Ala. Code § 40-2A-1 Short Title.
40-2A-1. Short Title.
This chapter shall be known and may be cited as the “Alabama Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act.”
(Acts 1992, No. 92-186, p. 349, §1(b).)
Alabama Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act.
Ala. Code tit. 40, ch. 2A
in effectAla. Code § 40-2A-2 Legislative Intent; Scope; Exclusiveness.
40-2A-2. Legislative Intent; Scope; Exclusiveness.
(1) LEGISLATIVE INTENT.
a. The legislative intent of this chapter is to provide equitable and uniform procedures for the operation of the department and for all taxpayers when dealing with the department. This chapter is intended as a minimum procedural code and the department may grant or adopt additional procedures not inconsistent with this chapter. This chapter shall be liberally construed to allow substantial justice.
b. The provisions of this chapter shall be complementary and in addition to all other provisions of law. In the event of any conflict between the provisions of this chapter and those of any other specific statutory provisions contained in other chapters of this title, or of any other title, it is hereby declared to be the legislative intent that, to the extent such other specific provisions are inconsistent with or different from the provisions of this chapter, the provisions of this chapter shall prevail.
(2) SCOPE. The provisions contained herein shall govern all matters administered by the department except as otherwise provided by law or by agreement entered into pursuant to lawful authority. However, nothing herein shall be construed to apply to the assessment of ad valorem taxes on real or personal property which is administered by the various counties of the State of Alabama, except that the determination and assessment of value of property of public utilities under Chapter 21 of this title, and the determination and assessment of value of corporate shares of stock under Article 4 of Chapter 14 of this title shall be governed by the procedures set forth in this chapter.
(3) PROCEDURES EXCLUSIVE. The department shall not be subject to the declaratory judgment, declaratory ruling, or contested case provisions of the Alabama Administrative Procedure Act, Chapter 22 of Title 41.
(Acts 1992, No. 92-186, p. 349, §2; Act 2000-233, p. 368, §1.)
Ala. Code § 40-2A-3 Definitions.
40-2A-3. Definitions.
For the purposes of this chapter and Chapter 2B, the following terms shall have the following meanings:
(1) ASSOCIATE ALABAMA TAX TRIBUNAL JUDGE. An associate judge as defined in Section 40-2B-2.
(2) AUTHORIZED REPRESENTATIVE. Any individual, including, but not limited to, an attorney or certified public accountant with written authority or power of attorney to represent a taxpayer before the department or the Alabama Tax Tribunal; provided however, that nothing herein shall be construed as entitling any such individual who is not a licensed attorney to engage in the practice of law.
(3) CHIEF ALABAMA TAX TRIBUNAL JUDGE or CHIEF JUDGE. The chief judge as defined in Section 40-2B-2.
(4) COMMISSIONER. The commissioner of the department or his or her delegate.
(5) COMPTROLLER. The Comptroller of the State of Alabama.
(6) DELEGATE. When used with reference to the commissioner means any officer or employee of the department duly authorized by the commissioner, directly or indirectly, by one or more redelegations of authority, to perform the function described in the context.
(7) DEPARTMENT or DEPARTMENT OF REVENUE. The Alabama Department of Revenue.
(8) GROSS RECEIPTS TAX IN THE NATURE OF A SALES TAX. A privilege or license tax, imposed by a municipality or county, measured by gross receipts or gross proceeds of sale and which: (i) was in effect on or before February 25, 1997, or is an amendment to a tax which was in effect on that date; (ii) is levied against those selling tangible personal property at retail, those operating places of amusement or entertainment, those making street deliveries, and those leasing or renting tangible personal property; and (iii) is due and payable to a county or municipality monthly or quarterly.
(9) FINAL ASSESSMENT. The final notice of value, underpayment, or nonpayment of any tax administered by the department.
(10) INTEREST. That amount computed under Section 40-1-44, on any overpayment or underpayment of tax or under Section 40-2A-18 on a final assessment.
(11) INTERNAL REVENUE SERVICE. The agency of the United States principally responsible for the determination, assessment, and collection of taxes established by Title 26 of the United States Code.
(12) NOTICE OF APPEAL. Any written notice sufficient to identify the name of the taxpayer or other party appealing, the specific matter appealed from, the basis for that appeal, and the relief sought.
(13) PERSON. Any individual, association, estate, trust, partnership, corporation, or other entity of any kind.
(14) PETITION FOR REFUND. Any written request for a refund of any tax previously paid, including in the form of an amended return. Unless otherwise provided by law, the request shall include sufficient information to identify the type and amount of tax overpaid, the taxpayer, the consumer/purchaser, the period included, and the reasons for the refund.
(15) PETITION FOR REVIEW. A written document filed with the department in response to a preliminary assessment in which the taxpayer sets forth reasonably specific objections to the preliminary assessment.
(16) PRELIMINARY ASSESSMENT. The preliminary notice of value or underpayment of any tax administered by the department.
(17) PRIVATE AUDITING OR COLLECTING FIRM. Any person in the business of collecting, through contract or otherwise, local sales, use, rental, lodgings or other taxes or license fees for any county or municipality, or auditing any taxpayer, through the examination of books and records, for any county or municipality. The term shall also be referred to as a third-party auditing firm, a third-party collecting firm, or a third-party administrator. The term shall not include any of the following:
a. The Department of Revenue.
b. A county or municipality that has entered into a contract or other arrangement to collect local sales, use, rental, lodgings, or other taxes or license fees on behalf of another county or municipality, or to audit a taxpayer, through the examination of books and records, on behalf of another county or municipality.
c. A person or firm whose sole function and purpose on behalf of a municipality or group of municipalities is to collect delinquent insurance premium license fees levied by that municipality or group of municipalities, and who has no authority to determine the amount of license fee, interest, court cost, or penalty owed to the municipality or group of municipalities.
(18) PUBLICATION 1A. A written pamphlet to be distributed by the department to all taxpayers whose books and records are being examined by the department, at or before the commencement of an examination, explaining in simple and nontechnical terms, the role of the department and the rights of the taxpayer whose books and records are being examined by the department during the examination and which shall be promptly revised from time to time to reflect any changes in the applicable law or rules.
(19) RETURN. Any report, document, or other statement required to be filed with the department for the purpose of paying, reporting, or determining the proper amount of value or tax due.
(20) SECRETARY. The secretary of the department.
(21) SELF-ADMINISTERED COUNTY OR MUNICIPALITY. A county or municipality that administers its own sales and use taxes or other local municipal or county taxes levied or authorized to be levied by a general or local act, or contracts out all or part of that function to a private auditing or collecting firm. The term does not include any of the following:
a. A county or municipality that allows the department to administer a sales, use, rental, or lodgings tax which is levied by or on behalf of that county or municipality.
b. A municipality or county that levies a gross receipts tax in the nature of a sales tax, as defined in subdivision (8). A county or municipality that both self-administers a sales, use, rental, or lodgings tax and allows the department to administer a sales, use, rental, or lodgings tax that is levied by or on behalf of the county or municipality is only a self-administered county or municipality with respect to those sales, use, rental, or lodgings taxes that the county or municipality administers itself or for those taxes that it contracts for the collection.
(22) TAX. Any amount, including applicable penalty and interest, levied or assessed against a taxpayer and which the department or any county, municipality, or their designees are required or authorized to administer under the provisions of Alabama law.
(23) ALABAMA TAX TRIBUNAL. The Alabama Tax Tribunal as described in Chapter 2B.
(24) TAXPAYER. Any person subject to or liable for any state or local tax; any person required to file a return with respect to, or to pay, or withhold and remit any state or local tax or to report any information or value to the department, a county, municipality, or its designee; or any person required to obtain or holding any interest in any license, permit, or certificate of title issued by the department, a county, municipality, or its designee, or any person that may be affected by any act or refusal to act by the department, a county, municipality, or its designee, or to keep any records required by this chapter.
(25) TAXPAYER ADVOCATE. The person so designated from time to time by the commissioner to assist the taxpayers of the State of Alabama with regard to tax issues resulting from any taxes administered or collected by the department.
(26) TAXPAYER ASSISTANCE ORDER. A written order issued by the Taxpayer Advocate and approved by either the commissioner or assistant commissioner which, among other items, states the facts and grants relief to a taxpayer concerning an issue in dispute with the department with regard to tax issues resulting from any taxes administered or collected by the department.
(Acts 1992, No. 92-186, p. 349, §3; Act 98-192, p. 310, §9; Act 2000-233, p. 368, §1; Act 2014-146, p. 378, §3; Act 2016-406, p. 1082, §1; Act 2018-180, §1.)
Ala. Code § 40-2A-4 Taxpayers’ Bill of Rights.
40-2A-4. Taxpayers’ Bill of Rights.
(a) Rights of the taxpayer.
(1) For purposes of this subsection and subsections (c) and (d), the term “department” shall include the Department of Revenue, a self-administered county or municipality, or a private examining or collecting firm, depending on whether the Department of Revenue, a self-administered county or municipality, or private examining or collecting firm is conducting the examination of the taxpayer.
(2) At or before the commencement of an examination of the books and records of a taxpayer, the department shall provide to the taxpayer the current version of Publication 1A. Publication 1A shall provide, in simple and non-technical terms, a statement of the taxpayer’s rights. Those rights include the right to be represented during an examination, an explanation of their appeal rights, and the right to know the criteria and procedures used to select taxpayers for an examination.
(3) At or before the issuance of a preliminary assessment, the department shall provide to the taxpayer in simple and non-technical terms:
a. A written description of the basis for the assessment and any penalty asserted with respect to the assessment.
b. A written description of the method by which the taxpayer may request an administrative review of the preliminary assessment.
(4) At or before the issuance of a final assessment, the department shall inform the taxpayer by a written statement of his or her right to appeal to the Alabama Tax Tribunal or to the circuit court.
(5) Except in cases involving suspected criminal violations of the tax law or other criminal activity, the department shall conduct an examination of a taxpayer during regular business hours after providing reasonable notice to the taxpayer. A taxpayer who refuses a proposed time for an examination on the grounds that the proposed examination would cause inconvenience or hardship must offer reasonable alternative times and dates for the examination.
(6) At all stages of an examination or the administrative review of the examination, and in any appeal to the Alabama Tax Tribunal, a taxpayer is entitled to be assisted or represented, at his or her own expense, by an authorized representative. The department shall prescribe a form by which the taxpayer may designate a person to represent him or her in the conduct of any proceedings, including collection proceedings, resulting from actions of the department. In the absence of this form, the department or the Alabama Tax Tribunal may accept such other evidence that a person is the authorized representative of a taxpayer as it considers appropriate. This subdivision shall not be construed as authorizing the practice of law before the department, Alabama Tax Tribunal, or any court in this state by a person who is not a licensed attorney.
(7) A taxpayer shall be allowed to make an audio recording of any in-person interview with any officer or employee of the department relating to any examination or investigation by the department, provided, however, the taxpayer shall give reasonable advance notice to the department of his or her intent to record and the recording shall be at the taxpayer’s own expense and with the taxpayer’s own equipment. The department shall also be allowed to record any interview if the taxpayer is recording the interview, or if the department gives the taxpayer reasonable advance notice of its intent to record the interview. The department shall provide the taxpayer with a copy of the recording, but only if the taxpayer provides reimbursement for the cost of the transcript and reproduction of the copy. The cost shall be reasonable as prescribed by rules issued by the department.
(8) This section shall not apply to criminal investigations or investigations relating to the integrity of any officer or employee of the department.
(b) Department responsibilities generally.
(1) The commissioner shall appoint one or more taxpayer advocates from among the employees of the department. These officers shall receive and review inquiries or complaints concerning matters that have been pending before the department for an unreasonable length of time, or matters where the taxpayer has been unable to obtain a reasonable response after several attempts to communicate with the department employee assigned to the taxpayer’s case, or his or her immediate superiors. In addition, these officers shall review and have the authority to waive a penalty for reasonable cause as provided in subsection (h) of Section 40-2A-11, shall promptly review inquiries concerning release of property levied upon, the erroneous filing of liens, the failure to release a lien for good cause, or other matters complained of by a taxpayer or other affected party. A taxpayer advocate shall have no authority nor issue any ruling with regard to any taxes collected by or on behalf of a self-administered county or municipality.
a. A taxpayer advocate, subject to the approval of the commissioner or the assistant commissioner, shall issue taxpayer assistance orders in the form and manner prescribed herein and by department rules.
b. Notwithstanding any statute of limitation or other provision in this title, a taxpayer assistance order may declare that any tax, including a final assessment, was erroneously assessed or reported and is not a liability due the state, or that a petition for refund was erroneously denied by the department.
c. A taxpayer assistance order shall grant relief as deemed appropriate, including the voiding of any erroneously issued final assessment for a tax which was not a debt due the state, granting of any refund due the taxpayer, or abating an assessment of interest that has accrued because of undue delay by department personnel.
d. At the request of the Alabama Tax Tribunal, a taxpayer advocate shall review a final order issued by the Alabama Tax Tribunal that was not appealed pursuant to Section 40-2B-2, if there is newly discovered evidence which by due diligence could not have been discovered in time to file an application for rehearing pursuant to Section 40-2B-2, and may propose relief as the taxpayer advocate deems appropriate and approved by the commissioner or the assistant commissioner.
e. All taxpayer assistance orders shall be dated and signed by a taxpayer advocate and approved either by the commissioner or the assistant commissioner, and shall state the underlying facts, the reasons for granting relief, and the relief granted. Any taxpayer assistance order, for good cause, may be modified or rescinded in writing by a taxpayer advocate and either the commissioner or the assistant commissioner.
f. A taxpayer advocate shall have full access to department personnel, books, and records subject, however, to the confidentiality restrictions imposed by this chapter.
g. Taxpayer assistance orders shall not be subject to the confidentiality provisions of this title, and shall be maintained by the secretary of the department and shall be open to review upon written request. A taxpayer advocate shall have no authority nor issue any ruling with regard to any taxes collected by or on behalf of a self-administered county or municipality.
h. The commissioner shall make an annual report to the Legislature of all taxpayer assistance orders approved in accordance with this section and Sections 40-2A-2 and 40-2A-3. The report shall contain the total amount of relief granted and the types of taxes for which relief was granted.
(2) The department shall maintain a continuing education program to train employees of the department and to provide them with a current knowledge of state and applicable federal tax laws.
(3) In addition to any other information provided by law, the commissioner shall include in the department’s annual report information about the number or kind of audits or assessments conducted in the year covered by the report.
(4) The department shall not use the amounts of taxes assessed by an employee of the department as:
a. The basis of a production quota system for employees; or
b. The basis for evaluating an employee’s performance.
(5) The department shall establish procedures for monitoring the performance of department employees which may include the use of evaluations obtained from taxpayers.
(6) INSTALLMENT PAYMENTS.
a. The commissioner is authorized to enter into written agreements to allow any taxpayer to pay any tax in installment payments if the commissioner determines that such agreement will facilitate collection of such tax. Notwithstanding the preceding sentence, such agreements shall be entered into only regarding a tax that has been finally assessed by the department. The commissioner shall only be authorized to enter such an agreement with regard to a tax administered or collected by the department.
b. The commissioner may terminate, alter, or modify any agreement entered into hereunder if:
1. Information provided by the taxpayer to the commissioner prior to the date of such agreement was inaccurate or incomplete;
2. The taxpayer fails to pay any installment at the time such installment payment is due under such agreement;
3. The taxpayer fails to pay any other tax liability due the department at the time such liability is due, unless the taxpayer has appealed such other liability pursuant to the terms of this chapter;
4. The financial condition of the taxpayer has significantly changed;
5. The taxpayer fails to provide a financial condition update as requested by the commissioner; or
6. The commissioner believes that collection of any tax to which an agreement under this subdivision relates is in jeopardy.
c. The commissioner shall have sole authority or discretion to enter into or amend, modify, or terminate any installment payment agreement provided for herein. The commissioner shall adopt rules necessary for the implementation of this subdivision.
d. Any self-administered county or municipality shall have the same authority as provided to the commissioner by this subdivision relating to installment payments with respect to taxes administered or collected by the self-administered county or municipality.
(c) Department failure to comply with this section. The failure of the department to comply with this section shall not prohibit the department from assessing any tax as provided in this chapter, nor excuse the taxpayer from timely complying with any time limitations under this chapter. However, if the department fails to substantially comply with this section, the commissioner, upon application by the taxpayer or other good cause shown, shall abate any penalties otherwise arising from the examination or assessment.
(d) Abatement of penalty. The department shall abate any penalty attributable to erroneous written advice furnished to a taxpayer by an employee of the department. However, this section shall apply only if the department employee provided the written advice in good faith while acting in his or her official capacity, the written advice was reasonably relied on by the taxpayer and was in response to a specific written request of the taxpayer, and the penalty did not result from the taxpayer’s failure to provide adequate or accurate information.
(Acts 1992, No. 92-186, p. 349, §3; Act 1998-192, p. 310, §9; Act 2000-233, p. 368, §1; Act 2014-146, p. 378, §3; Act 2019-101, §1.)
Ala. Code § 40-2A-5 Authority to Issue Revenue Rulings.
40-2A-5. Authority to Issue Revenue Rulings.
(a) The commissioner may, in addition to all other powers and authority now granted by law, issue “revenue rulings” describing the substantive application of any law or regulation administered by the department. Revenue rulings may also govern procedures applicable to the department, and in that event, shall be called “revenue procedures.” Revenue rulings shall be binding on the department and the state, its political subdivisions, and taxing authorities only with respect to the taxpayer making the request and only with respect to the facts contained in the request. The department attorney assigned to review the request for a revenue ruling shall consult with the taxpayer or its authorized representative, if requested by the taxpayer or the authorized representative, prior to issuing the revenue ruling. A revenue ruling shall constitute the department’s interpretation of the law or regulations as applied to the facts contained in the request, but only pertaining to the particular facts described in the request, and only to the taxpayer making the request.
(b) Revenue rulings may be issued only if no taxes have accrued with respect to the transactions, events, or facts contained in the request at the time of the issuance of the ruling.
(c) Revenue rulings may be revoked or modified by the commissioner at any time; but any revocation or modification shall not be effective retroactively unless one of the following has occurred:
(1) The person making the request misstated or omitted facts material to the ruling.
(2) The ruling was issued with respect to a matter involving the computation or payment of a tax that was due and payable at the time the ruling was requested.
(3) The law applied by the commissioner in the revenue ruling is changed in a manner to alter the commissioner’s conclusions in the ruling and the change in the law is made effective as of the date of the ruling.
The taxpayer may petition for a hearing with the Alabama Tax Tribunal to determine the propriety, under subsections (a), (b), or (c), of any retroactive revocation of a ruling.
(d) All revenue rulings issued by the department shall be published, maintained as a public record, and made available by the department for public inspection and copying, within a reasonable time following their issuance, at a reasonable cost to be determined by the department. Prior to publication, the department shall delete from the text of the ruling all names, addresses, titles, figures, dates, and other information which may identify the particular taxpayer who requested the ruling. If a revenue ruling contains trade secrets or other confidential information, the department shall, upon written request of the taxpayer, delete that information prior to publication.
(e) Requests for revenue rulings shall be submitted in writing to the secretary in the form and manner as prescribed by department regulations, accompanied by a fee of two hundred dollars ($200). The commissioner shall either issue or refuse to issue a ruling within 120 days after receipt of the request unless the taxpayer consents to an extension of time. If the commissioner refuses to issue a ruling within the time prescribed, the two hundred dollar ($200) fee shall be refunded to the taxpayer. A request may be withdrawn at any time prior to the issuance of the requested ruling, in which case there shall be no refund of the two hundred dollar ($200) fee.
(f) Revenue rulings shall be issued in the name of the commissioner.
(g) Subject to the provisions of this section, the commissioner may also issue a revenue ruling in response to a written request by a governing body of a self-administered county or municipality, or by a taxpayer, regarding the substantive application of a sales, use, rental, or lodgings tax levied by or on behalf of the self-administered municipality or county; provided, however, that the commissioner may not (i) issue a revenue ruling interpreting any tax levied by or on behalf of a self-administered municipality or county which levies a gross receipts tax in the nature of a sales tax, as defined in Section 40-2A-3(8), or (ii) issue a revenue ruling that would establish a rule of nexus determining the locality to which sales and use taxes, or gross receipts taxes in the nature of a sales tax as defined by Section 40-2A-3(8), are due if the locality is a self-administered county or municipality, as defined by Section 40-2A-3(20). Revenue rulings shall be binding on a self-administered county or municipality only with respect to the specific taxpayer making the request and only with respect to the specific facts contained in the request. Any ruling shall, if the other requirements of this section are met, be issued within 45 days of receipt of the request, and if the requesting party is a self-administered municipal or county governing body, the fee for issuance of the ruling shall be waived. If the requesting party is a taxpayer, the department shall, promptly upon receipt, forward a copy of the ruling request to the appropriate municipal or county governing body and shall consult with and accept written comments from representatives of the municipality or county prior to issuance of the ruling.
(Acts 1992, No. 92-186, p. 349, §5; Acts 1995, No. 95-607, p. 1279, §2; Act 98-191, p. 297, §2; Act 2014-146, p. 378, §3.)
