Refunds just got a whole lot easier in Alabama. In a typical transaction, customer pays business, who in turn remits the sales tax to the government. While technically the state can go after consumers directly for sales tax, it is not practical for the government to do so. As a result, it is generally the business that finds itself subject to a sales and use tax audit. But when it comes to a refund, where customer is the one who paid the tax while business is the one who remitted it, who applies?
Previously, Alabama consumers were required to file a joint petition with the business that collected and remitted the tax. However, Act 2018-180 (S.B. 63), Laws 2018, which became effective on March 8, has changed that, providing that customers can now directly apply for the refund by themselves. Not only can a consumer directly apply, but a business can apply by itself as well in certain circumstances.
Such applications are not limited to sales tax. Consumers can also apply for use tax, public utility tax, and transient occupancy taxes by themselves. This opens the door for customers who were previously unable to convince businesses to go through the time and effort of applying for a refund that would not benefit the business in the end. With no or little motivation to get involved, one can easily see why a business would be uninterested in taking up the fight for someone else’s refund.