Alabama Business Privilege Tax Service & Filing Instructions

How to File Your Alabama Business Privilege Tax Return

In order to successfully file your Alabama Business Privilege Tax, you’ll need to do the following:

1. Find your business entity’s due date and determine your filing fees.
2. Download and complete your tax return.
3. File your return and pay your business privilege tax.

Here is a set of instructions for how to accurately complete and file your Alabama Business Privilege Tax Return.

Alabama Business Privilege Tax Return – Fees and Due Dates

The tax rate for the Alabama Business Privilege Tax is based on how much revenue your business brings to the state of Alabama. So, your rate will rise and fall depending on how much money your business earns each year. Alabama tax rates range from $0.25 to $1.75 for each $1000 of your entity’s Alabama net worth.

The chart below breaks down the Alabama tax rates.

How To Determine Your Alabama Business Privilege Tax Rate

Determining your tax rate can be done by starting with your entity’s Alabama net worth. Then, you’ll calculate what percentage of your net worth is from sales, payroll, and property IN Alabama verses how much is from sales, payroll, and property OUTSIDE Alabama. If you solely conduct business in Alabama, this will be 100%.

So, let’s say your total Alabama net worth is $1,000,000 and $250,000 of that one million is generated from sales, payroll, and property IN Alabama. Looking at the above chart, your tax rate would be .00125.

To calculate your total business privilege tax due, you’ll need to multiply your total net worth ($1,000,000) by your assigned tax rate (.00125). So, in this case, your business privilege tax would be $1,250. The minimum tax payment for all entities is $100.

Below, we’ve organized the due dates and filing fees for the Alabama Privilege Business Tax Return into an easy-to-read chart.

Alabama Annual Report

All Alabama C corporations and S corporations must include an Alabama Annual Report (Schedule AL-CAR) WITH the business tax return. Annual Reports that are filed without a tax return will be rejected. LLCs that are taxed as S corporations DO NOT have to include an annual report. The filing fee is $10.

Filing The Alabama Business Privilege Tax Return

Alabama Business Privilege Tax Returns must be filed by mail. To download and print your tax return, you’ll need to visit the  Alabama Department of Revenue website.

• On the state website, click “Forms” on the top menu.
• Once you’re at the “Forms” page, you’ll need to type “Alabama Business Privilege Tax Return” in the Title Search box. Then, select the current year in the “Form Year” box. This will bring the most current (2023) tax return to the top of your search results.
• C Corporations will need to file “Form CPT” and S Corporations/Limited Liability Entities will need to file “Form PPT.”
• If you own a C or S corporation, you’ll be required to attach an Alabama Annual Report (Schedule AL-CAR) to your tax return. Again, this form does not apply to Limited Liability Entities.
• On the forms page, you’ll need to type “Schedule AL-CAR” in the Number Search box. Select the 2023 “Schedule AL-CAR” from the search results.

To complete the Alabama Business Privilege Tax Return, you must include the following information:

• The business’s information: Include the business’s full name, address, and FEIN (Federal Employer Identification Number).
• Return information: This section only applies to corporations (S and C). Check this box only if you need to make changes/updates to your corporation’s president and/or secretary on your annual report.
• The remaining sections of the form will be used to calculate your total Alabama net worth and total business privilege tax due.

Required attachments:

1. An Alabama Annual Report (Schedule AL-CAR) – C and S corporations only.
2. Your business’s federal tax return (copy of pages 1-5).
3. A copy of the Alabama apportionment schedule. All schedules can be found by searching the “Forms” page on the Alabama Department of Revenue website.
   • C Corporations: Form 20C
   • S Corporations: Form 20S
   • Limited Liability Entities: Form 65
4. A statement supporting any exclusions or deductions claimed.

The information listed below must be included when filing the Alabama Annual Report (S and C Corporations only):

• The corporation’s FEIN.
• The current name of your Alabama corporation.
• Name and phone number of the individual filling out the tax return.
• The taxpayer’s email address – this can be the business’s email address.
• The Alabama county you initially formed your corporation in (domestic corporations).
• The state or county you first registered your corporation in (foreign corporations).
• Date you registered to do business in Alabama (foreign entities only).
• Date you incorporated your business.
• The taxpayer’s phone number.
• Your Alabama registered agent’s information: include their full name, address, and FEIN OR social security number. Unfortunately, you are not able to update/change this information on your annual report. If you need to change your Alabama registered agent, you’ll need to file a “Change of Registered Agent Or Registered Office By Entity” form. There is a $25 filing fee.
• The president’s information: include their full name, address, and social security number.
• The secretary’s information: include their full name, address, and social security number.
• Brief summary of what type of business you conduct in Alabama and what type you GENERALLY conduct. Yes, the form really does ask for both.
• Your corporation’s principal address and mailing address.

