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The Community Safety Payroll tax will be effective January 1, 2021. The first quarterly tax return and payment for the employer payroll tax and the employee payroll tax will be due on April 30, 2021. The first annual return and payment for the self-employment tax will be due April 15, 2022, for calendar year filers.
After seven years, the City Council must refer the continuation of the payroll tax to a public vote, or the tax will be terminated. If the Council does not refer the continuation to voters or the voters reject the continuation, the payroll tax will end on Dec. 31, 2028.
The payroll tax is paid by employers, employees, and self-employed persons.
An employer is responsible for paying the employer payroll tax as well as withholding and remitting the employee payroll tax on behalf of all employees with subject wages. Self-employed individuals are responsible for paying the self-employment tax.
The employer payroll tax is calculated at a tax rate of 0.0021 (or .21 percent) of total wages paid by an employer. For employers with two or less employees, the tax rate is 0.0015 (or .15 percent) for the first $100,000 of wages paid.
The self-employment tax is calculated at a tax rate of 0.0021 (or .21 percent) of net earnings from self-employment. For self-employed individuals with two or less employees, the tax rate is 0.0015 (or .15 percent) for the first $100,000 of net earnings from self-employment.
The tax rate will be determined using annualized income tax rate charts divided out by pay period, based on the hourly wage rates provided in the Ordinance.
Estimate the payroll tax for employers and employees.
No, overtime wages are not used to determine the applicable tax rate but are subject to the payroll tax.
Example: Juan is paid $14 per hour and is paid weekly. During the workweek, he worked 50 hours (40 regular hours and 10 overtime hours) and received $770 in wages ($560 (40 hours * $14) plus $210 (10 hours * $21 – Juan’s overtime hourly rate)). Juan’s employer will exclude $210 in overtime wages in determining the applicable tax rate. That rate is then applied to all subject wages, including overtime wages.
Overtime wages should be calculated consistent with the Fair Labor Standards Act (FLSA) and applicable Oregon state law.
Public employees are subject to the employee payroll tax if they work at a public employer located in the Eugene city limits.
Public employers are exempt from the employer payroll tax because intergovernmental taxation is prohibited. Without express authority, one government entity cannot tax another.
Nonprofit 501(c)(3) organizations are subject to the employer payroll tax and their employees are subject to the employee payroll tax.
Use our online Search by Address tool to see if an address is in the city limits,. The Eugene city limits is not the same as the Eugene urban growth boundary or determined by certain ZIP codes. Your address may contain “Eugene,” but still be outside the Eugene city limits.
You are taxed on all wages earned while working at an employer’s business location in the Eugene city limits, regardless of where the work is performed. For this purpose, “business location” is defined as any physical location in the Eugene city limits to which an employer conducts business operations, including any real property, building, facility, or office owned, leased, or occupied by the employer. “Business location” does not include temporary job sites generated by customers located in the Eugene city limits, including but not limited to construction sites or plumbing/electrical/landscaping clients.
Telecommuters (or remote workers) are subject to the employee tax to the extent that they work for an employer located in the Eugene city limits, even though the work may be performed outside the City limits.
Client locations and temporary job sites are not considered a “business location” for the purposes of the payroll tax.
If an employer with a physical address in the City has one or more business locations outside the City, no tax is owed by the employer or employee for those hours an employee works at an employer’s business location that is outside the City, even if the employee lives in the City limits.
The employer payroll tax and the employee payroll tax are paid on a quarterly basis. Quarterly returns and payments of tax are due on or before the last day of the month following the end of the quarter.
The self-employment tax is paid on an annual basis and is due the same day as your federal and Oregon individual income tax returns which is April 15 for calendar year filers. For individuals filing a fiscal year return, the return is due on the 15th day of the fourth month following the end of the fiscal year.
When the due date falls on a Saturday, Sunday, or legal holiday, the due date will be the next business day.
The employer payroll tax is applied to the total wages paid by the employer all for services performed by an employee for an employer, including the cash value of all renumeration paid in any medium other than cash. This includes, but not limited to, salaries, fees, tips, bonuses, or commission on sales. If services are paid for in a medium other than cash, the fair market value of the thing taken in payment is the amount to be included as wages.
For the employee payroll tax, the tax is applied to total wages, after pre-tax deductions.
For the purposes of the payroll taxes, “wages” does not include renumeration:
Wages earned at minimum wage (or $12 per hour as of July 1, 2020) are exempt from the employee payroll tax. This is true even if the employee receives overtime pay.
Yes, you’ll owe a 5 percent late-payment penalty on any tax not paid by due date of the return, even if you’ve filed an extension for the self-employment tax.
If you file your return more than 30 days after the due date (including an extension for the self-employment tax return), a 20 percent late-filing penalty will be added, and you’ll owe a total penalty of 25 percent of any tax not paid.
If returns are not filed for 12 consecutive quarters, or three years for annual returns, you may be subject a 100% penalty.
Employers who knowingly fail to deduct and withhold the tax may be subject to a penalty of $250 per employee, up to $25,000 for each tax period, in addition to any other penalties or interest.
Interest is charged on any unpaid tax if you don’t pay the tax by the due date. The interest period begins the day after the tax is due on all unpaid tax from the due date until the tax is paid.
No, a self-employed individual who also has employees is not subject to the employer payroll tax, only the self-employment tax. However, as an employer you may be required to withhold and remit the employee payroll tax on behalf of your employees.
Yes, the Lane Transit Tax and Community Safety Payroll Tax are separate taxes and not connected. Therefore, if you are subject to both taxes, you must pay both taxes.
No, you do not need to submit estimated payments for the payroll taxes or self-employment tax.
You are not allowed an extension to file quarterly returns for the employer payroll tax or employee payroll tax. You must file the quarterly return and pay the tax by the due date to avoid penalty and interest.
For the self-employment tax, if you are allowed an extension for federal or Oregon purposes, you are allowed the same extension. If you have been granted an extension, you must make your payment by the original due date of the return to avoid a penalty and interest charge. An extension doesn’t mean more time to pay.
Yes, you are required to report the subject wages and tax withheld for each employee. Report the subject wages on Form W-2 provided to an employee in box 18 (local wages, tips, etc.), the payroll tax paid in box 19 (local income tax), and “EUG” in box 20 (locality name).
Yes, if you are an employer or self-employed person with a physical address in the Eugene city limits and subject to the community safety payroll tax, you’ll need to register with the City. The City is currently working with a tax administration service, MUNIRevs, that will provide online tools for registering, filing tax forms, and submitting payments. The City will post more information as that service is implemented.