SB244 By Senators Albritton, Stutts, Glover, Allen, Holtzclaw, Livingston, Shelnutt, Chambliss, Williams, Melson, Holley, Ward, Beasley, Smith, Orr, McClendon, Scofield, Sanford, Whatley, Brewbaker and Reed RFD Agriculture, Conservation, and Forestry Rd 1 23-FEB-17

SYNOPSIS: Under existing law the state levies a forest products severance tax on various forest products to provide for conservation of the states’ natural resources.

This bill further defines the types of forest products subject to the forest products severance tax, and the manufacturer’s forest product tax liability, and makes additional technical changes.

A BILL TO BE ENTITLED AN ACT

Relating to forest products severance tax; to amend sections 9-13-80, 9-13-81, 9-13-82, 9-13-84, 9-13-85, 9-13-86, 9-13-87, 9-13-88, 6-13-93, 9-13-103, 9-13-104, and 9-13-108, Code of Alabama 1975; to update definitions, to further define the types of forest products subject to the severance tax, and to streamline language to provide dual options for taxpayers to calculate severance taxes on all forest products; eliminate double taxation of any forest product and the levy of the manufacturers taxation of out of state companies; and clarify that timber or manufacturing byproducts used as fuel are not taxed.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 9-13-80, 9-13-81, 9-13-82, 9-13-84, 9-13-85, 9-13-86, 9-13-87, 9-13-88, 6-13-93, 9-13-103, 9-13-104, and 9-13-108, Code of Alabama 1975 are amended to read as follows:

§9-13-80.

"The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

"(1) PERSON. Such term includes any individual, firm, copartnership, association, corporation, receiver, trustee or any other group or combination acting as a unit.

"(2) DEPARTMENT. The Department of Revenue of the State of Alabama.

"(3) TAXPAYER. Any person liable for taxes under this article.

"(4) PRODUCER. Any person engaging or continuing to engage in this state in the business of severing timber or any other forest products from the soil, whether as owner, lessee, concessionaire or contractor. Such definition shall also include any person who assembles or causes to be assembled any forest product for shipment out of the State of Alabama in an unmanufactured condition.

"(5) FOREST PRODUCTS. Logs, timber, pulpwood, chemical wood, bolts, crossties and switch ties, mine ties, coal mine props, ore mine props, poles, piles pilings, in-woods pulpwood chips, turpentine (crude gum) and stumpwood (tarwood).

"(6) SEVER. To fell, cut or otherwise separate from the soil; provided, that for the purpose of this article, any person who is the owner or lessee of timber and is also the processor Processor thereof or a manufacturer Manufacturer of products derived therefrom shall be deemed the person engaged in severing such timber from the soil, notwithstanding the fact that the severance is made by an independent contractor or otherwise.

"(7) COMMISSIONER. The Commissioner of Revenue of the State of Alabama.

"(8) MANUFACTURER. As applied to forest products suitable for manufacture into lumber, plywood, veneer or other solid wood product, the person who operates the sawmill or plant in which such products are so manufactured into lumber; as applied to pulpwood, chemical wood and bolts, the person who operates the paper or pulp mill, oriented strand board mill, pellet mill chemical plant or other plant in which such forest products are processed; as applied to crossties, switch ties, mine ties, props, poles and piles pilings, the person who purchases from the Producer producer; as applied to turpentine, the person who processes or cooks the crude gum; as applied to stumpwood, the person who operates the plant or retort in which such product is processed.

"(9) CONCENTRATION YARD. A place where lumber is logs or pulpwood, severed in Alabama, are brought or received within the State of Alabama in a green or rough form or condition for manufacturing or for processing or for resale for resale to Processors or Manufacturers or for shipment out of state.

"(10) PROCESSOR. A chip mill or other facility that receives forest products from the Producer and further processes those forest products before delivery to a Manufacturer."

§9-13-81.

"To provide further for conservation of the natural resources of the state by protection of the state's forests forest products and development of the forestry program, there is hereby levied and shall be collected as provided in this article a privilege tax on account of the business activities upon every person engaging or continuing to engage in the state in the business of severing timber or any other forest products from the soil for sale, profit or commercial use whether as owner, lessee, concessionaire or contractor. The privilege tax imposed by this article is in addition to other taxes now levied and shall be known as the forest products severance tax. Said tax, together with interest and penalties imposed by this article, shall be a lien upon the forest products so severed and upon the product or products manufactured therefrom until the tax imposed by this article with respect to such forest products shall have been paid or until such forest products or the products manufactured therefrom shall have been sold by the manufacturer thereof, but the lien of such tax shall not be enforceable against the bona fide purchaser from the manufacturer of any such forest products or of the products manufactured therefrom."

§9-13-82.

