OAR 150-316-0250: Bonding Requirements for Delinquent Withholding Employers

(1) As used in this section, a surety bond means a bond that guarantees payment of future income tax withholding or statewide transit taxes of employers. In order for a surety bond to be acceptable, it must be issued by a company authorized to do business in Oregon by the Oregon Division of Financial Regulation. (2) As used in this section, an irrevocable letter of credit means an irrevocable letter of credit issued by a commercial bank. “Commercial bank” is defined as a bank, a savings bank, a stock savings bank, a national bank, a foreign institution or an extranational institution. (3) The department may require an employer to post a bond or irrevocable letter of credit if the employer becomes delinquent for three calendar quarters and the tax amount exceeds $2,500.00. The amount of the bond or irrevocable letter of credit must be at least equal to the amount that should have been withheld from wages for four calendar quarters. (4) If an employer elects to pay over income tax withholding or statewide transit taxes within three banking days of each payday, the employer will not be required to post a bond or irrevocable letter of credit. Employers electing this option must continue making payments in this manner until all delinquent amounts are paid in full and they have had no further delinquent returns or payments for four consecutive calendar quarters. (5) As used in ORS 316.164(4), “other methods of collection” means billing notices, collection letters, and telephone calls. (6) All bonds or irrevocable letters of credit become the property of the department and must be used solely to guarantee payment of income tax withholding or statewide transit taxes. The department may, at any time, apply any part or all of the bond or irrevocable letter of credit to any delinquency accrued after the bond or irrevocable letter of credit was posted. However, the employer must maintain the original amount of the bond or irrevocable letter of credit at all times. (7) The bond or irrevocable letter of credit, or unused portion must be returned to an employer when: (a) The employer stops doing business as an employer and all delinquent amounts are paid in full; or (b) The employer pays all delinquent amounts in full and has no further delinquent returns or payments for four consecutive calendar quarters. (8) The department may proceed with action through the Oregon Tax Court to require compliance from any employer who fails to comply with this section. (9) Any appeal by an employer will not relieve an employer of posting a bond or irrevocable letter of credit or making accelerated payments, if required to do so by the department.