SB257INTRODUCED
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S2RM77-1
By Senators Jones, Gudger, Elliott, Butler, Shelnutt, Bell,
Kelley, Coleman-Madison, Stewart, Figures, Weaver, Givhan,
Singleton, Smitherman, Allen, Roberts, Stutts, Williams,
Scofield, Waggoner, Livingston, Carnley, Hovey, Chambliss,
Sessions, Chesteen, Reed, Albritton, Barfoot, Beasley, Melson,
Price, Hatcher, Coleman, Orr
RFD: Finance and Taxation Education
First Read: 27-Apr-23
2023 Regular Session
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11 S2RM77-1 04/14/2023 KHF (F) KHF 2023-1553
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SYNOPSIS:
Under existing law, the state imposes sales or
use taxes upon certain persons, firms, or corporations.
Sales of certain items are taxed at a reduced rate.
"Food" is not a defined term and is taxed at the
general rate. Sales of other items are exempt from the
taxes.
This bill would define "food" for purposes of
sales and use taxes and begin phasing-out the state
sales and use tax on food on September 1, 2023. Future
rate reductions would be contingent upon certain growth
requirements in the Education Trust Fund.
This bill would establish the sales and use tax
rate on food for purposes of county and municipal sales
and use taxes as the existing general or retail sales
tax rate on the effective date of this act and allow a
county and municipal election to reduce the sales tax
rate or exempt food from local sales and use taxes.
A BILL
TO BE ENTITLED
AN ACT
Relating to sales taxes; to amend Section 40-23-1, as
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last amended by Acts 2022-199 and 2022-291, 2022 Regular
Session, Code of Alabama 1975, Section 40-23-2, as last
amended by Act 2022-346, 2022 Regular Session, Code of Alabama
1975, Section 40-23-60, as last amended by Act 2022-199, 2022
Regular Session, Code of Alabama 1975, and Section 40-23-61,
Code of Alabama 1975; to define "food" and begin phasing-out
the state sales and use tax on food on September 1, 2023; to
require certain growth targets in the Education Trust Fund for
future sales tax reductions on food; to establish the sales
and use tax rate on food for purposes of county and municipal
sales and use taxes as the existing general or retail sales
and use tax rate; and to authorize a county and municipality
to reduce the sales and use tax rate or exempt food from local
sales and use taxes.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-23-1, as last amended by Acts
2022-199 and 2022-291 in the 2022 Regular Session, Code of
Alabama 1975, Section 40-23-2, as last amended by Act 2022-346
in the 2022 Regular Session, Code of Alabama 1975, Section
40-23-60, as last amended by Act 2022-199 in the 2022 Regular
Session, Code of Alabama 1975, and Section 40-23-61, Code of
Alabama 1975, are amended to read as follows:
"§40-23-1
(a) For the purpose of this division, the following
terms shall have the respective meanings ascribed by this
section:
(1) PERSON or COMPANY. Used interchangeably, includes
any individual, firm, copartnership, association, corporation,
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receiver, trustee, or any other group or combination acting as
a unit and the plural as well as the singular number, unless
the intention to give a more limited meaning is disclosed by
the context.
(2) DEPARTMENT. The Department of Revenue of the State
of Alabama.
(3) COMMISSIONER. The Commissioner of Revenue of the
State of Alabama.
(4) TAX YEAR or TAXABLE YEAR. The calendar year.
(5) SALE or SALES. Installment and credit sales and the
exchange of properties as well as the sale thereof for money,
every closed transaction constituting a sale. Provided,
however, a transaction shall not be closed or a sale completed
until the time and place when and where title is transferred
by the seller or seller's agent to the purchaser or
purchaser's agent, and for the purpose of determining transfer
of title, a common carrier or the U.S. Postal Service shall be
deemed to be the agent of the seller, regardless of any F.O.B.
point and regardless of who selects the method of
transportation, and regardless of by whom or the method by
which freight, postage, or other transportation charge is
paid. Provided further that, where billed as a separate item
to and paid by the purchaser, the freight, postage, or other
transportation charge paid to a common carrier or the U.S.
Postal Service is not a part of the selling price.
(6) GROSS PROCEEDS OF SALES. The value proceeding or
accruing from the sale of tangible personal property, and
including the proceeds from the sale of any property handled
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on consignment by the taxpayer, including merchandise of any
kind and character without any deduction on account of the
cost of the property sold, the cost of the materials used,
labor or service cost, interest paid, any consumer excise
taxes that may be included within the sales price of the
property sold, or any other expenses whatsoever, and without
any deductions on account of losses; provided, that cash
discounts allowed and taken on sales shall not be included,
and "gross proceeds of sales" shall not include the sale price
of property returned by customers when the full sales price
thereof is refunded either in cash or by credit. The term
"gross proceeds of sale" shall also mean and include the
reasonable and fair market value of any tangible personal
property previously purchased at wholesale which is withdrawn
or used from the business or stock and used or consumed in
connection with a business, and shall also mean and include
the reasonable and fair market value of any tangible personal
property previously purchased at wholesale which is withdrawn
from the business or stock and used or consumed by any person
so withdrawing the same, except property that has been
previously withdrawn from business or stock and so used or
consumed with respect to which property the tax has been paid
because of previous withdrawal, use, or consumption, except
property that 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 any person so withdrawing,
using, or consuming the same, and except refinery, residue, or
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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.
