SB216 Alabama 2020 Session

Summary

Primary Sponsor

Tom Whatley

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

SB216 would extend sales and use tax exemption certificates to construction materials for highway, road, or bridge projects on contracts with tax-exempt government entities, starting with contracts entered on or after January 1, 2021.

What This Bill Does

The Department of Revenue would issue exemption certificates for tax-exempt projects and allow contractors and subcontractors to purchase materials exempt from state and local taxes if those materials become part of the project. It removes the previous exclusion that highway, road, or bridge contracts could not use such exemptions. The bill requires cost accounting for exempt purchases, requires reporting of exempt purchases to renew certificates, and sets penalties for improper use or misreporting, with possible bars from using exemptions. It also aims to reduce administrative costs and clarifies that professional services pricing is not changed by the exemption.

Who It Affects

• Contractors and subcontractors working on government highway, road, or bridge construction projects who are tax-exempt and purchasing materials
• Governmental entities (state and political subdivisions) that fund or oversee exempt projects
• Material suppliers and vendors who sell construction materials for these projects
• The Alabama Department of Revenue responsible for issuing certificates and enforcing rules

Key Provisions

• Deletes the prior exclusion and makes highway, road, or bridge contracts entered into on or after January 1, 2021 eligible for a sales and use tax exemption certificate for material purchases
• The Department of Revenue must issue a certificate of exemption for each tax-exempt project and grant exemptions to contractors/subcontractors for building and construction materials that become part of the project
• Exemption applies only to tangible property that becomes part of the project; contractors must maintain accurate cost accounting of exempt purchases
• Contractors must file reports of exempt purchases as a prerequisite to renewing the exemption certificate
• The department may assess taxes for improperly accounted purchases and impose civil penalties for intentional misuse (minimum $2,000 or twice the tax due) and may bar misuse from exemption for up to two years
• The department may adopt rules to implement the section; bid forms must include accounting for tax savings
• Effective date: the act becomes law October 1, 2020, and the highway/bridge contract provision applies to contracts entered on or after January 1, 2021

AI-generated summary using openai/gpt-5-nano on Feb 23, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Sales and Use Tax