Alabama Releases Guidance on Sales of Vehicles to Nonresidents

Monday, January 11th, 2016

A car lot.

The Alabama Department of Revenue has released guidance explaining recent changes to the law on sales of vehicles to nonresidents.

Effective January 1, 2016, residents of Arizona, California, Florida, Indiana, Massachusetts, Michigan, and South Carolina must pay a 2% sales tax on purchases of vehicles in Alabama. This "drive-out provision" applies when nonresidents from those states purchase automobiles, motorcycles, trucks, truck trailers, or semitrailers that (1) will be titled or registered outside of Alabama and (2) are removed from Alabama within 72 hours of the purchase for first use outside the state. Motor homes and travel trailers are excluded from this rule. The 2% tax applies unless the state where titling occurs allows an Alabama resident to purchase vehicles for first titling and registering in Alabama without paying tax to the other state.

The amount of tax Alabama can collect cannot exceed the amount of sales tax otherwise due in the state where the vehicle will be titled or registered. For example, a South Carolina resident will not be required to pay more than $300, which is the amount of sales tax due on vehicle purchases in South Carolina. For these sales, sellers must complete an Automotive Vehicle Drive-Out Certificate for Nonresidents (Form DOC-1).

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Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at or call 866.578.8193.

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