(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:
- (a) The agreed value placed on automotive vehicles, truck trailers,
semitrailers, or house trailers taken in trade on sales of other automotive
vehicles, truck trailers, semitrailers, or house trailers. On so called "trade-ups"
this allowance shall not exceed the sales price of the vehicles sold by the
dealer. (Sections 40-23-2(4) and 40-23-61(c))
-
- (b) Exchanges of cottonseed for cottonseed meal at or by gins.
(Sections 40-23- 4(6) and 40-23-62(9))
-
- (c) The agreed value placed on any used part including tires
of an automotive vehicle, truck trailer, semitrailer, or house trailer taken
in trade as a credit or part payment on the sale of a new, used or rebuilt
part or tire, for an automotive vehicle, truck trailer, semitrailer or house
trailer; provided, however, this provision shall not include batteries. (Section
40-23-2(1))
-
- (d) The agreed value placed on any machine, machinery, or equipment
used in planting, cultivating, and harvesting farm products or used in connection
with the production of agricultural produce or products, livestock or poultry
on farms taken in trade on the sale of other farm machines, machinery, or
equipment. (Section 40-23-37)
(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:
- (a) "It would seem that the business done by building contractors
generally has been considered to be rendering service rather than selling
materials at retail to the owner of the building or land. As to what amounts
to a sale at retail within sales tax acts the statutes and the courts seem
to endeavor to lay the tax on the last sale before the use or consumption
of the goods or articles sold". (State Board of Equalization v. Stanolind
Oil and Gas Company, Wyoming).
-
- (b) "A contractor who buys building material is not one
who buys and sells - a trader. He is not a dealer, or one who habitually and
constantly, as a business, deals in and sells any given commodity. He does
not sell lime and cement and nails and lumber. Sales to contractors are sales
to consumers." (State v. J. Watts Kearny & Sons, Louisiana).
-
- (c) "Under the contracts before us in the case, plaintiffs
agreed to build sewers and buildings requiring the use of sand, gravel, cement
and steel. They were the persons using these materials, even though after
their metamorphosis they became part of a structure whose title vested in
the Sanitary District of Chicago. Under these circumstances it would be unreasonable
to characterize the transfer of the materials incorporated in the completed
structures as a sale." (Herlihy Mid-Continent Company v. Nudelman,
Illinois)
(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:
- (a) Actual connection with or attachment to real property.
To become a part of real property, the device or appliance must have some
physical connections such as: by bolts, screws, nails, cement piping, or cable;
by contact, where by reason of great weight or bulk, no additional attachment
is required; by contact, where the device or appliance is necessary to make
complete or useable something which is real property; by attachment to another
device or appliance which has become a part of real property.
-
- (b) Appropriateness to the use or purpose of the real property
to which connected. The use or purpose of the device or appliance must
become an element of the use or purpose of the real property to which it is
connected.
(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:
- (a) Manufactured cost of materials, plus transportation to job
site, plus proportionate part of general overhead, selling cost, and profit
equals reasonable and fair market value of materials.
(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:
- (a) Licensing official's tax account number, name, and complete
address,
-
- (b) Period covered by the return,
-
- (c) Amount of casual sales and use tax collected on automotive
vehicles, truck trailers, trailers, semitrailers, travel trailers, and manufactured
homes,
-
- (d) Administrative fee for timely payment,
-
- (e) Penalties and interest due, if applicable,
-
- (f) Net amount after deducting administrative fee from or adding
applicable penalties and interest to Item (c),
-
- (g) Amount of casual sales and use tax collected on motor boats,
-
- (h) Administrative fee for timely payment,
-
- (i) Penalties and interest due, if applicable,
-
- (j) Net amount after deducting administrative fee from or adding
applicable penalties and interest to Item (g),
-
- (k) Total amount remitted,
-
- (l) An indication if payment of tax is made through electronic
funds transfer (EFT), and
-
- (m) Signature of the licensing official and the date signed.
(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.
