The Alabama Department of Revenue (ADOR) currently provides a “good standing certificate” upon request that indicates whether a taxpayer is current on its business privilege tax.  Lenders and others routinely request these certificates as a part of standard due diligence in business transactions.  ADOR charges a minimal fee and the certificates are often available on the day of the request because of an automated system established by ADOR.

All this may be about to change.  Act 2015-382, enacted this year, requires that ADOR provide a “compliance certificate” instead of a good standing certificate which will verify payment of all taxes owed by the taxpayer to ADOR, including income, sales and withholding, as well as the business privilege tax.  ADOR does not now have automated systems for determining this broad  compliance status.  Additionally, a taxpayer may have multiple accounts with ADOR for different types of taxes.  Therefore, issuing a compliance certificate will be more difficult for ADOR than issuing a good standing certificate.  ADOR currently is anticipating that it will take at least ten (10) days to issue a compliance certificate.  Although not certain at this time, it is possible that the taxpayer will need to sign a power of attorney authorizing a third party such as a lender to order the compliance certificate.  If a power of attorney is required, it may be more efficient to require the taxpayer to obtain the compliance certificate directly.  ADOR is continuing to work out the procedures for the compliance certificate.

The real challenge here is how quickly this change is taking place – the new law goes into effect October 1, 2015.  That means that the last day to order a good standing certificate under the current system is Wednesday, September 30, 2015!  So get your orders in now.