How to File the Alabama Annual Report and Privilege Tax

Alabama Annual Report Overview

The Alabama Annual Report is required for all C corps and S corps. LLCs taxed as S corps are not required to file an Alabama Annual Report. The Annual Report is really just an update of your company’s basic contact information. It is filed at the same time as the privilege tax.

How to Calculate and File Your AL Annual Privilege Tax

The Alabama Privilege Tax is owed by all for profit entities doing business in Alabama. It’s notoriously confusing, but we’ve broken it down for you.

Avoid confusion about the Alabama privilege tax by remembering that it’s a tax on your company’s net worth, but that the rate of the tax is based on your company’s annual income.

Step 1. Calculate Your Alabama Net Worth

So, to calculate your tax liability, you must first determine your company’s taxable net worth in Alabama. The formula for this figure is your company’s total net worth, minus exclusions, times the apportionment factor, minus deductions.

Step 2. Determine Your Tax Rate

Next determine your tax rate. This is based on your company’s federal taxable income apportioned to Alabama. If your company’s income is:

• under $200,000, the rate is $.25 per $1,000.
• $200,000 – $500,000, the rate is $1.00 per $1,000.
• $500,000 – $2.5 million, the rate is $1.5 per $1,000.
• $2.5 million and up, the rate is $1.75 per $1,000.
• The minimum tax due is $50 and the maximum due is $15,000.

So if your company’s taxable net worth in Alabama is $3,000,000 and your federal taxable income apportioned to Alabama is $200,000, your total tax liability would be, $3,000. Make sense?

The minimum due, say if you’re company had $0 in taxable income, is $50.

Once you’ve calculated your tax liability, you’re ready to file it.

Step 4. Download and Complete the Correct Form(s)

The form used to file your Alabama Franchise Tax and Annual Report is determined by how your company is federally taxed. Download and complete the appropriate forms

Corporations and LLCs taxed as corporations:

• Form CPT – Privilege Tax
• Schedule AL-CAR – Annual Report

Pass through entities, such as LLCs not taxed as corporations, S corporations, and disregarded entities:

• Form PPT – For Privilege Tax

Step 5. Submit Documents With Payment

Privilege Tax and Annual Report documents must be returned by mail with payment to:

Alabama Department of Revenue
Business Privilege Tax Section
PO Box 327431
Montgomery, AL 36132-7431

Benefits of Hiring a Service

Business owners often hire out annual report filing because of the out-sized consequences of forgetting to do it themselves. A good commercial registered agent, like Northwest Registered Agent, includes annual report compliance reminders as part of their service. We’ve used lots of online services for this, but in our experience Northwest is the most transparent and helpful.

Deadlines and Filing Fees

Due dates for Privilege tax and Annual Report filing correspond exactly with each business’ Federal income tax filing deadline.

• C corps with fiscal year other than June 30th – The 15th day of the 4th month after the beginning of the taxable year
• C corps with fiscal year of June 30th – The 15th day of the 3rd month after the beginning of the taxable year
• S corps – The 15th day of the 3rd month after the beginning of the taxable year
• LLCs – The 15th day of the 3rd month after the beginning of the taxable year
• Disregarded Entities – Due on the same date as the corresponding federal return

Consequences of Filing Late

Alabama charges a steep late fine of 10% of the total tax liability due and an additional 1% for each month the amount is due.

Required Information for Your Alabama Annual Report

If you are required to submit an annual report, here is the information required:

• 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.
• 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.
• Your corporation’s principal address and mailing address.

Maintaining Compliance and Good Standing

By filing your annual report on time, you will maintain compliance with state regulations and ensure that your business entity remains in good standing with the state of Wyoming.