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Section 40-9C-1 through Section 40-9C-8, Code of Alabama 1975
Chapter 9C Abatement Forms
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Tawanna Small
Preeti Gratz
Kelly Graham
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Chapter 9C of Title 40 (also known as the Brownfield Development Projects) gives cities and counties the authority to abate the following taxes:
To receive an abatement for any or all of these taxes, a project must meet certain qualifications and follow certain procedures, as determined by law and regulation.
In order to qualify for the Chapter 9C (Brownfield) abatements, the property must be in the Alabama Department of Environmental Management’s voluntary cleanup program.
There is no threshold or a limitation on the investment amount for new Brownfield abatement project. The total amount of the capital investment by a company that is located in Alabama is eligible for the tax abatements.
The additional capital investment by a company that is expanding their current facilities on a Brownfield development property must equal the lesser of:
To receive an abatement of sales and use taxes, property taxes, and/or mortgage recording taxes under Chapter 9C of Title 40, Code of Alabama 1975, certain actions must be taken by the private user, the granting authority, the Department of Revenue, local taxing authorities, and/or the Governor.
To receive an abatement of sales and use taxes, property taxes, and/or mortgage recording taxes under Chapter 9C of Title 40, Code of Alabama 1975, certain actions must be taken by the private user, the granting authority, the Department of Revenue, local taxing authorities, and/or the Governor.
Private User
The private user is any individual, pass-through entity, or corporation organized for profit that is or will be treated as the owner of private use property for federal income tax purposes. The private user must be in the Alabama Department of Environmental Management’s voluntary cleanup program to qualify for the Brownfield abatements. Once a project site is determined, the private user must apply for the appropriate sales, use, and property tax abatements at or about the time the voluntary cleanup plan is approved by the Alabama Department of Environmental Management (ADEM) by submitting a completed “Application to Granting Authority for Abatement of Taxes under Chapter 9C” (Form CO:CAAC) to the appropriate governing body.
After the abatement is granted, the private user is responsible for submitting a completed abatement package to the Alabama Department of Revenue within 90 days after the abatement is granted. The package must include the following:
Once the completed abatement package is received by the Department of Revenue, the Department will issue a certificate of exemption, which is used in making the necessary purchases to be incorporated into the project.
Note! Contractor(s) or subcontractor(s) who will be making purchases to be incorporated into the project must file an application for a certificate of exemption (Form ST: EX-A2) with the Department of Revenue, along with a letter from the private user (or contractor) verifying that they will be making purchases for the project. For further details please click here.
A certificate of exemption is issued to the private user (and their general and subcontractors, if applicable) to make all purchases of tangible personal property to be incorporated into the project without payment of sales and use taxes to the vendor. The statute does not allow the state sales and use tax to be abated; therefore, the certificate holder must file and remit any state sales and use tax monthly on all purchases of property.
For local taxes, the certificate holder is required to remit separately the portion of local sales and use taxes which have been earmarked for educational purposes, along with any local taxes due on purchases which do not qualify for the abatement but were purchased tax-exempt using the exemption certificate. The certificate of exemption is effective as of the date the abatement is granted and will expire on the date of the completion of the project.
For property tax purposes, the private user should contact the local county assessing official in the county where the property is located to claim the abatement for non-educational property taxes.
For the county assessing official to properly credit the abatement, certain information must be provided. The county assessing official must receive a copy of the abatement application, resolution, and abatement agreement. In addition, an itemized list of all abated property (real and/or personal) that has attained situs in Alabama as of October 1 must be provided before the abatement can be applied. Per Section 40-7-4, Code of Alabama, 1975, such property must be reported annually between October 1 and December 31 with the county assessing official. Therefore, property subject to abatement should be reported and identified as such each year on Form ADV-40, Business Personal Property Return. This form is available on the department’s website. Failure to provide this information to the local assessing official may delay the credit for the abated taxes.
The governing body is statutorily authorized with granting of the tax abatements to qualifying projects and is subject to geographical or jurisdictional limitations.
The governing body (county or city government), must adopt a resolution granting the abatements for the applicable taxes. The abatements must be embodied in a written abatement agreement between the governing body (county or city government) and the private user. The abatement agreement should specify the following:
An abatement applies to all real and personal property incorporated into the project. However, certain restrictions apply.