Section 40-12-220 through 40-12-227, Code of Alabama 1975.
Rental Facilitator – Section 40-2-11(a)(7)c, Code of Alabama 1975.
Rental or leasing tax is a privilege tax levied on the lessor for renting or leasing of tangible personal property. The gross receipts, including any rental tax invoiced, from the rental or leasing of tangible personal property are subject to the state rental tax.
This tax is due on true leases – those leases in which the title to the property is retained by the lessor at the end of the lease agreement or when the lessee has an option to purchase the item at the end of the lease agreement for the fair market value of the item.
Conditional sales leases – those in which the title of the property is transferred to the lessee at the end of the lease agreement or when the lessee has an option to purchase the item at the end of the lease agreement for $1 or a nominal amount with no option to return the leased item without purchasing – are subject to sales tax. When equipment is under the control of and operated by employee of lessor, then the transaction is considered a service rendered and is not subject to rental tax.
Rental Facilitators: Persons or entities that facilitate third-party rental transactions of Class II or Class IV property (as defined in Section 40-8-1, Code of Alabama 1975) are designated as rental facilitators. Rental facilitators are required to collect and remit rental tax for leases made to Alabama customers or comply with the notice and reporting requirements.
4% General, 1.5% Automotive, 2% Linens/Garments and additionally any local rates due for individual counties and cities.
The total proceeds of the taxes or other funds deposited in the State Treasury pursuant to Section 40-12-226 remaining after payment of the expenses of administration and enforcement of this article shall be distributed to the State General Fund.