Alabama Payroll Licensing

To register for employer withholding tax in Alabama, you will need to follow these steps:

1. Determine if you need to register as an employer: In Alabama, you are required to register as an employer if you have employees who work in the state, or if you have employees who are residents of the state but work outside of the state.
2. Obtain a federal employer identification number (EIN): You will need to obtain a federal EIN, which is a unique identification number assigned to your business by the Internal Revenue Service (IRS).
3. Register with the Alabama Department of Revenue (ADOR): Once you have obtained an EIN, you will need to register with the ADOR. Go to https://myalabamataxes.alabama.gov/ , click "Register a business/Obtain a new tax number" and follow the online wizard. When you get to the screen asking which tax types you are applying for, check "Payroll Withholding Tax".
4. Start withholding and remitting taxes: Once you have registered as an employer, you will need to start withholding and remitting state and federal income taxes from your employees' paychecks. You will also be responsible for paying unemployment insurance taxes and any other required taxes.

It is important to note that the process for registering as an employer and withholding taxes may vary depending on the specific circumstances of your business. If you have any questions or need assistance, please get in touch with us for more information.

Online

There is no fee to register for employer withholding tax in Alabama. However, once registered as an employer, you will be responsible for withholding and remitting state and federal income taxes from your employees' paychecks, as well as paying unemployment insurance taxes and any other required taxes.

It is important to note that the process for registering as an employer and paying the required withholding taxes may vary depending on the specific circumstances of your business.

It takes 3 to 5 business days for the ADOR to process your application and issue your new account number(s). 

In Alabama, employer withholding tax is governed by state and federal laws.

At the state level, the Alabama Department of Revenue (ADOR) is responsible for administering the state's tax laws, including those related to employer withholding tax. The ADOR has the authority to collect taxes from employers and to enforce tax laws, including by imposing penalties for failure to register as an employer and pay the required withholding taxes.

At the federal level, employer withholding tax is governed by the Internal Revenue Code (IRC). The IRC sets out the rules for withholding and remitting federal income taxes from employees' paychecks, as well as for paying unemployment insurance taxes and other required taxes. The IRS is responsible for enforcing the IRC and can impose penalties for failure to comply with the federal tax laws.

If you fail to register as an employer and pay the required withholding taxes in Alabama, you may be subject to penalties and fines. The specific penalties that you may face will depend on the specific circumstances of your case, such as the amount of taxes that you owe and whether you made a good faith effort to comply with the tax laws.

Some potential penalties that you may face for failing to register as an employer and pay the required withholding taxes in Alabama include:

1. Failure to file penalties: If you fail to file the required tax returns on time, you may be subject to a failure to file penalty. The amount of this penalty will depend on the amount of taxes that you owe and how late you file your return.
2. Failure to pay penalties: If you fail to pay the required withholding taxes when they are due, you may be subject to a failure to pay penalty. The amount of this penalty will depend on the amount of taxes that you owe and how late you pay your taxes.
3. Interest: If you fail to pay your withholding taxes when they are due, you may also be charged interest on the unpaid amount. The federal interest rate is determined by the IRS and is based on the federal short-term rate plus 3%.
4. Criminal penalties: In some cases, failing to register as an employer and pay the required withholding taxes may result in criminal penalties, including fines and imprisonment.

It is important to note that these are just some of the potential penalties that you may face for failing to register as an employer and pay the required withholding taxes in Alabama. If you are facing these or any other penalties, you should consult with a tax professional or an attorney for advice on your specific situation.

The ADOR estimates it takes over 30 minutes to complete the online application.

1. First, determine if you need to file by using Form SR-2: Application to Determine Liability and https://labor.alabama.gov/docs/forms/uc_sr2_instructions.pdf
2. Register for a state unemployment insurance (SUI) account number at Alabama Department of Labor eGov (Electronic Government Services).

Please note, per an announcement on the ADOL website, that they are becoming more strict with new hire noncompliance: "The Alabama Department of Labor has begun enforcement of the Employer New Hire Reporting Law. To avoid citations, please review your records and report all newly hired (not previously employed or previously employed but has returned to work after being separated for 60 consecutive days) or recalled employees within the last 12 months from the current date. Failure to report new hires in the future may result in the assessment of the $25.00 penalty per occurrence."