ADOR - Sales and Use Tax Rulebook

RULEBOOK

Rules as of April 2009

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:

(a) period covered by the return.

(b) legal name of taxpayer.

(d) taxpayer's tax account number.

(e) sales tax information as follows:

(1) a breakdown of total gross sales of automotive vehicles, truck trailers, semitrailers, and house trailers; total gross sales of farm machinery and equipment; total gross sales of machines used in mining, quarrying, manufacturing, compounding, or processing tangible personal property; total gross sales of food and food products for human consumption not including beverages other than coffee, milk, milk products, and substitutes therefor sold through vending machines, gross receipts from places of amusement, and gross sales of all other tangible personal property in the local taxing jurisdiction,

(2) a breakdown, by applicable tax rate, of the cost of property purchased at wholesale withdrawn for use or consumption,

(3) a breakdown, by applicable tax rate, of collections during reporting period on credit sales previously claimed as a deduction,

(4) totals, by applicable tax rate, of items (1), (2), and (3),

(5) a breakdown, by otherwise applicable tax rates, of total deductions claimed,

(6) measure of tax by applicable tax rate,

(7) gross tax due by applicable tax rate,

(8) number of automotive vehicles withdrawn for use as demonstrators,

(9) total demonstrator fee due,

(10) total gross amount of tax due,

(11) computation of applicable discount due for prompt payment,

(12) penalty and interest due, if applicable, and

(13) total amount due.

(f) rental tax information as follows:

(1) a breakdown of the gross proceeds derived from the leasing or rental of automotive vehicles, truck trailers, semitrailers, and house trailers; the gross proceeds derived from the leasing or rental of linens and garments; and the gross proceeds derived from the leasing or rental of all other tangible personal property,

(2) a breakdown, by otherwise applicable tax rates, of total deductions claimed,

(3) measure of tax by applicable rate,

(4) gross tax due by applicable rate,

(5) total gross amount of tax due,

(6) penalties and interest due, if applicable, and

(7) total amount due.

(g) lodgings tax information as follows:

(1) total gross charges, both cash and credit, from the rental of rooms, lodgings, accommodations, and services furnished to transients,

(2) total collections on credit charges previously claimed as a deduction,

(3) total of items (1) and (2),

(4) total deductions,

(5) total amount remaining as a measure of tax,

(6) gross amount of tax,

(7) discount for prompt payment of tax,

(8) penalties and interest due, if applicable, and

(9) total amount due.

(h) sellers use tax information as follows:

(1) a breakdown of the total sales price of automotive vehicles, truck trailers, semitrailers, and house trailers; the total sales price of farm machinery and equipment; the total sales price of machines used in mining, quarrying, manufacturing, compounding, or processing tangible personal property; and the total sales price of all other tangible personal property sold for delivery in the local taxing jurisdiction,

(2) a breakdown, by applicable tax rate, of collections on credit sales previously claimed as a deduction,

(3) totals, by applicable tax rate, of items (1) and (2),

(4) a breakdown, by otherwise applicable tax rates, of total deductions claimed,

(5) measure of tax by applicable tax rate,

(6) gross tax due by applicable tax rate,

(7) total gross amount of tax due,

(8) computation of applicable discount due for prompt payment,

(9) penalties and interest due, if applicable, and

(10) total amount due.

(i) consumers use tax information as follows:

(1) a breakdown of the total purchase price of automotive vehicles, truck trailers, semitrailers, and house trailers not registered with the county probate judge; the total purchase price of farm machinery and equipment; the total purchase price of machines used in mining, quarrying, manufacturing, compounding, or processing tangible personal property; and the total purchase price of all other tangible personal property purchased outside the local taxing jurisdiction for use, storage, or consumption in the jurisdiction,

(2) total purchases, by applicable tax rate,

(3) a breakdown, by otherwise applicable tax rates, of total deductions claimed,

(4) measure of tax by applicable tax rate,

(5) gross tax due by applicable tax rate,

(6) total gross amount of tax due,

(7) credit for taxes paid to another state or to a political subdivision of another state on out-of-state purchases,

(8) penalties and interest due, if applicable, and

(9) total amount due.

(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:

(a) federal employer identification number (if the applicant is not required to have a FEIN, the applicant's social security number)

(b) full legal name

(d) street address (must be a physical location, cannot be a post office box), city, state, and zip code

(e) web site address

(f) name of the primary contact person

(g) phone number and FAX number of the primary contact person

(h) E-mail address of the primary contact person

(i) names and phone numbers of other contact persons

(j) name, title, and dated signature of the authorized representative of the electronic return originator indicating that the applicant agrees to:

(i) develop Internet-based software programs to be used by taxpayers to electronically file tax returns included in the program from a personal computer and electronically transmit the taxpayer's tax payments to the department or to the appropriate self-administered local taxing authority,

(ii) comply with all statutes and departmental rules, guidelines, and specifications respecting the program,

(iii) submit to the department for its review and approval any software developed for use by taxpayers to electronically file and pay taxes included in the program,

(iv) refrain from releasing any product developed for the program prior to receiving written approval from the department,

(v) notify its customers or clients of the minimum computer requirements necessary to utilize the company's Internet-based software,

(vi) authorize the department to include the applicant's name in various public information material designed to inform taxpayers and the public about vendors who have agreed, complied, or failed to comply with departmental policies, procedures, guidelines, and specifications respecting the program,

(vii) comply with all statutes and departmental rules regarding the confidentiality of tax returns and taxpayer information,

(viii) inform each of its employees of the confidentiality provisions contained in Section 40-2A-10, Code of Alabama 1975, and departmental rules, and advise each employee that any unauthorized disclosure of tax returns or information may result in criminal prosecution pursuant to Section 40-2A-10,

(ix) inform each of its employees that the law expressly prohibits disclosure of confidential tax information to third parties for any reason, including the use of this information to solicit business from taxpayers, and the release of any data extracted from any database received from the department without the express written approval of the Disclosure Officer, and

(x) publish its Privacy Policy regarding the use of personal data obtained directly from the taxpayer, and provide the taxpayer with a highly visible means to easily opt-out from allowing the ERO to make the data available to advertisers, partners, and the general public.

(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:

(a) conviction of a criminal offense under the revenue laws of any state or of any offense involving dishonesty or breach of trust,

(b) failure to file timely and accurate tax returns, both personal and business,

(d) failure to adhere to any department rule,

(e) failure or refusal to effect corrective action as required by the department, or

(f) other facts or conduct of a disreputable nature that would reflect adversely on the program.

(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:

(a) taxpayer's full legal name,

(b) taxpayer's mailing address,

(d) an affirmation from the taxpayer, with respect to all returns to be filed by the taxpayer using the department's Internet-based electronic filing and payment program, that the taxpayer will not file a return under the program before comparing the tax return with the taxpayer's business records and verifying that the return is in agreement with the business records and that each electronic return transmitted via the program will, to the best of the taxpayer's knowledge and belief, be a true, correct, and accurate return,

(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:

(a) No Computer,

(b) No Internet Access,

(d) No Access to a Telephone,

(e) Any special circumstance (i.e. physical disability) deemed worthy of a waiver by the Commissioner of Revenue.

1. A waiver request must be submitted in writing and include the business name and address, account number and reason(s) why a method other than the prescribed method is necessary.

(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 registered to file and pay the taxes enumerated in Rule 810-1-6-.05 on behalf of multiple taxpayers.

(2) A person shall not act as a third-party bulk filer unless the person is registered with the Department for the purpose of electronically filing ADOR returns and payments.

(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:

(a) Submit returns and payments for those taxes required to be filed electronically, in a timely manner using the electronic filing systems made available by the Department for taxpayers having a valid account with the Department.

(b) Submit a separate electronic payment for each return, account, or filing period.

(c) Maintain on file the client’s power of attorney allowing the third-party to file returns and/or pay Alabama taxes on behalf of the client and, upon request, provide a copy to the Department. The power of attorney must also indicate the authorization for the third-party to receive information about filings or payments directly from the Department.

(d) Electronically provide the Department, on a monthly basis, an updated client list containing at least the name, current mailing address, account number, and telephone number for those clients for whom they are authorized to file. The mailing address listed for the client must be the client’s actual street or post office box address and not the third-party bulk filer’s address.

1. Initial client list must show all clients.

2. Subsequent updates should show only additions and deletions.

(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 a third-party bulk filer is not substantially complying with the Department’s electronic filing requirements, the Department may revoke the registration of the third-party bulk filer and notify the clients of the revocation. (Authority: Sections 40-2A-7(a)(5), 40-2A-7(a)(1), 40-23-31, 40-23-83, 40-23-111, 40-30-2, Code of Alabama 1975) (Adopted through APA effective October 5, 2004, amended February 10, 2009.)

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.

(a) Where an antenna or satellite dish, along with parts and attachments therefor, is sold for a lump sum amount which includes both the antenna or satellite dish and the cost of erection or installation, such lump sum amount shall be used as the measure of the tax to be paid to the State. In instances where separate contracts are made for the sale of the antenna or satellite dish and other property and for the erection or installation, the tax should be measured by the sales price only, provided that the billing to the customer and the books of the seller clearly show the receipts from sales and from erection and installation.

(b) In instances where dealers in radio and television receiving sets sell antennas or satellite dishes with parts and attachments therefor which they do not themselves furnish or install, but which are furnished and installed for them by an outside supplier, the sale of antennas or satellite dishes and other property sold in connection therewith are made at wholesale, tax free, by the outside supplier to the dealer who has made the retail sale. The dealer in these instances must collect and remit tax to the State in accordance with the rule stated in subparagraph (a).

(c) Where dealers and suppliers make over-the-counter sales of antennas or satellite dishes and parts and attachments therefor to customers not for resale, such sales to consumers are subject to sales tax which is to be collected by the seller and paid to the State.

(d) The dealers and suppliers who make the sales described in subparagraphs (a), (b), and (c) above purchase at wholesale, tax free, the antennas or satellite dishes and parts and attachments therefor which are resold by them. (Section 40-23-1(a)(10))

(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:

(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.

(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:

(a) The printer is located outside Alabama. The mailing list contains the names of people located within Alabama and people located outside Alabama. Use tax is due on the printed matter addressed to people within Alabama.

(b) The printer is located within Alabama. The mailing list contains names of people located within Alabama and people located outside Alabama. Sales tax is due on the printed matter addressed to people within Alabama. Sales tax is not due on the printed matter addressed to people outside Alabama since these sales qualify for exemption as sales in interstate commerce.

(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.

(a) The expressions "made or manufactured for use on," "necessary to the operation of," and "customarily used" are understood to mean that the part or attachment must be purchased substantially in the form in which it will be used by the manufacturer except for the usual and customary adjustments; that it is a standard part or attachment customarily used; and, further, that the machine or machinery on which it is used would not do the work for which designed if it were not so used. This includes all parts and attachments without which the machine would not do any work. In addition, it includes parts and attachments designed to increase the efficiency of the machine.

(b) Items of electrical equipment including starters, switches, and circuit breakers which become a part of or an attachment to a machine used in manufacturing are taxed at the reduced machine rate of sales or use tax. This equipment must either be attached directly to the machine or be immediately adjacent to the machine in order to qualify for the reduced machine rate. (Sections 40-23-2(3) and 40-23-61(b))

(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 Taxes.

The federal taxes required to be paid on single admissions, season tickets, and rental of boxes are not to be included in the measure of Alabama sales tax where such federal taxes are shown as a separate item properly identified on the tickets or receipts given to the person paying such admissions or rentals or purchasing such tickets. (Readopted through APA effective October 1, 1982)

810-6-1-.64. Federal Excise Taxes, Manufacturers.

(1) A manufacturer's federal excise tax may not be excluded from the measure of sales or use tax.

(2) Manufacturer's federal excise taxes become another overhead business expense to the retailer which he can take into consideration, together with other business expenses, in determining his selling price. (Sections 40-23-1(a)(6) and 40-23-1(a)(8)) (Readopted through APA effective October 1, 1982, amended October 3, 1987, amended May 22, 1993)

810-6-1-.65. Federal Excise Taxes, Retailers.

(1) A federal excise tax which a retailer must collect from his customer as a tax and remit directly to the federal government may be excluded from the measure of sales or use tax only if it is measured by the value of the articles sold at retail and it is billed to the customer as a separate item. (AGO Evans, July 31, 1992)

(2) If the retailer bills his customer a lump sum price, including the retail federal excise tax, the sales or use tax applies to the total selling price. (Sections 40-23-1(a)(6) and 40-23-1(a)(8)) (Readopted through APA effective October 1, 1982, amended October 3, 1987, amended May 22, 1993)

810-6-1-.66. Fencing.

(1) Fencing materials of all kinds including fence posts, fence wire, and fence accessories are building materials, the sales of which are at retail and subject to tax when made to the person who will attach the fencing materials to real property. Where the person who makes the installation is the manufacturer of the materials used, such manufacturer owes sales tax to be measured by the fair market value of the materials laid down at the job site. The manufacturer is required by the Sales Tax Law to report his use of such materials and pay tax thereon as if he had made a retail sale of the materials. Any fencing materials installed by the manufacturer not manufactured by him are taxed in the usual manner.

(2) In case a vendor or manufacturer of fencing materials is both selling such materials to others for installation by them and furnishing and installing the materials under contract all purchases of fencing materials are at wholesale, tax free. Thereafter both sales to others and withdrawals for use under installation contracts are to be reported as taxable sales to the Department of Revenue. (Section 40-23-1(a)(10)) (Adopted May 26, 1961, readopted through APA effective October 1, 1982)

810-6-1-.67. Florists, Telegraphic Orders.

When florists sell through a telegraphic delivery association the following rules will apply:

(a) Alabama florists are liable for sales tax measured by total receipts resulting from orders taken by them for transmittal to a second florist who makes delivery either within or without Alabama. Any expense of making the sale is to be included in the measure of the tax regardless of whether or not the expense is billed as a separate item.

(b) Sales tax does not apply to amounts received by Alabama florists who make deliveries in this state pursuant to telegraphed or telephoned instructions received from florists either within or without Alabama.(Adopted March 9, 1961, amended July 30, 1962, readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-1-.69. Containers, Components of Containers, Labels, Pallets, and Shipping Supplies.

(1) The term "label" as used in Sections 40-23-1(a)(9)b, 40-23-1(a)(9)c, 40-23-60(4)b, and 40-23-60(4)c, Code of Alabama 1975, and in this rule shall mean a tag or sticker of any material imprinted with information. The term "label" includes price stickers, address stickers, and shipping tags as well as those tags or stickers which identify or describe the property to which they are attached.

(2) The term "components of containers" as used in this rule shall include partitions, cellophane, tissue paper, excelsior, gummed tape, scotch tape, glue, steel straps, twine, string, wire staples, wax paper, and wrapping paper which are used in and on containers to shape, form, preserve, stabilize, or protect the contents of the containers and which accompany the container and the container's contents upon shipment and delivery to the customer.

(3) The term "container" as used in this rule shall mean articles in or on which tangible personal property is placed for shipment and delivery to the purchaser. Containers include bags, barrels, baskets, bottles, boxes, cans, cartons, cores, crates, cups, cylinders, drums, kegs, pails, plates, reels, sacks, and spools.

(4) Containers purchased by manufacturers or compounders for use in packaging products manufactured or compounded by them for sale, including the components of the containers, are not subject to sales or use tax where the containers are passed on to the purchaser of the products contained therein with no intention on the part of either the purchaser or the seller to return the containers or have them returned for reuse. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(a) This exclusion for manufacturers and compounders may apply to both inner and outer containers. Accordingly, when manufacturers or compounders place their manufactured or compounded products in cans or bottles and place the cans or bottles in fiber boxes for shipment to the customer; the cans or bottles and the fiber box qualify for the exclusion if both are intended for one-time use. Alabama-Georgia Syrup Co. v. State, 253 Ala. 49, 42 So. 2d 796 (1949).

(b) Containers, when purchased by manufacturers or compounders for use in purchasing and storing product ingredients prior to using them as ingredients in the manufacturing or compounding process and not purchased for use as one-time-use containers for shipping the manufactured or compounded product to customers, do not qualify for the exclusion. Alabama-Georgia Syrup Co. v. State, 253 Ala. 49, 42 So. 2d 796 (1949).

(5) Containers purchased by retailers for use in packaging products for sale, including the components of the containers, are not subject to sales or use tax where the containers are passed on to the purchaser of the products contained therein with no intention on the part of either the purchaser or the seller to return the containers or have them returned for reuse. (Sections 40-23-1(a)(9)c and 40-23-60(4)c)

(6) ; Containers and other packaging materials or supplies which are used or consumed in rendering nontaxable services are taxable when purchased by the person who performs the service even when the containers, materials, or supplies are transferred to the purchaser's customer. For example, the operator of a laundry or dry-cleaning establishment is the user or consumer of laundry bags, garment bags, and other packaging materials or supplies and must remit sales or use tax on purchases of these items even though the bags, materials, or supplies may be transferred to the operator's customer.

(7) Unless excluded by statute, containers, including the components of the containers, which are intended to be returned or repurchased for reuse are subject to sales or use tax. Sales of the following items are specifically excluded from sales or use tax regardless of whether there is an intent on the part of the purchaser or the purchaser's customer to return the containers or have them returned for reuse:

(a) Sales of containers to persons engaged in selling, supplying, or furnishing baby chicks to growers where the containers are for use in the delivery of the baby chicks to the grower. (Sections 40-23-1(a)(9)f and 40-23-60(4)f)

(b) Sales of egg crates and egg cartons to egg producers for use in the delivery of eggs to distributors or packers. (Sections 40-23-1-(a)(9)f and 40-23-60(4)f)

(d) Sales of wrapping paper and other wrapping materials to producers, processors, packers, or wholesale or retail sellers of poultry or poultry products for use in preparing poultry or poultry products for delivery, shipment, or sale. This exemption includes (i) pallets used in shipping poultry and eggs, (ii) paper, and (iii) other materials used to line boxes or other containers in which poultry or poultry products are packed together with any other materials including ice placed in the containers for the delivery, shipment, or sale of poultry or poultry products. (Sections 40-23-4(a)(20) and 40-23-62(21))

(8) Labels are purchased at wholesale, tax-free when (i) the label is purchased by a manufacturer or compounder and affixed to the tangible personal property or product which the manufacturer or compounder manufactures or compounds for sale or to the furnished container thereof or (ii) the label is purchased to be affixed to one-time-use containers that are purchased without contents and sold or furnished to the purchaser's customer along with the contents placed therein or thereon for sale. (Sections 40-23-1(a)(9)b, 40-23-1(a)9c, 40-23-60(4)b, and 40-23-60(4)c)

(9) Pallets purchased without contents by persons who sell or furnish the pallets along with the contents placed on the pallets for sale are excluded from sales or use tax where the pallets are passed on to the purchaser of the products contained thereon with no intention on the part of either the purchaser or the seller to return the pallets or have them returned for reuse. (Sections 40-23-1(a)(9)d and 40-23-60(4)d).

(10) Crowns, caps, and tops sold to manufacturers or compounders for use upon containers in which the manufacturer or compounder markets its products are excluded from sales or use tax when the crowns, caps, or tops are intended for one-time use only. (Sections 40-23-1(a)(9)e and 40-23-60(4)e)

(11) Except for supplies which qualify for the exemptions contained in Sections 40-23-4(a)(10), 40-23-4(a)(40), 40-23-4(a)(42)c, 40-23-62(12), 40-23-62(32), and 40-23-62(34)c, shipping supplies such as nails, lumber, metal straps, dunnage, and plates which are used for fastening or securing manufactured or compounded products into railroad cars, trucks, aircraft, or vessels for shipment are taxable at the time of purchase.

(12) Purchases by retailers, wholesalers, and others of sales tickets, cash register receipt paper, invoice forms, bill of lading forms, and other forms for use in receipting, billing, invoicing, or shipping are taxable.

(13) The following are examples of items sold by suppliers to certain retailers or service providers with notations as to whether the item qualifies as a nontaxable one-time-use container:

(a) RETAIL FOOD STORES (GROCERY & MEAT MARKETS):

Adding Machine Tape	T	Meat Interleaver	NT
Bags and Sacks	NT	Paper Cans	NT
Bag Holders	T	Paper Cutters	T
Brooms - Use	T	Parchment	NT
Broom Holders & Display Racks	T	Patty Paper	NT
Butcher Paper	NT	Plastic Film	NT
Cashier Pads	T	Pork Loin Wrap	NT
Cellophane Bags	NT	Prepackaging Trays	NT
Cellophane, Sheets or Roll	NT	Pressure Sensitive Tape	NT
Cellophane Cutters	T	Price Markers	T
Egg Cartons	NT	Produce Bags	NT
Food Pails and Tubs	NT	Roll Paper	NT
Greaseproof Paper	NT	Sausage Boxes and Liners	NT
Grocery Bags	NT	Signboard	T
Gum Tape	NT	Skewers	T(1)
Gum Tape Dispensers	T	Steak Interleaver	NT
Heat Sealing Equipment	T	Sugar Bags	NT
Ice Cream Bags	NT	Sweeping Compound	T
Labels	NT	Ti-Paks and Twistems	NT
Locker Paper	NT	Trays	NT
Marking Pencils	T	Twine	NT
Meat Boards	NT	Window Display Bags	NT

(1) Nontaxable only if accompanies sale and cannot be reused.

(b) FOOD AND BEVERAGE SERVERS:

(Restaurants, Drive-ins, Cafeterias, Concession Stands, Bars, Lounges, and Night Clubs)

Adding Machine Tape	T	Paper Cans and Pails	NT(2)
Aluminum Foil	T	Paper Plates	NT
Aluminum Plates	NT	Paper Trays	NT
Barbeque Bags	NT	Paper Linen Caps	T
Bibs	T	Patty Paper	NT
Burger Cups	NT	Place Mats	T
Burger Cup Holders	T	Printing Charge on Special Print Orders	T
Butter Chips	NT	Sandwich Bags	NT
Chop Holders	T	Sandwich and Drink Trays	NT
Coasters	T	Skewers	T
Cocktail Forks and Spoons	T	Souffle Cups	NT
Coffee Stirrers	T	Steak Markers	T
Crab Shells	NT(2)	Straws	T
Creamer Caps	T	Sundae Dishes	NT(2)
Cups and Lids	NT	Table Covers	T
Cup Carriers	T	Table Wiping Towels	T
Cup Dispensers	T	Tableware, Plastic and Spoons	T
Doilies	T	Tissue, 12 x 12 M.G.	NT(1)
Eclair Cases	NT	Toilet Tissue	T
Guest Checks	T	Toothpicks and Frills	T
Hot Dog Trays	NT	Towels	T
Kone Bottles	NT	Tray Covers	T
Napkins	T	Waxed Paper	NT(2)
Napkin Dispensers	T	Wooden Forks and Spoons	T
Paper Bags	NT	Wooden Dishes	NT(2)

(1) When used as sandwich wrap - NT, when used as napkin - T.

(2) Nontaxable only if accompanies sale and cannot be reused.

Bridal Gown Boxes	T	Shirt Bags	T
Coat Retainers	T	Shirt Bands	T
Collar Supports	T	Shirt Boards	T
Garment Bags	T	Shirt Boxes	T
Garment Roll Film	T	Shirt Pax	T
Garment Roll Film Dispenser Racks	T	Shirt Shells	T
Hanger Shields and Guards	T	Storage Bags	T
Hangers	T	Sweater Bags	T
Laundry Boxes	T	Tape	T
Laundry and Launderette Bags	T	Trouser Guards	T
Laundry Shells	T	Twine	T
Paper Cutters	T	Wrapping Paper	T

(d) RETAIL BAKERY AND CANDY SHOPS:

Adding Machine Tape	T	Jiffy Bags	NT
Aluminum Foil	NT(1)	Labels	NT
Aluminum Pie and Cake Plates	NT(1)	Marking Pencils	T
Bakery Bags	NT	Pan Liners	NT(1)
Bakery Boxes	NT	Paper Cans	NT
Bakery Tissue	NT	Paper Caps	T
Baking Cups	NT(1)	Paper Cutters	T
Bread Bags	NT	Paper Pie Plates	NT(1)
Cake Circles	NT(1)	Parchment	NT
Candy Bags	NT	Ribbon	NT
Candy Cups	NT	Sales Books	T
Cellophane	NT	Sandwich Bags	NT
Cellophane Bags	NT	Sandwich Wrap	NT
Doilies	NT(1)	Shredded Cellophane	NT
Eclair Cups	NT(1)	Signboard	T
Food Pails and Tubs	NT(1)	Sweeping Compound	T
Gift Wrap	NT	Toothpicks and Frills	T
Glassine Bags	NT	Transparent Tape	NT(2)
Grocery Bags	NT	Twine	NT
Gum Tape	NT(2)	Wax Paper	NT
Gum Tape Dispensers	T	Window Bags	NT
Heat Sealing Equipment	T	Wrapping Paper	NT

(1) Nontaxable only if accompanies sale and cannot be reused.

(2) If used as part of package.

(e) DRUG, VARIETY, AND SUNDRY STORES: (See also Food and Beverage Servers)

Adding Machine Tape	T	Notion Bags	NT
Gift Wrapping Paper	NT	Paper Cutters	T
Grocery Bags	NT	Prescription Bags	NT
Guest Checks	T	Ribbon and Accessories	NT
Gum Tape	NT	Sanitary Napkin Bags (resale)	NT
Gum Tape Dispensers	T	Shopping Bags	NT
Prescription Medicine Bottles	NT(1)	Signboard	T
Prescription Medicine Boxes	NT(1)	Twine	NT
Prescription Medicine Jars	NT(1)	Wrapping Paper	NT
Millinery Bags	NT

(1) Nontaxable only if accompanies sale and cannot be reused.

(2) If used as part of package.

(f) FLORISTS AND NURSERIES: (1)

Cellophane	NT	Polyethylene Rolls and Bags	NT
Cellophane Bags	NT	Polyethylene & Paper Cutters	T
Cellophane Tape	NT	Pressure Sensitive Tape	NT
Florist Tissue	NT	Ribbon and Accessories	NT
Flower Boxes	NT	Shredded Cellophane	NT
Flower Pots	NT	Ti-Paks and Twistems	NT
Gift Papers and Foil	NT	Twine	NT
Gummed Tape	NT	Wrapping Paper	NT
Gummed Tape Dispensers	T	Wrapping Tissue	NT
Paper Bags	NT

(g) RETAIL DEPARTMENT STORES & SPECIALTY STORES:

(Includes Book and Stationery Stores, Gift Shops, Hardware Stores, etc.)

Curtained Rod Bags	NT	Notion Bags	NT
Garment Bags	NT	Paper Cutters	T
Garment Bag Boxes	NT	Record Bags	NT
Gift Boxes	NT	Ribbon and Accessories	NT
Gift Wrap	NT	Sales Books	T
Grocery Bags	NT	Shirt Bags	NT
Gum Tape	NT	Shoe Bags	NT
Gum Tape Dispensers	T	Shopping Bags	NT
Ice Bags	NT	Shredded Cellophane	NT
Jiffy Bags	NT	Shredded Tissue	NT
Labels	NT	Signboard	T
Lampshade Bags	NT	Transparent Tape	NT
Marking Pencils	T	Twine	NT
Millinery Bags	NT	Wrapping Paper	NT
Millinery Boxes	NT	Wrapping Tissue	NT
Nail Bags	NT

(h) MEAT AND POULTRY PACKERS, FOOD LOCKERS AND DAIRIES: (1)

Butcher Paper	NT	Ice Cream Cans and Cartons	NT
Butter Tubs	NT	Ice Cream Pails	NT
Butter Wraps	NT	Ice Cream Sticks	NT
Cellophane and Plastic Films	NT	Marking Pencils	T
Cellophane Tape	NT	Meat Boards	NT
Chic Pax	NT	Parchment	NT
Chic Tainer Trays	NT	Poly Bags	NT
Cone Bottles	NT	Pork Loin Wrap	NT
Creamer Caps	NT	Poultry Bags	NT
Cups and Tubs	NT	Sacks	NT
Egg Cartons	NT	Sausage Boxes and Liners	NT
Freezer and Locker Paper	NT	Spoons, Forks and Knives	T
Freezer Tape	NT	Straws	T
Grocery Bags	NT	Ti-Paks and Twistems	NT
Gum Tape	NT	Twine	NT
Gum Tape Dispenser	T	Waxed Paper	NT
Ham Wraps	NT	Wrapping Paper	NT
Ice Cream Bags	NT

(1) If the sales are made to a food locker business - it must be determined if the products are used in rendering a service, or if they are in the actual retail meat business. If they are wrapping meat for customers to be stored in their individual lockers - this is a service and the items are taxable.

(i) FARMS, ASSEMBLERS OF FARM PRODUCTS:

Box Liners	NT	Hay Baling Ties or Twine	NT(1)
Butter Tubs	NT	Labels	NT
Car Liners	T	Marking Pencils	T
Cellophane	NT	Poly Bags	NT
Cellophane Bags	NT	Poly Sheets and Rolls	NT
Cellophane Tape	NT	Potato Bags	NT
Chic Pak	NT	Poultry Bags	NT
Chic Tainer Trays	NT	Prepackage Trays	NT
Containers for Packaging Bees or Worms for Sale	NT(1)	Shredded Paper and Cellophane	NT
Egg Cartons	NT	Tomato Cartons	NT
Flour and Meal Bags	NT	Twine	NT
Fruit Baskets	NT(1)	Window Bags	NT
Grocery Bags	NT	Wrapping Paper	NT
Gum Tape	NT	Wrapping Tissue	NT
Gum Tape Dispensers	T

(1) Nontaxable if accompanies sale and cannot be reused.

