Oregon law recognizes that agriculture and related land uses are important to Oregon’s character and economy. The legislature finds that providing the means for agriculture to continue and prosper is in the interest of all Oregonians who benefit directly or indirectly from agricultural production, and stewardship of farmlands and ranchlands.

Land that qualifies for farm use special assessment is assessed at its farm-use value exclusive of values related to urban influences or speculative purposes. County assessors are responsible for the valuation and assessment of land and homesites qualifying for farm use special assessment.

Definit​ions

Exclusive farm use (EFU) zone

Land in areas zoned EFU is specially assessed at farm-use value upon discovery that the land is used exclusively for farm use.

Nonexclusive farm use (non-EFU) zone

Nonexclusive farm-use zoned farmland is land that is not within an EFU zone but qualifies by application for farm use special assessment. To maintain the special assessment, the land must be used for farm use and meet minimum gross income requirements. The required minimum gross income is $650. If the land is more than 6.5 acres, the required minimum gross income is $100 per acre (or fraction of acre) up to a maximum of $3,000 gross income.

Homesite 

Homesite refers to the land, including all tangible land improvements that are customarily provided in conjunction with a dwelling. Land improvements necessary to establish a homesite include, but are not limited to, items such as grading, fill, drainage, wells, water supply systems, septic systems, utility connections, extension of utilities to any structure(s), retaining walls, landscaping, and graveled driveway area.

Farm use (ORS 308A.056)

Farm use means that the current use of land is for the primary purpose of obtaining a profit in money by raising, harvesting, and selling crops; feeding, breeding, managing, or selling livestock, poultry, fur-bearing animals or honeybees; dairying and selling dairy products; stabling or training horses; and raising, cultivating, maintaining, or harvesting aquatic birds and animals allowed by the Oregon Fish and Wildlife Commission. Farm use includes land growing cultured Christmas trees and certain hybrid cottonwood or hardwood timber for paper pulp production. Farm use also includes the preparing, storing, or disposing of, by marketing or otherwise, of the products or by-products raised on farmland for human or animal use.

Farm use includes land currently meeting one or more of the following conditions:

• Subject to any farm-related government program
  
• Crop-free for one year as a normal and regular requirement of sound agricultural practice, lying idle for no more than one year because of an injury to or illness of a farmer or farmer’s immediate family member
  
• Planted in orchards or other perennials prior to maturity
  
• Dry or water-covered wasteland in or adjacent to EFU land
  
• Land under buildings supporting farm practices, including qualifying farm-processing facilities
  
• In farm-water impoundments lying in or adjacent to and in common ownership with farm use land; a woodlot up to 20 acres of land contiguous to and owned by the owner of land specially valued for farm use.
  

The activity needs to be an accepted farming practice, which means the farming is conducted in a “mode of operation that is common to farms of a similar nature, necessary for the operation of these similar farms to obtain a profit in money, and customarily utilized in conjunction with farm use.”

Disqualification

Disqualification from farm use special assessment is determined by whether the land is in an EFU zone or a non-EFU zone.

In an EFU zone, the land will be disqualified from special assessment if one or more of the following conditions is met:

• The land is no longer used as farmland
• The land is removed from an EFU zone
• The permit approval is given for a non-farm dwelling or parcel under, ORS 215.236

In a non-EFU zone, the land will be disqualified from special assessment if any of the following are true:

• The owner notifies the assessor in writing to remove the land from special assessment
  
• The owner sells or transfers the land to an ownership making the land exempt from property tax
  
• Land is no longer used as farmland, or it does not meet the required income test
  
• Land is platted for a subdivision (the land may re-qualify after payment of an additional tax 
  

Upon disqualification, land may qualify for a different special assessment and, in some cases, avoid additional taxes. Check with your county assessor for information about changing special assessments.

Additional taxes levied against disqualified farmland

If your farmland loses its special assessment and does not change to another special assessment, it will be assessed at market value (or its maximum assessed value) and you may be charged additional tax.

The additional tax is based on the difference between the tax you paid and the tax you would have been paying if your land had not received the farm use special assessment. This tax difference is based on the number of years the land received farm use special assessment up to a maximum of five years (10 years in EFU zones that are outside of an urban growth boundary).

You will be charged additional tax if you change the use of the property so that it is incompatible with its return to farm use. These additional taxes are added to the next tax roll if you choose not to prepay them.

Note: These additional taxes will be deferred and will not be collectable at this time if the land becomes idle or is used in such a way that is compatible with returning the land to farm use. However, if the land is used for residential development, or commercial, industrial, or other uses so that it is no longer being used for farmland then the deferred additional taxes will become collectable at that time.

Additional taxes w​aiver

Additional taxes may be waived (abated) on disqualified non-EFU properties that have difficulty meeting the minimum gross income requirements if the land continues to be farmed after being disqualified. For each continuous year the land continues limited farming, the oldest year of additional taxes is waived until there are no years of potential additional taxes remaining.

Technical assistance

To find out in which zone your farmland is located, contact the planning office or county assessor’s office in which the land is located.