In the case of the retail sale of equipment,
accessories, fixtures, and other similar tangible personal
property used in connection with the sale of commercial mobile
services as defined herein, or in connection with satellite
television services, at a price below cost, "gross proceeds of
sale" shall only include the stated sales price thereof and
shall not include any sales commission or rebate received by
the seller as a result of the sale. As used herein, the term
"commercial mobile services" shall have the same meaning as
that term has in 47 U.S.C. §§ 153(n) and 332(d), as in effect
from time to time.
(7) TAXPAYER. Any person liable for taxes hereunder.
(8) GROSS RECEIPTS. The value proceeding or accruing
from the sale of tangible personal property, including
merchandise and commodities of any kind and character, all
receipts actual and accrued, by reason of any business engaged
in, not including, however, interest, discounts, rentals of
real estate, or royalties, and without any deduction on
account of the cost of the property sold, the cost of the
materials used, labor or service cost, interest paid, any
consumer excise taxes that may be included in the sales price
of the property sold, or any other expenses whatsoever and
without any deductions on account of losses. The term "gross
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receipts" shall also mean and include the reasonable and fair
market value of any tangible personal property previously
purchased at wholesale which is withdrawn or used from the
business or stock and used or consumed in connection with a
business, and shall also mean and include the reasonable and
fair market value of any tangible personal property previously
purchased at wholesale which is withdrawn from the business or
stock and used or consumed by any person so withdrawing the
same, except property which has been previously withdrawn from
business or stock and so used or consumed and with respect to
which property the tax has been paid because of previous
withdrawal, use, or consumption, except property which enters
into and becomes an ingredient or component part of tangible
personal property or products manufactured or compounded for
sale as provided in subdivision (9) and not for the personal
and private use or consumption of any person so withdrawing,
using, or consuming the same, and except 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.
(9) WHOLESALE SALE or SALE AT WHOLESALE. Any one of the
following:
a. A sale of tangible personal property by wholesalers
to licensed retail merchants, jobbers, dealers, or other
wholesalers for resale and does not include a sale by
wholesalers to users or consumers, not for resale.
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b. A sale of tangible personal property or products,
including iron ore, and including the furnished container and
label of the property or products, to a manufacturer or
compounder which enter into and become an ingredient or
component part of the tangible personal property or products
that the manufacturer or compounder manufactures or compounds
for sale, whether or not the tangible personal property or
product used in manufacturing or compounding a finished
product is used with the intent that it becomes a component of
the finished product; provided, however, that it is the intent
of this section that no sale of capital equipment, machinery,
tools, or product shall be included in the term "wholesale
sale." The term "capital equipment, machinery, tools, or
product" shall mean property that is subject to depreciation
allowances for Alabama income tax purposes.
c. A sale of containers intended for one-time use only,
and the labels thereof, when containers are sold without
contents to persons who sell or furnish containers along with
the contents placed therein for sale by persons.
d. A sale of pallets intended for one-time use only
when pallets are sold without contents to persons who sell or
furnish pallets along with the contents placed thereon for
sale by persons.
e. A sale to a manufacturer or compounder, of crowns,
caps, and tops intended for one-time use employed and used
upon the containers in which a manufacturer or compounder
markets his products.
f. A sale of containers to persons engaged in selling
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or otherwise supplying or furnishing baby chicks to growers
thereof where containers are used for the delivery of chicks
or a sale of containers for use in the delivery of eggs by the
producer thereof to the distributor or packer of eggs even
though containers used for delivery of baby chicks or eggs may
be recovered for reuse.
g. A sale of bagging and ties used in preparing cotton
for market.
h. 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 casings may
be recovered for reuse.
i. A sale of commercial fish feed including
concentrates, supplements, and other feed ingredients when
substances are used as ingredients in mixing and preparing
feed for fish raised to be sold on a commercial basis.
j. A sale 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 Chapter 12
of Title 9.
k. A sale of tangible personal property to any person
engaging in the business of leasing or renting tangible
personal property to others, if tangible personal property is
purchased for the purpose of leasing or renting it to others
under a transaction subject to the privilege or license tax
levied in Article 4 of Chapter 12 of this title against any
person engaging in the business of leasing or renting tangible
personal property to others.
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l. A purchase or withdrawal of parts or materials from
stock by any person licensed under this division where parts
or materials are used in repairing or reconditioning the
tangible personal property of a licensed person, which
tangible personal property is a part of the stock of goods of
a licensed person, offered for sale by him or her, and not for
use or consumption of a licensed person.
