Sage Software will only be updating Sage 100 version 2018 and Sage 100Cloud version 2018 to accommodate the new, statewide Oregon Transit Tax, which goes into effect on July 1 of this year. As we mentioned in our preview last month, the Transit Tax is 0.1% of each and every Employee’s Withholding Wage, is to be reported quarterly, and is reported on a separate form that is not part of the Oregon OQ Quarterly filing. For Sage Payroll clients on versions 2014, 2015, 2016, or 2017 (or even older versions!), we’ve had to be creative to accommodate the new tax. For clients using Sage Payroll version 2018, you’ll receive the update automatically through the new 2018 Tax Engine at month end.
But before we get to solutions for clients NOT using Sage Payroll 2018, there are a couple of things all employers running payroll will need to do. First, you’ll need to register at https://revenueonline.dor.oregon.gov in order to obtain an account number for the new Statewide Transit Tax. Setting up an account number through the website also gives you the ability to pay the tax online. (In the future, we believe the statewide Transit Tax will be added to the Oregon EFT website, but most likely not until 2019. For now, you must register on the aforementioned website to obtain an account number and have the convenience of making an EFT payment specifically for the Transit Tax.) Our second suggestion before setting up the Transit Tax in the Payroll module is to set up a General Ledger liability account for the new Transit Tax.
For Those not Running Sage Payroll 2018
One way to do this - but it's the difficult route - is to set it up as a local tax. While you can do that, it is more time consuming than simply using the 'Employee SDI' field under the State of Oregon Tax Table. For that reason, we advise using the 'Employee SDI' field as detailed below.
The State of Oregon doesn’t have an Employee SDI tax, so we can use that calculation to collect the new Transit Tax. The first step consists of simply accessing the Oregon Tax Table in Tax Table Maintenance under the Payroll Setup folder. Once there, you can insert both your new Transit Tax GL account number and “0.1” in the ‘Rate’ field, just like this:
Because the Transit Tax mimics current income tax withholding laws and regulations, step two ensures that pre-tax contributions are subtracted from subject employee wages before calculating the Transit Tax. You'll need to access each of your pre-tax deductions (Pension Plans and Cafeteria Plans that reduce State Withholding) and check the SDI field as noted below; so the pre-tax deduction also reduces your State Transit Tax, like so:
Finally, if you want "Transit Tax" to appear on your Employee Direct Deposit stubs or checks, rather than "OR State Disability Insurance", we'll need to make a change to your Crystal Reports form printing. Just give our office a call, and we'll be happy to help you for the price of a support call.
A Couple other Things to Know
An important note to mention concerns Aatrix. Since Sage is not providing a solution for the new tax in Payroll versions other than 2018, Aatrix may not be able to automatically populate the new Quarterly Transit Tax form, but they will have a fillable form available if you do use Aatrix. The following forms are now available:
Form OR-STT-1, Oregon Quarterly Statewide Transit Tax Withholding Return
Form OR-STT-2, Statewide Transit Tax Employee Detail Report
Form OR-STT-A, Oregon Annual Statewide Transit Tax Withholding Return
Form OR-STT-V, Oregon Statewide Transit Tax Quarterly Payment Voucher and Instructions
And finally, the State of Oregon has not decided whether the tax will be reported on the W-2 at year end or not. The current proposal is to put both the Employee Withholding Wage as well as the Transit Tax Withheld in Box 14 of the W-2, but that decision will apparently be made sometime this Fall.
As always, we’re happy to help you with setting up the new Statewide Transit Tax in your Sage 100 or Sage 100Cloud Payroll module. Just reach out to us via phone or email, and we will assist you in doing so!