Chapter 9B Property Tax and Sales Tax Abatements

Alabama Department of Revenue

Program Type:

Tax Incentive

Eligible Geography:

Alabama

Summary:

Businesses can apply to cities, counties, and public industrial authorities to abate property and sales tax associated with constructing and equipping a qualifying project. The Tax Incentive Reform Act of 1992 gives cities, counties, and public industrial authorities the ability to abate the following for new and expanding qualifying projects:

State sales and use taxes ;Non-educational county and city sales and use taxes; Non-educational state, county, and city property taxes – up to 20 years (except data processing centers which can be abated for up to 30 years);
Mortgage and recording taxes to which property is conveyed into or out of a public authority, city or county government.

Data processing centers can receive abatements as follows: Property tax abatement for 10 years from and after the date the private use property becomes owned for federal income tax purposes for projects that invest up to $200M within 10 years from the commencement of the project. Sales and use tax abatements can also be abated for the same 10 year period based on the same investment thresholds. Property tax abatement for 20 years from and after the date the private use property becomes owned for federal income tax purposes for projects that invest over $200M but less than $400M within 10 years from the commencement of the project. Sales and use tax abatements can also be abated for the same 20 year period based on the same investment thresholds. Property tax abatement for 30 years from and after the date the private use property becomes owned for federal income tax purposes for projects that invest over $200M within 10 years from the commencement of the project and exceed $400M within 20 years from the commencement of the project. Sales and use tax abatements can also be abated for the same 30 year period based on the same investment thresholds. To receive an abatement for any or all of these taxes, a project must meet certain qualifications and follow certain procedures, as determined by law and regulation.

Abatements are authorized to be granted by the governing body of a: Municipality for private use industrial property located within the corporate limits of the municipality or within the police jurisdiction of the municipality; County for private use industrial property located in the county and not within a municipality or its police jurisdiction, unless consented to by resolution of the governing body of the municipality; and Public industrial authority for private use industrial property located within the jurisdiction of the public authority.

Eligible Recipients:

For-Profit Business

Eligible Recipients Detail:

The qualifying project must constitute an "industrial, warehousing, or research activity", which includes the following: Any of the following trades or businesses in the 2012 North American Industrial Classification System (NAICS), promulgated by the Executive Office of the President of the United States, Office of Management and Budget: 1133 (logging), 115111 (cotton ginning), 2121 (coal mining), 22111 (electric power generation), 221330 (steam and air conditioning supply), 31 (except National Industry 311811), 32, and 33 (manufacturing), 423 and 424 (merchant wholesalers, goods), 482 (rail transportation), 4862 (pipeline transportation of natural gas), 48691 (pipeline transportation of refined petroleum products), 48699 (all other pipeline transportation), 48819 (air transportation support activities), 4882 (rail transport support activities), 4883 (Port authority water transportation support activities (other than 48833)), 493 (warehousing and storage), 511 (publishing industries), 5121 (motion picture and video industries (other than 51213)), 51221 (record productions), 517 (telecommunications), 518 (data processing, hosting, and related services), 51913 (internet publishing, broadcasting, web search portals), 52232 (financial transactions processing, reserve and clearinghouse activities), 54133 (engineering services), 54134 (drafting services), 54138 (testing laboratories), 5415 (computer systems design and related services), 541614 (process, physical distribution, logistics consulting services), 5417 (scientific research and development services), 55 (Management of companies (if not for the production of electricity)), 561422 (in bound call centers only), 562213 (solid waste combustors and incinerators), 56291 (remediation services), 56292 (materials recovery facilities), 611512 (flight training facilities), 927 (space research and technology), 92811 (national security). Headquarters facilities as defined in NAICS 551114 (where at least 50 new jobs are created) Data processing centers (where at least 20 new jobs are created) Renewable energy facilities Research & development facilities Tourist destination attractions The 11 targeted business sectors under the accelerate Alabama Strategic Economic Development Plan adopted in January 2012 by the Alabama Economic Development Alliance, created by Executive Order Number 21 of the Governor on July 18, 2011: Advanced Manufacturing in Aerospace/Defense, Automotive, Agricultural Products/Food Production, Steel/Metal or Forestry Products, Chemicals; Technology in Biosciences, Information Technology or Enabling Technologies; Distribution/Logistics; Corporate Operations

Eligible Purpose:

Building Connectivity; Last Mile Connectivity; Broadband Enabled Device (General)

Eligible Purpose Detail:

Tax abatements are offered in exchange for capital expenses for new and expanding qualifying projects (including upgrades):

-State sales and use taxes
-Non-educational county and city sales and use taxes
-Non-educational state, county, and city property taxes – up to 20 years (except data processing centers -which can be abated for up to 30 years)
-Mortgage and recording taxes for which property is conveyed into or out of a public authority, city, or county government

Capital Investment Requirement: There is no threshold or limiting investment amount for a new abatement project with the exception of projects owned by utilities producing electricity: Projects owned by utilities which produce electricity from alternative energy resources must have capital costs of at least $100,000,000 Projects which produce electricity from hydropower production must have capital costs of at least $5,000,000. The additional capital investment by an industry that is expanding their current facilities in Alabama must be at least: 30% of the original cost of the currently existing industrial property (sum total of the original facilities and equipment and any expansions and additions prior to the current addition); or $2,000,000.