Oregon announced a new statewide transportation tax to support public transportation systems. The new law requires employers to withhold and remit 0.1% of wages paid to all Oregon residents. Non-residents who work in Oregon are also subject to the new tax. The tax is applicable to wages paid on or after July 1, 2018.
Employers will report subject wages and transportation taxes withheld using the new Form OR-STT. All employers who file quarterly Form OQ to report their unemployment and withholding taxes will file Form OR-STT-1 quarterly. Agricultural and domestic employers who currently file the annual Form OA for unemployment and withholding taxes will file Form OR-STT-A annually. Transportation taxes withheld will be due with the tax return, similar to unemployment and Worker's Benefit Fund taxes.
Employers will also need to report subject wages and transportation taxes withheld on the employee W-2s at the end of the year. Oregon's annual Form WR has been revised to include reconciliation of the new transportation tax to the W-2s.
Out of state companies who employee Oregon residents performing work outside of Oregon are not required to withhold the transportation tax but may do so as a courtesy, as with Oregon income tax withholding. The new tax will be reported under the same Business Identification Number (BIN) as all other Oregon payroll taxes.
The new transportation tax does not affect local transit taxes currently in place for the TriMet, Lane County, Wilsonville, Canby, Sandy, and South Clackamas transit districts. These taxes are paid entirely by the employer and will remain in place to support those specific transit districts.
The state is in the process of sending notification letters to all Oregon employers. Letters began going out in mid-March and are being sent in waves. Companies enrolled with Revenue Online will have the tax automatically added to their dashboard.
Payroll On Time, Inc will include the new transportation tax in our standard tax service. We will calculate and withhold the tax from employee checks, remit the taxes at the end of each quarter, report the amount withheld on employee W-2s, and file both the quarterly tax returns and the revised Form WR.