SB425 Alabama 2012 Session

Summary

Primary Sponsor

Tammy Irons

Democrat

Session

Regular Session 2012

Title

Limited liability companies, certain owners not liable for non-income taxes solely based on partnership classification, and to express intent, Secs. 10A-5-3.02, 40-29-72 am'd.

Summary

SB425 clarifies that certain LLC owners are not personally liable for non-income taxes solely because the LLC is treated as a partnership for Alabama tax purposes.

What This Bill Does

The bill amends sections 10A-5-3.02 and 40-29-72 to say that a member or manager of an LLC is not personally liable for the LLC's non-income state or local taxes merely due to the LLC's partnership classification for Alabama income tax purposes. It overrules prior Department of Revenue interpretations that suggested joint personal liability. Personal liability remains possible only for other reasons, such as an individual’s own actions or written contribution obligations, or as otherwise provided under related tax sections. The changes apply to all open tax periods immediately after passage and approval.

Who It Affects

• Members and managers of Alabama LLCs, who would not be personally liable for non-income taxes solely because the LLC is classified as a partnership.
• State and local tax authorities (including the Department of Revenue), who would apply the clarified liability standard and adjust interpretations accordingly.

Key Provisions

• Amends 10A-5-3.02 to specify that LLC members/managers are not personally liable for non-income taxes solely due to the LLC's partnership classification.
• Amends 40-29-72 to align penalties/definitions with the liability clarification and to reflect how 'person' includes LLC members/managers for tax purposes.
• Overrules prior Department of Revenue interpretations that implied joint personal liability for LLC members/managers regarding non-income taxes (as referenced by related case language).
• Effective for all open tax periods immediately following passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Business and Commerce