alabama-sales-tax.md205 lines6.8 KB
v20State
| 1 | --- |
| 2 | name: alabama-sales-tax |
| 3 | 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. |
| 4 | version: 2.0 |
| 5 | --- |
| 6 | |
| 7 | # Alabama Sales and Use Tax Skill v2.0 |
| 8 | |
| 9 | ## Section 1 -- Quick reference |
| 10 | |
| 11 | | Field | Value | |
| 12 | |---|---| |
| 13 | | Jurisdiction | Alabama, United States | |
| 14 | | Jurisdiction code | US-AL | |
| 15 | | Tax type | Sales and Use Tax (state + local) | |
| 16 | | State rate | 4.00% | |
| 17 | | Local rate range | 0% -- 7% (county + city + special district) | |
| 18 | | Maximum combined rate | ~11.00% | |
| 19 | | Sourcing | Destination-based | |
| 20 | | Economic nexus | $250,000 in sales (revenue only) | |
| 21 | | Primary legislation | Code of Alabama §40-23 (Sales Tax); §40-23-60 (Use Tax) | |
| 22 | | Tax authority | Alabama Department of Revenue (ADOR) | |
| 23 | | Filing portal | https://myalabamataxes.alabama.gov | |
| 24 | | SST member | No | |
| 25 | | Self-administered cities | ~200+ cities administer their own local sales tax separately | |
| 26 | | Grocery food | FULLY TAXABLE at state level (reduced to 2% effective Sep 2023) | |
| 27 | | Federal framework skill | us-sales-tax | |
| 28 | | Skill version | 2.0 | |
| 29 | |
| 30 | **CRITICAL: Alabama has ~200+ self-administered cities. Sellers must register SEPARATELY with each self-administered city where they have nexus.** |
| 31 | |
| 32 | --- |
| 33 | |
| 34 | ## Section 2 -- Required inputs and refusal catalogue |
| 35 | |
| 36 | ### Required inputs |
| 37 | |
| 38 | | # | Question | Why it matters | |
| 39 | |---|----------|----------------| |
| 40 | | 1 | Alabama sales tax registration / tax ID? | Required for state filing | |
| 41 | | 2 | Filing frequency? | Monthly, quarterly, annual | |
| 42 | | 3 | Nexus type? | $250K threshold | |
| 43 | | 4 | Marketplace seller? | Facilitators collect on facilitated sales | |
| 44 | | 5 | Products/services sold? | Taxability classification | |
| 45 | | 6 | Sell to exempt entities? | Exemption certificates required | |
| 46 | | 7 | Locations/employees/inventory in AL? | Physical nexus | |
| 47 | | 8 | Sell into multiple local jurisdictions? | Self-administered city complexity | |
| 48 | |
| 49 | ### Refusal catalogue |
| 50 | |
| 51 | **R-AL-1 -- Self-administered city detailed compliance.** Each city has separate registration, returns, and rates. Specific city compliance requires individual research. |
| 52 | |
| 53 | --- |
| 54 | |
| 55 | ## Section 3 -- Transaction pattern library |
| 56 | |
| 57 | ### 3.1 Tangible personal property |
| 58 | |
| 59 | | Pattern | Taxable? | Notes | |
| 60 | |---|---|---| |
| 61 | | General TPP | TAXABLE | Code of Ala. §40-23-2 | |
| 62 | | Clothing and footwear | TAXABLE | No general exemption; holiday exemption only | |
| 63 | |
| 64 | ### 3.2 Food and beverages |
| 65 | |
| 66 | | Pattern | Taxable? | Notes | |
| 67 | |---|---|---| |
| 68 | | 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 | |
| 69 | | Prepared food | TAXABLE at full 4% | | |
| 70 | | Candy, soft drinks | TAXABLE | | |
| 71 | |
| 72 | ### 3.3 SaaS and digital goods |
| 73 | |
| 74 | | Pattern | Taxable? | Notes | |
| 75 | |---|---|---| |
| 76 | | Canned software (physical) | TAXABLE | TPP | |
| 77 | | Canned software (download) | TAXABLE | | |
| 78 | | Custom software | Varies | Escalate to reviewer | |
| 79 | | SaaS (cloud-hosted) | TAXABLE | Alabama taxes SaaS | |
| 80 | | Digital goods (downloads) | TAXABLE | | |
| 81 | |
| 82 | ### 3.4 Services |
| 83 | |
| 84 | | Pattern | Taxable? | Notes | |
| 85 | |---|---|---| |
| 86 | | Most services | NOT TAXABLE | Alabama taxes only enumerated services | |
| 87 | | Rental of TPP | TAXABLE | | |
| 88 | | Amusement/recreation | TAXABLE | | |
| 89 | | Professional services | NOT TAXABLE | | |
| 90 | |
| 91 | ### 3.5 Exemptions |
| 92 | |
| 93 | | Pattern | Status | Notes | |
| 94 | |---|---|---| |
| 95 | | Prescription drugs | EXEMPT | | |
| 96 | | Manufacturing machinery (directly in manufacturing) | REDUCED RATE | State rate 1.5%; local applies | |
