--- oa_review_kit: v1 guide_slug: alabama-sales-tax guide_version: alabama-sales-tax@2026-04-13T17:56:54.728Z archetype: vat_gst --- # Review kit: Alabama Sales Tax Thank you for reviewing this Guide. This kit is one file with three parts: how to use it, an interview prompt for your AI, and the Guide itself. ## How to use this kit (3 steps, about 15 minutes) 1. Open the AI you already use (ChatGPT, Claude, Gemini, anything that reads markdown) and paste in everything from "INTERVIEW PROMPT" below, including the Guide at the end. 2. Your AI interviews you like a colleague, one question at a time. Just talk: war stories, walk-throughs, the mistakes you catch. No writing required. 3. Your AI writes your answers up as a single markdown file. Hand it back at openaccountants.com/skills/alabama-sales-tax/handback (also linked from the Guide page: "Hand back your file"). What you added is published under your name and credential. If your AI cannot produce the exact output format, hand back whatever you have: a revised Guide file, a worksheet, or plain notes. We take those too, and a person reviews them by hand. The format below is the one we can apply straight away. --- # INTERVIEW PROMPT (paste from here down into your AI) You are interviewing a practising accountant about how they actually do the work covered by the attached Guide ("Alabama Sales Tax", slug `alabama-sales-tax`). Interview them like a colleague doing a handover. Do not lecture. Ask ONE question at a time and wait for the answer. Chase war stories and specifics: what kind of client, which portal step, how big the penalty was. The rates, thresholds, and citations are our job; we refresh those from primary sources. Capture ONLY what is NOT derivable from law: - order of operations, and what a wrong order corrupts - what to ask a client before computing anything - what to assume when a fact is unknown, and how it gets flagged - the most-missed traps, with penalty size and who falls in - how the portal or filing channel actually behaves - what has to reconcile before anyone signs - when to refuse the work and hand it to a human specialist If the accountant corrects a rate, threshold, or deadline in the Guide along the way, record it in the FACT CORRECTIONS table, but do not steer the interview toward numbers. ## Questions to work through Ask these in order, one at a time. Skip any the accountant has already covered; follow up where a story has specifics worth pinning down. Each question is tagged with the method slot(s) it feeds. 1. [sequence] Walk me through the last VAT return you prepared, start to finish. What did you open first, and why that order? 2. [intake_questions] [evidence] A new client hands you nothing but a bank statement. What do you do before you'll classify a single line? 3. [pattern_library] Which bank-statement line gets misclassified most often in your experience? What does it look like and where should it actually go? 4. [scope_gate] Tell me about a client you refused or referred out. What about their VAT situation made you stop? 5. [trap] When you review a return someone else drafted, what mistake do you catch most often? 6. [conservative_default] When you can't tell if a sale is domestic or cross-border, what do you assume, and how do you mark it? 7. [cross_check] Before you sign, what has to reconcile with what, and how close is close enough? 8. [filing_mechanics] Walk me through filing on the actual portal. What surprises first-timers: the order of forms, what locks, what you can't undo? 9. [judgment_rule] Ever had a client on a simplified scheme where the "simplification" made things worse? How do you decide who belongs on it? 10. [trap] What's the real penalty story you tell clients, the one that actually happened? 11. [evidence] Which claims will you draft from a bank statement but never file without the underlying paper? 12. [unsettled_law] Anything in VAT right now you deliberately won't finalise because the rules are moving? ## Method slots (for tagging the write-up) - `scope_gate` (Scope gate and refusals): when to stop and send the client to a human - `sequence` (Order of operations): what order to do things in, and what a wrong order corrupts - `intake_questions` (Client intake questions): what to ask a client before computing - `evidence` (Documents and evidence): which documents to insist on, and what is draft-grade vs file-grade - `judgment_rule` (Judgment rules): how a practitioner actually picks when the law allows two routes - `conservative_default` (Conservative defaults): what to assume when a fact