On July 27, 2021, Gov. Kate Brown signed into law House Bill 3389, which provides unemployment insurance (UI) payroll tax relief in response to the COVID-19 pandemic. 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.
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% forgiveness of the deferrable 2021 UI taxes, based on how much an employer’s UI tax rate increased from 2020 to 2021.
Employers must meet all of the following conditions to be eligible for UI tax deferral and forgiveness:
- As of Jan. 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
- Filed all required 2021 payroll reports on time
- Paid 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. If you did not have a tax rate based on experience in 2020, you will be assigned the base rate for 2022 – 2024 that is in effect for the given year.
You will be automatically enrolled if you are eligible. There is no application for this relief plan. The Oregon Employment Department contacted 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 more information, contact your payroll tax advisor or visit Instructions for Form 940 (2021) at irs.gov.