Are you an employer in Oregon? If so, you should familiarize yourself with state-specific taxes, including the TriMet Transit District payroll tax, the Lane Transit District payroll tax, and the new statewide Oregon transit tax.
Unlike the TriMet and Lane Transit District taxes, the statewide Oregon transit tax applies to all businesses with employees in Oregon. Find out what the Oregon transit tax is, how it differs from the two existing taxes, and your employer responsibilities.
What is the Oregon transit tax?
The Oregon transit tax is a statewide payroll tax that employers withhold from employee wages. Starting July 1, 2018, Oregon employers must withhold 0.1% (0.001) from each employee’s gross pay.
Withhold the Oregon transit tax from Oregon residents as well as nonresidents who perform services in Oregon. If an employee is an Oregon resident but your business isn’t in Oregon, you can withhold the tax as a courtesy.
Employees are not exempt from the Oregon transit tax withholding, even if they are exempt from federal income tax withholding.
As the employer, you do not pay the Oregon transit tax. You are only responsible for withholding, reporting, and remitting withheld taxes to the state government.
The statewide Oregon transit tax goes to the Statewide Transportation Improvement Fund and finances public transportation-related investments and improvements.
Oregon transit tax vs. TriMet tax vs. Lane tax
Unlike the Oregon transit tax, the TriMet and Lane Transit District taxes are employer taxes. Instead of withholding the TriMet and Lane taxes from employee wages, you pay them.
Not all Oregon employers have to pay the TriMet and Lane taxes. You must pay the tax on your employee’s wages if they work in the TriMet Transit District or Lane Transit District. To see whether you owe the TriMet or Lane taxes, consult Oregon’s zip code list.
If you owe the TriMet and/or Lane taxes, you are still responsible for withholding the Oregon transit tax from employee wages.
How to pay and report the Oregon transit tax
After withholding the Oregon transit tax from employee wages, you must remit the funds to the state of Oregon. You need to report the transit tax, too.
You can pay the withheld Oregon transit tax by cash, check, money order, or electronic funds transfer (EFT). If you pay by check or money order, you must file Form OR-STT-V, Oregon Statewide Transit Tax Quarterly Payment Voucher. You can only make a cash payment in person (955 Center Street NE in Salem, Oregon).
To report the collected tax, you must file a transit tax return and a detail report. You can file an electronic or paper return and report. You must set up a Revenue Online account to file electronically.
If you are a quarterly filer, you must report the tax using Form OR-STT-1, Oregon Quarterly Statewide Transit Tax Return. If you are subject to the tax, you must file Form OR-STT-1—even if you didn’t have a payroll during the quarter— and enter $0 in the subject wages box.
If you are an annual filer, report the tax using Form OR-STT-A, Oregon Annual Statewide Transit Tax Withholding Return.
In addition to the transit tax return, you must also file Form OR-STT-2, Statewide Transit Tax Employee Detail Report. Use the detail report to list employee names, wages, and withheld transit tax. Send Form OR-STT-2 when you send either Form OR-STT-1 or Form OR-STT-A.
Filing and payment due dates
If you are a quarterly filer, Forms OR-STT-1 and OR-STT-2 are due, with payments, by the following due dates:
- Quarter 1: April 30
- Quarter 2: July 31
- Quarter 3: October 31
- Quarter 4: January 31
If you are an annual filer, Forms OR-STT-A and OR-STT-2 are due by January 31.
Failing to file and pay the Oregon transit tax can result in hefty penalties and interest. You may also owe $250 per employee, up to $25,000 per tax period.
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This is not intended as legal advice; for more information, please click here.