Alabama Sales & Use Tax Rulebook

Sales and Use Tax

Rules

MARCH 2024

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-1-6-.01 Electronic Filing and Payment Through Department Provided Filing and

Payment Systems

(1) Under the authority of Chapter 30 of Title 40 of the Code of Alabama 1975,

the department shall provide an electronic filing and payment system for the purpose of

providing taxpayers with the capability to electronically file tax returns, licenses, required

documents, and make payment of taxes and fees.

(2) All taxes, fees, and licenses, and their corresponding returns or documents

are required to be electronically submitted through the filing and payment system unless

otherwise permitted by the department.

(3) The submission of a tax return or other document by the taxpayer or by the

taxpayer’s authorized representative shall qualify as electronic signature of the person with

the responsibility for filing the tax return or document. The taxpayer is responsible for the

accuracy of the tax return information, or other document information, submitted to the

department regardless of whether the return or document is filed by the taxpayer or the

authorized representative.

(4) The due date for filing electronic returns, or other required documents, shall

be the same due date for the corresponding tax returns or documents on paper. The date

and time the taxpayer completes the filing of the tax return, or document, utilizing the filing

and payment system as documented on the confirmation page shall be the date and time

used to determine timely filing of the electronic return or document. (§§40-2A-7(a)(5), 40-

30-1, 40-30-2, 40-30-3, 40-30-4, 40-30-5, 40-30-6, and 40-30-7, Code of Ala. 1975.

Adopted effective December 15, 2019)

810-1-6-.04 Electronic Payment Of Taxes To Be Provided

(1) The electronic filing and payment system will provide the taxpayer with the

capability of electronically filing a return and paying the tax due by electronic funds transfer

using Automated Clearing House (ACH) debit or credit method, except as noted in section

(3). An ACH debit method taxpayer who is not required to pay the tax due by electronic

funds transfer can utilize the system to electronically file a return and choose to make

payment by check rather than authorizing an electronic payment. However, payment by

check option is not available for electronically filed Income Tax Withholding and Non-State

Administered Local Tax returns. A taxpayer with prior approval from the department to pay

by ACH credit method can utilize the system to electronically file a return without

authorizing electronic payment through the system. The e-pay only application shall provide

the taxpayer with the capability of making an ACH debit method payment or additional

payment for returns, outstanding invoices, assessments, and other taxes and fees due the

department. The e-pay only application cannot be utilized to make a payment for tax types

for which a taxpayer has approval from the department to pay by ACH credit method or to

make a payment to a non-state administered locality.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-1-6-.04. (Continued)

(2) The submission of a tax return and/or the initiation of an ACH debit method

payment through the filing and payment system by the taxpayer or by the taxpayer’s

authorized representative shall qualify as electronic signature of the person with the

responsibility for filing the tax return. The taxpayer is responsible for the accuracy of the tax

return information submitted to the department regardless of whether the return is filed by

the taxpayer or by the authorized representative.

(3) International ACH Transactions.

In order to remain in compliance with the National Automated Clearing House

Association (NACHA) Operating rules, as amended from time to time, the department may

prohibit the initiation of an ACH debit method payment by a taxpayer through the filing and

payment system when the transaction is an International ACH Transaction as defined by

NACHA guidelines. A taxpayer who is prohibited from initiating an ACH debit method

payment through the system must make tax payments of $750 or more by ACH credit

method. ACH credit payment method requires pre-registration and department approval.

Tax payments made through ACH credit method must be initiated through the taxpayer’s

financial institution separate from the filing of the return. (§§40-2A-7(a)(5), 40-30-1,

40-30-2, 40-30-3, 40-30-4, 40-30-5, 40-30-6, and 40-30-7, Code of Ala. 1975. Adopted

effective December 15, 2019)

810-1-6-.13. Requirements for Third-Party Bulk Filers.

(1) A “third-party bulk filer is a person who is registered with the department to file

and pay taxes on behalf of multiple taxpayers.

(2) A person may apply, on a form prescribed by the department, for registration

as a third-party bulk filer. The department will approve the application if the properly

completed application indicates that the person will comply with this rule. However,

approval of the application does not grant the third-party bulk filer authority to act as an

agent of the department.

(3) Third-party bulk filers are required to:

(a) Submit returns and payments for those taxes required to be filed

electronically, in a timely manner using the electronic filing systems for taxpayers having a

valid account with the department.

(b) Submit a separate electronic payment for each return, account, or filing

period.

returns and/or pay Alabama taxes on behalf of the client and, upon request, provide a

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-1-6-.13. (Continued)

copy to the department. The power of attorney must also indicate the authorization for the

third-party to receive information about filings or payments directly from the department.

(d) Electronically provide the department, on a monthly basis, an updated client

list containing at least the name, current mailing address, account number, and telephone

number for those clients for whom they are authorized to file. The mailing address listed for

the client must be the client’s actual street or post office box address and not the third-party

bulk filer’s address.

1. Initial client list must show all clients.

2. Subsequent updates should show only additions and deletions.

(4) Third-party bulk filers are prohibited from including any information in

marketing materials, sales materials, or advertisements that could reasonably be

understood to mean that the department endorses or approves any third-party bulk filer.

(5) Third-party bulk filers are prohibited from including any information in

marketing materials, sales materials, or advertisements that could reasonably be

understood to mean that the department endorses or approves any third-party bulk filer.

(Authority: §§40-2A-7(a)(5), 40-2A-7(a)(1), 40-23-31, 40-23-83, 40-23-111, 40-30-2, and

40-30-7, Code of Ala.1975) (Adopted through APA effective October 5, 2004, amended

February 10, 2009, amended December 15, 2019)

810-6-1-.01. Accountants.

Accountants use books, supplies and equipment which are taxable to them at the time of

purchase. Accountants also subscribe to and receive tax reporting services which are not

subject to tax, the property received in such tax reporting services being incidental to the

service received. Note, however, that books and other publications sold by the tax service

companies, which become the permanent property of the accountants, are subject to the

tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982.)

810-6-1-.02. Advertising Agencies

Advertising agencies perform a service in formulating ideas and programs for advertising

purposes. All materials purchased by an advertising agency including, but not limited to,

brochures, drawing supplies, photographic supplies, and office supplies are consumed by

the agency in performing the service and are subject to tax at the time of purchase. The

subsequent transfers of brochures and other materials to the agency’s clients are not

classed as retail sales subject to tax. State of Alabama v. Douglas M. Harrison, d/b/a

Douglas M. Harrison Advertising. (§§40-2A-7(a)(5), 40-23-31, and 40-23-83, Code of Ala.

1975. 386 So. 2d 460 (1980) State of Alabama v. Douglas M. Harrison, d/b/a Douglas M.

Harrison Advertising. Adopted May 26, 1961, amended November 3, 1980, readopted

through APA effective October 1, 1982, amended December 15, 2019)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.03. Air Bag Materials Used By Tire Manufacturers.

Raw rubber and other materials withdrawn from stock by a tire manufacturer for use in

manufacturing air bags or water bags to be used by the manufacturer are to be included in

the gross proceeds of sales of the manufacturer. (§§40-2A-7(a)(5), 40-23-1(a)(6), 40-23-

1(a)(10), 40-23-31, and 40-23-83, Code of Ala. 1975) (Issued January, 1951, readopted

through APA effective October 1, 1982, amended January 13, 2020)

810-6-1-.04. Radio And Television Antennas And Television Satellite Dishes.

(1) Retail Sales. Retail sales of radio and television antennas, television satellite

dishes, and their parts and attachments are subject to sales or use tax

(a) When antennas and satellite dishes, along with their parts and attachments

are sold for a lump sum amount that includes both the antenna or satellite dish and the cost

of erection or installation, the lump sum must be used as the measure of the tax to be paid

to the state. When separate contracts are made for the sale of the tangible personal

property and for the erection or installation, the tax should be measured by the sales price.

The billing to the customer and the books of the seller must clearly show the receipts from

sales and from erection and installation separately.

(b) The sale of antennas or satellite dishes and parts and attachments are

wholesale sales when made by vendors to dealers who do not furnish or install, but hire an

outside supplier to furnish and install for them. The dealer in these instances must collect

and remit tax to the state as described in subparagraph (a).

satellite dishes and parts and attachments to consumers, the sales to consumers are

subject to sales tax that must be collected by the seller and paid to the state.

(d) The dealers and suppliers making the sales described in subparagraphs (a),

(b), and (c) purchase at wholesale, tax free, the antennas or satellite dishes and parts and

attachments resold by them. (§40-23-1(a)(10))

(2) Machine Rate. Sales of radio and television antennas, television satellite

dishes, and parts and attachments, qualify for the machine rate of sales or use tax, when

sold to radio and television stations or broadcasting companies for use in their business of

producing and propagating radio or television signals. (Kline Iron & Steel Corp. v. State of

Alabama Circuit Court of Montgomery County, Civil Action Nos. CV-78-1250-P and CV-78-

1251-P, April 26, 1979) (§§40-2A-7(a)(5), 40-23-1(a)(10), 40-23-2(3), 40-23-31, 40-23-83,

Code of Ala. 1975) (Readopted through APA effective October 1, 1982, amended October

3, 1987, amended January 14, 2022)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.05. Taxability Of Property Sold By Auctioneers.

(1) Retail sales of an auctioneer’s own tangible personal property or the

consigned tangible personal property of others are subject to Sales Tax.

(2) For the purposes of this rule auctioneers are deemed to have tangible

personal property on consignment when they receive payment for the tangible personal

property sold, issue the bill of sale or invoice, and pay the owner for the tangible personal

property sold with the auctioneer’s check or other remittance. Where the owner of the

tangible personal property is licensed under the Sales Tax Law and commissions the

auctioneer to sale the property in the name of the owner, the auctioneer is not liable for

sales tax on the sale of the property.

(3) Sales Tax is due on the gross receipts derived from sales of all tangible

personal property sold by persons regularly engaged in conducting auction sales,

regardless of how the tangible personal property may have been acquired or by whom it

may be owned, except the sale of tangible personal property that normally would not be

subject to tax such as a wholesale sale. (§40-23-1(a)(6)) (§§40-2A-7(a)(5), 40-23-1(a)(6),

40-23-31, and 40-23-83, Code of Ala. 1975) (Adopted March 9, 1961, amended June 2,

1961, amended August 16, 1974, readopted through APA effective October 1, 1982,

amended January 13, 2020)

810-6-1-.06. Taxability of Automotive Vehicle Painting Services And Supplies.

(1) The painting of an automotive vehicle is a service by the painter that is not

taxable.

(2) The paint and other supplies used or consumed by the painter are taxable at

the time of purchase.

Refer to Rule 810-6-1-.116 entitled Parts and Materials Used to Repair or

Recondition Dealers' Automotive Vehicle regarding painting of automotive vehicles of

dealers, that are part of dealers' stock in trade for sale. (§§40-2A-7(a)(5), 40-23-31, and

40-23-83, Code of Ala.1975. Rule: 810-6-1-.116.) (Adopted March 9, 1961, amended

November 1, 1963, readopted through APA effective October 1, 1982, amended January

13, 2020)

810-6-1-.07. Sales Of Automotive Vehicle Parts By Automotive Vehicle Repairman,

Repair Shops and Garages.

(1) Parts used in making repairs to the customer's automotive vehicle or sold to

the customer for use that are passed substantially intact as purchased by the repairman

are sold at retail to the customer. Examples of such parts are pistons, piston rings, fan

belts, gears, batteries, and tires. The full amount of an invoice will be subject to sales or

use tax when it does not separately state the parts from the labor.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.07. (Continued)

(2) Other materials and supplies, such as paints or lubricants are consumed and

purchased at retail by the repairman. These items are furnished incidental to rendering a

service. Materials and supplies, also tools and machinery, used or consumed by

automotive vehicle repair shops and garages in rendering services that are not resold as

merchandise are subject to the sales or use tax when purchased by the repairman from the

supply dealer. If the supply dealer is not required to collect the sales or use tax, the

automotive vehicle repair shop or garage must pay the use tax directly to the Department.

(Doby v. State, 174 So. 233, Merriwether v. State, 42 So. 2d. 465)

(3) Labor, installation and service charges not separately stated on the invoice to

the customer are taxable. If the labor, installation, and service charges are separately

stated from the sale of parts, the labor, installation, and service charges are not taxable.

(4) Books must be kept in a manner that clearly reflects the separation of the

charges for the tangible items sold and the charges for the labor or installation charges.

(5) Refer to the Rule 810-6-1-.116 entitled Parts and Materials Used To Repair

Or Recondition Dealers' Automotive Vehicles regarding parts used by repairmen on

automotive vehicles of dealers, that are part of the dealers' stock in trade for sale. (§§40-

2A-7(a)(5), 40-23-31, 40-23-83, Code of Ala. 1975. Rule: 810-6-1-.116. Doby v. State Tax

Commission 234 Ala. 150 (Ala. 1937). Merriwether v. State, 252 Ala. 590, 42 So. 2d 465,

11 A.L.R.2d 918.) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982, amended January 13, 2020)

810-6-1-.08.01. Automotive Supply Jobbers, Sales by.

Automotive supply jobbers must comply with Title 40 by maintaining the records necessary

to determine the amount of their sales or use taxes liability. Title 40 includes the

requirement that their records show the gross proceeds of wholesale sales and the gross

proceeds of retail sales separately. Automotive supply jobbers must also comply with Rule

810-6-4-.10 entitled Keeping Records Of Sales For Resale.

(2) Automotive supply jobbers must collect sales or use tax on sales to all

customers who do not have a valid Sales Tax License Number or Certificate of Exemption

Number. Invoices made out to “cash” that do not show the purchaser’s name will be

considered to be retail sales invoices.

(3) The automotive supply jobber may sell to the purchaser tax exempt when the

purchaser has a sales tax license and is buying the items for resale. The automotive supply

jobber is not relieved of the responsibility of collecting tax on the items the licensed

purchaser uses. The automotive supply jobber’s responsibility is to know the nature of the

customer’s business and when to collect tax on items purchased for use.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.08.01. (Continued)

(4) Sales of automotive parts to licensed automotive vehicle dealers with repair

shops or service departments are at wholesale and tax-free. Sales of automotive parts to

licensed automotive vehicle dealers without repair shops or service departments are

taxable unless the dealer qualified for the exemption contained in §40-23-1(a)(9) for parts

purchased for use in repairing or reconditioning automobiles that are a part of the dealer’s

stock of goods for sale. See Rule 810-6-1-.116 entitled Parts And Materials Used To Repair

Or Recondition Dealer’s Automotive Vehicles.

(5) Sales of materials to licensed automotive vehicle dealers are taxable unless

the dealer qualifies for the exemption contained in §40-23-1(a)(9) for materials purchased

for use in repairing or reconditioning automotive vehicles that are a part of the dealer’s

stock of goods for sale. See Rule 810-6-1-.116 entitled Parts And Materials Used To Repair

Or Recondition Dealers’ Automotive Vehicles. The term “materials” as used in this section

includes paint, solder, flux, body lead, wax, underseal, and tire blacking that become a part

of the reconditioned automotive vehicle. The term “materials” as used in this section does

not include items that do not become a part of the reconditioned automotive vehicle such

as sandpaper, thinner used for cleaning purposes, masking tape, rags, brushes, tools, and

soap.

(6) The automotive supply jobber must collect sales or use tax on sales of

supplies unless the customer is purchasing the supplies for resale. Supplies include but are

not limited to cleaning compounds, chamois, rags, drill bits, shop files, welding gases and

supplies, metal bars and rods, masking tape, fire extinguisher fluid, hydraulic jack oil,

friction tape, signs, white sidewall cleaner, brooms, mops, window cleaner, rivets, tacks,

cotter pins, repair parts for shop equipment, degreaser, bolts, nuts, washers, screws, oil

measures, wiping cloths, drop light cords, auto body soap, hand soap, vixen files, light

bulbs, rubbing compound, floor oil absorbent compounds, brushes of all kinds, tar remover,

and polishing cloths.

(7) The automotive supply jobber must collect sales or use tax on sales of power

tools, heavy tools, and equipment and replacement parts unless the customer is

purchasing the tools, equipment, or replacement parts for resale. Power tools, heavy tools,

and equipment and replacement parts include but are not limited to floor jacks, air

compressors and parts, washing equipment and parts, painting equipment and parts,

electric sanders, air hose and chucks, drop cords, and welding equipment and parts.

(8) The automotive supply jobber must collect sales or use tax on sales of hand

tools unless the customer is purchasing the tools, equipment, or replacement parts for

resale. Sales of hand tools to licensed resellers who do not stock tools for resale are

taxable.

(9) The automotive supply jobber must collect sales or use tax on sales to

automobile painters or repair shops of items that lose their identity, such as paint, solder,

and solvents.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.08.01. (Continued)

(10) The measure of sales or use tax due on taxable sales of new, used, or rebuilt

automotive parts, except batteries, is the net trade difference, that is the selling price less

credit for the used part taken in trade. The measure of sales or use tax due on taxable

sales of batteries is the total sales price of the battery without deduction or credit for the

value of the used taken in trade (See Rules 810-6-1-.12 entitled Automotive Vehicles and

810-6-1-.180 entitled Truck Trailers And Semitrailers for definitions of automotive vehicle

and trailer).

(11) If automotive supply jobbers perform labor in connection with a sale of repair

parts, invoices covering the transaction must clearly show the amounts charged for each

part and amounts charged for labor. For invoices not showing parts and labor separately,

sales tax is due on the total amount of the invoice.

(12) If automotive supply jobbers provide tire recapping service to a customer,

they must collect sales or use tax from the customer measured by the total amount billed

for the recapping service. Materials used by the automotive supply jobber in performing the

recapping service are not taxable when purchased or withdrawn by the automotive supply

jobber. The machines used directly in the recapping process by the automotive supply

jobber are taxable at the reduced machine rate when purchased or withdrawn by the

automotive supply jobber. Machines and equipment not used directly in the recapping

process and all materials and supplies that do not become a component part of the finished

product are taxable at the general rate when purchased or withdrawn by the automotive

supply jobber. (§§40-2A-7(a)(5), 40-23-1(a)(9), 40-23-2(1), 40-23-9, 40-23-26, 40-23-31,

40-23-67, 40-23-83 Code of Ala. 1975. Rules: 810-6-1-.12, 810-6-1-.116, 810-6-1-.180, and

810-6-4-.10.) (Adopted through APA effective March 10, 1998, amended February 14,

2020)

810-6-1-.09. Reporting and Notice Requirements for Facilitators of the Lease or

Rental of Automotive Vehicles.

(1) Definitions.

(a) AUTOMOTIVE VEHICLE. As defined in §40-23-1, Code of Ala. 1975, which is

required to be registered under Article 2 of Chapter 6 of Title 32, Code of Ala. 1975.

(b) PERSON. As defined in in §40-12-220, Code of Ala. 1975.

of the lease or rental of an automotive vehicle between a third-party owner/lessor and a

lessee for a rental period not exceeding 90 consecutive days.

(2) Reports and Notices Required. Except as provided in paragraph (5), a

facilitator is required to file an annual informational report with the department in

accordance with the provisions of paragraph (3) and to provide annual notices to the third-

party owners/lessors in accordance with paragraph (4).

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.09. (Continued)

(3) Annual Informational Report to the Department.

(a) A facilitator must provide an annual informational report on forms prescribed

by the department reflecting all transactions facilitated between a third-party owner/lessor

and lessee. The annual informational report must be filed electronically by January 31 of

the calendar year succeeding the year for which the annual informational report is provided.

(b) The annual informational report for each third-party owner/lessor must

include:

1. The name of the third-party owner/lessor.

2. The billing address and, if different, the last known mailing address of the

third-party owner/lessor.

3. The registration information for the automotive vehicle of the third-party

owner/lessor.

4. The total monetary amount of transactions that would be otherwise subject to

lease or rental tax levied under §40-12-222, Code of Ala. 1975.

(4) Annual Transaction Summary Notice to Third-party Owner/Lessor.

(a) A facilitator must provide an annual transaction summary notice to each third-

party owner/lessor who engaged in transactions facilitated by the facilitator for the lease or

rental of an automotive vehicle, when the third party owner/lessor has not furnished

evidence that it has acquired a license as required under §40-12-221, Code of Ala. 1975.

The annual transaction summary notice must be provided to the third-party owner/lessor by

January 31 of the calendar year succeeding the year for which the annual transaction

summary notice is provided.

(b) The annual transaction summary to the third-party owner/lessor must include:

1. The third-party owner/lessor’s name.

2. The date of each rental transaction facilitated by the facilitator.

3. The corresponding invoice, transaction, or other number used by the

facilitator to identify the transaction.

4. The name of the lessee associated with each transaction included in the

notice.

5. The total monetary amount of the transaction that would be otherwise subject

to lease or rental tax levied under §40-12-222, Code of Ala. 1975.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.09. (Continued)

6. A statement that a report will be submitted to the department pursuant to

paragraph (3).

owner/lessor’s most recent address of record with the facilitator, with a prominent notice in

the reference line (if forwarded electronically) or on the envelope in which the notice is

mailed indicating that important tax information is included in the electronic communication

or enclosed in the envelope.

(5) Voluntary Tax Remittance In lieu of Reporting and Notices. In lieu of providing

the annual informational report required in paragraph (3) and the annual transaction

summary notice required in paragraph (4), a facilitator may voluntarily register with the

department and remit tax pursuant to Article 4 of Chapter 12 of Title 40, Code of Ala. 1975,

for each facilitated rental transaction.

(6) Penalties. In addition to any other applicable penalties, a failure to timely file

penalty in the amount of fifty dollars ($50) will be assessed for failure to file the annual

informational report for each third-party owner/lessor required in paragraph (2).

(§§ 40-2-11, 40-2A-7(a)(5), 40-2A-11, 40-23-1, Article 2 of Chapter 6 of Title 32, and Article

4 of Chapter 12 of Title 40, Code of Alabama,1975.) (Adopted effective April 12, 2021)

810-6-1-.10. Services Rendered By Upholsterers.

(1) An upholsterer renders a service and sells tangible personal property.

Materials used or consumed by the upholsterer that are not passed to the customer are

considered supplies and are taxable at the time of purchase by the upholsterer. Materials

passed to the customer that either lose their identity or are inconsequential to the product

are also taxable at the time of purchase by the upholsterer. Examples of these materials

include but are not limited to:

(a) Tacks

(b) Glue

(d) Binding Twine

(e) Webbing

(f) Glimp Tape

(g) Welting

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.10. (Continued)

(h) Padding

(i) Stain

(j) Varnish

(2) Materials passed to the customer that are a substantial part of the product

and do not lose their identity are considered taxable retail sales made by the upholsterer.

Custom items fabricated and sold are subject to Sales Tax on the full sales price of the item

without any deduction for labor or service unless the installation fee is separately stated.

Examples of these materials include but are not limited to:

(a) Cloth

(b) Leather

(d) Foam rubber

(e) Springs

(f) Covers for cars, boats, and furniture

(3) Separate agreements to sell the materials and perform the labor and service

require tax to be collected and remitted on the price of the materials only, if the records and

invoices clearly show separation of the amount received from the sale of the materials and

the act of rendering the service. If there is no clear separation of the materials and services,

then tax is due on both the sales and services rendered. (§§ 40-2A-7(a)(5), 40-23-1-

(a)(10), 40-23-31, and 40-23-83, Code of Ala. 1975.) (Adopted November 14, 2021)

810-6-1-.12. Automotive Vehicles.

(1) The term "automotive vehicles" as used in the Sales and Use Tax Laws shall

mean and include, but shall not be limited to automobiles, trucks, buses, tractors (crawler

and pneumatic tired types), motorcycles, motorscooters, automotive industrial trucks, Ross

Carriers, lift trucks, locomotive cranes, airplanes, tugs, motorboats with built-in motors,

boats with outboard type motors attached thereto by attachments intended to be permanent

rather than readily removable and which motors are controlled with remote controls built on

or into the hull of said boat.

(2) In addition to the vehicles listed above, Sections 40-23-1(a)12 and 40-23-

60(12), Code of Alabama 1975, defined "automotive vehicles" to include power shovels,

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.12. (Continued)

drag lines, crawler cranes, ditchers and similar machines which are self- propelled, but

which are not primarily used as instruments of conveyance. Equipment of this class is to

be considered as falling within the automotive vehicle class treated for sales or use tax

purposes the same as automobiles, trucks, buses, or tractors; provided, however, self-

propelled machines which qualify as farm machines (see Rule 810-6-4-.07 Farm Machines,

Machinery, and Equipment) or mining machines (see Rule 810-6-2-.43 Machines Used in

Mining, Quarrying, Manufacturing, Compounding, and Processing) are taxed at the rate of

tax prescribed for equipment in those respective classes. (Sections 40-23-1(a)12, 40-23-

60(12), 40-23-2(4), and 40-23-61(c)) (Adopted March 9, 1961, amended November 14,

1966, readopted through APA effective October 1, 1982, amended December 6, 1990)

810-6-1-.12.01. Courtesy Deliveries Of Automotive Vehicles By Alabama Dealers For

Out-of-State Dealers.

(1) A courtesy delivery for an out-of-state automotive vehicle dealer occurs

when:

(a) The out-of-state dealer sells an automotive vehicle to a customer and

arranges for the vehicle to be shipped to an in-state dealer for delivery to a designated

person in Alabama.

(b) The in-state dealer performs the customary dealer preparation on the

vehicle and receives reimbursement for these services.

the sale of the vehicle.

(2) The out-of-state dealer for whom a courtesy delivery is made by an

Alabama dealer is the seller of the automotive vehicle.

(3) An Alabama dealer who makes a courtesy delivery of an automotive

vehicle in Alabama for an out-of-state dealer is not the seller of the vehicle and is not

liable for Alabama Sales Tax on the transaction. Such courtesy deliveries should not be

included in the measure of sales tax reported by the Alabama dealer.

(4) The out-of-state dealer making a courtesy delivery is not liable to collect

and remit Sellers Use Tax on sales of automotive vehicles required to be registered or

licensed with the local licensing official of any county in Alabama. Instead, the

purchaser of the automotive vehicle must remit the tax levied in §40-23-102, Code of

Ala. 1975, to the local licensing official in accordance with §40-23-104, Code of Ala.

1975. (§§40-2A-7(a)(5), 40-23-31, 40-23-83, 40-23-102, and 40-23-104, Code of Ala.

1975) (Adopted through APA effective July 7, 1989, amended November 5, 1996,

amended January 13, 2020)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.13. Awnings

(1) Generally an awning attached to a building as a permanent fixture is a part of

the building and comes within the provisions of the building materials provision of §40-23-

1(a)(10).

(2) A metal or other permanent type of awning attached to a building with screws

or bolts or otherwise securely attached becomes a part of the building. The materials from

which such awnings are made come within the building materials class. When the materials

are purchased prefabricated, tax is due to the supplier by the person making the

installation, or direct to the state as use tax, if purchased out-of-state from a seller not

registered.

(3) The manufacturing contractor provision of the Sales Tax Law does not apply

when a contractor manufactures an item to specifications for a special job. To come

within §40-23-1(b) the item manufactured must be standard, that is, it can be used on any

job. (See: Rule 810-6-1-.29 Building Materials Manufactured By Contractors)

(4) Lightly attached cloth awnings do not fall into the building materials category

and are to be taxed at the sale from the awning dealer to the property owner (§§40-2A-

7(a)(5), 40-23-1(a)(10), 40-23-31, and 40-23-83, Code of Ala.1975. Readopted through

APA effective October 1, 1982, amended effective December 15, 2019)

810-6-1-.22. The Measure of Sales and Use Tax on the Barter, Exchange, or Trade-In

of Tangible Personal Property.

(1) The money value allowed for tangible personal property received and

exchanged for other tangible personal property constitutes payment or partial payment of

the purchase price and must be included in the measure of the Sales or Use Tax, unless

the agreed upon value or transaction is one of the following:

(a) The agreed value placed on automotive vehicles, truck trailers, semitrailers,

or house trailers taken in trade on sales of other automotive vehicles, truck trailers,

semitrailers, or house trailers. On so called "trade-ups" this allowance cannot exceed the

sales price of the vehicles sold by the dealer. (§§40-23-2(4) and 40-23-61(c), Code of

Ala.1975.)

(b) The exchange of cottonseed for cottonseed meal at or by gins. (§§40-23-

4(a)(6) and 40-23-62(3), Code of Ala.1975.)

vehicle, truck trailer, semitrailer, or house trailer taken in trade as a credit or part payment

on the sale of a new, used, or rebuilt part or tire, for an automotive vehicle, truck trailer,

semitrailer or house trailer; provided, however, this provision does not include batteries.

(§40-23-2(1), Code of Ala.1975.)

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.22. (Continued)

(d) The agreed value placed on any machine, machinery, or equipment used in

planting, cultivating, and harvesting farm products or used in connection with the production

of agricultural produce or products, livestock or poultry on farms taken in trade on the sale

of other farm machines, machinery, or equipment. (§40-23-37, Code of Ala.1975.)

(3) Tangible personal property received as a "trade-in" or received in barter or

exchange for other tangible personal property is subject to sales or use tax, when resold at

full resale price. (§§40-2A-7(a)(5), 40-23-2(1), 40-23-2(4), 40-23-4(a)(6), 40-23-31, 40-23-

37, 40-23-61(c), 40-23-62(3), 40-23-83, Code of Ala. 1975) (Amended June 12, 1978,

amended August 8, 1982, readopted through APA effective October 1, 1982, amended

April 3, 1987, amended July 9, 1998, amended April 12, 2021)

810-6-1-.23. Beer Tax.

State, county, and municipal excise taxes on beer must be included in the measure of

Sales Tax or Use Tax. (§§40-2A-7(a)(5-23-1(a)(6), 40-23-1(a)(8),40-23-31, 40-23-83,

Code of Ala. 1975) (Adopted August 15, 1974, amended October 29, 1976, amended

June 12, 1978, amended August 10, 1982, readopted through APA effective October 1,

1982, amended April 3, 1987, amended May 22, 1993, amended April 12, 2021)

810-6-1-.24. Bingo.

(1) A bingo parlor is defined as a place of amusement; therefore, the gross

receipts derived therefrom are subject to sales tax. State of Alabama v. Roosevelt Crayton,

d/b/a Jody's Sporting Goods, 344 So. 2d 771 (Ala. Civ. App.), cert. denied, 344 So. 2d 775

(Ala. 1977).

(2) Effective June 1, 1990, Section 40-23-4(a)(43), Code of Alabama 1975,

exempts certain bingo games and operations from the sales tax levied in Section 40-23-

2(2). This exemption, however, does not apply to any gross receipts from sales of tangible

personal property such as concessions, novelties, food, or beverages.

(3) The exemption referenced in paragraph (2) above only applies in those

counties which have duly enacted constitutional amendments legalizing bingo games and

operations. Said exemption is further limited to bingo games and operations conducted by

organizations which have qualified for exemption under the provisions of 26 USC Section

501(c)(3), (4), (7), (8), (10), or (19) or which are defined in 26 USC Section 501(d).

(4) To qualify for the exemption contained in Section 40-23-4(a)(43) an

organization must comply with the distribution requirements of applicable local laws

including any threshold limits with respect to charitable donations from bingo receipts.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.24. (Continued)

(5) Organizations claiming to qualify for the exemption referenced in paragraph

(2) above must provide the Revenue Department with documented evidence that they

qualify for exemption with the Internal Revenue Service and that they are in compliance

with the distribution requirements of applicable local laws. (Adopted June 12, 1978,

readopted through APA effective October 1, 1982, amended December 6, 1990)

810-6-1-.27 Building Materials.

(1) Building Materials.

(a) The term "building materials," as used in the Alabama Sales and Use Tax

laws, means all tangible personal property, including any device or appliance used by

builders, contractors, or landowners in making improvements, additions, alterations or

repairs to real property in a way that the tangible personal property becomes identified with

a part of realty.

(b) Includes any tangible personal property used in making repairs, alterations,

or additions to real property such as lumber, timber, nails, screws, bolts, structural steel,

reinforcing steel, cement, lime, sand, gravel, slag, stone, telephone poles, fencing, wire,

electric cable, brick, tile, glass, plumbing supplies, plumbing fixtures, pipe, pipe fittings,

electrical fixtures, built-in cabinets, sheet metal, paint, roofing materials, road building

materials, sprinkler systems, air conditioning systems, built-in fans, heating systems,

flooring, floor furnaces, crane ways, crossties, railroad rails, railroad track accessories,

tanks, builders hardware, doors, door frames, windows, window frames, water meters, gas

meters, well pumps and any and all other tangible personal property that becomes a part of

real property.

(2) Builders, Contractors, and Landowners. “Builders”, “contractors”, and

“landowners” mean and include any person, firm, association, or corporation making

repairs, alterations, or additions to real property.

(3) Taxable Transactions. Sales of building materials to contractors and

builders that do not sell the building materials they use are taxable under Sales and Use

Tax laws. Building materials purchased by builders, contractors, or landowners for use in

adding to, repairing, or altering real property are subject to either Sales or Use Tax at the

time of purchase. The courts have stated:

(a) "It would seem that the business done by building contractors generally has

been considered to, be rendering service rather than selling materials at retail to the owner

of the building or land. As to what amounts to a sale at retail within sales tax acts the

statutes and the courts seem to endeavor to lay the tax on the last sale before the use or

consumption of the goods or articles sold." (State Board of Equalization v. Stanolind Oil and

Gas Company, Wyoming.)

(b) "A contractor who buys building material is not one who buys and sells - a

trader. He is not a dealer, or one who habitually and constantly, as a business, deals in and

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.27. (Continued)

sells any given commodity. He does not sell lime and cement and nails and lumber. Sales

to contractors are sales to consumers." (State v. J. Watts Kearny & Sons, Louisiana.)

and buildings requiring the use of sand, gravel, cement and steel. They were the persons

using these materials, even though after their metamorphosis they became part of a

structure whose title vested in the Sanitary District of Chicago. Under these circumstances

it would be unreasonable to characterize the transfer of the materials incorporated in the

completed structures as a sale." (Herlihy Mid-Continent Company v. Nudelman, Illinois.)

(4) A device or appliance becomes a fixture and a part of the real property to

which it is connected when it is built into or attached to a structure in a way that its removal

would substantially damage or deface the structure.

Where the removal of the device or appliance would not substantially damage or

deface the structure to which it is connected the following factors must be considered:

(a) Actual Connection with or Attachment to Real Property. To become a part of

real property, the device or appliance must have some physical connections such as: bolts,

screws, nails, cement piping, cable; or by contact.

i. Contact can be by reason of great weight or bulk, no additional attachment is

required.

ii. Where the device or appliance is necessary to make complete or useable

something which is real property.

ii. By attachment to another device or appliance which has become a part of the

real property.

(b) Appropriateness to the Use or Purpose of the Real Property to Which

Connected. The use or purpose of the device or appliance must become an element of the

use or purpose of the real property to which it is connected.

(5) Exceptions. This rule is not intended to apply to cook stoves, refrigerators,

washing machines, and portable heaters, acquired for the personal use of householders or

tenants which may be removed without material damage to the buildings in which they are

used. §40-23-1, Code of Ala.1975.

(6) Application of Machine Rate. Tangible personal property designated as

"building materials" are not classified as machines or parts or attachments for machines

unless items can be identified at the time of purchase as a part or an attachment for a

machine used in manufacturing, designed and manufactured for such use, customarily so

used, and necessary to the operation of the completed machine.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.27. (Continued)

(a) Bulk items such as lumber, random or stock length structural steel, brick,

paint, and common nails do not come within the classification.

(b) Prefabricated processing tanks, steam boilers, and steel when purchased

prefabricated to special design for a machine part do come within the machine rate. When

the landowner or contractor purchases the materials to make a boiler or tank, tax must be

paid either directly to the seller or the department. (Lone Star Cement Corporation v. State,

175 So. 399; Layne Central Company v. Curry, 8 So. 2d 829; State v. Wilputte Coke Oven

Corporation, 37 So. 2d 197.) §40-23-1, Code of Ala.1975. (§§40-2A-7(a)(5), 40-23-1, 40-

23-31, 40-23-83, Code of Ala. 1975; State Board of Equalization v. Stanolind Oil and Gas

Company, Wyoming; State v. J. Watts Kearny & Sons, Louisiana; Herlihy Mid-Continent

Company v. Nudelman, Illinois; Lone Star Cement Corporation v. State, 175 So. 399;

Layne Central Company v. Curry, 8 So. 2d 829; State v. Wilputte Coke Oven Corporation,

37 So. 2d 197) (Repealed and replaced effective January 14, 2022)

810-6-1-.28. Building Materials Defined. (REPEALED)

(Readopted through APA effective October 1, 1982; repealed effective January 14, 2022)

810-6-1-.29. Building Materials Manufactured by Contractors.

(1) Section 40-23-1(b) provides that the use of building materials in the

performance of a contract by a person who manufactures them is equivalent to making a

retail sale of such materials and that such use must be reported by such person as subject

to sales tax to be measured by the reasonable and fair market value at the time and place

where used.

(2) Where the contractor-manufacturer also sells the same kind of materials to

others for installation by them, the reasonable and fair market value would be the same as

the sales price. Where no such sales are made by the contractor-manufacturer, the sales

price of the same kind of materials when sold by other manufacturers during the same

period and under the same circumstances would be the reasonable and fair market value.

(3) Where no sales price can be found to be used as the measure of the tax, the

following formula should be used:

(a) Manufactured cost of materials, plus transportation to job site, plus

proportionate part of general overhead, selling cost, and profit equals reasonable and fair

market value of materials.

(4) Section 40-23-1(b) applies to fabricated or manufactured items of tangible

personal property permanently attached to real property when the components are

prefabricated into a standard item at the shop, plant, or mill of the manufacturing contractor.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.29. (Continued)

This subsection does not apply when the materials are cut and fitted on the job site for

attachment as construction progresses or to items prefabricated to job specifications at the

shop, plant, or mill of the manufacturing contractor.

(5) The courts of this State have held that the manufacturing contractor provision

of the Sales Tax Law does not apply when a contractor manufactures an item to

specifications for a special job. To come within Section 40-23-1(b), the item manufactured

must be standard, that is, it can be used on any job.

(6) Where the contractor is the manufacturer or compounder of ready-mix

concrete or asphalt plant mix used in the performance of a contract, whether the ready-mix

concrete or asphalt plant mix is manufactured or compounded at the job site or at a fixed or

permanent plant location, the tax applies only to the cost of the ingredients that become a

component part of the ready-mix concrete or the asphalt plant mix. (Section 40-23-1(b))

(Amended August 16, 1974, readopted through APA effective October 1, 1982, amended

July 7, 1989)

810-6-1-.30 Carpeting and Other Floor Coverings.

(1) The term "floor coverings" as used in this rule shall include carpet, carpet tile,

rugs, mats, carpet padding, linoleum and vinyl roll floor covering, linoleum tile, vinyl tile, and

similar materials. Floor coverings may be installed as the initial finished floor covering in

new construction or as an addition to, or a replacement for, an existing floor covering. Floor

coverings may be installed in a manner so as to become a permanent attachment to realty

or may be laid on finished floors in a manner that it remains tangible personal property.

(2) Persons who contract to furnish and install floor coverings, which are shaped

to fit a particular room or area and which are attached to the supporting floor with cement,

tacks, or by some other method making a permanent attachment to real property, are

contractors and the floor coverings they use in performing the contract are considered to be

building materials. Sales of floor coverings to persons who use them in performing

contracts to make additions or improvements to realty are retail sales subject to sales or

use tax. See Rule 810-6-1-.46 entitled Contractor’s Liability (Sections 40-23-1(a)(10) and

40-23-60(5), Code of Alabama 1975)

(3) Persons who are both selling floor coverings which they do not attach to realty

as well as contracting with customers to furnish and install floor coverings that become a

part of realty shall purchase all floor coverings at wholesale and thereafter collect and remit

sales or use tax to the Department of Revenue on their retail sales of floor coverings which

they do not attach to realty for the customer and compute and pay sales tax to the

Department of Revenue on the floor coverings which they withdraw from inventory for use

in performing "furnish and install" contracts. State and local sales taxes are due on

withdrawals at the time and place of the withdrawal of the materials from inventory and

shall be computed on the cost of the materials to the person making the withdrawal. Sales

tax is due on withdrawals from instate inventory regardless of whether the floor covering

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.30. (Continued)

materials are withdrawn for use in performing contracts inside or outside Alabama. The

sales taxes applicable to withdrawals are those taxes applicable in the jurisdiction where

the withdrawal occurs not where the materials are attached to realty. See Rule 810-6-1-.56

entitled Dual Business and Rule 810-6-1-.196 entitled Withdrawals from Inventory.

(Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975)

(4) Sales of floor coverings to the federal government, the State of Alabama,

counties and municipalities of the State of Alabama, their instrumentalities, or other exempt

entities are not taxable when the floor covering sold to the exempt entity is installed by the

exempt entity or by someone other than the seller who is hired by the exempt entity. See

Rule 810-6-1-.46 entitled Contractor’s Liability regarding the application of sales or use tax

to floor coverings both sold and installed by the seller. (Sections 40-23-4(a)(11),

40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2), 40-23-62(13), and 40-23-62(16), Code of

Alabama 1975)

(5) Sales of floor coverings which are not attached to realty but which are simply

laid on finished floors are retail sales to the building owner or occupant. The seller shall

collect sales or use tax on retail sales to nonexempt entities measured by the total gross

proceeds of the sale without any deduction for services incidental to the sale such as

trimming, joining, binding, or delivering. (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-26,

40-23-60(10), and 40-23-67, Code of Alabama 1975)

(6) Floor covering samples sold to dealers to be used by the dealer for

demonstration or display purposes, and not for resale in the regular course of business, are

retail sales subject to sales or use tax. All samples bound in sample books and all samples

having holes with metal fasteners inserted shall be considered "not purchased for resale"

by the dealer unless the dealer is in the business of reselling floor covering samples.

Dealers who do purchase floor covering samples for resale in the regular course of

business may purchase the samples tax-free and use them for demonstration or display

purposes prior to selling them. (Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama

1975) (Adopted May 26, 1961, amended June 12, 1978, readopted through APA effective

October 1, 1982, amended December 28, 1998, amended March 27, 2001)

810-6-1-.31. Carrying Charges, Finance Charges.

(1) When the seller has an established price for the goods he sells, that price is

the amount to be included in gross proceeds of sales even though the established price

may include an amount to cover a carrying charge.

(2) When the seller has an established cash price, and when selling on an

extended payment basis adds a separate charge for financing, the additional charge is not

included in the gross proceeds of sales.

(3) In no event may finance or carrying charges be deducted from gross

proceeds of sales when not shown as a separate item in the seller's billing to his customer.

(Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.32. Casings Sold to Meat Processors.

The terms "wholesale sale" or "sale at wholesale" shall include a sale to meat packers,

manufacturers, compounders or processors of meat products of all casings used in molding

or forming wieners and vienna sausages even though such casings may be recovered for

reuse. (Section 40-23-1(a)(9)h) (Adopted September 26, 1966, readopted through APA

effective October 1, 1982)

810-6-1-.33. The Taxation Of Casual Sale Transactions.

(1) Casual Sale Transactions Subject to Tax.

(a) The casual sale of automotive vehicles, motorboats, truck trailers, trailers,

semitrailers, travel trailers, and manufactured homes are subject to sales or use taxes

pursuant to the provisions of §40-23-100, et seq., Code of Ala. 1975. See Sales and Use

Tax Rule 810-6-5-.11.05.

(b) The sale of used property by a person engaged in the business of selling is

subject to sales tax.

(2) Casual Sale Transactions Not Subject to Tax.

(a) The casual or isolated sale by a person not engaged in the business of selling

is not required to be reported to the department by the provisions of the Sales Tax Law.

(b) Tangible personal property purchased outside Alabama from a person not

engaged in the business of selling is not subject to use tax when brought into this state for

use, storage, or consumption. (§§40-2A-7(a)(5), 40-23-31, 40-23-83, 40-23-100, et seq.,

Code of Ala.1975 and Administrative Rule 810-6-5-.11.05) (Repealed and new effective

January 14, 2022)

810-6-1-.33.01. Application of Casual Sales Tax and Use Tax to Automotive Vehicles,

Motorboats, Truck Trailers, Trailers, Semitrailers, Travel Trailers, and Manufactured

Homes Purchased from the U.S. Government, the State of Alabama, or Counties or

Incorporated Municipalities of the State of Alabama.

(1) The definition of the term "manufactured home" set forth in Code of Alabama

1975, Section 40-12-255(n) is incorporated by reference herein.

(2) The definitions of terms set forth in Code of Alabama 1975, Section 40-23-

100, are incorporated by reference herein.

(3) The casual sales taxes and the use taxes levied in Sections 40-23-101(a) and

40-23-102(a), respectively, are applicable to automotive vehicles, motorboats, truck trailers,

trailers, semitrailers, and travel trailers purchased directly from the U.S. Government, the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.33.01. (Continued)

State of Alabama, or counties and incorporated municipalities of the State of Alabama.

These taxes must be collected from the purchaser by the county licensing official before the

automotive vehicle, motorboat, or trailer is registered or licensed. (Sections 40-23-101(a),

40-23-102(a), and 40-23-104)

(4) The casual sales taxes and the use taxes levied in Sections 40-23-101(b) and

40-23-102(b), respectively, are applicable to manufactured homes purchased directly from

the U.S. Government, the State of Alabama, or counties and incorporated municipalities of

the State of Alabama. These taxes must be collected from the purchaser by the county

licensing official before the decal, which is provided for in Section 40-7-1, is issued to

evidence payment of ad valorem tax due and before any homestead exemption is granted

for a manufactured home. In those instances where an annual registration fee is due in lieu

of ad valorem tax, the county licensing official must collect any sales or use tax due before

the decal, which is provided for in Section 40-12-255(a), is issued to evidence payment of

the annual registration fee. (Sections 40-23-101(b), 40-23-102(b), and 40-23-104)

(5) Manufactured homes which constitute real property are not subject to the

taxes levied in Sections 40-23-101(b) and 40-23-102(b) when purchased from the U.S.

Government, the State of Alabama, counties or incorporated municipalities of the State of

Alabama, or anyone else. (Sections 40-23-101, 40-23-102 and 40-23-104) (Adopted

through APA effective February 19, 1993, amended October 4, 1994)

810-6-1-.33.02. State Casual Sales and Use Tax Returns.

(1) The term "Department" as used in this regulation shall mean the Department

of Revenue of the State of Alabama.

(2) The definition of the term "licensing official" contained in Code of Alabama

1975, Section 40-23-100(2) is incorporated by reference herein.

(3) The term "state casual sales and use tax" as used in this regulation shall mean

the state taxes levied in Sections 40-23-101 and 40-23-102, Code of Alabama 1975.

(4) State casual sales and use tax collected by licensing officials shall be remitted

to the Department in monthly installments on or before the twentieth day of the month next

succeeding the month in which the tax is collected. Every licensing official liable to collect

and remit the state casual sales and use tax shall prepare and forward to the Department,

within the time prescribed by law, a state casual sales and use tax return for each calendar

month using forms furnished by the Department and shall pay to the Department the

amount of tax shown to be due. Casual Sales and Use Tax returns shall require the

following information:

(a) Licensing official's tax account number, name, and complete address,

(b) Period covered by the return,

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.33.02. (Continued)

trailers, trailers, semitrailers, travel trailers, and manufactured homes,

(d) Administrative fee for timely payment,

(e) Penalties and interest due, if applicable,

(f) Net amount after deducting administrative fee from or adding applicable

penalties and interest to Item (c),

(g) Amount of casual sales and use tax collected on motor boats,

(h) Administrative fee for timely payment,

(i) Penalties and interest due, if applicable,

(j) Net amount after deducting administrative fee from or adding applicable

penalties and interest to Item (g),

(k) Total amount remitted,

(l) An indication if payment of tax is made through electronic funds transfer

(EFT), and

(m) Signature of the licensing official and the date signed.

(Adopted through APA effective April 1, 1996)

810-6-1-.34. Caterers.

(1) The total gross proceeds of sales by caterers of food and drinks are subject to

sales tax without any deduction because of the cost of preparing and serving food and

drinks and without any deduction because of the cost of the ingredients thereof.

(2) There is not, however, any sales tax due with respect to the receipts of a

caterer from preparing and serving food and drinks the ingredients of which are not

furnished by him. (Readopted through APA effective October 1, 1982)

810-6-1-.35. Chemicals Used in Treating Crude Oil.

Subject to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled Ingredient or

Component of Product Manufactured or Compounded for Sale, chemicals used in treating

crude oil which become an integral part thereof and are sold therewith, are purchased at

wholesale, tax free, for such purposes. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(Readopted through APA effective October 1, 1982, amended December 10, 1997)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.36. Commercial Fish Feed.

(1) Sales of commercial fish feed including concentrates, supplements and other

feed ingredients when such substances are used as ingredients in mixing and preparing

feed for fish raised to be sold on a commercial basis are exempt from the sales and use

taxes. (Section 40-23-4(a)(21))

(2) The gross proceeds of the sales of all antibiotics, hormones, and hormone

preparations, drugs, medicines, and other medications including serums and vaccines,

vitamins, minerals, or other nutrients for use in the production and growing of fish by

whomsoever sold are exempt from sales and use taxes. (Sections 40-23-4(a)(29) and 40-

23-62(29)) (Adopted December 15, 1969, amended March 18, 1970, readopted through

APA effective October 1, 1982, amended April 3, 1987, amended July 9, 1998)

810-6-1-.37. Computer Hardware and Software.

(1) Computers and related equipment, also known as computer hardware,

consist of components and accessories that make up the physical computer assembly. The

retail sale of computer hardware is subject to Sales Tax or Use Tax. The rental of computer

hardware is subject to Rental Tax.

(2) The term “computer software” is defined as:

(a) A sequence of automatic data-processing equipment instructions necessary

to solve a problem, and includes both system and application programs and subdivisions,

such as assemblers, compilers, routines, generators and utilities.

(b) Software programs prepared, held, or existing for general or repeated use,

including software programs developed in-house and subsequently held or offered for sale

or lease.

(3) The term “licensure” includes the rental or leasing of computer software.

(4) Computer software is tangible personal property. The retail sale or licensure

of computer software is subject to Sales Tax, Use Tax, or Rental Tax, whether the

transaction is effected by a transfer of title, possession, or a license to use or consume.

Unless specifically stated otherwise, the licensing of computer software is considered a

retail sale, and not a rental, and is subject to Sales Tax or Use Tax regardless of its

function or form of transmission to the purchaser or licensee. Sales Tax, Use Tax, or Rental

Tax is computed on the total amount received from the sale or licensure of computer

software to the customer.

(5) The term “software programming” includes services for the development and

modification of software applications specific to the needs of the customer. It does not

include any software sold or licensed to the customer as part of the development or

modification. The cost of the software programing should be separately stated on the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.37. (Continued)

invoice to the customer apart from the cost of the purchased or licensed software. When

separately stated, the software programming is not subject to tax regardless of the manner

or medium of transfer to the customer since the charge for the software programming is a

separately stated charge for professional services. The manner or medium of transfer is

considered incidental to the sale of the service.

(6) The provider of software programming owes Sales Tax or Use Tax on the

cost of the tangible medium for transferring the software programming to the customer.

Tangible mediums includes any tangible personal property used in transferring software

programming to the customer.

