HB253ENGROSSED
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HB253
4UUDNI3-2
By Representatives Colvin, Woods, Faulkner, Lovvorn, Lee,
Clouse, Clarke
RFD: Ways and Means Education
First Read: 11-Feb-25
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First Read: 11-Feb-25
A BILL
TO BE ENTITLED
AN ACT
Relating to taxation; to exempt the gross receipts from
the sale of certain aircraft and aircraft parts from state
sales and use tax; to amend Sections 40-12-222 and 40-12-223,
Code of Alabama 1975, relating to the state lease or rental
tax; to provide conditions regarding the application of rental
or lease taxes to the rental or lease transactions of
commercial aircraft; to exempt the gross receipts from the
lease of certain aircraft parts from the state lease or rental
tax; and to make nonsubstantive, technical revisions to update
the existing code language to current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) The gross receipts from the sale of
aircraft replacement parts, components, systems, sundries, and
supplies affixed to, used on, or that became part of, aircraft
brought into the state and used, or to be used, by certified
or licensed air carrier to undergo conversion,
reconfiguration, or general maintenance while temporarily
within this state are exempt from the state sales and use
taxes provided for in Sections 40-23-2 and 40-23-61, Code of
Alabama 1975.
(1) Under this section, an aircraft shall be considered
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(1) Under this section, an aircraft shall be considered
not permanently domiciled in Alabama if either of the
following non-exclusive conditions is true:
a. The hanger, airstrip, or other housing unit in which
the aircraft is primarily based, departs from, and returns to
in its normal operation is located outside of Alabama; or
b. The purchaser’s headquarters is not in Alabama on
the date of purchase, and the aircraft will be operated either
by a: (1) certificated air carrier holding certificate of
public convenience under 49 U.S.C. §40102; or (2) a foreign
air carrier or intrastate air carrier, as defined by 49 U.S.C.
§40102.
(b) The exemption provided in this section shall not
apply to county or municipal sales or use taxes unless
approved by resolution or ordinance adopted by the local
governing body.
(c) The exemption provided pursuant to this section
shall be available from September 1, 2025, to August 31, 2030.
Section 2. (a) The gross receipts from the sale of
aircraft delivered in this state and used, or to be used, by
certified or licensed air carriers, so long as the aircraft
will not be hubbed in Alabama, are exempt from the state sales
and use taxes provided for in Sections 40-23-2 and 40-23-61,
Code of Alabama 1975.
(1) Under this section, an aircraft shall be considered
not permanently domiciled in Alabama if either of the
following non-exclusive conditions is true:
a. The hanger, airstrip, or other housing unit in which
the aircraft is primarily based, departs from, and returns to
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the aircraft is primarily based, departs from, and returns to
in its normal operation is located outside of Alabama; or
b. The purchaser’s headquarters is not in Alabama on
the date of purchase, and the aircraft will be operated either
by a: (1) certificated air carrier holding certificate of
public convenience under 49 U.S.C. §40102; or (2) a foreign
air carrier or intrastate air carrier, as defined by 49 U.S.C.
§40102.
(b) The exemption provided in this section shall not
apply to county or municipal sales or use taxes unless
approved by resolution or ordinance adopted by the local
governing body.
(c) The exemption provided pursuant to this section
shall be available from September 1, 2025, to August 31, 2030.
Section 3. Section 40-12-222, Code of Alabama 1975, is
amended to read as follows:
"§40-12-222
(a)(1) In addition to all other taxes now imposed by
law, there is hereby levied and shall be collected a privilege
or license tax on each person engaging or continuing within
this state in the business of leasing or renting tangible
personal property at the rate of four percent of the gross
proceeds derived by the lessor from the lease or rental of
tangible personal property.
(2) The privilege or license tax on each person
engaging or continuing within this state in the business of
leasing or renting any automotive vehicle or truck trailer,
semitrailer, or house trailer shall be at the rate of one and
one-half percent of the gross proceeds derived by the lessor
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one-half percent of the gross proceeds derived by the lessor
from the lease or rental of such automotive vehicle or truck
trailer, semitrailer, or house trailer.
(3) The tax levied in this article shall not apply to
any leasing or rental, as lessor, by the state, or any
municipality or county in the state, or any public corporation
organized under the laws of the state, including, without
limiting the generality of the foregoing, any corporation
organized under the provisions of Sections 11-54-80 through
11-54-101.
(4) The privilege or license tax on each person or firm
engaging or continuing within this state in the business of
the leasing and rental of linens and garments shall be at the
rate of two percent of the gross proceeds derived by the
lessor from the lease or rental of the linens and garments.
(b) Notwithstanding subsection (a), nothing shall
prohibit a lessor subject to a state or local privilege or
license tax from passing the amounts on to a lessee by adding
the taxes to the leasing price or otherwise; provided,
however, that all amounts passed on to the lessee shall be
includable in the gross proceeds derived from the lease of
tangible personal property which shall be subject to the
privilege or license tax owed by the lessor.
