HB35 Summary

• Amends Section 40-9-14.1 of the Code of Alabama 1975 to expand the definition of "governmental entity" to include tax-exempt public water or sewer authorities, districts, systems, and boards.

• Allows these water and sewer entities to obtain certificates of exemption from state and local sales and use taxes for construction projects, the same as other governmental entities.

• Establishes an operative date of January 1, 2019 for water and sewer authorities to use exemption certificates, compared to January 1, 2014 for other governmental entities.

• Requires contractors and subcontractors to maintain accurate cost accounting of exempt purchases and file reports with the Department of Revenue as a prerequisite for certificate renewal.

• Imposes civil penalties of at least $2,000 or twice the tax due for intentional misuse of exemption certificates, and allows the Department to bar violators from using exemption certificates for up to two years.