Paying your Alabama Business Privilege Tax and Annual Report Fees

Your Alabama Business Privilege Tax/Annual Report fee can be paid in four ways:

1. Make an ACH direct debit payment through your My Alabama Taxes (MAT) account. You can create an account by clicking “Register here.”

2. Use “Quick Payments” on the MAT website. This option doesn’t require you to create a MAT account; however, you can only use this option if you first received a billing notice from the state of Alabama regarding your tax/annual report payment.

3. Make a credit card payment using Official Payments Corporation OR Value Systems Payments. You will be assessed a 2.5% convenience fee on payments made through Official Payments Corporation. Value Systems Payments does not charge a convenience fee.

4. Mail a check or money order (along with your completed tax return/annual report) to the Alabama Department of Revenue. This option can only be used if your total amount due is LESS than $750.

Never worry about forgetting to file, potential late fees, or penalties. Hire Northwest Registered Agent to file your Alabama Annual Report for you!

How Our Alabama Annual Report Service Works

For $100 plus the minimum tax payment owed for your entity type, we’ll submit your Business Privilege Tax Voucher for you. If you owe more than the minimum, you’ll need to pay that to state. Note that LLCs, C-Corporations and S-Corporations also need to submit an annual report form.

You can sign up for this service by itself or add it on to an existing service inside your client account. Compliance service is also automatically added when you sign up for our registered agent service or hire us to form your Alabama LLC or Alabama corporation.

Once you’re signed up for our annual compliance service, you’ll pay nothing up front. We’ll send you a reminder 90 days before your filing due date and auto-charge your preferred method five days later.

Alabama Business Privilege Tax Return FAQ

Does Alabama require initial reports?

Yes, the state of Alabama requires new business entities to file an initial Business Privilege Tax Return within 2.5 months after formation. However, companies do not need to file an initial annual report. Businesses will use the same tax rate and calculation process as the one used for the annual Business Privilege Tax Return. The minimum tax due will be $100 for all corporations and limited liability entities.

Because a large majority of businesses file their initial Alabama Business Privilege Tax Return immediately following formation, these returns aren’t included in our Alabama Annual Report service. However, we’ll send you a reminder to file your initial return if Northwest formed your company or acts as your Alabama registered agent.

When do I need to file my Alabama Business Privilege Tax Return?

The filing due date for the Alabama Business Privilege Tax Return varies by entity type.

• C corporations with a fiscal year end of June 30: Two and half months after the start of the taxable year. Typically April 15.
• C corporations with a fiscal year end OTHER than June 30: Three and half months after the start of the taxable year. Typically September 15.
• Limited Liability Entities and S corporations: Two and half months after the start of the taxable year. Typically March 15.

Are nonprofits required to file an annual report in Alabama?

No. However, Alabama nonprofits registered as charities do file an annual renewal statement with the Consumer Protection Division of the Alabama Office of Attorney General.

Are nonprofits required to pay the Alabama Business Privilege Tax?

Alabama nonprofits with IRS 501(c)(3) tax-exempt status are not required to file a Business Privilege Tax.

Are there late fees or penalties for failing to file an Alabama Business Privilege Tax Return?

The Alabama Department of Revenue may charge your business TWO different late fees if you file late and/or don’t pay your taxes on time. If your return is filed late, you will be assessed 10% of the total tax due OR $50, whichever is greater. If you don’t pay your business privilege tax one time, you will be assessed 1% of the total amount due (not to exceed 25%) for each month you are delinquent.

How long does it take to process an Alabama Business Privilege Tax Return?

Your Alabama Business Privilege Tax Return will be processed in 8-12 weeks. Unfortunately, you can’t pay for expedited service.

Can any authorized individual file the Alabama Business Privilege Tax Return?

Yes! Any person who is affiliated with the business can file the Alabama Business Privilege Tax. This could be a director, manager, or someone outside the business (such as an accountant or attorney) that’s hired to file your tax return.

Does the Alabama Business Privilege Tax require original signatures?

Nope. You can include photocopies of original documents.

Where can I get more information about the State of Alabama Business Privilege Tax Return filing?

Alabama Department of Revenue
50 North Ripley Street
Montgomery, AL 36104
T: (334) 242-9600

Hire Us To File Your Alabama Business Privilege Tax Return