South Clackamas Transit Tax: Who Owes It, Filing, and Deadlines

The South Clackamas transit tax is a 0.5% payroll and self-employment tax that funds bus service in and around Molalla, Oregon. Employers pay it on wages for work performed inside the South Clackamas Transportation District, and self-employed people pay it on net earnings over $400 from work done in the district.¹ It sits on the employer, not the employee, so nothing comes out of worker paychecks the way the statewide transit tax does.

Who Owes It

Oregon Revised Statutes Chapter 267 lets transportation districts tax any employer whose workers perform services inside the district.² Location of the work is what counts, not where your business is based. A Portland company sending crews to Molalla job sites owes the tax on those wages.

Self-employed individuals owe when net earnings from work inside the district exceed $400 for the year. At or below that threshold, there is no filing requirement.¹ Employers get a parallel small-payroll relief: if total wages paid to a given employee for the calendar year will be $300 or less, the employer can request to be relieved of the tax for that worker.³

Where the District Begins and Ends

The district covers the Molalla area and surrounding portions of southern Clackamas County. A district map is posted at sctd.org/transit-tax for confirming whether a specific work site sits inside the boundary.⁴

When an employee splits time between locations inside and outside the district, wages get allocated by the actual share of work performed within the boundary. Three days a week in Molalla and two days in Lake Oswego means 60% of that worker’s wages are taxable. Time records by work location are what make this defensible.

How to Calculate What You Owe

The rate is 0.5% (written as .005). Employers multiply total taxable wages for the quarter by .005; $200,000 in quarterly in-district wages produces $1,000 of tax.¹

Self-employed filers take net earnings from the federal return, subtract the $400 exclusion, and multiply what’s left by .005.⁵ Because this is an employer-level tax, you cannot withhold it from employee pay.

Wages That Are Exempt

The district tax code and Oregon administrative rules exempt several categories of wages:¹

501(c)(3) charitable, religious, and educational organizations, with hospitals being the notable exception that remains subject to the tax.
Domestic service in a private home when total pay to that worker is under $1,000 per year.
Seasonal agricultural labor for planting, cultivating, or harvesting crops.
Casual labor not in the regular course of the employer’s trade or business.
Services performed for the United States government.
Pay for temporary emergency firefighters engaged in fire suppression work.
Foreign insurance companies formed under another state’s laws, along with their agents and staff, under ORS 731.840.³
Any remuneration not subject to Oregon withholding under ORS Chapter 316.

The hospital carve-out catches people off guard. A nonprofit hospital with 501(c)(3) status still owes the full payroll tax on in-district wages.

When to File

Employers file quarterly, with returns and payments due by the last day of January, April, July, and October for the preceding calendar quarter.¹ Self-employed filers file once a year, with the return and payment due April 30 for the prior calendar year. Penalties and interest start on the day after.

How to Register, File, and Pay

New businesses open a transit tax account by emailing the district office at smasuo@sctd.org.⁴ There is no online portal. The district provides a fillable Quarterly Payroll Tax Report for employers and a separate Self-Employment Tax Form, both on the SCTD website.

The quarterly report asks for your Federal Employer Identification Number, total gross payroll for work performed inside the district during the quarter, and the calculated tax. Self-employed filers pull net earnings from the federal return. Confirm the .005 rate applies to the right wage base before you sign.

Mail the form and payment to South Clackamas Transportation District, P.O. Box 517, Molalla, OR 97038.⁶ Checks and money orders go to the South Clackamas Transportation District. The district does not currently offer electronic filing or payment based on available information. Mail in time to arrive by the deadline, not just be postmarked by it.

What Happens If You’re Late

Penalties escalate quickly:¹

$100 for the first delinquent period, meaning one quarter for employers or one year for the self-employed.
$250 for each additional delinquent period.
100% of the unpaid tax as a penalty for fraud or intentional evasion, plus interest at the rate set under ORS 305.220.
Interest on any delinquency at five-sixths of one percent per month (roughly 10% annualized) from the original due date.

The district can also tack on collection costs, attorney fees, and court costs. One narrow waiver exists: if the district finds you genuinely did not know about the filing requirement and you file promptly after being notified, the penalty can be waived. That option disappears the moment you’ve been told, so it only works once.

1
South Clackamas Transportation District. South Clackamas Transportation Tax Code
2
Oregon State Legislature. Oregon Code 267 – Mass Transit Districts; Transportation Districts
3
Cornell Law Institute. Oregon Admin Code 150-267-0020 – Wages Exempt From Transit District Payroll Taxes
4
South Clackamas Transportation District. Transit Tax and Tax Code
5
South Clackamas Transportation District. SCTD Self-Employment Tax Form
6
South Clackamas Transportation District. South Clackamas Transportation District