Alabama 2025 Regular Session

Alabama House Bill HB176 Compare Versions

Only one version of the bill is available at this time.

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1	1	HB176INTRODUCED
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3	3	HB176
4	4	UK43XXX-1
5	5	By Representative Shirey
6	6	RFD: Ways and Means Education
7	7	First Read: 05-Feb-25
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12	12	5 UK43XXX-1 01/29/2025 TEW (L)TEW 2025-381
13	13	Page 1
14	14	First Read: 05-Feb-25
15	15	SYNOPSIS:
16	16	Under current law certain items are exempt from
17	17	sales and use tax. Also under current law, certain
18	18	opthalmic materials are subject to sales tax.
19	19	This bill would exempt the gross proceeds from
20	20	the sale of optical aids, including eyeglasses and
21	21	contact lenses from sales and use tax.
22	22	A BILL
23	23	TO BE ENTITLED
24	24	AN ACT
25	25	Relating to sales tax; to amend Section 40-23-1, Code
26	26	of Alabama 1975; to exempt the gross proceeds from the sale of
27	27	optical aids, including eyeglasses and contact lenses from
28	28	sales and use tax.
29	29	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
30	30	Section 1. Section 40-23-1, Code of Alabama 1975, is
31	31	amended to read as follows:
32	32	"§40-23-1
33	33	(a) For the purpose of this division, the following
34	34	terms have the respective meanings ascribed by this section:
35	35	(1) PERSON or COMPANY. Used interchangeably, includes
36	36	any individual, firm, copartnership, association, corporation,
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66	66	any individual, firm, copartnership, association, corporation,
67	67	receiver, trustee, or any other group or combination acting as
68	68	a unit and the plural as well as the singular number, unless
69	69	the intention to give a more limited meaning is disclosed by
70	70	the context.
71	71	(2) DEPARTMENT. The Department of Revenue of the State
72	72	of Alabama.
73	73	(3) COMMISSIONER. The Commissioner of Revenue of the
74	74	State of Alabama.
75	75	(4) TAX YEAR or TAXABLE YEAR. The calendar year.
76	76	(5) SALE or SALES. Installment and credit sales and the
77	77	exchange of properties as well as the sale thereof for money,
78	78	every closed transaction constituting a sale. Provided,
79	79	however, a transaction shall not be closed or a sale completed
80	80	until the time and place when and where title is transferred
81	81	by the seller or seller's agent to the purchaser or
82	82	purchaser's agent, and for the purpose of determining transfer
83	83	of title, a common carrier or the U.S. Postal Service shall be
84	84	deemed to be the agent of the seller, regardless of any F.O.B.
85	85	point and regardless of who selects the method of
86	86	transportation, and regardless of by whom or the method by
87	87	which freight, postage, or other transportation charge is
88	88	paid. Provided further that, where billed as a separate item
89	89	to and paid by the purchaser, the freight, postage, or other
90	90	transportation charge paid to a common carrier or the U.S.
91	91	Postal Service is not a part of the selling price.
92	92	(6) GROSS PROCEEDS OF SALES. The value proceeding or
93	93	accruing from the sale of tangible personal property, and
94	94	including the proceeds from the sale of any property handled
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124	124	including the proceeds from the sale of any property handled
125	125	on consignment by the taxpayer, including merchandise of any
126	126	kind and character without any deduction on account of the
127	127	cost of the property sold, the cost of the materials used,
128	128	labor or service cost, interest paid, any consumer excise
129	129	taxes that may be included within the sales price of the
130	130	property sold, or any other expenses whatsoever, and without
131	131	any deductions on account of losses; provided, that cash
132	132	discounts allowed and taken on sales shall not be included,
133	133	and "gross proceeds of sales" shall not include the sale price
134	134	of property returned by customers when the full sales price
135	135	thereof is refunded either in cash or by credit. The term
136	136	"gross proceeds of sale" shall also mean and include the
137	137	reasonable and fair market value of any tangible personal
138	138	property previously purchased at wholesale which is withdrawn
139	139	or used from the business or stock and used or consumed in
140	140	connection with a business, and shall also mean and include
141	141	the reasonable and fair market value of any tangible personal
142	142	property previously purchased at wholesale which is withdrawn
143	143	from the business or stock and used or consumed by any person
144	144	so withdrawing the same, except property that has been
145	145	previously withdrawn from business or stock and so used or
146	146	consumed with respect to which property the tax has been paid
147	147	because of previous withdrawal, use, or consumption, except
148	148	property that enters into and becomes an ingredient or
149	149	component part of tangible personal property or products
150	150	manufactured or compounded for sale and not for the personal
151	151	and private use or consumption of any person so withdrawing,
152	152	using, or consuming the same, and except refinery, residue, or
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182	182	using, or consuming the same, and except refinery, residue, or
183	183	fuel gas, whether in a liquid or gaseous state, that has been
184	184	generated by, or is otherwise a by-product of, a
185	185	petroleum-refining process, which gas is then utilized in the
186	186	process to generate heat or is otherwise utilized in the
187	187	distillation or refining of petroleum products.
