OAR Chapter 150 — Department of Revenue

Division 18 JUDGMENTS, EXECUTION AND GARNISHMENT

Or. Admin. R. 150-018-0010 Oregon Department of Revenue Tax Garnishments and Orders to Withhold Child or Spousal Support

(1) The Department of Revenue is authorized to continuously garnish up to 25 percent of an individual’s disposable earnings to recover delinquent state tax debt. Generally, a garnishment to pay state tax debt would be calculated upon disposable earnings without reduction by any order to withhold child or spousal support.

(2) If, for any reason, orders to withhold wages for child or spousal support and garnishments for state tax debt combined exceed the individual’s nonexempt disposable earnings of the taxpayer, any orders to withhold wages under ORS 25.378 will have priority over any other legal process, including all garnishments for state tax debt or otherwise (see ORS 25.375). The employer must reduce payments as needed to the department’s garnishment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 18.385
REV 53-2024, amend filed 12/26/2024, effective 01/01/2025
Renumbered from 150-18.385, REV 7-2016, f. 8-10-16, cert. ef. 9-1-16
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
Renumbered from 150-23.186, REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
Renumbered from 150-23.185, REV 8-2002, f. & cert. ef. 12-31-02
REV 7-1998, f. 11-13-98 cert. ef. 12-31-98
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-018-0020 Oregon Department of Revenue Other Agency Account Garnishments

(1) Under ORS 293.250, the Department of Revenue may render assistance to recover delinquent debts owed to any entity listed in ORS 293.250(2) that is assigned by the entity to the department for collection, including actions to continuously garnish up to 25 percent of an individual’s nonexempt disposable earnings.

(2) Under ORS 18.385(5), an order to withhold amounts for child or spousal support under ORS 25.378, 419B.408, or 419C.600, or ORS Chapter 110 (“child or spousal support withholding”) reduces an individual’s nonexempt disposable earnings. The disposable earnings subject to garnishment are the remaining nonexempt disposable earnings after subtracting the amount withheld for child or spousal support.

(3) Under ORS 18.385(2) or 18.385(6), an individual’s nonexempt disposable earnings subject to garnishment for the period is calculated by reducing the individual’s disposable earnings for that period by the amount of disposable earnings exempt from garnishment. The amount of disposable earnings exempt from garnishment is the greater of 75 percent of the disposable earnings for the period under ORS 18.385(1) or the minimum exemption amount under ORS 18.385(2) or 18.385(6).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 18.385 & 293.250
REV 53-2024, amend filed 12/26/2024, effective 01/01/2025
REV 8-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-18.385-(A), REV 7-2016, f. 8-10-16, cert. ef. 9-1-16
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08
Renumbered from 150-23.186-(A), REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
Renumbered from 150-23.185-(A), REV 8-2002, f. & cert. ef. 12-31-02
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-018-0030 Appeal Period after Garnishment Challenge Denied

If a person makes a challenge to a garnishment, and that challenge is denied in whole or in part by the department, the person may request a contested case hearing before an administrative law judge of the Office of Administrative Hearings established under ORS 183.605. To be valid, the hearing request must be in writing and must be received by the department within 90 days of the date on the face of the Response to Challenge to Garnishment letter issued by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 18.855
Renumbered from 150-18.855(5), REV 7-2016, f. 8-10-16, cert. ef. 9-1-16
REV 2-2006, f. & cert. ef. 7-31-06, Renumbered from 150-18-902(5)
REV 8-2002, f. & cert. ef. 12-31-02;

Or. Admin. R. 150-018-0040 Garnishment of Wages

Circumstances in which a debtor may be jeopardizing the collection of a tax, and which are considered justification for garnishment of 100% of the debtor’s wages under ORS 18.855(6) include, but are not limited to, the following:

(1) The department receives information that, in the judgment of the department, indicates the debtor is attempting to jeopardize collection of the tax. For example: The debtor directs the employer to pay over the debtor's earnings to another entity;

(2) The department receives information that, in the judgment of the department, indicates the debtor may cease employment or change jobs to avoid paying taxes;

(3) The department receives information that, in the judgment of the department, indicates the debtor intends to leave the state to avoid paying taxes;

(4) The department receives information that, in the judgment of the department, indicates that the debtor has changed jobs in the past to avoid garnishment; or

(5) The debtor's failure to comply with Oregon tax laws in an attempt to avoid or evade the tax was the basis for assessment of the tax being collected by garnishment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 18.855
Renumbered from 150-18.855(6), REV 7-2016, f. 8-10-16, cert. ef. 9-1-16
REV 2-2006, f. & cert. ef. 7-31-06, Renumbered from 150-18.902(6)
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04, Renumbered from 150-29.375(2)(c)
RD 7-1988, f. 12-19-88 cert. ef. 12-31-88
RD 10-1983, f. 12-20-84, cert. ef. 12-31-84

Division 90 NOTICE OF TAX PROVISIONS TO TENANTS OF CLOSING MANUFACTURED DWELLING PARK

Or. Admin. R. 150-090-0020 Abandoned Personal Property Homes; Landlord’s Acquisition, Rehabilitation, and Sale to New Tenant with Tax Cancellation

(1) “Manufactured dwelling or floating home” has the same meaning as the term “personal property” as that term is defined in ORS 90.675(1)(e).

(2) ORS 90.675 requires three declarations or affidavits to be filed before the county tax collector and the Department of Revenue may cancel unpaid property taxes as provided in ORS 90.675(15). For purposes of this rule the declarations and affidavits required in the statute will be referred to as follows:

(a) The declaration or affidavit required by ORS 90.675(15)(a)(A) shall be referred to as a “Declaration or Affidavit of Intent.”

(b) The declaration or affidavit required by ORS 90.675(15)(a)(B) shall be referred to as a “Declaration or Affidavit of Compliance.”

(c) The declaration or affidavit required by ORS 90.675(15)(c)(C) shall be referred to as a “Declaration or Affidavit of the Buyer.”

(3) In addition to the information required under ORS 90.675(15), the Declaration or Affidavit of Intent and the Declaration or Affidavit of Compliance must contain the following additional information:

(a) Information identifying the manufactured dwelling or floating home. For manufactured dwellings, this is the “Home ID” in the Department of Consumer and Business Services ownership records, and, if known, the DMV X-plate number and Serial Number. For floating homes, identification would be the floating home plate number or other specific identifying information.

(b) The physical location of the manufactured dwelling in the manufactured dwelling park or the floating home in the marina (address/space number).

(A) Name of the manufactured dwelling park or marina;

(B) Mailing address of the manufactured dwelling park or marina;

(D) The county in which the manufactured dwelling or floating home is located.

(4) To comply with ORS 90.675(15), the owner of the manufactured dwelling park or marina must file a Declaration or Affidavit of Intent with the county tax collector or Department of Revenue, as appropriate, prior to selling the abandoned manufactured dwelling or floating home to a subsequent tenant.

(5) Upon receiving the Declaration or Affidavit of Intent and the filing by the owner of the manufactured dwelling park or marina of relevant ownership or title documents and any associated fees, the county tax collector shall provide to the owner of the manufactured dwelling park or marina an ownership document or title to the manufactured dwelling or floating home under ORS 90.675(15)(b). Manufactured dwelling ownership transfers are processed under ORS chapter 446. Floating home title transfers are processed under ORS chapter 830.

(6) After the manufactured dwelling or floating home has been sold by the owner of the manufactured dwelling park or marina, the owner of the manufactured dwelling park or marina may file a Declaration or Affidavit of Compliance as required under ORS 90.675(15)(a)(B) and (c).

(7) In addition to documentation filed under sections (4) and (6) of this rule, the following items must be filed or paid in order to have unpaid taxes or tax liens cancelled in accordance with ORS 90.675(15)(d):

(a) Filing of the Declaration or Affidavit of the Buyer with the county tax collector;

(b) Payments of taxes and warrant fees to the Department of Revenue or county tax collector as required under ORS 90.675(15); and

(c) Filing of ownership or title transfer documents to transfer ownership to the purchaser that made the Declaration or Affidavit of the Buyer.

(8) Warrant fees paid to the county as required in ORS 90.675(15)(c)(B) must be paid in full. There is no authority to cancel these fees.

(9) If the county tax collector or Department of Revenue receives and accepts all documents and payments required to be filed with them as described above and in ORS 90.675(15), the county tax collector or Department of Revenue must cancel the taxes or tax liens on the manufactured structure or floating home.

(10) For purposes of ORS 90.675(15)(a)(B)(iii) and the Declaration or Affidavit of Compliance, the period of time reasonably necessary to complete the improvements and the sale must be within six months from the date the manufactured dwelling or floating home was presumed to be abandoned unless reasonable explanation is provided to and found to be sufficient to justify the time period by the county tax collector or Department of Revenue, as appropriate.

(a) The county tax collector or Department of Revenue, as appropriate, may allow a reasonable period of time that is longer than six months to complete the improvements and the sale if the period of time was due to factors that may include, but are not limited to:

(A) Condition of the home;

(B) Extent of improvement work to be completed;

(D) Weather conditions;

(E) Permitting, inspections, or other government requirements;

(F) Arrangements for marketing and sale; or

(G) Any other pertinent information related to the improvement timeframe.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 90.675
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17

Or. Admin. R. 150-090-0600 Notice of Tax Provisions to Tenants of Closing Manufactured Dwelling Park

(1) A landlord must provide notice regarding the tax credit available to tenants of a closing manufactured dwelling park.

(2) The notice to tenants of a closing park must include:

(a) The qualifications for the personal income tax credit

(b) Information on how to apply for the personal income tax credit, and

Sample: TAX CREDIT: If you own and live in a mobile (manufactured) home in a park that is closing, and leave that park because you received a closure notice, you may qualify for a $5,000 refundable tax credit on your Oregon personal income tax return.

To qualify, you must:

Own and live in the manufactured home as your main residence;
Rent space in the closing park;
Receive a notice that the park is closing while you own and live in the manufactured home; and
Move out of the park because it’s closing.

If you qualify, you must attach a completed Schedule MPC to your Oregon income tax return for the year you leave the park.

Example: You move out of a closing park on October 15, 2009 and you qualify for the credit. You’ll claim it on your 2009 Oregon income tax return, due April 15, 2010. If the park converts to a subdivision and you sell your manufactured home to someone who buys a lot in the subdivision, you won’t qualify for this credit. For more information and to download Schedule MPC, visit www.oregon.gov/DOR/PERTAX. PROPERTY TAX APPEAL: If you receive notice that your park is closing, you may appeal the property tax assessment on your manufactured home. To appeal, send a completed Real Property Petition, 150-310-063, to the Property Value Appeals Board in the county where the park is located. For more information, see the publication, How to Appeal Your Property Value. The petition and publication are at www.oregon.gov/dor/forms. You may also contact the Department of Revenue for information at 1-800-356-4222 or questions.dor@dor.oregon.gov.

History

Statutory/Other Authority: ORS 305.100 & 90.650
Statutes/Other Implemented: ORS 90.650
REV 12-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-90.650, REV 8-2016, f. 8-10-16, cert. ef. 9-1-16
REV 4-2009, f. & cert. ef. 7-31-09

Division 118 INHERITANCE TAX

Or. Admin. R. 150-118-0010 Definitions

The term "intangible personal property" includes but is not limited to stocks, bonds, notes, currency, bank deposits, accounts receivable, patents, trademarks, copyrights, royalties, goodwill, partnership interests, limited liability interests, life insurance policies, annuity contracts, brokerage accounts, and other choices in action.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010–118.300 & 314.364
Renumbered from 150-118.005, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12

Or. Admin. R. 150-118-0020 Deductions Allowed in Determining Estate Tax or Fiduciary Income Tax

This rule applies to estates of decedents who die on or after January 1, 2012.

(1) An estate may claim deductions allowable under sections 2053 or 2054 of the Internal Revenue Code (IRC) for either estate tax purposes or fiduciary income tax purposes, but not both. The executor of an estate may make different elections for federal and Oregon purposes.

(2) If deductions are claimed against fiduciary income, the executor must include with the return a statement that the deductions are not being claimed for estate tax purposes.

Example 1: The executor of Estate A elects to deduct $19,500 of expenses in determining the estate’s federal income tax. For Oregon, the executor elects to claim the deduction in determining estate tax. The amount deducted for federal purposes is not allowed for Oregon fiduciary income tax purposes.

Example 2: The executor of Estate B elects to deduct $10,000 of expenses in determining the estate’s federal income tax. The executor elects to claim these deductions in determining Oregon’s fiduciary income tax. No modification to income is required for Oregon. A deduction may not be made on the Oregon estate tax return.

Example 3: The executor of Estate C elects to claim a deduction of $15,000 for federal estate tax purposes. For Oregon, the executor elects to claim the deduction for fiduciary income tax purposes. The deduction may not also be made on the Oregon estate tax return if the election is made by deducting the $15,000 on the Oregon fiduciary income tax return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010 – 118.300 & 314.364
Renumbered from 150-118.010, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12

Or. Admin. R. 150-118-0030 Imposition of Tax

This rule applies to estates of decedents who die before January 1, 2012.A tax equal to the state death tax credit allowable for federal estate tax purposes is imposed. The tax is due in every case even though the credit may not be claimed on the federal estate tax return, Form 706.

(1) Property within the jurisdiction of the state includes the following:

(a) Resident Decedent.

(A) Real property situated in Oregon.

(B) Tangible personal property situated in Oregon.

(b) Nonresident Decedent.

(A) Real property situated in Oregon.

(B) Tangible personal property situated in Oregon.

NOTE: See ORS 118.010(4)(b) which provides an exemption as to intangible personal property of nonresident decedents.

(2) The phrase "within the jurisdiction of the state" connotes extent of power and has a broader meaning than the phrase "within the state" which denotes locality. Property may be within the jurisdiction of the state but not physically situated in the state, for example:

(a) Stock of an Oregon corporation is within the jurisdiction of this state although the certificate may not be within this state.

(b) A savings account, checking account, and certificate of deposit in an Oregon bank are within the jurisdiction of this state although the passbook or certificate may not be within this state.

(c) A promissory note given by a resident of Oregon is within the jurisdiction of this state although the note may not be within this state.

(3) The term "intangible personal property" includes stocks, bonds, notes, currency, bank deposits, accounts receivable, patents, trademarks, copyrights, royalties, goodwill, partnership interests, life insurance policies, and other choices in action.

(4) The doctrine of equitable conversion is recognized in the administration of the Oregon inheritance tax law.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010
Renumbered from 150-118.010(1), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
12-31-77
9-74
11-73
9-71

Or. Admin. R. 150-118-0040 Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return

This rule applies to estates of decedents who die before January 1, 2012. Deductions allowed under sections 2053 or 2054 of the Internal Revenue Code (IRC) may be claimed on either the Oregon inheritance tax return (Form IT-1) or the Oregon fiduciary income tax return (Form 41), but not both. The personal representative of an estate may make different elections for federal and Oregon returns. If the deductions are claimed on the Oregon Form 41, attach a statement that the deductions are not being claimed on the Oregon Form IT-1. For federal purposes, those deductions may be taken on either the federal estate tax return (Form 706) or the federal estate income tax return (Form 1041) under IRC 642(g).

Example 1: Peter dies in 2004 with a gross estate of $900,000. The personal representative of the estate elects to deduct $19,500 of expenses on the federal Form 1041. For Oregon, the personal representative elects to take the deduction on the Oregon Form IT-1. The amount deducted on the federal Form 1041 must be added back to income on the Oregon Form 41.

Example 2: Sally dies in 2004 with a gross estate of $950,000. The personal representative of the estate elects to deduct $10,000 of expenses on the federal Form 1041. The personal representative does not claim these deductions on the Oregon Form IT-1. The deductions claimed on the federal Form 1041 flow through to the Oregon Form 41. No modification to income is required.

Example 3: Mildred dies in 2004 with a gross estate of $2,000,000. The personal representative of the estate elects to claim a deduction of $15,000 on the federal Form 706. For Oregon, the personal representative elects to claim the deduction on the Oregon Form 41. The election is made by subtracting the deduction from the Oregon return. The deduction is not allowed on the Oregon Form IT-1 if it was claimed on the Oregon Form 41. The personal representative must reduce the deductions by $15,000 on the Oregon Form IT-1.

[ED. NOTE: Forms referenced are available from the Agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010
Renumbered from 150-118.010(2), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 2-2004(Temp), f. 4-30-04 cert. ef. 5-1-04 thru 9-30-04
Repealed by RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78

Or. Admin. R. 150-118-0050 Apportionment of Tax

This rule applies to estates of decedents who die before January 1, 2012.

(1) Where property is left in two or more states by a decedent, the maximum state tax credit allowed against the federal estate tax is apportioned. The numerator of the apportionment formula is the value for federal estate tax purposes of the property within the jurisdiction of this state notwithstanding that some of such property for Oregon inheritance tax purposes may be exempt, deductible, appraised at different values or considered in computing a credit. The denominator of the apportionment formula is the value of the gross estate for federal estate tax purposes.

(2) The executor shall, upon demand, file a copy of the federal estate tax return and such other information deemed necessary by the Department in the computation of the additional tax. In case of failure to file such returns as these rules provide, the Department shall compute the tax upon the basis of the best information available.

(3) If the amount of federal estate tax is increased or decreased subsequently, the pick-up tax imposed upon such estate shall be changed accordingly. In such case it is the duty of the executor to notify the Department of the changes.

(4) Example of apportionment of federal credit where decedent leaves property in three states that impose death taxes: [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010
REV 34-2017, f. & cert. ef. 7-24-17
Renumbered from 150-118.010(3), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
RD 4-1997, f. 9-12-97 cert. ef. 12-31-97, Renumbered from 150-118.100(2)
TC 8-1980, f. 11-28-80, cert. ef. 12-31-80
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
1-1-77, 12-31-77, Renumbered
12-19-75, Renumbered
9-71

Or. Admin. R. 150-118-0060 Reciprocal Exemption of Intangible Personal Property of Nonresident Decedent

This rule applies to estates of decedents who die before January 1, 2012. Intangible personal property within the jurisdiction of the state of Oregon and owned by a nonresident of this state is exempt from inheritance tax if a like exemption is made by the laws of the state or country of decedent's residence in favor of residents of this state. There is no such exemption allowed as to property owned by a deceased resident of a state which does not impose a death tax. However, if a state has a death tax law which does not impose a tax on intangible personal property owned by a nonresident of that state, the "like exemption" requirement of ORS 118.010(4)(b) is satisfied, and Oregon would exempt intangible personal property owned by a deceased resident of that state. A nonresident is one who at the time of death had a permanent dwelling place and an official or legal residence outside the State of Oregon. To have a change of domicile there must be:

(1) Residence in a new place;

(2) Intent to abandon the old domicile; and

(3) Intent to acquire a new domicile (196 Or 256).

NOTE: For definition of the term “intangible personal property,” see OAR 150-118-0030.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010
Renumbered from 150-118.010(4)(b), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97, Renumbered from 150-118.060
12-19-75
9-74

Or. Admin. R. 150-118-0070 Separate Oregon Elections

This rule applies to estates of decedents who die before January 1, 2012.

(1) For deaths after December 31, 2001, and before January 1, 2012, the Oregon inheritance tax is computed using the Internal Revenue Code (IRC) in effect on December 31, 2000. Federal changes enacted after this date, including the "Economic Growth and Tax Relief Reconciliation Act of 2001", do not affect the computation of Oregon tax. Oregon allows separate elections, including but not limited to elections provided by IRC Sections 2031(c), 2032, 2032A, 2033A, 2056 and 2056A that would have been allowed under federal law in effect as of December 31, 2000, whether or not a federal estate tax return is filed. The Oregon elections are irrevocable. If a federal estate tax return is not required with respect to the decedent's death, the Oregon elections must be made in the same manner as required under the IRC on a return filed with the Oregon Department of Revenue.

Example 1: The personal representative may not make a qualified terminal interest property (QTIP) election on the 2004 Oregon Inheritance Tax Return under the following circumstances. Harold dies in 2004 with an estate valued at $950,000. He is survived by his wife, Wanda. They had provided for a credit shelter trust funded by an amount equal to the unused federal exclusion amount. The trust is set up to distribute or accumulate income to someone other than the spouse and allows for discretionary distribution of income to the surviving spouse. The trust does not qualify for a QTIP election under IRC 2056(b)(7), as in effect as of December 31, 2000.

Example 2: The personal representative may make a QTIP election on the 2004 Oregon Inheritance Tax Return under the following circumstances. Winifred dies in 2004 with an estate valued at $1,500,000. She is survived by her husband, Harvey. They had provided for a credit shelter trust funded by an amount equal to the unused federal exclusion amount. The trust provides for all income to be distributed to the surviving spouse and otherwise qualifies for the federal QTIP election. The personal representative files a 2004 federal estate tax return without claiming a QTIP election. The personal representative may file the 2004 Oregon return claiming a QTIP election because that election would have been allowed under federal law effective on December 31, 2000.

(2) If a QTIP election is taken when the first spouse dies, the estate of the surviving spouse must include the value of any property included in the QTIP election provided in IRC 2044. The Oregon and federal gross estate amount will be different for the surviving spouse's estate when a separate election is taken for Oregon only.

Example 3: Same situation as example 2. The personal representative claimed an Oregon only QTIP election on Winifred's Oregon IT-1 return. Harvey dies in 2005. Harvey's estate for Oregon will include the value of the Oregon only QTIP taken for Winifred per IRC 2044 "Certain property for which a marital deduction was previously allowed". Harvey's gross estate for Oregon and for federal will be different because of the Oregon only QTIP election taken on Winifred's Oregon IT-1 return.

(3) For purposes of the Oregon tax, the obligations of electing parties, agreements required of persons benefiting from elections, and the inclusion of property in the gross estate of a surviving beneficiary are the same as under the IRC.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010
Renumbered from 150-118.010(7), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 2-2004(Temp), f. 4-30-04 cert. ef. 5-1-04 thru 9-30-04

Or. Admin. R. 150-118-0080 Elections

This rule applies to estates of decedents who die on or after January 1, 2012.

(1) An estate may elect a larger or smaller amount, percentage or fraction of the qualified terminal interest property (QTIP) for Oregon tax purposes than was elected for federal estate tax purposes in order to reduce the Oregon estate tax liability while making full use of the federal unified credit. In addition to or in lieu of a QTIP the estate may elect to claim Oregon Special Marital Property (OSMP) to reduce the estate tax liability.

(2) The Oregon and federal taxable estate amount will be different for the surviving spouse's estate when a separate QTIP or OSMP election was taken for Oregon. In addition to the value of property for which a federal QTIP election was made, the value of property for which an Oregon QTIP or OSMP election was made is includible as part of the Oregon taxable estate to the extent that the property is subject to Oregon estate tax.

(3) The executor must identify the assets by schedule, item number, and the fixed amount, percentage or fractional interest that are included as part of the Oregon QTIP or OSMP election, either on the return or, if those assets have not been determined when the estate tax return is filed, on a statement to that effect, prepared when the assets are definitively identified.

Example 1: W dies in 2012 with a gross estate of $7,000,000. The decedent established a federal QTIP trust for the benefit of W’s surviving spouse H, an Oregon resident, in an amount to result in no federal estate tax. For Oregon, the executor may elect a larger fixed amount, percentage or fractional interest QTIP or an OSMP. To achieve zero Oregon estate tax, the Oregon QTIP or OSMP election will be the difference between the federal exemption amount and the Oregon exemption amount. H was an Oregon resident at the time of H’s death. Upon H’s death, the assets remaining in the Oregon QTIP or OSMP trust must be included in H’s gross estate.

(4) The amount to be included in the estate on the death of a surviving spouse is limited to trust property that is subject to Oregon estate tax. If a QTIP or OSMP election was taken when the first spouse dies, the property that is required to be included in the estate of the surviving spouse is dependent upon the residency status of the surviving spouse. If a resident decedent, the gross estate of a surviving spouse must include the value of any property included in the QTIP or OSMP election. If a nonresident decedent, the gross estate of a surviving spouse must include the value of any property included in the QTIP or OSMP election to the extent that the property consists of real property located in Oregon or tangible personal property located in Oregon.

Example 2: Same facts as Example 1, except H was not an Oregon resident at the time of H’s death. The Oregon estate must include the value of any real property located in Oregon and any tangible personal property located in Oregon remaining in the trust; intangible property is excluded from the estate.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.010–118.300 & 314.364
Renumbered from 150-118.010(8), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12

Or. Admin. R. 150-118-0090 Due Dates and Extensions of Time to File

(1) An estate transfer tax return shall be filed and the tax shall be paid to the Department of Revenue no later than 12 months following the date of death of the decedent. An estate transfer tax return is due the day of the 12th calendar month after the decedent's death numerically corresponding to the day of the calendar month on which death occurred, except that, if the decedent dies on February 29 in a leap year, the estate transfer tax return and tax payment must be made on or before February 28 of the next year.

(2) When the due date falls on a Saturday, Sunday, or a legal holiday, the due date for filing the estate transfer tax return is the next succeeding day that is not Saturday, Sunday or a legal holiday. For this purpose, “legal holiday” means a holiday recognized statewide in Oregon or a holiday recognized in the District of Columbia.

(3) A request made to the department for an extension of time to file an estate transfer tax return must be made on a form prescribed by the department that applies to the year of the decedent’s death. However, an estate is not required to request an extension of time to file an Oregon estate transfer tax return if the estate received an extension of time to file a federal estate transfer tax return from the IRS. In this situation, the estate is required to submit a copy of federal form 4768 and federal estate tax return form 706 with the originally filed Oregon estate transfer tax return. The length of an Oregon extension of time to file based on an IRS extension is determined by adding the extension granted by the IRS to the Oregon original return due date.

(a) If the estate’s request for extension of time to file an estate transfer tax return is filed on or before the original due date of the estate transfer tax return, the department shall grant an extension of time to file an estate transfer tax return. The extension of time to file expires six months after the original due date of the estate transfer tax return.

(b) If the estate files a request for extension of time to file an estate transfer tax return after the original due date of the estate transfer tax return, the department may grant an extension of time to file only if the estate sets forth good and sufficient cause for the estate’s failure to request an extension of time to file on or before the original due date of the estate transfer tax return. An extension of time to file granted under this provision expires six months after the original due date of the estate transfer tax return.

(c) The department may grant an additional six-month extension of time to file if the executor of the estate responsible for filing the estate transfer tax return is outside the United States when the return is due. An additional six-month extension of time to file shall not be approved unless an extension as described in subsection (a) or (b) of this section has been granted. The petition requesting an additional six-month extension of time to file must describe why it is impossible or impractical for the executor to file an estate transfer tax return by the end of the first extension period described in subsection (a) or (b) of this section. Any additional extension of time to file granted under this subsection expires twelve months after the original due date of the estate transfer tax return.

(d) Subsections (a) through (c) of this section do not apply to an extension of time to file that is allowed by the department based on an IRS granted extension of time to file to the estate transfer tax return.

(4) An extension of time to file, without an approved extension of time to pay, does not relieve the estate from the five percent penalty for failure to pay the tax on or before the original due date, and interest accrues during the extension period. See OAR 150-118-0170 for information regarding interest and penalty.

(5) Estates of decedents with a date of death before October 1, 2023, may file a request for extension of time to file an estate transfer tax return by following the provisions of OAR 150-118-0090 that were in effect prior to October 1, 2023.

History

Statutory/Other Authority: ORS 305.100 & 118.160
Statutes/Other Implemented: ORS 118.100 & 118.160
REV 13-2023, amend filed 09/20/2023, effective 10/01/2023
REV 18-2021, amend filed 12/15/2021, effective 01/01/2022
Renumbered from 150-118.100(1), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97, Renumbered from 150-118.110(3)
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78
12-31-77, Renumbered
12-19-75

Or. Admin. R. 150-118-0100 Property Values and Appraisals

This rule applies to estates of decedents who die on or after January 1, 2012.

(1) The fair market value of an estate’s property must be determined as of the date of death or six months following the date of death if the alternate valuation method is elected. The property value reported on the estate tax return must be substantiated. The executor is required to explain how the value was determined and must attach copies of any appraisals used to value property included on the return. If there was no appraisal, the executor must attach a statement to the return explaining how the value was determined. If the determination of value is based on a county property tax statement, the determination of value must be supported by other evidence of value.

(2) A fee appraisal represents both common and best practice for determination of the value for most real and personal property but may not always be necessary. For example, where an Oregon Special Marital Property election has been made, the value of the asset(s) included within the election may not have an impact upon the estate tax.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.100
REV 8-2018, minor correction filed 04/09/2018, effective 04/09/2018
Renumbered from 150-118.100(6), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12

Or. Admin. R. 150-118-0110 Estate Tax Credit for Natural Resource Property

(1) Definitions. The following definitions apply for purposes of ORS 118.140:

(a) “Active Management” is defined by Internal Revenue Code (IRC) Section 2032A(e)(12) to mean the making of the management decisions of a business (other than the daily operating decisions).

(b) “Ancestor” means a person from whom the decedent is directly descended, such as a parent, grandparent, or great-grandparent. The term does not include aunts, uncles, or cousins.

(c) “Cash equivalents” means accounts receivable, inventory, marketable securities, capital or sinking funds, prepaid expenses and other assets that are spent, maintained, used or available for use, in the operation of a farm business, forestry business, or fishing business.

(d) “Disposition” means to sell, exchange, transfer, convey, or otherwise dispose of natural resource property that was used to compute the natural resource property credit, if such disposition results in the property no longer qualifying for the credit.

(e) “Domestic partner” means an individual who has entered into a domestic partnership as defined in ORS 106.310. Per the general applicability provision of ORS 106.340, “spouse” as used in these rules includes domestic partner.

(f) ”Family member” means a member of the family as defined in IRC section 2032A, and for purposes of ORS 118.140 includes:

(A) An ancestor of the decedent;

(B) The spouse of the decedent;

(D) A lineal descendant of a parent of the decedent; or

(E) The spouse of any lineal descendant described in paragraph (C) or (D). For purposes of the preceding sentence, a legally adopted child of an individual is a lineal descendant of the adoptive parent(s).

(g) “Lineal descendant” means a person in a direct line of descent from the decedent, such as a child, grandchild or great-grandchild.

(h) “Lineal descendant of a parent of the decedent” means a decedent’s siblings, children and grandchildren of those siblings, and any other person in a direct line of descent from the decedent’s siblings.

(2) Estates of decedents who die on or after January 1, 2015 may only claim the natural resource property tax credit with respect to natural resource property located in Oregon that equals at least 50 percent of the adjusted gross estate that is in Oregon. All relevant provisions of this rule continue to apply to estates of decedents who die on or after January 1, 2015.

(3) Material participation by a Family Member. In order to qualify under ORS 118.140(8), at least one family member must materially participate in the business after the transfer.

(a) Material participation is a factual determination, and the types of activities which will support such a finding will vary. No single factor is determinative.

(b) Actual employment of the family member on a substantially full-time basis (35 hours a week or more) or to any lesser extent necessary personally to manage fully the farm or business in which the real property to be valued under section 2032A is used constitutes material participation.

(c) Payment of self-employment tax for employment with respect to the farm business, forestry business or fishing business is not conclusive as to the presence of material participation, and the requirement can be met even though no self-employment tax is payable by the family member with respect to income derived from the business.

(d) As provided by section 2032A of the Internal Revenue Code, active management shall be treated as material participation.

(e) The rules for determining material participation are illustrated by the examples found in CFR 20.2032A-3(g).

(f) Examples of active management decisions that can be used to demonstrate material participation include the following: inspecting growing crops, animals, forests, or equipment; reviewing and approving annual crop plans in advance of planting; making a substantial number of the management decisions of the business operation; approving expenditures for other than nominal operating expenses in advance of the time the amounts are expended; deciding what crops to plant or how many cattle to raise; determining what fields to leave fallow; determining where and when to market crops and other business products; determining how to finance business operations; and determining what capital expenditures the trade or business should make.

(4) If a transferee disposes of property resulting in additional tax as described in ORS 118.140(9)(a), the transferee must file a report with the department and pay the additional tax. The report may be made by filing a copy of the form described in ORS 118.140(10), identifying the asset or assets that no longer qualify for the credit, and including a calculation of the additional tax as described in ORS 118.140(9)(e). The report and payment of the tax are due within six months of the disposition. Interest and penalties under ORS 118.260 apply if the report is not filed and tax is not paid on or before the due date prescribed in ORS 118.140(9)(e).

[Publications: Contact the Oregon Department of Revenue for information on obtaining copies of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 118.140
Statutes/Other Implemented: ORS 118.140
Renumbered from 150-118.140, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 5-2015, f. 12-23-15, cert. ef. 1-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
REV 8-2010, f. 7-23-10, cert. ef. 7-31-10
REV 13-2008, f. & cert. ef. 11-3-08
REV 4-2008(Temp), f. & cert. ef. 5-23-08 thru 11-17-08

Or. Admin. R. 150-118-0115 Natural Resource Property Exemption

(1) Definitions. The following definitions apply for purposes of ORS 118.145:

(a) “Domestic partner” means an individual who has entered into a domestic partnership as defined in ORS 106.310. Per the general applicability provision of ORS 106.340, “spouse” as used in these rules includes domestic partner.

(b) “Eligible business entity” means a business entity that is owned 100 percent by qualifying family members or eligible entities, including, but not limited to corporations, partnerships, limited liability companies, and sole proprietorships.

(d) “Eligible trust” means a trust or subtrust whose permissible distributees are all qualifying family members or eligible entities.

(e) “Material participation“ means active management as defined by IRC 2032A(e)(12) and associated Treasury Regulations as of December 31, 2010.

(f) “Qualifying family member” means a person within the third degree of relation to the decedent, by blood, marriage, adoption, civil union, or domestic partnership, and includes:

(A) A great-grandparent, grandparent, or parent of the decedent;

(B) The spouse of the decedent;

(D) An aunt or uncle of the decedent;

(E) A sibling, niece or nephew of the decedent; and

(F) The spouse of any family member described in paragraphs (A) or (C) to (E).

(g) “Relevant business days” means those days during which a person that is engaged in active management of natural resource property would customarily be expected to exercise significant management activities, given the nature of the industry in which the business is operating.

(h) “Small forestland owner” means a decedent who owns, throughout the five years immediately prior to the date of the decedent’s death, forestland that is at least 10 acres but fewer than 5,000 acres. “Small forestland owner” also includes a decedent who holds an interest in an eligible entity that owns forestland that is at least 10 acres but fewer than 5,000 acres.

(2) Estates of decedents who die on or after July 1, 2023, may claim the exemption under ORS 118.145 only for natural resource property located in Oregon.

(3) An exemption under ORS 118.145 may be claimed for natural resource property held by an eligible entity. The eligible entity must qualify as an eligible business entity or eligible trust. The eligible entity may hold the natural resource property directly or indirectly through another eligible entity. The value of an eligible entity is included in the exemption only to the extent the value of the eligible entity is attributable to natural resource property used in a farm, fishing or forestry business owned by the entity.

(4) Transfer of ownership of natural resource property, which includes an interest in an eligible entity for purposes of this paragraph, between qualifying family members and eligible entities does not cause natural resource property to lose its eligibility for exemption under ORS 118.145 if all other requirements of ORS 118.145 and this rule continue to be met. If an interest in natural resource property is transferred by a qualified family member or an eligible entity to a qualified family member or an eligible entity, the interest in natural resource property shall be deemed to have been owned by the transferee during the time that the interest in natural resource property was owned or deemed to have been owned by the transferor.

(5) Material participation.

(a) To qualify under ORS 118.145, the decedent or a qualifying family member of the decedent must materially participate in the management of the business associated with the natural resource property. The duties of material participation may not be delegated to a person who is not a qualifying family member, except when the qualifying family member is an eligible qualified heir as defined by IRC 2032A(c)(7)(C), as in effect on December 31, 2010, in which case the material participation duties may be delegated to a fiduciary of the eligible qualified heir.

(b) The decedent or qualifying family member(s) must materially participate by engaging in active management of the farming, forestry, or fishing business for at least 75 percent of the relevant business days during the calendar year, or for qualifying small forestland owners, for the entire year as defined in 5(c) of this rule.

(c) A small forestland owner is not subject to the requirement to materially participate for at least 75 percent of the relevant business days during the calendar year. A small forestland owner must actively manage the small forestland property through appropriate or customary silvicultural or management activities given the current phase in the forest management cycle for the small forestland property. A small forestland owner must maintain documentation of these silvicultural or management activities. This paragraph applies to estates of a decedent who dies on or after January 1, 2026.

(d) Material participation by a decedent and each qualifying family member is evaluated separately for each family member and may not be combined for purposes of determining the percentage under subsection (b) of this section. However, more than one family member may materially participate at any given time.

(e) Disqualification for failure to meet material participation requirements in a calendar year shall not occur if the failure to meet material participation requirements in the calendar year is due to the death or disability, as defined in IRC 2032A(b)(4)(B), of a qualifying family member.

(f) Active management decisions that demonstrate material participation include, but are not limited to, the following: inspecting growing crops, animals, on-going fishing operations, forests, or equipment; reviewing and approving annual crop plans in advance of planting; making a substantial number of the management decisions of the business operation; approving expenditures for other than nominal operating expenses in advance of the time the amounts are expended; deciding what crops to plant or how many cattle to raise; determining what fields to leave fallow; determining what kind of fish to harvest and the equipment needed to harvest the fish; determining where and when to market crops and other business products; determining how to finance business operations; and determining what capital expenditures the trade or business should make.

(g) A disposition of the natural resource property occurs if the material participation requirements are not met. Whether the material participation requirement has been met for a calendar year will be determined at the end of the calendar year. If the material participation requirement is not met during the calendar year, the disposition of the natural resource property is deemed to occur December 31 of the calendar year in which the disposition occurs.

(h) The decedent or qualifying family member must maintain documentary evidence of all decisions described by IRC 2032A(e)(12) related to the conduct of the natural resource business. The documentary evidence should record the involvement of the decedent or qualifying family member. Examples of documentary evidence of decision-making include, but are not limited to, the following: a contemporaneous log, contemporaneous business communication, contracts, legal documents, contemporaneous minutes, and statements related to the natural resource business made under oath in a court of law. Documentary evidence of material participation may be evaluated with reference to industry standards to determine if the material participation requirement has been met.

(6)(a) Natural resource property previously used as a basis to claim the exemption under ORS 118.145 may be replaced with other natural resource property and not result in a disposition subject to additional tax, subject to following other applicable statutory requirements and the following:

(A) If the relinquished property is real property, the replacement property must be real property acquired within one year of the transfer of the relinquished property, or within two years of the transfer in the case of property that is involuntarily converted within the meaning of section 1033 of the Internal Revenue Code;

(B) Personal property is considered replaced by other natural resource property by holding and using the proceeds from the sale of personal property in an operating allowance as described in ORS 118.140(1)(j) and subject to the limitation at ORS 118.140(2)(a), or by acquiring other natural resource property within 180 days of the transfer of the relinquished property

(C) the replacement property must qualify as natural resource property and must be used in the farming, forestry or fishing business promptly after its acquisition.

(b) If the purchase price of the replacement property is less than the gross sales price of the relinquished property less selling expenses (net sales proceeds), the amount that is treated as a disposition subject to additional tax is the gross sales price multiplied by a fraction that is equal to the difference between the net sales proceeds and the purchase price of the replacement property, divided by the net sales proceeds. Gross sales include any amount of money and fair market value of property received, as defined by IRC 1011(b) and associated regulations in effect on January 1, 2026, from the sale of or other disposition of property.

(c) To the extent that the replacement is not treated as a disposition subject to additional tax, the replacement property shall be deemed to have been owned by the transferor during the time that the transferred property was held or deemed to have been owned by the transferor, regardless of whether the transfer occurs before or after the death of the decedent.

(7) The value of the exemption allowed under ORS 118.145 must be excluded from the numerator and denominator of the ORS 118.010(5) and (6) apportionment calculations.

(8)(a) A person who inherits an interest in natural resource property from the decedent or is a recipient of a transfer of an interest in natural resource property from a qualifying family member must attest, on a form prescribed by the department, that the person acknowledges and understands the requirements prescribed by ORS 118.145 and this rule to claim the natural resource property exemption.

(b) The owner of the natural resource property at the time of the disposition or disqualifying event must pay any additional tax owing if the requirements for exemption under ORS 118.145 and this rule are no longer met.

(c) A qualifying family member must file a report each year on a form prescribed by the department reporting whether the exemption requirements under ORS 118.145 and this rule continue to be met during the relevant five-year period.

(9) The amendments to this rule effective on January 1, 2026, except as stated in paragraph 5(c), apply to estates of decedents dying on or after July 1, 2025.

[Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 118.145
Statutes/Other Implemented: ORS 118.145
REV 13-2025, amend filed 12/23/2025, effective 01/01/2026
REV 45-2024, adopt filed 08/28/2024, effective 09/01/2024

Or. Admin. R. 150-118-0120 Filing Requirements for Estate Tax Returns

(1) If the estate is required to file a federal estate tax return, the executor must include a complete copy of the federal return, schedules, and supporting documents with the Oregon estate tax return.

(2) If the estate is not required to file a federal estate tax return, the executor must prepare and include with the Oregon estate tax return the federal schedules and supporting documents that would have been required to be filed if the estate had been required to file a federal estate tax return.

History

Statutory/Other Authority: ORS 305.100 & 118.140
Statutes/Other Implemented: ORS 118.101
Renumbered from 150-118.160, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
Repealed by TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from 150-118.160(2);

Or. Admin. R. 150-118-0130 Inheritance Tax Return; Extension of Time to File

(1) This rule applies to estates of decedents who die on or after January 1, 2003 and before January 1, 2012.

(2) The executor shall, not more than nine months after the date of the decedent's death, file with the department an inheritance tax return, Form IT-1. A complete copy of the federal estate tax return and schedules must be filed with the Oregon Form IT-1. If the estate is not required to file a federal estate tax return, the executor must prepare a federal estate tax return and schedules reflecting federal estate tax law in effect December 31, 2000 and file that return and schedules with the Oregon inheritance tax return.

(3) If the executor cannot file a return within nine months, the department may allow additional time, usually not to exceed six months, to file the return. A copy of the federal extension request must be attached to the front of the Oregon return when filed and will serve as evidence of a granted extension by the department.

(4) If the Internal Revenue Service denies the extension request, but grants a period of time from the date of denial in which to file the federal return without imposition of delinquency charges, the department will not impose delinquency charges if the Oregon return is received by the department within one month from the last date on which the Internal Revenue Service would accept the federal return without imposition of delinquency charges. A copy of the denied extension request must be attached to the front of the Oregon return at the time of filing.

(5) An extension of time to file does not relieve the estate from the five percent penalty for failure to pay the tax on or before the original due date. Interest accrues during the extension period.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.160
Renumbered from 150-118.160-(B), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
REV 8-2010, f. 7-23-10, cert. ef. 7-31-10
REV 1-2010(Temp), f. & cert. ef. 2-19-10 thru 7-31-10
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
RD 15-1987, f. 12-10-87 cert. ef. 12-31-87
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from 150-188.160(2)

Or. Admin. R. 150-118-0140 Procedure for Determination

(1) The following sections of ORS Chapter 305 relate to determination of taxes and appeals under Chapter 118, except where the context requires otherwise.

(a) Penalty and interest waivers, 305.145

(b) Audit of returns, 305.265;

(d) Assessments, 305.265;

(e) Claims for refund, 305.270;

(f) Conferences, 305.265 and 305.270;

(g) Appeals to Director, 305.275 and 305.280;

(h) Appeals to Tax Court, 305.515 and 305.560.

(2) A claim for refund shall be by letter or an amended return; however, the department may require an amended return. A tax paid before the due date is considered as having been paid on the due date for purposes of determining whether the claim for refund was filed within three years from the payment of the tax.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.171
Renumbered from 150-118.171, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
12-31-77

Or. Admin. R. 150-118-0150 Extension of Time to Pay Tax

(1) An executor may request an extension of time to pay the estate transfer tax. The extension request must be submitted on the form that is used to request an extension of time to file an estate transfer tax return by the date the return is due, or 30 days from the date shown on a notice of deficiency. This request must also include a written statement explaining why an extension of time to pay is being requested and how reasonable cause exits as described in (2). Collateral determined acceptable by the department must be secured for payment of the estate transfer tax as described in (5) if an extension of time to pay greater than one year is sought by the executor. An extension of time to pay tax does not eliminate penalties for late filing of a return, and interest continues to accrue on unpaid tax at the rate provided in OAR 150-305-0140. See OAR 150-118-0170.

(a) The request for an extension of time to pay the estate transfer tax must be made on a form prescribed by the department that applies to the year of the decedent’s death.

(b) If reasonable cause exists and acceptable collateral is provided to the department, the department may grant an extension of time for payment of estate transfer tax for up to 14 years, or, in the case of an estate transfer tax deficiency, for a period of up to four years.

(2) In general, reasonable cause exists if:

(a) The estate can pay the tax only by disposing of property for less than market value or by borrowing money at a rate in excess of the mortgage money market (on terms that would inflict loss on the estate), or

(b) The gross taxable estate includes a beneficial interest in one or more closely held businesses whose value exceeds either 35 percent of the gross taxable estate or 50 percent of the net taxable estate. For purposes of this rule:

(A) “Interest in a closely held business” means, as determined immediately before the decedent’s death, an interest that was:

(i) An interest as a proprietor in a trade or business carried on as a proprietorship;

(ii) An interest as a partner in a partnership carrying on a trade or business, if the gross taxable estate includes 20 percent or more of the total capital interest in that partnership, or the partnership had 15 or fewer partners;

(iii) Stock in a corporation carrying on a trade or business, if 20 percent or more of the voting stock of such corporation is included in the gross taxable estate, or such corporation had 15 or fewer shareholders. Stock, or a partnership interest, that is held by spouses in a marriage as community property or as joint tenants, tenants by the entirety, or tenants in common, is treated as owned by one shareholder or one partner, whichever is applicable.

(B) “Trade or business” does not include an investment or holding company;

(C) An extension only applies to the portion of tax attributable to the closely held business. To determine the portion of tax attributable to the closely held business, divide the value of the interest in the closely held business by the taxable estate amount, and multiply that ratio by the computed net tax.

(3) For purposes of subsection (2)(a) of this rule, if a liquid market exists for property, then fluctuations in the market value of the property will not create reasonable cause for an extension of time to pay the estate tax. However, if no liquid market exists for the property and the lack of a liquid market would require the estate to sell the property for less than its market value, the department may determine that there is reasonable cause for an extension.

(4) The department generally shall accept the following as collateral for purposes of extending the date for payment of tax:

(a) A first mortgage or trust deed on real property with a value at least double the amount of the tax paid on extension;

(b) A surety bond executed by a corporation licensed to do business in the State of Oregon. The bond must be at least double the amount of the tax paid on extension and must be renewed every five years.

(5) Collateral required by (1) must be proposed within 60 days from either the date the estate transfer tax return is due or the date the department provides notification that the extension of time to pay has been tentatively approved, whichever is later. The collateral shall be reviewed as part of the determination process to approve or deny a request for an extension of time to pay the estate transfer tax. Proposed collateral that is approved by the department must be received prior to the department agreeing to an extension of time to pay estate transfer tax. If acceptable collateral is not proposed or received, no extension of time to pay estate transfer tax will be granted.

(6) The executor must make payments in at least equal annual installments for the tax paid on extension, plus accrued interest. The department may cancel an extension of time to pay and collect the tax plus interest if any installment is not paid on or before its due date.

(7) The department may cancel an extension of time to pay and collect the tax plus interest if the value of the interest in a closely held business is reduced by one-third or more through sale, exchange or other disposition, or through aggregate withdrawals of money or other property.

(8) Estates of decedents with a date of death before October 1, 2023, may file a request for extension of time to pay the estate transfer tax by following the provisions of OAR 150-118-0150 that were in effect prior to October 1, 2023.

History

Statutory/Other Authority: ORS 305.100 & 118.225
Statutes/Other Implemented: ORS 118.225
REV 13-2023, amend filed 09/20/2023, effective 10/01/2023
REV 82-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-118.225, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
REV 10-2009, f. 12-21-09, cert. ef. 1-1-10
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78
12-31-77

Or. Admin. R. 150-118-0160 Estate Tax Receipt

A receipt issued by the department as required by ORS 118.250 to an executor, trustee or other payor is not a final determination of the estate tax liability; the department may determine that an estate owes additional tax under ORS 118.010.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.250
Renumbered from 150-118.250, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
Renumbered from 150-118.250(1), REV 8-2013, f. & cert. ef. 12-26-13
Renumbered from 150-118.250(1), REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-77
9-74

Or. Admin. R. 150-118-0170 Penalties and Interest

(1) Penalties

(a) For purposes of determining the five percent penalty under ORS 118.260(1) or the 20 percent penalty under ORS 118.260(2), the tax required to be shown on the return is reduced by the amount of any tax that is paid on or before the due date of the return, excluding extensions.

(b) If an estate fails to file a return by the due date, including extensions, and also fails to pay the tax by the due date, only one five percent delinquency penalty will be added.

(c) ORS 305.145 and the rules implementing that statute apply to penalties imposed under ORS 118.260 and requests for waiver of penalty. The one-time penalty waiver provision provided by OAR 150-305-0068 does not apply to penalties imposed under chapter 118.

(2) Interest on Refunds and Deficiencies

(a) A refund of an overpayment of estate tax accrues interest at the rates provided in OAR 150-305-0142.

(b) A deficiency in tax accrues interest at the rates provided in OAR 150-305-0140.

(c) For the estates of decedents who die on or after January 1, 2012, if an estate has been granted an extension to pay tax under ORS 118.225, or if a beneficiary has elected to defer payment of tax under ORS 118.300, interest accrues at the rates provided in OAR 150-305-0140.

(d) Except as provided in (2)(c), if the estate tax is not paid within 60 days of assessment, the annual interest rates provided in OAR 150-305-0140 are increased by four percentage points pursuant to ORS 305.222.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.260
Renumbered from 150-118-0260, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12

Or. Admin. R. 150-118-0180 Refund of Excess Payment

This rule applies to estates of decedents who die before January 1, 2012. Where payment exceeds the amount of tax shown by the return or as determined by audit of the return, the excess shall be refunded without application from the taxpayer. The department does not have authority to pay interest on the refund for interest periods beginning prior to May 31, 1982.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.100
Renumbered from 150-118.260(6), REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78

Or. Admin. R. 150-118-0190 Application for Determination of Estate Tax and Discharge from Personal Liability

(1) The executor may apply to the department for a determination of tax due and discharge from personal liability of estate tax.

(2) The written application must include the following information:

(a) The name and date of death of the decedent;

(b) The decedent's Social Security Number;

(c) If the executor applies before filing the estate tax return, a copy of the decedent’s will, the decedent’s trust, or other document indicating the person is authorized to act on behalf of the estate.

(3) The discharge does not apply to tax liability resulting from assets of the decedent's estate that are still in the possession or control of the executor.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.265
Renumbered from 150-118.265, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12

Or. Admin. R. 150-118-0200 Bond for Deferment of Tax

(1) A beneficiary electing to defer payment of the tax under ORS 118.300 must, within 12 months of the decedent’s death, file with the Director a signed statement indicating that the person has not come into actual possession or enjoyment of the property.

(a) A beneficiary of real property, as defined in ORS 111.005(28), is not required to provide a bond.

(b) A beneficiary of personal property, as defined in ORS 111.005(25), must give a bond to the State of Oregon in double the amount of the tax, with such sureties as the Director may approve, conditioned for the payment of the tax and accrued interest at such time and period as the beneficiary comes into actual possession or enjoyment of the property.

(2) The department will accept a bond:

(a) In a form approved by the Director and executed by a company licensed to issue surety insurance by the Oregon Department of Consumer and Business Services, Insurance Division;

(b) Executed by a corporate surety, other than a surety company, provided such corporate surety establishes that it is within its corporate powers to act as surety for another individual, partnership, association, or corporation; or

(A) A mortgage on real or personal property;

(B) A certified, cashier's or treasurer's check drawn on any bank authorized by the State Division of Finance and Corporate Securities to do business in the State of Oregon;

(D) Corporate bonds or stocks, or by bonds issued by the State of Oregon, or by a political subdivision of this state; or

(E) Any other collateral acceptable to the Director.

(d) Each surety that executes a bond under subsection (2)(c) must:

(A) Have property, including Oregon real property, that is subject to execution and with a current market value net of all encumbrances that is at least equal to the penalty of the bond;

(B) Agree to not encumber the secured property while the bond continues in effect;

(3) A beneficiary must file a return with the Director within six months of the date the person comes into actual possession or enjoyment of the property in question.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 118.300
REV 18-2021, amend filed 12/15/2021, effective 01/01/2022
Renumbered from 150-118.300, REV 9-2016, f. 8-10-16, cert. ef. 9-1-16
REV 8-2013, f. & cert. ef. 12-26-13
REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
12-31-77
12-19-75
9-71

Division 137 CRIMINAL FINE AND ASSESSMENT ACCOUNT DISTRIBUTION

Or. Admin. R. 150-137-0010 Criminal Fine Account Distribution

(1) Monthly, the department will distribute moneys available in the Criminal Fine Account after final deposits into the account for the calendar month have been made by the Oregon Department of Revenue and Oregon Judicial Department.

(2) The department will distribute to the General Fund all moneys remaining in the Criminal Fine Account after distributing the monthly allocations to funds and programs referenced in Oregon Laws 2011, Chapter 597, Section 53.

History

Statutory/Other Authority: ORS 305.100; 137.300
Statutes/Other Implemented: ORS 137.300
Renumbered from 150-137.300, REV 10-2016, f. 8-10-16, cert. ef. 9-1-16
Renumbered from 150-137.300(3), REV 7-2013, f. & cert. ef. 12-26-13
Renumbered from 150-137.300(3), REV 5-2012, f. 7-20-12, cert. ef. 8-1-12
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Division 180 CIVIL PENALTIES FOR NON PARTICIPATING MANUFACTURERS OF THE MASTER SETTLEMENT AGREEMENT

Or. Admin. R. 150-180-0010 Civil Penalties for Non Participating Manufacturers of the Master Settlement Agreement

(1) The Department of Revenue may assess a civil penalty against any person who sells, holds or possesses cigarettes for sale in Oregon that are cigarettes of a tobacco product manufacturer or brand family that were acquired at a time that the particular tobacco product manufacturer or brand family was not included on the nonparticipating manufacturer directory developed by the Oregon Department of Justice.

(a) The department will apply the following guidelines to determine the amount of the penalty, including the factors described in subsection (3) of this rule:

Incident — Penalty Not to Exceed — Minimum Penalty

First — Warning notice

Second — $100 per pack — $1,000

Third — $500 per pack — $1,000

Fourth — $1,000 per pack — $1,000

Fifth and subsequent — $5,000 per pack — $1,000

(b) For any single incident, including each sale, possession for sale or offer to sell, the department will not impose a total penalty that exceeds the greater of $5,000 or 500 percent of the retail value of the cigarettes.

(2) The Department of Revenue may assess a civil penalty against any person who affixes an Oregon tax stamp to a package of cigarettes produced by a tobacco product manufacturer or brand family that, at the time the stamp was affixed, was not included on the Dept. of Justice’s directory of nonparticipating manufacturers. The department will apply the following guidelines to determine the amount of the penalty, including consideration of the factors described in subsection (3) of this rule:

Incident — Penalty Not to Exceed — Minimum Penalty

First — Warning notice

Second — $100 per stamp affixed — $1,000

Third — $500 per stamp affixed — $1,000

Fourth — $1,000 per stamp affixed — $1,000

Fifth and subsequent — $5,000 per stamp affixed — $1,000

(3) The department may consider the following factors when determining the civil penalty for the violations listed in subsection (1) and (2) of this rule:

(a) Number of previous inspections by the Department of Revenue held at the business;

(b) Number of previous violations of Chapter 323 provisions;

(d) Any other factors the department considers relevant to its determination.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 180.455
Renumbered from 150-180.455, REV 11-2016, f. 8-10-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 1-2004(Temp), f. & cert. ef. 4-1-04 thru 8-1-04

Division 181 CRIMINAL RECORDS CHECK AND FITNESS DETERMINATION RULES

Or. Admin. R. 150-181-1010 Statement of Purpose and Statutory Authority

(1) Purpose. These rules address the Department of Revenue’s acquisition of information about a subject individual’s criminal history through criminal records checks and its use of that information to determine whether the subject individual is fit to provide services to the department as an employee, volunteer, contractor or vendor in a position covered by OAR 150-181-1020. The fact that the department approves a subject individual as fit does not guarantee the individual a position as a department employee, volunteer, contractor or vendor.

(2) Criminal records checks are conducted in accordance with OAR 125-007-0200 through 125-007-0330.

History

Statutory/Other Authority: ORS 181A.195 & 305.078
Statutes/Other Implemented: ORS 181A.195
REV 75-2017, amend filed 12/22/2017, effective 01/01/2018
REV 64-2017, temporary amend filed 10/30/2017, effective 10/30/2017 through 04/27/2018
Renumbered from 150-181.534(9), REV 12-2016, f. 8-10-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08

Or. Admin. R. 150-181-1020 Definitions

As used in this rule, unless the context of the rule requires otherwise, the following definitions apply:

(1) “Authorized Designee” means a department employee authorized to obtain and review criminal offender information and other criminal records information about a subject individual through criminal records checks and other means, and to conduct a fitness determination in accordance with these rules.

(2) "Related" means that an individual has a relationship with another person described by one of the following labels: spouse, domestic partner, natural parent, foster parent, adoptive parent, stepparent, child, foster child, adopted child, stepchild, sibling, stepbrother, stepsister, father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, grandparent, grandchild, aunt, uncle, niece, nephew or first cousin.

(3) “Subject Individual” means an individual identified in ORS 305.078 as someone from whom the department may require fingerprints for the purpose of conducting a criminal records check.

(4) See definitions in OAR 125-007-0210.

History

Statutory/Other Authority: ORS 181A.195 & 305.078
Statutes/Other Implemented: ORS 181A.195
REV 75-2017, amend filed 12/22/2017, effective 01/01/2018
REV 64-2017, temporary amend filed 10/30/2017, effective 10/30/2017 through 04/27/2018
Renumbered from 150-181.534(9)-(A), REV 12-2016, f. 8-10-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08

Or. Admin. R. 150-181-1130 Authorized Designees

(1) Appointment.

(a) The Department Director or the Director’s designee shall designate positions within the Human Resources Unit of the department as including the responsibilities of an authorized designee.

