Have you ever thought that your industry would be considered manufacturing? Probably not, but the Alabama sales and use tax code and State Department of Revenue does just that. You might ask, so what does that mean for me? The Alabama sales and use tax rates are 4% with additional city and county taxes that bring the total sales tax rate to as high as 10% or more in some locations. The sales tax code has carved out some special benefits for industries and businesses considered to be engaged in manufacturing and processing of tangible personal property. Some of those benefits are available to Television, Cable TV and Radio stations. These benefits can reduce the applicable sales and use tax rates as much as 60% to 70% on many assets and materials used in production and distribution of digital/electronic signal.
Since these benefits apply across the board to local taxes as well as the state tax, understanding how local taxes are assessed, which city/county jurisdictions are due to be paid on each transaction and which are not, assures only the appropriate tax is paid and paid to the correct jurisdictions. Vendors often over collect sales and use taxes, collect the wrong jurisdiction’s tax resulting in unnecessarily higher rates being assessed among other errors.
Use tax is the other side of this equation, requiring the consumer/purchaser to self-assess and remit consumer use tax on transactions when the sales tax has not been collected by the vendor. Failure to properly complete accurate self-assessments of state and local use taxes may result in unnecessary overpayments or subject the business to unexpected audit liabilities.
A lifelong resident of Alabama, Warren Maze graduated from Jacksonville State University with Bachelor of Science and MBA degrees. After serving four years active duty with the United States Air Force, Maze accepted employment with the Alabama Department of Revenue’s Sales & Use Tax Division in 1973 and retired from there in 1996.
After retirement from ADOR, he founded Warren Maze, Inc. His firm provided sales & use tax field audit services for 270 cities and counties with assignments throughout the United States.
Fulfilling a longtime ambition, Maze closed the auditing business in 2010 and began providing sales & use tax consulting services assisting taxpayers with sales and use tax compliance, refund recovery and avoidance of unexpected and costly audit liabilities.