188	188	In the case of the retail sale of equipment,
189	189	accessories, fixtures, and other similar tangible personal
190	190	property used in connection with the sale of commercial mobile
191	191	services as defined herein, or in connection with satellite
192	192	television services, at a price below cost, "gross proceeds of
193	193	sale" shall only include the stated sales price thereof and
194	194	shall not include any sales commission or rebate received by
195	195	the seller as a result of the sale. As used herein, the term
196	196	"commercial mobile services" shall have the same meaning as
197	197	that term has in 47 U.S.C. §§ 153(n) and 332(d), as in effect
198	198	from time to time.
199	199	(7) TAXPAYER. Any person liable for taxes hereunder.
200	200	(8) GROSS RECEIPTS. The value proceeding or accruing
201	201	from the sale of tangible personal property, including
202	202	merchandise and commodities of any kind and character, all
203	203	receipts actual and accrued, by reason of any business engaged
204	204	in, not including, however, interest, discounts, rentals of
205	205	real estate, or royalties, and without any deduction on
206	206	account of the cost of the property sold, the cost of the
207	207	materials used, labor or service cost, interest paid, any
208	208	consumer excise taxes that may be included in the sales price
209	209	of the property sold, or any other expenses whatsoever and
210	210	without any deductions on account of losses. The term "gross
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240	240	without any deductions on account of losses. The term "gross
241	241	receipts" shall also mean and include the reasonable and fair
242	242	market value of any tangible personal property previously
243	243	purchased at wholesale which is withdrawn or used from the
244	244	business or stock and used or consumed in connection with a
245	245	business, and shall also mean and include the reasonable and
246	246	fair market value of any tangible personal property previously
247	247	purchased at wholesale which is withdrawn from the business or
248	248	stock and used or consumed by any person so withdrawing the
249	249	same, except property which has been previously withdrawn from
250	250	business or stock and so used or consumed and with respect to
251	251	which property the tax has been paid because of previous
252	252	withdrawal, use, or consumption, except property which enters
253	253	into and becomes an ingredient or component part of tangible
254	254	personal property or products manufactured or compounded for
255	255	sale as provided in subdivision (9) and not for the personal
256	256	and private use or consumption of any person so withdrawing,
257	257	using, or consuming the same, and except refinery, residue, or
258	258	fuel gas, whether in a liquid or gaseous state, that has been
259	259	generated by, or is otherwise a by-product of, a
260	260	petroleum-refining process, which gas is then utilized in the
261	261	process to generate heat or is otherwise utilized in the
262	262	distillation or refining of petroleum products.
263	263	(9) WHOLESALE SALE or SALE AT WHOLESALE. Any one of the
264	264	following:
265	265	a. A sale of tangible personal property by wholesalers
266	266	to licensed retail merchants, jobbers, dealers, or other
267	267	wholesalers for resale and does not include a sale by
268	268	wholesalers to users or consumers, not for resale.
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298	298	wholesalers to users or consumers, not for resale.
299	299	b. A sale of tangible personal property or products,
300	300	including iron ore, and including the furnished container and
301	301	label of the property or products, to a manufacturer or
302	302	compounder which enter into and become an ingredient or
303	303	component part of the tangible personal property or products
304	304	that the manufacturer or compounder manufactures or compounds
305	305	for sale, whether or not the tangible personal property or
306	306	product used in manufacturing or compounding a finished
307	307	product is used with the intent that it becomes a component of
308	308	the finished product; provided, however, that it is the intent
309	309	of this section that no sale of capital equipment, machinery,
310	310	tools, or product shall be included in the term "wholesale
311	311	sale." The term "capital equipment, machinery, tools, or
312	312	product" shall mean property that is subject to depreciation
313	313	allowances for Alabama income tax purposes.
314	314	c. A sale of containers intended for one-time use only,
315	315	and the labels thereof, when containers are sold without
316	316	contents to persons who sell or furnish containers along with
317	317	the contents placed therein for sale by persons.
318	318	d. A sale of pallets intended for one-time use only
319	319	when pallets are sold without contents to persons who sell or
320	320	furnish pallets along with the contents placed thereon for
321	321	sale by persons.
322	322	e. A sale to a manufacturer or compounder, of crowns,
323	323	caps, and tops intended for one-time use employed and used
324	324	upon the containers in which a manufacturer or compounder
325	325	markets his products.
326	326	f. A sale of containers to persons engaged in selling
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356	356	f. A sale of containers to persons engaged in selling
357	357	or otherwise supplying or furnishing baby chicks to growers
358	358	thereof where containers are used for the delivery of chicks
359	359	or a sale of containers for use in the delivery of eggs by the
360	360	producer thereof to the distributor or packer of eggs even
361	361	though containers used for delivery of baby chicks or eggs may
362	362	be recovered for reuse.
363	363	g. A sale of bagging and ties used in preparing cotton
364	364	for market.
365	365	h. A sale to meat packers, manufacturers, compounders,
366	366	or processors of meat products of all casings used in molding
367	367	or forming wieners and Vienna sausages even though casings may
368	368	be recovered for reuse.
369	369	i. A sale of commercial fish feed including
370	370	concentrates, supplements, and other feed ingredients when
371	371	substances are used as ingredients in mixing and preparing
372	372	feed for fish raised to be sold on a commercial basis.
373	373	j. A sale of bait used to capture or attempt to capture
374	374	fish or other seafood in the process of commercial fishing by
375	375	a holder of a commercial license issued pursuant to Chapter 12
376	376	of Title 9.
377	377	k. A sale of tangible personal property to any person
378	378	engaging in the business of leasing or renting tangible
379	379	personal property to others, if tangible personal property is
380	380	purchased for the purpose of leasing or renting it to others
381	381	under a transaction subject to the privilege or license tax
382	382	levied in Article 4 of Chapter 12 of this title against any
383	383	person engaging in the business of leasing or renting tangible
384	384	personal property to others.
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414	414	personal property to others.
415	415	l. A purchase or withdrawal of parts or materials from
416	416	stock by any person licensed under this division where parts
417	417	or materials are used in repairing or reconditioning the
418	418	tangible personal property of a licensed person, which
419	419	tangible personal property is a part of the stock of goods of
420	420	a licensed person, offered for sale by him or her, and not for
421	421	use or consumption of a licensed person.
