HB419 Alabama 2013 Session

Summary

Primary Sponsor

Paul DeMarco

Republican

Session

Regular Session 2013

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, exception for highway projects, civil penalties

Summary

HB419 would allow tax-exempt certificates for building materials on Alabama government construction projects, issued to both governmental entities and licensed contractors, with reporting and penalties, while excluding highway projects.

What This Bill Does

The Department of Revenue would issue a certificate of exemption to governmental entities for each tax-exempt project, and would also grant exemptions to contractors or subcontractors licensed by the State Licensing Board for General Contractors for purchases of materials that become part of the project (excluding highway projects). Purchases under these certificates must be tracked with accurate cost accounting, and contractors must file an annual report of exempt purchases as a condition of renewing the exemption. The act permits the Department to adopt rules, imposes penalties for misuse, requires bidding to show tax savings, and applies to contracts entered into on or after October 1, 2013 (and not before January 1, 2014).

Who It Affects

• Governmental entities (state, counties, municipalities, school boards, and related bodies) that oversee exempt construction projects and would use certificates to purchase materials tax-free for those projects.
• Contractors and subcontractors licensed by the State Licensing Board for General Contractors who would receive certificates to buy building/construction materials for projects on which the government exemption applies, with required cost tracking and potential penalties for misuse.

Key Provisions

• The Department of Revenue must issue a certificate of exemption to the governmental entity for each tax-exempt project.
• The Department must grant certificates of exemption to licensed contractors and subcontractors for purchases of building materials and supplies that become part of the project, excluding highway projects.
• Purchases under exemption certificates must be accurately accounted for, with cost tracking of exempt purchases used in the project.
• Contractors must file an annual report of all exempt purchases as a prerequisite to renewing their exemption certificates.
• The department may assess state/local taxes on items not properly accounted for, and may impose civil penalties for willful misuse (minimum $2,000 or twice the tax due, plus possible disqualification from exemptions for up to two years).
• The department may adopt rules to implement the act; bid documents for tax-exempt projects must show the tax savings; and the act aims to reduce administrative costs while not changing how professional services are valued.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation