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State agencies propose accounting method to comply with IRS ruling on Paid Leave Oregon
Summary
After a new IRS revenue ruling would treat employer‑funded portions of medical leave benefits as wages subject to payroll taxes, Oregon Employment Department officials recommended an 'accounting method' that tracks contribution sources to avoid new taxes on employers or claimants; statutory changes and minor programming will be needed.
Oregon Employment Department officials told the Senate Interim Committee on Monday that a recent IRS revenue ruling changes how Paid Leave Oregon must treat employer‑funded portions of medical leave benefits for federal tax purposes and that the department recommends an accounting method to comply without imposing new payroll‑tax burdens on employers or claimants.
Acting Paid Leave Oregon Director Juan Serratos explained that the IRS ruling requires amounts funded by employer contributions that pay medical leave to be treated as wages for payroll‑tax purposes and reported on a W‑2 rather than the program’s prior 1099‑style reporting. "Employers could owe taxes on…
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