The United States Government, the State of Alabama, counties and incorporated municipalities of the state, and various other entities within the state are specifically exempt from paying state and local sales and use tax on their purchases of tangible personal property. These tax-exempt entities cannot transfer their exempt status to a contractor or developer who is required to purchase and pay for the materials that are to be used pursuant to a construction contract with the tax-exempt entity. However, a tax-exempt entity may appoint as its agent a contractor to act on its behalf to order materials or to order and pay for materials that will be incorporated into real estate pursuant to a construction contract with the tax-exempt entity. Purchases made by the agent on behalf of the tax-exempt entity will be exempt from the payment of state and local sales or use tax provided that the procedures outlined in Alabama Department of Revenue Rule 810-6-3-.69.02 are followed.
Certificates are not transferable and may only be used by the person, firm, or corporation whose name appears on the certificate. Each contractor or a subcontractor must apply for their own certificates of exemption.
In order to be approved for a Contractor’s Certificate of Exemption for a Government Entity Project, you will need to obtain a State Business License for Contractors. The designation on the State Business License is Schedule/Section 84 – Contractors. The cost of the license is based upon the amount of gross contract funds that you may receive.
If your contract amount on the project is over $50,000, you are required to obtain a General Contractor’s License. Please visit the website HERE for more information.
No, a subcontractor’s certificate of exemption’s “ending date” cannot be extended beyond the general contractor’s certificate of exemption’s “ending date.” If the general contractor does not extend their certificate, then any purchases the subcontractor makes after the “ending date” is subject to sales or use tax.
If an extension is needed for a project, please send an email to STContractorsExempt@revenue.alabama.gov. Be sure to include the certificate number (EXM-R#########) and the desired ending date. Extension requests should be submitted no more than 30 days after the expiration date. The general contractor must request and obtain an extension before the subcontractor can obtain an extension. An extension may also be requested via “Other Actions…” - “Apply for a Certificate of Exemption for a Government Entity Project” - “Request an extension” feature while logged in to My Alabama Taxes (myalabamataxes.alabama.gov).
Yes. Contractors and subcontractors who successfully apply for this exemption will be required to file monthly consumers use tax returns which include a total of all exempt purchases for ongoing projects. If there are no purchases made using the exemption certificate, then a “zero” return must still be filed in the reporting table for the period. There is a requirement of one entry for each active contractor’s certificate of exemption for each filing period. The consumer use return is filed through the My Alabama Taxes (MAT) filing system. Failure to comply with the filing requirement will result in the cancellation of your contractor’s certificate of exemption.
No. The certificate of exemption will be issued as of the project start date or the received date of the application. If, upon receipt of the application, the project has already commenced, the certificate will be issued as of the received date of the application. Any purchases made prior to the issuance of a certificate will not be exempt.
The contractor’s certificates of exemption shall be valid for the specified timeframe listed on the certificate of exemption.
Exempt Entity:
General Contractor:
Subcontractor:
The exempt entity certificate of exemption must be issued prior to the issuance of the general contractor’s certificate of exemption. The general contractor’s certificate of exemption must be issued prior to the issuance of the subcontractor’s certificate of exemption.
You must complete the appropriate application, Form ST: EXC-01, which can be found on our Forms page (use Number Search). Email the completed application to STContractorsExempt@revenue.alabama.gov or send it to:
Sales and Use Tax Division, Exemption Unit
P. O. Box 327710
Montgomery, AL 36132-7710
A Certificate of Exemption may also be applied for via My Alabama Taxes if the taxpayer already has an Alabama Consumers Use Tax Account.
Qualifying projects and contracts are those generally entered into with the following governmental entities: The State of Alabama, a county or incorporated municipality of Alabama, an Alabama public school, an Alabama industrial or economic development board or authority, and any Alabama public water and sewer authority, district, or board that is otherwise sales and use tax exempt. Please note that contracts entered into with the federal government do not qualify for the exemption provided for in Act 2013-205 or Act 2018-234.
For certain purchases by contractors working on qualifying government entity projects, per Act 2013-205 and Alabama Department Rule 810-6-3-.77, there is an additional option to purchase the materials for that project tax exempt by obtaining a Certificate of Exemption for Government Entity Projects. This Certificate applies to the purchase of building materials, construction materials and supplies, and other tangible personal property that become part of the structure.
Building materials include such tangible personal property as lumber, timber, nails, screws, bolts, structural steel, reinforcing steel, cement, lime, sand, gravel, slag, stone, telephone poles, fencing, wire, electric cable, brick, tile, glass, plumbing supplies, plumbing fixtures, pipe, pipe fittings, electrical fixtures, built-in cabinets, sheet metal, paint, roofing materials, road-building materials, sprinkler systems, built-in fans, heating systems, flooring, carpet, floor furnaces, crane ways, crossties, railroad rails, railroad track accessories, tanks, builders hardware, doors, door frames, windows, window frames, water meters, gas meters, well pumps and any and all other tangible personal property which becomes a part of real property.
For general sales and use tax purposes, a contractor is any person, firm or corporation who contracts to make additions, alterations, or improvements to real property. Contractors are deemed not to be reselling building materials which they purchase and affix to realty, but rather to be using or consuming such materials in performing their contracts. A contractor who buys building materials and supplies for use or “consumption” in completing the construction, repair, or alteration to real property must pay sales tax to the Alabama vendor at the point of sale on materials so used or consumed or pay use tax directly to the Revenue Department on purchases of materials from out-of-state vendors who do not collect the tax.
