HB434 Alabama 2011 Session

Updated Feb 27, 2026

Notable

Summary

Primary Sponsor: Jay Love
Republican
Session: Regular Session 2011
Title: Taxation, Multistate Tax Compact, determination of state and local tax liability of multistate business taxpayers, business income, apportionment, sales, other than tangible personal property, apportionment based taxpayers market for sale, Sec. 40-27-1 am'd.
Summary: Alabama adopts the Multistate Tax Compact, changing how multistate businesses are taxed, including sales sourcing and income apportionment, and creates a commission to administer it.
What This Bill Does
Alabama adds the Multistate Tax Compact to state law. It updates where non-tangible sales are sourced, so a sale is in Alabama if the market for that sale is located here. It changes the income apportionment formula to weight the sales factor more heavily. It also creates the Multistate Tax Commission to oversee uniform rules, audits, and arbitration, and allows a short-form filing option for small taxpayers; the changes apply to taxable years beginning after December 31, 2010.

Who It Affects
Multistate taxpayers (corporations, partnerships, and other business entities) doing business in Alabama; they may see changes in where income is taxed and in how much tax is owed due to the new sourcing rules and the double-weighted sales factor.
Alabama tax administration and related state entities (such as the Alabama Department of Revenue and the Multistate Tax Commission), which will implement uniform rules, oversee audits, and handle arbitration and governance across party states.

Key Provisions
Enacts the Multistate Tax Compact into Alabama law and clarifies its applicability to taxes with multistate impact (income, gross receipts, etc.).
Amends Section 40-27-1 to adopt MTCC sourcing rules: sales other than tangible personal property are sourced to this state if the taxpayer's market for the sale is in this state.
Apportions business income using a four-factor formula where the numerator is property plus payroll plus twice the sales factor, and the denominator is four (sales factor weighted double).
Allows a short-form filing option for taxpayers whose only activities in the state are sales and whose Alabama gross sales do not exceed $100,000 (adjustable every five years by the MT Commission).
Creates the Multistate Tax Commission to administer uniform regulations, forms, audits, and arbitration between party states, with budgeting and reporting provisions.
Provides for interstate audits and arbitration procedures to settle apportionment disputes, with final determinations binding for tax purposes.
Effective date: taxable years beginning on or after December 31, 2010.

AI-generated summary using openai/gpt-5-nano on Feb 27, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Taxation