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City of Huntsville, AL
  
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Finance Department - Tax Information - FAQ's

The City of Huntsville administers seven local taxes. Businesses and individuals who have transactions in Huntsville are responsible for reporting certain information and paying applicable taxes directly to the city. Information about these taxes is available on this web site. Information on this site is only intended for general guidance on tax matters. You are strongly encouraged to consult with your advisors or ask city representatives about the specific effect of city taxes on your activities.






























Finance Department Tax Contacts
By Phone (256) 427-5070 or (256) 427-5068
By Fax (256) 427-5064
By Email FinanceTax@huntsvilleal.gov
By Mail City of Huntsville Finance Department
P.O. Box 308, Huntsville, AL 35804-0308
In Person City of Huntsville Finance Department
308 Fountain Circle, 4th floor, Huntsville, AL 35801




Advice from City Representatives
Only tax representatives of the Finance Department are authorized to provide advice on city tax matters. Only written advice from the city is considered authoritative, so please contact the Finance Department if you require this.



What is my Local Jurisdiction ID number?
What taxes do I have to file with the city?
How do I register to pay Huntsville taxes?
How often must I file and pay city taxes?
Can I file and pay my city taxes electronically?
How can I determine if a transaction is inside the city?
My business provides services - what taxes apply to my business?
I am an automotive vehicle dealer - what do I need to know?
What records I am required to keep for my business transactions?
What is use tax and does it apply to me?
Am I required to pay taxes on Internet, mail-order and telephone purchases?
If the 20th falls on a weekend or holiday, when is the due date?
Am I allowed a discount for timely filing and paying the sales tax due?
Is penalty and interest imposed for not timely filing and paying any tax due?
What is Nexus?
What is a Wholesale Sale?
What is a Resale Certificate and how is it used?
I am a Contractor - what do I need to know?
What is a dual-business?
I am a U.S. Government Contractor - what do I need to know?
How are Machines Used in Manufacturing taxed?
How are Withdrawals from inventory taxed?
What happens if taxes are collected by unqualified or unregistered out-of-town vendors?
How are shipping and handling charges taxed?
What are the taxes on tobacco products?


What is my Local Jurisdiction ID number?
It is the Account Number shown on your City business license. If your business does not require a City business license but you have tax to report, you must complete a Tax Registration Form. The completed form can be faxed to (256)427-5064 or emailed to financetax@huntsvilleal.gov. What taxes do I have to file with the city?
The City of Huntsville administers seven local taxes: Sales/Use, Renting and Leasing, Lodgings, Gasoline, Liquor, Tobacco and Wholesale Wine. Businesses and individuals who have transactions in Huntsville are responsible for reporting certain information and paying applicable taxes directly to the city.

How do I register to pay Huntsville taxes?
Complete a Tax Registration Form and return it to the Finance Department for processing. The completed form can be faxed to (256)427-5064 or emailed to financetax@huntsvilleal.gov

How often must I file and pay city taxes?
All tax forms and payments are due monthly, except that some sales, use and rental taxes may be paid quarterly or annually depending on your business activities. Contact the Finance Department for assistance.

Can I file and pay my city taxes electronically?
As of September 1, 2012, City of Huntsville taxpayers that are registered to file returns electronically with the State of Alabama will be required to file City of Huntsville tax returns electronically for the following tax types: SALES TAX, USE TAX, RENTAL TAX, or LODGINGS TAX. For more information, visit the online filing website at Tax Return E-Filing or visit the Alabama Department of Revenue website at Alabama Department of Revenue

How can I determine if a transaction is inside the city?
Transactions occurring inside the corporate limits of Huntsville are those that are subject to tax according to applicable city law. It is the TAXPAYER'S RESPONSIBILITY (in the case of retail sales, it is the SELLER'S RESPONSIBILITY) to determine whether a transaction occurs in Huntsville.

IMPORTANT NOTE: U.S. Post Office addresses do not indicate Huntsville's geographic boundaries.

To determine the location of a transaction, you may refer to the Huntsville Address Locator, which is a current listing of all addresses inside Huntsville. For locations not having a postal address (such as new real estate developments), you should contact the City Planning Department for assistance at (256) 427-5100.

