ALABAMA DEPARTMENT OF REVENUE
SALES, USE & BUSINESS TAX DIVISION
SALES & USE TAX RULE
810-6-1-.138. Rebuilding of Tracks, Idlers, and Rollers.
(1) The rebuilding of tracks, idlers, and rollers belonging to others is a
service and the receipts from this service by the repairman-dealer are not subject
to sales or use tax. The repairman-dealer shall pay sales or use tax to the
supplier on purchases of materials used in rebuilding tracks, idlers, and rollers
belonging to others.
(2) Sales of rebuilt tracks, idlers, and rollers by the repairman-dealer are
subject to sales or use tax. The repairman-dealer shall compute sales or use
tax on the total sales price and collect the tax from the person to whom the
rebuilt item is sold. (Sections 40-23-1(a)(6) and 40-23-60(10))
(3) Where a repairman-dealer (i) rebuilds tracks, idlers, and rollers that
are part of the repairman-dealer's own stock of goods for sale and (ii) rebuilds
tracks, idlers, and rollers belonging to others, the following shall apply:
- (a) Sales or use tax shall be paid by the repairman-dealer to the supplier
on all purchases of materials used in rebuilding the tracks, idlers, and rollers
unless the repairman-dealer elects to claim the exemption provided by Section
40-23-1(a)(9)k for materials purchased or withdrawn for use in rebuilding
tracks, idlers, and rollers which are part of the repairman-dealer's stock
of goods for sale.
- (b) If the repairman-dealer elects to claim the exemption in Section 40-23-1(a)(9)k,
all materials becoming a part of the rebuilt tracks, idlers, and rollers shall
be purchased at wholesale tax-free by the repairman-dealer and the repairman-dealer
shall maintain suitable records to distinguish between the materials used
in rebuilding the tracks, idlers, and rollers offered for sale by the repairman-dealer
and the materials used by the repairman-dealer in rebuilding the tracks, idlers,
and rollers of others. If suitable records are maintained, the repairman-dealer
shall collect and remit sales tax on sales of rebuilt tracks, idlers, and
rollers in accordance with paragraph (2) and shall compute and pay sales tax
on the cost of the materials withdrawn and used in rebuilding tracks, idlers,
and rollers belonging to others.
- (c) In the event suitable records are not kept by the repairman-dealer to
determine which materials are used in rebuilding tracks, idlers, and rollers
offered for sale by the repairman-dealer, then all materials used by the repairman-dealer
shall become a taxable withdrawal by the repairman-dealer. The sales tax due
on withdrawals by the repairman-dealer shall be computed on the purchase price
or cost to the repairman-dealer of the materials withdrawn for use. (Section
40-23-1(a)(10))
(4) Where any used track, idler, or roller which is a part of an automotive
vehicle, truck trailer, semi trailer, or house
trailer is taken in trade, or in a series of trades, as a credit or part payment
on the sale of a new or rebuilt track, idler, or roller, the sales or use tax
shall be paid on the net difference, that is, the price of the new or used track,
idler, or roller sold less the credit for the used track,
idler, or roller taken in trade. See Rule 810-6-1-.22 entitled
Barter, Exchange, Trade-In. (Section 40-23-2(1)) (Adopted July 16, 1964, amended
July 6, 1977, amended August 10, 1982, readopted through APA effective October 1, 1982, amended
July 9, 1998)
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