(1) Sales to a
foreign government or to its agents for use of a foreign government are subject
to Alabama Sales Tax unless they are immune because of a treaty between the
foreign government and the United States. Alabama tax should be collected in
the absence of proof that the foreign power is immune because of such a
Exemptions of Sales.
(a) Tangible Personal Property Transactions
Exemption. Alabama Sales Tax and Alabama Use Tax does not apply to sales of
tangible personal property to foreign diplomatic and consular officials
identified by the U.S. Department of State or American Institute in Taiwan
(AIT) as exempt from the tax pursuant to treaties or other diplomatic
agreements with the United States.
(b) Lodgings Tax Transactions Exemption.
Lodgings tax does not apply to rooms, lodgings, or accommodations rented or
furnished to foreign diplomatic and consular officials, to the extent that such
persons have been identified by the U.S. Department of State or AIT as exempt
from the tax pursuant to treaties or other diplomatic agreements with the
United States. (U.S. Constitution, Article VI)
Motor Vehicle Transactions Exemptions.
Tax exemptions allowed on vehicle purchases by all diplomatic missions and
members in the United States must be approved or denied by the U.S. Department
of State, Office of Foreign Missions, before the transaction is completed.
Prior to completing the transaction, vendors selling vehicles pursuant to a
diplomatic tax exemption must follow these procedures:
1. The purchaser should present a mission tax
exemption card, a personal tax exemption card, or a protocol identification
card to the seller. Members of the United Nations (UN), Organization of
American States (OAS), World Bank (WB), and the International Monetary Fund
(IMF) requesting a diplomatic exemption on the purchase of a vehicle must
present their personal tax exemption card.
2. The vendor must contact the U.S.
Department of State, Office of Foreign Missions for a determination on the
tax-exempt status of the purchaser.
3. The U.S. Department of State, Office of
Foreign Missions, will determine the tax-exempt status of the purchaser and
provide a letter to the vendor setting forth that determination.
Pursuant to U. S. law, the Taipei Economic and Cultural Representative Office
in the United States (TECRO), the Taipei Economic and Cultural Offices (TECOs),
their designated employees, and their qualifying dependents are entitled to tax
exemption privileges. Accordingly, the American Institute in Taiwan (AIT)
issues tax exemption cards that incorporate the same features and design
elements as the Office of Foreign Mission's tax exemption cards. Other than the
exception noted in (2)(c), persons identified as exempt from taxation pursuant
to treaties or other diplomatic agreements with the United States are issued a
tax exemption card by the U.S. Department of State or AIT which identifies the
bearer as exempt from tax and specifies the extent of the exemption. Tax
exemption cards may be personal tax exemption cards, mission tax exemption
cards, or official tax exemption cards.
Personal Tax Exemption Cards. Personal tax exemption cards bear the photograph
and identification of a duly accredited consulate, embassy employee, or
dependent who is entitled to tax exemption privileges as stated on the card and
are for the personal use of the bearer whose picture appears on the front of
the card. The cards are not transferable and cannot be loaned to any other
person, regardless of that person's eligibility for exemption from taxation.
There is no restriction on the form of payment that can be used with this type
(b) Mission and Official
Tax Exemption Cards. Mission tax exemption cards and official tax exemption
cards bear the photograph and identification of a consulate, or embassy
employee who is the official purchasing agent for that office and are for use
by foreign missions (including TECRO and TECO) to obtain exemption from taxes
on purchases in the United States that are necessary for the mission and
function of the foreign consulate or embassy. The individual pictured is the
point of contact and need not be present at the purchase. However, all
purchases must be paid for with a check, credit card, or wire transfer
transaction in the name of the foreign government or mission, TECRO, or TECO.
The cards may not be used for personal purchases of tangible personal property
or personal rentals of rooms, lodgings, or accommodations.
Taxable Sales, Use, and
Lodgings Transactions. Taxes apply to the following transactions:
(a) Sales of tangible personal property to,
and the rental or furnishing of rooms, lodgings, or accommodations to foreign
diplomatic and consular officials who do not hold a tax exemption card issued
by the U.S. Department of State or the American Institute in Taiwan
(b) Sales of tangible
personal property to, and the rental or furnishing of rooms, lodgings, or
accommodations to persons holding tax exemption cards where their total
purchases in a single transaction do not exceed the minimum level of exemption
as specified on the tax exemption card. With respect to minimum purchase
requirements, the total of all items purchased in a single transaction must
equal or exceed the minimum purchase level shown on the card. For example, if a
foreign official has a card with a minimum purchase requirement of $150, the
official is required to pay sales or use tax on a bill of $145. However, the
same official would be exempt from all sales or use taxes on a bill of $175.
Also, if two foreign officials are traveling together but they have separate
rooms and separate bills, they cannot combine the room bills under one total in
order to qualify for a lodgings tax exemption.
(c) Sales of tangible personal property to,
and the rental or furnishing of rooms, lodgings, or accommodations to nationals
of the United States even though such persons may perform consular functions
for foreign governments.
(5) Receipt Retention of Sales. Sellers
making sales to, or renting or furnishing rooms, lodgings, or accommodations to
foreign diplomatic and consular officials shall retain a copy of the invoice or
other written evidence of the transaction to support any deductions claimed on
their sales, use, or lodgings tax returns for tax-exempt sales or room rentals
to foreign diplomatic and consular officials. These invoices shall show the
name of the purchaser, the name of the mission, the tax exemption number, the
expiration date of the tax exemption card, and the minimum level of exemption
specified on the tax exemption card. When a personal tax exemption card is
presented, the seller may ask the purchaser for an additional form of
identification such as the purchaser's driver's license or his or her
diplomatic or consular identification card, which many holders of personal tax
exemption cards are also issued.
Ala. Admin. Code r.
Amended: June 12, 1978.
Filed September 28, 1982.
Administrative Monthly Volume XXXIII, Issue No. 10, July 31,
2015, eff. 8/5/2015.
Administrative Monthly Volume XL, Issue No. 05, February 28,
2022, eff. 4/14/2022.
Author: Lee Ann Rouse
Statutory Authority: Code of Ala.