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RULEBOOK

Rules as of February 2008

810-1-6-.01.  Signature Requirements of Tax Returns and Other Documents of All Types Filed by Electronic Methods.

For the Alabama Department of Revenue to identify a taxpayer who files a tax return or submits other documents by electronic means, the identity of the taxpayer must be established by an electronic identifier (signature). The electronic identifier must be sufficiently unique to provide the Department with reasonable assurances of the correct identity of the taxpayer and must be compatible with the electronic filing systems in use by the Department. The Department shall determine which electronic procedures or methods are to be used in the electronic signature validation process. (Adopted through APA effective June 17, 1999)

810-1-6-.02. Scope of the Rules.

This chapter sets forth the rules to be used by the Alabama Department of Revenue in conjunction with a department-sponsored Internet-based system for the electronic filing and payment of the taxes enumerated in Rule 810-1-6-.05. The Department is authorized to accept tax returns filed in electronic commerce pursuant to Chapter 30 of Title 40 of the Code of Alabama 1975. The electronic payment of taxes filed under this program shall be made in accordance with the rules of the department governing electronic funds transfer found in Chapter 810-13-1. (Adopted through APA effective October 4, 2001)

810-1-6-.03. Definitions.

(1)  The definitions of terms contained in Code of Alabama 1975, Section 40-30-3, are incorporated into this chapter by reference.
 
(2)  The term "program" as used in this chapter shall mean the department- sponsored Internet-based system for the electronic filing and payment of the taxes enumerated in Rule 810-1-6-.05. (Adopted through APA effective October 4, 2001)

810-1-6-.04. Internet-Based Electronic Filing and Payment of Taxes to be Provided Through Electronic Return Originators.

The department shall sponsor an Internet-based electronic filing and payment program for the taxes enumerated in Rule 810-1-6-.05. Internet-based electronic filing and payment of taxes may be provided under this program by electronic return originators pursuant to Chapter 30 of Title 40, Code of Alabama 1975, and rules promulgated by the department. Electronic return originators accepted into the program must comply with the requirements of the program as outlined in department rules and in the publications referenced in the department rules. Electronic return originators are limited agents of the department only for the purpose of performing the duties and responsibilities required of electronic return originators as contemplated in Chapter 30 of Title 40, Code of Alabama 1975, and the rules promulgated by the department pertaining to the Internet-based electronic filing and payment program. (Adopted through APA effective October 4, 2001)

810-1-6-.05. Tax Types Covered and Requirements for Tax Returns.

(1)  The electronic return originator shall provide the taxpayer with the capability of Internet-based electronic filing and payment of the taxes listed below from the taxpayer's personal computer. A complete tax return filed via the Internet will consist of data transmitted electronically and shall contain the same information as the corresponding tax return filed entirely on paper.
 
(2)  The tax return information to be provided to the department through Internet- based filing with respect to each tax is the same information outlined in the corresponding rule or other source shown in the column entitled "Rule or other Source Containing Form Layout."

Tax Code
Form Type
Description of Tax Return
Rule or Other Source
Containing Form Layout
SS
2100
state sales tax 810-6-4-.19
SE
2105

state sales tax
with estimate

810-6-4-.19
SC
9501
state-administered county & municipal
sales, use, rental, & lodgings tax
810-1-6-.05
--
----
nonstate-administered county & municipal
sales, use, rental, & lodgings
guidelines issued by the Standard Tax From Committee created pursuant to §11-51-210
SU
2620
state sellers use tax 810-6-5-.19.01
CU
2610
state consumers use tax 810-6-5-.19.01
SR
2410
state rental tax 810-6-5-.09
LN
2310
north Alabama 5% state
lodgings tax
810-6-5-.22
LO
2320
state lodgings tax 810-6-5-.22
IW
A-6
state withholding tax
monthly return
810-3-74-.01
IW
A-1
state withholding tax
quarterly return
810-3-74-.01

(3)  Internet-based tax returns for state-administered county & municipal sales, use, rental, and lodgings taxes shall require the following information:

(Adopted through APA effective October 4, 2001)

810-1-6-.06. Electronic Payment Requirements and Determining Timely Payment.

(1)  The electronic return originator shall ensure that submissions of electronic payments for the taxes enumerated in Rule 810-1-6-.05 conform to the ACH record layout specified by the department as well as comply with all other requirements outlined by the department.
 
(2)  Tax payments initiated via the Internet for the taxes enumerated in Rule 810- 1-6-.05 shall be made in accordance with the rules of the department regarding electronic funds transfers. Timely payment of taxes via the Internet will be determined pursuant to department rules governing electronic funds transfers. (Adopted through APA effective October 4, 2001)

810-1-6-.07. Determining Timely Filing of Electronic Returns.

The due date for filing electronic returns for the taxes enumerated in Rule 810-1-6-.05 shall be the same due date applicable to the electronic payment of the taxes reported on the return. The date and time the taxpayer files the tax return with the electronic return originator shall be the date and time used to determine timely filing of an electronic return. (Adopted through APA effective October 4, 2001)

810-1-6-.08. Acceptance of Electronic Return Originators into Program and Revocation of Acceptance into the Program.

(1)  An electronic return originator desiring to qualify with the department to participate in the department's Internet-based electronic tax filing and payment program for the taxes enumerated in Rule 810-1-6-.05 shall complete and submit an application for qualification to the department using a form provided by the department.
 
(2)  The Application for Qualification (Form ST:EF-1)  shall require the following information from the electronic return originator:

(3)  Any of the following shall constitute cause for denial of the electronic return originator's application for qualification or revocation of the electronic return originator's qualification:

(Adopted through APA effective October 4, 2001)

810-1-6-.09.  Requirements for Filing Declaration.

(1)  The electronic return originator shall obtain the following from each taxpayer before the taxpayer files a return through the electronic return originator for the first time:

(2)  The electronic return originator shall assign each taxpayer a unique declaration control number.

(3)  The electronic return originator shall maintain records of the information required in paragraphs (1) and (2) for a period of not less than three years following the date that the taxpayer notifies the department and the electronic return originator that the taxpayer will cease filing and paying taxes by means of the electronic return originator's Internet-based service. The providing of the information enumerated in paragraph (1) to the electronic return originator by the taxpayer shall be presumed to be a valid signature of the person with the responsibility for filing tax returns with respect to each return filed via the program. The electronic transmission of one or more tax returns for a taxpayer by the electronic return originator shall constitute an attestation by the electronic return originator that it is in compliance with the requirements of paragraphs (1) and (2) of this rule. If deemed necessary by the department, the department may request, in writing, a printout of the information required to be maintained by the electronic return originator pursuant to paragraphs (1) and (2) and the electronic return originator shall provide the requested information within five working days of the request. In the event an electronic return originator ceases operations or elects to no longer participate in the program, the electronic return originator shall notify the department in writing no less than 60 days prior to the first day of the first reporting period that the electronic return originator will cease operations or discontinue participation in the program and transfer to the department a printout of all information maintained by the electronic return originator pursuant to paragraphs (1) and (2). Responsibility for maintaining the information required pursuant to paragraphs (1) and (2) may be transferred by the electronic return originator to another electronic return originator upon receiving written approval from the department.

(4)  A taxpayer who submits the information enumerated in paragraph (1) to the electronic return originator and is assigned a declaration control number pursuant to paragraph (2) shall file tax returns for the taxes enumerated in Rule 810-1-6-.05 utilizing the electronic return originator's Internet-based service until notification in writing to both the electronic return originator and the department. This notification shall be submitted no less than 30 days prior to the first day of the first reporting period to be filed by a means other than the electronic return originator's Internet-based service. (Adopted through APA effective October 4, 2001)

810-1-6-.10. Requirements for Submitting Tax Returns.

(1)  With respect to the taxes enumerated in Rule 810-1-6-.05, the electronic return originator shall electronically submit taxpayers' returns to the department in accordance with the record layouts and specifications issued by the department and shall ensure that its electronic submissions of taxpayers' returns conform to all data validations, edits, and cross-checks specified by the department.
 
(2)  The electronic return originator shall transmit all timely filed tax return data to the department by no later than twenty-four hours after the due date and time of the return. With respect to other than timely-filed tax returns, the electronic return originator shall transmit the tax return data to the department by no later than twenty-four hours after the date and time the tax return data is transmitted by the taxpayer to the electronic return originator. (Adopted through APA effective October 4, 2001)

810-1-6-.11. Requirement for Testing Prior to Department Approval.

The electronic return originator is required to obtain approval of its Internet-based tax return filing and payment system from the department before offering its services to taxpayers by submitting sample returns for the taxes enumerated in Rule 810-1-6-.05 to the department through the electronic return originator's system in accordance with guidelines provided by the department. The department will not accept tax returns received by the department through an Internet-based system which has not completed the testing required by the department and received the department's approval. (Adopted through APA effective October 4, 2001)

810-1-6-.12.  Taxes Required to be Filed Electronically.

