1 SB353
2 210875-2
3 By Senator Whatley
4 RFD: Finance and Taxation Education
5 First Read: 30-MAR-21
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1 210875-2:n:03/30/2021:LSA-SS/jmb
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8 SYNOPSIS: Under existing law, the gross proceeds from
9 certain products are exempt from rental, sales, and
10 use taxes. This bill would exempt from rental,
11 sales and use taxes the gross proceeds from the
12 rental or sale of detection dogs.
13
14 A BILL
15 TO BE ENTITLED
16 AN ACT
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18 To amend Sections 40-12-223 and 40-23-4, Code of
19 Alabama 1975, relating to exemptions from rental, sales and
20 use taxes; to exempt from rental, sales and use taxes gross
21 proceeds from the rental or sale of detection dogs.
22 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
23 Section 1. Sections 40-12-223 and 40-23-4, Code of
24 Alabama 1975, are amended to read as follows:
25 "40-12-223.
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1 "There are exempted from the computation of the
2 amount of the tax levied, assessed or payable under this
3 article the following:
4 "(1) The gross proceeds accruing from the leasing or
5 rental of a film or films to a lessee who charges, or proposes
6 to charge, admission for viewing the said film or films;
7 "(2) The gross proceeds accruing from any charge in
8 respect to the use of docks or docking facilities furnished
9 for boats or other craft operated on waterways;
10 "(3) The gross proceeds accruing from any charge
11 made by a landlord to a tenant in respect of the leasing or
12 furnishing of tangible personal property to be used on the
13 premises of real property leased by the same landlord to the
14 same tenant for use as a residence or dwelling place,
15 including mobile homes;
16 "(4) The gross proceeds accruing from the leasing or
17 rental of tangible personal property to a lessee who acquires
18 possession of the said property for the purpose of leasing or
19 renting to another the same property under a leasing or rental
20 transaction subject to the provisions of this article;
21 "(5) The gross proceeds accruing from any charge
22 made by a landlord to a tenant in respect to the leasing or
23 furnishing of tangible personal property to be used on the
24 premises of any room or rooms, lodging or accommodations
25 leased or rented to transients in any hotel, motel, inn,
26 tourist camp, tourist cabin, or any other place in which
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1 rooms, lodgings, or accommodations are regularly furnished to
2 transients for a consideration;
3 "(6) The gross proceeds accruing from the leasing or
4 rental of tangible personal property which the state is
5 prohibited from taxing under the Constitution or laws of the
6 United States or under the constitution of the state;
7 "(7) The gross proceeds accruing from the leasing or
8 rental of nuclear fuel assemblies together with the nuclear
9 material contained therein and other nuclear material used or
10 useful in the production of electricity and assemblies
11 containing ionizing radiation sources together with the
12 ionizing radiation sources contained therein used or useful in
13 medical treatment or scientific research;
14 "(8) A transaction whereunder the lessor leases a
15 truck or tractor-trailer or semitrailer for operation over the
16 public roads and highways and such lessor furnishes a driver
17 or drivers for each such vehicle, and such transaction shall
18 be deemed to constitute the rendition of service and not a
19 "leasing or rental" within the meaning of this article;
20 "(9) The gross proceeds accruing from the leasing or
21 rental of vehicles in interchange between regulated motor
22 carriers on a per diem basis;
23 "(10) The gross proceeds accruing from the leasing
24 or rental of all structures, devices, facilities, and
25 identifiable components of any thereof acquired primarily for
26 the control, reduction, or elimination of air or water
27 pollution, and the gross proceeds accruing from the leasing or
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1 rental of all materials used or intended for use in structures
2 built primarily for the control, reduction, or elimination of
3 air and water pollution;
4 "(11) The gross proceeds derived by the lessor,
5 which term includes a sublessor, from the leasing or rental of
6 tangible personal property when the lessor and lessee, which
7 term includes a sublessee, are wholly-owned subsidiary
8 corporations of the same parent corporation or one is the
9 wholly-owned subsidiary of the other; provided, that the
10 appropriate sales or use tax, if any was due, has been paid on
11 such item of personal property; and provided further, that in
12 the event of any subsequent subleasing of such tangible
13 personal property to any person other than any such sister,
14 parent or subsidiary corporation, any privilege or license tax
15 due and payable with respect to such subsequent subleasing
16 under the provisions of this article shall be paid;
17 "(12) The gross proceeds accruing from a transaction
18 which involves the leasing or rental of vessels or railroad
19 equipment which are engaged in interstate or foreign commerce,
20 or both;
21 "(13) The gross proceeds accruing from the leasing
22 or rental of aircraft, replacement parts, components, systems,
23 sundries, and supplies affixed or used on said aircraft and
24 all ground support equipment and vehicles used by or for the
