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EPY: Allow Alabama Withholding Exemption for Payments to Retirees & MSRRA Employees (Doc ID 2765972.1)

Last updated on APRIL 30, 2021

Applies to:

PeopleSoft Enterprise HCM Payroll for North America - Version 8.9 to 9.2 [Release 8.9 to 9]
Information in this document applies to any platform.


In Alabama, retirees are allowed to have a specific dollar amount of tax to be withheld, and otherwise not have taxes taken.

This differs from the current functionality of the State Tax Table for Alabama because current employees are not allowed to have this option.
When attempting to find a way to make this happen for the retirees, the payroll team could not choose Special Tax Withholding of "Maintain Taxable Gross" or add a dollar value to the additional tax withholding.
They also ran into issues of the Marital Status flipping to a no-longer valid value of X when attempting this, causing an additional issue.

The customer needs to be able to support their retirees' requests for State Tax Data for Alabama.

The issue can be reproduced at will with the following steps:
1. For a Retiree, Update Employee to have Special Withholding Tax Status 'Maintain Taxable Gross'
2. Note that the Marital Status Defaults to 'X'
3. Save
4. Error occurs.


Alabama eliminated the option of an employee claiming exemption from Alabama withholding tax.  This change was delivered in Tax Update 2015-D.


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