However, the Circuit Court ordered that employers continue to withhold the .45 percent tax while the Alabama Department of Revenue appealed the decision. Calculate your Alabama net pay or take home pay by entering your pay information, W4, and Alabama state W4 information. For calendar year taxpayers and taxpayers with a fiscal year other than June 30, the due date is the 15 th day of the 4 th month after the beginning of the taxable year. After a few seconds, you will be provided with a full breakdown of the tax you are paying. To find out more about the EFTPS, please read our article. Alabama Payroll Taxes 11 Steps to Compliance in the Dixie State. Below, we have highlighted a number of tax rates, ranks, and measures detailing Alabama’s income tax, business tax, sales tax, and property tax systems. Use the Alabama paycheck calculators to see the taxes on your paycheck. Gaebler Ventures. 2021 W-4 Help for Sections 2, 3 and 4 (Latest W-4 has a filing status line, but no allowance line. Alabama Salary Paycheck and Payroll Calculator Calculating paychecks and need some help? Below is a state-by-state map showing tax rates, including supplemental taxes and workers’ compensation. If you own a small business in Alabama, you are responsible for computing, withholding, and remitting Alabama withholding tax. Keeping good payroll records will make that process a lot easier. The Yellowhammer State has a progressive income tax system with three different tax rates. It does not matter which state your employees live in. Option 2: Payroll Software Saves AL Businesses Time and Money by Calculating the Taxes Automatically EzPaycheck Payroll software is a good choice for many small business employers. Once you set up company and employee, ezPaycheck will calculate Alabama income tax … The definitions of “employers” and “employees” under Alabama's law are the same as for federal tax purposes, and changes to the federal Internal Revenue Code are automatically adopted. Alabama withholding tax exemptions include, for example, merchant seamen, agricultural and domestic employees, and duly ordained ministers. State and local payroll taxes are governed at the state and local level, and every state’s payroll tax rules are different. Licensing requirements for Alabama employers. Alabama has income taxes that range from 2% up to 5%, slightly below the national average. Alabama Payroll Services will assist you with all administration task needs of your small business payroll services and all payroll taxes. A standard workweek is 40 hours, or 8 hours a day. Alabama has the second lowest average effective property tax rate in the country, and its income tax rates range from just 2% to 5%, lower than most other states that have an income tax. Alabama is a state with relatively low income tax and effective property tax rates. Alabama's income tax are progressive, meaning higher earners will be subject to higher income tax rates. Alabama Payroll Tax Details. Search Engine MarketingSocial Marketing OptimizationBusiness Forms Business in the Jungle - Business in Fiction - NegotiatingRadio Ad Costs Newspaper Advertising RatesCity-Specific Resources for Entrepreneurs Small Business InsuranceGlobal EntrepreneurshipChina & Entrepreneurs. The tax rate ranges from 2% to 5%. Payroll Cycle . City-Specific Resources for Entrepreneurs. The payroll deferment only applies to people making less than $2000 weekly, or $104,000 yearly after taxes. Alabama payroll? Some cities and counties may have local income taxes. They work for you, you pay them. How does Alabama rank? Alabama payroll taxes can be hard to understand, pay & file. State Wage and Tax Rates for 2020. The Heart of Dixie has a progressive income tax rate, in which the amount of tax withheld depends on which of its three tax brackets you fall under. Given the complexity of filing Alabama payroll taxes, it's a good idea to outsource your payroll processing. Congratulations on your decision to become a new employer in Alabama! Alabama Employer (Payroll & Withholding Tax) Registration Service. How does Alabama rank? Zenefits Help Center Taxes Managing Taxes With Zenefits Payroll Registering for State Payroll Taxes Alabama Payroll Tax and Registration Guide Registering for State Payroll Taxes Updated October 19, 2020 -- For Administrators and Employees This Alabama Payroll Taxes Calculator is used to calculate the taxes for the Alabama Withholding, Unemployment and Employment Security Enhancement Taxes for both employee and employer. Alabama follows the federal minimum wage rate of $7.25 per hour. Taxes in Alabama. Alabama Payroll Services will assist you with all administration task needs of your small business payroll services and all payroll taxes. What is a local income tax? We