422	422	(10) SALE AT RETAIL or RETAIL SALE. All sales of
423	423	tangible personal property except those defined as wholesale
424	424	sales. The quantities of goods sold or prices at which sold
425	425	are immaterial in determining whether or not a sale is at
426	426	retail. Sales of building materials to contractors, builders,
427	427	or landowners for resale or use in the form of real estate are
428	428	retail sales in whatever quantity sold. Sales of building
429	429	materials, fixtures, or other equipment to a manufacturer or
430	430	builder of modular buildings for use in manufacturing,
431	431	building, or equipping a modular building ultimately becoming
432	432	a part of real estate situated in the State of Alabama are
433	433	retail sales, and the use, sale, or resale of building shall
434	434	not be subject to the tax. Sales of tangible personal property
435	435	to undertakers and morticians are retail sales and subject to
436	436	the tax at the time of purchase, but are not subject to the
437	437	tax on resale to the consumer. Sales of tangible personal
438	438	property or products to manufacturers, quarry operators, mine
439	439	operators, or compounders, which are used or consumed by them
440	440	in manufacturing, mining, quarrying, or compounding and do not
441	441	become an ingredient or component part of the tangible
442	442	personal property manufactured or compounded as provided in
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472	472	personal property manufactured or compounded as provided in
473	473	subdivision (9) are retail sales. The term "sale at retail" or
474	474	"retail sale" shall also mean and include the withdrawal, use,
475	475	or consumption of any tangible personal property by any one
476	476	who purchases same at wholesale, except property that has been
477	477	previously withdrawn from the business or stock and so used or
478	478	consumed and with respect to which property tax has been paid
479	479	because of previous withdrawal, use, or consumption, except
480	480	property that enters into and becomes an ingredient or
481	481	component part of tangible personal property or products
482	482	manufactured or compounded for sale as provided in subdivision
483	483	(9) and not for the personal and private use or consumption of
484	484	any person so withdrawing, using, or consuming the same; and
485	485	wholesale purchaser shall report and pay the taxes thereon. In
486	486	the case of the sale of equipment, accessories, fixtures, and
487	487	other similar tangible personal property used in connection
488	488	with the sale of commercial mobile services as defined in
489	489	subdivision (6), or in connection with satellite television
490	490	services, at a price below cost, the term "sale at retail" and
491	491	"retail sale" shall include those sales, and those sales shall
492	492	not also be taxable as a withdrawal, use, or consumption of
493	493	such tangible personal property.
494	494	(11) BUSINESS. All activities engaged in, or caused to
495	495	be engaged in, with the object of gain, profit, benefit, or
496	496	advantage, either direct or indirect, and not excepting
497	497	subactivities producing marketable commodities used or
498	498	consumed in the main business activity, each of which
499	499	subactivities shall be considered business engaged in, taxable
500	500	in the class in which it falls.
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530	530	in the class in which it falls.
531	531	(12) AUTOMOTIVE VEHICLE. A power shovel, dragline,
532	532	crawler, crawler crane, ditcher, or any similar machine that
533	533	is self-propelled, in addition to self-propelled machines that
534	534	are used primarily as instruments of conveyance.
535	535	(13) PREPAID TELEPHONE CALLING CARD. A sale of a
536	536	prepaid telephone calling card or a prepaid authorization
537	537	number, or both, shall be deemed the sale of tangible personal
538	538	property subject to the tax imposed on the sale of tangible
539	539	personal property pursuant to this chapter. For purposes of
540	540	this subdivision, the sale of prepaid wireless service that is
541	541	evidenced by a physical card constitutes the sale of a prepaid
542	542	telephone calling card, and the sale of prepaid wireless
543	543	service that is not evidenced by a physical card constitutes
544	544	the sale of a prepaid authorization number.
545	545	(14) PREPAID WIRELESS SERVICE. The right to use mobile
546	546	telecommunications service, which must be paid for in advance
547	547	and that is sold in predetermined units or dollars of which
548	548	the number declines with use in a known amount, and which may
549	549	include rights to use non-telecommunications services or to
550	550	download digital products or digital content. For purposes of
551	551	this subdivision, mobile telecommunications service has the
552	552	meaning ascribed by Section 40-21-120.
553	553	(15) CONSUMABLE VAPOR PRODUCT. Any nicotine liquid
554	554	solution or other material containing nicotine that is
555	555	depleted when used as a vapor product.
556	556	(16) VAPOR PRODUCTS. Any non-lighted, noncombustible
557	557	product that employs a mechanical heating element, battery, or
558	558	electronic circuit regardless of shape or size and that can be
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588	588	electronic circuit regardless of shape or size and that can be
589	589	used to produce vapor from nicotine in a solution. The term
590	590	includes any vapor cartridge or other container of nicotine in
591	591	a solution or other form that is intended to be used with or
592	592	in an electronic cigarette, electronic cigar, electronic
593	593	cigarillo, electronic pipe, or similar product or device. The
594	594	term does not include any product regulated by the United
595	595	States Food and Drug Administration under Chapter V of the
596	596	Federal Food, Drug, and Cosmetic Act.
