This provision says which severed materials are excluded from the severance tax, which sales and transfers are taxable, and when certain minerals, on-site movements, fill material, chert, waste material, and direct purchases by government entities are exempt.
(a) The term severed material, as defined in subdivision (9) of Section 40-13-51 shall not include lime or limestone used for agricultural purposes or for pollution control or abatement purposes, nor rock dust used for settling coal dust in underground mines or similar uses, nor any natural minerals used for the purpose of producing portland cement, nor processed sand used in the foundry cores, mold, and linings, nor clay that produces lightweight aggregate, severed materials that are further processed into a finished aggregate or limestone product without being transported on a public road, marble and marble by-products, iron ore, quartzite, coal, oil, and natural gas and the severance of marble and marble by-products, iron ore, quartzite, coal, oil, and natural gas shall not be subject to the provisions of this article. (b) The tax levied by this article shall apply to all severed material severed from the ground within this state and sold as tangible personal property, regardless of the place of sale or the fact that delivery may be made outside the county, except that no tax shall be due on any such minerals that are sold to a purchaser for use outside the state provided such minerals are not transported on public roads in Alabama. Records relating to minerals purchased for use outside the state, including method of delivery, shall be available for verification and audit purposes to the department and the department shall make the records available to the county commission of the county from which the materials were severed upon request of the county commission. (c) Notwithstanding the provisions of subsection (b), or any other provisions in this article to the contrary: (1) Any severed material severed from the earth by an operator or producer and moved from one place to another on the same site, or transported to another site owned by the same operator or producer shall not be considered a severance thereof for purposes of taxation. (2) Any severed materials or any other kind of material when severed and used for fill by an operator, producer, or any other person, whether from the same construction site, job site, borrow pit, or any site other than a commercial quarry shall be exempt from the severance tax levied by this article. (3) Chert shall be exempt from the severance tax levied by this article, including any county or municipality owned and operated chert facility. (4) Severed materials which are sold, delivered, or transferred between separate legal entities are subject to the tax regardless of any common ownership or other affiliation between the producer and the purchaser. (5) A producer who severs material from the earth and sells the severed material to the first purchaser without the materials being transported on a public road shall be exempt from the payment of the tax on the sale, provided that the materials will later be processed into a finished aggregate or limestone product for resale. In such instance, the tax shall be levied on the finished aggregate or limestone product made from such exempt material and shall be remitted by the first purchaser who shall be subject to the provisions of this chapter. The severance tax shall not apply to severed material that is wasted by any manufacturing process provided the material is not transported on a public road in this state and is not sold to another entity. (6) The federal government and the State of Alabama, along with their agencies and political subdivisions, including municipalities, counties, and city and county school boards, are sovereign governmental entities. Direct purchases by sovereign governmental entities are not subject to the tax hereunder. (d) Any severed material which has been severed and on which any county severance tax has accrued prior to October 1, 2004, in the county in which the severance has occurred shall be exempt if such tax has been paid.