Updated January 26, 2023
What we'll cover:
- What information OnPay needs from you
- What state and local taxes and filings OnPay handles for Alabama employers
- Where you can find the tax account numbers needed
- How to authorize OnPay as a Third Party Administrator in Alabama
- Paying employees in other states?
Why is this important?
For employers who pay employees in Alabama, the state will require state income tax. Use this guide to learn what’s required to start running payroll while keeping compliant with state payroll tax regulations. Click on the topic below to learn more.
What information OnPay needs from you
Use this checklist to make sure you’ve covered everything required to set up your account as a Alabama employer so OnPay can accurately file and pay taxes on your behalf:
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To do: |
What is this? |
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Make sure your business is registered with the Alabama Department of Revenue |
Allows your business to file and pay withholding taxes in Alabama |
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Make sure your business is registered with the Alabama Department of Labor |
Allows your business to pay required unemployment insurance in Alabama |
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Provide OnPay with your Alabama State Withholding ID and deposit schedule |
The employer identification number issued by the Alabama Department of Revenue (Ex: R000123456) |
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Provide OnPay with your E-File Sign-On ID, and E-File Access Code, and TPA Password |
Allows OnPay to file and pay taxes on your behalf in Alabama. |
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Provide OnPay with your Alabama Unemployment Account Number |
A 10-digit number unique to your account with the Alabama Department of Labor. |
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Provide OnPay with your Alabama Unemployment (SUI) Rate and Alabama Employment Security Assessment Rate (ESA) Rate |
A tax rate you receive annually from the Alabama Department of Labor. |
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Authorize OnPay as a Third Party Administrator with AL DOL |
For OnPay to be able to file and pay taxes on behalf of your business, you will need to submit a Power of Attorney form |
What state and local taxes and filings OnPay handles for Alabama employers
OnPay handles the filing of all state and local taxes for businesses in Alabama, including:
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Type of Tax |
Form ID |
Form Name |
Frequency |
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Withholding
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Form A-6 |
Employer’s Monthly Return of Income Tax Withheld |
Monthly |
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Form A-1 |
Employer’s Quarterly Return of Income Tax Withheld |
Quarterly |
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Form A-3 & W-2s |
Annual Reconciliation of Alabama Income Tax Withheld filed with state W-2s |
Annual |
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Unemployment |
Forms UC-CR-4 and UC-10-R |
Alabama Quarterly Contribution and Wage Report |
Quarterly |
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Other |
New Hire Report |
Alabama New Hire Reporting Form |
As required |
Local Taxes:
All city and county rates are those given to the League by survey and should be verified with the appropriate entity for updates.
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Attalla 2% Auburn 1% Bear Creek 1% Beaverton 1% Bessemer 1% Birmingham 1% Brilliant 1% Fairfield 1% Gadsden 2% Glencoe 2% |
Goodwater 0.75% Guin 1% Hacklebug 1% Haleyville 1% Hamilton 1% Irondale 1% Leeds 1% Lynn 1% Macon County 1% Midfield 1% Mosses 1% |
Mountain Brook 0% Opelika 1.5% Rainbow City 2% Red Bay 0.5% Shorter 1% Southside 2% Sulligent 1% Tarrant 0.5% Tuskegee 2% Wadley 1% |
Where you can find the tax account numbers needed
If you are an existing employer who has previously run payroll in the Alabama, you likely already have the IDs and online accounts needed for OnPay to process your tax filings.
If you are a new employer in Alabama, you will need to register your business with the Alabama Department of Revenue and Alabama Department of Labor. This must be completed for OnPay to be able to file and pay your Alabama taxes.
Withholding Tax Account Number and E-File Sign-On ID/Access Password:
Existing Alabama Employer:
- You can find your Withholding Tax Account Number and your E-File Sign-On ID and Access Code on the notification letter you received from the Alabama Department of Revenue.
- If you have misplaced this letter, please get in touch with the Alabama Department of Revenue at (334) 242-1300 for withholding tax assistance.
New Alabama Employer: Register with the Alabama Department of Revenue
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- Click here and follow the instructions for registering your business
- Note: You must have already registered with the Alabama Secretary of State. For more information on registering with the Secretary of State please call 334-242-5324.
- Once you register online through the Department of Revenue, you will receive a letter in the mail in 3-5 business days with the following information:
- Alabama Withholding Tax Account Number
- E-File Sign-On ID
- E-File Access Code
- TPA Password
Unemployment Account Number, Unemployment Tax Rate, and Alabama Employment Security Assessment Rate (ESA) Rate
Existing Alabama Employer:
- You can find your Unemployment Account Number on the Tax Rate Notice (Form UC-216F) or Quarterly Contribution and Wage Report (Form UC-CR4).
- Your unemployment tax rate can be found in Box 6 of the Tax Rate Notice. New employers generally have a rate of 2.7% for SUTA with a wage base of $8,000.
- Your Employment Security Assessment (ESA) rate can be found in box 7 of the Tax Rate Notice.
New Alabama Employer: Register with the Alabama Department of Labor
- Click here and follow the instructions to register your business.
- You will need to register with this department if you have employees that work in Alabama. If your business is located out of the state, but some of your employee's primary work location is in Alabama, you will need to register with this agency.
- Note: Employers are not required to register with the Alabama Department of Labor until you have paid $1500.00 in wages during a calendar quarter, or had at least one employee working 20 or more different weeks during a calendar year.
How to authorize OnPay as a Third Party Administrator in Alabama
OnPay works with government entities on your behalf, reporting new hires to state labor departments, calculating tax rates, and filing financial reports. To do this effectively, you will need to add OnPay as your third party agent.
If you established a third-party password, please provide it to us. If you have not established a password, you are not required to set one up. If you're unsure whether you've established a password follow these steps:
Granting TPA access to the Department of Revenue
- Log into your MAT Account
- Navigate to Manage My Profile
- Select Other Actions
- Under "Access Management", click Manage third-party access to my accounts
- If Allowed is set to "No" click Yes (If you've established Third-party password, it will be displayed here)
- Default access: Third Party
- Default account: File & Pay
- Ensure that "Third-Party Log-ons Allowed/Change Third-Party Password" is set to Yes
Is "Third-Party Log-ons Allowed/Change Third-Party Password" set to "No"?
Note: If "Third-Party Log-ons Allowed/Change Third-Party Password" is not allowed, OnPay will be unable to securely access your account. To correct this, click the No hyperlink. You will then be directed to the Change Third-Party Access page, where you can:
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- Click the blue triangle beside "Would you like to enable others to access your accounts?", and select Yes.
- Create a third-party password.
Password requirements:
- 8-16 characters in length
- Must contain one letter (ABCabc) and one number (123)
This password should be different than the password you use to access your MAT account. We will not need this password to access your account. We will access your account using your account number, E-File Sign-On ID, and the E-File Access Code you provide.
Power of attorney
You will also need to complete an Alabama Power of Attorney form. Follow the instructions in this article to do so.
Once you have the following information, please email it to hello@onpay.com:
- DOR: E-File Sign-On ID/E-File Access Code & TPA Password
- Completed Alabama DOL POA found here.
Paying employees in other states?
If you operate in multiple states or just have employees working from home across a state line, it's important to file the correct state forms for those workers. See what forms we file in the states where you pay employees.
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