(1) Section 40-23-7, Code of Alabama 1975, as amended, requires persons to report certain taxes on a form prescribed by the department and to pay the amount of taxes shown due.  Pursuant to Chapter 30 of Title 40, the department is authorized to accept tax returns reported on an electronic form filed electronically.
 
(2) Effective October 1, 2003 the following taxes are required to be filed electronically: State Sales, Use, Rental or Leasing, Lodgings, Utility Gross Receipts, Utility Service Use, Mobile Telecommunications Service, Contractor's Gross Receipts, Pharmaceutical Providers, Alabama Nursing Home Privilege and State Administered Local Sales, Use, Rental or Leasing, and Lodgings Taxes.
 
(3) Persons subject to the above listed taxes, who are unable to utilize the electronic filing system available over the Internet are required to utilize the department's Telephone Voice Response system to file these taxes.
 
(4) Certain circumstances may require a waiver from the Commissioner to file in another department approved manner.  These circumstances include:
 
(5) For the taxes listed above, the return will be considered timely filed when due for these taxes if filed electronically the last day before the return and payment are considered delinquent.  (Sections 40-2A-7(a)(5), 40-23-7, 40-23-31, 40-23-83, 40-30-2, 40-26B-5, 40-26B-24, 40-26-19, 40-21-105, and 11-3-11.3(f), Code of Alabama 1975) (Adopted through APA effective September 22, 2003)

810-1-6.13.  Requirements for Third-Party Bulk Filers.

(1)   The term “third-party bulk filer”, as used in this rule, means a person who is authorized to file and pay the taxes enumerated in Rule 810-1-6-.05 on behalf of multiple taxpayers. Such term, however, shall not include any person that provides payroll tax filing and payment services to one or more employers if the person has the contractual authority to access the employer’s funds for the purpose of making payroll tax payments to the Department on behalf of the employer.
 
(2)   A person shall not act as a third-party bulk filer unless the person is registered with the Department.
 
(3)   A person may apply to the Department, on a form prescribed by the Department, for registration as a third-party bulk filer under this rule, and the Department will approve the application if the properly completed application indicates that the person will comply with this rule. However, approval of the application does not grant the third-party bulk filer authority to act as an agent of the Department.
 
(4)   Persons approved as third-party bulk filers are required to:
(5)   Third-party bulk filers are prohibited from including any information in marketing materials, sales materials, or advertisements that could reasonably be understood to mean that the Department endorses or approves any third-party bulk filer.
 
(6)   If the Department determines that continued operation of the third-party bulk filer would present a risk of loss to its clients, the Department may revoke the registration of the third-party bulk filer and notify the clients of the revocation.
 
(7)   If the Department determines that the third-party bulk filer is not in compliance with this rule or other Department rules applicable to taxes enumerated in Rule 810-1-6-.05, the Department may revoke the third-party bulk filer’s registration. (Adopted through APA effective October 5, 2004)

810-6-1-.01.  Accountants.

Accountants use books, supplies and equipment which are taxable to them at the time of purchase. Accountants also subscribe to and receive tax reporting services which are not subject to tax, the property received in such tax reporting services being incidental to the service received. Note, however, that books and other publications sold by the tax service companies, which become the permanent property of the accountants, are subject to the tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982.)

810-6-1-.02.  Advertising Agencies.

Advertising agencies perform a service in formulating ideas and programs for advertising purposes. All materials purchased by an advertising agency including, but not limited to, brochures, drawing supplies, photographic supplies, and office supplies are consumed by the agency in performing the service and are subject to the tax at the time of purchase. The subsequent transfers of brochures and other materials to the agencies' clients are not classed as retail sales subject to the tax. Amended to conform to the decision of the Alabama Court of Civil Appeals in the case State of Alabama v. Douglas M. Harrison, d/b/a Douglas M. Harrison Advertising. (Adopted May 26, 1961, amended November 3, 1980, readopted through APA effective October 1, 1982.)

810-6-1-.03.  Air Bag Materials.

Materials, raw rubber, etc., withdrawn from stock by a tire manufacturer for use in manufacturing air bags or water bags to be used by the manufacturer are to be included in the gross proceeds of sales of the manufacturer. (Sections 40-23-1(a)(6) and 40-23- 1(a)(10)) (Issued January, 1951, readopted through APA effective October 1, 1982.)

810-6-1-.04.  Radio and Television Antennas and Television Satellite Dishes.

(1)  Sales at retail of radio and television antennas, television satellite dishes, and parts and attachments therefor are subject to sales or use tax, whichever is applicable.
(2)  Sales of radio and television antennas, television satellite dishes, and parts and attachments therefor, qualify for the reduced 1 ½ percent machine rate of sales or use tax when sold to radio and television stations or broadcasting companies for use in their business of producing and propagating radio or television signals. Kline Iron & Steel Corp. v. State of Alabama (Circuit Court of Montgomery County, Civil Action No.s CV-78-1250-P and CV-78-1251-P, April 26, 1979) (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982, amended October 3, 1987)

810-6-1-.05.  Auctioneer.

(1)  An auctioneer is engaged in a business which is subject to sales tax where as a course of business he makes sales at retail of his own tangible personal property or makes sales at retail of tangible personal property owned by others which is consigned to him for sale.

(2)  For the purpose of administering the sales tax law, it is deemed that the auctioneer will have the property on consignment when he receives payment for the property sold, issues his bill of sale or invoice, and pays the owner for the property sold with his check or other remittance. An auctioneer does not become liable for sales tax when selling tangible personal property not owned by him where the owner has commissioned the auctioneer to make such sales in the name of the owner and for him in the operation of a business licensed under the sales tax law.

(3)  The sales tax will apply upon the gross receipts derived from sales of all tangible personal property sold by persons regularly engaged in conducting auction sales, regardless of how such tangible personal property may have been acquired or by whom it may be owned, except the sale of tangible personal property which normally would not be subject to tax such as a wholesale sale. (Section 40-23-1(a)(6)) (Adopted March 9, 1961, amended June 2, 1961, amended August 16, 1974, readopted through APA effective October 1, 1982)

810-6-1-.06.  Automobile Painting.

(1)  The painting of automobiles is a service by the painter. Receipts from such painting are not taxable. The paint, supplies, etc., used or consumed by the painter are taxable when sold to him.
 
(2)  Refer to Rule entitled "Parts and Materials Used to Repair or Recondition Dealers' Automobiles" with reference to painting of automobiles of dealers, which automobiles are a part of the dealers' stock in trade for sale. (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.07.  Automobile Parts Installed for Customer.

(1)  The repairman sells at retail parts used in making repairs to the customer's automobile which are passed substantially intact (as purchased by him) to the customer. Illustrations of such parts are pistons, piston rings, fan belts, gears, batteries, and tires.
 
(2)  On the other hand, the repairman does not sell at retail, but consumes such materials and supplies as paints or lubricants furnished by him as an incident to rendering a service. These materials and supplies are purchased at retail by the repairman. (Doby v. State, 174 So.233, Merriwether v. State, 42 So. 2d, 465.)
 
(3)  Refer to the rule entitled "Parts and Materials Used to Repair or Recondition Dealers' Automobiles", with reference to parts used by repairmen on automobiles of dealers, which automobiles are part of the dealers' stock in trade for sale. (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.08.  Automobile Repair Shops.

(1)  Automobile repairmen must report and pay tax on all sales of automobile parts, accessories, tires, tubes, and batteries which are passed to the automobile owner for his use. When the repairman does not itemize parts, in his billing, any amount charged for labor or service and included in the lump sum billing is to be included in the taxable amount.
 
(2)  Supplies consumed by the repairman, such as paint, solder, upholstery tacks, also tools and machinery used, are taxable on their sale to or use by the repairman, with tax to be collected from the repairman by his supplier, or to be paid to this Department as use tax if the supplier is not licensed under the sales tax law or registered under the use tax law. Doby v. State, 174 So.233, Cody v. State, 177 So.146.
 
(3)  Refer to regulation 810-6-1-.116 entitled "Parts and Materials Used to Repair or Recondition Dealers' Automobiles" with reference to parts and materials used by repairmen on automobiles of dealers, which automobiles are a part of the dealer's stock in trade for sale. (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.08.01.  Automotive Supply Jobbers, Sales by.

(1)  Automotive supply jobbers shall comply with the provisions of Title 40 relative to maintaining the records necessary to determine the amount of sales or use taxes for which they are liable including the requirement that their records show separately the gross proceeds of wholesale sales and the gross proceeds of retail sales. Automotive supply jobbers shall also comply with the provisions of Sales and Use Tax Rule 810-6-4- .10 Keeping Records of Sales for Resale. (Sections 40-2A-7(a), 40-23-9, and 40-23-83)
 
(2)  Automotive supply jobbers shall collect sales or use tax on sales to all customers who do not have a valid sales tax license number or certificate of exemption number. Invoices which do not show the purchaser's name, but are made out to "cash" shall always be considered to be retail sales invoices. (Sections 40-23-26 and 40-23-67)
 
(3)  If the purchaser has a sales tax license number, the jobber may sell to the purchaser tax exempt, provided the purchaser is buying the items for resale. Even though a purchaser has a sales tax license number, the jobber is not relieved of the responsibility of collecting tax on the items which the purchaser uses. It is the jobber's responsibility to know the nature of the customer's business so that the jobber will know when to collect tax on items purchased for use.
 
