How to Get and Use a Resale Certificate in Alabama

In Alabama, what most people call a resale certificate is actually a Sales Tax License, and you get one by registering your retail business through the Alabama Department of Revenue’s My Alabama Taxes portal. If your business only buys goods at wholesale and never sells at retail, you need a different document instead: a Certificate of Exemption on Form STE-1. Either one lets you buy inventory tax-free so sales tax is collected once, from the final customer.

Which Document You Actually Need

Alabama uses two documents, and confusing them is the most common mistake new business owners make.

A Sales Tax License applies to any business making retail sales of tangible goods in Alabama. You need it before you can legally sell taxable items, and it doubles as your proof to suppliers that you can buy inventory tax-free.¹

A Certificate of Exemption (Form STE-1) is for wholesalers, manufacturers, and other businesses that buy materials tax-free but don’t make retail sales. You cannot hold both. If you have a Sales Tax License, the Department will not issue you a Certificate of Exemption, and if you start making retail sales while holding a Certificate of Exemption, you have to return it and get a Sales Tax License.²

How to Get a Sales Tax License

If you’re making retail sales, this is your document. Apply online through the My Alabama Taxes (MAT) portal at myalabamataxes.alabama.gov.³

Read the Department of Revenue’s entity registration instructions first so you have your business details ready.
Create an account or log in at MAT and follow the prompts to register a sales tax account.
Submit the application and save the confirmation number that appears on screen.
Wait for your Sales Tax License to arrive by mail.

Once your license is issued, you can print extra copies anytime by logging into MAT, opening your sales tax account, and clicking “Print tax account license.”⁴

How to Get a Certificate of Exemption

Wholesalers, manufacturers, and certain exempt entities file a paper application. Which form you use depends on the type of exemption.⁵

Form ST: EX-A1 is for wholesalers, manufacturers, and other product-based exemptions.
Form ST: EX-A1-SE is for entities with a statutory exemption from sales, use, and lodgings taxes, such as certain nonprofits.

Both forms are downloadable from the Department of Revenue’s website.⁶

What the Form Asks For

The ST: EX-A1 asks for your Federal Employer Identification Number, the legal name of your business, physical and mailing addresses, and a description of the goods you buy for resale. Every applicable line must be completed; the Department will not issue a certificate on an incomplete application.⁷

Where to Send It

Form ST: EX-A1 goes by mail to the Taxpayer Service Center serving the county where your business is located. The form’s instructions list eight regional offices (Auburn/Opelika, Dothan, Gadsden, Huntsville, Pelham, Mobile, Montgomery, and Tuscaloosa), plus a Montgomery address for out-of-state applicants.⁷

Form ST: EX-A1-SE can be emailed to stexemptionunit@revenue.alabama.gov or mailed to the Sales and Use Tax Division, Exemption Unit, P.O. Box 327710, Montgomery, AL 36132-7710. For the SE form, the Department issues the certificate or a denial letter within 30 days of receiving a properly completed application.⁸

Renewing Your Certificate of Exemption

Certificates of Exemption are valid for one year from the issue date and must be renewed annually. If yours expires before you renew, you can’t make tax-exempt purchases until the renewal is processed.⁹

If your most recent application is less than three years old and nothing about your business has changed, email stexemptionunit@revenue.alabama.gov to request the renewal.
If your application on file is older than three years, or if your information has changed, submit a fresh ST: EX-A1 or ST: EX-A1-SE.

Renew before the end of the month your current certificate expires. The Department may also require you to file an information report before it processes the renewal.¹⁰

Sales Tax Licenses follow the state’s licensing period rather than the one-year certificate cycle.

Using the Certificate Correctly

Give a copy of your Sales Tax License or Certificate of Exemption to each vendor you buy tax-exempt inventory from. A seller who accepts a valid certificate in good faith is generally relieved of liability for collecting tax on that transaction. Both the buyer and the seller should keep copies on file.

The certificate covers goods you plan to resell, not items your business will consume. Office furniture, cleaning supplies, computers for staff, and similar purchases are taxable business supplies, not inventory. If you buy something tax-free and then use it yourself, you owe the tax on that purchase.

Alabama requires businesses to retain records related to sales, use, or rental tax transactions for at least six years from the date the related return was filed.¹¹

Out-of-State Resellers and Drop Shipping

Alabama does not issue Sales Tax Licenses to businesses with no physical location in the state. If you’re an out-of-state reseller buying goods to be drop-shipped to an Alabama customer, give the vendor your home-state resale certificate instead.¹²

Alabama treats a drop-shipping arrangement as two separate transactions: one between the vendor and the reseller, and another between the reseller and the Alabama customer. The vendor should accept the reseller’s home-state certificate for the first transaction. If the sale to the Alabama customer is taxable, the reseller is responsible for collecting and remitting Alabama sales tax on that second sale.¹²

Penalties for Misuse

Using a Certificate of Exemption to buy items you don’t intend to resell is costly. Beyond owing the unpaid sales tax, you face a civil penalty of at least $2,000 or twice the total state and local tax due on the transactions, whichever is greater. The Department of Revenue can also bar you from using any certificate of exemption for up to two years.¹³

Certificate holders also sign a statement on Form STE-1 declaring the validity of their exemption claim under penalties of false swearing, so intentional misrepresentation can lead to criminal charges as well.¹³

1
Alabama Legislature. Alabama Code 40-23-6 – License Required to Engage in Business; One-Time Surety Bond
2
Cornell Law Institute. Ala. Admin. Code r. 810-6-5-.02 – State Sales and Use Tax Certificate of Exemption Issued for Wholesalers, Manufacturers and Other Product Based Exemptions
3
Alabama Department of Revenue. How Do I Obtain or Register for a Sales Tax License
4
Alabama Department of Revenue. Where Do I Get a Copy of My Resale Certificate
5
Alabama Department of Revenue. How to Apply for a Sales Tax Certificate of Exemption
6
Alabama Department of Revenue. Application for Certificate of Exemption
7
Alabama Department of Revenue. Application for Sales Tax Certificate of Exemption ST: EX-A1
8
Cornell Law Institute. Ala. Admin. Code r. 810-6-5-.02.01 – State Sales and Use Tax Certificate of Exemption for Entities Having a Statutory Exemption
9
Alabama Legislature. Alabama Code 40-9-60 – Certificates of Exemption for Persons or Companies Exempt from Sales, Use, and Lodging Taxes
10
Alabama Department of Revenue. How Can I Renew My Certificate of Exemption
11
Alabama Department of Revenue. Ala. Admin. Code r. 810-27-1-7-.01 – Multistate Taxpayers: Recordkeeping for Sales, Use Tax
12
Alabama Department of Revenue. What Guidance Is There for Vendors Drop-Shipping into Alabama and Remote Sellers
13
Alabama Department of Revenue. Ala. Admin. Code r. 810-6-5-.02.01 – State Sales and Use Tax Certificate of Exemption for Entities Having a Statutory Exemption