Ala. Code § 40-2A-6 Government Contract for Examination of Taxpayer’s Records Where Compensation, Etc., Contingent Upon Tax, Interest, Etc., Assessed or Collected; Violation; Costs of Examination.
40-2A-6. Government Contract for Examination of Taxpayer’s Records Where Compensation, Etc., Contingent Upon Tax, Interest, Etc., Assessed or Collected; Violation; Costs of Examination.
(a) The state or any county or municipal governing authority may not enter into any contract or arrangement for the examination of a taxpayer’s books and records, written or otherwise, with a private auditing or collecting firm, if any part of the compensation or other benefits paid or payable to the private auditing or collecting firm is contingent upon or in any manner related to the amount of tax, license fee, interest, court cost, penalty, or any other item assessed against or collected from the taxpayer. Any such contract or arrangement, if made or entered into, is void and unenforceable. Any assessment or preliminary assessment of taxes, license fees, penalties, court costs, interest, or other items proposed or asserted by, or based upon the recommendation of, a private auditing or collecting firm compensated under any such contract or arrangement shall be void and unenforceable. This provision does not prohibit or restrict the state or any county or municipal governing authority from entering into contracts or arrangements for the collection of any tax, interest, court cost, or penalty when the private auditing or collecting firm has no authority to determine the amount of tax, interest, court cost, or penalty owed the state, county, or municipal governing authority.
(b) The compensation or other benefits paid or payable to any employee or other agent of a private auditing or collecting firm or to any employee or other agent of the state or county or municipal governing authority serving in the capacity of a hearings or appeals officer, including an attorney serving in that capacity, may not be contingent upon, in whole or in part, or otherwise related to in any manner, the amount of tax, license fee, interest, court cost, penalty, or other item assessed against or collected from the taxpayer. Any contract or arrangement based, in whole or in part, on any such contingency is void and unenforceable. Any assessment or preliminary assessment of taxes, license fees, penalties, court cost, interest, or other items proposed or asserted by or upon the recommendation of a private auditing or collecting firm, compensated under any such contract or arrangement, is void and unenforceable.
(c) Any person violating this section, for each violation, shall have committed a Class A misdemeanor. Violators shall also forfeit any certification granted under Section 40-2A-14. Any private auditing or collecting firm that violates subsections (a) or (b) shall forfeit its license issued under Section 40-12-43.1 until such time as it and each of its examiners or other employees or agents involved in the violation meet any remedial requirements prescribed by the board created under Section 40-2A-15. This provision may not, however, preclude employees of a private auditing or collecting firm from participating in a profit-sharing arrangement generally made available to other employees of the firm who are not engaged in examining taxpayers’ books and records, provided that the formula utilized in calculating the profit-sharing allocations is based primarily on the overall profitability of the firm and secondarily on non-monetary criteria such as age or years of service.
(d) Except as otherwise provided in this subsection, the state or any county or municipal governing authority may not assess or attempt to assess a taxpayer for any costs incurred by, or charged to, the state, county, or municipality in connection with performing an examination of the taxpayer’s books and records, including lodging, meals, or mileage charges, and any assessment or proposed assessment of such costs is void and unenforceable. A self-administered county or municipality may, however, assess and collect from the taxpayer the reasonable costs, based on the then current state government employee per diem rates incurred by, or charged to, the county or municipality in connection with performing an examination of the taxpayer’s books and records, if the taxpayer received notice by certified U.S. mail, return receipt requested, at least 30 days prior to the date on which the examination was to commence and the taxpayer either failed or refused to respond or did not propose a reasonable alternative date on which the examination was to commence within 15 days of receipt of notice of the pending examination, or the taxpayer and the self-administered county or municipality agreed in writing as to an alternative date on which the examination was to commence but the taxpayer then failed or refused to permit reasonable access to its books and records on the alternative date. This subsection does not apply to examinations of the books and records of a taxpayer with respect to the insurance premium license tax levied by Chapter 4A, Title 27, or examinations for gasoline or motor fuel taxes if authorized by local law in effect on July 1, 1998.
(Acts 1992, No. 92-186, p. 349, §5A; Act 98-191, p. 297, §3; Act 2016-406, §1.)
Ala. Code § 40-2A-7 Uniform Revenue Procedures.
40-2A-7. Uniform Revenue Procedures.
(a) Maintenance of records; audit and subpoena authority; authority to adopt rules.
(1) In addition to all other recordkeeping requirements otherwise set out in this title, taxpayers shall keep and maintain an accurate and complete set of records, books, and other information sufficient to allow the department to determine the correct amount of value or correct amount of any tax, license, permit, or fee administered by the department, or other records or information as may be necessary for the proper administration of any matters under the jurisdiction of the department. The books, records, and other information shall be open and available for inspection by the department upon request at a reasonable time and location.
(2) The department may examine and audit the records, books, or other relevant information maintained by any taxpayer or other person for the purpose of computing and determining the correct amount of value or correct amount of any tax, license, or fee administered by the department, or for any other purpose necessary for the proper administration of any matter under the jurisdiction of the department.
(3) A taxpayer, or any officer of a corporation or association, or partner of a partnership, or fiduciary of a trust, or responsible individual of any entity under a duty to maintain books and records pursuant to this subsection who fails or refuses to maintain such records and books, or permit inspection, shall be subject to contempt proceedings in the circuit court of the judicial circuit in which the person resides or has a principal place of business, and upon proof of the fact to the court, may be punished for contempt as provided in cases of contempt in circuit court.
(4) The department may summon any witness to appear and give testimony, and summon by subpoena duces tecum any records, books, or other information of any kind relating to any matter which the department has authority to administer. The witness may be summoned by subpoena issued by the secretary of the department, any circuit judge, any magistrate, or any district judge, in the name of the department, directed to any sheriff of Alabama and returnable to the department. The subpoena may be served in like manner as subpoenas issued out of any circuit court, or the subpoena may be served by an authorized employee of the department or by either U.S. mail with delivery confirmation or certified mail, return receipt requested. A fee shall be paid to banking institutions, other similar entities, or any other person except the taxpayer, for copying, searching for, reproducing, and transporting any records, books, papers, or other documents requested or subpoenaed by the department and to persons who are required to appear as a witness equal to the fee authorized to be paid by the Internal Revenue Service for similar services or appearances pursuant to 26 U.S.C. § 7610, as amended. If any witness has been subpoenaed to appear and testify or appear and produce records, books, or other information, and fails or refuses to appear or testify or to produce the books, records, or other information, that witness shall be subject to contempt proceedings in the circuit court of the judicial circuit in which the witness resides, and upon proof of the fact to a circuit court may be punished for contempt as is provided in cases of contempt in circuit court.
(5) The department may issue forms and make reasonable regulations concerning any matter administered by the department. Regulations adopted by the department shall be issued in accordance with the procedures set forth in the Alabama Administrative Procedure Act, Chapter 22 of Title 41.
(b) Procedures governing entry of preliminary and final assessments; appeals therefrom.
(1) ENTRY OF PRELIMINARY ASSESSMENT; FINAL ASSESSMENT OF UNCONTESTED TAX; EXECUTION OF PRELIMINARY AND FINAL ASSESSMENTS.
a. If the department determines that the amount of any tax as reported on a return is incorrect, or if no return is filed, or if the department is required to determine value, the department may calculate the correct tax or value based on the most accurate and complete information reasonably obtainable by the department. The department may thereafter enter a preliminary assessment for the correct tax or value, including any applicable penalty and interest.
b. Where the amount of tax or value reported on a return is undisputed by the department, or the taxpayer consents to the amount of any deficiency, determination of value, or preliminary assessment in writing as provided by regulation, the department may immediately enter a final assessment for the amount of the tax or value, plus applicable penalty and interest; provided, the department may at any time enter a final jeopardy assessment pursuant to Sections 40-17A-12, 40-29-90, and 40-29-91.
c. All preliminary and final assessments issued by the department shall be executed as provided by regulations adopted by the department.
(2) TIME LIMITATION FOR ENTERING PRELIMINARY ASSESSMENT. Any preliminary assessment shall be entered within three years from the due date of the return, or three years from the date the return is filed with the department, whichever is later, or if no return is required to be filed, within three years of the due date of the tax, except as follows:
a. A preliminary assessment may be entered at any time if no return is filed as required, or if a false or fraudulent return is filed with the intent to evade tax.
b. A preliminary assessment may be entered within six years from the due date of the return or six years from the date the return is filed with the department, whichever is later, if the taxpayer omits from the taxable base an amount properly includable therein which is in excess of 25 percent of the amount of the taxable base stated in the return.
For purposes of this paragraph:
1. The term “taxable base” means the gross income, gross proceeds from sales, gross receipts, net worth, or other amounts on which the tax paid with the return is computed; and
2. In determining the amount omitted from the taxable base, there shall not be taken into account any amount which is omitted from the taxable base stated in the return if the amount is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise the department of the nature and amount of the item.
c. A preliminary assessment entered pursuant to Sections 40-29-72 and 40-29-73, may be entered within five years from the due date of the return on which the underlying tax is required to be reported or within five years of the date the return is filed, whichever is later.
d.1. In the case of income received during the lifetime of a decedent, or by his or her estate during the period of administration, the preliminary assessment of any income tax shall be entered within 18 months after written request therefor, filed after the return is made, by the executor, administrator, or other fiduciary representing the estate of the decedent, but not after the expiration of three years from the due date of the return or three years from the date the return is filed with the department, whichever is later.
2. In the case of income received by a corporation contemplating dissolution, a preliminary assessment of any income tax shall be entered within 18 months after written request, by the corporation, filed after the return is made, but not after the expiration of three years from the due date of the return or three years from the date the return is filed with the department, whichever is later. This subparagraph shall not apply to any corporation unless dissolution is completed within 18 months of the date of the written notice.
e. If a taxpayer has made the election provided in Section 40-18-8(d) or (e), a preliminary assessment based on the gain realized as a result of the involuntary conversion (in the case of Section 40-18-8(d)) or a rollover of gain on the sale of a personal residence (as provided in Section 40-18-8(e)) may be entered within three years from the date the taxpayer notified the department of the replacement of the property in accordance with Section 40-18-8(d) or (e), as the case may be, or of his or her intention not to replace the property.
f. If a taxpayer has validly elected to have the provisions of Section 40-18-6(a)(7) and Section 40-18-8(l) apply to an acquisition of stock before January 1, 1985, any liability of the taxpayer under this title, solely from amendment of its returns to be consistent with that election may be assessed at any time within five years from the date on which the taxpayer filed the amended returns with the department.
g.1. When the Internal Revenue Service changes the amount of federal income tax or federal estate tax in any manner and the change results in an increase in additional income tax or estate tax owed under this title, the department, at any time within one year after the department is notified or otherwise learns that the change has become final, may enter a preliminary assessment for additional tax due. The department shall be allowed to assess the tax within the time period otherwise allowed by this section. Any tax assessed within the additional one year period allowed shall be limited to those items changed on the federal income tax return or federal estate tax return affect the income tax liability or the estate tax liability imposed by this title.
