(1) Unless otherwise defined herein, the
definitions of terms set forth in Code of Ala. 1975,
Section
40-21-80,
are incorporated by reference herein.
(2) Section
40-21-82,
Code of Ala. 1975, levies a privilege or license tax
against every utility in the State of Alabama on account of the furnishing of
utility services by said utilities.
(a) The
amount of tax levied on the furnishing of electricity, domestic water, and
natural gas services shall be determined by the application of rates against
gross sales or gross receipts, as the case may be, and shall be computed
monthly in accordance with the following table:
If monthly gross sales or gross receipts respecting a
person are:
|
The tax is:
|
Not over $4 0,0 00
|
4% of such gross sales or gross receipts
|
Over $40,000 but not over $60,000
|
$1,600 plus 3% of excess over $40,000
|
Over $60,000
|
$2,200 plus 2% of excess over $60,000
|
(b)
For periods prior to April 1, 2002, the amount of tax levied on the furnishing
of telegraph and telephone services shall be determined by the application of
rates against gross sales or gross receipts, as the case may be, and shall be
computed monthly in accordance with the following table:
If monthly gross sales or gross receipts respecting a
person are:
|
The tax is:
|
Not over $60,000
|
6.7% of such gross sales or gross receipts
|
Over $60,000
|
$4,020 plus 3.7% of excess over $60,000
|
1. Beginning with
bills dated on or after April 1, 2002, Act #2001-1090 amended Section
40-21-82(b) which provides that the amount of tax levied on the furnishing of telegraph and
telephone services shall be computed at the rate of 6% on all gross sales or
gross receipts.
2. Act #2001-1090
further provides that on or after February 1, 2002, the utility furnishing such
telegraph or telephone services shall be entitled to deduct and retain from the
gross amount of tax billed by the utility 9/10 of 1% of the amount of such tax
billed in consideration of the costs incurred by the utility in collecting and
remitting the tax levied by subsection
40-21-82(b).
However, on and following October 1, 2002, the amount deducted and retained by
such utility shall be 1/4 of 1% of the gross amount of such tax
billed.
(3)
Telephone and Telegraph Services
(a) The gross
sales or gross receipts from the furnishing of telegraph and telephone services
are taxable pursuant to Section
40-21-82(b).
(b) The term "telephone services" is defined
in Section
40-21-80(11),
and specifically includes the following which shall be included in the measure
of the tax levied in Section
40-21-82(b):
1. Local telephone service;
2. Intrastate toll telephone
service;
3. Private communications
service;
4. Teletypewriter, and
computer exchange service;
5.
Telephone services sold by motels and hotels to their customers or to others,
telephone services sold by colleges and universities to their students or to
others, and telephone services sold by hospitals to their patients or to
others;
6. Beginning with bills
dated on or after February 1, 2002, interstate telephone service which
originates or terminates within this state but does not both originate and
terminate in this state and is charged to a service address in this state. (Act
#2001-1090)
(c) The term
"telephone services" shall not include the following and as such shall not be
included in the measure of the tax levied in Section
40-21-82(b):
1. Telephone services provided through any
pay telephone;
2. Any excise,
franchise, or similar tax or like fee or assessment levied by the United
States, by the state of Alabama, or by any political subdivision of the state
of Alabama upon the purchase, sale, use, or consumption of any telephone
services provided it is collected by the seller from the purchaser and is
separately billed to the purchaser;
3. The furnishing of any telephone services
for resale including access charges paid by an interexchange carrier. Any
utility making a sale of telephone services for resale shall obtain from the
purchaser a copy or record of the purchaser's utility tax license issued to the
purchaser by the Department pursuant to Section
40-21-84 or a copy of a utility tax certificate of exemption (Form STE-3) issued to the
purchaser by the Department pursuant to Section
40-21-88,
Code of Ala. 1975, and Rule
810-6-5-.26.05;
4. Charges for customer premises equipment,
including such equipment that is leased or rented by the customer from any
source;
5. Cable television
service, paging services, specialized mobile radio, or mobile
telecommunications service;
6.
