Current through Register Vol. 43, No. 02, November 27, 2024
(1)
Building Materials.
(a) The term "building
materials," as used in the Alabama Sales and Use Tax laws, means all tangible
personal property, including any device or appliance used by builders,
contractors, or landowners in making improvements, additions, alterations or
repairs to real property in a way that the tangible personal property becomes
identified with a part of realty.
(b) Includes any tangible personal property
used in making repairs, alterations, or additions to real property such 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, air conditioning
systems, built-in fans, heating systems, flooring, 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 that becomes a part
of real property.
(2)
Builders, Contractors, and Landowners.
"Builders", "contractors", and "landowners" mean and include
any person, firm, association, or corporation making repairs, alterations, or
additions to real property.
(3) Taxable Transactions. Sales of building
materials to contractors and builders that do not sell the building materials
they use are taxable under Sales and Use Tax laws. Building materials purchased
by builders, contractors, or landowners for use in adding to, repairing, or
altering real property are subject to either Sales or Use Tax at the time of
purchase. The courts have stated:
(a) "It
would seem that the business done by building contractors generally has been
considered to, be rendering service rather than selling materials at retail to
the owner of the building or land. As to what amounts to a sale at retail
within sales tax acts the statutes and the courts seem to endeavor to lay the
tax on the last sale before the use or consumption of the goods or articles
sold." (State Board of Equalization v. Stanolind Oil and Gas Company,
Wyoming.)
(b) "A contractor who
buys building material is not one who buys and sells - a trader. He is not a
dealer, or one who habitually and constantly, as a business, deals in and sells
any given commodity. He does not sell lime and cement and nails and lumber.
Sales to contractors are sales to consumers." (State v. J. Watts Kearny &
Sons, Louisiana.)
(c) "Under the
contracts before us in the case, plaintiffs agreed to build sewers and
buildings requiring the use of sand, gravel, cement and steel. They were the
persons using these materials, even though after their metamorphosis they
became part of a structure whose title vested in the Sanitary District of
Chicago. Under these circumstances it would be unreasonable to characterize the
transfer of the materials incorporated in the completed structures as a sale."
(Herlihy Mid-Continent Company v. Nudelman, Illinois.)
(4) A device or appliance becomes a fixture
and a part of the real property to which it is connected when it is built into
or attached to a structure in a way that its removal would substantially damage
or deface the structure.
Where the removal of the device or appliance would not
substantially damage or deface the structure to which it is connected the
following factors must be considered:
(a) Actual Connection with or Attachment to
Real Property. To become a part of real property, the device or appliance must
have some physical connections such as: bolts, screws, nails, cement piping,
cable; or by contact.
1. Contact can be by
reason of great weight or bulk, no additional attachment is required.
2. Where the device or appliance is necessary
to make complete or useable something which is real property.
3. By attachment to another device or
appliance which has become a part of the real property.
(b) Appropriateness to the Use or Purpose of
the Real Property to Which Connected. The use or purpose of the device or
appliance must become an element of the use or purpose of the real property to
which it is connected.
(5) Exceptions. This rule is not intended to
apply to cook stoves, refrigerators, washing machines, and portable heaters,
acquired for the personal use of householders or tenants which may be removed
without material damage to the buildings in which they are used. §
40-23-1, Code of
Ala.1975.
(6)
Application of Machine Rate. Tangible personal property designated as "building
materials" are not classified as machines or parts or attachments for machines
unless items can be identified at the time of purchase as a part or an
attachment for a machine used in manufacturing, designed and manufactured for
such use, customarily so used, and necessary to the operation of the completed
machine.
(a) Bulk items such as lumber,
random or stock length structural steel, brick, paint, and common nails do not
come within the classification.
(b)
Prefabricated processing tanks, steam boilers, and steel when purchased
prefabricated to special design for a machine part do come within the machine
rate. When the landowner or contractor purchases the materials to make a boiler
or tank, tax must be paid either directly to the seller or the department.
(Lone Star Cement Corporation v. State, 175 So. 399; Layne Central Company v.
Curry, 8 So. 2d 829; State v. Wilputte Coke Oven Corporation, 37 So. 2d 197.)
§
40-23-1, Code of Ala.
1975.
Author: Lee Ann Rouse
Statutory Authority:
Code of Ala.
1975, §§
40-2A-7(a)(5),
40-23-1,
40-23-31,
40-23-83.