2. When a federal income tax return or federal estate tax return is changed in any manner after it has been filed with the Internal Revenue Service, other than by an amended return, and the change results in an overpayment of taxes imposed by this title, a petition for refund of the overpayment may be filed within the later of one year after the federal changes become final, or within the time allowed for the filing of a petition for refund as provided in this chapter. The refund shall be limited to those items changed on the federal income tax return or federal estate tax return which affect the income tax liability or estate tax liability imposed by this title.
3. For purposes of this subdivision, the date that a federal change becomes final is the date on which the taxpayer and the Internal Revenue Service formally agree to the changes, or the date of any administrative or judicial order, judgment, or decree from which no further appeal was or may be taken.
h. The running of the period of limitations provided herein for entering a preliminary assessment shall be suspended for the period that:
1. The taxpayer or the assets of the taxpayer are involved in a case under Title 11 of the United States Code, Bankruptcy, and for a period of six months thereafter; or
2. The assets of the taxpayer are in the control or custody of a court in any proceeding, and for a period of six months thereafter.
i. The department and the taxpayer, prior to the expiration of the period for entering a preliminary assessment or the filing of a petition for refund, may agree in writing to extend the time provided for entering the assessment or filing the petition in this chapter. The tax may be assessed, or the petition for refund may be filed, at any time prior to the expiration of the period agreed upon. The period agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon.
j. Additional tax may be assessed by the department within any applicable period allowed above, even though a preliminary or final assessment has been previously entered by the department against the same taxpayer for the same or a portion of the same tax period. No taxpayer, however, shall be subject to unnecessary examination or investigation, and only one inspection of a taxpayer’s books and records relating to each type of tax administered by the department shall be made for each taxable year, unless the taxpayer requests otherwise or unless the commissioner after investigation, notifies the taxpayer in writing that an additional inspection is necessary. The commissioner shall adopt regulations consistent with those followed by the Internal Revenue Service with respect to second inspection of a taxpayer’s books and records.
k. The three-year statute of limitations provided by this subdivision for entering a preliminary assessment shall be extended as provided in the following sentence, for the benefit of a self-administered county or municipality, in cases where: (i) the department has audited a taxpayer and has entered a final assessment against the taxpayer for additional sales, use, rental, or lodgings tax; (ii) the taxpayer owes the same type of tax to the self-administered county or municipality for the same tax period or periods; and (iii) the taxpayer or its authorized representative has not contacted the county or municipality or its private auditing firm, pursuant to its voluntary disclosure program, prior to the date of entry of the final assessment. In such cases, the statute of limitations shall not expire until the earlier of six months from the date of entry of the final assessment or 60 days following the date of mailing or transmittal by electronic mail by the department to the self-administered county or municipality or its private auditing firm of a copy of the notice of final assessment and any attachments thereto. Any tax assessed by the self-administered county or municipality within the additional time period allowed by this subdivision shall be limited to those items changed or adjustments included in the final assessment entered by the department. The Alabama Tax Tribunal, during the months of January and July of each year, shall publish a list of pending appeals and the tax or taxes at issue.
(3) SERVICE OF PRELIMINARY ASSESSMENT UPON TAXPAYER. The preliminary assessment entered by the department, or a copy thereof, shall be promptly mailed by the department to the taxpayer’s last known address by either first class U.S. mail or certified mail with return receipt requested, but at the option of the department, the preliminary assessment may be delivered to the taxpayer by personal service.
(4) PROCEDURE FOR REVIEW OF DISPUTED PRELIMINARY ASSESSMENTS; ENTRY AND NOTICE OF FINAL ASSESSMENT.
a. If a taxpayer disagrees with a preliminary assessment as entered by the department, the taxpayer may file a written petition for review with the department within 30 days from the date of mailing or personal service, whichever occurs earlier, of the preliminary assessment setting out the specific objections to the preliminary assessment. If a petition for review is timely filed, or if the department otherwise deems it necessary, the department shall schedule a conference with the taxpayer for the purpose of allowing the taxpayer and the department to present their respective positions, discuss any omissions or errors, and attempt to agree upon any changes or modifications to their respective positions.
b. If a written petition for review: (i) is not timely filed; or (ii) is properly filed, and upon further review the department determines the preliminary assessment is due to be upheld in whole or in part, the department may make the assessment final in the amount of tax due as computed by the department, with applicable interest and penalty computed to the date of entry of the final assessment.
c. If a preliminary assessment is not withdrawn or made final by the department within five years from the date of entry, the taxpayer may appeal the preliminary assessment to the Alabama Tax Tribunal or to the appropriate circuit court as provided by subdivision (b)(5) for an appeal of a final assessment.
d. The final assessment entered by the department, or a copy thereof, shall be mailed by the department to the taxpayer’s last known address by either: (i) first class U.S. mail or certified mail with return receipt requested in the case of assessments of tax of five hundred dollars ($500) or less; or (ii) certified mail with return receipt requested in the case of assessments of tax of more than five hundred dollars ($500). In either case and at the option of the department, the final assessment, or a copy thereof, may be delivered to the taxpayer by personal service.
(5) PROCEDURE FOR APPEAL FROM FINAL ASSESSMENT.
a. A taxpayer may appeal to the Alabama Tax Tribunal from any final assessment entered by the department by filing a notice of appeal with the Alabama Tax Tribunal within 60 days from the date of mailing or personal service, whichever occurred earlier, of the final assessment, and the appeal, if timely filed, shall proceed as provided in Chapter 2B for appeals to the Alabama Tax Tribunal.
b.1. In lieu of the appeal under paragraph a., at the option of the taxpayer, the taxpayer may appeal from any final assessment to the Circuit Court of Montgomery County, Alabama, or to the circuit court of the county in which the taxpayer resides or has a principal place of business in Alabama, as appropriate, by filing notice of appeal within 60 days from the date of mailing or personal service, whichever occurs earlier, of the final assessment with both the secretary of the department and the clerk of the circuit court in which the appeal is filed.
2. If the appeal is to the circuit court, the taxpayer, also within the 60-day period allowed for appeal, shall do one of the following:
(i) Pay the tax, interest, and any penalty shown on the final assessment.
(ii) File a supersedeas bond with the court for 125 percent of the amount of the tax, interest, and any penalty shown on the final assessment. The supersedeas bond shall be executed by a surety company licensed and authorized to do business in Alabama and shall be conditioned to pay the amount of tax, interest, and any penalties shown on the final assessment, plus applicable interest and any court costs relating to the appeal, payable to the department, or the self-administered county or municipality, if applicable.
(iii) File an irrevocable letter of credit with the circuit court in an amount equal to 125 percent of the amount of the tax, interest, and any penalty shown on the final assessment. The irrevocable letter of credit shall be issued by a financial institution designated as a qualified public depository by the Board of Directors of the Security for Alabama Funds Enhancement (SAFE) Program pursuant to Chapter 14A, Title 41. The department or the self-administered county or municipality, if applicable, shall be named the beneficiary of the irrevocable letter of credit. The irrevocable letter of credit shall be conditioned to pay the assessment plus applicable interest and any court costs relating to the appeal. The taxpayer may not issue an irrevocable letter of credit as to a final assessment entered against the same taxpayer.
(iv) File a pledge or collateral assignment of securities with the circuit court that constitute eligible collateral under Chapter 14A, Title 41, in an amount equal to 200 percent of the amount of the tax, interest, and penalty shown on the final assessment. The pledge or collateral assignment shall be in favor of the department or the self-administered county or municipality, if applicable, and conditioned to pay the assessment plus applicable interest and any court costs relating to the appeal.
(v) Show to the satisfaction of the clerk of the circuit court to which the appeal is taken that the taxpayer has a net worth, on the basis of fair market value, of two hundred fifty thousand dollars ($250,000) or less, including his or her homestead.
3. A taxpayer may appeal a final assessment to either the Alabama Tax Tribunal or to circuit court as provided herein, even though the taxpayer has paid the tax in issue prior to taking the appeal.
c.1. The filing of the notice of appeal with the Alabama Tax Tribunal or, in the case of appeals to the circuit court, the filing of the notice of appeal with both the secretary of the department and the clerk of the circuit court in which the appeal is filed and also the payment of the assessment in full and applicable interest or the filing of a supersedeas bond, an irrevocable letter of credit, or a pledge or collateral assignment of securities as provided herein, are jurisdictional. Except as set forth in subparagraph 2., if such prerequisites are not satisfied within the time provided for appeal, the appeal shall be dismissed for lack of jurisdiction.
2. Notwithstanding subparagraph 1., should the circuit court determine that the taxpayer has not satisfied the requirements of subparagraph b.2., the circuit court shall order that the taxpayer satisfy the requirements. The taxpayer may satisfy the requirements at any time within 30 days after service of the court order. No order of dismissal for lack of jurisdiction shall be entered within 30 days after service of the court order, and no order of dismissal shall thereafter be entered if the requirement is satisfied within the 30-day period.
3. On appeal to the circuit court or to the Alabama Tax Tribunal, the final assessment shall be prima facie correct, and the burden of proof shall be on the taxpayer to prove the assessment is incorrect.
d.1. The Alabama Tax Tribunal, circuit court, or the appellate court on appeal may increase or decrease the assessment to reflect the correct amount due.
2. If a final assessment is reduced on appeal, any overpayment of tax paid by the taxpayer shall immediately be refunded to the taxpayer by the state, county, municipality, or other entity to which the overpayment was distributed.
3. No court shall have the power to enjoin the collection of any taxes due on an assessment so appealed or to suspend the payment thereof.
(c) Procedure governing petitions for refund; appeals therefrom.
(1) PETITION FOR REFUND ALLOWED, GENERALLY. Any taxpayer may file a petition for refund with the department for any overpayment of tax or other amount erroneously paid to the department or concerning any refund that the department is required to administer. If a final assessment for the tax has been entered by the department, a petition for refund of all or a portion of the tax may be filed only if the final assessment plus applicable interest has been paid in full prior to or with the filing of the petition for refund. The department may also issue automatic refunds pursuant to Section 40-29-71. In the case of a petition for refund of public utilities taxes pursuant to Chapter 21, sales or use taxes pursuant to Chapter 23, and any transient occupancy tax pursuant to Chapter 26, a petition may be filed by the consumer/purchaser who paid the tax directly to the taxpayer that collected the tax, or by the taxpayer if the taxpayer remitted in excess of the tax due, however never collected the tax from the consumer/purchaser, or by the taxpayer if the consumer/purchaser paid the tax directly to the taxpayer, provided that a refund shall not be paid to the taxpayer until after the tax has been credited or repaid to the consumer/purchaser by the taxpayer. The department may adopt rules and establish procedures regarding petitions for refund, including establishing procedures for claiming such refunds on an annual basis when the amount of a refund is less than twenty-five dollars ($25) and offsetting any state use tax liability against any refund otherwise due prior to paying a refund.
