Oregon HB 3389 Unemployment Insurance Payroll Tax Relief and Forgiveness

At a Glance

• Employers may defer paying up to one-third of 2021 unemployment taxes until June 30, 2022.
• Employer’s UI tax experience rating for2022 through 2024 will roll back to the pre pandemic 2020 UI experience rate. 
• Employers may have up to 100% of the deferred amount forgiven.

Introduction

Oregon HB 3389 which provides unemployment insurance (UI) payroll tax relief in response to the ongoing COVID-19 pandemic was signed into law on July 27, 2021.

The payroll tax relief plan allows for three benefits. For UI tax year 2021, this plan allows eligible employers to defer one-third of their 2021 UI tax liability until June 30, 2022, without interest or penalty. The deferred taxes may be forgiven, depending on how much the employer’s UI tax rate increased from 2020 to 2021:

• Tax rate increased 0.5% to 1.0% will be eligible for deferral only.
• Tax rate increased more than 1.0% and not more than 1.5% will be eligible for 50% of their deferrable UI taxes forgiven.
• Tax rate increased more than 1.5%and not more than 2.0% will be eligible for 75% of their deferrable UI taxes forgiven.
• Tax rate increased more than 2.0% will be eligible for 100% of their deferrable UI taxes forgiven.

Employers must meet all the following conditions to be eligible for UI tax deferral and forgiveness.

• As of January 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.
• File all required 2021 payroll reports on time.
• Pay on time all 2021 tax liabilities imposed that are not deferred or forgiven.

An employer’s UI tax experience rating from 2022 through 2024 will roll back to the employer’s pre-pandemic experience rate. The tax rate may fluctuate during 2022 – 2024, however the rate will be based on your experience rate prior to the pandemic. Eligible employers will be automatically enrolled. There is no application for this relief plan. The Oregon Employment Department will contact 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 additional information please contact your payroll tax advisor.

Next Steps

Paylocity is closely monitoring this agency and will provide updates as they become available.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner.

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.