SALEM, Oregon – Oregon companies can now apply for relief or defer some payments for their 2021 payroll taxes, the Oregon Department of Labor says. Governor Kate Brown signed House Bill 3389 on Tuesday which brought these additional options to fruition.
“There is no question that Oregon’s economic backbone, our small businesses – as well as the hardworking Oregoners who work in those businesses – have been hard hit by the pandemic,” said Governor Brown. “But in these challenging times, we’ve seen the Oregonians react with creativity and resilience. As we have moved into the next chapter of the pandemic and looking to recover, HB 3389 should take some of the pressure off businesses while making sure we can continue to provide unemployment insurance benefits to all of the Oregonians who need them. “
The amount of UI tax in 2021 that employers can postpone or waive depends on how much their UI tax rate has increased from 2020 to 2021:
- An increase in the UI tax rates by 0.5% to 1% can only be postponed
- The tax rate has been increased by more than 1.0 percentage point and no more than 1.5 percentage points are eligible for 50% of the deferred UI taxes
- The tax rate has been increased by more than 1.5 percentage points and no more than 2.0 percentage points are eligible for 75% waiver of their deferred UI taxes
- If the tax rate is increased by more than 2.0 descent points, 100% of the deferred UI taxes will be waived
The wage tax relief plan provides three advantages. For the 2021 tax year, employers can pay a third of their unemployment tax liability up to 30. These deferred taxes can be waived, depending on how much an employer’s UI tax rate increases from 2020 to 2021.
In addition, an employer’s “tax experience rating” will be reset from 2022 to 2024 to the employer’s experience rate before the pandemic. Tax rates are likely to fluctuate over the next few years due to timetable changes, but the employer’s rate will be tied to its pre-pandemic rating.
“Oregon’s small businesses needed this legislation badly,” said Anthony Smith, Oregon state director for the National Federation of Independent Business. “With the state reopened to business, HB 3389 will aid the state’s economic recovery from the crippling effects of the COVID-19 pandemic by allowing employers to invest in their businesses, their employees and their communities. Its importance cannot be overestimated. “
Employers must meet several of the following conditions to be eligible for UI tax deferral and remission. As of January 1 of this year, they must have paid all outstanding UI tax contributions and related liabilities, including those set out in a payment schedule accepted by the Oregon Employment Department director. You must also submit all required 2021 pay slips on time and pay any 2021 tax liability that is not deferred or waived on time.
Businesses don’t need to apply for this tax break – OED says it will automatically enroll eligible employers and contact them throughout the tax year with updates or changes to their status or requirements.
OED also had a caveat: participation in the deferred portion of this relief plan could negatively impact an employer’s federal unemployment tax credit. Some employers may not be able to access the full state unemployment tax credit paid on their Federal Unemployment Tax Return (IRS) Form 940 if they pay state unemployment tax after the Federal Form 940 due date.