SB200 Alabama 2011 Session

Summary

Primary Sponsor

Bill Holtzclaw

Republican

Session

Regular Session 2011

Title

Sales and use tax, governmental entities that are tax exempt, construction projects, certain contractors and subcontractors to be granted certificates of exemption by Revenue Department to purchase materials

Summary

SB200 would let the Department of Revenue issue sales and use tax exemption certificates to licensed contractors for buying materials used in government construction projects, shifting the exemption from the government entity to the contractor.

What This Bill Does

The bill authorizes the Department of Revenue to grant exemption certificates to licensed general contractors and subcontractors for purchasing building and construction materials used on projects for tax-exempt governmental entities. Contractors must maintain detailed accounting showing how purchases are used on the project. The department can assess taxes on items not properly accounted for and can impose penalties for misuse, including a civil penalty equal to twice the tax due and potential bars from using exemptions for up to two years. The act allows the department to adopt rules to implement these provisions and specifies an effective date for implementation.

Who It Affects

• Contractors and subcontractors licensed by the State Licensing Board for General Contractors who can obtain and use exemption certificates to purchase materials for government projects.
• Tax-exempt governmental entities (state, counties, municipalities, boards, and related agencies) whose construction projects would use materials purchased under contractor exemption certificates.

Key Provisions

• Defines 'governmental entity' for the purpose of the exemption, including states, counties, municipalities, boards, authorities, and educational institutions.
• Authorizes the Department of Revenue to grant certificates of exemption to licensed contractors/subcontractors for purchasing building/construction materials to be used in projects for exempt governmental entities.
• Certificates may be used only for tangible property directly used in the construction project and require contractors to maintain accurate cost accounting of purchases and usage.
• Allows the department to assess sales or use taxes on items not properly accounted for and imposes a civil penalty of twice the tax due for intentional misuse, with possible removal of exemption eligibility for up to two years.
• Gives the department authority to adopt rules to implement the act and enforce the exemptions.
• Operative date October 1, 2011; allows adoption of implementing rules after the effective date; supersedes conflicting laws; becomes law immediately after passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation