ALABAMA DEPARTMENT OF REVENUE
SALES, USE & BUSINESS TAX DIVISION
SALES & USE TAX RULE
810-6-1-.58. Electrical Supplies and Equipment Sold to Contractors
and Manufacturers.
(1) Electrical supplies including wire, cable, clamps, outlet fixtures,
conduits, and switches, are building materials which come under the building
materials provisions of Sections 40-23-1(a)(10) and 40-23-60(5). Except
as outlined in paragraph (2), electrical supplies are taxable at the general
rate of sales or use tax upon the sale to, or use by, the person affixing
them to real property, whether that person is a contractor, builder, manufacturer,
or any other property owner. (Sections 40-23-1(a)(10), 40-23-2(1), 40-23-
60(5), and 40-23-61(a))
(2) Whether sold to a contractor or directly to the manufacturer, electrical
equipment used by manufacturers is taxable at the reduced machine rate
of sales or use tax when it is (i) made or manufactured for use on, (ii)
necessary to the operation of, and (iii) customarily used as a part of
or an attachment to a machine used in manufacturing.
- (a) The expressions "made or manufactured for use on," "necessary to
the operation of," and "customarily used" are understood to mean that the
part or attachment must be purchased substantially in the form in which
it will be used by the manufacturer except for the usual and customary
adjustments; that it is a standard part or attachment customarily used;
and, further, that the machine or machinery on which it is used would not
do the work for which designed if it were not so used. This includes all
parts and attachments without which the machine would not do any work.
In addition, it includes parts and attachments designed to increase the
efficiency of the machine.
- (b) Items of electrical equipment including starters, switches, and
circuit breakers which become a part of or an attachment to a machine used
in manufacturing are taxed at the reduced machine rate of sales or use
tax. This equipment must either be attached directly to the machine or
be immediately adjacent to the machine in order to qualify for the reduced
machine rate. (Sections 40-23-2(3) and 40-23-61(b))
(3) Switchboards, control boards and cabinets controlling the general
electrical supply system are not considered to be parts or attachments
of machines used in manufacturing. The general rule is that the switch
which is the direct control for the machine takes the machine rate and
all equipment to that point is taxable at the general rate. (Sections 40-23-2(1)
and 40-23-61(a)) (Readopted through APA effective October 1, 1982, amended
March 10, 1998)
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