HB334 Alabama 2020 Session

Summary

Primary Sponsor

David FaulknerRepresentative

Republican

Session

Regular Session 2020

Title

Sales and use tax, construction contracts for highways, roads, and bridges, Revenue Dept., issuance of exemption certificates if gov't entity contracting is tax exempt, Sec. 40-9-14.1 am'd.

Summary

HB334 would allow highway, road, or bridge construction projects for tax-exempt governmental entities to use sales and use tax exemption certificates for purchasing materials, starting with contracts entered into on or after January 1, 2021.

What This Bill Does

The bill removes the current exclusion that prevents highway/road/bridge contracts from using exemption certificates for material purchases. It authorizes the Department of Revenue to issue exemption certificates to governmental entities and to licensed contractors and subcontractors for materials that become part of the construction project on tax-exempt government projects. It requires proper cost accounting, periodic reporting as a condition for renewing certificates, and imposes penalties for misuse of the exemption, along with potential rules to implement these provisions.

Who It Affects

• Tax-exempt governmental entities (including the State, counties, municipalities, boards, authorities, and educational institutions) that would receive exemption certificates for qualifying projects.
• Contractors and subcontractors working on highway, road, or bridge construction projects for those governmental entities, who would be able to purchase materials tax-exempt and must maintain records and comply with reporting and enforcement requirements.

Key Provisions

• Amends Section 40-9-14.1 to delete the exclusion of highway, road, or bridge contracts from the list of contracts eligible for exemption certificates for purchasing construction materials.
• Applies to contracts for highway, road, or bridge construction entered into on or after January 1, 2021; effective date provisions specify the act becomes law October 1, 2020.
• Defines governmental entity to include state and political subdivisions, including educational institutions, and authorizes the Department of Revenue to issue exemption certificates to these entities and to licensed contractors/subcontractors for eligible purchases that become part of the project.
• Requires accurate cost accounting and reporting of exempt purchases as a condition for renewal of exemption certificates; sets penalties for misuse, including civil penalties and possible removal from exemption eligibility for up to two years.
• Authorizes the Department to adopt rules to implement the section and to require accounting of tax savings on bid forms.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Sales and Use Tax