OSPS News ~ Tax Adjustments for Quarter 1, 2026

[LOWRY Timothy * DAS]

Hi Rob & Fabiola, would you please review the draft email below to go out to Payroll Partners? Thank you - Tim

Greetings Payroll Partners,
In January we communicated with you that OSPS will regularly be making quarterly tax adjustments to ensure accurate annual and quarterly tax reporting. These adjustments will apply to employees who had any change from wages earned (salary) to paid leave, which generates negative hours that need to be corrected as negative hours will not calculate negative tax WH (tax adjustment).  WBF is the most common tax adjustment due to changes made to time entry after R1.
Adjustments have been processed through off-cycle payments with zero gross and net payroll, posted at quarter-end, and will have no impact on the employees' pay. Each adjustment will include:

  *   A positive or negative entry for the tax correction.
  *   A corresponding balancing entry for state income tax (SIT).

Common Reasons for Tax Adjustments

  1.  Net Negative Pay: STT and WBF do not calculate on negative wages and require manual correction. Paid Leave Oregon adjusts only up to the quarter-to-date (QTD) withholding limit.
  2.  Retro Time Changes: Adjustments to WBF-eligible hours in prior periods can create negative hours in the current period, requiring correction to meet quarterly reporting requirements.
  3.  Reversals with Different Pay Dates: These must be moved to the correct quarter for accurate reporting and amendments.
  4.  Imputed Values Without Wages: Taxes must still be captured.
  5.  Manual Negative Tax Entries: Posted without corresponding wage corrections.
  6.  Manual Overrides: Any entry that overrides calculated taxes.

This process will occur quarterly to ensure compliance and accurate reporting for all agencies, and the average tax adjustment is under $1.00. The list of employees impacted can be found here: Link once saved to the WD Drive, and attached for your reference.
If you have questions, please contact me at Timothy.Lowry at das.oregon.gov<mailto:Timothy.Lowry at das.oregon.gov>.
Thank you,
Tim

[cid:image002.png at 01DCCB37.A6C88070]
Timothy M. Lowry (he, him)
Oregon Statewide Payroll Services Manager
971-718-4230
Oregon Department of Administrative Services<https://www.oregon.gov/das/Pages/index.aspx>


From: OSPS-News <osps-news-bounces at omls.oregon.gov> On Behalf Of FLORES Fabiola * DAS
Sent: Friday, January 2, 2026 11:50 AM
To: osps-news at omls.oregon.gov
Subject: OSPS News ~ Quarterly Tax Adjustments

Greetings Payroll Partners,
Over the next couple of weeks OSPS will be making quarterly tax adjustments to ensure accurate annual and quarterly tax reporting for 2025. These adjustments will apply to employees whose taxable wages or hours do not align with the expected calculation (taxable wages/hours × applicable tax rate) for Medicare, Old-Age, Survivors, and Disability Insurance (OASDI), Paid Leave Oregon, Workers' Benefit Fund (WBF), and Statewide Transit Tax (STT).
Adjustments will be processed through off-cycle payments with zero gross and net payroll, posted at quarter-end, and will have no impact on the employees' pay. Each adjustment will include:

  *   A positive or negative entry for the tax correction.
  *   A corresponding balancing entry for state income tax (SIT) or federal income tax (FIT). Federal Insurance Contributions Act (FICA) adjustments are rare, as FICA typically self-corrects based on year-to-date (YTD) wages.
Common Reasons for Tax Adjustments:

  1.  Net Negative Pay: STT and WBF do not calculate on negative wages and require manual correction. Paid Leave Oregon adjusts only up to the quarter-to-date (QTD) withholding limit.
  2.  Retro Time Changes: Adjustments to WBF-eligible hours in prior periods can create negative hours in the current period, requiring correction to meet quarterly reporting requirements.
  3.  Reversals with Different Pay Dates: These must be moved to the correct quarter for accurate reporting and amendments.
  4.  Imputed Values Without Wages: Taxes must still be captured.
  5.  Manual Negative Tax Entries: Posted without corresponding wage corrections.
  6.  Manual Overrides: Any entry that overrides calculated taxes.
  7.  Deceased Checks: Negative wages for FIT, SIT, and STT tax due to pretax deductions require manual correction. Q1 will be zeroed out; Q2-Q4 adjustments will apply to prior periods.
This process will occur quarterly to ensure compliance and accurate reporting for all agencies, and the average tax adjustment is under $1.00.
Looking forward to 2026 and beyond, we will conduct this process three times per year, near the end of the second, third, and fourth quarters. In advance of these adjustments, we will notify the payroll community in case questions arise. If you have questions, please contact me at Timothy.Lowry at das.oregon.gov<mailto:Timothy.Lowry at das.oregon.gov>.
Thank you,

Tim

[A picture containing logo  Description automatically generated]Timothy M. Lowry
Oregon Statewide Payroll Services Manager
Chief Financial Office | Office of the State Controller
971-718-4230
http://www.oregon.gov/DAS/Financial/Payroll<https://www.oregon.gov/DAS/Financial/Payroll/Pages/index.aspx>
Pronouns: he, him, his



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