The Legislature has passed and the Governor has signed Act No. 2000-684 which exempts the sale to, or the storage, use, or consumption by, contractors and subcontractors of any tangible personal property to be incorporated into realty pursuant to contracts with (i) the United States government, (ii) the State of Alabama, (iii) a county of the State of Alabama, (iv) an incorporated municipality of the State of Alabama, (v) a public corporation created pursuant to the Alabama Constitution or a general or local state law, or (vi) an educational institution of the United States government, the State of Alabama, or a county or incorporated municipality of the State of Alabama. This exemption does not apply to any purchases by contractors or subcontractors for storage, use, or consumption in conjunction with performing contracts with nonexempt governmental entities, public corporations, or educational institutions nor to purchases of property that is not incorporated into realty pursuant to the contract.
Pursuant to Section 1(b) of Act No. 2000-684, the Sales, Use & Business Tax Division will propose a rule requiring contractors and subcontractors who do not qualify as a "dual business" to obtain a sales and use tax certificate of exemption (Form STE-1) to be used to claim the exemption when making qualifying purchases from vendors. The proposed rule will provide that contractors and subcontractors who qualify as a dual business shall use their sales tax account number to claim the exemption when making qualifying purchases from vendors and report the cost of the property subsequently withdrawn for use on qualifying contracts as nontaxable withdrawals.
Act No. 2000-684 becomes effective October 1, 2000.