HB 3389 Tax relief for Businesses

Signed into Law by Gov Brown on 07/27/21
Status (overview) of bill:https://olis.oregonlegislature.gov/liz/2021R1/Measures/Overview/HB3389

This bill allows businesses to reset their unemployment insurance taxes owed to pre-pandemic rates, and adjusts how unemployment insurance is calculated.

Fiscal Responsibility
Fixing the errors in our state’s unemployment benefits system provides relief. Extends look-back period used to determine Unemployment Compensation Trust Fund solvency level from 10 years to 20 years. Provides that calendar years 2020 and 2021 may not be considered high benefit cost period for purposes of making determinations of solvency level of fund. Provides that employers’ experience ratings used to determine 2020 unemployment insurance tax rates shall be used to determine rates for 2022, 2023 and 2024. Provides deferral of up to one-third of 2021 unemployment insurance taxes for employers whose tax rates increased by 0.5 percentage points or more from 2020 to 2021. Authorizes forgiveness of percentage of deferrable taxes according to tax rate increase brackets. Reduces fund adequacy percentages used to determine employer tax rate schedules. Broadens kinds of property that may be received for Unemployment Compensation Trust Fund.

Free Markets
Throughout the past year, government-mandated closures forced businesses with significantly less revenue to lay off staff in unprecedented numbers. This had unforeseen ramifications for the assessment of unemployment insurance taxes owed, 85% of all Oregon businesses saw their unemployment tax rates increase in 2021. Allows businesses that saw this tax increase to defer some payments and even forgive a percentage of the deferred taxes. This bill also ensures that tax rates don’t rise further because of impacts from the pandemic.

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