New rule means businesses must reapply for tax licenses before 2021

New rule means businesses must reapply for tax licenses before 2021
(Source: Live 5)

By MARY SELL, Alabama Daily News

New rules at the Alabama Department of Revenue will require businesses with various tax licenses to reapply in November and December or have their current licenses canceled in 2021.

Annual renewal of licenses is now required, a change from previous operations. The department posted a notice on its website Oct. 1 about the rule change and renewal requirement that was adopted in February.

“This rule applies to businesses subject to remitting and reporting sales, rental, sellers use, lodgings, utility gross receipts, or simplified sellers use tax and who are required under current law to obtain a corresponding license from the department,” ADOR spokeswoman Amanda Collier said in a statement to Alabama Daily News.

“These licensing requirements ensure that these businesses are properly registered with the department to collect and remit taxes due as a result of their business activities,” she continued. “In addition, having a sales tax or similar license allows a business making sales of tangible personal property to purchase goods tax-free at wholesale for resale to their customers.”

Valid sales tax licenses, for example, allow holders to buy goods, equipment, etc. sales tax-free even if they plan to re-sell them as a retailer or as a wholesaler or to lease them to third parties.

ADOR is requiring and will review from businesses their current legal name, owner information, Social Security or FEIN numbers and other information.

If a business fails to renew their annual license, the license will expire and the account will no longer be active.

“A handful of us tax practitioners are concerned that this important announcement largely went unnoticed by most busy CPAs, as well as businesses across the country that hold a sales tax, rental tax, seller’s use tax, or a handful of other Alabama DOR-issued licenses,” said Bruce Ely, a partner at the Birmingham-based Bradley Arant law firm who specializes in tax law. “Every one of those licenses automatically expires at midnight on Dec. 31. Taxpayers need to get started on the renewal process first thing Monday, Nov. 2.”

ADOR said the rule does not expand existing licensing requirements, but instead provides procedures for the annual, electronic renewal of these licenses that will streamline the licensing process and ensure that the department has up-to-date information for all businesses required to be licensed.

Collier said it’s impossible to know how many businesses operating in the state will be effected by the rule change because many hold multiple license types that are now subject to the annual renewal requirement.

“It is important for all CPA professionals to be aware of the Alabama Department of Revenue changes related to annual renewal of licenses,” Jeannine Birmingham, president and CEO of the Alabama Society of CPAs, told Alabama Daily News. “It is equally important for taxpayers to be aware and to consult with their CPA about any changes to their annual tax planning for all tax obligations.”

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