If your small business has employees working in Oregon, you'll need to pay Oregon unemployment insurance (UI) tax.The UI tax funds unemployment compensation programs for eligible employees.In Oregon, state UI tax is just one of several taxes that employers must pay.Other important employer taxes, not covered here, include federal UI tax, and state and federal withholding taxes.
Different states have different rules and rates for UI taxes.Here are the basic rules for Oregon's UI tax.
As an Oregon employer, your small business must establish an account with the Oregon Department of Revenue (DOR) and Oregon Employment Department.You can register either online or on paper.Once registered, you'll be issued a Business Identification Number (BIN) that you will use for all payroll tax purposes including for UI taxes.To register online, go to the Oregon Business Registry (OBR) within the Secretary of State website.If you register online, you should receive your BIN in 1-3 working days.To register on paper, use Form 150-211-055, Combined Employer's Registration.You can download blank forms from the Forms and Publications section of the DOR website.The form can be submitted by regular mail or by fax.If you register by mail, you should receive your BIN in about three weeks.There is no fee to register your business with DOR.Whether online or on paper, the process registers your business with the main employment-related state agencies including the Employment Department.
Note:To establish your Oregon UI tax account, you'll need a federal employer identification number (EIN).You can apply for an EIN at irs.gov.Generally, if you apply online, you will receive your EIN immediately.
In Oregon, most for-profit employers are liable for state UI taxes as soon as they have either:
These rules are different from those that apply for liability under the Federal Unemployment Tax Act (FUTA).There are also different Oregon rules, not covered here, that apply to agricultural (farm) workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.
One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.
UI tax is paid on each employee's wages up to a maximum annual amount.That amount, known as the taxable wage base, increases by roughly $700-900 every year in Oregon.In recent years it has approached and then exceeded $35,000.
The state UI tax rate for new employers, also known as the standard beginning tax rate, also changes from one year to the next, either increasing or decreasing.In recent years, it generally has been between 2.9% and 3.3%.Established employers are subject to a lower or higher rate than new employers depending on an "experience rating."This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.
Oregon combines its UI and other payroll tax reporting.UI tax reports and payments are due on the last day of the month following the end of the quarter.In other words:
If the due date is a Saturday, Sunday, or holiday, the due date is extended to the next business day.
You can file your reports and payments online or on paper.For online filing you have two options:
If you prefer to file on paper, use Form OQ, Oregon Quarterly Tax Report, and Form 132, Wage Detail Report.Packets containing all necessary payroll tax forms are mailed each year, in February, to employers who do not use a payroll reporting service and do not report using an electronic reporting method.You also can order copies from the Forms section of the Employment Department website.You can pay by Electronic Funds Transfer (EFT) or by check.If paying by check, use Form OTC, Oregon Tax Coupon.Each December the state sends these coupons to employers who do not use EFT.
You must file quarterly reports as long as your account is active and even if you have no payroll for the quarter.If there is no payroll, file a no-payroll report.You can file no-payroll reports using Interactive Voice Response (IVR) telephone reporting.Check the Employment Department website for more details.You will be subject to penalties for failing to file a report even if there is no payroll.
You are required to post a notice (poster) regarding state unemployment claims in a conspicuous place for all employees.The notice provides basic information on how to file a claim.The Employment Department automatically sends this notice (Form 11, Employment Insurance Notice) after an account is set up or reopened.You can order additional posters by going to the Forms section of the Employment Department website.
Employers who use independent contractors rather than hiring employees are not subject to the UI tax.However, it's important that you do not misclassify an employee as an independent contractor.If you do misclassify an employee, you could be subject to penalties or fines.
You may decide that it's easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service.If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.
This article touches on only the most basic elements of Oregon UI taxes.Avoid possible penalties for making mistakes by checking the IRS, DOR, and Employment Department websites for the latest information.The Employment Department also publishes an Employer Handbook that you can download from their website.In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, and required reporting of new hires.You can get more information about other small business tax issues in other articles here on Nolo.com.