(Readopted through APA effective October 1, 1982, amended July 25, 1994, amended July 30, 1998)

810-6-1-.72. Gases: Acetylene, Oxygen, Hydrogen.

(1) All sales to consumers such as dentists, doctors, private hospitals, manufacturers, refiners, repairmen, welders, or junk dealers of acetylene, oxygen, hydrogen, and other gases for use in rendering professional medical services or in manufacturing, processing, or repairing are subject to sales or use tax. (Sections 40-23-1(a)(10) and 40-23-60(5))

(2) Sales of these gases to manufacturers or compounders where the gas enters into and becomes an ingredient or component part of the product manufactured or compounded for sale are at wholesale, tax-free. For example, sales of oxygen to manufacturers of steel where the oxygen becomes an ingredient or component part of the product manufactured for sale are nontaxable wholesale sales. (State v. United States Steel Corporation, 206 So.2d 358) See Rule 810-6-1-.80 entitled Ingredient or Component of Product Manufactured or Compounded for Sale. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(3) Sales of these gases to dealers for resale are not taxable. (Sections 40-23-1(a)(9)a and 40-23-60(4)a) (Readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-1-.73. Gases: Propane and Butane.

Sales at retail of propane and butane gases or any similar gas are subject to sales or use tax, whichever may apply. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.75. Gratuities and Tips.

(1) The terms "gratuity" and "tip" as used in this rule shall mean a monetary amount paid by a customer in a bar, restaurant, or similar establishment usually in return for or in anticipation of some service. While a gratuity or tip is generally thought of as a voluntary monetary gift, in practice some retailers add a mandatory gratuity to the customer's bill.

(2) Sales tax does not apply to voluntary gratuities or tips, whether in cash or otherwise added by the customer to the bill, when given directly to the retailer's employee by the customer or given to the retailer who receives no benefit from the gratuity or tip and merely acts as a conduit to channel the gratuity or tip in total to the retailer's employee.

(3) Sales tax applies to mandatory charges designated as gratuities, minimum service charges, or other minimum charges billed to customers by retailers, whether listed separately on the customer's bill or included as part of the selling price of the food, meal, or drinks, when the retailer receives a benefit from the added charges such as using all or a portion of the mandatory charges to supplement the wages or salaries of the retailer's employees. (State v. International Trade Club, Inc., 351 So. 2d 895 (Ala. Civ. App. 1977)) (Sections 40-23-1(a)(6) and 40-23-1(a)(8), Code of Alabama 1975)

(4) A mandatory charge designated as a gratuity, minimum service charge, or other minimum charge is not taxable when the retailer collects the charge from the customer in lieu of voluntary gratuities or tips and merely acts as a conduit to channel the charge in total to his or her employees. Added charges of this nature are simply substitutes for cash tips and the retailer receives no benefit from the charge. (State v. International Trade Club, Inc., 351 So. 2d 895 (Ala. Civ. App. 1977)) (Adopted November 3, 1980, readopted through APA October 1, 1982, amended January 10, 1985, amended October 20, 1998)

810-6-1-.76. Hospitals, Infirmaries, Sanitariums, and Like Institutions - Private.

(1) Private hospitals, infirmaries, sanitariums, and like institutions are required to pay sales tax or use taxes, whichever may apply, on their purchases of tangible personal property. (Sections 40-23-2 and 40-23-61, Code of Alabama 1975)

(2) Private hospitals, infirmaries, sanitariums and like institutions are primarily engaged in the business of rendering services. They are not required to collect and remit sales tax on their gross receipts from meals, bandages, dressings, drugs, x-ray photographs, or other tangible personal property when the items are used in rendering hospital services. This is true irrespective of whether or not the tangible personal property is billed separately to their patients. Private hospitals, infirmaries, sanitariums, and like institutions are deemed to be the purchasers for use or consumption of the tangible personal property; and, the sellers of these items are required to collect sales or use tax on sales of the property to the institutions. Provided, however, purchases by private hospitals, infirmaries, sanitariums, and like institutions of drugs as defined in Section 40-23-4.1(a), Code of Alabama 1975, are specifically exempt from sales and use tax. (Sections 40-23-2, 40-23-4.1, and 40-23-61)

(3) When private hospitals, infirmaries, sanitariums, and like institutions furnish meals to nurses, attendants and patients as a part of their services rendered, the institutions are deemed to be the users or consumers of the food and beverages used in the preparation of these meals. Sales or use tax is due on the purchase of the food and beverages by the institution in the manner outlined in paragraph (2) unless the institution also operates a cafeteria which serves the public. (Sections 40-23-2 and 40-23-61)

(4) Privately-owned hospitals, infirmaries, sanitariums, and like institutions that operate cafeterias serving meals to the public must purchase all foodstuffs and beverages at wholesale, tax free, and collect the sales tax on sales of meals to their customers and remit the tax to the Department of Revenue. These institutions must also compute and pay tax to the Department of Revenue on the cost of foodstuffs withdrawn from stock and used to feed patients. (Sections 40-23-1(6) and 40-23-1(10)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended January 29, 1990, amended October 20, 1998)

810-6-1-.77.01. Ice, Sales of.

(1) Sales of ice to purchasers who have a sales tax license number are sales at wholesale not subject to sales or use tax, provided the purchaser is buying the ice for resale. (Sections 40-23-1(a)(9)a and 40-23-60(4)a)

(2) Sales of ice to purchasers for use as an ingredient of iced drinks manufactured or compounded for sale are sales at wholesale not subject to sales or use tax. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(3) Sales of ice to transportation companies or others for use in icing railroad cars or refrigeration trucks are subject to sales or use tax. (Sections 40-23-1(a)(10) and 40-23-60(5)) (Readopted through APA effective October 1 , 1982, amended March 10, 1998)

810-6-1-.79.03. Industrial Uniforms, Sales or Replacement of.

When a lessee is required under a contract with the lessor to reimburse the lessor for the depreciated value of any item lost or not returned by the lessee, the transaction is not a retail sale; therefore, no sales tax is due. (See State of Alabama v. Industrial Uniform Services, Inc.) (Adopted June 12, 1978, readopted through APA effective October 1, 1982).

810-6-1-.80. Ingredient or Component of Product Manufactured or Compounded for Sale.

(1) Subject to the qualifications outlined in paragraph (2), tangible personal property which is purchased by a manufacturer or compounder and which enters into and becomes an ingredient or component part of the final product manufactured or compounded for sale may be purchased at wholesale, tax free, for both sales and use tax purposes, regardless of whether the property is used with the intent that it becomes an ingredient or component part of the finished product. The burden of proving that materials become an ingredient or component part of the finished product shall be carried by the manufacturer or compounder. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(2) In order to qualify for the wholesale sale exclusion contained in Sections 40- 23-1(a)(9)b and 40-23-60(4)b, the tangible personal property purchased by the manufacturer or compounder must be present in the final product and must not be deducted as depreciation or as a Section 179 expense deduction as allowed under Section 40-18-35(a)(17), on the manufacturer's or compounder's Alabama income tax return. (Section 40-23-1(a)(9)b and 40-23-60(4)b), (Adopted October 1, 1959; readopted through APA effective October 1, 1982; amended February 4, 1985, amended December 10, 1997).

810-6-1-.80.01. Oils Used in Aluminum Rolling Process.

Oils used in the hot or cold aluminum rolling processes have been determined to remain on and become an ingredient or component part of the rolled aluminum and, therefore, 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 may be purchased by the processor at wholesale, free of sales or use tax. (Sections 40-23-1(a)(9)b and 40-23- 60(4)b) (Adopted through APA effective January 29, 1990, amended December 10, 1997)

810-6-1-.80.02. Materials Purchased by Manufacturers and Compounders for Use as Rust Preventatives or Protective Coatings.

Materials, including grease and other petroleum products, purchased by manufacturers or compounders for use as a rust preventative or a protective coating for metal products while in storage or in shipment are exempt from sales or use tax when they remain on the final product manufactured or compounded for sale. (Sections 40-23-1(a)(9)b and 40-23- 60(4)b) (Adopted through APA effective January 27, 1998)

810-6-1-.81. Installation Charges.

(1) Where the quoted or advertised price is a lump sum for both property and installation or where billing and other records do not show separate charges for property and for installation, the measure of the tax is the total amount received by the seller.

(2) Where the seller has a standard retail sales price for his products and where the standard sales price is used both when making across-the-counter sales and when selling and installing the property, he may make a separate and additional charge for making the installation which, when shown separately in his billings and on his books, will not be subject to the sales tax. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.81.01. Interior Decorators and Interior Designers.

(1) Interior decorators and interior designers making retail sales of tangible personal property in Alabama must apply for and obtain a sales tax license. Further, these interior decorators must collect sales tax from their clients on their retail sales of tangible personal property and remit the tax to the Department of Revenue. Out of state interior decorators and interior designers, who do not have a place of business in Alabama but for whose business sufficient nexus exists, must register to collect sellers use tax on their Alabama sales and collect and remit sellers use tax to the Department of Revenue on those sales. (Sections 40 23 6 and 40 23 66)

(2) Fees charged by interior decorators or interior designers in conjunction with sales of tangible personal property are a part of the gross proceeds of sales and must be included in the measure of sales or use tax charged to and collected from their clients. Fees charged by interior decorators or interior designers are taxable even if they are billed to clients as an amount separate from the cost of tangible personal property on a cost plus basis. (Sections 40 23 1(a)(6), 40 23 1(a)(8), and 40 23 60(10))

(3) Sales or use tax does not apply to fees charged by interior decorators or interior designers solely for consultation or designing services when no sale of tangible personal property occurs in conjunction with those services.

(4) In those instances where interior decorators or interior designers receive a fixed sum fee which is not in any way contingent upon the sale of tangible personal property and, subsequently, sell tangible personal property in a completely unrelated transaction, the fixed sum fee is not a part of the selling price of the tangible personal property and is not subject to sales or use tax.

(5) Interior decorators or interior designers who contract to furnish and install tangible personal property which becomes a part of realty are the users or consumers of such property and owe sales or use tax on the cost of the property so used or consumed. Property withdrawn from inventory by an interior decorator or interior designer for use in performing contracts for additions or improvements to realty must be reported as taxable withdrawals and the sales tax thereon remitted directly to the Department of Revenue. The measure of tax on withdrawals is the cost of the property to the interior decorator or interior designer who withdraws the property. Except as enumerated in Rule 810 6 3 .77, interior decorators or interior designers making additions or improvements to realty may not claim immunity or exemption from sales or use tax on account of property purchased and used in connection with contracts with the federal, state, county, or city governments. The fact that a governmental agency has advised the interior decorator or interior designer not to include tax on the invitation to bid or purchase order would not relieve the interior decorator or interior designer from liability for sales or use tax on the cost of materials used in fulfilling a contract with that agency for making additions or improvements to realty. (Sections 40 23 1(a)(10) and 40-23-60(5)) (Adopted through APA effective April 26, 1991, amended March 27, 2001, amended June 10, 2005)

810-6-1-.84. Labor or Service Charges.

(1) The term "new or different" as used in this rule shall mean new or different insofar as the ultimate purchaser is concerned. The fact that work may be performed at various stages before an item is ready for use by the ultimate purchaser does not mean that the item is not a new item.

(2) Sales or use tax applies to labor or service charges billed to customers in conjunction with sales of tangible personal property and repairs to tangible personal property as follows:

(a) Labor or service charges, whether included in the total charge for the product or billed as a separate item, are taxable if the labor or service (i) is incidental to making, producing, or fabricating a new or different item of tangible personal property or otherwise preparing the tangible personal property for sale and (ii) is performed prior to transfer of title to the purchaser. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(10), Code of Alabama 1975)

(b) Labor or service charges are not taxable when billed for labor or services expended in repairing or altering existing tangible personal property belonging to another in order to restore the property to its original condition or usefulness without producing new parts. When repair work includes the sale of repair parts in conjunction with repairs to existing tangible personal property belonging to another, only the sales price of the repair parts is taxable provided the charges for the repair parts and the charges for the repair labor or repair services are billed separately on the invoice to the customer. If the repairman fabricates repair parts which are used in conjunction with repairs to existing tangible personal property belonging to another, the total charge for the parts, including any labor or service charges incurred in making, producing, or fabricating the parts, is taxable even if the fabrication labor or service charges are billed to the customer as a separate item. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(10), Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended December 28, 1998)

810-6-1-.85. Laundries, Dry-Cleaning Establishments.

(1) Laundries and dry cleaning establishments in washing, dry cleaning, dying, pressing and otherwise reconditioning clothing, curtains, drapes, linens, rugs and other articles are performing a service which is not subject to the sales tax.

(2) The materials, supplies, and equipment used or consumed in rendering laundry and dry cleaning services are subject to sales or use tax, whichever may apply. The tax due is to be paid by the laundry or dry cleaning establishment to the supplier where the supplier is required to collect the tax or directly to the Department of Revenue as use tax where the supplier does not collect the tax.

(3) In case the laundry or dry cleaning establishment makes sales of tangible personal property at retail as well as renders services such sales are subject to sales tax. The goods acquired for resale at retail are purchased at wholesale tax free. (Adopted May 26, 1961, readopted through APA effective October 1, 1982)

810-6-1-.88. Lawyers.

Lawyers use law books, supplies, and equipment, which books, etc., are taxable. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.89. Lease Sales - Retention of Title.

Transfers of property constitute sales when made under lease-sale or retention-of-title contracts where these contracts contemplate transfer of ownership when all of the agreed upon payments have been made. (Section 40-23-1(a)(5)) (Readopted through APA effective October 1, 1982)

810-6-1-.89.02. Licensed Dealers, Sales to.

(1) Sales to Dealers at Wholesale. Sales of tangible personal property are sales at wholesale, not subject to tax, when made to a licensed dealer to be put into the stock of goods offered for sale by the dealer, not withstanding the fact that the dealer may occasionally or habitually withdraw from stock some part of the inventory for use or consumption in connection with the business or for the personal use or consumption of the dealer. Such withdrawals shall be reported on the licensed dealer's sales tax return and the sales tax thereon computed and remitted to the Department of Revenue. The sales tax on withdrawals shall be computed on the cost to the dealer of the property withdrawn. See Rule 810-6-1-.196 Withdrawals from Inventory. (Sections 40-23-1(a)(6), 40-23- 1(a)(8), 40-23-1(a)(9)a, and 40-23-1(a)(10))

(2) Sales to Dealers at Retail. Sales of tangible personal property to a licensed dealer for his own use or consumption rather than for resale purposes are sales at retail and are subject to tax. (Sections 40-23-1(a)(10) and 40-23-2) (Readopted through APA effective October 1, 1982, amended January 27, 1998)

810-6-1-.90. Machine Shops.

(1) Sales of property manufactured or fabricated by machine shops and custom foundries are subject to sales or use tax, except when the sale is for resale or otherwise specifically exempted.

(2) In doing repair work, the machine shop operator consumes materials such as paint, solder, babbitt, and lumber which lose their identity in the repairing process. The machine shop operator is also considered to be the consumer of items such as cotter keys, nails, washers, stove bolts and nuts, bits of metal, and sheets of metal used in patching, mending, or reinforcing weakened parts. The machine shop operator shall not collect sales or use tax from the customer on amounts billed to the customer for the cost of these materials which the operator consumes in performing repair work; instead, the operator shall remit sales or use tax to the supplier at the time of the operator's purchase of the materials.

(3) Where in making repairs the machine shop operator fabricates or manufactures a recognizable part or attachment for the article being repaired (as contrasted to patching, mending, or reinforcing weakened parts), the operator shall bill the parts or attachments separately and collect sales or use tax only on the sales price of the part or attachment. If the machine shop operator fails to separately state the charges for parts and attachments and the charges for services, the operator shall collect sales or use tax on the total amount of the charges billed to the customer. Under no circumstances, however, shall the machine shop operator deduct labor or other costs which go into the fabrication or manufacture of a recognizable part or attachment from the selling price of the part or attachment. (Sections 40-23-1(a)(6) and 40-23-60(10), Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-1-.91. Made-to-Order and Custom Sales.

Where persons contract to manufacture, compound, process or fabricate their materials into articles of tangible personal property according to the special order of their customers, the total receipts from the sales of such articles are subject to the sales or use tax, whichever may apply. The seller may not deduct any of his costs, nor can he deduct any of his charges for labor or services, which are an item of the production or fabrication costs of the article, to arrive at the taxable amount. Articles commonly made to order are curtains, draperies, tents, awnings, clothing, and slipcovers. The person making sales of made-to-order and custom made articles purchases the materials which become a component or ingredient of their products at wholesale, tax free. The equipment, tools and supplies used or consumed in the production of such articles and not becoming a part thereof are subject to tax, except that machines used in such production are specifically taxed at one and one-half percent rather than the general rate of four percent. (Section 40-23-1(a)(6) ) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.93. Materials From Which Patterns are Manufactured.

Pattern makers who make patterns which they sell to others for use, purchase at wholesale tax free the materials from which such patterns are made. (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.94. Materials Used in Plating.

(1) Materials purchased by a person, firm, or corporation for use in further processing or manufacturing tangible personal property not owned by the person, firm, or corporation but owned by a manufacturer or a compounder are exempt from the sales and/or use tax when the tangible personal property is to be ultimately sold at retail.

(2) The materials used in plating tangible personal property not belonging to the plating company are subject to the sales and/or use tax when the plating company customers used the product which was plated for the customer and there was no retail sale of the product. The materials used in this category are not purchased by or used by the manufacturer or compounder who manufactures or compounds a product for sale; therefore, the purchase of the materials does not fall within the meaning of the term "wholesale" as found in Section 40-23-1(a)(9), Code of Alabama 1975. (Adopted July 2, 1975, amended June 12, 1978, readopted through APA effective October 1, 1982)

810-6-1-.95. Materials Used in Repairing.

(1) Materials used in repairing, for tax purposes, fall into the following classes:

(a) Materials which pass to the repairman's customer and which do not lose their identity when used by the repairman and which are a substantial part of the repair job (such as auto repair parts, radio tubes, and condensers) are sold at retail by the repairman. He must collect and report sales tax on such sales, including tax on the service incidental thereto. He may, however, if making a separate agreement to sell the repair parts and to perform the labor and service required, collect and remit the tax only upon the price of the parts if his records and his invoices clearly show a separation of the amounts received from sales and parts and from rendering service.

(b) Materials which pass to the repairman's customer but which lose their identity when used by the repairman or which are inconsequential in amount, such as paint, solder, and tacks, are considered to have been used or consumed by the repairman and are taxable at the time of sale to him.

(c) Materials which are used or consumed by the repairman and which do not pass on to his customer are supplies and taxable when sold to the repairman. (Section 40-23- 1(a)(10))

(d) Materials which fall in classes (b) or (c) are purchased at wholesale for use by a repairman who, in addition to using such materials as a repairman, sells the same kinds of materials for use by others. These materials become subject to the sales tax upon their withdrawal for use by the repairman under the withdrawal feature of Section 40-23-1(6), (8), and (10). Note however, that a repairman is not to be considered a vendor of these classes of materials unless he carries a stock of them and sells outright therefrom a substantial amount. If the repairman makes only isolated sales or "accommodation" sales of these materials he is not to be considered as a seller of them under the sales tax law, in which case his supplier must collect the tax.

(2) In all instances, materials are taxable when sold to repairmen for use in making repairs where such materials lose their identity as a result of such use, for instance, solder used in welding, paint used in automobile refinishing, thread used in mending clothing. In all instances where the shape or composition of the repair material is materially changed, such altered or changed material is considered to have been used or consumed by the repairman and, for that reason, subject to tax when sold to him. No tax on this material is to be collected by the repairman from his customer.

(3) In instances where repair materials and repair parts are passed to the repairman's customer without change, except necessary and customary minor adjustments, such parts or materials may be purchased at wholesale by the repairman licensed under the Sales Tax Law. The repairman is then required to collect sales tax from his customer. (Readopted through APA effective October 1, 1982, amended October 8, 1985)

810-6-1-.97. Materials Used on Road and Bridge Projects.

(1) (a) Sales of sand, gravel, or other building materials by landowners or other suppliers who regularly sell or offer to sell these materials are subject to sales tax when made to contractors for the State of Alabama or the counties or municipalities of the State for use by the contractors in building roads or bridges. This rule applies in all instances where the contractor is obligated by the terms of the contract to furnish, to pay for, and to lay down the materials, including sales of materials which have been selected by and on which an option has been taken by the state or the counties or municipalities of the State. The supplier shall collect the tax from the contractor and remit the amount due to the Department of Revenue. (Sections 40-23-1(a)(10) and 40-23-60(5))

(b) Where an isolated sale of sand, gravel, or similar material is made to a contractor by a landowner who is not engaged in the business of selling such material, the isolated sale will not be required to be reported to the Department and neither sales tax nor use tax will be due from the landowner or from the contractor on the transaction.

(c) On and after October 1, 2000, the sale of sand, gravel, or other building materials by landowners or other suppliers to, or the storage, use, or consumption of these materials by, any contractor or subcontractor to be incorporated into realty pursuant to a road or bridge construction contract with the State of Alabama or any county or incorporated municipality of the State of Alabama pursuant to a contract awarded prior to July 1, 2004, 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) (Sections 40-2A-7(a)(5), 40-23-1(a)(10), 40-23-31, 40-23-60(5), and 40-23-83, 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-.98. Mattress Renovation.

(1) A mattress renovator both renders service and sells tangible personal property where he rebuilds or renovates a mattress for his customer by reworking the materials in the customer's mattress, the identity of which is maintained throughout the operation, and by adding thereto whatever new materials are required to complete the job in a satisfactory matter. Under these circumstances, the mattress renovator may make separate contracts to render the service required and to sell the tangible personal property used (ticking, cotton, springs, tufts, etc.) in which case the receipts from rendering service are not subject to sales tax where the invoice rendered to the customer and the records of the renovator show separately sales of tangible personal property and charges for performing services. Provided, however, where work of this nature is done for a lump sum without separation of charges for tangible personal property and for services, the sales tax shall apply to the lump sum amount.

(2) In instances where the identity of the customer's mattress is not preserved with the mattress delivered to the customer having been made from whatever materials were available, the mattress returned to the customer is considered a new article, the measure of the tax being the amount paid by the customer including the value of the customer's old mattress. The mattress renovator purchases at wholesale tax free the materials he uses in renovating or rebuilding his customer's mattress. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.99. Meals Served by Boarding Houses.

Food furnished by operators of boarding houses is not considered to be sold at retail when the charge for such food is a lump sum covering meals for a week or for a month and when such food is not offered for sale to the general public. The supplier of food stuff is required to collect the tax from the operator at the time of the sale to him. The boarding house operator is considered to be rendering a service rather than making sales and is regarded as the consumer of the materials he purchases. This rule does not apply to meals furnished by schools and colleges. (See Rule 810-6-2-.50.) (Adopted October 1, 1959, readopted through APA October 1, 1982, amended January 10, 1985)

810-6-1-.100. Meals, Snacks, Drinks, and Beverages Served in Alabama by Railroads, Airlines, and other Transportation Companies

(1) Sales of meals, snacks, drinks, and beverages to passengers by railroads, airlines, steamships, and other transportation companies within this state are subject to sales tax, provided the meals, snacks, drinks, or beverages are served to the passengers while still in Alabama. (Sections 40-23-1(a)(10) and 40-23-2(1), Code of Alabama 1975)

(2) Meals, snacks, drinks, and beverages served in Alabama by a transportation company as a part of its transportation service are retail sales subject to sales tax when the transportation company includes in the ticket price an amount to cover the selling price of the meal, snack, drink, or beverage. The amount for the meal included in the selling price of the ticket is the measure of tax. (State v. Hertz Skycenter, Inc., 294 Ala. 336, 317 So. 2d 324 (1975) and State v. Delta Air Lines, 356 So. 2d 1205 (Ala. Civ. App. 1978)) (Amended October 29, 1976, amended June 12, 1978, readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-1-.101. Meals Served to School Children in the School Buildings.

Lunches sold within school buildings, not for profit, to school children are exempted from the sales tax. This exemption is construed to mean sales of lunches to pupils of kindergartens, grammar, and high schools, either public or private. (Readopted through APA effective October 1, 1982)

810-6-1-.102. Meals Sold to the Public.

Sales of prepared foods and drinks of all kinds for consumption on or off the premises of the seller are subject to the sales tax, which tax must be collected and remitted by the seller, except as otherwise stated in Sales and Use Tax Rules 810-6-1-.99 Meals served by Boarding Houses, 810-6-2-.51 Meals Sold by Schools and 810-6-1-.100 Meals, Snacks, Drinks, and Beverages Served in Alabama by Railroads, Airlines, and other Transportation Companies. (Section 40-23-2(1), Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-1-.103. Metal Name Plates.

Plates attached by the manufacturer to his products for identification purposes are purchased at wholesale as a component part of the property manufactured for sale. (Section 40-23-1(a)(9)c) (Readopted through APA effective October 1, 1982)

810-6-1-.104. Microfilming of Records.

The microfilming of records is a service transaction with the material cost being incidental to the transaction. Sales and/or use tax will be due on films, equipment, and other supplies purchased for use in microfilming records. (Legal Division Opinion February 10, 1978) (Adopted June 12, 1978, readopted through APA effective October 1, 1982)

810-6-1-.105. Modular Buildings.

(1) The Alabama Supreme Court has interpreted the language relative to modular buildings in Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975, as "designed to make the sale of materials going into the construction of such buildings subject to the tax and to exempt the sale of the building itself" from sales or use tax. This interpretation places "modular building components on a par with conventional building materials" and makes "the sale of all building materials, modular or otherwise, sales at retail." The attachment of the building components or units to realty and the subsequent sale of the components or units as a completed building is not treated as a taxable transaction. In making this interpretation, the Supreme Court ruled that use tax is due on modular building units manufactured by an out-of-state manufacturer and sold by the manufacturer to a contractor who attached the units to realty in Alabama. The measure of the use tax is the manufacturer's selling price of the modular units. (Boswell v. Alcoa Construction Systems, Inc., 368 So. 2d 18 (S.Ct.1979))

(2) Sales tax is due on modular building components or units manufactured in Alabama as follows:

(a) An instate builder or manufacturer of modular building components or units who builds or manufactures the components or units for resale in the form of tangible personal property to persons who affix them to realty, shall obtain a sales tax license and purchase all building materials, fixtures and other equipment becoming part of the modular building components or units without payment of sales or use tax to the suppliers. The builder or manufacturer of the modular building components or units shall (i) collect sales tax on any retail sales of the components or units sold in Alabama measured by the selling price of the components or units and (ii) report and pay the sales tax to the Department of Revenue on those retail sales.

(b) In the event an instate builder or manufacturer of modular building components or units, who has obtained a sales tax license pursuant to paragraph (2)(a), also contracts to affix modular building components or units to realty either inside or outside Alabama, the builder or manufacturer shall be liable for sales tax computed on the cost price of the materials withdrawn from inventory and used to build or manufacture the components or units which the builder or manufacturer affixes to realty pursuant to the contract.

(3) Use tax is due on modular building components or units as follows:

(a) Out-of-state builders or manufacturers of modular building components or units, who do not have a place of business in Alabama but for whose business sufficient nexus exists, shall (i) register to collect sellers use tax on their Alabama sales of modular building components or units which are sold in the form of tangible personal property to persons who affix them to realty and (ii) report and pay the tax to the Department of Revenue on their Alabama sales. The measure of the sellers use tax is the selling price of the components or units. Purchases of modular building components or units from out-of-state builders or manufacturers who are not registered to collect sellers use tax are subject to consumers use tax. Consumers use tax should be computed and paid by the purchaser measured by the purchase price of the components or units. (Section 40-23-60(5))

(b) An out-of-state builder or manufacturer of modular building components or units, who contracts to affix modular building components or units to realty inside Alabama, is liable for consumers use tax computed on the cost price of the materials incorporated into the components or units which the builder or manufacturer affixes to realty in Alabama pursuant to the contract. Credit for legally imposed sales and use taxes paid to any other state or its subdivisions will be allowed against the Alabama use tax due as outlined in Rule 810-6-5-.04. (Sections 40-23-60(5) and 40-27-1, Article V.1, Code of Alabama 1975) (Adopted August 15, 1974, readopted through APA effective October 1, 1982, amended October 20, 1998)

810-6-1-.106. Monuments, Memorial Stones, Grave Markers, and other Decorative or Commemorative Objects.

(1) Monuments, memorial stones, grave markers, or other similar decorative or commemorative objects, collectively referred to in this rule as monuments, are building materials. Sales of monuments to the person who installs or erects them to realty are retail sales. The person who installs or erects monuments to realty is a contractor.

