By Jennifer Cranford, CPA
The 2017 Oregon Legislature passed House Bill 2017, which includes a new statewide transit tax. The new statewide transit tax begins July 1, 2018 and requires employers to withhold one-tenth of 1 percent (.001) from:
- Wages of Oregon residents (regardless of where work is performed)
- Wages of nonresidents who perform services in Oregon
Wages excludes amounts paid to certain types of employees and independent contractors. Self-employment income is not subject to the statewide transit tax. Refer to ORS 316.162 for exempt wages: https://www.oregonlaws.org/ors/316.162
The employer is responsible for withholding, reporting, and remitting the statewide transit tax. Keep in mind that the statewide transit tax is separate from the Lane or TriMet transit payroll taxes.
Non-compliance penalties and interest are substantial – $250 per employee, up to $25,000 for each tax period, if an employer knowingly fails to deduct and withhold the tax.
An employer will begin withholding July 1, 2018 so the first period to report and remit tax is third quarter 2018, which ends September 30, 2018. The return and payment is due by October 31, 2018. There is no minimum threshold for filing the return. All employers who withhold the tax will need to remit the tax. In addition, an annual reconciliation of the statewide transit tax will be required on
Form OR-WR. The 2018 Form OR-WR has already been updated to reflect the statewide transit tax.
The return can be filed electronically or in paper form. In order to file electronically, an employer needs to set up an account with the Department of Revenue first. https://revenueonline.dor.oregon.gov/tap/_/#1
Be sure to check out the Oregon Department of Revenue website for additional information:
Email address: email@example.com
Frequently asked questions: http://www.oregon.gov/DOR/FAQ/Pages/default.aspx
Contact your Kernutt Stokes LLP professional tax advisor at 541.687.1170 if you have additional questions.