Admin Order 44-21-07-F -- Payroll Tax Rule Amendments

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Exhibit A to Administrative Order No. 44-21-07-F Page 1 of 2 City Manager's Findings in Consideration of Written Submissions During Administrative Order No. 44-21-05’s 18-day comment period from September 24 – October 11, 2021, the City received 8 written comments. Of those 8 written comments, 7 related specifically to the proposed Payroll Tax Rule amendments ("proposed Rule Amendments"). The remaining comment related to a 3rd party tax preparer system implementing a software update to its platform. No comments were received in response to the Notice issued pursuant to Administrative Order No. 44-21-07. A summary of all the comments received, and findings addressing the comments, are set out below. 1. Comments regarding the tax reporting frequency under the proposed Rule Amendments. Findings: Eugene Code (EC) Section 3.756, adopted by the City Council via ordinance, establishes the frequency of submission of the payroll taxes. Administrative rules cannot alter the provisions of the City Code, thus, these proposed Rule Amendments cannot alter the tax reporting frequency set forth in EC 3.756. The tax reporting frequency of the Community Safety Payroll Tax(es) under the proposed Rule Amendments are consistent with the filing frequencies for other state and local taxes (SUTA, OR Withholding, and Transit taxes such as the Statewide Transit Tax and LTD/Trimet). While these taxes are not connected to the Community Safety Payroll Tax, the filing dates and frequencies are consistent for both Employee/Employer quarterly submissions as well as for annual filings of Self-Employment returns. No changes are being made to the proposed Rule Amendments as a result of these comments. 2. Comments expressing uncertainty regarding whether the proposed Rule Amendments apply to sole proprietors/partnerships that have no employees. Findings: The proposed Rule Amendments do not change the reporting requirements for sole proprietors/partnerships who have no employees. Self-Employment returns will continue to be an annual filing in April of each year and will be based on net earnings from self-employment for the prior calendar year. The first Self-Employment return will be due in April of 2022. The proposed Rule Amendments do affect sole proprietors and partnerships who have employees by having the business entity be subject to the quarterly Employer Tax return. The language in the original Administrative Order excluded Sole Proprietors and Partnerships from contributing to this employer-paid tax. The proposed Rule Amendments will correct this language and bring the Administrative Rules into alignment with City Council’s original intent and ensure that employers are treated equitably, regardless of business entity structure.