SB295 Alabama 2017 Session

Summary

Primary Sponsor

Greg J. Reed

Republican

Session

Regular Session 2017

Title

Taxation, certain public water, sewer, gas electric, and fire protection authorities, boards, and systems eligible as government entities for state and local sales and use tax exemptions, Sec. 40-9-14.1 am'd.

Summary

Expands sales and use tax exemption eligibility to include certain tax-exempt public water and sewer authorities, boards, and systems, and sets rules for how exemptions apply to government construction projects.

What This Bill Does

The Department of Revenue would issue exemption certificates to the governmental entity for each tax-exempt project and to licensed contractors or subcontractors for the purchase of building materials and other tangible property that becomes part of the project (excluding highways, roads, and bridges). Contractors must maintain accurate cost accounting and file exemption purchase reports as a prerequisite to renewing the exemption. The department may assess taxes for items not properly accounted for and may impose penalties for intentional misuse, including possible bans on exemption use for up to two years. The measure aims to lower administrative costs and applies to contracts entered into after January 1, 2014 (not retroactive to pre-2014 contracts or change orders).

Who It Affects

• Public water or sewer authorities, systems, or boards that are tax-exempt would become eligible to receive exemption certificates for their tax-exempt projects.
• Contractors and subcontractors working on these government projects (and their suppliers) would be able to purchase eligible construction materials tax-exempt, subject to cost accounting and reporting requirements.

Key Provisions

• Adds tax-exempt public water or sewer authorities, systems, or boards to the definition of governmental entity eligible for exemption certificates.
• The Department of Revenue shall issue exemption certificates to governmental entities and to contractors/subcontractors for purchases of building materials and other tangible property that become part of the project, excluding highways/roads/bridges.
• Exemption use must be tied to property that becomes part of the construction; requires accurate cost accounting and annual reporting of exempt purchases by contractors; imposes penalties for misuse including potential civil penalties and temporary bans on exemptions.
• Contracts must include accounting for tax savings in bids; the act is intended to lower administrative costs and is operative for contracts entered into after January 1, 2014, not retroactively for pre-2014 contracts or change orders; the Department may adopt implementing rules.

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