(7) The term “software maintenance agreement/contract” means contracts sold in

connection with the sale or licensure of software and includes any, all, or a combination of

the following: technical consultation (support) services, corrections of errors or malfunctions

(bugs) in the software, provisions for enhancements (software upgrades) to the software,

revisions to operating manuals for the software, and training services. If the maintenance

contract is required as a condition of the sale or licensure of software, the gross sales price

or gross rental price is subject to tax whether the charge for the maintenance contract is

separately stated from the charge for the software. If the maintenance contract is optional

to the purchaser of the software, then the portion of the contract fee representing

enhancements or upgrades and new operating manuals is subject to tax. The fees for

consultation or support services, error corrections, and training services that are separately

stated are not subject to tax, provided that a separate statement is not used as a means of

avoiding imposition of tax upon the actual gross receipts from the furnishing of upgrades or

manuals. If these fees are not separately stated, the entire charge for the maintenance

contract is subject to Sales Tax, Use Tax, or Rental Tax.

(8) Maintenance contracts sold in connection with software programming,

whether required or optional, are not subject to Sales Tax, Use Tax, or Rental Tax. The

provider of the software programming is the consumer of any tangible personal property

used in producing operating manuals and owes Sales Tax or Use Tax on the cost of these

items.

(9) This rule shall be applied prospectively from its effective date.(§§40-2A-

7(a)(5), 40-12-224, 40-23-2(1), 40-23-31, and 40-23-83 Code of Ala. 1975. Wal-Mart

Stores, Inc. v. City of Mobile 696 So. 2d 290 (1996) Ex parte Russell County Community

Hospital, LLC, d/b/a Jack Hughston Memorial Hospital v. Alabama Department of Revenue,

No. 1180204 (Ala. S.Ct. May 17, 2019) (Adopted July 2, 1975, amended June 12, 1978,

readopted through APA effective October 1, 1982, amended January 29, 1990, amended

February 21, 1997, amended August 21, 1997, amended January 13, 2020)

810-6-1-.38. Consigned Property.

Sellers of property held on consignment are required to include the gross proceeds of sales

of such property in sales tax returns filed under the Sales Tax Law. (Section 40-23-1(a)(6))

(Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.45. Contractors Furnishing and Erecting Building Materials Under Contract

With the United States.

(1) Sections 40-23-4(a)(17) and 40-23-62(2) specifically exempt the United

States government from paying sales or use tax on its purchases of tangible personal

property. These exemptions, however, do not apply to purchases by a contractor where the

contractor has a construction contract with the United States government to furnish all

materials and labor for use in the performance of the contract. The contractor is the

consumer of all the materials which the contractor purchases and uses in the performance

of the construction contract and which become a part of real property. The United States

Supreme Court in State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43 (1941), and

in Curry v. U.S., et al., 314 U.S. 1, 62 S.Ct. 48, held that the Alabama sales and use taxes

on building materials used by building contractors for the United States government were

due by such contractors even though the costs of such taxes were passed on to the United

States government. The court held that these taxes were levied on the contractors and not

on the United States. (Sections 40-23-1(a)(10) and 40-23-60(5)) (Sections 40-2A-7(a(5),

40-23-1(a)(10), 40-23-4(a)(17), 40-23-31, 40-23-60(5), 40-23-62(2), 40-23-83, and Act

2013-205, Code of Alabama 1975) (Readopted through APA effective October 1, 1982,

amended March 27, 2001, amended June 10, 2005, amended December 25, 2013)

810-6-1-.46. Contractor's Liability.

(1) Contractors or builders must pay either to the seller or directly to the

department sales or use tax on the following:

(a) All of the materials, equipment, tools, and supplies which they use or

consume in the operation of their business.

(b) All building materials attached by them to real property except property

qualifying for a specific exemption. See Rule 810-6-1-.27.

(2) Prior to January 1, 2014, contractors or builders may not claim any immunity

or exemption from the sales or use tax laws on account of property purchased and used in

connection with contracts with the state, county, or city governments. (Lone Star Cement

Corporation v. State, Curry v. U.S. et al., 314 U.S. 1, 62 S.Ct. 48 and State v. King &

Boozer, 314 U.S. 1, 62 S.Ct. 43 (1941)). (§§40-23-1(a)(10) and 40-23-60(5))

(3) On and after January 1, 2014, the sale to, or the storage, use, or consumption

by, any contractor or subcontractor of any tangible personal property to be incorporated

into realty pursuant to a contract awarded on or after January 1, 2014, with a governmental

entity, as defined in Rule 810-6-3-.77, is exempt from all state, county, and municipal sales

and use taxes provided the contractor or subcontractor has complied with all provisions of

said rule.

(4) The contractor provision provided in §40-23-1(a)(10), Code of Ala. 1975,

applies if all of the following criteria are met:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.46. (Continued)

(a) The taxpayer must be a contractor.

(b) The materials must be building materials.

23-1,40-23-31, 40-23-60,40-23-83, and 40-9-14.1, Code of Ala. 1975. Department of

Revenue v. James A. Head & Co., 306 So.2d 5 (Ala. Civ. App.1974), cert. denied 306

So.2d 12 (1975). Lone Star Cement Corporation v. State, Curry v. U.S. et al., 314 U.S. 1,

62 S.Ct. 48 and State v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43 (1941)) (Readopted

through APA effective October 1, 1982, amended March 27, 2001, amended June 10,

2005, amended December 25, 2013, amended February 10, 2016, amended April 14,

2022)

810-6-1-.46.01. Bleacher Systems, Lockers, Backstops, and Other Fixtures Installed

in Gymnasiums.

(1) Materials or fixtures which are purchased by contractors and are intended to

become permanently affixed or attached to gymnasiums, or other realty, are "building

materials" and are taxable at the time of purchase by the contractor. (See Rules 810-6-1-

.27 and 810-6-1-.28) (Sections 40-23-1(a)(10) and 40-23-60(5))

(a) Prior to January 1, 2014, these purchases are taxable even when the

materials are used by the contractor in furnish and install contracts with tax-exempt

governmental entities and tax-exempt educational institutions. A contractor that sells the

materials to a tax-exempt entity under one contract and affixes the materials to realty under

a second contract with the same tax-exempt entity is liable for sales or use tax; the fact that

the materials are sold and installed under separate contracts does not qualify the

contractor's purchase of materials for the sales or use tax exemptions found in Sections

40-23-4(a)(11), 40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2), 40-23-62(13), and

40-23-62(16). (State of Alabama v. Algernon Blair Industrial Contractors, Inc., 362 So. 2d

248 (Ala. Civ. App. 1978) and Alabama Precast Products, Inc. v. Charles A. Boswell, 357

So. 2d 985 (Ala. 1978)). On and after January 1, 2014, however, purchases by contractors

which do not qualify for the exemptions in Sections 40-23-4(a)(11), 40-23-4(a)(15), 40-23-

4(a)(17), 40-23-62(2), 40-23-62(13), and 40-23-62(16) may qualify for the sales and use tax

exemption outlined in paragraph (1)(b) below. (Rule 810-6-3-.69.02)

(b) On and after January 1, 2014, the sale of materials or fixtures to, or the

storage, use, or consumption of materials or fixtures by, any contractor or subcontractor to

be permanently affixed or attached to gymnasiums or other realty pursuant to a contract

awarded on or after January 1, 2014, with a governmental entity, as defined in Rule 810-6-

3-.77 entitled Exemption of Certain Purchases by Contractors and Subcontractors in

Conjunction with Construction Contracts with Certain Governmental Entities, is exempt

from state, county, and municipal sales and use taxes provided the contractor or

subcontractor has complied with all provisions of said rule.

(2) Criteria used in determining whether materials furnished and installed in

gymnasiums, or other realty, become additions to real property include but are not limited to

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.46.01. (Continued)

the following: the materials are physically attached to the realty with bolts; the materials

when attached are intended to be permanent and are easily identified with a part of the

realty; and the materials are appropriate to the realty to which they are attached--that is the

materials or fixtures perform a function appropriate to the real property and such function is

necessary or convenient to the normal and appropriate uses of the real property. Examples

of these items include but are not limited to the following: wall-attached telescopic bleacher

systems, reverse-fold telescopic bleacher systems, lockers, and basketball backstops.

(3) Materials which (i) are not intended to become permanently affixed or

attached to gymnasiums, or other realty, (ii) are intended to be mobile, and (iii) do, in fact,

retain their identity as tangible personal property; qualify for the sales or use tax

exemptions found in Sections 40-23-4(a)(11), 40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2),

40-23-62(13), and 40-23-62(16) when sold to tax-exempt governmental entities or tax-

exempt educational institutions. These items are subject to sales or use tax when sold to

nonexempt entities. Criteria used in determining whether materials remain tangible

personal property include but are not limited to the following: the materials are not intended

to become permanently affixed to realty; the materials can be easily moved from one

location to another, and can even be stored out of sight or moved from building to building.

An example of an item of this nature includes, but is not limited to, a mobile telescopic

bleacher system. (Sections 40-23-1(a)(10) and 40-23-60(5)) (Sections 40-2A-7(a)(5), 40-

23-31, 40-23-83, 40-23-1(a)(10) 40-23-60(5), and Act 2013-205, Code of Alabama 1975)

(Adopted through APA effective January 27, 1998, amended March 27, 2001, amended

June 10, 2005, amended December 25, 2013)

810-6-1-.47. Coupons, Receipts from Redemption.

A retail dealer's total receipts in cash, goods, or by credit from the redemption of coupons

issued by manufacturers or distributors are to be included in the measure of tax to be paid

where the coupons are accepted by him in exchange for, or as part payment for tangible

personal property. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1,

1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.50. Dentists, Dental Laboratories, and Dental Supply Houses.

(1) Dentists or dental laboratories primarily render professional services and

incidentally use tangible personal property in connection therewith. The courts have ruled

that dentists are not selling dentures and other prosthetic devices when they transfer such

items to their patients, and in-state or out-of-state dental laboratories are not making retail

sales when they transfer the finished dental appliances to dentists. Consequently, gross

receipts of dentists or dental laboratories derived from these sources are not subject to the

sales tax. Rather, dentists and dental laboratories are using or consuming the items

incidental to performing their professional services, and are required to pay state and local

sales or use tax at the time of purchase on all tangible personal property purchased at retail

for use in the practice of their profession. Dentists and dental laboratories purchasing

machinery, equipment, fixtures, supplies and other tangible personal property from out-of-

state dental supply houses and other vendors who fail to collect and remit Alabama tax on

such items sold at retail, would subsequently owe use tax when they use or consume the

personal property in Alabama as part of their professional services. (Haden v. McCarty,

152 So.2d 141 (Ala. 1963), and Hamm v. Proctor, 198 So.2d 782 (Ala. 1967)).

(2) Dental supply houses within or without Alabama engaged in the business of

selling tangible personal property such as platinum, gold, silver or cement for fillings,

artificial teeth or other such materials to dentists or dental laboratories for use in the

performance of such professional services are making sales at retail within the Sales and

Use Tax Laws. This is true whether dental supply houses sell materials to a dentist whose

services are rendered directly to a patient, or to a dental laboratory that uses them in

producing plates, bridge-work, artificial teeth or prosthetic devices on prescription of a

dentist, who then uses the latter items in connection with rendering dental services. Dental

supply houses likewise make retail sales of dental chairs, motors, instruments, drilling

machines, fixtures and other such items of tangible personal property for use by dentists

or dental laboratories. Dental supply houses within Alabama and those located outside

Alabama that have nexus with Alabama and its municipalities and counties are required to

collect and remit the state and local sales or use tax on their retail sales. (Adopted May 18,

1967, readopted through APA effective October 1, 1982, amended January 10, 1985,

amended May 7, 1997, amended September 26, 2006)

810-6-1-.51. Deposit on Bottles.

(1) Where a retailer sells bottled drinks and the sales price includes the deposit

on the bottles and sales tax is charged on the total sales price, the amount of the deposit

which is refunded on the return of the empty bottles is not subject to sales tax and may be

deducted from the gross proceeds of sales where the retailer refunds the deposit on the

bottles and also refunds the sales tax previously collected on the deposit for the bottles.

(2) Where such retailer refunds the deposit on the bottles and at the same time

does not refund the sales tax previously collected on the deposit for the bottles, he may not

deduct from the gross proceeds of sales the amount of the deposit so refunded and the full

sales price of the bottled drinks is to be included in the gross proceeds of sales and the tax

collected must be remitted to the State. (Adopted July 31, 1963, readopted through APA

effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.52. Direct Mail Advertising, Printer's Liability.

(1) Alabama sales or use tax is due as follows on sales of printed matter by

printers who are required, as part of the sales agreement, to mail the printed matter to

addresses located within Alabama that appear on a list furnished to or provided by the

printer:

(a) The printer is located outside Alabama. The mailing list contains addresses

located within Alabama and addresses located outside Alabama. Use tax is due on the

printed matter sent to addresses within Alabama.

(b) The printer is located within Alabama. The mailing list contains addresses

located within Alabama and addresses located outside Alabama. Sales tax is due on the

printed matter sent to addresses within Alabama. Sales tax is not due on the printed matter

addressed to locations outside Alabama since these sales qualify for exemption as sales in

interstate commerce.

(2) The postage paid by the printer to the U. S. Postal Service would not be

included in the measure of tax if billed by the printer to the customer as a separate charge

and paid by the customer. (Sections 40-23-2(4) and 40-23-1(a)(5), Code of Alabama

1975) (Adopted June 12, 1978, readopted through APA effective October 1, 1982,

amended January 10, 1985, amended April 3, 1987, amended January 29, 1990,

December 4, 2014)

810-6-1-.53. Cash Discounts.

Cash discounts when allowed and taken are not to be included in gross proceeds of sales.

(Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.54. Discounts Based on Volume Sales.

Discounts allowed and claimed on the basis of volume sales are deductible from gross

sales for sales tax purposes. Such discounts are allowable either on sales as they are

made or on accumulated sales totals. (Section 40-23-1(a)(6)) (Readopted through APA

effective October 1, 1982)

810-6-1-.55. Doctors, Medical.

(1) Medical doctors are the consumers of supplies, office furniture, office fixtures

and special tools and equipment which they use in the practice of their profession. Sales of

these items to doctors are taxable retail sales. (Section 40-23-1(a)(10))

(2) Drugs as defined in Section 40-23-4.1(a), Code of Alabama 1975, are exempt

when sold to or by medical doctors. (Readopted through APA effective October 1, 1982,

amended January 29, 1990)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.56. Dual Business.

(1) The term “dual business” as used in this rule shall mean a business which

both makes retail sales of tangible personal property to the public on a recurring basis and

withdraws tangible personal property for use from the same stock of goods.

(2) Dual businesses in Alabama shall obtain a sales tax license and purchase all

of the items they sell and withdraw for use at wholesale, tax-exempt. These businesses

shall collect sales tax on their retail sales to nonexempt customers and compute sales tax

on items which they withdraw from stock for use. The taxes collected on their sales to

nonexempt customers and the taxes computed on their withdrawals shall be reported on

their sales tax returns and remitted to the Department of Revenue. State and local sales

taxes are due on withdrawals at the time and place of the withdrawal from inventory and

shall be computed on the cost of the property to the business making the withdrawal. The

sales taxes applicable to withdrawals are those taxes applicable in the jurisdiction where

the withdrawal occurs. (Sections 40-23-1(a)(9), 40-23-1(a)(10), and 40-23-6, Code of

Alabama 1975)

(3) To qualify as a dual business, the business must have a substantial number

of retail sales. Contractors, plumbers, repairmen, and others who make isolated or

accommodation sales and who have not set themselves up as being engaged in selling do

not qualify as a dual business. Where only isolated sales are made, tax should be paid on

all of the taxable property purchased with no sales tax return being required of the seller

making such isolated or "accommodation" sales. (Section 40-23-1(a)(10), Code of Alabama

1975)

(4) A dual business operation shall maintain records sufficient to allow a

determination of the proper sales taxes due on sales and withdrawals. (Sections 40-2A-

7(a)(1) and 40-23-9, Code of Alabama 1975) (Readopted through APA effective October 1,

1982, amended December 28, 1998)

810-6-1-.58. Electrical Supplies and Equipment Sold to Contractors and

Manufacturers.

(1) Electrical supplies including wire, cable, clamps, outlet fixtures, conduits, and

switches, are building materials which come under the building materials provisions of

Sections 40-23-1(a)(10) and 40-23-60(5). Except as outlined in paragraph (2), electrical

supplies are taxable at the general rate of sales or use tax upon the sale to, or use by, the

person affixing them to real property, whether that person is a contractor, builder,

manufacturer, or any other property owner. (Sections 40-23-1(a)(10), 40-23-2(1), 40-23-

60(5), and 40-23-61(a))

(2) Whether sold to a contractor or directly to the manufacturer, electrical

equipment used by manufacturers is taxable at the reduced machine rate of sales or use

tax when it is (i) made or manufactured for use on, (ii) necessary to the operation of, and

(iii) customarily used as a part of or an attachment to a machine used in manufacturing.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.58. (Continued)

(a) The expressions “made or manufactured for use on,” “necessary to the

operation of,” and “customarily used” are understood to mean that the part or attachment

must be purchased substantially in the form in which it will be used by the manufacturer

except for the usual and customary adjustments; that it is a standard part or attachment

customarily used; and, further, that the machine or machinery on which it is used would not

do the work for which designed if it were not so used. This includes all parts and

attachments without which the machine would not do any work. In addition, it includes

parts and attachments designed to increase the efficiency of the machine.

(b) Items of electrical equipment including starters, switches, and circuit breakers

which become a part of or an attachment to a machine used in manufacturing are taxed at

the reduced machine rate of sales or use tax. This equipment must either be attached

directly to the machine or be immediately adjacent to the machine in order to qualify for the

reduced machine rate. (Sections 40-23-2(3) and 40-23-61(b))

(3) Switchboards, control boards and cabinets controlling the general electrical

supply system are not considered to be parts or attachments of machines used in

manufacturing. The general rule is that the switch which is the direct control for the

machine takes the machine rate and all equipment to that point is taxable at the general

rate. (Sections 40-23-2(1) and 40-23-61(a)) (Readopted through APA effective October 1,

1982, amended March 10, 1998)

810-6-1-.59. Welding Rods and Fluxes.

(1) Subject to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled

Ingredient or Component of Product Manufactured or Compounded for Sale, welding rods

and fluxes purchased by manufacturers and compounders that become a component part

of the product manufactured or compounded for sale are purchased at wholesale, tax free.

The fluxes must be of the type that have alloying elements that are picked up in the molten

pool of metal weld deposit, so that the materials in the flux become a part of the welded

structure. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(2) The purchase of welding rods and fluxes for repair work or construction work

is subject to the 4 percent sales and/or use taxes, whichever may apply. (Adopted

September 18, 1964, readopted through APA effective October 1, 1982, amended January

10, 1985, amended December 10, 1997)

810-6-1-.60. Opticians, Optometrists, and Ophthalmologists.

(1) The dispensing or transferring of ophthalmic materials, including lenses,

frames, eyeglasses, contact lenses, and other therapeutic optic devices, by opticians,

optometrists, or ophthalmologists are retail sales subject to sales tax. Such sales are

taxable when sold to the ultimate consumer regardless of whether the optician, optometrist

or ophthalmologist manufactured the materials for sale or purchased them for resale.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.60. (Continued)

(2) When a licensed optometrist or ophthalmologist exercises professional skills

in examining the eyes of a patient and prescribes eyeglasses, contact lenses, or some

other ophthalmic material which the optometrist or ophthalmologist dispenses or transfers

to that patient, the optometrist or ophthalmologist may separately state the charges for the

ophthalmic materials and the charges for the professional services, including dispensing

fees or fitting fees, on the invoice to the patient and collect sales tax only on the separately

stated charges for the ophthalmic materials which were dispensed or transferred to the

patient, provided the optometrist or ophthalmologist also maintains records which clearly

reflect the separate sources of receipts. In the absence of separately stated charges for

materials and professional services on the invoices to patients and the maintenance of

documentation in the records of the business, the tax shall apply to the total amount billed

to the patient. (Section 40-23-1(d))

(3) When the ophthalmic materials are purchased by a consumer covered by a

third party benefit plan, including Medicare, the sales tax shall be applicable to the amount

that the ophthalmologist, optometrist, or optician is reimbursed by the third party benefit

plan plus the amount that the consumer pays to the ophthalmologist, optometrist, or

optician at the time of the sale. (Section 40-23-1(d)) (Adopted November 5, 1959,

amended June 12, 1978, amended April 1, 1981, amended August 10, 1982, readopted

through APA effective October 1, 1982, amended April 3, 1987, amended December 10,

1996, amended December 4, 2014)

810-6-1-.61. Engravers, Sales of Materials are at Wholesale, Tax Free, When Such

Materials Become a Component of the Engraving.

Sales of materials to engravers are at wholesale, tax free, when such materials become a

component of the engraving, etc., produced for sale. The machine used by the engraver

manufacturing the engravings, etc., is taxable at the machine rate. The supplies, materials,

and equipment not becoming a component of the product sold or not constituting machines

used in manufacturing are subject to the sales or use tax, whichever may apply. (Sections

40-21-7(a)(5), 40-23-1(a)(9)b, 40-23-1(a)(10), 40-23-2(3), 40-23-31, and 40-23-83)

(Readopted through APA effective October 1, 1982, amended May 24, 2018)

810-6-1-.63. Federal Admission Taxes.

The federal taxes required to be paid on single admissions, season tickets, and rental of

boxes are not to be included in the measure of Alabama sales tax where such federal taxes

are shown as a separate item properly identified on the tickets or receipts given to the

person paying such admissions or rentals or purchasing such tickets. (Readopted through

APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.64. Federal Excise Taxes, Manufacturers.

(1) A manufacturer's federal excise tax may not be excluded from the measure of

sales or use tax.

(2) Manufacturer's federal excise taxes become another overhead business

expense to the retailer which he can take into consideration, together with other business

expenses, in determining his selling price. (Sections 40-23-1(a)(6) and 40-23-1(a)(8))

(Readopted through APA effective October 1, 1982, amended October 3, 1987, amended

May 22, 1993)

810-6-1-.65. Federal Excise Taxes, Retailers.

(1) A federal excise tax which a retailer must collect from his customer as a tax

and remit directly to the federal government may be excluded from the measure of sales or

use tax only if it is measured by the value of the articles sold at retail and it is billed to the

customer as a separate item. (AGO Evans, July 31, 1992)

(2) If the retailer bills his customer a lump sum price, including the retail federal

excise tax, the sales or use tax applies to the total selling price. (Sections 40-23-1(a)(6)

and 40-23-1(a)(8)) (Readopted through APA effective October 1, 1982, amended October

3, 1987, amended May 22, 1993)

810-6-1-.66. Fencing.

(1) Fencing materials of all kinds including fence posts, fence wire, and fence

accessories are building materials, the sales of which are at retail and subject to tax when

made to the person who will attach the fencing materials to real property. Where the

person who makes the installation is the manufacturer of the materials used, such

manufacturer owes sales tax to be measured by the fair market value of the materials laid

down at the job site. The manufacturer is required by the Sales Tax Law to report his use

of such materials and pay tax thereon as if he had made a retail sale of the materials. Any

fencing materials installed by the manufacturer not manufactured by him are taxed in the

usual manner.

(2) In case a vendor or manufacturer of fencing materials is both selling such

materials to others for installation by them and furnishing and installing the materials under

contract all purchases of fencing materials are at wholesale, tax free. Thereafter both sales

to others and withdrawals for use under installation contracts are to be reported as taxable

sales to the Department of Revenue. (Section 40-23-1(a)(10)) (Adopted May 26, 1961,

readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.67. Florists, Telegraphic Orders.

When florists sell through a telegraphic delivery association the following rules will apply:

(a) Alabama florists are liable for sales tax measured by total receipts resulting

from orders taken by them for transmittal to a second florist who makes delivery either

within or without Alabama. Any expense of making the sale is to be included in the

measure of the tax regardless of whether or not the expense is billed as a separate item.

(b) Sales tax does not apply to amounts received by Alabama florists who make

deliveries in this state pursuant to telegraphed or telephoned instructions received from

florists either within or without Alabama. (Adopted March 9, 1961, amended July 30, 1962,

readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-1-.69. Containers, Components of Containers, Labels, Pallets, and Shipping

Supplies.

(1) The term “label” as used in Sections 40-23-1(a)(9)b, 40-23-1(a)(9)c, 40-23-

60(4)b, and 40-23-60(4)c, Code of Alabama 1975, and in this rule shall mean a tag or

sticker of any material imprinted with information. The term “label” includes price stickers,

address stickers, and shipping tags as well as those tags or stickers which identify or

describe the property to which they are attached.

(2) The term “components of containers” as used in this rule shall include

partitions, cellophane, tissue paper, excelsior, gummed tape, scotch tape, glue, steel

straps, twine, string, wire staples, wax paper, and wrapping paper which are used in and on

containers to shape, form, preserve, stabilize, or protect the contents of the containers and

which accompany the container and the container’s contents upon shipment and delivery to

the customer.

(3) The term “container” as used in this rule shall mean articles in or on which

tangible personal property is placed for shipment and delivery to the purchaser. Containers

include bags, barrels, baskets, bottles, boxes, cans, cartons, cores, crates, cups, cylinders,

drums, kegs, pails, plates, reels, sacks, and spools.

(4) Containers purchased by manufacturers or compounders for use in packaging

products manufactured or compounded by them for sale, including the components of the

containers, are not subject to sales or use tax where the containers are passed on to the

purchaser of the products contained therein with no intention on the part of either the

purchaser or the seller to return the containers or have them returned for reuse. (Sections

40-23-1(a)(9)b and 40-23-60(4)b)

(a) This exclusion for manufacturers and compounders may apply to both inner

and outer containers. Accordingly, when manufacturers or compounders place their

manufactured or compounded products in cans or bottles and place the cans or bottles in

fiber boxes for shipment to the customer; the cans or bottles and the fiber box qualify for

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

the exclusion if both are intended for one-time use. Alabama-Georgia Syrup Co. v. State,

253 Ala. 49, 42 So. 2d 796 (1949).

(b) Containers, when purchased by manufacturers or compounders for use in

purchasing and storing product ingredients prior to using them as ingredients in the

manufacturing or compounding process and not purchased for use as one-time-use

containers for shipping the manufactured or compounded product to customers, do not

qualify for the exclusion. Alabama-Georgia Syrup Co. v. State, 253 Ala. 49, 42 So. 2d 796

(1949).

(5) Containers purchased by retailers for use in packaging products for sale,

including the components of the containers, are not subject to sales or use tax where the

containers are passed on to the purchaser of the products contained therein with no

intention on the part of either the purchaser or the seller to return the containers or have

them returned for reuse. (Sections 40-23-1(a)(9)c and 40-23-60(4)c)

(6) Containers and other packaging materials or supplies which are used or

consumed in rendering nontaxable services are taxable when purchased by the person

who performs the service even when the containers, materials, or supplies are transferred

to the purchaser’s customer. For example, the operator of a laundry or dry-cleaning

establishment is the user or consumer of laundry bags, garment bags, and other packaging

materials or supplies and must remit sales or use tax on purchases of these items even

though the bags, materials, or supplies may be transferred to the operator’s customer.

(7) Unless excluded by statute, containers, including the components of the

containers, which are intended to be returned or repurchased for reuse are subject to sales

or use tax. Sales of the following items are specifically excluded from sales or use tax

regardless of whether there is an intent on the part of the purchaser or the purchaser’s

customer to return the containers or have them returned for reuse:

(a) Sales of containers to persons engaged in selling, supplying, or furnishing

baby chicks to growers where the containers are for use in the delivery of the baby chicks

to the grower. (Sections 40-23-1(a)(9)f and 40-23-60(4)f)

(b) Sales of egg crates and egg cartons to egg producers for use in the delivery

of eggs to distributors or packers. (Sections 40-23-1-(a)(9)f and 40-23-60(4)f)

23-1(a)(9)g and 40-23-60(4)g)

(d) Sales of wrapping paper and other wrapping materials to producers,

processors, packers, or wholesale or retail sellers of poultry or poultry products for use in

preparing poultry or poultry products for delivery, shipment, or sale. This exemption

includes (i) pallets used in shipping poultry and eggs, (ii) paper, and (iii) other materials

used to line boxes or other containers in which poultry or poultry products are packed

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

together with any other materials including ice placed in the containers for the delivery,

shipment, or sale of poultry or poultry products. (Sections 40-23-4(a)(20) and 40-23- 62(21)

(8) Labels are purchased at wholesale, tax-free when (i) the label is purchased

by a manufacturer or compounder and affixed to the tangible personal property or product

which the manufacturer or compounder manufactures or compounds for sale or to the

furnished container thereof or (ii) the label is purchased to be affixed to one-time-use

containers that are purchased without contents and sold or furnished to the purchaser’s

customer along with the contents placed therein or thereon for sale. (Sections 40-23-

1(a)(9)b, 40-23-1(a)9c, 40-23-60(4)b, and 40-23-60(4)c)

(9) Pallets purchased without contents by persons who sell or furnish the pallets

along with the contents placed on the pallets for sale are excluded from sales or use tax

where the pallets are passed on to the purchaser of the products contained thereon with no

intention on the part of either the purchaser or the seller to return the pallets or have them

returned for reuse. (Sections 40-23-1(a)(9)d and 40-23-60(4)d).

(10) Crowns, caps, and tops sold to manufacturers or compounders for use upon

containers in which the manufacturer or compounder markets its products are excluded

from sales or use tax when the crowns, caps, or tops are intended for one-time use only.

(Sections 40-23-1(a)(9)e and 40-23-60(4)e)

(11) Except for supplies which qualify for the exemptions contained in Sections 40-

23-4(a)(10), 40-23-4(a)(40), 40-23-4(a)(42)c, 40-23-62(12), 40-23-62(32), and 40-23-

62(34)c, shipping supplies such as nails, lumber, metal straps, dunnage, and plates which

are used for fastening or securing manufactured or compounded products into railroad

cars, trucks, aircraft, or vessels for shipment are taxable at the time of purchase.

(12) Purchases by retailers, wholesalers, and others of sales tickets, cash register

receipt paper, invoice forms, bill of lading forms, and other forms for use in receipting,

billing, invoicing, or shipping are taxable.

(13) The following are examples of items sold by suppliers to certain retailers or

service providers with notations as to whether the item qualifies as a nontaxable one-time-

use container:

(a) RETAIL FOOD STORES (GROCERY & MEAT MARKETS):

Adding Machine Tape T Meat Interleaver NT

Bags and Sacks NT Paper Cans NT

Bag Holders T Paper Cutters T

Brooms - Use T Parchment NT

Broom Holders & Display

Racks T Patty Paper NT

Butcher Paper NT Plastic Film NT

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

Cashier Pads T Pork Loin Wrap NT

Cellophane Bags NT Prepackaging Trays NT

Cellophane, Sheets or Pressure Sensitive

Roll NT Tape NT

Cellophane Cutters T Price Markers T

Egg Cartons NT Produce Bags NT

Food Pails and Tubs NT Roll Paper NT

Greaseproof Paper NT Sausage Boxes and Liners NT

Grocery Bags NT Signboard T

Gum Tape NT Skewers T(1)

Gum Tape Dispensers T Steak Interleaver NT

Heat Sealing Equipment T Sugar Bags NT

Ice Cream Bags NT Sweeping Compound T

Labels NT Ti-Paks and Twistems NT

Locker Paper NT Trays NT

Marking Pencils T Twine NT

Meat Boards NT Window Display Bags NT

(1) Nontaxable only if accompanies sale and cannot be reused.

(b) FOOD AND BEVERAGE SERVERS:

(Restaurants, Drive-ins, Cafeterias, Concession Stands, Bars, Lounges, and Night

Clubs)

Adding Machine Tape T Paper Trays NT

Aluminum Foil T Paper Linen Caps T

Aluminum Plates NT Paper Liners for Food Trays NT

Barbeque Bags NT Patty Paper NT

Bibs NT(2) Place Mats NT(1)

Burger Cups NT Printing Charge on

Burger Cup Holders T Special Print Orders T

Butter Chips NT Sandwich Bags NT

Chop Holders T Sandwich and Drink Trays NT

Coasters T Skewers T

Cocktail Forks and Souffle Cups NT

Spoons T(1) Steak Markers NT(1)

Coffee Stirrers NT(2) Straws NT(2)

Crab Shells NT(1) Sundae Dishes NT(1)

Creamer Caps T Table Covers T

Cups and Lids NT Table Wiping Towels T

Cup Carriers NT(1) Tableware, Plastic and

Cup Dispensers T Spoons NT(2)

Doilies T Tissue, 12 x 12 M.G. NT(1)

Eclair Cases NT Toilet Tissue T

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

Guest Checks T Toothpicks and Frills T

Hot Dog Trays NT Towelettes, Moist NT(2)

Kone Bottles NT Towels T

Napkins NT(2) Tray Covers T

Napkin Dispensers T Waxed Paper NT(1)

Paper Bags NT Wooden Forks and Spoons NT(2)

Paper Cans and Pails NT(1) Wooden Dishes NT(1)

Paper Plates NT Wooden Skewers NT(2)

(1) Nontaxable only if accompanies sale and cannot be reused.

(2) Amended to conform to the decision of the Alabama Court of Civil Appeals in the

case State Department of Revenue v. Kelly’s Food Concepts of Alabama, LLP

Bridal Gown Boxes T Shirt Bags T

Coat Retainers T Shirt Bands T

Collar Supports T Shirt Boards T

Garment Bags T Shirt Boxes T

Garment Roll Film T Shirt Pax T

Garment Roll Film

Dispenser Racks T Shirt Shells T

Hanger Shields and Storage Bags T

Guards T

Hangers T Sweater Bags T

Laundry Boxes T Tape T

Laundry and

Launderette Bags T Trouser Guards T

Laundry Shells T Twine T

Paper Cutters T Wrapping Paper T

(d) RETAIL BAKERY AND CANDY SHOPS:

Adding Machine Tape T Jiffy Bags NT

Aluminum Foil NT(1) Labels NT

Aluminum Pie and Cake Marking Pencils T

Plates NT(1) Pan Liners NT(1)

Bakery Bags NT Paper Cans NT

Bakery Boxes NT Paper Caps T

Bakery Tissue NT Paper Cutters T

Baking Cups NT(1) Paper Pie Plates NT(1)

Bread Bags NT Parchment NT

Cake Circles NT(1) Ribbon NT

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

Candy Bags NT Sales Books T

Candy Cups NT Sandwich Bags NT

Cellophane NT Sandwich Wrap NT

Cellophane Bags NT Shredded Cellophane NT

Doilies NT(1) Signboard T

Eclair Cups NT(1) Sweeping Compound T

Food Pails and Tubs NT(1) Toothpicks and Frills T

Gift Wrap NT Transparent Tape NT(2)

Glassine Bags NT Twine NT

Grocery Bags NT Wax Paper NT

Gum Tape NT(2) Window Bags NT

Gum Tape Dispensers T Wrapping Paper NT

Heat Sealing Equipment T

(1) Nontaxable only if accompanies sale and cannot be reused.

(2) If used as part of package.

(e) DRUG, VARIETY, AND SUNDRY STORES:

(See also Food and Beverage Servers)

Adding Machine Tape T Notion Bags NT

Gift Wrapping Paper NT Paper Cutters T

Grocery Bags NT Prescription Bags NT

Guest Checks T Ribbon and Accessories NT

Gum Tape NT Sanitary Napkin Bags

Gum Tape Dispensers T (resale) NT

Prescription Medicine Bottles NT(1) Shopping Bags NT

Prescription Medicine Boxes NT(1) Signboard T

Prescription Medicine Jars NT(1) Twine NT

Millinery Bags NT Wrapping Paper NT

(1) Nontaxable only if accompanies sale and cannot be reused.

(2) If used as part of package.

(f) FLORISTS AND NURSERIES: (1)

Cellophane NT Polyethylene & Paper

Cellophane Bags NT Cutters T

Cellophane Tape NT Pressure Sensitive Tape NT

Florist Tissue NT Ribbon and Accessories NT

Flower Boxes NT Shredded Cellophane NT

Flower Pots NT

Gift Papers and Foil NT Ti-Paks and Twistems NT

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

Gummed Tape NT Twine NT

Gummed Tape Dispensers T Wrapping Paper NT

Paper Bags NT Wrapping Tissue NT

Polyethylene Rolls

and Bags NT

(g) RETAIL DEPARTMENT STORES & SPECIALTY STORES:

(Includes Book and Stationery Stores, Gift Shops, Hardware Stores, etc.)

Curtained Rod Bags NT Notion Bags NT

Garment Bags NT Paper Cutters T

Garment Bag Boxes NT Record Bags NT

Gift Boxes NT Ribbon and Accessories NT

Gift Wrap NT Sales Books T

Grocery Bags NT Shirt Bags NT

Gum Tape NT Shoe Bags NT

Gum Tape Dispensers T Shopping Bags NT

Ice Bags NT Shredded Cellophane NT

Jiffy Bags NT Shredded Tissue NT

Labels NT Signboard T

Lampshade Bags NT Transparent Tape NT

Marking Pencils T Twine NT

Millinery Bags NT Wrapping Paper NT

Millinery Boxes NT Wrapping Tissue NT

Nail Bags NT

(h) MEAT AND POULTRY PACKERS, FOOD LOCKERS AND DAIRIES: (1)

Butcher Paper NT Ice Cream Cans

and Cartons NT

Butter Tubs NT Ice Cream Pails NT

Butter Wraps NT Ice Cream Sticks NT

Cellophane and Plastic Films NT Marking Pencils T

Cellophane Tape NT Meat Boards NT

Chic Pax NT Parchment NT

Chic Tainer Trays NT Poly Bags NT

Cone Bottles NT Pork Loin Wrap NT

Creamer Caps NT Poultry Bags NT

Cups and Tubs NT Sacks NT

Egg Cartons NT Sausage Boxes and Liners NT

Freezer and Locker Paper NT Spoons, Forks and Knives T

Freezer Tape NT Straws T

Grocery Bags NT Ti-Paks and Twistems NT

Gum Tape NT Twine NT

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.69. (Continued)

Gum Tape Dispenser T Waxed Paper NT

Ham Wraps NT Wrapping Paper NT

Ice Cream Bags NT

(1) If the sales are made to a food locker business - it must be determined if the

products are used in rendering a service, or if they are in the actual retail meat business. If

they are wrapping meat for customers to be stored in their individual lockers - this is a

service and the items are taxable.

(i) FARMS, ASSEMBLERS OF FARM PRODUCTS:

Box Liners NT Hay Baling Ties or Twine NT(1)

Butter Tubs NT Labels NT

Car Liners T Marking Pencils T

Cellophane NT Poly Bags NT

Cellophane Bags NT Poly Sheets and Rolls NT

Cellophane Tape NT Potato Bags NT

Chic Pak NT Poultry Bags NT

Chic Tainer Trays NT Prepackage Trays NT

Containers for Packaging Shredded Paper and

Bees or Worms for Sale NT(1) Cellophane NT

Egg Cartons NT Tomato Cartons NT

Flour and Meal Bags NT Twine NT

Fruit Baskets NT(1) Window Bags NT

Grocery Bags NT Wrapping Paper NT

Gum Tape NT Wrapping Tissue NT

Gum Tape Dispensers T

(1) Nontaxable if accompanies sale and cannot be reused.

(Sections 40-2A-7(a)(5), 40-23-1(a)(9)d, 40-23-1(a)(9)e, 40-23-1(a)(9)(f), 40-23-1(a)(9)g,

40-23-4(a)(10), 40-23-4(a)(20), 40-23-4(a)(40), 40-23- 4(a)(42)c, 40-23-31,40-23-60(4)d,

40-23-60(4)e, 40-23-60(4)f, 40-23-60(4)g, 40-23-62(12), 40-23-62(21), 40-23-62(32), 40-

23-62(34)c, 40-23-83 and 40-23-31, Code of Alabama 1975) (Adopted March 9, 1961,

amended July 27, 1964, Readopted through APA effective October 1, 1982, amended July

30, 1998, amended March 5, 2015)

810-6-1-.72. Gases: Acetylene, Oxygen, Hydrogen.

(1) All sales to consumers such as dentists, doctors, private hospitals,

manufacturers, refiners, repairmen, welders, or junk dealers of acetylene, oxygen,

hydrogen, and other gases for use in rendering professional medical services or in

manufacturing, processing, or repairing are subject to sales or use tax. (Sections 40-23-

1(a)(10) and 40-23-60(5))

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.72. (Continued)

(2) Sales of these gases to manufacturers or compounders where the gas enters

into and becomes an ingredient or component part of the product manufactured or

compounded for sale are at wholesale, tax-free. For example, sales of oxygen to

manufacturers of steel where the oxygen becomes an ingredient or component part of the

product manufactured for sale are nontaxable wholesale sales. (State v. United States

Steel Corporation, 206 So.2d 358) See Rule 810-6-1-.80 entitled Ingredient or Component

of Product Manufactured or Compounded for Sale. (Sections 40-23-1(a)(9)b and 40-23-

60(4)b)

(3) Sales of these gases to dealers for resale are not taxable. (Sections 40-23-

1(a)(9)a and 40-23-60(4)a) (Readopted through APA effective October 1, 1982, amended

July 9, 1998)

810-6-1-.73. Gases: Propane and Butane.

Sales at retail of propane and butane gases or any similar gas are subject to sales or use

tax, whichever may apply. (Section 40-23-1(a)(10)) (Readopted through APA effective

October 1, 1982)

810-6-1-.75. Gratuities and Tips.

(1) The terms "gratuity" and “tip” as used in this rule shall mean a monetary

amount paid by a customer in a bar, restaurant, or similar establishment usually in return

for or in anticipation of some service. While a gratuity or tip is generally thought of as a

voluntary monetary gift, in practice some retailers add a mandatory gratuity to the

customer’s bill.

(2) Sales tax does not apply to voluntary gratuities or tips, whether in cash or

otherwise added by the customer to the bill, when given directly to the retailer’s employee

by the customer or given to the retailer who receives no benefit from the gratuity or tip and

merely acts as a conduit to channel the gratuity or tip in total to the retailer’s employee.

(3) Sales tax applies to mandatory charges designated as gratuities, minimum

service charges, or other minimum charges billed to customers by retailers, whether listed

separately on the customer’s bill or included as part of the selling price of the food, meal, or

drinks, when the retailer receives a benefit from the added charges such as using all or a

portion of the mandatory charges to supplement the wages or salaries of the retailer’s

employees. (State v. International Trade Club, Inc., 351 So. 2d 895 (Ala. Civ. App. 1977))

(Sections 40-23-1(a)(6) and 40-23-1(a)(8), Code of Alabama 1975)

(4) A mandatory charge designated as a gratuity, minimum service charge, or

other minimum charge is not taxable when the retailer collects the charge from the

customer in lieu of voluntary gratuities or tips and merely acts as a conduit to channel the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.75. (Continued)

charge in total to his or her employees. Added charges of this nature are simply substitutes

for cash tips and the retailer receives no benefit from the charge. (State v. International

Trade Club, Inc., 351 So. 2d 895 (Ala. Civ. App. 1977)) (Adopted November 3, 1980,

readopted through APA October 1, 1982, amended January 10, 1985, amended October

20, 1998)

810-6-1-.76. Hospitals, Infirmaries, Sanitariums, and Like Institutions - Private.

(1) Private hospitals, infirmaries, sanitariums, and like institutions are required to

pay sales tax or use taxes, whichever may apply, on their purchases of tangible personal

property. (Sections 40-23-2 and 40-23-61, Code of Alabama 1975)

(2) Private hospitals, infirmaries, sanitariums and like institutions are primarily

engaged in the business of rendering services. They are not required to collect and remit

sales tax on their gross receipts from meals, bandages, dressings, drugs, x-ray

photographs, or other tangible personal property when the items are used in rendering

hospital services. This is true irrespective of whether or not the tangible personal property

is billed separately to their patients. Private hospitals, infirmaries, sanitariums, and like

institutions are deemed to be the purchasers for use or consumption of the tangible

personal property; and, the sellers of these items are required to collect sales or use tax on

sales of the property to the institutions. Provided, however, purchases by private hospitals,

infirmaries, sanitariums, and like institutions of drugs as defined in Section 40-23-4.1(a),

Code of Alabama 1975, are specifically exempt from sales and use tax. (Sections 40-23-2,

40-23-4.1, and 40-23-61)

(3) When private hospitals, infirmaries, sanitariums, and like institutions furnish

meals to nurses, attendants and patients as a part of their services rendered, the

institutions are deemed to be the users or consumers of the food and beverages used in

the preparation of these meals. Sales or use tax is due on the purchase of the food and

beverages by the institution in the manner outlined in paragraph (2) unless the institution

also operates a cafeteria which serves the public. (Sections 40-23-2 and 40-23-61)

(4) Privately-owned hospitals, infirmaries, sanitariums, and like institutions that

operate cafeterias serving meals to the public must purchase all foodstuffs and beverages

at wholesale, tax free, and collect the sales tax on sales of meals to their customers and

remit the tax to the Department of Revenue. These institutions must also compute and

pay tax to the Department of Revenue on the cost of foodstuffs withdrawn from stock and

used to feed patients. (Sections 40-23-1(6) and 40-23-1(10)) (Adopted March 9, 1961,

amended November 1, 1963, readopted through APA effective October 1, 1982, amended

January 29, 1990, amended October 20, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.77.01. Ice, Sales of.

(1) Sales of ice to purchasers who have a sales tax license number are sales at

wholesale not subject to sales or use tax, provided the purchaser is buying the ice for

resale. (Sections 40-23-1(a)(9)a and 40-23-60(4)a)

(2) Sales of ice to purchasers for use as an ingredient of iced drinks

manufactured or compounded for sale are sales at wholesale not subject to sales or use

tax. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(3) Sales of ice to transportation companies or others for use in icing railroad cars

or refrigeration trucks are subject to sales or use tax. (Sections 40-23-1(a)(10) and 40-23-

60(5)) (Readopted through APA effective October 1, 1982, amended March 10, 1998)

810-6-1-.79.03. Industrial Uniforms, Sales or Replacement of.

When a lessee is required under a contract with the lessor to reimburse the lessor for the

depreciated value of any item lost or not returned by the lessee, the transaction is not a

retail sale; therefore, no sales tax is due. (See State of Alabama v. Industrial Uniform

Services, Inc.) (Adopted June 12, 1978, readopted through APA effective October 1, 1982).

810-6-1-.80. Ingredient or Component of Product Manufactured or Compounded for

Sale.

(1) Subject to the qualifications outlined in paragraph (2), tangible personal

property which is purchased by a manufacturer or compounder and which enters into and

becomes an ingredient or component part of the final product manufactured or

compounded for sale may be purchased at wholesale, tax free, for both sales and use tax

purposes, regardless of whether the property is used with the intent that it becomes an

ingredient or component part of the finished product. The burden of proving that materials

become an ingredient or component part of the finished product shall be carried by the

manufacturer or compounder. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(2) In order to qualify for the wholesale sale exclusion contained in Sections 40-

23-1(a)(9)b and 40-23-60(4)b, the tangible personal property purchased by the

manufacturer or compounder must be present in the final product and must not be

deducted as depreciation or as a Section 179 expense deduction as allowed under Section

40-18-35(a)(17), on the manufacturer’s or compounder’s Alabama income tax return.

(Section 40-23-1(a)(9)b and 40-23-60(4)b), (Adopted October 1, 1959; readopted through

APA effective October 1, 1982; amended February 4, 1985, amended December 10, 1997)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.80.01. Oils Used in Aluminum Rolling Process.

Oils used in the hot or cold aluminum rolling processes have been determined to remain on

and become an ingredient or component part of the rolled aluminum and, therefore, subject

to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled Ingredient or

Component of Product Manufactured or Compounded for Sale may be purchased by the

processor at wholesale, free of sales or use tax. (Sections 40-23-1(a)(9)b and 40-23-

60(4)b) (Adopted through APA effective January 29, 1990, amended December 10, 1997)

810-6-1-.80.02. Materials Purchased by Manufacturers and Compounders for Use as

Rust Preventatives or Protective Coatings.

Materials, including grease and other petroleum products, purchased by manufacturers or

compounders for use as a rust preventative or a protective coating for metal products while

in storage or in shipment are exempt from sales or use tax when they remain on the final

product manufactured or compounded for sale. (Sections 40-23-1(a)(9)b and 40-23-

60(4)b) (Adopted through APA effective January 27, 1998)

810-6-1-.81. Installation Charges.

(1) Where the quoted or advertised price is a lump sum for both property and

installation or where billing and other records do not show separate charges for property

and for installation, the measure of the tax is the total amount received by the seller.

(2) Where the seller has a standard retail sales price for his products and where

the standard sales price is used both when making across-the-counter sales and when

selling and installing the property, he may make a separate and additional charge for

making the installation which, when shown separately in his billings and on his books, will

not be subject to the sales tax. (Section 40-23-1(a)(6)) (Readopted through APA

effective October 1, 1982)

810-6-1-.81.01. Interior Decorators and Interior Designers.

(1) Interior decorators and interior designers making retail sales of tangible

personal property in Alabama must apply for and obtain a sales tax license. Further, these

interior decorators must collect sales tax from their clients on their retail sales of tangible

personal property and remit the tax to the Department of Revenue. Out-of-state interior

decorators and interior designers, who do not have a place of business in Alabama but for

whose business sufficient nexus exists, must register to collect sellers use tax on their

Alabama sales and collect and remit sellers use tax to the Department of Revenue on

those sales. (Sections 40-23-6 and 40-23-66)

(2) Fees charged by interior decorators or interior designers in conjunction with

sales of tangible personal property are a part of the gross proceeds of sales and must be

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.81.01. (Continued)

included in the measure of sales or use tax charged to and collected from their clients.

Fees charged by interior decorators or interior designers are taxable even if they are billed

to clients as an amount separate from the cost of tangible personal property on a cost plus

basis. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(10))

(3) Sales or use tax does not apply to fees charged by interior decorators or

interior designers solely for consultation or designing services when no sale of tangible

personal property occurs in conjunction with those services.

(4) In those instances where interior decorators or interior designers receive a

fixed sum fee which is not in any way contingent upon the sale of tangible personal

property and, subsequently, sell tangible personal property in a completely unrelated

transaction, the fixed sum fee is not a part of the selling price of the tangible personal

property and is not subject to sales or use tax.

(5) Interior decorators or interior designers who contract to furnish and install

tangible personal property which becomes a part of realty are the users or consumers of

such property and owe sales or use tax on the cost of the property so used or consumed.

Property withdrawn from inventory by an interior decorator or interior designer for use in

performing contracts for additions or improvements to realty must be reported as taxable

withdrawals and the sales tax thereon remitted directly to the Department of Revenue. The

measure of tax on withdrawals is the cost of the property to the interior decorator or interior

designer who withdraws the property. Except as enumerated in Rule 810-6-3-.77, interior

decorators or interior designers making additions or improvements to realty may not claim

immunity or exemption from sales or use tax on account of property purchased and used in

connection with contracts with the federal, state, county, or city governments. The fact that

a governmental agency has advised the interior decorator or interior designer not to include

tax on the invitation to bid or purchase order would not relieve the interior decorator or

interior designer from liability for sales or use tax on the cost of materials used in fulfilling a

contract with that agency for making additions or improvements to realty. (Sections

40-23-1(a)(10) and 40-23-60(5)) (Sections 40-2A-7(a)(5), 40-23-1(a)(6), 40-23-1(a)(8), 40-

23-(a)(10), 40-23-6, 40-23-31, 40-23-60(5), 40-23-60(10), 40-23-66 40-23-83, and 40-9-33,

Code of Alabama 1975) (Adopted through APA effective April 26, 1991, amended March

27, 2001, amended June 10, 2005)

810-6-1-.84. Labor or Service Charges.

(1) The term “new or different” as used in this rule shall mean new or different

insofar as the ultimate purchaser is concerned. The fact that work may be performed at

various stages before an item is ready for use by the ultimate purchaser does not mean

that the item is not a new item.

