Oct 31, 2016
From KPMG TaxWatch
The Alabama Attorney General recently addressed where local sales tax is due when the parties to a retail sales transaction make an agreement to allow title to transfer at the place of the sale and not at the time of delivery. Under Alabama law, a sale is closed or completed when and where title is transferred by the seller or by the seller's agent to the purchaser or to the purchaser's agent. Accordingly, for sales tax purposes, sales are deemed to be closed in Alabama when title to the goods passes to the purchaser in Alabama. When determining where title passes for Alabama sales tax purposes, Alabama courts have looked to the Uniform Commercial Code (UCC), which Alabama has adopted. Under the UCC, unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods. If the goods are shipped using a common carrier, the common carrier is considered to be the agent of the seller and title passes where the common carrier delivers the goods to the purchaser, regardless of any agreement between the parties.
The Attorney General concluded that this rule, which applies to Alabama state sales and use taxes, likewise applies to local sales and use taxes. Therefore, if parties to a retail sales transaction are not using a common carrier for delivery and execute an explicit and binding agreement to allow title to transfer at the place of the sale, then local tax is due in the jurisdiction where the sale takes place as that is the point where title was transferred. If, however, the parties use a common carrier, then regardless of any explicit agreement otherwise, title passes at the point of delivery, making local tax due in the jurisdiction where delivery is completed. Please contact Scott Jackson at 404-614-8688 with questions on Attorney General Opinion 2017-001.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.