My business provides services - what taxes apply to my business?
Many businesses primarily sell services, not merchandise to their customers, such as health care and dental professionals, attorneys, accountants, engineers, appraisers, software consultants, U.S. Government contractors, architects, and real estate agents. Although you may not be required to collect sales tax, it is very likely you are required to pay city use tax on materials, supplies, computer equipment, and other property used in your business, whether provided to your customers or not. Please refer to the other information on this website concerning use tax.

I am an automotive vehicle dealer - what do I need to know?
Automotive vehicle dealers are required to collect sales tax on the sale of all vehicles in the city. This does not apply to vehicles delivered outside Huntsville, "delivery" being defined by Alabama law. If a dealer delivers a vehicle outside Huntsville, the dealer is required to complete the State's "Certificate of Exemption - Out of State/City/County Delivery" ("State Form") for the sale to be exempt, which is available from the Alabama Department of Revenue.

The matter of delivery outside of Huntsville is complex and must comply with Alabama law concerning what constitutes delivery and passage of title. The DEALER IS RESPONSIBLE for determining whether a delivery location is inside or outside the city, and may refer to the Huntsville Address Locator for reference.

For the exemption to be accepted by the city, the dealer must submit the original or copy of all State Forms executed for the tax reporting period with the tax return for the period.

IMPORTANT NOTE: The State Form does not apply to sales to individuals or businesses having a Huntsville address according to the then applicable Huntsville Address Locator, regardless of the point of delivery. If such a sales is claimed as exempt by a dealer and the city discovers such, AND the city discovers the Madison County License Director did not collect the city sales tax from the buyer upon registration of the vehicle, the city will assess the sales tax on the sale to the dealer, plus a penalty for failure to pay the tax timely.

Also, if the city discovers from the buyer that the vehicle was not delivered outside the city, contrary to the State Form, the city will assess the sales tax on the sale to the dealer, plus a penalty for failure to pay the tax timely.

The city will assess sales tax on the sale to the buyer if the city finds the dealer properly exempted the sale but for other reasons finds the buyer owes the tax.

What records I am required to keep for my business transactions?
All individuals and entities having a city business license are required by law to keep records that clearly show all transactions subject to city privilege licenses and taxes. This includes, but is not limited to records showing:

  • All income of the business, whether by cash, check, credit or property.
  • Customer invoices establishing the delivery location of business merchandise and taxes collected.
  • Customer sales tax exemption documents, when applicable.
  • All banking activities.
  • All purchases by the business, whether by cash, check, credit or property.
  • Invoices from vendors.
  • Payroll records.
  • Real and personal property owned by the business.

    Failure to keep proper records and make them available upon the city's request constitutes a misdemeanor offense for which the city may issue a citation for observed violations. You are strongly encouraged to consult with your advisors about the law's requirements, or contact city for more information. Retail businesses receiving primarily cash are especially encouraged to establish proper recordkeeping procedures to avoid city penalties.

    What is use tax and does it apply to me?
    Use tax is traditionally the most confusing tax, and should be of particular interest to individuals and businesses engaged in construction, contracting, and services, but it is very likely that every person and business is subject to use tax to some degree.

    Use tax, at the same rates as sales tax, becomes due when the user and consumer of taxable goods does not pay tax to the seller, or pays tax to an seller that is not registered to collect City of Huntsville tax. Use tax is due on purchases made by Huntsville residents and businesses from another city or state which are not taxed.

    Generally, if you would be required to pay sales tax on goods purchased inside Huntsville, but you purchase them outside Huntsville and do not pay local sales tax, you are probably subject to use tax and must report and pay it to the city.

    You are strongly encouraged to consult with your advisors or ask city representatives about how use tax applies to your activities.

    Am I required to pay taxes on Internet, mail-order and telephone purchases?
    Individuals and businesses purchasing tangible property from businesses located outside the city and having the property delivered to a location inside the city for their use are generally required to report those transactions and pay use tax to the city. There is not a federal law that supersedes this requirement. Facts and circumstances may affect application of this general rule. Please contact the city tax representative for more information.

    If the 20th falls on a weekend or holiday, when is the due date?
    The return must be postmarked on or before the next working day to be timely filed.

    Am I allowed a discount for timely filing and paying the sales tax due?
    Yes. A discount is allowed if the tax paid before the 20th day of the month in which the tax is due. The sales tax discount consists of 5% on the first $100 of tax due, and 2% of all tax over $100. Please note, however, that the monthly discount may not exceed $400.

