Sales and Use Tax Exemption Guide for Equipment Leasing and Finance

Comments
State of:  Alabama       Exemption: Non-Profit & Charitable

Important to understand:       Alabama imposes a sales tax, a use tax and a rental tax. The sales and use tax is imposed on sales (includes a sale at end of lease) and on Conditional Sales Type Leases. The rental tax is on True Leases and imposed directly on Lessor. The Rental Tax is a separate tax statute that has limited exemptions (amusement related property, interstate commerce, durable medical equipment, intercompany rentals, film rentals, pollution control, sub-leases). Accordingly, several exemptions under the sales and use tax and applicable to Sales and Conditional Sales Type Leases are not available under the rental tax and therefore are not available for True Leases.

Alabama charitable organization exemption is limited to 1) those entities listed in the statute, and 2) only for  Sales and Conditional Sales Type Leases. The charitable organization exemption is not available under the rental tax statue and thus a Lessor must pay rental tax on True Leases to these entities. Click Here for Alabama list of charitable organizations exempt by statute from tax on Sales and Conditional Sales Type Leases.



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