ACT NO. 99-446 (ALABAMA IMPROVEMENT
DISTRICT ACT)
Sales and Use Tax Exemptions for Improvement Districts, Contractors, and Subcontractors
The Legislature has passed and the Governor has signed Act No. 99-446 providing for the creation of improvement districts and allowing for the issuance of revenue bonds to finance improvements such as streets, water systems, sewers, sidewalks, and recreational facilities.
New Section 11-99A-20(a) exempts improvement districts from all state, county, and municipal taxation. This exemption, as worded, exempts sales of tangible personal property to, and sales of tangible personal property by, improvement districts.
New Section 11-99A-20(b) exempts the purchase, acquisition, and installation of materials for improvements by a district from all sales and use taxes and gross receipts taxes in the nature of a sales tax whether levied on the vendor, contractor, subcontractor, or the district. This subsection also provides that the Department of Revenue shall issue rules to provide a simple procedure to allow contractors and subcontractors to make tax-free purchases of materials for use in acquiring, constructing, or installing improvements for a district. The Sales, Use & Business Tax Division will promulgate a rule providing that qualifying contractors and subcontractors may obtain a sales and use tax certificate of exemption (Form STE-1) to document their tax exempt status to vendors. This rule will specify that the exemption certificates will be "project specific" and that contractors or subcontractors obtaining exemption certificates must comply with all of the provisions of Sales and Use Tax Rule 810-6-5-.02.
Please note that the following restrictions or limitations apply to the exemptions enumerated above:
First, the last paragraph in Section 11-99A-2(6) provides that nothing within this act shall authorize the use of tax exemptions for the acquisition, equipping, or construction of property to be owned by any person other than a utility company, the district, or another public person (see definition in Section 11-99A-2(10)).
Secondly, Section 11-99A-20(b) provides that nothing in new Chapter 99A shall allow the exemption of sales and use taxes on purchases, acquisitions, or installations that would not be exempt if purchased, acquired, or installed directly by the appointing government (see definition in Section 11-99A-2(1)).
Thirdly, Section 11-99A-20(c) provides that the appointing government may, at or prior to making a preliminary assessment, require the payment of fees in lieu of taxes or limit, restrict, or rescind one or more of the tax exemptions provided in Section 11-99A-20. Also, see Section 11-99A-11(5).
Act No. 99-446 became law on June 12, 1999.
This page created June 21, 1999.