25 aircraft to or by a certificated or licensed air carrier with
26 a hub operation within this state, for use in conducting
27 intrastate, interstate or foreign commerce for transporting
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1 people or property by air. For the purpose of this
2 subdivision, the words "hub operation within this state" shall
3 be construed to have all of the following criteria:
4 "a. There originates from the location 15 or more
5 flight departures and five or more different first-stop
6 destinations five days per week for six or more months during
7 the calendar year; and
8 "b. Passengers and/or property are regularly
9 exchanged at the location between flights of the same or a
10 different certificated or licensed air carrier; and
11 "(14) The gross proceeds derived by the lessor,
12 which term includes a sublessor, from the leasing of tangible
13 personal property under the following conditions:
14 "a. Prior to being leased under the lease subject to
15 this exemption, the leased tangible personal property shall
16 have been owned, or considered to be owned for either Alabama
17 or federal income tax purposes or both, or subject to
18 acquisition pursuant to a binding contract, by the lessee or
19 by a corporation, partnership or other entity controlled by,
20 or under common control with, such lessee;
21 "b. The leased tangible personal property, or the
22 right to ownership thereof, shall have been acquired by the
23 lessor from the lessee or a corporation, partnership or other
24 entity controlled by, or under common control with, such
25 lessee and leased back to the lessee under a lease (i) that is
26 considered a lease and not a sale for either Alabama or
27 federal income tax purposes or both and (ii) that has a term
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1 of not less than 15 years, except that the lessor and the
2 lessee may agree in the lease or any subsequent amendment
3 thereof for the termination of the lease on any date through
4 purchase of the leased tangible personal property by the
5 lessee, which right to purchase such property shall be
6 exercisable solely at the option of the lessee;
7 "c. The appropriate sales or use tax levied by the
8 state shall have been paid with respect to the acquisition or
9 use of the leased tangible personal property, or,
10 alternatively, the acquisition or use of such property shall
11 be exempt by law from such sales or use tax;
12 "d. The leased tangible personal property shall be
13 installed in or about an industrial plant or other real
14 property that was specially constructed or modified for the
15 location and use of such tangible personal property and that
16 is owned, or considered to be owned for either Alabama or
17 federal income tax purposes or both, by a corporation,
18 partnership, or other entity controlled by, or under common
19 control with, the lessee of such tangible personal property;
20 and
21 "e. The leased tangible property shall be used only
22 by a lessee engaged in the iron and steel industry, and the
23 exemption from the tax levied by this article shall apply only
24 to the gross proceeds derived from leases that become binding
25 contracts of the parties thereto within 180 calendar days
26 following the date on which the act adding the exemption
27 contained in this subsection (14) shall become effective.
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1 "(15) The gross proceeds accruing from the leasing
2 or rental of detection dogs from or to a certified detection
3 dog trainer or a company employing certified detection dog
4 trainers.
5 a. For the purpose of this subdivision, a detection
6 dog is a dog trained to use its senses to detect substances
7 such as weapons, explosives, illegal drugs, accelerants,
8 wildlife scat, currency, blood, plant and mammalian viruses,
9 bed bugs, and contraband electronics.
10 "40-23-4.
11 "(a) There are exempted from the provisions of this
12 division and from the computation of the amount of the tax
13 levied, assessed, or payable under this division the
14 following:
15 "(1) The gross proceeds of the sales of lubricating
16 oil and gasoline as defined in Sections 40-17-30 and 40-17-170
17 and the gross proceeds from those sales of lubricating oil
18 destined for out-of-state use which are transacted in a manner
19 whereby an out-of-state purchaser takes delivery of such oil
20 at a distributor's plant within this state and transports it
21 out-of-state, which are otherwise taxed.
22 "(2) The gross proceeds of the sale, or sales, of
23 fertilizer when used for agricultural purposes. The word
24 "fertilizer" shall not be construed to include cottonseed
25 meal, when not in combination with other materials.
26 "(3) The gross proceeds of the sale, or sales, of
27 seeds for planting purposes and baby chicks and poults.
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1 Nothing herein shall be construed to exempt or exclude from
2 the computation of the tax levied, assessed, or payable, the
3 gross proceeds of the sale or sales of plants, seedlings,
4 nursery stock, or floral products.
5 "(4) The gross proceeds of sales of insecticides and
6 fungicides when used for agricultural purposes or when used by
7 persons properly permitted by the Department of Agriculture
8 and Industries or any applicable local or state governmental
9 authority for structural pest control work and feed for
10 livestock and poultry, but not including prepared food for
11 dogs and cats.
