Or. Admin. Code § 150-316-0237

Current through Register Vol. 63, No. 11, November 1, 2024

Section 150-316-0237 - Employees Exempt from Withholding

(1) Expiration for election. An election for exemption from withholding expires on February 15 of the calendar year following the year of the election. An individual must provide a new exemption certificate to the employer to claim an exemption from withholding for any subsequent tax year.

(2) Exemption requirements. An individual claiming exemption from withholding must meet one of the following requirements:

(a) The individual's wages must be exempt from Oregon taxation; or

(b) The individual must meet the qualification for having no tax liability.

(3) Qualifications for no tax liability. An individual claiming exemption from withholding due to no tax liability must meet the following conditions:

(a) For the previous tax year, the individual had the right to a refund of all Oregon tax withheld because the individual had no tax liability; and

(b) For the current tax year, the individual expects a refund of all Oregon income tax withheld because the individual expects to have no tax liability.

(4) Specific Employees Exempt from Withholding.

(a) Military pay in the Armed Forces of the United States. See ORS 316.792.

(b) Common carrier employees. Public Law 101-322 and ORS 316.162(2)(b) exempt from state withholding railroad, motor, and air carrier employees unless they are Oregon residents. OAR 150-316-0173 contains definitions and examples of common carrier employees. Public Law 91-569 and ORS 316.162(2)(b) exempt from state withholding nonresident air carrier employees unless they earn 50 percent or more of their compensation in Oregon. Employees whose scheduled flight time in Oregon is more than half of their total flight time for the year are considered to have earned more than half of their compensation in Oregon. The employees covered are those actually involved in transportation activities in more than one state.

(c) Domestic service. The exemption in ORS 316.162(2)(c) does not apply to wages paid to an employee who performs both domestic and business services, such as the chauffeur who also transports his employer's business clients, the domestic cook who also prepares meals for other employees or the paying public, etc.

(d) Casual labor. Withholding is not required from wages paid for casual labor not in the course of the employer's trade or business. Withholding is required from wages for substantial labor not in the regular course of the employer's trade or business, such as the construction of a private home where the owner is the employer. Labor which is both casual and not in the course of the business or trade of the employer is exempt from withholding requirements. "Business," as used in this section, is given a broader interpretation than "activity for profit" and includes governmental as well as proprietary functions of the state government or any of its political subdivisions.

(e) Agricultural services. Labor rendered solely in connection with the planting, cultivating, or harvesting of "seasonal agricultural crops" is exempt from withholding if the total annual wages paid the employee are less than $300. If at least $300 is received by the employee during the calendar year, the withholding and payments must have been timely made.

(A) A "seasonal agricultural crop" is a crop dependent upon an annual or less season for its fruition, and which is harvested at the termination of its season or shortly thereafter.

(B) Seasonal agricultural crops include:

(i) Field and forage crops.

(ii) The seeds of grasses, cereal grains, vegetable crops and flowers.

(iii) The bulbs and tubers of vegetable crops.

(iv) Any vegetable or fruit used for food or feed.

(v) Holly cuttings harvested annually for Christmas sales.

(C) Labor performed in connection with the following are not exempt from withholding:

(i) Forest products.

(ii) Landscaping.

(iii) Nursery stock as defined in ORS 571.005(5) unless planted, cultivated, and harvested within an annual period.

(iv) Raising, shearing, feeding, caring for, training or management of livestock, bees, poultry, fur-bearing animals or wildlife.

(D) Withholding is required as to the entire wages of "regular" farm employees even though, as a part of their duties, they engage in planting, cultivating, or harvesting. Withholding is required as to all wages paid in such seasonal activities as canning, or other food processing, logging, and sheep shearing, because they are not solely in connection with the planting, cultivating, or harvesting of seasonal agricultural crops. Withholding is required as to all wages paid in such agricultural activities as the care of poultry or livestock, and dairy farming, because they are not in connection with the planting, cultivating or harvesting of seasonal agricultural crops.

(f) Minister. Withholding is not required from wages paid to a duly ordained, commissioned, or licensed minister of a church when performing the duties of the minister's ministry, or from wages of a member of a religious order in performance of the religious duties required by the order, when the duties are not commercial in nature. Any amounts received from services performed outside of the order, and where a legal relationship of employer and employee exists between a member of a religious order or a minister and a third party, are considered income and are subject to withholding. For example, a member of a religious order has been hired by a school to teach a class for a fee. That member becomes an employee of the school and the wages are subject to withholding (pursuant to IRS Publication 525).

(g) Real Estate Salespeople. Withholding is not required from services provided to real estate brokers by real estate salespeople if there is a written contract providing the salesperson will not be treated as an employee by the real estate broker with respect to the services provided for Oregon tax purposes. Their income from commissions is not subject to state withholding taxes.

Or. Admin. Code § 150-316-0237

1-69; 11-71; 11-73; 9-74; 12-19-75; 12-31-77; TC 19-1979, f. 12-20-79, cert. ef. 12-31-79; RD 10-1983, f. 12-20-83, cert. ef. 12-31-83; RD 11-1985, f. 12-26-85, cert. ef. 12-31-85; RD 13-1987, f. 12-18-87, cert. ef. 12-31-87; RD 7-1992, f. & cert. ef. 12-29-92; RD 5-1995, f. 12-29-95, cert. ef. 12-31-95; REV 6-1998, f. 11-13-98 cert. ef. 12-31-98; REV 7-1999, f. 12-1-99, cert. ef. 12-31-99; Renumbered from 150-316.162(2)-(B), REV 61-2016, f. 8-15-16, cert. ef. 9/1/2016; REV 13-2019, amend filed 12/12/2019, effective 1/1/2020

Publications: Publications referenced are available from the agency.

Statutory/Other Authority: ORS 305.100

Statutes/Other Implemented: ORS 316.162, 316.177 & 316.182