Individual & Corporate Income Tax

• Do I need a withholding tax account number?

  If you are an employer with employees working in the state of Alabama, you will need to register with the Department of Revenue for a withholding tax account number. If you are an Alabama employer with Alabama residents working outside the state of Alabama, you will need to withhold Alabama income tax on those residents unless you are withholding tax for the state in which the employee is working in. For more information on this issue, please see page 2 of the Withholding Tax Tables and Instructions for Employers at revenue.alabama.gov. To obtain a withholding tax account number, employers must file the Combined Registration/Application available online. NOTE: “Account numbers assigned after April 9, 2007 will consist of 10 characters beginning with an “R”.  Please make sure that the payroll software provider or program that you will be using is aware of this change.

• My employer is not withholding tax or will not provide me with a W2 form. What should I do?

  Contact the Withholding Tax Section at (334) 242-1300 or your local Taxpayer Service Center. Taxpayer Service Center information can be obtained at revenue.alabama.gov/servcenters. Please include the following information: employer’s name, address, phone number and number of employees.

• I overpaid my withholding tax, how should I handle this?

  You can apply for a refund on Form IT:RE-2WH which is available from the Department. Copies of this form are not acceptable. Refunds generally take anywhere from 6-8 weeks. If you prefer to take a credit, complete line 5 on your next withholding tax return. The report on which a credit is claimed must be accompanied by a brief explanation of where the overpayment occurred in order for the Department to verify the overpayment. Please see the coupon book for further instructions. Any return showing credit without proper documentation will be denied the credit.

• How do I amend Form W-2?

  To amend Form W-2, you must obtain Form W-2C from Internal Revenue Service and submit a copy to the Alabama Department of Revenue. For Alabama withholding tax changes, the W-2C should be submitted with a corrected Form A-3 marked “Amended.” Corrections to items other than Alabama income tax (i.e. wages, social security number, FICA taxes, name corrections, etc.) do not require an amended Form A-3.

• I would like to begin filing and paying my withholding taxes electronically, where do I begin?

  The Alabama Department of Revenue now offers an electronic service for filing and remitting withholding tax. The Alabama Paperless Tax Filing and Payment Progam is a FREE service. This program is an Internet-based and telephone system developed to provide taxpayers with the capability of filing withholding tax returns and initiating payment of taxes from a personal computer or telephone.

To learn more about this service and how to file and pay electronically, visit our Web Site at http://revenue.alabama.gov/Withholding/efiling.html and follow the instructions. If you are unable to access your account via the Internet, you may use the Department's telephone filing system by calling 1-800-828-1727. In order to access the new program via the Internet or telephone, you will need your Sign ON ID and Access Code provided by the Department.

• I have an active withholding tax account, but currently don’t have any employees. Do I need to file monthly or quarterly returns?

  You will need to file a zero quarterly return in order to avoid receiving a delinquent notice for failure to file. You will not need to file a zero monthly report. If you do not plan on hiring any employees in the near future, you may file Form A-1 and mark the return as Final on line 1 to place your account on inactive status. This will eliminate the need to file the zero returns. You may also inactivate or reactivate the account at a later time by calling the Withholding Tax Section at (334) 242-1300.

• How can I check on my individual income tax refund?

  If you have questions concerning your individual income tax refund, call the Refund Hotline at 1-800-558-3912 or visit our Online Refund Status page for more information. The Withholding Tax Section does not handle individual income tax.

• My check for withholding tax has not cleared my bank, what should I do?

  The Withholding Tax Section handles a large volume of checks. The only way to know if a check has been received is when the check has cleared your bank. If you use the preprinted coupon book provided by the Department, your check will be processed immediately. All other forms must be checked for accuracy and take longer to process.

• We have a Section 125 Cafeteria Plan available to our employees, does the State of Alabama recognize this exclusion from gross income?

  The State of Alabama recognizes the following Federal Code Sections: Section 125 Cafeteria Plan, Section 401K, and Section 403B. For information on other exclusion from gross income, please see page 1 of the Withholding Tax Tables and Instructions for Employers.

• I have hired a sitter or someone to help in my home, am I required to withhold Alabama income tax from their wages?

  Domestic help in the home is exempt from the withholding tax regulations. Also exempt from withholding tax are merchant seaman, duly ordained ministers, and agricultural employees. For more information on these classes of exemption, please see page 1 of the Withholding Tax Tables and Instructions for Employers.

• My federal identification number has changed, do I need a new state withholding tax account number?

  If your federal identification number changes, you will need to apply for a new state withholding tax account number by filing the Combined Registration/Application available online.

• I am a sole proprietor and have opened another business, do I need another withholding tax account number?

  As a sole proprietor you do not need to apply for another withholding tax number for opening another business unless that business is operating under a different federal identification number than the sole proprietor. A sole proprietor will file all his business withholding under one state number.

• Why are there 2 penalties on this notice from the Department of Revenue?

  One penalty is for the late filing of the withholding tax return and the other penalty is for late payment of the withholding tax. Please see the billing code explanation enclosed with your letter.

• How are OTR (over the road) drivers taxed?

  Truck drivers that operate in two or more states will fall under the jurisdiction of the Amtrak Reauthorization Act (Public Law 101-322) and will be taxed on their state of residency.

• We have employees who will be receiving severance pay. Is this income taxable to the recipient?

  Severance pay exemption of up to $25,000.00 is available upon approval from the Department. For additional information concerning the severance pay exemption please visit the following link: http://revenue.alabama.gov/incometax/esp.html

• How do I change my banking information for electronic filing?

  An electronic check will appear when a return is filed electronically that shows an amount of tax due. The banking information can be changed by entering the new banking information over the current banking information on the electronic check.