"(a) The measure of the forest products severance tax is at the following rates:

"(1) On pine logs severed in Alabama and delivered to a Manufacturer or Concentration Yard for use to produce lumber $0.50, per 1,000 feet board measure lumber tally, or, at the election of the taxpayer, the rate shall be $0.10 per ton (2,000 pounds). Where the timber is sold as logs and is not converted into lumber On pine logs severed in Alabama and delivered to a Manufacturer or Concentration Yard for use to produce products other than lumber in Alabama, the rate shall be $0.75 per 1,000 feet log scale (Doyle rule), except that logs under eight inches in diameter inside the bark at the small end shall be scaled as containing one foot log scale for each foot of length, or, at the election of the taxpayer, the rate shall be $0.10 per ton (2,000 pounds). On pine logs severed in Alabama for transport out of the state, the rate shall be $0.10 per ton (2,000 pounds).

"(2) On hardwood, cypress, and all other species of logs severed in Alabama and delivered to a Manufacturer or Concentration Yard for use to produce lumber lumber, $0.30, per 1,000 feet board measure lumber tally, or, at the election of the taxpayer, the rate shall be $0.065 per ton (2,000 pounds). Where the timber is sold as logs and is not converted into lumber On all other species of logs severed in Alabama and delivered to a Manufacturer or Concentration Yard for use to produce products other than lumber in Alabama, the rate shall be $0.50, per 1,000 feet log scale (Doyle rule), except that logs under eight inches in diameter inside the bark at the small end shall be scaled as containing one foot log scale for each foot of length, or, at the election of the taxpayer, the rate shall be $0.065 per ton (2,000 pounds). On all other species of logs severed in Alabama for transport out of the state, the rate shall be $0.065 per ton (2,000 pounds).

"(3) On pulpwood, chemical wood, and bolts, $0.25, per standard cord of 128 cubic feet, or, at the election of the taxpayer, $0.10 per ton (2,000 pounds) on pulpwood severed in Alabama and delivered to the Manufacturer, Concentration Yard or Processor. On pulpwood transported out of the state, $0.10 per ton (2,000 pounds) for pulpwood severed in Alabama.

"(4) On crossties, $0.015 per piece, or, at the election of the taxpayer, $0.15 per ton (2,000 pounds), and on switch ties, $0.025 per piece, or, at the election of the taxpayer, $0.17 per ton (2,000 pounds).

"(5) On mine ties and coal mine props, $0.125 per 100 pieces, or, at the election of the taxpayer, $0.15 per ton (2,000 pounds).

"(6) On pine ore mine props, $0.75 per 1,000 feet log scale (Doyle rule) and on hardwood ore mine props, $0.50 per 1,000 feet log scale (Doyle rule), except that props under eight inches in diameter at the small end shall be scaled as containing one foot log scale for each foot of length, or, at the election of the taxpayer, $3.125 per 1,000 lineal feet, or, $0.15 per ton (2,000 pounds), regardless of species.

"(7) (4) On piling pilings and poles, $1.875 per 1,000 board feet (Doyle scale), or, at the election of the taxpayer, $0.205 per ton (2,000 pounds) on pilings and poles severed in Alabama and delivered to a Manufacturer or Concentration Yard. On pilings and poles severed in Alabama and transported out of the state, $0.205 per ton (2,000 pounds).

"(8) On turpentine (crude gum), $0.15 per barrel of 400 pounds.

"(9) (5) On stumpwood (tarwood), $0.125 per ton (2,000 pounds) on stumpwood severed in Alabama and delivered to a Manufacturer. On stumpwood severed in Alabama and transported out of the state, $0.125 per ton (2,000 pounds).

"(10) (6) On in-woods pulpwood chips, $0.25 per 190 cubic feet, or, at the election of the taxpayer, $0.10 per ton (2,000 pounds) on chips produced in the woods from pulpwood severed in Alabama and delivered to the Manufacturer or Concentration Yard. On in-woods pulpwood chips, produced from pulpwood severed in Alabama and transported out of the state, $0.10 per ton (2,000 pounds).

"(7) On residual pulpwood chips, $0.10 per ton (2,000 pounds) on chips produced from residues by a Manufacturer from logs severed in Alabama and re-sold to another Manufacturer or transported out of state.

"(b) There is also levied a privilege tax against the processor of the forest products or the manufacturer Manufacturer using the forest products in an amount equal to 50 percent of the tax on the severer as set out above. The privilege tax shall be collected in the same manner as the forest products severance tax on the severer is collected and shall be known as the forest products manufacturers tax. This tax is levied not only upon processors or manufacturers on Manufacturers located only within this state but also upon out-of-state processors or manufacturers who obtain the timber within this state and ship it outside the state for completion of the manufacturing process. It is the legislative intent that this privilege tax is not to be levied in any manner upon the person owning the land from which the forest products are severed nor upon the person actually cutting the forest products but it is levied upon the processor processing the forest products or manufacturer Manufacturer using that uses the forest products in the manufacturing process.