(2) TIME LIMITATION FOR FILING PETITION FOR REFUND; AUTOMATIC REFUND.
a. Generally. A petition for refund shall be filed with the department or an automatic refund issued pursuant to Section 40-29-71, or a credit allowed, within: (i) three years from the date that the return was filed; or (ii) two years from the date of payment of the tax, whichever is later, or, if no return was timely filed, two years from the date of payment of the tax. For purposes of this paragraph, taxes paid through withholding or by estimated payment shall be deemed paid on the original due date of the return.
b. Net Operating Loss Carryback. In lieu of the periods provided in paragraph a., in the case of a net operating loss carryback, the period for filing a petition for refund, the department making an automatic refund or allowing a credit shall be the period prescribed in 26 U.S.C. § 6511(d)(2) for the claiming of a credit or refund.
(3) DEPARTMENT REQUIRED TO GRANT OR DENY REFUNDS; TIME LIMITATIONS. The department shall either grant or deny a petition for refund within six months from the date the petition is filed, unless the period is extended by written agreement of the taxpayer and the department. The taxpayer shall be notified of the department’s decision concerning the petition for refund by first class mail, or by either United States mail with delivery confirmation or by certified mail, return receipt requested, sent to the taxpayer’s last known address. If the department fails to grant a refund within the time provided herein, the petition for refund shall be deemed to be denied.
(4) PROCEDURES IF REFUNDS GRANTED; CREDIT OF REFUND; PAYMENT OF OTHER TAXES; PAYMENT OF INTEREST. If a petition is granted, or the department, the Alabama Tax Tribunal, or a court otherwise determines that a refund is due, the overpayment shall be refunded to the taxpayer by the state, county, municipality, or other entity to which the overpayment was distributed. If the department determines that a refund is due, the amount of overpayment plus accrued interest may first be credited by the department against any outstanding final tax liabilities due and owing by the taxpayer to the department, and the balance of any overpayment shall, subject to the setoff provisions of Article 3 of Chapter 18, be refunded to the taxpayer. If any refund or part thereof is credited to any other tax by the department, the department shall provide a written detailed statement to the taxpayer showing the amount of overpayment, the amount credited for payment to other taxes, and the amount refunded.
(5) PROCEDURES IF REFUND DENIED; APPEAL.
a. A taxpayer may appeal from the denial in whole or in part of a petition for refund by filing a notice of appeal with the Alabama Tax Tribunal within two years from the date the petition is denied, and the appeal, if timely filed, shall proceed as hereinafter provided for appeals to the Alabama Tax Tribunal.
b. In lieu of appealing to the Alabama Tax Tribunal, the taxpayer may appeal from the denial of a petition for refund by filing a notice of appeal with the Circuit Court in Montgomery County, Alabama, or the circuit court of the county in which the taxpayer resides or has a principal place of business in Alabama, as appropriate, by filing the notice of appeal within two years from the date the petition is denied. The circuit court shall hear the appeal according to its own rules and procedures and shall determine the correct amount of refund due, if any.
c. If an appeal is not filed with the Alabama Tax Tribunal or the circuit court within two years of the date the petition is denied, then the appeal shall be dismissed for lack of jurisdiction.
(d) The Department of Revenue shall revise existing rules or administrative guidance, or issue new rules or administrative guidance, as appropriate, in conformance with this section.
(e) This section shall apply to all appeals filed after June 15, 2007. Notwithstanding the prior sentence, in any appeal to a circuit court which is pending on June 15, 2007, and in which a supersedeas bond was filed pursuant to, and in compliance with, the requirements of this section, for double the amount of the tax, interest, and any penalty shown on the final assessment, or for double the amount of the final order of the administrative law judge, the bond may be reduced to 125 percent of such amount shown on the final assessment or in the final order of the administrative law judge.
(Acts 1992, No. 92-186, p. 349, §6; Acts 1995, No. 95-607, p. 1279, §2; Act 2007-504, p. 1086, §§1-3; Act 2014-146, p. 378, §3; Act 2018-180, §1; Act 2025-343, §1.)
Ala. Code § 40-2A-8 Procedures Governing Denial or Revocation of Licenses, Permits, and Certificates of Title; Procedures for Contesting Other Acts or Failures to Act; Appeals.
40-2A-8. Procedures Governing Denial or Revocation of Licenses, Permits, and Certificates of Title; Procedures for Contesting Other Acts or Failures to Act; Appeals.
(a) The department shall notify a taxpayer in writing of any act or proposed act or refusal to act concerning the denial or revocation of a license, permit, or certificate of title concerning which the taxpayer has any interest. The notice must be mailed by either first-class U.S. mail, U.S. mail with delivery confirmation, or certified U.S. mail to the taxpayer’s last known address. Any taxpayer aggrieved by any act or proposed act or refusal to act concerning the denial or revocation of a license, permit, or certificate of title by the department shall be entitled to file a notice of appeal from such act or proposed act or refusal to act with the Alabama Tax Tribunal. Such notice of appeal must be filed within 60 days of the date notice of such act or refusal to act is mailed to the taxpayer, and such appeal, if timely filed, shall proceed as herein provided for appeals to the Alabama Tax Tribunal.
(b) A taxpayer may elect, but is not required, to file a notice of appeal with the Alabama Tax Tribunal regarding a notice of proposed adjustment issued by the department affecting the taxpayer’s net operating loss deductions or carryovers for purposes of the taxes imposed by Chapters 16 and 18 of this title. The notice of appeal shall be filed within the time period prescribed in subsection (a), and the Alabama Tax Tribunal shall have jurisdiction to determine the amount of the taxpayer’s net operating loss deductions or carryovers for the tax periods in question.
(c) The department may proceed with the intended action if no appeal is filed by the taxpayer with the Alabama Tax Tribunal within the time allowed under subsection (a). If a designated agent has failed to provide the department with a bond and any qualifying license as provided in Section 32-8-34, the revocation of designated agent status by the department shall be effective immediately upon electronic notice through the system the designated agent uses to process applications for certificates of title or receipt of written notice of revocation, whether by U.S. mail or hand delivery. Otherwise, the revocation of a designated agent status shall be effective after the time for appeal under this section has expired. If a new or used motor vehicle dealer, motor vehicle wholesaler, motor vehicle reconditioner, or motor vehicle rebuilder licensee has failed to provide the department with or maintain the required bond or insurance, the revocation of the regulatory license shall be effective immediately upon electronic notice through the system the licensee uses to apply for or renew the regulatory license or upon written notice or revocation, whether by U.S. mail or hand delivery. Otherwise, the revocation of the regulatory license shall be effective after the time for appeal under this section has expired. The revocation of any motor vehicle certificate of title or license by the department shall not be final until either the titled owner and lien holder, if any, consent to the revocation or the time for filing an appeal to the Alabama Tax Tribunal has expired. The department may obtain an injunction in the appropriate circuit court at any time enjoining a licensee or designated agent from continuing to operate under a disputed license or designated agent authority, if the continued operation may cause substantial loss of revenue, would cause substantial harm to the state or public, or for such other good reason as determined by the circuit court. The department may suspend the designated agent’s access to process new applications for certificate of title until such time as any outstanding title applications not properly filed by the designated agent are properly filed with the department.
(d) This section shall not apply to the procedures governing assessments and refunds which are otherwise provided for by this chapter, or to intradepartmental personnel actions or any matter which is the subject of any action then pending in state or federal court, or to the collection of any liability due the department.
(e) A taxpayer may appeal any matter governed by this section in accordance with Section 40-2B-2(m) only after exhausting his or her appeal rights provided under this section. Any appeal must be from a final or appealable order issued by the Alabama Tax Tribunal.
(Acts 1992, No. 92-186, p. 349, §7; Act 2014-146, p. 378, §3; Act 2025-343, §1.)
Ala. Code § 40-2A-8.1 Appeals Concerning Ownership and Title to a Motor Vehicle or Manufactured Home.
40-2A-8.1. Appeals Concerning Ownership and Title to a Motor Vehicle or Manufactured Home.
Notwithstanding Section 40-2A-8, any appeal concerning competing ownership claims related solely to who is the proper party to have possession of the motor vehicle or manufactured home and the certificate of title to the motor vehicle or manufactured home shall be filed in circuit court. Court costs incurred by such appeal shall be prepaid by the appealing party. Any claim by an interested party for damages or for other action must be brought as a separate action as provided by law.
(Act 2018-556, §1.)
Ala. Code § 40-2A-10 Confidentiality, Disclosure, and Exchange of Tax Returns and Tax Information.
40-2A-10. Confidentiality, Disclosure, and Exchange of Tax Returns and Tax Information.
(a) Except as otherwise provided in this section, it shall be unlawful for any person to print, publish, or divulge, without the written permission or approval of the taxpayer, the return of any taxpayer or any part of the return, or any information secured in arriving at the amount of tax or value reported, for any purpose other than the proper administration of any matter administered by the department, a county, or a municipality, or upon order of any court, or as otherwise allowed in this section. Statistical information pertaining to taxes may be disclosed at the discretion of the commissioner or his or her delegate to the legislative or executive branch of the state. Upon request, the commissioner or his or her delegate may make written disclosure as to the status of compliance of entities subject to state taxes administered by the department. A compliance certificate shall be issued to a requesting person with respect to a business entity if the entity has filed all state tax returns and paid the taxes shown as payable in accordance with those returns except as provided for in this section. The department shall charge a fee of ten dollars ($10) for each certificate of compliance issued. In addition to any and all funds heretofore or heretoafter appropriated, for the fiscal year beginning October 1, 2015, there is appropriated to the department the fees collected for the certificates of compliance. This fee shall be used by the department for administrative purposes. Any person found guilty of violating this section, for each act of disclosure, shall have committed a Class A misdemeanor. Additionally, to the extent provided in 26 U.S.C. § 7213A, it shall be unlawful for any state employee willfully to inspect, except as authorized in 26 U.S.C. § 6103, any federal tax return or federal tax return information acquired by the employee or another person under a provision of 26 U.S.C. § 6103 referred to in 26 U.S.C. § 7213(a)(2).
(b) This section shall not apply to returns filed and information secured under laws of the state (1) governing the registration and titling of motor vehicles, (2) levying or imposing excise taxes or inspection fees upon the sale of, use, and other disposition of gasoline and other petroleum products, (3) governing the licensing of motor vehicle dealers, reconditioners, rebuilders, wholesalers, and automotive dismantlers and parts recyclers, (4) governing the privilege licenses as provided in Chapter 12, other than Article 4, of this title, or (5) governing the issuance or affixing of tobacco stamps and governing the online web site listing of permitted and registered tobacco distributors required under Chapter 25.
(c) This section shall not apply to the disclosure of the amount of local privilege license or franchise fees paid to counties and municipalities by any taxpayer possessing a franchise (whether or not exclusive) granted by the respective county or municipality. However, any information other than the amount of license or franchise fees paid, including returns or parts thereof or documents filed with or secured by any municipality or county or their authorized agent and relating to local privilege licenses and franchises shall remain confidential information subject to subsection (a).
(d) Except as otherwise provided in subdivision (3) of subsection (k) of Section 40-2B-2, the orders of the Alabama Tax Tribunal judge and all evidence, pleadings, and any other information offered or submitted in any appeal before the Alabama Tax Tribunal are not subject to this section.
(e) The commissioner shall adopt reasonable rules permitting and governing the exchange of tax returns, information, records, and other documents secured by the department, with tax officers of other agencies of the state, municipal, and county government agencies in the state, federal government agencies, any association of state government tax agencies, any state government tax agencies of other states, and any foreign government tax agencies. However, (1) any tax returns, information, records, or other documents remain subject to the confidentiality provisions set forth in subsection (a); (2) the department may charge a reasonable fee for providing information or documents for the benefit of self-administered counties and municipalities; (3) self-administered counties and municipalities may charge a reasonable fee for providing information or documents for the benefit of the department; and (4) any exchange shall be for one or more of the following purposes:
a. Collecting taxes due.
b. Ascertaining the amount of taxes due from any person.
c. Determining whether a person is liable for, or whether there is probable cause for believing a person might be liable for, the payment of any tax to a federal, state, county, municipal, or foreign government agency.
(f)(1) Nothing herein shall prohibit the use of tax returns or tax information by the department or county tax collecting officials in the proper administration of any matter administered by the department or county tax collecting officials. The department, a municipality, or county tax official may also divulge to a purchaser, prospective purchaser, as defined pursuant to the rules of the department, or successor of a business or stock of goods the outstanding sales, use, or rental tax liability of the seller for which the purchaser, prospective purchaser, as defined pursuant to the rules of the department, or successor may be liable pursuant to Section 40-23-25, 40-23-82, or 40-12-224. This section shall not preclude the inspection of returns by federal or foreign state agents pursuant to Section 40-18-53.
(2) Upon a request by the State Treasurer, the commissioner may provide the State Treasurer with the names and addresses of those persons entitled to property acquired by the state under Article 2, commencing with Section 35-12-20, of Chapter 12 of Title 35, the Uniform Disposition of Unclaimed Property Act. The information shall be used by the State Treasurer solely for the purpose of administering the Uniform Disposition of Unclaimed Property Act.
(3) Upon a request by the Secretary of Information Technology, the commissioner may provide to the Secretary of Information Technology an annual report outlining the measures employed by the department to maintain the security of taxpayer information protected from disclosure under this section or under federal law, to include federal tax information as defined from time to time in Internal Revenue Service Publication 1075 and which is subject to the confidentiality protections of the Internal Revenue Code, or personal information subject to the confidentiality provisions of the federal Driver’s Privacy Protection Act under Public Law 103-322. Except as provided in this subdivision, the development, implementation, and maintenance of the information technology systems of the department shall not be subject to oversight by any other state agency.
(g) Nothing herein shall prohibit the exchange of information between and among county or municipal governments, provided that any exchange shall be subject to the same restrictions and criminal penalties imposed on the department and its personnel as described in this section.
(h) In no event shall any damages, attorney fees, or court costs be assessed against the state, a county, or a municipal government under this section, nor shall any damages, attorney fees, or court costs be assessed against elected officials, officers, or employees of a state, county, or municipal government.
(Acts 1992, No. 92-186, p. 349, §9; Acts 1995, No. 95-607, p. 1279, §2; Act 98-191, p. 297, §4; Act 98-502, p. 1083, §1; Act 2000-705, p. 1442, §3; Act 2000-738, p. 1617, §1; Act 2002-496, p. 1276, §1; Act 2006-577, p. 1518, §1; Act 2014-262, p. 827, §1; Act 2015-316, §1; Act 2015-368, §1; Act 2015-382, §1; Act 2019-101, §1.)
Ala. Code § 40-2A-11 Civil Penalties Levied in Addition to Other Penalties Provided by Law.
40-2A-11. Civil Penalties Levied in Addition to Other Penalties Provided by Law.
(a) Failure to timely file return. Except in the case of an individual income tax return filed with no tax due at the time of filing, if a taxpayer fails to file any return required to be filed with the department on or before the date prescribed therefor, determined with regard to any extension of time for filing, there shall be assessed as a penalty the greater of 10 percent of any additional tax required to be paid with the return or fifty dollars ($50).
(b) Failure to timely pay tax.
(1) If a taxpayer fails to pay to the department the amount of tax shown as due on a return required to be filed on or before the date prescribed for payment of the tax, determined with regard to any extension of time for payment, there shall be added as a penalty one percent of the amount of the tax due if the failure to pay is for not more than one month, with an additional one percent for each additional month or fraction thereof during which failure to pay continues, not exceeding 25 percent in the aggregate. In lieu of the penalty provided in the immediately preceding sentence, for any tax for which a monthly or quarterly return is required, or for which no return is required, the department shall add a failure to timely pay penalty of 10 percent of the unpaid amount shown as tax due on the return or the amount stated in the notice and demand.
(2) If a taxpayer fails to pay to the department any amount of any tax required to be shown on any return, which is not so shown, within 30 calendar days from the date of the first notice and demand therefore, there shall be added as a penalty one percent of the amount of the tax due if the failure to pay is for not more than one month, with an additional one percent for each additional month or fraction thereof during which failure to pay continues, not exceeding 25 percent in the aggregate. In lieu of the penalty provided in the immediately preceding sentence, for any tax for which a monthly or quarterly return is required, or for which no return is required, the department shall add a failure to timely pay penalty of 10 percent of the unpaid amount stated in the notice and demand unless payment is received within 30 calendar days from the date of the first notice and demand.
(c) Underpayment due to negligence. If any part of any underpayment of tax is due to negligence or disregard of rules or regulations, there shall be added to the tax an amount equal to five percent of that part of the tax attributable to negligence or disregard of rules or regulations.
For purposes of this subsection, the term “negligence” includes any failure to make a reasonable attempt to comply with Title 40, and the term “disregard” includes any careless, reckless, or intentional disregard.
(d) Underpayment due to fraud. If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 50 percent of that portion of the underpayment which is attributable to fraud.
For purposes of this section, the term “fraud” shall have the same meaning as ascribed to the term under 26 U.S.C. Section 6663, as in effect from time to time.
(e) Frivolous return penalty. If a taxpayer files a “frivolous return,” as that term is used in 26 U.S.C. Section 6702, that taxpayer may be liable for a penalty of up to two hundred fifty dollars ($250).
(f) Frivolous appeal penalty. If any appeal to the Alabama Tax Tribunal or circuit court is determined to be frivolous or primarily for the purpose of delay or to impede collection of any tax, a penalty of two hundred fifty dollars ($250) or 25 percent of the tax in question, whichever is greater, shall be assessed in addition to any tax due.
(g) Penalties not exclusive. The penalties provided in this section for failure to timely file a return, failure to timely pay tax, filing a frivolous return, filing a frivolous appeal, or negligence may be asserted against the same taxpayer for the same tax period. If the fraud penalty is asserted, no other penalties shall be asserted.
(h) Waiver of penalties. Notwithstanding the foregoing, any penalty under this title or Section 10-2B-15.02 shall be waived upon a determination of reasonable cause. Reasonable cause shall include, but not be limited to, those instances in which the taxpayer has acted in good faith. The burden of proving reasonable cause shall be on the taxpayer.
(i) Discount sustained for just causes. All other provisions of tax laws notwithstanding, the Commissioner of the Department of Revenue, upon review of the circumstances involved, may authorize continuance of a statute-allowable discount when timely payment is made, but filing is delayed for just causes.
(j) Penalty and interest assessed as tax. All penalties and interest administered by the department shall be assessed and collected in the same manner as taxes.
(k) Penalty not to apply to registration and titling of motor vehicles. The penalties provided herein shall not apply to the registration or titling of motor vehicles.
(Acts 1992, No. 92-186, p. 349, §10; Acts 1995, No. 95-607, p. 1279, §2; Act 98–637, p. 1406, §1; Act 2009-144, p. 268, §11; Act 2012-378, p. 994, §1; Act 2015-316, §1; Act 2015-368, §1.)
Ala. Code § 40-2A-11.1 Civil Penalties for Unethical Tax Preparation Conduct.
40-2A-11.1. Civil Penalties for Unethical Tax Preparation Conduct.
(a) For purposes of the individual income tax imposed by Chapter 18, if there is an understatement of liability on a return that would cause a tax return preparer to be subject to the penalties imposed by 26 U.S.C. §6694, except §6694(c), §6700, or §6701, and if any of the failures enumerated in 26 U.S.C. §6695, except §6695(e) and (g), occurs, the department may impose upon the tax return preparer a penalty in accordance with 26 U.S.C. §§6694(a), (b), (d), (e), and (f); §§6695(a), (b), (c), (d), and (f); §§6696(a) and (c), §6700, and §6701, as in effect from time to time.
(b) For purposes of this section:
(1) “Subject to this title” shall be substituted for references in the specified federal statutes to “imposed by subtitle A.”
(2) “Commissioner” will be substituted for references in the specified federal statutes to “secretary.”
(3) References in these federal statutes to federal district courts for appeal purposes shall apply in the same manner to Alabama circuit courts.
(4) “Tax return preparer” and “revenue laws” will be substituted for references in the specified federal statutes to “income tax return preparer” and “internal revenue laws,” respectively, as in effect from time to time.
(c)(1) A civil action in the name of the State of Alabama may be commenced at the request of the commissioner to enjoin any person who is a tax return preparer, or an employer having knowledge of an employee tax return preparer, who is doing business in this state and engaging in conduct described in this subsection, from further engaging in preparing tax returns. This action may be brought by the department in the circuit court for the judicial circuit of the tax return preparer’s residence or principal place of business, or in which the taxpayer with respect to whose tax return the action is brought resides. The court may exercise its jurisdiction over the action separate and apart from any other action brought by the State of Alabama against the tax return preparer or any taxpayer.