(b) Appointment to one of the designated positions shall be contingent upon an individual being approved under the department’s criminal records check and fitness determination process.

(2) The Department Director and Deputy Director may also serve as authorized designees, contingent on being approved under the department’s criminal records check and fitness determination process.

(3) Conflict of Interests. An authorized designee shall not participate in a fitness determination or review any information associated with a fitness determination for a subject individual if either of the following is true:

(a) The authorized designee is related to the subject individual; or

(b) The authorized designee has a financial or close personal relationship with the subject individual. If an authorized designee is uncertain of whether a relationship with a subject individual qualifies as a financial or close personal relationship under this subsection (3)(b), the authorized designee shall consult with his or her supervisor prior to taking any action that would violate this rule if such a relationship were determined to exist.

(4) Termination of Authorized Designee Status.

(a) When an authorized designee's employment in a designated position ends, his or her status as an authorized designee is automatically terminated.

(b) The department shall suspend or terminate a department employee’s appointment to a designated position within the department’s Human Resources Unit, and thereby suspend or terminate his or her status as an authorized designee, if the employee fails to comply with these rules in conducting criminal records checks and fitness determinations.

(c) An authorized designee shall immediately report to his or her supervisor if he or she is arrested for or charged with, is being investigated for, or has an outstanding warrant or pending indictment for a crime listed in OAR 125-007-0270. Failure to make the required report is grounds for termination of the individual’s appointment to a designated position within the Human Resources Unit, and thereby termination of his or her status as an authorized designee.

(d) The department will review and update an authorized designee’s eligibility for service in a designated position within the Human Resources Unit, during which a new criminal records check and fitness determination may be required:

(A) Every three years; or

(B) At any time the department has reason to believe that the authorized designee has violated these rules or no longer is eligible to serve in his or her current position within the Human Resources Unit.

(5) A denial under OAR 125-007-0260 related to a designated position within the Human Resources Unit is subject to the appeal rights provided under OAR 125-007-0300.

History

Statutory/Other Authority: ORS 181A.195 & 305.078
Statutes/Other Implemented: ORS 181A.195
REV 75-2017, amend filed 12/22/2017, effective 01/01/2018
REV 64-2017, temporary amend filed 10/30/2017, effective 10/30/2017 through 04/27/2018
Renumbered from 150-181.534(9)-(L), REV 12-2016, f. 8-10-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08

Or. Admin. R. 150-181-1140 Fees

(1) The Department may charge a fee for acquiring criminal offender information for use in making a fitness determination. In any particular instance, the fee shall not exceed the fee(s) charged the Department by the Oregon Department of State Police and the Federal Bureau of Investigation to obtain criminal offender information on the subject individual.

(2) The Department may charge the fee to the subject individual on whom criminal offender information is sought, or, if the subject individual is an employee of a Department contractor or vendor and is undergoing a fitness determination in that capacity, the Department may charge the fee to the subject individual’s employer.

History

Statutory/Other Authority: ORS 181A.195 & 305.078
Statutes/Other Implemented: ORS 181A.195
REV 76-2017, amend filed 12/22/2017, effective 01/01/2018
REV 66-2017, temporary amend filed 10/31/2017, effective 10/31/2017 through 04/27/2018
Renumbered from 150-181.534(9)-(M), REV 12-2016, f. 8-10-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08

Division 183 DESCRIPTION OF ORGANIZATION

Or. Admin. R. 150-183-0010 Obtaining Information from the Department

(1) Information on the organization of the department can be found on our website at www.oregon.gov/dor.

(2) Sources of Information. The department provides information to the public through several sources.

(a) Taxpayers may call for general tax information. The department answers questions about tax-related matters such as figuring income taxes, filing tax returns, and obtaining copies of forms and tax returns. Department listings are in the telephone directory.

(b) The department provides Oregon tax publications and forms by mail. Write to: Oregon Department of Revenue, 955 Center Street NE, Salem, Oregon 97301 to request copies of these publications or forms.

(c) Website. Many forms, publications, administrative rules and other information may be accessed at the department website: www.oregon.gov/dor.

(2) Requesting Records.

(a) Instructions for requesting public records, including copies of tax returns, are provided in OAR 150-192-0400.

(3) Additional Information. Other administrative rules provide additional information on obtaining department information or obtaining review of agency actions.

(a) For information on petitions for review of agency actions, see OAR 150-306-0050.

(b) For information on agency conference procedures, see OAR 150-305-0204.

History

Statutory/Other Authority: ORS 305.100; 183.330
Statutes/Other Implemented: ORS 183.330
Renumbered from 150-183.330, REV 13-2016, f. 8-10-16, cert. ef. 9-1-16
Renumbered from 150-183.330(1), REV 3-2015, f. 12-23-15, cert. ef. 1-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-183-0020 Oregon Attorney General’s Model Rules of Procedure under the Administrative Procedures Act

The Department of Revenue, for its rulemaking functions, adopts the following Model Rules of Procedure under the Administrative Procedures Act as those rules were in effect January 1, 2019:

(1) Definitions, 137-001-0005;

(2) Public Input Prior to Rulemaking, 137-001-0007;

(3) Assessment for Use of Collaborative Process in Rulemaking, 137-001-0008;

(4) Use of Collaborative Dispute Resolution in Rulemaking, 137-001-0009;

(5) Permanent Rulemaking Notice, 137-001-0011

(6) Limitation of Economic Effect on Small Businesses, 137-001-0018;

(7) Conduct of Rulemaking Hearings, 137-001-0030;

(8) Rulemaking Record, 137-001-0040;

(9) Agency Rulemaking Action, 137-001-0050;

(10) Secretary of State Rule Filing, 137-001-0060;

(11) Petition to Promulgate, Amend, or Repeal Rule, 137-001-0070;

(12) Temporary Rulemaking Requirements, 137-001-0080;

(13) Objections to Statements of Fiscal Impact, 137-001-0087;

(14) Statement of the Objective of Proposed Rules, 137-001-0095.

(15) Review of New Rules, 137-001-0100.

History

Statutory/Other Authority: ORS 183.341 & 305.100
Statutes/Other Implemented: ORS 183.341
REV 26-2018, amend filed 12/28/2018, effective 01/01/2019
Renumbered from 150-183.341(2), REV 13-2016, f. 8-10-16, cert. ef. 9-1-16
REV 3-2006, f. & cert .ef. 7-31-06
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
RD 4-1992, f. & cert. ef. 12-29-92
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-183-0030 Notifying Interested Parties of Intended Rulemaking Actions

(1) The Department of Revenue has established a process to allow interested parties to request notification of the department's intended rulemaking activities.

(a) Persons may mail written requests for notification to: Oregon Department of Revenue, Attn: Rules Coordinator, Director's Office, 955 Center St NE, Salem, OR 97301-2555.

(b) Requests may also be sent by electronic mail to: rulescoordinator.dor@state.or.us.

(2) A person whose request is received by the Rules Coordinator on or before the 20th day of the month will receive notification of any intended rulemaking actions as published in the Oregon Bulletin for the next succeeding month. A person whose request is received after the 20th day of the month will receive notification of any actions scheduled for the second succeeding month.

Example: In June, Renee sent a request to be added to the mailing list of interested parties. If the Rules Coordinator receives the request on June 20, Renee will receive notification of any intended actions as published in the July issue of the Oregon Bulletin. If, instead, the Rules Coordinator receives the request on June 25, Renee will receive notification beginning with intended actions as published in the August issue of the Oregon Bulletin.

(3) A request for notification will remain in effect for future rulemaking actions until the person withdraws the request or the department determines that the address used for sending notification is invalid.

(4) The department will send notification of its intended rulemaking activity by mail or, if requested, by electronic mail. For purposes of ORS 183.335(8), if the interested party chooses to receive notification electronically, that notice is considered “mailed” on the date it is sent by the department to the requestor.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 183.335 & 183.341
Renumbered from 150-183.341(4), REV 13-2016, f. 8-10-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Division 192 PUBLIC RECORDS

Or. Admin. R. 150-192-0400 Public Records Requests

(1) The department must provide, upon request, a copy of any public record that the requestor has a right to inspect.

(2) Requests for taxpayer records. Under ORS 314.840(1)(a), the department provides taxpayers and their authorized representatives access to the taxpayer’s tax return and related records containing information that would otherwise be exempt from public records disclosure. A person requesting taxpayer records must pay a document charge of no more than the actual costs of making records available.

(a) Requests must contain the taxpayer’s full name, address, Social Security number, daytime phone number, and the tax year(s) requested.

(b) Document charge. There may be a charge for locating, preparing, and providing documents.

(A) Payment must be made at the time of the request.

(B) Tax return transcripts are available through the same process at no cost.

(3) Requests for all other public records. Any person may make a public records request of the department. Following are the procedures and costs for making such a request.

(a) Requests must be made in writing and must include:

(A) Requester’s name.

(B) Requester’s contact information.

(b) Submit requests by mail to the department or online through the department’s self-service site.

(A) To recover the costs of photocopying and normal and reasonable staff time to locate, separate, photocopy, and return document(s) to files and to prepare/mail public record(s) to requestors, the following costs apply:

(i) Black and white physical copies: $0.25 per page for the first 20 pages and $0.15 per page thereafter;

(ii) Color physical copies: $0.70 per page for the first 20 pages and $0.60 per page thereafter.

(B) Additional charges for staff time may be made when responding to record requests that require more than the “normal and reasonable” time for responding to routine record requests. “Normal and reasonable” staff time is 10 minutes or less per request. Staff time must be charged at the hourly rate set by the Oregon Department of Administrative Services.

(D) The department will provide an estimate of any fees to the requester for approval. Payment is required before any records will be provided.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 192.324 & 314.840
REV 7-2018, minor correction filed 03/08/2018, effective 03/08/2018
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-192.440, REV 17-2016, f. 8-10-16, cert. ef. 9-1-16
REV 3-2015, f. 12-23-15, cert. ef. 1-1-16
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81

Or. Admin. R. 150-192-0500 Department Records Exempt from Disclosure

(1) The department shall protect as confidential the material listed in paragraph 2 of this rule and contained in its files relating to business activities of any person. (“Person” as used in this rule is defined in ORS 311.605.) There shall be no access to files containing confidential material except by department employees or by those authorized by the department, by statute, or by court order. Any department employee having access or charged with controlling or maintaining such files shall be familiar with and comply with the department’s procedures regarding security of the confidential material. Each employee shall sign a statement that explains their responsibility for the maintenance of confidentiality of the department’s confidential materials.

(2) The confidential materials included in the above referenced files are:

(a) Real and personal property tax returns and supporting schedules filed under ORS 308.290.

(b) Statements filed by companies such as railroads, gas, electric, and telephone in connection with the assessment of their properties under ORS 308.525.

(c) Reports of gross earnings filed by telephone companies under ORS 308.720 in connection with the in-lieu tax on gross earnings.

(d) Statements filed by mutual or cooperative associations engaged in operating electric transmission and distribution systems under ORS 308.810 in connection with the in lieu tax on gross earnings.

(e) Information collected by the department for purposes of establishing values under ORS 321.282 and 321.430. This includes but is not limited to sales of logs, standing timber sales between private parties, logging costs and other costs associated with logging. Particulars of private timber sales and purchases where the sales price was agreed upon on or after October 3, 1989, and log sales and purchases made on or after July 1, 1989, are subject to the confidentiality provisions of 321.381 and are not subject to this rule.

(f) Harvest forecast information obtained by the department from private parties.

(g) “Trade secrets” as defined under ORS 192.501(2).

(h) Research and statistical data of the department which allows identification of confidential material relating to the business activities of any person.

(i) Any information voluntarily submitted to the department in confidence and not otherwise required by law to be submitted when such information should reasonably be considered confidential. Such information includes but is not limited to production records, sale or purchase records, financial statements or similar business records to the extent such information would permit identification of the individual enterprise. It is the finding of the department that public interest would suffer by the disclosure of such information.

(3) It is the policy of the department to protect confidential information in its files. However, if a court lawfully orders the disclosure of confidential data, the department will limit the information disclosed in strict compliance with rulings of the court. Confidential information provided by a taxpayer which is relevant to the determination of the taxability or valuation of the taxpayer’s property may be disclosed in any administrative proceeding in which the taxability or valuation is an issue.

(4) The handling of confidential materials shall be as follows:

(a) The department mail clerk makes distribution to the Property Tax Division which further sorts and directs the mail to the proper work station.

(b) Returns are assembled for processing in restricted areas only.

(c) Confidential material is stored in and returned to files at end of day and protected from visual inspection by unauthorized persons at all times.

(d) Confidential areas are kept secured after working hours.

(e) Materials acquired by field appraisers or delivered by taxpayers will follow procedures in the above form as stated in items c through e.

(5) For public access to department records not exempted from disclosure in ORS 192.501 and 192.502, refer to OAR 150-183-0010 for proper procedure.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 192.501 & 192.502
Renumbered from 150-192.501, REV 17-2016, f. 8-10-16, cert. ef. 9-1-16
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-80, Renumbered from 150-308.290

Division 198 SPECIAL DISTRICTS

Or. Admin. R. 150-198-0900 Assets of Dissolved Districts

Surplus funds of the dissolved district shall be treated as an offset. The offsets shall be apportioned between the districts who share territory with the dissolved district in the following manner.

(1) The assessor shall use the value used to compute taxes for the current year to do this calculation. Only the value in code areas which both districts share shall be used in this calculation.

(2) The assessor shall list individually the value of each district within the shared territory of the dissolved district.

(3) The assessor shall establish a multiplier for each district in the following manner. Divide the shared value of each district within the dissolved district’s territory by the total shared value of all of the districts established in (2). The sum of the multipliers of the districts for this step shall equal 1.00.

(4) The assessor shall multiply the total offset available for apportionment by the individual district multiplier. This will yield the offset for each district. The total offsets for all districts must equal the total available for offset.

(5) The assessor shall divide the apportioned offset for the district by the shared value used to compute taxes for the district in order to determine the offset rate for each of those districts whose total territory lies within the boundaries of the dissolved district.

(6) The assessor shall subtract the offset rate from the district general operating tax rate in the same manner as all other offsets rates. For those taxing districts that have territory both within and outside of the boundaries of the dissolved district, the tax rate shall be adjusted for the offset only in code areas that are shared with the dissolved district.

Example: Dissolved district provides $16,000 to the county.

Step 1: In this example the county deducts $6,000 for actual administrative expenses. This leaves $10,000 as the total offset amount.

Step 2: Calculate the values for the taxing districts within the boundaries of the dissolved district and calculate the multiplier. [Table not included. See ED. NOTE.]

Step 3: Multiply the total offset available by the multiplier for each district. [Table not included. See ED. NOTE.]

Step 4: Divide the offset amount by the district’s taxable value within the shared territory; subtract this rate from the district’s operating rate in those code areas where there is shared territory with the dissolved district. [Table not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 198.955
REV 7-2017, f. & cert. ef. 6-8-17
Renumbered from 150-198.955(3)(a), REV 14-2016, f. 8-10-16, cert. ef. 9-1-16
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
RD 9-1990, f. 12-20-90, cert. ef. 12-31-90

Division 222 CITY BOUNDARY CHANGES; MERGERS; CONSOLIDATION; WITHDRAWALS

Or. Admin. R. 150-222-0100 Phase in of City Tax Rate

(1) Cities that use the provisions of ORS 222.111 shall certify their ad valorem property taxes as outlined in this rule.

(2) When a city certifies taxes under ORS 310.060 it shall include an additional schedule setting forth the ratio of the rate in the annexed area to the highest rate of taxation for city purposes to other property in the city as provided in the annexing ordinance. It is the responsibility of the city to inform the assessor of the ratio to be applied in each portion of the city according to the phase in provisions.

(3) When final value for the tax year is known, the assessor shall calculate the city tax rates based on the ratio schedule included with the city notice of property tax certification.

(4) At the time of adoption of the ordinance that will phase-in the tax rate, the city shall notify the assessor’s office and the assessor shall establish separate code areas for each territory subject to phase-in.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 222.111
Renumbered from 150-222.111, REV 15-2016, f. 8-10-16, cert. ef. 9-1-16
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99
RD 12-1987, f. 12-18-87, cert. ef. 12-31-87

Or. Admin. R. 150-222-0110 Calculating Phase-in City Tax Rates

(1) Only the tax rate of the city will be affected by this rule.

(2) This calculation shall be done for each category of levy of the city when the assessor is notified by the city that an annexed area is to have its rate phased-in over a number of years under the authority of ORS 222.111. The assessor shall use these steps to calculate the city tax rate(s):

(a) Step 1: Establish the annexed area(s) as a separate code area(s).

(b) Step 2: Determine the current year rate computation value of the city without the annexed area(s) for which tax rates are being phased in.

(c) Step 3: Determine the current year rate computation value of the annexed area(s) for which tax rates are being phased-in.

(A) If the city certifies only a rate, determine the maximum billing rate. Any tax offset rate is subtracted from the certified rate based on the value of the nonphased-in areas of the city. Multiply the phase-in ratio percentage by the billing rate for each phase-in area established as a separate code area. The result of this calculation will be the city billing rate for that phase-in area.

(B) If the city only certifies a rate, it is not necessary to complete the rest of the steps. The remaining steps only apply in the case where the city has certified a levy in dollars and cents.

(d) Step 4: Multiply the current year taxable assessed value of the annexed area(s) for which tax rates are being phased-in, by the ratio that the tax rate of the annexed area will be to the maximum rate within the area(s) of the city which will pay the maximum tax rate of the city.

(e) Step 5: Add the result(s) of Step 4 of this rule to the value determined in Step 2.

(f) Step 6: Divide the net category of levy for the city by the value calculated in Step 5 and truncate the rate as provided in OAR 150-310-0050. This is the maximum tax rate of the city.

(g) Step 7: Multiply the result of Step 6 by the ratio the rate in the annexed area will be and round to 7 decimal places. The result is the maximum rate of the city for the category of levy in the annexed area for the fiscal year.

(h) Step 8: Multiply the result of Step 7, the rate in the annexed area, by the current year rate computation value of the annexed area. This is the amount to be raised for this category of levy of the city, before any compression due to the limits of Section 11b, Article XI of the Oregon Constitution, in the annexed area.

(i) Step 9: Multiply the result of Step 6 (the maximum city rate) by the current year rate computation value of the city without annexed area(s) which will have a ratio of the city tax rate (the value determined in Step 2). This is the amount of tax to be raised for this category of levy of the city, before any compression due to the limits of Section 11b, Article XI of the Oregon Constitution, in the city portion which is paying the maximum rate.

(j) Step 10: Verify the result by adding the results of Step 8 and 9. This amount should equal the city’s category of levy, except for any loss due to the truncation of tax rates.

(3) Example: City has certified under their permanent rate limit general government category: 4.90 per thousand. City has certified under the exempt category: $900,000 for debt service. The city’s phase-in ratio percentage is: Annex 1 - 45.00% and Annex 2 - 70.00%.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 222.111
REV 63-2017, f. & cert. ef. 8-11-17
Renumbered from 150-222.111(3), REV 15-2016, f. 8-10-16, cert. ef. 9-1-16
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
RD 3-1991, f. 12-30-91, cert. ef. 12-31-91

Division 267 MASS TRANSIT DISTRICTS

Or. Admin. R. 150-267-0010 Wages

Generally, wages include all remuneration for services performed by an employee for the employer, including the cash value of all remuneration paid in any medium other than cash. Thus, salaries, fees, bonuses, commission on sales or insurance premiums are wages within the meaning of the statute if paid as compensation for services performed by the employee for the employer. The basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes wages. Thus, it may be paid on the basis of piecework or a percentage of profits; and may be paid hourly, daily, weekly, monthly or annually. Generally, the medium in which the remuneration is paid is also immaterial. It may be paid in cash or in something other than cash. If services are paid for in a medium other than cash, the fair market value of the thing taken in payment is the amount to be included as wages. Taxable emoluments — see OAR 150-316-0235

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 267.380
Renumbered from 150-267.380(1)(c), REV 16-2016, f. 8-10-16, cert. ef. 9-1-16
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-267-0020 Wages Exempt From Transit Payroll Tax

For purposes of the transit district payroll taxes, certain payrolls are exempted from taxation by exclusion of the amounts paid from the definition of wages. The following are clarifications of some of the allowable exemptions:

(1) All foreign insurance companies (those formed under laws from other states), their adjusters, agents, office support staff are specifically exempted by ORS 731.840. This exemption does not extend to domestic insurers, health care contractors, and motorist service clubs.

(2) ORS 267.380(2)(h) states if remuneration is not subject to withholding under ORS Chapter 316 it is not subject to the transit payroll tax. All wages paid for domestic service described in 316.162(c) are exempt from withholding and transit payroll tax. If the remuneration is not subject to withholding under ORS Chapter 316 such wages would be exempt from the transit payroll tax but generally are subject to transit self-employment tax. Unless a real estate agent meets all the requirements of 316.209, the remuneration for services performed by that agent will be subject to transit payroll taxes.

(3) ORS 267.380(4), which subjects deferred compensation to transit tax, creates an exception to the general rule stated in 267.380(2)(h), which exempts from transit tax remuneration not subject to withholding tax.

(4) The exemption in ORS 267.380(2)(c) applies to labor not in the course of the employer's trade or business. The exemption does not apply to wages for substantial labor not in the regular course of the employer's trade or business, such as the construction of a private home where the owner is the employer.

(5) Transit payroll tax is imposed only on that portion of the payroll paid with respect to duties performed by employees within the District. If an employee performs services both inside and outside the District, the employer shall prorate the wages paid to that particular employee based upon the relative amounts of time worked by that employee within and without the District.

(6) The exemption in ORS 267.380(2)(e) applies solely to seasonal labor in connection with the planting, cultivating or harvesting of agricultural crops. Transit payroll tax applies to the entire wages of "regular" farm employees even though, as a part of their duties, they engage in planting, cultivating or harvesting.

(7) Certain state agencies are exempt from transit payroll tax under the provisions of ORS 267.430.

(8) Internal Revenue Code Section 501(c)(3) institutions (charitable and other nonprofit institutions) other than hospitals are exempt from transit payroll taxes. For the purposes of ORS 267.380(2)(a), a hospital is defined as:

(a) A permanent facility or organization with facilities that include inpatient beds, and with medical services, including physician services and continuous nursing services under the supervision of registered nurses, to provide diagnosis and medical or surgical treatment primarily for but not limited to acutely ill patients and accident victims, or to provide treatment for the mentally ill.

(b) A hospital's parent or subsidiary 501(c)(3) organization that provides administrative and support functions to the hospital.

(9) Employers may be relieved of the duty to pay transit tax where it can be shown to the satisfaction of the department that subject wages paid to each individual employee will be $300 or less in a calendar year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 267.380
Renumbered from 150-267.380(2), REV 16-2016, f. 8-10-16, cert. ef. 9-1-16
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1992, f. & cert. ef. 12-29-92
RD 8-1990, f. 12-20-90, cert. ef. 12-31-90
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-267-0030 Employer-Employee Application

Unless the context requires otherwise, for purposes of administration of transit district payroll taxes, determination whether an employer-employee relationship exists will be made under rules adopted pursuant to state withholding statutes. See OAR 150-316-0255 and 150-316-0241.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 267.380
Renumbered from 150-267.380(2)(h), REV 16-2016, f. 8-10-16, cert. ef. 9-1-16
RD 7-1992, f. & cert. ef. 12-29-92
RD 7-1992, f. & cert. ef. 12-29-92, Renumbered from 150-267.380(2)-(H)
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-267-0040 Items Included in Wages

For tax years beginning on or after January 1, 1992, “wages” includes elective payments into a Simplified Employee Pension, IRC 3121(a)(5)(C) or an annuity contract, IRC 3121(a)(5)(D). Contributions, IRC 3121(v)(1)(A); to a 401k retirement plan; employee contributions under IRC 3121(v)(3)(A) and employer contributions under IRC 3121(a)(5)(E), to a government deferred compensation plan including contributions “picked up” by a governmental unit, IRC 3121(v)(1)(B) (and contributions to a nonqualified plan, a Section 457 plan, or a 403(b) annuity).

Example: Linda works for a firm subject to Lane Transit District Payroll Tax. She earned $30,000 wages for tax year 1992. She put $3,000 into her 401k retirement plan. Linda’s employer also put $1,000 in her 401k. Linda’s “wages,” for the purpose of determining the LTD payroll tax, is $31,000.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 267.380
Renumbered from 150-267.380(4), REV 16-2016, f. 8-10-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-267-0050 Reports and Payments

(1) For 1990 and subsequent years transit excise taxes are paid quarterly with the Oregon Quarterly Combined Tax Report. For purposes of quarterly filing, calendar quarters are used. The first quarter is January through March; the second quarter is April through June; the third quarter is July through September and the fourth quarter is October through December.

(2) Payment due dates are determined by corresponding state due dates for withholding tax returns. When an employer files an Oregon Quarterly Combined Tax Report, the transit excise information and tax must be filed and paid on or before the end of the month following the quarter with the combined tax report.

(3) For 1989 and prior years if an employer files a semi-annual withholding tax return, the transit excise tax for the 1st and 2nd quarters is due July 31. The 3rd and 4th quarter tax and return are due January 31st of the following year. No other reporting periods will be permitted without prior approval of the Department and concurrence of the transit district.

(4) For rules governing annual agricultural filing, see OAR 150-316.202(4).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 267.385
Renumbered from 150-267.385(3), REV 16-2016, f. 8-10-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84

Division 276 PUBLIC BUILDINGS

Or. Admin. R. 150-276-0010 Field Office Parking

(1) In General. Pursuant to ORS 276.594, the Department of General Services (“General Services”) has authority to establish charges for parking spaces located in the capitol area in the city of Salem. Excluding that area, the Department of Revenue (“the Department”) will charge employees a parking fee for spaces the agency owns or controls through a direct lease, lease purchase, or installment purchase agreement. Control is defined as having the right to the spaces, to identify who may use the spaces, to post signs marking the spaces, and to charge for the spaces.

(a) The rate charged will be determined on a pro rata basis of the Department’s cost of acquiring the parking spaces. If the Department’s cost cannot be determined, then the rate established by General Services for paid parking in the immediate vicinity of the office will be used. If there are no established General Services parking rates, then the Department’s fee will be based on local market rates. Specifically, the parking fee charged by the Department will be an average of the rates charged for similar parking facilities in the immediate vicinity of the office, by private vendors. To encourage the use of alternative modes of transportation, a reduction to the parking fee, determined above, will be allowed for participants in car or van pools. The Department accepts the rate discount allowed by General Services for pool participants.

(b) The Department Fiscal Section (“Fiscal”) will monitor all office leases and determine if the department owns or controls parking spaces.

(2) Establishing parking procedures. The field office manager for each office will determine priorities for use of owned or controlled parking space. Priority will be given to state vehicles assigned to the office, visitors, the disabled, and parking for agency employees not stationed at the office. Unused spaces may be sublet to office employees. Fiscal will be notified of employees who may sublet parking spaces.

(a) Fiscal will annually review and establish parking fees for spaces sublet to employees. Fiscal will also determine the process for payment and collection of parking fees from sublet parking spaces.

(b) Fiscal will notify the union of proposed changes in parking rates pursuant to Article 15 of the Collective Bargaining Agreement.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 276.595
Renumbered from 150-276.595, REV 18-2016, f. 8-10-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-276-0030 Access to and Use of Property Owned, Controlled or Leased by the Department of Revenue

(1) For the purposes of this rule, “recording” means either of the following, alone or in combination: (i) causing sound or visual data to be stored on any device, contrivance, machine or apparatus (such as a tape recorder, video camera, smartphone, computer or server) in reproducible form; or (ii) transmitting, livestreaming or otherwise broadcasting sound or visual data on any such device, contrivance, machine or apparatus.

(2) The Director of the Department of Revenue or a designee may develop and implement procedures to regulate and control public access to enclosed property owned, controlled, or leased by the department. The purposes of such procedures are to

(a) provide for the security and privacy of public visitors;

(b) provide for the security and privacy of department employees and officers; and

(c) minimize potential disruptions to the work of State government. Any person who engages in conduct that causes disruptions to the work of State government shall be deemed to no longer be present for legitimate public business within the department-owned, controlled, or leased property.

(3) The lobby or common area for Department of Revenue offices throughout the state, including inside the main entrances of the Department of Revenue building in Salem, are nonpublic forums and access by members of the public is limited to those conducting legitimate public business with the department. Unauthorized persons found by the Director or a designee to be within such an area and who refuse to leave the premises upon request, shall be considered a trespasser. At the request of the department, law enforcement, at its option, may issue a trespass warning notice for this conduct or take other action authorized by law.

(4) Photography and recording within department-owned, controlled, and leased property are prohibited. This prohibition shall not apply to any law enforcement or department security activities; recordings authorized by statute; or any other photography or recording authorized by the Director or designee. The Director or a designee may request any person who refuses to cease unauthorized photography or recording to leave the premises immediately. Any person who refuses to cease the unauthorized photography or recording and refuses to immediately leave the premises following the request of the Director or a designee, shall be considered a trespasser. At the request of the department, law enforcement, at its option, may issue a trespass warning notice or take other action authorized by law.

History

Statutory/Other Authority: ORS 305.100 & 305.045
REV 3-2025, adopt filed 07/16/2025, effective 08/14/2025

Division 280 TAX BALLOT MEASURES

Or. Admin. R. 150-280-0010 Calculating the Estimated Dollar Weighted Life for Local Option Taxes

(1) For local option taxes used to fund capital projects, the estimated dollar weighted life of capital projects shall be calculated in the following manner.

(a) The useful life of the project shall be estimated in years.

(b) The cost of the project shall be estimated in dollars and cents.

(c) The estimated useful life of the project shall be multiplied by the estimated cost of the project. This is the weight of the project.

(d) The weight of the project is divided by the cost of the project to come up with the estimated dollar average life of the project. This is the maximum time that may be financed using a local option tax.

(2) For a local option tax that only funds one capital project, the estimated dollar weighted life of the project will equal the useful life of the project.

(3) For a local option tax that supports more than one capital project, complete (1)(a) through (1)(c) above for each capital project. Sum the cost of all of the projects and sum the weight of all the projects in the local option tax. Then divide the total weight by the total cost to arrive at the estimated dollar average life of the capital project for this tax.

Example: A city decides to go out for a local option for their police department. The local option tax is going to be used to purchase 2 new computers, 2 patrol cars and rewire the station house. What is the estimated dollar average life of the capital projects financed by this local option levy? [Table not included. See ED. NOTE.]

Normal rounding is used in calculating the estimated dollar average life.

(4) Local option tax for capital projects cannot exceed 10 years.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 280.060
REV 8-2017, f. & cert. ef. 6-8-17
Renumbered from 150-280.060(A), REV 19-2016, f. 8-10-16, cert. ef. 9-1-16
REV 3-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-280-0020 Tax Election Ballot Measure Requirements

(1) All ballot titles are required to contain essentially the same language within the standard format as outlined in ORS 250.035.

(2) The caption is limited to not more than 10 words. The purpose is to identify the type of tax presented for voter approval. The name of the municipal corporation and dollar figures must not be included in the caption.

(3) The question is limited to 20 words that plainly state the purpose of the measure so that an affirmative response to the question corresponds to an affirmative vote on the measure. The question must contain the following:

(a) The name of the municipal corporation. The word "district" may be substituted for the full name of the municipal corporation if the full name appears in the ballot measure summary;

(b) The amount of property tax in dollars and cents, or the tax rate per $1,000 of assessed value;

(d) The first fiscal year the tax is to be imposed; and

(e) The length in years that the proposed tax is to be imposed.

(4)(a) Directly after the question for a proposed new local option tax, the following statement is required: "This measure may cause property taxes to increase more than three percent."

(4)(b) In lieu of the statement required by subsection (a) of this section, for a question that is requesting the renewal of a current local option tax, the following statement is required: “This measure renews current local option taxes.” To qualify as a renewing measure, a measure must ask for the same tax rate or annual dollar amount as the current local option tax, or a lower rate or amount, and be for substantially the same purpose as the current local option tax.

(5) The summary is limited to 175 words and explains the purpose of the tax in plain language. It must not advocate a yes or no vote on the question. The summary must contain the following:

(a) As the first sentence, except for elections held in May or November of any year: "This measure may be passed only at an election with at least a 50 percent voter turnout." This statement is not included in the 175-word limitation;

(b) For a dollar amount local option, the total amount of money to be raised by the measure, and;

(c) For a tax rate local option, an estimate of the amount of taxes to be raised in each year in which the tax will be imposed.

(6) If an estimated tax impact is included in the summary of a measure requesting an annual dollar amount levy, it must also contain the following statement: "The estimated tax cost for this measure is an ESTIMATE ONLY based on the best information available from the county assessor at the time of estimate and may reflect the impact of early payment discounts, compression and the collection rate.” This statement is not included in the 175-word limitation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 280.060, 280.075, 280.070, 250.035, 250.036 & 250.038
Renumbered from 150-280.075, REV 19-2016, f. 8-10-16, cert. ef. 9-1-16
REV 6-2016, f. 7-28-16, cert. ef. 8-1-16
REV 17-2010, f. 12-17-10, cert. ef. 1-1-11
REV 5-2009, f. & cert. ef. 7-31-09
REV 8-2000, f. & cert. ef. 8-3-00
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Division 285 ENTERPRISE ZONES

Or. Admin. R. 150-285-3100 Waiver of Enterprise Zone Application for Authorization Filing Deadline Requirement

(1) The Department of Revenue will waive the application for authorization filing deadline requirement under ORS 285C.140(1) if:

(a) The taxpayer had knowledge of the enterprise zone property tax exemption program prior to initiating its investment, as shown by contacts made by the taxpayer with the Oregon Business Development Department (doing business as Business Oregon), the enterprise zone sponsor, the local zone manager or the county assessor; and

(b) The reason for the late submission of the application constitutes good and sufficient cause as defined in OAR 150-307-0500.

(2) In addition to the extraordinary circumstances identified in OAR 150-307-0500, good and sufficient cause may also include reasonable reliance on misinformation provided by enterprise zone sponsor personnel, local zone manager or Oregon Business Development Department (doing business as Business Oregon) personnel.

(3) The following is an example of a filing deadline waiver request that the Department of Revenue would grant:

Example: A company began meeting with the local zone manager in July 1999. The local zone manager assured the company that it would be authorized and that construction could proceed. The company was authorized in March 2000. Just prior to authorization in March 2000, during a physical inspection of the property, the county discovered that a building was already under construction. The company otherwise met the program criteria and filed a timely enterprise zone exemption claim.

History

Statutory/Other Authority: ORS 305.100, 285C.140 & 285C.125
Statutes/Other Implemented: ORS 285C.140
Renumbered from 150-285C.140(12), REV 21-2016, f. 8-10-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04, Renumbered from 150-285B.719(8)
REV 8-2000, f. & cert. ef. 8-3-00, Renumbered from 150-285.613(8)
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-285-3200 Enterprise Zone Statutory Definitions

(1) “Additions to existing buildings or structures” means an enlargement of building space including construction which creates additional floor space or which creates more building volume by raising a ceiling or roof and in the case of a structure includes, but is not limited to, increasing the area of a parking lot to provide additional parking spaces.

(2) “Building” means a real property improvement erected to stand more or less permanently, usually with walls and roof, and designed for human use and occupancy or as a shelter. Building includes, but is not limited to, warehouses and manufacturing plants. Building also includes all structural components necessary to make the building usable such as wiring, plumbing, a foundation, heating and cooling ducts.

(3) “Construction in progress” means after work begins or that the foundation for the building or structure was partially or wholly laid.

(a) Acceptable documentation means a letter from the contractor, a building official or someone else who is not an employee of the firm concerning when work began.

(b) “Beginning date after interruption” means:

(A) If work begins and then stops for six months or more and/or a new building permit is issued, the beginning date is when work is resumed.

(B) If a firm goes out of business, stops construction and sells the property, the beginning date is when work is undertaken by the new owner.

(C) When rebuilding after a fire, or some other natural disaster, work begins when construction starts, not upon starting demolition or cleanup.

(4) “Destination resort” as used in ORS 285C.135(5) means a facility with hotel accommodations at which visitors stay in order to access amenities connected to the resort, including but not limited to a development that satisfies the criteria under 197.435 to 197.467 for siting on certain lands and for limiting or allowing uses and activities in accordance with an acknowledged comprehensive plan.

(5) “Hotel or motel” as used in ORS 285C.135(5) and consistent with 699.005 means a facility that:

(a) Offers rooms, suites of rooms, cabins, houses or other such units for transient lodging to persons typically from beyond the local area through direct overnight rental, time-share arrangements or other types of limited transactions;

(b) May include one or more visitor-oriented services, facilities or recreational activities, including but not limited to restaurants, laundry, conference rooms, golf course, swimming pool, tennis courts, ski runs, marinas or bicycle paths; and

(6) “Machinery and equipment” means any property used in the business activity or process except land, buildings and structures. It does not include furniture, commercial fixtures or structural components of a building such as standard wiring, plumbing, heating or cooling systems. Specialized pipes, air filtration systems, specialized wiring or other systems necessary for the manufacturing process are considered machinery and equipment rather than a structural component of a building. Machinery and equipment that is not easily movable is considered to be real property. Machinery and equipment that is readily movable is considered as personal property. “Readily movable” property is generally unattached in any way to a building or structure and also is not connected to other real property machinery and equipment. An example of “readily movable” property would be tools, testing equipment or a personal computer.

(7) “Modification” means to alter or change the elements of a property by modernization, renovation or remodeling.

(a) “Modernization” means to take corrective measures to bring a property into conformity with changes in style.

(b) “Renovation” means the process by which older structures or historic building are modernized, remodeled or restored.

(8) “Personal or household use or consumption” means consumption normally undertaken by an end user and not by a business in the course of business operations.

(9) “Site preparation” means an activity carried on to prepare raw land for construction including fill, grading, leveling, installation of underground utilities and installation of utility connections.

(10) “Structure” means a real property improvement including ramps, loading docks, and parking surfaces. Structure does not include buildings.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 285C.180
Renumbered from 150-285C.180, REV 21-2016, f. 8-10-16, cert. ef. 9-1-16
REV 9-2004, f. 2-29-04, cert. ef. 12-31-04, Renumbered from 150-285B.713
REV 8-2000, f. & cert. ef. 8-3-00, Renumbered from 150-285.570-(A)
RD 2-1997(Temp), f. & cert. ef. 9-15-97 thru 3-9-98
RD 6-1994, f. 12-15-94, cert. ef. 12-31-94, Renumbered from 150-284.115
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-285-3400 Commencement and Duration of Long-Term Nonurban Oregon Enterprise Zone Exemption

(1) For purposes of ORS 285C.409 and this rule, a facility is “in service” when a certified business has received a permit to occupy and use the building for its intended purpose.

(2) All real and personal property including improvements, machinery, and equipment newly located at the facility are exempt from ad valorem property tax for a minimum of seven and a maximum of 15 consecutive tax years. The period for the exemption commences with the first tax year for which the facility was placed in service as of the assessment date for that tax year. If there is no express written agreement between the certified business firm and the zone sponsor on the number of tax years for which the facility is to be exempt, the period for the exemption will be seven consecutive tax years.

(3) The following are examples of how to determine the tax year for which the exemption commences:

Example 1: The property for which the exemption is claimed was placed in service on November 15, 2002. The first assessment date after the property was placed in service is January 1, 2003. Therefore, the exemption commences with the 2003-04 tax year.

Example 2: The property for which the exemption is claimed was placed in service on February 15, 2003. The first assessment date after the property was placed in service is January 1, 2004. Therefore, the exemption commences with the 2004-05 tax year.

History

Statutory/Other Authority: ORS 305.100 & 285C.125
Statutes/Other Implemented: ORS 285C.409
Renumbered from 150-285C.409, REV 21-2016, f. 8-10-16, cert. ef. 9-1-16
Renumbered from 150-OL 1997, Ch 835, sec. 38, REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 8-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-285-3410 Assessor’s Action When A Long-Term Nonurban Oregon Enterprise Zone Facility is Disqualified

(1) Upon discovering that a certified business no longer qualifies for the property exemption under ORS 285C.409, the assessor must give written notice of exemption disqualification.

(2) The notice must include:

(a) A statement that the property is disqualified from the exemption for the following tax year,

(b) A statement explaining the reason for the disqualification,

(d) A statement that the additional tax liability will be added to the next general property tax roll.

(3) The additional tax liability must equal the taxes that would otherwise have been assessed against the disqualified property for each of the tax years the property was exempt under ORS 285C.409.

History

Statutory/Other Authority: ORS 305.100 & 285C.125
Statutes/Other Implemented: ORS 285C.420
Renumbered from 150-285C.420, REV 21-2016, f. 8-10-16, cert. ef. 9-1-16
Renumbered from 150-OL 1997, Ch 835, sec. 39, REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 8-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-285-3420 Criteria for Disqualification

(1) The county assessor will disqualify the facility of a certified business firm from exemption if the certified business firm does not begin operations and is not reasonably expected to begin operations. A decision of the assessor to disqualify the property from exemption must be based on one or more of the criteria listed in subsection (2). For purposes of this rule, the date that a facility “begins operations” is the date that the facility is placed in service, which, in turn, means the date a certified business has received a permit to occupy or use the facility for its intended purpose.

(2) In determining whether a facility should be disqualified because it has not begun operations and is not reasonably expected to begin operations, the county assessor must consider the following:

(a) Operations by the certified business firm have not started at the facility within 5 years from the date of starting construction or reconstruction of the facility unless otherwise specified in an agreement between the zone sponsor and the certified business firm;

(b) Two years have elapsed from the last date construction or reconstruction activity on the facility ceased;

(c) The certified business firm has notified the zone sponsor of the firm’s intent to cease construction or installation of facility property or improvements;

(d) The expected date the facility would first be placed in service, as specified on the Certification Application or a revised date specified in a written notice to the assessor and zone manager has elapsed;

(e) The certified business firm has declared bankruptcy or has ceased to exist;

(f) The certified business firm has notified the assessor and zone manager that the facility is inoperable.

History

Statutory/Other Authority: ORS 305.100 & ORS 285C.420
Statutes/Other Implemented: ORS 285C.420
Renumbered from 150-285C.420-(A), REV 21-2016, f. 8-10-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16

Division 291 PERSONAL INCOME TAX SURPLUS REFUND

Or. Admin. R. 150-291-0300 Procedures for Handling State Personal Income Tax Surplus Credit

(1) Surplus Credit Generally. This rule applies for biennia beginning on or after July 1, 2011, when personal income taxpayers are credited a surplus of tax revenues under ORS 291.349(4). Taxpayers claim the credit in odd-numbered tax years and calculate the credit based on the tax return information for the immediately preceding even-numbered tax year (base tax year).

(2) Surplus Credit Procedure. No later than October 15 following the end of the biennium for which a surplus is determined, the department will make publicly available to taxpayers the applicable surplus percentage amounts and information giving guidance on the calculation of the surplus credit.

(a) Personal income taxpayers calculate their surplus credit by multiplying the applicable surplus percentage amount by their total personal income tax liability for the base tax year.

(b) The total personal income tax liability is determined after allowing a credit for income taxes paid to another state (under ORS 316.082, 316.131, and 316.292) and before any other credit or offset against tax liability, allowed or allowable.

(c) If a surplus credit reduces tax liability to zero, the department will refund any unused surplus credit amount as an overpayment of tax. The department may offset an overpayment of tax due to any unused surplus credit amount to pay debts owing to the State of Oregon or other parties as indicated in ORS 314.415 and 293.250. The department will issue a notice when this occurs. The department will offset any unused surplus credit amount consistent with the priority set out in OAR 150-314-0248.

(3) Changes in filing status or spouse/registered domestic partner (RDP). A taxpayer who files returns using a different filing status in the base tax year and the immediately succeeding tax year, when claiming a surplus credit, or who files jointly with a different taxpayer in the base tax year and the immediately succeeding tax year, when claiming a surplus credit, must compute their surplus credit as follows:

(a) From another filing status to married/RDP filing jointly. The surplus credit allowed on the joint return is the combination of the surplus credits as calculated based on each taxpayer’s separate return from the base tax year.

Example 1: George and Robin each file their 20XX personal income tax returns, using the single filing status. George has a total personal income tax liability of $2,000. Robin has a total personal income tax liability of $3,000. In 20X1, George and Robin marry. After the end of the biennium in 20X1, a surplus credit is determined with an applicable percentage amount of 5%. George and Robin file their 20X1 personal income tax return jointly. They must each calculate their surplus credit separately and report the sum on their return. George’s surplus credit is $100 ($2,000 x 0.05) and Robin’s surplus credit is $150 ($3,000 x 0.05). They will claim a surplus credit of $250 on their 20X1 joint personal income tax return.

(b) From married/RDP filing jointly to another filing status. The surplus credits claimed by each taxpayer on their separate returns must bear the same proportion to the total surplus credit calculated according to ORS 291.349(5) as the federal adjusted gross income of each taxpayer bears to the federal adjusted gross income of both taxpayers on the joint return for the base tax year.

Example 2: Shawna and Nathan are married and file their 20XX personal income tax return, using the married filing jointly filing status. Their total federal adjusted gross income (AGI) is $65,000. Their total personal income tax liability is $5,000. Shawna’s portion of the total AGI is $45,500, or 70%. Nathan’s portion of the total AGI is $19,500, or 30%. In 20X1 Shawna and Nathan divorce and neither remarries during that year. After the end of the biennium in 20X1, a surplus credit is determined with an applicable percentage amount of 4%. When Shawna and Nathan file their separate 20X1 personal income tax returns, they will calculate separate surplus credits based on their 20XX AGI. Shawna will claim a surplus credit of $140 (5,000 x 0.04 x 0.70). Nathan will claim a surplus credit of $60 (5,000 x 0.04 x 0.30).

(c) From married/RDP filing jointly to married/RDP filing jointly with a different spouse/RDP. The provisions of this subsection apply to a taxpayer who files a joint return with one spouse/RDP for the base tax year and then divorces, marries a different spouse/RDP during the immediately succeeding tax year, and files a joint return with their new spouse/RDP for the immediately succeeding tax year. The surplus credit allowed on the joint return with the new spouse/RDP is the combination of the surplus credits as calculated based on each taxpayer’s separate return from the base tax year.

Example 3: Duane and Fern are married and file their 20XX personal income tax return, using the married filing jointly filing status. Their total AGI is $80,000. Their total personal income tax liability is $7,500. Duane’s portion of the total AGI is $48,000, or 60%. Fern’s portion of the total AGI is $32,000, or 40%. In 20X1, Duane and Fern finalize their divorce. Duane marries Leslie that same year. Leslie filed a 20XX personal income tax return, using the single filing status. Her total personal income tax liability was $2,000. After the end of the biennium in 20X1, a surplus credit is determined with an applicable percentage amount of 2%. When Duane and Leslie file their joint 20X1 personal income tax return, they must each calculate their surplus credits separately and report the sum on their return. Duane’s surplus credit is $90 ($7,500 x 0.02 x 0.60), calculated according to subsection (b) of this section. Leslie’s surplus credit is $40 ($2,000 x 0.02). They will then add their separate credits and claim a $130 surplus credit on their joint 20X1 personal income tax return. Fern will claim a surplus credit of $60 ($7,500 x 0.02 x 0.40) on her 20X1 personal income tax return.

(d) Death of a taxpayer. The provisions of this subsection apply when a taxpayer dies during the base or immediately succeeding tax year and personal income taxpayers are credited a surplus of tax revenues after the end of that biennium. The taxpayer’s representative may file a return on their behalf to claim the surplus credit. If one of the two taxpayers on a jointly filed return from the base tax year dies, the surviving taxpayer from the joint return may claim the full amount of the surplus credit.

(4) Surplus Credit and subsequent increase in tax liability. If a taxpayer claims a surplus credit and subsequently there is an increase in the tax liability for the base tax year, the taxpayer must recalculate and apply their surplus credit in the following manner:

(a) Determine the revised surplus credit under section (2) of this rule using the total personal income tax liability as determined in an audit or review or as self-assessed by the taxpayer if an amended return is filed with the department;

(b) If within the time allowed by law, adjust or amend the return for the odd-numbered tax year to include the revised surplus credit.

Example 4: Beth files her 20XX Oregon personal income tax return showing a total personal income tax liability of $5,000. A surplus credit of 10% of 20XX tax year personal income tax liabilities is determined for tax year 20X1. Beth files her 20X1 Oregon personal income tax return claiming a surplus credit of $500 ($5,000 x 0.10). Later, the department adjusts her 20XX personal income tax return increasing her tax liability before credits by $2,000. Beth’s revised 20XX total personal tax liability is $7,000 ($5,000 + $2,000). She will multiply this amount by 10% to calculate her revised surplus credit of $700 for tax year 20X1. Within the time allowed by law, Beth must correct her 20X1 personal income tax return to claim the additional $200 ($700 [allowed] - $500 [already claimed]) of surplus credit. The department may offset the additional $200 to any outstanding debt before refunding any portion to Beth.

(5) Surplus Credit and subsequent decrease in liability. If a taxpayer claims a surplus credit and subsequently there is a decrease in tax liability for the base tax year, the taxpayer must recalculate and apply their surplus credit in the following manner:

(b) If within the time allowed by law, adjust or amend the return for the odd-numbered tax year to include the revised surplus credit.

Example 5: Use the same facts as example 4, except Beth files a 20XX amended personal income tax return reducing her total personal income tax liability from $5,000 to $3,000 and claiming a refund of $2,000. Beth’s revised surplus credit for tax year 20X1 is $300 ($3,000 x 0.10). Within the time allowed by law, Beth must correct her 20X1 personal income tax return to include the revised credit and determine the amount previously allowed that she must pay back. Beth’s original surplus credit was $500. This means she must pay back $200 ($500 [original surplus credit] - $300 [revised surplus credit]). In addition to any other allowable offsets, the department will offset the refund from Beth’s 20XX amended return to pay back the excess surplus credit she previously claimed, plus interest.

(6) Interest accrual.

(a) Interest accrues according to ORS 314.415 on a refund of any unused surplus credit amount under subsection (2)(c) of this rule.

(b) Interest accrues according to ORS 314.400(7) on the amount of any surplus credit that a taxpayer must pay back under section (5) of this rule.

(7) Tax determined by the department on behalf of a delinquent taxpayer. If a taxpayer fails to file a return, the department may determine the taxpayer’s tax liability under ORS 314.400. If the department determines a taxpayer’s tax liability for a tax year in which personal income taxpayers are credited a surplus of tax revenues under 291.349(4), the amount of surplus credit will not be included in the department’s calculation of tax liability until:

(a) The taxpayer files a return with the department for the base tax year;

(b) The taxpayer accepts the tax liability assessed by the department for the base tax year; or

(8) Returns and the statute of limitations. The department will refund any unused surplus credit amount as an overpayment of tax only as the limitations under ORS 314.415 will allow.

(9) Claiming a surplus credit when a taxpayer otherwise has no requirement to file. The provisions of this section apply to taxpayers who are not otherwise required to file a return. If a taxpayer files a return and has, or the department determines the taxpayer has, a personal income tax liability for the base tax year, the taxpayer must file a return in the immediately succeeding tax year in order to claim a surplus credit and receive a refund.

(10) Joint return apportionment of refund. If two taxpayers together file a joint return claiming a surplus credit and either spouse requests the department make separate refunds under ORS 314.415(7), the department will apportion the total refund according to 314.415(7) and OAR 150-314-0254. The following is an example applying this section and subsection (3)(a) of this rule:

Example 6: John and Mary were not married and filed their 20XX personal income tax returns separately. John had a total personal income tax liability of $3,000. Mary had a total personal income tax liability of $1,000. In 20X1, they marry and later file their personal income tax return using the married filing jointly filing status. A surplus credit of 4% of 20XX tax year personal income tax liabilities is determined for tax year 20X1. John and Mary calculate their total surplus credit according to subsection (3)(a) of this rule. John calculates a separate surplus credit of $120 ($3,000 x 0.04) and Mary calculates a separate surplus credit of $40 ($1,000 x 0.04). They claim a total surplus credit of $160 on their 20X1 personal income tax return.

Mary is behind on her student loan payments and the department offsets Mary and John’s entire 20X1 refund to pay that debt. John requests that the department split the 20X1 refund, to avoid offsetting his portion of the refund to pay Mary’s loan. Their 20X1 joint return contains the following information:

AGI: $50,000; John’s AGI: $40,000 (80% of total AGI); Mary’s AGI: $10,000 (20% of total AGI); Total Refund $1,000.

The surplus credit calculation and the calculation for splitting refunds are independent of each other. The department splits the total refund according to ORS 314.415(7) and OAR 150-314-0254. John’s portion of the refund is $800 ($1,000 x 0.80) and the department sends it to him. Mary’s portion of the refund is $200 ($1,000 x 0.20) and the department offsets it to pay her student loan.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 291.349 & 305.100
Statutes/Other Implemented: ORS 291.349
Renumbered from 150-291.349, REV 20-2016, f. 8-10-16, cert. ef. 9-1-16
REV 2-2013, f. & cert. ef. 3-28-13
REV 9-2012, f. 12-18-12, cert. ef. 1-1-13
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08

Division 293 AUTHORITY TO MAKE REFUNDS

Or. Admin. R. 150-293-0020 Refunds on Receivable Accounts

(1) In the case of an overpayment on an account under ORS 305.270, the department will not refund or allow credit amounts under $25 unless a written request or refund claim is filed by the person who paid the money.

(2) In the case of an overpayment of money received for miscellaneous purposes, including, but not limited to: photocopies of returns, purchase of publications, public records requests, etc., the department will not refund amounts under $5 unless a written request for refund is received from the person who paid the money. If a written request is received, the refund will be offset against any delinquent accounts owed by the person who paid the money before being issued.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 293.445
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-293.445(4), REV 22-2016, f. 8-11-16, cert. ef. 9-1-16
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-293-0030 Duplicate Checks

(1) The department may issue a duplicate check if the original check has been lost, stolen, destroyed, or cashed because of forgery. The taxpayer must contact the department and request a “Statement of Ownership” form. The form must be completed and returned to the department. If a joint check was originally issued, both taxpayers must sign the “Statement of Ownership” form.

(2) If the check has been cashed because of forgery, the taxpayer must submit a “Statement of Ownership” form to the department. The department will compare the signature(s) on the cashed check to the signature(s) on the “Statement of Ownership” form. If it appears that the signature(s) on the check was forged, the department will send the following forms to the taxpayer(s):

(a) An “Affidavit: Claimant’s Forged Endorsement,” to be completed and notarized; and

(b) A separate “Handwriting Exemplar” to be completed and witnessed by two persons. All forms required in the case of a forged check must be completed and returned to the department within 15 months of the date the check was cashed for a duplicate check to be issued. The department will advise the State Treasurer of the forged check.

(3) No interest will be paid on the duplicate check.

[ED. NOTE: The forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 293.475
Renumbered from 150-293.475(3), REV 22-2016, f. 8-11-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

Or. Admin. R. 150-293-0040 Notification of Requirement to Make Payments by Electronic Funds Transfer; Penalty for Noncompliance; Exceptions

(1) Any person, required by federal law to make federal corporation estimated tax payments or federal payroll tax payments by means of electronic funds transfer (EFT), is also required to make such payments by EFT for Oregon corporation estimated tax (ORS 314.518) and Oregon combined quarterly payroll taxes and assessments (ORS 316.198).

(2) The department will notify a person, in writing, of the requirement to make payments by EFT. The notice will provide the person with information as to how to register and begin making EFT payments, and will inform the person of the penalty for failure to comply.

(3) If a person does not begin making payments by EFT within 90 days after notification, as described in section (2), a penalty may be assessed equal to five percent of the payments made by means other than EFT received after the 90 days has expired.

(4) A penalty will not be assessed against payments made by means other than EFT if at the time payment is due:

(a) The person is not required to make such payments by EFT for federal purposes;

(b) Payment by electronic funds transfer is not possible because of the registration waiting period;

(d) The department has granted the person an exemption from the requirement to make payment by EFT; or

(e) Any other circumstance occurs which, in the judgment of the department, reasonably prevented the person from paying by EFT.

History

Statutory/Other Authority: ORS 305.100 & 293.525.
Statutes/Other Implemented: ORS 293.525
Renumbered from 150-293.525(1)(b), REV 22-2016, f. 8-11-16, cert. ef. 9-1-16
REV 18-2010, f. 12-17-10, cert. ef. 1-1-11
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04

Division 294 LOCAL BUDGET

Or. Admin. R. 150-294-0100 Department of Revenue Review of the County Assessment, Appeal, Collection, and Distribution of Property Taxes

(1) As used in ORS 294.175, the following definitions will apply:

(a) “Adequacy to provide the resources needed to achieve compliance” means: Appropriate and sufficient resources to maintain compliance with all laws and rules pertaining to the assessment, levying, and collection of property taxes.

(b) “Laws requiring equality and uniformity in the system of property taxation” includes administrative rules implementing those statutes.

(c) “Equality” means equity of assessments as required by the Oregon Constitution and laws to achieve fairness in property taxation.

(d) “Other laws” include but are not limited to Chapters 305 to and including 312.

(e) “Review” under ORS 294.175 may include, but is not limited to, an examination by the department of any county records, both paper and electronic media; interviews with county staff; field review of values and procedures; and special studies.

(2) County programs operating under a department approved conference agreement or plan must maintain levels of uniformity and equity established under the agreement or plan.

(3) At the department’s discretion, the department may examine any property and records to verify the accuracy of county records.

(4) The department must provide written notice to the county governing body, assessor, and tax collector of any scheduled review no less than 30 days prior to the date the review is scheduled to begin. This notice must contain:

(a) The date the department will begin its review;

(b) The purpose of the review;

(c) A list of initial records the county must provide to the department. The records must be provided no later than the date specified in (a) above. The county must provide the department access to any records requested that are not available in hard copy or portable format;

(d) An estimate by the department of the number of department staff who will participate in the review. The county must make available adequate workspace for the conduct of this review.

(5) The determination by the department that assessment and taxation activities, functions or services of the county are not adequate to maintain compliance or are not in compliance with a conference agreement or plan must be made no later than 40 days prior to the next fiscal quarter. The department will notify the county governing body within 10 days by certified or registered mail of its final determination of deficiency and the approximate amount of funds that will be withheld. If the department’s notice is not sent in a timely manner, the funds will be withheld from the next following fiscal quarter which begins at least 40 days from the date of mailing the notice. No further notice by the department will be required. If the deficiency is corrected to the department’s satisfaction at least 30 days prior to the start of the ensuing fiscal quarter, no funds will be withheld.