(2) A monument dealer or builder who contracts to furnish and install or erect monuments is a contractor and shall pay sales or use tax to the supplier on the cost of the monuments purchased for use in performing contracts or on the cost of the materials which become a component part of monuments which the dealer/builder manufactures for use in performing contracts. In the event the supplier is an unregistered out-of-state supplier, the monument dealer/builder shall compute and pay consumers use tax on the monuments or monument materials purchased from the unregistered supplier. (Sections 40-23-1(a)(10) and 40-23-60(5))

(3) A monument dealer or builder who sells monuments uninstalled is a retailer and shall apply for and obtain a sales tax license or, if an out-of-state business with nexus in Alabama, register to collect sellers use tax. The licensed or registered monument retailer shall purchase at wholesale, tax-free all monuments purchased for resale and all materials which become a component of monuments which the retailer manufactures for sale. The monument retailer shall collect and remit sales or sellers use tax on the retail selling price of all monuments sold without any deduction for labor used in manufacturing, cutting, engraving, or marking the monuments. (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-1(a)(10), 40-23-26, 40-23-60(5), 40-23-60(10), and 40-23-67)

(4) A monument dealer or builder in Alabama who is in the dual business of both selling monuments uninstalled and contracting to furnish and install or erect monuments shall obtain a sales tax license. The dual business monument dealer/builder shall purchase at wholesale, tax-free all monuments and all materials becoming a component of monuments which the dealer/builder manufactures. The dual business monument dealer/builder shall collect sales tax from the customer and remit the tax to the Department of Revenue on all retail sales of uninstalled monuments and shall compute and pay sales tax on all monuments or components of monuments withdrawn from inventory for use in performing contracts to furnish and install or erect monuments. The measure of tax to be collected on sales of uninstalled monuments is the selling price of the monument sold without any deduction for labor used in manufacturing, cutting, engraving, or marking the monument. The measure of tax on monuments or monument materials withdrawn from inventory for use in performing contracts is the cost of these items to the dealer/builder who withdraws them. (Sections 40-23-1(a)(8) and 40-23-1(a)(10)) (Adopted November 3, 1980, readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-1-.107. Movie Theaters.

(1) Movie theater operators owe sales or use tax on all of the equipment, furniture, fixtures, and supplies used by them in operating their businesses. Movie film and advertising materials, including trailers and posters, are subject to tax to be measured by the purchase price when this property is bought outright and not rented. (Sections 40-23-2(1) and 40-23-61(a), Code of Alabama 1975)

(2) The lessor of film or films is not required to report and pay rental tax on the gross receipts derived from the leasing or rental of the film or films, when the lessee charges admission for viewing the film or films. (Sections 40-23-2(2) and 40-12-223(1), Code of Alabama 1975) (Adopted March 9, 1961, amended June 12, 1978, readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-1.107.02. Motor Freight Lines, Sales to.

Any sale of property to motor freight lines is subject to the sales tax where the property is delivered in Alabama by a seller doing business in Alabama. This is true even though the purchase order may have been given out-of-state to an out-of-state branch of the seller and even though payment is made out-of-state. (Readopted through APA effective October 1, 1982)

810-6-1-.109. Name Plates, Metal.

810-6-1-.110. Newspapers.

(1) A newspaper is printed matter which is distributed to the public generally. It is in sheet form, is published at regular or short intervals, and contains information of current events and news of general interest. In addition, a newspaper carries advertising and by editorial comment, advocates the opinions of its publishers.

(2) A publication is a newspaper if it has qualified under postal regulations for second class postal rates, is required by postal regulations to publish the names and addresses of its owners and editors, and is qualified as a medium for publishing legal notices.

(3) Company news sheets containing, primarily, information of company interest only, distributed by the company to its employees and its clients and owners are not newspapers and are not exempted from the sales or use taxes. This type of material is subject to tax measured by its purchase price. When purchased in Alabama, the printer will be required to collect the tax from the company. When purchased outside of Alabama, the tax will be required to be paid direct to the Department of Revenue by the company making the purchase.

(4) Postage charges over and above the regular price for the publication, separately billed, for mailing to individual readers will not be required to be included in the measure of the tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.110.01. Newspapers, Sales of.

(1) Sales of newspapers are subject to sales tax except when made at wholesale to dealers licensed in accordance with the provisions of Section 40-23-6, Code of Alabama 1975, as amended, or when made to the United States, the State of Alabama, or the counties or cities of the state.

(2) Sales of newspapers made by publishers and licensed dealers to unlicensed independent newsboys will be, in all instances, subject to tax as retail sales, the tax to be measured by the gross proceeds of such sales.

(3) The word "newsboys" as used herein shall be understood to mean street hawkers and newspaper route persons of all ages.

(4) Newsboys who are itinerant vendors who have not filed with the Department of Revenue the bond required by the provisions of Section 40-23-24, Code of Alabama 1975, as amended, will not be licensed as dealers under said act. (Amended January 25, 1977, to comply with decision rendered by the Court of Civil Appeals in State v. The Advertiser Company). (Readopted through APA effective October 1, 1982)

810-6-1-.111. Occasional Sale.

Property acquired for use or consumption may be sold tax free at a private sale completely disassociated from any retail business which may be operated by the seller. (Attorney General Opinion Price, May 12, 1937) (Readopted through APA effective October 1, 1982)

810-6-1-.112. Outdoor Advertising Signs.

(1) Outdoor advertising signs are to be considered subject to tax on the full sales price when such signs are prefabricated by the seller or his supplier and delivered as a complete unit to the point where set up.

(2) When the signs are built into a building, they come within the building materials provision with the tax being due from the person who erects the sign to his supplier, in which case no tax would be due from the person installing the sign on his service in attaching the materials to the building. The same rule will apply when a builder constructs an outdoor advertising sign from the ground up using lumber, nails, sheetmetal, etc.

(3) In some instances the sign dealer will be in a dual business, both selling and building signs. When both parts of the business are substantial rather than incidental, the dealer should be set up to purchase all material at wholesale, tax free, and pay tax directly to the Department of Revenue on sales and withdrawals. See Rule D21-011, (810-6-1- .56), Dual Business. See, also, B27-081, (810-6-1-.29), Building Materials Manufactured by Contractors.

(4) The providing of billboard advertising is a service; and, the receipts therefrom are not subject to sales tax. The provider of billboard advertising services must pay sales or use tax on purchases of supplies, materials, and equipment used in the operation of the business. (Section 40-23-1(a)(6)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended December 6, 1990)

810-6-1-.113. Outside Signs, Furnished.

Outside signs furnished by a manufacturer to his customers, when such signs are furnished without cost to the customers, are subject to the sales or use tax when purchased by the manufacturer. These signs are not purchased to be resold, nor are they purchased as a component of the property manufactured for sale by the manufacturers. (Section 40-23-1(a)(9)) (Readopted through APA effective October 1, 1982)

810-6-1-.114. Painters.

(1) Persons doing any kind of painting where the only tangible personal property supplied by them is the paint which they apply and the equipment, brushes, and supplies used in such application are primarily rendering a service and not making retail sales. The receipts from such painting are not subject to the sales tax. All of the paint, tools, brushes, equipment and supplies purchased by the painters are subject to sales tax or use tax, whichever applies, at the time of sale to the painter.

(2) Note however, that where painters sell painted signs, furniture, or articles which they have manufactured or purchased for painting for resale purposes, such sales are subject to sales tax. The paint and other materials used as a component part of articles to be sold are purchased tax free at wholesale.

(3) Where painters are both consuming paints, etc., in rendering services and consuming from the same stock the same kind of property and manufacturing property for sale, where the use and manufacturing is continuous and a substantial part of the total business, and where suitable records are kept revealing costs of all materials used in contract painting and cost of materials used in manufacturing, the painter using the materials for both purposes will be allowed to purchase all of the dual purpose materials at wholesale tax free and pay sales tax on the basis of gross receipts from property sold at retail plus the total cost of all materials used, consumed, or furnished by him in his contract painting business.

(4) Where the painter is in such dual business and his records are not kept to reveal his sales and the cost of property used in contract painting, he shall be required to pay sales or use tax on all of his purchases and, in addition, will be required to report and pay sales tax on all of his sales of property at retail.

(5) Such consumable supplies as brushes, thinners, paint removers, hand tools, sand paper, etc., are, in any event, taxable when purchased by the painter. (Section 40- 23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.116. Parts and Materials Used to Repair or Recondition Dealers' Automobiles.

(1) When a licensed dealer in automotive vehicles makes purchases of parts and materials to repair or recondition vehicles held in his inventory for sale, the purchases are tax free if the parts or materials become a part of the vehicle that will later be sold and taxed on the total sales price.

(2) When a licensed dealer in automotive vehicles repairs or reconditions vehicles for individuals as well as vehicles that are a part of his own inventory for sale, all of the dealer's purchases of parts or materials are at wholesale, tax free. Provided suitable records are maintained to distinguish between parts or materials used on his own vehicles and those of others, only the parts and materials used in repairing or reconditioning the vehicles of others are taxable. Such parts used in repairing the vehicles of others are taxable when sold to the customer and such materials used in reconditioning the vehicles of others are taxable when withdrawn and used by the dealer-repairman.

(3) The term "materials" as used herein shall mean items such as paint, body lead, solder, and wax which become a part of a reconditioned automobile. Supply items not becoming a part of a reconditioned automobile such as sandpaper, thinner used for cleaning purposes, masking tape, and rags are taxable retail sales when purchased by the dealer. The term "parts" as used herein shall mean items which are passed on substantially intact by the dealer such as seat covers, gears, fan belts, pistons, batteries, and tires. The term "parts" does not include materials as defined above and does not include supplies such as those listed above. (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended October 8, 1985)

810-6-1-.117. Pawnbrokers.

Pawnbrokers are required to file sales tax returns covering all property sold by them, including in the taxable retail sales reported sales of property forfeited to them by reason of the pawner's failure to redeem. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.118. Peddlers, Truckers.

(1) Peddlers and/or truckers making retail sales of tangible personal property must apply for and obtain a sales tax license. Further, such peddlers and truckers must collect sales tax from their customers on their retail sales of tangible personal property and remit same to the Department of Revenue. (Section 40-23-6)

(2) Peddlers and truckers are to be licensed under the sales tax law only when they have an established place of business or when they have a well established and continuous business confined to a certain area or route. Peddlers and truckers having no fixed place of business may, as a condition precedent to obtaining a sales tax license under the Sales Tax Law, be required to furnish the bond provided for in Section 40-23-24, Code of Alabama 1975 as amended. (Section 40-23-24)

(3) Sales to a trucker purchasing lumber for resale from a lumber manufacturer, when said trucker does not have a sales tax license, are sales at retail subject to tax unless the trucker has registered with the Department of Revenue and has received a certificate of such registration pursuant to Code of Alabama 1975, Section 40-23-1(c). (Readopted through APA effective October 1, 1982, amended September 25, 1992)

810-6-1-.119. Photographs, Photostats, Blueprints, etc.

(1) The gross proceeds accruing from retail sales of photographs, blueprints and other similar articles are subject to sales or use tax, without any deduction for any part of the cost of production, whether delivered in final printed form or delivered in digital form via telephone lines, over the Internet, by e-mail, or by another alternative form of transmission. The transfer of digital images of these items from a seller to a purchaser for a price constitutes the sale of tangible personal property. The form in which tangible property is delivered by the seller to the purchaser is of no consequence. (Sections 40-23-2(1) and 40-23-61(a)) (Robert Smith FlipFlopFoto v. State of Alabama (Admin. Law Div. Docket No. S. 05-1240, Final Order entered April 30, 2007))

(b) In cases where an airplane is chartered for use in making aerial photographs, the charge for use of the airplane is not subject to sales or use tax if a separate charge is made to the customer.

(c) In cases where individuals deliver pictures to photographers or photographic studios for tinting or coloring, the receipts from such tinting or coloring are not subject to tax, since such receipts result from services rendered and do not result from sales of tangible personal property. (Section 40-23-2(1))

(2) The materials which become a physical part of the photographic prints, photostats, blueprints, etc., are purchased tax free at wholesale by the seller of the photographic print, photostat, blueprint, etc. (Sections 40-23-1(a)(9)b and 40-23-60-(4)b)

(3) The materials and chemicals used or consumed by the seller of photographic prints, blueprints, etc., but not becoming a component thereof, are purchased at retail by the seller and are subject to the sales or use tax, whichever may apply at the time of such purchase. (Sections 40-23-1(a)(10) and 40-23-60-(5))

(4) The mechanical equipment used in the production of photographic negatives, photographic prints, photostats, and blueprints including cameras are taxed at the reduced machine rate of sales or use tax. (Sections 40-23-2(3) and 40-23-61-(b)) (Amended November 3, 1980, readopted through APA effective October 1, 1982, amended March 10, 1998, effective February 15, 2008)

810-6-1-.123. Pig and Scrap Iron.

When a manufacturer of iron pipe withdraws pig and scrap iron from his raw materials stock to be used by him in casting machine parts for his use, he must add the cost of such materials into his gross proceeds of sales. (Issued January, 1951, readopted through APA effective October 1, 1982)

810-6-1-.124. Pipe Fittings.

Ordinarily pipe fittings are used by builders, contractors, or landowners as building materials which are taxed in accordance with the building material provision found in the definition of retail sales. In some instances, however, pipe fittings are used as standard parts or attachments for machines used in manufacturing, in which case they are entitled to the special machine rate of tax. See rule 810-6-2-.57 entitled Parts and Attachments For Machines Used in Manufacturing. (Sections 40-23-1(a)(10), 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-1-.125. Places of Amusement or Entertainment.

(1) The total receipts accruing from the operation of places of amusement or entertainment are subject to the sales tax. Taxable gross receipts from places of amusement shall include receipts from admissions, service charges, amusement devices, musical devices, amounts paid to participate or engage in specific activities, and receipts from parking facilities when made available at the place of amusement for the convenience of patrons. Taxable gross receipts shall also include advertising receipts received from promotional sponsors where the sponsor purchases the right to give away general admission tickets or passes to a specific activity. Receipts received from third party advertisers relating to advertising space on billboards, scoreboards, fences, programs or tickets, or to radio or television time not in conjunction with the right to give away general admission tickets or passes would not be subject to sales tax. (State of Alabama v. Huntsville Baseball Club, Inc. and Birmingham Baseball Club, Inc. (Admin. Law Div. Docket No. S. 92-208 & S. 92-170, decided January 18, 1995))

(2) Sales tax shall be collected as a separate item from the consumer at the amusement rate of tax based on the price of admission to the place of amusement. Where the tax is not stated and collected separately, the total amount of the admission price shall be used as the measure of the tax. A deduction for the sales tax included in the price of admission will be allowed in computing the tax due whenever the business has permanently displayed a sign showing the admission price and the amount or amounts of tax due within the view of persons paying the admission, or where the tickets used in connection with the transactions have plainly printed on the face the admission price and, as a separate item, the amount of sales tax due. Likewise, sales tax shall not be backed-out of amounts received from amusement or musical devices where the business has failed to permanently display a sign showing the price and the amount of sales tax due. The federal amusement tax collected as a separate item shall not be included in the measure of the sales tax. (Section 40-23-26)

(3) Places of amusement or entertainment where the public is charged a fee to see, hear, attend, participate or engage in any kind of display, program, activity, or event offered, include, but are not limited to, the following:

(a) Live or recorded performances, whether by individual ticket or by season tickets:
1. ballet performances;
2. circuses;
3. ice-skating shows;
4. motion pictures;
5. musical concerts;
6. opera performances;
7. outdoor theaters; and
8. theaters (movies and plays)

(b) Exhibitions or displays:
1. animal shows (contests, exhibitions);
2. antique shows;
3. arts and crafts, and art shows (fairs);
4. auto, boat or gun shows;
5. museums (that display art objects, antique autos, etc.); and
6. zoos
(c) Spectator sports:

1. automobile races;
2. drag strip operations;
3. horse shows (horse riding exhibitions);
4. motorcycle races;
5. rodeos;
6. sporting events such as football, baseball, basketball, hockey, and soccer games; and
7. wrestling or boxing;

(d) Participatory sports or games:

1. arcades where amusement devices such as pinball machines or video games are played;
2. bowling games;
3. go-cart races;
4. golf courses;
5. golf driving ranges;
6. Internet cafes where amusement devices such as game consoles and computer stations are assembled for game play and have computer network access or Internet access to the video or computer games. (The Docking Station, LLC v. State of Alabama (Admin. Law Div. Docket S. 07-124, Final Order decided May 1, 2007));
7. miniature golf courses;
8. para-sail boats;
9. pool (billiard) games;
10. skate board tracks;
11. skating rinks;
12. swimming pools; and
13. water slides;

(e) Fairs or carnivals:
1. amusement parks;
2. carnivals;
3. fairs;
4. games of skill, at a circus, carnival, etc.
5. shooting galleries (ranges); and
6. side shows;

(f) Other:
1. boat rides or sight-seeing tours for pleasure (marine life viewing, sunset sailboat cruises, dinner cruises, etc.);
2. cover charges (for admission to dance halls, nightclubs, discos, etc. that provide dancing, music, or other entertainment); and
3. rides for pleasure in helicopters, hot-air balloons, trains, etc.

(4) With the exception of athletic events conducted by educational institutions other than primary or secondary schools, no sales tax is due on receipts accruing from admissions from places of amusement or entertainment conducted by the State of Alabama, a county or city of the State or any instrumentality thereof. (City of Anniston v. State of Alabama, 91 So.2d 211)

(5) Public primary and secondary schools shall collect sales tax on admissions to athletic contests which they conduct; but, instead of remitting the tax collected to the Department of Revenue, the tax shall be retained by the school and used by the school for school purposes.

(6) Private or nonpublic primary and secondary schools shall collect and remit sales tax to the Department of Revenue on their gross receipts from athletic contests which they conduct. Effective July 1, 2006, pursuant to Act #2006-602, private or nonpublic primary and secondary schools shall continue to collect sales tax on admissions to athletic contests which they conduct; but, instead of remitting the tax collected to the Department of Revenue, the tax shall be retained by the school and used by the school for school purposes. (Section 40-23-2(2))

(7) The sales tax levied in Section 40-23-2(2) does not apply to admissions to any football playoff conducted by or under the auspices of the Alabama High School Athletic Association. Taxes on admissions to these football playoffs shall continue to be collected; but, rather than being remitted to the Department of Revenue, the taxes collected shall be retained by the collecting schools and used for school purposes. Effective July 1, 2006, pursuant to Act #2006-602, this exemption and retention of the sales tax collected shall apply to any athletic event conducted by or under the auspices of the Alabama High School Athletic Association.

(8) Sales tax is due at the general rate of tax on the gross proceeds of retail sales of food, drink, souvenirs and other tangible personal property sold at retail at places of amusement or entertainment, except for sales made by counties and cities of the State of Alabama as provided in Rule 810-6-2-.92.02 entitled State, County and City, Sales Made By; and public and nonpublic primary or secondary schools and groups affiliated with these schools such as parent-teacher organizations and booster clubs as provided in Rule 810-6-2-.88.04 entitled Exemption for Certain Sales by Elementary and Secondary Schools, School Sponsored Clubs and Organizations, and School Affiliated Groups. (Section 40-23-2(1)) (Sections 40-2A-7(a)(5), 40-23-31, 40-23-83, 40-23-2(2), 40-23-26, Code of Alabama 1975, Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended June 5, 1992, amended September 29, 1994, amended July 9, 1998, amended December 13, 2006, amended February 15, 2008)

810-6-1-.125.01. Amusement Tax Due on Fees Collected by Golf Courses open to the Public.

(1) The term "golf course open to the public" as used in this regulation shall mean any golf course, except those owned and operated by the State of Alabama or a county or incorporated municipality of the State of Alabama, which allows the public to use one or more of its facilities for a fee. However, the following policies or activities shall not cause an otherwise private golf course to be classified as a golf course open to the public:

(a) reciprocal play agreements with other golf courses that are also not open to the public.

(b) play by guests of a member (whether or not accompanied by the member).

(d) periodically holding invitational or charitable tournaments.

(e) the sale of condominium units the purchase of which carries with it the privilege of using the golf course facilities.

(2) Golf courses open to the public are liable for and shall collect and remit the amusement tax levied in Section 40-23-2(2) on fees paid by their customers including but not limited to the following fees as of the effective date of this regulation:

membership dues	tennis court fees
initiation fees	swimming pool fees
golf cart fees	driving range fees
greens fees	locker fees

(3) The gross proceeds from the sales of condominium units by golf courses open to the public do not constitute gross receipts from places of amusement and, therefore, are not to be included in the measure of tax levied in Section 40-23-2(2).

(4) Golf courses owned and operated by the State of Alabama or a county or incorporated municipality of the State of Alabama are exempt from the amusement levy contained in Section 40-23-2(2). (City of Anniston v. State, 265 Ala. 303, 91 So.2d 211 (1956))

(5) Retail sales of tangible personal property by golf courses owned and operated by counties or incorporated municipalities of the State of Alabama are exempt from sales tax. Retail sales of tangible personal property by all other golf courses, public or private, are taxable.

(6) The provisions of this rule shall become effective October 1, 1993.

(Adopted through APA effective October 12, 1993)

810-6-1-.126. Pole Line Construction.

Materials used in the construction of pole lines for the transmission of electric power and telephone, telegraph, radio, and television signals are building materials. These materials are purchased at retail subject to sales or use tax, whichever may apply, by the persons who erect the pole lines into place by attachment to real property. These materials include poles, lines, lightning arresters, circuit breakers, switch gear, all pole accessories and also include all the materials and equipment used in the construction of substations. This class of materials is subject to tax at the four percent rate with the exception of transformers and amplifiers which are taxable at the machine rate of one and one-half percent. (Sections 40-23-1(a)(10), 40-23-2(3)) (Adopted May 26, 1961, effective July 1, 1963, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.128. Postal Uniforms.

(1) Effective November 14, 1983, the U. S. Postal Service's procedures regarding uniform purchases for postal employees require vendor invoices to be made out directly to the Postmaster who, upon approval of the purchase by the employee, forwards the invoices to the Postal Data Center for certification and payment. Postal Service employees make no payment and handle none of the money at any time. (Postal Bulletin No. 21425 dated October 6, 1983, and Postal Bulletin No. 21547 dated January 2, 1986)

(2) Postal Uniform purchases handled in accordance with the procedures outlined above are sales to the U. S. Postal Service and, therefore, are not subject to Alabama sales or use tax. (Section 40-23-4(a)(17)) (Adopted June 12, 1978, readopted through APA effective October 1, 1982, amended April 3, 1987)

810-6-1-.129. Premiums and Gifts.

A sale of tangible personal property is taxable when made to a person who will use the property as a prize or a premium or will give the property away as a gift. (Section 40-23- 1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.130. Printers.

(1) Gross receipts accruing from the retail sales of printed matter of all kinds are subject to the sales tax. (Also see rule 810-6-1-.137 entitled Raw Materials & Supplies Purchased by Manufacturers and Compounders.

(2) Sales to consumers of printed matter such as catalogs, books, letterheads, invoice forms, envelopes, folders, advertising circulars, and the like by printers or others engaged in selling printed matter are subject to the sales tax. A printer may not deduct from the selling price of such tangible personal property charges for the labor or service of performing the printing even though such labor or service charges may be billed to the customer separately from the charge for the stock. Such labor or service is embodied in and becomes a part of the tangible personal property sold.

(3) Where printers purchase from the United States Post Office stamped cards and envelopes and print thereon various legends for customers, the printers must pay sales tax measured by their gross proceeds of sales of the printed cards or envelopes to their customers. Such cards and envelopes constitute tangible personal property and, if they are not resold by such customers, the sales by the printers are at retail. Such printers will not be required to pay sales tax on the amount of the postage where stated separately in billing to customers.

(4) No tax arises from the service of printing or from the service of typesetting performed by the printer for a customer or for another printer where there is no transfer of ownership of tangible personal property from the printer to his customer. (Section 40-22- 1(6))

(5) Sales of materials to printers are at wholesale, tax free, when such materials become a component of the printed matter produced for sale. The machines used in the printing come within the machine levy and are taxed at the one and one-half percent rate. The supplies, materials, and equipment not becoming a component of the product sold or not constituting a machine used in manufacturing are subject to the sales or use tax, whichever may apply, at the general rate of four percent.

(6) Newspaper advertising supplements or circulars inserted in newspapers usually fall in the following categories:

(a) A buyer enters into a contract with a printer for the printing of advertising circulars, catalogs, etc., and directs the printer to deliver the printed material to a newspaper or several newspapers, or directs that they be delivered to another location, sometimes the buyer's place of business. The buyer then enters into a second contract with the newspaper for distribution of the inserts. That portion of advertising supplements or inserts retained by the buyer for distribution to buyer's customers, that do not become part of newspapers manufactured for sale, will be subject to sales tax. However, those advertising supplements or inserts that are delivered to the purchasers or newspaper companies to be inserted into and become part of the newspaper are purchased at wholesale, tax free. Ralph P. Eagerton, Jr. v. Dixie Color Printing Corporation.

(b) Newspaper advertising supplements and inserts which are inserted into newspapers and sold as part and parcel of the newspaper, the retail sales of which are subject to the sales tax, no sales tax arises where such advertising supplements or inserts are:

(1) printed by the publishers of the newspaper and inserted into and sold as part and parcel of the newspaper published by such publishers or

(2) printed by another printer for the newspaper publisher and paid for by the newspaper publisher for insertion into and sold as part and parcel of the newspaper. (Adopted March 9, 1961, amended November 1, 1963, amended August 16, 1974, amended June 12, 1978, readopted through APA effective October 1, 1982, amended January 10, 1985)

810-6-1-.131. Withdrawals of Products Manufactured, Compounded, or Processed for Sale.

(1) Except as noted in paragraphs (2) and (3) below, manufacturers, compounders, and processors shall include in taxable sales reported for sales tax purposes the costs of materials purchased at wholesale which have become ingredients or components of products manufactured or compounded for sale by them but which are withdrawn from stock for their own use or consumption.

(2) Neither the withdrawal, use, or consumption of a manufactured product by the manufacturer thereof in quality control testing performed by employees or independent contractors of the manufacturer nor a gift by the manufacturer of a manufactured product, withdrawn from the manufacturer's inventory, to an entity listed in 26 U.S.C. Sections 170(b) or (c), is subject to sales tax. (Sections 40-23-1(a)(6), 40-23- 1(a)(10) and 40-23-1(e))

(3) Refinery, residue, or fuel gas, Refinery, residue, or fuel gas, whether in a liquid or gaseous state, that has been generated by, or is otherwise a by-product of, a petroleum-refining process, which gas is then utilized in the process to generate heat or is otherwise utilized in the distillation or refining of petroleum products is not taxable under the withdrawal provisions of the sales or use tax statutes. (Sections 40-23-1(a)(6), 40-23-1(a)(8), and 40-23-60(5)) (Readopted through APA effective October 1, 1982, amended January 5, 1996, amended December 23, 1999)

810-6-1-.132. Proofs, Wholesale, Tax Free.

Sales of materials to the processors of the proofs are at wholesale, tax free, when such materials become a component part of the proofs produced for sale. (Section 40-23- 1(a)(9)b) (Readopted through APA effective October 1, 1982)

810-6-1-.133. Pump Installed by a Contractor.

(1) A contractor who installs a pump for a county or incorporated municipality of the State of Alabama is required to pay tax on his or her purchase of the pump. The pump is in the same category as any other building materials which become affixed to realty. When title to a pump installed under contract passes from the contractor to the landowner, it has ceased to be personal property and has become real property. (Sections 40 23 1(a)(10) and 40 23-60(5))

(2) On and after October 1, 2000, the sale of a pump to, or the storage, use, or consumption of a pump by, any contractor or subcontractor to be incorporated into realty pursuant to a contract with any county or incorporated municipality of the State of Alabama awarded prior to July 1, 2004, 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) (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-.134. Pumps.

Well pumps when installed become realty along with well casing, pumphouse, well connections, etc. The person who installs the pump is the purchaser at retail who must pay sales tax or use tax, as the case may be. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.137. Raw Materials and Supplies Purchased by Manufacturers and Compounders.

(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, ingredients or materials which are purchased by manufacturers or compounders and which become a part of the property manufactured or compounded for sale are purchased at wholesale, tax free, by such manufacturers or compounders. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(2) One-time-use containers used by manufacturers and compounders to package their products and which become the property of the purchaser of the products are purchased at wholesale, tax free, by the manufacturers and compounders. Returnable containers are purchased at retail and are subject to tax. (Sections 40-23-1(a)(9)c and 40- 23-60(4)c)

(3) Labels purchased by manufacturers and compounders, affixed to one-time-use containers, and sold along with the contents of the containers by said manufacturers and compounders are purchased at wholesale, tax free, by the manufacturers and compounders. The term "label" is understood to mean a tag or sticker of any material imprinted with information and said term includes price stickers, address stickers, and shipping tags as well as those tags or stickers which identify or describe the property to which they are attached. (Sections 40-23-1(a)(9)c and 40-23-60(4)c) (Readopted through APA effective October 1, 1982, amended January 29, 1990, amended September 25, 1992, amended December 10, 1997)

810-6-1-.138. Rebuilding of Tracks, Idlers, and Rollers.

(1) The rebuilding of tracks, idlers, and rollers belonging to others is a service and the receipts from this service by the repairman-dealer are not subject to sales or use tax. The repairman-dealer shall pay sales or use tax to the supplier on purchases of materials used in rebuilding tracks, idlers, and rollers belonging to others.

(2) Sales of rebuilt tracks, idlers, and rollers by the repairman-dealer are subject to sales or use tax. The repairman-dealer shall compute sales or use tax on the total sales price and collect the tax from the person to whom the rebuilt item is sold. (Sections 40-23-1(a)(6) and 40-23-60(10))

(3) Where a repairman-dealer (i) rebuilds tracks, idlers, and rollers that are part of the repairman-dealer's own stock of goods for sale and (ii) rebuilds tracks, idlers, and rollers belonging to others, the following shall apply:

(a) Sales or use tax shall be paid by the repairman-dealer to the supplier on all purchases of materials used in rebuilding the tracks, idlers, and rollers unless the repairman-dealer elects to claim the exemption provided by Section 40-23-1(a)(9)k for materials purchased or withdrawn for use in rebuilding tracks, idlers, and rollers which are part of the repairman-dealer's stock of goods for sale.