"(c) Round wood pulpwood Pulpwood on which the forest products severance tax has been paid shall not be subject to an additional tax when converted into pulpwood chips, but the additional forest products manufacturers tax levied by subsection (b) of this section shall be paid by the Manufacturer. person, firm, or corporation utilizing the chips in a manufacturing process.

"(d) Manufacturers that pay the forest products severance tax on logs that elect to utilize the per ton rate shall be deemed to have paid the total forest products severance tax due and no additional forest products severance tax shall be due on the parts of the log that are converted to residual pulpwood chips. Manufacturers that pay the forest products severance tax on logs that elect to utilize the lumber tally rate or Doyle’s Rule shall be responsible for paying the forest products severance tax for the parts of the log that are converted into residual pulpwood chips. Regardless of the method used to pay the forest products severance tax, the additional forest products manufacturers tax levied by subsection (b) of this section shall be paid by the Manufacturer utilizing the residual pulpwood chips in a manufacturing process.

"(e) A Manufacturer may establish its entitlement to the exemption from forest products severance tax provided by subsections (c) or (d) of this section by obtaining a certificate from the seller providing that such seller is a Manufacturer or Processor that is registered with the Department to remit forest products severance taxes, and any Manufacturer who obtains such certificate shall not be held liable for any forest products severance tax on the pulpwood chips or residual pulpwood chips purchased from the seller.

"(f) It is the intent of the Legislature to encourage the use of forest based renewable energy. To the extent a Manufacturer utilizes or sells wood residue to be used as a form of energy in conjunction with a forest product manufacturing process, the Manufacturer may deduct the amount of forest products severance tax and the forest products manufacturers tax attributable to the volume of wood consumed as energy from the amount due as imposed in this article."

§9-13-84.

"The taxes imposed by this article, and any other taxes imposed on the severance of forest products, shall be due and payable quarterly to the Department State Department of Revenue and shall, when collected, be paid by the Department such department into the State Treasury. When so paid into the State Treasury, all such taxes shall be credited by the Treasurer to a special fund which is hereby created and which shall be known as the Special State Forestry Fund of the State of Alabama, which fund shall be disbursed under the supervision of the State Forester, subject to the restrictions embodied in this article, for the purpose of carrying out the statewide forestry program as provided by law and for no other or different purposes. Not less than 85 percent of the taxes collected under and by virtue of this article shall be expended for forest protection. No portion of such fund shall revert to the General Fund of the state at the end of any fiscal year, and any surplus shall be allowed to accumulate from year to year and be disbursed as exigencies of the statewide forestry program may require.

"There is hereby continuously appropriated the receipts from the taxes levied in this article to the State Forestry Commission for the use of the State Forestry Commission. Such amount of money as shall be appropriated for each fiscal year by the Legislature to the Department Department of Revenue with which to pay the salaries, the cost of operation and the management of the Department said department shall be deducted, as a first charge thereon, from the taxes collected under and pursuant to said article; provided, however, that the expenditure of said sum so appropriated shall be budgeted and allotted pursuant to Article 4 of Chapter 4, Title 41 and limited to the amount appropriated to defray the expenses of operating said department the Department for each fiscal year; provided further, however, that for the fiscal years ending September 30, 1989, and September 30, 1990, the portion of the receipts allocated to the Forestry Commission is hereby appropriated for use in their fire control program."

§9-13-85.

"The percentage of the funds expended under this article for forest protection for the protection of farm forest lands shall not be less than the percentage that the area of the farm forest lands of the state is of the total area of the forest lands of the state. The percentage of the funds expended under this article for each four-year period for the forest protection in any county shall not be less than 50 percent of the amount of the tax collected on forest products severed from the soil in such county together with the equal portion of any available matching funds."

§9-13-86.

"Every manufacturer of forest products Manufacturer and Processor shall, within 30 days after the expiration of each quarter annual period expiring, respectively, on the last day of March, June, September and December of each year, file with the Department Department of Revenue of the State of Alabama a statement under oath, on forms prescribed by the Department said Department of Revenue, showing the kinds of forest products and the gross quantity of each manufactured during the preceding quarter annual period by the Manufacturer or Processor such manufacturer of forest products, showing the county or counties in which such products were severed from the soil and showing the gross quantity, if any, of such forest products severed from soil outside the State of Alabama and such other reasonable and necessary information pertaining thereto as the Department Department of Revenue may require for the proper enforcement of the provisions of this article. At the time of rendering such quarter annual reports, the Manufacturer or Processor manufacturer of forest products shall pay to the Department Department of Revenue the taxes imposed by this article with respect to all forest products severed from the soil in the State of Alabama and embraced in such report; provided, that in the case that any lumber is logs or pulpwood are sold or delivered to a Concentration Yard concentration yard as is defined in this article, then the taxes provided for in this article shall be reported and paid by the owner or owners of such Concentration Yard concentration yard to the state Department instead of the manufacturer, but it shall be the duty of the owner or owners of any such concentration yard to collect the tax in all cases from the seller.