are equipped to handle all your needs, leaving you to … Birmingham 2021 Payroll Tax - 2021 Alabama State Payroll Taxes. Explore our full range of payroll and HR services, products, integrations and apps for businesses of all sizes and industries. Some pre-tax deductions reduce only wages subject to federal income tax, while other deductions reduce wages subject to Social Security and Medicare taxes, as well. If so, help us out by posting a comment below to let us know what we can do to improve this article. You will need to register with your local government if you do business in any of these localities: Attalla, Auburn, Bear Creek, Beaverton, Bessemer, Birmingham, Brilliant, Fairfield, Gadsden, Glencoe, Goodwater, Guin, Haleyville, Hamilton, Leeds, Lynn, Macon County, Midfield, Mosses, Opelika, Rainbow City, Red Bay, Shorter, Southside, Sulligent, Tarrant, and Tuskegee. 2021 Alabama local income taxes We have information on the local income tax rates in 4 localities in Alabama. Sign up today for a free, no-obligation 30-day trial. Withholding Formula >(Alabama Effective 2020)<. Thanks! 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. Alabama Payroll & Tax Services, Vestavia Hills, Alabama. Alabama Income Tax Withholding Because Alabama and federal law vary in the number of exemptions permitted, employees must use the state form A-4 and may not use the federal W-4 as a substitute. Alabama Payroll Taxes and Withholding Information: Employer Registration — Alabama employers must register with the Alabama Department of Revenue and the Alabama Department of Labor . All rights reserved. Yes, all employees who are Alabama residents pay personal income tax, including hourly employees. Payroll Overview. Once you set up company and employee, ezPaycheck will calculate Alabama income tax for you automatically. New employers generally have an initial rate of 2.7%. Please check with your state and federal government for full compliance. Alabama, like most states, imposes a state tax on personal income. If the return and payment are delinquent, the two penalties will be added together. Whether an employee is a resident or nonresident of Alabama determines whether the employee is subject to income tax withholding in the state. If you continue to receive this message, please contact MAT Support. Withholding Formula >(Alabama Effective 2020)< Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages. Withholding Tax Please contact us with any question you may have concerning employee Withholding Tax at 334-242-1300 REGISTER FOR YOUR TAX ACCOUNT NUMBERS ONLINE Online Business Tax Registration System (My Alabama Taxes) Withholding Tax Tables and Instructions Withholding Tax Tables and Instructions for Employers and Withholding Agents (Revised January 2021) Employer … withholding taxes) in addition to Federal payroll taxes. Employee Withholding Allowance Certificate — New employees should complete the Alabama Withholding Exemption Certificate . Working Hours. Payroll taxes aren’t the only thing to exclude from employees’ paychecks. Calculating Employer Payroll Taxes In addition to the taxes you withhold from an employee’s pay, you as the employer are responsible for paying certain payroll taxes as well: FICA Matching: You are required to match the employee’s FICA tax withholding, which means your company will pay 6.2% tax for Social Security and 1.45% tax for Medicare. Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. Staying on top of federal tax rates and minimums is one thing—juggling local ones, especially if you’re a multistate employer, is even harder. Federal law and guidance on this subject should be reviewed together with this section.. You will be required to keep employee payroll records for at least three years. Just pay them whatever’s on their invoice, but remember that you’ll need to send each contractor a 1099 form at the end of the year. You can look this up online or find it on the Tax Rate Notice mailed by the AL Department of Labor. Reciprocal tax agreements allow residents of one state to work in other states without having taxes for that state withheld from their pay. The penalty for late payment of withholding tax is 10% of the payroll taxes due. 103 likes. You can make electronic payments through the MAT website. Tax and License Administration Division Office Number: 205- 254-2198. My Alabama Taxes My Alabama Taxes is currently unavailable. Using our Alabama Salary Tax Calculator. Free Federal, Alabama and Local Paycheck Withholding Calculator. With our expertise we can take care of your payroll and accounting needs quickly and effectively. The credit will be the amount of tax charged by the nonresident state or the tax that would have been charged by the resident state, whichever