OAR 150-267-0020: Wages Exempt From Transit Payroll Tax

For purposes of the transit district payroll taxes, certain payrolls are exempted from taxation by exclusion of the amounts paid from the definition of wages. The following are clarifications of some of the allowable exemptions: (1) All foreign insurance companies (those formed under laws from other states), their adjusters, agents, office support staff are specifically exempted by ORS 731.840. This exemption does not extend to domestic insurers, health care contractors, and motorist service clubs. (2) ORS 267.380(2)(h) states if remuneration is not subject to withholding under ORS Chapter 316 it is not subject to the transit payroll tax. All wages paid for domestic service described in 316.162(c) are exempt from withholding and transit payroll tax. If the remuneration is not subject to withholding under ORS Chapter 316 such wages would be exempt from the transit payroll tax but generally are subject to transit self-employment tax. Unless a real estate agent meets all the requirements of 316.209, the remuneration for services performed by that agent will be subject to transit payroll taxes. (3) ORS 267.380(4), which subjects deferred compensation to transit tax, creates an exception to the general rule stated in 267.380(2)(h), which exempts from transit tax remuneration not subject to withholding tax. (4) The exemption in ORS 267.380(2)(c) applies to labor not in the course of the employer's trade or business. The exemption does not apply to wages for substantial labor not in the regular course of the employer's trade or business, such as the construction of a private home where the owner is the employer. (5) Transit payroll tax is imposed only on that portion of the payroll paid with respect to duties performed by employees within the District. If an employee performs services both inside and outside the District, the employer shall prorate the wages paid to that particular employee based upon the relative amounts of time worked by that employee within and without the District. (6) The exemption in ORS 267.380(2)(e) applies solely to seasonal labor in connection with the planting, cultivating or harvesting of agricultural crops. Transit payroll tax applies to the entire wages of "regular" farm employees even though, as a part of their duties, they engage in planting, cultivating or harvesting. (7) Certain state agencies are exempt from transit payroll tax under the provisions of ORS 267.430. (8) Internal Revenue Code Section 501(c)(3) institutions (charitable and other nonprofit institutions) other than hospitals are exempt from transit payroll taxes. For the purposes of ORS 267.380(2)(a), a hospital is defined as: (a) A permanent facility or organization with facilities that include inpatient beds, and with medical services, including physician services and continuous nursing services under the supervision of registered nurses, to provide diagnosis and medical or surgical treatment primarily for but not limited to acutely ill patients and accident victims, or to provide treatment for the mentally ill. (b) A hospital's parent or subsidiary 501(c)(3) organization that provides administrative and support functions to the hospital. (9) Employers may be relieved of the duty to pay transit tax where it can be shown to the satisfaction of the department that subject wages paid to each individual employee will be $300 or less in a calendar year.