Alabama Amends Numerous Sales Tax Policies, December 2014
- Nov 5, 2014 | Gail Cole
The Alabama Department of Revenue has announced that several tax policies will be amended, effective December 4, 2014. Several changes are related to the medical industry, and one pertains to direct mailings of printed materials. The changes impact Alabama sales and use tax and exemptions.
The exemption for durable medical equipment is extended to rental and leasing tax. Under the amended rule, “any item used for the treatment of illness or injury or to replace all or part of a limb or internal body part purchased by or on behalf of an individual pursuant to a valid prescription and covered by and billed to Medicare, Medicaid, or a health benefit plan shall be exempt from state, county, and municipal sales, use [and rental and leasing] taxes.” This includes prosthetic and orthotic devices, medical supplies such as catheters, and durable medical equipment.
Also amended is a rule relating to the transfer or dispensing of ophthalmic materials, which include eyeglass frames, lenses, and contact lenses. These are considered retail sales and are therefore subject to sales tax when sold to the ultimate consumer, both when opticians or optometrists (etc.) manufacture the items and when they purchase them for resale.
An amendment clarifies when sales tax applies direct mailings of printed material. When printers are required under the sales agreement to mail printed materials to addresses:
- Printers located in Alabama owe sales tax on printed materials mailed to Alabama addresses.
- Printers located in Alabama do not owe sales tax on printed materials mailed to addresses outside of Alabama.
- Printers located outside of Alabama owe use tax on printed materials mailed to Alabama addresses.
Pending and adopted amending rules are available on the Alabama Department of Revenue website.
Automated sales tax software as a service (SaaS) helps businesses manage sales tax in Alabama and other states. Learn more.