(b) If the repairman-dealer elects to claim the exemption in Section 40-23-1(a)(9)k, all materials becoming a part of the rebuilt tracks, idlers, and rollers shall be purchased at wholesale tax-free by the repairman-dealer and the repairman-dealer shall maintain suitable records to distinguish between the materials used in rebuilding the tracks, idlers, and rollers offered for sale by the repairman-dealer and the materials used by the repairman-dealer in rebuilding the tracks, idlers, and rollers of others. If suitable records are maintained, the repairman-dealer shall collect and remit sales tax on sales of rebuilt tracks, idlers, and rollers in accordance with paragraph (2) and shall compute and pay sales tax on the cost of the materials withdrawn and used in rebuilding tracks, idlers, and rollers belonging to others.

(c) In the event suitable records are not kept by the repairman-dealer to determine which materials are used in rebuilding tracks, idlers, and rollers offered for sale by the repairman-dealer, then all materials used by the repairman-dealer shall become a taxable withdrawal by the repairman-dealer. The sales tax due on withdrawals by the repairman-dealer shall be computed on the purchase price or cost to the repairman-dealer of the materials withdrawn for use. (Section 40-23-1(a)(10))

(4) Where any used track, idler, or roller which is a part of an automotive vehicle, truck trailer, semi trailer, or house trailer is taken in trade, or in a series of trades, as a credit or part payment on the sale of a new or rebuilt track, idler, or roller, the sales or use tax shall be paid on the net difference, that is, the price of the new or used track, idler, or roller sold less the credit for the used track, idler, or roller taken in trade. See Rule 810-6-1-.22 entitled Barter, Exchange, Trade-In. (Section 40-23-2(1)) (Adopted July 16, 1964, amended July 6, 1977, amended August 10, 1982, readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-1-.140. Recordings Purchased for Use with Musical Devices.

Recordings purchased for use in operating musical devices are subject to sales or use taxes whichever may apply. When such recordings have served their purpose in connection with the operation of musical devices and are sold at retail as used recordings as a regular course of business by the machine operators, such sales are subject to sales tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-141. Repairs, Outside or Sublet.

(1) The operator of a repair shop who sublets a part or all of a repair job purchases at wholesale tax free the repair parts installed by the outside or subrepairman. The shop operator shall bill such repair parts to his customers separately from any charges for labor and services and report and pay sales tax only on the retail sales price of such parts. Provided however, where repair parts are not separately billed, sales tax shall be paid on the total charge for the job.

(2) When the subrepairman uses or consumes materials and supplies, such as solder, paint, paint thinners, bits of wire, and cement, these materials are subject to tax at the time of purchase by the subrepairman, the tax to be paid to the supplier. Provided where the subrepairman also is engaged in the business of selling at retail such supplies and materials, they are purchased by him at wholesale and are subject to the tax when withdrawn from stock for use or consumption, the tax to be paid direct to the Department of Revenue by the subrepairmen. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.142. Repairs to Equipment.

Where a repairman in Alabama repairs equipment, materials which pass to the repairman's customer but which lose their identity when used by the repairman or which are inconsequential in amount such as, paint, solder, and tacks are considered to have been used or consumed by the repairman and are taxable at the time of the sale to him. (Readopted through APA effective October 1, 1982)

810-6-1-.143. Repairs to Real Property.

(1) The term "repairs to real property" as used in this rule includes, but is not limited to, the repairing, remodeling, restoring, or altering of buildings of all kinds and descriptions, plumbing systems, electric supply systems, water supply systems, central heating and air conditioning systems, roads, streets, railroads, and railways.

(2) Sales or use taxes are due on sales of materials to repairmen, builders, contractors, or other persons who use the materials in making repairs to real property. (Sections 40-23-1(a)(10) and 40-23-60(5), Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended December 28, 1998)

810-6-1-.144. Repairs to Tires and Tubes.

(1) Tire repairmen shall collect and remit sales tax on total charges for recaps, retreads, and the major repairs; such as sectional, reinforcement, and spot repairs. Materials used in recapping, retreading, and major repairing are purchased at wholesale, tax free. Machines used directly in recapping, retreading, and major repairing are taxed at the special one and one-half percent rate levied on machines.

(2) Tire repairmen shall not collect sales tax on charges for tube and minor tire repairs. Materials used in making tube and minor tire repairs are taxable to the repairmen. Machines used solely in making tube and minor tire repairs are taxable to the repairmen at the general rate of 4 percent.

(3)

(a) Where the repairman uses repair materials for tube and minor tire repairs only, he shall pay tax thereon to his supplier; or, if purchased outside of Alabama from a supplier who does not collect Alabama tax, he shall pay the tax direct to the Department of Revenue as use tax.

(b) Where the repairman does recapping, retreading, and major repairing as well as tube and minor tire repair, he may purchase at wholesale all materials used in tire and tube repairing; then shall pay sales tax direct to the Department of Revenue on the cost price of materials withdrawn for use in tube and minor tire repairing.

(4) All hand tools used in recapping, retreading, and major and minor tire repairing are subject to sales tax. All supplies used or consumed by tire repairmen and which do not pass on to their customers are taxable when purchased by them.

(5) Sales by repairmen of repaired, retreaded, and recapped tires owned by them are subject to tax measured by the total sales price without any deduction for labor or cost of materials. (Readopted through APA effective October 1, 1982, amended April 3, 1987)

810-6-1-.144.03. Resale, Sales for.

All buyers of property for resale purposes are entitled to purchase at wholesale, tax free, the property they resell as regular course of business when they have secured the sales tax license required by law. This rule also applies to retailers located outside Alabama when they have secured the sales tax license required by law in the state in which they are located. (Section 40-23-6) (Adopted August 10, 1982, readopted through APA effective October 1, 1982)

810-6-1-.145. Meals Furnished to Employees by Restaurants.

Restaurants, cafes, and other eating establishments are liable for sales tax on meals furnished to their employees as part of a compensation plan. The measure of tax is the value of food withdrawn and consumed by the employees.(State v. Morrison Cafeterias Consolidated, Inc., 487 So.2d 898 (Ala. 1985)) (Sections 40-23-1(a)(6) and 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982, amended April 3, 1987, amended March 10, 1998)

810-6-1-.147. Returned Merchandise.

(1) When property is returned by the purchaser and the seller refunds the full amount paid, there is no sale and the sales price of such returned property is not to be included in the gross proceeds of sales.

(2) When property is returned and a part, but not all, of the sales price is refunded, the full sales price is to be included in the gross proceeds of sales. This would include but not be limited to property returned and a restocking fee is charged before refunding the balance of the purchase price. (State v. Leary and Owens Equipment Company).

(3) When the sale is on credit and less than the amount paid is refunded, the measure of the tax is the total amount of the sale. (Section 40-23-1(a)(6)) (Adopted March 9, 1961, amended November 3, 1980, readopted through APA effective October 1, 1982)

810-6-1-.148. Rural Electrification Authority (R.E.A.).

Cooperatives set up under authority of United States Rural Electrification Laws are not instrumentalities of any governmental body. All purchases are subject to the sales and use tax, whichever may apply, except when otherwise specifically exempted. (Section 40-23- 1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.150. Sale.

The term "sale" or "sales" includes installment and credit sales and the exchange of property as well as the sale thereof for money, every closed transaction constituting a sale. Each transaction whereby property is transferred from one owner to another constitutes a sale under the sales tax law except in instances where the property is transferred as a gift or where possession without ownership is given on a rental or lease basis with no intention to transfer ownership at the end of the rent or lease period. (Section 40-23- 1(a)(5)) (Readopted through APA effective October 1, 1982)

810-6-1-.150.05. Sand, Gravel, and other Building Materials, Sales of.

(1) The seller is making taxable sales of such building materials as sand, gravel, earth, crushed stone, and asphalt which are merely dumped or deposited by him on a job site or in a storage area. In this case the measure of the tax is the total amount received by the supplier without any deduction for the expense of loading, dumping, or hauling or any other expense whatsoever.

(2) On the other hand, sand, gravel, earth, crushed stone, and asphalt or like materials are purchased at retail subject to a tax measured by the purchase price where such materials are spread and placed by the purchaser under a contract to furnish and to apply the materials in such a way that they become a part of real property. Where this is the case, the purchaser is acting as a contractor rather than as a retailer and there is no sale at retail by him to the landowner.

(3) In case the supplier is both selling materials at retail and contracting to furnish and apply them, the rule of dual businesses will apply with the supplier purchasing all materials at wholesale, tax free, and thereafter reporting and paying tax to the Department of Revenue on both sales at retail and on withdrawals for use under contracts to furnish and apply. (Section 40-23-1(a)(10)) (Adopted May 26, 1961, readopted through APA effective October 1, 1982)

810-6-1-.166. Shoe Repairs.

(1) A shoe repair shop renders a service and also sells tangible personal property. A job which does not involve a sale of tangible personal property but merely represents the rendering of service does not require the payment of sales tax. In any transaction where tangible personal property is sold sales tax applies to the full purchase price without any deduction for labor or service.

(2) If the tangible personal property is sold and the labor or service is furnished in separate transactions, each transaction being billed separately, then the tax applies to the sales price of the tangible personal property and not to the labor or service.

(3) Materials and supplies used by shoe repairmen in rendering services, but which are not resold as merchandise are subject to sales tax when purchased by the repairmen from the supply dealer. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.167. Structural Steel.

Structural steel is a building material and, for that reason, is usually subject to tax at the general rate at the time of its sale to the builder, contractor, or landowner who purchases it to add to or alter real property. This is in accordance with the building material provision found in the definition of "retail sale". nbsp; In some instances, however, steel fabricators bill out machine parts as structural steel, in which case, where the facts show that the steel purchased is a part or attachment for a machine used in mining, quarrying, manufacturing, processing, or compounding, the machine rate will apply. (Sections 40-23-1(a)(10), 40-23- 2(3)) (Readopted through APA effective October 1, 1982)

810-6-1-.168. Table Wine Tax.

Whether billed separately to the purchaser or included in a lump sum selling price; the table wine tax levied pursuant to Code of Alabama 1975, Section 28-7-16, 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 November 3, 1980, amended March 16, 1981, readopted through APA effective October 1, 1982, amended January 10, 1985, amended May 22, 1993)

810-6-1-.170. Theatrical Productions, Symphonies, etc.

(1) The gross proceeds from sales of admissions to any theatrical production, symphonic or other orchestral concert, ballet or opera production when such concert or production is presented by any society, association, guild, or workshop group, organized within this state, whose members or some of whose members regularly and actively participate in such concert or production for the purpose of providing a creative outlet for the cultural and educational interests of such members, and of promoting such interests for the betterment of the community by presenting such productions to the general public for an admission charge is exempt from the sales tax.

(2) In order to be exempt from the tax, some of the members of the society, association, guild, or workshop group must take an active part in the concert or production such as director, musician, or actor. (Section 40-23-4(a)(24)) (Readopted through APA effective October 1, 1982)

810-6-1-.172. Taxability of Cross Ties and Timbers.

(1) Purchases of cross ties and timbers, treated or untreated, by railroad companies and others for use in Alabama are subject to sales or use tax on the following basis:

(a) Where untreated cross ties or timbers are purchased from outside this state and also creosoted outside this state and subsequently brought into this state for use, the measure of the use tax shall be the cost of the untreated ties or timbers plus the cost of creosoting. (Section 40-23-60(5), Code of Alabama 1975)

(b) Where untreated cross ties or timbers are purchased from outside this state and brought into this state and creosoted within this state prior to their use, the measure of the use tax shall be the cost of the untreated ties and timbers since the materials used in creosoting the ties or timbers are taxable when purchased or withdrawn by the person performing the service. (Section 40-23-60(5))

(c) Where untreated cross ties or timbers are purchased within Alabama for shipment in interstate commerce without paying the Alabama sales tax and where the cross ties or timbers are shipped outside this state for creosoting and subsequently shipped into and used within this state, the purchase is subject to the use tax as measured by the full price of the finished product brought into this state. (Section 40-23-60(5))

(d) Where the Alabama sales tax is paid on the purchases of untreated cross ties or timbers and the cross ties or timbers are subsequently creosoted either within this state or outside this state, the purchaser would owe no additional Alabama sales or use tax on the cross ties or timbers. (Section 40-23-1(a)(6))

(e) Cross ties and timbers are taxable when sold under bulk contract with the purchaser inspecting and approving the material at the plant or yard of the seller and the seller segregating and allotting the approved material to the purchaser for future shipment according to subsequently issued shipping instructions. This material is to be reported by the seller as subject to tax in accordance with the provisions of Section 40-23-8. (Sections 40-23-2(1) and 40-23-8))

(f) Cross ties and timbers are classified as building materials and are taxed at the general rate of sales or use tax except when used as a roadway for quarrying or mining equipment in which event the sales of cross ties and timbers are subject to the reduced mining or quarrying rate of sales or use tax. (Sections 40-23-2(1), 40-23-61(a), 40-23-2(3), and 40-23-61(b))

(2) Cross ties and timbers sold F.O.B. an Alabama shipping point on a purchase order requiring the seller to ship to an out-of-state destination are sales in interstate commerce and are not subject to sales tax regardless of whether shipment is made by the use of purchaser's transportation facilities when the purchaser is a common carrier. (Sections 40-23-1(a)(5) and 40-23-4(a)(17)) (Readopted through APA effective October 1, 1982, amended October 20, 1998)

810-6-1-.173. Tin Shops.

(1) Tin shops are usually found to be engaged in contracting, selling, manufacturing, and repairing. Because of the complex nature of these businesses, they ordinarily will be set up to purchase all of their materials at wholesale, tax free, with tax to be paid direct to the Department of Revenue as sales tax on use and sales.

(2) As contractors making additions to real property, tax should be paid on the cost price of materials which are used in the form received from the suppliers. Where the property installed is manufactured by the tin shop operators in their shops, sales tax is to be paid measured by the reasonable and fair market value of the property. (See rule entitled Building Materials Manufactured by Contractors.)

(3) As vendors making direct sales, sales tax is due measured by the sales price of the property sold.

(4) As repairmen, the sales tax is due on the cost of materials and supplies used or the sales price of the property transferred in the transactions, as the case may be. (See rule 810-6-1-.95 entitled Materials Used in Repairing, for ruling with regard to use and sale of materials used in repairing.) (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.174. Tobacco tax.

Whether billed separately to the purchaser or included in a lump sum selling price; state, county, and municipal tobacco excise taxes 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 5, 1963, amended October 29, 1976, readopted through APA effective October 1, 1982, amended May 22, 1993)

810-6-1-.175. Top Soil, Fill Dirt, Sand and Gravel.

(1) Sales of top soil, fill dirt, sand, and gravel are subject to sales tax, the tax to be measured by the amounts received from such sales including charges for transportation furnished by the seller. These materials are sold in every instance where they are supplied to tenants, landowners, builders, or contractors for a consideration, for use in making additions or alterations to real property. Suppliers may not, for tax purposes, claim to furnish these materials free where charges are made for services such as hauling, loading and handling. The measure of the tax is the amount received by the supplier without any deduction for labor or services which go into producing and delivering the materials regardless of the fact that such transportation, labor, or service may be billed as separate items.

(2) This rule applies only where the materials are furnished, and does not apply where a charge for hauling is made by a person who contracts to haul materials which he does not furnish. (Sections 40-23-1(a)(6), 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.176. Trade Stamps and Trade Coupons.

When making a sale of tangible personal property where as an incident thereto trade stamps or trade coupons are issued free to the purchaser, the seller shall collect and remit sales tax measured by the total amount paid by the purchaser. The seller shall not deduct from the total amount paid by the purchaser any amount on account of the value of the stamps or coupons issued nor, where the trade stamps or trade coupons have a fixed redemption value and are issued free based on a fixed ratio of stamp or coupon value to the sales price, shall the seller be required to add the value of the trade stamps or trade coupons issued to the total amount paid by the purchaser before computing, collecting, and remitting the sales tax. (Section 40-23-1(a)(6), Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-1-.177. Trading Stamps.

(1) This rule is intended to apply to those transactions where trading stamps are exchanged for articles of merchandise called premiums. These exchanges are usually referred to as trading stamp redemptions.

(2) The exchange of a premium for trading stamps is deemed to be a sale at retail. This exchange is subject to the sales tax. The amount of tax is to be measured by the fair retail market value of the premium. Where the trading stamps have been given a fixed value, the measure of the tax shall not be less than the fixed value of the trading stamps used in exchange. If, however, the fair retail market value of the premium is more than the fixed value of the trading stamps required for its redemption, the measure of the tax shall be the fair market value, rather than the fixed value of the stamps. The premiums used to redeem trading stamps are purchased at wholesale, tax free. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.178. Transportation Charges.

(1) Where a seller delivers tangible personal property in his own equipment or in equipment leased by him, the transportation charges shall be considered a part of the selling price subject to sales or use tax. Said transportation charges are taxable even if billed separately.

(2) Where delivery of tangible personal property is made by common carrier or the U. S. Postal Service, the transportation charges shall not be subject to sales or use tax if billed as a separate item and paid directly or indirectly by the purchaser. To be excluded from the measure of tax, these transportation charges must be separate and identifiable from other charges. Transportation charges are not separate and identifiable if included with other charges and billed as "shipping and handling" or "postage and handling". Indirect payment of the transportation charges shall include those instances where the seller prepays the freight to the common carrier or U. S. Postal Service and is reimbursed by the purchaser.

(3) Where a seller contracts to sell and deliver tangible personal property to some designated place and makes arrangements for delivery of the property by means other than a common carrier or the U. S. Postal Service, the transportation charges shall be considered a part of the selling price subject to sales or use tax. Said transportation charges are taxable even if billed separately. (Sections 40-23-1(a)(5) and 40-23-1(a)(6)) (Amended August 16, 1974, amended October 29, 1976, readopted through APA effective October 1, 1982, amended April 3, 1987)

810-6-1-.179. Transportation Costs, Sellers.

In no event may a seller deduct costs of bringing property to his place of business or costs of delivering property from factory to his customer when such factory to customer transportation is paid by the seller either to a transportation company, the manufacturer, or by way of credit to this customer for transportation costs paid by the customer and deducted from seller's invoice. (Section 40-23-1(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-1-.180. Truck Trailers and Semitrailers.

The term "semitrailers" in the Sales and Use Tax Laws shall include semitrailers designed and intended for use in connection with trucks and highway tractors ordinarily used for highway hauling; also luggage, boat, utility, camper, and travel semitrailers designed primarily to be drawn by passenger automobiles. A semitrailer may be pulled by any type automotive vehicle and be taxed at the automotive rate of 2%. A trailer must be pulled by a truck or truck tractor to be taxed at the automotive rate. (Section 40-23-2(4)) (Adopted March 9, 1961, amended March 23, 1962, amended December 15, 1969, readopted through APA effective October 1, 1982, amended January 24, 1989)

810-6-1-.181. Undertakers and Morticians.

(1) Sales of tangible personal property to undertakers and morticians are retail sales and subject to sales or use tax at the time of purchase. If the undertaker or mortician purchases tangible personal property from out-of-state vendors on which the tax has not been paid to the vendor, the undertaker or mortician will be required to pay consumers use tax directly to the Department.

(2) Where an undertaker manufactures vaults for his own use, he would be required to pay tax to his supplier on all the ingredients that become part of the vaults. If he is in a dual business of manufacturing vaults for his own use and for sale to others, he would be required to be licensed by this Department, buy all of his ingredients at wholesale tax exempt, and pay tax to this Department on the sale of vaults and the withdrawal of vaults for his own use. The measure of the tax on the withdrawal of vaults for his own use would be the cost of materials and ingredients that become part of the manufactured vault. (Section 40-23-1(a)(10)) (Adopted January 20, 1966, readopted through APA effective October 1, 1982, amended June 5, 1992)

810-6-1-.182. Upholstery Shops.

(1) An upholstery shop renders service and sells tangible personal property. Materials which pass to the upholsterer's customer and which do not lose their identity when used by the upholsterer and which are a substantial part of the repair job (such as cloth, leather or vinyl, foam rubber, and springs) are sold at retail by the upholsterer. He must collect and report sales tax on such sales, including tax on the services that are incidental thereto. He may, however, if he makes a separate agreement to sell the materials and to perform the labor and service required, collect and remit the tax only upon the price of the materials if his records and invoices clearly show a separation of the amount received from the sale of materials and from rendering service. These materials are purchased at wholesale, tax free, by the upholsterer.

(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. (Section 40-23-1(a)(10))(Readopted through APA effective October 1, 1982)

810-6-1-.183. Used and Secondhand Property.

Sales of used property are subject to the sales tax, also see Sales and Use Tax Rule 810- 6-1-.33 entitled Casual Sales. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.183.02. Sales of Tangible Personal Property Through Vending Machines.

(1) Sales tax is due on sales of tangible personal property sold through vending machines operated by coins, currency, credit cards, slugs, tokens, or other media of exchange. The retail operator of vending machines shall report and pay sales tax on the operator’s total gross receipts from sales through vending machines without any deduction for commissions or rental charges paid to a person on whose property the machines are located. Sales tax may be removed from the retail vending machine operator’s total gross receipts from vending machine sales before computing sales tax due. (State of Alabama v. Automatic Sales, 277 Ala. 63, 167 So.2d 146 (1964)) (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40-23-2(1), and 40-23-2(5), Code of Alabama 1975)

(2) Sales of tangible property through vending machines are taxable as follows:

(a) Vending machine sales of food and food products for human consumption, coffee, milk, milk products, and substitutes for these products are taxable at 3 percent of the retail sales price. Items which qualify for this special rate include, but are not limited to, sandwiches, candy, potato chips, and crackers. (Section 40-23-2(5))

(b) All other tangible personal property sold through vending machines is taxable at 4 percent of the retail sales price. Items which are taxable at the 4 percent general rate include, but are not limited, to softdrinks, fruit juices, bottled water, cigarettes, health and beauty aids, and chewing gum. (Section 40-23-2(1))

(3) Except as noted in (a) below, the wholesale supplier of property sold through vending machines sells the property at wholesale and is not required to collect sales tax from the retail operator provided the operator is a retailer licensed pursuant to Section 40-23-6, Code of Alabama 1975. The licensed retail operator is required to report and pay the sales tax due on vending machine sales. The wholesale supplier shall charge tax to all customers who do not have a sales tax license number or who are not otherwise exempted by law. The measure of tax is the amount received by the supplier for the sale of the property. (Section 40-23-1(a)(9)a)

(a) Where a licensed or unlicensed retail operator purchases property for resale through vending machines and retains title to the property in the vending machines, the wholesale supplier and the retail operator may agree that the wholesale supplier will service the machines, collect the receipts from the machines, and collect and pay sales tax to the Department of Revenue on the vending machine sales. The payment of all applicable sales tax to the Department of Revenue by the wholesale supplier shall discharge both the supplier and the licensed or unlicensed retail operator from any additional sales tax liability with respect to sales through the vending machines covered by the agreement. The payment of a rental fee on the machines by the retail operator to the wholesale supplier shall not affect the validity of the agreement.

(4) A wholesale supplier of property sold through vending machines shall maintain records which show the sales tax license number of every purchaser who purchases property at wholesale. These records may be maintained on a ledger or other suitable book, in a separate card index, on each individual invoice, or in a computerized record keeping system. Each wholesale invoice shall show the complete name and address of the wholesale purchaser. Invoices made out to "cash" shall always be considered retail sales invoices. (Section 40-23-9)

(5) A wholesale supplier who places vending machines on location, retains title to the property in the vending machines, pays the location owner a certain percentage of the gross sales as a rental charge for conducting business in the space occupied by the vending machines, services the machines, and collects the receipts is the retail operator of the vending machines and is required to report and pay the sales tax due on the sales through the machines. (Sections 40-23-2(1) and 40-23-2(5))

(6) The provision in paragraph (2)(a) regarding the proper measure of tax to be used in computing the 3 percent sales tax applicable to vending machine sales of food and food products for human consumption, coffee, milk, milk products, and substitutes for these products shall be effective January 1, 2000. (Adopted through APA effective December 23, 1999)

810-6-1-.184. Seller Sells Tax Free at the Seller's Risk.

(1) Other than the exceptions noted in paragraphs (2), (3), (4), and (5) below, the seller is liable for sales or use tax on any sales for which the seller fails to collect the appropriate sales or use tax due. It is the seller's duty under the Sales and Use Tax Laws to know the general and customary business of the customer and to collect the amount of tax due. The seller is not, however, expected to follow each article of goods sold to its final use; therefore, the seller is not to be held accountable for an isolated transaction made by the customer or for an isolated use of property by the customer. Where a seller sells to a customer who both uses and sells from the same stock of goods, the seller may sell, tax free, at wholesale all of the goods so used and resold. (Sections 40-23-26 and 40-23-67, Code of Alabama 1975)

(2) A seller, who acts in good faith and reasonably believes a tax exempt purchase is legal, is not liable for sales or use tax later determined to be due on a sale for which the purchaser provides the seller with a State Sales and Use Tax Certificate of Exemption (Form STE-1). (See Sales and Use Tax Rule 810-6-5-.02 State Sales and Use Tax Certificate of Exemption (Form STE-1) - Responsibilities of the Certificate Holder - Burden of Proof - Liability for Taxes Later Determined to be Due.) (Section 40-23-120)

(3) A seller who secures a properly completed and duly signed certificate pursuant to Section 40-23-4(a)(10) or Section 40-23-62(12), Code of Alabama 1975, and has no knowledge that such certificate is false when it is filed is not liable for sales or use tax on a sale later determined to be taxable. (See Sales and Use Tax Rule 810-6-3-.67.04 Certificate of Exemption - Fuel and/or Supplies Purchased for Use or Consumption Aboard Vessels Engaged in Foreign or International Commerce or in Interstate Commerce.) (Sections 40-23-4(a)(10) and 40-23-62(12))

(4) A seller who secures from the purchaser a Form ST:EXC-1, or a variation thereof approved by the Revenue Department, is not liable for sales or use tax later determined to be due on sales of tangible personal property which the purchaser claims are exempt pursuant to Sections 40-23-4(a)(2), (4), or (22) or 40-23-62(5), (7), or (23). (See Rule 810-6-3-.20.01 Exemption Certification Form Respecting Fertilizers, Insecticides, Fungicides, and Seedlings (Form ST:EXC-1).) (Section 40-23-4.3)

(5) A seller, who acts in good faith and reasonably believes a tax exempt purchase is legal, is not liable for sales or use tax later determined to be due on a sale for which the purchaser provides the seller with a Sales and Use Tax Certificate of Exemption for an Industrial or Research Enterprise Project (Form STE-2). (See Sales and Use Tax Rule 810-6-4-.24.01 Sales and Use Tax Certificate of Exemption for an Industrial or Research Enterprise Project (Form STE-2) - Responsibilities of the Certificate Holder - Burden of Proof - Liability for Taxes Later Determined to be Due.) (Section 40-23-120) (Readopted through APA effective October 1, 1982, amended January 29, 1990, amended March 24, 1993, amended December 10, 1996, amended June 9, 1999)

810-6-1-.185. Venetian Blinds.

Venetian blinds and similar window furnishings are subject to tax on the full sales price. This type of property remains personal property even though it is attached to a building. Where venetian blinds are sold at an installed price, tax is to be measured by the total invoiced amount. Also see regulation 810-6-1-.84 entitled Labor Service and regulation 810-6-1-.81 entitled Installation Charges. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.186. Veterinarians.

(1) Veterinarians use and consume medicines, equipment, and supplies in the rendering of professional services. When used by veterinarians who are not licensed to collect sales tax on their retail sales, these medicines, equipment and supplies are taxable at the time of purchase by the veterinarian.

(2) Veterinarians in many instances make retail sales of medicines, vaccines, and other supplies. Veterinarians who make retail sales shall apply for and obtain a sales tax license. Further, these veterinarians shall collect sales tax from their customers and remit the tax to the Department of Revenue.

(3) Veterinarians who have obtained a sales tax license shall purchase all medicines, equipment, and supplies from veterinarian supply houses tax-free. Those items purchased tax-free and used or consumed by the veterinarian shall be reported as a withdrawal by the veterinarian and the sales tax thereon remitted directly to the Department of Revenue. The tax on withdrawals shall be computed on the cost of the item purchased tax-free from the veterinarian supply house. The veterinarian shall collect sales tax from the customer on those items purchased tax-free from veterinarian supply houses and resold by the veterinarian. The tax on retail sales by veterinarians shall be computed on the selling price to the customer.

(4) With respect to purchases from suppliers other than veterinarian supply houses, veterinarians who have obtained a sales tax license shall pay tax to the supplier on items purchased for use or consumption and not for resale. Examples of such items include, but are not limited to, equipment, office supplies, and office furniture. Items purchased for resale from suppliers other than veterinarian supply houses shall be purchased tax-free and the veterinarian shall compute and pay sales tax on withdrawals and collect and remit sales tax on retail sales to customers.