(2) Sales or use tax applies to labor or service charges billed to customers in

conjunction with sales of tangible personal property and repairs to tangible personal

property as follows:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.84. (Continued)

(a) Labor or service charges, whether included in the total charge for the product

or billed as a separate item, are taxable if the labor or service (i) is incidental to making,

producing, or fabricating a new or different item of tangible personal property or otherwise

preparing the tangible personal property for sale and (ii) is performed prior to transfer of title

to the purchaser. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(10), Code of

Alabama 1975)

(b) Labor or service charges are not taxable when billed for labor or services

expended in repairing or altering existing tangible personal property belonging to another in

order to restore the property to its original condition or usefulness without producing new

parts. When repair work includes the sale of repair parts in conjunction with repairs to

existing tangible personal property belonging to another, only the sales price of the repair

parts is taxable provided the charges for the repair parts and the charges for the repair

labor or repair services are billed separately on the invoice to the customer. If the

repairman fabricates repair parts which are used in conjunction with repairs to existing

tangible personal property belonging to another, the total charge for the parts, including any

labor or service charges incurred in making, producing, or fabricating the parts, is taxable

even if the fabrication labor or service charges are billed to the customer as a separate

item. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(10), Code of Alabama 1975)

(Readopted through APA effective October 1, 1982, amended December 28, 1998)

810-6-1-.85. Laundries, Dry-Cleaning Establishments.

(1) Laundries and dry cleaning establishments in washing, dry cleaning, dying,

pressing and otherwise reconditioning clothing, curtains, drapes, linens, rugs and other

articles are performing a service which is not subject to the sales tax.

(2) The materials, supplies, and equipment used or consumed in rendering

laundry and dry cleaning services are subject to sales or use tax, whichever may apply.

The tax due is to be paid by the laundry or dry cleaning establishment to the supplier where

the supplier is required to collect the tax or directly to the Department of Revenue as use

tax where the supplier does not collect the tax.

(3) In case the laundry or dry cleaning establishment makes sales of tangible

personal property at retail as well as renders services such sales are subject to sales tax.

The goods acquired for resale at retail are purchased at wholesale tax free. (Adopted May

26, 1961, readopted through APA effective October 1, 1982)

810-6-1-.88. Lawyers.

Lawyers use law books, supplies, and equipment, which books, etc., are taxable. (Section

40-23-2(1)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.89. Lease Sales - Retention of Title.

Transfers of property constitute sales when made under lease-sale or retention-of-title

contracts where these contracts contemplate transfer of ownership when all of the agreed

upon payments have been made. (Section 40-23-1(a)(5)) (Readopted through APA

effective October 1, 1982)

810-6-1-.89.02. Licensed Dealers, Sales to.

(1) Sales to Dealers at Wholesale. Sales of tangible personal property are sales

at wholesale, not subject to tax, when made to a licensed dealer to be put into the stock of

goods offered for sale by the dealer, not withstanding the fact that the dealer may

occasionally or habitually withdraw from stock some part of the inventory for use or

consumption in connection with the business or for the personal use or consumption of the

dealer. Such withdrawals shall be reported on the licensed dealer’s sales tax return and the

sales tax thereon computed and remitted to the Department of Revenue. The sales tax on

withdrawals shall be computed on the cost to the dealer of the property withdrawn. See

Rule 810-6-1-.196 Withdrawals from Inventory. (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-

23-1(a)(9)a, and 40-23-1(a)(10))

(2) Sales to Dealers at Retail. Sales of tangible personal property to a licensed

dealer for his own use or consumption rather than for resale purposes are sales at retail

and are subject to tax. (Sections 40-23-1(a)(10) and 40-23-2) (Readopted through APA

effective October 1, 1982, amended January 27, 1998)

810-6-1-.90. Machine Shops.

(1) Sales of property manufactured or fabricated by machine shops and custom

foundries are subject to sales or use tax, except when the sale is for resale or otherwise

specifically exempted.

(2) In doing repair work, the machine shop operator consumes materials such as

paint, solder, babbitt, and lumber which lose their identity in the repairing process. The

machine shop operator is also considered to be the consumer of items such as cotter keys,

nails, washers, stove bolts and nuts, bits of metal, and sheets of metal used in patching,

mending, or reinforcing weakened parts. The machine shop operator shall not collect sales

or use tax from the customer on amounts billed to the customer for the cost of these

materials which the operator consumes in performing repair work; instead, the operator

shall remit sales or use tax to the supplier at the time of the operator’s purchase of the

materials.

(3) Where in making repairs the machine shop operator fabricates or

manufactures a recognizable part or attachment for the article being repaired (as

contrasted to patching, mending, or reinforcing weakened parts), the operator shall bill the

parts or attachments separately and collect sales or use tax only on the sales price of the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.90. (Continued)

part or attachment. If the machine shop operator fails to separately state the charges for

parts and attachments and the charges for services, the operator shall collect sales or use

tax on the total amount of the charges billed to the customer. Under no circumstances,

however, shall the machine shop operator deduct labor or other costs which go into the

fabrication or manufacture of a recognizable part or attachment from the selling price of the

part or attachment. (Sections 40-23-1(a)(6) and 40-23-60(10), Code of Alabama 1975)

(Readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-1-.91. Made-to-Order and Custom Sales.

Where persons contract to manufacture, compound, process or fabricate their materials

into articles of tangible personal property according to the special order of their customers,

the total receipts from the sales of such articles are subject to the sales or use tax,

whichever may apply. The seller may not deduct any of his costs, nor can he deduct any of

his charges for labor or services, which are an item of the production or fabrication costs of

the article, to arrive at the taxable amount. Articles commonly made to order are curtains,

draperies, tents, awnings, clothing, and slipcovers. The person making sales of made-to-

order and custom made articles purchases the materials which become a component or

ingredient of their products at wholesale, tax free. The equipment, tools and supplies used

or consumed in the production of such articles and not becoming a part thereof are subject

to tax, except that machines used in such production are specifically taxed at one and one-

half percent rather than the general rate of four percent. (Section 40-23-1(a)(6) )

(Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective

October 1, 1982)

810-6-1-.93. Materials From Which Patterns are Manufactured.

Pattern makers who make patterns which they sell to others for use, purchase at wholesale

tax free the materials from which such patterns are made. (Adopted March 9, 1961,

amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.94. Materials Used in Plating.

(1) Materials purchased by a person, firm, or corporation for use in further

processing or manufacturing tangible personal property not owned by the person, firm, or

corporation but owned by a manufacturer or a compounder are exempt from the sales

and/or use tax when the tangible personal property is to be ultimately sold at retail.

(2) The materials used in plating tangible personal property not belonging to the

plating company are subject to the sales and/or use tax when the plating company

customers used the product which was plated for the customer and there was no retail sale

of the product. The materials used in this category are not purchased by or used by the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.94. (Continued)

manufacturer or compounder who manufactures or compounds a product for sale;

therefore, the purchase of the materials does not fall within the meaning of the term

"wholesale" as found in Section 40-23-1(a)(9), Code of Alabama 1975. (Adopted July 2,

1975, amended June 12, 1978, readopted through APA effective October 1, 1982)

810-6-1-.95. Materials Used in Repairing.

(1) Materials used in repairing, for tax purposes, fall into the following classes:

(a) Materials which pass to the repairman's customer and which do not lose their

identity when used by the repairman and which are a substantial part of the repair job (such

as auto repair parts, radio tubes, and condensers) are sold at retail by the repairman. He

must collect and report sales tax on such sales, including tax on the service incidental

thereto. He may, however, if making a separate agreement to sell the repair parts and to

perform the labor and service required, collect and remit the tax only upon the price of the

parts if his records and his invoices clearly show a separation of the amounts received from

sales and parts and from rendering service.

(b) Materials which pass to the repairman's customer but which lose their identity

when used by the repairman or which are inconsequential in amount, such as paint, solder,

and tacks, are considered to have been used or consumed by the repairman and are

taxable at the time of sale to him.

pass on to his customer are supplies and taxable when sold to the repairman. (Section 40-

23-1(a)(10))

(d) Materials which fall in classes (b) or (c) are purchased at wholesale for use by

a repairman who, in addition to using such materials as a repairman, sells the same kinds

of materials for use by others. These materials become subject to the sales tax upon their

withdrawal for use by the repairman under the withdrawal feature of Section 40-23-1(6), (8),

and (10). Note however, that a repairman is not to be considered a vendor of these

classes of materials unless he carries a stock of them and sells outright therefrom a

substantial amount. If the repairman makes only isolated sales or "accommodation" sales

of these materials he is not to be considered as a seller of them under the sales tax law, in

which case his supplier must collect the tax.

(2) In all instances, materials are taxable when sold to repairmen for use in

making repairs where such materials lose their identity as a result of such use, for instance,

solder used in welding, paint used in automobile refinishing, thread used in mending

clothing. In all instances where the shape or composition of the repair material is materially

changed, such altered or changed material is considered to have been used or consumed

by the repairman and, for that reason, subject to tax when sold to him. No tax on this

material is to be collected by the repairman from his customer.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.95. (Continued)

(3) In instances where repair materials and repair parts are passed to the

repairman's customer without change, except necessary and customary minor adjustments,

such parts or materials may be purchased at wholesale by the repairman licensed under

the Sales Tax Law. The repairman is then required to collect sales tax from his customer.

(Readopted through APA effective October 1, 1982, amended October 8, 1985)

810-6-1-.97. Materials Used on Road and Bridge Projects.

(1) Sales of sand, gravel, or other building materials by landowners or other

suppliers who regularly sell or offer to sell these materials are subject to sales tax when

made to contractors for the State of Alabama or the counties or municipalities of the State

for use by the contractors in building roads or bridges. This rule applies in all instances

where the contractor is obligated by the terms of the contract to furnish, to pay for, and to

lay down the materials, including sales of materials which have been selected by and on

which an option has been taken by the state or the counties or municipalities of the State.

The supplier shall collect the tax from the contractor and remit the amount due to the

Department of Revenue. (Sections 40-23-1(a)(10) and 40-23-60(5))

(2) Where an isolated sale of sand, gravel, or similar material is made to a

contractor by a landowner who is not engaged in the business of selling such material, the

isolated sale will not be required to be reported to the Department and neither sales tax nor

use tax will be due from the landowner or from the contractor on the transaction. (Sections

40-2A-7(a)(5), 40-23-1(a)(10), 40-23-31, 40-23-60(5), and 40-23-83, Code of Alabama

1975) (Readopted through APA effective October 1, 1982, amended March 27, 2001,

amended June 10, 2005, amended December 25, 2013)

810-6-1-.98. Mattress Renovation.

(1) A mattress renovator both renders service and sells tangible personal

property where he rebuilds or renovates a mattress for his customer by reworking the

materials in the customer's mattress, the identity of which is maintained throughout the

operation, and by adding thereto whatever new materials are required to complete the job

in a satisfactory matter. Under these circumstances, the mattress renovator may make

separate contracts to render the service required and to sell the tangible personal property

used (ticking, cotton, springs, tufts, etc.) in which case the receipts from rendering service

are not subject to sales tax where the invoice rendered to the customer and the records of

the renovator show separately sales of tangible personal property and charges for

performing services. Provided, however, where work of this nature is done for a lump sum

without separation of charges for tangible personal property and for services, the sales tax

shall apply to the lump sum amount.

(2) In instances where the identity of the customer's mattress is not preserved

with the mattress delivered to the customer having been made from whatever materials

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.98. (Continued)

were available, the mattress returned to the customer is considered a new article, the

measure of the tax being the amount paid by the customer including the value of the

customer's old mattress. The mattress renovator purchases at wholesale tax free the

materials he uses in renovating or rebuilding his customer's mattress. (Section 40-23-2(1))

(Readopted through APA effective October 1, 1982)

810-6-1-.99. Meals Served by Boarding Houses.

Food furnished by operators of boarding houses is not considered to be sold at retail when

the charge for such food is a lump sum covering meals for a week or for a month and when

such food is not offered for sale to the general public. The supplier of food stuff is required

to collect the tax from the operator at the time of the sale to him. The boarding house

operator is considered to be rendering a service rather than making sales and is regarded

as the consumer of the materials he purchases. This rule does not apply to meals

furnished by schools and colleges. (See Rule 810-6-2-.50.) (Adopted October 1, 1959,

readopted through APA October 1, 1982, amended January 10, 1985)

810-6-1-.100. Meals, Snacks, Drinks, and Beverages Served in Alabama by Railroads,

Airlines, and other Transportation Companies.

(1) Sales of meals, snacks, drinks, and beverages to passengers by railroads,

airlines, steamships, and other transportation companies within this state are subject to

sales tax, provided the meals, snacks, drinks, or beverages are served to the passengers

while still in Alabama. (Sections 40-23-1(a)(10) and 40-23-2(1), Code of Alabama 1975)

(2) Meals, snacks, drinks, and beverages served in Alabama by a transportation

company as a part of its transportation service are retail sales subject to sales tax when the

transportation company includes in the ticket price an amount to cover the selling price of

the meal, snack, drink, or beverage. The amount for the meal included in the selling price

of the ticket is the measure of tax. (State v. Hertz Skycenter, Inc., 294 Ala. 336, 317 So.

2d 324 (1975) and State v. Delta Air Lines, 356 So. 2d 1205 (Ala. Civ. App. 1978).

(Amended October 29, 1976, amended June 12, 1978, readopted through APA effective

October 1, 1982, amended July 30, 1998)

810-6-1-.101. Meals Served to School Children in the School Buildings.

Lunches sold within school buildings, not for profit, to school children are exempted from

the sales tax. This exemption is construed to mean sales of lunches to pupils of

kindergartens, grammar, and high schools, either public or private. (Readopted through

APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.102. Meals Sold to the Public.

Sales of prepared foods and drinks of all kinds for consumption on or off the premises of

the seller are subject to the sales tax, which tax must be collected and remitted by the

seller, except as otherwise stated in Sales and Use Tax Rules 810-6-1-.99 Meals served by

Boarding Houses, 810-6-2-.51 Meals Sold by Schools and 810-6-1-.100 Meals, Snacks,

Drinks, and Beverages Served in Alabama by Railroads, Airlines, and other Transportation

Companies. (Section 40-23-2(1), Code of Alabama 1975) (Readopted through APA

effective October 1, 1982, amended July 30, 1998)

810-6-1-.104. Microfilming of Records.

The microfilming of records is a service transaction with the material cost being incidental to

the transaction. Sales and/or use tax will be due on films, equipment, and other supplies

purchased for use in microfilming records. (Legal Division Opinion February 10, 1978)

(Adopted June 12, 1978, readopted through APA effective October 1, 1982)

810-6-1-.105. Modular Buildings.

(1) The Alabama Supreme Court has interpreted the language relative to modular

buildings in Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975, as “designed

to make the sale of materials going into the construction of such buildings subject to the tax

and to exempt the sale of the building itself” from sales or use tax. This interpretation

places “modular building components on a par with conventional building materials” and

makes “the sale of all building materials, modular or otherwise, sales at retail.” The

attachment of the building components or units to realty and the subsequent sale of the

components or units as a completed building is not treated as a taxable transaction. In

making this interpretation, the Supreme Court ruled that use tax is due on modular building

units manufactured by an out-of-state manufacturer and sold by the manufacturer to a

contractor who attached the units to realty in Alabama. The measure of the use tax is the

manufacturer’s selling price of the modular units. (Boswell v. Alcoa Construction Systems,

Inc., 368 So. 2d 18 (S.Ct.1979))

(2) Sales tax is due on modular building components or units manufactured in

Alabama as follows:

(a) An instate builder or manufacturer of modular building components or units

who builds or manufactures the components or units for resale in the form of tangible

personal property to persons who affix them to realty, shall obtain a sales tax license and

purchase all building materials, fixtures and other equipment becoming part of the modular

building components or units without payment of sales or use tax to the suppliers. The

builder or manufacturer of the modular building components or units shall (i) collect sales

tax on any retail sales of the components or units sold in Alabama measured by the selling

price of the components or units and (ii) report and pay the sales tax to the Department of

Revenue on those retail sales.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.105. (Continued)

(b) In the event an instate builder or manufacturer of modular building

components or units, who has obtained a sales tax license pursuant to paragraph (2)(a),

also contracts to affix modular building components or units to realty either inside or outside

Alabama, the builder or manufacturer shall be liable for sales tax computed on the cost

price of the materials withdrawn from inventory and used to build or manufacture the

components or units which the builder or manufacturer affixes to realty pursuant to the

contract.

(3) Use tax is due on modular building components or units as follows:

(a) Out-of-state builders or manufacturers of modular building components or

units, who do not have a place of business in Alabama but for whose business sufficient

nexus exists, shall (i) register to collect sellers use tax on their Alabama sales of modular

building components or units which are sold in the form of tangible personal property to

persons who affix them to realty and (ii) report and pay the tax to the Department of

Revenue on their Alabama sales. The measure of the sellers use tax is the selling price of

the components or units. Purchases of modular building components or units from out-of-

state builders or manufacturers who are not registered to collect sellers use tax are subject

to consumers use tax. Consumers use tax should be computed and paid by the purchaser

measured by the purchase price of the components or units. (Section 40-23-60(5))

(b) An out-of-state builder or manufacturer of modular building components or

units, who contracts to affix modular building components or units to realty inside Alabama,

is liable for consumers use tax computed on the cost price of the materials incorporated

into the components or units which the builder or manufacturer affixes to realty in Alabama

pursuant to the contract. Credit for legally imposed sales and use taxes paid to any other

state or its subdivisions will be allowed against the Alabama use tax due as outlined in Rule

810-6-5-.04. (Sections 40-23-60(5) and 40-27-1, Article V.1, Code of Alabama 1975)

(Adopted August 15, 1974, readopted through APA effective October 1, 1982, amended

October 20, 1998)

810-6-1-.106. Monuments, Memorial Stones, Grave Markers, and other Decorative or

Commemorative Objects.

(1) Monuments, memorial stones, grave markers, or other similar decorative or

commemorative objects, collectively referred to in this rule as monuments, are building

materials. Sales of monuments to the person who installs or erects them to realty are retail

sales. The person who installs or erects monuments to realty is a contractor.

(2) A monument dealer or builder who contracts to furnish and install or erect

monuments is a contractor and shall pay sales or use tax to the supplier on the cost of the

monuments purchased for use in performing contracts or on the cost of the materials which

become a component part of monuments which the dealer/builder manufactures for use in

performing contracts. In the event the supplier is an unregistered out-of-state supplier, the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.106. (Continued)

monument dealer/builder shall compute and pay consumers use tax on the monuments or

monument materials purchased from the unregistered supplier. (Sections 40-23-1(a)(10)

and 40-23-60(5))

(3) A monument dealer or builder who sells monuments uninstalled is a retailer

and shall apply for and obtain a sales tax license or, if an out-of-state business with nexus

in Alabama, register to collect sellers use tax. The licensed or registered monument retailer

shall purchase at wholesale, tax-free all monuments purchased for resale and all materials

which become a component of monuments which the retailer manufactures for sale. The

monument retailer shall collect and remit sales or sellers use tax on the retail selling price

of all monuments sold without any deduction for labor used in manufacturing, cutting,

engraving, or marking the monuments. (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-

1(a)(10), 40-23-26, 40-23-60(5), 40-23-60(10), and 40-23-67)

(4) A monument dealer or builder in Alabama who is in the dual business of both

selling monuments uninstalled and contracting to furnish and install or erect monuments

shall obtain a sales tax license. The dual business monument dealer/builder shall

purchase at wholesale, tax-free all monuments and all materials becoming a component of

monuments which the dealer/builder manufactures. The dual business monument

dealer/builder shall collect sales tax from the customer and remit the tax to the Department

of Revenue on all retail sales of uninstalled monuments and shall compute and pay sales

tax on all monuments or components of monuments withdrawn from inventory for use in

performing contracts to furnish and install or erect monuments. The measure of tax to be

collected on sales of uninstalled monuments is the selling price of the monument sold

without any deduction for labor used in manufacturing, cutting, engraving, or marking the

monument. The measure of tax on monuments or monument materials withdrawn from

inventory for use in performing contracts is the cost of these items to the dealer/builder who

withdraws them. (Sections 40-23-1(a)(8) and 40-23-1(a)(10)) (Adopted November 3,

1980, readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-1-.107. Movie Theaters.

(1) Movie theater operators owe sales or use tax on all of the equipment,

furniture, fixtures, and supplies used by them in operating their businesses. Movie film and

advertising materials, including trailers and posters, are subject to tax to be measured by

the purchase price when this property is bought outright and not rented. (Sections 40-23-

2(1) and 40-23-61(a), Code of Alabama 1975)

(2) The lessor of film or films is not required to report and pay rental tax on the

gross receipts derived from the leasing or rental of the film or films, when the lessee

charges admission for viewing the film or films. (Sections 40-23-2(2) and 40-12-223(1),

Code of Alabama 1975) (Adopted March 9, 1961, amended June 12, 1978, readopted

through APA effective October 1, 1982, amended July 30, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1.107.02. Motor Freight Lines, Sales to.

Any sale of property to motor freight lines is subject to the sales tax where the property is

delivered in Alabama by a seller doing business in Alabama. This is true even though the

purchase order may have been given out-of-state to an out-of-state branch of the seller and

even though payment is made out-of-state. (Readopted through APA effective October 1,

1982)

810-6-1-.109. Name Plates.

Name plates attached by the manufacturer to the manufacturer’s products for identification

purposes are purchased at wholesale as a component part of the property manufactured

for sale. (Section 40-23-1(a)(9)c) (Readopted through APA effective October 1, 1982,

amended October 1, 2014)

810-6-1-.110. Newspapers.

(1) A newspaper is printed matter which is distributed to the public generally. It is

in sheet form, is published at regular or short intervals, and contains information of current

events and news of general interest. In addition, a newspaper carries advertising and by

editorial comment, advocates the opinions of its publishers.

(2) A publication is a newspaper if it has qualified under postal regulations for

second class postal rates, is required by postal regulations to publish the names and

addresses of its owners and editors, and is qualified as a medium for publishing legal

notices.

(3) Company news sheets containing, primarily, information of company interest

only, distributed by the company to its employees and its clients and owners are not

newspapers and are not exempted from the sales or use taxes. This type of material is

subject to tax measured by its purchase price. When purchased in Alabama, the printer will

be required to collect the tax from the company. When purchased outside of Alabama, the

tax will be required to be paid direct to the Department of Revenue by the company making

the purchase.

(4) Postage charges over and above the regular price for the publication,

separately billed, for mailing to individual readers will not be required to be included in the

measure of the tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October

1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.110.01. Newspapers, Sales of.

(1) Sales of newspapers are subject to sales tax except when made at wholesale

to dealers licensed in accordance with the provisions of Section 40-23-6, Code of Alabama

1975, as amended, or when made to the United States, the State of Alabama, or the

counties or cities of the state.

(2) Sales of newspapers made by publishers and licensed dealers to unlicensed

independent newsboys will be, in all instances, subject to tax as retail sales, the tax to be

measured by the gross proceeds of such sales.

(3) The word "newsboys" as used herein shall be understood to mean street

hawkers and newspaper route persons of all ages.

(4) Newsboys who are itinerant vendors who have not filed with the Department

of Revenue the bond required by the provisions of Section 40-23-24, Code of Alabama

1975, as amended, will not be licensed as dealers under said act. (Amended January 25,

1977, to comply with decision rendered by the Court of Civil Appeals in State v. The

Advertiser Company). (Readopted through APA effective October 1, 1982)

810-6-1-.111. Occasional Sale.

Property acquired for use or consumption may be sold tax free at a private sale completely

disassociated from any retail business which may be operated by the seller. (Attorney

General Opinion Price, May 12, 1937) (Readopted through APA effective October 1, 1982)

810-6-1-.112. Signs.

(1) Signs are subject to tax on the full sales price when such signs are standard,

prefabricated by the seller or his supplier, and delivered as a complete unit.

(2) When the signs are custom built into a building or otherwise affixed to real

property, they come within the building materials provision with the tax being due from the

person who erects the sign to his supplier on the cost of materials used to construct the

sign, in which case no tax would be due from the person installing the sign on his service in

attaching the materials to the building and/or real property. The same rule applies when a

builder constructs an outdoor advertising sign that will become affixed to real property from

the ground up using lumber, nails, sheetmetal, etc.

(3) In instances where the sign company subcontracts the installation or

subcontracts a portion of the construction of the sign, taxation of the materials will be as

described above in paragraph (2), with tax being due on the cost of the materials used by

the contractor and/or subcontractor that builds the custom-made signs.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.112. (Continued)

(4) The courts have held that the contractor provision provided in §40-23-1(a)(10),

Code of Ala. 1975, applies if all of the following criteria are met:

(a) The taxpayer must be a contractor.

(b) The materials must be building materials.

Revenue v. James A. Head & Co., 306 So.2d 5 (Ala. Civ. App.1974), cert. denied 306

So.2d 12 (1975).

(5) In some instances, the sign dealer will be in a dual business, both selling and

building signs. When both parts of the business are substantial rather than incidental, the

dealer should be set up to purchase all material at wholesale, tax free, and pay tax directly

to the department on sales and withdrawals. See Rule 810-6-1-.56, Dual Business and

Rule 810-6-1-.29, Building Materials Manufactured by Contractors.

(6) Billboard advertising is a service and is not subject to sales tax. The provider

of billboard advertising services must pay sales or use tax on purchases of supplies,

materials, and equipment used in the operation of the business. (§§40-2A-7(a)(5), 40-23-

1(a)(6), 40-23-30, 40-23-31, 40-23-83) (Adopted March 9, 1961, amended November 1,

1963, readopted through APA effective October 1, 1982, amended December 6, 1990,

amended October 1, 2014, amended April 14, 2022)

810-6-1-.113. Outside Signs, Furnished.

Outside signs furnished by a manufacturer to his customers, when such signs are furnished

without cost to the customers, are subject to the sales or use tax when purchased by the

manufacturer. These signs are not purchased to be resold, nor are they purchased as a

component of the property manufactured for sale by the manufacturers. (Section 40-23-

1(a)(9)) (Readopted through APA effective October 1, 1982)

810-6-1-.114. Painters.

(1) Persons doing any kind of painting where the only tangible personal property

supplied by them is the paint which they apply and the equipment, brushes, and supplies

used in such application are primarily rendering a service and not making retail sales. The

receipts from such painting are not subject to the sales tax. All of the paint, tools, brushes,

equipment and supplies purchased by the painters are subject to sales tax or use tax,

whichever applies, at the time of sale to the painter.

(2) Note however, that where painters sell painted signs, furniture, or articles

which they have manufactured or purchased for painting for resale purposes, such sales

are subject to sales tax. The paint and other materials used as a component part of articles

to be sold are purchased tax free at wholesale.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.114. (Continued)

(3) Where painters are both consuming paints, etc., in rendering services and

consuming from the same stock the same kind of property and manufacturing property for

sale, where the use and manufacturing is continuous and a substantial part of the total

business, and where suitable records are kept revealing costs of all materials used in

contract painting and cost of materials used in manufacturing, the painter using the

materials for both purposes will be allowed to purchase all of the dual purpose materials at

wholesale tax free and pay sales tax on the basis of gross receipts from property sold at

retail plus the total cost of all materials used, consumed, or furnished by him in his contract

painting business.

(4) Where the painter is in such dual business and his records are not kept to

reveal his sales and the cost of property used in contract painting, he shall be required to

pay sales or use tax on all of his purchases and, in addition, will be required to report and

pay sales tax on all of his sales of property at retail.

(5) Such consumable supplies as brushes, thinners, paint removers, hand tools,

sand paper, etc., are, in any event, taxable when purchased by the painter. (Section 40-23-

1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.116. Parts And Materials Used To Repair Or Recondition Dealers'

Automotive Vehicles.

(1) When a licensed automotive vehicle dealer makes purchases of parts and

materials to repair or recondition vehicles held in the dealer’s inventory for sale, the

purchases are tax free if the parts or materials become a part of the vehicle that will later be

sold and taxed on the total sales price.

(2) When a licensed automotive vehicle dealer repairs or reconditions vehicles for

individuals as well as vehicles that are a part of the dealer’s own inventory for sale, all of

the dealer's purchases of parts or materials are at wholesale, tax free. Provided suitable

records are maintained to distinguish between parts or materials used on the dealer’s own

vehicles and those of others, only the parts used in repairing the vehicles of others are

taxable when sold to the customer and materials used in reconditioning the vehicles of

others are taxable when withdrawn and used by the dealer-repairman.

(3) The term "materials" means items such as paint, body lead, solder, and wax

which become a part of a reconditioned automotive vehicle. Supply items not becoming a

part of a reconditioned automotive vehicle such as sandpaper, thinner used for cleaning

purposes, masking tape, and rags are taxable retail sales when purchased by the dealer.

The term "parts" means items that are passed by the dealer to the customer substantially

intact such as seat covers, gears, fan belts, piston, batteries, and tires. The term "parts"

does not include materials and supply items as defined and listed above. (§§40-2A-7(a)(5),

40-23-31, and 40-23-83, Code of Ala. 1975.) (Adopted March 9, 1961, amended November

1, 1963, readopted through APA effective October 1, 1982, amended October 8, 1985,

amended January 13, 2020)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.117. Pawnbrokers.

Pawnbrokers are required to file sales tax returns covering all property sold by them,

including in the taxable retail sales reported sales of property forfeited to them by reason of

the pawner's failure to redeem. (Section 40-23-2(1)) (Readopted through APA effective

October 1, 1982)

810-6-1-.118. Peddlers, Truckers.

(1) Peddlers and/or truckers making retail sales of tangible personal property

must apply for and obtain a sales tax license. Further, such peddlers and truckers must

collect sales tax from their customers on their retail sales of tangible personal property and

remit same to the Department of Revenue. (Section 40-23-6)

(2) Peddlers and truckers are to be licensed under the sales tax law only when

they have an established place of business or when they have a well established and

continuous business confined to a certain area or route. Peddlers and truckers having no

fixed place of business may, as a condition precedent to obtaining a sales tax license under

the Sales Tax Law, be required to furnish the bond provided for in Section 40-23-24, Code

of Alabama 1975 as amended. (Section 40-23-24)

(3) Sales to a trucker purchasing lumber for resale from a lumber manufacturer,

when said trucker does not have a sales tax license, are sales at retail subject to tax unless

the trucker has registered with the Department of Revenue and has received a certificate of

such registration pursuant to Code of Alabama 1975, Section 40-23-1(c). (Readopted

through APA effective October 1, 1982, amended September 25, 1992)

810-6-1-.119. Professional Photography Sales and Services, including Blueprints.

(1) The retail sales of photographs, blueprints and other similar articles are

subject to sales or use tax, whether delivered in final printed form or delivered in digital form

via telephone lines, over the Internet, by e-mail, or by another alternative form of

transmission. The transfer of digital images of these items from a seller to a purchaser for a

price constitutes the sale of tangible personal property. The form in which tangible property

is delivered by the seller to the purchaser is of no consequence. (Sections 40-23-2(1) and

40-23-61(a)) (Robert Smith FlipFlopFoto v. State of Alabama (Admin. Law Div. Docket No.

S. 05-1240, Final Order entered April 30, 2007))

(a) In cases where negatives belonging to the customer are developed, the

charge for developing the negatives is not subject to sales or use tax if a separate charge is

made to the customer.

(b) In cases where an airplane is chartered for use in making aerial photographs,

the charge for use of the airplane is not subject to sales or use tax if a separate charge is

made to the customer.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.119. (Continued)

studios for tinting or coloring, the receipts from such tinting or coloring are not subject to

tax, since such receipts result from services rendered and do not result from sales of

tangible personal property. (Section 40-23-2(1))

(2) The materials which become a physical part of the photographic prints,

blueprints, etc., are purchased tax free at wholesale by the seller of the photographic print,

blueprint, etc. (Sections 40-23-1(a)(9)b and 40-23-60-(4)b)

(3) The materials and chemicals used or consumed by the seller of photographic

prints, blueprints, etc., but not becoming a component thereof, are purchased at retail by

the seller and are subject to the sales or use tax, whichever may apply at the time of such

purchase. (Sections 40-23-1(a)(10) and 40-23-60-(5))

(4) The mechanical equipment used in the production of photographic negatives,

photographic prints, and blueprints including cameras are subject to the reduced machine

rate of sales or use tax. (Sections 40-23-2(3) and 40-23-61-(b))

(5) Photographic prints, blueprints, or other images sold to an advertising agency

for use in the performance of a contract are purchased at retail by the advertising agency

and are subject to the sales or use tax, whichever may apply at the time of such purchase.

(See Rule 810-6-1-.02, entitled Advertising Agencies.)

(6) The gross proceeds of services provided by photographers, including but not

limited to sitting fees and consultation fees, even when provided as part of a transaction

ultimately involving the sale of one or more photographs are exempt from sales and use

tax, so long as the exempt services are separately stated to the customer on a bill of sale,

invoice, or like memorialization of the transaction. For transactions occurring before

October 1, 2017, neither the Department of Revenue nor the local tax officials may seek

payment for sales or use tax not collected. With regard to such transactions in which sales

or use tax was collected and remitted on services provided by photographers, neither the

taxpayer nor the entity remitting the tax shall have the right to seek a refund of such tax

(Sections 40-2A-7(a)(5), 40-23-1(a)(9)b, 40-23-2(1), 40-23-2(3), 40-23-1(a)(10), 40-23-

31,40-23-60(4)b, 40-23-60(5), 40-23-61(a), 40-23-61(b), and 40-23-83, Code of Alabama

1975) (Amended November 3, 1980, readopted through APA effective October 1, 1982,

amended March 10, 1998, amended February 15, 2008, amended January 4, 2016,

amended September 29, 2017)

810-6-1-.123. Pig and Scrap Iron.

When a manufacturer of iron pipe withdraws pig and scrap iron from his raw materials stock

to be used by him in casting machine parts for his use, he must add the cost of such

materials into his gross proceeds of sales. (Issued January, 1951, readopted through APA

effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.124. Pipe Fittings.

Ordinarily pipe fittings are used by builders, contractors, or landowners as building

materials which are taxed in accordance with the building material provision found in the

definition of retail sales. In some instances, however, pipe fittings are used as standard

parts or attachments for machines used in manufacturing, in which case they are entitled to

the special machine rate of tax. See rule 810-6-2-.57 entitled Parts and Attachments For

Machines Used in Manufacturing. (Sections 40-23-1(a)(10), 40-23-2(3)) (Readopted

through APA effective October 1, 1982)

810-6-1-.125. Places of Amusement or Entertainment.

(1) The total receipts accruing from the operation of places of amusement or

entertainment are subject to the sales tax. Taxable gross receipts from places of

amusement shall include receipts from admissions, service charges, amusement devices,

musical devices, amounts paid to participate or engage in specific activities, and receipts

from parking facilities when made available at the place of amusement for the convenience

of patrons. Taxable gross receipts shall also include advertising receipts received from

promotional sponsors where the sponsor purchases the right to give away general

admission tickets or passes to a specific activity. Receipts received from third party

advertisers relating to advertising space on billboards, scoreboards, fences, programs or

tickets, or to radio or television time not in conjunction with the right to give away general

admission tickets or passes would not be subject to sales tax. (State of Alabama v.

Huntsville Baseball Club, Inc. and Birmingham Baseball Club, Inc. (Admin. Law Div. Docket

No. S. 92-208 & S. 92-170, decided January 18, 1995))

(2) Sales tax shall be collected as a separate item from the consumer at the

amusement rate of tax based on the price of admission to the place of amusement. Where

the tax is not stated and collected separately, the total amount of the admission price shall

be used as the measure of the tax. A deduction for the sales tax included in the price of

admission will be allowed in computing the tax due whenever the business has

permanently displayed a sign showing the admission price and the amount or amounts of

tax due within the view of persons paying the admission, or where the tickets used in

connection with the transactions have plainly printed on the face the admission price and,

as a separate item, the amount of sales tax due. Likewise, sales tax shall not be backed-

out of amounts received from amusement or musical devices where the business has failed

to permanently display a sign showing the price and the amount of sales tax due. The

federal amusement tax collected as a separate item shall not be included in the measure of

the sales tax. (Section 40-23-26)

(3) Places of amusement or entertainment where the public is charged a fee to

see, hear, attend, participate or engage in any kind of display, program, activity, or event

offered, include, but are not limited to, the following:

(a) Live or recorded performances, whether by individual ticket or by season

tickets:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.125. (Continued)

1. ballet performances;

2. circuses;

3. ice-skating shows;

4. motion pictures;

5. musical concerts;

6. opera performances;

7. outdoor theaters; and

8. theaters (movies and plays)

(b) Exhibitions or displays:

1. animal shows (contests, exhibitions);

2. antique shows;

3. arts and crafts, and art shows (fairs);

4. auto, boat or gun shows;

5. museums (that display art objects, antique autos, etc.); and

6. zoos

1. automobile races;

2. drag strip operations;

3. horse shows (horse riding exhibitions);

4. motorcycle races;

5. rodeos;

6. sporting events such as football, baseball, basketball, hockey, and soccer

games; and

7. wrestling or boxing;

(d) Participatory sports or games:

1. arcades where amusement devices such as pinball machines or video games

are played;

2. bowling games;

3. go-cart races;

4. golf courses;

5. golf driving ranges;

6. Internet cafes where amusement devices such as game consoles and

computer stations are assembled for game play and have computer network access or

Internet access to the video or computer games. (The Docking Station, LLC v. State of

Alabama (Admin. Law Div. Docket S. 07-124, Final Order decided May 1, 2007));

7. miniature golf courses;

8. para-sail boats;

9. pool (billiard) games;

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.125. (Continued)

10. skate board tracks;

11. skating rinks;

12. swimming pools; and

13. water slides;

(e) Fairs or carnivals:

1. amusement parks;

2. carnivals;

3. fairs;

4. games of skill, at a circus, carnival, etc.

5. shooting galleries (ranges); and

6. side shows;

(f) Other:

1. boat rides or sight-seeing tours for pleasure (marine life viewing, sunset

sailboat cruises, dinner cruises, etc.);

2. cover charges (for admission to dance halls, nightclubs, discos, etc. that

provide dancing, music, or other entertainment); and

3. rides for pleasure in helicopters, hot-air balloons, trains, etc.

(4) With the exception of athletic events conducted by educational institutions

other than primary or secondary schools, no sales tax is due on receipts accruing from

admissions from places of amusement or entertainment conducted by the State of

Alabama, a county or city of the State or any instrumentality thereof. (City of Anniston v.

State of Alabama, 91 So.2d 211)

(5) Public primary and secondary schools shall collect sales tax on admissions to

athletic contests which they conduct; but, instead of remitting the tax collected to the

Department of Revenue, the tax shall be retained by the school and used by the school for

school purposes.

(6) Private or nonpublic primary and secondary schools shall collect and remit

sales tax to the Department of Revenue on their gross receipts from athletic contests which

they conduct. Effective July 1, 2006, pursuant to Act #2006-602, private or nonpublic

primary and secondary schools shall continue to collect sales tax on admissions to athletic

contests which they conduct; but, instead of remitting the tax collected to the Department of

Revenue, the tax shall be retained by the school and used by the school for school

purposes. (Section 40-23-2(2))

(7) The sales tax levied in Section 40-23-2(2) does not apply to admissions to

any football playoff conducted by or under the auspices of the Alabama High School

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.125. (Continued)

Athletic Association. Taxes on admissions to these football playoffs shall continue to be

collected; but, rather than being remitted to the Department of Revenue, the taxes collected

shall be retained by the collecting schools and used for school purposes. Effective July 1,

2006, pursuant to Act #2006-602, this exemption and retention of the sales tax collected

shall apply to any athletic event conducted by or under the auspices of the Alabama High

School Athletic Association.

(8) Sales tax is due at the general rate of tax on the gross proceeds of retail

sales of food, drink, souvenirs and other tangible personal property sold at retail at places

of amusement or entertainment, except for sales made by counties and cities of the State

of Alabama as provided in Rule 810-6-2-.92.02 entitled State, County and City, Sales Made

By; and public and nonpublic primary or secondary schools and groups affiliated with these

schools such as parent-teacher organizations and booster clubs as provided in Rule 810-6-

2-.88.04 entitled Exemption for Certain Sales by Elementary and Secondary Schools,

School Sponsored Clubs and Organizations, and School Affiliated Groups. (Section 40-

23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA

effective October 1, 1982, amended June 5, 1992, amended September 29, 1994,

amended July 9, 1998, amended December 13, 2006, amended February 15, 2008)

810-6-1-.125.01. Amusement Tax Due on Fees Collected by Golf Courses open to

the Public.

(1) The term "golf course open to the public" as used in this regulation shall mean

any golf course, except those owned and operated by the State of Alabama or a county or

incorporated municipality of the State of Alabama, which allows the public to use one or

more of its facilities for a fee. However, the following policies or activities shall not cause

an otherwise private golf course to be classified as a golf course open to the public:

(a) reciprocal play agreements with other golf courses that are also not open to

the public.

(b) play by guests of a member (whether or not accompanied by the member).

4(a)(39), as amended.

(d) periodically holding invitational or charitable tournaments.

(e) the sale of condominium units the purchase of which carries with it the

privilege of using the golf course facilities.

(2) Golf courses open to the public are liable for and shall collect and remit the

amusement tax levied in Section 40-23-2(2) on fees paid by their customers including but

not limited to the following fees as of the effective date of this regulation:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.125.01. (Continued)

membership dues tennis court fees

initiation fees swimming pool fees

golf cart fees driving range fees

greens fees locker fees

(3) The gross proceeds from the sales of condominium units by golf courses

open to the public do not constitute gross receipts from places of amusement and,

therefore, are not to be included in the measure of tax levied in Section 40-23-2(2).

(4) Golf courses owned and operated by the State of Alabama or a county or

incorporated municipality of the State of Alabama are exempt from the amusement levy

contained in Section 40-23-2(2). (City of Anniston v. State, 265 Ala. 303, 91 So.2d 211

(1956))

(5) Retail sales of tangible personal property by golf courses owned and

operated by counties or incorporated municipalities of the State of Alabama are exempt

from sales tax. Retail sales of tangible personal property by all other golf courses, public or

private, are taxable.

(6) The provisions of this rule shall become effective October 1, 1993. (Adopted

through APA effective October 12, 1993)

810-6-1-.126. Pole Line Construction.

Materials used in the construction of pole lines for the transmission of electric power and

telephone, telegraph, radio, and television signals are building materials. These materials

are purchased at retail subject to sales or use tax, whichever may apply, by the persons

who erect the pole lines into place by attachment to real property. These materials include

poles, lines, lightning arresters, circuit breakers, switch gear, all pole accessories and also

include all the materials and equipment used in the construction of substations. This class

of materials is subject to tax at the four percent rate with the exception of transformers and

amplifiers which are taxable at the machine rate of one and one-half percent. (Sections 40-

23-1(a)(10), 40-23-2(3)) (Adopted May 26, 1961, effective July 1, 1963, amended

November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.128. Postal Uniforms.

(1) Effective November 14, 1983, the U. S. Postal Service's procedures regarding

uniform purchases for postal employees require vendor invoices to be made out directly to

the Postmaster who, upon approval of the purchase by the employee, forwards the invoices

to the Postal Data Center for certification and payment. Postal Service employees make no

payment and handle none of the money at any time. (Postal Bulletin No. 21425 dated

October 6, 1983, and Postal Bulletin No. 21547 dated January 2, 1986)

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.128. (Continued)

(2) Postal Uniform purchases handled in accordance with the procedures

outlined above are sales to the U. S. Postal Service and, therefore, are not subject to

Alabama sales or use tax. (Section 40-23-4(a)(17)) (Adopted June 12, 1978, readopted

through APA effective October 1, 1982, amended April 3, 1987)

810-6-1-.129. Premiums and Gifts.

A sale of tangible personal property is taxable when made to a person who will use the

property as a prize or a premium or will give the property away as a gift. (Section 40-23-

1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.130. Printers.

(1) Gross receipts accruing from the retail sales of printed matter of all kinds are

subject to the sales tax. (Also see rule 810-6-1-.137 entitled Raw Materials & Supplies

Purchased by Manufacturers and Compounders.

(2) Sales to consumers of printed matter such as catalogs, books, letterheads,

invoice forms, envelopes, folders, advertising circulars, and the like by printers or others

engaged in selling printed matter are subject to the sales tax. A printer may not deduct

from the selling price of such tangible personal property charges for the labor or service of

performing the printing even though such labor or service charges may be billed to the

customer separately from the charge for the stock. Such labor or service is embodied in

and becomes a part of the tangible personal property sold.

(3) Where printers purchase from the United States Post Office stamped cards

and envelopes and print thereon various legends for customers, the printers must pay sales

tax measured by their gross proceeds of sales of the printed cards or envelopes to their

customers. Such cards and envelopes constitute tangible personal property and, if they are

not resold by such customers, the sales by the printers are at retail. Such printers will not

be required to pay sales tax on the amount of the postage where stated separately in billing

to customers.

(4) No tax arises from the service of printing or from the service of typesetting

performed by the printer for a customer or for another printer where there is no transfer of

ownership of tangible personal property from the printer to his customer. (Section 40-23-

1(a)(6))

(5) Sales of materials to printers are at wholesale, tax free, when such materials

become a component of the printed matter produced for sale. The machines used in the

printing come within the machine levy and are taxed at the one and one-half percent rate.

The supplies, materials, and equipment not becoming a component of the product sold or

not constituting a machine used in manufacturing are subject to the sales or use tax,

whichever may apply, at the general rate of four percent.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.130. (Continued)

(6) Newspaper advertising supplements or circulars inserted in newspapers

usually fall in the following categories:

(a) A buyer enters into a contract with a printer for the printing of advertising

circulars, catalogs, etc., and directs the printer to deliver the printed material to a

newspaper or several newspapers, or directs that they be delivered to another location,

sometimes the buyer's place of business. The buyer then enters into a second contract with

the newspaper for distribution of the inserts. That portion of advertising supplements or

inserts retained by the buyer for distribution to buyer's customers, that do not become part

of newspapers manufactured for sale, will be subject to sales tax. However, those

advertising supplements or inserts that are delivered to the purchasers or newspaper

companies to be inserted into and become part of the newspaper are purchased at

wholesale, tax free. Ralph P. Eagerton, Jr. v. Dixie Color Printing Corporation.

(b) Newspaper advertising supplements and inserts which are inserted into

newspapers and sold as part and parcel of the newspaper, the retail sales of which are

subject to the sales tax, no sales tax arises where such advertising supplements or inserts

are

1. printed by the publishers of the newspaper and inserted into and sold

as part and parcel of the newspaper published by such publishers, or

2. printed by another printer for the newspaper publisher and paid for by

the newspaper publisher for insertion into and sold as part and parcel of the newspaper.

(Adopted March 9, 1961, amended November 1, 1963, amended August 16, 1974,

amended June 12, 1978, readopted through APA effective October 1, 1982, amended

January 10, 1985, amended March 28, 2016)

810-6-1-.131. Withdrawals of Products Manufactured, Compounded, or Processed

for Sale.

(1) Except as noted in paragraphs (2) and (3) below, manufacturers,

compounders, and processors shall include in taxable sales reported for sales tax purposes

the costs of materials purchased at wholesale which have become ingredients or

components of products manufactured or compounded for sale by them but which are

withdrawn from stock for their own use or consumption.

(2) Neither the withdrawal, use, or consumption of a manufactured product by the

manufacturer thereof in quality control testing performed by employees or independent

contractors of the manufacturer nor a gift by the manufacturer of a manufactured product,

withdrawn from the manufacturer’s inventory, to an entity listed in 26 U.S.C. Sections

170(b) or (c), is subject to sales tax. (Sections 40-23-1(a)(6), 40-23-1(a)(10) and 40-23-

1(e))

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.131. (Continued)

(3) Refinery, residue, or fuel gas, whether in a liquid or gaseous state, that has

been generated by, or is otherwise a by-product of, a petroleum-refining process, which

gas is then utilized in the process to generate heat or is otherwise utilized in the distillation

or refining of petroleum products is not taxable under the withdrawal provisions of the sales

or use tax statutes. (Sections 40-23-1(a)(6), 40-23-1(a)(8) and 40-23-60(5)) (Readopted

through APA effective October 1, 1982, amended January 5, 1996, amended December

23, 1999)

810-6-1-.132. Proofs, Wholesale, Tax Free.

Sales of materials to the processors of the proofs are at wholesale, tax free, when such

materials become a component part of the proofs produced for sale. (Section 40-23-

1(a)(9)b) (Readopted through APA effective October 1, 1982)

810-6-1-.133. Pump Installed for a County or Municipality by a Contractor.

(1) A contractor who installs a pump for a county or incorporated municipality of

the State of Alabama is required to pay tax on his or her purchase of the pump. The pump

is in the same category as any other building materials which become affixed to realty.

When title to a pump installed under contract passes from the contractor to the landowner,

it has ceased to be personal property and has become real property. (Sections

40-23-1(a)(10) and 40-23-60(5))

(2) On and after January 1, 2014, the sale of a pump to, or the storage, use, or

consumption of a pump by, any contractor or subcontractor to be incorporated into realty

pursuant to a contract with any county or incorporated municipality of the State of Alabama

awarded on or after January 1, 2014, is exempt from state, county, and municipal sales and

use taxes provided the contractor or subcontractor has complied with Rule 810-6-3-.77

entitled Exemption of Certain Purchases by Contractors and Subcontractors in conjunction

with Construction Contracts with Certain Governmental Entities. (Act No. 2013-205)

(Sections 40-2A-7(a)(5), 40-23-1(a)(10), 40-23-31, 40-23-60(5), 40-23-83, Code of

Alabama 1975) (Readopted through APA effective October 1, 1982, amended March 27,

2001, amended June 10, 2005, amended December 25, 2013)

810-6-1-.134. Pumps.

Well pumps when installed become realty along with well casing, pumphouse, well

connections, etc. The person who installs the pump is the purchaser at retail who must pay

sales tax or use tax, as the case may be. (Section 40-23-1(a)(10)) (Readopted through

APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.137. Raw Materials and Supplies Purchased by Manufacturers and

Compounders.

(1) Subject to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled

Ingredient or Component of Product Manufactured or Compounded for Sale, ingredients or

materials which are purchased by manufacturers or compounders and which become a part

of the property manufactured or compounded for sale are purchased at wholesale, tax free,

by such manufacturers or compounders. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(2) One-time-use containers used by manufacturers and compounders to

package their products and which become the property of the purchaser of the products are

purchased at wholesale, tax free, by the manufacturers and compounders. Returnable

containers are purchased at retail and are subject to tax. (Sections 40-23-1(a)(9)c and 40-

23-60(4)c)

(3) Labels purchased by manufacturers and compounders, affixed to one-time-

use containers, and sold along with the contents of the containers by said manufacturers

and compounders are purchased at wholesale, tax free, by the manufacturers and

compounders. The term "label" is understood to mean a tag or sticker of any material

imprinted with information and said term includes price stickers, address stickers, and

shipping tags as well as those tags or stickers which identify or describe the property to

which they are attached. (Sections 40-23-1(a)(9)c and 40-23-60(4)c) (Readopted

through APA effective October 1, 1982, amended January 29, 1990, amended September

25, 1992, amended December 10, 1997)

810-6-1-.138. Rebuilding of Tracks, Idlers, and Rollers.

(1) The rebuilding of tracks, idlers, and rollers belonging to others is a service

and the receipts from this service by the repairman-dealer are not subject to sales or use

tax. The repairman-dealer shall pay sales or use tax to the supplier on purchases of

materials used in rebuilding tracks, idlers, and rollers belonging to others.