(4)  Sales of automotive parts to licensed automobile dealers with repair shops or service departments are at wholesale, tax-free. Sales of automotive parts to licensed automobile dealers without repair shops or service departments are taxable unless the dealer qualifies for the exemption contained in Section 40-23-1(a)(9)k for parts purchased for use in repairing or reconditioning automobiles that are a part of the dealer's stock of goods for sale. See Rule 810-6-1-.116 Parts and Materials Used to Repair or Recondition Dealers' Automobiles.
 
(5)  Sales of materials to licensed automobile dealers are taxable unless the dealer qualifies for the exemption contained in Section 40-23-1(a)(9)k for materials purchased for use in repairing or reconditioning automobiles that are a part of the dealer's stock of goods for sale. See Rule 810-6-1-.116 Parts and Materials Used to Repair or Recondition Dealers' Automobiles. The term "materials" as used in this section includes paint, solder, flux, body lead, wax, underseal, and tire blacking which become a part of the reconditioned automobile. The term "materials" as used in this section does not include items which do not become a part of the reconditioned automobile such as sandpaper, thinner used for cleaning purposes, masking tape, rags, brushes, tools, and soap.
 
(6)  The automotive supply jobber shall collect sales or use tax on sales of supplies unless the customer is purchasing the supplies for resale. Supplies include but are not limited to cleaning compounds, chamois, rags, drill bits, shop files, welding gases and supplies, metal bars and rods, masking tape, fire extinguisher fluid, hydraulic jack oil, friction tape, signs, white sidewall cleaner, brooms, mops, window cleaner, rivets, tacks, cotter pins, repair parts for shop equipment, degreaser, bolts, nuts, washers, screws, oil measures, wiping cloths, drop light cords, auto body soap, hand soap, vixen files, light bulbs, rubbing compound, floor oil absorbent compounds, brushes of all kinds, tar remover, and polishing cloths.
 
(7)  The automotive supply jobber shall collect sales or use tax on sales of power tools, heavy tools, and equipment and replacement parts unless the customer is purchasing the tools, equipment, or replacement parts for resale. Power tools, heavy tools, and equipment and replacement parts include but are not limited to floor jacks, air compressors and parts, washing equipment and parts, painting equipment and parts, electric sanders, air hose and chucks, drop cords, and welding equipment and parts.
 
(8)  The automotive supply jobber shall collect sales or use tax on sales of hand tools unless the customer is purchasing the tools, equipment, or replacement parts for resale. Sales of hand tools to licensed resellers who do not stock such tools for resale are taxable.
 
(9)  The automotive supply jobber shall collect sales or use tax on sales to automobile painters or repair shops of items which lose their identity, such as paint, solder, and solvents.
 
(10)  The measure of sales or use tax due on taxable sales of any new, used, or rebuilt automotive part, except batteries, is the net trade difference, that is the selling price less credit for the used part taken in trade. The measure of sales or use tax due on taxable sales of batteries is the total sales price of the battery without any deduction or credit for the value of the used part taken in trade (See Rules 810-6-1-.12 and 810-6-1- .180 for definitions of automotive vehicle and trailer). (Section 40-23-2(1))
 
(11)  When automotive supply jobbers perform labor in connection with a sale of repair parts, invoices covering the transaction shall clearly show the amounts charged for each part and amounts charged for labor. Where invoices do not show parts and labor separately, sales tax is due on the total amount of the invoice.
 
(12)  When automotive supply jobbers provide tire recapping service to a customer, they shall collect sales or use tax from the customer measured by the total amount billed for the recapping service. Materials used by the automotive supply jobber in performing the recapping service are not taxable when purchased or withdrawn by the jobber. The machines used directly in the recapping process by the automotive supply jobber are taxable at the reduced machine rate when purchased or withdrawn by the jobber. Machines and equipment not used directly in the recapping process and all materials and supplies which do not become a component part of the finished product are taxable at the general rate when purchased or withdrawn by the jobber. (Adopted through APA effective March 10, 1998)

10-6-1-.09.  Automobile Repair Shops and Garages.

(1)  Sales of tangible personal property, such as automobile parts, automobile accessories, tires, batteries, etc., by automobile repair shops and garages to purchasers for use and not for resale, either separately or in connection with automobile repair work, are subject to the sales tax. Charges for labor and service performed in connection with such repair work or installations are to be included in the measure of the tax, if not separately billed to customers.
 
(2)  When labor and service are separately billed from the sale of parts, etc., the tax does not apply to the labor and service rendered.
 
(3)  Books must be kept in such a manner as to clearly reflect the separate sources of receipts. This tax will apply to the total gross receipts of any automobile repairers who fail to make such separation of charges on bills tendered to their customers. Materials and supplies used by automobile repair shops and garages in rendering services but which are not resold as merchandise are subject to sales tax when purchased by repairmen from the supply dealer. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.10.  Automobile Seat Covers, Top Linings, Vinyl Tops.

(1)  Upholstery repairs performed on automobile seats, top linings, and vinyl tops will be considered as repair jobs. The upholsterer must collect and report sales tax on his sales of items which do not lose their identity, such as cloth, leather, vinyl, foam rubber, and springs. If he makes a separate agreement to sell the materials and to perform the labor and service required, the separate amount received for labor and/or service will not be subject to the tax.
 
(2)  Materials which pass to the upholsterer's customer but which lose their identity when used by the upholsterer or which are inconsequential in amount (such as tacks, glue, thread, binding twine, webbing, gimp tape, welting, padding, stain, and varnish) are considered to have been used or consumed by the upholsterer and are taxable at the time of purchase by him.
 
(3)  Materials which are used or consumed by the upholsterer and which do not pass on to the customer are supplies and taxable when purchased by the upholsterer.
 
(4)  Any custom items that are fabricated and sold, with or without installation, such as, but not limited to, auto seat slip covers, boat covers, and car covers will be subject to sales tax on the full sales price without any deduction for labor or service. If stated separately a reasonable installation fee may be excluded from the measure of the tax. See regulation 810-6-1-.182 entitled "Upholstery Shops". (Adopted March 9, 1961, amended November 1, 1963, amended November 3, 1980, amended February 10, 1982, readopted through APA effective October 1, 1982)

810-6-1-.12.  Automotive Vehicles.

(1)  The term "automotive vehicles" as used in the Sales and Use Tax Laws shall mean and include, but shall not be limited to automobiles, trucks, buses, tractors (crawler and pneumatic tired types), motorcycles, motorscooters, automotive industrial trucks, Ross Carriers, lift trucks, locomotive cranes, airplanes, tugs, motorboats with built-in motors, boats with outboard type motors attached thereto by attachments intended to be permanent rather than readily removable and which motors are controlled with remote controls built on or into the hull of said boat.
 
(2)  In addition to the vehicles listed above, Sections 40-23-1(a)12 and 40-23- 60(12), Code of Alabama 1975, defined "automotive vehicles" to include power shovels, drag lines, crawler cranes, ditchers and similar machines which are self- propelled, but which are not primarily used as instruments of conveyance. Equipment of this class is to be considered as falling within the automotive vehicle class treated for sales or use tax purposes the same as automobiles, trucks, buses, or tractors;  provided, however, self- propelled machines which qualify as farm machines (see Rule 810-6-4-.07 Farm Machines, Machinery, and Equipment) or mining machines (see Rule 810-6-2-.43 Machines Used in Mining, Quarrying, Manufacturing, Compounding, and Processing) are taxed at the rate of tax prescribed for equipment in those respective classes. Sections 40-23-1(a)12, 40- 23-60(12), 40-23-2(4), and 40-23-61(c)) (Adopted March 9, 1961, amended November 14, 1966, readopted through APA effective October 1, 1982, amended December 6, 1990)

810-6-1-.12.01.  Courtesy Deliveries of Automotive Vehicles by Alabama Dealers for Out-of-State Dealers.

(1)  A courtesy delivery for an out-of-state automobile dealer occurs when the out-of-state dealer sells an automobile to a customer and arranges for the vehicle to be shipped to an in-state dealer for delivery to a designated person in Alabama. The in-state dealer performs the customary dealer preparation on the vehicle and receives reimbursement for these services. The out-of-state dealer, not the in-state dealer, invoices the customer for the sale of the vehicle.
 