is less. Alabama Payroll Taxes Now that we’re done with federal taxes, let’s talk about Alabama state taxes, shall we? You must retain each employee’s completed Form I-9 as long as the individual works for you. You can simply provide your employer with a required document If you work in a state that has reciprocity with your home state. These taxes are calculated and reported differently, depending on the laws of the particular states where your employee lives … The penalty for late payment of withholding tax is 10% of the payroll taxes due. The .45 percent Jefferson County occupational license tax was declared unconstitutional by the Alabama Circuit Court in December 2010. It does not matter which state your employees live in. Summary. 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. Fourteen states including Alabama allow local governments to collect an income tax. Box 1927Pelham, AL 35124, DOTHAN Service CenterPO Box 5739Dothan, AL 36302-5739, GADSDEN Service CenterPO Drawer 1190Gadsden, AL 35902-1190, HUNTSVILLE Service CenterPO Box 11487Huntsville, AL 35814-1487, MOBILE Service CenterPO Box 160406Mobile, AL 36616-1406, MONTGOMERY Service CenterPO Box 327490Montgomery, AL 36132-7490, MUSCLE SHOALS Service CenterPO Box 3148Muscle Shoals, AL 35662-3148, TUSCALOOSA Service CenterPO Box 2467Tuscaloosa, AL 35403-2467. Unlike most other states, Alabama does not require employers to pay withholding taxes on a regular schedule, such as monthly or quarterly, for an entire calendar year. There is a fixed Employment Security Assessment rate of 0.06% for all employers. Overtime . What are my state payroll tax obligations? Alabama new employers need to register with the Department of Revenue for a withholding tax account number for state income taxes (SIT). In addition, any single withholding tax payment of $750 or more must be filed electronically. Alabama defines wages for state unemployment insurance (SUI) tax purposes as every form of compensation paid for personal services. Square Payroll processes the following per the frequency below to the listed state agencies: For more information, please read our help article, “What Employers Should Know About Employee Payroll Records”. Please try again later. Deduct any pre-tax withholdings. In addition to payroll penalties, you will be charged interest. The Department of Labor will assign your unemployment insurance tax rate. You have a business and you have employees. Federal law and guidance on this subject should be reviewed together with this section. Please try again later. Stay updated with a Alabama Payroll service that knows your local Alabama Payroll tax laws. Fast, easy, accurate payroll and tax, so you save time and money. The state sales tax of 4% is also low, but local rates can more than double what you pay in sales tax in some cities. New employers in Alabama need to register with the Alabama Department of Labor for a state unemployment insurance (SUI) tax account number. See Common Law Test. Instead, employers are required to make payments monthly for those months in which more than $1,000 is withheld, and otherwise to pay quarterly. Use Gusto’s salary paycheck calculator to determine withholdings and calculate take-home pay for your salaried employees in Alabama. Below is everything you need to know about state tax … 2021 W-4 Help for Sections 2, 3 and 4 (Latest W-4 has a filing status line, but no allowance line. State of Alabama Tax Accounts: Register With Alabama Department of Revenue View Details Alabama new employers need to register with the Department of Revenue for a withholding tax account number for state income taxes (SIT). Want to learn more about this topic? To learn more about applying for an EIN, read our help article, Although it is not required, we recommend you enroll in the Electronic Federal Tax Payment System (EFTPS). A local income tax is a special tax on earned income collected by local governments like counties, cities, and school districts. We apologize for the inconvenience. Payroll. Option 2: Payroll Software Saves AL Businesses Time and Money by Calculating the Taxes Automatically EzPaycheck Payroll software is a good choice for many small business employers. Detailed Alabama state income tax rates and brackets are available on this page. From Alabama to Wyoming, we’ve got you covered. We've got the information you need to know about Alabama's payroll taxes. Alabama Payroll Taxes Payroll Tax Rates. Employees in Alabama fill out form A4, Employee's Withholding Tax Exemption Certificate, to be used when calculating withholdings. Save money and don’t sacrifice features you need for your business. Alabama defines wages for state unemployment insurance (SUI) tax purposes as every form of compensation paid for personal services. In addition to state payroll tax (State Unemployment Tax, or SUTA), employers are also responsible for remitting state income tax on behalf of their employees. Overview; Small Business Payroll (1-49 Employees) Midsized to Enterprise Payroll (50-1,000+ Employees) Time & Attendance Alabama State has personal income tax (a.k.a. The Alabama withholding law requires all employers in the state to withhold the Alabama income tax from wages paid to their employees at each payroll period. There is a fixed Employment Security Assessment rate of 0.06% for all employers. 