Oregon Revised Statutes

Or. Rev. Stat. § 267.385 (2026)

Employer payroll tax; collection; enforcement

✓ current as of May 2026

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267.385 Employer payroll tax; collection; enforcement. (1) To carry out the powers granted by ORS 267.010 to 267.394, a district may by ordinance impose an excise tax on every employer equal to not more than eight-tenths of one percent of the wages paid with respect to the employment of individuals. For the same purposes, a district may by ordinance impose a tax on each individual equal to not more than eight-tenths of one percent of the individual’s net earnings from self-employment.

(2) No employer shall make a deduction from the wages of an employee to pay all or any portion of a tax imposed under this section.

(3) The provisions of ORS 305.620 are applicable to collection, enforcement, administration and distribution of a tax imposed under this section.

(4) At any time an employer or individual fails to remit the amount of taxes when due under an ordinance of the district board imposing a tax under this section, the Department of Revenue may enforce collection by the issuance of a distraint warrant for the collection of the delinquent amount and all penalties, interest and collection charges accrued thereon. Such warrant shall be issued and may be enforced in the same manner and have the same force and effect as prescribed with respect to warrants for the collection of delinquent state income taxes.

(5) Any ordinance adopted under subsection (1) of this section shall require an individual having net earnings from self-employment from activity both within and without the district taxable by the State of Oregon to allocate and apportion such net earnings to the district in the manner required for allocation and apportionment of income under ORS 314.280 and 314.605 to 314.675. Such ordinance shall give the individual the option of apportioning income based on a single factor designated by the ordinance.

(6) Any ordinance adopted under subsection (1) of this section with respect to net earnings from self-employment may impose a tax for a taxable year measured by each individual’s net earnings from self-employment for the prior taxable year, whether such prior taxable year begins before or after November 1, 1981, or such ordinance.

(7) Any ordinance imposing a tax authorized by subsection (1) of this section shall not apply to any business, trade, occupation or profession upon which a tax is imposed under ORS 267.360.

(8) The district board may not adopt an ordinance increasing a tax authorized by subsection (1) of this section unless the board makes a finding that the economy in the district has recovered to an extent sufficient to warrant the increase in tax. In making the finding, the board shall consider regional employment and income growth. [1969 c.643 §35; 1981 c.907 §3; 2003 c.576 §197; 2003 c.739 §7; 2009 c.253 §1]

Notes of Decisions

Cited in 7 cases, 1983–2005 · leading case: Realty Grp., Inc. v. Dep't of Revenue, 702 P.2d 1075 (Or. 1985).

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Realty Grp., Inc. v. Dep't of Revenue, 702 P.2d 1075 (Or. 1985). · cites it 2× “* * * * * “(2) As used in this section and ORS 267.385, ‘wages’ does not include remuneration paid: * * * * *380 “(h) If the remuneration is not subject to withholding under ORS chapter 316.”

Kane v. Tri-Cnty. Metro. Transp., 670 P.2d 178 (Or. Ct. App. 1983). · cites it 3× “ORS 267.385(1), as amended by Or Laws 1981, ch 907, § 3, provides: “To carry out the powers granted by ORS 267.”

Stan Wiley, Inc. v. Dep't of Revenue Tri-Cnty. Metro. Transit Dist., 9 Or. Tax 399 (Or. T.C. 1984). · cites it 4× “Pursuant to ORS 267.385, Tri-Met adopted an ordinance imposing an excise tax on every employer equal to a percentage of the wages paid with respect to the employment of individuals.”

Schweitzer's Casual Wear, Inc. v. Dep't of Revenue, 16 Or. Tax 46 (Or. T.C. 2002). “have authorized: (1) the creation of transit districts; (2) the procedure for changing district boundaries; (3) the governance of transit districts by directors appointed by the elected governor and confirmed by the Senate; and (4) the imposition of certain taxes for the purpose…”

Lane Transit Dist. v. Peacehealth, 17 Or. Tax 364 (Or. T.C. 2004). “620, 1 the Lane County Mass Transit District (LTD) and defendant Department of Revenue (the department) entered into an agreement whereby the department was to supervise and administer collection of payroll and self-employment taxes that LTD is authorized to impose under ORS…”

Lane Transit Dist. v. PeaceHealth, 121 P.3d 1138 (Or. 2005). · cites it 3× “ORS 267.385(1). It also has provided that an organization is not an “employer” and thus not liable for the payroll tax if it is both exempt from taxation under IRC § 501(c)(3) and not a hospital.”

Legacy Health Sys. v. Dep't of Revenue, 13 Or. Tax 140 (Or. T.C. 1994). “Accordingly, plaintiff is exempt from tax under ORS 267.385. Now, therefore, IT IS ORDERED that defendant’s Motion for Summary Judgment is denied and judgment will be entered in favor of plaintiff.”

— Or. Rev. Stat. § 267.385(1) — 3 cases

Kane v. Tri-Cnty. Metro. Transp., 670 P.2d 178 (Or. Ct. App. 1983). “ORS 267.385(1), as amended by Or Laws 1981, ch 907, § 3, provides: “To carry out the powers granted by ORS 267.”

Realty Grp., Inc. v. Dep't of Revenue, 702 P.2d 1075 (Or. 1985). “* * * * * “(2) As used in this section and ORS 267.385, ‘wages’ does not include remuneration paid: * * * * *380 “(h) If the remuneration is not subject to withholding under ORS chapter 316.”

Lane Transit Dist. v. PeaceHealth, 121 P.3d 1138 (Or. 2005). “ORS 267.385(1). It also has provided that an organization is not an “employer” and thus not liable for the payroll tax if it is both exempt from taxation under IRC § 501(c)(3) and not a hospital.”

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