OAR 150-267-0020
Wages Exempt From Transit Payroll Tax
(1)
All foreign insurance companies (those formed under laws from other states), their adjusters, agents, office support staff are specifically exempted by ORS 731.840 (Retaliatory or corporate excise tax in lieu of certain taxes and assessments). This exemption does not extend to domestic insurers, health care contractors, and motorist service clubs.(2)
ORS 267.380 (Definitions for ORS 267.380 and 267.385)(2)(h) states if remuneration is not subject to withholding under ORS Chapter 316 (Personal Income Tax) it is not subject to the transit payroll tax. All wages paid for domestic service described in 316.162 (Definitions for ORS 316.162 to 316.221)(c) are exempt from withholding and transit payroll tax. If the remuneration is not subject to withholding under ORS Chapter 316 (Personal Income Tax) such wages would be exempt from the transit payroll tax but generally are subject to transit self-employment tax. Unless a real estate agent meets all the requirements of 316.209 (Applicability of ORS 316.162 to 316.221 when services performed by qualified real estate broker or direct seller), the remuneration for services performed by that agent will be subject to transit payroll taxes.(3)
ORS 267.380 (Definitions for ORS 267.380 and 267.385)(4), which subjects deferred compensation to transit tax, creates an exception to the general rule stated in 267.380 (Definitions for ORS 267.380 and 267.385)(2)(h), which exempts from transit tax remuneration not subject to withholding tax.(4)
The exemption in ORS 267.380 (Definitions for ORS 267.380 and 267.385)(2)(c) applies to labor not in the course of the employer’s trade or business. The exemption does not apply to wages for substantial labor not in the regular course of the employer’s trade or business, such as the construction of a private home where the owner is the employer.(5)
Transit payroll tax is imposed only on that portion of the payroll paid with respect to duties performed by employees within the District. If an employee performs services both inside and outside the District, the employer shall prorate the wages paid to that particular employee based upon the relative amounts of time worked by that employee within and without the District.(6)
The exemption in ORS 267.380 (Definitions for ORS 267.380 and 267.385)(2)(e) applies solely to seasonal labor in connection with the planting, cultivating or harvesting of agricultural crops. Transit payroll tax applies to the entire wages of “regular” farm employees even though, as a part of their duties, they engage in planting, cultivating or harvesting.(7)
Certain state agencies are exempt from transit payroll tax under the provisions of ORS 267.430 (Certain state agencies exempt from employer payroll tax).(8)
Internal Revenue Code Section 501(c)(3) institutions (charitable and other nonprofit institutions) other than hospitals are exempt from transit payroll taxes. For the purposes of ORS 267.380 (Definitions for ORS 267.380 and 267.385)(2)(a), a hospital is defined as:(a)
A permanent facility or organization with facilities that include inpatient beds, and with medical services, including physician services and continuous nursing services under the supervision of registered nurses, to provide diagnosis and medical or surgical treatment primarily for but not limited to acutely ill patients and accident victims, or to provide treatment for the mentally ill.(b)
A hospital’s parent or subsidiary 501(c)(3) organization that provides administrative and support functions to the hospital.(9)
Employers may be relieved of the duty to pay transit tax where it can be shown to the satisfaction of the department that subject wages paid to each individual employee will be $300 or less in a calendar year.
Source:
Rule 150-267-0020 — Wages Exempt From Transit Payroll Tax, https://secure.sos.state.or.us/oard/view.action?ruleNumber=150-267-0020.