0% | 10% |
| 36619 | 10% | Mobile | 0% | 10% |
| 36621 | 10% | Mobile | 0% | 10% |
| 36622 | 10% | Mobile | 0% | 10% |
| 36625 | 10% | Mobile | 0% | 10% |
| 36628 | 10% | Mobile | 0% | 10% |
| 36630 | 10% | Mobile | 0% | 10% |
| 36633 | 10% | Mobile | 0% | 10% |
| 36640 | 10% | Mobile | 0% | 10% |
| 36641 | 10% | Mobile | 0% | 10% |
| 36644 | 10% | Mobile | 0% | 10% |
| 36652 | 10% | Mobile | 0% | 10% |
| 36660 | 10% | Mobile | 0% | 10% |
| 36663 | 10% | Mobile | 0% | 10% |
| 36670 | 10% | Mobile | 0% | 10% |
| 36671 | 10% | Mobile | 0% | 10% |
| 36675 | 10% | Mobile | 0% | 10% |
| 36685 | 10% | Mobile | 0% | 10% |
| 36688 | 10% | Mobile | 0% | 10% |
| 36689 | 10% | Mobile | 0% | 10% |
| 36691 | 10% | Mobile | 0% | 10% |
| 36693 | 10% | Mobile | 0% | 10% |
| 36695 | 10% | Mobile | 0% | 10% |
How to establish (or determine if you have) sales tax nexus in Mobile, Alabama
You have sales tax nexus in Mobile, Alabama if you
- Have a physical location in Mobile, such as an office, warehouse, store, or inventory
- Have employees, contractors, agents, or representatives in Mobile who perform activities related to your business, such as sales, delivery, installation, or service
- Have property or equipment in Mobile, such as machinery, furniture, or vehicles
- Have affiliates or subsidiaries in Mobile who sell similar products or services under a similar name or brand
- Sell or deliver products or services to customers in Mobile through a marketplace facilitator, such as Amazon, eBay, or Etsy
- Sell or deliver products or services to customers in Mobile through a referral agreement with a third party, such as a website, blog, or social media platform
- Sell or deliver products or services to customers in Mobile that exceed the economic sales threshold
What is Mobile Alabama economic sales threshold?
The economic sales threshold is the amount of sales or transactions that a remote seller (a seller who does not have a physical presence in Alabama) must make to customers in Alabama before they are required to collect and remit sales tax. The economic sales threshold for Alabama is $250,000 or more in gross sales of tangible personal property or taxable services in the previous calendar year. This threshold applies to the state and local sales tax jurisdictions, including Mobile.
If you are a remote seller who meets or exceeds the economic sales threshold in Alabama, you must register with the Alabama Department of Revenue and the City of Mobile and collect and remit sales tax on your taxable sales to customers in Mobile. You can register online through the [Simplified Sellers Use Tax Program], which allows you to remit a flat 8% sales tax rate to the state and receive a discount of 2% on the amount of tax due.
Mobile Alabama sales tax returns filing due dates
The sales tax returns filing due dates for Mobile Alabama are based on the reporting period and the filing frequency. The reporting period is the time frame for which the sales tax is calculated and reported. The filing frequency is how often the sales tax return is required to be filed, which can be monthly, quarterly, semi-annually, or annually. The filing frequency is determined by the amount of sales tax collected by the seller in the previous year.
The sales tax returns and payments are due on or before the 20th day of the month following the end of the reporting period.
For example, the sales tax return for the month of January is due by February 20th. If the due date falls on a weekend or a holiday, the sales tax return is due on the next business day.
The sales tax returns must be filed electronically through the [One Spot System], which is a portal that allows taxpayers to file and pay state and local sales taxes online. The sales tax payments can be made by electronic funds transfer (EFT), credit card, or check.
