Tax Collection on University Sales
General Rule and Recordkeeping
UA must collect and remit sales taxes on items sold, unless an exemption applies as detailed below in “nontaxable sales”. In the event of an audit, all sales are assumed to be taxable until shown to be otherwise. Banner account codes are used to track taxable vs. nontaxable sales. In addition, departments are responsible for maintaining detailed sales records.
Taxable Sales
Examples of ITEMS SUBJECT TO SALES TAX include:
- Tangible personal property
- Athletic event tickets
- Parking fees for athletic events
- Shipping & handling fees / not based on actual cost of postage
Nontaxable Sales
Certain TYPES OF ITEMS are not subject to sales tax, including:
- Services
- Admission fees/tickets to non-athletic events (such as museums or plays)
- Parking fees (other than for athletic events)
- Shipping costs / separately stated, based on cost of postage
Certain TYPES OF TRANSACTIONS are not subject to sales tax, including:
- Internal transactions – Departmental transfer from one UA department to another. Both areas must be part of UA (i.e. Chart A).
For example, a University Printing sale to Alumni Association would not be considered an internal transaction, because Alumni Association is a separate entity (Chart N).
- Out-of-state sales – For sales shipped outside the State of Alabama, no sales tax is charged. The selling department must retain information to show the shipping address for verification in case of audit.
Certain CUSTOMERS are exempt from sales tax, including the following:
- Customer has an exemption certificate issued by the State of Alabama – (EXM#)
- Customer has a Regulation A permit # issued by the State of Alabama – (8000-RA#)
- Customer is specifically exempt by law – (for example: federal government or State of Alabama government or their agencies; public and private schools in the State of Alabama)
- Customer is purchasing the item for resale in their normal course of business.
NOTE: Being a “nonprofit” or “tax-exempt” entity for federal purposes does NOT automatically indicate that the customer is exempt from sales taxes.
It is the responsibility of the selling department to collect the necessary documentation as proof of the customer’s sales tax exemption. The Alabama Taxable Status Questionnaire form can be used for this purpose.