Or. Admin. R. 150-316-0255

Current through Register Vol. 63, No. 8, August 1, 2024

Section 150-316-0255 - Withholding by Employers

(1) The term "employer" includes any person or organization for whom an individual performs any service as an employee. An employer may be an individual, corporation, partnership, estate, trust, association, joint venture, or other unincorporated organization. The term also includes religious, educational, charitable, and social organizations or societies even though such organizations are themselves exempted from payment of taxes. It includes governmental agencies, including federal, state, and local subdivisions, such as towns and counties. The federal government agencies withhold under an agreement sanctioned by the Act of Congress of July 17, 1952, and Executive Order 10407, dated December 6, 1952. It includes employers who engage only in interstate commerce.

(2) No statutory distinction is made as to the location of the employer. The withholding provision applies generally to any employer within the jurisdiction of the State of Oregon. Withholding is required of employers situated outside the state upon wages, commissions, or other emoluments paid to an employee or agent for services performed within the state, even though the employee or agent may be a nonresident and their Oregon employment may be of short duration. The department may, upon the written petition of an out-of-state employer, relieve such employer of the duty to withhold where it can be shown to the satisfaction of the department that the nonresident employee or agent temporarily serving within Oregon is not acting in the regular course of the employer's business or their stay within Oregon will be extremely short and income resulting therefrom will not create a potential Oregon individual income tax liability as to the employee. Both in-state and out-of-state employers may be relieved of the duty to withhold where it can be shown to the satisfaction of the department that each individual employee serving within Oregon will receive $300 or less in wages from that employer within a calendar year.

(3) Withholding is required as to all wages paid by resident and nonresident employers doing business in Oregon for services performed by any employee within the state. For services performed by a resident partly or entirely outside of Oregon the Department of Revenue may authorize special withholding arrangements in hardship cases where it can be shown that withholding tax is being paid to another state on such employee. An employer who is located outside of the state and has no Oregon business activity cannot be required to withhold Oregon tax from the wages of an Oregon resident working outside the state. However, such employer may register and withhold as a convenience to the employee. All wages paid to nonresidents (persons domiciled outside Oregon) for services performed in Oregon are subject to withholding. If the nonresident earns wages both in and outside of Oregon, such as a salesperson, only that part of the wages earned in Oregon is subject to withholding.

(4) If the employer, in violation of the provisions of ORS 316.167, fails to deduct and withhold the tax, the employer nevertheless is liable to remit to the department the amount which should have been withheld. The employer shall be relieved of such liability if and when the employer can show by proper evidence and proof satisfactory to the department that the employee's income tax against which such sum would have been credited has been paid without reduction through failure to withhold. Such waiver shall not operate to relieve the employer from liability for penalties, additions, or interest provided in the Act. The moneys withheld by employers from the wages of employees must be remitted promptly on the due date and no extension of time for such remittance is provided by statute or can be granted by the department. The funds involved are held by the employer in trust for the State of Oregon, and any use thereof by the employer amounts to an illegal conversion. The employer may not regard such funds as being in the same category as their own personal income tax indebtedness.

(5) An "employee" is any individual who performs services for another individual or organization having the right to control the employee as to the services to be performed and as to the manner of performance. Designation of an individual as an employee for purposes of industrial accident insurance, unemployment compensation, federal social security, or federal withholding will establish that individual as an employee for purposes of the Oregon withholding tax unless facts can be shown to the contrary.

(6) If the relationship of employer and employee actually exists, a different description of the relationship by the parties is immaterial; thus, it is of no consequence that the employee may be designated as a partner or independent contractor, contrary to fact. Family relationships or the fact that compensation may be based upon an agreed percentage of profits or other indeterminate measure, are of no consequence in determining the relationship of employer to employee. No distinction is made between classes or grades of employees; administrative and executive personnel and corporate officers are employees. Persons who are in business solely for themselves are not employees. However, professional people organized under Oregon's Professional Corporation Act, ORS Chapter 58, will be treated as employees of the corporation. By incorporating and rendering services, the professional person generally creates an employment relationship with the corporation.

(7) As used in this rule, the definition of worker leasing company is identical to the definition found in ORS Chapter 656. The relationship of employer to employee exists between worker leasing companies and the workers for which they act as lessor. The relationship of employer to employee does not exist between leased workers and the lessee if the following conditions are met:

(a) The worker leasing company has a valid license under ORS Chapter 656 and;

(b) There is a valid written worker leasing contract between the worker leasing company and the lessee. If these conditions are not met, the department may determine that the lessee is the employer of the leased workers. Statements in contractual agreements concerning employer tax liabilities are not sufficient to transfer liabilities between worker leasing companies and lessors.

Or. Admin. R. 150-316-0255

1-69 as 150-316.167-(A), 150-316.167-(B), 150-316.167-(C), 150-316.197-(A); 12-1-9-75, Renumbered to 150-316.167(1); 12-31-82; RD 10-1983, f. 12-20-83, cert. ef. 12-31-83; RD 5-1993, f. 12-30-93, cert. ef. 12-31-93; Renumbered from 150-316.167(1), REV 61-2016, f. 8-15-16, cert. ef. 9/1/2016

Stat. Auth.: ORS 305.100

Stats. Implemented: ORS 316.167