Alabama law (Sections 40-21-83 and 40-21-103) allows exclusions from the utility gross receipts tax and the utility service use tax if electricity or natural gas is used in an electrolytic or electro-thermal manufacturing or compounding process. (c) If charges for a nontaxable service are aggregated with and not separately stated from charges for telephone or telegraph service that are subject to taxation, then the charges for the nontaxable service are subject to taxation unless the utility can reasonably identify the charges not subject to taxation from its books and records that are kept in the regular course of business. “No doubt, 2020 has offered its share of challenges, but the department uncovered many opportunities as well,” Department of Revenue Commissioner Vernon Barnett wrote in a cover letter to Alabama Gov. Delaware - Business and occupational gross receipts tax rates range from 0.096% to 1.92%, depending on the business activity. The Department of Revenue of the State of Alabama. State of Alabama revenues reached an all-time high in the midst of the pandemic, with $12.2 billion collected in 2020, an increase of more than $2.3 billion from five years ago, state officials said in a report released this week. 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 ut ility in collecting and remi tting the tax levied by subsection 40-21-82(b). 2006-552 requires payments that are $750 or greater to be made electronically through an Electronic Funds Transfer (EFT) method. Sales tax is a percentage of the purchase of certain goods and services that … Beginning November 1, 2020, businesses that hold an Alabama Sales Tax, Rental Tax, Sellers Use Tax, Lodgings Tax, Simplified Sellers Use Tax and/or Utility Gross Receipts Tax account(s) are required to renew those licenses annually for the next tax year. The financial institution excise tax brought in $150 million, of which $74 million was distributed to the state General Fund, cities and counties, which was a drop from the $81 million distributed in 2019. Copyright © 2021, Thomson Reuters. Sewer costs are not taxed. Yes. Under existing law, a utility gross receipts tax is levied on utility services. Any person liable for taxes under the provisions of this article. Please verify the status of the code you are researching with the state legislature or via Westlaw before relying on it for your legal needs. Utility Gross Receipts Tax Exclusion: Alabama law (Sections 40-21-83 and 40-21-103) allows exclusions from the utility gross receipts tax and the utility service use tax if electricity or natural gas is used in an electrolytic or electrothermal manufacturing or compounding process. (2) DOMESTIC WATER. The Archives Services Fund was the low performer, receiving a total of $15 from three contributors. (12) USE. “We implemented sweeping upgrades to our IT systems and communications infrastructure, and we enhanced our audit activities and taxpayer support platforms to safely ensure uninterrupted and more effective operations.”. Article 3 - Utility Gross Receipts Tax. (a) For the purpose of this article, the following terms shall have the respective meanings ascribed by this section: (1) DEPARTMENT. Utility Gross Receipts Tax: 40-21-80 – 40-21-88: Article 4: Utility Service Use Tax: 40-21-100 – 40-21-107: Article 5: Cellular Radio Telecommunication Services Tax: 40-21-120 – 40-21-126: Terms Used In Alabama Code > Title 40 > Chapter 21. However, the list does not include either consumers use tax licenses or so-called direct pay permits. Sales tax collections were a record $2.5 billion, up about $50 million from 2019. Section 40-21-80 - Definitions. Utility Gross Receipts Tax; Simplified Sellers Use Tax; Alabama taxpayers will be able to verify and update their business information for new licenses on the My Alabama Taxes website for the upcoming year. The tax shall be computed monthly with respect to each person to whom such services are furnished, in accordance with the following table: 6.7% of such gross sales or gross receipts. How GRT Differs From Income Taxes or Franchise Taxes Some states tax the incomes of businesses, but in most cases that taxable income is net income—sales minus expenses. The Tennessee Valley Authority makes annual payments to the state in lieu of taxes, which amounts to 5% of gross revenues on power sales. Gross receipts tax is paid by the business rather than by its customers and typically does not exempt many of the products and services that a sales tax law does. (2) Except for the defined telegraph or telephone services in subdivisions (3) and (4), the sale of telephone service sold on a basis other than a call-by-call basis is sourced to the customer's place of primary use. (4) A sale of private communication service is sourced as follows: a. Alabama Code Title 40. There are several exemptions from the utility gross receipts tax. Property tax collections in 2020 totaled $3.1 billion and were highest in Jefferson County at $788 million, followed by Mobile County at $306 million, Madison at $263 million, Shelby at $198 million and Baldwin County at $167 million. Section 40-21-82 - Levy of tax; sourcing of gross sales or gross receipts from telegraph or telephone services. There are several exemptions from the utility gross receipts tax. Utility gross receipts tax; Simplified Sellers Use Tax; The renewal process must be completed on an annual basis in order to generate a new license each year. Alabama Power employees celebrate MLK Day by giving back to communities, USDA, Alabama sign historic agreement to improve forests on public, private lands, Ransom Ministries is a shining Alabama Bright Light, Volunteers build new fish habitats for Alabama's lakes and rivers, People of Alabama: Jared Presswood of Bessemer, Auburn University researchers examine impact of feral swine in Alabama to decrease devastation. This bill would exempt the Floyd Cherokee Medical Center LLC from the utility gross receipts tax. The 197 local sales, use, rental and lodgings taxes are collected from 160 localities, the report said. The rate cannot exceed 3 percent. Additionally, rates for taxes on gross receipts tend to be lower than sales tax rates although they often are applicable to more transactions. It is a graduated rate based on a company’s federal taxable income, ranging from 25 cents to $1.75 for each $1,000 of net worth. Sewer costs are not taxed. Section 40-21-80Definitions. Several states in the United States have imposed gross receipts