(10) SALE AT RETAIL or RETAIL SALE. All sales of
tangible personal property except those defined as wholesale
sales. The quantities of goods sold or prices at which sold
are immaterial in determining whether or not a sale is at
retail. Sales of building materials to contractors, builders,
or landowners for resale or use in the form of real estate are
retail sales in whatever quantity sold. Sales of building
materials, fixtures, or other equipment to a manufacturer or
builder of modular buildings for use in manufacturing,
building, or equipping a modular building ultimately becoming
a part of real estate situated in the State of Alabama are
retail sales, and the use, sale, or resale of building shall
not be subject to the tax. Sales of tangible personal property
to undertakers and morticians are retail sales and subject to
the tax at the time of purchase, but are not subject to the
tax on resale to the consumer. Sales of tangible personal
property or products to manufacturers, quarry operators, mine
operators, or compounders, which are used or consumed by them
in manufacturing, mining, quarrying, or compounding and do not
become an ingredient or component part of the tangible
personal property manufactured or compounded as provided in
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subdivision (9) are retail sales. The term "sale at retail" or
"retail sale" shall also mean and include the withdrawal, use,
or consumption of any tangible personal property by any one
who purchases same at wholesale, except property that has been
previously withdrawn from the business or stock and so used or
consumed and with respect to which property tax has been paid
because of previous withdrawal, use, or consumption, except
property that enters into and becomes an ingredient or
component part of tangible personal property or products
manufactured or compounded for sale as provided in subdivision
(9) and not for the personal and private use or consumption of
any person so withdrawing, using, or consuming the same; and
wholesale purchaser shall report and pay the taxes thereon. In
the case of the sale of equipment, accessories, fixtures, and
other similar tangible personal property used in connection
with the sale of commercial mobile services as defined in
subdivision (6), or in connection with satellite television
services, at a price below cost, the term "sale at retail" and
"retail sale" shall include those sales, and those sales shall
not also be taxable as a withdrawal, use, or consumption of
such tangible personal property.
(11) BUSINESS. All activities engaged in, or caused to
be engaged in, with the object of gain, profit, benefit, or
advantage, either direct or indirect, and not excepting
subactivities producing marketable commodities used or
consumed in the main business activity, each of which
subactivities shall be considered business engaged in, taxable
in the class in which it falls.
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(12) AUTOMOTIVE VEHICLE. A power shovel, dragline,
crawler, crawler crane, ditcher, or any similar machine that
is self-propelled, in addition to self-propelled machines that
are used primarily as instruments of conveyance.
(13) PREPAID TELEPHONE CALLING CARD. A sale of a
prepaid telephone calling card or a prepaid authorization
number, or both, shall be deemed the sale of tangible personal
property subject to the tax imposed on the sale of tangible
personal property pursuant to this chapter. For purposes of
this subdivision, the sale of prepaid wireless service that is
evidenced by a physical card constitutes the sale of a prepaid
telephone calling card, and the sale of prepaid wireless
service that is not evidenced by a physical card constitutes
the sale of a prepaid authorization number.
(14) PREPAID WIRELESS SERVICE. The right to use mobile
telecommunications service, which must be paid for in advance
and that is sold in predetermined units or dollars of which
the number declines with use in a known amount, and which may
include rights to use non-telecommunications services or to
download digital products or digital content. For purposes of
this subdivision, mobile telecommunications service has the
meaning ascribed by Section 40-21-120.
(15) CONSUMABLE VAPOR PRODUCT. Any nicotine liquid
solution or other material containing nicotine that is
depleted when used as a vapor product.
(16) VAPOR PRODUCTS. Any non-lighted, noncombustible
product that employs a mechanical heating element, battery, or
electronic circuit regardless of shape or size and that can be
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used to produce vapor from nicotine in a solution. The term
includes any vapor cartridge or other container of nicotine in
a solution or other form that is intended to be used with or
in an electronic cigarette, electronic cigar, electronic
cigarillo, electronic pipe, or similar product or device. The
term does not include any product regulated by the United
States Food and Drug Administration under Chapter V of the
Federal Food, Drug, and Cosmetic Act.
(17) PRODUCER VALUE ADDED AGRICULTURAL PRODUCTS. Fruits
or other agricultural products that have undergone some degree
of further processing by the original producer of the
agricultural product, including, but not limited to, whole
cuts of meat, bound cut flowers, jams, jellies, or boiled or
roasted peanuts.
(18) COMMERCIAL FISHING. 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.
(19) COMMERCIAL FISHING VESSEL. Any vessel whose
masters and owners are regularly and exclusively engaged in
commercial fishing as their means of livelihood.
(20) FOOD. Food as defined in 7 U.S.C § 2011, et seq.,
for the purposes of the federal Supplemental Nutrition
Assistance Program regardless of where or by what means food
is sold. In the event that the federal Supplemental Nutrition
Assistance Program definition no longer exists, the
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Legislature shall provide a new definition of "food" by
general law.
