SB292 Alabama 2023 Session

Summary

Primary Sponsor

Dan RobertsSenator

Republican

Session

Regular Session 2023

Title

Relating to taxation and revenue; to provide for the Department of Revenue to grant certificates of exemption from sales and use taxes to contractors and subcontractors licensed by the State Licensing Board for General Contractors for the purchase of building materials and construction materials to be used in the construction of a building or other project for an entity statutorily exempt from paying sales and use taxes; and to provide for accounting for purchases and enforcement for violations.

Summary

SB292 creates a system for tax exemptions on building materials used in projects for statutorily exempt entities, with certificates for contractors and enforcement mechanisms.

What This Bill Does

If enacted, the Department of Revenue would issue certificates of exemption for each tax-exempt project, allowing licensed contractors and subcontractors to buy building and construction materials without paying state or local sales and use taxes. Contractors must keep accurate cost records of exempt purchases and report them as a condition for renewing the exemption. The bill also sets penalties for improper use and outlines enforcement, with applicability to contracts entered on or after January 1, 2024 and not retroactive to pre-2024 contracts.

Who It Affects

• Statutorily exempt entities (those exempt from paying sales and use taxes) and their projects, who may benefit from clearer tax exemption processes and potentially lower project costs.
• Contractors and subcontractors licensed by the State Licensing Board for General Contractors, who can obtain and must use exemption certificates for eligible material purchases and who must maintain cost accounting and comply with reporting and enforcement rules.

Key Provisions

• Provision 1: Establishes a certificate-of-exemption system where the Department of Revenue issues an exemption certificate for each tax-exempt project, covering building materials and supplies purchased by licensed contractors or their subcontractors and requiring accurate cost accounting and reporting for renewal.
• Provision 2: Establishes enforcement and penalties for misuse, including civil penalties up to twice the tax due (minimum $2,000) and potential for a ban on using exemptions for up to two years; permits the department to adopt implementing rules; specifies applicability to contracts entered on/after January 1, 2024, and not retroactive to pre-2024 contracts or their change orders.

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