(2) In an action under this subsection, the court may issue an injunction prohibiting a person from acting as a tax return preparer if the court finds that the individual has done any of the following:
a. Engaged in any pattern of conduct subject to a civil penalty under subsection (a) or a violation of Section 40-29-115.
b. Misrepresented the preparer’s eligibility to practice before the department, or otherwise misrepresented the preparer’s experience or education as a tax return preparer.
c. Guaranteed the payment of any tax refund or the allowance of any tax credit.
d. Aided or assisted in, counseled, or advised the preparation or presentation under, or in connection with any matter arising under, the state revenue laws, of any returns, affidavits, claims, or other documents, which may constitute a significant congruous pattern of any of the following:
1. Omissions of income.
2. Excessive or nonexistent deductions.
3. Claims of nonexistent dependents.
4. Fictitious business schedules.
5. Excessive losses.
6. Documents that are fraudulent or false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present the return, affidavit, claim, or document.
(d) For purposes of this section, the term “understatement of liability” means an understatement of the net amount payable with respect to the individual income tax imposed by Chapter 18, or an overstatement of the net amount creditable or refundable with respect to the individual income tax imposed by Chapter 18. The determination of whether there is an understatement of liability must be made without regard to any administrative or judicial action involving the taxpayer. For purposes of this section, the amount determined as an underpayment of estimated income tax under either Sections 40-18-80 or 40-18-80.1 is not considered an understatement of liability.
(e) For purposes of this section, the term “tax refund preparer,” “return preparer,” or “tax return preparer” means an individual who prepares for compensation, or who employs one or more individuals who prepare for compensation, a tax return or a claim for refund of tax. The preparation of a substantial part of a return or claim for refund is treated as if it were the preparation of the entire return or claim for refund. An individual is not considered a tax return preparer merely because the individual does any of the following:
(1) Furnishes typing, reproducing, or other mechanical assistance.
(2) Prepares a return or claim for refund of the employer, or an officer or employee of the employer, by whom the individual is regularly and continuously employed.
(3) Prepares a return or claim for refund of any person as a fiduciary for that person.
(4) Prepares a claim for refund for a taxpayer in response to an assessment issued to the taxpayer.
(f)(1) A civil action in the name of the State of Alabama to enjoin any person from further engaging in conduct subject to penalty under 26 U.S.C. §6700, relating to penalty for promoting abusive tax shelters, or 26 U.S.C. §6701, relating to penalties for aiding and abetting understatement of tax liability, may be commenced at the request of the commissioner. Any action under this section shall be brought in the circuit court of Alabama for the judicial circuit in which that person resides, has his or her principal place of business, or has engaged in conduct subject to penalty under §6700 or §6701. The court may exercise its jurisdiction over such action separate and apart from any other action brought by the State of Alabama against that person.
(2) In any action under subdivision (1), the court may enjoin a person from engaging in conduct or in any other activity subject to penalty under 26 U.S.C. §6700 or 26 U.S.C. §6701 if the court finds both of the following:
a. The person has engaged in any conduct subject to penalty under 26 U.S.C. §6700 or 26 U.S.C. §6701.
b. Injunctive relief is appropriate to prevent recurrence of such conduct.
(3) If any citizen or resident of the United States does not reside in, and does not have his or her principal place of business in, any Alabama judicial circuit, that citizen or resident shall be treated for purposes of this section as residing in Montgomery County.
(g) This section shall apply solely to the individual income tax imposed by Chapter 18.
(Act 2006-589, p. 1593, §1.)
Ala. Code § 40-2A-12 Terms of Contracts; Termination; Renewal.
40-2A-12. Terms of Contracts; Termination; Renewal.
No contract between a self-administered municipality or county and a private auditing or collecting firm entered into for the purpose of examining or collecting municipal or county taxes shall have a term in excess of three years, including any renewal or extension options, and any contract between a self-administered municipality or county and a private auditing or collecting firm shall terminate automatically, whether or not it is stated in the contract, if the private auditing or collecting firm loses or forgoes its license under Sections 40-2A-13 or 40-2A-14. The limitation on the term of a contract between a self-administered county or municipality and a private auditing or collecting firm does not prohibit the negotiation of a new contract between the parties following expiration of a properly executed contract. Contracts executed on or after October 1, 2016, shall be subject to termination upon either party giving 90 days’ written notice to the other party.
(Act 98-191, p. 297, §5; Act 2016-406, §1.)
Ala. Code § 40-2A-13 Examination of Taxpayer’s Records; Additional Assessments; Disclosure Requirements; Taxpayer Notification.
40-2A-13. Examination of Taxpayer’s Records; Additional Assessments; Disclosure Requirements; Taxpayer Notification.
(a) The Department of Revenue, a governing body of a self-administered county or municipality, or an agent of such a municipality or county may not conduct an examination of a taxpayer’s books and records for compliance with applicable sales, use, rental, or lodgings tax laws except in accordance with this section and with the Alabama Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act.
(b) Additional sales, use, rental, or lodgings tax may be assessed by the Department of Revenue, a governing body of a self-administered county or municipality, or an agent of such a municipality or county within any applicable period allowed pursuant to Section 40-2A-7(b), even though a preliminary or final assessment has previously been entered by the Department of Revenue, a governing body of a self-administered county or municipality, or an agent of such a municipality or county against the same taxpayer for the same or a portion of the same tax period. No taxpayer, however, shall be subject to unnecessary examination or investigation, and no more than one examination of a taxpayer’s books and records by each respective taxing entity relating to each type of tax shall be made every three taxable years, unless the taxpayer requests otherwise or unless the commissioner, or the corresponding governing body of a self-administered county or municipality, after investigation, notifies the taxpayer in writing that an additional examination is necessary, together with the basis or bases for the additional examination.
(c) The Department of Revenue and each governing body of a self-administered county or municipality shall promulgate regulations or procedures consistent with those followed by the Internal Revenue Service with respect to second examinations of a taxpayer’s books and records. Provided, however, an examination of a taxpayer’s books and records may be conducted and shall not constitute an unnecessary examination pursuant to this section or the Alabama Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act if the examination is necessary to meet one or more of the following criteria: (i) fulfill an obligation to another state pursuant to a Southeastern Association of Tax Administrators (“SEATA”) exchange of information agreement or to the Multistate Tax Commission; (ii) follow up on leads furnished by the Multistate Tax Commission or pursuant to a SEATA exchange agreement; (iii) verify a direct or joint refund claim and to determine if there is any offsetting tax liability to be credited against or that may exceed the refund claim; (iv) secure a tax return and the tax, penalty, interest, and service charge, if any, due thereon for any reporting period for which the taxpayer has failed to file a return by the due date of the return; (v) collect any tax, penalty, interest, or service charge which the taxpayer has failed to remit within 30 days after receiving notification that the amount is due; (vi) secure a corrected return and the additional tax, penalty, interest, or service charge due thereon, if any, when the taxpayer has failed to file a corrected return and remit any additional amount due thereon within 30 days of receiving a request for a corrected return; (vii) collect any tax due based upon substantial evidence of fraud or tax evasion discovered since the prior examination, and then only if the Department of Revenue or the governing body of the self-administered municipality or county explains to the taxpayer in writing the basis for the alleged fraud or tax evasion; or (viii) follow up on representations by the taxpayer that it is going out of business or the taxpayer has gone out of business.
(d) Any person examining a taxpayer’s books and records on behalf of a self-administered municipality or county shall disclose in writing, upon first contact with the taxpayer, the identity of the self-administered municipalities and counties represented, and provide signed and dated written authorization, or a copy of signed and dated written authorization, from each self-administered municipality and county represented. Also, a copy of the contract between the entity and the self-administered municipality or county, and a statement as to whether the municipality or county has elected out of the tax tribunal shall be provided upon first contact with the taxpayer.
(e) On or before January 15 of each year, beginning in 1999, each private auditing or collecting firm shall disclose in writing to the department, and to the self-administered municipalities and counties it represents as of the date of disclosure, the identity of all municipalities and counties for which it at any time during the preceding calendar year performed examinations of taxpayers’ books and records for compliance with applicable sales, use, rental, or lodgings tax laws or collected sales, use, rental, or lodgings taxes.
(f) A private auditing or collecting firm representing more than one self-administered municipality or more than one self-administered county on the date of the first contact with a taxpayer shall examine the taxpayer’s books and records for all such self-administered municipalities and counties simultaneously. A private auditing or collecting firm or its examiners or other agents may not disclose or encourage others to disclose, either directly or indirectly, to any non-client municipality or county or its agents, the fact that the firm is presently conducting an examination of the taxpayer’s books and records.
(g) If a private auditing or collecting firm is engaged by a self-administered municipality or county not represented by the firm on the date of the first contact with the taxpayer, and is not in violation of subsection (f), the private auditing or collecting firm may conduct an examination of the taxpayer’s books and records on behalf of the newly-represented self-administered municipality or county, but the examination may not commence until at least three years following the date of completion of the previous examination, as certified in writing by the private auditing or collecting firm to the taxpayer, unless one of the grounds for early examination described in subsection (c) exists, or unless the delay would result in the closing of a tax year by virtue of the applicable statute of limitations and the taxpayer fails or refuses, within a reasonable time after written request, to agree in writing to an applicable statute of limitations in favor of the newly-represented self-administered municipality or county.
(h) Whenever the private auditing or collecting firm becomes aware that a taxpayer may be owed a refund by, or may owe tax to, one or more self-administered counties or municipalities represented by the firm, the firm shall promptly notify the taxpayer in writing and, simultaneously, the respective self-administered counties and municipalities, of the reason or reasons for, and the estimated amount of, the refund due or tax owed and shall also advise the taxpayer of the general procedure by which to make a claim for refund or pay the tax. If the private auditing or collecting firm refuses or willfully fails to comply with this subsection, and the taxpayer ultimately receives a refund from or pays a tax to a self-administered county or municipality represented by the firm during the course of an examination of more than one hundred dollars ($100) of taxes for which the firm examined the taxpayer’s books and records, the firm shall forfeit its license granted pursuant to Section 40-12-43.1 for a period of six months, and each examiner who participated in the examination of the taxpayer’s books and records, but did not advise the firm in writing of the possible refund due or tax liability owed at, or prior to completion of, the examination, shall forfeit his or her license granted under Section 40-12-43.1 for a period of six months. At the expiration of the suspension period, any examiner or private auditing or collecting firm desiring to reinstate their license must reapply under the provisions of Section 40-12-43.1.
(i) A final assessment or forced collection action based upon an audit conducted by a private auditing or collecting firm shall not be issued and applicable to a taxpayer until signed by a public official or employee designated by the self-administered county or municipality. This document shall not be subject to Section 36-12-40.
(j) A self-administered county or municipality, which has chosen to opt-out of participation in the Alabama Tax Tribunal as per Section 40-2B-2, shall retain the services of an independent hearing or appeals officer who is not affiliated with the private auditing or collecting firm to conduct any hearings held pursuant to Section 40-2B-2.
(Act 98-191, p. 297, §5; Act 2016-406, §1.)
