Earlier this year, Alabama Department of Revenue Chief Administrative Law Judge William Thompson issued a ruling in which he held that logging and forestry equipment used in the field as demonstration equipment by our client Warrior Tractor & Equipment Company, Inc. was subject to sales tax under the "withdrawal for use" provision of the Alabama Code. This despite the fact that all of the equipment in question was subsequently sold by the taxpayer and sales taxes collected from the ultimate consumers of the equipment in question. Under that scenario, the equipment would have been taxed twice.
Last week, after the taxpayer timely filed an Application for Rehearing on the issue, Judge Thompson issued his Second Preliminary Order on Taxpayer's Application for Rehearing, in which he reversed his original opinion on the issue and determined that the taxpayer was not subject to sales tax under the "withdrawal for use" provision of Alabama law for its use of the demonstration equipment in the field. On rehearing, Judge Thompson was provided with additional clarifying information that made it clear that the taxpayer did not profit from the use of the demonstration equipment in the field. Thus, Judge Thompson correctly determined that the "withdrawal for use" provision was not applicable and ordered that the Department of Revenue's tax assessment against the taxpayer be reduced accordingly.
No Final Order has been rendered in the matter, so it is unknown at this time if the Alabama Department of Revenue will choose to appeal Judge Thompson's decision.
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