(5) The sale, use, storage, or consumption of all antibiotics, drugs, serums, vaccines, and other medications used in the commercial production and growing of fish, livestock, and poultry is exempt from sales and use tax. This exemption does not apply to medications for dogs, cats, or any other animal which does not qualify as fish, livestock, or poultry. When antibiotics, drugs, serums, vaccines, and other medications are used for both taxable and exempt purposes, the veterinarian must maintain adequate records to substantiate the exempt usage; otherwise tax shall be due on all antibiotics, drugs, serums, vaccines, and other medications regardless of how used. (Sections 40-23- 4(a)(29) and 40-23-62(29)) (Amended November 3, 1980, readopted through APA effective October 1, 1982, amended January 19, 1998)

810-6-1-.186.03. Warehousemen, Sales Made by.

(1) Receipts of warehousemen from their services in storing, handling, packing, crating, delousing, etc., property for others are not subject to the sales tax. Any materials used incidental to the rendering of such services are taxable at the sale to the warehousemen.

(2) When, however, warehousemen buy and sell property as a regular course of business, such sales, if not otherwise exempted, are subject to the sales tax, including sales of goods held on consignment and including transactions in which the warehouseman acts as a broker selling goods not actually owned by him or in his possession at the time he accepts the order.

(3) Sales by warehousemen of property forfeited to them in the operation of their warehousing business are subject to tax where such sales are made as a regular course of business. Where such sales are infrequently made they will be considered casual sales not required to be reported in sales tax returns filed with this Department. (Section 40- 23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.186.04. Warehousemen, Sales to.

(1) All property purchased for use in operating places of storage is subject to sales or use tax, whichever may apply, including all tickets, labels, receipt forms, heating or cooling equipment, fire protection equipment, pest control supplies and equipment, compressors, containers, and crating materials, and any and all other supplies, materials, or equipment purchased for use incidental to the storing or warehousing of property of any kind or character.

(2) Note, however, that warehousemen may also be engaged in the business of selling, processing, or manufacturing for sale, in which event the supplies and equipment used in such activities will be taxable or not in accordance with the rules applying to the use of property for such purposes. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.186.05. Warranty, Extended or Service Contract.

(1) When a dealer sells an extended warranty or service contract to a customer, no sales tax is due.

(2) Except as noted in (3) below, sales or use tax is due on the purchase of, or withdrawal from inventory of, parts used in performing repairs or services pursuant to an extended warranty or service contract. Tax is to be computed on the cost of the parts to the dealer.

(3) Sales or use tax is not due on the purchase of, or withdrawal from inventory of, parts by dealers to be used in performing repairs or services free-of-charge for a customer under the terms of a manufacturer's extended warranty or service contract sold to the customer by the dealer. Such warranties are granted to the customer by the manufacturer, the manufacturer warrants or guarantees the replacement of defective parts at no cost to the customer, and the manufacturer provides full credit to the dealer performing the repair for the parts purchased or withdrawn. Department of Revenue v. Equipment Sales Corporation (Docket No. S. 92-286) (Sections 40-23-4(a)(18) and 40-23- 62(19)) (Adopted June 12, 1978, readopted through APA effective October 1, 1982, amended October 4, 1994)

810-6-1-.187. Warranty Contracts - Replacements of Articles.

Where an unsatisfactory article is returned to the seller for replacement or repair under a warranty contract between the seller and his customer and the new article is given in exchange or defective parts are replaced at a reduced price, the amount of sales tax on such exchange or replacement shall be measured by the reduced price plus the fair and reasonable market value of any unsatisfactory article or part kept by the seller. In instances where there is no charge for the article given in exchange or for the replacement parts no tax is due. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-1-.188. Watch and Jewelry Repair Shops.

(1) Watch and jewelry repairmen render services in repairing, cleaning or servicing articles which belong to other persons. They also engage in the business of selling tangible personal property for use or consumption, such as watches, clocks, watch cases, watch parts, etc.

(2) Where the watch or jewelry repairman renders nothing but a service, sales tax does not apply to the transaction. In the cases where he furnishes tangible personal property, such as the above mentioned, then sales tax does apply to the full sales price of such tangible personal property without deduction for labor or service charges. If the tangible personal property is sold and the labor or services furnished in separate transactions, each transaction being billed separately, then the tax applies to the sales price of the tangible personal property and not to the labor or service.

(3) Materials and supplies used by watch and jewelry repairmen in rendering services but which are not resold as merchandise are subject to sales tax when purchased by the repairman from the supply dealer. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-1-.189. Wheel Weights.

The balancing of wheels of automobiles is a service by the balancer. Receipts from such wheel balancing are not taxable. The weights used by a balancer are consumed by him and are taxable when sold to him. (Adopted November 1, 1963, readopted through APA effective October 1, 1982)

810-6-1-.190. Whiskey tax.

(1) Code of Alabama 1975, as amended, levies a total tax of 56 percent upon the selling price of all spirituous and vinous liquors sold by the Alabama ABC Board. Section 28-3-203 levies a 13 percent tax; Sections 28-3-200, 28-3-201, 28-3-202, and 28- 3-205 each levy a 10 percent tax; and Section 28-3-204 levies a 3 percent tax for the total 56 percent tax.

(2) Each of the above Code Sections provides that the tax shall be collected by the Board from the purchaser at the time the purchase price is paid, it being the intention that the said tax shall be passed on to the purchaser. Therefore, the tax is not a part of the purchase price paid to the ABC Board and should not be included in the measure of the state sales tax due on retail sales by the Board.

(3) The operator of a bar, tavern, or restaurant who sells alcoholic drinks purchases the liquors from the ABC Board at wholesale and pays the 56 percent liquor tax to the Board based on the selling price. The sales tax is not due on such purchases, since they are purchases for resale. Subsequent sales of drinks by the bar, tavern, or restaurant operator are subject to the state sales tax. The measure of the tax is the total amount received for the drinks. The tax paid to the ABC Board in such cases becomes another overhead business expense to the retailer which he can take into consideration, together with other business expenses, in determining the selling price of each drink. He cannot collect the liquor tax from his purchaser as a tax; therefore, the total selling price is subject to state sales tax at the general rate. (Adopted November 3, 1980, readopted through APA effective October 1, 1982, amended July 7, 1989)

810-6-1-.194. Wrapping Paper.

(1) Wrapping paper is sold at wholesale, tax free when sold to manufacturers or compounders for use by them in the form of containers to be furnished by them with the products which they manufacture or compound for sale and when there is no intention on the part of the manufacturers, compounders or their customers for the containers to be returned for reuse. (Section 40-23-1(a)(9)c)

(2) Wrapping paper is sold at wholesale, tax free when sold to retailers for use by them in the form of containers to be furnished with the product they have for sale when there is no intention on the part of the retailer or his customer for the container to be returned for reuse. (Section 40-23-1(a)(9)c)

(3) The term "wrapping paper" as used in this rule does not include the material used to line transportation equipment for the protection of products during shipment. Such material is subject to tax when sold to the user. (Section 40-23-1(a)(10)) (Adopted March 9, 1961, amended November 1, 1963, amended July 27, 1964, readopted through APA effective October 1, 1982)

810-6-1-.195. X-ray Machines, Heart Catheterization Machines, Computerized Tomography Machines and Consumable Supplies Used Therein.

(1) X-ray machines, heart catheterization machines, and computerized tomography machines (CT scan machines) process tangible personal property and, therefore, qualify for the reduced machine rate of sales or use tax. Machine parts, attachments, and replacement parts which are made or manufactured for use on or in the operation of such machines and which are necessary to the operation of such machines and are customarily so used also qualify for the reduced machine rate of sales or use tax. (Section 40-23-2(3))

(2) Film, chemicals, and other consumable supplies used in x-ray machines, heart catheterization machines, and computerized tomography machines are taxable at the general rate of sales or use tax. (Section 40-23-2(1)) (Adopted through APA effective July 7, 1989)

810-6-1-.196. Withdrawals from Inventory.

(1) Except as noted in paragraphs (2), (3), and (4) below, all withdrawals of tangible personal property from inventory are taxable under the withdrawal provisions of the sales tax statute unless the property has been previously withdrawn from the inventory and the sales tax has been paid because of the previous withdrawal or unless the property withdrawn enters into and becomes an ingredient or component part of tangible personal property or products manufactured or compounded for sale and not for the personal and private use or consumption of the person withdrawing same. (Ex parte Sizemore, 605 So. 2d 1221 (Ala. 1992)) (Sections 40-23-1(a)(6), 40-23-1(a)(8), 40‑23-1(a)(10), and 40-23-60(5), Code of Alabama 1975)

(2) The transactions in (a) and (b) below shall not be deemed or considered to constitute a transaction subject to sales tax. Qualified charitable entities listed in 26 U.S.C. Sections 170(b) or (c) are defined in (c) below.

(a) Pursuant to Section 40-23-1(e), the withdrawal, use, or consumption of a manufactured product by the manufacturer thereof in quality control testing performed by employees or independent contractors of the manufacturer, nor a gift by the manufacturer of a manufactured product, withdrawn from the manufacturer's inventory, to an entity listed in 26 U.S.C. Sections 170(b) or (c).

(b) Pursuant to Section 40-23-23-1(f), effective July 1, 2006, a gift by a retailer of a product or products withdrawn from the retailer’s inventory to a qualified charitable entity listed in 26 U.S.C. Sections 170(b) or (c), where the aggregate retail value of any single gift is equal to or less than $10,000.00.

(c) Qualified charitable entities listed in 26 U.S.C. Sections 170(b) or (c) include, but are not limited to the following:

2. an educational organization which normally maintains a regular faculty, curriculum, and enrolled body of students;

3. a hospital or a medical research organization which provides medical or hospital care, medical education, or medical research as their primary purpose or function;

4. an organization which normally receives a substantial part of its support from the United States or any State or political subdivision thereof or from direct or indirect contributions from the general public, and which is organized and operated for the benefit of a college or university referenced in 2. above;

5. a governmental unit that is a State or a possession of the United States and any political subdivision of any of the foregoing, the United States, or the District of Columbia, which uses the gift exclusively for public purposes;

6. a corporation, trust, or community chest, fund, or foundation created or organized in the United States or in any possession thereof or under the laws thereof, and organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals, and which normally receives a substantial part of its support from governmental units referenced in 5. above or from direct or indirect contributions from the general public;

7. a private foundation described in 26USC170(b)(1)(E); and

8. an organization described in 26USC509(a)(2).

(3) Sales of equipment, accessories, fixtures, and other similar tangible personal property used in connection with a sale of commercial mobile services as defined in Section 40‑23‑1(a)(6) or in connection with satellite television services, at a price below cost, are not taxable as a withdrawal. Instead, sales of this nature are retail sales and are taxable measured only by the seller's stated retail selling price. (Sections 40‑23‑1(a)(6) and 40‑23‑1(a)(10))

(4) Refinery, residue, or fuel gas, whether in a liquid or gaseous state, that has been generated by, or is otherwise a by-product of, a petroleum-refining process, which gas is then utilized in the process to generate heat or is otherwise utilized in the distillation or refining of petroleum products is not taxable under the withdrawal provisions of the sales or use tax statutes. (Sections 40‑23‑1(a)(6), 40-23-1(a)(8), and 40-23-60(5))

(5) The sales tax due on taxable withdrawals shall be computed and paid by the person, firm, or corporation withdrawing the property. The measure of the sales tax due on taxable withdrawals is the price paid for the property by the person, firm, or corporation withdrawing same. Alabama sales tax becomes due at the time and place of the withdrawal of tangible personal property from inventory. Alabama sales tax is due on tangible personal property withdrawn from inventory in Alabama regardless of where the property so withdrawn is used or consumed.

(6) Withdrawals of building materials by a contractor who makes retail sales of building materials and who also withdraws building materials from the same stock of goods for use in fulfilling a contract for making additions, alterations, or improvements to realty are taxable to the person, firm, or corporation making the withdrawals. The measure of sales tax due on these withdrawals is the price paid for the building materials by the person, firm, or corporation withdrawing same. Alabama sales tax becomes due on these withdrawals of building materials at the time and place of the withdrawals. Alabama sales tax is due on building materials withdrawn from stock in Alabama for use in fulfilling contracts both inside and outside the state of Alabama. (Sections 40‑23‑ 1(a)(6), 40‑23‑1(a)(8) and 40‑23‑1(a)(10)) (Adopted through APA effective May 22, 1993, amended January 5, 1996, amended December 23, 1999, amended September 28, 2007)

810-6-1-.197. Sales Taxes Paid by Certain Camps.

(1) The term "camp" as used in this rule shall mean a facility providing lodgings, meals, and educational and recreational opportunities primarily for the benefit of children, students, and nonprofit organizations, and not members of the general public. The term "camp" as used in this rule shall not include any facility that does not qualify for the lodgings tax exemptions contained in Sections 40-26-1(b)(ii) or 40-26-1(b)(iii), Code of Alabama 1975.

(2) The term "department" as used in this rule shall mean the Alabama Department of Revenue.

(3) The definitions of terms contained in Section 40-26-1(c), are incorporated into this rule by reference.

(4) The furnishing of food, food items, T-shirts, caps, gym bags, and similar items by a camp, without a separate charge therefor, to children or students, members of a child or student's family, members and guests of nonprofit organizations, or other persons in conjunction with lodgings, meals, and educational or recreational opportunities provided for a lump sum payment shall not be considered a sale at retail. The furnishing of these items and activities is considered to be rendering a service rather than making a retail sale and the camp is considered to be the consumer of the items furnished. Unless the camp provides a valid sales tax account number or certificate of exemption, the vendor selling these items to the camp shall collect state and applicable county and municipal sales or use taxes from the camp at the time of purchase and remit the taxes collected to the department.

(5) Sales of food, food items, T-shirts, caps, gym bags, and similar items by a camp that purchases these items and regularly displays and offers them for sale through a gift shop, snack shop, or similar place to children or students, members of a child or student's family, members and guests of nonprofit organizations, or other persons for a separate charge that is in addition to any lump sum charge for lodgings, meals, and educational or recreational opportunities shall be considered sales at retail and are subject to state and applicable county and municipal sales tax. A camp making retail sales of this nature shall obtain a sales tax license and comply with Sales and Use Tax Rule 810-6-1-.56 entitled Dual Business. (Sections 40-23-1(a)(9), 40-23-1(a)(10), and 40-23-6, Code of Alabama 1975)

(6) A camp that does not maintain a stock or inventory of food, food items, T-shirts, caps, gym bags, and similar items from which it regularly makes retail sales as outlined in paragraph (5) and makes only isolated or accommodation sales of these items which it acquired for use in conjunction with providing services as outlined in paragraph (4) is not engaged in making retail sales and does not qualify as a dual business. Where only isolated or accommodation sales of this nature are made, the camp shall pay state and applicable county and municipal sales or use tax to its vendors on all of its purchases of the items and is not required to obtain a sales tax license.

(7) The sales tax on amusements levied in Section 40-23-2(2), does not apply to a camp's receipts from providing lodgings, meals, and educational or recreational opportunities for a lump sum payment. (Adopted through APA effective September 27, 1999)

810-6-2-.01. Abrasives - Shot, Grit, Etc.

Shot, grit, stars, sand, and other abrasives of like kind are taxed as parts or attachments to machines when used in machines manufacturing or processing tangible personal property. Such abrasive, when used in maintenance of equipment or when used for purposes other than manufacturing or processing tangible personal property are taxed at the general rate. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.02. Accessories on New Automobiles, Applicable Tax Levy.

(1) Accessories which are purchased from the dealer after title and possession of the automotive vehicle have passed to the purchaser are taxed at the usual 4% rate.

(2) As a practical application of this rule, the dealer's sales invoice will be accepted as the basis for determining the tax rate applicable unless there is conclusive evidence that the invoice does not reveal the true facts. (Sections 40-23-2(1) and 40-23- 2(4)) (Adopted March 9, 1961, amended November 1, 1963, amended September 26, 1966, readopted through APA effective October 1, 1982)

810-6-2-.02.05. Agricultural Publications.

No exemption is granted for agricultural publications in the Sales Tax Law. (Readopted through APA effective October 1, 1982)

810-6-2-.03. Annealing Pots.

Steel pots or tubs used to contain small metal parts or fittings while being heat treated in an annealing furnace as a step in the manufacture thereof are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.04. Automotive Demonstrator, Levy of Tax.

(1) Any dealer licensed pursuant to Section 40-23-6, Code of Alabama 1975, who withdraws from his or her stock in trade any automotive vehicle, truck trailer, semi-trailer, or house trailer for use by the dealer or by the dealer's employee or agent in the operation of the business, shall pay, in lieu of the sales tax, a fee of five dollars ($5.00) per year or part of year on each automotive vehicle, truck trailer, semi-trailer, or house trailer so withdrawn. Each year or part thereof shall begin with the date or anniversary date of the withdrawal and run for the 12 succeeding months during which the automotive vehicle, truck trailer, semitrailer, or house trailer remains the property of the dealer. This fee is to be reported on the dealers' sales tax returns covering the tax reporting period in which the withdrawal is made. When the vehicle is returned to the stock of the dealer and sold, the sale is subject to the tax. (Section 40-23-2(4))

(2) The use described in the preceding paragraph does not include the withdrawal of automotive vehicles, truck trailers, semitrailers, or house trailers by a dealer for rental or leasing purposes where the dealer is engaged in business both of selling and leasing such property. If a dealer withdraws from stock a vehicle or trailer for leasing purposes, the withdrawal is exempt from sales tax if the lease of the vehicle or trailer is taxable pursuant to Section 40-12-222, Code of Alabama 1975.

(3) Where the dealer follows the practice of having his or her salesmen purchase the vehicles which they use as demonstrators, the sales to the salesmen are subject to sales tax measured on the sales price thereof less any allowance made for used vehicles taken in trade. The sale of the used vehicle so taken in trade is subject to sales tax when resold.

(4) The withdrawal of an automotive vehicle from inventory by a licensed dealer for the purpose of providing the vehicle to a school for use in a drivers education program constitutes use by the dealer in the operation of the dealer's business and, therefore, is subject to the five dollar ($5.00) fee outlined in paragraph (1) above. (Section 40-23-2(4)) (Adopted March 9, 1961, amended November 1, 1963, amended August 16, 1974, amended June 12, 1978, amended October 16, 1978, readopted through APA effective October 1, 1982, amended January 29, 1990, amended October 20, 1998)

810-6-2-.06. Baking Pans.

Baking pans used in the production of bakery products for sale are taxable at the machine rate of 1 1/2% of the gross proceeds of the sale. (Readopted through APA effective October 1, 1982)

810-6-2-.07. Barbers and Beauticians.

(1) Barber and beauty shop operators primarily render personal services. They are the purchasers for use or consumption of such tangible personal property as is used or consumed incidentally in the rendering of such personal service.

(2) Barber and beauty shops are not however, relieved from collecting and reporting tax on sales of tangible personal property for use or consumption, such as, package cosmetics, hair tonics, lotions and like articles when sold apart from the rendering of personal services. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.08. Belting.

Belting purchased for use on a particular machine used in manufacturing is taxed at the special machine rate of 1 1/2% even though such belting may not be purchased to the exact length required. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.09. Boiler Tubes.

Boiler tubes used in repairing boilers used to furnish heat or power used in manufacturing are taxed at 1 1/2% as parts for machines used in manufacturing. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.09.02. Sales of Textbooks, Other Books, and School Supplies by Schools.

(1) The term "elementary or secondary school" as used in this rule shall mean a school where the curriculum consists of one or more of grade levels K through 12. This term shall not include nurseries and day care centers nor shall it include private schools at which the courses of study are limited to specialized subjects such as dance, horseback riding, music, cooking, sewing, or religion.

(2) The sales and use tax statutes contain no exemption for sales of textbooks, other books, and school supplies. Accordingly, unless the sales or use tax statutes contain a specific exemption for the seller or purchaser, sales or use tax is due on retail sales of these items at the general rate of tax. (Sections 40-23-2(1) and 40-23-61(a), Code of Alabama 1975)

(3) Sales of textbooks, other books, and school supplies made by a school (not including an institution of higher learning) owned and operated by a county or a municipality of the State of Alabama are not subject to sales or use tax. (City of Anniston v. State, 265 Ala. 303, 91 So. 2d 211 (1956))

(4) Sales of textbooks, other books, and school supplies made by a privately-owned and operated elementary or secondary school or by an elementary or secondary school owned and operated by the State of Alabama are exempt from sales or use tax when the net proceeds from the sales are used solely for the benefit of the elementary or secondary school. See Sales and Use Tax Rule 810-6-2-.88.04 entitled Exemption for Certain Sales by Elementary and Secondary Schools, School Sponsored Clubs and Organizations, and School Affiliated Groups. (Section 40-9-31, Code of Alabama 1975)

(5) Except as outlined in paragraph (4), sales of textbooks, other books, and school supplies made by a privately owned and operated school or college or by a school or college owned and operated by the State of Alabama are subject to sales or use tax. (Sections 40-23-2(1) and 40-23-61(a), Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended June 9, 1999)

810-6-2-.10. Coal Loading Machines.

Coal loading machines used in mines are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.11. Coal Cutting Machines.

Coal cutting machines are taxed at the special rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1982)

810-6-2-.12. Coke, Petroleum.

Petroleum coke and pitch used in the manufacture of aluminum from alumina are subject to tax at the special machine rate where such petroleum coke and pitch are made into linings for pots where alumina is reduced to aluminum or are made into anodes for such pots. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.12.05. Community Action Agencies.

Sales of tangible personal property to organizations which are nonprofit corporations including those that are federally funded are subject to state and local sales tax. (Community Action Agency of Huntsville, Madison County, Inc., v. State of Alabama) (Adopted August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.12.06. Compressors, Tar Buckets, Portable Signs.

Compressors, tar buckets, and portable signs mounted on wheels are not considered trailers. A trailer is defined as a vehicle without motive power designed to carry persons or property wholly on its own structure and to be drawn by a motor vehicle. Since portable compressors, portable tar buckets, and portable signs are not designed for ordinary highway hauling purposes, they are subject to tax at the rate of 4 percent. (Adopted through APA effective January 10, 1985)

810-6-2-.13. Compositions.

(1) Gross proceeds accruing from the retail sales of compositions, paste-ups, or layouts sold to printers, publishers, or others are subject to the sales tax at the machine rate of 1 1/2%.

(2) 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, sales of materials to the manufacturer of the compositions are at wholesale, tax free, when such materials become a component of the compositions, etc., produced for sale. The machines used by the composition manufacturer in manufacturing the compositions are taxable at the machine rate of 1 ½%. 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, at the general rate of 4%. (Sections 40-23-1(a)(9)b and 40-23-60(4)b)

(3) Where a printer or publisher manufactures compositions for their own use, sales or use tax, whichever may apply shall be due on the purchase price of the materials becoming a component of the compositions at the machine rate of 1 1/2%. (Section 40- 23-2(3)) (Adopted June 20, 1966, readopted through APA effective October 1, 1982, amended December 10, 1997)

810-6-2-.14. Cotton Gins.

(1) Cotton gin machinery and equipment used in separating lint from seed, in cleaning and conditioning lint, in baling lint, the engines or motors furnishing the power for such separating, cleaning, conditioning and baling, and the equipment used to carry the cotton lint and seed, from step to step in the ginning process are taxed at the special machine rate of 1 1/2%. The equipment which carries the seed cotton directly into the first processing machine and the blower which discharges the seed from the gin are considered to be attachments to the processing machines and therefore, are also taxed at the special rate.

(2) The special rate does not, however, apply to conveyor equipment used in unloading seed cotton and putting it into storage and does not apply to moving cotton seed from the gin to storage and from storage into transport equipment. Other equipment and materials which are taxed at the general 4% rate are scales of all description and building materials used in the construction of the gin house and storage facilities. (Sections 40-23-2(3) and 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.15. Crossties Used in Mining.

Crossties and switchties used in the construction and maintenance of tracks used in bringing minerals to the surface of the earth are taxed at the special machine rate of 1 1/2%. This provision does not, however, extend to crossties and switchties used in the construction or maintenance of tracks used in transporting minerals from the mine after the mining operation has been completed and it does not extend to timbers used in erecting structures in or about mines or used in supporting mine roofs. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.15.03. Double Wide Mobile Homes.

Mobile homes whether they be of the double wide variety or the standard variety are in fact mobile homes. Mobile homes, including double wide mobile homes, do not qualify as modular buildings. (Section 40-23-2(4)) (Adopted August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.15.05. Dry Docks.

A dry dock is subject to the sales or use tax, whichever applies. A dry dock is not a vessel, nor is it a barge, exempted from the sales or use tax. (Section 40-23-4(a)(12)) (Readopted through APA effective October 1, 1982)

810-6-2-.16. Dust Collecting Equipment.

Dust collectors made up of ducts, collectors, filters, and other parts are not of themselves machines used in manufacturing. They may, however, by attachment to a machine used in manufacturing take the special one and half percent rate. The special rate would not in any event apply with respect to sheet metal or other building materials used to construct duct work or other parts of dust collection systems where such materials become a part of the building in which the system is located. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-2-.17. Electric Motors.

Electric motors used to drive machines used in mining, processing or manufacturing are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.18. Electric Mine Locomotives.

Locomotives receiving power from an electric trolley used to bring coal to the surface of a mine are taxed under the machine levy at 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.19. Electric Motors, When Furnishing Power for Machines Used in Manufacturing, Compounding, Processing, Mining or Quarrying and Plant Maintenance.

Electric motors used to furnish power for machines used in manufacturing, compounding, processing, mining, or quarrying are taxed at the machine rate of 1 1/2%. Electric motors used to power equipment used primarily in plant maintenance are subject to the tax at the general rate of 4%. (Sections 40-23-2(1) and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.22. Engravers and the Machine Rate.

Gross receipts accruing from the retail sales of photo engravings, plates, cuts, and other like articles sold to printers are subject to the sales tax at the machine rate of 1 1/2% where sold for use as parts or attachments of machines used in manufacturing. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.22.05. Federal Tax on Hazardous Chemicals.

It is the position of the Department based on an opinion by the Legal Division of the Department of Revenue that the federal tax is to be included in the measure of the tax when computing sales and/or use tax on retail sales of hazardous chemicals. The federal tax is a "cost of doing business" tax levied upon the sale or use of certain chemicals sold by a manufacturer, producer or importer thereof. Section 4662C, Title 26, U.S.C.A. reads as follows: "If any person manufactures, produces, or imports a taxable chemical and uses such chemical, then such person shall be liable for tax under section 4661 in the same manner as if such chemical were sold by such person." Therefore, if the tax is on the cost of doing business by the provider of the chemical, then the federal tax would be included in the measure of the base used for computing the sales and/or use tax payable to the state. (Section 40-23-1(a)(10)) (Adopted August 10, 1982, readopted through APA effective October 1,1982)

810-6-2-.25. Refractories, Rates Applicable to.

(1) The term "refractories" as used in this rule shall mean fire clay, firebrick, magnesite, steel, and other special purpose heat resistant materials.

(2) Refractories, which are not in the nature of building materials and which are designed and manufactured for use as parts or attachments for machines used in manufacturing, compounding, or processing tangible personal property, are taxable at the reduced machine rate of sales or use tax when purchased for use as a part or attachment to manufacturing machinery. (Sections 40-23-2(3) and 40-23-61(b))

(3) Refractories purchased for use in lining blast furnaces, kilns, boilers, cupolas, ladles, or other machines used to manufacture, compound, or process tangible personal property are taxable at the reduced machine rate of sales or use tax. (Sections 40-23-2(3) and 40-23-61(b))

(4) Refractories purchased for purposes other than becoming parts or attachments to machines used in manufacturing, compounding, or processing tangible personal property are taxable at the general rate of sales or use tax. (Sections 40-23-2(1) and 40-23-61(a)) (Readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-2-.27. Gold, Coin and Bullion.

(1) Sales of gold in coin, bullion, nugget, flake or other form to purchasers within the State are subject to the retail sales or use tax. In any form other than as a mineral in place, not yet extracted, gold is tangible personal property subject to the usual rules of taxation. Therefore, exemption is allowed only if the sale is for resale in the regular course of business or if the gold becomes an ingredient or a component of a new article for sale. Sales to purchasers for investment or speculation are fully taxable and are treated as sales of coins, stamps, paintings, antiques or other valuables purchased by collectors. When applicable, the tax is measured by the full selling price without deductions for brokerage fees, service fees or premiums included in the gross price.

(2) Following are a few guidelines for the taxation of gold:

(a) Gold purchased and delivered outside the State is subject to use tax at the time it is brought into the State.

(b) Sales of gold to persons who take only a document of ownership covering gold remaining outside of the State are exempt from sales and use tax.

(c) Sales to persons who use gold in the rendition of professional or commercial services such as dentists or dental laboratories are taxable.

(d) Agents, including gold jobbers and brokers, who sell gold at retail in their own name must collect retail sales tax thereon. (Section 40-23-2(1)) (Adopted July 2, 1975, readopted through APA effective October 1, 1982)

810-6-2-.28. Gravel Screens.

Gravel screens used in substantially the form in which they are purchased as parts of a mechanically powered gravel or sand washer and grader are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.29. Hand Tools Not Exempted as Machines.

(1) The word "machine" as used in the Sales and Use Tax Laws is notunderstood to mean and include the hand implements used by laborers and craftsmen, commonly referred to as "hand tools" which are manually powered and controlled.

(2) Implements, hand operated, which are powered by electricity, steam or compressed air which is delivered to implements through wires, pipes, or hoses are considered to come within the levy of the tax at 1 1/2% where such implements are used in mining, quarrying, manufacturing, processing or compounding. (Sections 40-23-1(a)(10) and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.30. Hose - Water, Steam, or Air.

