Thursday, September 7, 2017

New State Payroll Tax Coming in Oregon

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PNN: OR Transit Tax

There will be a new 0.1% Public Transportation Payroll Tax on employee wages in Oregon, effective July 1, 2018 [H.B. 2017, L. 2017]. The new tax will fund transit projects in the state.

Who Will Be Taxed?
The tax will be imposed on state residents regardless of where services are performed and nonresidents for services performed in the state.

Nexus Required for Withholding
Employers will withhold the tax from nonresident employees’ wages and from certain resident employees’ wages. Residents subject to the new tax who work out of state for an employer not doing business in Oregon will report and pay the tax themselves (i.e., an employer with no nexus is not required to withhold the tax).

Employer Reporting and Penalties
An employer will report and pay the tax to the Oregon Department of Revenue (DOR) at the time and manner determined by the rule (the tax may be included in the Oregon combined quarterly tax report). An annual return will have to be filed with the DOR. If an employer fails to deduct and withhold the tax as required, it will be responsible for the amount of the tax and a penalty of $250 per employee, up to a maximum of $25,000, if the failure is willful.

More information, including rules and guidance issued by the DOR, will be reported in PayState Update when available.