Oregon Withholding laws & HR compliance analysis

Oregon Withholding: What you need to know

The Oregon Department of Revenue (DOR) administers the state's withholding tax program. Employers residing in, or doing business in, Oregon must withhold taxes from all wages paid to employees who are residents of Oregon, even for services performed and wages earned outside of Oregon. Employers must also withhold tax from all wages earned by nonresident employees for services performed in Oregon. All Oregon employers must withhold taxes from employee wages at the same time employees are paid. For Oregon employers, due dates for paying state withholding tax are the same as the due dates for making federal withholding tax and Federal Insurance Contributions Act (FICA) tax deposits. Employers must report all wages on combined payroll tax reports. Withholding amounts are calculated based on Withholding Tax Formulas or, for computer payroll systems, percentage formulas provided by the DOR. Oregon taxable income is based on the taxpayer's federal adjusted gross income as determined under the provisions of the Internal Revenue Code in effect for the tax year of the taxpayer (OR Rev. Stat. Sec. 316.013).
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Withholding applies to all payments for services performed by an employee and paid by an employer, including the cash value of all remuneration paid in any medium other than cash (such as meals and lodging) (OR Rev. Stat. Sec. 316.162). Reimbursable expenses paid to an employee are not subject to withholding tax but must be specifically so identified when wages and reimbursement of expenses are in a single payment. If an employee receives a definite hourly, weekly, or monthly salary, employers must withhold tax on the entire amount, even though the amount includes an ...

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