Hose when used as an attachment for a machine used in manufacturing, compounding, processing, mining or quarrying is taxed at the machine rate of 1 1/2%. Hose used for general purposes or for maintenance is taxed at the general rate of 4%. (Sections 40-23- 2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.31. Hospitals, Infirmaries, Sanitariums, and Like Institutions - State, City, and County.

(1) State, city, and county owned and operated hospitals, infirmaries, sanitariums, and like institutions are exempt from the payment of sales or use tax on their purchases of tangible personal property. (Sections 40-23-4(11) and 40-23-62(13))

(2) State, city, and county owned and operated hospitals, infirmaries, sanitariums, and like institutions are primarily engaged in the business of rendering services. They are not required to collect and remit sales tax on their gross receipts from meals, bandages, dressings, drugs, x-ray photographs, or other tangible personal property when such items are used in rendering hospital services. This is true irrespective of whether or not such tangible personal property is billed separately to their patients. State, city, and county owned and operated hospitals, infirmaries, sanitariums, and like institutions are deemed to be the purchasers for use or consumption of such tangible personal property; and, the sellers of these items are not required to collect sales or use tax on sales of such property to said institutions since such purchases are specifically exempt from sales and use tax pursuant to Sections 40-23-4(11) and 40-23-62(13), Code of Alabama 1975.

(3) When state, city, or county owned and operated hospitals, infirmaries, sanitariums, and like institutions furnish meals to nurses, attendants, and patients as a part of their services rendered, such institutions are deemed to be the users or consumers of the food and beverages used in the preparation of these meals. Purchases of food and beverages for use or consumption by these institutions are exempt from sales and use tax. (Sections 40-23-4(11) and 40-23-62(13))

(4) When state owned and operated hospitals, infirmaries, sanitariums, and like institutions operate cafeterias that serve meals to the public, such institutions will be required to collect and remit sales tax on sales of meals and beverages to their customers. Foodstuffs and beverages withdrawn by such state owned and operated institutions and used or consumed in furnishing meals as outlined in paragraph (3) are not subject to sales tax. (Section 40-23-2(1))

(5) When city and county owned and operated hospitals, infirmaries, sanitariums, and like institutions operate cafeterias that serve meals to the public, such institutions are not required to collect and remit sales tax on sales of meals to their customers. (City of Annistion v. State of Alabama, 91 So.2d 211) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended January 29, 1990)

810-6-2-.32. House Trailers and Mobile Homes.

(1) The gross proceeds of sales of house trailers or mobile homes are taxable at the reduced automotive rate of sales or use tax. Where any house trailer or mobile home is taken in trade as a credit or part payment on the sale of a new or used house trailer or mobile home, the measure of sales or use tax shall be the price of the new or used house trailer or mobile home sold less credit for the house trailer or mobile home taken in trade. (Sections 40-23-2(4) and 40-23-61(c), Code of Alabama 1975)

(2) The reduced automotive rate of sales or use tax also applies to parts, attachments, or accessories for house trailers or mobile homes purchased from the dealer as a unit along with the house trailer or mobile home. Parts, attachments, or accessories purchased from the dealer after title and possession of the house trailer or mobile home has passed to the purchaser are taxable at the general rate of sales or use tax. The dealer's sales invoice shall be the basis for determining the applicable tax rate unless there is conclusive evidence that the invoice does not reveal the true facts. (Sections 40-23-2(1) and 40-23-61(a), Code of Alabama 1975)

(3) Where a dealer purchases parts and materials or withdraws parts and materials from a stock of goods for use in repairing or reconditioning house trailers or mobile homes which (i) are owned by the dealer, (ii) are offered for sale by the dealer, and (iii) are not for the dealer's own use or consumption, the parts and materials would be exempt from sales or use tax when purchased or withdrawn from the dealer's stock of goods. (Sections 40-23-1(a)(9)k and 40-23-60(4)j, Code of Alabama 1975)

(4) Mobile home set-up materials and supplies are taxable at the reduced automotive rate of sales or use tax. These items qualify for the reduced rate regardless of who sells them or to whom they are sold provided the facts substantiate that they were used to set-up a house trailer or mobile home. The term "mobile home set-up materials and supplies" shall include steps; blocks; anchoring materials such as cable, straps, and buckles; and pipe. The term shall not include tape or other similar supply items which lose their identity or are not passed on substantially intact to the owner of the mobile home. The term "mobile home set-up materials and supplies" shall not include hand tools or electrical tools used to set-up a mobile home and not becoming a part of the mobile home dwelling. (Sections 40-23-2(4) and 40-23-61(c), Code of Alabama 1975) (Adopted July 2, 1975, amended November 3, 1980, readopted through APA effective October 1, 1982, amended January 24, 1989, amended January 29, 1990, amended December 28, 1998)

810-6-2-.32.05. Hydraulic Oils.

Retail sales of hydraulic oils are subject to the sales tax at a rate of 4 percent except hydraulic oil used as part of a machine used in quarrying, mining, manufacturing, processing, and compounding tangible personal property which is taxed at 1 1/2 percent. (Sections 40-23-2(1) and 40-23-2(3)) (Adopted August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.33. Ice Plants.

(1) The following are taxed at 1 1/2% rate levied on machines used in manufacturing when used by ice manufacturers: pumps, motors, compressors, pipes, valves, gauges, water filters, ice crushing and shaving machines and other machines and the machinery used directly in the ice making process beginning with the point where the water enters into the process through the point where the ice is removed from the cans in which it is made or, if the ice is to be sold as crushed or shaved ice, through the point where the ice is crushed or shaved. Refrigerants used in the manufacturing process are also taxed at the machine rate.

(2) Property taxed at 4% rate includes: ice hooks, hand saws, ice picks, containers (not furnished), tarpaulins, power saws, scoring machines, transportation equipment, ice tickets, office supplies and equipment, scales, chemicals of all kinds, fuel oil, other oils not classified and taxed as lubricants, advertising materials, mechanical conveyors having no part in the manufacturing process, etc. (Sections 40-23-2(3), 40-23- 2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.34. Improvised Attachments for Machines Used in Manufacturing.

The materials, from which parts and attachments for machines used in manufacturing, compounding, processing, mining or quarrying are improvised, are taxed at the special 1 1/2% rate when such improvised parts or attachments are necessary to the operation of such machines and are customarily so used. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.36. Kerosene Used in Making Molds.

Sales to foundrymen of kerosene to be used in making molds and cores are taxed at the general rate of 4%. (Sections 40-23-1(a)(10) and 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.36.02. Lawnmowers.

(1) Push type and self-propelled lawn mowers, roto-tillers, and garden tractors do not come within the automotive section of law levying a lower rate of tax, they are taxable at the rate of 4%. (Section 40-23-2(1))

(2) Self-propelled riding lawn mowers and garden tractors do come within the automotive section and are taxable at the rate of 2%. (Section 40-23-2(4)) (Adopted August 15, 1974, readopted through APA effective October 1, 1982, amended January 24, 1989)

810-6-2-.36.05. Lay-away Sales.

(1) The Sales Tax Law defines a sale as follows: "installment and credit sales and the exchange of properties as well as the sale thereof for money, every closed transaction constituting a sale." It has been held that Alabama sales tax applies only to sales that are "closed" within the state and that, for tax purposes, sales are closed when title to the goods are passed to the purchaser.

(2) The time that title to the goods passes as designated by the layaway contract is determinative of the time that sales tax is due. If there is no layaway contract or the contract is silent as to the time title transfers, amounts received in payment of the sales price of property held by the seller until the total amount of the sales price is paid to him are not taxable until the total sales price, including the service charge, has been paid and the property delivered to the purchaser.

(3) If the customer fails to complete payments under the layaway agreement and obtains from the retail merchant a refund of those payments, excluding the service charge, and title has not passed, the retail merchant is entitled to a credit for any sales tax previously paid to the Department upon the transaction regardless of the amount refunded to the customer. In an incompleted layaway transaction there can be no "return" since the customer never obtains delivery of the goods. (Adopted October 1, 1959, readopted through APA October 1, 1982, amended January 10, 1985)

810-6-2-.37. Lumber and Timbers Used in Mine Tipple.

Sales of lumber and timbers to mine operators for use in constructing or repairing structures such as tipples, bridges, or trestles used in supporting mining and processing equipment and tracks are subject to tax at the general rate of 4%. This rule does not apply to machines and machinery supported by such structures, nor does it apply to crossties and switchties all of which are covered in other rules. (Section 40-23-1(a)(10)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.38. Lumber and Timbers Used in Mining.

Sales of lumber and timbers to mine operators for use in the building and maintenance of structures and for use in supporting mine roofs are subject to sales tax at the general rate of 4%. (Section 40-23-1(a)(10)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.39. Machine Shop Equipment.

Machine shop equipment used for maintenance and repair purposes is taxable at the general rate of 4%. Machines used both in maintenance and repair work and in the production of manufactured articles are taxed at the special machine rate of 1 1/2% when use in production is substantial. Tax is due at the general rate, however, when use in production is an incidental or inconsequential use as compared to use in maintenance and repair. (Sections 40-23-1(a)(10) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.41. Machines Furnished and Installed by Building Contractors.

(1) The 1 1/2% tax rate shall apply where a building contractor purchases for installation under a building contract machines and parts or attachments for machines which are to be used in mining, quarrying, manufacturing, compounding or processing. The parts or attachments to come under the special 1 1/2% rate must be made or manufactured for such use and customarily so used.

(2) On the other hand, building materials when used as such cannot come within the special 1 1/2% levy when purchased by a contractor or by a manufacturer regardless of whether or not the structure made therefrom may be used in mining, quarrying, manufacturing, compounding or processing. (Sections 40-23-2(3), 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-2-.41.01. Sales of Electrical Generators.

Retail sales of stand alone, commercial and portable electrical generators that manufacture alternating current electricity are taxable at the reduced machine rate. (Sections 40-23-2(3) and 40-23-61(b)) (Adopted through APA effective July 9, 1998)

810-6-2-.42. Machines or Machinery Not Used in Manufacturing.

Materials or equipment which might constitute a machine or machinery when not used for mining, quarrying, manufacturing, compounding or processing are taxed at the general rate of 4%. (Section 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.43. Self-Propelled Draglines Used in Mining.

A self-propelled dragline purchased for use in mining tangible personal property is taxable at the reduced machine rate of sales or use tax. Replacement parts and attachments for self-propelled draglines used in mining tangible personal property are also taxable at the reduced machine rate of sales or use tax when (i) made or manufactured for use on or in the operation of the dragline, (ii) necessary to the operation of the dragline, and (iii) customarily so used. State v. Twin Seam Mining Co., Inc., 274 Ala. 3, 145 So 2d 177 (1962) (Sections 40-23-2(3) and 40-23-61(b), Code of Alabama 1975) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended July 30, 1998)

810-6-2-.46. Manufacturer's Use of Patterns.

(1) Patterns purchased by a manufacturer for use as a part or attachment to a machine used in manufacturing tangible personal property are subject to the sales and/or use tax at the machine rate of 1 1/2%.

(2) Pattern materials purchased by a manufacturer for use in making patterns that will become a part or attachment for a machine used in manufacturing tangible personal property are subject to the sales and/or use tax at the machine rate of 1 1/2%.

(3) The patterns or materials used in making patterns are taxable to the manufacturer at the time of purchase even though the patterns may pass to the manufacturer's customer after use by the manufacturer in making castings. (Section 40- 23-2(3)) (Adopted October 29, 1976, readopted through APA effective October 1, 1982)

810-6-2-.46.01. Marine Dealers, Sales By.

The proper rates of state sales tax to be paid on sales of boats, motors, trailers, and other items associated with the marine industry are as follows:

(a) Boat trailers sold alone are taxable at 2 percent of the net difference paid.

(b) Boat motors sold alone are taxable at the general rate of 4 percent of the total selling price.

(d) When a boat without a motor is sold with a trailer, the total selling price of the boat is taxable at the general rate and the trailer is taxable at the automotive rate on the net trade difference (total selling price of the trailer less credit allowed for a qualifying automotive unit traded-in) provided the boat and trailer prices are separately stated on the dealer's invoice. To qualify for the trade-in allowance, the unit traded-in for the trailer must qualify as an automotive unit. If the boat and trailer prices are not separately stated on the invoice, the total selling price of the boat and trailer is taxable at the general rate with no deduction allowed for a trade-in.

(e) Boat, motor and trailer sold as a unit is taxable at 2 percent of the net difference paid if it qualifies as an automotive vehicle.

(f) If a dealer removes a motor from a customer's unit classified as an automotive vehicle, accepts it as part payment of another motor, and installs the new motor; the tax is computed at 4 percent of the net difference paid. A motor sold with a motor traded that is not part of an automotive vehicle at the time of the sale is taxable at 4 percent of the total selling price.

(g) Coast Guard required equipment and accessories such as, but not limited to, life jackets and fire extinguishers included in the price of boat, motor and trailer, are taxable at 2 percent of the net difference paid. Skis, ropes, etc., are taxable at the general rate of 4 percent.

(h) Depth finders, trolling motors, and other permanently attached accessories sold with unit at time of original purchase are taxable at 2 percent of the net difference paid provided the unit qualifies as a motorboat with built-in motor, or boat with outboard type motor attached thereto by attachments intended to be permanent rather than readily removable, and which motor is controlled with remote controls built on or into the hull of said boat.

(i) Boat, motor and trailer sold by dealer for an individual is subject to the tax in the same manner and at the same rate as a boat, motor and trailer owned and sold by the dealer.

(j) Boat, motor and trailer sold with trade-in allowed (example: new unit $10,000.00, credit for unit traded $5,000.00, net difference $5,000.00) would be taxable at 2 percent of net difference paid provided both units qualify as an automotive vehicle as outlined in (h).

(k) Sail boat sold alone is taxable at 4 percent of total selling price.

(l) Sail boat sold with auxiliary motor permanently attached so that it qualifies as an automotive vehicle as outlined in (h) is taxable at 2 percent of the net difference paid.

(m) Aluminum fishing boat sold alone is taxable at the general rate of 4 percent of total selling price. (Sections 40-23-2(1) and 40-23-2(4)) (Adopted through APA effective January 10, 1985, amended January 24, 1989, amended July 9, 1998)

810-6-2-.47. Material Handling Equipment.

(1) Equipment used for transporting materials to the plant of a manufacturer, processor, or compounder or used for transporting finished products from such plants is taxed at the general 4% rate.

(2) The movement of materials or products purely for transportation purposes is not manufacturing, processing or compounding. In Alabama- Georgia Syrup Company v. State, 42 So.2d 796, the Supreme Court of Alabama stated with reference to platform trucks used for moving the company's products in the process of blending and packing. "We do not think that platform trucks are machines within the meaning of the exemption. They are obviously used in transportation from one point in the plant to another and not in compounding and manufacturing of tangible personal property."

(3) The general rule with reference to transportation equipment is that it is taxable at the general rate of 4% up to the point where the materials go into process, the equipment feeding the first processing machine being taxed under the machine levy at 1 1/2%.

(4) Equipment for transporting the finished product is subject to tax at the general 4% rate, the last equipment to come under the machine levy being that equipment which discharges the finished product from the last machine used in the process. (Section 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.48. Materials From Which Patterns are Manufactured, Tax Rates Applicable.

(1) Pattern materials used by foundrymen in making patterns to be used in casting are taxed at the special machine rate of 1 1/2%.

(2) Sales of patterns are taxed at the special machine rate of 1 1/2% when made to a foundryman to be used by him in making molds for castings.

(3) Sales of supplies and hand tools used in making patterns are subject to the tax at the 4% rate. (Sections 40-23-2(3), 40-23-1(a)(10)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.49. Mats Purchased for Use in Newspaper Advertising.

Mats purchased by advertisers to be furnished to newspaper publishers for use in producing plates used in printing newspapers are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.50. Meals Furnished Along With Rooms by Schools and Colleges.

Where both lodgings and meals are furnished to students by institutions of higher learning, both public and private, the meals are subject to sales tax. If both lodgings and meals are furnished for a lump sum, the full amount is to be used as the measure of the tax. Where lodgings and the meals are furnished for separate amounts and the billings and records of the institution show such charges separately, only the charge for meals is to be used as the measure of the tax. (Attorney General's Opinion 12-19-60) (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.51. Meals Sold by Schools.

(1) Sales to children of lunches, when not for profit, in kindergartens, grammar schools, junior high schools, and high schools, both private and public, are specifically exempted from sales tax.

(2) Sales of meals made by all colleges, universities or other institutions of higher learning, both privately and publicly owned and operated, are by specific provisions of the Sales Tax Law subject to sales tax.

(3) Sales of meals made by schools (not including institutions of higher learning) owned and operated by the counties and municipalities of the State of Alabama are not subject to the sales tax. (City of Anniston v. State of Alabama, 91 So. 2d 211.)

(4) With the exception of the sales of meals described in the paragraphs above, sales of meals made by privately owned and operated schools and colleges and sales of meals made by schools and colleges owned and operated by the State of Alabama are subject to the tax. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.51.05. Members of Armed Services Stationed in Alabama Subject to Sales and Use Taxes.

(1) Members of the armed services of the United States stationed in Alabama have no immunity from sales taxes imposed upon sales of tangible personal property to them by Alabama vendors.

(2) Property is not subject to Alabama use tax where purchased outside Alabama for use in this state by members of the armed services of the United States who are residents of another state, but who are stationed in this state, except that Alabama use tax is due on automobiles where purchased outside Alabama for use in this state where a sales or use tax on such vehicles is levied by but has not been paid to the state of residence of the purchaser. Members of the armed services stationed in states other than Alabama who purchase automotive vehicles outside of Alabama for use outside Alabama but will title and register said vehicle in Alabama will not be subject to the use tax. (Title 50, U.S. Code, Section 754(2).) (Sections 40-23-2(4) and 40-23-102) (Amended June 12, 1978, readopted through APA effective October 1, 1982)

810-6-2-.51.07. Metal Cleaning Chemicals.

Manufacturers of metal products are taxed on the use of all chemicals and oils which they use as cleaning materials, except oils classified and taxed as lubricating oils. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.52. Molding Machines.

Mechanically operated devices used in making molds from sand for use in manufacturing are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.52.03. Music Machines.

Gross receipts from the operation of musical devices (juke boxes) are taxable. The Supreme Court of Alabama held in the case Birmingham Vending Company v. State of Alabama, 38 So.2d 876, that both the machine owner and the proprietor of the place of business where the machine was operated are jointly and individually liable for the total amount of sales tax due on the gross receipts from such machines, where the machine owner supplied the machine and recordings, and where the proprietor of the location controlled the playing of the machine and both the owner and the proprietor shared in the income. The court held that this was a joint venture with either of the parties to the venture being liable for the payment of the tax due. (Section 40-23-2(2)) (Readopted through APA effective October 1, 1982)

810-6-2-.52.05. National and State Banks.

(1) Sales of tangible personal property to any national or state bank are taxable unless the bank is purchasing the property for resale. (Sections 40-23-2 and 40-23-61, Code of Alabama 1975 and 12 U.S.C. Section 548)

(2) National or state banks that are in the business of selling tangible personal property shall collect sales or use tax on their retail sales. Examples of retail sales by banks include sales by bank-operated cafeterias and sales of personalized checks or coin banks to bank customers. (Sections 40-23-2 and 40-23-61, Code of Alabama 1975 and 12 U.S.C. Section 548) (Adopted February 13, 1970, readopted through APA effective October 1, 1982, amended April 3, 1987, amended June 9, 1999)

810-6-2-.53. Negatives.

(1) Gross receipts accruing from the retail sales of black and white negatives or color separations sold to printers to produce plates for offset printing are subject to the sales tax at the machine rate of 1 1/2% where sold for use as parts or attachments of machines used in manufacturing plates.

(2) Sales of materials to processors producing negatives are at wholesale, tax free, where such materials become a component of the negatives produced for sale.

(3) Where a printer or publisher develops negatives for his own use, sales or use tax, whichever may apply, shall be due on the purchase price of the materials becoming a component of the negatives at the machine rate of 1 1/2% where the negatives are used as an attachment for machines used in manufacturing plates. (Sections 40-23- 2(3) and 40-23-1(a)(9)g) (Adopted June 20, 1966, readopted through APA effective October 1, 1982)

810-6-2-.54. Packaging Equipment.

Mechanical equipment used in measuring, weighing, or packaging by manufacturers, compounders, or processors is taxed at the special machine rate of 1 1/2% when such equipment is a part of the production line used to put the product in condition for sale. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.56. Pan Glaze.

Pan glaze used by bakers as a coating for pans and trays used in baking is a supply item subject to tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-2-.56.01. Used Equipment.

Used equipment is subject to the sales and use taxes on the same basis that new equipment is subject to tax. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982, amended November 3, 1998)

810-6-2-.57. Parts and Attachments For Machines Used in Manufacturing.

Materials purchased by a manufacturer, compounder, processor, miner, or quarryman for attachment to, or to be made a part of, a machine used in manufacturing, compounding, processing, mining or quarrying is entitled to the reduced machine rate of sales or use tax regardless of whether or not such materials at the time of purchase are recognizable as parts and attachments for machines, provided, however, that the parts and attachments made from such materials are designed and manufactured for use, customarily so used and necessary to the operation of the completed machine. Such materials would include, but would not be limited to tool steel, steel plate, steel angles, shafting, packing, pipe, pipe fittings, pipe fitting supplies, valves, steam hose, fire clay, bulk lining materials, bulk insulation materials and pipe and tank coverings. Also recording instruments and similar attachments which are not generally classified as parts and attachments to manufacturing machines would qualify as parts and attachments when attached directly to a manufacturing machine. The reduced machine rate does not, however, extend to the materials used in erecting buildings or other structures even though such buildings or structures may house or support machines used in manufacturing, compounding, processing, mining, or quarrying. (Sections 40-23-2(3) and 40-23-61(b)) (Readopted through APA effective October 1, 1982, amended November 3, 1998)

810-6-2-.58. Patterns Purchased for Use.

Patterns which become parts or attachments of molding machines used in manufacturing are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.59. Patterns Used by Operators of Foundries.

Foundry operators use patterns to form the molds in which their products are cast. These patterns are subject to tax at the special machine rate of 1 1/2% when purchased by the foundry operators. In those cases where the foundryman fabricates the pattern used by him, the materials used in such fabrication are taxed at the special rate. (Section 40-23- 2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.62. Pipe Threading Machines.

Pipe threading machines used for construction purposes by a contractor or other builder are taxed at the 4% general rate. (Sections 40-23-1(a)(10) and 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.63. Piping.

Piping leading to and from storage tanks and piping bringing gas or water into a plant does not come within the levy on machines used in manufacturing. The general rate of 4% applies. (Section 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982.)

810-6-2-.64. Piping in Manufacturing Plant.

(1) Piping furnished and installed by a contractor along with pump houses and well connections is subject to use tax when intended for use by a paper manufacturer to supply his plant with the water necessary to the manufacturing of paper. The Supreme Court of Alabama held that the pipe and other materials used were building materials which are made taxable at the general tax rate by the building materials provision found in the definition of "sale at retail." (Layne Central Company v. Curry, 8 So.2d 839).

(2) Please note that the Supreme Court has in the Wilputte Coke Oven case made a distinction between "building materials" and recognizable parts and attachments for machines. See rule 810-6-2-.41 Machines Furnished and Installed by Building Contractors. (Sections 40-23-1(a)(10) and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.65. Plates, Printers.

(1) Plates purchased by a printer for use as a part or attachment for a machine used in printing tangible personal property are subject to the sales and/or use tax at the machine rate of 1 1/2%.

(2) Materials purchased by a printer for use in making plates that become a part or attachment to a machine used in printing tangible personal property are subject to the sales and/or use tax at the machine rate of 1 1/2%.

(3) The plates or materials used in making plates are taxable to the printer at the time of purchase even though the plates may pass to the printer's customer after use by the printer.

(4) An example would be a person needing business cards with his picture shown thereon. The printer does not have the facilities to make the type plate needed; therefore, he purchases the plate needed to print the cards from a person in the business of making plates. (Section 40-23-2(3)) (Adopted October 29, 1976, readopted through APA effective October 1, 1982)

810-6-2-.66. Platform Trucks.

In Alabama-Georgia Syrup Company v. State of Alabama, 42 So.2d 796, the Alabama Supreme Court held that platform trucks "used for moving the company's products in the process of blending and packing the syrup in the plant" are not exempted by the machine exemption "under old sales tax law". The court stated: "We do not think that platform trucks are machines within the meaning of the exemption. They are obviously used in transportation from one point in the plant to another and not in compounding and manufacturing of tangible personal property." (Sections 40-23-2(1) and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.66.05. Portable Power Saws.

(1) The Sales and/or Use Tax Laws levy a tax of 1 1/2% on the net difference paid for any machine, machinery, or equipment used in planting, cultivating, or harvesting farm products or used in connection with the production of agricultural produce or products, livestock, or poultry on farms.

(2) The machines and machinery including chain saws used in production and harvesting of timber grown on tree farms, including pulpwood are taxed at 1 1/2%. Chain saws used for clearing land, cutting firewood, or other nonagricultural uses are taxed at 4%. (Sections 40-23-37, 40-23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended July 27, 1964, amended June 12, 1978, readopted through APA effective October 1, 1982)

810-6-2-.67. Power Cables.

Power cables supplying power to working areas in mines and quarries are subject to the tax at the 4% rate. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.68. Power Lines.

Electric power lines carrying electric power into a plant of a manufacturer, compounder or processor are taxed at the general rate of 4%. (Section 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.69. Printers, Applicable Tax Rate.

Sales of materials to printers are at wholesale, tax free, when such materials become a component of the printed matter produced for sale. The machines used in the printing come within the machine levy and are taxed at the 1 1/2% rate. The supplies, materials, and equipment not becoming a component of the product sold or not constituting a machine used in manufacturing are subject to the sales or use tax, whichever may apply, at the general rate of 4%. (Readopted through APA effective October 1, 1982)

810-6-2-.71. Proofs.

Gross receipts accruing from the retail sales of proofs sold to printers, publishers or others, which are used to make negatives to produce plates for offset printing, are subject to the sales tax at the machine rate of 1 1/2%. The machines used by the processor in the processing of proofs are taxable at the machine rate of 1 1/2%. The supplies, materials, and equipment not becoming a component of the product sold, or not constituting machines used in processing are subject to the sales or use tax, whichever may apply at the general rate of 4%. Where a printer or publisher processes proofs for their own use, sales or use tax shall be due on the purchase price of the materials becoming a component of the proofs at the machine rate of 1 1/2% where the proofs are used to make negatives to produce plates for offset printing. (Section 40-23-2(3)) (Adopted June 20, 1966, readopted through APA effective October 1, 1982)

810-6-2-.72. Pumps, Mines.

Pumps when used in mining are taxed at the special machine rate of 1 1/2%. (Section 40- 23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.73. Rail Bonds Used in Mining.

Rail bonds used in the construction and maintenance of mine tracks used in bringing minerals to the surface of the earth are taxed at the special machine rate of 1 1/2%. This provision does not, however, extend to rail bonds used in the construction and maintenance of trucks used in transporting materials from the mine after the mining operation has been completed. (Sections 40-23-2(3), 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.74. Railroad Companies-Machines.

Machines when sold to, or for use by, railroad companies in maintaining, repairing or reconditioning their equipment are subject to the sales or use tax at the general rate of 4%. (Section 40-23-2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.74.05. Railroad Rails.

(1) Railroad rails are taxable at the general rate of 4% when used as a roadway for transportation equipment or for general purposes not described in the next paragraph.

(2) Railroad rails are taxed at the special machine rate of 1 1/2% when used as a roadway for quarrying or mining equipment in quarries or mines or when used on or in the operation of machines used in manufacturing, compounding or processing. (Sections 40-23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.75. Rails Used in Mining.

Mine rails used in the construction and maintenance of tracks used in removing minerals from the earth are taxed at the special machine rate of 1 1/2%. This provision does not, however, extend to rails used in the construction or maintenance of tracks used in transporting minerals after the mining operation has been completed. (Sections 40-23- 2(3) and 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.78. Repairs, Machine.

(1) When repairs require service only or service with the use of an inconsequential amount of materials, the amount received is not subject to tax.

(2) When materials and service are used in repairing machines taxed at the special machine rate and when there is no separation in the billing, both materials and services are to be included in gross proceeds of sales at the special rate.

(3) When materials and service are used in repairing machines taxed at the special machine rate with service and materials shown separately, the materials only are subject to the tax.

(4) Materials are taxable at the general rate in any event when sold to repairmen for use in making repairs when such materials lose their identity as the result of such use; for instance, paint, solder, lumber, and sheet metal.

(5) When both materials and services are used in repairing machines taxed at the general rate and when there is no separation in the billing, both materials and services are to be included in the measure of tax to be paid. Both are taxed at the general rate. When the materials are shown separately on the invoice, the materials only are taxable.

(6) Also see rule 810-6-1-.95 entitled Materials Used in Repairing.

(Section 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.79. Repairs of Electric Motors and Electric Generators.

(1) Parts and attachments furnished by repairmen in reconditioning or repairing electric motors and electric generators are sold by the repairmen to the owners of the motors and generators. The repairman's sales of repair parts, such as ball bearings, brushes and wire used in rewinding, are subject to the sales tax. These parts and attachments are purchased at wholesale tax free by the repairman.