(2) Sales of rebuilt tracks, idlers, and rollers by the repairman-dealer are subject

to sales or use tax. The repairman-dealer shall compute sales or use tax on the total sales

price and collect the tax from the person to whom the rebuilt item is sold. (Sections 40-23-

1(a)(6) and 40-23-60(10))

(3) Where a repairman-dealer (i) rebuilds tracks, idlers, and rollers that are part of

the repairman-dealer’s own stock of goods for sale and (ii) rebuilds tracks, idlers, and

rollers belonging to others, the following shall apply:

(a) Sales or use tax shall be paid by the repairman-dealer to the supplier on all

purchases of materials used in rebuilding the tracks, idlers, and rollers unless the

repairman-dealer elects to claim the exemption provided by Section 40-23-1(a)(9)k for

materials purchased or withdrawn for use in rebuilding tracks, idlers, and rollers which are

part of the repairman-dealer’s stock of goods for sale.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.138. (Continued)

(b) If the repairman-dealer elects to claim the exemption in Section 40-23-

1(a)(9)k, all materials becoming a part of the rebuilt tracks, idlers, and rollers shall be

purchased at wholesale tax-free by the repairman-dealer and the repairman-dealer shall

maintain suitable records to distinguish between the materials used in rebuilding the tracks,

idlers, and rollers offered for sale by the repairman-dealer and the materials used by the

repairman-dealer in rebuilding the tracks, idlers, and rollers of others. If suitable records

are maintained, the repairman-dealer shall collect and remit sales tax on sales of rebuilt

tracks, idlers, and rollers in accordance with paragraph (2) and shall compute and pay

sales tax on the cost of the materials withdrawn and used in rebuilding tracks, idlers, and

rollers belonging to others.

determine which materials are used in rebuilding tracks, idlers, and rollers offered for sale

by the repairman-dealer, then all materials used by the repairman-dealer shall become a

taxable withdrawal by the repairman-dealer. The sales tax due on withdrawals by the

repairman- dealer shall be computed on the purchase price or cost to the repairman-dealer

of the materials withdrawn for use. (Section 40-23-1(a)(10))

(4) Where any used track, idler, or roller which is a part of an automotive vehicle,

truck trailer, semi trailer, or house trailer is taken in trade, or in a series of trades, as a

credit or part payment on the sale of a new or rebuilt track, idler, or roller, the sales or use

tax shall be paid on the net difference, that is, the price of the new or used track, idler, or

roller sold less the credit for the used track, idler, or roller taken in trade. See Rule 810-6-

1-.22 entitled Barter, Exchange, Trade-In. (Section 40-23-2(1)) (Adopted July 16, 1964,

amended July 6, 1977, amended August 10, 1982, readopted through APA effective

October 1, 1982, amended July 9, 1998)

810-6-1-.140. Recordings Purchased for Use with Musical Devices.

Recordings purchased for use in operating musical devices are subject to sales or use

taxes whichever may apply. When such recordings have served their purpose in

connection with the operation of musical devices and are sold at retail as used recordings

as a regular course of business by the machine operators, such sales are subject to sales

tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-141. Repairs, Outside or Sublet.

(1) The operator of a repair shop who sublets a part or all of a repair job

purchases at wholesale tax free the repair parts installed by the outside or subrepairman.

The shop operator shall bill such repair parts to his customers separately from any charges

for labor and services and report and pay sales tax only on the retail sales price of such

parts. Provided however, where repair parts are not separately billed, sales tax shall be

paid on the total charge for the job.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.141. (Continued)

(2) When the subrepairman uses or consumes materials and supplies, such as

solder, paint, paint thinners, bits of wire, and cement, these materials are subject to tax at

the time of purchase by the subrepairman, the tax to be paid to the supplier. Provided

where the subrepairman also is engaged in the business of selling at retail such supplies

and materials, they are purchased by him at wholesale and are subject to the tax when

withdrawn from stock for use or consumption, the tax to be paid direct to the Department of

Revenue by the subrepairmen. (Section 40-23-1(a)(10)) (Readopted through APA

effective October 1, 1982)

810-6-1-.142. Repairs to Equipment.

Where a repairman in Alabama repairs equipment, materials which pass to the repairman's

customer but which lose their identity when used by the repairman or which are

inconsequential in amount such as, paint, solder, and tacks are considered to have been

used or consumed by the repairman and are taxable at the time of the sale to him.

(Readopted through APA effective October 1, 1982)

810-6-1-.143. Repairs to Real Property.

(1) The term “repairs to real property” as used in this rule includes, but is not

limited to, the repairing, remodeling, restoring, or altering of buildings of all kinds and

descriptions, plumbing systems, electric supply systems, water supply systems, central

heating and air conditioning systems, roads, streets, railroads, and railways.

(2) Sales or use taxes are due on sales of materials to repairmen, builders,

contractors, or other persons who use the materials in making repairs to real property.

(Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975) (Readopted through

APA effective October 1, 1982, amended December 28, 1998)

810-6-1-.144. Repairs to Tires and Tubes.

(1) Tire repairmen shall collect and remit sales tax on total charges for recaps,

retreads, and the major repairs; such as sectional, reinforcement, and spot repairs.

Materials used in recapping, retreading, and major repairing are purchased at wholesale,

tax free. Machines used directly in recapping, retreading, and major repairing are taxed at

the special one and one-half percent rate levied on machines.

(2) Tire repairmen shall not collect sales tax on charges for tube and minor tire

repairs. Materials used in making tube and minor tire repairs are taxable to the repairmen.

Machines used solely in making tube and minor tire repairs are taxable to the repairmen at

the general rate of 4 percent.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.144. (Continued)

(3) (a) Where the repairman uses repair materials for tube and minor tire repairs

only, he shall pay tax thereon to his supplier; or, if purchased outside of Alabama from a

supplier who does not collect Alabama tax, he shall pay the tax direct to the Department of

Revenue as use tax.

(b) Where the repairman does recapping, retreading, and major repairing as well

as tube and minor tire repair, he may purchase at wholesale all materials used in tire and

tube repairing; then shall pay sales tax direct to the Department of Revenue on the cost

price of materials withdrawn for use in tube and minor tire repairing.

(4) All hand tools used in recapping, retreading, and major and minor tire

repairing are subject to sales tax. All supplies used or consumed by tire repairmen and

which do not pass on to their customers are taxable when purchased by them.

(5) Sales by repairmen of repaired, retreaded, and recapped tires owned by them

are subject to tax measured by the total sales price without any deduction for labor or cost

of materials. (Readopted through APA effective October 1, 1982, amended April 3, 1987)

810-6-1-.144.03. Resale, Sales for.

All buyers of property for resale purposes are entitled to purchase at wholesale, tax free,

the property they resell as regular course of business when they have secured the sales

tax license required by law. This rule also applies to retailers located outside Alabama

when they have secured the sales tax license required by law in the state in which they are

located. (Section 40-23-6) (Adopted August 10, 1982, readopted through APA effective

October 1, 1982)

810-6-1-.145. Meals Furnished to Employees by Restaurants.

Restaurants, cafes, and other eating establishments are liable for sales tax on meals

furnished to their employees as part of a compensation plan. The measure of tax is the

value of food withdrawn and consumed by the employees.(State v. Morrison Cafeterias

Consolidated, Inc., 487 So.2d 898 (Ala. 1985)) (Sections 40-23-1(a)(6) and 40-23-1(a)(10))

(Readopted through APA effective October 1, 1982, amended April 3, 1987, amended

March 10, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.147. Returned Merchandise.

(1) When property is returned by the purchaser and the seller refunds the full

amount paid, there is no sale and the sales price of such returned property is not to be

included in the gross proceeds of sales.

(2) When property is returned and a part, but not all, of the sales price is

refunded, the full sales price is to be included in the gross proceeds of sales. This would

include but not be limited to property returned and a restocking fee is charged before

refunding the balance of the purchase price. (State v. Leary and Owens Equipment

Company).

(3) When the sale is on credit and less than the amount paid is refunded, the

measure of the tax is the total amount of the sale. (Section 40-23-1(a)(6)) (Adopted March

9, 1961, amended Nov. 3, 1980, readopted through APA effective October 1, 1982)

810-6-1-.148. Rural Electrification Authority (R.E.A.).

Cooperatives set up under authority of United States Rural Electrification Laws are not

instrumentalities of any governmental body. All purchases are subject to the sales and use

tax, whichever may apply, except when otherwise specifically exempted. (Section 40-23-

1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.150. Sale.

The term "sale" or "sales" includes installment and credit sales and the exchange of

property as well as the sale thereof for money, every closed transaction constituting a sale.

Each transaction whereby property is transferred from one owner to another constitutes a

sale under the sales tax law except in instances where the property is transferred as a gift

or where possession without ownership is given on a rental or lease basis with no intention

to transfer ownership at the end of the rent or lease period. (Section 40-23-1(a)(5))

(Readopted through APA effective October 1, 1982)

810-6-1-.150.05. Sand, Gravel, and other Building Materials, Sales of.

(1) The seller is making taxable sales of such building materials as sand, gravel,

earth, crushed stone, and asphalt which are merely dumped or deposited by him on a job

site or in a storage area. In this case the measure of the tax is the total amount received by

the supplier without any deduction for the expense of loading, dumping, or hauling or any

other expense whatsoever.

(2) On the other hand, sand, gravel, earth, crushed stone, and asphalt or like

materials are purchased at retail subject to a tax measured by the purchase price where

such materials are spread and placed by the purchaser under a contract to furnish and to

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.150.05. (Continued)

apply the materials in such a way that they become a part of real property. Where this is

the case, the purchaser is acting as a contractor rather than as a retailer and there is no

sale at retail by him to the landowner.

(3) In case the supplier is both selling materials at retail and contracting to furnish

and apply them, the rule of dual businesses will apply with the supplier purchasing all

materials at wholesale, tax free, and thereafter reporting and paying tax to the Department

of Revenue on both sales at retail and on withdrawals for use under contracts to furnish

and apply. (Section 40-23-1(a)(10)) (Adopted May 26, 1961, readopted through APA

effective October 1, 1982)

810-6-1-.166. Shoe Repairs.

(1) A shoe repair shop renders a service and also sells tangible personal

property. A job which does not involve a sale of tangible personal property but merely

represents the rendering of service does not require the payment of sales tax. In any

transaction where tangible personal property is sold sales tax applies to the full purchase

price without any deduction for labor or service.

(2) If the tangible personal property is sold and the labor or service is furnished in

separate transactions, each transaction being billed separately, then the tax applies to the

sales price of the tangible personal property and not to the labor or service.

(3) Materials and supplies used by shoe repairmen in rendering services, but

which are not resold as merchandise are subject to sales tax when purchased by the

repairmen from the supply dealer. (Section 40-23-1(a)(10)) (Readopted through APA

effective October 1, 1982)

810-6-1-.167. Structural Steel.

Structural steel is a building material and, for that reason, is usually subject to tax at the

general rate at the time of its sale to the builder, contractor, or landowner who purchases it

to add to or alter real property. This is in accordance with the building material provision

found in the definition of "retail sale". In some instances, however, steel fabricators bill out

machine parts as structural steel, in which case, where the facts show that the steel

purchased is a part or attachment for a machine used in mining, quarrying, manufacturing,

processing, or compounding, the machine rate will apply. (Sections 40-23-1(a)(10), 40-23-

2(3)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.168. Table Wine Tax.

Whether billed separately to the purchaser or included in a lump sum selling price; the table

wine tax levied pursuant to Code of Alabama 1975, Section 28-7-16, may not be excluded

from the measure of sales or use tax. (Sections 40-23-1(a)(6) and (40-23-1(a)(8))

(Adopted November 3, 1980, amended March 16, 1981, readopted through APA effective

October 1, 1982, amended January 10, 1985, amended May 22, 1993)

810-6-1-.170. Theatrical Productions, Symphonies, etc.

(1) The gross proceeds from sales of admissions to any theatrical production,

symphonic or other orchestral concert, ballet or opera production when such concert or

production is presented by any society, association, guild, or workshop group, organized

within this state, whose members or some of whose members regularly and actively

participate in such concert or production for the purpose of providing a creative outlet for

the cultural and educational interests of such members, and of promoting such interests for

the betterment of the community by presenting such productions to the general public for

an admission charge is exempt from the sales tax.

(2) In order to be exempt from the tax, some of the members of the society,

association, guild, or workshop group must take an active part in the concert or production

such as director, musician, or actor. (Section 40-23-4(a)(24)) (Readopted through APA

effective October 1, 1982)

810-6-1-.172. Taxability of Cross Ties and Timbers.

(1) Purchases of cross ties and timbers, treated or untreated, by railroad

companies and others for use in Alabama are subject to sales or use tax on the following

basis:

(a) Where untreated cross ties or timbers are purchased from outside this state

and also creosoted outside this state and subsequently brought into this state for use, the

measure of the use tax shall be the cost of the untreated ties or timbers plus the cost of

creosoting. (Section 40-23-60(5), Code of Alabama 1975)

(b) Where untreated cross ties or timbers are purchased from outside this state

and brought into this state and creosoted within this state prior to their use, the measure of

the use tax shall be the cost of the untreated ties and timbers since the materials used in

creosoting the ties or timbers are taxable when purchased or withdrawn by the person

performing the service. (Section 40-23-60(5))

shipment in interstate commerce without paying the Alabama sales tax and where the cross

ties or timbers are shipped outside this state for creosoting and subsequently shipped into

and used within this state, the purchase is subject to the use tax as measured by the full

price of the finished product brought into this state. (Section 40-23-60(5))

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.172. (Continued)

(d) Where the Alabama sales tax is paid on the purchases of untreated cross ties

or timbers and the cross ties or timbers are subsequently creosoted either within this state

or outside this state, the purchaser would owe no additional Alabama sales or use tax on

the cross ties or timbers. (Section 40-23-1(a)(6))

(e) Cross ties and timbers are taxable when sold under bulk contract with the

purchaser inspecting and approving the material at the plant or yard of the seller and the

seller segregating and allotting the approved material to the purchaser for future shipment

according to subsequently issued shipping instructions. This material is to be reported by

the seller as subject to tax in accordance with the provisions of Section 40-23-8. (Sections

40-23-2(1) and 40-23-8))

(f) Cross ties and timbers are classified as building materials and are taxed at

the general rate of sales or use tax except when used as a roadway for quarrying or mining

equipment in which event the sales of cross ties and timbers are subject to the reduced

mining or quarrying rate of sales or use tax. (Sections 40-23-2(1), 40-23-61(a), 40-23-2(3),

and 40-23-61(b))

(2) Cross ties and timbers sold F.O.B. an Alabama shipping point on a purchase

order requiring the seller to ship to an out-of-state destination are sales in interstate

commerce and are not subject to sales tax regardless of whether shipment is made by the

use of purchaser's transportation facilities when the purchaser is a common carrier.

(Sections 40-23-1(a)(5) and 40-23-4(a)(17)) (Readopted through APA effective October 1,

1982, amended October 20, 1998)

810-6-1-.173. Tin Shops.

(1) Tin shops are usually found to be engaged in contracting, selling,

manufacturing, and repairing. Because of the complex nature of these businesses, they

ordinarily will be set up to purchase all of their materials at wholesale, tax free, with tax to

be paid direct to the Department of Revenue as sales tax on use and sales.

(2) As contractors making additions to real property, tax should be paid on the

cost price of materials which are used in the form received from the suppliers. Where the

property installed is manufactured by the tin shop operators in their shops, sales tax is to

be paid measured by the reasonable and fair market value of the property. (See rule

entitled Building Materials Manufactured by Contractors.)

(3) As vendors making direct sales, sales tax is due measured by the sales price

of the property sold.

(4) As repairmen, the sales tax is due on the cost of materials and supplies used

or the sales price of the property transferred in the transactions, as the case may be. (See

rule 810-6-1-.95 entitled Materials Used in Repairing, for ruling with regard to use and sale

of materials used in repairing.) (Section 40-23-1(a)(10)) (Readopted through APA effective

October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.174. Tobacco tax.

Whether billed separately to the purchaser or included in a lump sum selling price; state,

county, and municipal tobacco excise taxes may not be excluded from the measure of

sales or use tax. (Sections 40-23-1(a)(6) and 40-23-1(a)(8)) (Adopted August 5, 1963,

amended October 29, 1976, readopted through APA effective October 1, 1982, amended

May 22, 1993)

810-6-1-.175. Top Soil, Fill Dirt, Sand and Gravel.

(1) Sales of top soil, fill dirt, sand, and gravel are subject to sales tax, the tax to

be measured by the amounts received from such sales including charges for transportation

furnished by the seller. These materials are sold in every instance where they are supplied

to tenants, landowners, builders, or contractors for a consideration, for use in making

additions or alterations to real property. Suppliers may not, for tax purposes, claim to

furnish these materials free where charges are made for services such as hauling, loading

and handling. The measure of the tax is the amount received by the supplier without any

deduction for labor or services which go into producing and delivering the materials

regardless of the fact that such transportation, labor, or service may be billed as separate

items.

(2) This rule applies only where the materials are furnished, and does not apply

where a charge for hauling is made by a person who contracts to haul materials which he

does not furnish. (Sections 40-23-1(a)(6), 40-23-2(1)) (Readopted through APA effective

October 1, 1982)

810-6-1-.176. Trade Stamps and Trade Coupons.

When making a sale of tangible personal property where as an incident thereto trade

stamps or trade coupons are issued free to the purchaser, the seller shall collect and remit

sales tax measured by the total amount paid by the purchaser. The seller shall not deduct

from the total amount paid by the purchaser any amount on account of the value of the

stamps or coupons issued nor, where the trade stamps or trade coupons have a fixed

redemption value and are issued free based on a fixed ratio of stamp or coupon value to

the sales price, shall the seller be required to add the value of the trade stamps or trade

coupons issued to the total amount paid by the purchaser before computing, collecting, and

remitting the sales tax. (Section 40-23-1(a)(6), Code of Alabama 1975) (Readopted

through APA effective October 1, 1982, amended July 30, 1998)

810-6-1-.177. Trading Stamps.

(1) This rule is intended to apply to those transactions where trading stamps are

exchanged for articles of merchandise called premiums. These exchanges are usually

referred to as trading stamp redemptions.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.177. (Continued)

(2) The exchange of a premium for trading stamps is deemed to be a sale at

retail. This exchange is subject to the sales tax. The amount of tax is to be measured by

the fair retail market value of the premium. Where the trading stamps have been given a

fixed value, the measure of the tax shall not be less than the fixed value of the trading

stamps used in exchange. If, however, the fair retail market value of the premium is more

than the fixed value of the trading stamps required for its redemption, the measure of the

tax shall be the fair market value, rather than the fixed value of the stamps. The premiums

used to redeem trading stamps are purchased at wholesale, tax free. (Section 40-23-2(1))

(Readopted through APA effective October 1, 1982)

810-6-1-.178. Transportation Charges.

(1) Where a seller delivers tangible personal property in his own equipment or in

equipment leased by him, the transportation charges shall be considered a part of the

selling price subject to sales or use tax. Said transportation charges are taxable even if

billed separately.

(2) Where delivery of tangible personal property is made by common carrier or

the U. S. Postal Service, the transportation charges shall not be subject to sales or use tax

if billed as a separate item and paid directly or indirectly by the purchaser. To be excluded

from the measure of tax, these transportation charges must be separate and identifiable

from other charges. Transportation charges are not separate and identifiable if included

with other charges and billed as "shipping and handling" or "postage and handling".

Indirect payment of the transportation charges shall include those instances where the

seller prepays the freight to the common carrier or U. S. Postal Service and is reimbursed

by the purchaser.

(3) Where a seller contracts to sell and deliver tangible personal property to some

designated place and makes arrangements for delivery of the property by means other than

a common carrier or the U. S. Postal Service, the transportation charges shall be

considered a part of the selling price subject to sales or use tax. Said transportation

charges are taxable even if billed separately. (Sections 40-23-1(a)(5) and 40-23-1(a)(6))

(Amended August 16, 1974, amended October 29, 1976, readopted through APA effective

October 1, 1982, amended April 3, 1987)

810-6-1-.179. Transportation Costs, Sellers.

In no event may a seller deduct costs of bringing property to his place of business or costs

of delivering property from factory to his customer when such factory to customer

transportation is paid by the seller either to a transportation company, the manufacturer, or

by way of credit to this customer for transportation costs paid by the customer and

deducted from seller's invoice. (Section 40-23-1(a)(6)) (Readopted through APA effective

October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.180. Truck Trailers and Semitrailers.

The term "semitrailers" in the Sales and Use Tax Laws shall include semitrailers designed

and intended for use in connection with trucks and highway tractors ordinarily used for

highway hauling; also luggage, boat, utility, camper, and travel semitrailers designed

primarily to be drawn by passenger automobiles. A semitrailer may be pulled by any type

automotive vehicle and be taxed at the automotive rate of 2%. A trailer must be pulled by a

truck or truck tractor to be taxed at the automotive rate. (Section 40-23-2(4)) (Adopted

March 9, 1961, amended March 23, 1962, amended December 15, 1969, readopted

through APA effective October 1, 1982, amended January 24, 1989)

810-6-1-.181. Undertakers and Morticians.

(1) Sales of tangible personal property to undertakers and morticians are retail

sales and subject to sales or use tax at the time of purchase. If the undertaker or mortician

purchases tangible personal property from out-of-state vendors on which the tax has not

been paid to the vendor, the undertaker or mortician will be required to pay consumers use

tax directly to the Department.

(2) Where an undertaker manufactures vaults for his own use, he would be

required to pay tax to his supplier on all the ingredients that become part of the vaults. If he

is in a dual business of manufacturing vaults for his own use and for sale to others, he

would be required to be licensed by this Department, buy all of his ingredients at wholesale

tax exempt, and pay tax to this Department on the sale of vaults and the withdrawal of

vaults for his own use. The measure of the tax on the withdrawal of vaults for his own use

would be the cost of materials and ingredients that become part of the manufactured vault.

(Section 40-23-1(a)(10)) (Adopted January 20, 1966, readopted through APA effective

October 1, 1982, amended June 5, 1992)

810-6-1-.182. Upholstery Shops. (REPEALED)

(Readopted through APA effective October 1, 1982, Repealed November 14, 2021)

810-6-1-.183. Used And Secondhand Property. (REPEALED)

(Readopted through APA effective October 1, 1982, repealed effective January 14, 2022)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.183.02. Sales of Tangible Personal Property Through Vending Machines.

(1) Sales tax is due on sales of tangible personal property sold through vending

machines operated by coins, currency, credit cards, slugs, tokens, or other media of

exchange. The retail operator of vending machines shall report and pay sales tax on the

operator’s total gross receipts from sales through vending machines without any deduction

for commissions or rental charges paid to a person on whose property the machines are

located. Sales tax may be removed from the retail vending machine operator’s total gross

receipts from vending machine sales before computing sales tax due. (State of Alabama

v. Automatic Sales, 277 Ala. 63, 167 So.2d 146 (1964)) (Sections 40-23-1(a)(6), 40-23-

1(a)(8), 40-23-2(1), and 40-23-2(5), Code of Alabama 1975)

(2) Sales of tangible property through vending machines are taxable as follows:

(a) Vending machine sales of food and food products for human consumption,

coffee, milk, milk products, and substitutes for these products are taxable at 3 percent of

the retail sales price. Items which qualify for this special rate include, but are not limited to,

sandwiches, candy, potato chips, and crackers. (Section 40-23-2(5))

(b) All other tangible personal property sold through vending machines is taxable

at 4 percent of the retail sales price. Items which are taxable at the 4 percent general rate

include, but are not limited, to softdrinks, fruit juices, bottled water, cigarettes, health and

beauty aids, and chewing gum. (Section 40-23-2(1))

(3) Except as noted in (a) below, the wholesale supplier of property sold through

vending machines sells the property at wholesale and is not required to collect sales tax

from the retail operator provided the operator is a retailer licensed pursuant to Section

40-23-6, Code of Alabama 1975. The licensed retail operator is required to report and pay

the sales tax due on vending machine sales. The wholesale supplier shall charge tax to

all customers who do not have a sales tax license number or who are not otherwise

exempted by law. The measure of tax is the amount received by the supplier for the sale of

the property. (Section 40-23-1(a)(9)a)

(a) Where a licensed or unlicensed retail operator purchases property for resale

through vending machines and retains title to the property in the vending machines, the

wholesale supplier and the retail operator may agree that the wholesale supplier will

service the machines, collect the receipts from the machines, and collect and pay sales tax

to the Department of Revenue on the vending machine sales. The payment of all

applicable sales tax to the Department of Revenue by the wholesale supplier shall

discharge both the supplier and the licensed or unlicensed retail operator from any

additional sales tax liability with respect to sales through the vending machines covered by

the agreement. The payment of a rental fee on the machines by the retail operator to the

wholesale supplier shall not affect the validity of the agreement.

(4) A wholesale supplier of property sold through vending machines shall

maintain records which show the sales tax license number of every purchaser who

purchases property at wholesale. These records may be maintained on a ledger or other

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.183.02. (Continued)

suitable book, in a separate card index, on each individual invoice, or in a computerized

record keeping system. Each wholesale invoice shall show the complete name and

address of the wholesale purchaser. Invoices made out to "cash" shall always be

considered retail sales invoices. (Section 40-23-9)

(5) A wholesale supplier who places vending machines on location, retains title to

the property in the vending machines, pays the location owner a certain percentage of the

gross sales as a rental charge for conducting business in the space occupied by the

vending machines, services the machines, and collects the receipts is the retail operator of

the vending machines and is required to report and pay the sales tax due on the sales

through the machines. (Sections 40-23-2(1) and 40-23-2(5))

(6) The provision in paragraph (2)(a) regarding the proper measure of tax to be

used in computing the 3 percent sales tax applicable to vending machine sales of food and

food products for human consumption, coffee, milk, milk products, and substitutes for these

products shall be effective January 1, 2000. (Adopted through APA effective December 23,

1999)

810-6-1-.184. Seller Sells Tax Free at the Seller’s Risk.

(1) Other than the exceptions noted in paragraphs (2), (3), (4), and (5) below, the

seller is liable for sales or use tax on any sales for which the seller fails to collect the

appropriate sales or use tax due. It is the seller's duty under the Sales and Use Tax Laws

to know the general and customary business of the customer and to collect the amount of

tax due. The seller is not, however, expected to follow each article of goods sold to its

final use; therefore, the seller is not to be held accountable for an isolated transaction made

by the customer or for an isolated use of property by the customer. Where a seller sells to

a customer who both uses and sells from the same stock of goods, the seller may sell, tax

free, at wholesale all of the goods so used and resold. (Sections 40-23-26 and 40-23-67,

Code of Alabama 1975)

(2) A seller, who acts in good faith and reasonably believes a tax exempt

purchase is legal, is not liable for sales or use tax later determined to be due on a sale for

which the purchaser provides the seller with a State Sales and Use Tax Certificate of

Exemption (Form STE-1). (See Sales and Use Tax Rule 810-6-5-.02 State Sales and Use

Tax Certificate of Exemption (Form STE-1) - Responsibilities of the Certificate Holder -

Burden of Proof - Liability for Taxes Later Determined to be Due.) (Section 40-23-120)

(3) A seller who secures a properly completed and duly signed certificate

pursuant to Section 40-23-4(a)(10) or Section 40-23-62(12), Code of Alabama 1975, and

has no knowledge that such certificate is false when it is filed is not liable for sales or use

tax on a sale later determined to be taxable. (See Sales and Use Tax Rule 810-6-3-.67.04

Certificate of Exemption - Fuel and/or Supplies Purchased for Use or Consumption Aboard

Vessels Engaged in Foreign or International Commerce or in Interstate Commerce.)

(Sections 40-23-4(a)(10) and 40-23-62(12))

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.184. (Continued)

(4) A seller who secures from the purchaser a Form ST:EXC-1, or a variation

thereof approved by the Revenue Department, is not liable for sales or use tax later

determined to be due on sales of tangible personal property which the purchaser claims are

exempt pursuant to Sections 40-23-4(a)(2), (4), or (22) or 40-23-62(5), (7), or (23). (See

Rule 810-6-3-.20.01 Exemption Certification Form Respecting Fertilizers, Insecticides,

Fungicides, and Seedlings (Form ST:EXC-1).) (Section 40-23-4.3)

(5) A seller, who acts in good faith and reasonably believes a tax exempt

purchase is legal, is not liable for sales or use tax later determined to be due on a sale for

which the purchaser provides the seller with a Sales and Use Tax Certificate of Exemption

for an Industrial or Research Enterprise Project (Form STE-2). (See Sales and Use Tax

Rule 810-6-4-.24.01 Sales and Use Tax Certificate of Exemption for an Industrial or

Research Enterprise Project (Form STE-2) - Responsibilities of the Certificate Holder -

Burden of Proof - Liability for Taxes Later Determined to be Due.) (Section 40-23-120)

(Readopted through APA effective October 1, 1982, amended January 29, 1990, amended

March 24, 1993, amended December 10, 1996, amended June 9, 1999)

810-6-1-.185. Venetian Blinds.

Venetian blinds and similar window furnishings are subject to tax on the full sales price.

This type of property remains personal property even though it is attached to a building.

Where venetian blinds are sold at an installed price, tax is to be measured by the total

invoiced amount. Also see regulation 810-6-1-.84 entitled Labor Service and regulation

810-6-1-.81 entitled Installation Charges. (Section 40-23-1(a)(10)) (Readopted through

APA effective October 1, 1982)

810-6-1-.186. Veterinarians.

(1) Veterinarians use and consume medicines, equipment, and supplies in the

rendering of professional services. When used by veterinarians who are not licensed to

collect sales tax on their retail sales, these medicines, equipment and supplies are taxable

at the time of purchase by the veterinarian.

(2) Veterinarians in many instances make retail sales of medicines, vaccines, and

other supplies. Veterinarians who make retail sales shall apply for and obtain a sales tax

license. Further, these veterinarians shall collect sales tax from their customers and remit

the tax to the Department of Revenue.

(3) Veterinarians who have obtained a sales tax license shall purchase all

medicines, equipment, and supplies from veterinarian supply houses tax-free. Those items

purchased tax-free and used or consumed by the veterinarian shall be reported as a

withdrawal by the veterinarian and the sales tax thereon remitted directly to the Department

of Revenue. The tax on withdrawals shall be computed on the cost of the item purchased

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.186. (Continued)

tax-free from the veterinarian supply house. The veterinarian shall collect sales tax from

the customer on those items purchased tax-free from veterinarian supply houses and

resold by the veterinarian. The tax on retail sales by veterinarians shall be computed on

the selling price to the customer.

(4) With respect to purchases from suppliers other than veterinarian supply

houses, veterinarians who have obtained a sales tax license shall pay tax to the supplier on

items purchased for use or consumption and not for resale. Examples of such items

include, but are not limited to, equipment, office supplies, and office furniture. Items

purchased for resale from suppliers other than veterinarian supply houses shall be

purchased tax-free and the veterinarian shall compute and pay sales tax on withdrawals

and collect and remit sales tax on retail sales to customers.

(5) The sale, use, storage, or consumption of all antibiotics, drugs, serums,

vaccines, and other medications used in the commercial production and growing of fish,

livestock, and poultry is exempt from sales and use tax. This exemption does not apply to

medications for dogs, cats, or any other animal which does not qualify as fish, livestock, or

poultry. When antibiotics, drugs, serums, vaccines, and other medications are used for

both taxable and exempt purposes, the veterinarian must maintain adequate records to

substantiate the exempt usage; otherwise tax shall be due on all antibiotics, drugs, serums,

vaccines, and other medications regardless of how used. (Sections 40-23-4(a)(29) and 40-

23-62(29)) (Amended November 3, 1980, readopted through APA effective October 1,

1982, amended January 19, 1998)

810-6-1-.186.03. Warehousemen, Sales Made by.

(1) Receipts of warehousemen from their services in storing, handling, packing,

crating, delousing, etc., property for others are not subject to the sales tax. Any materials

used incidental to the rendering of such services are taxable at the sale to the

warehousemen.

(2) When, however, warehousemen buy and sell property as a regular course of

business, such sales, if not otherwise exempted, are subject to the sales tax, including

sales of goods held on consignment and including transactions in which the warehouseman

acts as a broker selling goods not actually owned by him or in his possession at the time he

accepts the order.

(3) Sales by warehousemen of property forfeited to them in the operation of their

warehousing business are subject to tax where such sales are made as a regular course of

business. Where such sales are infrequently made they will be considered casual sales

not required to be reported in sales tax returns filed with this Department. (Section 40-23-

2(1)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.186.04. Warehousemen, Sales to.

(1) All property purchased for use in operating places of storage is subject to

sales or use tax, whichever may apply, including all tickets, labels, receipt forms, heating or

cooling equipment, fire protection equipment, pest control supplies and equipment,

compressors, containers, and crating materials, and any and all other supplies, materials,

or equipment purchased for use incidental to the storing or warehousing of property of any

kind or character.

(2) Note, however, that warehousemen may also be engaged in the business of

selling, processing, or manufacturing for sale, in which event the supplies and equipment

used in such activities will be taxable or not in accordance with the rules applying to the use

of property for such purposes. (Section 40-23-1(a)(10)) (Readopted through APA effective

October 1, 1982)

810-6-1-.186.05. Warranty, Extended or Service Contract.

(1) When a dealer sells an extended warranty or service contract to a customer,

no sales tax is due.

(2) Except as noted in (3) below, sales or use tax is due on the purchase of, or

withdrawal from inventory of, parts used in performing repairs or services pursuant to an

extended warranty or service contract. Tax is to be computed on the cost of the parts to the

dealer.

(3) Sales or use tax is not due on the purchase of, or withdrawal from inventory

of, parts by dealers to be used in performing repairs or services free-of-charge for a

customer under the terms of a manufacturer's extended warranty or service contract sold to

the customer by the dealer. Such warranties are granted to the customer by the

manufacturer, the manufacturer warrants or guarantees the replacement of defective parts

at no cost to the customer, and the manufacturer provides full credit to the dealer

performing the repair for the parts purchased or withdrawn. Department of Revenue v.

Equipment Sales Corporation (Docket No. S. 92-286) (Sections 40-23-4(a)(18) and 40-23-

62(19)) (Adopted June 12, 1978, readopted through APA effective October 1, 1982,

amended October 4, 1994)

810-6-1-.187. Warranty Contracts - Replacements of Articles.

Where an unsatisfactory article is returned to the seller for replacement or repair under a

warranty contract between the seller and his customer and the new article is given in

exchange or defective parts are replaced at a reduced price, the amount of sales tax on

such exchange or replacement shall be measured by the reduced price plus the fair and

reasonable market value of any unsatisfactory article or part kept by the seller. In instances

where there is no charge for the article given in exchange or for the replacement parts no

tax is due. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.188. Watch and Jewelry Repair Shops.

(1) Watch and jewelry repairmen render services in repairing, cleaning or

servicing articles which belong to other persons. They also engage in the business of

selling tangible personal property for use or consumption, such as watches, clocks, watch

cases, watch parts, etc.

(2) Where the watch or jewelry repairman renders nothing but a service, sales tax

does not apply to the transaction. In the cases where he furnishes tangible personal

property, such as the above mentioned, then sales tax does apply to the full sales price of

such tangible personal property without deduction for labor or service charges. If the

tangible personal property is sold and the labor or services furnished in separate

transactions, each transaction being billed separately, then the tax applies to the sales

price of the tangible personal property and not to the labor or service.

(3) Materials and supplies used by watch and jewelry repairmen in rendering

services but which are not resold as merchandise are subject to sales tax when purchased

by the repairman from the supply dealer. (Section 40-23-1(a)(10)) (Readopted through

APA effective October 1, 1982)

810-6-1-.189. Wheel Weights.

The balancing of wheels of automobiles is a service by the balancer. Receipts from such

wheel balancing are not taxable. The weights used by a balancer are consumed by him

and are taxable when sold to him. (Adopted November 1, 1963, readopted through APA

effective October 1, 1982)

810-6-1-.190. Whiskey Tax.

(1) Title 28, Chapter 3, Article 6, Code of Ala. 1975, entitled Taxes on Sale of

Spirited or Vinous Liquors, levies a total tax of 56 percent upon the selling price of all

spirituous and vinous liquors sold by the Alabama ABC Board.

(2) The definitions of “Gross Proceeds of Sales” and “Gross Receipts” found in

§40-23-1, Code of Ala. 1975, were amended effective May 7, 1992 to provide that any

consumer excise tax included in the sales price of the property sold cannot be deducted

from the gross proceeds of sales or gross receipts used to compute sales tax due on

taxable sales. State and local consumer taxes, including, but not limited to, tobacco tax,

beer tax, wine tax, and liquor tax cannot be excluded from the measure of state or local

sales tax computed on taxable retail sales.

(3) The operator of a bar, tavern, or restaurant who sells alcoholic drinks

purchases the liquors from the ABC Board at wholesale and pays the 56 percent liquor tax

to the board based on the selling price. The sales tax is not due on such purchases, since

they are purchases for resale. Subsequent sales of drinks by the bar, tavern, or restaurant

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.190. (Continued)

operator are subject to the state sales tax. The measure of the tax is the total amount

received for the drinks. The tax paid to the ABC Board in such cases becomes another

overhead business expense to the retailer which he can take into consideration, together

with other business expenses, in determining the selling price of each drink. He cannot

collect the liquor tax from his purchaser as a tax; therefore, the total selling price is subject

to state sales tax at the general rate. (Adopted November 3, 1980, readopted through APA

effective October 1, 1982, amended July 7, 1989, amended June 8, 2019)

810-6-1-.194. Wrapping Paper.

(1) Wrapping paper is sold at wholesale, tax free when sold to manufacturers or

compounders for use by them in the form of containers to be furnished by them with the

products which they manufacture or compound for sale and when there is no intention on

the part of the manufacturers, compounders or their customers for the containers to be

returned for reuse. (Section 40-23-1(a)(9)c)

(2) Wrapping paper is sold at wholesale, tax free when sold to retailers for use by

them in the form of containers to be furnished with the product they have for sale when

there is no intention on the part of the retailer or his customer for the container to be

returned for reuse. (Section 40-23-1(a)(9)c)

(3) The term "wrapping paper" as used in this rule does not include the material

used to line transportation equipment for the protection of products during shipment. Such

material is subject to tax when sold to the user. (Section 40-23-1(a)(10)) (Adopted March

9, 1961, amended November 1, 1963, amended July 27, 1964, readopted through APA

effective October 1, 1982)

810-6-1-.195. X-ray Machines, Heart Catheterization Machines, Computerized

Tomography Machines and Consumable Supplies Used Therein.

(1) X-ray machines, heart catheterization machines, and computerized

tomography machines (CT scan machines) process tangible personal property and,

therefore, qualify for the reduced machine rate of sales or use tax. Machine parts,

attachments, and replacement parts which are made or manufactured for use on or in the

operation of such machines and which are necessary to the operation of such machines

and are customarily so used also qualify for the reduced machine rate of sales or use tax.

(Section 40-23-2(3))

(2) Film, chemicals, and other consumable supplies used in x-ray machines,

heart catheterization machines, and computerized tomography machines are taxable at the

general rate of sales or use tax. (Section 40-23-2(1)) (Adopted through APA effective July

7, 1989)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.196. Withdrawals from Inventory.

(1) Except as noted in paragraphs (2), (3), and (4) below, all withdrawals of

tangible personal property from inventory are taxable under the withdrawal provisions of the

sales tax statute unless the property has been previously withdrawn from the inventory and

the sales tax has been paid because of the previous withdrawal or unless the property

withdrawn enters into and becomes an ingredient or component part of tangible personal

property or products manufactured or compounded for sale and not for the personal and

private use or consumption of the person withdrawing same. (Ex parte Sizemore, 605 So.

2d 1221 (Ala. 1992)) (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-1(a)(10), and 40-23-

60(5), Code of Alabama 1975)

(2) The transactions in (a) and (b) below shall not be deemed or considered to

constitute a transaction subject to sales tax. Qualified charitable entities listed in 26 U.S.C.

Sections 170(b) or (c) are defined in (c) below.

(a) Pursuant to Section 40-23-1(e), the withdrawal, use, or consumption of a

manufactured product by the manufacturer thereof in quality control testing performed by

employees or independent contractors of the manufacturer, nor a gift by the manufacturer

of a manufactured product, withdrawn from the manufacturer's inventory, to an entity listed

in 26 U.S.C. Sections 170(b) or (c).

(b) Pursuant to Section 40-23-23-1(f), effective July 1, 2006, a gift by a retailer of

a product or products withdrawn from the retailer’s inventory to a qualified charitable entity

listed in 26 U.S.C. Sections 170(b) or (c), where the aggregate retail value of any single gift

is equal to or less than $10,000.00.

but are not limited to the following:

1. a church, or a convention or association of churches;

2. an educational organization which normally maintains a regular faculty,

curriculum, and enrolled body of students;

3. a hospital or a medical research organization which provides medical or

hospital care, medical education, or medical research as their primary purpose or function;

4. an organization which normally receives a substantial part of its support from

the United States or any State or political subdivision thereof or from direct or indirect

contributions from the general public, and which is organized and operated for the benefit

of a college or university referenced in 2. above;

5. a governmental unit that is a State or a possession of the United States and

any political subdivision of any of the foregoing, the United States, or the District of

Columbia, which uses the gift exclusively for public purposes;

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.196. (Continued)

6. a corporation, trust, or community chest, fund, or foundation created or

organized in the United States or in any possession thereof or under the laws thereof, and

organized and operated exclusively for religious, charitable, scientific, literary, or

educational purposes, or to foster national or international amateur sports competition, or

for the prevention of cruelty to children or animals, and which normally receives a

substantial part of its support from governmental units referenced in 5. above or from direct

or indirect contributions from the general public;

7. a private foundation described in 26USC170(b)(1)(E); and

8. an organization described in 26USC509(a)(2).

(3) Sales of equipment, accessories, fixtures, and other similar tangible personal

property used in connection with a sale of commercial mobile services as defined in Section

40-23-1(a)(6) or in connection with satellite television services, at a price below cost, are

not taxable as a withdrawal. Instead, sales of this nature are retail sales and are taxable

measured only by the seller's stated retail selling price. (Sections 40-23-1(a)(6) and

40-23-1(a)(10))

(4) Refinery, residue, or fuel gas, whether in a liquid or gaseous state, that has

been generated by, or is otherwise a by-product of, a petroleum-refining process, which

gas is then utilized in the process to generate heat or is otherwise utilized in the distillation

or refining of petroleum products is not taxable under the withdrawal provisions of the sales

or use tax statutes. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(5))

(5) The sales tax due on taxable withdrawals shall be computed and paid by the

person, firm, or corporation withdrawing the property. The measure of the sales tax due on

taxable withdrawals is the price paid for the property by the person, firm, or corporation

withdrawing same. Alabama sales tax becomes due at the time and place of the withdrawal

of tangible personal property from inventory. Alabama sales tax is due on tangible

personal property withdrawn from inventory in Alabama regardless of where the property so

withdrawn is used or consumed.

(6) Withdrawals of building materials by a contractor who makes retail sales of

building materials and who also withdraws building materials from the same stock of goods

for use in fulfilling a contract for making additions, alterations, or improvements to realty are

taxable to the person, firm, or corporation making the withdrawals. The measure of sales

tax due on these withdrawals is the price paid for the building materials by the person, firm,

or corporation withdrawing same. Alabama sales tax becomes due on these withdrawals of

building materials at the time and place of the withdrawals. Alabama sales tax is due on

building materials withdrawn from stock in Alabama for use in fulfilling contracts both inside

and outside the state of Alabama. (Sections 40-23- 1(a)(6), 40-23-1(a)(8) and

40-23-1(a)(10)) (Adopted through APA effective May 22, 1993, amended January 5, 1996,

amended December 23, 1999, amended September 28, 2007)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.197. Sales Taxes Paid by Certain Camps.

(1) The term “camp” as used in this rule shall mean a facility providing lodgings,

meals, and educational and recreational opportunities primarily for the benefit of children,

students, and nonprofit organizations, and not members of the general public. The term

“camp” as used in this rule shall not include any facility that does not qualify for the lodgings

tax exemptions contained in Sections 40-26-1(b)(ii) or 40-26-1(b)(iii), Code of Alabama

1975.

(2) The term “department” as used in this rule shall mean the Alabama

Department of Revenue.

(3) The definitions of terms contained in Section 40-26-1(c), are incorporated into

this rule by reference.

(4) The furnishing of food, food items, T-shirts, caps, gym bags, and similar items

by a camp, without a separate charge therefor, to children or students, members of a child

or student’s family, members and guests of nonprofit organizations, or other persons in

conjunction with lodgings, meals, and educational or recreational opportunities provided for

a lump sum payment shall not be considered a sale at retail. The furnishing of these items

and activities is considered to be rendering a service rather than making a retail sale and

the camp is considered to be the consumer of the items furnished. Unless the camp

provides a valid sales tax account number or certificate of exemption, the vendor selling

these items to the camp shall collect state and applicable county and municipal sales or

use taxes from the camp at the time of purchase and remit the taxes collected to the

department.

(5) Sales of food, food items, T-shirts, caps, gym bags, and similar items by a

camp that purchases these items and regularly displays and offers them for sale through a

gift shop, snack shop, or similar place to children or students, members of a child or

student’s family, members and guests of nonprofit organizations, or other persons for a

separate charge that is in addition to any lump sum charge for lodgings, meals, and

educational or recreational opportunities shall be considered sales at retail and are subject

to state and applicable county and municipal sales tax. A camp making retail sales of this

nature shall obtain a sales tax license and comply with Sales and Use Tax Rule

810-6-1-.56 entitled Dual Business. (Sections 40-23-1(a)(9), 40-23-1(a)(10), and 40-23-6,

Code of Alabama 1975)

(6) A camp that does not maintain a stock or inventory of food, food items, T-

shirts, caps, gym bags, and similar items from which it regularly makes retail sales as

outlined in paragraph (5) and makes only isolated or accommodation sales of these items

which it acquired for use in conjunction with providing services as outlined in paragraph (4)

is not engaged in making retail sales and does not qualify as a dual business. Where only

isolated or accommodation sales of this nature are made, the camp shall pay state and

applicable county and municipal sales or use tax to its vendors on all of its purchases of the

items and is not required to obtain a sales tax license.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-1-.197. (Continued)

(7) The sales tax on amusements levied in Section 40-23-2(2), does not apply to

a camp’s receipts from providing lodgings, meals, and educational or recreational

opportunities for a lump sum payment. (Adopted through APA effective September 27,

1999)

810-6-2-.01. Abrasives - Shot, Grit, Etc.

Shot, grit, stars, sand, and other abrasives of like kind are taxed as parts or attachments to

machines when used in machines manufacturing or processing tangible personal property.

Such abrasive, when used in maintenance of equipment or when used for purposes other

than manufacturing or processing tangible personal property are taxed at the general rate.

(Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.02. Accessories on New Automobiles, Applicable Tax Levy.

(1) Accessories which are purchased from the dealer after title and possession of

the automotive vehicle have passed to the purchaser are taxed at the usual 4% rate.

(2) As a practical application of this rule, the dealer's sales invoice will be

accepted as the basis for determining the tax rate applicable unless there is conclusive

evidence that the invoice does not reveal the true facts. (Sections 40-23-2(1) and 40-23-

2(4)) (Adopted March 9, 1961, amended November 1, 1963, amended September 26,

1966, readopted through APA effective October 1, 1982)

810-6-2-.02.05. Agricultural Publications.

No exemption is granted for agricultural publications in the Sales Tax Law. (Readopted

through APA effective October 1, 1982)

810-6-2-.03. Annealing Pots.

Steel pots or tubs used to contain small metal parts or fittings while being heat treated in an

annealing furnace as a step in the manufacture thereof are taxed at the special machine

rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.04. Automotive Demonstrator, Levy of Tax.

(1) Any dealer licensed pursuant to Section 40-23-6, Code of Alabama 1975,

who withdraws from his or her stock in trade any automotive vehicle, truck trailer, semi-

trailer, or house trailer for use by the dealer or by the dealer’s employee or agent in the

operation of the business, shall pay, in lieu of the sales tax, a fee of five dollars ($5.00) per

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.04. (Continued)

year or part of year on each automotive vehicle, truck trailer, semi-trailer, or house trailer so

withdrawn. Each year or part thereof shall begin with the date or anniversary date of the

withdrawal and run for the 12 succeeding months during which the automotive vehicle,

truck trailer, semitrailer, or house trailer remains the property of the dealer. This fee is to be

reported on the dealers' sales tax returns covering the tax reporting period in which the

withdrawal is made. When the vehicle is returned to the stock of the dealer and sold, the

sale is subject to the tax. (Section 40-23-2(4))

(2) The use described in the preceding paragraph does not include the

withdrawal of automotive vehicles, truck trailers, semitrailers, or house trailers by a dealer

for rental or leasing purposes where the dealer is engaged in business both of selling and

leasing such property. If a dealer withdraws from stock a vehicle or trailer for leasing

purposes, the withdrawal is exempt from sales tax if the lease of the vehicle or trailer is

taxable pursuant to Section 40-12-222, Code of Alabama 1975.

(3) Where the dealer follows the practice of having his or her salesmen purchase

the vehicles which they use as demonstrators, the sales to the salesmen are subject to

sales tax measured on the sales price thereof less any allowance made for used vehicles

taken in trade. The sale of the used vehicle so taken in trade is subject to sales tax when

resold.

(4) The withdrawal of an automotive vehicle from inventory by a licensed dealer

for the purpose of providing the vehicle to a school for use in a drivers education program

constitutes use by the dealer in the operation of the dealer’s business and, therefore, is

subject to the five dollar ($5.00) fee outlined in paragraph (1) above. (Section 40-23-2(4))

(Adopted March 9, 1961, amended November 1, 1963, amended August 16, 1974,

amended June 12, 1978, amended October 16, 1978, readopted through APA effective

October 1, 1982, amended January 29, 1990, amended October 20, 1998)

810-6-2-.06. Baking Pans.

Baking pans used in the production of bakery products for sale are taxable at the machine

rate of 1 1/2% of the gross proceeds of the sale. (Readopted through APA effective

October 1, 1982)

810-6-2-.07. Barbers and Beauticians.

(1) Barber and beauty shop operators primarily render personal services. They

are the purchasers for use or consumption of such tangible personal property as is used or

consumed incidentally in the rendering of such personal service.

(2) Barber and beauty shops are not however, relieved from collecting and

reporting tax on sales of tangible personal property for use or consumption, such as,

package cosmetics, hair tonics, lotions and like articles when sold apart from the rendering

of personal services. (Section 40-23-2(1)) (Readopted through APA effective October 1,

1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.08. Belting.

Belting purchased for use on a particular machine used in manufacturing is taxed at the

special machine rate of 1 1/2% even though such belting may not be purchased to the

exact length required. (Section 40-23-2(3)) (Readopted through APA effective October 1,

1982)

810-6-2-.09. Boiler Tubes.

Boiler tubes used in repairing boilers used to furnish heat or power used in manufacturing

are taxed at 1 1/2% as parts for machines used in manufacturing. (Section 40-23-2(3))

(Readopted through APA effective October 1, 1982)

810-6-2-.09.02. Sales of Textbooks, Other Books, and School Supplies by Schools.

(1) The term “elementary or secondary school” as used in this rule shall mean a

school where the curriculum consists of one or more of grade levels K through 12. This

term shall not include nurseries and day care centers nor shall it include private schools at

which the courses of study are limited to specialized subjects such as dance, horseback

riding, music, cooking, sewing, or religion.

