The IRS is not supporting the transmission of the 1099-NEC forms to the states in the Combined Federal/State Filing Program for the 2020 tax year.
1099-NECs with Alabama tax withheld should be submitted with the A-3 Annual Reconciliation of Alabama Income Tax Withheld by January 31, 2021.
1099-NECs without Alabama tax withheld may be submitted via paper by March 15, 2021 to:
Alabama Department of Revenue
P.O. Box 327489
Montgomery, AL 36132-7489
The 1099-NEC forms cannot be transmitted via the Combined Federal/State program for the 2020 filing year. However, for the 2021 filing year and forward, the 1099-NEC can be transmitted via the Combined Federal/State program.
For those 1099-NECs with Alabama tax withheld, submit with your A3 Annual Reconciliation. Income would go in the “Other Income” column, not AL wages.
For those without Alabama tax withheld, please submit via paper by March 15 to:
Alabama Department of Revenue
P.O. Box 327489
Montgomery, AL 36132-7489
If your federal identification number changes, you will need to apply for a new state withholding tax account number by filing the Combined Registration/Application available online.
The State of Alabama recognizes the following Federal Code Sections: Section 125 Cafeteria Plan, Section 401K, and Section 403B. For information on other exclusion from gross income, please see page 2 of the Withholding Tax Tables and Instructions for Employers.
Severance pay exemption of up to $25,000.00 is available upon approval from the Department. Please visit the Severance Pay Exemption page. Employees will not receive this exemption unless the Employer applies for the exemption and is approved by ADOR.
Accountants and tax filing services who file withholding tax returns and payments on behalf of employers must register with the ADOR as a bulk filer and must utilize their bulk filer registration when filing withholding tax returns on behalf of their clients. View more information concerning Bulk Filing.
Employers and filing agents who submit 25 or more Form W-2s (and/or Form 1099s with Alabama tax withheld) or who have filed and paid electronically during the year must electronically file this information and the Form A-3 online through My Alabama Taxes (MAT) on or before January 31 of the following year.
One penalty is for the late filing of the withholding tax return and the other penalty is for late payment of the withholding tax. Please see the billing code explanation enclosed with your letter.
