When Is Alabama Business Privilege Tax Due?

The Alabama Business Privilege Tax applies to many businesses operating within the state. This tax is levied on the privilege of being organized under Alabama laws or for conducting business activities within the state. Its purpose is to ensure that various business entities contribute to Alabama’s economy, supporting public services and allowing the state to track business operations.

The tax is not based on income alone but considers the net worth of the business and its capacity to generate revenue in Alabama. Businesses must navigate specific filing requirements and due dates, which differ for initial and annual submissions.

Who Must File

Various types of business entities are subject to the Alabama Business Privilege Tax. This includes corporations, limited liability companies (LLCs), limited partnerships, and disregarded entities. Both domestic entities formed within Alabama and foreign entities qualified or registered to do business in the state are generally required to file. The obligation to file exists regardless of the level of business activity, as long as the entity is in legal existence or qualified to do business in Alabama.

The tax applies to entities that provide their owners with limited liability, reflecting the privilege of operating with such legal protections in the state.

Initial Filing Requirements

Newly formed or newly qualified business entities in Alabama have specific requirements for their first Business Privilege Tax return. This initial filing uses Form BPT-IN. The due date for this one-time filing is typically two and a half months after the date of the entity’s incorporation, organization, or qualification to do business in Alabama.

This initial return requires specific information to be completed, such as the entity’s legal name, Federal Employer Identification Number (FEIN), and the date of incorporation or qualification. It also involves calculating the initial capital or net worth to determine the tax due. While the minimum tax for this initial filing is typically $50, the actual amount can be higher depending on the business’s net worth and federal taxable income.

Annual Filing and Payment Due Dates

After the initial filing, businesses in Alabama must submit an annual Business Privilege Tax return. This is a recurring obligation that ensures ongoing compliance. For most entities, including S-corporations, limited liability entities, and disregarded entities, the annual return (Form PPT) is generally due by March 15. C-corporations, on the other hand, typically file Form CPT, which is due by April 15 for calendar year filers.

These due dates align with the corresponding federal income tax return deadlines for many businesses. If the due date falls on a weekend or state holiday, the deadline shifts to the next business day. The annual return must be filed even if the company had no income during the tax year, and both the return and payment are generally due on the same date. The minimum annual tax is typically $50, though the amount can vary based on the entity’s net worth and federal taxable income apportioned to Alabama.

Extensions for Filing and Payment

Businesses needing additional time to file their Alabama Business Privilege Tax return may be granted an extension. An automatic extension of six months to file is generally provided if a corresponding federal business tax extension has been successfully filed.

It is important to understand that an extension to file the return does not extend the time to pay the tax due. The full amount of tax must still be paid by the original due date to avoid penalties and interest. Payments of $750 or more must generally be made electronically. If the payment is less than $750, it can be remitted by check or money order along with a payment voucher, such as Form BPT-V. There is no extension available for the initial Business Privilege Tax return (Form BPT-IN).

Consequences of Missed Deadlines

Failing to meet Alabama Business Privilege Tax deadlines can result in financial penalties and interest. For late filing, a penalty of 10% of the tax due or $50, whichever is greater, may be assessed. Additionally, interest accrues on unpaid tax at a rate of 1% per month until the tax is paid in full. This interest begins from the original due date of the return.

Late payment can also incur a separate penalty. This penalty is typically 1% of the total amount due for each month or fraction of a month the payment is delinquent, up to a maximum of 25%. These penalties and interest apply regardless of whether an extension to file was granted if the payment was not made by the original due date. Consistent non-compliance can lead to a loss of good standing with the state, potentially jeopardizing the entity’s legal status.