(a) Example 1: Next fiscal quarter begins—October 1; Department makes determination—August 15; Department notifies county by—August 15; No corrective action taken by county; Funds withheld from county beginning—October 1.

(b) Example 2: Next fiscal quarter begins—October 1; Department makes determination—September 5; Department notifies county by—September 14; No corrective action taken by county; Funds withheld from county beginning—January 1.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.175
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-294.175, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01, Renumbered from 150-294.005(Note)-(D)
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0105 Expenditures for Assessment and Taxation

(1) Expenditures include all direct costs, including personnel and supplies, associated with the assessment and appeal of property values and the collection and distribution of property taxes, as set out in ORS Chapters 305 through 312 and 321 or other statutes relating to the assessment, appeal, collection, and distribution of property taxes. Costs resulting from the performance of these functions performed in the offices of the county must be allowed.

(2) All expenditures for assessment and taxation funding will be for no more than one fiscal year.

(3) Costs incurred by the assessor's, tax collector's, and treasurer's office, or any other office in the county that are not attributable to assessment and taxation as set out in ORS Chapters 305 through 312 and 321 or any other statute or meet the requirements of section (1) of this rule must not be allowed.

(4) Direct costs as determined for the county budget include:

(a) Personnel Services.

(b) Materials and Services.

(c) Transportation. For purposes of this rule, the cost of transportation included as a direct cost must be determined using one of the following two methods:

(A) The estimate of the actual cost of operating vehicle for a twelve-month period plus a depreciation allowance for the useful life of the vehicle.

(B) The mileage rate used in the other county programs, with the estimate of number of miles to be driven based on historical information.

(d) For the purpose of section (4) of this rule, only the costs of cadastral maps or mapping necessary for the assessor's office may be included in the expenditures for assessment and taxation funding. All other costs for maps or mapping are not allowed.

(e) For the purpose of section (4) of this rule, costs for data processing support based on the actual cost of items directly relating to assessment and taxation may be included in the expenditures for assessment and taxation funding. For example:

(A) System operating costs will be allocated on a pro rata share based on the ratio of usage for assessment and taxation functions.

(B) Development of new computer applications to support the assessment and taxation functions.

(D) Software changes required because of changes to laws or rules which govern the assessment, appeal, levy, collection or distribution of property taxes.

(E) Software changes requested by the user to improve or extend the functionality of the system.

(F) Elimination of reproducible errors (BUGS) in the application software.

(G) Installation of periodic software upgrades.

(H) Training of user staff in the use of new or enhanced software.

(I) Technical assistance for personal computer support.

(5) Indirect costs associated with the assessment, appeal, collection, and distribution of property taxes will be determined using one of the following methods.

(a) A percentage amount approved by a Federal Granting Agency for the county in accordance with the Cost Principles and Procedures for Establishing Cost Allocation Plans and Indirect Cost Rates for Grants and Contracts with the Federal Government. The percentage must be applied in the same manner as has been approved by the Federal Agency; or

(b) Five percent of the total direct expenditures less capital outlay.

(6) Capital outlay as determined for the county budget includes:

(a) For the purpose of this rule, automobiles purchased by the county and used for assessment and taxation functions are an exception to section (6) of this rule and should be included as an expense item under section (4)(c) of this rule. They must not be included as part of the capital outlay expenditures eligible to be certified for funding under ORS Chapter 294.

(b) The county must be limited in the amount of capital outlay expenditure to be funded by these statutes to the higher of:

(A) $50,000; or

(B) Six percent of the total dollars certified as expenditures under the statutes for funding pursuant to ORS Chapter 294.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.175
Renumbered from 150-294.175-(B), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.175(1)(c), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01, Renumbered from 150-294.005(Note)-(A)(1)
REV 8-2000, f. & cert. ef. 8-3-00
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0110 Definition: Certification of Compliance. Plan to Achieve Adequacy

(1) On or before May 1 of each year, each county will file with the Department of Revenue an estimate of expenditures as required by ORS 294.175. The Department of Revenue will determine the adequacy of each county's estimates of expenditures to comply with the requirements of ORS 308.232, 308.234, ORS Ch. 309, and other laws requiring equality and uniformity in the system of property taxation. For any county whose proposed expenditures are neither at a level nor of a type to achieve adequacy as determined by the department, the county will state how it intends to comply with a plan to achieve adequacy previously approved by the department.

(2) Any county which is not in compliance as of January 1, of any year, and does not have a plan to achieve adequacy which has been approved by the department must, in lieu of the statement of compliance required under section 1 of this rule, submit a plan to achieve adequacy. After its review of the plan, the department will, if it deems necessary before approval, set a date for a meeting to be held with the county. The meeting may be for review of the plan only, or may be held in conjunction with the conference with the county governing body on their expenditure level.

(3) At the meeting the department and county governing body, assessing officials, and others as appropriate, will conduct a thorough review of the plan to identify and resolve any areas of disagreement. Before the conclusion of the meeting the department will inform the county governing body of its agreement with the plan, or modifications that may be necessary to the plan before approval. If the department and county governing body reach agreement on the county's plan, or modified plan, the department will include in its approval, based upon the plan, the number of years for the county to reach full compliance.

(4) Within ten days after the date of the meeting, the county governing body must furnish to the department a signed resolution of intent by the county governing body and assessing official to meet the provisions of the plan.

(5) If the department and county governing body cannot reach agreement on the plan, or if the signed statement of intent is not furnished to the department by June 1 of the year, the department must issue a denial of certification under ORS 294.175 (6).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.005 & 294.175
Renumbered from 150-294.175-(C), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.175(2), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01, Renumbered from 150-294.005(Note)-(B)(2) )
RD 2-1995, f. 12-29-95, cert. ef. 12-31-95
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0115 Contents of Grant Application

(1) On or before May 1 of each year, each county must file with the Department of Revenue an application in order to participate in the grant program provided through the County Assessment Function Funding Assistance Account under ORS 294.178.

(2) The county must submit a grant application on forms provided by the department.

(3) The application must be accompanied by a resolution from the governing body of the county.

(a) The grant application resolution must be signed by the chairperson or judge of the governing body, or an appointee of the governing body that is acting under the authority of the governing body.

(b) If the chairperson or judge does not sign the resolution, the county also must submit a copy of the minutes of the meeting in which the governing body heard and approved the grant application resolution.

(c) The resolution must provide that the county agrees to appropriate the budgeted dollars in the grant application based on 100 percent of the expenditures certified by the department as provided under ORS 294.175(5).

(4) The department may reject an application that fails to meet the requirements of subsections (2) and (3).

History

Statutory/Other Authority: ORS 305.100 & 294.175
Statutes/Other Implemented: ORS 294.175
Renumbered from 150-294.175(2)-(A), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-294-0120 Estimates of Expenditures for Assessment and Taxation

(1) On or before May 1 of each year, each county must file with the Department of Revenue an estimate of expenditures for assessment and taxation as required by ORS 294.175 in order to participate in the grant program provided under ORS 294.178 for the tax year beginning on July 1.

(2) The county must file an amended estimate of expenditures no later than June 1 if it determines there is a need to increase or decrease its estimated expenditures.

(3) The amended filing must be filed in the same manner as the original application.

(4) The department will review the amended filing using the review standards and criteria for determining adequacy of resources that were applicable to the original filing.

History

Statutory/Other Authority: ORS 305.100 & 294.175
Statutes/Other Implemented: ORS 294.175
Renumbered from 150-294.175(2)-(B), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 17-2010, f. 12-17-10, cert. ef. 1-1-11
Reverted to REV 6-2003, f. & cert. ef. 12-31-03
REV 3-2010(Temp), f. & cert. ef. 3-9-10 thru 8-31-10
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-294-0125 Certification

(1) On or before June 15 of each year, the Department of Revenue, must mail to the governing body of each county a letter of certification or of denial of participation in the County Assessment Function Funding Assistance (CAFFA) Account.

(2) The letter of certification referred to in (1) above must include the following information:

(a) The total dollar expenditures budgeted by the county and approved by the department to be funded under the County Assessment Function Funding Program for that county.

(b) A statement that the total expenditures budgeted by the county for the assessment and equalization of property values and the collection and distribution of property taxes is adequate to maintain the county property taxation system or to comply with an approved plan to bring the county property taxation system into compliance.

(c) An estimate of the total dollars to be available for distribution to the counties from the CAFFA Account in the ensuing fiscal year.

(d) An estimate of the county’s percentage distribution rate. For example, County A will receive 5 percent of the total for distribution from the CAFFA Account.

(e) An estimate of the total amount the county will receive from the grant during the ensuing fiscal year.

(3) The letter of denial referred to in (1) above must include the following information:

(a) Reason(s) for the denial.

(b) Appeal process for the county, if any.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.175
Renumbered from 150-294.175(6), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01, Renumbered from 150-294.005(Note)-(B)(1)
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99
RD 2-1995, f. 12-29-95, cert. ef. 12-31-95
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0130 Alternative Method for Certification

(1) If, at a conference held pursuant to notice under ORS 294.175, a county is unable to meet the level of expenditures required by the department for certification in the county assessment function funding assistance program for a particular year, that county may request that the department certify a lesser level of expenditures under the alternative method described in this rule.

(2) To meet the requirements of this alternative method of certification, a county must submit a plan that describes the actions the county will take to achieve adequacy of expenditures for the county assessment and taxation program. The department will not certify any plan submitted by a county that requires more than three tax years to comply with ORS 308.232 and 308.234, ORS chapter 309 and other laws requiring equality and uniformity in the system of property taxation within the county.

(3) The plan submitted by the county may include any combination of increased expenditures or increased efficiencies that will lead to adequacy within the specified duration of the plan.

(4) Acceptance of the plan described in paragraph (2) of this rule is at the discretion of the department. No plan will be accepted for which compliance is conditioned only upon the county’s future receipt of funding authority not in existence at the time of submission of the plan.

Example 1: The department determines County A's assessment program is inadequate because it fails to meet the minimum requirements under ORS 294.175. The department determines that two appraisers are necessary to satisfy the minimum requirements. Pursuant to a plan submitted under ORS 294.181, County A proposes to add two appraisers beginning in December of the fiscal year, contingent on passage of a local option tax levy in November to fund the positions. Because the plan to fund the appraisers is contingent upon passing the local option tax measure, it cannot be approved by the department.

Example 2: The department determines County B’s assessment program is inadequate because it fails to meet the minimum requirements under ORS 294.175. County B submits a plan under ORS 294.181 that agrees to add two appraisers by January 1 of the first year of the plan. The department determines that this will enable County B to achieve adequacy in the assessment program by the midpoint of the second year of the plan. Accordingly, the department certifies the expenditures presented by the county under the plan. The county also proposes to add yet another appraiser (for a total of three) if a local option tax measure passes in the first year of the plan. The addition of the third appraiser is contingent upon passage of the local option tax, but the plan to add two appraisers is not so conditioned. The fact that a local option tax has been proposed to add staff or resources during the plan period will not automatically disqualify the plan submitted by the county.

(5) The department will not certify expenditures under this alternative method of certification if the expenditures for the tax year for which the filing under ORS 294.175 was made, or for any subsequent year covered by the plan, do not demonstrate the county’s ability to maintain adequacy in all of the following functions:

(a) Accurate appraisal of real property in accordance with OAR 150-308-0380;

(b) Assessment of new construction, subdivisions, segregations, consolidations, omitted property, and other exceptions activity described in ORS 308.146;

(c) Accurate processing of special assessment qualification applications and disqualifications, including but not limited to, farm, forest, and small tract forest programs;

(d) Accurate processing of property tax exemption and deferral applications and disqualifications;

(e) Accurate processing of personal property, real property, and combined property tax returns;

(f) Providing explanation of the process of developing real market value to a court of jurisdiction for a property tax assessment under appeal;

(g) Completing an annual ratio report and appraisal plan that meets the requirements of ORS 309.200, 308.234, and OAR 150-309-0230, 0240, and 0250;

(h) Maintaining accurate property records by timely processing deeds, including address and name changes and property transfers;

(i) Maintaining tax collection and distribution activity as prescribed by statute, including tax statement issuance, roll corrections, refunds, and processes related to delinquency notification, foreclosures, warrants, and bankruptcies;

(j) Maintaining all cadastral functions for new and existing tax lots, including lot line adjustments, consolidations, creating new maps, and updating tax code boundary changes;

(k) Maintaining accurate and current assessment and tax rolls; and

(L) Completing roll summary reports as required by ORS 309.330.

(6) The department will notify the county governing body if it determines the plan as submitted does not meet the requirements of this rule. The notice will contain an explanation of the reasons for the determination and describe specific items required to achieve adequacy.

(7) If the department determines that the plan submitted by the county or subsequently modified during conference meets the requirements of this rule, the department will certify to the county governing body the expenditures for assessment and taxation at the level contained in the county’s estimate filed with the department pursuant to ORS 294.175 or as adjusted by the conference agreement.

(8) A county operating under an accepted plan must certify to the department not less than 15 days prior to the close of each fiscal quarter that the county is in compliance with the accepted plan. The certification must be in the form of a written status report that provides details demonstrating the county’s compliance with the accepted plan.

(9) The department will deny grant funds pursuant to ORS 294.178(5) for any quarter in which the department determines the county has failed to demonstrate compliance with the accepted plan.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.175, 294.178 & 294.181
Renumbered from 150-294.181, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2007, f. 7-30-07, cert. ef. 7-31-07
REV 3-2007(Temp), f. & cert. ef. 4-5-07 thru 10-1-07

Or. Admin. R. 150-294-0140 Transfers from the CATF to the CAFFA Account

Each county must notify the Department of Revenue of the amount it deposits into the County Assessment Function Funding Assistance (CAFFA) account from the County Assessment and Taxation Fund (CATF) account at the time of deposit. The deposit must occur on or before the 10th working day of the month following the last day of the fiscal quarter.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.187
Renumbered from 150-294.187, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2013, f. & cert. ef. 3-28-13
REV 8-2012, f. 12-18-12, cert. ef. 1-1-13
REV 6-2003, f. & cert. ef. 12-31-03
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01, Renumbered from 150-294.005(Note)-(F)
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-294-0150 Calculation of Interest on Late Payments

The interest rate calculation must be carried out a minimum of seven places to the right of the decimal point and rounded back to six places to the right of the decimal point. When rounding back to the sixth place, all numbers five and above increase the sixth place by one; all numbers four or less have no effect on the sixth place number.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.187
Renumbered from 150-294.187(1)(c), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01, Renumbered from 150-294.005(Note)-(E)
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0300 Definition of Taxing Authority

(1) “Permanent Tax Rate” means the tax rate calculated by the Department of Revenue for the 1997-98 tax roll or as subsequently adjusted as provided for in ORS 310.246. In the case of districts that have never levied a tax, it is the tax rate adopted by voters as set out in Section 11(3)(c), and Section 11(8), Article XI of the Oregon Constitution.

(2) “Local Option Tax” means an ad valorem property tax that exceeds the limitation of the Article XI, Section 11, of the Oregon Constitution. The tax must be adopted by voters as set out in Section 11(4) and Section 11(8), Article XI of the Oregon Constitution.

(3) “Bond levy” means a levy for payment of bond principal and interest for general obligation bonds.

(4) “GAP Bond” means obligations which have been in existence since before December 5, 1996 as set out in Section 21(7)(a)(b)(c) of Chapter 541, Oregon Laws 1997. No new “GAP Bonds” can be created.

(5) “Local government pension and disability plan obligations that commit ad valorem property taxes” has the meaning set out in Section 11(5)(c), Article XI of the Oregon Constitution.

(6) “Urban Renewal Special Levy” means the amount an urban renewal agency can collect in addition to the amount collected by applying the rates of the taxing districts in the plan area to be increment value in the plan area in order to carry out the urban renewal program as set out in Section 34 of Chapter 541, Oregon Laws 1997.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.311
Renumbered from 150-294.311, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-1998, f. & cert. ef. 6-30-98
RD 2-1994, f. 12-15-94, cert. ef. 12-31-94
RD 5-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-294-0310 Definition of Budget Document

(1) The complete copy of the budget document filed with the county clerk under ORS 294.458 must include the following:

(a) A copy of the two notices of the budget committee meeting showing the dates published, or an affidavit of publication, accompanying a copy of the actual publications;

(b) A copy of the notice of budget hearing showing the date published, or an affidavit of publication, accompanying a copy of the actual publications;

(d) A copy of the resolution statements or ordinance that adopt the budget, and make appropriations;

(e) If the district is imposing taxes on property subject to ad valorem property taxation, a copy of the resolution statement or ordinance that imposes the tax;

(f) If the district is imposing taxes on property subject to ad valorem property taxation, a copy of the resolution statement or ordinance that categorizes the tax for purposes of Article XI, section 11(b), of the Oregon Constitution;

(g) If the district is imposing taxes on property subject to ad valorem property taxation, a copy of the Notice of Property Tax Levy form;

(h) Sample ballots of any new ad valorem tax authority approved by the voters and being used for the first time by the district.

(2) The budget document may include any other document the district chooses to include.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.311
Renumbered from 150-294.311(6), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-310.060(7), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01

Or. Admin. R. 150-294-0320 Definition of Organizational Unit

As used in ORS 294.305 to 294.565, an organizational unit is an administrative subdivision of a municipal corporation accountable for specific services, functions, or activities.

Example 1: Cities may allocate expenditures within the general fund to organizational units such as: City Recorder, Police Department, Fire Department, Library, etc.

Example 2: Counties may allocate expenditures within the general fund to organizational units such as: Assessor’s Office, Treasurer’s Office, Clerk’s Office, Health Department, etc.

Example 3: For municipalities other than cities or counties, the governing body may identify organizational units within the general fund by the responsibilities assigned, e.g., General Administration, Plant Maintenance, etc.

History

Statutory/Other Authority: ORS 305.100 & 294.495
Statutes/Other Implemented: ORS 294.311
Renumbered from 150-294.311(31), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.311(30), REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
REV 4-2004, f. 7-30-04, cert. ef. 7-31-04
Renumbered from 150-294.311(26), REV 6-2003, f. & cert. ef. 12-31-03
Renumbered from 150-294.311(23), REV 4-1998, f. & cert. ef. 6-30-98
TC 18-1979, f. 12-20-79, cert. ef. 12-31-79
12-1-77, Renumbered from 150-294.311(19)

Or. Admin. R. 150-294-0330 Budgeting Grants, Gifts, Bequests, and Devises

(1) All grants, gifts, bequests, and devises that have been partially received in a prior year must be included with the budget document. Similarly when the receipt and the amount of such items are known for the ensuing year, they also must be included although the grant, gift, bequest, or devise is for a specific purpose.

(2) Those grants, gifts, bequests, and devises for a specific purpose that have been received on a regular basis, that are expected to be received in the ensuing year, but the actual amount is uncertain, should be budgeted at an amount reasonably expected to be received. Monies received in amounts above those estimated in the budget document may be expended through the special provisions of ORS 294.338(2), after a resolution or ordinance providing the appropriation of such amounts is made. Those grants, gifts, bequests, and devises for a specific purpose that have not been received on a regular basis should also be included within the budget document where there exists a degree of certainty as to the receipt and amount for the ensuing year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.338
Renumbered from 150-294.338(2), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.326(3), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
Renumbered from 150-294.336-(B);
REV 4-1998, f. & cert. ef. 6-30-98, Renumbered from 150-294.326(2)
REV 1977, f. & cert. ef. 12-31-77

Or. Admin. R. 150-294-0340 Establishing a Financial Reserve Fund

Reserves funds under ORS 294.346 may be established only for those purposes set out in ORS 280.050; i.e., for the financing of a service, project, property or equipment which the municipal corporation is authorized to perform, construct or acquire and for repairs and improvements thereto and maintenance and replacement thereof. Reserves for undefined purposes or projects are not permitted.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.346
Renumbered from 150-294.346, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.525, REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-280.100

Or. Admin. R. 150-294-0350 "Reserved for Future Expenditure" Requirement

(1) "Reserved for future expenditure" means a budget requirement which is not intended to be expended during the fiscal year or budget period in which it is budgeted. This requirement shows the amount a municipal corporation plans to "save" for future financing of a service, project, property or equipment which the municipal corporation is authorized to perform, construct or acquire.

(2) An amount reserved for future expenditure may be appropriated during the fiscal year or budget period if the situation meets the conditions for a supplemental budget outlined in ORS 294.471(1) or as otherwise authorized by law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.346
Renumbered from 150-294.346-(A), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.525-(A), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-280.100(A)

Or. Admin. R. 150-294-0360 Detail Sheets for Biennial Budgets

(1) The detail sheets containing the estimates of resources and expenditures for a biennial budget must show the total estimated expenditures for both years of the ensuing budget period.

(2) The detail sheets containing the estimates of resources and expenditures for a biennial budget must show actual expenditures for the two budget periods preceding the current period, the estimated expenditures for the current budget period, and the estimated expenditures for the ensuing budget period. For the first three budget periods after changing from a fiscal year budget period to a biennial budget period, the sheet should contain a mix of single year data and biennial data. The fiscal year data will appear in the columns that represent budget periods that occurred before changing to biennial budgeting. This fiscal year data must not be "doubled" or "interpolated" to make it comparable to the data reported in the columns that represent biennial budget periods.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.358
Renumbered from 150-294.358, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.376, REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02

Or. Admin. R. 150-294-0370 Resources Are Not Required to Be Budgeted

Resources are not considered budget resources and are not required to be budgeted if the following three criteria are met:

(1) The municipal corporation holds the resources merely for safekeeping;

(2) Expenditure of resources is not under the control of the municipal corporation or a third party chosen by the municipal corporation; and

(3) The resources are expended for the purpose other than that for which the municipal corporation levies a tax or expends funds.

(4) In addition, resources are not budgeted resources if the criteria of ORS 294.361(3) and 294.338(2) are met.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.361
Renumbered from 150-294.370, REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-1998, f. & cert. ef. 6-30-98
RD 2-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-294.361(1)
RD 9-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-294-0380 Negative Resources

A municipal corporation when estimating its budget resources shall not show negative amounts. Resource amounts should be the net amount that the municipal corporation anticipates to receive.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.361
Renumbered from 150-294.361(1)-(B), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0390 Budget Resources

Budget resources of a county shall not include proceeds and interest arising under ORS 275.090 to 275.310 which will be distributed to any municipal corporation. However, any proceeds and interest distributed under 275.090 to 275.310 shall be considered a budget resource for the municipal corporation receiving the distribution, including the county.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.361
Renumbered from 150-294.361(2), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-294-0400 Estimating Tax Revenue for Biennial Budgets

(1) When estimating the amount of tax revenue in a biennial budget, follow the procedure in ORS 294.368 for both years of the ensuing budget period and then add the two single-year amounts to get the biennial total.

(2) Each year during the biennial budget period, when certifying the tax levy for the ensuing year, use the single-year estimate for the corresponding year for the purposes of complying with ORS 310.060.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.368
Renumbered from 150-294.368(2), REV 41-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.381(2), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02

Or. Admin. R. 150-294-0410 Proposed Expenditures-Required Presentation

Proposed expenditures presented within a traditional budget or a program budget must be detailed fully by object of expenditure and as a minimum, be classified by organization unit or program, and categorized into the object classifications listed in ORS 294.388(3) and (4) or according to the classification of accounts approved by the Department of Revenue under ORS 294.393. Organizational unit has the same meaning as found in OAR 150-294-0320.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.388
Renumbered from 150-294.388, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.352, REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
TC 18-1979, f. 12-20-79, cert. ef. 12-31-79
12-31-77, Renumbered from 150.294.351

Or. Admin. R. 150-294-0420 Governmental Fund Definitions

(1) For the purpose of this rule "fund" means a fiscal and accounting entity with self-balancing accounts to record cash and other financial resources, related liabilities, balances and changes, all segregated for specific, regulated activities and objectives.

(2) Municipal corporations organized and operated on a fund accounting system shall prepare estimates of expenditures for the ensuing year using the following types of funds:

(a) The General Fund — To account for all financial resources except those required to be accounted for in another fund.

(b) Special Revenue Funds — To account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or for major capital projects) that are legally restricted to expenditure for specific purposes. Funds as defined in ORS 294.311(39) and 280.040(2) are examples of special revenue funds.

(c) Capital Projects Funds — To account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds, Special Assessment Funds and Trust Funds).

(d) Debt Service Funds — To account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.

(e) Special Assessment Funds — To account for the financing of public improvements or services deemed to benefit the properties against which special assessments are levied.

(f) Enterprise Funds — To account for operations:

(A) That are financed and operated in a manner similar to private business enterprises — where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or

(B) Where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

(g) Internal Service Funds — To account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis.

(h) Trust and Agency Funds — To account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include:

(A) Expendable Trust Funds;

(B) Nonexpendable Trust Funds;

(D) Agency Funds.

(3) Estimates of expenditures and resources are not required to be budgeted if the following three criteria are met:

(a) The municipal corporation holds the resources merely for safekeeping;

(b) Expenditure of the resources is not under the control of the municipal corporation or a third party chosen by the municipal corporation; and

(c) The resources are expended for a purpose other than that for which the municipal corporation levies a tax or expends funds.

(4) Estimates of expenditures and resources are not budgeted if the criteria of ORS 294.361(3) and 294.338(2) are met.

(5) It is the intention of this administrative rule to adopt governmental fund definitions that are recognized as generally accepted governmental accounting principles.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.388
Renumbered from 150-294.388(1)-(A), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.352(1)-(A), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-1998, f. & cert. ef. 6-30-98, Renumbered from 150-294.352(1)
RD 9-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-294-0430 General Operating Contingencies

(1) An estimate for general operating contingency may be included in any operating fund. The general operating contingency is not a fund, but an appropriation within a fund. This type of appropriation is allowed on the assumption that in the operation of any municipal corporation certain expenditures will become necessary in the fiscal year of the budget which cannot be foreseen and planned in the budget.

(a) An operating fund is one which contains estimates for personnel services, materials and services, or capital outlay.

(b) The estimate for a general operating contingency, like other budget estimates, must be a good faith estimate. The estimate must be reasonable and based on past experience, comparable information, or through the use of risk analysis.

(c) The estimate for general operating contingencies may not be used to compensate for improper estimating practices in the preparation of the budget.

(2) A fund that finances an activity, the cost of which can be accurately estimated, may not include an appropriation for a general operating contingency.

Example 1: A debt service fund for general obligation bonds may not include a general operating contingency. The requirements for a debt service fund are known at the time the budget is prepared. Therefore, there is no unknown or unascertainable aspect to the expenditures from the fund.

(3) A non-operating fund may not have an estimate for general operating contingencies.

Example 2: A reserve fund is used to save money for future expenditure. If a reserve fund does not include estimates for personnel services, materials and services, or capital outlay, it is a nonoperating fund and may not have an estimate for a general operating contingency.

(4) An expenditure may not be made directly from the general operating contingency appropriation. The amount must be transferred from the general operating contingency appropriation to another existing appropriation. The general operating contingency is then reduced, and the appropriation in question is increased correspondingly.

(a) The amount, in aggregate, that may be transferred by resolution of the governing body during any fiscal year or budget period is limited to 15 percent of the original total appropriations made in the fund, per ORS 294.463(2).

(b) Total transfers may exceed 15 percent of the total appropriation budgeted in a fund following the adoption of a supplemental budget prepared for that purpose. See ORS 294.471 and ORS 294.473 for the supplemental budget process.

Example 3: The General Fund has total appropriations in the amount of $100,000, including a $20,000 appropriation for the general operating contingency. Only $15,000 of the general operating contingency may be transferred (by one or more transfers) by a resolution of the governing body. Any portion of the remaining $5,000 can be transferred only through a supplemental budget.

History

Statutory/Other Authority: ORS 305.100 & 294.495
Statutes/Other Implemented: ORS 294.388
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-294.388(7), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.352(8), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-2004, f. 7-30-04, cert. ef. 7-31-04
RD 11-1984, f. 12-5-84, cert. ef. 12-31-84
12-67
2-66

Or. Admin. R. 150-294-0440 Unappropriated Ending Fund Balance

(1) A municipal corporation may include an estimate for unappropriated ending fund balance in its budget. This estimate is intended to provide the municipal corporation with the working capital or cash balance to finance activities for the period between July 1 of the ensuing fiscal year and the time when sufficient new revenues become available to meet cash flow needs of the fund. When calculating the amount of the unappropriated ending fund balance, the municipal corporation will determine the cash requirements of the ensuing fiscal year that must be met prior to the receipt of sufficient revenues. If all other resources estimated to be received during the same period are not sufficient to meet these needs an unappropriated fund balance may be budgeted. The maximum amount of cash or net working capital that may be budgeted as an unappropriated ending fund balance is the difference between the budget requirements except the unappropriated ending fund balance and the total resources of the fund.

(2) Unless unexpected expenditures result from civil disturbance, other calamity, or natural disaster defined in ORS 294.481, expenditure cannot be made from the unappropriated ending fund balance in the year or budget period in which it is budgeted. Except for the specific conditions cited in ORS 294.481, no action may be taken through resolution, ordinance or supplemental budget to spend these monies. It is not necessary to include the unappropriated ending fund balance in the schedule of appropriations. Any amount carried over by reason of an unappropriated ending fund balance becomes a budget resource in the fiscal year or budget period following the one for which the unappropriated ending fund balance is being budgeted.

(3) For those municipal corporations that adopt a biennial budget, an unappropriated ending fund balance may be included to cover the cash requirements that must be met prior to the receipt of sufficient revenues only in the first year of the ensuing budget period. Cash requirements in the second year of a biennial budget must be estimated, budgeted, and appropriated.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.398
Renumbered from 150-294.398, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.371, REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 4-1998, f. & cert. ef. 6-30-98
RD 11-1984, f. 12-5-84, cert. ef. 12-31-84
RD 15-1982, f. 12-6-82, cert. ef. 12-31-82
TC 18-1979, f. 12-20-79, cert. ef. 12-31-79
12-67
2-66

Or. Admin. R. 150-294-0450 Quorum Necessary to Hold Meeting

A budget committee must have a quorum, or majority of the total membership of the committee, present in order to hold a meeting. To take any action requires the affirmative vote of a majority of the total budget committee membership. Majority is defined as one more than half unless otherwise specified by law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.414
Renumbered from 150-294.414, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2012, f. 7-26-12, cert. ef. 8-1-12, Renumbered from 150-294.336
REV 4-1998, f. & cert. ef. 6-30-98, Renumbered from OAR 150-294.336-(B)
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0460 Charging for Budget Document Copies

(1) The budget document of a municipal corporation becomes a public record as defined under ORS 192.410(4) at the time the proposed budget is filed with the office of the governing body. It remains a public record throughout the budget process and after adoption. Municipal corporation budget documents are not exempt from disclosure under Oregon law so they may be inspected by interested individuals. ORS 192.440 authorizes the custodian of any public record to give a copy of the record to a person when requested.

(2) A municipal corporation may charge a fee for a copy of any version of the budget under ORS 192.440.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.426
Renumbered from 150-294.426(8), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.401(7), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-1998, f. & cert. ef. 6-30-98
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0470 Reporting Historical Data for Published Budget Summaries

(1) For purposes of complying with ORS 294.438, the published budget summary for a biennial budget must show the total amount of estimated budget resources and expenditures for both years of the ensuing biennial budget period as approved by the budget committee.

(2) The summary of the ensuing biennial budget must be compared to the actual expenditures and budget resources of the most recent preceding budget period and to the estimates for the current budget period.

(3) When changing from a fiscal year budget to a biennial budget, there will be several budget periods in which the published budget summary contains a mix of single year data and two-year biennial data. This fiscal year data must not be "doubled" or "interpolated" to make it comparable to the data reported in the columns that represent biennial budget periods.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.438
Renumbered from 150-294.438, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.416, REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02

Or. Admin. R. 150-294-0480 Quorum Necessary to Hold Meeting

To hold a budget hearing there must be a quorum, or majority of the total governing board membership present. To take any action requires the affirmative vote of a majority of the total governing board. Majority is defined as one more than half unless otherwise specified by law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.453
Renumbered from 150-294.453(1), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.430(1), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0490 Property Taxes Certified

(1) The amount or rate of any property tax proposed to be certified by a municipal corporation which is subject to Local Budget Law cannot exceed the amount or rate approved by the budget committee. The budget committee must approve the amount or the rate of each tax to be lawfully certified to the assessor. Any portion of the certified tax exceeding the amount or the rate approved by the budget committee that was not included in a budget summary republished as required by ORS 294.456(1)(c) will not be extended by the assessor on the assessment roll except as provided in ORS 294.476 and 294.477.

(2) The budget committee of a municipal corporation which is subject to Local Budget Law that adopts a biennial budget must approve the total amount or the rate of each tax to be certified each year. Taxes must be certified in each year of the budget period. Any portion of the certified tax exceeding the amount or the rate approved by the budget committee for either year of the budget period that was not included in a republished budget summary will not be extended by the assessor on the assessment roll except as provided in ORS 294.476 and 294.477.

History

Statutory/Other Authority: ORS 305.100 & 294.495
Statutes/Other Implemented: ORS 294.456
REV 22-2020, amend filed 11/30/2020, effective 12/01/2020
Renumbered from 150-294.456(1)-(A), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2012, f. 7-26-12, cert. ef. 8-1-12, Renumbered from 150-294.435(1)-(A)
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 17-2008, f. 12-26-08, cert. ef. 1-1-09
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 4-1998, f. & cert. ef. 6-30-98
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from 150-294.435
2-69

Or. Admin. R. 150-294-0500 Publishing of Amended Budget Document

When publishing an amended budget document, the governing body must include the following information using the same publishing procedures as the original summary described under ORS 294.448:

(1) The date, time, and place of the hearing on the amended budget.

(2) The place and times the amended budget document is available for inspection.

(3) A financial summary of the total budget described in ORS 294.438, as amended by the governing body.

(4) A reference to the date and publication that the budget as approved by the budget committee was originally published. For example: "To review the budget as approved by the budget committee prior to this amendment, see page 5 in the May 1, 2003, edition of the Beach Bugle."

History

Statutory/Other Authority: ORS 305.100 & 294.495
Statutes/Other Implemented: ORS 294.456
Renumbered from 150-294.456(1)-(C), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.435(1)-(C), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-294-0510 Manner of Appropriations

(1)(a) Except as otherwise permitted or required by statute or rule, amounts must be appropriated by organizational unit or program of each fund, with one appropriation amount for each organizational unit or program.

(b) Notwithstanding section (1)(a), municipal corporations may appropriate separate amounts for an activity within an organizational unit or program as long as the organizational unit or program to which the separately appropriated amount is allocated is also clearly identified.

(2) Separate amounts in each fund must be appropriated for any operating expenses for personnel services, materials and services, or capital outlay that cannot be allocated to a specific organizational unit or program and for debt service, special payments, interfund revenue transfers, and operating contingencies.

(3) If a municipal corporation is permitted by statute to estimate expenditures in a manner other than by organizational unit or program under ORS 294.388(2) and no other statute or rule prescribes the manner for appropriation of such expenditures, then it must appropriate by personnel services, materials and services, capital outlay, debt service, special payments, interfund revenue transfers, and operating contingencies for each fund.

(4) When adopting a biennial budget the appropriated amount is the total for the fund for both years of the ensuing budget period.

(5) When adopting an annual budget the appropriated amount is the total for the ensuing fiscal year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.456
REV 9-2018, minor correction filed 04/12/2018, effective 04/12/2018
Renumbered from 150-294.456(3), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
Renumbered from 150-294.435(3), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
TC 18-1979, f. 12-20-79, cert. ef. 12-31-79
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from 150-294.435
12-31-77

Or. Admin. R. 150-294-0520 Documents to File When Certification Cannot Be Certified By July 15

(1) In those instances where the municipal corporation cannot certify to the assessor by July 15, the municipal corporation shall submit, to the county assessor, a written request for an extension stating the reason for request.

(2) Not later than the extension date granted by the assessor, the municipal corporation shall file two copies of the following documents with the county assessor, and where required, one copy with the Tax Supervising and Conservation Commission:

(a) Notice of categorization and certification, (LB-50, UR-50 or ED-50);

(b) The final resolution or ordinance adopting the budget, making the appropriations, and declaring and categorizing the tax for each fund;

(d) Sample ballots of all newly established permanent rates approved by the voters and to be imposed for the first time.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.458
Renumbered from 150-294.458(3)-(A), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.555(2)-(A), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-1998, f. & cert. ef. 6-30-98
RD 9-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1987, f. 12-18-87, cert. ef. 12-31-87
RD 5-1985, f. 12-26-85, cert. ef. 12-31-85
RD 11-1984, f. 12-5-84, cert. ef. 12-31-84
TC 18-1979, f. 12-20-79, cert. ef. 12-31-79
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from 150-294.555

Or. Admin. R. 150-294-0530 Budget Certification Document to Be Submitted

(1) Local governments imposing a tax on property shall submit two copies of the following documents to the assessor's office:

(a) The resolution statements that adopt the budget, make appropriations, categorize the tax and levy the taxes.

(b) The notice of property tax certification form (LB-50, UR-50 or ED-50).

(d) Voter approved ballot measure for the establishment of a permanent rate.

(2) Local governments that do not levy an ad valorem tax but are subject to Local Budget Law (ORS 294.305 to 294.565) shall file directly with the Oregon Department of Revenue a copy of the resolution adopting the budget and making appropriations.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.458
Renumbered from 150-294.458(3)-(B), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.555(2)-(B), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-1998, f. & cert. ef. 6-30-98
RD 2-1994, f. 12-15-94, cert. ef. 12-31-94
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 9-1990, f. 12-20-90, cert. ef. 12-31-90
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0540 Transfers of Appropriations

(1) A transfer of appropriation is a decrease of one existing appropriation and a corresponding increase of another existing appropriation category.

(2) During the fiscal year or budget period the governing body of a municipal corporation may transfer from one existing appropriation category within a fund to another existing appropriation category in the same fund when a resolution or ordinance is adopted that authorizes this transfer. The resolution or ordinance must state the purpose of the transfer, and the amount of the transfer. The appropriation reductions must equal the appropriation increases. The net effect of this change on the total appropriation in the fund must be zero.

(3) Transfer of appropriations and a like amount of budget resources may be made between funds by governing body resolution or ordinance. Transfer of appropriation and a like amount of resources to another fund is accomplished by increasing or creating, a "transfer to other funds" appropriation category in the fund from which the transfer is made. The amount of this increased or created appropriation must be offset by reductions in one or more other appropriation categories in the fund from which the transfer is made. The net effect of this change on the total appropriation in the fund from which the transfer is made must be zero. Appropriation categories in the receiving fund are increased by the amount of the transfer, and the budget resources available to that fund are increased by the amount of resources transferred from the fund from which the transfer is made.

(4) Transfers referred to in this rule apply to transfers that occur after the budget has been approved and that are made during the fiscal year or budget period for which the appropriations are made. Nothing in this rule prohibits or regulates lawful transfers that have been budgeted in accordance with local budget law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.463
Renumbered from 150-294.463(3), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.450(3), REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 11-2010, f. 7-23-10, cert. ef. 7-31-10
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
RD 5-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-294-0550 Supplemental Budget Procedures

(1) During the fiscal year or budget period, the governing body may find that an unanticipated condition requires adjustments to the budget. If the condition meets the requirements of ORS 294.471, the governing body may prepare a supplemental budget.

(2) A supplemental budget may only authorize additional expenditures during the current fiscal year or budget period. It must not authorize expenditures for a past or future fiscal year or budget period.

(3) A supplemental budget that is being prepared to create or increase an appropriation must be adopted before any expenditures are made in excess of the current annual budget appropriations.

(4) Only one supplemental budget may be prepared as a result of a single situation or condition that meets the requirements of ORS 294.471.

(5) When the estimated expenditures in the supplemental budget differ by 10 percent or less from the expenditures of the adopted annual or biennial budget for each fund being adjusted, the governing body may adopt the supplemental budget at one of its regular meetings. Fund expenditures do not include unappropriated ending fund balance, amounts reserved for future expenditure, interfund transfers, or contingency amounts.

(a) Notice of the regular meeting at which the supplemental budget will be adopted must be published by one of the methods in ORS 294,311(35) not less than 5 days before the meeting. The notice must include a statement that a supplemental budget will be considered at the meeting.

(b) The resolution adopting and appropriating the supplemental budget may take place at the same regular meeting.

(6) When a new fund is being established or when the estimated expenditures in the supplemental budget differ by more than 10 percent from the expenditures in the budget as most recently amended prior to the supplemental budget, the governing body must publish notice and hold a public hearing before adopting the supplemental budget. The notice of the hearing must include for each fund being adjusted by more than 10 percent: the name of the fund; and the new total for each resource line item or appropriation category being changed, added or deleted.

Example: (This example is of the published summary of a supplemental budget in which the new total expenditure in the Utility Fund differs by more than 10 percent from the amount currently budgeted.) The supplemental budget transfers $20,000 in resources and appropriation authority from the General Fund to the Utility Fund Materials and Services, increasing that appropriation and the total expenditure in the Utility Fund to a new total of $40,000.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.471
Renumbered from 150-294.471, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-294.480, REV 7-2012, f. 7-26-12, cert. ef. 8-1-12
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 5-2009, f. & cert. ef. 7-31-09
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 8-2000, f. & cert. ef. 8-2-00
REV 4-1998, f. & cert. ef. 6-30-98
RD 1-1992, f. 5-28-92, cert. ef. 6-1-92
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78

Or. Admin. R. 150-294-0800 Councils of Governments Subject to Certain Budgetary Requirements

(1) A group of government units is a council of governments that must comply with ORS 294.900 to 294.930 if the group:

(a) Is operating under an intergovernmental agreement authorized by ORS 190.003 to 190.110;

(b) Functions under the direction and control of more than one member government;

(2) “Services Directly to Individuals” means any act performed, without working through another governmental unit, which contributes to the advantage of an individual. A service is still provided directly to the public if a Council of Governments contracts with a private entity to provide a service.

(3) The organization is subject to ORS 294.900–294.930 if the nature of the activity provided directly to individuals is similar, but is not limited to the following examples:

(a) Services to Individual Employers. Marketing, financial packaging, development of training sites.

(b) Services to Individual Trainees or Employees. Recruitment, eligibility determination, orientation, information, referral, adult and youth occupational training.

(c) Services to Individual Senior Citizens. Senior employment programs, home-delivered meals, assistance by escort, shopping or transportation services, programs for the aging.

(d) Services to Individuals by Offering Basic Needs Assistance. Food and commodities distribution, low-income relief, weatherization, family professional services (legal, medical, psychiatric, etc.), operation/maintenance of sewerage facilities.

(e) Services to Individuals by Providing Public Safety Assistance. Communicating, dispatching, relaying or call transferring in the furtherance of public safety.

(f) Services to Individuals toward Economic Development. Low-interest loans to businesses, capital for small business start-ups, assistance with expansion/diversification projects, goods and services information, grant applications.

(g) Services to Individuals by Offering a benefit through centralization. Operating public educational TV channels, photocopy services, computer applications to individual businesses, regional information system data to individuals, library services to individuals, recreational programs.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.900
Renumbered from 150-294.900, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0810 Members of the Budget Committee: Governing Body and Appointees. Definition of Representatives of the Services Provided for a Council of Government

(1) Not all of the governing body members are required to participate on the budget committee. The number of governing body representatives may be determined by each council of governments.

(2) For the purpose of appointive representation on the budget committee as described in ORS 294.905(2), a “representative of services provided” means a person who is not prohibited from serving by OAR 150-294-0820 and who is willing to be a delegate for a general classification of services provided. As an example: It is not necessary to seek a member from each senior citizen program (senior employment, home-delivered means, senior transportation, etc.). The member(s) may be appointed from the general classification of “senior citizen services” or “public safety services” or “job training services.” A good faith effort should be made to obtain a number of appointive representatives equal to the number of governing body representatives.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.905
Renumbered from 150-294.905(2), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0820 Restrictions on Appointive Budget Committee Members for a Council of Government

In order to avoid bias in favor of aservice provider or any unit of government, the following are prohibited from serving as an appointive budget committee member: Officers, agents or employees of the council of governments or of the providers of services. Appointive members shall be lay persons who represent a general service classification.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.905
Renumbered from 150-294.905(4), REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0830 Duties of the Budget Committee of a Council of Government

The budget committee shall notify the public of the time and place of public meetings on the budget and shall make the budget available. The budget committee must approve a budget document prior to any council of government hearings on that document.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.915
Renumbered from 150-294.915, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-294-0840 Duties of the Governing Body of a Council of Government

The council of governments notifies the public of the time and place of a public hearing on a budget document as approved by the budget committee. The council of governments must pass a resolution adopting a budget document as approved by the budget committee or as modified by the council of governments.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 294.920
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-294.388, REV 42-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Division 305 GENERAL ADMINISTRATION OF REVENUE LAWS

Or. Admin. R. 150-305-0010 Requirement for Social Security Numbers

(1) Pursuant to the authority provided by ORS 305.100 and 42 USC §405, tax returns, refund claims, applications, registrations, records, requests for information, reports, and other items of a similar nature filed with the Department of Revenue shall state the social security number or numbers of the taxpayer or taxpayers, homeowner or renter, applicant, reporting individual, or other person making the filing, as required by the item being filed. Social security numbers are used by the Department of Revenue as a part of providing expeditious and practicable processing systems in the administration of the laws by the department, including (but not limited to) such matters as the issuance of tax refunds, allocation or application of incoming payments by program, administration of applicable payroll taxes, personnel and payroll work, and other matters of a similar nature. A social security number submitted under any provision of the laws imposing a tax upon or measured by net income is subject to the confidentiality provisions of ORS 314.835 and 314.840. Penalties for violation of such confidentiality provisions are set forth in ORS 314.991.

(2) The department may require a taxpayer to provide the department with a copy of the taxpayer’s Social Security card.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.100
Renumbered from 150-305.100, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
12-27-74(Temp); 12-30-74

Or. Admin. R. 150-305-0011 Business Entity Identification Requirements

(1) As used in this rule:

(a) “Entity” means a foreign or domestic:

(A) Corporation;

(B) Nonprofit corporation;

(D) Business trust;

(E) Partnership;

(F) Limited liability company; or

(G) Sole proprietorship that

(i) Employs at least one employee;

(ii) Is subject to an Oregon tax program other than personal income tax; or

(iii) Is otherwise required by federal law to have an FEIN.

(b) “Federal Employer Identification Number (FEIN),” also known “Employer Identification Number (EIN)” and “Identification Number,” means the identifying number assigned to an entity by the Internal Revenue Service.

(2) All tax returns, refund claims, applications, registrations, records, requests for information, reports, and other documents or communications filed with the Department of Revenue by an entity must include a Federal Employer Identification Number for the entity where requested.

(3) Federal Employer Identification Numbers are used by the Department of Revenue as a part of providing expeditious and practicable administration of the tax laws by the department, including but not limited to use in the issuance of tax refunds, allocation or application of incoming payments, and the administration of the revenue and tax laws of this state.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.015, 305.100 & 314.385
REV 51-2024, adopt filed 12/26/2024, effective 01/01/2025

Or. Admin. R. 150-305-0014 Applicable Dates

Administrative rules adopted by the department, unless specified otherwise by statute or by rule, shall be applicable for all periods open to examination.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.100
Renumbered from 150-305.100-(B), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-305-0016 Electronic Filing

(1) Any return, statement, other document or report required to be filed under any provision of the laws administered by the Department of Revenue may be filed in electronic (as defined in ORS chapter 84) form if an authorized electronic method of filing such return, statement, other document or report is made available by the department.

(2) A return, statement, other document or report that is filed in electronic form may not be denied legal effect or enforceability solely because it is in electronic form.

(3) A return, statement, other document or report that is filed in electronic form is deemed to be filed and received on the date actually received by the department, the IRS, or on the date stated in the electronic acknowledgment of receipt issued by the department.

(4) A return, statement, other document or report filed in electronic form must be verified pursuant to the rules of the department adopted under ORS 305.810.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 84.052 & 305.100
Renumbered from 150-305.100-(D), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14

Or. Admin. R. 150-305-0018 Acceptance of Cash Payments

(1) Definitions. For purposes of this rule, the following definitions apply:

(a) “Currency” means United States coin and paper notes issued by the United States Federal Reserve Banks that are not mutilated as described in 31 CFR 100.5, 100.11, and 100.12 or contaminated such that they cannot be safely processed under routine operating procedures.

(b) “Faced” means United States paper currency presented facing portrait-side up.

(c) “Oriented” means United States paper currency presented so that the words on the bill are right-side up from the perspective of the reader.

(d) “Department district office” includes all Oregon Department of Revenue offices, but does not include certain designated department satellite offices or the department’s main building at 955 Center Street NE, Salem, Oregon 97301.

(2) All payments made to the department in currency must follow the cash handling requirements set forth in this rule. This rule is adopted consistent with the Oregon Treasury Department’s Policy FIN 201: Collection and Deposit of Money(s).

(3) Sections (4) and (5) of this rule are effective July 1, 2016 through December 31, 2016.

(4) A payor may not make more than one deposit or payment of currency in a department district office per day. A deposit or payment of currency made by a payor in a department district office may not exceed $500.

(5) A payor may make no more than five deposits or payments of currency in a department district office during a calendar month.

(6) On or after January 1, 2017, all deposits or payments of currency must be delivered to the department’s main building at 955 Center Street, NE, Salem, Oregon 97301. No deposits or payments of currency will be accepted at any other location. Deposits or payments of currency may not be remitted to the department via the United States Postal Service or any other mail courier.

(7) The department may determine and publish a threshold amount for delivery of deposits or payments of currency without an appointment. If the deposit or payment of currency exceeds the threshold amount, the department may require payors to schedule an appointment to deliver a deposit or payment of currency. The threshold amount may be found in forms, instructions, or other forms of media provided by the department.

(8) The department will accept no more than one dollar in United States coins as part of each deposit or payment of currency.

(9) If a payor must schedule an appointment to deliver deposits or payments of currency to the department, the deposits or payments of currency must be sorted by denomination, faced and oriented upon delivery.

(10) The department will not accept any mutilated or contaminated currency.

(11) All deposits or payments of currency that require an appointment must be accompanied by a completed payment voucher that shows the amount of tax or other debt being paid with currency.

(12) The department will provide a receipt for deposits or payments made in person at the Oregon Department of Revenue. The receipt will identify the amount paid, the tax period or other applicable account information to which the deposit or payment will be applied, the name of the payor, the business identification number or social security number, and the date the deposit or payment was paid to the department.

(13) If the department calculates an amount of a deposit or payment of currency that does not match the amount asserted by a payor as having been paid and the payor is not able to provide a department-issued receipt for that deposit or payment, the department will credit to the payor’s account the amount as determined by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.100
Renumbered from 150-305.100-(E), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 3-2016, f. & cert. ef. 7-1-16

Or. Admin. R. 150-305-0030 Declaratory Rulings

(1) Applicability of this rule. The provisions set forth in this rule shall apply to declaratory ruling requests with respect to the validity or applicability of:

(a) Tax and revenue laws of the State of Oregon to any person, property or state of facts.

(b) Any Department of Revenue administrative rule to any person, property or state of facts.

(2) Definitions for purposes of this rule.

(a) Declaratory Ruling. A declaratory ruling is an advisory opinion or order issued by the department specifying how a tax and revenue law of the State of Oregon or an administrative rule promulgated by the department is to be applied to any person, property or state of facts.

(b) Person. The term person includes an individual, a county assessor or tax collector, trust, estate, partnership, association, joint stock company, corporation, syndicate, group, pool, joint venture, or other unincorporated organization or group. Such term also includes a guardian, trustee, executor, administrator, trustee in bankruptcy, receiver, conservator, or any person acting in a fiduciary capacity.

(3) General practice. Upon petition by an interested person, the department has discretionary authority to issue declaratory rulings. This discretion shall be exercised in the light of all relevant circumstances, including the business or other reasons motivating the transaction, and with a view to issuing rulings only to the extent consistent with the proper administration of the tax laws.

(4) Examples of situations in which declaratory rulings shall not be issued. Generally, the department shall not issue declaratory rulings if:

(a) At the time the ruling is requested the identical issue is involved in a person’s return for an earlier tax year and:

(A) That issue is being examined by the department or the courts;

(B) That issue has already been examined by the department and an opinion and order has been issued;

(C) That issue has been examined by the department and the statutory period of limitation for appealing the department’s determination has not expired; or

(D) That issue has already been examined by the Oregon Tax Court and a decision has been issued.

(b) The person is considering alternative plans of proposed transactions or is requesting a ruling on a hypothetical situation.

(c) The administrative rule being considered is scheduled for amendment as it relates to the issue involved or, the legislature is considering, or has adopted, legislation which will necessitate revision to the rule as it applies to the tax year involved.

(d) The transaction to be ruled on will not be entered into until some indefinite future time.

(e) The legislature is considering a revision to the statute as it applies to the tax year involved.

(5) Instructions to person requesting a ruling.

(a) A request for a declaratory ruling shall be accompanied by a declaration in the following form: “Under penalties for false swearing, I declare that I have examined this request, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of the requested declaratory ruling are true, correct, and complete.” The declaration shall be signed by the person or persons on whose behalf the request is made or by their representative. The person who signs for a corporation shall be an officer of the corporation, an authorized employee or an authorized representative of the corporation regularly employed by the corporation in tax matters who has personal knowledge of the facts. The officer or employee shall be one whose duties are not limited to obtaining a ruling from the department. The person signing for a trust, estate, or partnership shall be a fiduciary or partner who has personal knowledge of the facts.

(b) Each request for a declaratory ruling shall contain a complete statement of all of the facts relating to the transaction. Such facts include: names, addresses, telephone numbers, and personal identification numbers of all interested parties; a full and precise statement of the reasons for the transaction, and a carefully detailed description of the transaction. (The term “all interested parties” does not mean that a list is required of all shareholders of a widely-held corporation requesting a declaratory ruling or a list of employees where a larger number may be involved.) If the request deals with only one step of a larger integrated transaction, the facts, circumstances, etc. relating to the entire transaction must be submitted. In addition, true copies of all contracts, wills, deeds, agreements, instruments, and other documents in the transaction shall be submitted with the request. Original documents, such as contracts, wills, etc., should not be submitted because they become part of the department’s file and will not be returned. All material facts and documents shall be included in the taxpayer’s letter requesting a ruling or in supplemental letters, or attached to the letter. Material facts furnished to the department orally shall be promptly confirmed by letter to the department with a declaration in the form described in section (5)(a). This confirmation shall be furnished within 30 calendar days to be considered part of the request.

(c) The request shall contain a statement of whether, to the best of the knowledge of the person and the person’s representative(s), if any, the identical issue is in a tax return of the person for an earlier tax year and, if so, whether the issue (1) is being examined by the department or (2) has been examined by the department and whether the statutory period of limitation for appealing the department’s determination has expired. If, after the request is filed but before a declaratory ruling is issued, the person knows that an examination of the issue by the department has been started, the person shall notify the department of such action. If a return is filed before a ruling is received concerning the issue, a copy of the request shall be attached to the return. This alerts the department’s processing center and avoids premature action on the issue.

(d) If the person advocates a particular conclusion, an explanation of the grounds for the assertion shall be furnished, together with a statement of relevant authorities in support of the person’s views. The person is encouraged to inform the department and discuss the implications of any legislation, court decisions, or administrative rules that the person determines to be contrary to the position advanced. If the person determines that there are no contrary authorities, a statement to this effect would be helpful in the ruling request. Identification and discussion of contrary authorities will generally enable department personnel to arrive more quickly at a full understanding of the issue and the relevant authorities.

(e) A request for a declaratory ruling shall be sent to the Oregon Department of Revenue, Director’s Office, Revenue Building, 955 Center St. N.E., Salem, OR 97301. The request shall clearly indicate what tax program is affected (i.e., personal income tax, corporate excise tax, property tax, timber tax, etc.).

(f) A person who wants to have a hearing on the issue or issues involved shall indicate this in writing when filing the request.

(6)(a) If a request for a declaratory ruling does not comply with all the provisions of this administrative rule, the request shall be acknowledged, and the requirements that have not been met shall be pointed out. If a request for a ruling lacks essential information, the person shall be notified in writing that if the information is not received within 30 calendar days, the request shall be closed. After 30 days, a letter shall be sent by the department to inform the taxpayer that a declaratory ruling will not be issued. If the information is received after the request is closed, it shall be reopened and treated as a new request as of the date the essential information is received.

(b) The department shall process requests for declaratory rulings as expeditiously as possible. Although consideration shall be given to requests for processing by a specified time, the department cannot give assurance that any ruling will be processed by the time requested.

(c) A person may obtain information regarding the status of a request by calling the department representative whose name and telephone number is shown on the acknowledgement of receipt of the request.

(d) A person who receives a declaratory ruling before filing a return about any transaction that has been consummated and that is relevant to the return being filed shall attach a copy of the ruling to the return when it is filed.

(7) Effect of declaratory rulings.

(a) A declaratory ruling issued by the department pertains only to the person, property or state of facts presented in the ruling request and is binding on the department and the requestor with respect to those facts. The ruling is not binding on the department if the facts and circumstances which the ruling addresses are different when the department is auditing a transaction once it has occurred.

(b) A change in the applicable statutory law or an amendment of administrative rules has the effect of an automatic revocation of a declaratory ruling to the extent that the declaratory ruling is inconsistent with the amended statute or administrative rule. The director may also revoke or modify a declaratory ruling by direct letter to the taxpayer.

(c) A person shall not rely on a ruling issued to another person unless that person has substantially identical facts or property as the person who received the prior declaratory ruling. If the person knows of a ruling issued to another person on a similar state of facts, such information shall be included in the declaratory ruling request. The department may use the prior declaratory ruling as a guide in issuing a subsequent declaratory ruling on a similar state of facts unless the circumstances explained at section (4)(c) of this rule exist.

(8)(a) Hearings. A person may request a department hearing on all issues to be addressed by a declaratory ruling. The request must be in writing. If tentative findings have been made by the director or the director’s agents prior to the hearing, they will be made available to the petitioner for use at the hearing. At least 30 days before the declaratory ruling hearing, parties to the hearing shall be given written notice of the procedures to be followed in the hearing. The hearing procedures shall be those which the department determines are best suited for the particular issues to be decided.

(b) Oregon Tax Court. A person may appeal a declaratory ruling issued by the department in the Oregon Tax Court and Oregon Supreme Court in the manner provided by ORS 305.445.

(9) Oral advice to persons.