(2) The sales and use tax statutes contain no exemption for sales of textbooks,

other books, and school supplies. Accordingly, unless the sales or use tax statutes contain

a specific exemption for the seller or purchaser, sales or use tax is due on retail sales of

these items at the general rate of tax. (Sections 40-23-2(1) and 40-23-61(a), Code of

Alabama 1975)

(3) Sales of textbooks, other books, and school supplies made by a school (not

including an institution of higher learning) owned and operated by a county or a municipality

of the State of Alabama are not subject to sales or use tax. (City of Anniston v. State, 265

Ala. 303, 91 So. 2d 211 (1956))

(4) Sales of textbooks, other books, and school supplies made by a privately-

owned and operated elementary or secondary school or by an elementary or secondary

school owned and operated by the State of Alabama are exempt from sales or use tax

when the net proceeds from the sales are used solely for the benefit of the elementary or

secondary school. See Sales and Use Tax Rule 810-6-2-.88.04 entitled Exemption for

Certain Sales by Elementary and Secondary Schools, School Sponsored Clubs and

Organizations, and School Affiliated Groups. (Section 40-9-31, Code of Alabama 1975)

(5) Except as outlined in paragraph (4), sales of textbooks, other books, and

school supplies made by a privately owned and operated school or college or by a school

or college owned and operated by the State of Alabama are subject to sales or use tax.

(Sections 40-23-2(1) and 40-23-61(a), Code of Alabama 1975) (Readopted through APA

effective October 1, 1982, amended June 9, 1999)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.10. Coal Loading Machines.

Coal loading machines used in mines are taxed at the special machine rate of 1 1/2%.

(Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.11. Coal Cutting Machines.

Coal cutting machines are taxed at the special rate of 1 1/2%. (Section 40-23-2(3))

(Readopted through APA effective October 1982)

810-6-2-.12. Coke, Petroleum.

Petroleum coke and pitch used in the manufacture of aluminum from alumina are subject to

tax at the special machine rate where such petroleum coke and pitch are made into linings

for pots where alumina is reduced to aluminum or are made into anodes for such pots.

(Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.12.05. Community Action Agencies.

Sales of tangible personal property to organizations which are nonprofit corporations

including those that are federally funded are subject to state and local sales tax.

(Community Action Agency of Huntsville, Madison County, Inc., v. State of Alabama)

(Adopted August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.12.06. Compressors, Tar Buckets, Portable Signs.

Compressors, tar buckets, and portable signs mounted on wheels are not considered

trailers. A trailer is defined as a vehicle without motive power designed to carry persons or

property wholly on its own structure and to be drawn by a motor vehicle. Since portable

compressors, portable tar buckets, and portable signs are not designed for ordinary

highway hauling purposes, they are subject to tax at the rate of 4 percent. (Adopted

through APA effective January 10, 1985)

810-6-2-.13. Compositions.

(1) Gross proceeds accruing from the retail sales of compositions, paste-ups, or

layouts sold to printers, publishers, or others are subject to the sales tax at the machine

rate of 1 1/2%.

(2) Subject to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled

Ingredient or Component of Product Manufactured or Compounded for Sale, sales of

materials to the manufacturer of the compositions are at wholesale, tax free, when such

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.13. (Continued)

materials become a component of the compositions, etc., produced for sale. The machines

used by the composition manufacturer in manufacturing the compositions are taxable at the

machine rate of 1 ½%. The supplies, materials and equipment not becoming a component

of the product sold, or not constituting machines used in manufacturing are subject to the

sales or use tax, whichever may apply, at the general rate of 4%. (Sections 40-23-1(a)(9)b

and 40-23-60(4)b)

(3) Where a printer or publisher manufactures compositions for their own use,

sales or use tax, whichever may apply shall be due on the purchase price of the materials

becoming a component of the compositions at the machine rate of 1 1/2%. (Section 40-

23-2(3)) (Adopted June 20, 1966, readopted through APA effective October 1, 1982,

amended December 10, 1997)

810-6-2-.14. Cotton Gins.

(1) Cotton gin machinery and equipment used in separating lint from seed, in

cleaning and conditioning lint, in baling lint, the engines or motors furnishing the power for

such separating, cleaning, conditioning and baling, and the equipment used to carry the

cotton lint and seed, from step to step in the ginning process are taxed at the special

machine rate of 1 1/2%. The equipment which carries the seed cotton directly into the first

processing machine and the blower which discharges the seed from the gin are considered

to be attachments to the processing machines and therefore, are also taxed at the special

rate.

(2) The special rate does not, however, apply to conveyor equipment used in

unloading seed cotton and putting it into storage and does not apply to moving cotton seed

from the gin to storage and from storage into transport equipment. Other equipment and

materials which are taxed at the general 4% rate are scales of all description and building

materials used in the construction of the gin house and storage facilities. (Sections 40-23-

2(3) and 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982)

810-6-2-.15. Crossties Used in Mining.

Crossties and switchties used in the construction and maintenance of tracks used in

bringing minerals to the surface of the earth are taxed at the special machine rate of 1 ½%.

This provision does not, however, extend to crossties and switchties used in the

construction or maintenance of tracks used in transporting minerals from the mine after the

mining operation has been completed and it does not extend to timbers used in erecting

structures in or about mines or used in supporting mine roofs. (Section 40-23-2(3))

(Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.15.03. Double Wide Mobile Homes.

Mobile homes whether they be of the double wide variety or the standard variety are in fact

mobile homes. Mobile homes, including double wide mobile homes, do not qualify as

modular buildings. (Section 40-23-2(4)) (Adopted August 10, 1982, readopted through

APA effective October 1, 1982)

810-6-2-.15.05. Dry Docks.

A dry dock is subject to the sales or use tax, whichever applies. A dry dock is not a vessel,

nor is it a barge, exempted from the sales or use tax. (Section 40-23-4(a)(12))

(Readopted through APA effective October 1, 1982)

810-6-2-.16. Dust Collecting Equipment.

Dust collectors made up of ducts, collectors, filters, and other parts are not of themselves

machines used in manufacturing. They may, however, by attachment to a machine used in

manufacturing take the special one and half percent rate. The special rate would not in any

event apply with respect to sheet metal or other building materials used to construct duct

work or other parts of dust collection systems where such materials become a part of the

building in which the system is located. (Section 40-23-1(a)(10)) (Readopted through

APA effective October 1, 1982)

810-6-2-.17. Electric Motors.

Electric motors used to drive machines used in mining, processing or manufacturing are

taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through

APA effective October 1, 1982)

810-6-2-.18. Electric Mine Locomotives.

Locomotives receiving power from an electric trolley used to bring coal to the surface of a

mine are taxed under the machine levy at 1 1/2%. (Section 40-23-2(3)) (Readopted

through APA effective October 1, 1982)

810-6-2-.19. Electric Motors, When Furnishing Power for Machines Used in

Manufacturing, Compounding, Processing, Mining or Quarrying and Plant

Maintenance.

Electric motors used to furnish power for machines used in manufacturing, compounding,

processing, mining, or quarrying are taxed at the machine rate of 1 1/2%. Electric motors

used to power equipment used primarily in plant maintenance are subject to the tax at the

general rate of 4%. (Sections 40-23-2(1) and 40-23-2(3)) (Readopted through APA

effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.22. Engravers and the Machine Rate.

Gross receipts accruing from the retail sales of photo engravings, plates, cuts, and other

like articles sold to printers are subject to the sales tax at the machine rate of 1 1/2% where

sold for use as parts or attachments of machines used in manufacturing. (Section 40-23-

2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.22.05. Federal Tax on Hazardous Chemicals.

It is the position of the Department based on an opinion by the Legal Division of the

Department of Revenue that the federal tax is to be included in the measure of the tax

when computing sales and/or use tax on retail sales of hazardous chemicals. The federal

tax is a "cost of doing business" tax levied upon the sale or use of certain chemicals sold by

a manufacturer, producer or importer thereof. Section 4662C, Title 26, U.S.C.A. reads as

follows: "If any person manufactures, produces, or imports a taxable chemical and uses

such chemical, then such person shall be liable for tax under §4661 in the same manner as

if such chemical were sold by such person." Therefore, if the tax is on the cost of doing

business by the provider of the chemical, then the federal tax would be included in the

measure of the base used for computing the sales and/or use tax payable to the state.

(Section 40-23-1(a)(10)) (Adopted August 10, 1982, readopted through APA effective

October 1,1982)

810-6-2-.25. Refractories, Rates Applicable to.

(1) The term “refractories” as used in this rule shall mean fire clay, firebrick,

magnesite, steel, and other special purpose heat resistant materials.

(2) Refractories, which are not in the nature of building materials and which are

designed and manufactured for use as parts or attachments for machines used in

manufacturing, compounding, or processing tangible personal property, are taxable at the

reduced machine rate of sales or use tax when purchased for use as a part or attachment

to manufacturing machinery. (Sections 40-23-2(3) and 40-23-61(b))

(3) Refractories purchased for use in lining blast furnaces, kilns, boilers, cupolas,

ladles, or other machines used to manufacture, compound, or process tangible personal

property are taxable at the reduced machine rate of sales or use tax. (Sections 40-23-2(3)

and 40-23-61(b))

(4) Refractories purchased for purposes other than becoming parts or

attachments to machines used in manufacturing, compounding, or processing tangible

personal property are taxable at the general rate of sales or use tax. (Sections 40-23-2(1)

and 40-23-61(a)) (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982,

amended July 9, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.27 Gold, Coin, And Bullion

(1) Through May 31, 2018, sales of gold in coin, bullion, nugget, flake, or other

form to purchasers within the state are subject to the retail sales or use tax. In any form

other than as a mineral in place, not yet extracted, gold is tangible personal property

subject to the usual rules of taxation. Therefore, exemption is allowed only if the sale is for

resale in the regular course of business or if the gold becomes an ingredient or a

component of a new article for sale. Sales to purchasers for investment or speculation are

fully taxable and are treated as sales of coins, stamps, paintings, antiques, or other

valuables purchased by collectors. When applicable, the tax is measured by the full selling

price without deductions for brokerage fees, service fees, or premiums included in the

gross price.

(2) Following are a few guidelines for the taxation of gold through May 31, 2018:

(a) Gold purchased and delivered outside the state is subject to use tax at the

time it is brought into the state.

(b) Sales of gold to persons who take only a document of ownership covering

gold remaining outside of the state are exempt from sales and use tax.

name must collect retail sales tax thereon.

(3) Beginning June 1, 2018, until May 31, 2028, sales of bullion (including coins),

gold, silver, platinum, palladium, or a combination of each precious metal (not including

jewelry or works of art) that has gone through a refining process and for which the item’s

value depends on its mass and purity, and not its form, numismatic value, or other value

are exempt from sales and use tax.

(4) Sales to persons who use gold in the rendition of professional or commercial

services such as dentists or dental laboratories continue to be taxable. (§§40-2A-7(a)(5),

40-23-2(1), 40-23-4(a)(51), 40-23-31, and 40-23-83 Code of Ala. 1975. Adopted July 2,

1975, readopted through APA effective October 1, 1982, amended January 1, 2019,

amended November 14, 2022)

810-6-2-.28. Gravel Screens.

Gravel screens used in substantially the form in which they are purchased as parts of a

mechanically powered gravel or sand washer and grader are taxed at the special machine

rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.29. Hand Tools Not Exempted as Machines.

(1) The word "machine" as used in the Sales and Use Tax Laws is not

understood to mean and include the hand implements used by laborers and craftsmen,

commonly referred to as "hand tools" which are manually powered and controlled.

(2) Implements, hand operated, which are powered by electricity, steam or

compressed air which is delivered to implements through wires, pipes, or hoses are

considered to come within the levy of the tax at 1 1/2% where such implements are used in

mining, quarrying, manufacturing, processing or compounding. (Sections 40-23-1(a)(10)

and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.30. Hose - Water, Steam, or Air.

Hose when used as an attachment for a machine used in manufacturing, compounding,

processing, mining or quarrying is taxed at the machine rate of 1 1/2%. Hose used for

general purposes or for maintenance is taxed at the general rate of 4%. (Sections 40-23-

2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982)

810-6-2-.31. Hospitals, Infirmaries, Sanitariums, and Like Institutions - State, City,

and County.

(1) State, city, and county owned and operated hospitals, infirmaries,

sanitariums, and like institutions are exempt from the payment of sales or use tax on their

purchases of tangible personal property. (Sections 40-23-4(11) and 40-23-62(13))

(2) State, city, and county owned and operated hospitals, infirmaries,

sanitariums, and like institutions are primarily engaged in the business of rendering

services. They are not required to collect and remit sales tax on their gross receipts from

meals, bandages, dressings, drugs, x-ray photographs, or other tangible personal property

when such items are used in rendering hospital services. This is true irrespective of

whether or not such tangible personal property is billed separately to their patients. State,

city, and county owned and operated hospitals, infirmaries, sanitariums, and like institutions

are deemed to be the purchasers for use or consumption of such tangible personal

property; and, the sellers of these items are not required to collect sales or use tax on

sales of such property to said institutions since such purchases are specifically exempt

from sales and use tax pursuant to Sections 40-23-4(11) and 40-23-62(13), Code of

Alabama 1975.

(3) When state, city, or county owned and operated hospitals, infirmaries,

sanitariums, and like institutions furnish meals to nurses, attendants, and patients as a part

of their services rendered, such institutions are deemed to be the users or consumers of

the food and beverages used in the preparation of these meals. Purchases of food and

beverages for use or consumption by these institutions are exempt from sales and use tax.

(Sections 40-23-4(11) and 40-23-62(13))

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.31. (Continued)

(4) When state owned and operated hospitals, infirmaries, sanitariums, and like

institutions operate cafeterias that serve meals to the public, such institutions will be

required to collect and remit sales tax on sales of meals and beverages to their customers.

Foodstuffs and beverages withdrawn by such state owned and operated institutions and

used or consumed in furnishing meals as outlined in paragraph (3) are not subject to sales

tax. (Section 40-23-2(1))

(5) When city and county owned and operated hospitals, infirmaries, sanitariums,

and like institutions operate cafeterias that serve meals to the public, such institutions are

not required to collect and remit sales tax on sales of meals to their customers. (City of

Anniston v. State of Alabama, 91 So.2d 211) (Adopted March 9, 1961, amended

November 1, 1963, readopted through APA effective October 1, 1982, amended January

29, 1990)

810-6-2-.32. House Trailers and Mobile Homes.

(1) The gross proceeds of sales of house trailers or mobile homes are taxable at

the reduced automotive rate of sales or use tax. Where any house trailer or mobile home is

taken in trade as a credit or part payment on the sale of a new or used house trailer or

mobile home, the measure of sales or use tax shall be the price of the new or used house

trailer or mobile home sold less credit for the house trailer or mobile home taken in trade.

(Sections 40-23-2(4) and 40-23-61(c), Code of Alabama 1975)

(2) The reduced automotive rate of sales or use tax also applies to parts,

attachments, or accessories for house trailers or mobile homes purchased from the dealer

as a unit along with the house trailer or mobile home. Parts, attachments, or accessories

purchased from the dealer after title and possession of the house trailer or mobile home

has passed to the purchaser are taxable at the general rate of sales or use tax. The

dealer's sales invoice shall be the basis for determining the applicable tax rate unless there

is conclusive evidence that the invoice does not reveal the true facts. (Sections 40-23-2(1)

and 40-23-61(a), Code of Alabama 1975)

(3) Where a dealer purchases parts and materials or withdraws parts and

materials from a stock of goods for use in repairing or reconditioning house trailers or

mobile homes which (i) are owned by the dealer, (ii) are offered for sale by the dealer, and

(iii) are not for the dealer’s own use or consumption, the parts and materials would be

exempt from sales or use tax when purchased or withdrawn from the dealer’s stock of

goods. (Sections 40-23-1(a)(9)k and 40-23-60(4)j, Code of Alabama 1975)

(4) Mobile home set-up materials and supplies are taxable at the reduced

automotive rate of sales or use tax. These items qualify for the reduced rate regardless of

who sells them or to whom they are sold provided the facts substantiate that they were

used to set-up a house trailer or mobile home. The term "mobile home set-up materials

and supplies" shall include steps; blocks; anchoring materials such as cable, straps, and

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.32. (Continued)

buckles; and pipe. The term shall not include tape or other similar supply items which lose

their identity or are not passed on substantially intact to the owner of the mobile home. The

term "mobile home set-up materials and supplies" shall not include hand tools or electrical

tools used to set-up a mobile home and not becoming a part of the mobile home dwelling.

(Sections 40-23-2(4) and 40-23-61(c), Code of Alabama 1975) (Adopted July 2, 1975,

amended November 3, 1980, readopted through APA effective October 1, 1982, amended

January 24, 1989, amended January 29, 1990, amended December 28, 1998)

810-6-2-.32.05. Hydraulic Oils.

Retail sales of hydraulic oils are subject to the sales tax at a rate of 4 percent except

hydraulic oil used as part of a machine used in quarrying, mining, manufacturing,

processing, and compounding tangible personal property which is taxed at 1 1/2 percent.

(Sections 40-23-2(1) and 40-23-2(3)) (Adopted August 10, 1982, readopted through APA

effective October 1, 1982)

810-6-2-.33. Ice Plants.

(1) The following are taxed at 1 1/2% rate levied on machines used in

manufacturing when used by ice manufacturers: pumps, motors, compressors, pipes,

valves, gauges, water filters, ice crushing and shaving machines and other machines and

the machinery used directly in the ice making process beginning with the point where the

water enters into the process through the point where the ice is removed from the cans in

which it is made or, if the ice is to be sold as crushed or shaved ice, through the point

where the ice is crushed or shaved. Refrigerants used in the manufacturing process are

also taxed at the machine rate.

(2) Property taxed at 4% rate includes: ice hooks, hand saws, ice picks,

containers (not furnished), tarpaulins, power saws, scoring machines, transportation

equipment, ice tickets, office supplies and equipment, scales, chemicals of all kinds, fuel oil,

other oils not classified and taxed as lubricants, advertising materials, mechanical

conveyors having no part in the manufacturing process, etc. (Sections 40-23-2(3), 40-23-

2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA

effective October 1, 1982)

810-6-2-.34. Improvised Attachments for Machines Used in Manufacturing.

The materials, from which parts and attachments for machines used in manufacturing,

compounding, processing, mining or quarrying are improvised, are taxed at the special 1

1/2% rate when such improvised parts or attachments are necessary to the operation of

such machines and are customarily so used. (Section 40-23-2(3)) (Readopted through

APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.36. Kerosene Used in Making Molds.

Sales to foundrymen of kerosene to be used in making molds and cores are taxed at the

general rate of 4%. (Sections 40-23-1(a)(10) and 40-23-2(1)) (Adopted March 9, 1961,

amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.36.02. Lawnmowers.

(1) Push type and self-propelled lawn mowers, roto-tillers, and garden tractors do

not come within the automotive section of law levying a lower rate of tax, they are taxable

at the rate of 4%. (Section 40-23-2(1))

(2) Self-propelled riding lawn mowers and garden tractors do come within the

automotive section and are taxable at the rate of 2%. (Section 40-23-2(4)) (Adopted

August 15, 1974, readopted through APA effective October 1, 1982, amended January 24,

1989)

810-6-2-.36.05. Lay-away Sales.

(1) The Sales Tax Law defines a sale as follows: "installment and credit sales

and the exchange of properties as well as the sale thereof for money, every closed

transaction constituting a sale." It has been held that Alabama sales tax applies only to

sales that are "closed" within the state and that, for tax purposes, sales are closed when

title to the goods are passed to the purchaser.

(2) The time that title to the goods passes as designated by the layaway contract

is determinative of the time that sales tax is due. If there is no layaway contract or the

contract is silent as to the time title transfers, amounts received in payment of the sales

price of property held by the seller until the total amount of the sales price is paid to him are

not taxable until the total sales price, including the service charge, has been paid and the

property delivered to the purchaser.

(3) If the customer fails to complete payments under the layaway agreement and

obtains from the retail merchant a refund of those payments, excluding the service charge,

and title has not passed, the retail merchant is entitled to a credit for any sales tax

previously paid to the Department upon the transaction regardless of the amount refunded

to the customer. In an incompleted layaway transaction there can be no "return" since the

customer never obtains delivery of the goods. (Adopted October 1, 1959, readopted

through APA October 1, 1982, amended January 10, 1985)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.37. Lumber and Timbers Used in Mine Tipple.

Sales of lumber and timbers to mine operators for use in constructing or repairing

structures such as tipples, bridges, or trestles used in supporting mining and processing

equipment and tracks are subject to tax at the general rate of 4%. This rule does not apply

to machines and machinery supported by such structures, nor does it apply to crossties

and switchties all of which are covered in other rules. (Section 40-23-1(a)(10)) (Adopted

March 9, 1961, amended November 1, 1963, readopted through APA effective October 1,

1982)

810-6-2-.38. Lumber and Timbers Used in Mining.

Sales of lumber and timbers to mine operators for use in the building and maintenance of

structures and for use in supporting mine roofs are subject to sales tax at the general rate

of 4%. (Section 40-23-1(a)(10)) (Adopted March 9, 1961, amended November 1, 1963,

readopted through APA effective October 1, 1982)

810-6-2-.39. Machine Shop Equipment.

Machine shop equipment used for maintenance and repair purposes is taxable at the

general rate of 4%. Machines used both in maintenance and repair work and in the

production of manufactured articles are taxed at the special machine rate of 1 1/2% when

use in production is substantial. Tax is due at the general rate, however, when use in

production is an incidental or inconsequential use as compared to use in maintenance and

repair. (Sections 40-23-1(a)(10) and 40-23-2(3)) (Adopted March 9, 1961, amended

November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.41. Machines Furnished and Installed by Building Contractors.

(1) The 1 1/2% tax rate shall apply where a building contractor purchases for

installation under a building contract machines and parts or attachments for machines

which are to be used in mining, quarrying, manufacturing, compounding or processing.

The parts or attachments to come under the special 1 1/2% rate must be made or

manufactured for such use and customarily so used.

(2) On the other hand, building materials when used as such cannot come within

the special 1 1/2% levy when purchased by a contractor or by a manufacturer regardless of

whether or not the structure made therefrom may be used in mining, quarrying,

manufacturing, compounding or processing. (Sections 40-23-2(3), 40-23-1(a)(10))

(Readopted through APA effective October 1, 1982)

810-6-2-.41.01 Sales of Electrical Generators.

Retail sales of stand alone, commercial and portable electrical generators that manufacture

alternating current electricity are taxable at the reduced machine rate. (Sections 40-23-2(3)

and 40-23-61(b)) (Adopted through APA effective July 9, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.42. Machines or Machinery Not Used in Manufacturing.

Materials or equipment which might constitute a machine or machinery when not used for

mining, quarrying, manufacturing, compounding or processing are taxed at the general rate

of 4%. (Section 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963,

readopted through APA effective October 1, 1982)

810-6-2-.43. Self-Propelled Draglines Used in Mining.

A self-propelled dragline purchased for use in mining tangible personal property is taxable

at the reduced machine rate of sales or use tax. Replacement parts and attachments for

self-propelled draglines used in mining tangible personal property are also taxable at the

reduced machine rate of sales or use tax when (i) made or manufactured for use on or in

the operation of the dragline, (ii) necessary to the operation of the dragline, and (iii)

customarily so used. State v. Twin Seam Mining Co., Inc., 274 Ala. 3, 145 So 2d 177

(1962) (Sections 40-23-2(3) and 40-23-61(b), Code of Alabama 1975) (Adopted March 9,

1961, amended November 1, 1963, readopted through APA effective October 1, 1982,

amended July 30, 1998)

810-6-2-.46. Manufacturer's Use of Patterns.

(1) Patterns purchased by a manufacturer for use as a part or attachment to a

machine used in manufacturing tangible personal property are subject to the sales and/or

use tax at the machine rate of 1 1/2%.

(2) Pattern materials purchased by a manufacturer for use in making patterns

that will become a part or attachment for a machine used in manufacturing tangible

personal property are subject to the sales and/or use tax at the machine rate of 1 1/2%.

(3) The patterns or materials used in making patterns are taxable to the

manufacturer at the time of purchase even though the patterns may pass to the

manufacturer's customer after use by the manufacturer in making castings. (Section 40-23-

2(3)) (Adopted October 29, 1976, readopted through APA effective October 1, 1982)

810-6-2-.46.01. Marine Dealers, Sales By.

The proper rates of state sales tax to be paid on sales of boats, motors, trailers, and other

items associated with the marine industry are as follows:

(a) Boat trailers sold alone are taxable at 2 percent of the net difference paid.

(b) Boat motors sold alone are taxable at the general rate of 4 percent of the total

selling price.

of the total selling price.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.46.01. (Continued)

(d) When a boat without a motor is sold with a trailer, the total selling price of the

boat is taxable at the general rate and the trailer is taxable at the automotive rate on the net

trade difference (total selling price of the trailer less credit allowed for a qualifying

automotive unit traded-in) provided the boat and trailer prices are separately stated on the

dealer’s invoice. To qualify for the trade-in allowance, the unit traded-in for the trailer must

qualify as an automotive unit. If the boat and trailer prices are not separately stated on the

invoice, the total selling price of the boat and trailer is taxable at the general rate with no

deduction allowed for a trade-in.

(e) Boat, motor and trailer sold as a unit is taxable at 2 percent of the net

difference paid if it qualifies as an automotive vehicle.

(f) If a dealer removes a motor from a customer's unit classified as an

automotive vehicle, accepts it as part payment of another motor, and installs the new

motor; the tax is computed at 4 percent of the net difference paid. A motor sold with a

motor traded that is not part of an automotive vehicle at the time of the sale is taxable at 4

percent of the total selling price.

(g) Coast Guard required equipment and accessories such as, but not limited to,

life jackets and fire extinguishers included in the price of boat, motor and trailer, are taxable

at 2 percent of the net difference paid. Skis, ropes, etc., are taxable at the general rate of 4

percent.

(h) Depth finders, trolling motors, and other permanently attached accessories

sold with unit at time of original purchase are taxable at 2 percent of the net difference paid

provided the unit qualifies as a motorboat with built-in motor, or boat with outboard type

motor attached thereto by attachments intended to be permanent rather than readily

removable, and which motor is controlled with remote controls built on or into the hull of

said boat.

(i) Boat, motor and trailer sold by dealer for an individual is subject to the tax in

the same manner and at the same rate as a boat, motor and trailer owned and sold by the

dealer.

(j) Boat, motor and trailer sold with trade-in allowed (example: new unit

$10,000.00, credit for unit traded $5,000.00, net difference $5,000.00) would be taxable at

2 percent of net difference paid provided both units qualify as an automotive vehicle as

outlined in (h).

(k) Sail boat sold alone is taxable at 4 percent of total selling price.

(l) Sail boat sold with auxiliary motor permanently attached so that it qualifies as

an automotive vehicle as outlined in (h) is taxable at 2 percent of the net difference paid.

(m) Aluminum fishing boat sold alone is taxable at the general rate of 4 percent of

total selling price. (Sections 40-23-2(1) and 40-23-2(4)) (Adopted through APA effective

January 10, 1985, amended January 24, 1989, amended July 9, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.47. Material Handling Equipment.

(1) Equipment used for transporting materials to the plant of a manufacturer,

processor, or compounder or used for transporting finished products from such plants is

taxed at the general 4% rate.

(2) The movement of materials or products purely for transportation purposes is

not manufacturing, processing or compounding. In Alabama- Georgia Syrup Company v.

State, 42 So.2d 796, the Supreme Court of Alabama stated with reference to platform

trucks used for moving the company's products in the process of blending and packing.

"We do not think that platform trucks are machines within the meaning of the exemption.

They are obviously used in transportation from one point in the plant to another and not in

compounding and manufacturing of tangible personal property."

(3) The general rule with reference to transportation equipment is that it is taxable

at the general rate of 4% up to the point where the materials go into process, the

equipment feeding the first processing machine being taxed under the machine levy at 1

1/2%.

(4) Equipment for transporting the finished product is subject to tax at the general

4% rate, the last equipment to come under the machine levy being that equipment which

discharges the finished product from the last machine used in the process. (Section 40-23-

2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA

effective October 1, 1982)

810-6-2-.48. Materials From Which Patterns are Manufactured, Tax Rates Applicable.

(1) Pattern materials used by foundrymen in making patterns to be used in

casting are taxed at the special machine rate of 1 1/2%.

(2) Sales of patterns are taxed at the special machine rate of 1 1/2% when made

to a foundryman to be used by him in making molds for castings.

(3) Sales of supplies and hand tools used in making patterns are subject to the

tax at the 4% rate. (Sections 40-23-2(3), 40-23-1(a)(10)) (Adopted March 9, 1961,

amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.49. Mats Purchased for Use in Newspaper Advertising.

Mats purchased by advertisers to be furnished to newspaper publishers for use in

producing plates used in printing newspapers are taxed at the special machine rate of 1

1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.50. Meals Furnished Along With Rooms by Schools and Colleges.

Where both lodgings and meals are furnished to students by institutions of higher learning,

both public and private, the meals are subject to sales tax. If both lodgings and meals are

furnished for a lump sum, the full amount is to be used as the measure of the tax. Where

lodgings and the meals are furnished for separate amounts and the billings and records of

the institution show such charges separately, only the charge for meals is to be used as the

measure of the tax. (Attorney General's Opinion 12-19-60) (Section 40-23-2(1))

(Readopted through APA effective October 1, 1982)

810-6-2-.51. Meals Sold by Schools.

(1) Sales to children of lunches, when not for profit, in kindergartens, grammar

schools, junior high schools, and high schools, both private and public, are specifically

exempted from sales tax.

(2) Sales of meals made by all colleges, universities or other institutions of higher

learning, both privately and publicly owned and operated, are by specific provisions of the

Sales Tax Law subject to sales tax.

(3) Sales of meals made by schools (not including institutions of higher learning)

owned and operated by the counties and municipalities of the State of Alabama are not

subject to the sales tax. (City of Anniston v. State of Alabama, 91 So. 2d 211.)

(4) With the exception of the sales of meals described in the paragraphs above,

sales of meals made by privately owned and operated schools and colleges and sales of

meals made by schools and colleges owned and operated by the State of Alabama are

subject to the tax. (Section 40-23-2(1)) (Readopted through APA effective October 1,

1982)

810-6-2-.51.05. Members of Armed Services Stationed in Alabama Subject to Sales

and Use Taxes.

(1) Members of the armed services of the United States stationed in Alabama

have no immunity from sales taxes imposed upon sales of tangible personal property to

them by Alabama vendors.

(2) Property is not subject to Alabama use tax where purchased outside Alabama

for use in this state by members of the armed services of the United States who are

residents of another state, but who are stationed in this state, except that Alabama use tax

is due on automobiles where purchased outside Alabama for use in this state where a

sales or use tax on such vehicles is levied by but has not been paid to the state of

residence of the purchaser. Members of the armed services stationed in states other than

Alabama who purchase automotive vehicles outside of Alabama for use outside Alabama

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.51.05. (Continued)

but will title and register said vehicle in Alabama will not be subject to the use tax. (Title 50,

U.S. Code, Section 754(2).) (Sections 40-23-2(4) and 40-23-102) (Amended June 12,

1978, readopted through APA effective October 1, 1982)

810-6-2-.51.07. Metal Cleaning Chemicals.

Manufacturers of metal products are taxed on the use of all chemicals and oils which they

use as cleaning materials, except oils classified and taxed as lubricating oils. (Section 40-

23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.52. Molding Machines.

Mechanically operated devices used in making molds from sand for use in manufacturing

are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted

through APA effective October 1, 1982)

810-6-2-.52.03. Music Machines.

Gross receipts from the operation of musical devices (juke boxes) are taxable. The

Supreme Court of Alabama held in the case Birmingham Vending Company v. State of

Alabama, 38 So.2d 876, that both the machine owner and the proprietor of the place of

business where the machine was operated are jointly and individually liable for the total

amount of sales tax due on the gross receipts from such machines, where the machine

owner supplied the machine and recordings, and where the proprietor of the location

controlled the playing of the machine and both the owner and the proprietor shared in the

income. The court held that this was a joint venture with either of the parties to the venture

being liable for the payment of the tax due. (Section 40-23-2(2)) (Readopted through APA

effective October 1, 1982)

810-6-2-.52.05. National and State Banks.

(1) Sales of tangible personal property to any national or state bank are taxable

unless the bank is purchasing the property for resale. (Sections 40-23-2 and 40-23-61,

Code of Alabama 1975 and 12 U.S.C. Section 548)

(2) National or state banks that are in the business of selling tangible personal

property shall collect sales or use tax on their retail sales. Examples of retail sales by

banks include sales by bank-operated cafeterias and sales of personalized checks or coin

banks to bank customers. (Sections 40-23-2 and 40-23-61, Code of Alabama 1975 and

12 U.S.C. Section 548) (Adopted February 13, 1970, readopted through APA effective

October 1, 1982; amended April 3, 1987, amended June 9, 1999)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.53. Negatives.

(1) Gross receipts accruing from the retail sales of black and white negatives or

color separations sold to printers to produce plates for offset printing are subject to the

sales tax at the machine rate of 1 1/2% where sold for use as parts or attachments of

machines used in manufacturing plates.

(2) Sales of materials to processors producing negatives are at wholesale, tax

free, where such materials become a component of the negatives produced for sale.

(3) Where a printer or publisher develops negatives for his own use, sales or use

tax, whichever may apply, shall be due on the purchase price of the materials becoming a

component of the negatives at the machine rate of 1 1/2% where the negatives are used as

an attachment for machines used in manufacturing plates. (Sections 40-23-2(3) and 40-

23-1(a)(9)g) (Adopted June 20, 1966, readopted through APA effective October 1, 1982)

810-6-2-.54. Packaging Equipment.

Mechanical equipment used in measuring, weighing, or packaging by manufacturers,

compounders, or processors is taxed at the special machine rate of 1 1/2% when such

equipment is a part of the production line used to put the product in condition for sale.

(Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.56. Pan Glaze.

Pan glaze used by bakers as a coating for pans and trays used in baking is a supply item

subject to tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1,

1982)

810-6-2-.56.01. Used Equipment.

Used equipment is subject to the sales and use taxes on the same basis that new

equipment is subject to tax. (Section 40-23-2(3)) (Readopted through APA effective

October 1, 1982, amended November 3, 1998)

810-6-2-.57. Parts and Attachments For Machines Used in Manufacturing.

Materials purchased by a manufacturer, compounder, processor, miner, or quarryman for

attachment to, or to be made a part of, a machine used in manufacturing, compounding,

processing, mining or quarrying is entitled to the reduced machine rate of sales or use tax

regardless of whether or not such materials at the time of purchase are recognizable as

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.57. (Continued)

parts and attachments for machines, provided, however, that the parts and attachments

made from such materials are designed and manufactured for use, customarily so used

and necessary to the operation of the completed machine. Such materials would include,

but would not be limited to tool steel, steel plate, steel angles, shafting, packing, pipe, pipe

fittings, pipe fitting supplies, valves, steam hose, fire clay, bulk lining materials, bulk

insulation materials and pipe and tank coverings. Also recording instruments and similar

attachments which are not generally classified as parts and attachments to manufacturing

machines would qualify as parts and attachments when attached directly to a

manufacturing machine. The reduced machine rate does not, however, extend to the

materials used in erecting buildings or other structures even though such buildings or

structures may house or support machines used in manufacturing, compounding,

processing, mining, or quarrying. (Sections 40-23-2(3) and 40-23-61(b)) (Readopted

through APA effective October 1, 1982, amended November 3, 1998)

810-6-2-.58. Patterns Purchased for Use.

Patterns which become parts or attachments of molding machines used in manufacturing

are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through

APA effective October 1, 1982)

810-6-2-.59. Patterns Used by Operators of Foundries.

Foundry operators use patterns to form the molds in which their products are cast. These

patterns are subject to tax at the special machine rate of 1 1/2% when purchased by the

foundry operators. In those cases where the foundryman fabricates the pattern used by

him, the materials used in such fabrication are taxed at the special rate. (Section 40-23-

2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.62. Pipe Threading Machines.

Pipe threading machines used for construction purposes by a contractor or other builder

are taxed at the 4% general rate. (Sections 40-23-1(a)(10) and 40-23-2(1)) (Adopted

March 9, 1961, amended November 1, 1963, readopted through APA effective October 1,

1982)

810-6-2-.63. Piping.

Piping leading to and from storage tanks and piping bringing gas or water into a plant does

not come within the levy on machines used in manufacturing. The general rate of 4%

applies. (Section 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963,

readopted through APA effective October 1, 1982.)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.64. Piping in Manufacturing Plant.

(1) Piping furnished and installed by a contractor along with pump houses and

well connections is subject to use tax when intended for use by a paper manufacturer to

supply his plant with the water necessary to the manufacturing of paper. The Supreme

Court of Alabama held that the pipe and other materials used were building materials which

are made taxable at the general tax rate by the building materials provision found in the

definition of "sale at retail." (Layne Central Company v. Curry, 8 So.2d 839).

(2) Please note that the Supreme Court has in the Wilputte Coke Oven case

made a distinction between "building materials" and recognizable parts and attachments for

machines. See rule 810-6-2-.41 Machines Furnished and Installed by Building Contractors.

(Sections 40-23-1(a)(10) and 40-23-2(3)) (Readopted through APA effective October 1,

1982)

810-6-2-.65. Plates, Printers.

(1) Plates purchased by a printer for use as a part or attachment for a machine

used in printing tangible personal property are subject to the sales and/or use tax at the

machine rate of 1 1/2%.

(2) Materials purchased by a printer for use in making plates that become a part

or attachment to a machine used in printing tangible personal property are subject to the

sales and/or use tax at the machine rate of 1 1/2%.

(3) The plates or materials used in making plates are taxable to the printer at the

time of purchase even though the plates may pass to the printer's customer after use by the

printer.

(4) An example would be a person needing business cards with his picture

shown thereon. The printer does not have the facilities to make the type plate needed;

therefore, he purchases the plate needed to print the cards from a person in the business

of making plates. (Section 40-23-2(3)) (Adopted October 29, 1976, readopted through

APA effective October 1, 1982)

810-6-2-.66. Platform Trucks.

In Alabama-Georgia Syrup Company v. State of Alabama, 42 So.2d 796, the Alabama

Supreme Court held that platform trucks "used for moving the company's products in the

process of blending and packing the syrup in the plant" are not exempted by the machine

exemption "under old sales tax law". The court stated: "We do not think that platform

trucks are machines within the meaning of the exemption. They are obviously used in

transportation from one point in the plant to another and not in compounding and

manufacturing of tangible personal property." (Sections 40-23-2(1) and 40-23-2(3))

(Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.66.05. Portable Power Saws.

(1) The Sales and/or Use Tax Laws levy a tax of 1 1/2% on the net difference

paid for any machine, machinery, or equipment used in planting, cultivating, or harvesting

farm products or used in connection with the production of agricultural produce or products,

livestock, or poultry on farms.

(2) The machines and machinery including chain saws used in production and

harvesting of timber grown on tree farms, including pulpwood are taxed at 1 1/2%. Chain

saws used for clearing land, cutting firewood, or other nonagricultural uses are taxed at 4%.

(Sections 40-23-37, 40-23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended July

27, 1964, amended June 12, 1978, readopted through APA effective October 1, 1982)

810-6-2-.67. Power Cables.

Power cables supplying power to working areas in mines and quarries are subject to the

tax at the 4% rate. (Section 40-23-2(1)) (Readopted through APA effective October 1,

1982)

810-6-2-.68. Power Lines.

Electric power lines carrying electric power into a plant of a manufacturer, compounder or

processor are taxed at the general rate of 4%. (Section 40-23-2(3)) (Adopted March 9,

1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.69. Printers, Applicable Tax Rate.

Sales of materials to printers are at wholesale, tax free, when such materials become a

component of the printed matter produced for sale. The machines used in the printing

come within the machine levy and are taxed at the 1 1/2% rate. The supplies, materials,

and equipment not becoming a component of the product sold or not constituting a

machine used in manufacturing are subject to the sales or use tax, whichever may apply, at

the general rate of 4%. (Readopted through APA effective October 1, 1982)

810-6-2-.71. Proofs.

Gross receipts accruing from the retail sales of proofs sold to printers, publishers or others,

which are used to make negatives to produce plates for offset printing, are subject to the

sales tax at the machine rate of 1 1/2%. The machines used by the processor in the

processing of proofs are taxable at the machine rate of 1 1/2%. The supplies, materials,

and equipment not becoming a component of the product sold, or not constituting machines

used in processing are subject to the sales or use tax, whichever may apply at

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.71. (Continued)

the general rate of 4%. Where a printer or publisher processes proofs for their own use,

sales or use tax shall be due on the purchase price of the materials becoming a component

of the proofs at the machine rate of 1 1/2% where the proofs are used to make negatives to

produce plates for offset printing. (Section 40-23-2(3)) (Adopted June 20, 1966, readopted

through APA effective October 1, 1982)

810-6-2-.72. Pumps, Mines.

Pumps when used in mining are taxed at the special machine rate of 1 1/2%. (Section 40-

23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.73. Rail Bonds Used in Mining.

Rail bonds used in the construction and maintenance of mine tracks used in bringing

minerals to the surface of the earth are taxed at the special machine rate of 1 1/2%. This

provision does not, however, extend to rail bonds used in the construction and

maintenance of trucks used in transporting materials from the mine after the mining

operation has been completed. (Sections 40-23-2(3), 40-23-2(1)) (Readopted through

APA effective October 1, 1982)

810-6-2-.74. Railroad Companies-Machines.

Machines when sold to, or for use by, railroad companies in maintaining, repairing or

reconditioning their equipment are subject to the sales or use tax at the general rate of 4%.

(Section 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982)

810-6-2-.74.05. Railroad Rails.

(1) Railroad rails are taxable at the general rate of 4% when used as a roadway

for transportation equipment or for general purposes not described in the next paragraph.

(2) Railroad rails are taxed at the special machine rate of 1 1/2% when used as a

roadway for quarrying or mining equipment in quarries or mines or when used on or in the

operation of machines used in manufacturing, compounding or processing. (Sections 40-

23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.75. Rails Used in Mining.

Mine rails used in the construction and maintenance of tracks used in removing minerals

from the earth are taxed at the special machine rate of 1 1/2%. This provision does not,

however, extend to rails used in the construction or maintenance of tracks used in

transporting minerals after the mining operation has been completed. (Sections 40-23-

2(3) and 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.78. Repairs, Machine.

(1) When repairs require service only or service with the use of an

inconsequential amount of materials, the amount received is not subject to tax.

(2) When materials and service are used in repairing machines taxed at the

special machine rate and when there is no separation in the billing, both materials and

services are to be included in gross proceeds of sales at the special rate.

(3) When materials and service are used in repairing machines taxed at the

special machine rate with service and materials shown separately, the materials only are

subject to the tax.

(4) Materials are taxable at the general rate in any event when sold to repairmen

for use in making repairs when such materials lose their identity as the result of such use;

for instance, paint, solder, lumber, and sheet metal.

(5) When both materials and services are used in repairing machines taxed at the

general rate and when there is no separation in the billing, both materials and services are

to be included in the measure of tax to be paid. Both are taxed at the general rate. When

the materials are shown separately on the invoice, the materials only are taxable.

(6) Also see rule 810-6-1-.95 entitled Materials Used in Repairing.

(Section 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982)

810-6-2-.79. Repairs of Electric Motors and Electric Generators.

(1) Parts and attachments furnished by repairmen in reconditioning or repairing

electric motors and electric generators are sold by the repairmen to the owners of the

motors and generators. The repairman's sales of repair parts, such as ball bearings,

brushes and wire used in rewinding, are subject to the sales tax. These parts and

attachments are purchased at wholesale tax free by the repairman.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.79. (Continued)

(2) Materials which lose their identity because of use by a repairman in repairing

or reconditioning electric motors and electric generators, such as solder, babbitt, varnish,

and insulation paste are subject to sales or use tax when purchased by the repairman. The

tax shall be paid to the repairman's supplier or direct to the Department of Revenue as the

circumstances require. Provided, however, where a repairman is engaged in the business

of selling such repair materials, as well as using them, he may purchase at wholesale all

repair materials which he both sells and uses in making repairs and pay direct to the

Department of Revenue as sales tax the amount due on both sales and withdrawals from

stock for use.

(3) The repairman's charges for labor used in installing parts and materials are

not to be included in the measure of tax to be collected from his customers and paid to this

state where such charges for labor are separately invoiced by the repairman to his

customers and where the books and records of the repairman are kept in such a manner as

to clearly reflect receipts from making installations and rendering services.

(4) In those instances where repair parts are used in repairing or rebuilding a

motor or generator used in such a way that it would be taxed at the special machine rate,

such repair parts are also taxed at the special rate. (Section 40-23-2(1)) (Readopted

through APA effective October 1, 1982)

810-6-2-.79.03. Repossessed Used Vehicles, Sales of.

Resales of automotive vehicles repossessed by the seller or for him by a finance company

are taxable measured by the gross proceeds of the resales thereof less credit for any

automotive vehicle accepted as part-payment of the sales price of the vehicle so resold.

(Section 40-23-2(4)) (Readopted through APA effective October 1, 1982)

810-6-2-.79.04. Restaurants, Equipment and Supplies.

(1) Restaurants and cafeterias are considered to be processors and

compounders of food products for sale; therefore, they are entitled to purchase machines

used in processing and compounding at the reduced rate of 1 1/2 percent.

(2) The machines falling in this category include, but are not limited to, meat

slicers, burger patty makers, ice machines, coffee makers, shredders, electric mixers,

electric food cutters, french fry machines and ranges.

(3) Items not falling in this category, such as refrigeration units, pots, pans,

stainless steel work tables, hand tools, and similar items are taxable at the general rate of 4

percent.

(4) See Rule entitled Furnished Containers, 810-6-1-.69 for information regarding

application of tax on purchases of paper products. (Sections 40-23-2(1) and 40-23-2(3))

(Adopted August 10, 1982, readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.79.05. Rural Electrification Authority (R.E.A.). (REPEALED)

(Readopted through APA effective October 1, 1982; repealed effective August 14, 2022.)

810-6-2-.87. Sand Handling and Sand Conditioning Equipment.

Machines and equipment used by manufacturers for conditioning and transporting, while in

process, sand for use in mold making are taxed at the special machine rate of 1 1/2%.

(Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.88. Sawdust Removal Equipment.

(1) Equipment manufactured for and customarily used in removing sawdust from

saws in saw mills is taxed at the special machine rate of 1 1/2% when such equipment is a

part or attachment of the sawing mechanism.

(2) The same rule applies to equipment manufactured for and customarily used

to remove waste material from planers, edgers, and other manufacturing machines.

(3) Note, however, the removal or disposal of waste materials is not of itself a

manufacturing process. The waste removal equipment must be an attachment of a

machine which is covered by the levy on machines used in manufacturing in order for it to

take the special rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective

October 1, 1982)

810-6-2-.88.02. School Buses.

A school bus purchased by an individual for use under direction of and control of a board of

education is subject to tax. (Section 40-23-1(a)(10)) (Readopted through APA effective

October 1, 1982)

810-6-2-.88.03. Schools and Colleges Owned by the State, Counties or Cities, Sales

Made By.

(1) Except as outlined in paragraph (2), retail sales of tangible personal property

made by all schools and colleges owned and operated by the State of Alabama are subject

to sales tax.

(2) Sales by elementary or secondary schools owned and operated by the State

of Alabama are exempt from sales tax when the net proceeds from the sales are used

solely for the benefit of the elementary or secondary school.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.88.03. (Continued)

(3) Sales made by all colleges, universities, or other institutions of higher

learning, both privately and publicly owned and operated, are by specific provisions of the

Sales Tax Law subject to sales tax.

(4) If a student activity fee is collected from each student as a lump sum not

broken down and covers the yearbook which is then supplied without further charge, the

distribution of the yearbooks to the students is a service of the school not subject to tax.

(5) Gross proceeds of sales made by schools (not including institutions of higher

learning) owned and operated by the counties and municipalities of the State are not

subject to sales tax.

(6) Gross receipts from athletic contests conducted by or under the auspices of

state-, city-, and county-operated educational institutions, other than primary or secondary

schools, are subject to sales tax. Such institutions must collect the sales tax on their gross

receipts from athletic contests and remit the tax to the Department of Revenue. State-, city-

, and county-operated primary and secondary schools shall collect the sales tax on their

gross receipts from athletic contests including receipts from any football playoff conducted

by or under the auspices of the Alabama High School Athletic Association; but, instead of

remitting the tax collected to the Department of Revenue, the tax shall be retained by the

collecting school and used by the school for school purposes. Effective July 1, 2006,

pursuant to Act #2006-602, this exemption and retention of the sales tax collected shall

apply to any athletic event conducted by or under the auspices of the Alabama High School

Athletic Association. With the exception of athletic events conducted by educational

institutions other than primary or secondary schools, no sales tax is due on receipts

accruing from admissions or fees from other amusements or entertainment conducted by

schools and colleges owned and operated by the State of Alabama, a county or city of the

State of Alabama. (Section 40-23-2(2)) (Amended July 2, 1975, readopted through APA

effective October 1, 1982, amended June 5, 1992, amended September 29, 1994,

amended November 5, 1996, amended December 13, 2006)

810-6-2-.88.04. Exemption for Certain Sales by Elementary and Secondary Schools,

School Sponsored Clubs and Organizations, and School Affiliated Groups.

(1) The term "elementary or secondary school" as used in Act No. 96-653 and in

this regulation shall mean both public and private schools where the curriculum consists of

one or more of grade levels K through 12. The term "elementary or secondary school" shall

not include nurseries and day care centers nor shall it include private schools at which the

courses of study are limited to specialized subjects such as dance, horseback riding, music,

cooking, or sewing.

(2) Provided the net proceeds from the sales are used solely for the benefit of the

elementary or secondary school, sales and use taxes do not apply to sales by the following:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.88.04. (Continued)

(a) elementary or secondary schools,

(b) nonprofit elementary or secondary school-sponsored clubs and organizations,

teacher organizations and booster clubs whose membership may be composed of

individuals other than students.

(3) The exemption outlined in paragraph (2) above also applies to sales resulting

from agreements or contracts entered into with resident or nonresident organizations to

participate in fund-raising campaigns for a percentage of the gross receipts where students

act as agents or salespersons for the organizations by selling or taking orders for the sale

of tangible personal property. Neither the school, club, organization, or group enumerated

in paragraph (2) nor the resident or nonresident organization with whom the school, club,

organization, or group contracts is required to collect or remit sales or use tax on the

tangible personal property sold for fund-raising purposes. (Adopted through APA effective

November 5, 1996)

810-6-2-.89. Scrap Metal Shredder.

A scrap metal shredder that will take such items as junk automobile bodies and through a

series of magnetically operated devices separate the metal from the nonmetal items, shred

the metal, and hydraulically compress it into blocks of certain sizes to specifications so that

it can be measured when loading the furnace is taxed at the machine rate of 1 1/2%.

(Section 40-23-2(3)) (Adopted June 12, 1978, readopted through APA effective October 1,

1982)

810-6-2-.90.01. Seller’s Responsibility to Collect and Pay State Sales Tax and

Seller’s Use Tax.

(1) Under certain conditions, an out-of-state seller engaged within this state in the

business of selling at retail tangible personal property is required to register with the

Department for a sales tax license and collect and remit sales tax on all sales made within

the state as provided for by Chapter 23, Article 1 of Title 40, Code of Alabama 1975. Sales

taxes collected must be reported and paid in accordance with the provisions of Rule 810-6-

4-.19, State Sales Tax Returns Required from All Retail Vendors and Annual Schedule of

Locations Required from All Retail Vendors with Multiple Locations.

(2) A transaction on which the sales tax imposed is collected by a licensed seller is

exempt from use tax and is not subject to the following provisions of this rule. (Section 40-

23-62(1))

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.01. (Continued)

(3) Otherwise, a seller engaged in making retail sales of tangible personal

property for storage, use or other consumption in this state is required to register with the

Department and collect and remit use tax, as provided for by Chapter 23, Article 2 of Title

40, when the seller has "substantial nexus" with the state. Substantial nexus is a

connection between a seller and the state, created by the seller’s business activities in the

state, which is substantial enough to cause the seller to be subject to the jurisdictional

taxing authority of the state.