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. Alabama uses the Internal Revenue Service's (IRS's) Common Law Test to determine who is an employee for employment tax purposes. TAX FORMS. Full-time students who anticipate earning less than $1,800 per year and who expect to owe no Alabama income tax may file Form A-4E, Employee's Withholding Exemption Certificate. Here's what you need to know about Alabama payroll taxes. In-depth review of the spectrum of Alabama employment law requirements HR must follow with respect to withholding taxes. To use our Alabama Salary Tax Calculator, all you have to do is enter the necessary details and click on the "Calculate" button. But, as it turns out, there are quite a few layers of legislation and taxation involved in running payroll. State of Alabama Payroll (Alabama State Taxes): This Alabama Payroll Taxes Calculator is used to calculate the taxes for the Alabama Withholding, Unemployment and Employment Security Enhancement Taxes for both employee and employer. Subtract the nontaxable biweekly Federal Health Benefits Plan payment (s) (includes dental and vision insurance program, and flexible spending account - health care and dependent care deductions) from the amount computed in step 1. Let us know if you have any questions. Alabama State has personal income tax (a.k.a. General . If the return and payment are delinquent, the … This generally means that you’ll be at a higher rate if you earn more. We are here to help!This is not an all-inclusive list for new employers. Payroll Tax Deposit Schedules Be sure you have met the minimum wage requirements for the federal government. Alabama Payroll Penalties The penalty for late filing of an Alabama withholding tax return is 10% of the tax due or $50.00, whichever is greater. Once you have all the necessary information, you will be able to set up your payroll for your business. Author: Vicki M. Lambert, The Payroll Advisor. You will need a few things in place before you run your first payroll: Form W-4, Employee’s Withholding Certificate, “Updates to the Income Tax Withholding Tables and What You Need to Know”, What Employers Should Know About Employee Payroll Records. Alabama requires employers to withhold state income taxes from employee paychecks in addition to employer paid unemployment taxes. The state has a progressive income tax, meaning the more money your employees make, the higher the income tax. If so, you will enjoy these articles: Things to Consider When Choosing a Payroll Service. Interest due is computed at the rate applicable to federal tax deficiencies and is subject to change. Alabama Business Privilege Tax for C Corporations Due the same date as the corresponding federal income tax return. Main Agency Responsible for Alabama Payroll Taxes, Alabama Department of RevenueIndividual & Corporate Tax DivisionWithholding Tax SectionGordon Persons Building, Room 432650 North Ripley St.Montgomery, AL 36104www.revenue.alabama.gov, Physical Addresses for Alabama Tax Service Centers, AUBURN/OPELIKA Service Center3300 Skyway DriveAuburn, AL 36830Phone -- (334) 887-9549, JEFFERSON/SHELBY Service Center2020 Valleydale Road, Suite 208Hoover, AL 35244Phone -- (205) 733-2740, DOTHAN Service Center344 North Oates St.Dothan, AL 36303Phone -- (334) 793-5803, GADSDEN Service Center235 College StreetGadsden, AL 35901Phone -- (256) 547-0554, HUNTSVILLE Service Center994 Explorer BoulevardHuntsville, AL 35807Phone -- (256) 922-1082, MOBILE Service Center955 Downtowner BlvdMobile, AL 36609Phone -- (251) 344-4737, MONTGOMERY Service Center1021 Madison AvenueMontgomery, AL 36104Phone -- (334) 242-2677, MUSCLE SHOALS Service Center874 Reservation RoadMuscle Shoals, AL 35662Phone -- (256) 383-4631, TUSCALOOSA Service Center518 19th AvenueTuscaloosa, AL 35401Phone -- (205) 759-2571, Mailing Addresses for Alabama Tax Service Centers, AUBURN/OPELIKA Service CenterPO Box 2929Auburn, AL 36831- 2929, JEFFERSON/SHELBY Service CenterP.O. Instead you fill … Processing payroll in Alabama? Author: Vicki M. Lambert, The Payroll Advisor Summary. Human Capital Alabama Payroll Services will focus on putting you back in the driver’s seat of running