(a) The department shall not issue declaratory rulings from oral requests. The request must be in writing and contain the information required in Section (5). However, representatives of the department ordinarily will discuss with taxpayers or their representatives, inquiries regarding: substantive tax issues; whether the department will issue rulings on particular issues and questions relating to procedural matters about submitting ruling requests. Any discussion of substantive issues shall be at the discretion of the department and shall not be binding on the department.

(b) Oral advice from the department is advisory only and the department is not bound to recognize it in the examination of the person’s return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.105
Renumbered from 150-305.105, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2000, f. & cert. ef. 8-3-00
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-77
1-64

Or. Admin. R. 150-305-0050 Release of Tax Lien and Clouds on Title

(1) Any request made to the Department for the release of a warrant, where such warrant is not in fact a lien on the title to the real property in question but merely a cloud on the title to such real estate, shall be accompanied by a statement. This statement shall show the facts affecting the title to the real property in question that render the Department’s warrant a cloud on the title to such real property, and show the reasons the warrant does not actually constitute a lien thereon. Normally, such request should be accompanied by a current title report. However, the Department may require other documentary proof showing the present condition of the title of the property in question.

(2) Any request made to the Department for the release of the lien of any warrant shall be certified to be true by the taxpayer or by his authorized representative and shall disclose fully the circumstances relative to prior liens, including an estimate of the value of the property subject to the lien, a legal description of this property, a full and complete statement of the amount of all other liens prior to the Department’s warrant and the date when such prior liens were acquired, an estimate of the amount to be recovered upon the sale of said property by foreclosure, and make reference to the subsection of ORS 305.140 on which reliance is placed as giving the Department the power to execute a release.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.140
Renumbered from 150-305.140, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
1-64

Or. Admin. R. 150-305-0052 Release of Lien

(1) The department may issue a release of a lien against real property if the department determines there is no value in the lien or the full value of the lien is realized. This release applies to the property described in the release only, the lien remains against all of the taxpayer’s other property.

(2) A release may be requested by any party in interest to a transfer of real property that is subject to a lien of the department. The request must be in writing and state the reason for the release, the circumstances of the transfer and a description of the terms of the transaction. The request must be accompanied by a preliminary title report and a complete legal description of the property to be released. An escrow statement may be included to show the distribution of funds. Other supporting documentation may be required by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.140
Renumbered from 150-305.140(3)(d), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-305-0060 How to Appeal When the Department Denies a Request for Waiver of Penalty or Interest

(1) Waivers in General. ORS 305.145 allows the department to reduce or cancel any part or all of the interest or penalties imposed by Oregon law in certain cases. If the taxpayer has requested that interest or penalty be waived and the department denies that request, the taxpayer may appeal the denial by requesting a conference with the department.

(2) Appealing a denial when the department exercised its discretionary authority. If the taxpayer agreed that the interest or penalties were lawfully imposed, but the department denied the taxpayer's request for a discretionary waiver of interest or penalties under ORS 305.145(3) or (4), the taxpayer may request a conference within 30 days of the date of the department's notice of denial. The request for conference must be filed with the department as described in OAR 150-305-0202. If the conference results in a denial of the waiver request, that decision is final and may not be appealed to the Oregon Tax Court.

(3) Appeals based on the accuracy of penalty or interest charges. If a taxpayer believes the interest or penalties were incorrectly imposed or calculated, the taxpayer may request a conference with the department within 30 days of the date of the department’s first notice assessing interest or penalty. The conference request must be filed as described in OAR 150-305-0202. If the conference results in a denial, the taxpayer may appeal the decision to the Oregon Tax Court as provided by ORS 305.275.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.145
Renumbered from 150-305.145, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87

Or. Admin. R. 150-305-0062 Discretionary Penalty Waivers for Information Returns

(1) An employer or other payer, or a representative authorized under ORS 305.230, may request that a penalty assessed under ORS 314.360(4)(a) or 316.202(5)(a) be waived. The department’s decision will be based upon the facts and circumstances in each case. To qualify for consideration of a waiver for penalties in this rule, the employer or other payer must:

(a) Submit a written waiver request that explains the reason(s) for:

(A) Filing an information return or W-2 after the due date for that return, or

(B) Filing an incorrect or incomplete information return or W-2.

(b) Meet all filing requirements under ORS 314.360 and 316.202.

(2) The waiver request must be received by the department within one year of the date of the department’s written notice of assessment of the penalty.

(3) Penalties assessed under ORS 314.360(4)(b) or 316.202(5)(b) are not eligible for waiver consideration.

(4) Where applicable, the department will consider waiving penalties under ORS 314.360(4)(a) or 316.202(5)(a) for circumstances beyond the control of an employer or other payer, as described in OAR 150-305-0068.

(5) One-time penalty waiver for information returns or W-2s. When an employer or other payer does not qualify for relief under any other section of this rule, the department will consider waiver of the penalty under ORS 314.360(4)(a) or 316.202(5)(a) for one tax period if the employer or other payer has not already received relief under this section for any tax period; and

(a) The employer or other payer did not know they were subject to reporting requirements under ORS 314.360(4)(a) or 316.202(5)(a) for which the penalty was imposed; or

(b) The employer or other payer has a history of timely filing the type of return or form for which the penalty was imposed.

(6) The provisions of this rule apply to discretionary waiver requests received by the department after April 1, 2015.

History

Statutory/Other Authority: ORS 305.100 & 305.145
Statutes/Other Implemented: ORS 314.360 & 316.202
Renumbered from 150-305.145-(A), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-305.145(5), REV 6-2015, f. 12-23-15, cert. ef. 1-1-16
REV 2-2014, f. & cert. ef. 7-31-14

Or. Admin. R. 150-305-0064 Accrual of Interest After Waiver

(1) The Department of Revenue will notify the taxpayer in writing if interest is waived under ORS 305.145(1). The taxpayer must pay the amount of the assessment within the appropriate appeal period. If the taxpayer does not pay the balance in full within the applicable appeal period, interest will accrue from that time on the balance due as provided in ORS 314.400(4).

(2) If the balance due is based on a Notice of Assessment the appeal period is 90 days from the date on the notice. If the balance due is based on a Magistrate decision, the appeal period is 60 days from the date of thedecision. If the balance due is based on a Tax Court Judgment, the appeal period is 30 days from the date of the judgment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.145
Renumbered from 150-305.145(2), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2002, f. & cert. ef. 12-31-02
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87

Or. Admin. R. 150-305-0066 Discretionary Waiver of Interest

(1) General Policy. The department does not generally waive interest because interest represents a charge for the use of money.

(2) Interest may be waived for good and sufficient cause upon request of the taxpayer as required in OAR 150-305-0068 section (4).

(a) The department will waive interest charges if the department determines the taxpayer did not have the use of the money on which the interest is charged.

Example 1: Sue mailed her Oregon tax payment to the Internal Revenue Service (IRS) by mistake. The IRS cashed the check and six months later sent the money back to Sue as an overpayment. Two months later, Sue mailed payment to the department. The department will waive interest for the six-month period that Sue did not have use of the money.

(b) The department will waive interest imposed for failure to pay state tax on or before the due date if the taxpayer:

(A) Files an Oregon tax return on or before the due date of the return, excluding extensions;

(B) Submits the Oregon tax return in the same transmission as a federal tax return, using a department-approved alternative to filing a paper return;

(C) Pays any federal tax shown as due on the transmitted federal return on or before the due date using an electronic form of payment such as a credit card, debit card, or electronic funds transfer (ACH Debit);

(D) Pays any tax shown as due on the Oregon return within 30 days of the date shown on the Notice of Assessment sent to the taxpayer;

(E) Establishes to the department's satisfaction that failure to pay Oregon tax was due to a good faith, mistaken belief of the taxpayer that the state tax had been paid; and

(F) Has not received relief under this subsection before.

(c) The waiver of interest provided by subsection (2)(b) of this rule applies only to interest otherwise imposed on unpaid tax and does not include interest imposed on the underpayment of estimated tax.

(3) When interest will not be waived.

(a) The department will not waive interest on a deficiency resulting from changes made to Oregon tax based on any adjustments reported by the Internal Revenue Service (IRS) or another state’s taxing authority, regardless of the time lapse between completion of the IRS or another state’s taxing authority adjustment and the completion of the Oregon audit report. ORS 314.380 and 314.410 require a taxpayer to report to the department a change in the taxpayer's net income as defined under OAR 150-314-0160 resulting from an adjustment by the IRS or another taxing authority.

(b) The department will not waive interest to the extent the taxpayer earned interest on the money from another taxing authority.

Example 2: Don mailed his Oregon tax payment with his Idaho return by mistake. Idaho cashed the check and three months later refunded the $1,000 plus $25 of interest. One month later, Don mailed his payment to Oregon and requested a waiver of Oregon's interest charge of $35. The department will waive $10, which is the excess of interest charged over what Don received from Idaho.

(c) The department will not waive interest on underpayment of tax when the taxpayer requests that a refund shown on a delinquent return be applied to a later tax year. ORS 316.583 requires that a refund from a delinquent return that is applied to the next tax year is credited as an estimated payment as of the date the delinquent return was filed.

Example 3: Scott files his 2010 return on February 19, 2012 and requests that his tax year 2010 refund be applied to his tax year 2011 tentative tax. His 2010 tax return was due April 18, 2011. Because he filed his return late, the refund is credited as an estimated payment on February 19, 2012. The interest charged on the underpayment of 2011 estimated tax will not be waived because ORS 316.583 requires that the payment be credited as of the date the delinquent return is filed.

History

Statutory/Other Authority: ORS 305.100 & 305.145
Statutes/Other Implemented: ORS 305.145 & 316.583
Renumbered from 150-305.145(3), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06

Or. Admin. R. 150-305-0068 Discretionary Penalty Waivers

(1) Taxpayers who believe a penalty was imposed improperly may contest the penalty as provided in OAR 150-305-0060.

(2) For rules governing the waiver of penalty imposed under ORS 314.402, 316.177 or 316.992 see ORS 316.177(4); OAR 150-314-0205; 150-316-0284, or 150-316-0650.

(3)(a) The following penalties are eligible for waiver under this rule:

(A) The five percent penalty under ORS 314.400(1) or 321.560(2) for failure to file a report or return by the due date);

(B) The five percent penalty under ORS 314.400(1) or 321.560(2) for failure to pay a tax by the due date;

(C) The additional 20 percent penalty under ORS 314.400(2)(a), 314.400(3)(a), or 321.560(3) for failure to file a report or return within the timeframes set forth in such statutes;

(D) The additional 25 percent penalty under ORS 314.400(2)(b) or 314.400(3)(b) for failure to file a report or return after the timeframes set forth in such statutes and the taxpayer receives a Notice of Determination and Assessment;

(E) The 100 percent penalty under ORS 305.992 for failure to file three consecutive reports or returns by the due date of the third year;

(F) The $100 penalty under ORS 316.202(3) for failure to file an annual report (Form WR or statewide transit tax annual report);

(G) The five percent penalty imposed under ORS 317A.161 for underpayment of the quarterly commercial activity estimated tax payment; and

(H) The five percent penalty imposed under ORS 316.801(3) for a nonqualified withdrawal from a first-time homebuyer savings account.

(b) The following penalties are not eligible for waiver under this rule:

(A) The 100 percent penalty imposed under ORS 305.265(13), 314.400(6), or 321.560(4);

(B) Civil or criminal penalties imposed under ORS Chapter 323 (cigarette and other tobacco products);

(C) Any penalty if the taxpayer was involved in an "abusive tax shelter" as defined in ORS 314.402(4) for the year at issue or any penalty imposed under ORS 314.403, 314.404, or 314.406; or

(D) The Working Family Household and Dependent Care Credit penalty under ORS 315.264.

(4) Taxpayers, or a taxpayer's representative authorized under ORS 305.230, may request that a failure-to-file or failure-to-pay penalty listed in subsection (3)(a) of this rule be waived. A waiver request is timely filed if the department receives it any time before the tax, penalty, and interest are paid in full, or up to one year after the tax, penalty, and interest are paid in full. The department's decision will be based upon the facts and circumstances in each case. To qualify for waiver, the taxpayer must:

(a) Make a written request that explains the reason(s) for the taxpayer's failure to file a return or failure to pay the tax as required by law; and

(b) Meet all filing requirements for the tax program that assessed the penalty. Filing requirements for the tax program that assessed the penalty may be found in forms, instructions, or other forms of media provided by the department.

(5) Penalty Waivers Due to Circumstance beyond Taxpayer Control. The department will waive all of any penalty listed in subsection (3)(a) of this rule for any tax program if there are circumstances beyond the taxpayer's control that caused the failure to file or pay. The circumstance must have existed at the time the return or payment was due. The return must be filed and the tax must be paid within a reasonable period of time depending on the facts and circumstances of each case.

(a) Circumstances that are accepted by the department as "circumstances beyond the taxpayer's control" include, but are not limited to:

(A) Death or serious illness of the taxpayer or a member of the taxpayer's immediate family;

(B) Destruction by fire, a natural disaster, or other casualty of the taxpayer's home, place of business, or records needed to prepare the returns;

(D) A department employee provided erroneous written information to the taxpayer that caused the taxpayer to incur the penalty if:

(i) The taxpayer's reliance on the erroneous written information caused the failure of the taxpayer to pay or file timely;

(ii) The taxpayer supplied the department with complete information connected with the erroneous written information given; and

(iii) The taxpayer could not reasonably be expected to be knowledgeable in the tax matter connected with the erroneous written information; or

(E) The taxpayer's reliance on incorrect advice from a professional the taxpayer could reasonably assume was knowledgeable and experienced in the tax involved if:

(i) The taxpayer's reliance on the advice caused the failure of the taxpayer to pay or file timely;

(ii) The taxpayer supplied the professional with complete information connected with the advice given; and

(iii) The taxpayer could not reasonably be expected to be knowledgeable in the tax matter connected with the erroneous advice.

(b) Circumstances that are not accepted by the department as "circumstances beyond the taxpayer's control" include, but are not limited to:

(A) Reliance on a professional to merely prepare a return on time;

(B) Reliance on an employee of the taxpayer to prepare a return on time;

(6) One-time penalty waiver.

(a) When a taxpayer does not qualify for relief under section (5) of this rule, the department will consider for waiver all of any penalty listed under subsections 3(a)(A) through 3(a)(C) and 3(a)(G) of this rule for one tax period if the taxpayer has not already received relief under this section for any tax period in the tax program that assessed the penalty, or in a "closely-related" tax program defined in subsection (6)(b) of this rule; and

(A) The taxpayer did not know that the taxpayer was subject to the tax program in which the penalty was imposed; or

(B) Has a history of filing and paying on time.

(b) "Closely-related" tax programs are:

(A) Any transit payroll tax program administered by the department under ORS 305.620, income tax withholding under ORS 316.162 to 316.221, and the statewide transit tax under ORS 320.550;

(B) Forest Products Harvest Tax and Small Tract Forestland Severance Tax programs authorized under ORS Chapter 321; or

(7) Payroll Tax Penalty Waivers. Taxes due under ORS 316.162 to 316.221 and statewide transit tax due under ORS 320.550 are collected at the source of payment and are held in trust for eventual payment to the State of Oregon. Because failure to remit trust funds or timely file reports related to trust funds is considered a breach of fiduciary duty, the standards for waiver of penalties imposed for such failures are higher than standards for waiver of penalties for other tax programs. For penalties that are imposed on income tax withholding or transit payroll taxes due under ORS 316.162 to 316.221 or statewide transit tax due under ORS 320.550 and that do not qualify for waiver under subsections (5) or (6) of this rule, the department will provide waiver of penalties as follows:

(a) The department will waive the entire penalty imposed under ORS 314.400(1) (five percent failure-to-file or pay penalty) or 314.400(2)(a) (25 percent failure-to-file penalty) for the most recent quarter due if the taxpayer has not received a penalty in the eight quarters preceding the most recent quarter.

(b) The department will waive the 25 percent failure to file penalty imposed under ORS 314.400(2)(b) or ORS 314.400(3)(b) if a taxpayer files the tax return and pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of the date shown on the Notice of Determination and Tax Assessment.

(A) The department will waive 70 percent of the 100 percent failure-to-file penalty if the taxpayer:

(i) Files an income tax withholding, transit payroll, or statewide transit tax return before receiving a Request to File Notice, Notice and Demand to File, Combined Failure-to-File Notice, or any combination of these notices from the department that relates to the return the taxpayer filed; and

(ii) Pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of filing the return.

(B) The department will waive 50 percent of the 100 percent failure-to-file penalty if a taxpayer:

(i) Files an income tax withholding, transit payroll, or statewide transit tax return after receiving a notice listed in section (7)(c)(A)(i) of this rule; and

(ii) Pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of the date on the most recent notice.

(C) The department will waive 25 percent of the 100 percent failure-to-file penalty if the taxpayer, after receiving a Notice of Determination and Assessment, files the tax return and pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of the date of the notice.

(8) Additional Penalty Waivers. For penalties imposed on taxes other than income tax withholding or transit payroll taxes due under ORS 316.162 to 316.221 or statewide transit tax due under ORS 320.550 and that do not qualify for waiver under subsections (5) or (6) of this rule, the department will provide waiver of penalties as follows:

(a) The department will waive the 25 percent failure to file penalty imposed under ORS 314.400(2)(b) or ORS 314.400(3)(b) if a taxpayer files the tax return within 30 days of the date shown on the Notice of Determination and Tax Assessment. The department will not waive this penalty for the tax program or "closely-related" tax program (as defined in subsection (6)(b) of this rule) that assessed the penalty if the taxpayer:

(A) Has not filed as required by the due date of the return (including extensions) for any three of the most recent six filing periods; or

(B) Has received the 100 percent failure-to-file penalty under ORS 305.992.

(b) The department will waive part of the 100 percent failure-to-file penalty imposed under ORS 305.992 as follows:

(A) The department will waive 70 percent of the 100 percent failure-to-file penalty if the taxpayer files a return before receiving a Request to File Notice, Notice and Demand to File, Combined Failure-to-File Notice, or any combination of these notices from the department that relates to the return the taxpayer filed.

(B) The department will waive 50 percent of the 100 percent failure-to-file penalty if the taxpayer files a return after receiving a notice listed in section (8)(b)(A) of this rule.

(i) Received a Notice of Determination and Assessment; and

(ii) Files the return (other than transit payroll, income tax withholding, or statewide transit tax returns) related to the Notice of Determination and Assessment.

(9) Late payments made in connection with electronic filing. The department will waive the entire five percent failure-to-pay penalty imposed under ORS 314.400(1) if the taxpayer:

(a) Files an Oregon tax return on or before the due date of the return, excluding extensions;

(b) Submits the Oregon tax return in the same transmission as a federal tax return, using a department-approved alternative to filing a paper return;

(c) Pays any federal tax shown as due on the transmitted federal return on or before the due date using an electronic form of payment such as a credit card, debit card, or electronic funds transfer (ACH Debit);

(d) Pays any tax shown as due on the Oregon return within 30 days of the date shown on the Notice of Tax Assessment sent to the taxpayer;

(e) Proves to the department that failure to pay Oregon tax was due to a good faith, mistaken belief of the taxpayer that the state tax had been paid; and

(f) Has not received relief under this section before.

(10) The provisions of this rule apply to discretionary waiver requests received on or after July 31, 2007.

[Publications:Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100, 305.145 & 317A.143
Statutes/Other Implemented: ORS 305.145, 316.801 & 317A.149
REV 6-2026, minor correction filed 05/19/2026, effective 05/19/2026
REV 9-2021, amend filed 06/28/2021, effective 07/01/2021
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
REV 86-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-305.145(4), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

Or. Admin. R. 150-305-0071 Interest Waivers Due to COVID-19 Pandemic Emergency

(1) The department will waive statutory interest imposed under ORS 305.220 or 305.222 on income/excise tax deficiencies or delinquencies of certain businesses for tax year 2019 if all of the following criteria are met:

(a) The taxpayer has unpaid individual income or corporate income/excise tax for tax year 2019 that remains unpaid beyond the due date of the tax year 2019 tax return;

(b) The individual taxpayer’s business or the corporate taxpayer has gross receipts of less than $5 million for tax year 2019;

(c) The taxpayer has entered into a department-approved payment plan or the taxpayer pays the balance of the tax liability in full within six months of the date of assessment of the tax; and

(d) The taxpayer’s ability to timely pay the tax has been affected by COVID-19 restrictions in place due to the pandemic emergency that, in the department’s determination, constitute good and sufficient cause for the waiver of interest.

(2) The department will waive the interest for qualifying taxpayers at the time the tax year 2019 tax has been paid in full, either when the taxpayer makes payment in full or the taxpayer has successfully completed the department-approved payment plan, whichever is earlier.

History

Statutory/Other Authority: ORS 305.100 & 305.145(3)
Statutes/Other Implemented: ORS 305.145
REV 10-2021, adopt filed 07/13/2021, effective 07/13/2021

Or. Admin. R. 150-305-0080 Closing Agreements

A closing agreement may relate to any taxable period ending prior or subsequent to the date of the agreement. With respect to taxable periods ended prior to the date of the agreement, the matter agreed upon may relate to the total tax liability of the taxpayer, or it may relate to one or more separate items affecting the tax liability of the taxpayer. With respect to any taxable period ending subsequent to the date of the closing agreement, such agreement is subject to any change in or modification of the law enacted subsequent to the date of execution and applicable to such taxable period and each such agreement shall so recite.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.150
Renumbered from 150-305.150, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
1-64

Or. Admin. R. 150-305-0085 Financial Institution Data Match

(1) For purposes of this rule, “third-party aggregator” means a third-party provider of computer software that aggregates information from multiple sources, with which the department has entered an agreement to provide services in facilitating data matching with financial institutions.

(2) The department must enter into a written agreement with each financial institution required to participate in the data match system under ORS 305.084. The agreement must include required information security standards or protocols designed to prevent unauthorized or unintentional disclosure of data transmitted to and from the department, or third-party aggregator, under the data match system. Financial institutions, the third-party aggregator, and the department will ensure compliance with all applicable federal and state laws and administrative rules governing the confidentiality of information and will apply any additional security controls required to maintain the privacy and security of Oregon taxpayers and the integrity of the data accessed. Furthermore, all exchanged data will be maintained in a secure location, in the United States, and protected from any release or disclosure that is not specifically authorized by the agreement.

(3)(a) The department will use a third-party aggregator selected by the department to facilitate information sharing for the purpose of conducting data matches. The department will inform financial institutions of the company or companies selected for this process. Financial institutions may choose between two methods for conducting data matches through the third-party aggregator.

(A) Method 1. A financial institution may provide a list of account holders’ names and social security numbers or other taxpayer identification numbers to the third-party aggregator. The third-party aggregator will compare the list provided by the financial institution to a list of delinquent debtors’ names and social security numbers or taxpayer identification numbers provided by the department, to determine if there is a match and send the department a list of any matching names, social security numbers or taxpayer identification numbers. The frequency and format of the lists provided to the third-party aggregator by a financial institution may be determined pursuant to the written agreement between the department and the financial institution. In no case will the lists provided by a financial institution to the third-party aggregator be required more than once a calendar quarter.

(B) Method 2. A financial institution may choose to have the third-party aggregator provide a list of delinquent debtors’ names and social security numbers or other taxpayer identification numbers to the financial institution. The financial institution will compare the list provided by the third-party aggregator to a list of account holders’ names and social security numbers or other taxpayer identification numbers, to determine if there is a match, and send the third-party aggregator a list of any matching names, social security numbers or other taxpayer identification numbers. The frequency and format of the lists provided to the third-party aggregator by a financial institution may be determined pursuant to the written agreement between the department and the financial institution. In no case will the lists provided by a financial institution to the third-party aggregator be required more than once a calendar quarter.

(b) A financial institution wanting to use an alternative method of data matching must submit a written request to the department that demonstrates, to the department’s satisfaction, that a technological or financial hardship prevents the financial institution from conducting automated data matching through the third-party aggregator under section (3)(a) of this rule. If the alternative method of data matching is approved by the department, the financial institution must submit its account holder list pursuant to a written agreement with the department describing the content, frequency, and format of those submissions.

(c) A financial institution demonstrating, to the department’s satisfaction, that it has a technological or financial hardship described in ORS 305.084(5)(b) or (c) that prevents it from providing the type of submissions described in section 3(a) or (b) of this rule may request a temporary waiver from complying with the data match system requirements. If the temporary waiver is approved by the department, the financial institution does not have to participate in the data match system for a time period specified by the department, not to exceed three years.

(A) A financial institution applying for a temporary waiver from the data match system must follow the form and process as prescribed by the department for obtaining the waiver.

(B) The waiver request must demonstrate, to the department’s satisfaction:

(i) That the financial institution has a current financial or technological hardship that prevents it from conducting data matching; or

(ii) That the financial institution’s supervisory banking authority has determined that the financial institution is undercapitalized, significantly undercapitalized, or critically undercapitalized, as those terms are defined under 12 C.F.R. 325.103(B) or 12 C.F.R. 702-102(a).

(C) A waiver request must be resubmitted at least once every three years following the grant of the initial waiver, and no later than the date that is three years from the date that the prior waiver was issued by the department.

(4) Unless waived by the financial institution in the agreement with the department, the department must pay a fee to financial institutions for the costs of complying with the data match system under ORS 305.084(3).

(a) The process for submitting a fee payment request may be set forth in a written agreement between the department and the financial institution.

(b) Financial institutions must retain documentation for two years following the submission of a fee payment request that substantiates the actual costs requested to be reimbursed.

(d) In any review, the department will compare the cost substantiation documents against costs of similar financial institutions, in asset size and amount of Oregon deposits, to determine the reasonableness of the costs.

(5) The department may impose penalties under ORS 305.994 on any financial institution that fails to either participate in the data matching program or obtain the waiver described in section (3) of this rule.

[ Publications: C ontact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 305.094
Statutes/Other Implemented: ORS 305.084 - 305.094
REV 23-2018, adopt filed 12/13/2018, effective 12/17/2018
REV 12-2018, temporary adopt filed 06/20/2018, effective 06/20/2018 through 12/16/2018

Or. Admin. R. 150-305-0090 Settlement Offer

(1) As used in this rule:

(a) “Ability to pay” means the amount the department determines the taxpayer can pay towards their tax liability based on the taxpayer’s financial condition calculated during the settlement offer process and an evaluation of any special circumstances relating to expenses, income, and assets the taxpayer may have included in their application.

(b) “Active settlement offer” starts at the point a settlement offer has been submitted to the department and ends with the cancellation of the balance under ORS 305.155.

(c) “Approved settlement offer” means a settlement offer that has been accepted by the department but is not yet a completed settlement offer.

(d) “Completed settlement offer” means a settlement offer that has been accepted by the department, final payment of the offered amount has been received, the period of compliance outlined in section 9(b) of this rule has expired, and the department has processed a cancellation of the balance under ORS 305.155.

(e) “Settlement offer” means an offer made by a taxpayer or an authorized representative to satisfy a tax liability for less than the full amount owed, for which appeal rights have expired and there is no pending appeal.

(f) “Tax liability” means the amount owed to the department, including taxes, penalties, and associated interest and fees.

(g) “Taxpayer” means an individual owing a tax liability to the department.

(h) All references to the IRS Financial Analysis Handbook, Offer in Compromise calculation, and Collection Financial Standards are to those versions in effect as of December 31, 2023.

(2) The department reviews all settlement offer applications and may accept or reject the offer based on the department’s evaluation of the taxpayer’s ability to pay and the anticipated costs of further collection work.

(a) Anticipated costs of further collection work include, but are not limited to, the costs the department incurs to collect the debt such as legal costs, transcribing warrants to other states, occupational license suspensions, and other collection related costs.

(b) During the settlement offer application review process, the department may also evaluate whether other collection actions such as cancellation, payment plans, suspended collection status, or temporary uncollectible status, may better address the taxpayer’s ability to pay their tax liability.

(3) Settlement offer application requirements:

(a) A taxpayer may apply for settlement of tax liabilities owed to the department by completing and submitting the “Settlement Offer Application” form provided by the department. This form includes a calculation method designed to result in an acceptable settlement offer based upon a standard formula determined by the department.

(b) The settlement offer must be accompanied by a nonrefundable payment equal to five percent of the settlement offer amount. This five percent payment will be applied to the taxpayer’s tax liability as part of the offer. This payment will not be refunded, even if the offer is not accepted or is withdrawn. Settlement offer payments can be made by using one or more of the forms of payment listed in OAR 150-305-0193.

(c) A settlement offer must be made in good faith. Fraud or misrepresentation on the part of the taxpayer or authorized representative may invalidate a settlement offer application or a completed settlement offer.

(d) Prior to submitting a settlement offer application, a taxpayer must file all required reports or returns for the current tax year and the three tax years (12 quarters or 36 months for reports or returns required to be filed more frequently than annually) immediately preceding the date of the settlement offer application.

(4) When a taxpayer has been found personally liable for tax liabilities owed by a business, the taxpayer may include these tax liabilities in the settlement offer if the business is closed and the taxpayer provides proof of dissolution such as Articles of Amendment/Dissolution from the Oregon Secretary of State. Once a settlement offer is completed, the taxpayer making the settlement offer is no longer personally responsible for the tax liability, but the business and any other responsible officers or employees will remain liable for the outstanding balance of the tax liability.

(5) Bankruptcy:

(a) If a taxpayer is currently part of an open bankruptcy case, the taxpayer may not apply for the settlement offer program until a discharge order is entered or the case is dismissed.

(b) If a taxpayer files bankruptcy after an approved settlement offer, the settlement offer agreement will be paused until a discharge order is entered or the case is dismissed. If the debt is discharged in bankruptcy, the taxpayer will send a copy of the order of discharge to the department. If the debt was discharged, the department shall cancel the debt according to the discharge order of the court. If an approved settlement offer is paused due to a bankruptcy filing and the debt was not discharged, the term of the original approved settlement offer will be extended beginning with the date of the discharge or dismissal, for a term equal to the time that the approved settlement offer was paused.

(6) Non-finalized liabilities: If the taxpayer seeks to include any liability in the settlement offer application that is not final, such as occurs when an audit is open or a taxpayer amends a return before a settlement offer is completed, the department will deny the settlement offer application. The taxpayer may reapply once the liability is finalized.

(7) The taxpayer is allowed one active settlement offer at a time.

(8) Income and expense qualifications include income, expenses, and assets of the taxpayer and taxpayer’s household and must be reported to the department in the manner prescribed by the department in its forms, instructions, and this rule.

(a) Income:

(A) All household income must be listed on a settlement offer application. The department considers all sources and types of income when determining the taxpayer’s ability to pay.

(i) Income totals are established using the method outlined in the IRS Financial Analysis Handbook for verifying financial information.

(ii) The department follows the IRS Offer in Compromise calculation for income qualifications to determine the total income that the department will consider when determining the taxpayer’s ability to pay.

(B) If the taxpayer believes that certain income should not be considered by the department when determining the taxpayer’s ability to pay, the taxpayer may provide an explanation to the department for consideration. The department may request documentation to substantiate the claim.

(b) Expenses:

(A) All household expenses must be listed on a settlement offer application. The department considers all sources and types of household expenses when determining the taxpayer’s ability to pay.

(i) Expense totals will be established using the method outlined in the IRS Financial Analysis Handbook for verifying financial information and shared expenses.

(ii) The department follows the IRS Offer in Compromise calculation for expense qualifications to determine the total expenses that the department will consider when determining the taxpayer’s ability to pay.

(B) A taxpayer may claim living expenses according to the IRS Collection Financial Standards based on the taxpayer’s household size. If expenses exceed the standard, then the taxpayer must submit an explanation to the department for consideration but does not guarantee the department will allow the expenses. The department may require documentation to substantiate any expense amount above the IRS Collection Financial Standards.

(C) Taxpayers may claim other expenses not specifically covered under the IRS Collection Financial Standards categories by submitting an explanation to the department for consideration, however this does not guarantee the expense will be allowed by the department. The department may require documentation to substantiate the claim.

(A) All assets must be listed on a settlement offer application. The department considers all types of assets when determining the taxpayer’s ability to pay.

(i) Asset value totals are established using the method outlined in the IRS Financial Analysis Handbook for verifying financial information.

(ii) The department follows the IRS Offer in Compromise calculation for asset totals to determine the total asset value that the department considers when determining the taxpayer’s ability to pay.

(B) If the taxpayer believes that certain assets should not be considered by the department when determining the taxpayer’s ability to pay, the taxpayer may provide an explanation to the department for consideration, however this does not mean the asset will be excluded from the ability-to-pay calculation. The department may require documentation to substantiate the claim.

(i) The department considers the value of real property owned by the taxpayer or in which the taxpayer has an interest in determining the taxpayer’s ability to pay.

(ii) The value of real property is determined using the method outlined in the IRS Financial Analysis Handbook for real estate.

(iii) The department follows the calculation for real property described in the IRS Offer in Compromise to determine the real property equity that the department will consider when determining the taxpayer’s ability to pay.

(D) Motor vehicle, aircraft, and vessel (boats) allowance calculation:

(i) The department considers the value of these types of vehicles in determining the taxpayer’s ability to pay.

(ii) The department determines the value of these vehicles using the method outlined in the IRS Financial Analysis Handbook for motor vehicles, aircrafts, and vessels.

(iii) The department follows the IRS Offer in Compromise calculation in determining the amount of the taxpayer’s equity value in vehicle(s), aircrafts, and vessels that the department will consider when determining the taxpayer’s ability to pay.

(E) Retirement account asset calculations:

(i) The department considers the value of retirement account assets in determining the taxpayer’s ability to pay.

(ii) The department determines the value of retirement account assets using the method outlined in the IRS Financial Analysis Handbook for retirement or profit-sharing plans.

(iii) The department follows the IRS Offer in Compromise process to determine retirement account assets.

(9) Terms and conditions of an approved settlement offer include, but are not limited to:

(a) With regards to any tax liability subject to the settlement offer, an agreement by the taxpayer to waive any right of appeal;

(b) Agreement by the taxpayer to file all required reports and returns while making payments on their settlement offer and for the five subsequent tax years (20 quarters or 60 months for reports or returns that required to be filed more frequently than annually) beginning with the date on which the final settlement offer payment is made;

(c) An agreement by the taxpayer to pay any additional amounts assessed by the department during an active settlement offer within 90 days of the date of the assessment unless the taxpayer files an appeal within 90 days of the assessment date. A taxpayer who files an appeal within 90 days of the assessment date must pay all amounts that are determined to be due within 90 days after the taxpayer’s appeal rights have been exhausted or have expired and the liability has become final. This requirement includes assessments issued for all tax programs administered by the Oregon Department of Revenue;

(d) Agreement by the taxpayer to pay the amount determined to be due under subsection (c) of this section within 90 days after it has become final, even if the appeal is resolved after the compliance period in subsection (b) of this section has expired.

(10) In the event that any of the requirements set forth in section (9) of this rule are not met, the approved settlement agreement will become null and void, the full amount of the liabilities that were the subject of the settlement offer will not be cancelled, and collection activity may begin.

(11) Even after the department’s acceptance of a settlement offer, but before the taxpayer makes payment in full of the settlement offer amount, the department may continue to offset any refunds or sums due to the taxpayer from the department, any other state agency, or the federal government against delinquent accounts owed by the taxpayer.

(12) The department will release any tax liens related to tax liabilities included in the settlement offer agreement once there is a completed settlement offer under ORS 305.155 and this rule.

(13) The taxpayer must affirm in the manner prescribed by the department that all information provided by the taxpayer or taxpayer’s authorized representative during the settlement offer process is, to the best of the taxpayer’s or taxpayer’s authorized representative’s knowledge, true, correct, and complete. The department may use credit reports and other tools to verify the information.

(14) The department’s determination related to the settlement offer is final. However, the taxpayer may apply for a new settlement offer, except as otherwise limited by this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.155
REV 21-2023, amend filed 12/21/2023, effective 01/01/2024
Renumbered from 150-305.155, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2001, f. 9-28-01, cert. ef. 10-1-01
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-305-0092 Suspended Collection Status

(1) For the purpose of ORS 305.155:

(a) “Assets” do not include the following:

(A) The home the debtor lives in and the land the home is on, regardless of value;

(B) Household goods and personal effects of the debtor as defined in 20 CFR 416.1216 (e.g. an individual’s wedding rings and engagement rings), regardless of value;

(D) Other personal property of the debtor listed or described in ORS 18.345 or 18.845, with a value below the limits listed therein, unless otherwise provided for in this rule;

(E) Burial spaces for the debtor and the debtor’s immediate family as the term “immediate family” is defined in ORS 163.730;

(F) Burial funds for the debtor and debtor’s spouse, each valued at $1,500 or less;

(G) Life insurance policies payable to the debtor that have no more than $1,500 total face value owned on any one person; and

(H) Grants, scholarships, fellowships, or gifts set aside to pay educational expenses of the debtor for nine months after receipt.

(b) A debtor that has an asset that exceeds the limit listed or described in ORS 18.345 or 18.845 may choose to use part of their $5,000 asset allowance for the amount of value above the asset value limit listed in ORS 18.345 or 18.845.

Example 1: Jean receives a $1,200 monthly Social Security benefit. She owns one home and one car. She also owns one rifle (valued at $600) and one pistol (valued at $500). The combined value of the weapons is greater than the $1,000 asset limit set forth in ORS 18.845 by $100. She will qualify for suspended collection status under ORS 305.155(2) as long as her remaining assets do not exceed $4,900. ($5,000 minus $100 above the firearms value amount listed in ORS 18.845 equals $4,900.)

(2) To be considered for suspended collection status, the debtor may be required to submit a financial statement and attach proof of income, assets, and asset values.

(3) If the department determines that a debtor does not qualify for suspended collection status, the debtor may submit a new financial statement containing new, additional or revised information and request to be reconsidered for suspended collection status.

[Publications: Contact the Oregon Department of Revenue to learn how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.155
Renumbered from 150-305.155-(A), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2015, f. 12-23-15, cert. ef. 1-1-16

Or. Admin. R. 150-305-0094 Cancellation of Liabilities Discharged in Bankruptcy

(1) Generally, all tax liabilities which are discharged in a bankruptcy proceeding under the Bankruptcy Reform Act of 1978 shall be cancelled upon the Department’s records. The Department shall issue an order cancelling the tax, penalty and interest on such liabilities and all liens of record shall be released.

(2) An exception to this general policy will be made when the department has a recorded lien on real property retained by the taxpayer after the bankruptcy proceeding is closed. Although the department is stayed from taking collection action on the account, nothing prevents the department from receiving payment, as one of the property lienholders, at the time the taxpayer disposes of the property. If the department determines a sufficient opportunity exists to collect state debt at some point in the future, the account will not be canceled nor will the lien be released.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.155
Renumbered from 150-305.155(1)(d), REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84
RD 16-1982, f. 12-6-82, cert.ef. 12-31-82

Or. Admin. R. 150-305-0100 Subpoena Issued by the Department

(1) Definitions:

(a) As used in this rule “books and papers” shall mean and include any kind of written, printed, typed, or recorded matter of any kind or nature, however produced or reproduced, including but not limited to: all mechanical, electronic, sound or video recordings or their transcripts; microfilm and microfiche records; papers; service orders; repair orders; agreements; contracts; notes; memoranda; correspondence; letters; telegrams; statements; books; reports; studies; minutes; records; accounting books; maps; plans; drawings; diagrams; photographs; analyses or studies; and all drafts prepared in connection with such items. “Books and papers” also include electronic files and computer stored data.

(b) As used in this rule, “person” shall mean any individual, company, corporation, or other legal entity.

(c) As used in this rule, “director” shall mean the Director of the Oregon Department of Revenue or a designee as provided in ORS 305.057.

(d) As used in this rule, “third party” shall mean a person who is a stranger to a transaction, contract, or proceeding, but is in possession of books and papers or knowledge pertinent to the particular investigation.

(2) The director may issue subpoenas whenever necessary to fulfill the department’s statutory responsibilities. ORS 305.190, 314.425.

(a) A subpoena may be issued to any person who: is an Oregon resident or domiciliary; earns income in this state; owns or has an interest in any real or personal property in Oregon; conducts business in Oregon; or has a registered agent in Oregon. A subpoena may also be issued to an officer, employee, or agent who has custody, possession, or control of the books and papers of such a person even if the officer, employee, or agent does not satisfy the conditions of this subsection.

(b) A subpoena issued by the director shall be limited to the needs of the particular investigation, including but not limited to, determining the correct fee or tax liability, collecting or resolving an account, or establishing an appropriate valuation or assessment. A subpoena is also subject to limitations found in ORS 192.583 through 192.606 referring to financial institutions.

(c) Generally, the director will issue a subpoena only after the department has made a written request, and the person has failed to comply within the time specified by the department. Exceptions to making prior written requests will be made if the director deems it necessary to protect the books and papers from destruction, or the department has an immediate need for the information being subpoenaed.

(d) The subpoenaed books and papers shall be produced at the location, time, and date required by the director.

(e) Within five business days from the date of service, the person subpoenaed may request from the director an extension of the time within which to comply with the subpoena.

(f) The department may compensate third parties for the cost of reproducing the books and records subpoenaed at the same rate per page as the department charges the public for reproducing department records (see OAR 150-192-0400). The person may comply with the subpoena by providing the originals of the documents subpoenaed to the director. Copies will be made and the originals shall be returned to the person.

(g) At the director’s option, electronic files and computer stored data shall be produced in printout form.

(h) The director has designated the department’s division administrators as authorized to issue subpoenas.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.190
REV 7-2026, minor correction filed 06/11/2026, effective 06/11/2026
Renumbered from 150-305.190, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-305-0110 Disclosure of Confidential Information Provided to the Department of Revenue

(1) The definitions in OAR 150-305-0100 shall apply to this rule.

(2) The department must notify the provider of the “books and papers” of an intended disclosure more than 33 days in advance of the intended disclosure.

(3) The notice will include a description identifying the documents intended to be disclosed. The taxpayer shall also be advised that any “books and papers” may be disclosed if requested in the judicial process.

(4) The disclosure will not occur until:

(a) Thirty-three days after the notice; or

(b) The date of the final decision of the Tax Court or Supreme Court on a request for an order limiting disclosure.

(5) A notice under this section shall be sent to the provider at its last known address by certified mail. The period for requesting a court order shall start from the date of the mailing of the notice.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.192
Renumbered from 150-305.192, REV 48-2016, f. 8-13-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-305.190-(A)

Or. Admin. R. 150-305-0120 Implied Consent

(1) A "designee" as used in this rule is a person, firm, organization, or agency authorized by a taxpayer to receive the taxpayer's confidential information. Taxpayer consent for the department to disclose to a designee may be in writing, oral, or implied. See OAR 150-314-0535.

(2) Without evidence of the filing of written consent to disclose the taxpayer's information, the department may determine that a person is authorized to receive confidential information with respect to a particular tax matter by that person representing to the department that they are authorized to receive the information and revealing to the department knowledge of tax information that is:

(a) Related to the tax matter that is the subject of the inquiry or communication;

(b) Of a nature that is generally known only to the taxpayer; and

(c) Of a nature that taxpayers ordinarily do not share with others except for the purpose of empowering the person to participate in the taxpayer's tax matters. Information disclosed by the department will be limited based on the nature of information a person presents.

(3) The following examples illustrate how the department may conclude that a taxpayer has given implied consent to the department to disclose confidential information.

Example 1: A Certified Public Accountant (CPA) calls the department, states that he is authorized to receive confidential tax information and reveals knowledge of Mary's private tax information from a department billing or notice. The department concludes that Mary has given the department implied consent to disclose information to the CPA relating to that issue since she presumably gave a copy of her billing or notice to the CPA.

Example 2: A Licensed Tax Consultant (LTC) calls the department while preparing Tom and Sue's tax return to confirm estimated tax payments made during the tax year. The practitioner, after representing that Tom and Sue have authorized disclosure, is able to provide the date and amount of each scheduled payment. The department concludes that Tom and Sue have given the department implied consent to confirm the payment information provided since they presumably gave the LTC their tax information.

Example 3: A lawyer qualified to practice in Oregon calls the department wanting to set up a payment arrangement for her client, Ashley. She states that she is representing Ashley and presents knowledge of the tax debt and Ashley's personal financial situation. The department concludes that Ashley has given implied consent to discuss and negotiate a payment plan with the lawyer.

Example 4: While speaking on the telephone with a department customer service representative, Margaret asks if she may have her daughter listen and participate in the conversation on another telephone extension or a speaker phone. The department concludes that Margaret has given consent to disclose her confidential information to her daughter during the telephone call.

Example 5: Carlos comes to the department's walk-in assistance center and brings a friend to help interpret his questions. The department concludes that Carlos has given implied consent to disclose his confidential tax information to his friend during that visit.

Example 6: Jerry, age 19, is stationed overseas with the U.S. Army. His mother calls the department indicating that she is authorized to receive Jerry's confidential tax information and with information from a billing notice issued to Jerry three months previously, along with a copy of Jerry's return. She offers to make full payment on the debt using her credit card, if the department will provide the payoff balance. The department concludes that Jerry has given the department implied consent to provide the balance due to his mother.

Example 7: Jim and Julie file Oregon personal income tax returns jointly, but Jim files a Lane Transit District Self-Employment Tax return in his name only for his Schedule C business. Julie calls the department to discuss a billing notice issued on the LTD return. She tells the department that she performs all bookkeeping services for his business and has the return, notices and knowledge of all business transactions. The department concludes that Jim has given implied consent for the department to disclose information to Julie to resolve the billing notice.

Example 8: Martin, representing that he is an employee in the tax section of XYZ, Inc. authorized to discuss the business's tax matters, calls the department with information from a department billing notice requesting a payoff amount. The department concludes that XYZ, Inc. has given the department implied consent to provide Martin with the payoff amount.

Example 9: ZYX Corporation contracts with Advent Payroll Service to perform all of its payroll functions, including remittance of payroll withholding deposits and quarterly payroll reports. Advent registers with the department to remit ZYX's payments via electronic funds transfer by filing required tax information. The department concludes that ZYX has given the department implied consent to disclose payment-related confidential information to Advent in order to process payments received.

Example 10: Connie, an Elderly Rental Assistance recipient, asks her caseworker from Senior and Disabled Services to contact the department regarding benefits she received from that agency. The caseworker indicates that Connie has authorized her to receive confidential information and demonstrates full knowledge of Connie's ERA claim. The department concludes that Connie has given implied consent for the department to discuss her claim with the caseworker.

Example 11: Joseph electronically filed his individual income tax return. Joseph’s tax return information is sent to an electronic return transmitter (e-file transmitter). The e-file transmitter in turn, sends it to the Internal Revenue Service (IRS) who then forwards it to the department. By receiving Joseph’s tax return information from the e-file transmitter (via the IRS), the department concludes that the taxpayer has provided implied consent for the department to discuss information about Joseph’s return with the transmitter. The types of disclosures the department may make to e-file transmitters about Joseph’s information include, but are not limited to: acknowledgement of the receipt of his e-filed return, the reason for any delay in processing, refund payment dates or delays, and any other information the taxpayer has given to the e-file transmitter for purposes of transmitting such information to the department.

(4) If the department is unable to sufficiently determine that a taxpayer has given express or implied consent to disclose confidential information, written consent will be required.

Example 12: Donna calls the department inquiring as to whether Avis, her mother, received tax refunds during the past two years. Donna indicates that Avis has authorized her to receive confidential information. Although Donna provides Avis' full name, address, and social security number, she does not demonstrate any knowledge of Avis' tax returns or filing history. She does not have any notices or department letters to Avis in her possession. The department concludes that Avis has not given the department implied consent to disclose her confidential tax information to Donna. To receive the information, Donna will need to provide the department with written consent to disclose from Avis.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.193
Renumbered from 150-305.193, REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08
Renumbered from 150-OL 2003, Ch. 541, Sec. 3, REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 4-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-305-0130 When Deduction for Amounts Paid as Wages or Remuneration Permitted

(1) An individual or entity will not be allowed a deduction for wages or payments to individuals for personal services rendered if:

(a) The individual or entity fails to file information returns, such as 1099's or W-2's, as required by ORS 314.360 or 316.202 or by administrative rule; or

(b) The individual or entity files information returns for payments made to an individual as if the individual was an independent contractor and upon examination the individual is determined to have actually been an employee.

Example 1: Brian owns a convenience store. Brian hired Elmer to help stock shelves in the evenings. Brian did not issue W-2's for Elmer. Brian's expense for payments made to Elmer for services rendered are not deductible.

Example 2: Assume the same facts in Example 1, except that Brian issued a Form 1099 to Elmer. Upon examination of Brian's return it was determined that Elmer was actually an employee, subject to withholding. Brian's expense for the payments made to Elmer for services rendered are not deductible.

(2) In the case of a failure to file as described in subsection (1)(a) of this rule, the expense will be allowed if the individual or entity can show there was a circumstance beyond the individual or entity's control that caused the failure to file returns as required by law. Refer to OAR 150-305-0068 for examples of situations that are accepted by the department as a circumstance beyond the individual or entity's control.

(3) In the case of a misclassification as described under subsection (1)(b) of this rule, the expense will be allowed if the individual or entity can show reasonable cause as to why the appropriate returns were not filed. Reasonable cause will be considered if the individual or entity had relied on information from:

(a) Judicial precedents;

(b) Published rulings;

(d) Past Internal Revenue Service audits in which there were no assessments of employment tax for amounts paid to other individuals who held a similar position;

(e) A recognized practice of the industry;

(f) Advice from someone who would be considered knowledgeable in tax matters; or

(g) Written advice from an employee of the Department of Revenue.

(4) The preceding are factors that would influence the department's decision regarding the existence of reasonable cause. It is not intended to be an exclusive list.

Example 3: Martha owns a hair salon employing Sam as an independent contractor. She issues Sam a Form 1099 at the end of each year showing the amount paid to Sam that year for services rendered. The Internal Revenue Service had examined Martha's payroll in a prior year and no changes or assessments were made to Martha's return regarding her wage expense. Martha produces the audit reports that show the Internal Revenue Service accepted her characterization of Sam as an independent contractor. Therefore, Martha had reasonable cause to classify Sam as an independent contractor.

(5) For the purposes of section (3) of this rule, the evidence of reasonable cause must be clear and convincing.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.217
REV 86-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-305.217, REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-305-0140 Interest on Deficiencies and Delinquencies

(1) Adjustment to statutory rate. For deficiencies and delinquencies owing on or after January 1, 2026, unless otherwise provided by law, every deficiency and delinquency arising under any law administered by the department will bear interest at the rate of eight percent annually. For historic interest rates, see section (4) of this rule.

(2) Interest start date. The interest start date for deficiencies and delinquencies will be one day after the due date of the return, excluding extensions.

(3) Interest periods.

(a) An interest period is one full calendar day beginning with the interest start date. Interest will be computed on a daily basis. The daily rate is based on a 365-day year.

(b) The daily interest rate is calculated by dividing the annual interest rate by 365 without rounding.

(4) Interest rates. The following table shows interest rates used by the department to compute interest due from taxpayers on deficiencies and delinquencies.

History

Statutory/Other Authority: ORS 305.100 & 305.220
Statutes/Other Implemented: ORS 305.220
REV 9-2025, amend filed 12/15/2025, effective 01/01/2026
REV 50-2024, amend filed 12/26/2024, effective 01/01/2025
REV 23-2023, amend filed 12/26/2023, effective 01/01/2024
REV 30-2022, amend filed 12/20/2022, effective 01/01/2023
REV 43-2020, amend filed 12/23/2020, effective 01/01/2021
REV 31-2018, amend filed 12/31/2018, effective 01/01/2019
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
REV 81-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-305.220(1), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 3-2013, f. & cert. ef. 3-28-13
REV 10-2012, f. 12-18-12, cert. ef. 1-1-13
REV 9-2009, f. 12-21-09, cert. ef. 1-1-10
REV 16-2008, f. 12-26-08, cert. ef. 1-1-09
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
REV 5-2005, f. 12-30-05, cert. ef. 1-1-06
REV 10-2004, f. 12-29-04, cert. ef. 12-31-04
REV 4-2003, f. & cert. ef. 12-31-03
REV 9-2002, f. 12-31-02, cert. ef. 1-31-03
REV 9-2001, f. 12-31-01, cert. ef. 2-1-02
REV 12-2000, f. & cert. ef. 12-29-00, cert. ef. 12-31-00
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1992, f. & cert. ef. 12-29-92
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 14-1987, f. 12-18-87, cert. ef. 1-16-88
RD 8-1986, f. & cert. ef. 12-31-86
RD 2-1986, f. 7-2-86, cert. ef. 8-1-86

Or. Admin. R. 150-305-0142 Interest on Refunds

(1) Adjustment to statutory rate. For refunds owing on or after January 1, 2026, unless specifically provided by statute or by rule, every refund arising under any law administered by the department will bear interest at the rate of eight percent annually. For historic rates, see section (4) of this rule.

(2) Interest start date.

(a) As provided in OAR 150-314-0240, when a refund of individual income tax is attributable to tax withheld by an employer, or when a refund of individual income tax, corporate excise tax, or corporate income tax is attributable to estimated taxes, the interest starting date is 45 days after the return was due or 45 days after the return was filed, whichever is later.

(b) The interest start date for a refund of estate tax is 45 days after the return was due, 45 days after the original return was filed, or 45 days after the tax was paid, whichever is later.

(c) The interest start date for refunds not described in (2)(a) or (2)(b) is 45 days after the return was due or 45 days after the date the tax was paid, whichever is later.

(3) Interest periods.

(a) An interest period is one full calendar day beginning with the interest start date. Interest will be computed on a daily basis. The daily rate is based on a 365-day year.

(b) The daily interest rate is calculated by dividing the annual interest rate by 365 without rounding.

(4) The following table shows interest rates used by the department to compute interest due to taxpayers on refunds.

History

Statutory/Other Authority: ORS 305.100 & 305.220
Statutes/Other Implemented: ORS 305.220
REV 9-2025, amend filed 12/15/2025, effective 01/01/2026
REV 50-2024, amend filed 12/26/2024, effective 01/01/2025
REV 23-2023, amend filed 12/26/2023, effective 01/01/2024
REV 30-2022, amend filed 12/20/2022, effective 01/01/2023
REV 44-2020, amend filed 12/23/2020, effective 01/01/2021
REV 31-2018, amend filed 12/31/2018, effective 01/01/2019
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
REV 81-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-305.220(2), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 3-2013, f. & cert. ef. 3-28-13
REV 10-2012, f. 12-18-12, cert. ef. 1-1-13
REV 9-2009, f. 12-21-09, cert. ef. 1-1-10
REV 16-2008, f. 12-26-08, cert. ef. 1-1-09
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
REV 5-2005, f. 12-30-05, cert. ef. 1-1-06
REV 10-2004, f. 12-29-04, cert. ef. 12-31-04
REV 4-2003, f. & cert. ef. 12-31-03
REV 9-2002, f. 12-31-02, cert. ef. 1-31-03
REV 9-2001, f. 12-31-01, cert. ef. 2-1-02
REV 12-2000, f. & cert. ef. 12-29-00, cert. ef. 12-31-00
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1992, f. & cert. ef. 12-29-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87, Renumbered from 305.220
;Renumbered from 150-314.415(1)(a);
12-31-86
12-31-85
12-31-82, Renumbered from Ch. 16. Or Laws 1982 (2nd SS) to 150-314.415(1)(a)
6-15-82
5-5-82

Or. Admin. R. 150-305-0144 Interest Rate Formula Rule

(1) Once a year the director will compare the Oregon interest rate used for deficiencies, delinquencies, and refunds with the interest rate charged by the Internal Revenue Service for deficiencies and delinquencies to which one percent has been added. If the Oregon rate is one percent or more different from the modified federal rate, the director will revise the Oregon rate to the federal rate plus one percent. The comparison will be conducted in July and will use the rates charged by the Internal Revenue Service for the 3rd calendar quarter.

(2) Interest rates established under section (1) will be effective for interest periods beginning on or after January 1, 2004 and for interest periods beginning on or after January 1 of each year thereafter.

History

Statutory/Other Authority: ORS 305.100 & 305.220(3)(a)
Statutes/Other Implemented: ORS 305.220
Renumbered from 150-305.220(3), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2003, f. & cert. ef. 7-31-03
REV 9-2002, f. 12-31-02, cert. ef. 1-31-03
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 2-1989, f. 12-18-89, cert. ef. 12-31-89
RD 14-1987, f. 12-18-87, cert. ef. 1-16-88
RD 8-1986, f. & cert. ef. 12-31-86
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-305-0150 Defines Order for Purposes of Interest Rate Increase

(1) If tax is not paid within 60 days after the date an individual is notified of a tax delinquency, the interest rate imposed by ORS 305.220 is increased by four (4) percent annually. The interest is also increased after 60 days for tax due, if not paid or appealed, on a notice of assessment following a deficiency, or a final order issued by the Tax Court or Supreme Court that affirms the deficiency.

(2) For purposes of ORS 305.222, an order is defined as:

(a) Any Final Decision or Stipulated Judgment issued by the Magistrate Division of the Oregon Tax Court,

(b) A Judgment issued by the Regular Division of the Oregon Tax Court, or

Example 1 : Clyde timely files his current year return on April 15, but does not pay the tax shown as due. The department processes the return and sends a notice of tax due on April 28. Additional interest is charged beginning on the 61st day (June 28) after the department issues the notice.

Example 2 : Assume the same facts as Example 1, except the return is adjusted in processing and Clyde receives a notice of deficiency for additional tax due. No payment is received and a notice of assessment is issued 30 days later. The interest rate is increased beginning 61 days from the assessment date if the tax is not paid or appealed.

Example 3 : Assume the same facts as Example 2, except that Clyde appeals to the Magistrate Division of the Oregon Tax Court. The Magistrate Division issues a Final Decision that upholds the assessment. Additional interest is charged beginning 61 days after the date of the Final Decision, if the tax is not paid and no appeal is filed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.222
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
REV 1-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-305.222, REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2002, f. & cert. ef. 12-31-02

Or. Admin. R. 150-305-0152 Interest Rate Increase — Jurisdictional Only Appeals

For purposes of ORS 305.222(3), an appeal to the Oregon Tax Court must be one in which there is jurisdiction to consider the merits of the issue. In an appeal where the court must first determine whether it has jurisdiction to consider the issues, the increased rate of interest will commence on the 61st day after the date of the assessment. If it is determined that the court has jurisdiction to consider the merits of the issue, the rate of interest will be retroactively adjusted to the lower rate until a final decision is made.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.222
Renumbered from 150-305.222(3), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-305-0160 Penalty for Dishonored Checks

(1) A penalty on dishonored checks will be assessed in the amount of $25.00 or three times the amount of the check, whichever is greater, but not to exceed $500.00. This is in addition to all other penalties provided by statute.