(4) Section 40-23-68 sets forth the conditions under which a seller must collect

and remit use tax on retail sales of property for storage, use or other consumption in the

state. These conditions include any contact with this state that would allow this state to

require the seller to collect and remit the tax due under the provisions of the Constitution

and laws of the United States. These conditions include, but are not limited to:

(a) Delivery within the State of Alabama by means of vehicle owned by

the selling entity;

(b) Maintains, occupies, or uses, permanently or temporarily, directly or indirectly,

or through a subsidiary, or agent by whatever name called, an office, place of distribution,

sales or sample room or place, warehouse or storage place or other place of business;

canvasser, solicitor or installer operating in this state under the authority of the person or its

subsidiary for the purpose of selling, delivering, or the taking of orders for the sale of

tangible personal property or any services taxable under this chapter or otherwise solicits

and receives purchases or orders by any agent or salesman;

(5) A seller may have substantial nexus with this state due to the business activities

conducted in the state by the seller’s affiliates as set forth in Section 40-23-190, Conditions

for Remote Entity Nexus. A seller has substantial nexus with this state for the collection of

use tax if:

(a) The seller and an in-state business maintaining one or more locations within

this state are related parties; and

(b) The seller and the in-state business use an identical or substantially similar

name, tradename, trademark, or goodwill, to develop, promote, or maintain sales, or the in-

state business and the seller pay for each other's services in whole or in part contingent

upon the volume or value of sales, or the in-state business and the seller share a common

business plan or substantially coordinate their business plans, or the in-state business

provides services to, or that inure to the benefit of, the business related to developing,

promoting, or maintaining the in-state market.

(6) Two entities are related parties under this section if one of the entities meets at least

one of the following tests with respect to the other entity:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.01. (Continued)

(a) One or both entities is a corporation, and one entity and any party related to

that entity in a manner that would require an attribution of stock from the corporation to the

party or from the party to the corporation under the attribution rules of Section 318 of the

Internal Revenue Code owns directly, indirectly, beneficially, or constructively at least 50

percent of the value of the corporation's outstanding stock;

(b) One or both entities is a limited liability company, partnership, estate, or trust

and any member, partner, or beneficiary, and the limited liability company, partnership,

estate, or trust and its members, partners, or beneficiaries own directly, indirectly,

beneficially, or constructively, in the aggregate, at least 50 percent of the profits, or capital,

or stock, or value of the other entity or both entities; or

defined in Section 318 of the Internal Revenue Code, owns directly, indirectly, beneficially,

or constructively, in the aggregate, at least 50 percent of the value of both entities'

outstanding stock. (Section 40-23-190)

(7) Every seller required to collect the use tax shall register with the Department

and give the name and address of each agent operating in this state, the location of any

and all distribution or sales houses or offices or other places of business in this state, and

such other information as the Department may require with respect to matters pertinent to

the enforcement of the Alabama Use Tax Law. Use taxes collected must be reported and

paid in accordance with the provisions of Rule 810-6-5-.19.01, State Use Tax Returns.

(Sections 40-2A-7(a)(5), 40-23-2, 40-23-61 thru 40-23-68, 40-23-83, and 40-23-190, Code

of Alabama 1975. Effective August 24, 2012.)

810-6-2-.90.02. Simplified Sellers Use Tax Remittance Program.

(1) Unless otherwise defined herein, the definitions of terms set forth in §40-23-

191, Code of Ala. 1975, are incorporated by reference herein.

(2) The term “eligible seller” shall mean (a) A seller that sells tangible personal

property or a service, but

(i) Does not have a physical presence in this state; or

(ii) Is not otherwise required to register with the Department pursuant to §§ 41-4-

116 or 40-23-190, Code of Ala. 1975.

(b) A marketplace facilitator for all sales made through the marketplace

facilitator’s marketplace by or on behalf of a marketplace seller.

(3) The terms “marketplace facilitator” and “marketplace seller” shall be as

defined in § 40-23-199.1. See Rule 810-6-2-.90.04 Requirements for Certain Marketplace

Facilitators.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.02. (Continued)

(4) The term “locality” shall mean a county, municipality, or other local

governmental taxing authority which levies a local sales and/or use tax.

(5) The term “most recent federal census” shall mean the decennial population

count conducted by the U. S. Census Bureau.

(6) The term “municipality” shall mean any incorporated city or town located in the

state.

(7) The term “otherwise delivered” shall mean delivery by a method other than in

equipment owned or leased by the seller. Delivery in the seller’s own vehicle or in

equipment leased by the seller establishes a physical presence and disqualifies the seller

from participation in the program.

(8) The term “participating eligible seller” shall mean a seller that has been

admitted into and is in good standing in the program.

(9) The term “program” shall mean the Simplified Sellers Use Tax Remittance

Program.

(10) The term “seller” shall be as defined in § 40-23-191, Code of Ala. 1975.

(11) The term “simplified sellers use tax return” shall mean the monthly report of

tax due from eligible sellers participating in the program.

(12) The term “state” shall mean the State of Alabama.

(13) Pursuant to §40-23-193, Code of Ala. 1975, the program is designed to allow

an eligible seller who participates in the program to collect, report, and remit a statewide

eight percent (8%) tax on sales made into Alabama. Participation in the program is

voluntary. Only those eligible sellers accepted into the program shall collect and remit the

simplified sellers use tax. The collection and remittance of simplified sellers use tax relieves

the eligible seller and the purchaser from any additional state or local sales and use taxes

on the transaction.

(a) No participating eligible seller shall be required to collect the tax at a rate

greater than eight percent (8%), regardless of the combined actual tax rate that may

otherwise be applicable.

(b) No sales for which the simplified sellers use tax is collected shall be subject to

any additional sales or use taxes from any locality levying a sales or use tax with respect to

the purchase or use of the property, regardless of the actual tax rate that might have

otherwise been applicable.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.02. (Continued)

or otherwise delivered into the state unless the purchaser furnishes the eligible seller with a

valid exemption certificate, sales tax license, or direct pay permit issued by the department.

(14) A participating eligible seller shall provide the purchaser with a statement or

invoice showing that the simplified sellers use tax was collected and is to be remitted on the

purchaser’s behalf. The statement may be included in an order confirmation e-mail to the

purchaser, in a notice on the seller’s website, or by any other means approved by the

department as sufficient to provide reasonable notice to the customer.

(15) To participate in the program, an eligible seller shall complete the required

application and provide other information as necessary to certify that the seller

(a) Meets the definition of an eligible seller,

(b) Agrees to collect, report, and remit the simplified sellers use tax for all sales

shipped or otherwise delivered into the state while participating in the program,

customers as required by law or requested by the department, and

(d) Agrees to comply with all program reporting requirements established under

program procedures.

(16) Subject to constitutional limitations, a participating eligible seller shall be

removed from the program if:

(a) The eligible seller substantially fails to collect, report, and remit the simplified

sellers use tax.

(b) The eligible seller fails to submit required reports on a timely basis.

§40-23-191, Code of Ala. 1975.

(d) There is any other finding by the department that the participant is not in

compliance with the terms authorizing participation in the program.

(17) Participating sellers remain eligible for participation in the program unless the

seller establishes a presence through a physical business address for the purpose of

making instate retail sales within the state or becomes otherwise required to collect and

remit sales or use tax pursuant to § 40-23-190, Code of Ala. 1975, through an affiliate

making retail sales at a physical business address in Alabama. A participating eligible seller

that establishes a substantial nexus in this state only though the acquisition of an in-state

business may continue in the program to satisfy the requirements to collect and remit tax

for its Alabama sales.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.02. (Continued)

(18) Any participating eligible seller who fails to report that he or she is no longer

eligible to participate in the program or falsely certifies eligibility on any report or application

shall be subject to the negligence and/or fraud penalties in accordance with §40-2A-11,

Code of Ala. 1975.

(19) Participating eligible sellers shall file monthly a simplified sellers use tax

return reporting all sales shipped or otherwise delivered into the state.

(a) The return shall be due on or before the 20th day of the month next

succeeding the month in which tax accrues.

(b) The return shall be due even in months where no tax liability is incurred.

electronic online filing and payment system, My Alabama Taxes (MAT).

(d) Returns required to be submitted shall only include statewide totals of the

simplified sellers use tax collected and remitted and shall not require information related to

the location of purchasers or amounts of sales into a specific city or county.

(e) Returns and payments submitted after the due date will be subject to

penalties and interest in the same manner as those applied to other tax returns due the

department and in accordance with the provisions of §§40-2A-11 and 40-1-44, Code of Ala.

1975, respectively.

(20) Participating eligible sellers shall be entitled to a discount of two percent (2%)

of the simplified sellers use tax collected and timely reported and remitted to the

department. For tax periods beginning on or after January 1, 2019, the allowance for

discount shall not apply to any taxes collected and remitted in excess of four hundred

thousand dollars ($400,000) and is limited to $8,000 per tax period. No discount shall be

allowed for any taxes which are not timely reported and remitted to the department

pursuant to the program.

(21) The proceeds of the simplified sellers use tax paid shall be appropriated to the

department, which shall retain the amount necessary to cover the amounts paid for

refunds authorized in §40-23-196, Code of Ala. 1975. The balance of the amounts collected

shall be distributed as follows:

(a) Fifty percent (50%) to the state treasury allocated as seventy-five percent

(75%) to the General Fund and twenty-five percent (25%) to the Education Trust Fund.

(b) Twenty-five percent (25%) to each county in the state on a prorated basis

according to population as determined in the most recent federal census prior to the

distribution for all tax periods prior to January 1, 2019. For tax periods beginning on or after

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.02. (Continued)

January 1, 2019, the amount distributed on a prorated basis according to population as

determined in the most recent federal census prior to the distribution to each county shall

be twenty percent (20%).

basis according to the population as determined in the most recent federal census prior to

the distribution for all tax periods prior to January 1, 2019. For tax periods on or after

January 1, 2019, the amount distributed on a prorated basis according to population as

determined in the most recent federal census prior to the distribution to each municipality

shall be thirty percent (30%).

(22) The distribution of the proceeds from the simplified sellers use tax paid to

counties and municipalities shall be made electronically and shall be deposited in the most

current banking account for each county and municipality on file with the department.

Proceeds shall be paid to counties and municipalities monthly, for proceeds received during

each preceding calendar month.

(23) Participating eligible sellers shall maintain records of all sales shipped or

otherwise delivered into Alabama, including copies of invoices showing the purchaser’s

name, address, purchase amount, and the amount of simplified sellers use tax collected.

Such records shall be made available for review and inspection upon request by the

department.

(24) Eligible sellers participating in the program shall not be subject to audit or

review by any Alabama locality for simplified sellers use tax. The Department holds the sole

authority for audit and review of eligible sellers participating in the program. (Sections 40-

2A-7(a)(5), 40-23-191 and 40-23-199.1, Code of Alabama 1975. Effective October 22,

2015, Amended April, 23, 2016, Amended October 16, 2017, Amended November 30,

2018, Amended November 14, 2019)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.03. Requirements for Certain Out-of-State Sellers Making Significant

Sales into Alabama.

(1) An out-of-state seller who is making retail sales of tangible personal property

into the state is required to register with the Department and to collect and remit tax

pursuant to Section 40-23-67, Code of Ala. 1975, when the seller’s retail sales of tangible

personal property sold into the state exceed $250,000 per year based on the previous

calendar year’s sales.

(2) Sellers may satisfy the requirements described in (1) above by one of the

following methods:

(a) Using the collecting, reporting, and remitting provisions of Article 2, Chapter 23

of Title 40, Code of Ala. 1975,

(b) Using the collecting, reporting, and remitting provisions created by the

Simplified Sellers Use Tax Remittance Act codified at 40-23-191 through 40-23-199, Code

of Ala. 1975, or

marketplace facilitator pursuant to Rule 810-6-2-.90.04 Requirements for Certain

Marketplace Facilitators and Marketplace Sellers.

(3) This rule shall not be enforced for any of the following:

(a) transactions occurring prior to October 1, 2018,

(b) any transactions made through a marketplace facilitator’s market for any time

period prior to January 1, 2019, or

time period for which a waiver of penalties was granted to the marketplace facilitator

pursuant to Rule 810-6-2-.90.04. (Sections 40-2A-7(a)(5), 40-23-83, 40-23-67, 40-23-68,

40-23-191 through 40-23-199, Code of Alabama 1975. Effective October 22, 2015,

Amended November 30, 2018.)

810-6-2-.90.04 Requirements For Certain Marketplace Facilitators And Marketplace

Sellers.

(1) Definitions. For the purpose of this rule, the following terms shall have the

following meanings:

(a) Department: The Alabama Department of Revenue.

(b) Simplified Sellers Use Tax Remittance Program (“SSUT Program”): As

defined in §40-23-191, Code of Ala. 1975.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.04. (Continued)

1975.

(d) Marketplace facilitator: As defined in § 40-23-199.2, Code of Ala. 1975.

(e) Marketplace seller: As defined in §40-23-199.2, Code of Ala. 1975.

(f) Transaction: A sale or purchase at retail of tangible personal property made

through the marketplace facilitator’s marketplace by or on behalf of a marketplace seller for

delivery to a location in this state, whether by the marketplace facilitator or another person.

(g) Purchaser: As defined in §40-23-199.2, Code of Ala. 1975.

(h) Non-participating marketplace facilitator: A marketplace facilitator that elects

to comply with the notice and reporting requirements prescribed herein on transactions

made through the marketplace facilitator’s marketplace by or on behalf of a marketplace

seller. A marketplace facilitator that is not a registered participant in good standing in the

SSUT Program is deemed to have elected to comply with these notice and reporting

requirements.

(i) Participating marketplace facilitator: A marketplace facilitator that elects to

collect and remit SSUT on transactions made through the marketplace facilitator’s

marketplace by or on behalf of a marketplace seller and is registered and in good standing

in the SSUT Program.

(j) Taxable transaction: Any transaction made through the marketplace

facilitator’s marketplace by or on behalf of a marketplace seller except the following:

1. Sales to licensed retailers with a valid sales tax license. See Rules 810-6-1-

.144.03, and 810-6-1-.89.02.

2. Sales to purchasers with valid exemption certificates. See Rules 810-6-5-.02

and 810-6-5-.02.01.

3. Sales of motor vehicles as this term is defined in §40-12-240, Code of Ala.

1975.

(k) Qualifying amount: Transactions totaling in excess of $250,000 for the

calendar year preceding the year in which a marketplace facilitator elects to either collect

SSUT or to comply with notice and reporting requirements. The qualifying amount shall be

calculated by aggregating the transactions made directly by the marketplace facilitator,

including sales by related parties, and the combined transactions made by all marketplace

sellers through the marketplace facilitator’s marketplace.

(2) Related parties: As defined in §40-23-190, Code of Ala. 1975.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.04. (Continued)

(3) Requirements for Participating Marketplace Facilitators

(a) Except as provided in subparagraph (2)(b), effective January 1, 2019,

participating marketplace facilitators with transactions in excess of the qualifying amount

are required to collect and remit SSUT on all taxable transactions made through the

marketplace facilitator’s marketplace by or on behalf of a marketplace seller, including

those marketplace sellers that would otherwise have an obligation to collect and remit sales

or use tax on these transactions.

(b) Transactions made through the marketplace facilitator’s marketplace by or on

behalf of a related party that has a retail location in this state are subject to sales tax.

obligation to collect and remit SSUT will be as follows:

1. If each party is a participating marketplace facilitator, as agreed to by the

marketplace facilitators in writing, provided that the agreement has been provided to the

department.

2. If no agreement has been provided to the department and only one of the

parties is a participating marketplace facilitator, by the participating marketplace facilitator.

3. If no agreement has been provided to the department and each party is a

participating marketplace facilitator, by the marketplace facilitator who lists the potential

retail sale on its marketplace.

(d) Participating marketplace facilitators must comply with the collection,

remittance, and reporting requirements set forth in §§40-23-192 and 40-23-193, Code of

Ala. 1975.

(e) Participating marketplace facilitators are required to maintain records of all

sales delivered, in accordance with §40-23-195, Code of Ala. 1975, and shall make such

records available for review and inspection by the department upon request.

(f) Participating marketplace facilitators are not subject to audit by an Alabama

locality for SSUT. However, an Alabama locality may audit the non-marketplace facilitator

sales of a marketplace seller for sales or use tax that may be due.

(4) Requirements for Marketplace Sellers

(a) Marketplace sellers are relieved from the collection and remittance of sales

tax, use tax, or SSUT for transactions made on or through a participating marketplace

facilitator’s platform for which SSUT has already been collected on such transactions and

no further tax shall be collected by the marketplace seller for such transactions.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.04. (Continued)

(b) Marketplace sellers making sales on or through a non-participating

marketplace facilitator’s marketplace are not relieved of their obligation under the laws of

this state to remit sales or use tax on transactions made on or through a non-participating

marketplace facilitator’s marketplace, on or through the marketplace seller’s own electronic

sales platform, or at the marketplace seller’s retail location in this state.

(5) Requirements for Non-Participating Marketplace Facilitators

(a) A non-participating marketplace facilitator must file in a form prescribed by the

department an election to comply with the notice and reporting requirements set forth in

sub-paragraphs (4)(b), (c), and (d) for all transactions for which sales or sellers use tax is

not remitted by the marketplace facilitator on behalf of the marketplace seller. Elections

required by this subparagraph must be filed with the department:

1. On or before January 31, 2019, if during calendar year 2018 transactions on

or through its marketplace exceeded the qualifying amount.

2. On or before January 31 of each subsequent calendar year in which the

marketplace facilitator’s transactions for the previous calendar year exceeded the qualifying

amount.

(b) TRANSACTIONAL NOTICES. Non-participating marketplace facilitators must

provide notices to each purchaser who enters into a transaction as follows:

1. The notice must state that no sales or use tax is being collected or remitted

upon the transaction, or that the seller is not required to collect sales or use tax and that the

purchaser may be required to remit any tax owed directly to the department. The notice

shall also advise that a summary of such sales is being provided to the department.

2. The notice must be prominently displayed on each order form, invoice, and

sales receipt for the transaction that is provided to the purchaser, whether provided in

physical or electronic form.

marketplace facilitators must provide an annual transaction summary to each purchaser

who entered into, in the aggregate during the previous calendar year, more than $200 in

transactions that are subject to the notice and reporting requirements of paragraph (4) of

this rule.

1. The annual transaction summary must include:

(i) A statement that sales or use tax was not collected on the listed transactions

in the prior calendar year and that the purchaser may be required to remit any tax owed

directly to the department

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.04. (Continued)

(ii) A list of transactions entered into during the prior calendar year by the

purchaser showing with respect to each transaction the

I. Seller’s Name

II. Transaction Date

III. Invoice or Transaction Number

IV. Purchaser’s Name

V. Purchaser’s Billing Address

VI. Delivery Address

VII. Number of Items Purchased

VIII. The type of tangible personal property purchased

IX. Total Purchase Price

(iii) A statement that a report will be submitted to the department pursuant to

subparagraph (4)(d) of this rule stating only the purchaser’s name, address, total dollar

amount of the purchaser’s transactions, and the name and address of the seller for each

transaction included in the annual transaction summary.

2. The annual transaction summary is due by January 31 of each year following

the year for which the summary is due.

3. Except as provided in subdivision (iv) of this subparagraph (4)(c), the annual

transaction summary shall be sent to the purchaser’s billing address, or if unknown, the

purchaser’s shipping address, in an envelope marked prominently with words indicating

important tax information is enclosed. If no billing or shipping address is known, the

summary shall be sent electronically to the purchaser’s last known e-mail address with a

subject heading indicating important tax information is enclosed.

4. If the purchaser’s billing or shipping address is known, the summary may be

provided to the purchaser electronically, if:

(i) No earlier than December 1 of the year to be covered by the summary and no

later than January 15 of the following year, the purchaser agrees to receive the report

electronically, and

(ii) The purchaser acknowledges that she or he understands that the summary to

be received electronically will contain important tax information and that information

included in the summary will be provided to the department.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.04. (Continued)

(d) PURCHASER REPORTS TO DEPARTMENT. Non-participating marketplace

facilitators must provide reports to the department for each purchaser who entered into

transactions that are subject to the transactional notice requirement of subparagraph (4)(b).

1. Reports for each purchaser must be filed electronically in a form and manner

prescribed by the department.

2. Time of filing

(i) Marketplace facilitators with transactions in excess of $1,000,000 in any given

quarter ending March 31, June 30, September 30, or December 31, must file the purchaser

report required in this subparagraph on or before the 20th day of the month succeeding the

end the quarter.

(ii) Marketplace facilitators with quarterly transactions of $1,000,000 or less in

any given calendar year may file the purchaser report required by this subparagraph

annually by the January 30 of the calendar year succeeding the year for which the report is

being provided or quarterly on or before the 20th day of the month succeeding the end of

the quarterly reporting period.

(iii) For the purposes of this subdivision, total quarterly transactions shall be

calculated by aggregating the transactions made directly by the marketplace facilitator,

including sales by related parties, and the combined transactions made by all marketplace

sellers through the marketplace facilitator’s marketplace.

3. Purchaser’s Report Requirement. The report for each purchaser must include:

(i) The name of the purchaser.

(ii) The billing address and, if different, the last known mailing address of the

purchaser.

(iii) The shipping address for each transaction that the purchaser entered into that

is subject to the transactional notice requirement in subparagraph (4)(b).

(iv) The total purchase price for each transaction that the purchaser entered into

that is subject to the transactional notice requirement in subparagraph (4)(b).

(v) The name and address of the seller for each transaction included in the

report.

4. A certification by the filing entity that it has complied with the transactional

notice requirement for each transaction included in the report.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.90.04. (Continued)

(6) Penalties. In addition to any other applicable penalties a failure to timely file

penalty in the amount of $50 will be assessed for failure to file with the department the

report for each purchaser required in subparagraph (4)(d).

(7) Waiver of Penalties. A marketplace facilitator that elects to collect and remit

SSUT, in lieu of complying with the notice and reporting requirements in paragraph (4), may

be granted a waiver of the penalties imposed under paragraph (5) upon a demonstration

that it is impractical for the marketplace facilitator to begin collecting and remitting SSUT on

marketplace sales prior to January 1, 2019. Waivers will be granted on a case-by-case

basis, but shall be granted only if the following conditions are satisfied prior to January 1,

2019:

1. The marketplace facilitator has registered with the department to participate in

the SSUT Program; and

2. The marketplace facilitator has requested in writing and received approval

from the department for a deferral of its obligation to collect and remit SSUT as required

under paragraph (3) to a reasonable date certain.

(8) Marketplace Seller Exemptions.

(a) The limited amount of information required to be reported to the department

by this rule is designed to alleviate any concerns regarding the privacy of a marketplace

seller’s customers with respect to their purchases. However, if a seller believes that, due to

the nature of business conducted by the seller, reporting to the department even the limited

information required by this rule would result in a violation of the rights of its customers

under the First Amendment of the United States Constitution, the seller may apply to the

department for an exemption from the reporting requirements of this rule.

(b) An application for a marketplace seller exemption from the reporting

requirements of this rule must be submitted to the department. An application for a seller

exemption must list the seller’s name, address, telephone number and point of contact and

must explain in detail why reporting the information required by this rule would result in a

violation of the first amendment rights of its customers. The department may request

additional information from the seller regarding its application. The vendor may request a

conference with the department to discuss its application.

application in a reasonable time and will notify the seller of its decision. (§§ 40-2-11(7), 40-

2A-7(a)(5), 40-2A-11, 40-23-31, 40-23-83,40-23-190, 40-23-197(3)(a), 40-23-198 ,40-23-

199, and 40-23-199.2, Code of Ala. 1975) (Effective November 30, 2018, amended

January 14, 2022)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.91. Soda Fountains and Ice Cream Cabinets (REPEALED).

(Readopted through APA effective October 1, 1982; Repealed effective April 14, 2022)

810-6-2-.92. Soft Drink Bottlers.

Soft drink bottlers are engaged in manufacturing and compounding and, therefore, shall

pay sales or use tax at the machine rate on the machines purchased used directly in

manufacturing and compounding. They shall also purchase at wholesale, tax free, the

ingredients of the drink which they compound. Supplies consumed in manufacturing or

compounding are subject to tax at the general rate when purchased by the bottlers.

(Sections 40-23-1(a)(9)b, 40-23-2(3), 40-23-2(1), 40-23-60(4)b, 40-23-61(a), and 40-23-61)

(a) Examples of machines used at the machine rate:

1. Bottle filling machines

2. Capping machines

3. Refrigeration equipment, when used to cool the product when in the

compounding process

4. Filtering equipment, used for filtering water used in the product

5. Bottle washers and soakers

6. Sterilizers

7. Water heaters

(b) Examples of supplies and equipment which are subject to tax at the general

rate:

1. Returnable or reusable bottles

2. Flats

3. Soap

4. Hand trucks

5. Office equipment

6. Office supplies

7. Advertising materials

(Readopted through APA effective October 1, 1982, amended January 27, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.92.02. State, County and City, Sales made by.

(1) The counties and cities of the State of Alabama and the agencies and the

instrumentalities thereof are not required by the provisions of the Sales Tax Law to collect

or to pay the Department of Revenue sales tax because of sales of tangible personal

property made by them, except those institutions of higher learning operated by the cities

and the counties must pay sales tax on sales made by them.

(2) The Sales Tax Law by specific provisions requires state-, city-, and county-

operated educational institutions, other than primary or secondary schools, to collect and

remit to the Department of Revenue the tax levied on admissions to athletic contests.

State-, city-, and county-operated primary and secondary schools shall collect the sales tax

levied on admissions to athletic contests including admissions to any football playoff

conducted by or under the auspices of the Alabama High School Athletic Association; but,

instead of remitting the tax collected to the Department of Revenue, the tax shall be

retained by the collecting school and used by the school for school purposes. Effective

July 1, 2006, pursuant to Act #2006-602, this exemption and retention of the sales tax

collected shall apply to any athletic event conducted by or under the auspices of the

Alabama High School Athletic Association. (Section 40-23-2(2))

(3) The Sales Tax Law also requires the State of Alabama and all of its agencies

or instrumentalities to collect and remit to the Department of Revenue the sales tax levied

on sales of tangible personal property. (Section 40-23-2(1)) (Readopted through APA

effective October 1, 1982, amended June 5, 1992, amended September 29, 1994,

amended December 13, 2006)

810-6-2-.93. Steel Plate.

Steel plate is taxable at the 1 1/2% machine rate when made into a tank at the site when

the tank becomes a part of machinery used in manufacturing or processing. (Section 40-

23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, amended July 1, 1963,

amended August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.94. Storage Tanks.

(1) Storage tanks in or at manufacturing plants are subject to tax at the general

rate of 4%. Piping leading to and from the storage tanks is also taxed at the 4% rate.

(2) Tanks which are connected into a processing system for the purpose of

maintaining a suitable flow of materials through the connecting processing equipment are

entitled to the special rate of 1 1/2%. (Sections 40-23-2(1) and 40-23-2(3)) (Adopted

March 9, 1961, amended November 1, 1963, readopted through APA effective October 1,

1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.95. Supplies and Materials.

In maintaining and making repairs of machines and equipment used in mining, replacement

parts specifically manufactured for use on such machines are taxed at the special machine

rate of 1 1/2% when the machines themselves are entitled to the special rate. (Section 40-

23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.96. Switchboards.

Switchboards and other electrical equipment used in controlling the flow of electric power

into manufacturing plants and mines are taxed at the general rate of 4%. (Section 40-23-

2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA

effective October 1, 1982)

810-6-2-.97. Tanks Used in Manufacturing.

Tanks which are part of a chain of processing operations are taxed at the special machine

rate of 1 1/2% when such tanks are purchased prefabricated and require no more than

installation at the site. (Section 40-23-2(3)) (Readopted through APA effective October 1,

1982)

810-6-2-.98. Equipment Used by Television, Cable TV, and Radio Stations.

(1) Amplifiers used in broadcasting by television, cable tv, and radio stations are

machines used in processing tangible personal property. State of Alabama v. The

Television Corporation, 271 Ala. 692, 127 So.2d 603, Mountain Brook Cablevision, Inc. v.

State of Alabama, CV-82-1469-TH (Cir. Ct. Montgomery County February 25, 1983) and

Cablevision Company, Inc. v. State of Alabama CV-82-1470-TH (Cir. Ct. Montgomery

County February 25, 1983). (See Curry v. Alabama Power Company, 243 Alabama 53, 8

So.2d 521, holding that electricity is tangible personal property within the meaning of that

term as used in the sales and use tax statutes.)

(2) When used in broadcasting by television, cable tv, and radio stations,

equipment, which amplifies, modifies, or otherwise controls electrical currents and signals

imposed on electrical current and the attendant electromagnetic waves, qualifies as a

machine used in processing tangible personal property and is subject to the reduced

machine rate of tax. Examples of this equipment include, but are not limited to, traps,

receivers, video sequencers, filters, data scanners, taps, character generators, equalizers,

modulators and modules, power supplies and standby power supplies, attenuators, and

converters (wherever located). (Sections 40-23-2(3) and 40-23-61(b), Code of Alabama

1975)

(3) Transmission cable and all other tangible personal property not classified as

machines or parts and attachments for machines used in processing tangible personal

property are taxable at the general rate. (Sections 40-23-2(1) and 40-23-61(a)) (Adopted

October 1, 1959, readopted through APA effective October 1, 1982, amended January 10,

1985, amended October 29, 1993, amended July 30, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.99. Tool Steel.

Tool steel is taxed at the special machine rate of 1 1/2% when used as a part or an

attachment for a machine used in mining or quarrying even though it may require some

fabrication by the mine or quarry operator to adapt it for use on his equipment. (Section 40-

23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.100. Track Accessories Used in Mining.

Track accessories including spikes, bolts, plates, and switch parts becoming a part of mine

tracks used in removing minerals from the earth are taxed at the special machine rate of 1

1/2%. This provision does not, however, extend to track accessories used in the

construction or maintenance of tracks used in transporting minerals from the mine after the

mining operation has been completed. (Sections 40-23-2(1) and 40-23-2(3)) (Readopted

through APA effective October 1, 1982)

810-6-2-.101. Transformers.

Transformers used in the generation, manufacture, or distribution of electricity by public

utilities are machines used in manufacturing and processing tangible personal property

and, therefore, are taxed at the reduced machine rate. (Curry v. Alabama Power

Company, 8 So.2d 521) Following this decision by the court, the Department has ruled that

all transformers used by producers or distributors of electricity and transformers used by

other manufacturers, processors, or compounders as a part of their manufacturing,

processing, or compounding equipment are entitled to the reduced machine rate of sales

and use tax. Power capacitors and voltage regulators qualify for the reduced machine rate

when used in the generation, manufacture, or distribution of electricity by public utilities or

by other manufacturers, processors, or compounders as a part of their manufacturing,

processing, or compounding equipment. (Sections 40-23-2(3) and 40-23-61b)) (Readopted

through APA effective October 1, 1982, amended October 29, 1993)

810-6-2-.102. Trolley, Materials, Mine.

Trolley equipment used in supplying electric power to mine locomotives used in bringing

minerals to the surface of the earth are taxed at the special machine rate of 1 1/2%. This

provision, however, does not extend to electric cable, switch gear, and other equipment

used to deliver electric current to trolley lines or to other mining machines or machinery.

(Sections 40-23-2(3) and 40-23-2(1)) (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.103. Truck Bodies, Rates of Tax.

A truck body, not a part of an automotive vehicle at the time it is purchased, is taxable at

the general 4% rate except in those instances where a truck chassis and a truck body are

purchased out of Alabama in separate transactions but are assembled into a unit for

importation into this State, in which event, the unit is taxable at the automotive rate of 2%.

(Sections 40-23-2(1), 40-23-2(4)) (Adopted March 9, 1961, amended July 1, 1963,

amended November 1, 1963, readopted through APA effective October 1, 1982, amended

January 24, 1989)

810-6-2-.104. Used Automotive Vehicles.

A used automotive vehicle is one which has been put to the use for which it was intended.

All sales of used automotive vehicles are taxed at the automotive rate regardless of how

acquired. The sales tax applies on sales of used automotive vehicles in the same way it

applies on new automotive vehicles. (Section 40-23-2(4)) (Readopted through APA

effective October 1, 1982)

810-6-2-.104.02. Used Vehicles Acquired in Trades, Sales of.

Used automotive vehicles, used truck trailers and semi-trailers when taken in trade are

subject to sales tax at the automotive rate when resold. (Section 40-23-2(4)) (Readopted

through APA effective October 1, 1982)

810-6-2-.105. Wire Rope.

Wire rope is subject to sales or use tax at the 4% general rate when used on locomotive

cranes or other material handling equipment which is not entitled to the special machine

rate of 1 1/2%. (Sections 40-23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended

November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.106. Wire Rope Used on Machines.

Wire rope is taxed at the special machine rate of 1 1/2% when used as an attachment for a

machine used in mining, manufacturing or quarrying. (Section 40-23-2(3)) (Readopted

through APA effective October 1,1982)

810-6-2-.107. Wholesale Sales.

(1) Record of sales at wholesale to be kept. In the court case State of Alabama

v. Levey, 29 So.2d 129, the Alabama Supreme Court held that suitable records of

wholesale sales must be kept in accordance with the provisions of the Sales and Use Tax

Laws in order to claim nontaxability for such sales.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.107. (Continued)

(2) "We pointed out that the taxpayer kept no proper record to indicate these

sales or differentiate them from the remainder of the gross sales shown on his general

ledger. He, himself, said this and testified his charge tickets, which had been destroyed,

were his only records to distinguish such sales. Other evidence was of like import."

(3) "We have construed the pertinent provisions of Title 51, noted above, as

requiring the keeping of accurate records of such exempt sales if they are to escape

taxation; and noncompliance gives authority to the tax department to disregard such a

claim of exemption and, on a proper showing of liability to levy the tax on the gross, as for

retail sales, as the provisions of the statute contemplate." (Section 40-23-2(1))

(Readopted through APA effective October 1,1982)

810-6-2-.108. Paper Manufacturers, Tax Rates Applicable to.

(1) Purchases of machines by paper manufacturers to be used in manufacturing,

processing, or compounding tangible personal property and purchases by paper

manufacturers of the parts, attachments, or replacements for these machines which are (i)

made or manufactured for use on or in the operation of the machines, (ii) necessary to the

operation of the machines, and (iii) customarily so used are taxable at the reduced machine

rates of sales and use tax levied in Sections 40-23-2(3) and 40-23-61(b). Examples of

tangible personal property that are taxable at the reduced machine rate when purchased

by paper manufacturers are:

(a) machine clothing - felts, screen plates, and wire

(b) tanks to be used in manufacturing

(d) pipes, valves, pipe fittings, and pipe fitting supplies attached to manufacturing

machinery (all other pipes, valves, pipe fittings, and pipe fitting supplies are taxable at the

general rate except for those which are used in a water treatment plant and, therefore,

qualify for the pollution control exemption in Sections 40-23-4(a)(16) and 40-23-62(18))

(e) all machinery and equipment used to generate electricity including boilers,

engines, condensers, generators, transformers, and attachments thereto (machinery and

equipment used solely for the transmission of electricity is taxable at the general rate)

(f) electrical equipment used as direct controls of manufacturing machines

(g) all transformers, wherever used

(h) insulating material, both bulk and preformed, which is applied to

manufacturing machinery

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.108. (Continued)

(i) shafting, whether purchased prefabricated to exact size or unfinished to be

cut and machined by the purchaser, when used on manufacturing machinery

(j) packing, whether purchased prefabricated or in bulk form, when purchased

for use on manufacturing machinery

(k) steam hose purchased for use as a part or attachment to manufacturing

machinery

(l) steel, steel plate, steel angles, bushing, bronze, steel shapes, and tool steel

from which machine parts or attachments are fabricated

(m) fire clay and bulk lining materials

(n) equipment used in measuring, weighing, and packaging product when it is a

part of the production line machinery and is used to put the product in condition for sale

(o) computers directly linked to manufacturing machinery and used to control or

monitor manufacturing machinery

(p) machinery used during the manufacturing process to test or measure

materials entering the product.

(2) Tangible personal property purchased by paper manufacturers is taxable at

the general rate of sales or use tax levied in Sections 40-23-2(1) and 40-23-61(a) unless it

qualifies for the reduced automotive, manufacturing machine, or farm machine rate of tax or

for a specific statutory exemption or exclusion. Property purchased for use in general plant

maintenance, administration, general management, or marketing is taxable at the

general rate. The following items are taxable at the general rate of sales or use tax when

purchased by paper manufacturers with certain exceptions as noted:

(a) steam hose used for cleaning purposes including bulk purchases of steam

hose of the kind which may be used either for cleaning the plant and plant equipment or for

use as an attachment to manufacturing machinery (unless the purchaser can document

that all of the steam hose purchased in bulk was used on manufacturing machinery)

(b) bulk or preformed insulating material not becoming an attachment to

manufacturing machinery

powerhouse to motor control centers on manufacturing machinery (these items transmit

electricity rather than manufacture electricity)

(d) all wire, fixtures, and other materials used in lighting

(e) baling wire pulp for internal use

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.108. (Continued)

(f) skid and anchor plates

(g) steel strapping, when not furnished as part of a one-time-use container

(h) gummed tape, when not furnished as part of a one-time-use container

(i) wooden skids

(j) pulpwood saws and saw parts (taxable at the reduced farm machine rate

when purchased for use in harvesting timber)

(k) yard switcher repair parts

(l) safety shoes

(m) lumber

(n) magazine subscriptions

(o) repair parts for electric trucks

(p) office supplies

(q) laboratory supplies

(r) cafeteria equipment

(s) charts used on recording instruments that are attached directly to

manufacturing machinery

(t) tractor repair parts

(u) paints

(v) auto, truck, and trailer repair parts

(w) hand-operated hoists and parts

(x) portable air compressors and parts

(y) tools

(z) first aid supplies, fire protection supplies and equipment, safety supplies and

equipment

(aa) welding machines and parts

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-2-.108. (Continued)

(bb) fuel oil

(cc) Dowicide (not taxable when it becomes an ingredient or component part of

the paper manufacturer’s manufactured product)

(dd) Nopco K. F. foam killer (exempt when used primarily for air or water pollution

control purposes)

(ee) seedlings and plants

(ff) repair parts for gas-driven and electric lift trucks (new units taxable at the

reduced automotive rate)

(gg) building materials including brick, structural steel, concrete, lumber rails,

paint, insulation materials, plumbing fixtures, and all other materials becoming a part of a

structure

(hh) pipes, valves, pipe fittings, and pipe fitting supplies including those which are

used in drinking water lines and fire protection lines (pipes, valves, pipe fittings, and pipe

fitting supplies which are attached to manufacturing machinery are taxable at the reduced

machine rate; those which are used in a water treatment plant qualify for the pollution

control exemption in Sections 40-23-4(a)(16) and 40-23-62(18))

(ii) construction supplies including welding rods, acetylene, oxygen, screws, nuts,

bolts, and rivets.

(3) The rates of sales and use tax applicable to purchases of used machinery

and equipment by paper manufacturers are the same as the rates applicable to purchases

of new equipment.

(4) Exemptions and exclusions which commonly apply to paper manufacturers

include the wholesale exclusion for purchases of materials becoming an ingredient or

component part of a manufactured product and the one-time-use containers or container

components in which the manufacturer’s product is furnished, the exemption for oils and

greases otherwise taxed as lubricants, and the exemption for certain railroad cars, vessels,

and barges of over five tons load displacement. (Sections 40-23-1(a)(9)b, 40-23-1(a)(9)c,

40-23-4(a)(1), 40-23-4(a)(12), 40-23-60(4)b, 40-23-60(4)c, 40-23-62(4), and 40-23-62(17))

(Adopted through APA effective November 3, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.01. Exemptions For Agricultural Products Sold By The Producer.

(1) There are two exemptions in the sales and use tax statutes relative to

agricultural products sold by the producer. One is found in §§40-23-4(a)(5) and 40-23-

62(8), Code of Ala. 1975, and the other in §40-23-4(a)(45) Code of Ala. 1975. A sale of

agricultural products that does not qualify for one of these exemptions may still qualify for

the other.

(2) §§40-23-4(a)(5) and 40-23-62(8), Code of Ala. 1975, exempt sales of

products of the farm, dairy, grove, or garden from sales and use tax when the products (i)

are sold by the producer, by members of the producer’s immediate family, or by persons

employed by the producer to assist in the production of the products and (ii) have not been

processed, except to the extent that the products are customarily processed by operators of

farms, dairies, groves or gardens in preparing products for market.

(a) This exemption does not apply to agricultural products sold by the producer

through a store which the producer operates. (Curry v. Reeves, 195 So. 428 (Ala. 1940)).

(b) Unlike the exemption outlined in paragraph (3) below, this exemption is not

limited to products that are planted, cultivated, and harvested by the producer. Examples of

products that may qualify for this exemption but not the exemption in paragraph (3) include

but are not limited to milk, eggs, catfish, minnows, bees, honey, rabbits, and hamsters

produced on farms.

(3) §40-23-4(a)(45), Code of Ala. 1975, exempts fruit or other agricultural

products from sales and use tax when sold by the person or corporation that planted or

cultivated, and harvested the products on land owned or leased by them. Unlike the

exemption outlined in paragraph (2) above, this exemption is not lost to the producer who

sells qualifying agricultural products through a store operated by the producer.

(4) Sales of agricultural products which otherwise qualify for one or both

exemptions outlined in paragraphs (2) and (3) above, do not lose their exempt status if the

products, retain their raw, unprocessed form when prepared by the producer for marketing

or merchandising. An agricultural product is no longer in its raw, unprocessed form if it is

cooked, boiled, roasted, or mixed or compounded with ingredients other than additional

exempt agricultural products.

(a) Examples of prepared agricultural products which do not lose their exempt

status when they otherwise qualify for either or both exemptions outlined in paragraphs (2)

and (3) are:

1. raw pecans when cracked or shelled

2. raw shelled peanuts

3. raw shelled peas, beans, or butterbeans

4. raw shucked corn

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.01. (Continued)

5. raw washed fruits or vegetables.

(b) Examples of processed agricultural products which do not qualify for the

exemptions outlined in paragraphs (2) and (3) above are:

1. apple cider

2. boiled or roasted peanuts

3. candy

4. cane or sorghum syrup

5. fruit pies

6. ice cream

7. jellies and jams

8. peanut butter

9. pickled peaches

10. pickles

11. roasted pecans.

(§§40-2A-7(a)(5), 40-23-4(a)(5) 40-23-4(a)(45), 40-23-31, 40-23-83, Code of Ala. 1975.)

(Readopted through APA effective October 1, 1982, amended May 22, 1993, amended July

30, 1998, amended December 1, 2018)

810-6-3-.01.01. Agriculture, Definition of.

(1) For purposes of interpreting references in the sales and use tax statutes to

agriculture and agricultural purposes, the term "agriculture" is defined to be the art or

science of cultivating the ground, or raising and harvesting crops on land owned or leased

by the person who planted or cultivated and harvested the agricultural crops, including also

feeding, breeding, and management of livestock and poultry; tillage; husbandry, farming.

(2) The following items or areas fall within the definition of agriculture:

a. tree farming

b. raising horticultural products in commercial greenhouses and nurseries

c. fruit and nut trees (whether or not in groves or orchards)

d. vegetable gardens (whether or not on farms)

e. livestock farming

f. dairy farming

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.01.01 (Continued)

g. commercial fish ponds

h. commercial sod farms

i. poultry and egg farming

(3) The following items or areas do not fall within the definition of agriculture:

a. lawns, shrubbery, and flower beds around residential and business property

b. golf courses, baseball or football fields

c. highway, railroad, or utility right-of-way

d. shade trees (other than fruit or nut trees)

e. house plants

f. commercial pest control services

(§§40-23-4(a)(45), 40-23-31, 40-23-62, and 40-23-83, Code of Ala. 1975, ACT 2018-562.

Adopted through APA effective May 20, 1993, amended February 25, 2019)

810-6-3-.01.02. Livestock, Definition of.

(1) In accordance with the guidelines for interpretation outlined in Brundidge

Milling Co. v. State, 45 Ala. App. 208, 228 So. 2d 475 (1969); the term "livestock" as used

in Title 40, Chapter 23 of Code of Alabama 1975 and in the sales and use tax regulations

shall mean cattle, swine, sheep, goats, and members of the equidae family of mammals

such as horses, mules, and donkeys.

(2) Animals other than those enumerated above do not fall within the term

"livestock." (Adopted through APA effective July 20, 1994)

810-6-3-.02. Alabama State Bar.

The Alabama State Bar is an instrumentality of the state (Section 34-3-105, Code of

Alabama 1975) and is not subject to sales or use taxes on the property purchased for use

in carrying on any activity they are authorized to engage in by law. (Section 40-23-

4(a)(11)) (Adopted February 6, 1968, readopted through APA effective October 1, 1982)

810-6-3-.03. American National Red Cross.

The American National Red Cross is an agency of the United States; its purchases are

exempt from the sales and use tax. (Section 40-23-4(a)(17)) (Readopted through APA

effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.03.02 Automotive Vehicles, Certificate of Exemption - Out-of-

State/City/County Delivery Form

(1) When a dealer sells an automobile, motorcycle, truck, truck trailer, travel

trailer, camper, housecar, or semitrailer and delivers it outside Alabama, or outside the city

and/or county in which the dealer is located, a portion of the sales tax due may be exempt.

Any sales tax exemption claim based on the delivery location shall be supported by an

affidavit of the dealer and the buyer and by an affidavit of the person making delivery of the

vehicle, trailer, camper, housecar, or semitrailer. The required affidavits must be recorded

on the Certificate of Exemption-Out of State/City/County Delivery form provided by the

department.

(2) No sale of any automobile, motorcycle, truck, truck trailer, travel trailer,

camper, housecar, or semitrailer will be recognized as having been delivered outside

Alabama or outside the city and/or county in which the dealer is located, unless the dealer

maintains a valid Certificate of Exemption-Out of State/City/County Delivery form for each

such sale.

(3) This rule does not apply to a sale of an automobile, motorcycle, truck, truck

trailer, travel trailer, camper, housecar, or semitrailer to a person who takes delivery of the

vehicle, trailer, or semitrailer inside Alabama and removes it within 72 hours for first use

and registration or titling outside Alabama. See Rule 810-6-3-.42.03, entitled Sales of

Certain Automotive Vehicles to Nonresidents for First Use and Registration or Titling

Outside Alabama, for the requirements necessary to document a sale that qualifies for the

72-hour drive-out exclusion contained in §40-23-2(4), Code of Ala. 1975. (§§40-2A-7(a)(5),

40-23-2(4), 40-23-4(17), 40-23-31, Code of Ala. 1975. Repealed and replaced effective

November 14, 2022)

810-6-3-.04. Baby Chicks and Poults. (REPEALED)

(Readopted through APA effective October 1, 1982. Repealed effective November 14,

2022)

810-6-3-.06.04. Boxing and Wrestling Matches Staged by National Guard.

Boxing and wrestling matches staged by the National Guard in National Guard Armories or

on property adjacent thereto controlled by the National Guard are exempted from sales tax

where such matches are held in accordance with the provisions of Section 31-2-56, Code

of Alabama 1975. (Amended June 12, 1978, readopted through APA effective November

27, 1985)

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.07. (Continued)

(1) Canteens and exchanges of the Alabama National Guard and the Alabama

Naval Militia are not required to collect or pay sales tax where:

(a) Established and operated in accordance with rules and regulations issued by

the Adjutant General and approved by the Governor, and where,

(b) Owned, operated, and run exclusively by National Guard or Naval Militia units

for the convenience and benefit of the active and retired members of the National Guard

and Naval Militia, and pursuant to Act # 2006-195, all other active and retired members of

the United States Armed Forces (Section 31-2-81), and where,

operating them.

(2) The canteens and exchanges established and operated as described above

are not subject to sales tax on purchases for use in such operations. (Section 40-23-

4(a)(11)) (Sections 40-2A-7(a)(5), 40-23-4(a)(11), 31-2-81 and 40-23-31, Code of

Alabama 1975, Readopted through APA effective October 1, 1982, amended November

22, 2006)

810-6-3-.07.05 Charitable And Non-Profit Organizations and Institutions.

(1) Unless specifically exempted by statute, charitable and nonprofit organizations and

institutions are subject to the sales and use tax levied under Title 40, Chapter 23, Code of

Ala. 1975, and related collection, remittance, and reporting requirements.

(a) Entities, other than governmental entities as defined in § 40-9-60, Code of Ala. 1975,

which have a statutory exemption are required to obtain a Certificate of Exemption (Form

STE-1) in accordance with Rule 810-6-5-.02.01 and file an informational report in

accordance with Rule 810-6-5-.02.02. (§40-9-61)

(b) The validity of a certificate of exemption can be verified through the department’s

electronic filing system or by contacting a department representative. (Sections 40-2A-

7(a)(5), Title 40 Chapters 9 and 23, Code of Alabama 1975. Readopted through APA

effective October 1, 1982, amended January 10, 1985, amended February 23, 1988,

amended July 7, 1989, amended January 29, 1990, amended December 6, 1990,

amended June 5, 1992, amended October 12, 1993, amended October 4, 1994, amended

January 5, 1996, amended November 5, 1996, amended October 1, 1997, amended March

10, 1998, amended October 20, 1998, amended February 8, 2001, amended August 12,

2011, amended January 23, 2013, amended June 8, 2019)

(1) The Tax Exemption Reform Act of 2017 (Act 2017-149), amends Section 40-

9-12, Code of Alabama 1975, and provides that a united appeal fund and any supported

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.07.06. (Continued)

charity of the united appeal fund, that holds a valid sales and use tax certificate of

exemption as of July 1, 2017, are exempt from the payment of any and all state, county,

and municipal taxes, licenses, fees and charges of any nature whatsoever, including any

privilege or excise tax heretofore or hereafter levied by the State of Alabama or any county

or municipality thereof.

(2) A united appeal fund, as defined in Section 40-9-12(d), is any nonprofit

entity that demonstrates to the reasonable satisfaction of the Department of Revenue

that it has all of the following characteristics:

(a) Is an Alabama nonprofit corporation, or another type of legal entity, whether

formed in Alabama or in another jurisdiction, which is required by its principal governing

documents to be operated as a charity.

(b) Is one of a class, donations to which are deductible for federal and Alabama

income tax purposes under Section 170(c) of the Internal Revenue Code.

the raising of funds or the aggregation or consolidation of fund-raising efforts, to support

other charities which are not themselves united appeal funds, known as supported

charities.

(d) The united appeal fund has been issued a Certificate of Exemption from

Alabama sales, use and lodgings tax prior to July 1, 2017, and has continually maintained

the Certificate of Exemption as required by Section 40-9-60.

(e) With respect to the distribution of funds raised by the united appeal fund, the

entity’s principal governing documents must require that no supported charity, as defined in

this subsection, will receive de minimus support. (Section 40-9-12(c)(2)).

(f) Is an Alabama nonprofit corporation, or another type of legal entity, whether

formed in Alabama or in another jurisdiction, which is required by its principal governing

documents to be operated as a charity.

(g) Is one of a class, donations to which are deductible for federal and Alabama

income tax purposes under Section 170(c) of the Internal Revenue Code.

(h) Has as its principal purpose, as stated by its principal governing documents,

the raising of funds or the aggregation or consolidation of fund-raising efforts, to support

other charities which are not themselves united appeal funds, known as supported

charities.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.07.06. (Continued)

(i) The united appeal fund has been issued a Certificate of Exemption from

Alabama sales, use and lodgings tax prior to July 1, 2017, and has continually maintained

the Certificate of Exemption as required by Section 40-9-60.

