SALES AND USE TAX IN ALABAMA: Creditor Remedies

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June 30, 2015

The Code of Alabama entitles the state and local taxing authorities to use the following creditor remedies against the taxpayer to collect its debt:

  1. Garnishing bank accounts;
  2. Garnishing wages;
  3. Garnishing accounts receivable/money owed from customers or other parties;
  4. (4) Seizing real property, equipment, inventory, cash registers, or any
  5. other property than can be sold at a sheriff’s auction;
  6. (5) Business license revocation (including liquor licenses);
  7. (6) Attaching liens to all property owned by the taxpayer; and
  8. (7) Seizing any state or federal tax refunds before the checks are mailed.

State law controls the rules for collection of debts. Judgments in Alabama are valid for ten years and may be renewed by the creditor for another ten years. During this twenty‐year period, the revenue departments may engage in any of the above listed remedies to satisfy its debt. There are special rules limiting the amount of wages a creditor can garnish, but generally the revenue department may garnish the entire balance of bank accounts, accounts receivable, tax refunds, any money on deposit for a business license, and may seize and sell property to satisfy its debt. Creditors in Alabama, including the revenue departments, have many remedies available to ensure that their

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