Tax Abatements & Exemptions Procedures
Checklist of Procedures
Abatement of Non-educational Property Taxes, State and Non-educational County and City Sales and Use Taxes
- Determine a site for development. The site must be chosen before an abatement can be granted.
- Subject to geographical or jurisdictional limitations, the Opelika Industrial Development Authority (OIDA) may grant abatements of all non-educational property taxes, state and non-educational county and city sales and use taxes allowed to be abated with respect to private use industrial property.
- The private user should apply for an abatement of state and non-educational county and city sales and use taxes and non-educational property taxes on industrial development property to the Opelika Industrial Development Authority by petitioning the OIDA. To petition, the private user should submit a completed "Combined Application for Abatement" (Form CO:CAA) to the OIDA along with a cover letter outlining the project and the company's desire for an abatement. The application should include a list of all real and personal property for which an abatement is requested. Forms can be downloaded on the Department of Revenue website by following the links to "Tax Incentives," or download the most current Alabama Abatement Booklet (PDF).
- The granting of an abatement by the OIDA will be incorporated into a written abatement agreement between the OIDA and the private user. The abatement agreement drafted by the OIDA will need to specify the following:
- An estimated amount of each abatement
- The maximum exemption period for each abatement
- Projections of the amount to be invested, the number of individuals to be employed (initially and in the succeeding three years), and the payroll
- The Standard Industrial Classification Code Number of the business
- An abatement applies to all real and personal property incorporated into the project and only purchases made after the abatement is granted can be abated.
- For sales and use tax purposes, the abatement shall start on the date which the abatement is granted and shall continue in effect until the entire project is placed in service.
- For property tax purposes, if bonds are issued the abatement shall start on the date the bonds are issued to finance the cost of a private use property; else, the abatement shall start on the date the project is placed in service or such date as specified in the abatement agreement.
- The private user should send a copy of the executed abatement agreement, certified resolution by the granting authority, combined application for abatement (Form CO:CAA), and the application for a certificate of exemption (Form ST:EX-A2) with an original signature via certified mail to the Department of Revenue at the following address within 90 days after the abatement is granted:
- Alabama Department of Revenue
Attention: Abatement Program Administrator
P.O. Box 327001
Montgomery, AL 36132-7001
- Alabama Department of Revenue
- The private user must also send a copy of the abatement agreement via certified mail to the county tax assessing official in Lee County, as well as to the chairman of the Lee County Commission.
- Once the above documents are received by the Department, the Department will issue a Certificate of Exemption to the private user. The primary contractor will then need to complete an application for a certificate of exemption (Form ST:EX-A2) with an attached letter from the company confirming the contractor as their primary contractor. The contractor will then be authorized to extend their abatement to their subcontractors to make purchases in conjunction with the project, for Sales and Use tax purposes.
- Once the Certificate of Exemptions are issued, the Certificates of Exemption will be used to make all purchases of tangible personal property to be incorporated into the project without payment of sales or use tax to the vendor. The certificate holder will not have to file and remit any state sales and use tax returns with respect to the project unless the certificate is used to make a tax-exempt purchase of property which does not qualify for an abatement.
- When local taxes are administered by the Department of Revenue, the certificate holder is required to remit separately that portion of local sales and use taxes which have been earmarked for educational purposes and any local taxes use on purchases which do not qualify for the abatement but were purchased tax-exempt using the exemption certificate.