(c) The state and applicable local privilege or license
taxes applicable to a lease or rental transaction to which a
lessor is subject shall be determined as follows:
(1) Except for automotive vehicles as provided in
subdivision (2) and commercial aircraft as provided in
subdivision (3), the following shall apply:
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subdivision (3), the following shall apply:
a. When tangible personal property is delivered to the
lessee by the lessor or his or her agent, the privilege or
license tax levy shall be determined based on where the
property is delivered.
b. When tangible personal property is picked up at the
lessor's rental location by the lessee or his or her agent,
the privilege or license tax levy shall be determined based on
the rental location.
(2) For automotive vehicles required to be registered
pursuant to Section 32-6-61, each lease payment is considered
a separate lease transaction and occurs in the location as
provided below and the following rules shall apply:
a. The privilege or license tax levy on any
nonrecurring gross proceeds due at the inception of the lease
to a new motor vehicle dealer or a used motor vehicle dealer
licensed pursuant to Section 40-12-391, including any
capitalized cost reduction or other fee that is retained by
the dealer in connection with its initiation of the lease,
shall be determined based on the location of the dealer where
the lease was initiated.
b. The privilege or license tax levy on gross proceeds
other than those described in paragraph a., including the
initial lease or rental payment and all subsequent lease or
rental payments, shall be determined based on the garage
address of the lessee as provided to the county licensing
official. The lessor is considered to be engaging or
continuing within this state in the business of leasing or
renting tangible personal property when its lessee has a
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renting tangible personal property when its lessee has a
garage address within this state.
(3) For commercial aircraft, which are aircraft used by
certificated or licensed air carriers, the privilege or
license tax levy on gross proceeds, including the initial
lease or rental payment and all subsequent lease or rental
payments, shall be determined based on the location of the
aircraft when the aircraft is first entered into revenue
service."
Section 4. Section 40-12-223, Code of Alabama 1975 is
amended to read as follows:
"§40-12-223
There are exempted from the computation of the amount
of the tax levied, assessed, or payable under this article all
of the following:
(1) The gross proceeds accruing from the leasing or
rental of a film or films to a lessee who charges, or proposes
to charge, admission for viewing the film or films.
(2) The gross proceeds accruing from any charge in
respect to the use of docks or docking facilities furnished
for boats or other craft operated on waterways.
(3) The gross proceeds accruing from any charge made by
a landlord to a tenant in respect of the leasing or furnishing
of tangible personal property to be used on the premises of
real property leased by the same landlord to the same tenant
for use as a residence or dwelling place, including mobile
homes.
(4) The gross proceeds accruing from the leasing or
rental of tangible personal property to a lessee who acquires
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rental of tangible personal property to a lessee who acquires
possession of the property for the purpose of leasing or
renting to another the same property under a leasing or rental
transaction subject to this article.
(5) The gross proceeds accruing from any charge made by
a landlord to a tenant in respect to the leasing or furnishing
of tangible personal property to be used on the premises of
any room or rooms, lodging, or accommodations leased or rented
to transients in any hotel, motel, inn, tourist camp, tourist
cabin, or any other place in which rooms, lodgings, or
accommodations are regularly furnished to transients for a
consideration.
(6) The gross proceeds accruing from the leasing or
rental of tangible personal property which the state is
prohibited from taxing under the Constitution or laws of the
United States or under the constitution of the
state.Constitution of Alabama of 2022.
(7) The gross proceeds accruing from the leasing or
rental of nuclear fuel assemblies together with the nuclear
material contained therein and other nuclear material used or
useful in the production of electricity and assemblies
containing ionizing radiation sources together with the
ionizing radiation sources contained therein used or useful in
medical treatment or scientific research.
(8) A transaction in which the lessor leases a truck or
tractor-trailer or semitrailer for operation over the public
roads and highways and such lessor furnishes a driver or
drivers for each vehicle, and the transaction shall be deemed
to constitute the rendition of service and not a "leasing or
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to constitute the rendition of service and not a "leasing or
rental" within the meaning of this article.
(9) The gross proceeds accruing from the leasing or
rental of vehicles in interchange between regulated motor
carriers on a per diem basis.
(10) The gross proceeds accruing from the leasing or
rental of all structures, devices, facilities, and
identifiable components of any thereof acquired primarily for
the control, reduction, or elimination of air or water
pollution, and the gross proceeds accruing from the leasing or
rental of all materials used or intended for use in structures
built primarily for the control, reduction, or elimination of
air and water pollution.
(11) The gross proceeds derived by the lessor, which
term includes a sublessor, from the leasing or rental of
tangible personal property when the lessor and lessee, which
term includes a sublessee, are wholly-owned subsidiary
corporations of the same parent corporation or one is the
wholly-owned subsidiary of the other; provided, that the
appropriate sales or use tax, if any was due, has been paid on
the item of personal property; and provided further, that in
the event of any subsequent subleasing of the tangible
personal property to any person other than any sister, parent,
or subsidiary corporation, any privilege or license tax due
and payable with respect to that subsequent subleasing under
the provisions of this article shall be paid.
(12) The gross proceeds accruing from a transaction
which involves the leasing or rental of vessels or railroad
equipment which are engaged in interstate or foreign commerce,
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equipment which are engaged in interstate or foreign commerce,
or both.
(13) The gross proceeds accruing from the leasing or
rental of aircraft, replacement parts, components, systems,
sundries, and supplies affixed or used on the aircraft and all
ground support equipment and vehicles used by or for the
aircraft to or by a certificated or licensed air carrier with
a hub operation within this state, for use in conducting
intrastate, interstate, or foreign commerce for transporting
people or property by air. For the purpose of this
subdivision, the words "hub operation within this state" shall
be construed to have both of the following criteria:
a. There originates from the location 15 or more flight
departures and five or more different first-stop destinations
five days per week for six or more months during the calendar
year.
b. Passengers, property, or both, are regularly
exchanged at the location between flights of the same or a
different certificated or licensed air carrier.
(14) The gross proceeds derived by the lessor, which
term includes a sublessor, from the leasing of tangible
personal property under all of the following conditions:
a. Prior to being leased under the lease subject to
this exemption, the leased tangible personal property shall
have been owned, or considered to be owned , for either Alabama
or federal income tax purposes or both, or subject to
acquisition pursuant to a binding contract, by the lessee or
by a corporation, partnership, or other entity controlled by,
or under common control with, the lessee.
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or under common control with, the lessee.
b. The leased tangible personal property, or the right
to ownership thereof, shall have been acquired by the lessor
from the lessee or a corporation, partnership, or other entity
controlled by, or under common control with, that lessee and
leased back to the lessee under a lease that is considered a
lease and not a sale for either Alabama or federal income tax
purposes, or both, and that has a term of not less than 15
years, except that the lessor and the lessee may agree in the
lease or any subsequent amendment thereof for the termination
of the lease on any date through purchase of the leased
tangible personal property by the lessee, which right to
purchase the property shall be exercisable solely at the
option of the lessee.
c. The appropriate sales or use tax levied by the state
shall have been paid with respect to the acquisition or use of
the leased tangible personal property, or, alternatively, the
acquisition or use of that property shall be exempt by law
from such sales or use tax.
d. The leased tangible personal property shall be
installed in or about an industrial plant or other real
property that was specially constructed or modified for the
location and use of the tangible personal property and that is
owned, or considered to be owned, for either Alabama or
federal income tax purposes , or both, by a corporation,
partnership, or other entity controlled by, or under common
control with, the lessee of such tangible personal property.
e. The leased tangible property shall be used only by a
lessee engaged in the iron and steel industry, and the
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lessee engaged in the iron and steel industry, and the
exemption from the tax levied by this article shall apply only
to the gross proceeds derived from leases that become binding
contracts of the parties thereto within 180 calendar days
following the date on which the act adding the exemption
contained in this subsection (14) shall become effective.
(15) The gross proceeds accruing from a motor vehicle
lease transaction for a duration of at least 180 days with the
federal government, or any state, county, or municipal entity
within the state, including a public school board or an
individual public school, or any entity eligible for a sales
tax exemption under federal law or Section 40-23-5.
(16)a. The gross receipts from the leasing or rental of
aircraft replacement parts, components, systems, sundries, and
supplies affixed to, used on, or that became part of, aircraft
brought into the state and used, or to be used, by certified
or licensed air carrier to undergo conversion,
reconfiguration, or general maintenance while temporarily
within this state.
1. Under this subdivision an aircraft shall be
considered not permanently domiciled in Alabama during the
term of the lease if either of the following non-exclusive
conditions is true:
(i) The hanger, airstrip, or other housing unit in
which the aircraft is primarily based, departs from, and
returns to in its normal operation is located outside of
Alabama; or
(ii) The purchaser’s headquarters is not in Alabama on
the date of purchase, and the aircraft will be operated either
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the date of purchase, and the aircraft will be operated either
by a: (1) certificated air carrier holding certificate of
public convenience under 49 U.S.C. §40102; or (2) a foreign
air carrier or intrastate air carrier, as defined by 49 U.S.C.
§40102.
b. The exemption provided in this subdivision shall not
apply to county or municipal rental or lease taxes unless
approved by resolution or ordinance adopted by the local
governing body.
c. The exemption provided in this subdivision shall be
effective from September 1, 2025, to August 31, 2030. "
Section 5. This act shall become effective on June 1,
2025.
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2025.
House of Representatives
Read for the first time and referred
to the House of Representatives
committee on Ways and Means
Education
................11-Feb-25
Read for the second time and placed
on the calendar:
1 amendment
................05-Mar-25
Read for the third time and passed
as amended
Yeas 101
Nays 0
Abstains 1
................18-Mar-25
John Treadwell
Clerk
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