(2) Other than as provided in sections (5) and (6) of this rule, the penalty will be imposed on a dishonored check if a prior dishonored check has been tendered by any individual, firm, corporation, company, association, copartnership, estate, trust, trustee, receiver syndicate or any group or combination acting as a unit to the Department of Revenue within the immediately preceding two years. Checks tendered in the same envelope will be considered a single occurrence for the purpose of determining if a prior dishonored check has been received.

(3) This penalty will be assessed on all types of dishonored checks to the department including, but not limited to:

(a) Advance deposits on withholding accounts.

(b) Estimated tax payments for personal income and corporate excise tax.

(4) For the purposes of this rule, “check” includes checks, drafts, orders and electronic funds transfers.

(5) Under authority granted in ORS 305.229, the department will not impose the penalty described in section (1) of this rule for a period of time beginning March 8, 2020 and extending until 90 days after the Governor of the State of Oregon declares an end to the state of emergency existing in the state of Oregon related to COVID-19.

(6) Under authority granted in ORS 305.229, the department will not impose the penalty described in section (1) of this rule on a second dishonored check if the first dishonored check was received by the department during the period of time set forth in section 5 of this rule.

(7) The department may waive the entire penalty if a reasonable basis exists. “Reasonable basis” means any situation in which circumstances beyond the taxpayer’s reasonable ability to control resulted in the refusal to honor the check. In determining reasonable basis for waiving the penalty the department will examine all facts and circumstances. Examples of reasonable basis for waiver include, but are not limited to:

(a) The bank returns the check to the payee in error.

(b) The taxpayer issues a stop payment order for presumably lost or stolen checks that are later located and processed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.228
REV 21-2020, amend filed 11/17/2020, effective 11/17/2020
REV 9-2020, temporary amend filed 05/20/2020, effective 05/21/2020 through 11/16/2020
Renumbered from 150-305.228, REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
REV 6-1998, f. 11-13-98, cert. ef. 12-31-98
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-305-0170 Representation of Taxpayers before the Department of Revenue

(1) Application of ORS 305.230. The provisions of ORS 305.230 apply to all administrative proceedings before the Department of Revenue. Only those individuals who qualify under ORS 305.230 and this rule may represent the taxpayer.

(2) Individuals Authorized to Represent by Department Rule. The following individuals may represent the taxpayer before the department unless the individual is prohibited from representing the taxpayer by other Oregon law:

(a) An adult immediate family member of the taxpayer may represent the taxpayer.

(b) The taxpayer's registered domestic partner may represent the taxpayer.

(d) A general partner or a regular full-time employee of a partnership may represent the partnership. For general representation rules for partnerships see OAR 150-305-0180 and 150-305-0182.

(e) An officer or a regular full-time employee of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group may represent the corporation, association, or organized group.

(f) Any shareholder in an S corporation may be designated to represent that S corporation as the tax matters shareholder.

(g) Any tax matters shareholder or any shareholder of an S corporation may represent another shareholder or group of shareholders of that S corporation in matters related to adjustments of items that flow through from the S corporation to the shareholder’s return.

(h) Limited Liability Company (LLC) classified as a corporation. A member-manager, a non-member manager, or a regular full-time employee of the LLC may represent the LLC.

(i) Limited Liability Company classified as a partnership. Any member with management authority may represent the LLC (including a member in a member-managed LLC). Any regular, full-time employee of the LLC may represent the LLC. If the LLC has no members with management authority, then any member may represent the LLC (see ORS 63.130 and Treas. Reg. § 301.6231(a)(7)-2).

(j) A regular full-time employee of a trust, receivership, guardianship, or estate may represent the trust, receivership, guardianship, or estate.

(k) An officer or a regular employee of a governmental unit, agency, or authority may represent the governmental unit, agency, or authority in the course of his or her official duties.

(l) An individual may represent any individual or entity that is outside the United States before department personnel when such representation takes place outside the United States.

(m) An individual who prepares and signs a taxpayer's tax return as the preparer, or who prepares a tax return but is not required (by the instructions to the tax return or by rule) to sign the tax return, may represent the taxpayer during an examination of the tax year or period covered by that tax return. This provision does not permit such individuals to represent taxpayers, regardless of the circumstances, before conference officers, revenue agents, legal counsel or similar department employees.

(n) A taxpayer's authorized agent may represent the taxpayer in proceedings relating to the property tax assessment of designated utilities and companies by the Oregon Department of Revenue under ORS 308.505 through 308.665 and 308.805 through 308.820. For purposes of this rule, an "authorized agent" means a person who is authorized by a company assessed under ORS 308.505 to 308.665 and 308.805 to 308.820 to transact all business related to the filing or processing of an annual statement filed as required by ORS 308.525 or all business related to the filing of a request for a director's conference under ORS 308.595.

(o) Persons authorized to represent in an ad valorem property tax conference or proceeding under ORS 305.230(1)(d), any person licensed by the Oregon State Board of Tax Practitioners, and consulting foresters may represent a taxpayer in any proceeding with respect to taxes imposed under ORS Chapter 321. For purposes of this rule, "consulting forester" means a person who is engaged by the taxpayer to render expert or professional advice in forest management related matters.

(p) The director may, subject to restrictions imposed under other Oregon law, authorize an individual who is not otherwise eligible under this rule to represent a taxpayer before the department. The sole fact that an individual does not qualify under another section of this rule is not an adequate reason to request special permission to represent a taxpayer.

(3) Revocation of Authorization. The department, in its discretion, may revoke the authority to represent a taxpayer granted under section (2) of this rule.

(4) Representation by a Tax Matters Shareholder.

(a) A tax matters shareholder may be designated to represent an S corporation before the Department of Revenue in any conference or proceeding with respect to the administration of any tax on or measured by net income.

(b) An S corporation that elects to designate a tax matters shareholder as its authorized representative in proceedings before the department for issues relating to the S corporation adjustments on a Notice of Deficiency must make the designation as provided in this rule.

(c) The tax matters shareholder designated for Oregon purposes may be the federal tax matters shareholder or may be another shareholder, and must be a shareholder who is:

(A) A shareholder in the S corporation at some time during the taxable year to which the Notice of Deficiency pertains; or

(B) A shareholder in the S corporation at the time the designation is made.

(d) In order to designate a tax matters shareholder, an S corporation must file a signed statement with the department. The statement must:

(A) Identify the shareholders making the designation by name, address, and social security number;

(B) Identify the S corporation and the designated shareholder by name, address, and taxpayer identification number;

(C) Declare that the statement is a designation of a tax matters shareholder for the taxable year to which the Notice of Deficiency relates; and

(D) Authorize the tax matters shareholder as a qualified representative under ORS 305.230 and identify the taxable year(s) of authorization.

(e) Only one tax matters shareholder may be designated and authorized to represent the corporation for each examination at the S corporation level which results in a Notice of Deficiency to the corporation.

(f) If a notice explaining the S corporation adjustments is mailed by the department to the tax matters shareholder with respect to any S corporation taxable year, the tax matters shareholder must supply the department with the name, address, ownership percentage and taxpayer identification number of each person who was a shareholder in the S corporation at any time during the taxable year, unless that information was provided in the S corporation return for that year.

(g) The tax matters shareholder for Oregon will bind the S corporation with respect to the proceedings between the department and the S corporation whose tax liability is in dispute. When appealing on behalf of the S corporation, the tax matters shareholder may exercise any administrative remedy before the department allowed by Oregon law.

(h) Other actions of the tax matters shareholder that are binding on the S corporation include, but are not limited to:

(A) Consent to the extension of the statute of limitations regarding an S corporation return.

(B) Making a settlement offer to the department.

(D) Consent to time and place of any appeals proceedings.

(5) S corporation Shareholder Representation.

(a) When the treatment of S corporation items on a shareholder's return is consistent with the treatment of that item on the S corporation return and results in a deficiency, a tax matters shareholder or any shareholder of that S corporation may be designated to represent a shareholder or group of shareholders of that S corporation before the Department of Revenue in any conference or proceeding with respect to the administration of any tax on or measured by net income. All shareholders or groups of shareholders are not required to designate the same representative.

(b) A shareholder or group of shareholders that elect to designate an authorized representative in proceedings before the department for issues relating to the S corporation adjustments on a Notice of Deficiency must make the designation as provided in this rule.

(c) If the representative designated for Oregon purposes is a shareholder, the representative may be the tax matters shareholder or another shareholder, and must be a shareholder who is:

(A) A shareholder in the S corporation at some time during the taxable year to which the Notice of Deficiency pertains; or

(B) A shareholder in the S corporation at the time the designation is made.

(d) In order to designate a representative, a shareholder or group of shareholders of an S corporation must file a signed statement with the department. The statement must be signed by each shareholder electing that representative and:

(A) Identify the name, address, and social security number of each shareholder electing the representative;

(B) Identify the S corporation and the representative by name, address, and taxpayer identification number;

(D) Authorize the representative as a qualified representative under ORS 305.230 and identify the taxable year(s) of authorization. The shareholder or group of shareholders may authorize the representative to represent the shareholders for issues other than S corporation issues that are heard during the same appeal with any S corporation adjustments.

(e) A shareholder or group of shareholders may not designate more than one representative for an appeal. While different shareholders can designate different representatives, each cannot not have more than one representative.

(f) If a group of shareholders has the same representative and has filed an appeal requesting a conference for the same S corporation adjustment the appeal will be resolved in a single conference.

(g) Shareholders who do not designate a representative as provided in this rule may appeal their Notice of Deficiency by following the administrative remedies under ORS 305.265 and the related rules.

(h) The representative will bind all shareholders who have made the designation under this section to all actions with respect to the proceedings between the department and the shareholder whose tax liability is in dispute. Any shareholder who has designated a representative may participate in any level of the administrative proceedings.

Example: Assume an S corporation with 10 shareholders has been examined and each shareholder receives a Notice of Deficiency. If 8 shareholders designate the same representative, their appeal will be heard collectively. If the representative requests a conference, the conference decision will apply to all 8 shareholders (all 8 shareholders may participate). The other 2 shareholders may appeal their cases individually because they did not make the election to be represented by the same representative.

(i) Other actions of the representative that are binding on the shareholders who have made the designation include, but are not limited to:

(A) Consent to the extension of the statute of limitations regarding S corporation items with respect to all electing shareholders.

(B) Making a settlement offer to the department.

(D) Consent to time and place of any appeals proceedings.

(6) Limited Liability Companies. When a limited liability company (LLC) has elected to be classified as a corporation and has made an S corporation election, section (4) applies to the LLC. When applying section (4) to an LLC, LLC members are treated as shareholders.

History

Statutory/Other Authority: ORS 305.100 & 305.230
Statutes/Other Implemented: ORS 305.230 & ORS 63.810
Renumbered from 150-305.230, REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10
REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
12-31-88
RD 2-1988, f. 1-11-88, cert. ef. 1-15-88
RD 5-1986, f. & cert. ef. 12-31-86
RD 8-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-305-0180 Designation of Oregon Tax Matters Partner

(1) A partner who elects to designate a tax matters partner as their authorized representative in proceedings before the Department of Revenue for issues relating to the partnership adjustments on a notice of deficiency shall make the designation as provided in this rule.

(2) The tax matters partner designated for Oregon purposes may be the federal tax matters partner or may be another partner, but the designation for Oregon shall only be made in accordance with ORS 305.242(2) and this rule. The tax matters partner shall be a partner who is:

(a) A general partner in the partnership at some time during the taxable year to which the notice of deficiency pertains; or

(b) A general partner in the partnership at the time the designation is made.

(3) Information required. The partner shall designate a tax matters partner by filing with the Department of Revenue within 30 days of the date on the Notice of Deficiency a signed statement. The statement shall:

(a) Identify the partner making the designation by name, address, and social security number.

(b) Identify the partnership and the designated partner by name, address, and taxpayer identification number.

(c) Declare that the statement is a designation of a tax matters partner for the taxable year to which the notice of deficiency relates.

(d) Authorize the tax matters partner as a qualified representative under ORS 305.230 and identify the taxable year(s) of authorization. The partner may authorize the tax matters partner to represent the partner for issues other than partnership issues only by making the election with this authorization.

(4) Only one tax matters partner shall be designated and authorized to represent the partners for each examination at the partnership level which results in a notice of deficiency to the partners.

(5) Partners who do not designate a tax matters partner as provided in this rule may appeal their notice of deficiency by following the administrative remedies under ORS 305.265 and the rules pertaining thereto.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.242
Renumbered from 150-305.242(2), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-305-0182 Binding Actions of the Tax Matters Partner

The provisions of this rule dealing with hearings apply to hearing requests filed with the Department of Revenue prior to September 1, 1997. See OAR 150-305-0330 for information about hearing requests filed on or after September 1, 1997.

(1) The tax matters partner for Oregon shall bind all partners who have made the designation under ORS 305.242(1) to all actions of the tax matters partner with respect to the proceedings between the Department of Revenue and the partner whose tax liability is in dispute. When appealing on behalf of the partners, the tax matters partner may exercise any administrative remedy before the department allowed by Oregon law except that all electing partners are considered to have appealed under the same action. Any partner who has designated a tax matters partner may participate in any level of the administrative proceedings.

Example: Assume a partnership with 100 partners has been examined and each partner receives a notice of deficiency. If 90 partners designate a tax matters partner, their appeal will be heard collectively. If the tax matters partner chooses a conference, the conference decision will apply to all 90 partners (all 90 partners may participate). If the partners want to appeal the conference decision, they must appeal at a partnership level proceeding. If the tax matters partner requests a hearing, the hearing decision will apply to all 90 partners. The other 10 partners must appeal their cases individually because they did not make the election to be represented by the tax matters partner within 30 days of the notice.

(2) Other actions of the tax matters partner that are binding on the partners who have made the designation include, but are not limited to:

(a) Consent to the extension of the statute of limitations with respect to all electing partners;

(b) Making a settlement offer to the Department of Revenue;

(d) Consent to time and place of any appeals proceedings.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.242
Renumbered from 150-305.242(5), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-305-0190 Compromise of a Disputed Liability

(1) A disputed liability is one where the taxpayer sends written objection to a notice of deficiency, appeals a notice of assessment, or appeals a determination by the director of the Department of Revenue.

(2) Compromise of a disputed liability cannot be accomplished by submitting a conditional partial payment. If a partial conditional payment is made in an attempt to compromise a disputed liability prior to a written compromise having been agreed upon, and the payment is inadvertently processed by the Department, the amount of the conditional partial payment shall be refunded with interest. A partial payment that is submitted without conditions and that does not purport to be in full satisfaction of the disputed liability may be retained by the department and applied against the disputed liability pending resolution of the dispute.

(3) This rule doesn’t preclude settlement by negotiation and signing of a closing agreement. For compromise of an undisputed liability, see OAR 150-305-0090. See ORS 305.150 for closing agreements.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(1), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 10-1986, f. & cert. ef. 12-31-86
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-305-0192 Appeals of Interest Charged on the Underpayment of Estimated Tax

(1) Appeals based on accuracy. Interest on underpayment of estimated tax imposed under the provisions of ORS 316.587 or 314.525 must be appealed as if it were a deficiency, as defined in OAR 150-305-0194. A taxpayer who disagrees with either the correctness of the imposition or the calculation of interest may request a conference or file a written objection with the department. The conference request or written objection must be made in the manner prescribed under OAR 150-305-0202. If the taxpayer does not agree with the result of the conference or the written objection, the taxpayer may appeal the decision to the Oregon Tax Court as provided by ORS 305.275.

(2) Discretionary waiver. A taxpayer who agrees that interest on underpayment of estimated tax was correctly imposed, but who believes there is good and sufficient cause for a waiver of all or part of the interest, may file a request for waiver of interest under OAR 150-305-0066. A denial by the department of a discretionary waiver request under that provision is final and may not be appealed to the Oregon Tax Court.

(3) Effective date: The provisions of this rule apply to appeals of interest on underpayment of estimated tax filed with the department on or after January 1, 1998.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(1)-(B), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07
Rev 5-1998, f. 7-14-98, cert. ef. 7-15-98

Or. Admin. R. 150-305-0193 Satisfying liens or warrants

(1) For the purpose of the satisfaction of liens or warrants, for amounts collected by the Department, a lien or warrant is satisfied when a balance under the lien or warrant is paid in full upon receipt of one or more of the acceptable forms of payment listed in section (2) of this rule or after a financial institution clears a personal or business check or a debit or credit card payment.

(2) “Acceptable forms of payment” are:

(a) Cash;

(b) Certified check;

(d) Treasurer’s check;

(e) Postal, bank, express or telegraph money order;

(f) ACH deposit; or

(g) Wire transfer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 293.250, 308.640, 308.820, 314.417, 314.430, 321.570 & 324.190
REV 7-2023, adopt filed 03/14/2023, effective 04/01/2023

Or. Admin. R. 150-305-0194 “Deficiency” Defined

A deficiency is the amount by which the tax as correctly computed exceeds the tax, if any, reported by the taxpayer. If, after the original deficiency has been assessed, subsequent information shows the correct amount of tax to be greater than previously determined, an additional deficiency arises.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(2)-(A), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-305.265(2)
12-31-77

Or. Admin. R. 150-305-0196 Notices of Deficiency and Assessment Mailed When Authorization to Represent Signed

(1) If a written authorization to represent the taxpayer is filed with the department, original Notices of Deficiency (as referred to by ORS 305.265(2)) and original Notices of Assessment (as referred to by 305.265(7)) shall be sent directly to the taxpayer at the last-known address as required by 305.265(11). Where the taxpayer has a guardian or conservator, Notices of Deficiency and Assessment shall be sent to the guardian or conservator.

(2) If the authorized representative has a fiduciary relationship to the taxpayer, original Notices of Deficiency and original Notices of Assessment will be sent to the personal representative as defined in ORS 111.005.

(3) For trusts, original Notices of Deficiency and original Notices of Assessment shall be sent directly to the trustee.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(2)-(B), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-305-0198 Reopening an Audit

(1) Policy. When an issue has been audited, a position taken, and the case closed, that issue may be reopened for audit if there is evidence of fraud, malfeasance, concealment, misrepresentation of material fact, omission of income, or collusion either by the tax payer or by the taxpayer and a representative of the department. If income or expenses are claimed on a return from an outside entity, those items of income or expenses may be adjusted if the entity is later audited and adjustments are made.

(2) Definitions. Audited. An issue is not considered to have been “audited” unless the department has examined the issue and verified supporting documentation. Requesting a copy of a federal schedule is not an audit.

Example 1: A taxpayer reports $18,000 income from self-employment on a 1987 return. The department examines the return and reconstructs income using a T-account analysis. An adjustment of $5,000 is made to the return for underreported income.

In 1989, the department receives a federal audit report (RAR). The IRS discovered $15,000 of unreported income. Because the case involves omitted income, that issue may be reaudited by the department.

Example 2: A taxpayer claims a credit for household and dependent care expenses on a 1987 Oregon return. The taxpayer did not attach a copy of the required federal form 2441 to the return. The return suspends in processing and the department denies the credit and adjusts the return. The taxpayer submits the required form in response to a department notice and the credit is allowed.

In 1989, the department receives a federal audit report (RAR). The IRS disallowed the household and dependent care credit because the taxpayer could not document expenses claimed in computing the credit. This issue was not previously “audited” by the department since dependent care expenses had not been examined or verified. The household and dependent care credit may be audited by the department.

Example 3: A taxpayer claims a $14,000 casualty loss on a 1987 return. Upon request by the department, the taxpayer provides substantiation of the loss in the form of written records, insurance documents, etc. After an examination and review of documentation, the department allows the casualty loss in full. No adjustments are made to the return.

In 1989, the department receives a federal audit report (RAR) in which the IRS has allowed a casualty loss of only $10,000 on the 1987 return. Additionally, $3,000 of employee business expenses have been disallowed by the IRS. Because the department has previously audited the casualty loss, and there is not evidence of fraud, malfeasance, collusion, concealment, misrepresentation, or omission of income, the department will not reaudit that issue. The employee business expenses may be audited by the department.

Example 4: In 1990, the department audits the taxpayer’s 1988 personal income tax return. As a shareholder in an S corporation, the taxpayer claimed a loss from the S corporation return. As part of the audit, the auditor looks at the S corporation return and verifies that the taxpayer has sufficient basis to deduct the loss. The auditor does not audit the S corporation return nor is the loss from the S corporation audited.

In November, 1990 the S corporation return for tax year 1988 is audited by the department. Due to the adjustments to the S corporation return, the taxpayer no longer has sufficient basis to deduct the 1988 loss. The taxpayer’s 1988 return will be adjusted to disallow the loss. Even though the taxpayer’s return has previously been audited, the S corporation return had not been audited. The adjustments made to the S corporation return will flow through and be made on the individual shareholder’s return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(2)-(C), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-305-0200 Adjustments Included in Deficiency Notice When Federal Audit Report Received

See OAR 150-314-0224 which explains what adjustments can be included in a Notice of Deficiency when a federal audit report is received.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(4)(a), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-305-0202 Language Used to Request a Conference or File Written Objections

(1) Requesting a Conference. A conference request must be mailed, emailed, faxed, or sent through Revenue Online at the address provided in the Notice of Deficiency or accompanying statement. In all events, it must be received within 30 days of the date on the Notice of Deficiency or accompanying statement. It must state the reason for the protest as well as stating in what respect the determination is erroneous. Any language indicating that a taxpayer is requesting an opportunity to meet with a department representative to discuss an adjustment must be considered a conference request.

(2) Filing Written Objections.

(a) If a taxpayer disagrees with a deficiency notice, and does not want a conference, the taxpayer may file written objections with the department.

(b) A written objection must be mailed, emailed, faxed, or sent through Revenue Online at the address provided in the Notice of Deficiency or accompanying statement. In all events, the objection must be received within 30 days of the date on the Notice of Deficiency or accompanying statement. It must state the reason for the protest as well as stating in what respect the determination is erroneous.

(c) Any language indicating that a taxpayer disagrees with an adjustment but which doesn’t convey an intent to meet with a department representative must be construed as written objections.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
REV 86-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-305.265(5), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1986, f. & cert. ef. 12-31-86, Renumbered from 150-305.265(5)-(B)
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-305-0204 Conferences: Purpose and Procedure

(1) A conference is a meeting with a department conference officer who reviews the reasons for the adjustment with the taxpayer. The purpose of a conference is to allow a person to obtain an informal department review of a deficiency notice or other department action if the person believes the notice or action is incorrect. Assessments related to personal income tax, corporate excise tax, or corporate income tax, including assessments issued under ORS 305.265(10) for failure to file a report or return, generally cannot be appealed using the conference process but must instead be appealed to the Oregon Tax Court. This provision does not prohibit use to the conference process for assessments issued for failure to file a withholding tax report. See ORS 316.207(4)(a).

(2) A conference may be requested by a taxpayer in any of the following instances:

(a) From a determination of tax deficiency, interest, or penalty arising under ORS Chapters 118, 119, 314, 316, 317, 318, or 321.

(b) From a denial in whole or in part of a refund requested under ORS 305.270 or of an elderly rental assistance claim under 310.657.

(d) From a department action concerning any program administered by the department.

(3) Payment of a deficiency to stop the accumulation of interest will not affect a conference request or decision. If a conference decision favors the taxpayer, the amount of the payment determined to be owed to the taxpayer is refunded with interest.

(4) Conferences are informal. The taxpayer may raise any point of fact or law that has a bearing on the matter. The taxpayer may use witnesses. Any competent person with relevant information may be allowed to testify. A witness qualified as an expert by knowledge, skill, experience, training, or education may give an opinion.

(5) A taxpayer may be represented by himself or herself, an attorney-at-law, certified public accountant, licensed tax consultant, public accountant, or other person authorized under ORS 305.230.

(6) For purposes of ORS 305.265(6), the department employee who made the adjustment to the taxpayer’s return may not also conduct a conference related to the adjustment. However, the employee may attend the conference if so requested by the conference officer.

(7) Conferences are held in person in Salem or such other place as may be designated by the department or by telephone. The conference officer directs the conference proceedings. The person requesting the conference is given an opportunity to explain the facts, as the individual knows them, and to ask relevant questions of any conference participant. In all cases involving a conference granted under this rule, a written decision will be sent to the taxpayer. The decision will generally be sent by regular mail unless the taxpayer requests that the letter be sent by certified mail.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(6)-(A), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-305.265(6)
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
12-31-77

Or. Admin. R. 150-305-0206 Written Objections: Procedures

(1) When the department receives written objections, a department representative shall review the objections and try to resolve the disagreement. The representative shall then reach a decision regarding the written objections.

(2) Once a decision has been reached the department shall advise the taxpayer of the decision by letter.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(6)-(B), REV 47-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-305-0208 Assessing Tax on Failure to File

(1) The law places an affirmative duty on the taxpayer to file a timely and correct return and directs the department to take steps to require compliance.

(2) General. In the case of a failure by the taxpayer to file a return, the department must determine the tax liability of the taxpayer according to the best of its information and belief. “Best of its information and belief” means that the department must use evidence on which a reasonable person would rely in determining the tax to be assessed by the department because of the taxpayer’s failure to file a return. Sources of information include but are not limited to the taxpayer’s federal return for the year in question, state returns filed by the taxpayer, any partnership return naming the taxpayer as a partner, information returns, the income of returns of taxpayers similarly situated, or withholding returns (in the case of individual taxpayers).

(3) Personal Income Tax.

(a) The determination of income, exemptions, and other provisions must be made in accordance with Internal Revenue Code rules for the year in question. When the department has knowledge of a federal return having been filed jointly for the year in question, a joint assessment will be made. When the department’s best information indicates the taxpayer is married, and a joint federal return has not been filed, the filing status will be married filing separate. In all other cases the filing status will be single.

(b) The standard deduction must be allowed unless itemized deductions are claimed on the taxpayer’s federal return. Also, a deduction will be allowed for the amount of federal tax computed on the federal return, or in absence of such a return, the allowable federal tax must be calculated by the department to provide an automatic deduction for the proper amount of accrued federal tax, whether paid or not.

(c) An exemption credit(s) must be allowed based on the filing status determined under this rule. No other credit will be allowed in determining an assessment unless specific information that the taxpayer is entitled to a credit is available.

(4) Income Tax Withholding and Statewide Transit Tax. When an employer or payer fails to file a combined tax report or a statewide transit tax report, the department must determine the tax liability of the employer or payer using information from Employment Department records, federal tax returns, returns filed by the employer or payer for prior reporting periods and any other information available.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-305.265(10), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85, Renumbered from 150-305.265(9)
12-31-77

Or. Admin. R. 150-305-0210 Last Known Address

(1) Notices of Deficiency and Notices of Assessment are required to be mailed to the last-known address or via other means as agreed upon by the taxpayer. Pursuant to ORS 305.127, the department may provide notice to a person by means other than regular mail if a notification agreement exists with the department and the person affirmatively indicates that the department may use means other than regular mail for any required notice to the person.

(2) The department will use the address on the most recently filed return as the last-known address unless the taxpayer has notified the department in writing, electronically, or through a documented phone call that this address is incorrect.

(a) “In writing” means a letter written to the department, a completed Form 150-800-738 Change of Address/Name, or a completed Form 150-211-156 Oregon Combined Payroll Tax Business Change in Status submitted to the department by the taxpayer or the taxpayer’s authorized representative.

(b) “Electronically” means a taxpayer provides the department with a new address or other contact information via their online taxpayer account.

(c) “Documented phone call” means a call that is noted or described in a contemporaneous record of the substance of the phone call, made by the taxpayer, the taxpayer's authorized representative or an employee of the department and must include the date and time of the call and the names of the parties involved in the conversation.

(3) When the department receives information indicating that the last-known address is incorrect or outdated, the department may use the following methods to determine the last-known address:

(a) An Address Information Request, which is a letter sent to the United States Postal Service by the Department of Revenue requesting verification of the taxpayer's address.

(b) Address information received from the United States Postal Service or from a service using an address-updating method approved by the United States Postal Service.

(c) Address information received from other third parties, except that other third-party information will be accepted only after contact is made with the taxpayer and the taxpayer has verified that the address is a permanent address.

(4) If a taxpayer has never filed an income tax return with the department, or if the most recently filed income tax return was filed more than two years prior to the date the notice is mailed, the department may, in addition to those procedures described in section (3) of this rule, use address information received from another government agency to determine last-known address. That agency must follow strict policies regarding address verification, such as:

(a) Address documentation must be in writing and be signed by the taxpayer.

(b) The agency must use at least one method from section (3) of this rule to verify address changes.

(5) If a clear typographical error has been made on the taxpayer’s most recently filed return, the department may take the following actions:

(a) If the address on the return is the same address on the taxpayer’s account except for a typographical error, the department will revert back to the current account address. A change in street number or apartment number is not to be considered a typographical error.

(b) If the address on the return is wholly different than the address on the taxpayer’s account, which includes a typographical error, the department will use the address that is listed on the taxpayer’s last-filed return, as provided in section (2) of this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
REV 28-2018, amend filed 12/28/2018, effective 01/01/2019
Renumbered from 150-305.265(11), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 5-2014, f. 12-23-14, cert. ef. 1-1-15
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-305-0212 Interest on Deficiency

If a refund is allowed due to a net operating loss carryback and subsequently it is determined that the amount of the net operating loss was in error, interest shall be computed on the amount of the incorrectly received refund (tax and interest) beginning on the day after the date the refund was issued.

Example: A taxpayer carried a 1983 net operating loss of $10,000 back to the 1980 return and received a refund of $1,000 tax plus $200 interest. During an audit of the 1983 return it was determined that the correct loss to carryback was $4,000 resulting in a corrected refund of $400 plus interest. The taxpayer will need to repay $600 of the refund and $120 (60 percent) of the interest for a total of $720. Interest shall be computed on this amount beginning the day after the date the refund was issued by the Department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(12)-(B), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-305-0214 Penalties

(1) A fraud penalty imposed pursuant to ORS 305.265(13) is separate and distinct from delinquency penalties as it relates to the nature of the deficiency itself. Such penalty normally will be imposed with the issuance of the initial notice of deficiency. Thereafter, if the deficiency is not paid when due, a delinquency penalty may also be imposed.

(2) The penalties provided under ORS 305.265(13) and 314.400(6)(b) shall not be combined. Only one 100% penalty may be assessed on a particular report or return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(13), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85, Renumbered from 150-305.265(12)-(A)
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
12-31-77, Renumbered from 305.265(12)

Or. Admin. R. 150-305-0216 Appeal from a Notice of Deficiency: Periods of Limitation

(1) Date of assessment if taxpayer does not file a timely appeal with the department. If a taxpayer pays a deficiency in full before the department issues a notice of assessment and does not send a timely written objection or request for a conference, the deficiency is considered assessed on the date the deficiency is paid or 30 days from the date of the notice, whichever is later. A taxpayer has 90 days from the date of assessment in which to appeal to the Magistrate Division of the Oregon Tax Court. If a taxpayer does not appeal to the Magistrate Division of the Oregon Tax Court within the 90-day period, the assessment is final, unless the taxpayer appeals under ORS 305.280(3) following payment of the tax.

(2) Date of assessment if taxpayer files a timely appeal with the department. If a taxpayer files a timely request for a conference or written objections, the deficiency is not considered assessed until the department sends a written determination of the issues to the taxpayer. Also, if a timely conference request or written objections accompany or follow the payment of a deficiency, the department will not assess the deficiency until it sends a written determination of the issues to the taxpayer. Payment of the deficiency is a credit to the taxpayer's account. If the balance is zero, the written determination of the issues is considered the notice of assessment.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(14), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150.305.265(14)-(A), REV 2-2013, f. & cert. ef. 3-28-13
Renumbered from 150.305.265(14)-(A), REV 9-2012, f. 12-18-12, cert. ef. 1-1-13
;REV 5-2000, f. & cert. ef. 8-3-00;
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
Renumbered from 150-305.265(14), RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 10-1986, f. & cert. ef. 12-31-86
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
12-31-84, Renumbered from 150-305.265(13)
12-31-79
12-31-77

Or. Admin. R. 150-305-0218 Waiver of a Conference or Written Objection; Direct Appeal of Deficiency

(1) A taxpayer may waive a conference or written objection and request immediate assessment of a deficiency for purposes of filing a direct appeal with the Magistrate Division of the Oregon Tax Court.

(2) In general. Any request for a direct appeal from a notice of deficiency must meet general requirements. The request must:

(a) Be in writing and be filed with the department within 30 days of the date on the notice of deficiency.

(b) Contain language that requests a waiver of a conference or written objection.

(d) Inform the department of the taxpayer's intent to appeal to the Magistrate Division of the Oregon Tax Court.

(3) The department will assess the deficiency with any applicable penalty and interest. Payment of the deficiency is a credit to the taxpayer's account; only the balance of the account will be assessed.

(4) A request for assessment and appeal from a notice of deficiency that does not satisfy the requirements of this rule is considered a request for a conference or written objection, whichever is applicable, and the corresponding administrative remedies under ORS 305.265 apply.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.265
Renumbered from 150-305.265(15), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-305-0230 Claim for Refund

A claim for refund is not required to be submitted on a particular form. A claim for refund may be submitted as an original return or report claiming a refund, an amended return or report claiming a refund, or any other refund computation setting forth a claim for refund. A claim for refund shall include the taxpayer’s name, address, social security number or other identifying number, the tax year(s) or period(s) involved, the basis for the claim for refund and the amount of refund asserted to be due the taxpayer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.270
Renumbered from 150-305.270(3)-(A), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-305.270(3)

Or. Admin. R. 150-305-0232 Notices of Proposed Refund Adjustment Mailed When Authorization to Represent Signed

(1) If a written authorization to represent the taxpayer is filed with the department, the original Notice of Proposed Refund Adjustment (as referred to by ORS 305.270(3)) shall be sent directly to the taxpayer at the last-known address as required by ORS 305.265(11). Where the taxpayer has a guardian or conservator, Notices of Proposed Refund Adjustment shall be sent to the guardian or conservator.

(2) If the authorized representative has a fiduciary relationship to the taxpayer, original Notices of Proposed Refund Adjustment will be sent to the personal representative as defined in ORS 111.005.

(3) For trusts, original Notices of Proposed Refund Adjustment shall be sent directly to the trustee.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.270
Renumbered from 150-305.270(3)-(B), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-305-0234 Written Objections to a Proposed Refund Adjustment

(1) Written Objection Procedures.

(a) If a taxpayer disagrees with a notice of proposed refund adjustment, and does not want a conference, the taxpayer may file written objections with the department.

(b) The taxpayer must write to the department within 30 days from the date on the notice of proposed refund adjustment and explain the reasons for any objections in the letter.

(c) When the department receives the written objections, a department representative will review the objections to try to resolve the disagreement. The department representative will then reach a decision regarding the written objections and either:

(A) Send the refund originally requested;

(B) Send an adjusted refund;

(D) Issue a notice of deficiency.

(d) The department must send the taxpayer a letter explaining the decision. The letter must also explain the taxpayer's appeal rights. If the taxpayer receives a notice of refund denial or notice of an adjusted refund, the taxpayer may appeal the department's decision as described below. If the taxpayer receives a notice of deficiency, the taxpayer must follow the remedies as set forth in ORS 305.265 and the corresponding rules.

(2) Appeal to the Magistrate Division of the Oregon Tax Court. An appeal to the Magistrate Division must be in writing and filed with the Oregon Tax Court within 90 days of the date of the notice of refund denial or notice of an adjusted refund.

(3) Direct Appeals. If the taxpayer disagrees with a notice of proposed refund adjustment and submits a written request for a direct appeal to the Magistrate Division in lieu of a conference or written objection, OAR 150-305-0240 applies.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.270
Renumbered from 150-305.270(4)-(A), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
REV 5-2000, f. & cert. ef. 8-3-00
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 8-1985, f. 12-26-85, cert. ef. 12-31-85, Renumbered from 150-305.270(4)
RD 4-1985(Temp), f. & cert. ef. 9-20-85

Or. Admin. R. 150-305-0236 Date of Notice

(1) For purposes of ORS 305.270(4), the term “date of the notice of proposed adjustment” means the date the notice was mailed.

(2) The date the notice was mailed shall be deemed to be the date printed on the notice unless the addressee can establish by proof satisfactory to the department that such notice was mailed on a date other than the date printed on the notice.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.270
Renumbered from 150-305.270(4)-(B), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-305-0238 Audit Period for Refunds Issued without Examination

The department shall have the periods of limitation as provided in ORS 314.410 or one year from the date the refund check is issued, whichever period expires the later, to examine or audit the refund claim and issue a notice of deficiency. The refund claim can be adjusted to -0- but a deficiency in excess of the refund previously issued or requested cannot be asserted if the statute of limitations has expired. This subsection applies to amended returns filed on or after September 20, 1985 (the effective date of Chapter 266, OR Laws 1985).

Example 1: Benjamin files a timely 1982 income tax return on April 15, 1983. He later files an amended return on August 30, 1985. The department issues the refund check two months later. Because the amended return is filed before September 20, 1985, ORS 305.270(8) doesn’t apply.

Example 2: Use the same facts that appear in Example 1, except that Benjamin files his amended return on September 30, 1985. The department issues the refund check on January 15, 1986, without having audited or examined the refund claim. Because the amended return is filed after September 20, 1985, ORS 305.270(8) applies. The department may examine or audit Benjamin’s return until January 15, 1987, one year after the refund check is issued. The audit period is open until January 15, 1987 because it is later than the expiration of the three-year period in ORS 314.410(1). If Benjamin’s return is adjusted prior to April 16, 1986, a deficiency may be asserted in excess of the refund previously issued. If the return is adjusted after April 15, 1986, a deficiency shall not exceed the refund previously issued.

Example 3: Rob files a timely 1984 income tax return on April 15, 1985. He later files an amended return on January 15, 1987 and the department issues a refund check on March 15, 1987, without having audited or examined the refund claim. The department may examine or audit Rob’s return until April 15, 1988, the expiration of the three-year period in ORS 314.410(1). The audit period is open until April 15, 1988, because it expires later than one year after the refund check date. A deficiency may be asserted during this period in excess of the refund previously issued.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.270
Renumbered from 150-305.270(8), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-305-0240 Proposed Refund Adjustment

(1) A taxpayer may waive a conference or written objection and appeal a notice of proposed refund adjustment as provided in this rule.

(2) In general. Any request for a direct appeal from a notice of proposed refund adjustment must meet general requirements. The request must:

(a) Be in writing;

(b) Be filed with the department within 30 days of the date on the notice of proposed refund adjustment;

(d) Contain language that requests the department to issue a refund denial.

(3) Direct Appeal to the Magistrate of the Oregon Tax Court. For the purpose of direct appeal under this rule, the taxpayer must first file a request as described in section (2) before an appeal can be taken to the Magistrate Division. If the requirements of this section are met, the department will send the taxpayer a notice of refund denial, which constitutes the department’s final administrative appeal action. The taxpayer then has 90 days from the date on the notice of refund denial to appeal to the Magistrate Division.

(4) A written appeal from a notice of proposed refund adjustment that does not satisfy the requirements of this rule is considered a request for a conference or a written objection, whichever is applicable, and the corresponding administrative remedies under ORS 305.270 apply.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.270
Renumbered from 150-305.270(10), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
REV 5-2000, f. & cert. ef. 8-3-00
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-305-0260 Relief for Subsequent Tax Years

(1) ORS 305.285 provides an additional procedural remedy for a taxpayer. It precludes the need for filing a protective petition during the pendency of petition for a previous year. While ORS 305.285 extends the period for filing petition it does not automatically entitle the taxpayer to the substantive relief requested.

(2) The taxpayer shall make his or her request for relief in a subsequent year to the department on or before December 15 of the year in which the final determination was made, or within six months of the mailing date of the final determination, whichever is later. Subsequent year is defined as any tax year following the tax year that is the subject of the final determination.

(3) The request shall state the name of the taxpayer, the property's account number and the county in which it is located, the year or years for which relief is requested, and the mailing date of the final determination. For purposes of this section, a final determination includes only those cases where there has been a decision on the merits (including stipulations). A copy of this final determination shall be attached to the request.

History

Statutory/Other Authority: 305.100
Statutes/Other Implemented: 305.285
Renumbered from 150-305.285, REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
REV 1-2003, f. & cert. ef. 7-31-03, Renumbered from 150-306.115-(B)
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-305.285
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 6-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1990, f. 12-20-90, cert. ef. 12-31-90
RD 5-1986, f. & cert. ef. 12-31-86
RD 9-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-305-0270 Beneficial Ownership

(1) An employer is any business entity which has employees.

(2) A business entity’s activity shall not be considered to have ceased doing business if the employer has changed its name and still the business activity continues under the same beneficial ownership. Listed below are examples of business entity changes that do not change the beneficial ownership:

(a) A sole proprietorship becomes a partnership.

(b) A partnership becomes a corporation.

(d) A corporation becomes a partnership.

(e) A partnership becomes a sole proprietorship.

(f) A sole proprietorship changes its name.

(g) There is a change in corporate officers.

(h) A corporation is sold.

(i) Corporation stock is sold.

(j) A corporation changes its name.

(k) The remaining part of a business after a portion is sold.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.295
Renumbered from 150-305.295(1)(c), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87

Or. Admin. R. 150-305-0272 Cancellation of Doubtful Liabilities

(1) This procedure is intended for those cases where the tax assessment set up by the department exceeds the taxpayer’s correct tax liability by at least $100.

(2) For purposes of this rule, the correct tax is the amount of tax determined by the department as supported by facts and documentation.

(3) It shall be the policy of the Department to provide a means for cancellation of all or a portion of tax, penalty, or interest for a specific tax year in cases where all other statutory appeal periods have expired, and where all of the following provisions are met:

(a) After an objective review of the facts and documentation, the department representative concludes that the department would have reduced or canceled the assessment if the taxpayer had objected to the assessment within the statutory time period.

(b) Taxpayer has a completed return or a report computing tax that supports cancellation or reduction of an assessment which could include:

(A) Written documentation made at the time income was received or expense was incurred;

(B) Records maintained by independent third parties; or

(A) Has filed returns and reports as required for all tax programs administered by the department; and

(B) Has submitted full payment of the amount of tax, interest and penalty determined to be correct by the department, or has entered into and fulfilled an acceptable installment agreement for payment of such amounts.

(4) If relief is denied under these provisions, the taxpayer’s only right of appeal is directly to the Director of the Department of Revenue. The decision of the Director shall be final and may not be appealed further under this statute or any other statute pertaining to appeals of department assessments.

(5) In cases where the taxpayer has appealed an assessment to either the department or a court of this state, and a decision that determines the liability of the taxpayer has been issued, no relief shall be granted under the provisions of this section.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.295
Renumbered from 150-305.295(1)(d), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-305.295
REV 2-1999(Temp), f. & cert. ef. 7-6-99 thru 12-31-99
REV 7-1998, f. 11-13-98 cert. ef. 12-31-98
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

Or. Admin. R. 150-305-0274 Refund of Penalty and Interest

The department must refund penalty and interest when it has been determined that it has been paid but was not legally due. Interest must be computed on the amount of tax plus penalty and interest not legally due. The interest starting date must be 45 days after the date the deficiency was paid or 45 days after the return was filed, whichever is later.

Example 1 : The taxpayer files a delinquent return and pays the tax, penalty and interest due. Subsequently, it is determined that the taxpayer is not required to file an Oregon income tax return. The amount of tax, penalty and interest paid must be refunded and interest computed on the entire amount beginning 45 days after the date the return was filed.

Example 2 : The taxpayer pays the tax, penalty and interest based on a Notice of Assessment. The assessment is subsequently determined to be erroneous. The amount of tax, penalty and interest paid must be refunded and interest computed on the entire amount beginning 45 days after the date the assessment was paid.

Example 3 : The taxpayer files a delinquent return and pays the tax, penalty and interest due. Subsequently, the taxpayer amends the return to claim a refund from a net operating loss carryback. The penalty and interest paid with the delinquent return will not be refunded since this amount was legally due.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.295
REV 72-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-305.295(4), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-305-0276 Appeal Time Frame

If a taxpayer wishes to appeal denial of a request for cancellation of assessment or refund, the appeal shall be made within 90 days of notice of denial.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.295
Renumbered from 150-305.295(6), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87

Or. Admin. R. 150-305-0290 Concurrent Appeals

(1) Applicability of ORS 305.305.

(a) Any reference in this rule to the appeal provisions in ORS 305.305 refers to deficiencies of Oregon tax based on:

(A) A federal revenue agent’s report; or

(B) The audit report of another state’s taxing authority.

(b) The appeal provisions in ORS 305.305 apply to and constitute the exclusive remedy for appealing an Oregon tax deficiency based on adjustments contained in a federal revenue agent’s report or the audit report of another state that also asserts a deficiency. These provisions do not apply to a taxpayer when adjustments contained in the federal revenue agent’s report or the audit report of another state result in:

(A) A refund of federal or other state’s tax; or

(B) No change in federal tax liability or the tax liability to the other state. See ORS 314.380 and corresponding administrative rules for procedures to claim a refund based upon a federal adjustment or adjustment of another state.

(c) The appeal provisions in ORS 305.305 apply to and constitute the exclusive remedy of a taxpayer who timely appeals a federal adjustment or the adjustment of another state. These provisions do not apply to a taxpayer who, by choice or default, does not file a timely appeal.

(d) The appeal provisions in ORS 305.305 are the exclusive remedy of a taxpayer who appeals a department billing based on a federal or other state audit adjustment that:

(A) Asserts a deficiency, and

(B) Is timely appealed at the federal level or the other state level by the taxpayer.

Example 1: Taxpayer is audited by IRS and receives a federal revenue agent’s report showing tax due, interest and a penalty for substantial understatement of income. Taxpayer agrees with the tax and interest due but appeals the penalty. Oregon does not automatically impose the same penalties as federal but may assert the penalty for substantial understatement of income under ORS 314.402. The Oregon deficiency does not include the federal penalty for substantial understatement of income. Since the Oregon deficiency is not asserted based on an adjustment timely appealed by the taxpayer for federal purposes, the appeal provisions of ORS 305.305 do not apply. The taxpayer must follow the appeal procedures in ORS 305.265.

Example 2: Taxpayer is audited by IRS and receives a federal revenue agent’s report showing two adjustments to income—an increase to interest income from U.S. government obligations and a decrease to the charitable contributions deduction. Taxpayer agrees with the adjustment to charitable contributions but appeals the adjustment to interest income. The notice of deficiency issued by the department will contain only the adjustment to charitable contributions since under ORS 316.680 interest from U.S. government obligations is not taxable. Since the Oregon deficiency is not asserted based on an adjustment timely appealed by the taxpayer at the federal level, the appeal provisions of ORS 305.305 do not apply. The taxpayer must follow the appeal procedures in ORS 305.265.

(e) The taxpayer may not elect to follow other appeal procedures in ORS Ch. 305 instead of those described above.

(2) Oregon Deficiency based on Federal Report or Audit Report of Another State.

(a) The appeal provisions in ORS 305.305 apply only to an Oregon deficiency based upon a federal revenue agent’s report or the audit report of another state. A deficiency is based on such a report if it refers to the federal report or the report of the other state for its authority or justification. An Oregon deficiency which does not refer to the federal report or the report of the other state in this way is not based on the federal or other state’s audit report, even if both the Oregon and federal or other state adjustments are based on the same tax items.

(b) If the Oregon deficiency results from adjustments that are based both on a federal or other state adjustment, and adjustments independently determined by the department, the department will allow the taxpayer to follow the appeal procedures in ORS 305.265 in appealing the deficiency based on the independently determined adjustments.

(3) Method of Department Assessment. As used in ORS 305.305, the phrase “department assesses the deficiency” includes assessments initiated by full payment of the Oregon deficiency under ORS 305.265(14).

(4) IRS Settlement. In some cases, the IRS may reach a settlement agreement with a taxpayer during the federal appeal process. If this occurs, the department is not required to accept a settlement agreement also. The department may still resolve the appeal case based on its merits.

(5) Proof of IRS Appeal and Assessment.

(a) Proof of IRS Appeal. Proof of a timely request for a federal appeal may be demonstrated by:

(A) Submission of a copy of the IRS letter notifying the taxpayer of the time allowed for administrative appeal, together with a copy of the taxpayer’s written request for appeal and the IRS acknowledgment, or

(B) If the correspondence in (A) is unavailable, submission of any other materials that demonstrate that a timely filed appeal is pending before the IRS or a federal court.

(b) Proof of IRS Assessment. Proof of an IRS assessment may be demonstrated by:

(A) Submission of a copy of the IRS 10-day letter; or

(B) If the billing described in (A) is unavailable, submission of any other materials that demonstrate that the federal adjustment is final and can no longer be appealed.

(6) A taxpayer must notify the department within 30 days after the taxpayer’s federal appeal has been resolved. The department will review the issues in the appeal and issue a refund, a notice of denial of a refund, or a notice of additional amounts due. A taxpayer that disagrees with a decision issued before October 6, 2001, must file an appeal with the Magistrate Division of the Oregon Tax Court within 60 days of the department’s decision. A taxpayer that disagrees with a decision issued on or after October 6, 2001, must file an appeal with the Magistrate Division of the Oregon Tax Court within 90 days of the department’s decision.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.305
Renumbered from 150-305.305, REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-85, Renumbered from 150-305.265(5)-(A)
9-20-85(Temp)

Or. Admin. R. 150-305-0300 “Methods of Collection” Defined

Methods of collection include but are not limited to seizure of wages, bank accounts, personal property, business property, stocks, bonds, dividends and real property to the extent it is determined to be cost effective by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.385
Renumbered from 150-305.385(4)(a)-(A), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-305.385(4)(a)
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-305-0302 Contracts Requiring Certificate of Compliance with Oregon Tax Laws

(1) An agency must obtain a certificate of compliance with Oregon tax laws from providers before entering into certain contracts. Those contracts or agreements under which goods, services, or real estate space will be provided directly to such agencies in the future require certification.

(a) For purposes of this rule, “agency” means any department, board, commission, division or authority of the State of Oregon, or any political subdivision of this state which imposes a local tax administered by the Department of Revenue under ORS 305.620. See ORS 305.380(1).

(b) For purposes of this rule, “tax” means those programs listed in ORS 305.380(4). Examples include the estate tax, personal income tax, withholding tax, corporation income and excise taxes, amusement device tax, timber taxes, cigarette tax, other tobacco tax, 9-1-1 emergency communications tax, and local taxes administered by the Department of Revenue (Lane Transit District Self-Employment Tax, Lane Transit District Employer Payroll Tax, Tri-Metropolitan Transit District Employer Payroll Tax, and Tri-Metropolitan Transit District Self-Employment Tax).

(c) For purposes of this rule, “provider” means any individual, corporation, association, firm, partnership, or joint stock company who contracts to supply goods, services, or real estate space to an agency. See ORS 305.380(3). Out of state and nonprofit entities are included in this definition. The term provider shall not include the United States, its territories or possessions, state, local, or foreign governments, and the political subdivisions and agencies thereof.

(2) The following contracts do not require contractor certification:

(a) Purchase orders and contract release orders issued by state agencies to vendors or providers.

(b) Credit card purchases. The contract requiring a certificate of compliance with Oregon tax laws is between the agency in whose name the credit card is issued and the issuer of the credit card; not the agency and the vendor of goods and services purchased with the credit card.

(c) Third party contracts and purchases. Many agencies pay for goods or services that are provided to third parties. Some examples are:

(A) Adult and Family Services (AFS) pays physicians directly for service provided to AFS clients.

(B) Seniors and People with Physical Disabilities (SPPD) enters into “provider agreements” with nursing homes for the benefit of elderly residents of those nursing homes. Payment is made directly by SPPD to the nursing home.

(C) Reimbursement of travel expenses. State agencies make payments to their employees to reimburse travel expenses such as meals, lodging, airfare, and automobile expenses. The costs have been incurred by the employee directly.

(d) Contracts with a consideration of no more than $1,000.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.385
REV 72-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-305.385(6)-(A), REV 46-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 1-1990, f. & cert. ef. 3-15-90

Or. Admin. R. 150-305-0304 Certificate of Compliance With Oregon Tax Laws

(1) The Department of Revenue may issue a certificate of tax compliance to a taxpayer upon request. The certificate acts as an official acknowledgement by the department that the taxpayer is in compliance with all tax or fee programs administered by the department to which the taxpayer is subject, including any local tax administered by the department under ORS 305.620, as of the date the certificate is issued based on information available to the department. For purposes of this rule, a taxpayer is “subject” to a tax or fee program if the taxpayer is required to file a report or return or pay any tax or fee for that program under any law administered by the department.

(2) A taxpayer is considered in compliance for purposes of this rule, and the department will issue a certificate to the taxpayer, if all required returns or reports have been filed for the three years preceding the date of the request for a certificate of tax compliance; and

(a) All tax and fee assessments, including any applicable penalties and interest, are paid in full for all tax and fee programs to which the taxpayer is subject, or the taxpayer has a pending good faith appeal in the Oregon Tax Court of any assessment that remains unpaid; or

(b) The taxpayer is in compliance with a department-approved payment plan for all assessed taxes and fees owed by the taxpayer for department administered programs to which the taxpayer is subject.

(3) If the taxpayer has not met the requirements of section (2) of this rule for all tax and fee programs to which they are subject, the department will notify them that they are not in compliance and provide them with information on how to achieve tax compliance. The notification from the department under this section does not constitute a certificate of tax compliance.

(4) A taxpayer required to attest or certify under ORS 279B.110(2)(e), ORS 305.385(6), or any other law that requires the taxpayer to provide a statement of compliance that is not issued by the Department, regarding the taxpayer’s compliance with Oregon tax laws and local taxes administered by the department may request a certificate of tax compliance under section (1) of this rule as a method of certifying tax compliance in lieu of providing a written statement, signed under penalty of perjury, as further described in this section.

(a) A written statement provided in lieu of a certificate issued by the Department under section (1) of this rule shall contain the following elements:

(A) For individuals, including sole proprietors and individual owners of disregarded business entities, a statement certifying under penalty of perjury that the individual is, to the best of the individual’s knowledge, in compliance with all Oregon tax laws administered by the department.

(B) For corporations, partnerships, estates, trusts, and all other non-disregarded entities, a statement by an individual authorized by the entity certifying under penalty of perjury that the entity is, to the best of the representative’s knowledge, in compliance with all Oregon tax laws administered by the department.

(b) Notarization by a notary public is not required.

(5) A certificate issued under section (1) of this rule certifies that a taxpayer is in tax compliance only as of the date it is issued and does not affect the authority of the department to conduct an examination of any return or report of a taxpayer or to issue any assessment it determines is appropriate for any tax or fee program to which the taxpayer is subject.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.385, 418.255, 475C.037 & Governor's Executive Order 17-09
REV 20-2023, amend filed 12/11/2023, effective 12/11/2023
REV 12-2023, temporary amend filed 06/09/2023, effective 06/15/2023 through 12/11/2023
REV 72-2017, amend filed 12/22/2017, effective 01/01/2018
REV 6-2017, f. & cert. ef. 6-8-17
Renumbered from 150-305.385(6)-(B), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 1-1990, f. & cert. ef. 3-15-90

Or. Admin. R. 150-305-0306 Circumstances Not in Violation of Oregon Tax Laws

(1) For purposes of ORS 305.385(6), a taxpayer complying with an acceptable payment arrangement for satisfaction of an unpaid tax obligation is not in violation of the tax laws as they relate to that unpaid tax. Any taxpayer complying with an acceptable payment arrangement may sign the certificate of compliance in good faith if no other Oregon tax laws have been violated. A provisional certificate of good standing, provided by ORS 305.385(5), is not necessary.

(2) A taxpayer is not in violation of the tax laws as they relate to an unpaid tax, if that unpaid tax is under appeal as provided under ORS Chapter 305.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.385
Renumbered from 150-305.385(6)-(C), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1990, f. & cert. ef. 3-15-90

Or. Admin. R. 150-305-0308 Annual Certification Requirement

(1) An agency shall obtain a written certification of compliance with the tax laws listed in ORS 305.380(4) from each provider of goods, services, or real estate space. The written certification may be obtained either:

(a) Annually; or

(b) With each contract or other agreement entered into, renewed or extended if the agency does not anticipate contracting with the provider frequently (i.e., one time only or less than once a year).

(2) A certificate shall be obtained prior to entering into a price agreement with a provider. Certificates do not need to be obtained with individual contract release orders executed under the price agreement.

Example: The Department of General Services enters into a price agreement with the Tree Paper Company for the purchase of paper and obtains a written certification of compliance with the tax laws. During the next two years the Department of Revenue executes contract release orders (CROs) with Tree Paper Company for additional paper. The Department of Revenue does not need to obtain a certificate for any CRO delivered to Tree Paper Company that is under the original price agreement.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.385
Renumbered from 150-305.385(7), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1990, f. & cert. ef. 3-15-90

Or. Admin. R. 150-305-0320 Mediation

Any statements made during mediation will be confidential except as provided for in ORS 314.840.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.501
Renumbered from 150-305.501, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 1-2001, f. 7-31-01, cert. ef. 8-1-01

Or. Admin. R. 150-305-0330 Appeal Procedures

(1) The Department of Revenue shall give notice to the taxpayer to reflect that final department actions may only be appealed to the Magistrate Division of the Oregon Tax Court.

(2) Time for Filing Appeals:

(a) Under ORS 305.280(2), an appeal from a notice of assessment or refund denial with respect to a tax imposed under ORS Chapter 118, 305, 308, 310, 314, 316, 317, 318 or 321 shall be filed within 90 days after the date of the notice.

(b) Under ORS 305.280(3), an appeal from a notice of assessment with respect to a tax assessed under Chapters 314, 316, 317 or 318 may also be filed within two years of the date of payment of the tax, penalty and interest shown on the Notice of Assessment.

(c) Under ORS 305.280(2), an appeal from a proposed refund adjustment made under ORS 305.270 shall be filed within 90 days after the date on which the adjustment is final (i.e., within 30 days after the date of the notice of proposed adjustment, as provided in ORS 305.270(5)(b)).

(d) Under ORS 305.280(4), an appeal from an order of the county property value appeals board, must be filed with the Tax Court within 30 days after the order is mailed to the appellant. If, pursuant to ORS 309.110(1), the order is personally delivered to the appellant, then the appeal must be filed with the Tax Court within 30 days after the date the order is personally delivered.