is unknowable at draft time - `trap` (Traps and most-missed items): the mistakes everyone makes, what they cost, and who falls in - `filing_mechanics` (Portal and filing mechanics): how submission actually works: channel, order, what locks - `cross_check` (Cross-checks before signing): what has to reconcile with what before delivery, and how close is close enough - `pattern_library` (Pattern library): how messy real-world data (bank lines, payout platforms) maps to tax categories - `edge_case` (Edge-case playbook): the client situations that change the method, not just the numbers - `unsettled_law` (Unsettled-law flags): what not to finalise right now, and why - `handback_protocol` (Hand-back protocol): what the finished working paper contains and who reviews it ## Output format: oa-handback v1 When the interview is done, write the answers up as ONE markdown file in exactly this shape. Fill in the reviewer's real name, credential, and email (ask for them at the end if they have not come up). Every method block gets a `### [method:]` heading where `` is one of the 13 slot ids above. Keep `guide_slug` and `guide_version` exactly as given. Omit any section the interview produced nothing for, but keep the headings that remain exactly as shown. The `fact_key` column may be left blank when unknown. ```markdown --- oa_handback: v1 guide_slug: alabama-sales-tax guide_version: alabama-sales-tax@2026-04-13T17:56:54.728Z reviewer_name: reviewer_credential: # free text: CPA, EA, ACCA, Steuerberater... reviewer_email: verdict: --- ## METHOD ### [method:filing_mechanics] ### [method:intake_questions] - - ... ## FACT CORRECTIONS | fact_key | current | correct | source | |---|---|---|---| | | | | | ## FLAGS - [unsettled] - [refer] ## NOTES ``` If for any reason you cannot produce this exact format, output the accountant's corrections and methods as clear plain notes instead. The hand-back page accepts plain notes and revised Guide files too; this format is an optimization, never a gate. --- # THE GUIDE UNDER REVIEW --- name: alabama-sales-tax description: Use this skill whenever asked about Alabama sales tax, Alabama use tax, Alabama sales tax nexus, ADOR sales tax filing, self-administered city taxes in Alabama, or Alabama grocery food taxation. Trigger on phrases like "Alabama sales tax", "AL sales tax", "ADOR", "Code of Ala. §40-23", "Alabama local tax", "Alabama grocery tax", "self-administered cities Alabama", or any request involving Alabama state and local sales and use tax compliance. ALWAYS load us-sales-tax first for federal context. jurisdiction: US-AL domain: vat-gst tax_year: 2025 --- # alabama-sales-tax ## Section 1 -- Quick reference **Quick reference** | Field | Value | | --- | --- | | Jurisdiction | Alabama, United States | | Jurisdiction code | US-AL | | Tax type | Sales and Use Tax (state + local) | | State rate | 4.00% | | Local rate range | 0% -- 7% (county + city + special district) | | Maximum combined rate | ~11.00% | | Sourcing | Destination-based | | Economic nexus | $250,000 in sales (revenue only) | | Primary legislation | Code of Alabama §40-23 (Sales Tax); §40-23-60 (Use Tax) | | Tax authority | Alabama Department of Revenue (ADOR) | | Filing portal | https://myalabamataxes.alabama.gov | | SST member | No | | Self-administered cities | ~200+ cities administer their own local sales tax separately | | Grocery food | FULLY TAXABLE at state level (reduced to 2% effective Sep 2023) | | Federal framework skill | us-sales-tax | | Skill version | 2.0 | **CRITICAL: Alabama has ~200+ self-administered cities. Sellers must register SEPARATELY with each self-administered city where they have nexus.** ### Required inputs **Required inputs** | # | Question | Why it matters | | --- | --- | --- | | 1 | Alabama sales tax registration / tax ID? | Required for state filing | | 2 | Filing frequency? | Monthly, quarterly, annual | | 3 | Nexus type? | $250K threshold | | 4 | Marketplace seller? | Facilitators collect on facilitated sales | | 5 | Products/services sold? | Taxability classification | | 6 | Sell to exempt entities? | Exemption certificates required | | 7 | Locations/employees/inventory in AL? | Physical nexus | | 8 | Sell into multiple local jurisdictions? | Self-administered city complexity | ### Refusal catalogue - **R-AL-1 -- Self-administered city detailed compliance** — Each city has separate registration, returns, and rates. Specific city compliance requires individual research. _(R-AL-1)_ ### 3.1 Tangible personal property **Tangible personal property** _(Code of Ala. §40-23-2)_ | Pattern | Taxable? | Notes | | --- | --- | --- | | General TPP | TAXABLE | Code of Ala. §40-23-2 | | Clothing and footwear | TAXABLE | No general exemption; holiday exemption only | ### 3.2 Food and beverages **Food and beverages** | Pattern | Taxable? | Notes | | --- | --- | --- | | Grocery food (unprepared) | TAXABLE at reduced state rate 2% | State rate reduced from 4% to 2% (effective Sep 2023); local rates still apply at full rate | | Prepared food | TAXABLE at full 4% | | | Candy, soft drinks | TAXABLE | | ### 3.3 SaaS and digital goods **SaaS and digital goods** | Pattern | Taxable? | Notes | | --- | --- | --- | | Canned software (physical) | TAXABLE | TPP | | Canned software (download) | TAXABLE | | | Custom software | Varies | Escalate to reviewer | | SaaS (cloud-hosted) | TAXABLE | Alabama taxes SaaS | | Digital goods (downloads) | TAXABLE | | ### 3.4 Services **Services** | Pattern | Taxable? | Notes | | --- | --- | --- | | Most services | NOT TAXABLE | Alabama taxes only enumerated services | | Rental of TPP | TAXABLE | | | Amusement/recreation | TAXABLE | | | Professional services | NOT TAXABLE | | ### 3.5 Exemptions **Exemptions** | Pattern | Status | Notes | | --- | --- | --- | | Prescription drugs | EXEMPT | | | Manufacturing machinery (directly in manufacturing) | REDUCED RATE | State rate 1.5%; local applies | | Farm equipment | EXEMPT | | | Resale | EXEMPT | Valid certificate required | | Interstate commerce | EXEMPT | Shipped out of state | | Government purchases | EXEMPT | | ## Section 4 -- Rate lookup **Rate lookup** | Jurisdiction | Approximate combined rate | | --- | --- | | Birmingham | ~10% | | Montgomery | ~10% | | Huntsville | ~9% | | Mobile | ~10% | | Tuscaloosa | ~9% | **Use ADOR rate lookup for exact rate by address.** ### 5.1 Self-administered cities ~200+ Alabama cities self-administer their local sales tax. Sellers must register separately with each. Birmingham, Montgomery, Huntsville, Mobile, Tuscaloosa are all self-administered. ### 5.2 Grocery food reduced rate - **Grocery food reduced rate** — State rate on grocery food reduced from 4% to 2% effective September 1, 2023. Local rates apply at full local rate on top. ## Section 6 -- Return form and filing **Return form and filing** | Level | Return | Portal | | --- | --- | --- | | State | Filed via ADOR | https://myalabamataxes.alabama.gov | | Self-administered cities | Filed separately with each city | Individual city portals | | ADOR-administered locals | Filed with state return | Same as state | ### 7.1 Economic nexus **Economic nexus** | Parameter | Value | | --- | --- | | Revenue threshold | $250,000 in sales into Alabama | | Transaction threshold | None | | Effective date | October 1, 2018 | ### 7.2 Penalties **Penalties** | Penalty | Rate | | --- | --- | | Late filing | 10% of tax due | | Fraud | 50% of deficiency | ### EC1 -- Self-administered city registration **Situation:** Online seller meets nexus in Alabama. **Resolution:** Must register with ADOR for state tax. Must ALSO register separately with each self-administered city where nexus exists. ADOR does not administer these cities' taxes. ### EC2 -- Grocery food dual rates **Situation:** Customer buys groceries in Birmingham. **Resolution:** State rate 2% on food + full local Birmingham rate. Combined rate on food may be ~8%. ### Test 1 -- Basic sale **Input:** $1,000 item in Birmingham. Combined rate: ~10%. **Expected:** Tax = ~$100. ### Test 2 -- Grocery food **Input:** $200 groceries. State 2% + local ~6%. **Expected:** Tax = ~$16. Food taxable at reduced state + full local. ### Test 3 -- Economic nexus **Input:** $300K Alabama sales, no physical presence. **Expected:** Exceeds $250K. Must register. ## Section 10 -- Prohibitions - NEVER assume Alabama exempts grocery food -- it taxes it (reduced state rate 2% + full local). - NEVER ignore self-administered cities -- ~200+ cities require separate registration and filing. - NEVER assume ADOR handles all local taxes -- many cities self-administer. - NEVER apply one city's local rate to another jurisdiction. - NEVER compute any number -- all arithmetic is handled by the deterministic engine, not Claude. ## Disclaimer This skill is provided for informational and computational purposes only and does not constitute tax, legal, or financial advice. All outputs must be reviewed by a qualified professional before filing. ## Disclaimer This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon. The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com). Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.