Tax - Employer Responsibilities

Contact: Unemployment Insurance Programs & Methods | Phone: 503-947-1685
875 Union St. NE | Salem, OR 97311 | Hours of Operation: 9:00 AM - 4:00 PM
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Registration

As an employer, you'll need to register with the Oregon Employment Department. Once you are registered and if you have employees, you will be directed to the Department of Revenue to apply for a Business Identification Number (BIN).

You can register quickly and securely on the Department of Revenue, Revenue Online site. Register online for a BIN using Revenue Online or by submitting a Combined Employer's Registration form. You must register before issuing any paychecks.

If you are a subject employer, you'll also need to post the notice concerning Unemployment Insurance (Form 11) where your employees can read it. We will mail you this form. We can provide this form in English and Spanish.

Status Changes

You must notify the Oregon Employment Department and the Oregon Department of Revenue when changes are made in the organization, or the status of your business. The following are examples of changes that you need to report on the Business Change in Status (Form 013):

Sale or lease of business
Dissolution of a partnership
Formation of a new partnership
Dissolution of a corporation
Formation of a new corporation
Death of an owner or partner
Any other changes in the legal standing of a business

If the address of your business changes, you will need to notify us on the Business Contact Change Form so we can update your mailing information to receive important information regarding taxes, Unemployment Insurance, hearings etc.

Forms for status or contact changes are located on the Tax Forms & Fliers page.

Payroll Records

You are expected to keep adequate payroll records as an employer or third party administrator. This includes:

Social Security numbers for each employee
Proof of U.S. citizenship or authorization to work in the U.S. for all employees, and
Payroll records of when and how much each employee has been paid

Taxes

You are expected to pay taxes or reimbursements when they are due.

Filing Reports

You are expected to file required quarterly reports or annual tax forms on time with complete information.

Employers are required to file an Oregon Quarterly Tax Report (Form OQ) each calendar quarter.

Domestic employers may choose to file annually using Oregon Annual Tax Report (Form OA).

When a former employee files a claim for Unemployment Insurance (UI) benefits, we will send you a request for information about why the employee is no longer working for you. We need this information to decide if the former employee is eligible for benefits.

Employers use Frances Online to reply to information requests like this. We may send you other questionnaires or forms to respond to through your Frances Online account. When you are logged in to Frances, select the "Questionnaires" panel from the employer home page where you will see all questionnaires that need a response. Select the "Respond to Questionnaire" link, answer all questions and submit. You will also see an alert on your action center tab.

If an employer or third-party administrator already has a SIDES account they are using respond to information requests, they can continue to do so. SIDES, or the State Information Data Exchange System, is another option for employers and third-party administrators, especially those who have employees in multiple states. Oregon currently uses the following SIDES exchanges: Notice of Wages Reported, Possible Claim Notice, and Notice of Claim Filed. For more information, call 503-947-1685 or email oregon.sideshelp@employ.oregon.gov.

Tax Law and Rules

UI Tax Law | UI Tax Rules

Payments, Reports, Penalties & Interest

Payments

Payroll tax payments are due the last day of the month following the end of the quarter.

Unemployment tax payments only for annual domestic employers are due January 31 of each year.

Employers required to deposit state withholding once each month or more may also include a payment for unemployment insurance tax.

Employers receive billing statements reflecting their balance with the Oregon Employment Department each month. Additionally, we may send you specific notices or other communications if you have an outstanding balance due to unpaid unemployment insurance taxes.

To pay your balance in full, log in to your Frances Online account, select “Pay Outstanding Balance,", then follow the payment links.
To submit a request for a payment plan, log in to your Frances Online account, select the “I want to" tab, select the payment plan application, and follow the links.
If you have extenuating circumstances that prevent you from paying your balance in full or setting up a payment plan, please call 503-947-1710 or 800-553-5396 (toll free).
If you want to mail your payment, please include the Statement of Account payment voucher we sent you and mail your payment to:

Attn: Contributions and Recovery

Oregon Employment Department

PO Box 4395

Portland, OR 97208

If you have questions regarding a message you receive from the Employment Department because of unpaid unemployment insurance taxes, please contact Contributions and Recovery at contributions.unit@employ.oregon.gov or call 503-947-1488 between 9 a.m. and 5 p.m. Monday through Friday.”

Reports

Reports are due the same day as payments. Domestic employer reports are due quarterly or annually each year on January 31.

A penalty may be assessed for any reports received after the due date. The amount of the penalty may change from year to year.

Penalties

A penalty may be assessed for any reports received after the due date. The amount of the penalty may change from year to year.

