Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 316 - PERSONAL INCOME TAX GENERAL PROVISIONS › Section 150-316-0255 - Withholding by Employers

Current through Register Vol. 63, No. 7, July 1, 2024
(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.