On December 31, 2003, the County received an outside legal opinion that the County is prohibited by the Oregon PERS statutes from taxing retirement benefits under the PERS system. Furthermore, if the County may not tax Oregon PERS benefits, under federal law it is prohibited from taxing federal pension benefits.
Accordingly, we have modified the Form MC TR to allow PERS and federal pension benefits to be exempted on line 2. This exemption will be in addition to the $2,500 and $5,000 exemptions for single or married filers.
If you are exempting your federal pension benefits, you may only exempt those benefits taxed by Oregon. The correct entry for federal pension benefits would be the sum of your 1099-R less any amount already exempted from line 16b of your federal 1040 or exempted on line 17 of your Oregon Form 40 (or line 38 if filing Form 40P or Form 40N). Please attach a copy of your PERS or federal pension Form 1099-R. Failure to attach your Form 1099-R for PERS or federal pension benefits may result in denial of income exemption for such benefits.
- Note: Federal pension benefits include amounts paid from the Federal Retirement System (FERS), the Civil Service Retirement System (CSRS), and military retirement.
- Note: Only Oregon PERS payments are exempt from the Multnomah County income tax. Other public retirement programs that are not paid from the state of Oregon Public Employees Retirement fund are not exempt.
If you assumed that your PERS or federal pension benefits were taxable and you made a prepayment of the Multnomah County income tax, we will refund the tax that you paid on your PERS/FERS benefits after you file your County income tax return. The refunds will be mailed after April 15.
Call the telephone helpline at (503) 988-ITAX if you have individual questions.