Don’t Forget to Ring Up the Tax on Online Holiday Purchases

Matt Boster

Viewed: 4752

Posted by: Matt Boster
Date: Dec 10 2014 12:04 PM

MONTGOMERY, Dec. 10, 2014—Many shoppers will go online to do their holiday shopping this season, but don’t forget you still have to pay tax.

The Alabama Department of Revenue reminds Alabamians who shop the Internet, TV home-shopping networks, or catalog sales to report and pay use tax on their purchases if no tax has been collected by the online or catalog retailer.

Shoppers owe a four percent state use tax on their out-of-state purchases if no taxhas been collected by the out-of-state seller. Local taxes also apply if they live in a city or county that levies a local sales or use tax. If theirpurchase receipt shows that theyhave paid a sales tax to another state equal to the Alabama tax rate, they will not be taxed again. 

The state use tax rate is four percent, the same as the state sales tax rate. Like the sales tax, the four percent use tax is primarily earmarked for the state’s Education Trust Fund. The use tax is not a new tax; it has been a part of the Alabama tax system as long as the state sales tax. The use tax is a complementary tax to the state sales tax and prevents Alabama merchants from being placed at an unfair competitive disadvantage to out-of-state online or catalog merchants who may not be required tocollect tax on sales to Alabama residents.

Items subject to use tax are the same items that would be subject to sales tax ifpurchased in Alabama, such as: computers, books, electronic equipment, toys, games, furniture, jewelry, clothing, etc.

Alabama taxpayers can pay their use tax at the time they file their Alabamaindividual income tax return by entering the amount of use tax owed on a line item included on the Alabama individual income tax return. By doing this, the taxpayer simply either increases their balance due or decreases their income tax refund by the amount of the use tax owed.

For more information concerning Alabama’s consumer use tax reportingrequirements, contact the Alabama Department of Revenue Sales and Use Tax Division at 334-242-1490, or visit the department’s website at http://revenue.alabama.gov.

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