597	597	(17) PRODUCER VALUE ADDED AGRICULTURAL PRODUCTS. Fruits
598	598	or other agricultural products that have undergone some degree
599	599	of further processing by the original producer of the
600	600	agricultural product, including, but not limited to, whole
601	601	cuts of meat, bound cut flowers, jams, jellies, or boiled or
602	602	roasted peanuts.
603	603	(18) COMMERCIAL FISHING. The activity of catching or
604	604	processing fish or other seafood regularly and exclusively as
605	605	a means of livelihood by a holder of a commercial license
606	606	issued pursuant to Chapter 12 of Title 9. The term includes
607	607	shellfish farmers, shrimpers, oysterers, lobsterers, and
608	608	crabbers.
609	609	(19) COMMERCIAL FISHING VESSEL. Any vessel whose
610	610	masters and owners are regularly and exclusively engaged in
611	611	commercial fishing as their means of livelihood.
612	612	(20) FOOD. Food as defined in 7 U.S.C. § 2012, for the
613	613	purposes of the federal Supplemental Nutrition Assistance
614	614	Program regardless of where or by what means food is sold. In
615	615	the event that the federal Supplemental Nutrition Assistance
616	616	Program definition no longer exists, the Legislature shall
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646	646	Program definition no longer exists, the Legislature shall
647	647	provide a new definition of "food" by general law.
648	648	(b) The use within this state of tangible personal
649	649	property by the manufacturer thereof, as building materials in
650	650	the performance of a construction contract, for the purposes
651	651	of this division, shall be considered as a retail sale thereof
652	652	by the manufacturer, who shall also be construed as the
653	653	ultimate consumer of materials or property, and who shall be
654	654	required to report transaction and pay the sales tax thereon,
655	655	based upon the reasonable and fair market price thereof at the
656	656	time and place where same are used or consumed by the
657	657	manufacturer. Where the contractor is the manufacturer or
658	658	compounder of ready-mix concrete or asphalt plant mix used in
659	659	the performance of a contract, whether the ready-mix concrete
660	660	or asphalt plant mix is manufactured or compounded at the job
661	661	site or at a fixed or permanent plant location, the tax
662	662	applies only to the cost of the ingredients that become a
663	663	component part of the ready-mix concrete or the asphalt plant
664	664	mix. The provisions of this subsection shall not apply to any
665	665	tangible personal property that is specifically exempted from
666	666	the tax levied in this division.
667	667	(c) The sale of lumber by a lumber manufacturer to a
668	668	trucker for resale is a sale at wholesale as sales are defined
669	669	herein where the trucker is either a licensed dealer in lumber
670	670	or, if a resident of Alabama, has registered with the
671	671	Department of Revenue, and has received therefrom a
672	672	certificate of registration or, if a nonresident of this state
673	673	purchasing lumber for resale outside the State of Alabama, has
674	674	furnished to the lumber manufacturer his or her name, address,
675	675	309
676	676	310
677	677	311
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680	680	314
681	681	315
682	682	316
683	683	317
684	684	318
685	685	319
686	686	320
687	687	321
688	688	322
689	689	323
690	690	324
691	691	325
692	692	326
693	693	327
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704	704	furnished to the lumber manufacturer his or her name, address,
705	705	and the vehicle license number of the truck in which the
706	706	lumber is to be transported, which name, address, and vehicle
707	707	license number shall be shown on the sales invoice rendered by
708	708	the lumber manufacturer. The certificate provided for herein
709	709	shall be valid for the calendar year of its issuance and may
710	710	be renewed from year to year on application to the Department
711	711	of Revenue on or before January 31 of each succeeding year;
712	712	provided, that if not renewed the certificate shall become
713	713	invalid for the purpose of this division on February 1.
