| FAQ |
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| GENERAL QUESTIONS |
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- How do I register as an employer?
- Who is an employee?
- How is the money to pay unemployment insurance benefits financed?
- Who is a subject employer?
- How do I find out what my UI tax rate is?
- I have domestic (household) employees working in my home. Do I have to report their wages?
- I own a farm and operate with employees six months out of the year. Do I report wages on these employees?
- I have employees paid commission only. Do I have to report these as wages?
- I hire people who work on contract. Do I have to report their earnings? What is the definition of an Independent Contractor?
- I hire employees on a temporary basis and musicians on contract. Are these Independent Contractors?
- Do nonprofit employers have to file payroll taxes?
- If an employee performs services in Oregon and another state(s), where should the wages be reported for unemployment insurance taxes?
- I purchased part of another business. Can I use the tax rate assigned to that business?
- I pay my employees on a piece-rate basis. How do I report hours worked on the Employee Detail Report (Form 132)?
- Are my contributions to an employee benefit plan considered wages?
- If I don’t have any employees for a quarter, do I need to file a quarterly report?
- What is the difference in the unemployment insurance tax obligation between a corporation and an LLC?
- I dissolved a partnership and incorporated. Do I have to report these changes to the Employment Department?
- Why does my tax rate change from year to year? What is an “experience rate?”
- What is the Special Payroll Tax Offset? What is it used for?
- What do I need to know and do if the Employment Department notifies me they are going perform an audit?
- What rights are protected by the Employment Department? What are my responsibilities as an employer?
- What are the Employment Department programs?
1. Question
How do I register as an employer?
ANSWER
Register with the Oregon Department of Revenue. The forms can be accessed through theirWeb site or call 503-945-8091.
2. Question
Who is employee?
ANSWER
An employee is anyone who performs services for another person or organization under the direction and control of that person or organization. Even when the employer gives the employee freedom of action, the person performing the service may still be considered an employee. All individuals, including aliens and minors, who are employed for any compensation or under any contract of hire by an employer, are considered to be employees for the purpose of reporting and paying unemployment taxes. This includes contract, casual, or temporary labor.
Corporate officers who are paid for working for the corporation are considered to be employees of the corporation, even if they “own” the corporation. To qualify for the family corporate officer exclusion, an election must be made in writing to the Employment Department.
Employment Department law does not cover some types of services. For example, service performed by an independent contractor (as defined by ORS 657.040 and ORS 670.600) would not be covered. Members of limited liability companies and of limited liability partnerships are excluded. Some people who are paid on commission and their wages are exempt, for instance, real estate salespersons and brokers.
For more information go to one of these Informational Flyers:
Requires Adobe Acrobat Reader
If you have questions or need additional information, please contact the Employment Department tax representative at one of our offices or call 503-947-1488; TDD/Nonvoice Users 711 or by e-mail at taxinfo@emp.state.or.us
3.Question
How is the money to pay unemployment insurance benefits financed?
ANSWER
The money used to pay Oregon unemployment insurance benefits comes from Oregon employers.
- Taxpaying Employers - Private, subject employers pay a quarterly tax (annually for domestic employers) directly to the State of Oregon.
- Reimbursing Employers - State and federal subject employers must reimburse (pay back) the state for benefits paid to former employees.
- Local governments or non-profit private sector employers (exempt under Internal Revenue Code 501(c)(3)) may choose either to pay the tax or reimburse the state for benefits paid.
Taxes collected are deposited in a trust fund used to pay unemployment insurance benefits.
The money to administer the unemployment insurance program comes from a federal tax, created by the Federal Unemployment Tax Act (FUTA). This federal tax is assessed against all private employers and is paid to the Internal Revenue Service.
If you have questions or need additional information, please contact the Employment Department tax representative at one of our offices or call 503-947-1488; TDD/Nonvoice Users 711 or by e-mail at taxinfo@emp.state.or.us
4. Question
Who is a subject employer?
ANSWER
A "subject employer" is an employing unit required to provide unemployment insurance coverage for their workers.
