INSIGHTS AND RESOURCES
New taxes impact Portland, Oregon area businesses and individuals
INSIGHT ARTICLE |
Authored by RSM US LLP
Effective Jan. 1, 2021, Portland, Oregon area businesses and individuals are subject to new taxes at the regional and county levels. Voters in greater Portland and Multnomah County approved measures in recent elections that levy additional taxes beginning as early as April 1, 2021, including a Supportive Housing Services Tax (regional government) and a Preschool for All Tax (Multnomah County).
Supportive Housing Services Tax
The Supportive Housing Services Tax is a program to raise money for people experiencing homelessness or at risk for experiencing homelessness. Initiated by Metro, the regional government of Clackamas, Multnomah and Washington counties, the program was passed by voters in May 2020 and will be funded by a 1% tax on taxable income of more than $125,000 for individuals and $200,000 for couples filing jointly, as well as a 1% tax on profits from businesses with gross receipts of more than $5 million.
Metro is providing an online address tool for taxpayers to determine if they are in the Metro jurisdiction, thus subject to the tax, either by residency, business location or work situs. Portland will be administering the tax on Portland Revenue Online (PRO).
For 2021, employers in the Metro jurisdiction can voluntarily withhold the tax from employee’s paychecks. Withholding will become mandatory in 2022 for employees earning $200,000 or more annually. Employees have the option of opting out of withholding. Additionally, employers are required to file quarterly and annual reconciliations and report local wages and tax withheld on employee W-2 forms.
The business tax portion of this new program is based on the net income of businesses located in Metro with over $5 million in gross receipts from both within and without of Metro’s jurisdiction. Estimated quarterly payments for the tax are expected to be required but administrative rules for the tax are still undergoing rulemaking.
Preschool for All Tax
The Preschool for All Tax was passed by Multnomah County voters in the November election to provide funding for three and four year olds in the county to access “free, high-quality, developmentally appropriate, culturally responsive preschool experiences.” The tax is imposed on the personal income of residents of Multnomah County as well as non-residents with Multnomah County-sourced income.
Individuals with Oregon taxable income over $125,000 will be taxed at 1.5%, increasing to 3% for incomes above $250,000. Joint filers with Oregon taxable income over $200,000 will be taxed at the 1.5% rate with the 3% rate for incomes above $400,000.
The tax will have similar withholding to the Supportive Housing Services Tax, voluntary in 2021 and required in 2022 for employees earning over $200,000 annually from a single employer. Employees can opt out of withholding. It is anticipated that withholding tables will be published soon.
The tax is due on April 15 of the following year on a separate return. An annual report, in addition to quarterly withholding, is also required of county employers. The tax is collected by Portland on behalf of Multnomah County. The city will be able to accept remitted taxes in April 2021.
Businesses and individuals operating/working in the Portland area and Multnomah County should be aware of these new taxes and the withholding and filing requirements that are effective as early as the second quarter of 2021. Taxpayers with questions about these new taxes should consult with their state and local tax professional for more information.
Call us at +1 213.873.1700, email us at email@example.com or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Andy Colson and originally appeared on 2021-02-23.
2020 RSM US LLP. All rights reserved.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.