A 10 percent penalty may be assessed if you fail to pay tax assessed (Notice of Tax Assessment, Written Demand Notice, or a Notice of Estimated Tax Assessment) within the time prescribed. Compliance with an approved payment plan will help you avoid the assessment of a penalty.

Interest

Interest on payments after the due date is 1.5 percent per month on unpaid taxes. Interest is not calculated on accrued interest, penalties or legal costs - only on tax due. Interest is assessed if the payment is even one day late.

If all money owed or reports required are not received by the Employment Department prior to September 1, of each year, an additional penalty of 1 percent of the previous year’s taxable payroll will be assessed.

Funds received from an employer apply first to legal costs (including the service of warrants incurred in collecting the debt), then to penalties assessed, then to interest assessed, and lastly to unpaid tax assessed.

Recovery Efforts

In certain circumstances, the Employment Department may take actions to recover overdue unemployment insurance tax payments when employers do not pay them. Recovery efforts for overdue balances can include setting up payment plans, sending letters, making calls, garnishing bank accounts, placing liens, intercepting tax refunds (both state and federal), and sending the account to the Oregon Department of Revenue or a third party collection agency. It is important to pay your employer contributions on time in order to avoid facing interest, penalties, and involuntary collections actions.

What is a rate manipulation?

Rate manipulation is a tax evasion scheme where an employer manipulates their Unemployment Insurance (UI) payroll tax rate to achieve a lower rate, and thereby pay less taxes.

Typically, rate manipulation occurs when a business transfers payroll out of an existing company or organization to a new or different organization solely or primarily to reduce payroll taxes.

What is the harm in rate manipulation?

Rate manipulation hurts employers and harms the state’s Unemployment Insurane Trust Fund.

Rate manipulation goes against the experience-rated tax system that is widely supported by the business community. The Unemployment Insurance payroll tax rate is based on an employer’s history of benefit charges. With rate manipulation, an employer with a high payroll tax rate attempts to hide behind a different company with a lower tax rate and dump their payroll costs on all other employers.
Rate manipulation creates a competitive cost advantage for employers practicing this type of tax evasion.
Rate manipulation reduces money in Oregon’s Unemployment Insurance Trust Fund, causing an increase in tax rates for all employers.
Rate manipulation has already affected Oregon employers by reducing the tax dollars going into the Unemployment Insurance Trust Fund.
Rate manipulation reduces funds available to pay Unemployment Insurance benefits to unemployed workers.
Rate manipulation puts employers who try to manage their work and maintain steady employment for their employees at a disadvantage.
Rate manipulation rewards employers for dumping their tax responsibility on the rest of employers.

How is rate manipulation done?

The three most common ways (with many variations) include:

Vertical method – Create a “new” employer that is assigned a “new” employer tax rate of 3.3% (2011) and transfer payroll to the new employer.
Horizontal method – Transfer payroll to a subsidiary with a lower payroll tax rate.
Acquired rate method – Find another employer with a low payroll tax rate and arrange to transfer payroll to that employer.

We've discovered all types of businesses, across all industries, participating in rate manipulation schemes – for profit and nonprofit employers, small and large businesses.

Some employers don't realize they are participating in a rate manipulation scheme, but are simply following the advice of a business consultant or accountant. In fact, most employers become involved in rate manipulation at the suggestion of a consultant or accountant.

What is the penalty for rate manipulation

Under ORS 657.480, a person (employer) may not engage in or advise another person (employer) to engage in activity to transfer or acquire, or attempt to transfer or acquire, a trade or business or any portion of a trade or business solely or primarily for the purpose of obtaining a lower unemployment insurance (UI) tax rate.

If a person (employer) knowingly engages in such activity, the highest UI tax rate (currently 5.4%) will be assigned to that trade or business for the tax year in which the activity occurred and for the next three years. However, if the person (employer) is already subject to the highest tax rate for the year or if the amount of increase in the tax rate is less than 2%, an additional penalty tax rate of 2% will be added to the calculated tax rate.

In addition, if a person (employer) advises another person (employer) to engage in this activity, they may be assessed a civil penalty not to exceed $10,000. Criminal penalties for engaging in tax avoidance schemes may also be imposed.

Why should I voluntarily come forward?

We are already actively reviewing employer accounts looking for potential rate manipulation cases, and we aggressively build cases that may result in civil, administrative, and, in some cases, criminal penalties.

What should I do if I think rate manipulation is taking place with another employer?

Please contact us. You will be asked to provide some basic information regarding the situation. All information provided will be kept confidential.

Do you really know who is manipulating rates?

We have developed several methods to uncover this type of tax avoidance. Additionally, we use an automated detection software package that was specifically developed to identify rate manipulation cases.