22 August 2017 Oregon law requires new withholding tax for funding of transportation costs starting July 1, 2018 The Oregon legislature recently passed HB 2017, which effective July 1, 2018 will create a new payroll tax on Oregon residents and nonresidents working in Oregon to fund state highway upgrades. Governor Kate Brown has indicated that she plans to sign the bill into law. The governor also stated the following on Twitter: "Proud and grateful of all those who worked tirelessly on the transportation package. I look forward to signing this critical bill." The bill requires that employers withhold a tax of 0.1% from the wages of resident employees and nonresident employees working in Oregon and remit this new tax to the Oregon Department of Revenue. The tax will be deposited into a new Statewide Transportation Improvement Fund (STIF). The new payroll tax applies to all residents of Oregon, regardless of where services are performed, and to nonresidents for services performed in Oregon. The bill provides that the Department may require employers to submit the new payroll tax with the quarterly combined tax report and requires that employers file an annual return with the Department. An employer that fails to withhold and submit the new payroll tax will be held responsible for the payment of the tax in an amount equal to the amount required to be withheld from the employee's wages. Additionally, the employer will be subject to a penalty of $250 per employee, up to a maximum penalty of $25,000, if the employer knowingly fails to withhold and remit the tax. Oregon residents that work for an out-of-state employer not doing business within the state will be required to report and pay the tax at the time and in the manner determined by the Department by rule. Currently, Oregon requires the withholding of state income tax from wages and, in some areas of the state, employer payment of taxes to fund mass transit — Transit District Taxes (TriMet) and Lane County Mass Transit District (LTD). Under the new law, residents and nonresidents will see an increase in their withholding taxes. Employers will need to modify their payroll systems to accommodate the withholding and deposit of this added transportation tax for both resident employees and their short-term business travelers working within the state. Document ID: 2017-1358 |