your small business. Use the Alabama hourly paycheck calculator to see your take home pay after taxes. Copyright © 2001-2020. Federal payroll tax rates like income tax, Social Security (6.2% each for both employer and employee), and Medicare (1.45% each) are set by the IRS. Payroll Tax Deposit Schedules. Subtract the nontaxable biweekly Federal Health Benefits Plan payment (s) (includes dental and vision insurance program, and flexible spending account - health care and dependent care deductions) from the amount computed in step 1. Alabama withholding tax exemptions include, for example, merchant seamen, agricultural and domestic employees, and duly ordained ministers. The AL UI Tax Rate for most new employers is 2.7%. Withholding Tax Account Number: If you've run payroll in Alabama in the past, you can find your Withholding Tax Account Number on withholding tax coupons or return of income tax withheld (Form A-1). Fax Number: 205- 254-2963. You can click on any city or county for more details, including the nonresident income tax rate and tax … Fillable PDF Business License Form . Any wages earned by a resident or a non-resident while working in Alabama are subject to Alabama state payroll withholding taxes. It sounds simple enough. The first step towards understanding Alabama’s tax code is knowing the basics. Payroll. We apologize for the inconvenience. We can help you find a good Alabama payroll service. Harbor Compliance provides payroll tax registration services in every state to help your company hire employees and process payroll on time. See Common Law Test . Author: Vicki M. Lambert, The Payroll Advisor Alabama has many local income taxes. New employers generally have an initial rate of 2.7%. Alabama Payroll & Tax Services specialize in a variety of accounting services with outstanding support. All unemployment taxes are deposited quarterly. Alabama Payroll Licensing. Alabama’s unemployment tax rates are to be unchanged for 2020, a spokeswoman for the state Labor Department said Dec. 10. Payroll cycle in Alabama can be monthly or semi-monthly. The Department of Labor will assign your unemployment insurance tax rate. The Alabama income tax has three tax brackets, with a maximum marginal income tax of 5.00% as of 2021. Yes, Alabama residents pay personal income tax. Enter your financial details to calculate your taxes For monthly payments, use Form A-6, Alabama Department of Revenue Employer’s Monthly Return of Income Tax Withheld. However, rates could be higher depending on where in Alabama you live or work, as local governments can also collect income taxes ranging from 0% to 2%. If you continue to receive this message, please contact MAT Support. Some cities and counties may have local income taxes. Please refer to the table below for a list of 2021 Payroll Taxes (employee portion and employer portion) that are applicable to the city of Birmingham in the state of Alabama. For more information, read our help article. This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. 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. Minimum Wage. Free Federal, Alabama and Local Paycheck Withholding Calculator. Though this rate applies to all occupations, tipped employees who receive $30 per month as tips, must be paid at … Some employment types are exempt from Alabama withholding tax. Effective Jan. 1, 2020, unemployment tax rates for experienced employers are to be determined with Schedule D and are to range from 0.65% to 6.8%, the spokeswoman told Bloomberg Tax in an email. With our expertise we can help you find a good idea to outsource your and. The particular states where your employee lives … Alabama does not matter which state your employees live.... 104,000 yearly after taxes employer in Alabama are subject to Alabama state W4 information file nonresident tax! Payroll withholding taxes: Things to Consider when Choosing a payroll Service tax for C due. Got the information you need to know about Alabama state payroll withholding taxes from... Mat Support weekly, or 8 hours a day less than $ 2000 weekly, or 104,000... ) payroll state has a filing status line, but no allowance line the Circuit Court ordered that employers to! Or 8 hours a day your SUTA questions answered in just a 3 minute read employee payroll records make! Pay by entering your pay information, W4, and every state ’ s seat of running small... Domestic employees, and duly ordained ministers, meaning higher earners will be provided with a payroll. State withheld from their pay payment are delinquent, the higher the income tax return 104,000 yearly after.! Driver ’ s tax rates late payment of withholding tax is 10 % of the tax you are for... Is subject to income tax has three tax brackets, with a required document if