taxes. (3) The sale of post-paid calling service is sourced to the origination point of the telecommunications signal as first identified by either a. the seller's telecommunication system, or b. information received by the seller from its service provider, where the system used to transport such signal is not that of the seller. Revenue and Taxation § 40-21-82 on Westlaw, industry-leading online legal research system. For more detailed codes research information, including annotations and citations, please visit Westlaw. Alabama - Per Article 3 of the code of Alabama, the state has imposed this type of tax on most utilities. Alabama Utility Gross Receipts Tax – This is a state tax on the purchase of telecommunications and telephone services. The utility gross receipts tax levied on all companies furnishing electricity, water, gas, telephone or telegraph services garnered a record $420 million. For the first time, Alabama’s incentives cover capitalized replacement and maintenance property, as follows. The amount of the tax shall be determined by the application of rates against gross sales or gross receipts, as the case may be, from the furnishing of such services in the State of Alabama. Section 40-21-82.1 - Exemptions. Despite the challenges of the pandemic, APSO members found ways to honor King's legacy. b. Chapter 21 - PUBLIC UTILITIES. Their appeal comes as many states are looking to replace revenue lost by eroding corporate income tax bases and as a way to limit revenue volatility. Read the code on FindLaw , . Gross receipts taxes impact firms with low profit margins and high production volumes, as the tax does not account for a business’ costs of production, as a corporate income tax would. Water used in industrial manufacturing in which 50 percent or more is used in industrial processing is also exempt from the utility gross receipts tax. Ivey on March 23, 2020, declared a state of emergency that allowed the Department of Revenue to provide relief to taxpayers, extending filing deadlines until July 15. All rights reserved. Sewer costs are not taxed The tax is calculated based on gross sales, at 4% for receipts of $40,000 or less and $2,200 plus 2% of excess over $60,000 for companies having over $60,000 in sales. 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 nine-tenths of one percent of the amount of such tax billed on or after February 1, 2002, in consideration of the costs incurred by the utility in collecting and remitting the tax levied by this subsection;  provided, however, that on and following October 1, 2002, the amount deducted and retained by such utility shall be one-fourth of one percent of the gross amount of such tax billed. One renewal process will update all of the required licenses for that entity. The amount of the tax shall be determined by the application of rates against gross sales or gross receipts, as the case may be, from the furnishing of such services in the State of Alabama. Utility Gross Receipts Tax Exemptions. The minimum tax is $100 and maximum for most companies is $15,000, although financial and insurance companies are subject to a maximum $3 million. Other states have franchise taxes, which are similar to income taxes… For telephone companies the state tax is 6% of gross sales. The tax shall be computed monthly with respect to each person to whom such services are furnished, in accordance with the following table: Article 3 - Utility Gross Receipts Tax. Begin typing to search, use arrow keys to navigate, use enter to select. Cigarette tax collections were down for the first time in five years, falling to $162 million, nearly $20 million below 2016. The service provider collects the tax based on the rate established by the local authority. Section 40-21-80 - Definitions. The utility gross receipts tax levied on all companies furnishing electricity, water, gas, telephone or telegraph services garnered a record $420 million. Other exemptions for sales and use taxes are described in the Sales & Use Tax Laws. Report Says Lawyers Will Discover a New Normal in 2021, 2021 May Bring Pro-Labor and Unionization Movement in Tech. Microsoft Edge. Relating to the utility gross receipts tax; to amend Section 40-21-82.1 of the Code of Alabama 1975, to exempt the Floyd Cherokee Medical Center LLC from the tax. The tax shall be computed monthly with respect to each person to whom such services are furnished, in accordance with the following table: The taxpayer’s business information must be verified and/or updated, which can be done on the My Alabama Taxes website. The amount of the tax shall be determined by the application of rates against gross sales or gross receipts, as the case may be, from the furnishing of such services in the State of Alabama. Those licenses included sales tax, rental tax, lodgings tax, sellers use tax, utility gross receipts tax, and Simplified Sellers Use Tax licenses. The following tax types will be required to renew the State of Alabama Tax License each year: Sales Tax; Rental Tax; Sellers Use Tax; Lodgings Tax; Utility Gross Receipts Tax; Simplified Sellers Use Tax Utility Gross Receipts Tax Simplified Sellers Use Tax Taxpayers will renew licenses online at the Alabama Department of Revenue website. Income tax accounted for 48% ($4.9 billion) of 2020 revenues. c. Service for segments of a channel between two customer channel termination points located in different jurisdictions and which segments of channel are separately charged is sourced 50 percent in each level of jurisdiction in which the customer channel termination points are located. Any keeping or retention in the State of Alabama of utility services for any purpose, except sale in the regular course of business or subsequent use solely outside the State of Alabama. d. Service for segments of a channel located in more than one jurisdiction or levels of jurisdiction and which segments are not separately billed is sourced in each jurisdiction based on the percentage determined by dividing the number of customer channel termination points in such jurisdiction by the total number of customer channel termination points. The tax shall be applied to interstate telephone service beginning with bills dated on and after February 1, 2002, regardless of when the services being billed were provided. Google Chrome, Credits may offset income, utility gross receipts, insurance, and bank taxes, including taxes owed by existing operations. 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