Services which are ancillary to the provision of telephone service but are not
directly related to the transmission of voice, data, or information such as
directory advertising and installation and repair of equipment and inside
wiring;
7. Internet access
charges;
8. Prior to February 1,
2002, charges made for telephone calls and telegraphic messages originating
within this state to a point outside of this state, or originating outside of
this state to a point within this state, provided the charges were clearly
indicated on a statement given to the customer;
9. The use or consumption of telephone
service by an incorporated municipality in providing a fire alarm
system;
10. Telephone service or
telegraph service used or consumed by a utility regularly engaged in furnishing
such service to persons.
11. The
furnishing of utility services through the use of a prepaid telephone calling
card.
(d) Beginning with
bills dated on or after May 5, 2004, charges for nontaxable services combined
or bundled with and not separately stated from taxable charges for telephone or
telegraph services are subject to taxation, unless the exempt charges can be
reasonably identified in the books and records kept in the regular course of
business by the utility provider.
(e) The provisions of subsection (d) do not
create any right for the customer to require that either the utility or the
department allocate or attribute the bundled charge to the different portions
of the transaction in order to reduce or minimize the amount of tax charged to
the customer.
(4)
Domestic Water
(a) The gross sales or gross
receipts from the furnishing of domestic water are taxable pursuant to Section
40-21-82(a).
(b) "Domestic water" shall mean all water
except water that is sold to persons for use or consumption in industrial
processes and not primarily for human consumption. Water used in industrial
processes shall mean water used by any person in the manufacturing, processing,
compounding, mining or quarrying of tangible personal property for sale. Where
water is used for both human consumption and industrial processing and more
than 50 percent of the total water purchased is used in industrial processing,
the gross receipts from the sale of the water would not be taxable. Where less
than 50 percent is used for industrial processing and more than 50 percent is
used for human consumption, the total gross receipts from the sale of water
would be taxable.
(c) The use or
consumption of domestic water by an incorporated municipality in extinguishing
fires, explosions, or conflagrations is not taxable. (Section
40-21-83(8))
(d) Water used or consumed by a
water board created under Sections
11-50-310,
et seq., Code of Ala. 1975, as amended, which is
engaged in furnishing water to persons is not taxable.
(e) Water used or consumed by a municipal
utility department or an independent municipal utility board which is engaged
in furnishing water to persons is not taxable. Water furnished by a municipal
utility department or an independent municipal utility board to other
departments or agencies of the same municipality is taxable.
(f) Water used or consumed by private water
systems engaged in furnishing water to persons is not taxable.
(g) The sale of water by a board (created
under Sections
11-50-310,
et seq., Code of Ala. 1975, as amended) to an
incorporated municipality is taxable except water used in extinguishing fires,
explosions, or conflagrations.
(h)
Domestic water used or consumed by any person in or for the direct production,
generation, processing, storage, delivery, or transmission of domestic water,
electricity, and natural gas is not taxable. (Section
40-21-83(4))
(5) Electricity and
Natural Gas
(a) The gross sales or gross
receipts from the furnishing of electricity and natural gas are taxable
pursuant to Section
40-21-82(a).
(b) The use or consumption of electricity by
an incorporated municipality or a board or corporation organized under the
authority of any incorporated municipality in furnishing or providing street
lighting or traffic control systems is not taxable. (Section
40-21-83(8))
(c) Electricity and natural gas
used or consumed by any person in or for the direct production, generation,
processing, storage, delivery, or transmission of electricity, natural gas, or
domestic water are not taxable. (Section
40-21-83(4))
(d) The furnishing of electricity
to a manufacturer or compounder for use in an electrolytic or electrothermal
manufacturing or compounding process, natural gas which becomes a component of
tangible personal property manufactured or compounded (but not as fuel or
energy), and natural gas used by a manufacturer or compounder to chemically
convert raw materials prior to the use of such converted raw materials in an
electrolytic or electrothermal manufacturing or compounding process are not
taxable.