(2)  An Alabama dealer who makes a courtesy delivery of an automotive vehicle in Alabama for an out-of-state dealer is not the seller of the vehicle and would not be liable for Alabama sales tax on the transaction. Such courtesy deliveries should not be included in the measure of sales tax reported by the Alabama dealer.
 
(3)  The out-of-state seller for whom a courtesy delivery is made by an Alabama dealer is the seller of the automotive vehicle.
 
(4)  The out-of-state seller referenced in (3) above is not liable to collect and remit sellers use tax on sales of automotive vehicles required to be registered or licensed with the judge of probate of any county in Alabama. Instead, the purchaser of the automotive vehicle must remit the tax levied in Section 40-23-102, Code of Alabama 1975, to the county licensing official in accordance with Section 40-23-104. (Sections 40-23-102 and 40-23-104) (Adopted through APA effective July 7, 1989, amended November 5, 1996)

810-6-1-.13.  Awnings.

(1)  Generally an awning attached to a building as a permanent fixture is a part of the building and comes within the provisions of the building materials provision of Section 40-23-1(a)(10).
 
(2)  It is the ruling of the Department that lightly attached cloth awnings do not fall into the building materials category and are to be taxed at the sale thereof from the awning dealer to the property owner. (Ruling by Commissioner Edwards, July 19, 1951, readopted through APA effective October 1, 1982)

810-6-1-.14.  Awnings, Metal.

(1)  A metal or other permanent type of awning attached to a building with screws or bolts or otherwise securely attached becomes a part of the building. The materials from which such awnings are made come within the building materials class. When the materials are purchased prefabricated, tax is due to the supplier by the person making the installation, or direct to the State as use tax if purchased out-of- state from a seller not registered with the Department under the Use Tax Law.
 
(2)  In recent court decisions the courts of this State have held that the manufacturing contractor provision of the Sales Tax Law does not apply when a contractor manufactures an item to specifications for a special job. To come within Section 40-23- 1(a)(12)b the item manufactured must be standard, that is, it can be used on any job. See: Rule 810-6-1-.29 Materials Manufactured by Contractors. (Amended August 16, 1974, readopted through APA effective October 1, 1982)

810-6-1-.22.  Barter, Exchange, Trade-In.

(1)  Except as outlined in paragraph (2), the money value allowed for property received and exchanged for other property constitutes payment or partial payment of the purchase price and must be included in the measure of the sales or use tax.
 
(2)  Exceptions to the general rule are:
(3)  Property received as a "trade-in" or received in barter or exchange for other property is subject to tax, when resold, at the full resale price. (Amended June 12, 1978, amended August 8, 1982, readopted through APA effective October 1, 1982, amended April 3, 1987, amended July 9, 1998)

810-6-1-.23.  Beer Tax.

Whether billed separately to the purchaser or included in a lump sum selling price; state, county, and municipal excise taxes on beer may not be excluded from the measure of sales or use tax. (Sections 40-23-1(a)(6) and 40-23-1(a)(8)) (Adopted August 15, 1974, amended October 29, 1976, amended June 12, 1978, amended August 10, 1982, readopted through APA effective October 1, 1982, amended April 3, 1987, amended May 22, 1993)

810-6-1-.24.  Bingo.

(1)  A bingo parlor is defined as a place of amusement; therefore, the gross receipts derived therefrom are subject to sales tax. State of Alabama v. Roosevelt Crayton, d/b/a Jody's Sporting Goods, 344 So. 2d 771 (Ala. Civ. App.), cert. denied, 344 So. 2d 775 (Ala. 1977).
 
(2)  Effective June 1, 1990, Section 40-23-4(a)(43), Code of Alabama 1975, exempts certain bingo games and operations from the sales tax levied in Section 40-23- 2(2). This exemption, however, does not apply to any gross receipts from sales of tangible personal property such as concessions, novelties, food, or beverages.
 
(3)  The exemption referenced in paragraph (2) above only applies in those counties which have duly enacted constitutional amendments legalizing bingo games and operations. Said exemption is further limited to bingo games and operations conducted by organizations which have qualified for exemption under the provisions of 26 USC Section 501(c)(3), (4), (7), (8), (10), or (19) or which are defined in 26 USC Section 501(d).
 
(4)  To qualify for the exemption contained in Section 40-23-4(a)(43) an organization must comply with the distribution requirements of applicable local laws including any threshold limits with respect to charitable donations from bingo receipts.
 
(5)  Organizations claiming to qualify for the exemption referenced in paragraph (2) above must provide the Revenue Department with documented evidence that they qualify for exemption with the Internal Revenue Service and that they are in compliance with the distribution requirements of applicable local laws. (Adopted June 12, 1978, readopted through APA effective October 1, 1982, amended December 6, 1990)

810-6-1-.27.  Building Materials.

(1)  The courts of this state and other states have generally held that contractors and builders do not sell the building materials they use and that sales to them are taxable under sales and use tax laws. The courts have stated:
(2)  Building materials when purchased by builders, contractors or landowners for use in adding to, repairing, or altering real property are subject to either the sales or use tax at the time of purchase by such builder, contractor, or landowner. Building materials as used in the sales or use tax laws includes any material used in making repairs, alterations, or additions to real property. "Builders", "contractors", and "landowners", mean and include any person, firm, association, or corporation making repairs, alterations or additions to real property. The term "building materials" includes such tangible personal property as lumber, timber, nails, screws, bolts, structural steel, reinforcing steel, cement, lime, sand, gravel, slag, stone, telephone poles, fencing, wire, electric cable, brick, tile, glass, plumbing supplies, plumbing fixtures, pipe, pipe fittings, electrical fixtures, built-in cabinets, sheetmetal, paint, roofing materials, road building materials, sprinkler systems, air conditioning systems, built-in fans, heating systems, flooring, floor furnaces, crane ways, crossties, railroad rails, railroad track accessories, tanks, builders hardware, doors, door frames, windows, window frames, water meters, gas meters, well pumps and any and all other tangible personal property which becomes a part of real property.
 
(3)  None of the kinds of property designated as "building material" is to be classified as machines or parts or attachments for machines except such items as can be identified at the time of purchase as a part or an attachment for a machine used in manufacturing, designed and manufactured for such use, customarily so used, and necessary to the operation of the completed machine. Such bulk items as lumber, random or stock length structural steel, brick, paint, and common nails do not come within the classification. Such items as prefabricated processing tanks, steam boilers, and steel when purchased prefabricated to special design for a machine part do come within the machine rate. When the landowner or contractor purchases the materials from which he may make a boiler or tank, he must pay tax to the seller or direct to the state, as the case may be. (Lone Star Cement Corporation v. State, 175 So. 399; Layne Central Company v. Curry, 8 So.2d 829; State v. Wilputte Coke-Oven Corporation, 37 So.2d 197). (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.28.  Building Materials Defined.

(1)  The term "building materials", as used in the Alabama sales and use tax laws, means all tangible personal property, including any device or appliance used by builders, contractors, or landowners in making improvements, additions, alterations or repair to real property in such a way that such tangible personal property becomes identified with a part of realty.
 
(2)  A device or appliance becomes a fixture and a part of the real property to which it is connected when it is built into or is attached to a structure in such a way that its removal would substantially damage or deface such structure.
 
(3)  Where the removal of the device or appliance would not substantially damage or deface the structure to which it is connected the following factors shall be considered:
(4)  This rule is not intended to apply to cook stoves, refrigerators, washing machines, and portable heaters, acquired for the personal use of householders or tenants which may be removed without material damage to the buildings in which they are used. (Section 40-23-1(a)(10))   (Readopted through APA effective October 1, 1982)

810-6-1-.29.  Building Materials Manufactured by Contractors.

(1)  Section 40-23-1(b) provides that the use of building materials in the performance of a contract by a person who manufactures them is equivalent to making a retail sale of such materials and that such use must be reported by such person as subject to sales tax to be measured by the reasonable and fair market value at the time and place where used.
 
(2)  Where the contractor-manufacturer also sells the same kind of materials to others for installation by them, the reasonable and fair market value would be the same as the sales price. Where no such sales are made by the contractor-manufacturer, the sales price of the same kind of materials when sold by other manufacturers during the same period and under the same circumstances would be the reasonable and fair market value.
 
(3)  Where no sales price can be found to be used as the measure of the tax, the following formula should be used:
(4)  Section 40-23-1(b) applies to fabricated or manufactured items of tangible personal property permanently attached to real property when the components are prefabricated into a standard item at the shop, plant, or mill of the manufacturing contractor. This subsection does not apply when the materials are cut and fitted on the job site for attachment as construction progresses or to items prefabricated to job specifications at the shop, plant, or mill of the manufacturing contractor.
 
(5)  The courts of this State have held that the manufacturing contractor provision of the Sales Tax Law does not apply when a contractor manufactures an item to specifications for a special job. To come within Section 40-23-1(b), the item manufactured must be standard, that is, it can be used on any job.
 
