Alabama Administrative Code
Title 810 - ALABAMA DEPARTMENT OF REVENUE
Chapter 810-3-73.1 - PROVISIONAL CONSTRUCTION EMPLOYERS
Section 810-3-73.1-.02 - Compliance Requirements And Procedures Concerning Provisional Construction Employers
Current through Register Vol. 43, No. 02, November 27, 2024
(1) A provisional construction employer is defined in Section 40-18-70, Code of Ala. 1975, and Rule 810-3-70-.03. For purposes of this regulation, the party contracting with a provisional construction employer shall be referred to as the contractor.
(2) Section 40-18-73.1, Code of Ala. 1975, and Rule 810-3-73.1 -.01 require a provisional construction employer to provide a bond to the Alabama Department of Revenue and specify the proper format and the required amount of the bond.
(3) The bond must be transmitted to the Alabama Department of Revenue with a coversheet, which provides:
(4) The bond coversheet must provide a statement, signed by the owner, partner, corporate officer or member of the provisional construction employer which authorizes the Alabama Department of Revenue to disclose the Alabama withholding tax filing, reporting, and payment compliance of the provisional construction employer to either the contractor, surety or financial institution named on the bond coversheet, as required in order to administer Section 40-18-73.1, Code of Ala. 1975.
(5) Provided the provisional construction employer has registered for a withholding tax account number and upon receiving an acceptable bond instrument and a properly completed bond coversheet from the provisional construction employer, the Alabama Department of Revenue will issue a Notice of Compliance to the provisional construction employer.
(6) The provisional construction employer shall provide the contractor with the Notice of Compliance prior to the contractor making the first withdrawal or payment to the provisional construction employer.
(7)
(8) The contractor will be required to retain all affidavits and compliance notices as required by Departmental Rule 810-3-70-.02 and shall make the contractor records available to the Alabama Department of Revenue.
(9) If the construction employer does not provide the contractor with a Notice of Compliance or Affidavit of Provisional Construction Employer Exemption, the contractor must retain from the payments made to the construction employer an amount equal to ten percent of the contract amount. Unless an extension is approved by the Alabama Department of Revenue, the retained amount must be remitted to the Alabama Department of Revenue for the payment of Alabama withholding taxes owed by the construction employer within thirty days of the effective date of the contract entered into between the contractor and the construction employer.
(10) The Alabama Department of Revenue will periodically review the Alabama withholding tax reporting, filing, and payment compliance of the provisional construction employer during the twelve months following the issuance of the Notice of Compliance.
(11) If the bond instrument is cancelled, expires, or is deemed unacceptable by the Commissioner of Revenue prior to the construction employer no longer being deemed a provisional construction employer, and a replacement bond instrument is not received by the Department within 15 days of the cancellation or expiration of the bond instrument, the provisional construction employer will be deemed in noncompliance of Section 40-18-73.1, Code of Ala. 1975 and the Notice of Compliance will be revoked. The provisional construction employer and the contractor will be notified of the revocation of compliance and the contractor will be required to retain an amount equal to ten percent of the remaining total contract amount, as stated in the contract between the contractor and the provisional construction employer, for payment of the provisional construction employer's Alabama withholding taxes, interest and penalties due the State of Alabama. Unless an extension is approved by the Alabama Department of Revenue, the retained amount must be remitted to the Alabama Department of Revenue within thirty days of receiving the revocation of notice of compliance from the Commissioner of Revenue.
(12) If the Department of Revenue determines that a construction employer falls under the provisional construction employer requirements, and is not in compliance with Section 40-18-73.1, Code of Ala. 1975, the Department of Revenue will notify the construction employer and the contractor that the construction employer is not in compliance with the bond requirements. Upon receipt of a notice of noncompliance from the Department of Revenue, the contractor will be required to retain an amount equal to ten percent of the remaining total contract amount, as stated in the contract between the contractor and the provisional construction employer, for payment of the provisional construction employer's Alabama withholding taxes, interest and penalties due the State of Alabama. Unless an extension is approved by the Alabama Department of Revenue, or the Department notifies the contractor that the provisional construction employer has come into compliance, the retained amount must be remitted to the Alabama Department of Revenue within thirty days of receiving a notice of noncompliance from the Commissioner of Revenue.
(13) If the provisional construction employer fails to comply with the requirements of filing and remitting all withholding taxes, interest and penalties, when due and demanded by the Alabama Department of Revenue, the department will make demand on the surety or financial institution for the payment of the amount of unpaid withholding taxes, interest and penalties due by the provisional construction employer.
Authors: Ed Cutter and Kelly Graham
Statutory Authority: Code of Ala. 1975, §§ 40-18-73.1 (Act 2007-199), 40-2A-7(a)(5).