Small Business Guide - Welcome to Alabama A&M University

S m a l l B u s i n e s s H a n d b o o k f o r N o r t h A l a b a m aALABAMA CONSUMER USE TAXWHAT IS A USE TAX?Use tax is the counterpart of sales tax. It is due when merchandise ispurchased for use inside Alabama and tax is not paid to the seller. Theuse tax rate is the same amount as the state sales tax rate.WHY A USE TAX?The Alabama use tax was enacted in 1939 to prevent vendors locatedoutside the state from having an unfair competitive advantageagainst the instate vendors who have to charge the sales tax. The liabilityfor paying the use tax falls on the purchaser. If the vendor doesnot collect the use tax, it is the responsibility of the purchaser to selfassessand report the tax due to the Alabama Department of Revenue.WHAT IS TAXABLE?The use tax applies to the same type of merchandise that is taxableunder the Alabama sales tax law. This includes all tangible personalproperty that is purchased at retail and brought into Alabama forstorage, use, or consumption in Alabama unless it is specifically exemptedby law.35