(3) Federal Appeals or Appeals of Audit Adjustments Made by Other States: Providing proof of a timely federal appeal or appeal of another state’s audit adjustment will extend the time the taxpayer can appeal to Tax Court. The taxpayer must notify the department in writing within 30 days after the appeal is resolved. The department shall review the issues raised by the appeal and make a determination of the effect on the taxpayer’s Oregon tax liability. If there is a disagreement, the taxpayer has 60 days from the department’s determination to appeal to the Tax Court.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.525
REV 47-2024, minor correction filed 10/03/2024, effective 10/03/2024
Renumbered from 150-305.525, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97

Or. Admin. R. 150-305-0340 Stay of Collection: When Collection Action Won’t Be Stayed

(1) The department may continue to collect delinquent taxes during the pendency of an appeal if it becomes known the taxpayer is preparing to depart from the state or move assets out of the state to avoid paying taxes. In addition, the department may continue collection if the taxpayer does any other act tending to prejudice or to render wholly or partially ineffectual proceedings to collect tax. These acts include but are not limited to:

(a) Communication has been received that acts of the taxpayer indicate the taxpayer will cease employment or change jobs to avoid paying the taxes.

(b) Communication has been received that acts of the taxpayer indicate the taxpayer will sell, convey, give away, hide, or destroy an asset rather than having it seized.

(c) The taxpayer actually begins to sell, convey, give away, hide, or destroy real or personal property subsequent to taking of an appeal to the director.

(2) Also, if there exists documented evidence the taxpayer has changed jobs or has sold, conveyed, given away, hidden, or destroyed assets in the past to avoid garnishment or seizure, collection action may be continued.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.565
Renumbered from 150-305.565(2)(a), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1992, f. & cert. ef. 12-29-92

Or. Admin. R. 150-305-0350 Offset of State Debt Through U.S. Treasury Offset Program

(1) For the purpose of this rule:

(a) A debt is “liquidated” if the debt meets the criteria for liquidated debt under the Oregon Accounting Manual, Chapter 35, the debtor is not currently in bankruptcy, and the department has issued a warrant for the debt.

(b) “Federal payments” do not include payments that are exempt from offset under federal law, including but not limited to social security payments, and veterans’ affairs benefit payments to the extent such payments are exempt from offset under federal law.

(2) The department may submit liquidated state debt for offset against federal tax refunds through the "Treasury Offset Program" under 26 USC 6402(e) and 31 CFR 285.8 and federal payments under 31 USC 3716(h) and 31 CFR 285.6.

(3) Notice of intent to offset federal tax refunds. Before submitting an Oregon tax debt to the Debt Management Services, U.S. Treasury for offset against a federal tax refund, the department must send written notice of intent to offset to the taxpayer by certified mail.

(4) Notice of intent to offset federal non-tax payments. Before submitting a liquidated state debt to the Debt Management Services, U.S. Treasury for offset against a federal non-tax payment, the department must send written notice of intent to offset to the debtor by regular mail or certified mail.

(5) Disagreement procedures. If a debtor disagrees with the notice of intent to offset and wants reconsideration of the decision to offset, the debtor must submit a letter of disagreement to the department within 60 days of the date shown on the notice of intent to offset. The debtor must provide, and the department will limit consideration to, evidence that the debt scheduled for offset is not:

(a) Past due; or

(b) Legally enforceable.

(6) If the debtor claims that a tax debt is not legally enforceable because the debtor is an enrolled member of an Indian tribe whose income is not subject to Oregon tax under ORS 316.777 or 316.785, the department will consider the merits of such a claim unless the issue has already been finally adjudicated by a court in a proceeding to which the department is a party.

(7) Review of disagreement. For each letter of disagreement, the department will:

(a) Review all evidence provided by the debtor, and

(b) Remove the debtor's name from the federal offset list for the debt if the department determines that the debt is not past due or is not legally enforceable.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.612
Renumbered from 150-305.612, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2105, f. 12-23-15, cert. ef. 1-1-16
REV 8-2002, f. & cert. ef. 12-31-02
REV 5-2002(Temp), f. & cert. ef. 9-23-02 thru 3-1-03

Or. Admin. R. 150-305-0360 Rules Application

(1) “Local marijuana tax” means a tax or fee authorized under ORS 475B.491 on the sale of marijuana items that are sold within an area subject to a city’s jurisdiction or an unincorporated area subject to a county’s jurisdiction by a person that holds a license under ORS 475B.110.

(2) Unless the context requires otherwise, the department will apply the same rules to administer transit district payroll tax programs as are used in the administration of the withholding tax program. See rules adopted under ORS 316.162 to 316.212. In addition, unless the context requires otherwise, the provisions of rules adopted pursuant to ORS Chapters 305 and 314 as to the audit and examination of reports and returns, periods of limitations, determination of an and notice of deficiencies, assessments, collections, liens, delinquencies, claims for refund and refunds, conferences, appeals to the Oregon Tax Court, stays of collection pending appeal, confidentiality or returns and the penalties relative thereto, and the procedures relating thereto, apply to the determination of taxes, penalty, and imposed under transit district payroll tax statutes and ordinances.

(3) Unless the context requires otherwise, the department will apply the same rules to administer local marijuana taxes as are used in the administration of the marijuana tax program. See rules adopted under ORS 475B.705 to 475B.760. In addition, the provisions of rules adopted pursuant to ORS Chapters 305, 314, or 475B as to the audit and examination of reports and returns, periods of limitation, determination of and notices of deficiencies, assessments, collections, liens, delinquencies, claims for refund and refunds, conferences, appeals to the Oregon Tax Court, stays of collections pending appeal, confidentiality of returns and the penalties relative thereto, and the procedures relating thereto, apply to the determination of taxes, penalty, and interest under local marijuana taxes statutes and ordinances.

(4) For rules relating to the department’s administration of local transient lodging taxes, please see OAR 150-320-0365.

History

Statutory/Other Authority: ORS 305.100, 305.620 & 475B.750
Statutes/Other Implemented: ORS 305.620 & 475B.750
REV 6-2021, amend filed 06/28/2021, effective 07/01/2021
REV 2-2021, temporary amend filed 01/07/2021, effective 01/07/2021 through 07/05/2021
REV 2-2017, f. 5-31-17, cert. ef. 6-1-17
REV 76-2016(Temp), f. 12-20-16, cert. ef. 12-21-16 thru 6-18-17
Renumbered from 150-305.620(1)-(A), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-305-0362 Appearance Procedure — Local Taxes Administered by the Department of Revenue

A political subdivision may intervene in any conference held by the department in connection with a local tax administered by the department under an agreement with that political subdivision.

(1) The department will notify a political subdivision of each significant conference request arising from the department’s administration of that subdivision’s local tax. Whether a conference request is “significant” is determined by the program manager’s evaluation of the possible impact on the tax program.

(2) If appropriate under subsection (1), the department will notify the political subdivision of the conference request by letter. A copy of the conference request will be provided with the letter subject to the limitations imposed by ORS 314.840.

(3) A political subdivision desiring to intervene must notify the department by letter of its intent to intervene within 14 days of the date the department mails the copy of the conference request. The political subdivision must serve a petition of intervention upon all the parties and the department not more than 30 days after notifying the department of its intent to intervene. The petition must state the grounds for intervention, the political subdivision’s position on each issue raised in the appeal, and whether or not the political subdivision desires to be represented at the conference.

(4) The conference officer will serve the political subdivision with a copy of any conference decision in a case where the political subdivision has intervened. Service will be made at the same time and in the same manner that the decision is served upon the petitioner.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.620
Renumbered from 150-305.620(4), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
Reverted to RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 8-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-305-0370 Use of Checkoff Resources

Entities receiving checkoff resources are restricted in the manner in which the resources may be used by the organization.

(1) Checkoff resources received by an entity may only be used to fund:

(a) Existing programs. Checkoff resources may only be used to fund existing programs to the extent that the checkoff funds serve to augment the existing program. Checkoff resources may not be used to replace existing funding that would allow a shift of entity resources to another unrelated purpose.

(b) New programs. Checkoff resources may be used to fund new programs, but only if the new program has a close connection to an existing program. The existing program after which the new program is patterned must have a proven record of success in providing substantial and direct benefit to the state.

(2) Checkoff resources may not be used to meet the administrative expenses of the entity. Included in this prohibition are any increased fixed or variable administrative expenses that are a direct result of the new or augmented program funded by the checkoff resources.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.720
Renumbered from 150-305.720(1)(a), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-305-0380 Application and Signature Due Dates

Completed applications and completed signature petitions must be received by the Charitable Checkoff Commission by July 1 of the first tax year for which the entity seeks to be included on a schedule of the individual tax return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.725
REV 31-2022, amend filed 12/27/2022, effective 01/01/2023
Renumbered from 150-305.725(1), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 13-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-305.725
REV 1-2000, f. & cert. ef. 2-1-00

Or. Admin. R. 150-305-0392 Definitions of the Terms “Affiliated and “Central Office”

For purposes of the statutes and rules relating to the charitable checkoff system:

(1) The term “central office” means an organization that the Internal Revenue Service recognizes to be an exempt organization under Internal Revenue Code §501(c)(3). It must have written bylaws or other written provisions that describe its structure and purpose. It must also have the same primary purpose as that of its affiliates. It must be located in Oregon and a substantial proportion of the funds that it collects must remain in Oregon, benefiting the state and its residents, as required by ORS 305.720(1).

(2) The phrase “affiliated entities” means entities with a relationship documented in writing. Each affiliate must share a specific primary purpose and that purpose must be charitable. Each affiliated entity must be recognized by the Internal Revenue Service to be an exempt organization under Internal Revenue Code §501(c)(3). Affiliated entities must be located in Oregon and a substantial proportion of the funds that they collect must remain in Oregon, benefiting the state and its residents, as required by ORS 305.720(1).

History

Statutory/Other Authority: ORS 305.100 & 305.720
Statutes/Other Implemented: ORS 305.725
REV 31-2022, amend filed 12/27/2022, effective 01/01/2023
Renumbered from 150-305.727(3)(a), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 13-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-305.727-(A)
REV 1-2000, f. & cert. ef. 2-1-00

Or. Admin. R. 150-305-0394 Signatures Must Be on Department’s Form

(1) For purposes of meeting the requirement that an entity gather the signatures of 10,000 registered Oregon voters, signatures must be collected and submitted on the department’s designated form. The signatures must include all the information requested on that form.

(2) The submitter of such signatures must swear that, to the best of the submitter’s knowledge and belief, all the signatures that the submitter is presenting to the commission on behalf of the organization are those of registered Oregon voters.

(3) If an entity fails to meet any of the requirements listed within this rule, commission shall reject the entity’s application or shall deem the applying entity unqualified to be included on a schedule of the individual tax return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.725
REV 31-2022, amend filed 12/27/2022, effective 01/01/2023
Renumbered from 150-305.727(3)(b), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 13-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-305.727-(B)
REV 1-2000, f. & cert. ef. 2-1-00

Or. Admin. R. 150-305-0396 Signature Gathering Period

The signature gathering period for any tax year for which an entity seeks to be included on a schedule of the individual tax return begins July 1 of the tax year two years prior to the year in which being included on a schedule is sought and extends through June 30 of the tax year being included on a schedule is sought. For example: if an entity seeks to be included on a schedule of the individual tax return for tax year 2021, the signature gathering period is from July 1, 2019, through June 30, 2021.

History

Statutory/Other Authority: ORS 305.100, 305.720 & 305.753
Statutes/Other Implemented: ORS 305.720
REV 6-2025, minor correction filed 07/16/2025, effective 07/16/2025
REV 31-2022, amend filed 12/27/2022, effective 01/01/2023
REV 30-2020, amend filed 12/23/2020, effective 01/01/2021
REV 15-2020, temporary amend filed 08/07/2020, effective 08/07/2020 through 02/02/2021
Renumbered from 150-305.727(3)(b)-(B), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2001, f. 7-31-01, cert. ef. 8-1-01
REV 13-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-305-0410 Charitable Checkoff Financial Reporting Requirements

It is the commission’s responsibility to properly consider all applicants to the checkoff program and participants in the program approved by the commission. In order to carry out this responsibility, the commission finds that it is necessary to receive additional financial information. This information will also be used to determine the use of any funds received through the checkoff program.

(1) Financial statements and budget documents shall be required.

(a) The financial statements and budget documents must cover the most recent three years or the length of time the entity has been in existence.

(b) The financial statements and budget documents must be submitted by July 1 the third tax year for which the entity seeks to be included on a schedule of the individual income tax return and no later than July 1 of every second year thereafter.

(2) All documents shall be verified as provided in ORS 305.810 by a principal of the entity, a principal in the solicitation activities of the entity, or the executive officer of the entity.

(3) If the documents submitted by July 1 do not contain the necessary information, documentation, or verification the commission shall notify the applicant of the deficiency within 15 days. The commission will provide a reasonable opportunity after the notification to submit the necessary materials. Failure to submit the necessary materials when requested may result in disqualification.

(4) The provisions of this administrative rule will be effective for applications received on or after January 1, 1992.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.730
REV 32-2022, amend filed 12/28/2022, effective 01/01/2023
Renumbered from 150-305.730, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-305-0420 Costs of Administration

(1) The department shall estimate the fixed and variable costs to administer each of the personal income tax checkoff programs which have been approved by the Oregon Legislature or the Oregon Charitable Checkoff Commission for each biennium. The department shall set aside in an administrative expense reserve account 10 percent of the monthly contributions for each program until the fund balance equals the estimated fixed and variable costs for each checkoff program. No further charges to that program shall be made for the year.

(2) For purposes of this rule, examples of fixed costs include accounting time, programming time, and tax booklet revision. An example of a variable cost is data entry charges, which are dependent upon the number of returns filed contributing to the checkoff.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.747
Renumbered from 150-305.747, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-305-0430 Method of Distribution from Check-off Contributions and Reimbursement of Administrative Expenses

For programs which have been approved for charitable contribution checkoff by the Oregon Legislature or the Oregon Charitable Checkoff Commission, the department will maintain a record of contributions received and distribute the respective amounts, minus administrative expenses to each entity once a month.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.747
REV 32-2022, amend filed 12/28/2022, effective 01/01/2023
Renumbered from 150-305.749(3), REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-305.749(2), RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
Renumbered from 305.835(1), RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-305-0440 Per Diem Compensation

(1) The Oregon Department of Revenue shall pay any member of a Commission or Council, other than a member who is employed in full-time public service, compensation for each day or portion thereof during which the member is actually engaged in the performance of official Commission or Council duties.

(2) The rate of compensation per day pursuant to ORS 292.495(5) is equal to the per diem paid to members of the Legislative Assembly under ORS 171.072.

(3) A member of a Commission or Council may decline to accept compensation or reimbursement of expenses related to the member’s service on the Commission or Council.

(4) In order to receive compensation, a member must submit to the Oregon Department of Revenue a signed written request for compensation within 30 days of the meeting or work performed. The member must specify the date, name, type of meeting(s) or work, and the number of full or partial days the member spent performing official Commission or Council business.

History

Statutory/Other Authority: ORS 305.100, 292.495 & 305.695(4)
Statutes/Other Implemented: ORS 292.495 & 305.695(4)
REV 48-2024, adopt filed 10/08/2024, effective 11/01/2024

Or. Admin. R. 150-305-0441 Reimbursement of Travel and Other Expenses

(1) The Oregon Department of Revenue shall provide reimbursement to all members of the Commission or Council, including those employed in full-time public service, for actual and necessary travel or other expenses actually incurred in the performance of a member’s official duties within the limits provided by law or by the Oregon Department of Administrative Services under ORS 292.210 to 292.250.

(2) In order to receive reimbursement of actual and necessary travel and other expenses, a member must submit to the Department a travel expense claim for reimbursement supported by receipts, invoices, or other appropriate documentation for travel and other expenses within 30 days following the day the member incurred the expense.

(3) A member of a Commission or Council may decline to accept compensation reimbursement of expenses related to the member’s service on the Commission or Council.

History

Statutory/Other Authority: ORS 305.100, 292.495 & 305.695(4)
Statutes/Other Implemented: ORS 292.495 & 305.695(4)
REV 48-2024, adopt filed 10/08/2024, effective 11/01/2024

Or. Admin. R. 150-305-0442 Reimbursement for Hiring a Substitute

(1) As used in OAR 150-305-0406(1), “other expenses” includes expenses incurred by a member of the Commission or Council in employing a substitute to carry out duties, including personal duties, normally performed by the member, which the member is unable to carry out because of the performance of official duties and which, by the nature of such duties, cannot be delayed without risk to health or safety.

(2) The amount that a member may be reimbursed for expenses incurred in employing a substitute must not exceed $25 per day, pursuant to ORS 292.495(3).

History

Statutory/Other Authority: ORS 305.100, 292.495 & 305.695(4)
Statutes/Other Implemented: ORS 292.495 & 305.695(4)
REV 48-2024, adopt filed 10/08/2024, effective 11/01/2024

Or. Admin. R. 150-305-0450 Depositing Refunds into 529 Savings Account

A taxpayer electing to make contributions authorized by ORS 305.796 to one or more accounts established under ORS 178.335:

(1) May contribute to a maximum of four accounts.

(2) Must contribute at least $25 per account in accordance with ORS 315.650.

(3) May use contributions made under this section in calculating the credit under ORS 315.650 only for the tax year in which the refund is issued.

History

Statutory/Other Authority: ORS 305.100 & 305.796
Statutes/Other Implemented: ORS 305.796
REV 10-2026, amend filed 06/29/2026, effective 07/01/2026
Renumbered from 150-305.796, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2013, f. & cert. ef. 3-28-13
REV 9-2012, f. 12-18-12, cert. ef. 1-1-13

Or. Admin. R. 150-305-0460 Verification of Returns, Statements, or Documents Filed Under Tax Law

(1) The declaration under ORS 305.810 that a return, statement, other document or report is made under penalties for false swearing and is true, complete, and correct must be verified by the taxpayer, an authorized agent, or declarant, and in the case of a joint personal income tax return, by each taxpayer or authorized agent for such taxpayer.

(2) Returns, statements, other documents and reports are verified by:

(a) Hand signing the return, statement, other document or report.

(b) An electronic signature (as defined in ORS chapter 84) associated with an electronically filed return, statement, other document or report, by the taxpayer, tax preparer, authorized representative of the taxpayer, or declarant.

(c) Any verification method allowed by the IRS when electronically filing the federal return with the Oregon return, such as a federal personal identification number.

(d) A hand signed statement, such as Oregon Form EF, submitted to the department if requested.

(e) A hand signed and scanned Corporation E-file Signature Form included with the electronically filed corporate income and excise tax return for tax year 2011 and earlier, without the use of a federal signature method or when the Oregon filer is different than the federal filer.

(f) Transmitting a payroll tax return using the state’s online payroll reporting method. The return is considered signed when the return is transmitted to the state by a person certified by the employer and the Oregon Employment Department as allowed to file the return using the state’s reporting system.

(g) A facsimile signature by the taxpayer, tax preparer, authorized representative of the taxpayer or declarant. A facsimile signature is a signature visibly affixed to a paper return using electronic or mechanical equipment or an electronic or mechanical device.

History

Statutory/Other Authority: ORS 305.100 & 305.810
Statutes/Other Implemented: ORS 305.810
REV 28-2020, amend filed 12/23/2020, effective 01/01/2021
REV 20-2020, temporary amend filed 10/13/2020, effective 10/13/2020 through 04/10/2021
Renumbered from 150-305.810, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14
REV 6-2013, f. & cert. ef. 12-26-13
REV 4-2012, f. 7-20-12, cert. ef. 8-1-12
Reverted to REV 1-2005, f. 6-27-05, cert. ef. 6-30-05
REV 1-2012(Temp), f. 1-31-12, cert. ef. 2-1-12 thru 7-29-12
REV 1-2005, f. 6-27-05, cert. ef. 6-30-05

Or. Admin. R. 150-305-0470 Date When Writing or Remittance Deemed Received by Department of Revenue

(1) The term “due date” means the last date or the last day of the period prescribed for filing the writing or remittance and includes any extension of time granted for such filing.

(2) Any writing or remittance received after the due date bearing a legible postmark dated on or before the due date will be considered timely filed if properly mailed and the postmark is that of the United States Postal Service. If the postmark is other than that of the United States Postal Service, the writing or remittance will be considered timely filed if it has been properly mailed and is received not later than the time a writing or remittance postmarked by the United States Postal Service at the same point of origin on the due date would ordinarily be received. If the writing or remittance is not received within the period of time, it must be shown by satisfactory proof to the Department that the writing or remittance was placed in the hands of the United States Postal Service or in the hands of a private express carrier on or before the due date.

(a) Satisfactory proof will consist of one or more of the following:

(A) If sent by United States registered mail, the date of registration shall be treated as the postmark date.

(B) If sent by United States certified mail and the sender’s receipt is postmarked by a postal employee, the date of the United States postmark on such receipt shall be treated as the postmark date of the writing or remittance.

(C) If sent by private express carrier, the date recorded on the transmittal receipt shall be treated as the postmark date.

(D) If the writing or remittance bears a postmark date that is not legible or bears a postmark date dated later than the due date, it will be treated as having been mailed on or before the due date provided the person who is required to file the writing or remittance establishes by sworn affidavit that it was actually deposited on or before the due date in the hands of a private express carrier or in a government mail receptacle before the last collection of mail for the place in which it was deposited.

(E) Any writing or remittance having a legible postmark other than that of the United States Postal Service and bearing a proper due date is considered timely filed although not received by the Department within the ordinary delivery time for such class mail if it is established that the delay was due to a delay in the transmission of the mail.

(b) If the department has no record of receiving a return, the taxpayer may be able to establish satisfactory proof of timely mailing. Examples of evidence the department will consider include:

(A) A history of timely filing returns with the department;

(B) Proof of timely filed federal returns;

(C) Written documentation from the taxpayer which would indicate that the taxpayer had timely filed. Such documentation may include correspondence to the department about refunds not received, or about checks for payment of tax which remain uncashed.

(3) If the person required to file the document has reason to believe that the mailing of the writing or remittance is so close to the deadline that it could possibly fail to meet the requirements of timely filing, the writing or remittance should be mailed by registered or certified mail so that the sender will be able to obtain an official receipt in verification of the date the document was mailed.

(4) In order for a writing or remittance to be considered “properly mailed” it must have been placed in a properly addressed envelope or other appropriate wrapper, postage duly prepaid, and placed in the hands of a private express carrier or deposited in a government mail receptacle.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.820
Renumbered from 150-305.820 , REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
12-19-75 11-71

Or. Admin. R. 150-305-0480 Returns Not Filed for Three Consecutive Years; 100 Percent Penalty

(1) General requirements. The 100 percent penalty under ORS 305.992 may be imposed if:

(a) The taxpayer was required to file returns for each tax year of three or more consecutive years including returns for tax periods of less than 12 months; and

(b) All returns due during the three-year period are not filed by the due date (including extensions) of the return required for the third consecutive year. Assessments under ORS 305.265(10) are not returns for the purpose of the penalty under ORS 305.992.

Example 1: On July 1, 2017, Mary filed her Oregon individual income tax returns for 2013, 2014, and 2016. In 2015, Mary was a nonresident and had no Oregon source income. Mary was not required to file an Oregon return for each of three or more consecutive taxable years because she had no Oregon source income in 2015. The 100 percent penalty will not be imposed on the 2013, 2014, or 2016 returns.

Example 2: Assume the same facts as Example 1 except that Mary had income from Oregon sources in 2015 and was required to file a return for 2015 but did not. The requirement that tax returns for three consecutive years were not filed by the due date of the third consecutive year was met and the 100 percent penalty will be imposed on the 2013, 2014, 2015, and 2016 returns.

(2) Under authority granted in ORS 305.229, the department will not impose the 100 percent penalty under ORS 305.992 for returns filed or a Notice of Assessment that have been assessed a lower failure-to-file penalty.

Example 3: Laurie did not file returns for tax years 2014, 2015, or 2016. In 2016, the department issued Notices of Assessment for tax years 2014 and 2015. The 2014 and 2015 Notices of Assessment reflect a 50 percent failure-to-file penalty under ORS 314.400. In 2017, the department issues a Notice of Assessment for tax year 2016. The 2016 Notice of Assessment reflects the 100 percent failure-to-file penalty under ORS 305.992. The department will not assess a 100 percent penalty for the Notices of Assessment issued for tax years 2014 and 2015 because a penalty was previously assessed. Thus, the penalty would remain at 50 percent for tax years 2014 and 2015.

Example 4: In November 2016, Hilda filed her 2012 and 2013 tax returns. The department asserted a 25 percent failure-to-file penalty on both the 2012 and 2013 returns. In January 2017, she filed her 2014 and 2015 tax returns. The department asserted the 100 percent failure-to-file penalty on both the 2014 and 2015 returns because the 2012, 2013, and 2014 returns were all filed after the due date for the 2014 return and the 2013, 2014, and 2015 returns were all filed after the due date for the 2015 return. Even though the 2012 and 2013 returns were subject to the 100 percent penalty, the department will not increase the penalty to 100 percent because a lower penalty was previously assessed. Thus, the penalty would remain at 25 percent for tax years 2012 and 2013.

(3) Net tax liability. The penalty is 100 percent of the net tax liability determined for each taxable year. The net tax liability is the tax remaining after subtracting credits, withholding, and other prepayments from the tax required to be shown on the return. A net tax liability may be determined by the taxpayer, an assessment under ORS 305.265(10), an examination, or audit of a return by the department.

Example 5: On September 27, 2016, Jack filed Oregon income tax returns for 2014 and 2015. The 2015 return showed Oregon tax of $450, state withholding of $700 and a refund of $250. The 2014 return has a net tax liability of $325. Jack was required to file a return for 2013 but did not file a return. Because Jack did not file all returns due during the three-year period by the due date of the 2015 return, the penalty may be assessed on 100 percent of the net tax liability for 2014.

Example 6: Assume the same facts as in Example 5 except that upon examination, the department adjusted the refund claim for 2015 and asserted a deficiency. The penalty may be assessed on 100 percent of the net tax liability for taxable years 2014 and 2015.

Example 7: Assume the same facts as in Example 5 except that the department assessed a tax under ORS 305.265(10) for 2013. The penalty may be imposed on 100 percent of the net tax liability for each taxable year: 2013, 2014, and 2015.

Example 8: Assume the same facts as in Example 5 except that the department asserted a deficiency one year later for tax year 2015 as the result of an audit. The auditor recomputed Oregon tax to be $1,017. After application of withholding and refunds already received, the taxpayer owed an additional $567 of tax. The 100 percent penalty may be assessed on the net tax liability of $317 for tax year 2015 (the corrected tax of $1,017 less the $700 of withholding) and on the net tax liability of $325 for tax year 2014.

Example 9: Assume the same facts as in Example 5 except that Jack was granted a federal extension to file the 2015 return until October 15, 2016. The 100 percent penalty does not apply. The returns for 2014 and 2015 were filed before the due date of the return required for the third year (October 15, 2016).

(4) Timber tax returns. Timber tax returns are those required to be filed under ORS 321.045 and 321.733 (2003). A timber tax return is required to be filed if a taxpayer:

(a) Harvested timber; or

(b) Obtained a Notification of Operations (permit) indicating the taxpayer would harvest. Obtaining a permit will cause the department to generate returns. There does not need to be a harvest to meet the filing qualification because non-harvests require a "NO HARVEST" filing.

Example 10: A taxpayer was required to file returns for 2013, 2014 and 2015 after harvesting timber in each of those years. If all three returns are not filed by January 31, 2016, the 100 percent penalty may be applied to any net tax liability for each of the three years.

Example 11: In 2013 and 2014 a taxpayer obtained permits to harvest; no harvest occurred for either year and the taxpayer did not file returns. In 2015 the taxpayer did not obtain a permit, but harvested timber. If a return is not filed by January 31, 2016, the 100 percent penalty may be applied to the 2015 net tax liability.

(5) Oregon income tax withholding and statewide transit tax payment due dates are determined by the corresponding federal due dates. Generally, income tax withholding and statewide transit tax reports are filed for four quarters per year. The 100 percent penalty will apply if the taxpayer failed to file 12 consecutive quarters representing three consecutive years.

Example 12: After February 1, 2016, an employer filed income tax withholding reports for first through fourth quarter 2015, first through fourth quarter 2014 and first through fourth quarter 2013. The taxpayer is subject to the 100 percent penalty on all of the late reports.

Example 13: On May 30, 2017, an employer files income tax withholding reports for first quarter 2017, fourth quarter 2016, and second quarter 2015. All other quarters have been filed timely. The 100 percent penalty is not assessed because the taxpayer was not delinquent for 12 consecutive quarters (three years).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.992 & 320.555
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-305.992, REV 49-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-305-0481 Tax Professional Data Security Breach with Information Unavailable.

(1) If, due to the breach of security, the tax professional does not have immediate access to the consumer information, whose personal information is compromised, the tax professional must notify the department of the breach and provide their preparer tax identification number (PTIN).

(2) Once the tax professional has access to the consumer information for their clients and confirms the identity of the impacted consumer, they must provide the name, address and tax identification number of the consumer whose personal information is compromised, to the department within 15 days of obtaining the information.

History

Statutory/Other Authority: ORS 305.100 & Chapter 353, 2021 Oregon Laws
Statutes/Other Implemented: Chapter 353, 2021 Laws
REV 26-2021, adopt filed 12/27/2021, effective 01/01/2022

Division 306 PROPERTY TAX GENERALLY

Or. Admin. R. 150-306-0050 Supervisory Authority

(1) ORS 306.115 is an extraordinary remedy that gives the Department of Revenue authority to order a change or correction to a separate assessment of property. An assessor or taxpayer may request a change or correction by filing a petition with the department. A petition must meet the requirements of OAR 150‐306‐0060.

(2) The department may correct any errors or omissions in the assessment or tax roll under ORS 306.115(2) through (4), including but not limited to clerical errors and errors in property value, classification, or exemption.

(3) Before the department will consider the substantive issue in a petition (for example, value of the property, qualification for exemption, etc.), the petitioner has the burden of showing that the requirements for supervisory jurisdiction, as stated in ORS 306.115 and section (4) of this rule, have been met. The department will base its determination on the record before it.

(a) The department may request supplemental information from the petitioner if it determines the petition is inadequate. The department may dismiss the petition if the petitioner does not provide the requested information within the time specified.

(b) If a determination can be made from the written information, a supervisory conference will not be held.

(c) If a determination cannot be made from the written information, a supervisory conference will be held. At a supervisory conference, the department will consider only whether the requirements of ORS 306.115 and this rule have been met. The substantive issue in the petition will not be considered.

(d) If the department determines that it has the authority under ORS 306.115(3) to consider the substantive issue in the petition, it will hold a merits conference, if necessary, to consider the substantive issue. If the department determines that it does not have the authority to consider the substantive issue in the petition, the petition will be denied.

(4) The department will consider the substantive issue in the petition only when:

(a) The assessor or taxpayer has no remaining statutory right of appeal; and

(b) The department determines that an error on the roll is likely as indicated by at least one of the following standards:

(A) The parties to the petition agree to facts indicating likely error; or

(B) There is an extraordinary circumstance indicating a likely error. Extraordinary circumstances under this provision are:

(i) The taxation of nonexistent property, property that is exempt as a matter of law without an application, or property outside the taxing jurisdiction;

(ii) Taxpayers' computational or clerical errors in reporting the value of personal property pursuant to ORS 308.290;

(iii) Instances in which a bona fide purchaser had no notice of a real property roll correction made under ORS Chapter 311 during the appeal period set forth in 305.280;

(iv) A clerical or jurisdictional error exists in an order from a county Property Value Appeals Board;

(v) An increase in maximum assessed value above the 3% limitation during the years for which the department has supervisory jurisdiction where there has been no change to the property that qualifies as an exception under ORS 308.146(3), and there is no dispute involving valuation judgment, the identification of activity as general ongoing maintenance and repair, or an account modification under 308.162; or

(vi) Instances in which a question of fact exists which is of interest to the department, does not fall within any other provision of ORS 306.115 or this rule and does not involve an error in valuation judgment.

(5) The department may correct the assessment or tax roll with respect to a separate assessment of property for the current tax year, for either or both of the tax years immediately preceding the current tax year, or for any combination of such years. The requirements of ORS 306.115 and this rule must be met for each year that a correction is to be made. The department may make a correction under 306.115(3) only when:

(a) The requirements of subsections (4)(a) and (4)(b) of this rule have been met and the department determines that an error exists on the roll; or

(b) The requirements of section (6) of this rule have been met.

(6) Notwithstanding the requirements of section (4) of this rule, the department may correct the roll when:

(a) The assessor requests a reduction in value; or

(b) The taxpayer and assessor stipulate to an assessment change.

(7) The remedies provided by ORS 306.115 should not be viewed as substitutes for the ordinary appeal remedies provided by other sections or the provisions of 305.288.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.115
REV 13-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-306.115, REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2013, f. & cert. ef. 3-28-13
REV 8-2012, f. 12-18-12, cert. ef. 1-1-13
REV 5-2003, f. & cert. ef. 12-31-03;
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
REV 3-1999, f. & cert. ef. 9-1-99
REV 1-1999(Temp), f. 3-2-99, cert. ef. 3-3-99 thru 8-3-99
RD 9-1997, f. & cert. ef. 12-31-97
RD 2-1997(Temp), f. & cert. ef. 9-15-97 thru 3-9-98
RD 10-1992, f. 12-30-92, cert. ef. 12-31-92, Renumbered from 306.115-(B)
RD 5-1992, f. & cert. ef. 12-29-92
RD 6-1991, f. 12-30-91, cert. ef. 12-31-91
RD 2-1988, f. 1-11-88, cert. ef. 1-15-88
RD 10-1987(Temp), f. & cert. ef. 11-1-87
RD 9-1985, f. 12-26-85, cert. ef. 12-31-85
RD 7-1984, f. 12-5-84, cert. ef. 12-31-84
RD 4-1984(Temp), f. & cert. ef. 8-6-84

Or. Admin. R. 150-306-0060 Sufficiency of a Petition

(1) A petitioner must be one of the following for each of the years that supervisory jurisdiction is requested:

(a) An owner of the property;

(b) A person holding an interest in the property that obligates the person to pay taxes imposed on the property. An interest that obligates the person to pay taxes includes a contract, lease, or other intervening instrumentality;

(d) The clerk or tax collector of the county in which the property affected by the petition is located, if the petition involves a clerical or jurisdictional error in an order from a county Property Value Appeals Board.

(2) The purpose of a petition is to inform the department and the nonpetitioning participant of the nature of the claim for relief. For this reason, petitions to the department must include the following information:

(a) Specific facts asserted that satisfy the conditions of OAR 150‐306‐0050;

(b) A statement of the specific result requested by the petitioner;

(d) The signature of the petitioner or authorized representative, verified by a written declaration that the contents of the petition are true and made subject to the statutory penalties for false swearing;

(e) The assessor's tax account number or identification number of the property in question;

(f) In a petition regarding an act or omission by a county tax official or the department, a copy of the written notice of the act or omission that is the subject of the petition must be attached.

(A) The department will review all petitions filed (except those filed pursuant to ORS 308.584, relating to properties centrally assessed by the department) and determine their compliance with this rule. If the department finds a petition to be deficient in any material respect, the department will provide written notice of the deficiency to the petitioner by a letter mailed to the address appearing on the filing. The petitioner has 30 days from the mailing date of the notice to provide the information requested by the department. If the deficiency is not cured within the 30‐day period, the petition may be dismissed without further proceedings.

(B) Any petition which is filed by someone who does not appear to be a proper petitioner, or authorized representative pursuant to ORS 305.239, will not be considered a valid petition. The petition will be returned to the sender. The petition may be refiled at a later time with the appropriate authorization. However, the filing date is the day the petition from a proper petitioner or an authorized representative is deemed to be filed or received pursuant to 305.820.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.115
REV 2-2026, minor correction filed 01/30/2026, effective 01/30/2026
REV 14-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-306.115-(A), REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
12-31-77; RD 8-1983, f. 12-20-83, cert. ef. 12-31-83, Renumbered from 150-305.275; RD 10-1990, f. 12-20-90, cert. ef. 12-31-90; RD 6-1991, f. 12-30-91, cert. ef. 12-31-91; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 4-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-305.275-(A); REV 3-2001, f. 7-31-01, cert. ef. 8-1-01; REV 8-2012, f. 12-18-12, cert. ef. 1-1-13; REV 1-2013, f. & cert. ef. 3-28-13
Repealed by RD 6-1994, f. 12-15-94, cert. ef. 12-31-94
RD 6-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-306-0070 Property Tax Conference Procedures

This rule applies only to conferences conducted in the Property Tax Division.

(1) The department will hold a conference if it determines that the written record is insufficient to make a decision. If a conference is necessary, it will be held by telephone unless the department finds it more appropriate to hold the conference in person. The department will record the conferences.

(2) When the department schedules a conference, it will send written notice to the participants 30 to 90 days in advance.

(a) The department may grant postponement requests for good cause. The department may require that a participant requesting a postponement obtain the approval of the other participants prior to granting a postponement.

(b) The department may dismiss the petition if the petitioner or authorized representative fails to appear or be available at the time of the conference.

(3) Conferences will be conducted by a conference officer who is in charge of the conference proceedings.

(4) Conference participants may authorize any person to be a witness on their behalf; however, only those persons qualified under ORS 305.239 may be authorized to act as a taxpayer's representative. The department will not require any particular person to testify. The conference officer will administer an oath to all persons giving testimony.

(5) The burden of proof in all conferences is on the person seeking relief. A preponderance of the evidence is sufficient to sustain the burden of proof.

(6) Any evidence to be considered during the conference must have been mailed to the department and all participants at least ten business days prior to the conference, or it must have been actually received by the department and all participants at least five business days prior to the conference.

(7) No information will be accepted after the conference unless the conference officer determines that more information is needed to clarify an issue raised during the conference.

(8) Conference participants must not communicate privately with the conference officer concerning the substantive issue in a petition. If such a communication occurs, the conference officer will inform the other participants of the communication and give them a reasonable opportunity to respond.

(9) The conference decision is an order for purposes of ORS 309.115.

(a) Conference decisions may be appealed to the Oregon Tax Court within 90 days of the mailing date, as provided in ORS 305.275 and 305.280.

(b) The department may correct or amend a conference decision if a written request is received within 90 days of the date the conference decision was issued. The department will not amend a conference decision that has been appealed to the Tax Court.

(c) The department may issue a preliminary ruling when an intermediate decision is required prior to making the final decision. A preliminary ruling is not a final decision for purposes of appeal.

(10) Participants to a conference may request a copy of the recording of the proceeding and shall pay reasonable costs. See OAR 150-192-0400. No written transcripts will be provided.

(11) Any exhibit introduced at the conference may be destroyed by the department anytime after 90 days following the issuance of an order, unless, prior to the end of the 90-day period, the person who presented the exhibit makes a written request for the return of the exhibit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.115
REV 3-2026, minor correction filed 01/30/2026, effective 01/30/2026
Renumbered from 150-306.115-(C), REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2013, f. & cert. ef. 3-28-13
REV 8-2012, f. 12-18-12, cert. ef. 1-1-13
REV 1-2003, f. & cert. ef. 7-31-03
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-305.115-(A)
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 6-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1990, f. 12-20-90, cert. ef. 12-31-90
RD 5-1986, f. & cert. ef. 12-31-86
RD 8-1983, f. 12-20-83, cert. ef. 12-31-83
TC 6-1981, f. 12-7-81, cert. ef. 12-31-81
TC 16-1979, f. 12-20-79, cert. ef. 12-31-79
12-31-77
11-73

Or. Admin. R. 150-306-0080 Electronic Data Transfer

Any data required to be delivered in compliance with property taxation law may be sent and received electronically by agreement of the parties. All required data fields must be included in the transmission.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.125
REV 16-2020, minor correction filed 09/25/2020, effective 09/25/2020
Renumbered from 150-306.125(1), REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-306-0090 Confidentiality of Appraisals of Industrial Property Made by and Contained in Department of Revenue Files The files of industrial property, appraised by the Department of Revenue and contained in DOR files, will be safeguarded in the manner stated in OAR 150-308-0440.

Text available via filing PDF that is stored in ORMS

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.126
Renumbered from 150-306.126, REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80

Or. Admin. R. 150-306-0100 Determination of Responsibility for the Appraisal of Industrial Property

(1) Definitions for purposes of this rule:

(a) “Industrial property” means a facility or property engaged in manufacturing or processing which includes, but is not limited to sawmills, plywood and veneer plants, paper and pulp mills, food processing facilities, bakeries, flour mills, chemical processing operations refineries, breweries, wineries bottling operations, machine shops, metal rolling mills, metal fabrication facilities, smelters, printing and publishing operations, seed processing operations, permanent sand and gravel operations, and electronic and high technology manufacturing operations.

(b) “State-appraised industrial property” means industrial property that had real market value for improvements of more than $1 million for the preceding year and whose appraisal responsibility has not been delegated by the department to the county.

(c) "Improvements" or "real property improvements", for determining responsibility for property of more than $1 million, means improvements erected upon, above or affixed to the land but not the land itself. Improvements include, but are not limited to: yard improvements, buildings, structures, and real property machinery and equipment. Improvements do not include site development and personal property.

(A) "Yard improvements" include but are not limited to on-site: paving, exterior lighting, log ponds, underground fire systems, fences, access roads and roadways and railroad sidings.

(B) "Site developments" are defined in OAR 150-307-0010.

(d) "Integrated" and "integral" means directly involved in the production of a new product.

(e) "Processing" means the treatment of materials to produce a new product.

(f) “Unit of industrial property” means, for appraisal purposes, a single facility or an integrated complex currently engaged in manufacturing or processing operations and may include one or more accounts.

(2) The purpose of this rule is to determine the responsibility for the appraisal of industrial property between the Oregon Department of Revenue and the thirty-six Oregon county assessors’ offices. Property classification for all purposes other than assigning appraisal responsibility is determined by OAR 150-308-0310

(3) The department is responsible for the appraisal of industrial property that meets the definition of “state-appraised industrial property”. The county is responsible for the appraisal of all land, including that for state responsibility industrial accounts.

(4) Property other than industrial property that is at the same location as the manufacturing or processing operation may be appraised as part of the unit of industrial property.

(5) The procedure for determining the appraisal responsibility for industrial property is as follows:

(a) On or before August 1 of each year, the department will provide each county a list of all industrial property accounts within their jurisdiction for which the state was responsible for appraising in the preceding year. The list will include the owner's name, the account number, and the real market value.

(b) The county will review the list, and all other industrial property accounts, to determine if there are any units of industrial property that have moved above or below the $1 million threshold.

(A) Units of industrial property that have gone below the threshold will be placed on a list to be transferred to the county.

(B) Units of industrial property that have gone above the threshold will be placed on a list to be transferred to the department.

(C) Construction of a new industrial facility that will result in a real market value of more than $1 million for the real property improvements will be placed on a list of properties recommended for transfer to the department. If construction has begun or is expected to begin by January 1 of the current tax year it will also be placed on the list to be transferred.

(d) By November 15, the department will make a final determination of appraisal responsibility for all industrial property and provide this information to the county.

(6) For state-appraised industrial property in which the real property improvements are not all at the same location, the department and the county will evaluate each account to determine if the account should be appraised by the department. The criteria that will be used are:

(a) The combined value of the real property improvements from all locations is more than $1 million, and

(b) The real property improvements are integral to the same manufacturing or processing operation.

(7) The party that valued the property will be responsible for defending any appeals. In all cases, the county is responsible for the defense of the land valuation.

(8) The department may return to the county the appraisal responsibility for any property that no longer qualifies as state responsibility industrial property. The department will forward to the county a copy of all appraisal material on file at the department and a copy of all industrial property returns filed by the taxpayer.

(9) This rule is effective January 1, 2016.

History

Statutory/Other Authority: ORS 305.100 & 306.126
Statutes/Other Implemented: ORS 306.126
Renumbered from 150-306.126-(A), REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-306.126(1), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01
REV 8-1998, f. 11-13-98, & cert. ef. 12-31-98
Renumbered from 150-306.126(1)-(A), RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
3-70
1-66
8-65
11-59
3-58
12-55

Or. Admin. R. 150-306-0110 Transmission of the Values for State-Appraised Industrial Properties

(1) The department will transmit the real market values of state-appraised industrial accounts to the assessor prior to July 1 of each year.

(2) For each real property account, the real market value transmitted to the assessor by the department will include:

(a) The total real market value of all improvements as of January 1; and

(b) The real market value of all additions minus retirements as of January 1 for purposes of calculating maximum assessed value for the current assessment year.

(3) For each personal property account, the real market value transmitted to the assessor by the department will include the total real market value of all personal property assets as of January 1 for the current assessment year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.126
Renumbered from 150-306.126-(B), REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-306.126(2), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
RD 9-1997, f. & cert. ef. 12-31-97
Renumbered from 306.126(2)-(A), RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
Repealed by RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-306-0120 Delegation of Responsibility for Industrial Property

(1) If the assessor requests the delegation of responsibility for a state-appraised industrial property, the request shall be in writing to the department prior to October 1. The request shall include:

(a) Name of the property owner,

(b) Account number,

(d) Reason for the request.

(2) On or before November 15, the department shall either approve or deny the assessor's request for delegation of responsibility. The county must meet the following criteria:

(a) The county industrial appraisal staff must be qualified to perform the appraisals of these industrial properties and adhere to the department’s industrial appraisal standards.

(b) The county must maintain and achieve compliance with all the locally appraised property for which they currently have responsibility.

(c) The county must commit to provide all necessary resources for the appraisal, maintenance, and legal defense of the value of the delegated properties for a regular appraisal cycle with no shift of resources from the county's other assessment and taxation programs.

(3) When the department delegates the responsibility for a state-appraised industrial property to the county assessor, the assessor shall be responsible for this property for five consecutive assessment years, including the original appraisal, annual updates to value, and appeals. After five consecutive assessment years, the county assessor may request the department to resume responsibility for appraising the property. At the following assessment year, the responsibility shall revert to the department if the property still qualifies as a state-appraised industrial property as defined by OAR 150-306-0100, 0110 and 0120.

(4) Appraisals of industrial property by the county under this section are subject to audit and review under the procedures established by OAR 150-294-0100. If the department finds an appraisal of industrial property made by the county assessor under this section does not follow the established procedures, the department shall take corrective action.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.126
Renumbered from 150-306.126-(C), REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-306.126(3)-(A), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-306-0130 Oregon Land Information System Fund and the Oregon Map Project

(1) Definitions. For the purpose of this rule:

(a) “Cadastral Data Exchange Standard” is a document created and maintained via Oregon’s Framework Program and approved by the Oregon Geographic Information Council (OGIC) to provide the structure and specifications necessary for the exchange of standardized cadastral data for the state of Oregon to maintain interoperability and facilitate data sharing. Geospatial data standards can be accessed on the Oregon Framework Program website

(b) “County” is the agency, approved by the County Assessor, requesting funds from the Oregon Map Project (ORMAP).

(d) “Director” means the director of the Oregon Department of Revenue.

(e) “Fund” means the Oregon Land Information System (OLIS) Fund. The fund provides financial support for ORMAP. The fund is separate from the state’s General Fund. The fund’s source is an allocated dollar amount received quarterly from each county’s collected document-recording fees, as provided by ORS 205.323(3)(a).

(f) “Grant” means a money award from the OLIS Fund.

(g) “Oregon Map Project” (ORMAP) means the program implemented and authorized by the department to establish a statewide base map for facilitating and improving Oregon’s property tax mapping system and for providing other Geographic Information System (GIS) benefits, pursuant to ORS 306.132 and 306.135.

(h) “ORMAP Project Coordinator” is the department employee tasked with administering the ORMAP project.

(i) “Oregon Land Information System Advisory Committee” (Advisory Committee) is a team of individuals appointed by the department’s director. The committee is comprised of ORMAP stakeholders in private industry, and in federal, state, or local government who have an interest in the success of the program (OAR 150-306-0140).

(j) “ORMAP Funding Criteria” (Funding Criteria) are listed in the document used for the administrative review, technical review, and priority scoring for grant applications. The criteria are part of the grant application and are on the ORMAP web site (www.ormap.net).

(k) “ORMAP Phases” are the project goals approved by the advisory committee. The phases are identified on the ORMAP web site.

(L) “ORMAP Policies” are administrative policies approved by the advisory committee. The policies are identified on the ORMAP web site.

(m) “ORMAP Technical Group” (Tech Group) is comprised of volunteers who have education or experience in surveying, cadastral cartography, legal descriptions, mapping software, database software, or other GIS technology. The group evaluates and provides recommendations on individual county project grant applications and ORMAP policies to the department and the advisory committee.

(n) “ORMAP Technical Specifications” (Tech Specs) is a minimum standard used to determine if taxlots and tax maps remapped with ORMAP funds have been completed and meet ORMAP Phase 1 goals.

(o) “ORMAP Tools Group” (Tools Group) is comprised of county and department staff who have education or experience in surveying, cadastral cartography, legal descriptions, mapping software, database software, or other GIS technology. This group develops and provides support in the construction of Oregon assessor’s maps.

(p) “Project” means an activity that is eligible for a grant from the fund.

(2) The department administers the fund to fulfill the goals of the ORMAP Phases. The department adopts priorities for funding specific projects, goals, or geographic areas in support of ORMAP. The grant is intended to assist the counties in the development of a statewide base map system. The department makes the following disbursements from the fund:

(a) Quarterly payments for ORMAP administrative costs to the department. Administrative costs include but are not limited to, personnel, equipment, and other services and supplies required to administer ORMAP .

(b) Tools group funding. The tools group is eligible for funding up to $75,000 per year.

(A) The Tools Group may provide technical services to counties to assist in the development of GIS editing tools, data development, and data migration.

(B) All projects and services approved by the Tools Group must meet data standards defined by the department.

(c) Grants to the counties. Counties are eligible for grants to support eligible ORMAP projects and for the purchase of approved equipment or software.

(3) Counties applying for a grant to fund an ORMAP project must complete an ORMAP Grant Application; Form No. 150-304-101-9. The application is available upon request to the department or on the ORMAP web site.

(a) Completed project grant applications must be submitted to the department’s ORMAP Project Coordinator no later than the due date for that funding cycle, which is posted on the ORMAP web site. The department accepts grant applications for the purchase of approved equipment or software at any time.

(b) A county’s grant request must adhere to the ORMAP Phase goals and tech specs.

(c) A county that submits a grant application must have a representative available during the tech group meeting to respond to questions related to the application.

(d) If requested by the department, a county must provide a reduction package by completing the Alternative Funding Request form developed by the department and attached to the grant application. The county must describe the modified deliverable in the event full funding is not possible.

(4) The ORMAP Project Coordinator reviews applications using the current version of the ORMAP policies and the funding criteria’s section titled, Administrative Review Criteria.

(a) Administrative review criteria are all pass/fail and include:

(A) The county provides the department with a status map of the county’s ORMAP project phases,

(B) The county has no more than two outstanding ORMAP grant contracts,

(C) The county agrees to share its countywide cadastral data with the department for its internal use and the ORMAP website.

(D) The county has proposed a project directed at meeting the goals of the ORMAP Phases ,

(E) The county has provided the department with the most current calendar year’s countywide cadastral data, which meets the current Cadastral Data Exchange Standard.

(F) At the department’s discretion, the county provides an alternative funding request for the grant application outlining funding reductions of varying percentages defined by the department, and

(G) Final remapping grant application. If a county grant application proposes to bring the entire county to meet the goal of ORMAP Phase 1 (100% of county tax maps meeting the technical specifications) and the application meets other criteria for approval, it may receive priority for a one-time full funding to the 20% funding limitation for that funding cycle. If more than one county submits a final remapping grant request for a funding cycle, the tech group and advisory committee may review final grant applications and make recommendations for prioritizing and funding final remapping grant requests.

(b) The ORMAP Project Coordinator will notify the county applicant if any of the criteria are not met. The applicant may resubmit an amended grant application prior to the grant cycle deadline.

(c) An application that does not pass all the department’s administrative review criteria referenced in section (4) of this rule will be denied.

(d) Applications for approved equipment and software may be awarded at the discretion of the department without review by the tech group. A list of approved equipment and software is attached to the grant application form.

(5) A project grant request that passes the department’s administrative review process will be submitted to the tech group for review at its first scheduled meeting for that funding cycle. Each grant application will be reviewed using the current version of the funding criteria section titled, Technical Review Criteria.

(a) Technical review criteria are pass/fail and include:

(A) The project demonstrates a successful process,

(B) The project has a completion time frame that does not exceed one year, and

(b) If additional information is requested by the tech group, the county must submit a written addendum to the ORMAP Project Coordinator by the date specified.

(c) The tech group may review any information submitted at its next scheduled meeting. The department will determine if more meetings are required to complete the application review process.

(6) The department will determine if there are sufficient funds to provide full funding to all grant requests that pass the technical review. The department will provide funding to as many counties as possible as its first priority. If full funding is not available, grant applications will then be scored using the current Priority Scoring section of the funding criteria.

(a) The Priority Scoring criteria will each be assigned points, and include:

(A) The project is identified as a county edge matching project,

(B) The project is part of an ongoing process,

(D) The project shows a multi-county effort to encourage collaboration,

(E) The project shows funding partnerships,

(F) The project demonstrates significantly greater costs if not funded in the current cycle,

(G) The county has had significant contribution of non-department resources in completing goals of an ORMAP Phase,

(H) The county has signed a statewide data sharing agreement to share its taxlot data, and

(I) The County voluntary withdraws the application from the current funding cycle.

(b) The department will rank each grant application in point total order, with the higher scoring projects receiving preference, using the Priority Scoring methodology.

(c) The tech group will evaluate the department’s ranking and make findings and recommendations as to the department’s application of that methodology.

(d) The department will take account of each of the tech group’s findings and recommendations in the course of recommending approval, denial, or partial funding of the grant based on the Priority Scoring and, if applicable, the quality and quantity of the deliverable in the event of insufficient overall funds.

(7) The department may make changes to the criteria listed in sections (4), (5) and (6) of this rule and notice will be given in the grant application prior to the funding cycle.

(8) The department will provide a written recommendation on grant awards to the advisory committee.

(a) The advisory committee will review the written recommendation of the department and may provide suggestions and input during each funding cycle.

(b) The department will consider any suggestions and input from the advisory committee, and in its discretion, may modify the original written recommendation on grant awards.

(c) The department will notify each grant requestor of its final grant determination and award by letter within two weeks of notifying the advisory committee of grant determinations.

(9) The department will consider appeals of grant decisions.

(a) Appeals must be submitted in writing to the department within 30 days from the action that is being appealed.

(b) If an appellant is successful and additional funds are granted, the additional funding will be deducted from the next quarterly fund deposit.

(10) The department and the grant award recipient must execute an intergovernmental service agreement prior to the disbursement from the fund.

(11) The department must review and approve all documentation of completed project deliverables before approving the payment from the fund to grant recipients.

(12) The department may approve modifications to awarded ORMAP contracts. These modifications may be adjustments to the timeline, deliverables, or amount awarded. The modifications are granted at the discretion of the department based on the availability of funds or the circumstances that required the modification of the contract.

(a) To be granted a contract modification, the county assessor must approve, by letter or e-mail, to the ORMAP Project Coordinator the completed ORMAP Contract Modification Request form attached to the grant application. The form is also available upon request to the department’s ORMAP Project Coordinator.

(b) The department must receive contract modification requests one month prior to the contract expiration date.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.132, 306.135 & 205.323
REV 8-2023, amend filed 03/14/2023, effective 04/01/2023
Renumbered from 150-306.132, REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 6-2009, f. & cert. ef. 7-31-09
REV 7-2005, f. 12-30-05, cert. ef. 1-1-06

Or. Admin. R. 150-306-0140 Statewide Base Map System and the Oregon Land Information System Advisory Committee Role, Membership and Meetings

(1) The department is responsible to establish and deliver the Oregon Map (ORMAP) project pursuant to ORS 306.132 and 306.135. The ORMAP project creates an accessible statewide base map system to assist with and improve the administration of Oregon’s property tax system.

(2) The role of the Oregon Land Information System (OLIS) Advisory Committee is to provide advice and support to the department in the development and implementation of ORMAP’s administrative and technical needs. The committee has the authority to submit recommendations to the department concerning ORMAP and related project proposals. The advice and support that the committee provides to the department includes, but is not limited to:

(a) Assisting the department in developing the statewide goals and priorities for ORMAP.

(b) Assisting and providing advice to the department in setting statewide mapping and Geographical Information System (GIS) standards for ORMAP.

(c) Providing review of the Oregon Land Information System Fund and giving assistance in the development of fair and equitable fund distribution processes and policies for ORMAP projects.

(d) Support by communicating ORMAP information and goals to citizens and interested groups within the state and local communities.

(3) The Advisory Committee is composed of not more than 15 individuals appointed by the department’s director. Members of the committee include ORMAP stakeholders from private industry, and federal, state, or local government leaders with an interest in the success of the project.

(a) Committee members serve at the pleasure of the director. Each Advisory Committee member serves a two-year term with an opportunity to continue for multiple terms. Committee member terms are staggered to allow for sufficient committee membership coverage; terms begin July 1 and end June 30.

(b) In the event of a vacancy, the director appoints another member to serve the duration of the term.

(c) Upon expiration of a term, a committee member may serve until the appointment of a successor. Members reaching the end of their two-year term may remain on the committee, if they request and receive approval from the director.

(d) Advisory Committee members serve without compensation for travel or per diem.

(4) The Advisory Committee meetings must adhere to the Oregon Public Meetings Laws, ORS 192.610–192.690.

(a) The Advisory Committee meets at the request of the department to review ORMAP policies, proposals, funding, and practices.

(b) A department employee designated by the director, presides as the Advisory Committee chair at all meetings.

(c) Advisory Committee members and any other organization or person who expresses interest in Advisory Committee meetings will receive agendas and study notes prepared by the department’s ORMAP staff before the meeting date.

(d) Advisory Committee members or other interested parties with additional agenda items must request an agenda revision from the ORMAP staff to add the item and receive meeting time in which to present the item.

(e) Decisions are made by a consensus of the committee members.

(5) After each funding cycle, the department will post project update information to the publicly-accessible ORMAP website.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 306.135
Renumbered from 150-306.135, REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
REV 7-2005, f. 12-30-05, cert. ef. 1-1-06

Or. Admin. R. 150-306-0200 Application Filing by Telephonic Facsimile (FAX)

Application Filing by Electronic Means

The Department of Revenue or any county may accept any application for property tax exemption or special assessment by telephonic facsimile (FAX) or other electronic means according to the policies and procedures of the receiving agency.

History

Statutory/Other Authority: ORS 305.100 & 306.265
Statutes/Other Implemented: ORS 306.265
Renumbered from 150-306.265, REV 43-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
REV 10-2002, f. & cert. ef. 12-31-02

Division 307 PROPERTY SUBJECT TO TAXATION

Or. Admin. R. 150-307-0010 Real Property

(1) For purposes of ad valorem taxation, the determination of real and personal property is controlled by the statutory definitions of real property, whether or not they conform to definitions used for other purposes.

(2) Real property includes:

(a) Land. “Land” may be either the raw undeveloped land, or improved to the extent a site is created. A “site” exists when land has been improved by site developments to the point that it is, or is ready to be, used for the purpose intended.

(A) Site developments are improvements to the land that become so intertwined with the land as to become inseparable. Examples are: fill, grading and leveling, utility facilities (sewer, water, etc.), cost of developer’s activities and profit that accrues to the land, including but not limited to: permits, advertising, sales commissions, developer’s profit and overhead, insurance coverage, and any other improvements to the land necessary to improve it to become a site. Site developments are synonymous with site improvements, land improvements, and site preparation. Site developments consist of both “offsite developments” and “onsite developments.”

(i) Offsite developments are land improvements provided to the site. These include but are not limited to items such as streets, curbs, sidewalks, street lighting, storm drains, and utility services such as electricity, water, gas, sewer and telephone lines.

(ii) Onsite developments (OSD) are land improvements within the site which support the buildings or other property uses. These include but are not limited to items such as grading, fill, drainage, wells, water supply systems, septic systems, utility connections, extension of utilities to any structure(s), retaining walls, landscaping, graveled driveway area. Onsite development is synonymous with onsite improvement.

(B) For all specially assessed farm and forest land appraisals the value of onsite developments included as part of the land value will be listed as a separate item on the land record. An exception to this procedure is the appraisal of taxable improvements on exempt federal land. In this situation, the onsite development value shall be carried as a separate item on the improvement record.

(C) The value of site development may be higher or lower than the total cost of its components and is determined by the contribution of the site developments to the market value of the site.

(b) Buildings, structures, improvements, machinery and equipment. These are improvements on the land and are real property when erected upon or affixed to the land.

(A) Erected Upon. “Erected upon” means assembled, built or constructed and permanently situated on real property and adapted to use in place. For example, a large piece of machinery or equipment is set upon a foundation without being fastened thereto, but is integrated with the building by the use of special foundations, special wiring, electrical panels and switches, plumbing, venting, access ramps, openings and other forms of construction.

(B) Affixed To. “Affixed to” means being annexed or attached to the real property by bolts, screws, nails or by being built into the structure. Also, items may be constructively affixed to the land or building and considered real property by virtue of their weight or size. Some examples include but are not limited to: pipeline milking equipment, milk bulk tanks, seed cleaning equipment, bowling alley lanes, pin setters, and scoring equipment, rock crushing plants, foundries, smelters, paper machines, newspaper presses, sawmills, plywood machinery and presses, aluminum reduction machinery and cannery equipment.

(C) When machinery, equipment or fixtures are affixed to or erected upon real property and owned separately from real property, they are assessable as real property to the owner as provided in ORS 308.115(2).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.010
Renumbered from 150-307.010(1), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
11-71
3-70
1-66
11-59
3-58
1-54

Or. Admin. R. 150-307-0020 Personal Property Definitions

(1) Goodwill. “Goodwill” is a saleable business asset based on reputation, not physical assets.

(2) Customer list. “Customer list” is a proprietary list containing information regarding a business enterprises’s clients and is part of the business records for that business.

(3) Contracts and contract rights. “Contracts and contract rights” refers to agreements between two or more parties, which establish mutual rights and responsibilities for a stated consideration, and rights created under such agreements. Examples of contracts include but are not limited to:

(a) Contracts for sale of goods;

(b) Covenants not to compete;

(d) Contracts to rent or lease property;

(e) Contracts to provide financing;

(f) Contracts for services by employees or others;

(g) Contracts for permission to use property or processes.

(4) When appraising property utilizing the income approach, the rent attributable to the property shall be based on market rent. “Market rent” is the rental income that the property would most probably command in the open market as of the assessment date. Market rent shall be used for both owner occupied and rented or leased property regardless of the terms of any particular rental or lease agreement encumbering the property.

(5) Trade secret. “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique or process that derives independent economic value from not being generally known by other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.020
Renumbered from 150-307.020, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-307-0030 Personal Property

Property classified as personal property is: (This list is not exclusive.)

(1) Boats and vessels includes all floatable craft. See also ORS 308.260.

(2) Merchandise and stock in trade, commonly referred to as inventories, include the following categories:

(a) Merchandise includes all classes of commodities which are obtained in a salable condition and held for sale in the ordinary course of business.

(b) Materials consist of goods purchased for use in manufacturing and upon which further work is necessary before they are available for disposal. Such goods may be raw materials or they may be partially fabricated commodities secured from others. Thus, things which are finished stock or merchandise for one establishment may be raw materials for another. However, when parts are manufactured and held for future use in manufacturing, they may be classed as finished parts but included in raw materials inventory.

(A) Inventory Supplies consist of personal property owned by or in possession of the taxpayer, that are expended in the production of finished goods or will be consumed in the sale of the stock in trade of the taxpayer held for sale in the ordinary course of his business.

(B) Noninventory Supplies include those items which are not to be expended in the production of finished goods or not to be sold to customers.

(d) Work in process applies to all goods to which manufacturing services have been applied and on which further operation will be necessary before the product is normally ready for disposition. The value of work in process includes material and any labor and factory service (overhead) which have been exerted in bringing the work to the present state of completion.

(e) Finished stock consists of completed products which are available for disposal, comparable to a dealer’s merchandise. See ORS 308.250 — Processor’s Exemptions, and ORS 311.211 — Omitted Property Statutes.

(3) Livestock consisting of all domesticated or confined animals, birds, bees, fish and reptiles.

(4) Movable machinery, movable tools and movable equipment include items readily movable as opposed to apparently stationary or fixed items. See paragraph (2)(b) of OAR 150-307-0010.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.020
Renumbered from 150-307.020(3), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
3-70
12-66
1-66
12-65
12-61
11-59
3-58
1-54

Or. Admin. R. 150-307-0032 Recalculation of maximum assessed value for partial assessed value exemptions

(1) For the purposes of ORS 307.032(1)(a)(A), in the case of a partial exemption of assessed value, “the value of the partial exemption” means the dollar amount of assessed value exempted.

(2) For purposes of ORS 307.032(1)(b), in the case of a partial exemption of assessed value, the assessed value of the property shall equal the lesser of:

(a) The real market value of the property reduced by the statutory dollar amount of the partial exemption;

(b) The maximum assessed value of the property as calculated under ORS 307.032(1)(a) and section (1) of this rule; or

(c) The assessed value of the property as though not eligible for partial exemption reduced by the statutory dollar amount of the partial exemption.

(3) This rule is applicable to all properties that first become eligible for a partial exemption of assessed value on or after January 1, 2024.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.032
REV 22-2023, adopt filed 12/21/2023, effective 01/01/2024

Or. Admin. R. 150-307-0040 Taxation of Property Associated with Mining Claims on Federal Land

(1) A mining claim filed with the United States Bureau of Land Management (BLM) conveys a right of possession and right to extract minerals under conditions set forth by those agencies. BLM issues an identification number to recognize unpatented mining claims.

(2) An unpatented mining claim allows the claimant limited use of land owned by the United States government.

(a) The unpatented mining claim including the land and minerals is exempt from property tax as required by ORS 307.080. Land includes site developments that are so intertwined as to be inseparable from the land as defined in OAR 150-307-0010 and roads as described in ORS 308.236.

(b) All rights and interests associated with an unpatented mining claim, including but not limited to the right to possess, use, or access the land, are exempt from property tax.

(d) Annual filing fees, maintenance payment fees, maintenance payment fee waiver certification (small miner’s waiver), a notice of intent to hold, or assessment work notices (proof of labor) are also exempt from property tax unless such labor or fees increase the real market value of taxable improvements to the property.

(3) A patented mining claim issued by the United States government confers ownership, rights, privileges, immunities and appurtenances to the claimant. A patented mining claim is subject to property tax as described in ORS 308.115.

(4) Taxable personal property must be reported to the assessor in the county in which the property is located each year. This requirement is further described in ORS 307.190, 308.105, 308.210, 308.250, 308.285 and 308.290.

(a) Except as otherwise specifically provided, all taxable personal property must be reported for taxation in the county where it is located (situs) as of 1:00 am on the first day of January each year.

Example 1: A taxpayer resides in County A and has a mining claim in County B. The mining equipment is kept at taxpayer’s residence when not in use on the claim during the winter months. It is located in the taxpayer’s garage on January 1st at 1:00 am. The taxpayer must report the mining equipment in County A.

(b) The assessor will provide a Confidential Personal Property Return for purposes of reporting taxable personal property. The return is due in the office of the assessor by March 1 each year.

(c) Personal property may be assessed in the name of the owner or of any person having possession or control of the property.

(d) The assessor must cancel the personal property assessment for any taxpayer whose taxable personal property in the county has a total assessed value (AV) below a threshold value. The Department of Revenue re-computes the threshold value annually under ORS 308.250(4). Canceling the assessed tax in one year does not relieve the taxpayer from the annual filing requirement for any other tax year.

Example 2: A taxpayer garages movable machinery used on a mining claim at her residence in County A but leaves tools and small equipment in a shed at the mining claim located in County B. The value of taxable personal property in County A on January 1 is $12,000 and the value of taxable personal property in County B is $1,600. The taxpayer must report the personal property in both County A and County B. The Department calculated the threshold value at $13,000 for this assessment year. The assessor in each county will cancel the tax owing for the year since the value of the property in the assessor’s respective county is under the threshold value.

(e) Pursuant to ORS 307.190(1), personal property mining equipment owned or held by an individual solely for personal use, benefit, and enjoyment is exempt from taxation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.080
Renumbered from 150-307.080, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07

Or. Admin. R. 150-307-0050 Public Property Leased or Rented by Taxable Owner

(1) Qualifying Conditions. The assessor shall assess and tax publicly owned real or personal property for the assessed or specially assessed value thereof uniformly with real property of nonexempt ownerships when the following conditions of a lease or other interest or estate less than fee simple are met. A lease or other possessory interest exists if the occupant is granted exclusive possession of a definitely described area for a specified period of time (term).

(2) Exclusive Possession. The test is whether the occupant has sufficient control over the premises to warrant the label of possession. If the occupant can exclude others, including the owner (except for inspection, making repairs etc.) the occupant has possession. But, if the premises must be shared with others, such as a common pasture, the occupant does not have a possessory interest. When the property can be used for many purposes such as farming, recreational, residential, or mining, the right to use it for a single limited purpose might not constitute possession; yet, the same right to use may well be regarded as possessory if the property in question is used for a limited number of purposes. If the property in question is of little use for anything other than mining or recreation, the grant of the right to use it for one of these purposes embraces a substantial part of all of the practical uses to which the land may be put. Therefore, although such use is limited, it could be considered “exclusive.”

(a) Revocation. A possessory interest may exist even though the agreement provides that it may be revoked upon notice, for cause or upon the happening of some event. If the use may be terminated, without notice or cause, it may be a mere non-possessory license which is ordinarily revocable at will and without notice.

(b) “Management” or “Concession” agreements present special problems. For example, a county and a private corporation agree that the corporation will operate a county owned golf course for the county. Even though the agreement requires the corporation to meet many standards as to services, pricing, personnel etc., the corporation may still have a possessory interest if it has the exclusive right to occupy and operate the facilities without interference from the county and retains the major part of the proceeds. However, if the county is actively involved in the operation and allows the corporation a minor portion of the proceeds as compensation for its services, the corporation may be considered a mere agent or employee of the county.

(c) Parking Lots and Similar Arrangements. If the right is merely a “hunting license” to park in any available space, it is non-possessory. However, if a specific space is assigned, the interest may be possessory if the other conditions are met.

(3) Area. The occupant must have possession of an area that is definitely described or capable of being described.

(4) Term. A possessory interest may be for any period of time the parties agree upon.

(5) Rent. A lease is a contract and requires some sort of consideration in terms of money, goods, services, or other benefits.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.110
Renumbered from 150-307.110(1), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-307-0060 Property Held Under Lease

(1) A new claim must be filed with the county assessor, as required under ORS 307.112(4), when a new lease, new lease-purchase agreement, extension of current lease, extension of current lease-purchase agreement or any modification to the existing lease or lease-purchase agreement is made.

(2) The new claim must meet all the requirements of ORS 307.112.

(3) Late filing as provided in ORS 307.162(2) is permitted.

(4) The State of Oregon and the United States government are not permitted to file a claim for exemption under ORS 307.112.

(5) When used in reference to real property or tangible personal property, a lease is a contract of at least one year by which the owner of a property grants the rights of possession, use, and enjoyment of the property to another for a specified period of time in exchange for payment.

(6) Month-to-month tenancy or a general rental agreement is not considered the same as a lease for purposes of an exemption under this statute and will not qualify in an exemption claim.

(7) The assessor must be satisfied that the tax savings resulting from the exemption will inure solely to the benefit of the lessee.

(8) Sufficient documentary proof must be submitted at the time of application. Documentary proof to show the property tax savings is passed on to the lessee includes:

(a) A form prescribed by the department stating that the lessee and lessor agree that the tax savings resulting from the exemption will inure solely to the benefit of the lessee;

(A) The form must be signed by the lessor and lessee; and

(B) The form must specify how the tax savings inures to the lessee.

(b) Other documentation the county assessor deems necessary to prove that the lessee is receiving the full benefit of the tax savings; or

(c) An agreement under the terms of the lease that any tax savings resulting from the exemption will inure solely to the benefit of the lessee.

(9) Insufficient proof or failure to show the tax savings inures to the lessee as described above is grounds for denial of the exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.112
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-307.112, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-307.112(1)
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-307-0070 Property Used for Public Park or Recreation

For property to qualify as an exempt public park or recreation site it must meet the standards for ownership and use.

(1) Owner means a nonprofit corporation that owns or is purchasing the property and meets the requirements of ORS 307.115(2).

(2) “Public use” means the property is open and available to all the people for lawful common uses without discrimination, limitations or restrictions other than those imposed by law or ordinance.

(3) Use of the property is not considered ‘public use’ when:

(a) Access is limited to persons paying a fee.

(b) Access is refused to persons who are unable to pay a fee.

(d) Access is limited due to the owner’s activities.

(e) Entry is by invitation only from the owner.

(f) Entry is controlled by the desires of the owner.

(g) Entry contributes to the owner’s financial interest.

(4) The following do not constitute public use and recreation:

(a) The owner sponsoring special events for public attendance.

(b) A mere byproduct of the owner’s activities.

(d) An activity which may financially benefit the owner.

(5) Nonqualifying activities of public park or recreation property includes and is not limited to: commercial business, industry, or trade, and income producing projects or ventures.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.115
Renumbered from 150-307.115(1), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-307-0080 Guidelines for Exempt Port Property Subject to In Lieu Tax

(1) Definitions: Port property subject to in lieu of payments means property, excepting the dock area, that is leased to a taxable owner and used for discharging, loading or handling of cargo from ships, or for the temporary storage of cargo that is directly incidental to transshipment.

(a) “Discharging, loading, or handling of cargo from ships” is limited to activities during which no change in the cargo can occur while it is being discharged, loaded, or handled.

(b) “Temporary storage of cargo” means storage of cargo temporarily resting in place and awaiting further movement or shipment to another location.

(2) Property Subject to In Lieu of Payment:

(a) Certain properties exempt under ORS 307.120 are subject to one quarter of one percent (.0025) payments in lieu of taxes to schools. Properties subject to the in lieu of payments are those leased, rented or preferentially assigned on January 1, and used for storage of cargo directly incidental to transshipment.

(b) Dock area properties used for the berthing of ships, barges or other watercraft, (except floating homes as defined in ORS 830.700), or the discharging, loading or handling of cargo are exempt and are not subject to the payments in lieu of taxes to schools.

(c) A property not leased, rented or preferentially assigned on January 1, will not be subject to the in lieu of payment for the tax year for which the January 1, assessment date applies.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.120
Renumbered from 150-307.120, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-1998, f. & cert. ef. 6-30-98
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-307-0090 Request For Computation of In Lieu Tax Payment

(1) The request for computation of payment in lieu of tax is an annual request.

(2) To receive the in lieu tax computation in any year the taxpayer must:

(a) Have a possessory interest in the property;

(b) File a request using the Department of Revenue prescribed form;

(d) File the request form in the time prescribed by law;

(e) Provide a true copy of the lease or agreement that establishes the possessory interest; and

(f) Provide any other information the assessor deems necessary to complete the computation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.120
Renumbered from 150-307.120(3)(a), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-307-0100 Strategic Investment Program

(1) The county shall establish a separate tax account for project investments (for example A-1 account for buildings and M & E, and when applicable, a separate personal property account).

(2) Value not defined in the eligible project is taxable in addition to the trended base (assessable portion of the eligible project).

(3) The agreement between the company and the county governing body shall state that the company shall file with the Department of Revenue the information required by ORS 308.285–308.290 on the annual industrial property return as if the property were taxable.

(4) The Department of Revenue shall be responsible for the following:

(a) Accumulating the invested cost on the eligible project from data provided by the company on their industrial property return.

(b) Determining the RMV of buildings, machinery and personal property identified as part of the eligible project.

(5) The county assessor shall be responsible for:

(a) Determining the trended base at three percent annually (for example $100 million the first year, $103 million the second year).

(b) Allocating the trended base of the eligible project per ORS 307.123(2)(a).

(6) The county assessor and governing body shall be responsible for determining the amount of the community services fee and establishing procedures for the billing, collection and distribution of the community services fee. Enforcement of the contracts or other agreements shall be the sole responsibility of the parties to the contract.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.123
REV 17-2020, minor correction filed 09/25/2020, effective 09/25/2020
Renumbered from 150-307.123, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 1-1994, f. 6-21-94, cert. ef. 7-1-94, Renumbered from 150-307.110

Or. Admin. R. 150-307-0120 Review Required in Determining Exempt Status of Property for Charitable Institutions

The following criteria shall be used in determining the qualification for property tax exemption under ORS 307.130 when an application is made by a charitable organization as required in 307.162, 307.112, or 307.166:

(1) Purpose. The purpose of this rule is to set forth, as a guide for assessors, those tests that are commonly applied by the Oregon courts in determining whether property qualifies for exemption under ORS 307.130. This rule does not include all of the principles that have been used by the courts. The assessor must recognize that evaluation of an application for charitable exemption must be made on a case-by-case basis in light of the specific fact situation presented.

(2) Organization:

(a) Applicant must be an incorporated institution;

(b) The corporation must be organized as a nonprofit corporation. This is a mandatory first step for an organization; however the status of an institution as a nonprofit corporation does not conclusively endow it with the attributes of a charity. For example, an organization is recognized by the Internal Revenue Service as income tax exempt within IRC (1954) Section 501(c)(3). However, the standards for determining whether the income of an organization is subject to federal income taxes and the question of whether property is exempt from property taxes are separate and distinct. Thus, whether a corporation is a charity is to be determined not only from its charter, but also from the manner in which it conducts its activities;

(d) The organization must not operate for the profit or private advantage of the organization’s founders and officials; and

(e) The organization’s articles of incorporation or bylaws must require that its assets be used for charitable purposes when the organization dissolves.

(3) Property Interest:

(a) If application is made under ORS 307.162 the organization must be the owner or purchaser of the property.

(b) If application is made under ORS 307.112 the organization must be the lessee.

(d) Any organization claiming the benefit of property tax exemption in subsection (3)(a), (b), or (c) under ORS 307.130, must have possession of and be using the property for the stated exempt purpose by June 30 of the year in which the exemption is claimed.

(4) Purpose and Activity:

(a) Any organization claiming the benefit of property tax exemption under ORS 307.130, as a charitable institution, must have charity as its primary, if not sole, object and must be performing in a manner that furthers that object.

(b) The activity conducted by the charitable institution must be for the direct good or benefit of the public or community at large. Public benefits must be the primary purpose rather than a by-product. An organization that is established primarily for the benefit of its members, is not a qualifying charity. For example, a rifle club formed primarily for the pleasure of its members also provides safety information and instruction. Since the club’s primary purpose is not to provide a direct benefit to the public, its property is not exempt. An organization that performs a service to a professional organization of private persons (example: teachers, physicians or architects) is not a charity.

(c) If the activity of the charitable institution relieves a government burden, it is an indicator that the institution may be charitable. Failure to relieve a government burden will not disqualify an organization as charitable.

(d) An element of gift and giving must be present in the organization’s activities, relating to those it serves. This element of gift and giving is giving something of value to a recipient with no expectation of compensation or remuneration. Often, a charitable organization’s product or service is delivered to recipients at no cost or at a price below the market price or price to the organization of the product or service. Declarations of worthwhile purpose and charitable endeavors must be manifested in concrete endeavors and tangible reality which benefits the recipient. Unless this element of a gift or giving is present promises of future worthy endeavors are meaningless by inaction, and give the applicant no preferred status.

(A) Forgiveness of uncollectible accounts does not by itself constitute a gift or giving.

(B) The fact that a business activity actually operates at a loss does not make it charitable.

(C) The fact that an organization charges a fee for its services does not necessarily invalidate its claimed status as charitable. It is a factor to be considered in the context of the organization’s manner of operation. In determining whether a fee-charging operation is charitable, it is relevant to consider the following:

(i) Whether the receipts are applied to the upkeep, maintenance and equipment of the institution or are otherwise employed;

(ii) Whether patients or patrons receive the same treatment irrespective of their ability to pay;

(iii) Whether the doors are open to rich and poor alike and without discrimination as to race, color or creed;

(iv) Whether charges are made to all and, if made, are lesser charges made to the poor or are any charges made to the indigent.

(D) The fact that individuals provide volunteer labor to assist the organization in performing its activities may indicate that the organization is charitable. However, it is not a standard in determining whether an organization is charitable per se.

(E) An institution shall not be denied exemption solely because:

(i) Its primary source of funding is from one or more government entities; or

(ii) The purpose or use of the property is not limited to relieving pain, alleviating disease or removing constraints.

(5) Use. The property must be used primarily for charitable purposes.

(a) There must be an actual charitable use of the property rather than just a charitable use of the income derived from the operation of the property. “Destination of income” theory does not qualify the property for exemption. For example, use of property by a charitable organization as a bingo parlor to raise money for a charitable activity is not an actual charitable use of the property, and does not qualify the property for exemption.

(b) A retail store operated by volunteers of a qualified organization may receive exemption if at least one-half of the inventory is donated and consigned. One-half of the inventory refers to the number of items. The total number of donated and consigned items must be at least equal to the total number items that constitutes new merchandise.

(c) To be eligible for a property tax exemption as a charitable institution, the applicant must be primarily eleemosynary in nature. Such an institution will demonstrate two elements of charity. First, the institution must perform a function or act which is good or beneficial for humans and other living things. The second part entails a gift or act of giving. The words “gift” and “giving” imply a voluntary act. While an institution shall not be deprived of an exemption as a charitable organization solely because its primary source of funding is one or more governmental agencies.

(d) The property shall be actually used or occupied for the benevolent and charitable work carried on by the organization.

(A) The use of the property must substantially contribute to the furtherance of the charitable purpose and goal of the organization. For example, a gift shop is located in a hospital qualifying for exemption as a benevolent and charitable institution. The gift shop sells candy and flowers and may be subject to ad valorem taxation, unless it furthers the charitable purpose and goal of the organization. As another example, a cafeteria is located in a hospital qualifying for exemption as a benevolent and charitable institution. The cafeteria is operated primarily for the use of the hospital staff and is incidentally used by the general public. The cafeteria is being used to contribute to the charitable goal of the hospital, and is exempt from ad valorem taxation.

(B) Only the portion of a property used for literary, benevolent, charitable or scientific purposes shall be granted exemption from ad valorem taxation under ORS 307.130. Property may be in part taxable and exempt. For example, a property otherwise qualifying for exemption, has a barber shop operating within the facility. The portion of the building in which the barber shop is located is subject to ad valorem taxation, unless the barbershop furthers the charitable purpose and goal of the organization.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.130
Renumbered from 150-307.130-(A), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 3-1988, f. & cert. ef. 4-15-88
RD 2-1988, f. 1-11-88, cert. ef. 1-15-88
RD 6-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-307-0130 Literary Institution Defined

(1) A literary institution is an organization that is devoted to propagation and spread, or live performance of literature, study or use of books and body of writings in prose or verse, and scripts of plays both contemporary and classic.

(2) A literary institution must operate in a manner in which a significant portion of its activities are charitable. Property tax exemption must be denied when charitable activities are not present. OAR 150-307-0120 is the appropriate guideline for determining whether an organization is charitable.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.130
Renumbered from 150-307.130(1), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-307-0140 Minimum Criteria Required in Determining Exempt Status of Property for Religious Organizations

(1) The following criteria, as a minimum, will be used in determining the qualification for property tax exemption of property of a religious organization under 307.140 when an application is made as required in ORS 307.162, 307.112 or 307.166:

(a) The applicant must be a religious organization.

(A) If the religious organization is the owner or purchaser of the property, application is made under ORS 307.162.

(B) If the religious organization is leasing, subleasing, or in a lease-purchase agreement for the property from a taxable owner, application is made under ORS 307.112.

(C) If the religious organization is leasing or subleasing the property from another exempt organization, application is made under ORS 307.166.

(b) The applicant must be the entity in possession of the property.

(c) The property for which a religious organization claims an exemption must be reasonably necessary to accomplish the religious objectives of that organization.

(d) The actual use of the property must be consistent with the claimed necessity.

(2)(a) Upon receipt of an initial-year application for exemption under ORS 307.140(4), the Department of Revenue will provide a copy of the application to the relevant county assessor and the county assessor will approve or deny the application.

(b) The date the initial application is received by the department will be the date filed for purposes of timely filing. (See OAR 150-305-0470.)

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.140
REV 22-2021, amend filed 12/16/2021, effective 01/01/2022
Renumbered from 150-307.140, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 17-2008, f. 12-26-08, cert. ef. 1-1-09
RD 6-1986, f. & cert. ef. 12-31-86
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-307-0150 Parsonage and Caretaker Residence Exemption Guidelines

(1) A parsonage or caretaker residence is considered primarily a residence even though incidental religious use may occur there. A parsonage or caretaker’s residence is totally taxable unless it meets the criteria established in OAR 150-307-0140.

(2) The following are examples of activities which do not qualify the residence for an exemption:

(a) Living close to the house of worship to deter vandalism;

(b) Opening and closing the house of worship daily;

(d) Required living quarters for caretaker or pastor’s family which do not meet conditions in OAR 150-307-0140.

(3) Notwithstanding subsection (2), a parsonage or caretaker residence may qualify for the affordable housing exemption under ORS 307.140(4) if it meets all requirements of that statute and ORS 307.162.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.140 & 307.162
REV 24-2021, amend filed 12/16/2021, effective 01/01/2022
Renumbered from 150-307.140(4), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-307-0160 Definition of Schools and Academies

(1) “Schools” and “academies” mean educational institutions that:

(a) Offer education in kindergarten or grades 1 through 12, or any combination of those grade levels; or are post-secondary colleges or universities; and

(b) Provide a comprehensive instructional program that is not limited to dance, drama, music, religious or athletic instruction, or other special art or technical skill.

Example 1: An incorporated, charitable nonprofit organization that promotes the arts in its community offers several weekly dance classes at its Arts Center. The organization would not qualify for exemption as a “school” or “academy” under ORS 307.145 because it does not offer a comprehensive instructional program. Failure to qualify for exemption under 307.145 does not preclude exemption under another statute if the property qualifies for exemption under that statute.

Example 2: An incorporated charitable school focuses on teaching children about a foreign culture through a foreign language immersion program where children spend the school day speaking and hearing a foreign language as they learn about literature, mathematics, science, language, and social studies. The school would qualify for exemption under ORS 307.145 because it provides a comprehensive instructional program.

(2) Schools or academies focusing primarily on providing on-the-job training do not qualify.

(3) To qualify for exemption under ORS 307.145, a pre-school or pre-kindergarten must qualify as a “child care facility” as defined in 307.145(3)(a).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.145
Renumbered from 150-307.145, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15

Or. Admin. R. 150-307-0170 Senior Center Property Exemption

The following criteria, as a minimum, is specific to senior center property only.

(1) To qualify for an exemption, the primary use of a property must be providing senior services and activities, rather than a by-product of another group or activity.

(2) Property used primarily for providing services and activities for senior persons may qualify for exemption.

(3) “Primary use” means 51 percent or more of the time the property is actually used.

(4) Eligible activities may include but are not limited to food service programs, exercise and health screening, estate planning seminars, arts and crafts workshops, dances or celebrations.

(5) Only the portion of a property that is reasonably necessary and actually used is eligible for exemption. Actual use must be consistent with the qualifying activities.

(6) An exemption shall not be denied due to incidental fund raising.

(7) Some fund raising activities such as baked goods sales, salmon bakes, benefit breakfasts, and raffles or games of chance, may occur so long as those activities comprise 49 percent or less of the total activity time. The assessor shall deny any claim for exemption if a record of the activities is not provided upon request.

(8) Activities which do not qualify include but are not limited to the following:

(a) A retail store, thrift store or gift shop whether stocked with consignment items, or donated goods does not qualify.

(b) Living quarters do not qualify.

(9) The property may be in part taxable and exempt. A partial exemption may be granted when a specific portion of a property is used in a manner that does not qualify.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.147
Renumbered from 150-307.147, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-31-94, Renumbered from 150-307.130-(C)
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-307-0180 Burial Grounds, Cemeteries, Crematories

(1) Buildings used exclusively to store machinery and equipment which is used solely for cemetery, crematory, or alternative disposition of human remains purposes are exempt.

(2) A pet cemetery is taxable. The assessor shall exempt only burial grounds of human remains.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.150
REV 12-2022, amend filed 06/24/2022, effective 07/01/2022
Renumbered from 150-307.150, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-307-0190 Application Process for Property Tax Exemption

(1) The applicant must specify the applicable exemption statute when filing a claim for exemption.

(2) It is not the county assessor or Department of Revenue’s responsibility to determine under which statutory provision the applicant should apply.

(3) The assessor shall determine property tax exemption eligibility based on the exemption statute specified by the applicant on the application.

(4) The assessor shall return any application that is incomplete to the applicant for completion.

(5) If the assessor returns an application for completion or clarification, the applicant must return the application to the assessor within 15 days of the date it was mailed to the applicant or by the filing deadline, whichever is later, for the assessor to accept the application as a timely filing.

(6) Any application that is filed late must be accompanied by a late filing fee. If the applicant does not pay the late filing fee no exemption shall be allowed.

(7) If the exemption is denied by the assessor, the late filing fee shall be refunded to the applicant.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.162
Renumbered from 150-307.162(1), REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-307-0200 Property of Exempt Entities Leased to Other Exempt Entities

(1) For purposes of ORS 307.166, a lease or other agreement means any written document that communicates the terms and conditions of tenancy. A verbal agreement will not qualify in an exemption claim.

(2) Public body property which is leased or used by another public body is exempt from property taxes when the property is used by the lessee for a qualifying exempt purpose on July 1 of the assessment year to be exempted. The public body granting possession and use of their property must provide notice of the lease or other agreement to the assessor after entering the agreement. If requested by the assessor, a copy of the lease or other agreement must be provided.

(3) When public body property is subsequently leased to another entity other than a public body whose property is exempt from taxation, filing a timely application for a property tax exemption is required.

(4) When property of entities that are not public bodies but whose property is exempt from taxation is leased to a public body, an application for a property tax exemption is also required.

(5) When application is required, late filing is permitted. Payment of the late filing fee must be submitted with the application. The late filing fee cannot be excused or waived.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.166
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-307.166, REV 53-2016, f. 8-13-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 9-1997, f. & cert. ef. 12-31-97
RD 5-1996, f. 12-23-96, cert. ef. 12-31-96
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-307-0210 Property Tax Status of Alternative Energy Systems

(1) Definitions:

(a) "Alternative energy system" means a solar, geothermal, wind, water, fuel cell or methane gas energy system used for the purpose of heating, cooling or generating electricity.

(A) Solar alternative energy systems use the sun and may include but are not limited to:

(i) Solar electric or photovoltaic (PV) systems that consist of solar electric panels (photovoltaic cells) that convert sunlight directly into electricity and may include connective wiring, solar electric modules, inverter, mounting system, disconnection equipment, net-metering system, and storage batteries,

(ii) Solar heating or cooling systems that consist of active, passive, and thermal systems used for water, or space heating or cooling and may include south facing windows, trombe walls, extra thick concrete/stone floors designed for the absorption of heat, thermal chimneys, solar panels or collectors which directly heat coils of water on the roof or outside walls, extra hot water storage tanks, connecting piping, sensors, valves, pumps, heat exchangers, and controls.

(B) Geothermal alternative energy systems use heat extracted from the earth and may include but are not limited to geothermal heat pumps (GHPs), which can be used for both heating and cooling of buildings and hot water needs.

(i) Ground source geothermal heat pumps consist of buried loops or coils of tubing used to exchange heat.

(ii) Water source geothermal heat pumps consist of loops submerged in a lake, pond or well.

(C) Wind alternative energy systems produce mechanical or electrical power or energy. Wind turbines typically consist of a propeller driven generator attached to a building or tower used to drive a direct current generator which is generally tied to a battery storage system and used to power household or business needs. The system may be connected to a net-metering system or be completely off-grid. These systems may include:

(i) Small stand-alone wind turbines.

(ii) Groups of wind turbines.

(D) Water alternative energy systems or hydropower systems are used to generate electricity. These systems may include but are not limited to micro hydro systems which are small-scale facilities providing electricity to power homes, small farms, and businesses. Micro hydro systems typically consist of a small water drive wheel or turbine which is connected to an electric generator and the output is connected to the user by power wiring. These systems may include a storage battery system and net-metering system.

(E) Fuel cell alternative energy systems produce electricity electrochemically and non-reversibly, using hydrogen-rich fuel and oxygen, producing an electric current, water, and thermal energy. These systems may include but are not limited to fuel cell systems using reformed fossil fuels which also produce carbon dioxide.

(F) Methane gas alternative energy systems are typically gas collection systems used to fuel an electric generator and may also include methane digester systems. These systems may include but are not limited to:

(i) Methane collection systems installed at closed or partially closed land fills and used to fuel electric generator systems.

(ii) Methane digester systems owned by and installed at dairy farms and used to generate power.

(b) “Onsite” means a single, operationally integrated complex of property or properties composed of a single parcel of land and improvements thereon or a group of adjacent parcels and improvements thereon.

(2) Alternative energy systems qualify for exemption only if the system is a net metering facility, as defined in ORS 757.300, or is primarily designed to offset onsite electricity use.

Example 1: A company installs solar panels to generate electricity. The solar energy system is installed as a net metering facility. Therefore, the solar energy system qualifies for the property tax exemption.

Example 2: A utility owns a large wind generating farm. The system is not a net metering facility nor is it designed to offset onsite electricity use. Therefore, the wind energy system does not qualify for the property tax exemption.

Example 3: A methane collection system installed at a closed portion of an otherwise active landfill is used to fuel an electric generating facility to produce electricity used to offset power use at the active portion of the landfill. The system qualifies for the property tax exemption.

Example 4: A methane digester system installed at a dairy farm is used to fuel an electric generator system to generate power for the dairy farm’s operations. This qualifies for exemption.

Example 5: An industrial facility installs a methane collection system where methane gas is compressed and used as a fuel source to generate electricity for the facility’s operations. This qualifies for exemption.

(3) Alternative energy systems that provide heating, cooling or that generate electrical energy for personal consumption qualify for the property tax exemption only to the extent that they are primarily designed to offset onsite electricity use or are net metering facilities.

(4) Alternative energy system devices and components are exempt to the extent that they add real market value (RMV) to the property. Additional value accruing to property to which a qualified alternative energy system is installed due to the existence of such a system is exempt.

(5) Examples of property that typically do not qualify for the exemption include but are not limited to porches, sunrooms, solariums, and greenhouses.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.175
Renumbered from 150-307.175, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 9-2008, f. & cert. ef. 9-23-08
REV 10-2002, f. & cert. ef. 12-31-02
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 2-1988, f. 1-11-88, cert. ef. 1-15-88

Or. Admin. R. 150-307-0220 Qualifications for Exemption of Indian Properties

The following criteria shall be used to determine the qualification for property tax exemption under ORS 307.180 when land is not held in trust for the tribe or for an individual by the federal government.

(1) Property must be located within the tribal boundaries of the reservation.

(2) The owner must be an enrolled tribal member residing on the reservation but not necessarily on the property.

Example: an enrolled tribal member owns farmland on the reservation but maintains a household in a housing unit on the reservation. The farmland is exempt from taxation.

(3) Property may be leased to a non-Indian and retain tax-exempt status.

Example: an enrolled tribal member living on the reservation leases all farmland to a non-Indian farmer. The farmland is exempt from taxation.

(4) Personal property leased to a tribal member and delivered on the reservation is exempt. Property leased to a tribal member, delivered off the reservation but used on the reservation is also exempt.

NOTE: A lease-purchase agreement is different than a lease, therefore property covered by a lease-purchase agreement might be taxable.

(5) Fee title ownership of land located on the reservation by an enrolled tribal member of that reservation does not negate the tax-exempt status of that land.

(6) Marriage between an enrolled tribal member and a non-Indian spouse will not, of itself, jeopardize the tax-exempt status of the land they hold together on the reservation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.180
Renumbered from 150-307.180, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-307-0230 Valuation of Summer Home Properties

(1) Real property belonging to the United States leased for summer homes is exempt from taxation. This exemption applies only to the land. Leased fee and leasehold (or possessory) interests in the land are exempt. No value for land shall be shown on the assessment roll.

(2) Improvements to the land are site developments and are taxable. Site developments include such items as water systems, septic systems, roadways, electrical service, and landscaping. The value of site developments shall be included on the improvement portion of the assessment roll.

(3) Improvements on the land such as buildings and structures are taxable.

(4) Appraisal methods for valuing these properties will vary depending on available market data. Regardless of the method used, care and consideration must be taken to avoid taxation of the land or any interests in the land. Appraisal methods to be used include:

(a) Reproduction or replacement cost new less allowances for various forms of depreciation.

(b) Sales comparison of summer home properties which may be owned fee simple. In using this method, care must be taken to recognize the tenuous nature of Forest Service leases and permits.

Example: Comparison of improvements. Sales of comparable improved properties owned in fee simple indicate a market value of $75,000. The land value for these properties is indicated from land sales to be $15,000. Thus, an indicated value of $60,000 ($75,000–$15,000) is indicated for the improvements of the subject summer home property. This value may not be applicable for the summer home property if the lease term (or expected continuation of the lease) is less than the anticipated life of the improvements.

Example: Land to property ratio. Sales of comparable improved properties owned in fee simple indicate a land to property ratio of 20% and a market value of $75,000 for the subject summer home property. Thus, the indicated value for the summer home property is $60,000 (80% times $75,000).

(c) Income capitalization. This approach is generally not applicable to summer home properties because they are not typically rented on a month-to-month basis. Also, lease payments made to the U.S. government for use of the land are usually very favorable to the lessee, making capitalization of this income stream unreliable as a value indicator.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.183
Renumbered from 150-307.183, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-307-0240 Exception To Taxable Personal Property

(1) Tangible personal property is assessed and taxed unless statutes specifically grant an exemption.

(2) “Use” of the property is the determining factor for granting an exemption.

(a) Tangible personal property used exclusively for personal use and enjoyment by the owner is granted exemption from property tax.

(b) Tangible personal property used in a trade or business is taxable. A trade or business is an activity performed for any form of compensation, personal reward or gain.

(c) Tangible personal property that is used both for the owner’s personal use and as part of a trade or business is taxable.

Example: Household furnishings in a Bed and Breakfast or adult foster home are taxable when used by anyone other than the owner. Items used exclusively by the owner for personal enjoyment are exempt from property tax, such as the bed where the owner sleeps and the armoire or dresser that contains the owners clothes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.190
Renumbered from 150-307.190, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-307-0250 Water Association Qualifications

(1) For purposes of ORS 307.210:

(a) “Water Associations” are wholly mutual or cooperative in character and have the following characteristics:

(A) Each incorporated association is organized as a wholly mutual or cooperative association or, if organized as a nonprofit organization, its bylaws provide that it operate as a wholly mutual or cooperative association.

(B) An unincorporated association provides in its bylaws that the association is wholly mutual or cooperative in character and is not to produce a profit.

(b) “Domestic Water Use” is all household and outdoor uses that may include watering of livestock, lawn, garden, and farm irrigation.

(c) “Commercial Water Use” is use by an industrial or business establishment where the production of a product for resale is the company’s main operation.

(2) Exempt water association property may include but is not limited to parcels of land, dams, man made and natural wells, reservoirs and diversion works, purifying, processing, treating facilities and chemicals, flumes, canals and ditches, pipe and pipe pushers, gates, valves, pressure tanks, pumps and pump houses, hoses, meters and meter boxes, cutting and threading machines, bulldozers, cranes, tractors and hand tools.

(3) The following property is not exempt and shall be classified and assessed in the same manner as other property subject to assessment and taxation.

(a) Property that is not owned by the association.

(b) Property that is owned by the association but is not used primarily in storing, conveying or distributing water.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.210
Renumbered from 150-307.210, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
11-71
3-70
1-66
11-59
1-58
3-56

Or. Admin. R. 150-307-0260 Water Association Exemption Under ORS 307.210 Is Assessor’s Responsibility

(1) The Assessor shall consider all water association exemption applications and determine whether any portion of the property is exempt.

(2) The water association shall include the information and data required on the exemption application form 150-310.013 to claim exemption.

(3) The Assessor may request additional information from the water association.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.210
Renumbered from 150-307.210(5), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99

Or. Admin. R. 150-307-0270 Jurisdiction Over Assessment of Telephonic Companies

(1) ORS 307.220 provides for the exemption from taxation of certain property, except parcels of land and buildings, owned by qualified associations used exclusively in the construction, maintenance, and operation of a telephonic communication system.

(2) Any property owned, rented, leased or occupied by an association used exclusively in the construction, maintenance, and operation of a telephonic system and not exempt will be classified and assessed pursuant to ORS 308.505 to 308.660.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.220
Renumbered from 150-307.220-(A), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
11-71
3-70
1-66
6-61

Or. Admin. R. 150-307-0280 Qualifications for Exemption of Mutual or Cooperative Telephone Associations

(1) Qualifying Conditions. Property owned by a mutual or cooperative telephone association is qualified for exemption if all the following conditions are satisfied:

(a) Ownership. The property must be owned by an association of persons that:

(A) Is wholly mutual or cooperative in character, whether incorporated or not. The characteristics of a mutual or cooperative association are:

(i) Each incorporated association is organized as a cooperative association or, if organized as a nonprofit organization, its bylaws provide that it operate as a cooperative association.

(ii) Each unincorporated association provides in its bylaws that the association is mutual or cooperative in character and is not to produce profit.

(iii) While one member may hold more stock or shares in the association than another member, voting cannot be based on ownership of shares, stock, certificates, or other evidence of their interest. Voting must be restricted to one vote to a member, or in proportion to their actual, estimated or potential patronage, as the bylaws may provide, except that in no event may any one member thereby exercise a majority vote.

(iv) All members must share proportionately, according to their evidence of interest, in the cost of construction, maintenance, and operation of the association’s properties, and in the division of any surplus or reserves accumulated when such a surplus or reserve is not necessary for proper maintenance or construction of such system or all members must share in proportion to their patronage as the bylaws may provide.

(B) Operates without profit in money.

(b) Use. All persons served must be members and must own shares, stock, certificates, or other evidence of their interest.

(c) Value. The association’s telephone property has a real market value of not more than $2,500 as determined by the Department of Revenue.

(d) Operation. The association’s telephone communication system operation is conducted without the ownership, operation or lease of telephonic switchboard exchange facilities, or direct or indirect ownership of stock in any telephone switchboard association, partnership or corporation.

(2) Eligible Property. Property that may qualify for exemption includes all property consisting of improvements, fixtures, equipment and supplies used exclusively in the construction, maintenance, and operation of a telephone communication system. Examples of property that may qualify for exemption include but are not restricted to:

(a) Poles, crossarms, guy stubs and guy wire;

(b) Aerial wire;

(d) Suspension strand;

(e) Insulators;

(f) Terminals;

(g) Drop and blockwire;

(h) Telephones.

(3) Ineligible Property. The following types of property that cannot qualify for exemption will be classified and assessed pursuant to ORS 308.505 to 308.660.

(a) Parcels of land and buildings owned, leased, rented, chartered or otherwise held for or used by an association in a telephone communication system.

(b) Any other property not owned by the association but used or held by it in a telephone communication system.

(c) Any property owned, leased, rented, chartered or otherwise held by an association and not used in providing telephone communication.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.220
Renumbered from 150-307.220-(B), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2002, f. & cert. ef. 12-31-02
11-71
3-70
1-66
6-61

Or. Admin. R. 150-307-0290 Jurisdiction over Assessment of Non-public Telephonic Systems

(1) ORS 307.230 provides for the exemption from taxation of all property owned by any person not engaged in public service operation and used exclusively in the construction, maintenance and operation of a telephone communication system serving exclusively property owned or operated by such person.

(2) Any property owned, rented, leased or occupied by a person not engaged in public service and used exclusively in the construction, maintenance and operation of a telephone communication system and not exempt will be classified and assessed pursuant to ORS 308.505 to 308.660.

(3) “Person” has the same meaning as defined in ORS 311.605.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.230
Renumbered from 150-307.230-(A), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
11-71
3-70
1-66
6-61

Or. Admin. R. 150-307-0300 Qualifications for Exemption for Privately Owned Telephone Systems

(1) Qualifying Conditions. Property as part of privately owned telephone systems is qualified for exemption if all the following conditions are satisfied:

(a) Ownership. The property must be owned by a person not engaged in public service operation.

(b) Use. The property is used exclusively in the construction, maintenance and operation of a telephone communication system serving exclusively property owned or operated by such person.

(c) Value. The person’s telephone property has a real market value of not more than $1,500 as determined by the Department of Revenue.

(d) Operation. The person’s telephone communication system operation is conducted without ownership, operation or lease of telephone switchboard exchange facilities, or direct or indirect ownership of stock in any telephone switchboard association, partnership or corporation.

(2) Eligible Property. Property that may qualify for exemption includes all property owned consisting of improvements, fixtures, equipment and supplies, used exclusively in the construction, maintenance and operation of a telephone communication system. Property that may qualify for exemption includes but is not restricted to the examples listed in OAR 150-307-0280.

(3) Ineligible Property. The following types of property which cannot qualify for exemption will be classified and assessed in accordance with provisions of ORS 308.505 to 308.660:

(a) Parcels of land and buildings owned, leased, rented, chartered or otherwise held for or used by a person in a telephone communication system.

(b) Any other property not owned by a person and used or held in a telephone communication system.

(c) Any property owned, leased, rented, chartered or otherwise held by a person and not used in providing telephone communication.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.230
Renumbered from 150-307.230-(B), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2002, f. & cert. ef. 12-31-02
11-71
3-70
1-66
6-61

Or. Admin. R. 150-307-0320 Definition of Elderly

Funded exemptions are granted to qualifying non profit homes for the elderly under ORS 307.241 to 307.245. For purposes of 307.241 to 307.245 and 307.375, the term “elderly” refers to a person 62 years of age or older. This rule is to assist in determining the eligibility of a nonprofit home for a funded property tax exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.241
Renumbered from 150-307.241, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-307-0330 Exemption Claim Procedures

(1) The assessor shall review all claims filed under ORS 307.241 to 307.245 and approve or deny the claims, except as provided in section 3 of this rule.

(2) A copy of each claim approved by the assessor must be sent to the Department of Revenue with a checklist indicating the assessor has, at a minimum, received and reviewed the following information:

(a) The application form completed in full by the corporation;

(b) A description of the federal financial assistance the corporation making the application is receiving or has received;

(d) A statement showing in detail the basis for rental amounts charged for occupancy of the facility;

(e) Verification that the corporation meets the requirements of ORS 307.375 and ORS 307.243(1), including that the corporation.

(A) Is organized and operated only for the purpose of providing permanent residential, recreational and social facilities primarily for elderly persons;

(B) Is a nonprofit corporation organized under ORS chapter 65;

(C) Receives at least 95% of its operating gross income, excluding investment income, from payments by or on behalf of elderly persons solely for living, medical, recreational and social services and facilities;

(D) Permits none of its net earnings to inure to the benefit of a stockholder or individual;

(E) Provides that upon dissolution of the corporation the net assets must be distributed to one or more charitable, scientific, literary or educational corporations exempt under ORS chapter 307, or to the State of Oregon;

(F) Is applying for exemption of land and improvements on which construction of the improvements started after January 1, 1977, or where the property was acquired after January 1, 1977; or in the case of corporations that received state financial assistance as described in ORS 307.242(1)(e), where the property was actually occupied and used for permanent residential recreational and social facilities primarily for elderly persons prior to January 1, 1990;

(f) Verification that a payment in excess of one month’s rent is not required as a condition for occupancy;

(g) That the actual use being made of the property is consistent with the claim;

(h) A statement from the claimant that either

(A) The rent charged does not include an amount for property tax, as certified by the U.S. Department of Housing and Urban Development, or

(B) If the exemption was granted the previous year, showing how the rent that otherwise would have been paid for occupancy at the facility has been reduced as a result of the exemption; and

(3)(a) The assessor may request from the Department of Revenue a statement certifying a corporation’s qualification or non-qualification under ORS 307.375 and ORS 307.242.

(b) The assessor’s request to the department must be accompanied by the following:

(A) The application form completed by the corporation;

(B) The source documents evidencing the requirements on the checklist referenced in subsection 2 above.

(c) The department shall notify the assessor in writing of its certification of qualification or non-qualification under ORS 307.242 and ORS 307.375, and the assessor shall thereafter notify the claimant of the decision.

(4) This rule is effective January 1, 2016.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.242
Renumbered from 150-307.242, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-307.242(2), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80

Or. Admin. R. 150-307-0340 Defining "Surviving Spouse” of a Veteran

(1) “Surviving spouse” of a veteran means:

(a) A man or woman who is legally married to a veteran at the time of the veteran's death; or

(b) A man or woman who is joined in a registered domestic partnership with a veteran at the time of the veteran’s death. “Domestic partnership” has the meaning given that term as defined in ORS 106.310, and the partnership must meet the provisions of ORS 106.300 to ORS 106.340, also known as the Oregon Family Fairness Act (OFFA).

(2) “Surviving spouse remaining unmarried of a veteran” means the individual does not enter into a new marriage or registered domestic partnership following the death of the veteran.

(3) The exemption applies only to the period before the date of the first new marriage or registered domestic partnership of the surviving spouse after the death of the veteran.

(4) If a surviving spouse of a veteran enters into a new marriage or registered domestic partnership following the death of the veteran and that marriage or partnership is annulled by a court having jurisdiction to do so, the surviving spouse will be restored to his or her previous status as a surviving spouse remaining unmarried of a veteran.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.250
Renumbered from 150-307.250, REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-307.250(1)(c), REV 4-2011, f, 12-30-11, cert. ef. 1-1-12
REV 5-2009, f. & cert. ef. 7-31-09
Renumbered from 150-307.250(1)(d), REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-307-0350 Veteran’s Exemption for Surviving Spouse

(1) If a qualified veteran dies after making timely application, the exemption shall continue on the property for the surviving spouse for the assessment year for which the application was made.

(2) The surviving spouse must own and live on the property and notify the assessor they elect to continue the exemption in the following year to continue the exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.260
REV 14-2023, minor correction filed 10/06/2023, effective 10/06/2023
Renumbered from 150-307.260(1)(a), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-307.206(1)-(C)
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-307-0360 Physician Certification of Disability for Exemption

(1) A veteran described under ORS 307.250(2)(b) must be certified annually by a physician as having a disability rating of 40 percent or more.

(2) The veteran must file the physician’s certificate annually with the Exemption Claim form and their statement of total gross income.

(3) The veteran must file the physician’s certificate annually up to and including age 65. Once the veteran reaches the age of 66 and has filed the physician’s certificate in the previous year, the veteran is no longer required to file the certificate but is required to file annually the Exemption Claim form and the statement of total gross income.

Example: A veteran 64 years of age files the physician’s certificate with the Exemption Claim form and their statement of total gross income on or before April 1, 2009. He then has his 65th birthday on May 15, 2009. The veteran must file the physician’s certificate with the Exemption Claim form and income statement when he next files on or before April 1, 2010. On May 15, 2010, the veteran has his 66th birthday. Since the veteran is now 66 years of age and previously filed the certificate after his 65th birthday, he is no longer required to file the certificate but is required to file his Exemption Claim form and statement of total gross income on or before April 1, 2011, or for any year thereafter.

(4) A veteran with a physician-certified permanent disability must be rated as having disabilities of 40 percent or more to qualify for the exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.260
Renumbered from 150-307.260(3), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-307.250(1)(b), REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
Renumbered from 150-307.260(1)-(A), REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-307-0370 Property to Which Veteran’s Exemption Applies

(1) Definitions for the purpose of this rule:

(a) “Basic life needs” include, but are not limited to, preparation of meals, personal hygiene, or daily care of oneself.

(b) “By reason of health” means to obtain medical care or to receive basic life needs.

(c) “Temporary absence” means absence with the intention to reoccupy the homestead, similar to a domicile. Examples include but are not limited to temporary vacation, business travel, or military service.

(2) If a qualified veteran or surviving spouse owns only an undivided interest in a property and the remaining interest is owned by a nonspouse or a nonveteran, the veteran is entitled to a tax exemption only to the extent of the veteran's actual ownership interest in the homestead property.

Example 1: A qualified veteran owns an undivided one-half interest in a manufactured structure that has an assessed value of $10,000. The remaining undivided one-half interest is in the name of the veteran's son. The veteran will be allowed an exemption of $5,000, which is one-half the assessed value of the manufactured structure. The remaining undivided interest is not entitled to an exemption unless the person owning the remaining one-half interest is a qualified veteran who also occupies the same homestead property.

(3) Only one exemption for each qualified veteran is allowed in any tax year. Two or more qualified veterans may each receive an exemption on the same homestead property if each veteran owns, lives on the property, and files timely.

(4) The right to claim the exemption will not be lost if the claimant is temporarily absent from the property or is required to live away from the homestead by reason of health. Examples of absence by reason of health may include, but are not limited to:

(a) Confinement to a nursing home or other long-term care facility; or

(b) Receiving care at a family member’s or other individual’s home.

Example 2: An Oregon resident who qualifies for the veteran’s property tax exemption on their homestead stays in Arizona for a few months during the year. Although temporarily absent from their homestead, it continues to qualify as their primary residence because the claimant has the intention of returning.

Example 3: Due to failing health, the claimant moves to her daughter’s home. After eighteen months, it becomes apparent it is unlikely the claimant will ever be able to return to her own home. Although the claimant did not remain in her home, the property continues to qualify as her primary residence and is eligible for the exemption because the claimant was absent by reason of health.

(5) If the assessor is notified or has reason to believe the claimant is not living at the primary residence by reason of health, the assessor may request documentation that proves continued eligibility for the exemption. An example of documentation is a letter from a medical provider stating the claimant is unable to provide their own basic life needs.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.270
Renumbered from 150-307.270(1)-(A), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-307.270
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-307-0380 Transfer of Veteran’s Exemption to a Different Property Requires Refiling

(1) The exemption provided for veterans or surviving spouses under ORS 307.250 does not automatically transfer from one property to another property.

(2) The veteran or surviving spouse will need to file a new application with the county assessor where the property is located to claim the exemption.

(3) The late filing provision allowed under ORS 307.260(1)(c)(B) is not applicable when the exemption is claimed for a new or different property.

(4) A written claim must be filed on or before April 1 of the assessment year for which the exemption is claimed. When the designated property is acquired after March 1 but prior to July 1, the claim shall be filed within 30 days after the date of acquisition.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.250 & 307.270
REV 24-2020, minor correction filed 12/11/2020, effective 12/11/2020
Renumbered from 150-307.270(1)-(B), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-307.260(1)-(B)
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92, Renumbered from 150-307.260(1)
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-307-0390 Veterans Property Held in Trust

To receive an exemption on property that is held in a trust, the trust must be clearly identified as revocable for the specific property on which a claim for exemption is filed under ORS 307.250 and an application is made as required in 307.260

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.270
Renumbered from 150-307.270(1)-(C), REV 55-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-307.250
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-307-0400 Oregon Active Military Service Member’s Exemption — Eligibility

For purposes of ORS 307.286:

(1) A qualifying service member's homestead:

(a) Must be the qualifying service member's principal residence that is located in Oregon;

(b) Must be owned by the qualifying service member prior to July 1 of the tax year for which exemption is claimed;

(d) Includes land under a manufactured structure if the land is owned by the qualifying service member.

(2) The right to claim the exemption will not be lost if the qualifying service member is temporarily absent from the homestead during the tax year for which exemption is claimed. Temporary absences include absences for vacation, business travel, hospitalization, or military service.

(3) The exemption allowed under ORS 307.286 is limited to the lesser of the:

(a) Assessed value of the homestead property owned by the qualifying service member; or

(b) Statutory limitation, which is equal to $60,000 for the 2005-06 tax year and adjusted annually as described in ORS 307.286(2).

(4) An Oregon resident is eligible for the exemption provided under ORS 307.286, if:

(a) The individual is serving in the Oregon National Guard, military reserve forces, or other U.S. state’s or territory’s organized militia;

(b) The individual has been ordered to federal active duty under Title 10 United States Code (USC), or a deployment under the Emergency Management Assistance Compact; and

(5) The qualifying service member must attach documentation to the claim for exemption that shows proof of active duty during each tax year for which exemption is claimed. The service member may claim the exemption for each tax year during which at least one day was served on active duty.

(a) Examples of valid documentation include, but are not limited to: military orders, form DD214, a letter on military letterhead, or other military record.