(b) The use within this state of tangible personal
property by the manufacturer thereof, as building materials in
the performance of a construction contract, for the purposes
of this division, shall be considered as a retail sale thereof
by the manufacturer, who shall also be construed as the
ultimate consumer of materials or property, and who shall be
required to report transaction and pay the sales tax thereon,
based upon the reasonable and fair market price thereof at the
time and place where same are used or consumed by the
manufacturer. 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. The provisions of this subsection shall not apply to any
tangible personal property that is specifically exempted from
the tax levied in this division.
(c) The sale of lumber by a lumber manufacturer to a
trucker for resale is a sale at wholesale as sales are defined
herein where the trucker is either a licensed dealer in lumber
or, if a resident of Alabama, has registered with the
Department of Revenue, and has received therefrom a
certificate of registration or, if a nonresident of this state
purchasing lumber for resale outside the State of Alabama, has
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furnished to the lumber manufacturer his or her name, address,
and the vehicle license number of the truck in which the
lumber is to be transported, which name, address, and vehicle
license number shall be shown on the sales invoice rendered by
the lumber manufacturer. The certificate provided for herein
shall be valid for the calendar year of its issuance and may
be renewed from year to year on application to the Department
of Revenue on or before January 31 of each succeeding year;
provided, that if not renewed the certificate shall become
invalid for the purpose of this division on February 1.
(d) The dispensing or transferring of ophthalmic
materials, including lenses, frames, eyeglasses, contact
lenses, and other therapeutic optic devices, to a patient by a
licensed ophthalmologist, as a part of his or her professional
service, for purposes of this division, shall constitute a
sale, subject to the state sales tax. The licensed
ophthalmologist or licensed optometrist shall collect the
state sales tax. In no event shall the providing of
professional services in connection with the dispensing or
transferring of ophthalmic materials, including dispensing
fees or fitting fees, by a licensed ophthalmologist or
licensed optometrist be considered a sale subject to the state
sales tax. 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
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time of the sale. All transfers of ophthalmic materials by
opticians or optometrists shall be considered retail sales
subject to the state sales tax. The term "supplier" shall
include but not be limited to optical laboratories, ophthalmic
material wholesalers, or anyone selling ophthalmic materials
to ophthalmologists.
(e) Notwithstanding the above, 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 taxpayer, for purposes of this
division, shall not be deemed or considered to constitute a
transaction subject to sales tax, nor shall a gift by the
manufacturer of a manufactured product, withdrawn from the
manufacturer's inventory, to an entity listed in 26 U.S.C. §§
170(b) or (c), be considered a transaction subject to sales
tax.
(f) Notwithstanding the foregoing, a gift by a retailer
of a product or products where the aggregate retail value of
any single gift is equal to or less than ten thousand dollars
($10,000), withdrawn from the retailer's inventory, to an
entity listed in 26 U.S.C. §§ 170(b) or (c) shall not be
deemed or considered to constitute a transaction subject to
sales and use tax."
"§40-23-2
There is levied, in addition to all other taxes of
every kind now imposed by law, and shall be collected as
herein provided, a privilege or license tax against the person
on account of the business activities and in the amount to be
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determined by the application of rates against gross sales, or
gross receipts, as the case may be, as follows:
(1) Upon every person, firm, or corporation, (including
the State of Alabama and its Alcoholic Beverage Control Board
in the sale of alcoholic beverages of all kinds, the
University of Alabama, Auburn University, and all other
institutions of higher learning in the state, whether the
institutions be denominational, state, county, or municipal
institutions, any association or other agency or
instrumentality of the institutions) engaged or continuing
within this state, in the business of selling at retail any
tangible personal property whatsoever, including merchandise
and commodities of every kind and character, (not including,
however, bonds or other evidences of debts or stocks, nor
sales of material and supplies to any person for use in
fulfilling a contract for the painting, repair, or
reconditioning of vessels, barges, ships, other watercraft,
and commercial fishing vessels of over five tons load
displacement as registered with the U.S. Coast Guard and
licensed by the State of Alabama Department of Conservation
and Natural Resources) an amount equal to four percent of the
gross proceeds of sales of the business except where a
different amount is expressly provided herein. Provided,
however, that any person engaging or continuing in business as
a retailer and wholesaler or jobber shall pay the tax required
on the gross proceeds of retail sales of the business at the
rates specified, when his or her books are kept so as to show
separately the gross proceeds of sales of each business, and
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when his or her books are not kept he or she shall pay the tax
as a retailer, on the gross sales of the business.
Where any used part including tires of an automotive
vehicle or a truck trailer, semitrailer, 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 part or tire, the tax
levied herein shall be paid on the net difference, that is,
the price of the new or used part or tire sold less the credit
for the used part or tire taken in trade, provided, however,
this provision shall not be construed to include batteries.