Ala. Code § 40-2A-14 Certification of Examiners; Bonding of Private Auditing or Collecting Firms; Violations; Exemptions; Confidentiality Requirements.
40-2A-14. Certification of Examiners; Bonding of Private Auditing or Collecting Firms; Violations; Exemptions; Confidentiality Requirements.
(a) Except as provided in subsection (c), any examiner employed by a private auditing or collecting firm to examine books and records of taxpayers on behalf of any self-administered county or municipality shall be certified by the Alabama Local Tax Institute of Standards and Training established pursuant to Section 40-2A-15. Any examiner employed by a private auditing or collecting firm to examine books and records of taxpayers on behalf of any self-administered county or municipality as of July 1, 1998, shall have two years from the effective date of the rules and regulations of the certification program to obtain the certification required by this subsection and may continue to conduct examinations during this two-year period.
(b) Except as provided in subsection (c), every private auditing or collecting firm shall maintain fidelity bonds with respect to each of its examiners, in accordance with Section 40-23-30. A private auditing or collecting firm may not employ unbonded auditors, or examiners who have failed to receive or maintain their certification under subsection (a). Any violation of this subsection of which the private auditing or collecting firm knew or should have known shall have the effect of doing all of the following:
(1) Automatically terminate any contract or arrangement between a self-administered county or municipality and the private auditing or collecting firm.
(2) Void any assessment or proposed assessment issued by the self-administered county or municipality or its agent as a result of any examination conducted, in whole or in part, by the examiner, but shall not prohibit a self-administered county or municipality from sending a qualified examiner to reexamine the taxpayer’s books and records even though the required waiting period between examinations has not expired or the applicable statute of limitations has expired with respect to the period at issue.
(3) Cause the private auditing or collecting firm to forfeit its license granted pursuant to Section 40-12-43.1 for a period of six months.
(c) Certified public accountants and public accountants licensed by the State Board of Public Accountancy are exempt from the following requirements:
(1) To be certified by the Alabama Local Tax Institute of Standards and Training pursuant to subsection (a).
(2) To maintain fidelity bonds with respect to each of its examiners pursuant to subsection (b).
(d) At the expiration of any suspension period, any examiner or private auditing or collecting firm desiring to reinstate their license must reapply under the provisions of Section 40-12-43.1. The requirements, restrictions, and penalties imposed by this section and Section 40-2A-13 with respect to examiners shall apply equally to those who are employees, as well as those who are independent contractors, of private auditing or collecting firms.
(e) For the purposes of this chapter, a private auditing or collecting firm is subject to the confidentiality requirements of Section 40-2A-10.
(Act 98-191, p. 297, §5; Act 2016-406, §1.)
Ala. Code § 40-2A-15 Alabama Local Tax Institute of Standards and Training - Creation; Composition; Duties.
40-2A-15. Alabama Local Tax Institute of Standards and Training - Creation; Composition; Duties.
(a) There is hereby created the Alabama Local Tax Institute of Standards and Training. All costs of operating the institute shall be paid from public funds appropriated, contributions received, or fees and license revenues collected for this purpose.
(b) The institute shall operate under the direction and supervision of a board of directors. The board shall organize, administer, control, oversee, and advise the institute so that the institute may carry out the purposes of this section. The board shall promulgate reasonable rules and regulations to effectuate this intent.
(c) The board shall consist of six members as follows:
(1) Three representatives appointed by the Alabama League of Municipalities, who shall either be municipal officers, employees, or attorneys, at least one of whom shall be a municipal revenue officer or finance officer.
(2) Three representatives appointed by the Association of County Commissions of Alabama, who shall either be county officers, employees, or attorneys, at least one of whom shall be a county revenue officer or finance officer.
(d) The board may accept appropriations, grants, gifts, donations, or contributions from: The federal government; the state government; a county, municipal, or local government; a board, bureau, commission, agency, or establishment of any such government; any other organization, firm, or corporation, public or private; and an individual or groups of individuals in furtherance of the services, purposes, duties, responsibilities, or functions vested in the board and institute.
(e) The board shall, as its first order of business, develop a proposed examiner certification program for the examiners of private auditing or collecting firms. The program shall require minimum qualifications for certification, which shall include a bachelor’s degree in accounting from an accredited university or college and satisfactory completion of the certification program adopted by the board. Beginning October 1, 2016, the program shall include a course on customer relations and professional courtesy. The program shall also impose continuing education rules which shall be substantially similar to the continuing professional education requirements imposed by the State Board of Public Accountancy with respect to public accountants. Once the board has developed a proposed program, copies thereof shall be distributed for comment to all counties and municipalities, the Business Council of Alabama, the Alabama Retail Association, the Alabama Chapter of the National Federation of Independent Business, and the department. Copies may be sold to other interested parties at cost. Written comments may be submitted to the board within 45 days of initial distribution of the proposed program. Following expiration of the comment period, the board shall adopt a final examiner certification program to be administered by the institute. Notwithstanding any provision of this subsection to the contrary, any certified public accountant or public accountant who is licensed by the State Board of Public Accountancy shall be exempt from any certification requirement or any separate continuing professional education requirement. When any certified public accounting or public accounting firm is employed for the first time by a self-administered county or municipality for local tax examinations, the firm shall notify the board in writing of such employment.
(f) The institute may, however, contract out the examiner certification program to any one of the following:
(1) The Alabama League of Municipalities or the Association of County Commissions of Alabama, or any successor or assignee to, or designee of, either of those organizations.
(2) Any two-year or four-year college or university in the state.
(3) Any organization which the board believes can and will conduct the program in a manner which is consistent with this section.
Any examiner certification program contracted out pursuant to this subsection shall be conducted pursuant to the rules and regulations promulgated by the board pursuant to subsection (b). The institute or the organization with which it contracts shall be authorized to charge a registration fee to all participants in the certification and continuing education programs.
(g) The board shall also develop for the benefit of all municipal, county, or private examiners conducting examinations of taxpayers’ books and records on behalf of self-administered counties and municipalities, a minimum standard examination program, not in conflict with the Alabama Taxpayers’ Bill of Rights and Uniform Revenue Procedures Act, to be followed by municipal, county, or private examiners when examining a taxpayer’s books and records for compliance with applicable sales, use, rental, or lodgings tax laws of self-administered counties and municipalities. Once the board has developed a proposed program, copies thereof shall be distributed for comment to all counties and municipalities, the Business Council of Alabama, the Alabama Retail Association, the Alabama Chapter of the National Federation of Independent Business, and the department. Copies may be sold to other interested parties at cost. Written comments may be submitted to the board within 45 days of initial distribution of the proposed program. Following expiration of the comment period, the board shall adopt a minimum standard examination program.
(h) The institute shall have in place no later than January 1, 2017, a toll free number identified as a hotline for taxpayers to submit complaints related to the auditing or collection activities of a private auditing or collecting firm. A notice advising taxpayers of the hotline, including the toll free number, shall at all times be posted in conspicuous places in appropriate offices of any self-administered county or municipality utilizing the services of a private auditing or collecting firm and on the website of the county or municipality, if available. Additionally, a notice advising taxpayers of the hotline, including the toll free number, shall be posted on the website of the Alabama Department of Revenue. The institute shall be responsible for transcribing any complaints received through the hotline, and shall on a quarterly basis beginning April 1, 2017, prepare a report of each complaint filed against an auditing or collecting firm and forward the report, including transcripts, to the auditing or collecting firm receiving the complaints. The institute shall maintain reports for a period of three years, and the reports shall be made available to a self-administered county or municipality utilizing the services of a private auditing or collecting firm which has had complaints filed through the hotline. The records shall otherwise be confidential and not subject to Section 36-12-40.
(Act 98-191, p. 297, §5; Act 2016-406, §1.)
Ala. Code § 40-2A-16 Reserved.
40-2A-16. Reserved.
RESERVED.
Ala. Code § 40-2A-17 Allocation , Etc., of Gross Income, Deductions, Etc., Between Entities Controlled by the Same Interests; Improper Contingent Fees.
40-2A-17. Allocation , Etc., of Gross Income, Deductions, Etc., Between Entities Controlled by the Same Interests; Improper Contingent Fees.
For purposes of the tax imposed in Chapter 18 of this title, the following rules shall apply:
(a) In any case of two or more organizations, trades, or businesses (whether or not affiliated within the meaning of 26 U.S.C. § 1504) owned or controlled directly or indirectly by the same interests, the Commissioner of the Alabama Department of Revenue may distribute, apportion, or allocate gross income, deductions, credits, or allowances, if the commissioner determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of Alabama income taxes or to clearly reflect the income of any such organization, trade, or business.
(b) Any transaction based upon tax planning advice, tax return preparation advice, or tax return preparation services with respect to which an improper contingent fee is directly or indirectly paid by the taxpayer shall be evidence of the evasion of Alabama income taxes.
(c) Any paid tax return preparer or tax planner who provides to a taxpayer tax planning advice, tax return preparation advice, or tax return preparation services in consideration for an improper contingent fee shall be subject to a penalty as if such paid tax return preparer or tax planner was subject to the penalties imposed by 26 U.S.C. § 6701.
(d) “Improper contingent fee” shall mean compensation received by a person or entity that is subject to the Code of Professional Conduct of the American Institute of Certified Public Accountants (or the applicable state version of such code) for tax planning advice or tax return advice or preparation that would be improper under the terms of the code rendered after December 31, 2001. With respect to any person or entity that renders tax planning advice, tax return advice, or tax return preparations, but is not a certified public accountant, an improper contingent fee shall be defined in regulations prescribed by the Alabama Department of Revenue on a basis consistent with the Code of Professional Conduct of the American Institute of Certified Public Accountants.
(e) Subsections (b), (c), and (d) shall not apply to any contingent fee contract executed prior to January 1, 2002.
(f) The Commissioner of the Alabama Department of Revenue shall exercise such authority in a manner consistent with Act 2001-1088 and, to the extent applicable, 26 U.S.C. § 482 and the rulings and regulations issued thereunder. The commissioner is authorized and directed to promulgate such additional regulations as are necessary to enforce the provisions of Act 2001-1088.
(Act 2001-1088, 4th Sp. Sess., p. 1095, §2.)
Ala. Code § 40-2A-18 Interest on Final Assessment.
40-2A-18. Interest on Final Assessment.
Interest on any final assessment accrues from the date of entry of the final assessment on the total amount of its components including tax, interest, and any penalty, as one lump sum amount. The preceding sentence is a restatement of current law as it applies to interest accrual after final assessment. Notwithstanding any provision of Act 2001-1088, this section shall apply to all open tax years as of the effective date of Act 2001-1088 and for all subsequent tax years.
(Act 2001-1088, 4th Sp. Sess., p. 1095, §6.)
Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026