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Alabama Uniform Severance Tax Act (Act 2004-629)

  • Alabama Uniform Severance Tax Act (Act 2004-629)

Effective October 1, 2004, the Alabama Uniform Severance Tax Act applies to all persons severing natural materials within the state of Alabama.

What do you need to know?

  • The Alabama Uniform Severance Tax Act repealed or replaced Act 99-255 (Macon County), Act 94-478 (Cleburne County), Act 91-609 (Hale County), and other conflicting local laws. The act did not affect the tax for Coosa County, so the Coosa County tax return must still be filed as previously instructed.
  • The act levies 10 cents per ton statewide tax on all natural minerals severed and sold as tangible personal property.
  • Producers are required to remit the tax and file the tax return by the 20th day of the next month after the month the tax accrues.
  • Severed material is defined as all natural minerals (including, but not limited to, sand, gravel, sandstone, granite, shale, clay, dolomite, limestone) except clay that produces lightweight aggregate.
  • Severed material does not include:
    • Lime or limestone used for agricultural purposes or for pollution control or abatement purposes;
    • Rock dust used for settling coal dust in underground mines or similar uses;
    • Any natural minerals used for the purpose of producing Portland cement;
    • Processed sand used in the foundry cores, mold, and linings;
    • Clay that produces lightweight aggregate; nor
    • Any chert, including county or municipality owned chert facilities, marble and marble by-products, iron ore, quartzite, coal, oil, and natural gas.
  • The severance tax does not apply to severed material moved from one place to another on the same site or transported to another site owned by the same operator or producer.
  • The severance tax does not apply to sales made directly to sovereign governmental entities (federal, state or county). Cities, as municipal corporations, are subject to the tax.
  • In addition, the severance tax does not apply to material severed and used by a producer, operator, or any other person for fill.
  • The tax is due on all minerals that are sold to a purchaser for use outside the state when such minerals are transported on public roads in Alabama.
  • The tax levied by this act shall be collected by the producer from the purchaser at the time of sale or delivery, whichever occurs first, provided the tax is identified as a severance tax on the bill of sale, invoice, or similar sales document.
  • Any tax not identified and collected from the purchaser must still be paid by the producer.