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How to Get a Resale Certificate in Alabama

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Reviewed by: Daniel Javor

Updated on January 23, 2023

How to Get a Resale Certificate in Alabama

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How to Get a Resale Certificate in Alabama

If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in Alabama, you may be wondering how to get a resale certificate. Alabama is unusual, in that they do not have a resale certificate. You just need your sales tax license, which serves the same purpose. 

It’s a relatively simple process, as detailed in this step-by-step guide. 

What is a Resale Certificate?

If your LLC has a valid resale certificate, you can buy goods from a wholesaler without paying sales tax, though you may pay a use tax. Depending on the size of your business, this can save you tens of thousands of dollars each year. In Alabama, you just need to present your sales tax license to the seller of the goods to avoid paying sales tax. 

The catch is that whenever you do use a resale certificate or your sales tax license to purchase goods, you are legally bound to resell those items and collect sales tax when you do so. If you do not resell those items, or fail to collect sales tax, the punishment could be that you will be liable for the sales tax on those goods.

Keep in mind, each resale certificate, also known as a resale license, applies to a single vendor. Thus, you’ll need a resale certificate for each one of your vendors. In Alabama, this means that you’ll need to present a copy of your sales tax license to each of your vendors.

You cannot use your sales tax license to buy items you do not intend to resell, such as a new computer for your business. This would be tax fraud, a felony offense. You are only able to buy items tax-exempt if you are going to collect sales tax on them later.

Not all wholesalers will accept resale certificates or your Alabama sales tax license, nor do they have to. They may choose not to because of the risk of expired or false certificates or licenses, which would put the wholesaler on the hook for the sales tax.

view of downtown alabama, usa
Paul Brady Photography / Shutterstock.com

How to Apply for a Sales Tax License in Alabama

In a few states, including Alabama, a seller’s permit, or sales tax license, also serves as a resale certificate that applies to all vendors. 

The Department of Revenue issues sales tax licenses in Alabama. You simply need to fill out the application on the department’s website

The seller’s permit identifies you with your state as a collector of sales tax. If you sell tangible personal property or goods you are required to have a sales tax permit. In some states, even a service provider like a lawyer is required to have a sales tax permit and collect state sales tax.

The resale certificate or your sales tax license applies to items that you buy for resale, or for parts that you buy to manufacture something for sale. 

How to Fill out the Alabama Sales Tax License Application

In Alabama, the Department of Revenue issues sales tax licenses. Start by visiting the website, then follow these simple steps:

  1. Enter your entity type and FEIN
Alabama Sales Tax License Application
  1. Select sales tax for the type of tax you’re applying for.
  2. Fill out all the requested information about your business. 
Alabama Sales Tax License Application

The whole process may take half an hour, as you’ll be asked for detailed information about the products or services you sell.  There is no fee for the application, and you should receive your sales tax license within 10 days.

Does an Alabama Sales Tax License Expire?

In Alabama, sales tax licenses expire after one year. It’s best to create calendar reminders so you’re aware when expirations are coming up to ensure you’re able to apply for renewal in time and run your business without interruption. 

Conclusion 

Sales tax licenses can be a bit of a hassle, but in Alabama, they are an absolute necessity. So take the time to get copies of your sales tax license for each of your vendors to ensure full compliance with your state’s tax regulations.