Text Size:   A+ A- A   •   Text Only
Find     
Site Image
SPECIAL PAYROLL TAX OFFSET
The following information is for even years, such as 2012. If you would like to view information for odd years, such as 2011, please click here.
 
Special Payroll Tax Offsets are authorized by the Oregon Legislature and collected using the unemployment insurance tax system. They are included as part of the Unemployment Insurance (UI) tax rate, but the money is not deposited in the UI Trust Fund. For that reason the money cannot be reported as "contributions paid to the state unemployment fund" when preparing Federal Unemployment Tax Act (FUTA) Form 940. 
 
These offsets do not affect the total amount payable for federal or state unemployment taxes as long as payments and reports to the state are kept current and no wages paid were excluded from state unemployment tax. The Special Payroll Tax Offset is included in the overall unemployment insurance tax rate assigned by the state and this will be the same regardless of whether a quarterly offset is being collected or not. There may be years in which there is no Special Payroll Tax Offset collected. The US Department of Labor requires offsets be calculated separately from regular unemployment insurance contributions.
 
Special Payroll Tax Offsets are used to fund various state programs, including the Wage Security Fund (BOLI) and the Supplemental Employment Department Administrative Fund (SEDAF).  The BOLI fund pays final wages to persons who are unemployed and whose employer could not afford to make a final payroll. This fund is only collected in odd years. The SEDAF fund is used to provide Employment Department services.
  
Special Payroll Tax Offset will be collected in all four quarters of 2012.
 
 
When preparing the redesigned Federal Form 940 use the tax rate less the Special Payroll Tax Offset rate to find the “assigned experience rate”. To calculate "contributions paid to the state", use two lines in item 3 on Form 940 (computation of tentative credit), one for the first quarter, and one for the remaining quarters. The "state experience rating" for the first quarter is the unemployment insurance tax rate less 0.0009 and for the remaining three quarters it would be less 0.0009. The exception to this is employers paying the maximum state rate (5.4%).
  • Example 1: An employer has a tax rate of 3 percent (0.03). In the second quarter, the experience rate will be 2.91 percent (0.0291), which is the tax rate less the 0.09 percent (0.0009) special payroll tax offset.
  • Example 2: An employer has been assigned the highest state unemployment tax rate, 5.4 percent (0.054). The employer does not calculate the amount of the special payroll tax offset. The employer should use the unadjusted amount of taxes paid to the state as "contributions paid to your state unemployment fund".
 
To obtain Form 940 call the Internal Revenue Service at 1-800-829-3676 or download their forms at:  www.irs.gov/formspubs. To obtain help in completing these forms contact the IRS at 1-800-829-1040.
 
For help in determining how to calculate "assigned experience rate" contact us at (503) 947-1488 or email us at taxinfo@emp.state.or.us.