(e) Electricity and
natural gas used or consumed by an electric board or gas board created under
Sections
11-50-310,
et seq., Code of Ala. 1975, as amended, which is
engaged in furnishing such utility services to persons are not
taxable.
(f) Electricity and
natural gas used or consumed by a municipal utility department or an
independent municipal utility board which is engaged in furnishing such utility
services to persons are not taxable. Electricity and natural gas furnished by a
municipal utility department or an independent municipal utility board to other
departments or agencies of the same municipality are taxable.
(g) Electricity and natural gas used or
consumed by private utilities engaged in furnishing such utility services to
persons are not taxable.
(h) The
sale of electricity by a board created under Section
11-50-310,
et seq., Code of Ala. 1975, as amended, to an
incorporated municipality is taxable except electricity used in furnishing or
providing street lighting or traffic control systems.
(i) The sale of natural gas by a board
created under Section
11-50-310,
et seq., to an incorporated municipality is taxable.
(j) "Electrolysis" is the passage of an
electric current through a conducting solution or molten salt (either is a type
of electrolyte) which then dissociates. Various substances are prepared
commercially by electrolysis; for example, chlorine (from salt), hydrogen (from
water), and aluminum (from alumina). An "electrolyte" chemically, is a
conductor in which the electric current is a movement of ions. Electrolysis is
also used in the medical profession. "Electrothermal" means heat produced by
electricity. Electric furnaces are used for making large quantities of high
grade steel; they are especially used in making high grade alloy
steels.
(k) A person, firm, or
corporation that transports natural gas purchased by their customer from a
third party is not liable for utility tax on their gross receipts from
furnishing such transportation services.
(l) Electricity or natural gas used or
consumed as fuel or energy in and for the heating of poultry houses is not
taxable. (Section
40-21-83(9))
(6) Alabama Economic
Incentive Enhancement Act of 2007
(a) An
entity locating in Alabama subsequent to December 31, 2 006 and qualifying for
the tax abatements created by Act # 2007-199 under new Chapter 9D of Title 40
of
Code of Ala. 1975 known as the "Alabama Economic
Incentive Enhancement Act of 2007", shall be allowed an exclusion for a period
of ten years from the utility tax levied in Section
40-21-82(a) on purchases of electricity, natural gas, and domestic water. Entities
qualifying for this exemption shall obtain a State Utility Tax Certificate of
Exemption (Form STE-3) by applying for the certificate on forms provided by the
Department. (See Rule
810-6-5-.26.05 entitled Utility Gross Receipts Tax or Mobile Communication Services Tax
Certificate of Exemption (Form STE-3) - Responsibilities of the Certificate
Holder - Burden of Proof -Liability for Taxes Later Determined to be
Due.)
(b) Pursuant to Section
40-9B-3(8),
the beginning date of the ten year period exclusion shall commence from:
1. The date of initial issuance by a county,
city, or public authority of bonds to finance any costs of the property,
or
2. If no bonds are ever issued,
the later of:
i. The date on which title to
such property was acquired by or vested in such county, city, or public
authority, or
ii. The date on which
such property is or becomes owned, for federal income tax purposes, by the
qualifying entity
3. Or,
the date the property (facility) is placed in service.
(c) The existing utility tax exemption
specified in paragraph (4)(b) of this Rule on total purchases of water where
more than 50 percent of the water is used in industrial processing does not
limit the exemption to a specified number of years. An entity qualifying under
Chapter 9D of Title 40 may qualify for this existing exemption.
(d) The exclusion from utility tax provided
in paragraph (6)(a) of this rule and the provisions thereof shall apply equally
to the Utility Service Use Tax levied on electricity, natural gas, and domestic
water.
(7) Consolidation
by a Single Entity of Multiple Monthly Bills from Any One Utility Service
Provider of Electricity, Domestic Water, or Natural Gas Services
(a) The taxes levied in Sections
40-21-82 and
40-21-102 are structured such that, when a person who is furnished electricity, domestic
water, or natural gas services is receiving more than one bill from any one
utility for such services, respective of a month, and the aggregate of the
purchase price of utility services furnished by the utility exceeds forty
thousand dollars ($40,000) for the month, the tax calculated on the separate
billings may exceed the tax due.