(6)  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. (Section 40-23-1(b)) (Amended August 16, 1974, readopted through APA effective October 1, 1982, amended July 7, 1989)

810-6-1-.30.  Carpeting and Other Floor Coverings.

1) The term "floor coverings" as used in this rule shall include carpet, carpet tile, rugs, mats, carpet padding, linoleum and vinyl roll floor covering, linoleum tile, vinyl tile, and similar materials. Floor coverings may be installed as the initial finished floor covering in new construction or as an addition to, or a replacement for, an existing floor covering. Floor coverings may be installed in a manner so as to become a permanent attachment to realty or may be laid on finished floors in a manner that it remains tangible personal property.
 
(2) Persons who contract to furnish and install floor coverings, which are shaped to fit a particular room or area and which are attached to the supporting floor with cement, tacks, or by some other method making a permanent attachment to real property, are contractors and the floor coverings they use in performing the contract are considered to be building materials. Sales of floor coverings to persons who use them in performing contracts to make additions or improvements to realty are retail sales subject to sales or use tax. See Rule 810-6-1-.46 entitled Contractor's Liability (Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975)
 
(3) Persons who are both selling floor coverings which they do not attach to realty as well as contracting with customers to furnish and install floor coverings that become a part of realty shall purchase all floor coverings at wholesale and thereafter collect and remit sales or use tax to the Department of Revenue on their retail sales of floor coverings which they do not attach to realty for the customer and compute and pay sales tax to the Department of Revenue on the floor coverings which they withdraw from inventory for use in performing "furnish and install" contracts. State and local sales taxes are due on withdrawals at the time and place of the withdrawal of the materials from inventory and shall be computed on the cost of the materials to the person making the withdrawal. Sales tax is due on withdrawals from instate inventory regardless of whether the floor covering materials are withdrawn for use in performing contracts inside or outside Alabama. The sales taxes applicable to withdrawals are those taxes applicable in the jurisdiction where the withdrawal occurs not where the materials are attached to realty. See Rule 810-6-1-.56 entitled Dual Business and Rule 810-6-1-.196 entitled Withdrawals from Inventory. (Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975)
 
(4) Sales of floor coverings to the federal government, the State of Alabama, counties and municipalities of the State of Alabama, their instrumentalities, or other exempt entities are not taxable when the floor covering sold to the exempt entity is installed by the exempt entity or by someone other than the seller who is hired by the exempt entity. See Rule 810-6-1-.46 entitled Contractor's Liability regarding the application of sales or use tax to floor coverings both sold and installed by the seller. (Sections 40-23-4(a)(11), 40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2), 40-23-62(13), and 40-23-62(16), Code of Alabama 1975)
 
5) Sales of floor coverings which are not attached to realty but which are simply laid on finished floors are retail sales to the building owner or occupant. The seller shall collect sales or use tax on retail sales to nonexempt entities measured by the total gross proceeds of the sale without any deduction for services incidental to the sale such as trimming, joining, binding, or delivering. (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-26, 40-23-60(10), and 40-23-67, Code of Alabama 1975)
 
(6) Floor covering samples sold to dealers to be used by the dealer for demonstration or display purposes, and not for resale in the regular course of business, are retail sales subject to sales or use tax. All samples bound in sample books and all samples having holes with metal fasteners inserted shall be considered "not purchased for resale" by the dealer unless the dealer is in the business of reselling floor covering samples. Dealers who do purchase floor covering samples for resale in the regular course of business may purchase the samples tax-free and use them for demonstration or display purposes prior to selling them. (Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975) (Adopted May 26, 1961, amended June 12, 1978, readopted through APA effective October 1, 1982, amended December 28, 1998, amended March 27, 2001)

810-6-1-.31.  Carrying Charges, Finance Charges.

(1)  When the seller has an established price for the goods he sells, that price is the amount to be included in gross proceeds of sales even though the established price may include an amount to cover a carrying charge.
 
(2)  When the seller has an established cash price, and when selling on an extended payment basis adds a separate charge for financing, the additional charge is not included in the gross proceeds of sales.
 
(3)  In no event may finance or carrying charges be deducted from gross proceeds of sales when not shown as a separate item in the seller's billing to his customer. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.32.  Casings Sold to Meat Processors.

The terms "wholesale sale" or "sale at wholesale" shall include 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 such casings may be recovered for reuse. (Section 40-23-1(a)(9)h) (Adopted September 26, 1966, readopted through APA effective October 1, 1982)

810-6-1-.33.  Casual Sales.

(1)  Other than the exception noted in (3) below, casual or isolated sales by persons not engaged in the business of selling are not required to be reported to the Department of Revenue by the provisions of the Sales Tax Law.
 
(2)  Other than the exception noted in (3) below, tangible personal property purchased outside Alabama from a person not engaged in the business of selling is not subject to use tax when brought into this state for use, storage, or consumption.
 
(3)  Casual sales of automotive vehicles, motorboats, truck trailers, trailers, semitrailers, travel trailers, and manufactured homes are subject to sales or use taxes pursuant to the provisions of Section 40-23-100, et. seq., Code of Alabama 1975. See Sales and Use Tax Rule 810-6-5-.11.05. (Readopted through APA effective October 1, 1982, amended February 23, 1988, amended October 30, 1993, amended October 4, 1994)

810-6-1-.33.01.  Application of Casual Sales Tax and Use Tax to Automotive Vehicles, Motorboats, Truck Trailers, Trailers, Semitrailers, Travel Trailers, and Manufactured Homes Purchased from the U.S. Government, the State of Alabama, or Counties or Incorporated Municipalities of the State of Alabama.

(1)  The definition of the term "manufactured home" set forth in Code of Alabama 1975, Section 40-12-255(n) is incorporated by reference herein.
 
(2)  The definitions of terms set forth in Code of Alabama 1975, Section 40-23- 100, are incorporated by reference herein.
 
(3)  The casual sales taxes and the use taxes levied in Sections 40-23-101(a) and 40-23-102(a), respectively, are applicable to automotive vehicles, motorboats, truck trailers, trailers, semitrailers, and travel trailers purchased directly from the U.S. Government, the State of Alabama, or counties and incorporated municipalities of the State of Alabama. These taxes must be collected from the purchaser by the county licensing official before the automotive vehicle, motorboat, or trailer is registered or licensed. (Sections 40-23-101(a), 40-23-102(a), and 40-23-104)
 
(4)  The casual sales taxes and the use taxes levied in Sections 40-23-101(b) and 40-23-102(b), respectively, are applicable to manufactured homes purchased directly from the U.S. Government, the State of Alabama, or counties and incorporated municipalities of the State of Alabama. These taxes must be collected from the purchaser by the county licensing official before the decal, which is provided for in Section 40-7-1, is issued to evidence payment of ad valorem tax due and before any homestead exemption is granted for a manufactured home. In those instances where an annual registration fee is due in lieu of ad valorem tax, the county licensing official must collect any sales or use tax due before the decal, which is provided for in Section 40-12-255(a), is issued to evidence payment of the annual registration fee. (Sections 40-23-101(b), 40-23-102(b), and 40-23-104)
 
(5)  Manufactured homes which constitute real property are not subject to the taxes levied in Sections 40-23-101(b) and 40-23-102(b) when purchased from the U.S. Government, the State of Alabama, counties or incorporated municipalities of the State of Alabama, or anyone else. (Sections 40-23-101, 40-23-102 and 40-23-104) (Adopted through APA effective February 19, 1993, amended October 4, 1994)

810-6-1-.33.02.  State Casual Sales and Use Tax Returns.

(1)  The term "Department" as used in this regulation shall mean the Department of Revenue of the State of Alabama.
 
(2)  The definition of the term "licensing official" contained in Code of Alabama 1975, Section 40-23-100(2) is incorporated by reference herein.
 
(3)  The term "state casual sales and use tax" as used in this regulation shall mean the state taxes levied in Sections 40-23-101 and 40-23-102, Code of Alabama 1975.
 
(4)  State casual sales and use tax collected by licensing officials shall be remitted to the Department in monthly installments on or before the twentieth day of the month next succeeding the month in which the tax is collected. Every licensing official liable to collect and remit the state casual sales and use tax shall prepare and forward to the Department, within the time prescribed by law, a state casual sales and use tax return for each calendar month using forms furnished by the Department and shall pay to the Department the amount of tax shown to be due. Casual Sales and Use Tax returns shall require the following information:

(Adopted through APA effective April 1, 1996)

810-6-1-.34.  Caterers.

(1)  The total gross proceeds of sales by caterers of food and drinks are subject to sales tax without any deduction because of the cost of preparing and serving food and drinks and without any deduction because of the cost of the ingredients thereof.
 
(2)  There is not, however, any sales tax due with respect to the receipts of a caterer from preparing and serving food and drinks the ingredients of which are not furnished by him. (Readopted through APA effective October 1, 1982)

810-6-1-.35.  Chemicals Used in Treating Crude Oil.

