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May 8, 2018 - The 2017 Oregon Legislature passed House Bill 2017, which includes a new statewide transit tax that becomes effective July 1, 2018. Oregon employers will be required to start withholding an additional 0.1% for the statewide transit tax from the wages of Oregon residents and nonresidents who perform services in Oregon.
This tax is not related to the Lane or TriMet transit payroll taxes which are imposed on the employer. The new statewide transit tax is imposed on the wages of each employee, and the employer is responsible for withholding, reporting, and remitting the tax.
Employers who fail to deduct, withhold, and remit the tax to the Oregon Department of Revenue will be subject to a penalty of $250 per employee, up to $25,000 (in addition to other penalties and interest authorized by state law).
There is no minimum threshold and there are no exemptions for withholding or filing. Employees who aren't subject to income tax withholding due to high exemptions, wages below the threshold for income tax withholding, or other factors are still subject to the statewide transit tax. Self-employment income is not subject to this tax.
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.
Companies who outsource their payroll will find it important to confirm the provider handling the processing and implementation of this tax over the upcoming weeks so that the system is accounting for the new tax when it goes into effect. For those who provide payroll in-house, the software used should be up to date and the transit tax administered through the system by the time the tax is put in place beginning July 1.
Delap CPA’s are committed to bringing you up-to-moment information regarding the financial landscape. For more information about the many changes that can impact your business, contact a Delap advisor or call 503-697-4118 to reach our Portland or Lake Oswego offices today.
To find more information on the 2018 Tax Reform, our slide presentation gives a clear outline of the past tax laws vs. the new tax laws for individuals, families, C Corporations, Partnerships, and more.