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  4. Additional Steps for Out-of-State Employees – Set Up Out-of-State Employee

Additional Steps for Out-of-State Employees – Set Up Out-of-State Employee

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Procedure Updated: 
10/18/2024

Use this procedure if an employee begins living or working in Oregon or Idaho and your agency is configured to process Oregon and Idaho taxes in HRMS. This procedure can be used following a personnel action or when an existing employee newly begins living or working in Idaho or Oregon.

Tips: 

Employer ID number(s) must be set up to allow out-of-state tax collection prior to beginning this procedure. Refer to the Additional Steps for Out-of-State Employees – Set Up Tax Company for Out-of-State Tax Processing user procedure if needed.

HRMS is only configured to process Oregon and Idaho taxes (in addition to Washington and Federal taxes). All other out-of-state taxes must be calculated and collected manually using the wage types listed in the HRMS Other State Tax Wage Types document.

If an employee transfers to another agency, the losing agency must delimit out-of-state records or revert to Washington tax areas and tax authorities, depending on the infotype. Follow the Additional Steps for Out-of-State Employees – End Out-of-State Employee user procedure for more information.

The only exception is if the gaining agency has communicated to the losing agency that the employee will continue living and/or working out-of-state and the gaining agency is fully configured for the applicable OOS taxes and has requested the OOS tax infotype records remain active.

  1. Step 1

    Work with your personnel administration processor to verify that the employee’s Permanent residence and Out of State Work Location records are reflected correctly in the Addresses (0006) infotype. Refer to the Addresses user procedure as needed. Once you have received confirmation from the personnel administration processor, you may move on to the next steps.

    TIPS:

    • In order to process payroll, employees must have an active Permanent residence (1) address in the Addresses (0006) infotype. If the employee lives in Oregon or Idaho, their Permanent residence address should reflect that.

    • All employees who are working outside of Washington should have an Out of State Work Location (9) address record. If the employee is working out-of-state at their permanent residence, then that address should be entered under both the Permanent residence (1) and Out of State Work Location (9) address types.

    • In addition to the employee’s permanent residence and OOS work location address records, the personnel administration processor may also need to update the employee’s Telework/Flex Work (Employee) (9106) and/or Duty Station Address (9105) infotype records as needed. Refer to the Telework/Flex Work (Employee) and Duty Station Address user procedures for more information.

  2. Step 2

    Follow the Out-of-State Tax Authority Locator report to verify tax areas and tax authorities based on where the employee will be living and working.

    TIPS:

    • This report is used to verify an out-of-state employee’s tax areas and tax authorities to aid processors in entering appropriate data into an employee’s Residence Tax Area (0207) infotype and Work Tax Area (0208) infotype records. The report can also be used to verify whether the employee's tax company is fully set-up to process the applicable taxes.

  3. Step 3

    If the employee lives in Oregon or Idaho, or meets Oregon’s or Idaho’s residency requirements for tax purposes:

    Complete the following procedure:

    TIPS:

    • Follow this procedure to create a new Residence Tax Area (0207) infotype record. This infotype is used to identify the tax area and tax authorities that are applicable to the employee based on where they reside.

    • Washington, Oregon, and Idaho are the only states with tax areas configured in HRMS. For employees who reside outside of Washington, Oregon, or Idaho, the tax area should remain as WA and any out-of-state taxes will need to be calculated and collected manually. Setting the tax area to Washington will turn on federal taxes for the employee, unless they are systematically excluded from federal taxes.

      Refer to the Payroll Out-of-State Employee Tax Resources page for more information on manual tax processing in HRMS.

  4. Step 4

    If the employee works in Oregon or Idaho, or works in Washington while living in Oregon or Idaho:

    Complete the following procedure:

    TIPS:

    • Follow this procedure to create a new Work Tax Area (0208) infotype record. This infotype is used to identify the tax area(s) and tax authorities that are applicable to the employee based on where they are working.

    • Washington, Oregon, and Idaho are the only tax areas configured in HRMS.

      Oregon has multiple work tax areas, so be sure to select the correct tax area based on which taxes should apply.

    • An active Work Tax Area (0208) infotype record is not needed for employees living and working in Washington or another state outside of Oregon or Idaho.

    • Employees can have more than one work tax area record; if so, the combined allocation percentages must total 100%.

    • A work tax area override can be entered in CATS. An override may be necessary when the employee works in a different tax area for a portion of a pay period and entering an allocation split on the employee’s Work Tax Area (0208) record is not desired. Refer to Additional Steps for Out-of-State Employees – CATS Work Tax Area Override user procedure for more information.

  5. Step 5

    If the employee is subject to Oregon or Idaho state income tax and has submitted an Oregon or Idaho form W-4:

    Complete the following procedure:

    TIPS:

    • Follow this procedure to create a new Withholding Info W4/W5 US (0210) infotype record with the Tax Authority Oregon (OR) or Tax Authority Idaho (ID) and set the employee’s withholding allowances/amounts in accordance with their form W-4 selections. If no Withholding Info W4/W5 US (0210) record exists, HRMS will withhold a default amount.

  6. Step 6

    If the employee’s work is localized to Oregon or Idaho:

    Complete the following procedure:

    TIPS:

    • Follow this procedure to create a new Unemployment State (0209) infotype record. This infotype is used to identify the tax authority that is applicable to the employee based on where their work is localized.

    • Washington, Oregon, and Idaho are the only tax authorities configured in HRMS for this infotype. For employees whose work is localized outside of Washington, Oregon or Idaho, the tax authority should remain as WA, any out-of-state taxes will need to be calculated and collected manually, and Washington tax types will likely need to be exempted on the employee’s Other Taxes US (0235) record. See the next step for more information.

  7. Step 7

    If the employee should be exempted from any tax types that were assigned from the Residence Tax Area, Work Tax Area, or Unemployment State infotypes:

    Complete the following procedure:

    TIPS:

    • Use this procedure to create or maintain employee and/or employer tax exemptions.

    Related Resources 
  1. Payroll Out-of-State Employee Tax Resources
  2. Out-of-state Remote Work Guidance and Resources
  3. Out-of-State Employees Coding Guide