Subject to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled Ingredient or Component of Product Manufactured or Compounded for Sale, chemicals used in treating crude oil which become an integral part thereof and are sold therewith, are purchased at wholesale, tax free, for such purposes. (Sections 40-23-1(a)(9)b and 40-23- 60(4)b) (Readopted through APA effective October 1, 1982, amended December 10, 1997)

810-6-1-.36.  Commercial Fish Feed.

(1)  Sales 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 are exempt from the sales and use taxes. (Section 40-23-4(a)(21))
 
(2)  The gross proceeds of the sales of all antibiotics, hormones, and hormone preparations, drugs, medicines, and other medications including serums and vaccines, vitamins, minerals, or other nutrients for use in the production and growing of fish by whomsoever sold are exempt from sales and use taxes. (Sections 40- 23-4(a)(29) and 40-23-62(29)) (Adopted December 15, 1969, amended March 18, 1970, readopted through APA effective October 1, 1982, amended April 3, 1987, amended July 9, 1998)

810-6-1-.37.  Computer Hardware and Software.

(1)  Computers and related equipment, also known as computer hardware, consist of components and accessories that make up the physical computer assembly. The retail sale of computer hardware is subject to sales or use tax. The rental of computer hardware is subject to rental tax.
 
(2)  The term "computer software" as used in this regulation shall mean a sequence of automatic data-processing equipment instructions necessary to solve a problem, and includes both system and application programs and subdivisions, such as assemblers, compilers, routines, generators and utilities.
 
(3)  The term "canned computer software" as used in this regulation shall mean software programs prepared, held, or existing for general or repeated use, including software programs developed in-house and subsequently held or offered for sale or lease. Canned computer software includes all software, except custom software programming, regardless of its function and regardless of whether it is transferred to the purchaser in physical form, via telephone lines, or by another alternative form of transmission.
 
(4)  Canned computer software is tangible personal property; and, on and after March 1, 1997, the retail sale or rental of canned computer software is subject to the sales, use, or rental tax, whether such transaction was affected by a transfer of title, or of possession or of both, or a license to use or consume. Unless specifically stated otherwise, the licensing of canned computer software is considered a retail sale, and not a rental, and is subject to sales or use tax. The measure of tax upon which the sales, use, or rental tax is to be computed is the total amount received from the sale or rental of canned computer software to the customer. Wal-Mart Stores, Inc. v. City of Mobile and County of Mobile, Alabama Supreme Court, decided September 13, 1996, substitute opinion released November 27, 1996.
 
(5)  The term "custom software programming" as used in this regulation shall mean software programs created specifically for one user and prepared to the specialorder of that user. The term "custom software programming" also includes programs that contain pre-existing routines, utilities, or other program components that are integrated in a unique way to the specifications of a specific purchaser. Custom software programming also includes those services represented by separately stated charges for modifications to a canned computer software program when such modifications are prepared to the special order of the customer. Modification to a canned computer software program to meet the customer's needs is custom software programming only to the extent of the modification. Custom software programming is not subject to tax regardless of the manner or medium of transfer to the customer since the charge for the custom software programming is a charge for professional services and the manner or medium of transfer is considered incidental to the sale of the service.
 
(6)  The provider of custom software programming would owe sales or use tax on the cost of the tangible medium for transferring the custom software programming to the customer. Such tangible mediums would include tapes, cards, discs, compact discs, and any other tangible personal property used in transferring custom software programming to the customer.
 
(7)  The term "software maintenance agreement/contract" as used in this regulation shall mean contracts sold in connection with the sale or rental of canned software and can include any, all, or a combination of the following: technical consultation (support) services either by telephone or on-site visits, corrections of errors or malfunctions (bugs) in the canned software, provisions for enhancements (software upgrades) to the canned software, revisions to operating manuals for the canned software, and training services. If the maintenance contract is required as a condition of the sale or rental of canned software, the gross sales price or gross rental price is subject to tax whether or not the charge for the maintenance contract is separately stated from the charge for the canned software. If the maintenance contract is optional to the purchaser of the canned software, then only the portion of the contract fee representing enhancements or upgrades and new operating manuals is subject to tax provided the fees for consultation or support services, error corrections, and training services are separately stated and such separate statement is not used as a means of avoiding imposition of tax upon the actual gross receipts from the furnishing of upgrades or manuals. If these fees are not separately stated, the entire charge for the maintenance contract is subject to tax. If the maintenance contract is optional to the lessee of the canned software, the rental tax will not apply to the gross receipts derived therefrom.
 
(8)  Maintenance contracts sold in connection with custom software programming, whether required or optional, or whether or not separately stated, are not subject to tax. The provider of the custom software programming is the consumer of any tangible personal property used in producing operating manuals and would owe sales or use tax on the cost of these items. Section 40-23-2(1)) (Adopted July 2, 1975, amended June 12, 1978, readopted through APA effective October 1, 1982, amended January 29, 1990, amended February 21, 1997, amended August 21, 1997)

810-6-1-.38.  Consigned Property.

Sellers of property held on consignment are required to include the gross proceeds of sales of such property in sales tax returns filed under the Sales Tax Law. (Section 40-23- 1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.45.  Contractors Furnishing and Erecting Building Materials Under Contract With the United States.

(1) Sections 40-23-4(a)(17) and 40-23-62(2) specifically exempt the United States government from paying sales or use tax on its purchases of tangible personal property. These exemptions, however, do not apply to purchases by a contractor where the contractor has a construction contract with the United States government to furnish all materials and labor for use in the performance of the contract. The contractor is the consumer of all the materials which the contractor purchases and uses in the performance of the construction contract and which become a part of real property. The United States Supreme Court in State of Alabama v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43 (1941), and in Curry v. U.S., et al., 314 U.S. 1, 62 S.Ct. 48, held that the Alabama sales and use taxes on building materials used by building contractors for the United States government were due by such contractors even though the costs of such taxes were passed on to the United States government. The court held that these taxes were levied on the contractors and not on the United States. On and after October 1, 2000, however, a contractor’s purchases which do not qualify for the exemptions in Sections 40-23-4(a)(17) and 40-23-62(2) may qualify for the new sales and use tax exemption outlined in paragraph (2) below. (Sections 40 23 1(a)(10) and 40-23-60(5))
 
(2) On and after October 1, 2000, the sale to, or the storage, use, or consumption by, any contractor or subcontractor of any tangible personal property to be incorporated into realty pursuant to a contract awarded prior to July 1, 2004, with the United States government is exempt from all state, county, and municipal sales and use taxes provided the contractor or subcontractor has complied with Rule 810 6 3 .77 entitled Exemption of Certain Purchases by Contractors and Subcontractors in conjunction with Construction Contracts with Certain Governmental Entities, Public Corporations, and Educational Institutions. (Section 40-9-33)
 
(3) On and after July 1, 2004, the sale to, or the storage, use, or consumption by, any contractor or subcontractor of any tangible personal property to be incorporated into realty pursuant to a contract with the United States government is subject to all state, county, and municipal sales and use taxes for any contract awarded, or any portion of a contract which is revised, renegotiated, or otherwise altered, on and after July 1, 2004, to the extent that such revision, renegotiation, or alteration requires the purchase of additional tangible personal property. Items purchased after June 30, 2004, pursuant to a contract awarded prior to July 1, 2004, will continue to be exempt for the remainder of the contract to the extent that any post June 30, 2004, revision or amendment does not require the purchase of additional tangible personal property. (Sections 40-2A-7(a(5), 40-23-1(a)(10), 40-23-4(a)(17), 40-23-31, 40-23-60(5), 40-23-62(2), 40-23-83, and 40-9-33, Code of Alabama 1975, Act No. 2000-684) (Readopted through APA effective October 1, 1982, amended March 27, 2001, amended June 10, 2005)

810-6-1-.46.  Contractor's

Liability.

 
(1) Contractors or builders must pay either to the seller or directly to the Department of Revenue sales or use tax on the following:

(a) All of the materials, equipment, tools, and supplies which they use or consume in the operation of their business and

(b) All building materials attached by them to real property except property qualifying for a specific exemption. See Rule 810 6 1 .27 entitled Building Materials.

