A measure recently approved by governor Kay Ivey would provide sales tax relief for some companies.
The tax filing and payment requirements for small firms are simplified under House Bill 77.
It has been called an administrative nightmare before. Quarterly payments were required from small enterprises with annual sales estimates of $1 million or higher.
In the words of NFIB’s State Director Rosemary Elebash, “they’re guessing” at what their sales tax will be in the next year. If they underpay, they incur fines and interest; if they overspend, they must wait for the Department of Revenue to credit the excess amount to their future tax obligations.
Because of House Bill 77, that limit is now much higher, benefiting an estimated 75% to 80% of companies.
State Representative and Chair of the Small Business Commission Danny Garrett explains, “What we did with this most recent bill was increase that threshold from $5,000 to $20,000, which means you have to have $6 million of estimated revenue before you have to make quarterly estimated sales tax payments.”
The National Federation of Independent Business estimates that this will save some firms money in addition to reducing their administrative workload.
More than 3,000 small enterprises won’t have to pay that monthly charge because to the increase in the threshold to $20,000. They may pick their own frequency, whether it’s quarterly, semiannually, or annually,” Elebash explained.
The state’s small business commission is charged with supporting and promoting these vital organizations.
For years, Garrett and his colleagues have sought legislation designed to reduce burdens on Alabama’s small companies. “About 80% of our citizens of Alabama either work for, own, or are connected in some way to a small business,” he explained.
The new fiscal year in Alabama begins on October 1, therefore House Bill 77 will take effect on that day.