| 97 | | Farm equipment | EXEMPT | | |
| 98 | | Resale | EXEMPT | Valid certificate required | |
| 99 | | Interstate commerce | EXEMPT | Shipped out of state | |
| 100 | | Government purchases | EXEMPT | | |
| 101 | |
| 102 | --- |
| 103 | |
| 104 | ## Section 4 -- Rate lookup |
| 105 | |
| 106 | | Jurisdiction | Approximate combined rate | |
| 107 | |---|---| |
| 108 | | Birmingham | ~10% | |
| 109 | | Montgomery | ~10% | |
| 110 | | Huntsville | ~9% | |
| 111 | | Mobile | ~10% | |
| 112 | | Tuscaloosa | ~9% | |
| 113 | |
| 114 | **Use ADOR rate lookup for exact rate by address.** |
| 115 | |
| 116 | --- |
| 117 | |
| 118 | ## Section 5 -- Classification rules |
| 119 | |
| 120 | ### 5.1 Self-administered cities |
| 121 | |
| 122 | ~200+ Alabama cities self-administer their local sales tax. Sellers must register separately with each. Birmingham, Montgomery, Huntsville, Mobile, Tuscaloosa are all self-administered. |
| 123 | |
| 124 | ### 5.2 Grocery food reduced rate |
| 125 | |
| 126 | State rate on grocery food reduced from 4% to 2% effective September 1, 2023. Local rates apply at full local rate on top. |
| 127 | |
| 128 | --- |
| 129 | |
| 130 | ## Section 6 -- Return form and filing |
| 131 | |
| 132 | | Level | Return | Portal | |
| 133 | |---|---|---| |
| 134 | | State | Filed via ADOR | https://myalabamataxes.alabama.gov | |
| 135 | | Self-administered cities | Filed separately with each city | Individual city portals | |
| 136 | | ADOR-administered locals | Filed with state return | Same as state | |
| 137 | |
| 138 | --- |
| 139 | |
| 140 | ## Section 7 -- Thresholds, penalties, and deadlines |
| 141 | |
| 142 | ### 7.1 Economic nexus |
| 143 | |
| 144 | | Parameter | Value | |
| 145 | |---|---| |
| 146 | | Revenue threshold | $250,000 in sales into Alabama | |
| 147 | | Transaction threshold | None | |
| 148 | | Effective date | October 1, 2018 | |
| 149 | |
| 150 | ### 7.2 Penalties |
| 151 | |
| 152 | | Penalty | Rate | |
| 153 | |---|---| |
| 154 | | Late filing | 10% of tax due | |
| 155 | | Fraud | 50% of deficiency | |
| 156 | |
| 157 | --- |
| 158 | |
| 159 | ## Section 8 -- Edge cases |
| 160 | |
| 161 | ### EC1 -- Self-administered city registration |
| 162 | |
| 163 | **Situation:** Online seller meets nexus in Alabama. |
| 164 | **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. |
| 165 | |
| 166 | ### EC2 -- Grocery food dual rates |
| 167 | |
| 168 | **Situation:** Customer buys groceries in Birmingham. |
| 169 | **Resolution:** State rate 2% on food + full local Birmingham rate. Combined rate on food may be ~8%. |
| 170 | |
| 171 | --- |
| 172 | |
| 173 | ## Section 9 -- Test suite |
| 174 | |
| 175 | ### Test 1 -- Basic sale |
| 176 | |
| 177 | **Input:** $1,000 item in Birmingham. Combined rate: ~10%. |
| 178 | **Expected:** Tax = ~$100. |
| 179 | |
| 180 | ### Test 2 -- Grocery food |
| 181 | |
| 182 | **Input:** $200 groceries. State 2% + local ~6%. |
| 183 | **Expected:** Tax = ~$16. Food taxable at reduced state + full local. |
| 184 | |
| 185 | ### Test 3 -- Economic nexus |
| 186 | |
| 187 | **Input:** $300K Alabama sales, no physical presence. |
| 188 | **Expected:** Exceeds $250K. Must register. |
| 189 | |
| 190 | --- |
| 191 | |
| 192 | ## Section 10 -- Prohibitions |
| 193 | |
| 194 | - NEVER assume Alabama exempts grocery food -- it taxes it (reduced state rate 2% + full local). |
| 195 | - NEVER ignore self-administered cities -- ~200+ cities require separate registration and filing. |
| 196 | - NEVER assume ADOR handles all local taxes -- many cities self-administer. |
| 197 | - NEVER apply one city's local rate to another jurisdiction. |
| 198 | - NEVER compute any number -- all arithmetic is handled by the deterministic engine, not Claude. |
| 199 | |
| 200 | --- |
| 201 | |
| 202 | ## Disclaimer |
| 203 | |
| 204 | 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. |
| 205 |
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About
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.
US-ALty-2025