HB349 Alabama 2016 Session

Summary

Primary Sponsor

Ed Henry

Republican

Session

Regular Session 2016

Title

Taxation, exemption from sale, use, and rental tax granted to certain subscription services, Secs. 40-12-223, 40-23-4, 40-23-62 am'd.

Summary

HB349 would exempt from Alabama rental, sales, and use taxes the gross proceeds from rental or sale of electronically transferred products that do not grant permanent use (subscription-based digital services).

What This Bill Does

It adds a new tax exemption for gross proceeds from the rental or sale of electronically transferred products that are not granted permanent use. The exemption covers video programming services, subscription video services, video on demand, and broadcasting services, but not computer software. A right of permanent use is assumed only if the contract or circumstances clearly indicate it, and subscription access is not considered permanent. The change updates three tax code sections (40-12-223, 40-23-4, 40-23-62) and becomes effective after governor approval with a three-month delay.

Who It Affects

• Consumers in Alabama who purchase or rent electronically transferred products (digital streaming/video services) would pay no state or local tax on those transactions.
• Providers and sellers of electronically transferred products (such as video programming services, streaming services, and broadcasting content) would benefit from the tax exemption on the gross proceeds of these digital products, provided the products meet the non-permanent use criteria.

Key Provisions

• Adds an exemption to Sections 40-12-223, 40-23-4, and 40-23-62 for gross proceeds from the rental or sale of electronically transferred products that have less than permanent use.
• Defines "Product transferred electronically" to include video programming services, subscription video services, video on demand, and broadcasting services, but excludes computer software.
• Defines "permanent" as perpetual or indefinite use; states that access on a subscription basis is not a right of permanent use and that a right of permanent use is presumed only if the contract or circumstances indicate it.
• Specifies that the exemption applies to gross proceeds from both rental and sale of such electronically transferred products and takes effect three months after governor approval (per the bill’s effective date).

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