(2) Prior to October 1, 2000, contractors or builders may not claim any immunity or exemption from the sales or use tax laws on account of property purchased and used in connection with contracts with the federal, state, county, or city governments. (Lone Star Cement Corporation v. State, Curry v. U.S. et al., 314 U.S. 1, 62 S.Ct. 48 and State v. King & Boozer, 314 U.S. 1, 62 S.Ct. 43 (1941)). (Sections 40 23 1(a)(10) and 40-23-60(5))

(3) On and after October 1, 2000, the sale to, or the storage, use, or consumption by, any contractor or subcontractor of any tangible personal property to be incorporated into realty pursuant to a contract awarded prior to July 1, 2004, with the United States government, the State of Alabama, and counties and incorporated municipalities of the State of Alabama is exempt from all state, county, and municipal sales and use taxes provided the contractor or subcontractor has complied with Rule 810 6 3 .77 entitled Exemption of Certain Purchases by Contractors and Subcontractors in conjunction with Construction Contracts with Certain Governmental Entities, Public Corporations, and Educational Institutions. (Section 40-9-33)

(4) In accordance with Act No. 2004-638, which repeals Section 40 9 33, the sale to, or the storage, use, or consumption by, any contractor or subcontractor of any tangible personal property to be incorporated into realty pursuant to a contract with the United States government, the State of Alabama, counties and incorporated municipalities of the State of Alabama, corporations created for public purposes pursuant to a provision of the Constitution of Alabama of 1901, or a general or local law, or any educational institution of the United States government, the State of Alabama, or a county or incorporated municipality of the State of Alabama is subject to all state, county, and municipal sales and use taxes for any contract awarded on and after July 1, 2004, or any portion of a contract which is revised, renegotiated, or otherwise altered, to the extent that such revision, renegotiation, or alteration requires the purchase of additional tangible personal property. Items purchased after June 30, 2004, pursuant to a contract awarded prior to July 1, 2004, will continue to be exempt for the remainder of the contract to the extent that any post June 30, 2004, revision or amendment does not require the purchase of additional tangible personal property. (Sections 40-2A-7(a)(5), 40-23-1(a)(10), 40-23-31, 40-23-60(5) 40-23-83, and 40-9-33, Code of Alabama 1975, Act No. 2000-684) (Readopted through APA effective October 1, 1982, amended March 27, 2001, amended June 10, 2005)

810-6-1-.46.01.  Bleacher Systems, Lockers, Backstops, and Other Fixtures Installed in Gymnasiums.

(1) Materials or fixtures which are purchased by contractors and are intended to become permanently affixed or attached to gymnasiums, or other realty, are "building materials" and are taxable at the time of purchase by the contractor. (See Rules 810-6-1-.27 and 810-6-1-.28) (Sections 40-23-1(a)(10) and 40-23-60(5))
 
(a) Prior to October 1, 2000, these purchases are taxable even when the materials are used by the contractor in furnish and install contracts with tax exempt governmental entities and tax-exempt educational institutions. A contractor that sells the materials to a tax exempt entity under one contract and affixes the materials to realty under a second contract with the same tax exempt entity is liable for sales or use tax; the fact that the materials are sold and installed under separate contracts does not qualify the contractor's purchase of materials for the sales or use tax exemptions found in Sections 40 23 4(a)(11), 40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2), 40 23 62(13), and 40 23 62(16). (State of Alabama v. Algernon Blair Industrial Contractors, Inc., 362 So. 2d 248 (Ala. Civ. App. 1978) and Alabama Precast Products, Inc. v. Charles A. Boswell, 357 So. 2d 985 (Ala. 1978)). On and after October 1, 2000, however, purchases by contractors which do not qualify for the exemptions in Sections 40 23 4(a)(11), 40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2), 40 23 62(13), and 40-23-62(16) may qualify for the sales and use tax exemption outlined in paragraph (1)(b) below. (Rule 810 6 3 .69.02)
 
(b) On and after October 1, 2000, the sale of materials or fixtures to, or the storage, use, or consumption of materials or fixtures by, any contractor or subcontractor to be permanently affixed or attached to gymnasiums or other realty pursuant to a contract awarded prior to July 1, 2004, with the United States government, the State of Alabama, a county or incorporated municipality of the State of Alabama, or a federal, state, county, or municipal educational institution is exempt from state, county, and municipal sales and use taxes provided the contractor or subcontractor has complied with Rule 810 6 3-.77 entitled Exemption of Certain Purchases by Contractors and Subcontractors in conjunction with Construction Contracts with Certain Governmental Entities, Public Corporations, and Educational Institutions. (Section 40-9-33, Code of Alabama 1975)
 
(2) Criteria used in determining whether materials furnished and installed in gymnasiums, or other realty, become additions to real property include but are not limited to the following: the materials are physically attached to the realty with bolts; the materials when attached are intended to be permanent and are easily identified with a part of the realty; and the materials are appropriate to the realty to which they are attached that is the materials or fixtures perform a function appropriate to the real property and such function is necessary or convenient to the normal and appropriate uses of the real property. Examples of these items include but are not limited to the following: wall attached telescopic bleacher systems, reverse fold telescopic bleacher systems, lockers, and basketball backstops.
 
(3) Materials which (i) are not intended to become permanently affixed or attached to gymnasiums, or other realty, (ii) are intended to be mobile, and (iii) do, in fact, retain their identity as tangible personal property; qualify for the sales or use tax exemptions found in Sections 40 23 4(a)(11), 40-23-4(a)(15), 40-23-4(a)(17), 40-23-62(2), 40 23 62(13), and 40-23-62(16) when sold to tax exempt governmental entities or tax-exempt educational institutions. These items are subject to sales or use tax when sold to nonexempt entities. Criteria used in determining whether materials remain tangible personal property include but are not limited to the following: the materials are not intended to become permanently affixed to realty; the materials can be easily moved from one location to another, and can even be stored out of sight or moved from building to building. An example of an item of this nature includes, but is not limited to, a mobile telescopic bleacher system. (Sections 40 23 1(a)(10) and 40 23 60(5))
 
(4) On and after July 1, 2004, the sale to, or the storage, use, or consumption by, any contractor or subcontractor of any tangible personal property to be incorporated into realty pursuant to a contract with the United States government, the State of Alabama or a county or incorporated municipality of the State of Alabama is subject to all state, county, and municipal sales and use taxes for any contract awarded, or any portion of a contract which is revised, renegotiated, or otherwise altered on and after July 1, 2004, to the extent that such revision, renegotiation, or alteration requires the purchase of additional tangible personal property. If the “change order” or revision does not require the purchase of additional tangible personal property, the change will not cause the contract to lose its exempt status. Items purchased after June 30, 2004, pursuant to a contract awarded prior to July 1, 2004, will continue to be exempt for the remainder of the contract to the extent that any post June 30, 2004, revision or amendment does not require the purchase of additional tangible personal property. (Sections 40-2A-7(a)(5), 40-23-31, 40-23-83, 40-23-1(a)(10) 40-23-60(5), and 40-9-33, Code of Alabama 1975) (Adopted through APA effective January 27, 1998, amended March 27, 2001, amended June 10, 2005)

810-6-1-.47.  Coupons, Receipts from Redemption.

A retail dealer's total receipts in cash, goods, or by credit from the redemption of coupons issued by manufacturers or distributors are to be included in the measure of tax to be paid where the coupons are accepted by him in exchange for, or as part payment for tangible personal property. (Section 40-23-1(a)(6))(Readopted through APA effective October 1, 1982)

810-6-1-.50.  Dentists, Dental Laboratories, and Dental Supply Houses.

(1)  Dentists or dental laboratories primarily render professional services and incidentally use tangible personal property in connection therewith.  The courts have ruled that dentists are not selling dentures and other prosthetic devices when they transfer such items to their patients, and in-state or out-of-state dental laboratories are not making retail sales when they transfer the finished dental appliances to dentists.  Consequently, gross receipts of dentists or dental laboratories derived from these sources are not subject to the sales tax.  Rather, dentists and dental laboratories are using or consuming the items incidental to performing their professional services, and are required to pay state and local sales or use tax at the time of purchase on all tangible personal property purchased at retail for use in the practice of their profession.  Dentists and dental laboratories purchasing machinery, equipment, fixtures, supplies and other tangible personal property from out-of-state dental supply houses and other vendors who fail to collect and remit Alabama tax on such items sold at retail, would subsequently owe use tax when they use or consume the personal property in Alabama as part of their professional services.  (Haden v. McCarty, 152 So.2d 141 (Ala. 1963), and Hamm v. Proctor, 198 So.2d 782 (Ala. 1967)).
 
(2)  Dental supply houses within or without Alabama engaged in the business of selling tangible personal property such as platinum, gold, silver or cement for fillings, artificial teeth or other such materials to dentists or dental laboratories for use in the performance of such professional services are making sales at retail within the Sales and Use Tax Laws.  This is true whether dental supply houses sell materials to a dentist whose services are rendered directly to a patient, or to a dental laboratory that uses them in producing plates, bridge‑work, artificial teeth or prosthetic devices on prescription of a dentist, who then uses the latter items in connection with rendering dental services.  Dental supply houses likewise make retail sales of dental chairs, motors, instruments, drilling machines, fixtures and other such items  of tangible personal property  for use by dentists or dental laboratories.   Dental supply houses within Alabama and those located outside Alabama that have nexus with Alabama and its municipalities and counties are required to collect and remit the state and local sales or use tax on their retail sales. (Adopted May 18, 1967, readopted through APA effective October 1, 1982, amended January 10, 1985, amended May 7, 1997, amended September 26, 2006)

810-6-1-.51.  Deposit on Bottles.

