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ADOR - Frequently Asked Questions - Employer Construction FeeNonResident Withholding Requirement on Certain Sales

 

Construction Employer Fee Frequently Asked Questions

 

  • What is the purpose of the new fee?

The fee is intended to fund a program for the recruitment and training of new construction craft trade workers in Alabama.

  • What kind of fee is this?

This is a fee paid by licensed contractors (both general and subcontractors) based on the total gross wages paid quarterly to covered employees for the performance of skilled labor under a construction or maintenance contract or job located in Alabama.

  • How is the fee calculated?

The fee is calculated by taking the total gross wages (before deductions) paid during a calendar quarter to covered employees working on a construction or maintenance site in Alabama and multiplying these wages by the fee rate of .0015. As an example, an employer would owe a fee of $150 per $100,000 of covered wages.

  • How is the fee paid?

This fee is to be paid electronically through the department’s website. Upon sign in, contractors will be asked to enter their total gross wages paid to covered construction employees for the quarter. The system will compute the amount of fee due and you will enter your banking information to submit your payment electronically. NOTE: If you have debit block on your bank account, please provide the following information to your bank so that your bank will allow the fee payment(s) to be processed without rejecting: 1522077581 (Company ID #) for Alabama Department of Revenue Payments.

  • When is this fee due?

This fee is due on or before the last day of the month following the end of the quarter. For example: the return and fee for the quarter ending March 31 is due on or before April 30, the quarter ending June 30 is due on or before July 31, the quarter ending Sept. 30 is due on or before Oct. 31 and the quarter ending December 31 is due on or before Jan. 31 of the subsequent year.

  • What employees are included in the Act?

Covered employees include all payroll workers at or below the working foreman level who are performing labor or services for a covered employer at any construction or maintenance site in Alabama.

  • Does this fee include all contractors?

No, this fee does not apply to Home Builders and Licensed Residential Home Builders contracting for home building as defined in Chapter 14A of Title 34 of the Code of Alabama 1975, or those specifically exempt under Chapter 14A of Title 34 of the Code of Alabama 1975 including their subcontractors working on any single family residential projects in Alabama.

  • Which contractors are included in the Act? 

Contractors licensed in Alabama with employees working onsite on a construction or maintenance contract or job located in Alabama including governmental sites or installations.

  • Is there a contract amount?

No, all licensed contractors paying employees for the performance of skilled labor under a construction contract or job located in this state of any amount will be subject to the Fee under this Act.

  • Can this fee be paid with my withholding tax return?

No, the fee must not be paid with or included on a payroll withholding tax form. This fee is owed by the employer and should not be confused with payroll tax withholdings from employees.

  • Is this fee withheld from the wages of employees?

No, this is not a tax on the individual employee or independent contractor but is a fee paid by the contractor-employer based on the total gross quarterly wages paid to covered construction employees for labor or services performed on a construction or maintenance site located in Alabama.

  • Are all wages included?

No, the Act excludes wages paid for labor or service performed by clerical, management, owners, or supervisory employees above the working foreman level or payments to independent contractors. Wages included are those paid to full or part-time skilled craftsmen in the field as well as those of an apprentice or laborer working on the jobsite, whether based on an hourly rate, salary, or otherwise.

  • Will the new fee apply to the wages of employees performing routine maintenance of a commercial or industrial nature at an Alabama jobsite? 

Yes, all licensed contractors will pay the fee on the quarterly gross wages of all covered construction employees performing skilled labor in the field.

  • Does the fee apply to the wages of employees working on a project who are not directly on site, such as the employees of manufacturers, engineering firms or fabricators?

No, the fee does not apply to employees of a manufacturer, engineering firm or fabricator unless directly working on a construction or maintenance site performing installation or other services and who are at or below the working foreman level.

  • Does the new fee apply to employees leased from an employee staffing or leasing agency?

No, the fee applies only to the wages paid for the skilled labor of payroll workers of the employer directly engaged in construction operations at the location of any construction or maintenance site in Alabama.

  • Are there any other exemptions allowed?

The fee does not apply to projects performed outside the state of Alabama or to licensed contractors who receive five percent or less of their primary business from construction services described in either NAICS Code 237 or 238. Contractors will need to allocate the wages of a covered employee who is working on projects both in Alabama and outside Alabama during a quarter.

Updated last: March 23, 2016