(2) Upon every person, firm, or corporation engaged or
continuing within this state in the business of conducting or
operating places of amusement or entertainment, billiard and
pool rooms, bowling alleys, amusement devices, musical
devices, theaters, opera houses, moving picture shows,
vaudevilles, amusement parks, athletic contests, including
wrestling matches, prize fights, boxing and wrestling
exhibitions, football and baseball games, (including athletic
contests, conducted by or under the auspices of any
educational institution within this state, or any athletic
association thereof, or other association whether the
institution or association be a denominational, a state, or
county, or a municipal institution, or association or a state,
county, or city school, or other institution, association or
school) skating rinks, race tracks, golf courses, or any other
place at which any exhibition, display, amusement, or
entertainment is offered to the public or place or places
where an admission fee is charged, including public bathing
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places and public dance halls of every kind and description
within the State of Alabama, an amount equal to four percent
of the gross receipts of any such business. Provided, however,
notwithstanding any language to the contrary in the prior
portion of this subdivision, the tax provisions so specified
shall not apply to any athletic event conducted by a public or
nonpublic primary or secondary school or any athletic event
conducted by or under the auspices of the Alabama High School
Athletic Association. The tax amount which would have been
collected pursuant to this subdivision shall continue to be
collected by the public or nonpublic primary or secondary
school, but shall be retained by the school that collected it
and shall be used by the school for school purposes.
(3) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling at
retail machines used in mining, quarrying, compounding,
processing, and manufacturing of tangible personal property an
amount equal to one and one-half percent of the gross proceeds
of the sale of the machines. The term "machine," as herein
used, shall include machinery which is used for mining,
quarrying, compounding, processing, or manufacturing tangible
personal property, and the parts of the machines, attachments,
and replacements therefor, which are made or manufactured for
use on or in the operation of the machines and which are
necessary to the operation of the machines and are customarily
so used.
(4) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling at
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retail any automotive vehicle or truck trailer, semitrailer,
or house trailer, or mobile home set-up materials and supplies
including but not limited to steps, blocks, anchoring, cable
pipes, and any other materials pertaining thereto, an amount
equal to two percent of the gross proceeds of sale of the
automotive vehicle or truck trailer, semitrailer, or house
trailer, or mobile home set-up materials and supplies
provided, however, where a person subject to the tax provided
for in this subdivision withdraws from his or her stock in
trade any automotive vehicle or truck trailer, semitrailer, or
house trailer for use by him or her or by his or her employee
or agent in the operation of the business, there shall be
paid, in lieu of the tax levied herein, a fee of five dollars
($5) per year or part thereof during which the automotive
vehicle, truck trailer, semitrailer, or house trailer shall
remain the property of the person. Each year or part thereof
shall begin with the day or anniversary date, as the case may
be, of such withdrawal and shall run for the 12 succeeding
months or part thereof during which the automotive vehicle,
truck trailer, semitrailer, or house trailer shall remain the
property of the person.
Where any used automotive vehicle or truck trailer,
semitrailer, 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
used vehicle, the tax levied herein shall be paid on the net
difference, that is, the price of the new or used vehicle sold
less the credit for the used vehicle taken in trade.
Sales of automobiles, motorcycles, trucks, truck
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trailers, travel trailers, campers, housecars, or semitrailers
that will be registered or titled outside Alabama, that are
exported or removed from Alabama within 72 hours by the
purchaser or his or her agent for first use outside Alabama
are subject to Alabama sales tax in an amount equal to only
the state automotive sales tax rate, unless 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. 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. In order to qualify as a travel trailer, camper, or
housecar that will be registered or titled for use in another
state, the purchaser must provide documentation to the seller
that the purchaser is not a resident of Alabama as required by
the Department of Revenue. No such proof is required in the
sale of an automobile, motorcycle, truck, truck trailer, or
semitrailer, excluding a travel trailer, camper, or housecar.
The tax collected under this export provision shall be Alabama
sales tax and shall exclude county and municipal sales tax. On
January 1, 2016, and each January 1 thereafter, the Alabama
Department of Revenue shall publish to the state's website a
list of states that do not allow drive out provisions to
Alabama residents. Should the list, required by this
subsection and relied upon by the taxpayer, be incorrect, the
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taxpayer shall be relieved from the liability concerning the
miscollection of the state automotive sales tax. Sales of all
other vehicles such as mobile homes, motor bikes, all terrain
vehicles, and boats do not qualify for the export exemption
provision and are taxable unless the dealer can provide
factual evidence that the vehicle was delivered outside of
Alabama or to a common carrier for transportation outside
Alabama. In order for the sale to be exempt from Alabama tax,
the information relative to the exempt sale shall be
documented on forms approved by the Revenue Department.
Of the total $.02 tax on each dollar of sale provided
hereunder, 58 percent of the total tax generated by this
subdivision (4) shall be deposited to the credit of the
Education Trust Fund and 42 percent of the total tax generated
by this subdivision (4) shall be deposited to the credit of
the State General Fund.
(5) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling
through coin-operated dispensing machines, food and food
products for human consumption, not including beverages other
than coffee, milk, milk products, and substitutes therefor,
there is levied a tax equal to three percent of the cost of
the food, food products, and beverages sold through the
machines, which cost for the purpose of this subdivision shall
be the gross proceeds of sales of the business.
