SB20 Alabama 2015 1st Special Session

Summary

Primary Sponsor

Tim MelsonSenator

Republican

Session

First Special Session 2015

Title

Income tax withholdings, exemption for no tax liability for prior year or no anticipated tax liability, repealed, Sec. 40-18-73 am'd.

Summary

The bill repeals the blanket no-withholding exemption for Alabama income tax, requiring withholding and directing taxpayers to file returns to claim refunds.

What This Bill Does

It removes the option for an employee to certify no liability in the prior year and no anticipated liability for the current year to stop withholding. Employees would need to file an Alabama income tax return and claim any refund they are owed. The bill requires using Alabama Form A-4 (not the federal Form W-4) for exemptions and sets rules for when exemptions take effect, change, or expire. It also imposes penalties for inflating exemptions and for employers who fail to file required exemption certificates, and specifies effective dates for these changes.

Who It Affects

• Employees who previously claimed a total exemption from withholding will no longer be able to avoid withholding and must file an Alabama tax return to claim refunds if due.
• Employers must withhold taxes according to standard exemptions, use Alabama Form A-4, manage changes to exemptions, and face penalties and reporting requirements (e.g., copying certificates for eight or more exemptions).

Key Provisions

• Repeals the total withholding exemption in 40-18-73; no longer allows withholding waivers based on no liability certificates.
• Requires use of Alabama Form A-4 for exemptions; federal Form W-4 is not acceptable.
• Withholding exemption certificates take effect at the start of the first payroll period after submission and continue until a new certificate takes effect; old certificates may stay in force for wages paid before a status date.
• If exemptions change, employees must submit a new certificate; the new certificate cannot take effect in the same calendar year.
• Employees may be penalized ($500) for inflating their exemption number; employers must report certificates for eight or more exemptions and face a $50 per certificate penalty if not filed within 60 days.
• Effective dates: exemption certificates received after September 30, 2015 apply to wages on/after January 1, 2016; the act is part of the Fraud Prevention Act.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation