Surprise! Oregon has a new statewide transit tax that will be effective starting July 1, 2018. Employers, there is quite a lot of information you need to be aware of to stay abreast with compliance! Read on to find out more.
Employers must begin withholding 0.1% Oregon statewide transit tax from:
- The wages of Oregon residents
- The wages of nonresidents who perform services in Oregon.
What this means for employers
There are a few things you, as an employer, will be 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
For you to stay compliant, you must withhold this tax appropriately and file and pay on time. Otherwise, you may face a penalty of $250 per employee. Employers of Oregon residents who work outside of the state are not required to withhold this tax as they are outside of Oregon’s taxing jurisdiction. However, you may do so out of courtesy to your employee.
Reporting and Remitting
The tax that is collected should be reported and remitted to the Department of Revenue on or before the last day of the month following the previous calendar quarter. For example, you must begin withholding this tax on July 1, 2018 which is also the first day of the third quarter, so you should report and remit when the quarter ends on September 30, 2018 and your return and payment will be due on October 31, 2018.
Please note that agricultural and domestic employers may file returns and make payments for this tax annually, as they do with their income tax withholding.
Currently, it is not required to report the statewide transit tax on the Form W-2. Later this year, there may be new rules regarding reporting this tax on the Form W-2.
What this means for employees
If your employer doesn’t withhold the tax for you, you’re responsible for reporting and paying the tax when you file your personal income tax return. There is no extension to the filing and payment deadline for the statewide transit tax. You may be subject to penalties and interest if you do not report or pay on time.