(6) Upon every person, firm, or corporation engaged or
continuing within this state in the business of selling food
as defined in Section 40-23-1, there is a tax levied equal to
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four percent. Beginning September 1, 2023, the tax rate shall
be reduced to three and one-half percent. On November 1, 2024,
and on November 1 of every year thereafter until the tax rate
is two percent, the tax rate shall be reduced by one-half of
one percent. Provided, however, the rate of tax shall only be
reduced if the growth in total net receipts from all revenue
sources to the Education Trust Fund in the immediately
preceding fiscal year was at least two percent more than the
prior fiscal year. "
"§40-23-60
For the purpose of this article, the following terms
shall have the respective meanings ascribed to them in this
section:
(1) PERSON or COMPANY. Any individual, firm, company,
partnership, association, corporation, receiver or trustee, or
any other group or combination acting as a unit, and the
plural as well as the singular number, unless the intention to
give a more limited meaning is disclosed by the context.
(2) DEPARTMENT. The Department of Revenue of the State
of Alabama.
(3) COMMISSIONER. The Commissioner of Revenue of the
State of Alabama.
(4) WHOLESALE SALE or SALE AT WHOLESALE. Any one of the
following:
a. A sale of tangible personal property by wholesaler
to licensed retail merchants, jobbers, dealers or other
wholesalers for resale and does not include a sale by
wholesalers to users or consumers, not for resale.
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b. A sale of tangible personal property or products,
including iron ore, and including the furnished container and
label of such property or products, to a manufacturer or
compounder which enter into and become an ingredient or
component part of the tangible personal property or products
which the manufacturer or compounder manufactures or compounds
for sale, whether or not such tangible personal property or
product used in manufacturing or compounding a finished
product is used with the intent that it become a component of
the finished product; provided, however, that it is the intent
of this section that no sale of capital equipment, machinery,
tools, or product shall be included in the term "wholesale
sale." The term "capital equipment, machinery, tools, or
product" shall mean property that is subject to depreciation
allowances for Alabama income tax purposes.
c. A sale of containers intended for one-time use only,
and the labels thereof, when the containers are sold without
contents to persons who sell or furnish the containers along
with the contents placed therein for sale by such persons.
d. A sale of pallets intended for one-time use only
when the pallets are sold without contents to persons who sell
or furnish the pallets along with the contents placed thereon
for sale by such persons.
e. A sale to a manufacturer or compounder of crowns,
caps, and tops intended for one-time use employed and used
upon the containers in which the manufacturer or compounder
markets the manufacturer's or compounder's products.
f. A sale of containers to persons engaged in selling
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or otherwise supplying or furnishing baby chicks to growers
thereof where the containers are used for the delivery of the
chicks or a sale of containers for use in the delivery of eggs
by the producer thereof to the distributor or packer of the
eggs even though the containers used for delivery of baby
chicks or eggs may be recovered for reuse.
g. A sale of bagging and ties used in preparing cotton
for market.
h. A sale 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.
i. A sale of bait used to capture or attempt to capture
fish or other seafood in the process of commercial fishing, as
defined in Section 40-23-1, by a holder of a commercial
license issued pursuant to Chapter 12 of Title 9.
j. A sale of tangible personal property to any person
engaging in the business of leasing or renting such tangible
personal property to others, if the tangible personal property
is purchased for the purpose of leasing or renting it to
others under a transaction subject to the privilege or license
tax levied in Article 4 of Chapter 12 against any person
engaging in the business of leasing or renting tangible
personal property to others.
k. A purchase or withdrawal of parts or materials from
stock by any person licensed under this article where the
parts or materials are used in repairing or reconditioning the
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tangible personal property of the licensed person which
tangible personal property is a part of the stock of goods of
the licensed person, offered for sale by the licensed person
and not for use or consumption of the licensed person.
l. A sale to meat packers, manufacturers, compounders,
or processors of meat products of all casings used in moulding
or forming wieners and Vienna sausages, even though the
casings may be recovered for reuse.