- Subject employers (other than agricultural [farm] or domestic [home] employers) are those employing units who:
- Pay $225 or more ($1000 or more after January 1, 2008) to employees in a calendar quarter (a three-month period that begins January 1, April 1, July 1 or October 1), or
- Have one or more employees in each of 18 weeks during a calendar year (January 1 through December 31).
- Subject employers are Agricultural (farm) employers who:
- Pay $20,000 or more cash wages in a calendar quarter, or
- Have 10 or more employees in each of 20 weeks during a calendar year.
- For more information go to Informational Flyer - Agricultural Employers
- Subject employers are Domestic (home) employers who:
- Pay $1,000 or more in cash wages in a calendar quarter whose employees work in a personal residence.
- For more information go to Informational Flyer - Domestic Employers
Requires Adobe Acrobat Reader
An employing unit is any individual or organization that has or had in its employ one or more individuals performing services for it within this state. Employing units must keep these records:
- Social Security number for each employee
- Proof of US citizenship or authorization to work in the US, and
- Payroll records that show how much and when each employee was paid.
Not everyone who meets the above criteria is a subject employer as there are certain exemptions. For more information about exemptions, contact a tax representative at one of our offices or call 503-947-1488; TDD/Nonvoice Users 711 or by e-mail at taxinfo@emp.state.or.us
5. Question
How do I find out what my UI tax rate is?
ANSWER
Go to Your Account Information Center or call 503-947-1488.
6. Question
I have domestic (household) employees working in my home. Do I have to report their wages?
Answer
Domestic employers are required to cover employees once the employees are paid cash wages of $1,000 or more in total payroll in a calendar quarter, in either the current or preceding calendar year. For unemployment tax purposes, domestic employers do not include non-cash compensation (i.e., room and board) as wages.
When domestic employers meet this criterion they must:
- Register with the Employment Department.
- File an annual tax report (Forms OA & 132) or
- Quarterly tax reports (Form OQ & 132).
- Pay unemployment taxes.
To order a form go to our Web site www.oregon.gov/EMPLOY/TAX and then go to Order Forms or use the Order Request at the back of the Oregon Combined Payroll Tax Report booklet or call 503-947-1488, option 3.
During the year, if a former employee files an unemployment insurance claim, the Employment Department may need to contact the employer to obtain the needed wage information to determine eligibility.
Once a domestic employer becomes subject to Employment Department Law, they remain subject for the remainder of the current year and all of the next calendar year, as long as employment exists. This holds true even if the payroll is less than $1,000 in those quarters. For more information go to Informational Flyer Domestic Employers .
Requires Adobe Acrobat Reader
7. Question
I own a farm and operate with employees six months out of the year. Do I report wages on these employees?
Answer
To become an agricultural employer subject to state unemployment insurance laws, you must meet one of the following criteria:
- Have $20,000 cash payroll in a calendar quarter in either the current or preceding calendar year, or
- Have 10 or more people working on 20 days, each day being in a separate calendar week during the current or preceding calendar year.
For unemployment insurance tax purposes, agricultural employers do not include non-cash compensation (i.e., room and board) as wages.
Once an agricultural employer becomes subject to Employment Department Law, they become subject for the entire current calendar year and all of the next calendar year, as long as employment exists. This is true even if the payroll is less than $20,000 in those quarters.
For more information go to Informational Flyer Agricultural Employers .
Requires Adobe Acrobat Reader
8. Question
I have employees paid commission only and a relative on payroll. Do I have to report these as wages?
Answer
Unless specifically excluded in ORS Chapter 657, wages include, but are not limited to, the following: salaries, hourly pay, piece rate, or payments by the job; vacation, sick, holiday, disability, and guaranteed wage payments; commissions, dividends, distributions, bonuses, gifts, fees, prizes, and tips. For more information go to Informational Flyer Employer, Employee, and Wages.
Requires Adobe Acrobat Reader
9. Question
I hire people who work on contract. Do I have to report their earnings? What is the definition of an Independent Contractor?
Answer
Individuals who are hired and compensated for services are employees and their compensation for services is taxable wages unless specifically excluded by law. The law has recently changed. For the period prior to 1/1/2006 go to Informational Flyer 201 Independent Contractors.
For the period after 12/31/2005 go to Informational Flyer 201a Independent Contractors.
