2023 Oregon Revised Statutes › Volume : 08 - Revenue and Taxation › Chapter 316 - Personal Income Tax › Section 316.164 - When surety bond or letter of credit required of employer; enforcement.

(1) Except as provided in subsection (3) of this section, if the Department of Revenue makes the findings required under subsection (2) of this section, the department may require any employer subject to ORS 316.162 to 316.221, except the state or its political subdivisions, to post a surety bond, or irrevocable letter of credit issued by an insured institution, as defined in ORS 706.008, with the department, to secure future payment of amounts required to be withheld and paid over to the department under ORS 316.162 to 316.221 or 320.550. The bond or letter of credit shall be in an amount equal to the amounts required to be withheld upon the wages paid or estimated to be paid by the employer for a period of four calendar quarters. The bond or letter of credit shall be in a form acceptable to the department. Posting of the bond or letter of credit shall not relieve the employer from withholding and paying over amounts based on wages paid by the employer under any provision of ORS 316.162 to 316.221 or 320.550. The department may, in its discretion, at any time apply such bond or letter of credit or part thereof to the delinquencies or indebtedness of the employer arising under any provision of ORS 316.162 to 316.221 and 320.550 and accruing after the date the bond or letter of credit was posted. Appeal of an action of the department under this section shall not relieve an employer of the requirement during the pendency of the appeal.
(2) Before requiring an employer to post a bond or irrevocable letter of credit under subsection (1) of this section, the department shall determine that the employer has failed to make payment to the department of amounts required to be withheld and paid over under any provision of ORS 316.162 to 316.221 or 320.550 for at least three calendar quarters, and the total amount of delinquent payments exceeds $2,500, exclusive of interest or penalties. For purposes of this subsection, a payment shall not be considered delinquent if the employer’s liability to withhold is subject to appeal to the tax court.
(3) The department shall not require a bond or irrevocable letter of credit to be posted under this section if the employer elects to notify the department of the times of payment of wages to the employees of the employer, and, notwithstanding ORS 316.197, to pay over amounts withheld within three banking days after the dates the wages were paid.
(4) Before requiring an employer to post a bond or irrevocable letter of credit or make payment of amounts required to be withheld in the manner prescribed in subsection (3) of this section, the department shall attempt to obtain payment of delinquent amounts through other methods of collection, however, the department is not required to seize or sell real or personal property in order to comply with the requirements of this subsection.
(5) Any bond or irrevocable letter of credit required under subsection (1) of this section shall become the sole property of the department and shall be held by the department to guarantee payment of withholding taxes by the employer. The bond or letter of credit shall be held for the benefit of the State of Oregon, subject only to the provisions of subsection (6) of this section. The bond or letter of credit shall be prior to all other liens, claims or encumbrances and shall be exempt from any process, attachment, garnishment or execution.
(6) If an employer ceases to be an employer subject to ORS 316.162 to 316.221 or 320.550, the department shall, upon receipt of all payments due from the employer for withheld amounts, cancel any bond or irrevocable letter of credit given under this section. Such bonds or letters of credit held for the benefit of the State of Oregon shall first be applied to any indebtedness or deficiencies due from the employer under ORS 316.162 to 316.221 and 320.550 and accruing after the date the bond or letter of credit was posted before any return is made to the employer. The employer shall have no interest in such bond or letter of credit prior to full compliance with this section and all provisions of ORS 316.162 to 316.221 and 320.550.
(7) If an employer required to post a bond or irrevocable letter of credit or make payment of amounts withheld in the manner prescribed under this section makes full payment of all delinquent amounts due and owing at the time the bond, letter of credit or accelerated payment schedule was required and makes payment of amounts due under ORS 316.162 to 316.221 and 320.550 and files returns required in connection with those payments in a timely manner for the succeeding four calendar quarters, the department shall release the employer from the requirement to post the bond or letter of credit or make accelerated payments of amounts withheld.
(8) If any employer fails to comply with subsections (1) to (7) of this section, the Oregon Tax Court, upon commencement of an action by the department for that purpose, may order the employer to post the required bond or irrevocable letter of credit or make accelerated payments of amounts withheld. The employer’s failure to obey an order of the court is punishable by contempt. If the Oregon Tax Court determines that an order of compliance enforceable by contempt proceedings will not assure the payment of withheld taxes by the employer, the court may enjoin the employer from further employing individuals in this state or continuing in business therein until the employer has complied with subsections (1) to (7) of this section. [1985 c.406 §§2,3; 1991 c.331 §143; 1995 c.650 §36; 1997 c.631 §§453,454; 2017 c.750 §122b]