Multnomah County Chair Jessica Vega Pederson announced an amnesty today for people who still owe Preschool for All personal income taxes for tax year 2021, waiving all penalties and interest assessed on unpaid tax liabilities regardless of individual circumstances.
For tax year 2022, taxes are due as usual on April 18, 2023.
All interest and penalties will be waived for tax year 2021. Taxpayers who were required to make quarterly payments in tax year 2022 (taxpayers who owe more than $1,000 in tax for the year), will have their interest for quarterly underpayments waived for tax year 2022 only. All other penalties and interest associated with tax year 2022 and beyond will remain in effect.
Anyone who has already paid their 2021 tax, and who paid interest and/or penalties for tax year 2021, will receive a full refund for the interest and penalties paid for tax year 2021. Refunds will be issued over the coming months, more information will be shared about the process at a later date.
“We appreciate the community supporting Preschool for All through this tax. This is a new tax for our region, and we want to give people room to pay it,’’ Chair Vega Pederson said.
Please note that the City of Portland Revenue Division that collects the tax on behalf of Multnomah County is updating its website and online portal to reflect the amnesty. As that is occurring, tax filers may still see materials that reflect penalties and interest for 2021. Those charges are waived.
The Chair’s announcement comes as Metro announces today that it will also waive penalties and interest on all 2021 taxes for the Supportive Housing Services measure. Both Preschool for All and the Supportive Housing Services taxes took effect in January 2021, after voters approved them in 2020. Both are levied on higher income earners.
The Preschool for All tax is levied on 1.5% on taxable income for those earning over $125,000 for individuals and $200,000 for joint filers, and an additional 1.5% on taxable income over $250,000 for individuals and $400,000 for joint filers.
More than 90 percent of County residents do not earn above the income thresholds to owe the Preschool taxes at all. And, most people who owed the new taxes paid and paid on time.
But a smaller number of tax filers — those who filed with software such as Turbo Tax that did not offer the automated filing, were outside the geographic area, or who did their own taxes — fell outside the tax communication efforts about these new taxes, missed the filing deadline and were subject to interest and penalties.
“In levying the first County income tax since 2003, we didn’t succeed in getting information to everyone who needed to hear it,’’ Chair Vega Pederson said. “We’re going to fix that.’’
In addition to offering the amnesty for 2021 penalties and interest, the County is working with the City’s Revenue Division to increase outreach to those with potential liability through mailers, advertising, press releases and social media.
In addition, since Jan. 1, 2022, employers in Multnomah County have been required to withhold the Preschool for All taxes on behalf of employees — withholding was voluntary the first year. Employers have been notified to automatically withhold for employees making over $200,000 of taxable income per year. Employees may elect to opt-in or -out of withholding based on their individual tax situation.
It’s important to note that the County is advising everyone with tax liability not to wait to submit their 2021 and 2022 returns. The County also reserves the right to reassess 2021 penalties and interest for those who continue to not file their return or otherwise attempt to evade Preschool for All personal income tax liability after notification.
Preschool for All Tax
Multnomah County voters approved the new tax on Nov. 3, 2020, to establish a tuition-free preschool program for 3- and 4-year-olds. It funds high-quality, developmentally appropriate, culturally responsive preschool experiences.
Preschool for All opened 718 slots for children in its first year. Each year the number of slots will increase until there is a publicly funded preschool slot available for every interested family in 2030.
Providers are reimbursed $15,000 to $21,000 a slot, depending on their calendar (year-round or school-year) and schedule (full day or school day)
The Preschool for All program was designed to grow every year as will the number of preschools and qualified teachers — now in short supply due to the devastating impact of the COVID-19 pandemic on early childhood education. Preschool for All includes funding for workforce development, preschool facilities, professional development and early childhood mental health. Because the system is based on volatile personal income taxes, the County has multiple fiscal stability strategies in place, including saving money in these early years when the number of slots is lower. You can read more about this strategy to match revenue to need here.
The County, which forecast $119 million in revenue for fiscal year 2022, has already collected $187 million in Preschool for All taxes for fiscal year due to higher-than-expected capital gains collections. As the Preschool for All program grows, surplus funds will be used to balance out increasing expenditures.
For County residents, 100% of their Oregon taxable income is subject to the tax. For non-residents of Multnomah County, income sourced within the County is also subject to the tax thresholds. Please see this FAQ for more information.
All payment and filings should be sent to the City of Portland through their Portland Revenue Online (PRO) system or through participating tax software. You can file and pay online at PRO.portland.gov. You do not need to create a username or login to file. For questions regarding filing/payment please reach out to the City Revenue Division, at (503) 865-4748 or email PFA.Tax@portlandoregon.gov.
You can also go online to learn more about Preschool for All here.
Source: Multnomah County