Both documents require Adobe Acrobat Reader
10. Question
I hire employees on a temporary basis and musicians on contract. Are these considered Independent Contractors?
Answer
Individuals hired and compensated on a temporary basis are employees and their compensation for services is taxable wages. Musicians are employees of the person or organization engaging their services and compensation to them is taxable wages unless the musicians are hired under proper written contract. For more information go to Informational Flyer Restaurant and Bar Industry .
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11. Question
Do nonprofit employers have to file payroll taxes?
Answer
Nonprofit employers must register and file quarterly tax reports like other employers. Certain nonprofit employers have may finance their unemployment insurance costs. For more information go to Informational Flyer Nonprofit Employers. Local governments may finance their costs by paying quarterly. For more information view the Local Government publication.
Requires Adobe Acrobat Reader
12. Question
If an employee performs services in Oregon and another state(s), where should the wages be reported for unemployment insurance taxes?
Answer
This is determined by the application of four tests. The tests are similar to provisions of all other states’ law and are applied in descending order. They are applied to the employee’s work situation and not the employer. For more information, please go to Informational Flyer: Multi-State Employment. Requires Adobe Acrobat Reader
13. Question
I purchased part of another business. Can I use the tax rate assigned to that business?
ANSWER
A new or existing employing unit that acquires an identifiable and segregable portion of an employer may be a partial successor. The identifiable and segregable unit of the transferring employing unit must be such that it could operate independently of the remainder of the transferring enterprise. A new employer’s tax rate will be based on the transferring employer’s experience. If the acquiring employer was previously subject to unemployment tax, the transferring employer’s experience would be consolidated with its experience in the following year.
If you believe you might qualify for partial transfer of a predecessor’s experience rating or need additional information, please contact the Employment Department tax representative at one of our offices or call (503) 947-1488; TDD/Nonvoice users 711; or send e-mail to taxinfo@emp.state.or.us
14. Question
I pay my employees on a piece-rate basis. How do I report their hours worked on the Employee Detail Report (Form 132)?
Answer
The Employee Detail Report, Form 132, requires employers to report the number of hours worked during a quarter. If you don’t keep hours worked as part of your payroll system, a reasonable estimate of hours worked is acceptable. For more information go to Informational Flyer Hours and Estimating Hours Worked .
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15. Question
Are my contributions to an employee benefit plan considered wages?
Answer
The Employment Department Law generally considers fringe benefits as wages. However, it excludes payments for several types of benefits. For more information go to Informational Flyer Cafeteria and 401(K) Plans.
Requires Adobe Acrobat Reader
16. Question
If I don’t have any employees for a quarter, do I need to file a quarterly report?
Answer
A quarterly report is required as long as the account is active. Penalties may be applied for failing to file a report even if there is no payroll.
OPTIONS
1. Telephone Reporting: You can now file "no payroll" quarterly reports by telephone, any time day or night. If you have no payroll and no subject hours for any quarter, dial (503) 378-3981 and phone in your quarterly report.
2. Form OQ: Place a "0" (zero) in the "subject wages" boxes for each subject program and use the "number of hours worked" box for the Workers’ Compensation Assessment. Leave blank "subject wages" boxes of any programs the employer is not subject to.
3. Change in Status: To close an account due to being out of business or no employees and none will likely be hired in the foreseeable future, complete a Change in Status form.
Employers are required to notify the Employment Department of any changes in their business entity. To report use Form 013. To order a form go to our Web site and then go to Order Forms or use the Order Request at the back of the Oregon Combined Payroll Tax Report booklet or call 503-947-1488, option 3. For more information go to Informational Flyer Change in Business Entity.
Requires Adobe Acrobat Reader
17. Question
What is the difference in the unemployment insurance tax obligation between a corporation and an LLC?
Answer
Corporations must report and pay unemployment insurance taxes on amounts paid to individuals for services rendered. This includes amounts paid to corporate officers and shareholders. An LLC is not liable for unemployment insurance taxes on compensation for services paid to its members. For more information go to Informational Flyer Corporations and Limited Liability Companies.
Requires Adobe Acrobat Reader
18. Question
I dissolved a partnership and incorporated. Do I have to report these changes to these Employment Department?