"It shall be unlawful for the owner or owners of any such concentration yard to fail or refuse to collect the tax from the seller as aforesaid. It shall also be unlawful to refund or offer to refund all or any part of the tax collected by the owner of the concentration yard from a seller or to absorb or advertise directly or indirectly that the concentration yard will absorb or refund to the seller all or part of said tax. Any persons, firms, associations, corporations or copartnerships violating any of the provisions of this section or this article in said respect shall be guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not less than $50.00 nor more than $100.00, or by imprisonment in the county jail for not more than six months or by both such fine and imprisonment, and each act in violation of the provisions of this article shall constitute a separate offense."

§9-13-87.

"Every producer Producer of forest products who shall ship the same out of the State of Alabama in an unmanufactured condition or who shall sell such product for shipment outside the State of Alabama in an unmanufactured condition shall, within 30 days after the expiration of each quarter annual period expiring, respectively, on the last day of March, June, September and December of each year, file with the Department Department of Revenue a statement under oath, on forms prescribed by the Department Department of Revenue, showing the kinds of forest products and the gross quantity thereof severed from the soil in Alabama and shipped or sold for shipment to points outside the State of Alabama in an unmanufactured condition, the county or counties in which such products were severed from the soil and such other reasonable and necessary information pertaining thereto as the Department Department of Revenue may require for the proper enforcement of the provisions of this article. At the time of rendering such quarter annual reports, such producer of forest products shall pay to the Department Department of Revenue the taxes herein imposed by this article upon the forest products embraced in said report."

§9-13-88.

"It shall be the duty of every Manufacturer and Processor manufacturer of forest products in this state and of every Producer producer who shall ship forest products out of the State of Alabama in an unmanufactured condition and of every Concentration Yard concentration yard as is defined in this article where any lumber is logs or pulpwood are sold or delivered to it to keep and preserve suitable records with the items separated into the various items on which privilege taxes are levied in this article, and such other books or accounts as may be necessary to determine the amount of taxes for which he is liable under the provisions of this article. Said books and records shall be kept and preserved for a period of three years, and all such records shall be open for examination at any time by the Department department or its duly authorized agent."

§9-13-93.

"The taxes provided in this article shall become delinquent after the date fixed for the filing of the quarter annual report to be filed with in the office of the Department Department of Revenue."

§9-13-103.

"If the Department department finds that a person liable for taxes under any provisions of this article designs quickly to depart from the state or to remove his property therefrom, or to conceal himself or his property therein or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect such tax unless such proceedings are brought without delay, the Department department shall cause notice of such finding to be given such person together with a demand for an immediate return and immediate payment of such taxes. Thereupon such taxes shall become immediately due and payable. If such person is not in default in making such return or paying any taxes prescribed by this article and furnishes evidence satisfactory to the Department department under regulations to be prescribed by the Department department that he will duly return and pay the taxes to which the Department's department's finding relates, then such tax shall not be payable prior to the time otherwise fixed for payment. If such person fails to appear and make such showing, then the Department department shall make such assessment final and execution may immediately issue as is provided in this article."

§9-13-104.

"When requested by the Department commissioner, all transporters of forest products out of, within or across the State of Alabama shall be required to furnish the Department said commissioner, under oath and upon forms prescribed by the Department him, any and all information relative to the transportation of such forest products, and such reports shall contain, in addition to other required information, the name of the shipper, the date of shipment, the quantity and type or character of such forest products, stated in units or measurements applicable to such forest products, the point of receipt or shipment and the point of destination; provided, that in the case of common carriers using bills of lading or way bills prescribed or approved by the interstate commerce commission, such common carriers shall only be required to keep the usual records at the office or offices in this state where such records are usually kept."

§9-13-108.

"Any and all taxes upon the excise or privilege of severing, processing, or manufacturing of forest products shall inure to the State of Alabama and shall be exercised only in a uniform, statewide tax. No tax shall be levied by local law or by any political subdivision of the state, including counties, cities, special taxing authorities or other taxing instrumentalities, upon the excise or privilege of severing, processing or manufacturing of forest products in Alabama."

Section 2. The amendments to Section 9-13-82, Code of Alabama 1975, by this act shall apply retroactively to all open tax periods and all periods for which a preliminary or final assessment of tax could be or was entered pursuant to Section 40-2A-7, Code of Alabama 1975, or any successor general or local law. No refunds shall be due or issued pursuant to this act with respect to those periods prior to the effective date of this act.