Mobile Alabama sales tax returns reporting periods and thresholds
The sales tax returns reporting periods and thresholds for Mobile Alabama are as follows :
| Filing Frequency | Reporting Period | Threshold for Previous Year |
|---|---|---|
| Monthly | Calendar Month | More than $200 |
| Quarterly | Calendar Quarter | Between $50 and $200 |
| Semi-Annually | Semi-Annual Period | Between $25 and $50 |
| Annually | Calendar Year | Less than $25 |
- Monthly: The reporting period is the calendar month. The filing frequency is monthly for sellers who collected more than $200 in sales tax in the previous calendar year.
- Quarterly: The reporting period is the calendar quarter (January-March, April-June, July-September, October-December). The filing frequency is quarterly for sellers who collected less than $200 but more than $50 in sales tax in the previous calendar year.
- Semi-Annually: The reporting period is the semi-annual period (January-June, July-December). The filing frequency is semi-annually for sellers who collected less than $50 but more than $25 in sales tax in the previous calendar year.
- Annually: The reporting period is the calendar year (January-December). The filing frequency is annually for sellers who collected less than $25 in sales tax in the previous calendar year.
Sellers can request to change their filing frequency by submitting a written request to the Alabama Department of Revenue before February 20th of each year.
Mobile Alabama sales tax penalties and interests for late or non compliance
Sellers who fail to file or pay their sales tax returns on time may be subject to penalties and interest. The penalties and interest are calculated based on the amount of tax due and the length of the delinquency.
The penalties for late filing and late payment are as follows:
- Late Filing Penalty: The greater of 10% of the tax due or $50 for each month or part of a month that the sales tax return is not filed, up to a maximum of 25% of the tax due or $750, whichever is less.
- Late Payment Penalty: 10% of the tax due for each month or part of a month that the sales tax is not paid, up to a maximum of 25% of the tax due.
- Combined Penalty: The sum of the late filing penalty and the late payment penalty, up to a maximum of 25% of the tax due or $750, whichever is less.
The interest for late payment is as follows:
- Interest: The interest rate is the same as the federal short-term rate plus 3%, compounded daily. The interest rate is adjusted quarterly and published by the Alabama Department of Revenue. The interest is calculated from the due date of the sales tax return until the date of payment.
Sellers who fail to file or pay their sales tax returns may also be subject to criminal penalties, such as fines, imprisonment, or both, if they are found to have willfully evaded or attempted to evade the sales tax laws.
The sales tax exemptions and refunds in Mobile, Alabama
Some sales of tangible personal property and services are exempt from sales tax in Mobile, Alabama, either by state law or by local ordinance. Some examples of exempt sales are:
- Sales to the federal, state, or local governments or their agencies
- Sales to nonprofit educational, religious, or charitable organizations
- Sales of prescription drugs, prosthetic devices, or durable medical equipment
- Sales of food and food ingredients for human consumption
- Sales of machinery and equipment used in manufacturing, farming, or mining
- Sales of automotive vehicles, trailers, or semitrailers
Sellers who make exempt sales must obtain a certificate of exemption from the buyer and keep it in their records as proof of the exemption.
The certificate of exemption must include the name and address of the buyer, the reason for the exemption, the signature of the buyer or their authorized representative, and the date of the sale. The certificate of exemption must be renewed every three years.
Sellers can apply for a certificate of exemption from the Alabama Department of Revenue by completing the appropriate application form and submitting it to the relevant office. The application form can be found on the department’swebsite.
Buyers who paid sales tax on exempt purchases can claim a refund from the seller or from the Alabama Department of Revenue. To claim a refund from the seller, the buyer must provide the seller with a certificate of exemption and a written request for a refund within 180 days of the purchase.
To claim a refund from the department, the buyer must file a petition for refund and provide the necessary documentation, such as invoices, receipts, and proof of payment. The petition for refund must be filed within three years of the purchase. The petition for refund form can be found on the department’s website.
How to qualify and apply for Mobile Alabama sales tax exemption
To qualify for a sales tax exemption in Mobile Alabama, you must meet the criteria for one of the exempt categories listed above. You must also obtain a certificate of exemption from the Alabama Department of Revenue and present it to the seller at the time of purchase. The certificate of exemption will indicate the type and scope of the exemption and the expiration date.