714	714	(d) The dispensing or transferring of ophthalmic
715	715	materials, including lenses, frames, eyeglasses, contact
716	716	lenses, and other therapeutic optic devices, to a patient by a
717	717	licensed ophthalmologist, as a part of his or her professional
718	718	service, for purposes of this division, shall constitute a
719	719	sale, subject to the state sales tax. The licensed
720	720	ophthalmologist or licensed optometrist shall collect the
721	721	state sales tax. In no event shall the providing of
722	722	professional services in connection with the dispensing or
723	723	transferring of ophthalmic materials, including dispensing
724	724	fees or fitting fees, by a licensed ophthalmologist or
725	725	licensed optometrist be considered a sale subject to the state
726	726	sales tax. When the ophthalmic materials are purchased by a
727	727	consumer covered by a third party benefit plan, including
728	728	Medicare, the sales tax shall be applicable to the amount that
729	729	the ophthalmologist, optometrist, or optician is reimbursed by
730	730	the third party benefit plan plus the amount that the consumer
731	731	pays to the ophthalmologist, optometrist, or optician at the
732	732	time of the sale. All transfers of ophthalmic materials by
733	733	337
734	734	338
735	735	339
736	736	340
737	737	341
738	738	342
739	739	343
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741	741	345
742	742	346
743	743	347
744	744	348
745	745	349
746	746	350
747	747	351
748	748	352
749	749	353
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751	751	355
752	752	356
753	753	357
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756	756	360
757	757	361
758	758	362
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760	760	364 HB176 INTRODUCED
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762	762	time of the sale. All transfers of ophthalmic materials by
763	763	opticians or optometrists shall be considered retail sales
764	764	subject to the state sales tax. The term "supplier" shall
765	765	include but not be limited to optical laboratories, ophthalmic
766	766	material wholesalers, or anyone selling ophthalmic materials
767	767	to ophthalmologists.
768	768	(d)(e) Notwithstanding the above, the withdrawal, use,
769	769	or consumption of a manufactured product by the manufacturer
770	770	thereof in quality control testing performed by employees or
771	771	independent contractors of the taxpayer, for purposes of this
772	772	division, shall not be deemed or considered to constitute a
773	773	transaction subject to sales tax, nor shall a gift by the
774	774	manufacturer of a manufactured product, withdrawn from the
775	775	manufacturer's inventory, to an entity listed in 26 U.S.C. §§
776	776	170(b) or (c), be considered a transaction subject to sales
777	777	tax.
778	778	(e)(f) Notwithstanding the foregoing, a gift by a
779	779	retailer of a product or products where the aggregate retail
780	780	value of any single gift is equal to or less than ten thousand
781	781	dollars ($10,000), withdrawn from the retailer's inventory, to
782	782	an entity listed in 26 U.S.C. §§ 170(b) or (c) shall not be
783	783	deemed or considered to constitute a transaction subject to
784	784	sales and use tax."
785	785	Section 2. (a) For the purposes of this section, the
786	786	following words or terms are defined and interpreted as
787	787	follows:
788	788	(1) EYEGLASSES. The term includes lenses and frames
789	789	into which lenses have been installed if the lenses have been
790	790	prescribed by a physician or optometrist licensed by any
791	791	365
792	792	366
793	793	367
794	794	368
795	795	369
796	796	370
797	797	371
798	798	372
799	799	373
800	800	374
801	801	375
802	802	376
803	803	377
804	804	378
805	805	379
806	806	380
807	807	381
808	808	382
809	809	383
810	810	384
811	811	385
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813	813	387
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818	818	392 HB176 INTRODUCED
819	819	Page 15
820	820	prescribed by a physician or optometrist licensed by any
821	821	state, country, or province.
822	822	(2) OPTICAL AID. Eyeglasses, contact lenses, or other
823	823	instruments or devices that may aid or correct human vision
824	824	and that have been prescribed by a physician or optometrist
825	825	licensed by a state, country, or province.
826	826	(b)(1) The gross proceeds of the sale or sales of
827	827	optical aids are exempted from all state sales and use tax.
828	828	(2) The exemption shall not apply to county or
829	829	municipal sales or use taxes unless approved by resolution or
830	830	ordinance adopted by the local governing body.
831	831	Section 3. This act shall become effective on September
832	832	1, 2025.
833	833	393
834	834	394
835	835	395
836	836	396
837	837	397
838	838	398
839	839	399
840	840	400
841	841	401
842	842	402
843	843	403
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