Payroll Tax Relief
Your Business May Be Eligible for UI Payroll Tax Relief and Forgiveness
On July 27, 2021, Governor Brown signed into law House Bill 3389, which provides unemployment insurance (UI) payroll tax relief in response to the ongoing COVID-19 pandemic. The goal of the relief plan is to stimulate the immediate recovery from the COVID-19 pandemic while maintaining long-term stability for the UI Trust Fund.
This effort reflects the recognition by the Oregon Employment Department, Oregon State Legislature, Gov. Brown, and a variety of interest groups that COVID-19 has significantly affected many Oregon businesses. The new relief plan provided by House Bill 3389 expands ongoing efforts to help employers subject to UI tax that have been affected by the pandemic.
For UI tax year 2021, this plan allows eligible employers to defer one-third of their 2021 UI tax liability until June 30, 2022, and avoid any associated interest and penalties.
This plan also provides up to 100 percent forgiveness of the deferrable 2021 UI taxes, based on how much an employer’s UI tax rate increased from 2020 to 2021:
- Tax rate increased 0.5 to 1.0 percentage point will be eligible for deferral only
- Tax rate increased more than 1.0 percentage point and not more than 1.5 percentage points will be eligible for 50 percent of their deferrable UI taxes forgiven
- Tax rate increased more than 1.5 percentage points and not more than 2.0 percentage points will be eligible for 75 percent of their deferrable UI taxes forgiven
- Tax rate increased more than 2.0 percentage points will be eligible for 100 percent of their deferrable UI taxes forgiven
Employers must meet all of the following conditions to be eligible for UI tax deferral and forgiveness:
- As of January 1, 2021 have paid all outstanding UI tax contributions and related liabilities, including those determined in a payment plan accepted by the director of the Oregon Employment Department
- File all required 2021 payroll reports on time
- Pay on time all 2021 tax liabilities imposed under ORS chapter 657 that are not deferred or forgiven
Additionally, an employer’s UI tax experience rating for 2022 through 2024 will roll back to the pre-pandemic 2020 UI experience rate (benefit ratio). Your tax rates may fluctuate during the 2022 – 2024 period due to tax schedule changes; however, the rate will be based on your experience rate prior to the pandemic.
- Eligible employers will be automatically enrolled. There is no application for this relief plan. The Oregon Employment Department will contact employers throughout the 2021 UI tax year with updates on eligibility status or requirements.
Participation in the deferral portion of this relief plan could negatively affect your Federal Unemployment Tax credit, for additional information please contact your payroll tax advisor or visit Instructions for Form 940 (2020) | Internal Revenue Service (irs.gov)
This relief only applies to Oregon UI payroll taxes. The Oregon Employment Department does not have authority over other payroll taxes, such as Withholding Tax, Statewide Transit, Workers’ Benefit Fund, and Lane Transit or Tri-met taxes.