To apply for a certificate of exemption, you must
- Complete the appropriate application form and submit it to the Alabama Department of Revenue. The application form will depend on the nature of your business and the reason for the exemption. You can find the application forms on the department’s website .
- Provide supporting documents and information, such as your federal identification number, your business description, your sales tax account number, and your exemption category.
- Wiat for review. The Alabama Department of Revenue will review your application and issue you a certificate of exemption if you are eligible.
The certificate of exemption will be valid for three years, unless otherwise specified. You must renew your certificate of exemption before it expires by submitting a new application form and any updated documents.
How to claim Mobile Alabama sales tax refunds
If you paid sales tax on purchases that are exempt from sales tax in Mobile, Alabama, you can claim a refund from the seller or from the Alabama Department of Revenue. You must have a valid certificate of exemption to claim a refund.
To claim a refund from the seller, you must provide the seller with a copy of your certificate of exemption and a written request for a refund within 180 days of the purchase. The seller will verify your exemption and issue you a refund or credit for the amount of sales tax paid.
To claim a refund from the Alabama Department of Revenue, you must file a petition for refund and provide the required documents and information, such as your certificate of exemption, your invoices, your receipts, and your proof of payment. The petition for refund must be filed within three years of the purchase. You can find the petition for refund form on the department’s website.
The Alabama Department of Revenue will process your petition for refund and issue you a refund check or a credit for the amount of sales tax paid, if you are eligible. The refund process may take up to six weeks.
How to Comply with Sales Tax Laws in Mobile, Alabama: A Step-by-Step Guide
To comply with the sales tax laws in Mobile, Alabama, you must follow these steps:
- Determine if you have sales tax nexus in Mobile, Alabama.If you have sales tax nexus in Mobile, Alabama, you are required to register with the Alabama Department of Revenue and the City of Mobile and collect and remit sales tax on your taxable sales to customers in Mobile.
- Register for a sales tax account with the Alabama Department of Revenue and the City of Mobile. You can register online through the [One Spot System] or by submitting a paper application form to the department and the city. The registration fee is $10 for the state and $10 for the city. You will receive a sales tax license and a sales tax account number upon registration.
- Collect sales tax from your customers on taxable sales of tangible personal property and services in Mobile, Alabama. You must charge the applicable sales tax rate based on the location of the sale, the type of product or service sold, and the status of the buyer. The sales tax rate in Mobile, Alabama, is 10.000%, which consists of 4% state sales tax, 1% county sales tax, and 5% city sales tax. Some products and services have special sales tax rates, such as automotive vehicles (2%), food and food ingredients (4%), lodging (14%), and machinery and equipment used in manufacturing or farming (1.5%) .
- File sales tax returns and remit sales tax payments to the Alabama Department of Revenue and the City of Mobile. You must file sales tax returns and remit sales tax payments electronically through the [One Spot System] on or before the 20th day of the month following the end of the reporting period. The reporting period and the filing frequency depend on the amount of sales tax collected by the seller in the previous year. The filing frequency can be monthly, quarterly, semi-annually, or annually.
- Keep records of your sales, purchases, exemptions, returns, and payments for at least three years. You must maintain accurate and complete records of your sales, purchases, exemptions, returns, and payments for sales tax purposes. The records must include invoices, receipts, contracts, certificates of exemption, tax returns, and payment confirmations. The records must be available for inspection by the Alabama Department of Revenue or the City of Mobile upon request.
Conclusion
As a seller, you must always comply with the sales tax rules and regulations, such as registering for a sales tax account, collecting the correct sales tax rate, filing sales tax returns, and keeping records.
If you fail to comply with the sales tax laws, you may face penalties, interest, and criminal charges.
Additionally, sellers who make exempt sales or pay sales tax on exempt purchases can apply for a certificate of exemption or a refund of sales tax. By following this step-by-step guide, you can ensure that you comply with the sales tax laws in Mobile, Alabama, and avoid any unnecessary trouble.