Oregon Department of Revenue
Phone (Salem) 503-945-8278
Phone (toll free from an Oregon prefix) 800-356-4222
Fax 503-945-8738
TTY 800-886-7204
TTY is for hearing or speech impaired only. These numbers are answered by machine and returned by a DOR representative.
Web oregon.gov/DOR
Email questions.dor@state.or.us

Refer to the Internal Revenue Service for information regarding the following:

• Who must comply
• Tax rate
• Compliance
• Filling annual FUTA (Federal Unemployment Tax Act) tax returns
• Family employees
  

Technical assistance

Internal Revenue Service
Forms Distribution Center
Rancho Cordova, CA 95743-0001
Phone 800-TAX-FORM (800-829-3676)
Web irs.ustreas.gov/formspubs

Publications

• Publication 51, Circular A, Agricultural Employer’s Tax Guide
  
• Publication 15, Circular E, Employer’s Tax Guide
  
• Form 940, Employer’s Annual Federal Unemployment
  
• Form 8109, Federal Tax Deposit Coupon
  
• Publication 225, Farmer’s Tax Guide
  
• Publication 583, Starting a Business and Keeping Records
  
• Publication 15-A, Employers Supplemental Tax Guide

Telephone help

You can call the IRS with your tax questions 24 hours a day, seven days a week. Check your telephone book for the local number or call 800-829-1040.

Help for people with disabilities

Telephone help is available using TTY equipment. You may call 800-829-4059 with your tax question or to order forms and publications.

Calendar for filing and paying FUTA

January: file Form 940
March: calculate first quarter FUTA
April: pay first quarter FUTA
June: calculate second quarter FUTA
July: pay second quarter FUTA
September: calculate third quarter FUTA
October: pay third quarter FUTA
December: calculate total FUTA

Note: Refer to the corresponding section in this handbook for federal information.

Who must comply?

Agricultural employers are subject to unemployment taxes if they meet one of the following thresholds:

• Have $20,000 or more cash payroll in a calendar quarter in either the current or preceding calendar year
  
• Have 10 or more people working for 20 days, each day being in a separate calendar week during the current or preceding calendar year
  

Non-cash remuneration, such as room and board, is not included in the payroll calculations to determine subjectivity. However, wages paid in other states for the same entity, and corporate officer wages, even if excluded under the family officer provision, are included.

Once an agricultural employer becomes subject to Employment Department Law, they become subject for the entire current calendar year and all of the next calendar year, as long as employment exists. This is true even if the payroll is less than $20,000 in those quarters.

Employers are responsible for registering with the Employment Department by completing and filing a Combined Employer’s Registration.

​Web oregon.gov/DOR/BUS/Pages/forms-payroll.aspx​

When coverage of agricultural employment ceases

An agricultural employer may request that their account be closed when the following conditions are met:

• The employer notifies the Oregon Employment Department that they have not had qualifying payroll in the preceding calendar year.
  
• The employer does not anticipate having qualifying payroll in the current calendar year.
  

The notification must be made in writing to:

Oregon Employment Department
Tax Section, Room 107
875 Union St NE
Salem, OR 97311-0030

The employer’s account will cease to be subject beginning the first day of the calendar quarter in which the request is filed. The exclusion doesn’t go into effect until you receive written approval. This cannot be retroactive.

Definitions

Employee

Includes any person employed for pay under any contract for hire unless the services are specifically excluded from coverage under the law. You should check with your local Employment Department Tax Office to determine whether the services performed by your workers are excluded from coverage.

Family employees

Family employees are exempt from unemployment tax for services performed by the owner’s (as a sole proprietor) parents, spouse, and children under the age of 18.

Farm workers supplied by contractors

Farm workers supplied by farm labor contractors are considered employees of the farm operator unless any of the following are true:

• The contractor holds a valid federal Certificate of Registration under the Federal Migrant and Seasonal Agricultural Worker Protection Act.
  
• Substantially all the workers supplied by the contractor operate or maintain tractors, harvesting or crop-dusting machines, or other machines provided by the contractor, and the contractor meets standards set for independent contractors under other sections of Employment Department law.
  

Tax calculation

Unemployment tax rates are assigned in accordance with Oregon law. New employers are assigned a “base rate” until they have had sufficient “experience” to qualify for an “experience rate” based tax rate. This usually takes about three years. The Oregon Employment Department sends out notifications to employers asking for specific information when Unemployment Insurance (UI) claims are filed. If requested, a timely response is not only required, but may help mitigate the effect of unemployment claims on an employer’s future UI tax rate.

All employers are notified of their rate and the maximum taxable wages for each employee for the next calendar year by November 15.

Filing

Employers must pay their unemployment taxes and file a combined tax report on a quarterly basis. The forms are mailed to employers at the beginning of each year.

Information required on reports includes the following:

• Number of workers at mid-month in each month of the quarter
• Subject and taxable payroll
• Each employee’s Social Security number, name, number of hours worked in the quarter in which service was performed, and wages paid in the quarter
  

Tech​nical assistance

Oregon Employment Department
875 Union St NE, Room 107
Salem, OR 97311
Phone 503-947-1488
Email taxinfo@emp.state.or.us
Web oregon.gov/employ/tax

Oregon Business Information Center
255 Capitol St NE, Suite 151
Salem, OR 97310-1327
Phone 503-986-2200
Web filinginoregon.com

Publications

How to Start a Business in Oregon
Employer’s Guide for Doing Business in Oregon
Web www.filinginoregon.com