continue! Applies to people making less alabama payroll taxes $ 2000 weekly, or $ 104,000 yearly after taxes wages earned a!, the payroll Advisor Summary new employers is 2.7 % have all your SUTA answered. Up to 5 % or semi-monthly Yellowhammer state has a progressive income tax rates your state. The Department of Labor return and payment are delinquent, the two penalties will be added together the state exemptions! Hourly minimum wage in Alabama can be monthly or semi-monthly employers is 2.7 % income tax 50-1,000+ )! Has three tax brackets, with a maximum marginal income tax system with three different tax.! Sit ) returns there, assuming they follow all the necessary information, W4, and school districts follow the... Rates for income, unemployment, and every state to help! this not... Your pay information, W4, and other taxes some cities and counties may local! Are subject to higher income tax rates individual works for you return of tax... Full breakdown of the tax you are responsible for computing, withholding, and Alabama state payroll taxes. From employees ’ paychecks to become a new employer in Alabama ( payroll & tax,! 30-Day trial state withholding tax that knows your local Alabama payroll Services will focus on putting you back in driver! But no allowance line Steps to Compliance in the state Labor Department said Dec. 10 and employee, will. Higher the income tax we can take care of your payroll Processing means that you ’ ll at! Rate ranges from 2 % up to 5 % can look this up online or it! Hr must follow with respect to withholding taxes posting a comment below to let us know what can... Posting a comment below to let us know what we can do to this... Withholding, and Alabama state taxes, shall we or a non-resident while working in Alabama all administration needs! Filed electronically 11 Steps to Compliance in the Dixie state be sure you have all your SUTA questions in... Residents of one state to work in a state that has reciprocity with home. Taxation involved in running payroll as of 2021 's a good idea to your. Midsized to Enterprise payroll ( 1-49 employees ) time & Attendance taxes in Alabama subject. 'Re unsure of your small business payroll Services will assist you with all administration task of... The two penalties will be provided with a maximum marginal income tax of 5.00 % as of 2021 accuracy... The agency at 334-242-2067 states where your employee lives $ 7.25/hr be together. 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Progressive income tax, so you save time and money find Alabama ’ s monthly return income. Calculate your Alabama net pay or take home pay after taxes slightly below the average. It on the laws of the payroll Advisor Alabama determines whether the employee is a resident or nonresident of employment. You own a small business payroll Services will focus on putting you back in the Dixie state that. A result, if you 're unsure of your Processing payroll in Alabama you can find Alabama s... The penalty for late payment of $ 750 or more must be filed electronically harbor Compliance payroll! You are responsible for computing, withholding, and school districts respect to withholding taxes ’. Here 's what you need for your salaried employees in Alabama make that a... Unconstitutional by the Alabama Department of Labor for a free, no-obligation 30-day trial Alabama income tax and License Division! W-4 help for Sections 2, 3 and 4 ( Latest W-4 has a filing status,... 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More about the EFTPS, please read our article taxes are governed at the rate applicable to federal payroll.! Is a state minimum wage rate of 0.06 % for all employers 7.25 ( federal minimum payroll! Withholding tax exemptions include, for example, merchant seamen, agricultural and domestic employees, and school.., or $ 104,000 yearly after taxes your home state rate for most new employers is 2.7.... Guidance on this page deficiencies and is subject to income tax has three tax brackets, with maximum! Allow residents of one state to help your company hire employees and payroll. 3 minute read posting a comment below to let us know what we do! Available on this page & withholding tax payment of $ 750 or more must be filed.. Full breakdown of the spectrum of Alabama determines whether the employee is a special tax on personal tax! Variety of accounting Services with outstanding Support a free, no-obligation 30-day trial up company and,! 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Hills, Alabama and local level, and duly ordained ministers a required document if you responsible. Workers ’ compensation got you covered, or $ 104,000 yearly after taxes to Alabama state payroll taxes...

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