(5) SALE AT RETAIL or RETAIL SALE. All sales of
tangible personal property except those above defined as
wholesale sales. The quantities of goods sold or prices at
which sold are immaterial in determining whether or not a sale
is at retail. Sales of building materials to contractors,
builders, or landowners for resale or use in the form of real
estate are retail sales in whatever quantity sold. Sales of
building materials, fixtures, or other equipment to a
manufacturer or builder of modular buildings for use in
manufacturing, building, or equipping a modular building
ultimately becoming a part of real estate situated in the
State of Alabama are retail sales, and the use, sale, or
resale of such building shall not be subject to the tax. Sales
of tangible personal property to undertakers and morticians
are retail sales and subject to the tax at the time of
purchase, but are not subject to the tax on resale to the
consumer. Sales of tangible personal property or products to
manufacturers, quarry operators, mine operators, or
compounders, which are used or consumed by them in
manufacturing, mining, quarrying, or compounding and do not
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become an ingredient or component part of the tangible
personal property manufactured or compounded as provided in
subdivision (4) are retail sales. The term "sale at retail" or
"retail sale" shall also mean and include the withdrawal, use,
or consumption of any tangible personal property by anyone who
purchases same at wholesale, except property that has been
previously withdrawn from the business or stock and so used or
consumed and with respect to which property the tax has been
paid because of such previous withdrawal, use, or consumption,
except property that enters into and becomes an ingredient or
component part of tangible personal property or products
manufactured or compounded for sale as provided in subdivision
(4); and not for the personal and private use or consumption
of any person so withdrawing, using, or consuming the same,
and such wholesale purchaser shall report and pay the taxes
thereon; and except 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. The term "retail sale" or "sale at retail"
shall also mean and include the sale of tangible personal
property previously purchased at wholesale for the purpose of
leasing or renting under a transaction subject to the
privilege or license tax levied in Article 4 of Chapter 12,
regardless of whether the sale is to the person who
theretofore leased or rented the tangible personal property or
to some other person.
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(6) BUSINESS. All activities engaged in, or caused to
be engaged in, with the object of gain, profit, benefit, or
advantage, either direct or indirect, and not excepting
subactivities producing marketable commodities used or
consumed in the main business activity, each of which
subactivities shall be considered business engaged in, taxable
in the class in which it falls.
(7) STORAGE. Any keeping or retention in this state for
any purpose except sale in the regular course of business or
subsequent use solely outside this state of tangible personal
property purchased at retail.
(8) USE. The exercise of any right or power over
tangible personal property incident to the ownership of that
property, or by any transaction where possession is given,
except that it shall not include the sale of that property in
the regular course of business.
(9) PURCHASE. Acquired for a consideration, whether
such acquisition was effected by a transfer of title, or of
possession or of both, or a license to use or consume; whether
such transfer shall have been absolute or conditional, and by
whatsoever means the same shall have been effected; and
whether such consideration be a price or rental in money, or
by way of exchange or barter.
(10) SALES PRICE. The total amount for which tangible
personal property is sold, including any services, including
transportation, that are a part of the sale, valued in money,
whether paid in money or otherwise, and includes any amount
for which credit is given to the purchaser by the seller,
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without any deduction therefrom on account of the cost of the
property sold, the cost of the materials used, labor or
service cost, interest charged, losses, or any other expenses
whatsoever; provided, that cash discounts allowed and taken on
sales shall not be included and sales price shall not include
the amount charged for property returned by customers when the
entire amount charged therefor is refunded either in cash or
by credit.
(11) IN THIS STATE or IN THE STATE. Within the exterior
limits of the State of Alabama, and includes all territory
within such limits owned by or ceded to the United States of
America.
(12) AUTOMOTIVE VEHICLE. A power shovel, dragline,
crawler, crawler crane, ditcher or any similar machine which
is self-propelled, in addition to self-propelled machines
which are used primarily as instruments of conveyance.
(13) PREPAID TELEPHONE CALLING CARD. A sale of a
prepaid telephone calling card or a prepaid authorization
number, or both, shall be deemed the sale of tangible personal
property subject to the tax imposed pursuant to this chapter.
For purposes of this subdivision, the sale of prepaid wireless
service that is evidenced by a physical card constitutes the
sale of a prepaid telephone calling card, and the sale of
prepaid wireless service that is not evidenced by a physical
card constitutes the sale of a prepaid authorization number.
(14) PREPAID WIRELESS SERVICE. The right to use mobile
telecommunications service, which must be paid for in advance
and that is sold in predetermined units or dollars of which
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the number declines with use or the expiration of time in a
known amount, and which may include rights to use
non-telecommunications services or to download digital
products or digital content. For purposes of this subdivision,
mobile telecommunications service has the meaning ascribed by
Section 40-21-120.
(15) REMOTE USE TAX. Amounts collected from out of
state vendors who, on October 1, 2012, were or would have been
remote sellers as defined in Section 40-23-171; and amounts
remitted by consumers on the individual tax return.
(16) FOOD. Food as defined in 7 U.S.C § 2011, et seq.,
for the purposes of the federal Supplemental Nutrition
Assistance Program regardless of where or by what means food
is sold. In the event that the federal Supplemental Nutrition
Assistance Program definition no longer exists, the
Legislature shall provide a new definition of "food" by
general law."
"§40-23-61
(a) An excise tax is hereby imposed on the storage, use
or other consumption in this state of tangible personal
property, not including, however, materials and supplies
bought for use in fulfilling a contract for the painting,
repairing or reconditioning of vessels, barges, ships, other
watercraft and commercial fishing vessels of over five tons
load displacement as registered with the U.S. Coast Guard and
licensed by the State of Alabama Department of Conservation
and Natural Resources, purchased at retail on or after October
1, 1965, for storage, use or other consumption in this state
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at the rate of four percent of the sales price of such
property or the amount of tax collected by the seller,
whichever is greater; provided, however, when the seller
follows the Department of Revenue's suggested use tax brackets
and his records prove that his following said brackets
resulted in a net undercollection of tax for the month, he may
report the tax due or tax collected, whichever is less, except
as provided in subsections (b) and (c) of this section.