(j) With respect to the distribution of funds raised by the united appeal fund, the

entity’s principal governing documents must require that no supported charity, as defined in

this subsection, will receive de minimus support. (Section 40-9-12(c)(2)).

(3) A supported charity is any charitable, civic or eleemosynary institution for

which a united appeal fund solicits funds. (Section 40-9-12(c)(1)).

(a) Each supported charity must be separately identified by name in the principal

governing documents of the united appeal fund entity.

(b) Each supported charity must agree, in its own principal governing documents,

to become or remain a member of the united appeal fund that funded the supported charity.

(Section 40-9-12(d)(1)).

(4) Also effective July 1, 2017, as a condition for united appeal funds and

supported charities to keep their exempt status, the united appeal fund or

supported charity must:

(a) attach its respective governing documents to requests for a Certificate of

Exemption renewal, and

(b) continuously maintain its Certificate of Exemption without allowing it to expire

or otherwise lapse.

(5) If its Certificate of Exemption is not timely renewed, the united appeal fund or

supported charity loses the exemption.

(6) The term “governing documents” as used in this rule shall mean:

(a) In the case of a corporation, that corporation’s Articles of Incorporation,

Certificate of Incorporation, Certificate of Formation, Charter, or other like document, and

also such corporation’s Bylaws, and Resolutions adopted by the corporation’s board of

directors or other highest authority.

(b) In the case of Nonprofit Entities other than corporations, the document or

certificate by which the entity was created (whatever the title of such document may be),

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.07.06. (Continued)

and rules, regulations, and resolutions adopted by the person or persons with the highest

or paramount authority to act on behalf of the entity, which bind the entity and all its agents

and employees.

(7) No new united appeal funds will be approved for a Certificate of

Exemption after July 1, 2017.

(8) All united appeal funds and supported charities must comply with

requirements to file informational reports as outlined in Sales and Use Tax Rule 810-6-

5-.02.02. (Sections 40-2A-7(a)(5), 40-23-31, 40-23-83, 40-9-12, 40-9-60, 40-9-61,

Code of Alabama 1975. Effective January 18, 2018)

810-6-3-.08. Chicken Litter. (REPEALED)

(Readopted through APA effective October 1, 1982, amended July 9, 1998; repealed June

12, 2023)

810-6-3-.09. Chinchillas, Hamsters, Mice, and Rabbits.

(1) Chinchillas, hamsters, mice and rabbits are not livestock and sales of such

animals are subject to sales or use tax unless they are products of a farm and sold by the

producer or for him by a member of his family or by a person employed to assist in the

production thereof. (Sections 40-23-2(1), 40-23-4(a)(5), 40-23-61(a), and 40-23-62(8))

(2) Sales of chinchillas, hamsters, mice, and rabbits by the producer do not

qualify for the exemption contained in Section 40-23-4(a)(44) for sales of agricultural

products by the person or corporation that planted, cultivated, and harvested such

agricultural products.

(3) Since the above animals are not classified as livestock, their feed is not

exempt from sales and use tax.

(4) The term "farm" as used herein is understood to mean a place in a rural area

on premises which include cultivated areas that is operated by a person that is commonly

known as a farmer or a person who cultivates or manages a portion of land. (Adopted

March 9, 1961, amended November 1, 1963, amended June 12, 1978, readopted through

APA effective October 1, 1982, amended May 22, 1993)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.11. Cottonseed Meal.

Cottonseed meal is exempt from sales and use tax when sold for use as a feedstuff for

livestock or poultry. It is not exempt as a fertilizer when sold in pure form unmixed with

other ingredients. See Rule 810-6-3-.12, Cottonseed Meal Exchanged for Cottonseed.

(Sections 40-23-4(a)(2), 40-23-4(a)(4), 40-23-62(5) and 40-23-62(7)) (Readopted through

APA effective October 1, 1982, amended March 24, 1993)

810-6-3-.12. Cotton Seed Meal Exchanged for Cotton Seed.

Cotton seed meal exchanged for cotton seed in a transaction taking place at a cotton gin is

not subject to sales or use tax. The exchange may be either between the owner of the

seed and the ginner or between the owner of the seed and a third party who takes

possession of the seed at the gin. Where the cotton seed is delivered at the gin to the

ginner or to the third party, the transaction may be completed by acceptance of the cotton

seed meal at a warehouse or other storage place not at the gin without loss of the

exemption. Where the cotton seed meal given in exchange is of greater value than the

cotton seed received, the ginner or third party shall collect and pay to the State of Alabama

sales tax measured by the amount received in payment of the difference. (Section 40-23-

4(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-3-.12.02. Credit Unions, Federal and State Chartered, Sales by.

(1) Sales of tangible personal property by a federally chartered credit union are

exempt from sales tax. A federally chartered credit union is an instrumentality of the

Federal Government and, therefore, exempt from tax.

(2) Sales of tangible personal property by a state chartered credit union are

subject to the sales tax. (Adopted June 12, 1978, readopted through APA effective

October 1, 1982)

(1) The Defense Plant Corporation is an instrumentality of the United States.

Sales to this corporation or its agents acting for it are not subject to the sales tax.

(2) The purchase order of the agents of this corporation, when making purchases

for the use and benefit of the corporation, must plainly state that the purchases are being

made by the agent "acting for and on behalf of the corporation." (Section 40-23-4(a)(17))

(Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.14. County Departments of Human Resources.

Sales to county departments of human resources are sales to counties and are exempted

from sales and use tax. (Sections 40-23-4(a)(11) and 40-23-62(13)) (Adopted March 9,

1961, amended November 1, 1963, readopted through APA effective October 1, 1982,

amended March 10, 1998)

810-6-3-.15. Federal Charge Card Program, Exemption Certification.

(1) Sales of tangible personal property to the United States government, its

departments, or its agencies are exempt from state, county, and municipal sales and use

tax provided the sales are billed directly to the United States government and paid for by

the United States government with government funds.

(2) Charges for rooms, lodgings, or other accommodations furnished to the United

States government, its departments, or its agencies are exempt from state, county, and

municipal lodgings tax provided the charges are billed directly to the United States

government and paid for by the United States government with government funds.

(Department Rule 810-6-5-.13.)

(3) The United States General Services Administration (GSA) sponsors a federal

charge card program, SmartPay, providing charge card services to federal governmental

agencies and departments for the conduct of official business. Sales of tangible personal

property and charges for renting or furnishing rooms, lodgings, or accommodations that are

paid by federal charge cards are exempt from state and local sales, use and lodgings tax

when the charge card account is billed directly to and paid directly by the United States

government. Sales of tangible personal property and charges for renting or furnishing

rooms, lodgings, or accommodations that are paid by federal charge cards are subject to

state and local sales, use or lodgings tax when the federal employee pays the charge card

account with their own funds and receives reimbursement from the United States

government.

(4) A vendor or lodgings provider making sales of tangible personal property or

renting or furnishing rooms, lodgings, or accommodations where payment is made by a

federal charge card that is billed to and paid directly by the federal government shall retain

a copy of the invoice and a completed exemption certification in the following form, Form

ST-GSA, to substantiate that the transaction is exempt from sales, use or lodgings tax.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.15. (Continued)

ALABAMA DEPARTMENT OF REVENUE

SALES, USE & BUSINESS TAX DIVISION

EXEMPTION CERTIFICATION RESPECTING CERTAIN PURCHASES OF

TANGIBLE PERSONAL PROPERTY OR LODGINGS

MADE THROUGH THE FEDERAL CHARGE CARD PROGRAM

Business Name: ______________________________________________________________________

Address: _______________________________________________________________________

_______________________________________________________________________

THIS PART TO BE COMPLETED BY THE CARDHOLDER:

I hereby certify that the purchase of tangible personal property or purchase of lodgings and

accommodations that is being made under this exemption certification is for the official use of the Federal

Government, is a debt of the Federal Government, and the charges will be paid with a federal charge

card that is centrally billed to and paid by the Federal Government.

Federal Charge Card Type (Purchase, Fleet, Travel, or Integrated): ______________________________

Federal Charge Card Account Number: __________________________________________________

Federal Agency/Department: __________________________________________________

Agency/Department Telephone Number: __________________________________________________

Date(s) of Occupancy (if applicable): __________________________________________________

Signature of Federal Employee: ____________________________ Date: _______________________

Name of Federal Employee: ____________________________ Title: _______________________

(5) In lieu of utilizing the exemption certification form, written documentation of

the same information as required on the certification may be retained by the vendor or

provider of lodgings and accommodations to substantiate that the transaction is exempt

from tax. (Sections 40-2A-7(a)(5), 40-23-4(17), 40-23-62(2), 40-26-19, Code of Alabama

1975) (Adopted through APA effective January 5, 2010)

810-6-3-.16. Federal and State Chartered Credit Unions.

The sale to, or use by, a Federal or state chartered credit union of tangible personal

property in this state is not subject to sales or use taxes. (Section 40-23-4(a)(17)) (Adopted

March 9, 1961, amended July 27, 1964, readopted through APA effective October 1, 1982)

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.17. (Continued)

Sales of property to federal production credit associations for use in conducting the

activities of such associations as authorized by federal statutes are not subject to the sales

tax; provided, however, this exemption does not apply with respect to any federal

production credit association after the stock held in it by the production credit corporation

has been retired. (Section 40-23-4(a)(17)) (Readopted through APA effective October 1,

1982)

810-6-3-.18. Federal Savings and Loan Associations.

(1) Alabama sales or Alabama use taxes, whichever may apply, are due on

property sold to federal savings and loan associations.

(2) The only limitation placed upon the taxation of a federal savings and loan

association is that the tax imposed on the federal institution shall not be greater than that

imposed on other similar local mutual or cooperative thrift and home financing institutions.

(Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-3-.19. Feed for Livestock and Poultry.

(1) Sales of feed for livestock and poultry (not including prepared food for dogs

and cats) are exempt from sales and use taxes. (Sections 40-23-4(a)(4) and 40-23-62(7))

(2) The following items qualify for exemption when sold for consumption by

livestock or poultry:

(a) Stale bread, table waste, and other foodstuffs which have become unsuitable

for sale for human consumption

(b) Salt and salt blocks

(d) Blackstrap molasses

(3) Bees are members of the insect family and are not livestock; therefore, sales

of food, including sugar, for consumption by bees are not exempt from sales or use tax.

(Section 40-23-1(a)(10))

(4) The gross proceeds of the sales of all antibiotics, hormones and hormone

preparations, drugs, medicines, and other medications including serums and vaccines,

vitamins, minerals, or other nutrients for use in the production and growing of livestock and

poultry by whomsoever sold are exempt from the sales and use taxes. (Sections 40-23-

4(a)(29) and 40-23-62(29)) (Adopted March 9, 1961, amended November 1, 1963,

amended March 18, 1970, readopted through APA effective October 1, 1982, amended

April 3, 1987, amended July 9, 1998)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.20. Fertilizer.

(1) Sales of fertilizer when used for agricultural purposes are exempt from sales

and use tax. (Sections 40-23-4(a)(2) and 40-23-62(5))

(2) The word "fertilizer" as used in the exemption sections referenced above

means any material (not including cottonseed meal when unmixed with other material)

which results in an increase in plant growth when added to the basic natural substances in

which plants are grown. Basic natural substances, including sand, clay, top soil, and water

are not to be considered to fall within the meaning of the word "fertilizer" as used in those

sections. (Sections 40-23-4(a)(2) and 40-23-62(5))

(3) Ammonium nitrate when used as an explosive, and not for agricultural

purposes as a fertilizer, is taxable when sold to the consumer or user. (Sections 40-23-

2(1) and 40-23-61(a)) (Adopted March 9, 1961, amended November 1, 1963, readopted

through APA effective October 1, 1982, amended March 24, 1993)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.20.01. Exemption Certification Form Respecting Fertilizers, Insecticides,

Fungicides, and Seedlings (Form ST:EXC-1).

(1) When a retail purchaser purchases tangible personal property which is

exempt from sales tax pursuant to Section 40-23-4(a)(2), (4), or (22) or use tax pursuant to

Section 40-23-62(5), (7), or (23); the filing by said purchaser of a certificate in the following

form shall relieve the seller of any obligation to collect sales or use tax on the items

purchased in conjunction therewith:

ALABAMA DEPARTMENT OF REVENUE

SALES AND USE TAX DIVISION

EXEMPTION CERTIFICATION RESPECTING FERTILIZERS,

INSECTICIDES, FUNGICIDES, AND SEEDLINGS

Purchaser's Name:_____ __________________________________________________

Address:_______________________________________________________________

City: __________________________ State: ______________ Zip Code:_____________

SCS Farm Number (if available):____________________________________________

I, the undersigned, hereby certify that the items of tangible personal property purchased

from (name of retailer)______________________________ will be used for the exempt

agricultural purposes described in subdivision (2), (4), or (22) of Section 40-23-4(a) or

subdivisions (5), (7), or (23) of Section 40-23-62, Code of Alabama 1975, as amended, and

therefore may be purchased without payment of sales or use tax under Alabama law. I am

aware that liability for payment of any sales or use tax ultimately determined to be

applicable with respect to the items so purchased will be the exclusive responsibility of the

undersigned.

Signature: ____________________________ Date: ___________________________

(2) The form outlined in paragraph (1) shall be referred to as Form ST:EXC-1

Exemption Certification Respecting Fertilizers, Insecticides, Fungicides, and Seedlings and

the following procedures should be followed in conjunction with the execution of said form:

(a) all of the information requested on the form should be completed;

(b) the seller should furnish a copy of the completed certificate, with sales receipt

attached, to the purchaser; and

for a three-year period.

(3) The items enumerated in Section 40-23-4(a)(2), (4), and (22) and Section 40-

23-62(5), (7), and (23) are exempt from sales and use tax when used for agricultural

purposes regardless of whether Form ST:EXC-1 is executed in conjunction with purchases

of such items. Liability for sales or use tax on such items will later arise only if the Revenue

Department determines that the item purchased, in fact, was not used for agricultural

purposes. In the absence of a properly executed Form ST:EXC-1, the seller is

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.20.01. (Continued)

liable for sales or use tax later determined to be due in the event the "agricultural use"

exemption claim is disallowed; however, by having the purchaser execute a Form ST:EXC-

1 the seller can place upon the purchaser the exclusive responsibility for payment of any

sales or use taxes later determined to be due. Whenever a seller feels that the purchaser's

exemption claim is invalid, the seller should collect sales or use tax from the purchaser or

have the purchaser execute a Form ST:EXC-1.

(4) The seller is not required to secure a Form ST:EXC-1 for each sale of exempt

items to a farmer with an SCS farm number when said seller knows the items purchased

will be used for exempt agricultural purposes. Instead, the seller may have the farmer

complete an annual exemption certification form and keep the certificate on file and

available for review by the Revenue Department along with other business records. The

purchaser's SCS farm number can be used as a reference number on each sales invoice

covered by the annual certification form. Such annual exemption certification forms should

be reexecuted every 12 months.

(5) Form ST:EXC-1 may be incorporated into the sales invoice if it contains

substantially the same information as provided for on the certification form. This may be

done by (I) including the certification form on the sales invoice at the time of printing or (ii)

by designing and using a rubber stamp to add the information to the sales invoice. Other

methods which accomplish the same result as the exemption certification form may also be

used. (Section 40-23-4.3) (Adopted through APA effective March 24, 1993)

810-6-3-.21. Sales of Fish, Bait, and Minnows.

(1) Sales of domesticated fish and minnows produced on farms are exempted

from sales and use tax when such sales are made by the producer, a member of his

immediate family, or for him by a person employed to assist in the production thereof.

(2) Fish and minnows are considered products of a farm only when they are

raised from captive, domesticated stock owned by the producer or raised from fry to

fingerlings acquired from commercial or publicly owned hatcheries. The exemption does not

apply either with respect to sales of fish or minnows which originated as wild life in flowing

streams, natural or artificial lakes or ponds, or with respect to retail sales of fish or minnows

made by fish market operators, bait dealers, or other vendors who have purchased such

fish or minnows for resale purposes.

(3) Sales of domesticated fish and minnows produced on farms do not qualify for

the exemption contained in §40-23-4(a)(45) for sales of agricultural products by the person

or corporation that planted or cultivated, and harvested such agricultural products.

(4) Sales of bait used to capture or attempt to capture fish or other seafood in the

process of commercial fishing by a holder of a commercial license issued pursuant to Title

9, Chapter 12, Code of Ala. 1975, is considered a wholesale sale and is

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.21 (Continued)

exempt from sales and use taxes. Commercial fishing, pursuant to §40-23-1, is the activity

of catching or processing fish or other seafood regularly and exclusively as a means of

livelihood by a holder of a commercial license issued pursuant to Chapter 12 of Title 9. The

term includes shellfish farmers, shrimpers, oysterers, lobsterers, and crabbers. (§§Title 9 of

Chapter 12, 40-23-1, 40-23-2, 40-23-4, 40-23-31, 40-23-62, and 40-23-83, Code of Ala.

1975 Filed September 28, 1982. Filed January 15, 1993. Filed April 15, 1993, effective May

20, 1993.Amended Filed: March 27, 2023, June 12, 2023)

810-6-3-.22. Sales of Nursery Stock and Floral Products by Florist

(1) Sales of nursery stock and floral products by the florist who planted or

cultivated, and harvested said items, when the land is owned or leased by the seller, are

exempt from sales and use tax. Other sales of nursery stock and floral products by the

seller are taxable.

(2) A florist who claims the exemption outlined in paragraph (1) must keep

sufficient records to document such claims. In the absence of sufficient documentation, the

seller will be liable for the sales or use tax due on all sales for which exemption claims

cannot be verified by the department. (§§ 40-23-2, 40-23-4, 40-23-31, and 40-23-83, Code

of Ala. 1975. Adopted March 9, 1961. Amended: January 20, 1966. Filed September 28,

1982. Filed January 15, 1993, certification filed April 15, 1993, effective May 20, 1993. Filed

May 19, 2023; effective July 15, 2023.)

810-6-3-.23. Fluid, Milk.

(1) Sales of milk and milk products made by milk processors and distributors are

subject to sales and use tax. The only exemption for milk and milk products is the

producer's exemption. (See Rule 810-6-3-.01, Agricultural Products) (Sections 40-23-2(1),

40-23-4(a)(5), 40-23-61(a) and 40-23-62(8))

(2) The exemption contained in Section 40-23-4(a)(44) for sales of agricultural

products by the person or corporation that planted, cultivated, and harvested such

agricultural products does not apply to sales of milk and milk products by the producer,

processor, or distributor. (Readopted through APA effective October 1, 1982, amended

May 22, 1993)

810-6-3-.23.01. Food Banks.

(1) The term “food bank” as used in this rule shall mean any entity located within

Alabama that is an affiliated food bank of the “America’s Second Harvest - The Nation’s

Food Bank Network” or their subsidiary distribution organizations (SDOs).

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.23.01 (Continued)

(2) The term “subsidiary distribution organization (SDOs)” as used in this rule shall

mean smaller food banks or larger agencies allied with affiliated food banks that are

private, nonprofit, charitable organizations providing important community services.

Although some are agencies, all SDOs distribute part of their food to other charities for

direct distribution to clients.

(3) The food banks and SDOs listed in paragraphs (4) and (5) below located within

the State of Alabama are exempt from the payment and collection of state, county and

municipal sales and use taxes. This exemption is effective June 14, 2007. (Act No. 2007-

453)

(4) The following list includes the current food banks that are exempt as specified in

paragraph (3) above:

(a) Bay Area Food Bank, Theodore, AL

(b) Food Bank of North Alabama, Huntsville, AL

(d) United Way Community Food Bank, Birmingham, AL

(5) The following list includes the current SDOs that are exempt as specified in

paragraph (3) above:

(a) Food Bank of East Alabama, Auburn, AL

(b) Food Bank of Northwest Alabama, Muscle Shoals, AL

(d) West Alabama Food Bank, Tuscaloosa, AL

(e) Wiregrass Area United Way Food Bank, Dothan, AL

(Section 40-2A-7(a)(5), Code of Alabama 1975 and Act 2007-453, effective December 14,

2007)

810-6-3-.24. Sales to Foreign Governments, Diplomatic and Consular Officials.

(1) Sales to a foreign government or to its agents for use of a foreign government

are subject to Alabama Sales Tax unless they are immune because of a treaty between the

foreign government and the United States. Alabama tax should be collected in the absence

of proof that the foreign power is immune because of such a treaty.

(2) Exemptions of Sales.

(a) Tangible Personal Property Transactions Exemption. Alabama Sales Tax and

Alabama Use Tax does not apply to sales of tangible personal property to foreign

diplomatic and consular officials identified by the U.S. Department of State or American

Institute in Taiwan (AIT) as exempt from the tax pursuant to treaties or other diplomatic

agreements with the United States.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.24. (Continued)

(b) Lodgings Tax Transactions Exemption. Lodgings tax does not apply to rooms,

lodgings, or accommodations rented or furnished to foreign diplomatic and consular

officials, to the extent that such persons have been identified by the U.S. Department of

State or AIT as exempt from the tax pursuant to treaties or other diplomatic agreements

with the United States. (U.S. Constitution, Article VI)

purchases by all diplomatic missions and members in the United States must be approved

or denied by the U.S. Department of State, Office of Foreign Missions, before the

transaction is completed. Prior to completing the transaction, vendors selling vehicles

pursuant to a diplomatic tax exemption must follow these procedures:

1. The purchaser should present a mission tax exemption card, a personal tax

exemption card, or a protocol identification card to the seller. Members of the United

Nations (UN), Organization of American States (OAS), World Bank (WB), and the

International Monetary Fund (IMF) requesting a diplomatic exemption on the purchase of a

vehicle must present their personal tax exemption card.

2. The vendor must contact the U.S. Department of State, Office of Foreign

Missions for a determination on the tax-exempt status of the purchaser.

3. The U.S. Department of State, Office of Foreign Missions, will determine the

tax-exempt status of the purchaser and provide a letter to the vendor setting forth that

determination.

(3) Exemption Cards. Pursuant to U. S. law, the Taipei Economic and Cultural

Representative Office in the United States (TECRO), the Taipei Economic and Cultural

Offices (TECOs), their designated employees, and their qualifying dependents are entitled

to tax exemption privileges. Accordingly, the American Institute in Taiwan (AIT) issues tax

exemption cards that incorporate the same features and design elements as the Office of

Foreign Mission’s tax exemption cards. Other than the exception noted in (2)(c), persons

identified as exempt from taxation pursuant to treaties or other diplomatic agreements with

the United States are issued a tax exemption card by the U.S. Department of State or AIT

which identifies the bearer as exempt from tax and specifies the extent of the exemption.

Tax exemption cards may be personal tax exemption cards, mission tax exemption cards,

or official tax exemption cards.

(a) Personal Tax Exemption Cards. Personal tax exemption cards bear the photograph

and identification of a duly accredited consulate, embassy employee, or dependent who is

entitled to tax exemption privileges as stated on the card and are for the personal use of

the bearer whose picture appears on the front of the card. The cards are not transferable

and cannot be loaned to any other person, regardless of that person’s eligibility for

exemption from taxation. There is no restriction on the form of payment that can be used

with this type of card.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.24. (Continued)

(a) Personal Tax Exemption Cards. Personal tax exemption cards bear the

photograph and identification of a duly accredited consulate, embassy employee, or

dependent who is entitled to tax exemption privileges as stated on the card and are for the

personal use of the bearer whose picture appears on the front of the card. The cards are

not transferable and cannot be loaned to any other person, regardless of that person’s

eligibility for exemption from taxation. There is no restriction on the form of payment that

can be used with this type of card.

(b) Mission and Official Tax Exemption Cards. Mission tax exemption cards and

official tax exemption cards bear the photograph and identification of a consulate, or

embassy employee who is the official purchasing agent for that office and are for use by

foreign missions (including TECRO and TECO) to obtain exemption from taxes on

purchases in the United States that are necessary for the mission and function of the

foreign consulate or embassy. The individual pictured is the point of contact and need not

be present at the purchase. However, all purchases must be paid for with a check, credit

card, or wire transfer transaction in the name of the foreign government or mission,

TECRO, or TECO. The cards may not be used for personal purchases of tangible personal

property or personal rentals of rooms, lodgings, or accommodations.

(4) Taxable Sales, Use, and Lodgings Transactions. Taxes apply to the following

transactions:

(a) Sales of tangible personal property to, and the rental or furnishing of rooms,

lodgings, or accommodations to foreign diplomatic and consular officials who do not hold a

tax exemption card issued by the U.S. Department of State or the American Institute in

Taiwan (AIT).

(b) Sales of tangible personal property to, and the rental or furnishing of rooms,

lodgings, or accommodations to persons holding tax exemption cards where their total

purchases in a single transaction do not exceed the minimum level of exemption as

specified on the tax exemption card. With respect to minimum purchase requirements, the

total of all items purchased in a single transaction must equal or exceed the minimum

purchase level shown on the card. For example, if a foreign official has a card with a

minimum purchase requirement of $150, the official is required to pay sales or use tax on a

bill of $145. However, the same official would be exempt from all sales or use taxes on a

bill of $175. Also, if two foreign officials are traveling together but they have separate rooms

and separate bills, they cannot combine the room bills under one total in order to qualify for

a lodgings tax exemption.

lodgings, or accommodations to nationals of the United States even though such persons

may perform consular functions for foreign governments.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.24. (Continued)

(5) Receipt Retention of Sales. Sellers making sales to, or renting or furnishing

rooms, lodgings, or accommodations to foreign diplomatic and consular officials shall retain

a copy of the invoice or other written evidence of the transaction to support any deductions

claimed on their sales, use, or lodgings tax returns for tax-exempt sales or room rentals to

foreign diplomatic and consular officials. These invoices shall show the name of the

purchaser, the name of the mission, the tax exemption number, the expiration date of the

tax exemption card, and the minimum level of exemption specified on the tax exemption

card. When a personal tax exemption card is presented, the seller may ask the purchaser

for an additional form of identification such as the purchaser's driver’s license or his or her

diplomatic or consular identification card, which many holders of personal tax exemption

cards are also issued. (§§40-2A-7(a)(5), 40-2A-7(a)(1), 40-23-4(a)(17), 40-23-4, 40-23-9,

40-23-9, 40-23-62, and 40-23-83, Code of Ala. 1975) (Repealed and replaced effective

April 14, 2022)

810-6-3-.25. Fuel Oil Used in Firing Kilns.

(1) The term "kiln" as used in Code of Alabama 1975, Sections 40-23-4(a)(14)

and 40-23-62(15) and in this regulation shall mean an oven, stove, chamber, or other

device or enclosure to provide thermal processing of nonmetallic articles or substances in a

controlled temperature environment or atmosphere, often by direct convection or radiation

heat transfer. A "kiln" is used in the high temperature treatment of nonmetallic materials

and generally operates at sufficiently high temperatures to require that its walls be

constructed of refractory materials. The term "kiln" as used in the aforementioned Code

sections and in this regulation shall not include a furnace, oven, chamber, or other device

or enclosure used in the melting, fusing, or manufacture of metal. Examples of devices

which qualify as "kilns" are brick kilns, lime kilns, dry kilns (for lumber), and cement kilns.

Examples of devices which do not qualify as "kilns" are blast furnaces, basic oxygen

furnaces, and open hearth furnaces used in steel manufacturing. (State of Alabama v.

American Brass, Inc., Court of Civil Appeals, decided November 5, 1993)

(2) Sales of fuel oil purchased as fuel for kilns used in manufacturing

establishments are exempt from sales and use tax. (Sections 40-23-4(a)(14) and 40-23-

62(15))

(3) Where a manufacturer uses fuel oil for both taxable and nontaxable purposes,

the supplier of fuel oil must collect and pay the state sales tax on all of the fuel oil he

delivers to a storage facility from which withdrawals are made for a taxable use regardless

of the fact that some part of the fuel oil withdrawn is for an exempted use. In these

instances where a manufacturer maintains separate facilities for storing fuel oil for taxable

and nontaxable uses, the supplier is authorized to deliver tax free to the facility maintained

for storing fuel oil for a nontaxable use. The supplier is burdened with the responsibility of

knowing the usual and customary use made of the fuel oil delivered to his customers.

(Adopted March 9, 1961, amended September 18, 1964, amended July 2, 1975, readopted

through APA effective October 1, 1982, amended May 4, 1994)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.26. Gas Districts.

(1) Any gas district organized under the provisions of Section 11-50-390/417

would not be required to report and pay any state or county sales and use taxes on and

after September 1, 1965.

(2) Gas districts would not be required to pay municipal privilege license tax on

and after January 1, 1966. (Quarterly Report-Attorney General-Volume No. 124, P. 23 -

September 19, 1966.) (Adopted January 20, 1966, amended February 6, 1968, readopted

through APA effective October 1, 1982)

810-6-3-.28. Gasoline, Motor Fuels, and Lubricants.

Gasoline, liquefied natural gas, compressed natural gas, motor fuel, and lubricants

otherwise taxed, are exempted from sales and use taxes as follows:

(a) Gasoline and substitutes therefor (not including diesel fuel, tractor fuel,

distillate, liquefied gas, compressed gas, kerosene, fuel oil, crude oil, and other liquid fuel

oil and gases commonly used for heating, lighting or industrial purposes), lubricating oil

and greases, and substitutes therefor commonly used in lubricating or oiling the moving

parts of machines or machinery are exempted from sales and use taxes regardless of use.

(b) Diesel fuel, tractor fuel, distillate, liquefied gas, compressed gas, kerosene,

fuel oil, crude oil, and other liquid fuel oil and gases commonly used for heating or lighting

or industrial purposes are exempted from sales and use taxes when otherwise taxed by the

motor fuels excise tax statutes of this state. (Sections 40-2A-7(a)(5), 40-23-4(a)(1), 40-23-

31, 40-23-62(4), 40-23-83.) (Readopted through APA effective October 1, 1982, amended

April 1, 1996, amended December 4, 2017)

810-6-3-.29. Grass Sod.

(1) The gross receipts from sales of grass sod of all kinds and character when in

the original state of production or condition of preparation for sale, when such sales are

made by the producer or members of his family or for him by those employed by him in the

production thereof, are exempt from sales and use tax. This exemption does not apply to

sales of grass sod by a person engaged in the business of selling plants, seedlings,

nursery stock, or floral products. (Section 40-23-4(a)(31))

(2) Sales of grass sod by the person or corporation that planted, cultivated, and

harvested the sod are exempt from sales and use tax. Unlike the exemption outlined in

paragraph (1) above, this exemption is not lost to the producer who also sells plants,

seedlings, nursery stock, or floral products. (Section 40-23-4(a)(44))

(3) A seller who claims the exemption outlined in paragraph (2) must keep

sufficient records to document such claims; and, in the absence of sufficient

documentation, shall be liable for the sales or use tax due on all sales for which exemption

claims cannot be verified by the Revenue Department. (Adopted October 29, 1976,

readopted through APA effective October 1, 1982, amended May 22, 1993)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.31. Herbicides. (REPEAL)

(Adopted January 1, 1966, readopted through APA effective October 1, 1982, amended

March 24, 1993; repealed June 12, 2023)

810-6-3-.32. Historical Preservation Authorities.

(1) A historical preservation authority organized pursuant to Article 5 of

Chapter10 of Title 41, Code of Alabama 1975, as amended, is exempt from the payment of

sales and use tax on any tangible personal property purchased by the authority provided

the purchases are made in the name of the authority, the authority's credit is obligated, and

the purchases are paid for with funds belonging to the authority. (Section 41-10-147, Code

of Alabama 1975)

(2) The exemption in Section 41-10-147 does not apply to a contractor where the

contractor has a construction contract with a historical preservation authority to furnish all

materials and labor for use in the performance of the contract. The contractor is the

consumer thereof of all materials used in the performance of the construction contract

which becomes part of real property. (Sections 40-23-1(a)(10) and 40-23-60(5))

(3) Notwithstanding any of the exemptions outlined above, an individual,

partnership, or corporation organized for profit that is or will be treated for federal income

tax purposes as the owner of property to which a historical preservation authority has title

to, or a possessory right in, is liable for sales or use taxes as if the for-profit entity held title

to the property unless the individual, partnership, or corporation would be entitled to use the

property pursuant to a lease or other agreement entered into before May 21, 1992, or

would be entitled to use the property at some future time pursuant to an inducement

agreement entered into or adopted before May 21, 1992. For-profit entities, however, may

qualify for abatements of certain sales and use taxes pursuant to Chapter 9B of Title 40 of

the Code of Alabama 1975. Section 40-9B-7 only pertains to private users of private use

property. Private user is defined in 40-9B-3. Therefore, Section 40-9B-7 does not change

the tax exempt status of a non-profit entity for sales and use tax purposes. (Section 40-9B-

7, Code of Alabama 1975) (Sections 40-2A-7(a)(5), 40-9B-7, 40-3-1(a)(10), 40-23-31, 40-

23-60(5), 40-23-83, 41-10-147, Code of Alabama 1975) (Adopted November 3, 1980,

readopted through APA effective October 1, 1982, amended May 22, 1993, amended

March 27, 2001, amended June 10, 2005, amended August 4, 2009, amended December

25, 2013)

810-6-3-.33. Industrial Development Board.

(1) An industrial development board created by an incorporated municipality

within the State of Alabama pursuant to Article 4 of Chapter 54 of Title 11, Code of

Alabama 1975, as amended, is exempt from sales and use tax on any tangible personal

property purchased by the board or its duly authorized agent, provided the purchases are

made in the name of the board, the board's credit is obligated and said purchases are paid

for by the board with funds belonging to the board. The term "funds belonging to the board"

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.33 (Continued)

shall normally be construed to mean those funds not exceeding the amount of the long

term revenue bonds and any temporary borrowing evidenced by revenue bonds or notes

maturing not later than 18 months from date of issue. (Section 11-54-96, Code of Alabama

1975)

(2) (a) The exemption in Section 11-54-96 does not apply to a contractor where

the contractor has a construction contract with an industrial development board to furnish

all materials and labor for use in the performance of the contract. The contractor is the

consumer thereof of all the materials used in the performance of the construction contract

which becomes part of real property. A contractor may purchase items of machinery or

equipment not becoming part of the realty, tax exempt, where such items are intended for

resale to the board in the form of tangible personal property. (Sections 40-23-1(a)(10) and

40-23-60(5), Code of Alabama 1975)

(b) The sale to, or the storage, use, or consumption by, any contractor or

subcontractor of any tangible personal property to be incorporated into realty pursuant to a

contract awarded after October 1, 2000 but prior to July 1, 2004, with an industrial

development board organized pursuant to Article 4 of Chapter 54 of Title 11, Code of

Alabama 1975, is exempt from all state, county, and municipal sales and use taxes

provided the contractor or subcontractor has complied with Rule 810-6-3-.77 entitled

Exemption of Certain Purchases by Contractors and Subcontractors in conjunction with

Construction Contracts with Certain Governmental Entities, Public Corporations, and

Educational Institutions. (Section 40-9-33, Code of Alabama 1975, repealed by Act 2004-

638, effective July 1, 2004)

(3) Notwithstanding any of the exemptions outlined above, an individual, partnership, or

corporation organized for profit that is or will be treated for federal income tax purposes as

the owner of property to which an industrial development board has title to, or a possessory

right in, is liable for sales and use taxes as if the for-profit entity held title to the property

unless the individual, partnership, or corporation would be entitled to use the property

pursuant to a lease or other agreement entered into before May 21, 1992, or would be

entitled to use the property at some future time pursuant to an inducement agreement

entered into or adopted before May 21, 1992. For-profit entities, however, may qualify for

abatements of certain sales and use taxes pursuant to Chapter 9B of Title 40 of the Code

of Alabama 1975. Section 40-9B-7 only pertains to private users of private use property.

Private user is defined in Section 40-9B-3. Therefore, Section 40-9B-7 does not qualify for

abatements of certain sales and use taxes pursuant to Chapter 9B of Title 40 of the Code

of Alabama 1975. Section 40-9B-7 only pertains to private users of private use property.

Private user is defined in Section 40-9B-3. Therefore, Section 40-9B-7 does not change

the tax exempt status of a non-profit entity for sales and use tax purposes. (Sections 40-

2A-7(a)(5), 11-54-96, 40-9B-4, 40-9B-5, 40-9B-6, 40- B-7, 40-23-1(a)(10), 40-23-31, 40-23-

60(5), 40-23-83, and 40-9-33, Code of Alabama 1975) (Adopted February 6, 1968,

amended October 10, 1974, amended August 24, 1982, amended September 29, 1982,

readopted through APA effective October 1, 1982, amended May 22, 1993, amended

March 27, 2001, amended June 10, 2005, amended August 4, 2009)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.34. Insecticides and Fungicides.

(1) The term "insecticides" means any substance or mixture of substances which

are used for the preventing, destroying, repelling, or mitigating of any insects. The term

"insect" means flies, mites, spiders, ticks, nematodes, and destructive worms and grubs as

well as those small invertebrate animals strictly falling within the scientific class Insecta.

(AGO Graddick, August 29, 1979). The term "fungicides" means any substance or mixture

of substances which are used for preventing, destroying, or mitigating any fungi.

(2) Sales of insecticides and fungicides when used for agricultural purposes are

exempt from sales and use tax.

(3) Sales of insecticides and fungicides when used by persons properly permitted

by the Department of Agriculture and Industries or any applicable local or state

governmental authority for structural pest control work are exempt from sales and use tax.

(Sections 40-23-4(a)(4) and 40-23-62(7)) (Adopted March 9, 1961, amended November 1,

1963, amended January 20, 1966, amended June 12, 1978, readopted through APA

effective October 1, 1982, amended March 24, 1993, amended October 12, 1993)

810-6-3-.35. Interstate Shipments Subject to Sales Tax.

Sales tax is due by the seller in Alabama who accepts an order which he fills by having an

out-of-state supplier ship the goods ordered, F.O.B. supplier's out-of-state shipping point, to

the buyer in Alabama and the seller's supplier renders his invoice to the seller in Alabama

and the seller in turn invoices his customer. (Graybar Electric v. Curry, 189 So. 186.)

Sales tax is due by a seller in Alabama who accepts an order which he fills by having the

goods shipped to buyer, F.O.B. shipping point, his warehouse or stock of goods located

outside Alabama. (Graybar Electric v. Curry, 189 So. 186.) (Sections 40-23-1(a)(5) and

40-23-4(a)(17)) (Readopted through APA effective October 1, 1982)

810-6-3-.35.01. Interstate Commerce.

Where a resident contractor purchases materials from an Alabama dealer with the provision

that the materials be delivered outside of Alabama by the seller for the contractor's use

outside of Alabama, the sale is in interstate commerce and is exempt from the tax.

(Section 40-23-4(a)(17)) (Amended June 12, 1978, readopted through APA effective

October 1, 1982)

810-6-3-.35.02. Interstate Commerce, Sales in.

(1) Sales are considered to be made outside Alabama and cannot be taxed by

the Alabama Sales Tax Law where:

(a) The seller is required by the sales agreement to deliver the goods outside the

state in the seller’s equipment, or

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.35.02. (Continued)

(b) The seller delivers the goods to a common carrier or to the United States

Postal Service for transportation outside the state regardless of any F.O.B. point, or

state by the use of an independent trucker hired by the seller.

(2) Property is not sold outside Alabama, and therefore is subject to Alabama

Sales Tax, when the buyer takes actual possession of the goods in this state or when an

agent of the buyer accepts delivery for the buyer to make delivery outside the state at the

buyer's direction. However, when the buyer contracts with a common carrier or the United

States Postal Service to accept goods in this state for delivery outside this state at the

buyer’s direction, the sale is not subject to Alabama Sales Tax since the common carrier or

United States Postal Service is the agent of the seller regardless of who selects the method

of transportation. (Sections 40-23-1(a)(5) and 40-23-4(a)(17)) (Readopted through APA

effective October 1, 1982, amended effective June 9, 1995, amended March 10, 1998)

810-6-3-.36. Liquefied Petroleum Gas, Liquefied Natural Gas and Compressed

Natural Gas.

(1) Liquefied petroleum gas, liquefied natural gas and compressed natural gas

sold to be used for agricultural purposes are exempt from sales tax.

(2) Liquefied petroleum gas, liquefied natural gas and compressed natural gas

sold to hatcheries for use as fuel for heaters used to maintain a constant temperature in

incubators qualify for the exemption outlined in (1) above. This exemption applies to a

hatchery whose sole function is the hatching and raising of poultry even if the hatchery is

not located on a traditional farm.

(3) Liquefied petroleum gas, liquefied natural gas and compressed natural gas

sold for use in the commercial production of greenhouse and nursery products qualify for

the exemption outlined in (1) above. (AGO Graddick February 6, 1979) Noncommercial

greenhouses or hothouses when not being operated as part of a farming operation are not

entitled to this exemption.

(4) The ginning of cotton occurs after harvesting is completed and, since the

agricultural aspect ends with harvesting, cotton gins are nonagricultural processing

operations and do not qualify for the exemption outlined in (1) above. Sales of liquefied

petroleum gas, liquefied natural gas and compressed natural gas to cotton gins located on

traditional farms and operated by the farmer do not qualify for this exemption.

(5) The drying of grain by grain dealers not located on traditional farms occurs

after the harvesting is completed and, since the agricultural aspect ends with harvesting,

such operations are nonagricultural processing in nature and do not qualify for the

exemption outlined in (1) above. (Section s 40-2A-7(a)(5), 40-23-4(33), 40-23-31, and 40-

23-83.) (Readopted through APA effective October 1, 1982, amended July 7, 1989,

amended December 4, 2017)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.36.01. Liquefied Petroleum Gas, Exempt from Sales Tax.

The sale of liquefied petroleum gas sold for use as motor fuel is exempt from sales tax

provided the purchaser has secured the required permit which is issued by the Liquefied

Petroleum Gas Board and displays the decal issued by the Board on the vehicle.

(Section 40-23-4(a)(1)) (Adopted August 10, 1982, readopted through APA effective

October 1, 1982)

810-6-3-.37. Livestock.

All sales of livestock are exempted from sales tax. (Section 40-23-4(a)(5)) (Readopted

through APA effective October 1, 1982)

810-6-3-.37.01. Meals Furnished Along With Rooms by Schools and Colleges.

(REPEALED)

(Readopted through APA effective October 1, 1982; repealed August 14, 2022.)

810-6-3-.37.03. Exemption For Certain Items Furnished To Medicaid Recipients.

(1) Medicaid Covered Products Paid by the State.

(a) Eyeglasses, durable medical equipment, prosthetic and orthotic devices, and

medical supplies as defined and covered under the Medicare program furnished to

Medicaid recipients are exempt from sales, use, or rental and leasing tax when billed

directly to and paid for directly by Medicaid pursuant to §§40-23-4 and 40-23-62, Code of

Ala. 1975.

(b) Payment for Medicare program furnished items may be as the result of a

contract between Medicaid and a manufacturer who provides the item, bills Medicaid

directly under the terms of the contract, and receives payment directly from Medicaid.

home health providers, who furnish the item, bill Medicaid directly pursuant to the terms

established by the Medicaid program, and receive payment directly from Medicaid.

(2) Medicaid Covered Products Paid by the Recipient.

(a) The sales and use tax exemption outlined in Section (1) above does not

apply in instances where an item is sold directly to and paid for by a Medicaid recipient.

Should the nature of the present Medicaid program change, the sales and use tax

exemption outlined in Section (1) would not apply to eyeglasses or durable medical

equipment purchased and paid for by a Medicaid recipient who later receives

reimbursement from Medicaid nor would the exemption apply with respect to that portion of

a co-pay purchase paid for directly by the Medicaid recipient. (§§40-23-2 and 40-23-61,

Code of Ala. 1975)

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.37.03. (Continued)

(b) Drugs as defined in §40-23-4.1, Code of Ala. 1975, are specifically exempt

from sales and use tax; and, sales to Medicaid recipients are exempt regardless of who is

or who makes payment for said drugs.

(3) Exceptions. (a) Hospitals and nursing homes purchasing tangible personal

property for use in furnishing services to Medicaid recipients are not exempt from sales or

use tax. Hospitals and nursing homes are primarily engaged in the business of rendering

services. They are not liable for sales tax with respect to their gross receipts for meals,

drugs, or other tangible personal property used in rendering hospital or nursing home

services. Hospitals and nursing homes are deemed to be the purchasers for use or

consumption of such tangible personal property, and the sellers of these items to hospitals

and nursing homes are required to collect sales or use tax on sales of such property to

private hospitals and nursing homes.

(b) Purchases by private hospitals and nursing homes of drugs as defined in §

40-23-4.1, Code of Ala. 1975, are specifically exempt from sales and use tax. Prescription

drugs sold separate and apart from services rendered by a hospital or nursing home are

also exempt from sales and use tax pursuant to §40-23-4.1, Code of Ala. 1975. See 810-6-

3-.47.01 entitled Prescription Drugs, and 810-6-5-.09 entitled Leasing and Rental of

Tangible Personal Property. (§§ 40-2A-7(a)(5), 40-23-2, 40-23-4, 40-23-31, 40-23-61, 40-

23-62, 40-23-83, Code of Ala. 1975. Administrative Rule 810-6-3-.47.01 & 810-6-5-.09)

(Adopted March 18, 1970, amended November 9, 1970, amended September 20, 1974,

amended August 10, 1982, readopted through APA effective October 1, 1982, amended

January 29, 1990, amended December 4, 2014, amended January 14, 2022)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.38. Medical Clinic Boards.

(1) A medical clinic board created pursuant to Chapter 58 of Title 11, Code of

Alabama 1975, is exempt from sales or use tax on any tangible personal property

purchased by the board or its duly authorized agents, provided the purchases are made in

the name of the board, the board's credit is obligated, and the purchases are paid for by the

board with funds belonging to the board.

(2) (a) The exemption referenced in paragraph (1) above does not apply to a

contractor where the contractor has a construction contract with a medical clinic board to

furnish all materials and labor for use in the performance of the contract. The contractor is

the consumer thereof of all the materials used in the performance of the construction

contract which becomes part of real property. A contractor may purchase items of

machinery or equipment not becoming part of the realty, tax exempt, where such items are

intended for resale to the board in the form of tangible personal property. (Sections 40-23-

1(a)(10) and 40-23-60(5), Code of Alabama 1975)

(b) The sale to, or the storage, use, or consumption by, any contractor or

subcontractor of any tangible personal property to be incorporated into realty pursuant to a

contract awarded after October 1, 2000 but prior to July 1, 2004, with a medical clinic board

organized pursuant to Chapter 58 of Title 11, Code of Alabama 1975, is exempt from all

state, county, and municipal sales and use taxes provided the contractor or subcontractor

has complied with Rule 810-6-3- .77 entitled Exemption of Certain Purchases by

Contractors and Subcontractors in conjunction with Construction Contracts with Certain

Governmental Entities, Public Corporations, and Educational Institutions. (Section 40-9-33,

Code of Alabama 1975, repealed by Act 2004 638, effective July 1, 2004)

(3) Notwithstanding any of the exemptions outlined above, an individual,

partnership, or corporation organized for profit that is or will be treated for federal income

tax purposes as the owner of property to which a medical clinic board has title to, or a

possessory right in, is liable for sales and use taxes as if the for-profit entity held title to the

property unless the individual, partnership, or corporation would be entitled to use the

property pursuant to a lease or other agreement entered into before May 21, 1992, or

would be entitled to use the property at some future time pursuant to an inducement

agreement entered into or adopted before May 21, 1992. For-profit entities, however, may

qualify for abatements of certain sales and use taxes pursuant to Chapter 9B of Title 40 of

the Code of Alabama 1975. Section 40-9B-7 only pertains to private users of private use

property. Private user is defined in Section 40-9B-3. Therefore, Section 40-9B-7 does not

change the tax exempt status of a non-profit entity for sales and use tax purposes.

(Sections 40-2A-7(a)(5), 40-9B-7, 40-9-33, 40-23-1(a)(10), 40-23-31, 40-23-60(5), and 40-

23-83, Code of Alabama 1975) (Adopted August 15, 1974, amended August 24, 1982,

readopted through APA effective October 1, 1982, amended May 22, 1993, amended

March 27, 2001, amended June 10, 2005, amended August 4, 2009)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.39. Motor Freight Lines, Sales to.

Any sale of property to motor freight lines is subject to the sales tax where the

property is delivered in Alabama by a seller doing business in Alabama. This is true

even though the purchase order may have been given out of state to an out-of-state

branch of the seller and even though payment is made out of state. (Sections 40-23-31,

40-23-83, Code of Alabama 1975.) (Adopted effective November 18, 2022, effective

January 14, 2023.)

810-6-3-.39.02. Motor Freight Lines, Sales to. (REPEALED)

(Readopted through APA effective October 1, 1982, repealed effective January 14, 2023.)

810-6-3-.40. Municipal Housing Authority.

Sales of property to a municipal housing authority for use by such authority in construction,

repair, or maintenance of its property are sales to an agency of a city and exempted from

the sales tax. (Section 40-23-4(a)(11)) (Readopted through APA effective October 1,

1982)

810-6-3-.41. Exemption for Municipal Special Health Care Facilities.

(1) Chapter 62 of Title 11, Code of Alabama 1975, as amended, provides for the

incorporation and operation of municipal special health care facility authorities.

(2) Section 11-62-18(d) exempts from sales and use tax any purchase of tangible

personal property used in the construction and equipment of a special health care facility if

the purchase is pursuant to any contractual arrangement between an authority and a user

for the acquisition of a facility for sale or lease to the user or for financing the acquisition of

a facility by loan from the authority. These purchases are exempt regardless of whether

they are made by the authority, the user, or any contractor or agent of either.

(3) To qualify for the sales and use tax exemption outlined in Section 11-62-

18(d), the property purchased must become a part of the facility or the equipment of the

facility or must constitute supplies or other items necessary for the day to day operation of

the facility. Purchases of tangible personal property by an authority's or user's contractor or

agent for use by the contractor or agent, when such property does not become a part of the

facility or the equipment of the facility or does not constitute supplies or other items

necessary for the day to day operation of the facility, are subject to sales or use tax.

Examples of nonexempt items are diesel fuel and repair parts for construction equipment,

hand tools, and consumable supply items used by the contractor or agent.

(4) Notwithstanding the exemption outlined above, an individual, partnership, or

corporation organized for profit that is or will be treated for federal income tax purposes as

the owner of property to which a municipal special health care facility authority has title to,

or a possessory right in, is liable for sales and use taxes as if the for-profit entity held title to

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.41. (Continued)

the property unless the individual, partnership, or corporation would be entitled to use the

property pursuant to a lease or other agreement entered into before May 21, 1992, or

would be entitled to use the property at some future time pursuant to an inducement

agreement entered into or adopted before May 21, 1992. For-profit entities, however, may

qualify for abatements of certain sales and use taxes pursuant to Chapter 9B of Title 40 of

the Code of Alabama 1975. Section 40-9B-7 only pertains to private users of private use

property. Private user is defined in 40-9B-3. Therefore, Section 40-9B-7 does not change

the tax exempt status of a non-profit entity for sales and use tax purposes. (Sections 40-

2A-7(a)(5), 40-9B-7, 40-23-31, 11-62-18 and 40-23-83, Code of Alabama 1975) (Adopted

October 3, 1987, amended May 22, 1993, amended April 7, 1994, amended March 27,

2001, amended June 30, 2005, amended August 4, 2009)

810-6-3-.41.01. Exemption for Certain Health Care Authorities.

(1) The term "health care authority" as used in this rule shall mean any public

corporation organized pursuant to Article 11 of Chapter 21 of Title 22, Code of Alabama

1975, and any public hospital corporation reincorporated pursuant to Article 11 of Chapter

21 of Title 22, Code of Alabama 1975.