Answer
Employers are required to notify the Employment Department of any changes in their business entity. To report use Form 013. To order a form go to our Web site www.oregon.gov/EMPLOY/TAX and then go to Order Forms or use the Order Request at the back of the Oregon Combined Payroll Tax Report booklet or call 503-947-1488, option 3. For more information go to Informational Flyer Change in Business Entity.
Requires Adobe Acrobat Reader
19. Question
Why does my tax rate change from year to year? What is an “experience rate?”
Answer
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Taxable
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Taxable
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LGEBTF
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Tax Year
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Schedule
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Base Rate
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Minimum Rate
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Wage Base
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Base Rate
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| 2008 |
2 |
2.1% |
0.7% |
$30,200 |
1.0% |
2007
|
3
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2.4%
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0.9%
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$29,000
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1.0%
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2006
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4
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3.1%
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1.2%
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$28,000
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1.0%
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2005
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5
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3.2%
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1.5%
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$27,000
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1.0%
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2004
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6
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3.3%
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1.8%
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$27,000
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1.0%
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2003
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4
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3.1%
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1.2%
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$26,000
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1.0%
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Unemployment Tax Rates are assigned in accordance with Oregon Law. New employers are assigned a “base rate” until they have sufficient “experience” to qualify for an “experience rate” based tax rate. This usually takes about three years. All employers are mailed their rate for the next calendar year by November 15. The employer’s unemployment insurance tax rate is also preprinted on the Oregon Quarterly Tax Report (Form OQ) sent in February of each year. For more information go to Informational Flyer How UI Tax Rates Are Determined.
Requires Adobe Acrobat Reader
20. Question
What is the Special Payroll Tax Offset? What is it used for?
Answer
Special Payroll Tax Offsets are authorized by the Oregon Legislature and collected using the unemployment insurance tax system. They are included as part of the UI Tax rate, but the money is not deposited in the Unemployment Insurance Trust Fund. For that reason the money cannot be certified as "contributions paid to the state" when preparing federal FUTA Form 940.
Special Payroll Tax Offsets are used to fund various state programs. Programs that have been supported this way include:
- Wage Security Fund -- Pays final wages to persons who are unemployed and whose employer could not afford to make a final payroll.
- SEDAF--The Supplemental Employment Department Administrative Fund is used to provide Employment Department services.
- JOBS Plus Program -- Provided partial wage reimbursement to employers--this program ended June 30, 2005. Click on the link above for more information.
For more information go to Special Payroll Tax Offset.
Requires Adobe Acrobat Reader
21. Question
What do I need to know and do if the Employment Department notifies me they are going perform an audit?
Answer
All federal and state taxing agencies perform audits to ensure compliance with their laws. An auditor confirms all wages have been reported correctly and all taxable wages have been computed correctly.
You may be required to provide payroll records, W-2s, 1099s, IRS and State Department of Revenue records, and general disbursement records such as your check register, invoices, and canceled checks for review. For more information go to Informational Flyer Questions and Answers about UI Tax Audits.
Requires Adobe Acrobat Reader
22. Question
What rights are protected by the Employment Department? What are my responsibilities as an employer?
Answer
Employer rights include confidential handling of your information and protection from unauthorized disclosure. Oregon Law provides you with appeal rights. Many documents you receive give you the option to appeal the decision or assessment.
Employer responsibilities specify that you must:
- Allow the Employment Department to review your records, if asked.
- Register using the Combined Employer’s Registration.
- Post the notice that you are a subject employer where employees can read it.
- Keep adequate business payroll records.
- Pay taxes or reimbursements when due.
- File the required quarterly or annual tax forms on time with complete information.
- Inform the Employment Department and Department of Revenue of any changes to the organization or its status.
For more information go to Informational Flyer Employer Rights and Responsibilities .
Requires Adobe Acrobat Reader
23. Question
What are the Employment Department programs?
Answer
Employment Department programs include:
For more information go to Employers Handbook . You can order a paper copy of the Employers Handbook ( ED Pub 117) online at www.oregon.gov/EMPLOY/TAX and then select Order Employer Forms or call 503-947-1488, Option 3.
Requires Adobe Acrobat Reader
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