    Is penalty and interest imposed for not timely filing and paying any tax due?
    Yes. Penalty and interest is due if the tax paid after the 20th day of the month in which the tax is due. The Failure to Timely File Penalty is 10% of the tax required to be paid or $50, whichever is greater. The Failure to Timely Pay Penalty is 10% of the tax required to be paid. A Negligence Penalty of 5% may be assessed if a taxpayer disregards the city's laws or rules. Interest is assessed at the statutory rate.

    What is Nexus?
    Nexus, also known as sufficient physical presence, is the determining factor of whether an out-of-city business selling products in this city is liable for collecting the tax on sales in Huntsville. Nexus may be established by a corporate presence, ownership of real or tangible personal property in this city, resident employees, or similar other types of existence.

    What is a Wholesale Sale?
    Wholesale sales are sales of tangible personal property to licensed retail merchants, jobbers, dealers, or other wholesalers for resale. It does not include sales to users or consumers that are not for resale. The seller must maintain the sales tax number or exemption number for these customers.

    What is a Resale Certificate and how is it used?
    A business, registered for sales and use tax can use a resale certificate only when the merchandise being purchased is to be resold by the business. It only applies to resold merchandise, not merchandise that it will use and consume in the conduct of business. Any merchandise obtained using a resale certificate is subject to the sales and use tax if it is used or consumed by the purchaser in any manner, and must be reported and the tax paid thereon direct to the city.

    The city does not require or issue a resale certificate, but accepts those issued by the Alabama Department of Revenue when they are applied correctly.

    I am a Contractor - what do I need to know?
    Individuals and business engaged in contracting are subject to numerous laws and rules pertaining to their business transactions, and you are strongly encouraged to consult with your advisors concerning them. Generally, contractors are considered the user and consumer of the merchandise they purchase in fulfillment of their contractual obligations. As such, sale and use tax must be paid by the contractor on merchandise purchased. The local governments to which the taxes must be paid depends on the nature of the business activities and where they are conducted.

    What is a dual-business?
    A dual-business is one engaged in retail sales and using its merchandise in connection with furnish-and-install contracts. These business are required to collect and pay sales tax on their retail activities, and report and pay sales and use taxes on their contracting activities.

    I am a U.S. Government Contractor - what do I need to know?
    Materials and supplies used and consumed within the city by government contractors in the performance of their contracts may be subject to city sales and use tax, even though the cost is ultimately paid by the U.S. Government. Passage of title to the U.S. Government does not necessarily affect local tax treatment. The sales and use tax effect on transactions involving government contracts is particularly complex and requires an assessment of the facts and circumstances of each situation. Contractors should consult with their advisors and government tax representatives for assistance in the proper application of law to their business transactions.

    How are Machines Used in Manufacturing taxed?
    Machines, machinery, parts, and attachments thereof, used for mining, quarrying, manufacturing, compounding or processing is exempt from city sales and use tax.

    How are withdrawals from inventory taxed?
    Withdrawals are items purchased at wholesale that are purchased tax free for resale, but are withdrawn from inventory and used by the business for any reason other than resale. Withdrawals are subject to sales tax on the cost of items withdrawn from inventory.

    What happens if taxes are collected by unqualified or unregistered out-of-town vendors?
    When city tax is paid to out-of-town vendors and other vendors that do not remit this tax to the city, you are liable to pay this same tax to this city, even though it may represent a "double tax" to you. To verify the qualified tax status of any of your vendors, contact city tax representatives.

    How are shipping and handling charges taxed?
    Shipping and handling charges included on a vendor invoice with other charges is subject to sales and use tax.

    What are the taxes on tobacco products?
    The City adopted a tax on tobacco products on January 1, 2004. This tax applies to all tobacco products sold inside the city, and requires a city tobacco stamp on all cigarette packages sold inside the city. The products and taxes are as follows:

    Product Tax Reported
    Cigarettes Ten (10) cents per package Stamp
    Other tobacco Ten (10) cents per package Monthly return
    Cigars Three (3) cents each Monthly return


    While the tobacco tax ordinance and related rules require wholesalers to pay the tax, retailers are responsible for having a stamp affixed to all cigarette packages, and risk confiscation of unstamped products.





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