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Alabama - Sales and Use Tax Exemptions and Exemption Certificates

Sales tax is a privilege tax imposed on the retail sale of tangible personal property sold in Alabama by businesses located in Alabama. The tax is collected by the seller from their customer and remitted directly to the state. All sales of tangible personal property are retail sales except those defined as wholesale sales.

ALABAMA EXEMPTIONS: Some of the enumerated exemptions are :

  • Alabama Product-based Exemptions: Prescription drugs, gasoline and lubricating oil, fertilizers, insecticides and fungicides when used for agricultural purposes, seeds for planting purposes, feed for livestock and poultry, baby chicks and poults, livestock.
    Sales Paid For With Food Stamps - Items which are purchased with food stamps are exempt.
    Labor - Labor to repair or install property is exempt when billed as a separate item on the customer's invoice.
  • Alabama Entity-based Exemptions: Sales made directly to the Federal government, the State of Alabama and its counties and cities; sales made directly to schools within the State; sales made to City and County owned and operated hospitals and nursing homes; sales made to some non-profit agencies that have been specifically exempted by the Alabama Legislature.
  • Alabama Use-based Exemptions: Sale of fertilizers when used for agricultural purposes; sales of coal to manufacturers, electric power companies, and transportation companies for use or consumption in the production of by-products, or the generation of heat or power used in manufacturing tangible personal property for sale, for the generation of electric power or energy for use in manufacturing tangible personal property for sale or for resale, or for the generation of motive power for transportation; sales of fuel and supplies for use or consumption aboard ships, vessels engaged in foreign or international commerce or in interstate commerce. Refer Alabama statute for more information on exemptions. Alabama Code 40-23-4

    CAUTION : Sales tax exemptions mentioned above are very briefly described. Please see the exemption statute and the applicable regulations for details. Transactions that do not meet requirements of the exemption statutes and its applicable regulations do not qualify for sales tax exemptions.

ALABAMA EXEMPTION CERTIFICATES: 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. A seller, who acts in good faith and reasonably believes a tax exempt purchase is legal, is not liable for sales or use tax for which the purchaser provides the seller with a State Sales and Use Tax Certificate of Exemption later. (Alabama Regulation 810-6-1-.184)

To verify the status of an Alabama issued resale or exemption number: Login to the Alabama Paperless Filing & Payment System.

 

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