Ala. Admin. Code r. 810-6-3-.41.01

Current through Register Vol. 43, No. 1, October 31, 2024

Section 810-6-3-.41.01 - Exemption For Certain Health Care Authorities

(1) The term "health care authority" as used in this rule shall mean any public corporation organized pursuant to Article 11 of Chapter 21 of Title 22, Code of Ala. 1975, and any public hospital corporation reincorporated pursuant to Article 11 of Chapter 21 of Title 22, Code of Ala. 1975.

(2) The sale, purchase, use, storage, or consumption of tangible personal property used in the construction and equipment of any health care facilities for a health care authority, regardless of whether the sale is to the health care authority, its contractor, its subcontractors, or its agent, is exempt from state, county, and municipal sales and use taxes. (Section 22-21-333 ).

(3) The exemption in Section 22-21-333 applies to purchases of materials and equipment used in the construction of a new facility and in the construction of an addition to an existing facility. (AGO, Sessions, March 26, 1996)

(4) To qualify for the exemption in Section 22-21-333, the property purchased must become a part of the facility or the equipment of the facility or must constitute supplies or other items necessary for the day-to-day operation of the facility. Purchases of tangible personal property by the health care authority's contractor, subcontractors, or agent, when the property does not become a part of the facility or the equipment of the facility or does not constitute supplies or other items necessary for the day-to-day operation of the facility, are taxable. Examples of nonexempt items are diesel fuel and repair parts for construction equipment, hand tools, and consumable supply items used by the contractor, subcontractor, or agent.

(5) Notwithstanding the exemption outlined above, an individual, partnership, or corporation organized for profit that is or will be treated for federal income tax purposes as the owner of property to which a health care authority has title to, or a possessory right in, is liable for sales or use taxes as if the for-profit entity held title to the property unless the individual, partnership, or corporation would be entitled to use the property pursuant to a lease or other agreement entered into before May 21, 1992, or would be entitled to use the property at some future time pursuant to an inducement agreement entered into or adopted before May 21, 1992. For-profit entities, however, may qualify for abatements of certain sales and use taxes pursuant to Chapter 9B of Title 40 of the Code of Ala. 1975. Section 40-9B-7 only pertains to private users of private use property. Private user is defined in Section 40-9B-3. Therefore, Section 40-9B-7 does not change the tax exempt status of a non-profit entity for sales and use tax purposes.

Ala. Admin. Code r. 810-6-3-.41.01

New Rule: Filed September 29, 1998; effective November 3, 1998. Amended: Filed February 20, 2001; effective March 27, 2001. Amended: Filed May 26, 2005; effective June 30, 2005. Amended: Filed June 30, 2009; effective August 4, 2009.

Authors: Deborah Lee, Ginger L. Buchanan

Statutory Authority:Code of Ala. 1975, §§ 40-2A-7(a)(5), 11-62-18, 40-9B-7, 40-23-31, 40-23-83.