(b) An excise tax is hereby imposed on the storage, use
or other consumption in this state of any machines used in
mining, quarrying, compounding, processing and manufacturing
of tangible personal property, purchased at retail on or after
October 1, 1965, at the rate of one and one-half percent of
the sales price of any such machine or the amount of tax
collected by the seller, whichever is greater; provided,
however, when the seller follows the Department of Revenue's
suggested use tax brackets and his records prove that his
following said brackets resulted in a net undercollection of
tax for the month, he may report the tax due or tax collected,
whichever is less; provided, that the term "machine," as
herein used, shall include machinery which is used for mining,
quarrying, compounding, processing, or manufacturing tangible
personal property, and the parts of such machines, attachments
and replacements therefor, 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.
(c) An excise tax is hereby imposed on the storage, use
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or other consumption in this state of any automotive vehicle
or truck trailer, semitrailer or house trailer, and mobile
home set-up materials and supplies including but not limited
to steps, blocks, anchoring, cable pipes and any other
materials pertaining thereto, purchased at retail on or after
October 1, 1965, for storage, use or other consumption in this
state at the rate of two percent of the sales price of such
automotive vehicle, truck trailer, semitrailer or house
trailer, and mobile home set-up materials and supplies as
specified above, or the amount of tax collected by the seller,
whichever is greater; provided, however, when the seller
follows the Department of Revenue's suggested use tax brackets
and his records prove that his following said brackets
resulted in a net undercollection of tax for the month, he may
report the tax due or tax collected, whichever is less. Where
any used automotive vehicle or truck trailer, semitrailer 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 used vehicle,
the tax levied herein shall be paid on the net difference,
that is, the price of the new or used vehicle sold less the
credit for the used vehicle taken in trade.
Of the total $.02 tax on each dollar of sale provided
hereunder, 58 percent of the total tax generated by this
subsection shall be deposited to the credit of the Education
Trust Fund; and 42 percent of the total tax generated by this
subsection shall be deposited to the credit of the State
General Fund.
(d) An excise tax is hereby imposed on the storage, use
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or other consumption in this state of food as defined in
Section 40-23-60, at the rate of four percent of the sales
price of such food. Beginning September 1, 2023, the tax rate
shall be reduced to three and one-half percent. On November 1,
2024, and on November 1 of every year thereafter until the tax
rate is two percent, the tax rate shall be reduced by one-half
of one percent. Provided, however, the rate of tax shall only
be reduced if the growth in total net receipts from all
revenue sources to the Education Trust Fund in the preceding
fiscal year was at least two percent more than the prior
fiscal year.
(d)(e) Every person storing, using or otherwise
consuming in this state tangible personal property purchased
at retail shall be liable for the tax imposed by this article,
and the liability shall not be extinguished until the tax has
been paid to this state; provided, that a receipt from a
retailer maintaining a place of business in this state or a
retailer authorized by the department, under such rules and
regulations as it may prescribe, to collect the tax imposed
hereby and who shall for the purpose of this article be
regarded as a retailer maintaining a place of business in this
state, given to the purchaser in accordance with the
provisions of Section 40-23-67, shall be sufficient to relieve
the purchaser from further liability for tax to which such
receipt may refer.
(e)(f) An excise tax is hereby imposed on the classes
of tangible personal property, and at the rates imposed on
such classes, specified in subsections (a), (b) and (c) of
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this section, on the storage, use, or other consumption in the
performance of a contract in this state of any such tangible
personal property, new or used, the tax to be measured by the
sales price or the fair and reasonable market value of such
tangible personal property when put into use in this state,
whichever is less; provided, that the tax imposed by this
subsection shall not apply where the taxes imposed by
subsection (a), (b), or (c) of this section apply."
Section 2. (a) On the effective date of this act, the
definition of "food" in Sections 40-23-1 and 40-23-60, Code of
Alabama 1975, shall apply to county and municipal sales and
use taxes. For purposes of county and municipal sales and use
taxes, the sales tax rate on food shall be established as the
general or retail sales tax rate in effect in the county or
municipality on the effective date of this act, unless
otherwise provided by law. An act of the Legislature or an
ordinance or resolution adopted by a county or municipal
governing body levying a county or municipal sales and use tax
inclusive of food passed or enacted on or before the effective
date of this act shall remain operative, but no additional
county or municipal sales and use taxes on food may be levied.
(b) Any county or municipal governing body may, by
resolution or ordinance, reduce the general or retail sales
tax rate on food for local sales and use taxes. Such ordinance
or resolution must be adopted at least 60 days prior to
becoming effective.
Section 3. This act shall become effective on September
1, 2023, following its passage and approval by the Governor,
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or its otherwise becoming law.925