HB418 Alabama 2019 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Session

Regular Session 2019

Title

Sales and use tax, simplied seller use tax on sellers selling goods without a physical presence in state, affiliated nexus repealed, one-time average state and local sellers use tax rate, Sec. 40-23-190 repealed; Secs. 40-23-191, 40-23-199.2 am'd.

Summary

HB 418 repeals affiliated nexus and creates a one-time combined state and local sellers use tax rate with a local adjustment added to the simplified rate.

What This Bill Does

The bill repeals the affiliated nexus rule. It requires the Department to compute a combined average rate by adding the state rate, the average county rate, and the average municipal rate (rounded to the nearest percent) based on rates in effect on January 1, 2019, and then to adjust the simplified sellers use tax rate with a local adjustment to approximate that combined rate. Starting October 1, 2020, the local adjustment (up to one percentage point above the simplified rate) would be collected and remitted along with the simplified tax, with proceeds distributed to localities under existing rules. It also clarifies and expands provisions for the Simplified Sellers Use Tax Remittance Program, including responsibilities for marketplace facilitators, records, refunds, and audits related to the simplified tax.

Who It Affects

• Eligible sellers that participate in the Simplified Sellers Use Tax Remittance Program and do not have a physical presence in Alabama (including marketplace facilitators) would collect and remit the simplified sellers use tax at a rate adjusted by the one-time combined rate local adjustment.
• Local governments (counties and municipalities) that levy local sales/use taxes would receive distributions from the local rate adjustment, and the adjustment could increase the rate up to one percentage point above the simplified rate.

Key Provisions

• Repeal of affiliated nexus (removing the existing rule that tied tax obligations to affiliate-based presence).
• A one-time calculation of the combined rate: state rate plus average county rate plus average municipal rate, based on rates in effect on January 1, 2019, rounded to the nearest percent.
• Introduction of a local rate adjustment: beginning October 1, 2020, any excess of the combined rate over the base rate (per 40-23-193) is collected by sellers in the simplified program, added to the simplified rate, and distributed to localities; the adjustment cannot exceed one percentage point above the simplified rate.
• Effective dates: the act becomes law October 1, 2019; the combined rate calculation by December 31, 2019; the local rate adjustment becomes effective October 1, 2020.
• Marketplace facilitators and eligibility: marketplace facilitators must collect/remit the simplified sellers use tax on applicable sales and maintain records, with certain protections and audits governed by related sections; facilitators may be eligible for discounts and must provide purchaser statements.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation