April 25, 2018 Oregon DOR releases new statewide transit payroll tax forms The Oregon Department of Revenue has released the forms to be used by employers to report the new statewide transit payroll tax, which goes into effect July 1, 2018. New Forms OR-STT-1, Oregon Quarterly Statewide Transit Tax Withholding Return, and OR-STT-2, Statewide Transit Tax Employee Detail Report, and OR-STT-V, Oregon Statewide Transit Tax Quarterly Payment Voucher will be used to report the new tax. Form OR-STT-A, Oregon Annual Statewide Transit Tax Withholding Return, will be used by agricultural and domestic employers and as an annual reconciliation. Employers must begin withholding for the new statewide transit tax on July 1, 2018 As we previously reported, legislation enacted in 2017 created a new payroll tax on Oregon residents and nonresidents working in Oregon to fund state highway upgrades. (HB 2017.) (EY Payroll NewsFlashes Vol. 19, #037, 2-2-2018; Vol. 18, #144, 8-22-2017.) Effective July 1, 2018 employers and payers must start withholding the?new 0.1% tax?from the: — wages of Oregon residents (regardless of where the work is performed); — wages of nonresidents who perform services in Oregon; and — periodic payments made under ORS 316.189, not including retirement income paid to — nonresidents from an Oregon source. Employers will not be required to match the employee withholding tax. Out-of-state employers Out-of-state employers not doing business in Oregon are not required to withhold the new transit tax from Oregon residents' wages. Oregon residents that work for an out-of-state employer not doing business within Oregon will be required to report and pay the tax at the time and in the manner determined by the Department, or they may ask their out-of-state employer to voluntarily withhold the new tax The new statewide transit tax is calculated based on the employee's?gross wages before any exemptions or deductions. Employees who aren't subject to regular income tax withholding due to high exemptions, wages below the threshold for income tax withholding, or other factors?are nonetheless subject to statewide transit tax withholding.? The definition of "wages" excludes amounts paid to certain types of employees and independent contractors. (ORS 316.162.) Self-employment income isn't subject to this tax. The statewide transit tax is not related to the Lane or TriMet transit payroll taxes. Transit payroll taxes are imposed on the employer based on the amount of payroll while this statewide transit tax is imposed on the wages of each employee. Revenue from the statewide transit?tax will go into the Statewide Transportation Improvement Fund to finance investments and improvements in public transportation services, except for those involving light rail. Penalties for payment withholding and payment 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. Quarterly and annual return filing requirements Oregon employers are required to the new statewide transit tax on a quarterly basis on new OR-STT- Oregon Quarterly Statewide Transit Tax Withholding Return, and OR-STT-2, Statewide Transit Tax Employee Detail Report, submitting payments electronically through a?Revenue Online account or with Form OR-STT-V, Oregon Statewide Transit Tax Quarterly Payment Voucher (by check?or money order).? Cash payments will only be accepted at the Department's main office?at 955 Center Street NE in Salem. Employers will not report the new transit tax on their quarterly income tax withholding return. Because employers will begin withholding the new transit tax on July 1, 2018, they will need to file a statewide transit tax return beginning for the third quarter 2018, due by October 31, 2018. Annual reconciliation Form OR-STT-A, Oregon Annual Statewide Transit Tax Withholding Return, must be filed January 31 each year. (This form will also be used by agricultural and domestic employers.) Agricultural employers?will file returns and make payments for the new transit tax annually, as they do with their income tax withholding. The Department will continue to release information on its website as the July 1, 2018 effective date gets closer. ———————————————
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