Alabama Administrative Code › Title 810 - ALABAMA DEPARTMENT OF REVENUE › Chapter 810-3-71 - WITHHOLDING TAX › Section 810-3-71-.01 - Employers Required To Withhold Tax From Wages

Current through Register Vol. 42, No. 9, June 28, 2024
(1) Each calendar quarter every withholding
			 agent shall deduct, withhold, and pay over to the Department of Revenue on or
			 before the last day of the month following the close of each quarterly period a
			 tax, computed as indicated in Rule
			 810-3-71-.02 on the compensation paid within each quarter for personal services of covered
			 employees. For employers required to submit payment monthly see Rule
			 810-3-74-.01.
(2) All employers or withholding tax agents
			 are required to register with the Alabama Department of Revenue prior to
			 withholding Alabama income tax. Employers must register online for an Alabama
			 withholding tax account number via the Department's website.
(3) Similar to the provisions of
			 26 U.S.C §
									3504, the Alabama Department of Revenue also
			 allows common-pay agents to register with the Department and withhold Alabama
			 income tax on behalf of employers or other withholding tax agents. Common-pay
			 agents are required by
			 26 U.S.C §
									3504 to make written request to the Internal
			 Revenue Service for permission to act as a common-pay agent.
(4) Alabama income tax must be withheld on
			 the total wages subject to Alabama income tax.
(5) An employer who is a resident of Alabama
			 is required to withhold tax from the wages of his or her employees who are
			 residents of Alabama, regardless of whether the wages are earned in Alabama or
			 outside the State; except that if the employer is withholding tax for the state
			 in which the employee is working, the employer is not required to withhold tax
			 for Alabama.
(6) An employer who is
			 a resident of Alabama is required to withhold tax from the wages of employees
			 who are not residents of Alabama only to the extent that the wages are earned
			 in Alabama. In other words, a nonresident employee of an Alabama employer
			 should have Alabama income tax withheld only on wages earned in
			 Alabama.
(7) An employer who is not
			 a resident of Alabama is required to withhold tax from the wages of employees
			 to the extent that such wages are earned in Alabama, whether the employee is a
			 resident or a nonresident of the State. A nonresident employer is not required
			 to withhold Alabama income tax on wages paid for services performed outside of
			 Alabama, whether such wages are paid to a resident or to a nonresident of
			 Alabama.
(8)Public Law 91-569
			 provides that the withholding tax of an employee of a water or air carrier that
			 does not earn more than 50% of their compensation from said carrier in any one
			 state shall be required only for the State of the employee's
			 residence.
(9) Beginning July 6,
			 1990, the Amtrack Reauthorization and Improvement Act (P.L.
			 101-322) provides that no part of the
			 compensation paid to an employee of an interstate railroad subject to the
			 jurisdiction of the Interstate Commerce Commission (ICC) may be subject to the
			 income tax laws of any state except the state of the employee's residence when
			 such employee performs regularly assigned duties in more than one state. The
			 bill also precludes the taxation of compensation paid by an interstate motor
			 carrier subject to the jurisdiction of the ICC or to an employee of a motor
			 private carrier performing services in two or more states except by the state
			 of the employee's residence. For purposes of the motor carrier, "employee" is
			 as defined in §204 of the Motor Carrier Act of 1984 (  40 U.S.C. 2503
			).
(10) The burden and duty is
			 placed upon the employer to determine the place of residence of each employee,
			 and to determine the exact part of each employee's earnings which is
			 attributable to the services performed within Alabama and to apportion such
			 earnings accordingly for the purpose of withholding the tax.
(11) An employer and employee may agree to
			 the withholding of Alabama income tax in addition to the amounts specified in
			 this rule. The employee may request such withholding by proper indication on
			 Form A-4, or any other means acceptable to the employer. If the employer
			 withholds such additional amounts from the employee's wages, such action
			 constitutes agreement to withhold the additional amounts, and to submit such
			 additional amounts at the same time and in the same manner that other
			 withholding is submitted. An agreement for additional withholding continues in
			 effect until canceled or modified by the employer and/or employee.
(12) Any person paying winnings subject to
			 withholding is required to withhold income tax from such winnings in the same
			 manner as if the person receiving such winnings was an employee and the payer
			 was an employer.
Authors:
Ewell Berry, Ann F. Winborne, CPA,
				  Kathleen Abrams, Neal Hearn, CPA
Statutory Authority:
Code of Ala.
				  1975
, §§
										40-2A-7(a)(5),
				  40-18-70,
				  40-18-91,
				  41-10-44.8(a)(2),
				  41-10-44.8(b).