(2) Materials which lose their identity because of use by a repairman in repairing or reconditioning electric motors and electric generators, such as solder, babbitt, varnish, and insulation paste are subject to sales or use tax when purchased by the repairman. The tax shall be paid to the repairman's supplier or direct to the Department of Revenue as the circumstances require. Provided, however, where a repairman is engaged in the business of selling such repair materials, as well as using them, he may purchase at wholesale all repair materials which he both sells and uses in making repairs and pay direct to the Department of Revenue as sales tax the amount due on both sales and withdrawals from stock for use.

(3) The repairman's charges for labor used in installing parts and materials are not to be included in the measure of tax to be collected from his customers and paid to this state where such charges for labor are separately invoiced by the repairman to his customers and where the books and records of the repairman are kept in such a manner as to clearly reflect receipts from making installations and rendering services.

(4) In those instances where repair parts are used in repairing or rebuilding a motor or generator used in such a way that it would be taxed at the special machine rate, such repair parts are also taxed at the special rate. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.79.03. Repossessed Used Vehicles, Sales of.

Resales of automotive vehicles repossessed by the seller or for him by a finance company are taxable measured by the gross proceeds of the resales thereof less credit for any automotive vehicle accepted as part-payment of the sales price of the vehicle so resold. (Section 40-23-2(4)) (Readopted through APA effective October 1, 1982)

810-6-2-.79.04. Restaurants, Equipment and Supplies.

(1) Restaurants and cafeterias are considered to be processors and compounders of food products for sale; therefore, they are entitled to purchase machines used in processing and compounding at the reduced rate of 1 1/2 percent.

(2) The machines falling in this category include, but are not limited to, meat slicers, burger patty makers, ice machines, coffee makers, shredders, electric mixers, electric food cutters, french fry machines and ranges.

(3) Items not falling in this category, such as refrigeration units, pots, pans, stainless steel work tables, hand tools, and similar items are taxable at the general rate of 4 percent.

(4) See Rule entitled Furnished Containers, 810-6-1-.69 for information regarding application of tax on purchases of paper products. (Sections 40-23-2(1) and 40- 23-2(3)) (Adopted August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.79.05. Rural Electrification Authority (R.E.A.).

Cooperatives set up under authority of United States Rural Electrification Laws are not instrumentalities of any governmental body. All purchases are subject to the sales or use tax, whichever may apply, except when otherwise specifically exempted. (Section 40- 23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-2-.87. Sand Handling and Sand Conditioning Equipment.

Machines and equipment used by manufacturers for conditioning and transporting, while in process, sand for use in mold making are taxed at the special machine rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.88. Sawdust Removal Equipment.

(1) Equipment manufactured for and customarily used in removing sawdust from saws in saw mills is taxed at the special machine rate of 1 1/2% when such equipment is a part or attachment of the sawing mechanism.

(2) The same rule applies to equipment manufactured for and customarily used to remove waste material from planers, edgers, and other manufacturing machines.

(3) Note, however, the removal or disposal of waste materials is not of itself a manufacturing process. The waste removal equipment must be an attachment of a machine which is covered by the levy on machines used in manufacturing in order for it to take the special rate of 1 1/2%. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.88.02. School Buses.

A school bus purchased by an individual for use under direction of and control of a board of education is subject to tax. (Section 40-23-1(a)(10)) (Readopted through APA effective October 1, 1982)

810-6-2-.88.03. Schools and Colleges Owned by the State, Counties or Cities, Sales Made By.

(1) Except as outlined in paragraph (2), retail sales of tangible personal property made by all schools and colleges owned and operated by the State of Alabama are subject to sales tax.

(2) Sales by elementary or secondary schools owned and operated by the State of Alabama are exempt from sales tax when the net proceeds from the sales are used solely for the benefit of the elementary or secondary school.

(3) Sales made by all colleges, universities, or other institutions of higher learning, both privately and publicly owned and operated, are by specific provisions of the Sales Tax Law subject to sales tax.

(4) If a student activity fee is collected from each student as a lump sum not broken down and covers the yearbook which is then supplied without further charge, the distribution of the yearbooks to the students is a service of the school not subject to tax.

(5) Gross proceeds of sales made by schools (not including institutions of higher learning) owned and operated by the counties and municipalities of the State are not subject to sales tax.

(6) Gross receipts from athletic contests conducted by or under the auspices of state-, city-, and county-operated educational institutions, other than primary or secondary schools, are subject to sales tax. Such institutions must collect the sales tax on their gross receipts from athletic contests and remit the tax to the Department of Revenue. State-, city-, and county-operated primary and secondary schools shall collect the sales tax on their gross receipts from athletic contests including receipts from any football playoff conducted by or under the auspices of the Alabama High School Athletic Association; but, instead of remitting the tax collected to the Department of Revenue, the tax shall be retained by the collecting school and used by the school for school purposes. Effective July 1, 2006, pursuant to Act #2006-602, this exemption and retention of the sales tax collected shall apply to any athletic event conducted by or under the auspices of the Alabama High School Athletic Association. With the exception of athletic events conducted by educational institutions other than primary or secondary schools, no sales tax is due on receipts accruing from admissions or fees from other amusements or entertainment conducted by schools and colleges owned and operated by the State of Alabama, a county or city of the State of Alabama. (Section 40-23-2(2)) (Sections 40-23-2(1), 40-23-2(2), 40-23-31, 40-2A-7(a)(5), and 40-23-83 Code of Alabama 1975) (Amended July 2, 1975, readopted through APA effective October 1, 1982, amended June 5, 1992, amended September 29, 1994, amended November 5, 1996, amended December 13, 2006)

810-6-2-.88.04. Exemption for Certain Sales by Elementary and Secondary Schools, School Sponsored Clubs and Organizations, and School Affiliated Groups.

(1) The term "elementary or secondary school" as used in Act No. 96-653 and in this regulation shall mean both public and private schools where the curriculum consists of one or more of grade levels K through 12. The term "elementary or secondary school" shall not include nurseries and day care centers nor shall it include private schools at which the courses of study are limited to specialized subjects such as dance, horseback riding, music, cooking, or sewing.

(2) Provided the net proceeds from the sales are used solely for the benefit of the elementary or secondary school, sales and use taxes do not apply to sales by the following:

(a) elementary or secondary schools,

(b) nonprofit elementary or secondary school-sponsored clubs and organizations, or

(c) nonprofit elementary or secondary school affiliated groups, such as parent- teacher organizations and booster clubs whose membership may be composed of individuals other than students.

(3) The exemption outlined in paragraph (2) above also applies to sales resulting from agreements or contracts entered into with resident or nonresident organizations to participate in fund-raising campaigns for a percentage of the gross receipts where students act as agents or salespersons for the organizations by selling or taking orders for the sale of tangible personal property. Neither the school, club, organization, or group enumerated in paragraph (2) nor the resident or nonresident organization with whom the school, club, organization, or group contracts is required to collect or remit sales or use tax on the tangible personal property sold for fund-raising purposes. (Adopted through APA effective November 5, 1996)

810-6-2-.89. Scrap Metal Shredder.

A scrap metal shredder that will take such items as junk automobile bodies and through a series of magnetically operated devices separate the metal from the nonmetal items, shred the metal, and hydraulically compress it into blocks of certain sizes to specifications so that it can be measured when loading the furnace is taxed at the machine rate of 1 1/2%. (Section 40-23-2(3)) (Adopted June 12, 1978, readopted through APA effective October 1, 1982)

810-6-2-.91. Soda Fountains and Ice Cream Cabinets.

Soda fountains and ice cream cabinets are taxed by the Sales and Use Tax Laws at the general rate. The machine rate does not apply. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.92. Soft Drink Bottlers.

Soft drink bottlers are engaged in manufacturing and compounding and, therefore, shall pay sales or use tax at the machine rate on the machines purchased used directly in manufacturing and compounding. They shall also purchase at wholesale, tax free, the ingredients of the drink which they compound. Supplies consumed in manufacturing or compounding are subject to tax at the general rate when purchased by the bottlers. (Sections 40-23-1(a)(9)b, 40-23-2(3), 40-23-2(1), 40-23-60(4)b, 40-23-61(a), and 40-23- 61)

(a) Examples of machines used at the machine rate:

1. Bottle filling machines

2. Capping machines

3. Refrigeration equipment, when used to cool the product when in the compounding process

4. Filtering equipment, used for filtering water used in the product

5. Bottle washers and soakers

6. Sterilizers

7. Water heaters

(b) Examples of supplies and equipment which are subject to tax at the general rate:

1. Returnable or reusable bottles

2. Flats

3. Soap

4. Hand trucks

5. Office equipment

6. Office supplies

7. Advertising materials

(Readopted through APA effective October 1, 1982, amended January 27, 1998)

810-6-2-.92.02. State, County and City, Sales made by.

(1) The counties and cities of the State of Alabama and the agencies and the instrumentalities thereof are not required by the provisions of the Sales Tax Law to collect or to pay the Department of Revenue sales tax because of sales of tangible personal property made by them, except those institutions of higher learning operated by the cities and the counties must pay sales tax on sales made by them.

(2) The Sales Tax Law by specific provisions requires state-, city-, and county-operated educational institutions, other than primary or secondary schools, to collect and remit to the Department of Revenue the tax levied on admissions to athletic contests. State-, city-, and county-operated primary and secondary schools shall collect the sales tax levied on admissions to athletic contests including admissions to any football playoff conducted by or under the auspices of the Alabama High School Athletic Association; but, instead of remitting the tax collected to the Department of Revenue, the tax shall be retained by the collecting school and used by the school for school purposes. Effective July 1, 2006, pursuant to Act #2006-602, this exemption and retention of the sales tax collected shall apply to any athletic event conducted by or under the auspices of the Alabama High School Athletic Association. (Section 40-23-2(2))

(3) The Sales Tax Law also requires the State of Alabama and all of its agencies or instrumentalities to collect and remit to the Department of Revenue the sales tax levied on sales of tangible personal property. (Section 40-23-2(1)) (Section 40-23-31, and Code of Alabama 1975) (Readopted through APA effective October 1, 1982, amended June 5, 1992, amended September 29, 1994, amended December 13, 2006)

810-6-2-.93. Steel Plate.

Steel plate is taxable at the 1 1/2% machine rate when made into a tank at the site when the tank becomes a part of machinery used in manufacturing or processing. (Section 40- 23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, amended July 1, 1963, amended August 10, 1982, readopted through APA effective October 1, 1982)

810-6-2-.94. Storage Tanks.

(1) Storage tanks in or at manufacturing plants are subject to tax at the general rate of 4%. Piping leading to and from the storage tanks is also taxed at the 4% rate.

(2) Tanks which are connected into a processing system for the purpose of maintaining a suitable flow of materials through the connecting processing equipment are entitled to the special rate of 1 1/2%. (Sections 40-23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.95. Supplies and Materials.

In maintaining and making repairs of machines and equipment used in mining, replacement parts specifically manufactured for use on such machines are taxed at the special machine rate of 1 1/2% when the machines themselves are entitled to the special rate. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.96. Switchboards.

Switchboards and other electrical equipment used in controlling the flow of electric power into manufacturing plants and mines are taxed at the general rate of 4%. (Section 40-23- 2(1)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.97. Tanks Used in Manufacturing.

Tanks which are part of a chain of processing operations are taxed at the special machine rate of 1 1/2% when such tanks are purchased prefabricated and require no more than installation at the site. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.98. Equipment Used by Television, Cable TV, and Radio Stations.

(1) Amplifiers used in broadcasting by television, cable tv, and radio stations are machines used in processing tangible personal property. State of Alabama v. The Television Corporation, 271 Ala. 692, 127 So.2d 603, Mountain Brook Cablevision, Inc. v. State of Alabama, CV-82-1469-TH (Cir. Ct. Montgomery County February 25, 1983) and Cablevision Company, Inc. v. State of Alabama CV-82-1470-TH (Cir. Ct. Montgomery County February 25, 1983). (See Curry v. Alabama Power Company, 243 Alabama 53, 8 So.2d 521, holding that electricity is tangible personal property within the meaning of that term as used in the sales and use tax statutes.)

(2) When used in broadcasting by television, cable tv, and radio stations, equipment, which amplifies, modifies, or otherwise controls electrical currents and signals imposed on electrical current and the attendant electromagnetic waves, qualifies as a machine used in processing tangible personal property and is subject to the reduced machine rate of tax. Examples of this equipment include, but are not limited to, traps, receivers, video sequencers, filters, data scanners, taps, character generators, equalizers, modulators and modules, power supplies and standby power supplies, attenuators, and converters (wherever located). (Sections 40-23-2(3) and 40-23-61(b), Code of Alabama 1975)

(3) Transmission cable and all other tangible personal property not classified as machines or parts and attachments for machines used in processing tangible personal property are taxable at the general rate. (Sections 40-23-2(1) and 40-23-61(a)) (Adopted October 1, 1959, readopted through APA effective October 1, 1982, amended January 10, 1985, amended October 29, 1993, amended July 30, 1998)

810-6-2-.99. Tool Steel.

Tool steel is taxed at the special machine rate of 1 1/2% when used as a part or an attachment for a machine used in mining or quarrying even though it may require some fabrication by the mine or quarry operator to adapt it for use on his equipment. (Section 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.100. Track Accessories Used in Mining.

Track accessories including spikes, bolts, plates, and switch parts becoming a part of mine tracks used in removing minerals from the earth are taxed at the special machine rate of 1 1/2%. This provision does not, however, extend to track accessories used in the construction or maintenance of tracks used in transporting minerals from the mine after the mining operation has been completed. (Sections 40-23-2(1) and 40-23-2(3)) (Readopted through APA effective October 1, 1982)

810-6-2-.101. Transformers.

Transformers used in the generation, manufacture, or distribution of electricity by public utilities are machines used in manufacturing and processing tangible personal property and, therefore, are taxed at the reduced machine rate. (Curry v. Alabama Power Company, 8 So.2d 521) Following this decision by the court, the Department has ruled that all transformers used by producers or distributors of electricity and transformers used by other manufacturers, processors, or compounders as a part of their manufacturing, processing, or compounding equipment are entitled to the reduced machine rate of sales and use tax. Power capacitors and voltage regulators qualify for the reduced machine rate hen used in the generation, manufacture, or distribution of electricity by public utilities or by other manufacturers, processors, or compounders as a part of their manufacturing, processing, or compounding equipment. (Sections 40-23-2(3) and 40-23-61b)) (Readopted through APA effective October 1, 1982, amended October 29, 1993)

810-6-2-.102. Trolley, Materials, Mine.

Trolley equipment used in supplying electric power to mine locomotives used in bringing minerals to the surface of the earth are taxed at the special machine rate of 1 1/2%. This provision, however, does not extend to electric cable, switch gear, and other equipment used to deliver electric current to trolley lines or to other mining machines or machinery. (Sections 40-23-2(3) and 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-2-.103. Truck Bodies, Rates of Tax.

A truck body, not a part of an automotive vehicle at the time it is purchased, is taxable at the general 4% rate except in those instances where a truck chassis and a truck body are purchased out of Alabama in separate transactions but are assembled into a unit for importation into this State, in which event, the unit is taxable at the automotive rate of 2%. (Sections 40-23-2(1), 40-23-2(4)) (Adopted March 9, 1961, amended July 1, 1963, amended November 1, 1963, readopted through APA effective October 1, 1982, amended January 24, 1989)

810-6-2-.104. Used Automotive Vehicles.

A used automotive vehicle is one which has been put to the use for which it was intended. All sales of used automotive vehicles are taxed at the automotive rate regardless of how acquired. The sales tax applies on sales of used automotive vehicles in the same way it applies on new automotive vehicles. (Section 40-23-2(4)) (Readopted through APA effective October 1, 1982)

810-6-2-.104.02. Used Vehicles Acquired in Trades, Sales of.

Used automotive vehicles, used truck trailers and semi-trailers when taken in trade are subject to sales tax at the automotive rate when resold. (Section 40-23-2(4)) (Readopted through APA effective October 1, 1982)

810-6-2-.105. Wire Rope.

Wire rope is subject to sales or use tax at the 4% general rate when used on locomotive cranes or other material handling equipment which is not entitled to the special machine rate of 1 1/2%. (Sections 40-23-2(1) and 40-23-2(3)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982)

810-6-2-.106. Wire Rope Used on Machines.

Wire rope is taxed at the special machine rate of 1 1/2% when used as an attachment for a machine used in mining, manufacturing or quarrying. (Section 40-23-2(3)) (Readopted through APA effective October 1,1982)

810-6-2-.107. Wholesale Sales.

(1) Record of sales at wholesale to be kept. In the court case State of Alabama v. Levey, 29 So.2d 129, the Alabama Supreme Court held that suitable records of wholesale sales must be kept in accordance with the provisions of the Sales and Use Tax Laws in order to claim nontaxability for such sales.

(2) "We pointed out that the taxpayer kept no proper record to indicate these sales or differentiate them from the remainder of the gross sales shown on his general ledger. He, himself, said this and testified his charge tickets, which had been destroyed, were his only records to distinguish such sales. Other evidence was of like import."

(3) "We have construed the pertinent provisions of Title 51, noted above, as requiring the keeping of accurate records of such exempt sales if they are to escape taxation; and noncompliance gives authority to the tax department to disregard such a claim of exemption and, on a proper showing of liability to levy the tax on the gross, as for retail sales, as the provisions of the statute contemplate." (Section 40-23-2(1)) (Readopted through APA effective October 1,1982)

810-6-2-.108. Paper Manufacturers, Tax Rates Applicable to.

(1) Purchases of machines by paper manufacturers to be used in manufacturing, processing, or compounding tangible personal property and purchases by paper manufacturers of the parts, attachments, or replacements for these machines which are (i) made or manufactured for use on or in the operation of the machines, (ii) necessary to the operation of the machines, and (iii) customarily so used are taxable at the reduced machine rates of sales and use tax levied in Sections 40-23-2(3) and 40-23-61(b). Examples of tangible personal property that are taxable at the reduced machine rate when purchased by paper manufacturers are:

(a) machine clothing - felts, screen plates, and wire

(b) tanks to be used in manufacturing

(d) pipes, valves, pipe fittings, and pipe fitting supplies attached to manufacturing machinery (all other pipes, valves, pipe fittings, and pipe fitting supplies are taxable at the general rate except for those which are used in a water treatment plant and, therefore, qualify for the pollution control exemption in Sections 40-23-4(a)(16) and 40-23-62(18))

(e) all machinery and equipment used to generate electricity including boilers, engines, condensers, generators, transformers, and attachments thereto (machinery and equipment used solely for the transmission of electricity is taxable at the general rate)

(f) electrical equipment used as direct controls of manufacturing machines

(g) all transformers, wherever used

(h) insulating material, both bulk and preformed, which is applied to manufacturing machinery

(i) shafting, whether purchased prefabricated to exact size or unfinished to be cut and machined by the purchaser, when used on manufacturing machinery

(j) packing, whether purchased prefabricated or in bulk form, when purchased for use on manufacturing machinery

(k) steam hose purchased for use as a part or attachment to manufacturing machinery

(l) steel, steel plate, steel angles, bushing, bronze, steel shapes, and tool steel from which machine parts or attachments are fabricated

(m) fire clay and bulk lining materials

(n) equipment used in measuring, weighing, and packaging product when it is a part of the production line machinery and is used to put the product in condition for sale

(o) computers directly linked to manufacturing machinery and used to control or monitor manufacturing machinery

(p) machinery used during the manufacturing process to test or measure materials entering the product.

(2) Tangible personal property purchased by paper manufacturers is taxable at the general rate of sales or use tax levied in Sections 40-23-2(1) and 40-23-61(a) unless it qualifies for the reduced automotive, manufacturing machine, or farm machine rate of tax or for a specific statutory exemption or exclusion. Property purchased for use in general plant maintenance, administration, general management, or marketing is taxable at the general rate. The following items are taxable at the general rate of sales or use tax when purchased by paper manufacturers with certain exceptions as noted:

(a) steam hose used for cleaning purposes including bulk purchases of steam hose of the kind which may be used either for cleaning the plant and plant equipment or for use as an attachment to manufacturing machinery (unless the purchaser can document that all of the steam hose purchased in bulk was used on manufacturing machinery)

(b) bulk or preformed insulating material not becoming an attachment to manufacturing machinery

(c) machinery and equipment used solely to transmit electricity from the powerhouse to motor control centers on manufacturing machinery (these items transmit electricity rather than manufacture electricity)

(d) all wire, fixtures, and other materials used in lighting

(e) baling wire pulp for internal use

(f) skid and anchor plates

(g) steel strapping, when not furnished as part of a one-time-use container

(h) gummed tape, when not furnished as part of a one-time-use container

(i) wooden skids

(j) pulpwood saws and saw parts (taxable at the reduced farm machine rate when purchased for use in harvesting timber)

(k) yard switcher repair parts

(l) safety shoes

(m) lumber

(n) magazine subscriptions

(o) repair parts for electric trucks

(p) office supplies

(q) laboratory supplies

(r) cafeteria equipment

(s) charts used on recording instruments that are attached directly to manufacturing machinery

(t) tractor repair parts

(u) paints

(v) auto, truck, and trailer repair parts

(w) hand-operated hoists and parts

(x) portable air compressors and parts

(y) tools

(z) first aid supplies, fire protection supplies and equipment, safety supplies and equipment

(aa) welding machines and parts

(bb) fuel oil

(cc) Dowicide (not taxable when it becomes an ingredient or component part of the paper manufacturer's manufactured product)

(dd) Nopco K. F. foam killer (exempt when used primarily for air or water pollution control purposes)

(ee) seedlings and plants

(ff) repair parts for gas-driven and electric lift trucks (new units taxable at the reduced automotive rate)

(gg) building materials including brick, structural steel, concrete, lumber rails, paint, insulation materials, plumbing fixtures, and all other materials becoming a part of a structure

(hh) pipes, valves, pipe fittings, and pipe fitting supplies including those which are used in drinking water lines and fire protection lines (pipes, valves, pipe fittings, and pipe fitting supplies which are attached to manufacturing machinery are taxable at the reduced machine rate; those which are used in a water treatment plant qualify for the pollution control exemption in Sections 40-23-4(a)(16) and 40-23-62(18))

(ii) construction supplies including welding rods, acetylene, oxygen, screws, nuts, bolts, and rivets.

(3) The rates of sales and use tax applicable to purchases of used machinery and equipment by paper manufacturers are the same as the rates applicable to purchases of new equipment.

(4) Exemptions and exclusions which commonly apply to paper manufacturers include the wholesale exclusion for purchases of materials becoming an ingredient or component part of a manufactured product and the one-time-use containers or container components in which the manufacturer's product is furnished, the exemption for oils and greases otherwise taxed as lubricants, and the exemption for certain railroad cars, vessels, and barges of over five tons load displacement. (Sections 40-23-1(a)(9)b, 40-23-1(a)(9)c, 40-23-4(a)(1), 40-23-4(a)(12), 40-23-60(4)b, 40-23-60(4)c, 40-23-62(4), and 40-23-62(17)) (Adopted through APA effective November 3, 1998)

810-6-3-.01. Exemptions for Agricultural Products Sold by the Producer.

(1) There are two exemptions in the sales and use tax statutes relative to agricultural products sold by the producer - one is found in Sections 40-23-4(a)(5) and 40-23-62(8), Code of Alabama 1975, and the other in Section 40-23-4(a)(44). A sale of agricultural products that does not qualify for one of these exemptions may still qualify for the other.

(2) Sections 40-23-4(a)(5) and 40-23-62(8) exempt sales of products of the farm, dairy, grove, or garden from sales and use tax when the products (i) are sold by the producer, by members of the producer's immediate family, or by persons employed by the producer to assist in the production of the products and (ii) have not been processed, except to the extent that the products are customarily processed by operators of farms, dairies, groves or gardens in preparing products for market.

(a) This exemption does not apply to agricultural products sold by the producer through a store which the producer operates. (Curry v. Reeves, 240 Ala. 14, 195 So. 428)

(b) Unlike the exemption outlined in paragraph (3) below, this exemption is not limited to products that are planted, cultivated, and harvested by the producer. Examples of products that may qualify for this exemption but not the exemption in paragraph (3) include but are not limited to milk, eggs, catfish, minnows, bees, honey, rabbits, and hamsters produced on farms.

(3) Section 40-23-4(a)44 exempts fruit or other agricultural products from sales and use tax when sold by the person or corporation that planted, cultivated, and harvested the products. Unlike the exemption outlined in paragraph (2) above, this exemption is not lost to the producer who sells qualifying agricultural products through a store operated by the producer.

(4) Sales of agricultural products which otherwise qualify for one or both of the exemptions outlined in paragraphs (2) and (3) above do not lose their exempt status if the products retain their raw, unprocessed form when prepared by the producer for marketing or merchandising. An agricultural product is no longer in its raw, unprocessed form if it is cooked, boiled, roasted, or mixed or compounded with ingredients other than additional exempt agricultural products.

(a) Examples of prepared agricultural products which do not lose their exempt status when they otherwise qualify for either or both of the exemptions outlined in paragraphs (2) and (3) are:

1. raw pecans when cracked or shelled

2. raw shelled peanuts

3. raw shelled peas, beans or butterbeans

4. raw shucked corn

5. raw washed fruits or vegetables

(b) Examples of processed agricultural products which do not qualify for the exemptions outlined in paragraphs (2) and (3) above are:

1. apple cider

2. boiled or roasted peanuts

3. candy

4. cane or sorghum syrup

5. fruit pies

6. ice cream

7. jellies and jams

8. peanut butter

9. pickled peaches

10. pickles

11. roasted pecans

(Readopted through APA effective October 1, 1982, amended May 22, 1993, amended July 30, 1998)

810-6-3-.01.01 Agriculture, Definition of.

(1) For purposes of interpreting references in the sales and use tax statutes to agriculture and agricultural purposes, the term "agriculture" is defined to be the art or science of cultivating the ground, and raising and harvesting crops, including also feeding, breeding, and management of livestock and poultry; tillage; husbandry, farming.

(2) The following items or areas fall within the definition of agriculture:

tree farming

raising horticultural products in commercial greenhouses and nurseries

fruit and nut trees (whether or not in groves or orchards)

vegetable gardens (whether or not on farms)

livestock farming

dairy farming

commercial fish ponds

commercial sod farms

poultry and egg farming

(3) The following items or areas do not fall within the definition of agriculture:

lawns, shrubbery, and flower beds around residential and business property

golf courses, baseball or football fields

highway, railroad, or utility right-of-way

shade trees (other than fruit or nut trees)

house plants

commercial pest control services

(Adopted through APA effective May 22, 1993)

810-6-3-.01.02. Livestock, Definition of.

(1) In accordance with the guidelines for interpretation outlined in Brundidge Milling Co. v. State, 45 Ala. App. 208, 228 So. 2d 475 (1969); the term "livestock" as used in Title 40, Chapter 23 of Code of Alabama 1975 and in the sales and use tax regulations shall mean cattle, swine, sheep, goats, and members of the equidae family of mammals such as horses, mules, and donkeys.

(2) Animals other than those enumerated above do not fall within the term "livestock." (Adopted through APA effective July 20, 1994)

810-6-3-.02. Alabama State Bar.

The Alabama State Bar is an instrumentality of the state (Section 34-3-105, Code of Alabama 1975) and is not subject to sales or use taxes on the property purchased for use in carrying on any activity they are authorized to engage in by law. (Section 40-23- 4(a)(11)) (Adopted February 6, 1968, readopted through APA effective October 1, 1982)

810-6-3-.03. American National Red Cross.

The American National Red Cross is an agency of the United States; its purchases are exempt from the sales and use tax. (Section 40-23-4(a)(17)) (Readopted through APA effective October 1, 1982)

810-6-3-.03.02. Automotive Vehicles, Certificate of Exemption - Out-of-State/City/County Delivery Form.

(1) Whenever a dealer in automotive vehicles, truck trailers, semitrailers, or house trailers sells an automotive vehicle, truck trailer, semitrailer, or house trailer and delivers it outside Alabama, or outside the city and/or county in which the dealer is located, any claim of exemption from sales tax on the sale because of delivery outside Alabama or the city or county in which the sale was made, shall be supported by an affidavit of the dealer and the buyer and by an affidavit of the person making delivery of the vehicle, trailer, semitrailer, or house trailer using a form furnished by the Department of Revenue. This form shall be entitled “Certificate of Exemption – Out of State/City/County Delivery” and shall require the following information:

(a) The date of the sale.

(b) The invoice number.

(d) The purchaser's name and address.

(e) A description of the automotive vehicle, truck trailer, semitrailer, or house trailer to include the make, model, year, vehicle identification number (VIN), an indication as to whether the vehicle is new or used, the total sales price of the vehicle, the trade-in allowance, and the net amount paid for the vehicle.

(f) An indication as to the state in which the vehicle will be titled or registered.

(g) A certification by the undersigned seller and buyer, or their representatives, that the vehicle described on the form has been sold and will be delivered outside Alabama, the city and/or county in which the dealer is located, and that the information provided on the form is true and correct.

(h) The state, county, and city if applicable, where the vehicle, trailer, semitrailer, or house trailer was delivered.

(i) The name of the person making the out-of-state or out-of- city/county delivery and an indication as to whether that person is the seller or an employee of the seller.

(j) The name of the person to whom the out-of-state or out-of- city/county delivery was made and the date and place of delivery.

(k) A certification by the person making the delivery of the vehicle, trailer, semitrailer, or house trailer that he or she has personally delivered the vehicle, trailer, semitrailer, or house trailer described in (e) to the person and place indicated in (j).

