(a) If any person shall engage in or continue in any business for which a privilege tax is imposed by Section 40-23-2 as a condition precedent to engaging or continuing in such business, the person shall apply for and obtain from the Department of Revenue a license to engage in and to conduct such business for the current tax year upon the condition that the person shall pay the taxes accruing to the State of Alabama under the provisions of this division; provided, that no license shall be issued under the provisions of this division to any person who has not complied with the provisions of this division, and no provision of this division shall be construed as relieving any person from the payment of any license or privilege tax now or hereafter imposed by law.
(b)(1) Any person applying for an initial license or the renewal of an expired or cancelled license on or after January 1, 2020, who is in the business of selling at retail products that may be purchased from a seller, as defined in Section 40-23-260, shall be required to purchase and maintain a one-time surety bond for a two-year period, executed by the applicant as principal and by a corporate surety company qualified to do business in this state as surety, in the amount of twenty-five thousand dollars ($25,000). The bond shall be in a form to be approved by the commissioner and shall be conditioned upon the licensee collecting and remitting sales tax pursuant to this chapter and any rules promulgated thereunder. The bond shall be payable to the commissioner and to his or her successors in office.
(2) The department shall provide a waiver for the surety bond as required pursuant to subdivision (1) where the person applying for an initial license or the renewal of an expired or cancelled license and a current licensee are related parties as defined in Section 40-23-190(b), or members of a controlled group of corporations as defined in 26 U.S.C. § 1563, or with respect to any other business, whether or not incorporated, which would be members of a controlled group if similar rules applied to the business, and the related party’s current licensee has been compliant over the previous two-year period.
(c)(1) Any licensee who becomes non-compliant in the collection and remittance of sales tax during any period occurring on or after January 1, 2020, shall be required to purchase and maintain a one-time surety bond for a two-year period in the amount of the actual sales tax liability for the three months immediately preceding the non-compliant period, however not less than the amount as prescribed in subsection (b)(1). For the purpose of this section, a licensee shall be deemed non-compliant when a final assessment that has been entered against the licensee is no longer subject to appeal and the licensee has not paid or otherwise satisfied the liability associated with the final assessment within 30 days from the date on which the final assessment was no longer subject to appeal. The surety bond shall be in a form to be approved by the commissioner and shall be conditioned upon the licensee collecting and remitting sales tax pursuant to this chapter and any rules promulgated thereunder. The bond shall be payable to the commissioner and to his or her successors in office.
(2) The department shall notify a licensee at his or her last known address by first class U.S. mail or by certified mail, return receipt requested, when a bond is being required pursuant to subdivision (1). The licensee, within 30 days from the date the notice is mailed by the department, shall file the bond as requested by the department or file a notice of appeal with the Alabama Tax Tribunal as allowed under Section 40-2A-8(a). The department may immediately cancel a license upon the expiration of the 30-day period set out above if the licensee fails to either provide the required surety bond or timely appeal to the Alabama Tax Tribunal. Furthermore, a cancelled license shall not be renewed until the licensee provides the required surety bond.
(d) After two years of continuous compliance, a licensee shall be exempt from the surety bond requirement so long as the licensee collects and timely remits sales tax pursuant to this chapter and any rules promulgated thereunder.
Last modified: May 3, 2021