(1)  Where a retailer sells bottled drinks and the sales price includes the deposit on the bottles and sales tax is charged on the total sales price, the amount of the deposit which is refunded on the return of the empty bottles is not subject to sales tax and may be deducted from the gross proceeds of sales where the retailer refunds the deposit on the bottles and also refunds the sales tax previously collected on the deposit for the bottles.
 
(2)  Where such retailer refunds the deposit on the bottles and at the same time does not refund the sales tax previously collected on the deposit for the bottles, he may not deduct from the gross proceeds of sales the amount of the deposit so refunded and the full sales price of the bottled drinks is to be included in the gross proceeds of sales and the tax collected must be remitted to the State. (Adopted July 31, 1963, readopted through APA effective October 1, 1982)

810-6-1-.52.  Direct Mail Advertising, Printer's Liability.

(1)  Effective April 30, 1986, Alabama sales or use tax is due as follows on sales of printed matter by printers who are required as part of the sales agreement to mail the printed matter to people whose names appear on a list furnished to the printer by the customer:
(2)  The postage paid by the printer to the U. S. Postal Service would not be included in the measure of tax if billed by the printer to the customer as a separate charge and paid by the customer.  (Sections 40-23-2(4) and 40-23-1(a)(5)) (Adopted June 12, 1978, readopted through APA effective October 1, 1982, amended January 10, 1985, amended April 3, 1987, amended January 29, 1990)

810-6-1-.53.  Cash Discounts.

Cash discounts when allowed and taken are not to be included in gross proceeds of sales. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.54.  Discounts Based on Volume Sales.

Discounts allowed and claimed on the basis of volume sales are deductible from gross sales for sales tax purposes. Such discounts are allowable either on sales as they are made or on accumulated sales totals. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.55.  Doctors, Medical.

(1)  Medical doctors are the consumers of supplies, office furniture, office fixtures and special tools and equipment which they use in the practice of their profession. Sales of these items to doctors are taxable retail sales. (Section 40-23-1(a)(10))
 
(2)  Drugs as defined in Section 40-23-4.1(a), Code of Alabama 1975, are exempt when sold to or by medical doctors. (Readopted through APA effective October 1, 1982, amended January 29, 1990)

810-6-1-.56.  Dual Business.

(1)  The term "dual business" as used in this rule shall mean a business which both makes retail sales of tangible personal property to the public on a recurring basis and withdraws tangible personal property for use from the same stock of goods.
 
(2)  Dual businesses in Alabama shall obtain a sales tax license and purchase all of the items they sell and withdraw for use at wholesale, tax-exempt. These businesses shall collect sales tax on their retail sales to nonexempt customers and compute sales tax on items which they withdraw from stock for use. The taxes collected on their sales to nonexempt customers and the taxes computed on their withdrawals shall be reported on their sales tax returns and remitted to the Department of Revenue. State and local sales taxes are due on withdrawals at the time and place of the withdrawal from inventory and shall be computed on the cost of the property to the business making the withdrawal. The sales taxes applicable to withdrawals are those taxes applicable in the jurisdiction where the withdrawal occurs. (Sections 40-23-1(a)(9), 40-23-1(a)(10), and 40-23-6, Code of Alabama 1975)
 
(3)  To qualify as a dual business, the business must have a substantial number of retail sales. Contractors, plumbers, repairmen, and others who make isolated or accommodation sales and who have not set themselves up as being engaged in selling do not qualify as a dual business. Where only isolated sales are made, tax should be paid on all of the taxable property purchased with no sales tax return being required of the seller making such isolated or "accommodation" sales. (Section 40-23-1(a)(10), Code of Alabama 1975)
 
(4)  A dual business operation shall maintain records sufficient to allow a determination of the proper sales taxes due on sales and withdrawals. (Sections 40-2A-7(a)(1) and 40-23-9, Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended December 28, 1998)

810-6-1-.58.  Electrical Supplies and Equipment Sold to Contractors and Manufacturers.

(1)  Electrical supplies including wire, cable, clamps, outlet fixtures, conduits, and switches, are building materials which come under the building materials provisions of Sections 40-23-1(a)(10) and 40-23-60(5). Except as outlined in paragraph (2), electrical supplies are taxable at the general rate of sales or use tax upon the sale to, or use by, the person affixing them to real property, whether that person is a contractor, builder, manufacturer, or any other property owner. (Sections 40-23-1(a)(10), 40-23-2(1), 40-23- 60(5), and 40-23-61(a))
 
(2)  Whether sold to a contractor or directly to the manufacturer, electrical equipment used by manufacturers is taxable at the reduced machine rate of sales or use tax when it is (i) made or manufactured for use on, (ii) necessary to the operation of, and (iii) customarily used as a part of or an attachment to a machine used in manufacturing.
(3)  Switchboards, control boards and cabinets controlling the general electrical supply system are not considered to be parts or attachments of machines used in manufacturing. The general rule is that the switch which is the direct control for the machine takes the machine rate and all equipment to that point is taxable at the general rate. (Sections 40-23-2(1) and 40-23-61(a)) (Readopted through APA effective October 1, 1982, amended March 10, 1998)

810-6-1-.59.  Welding Rods and Fluxes.

(1)  Subject to the criteria outlined in Sales and Use Tax Rule 810-6-1-.80 entitled Ingredient or Component of Product Manufactured or Compounded for Sale, welding rods and fluxes purchased by manufacturers and compounders that become a component part of the product manufactured or compounded for sale are purchased at wholesale, tax free. The fluxes must be of the type that have alloying elements that are picked up in the molten pool of metal weld deposit, so that the materials in the flux become a part of the welded structure. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)
 
(2)  The purchase of welding rods and fluxes for repair work or construction work is subject to the 4 percent sales and/or use taxes, whichever may apply. (Adopted September 18, 1964, readopted through APA effective October 1, 1982, amended January 10, 1985, amended December 10, 1997)

810-6-1-.60.  Opticians, Optometrists, and Ophthalmologists.

(1)  The dispensing or transferring of ophthalmic materials, including lenses, frames, eyeglasses, contact lenses, and other therapeutic optic devices, by opticians or optometrists are retail sales subject to sales tax. Such sales are taxable when sold to the ultimate consumer regardless of whether the optician or optometrist manufactured the materials for sale or purchased them for resale. The measure of tax on these sales shall be the gross receipts or gross proceeds therefrom without any deduction for the cost of the property sold, the cost of materials used, labor, service cost, or any other expenses whatsoever. (Section 40-23-1(d))
 
(2)  When a licensed optometrist exercises professional skills in examining the eyes of a patient and prescribes eyeglasses, contact lenses, or some other ophthalmic material which the optometrist dispenses or transfers to that patient, the optometrist may separately state the charges for the ophthalmic materials and the charges for the professional services on the invoice to the patient and collect sales tax only on the separately stated charges for the ophthalmic materials which were dispensed or transferred to the patient, provided the optometrist also maintains records which clearly reflect the separate sources of receipts. In the absence of separately stated charges for materials and professional services on the invoices to patients and the maintenance of documentation in the records of the business, the tax shall apply to the total amount billed to the patient. (Section 40-23-1(d))
 
(3)  The dispensing or transferring of ophthalmic materials including lenses, frames, eyeglasses, contact lenses, and other therapeutic optic devices to patients by licensed ophthalmologists as a part of their professional service is not subject to sales tax. Such licensed ophthalmologists are considered the ultimate consumers of the ophthalmic materials. The sale of the ophthalmic materials to licensed ophthalmologists by a supplier thereof is a retail sale subject to sales tax and the supplier is responsible for collecting the sales tax from the licensed ophthalmologist. The term "supplier" shall include but not be limited to optical laboratories, ophthalmic material wholesalers, or anyone selling ophthalmic materials to ophthalmologists. (Section 40-23-1(d)) (Adopted November 5, 1959, amended June 12, 1978, amended April 1, 1981, amended August 10, 1982, readopted through APA effective October 1, 1982, amended April 3, 1987, amended December 10, 1996)

810-6-1-.61.  Engravers.

Sales of materials to engravers are at wholesale, tax free, when such materials become a component of the engravings, etc., produced for sale. The machines used by the engraver manufacturing the engravings, etc. are taxable at the machine rate. The supplies, materials and equipment not becoming a component of the product sold or not constituting machines used in manufacturing are subject to the sales or use tax, whichever may apply. (Sections 40-23-1(a)(9)b) and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-1-.62.  Engravers, Sales of Materials are at Wholesale, Tax Free When Such Materials Become a Component of the Engraving.

Sales of materials to engravers are at wholesale, tax free, when such materials become a component of the engravings, etc., produced for sale. The machines used by the engraver manufacturing the engravings, etc., are taxable at the machine rate. The supplies, materials, and equipment not becoming a component of the product sold or not constituting machines used in manufacturing are subject to the sales or use tax, whichever may apply. (Sections 40-23-1(a)(9)b) and 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.63.  Federal Admission Ta