1. When a
person purchasing utility services and receiving more than one bill each month
from any one utility for such services has paid to the utility more tax on the
billings than is due on the aggregate of the purchase price of utility services
furnished for the month by the utility, the person may apply for a refund of
the overpayment in accordance with the procedures outlined in Section
40-2-7(c),
Code of Alabama 1975, including the joint petition requirement contained in
Section
40-2A-7(c)(1).
2. When a person purchasing utility services
and receiving more than one bill each month from any one utility for such
services desires to pay the utility privilege license tax computed upon the
aggregate of the purchase price of utility services furnished for the month by
the utility, the person may apply for a permit from the Department of Revenue,
purchase the utility services without the payment of the tax to the utility,
and remit the tax directly to the Department in accordance with the procedures
outlined in Rule
810-6-5-.26.02.
Utility Tax Direct Pay Permit.
(8) General Provisions
(a) Where a discount is deductible from the
gross charge for a utility service if payment is made within a prescribed
period, the tax applies to the amount actually paid.
(b) Receipts from (i) standard collection
charges, which are flat-amount administrative fees charged to cover the cost of
sending a customer a delinquent billing letter; (ii) reconnect fees, which are
fees charged for reconnecting a utility service after someone has moved from
one location to another or after service has been disconnected because of
nonpayment for services; (iii) collection fees, which are fees charged when a
utility must send a collector to a utility customer to attempt to collect
payment on a utility service billing prior to disconnecting service; and (iv)
charges or fees added for failure to timely pay utility bills, whether the
charge or fee is a flat amount or is based upon a percentage of the bill which
was not timely paid, do not constitute gross sales or gross receipts from
furnishing utility services and, therefore, are not taxable. (State of Alabama
v. Muscle Shoals Electric Board (Admin. Law Div. Docket No. S. 93-286, decided
November 4, 1993) and State Department of Revenue v. Mobile Gas 621 So.2d 1333
(Ala. Civ. App. 1993))
(c) Any
person engaged or continuing in the business of furnishing taxable and
nontaxable utility services to a customer shall pay the tax required on the
taxable services furnished when his or her books are kept so as to show
separately the taxable utility services furnished and the nontaxable utility
services furnished. When the books are not so kept, the person furnishing the
utility services shall pay tax on the total gross receipts of all utility
services furnished. This would require separate meters for taxable and
nontaxable services furnished; estimates will not be acceptable. (Shellcast
Corp. v. White, 477 So.2d 422 (Ala. 1985))
(d) In case a customer of a utility claims an
exemption, the applicability of which there is some doubt, either the utility
or the customer may request from the Department a determination of the validity
of the claim for the exemption.
(e)
The tax levied in Section
40-21-82 shall apply to all utility services furnished for use by the State of Alabama,
the counties within the State of Alabama, and any other person or entity
previously exempt from all taxation. The tax levied under this section shall
apply to utility services furnished for use by incorporated municipalities of
the State of Alabama except the exemptions noted in previous paragraphs. The
tax levied under this section shall not apply to utility services furnished to
the Federal Government and its agencies. Utility services furnished to national
banks are taxable.
(f) Any person
regularly engaging in any business for which a privilege tax is imposed by
Section
40-21-82 shall apply for and obtain from the Department a license to engage in and to
conduct such business on forms furnished by the Department. The application for
a utility tax license shall require the following information:
1. Applicant's Federal Employer
Identification Number,
2.