(2) No sale of any automotive vehicle, truck trailer, semitrailer, or house trailer will be recognized as having been delivered outside Alabama or outside the city and/or county in which the dealer is located unless there has been specific compliance with this rule.

(3) This rule shall not apply to a sale of an automobile, motorcycle, truck, truck trailer, or semitrailer to a person who takes delivery of the vehicle, trailer, or semitrailer inside Alabama and removes it from Alabama within 72 hours for first use and registration or titling outside Alabama. See Rule 810 6 3 .42.03 entitled Sales of Certain Automotive Vehicles to Nonresidents for First Use and Registration or Titling Outside Alabama for the requirements necessary to document a sale which qualifies for the 72-hour drive-out exclusion contained in Section 40-23-2(4), Code of Alabama 1975. (Amended August 16, 1974, amended November 3, 1980, readopted through APA October 1, 1982, amended June 2, 1988, amended July 30, 1998, amended July 7, 2006)

810-6-3-.04. Baby Chicks and Poults.

Sales of baby chicks and poults are specifically exempted from sales tax. (Section 40-23- 4(a)(3)) (Readopted through APA effective October 1, 1982)

810-6-3-.06.04. Boxing and Wrestling Matches Staged by National Guard.

Boxing and wrestling matches staged by the National Guard in National Guard Armories or on property adjacent thereto controlled by the National Guard are exempted from sales tax where such matches are held in accordance with the provisions of Section 31-2-56, Code of Alabama 1975. (Amended June 12, 1978, readopted through APA effective November 27, 1985)

810-6-3-.07. Canteens of Alabama National Guard.

(1) Canteens and exchanges of the Alabama National Guard and the Alabama Naval Militia are not required to collect or pay sales tax where:

(a) Established and operated in accordance with rules and regulations issued by the Adjutant General and approved by the Governor, and where,

(b) Owned, operated, and run exclusively by National Guard or Naval Militia units for the convenience and benefit of the active and retired members of the National Guard and Naval Militia, and pursuant to Act # 2006-195, all other active and retired members of the United States Armed Forces (Section 31-2-81), and where,

(2) The canteens and exchanges established and operated as described above are not subject to sales tax on purchases for use in such operations. (Section 40-23-4(a)(11)) (Sections 40-2A-7(a)(5), 40-23-4(a)(11), 31-2-81 and 40-23-31, Code of Alabama 1975, Readopted through APA effective October 1, 1982, amended November 22, 2006)

810-6-3-.07.05. Charitable Organizations and Institutions.

Charitable and nonprofit organizations and institutions have no special exemption from the sales and use taxes. Further, they are required to comply with all the provisions of these laws, relating to the filing of returns, making payments of taxes required to be collected, etc. with the exception of those listed below which are exempt from payment of all sales and use taxes by special acts of the Legislature.

ACT NO.	ORGANIZATION	EFFECTIVE DATE
94-363	AIDS Action Council of Huntsville	April 12, 1994
94-363	AIDS Services Center, Inc.	April 12, 1994
94-363	AIDS Task Force of Alabama, Inc.	April 12, 1994
79-663	Alabama Aviation Hall of Fame Board	July 30, 1979
123	Alabama Chapter Cystic Fibrosis Research Foundation	October 1, 1965
81-812	Alabama Federation of Women's Clubs	May 27, 1981
81-790	Alabama Goodwill Industries, Inc. of Birmingham	May 27, 1981
93-484	Alabama Goodwill Industries, Inc.	May 13, 1993
670	Alabama Goodwill Industries, State Headquarters Only	May 1, 1978
1204	Alabama Heart Association	September 18, 1973
259	Alabama Masonic Home	September 7, 1964
83-408	Alabama Shakespeare Festival Theatre Finance Authority	January 27, 1983
1102	Alabama Sheriffs Boys Ranch	September 12, 1969
670	Alabama Sight Conservation State Headquarters Only	May 1, 1978
1204	Alabama Society of the Daughters of the American Revolution	September 18, 1973
2080	Alabama University of, Huntsville Foundation	October 1, 1971
95-724	American Bowling Congress or any predecessor organization or entity (exemption limited to state, county, and municipal sales or use taxes applicable to its entry fees	October 1, 1995
761	American Cancer Society - Alabama Division	September 9, 1967
670	American Legion, State Headquarters Only	May 1, 1978
670	American Veterans World War II, Korea, and Vietnam, State Headquarters Only	May 1, 1978
97-868	American Youth Soccer Organization, Region 498 (exemption is limited to county and municipal sales and use taxes in Madison County)	December 1, 1997
97-709	Anniston Fellowship House, Inc.	August 1, 1997
1591	Baptist, Freewill, Children's Home	September 20, 1970
94-363	Birmingham AIDS Outreach, Inc.	April 12, 1994
1944	Birmingham Building Trades Tower	September 20, 1971
96-745	Birmingham Civil Rights Institute, Inc.	July 1, 1996
84-664	Birmingham Football Foundation	May 31, 1984
261	Boy Scouts of America	September 7, 1966
97-420	Bridge, Incorporated, The	August 1, 1997
47	Catholic Maritime Club of Mobile, Inc.	October 1, 1961
1591	Childhaven, Inc.	September 20, 1971
149	Chilton County Rescue Squad	September 21, 1975
96-426	Christian Children Homes, Inc.	July 1, 1996
89-829	Christian Service Mission, Inc. (exemption limited to sales of food pursuant to the food distribution program conducted by Christian Service Mission, Inc., in cooperation with World Share, Inc.)	May 17, 1989
95-376	Citizenship Trust	July 24, 1995
261	Community Chest, All and United Appeal Funds and all charitable, civic, and eleemosynary organizations and institutions for whom they solicit funds	September 7, 1966
97-421	Councils; State, Regional, and affiliated Community; created pursuant to Chapter 9A of Title 38 to administer the Individual and Family Support Program for persons with developmental disabilities and their families (exemption is limited to county and municipal sales and use taxes)	August 1, 1997
85-749	County Public Hospital Associations and any of their branches, agencies, lessees, or successors organized pursuant to Section 10-3A-1, et seq., Code of Alabama 1975, which operate or maintain hospitals for purposes other than pecuniary gain or individual profit	December 31, 1985
94-596	County Public Hospital Associations, or any Alabama nonprofit membership corporation if one or more of its members is a county public hospital association, and any of their branches, agencies, lessees, or successors organized pursuant to Section 10-3A-1, et seq., Code of Alabama 1975, which operate or maintain hospitals for purposes other than pecuniary gain and not for individual profit	December 31, 1993
96-344	Crenshaw Baptist Hospital (exemption is limited to county and municipal sales or use taxes in Crenshaw County)	June 1, 1996
154	Diabetes Trust Fund, Inc.	September 1, 1974
670	Disabled American Veterans, State Headquarters Only	May 1, 1978
97-709	DoDa Parade	August 1, 1997
77	Eastern Star, Grand Chapter and All Orders	August 7, 1978
1202	Elks Memorial Center	September 17, 1971
1204	Episcopal Foundation of Jefferson County	September 18, 1973
1102	Eufaula Heritage Association	September 12, 1969
88-543	Eye Foundation, Inc., and its branches and agencies	May 5, 1988
1204	Fire Departments, All Volunteer in Alabama	September 18, 1973
96-466	Franklin Memorial Clinic, Inc. (Exemption is limited to municipal gross receipts taxes)	July 1, 1996
94-246	Friends of Magnolia Cemetery, Inc., The (exemption is limited to county and municipal sales or use taxes in Mobile County	May 1, 1994
84-187	George Lindsey Celebrity Benefit, Inc., and The Alabama Special Olympics or any predecessor	April 24, 1984
261	Girl Scouts of America	September 7, 1966
93-484	Goodwill Industries of Central Alabama, Inc.	May 13, 1993
93-484	Goodwill Industries of Mobile Area, Inc.	May 13, 1993
94-119	Greater Gulf State Fair, Inc. And all persons, firms, or corporations that do business with the Greater Gulf State Fair, Inc. on its fairgrounds in Mobile County during its annual fair (exemption relates to Mobile County and is limited to county and municipal sales or use taxes	April 1, 1994
95-394	Habitat for Humanity Organizations	September 1, 1995
1250	Helping Hand Club of Anniston	September 13, 1969
1944	Holy Comforter House, Inc. Of Gadsden	September 20, 1971
97-868	Huntsville-Madison County Senior Center, Inc. (exemption is limited to county and municipal sales and use taxes in Madison County)	December 1, 1997
97-709	Huntsville Emergency Medical Services, Inc.	August 1, 1997
97-709	Jacksonville Christian Outreach Center, Inc.	August 1, 1997
94-363	Jefferson County AIDS in Minorities	April 12, 1994
123	Jefferson Tuberculosis Sanatorium	October 1, 1965
47	Jewish Community Center	October 1, 1961
87-549	King's Ranch, Inc.	July 22, 1987
47	Knights of Pythias Lodges	October 1, 1961
94-94	L'Arche-Mobile, Inc. (exemption is limited to county and municipal sales or use taxes)	April 1, 1994
94-363	Lee County AIDS Outreach, Inc.	April 12, 1994
97-517	Lee County Cattlemen's Association Rodeo (exemption is limited to county and municipal sales taxes levied upon admission to the rodeo)	August 1, 1997
97-709	Lee County Humane Society	August 1, 1997
97-943	Little Sisters of the Poor	December 1, 1997
97-868	Madison Baseball Association (exemption is limited to county and municipal sales and use taxes in Madison County)	December 1, 1997
97-868	Madison Dolphins Swim Team (exemption is limited to county and municipal sales and use taxes in Madison County)	December 1, 1997
94-212	Magic Moments, Inc.	May 1, 1994
	March of Dimes (The National Foundation's Field Offices)	Prior 1971
1591	Methodist Homes for the Aging	September 20, 1971
1591	Methodist, United, Children's Home	September 20, 1971
94-218	Mission of Hope, Inc. (exemption is limited to county and municipal sales or use taxes)	May 1, 1994
94-363	Mobile AIDS Support Services	April 12, 1994
94-119	Mobile Arts and Sport Association (exemption relates to Mobile County and is limited to county and municipal sales or use taxes)	April 1, 1994
98-126	Mobile Optimist Club, Christmas trees sold from the tree lot of the (exemption applies only in Mobile County and is limited to county and municipal sales and use taxes and gross receipts taxes)	June 1, 1998
96-750	Monrovia Parks and Recreation Association (exemption is limited to county and municipal sales and use taxes in Madison County)	July 1, 1996
94-363	Montgomery AIDS Outreach, Inc.	April 12, 1994
84-406	National Conference of State Legislatures and the Council of State Governments	May 23, 1984
864	New Hope Industries of Dothan	September 3, 1965
1102	North Alabama T. B. Associations	September 12, 1969
1204	Presbyterian Apartments, Inc., The	September 18, 1973
1591	Presbyterian Home for Children	September 20, 1971
95-586	Rainbow Omega, Inc.	September 1, 1995
2000-576	Religious organizations conducting fund raising activities in Mobile County (exemption is limited to county and municipal gross receipts taxes in Mobile County imposed upon gross receipts from fund raising activities of religious organizations that qualify as an exempt organization under Section 501(c)(3) or Title 26, U.S.C.)	August 1, 2000
91-324	Rescue service organizations operating within Alabama which are exempt from federal income taxes under the Internal Revenue Code of 1986, Section 501(c)(3) and which are members of the Alabama Rescue Services Association Incorporated	July 24, 1991
95-692	Rescue units; volunteer, nonprofit; operating within Alabama which do not meet the criteria in Section 40-23-5(o) but are licensed by the State Board of Health	October 1, 1995
297	Salvation Army	August 28, 1963
47	Seamens Home of Mobile, Inc.	October 1, 1961
90-566	Selma-Dallas County Historic Preservation Society	April 19, 1990
98-380	Service Guild of Birmingham, Incorporated, Early Intervention Program	July 1, 1998
84-739	Shrine	June 11, 1984
1204	Shrine Circus, The Annual	September 18, 1973
2000-642	Society of St. Vincent DePaul (exemption is limited to county and municipal sales and use taxes in Mobile County)	August 1, 2000
77	South Alabama State Fair Association	August 7, 1978
77	Southeastern Livestock Exposition	August 7, 1978
84-292	Tennessee Valley Authority Exhibit Commission	May 14, 1984
90-566	Valegrande Community Center	April 19, 1990
670	Veterans of Foreign Wars, State Headquarters Only	May 1, 1978
97-868	Wesco Girls Softball Team (exemption is limited to county and municipal sales and use taxes in Madison County)	December 1, 1997
94-363	West Alabama AIDS Outreach	April 12, 1994
95-394	West Alabama Youth Services, Inc. (WAYS)	September 1, 1995
97-709	Wings of Life, Inc.	August 1, 1997
94-363	Wiregrass AIDS Outreach, Inc.	April 12, 1994
97-709	Wiregrass Children's Home, Inc.	August 1, 1997
753	Young Men's Christian Association (YMCA)	September 23, 1957
47	Young Men's Hebrew Association (YMHA)	October 1, 1961
73	Young Women's Christian Association (YWCA)	October 1, 1959
49	Young Women's Christian Organization (YWCO)	July 2, 1962
97-868	Youth Development Association, Inc. (exemption is limited to county and municipal sales and use taxes in Madison County)	December 1, 1997

(Readopted through APA effective October 1, 1982, amended January 10, 1985, amended February 23, 1988, amended July 7, 1989, amended January 29, 1990, amended December 6, 1990, amended June 5, 1992, amended October 12, 1993, amended October 4, 1994, amended January 5, 1996, amended November 5, 1996, amended October 1, 1997, amended March 10, 1998, amended October 20, 1998, amended February 1, 2001)

810-6-3-.08. Chicken Litter.

The gross proceeds of sales of sawdust, wood shavings, wood chips, and other like materials sold for use as chicken litter by poultry producers and poultry processors are exempt from sales and use taxes. Sections 40-23-4(a)(28) and 40-23-62(28) (Readopted through APA effective October 1, 1982, amended July 9, 1998)

810-6-3-.09. Chinchillas, Hamsters, Mice, and Rabbits.

(1) Chinchillas, hamsters, mice and rabbits are not livestock and sales of such animals are subject to sales or use tax unless they are products of a farm and sold by the producer or for him by a member of his family or by a person employed to assist in the production thereof. (Sections 40-23-2(1), 40-23-4(a)(5), 40-23-61(a), and 40-23-62(8))

(2) Sales of chinchillas, hamsters, mice, and rabbits by the producer do not qualify for the exemption contained in Section 40-23-4(a)(44) for sales of agricultural products by the person or corporation that planted, cultivated, and harvested such agricultural products.

(3) Since the above animals are not classified as livestock, their feed is not exempt from sales and use tax.

(4) The term "farm" as used herein is understood to mean a place in a rural area on premises which include cultivated areas that is operated by a person that is commonly known as a farmer or a person who cultivates or manages a portion of land. (Adopted March 9, 1961, amended November 1, 1963, amended June 12, 1978, readopted through APA effective October 1, 1982, amended May 22, 1993)

810-6-3-.11. Cottonseed Meal.

Cottonseed meal is exempt from sales and use tax when sold for use as a feedstuff for livestock or poultry. It is not exempt as a fertilizer when sold in pure form unmixed with other ingredients. See Rule 810-6-3-.12, Cottonseed Meal Exchanged for Cottonseed. (Sections 40-23-4(a)(2), 40-23-4(a)(4), 40-23-62(5) and 40-23-62(7)) (Readopted through APA effective October 1, 1982, amended March 24, 1993)

810-6-3-.12. Cotton Seed Meal Exchanged for Cotton Seed.

Cotton seed meal exchanged for cotton seed in a transaction taking place at a cotton gin is not subject to sales or use tax. The exchange may be either between the owner of the seed and the ginner or between the owner of the seed and a third party who takes possession of the seed at the gin. Where the cotton seed is delivered at the gin to the ginner or to the third party, the transaction may be completed by acceptance of the cotton seed meal at a warehouse or other storage place not at the gin without loss of the exemption. Where the cotton seed meal given in exchange is of greater value than the cotton seed received, the ginner or third party shall collect and pay to the State of Alabama sales tax measured by the amount received in payment of the difference. (Section 40- 23-4(a)(6)) (Readopted through APA effective October 1, 1982)

810-6-3-.12.02. Credit Unions, Federal and State Chartered, Sales by.

(1) Sales of tangible personal property by a federally chartered credit union are exempt from sales tax. A federally chartered credit union is an instrumentality of the Federal Government and, therefore, exempt from tax.

(2) Sales of tangible personal property by a state chartered credit union are subject to the sales tax. (Adopted June 12, 1978, readopted through APA effective October 1, 1982)

810-6-3-.13. Defense Plant Corporation.

(1) The Defense Plant Corporation is an instrumentality of the United States. Sales to this corporation or its agents acting for it are not subject to the sales tax.

(2) The purchase order of the agents of this corporation, when making purchases for the use and benefit of the corporation, must plainly state that the purchases are being made by the agent "acting for and on behalf of the corporation." (Section 40- 23-4(a)(17)) (Readopted through APA effective October 1, 1982)

810-6-3-.14. County Departments of Human Resources

Sales to county departments of human resources are sales to counties and are exempted from sales and use tax. (Sections 40-23-4(a)(11) and 40-23-62(13)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended March 10, 1998)

810-6-3-.16. Federal and State Chartered Credit Unions.

The sale to, or use by, a Federal or state chartered credit union of tangible personal property in this state is not subject to sales or use taxes. (Section 40-23-4(a)(17)) (Adopted March 9, 1961, amended July 27, 1964, readopted through APA effective October 1, 1982)

810-6-3-.17. Federal Production Credit Associations.

Sales of property to federal production credit associations for use in conducting the activities of such associations as authorized by federal statutes are not subject to the sales tax; provided, however, this exemption does not apply with respect to any federal production credit association after the stock held in it by the production credit corporation has been retired. (Section 40-23-4(a)(17)) (Readopted through APA effective October 1, 1982)

810-6-3-.18. Federal Savings and Loan Associations.

(1) Alabama sales or Alabama use taxes, whichever may apply, are due on property sold to federal savings and loan associations.

(2) The only limitation placed upon the taxation of a federal savings and loan association is that the tax imposed on the federal institution shall not be greater than that imposed on other similar local mutual or cooperative thrift and home financing institutions. (Section 40-23-2(1)) (Readopted through APA effective October 1, 1982)

810-6-3-.19. Feed for Livestock and Poultry.

(1) Sales of feed for livestock and poultry (not including prepared food for dogs and cats) are exempt from sales and use taxes. (Sections 40-23-4(a)(4) and 40-23-62(7))

(2) The following items qualify for exemption when sold for consumption by livestock or poultry:

(a) Stale bread, table waste, and other foodstuffs which have become unsuitable for sale for human consumption

(b) Salt and salt blocks

(d) Blackstrap molasses

(3) Bees are members of the insect family and are not livestock; therefore, sales of food, including sugar, for consumption by bees are not exempt from sales or use tax. (Section 40-23-1(a)(10))

(4) 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 livestock and poultry by whomsoever sold are exempt from the sales and use taxes. (Sections 40-23-4(a)(29) and 40-23-62(29)) (Adopted March 9, 1961, amended November 1, 1963, amended March 18, 1970, readopted through APA effective October 1, 1982, amended April 3, 1987, amended July 9, 1998)

810-6-3-.20. Fertilizer.

(1) Sales of fertilizer when used for agricultural purposes are exempt from sales and use tax. (Sections 40-23-4(a)(2) and 40-23-62(5))

(2) The word "fertilizer" as used in the exemption sections referenced above means any material (not including cottonseed meal when unmixed with other material) which results in an increase in plant growth when added to the basic natural substances in which plants are grown. Basic natural substances, including sand, clay, top soil, and water are not to be considered to fall within the meaning of the word "fertilizer" as used in those sections. (Sections 40-23-4(a)(2) and 40-23-62(5))

(3) Ammonium nitrate when used as an explosive, and not for agricultural purposes as a fertilizer, is taxable when sold to the consumer or user. (Sections 40-23- 2(1) and 40-23-61(a)) (Adopted March 9, 1961, amended November 1, 1963, readopted through APA effective October 1, 1982, amended March 24, 1993)

810-6-3-.20.01. Exemption Certification Form Respecting Fertilizers, Insecticides, Fungicides, and Seedlings (Form ST:EXC-1).

(1) When a retail purchaser purchases tangible personal property which is exempt from sales tax pursuant to Section 40-23-4(a)(2), (4), or (22) or use tax pursuant to Section 40-23-62(5), (7), or (23); the filing by said purchaser of a certificate in the following form shall relieve the seller of any obligation to collect sales or use tax on the items purchased in conjunction therewith:

ALABAMA DEPARTMENT OF REVENUE SALES AND USE TAX DIVISION EXEMPTION CERTIFICATION RESPECTING FERTILIZERS, INSECTICIDES, FUNGICIDES, AND SEEDLINGS

Purchaser's Name:___________________________________________________________________
Address:______________________________ City: _______ State: _____ Zip Code:________
SCS Farm Number (if available):____________________________________________________

I, the undersigned, hereby certify that the items of tangible personal property purchased from (name of retailer)___________
______________________ will be used for the exempt agricultural purposes described in subdivision (2), (4), or (22) of Section 40-23-4(a) or subdivisions (5), (7), or (23) of Section 40-23-62, Code of Alabama 1975, as amended, and therefore may be purchased without payment of sales or use tax under Alabama law. I am aware that liability for payment of any sales or use tax ultimately determined to be applicable with respect to the items so purchased will be the exclusive responsibility of the undersigned.

Signature: ________________________ Date: ______________________

(2) The form outlined in paragraph (1) shall be referred to as Form ST:EXC-1 Exemption Certification Respecting Fertilizers, Insecticides, Fungicides, and Seedlings and the following procedures should be followed in conjunction with the execution of said form:

(a) all of the information requested on the form should be completed;

(b) the seller should furnish a copy of the completed certificate, with sales receipt attached, to the purchaser; and

(3) The items enumerated in Section 40-23-4(a)(2), (4), and (22) and Section 40- 23-62(5), (7), and (23) are exempt from sales and use tax when used for agricultural purposes regardless of whether Form ST:EXC-1 is executed in conjunction with purchases of such items. Liability for sales or use tax on such items will later arise only if the Revenue Department determines that the item purchased, in fact, was not used for agricultural purposes. In the absence of a properly executed Form ST:EXC-1, the seller is liable for sales or use tax later determined to be due in the event the "agricultural use" exemption claim is disallowed; however, by having the purchaser execute a Form ST:EXC- 1 the seller can place upon the purchaser the exclusive responsibility for payment of any sales or use taxes later determined to be due. Whenever a seller feels that the purchaser's exemption claim is invalid, the seller should collect sales or use tax from the purchaser or have the purchaser execute a Form ST:EXC-1.

(4) The seller is not required to secure a Form ST:EXC-1 for each sale of exempt items to a farmer with an SCS farm number when said seller knows the items purchased will be used for exempt agricultural purposes. Instead, the seller may have the farmer complete an annual exemption certification form and keep the certificate on file and available for review by the Revenue Department along with other business records. The purchaser's SCS farm number can be used as a reference number on each sales invoice covered by the annual certification form. Such annual exemption certification forms should be reexecuted every 12 months.

(5) Form ST:EXC-1 may be incorporated into the sales invoice if it contains substantially the same information as provided for on the certification form. This may be done by (I) including the certification form on the sales invoice at the time of printing or (ii) by designing and using a rubber stamp to add the information to the sales invoice. Other methods which accomplish the same result as the exemption certification form may also be used. (Section 40-23-4.3) (Adopted through APA effective March 24, 1993)

810-6-3-.21. Fish and Minnow Sales by Producers.

(1) Sales of domesticated fish and minnows produced on farms are exempted from sales and use tax when such sales are made by the producer, a member of his immediate family, or for him by a person employed to assist in the production thereof. (Sections 40-23-4(a)(5) and 40-23-62(8))

(2) Fish and minnows are considered products of a farm only when they are raised from captive, domesticated stock owned by the producer or raised from fry to fingerlings acquired from commercial or publicly owned hatcheries. The exemption does not apply either with respect to sales of fish or minnows which originated as wild life in flowing streams, natural or artificial lakes or ponds, or with respect to retail sales of fish or minnows made by fish market operators, bait dealers, or other vendors who have purchased such fish or minnows for resale purposes.

(3) Sales of domesticated fish and minnows produced on farms do not qualify for the exemption contained in Section 40-23-4(a)(44) for sales of agricultural products by the person or corporation that planted, cultivated, and harvested such agricultural products. (Readopted through APA effective October 1, 1982, amended May 22, 1993)

810-6-3-.22. Florist, Sales of Nursery Stock and Floral Products by.

(1) Sales of nursery stock and floral products by the florist who planted, cultivated, and harvested said items are exempt from sales and use tax. Sales of nursery stock and floral products not planted, cultivated, or harvested by the seller are taxable. (Sections 40-23-2(1), 40-23-4(a)(44),and 40-23-61(a))

(2) A florist who claims the exemption outlined in paragraph (1) must keep sufficient records to document such claims; and, in the absence of sufficient documentation, shall be liable for the sales or use tax due on all sales for which exemption claims cannot be verified by the Revenue Department. (Adopted March 9, 1961, amended January 20, 1966, readopted through APA effective October 1, 1982, amended May 22, 1993)

810-6-3-.23. Fluid, Milk.

(1) Sales of milk and milk products made by milk processors and distributors are subject to sales and use tax. The only exemption for milk and milk products is the producer's exemption. (See Rule 810-6-3-.01, Agricultural Products) (Sections 40-23- 2(1), 40-23-4(a)(5), 40-23-61(a) and 40-23-62(8))

(2) The exemption contained in Section 40-23-4(a)(44) for sales of agricultural products by the person or corporation that planted, cultivated, and harvested such agricultural products does not apply to sales of milk and milk products by the producer, processor, or distributor. (Readopted through APA effective October 1, 1982, amended May 22, 1993)

810-6-3-.23.01. Food Banks.

(1) The term “food bank” as used in this rule shall mean any entity located within Alabama that is an affiliated food bank of the “America’s Second Harvest - The Nation’s Food Bank Network” or their subsidiary distribution organizations (SDOs).

(2) The term “subsidiary distribution organization (SDOs)” as used in this rule shall mean smaller food banks or larger agencies allied with affiliated food banks that are private, nonprofit, charitable organizations providing important community services. Although some are agencies, all SDOs distribute part of their food to other charities for direct distribution to clients.

(3) The food banks and SDOs listed in paragraphs (4) and (5) below located within the State of Alabama are exempt from the payment and collection of state, county and municipal sales and use taxes. This exemption is effective June 14, 2007. (Act No. 2007-453)

(4) The following list includes the current food banks that are exempt as specified in paragraph (3) above:

(a) Bay Area Food Bank, Theodore, AL

(b) Food Bank of North Alabama, Huntsville, AL

(d) United Way Community Food Bank, Birmingham, AL

(5) The following list includes the current SDOs that are exempt as specified in paragraph (3) above:

(a) Food Bank of East Alabama, Auburn, AL

(b) Food Bank of Northwest Alabama, Muscle Shoals, AL

(d) West Alabama Food Bank, Tuscaloosa, AL

(e) Wiregrass Area United Way Food Bank, Dothan, AL

(Section 40-2A-7(a)(5), Code of Alabama 1975 and Act 2007-453) (Adopted December 14, 2007)

810-6-3-.24. Foreign Government.

(1) Sales to a foreign government or to its agents for use of a foreign government are subject to the sales tax unless they are immune because of a treaty between the foreign government and the United States. The Alabama tax should be collected on such sales in the absence of proof that the foreign power is immune because of such a treaty. (Section 40-23-4(a)(17))

(2) The immunity does not extend to the members of the armed services of foreign governments who are purchasing tangible personal property for their own use. (Section 40-23-1(a)(10)) (Amended June 12, 1978, readopted through APA effective October 1, 1982)

810-6-3-.24.01. Foreign Diplomatic and Consular Officials.

(1) Sales and use tax does not apply to sales of tangible personal property to foreign diplomatic and consular officials, to the extent that such persons have been identified by the U.S. Department of State as exempt from the tax pursuant to treaties or other diplomatic agreements with the United States. (U.S. Constitution, Article VI, and Code of Alabama 1975, Sections 40-23-4(a)(17) and 40-23-62(2))

(2) Lodgings tax does not apply to rooms, lodgings, or accommodations rented or furnished to foreign diplomatic and consular officials, to the extent that such persons have been identified by the U.S. Department of State as exempt from the tax pursuant to treaties or other diplomatic agreements with the United States. (U.S. Constitution, Article VI)

(3) Other than the exception noted in (4) below, persons identified as exempt from taxation pursuant to treaties or other diplomatic agreements with the United States are issued a tax exemption card by the U.S. Department of State which identifies the bearer as exempt from tax and specifies the extent of the exemption. Tax exemption cards may be personal tax exemption cards or mission tax exemption cards. Personal tax exemption cards bear the photograph and identification of a duly accredited consulate or embassy employee who is entitled to tax exemption privileges as stated on the card and are for the personal use of the bearer whose picture appears on the front of the card. Mission tax exemption cards bear the photograph and identification of a consulate or embassy employee who is the official purchasing agent for that office and are for use by the purchasing agent to make official purchases for the foreign consulate or embassy. Mission tax exemption cards are not transferable and may not be used for personal purchases of tangible personal property or personal rentals of rooms, lodg