HB240 Alabama 2015 Session

Summary

Primary Sponsor

Ken Johnson

Republican

Session

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Income tax withholdings, exemption for no tax liability for prior year or no anticipated tax liability, repealed, Sec. 40-18-73 am'd.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

HB240 repeals the blanket 'no withholding' exemption and requires withholding to be based on Alabama Form A-4 exemptions, with penalties and rules for updating exemptions.

What This Bill Does

The bill removes the option to stop withholding entirely. Employees must use Alabama Form A-4 to claim withholding exemptions (Form W-4 from the federal system is not acceptable). If an employee does not provide a Form A-4, the employer must withhold as if there are zero exemptions. Certificates take effect at the first payroll period after submission and remain in effect until changed, with specific rules for updating exemptions and timing. The bill also adds penalties for inflating exemptions and requires employers to provide the Department of Revenue copies of A-4 forms for employees with eight or more exemptions; penalties apply for late filing of these certificates.

Who It Affects

• Employees: must file Alabama Form A-4 to determine withholding; cannot rely on a blanket exemption; penalties possible for misrepresenting exemptions.
• Employers: must withhold based on the employee's Form A-4 exemptions and adjust withholding when certificates change; must report copies for eight or more exemptions and may face penalties for late filings.
• Alabama Department of Revenue: enforces the new withholding rules, collects exemption certificates, and administers penalties and regulations.

Key Provisions

• Repeals the total withholding exemption, eliminating the option to avoid withholding entirely.
• Requires use of Alabama Form A-4 for withholding exemptions; federal Form W-4 is not acceptable.
• If no A-4 is furnished, the employer must withhold with zero exemptions; exemptions take effect at the first payroll period after submission and continue until changed.
• If an employee’s number of exemptions changes, a new A-4 must be submitted and will affect future withholdings; changes do not take effect for the current calendar year until the new certificate is processed.
• Penalties include $500 for inflating exemptions and a $50 per certificate penalty for employers who fail to timely file copies for eight or more exemptions.
• The commissioner may issue regulations to implement the act.
• Effective date: September 1, 2015.

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