Applicant's legal name, trade name, and complete mailing address,
3. Number of businesses in Alabama and exact
location of each (exact location shall include city, county, and street
address; if location is on highway or rural route, exact location shall include
details sufficient to allow Department personnel to find the place of
business),
4. Indication of the
kind and class of business (i.e. domestic water, natural gas, electricity,
telephone services, and/or telegraph services,
5. Indication of the legal form of ownership
(sole proprietorship, partnership, corporation, multi-member limited liability
company, single-member limited liability company, limited liability
partnership, etc.),
6. If the
applicant is a corporation, a copy of the certified certificate of
incorporation, amended certificate of incorporation, certificate of authority,
or articles of incorporation; if the applicant is a limited liability company
or a limited liability partnership, a copy of the certified articles of
organization,
7. Name, title, home
address, and social security number of the sole proprietor, each partner, each
corporate officer, or each member (for a partner or member that is a
corporation or limited liability entity, the federal employer identification
number shall be requested in lieu of a social security number)
8. Name of former owner of business, if
any,
9. Beginning date of
business,
10. Business and home
phone numbers, and
11. Signature
and title of the sole proprietor, each partner, an elected corporate officer,
or a member and the date of the signature.
(g) The taxes levied under Sections
40-21-82 and
40-21-102 shall be due and payable in monthly installments on or before the twentieth day
of the month next succeeding the month in which the tax accrues. Every person,
firm, or corporation on whom these taxes are levied shall prepare and forward
to the Department within the time fixed and prescribed by law a return for each
calendar month using forms prepared and furnished by the Department, and shall
pay to the Department the amount of tax shown to be due. See Rule
810-1-6-.12 entitled Taxes Required to be Filed Electronically. Each taxpayer shall file
only one return for all units of businesses operated within the state. Any
taxpayer liable for utility tax whose average monthly tax liability was $10,000
or greater during the preceding calendar year shall make estimated payments to
the Department on or before the twentieth day of the month in which the
liability occurred. Such estimated payments must be at least equal to the
taxpayer's actual tax liability for the same calendar month of the preceding
year. (Section
40-21-85) Beginning with the October 2011 return due November 20, 2011, the term
"actual tax liability" as used herein shall not include the estimated amounts
reported on the return from the previous year.
1. Utility Privilege License Tax returns
shall require the following information:
(i)
Taxpayer's utility privilege license tax account number, legal name, and
complete address,
(ii) Period
covered by the return and due date of the return,
(iii) Estimated tax due for the current
month, if applicable, must be at least equal to line 7 (Total Utility Tax Due)
of the return for the same calendar month of the previous year,
(iv) A breakdown, by utility service type, of
total receipts, exempt receipts, and taxable receipts from furnishing utility
services,
(v) A breakdown, by
applicable tax rate, of the number of persons from whom taxable receipts were
received, the amount of such receipts, and the tax due thereon,
(vi) Total tax due,
(vii) Estimated tax paid on previous month's
return, if applicable,
(viii) Tax
due after deducting credit for previous month's estimate,
(ix) Grand total tax due (total tax due plus
current month's estimate, if applicable),
(x) Penalties and interest due, if
applicable,
(xi) Credits claimed,
if any,
(xii) Total amount
remitted,
(xiii) An indication if
payment of tax is made through electronic funds transfer (EFT), and
(xiv) Taxpayer's signature, title, and date
signed. Pursuant to department Rule
810-1-6-.01 entitled Signature Requirements of Tax Returns and Other Documents of All Types
Filed by Electronic Methods, the taxpayer's signature and date requirements are
met upon the submission of an electronic return filed in accordance with Rule
810-1-6-.12 entitled Taxes Required to be Filed Electronically.
2. Utility Excise Tax returns shall require
the following information:
(i) Taxpayer's
utility excise tax account number, legal name, and complete address,
(ii) Period covered by the return and due
date of the return,
(iii) Estimated
tax due for the current month, if applicable, must be at least equal to line 5
(Total Tax Due) of the return for the same calendar month of the previous
year,
(iv) A breakdown, by vendor,
of taxable purchases and the tax due thereon,
(v) Total tax due on all taxable
purchases,
(vi) Estimated tax paid
on previous month's return, if applicable,
(vii) Total tax due after deducting credit
for previous month's estimate,
(viii) Grand total tax due (total tax due
plus current month's estimate, if applicable),
(ix) Penalties and interest due, if
applicable,
(x) Credits claimed, if
any,
(xi) Total amount
remitted,
(xii) An indication if
payment of tax is made through electronic funds transfer (EFT), and
(xiii) Taxpayer's signature, title, and date
signed. Pursuant to department Rule
810-1-6-.01 entitled Signature Requirements of Tax Returns and Other Documents of All Types
Filed by Electronic Methods, the taxpayer's signature and date requirements are
met upon the submission of an electronic return filed in accordance with Rule
810-1-6-.12 entitled Taxes Required to be Filed Electronically.
(h) Every person engaged in the
business of furnishing utility services shall add the tax levied in Section
40-21-82 to the gross receipts from furnishing such services and include the tax as a
part of the total price billed to the purchaser of the services. (Section
40-21-86)
(i) A utility service provider is
not required to collect utility tax from a purchaser who claims an exemption
from the tax and, as documentation of the exemption claim, furnishes the
utility service provider a properly executed utility tax certificate of
exemption (Form STE-3) issued by the Department pursuant to Rule
810-6-5-.26.05.
The utility service provider who relies in good faith on the Form STE-3 and
reasonably believes the tax exemption claim is legal shall not be held liable
for utility tax later determined by the Department to be due on the sale for
which the certificate was received. Instead, the Department will collect or
recover the utility tax due from the party or parties who made the illegal
tax-free purchase with the Form STE-3 and the person or persons who benefited
from the illegal use of the Form STE-3. (Section
40-21-88).
(j) The utility gross receipts
tax shall be administered and the tax shall be collected in accordance with the
uniform procedures set forth in Title 40 along with the procedures outlined in
Sections
40-23-8 through
40-23-12,
40-23-25,
and
40-23-27 through
40-23-31,
Code of Ala. 1975, as amended, together with the
applicable definitions contained in Section
40-23-1,
Code of Ala. 1975, as amended. No discount is allowed
for prompt payment of the utility gross receipts tax. However, Act #2001-1090
amended Section
40-21-82(b) which provides that a utility furnishing telephone and telegraph services is
entitled to a collection allowance effective February 1, 2002 as stipulated in
paragraph (2)(b) of this rule. (Section
40-21-85)
(k) Insofar as applicable, the
provisions of this rule shall apply equally to the tax levied in Section
40-21-102.
In the event that a seller making sales of utility services for storage, use,
or other consumption in this state, not exempted under the provisions of
Section
40-21-103,
is exempted from collection of the tax herein levied by any provisions of the
Constitution or laws of the United States of America, then the purchaser of the
utility services shall pay the tax directly to the Department each month
pursuant to this rule.
Notes
Ala. Admin. Code r. 810-6-5-.26
(Adopted July 14, 1969.
Amended: September 18, 1969; March 9, 1970; June 18, 1971. Readopted through
APA effective October 1, 1982. Amended: Filed February 5, 1988, March 11,
1988.) Amended: Filed November 18, 1993, effective December 23, 1993. Amended:
Filed April 15, 1994; effective May 20, 1994. Amended: Filed December 1, 1995;
effective January 5, 1996. Amended: Filed February 26, 1996; effective April 1,
1996. Amended: Filed November 23, 1998; effective December 28, 1998. Amended:
Filed March 2, 2000; effective April 6, 2000. Amended: Filed April 19, 2002;
effective May 24, 2002. Amended: Filed August 31, 2004; effective October 5,
2004. Amended: Filed November 9, 2007; effective December 14, 2007. Amended:
Filed March 2 2009; effective April 6, 2009. Amended: Filed November 3 2011;
effective December 8, 2011.
Authors: Deborah Lee, Ginger Buchanan
Statutory Authority:
Code of Ala.
1975, ยงยง
40-2A-7(a)(5),
40-9B-3(8), 40-21-80,
40-21-82,
40-21-82.1,
40-21-83,
40-21-84,
40-21-85,
40-21-86,
40-21-88,
40-21-102,
40-21-103,
40-21-104,
40-21-105,
40-21-106,
40-23-31,
40-23-100,
40-23-102,
40-23-103;
Act No. 2001-2090, Act No. 2007-199.