HB176INTRODUCED
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HB176
UK43XXX-1
By Representative Shirey
RFD: Ways and Means Education
First Read: 05-Feb-25
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5 UK43XXX-1 01/29/2025 TEW (L)TEW 2025-381
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First Read: 05-Feb-25
SYNOPSIS:
Under current law certain items are exempt from
sales and use tax. Also under current law, certain
opthalmic materials are subject to sales tax.
This bill would exempt the gross proceeds from
the sale of optical aids, including eyeglasses and
contact lenses from sales and use tax.
A BILL
TO BE ENTITLED
AN ACT
Relating to sales tax; to amend Section 40-23-1, Code
of Alabama 1975; to exempt the gross proceeds from the sale of
optical aids, including eyeglasses and contact lenses from
sales and use tax.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Section 40-23-1, Code of Alabama 1975, is
amended to read as follows:
"§40-23-1
(a) For the purpose of this division, the following
terms 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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any individual, firm, copartnership, association, corporation,
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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including the proceeds from the sale of any property handled
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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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.
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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without any deductions on account of losses. The term "gross
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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wholesalers to users or consumers, not for resale.
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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f. A sale of containers to persons engaged in selling
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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personal property to others.
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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personal property manufactured or compounded as provided in
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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in the class in which it falls.
(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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electronic circuit regardless of shape or size and that can be
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. § 2012, 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
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Program definition no longer exists, the 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
furnished to the lumber manufacturer his or her name, address,
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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
time of the sale. All transfers of ophthalmic materials by
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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.
(d)(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.
(e)(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."
Section 2. (a) For the purposes of this section, the
following words or terms are defined and interpreted as
follows:
(1) EYEGLASSES. The term includes lenses and frames
into which lenses have been installed if the lenses have been
prescribed by a physician or optometrist licensed by any
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prescribed by a physician or optometrist licensed by any
state, country, or province.
(2) OPTICAL AID. Eyeglasses, contact lenses, or other
instruments or devices that may aid or correct human vision
and that have been prescribed by a physician or optometrist
licensed by a state, country, or province.
(b)(1) The gross proceeds of the sale or sales of
optical aids are exempted from all state sales and use tax.
(2) The exemption shall not apply to county or
municipal sales or use taxes unless approved by resolution or
ordinance adopted by the local governing body.
Section 3. This act shall become effective on September
1, 2025.
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