Oregon Statewide Transit Tax

By TEAM Software June 20, 2018 Categories:

What you need to know (and do) before July 1, 2018.

We included a short update on the looming Oregon Statewide Transit Tax in our most recent payroll tax compliance blog earlier this month, but we wanted to dive a little deeper into this particular update to ensure you’re informed on the upcoming changes. The state of Oregon is requiring employers to withhold a Statewide Transit Tax effective July 1, 2018. This tax will be strictly enforced and employers could face penalties if they do not withhold this tax in a timely manner. This tax is NOT related to the Lane or TriMet transit payroll taxes; it is in addition to all other local tax codes for Oregon.

TEAM is dedicated to ensuring our software solutions meet the ever-changing compliance needs of our customers. While we’re committed to keeping you informed, it’s important to do your own research, and consult your own legal and tax advisors when necessary, too. That said, here’s a roundup of information along with some helpful tips on how to handle it using our software.

Which wages are subject to this statewide tax?

On July 1, 2018, employers must start withholding the tax (one-tenth of 1 percent or .001) from: ​

  • Wages of Oregon residents (regardless of where the work is performed).
  • Wages of nonresidents who perform services in Oregon.

The statewide transit tax is calculated based on the employee’s wages as defined in ORS 316.162. 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 still subject to statewide transit tax withholding.

Oregon employers are responsible for:

  • Withholding the tax from employees’ wages.
  • Reporting taxes withheld on a quarterly or annual return.
  • Remitting taxes withheld quarterly or annually.
  • Reconciling quarterly or annual reports on the annual reconciliation return.

If you don’t withhold this tax appropriately or file and pay on time, you may be subject to penalties and interest. Penalties of $250 per employee, up to $25,000 for each tax period, can be assessed for knowingly failing to deduct and withhold the tax, in addition to other penalties and interest authorized by state law.

How do I setup this tax code in WinTeam?

TEAM clients who process payroll in our solution should visit our Solutions Online help topic on the Oregon Statewide Transit Tax for more information on how to set up this tax code in WinTeam, TEAM’s core financial, operations and workforce management solution.

How do I communicate this information to employees?

You can share information about this new tax with your employees through messages on their paystubs. If you issue paper paystubs through WinTeam, you can include the text below to be printed directly on the employees’ paystubs. You can also try these easy-to-print stuffers. For electronic paystubs, consider adding the following language to eHub or TeamTime messaging:

“Starting July 1, 2018, you’ll see a new item on your paystub: the statewide transit tax. The tax is one-tenth of one percent—or $1 per $1,000—withheld from your wages. Please note, those exempt from income tax withholding, aren’t exempt from withholding for this tax. For more information on the tax, go to the Oregon Department of Revenue’s website at www.oregon.gov/dor.”

For additional information and resources on the new Oregon statewide transit tax, visit the Oregon Department of Revenue website.