Is there a filing requirement associated with the contractor’s certificate of exemption?
Yes. Contractors and subcontractors who successfully apply for this exemption will be required to file monthly consumers use tax returns which include a total of all exempt purchases for ongoing projects. If there are no purchases made using the exemption certificate, then a “zero” return must still be filed in the reporting table for the period. There is a requirement of one entry for each active contractor’s certificate of exemption for each filing period. The consumer use return is filed through the My Alabama Taxes (MAT) filing system. Failure to comply with the filing requirement will result in the cancellation of your contractor’s certificate of exemption.
Related FAQs in Government Contractor’s Certificate of Exemptions
The United States Government, the State of Alabama, counties and incorporated municipalities of the state, and various other entities within the state are specifically exempt from paying state and local sales and use tax on their purchases of tangible personal property. These tax-exempt entities cannot transfer their exempt status to a contractor or developer who is required to purchase and pay for the materials that are to be used pursuant to a construction contract with the tax-exempt entity. However, a tax-exempt entity may appoint as its agent a contractor to act on its behalf to order materials or to order and pay for materials that will be incorporated into real estate pursuant to a construction contract with the tax-exempt entity. Purchases made by the agent on behalf of the tax-exempt entity will be exempt from the payment of state and local sales or use tax provided that the procedures outlined in Alabama Department of Revenue Rule 810-6-3-.69.02 are followed.
Certificates are not transferable and may only be used by the person, firm, or corporation whose name appears on the certificate. Each contractor or a subcontractor must apply for their own certificates of exemption.
In order to be approved for a Contractor’s Certificate of Exemption for a Government Entity Project, you will need to obtain a State Business License for Contractors. The designation on the State Business License is Schedule/Section 84 – Contractors. The cost of the license is based upon the amount of gross contract funds that you may receive.
No, a subcontractor’s certificate of exemption’s “ending date” cannot be extended beyond the general contractor’s certificate of exemption’s “ending date.” If the general contractor does not extend their certificate, then any purchases the subcontractor makes after the “ending date” is subject to sales or use tax.
If an extension is needed for a project, please send an email to STExemptionUnit@revenue.alabama.gov. Be sure to include the certificate number (EXM-R#########) and the desired ending date. Extension requests should be submitted no more than 30 days after the expiration date. The general contractor must request and obtain an extension before the subcontractor can obtain an extension. An extension may also be requested via “Other Actions…”, “Apply for a Certificate of Exemption for a Government Entity Project”, “Request an extension” feature while logged into My Alabama Taxes (myalabamataxes.alabama.gov).