12 "(5) The gross proceeds of sales of all livestock by
13 whomsoever sold, and also the gross proceeds of poultry and
14 other products of the farm, dairy, grove, or garden, when in
15 the original state of production or condition of preparation
16 for sale, when such sale or sales are made by the producer or
17 members of his immediate family or for him by those employed
18 by him to assist in the production thereof. Nothing herein
19 shall be construed to exempt or exclude from the measure or
20 computation of the tax levied, assessed, or payable hereunder,
21 the gross proceeds of sales of poultry or poultry products
22 when not products of the farm.
23 "(6) Cottonseed meal exchanged for cottonseed at or
24 by cotton gins.
25 "(7) The gross receipts from the business on which,
26 or for engaging in which, a license or privilege tax is levied
27 by or under the provisions of Sections 40-21-50, 40-21-53, and
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1 40-21-56 through 40-21-60; provided, that nothing contained in
2 this subdivision shall be construed to exempt or relieve the
3 person or persons operating the business enumerated in said
4 sections from the payments of the tax levied by this division
5 upon or measured by the gross proceeds of sales of any
6 tangible personal property, except gas and water, the gross
7 receipts from the sale of which are the measure of the tax
8 levied by said Section 40-21-50, merchandise or other tangible
9 commodities sold at retail by said persons, unless the gross
10 proceeds of sale thereof are otherwise specifically exempted
11 by the provisions of this division.
12 "(8) The gross proceeds of sales or gross receipts
13 of or by any person, firm, or corporation, from the sale of
14 transportation, gas, water, or electricity, of the kinds and
15 natures, the rates and charges for which, when sold by public
16 utilities, are customarily fixed and determined by the Public
17 Service Commission of Alabama or like regulatory bodies.
18 "(9) The gross proceeds of the sale, or sales of
19 wood residue, coal, or coke to manufacturers, electric power
20 companies, and transportation companies for use or consumption
21 in the production of by-products, or the generation of heat or
22 power used in manufacturing tangible personal property for
23 sale, for the generation of electric power or energy for use
24 in manufacturing tangible personal property for sale or for
25 resale, or for the generation of motive power for
26 transportation.
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1 "(10) The gross proceeds from the sale or sales of
2 fuel and supplies for use or consumption aboard ships,
3 vessels, towing vessels, or barges, or drilling ships, rigs or
4 barges, or seismic or geophysical vessels, or other watercraft
5 (herein for purposes of this exemption being referred to as
6 "vessels") engaged in foreign or international commerce or in
7 interstate commerce; provided, that nothing in this division
8 shall be construed to exempt or exclude from the measure of
9 the tax herein levied the gross proceeds of sale or sales of
10 material and supplies to any person for use in fulfilling a
11 contract for the painting, repair, or reconditioning of
12 vessels, barges, ships, other watercraft, and commercial
13 fishing vessels of over five tons load displacement as
14 registered with the U.S. Coast Guard and licensed by the State
15 of Alabama Department of Conservation and Natural Resources.
16 "For purposes of this subdivision, it shall be
17 presumed that vessels engaged in the transportation of cargo
18 between ports in the State of Alabama and ports in foreign
19 countries or possessions or territories of the United States
20 or between ports in the State of Alabama and ports in other
21 states are engaged in foreign or international commerce or
22 interstate commerce, as the case may be. For the purposes of
23 this subdivision, the engaging in foreign or international
24 commerce or interstate commerce shall not require that the
25 vessel involved deliver cargo to or receive cargo from a port
26 in the State of Alabama. For purposes of this subdivision,
27 vessels carrying passengers for hire, and no cargo, between
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1 ports in the State of Alabama and ports in foreign countries
2 or possessions or territories of the United States or between
3 ports in the State of Alabama and ports in other states shall
4 be engaged in foreign or international commerce or interstate
5 commerce, as the case may be, if, and only if, both of the
6 following conditions are met: (i) The vessel in question is a
7 vessel of at least 100 gross tons; and (ii) the vessel in
8 question has an unexpired certificate of inspection issued by
9 the United States Coast Guard or by the proper authority of a
10 foreign country for a foreign vessel, which certificate is
11 recognized as acceptable under the laws of the United States.
12 Vessels that are engaged in foreign or international commerce
13 or interstate commerce shall be deemed for the purposes of
14 this subdivision to remain in such commerce while awaiting or
15 under repair in a port of the State of Alabama if such vessel
16 returns after such repairs are completed to engaging in
17 foreign or international commerce or interstate commerce. For
18 purposes of this subdivision, seismic or geophysical vessels
19 which are engaged either in seismic or geophysical tests or
20 evaluations exclusively in offshore federal waters or in
21 traveling to or from conducting such tests or evaluations
22 shall be deemed to be engaged in international or foreign
23 commerce. For purposes of this subdivision, proof that fuel
24 and supplies purchased are for use or consumption aboard
25 vessels engaged in foreign or international commerce or in
26 interstate commerce may be accomplished by the merchant or
27 seller securing the duly signed certificate of the vessel