Any business paying wages in Alabama must complete Alabama withholding tax registration with the Alabama Department of Revenue (ADOR) before issuing its first paycheck. Registration happens online through the My Alabama Taxes (MAT) portal, and once you have an account number the state expects returns on its own schedule using its own forms. Miss the first deadline and the penalty can reach 10% of the tax due plus a $50 minimum.
Who Has to Register
Alabama ties its definition of “employer” directly to the federal Internal Revenue Code. If you are an employer for federal tax purposes, you are one in Alabama, regardless of headcount or entity type.1Alabama Legislature. Alabama Code 40-18-71 – Withholding Tax Sole proprietors, corporations, LLCs, partnerships, and nonprofits all qualify. One employee performing work in Alabama is enough to trigger the requirement.
Before you register, be sure the people you are paying are actually employees. The IRS looks at behavioral control, financial control, and the nature of the relationship, and warns that no single factor decides the question.2Internal Revenue Service. Independent Contractor (Self-Employed) or Employee? Misclassifying an employee as a contractor exposes you to back taxes, penalties, and interest at both the state and federal level. Document how you classified each worker.
Wages for services physically performed in Alabama are subject to withholding whether the employee lives in Alabama or not. If an Alabama resident works in another state, you generally still withhold Alabama tax unless the other state’s withholding already covers that income.
What to Gather Before You Register
Have these in front of you when you open the application:
- Federal Employer Identification Number (FEIN). If you don’t have one, apply through the IRS using Form SS-4; the online method issues the number immediately.3Internal Revenue Service. Instructions for Form SS-4
- Legal business name and entity type (corporation, LLC, partnership, sole proprietorship, or other).
- Primary mailing address for the business.
- The exact date wages begin, or began, in Alabama.
- Name, title, and Social Security Number of the responsible party who controls the business’s finances.
How to Register on My Alabama Taxes
Registration runs through myalabamataxes.alabama.gov. From the home page, choose the option to register a new business or obtain a new tax account number. The system walks you through entity type, FEIN, and business details. When it asks which tax types to add, select Payroll Withholding Tax.
After you submit, you create a username and password, enter contact information, and decide whether to grant third-party access, which is useful when an accountant or payroll service will file on your behalf.4Alabama Department of Revenue. How to Register Your Tax Account(s) in My Alabama Taxes ADOR emails an authorization code to complete your first login and assigns your ten-digit Alabama Withholding Account Number along with an access code. Keep both somewhere you can find them; you will need the account number on every return.
Collect Form A-4 From Every Employee
Alabama does not accept the federal W-4 in place of its own withholding certificate. The exemption values on the two forms differ significantly, so every employee must complete a separate Alabama Form A-4 at hire.5Alabama Administrative Code. Alabama Administrative Code 810-3-73-.01 – Withholding Exemption Certificates If an employee never turns in a signed A-4, you must withhold at zero exemptions, which takes the maximum out of each paycheck.
When any employee claims eight or more exemptions, send a copy of that certificate to ADOR within 60 days. Missing that deadline costs $50 per certificate, and an employee who inflates exemptions to reduce withholding faces a $500 penalty.5Alabama Administrative Code. Alabama Administrative Code 810-3-73-.01 – Withholding Exemption Certificates File each A-4 in the employee’s personnel record.
Filing Schedule After You Register
Once your account is open, Alabama expects returns on a two-tier schedule plus an annual reconciliation.
Form A-6, Monthly Return
Form A-6 is required only for the first two months of each calendar quarter, and only when you withhold more than $1,000 in that month. The months that can trigger a monthly filing are January, February, April, May, July, August, October, and November. The deadline is the 15th of the following month.6Alabama Department of Revenue. Payroll Withholding Tax Brochure If your withholding stays at $1,000 or below in a given month, you can hold it until the quarterly return, or remit voluntarily on an A-6 if you prefer not to sit on the money.7Alabama Administrative Code. Alabama Administrative Code 810-3-74-.01 – Withholding Returns and Payments
Form A-1, Quarterly Return
Every employer with a withholding account files Form A-1 each quarter, regardless of amount. It reports all withholding for the quarter minus anything already sent in on Form A-6. Deadlines fall on the last day of the month after each quarter closes: April 30, July 31, October 31, and January 31.7Alabama Administrative Code. Alabama Administrative Code 810-3-74-.01 – Withholding Returns and Payments
Form A-3, Annual Reconciliation
By January 31 each year, file Form A-3 to reconcile the prior calendar year’s withholding. Include a copy of every employee’s W-2. Employers submitting ten or more W-2s must file the entire package electronically through the ADOR website.8Alabama Administrative Code. Alabama Administrative Code 810-3-75-.03 – Annual Returns of Withholding Tax Information
Electronic Filing Threshold
Any employer remitting withholding payments of $750 or more must file and pay electronically through the MAT portal. The rule applies to both monthly and quarterly filings.6Alabama Department of Revenue. Payroll Withholding Tax Brochure
Penalties for Missing a Deadline
Alabama’s penalty structure escalates fast. Failing to file a withholding return on time carries a penalty equal to the greater of 10% of the tax due or $50. Failing to pay the tax due on a monthly or quarterly return also carries a 10% penalty on the unpaid amount. The two stack, so one missed deadline where you neither filed nor paid can cost 20% of the tax plus the $50 floor.
The administrative code cross-references criminal liability for employers who withhold tax from paychecks and then keep it. Once withheld, that money belongs to Alabama.9Alabama Administrative Code. Alabama Administrative Code 810-3-76-.01 – Liability for Tax Withheld
Registrations That Do Not Come With Your Withholding Account
Registering for withholding with ADOR does not cover everything a new employer owes to the state. Two obligations run on separate systems and are easy to miss.
Alabama unemployment tax (SUTA) is administered by the Alabama Department of Labor, not ADOR. New employers pay 2.70% on the first $8,000 of wages per employee, and the rate adjusts over time based on your experience rating.10Alabama Department of Labor. What Is the New Account Rate? You register with the Department of Labor separately.
Alabama also requires you to report each new hire to the state’s Directory of New Hires. Employers with five or more employees must report electronically, transmitting twice a month, spaced 12 to 16 days apart. Employers who receive a waiver from electronic reporting file within seven days of each hire.11Alabama Administrative Code. Alabama Administrative Code 480-1-1-.11 – Electronic Filing of New Hire Data Each report carries the employee’s name, address, Social Security Number, and hire date, along with your business name, address, and FEIN.