OSPS E-News ~ out of state tax withholding process

[Announcements from OSPS to the users of the Oregon State Payroll Application]

Hello Payroll Professionals,

We wanted to give an update on how the Out of State Taxes process works for employees in Workday.

The first step is done centrally (OSPS Workday). OSPS Workday needs to register with a state that has one (or more) of our employees in it. OSPS Workday won't know that you have an Out of State employee until the working remotely request process is completed in Workday and HR has changed their alternate work address to their out-of-state home address. We've successfully registered with 31 states and are actively working on the last 15. When complete we will be registered in a total of 46 states where our employees reside.

Once we have an account number with the state, we then enter that number for every agency in Workday. This means that although you may not have any out of state employees at this time, when you do, it will already be set up for your agency to tax appropriately.

The next step is for the employee to fill out a remote work agreement indicating the out of state situation and make sure their home address indicates the state they are residing in. When you've confirmed and updated your home address, it will allow HR to set an alternate work address for that home address on the date the employee changed it. This alternate work address that is the employee's home address will allow Workday to tax them for the state they reside in. This also activates the W-4 (if there is one) for that state so employees can choose their tax elections. Taxes are not retroactive, so the date the employee changes their address is the soonest that taxes can start for them in that other state.

Employees currently working from a state that we are not yet registered in will continue to pay taxes to their home state as they have in the past. Once the employee is activated for withholding in their home state, they may ask to have taxes taken out for prior months' pay. Workday cannot do retroactive tax withholdings. Once a pay period has closed, no additional withholding can be made on that pay. If they have not made those estimated tax payments for prior months, an employee can choose, through their tax elections, to have additional funds withheld to make up for those past wages.

If an employee has been paying tax into Oregon, instead of their state, we cannot provide refunds on tax withholdings. There are multiple ways to recoup those funds from the Oregon Department of Revenue, depending on the employee's tax situation. We recommend talking to a tax professional for the best solution to fit their given situation.

Thanks,


Jason Robinson (he, him, his), CPA
OSPS Manager
DAS | Oregon Statewide Payroll Services
(971) 900-7688
Data Classification: Level 2 - Limited
http://oregon.gov/DAS/Financial/payroll/Pages/index.aspx

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