What minerals are covered
by the Uniform Severance Tax Act?
All natural minerals, including sand, gravel, sandstone, granite, shale, clay,
dolomite, limestone, and any other mineral listed as such by the Geological
Survey of Alabama that is not specifically excluded from taxation. Other taxable
minerals include bauxite, salt, and silicon.
What minerals are specifically
excluded from the Uniform Severance Tax Act?
Lime or limestone used for agricultural purposes or for pollution control or
abatement purposes, rock dust used for settling coal dust in underground mines
or similar uses, any natural minerals used for the purpose of producing Portland
cement, processed sand used in the foundry cores, mold, and linings, clay that
produces lightweight aggregate, nor any chert including county or municipality
owned chert facilities, marble and marble by-products, iron ore, quartzite,
coal, oil and natural gas.
What is the tax rate?
Natural minerals are taxed at ten cents per ton.
Who
should pay the tax?
The purchaser should pay the tax at the time of delivery or point of sale of
the natural minerals.
Who
must collect and remit the tax?
The producer must collect the tax from the purchaser at the point of sale or
delivery and remit the tax to the Alabama Department of Revenue. The producer
must remit the tax even if he fails to collect the tax from a purchaser.
When
is the tax due?
It is due by the twentieth (20th) day of the month next succeeding the month
of sale or delivery
whichever occurs first.
Who
receives the net proceeds from the tax that is collected from the producer?
Revenue collected under this act is sent in quarterly installments to the county
commission in the county where the materials were severed.
How
does the severance tax apply?
The severance tax applies at the point the natural minerals are sold by the
producer to a purchaser.
Is
there a standard conversion of cubic yards to tons?
A producer should attempt to determine the tonnage of materials sold. A producer,
who is unable to determine the tonnage, may use a conversion rate of 2 tons
to 1 cubic yard as an alternative method.
What
is tangible personal property?
Tangible personal property is property that is not attached to the earth at
the time it is sold.
Are
products used for real property exempt?
If a producer uses the natural minerals as a part of a “furnish
and install” contract then the material used by the producer would not
be subject to the tax; however, if the producer sells the natural minerals to
a contractor who completes a real property contract, the natural minerals sold
would be subject to the tax.
Are
governmental entities subject to the tax?
Sales made directly to the Federal government, the State of Alabama, and Alabama
counties are exempt from the uniform severance tax. However, cities, as municipal
corporations, and city and county school boards are required to pay the severance
tax. Also, sales to contractors are not exempt.
Are
materials used for fill taxable?
If the producers uses severed materials for fill on his property then the severed
materials are not taxable; however, if a producer sells severed material to
a purchaser who may use the materials for fill, then the materials are taxable
at the point of sale.
Are
sales of dirt and top soil subject to the severance tax?
Materials which are specifically subject to the tax (i.e. sand and clay) are
taxable even if it they are mixed with other materials. Top soil and dirt are
not usually considered to be “natural minerals” and are not subject
to the severance tax.
Are
natural minerals used for pollution control exempt from the severance tax?
Only lime and limestone used for pollution control or abatement purposes are
tax exempt; provided they meet the requirements for sales tax exemption in the
State of Alabama.
Are
natural minerals used for agricultural purposes exempt from the severance tax?
Only lime and limestone used for agricultural purposes are exempt. Producers
and purchasers qualifying for the exemption must be registered with the Department
of Agriculture and Industries.
Are
materials sold for use outside the state taxable?
Materials sold for use outside the State of Alabama are subject to the severance
tax unless the materials are never transported on Alabama roads. To qualify
for the exemption, the materials must be loaded into a non-road conveyance (railroad
car or barge) at the producer’s site.
Are
the materials severed and used by the producer subject to the tax?
The severance tax does not apply to severed materials stockpiled, transported
or used in any other way by the producer until the materials are sold.