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Chapter 9G Utility Refund/Abatements

  • Chapter 9G Utility Refund/Abatements

Chapter 9G tax abatements allow qualifying projects to receive a refund of utility taxes (electricity, natural gas, water, and telephone/telegraph) imposed by Sections 40-21-82 and 40-21-102, Code of Alabama, up to a ten-year period. The incentive is calculated and paid annually.  The amount of the refund is equal to the utility taxes paid, minus the utility taxes paid on average during the three tax years immediately before the qualifying project is placed in service.

To qualify for the utility refund, all three requirements must be confirmed by the Department of Commerce:

  • the project is a qualifying project.
  • the company or any related company has not defaulted on a project agreement or similar agreement, or any economic incentive agreement at any time during the last 10 years, and
  • the qualifying project will promote continued and sustained operations of the company’s business operations in Alabama.

A qualifying project is defined as a project:

  • that invests in least $2,000,000 in capital expenditures as part of any addition, improvement, renovation, re-opening, or rehabilitation of a facility, or replacement of any existing equipment or tangible personal property,
  • that predominately involves an approved activity; and
  • in which no project agreement has been entered into with the Governor for the project for provisions of other incentives. 

Procedures for Alabama Reinvestment Act of 2015 Chapter 9G Utility Refund/Abatements

To receive a refund/abatement for the utility taxes paid under Chapter 9G of Title 40, Code of Alabama 1975, certain actions must be taken by private user and the Governor.

General Overview of an Abatement Process

  • Gather the utility refund application and e-verify documentation 
  • Apply with the Department of Commerce
  • Department of Commerce affirms the project is a qualifying project
  • Department of Commerce recommends project approval by the Governor
  • Governor enters into a project agreement with incentivized company

The Incentivized Company

The incentivized company must apply for the utility refund by submitting a completed application to the Department of Commerce. If approved, the Governor will enter into a project agreement with the incentivized company.  Once the project is placed in service, the incentivized company must certify the capital investment to the Department of Commerce.  Once the project is certified by the Department of Commerce, the incentivized company is required to submit to the Department of Revenue a certification of the utility taxes paid during the three tax years immediately before the qualifying project is placed in service to determine the base for the incentive.  Annually thereafter, the incentivized company will submit to the Department of Revenue a certification of the utility taxes paid during the prior year.  The Department of Revenue will review the information submitted can calculate the correct refund and issue it directly to the incentivized company.

Please contact incentives@revenue.alabama.gov for detailed procedures on how to request the utility refund.