(2) The sale, purchase, use, storage, or consumption of tangible personal

property used in the construction and equipment of any health care facilities for a health-

care authority, regardless of whether the sale is to the health care authority, its contractor,

its subcontractors, or its agent, is exempt from state, county, and municipal sales and use

taxes. (Section 22-21-333)

(3) The exemption in Section 22-21-333 applies to purchases of materials and

equipment used in the construction of a new facility and in the construction of an addition to

an existing facility. (AGO, Sessions, March 26, 1996)

(4) To qualify for the exemption in Section 22-21-333, the property purchased

must become a part of the facility or the equipment of the facility or must constitute supplies

or other items necessary for the day to day operation of the facility. Purchases of tangible

personal property by the health care authority's contractor, subcontractors, or agent, when

the property does not become a part of the facility or the equipment of the facility or does

not constitute supplies or other items necessary for the day to day operation of the facility,

are taxable. Examples of nonexempt items are diesel fuel and repair parts for construction

equipment, hand tools, and consumable supply items used by the contractor,

subcontractor, or agent.

(5) Notwithstanding the exemption outlined above, an individual, partnership, or

corporation organized for profit that is or will be treated for federal income tax purposes as

the owner of property to which a health care authority has title to, or a possessory right in,

is liable for sales or use taxes as if the for-profit entity held title to the property unless the

individual, partnership, or corporation would be entitled to use the property pursuant to a

lease or other agreement entered into before May 21, 1992, or would be entitled to use the

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.41.01. (Continued)

property at some future time pursuant to an inducement agreement entered into or adopted

before May 21, 1992. For-profit entities, however, may qualify for abatements of certain

sales and use taxes pursuant to Chapter 9B of Title 40 of the Code of Alabama 1975.

Section 40-9B-7 only pertains to private users of private use property. Private user is

defined in Section 40-9B-3. Therefore, Section 40-9B-7 does not change the tax exempt

status of a non-profit entity for sales and use tax purposes. (Sections 40-2A-7(a)(5), 11-62-

18, 40-9B-7, 40-23-31, and 40-23-83, Code of Alabama 1975) (Adopted through APA

effective November 3, 1998, amended March 27, 2001, amended June 30, 2005, amended

August 4, 2009)

810-6-3-.41.02. Exemption for Improvement Districts.

(1) The definitions of the terms “appointing government,” “improvements,” and

“public person” contained in Section 11-99A-2, Code of Alabama 1975, are incorporated

into this rule by reference.

(2) The term “improvement district” as used in this rule shall mean a district

created pursuant to Chapter 99A of Title 11 of the Code of Alabama 1975.

(3) Subject to any limitation or restriction imposed by the appointing government

pursuant to Section 11-99A-20(c) and the restrictions outlined in paragraphs (5) and (6)

below; all sales of tangible personal property to, and all sales of tangible personal property

by, an improvement district are exempt from all state, county, and municipal sales and use

taxes and gross receipts taxes in the nature of a sales tax. (Section 11-99A-20(a))

(4) Subject to any limitation or restriction imposed by the appointing government

pursuant to Section 11-99A-20(c) and the restrictions outlined in paragraphs (5) and (6)

below; the purchase, acquisition, and installation of tangible personal property for

improvements by an improvement district are exempt from all state, county, and municipal

sales and use taxes and gross receipts taxes in the nature of a sales tax regardless of

whether the purchases of the materials are made by the improvement district or by a

contractor or subcontractor for use in the acquisition, construction, or installation of

improvements for an improvement district. (Sections 11-99A-20(b) and 11-99A-20(c))

(5) The sales and use tax exemptions outlined in Section 11-99A-20 shall not

apply to any purchase, acquisition, or installation that would not be exempt if purchased,

acquired, or installed directly by the appointing government. (Section 11-99A-20(b))

(6) The sales and use tax exemptions outlined in Section 11-99A-20 shall not be

used for the acquisition, equipping, or construction of property to be owned by any person

other than a utility company, the improvement district, or another public person. (Section

11-99A-2(6))

(7) Any contractor or subcontractor who is making tax-exempt purchases

pursuant to Section 11-99A-20(b) may apply for and obtain a sales and use tax Certificate

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.41.02. (Continued)

of Exemption (Form STE-1). A contractor or subcontractor applying for a Form STE-1 shall

attach to its application a certification, under oath, from the Chairman of the Board of the

improvement district outlining the terms of the improvement district’s agreement with the

appointing government with respect to any limitations, restrictions, or rescissions to the

sales and use tax exemptions otherwise applicable to purchases by the improvement

district, contractor, or subcontractor. The Form STE-1 issued to the contractor or

subcontractor will be project specific and shall be provided by the contractor or

subcontractor to its vendors to document the tax-exempt status of its purchases of

materials for the improvement project indicated on the Form STE-1. A contractor or

subcontractor who will be making tax-exempt purchases for more than one qualifying

improvement project shall obtain a separate Form STE-1 for each project. A contractor or

subcontractor who obtains a Form STE-1 shall comply with all of the provisions of Sales

and Use Tax Rule 810-6-5-.02 entitled State Sales and Use Tax Certificate of Exemption

(Form STE-1) - Responsibilities of the Certificate Holder - Burden of Proof - Liability for

Taxes Later Determined to be Due.

(8) Effective October 1, 2000, the sale to, or the storage, use, or consumption by,

any contractor or subcontractor of any tangible personal property to be incorporated into

realty pursuant to a contract awarded prior to July 1, 2004, with an improvement district

organized pursuant to Chapter 99A of Title 11, Code of Alabama 1975, is exempt from all

state, county, and municipal sales and use taxes provided the contractor or subcontractor

has complied with Rule 810-6-3-.77 entitled Exemption of Certain Purchases by

Contractors and Subcontractors in conjunction with Construction Contracts with Certain

Governmental Entities, Public Corporations, and Educational Institutions. This exemption,

which is in addition to the one found in Section 11-99A-20, does not exempt any purchases

by contractors or subcontractors that are not also exempt pursuant to Section 11-99A-20.

(9) In accordance with Act No. 2004-638, the sale to, or the storage, use, or

consumption by any contractor or subcontractor of any tangible personal property to be

incorporated into realty pursuant to a contract awarded, or any portion of a contract which

is revised, renegotiated, or otherwise altered, on and after July 1, 2004, to the extent that

such revision, renegotiation, or alteration requires the purchase of additional tangible

personal property is subject to all state, county and municipal sales and use taxes. Items

purchased after June 30, 2004, pursuant to a contract awarded prior to July 1, 2004, will

continue to be exempt for the remainder of the contract to the extent that any post June 30,

2004, revision or amendment does not require the purchase of additional tangible personal

property. (Sections 40-2A-7(a)(5), 11-99A-2, 11-99A-20, 40-23-31 and 40-23-83, Code of

Alabama 1975) (Adopted through APA effective December 23, 1999, amended March 27,

2001, amended June 2, 2005)

810-6-3-.42. National Farm Loan Associations.

National farm loan associations are instrumentalities of the United States and are not

subject to sales or use taxes on the property purchased by them for use in carrying on any

activity they are authorized to engage in by Federal Law. (Authority: 12 U.S.C.A. 931.)

(Section 40-23-4(a)(17)) (Readopted through APA effective October 1, 1982

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.42.02. Nonresidents, Sales to.

(1) Other than the exceptions noted in (2) and (3) below, sales to nonresidents

are sales at retail subject to the tax even though such purchasers claim that the property

purchased is for use outside of Alabama, except where the seller delivers the property

outside Alabama or to the U.S. Postal Service or to a common carrier for transportation

outside Alabama. (Sections 40-23-1(a)(5), 40-23-4(a)(17) and 40-23-62(2))

(2) Sales of automobiles, motorcycles, trucks, truck trailers, or semitrailers that (i)

will be registered or titled outside Alabama and (ii) are exported or removed from Alabama

within 72 hours by the purchaser or the purchaser’s agent for first use outside Alabama are

not subject to Alabama sales tax when the sales tax laws of the state in which the

purchaser will title or register the vehicle allows an Alabama resident to purchase a motor

vehicle for first titling and registering in Alabama without the payment of tax to that state.

To be exempt from Alabama sales tax, the information relative to the exempt sale must be

documented on forms approved by the Revenue Department. (See Sales and Use Tax

Rule 810-6-3-.42.03 entitled Sales of Certain Automotive Vehicles to Nonresidents for First

Use and Registration or Titling Outside Alabama.) Sales of other vehicles such as mobile

homes, motor bikes, all terrain vehicles, motor homes, travel trailers, and boats do not

qualify for this export exemption provision and are subject to Alabama sales tax unless the

seller can provide factual evidence that the vehicle was delivered outside Alabama or

delivered to a common carrier for transportation outside Alabama. (Section 40-23-2(4))

(3) The purchase of a new truck with a gross weight not exceeding 8,000 pounds

or a new passenger vehicle by a nonresident of the United States is exempt from sales or

use tax when (i) the truck or passenger vehicle is manufactured in Alabama, (ii) the truck or

passenger vehicle is delivered to the purchaser in Alabama by the manufacturer or an

affiliated corporation, (iii) at the time of purchase the purchaser intends to export the truck

or passenger vehicle to and permanently license the truck or passenger vehicle in a foreign

country within 90 days after the date of delivery, and (iv) the purchaser obtains a temporary

metal license plate and a temporary registration certificate from the probate judge or

license commissioner of the county in which the manufacturer is located.

(4) Effective January 1, 2016, sales of automobiles, motorcycles, trucks, truck

trailers, or semitrailers that (i) will be registered or titled outside Alabama and (ii) are

exported or removed from Alabama within 72 hours by the purchaser or the purchaser’s

agent for first use outside Alabama are subject to the Alabama state sales tax rate of two

percent (2%) unless the sales tax laws of the state in which the purchaser will title or

and registering in Alabama without the payment of tax to that state. However, in no case

shall the amount of Alabama state sales tax due on a motor vehicle that will be registered

or titled for use in another state exceed the amount of sales tax that would otherwise have

been due in the state where the vehicle will be registered or titled for first use.

(a) The tax collected on sales outlined in paragraph (4) above shall be Alabama

sales tax and shall exclude county and municipal sales tax.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.42.02. (Continued)

(5) A list of states that do not allow a reciprocal drive-out provision for Alabama

residents purchasing automotive vehicles for first titling and registration in Alabama may be

viewed on the Department’s website at: http://www.revenue.alabama.gov/salestax/. Such

list will be published by December 1, 2015, and will be updated each December 1

thereafter. Sellers that have relied on list information that is later determined to be incorrect

shall not be held liable for the non-collection of the state automotive sales tax.

(Sections 40-2A-7(a)(5), 40-23-39(b), 40-23-2(4), 40-23-31, Code of Alabama 1975 and

Act 2015-503) (Readopted through APA effective October 1, 1982, amended January 24,

1989, amended March 10, 1998, amended February 10, 2016)

810-6-3-.42.03. Sales of Certain Automotive Vehicles to Nonresidents for First Use

and Registration or Titling Outside Alabama.

(1) (a) Effective January 1, 2016, sales of automobiles, motorcycles, trucks, truck

trailers, or semitrailers that will be registered or titled outside Alabama, that are exported

or removed from Alabama within 72 hours by the purchaser or purchaser's agent for first

use outside Alabama are not subject to Alabama sales tax provided the following

conditions are met:

1. The state sales tax laws of the state in which the purchaser will title or

titling and registering in Alabama without the payment of tax to that state.

2. The exempt sale is documented on the Automotive Vehicle Drive Out

Certificate for Nonresidents.

(b) Effective July 1, 2022, sales of travel trailers, campers, or housecars that

are exported or removed from Alabama within 72 hours by the purchaser or purchaser’s

agent for first use outside Alabama are not subject to Alabama sales tax provided that

the conditions in 1. and 2. above are met and the following additional documentation is

collected and retained:

1. Copy of sales invoice.

2. Copy of the purchaser’s valid state-issued identification card, state-issued

driver’s license, U.S. passport, or for entities, a copy of the same for the individual

signing for the purchase. An entity must also provide a copy of the same for a member

of an LLC or a member of the board of directors for a corporation as well as the location

the travel trailer, camper, or housecar will be housed upon export from Alabama.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.42.03 (Continued)

(2) The certificate must be executed by both the seller and the purchaser or

the purchaser's agent at the time of the sale. A certificate executed subsequent to the

time of the sale shall be invalid and the Alabama sales tax shall be due from the seller

on the sale for which the invalidated certificate was prepared.

(3) The certificate, properly completed, must be retained in the seller's records

with a copy of the corresponding sales invoice, and when applicable, the additional

documentation required in subparagraph (1)(b). The certificate and documents shall be

available for inspection or examination by the department or any authorized agent during

normal business hours. The seller will be liable for the Alabama sales tax on any sale for

which the export exemption has been claimed but for which a properly executed certificate

and sales invoice, and when applicable, additional documentation required in subparagraph

(1)(b) are not maintained in the seller's records.

(4) A Certificate of Exemption - Out of State Delivery is not required for sales

which qualify for the export exemption contained in Section 40-23-2(4) and for which the

certificate is properly executed and maintained.

(5) Sales of other vehicles such as mobile homes, all terrain vehicles, and boats

do not qualify for the export exemption provision and are taxable unless the seller can

provide factual evidence that the vehicle was delivered outside Alabama or to a common

carrier for transportation outside Alabama.

(6) In the event the laws of the state in which the purchaser will title or register

the vehicle do not allow an Alabama resident to purchase a motor vehicle for first titling and

registering in Alabama without the payment of tax to that state, the sale of the automotive

vehicle to the nonresident will be subject to the Alabama state automotive sales tax rate.

The tax collected will be state tax and will exclude county and municipal sales tax.

(7) A list of states that do not allow a reciprocal drive-out provision for Alabama

residents purchasing automotive vehicles for first titling and registration in Alabama may be

viewed on the Department’s website at: http://www.revenue.alabama.gov/salestax/. Such

list will be updated annually. Sellers that have relied on list information that is later

determined to be incorrect will not be held liable for the non-collection of the state

automotive sales tax. (Sections 40-2A-7(a)(5), 40-23-2(4) and 40-23-31, Code of Alabama

1975) (Adopted through APA effective January 24, 1989, amended February 10, 2016;

amended September 9, 2022; effective November 14, 2022)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.43. Nurserymen-Sales of Plants, Seedlings, Nursery Stock and Floral

Products.

(1) The gross proceeds of the sales of seedlings, plants, shoots and slips which

are to be used for planting vegetable gardens or truck farms and other agricultural

purposes are exempt from sales and use tax. (Section 40-23-4(a)(22))

(2) Sales of nursery stock and floral products by the nurseryman who planted,

cultivated, and harvested said items are exempt from sales and use tax. Sales of nursery

stock and floral products not planted, cultivated, or harvested by the seller are taxable

(Sections 40-23-2(1), 40-23-4(a)(44), and 40-23-61(a))

(3) A nurseryman who claims the exemption outlined in paragraph (2) must keep

sufficient records to document such claims; and, in the absence of sufficient

documentation, shall be liable for the sales or use tax due on all sales for which exemption

claims cannot be verified by the Revenue Department.

(4) The planting of trees, floral products, and shrubbery or other nursery stock on

the real property of a customer pursuant to a contract to furnish such items and plant same

does not constitute a retail sale by the person performing the contract; instead, the person

is performing a contract for making additions, alterations, or improvements to realty and is

deemed to be the user or consumer of the items which are planted. Accordingly,

nurserymen who maintain an inventory of trees, floral products, and shrubbery or other

nursery stock from which they make retail sales to customers and from which they also

withdraw items for use in performing contracts for making additions, alterations, or

improvements to realty shall purchase all such items tax-free and, in turn, remit sales tax

collected from the customer on retail sales of items from inventory and compute and pay

sales tax on items withdrawn from inventory for use or consumption in the performance of

contracts. Nurserymen or landscapers who maintain no inventory and make no retail sales

of trees, floral products, or shrubbery or other nursery stock shall remit the appropriate

sales or use tax to the vendor at the time they purchase such items for use in performing

contracts for making additions, alterations, or improvements to realty. Purchases or

withdrawals of trees, floral products, and shrubbery or other nursery stock which qualify for

the exemptions outlined in paragraphs (1) and (2) above are exempt from sales and use

tax. (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-1(a)(10), 40-23-2(1), and 40-23-61(a))

(Adopted March 9, 1961, amended January 20, 1966, readopted through APA effective

October 1, 1982, amended May 22, 1993, amended July 25, 1994

810-6-3-.44. Parakeets, Parrots, Canaries.

(1) Sales at retail of parakeets, parrots or canaries are subject to sales or use tax

when made by dealers. Sales of these birds are not subject to tax, however, when they are

products of a farm and are sold by the producer or for him by a member of his family or by

a person employed to assist in the production thereof. A person other than a dealer

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.44 (Continued)

making a casual sale of a pet, or the offspring of that pet, is not required to collect and remit

sales or use tax on such sale. (Sections 40-23-2(1), 40-23-4(a)(5), 40-23-61(a), and 40-

23-62(8))

(2) Sales of parakeets, parrots, and canaries by the producer do not qualify for

the exemption contained in Section 40-23-4(a)(44) for sales of agricultural products by the

person or corporation that planted, cultivated, and harvested such agricultural product.

(Readopted through APA effective October 1, 1982, amended May 22, 1993)

810-6-3-.45. Peat Moss.

When purchased for agricultural use as a soil conditioner or plant food, peat or peat moss

is exempt from the sales or use tax, as the case may be, by the fertilizer exemptions found

in Sections 40-23-4(a)(2) and 40-23-62(5). (State v. Flowerwood Nursery, Inc., 55 So.2d

130) (Readopted through APA effective October 1, 1982, amended March 24, 1993)

810-6-3-.46. Air and Water Pollution Control Exemption.

(1) The term "pollution control facilities" shall mean any system, method,

construction, device, or appliance appurtenant thereto acquired for the primary purpose of

eliminating, preventing, or reducing air and water pollution, or acquired for the primary

purpose of treating, pretreating, modifying, or disposing of any potential solid, liquid, or

gaseous pollutant which, if released without such treatment, pretreatment, modification, or

disposal, might be harmful, detrimental, or offensive to the public and the public interest.

(2) The term "air pollution" shall mean the presence in the outdoor atmosphere of

one or more air contaminants or combinations of contaminants in such quantities and of

such characteristics, location, and duration which are injurious to the public and the public

interest, or which unreasonably interfere with the comfortable enjoyment of life or property

or to the conduct of business within affected areas.

(3) The term "air contaminant" shall mean dust, fumes, mist, smoke, other

particulate matter, vapor, gas, odorous substances, or any combination thereof.

(4) The term "air contamination source" shall mean any source at, from, or by

reason of which there is admitted into the atmosphere any air contaminant regardless of

who owns or operates the building, premises, or other property in, at, or on which source is

located, or the facility, equipment, or other property by which the emission is caused or

from which the emission comes.

(5) The term "water pollution" shall mean the discharge or deposit of sewage,

industrial wastes, or other wastes of such condition, manner, or quantity as may cause

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.46 (Continued)

ground or surface water to be contaminated, unclean, or impure to such an extent to make

said waters detrimental to the public and the public interest.

(6) Sections 40-23-4(a)(16) and 40-23-62(18), Code of Alabama 1975, exempt

from sales and use tax the sale, storage, use, or consumption of (i) all devices or facilities,

including all identifiable components of the devices or facilities and all materials used in the

devices or facilities, which are acquired primarily for the control, reduction, or elimination of

air or water pollution and (ii) all identifiable components of or materials used or intended for

use in structures built primarily for the control, reduction, or elimination of air or water

pollution.

(7) Noise pollution control devices are not exempt from the sales or use tax.

(8) To qualify for the pollution control exemption the primary purpose for

acquiring tangible personal property purchased, stored, used, or consumed shall be the

control, reduction, or elimination of air or water pollution. Property acquired for the primary

purpose of controlling, reducing, or eliminating air or water pollution, qualifies for the

exemption even though a secondary or incidental purpose may be its use in the production

of goods or services. Property which is acquired primarily for the production of goods or

services and is integral to a profit-motivated business purpose or activity does not qualify

for the pollution control exemption even when the property controls, reduces, or eliminates

air or water pollution. (Chemical Waste Management, Inc. v. State, 512 So. 2d 115 (Ala.

Civ. App. 1987)) (Adopted March 9, 1970, amended August 16, 1974, readopted through

APA effective October 1, 1982, amended July 30, 1998, Amended March 14, 2001)

810-6-3-.46.02. Post Office, Sales to the.

(1) The post office is a quasi-independent governmental agency and is,

therefore, exempt from state taxation. The U. S. Postal Service as it exists today was

created under the Postal Reorganization Act, Public Law No. 91-375, August 12, 1970, 84

Stat. 719. Section 10(a) of this Act provides that "The United States Postal Service shall be

operated as a basic and fundamental service provided to the people by the government of

the United States, authorized by the constitution, created by act of Congress and supported

by the people."

(2) Section 201 of said Act provides: "There is established as an independent

establishment of the Executive Branch of the Government of the United States, the United

States Postal Service."

(3) It can be seen from reading the above quotations that the United States

Postal Service remains a part of the Executive Branch of the Government of the United

States. Therefore, sales of items to the post office would be exempt from state sales and

use taxes. (Adopted June 12, 1978, readopted through APA effective October 1, 1982,

readopted through APA effective October 13, 2016)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.47. Poultry Products.

Baby chicks, broilers, eggs, and other poultry products are exempted when sold by the

producer, members of his family, or persons employed by him to aid in the production

thereof, and when produced in a rural area on premises which include cultivated areas

used in connection with the production. (State v. Southland Hatchery, Spring term, 1950, 3

Div. 553.) (Section 40-23-4(a)(5)) (Readopted through APA effective October 1, 1982,

readopted through APA effective October 13, 2016)

810-6-3-.47.01. Prescription Drugs.

(1) Drugs as defined in Section 40-23-4.1(a), Code of Alabama 1975, are exempt

from sales and use tax.

(2) The exemption referenced in Section (1) above applies to drugs purchased by

hospitals, infirmaries, sanitariums, nursing homes, medical clinics, and physicians for use

or consumption in rendering medical services to patients, as well as to drugs sold outright

to patients by pharmacies on a doctor's prescription.

(3) Sales of drugs which meet the definition contained in Section 40-23-4.1(a),

Code of Alabama 1975, are exempt regardless of whether they are diagnostic in nature or

they are used in preventing, treating, or mitigating diseases.

(4) Items such as aspirin, vitamins, and shampoo that do not ordinarily require a

physician's prescription are exempt from sales or use tax when prescribed by a physician and the

prescription is filled dispensed by a licensed pharmacist are exempt from tax. (Section 40-23-4.1)

(Adopted August 15, 1974, amended August 10, 1982, readopted through APA effective October 1,

1982, amended April 3, 1987, amended January 29, 1990)

810-6-3-.47.02. Exemption from Sales and Use Tax for Privately Owned Educational

Institutions.

(1) Sales to privately owned educational institutions are exempt from sales and

use tax.

(2) Privately owned educational institutions are:

a. Institutions operating within the State of Alabama offering conventional and

traditional courses of study, such as those offered by public schools, colleges or

universities within the State of Alabama. These are often referred to as “private schools”.

b. Schools of business instruction where, in addition to specialized courses such

as typing, there are also offered general courses in conventional academic subjects such

as grammar, spelling, and mathematics.

c. Kindergartens at which pre-grammar-school-age children are given initial

instructions in the arts of reading, writing, and the use of numbers.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.47.02 (Continued)

(3) Privately owned educational institutions are not:

a. Institutions at which the courses of study are limited to specialized subjects

such as dancing, riding, music, cooking, sewing, and welding.

b. Nurseries, day care centers, or home schools.

(4) Nurseries or day care centers and kindergartens that are operated together

must separate purchase records to support the exemption for the kindergarten. In the

absence of separate records, the total purchases will be subject to the tax. (§§40-2A-7(a)(5), 40-

23-30, 40-23-31, and 40-23-4, Code of Alabama 1975. Adopted effective October 15, 2021)

810-6-3-.47.03. Property to State, City, or County for Use by Public Schools, Sales of.

Sales of tangible personal property are exempted from sales and use taxes when made to

state, county or city school boards or to other instrumentalities or agencies of the state or

cities or counties of the state for use in the operation of public schools. (Section 40-23-

4(a)(11)) (Readopted through APA effective October 1, 1982)

810-6-3-.47.04. Public Schools, Sales to.

Tangible personal property is exempted from sales and use taxes when purchased for the

sole use and benefit of, and for use under control of a state, county, or city school from any

funds under the control of such school where a purchase order is issued therefor by the

principal of an elementary or high school or by an official authorized to make purchases for

an institution of higher learning. The purchase order so issued must contain the following:

(a) The name and address of the school or institution.

(b) An itemized list of the property being purchased.

1. The property purchased will be under the control of and for the sole use and

benefit of the school or institution named,

2. The person making the certificate and signing the purchase order is the

principal of the school or official authorized to make purchases for an institution of higher

learning. (Readopted through APA effective October 1, 1982)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.47.05. Public Schools - Athletic Equipment, Sales to.

(1) Sales of athletic equipment to public schools is exempted from sales tax

where such sales are made in accordance with the provisions of Sales and Use Tax rule

810-6-3-.47.04 Sales to Public Schools.

(2) In those instances where athletic equipment is purchased by a private person

or private organization for use by a school, private or public, the sales thereof for such use

is subject to tax. (Section 40-23-4(a)(11)) (Readopted through APA effective October 1,

1982)

810-6-3-.47.06. Public Schools, Public School Principals or Teachers, Etc., Sales to..

(1) Sales of tangible personal property to public schools or for use therein shall

not be subject to tax under the following circumstances:

(a) Where the property is sold pursuant to the purchase order issued by the State

of Alabama or a county or city of the state or any instrumentality thereof.

(b) Where the property is sold pursuant to a certificate as provided for by Sales

and Use Tax rule 810-6-3-.47.04 entitled Sales to Public Schools.

be sold to school children in school buildings, not for profit.

(d) Where the property sold is for resale in the school to students for

consumption on the school premises or for use in the preparation of lessons and where the

sales are made under the supervision and control of the school principal and with no profit

to any individual.

(e) Where purchases of items for resale through fund raising projects are made

by organizations such as Beta Clubs, Hi-Y Clubs, band clubs, athletic clubs, civic clubs,

and class organizations under the control and supervision of the administrative head of the

school. (State of Alabama v. Monk and Associates, Inc.)

(2) Vendors making sales to public school principals or teachers must treat as

subject to sales tax any sales of property for the private and personal use of any individual

except as noted above.

(3) Vendors making sales to students for their personal use cannot claim

exemption even though such sales may be made through the school principal or a teacher

or an organized group affiliated with the institution.

(4) The records to be maintained by vendors making sales to public school

principals in order to establish an exemption under this rule shall include a copy of the

vendor's invoice giving the name of the school, the name of the principal, and a description

of the goods; provided, it will not be necessary to have the principal sign the purchase

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.47.06. (Continued)

order where delivery is made to a school lunchroom or to a school supply store regularly

making purchases of property exempted under this rule. It is further provided that a signed

purchase order alone will not guarantee exemption to a vendor where the goods sold would

not customarily be used for educational purposes. In instances of such sales, the vendor

must be prepared to prove that the goods were used in connection with a recognized and

approved public school program under the supervision and control of the school officials.

(5) Examples of vendors' sales which would not be subject to sales tax:

(a) Sales of food or supplies to school lunchrooms.

(b) Sales of cold drinks, milk, ice cream, and school supplies to an established

school supply store operated under the supervision and control of the school principal.

executed purchase orders signed by the administrative head of the school.

(d) Sales of fuel delivered to a public school for school use.

(6) Examples of vendors' sales which would be subject to sales tax:

(a) Sale of desk set to a principal for his personal use.

(b) Sales of class rings to students, either directly to the students or through a

teacher or school organization.

a teacher or a school organization.

(d) Sales of sweaters and jackets to students either directly to students or to

students through a teacher or a school organization.

(7) Such property listed in paragraph 6(b) through 6(d) is not school property and

is not used for school purposes, but becomes solely the property of the student who

ultimately pays for the item. (Hibbett Sporting Goods, Inc. v. State of Alabama.) (Section

40-23-4(a)(11)) (Amended October 29, 1976, readopted through APA effective October 1,

1982)

810-6-3-.48. Repairs to Equipment, When not Subject to Tax.

(1) Materials which pass to the repairman's customer, and which do not lose their

identity, such as auto repair parts, radio tubes, and condensers, are sold at retail by the

repairman. He must report and pay sales tax on such sales provided delivery is made to

the customer in Alabama. If the repairman delivers the repaired equipment to the customer

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.48 (Continued)

or the equipment is delivered by common carrier to a point outside the State of Alabama,

the sale is in interstate commerce not subject to Alabama sales tax. See Rule 810-6-1-

.142.

(2) This rule is amended to conform to the decision rendered by the Court of Civil

Appeals in State of Alabama v. Communication Equipment and Contracting Company, Inc.

(Section 40-23-4(a)(17)) (Adopted March 9, 1961, amended February 6, 1968, amended

November 13, 1970, amended October 29, 1976, readopted through APA effective October

1, 1982)

810-6-3-.52. State Sales, Use, and Lodgings Tax Exemption for Qualified

Production Companies.

(1) Purpose. This rule sets forth guidelines and procedures to be used by the

Department of Revenue in the administration of Act 2009-144, as codified in Article 3,

Chapter 7A of Title 41 of the Code of Alabama 1975.

(2) Definitions. For purposes of this rule, and to the extent not inconsistent with

the Rules of the Alabama Film Office, these terms shall be defined as follows:

(a) Department: The Alabama Department of Revenue.

(b) Office: The Alabama Film Office.

ascribed to it in Code of Alabama 1975, Section 41-7A-42.

(d) Report: Statement of a CPA issued upon the completion of the Final

Incentive Audit that provides a summary of the Production Expenditures Expended in

Alabama. (Required by Alabama Department of Commerce/Alabama Film Office

Incentives Rule 281-3-1-.02(1)(w)).

(e) State-Certified Production: This term shall have the same meaning as

ascribed to it in Code of Alabama 1975, Section 41-7A-42.

(3) Act 2009-144, as codified in Article 3, Chapter 7A of Title 41 provides for an

exemption of state sales, use, and lodgings taxes levied pursuant to Sections 40-23-2, 40-

23-61, and 40-26-1, respectively, of the Code of Alabama 1975 for Qualified Production

Companies that incur, in the aggregate, $150,000 or more in connection with one or more

State-Certified Productions within a consecutive 12 month period.

(4) The Qualified Production Company must submit an application to the Office

for approval. (See Alabama Department of Commerce/Alabama Film Office Incentives

Rule 281-3-1-.04 for requirements and procedures)

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.52 (Continued)

(5) Once approved, the Office shall issue an approval letter to the Qualified

Production Company and to the Department notifying both that the Qualified Production

has been approved. The approval letter shall provide the total amount of Incentives

approved and a breakdown of the Incentives awarded by State sales, use and lodgings tax

and by Rebate. Upon receipt of the approval letter, the Department will issue a state sales,

use, and lodgings tax exemption certificate to the Qualified Production Company. This

exemption certificate shall be used by the Qualified Production Company to claim the

exemption from the state portion of sales, use and lodgings tax when making qualifying

purchases and/or accommodations. Local sales, use and lodgings tax are not exempt and

shall be paid to the vendor at the time of purchase or at the time the accommodations are

provided. The exemption is effective on the date the exemption certificate is issued by the

Department.

(6) Upon completion of production activities within the State of Alabama on the

State-Certified Production, the Qualified Production Company shall return the state sales,

use, and lodgings tax exemption certificate to the Department.

(7) The Report is required to be filed with the Office as provided for in Alabama

Department of Commerce/Alabama Film Office Incentives Rule 281-3-1-.06, and shall

identify, on a city-by-city and county-by-county basis, the amount of total incentives used in

the way of exemptions from state sales, use and lodgings taxes, in addition to specifically

identifying the amount of the total Production Expenditures eligible for the Rebate.

(8) If a Qualified Production Company fails to timely submit the Report to the

Office as provided for in Rule 281-3-1-.06, the Qualified Production Company shall become

liable for the state sales, use, and lodgings taxes that would otherwise have been paid.

(9) If the Qualified Production Company, which is producing a State-Certified

Production, incurs Production Expenditures in an amount less than $150,000, then the

Qualified Production Company shall be liable for the state sales, use, and lodgings taxes

that would have been paid had the exemption not been granted; provided, however, that if

the Qualified Production Company pays the state sales, use, and lodgings taxes due within

60 days of the date the Report was submitted, the Qualified Production Company shall

incur no penalties. (Sections 40-2A-7(a)(5) and 41-7A-40 through 48, Code of Alabama

1975. Adopted through APA, effective March 3, 2014)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. Sales Tax Holiday for “Back-to-School”.

(1) In accordance with Section 40-23-211, Code of Alabama 1975, the Back-to-

School Sales Tax Holidays will be held each year on the third full weekend of July

beginning at 12:01 a.m. on Friday and ending at twelve midnight on the following Sunday,

whereby no state sales or use tax will be due on “covered items” as defined herein. This

annual period during which purchases of covered items are exempt from state sales and

use taxes is referred to as the “Back-to-School” Sales Tax Holiday.

(2) Any county or municipality may, by resolution or ordinance adopted at least

30 days prior to the third full weekend of July, provide for the exemption of "covered items"

from county or municipal sales or use taxes during the same time period, under the same

terms, conditions, and definitions as provided in this rule for the state sales tax holiday. A

county or municipality is prohibited from providing for a sales and use tax exemption during

any period other than a state sales tax holiday. A participating county or municipality shall

submit a certified copy of their adopted resolution or ordinance providing for the sales tax

holiday, and any subsequent amendments thereof, to the Alabama Department of Revenue

at least 30 days prior to the effective date of the resolution or ordinance. The Department

will compile this information into a list of all counties and municipalities participating in the

“Back-to-School” Sales Tax Holiday and issue a current publication of the list on its

website.

(3) “Covered items" means: Articles of clothing with a sales price of one hundred

dollars ($100), or less, per article of clothing. The exemption applies regardless of how

many items are sold on the same invoice to a customer. "Clothing" means all human

wearing apparel suitable for general use including sandals, shoes and sneakers. Clothing

shall not include the following listed items which are excluded from the exemption:

(a) Belt buckles sold separately;

(b) Costume masks sold separately;

(d) Sewing equipment and supplies including, but not limited to, knitting needles,

patterns, pins, scissors, sewing machines, sewing needles, tape measures, and thimbles;

(e) Sewing materials that become part of "clothing" including, but not limited to,

buttons, fabric, lace, thread, yarn, and zippers;

(f) In addition to (a) through (e) above, clothing shall not include clothing

accessories or equipment, protective equipment, or sport or recreational equipment, as

defined in 1., 2., and 3. below, and which are therefore taxable:

1. "Clothing accessories or equipment" means incidental items worn on the

person or in conjunction with "clothing." The following list includes examples of "clothing

accessories or equipment" and is not intended to be an all-inclusive list:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

(i) briefcases;

(ii) cosmetics;

(iii) hair notions, including, but not limited to, barrettes, hair bows, and hair nets;

(iv) handbags;

(v) handkerchiefs;

(vi) jewelry;

(vii) sun glasses, non-prescription;

(viii) umbrellas;

(ix) wallets;

(x) watches; and

(xi) wigs and hair pieces.

2. "Protective equipment" means items for human wear and designed as

protection of the wearer against injury or disease or as protections against damage or injury

of other persons or property but not suitable for general use. The following list includes

examples of "protective equipment" and is not intended to be an all-inclusive list:

(i) breathing masks;

(ii) clean room apparel and equipment;

(iii) ear and hearing protectors;

(iv) face shields;

(v) hard hats;

(vi) helmets;

(vii) paint or dust respirators;

(viii) protective gloves;

(ix) safety glasses and goggles;

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

(x) safety belts;

(xi) tool belts; and

(xii) welders gloves and masks.

3. "Sport or recreational equipment" means items designed for human use and

worn in conjunction with an athletic or recreational activity that are not suitable for general

use. The following list includes examples of "sport or recreational equipment" and is not

intended to be an all-inclusive list:

(i) ballet and tap shoes;

(ii) cleated or spiked athletic shoes;

(iii) gloves, including, but not limited to, baseball, bowling, boxing, hockey, and

golf; goggles;

(iv) hand and elbow guards;

(v) life preservers and vests;

(vi) mouth guards;

(vii) roller and ice skates;

(viii) shin guards;

(ix) shoulder pads;

(x) ski boots;

(xi) waders; and

(xii) wetsuits and fins.

(4) "Covered items" means: A single purchase, with a sales price of seven

hundred fifty dollars ($750), or less, of computers, computer software, and school

computer supplies. "Computer," "computer software," and "school computer supplies" shall

not include furniture and any systems, devices, software, peripherals designed or intended

primarily for recreational use, or video games of a non-educational nature. These items

are defined as follows:

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

(a) "Computer" means an electronic device that accepts information in digital or

similar form and manipulates it for a result based on a sequence of instructions also known

as a central processing unit (CPU). For purposes of the exemption during the sales tax

holiday, a computer may include a laptop, desktop, or tower computer system which

consists of a CPU, display monitor, keyboard, mouse, and speakers sold as a computer

package. The computer package will qualify for the exemption if the dollar amount of the

sale is at or below seven hundred fifty dollars ($750). However, display monitors,

keyboards, mouse devices, speakers and other computer parts or devices designed for use

in conjunction with a personal computer not sold as part of a package will not qualify for the

exemption.

(b) "Computer software" means a set of coded instructions designed to cause a

"computer" or automatic data processing equipment to perform a task.

course of study in which a computer is used. The following is an all-inclusive list of school

computer supplies:

1. Computer storage media; diskettes, compact disks;

2. Handheld electronic schedulers, except devices that are cellular phones;

3. Personal digital assistants, except devices that are cellular phones;

4. Computer printers; and

5. Printer supplies for computers; printer paper, printer ink.

(5) "Covered items" means: Noncommercial purchases of school supplies,

school art supplies, and school instructional material, up to a sales price of fifty dollars

($50) per item. These items are defined as follows:

(a) "School supply" is an item commonly used by a student in a course of study.

The following is an all-inclusive list:

1. Binders;

2. Book bags;

3. Calculators;

4. Cellophane tape

5. Blackboard chalk;

6. Compasses;

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

7. Composition books;

8. Crayons;

9. Erasers;

10. Folders, expandable, pocket, plastic, and manila;

11. Glue, paste, and paste sticks;

12. Highlighters;

13. Index cards;

14. Index card boxes;

15. Legal pads;

16. Lunch boxes;

17. Markers;

18. Notebooks;

19. Paper, loose leaf ruled notebook paper, copy paper, graph paper, tracing

paper, manila paper, colored paper, poster board, and construction paper;

20. Pencil boxes and other school supply boxes;

21. Pencil sharpeners;

22. Pencils;

23. Pens;

24. Protractors;

25. Rulers;

26. Scissors; and

27. Writing tablets

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

(b) "School art supply" is an item commonly used by a student in a course of

study for artwork. The following is an all-inclusive list:

1. Clay and glazes;

2. Paints, acrylic, tempora, and oil;

3. Paintbrushes for artwork;

4. Sketch and drawing pads; and

5. Watercolors.

in a course of study as a reference and to learn the subject being taught. The following is

an all inclusive list:

1. Reference maps and globes;

2. Required textbooks on an official school book list with a sales price of more

than thirty dollars ($30) and less than fifty dollars ($50).

(6) "Covered items" means: Noncommercial purchases of books with a sales

price of not more than thirty dollars ($30) per book. The term book shall mean a set of

printed sheets bound together and published in a volume with an ISBN number, but does

not include magazines, newspapers, periodicals, or any other document printed or offered

for sale in a non-bound form.

(7) Covered items are exempt only if the individual item is priced at or below the

established threshold for the exemption. Exemption for only a portion of an individual item

is not allowed. The following example illustrates the application of the rule to the

exemption:

(a) A customer purchases a pair of pants costing $120.00. Tax is due on the

entire $120.00. The exemption does not apply to the first $100.00 of the price of an item of

clothing selling for more than $100.00.

(8) Splitting of items normally sold together. To qualify for the exemption, items

normally sold in pairs shall not be separated, and articles that are normally sold as a single

unit must continue to be sold in that manner. The following examples illustrate the

application of the rule to the exemption:

(a) A pair of shoes sells for $200.00. The pair of shoes cannot be split in order to

sell each shoe for $100.00 to qualify for the exemption.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

(b) A suit is normally priced at $300.00. The suit cannot be split into a coat and

slacks so that one of the articles may be sold for $100.00 or less to qualify for the

exemption. However, articles that are normally sold as separate articles, such as a sport

coat and slacks, may continue to be sold as separate articles and qualify for the exemption.

would not qualify for the exemption.

(9) “Buy one, get one free” and other similar offers. If a dealer offers “buy one,

get one free” or “two for the price of one” on covered items, the purchase shall qualify for

the exemption when all other conditions of the exemption are met. However, if a dealer

offers a “buy one, get one for a reduced price” the two prices cannot be averaged to qualify

both items for the exemption. The following examples illustrate the application of the rule to

the exemption:

(a) A dealer offers “buy one, get one free” on a pair of shoes. The first pair of

shoes has a sale price of $99.00 and the second pair is free. Both pairs of shoes will

qualify for the exemption because the first pair of shoes does not exceed the $100.00

exemption limitation.

(b) A coat is purchased for $120.00 and a second coat is purchased for half price

($60.00) at the time the first coat is purchased. The second coat will qualify for the

exemption, but the tax will be due on the first coat. In this example, the sales price of the

items may not be averaged in order to qualify for the exemption.

(10) Discounts, coupons, and rebates. A discount by the seller reduces the sales

price of the item and the discounted sales price determines whether the sales price is

within the sales tax holiday price threshold. A coupon that reduces the sales price is

treated as a discount if the seller is not reimbursed for the coupon amount by a third-party.

If a discount applies to the total amount paid by a purchaser rather than to the sales price

of a particular item and the purchaser has purchased both eligible property and taxable

property, the seller should allocate the discount based on the total sales prices of the

taxable property compared to the total sales prices of all property sold in that same

transaction. The application of the exemption to discounts, coupons and rebates extended

on a covered item during the exemption period is illustrated by the following examples:

(a) If a dealer sells a pair of jeans with a sales price of $110.00 and offers to

discount the item 10 percent at the time of sale, the exemption would apply because the

actual sales price of the jeans is $99.00.

(b) If a customer buys a $400.00 suit and a $55.00 shirt, and the retailer is

offering a 10 percent discount, after applying the 10 percent discount, the final sales price

of the suit is $360.00, and the sales price of the shirt is $49.50. The suit is taxable (its price

is over $100.00) and the shirt is exempt (its price is less than $100.00).

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

for a computer with a sales price of $850.00, the exemption would apply to the purchase

because the dealer's actual sales price to the customer is $750.00.

(d) If a customer gives to a dealer a manufacturer's coupon for $100.00 for a

computer with a sales price of $850.00, the exemption would not apply.

(e) Rebates generally occur after the sale, thus the amount of the rebate does

not affect the sales price of the purchased item. For example, if a pair of jeans was

purchased for $110.00 with a manufacturer's rebate for $10.00, the exemption would not

apply because the sales price is in excess of $100.00.

(11) Exchanges. The application of the exemption to an exchange of a covered

item purchased during the exemption period is illustrated by the following examples:

(a) A customer purchases a covered item during the exemption period, but later

exchanges the item for a different size, color, or other feature, and the original sale is not

cancelled. No additional tax is due even though the exchange is made after the exemption

period.

(b) A customer purchases a covered item during the exemption period. After the

exemption period has ended, the customer returns the item and receives credit on the

purchase of a different item and the original sale is cancelled. Sales tax is due on the total

sales price of the newly purchased item.

the exemption period the customer returns the item and receives credit on the purchase of

a different covered item and the original sale is cancelled. Sales tax is not due on the sale

of the new item if the new item is purchased during the exemption period.

(12) Layaway sales. A layaway sale is a transaction in which articles are set aside

for future delivery to a purchaser who makes a deposit, agrees to pay the balance of the

sales price over a period of time, and, at the end of the payment period, receives the

merchandise. A sale of a covered item under a layaway sale will qualify for the exemption

when final payment on the layaway order is made by, and the item is given to, the

purchaser during the exemption period; or when title to the covered item transfers to the

purchaser and delivery is made to the purchaser during the exemption period. A sale made

by completion of transfer of title after the exemption period shall not qualify for the

exemption.

(13) Rain checks. A rain check allows a customer to purchase an item at a certain

price at a later time because the particular item was out of stock. Covered items purchased

during the exemption period with the use of a rain check will qualify for the exemption

regardless of when the rain check was issued. Issuance of a rain check during the

exemption period will not qualify a covered item for the exemption if the item is actually

purchased after the exemption period.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

(14) Mail, telephone, e-mail, and Internet sales. The sale of a covered item

qualifies for exemption when sold through the mail, telephone, e-mail or Internet when the

item is paid for and delivered to the customer during the exemption period; or when title to

the covered item transfers to the purchaser and delivery is made to the purchaser during

the exemption period. Pursuant to Section 40-23-1(a)(5), the sale of an item is not closed

or completed until the time and place where delivery occurs to the purchaser after the act of

transportation ends and the item comes to rest in this state for use or consumption.

Covered items that are pre-ordered and delivered to the customer during the exemption

period qualify for the exemption.

(15) Gift certificates and gift cards. Covered items purchased during the exemption

period using a gift certificate or gift card will qualify for the exemption, regardless of when

the gift certificate or gift card was purchased. Covered items purchased after the exemption

period using a gift certificate or gift card are taxable even if the gift certificate or gift card

was purchased during the exemption period. A gift certificate or gift card cannot be used to

reduce the selling price of a covered item in order for the item to qualify for the exemption.

(16) Returns. For a 60 day period immediately after the sales tax holiday

exemption period, when a customer returns an item that would qualify for the exemption, no

credit for or refund of sales tax shall be given unless the customer provides a receipt or

invoice that shows tax was paid, or the seller has sufficient documentation to show that tax

was paid on the specific item. This 60 day period is set solely for the purpose of

designating a time period during which the customer must provide documentation that

shows that sales tax was paid on returned merchandise. The 60 day period is not intended

to change a seller's policy on the time period during which the seller will accept returns.

(17) Different time zones. The time zone of the purchaser's location determines

the authorized time period for a sales tax holiday when the purchaser is located in one time

zone and a seller is located in another.

(18) Records. The retailer is not required to obtain an exemption certificate on

sales of covered items during the exemption period. However, the retailer's records should

clearly identify the type of item sold, the date on which the item was sold, the sales price of

all items and, if applicable, any tax charged.

(19) Reporting Exempt Sales. No special reporting procedures are necessary to

report exempt sales on covered items made during the exemption period. Exempt

sales are to be included in the Gross Sales Amount and in the Deductions amount reported

on the state and local returns. Taxable sales and exempt transactions should be reported

as currently required by law.

(20) Transportation Charges.

(a) Where delivery is made by common carrier or the U.S. Postal Service, the

transportation charge if billed as a separate item and paid directly or indirectly by the

purchaser, is excluded from the sales price of the covered item. Transportation charges

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.65. (Continued)

made by any other means are included as part of the sales price of the covered item,

whether or not separately stated. Transportation charges are not separately stated if

included with other charges and billed as "shipping and handling" or "postage and

handling."

(b) "Shipping and handling" or "postage and handling" charges are included as

part of the sales price of the covered item, whether or not separately stated. If multiple

items are shipped on a single invoice, to determine if any covered items qualify for the

exemption for purposes of determining a sales tax holiday price threshold, the shipping and

handling charge or postage and handling charge must be proportionately allocated to each

item ordered, and separately identified on the invoice.

(Sections 40-2A-7(a)(5), 40-23-31, 40-23-83, Code of Alabama 1975. Emergency Rule

Adopted May 15, 2006, effective July 1, 2006, expires October 28, 2006; permanent rule

filed October 4, 2006, effective November 22, 2006, amended January 23, 2013, amended

November 16, 2017)

810-6-3-.66 Sales Tax Holiday for Severe Weather Preparedness.

(1) Beginning at 12:01 a.m. on Friday, July 6, 2012, and ending at twelve midnight

on Sunday, July 8, 2012, a sales tax holiday is enacted pursuant to Act No. 2012-256,

whereby no state sales or use tax is due on "covered items" as defined herein. For each

year thereafter, the sales tax holiday begins at 12:01 a.m. on the Friday of the last full

weekend in February and ends at twelve midnight the following Sunday. This sales tax

holiday is referred to as the Severe Weather Preparedness Sales Tax Holiday.

(2) Pursuant to Act No. 2012-256, any county or municipality may, by resolution or

ordinance adopted at least 14 days prior to July 6, 2012 and at least 30 days prior to the

last full weekend of February in subsequent years, provide for the exemption of "covered

items" from county or municipal sales or use taxes during the same time period, under the

same terms, conditions, and definitions as provided in this rule for the state sales tax

holiday. A county or municipality is prohibited from providing for a sales and use tax

exemption during any period other than concurrently with a state sales tax holiday. A

participating county or municipality shall submit a certified copy of their adopted resolution

or ordinance providing for the sales tax holiday, and any subsequent amendments thereof,

to the Alabama Department of Revenue at least 14 days prior to the 2012 holiday and at

least 30 days prior to the holiday in subsequent years. The Department will compile this

information into a list of all counties and municipalities participating in the Severe Weather

Preparedness Sales Tax Holiday and issue a current publication of the list on its website.

(3) “Covered items” include the following selling for $60 or less per item:

(a) Any package of AAA-cell, AA-cell, C-cell, D-cell, 6-volt, or 9-volt batteries,

excluding coin batteries and automobile and boat batteries;

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.66. (Continued)

(b) Any cellular phone battery or cellular phone charger;

weatherband radio, or NOAA weather radio;

(d) Any portable self-powered light source, including battery-powered flashlights,

lanterns, or emergency glow sticks;

(e) Any tarpaulin, plastic sheeting, plastic drop cloths or other flexible, waterproof

sheeting;

(f) Any ground anchor system, such as bungee cords or rope, or tie-down kit;

(g) Any duct tape;

(h) Any plywood, window film or other materials specifically designed to protect

window openings;

(i) Any non-electric food storage cooler or water storage container;

(j) Any non-electric can opener;

(k) Any artificial ice, blue ice, ice packs, or reusable ice;

(l) Any self-contained first aid kit;

(m) Any fire extinguisher, smoke detector or carbon monoxide detector; and,

(n) Any gas or diesel fuel tank or container.

(4) “Covered items” also includes any portable generator and power cords used

to provide light or communications or preserve food in the event of a power outage selling

for $1,000 or less per item.

(5) Covered items are exempt only if the individual item is priced at or below the

established threshold for the exemption. Exemption for only a portion of an individual item

is not allowed. The following example illustrates the application of the rule to the

exemption:

(a) A customer purchases a generator for $1800. Tax is due on the entire $1800.

The exemption does not apply to the first $1000 of the price of a generator selling for more

than $1000.

(6) Splitting of items normally sold together. To qualify for the exemption, items

normally sold in pairs shall not be separated, and articles that are normally sold as a single

unit must continue to be sold in that manner.

(Continued)

ALABAMA DEPARTMENT OF REVENUE - SALES AND USE TAX RULES

Code of Alabama 1975, Sections 40-23-31 and 40-23-83

810-6-3-.66. (Continued)

(7) “Buy one, get one free” and other similar offers. If a dealer offers “buy one,

get one free” or “two for the price of one” on covered items, the purchase shall qualify for

the exemption when all other conditions of the exemption are met. However, if a dealer

offers a “buy one, get one for a reduced price” the two prices cannot be averaged to qualify

both items for the exemption.

(8) Discounts, coupons, and rebates. A discount by the seller reduces the sales