(b) Acceptable documentation for the exemption must show:

(A) Service in the Oregon National Guard, military reserve force, or other U.S. state’s or territory’s organized militia; and

(B) Service performed for more than 178 consecutive days in federal active duty under Title 10 USC or in deployment under the Emergency Management Assistance Compact on or after January 1, 2005.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.286
REV 55-2024, amend filed 12/26/2024, effective 01/01/2025
Renumbered from 150-307.286, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 4-2006, f. & cert. ef. 7-31-06

Or. Admin. R. 150-307-0410 Oregon Active Military Service Member’s Exemption Claimed By Lawful Occupant

For purposes of ORS 307.289:

(1) “Qualifying duty” means:

(a) An Oregon resident is serving in the Oregon National Guard, military reserve forces, or other U.S. state’s or territory’s organized militia;

(b) The individual has been ordered to federal active duty under Title 10 United States Code (USC), or a deployment under the Emergency Management Assistance Compact;

(d) The period of ordered active duty service exceeds 178 consecutive days.

(2) A qualifying service member's homestead:

(a) Must be the qualifying service member's principal residence that is located in Oregon;

(b) Must be owned by the qualifying service member prior to July 1 of the tax year for which exemption is claimed;

(d) Includes land under a manufactured structure if the land is owned by the qualifying service member.

(3) A lawful occupant is an individual who is using the qualifying service member's homestead as his or her principal residence at the time the claim is filed.

(a) The lawful occupant is not required to hold an ownership interest in the homestead.

(b) A lawful occupant may include, but is not limited to, a qualifying service member's: spouse, parent, adult child, or other relative; domestic partner; or roommate. A neighbor or caretaker, who has a key to the qualifying service member's homestead, but for whom the homestead is not a principal residence, does not qualify as a lawful occupant.

(4) The lawful occupant may claim the homestead exemption if the service member would otherwise qualify for this exemption but died while performing the qualifying duty during the current or prior tax year and before filing a claim.

(a) An individual claiming to be a lawful occupant must attach documentation to the claim for exemption that demonstrates the homestead is his or her principal residence at the time claim is made. The county assessor may require more than one piece of documentation.

(b) Documentation may include, but is not limited to, a valid driver's license, passport, election registration card, or the most recent property tax statement for the homestead.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.289
REV 56-2024, amend filed 12/26/2024, effective 01/01/2025
Renumbered from 150-307.289, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 4-2006, f. & cert. ef. 7-31-06

Or. Admin. R. 150-307-0420 Agricultural Land Devoted to Agricultural Purposes as Real Property

(1) The term “land” as used in ORS 307.320 differs from the definition of “land” in 307.010(1) in that it is limited to the land itself. It is land that has a classification as agricultural land and is being used for agricultural purposes such as raising and harvesting crops or rearing, feeding and management of livestock.

(2) For the purpose of advalorem taxation, deciduous trees, shrubs, plants and crops in, under, or growing upon agricultural land devoted to agricultural purposes are wholly exempt from such taxation and need not be listed upon the assessment roll. (See OAR 150-308-0390.)

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.320
Renumbered from 150-307.320, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80
3-70
1-66
11-59
1-58

Or. Admin. R. 150-307-0430 Exemption of Buildings, Structures and Machinery or Equipment during Construction

(1) Definitions for purposes of ORS 307.330 and this rule:

(a) “Addition” means any enlargement of an existing building or structure. This includes the construction of additional stories or the erection of a new wing on an existing building.

(b) “Building” means all real property improvements erected upon the land such as hotels, office buildings, retail stores, condominiums and manufacturing plants and includes heating and ventilating systems, elevators, and similar equipment normally installed as part of the building construction.

(d) “In the process of construction” means that construction of the new building, structure or addition has begun, but is not yet completed, and typically the foundation is partially or wholly laid. Site preparation or demolition of an existing building or structure is not considered part of the construction process.

(e) “In use or occupancy” means the property is being utilized in the manner for which the completed building, structure or addition was intended.

(f) “Land” means land in its natural state and includes site development such as fill, excavation, grading and leveling.

(g) “Machinery or equipment” includes machinery or equipment housed within the building, structure or addition for the purpose of manufacturing or otherwise processing raw or finished materials.

(h) “Modernization” means to take corrective measures to bring a property into conformity with changes in style.

(i) “Structure” means all real property improvements, other than buildings, and includes improvements such as ramps, loading docks, wharfs, and paved areas used for parking or storage.

(j) “Testing" means a limited trial production run as a check of equipment and system performance, but does not include the processing of a substantial quantity of finished and marketable products that are, or can be, sold through the usual channels of trade.

(2) Property eligible for exemption:

(a) New building, structure or addition to an existing building or structure that is in the process of construction on January 1 of each assessment year in which exemption is claimed. The building, structure or addition must be intended primarily for the furtherance of the production of income, whether from a one-time sale of property or an ongoing stream of income. For example, a new condominium project being constructed for future sale to purchasers, who may live on the property or rent the property to others, will qualify for exemption.

(b) Machinery or equipment located at the construction site or installed in or affixed to a building, structure or addition. Testing of equipment is allowable during the period of construction.

(c) All personal property that would qualify as real property under OAR 150-307-0010 that is situated at the place of construction on January 1 of each assessment year in which exemption is claimed.

(3) Manufacturing facilities may claim exemption for no more than two consecutive years. Conditions for exemption must exist on January 1 of each assessment year in which exemption is claimed.

(4) Property not eligible for exemption:

(a) Land.

(b) Modernization of an existing building or structure.

(c) Heating equipment, elevators, ventilating systems and similar equipment installed in a building after its original construction.

(d) Property constructed for residential occupancy by the owner.

(e) Nonmanufacturing facilities, of any kind, completed less than one year from the date construction began.

(5) No exemption may be allowed if use or occupancy is made of the building, structure or addition, or any part thereof, on or before January 1 of any assessment year in which exemption is claimed.

(a) If the building, structure or addition is completed and ready for use or occupancy on January 1, although not in use, it is taxable.

(b) If the building, structure or addition is completed and leased on January 1, but not occupied by the lessee, it is taxable.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.330
Renumbered from 150-307.330, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
11-71
3-70
12-66
1-66
7-64
11-61
11-59

Or. Admin. R. 150-307-0440 War Veterans Filing a Claim for Exemption if Living in a Nonprofit Home for the Elderly

(1) Residents of nonprofit homes for the elderly established under ORS 307.370 to 307.385, and 308.490, and who are otherwise qualified, are entitled to the war veteran’s tax exemptions. Each veteran or surviving spouse qualifying for the exemption under 307.250 shall file a claim with the county assessor on or before April 1 of each year the exemption is claimed. When the veteran or surviving spouse moves into the nonprofit home for the elderly after March 1 and before July 1 of any year, then the claim must be filed within 30 days after the veteran or surviving spouse moves into the nonprofit home for the elderly.

(2) Each nonprofit home for the elderly corporation annually shall aid qualifying residents in applying for the property tax exemptions on behalf of the corporation, for the benefit of the war veteran or surviving spouse as provided by ORS 307.370 to 307.385, and 308.490. The application shall be on duplicate forms and shall be completed and signed by the resident-applicant, and filed with the assessor on or before the date required by law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.370
Renumbered from 150-307.370, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-307-0450 Nonprofit Home for the Elderly

The corporation must be nonprofit in nature and organized to furnish facilities primarily for citizens over 62 years of age.

(1) At least 95 percent of the corporation’s gross operating income must come from payments for living, medical, recreation, and social services for persons over 62 years of age using the facilities.

(2) No part of the net earnings of the corporation can be used to benefit any stockholder or individual.

(3) Upon dissolution, the assets remaining after satisfying all lawful debts and liabilities shall be distributed to one or more corporations exempt from taxation under ORS Chapter 307 or to the state of Oregon. These corporations receiving the assets upon dissolution shall be organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes in Chapter 307.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.375
Renumbered from 150-307.375, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2002, f. & cert. ef. 7-29-02, Renumbered from 150-370.370(A)
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93;

Or. Admin. R. 150-307-0460 Real and Personal Property Used for Placing Farm Crops in Storage

(1) Definitions:

(a) “Primary” is the leading use or the use involving the highest percentage of time, including time held for use, relative to all the various uses.

(b) “Processing” is altering the crop in any way such as: washing, icing, sorting, grading, waxing, boxing, slicing, or cutting.

(2) Personal property and real property machinery and equipment used to place a farm crop in storage are exempt from taxation. However, once processing of the crop is begun, it is no longer a crop, but a product. When the same machinery and equipment are used for both placing in storage and processing the primary use is what determines its assessment status.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.394
REV 5-2025, amend filed 07/16/2025, effective 07/16/2025
Renumbered from 150-307.394, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
REV 4-2002, f. & cert. ef. 7-29-02, Renumbered from 150-370.400

Or. Admin. R. 150-307-0465 Dairy Definition for Determining Exempt Status of On-Site Processing Equipment

(1) Definitions:

(a) “Dairy” means a farm or the department of farming that is concerned with the production of milk, butter, cheese or other dairy products (from a cow or other domestic animal, such as a goat).

(b) “Dairy Products” means butter; all varieties of cheese; frozen dessert mixes containing milk; cream or nonfat milk solids; evaporated, condensed, concentrated, powdered, dried or fermented milk; whey; cream and skimmed milk.

(d) “On-site” means all dairying related activities located or occurring at the site of the dairy.

(e) “Processing” means altering or modifying raw milk in any way to produce dairy products for human consumption.

(f) “Site” means a farm, whether a single parcel or several contiguous parcels under common ownership in a location whose zoning permits farming that is used for an integrated purpose and appraised as a single unit, whether that property is taxed as a single account or multiple accounts.

(2) All machinery and equipment in on-site use or held for such use for the raising of dairy animals, or the processing, storage, and sale of milk or dairy products, up until the point it is first sold or otherwise leaves the site, is exempt from taxation.

(3) For a dairy that uses off-site operations for the processing, storage and/or sale of milk or dairy products, the equipment used off-site is taxable, unless otherwise exempt. Only equipment used on-site up until the milk or dairy product is sold or otherwise leaves the on-site dairy is exempt from taxation under this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.394
REV 4-2025, adopt filed 07/16/2025, effective 07/16/2025

Or. Admin. R. 150-307-0480 Pollution Control Facilities

Certified pollution control facilities meeting the requirements of ORS 468.165 and 468.170, are exempt from advalorem taxes to the extent of the highest percentage figure certified by the Environmental Quality Commission. This percentage is then applied to the amount of value the certified pollution control facilities contribute to the total property value. The value contribution of the pollution control facility can differ from its original cost because of inflation, depreciation, obsolescence, or other economic factors. Whenever the property is reappraised the value contribution of the certified pollution control facility shall be identified in the conclusion of value. The annual value changes will be recorded by the appraiser on county Form 310-089.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.405
Renumbered from 150-307.405, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-307-0490 Oregon Food Processor Property Tax Exemption

(1) Definitions:

(a) “Assessor” means the county assessor, or the Oregon Department of Revenue (DOR) if DOR is responsible for the appraisal of the facility under ORS 306.126.

(b) “Certified” means that Oregon Department of Agriculture (ODA) has inspected the qualified machinery and equipment (M&E) and has provided written verification to the food processor that the M&E is eligible for exemption under ORS 307.455.

(c) "Newly acquired" means new or used M&E that is first purchased or leased by a food processor not more than two years (24 months) prior to placing it into service. Leased equipment may be exempt only if the food processor is responsible for the payment of the property taxes under the terms of the lease agreement. Newly acquired property does not include existing equipment that has been refurbished or reconditioned in the time frame provided by this rule.

(d) "Placed into service" means the date the M&E is first used or in such condition that it is readily available and operational for its intended commercial use. It does not include property that is being tested or is in the process of being erected or installed on the January 1 assessment date.

(e) “Qualified M&E” means property, whether new or used, that is newly acquired by a food processor and placed into service prior to January 1 preceding the first tax year for which an exemption under this section is sought, and that consists of:

(A) Real property M&E that is used by a food processor in the primary processing of raw or fresh fruit, vegetables, nuts, legumes, grains, bakery products, dairy products, eggs or seafood; or

(B) Personal property M&E that is used in an integrated processing line for the primary processing of raw or fresh fruit, vegetables, nuts, legumes, grains, bakery products, dairy products, eggs or seafood.

(f) “Real Market Value” (RMV) of the property, for the purpose of determining the late filing fee pursuant to ORS 307.455, means the invoice cost of the qualified M&E, installation, engineering, and all miscellaneous costs including machinery process piping, foundations, power wiring, interest during installation, and freight.

(2) A food processor seeking an exemption under ORS 307.455 must make a request to ODA for certification. The request must:

(a) Be made in writing on a form provided by ODA and pursuant to ODA administrative rules;

(b) Include a listing on the Food Processor Certification of Qualified Machinery and Equipment form provided by DOR of all qualified M&E for which certification is sought;

(d) Be filed with ODA at least two weeks prior to March 1 in order that ODA may certify the property prior to the March 1 deadline for timely filing of the exemption claim with the assessor. Later requests for certification may be made, but the resulting certification may be after the March 1 claim filing deadline.

(3) Upon receiving the request for certification, ODA will:

(a) Schedule a site visit with the food processor;

(b) Inspect the M&E that is the subject of the listing submitted to ODA for which certification is sought;

(d) Provide written certification to the food processor approving or denying the subject M&E as qualified M&E. The written certification is provided by ODA on the listing of qualified M&E submitted by the food processor.

(e) Denial of certification of certain property by the ODA is a contested case for the purpose of ORS Chapter 183.

(4) Following the certification process, the food processor must file an exemption claim form with the assessor. The claim must:

(a) Be filed on a completed Food Processor Exemption Claim form provided by DOR;

(b) Include the written certification signed and dated by ODA; and

(5) The filing of an exemption claim form is separate from the filing of a property tax return.

(6) The assessor will return any exemption claim form not meeting the requirements of subsection (4)(a) and (b) of this rule to the food processor.

(7) If the assessor returns an exemption claim form for completion, the food processor must return the exemption claim form to the assessor by March 1 for the claim to be considered as timely filed.

(8) An exemption claim form that is filed after March 1, and on or before December 31 of the assessment year during which the exemption is claimed, must be accompanied by a late filing fee pursuant to ORS 307.455(2)(b). If the late filing fee is not included with the claim form, no exemption will be allowed.

(a) The late filing fee is the greater of $200 or one-tenth of one percent of RMV of the property that is the subject of the claim form.

(b) The certified listing required by subsection (4)(b) of this rule that is included with a late filed exemption claim must show the RMV of each piece of qualified M&E. The RMV is reported on the certified listing form, as directed by that form’s instructions.

(9) Upon the assessor’s receipt of a completed exemption claim form, and late filing fee if applicable, the assessor will compare the certified listing of all qualified M&E with the schedule of real and personal property M&E included on the property tax return. The property tax return must clearly identify the M&E that has been certified as qualified M&E by ODA.

(10) Eligible M&E is exempt for the first qualifying tax year and the following four tax years as long as it continues to qualify as of January 1 of each year.

(a) Qualified M&E that is used to process grains or bakery products must in total, based on the certifications for the site for the initial exemption year, have a cost of initial investment of $100,000 or more to be exempted.

(b) In addition to subsection (10)(a), qualified M&E that is used to process bakery products may be exempted:

(A) Based on processing to create bakery products, even if not from raw or fresh ingredients,

(B) If not used to additionally process or re-process previously created bakery products, and

(c) The food processor must notify the assessor if any of the exempt M&E becomes ineligible for the exemption. Property becomes ineligible when it no longer constitutes qualified M&E as defined in this rule.

(d) The assessor may require verification of the M&E’s continued qualification for exemption.

(11) Denial of the exemption may be appealed to the Oregon Tax Court pursuant to 305.275.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & 307.459
Statutes/Other Implemented: ORS 307.455
Renumbered from 150-307.455, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2016, f. 7-28-16, cert. ef. 8-1-16
REV 17-2008, f. 12-26-08, cert. ef. 1-1-09

Or. Admin. R. 150-307-0500 Hardship Situations

(1) "Exemption" includes total exemptions, partial exemptions, and special assessments including, but not limited to, those listed in ORS 308A.706(1)(d). Relief under this section does not apply to the provisions of ORS 311.666 to 311.735.

(2) "Good and sufficient cause" is an extraordinary circumstance beyond the control of the taxpayer or the taxpayer's agent or representative that causes the taxpayer to file a late application for an exemption, cancellation of tax, or redetermination of value pursuant to ORS 308.146(6) with the assessor or local governing body.

(a) Extraordinary circumstances include, but are not limited to:

(A) Illness, absence, or disability that substantially impairs a taxpayer's ability to make a timely application. The substantial impairment must have existed prior to the filing deadline, and must have been of such a nature that a reasonable and prudent taxpayer could not have been expected to conform to the deadline.

(B) Delayed receipt of a disability certification, a death certificate, or other documentary justification necessary for the filing of an application for exemption, cancellation of tax, or redetermination of value, unless the taxpayer, with ordinary prudence, could have obtained the required information in a timely manner.

(C) Reasonable reliance on misinformation provided by county assessment and taxation staff or Department of Revenue personnel.

(D) Active duty military service during the tax year for which the application for the exemption was filed but only when the petitioner has applied and otherwise qualified for the exemption under ORS 307.286. The department may not recommend the assessor accept a late filed application for the exemption due to this circumstance unless the petition to the department is filed timely or the deadline for filing a petition with the department is extended under section (4) of this rule.

(b) If none of the other extraordinary circumstances described in subsection (2)(a) of this rule apply, the department cannot find that good and sufficient cause exists if the late filing is due to:

(A) The taxpayer's inadvertence, oversight, or lack of knowledge regarding the filing requirements.

(B) Financial hardship.

(3) "Military service," as used in section (4) of this rule, includes the period of time that National Guard members are called into federal service for more than 30 days under 32 USC 502(f), as well as the time that members of the Army, Air Force, Navy, Marine Corps, or Coast Guard, and military reservists are ordered to report to active duty.

(4) Notwithstanding ORS 307.475(3), the Servicemembers' Civil Relief Act (SCRA), 50 USC app. 526, suspends the deadline for filing a petition for hardship relief during the period that a service member is in active duty military service with the armed forces.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.475
Renumbered from 150-307.475, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2016, f. 7-28-16, cert. ef. 8-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 4-2007, f. 7-30-07, cert. ef. 7-31-07
REV 4-2006, f. & cert. ef. 7-31-06
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
RD 8-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-307-0510 Agricultural Workforce Housing and Farm Labor Camp Assessment

(1) Only the portion of the farm labor camp property actually occupied, or held for occupation, by persons primarily employed for agricultural or horticultural purposes would qualify. Land and improvements which are not an integral part of the farm labor camp shall not qualify for the exemption. Examples of areas which may qualify for exemption are:

(a) Cooking and eating areas.

(b) Parking areas.

(c) Buffer areas, when reasonably necessary to protect the labor camp or to protect surrounding area from noise or other nuisance factors.

(d) Recreation areas.

(2) The term “facility” as used in ORS 307.480(2) means housing, and associated common areas reasonably necessary for the provision of housing, that is established for occupancy by agricultural workers, retired or disabled agricultural workers, and the immediate family members of agricultural workers. Such housing may be composed of:

(a) Specifically dedicated or designated units within a housing development; or

(b) A defined number of housing units of specified sizes, where vacancies may be filled from the available housing inventory in the development on a first-available basis, but may only be filled with a similar sized unit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.480
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-307.480, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-307-0520 Filing a Claim for Exemption When a Farm Labor Camp or Child Care Facility is Acquired

(1) Each nonprofit corporation claiming exemption under ORS 307.485 shall file a claim with the county assessor on or before April 1 of each assessment year for which the exemption is claimed.

(2) Each nonprofit corporation claiming exemption under ORS 307.485 that acquires property after March 1 and before July 1 shall file a claim with the county assessor within 30 days after acquisition.

(3) For existing farm labor camps or child care facilities, “acquisition” occurs when:

(a) The nonprofit corporation takes ownership of the property; or

(b) The nonprofit corporation, who is operating the camp or facility, enters into a lease or lease-purchase agreement.

(4) For unimproved property, “acquisition” occurs when:

(a) The new improvements for the farm labor camp or child care facility are completed and have been issued a temporary or permanent certificate of occupancy; or

(b) If no certificate is required, is ready for occupancy.

(5) When the claim for exemption is filed, the farm labor camp or child care facility must qualify as being “eligible” within the definitions of ORS 307.480(1) and (2) and must be in compliance with the required health and fire codes for farm labor camps or is a certified child care facility.

(6) Acquisition must occur before July 1 of the assessment year for which the exemption is claimed.

(a) If the farm labor camp or child care facility property qualifies before July 1, the property may be eligible for exemption for the ensuing tax year.

(b) If acquisition does not occur before July 1, or if the property does not meet other statutory requirements for a camp or facility before July 1, the property will not be eligible for the exemption for the ensuing tax year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.495
Renumbered from 150-307.495, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

Or. Admin. R. 150-307-0530 Certification of Nonprofit Corporation Low Income Housing Exemption to County Assessor

If the governing body determines under ORS 307.547 that property qualifies for exemption from taxation, the governing body must certify the exemption to the county assessor:

(1) On or before April 1 preceding the tax year for which exemption is granted, or

(2) If after April 1, within one week of the governing body determining the property qualifies for exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.547
Renumbered from 150-307.547, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10

Or. Admin. R. 150-307-0700 Rural Health Care Facilities

(1) Definitions:

(a) "Health care provider" has the meaning given that term as defined in ORS 127.505(11).

(b) "Medical care" has the same meaning as "health care services" as defined in ORS 750.005(5) and it must be provided by a health care provider.

(2) To qualify for the property tax exemption under ORS 307.804, the rural health care facility must be used exclusively to provide medical care.

(3) The following examples are types of facilities that do not provide medical care exclusively, and therefore do not qualify for the exemption provided in ORS 307.804. These include but are not limited to:

(a) Athletic clubs as defined in OAR 333-060-0015;

(b) Long term care facilities as defined in ORS 442.015(22);

(d) Group homes; or

(e) Drug or alcohol treatment facilities.

(4) Real and personal property of a rural health care facility qualifying for exemption under ORS 307.804 includes:

(a) Real and personal property located at a rural health care facility and used exclusively to provide the medical care. The property may be owned by an entity other than the owner of the facility.

(b) Real and personal property equipment located at a rural health care facility and used exclusively to provide the medical care. The property may be owned by an entity other than the owner of the facility.

(5) The owner of the rural health care facility must file annually with the county assessor to receive the exemption.

(6) The owner of the rural health care facility may file on behalf of other persons whose property is located at the facility and used exclusively to provide medical care.

History

Statutory/Other Authority: 305.100
Statutes/Other Implemented: 307.804
Renumbered from 150-307.804, REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 1-2003, f. & cert. ef. 7-31-03

Or. Admin. R. 150-307-0710 Definitions

The word “solely” in ORS 307.811(1), is interpreted to mean that the potentially exempt property, real or personal, is being used exclusively in the operations of a long term care facility, including personal, common and auxiliary support areas and property related to such operations. Example: The exemption may include the bedroom and bathroom, common areas and kitchen and storage areas and other property, provided that such property is used only in the operations of the facility.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.811
Renumbered from 150-307.811(1), REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-307-0720 Filing Requirements

(1) For the facility to obtain the long term care facility exemption, the following documentation must be filed with the county assessor’s office:

(a) A copy of the certification of qualification for exemption, for the tax year for which exemption is sought, issued by Oregon Department of Human Services.

(b) A copy of the appropriate resolution or ordinance from each taxing district adopting the provisions of ORS 307.811. Such an ordinance or resolution would read substantially equivalent to the following: The provisions of ORS 307.811 are adopted for the purpose of allowing real and personal property or eligible long term care facilities to be exempt from ad valorem property taxation within this taxing district.

(2) To avoid the late filing penalty, the certification of qualification for exemption accompanied by the resolution of ordinance must be filed on or before April 1 preceding the tax year for which the exemption is being claimed. After April 1 and on or before December 31 of the tax year, the taxpayer may file a certification of qualification for exemption accompanied by a copy of the resolution or ordinance. The filing must be accompanied by a late fee of the greater of $200 or one-tenth of one percent of the real market value of the property to which the certification of qualification for exemption applies.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.811
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-307.811(2)(a), REV 54-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-307-0800 Vertical Housing Development Zone Program

(1) "Residential use" means regular, sustained occupancy of a residential unit in the project by a person or family as the person's or family's primary domicile, but not units and related areas used primarily as:

(a) Hotels, motels, hostels, rooming houses, bed and breakfast operations or other such transient accommodations; or

(b) Nursing homes, hospital-type in-patient facilities or other living arrangements, even of an enduring nature, where the character of the environment is predominately care-oriented rather than solely residential; or

(2) A new district that forms after the approval of a vertical housing development zone (VHDZ), or a district that annexes territory that is included in an existing VHDZ may opt out of participating in a VHDZ. To opt out, the district must provide:

(a) Written notice to the assessor and VHDZ city or county post-marked on or before a due date set by the city or county by rule; and

(b) A copy of a resolution or other appropriate official instrument duly adopted and issued by the governing body of the district affirming its decision to opt out of the VHDZ designation.

(3) In the application for exemption under ORS 307.857, proposed projects must be described in terms of entire tax lots. Certified projects may not include partial tax lots.

(4) VHDZ boundaries may not overlap. A project may only be located in one VHDZ.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.841 - 307.867
REV 21-2021, amend filed 12/16/2021, effective 01/01/2022
REV 32-2018, adopt filed 12/31/2018, effective 01/01/2019

Or. Admin. R. 150-307-0900 Qualified Heavy Equipment and Qualified Heavy Equipment Rental Providers - Definitions and Responsibilities

(1) Definitions set forth in ORS 307.870 are incorporated herein by reference.

(2) Qualified heavy equipment is held primarily for rent if it is publicly offered for rent for a term of less than 365 consecutive days, or offered for rent for a term of less than 365 consecutive days with an option to purchase or lease.

(3)(a) A qualified heavy equipment rental provider must be primarily engaged in the business of renting qualified heavy equipment without an operator. A heavy equipment rental provider is primarily engaged in the business of renting heavy equipment without an operator if more than 50 percent of gross revenue earned from the rental of personal property (as defined in ORS 307.020 and OAR 150-307-0030) in Oregon during the rental provider’s prior fiscal year was from the rental of heavy equipment, heavy equipment attachments, associated trailers, and other equipment and tools that:

(A) are mobile;

(B) are rented without an operator but typically require an operator for use;

(b) For the purpose of determining whether the minimum threshold has been met, rental revenue received from the following transactions is excluded:

(A) renting equipment with an operator;

(B) renting equipment for a single defined term of more than 365 consecutive days;

(D) renting equipment to an affiliate, as defined in ORS 307.870.

(4) Any person meeting the requirements in section (3) is a qualified heavy equipment rental provider for purposes of the heavy equipment rental tax established by ORS 307.872, and must register with the Oregon Department of Revenue annually, and collect and remit heavy equipment rental tax quarterly.

(5) A person with no rental revenue from the prior fiscal year, but who expects to be primarily engaged in renting qualified heavy equipment in the next calendar year, must register as a qualified heavy equipment rental provider with the Oregon Department of Revenue in December of the current year and begin collecting and remitting heavy equipment rental tax starting January 1.

History

Statutory/Other Authority: ORS 305.100 & 307.872
Statutes/Other Implemented: ORS 307.870
REV 4-2020, minor correction filed 04/20/2020, effective 04/20/2020
REV 30-2018, adopt filed 12/28/2018, effective 01/01/2019
REV 22-2018, temporary adopt filed 11/29/2018, effective 11/29/2018 through 04/23/2019
REV 20-2018, temporary adopt filed 10/26/2018, effective 10/26/2018 through 04/23/2019

Or. Admin. R. 150-307-0905 Equipment and Tools Subject to the Heavy Equipment Rental Tax

(1) Definitions set forth in ORS 307.870 are incorporated herein by reference.

(2) The heavy equipment rental tax applies to heavy equipment, heavy equipment attachments, associated trailers, and other equipment and tools rented from a qualified heavy equipment rental provider required to be registered with the Oregon Department of Revenue, provided that the heavy equipment, attachments, associated trailers, and equipment and tools:

(a) are mobile;

(b) can be used for construction, mining, earthmoving or industrial activities;

(d) are rented for a term less than 365 consecutive days, or an open-ended, or undefined term.

(3) When determining the length of a rental agreement, each term and any extensions or amendments extending the agreement beyond the initial term are considered separately.

(4) The heavy equipment rental tax does not apply to any equipment or tools rented from a person that is not a qualified heavy equipment rental provider required to be registered with the Oregon Department of Revenue.

(5) The heavy equipment rental tax does not apply to equipment or tools rented under a rental agreement for a single defined term of 365 consecutive days or more.

History

Statutory/Other Authority: ORS 305.100 & 307.872
Statutes/Other Implemented: ORS 307.872
REV 5-2020, minor correction filed 04/20/2020, effective 04/20/2020
REV 30-2018, adopt filed 12/28/2018, effective 01/01/2019

Or. Admin. R. 150-307-0906 Liability for Unpaid Heavy Equipment Rental Taxes

(1) For purposes of this rule, “qualified heavy equipment provider” has the meaning given under OAR 150-307-0900 and includes, but is not limited to, an officer, member, or employee of the qualified heavy equipment provider, if, among other duties, that individual has:

(a) Authority to see that the heavy equipment rental taxes are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees’ working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign heavy equipment rental tax returns;

(g) Authority to make fiscal decisions for the business; or

(h) Authority to incur debt on behalf of the business.

(2) It is the duty of a qualified heavy equipment provider to hold in trust any amount of heavy equipment rental tax collected from the rental of heavy equipment and to assume custodial liability for amounts to be paid to the department. Any qualified heavy equipment provider who fails to pay the heavy equipment rental tax when due is subject to penalties, as provided by law, as any other taxpayer who fails to file a return or pay a tax when due.

(3) If a qualified heavy equipment provider fails to file returns or to pay any collected tax when due, any or all officers, members, and employees may be held personally responsible, as provided in this rule, for the returns and payments together with any interest and penalties, that are due.

(4) To be held personally liable for unpaid heavy equipment rental tax, a person must be a qualified heavy equipment rental provider. In addition, the person must be in a position to pay the heavy equipment provider rental tax or direct the payment of the heavy equipment provider rental tax at the time the duty arises to collect or pay over the heavy equipment provider rental taxes. The person may be held personally liable if the individual was, or should have been aware, that the heavy equipment provider rental taxes were not paid to the department. A qualified heavy equipment rental provider cannot avoid personal liability by delegating their responsibilities to another.

(5) The following factors do not preclude a finding that an individual is liable for the payment of heavy equipment rental provider taxes:

(a) Lack of willfulness in failing to pay over the required heavy equipment provider rental tax;

(b) The individual’s receipt of remuneration;

(d) Another individual is also liable for the same heavy equipment rental provider taxes;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and to set working conditions and schedules; or

(i) Delegation to another person any functions indicating liability.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.883
REV 3-2022, adopt filed 06/03/2022, effective 06/03/2022

Or. Admin. R. 150-307-0910 Cost of Heavy Equipment Operator's Service Not Subject to Rental Tax

The cost of a heavy equipment operator’s services is not subject to the heavy equipment rental tax. The rental tax must be applied to the rental price of the equipment rental as if rented without an operator. The amount of rental tax charged for the rental of heavy equipment with an operator’s services cannot be less than the tax that would have been charged if the equipment had been rented without an operator.

History

Statutory/Other Authority: ORS 305.100 & 307.872
Statutes/Other Implemented: ORS 307.872
REV 6-2020, minor correction filed 04/20/2020, effective 04/20/2020
REV 30-2018, adopt filed 12/28/2018, effective 01/01/2019

Or. Admin. R. 150-307-0915 Heavy Equipment Rental Tax Exemptions

(1) Definitions set forth in ORS 307.870 are incorporated herein by reference.

(2) Qualified equipment and tools rented directly to the United States (U.S.) federal government or any of its agencies or instrumentalities are exempt from the heavy equipment rental tax.

(3) The qualified heavy equipment rental provider must document the tax-exempt nature of rentals made to federal government agencies or instrumentalities and retain such documentation in its records.

History

Statutory/Other Authority: ORS 305.100 & 307.872
Statutes/Other Implemented: ORS 307.872
REV 7-2020, minor correction filed 04/20/2020, effective 04/20/2020
REV 30-2018, adopt filed 12/28/2018, effective 01/01/2019

Or. Admin. R. 150-307-0920 Long Term Rental Agreements

(1) Definitions set forth in ORS 307.870 are incorporated herein by reference.

(2) For purposes of this rule, “rental agreement” means an agreement between a qualified heavy equipment rental provider and a renter for the use of qualified heavy equipment for a single defined term of less than 365 consecutive days, an open-ended term, or an undefined term. When determining the length of a rental agreement, each term and any extensions or amendments extending the agreement beyond the initial term are considered separately.

(3) Qualified heavy equipment rented for a single defined term of 365 consecutive days or more is not subject to the heavy equipment rental tax and, therefore, no longer qualifies for the exemption from ad valorem property tax provided in ORS 307.872.

(a) The qualified heavy equipment rental provider must notify the County Assessor according to ORS 308.290 and ORS 311.410. The heavy equipment must be added to the property tax rolls.

(b) Any qualified heavy equipment rented under an agreement for a defined term of 365 consecutive days or more on July 1 is subject to ad valorem property tax as provided by ORS 311.410(1).

History

Statutory/Other Authority: ORS 305.100 & 307.872
Statutes/Other Implemented: ORS 307.872
REV 8-2020, minor correction filed 04/20/2020, effective 04/20/2020
REV 30-2018, adopt filed 12/28/2018, effective 01/01/2019

Or. Admin. R. 150-307-0930 Eligibility for Workforce Housing

For purposes of determining eligibility for workforce housing exemptions under Chapter 527, Oregon Laws 2021, “annual taxable income” means adjusted gross income from the applicant’s federal income tax return for the taxpayer’s federal tax year immediately preceding the federal tax year in which the applicant files an application.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: Section 2, Chapter 527, Oregon Laws 2021
REV 17-2022, amend filed 10/22/2022, effective 11/01/2022
REV 25-2021, adopt filed 12/16/2021, effective 01/01/2022

Division 308 ASSESSMENT OF PROPERTY FOR TAXATION

Or. Admin. R. 150-308-0010 Continuing Education Requirements for Registered Appraisers, Waiver of those Requirements, and Revocation of Registrations

(1) Registered appraisers in Oregon must participate in a continuing education program related to technical competency. To maintain their registration, appraisers must meet the continuing education requirements outlined in this rule, or OAR 150‐308‐0050 for assessors and directors of assessment and taxation, or OAR 150‐308‐0060 for appraisal managers. The requirements of this rule apply to any person who wishes to maintain registration, without regard to the person's place of employment, except for assessors, directors of assessment and taxation, and appraisal managers.

(2) Definitions:

(a) For the purposes of this rule, a "registered appraiser" is a person who has satisfied the requirements of ORS 308.010 relating to successful completion of an appraiser skills examination.

(b) "Technical credits" are units of training that are approved by the department in assessment and taxation subjects.

(A) Topics eligible for technical credit include, but are not limited to: mass appraisal, tax rate calculation, ratio studies, personal property, farm or forest uses, property value appeals board, property tax exemptions and special assessments and computer applications.

(B) Technical credits are equal to the number of hours in a course or presentation the Department of Revenue (department) approves for continuing education.

(C) Technical credits are awarded for course attendance and presentation once per two‐year cycle. A maximum of 10 technical credits per two year cycle are awarded for course development. A course instructor will receive technical credits for presentation for the first training session equal to the number of hours the department approved for continuing education for that training session.

(3) Required Credit Hours

(a) Registered appraisers who achieve their registration by passing the examination either for the first time, or after a lapse in their registered appraiser status, must accumulate 60 technical credit hours within the first two full calendar years after their registration is issued.

(b) All other registered appraisers must accumulate 30 technical credit hours every two full calendar years.

(c) The department will maintain a database of training it provides to registered appraisers. That database may be supplemented by records provided by the registered appraiser as to qualifying appraisal training received from sources other than the department.

(d) The department will provide sufficient training programs to allow registered appraisers to meet technical credit requirements. Technical credit hours are approved for appraisal related courses offered by the following organizations:

(A) The department;

(B) International Association of Assessing Officers (IAAO);

(D) Appraisal Institute.

(e) The department will approve technical credit hours provided through training given by other entities, individuals or by the county if it determines that the content of the training meets the definition for technical credits provided in this rule.

(f) The department may restrict the number or types of enrollees in certain classes, so long as the department meets the requirements of subsection (d) of this section for all registered appraisers.

(4) Waiver of Requirement for Continuing Education Credits

(a) Prior to January 31 of the first year of any registered appraiser’s current registration period, the registered appraiser may submit a request to the department for waiver of the technical credit requirements to be certified for the current two‐year certification period. A request for waiver must be in writing and signed by the requestor. If it is a waiver for a registered appraiser employed by the county, the assessor must approve it. For registered appraisers employed by the department, the appraiser's immediate supervisor must approve the request for waiver.

(b) The following are conditions for which the department may grant a waiver:

(A) Military service that prevents the completion of technical credit requirements.

(B) Disability or illness that prevents the completion of technical credit requirements.

(D) Limited duration assignments within the department but outside the Property Tax Division for department appraisers.

(c) Waivers under this section for the conditions in paragraphs (A) through (C) of subsection (b) above may be allowed indefinitely as long as the condition continues. However waivers under paragraphs (A) through (C) above will not be granted for more than a single two‐year certification period if the appraiser is also practicing in an appraisal capacity, either independently or under the employ of an individual, entity, or public employer.

(d) Waivers under this section may be granted for no more than a single two‐year certification period for the conditions in paragraph (D) above.

(5) Validation of Accumulated Technical Credits

(a) Prior to January 1:

(A) In the case of registered appraisers employed by the county, the assessor annually will certify on forms provided by the department a list of those registered appraisers who have met the technical credit requirements for their two‐year continuing education cycle.

(B) In the case of registered appraisers employed by the State of Oregon, the direct supervisor of those employees annually will certify on forms provided by the department a list of those registered appraisers who have met the technical credit requirements for their two‐year continuing education cycle.

(C) In the case of registered appraisers not employed by a county assessor or the State of Oregon, at the end of each two‐year continuing education cycle, the department will certify as to the satisfactory completion of technical credit requirements.

(b) The department will revoke appraiser registration under ORS 308.010(3)(d) for failing to submit satisfactory evidence to the department that the registered appraiser has met the technical credit requirement.

(6) The appraiser must notify the department within 30 calendar days, via email or in writing, of any change in address or employment status.

History

Statutory/Other Authority: ORS 305.100 & 308.010
Statutes/Other Implemented: ORS 308.010
REV 15-2024, minor correction filed 06/25/2024, effective 06/25/2024
REV 2-2018, minor correction filed 01/01/2018, effective 01/01/2018
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-308.010, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
Renumbered from 150-308.010-(A), REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
Renumbered from 150-308.010, RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0020 Revocation of Appraiser Registration

(1) The department will permanently revoke the registration of an appraiser when it has received a certified copy of a final determination, as prescribed by this rule, that the appraiser has committed civil or criminal fraud or misrepresentation.

(2) Such determination must be by a court, state or local government administrative body, or statutorily authorized board of arbitration, and must result from a claim or defense in the proceeding based upon an allegation that the appraiser committed such fraud or misrepresentation.

(3) Such determination shall be ‘final,’ when no longer subject to review by a court or body of higher jurisdiction.

(4) The appraiser’s registration shall then be removed from the data base of currently registered appraisers.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.010
REV 57-2024, amend filed 12/26/2024, effective 01/01/2025
Renumbered from 150-308.010(1), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0030 County Appraiser Trainee Exam Preparation Course

(1) The Department of Revenue (DOR) shall develop a standardized training course for all county appraiser trainees.

(2) Except as provided in ORS 204.016(4)(a) to be enrolled in the Appraiser Trainee Exam Preparation Course:

(a) An individual must be employed by a county assessor in an appraiser trainee position; and

(b). The county assessor must make a written request to the DOR, Property Tax Division, to have the employee enrolled in the Appraiser Trainee Exam Preparation Course.

(3) Completion or termination of the Appraiser Trainee Exam Preparation Course:

(a) Each person enrolled in the Appraiser Trainee Exam Preparation Course must complete the requirements of the course within two years from the date of enrollment.

(b) The trainee will automatically be terminated from the course upon leaving employment with the county assessor.

(c) Upon reemployment with a county assessor, in an appraiser trainee position, within one year of the date of termination, the trainee may be reinstated in the course upon compliance with subsection (2)(b) of this rule.

(d) The trainee will automatically be terminated from the course after two years of participation time in the course. If the trainee was reinstated upon reemployment, the total participation time in the course may not exceed two years.

(4) The assessor will determine if the trainee has met the requirements of the course. Upon satisfactory completion of the course, the assessor of the county will issue a Certification of Completion Affidavit to:

(a) the trainee; and

(b) DOR, Property Tax Division.

(5) To become a registered appraiser in the state of Oregon, the trainee must successfully complete the Property Appraiser examination administered by the DOR, Property Tax Division.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.015
REV 58-2024, amend filed 12/26/2024, effective 01/01/2025
Renumbered from 150-308.015, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
12-19-75

Or. Admin. R. 150-308-0040 Standards for Imposition, Waiver, and Reduction of Penalty on Utilities and Designated Companies Assessed by the Department. Imposition of Penalty for Failure to File a Timely or Complete Return

(1) The department may impose a penalty under ORS 308.030 whenever an annual statement is not filed within the time fixed for filing an annual statement or by the approved extension date, or an incomplete annual statement is filed.

(a) The annual statement packets that are mailed to the taxpayer contain cover letters which specify the information that the taxpayer must include in the annual statement the taxpayer submits to the department. If a taxpayer submits an incomplete annual statement, the department will return it to the taxpayer with a notice stating the information that is required for the annual statement to be considered complete. A complete annual statement must be refiled within 14 days from the date on the notice of the incomplete filing.

(b) The taxpayer may be subject to a late-filing penalty under ORS 308.030 if the complete annual statement is not filed by the later of the original due date, the approved extension date, or 14 days from the date on the notice of the incomplete filing. Taxpayer Request for Waiver or Reduction

(2) Taxpayers who object to a late-filing penalty imposed under ORS 308.030 for late filing of an annual statement may request that the penalty be waived or reduced. The director of the department will consider all requests to waive or reduce late-filing penalties imposed under ORS 308.030 consistent with this rule.

(3) The request for waiver or reduction of a late-filing penalty must be in writing and must be signed by the taxpayer, an officer of the taxpayer, or an authorized representative of the taxpayer.

(4) The taxpayer may file a request for waiver or reduction of the late-filing penalty at any time after the taxpayer is subject to the late-filing penalty, but must be received by the department no later than July 31, of the year in which the director reviews the assessment roll for the year of delinquency.

(5) The request for waiver or reduction of a late-filing penalty must contain all the facts showing that one or more of the following factors for waiver or reduction of the late-filing penalty apply:

(a) The actions of the taxpayer resulted in the imposition of a penalty which constituted a first-time offense on the part of the taxpayer.

(b) Good and sufficient cause, as defined in ORS 305.288(5)(b), exists for a taxpayer’s failure to file the annual statement required by law within the time fixed for filing or the approved extension date.

(6) Examples of situations the director may accept as good and sufficient cause for the late filing of an annual statement include:

(a) The delay was caused by the death or serious illness of the person who is solely responsible for filing the annual statement, or death or serious illness in that person’s immediate family.

(b) The delay was caused by the unavoidable and unforeseen absence of the person who is solely responsible for filing the annual statement prior to the due date of the annual statement.

(c) The delay occurred because the taxpayer did not receive the annual statement packet mailed by the department to the taxpayer’s last-known address, which was not the taxpayer’s current address. The annual statement packet was returned to the department, remailed to a new address, and the taxpayer responded within the extended filing time.

(d) The delay was caused by the destruction by fire, natural disaster or other casualty of the taxpayer’s records needed to prepare the annual statement.

(7) Examples of situations the director may not accept as good and sufficient cause for the late filing of the annual statement include:

(a) The delay was due to the taxpayer’s reliance upon an individual (e.g., an accountant) to prepare the annual statement on time. The taxpayer has an affirmative duty to file timely.

(b) The delay was the result of personnel changes within the taxpayer’s organization.

(c) For private railroad companies, the delay was the result of railroads not providing necessary mileage reports prior to the filing deadline or the approved extension date.

(8) The director will use the following guidelines when considering a request to waive or reduce a late-filing penalty.

(a) Non-filers No waiver of late-filing penalty.

(b) Filing delinquency 1–5 days: 6–30 days: Over 30 days.

(A) First time offense for late-filing: Waive: Waive: Waive.

(B) Good and sufficient cause established: Waive: Reduce 75%: No Waiver

(A) First delinquency in rolling three years: Waive: Reduce 75%: No Waiver

(B) Second delinquency in rolling three years Reduce 75%: Reduce 50%: No Waiver

(d) Days late are calculated from the later of the original due date or the approved extension date. If no delinquency has occurred within the preceding three years, any request for waiver or reduction may be considered the same as a “first delinquency in rolling three years.” If a taxpayer has been subject to a late-filing penalty at any time within the preceding three years, a second delinquency will be considered a “second delinquency in rolling three years,” even if a delinquency did not occur in the intervening year.

History

Statutory/Other Authority: ORS 305.100 & 308.030.
Statutes/Other Implemented: ORS 308.030.
Renumbered from 150-308.030, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2005, f. 6-27-05, cert. ef 6-30-05

Or. Admin. R. 150-308-0050 Continuing Education Requirements for Assessors

(1) Assessors and directors of assessment and taxation must have 15 credits of technical training, 15 credits of management training and 15 credits which they can allocate in any combination of technical or management credits for a total of 45 credits every two years. Newly appointed or elected assessors must complete 20 credits of technical training, 20 credits of management training and 20 credits which they can allocate in any combination of technical or management credits for a total of 60 credits within the first two calendar years following their appointment or election.

(a) Technical training must be in the area of assessment and taxation such as appraisal, budgets, ratio studies, and tax rate computation. A minimum of 15 credits of technical training must be completed every two years. Assessors and directors of assessment and taxation must complete a course in Basic Mass Appraisal.

(b) Management training must be in the area of personnel relations (hiring, discipline, dismissals) office management and management of an appraisal program. A minimum of 15 credits of management training must be taken every two years.

(2) Completion of the continuing education requirements under this rule for assessors and directors of assessment and taxation shall be considered to meet the continuing education requirements of ORS 308.010(4)(a).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.057
Renumbered from 150-308.057, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-308.057-(A)
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0060 Continuing Education Requirement for Appraisal Managers in County Assessment Offices

(1) Appraisal managers means employees classified in the county’s management personnel category who supervise appraisal staff. Appraisal managers must be registered appraisers under ORS 308.010.

(2) Appraisal managers must meet the same continuing education requirements as assessors under OAR 150-308-0050.

(3) Completion of the continuing education requirements under this rule for appraisal managers shall be considered to meet the continuing education requirements of ORS 308.010(4)(a).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.059
Renumbered from 150-308.059-(A), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
Renumbered from 150-308.059, RD 3-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0070 Qualifications of Managerial Employees of the Assessor’s Office

(1) In order to ensure qualified management in county assessment offices, persons hired into a management position in a county must meet at least the following general minimum qualifications.

(a) Basic knowledge of the principles, practices and techniques of supervision and management.

(b) Skill in communicating effectively.

(d) Ability to use the people, equipment and budgetary resources available to meet program goals and objectives.

(e) Ability to understand, apply, and explain provisions of the laws, rules, regulations, policies, procedures, standards and guidelines governing program operations.

(f) Some positions, for example chief appraiser, will require a high level of specialized technical expertise.

(2) The management positions in the various counties are distinguished by varying degrees of knowledge, problem solving and accountability determined by the nature of work, working relationships, number of employees, and other factors. Therefore, the minimum employment qualifications for each management position shall be agreed upon between the county and department prior to their use for hiring.

(3) In the event a county does not have established minimum employment qualifications, the department and the assessor shall agree upon the hiring criteria. The criteria used will consider the minimum qualifications listed above and the assessor’s organizational structure and the management position. If, because of a lack of qualified applicants, it becomes necessary for the assessor to hire a person who does not meet the minimum qualifications, a training program for that person will be jointly established by the department and county.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.059
Renumbered from 150-308.059-(B), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-308-0080 Taxable Personal Property Whose Temporary Situs Is in the State of Oregon

Personal property is assessable under ORS 308.105 if it is in Oregon on the assessment date, January 1, at 1 a.m., and meets the following conditions:

(1) The property is not in transit, but has come to rest in Oregon;

(2) The property was not here by misadventure or some reason beyond the owner’s control. The owner intended the property to remain here for the time being;

(3) While in Oregon the property performed the service for which it was designed and for the benefit of the owner’s business;

(4) Was not in Oregon solely for repairs.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.105
Renumbered from 150-308.105, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 10-1992, f. 12-30-92, cert. ef. 12-31-92, Renumbered from 150-308.105-(A)
RD 5-1992, f. & cert. ef. 12-29-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-308-0090 Billboards as Real Property

All billboards that are erected upon the land or affixed to buildings or other permanent structures shall be classified as real property.

(1) The person or persons who are responsible for paying the taxes on the billboard must file annually with the assessor’s office a Real Property Return for all billboards within the county.

(2) Either of the following procedures may be used by the assessor in assessing billboards.

(a) Establish one “A1-improvement only” account for each billboard based upon location; or

(b) The county may establish one “A1-improvement only” account for each individual ownership in each tax code area where the billboards are located. This account lists the locations — by address, map/tax lot or both — of all billboards in the tax code area.

(3) Mobile billboards shall be classified as personal property. A billboard is mounted on a frame so it can be carried by a person, on a flatbed, or in the back of a pickup.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.115
Renumbered from 150-308.115, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-308-0100 Determining Maximum Assessed Value when the Property Class is Changed

(1) The single act of changing the property classification, described in OAR 150-308-0310, to better reflect the highest and best use of the property, does not qualify as an exception to the 3 percent limitation on growth in the maximum assessed value (MAV), as described in ORS 308.146(1).

(2) Any exception value added to the base MAV after the change is made to the property class will be calculated by applying the changed property ratio of the current property class to the real market value of any qualified exception identified in ORS 308.146.

History

Statutory/Other Authority: ORS 305.100.
Statutes/Other Implemented: ORS 308.146.
Renumbered from 150-308.146, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2005, f. 6-27-05, cert. ef 6-30-05

Or. Admin. R. 150-308-0110 Reduction of Maximum Assessed Value (MAV) for Property Destroyed or Damaged by Fire or Act of God

(1) "Fire or act of God" has the same meaning and restrictions as used in ORS 308.425 including the arson restriction of ORS 308.429.

(2) As used in ORS 308.146(5)(a), "reduction in real market value" means that the total real market value (RMV) after adjustment is less than it would otherwise have been, had the damage or destruction by fire or act of God not occurred.

(3) When a portion of property is destroyed or damaged by fire or act of God, use the following procedure to adjust MAV for the year in which the destruction or damage is reflected by a reduction in RMV.

Note: An example is incorporated into the steps with the following assumptions:

2008-09 MAV = $187,379

2008-09 (1-1-08) total RMV equals $300,000.

2008-09 assessed value (AV) = $187,379.

9-1-08 the house is destroyed by fire. The house RMV for 1-1-08 was $180,000.

There is no market trending in this area.

Step 1: Multiply the prior year AV by 1.03. Compare the result to the prior year MAV to determine the larger amount. The larger amount becomes the current year MAV (unadjusted) as if the account had not changed, i.e., the larger of: Prior year AV x 1.03 or prior year MAV = current year MAV of unchanged account.

Example: Larger of: $187,379 x 1.03 = $193,000 or $187,379. Current year MAV = $193,000.

Step 2: Determine the prior year’s RMV for the affected portion. The affected portion is that part of the property that was destroyed or damaged by fire or act of God. The RMV of the loss is the RMV of the affected portion.

Example: RMV of affected portion equals $180,000.

Step 3: Subtract the RMV of the affected portion (Step 2) from the prior year total RMV to determine the RMV of the unaffected portion, i.e., the prior year total RMV - RMV of the affected portion = RMV of the unaffected portion.

Example: $300,000 - $180,000 = $120,000.

Step 4: Divide the RMV of the unaffected portion (Step 3) by the total prior year RMV to determine the percentage of unaffected property, i.e., the RMV of the unaffected portion / total prior year RMV = percentage of unaffected property.

Example: $120,000 / $300,000 = 40%

Step 5: Multiply the unadjusted MAV (Step 1) by the percentage of unaffected property (Step 4) to determine MAV that has been adjusted to reflect the loss from fire or act of God (MAV attributable to the unaffected portion only), i.e., the unadjusted MAV x percentage of unaffected property = MAV adjusted to reflect the loss from fire or act of God.

Example: $193,000 x 40% = $77,200.

(5) As used in section (4), the "year" in which the RMV is reduced due to fire or act of God can be either:

(a) The assessment year.

(b) The tax year if RMV is determined as of July 1 under ORS 308.146(6) or 308.428.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.146
REV 4-2026, minor correction filed 03/10/2026, effective 03/10/2026
Renumbered from 150-308.146(5)(a), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 5-2009, f. & cert. ef. 7-31-09
REV 8-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-308-0120 Reduction of Maximum Assessed Value (MAV) When a Building is Demolished or Removed

(1) As used in ORS 308.146(8)(a), “reduction in real market value” means the total real market value (RMV) after adjustment is less than it would otherwise have been, had the demolition or removal not occurred.

(2) As used in section (3) of this rule, the “year” in which the RMV is reduced due to demolition or removal is either:

(a) The assessment year, or

(b) The tax year, if RMV is determined as of July 1 under ORS 308.146(6).

(3) When a building is demolished or removed, use the following procedure to adjust the maximum assessed value (MAV) for the year in which the demolition or removal is reflected by a reduction in RMV.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.146
REV 32-2018, amend filed 12/31/2018, effective 01/01/2019
Renumbered from 150-308.146(8), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

Or. Admin. R. 150-308-0130 Definitions

(1) For purposes of ORS 308.149:

(a) “New construction” means any new structure, building, addition or improvement to the land, including site development.

(b) “Reconstruction” means to rebuild or replace an existing structure with one of comparable utility.

(i) has a real market value over the threshold for minor construction in any assessment year established under ORS 308.149; and

(ii) adds square footage to an existing structure.

(d) “Remodeling” means a type of renovation that changes the basic plan, form or style of the property.

(e) “Renovation” means the process by which older structures or historic buildings are modernized, remodeled or restored.

(f) “Rehabilitation” means to restore to a former condition without changing the basic plan, form or style of the structure.

(2)(a) For purposes of ORS 308.149 “general ongoing maintenance and repair” means activity that:

(A) Preserves the condition of existing improvements without significantly changing design or materials and achieves an average useful life that is typical of the type and quality so the property continues to perform and function efficiently;

(B) Does not create new structures, additions to existing real property improvements or replacement of real or personal property machinery and equipment;

(C) Does not affect a sufficient portion of the improvements to qualify as new construction, reconstruction, major additions, remodeling, renovation or rehabilitation; and

(D) For income producing properties is part of a regularly scheduled maintenance program.

(b) Regardless of cost, the value of general ongoing maintenance and repairs may not be included as additions for the calculation of maximum assessed value.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.149
REV 15-2023, minor correction filed 10/06/2023, effective 10/06/2023
Renumbered from 150-308.149-(A), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
REV 11-1998, f. 12-29-98, cert. ef. 12-31-98
Renumbered from 150-308.149, REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 9-1997, f. & cert. ef. 12-31-97

Or. Admin. R. 150-308-0140 Computation of Changed Property Ratio for Centrally Assessed Property

The ratio of average maximum assessed value to average real market value, also known as the changed property ratio, shall be rounded to two decimal places for purposes of assessed value calculation. See OAR 150-308-0570.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.149
Renumbered from 150-308.149(3), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from OAR 150-1997 Or. Law Ch. 541 Sect. 19, REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
REV 9-1997, f. & cert. ef. 12-31-97

Or. Admin. R. 150-308-0150 Net Capitalized Additions

(1) Definitions:

(a) For purposes of centrally-assessed property, the term “improvements” means changes in the value of property (as defined in 1997 OR Law Ch. 541, Sect. (7)(1)(b)) as the result of new construction, reconstruction, major additions, remodeling, renovation, rehabilitation or acquisition of property except on-going maintenance and repair. “Improvements” are measured by changes in Oregon net capitalized additions as defined below.

(b) The term “capitalized” refers to company expenditures for certain assets with a useful life typically extending beyond one year. These assets are aggregated in fixed asset accounts subject to annual depreciation charges, rather than repair and maintenance expense accounts. Examples include acquisitions of or changes to buildings, equipment, and personal property such as furniture and fixtures.

(c) The term “net additions” means the difference between the aggregate costs of Oregon assets in the prior and current years. For the 1997–98 implementation year, additions include the change from the 1995–96 base year. In all subsequent years, additions include the change from the prior year.

(d) The term “net capitalized additions” means “net additions” as calculated using capitalized costs in the company’s annual reports.

Examples:

(A) For the current year, a new transformer is added for $100,000 and there are no retirements. The net addition is $100,000.

(B) A seven-year old transformer with a ten-year life expectancy (net book value of $30,000) is retired from service and replaced by a new transformer (cost $100,000). The net addition is $70,000, reflecting the additional 7 years’ life expectancy. (The remaining $30,000 is considered maintenance).

(C) Same as (B) above, except that the new transformer is added to the existing number of transformers. No other transformers are retired; however, $30,000 of other capitalized equipment is retired. The net addition is still $70,000.

Typical fixed asset accounting procedures provide for annual removal of retired assets. Using successive years’ account totals to determine maximum assessed value will result in a netting of retirements against true improvements.

(D) Same as (B) above, except that no new transformer is added. The net capitalized addition is $0, since there have been no improvements.

(E) If the change in Oregon assets can only be determined by an allocation of system additions, then these changes shall be allocated to Oregon in the same manner as other company property.

(F) In the case of mobile property, additions shall also include the change in presence in the state as measured by the change in allocation factors.

(e) The term “ongoing maintenance and repair” means expenditures which the company has elected to record as an expense in repair and maintenance accounts rather than aggregate in a fixed asset account as described (1)(b). Items may be expensed because the useful life of the expenditures does not extend over one year, or because their associated dollar amounts are too small to qualify as a capital asset under company capitalization threshold guidelines. Typical examples include spare parts and maintenance supplies.

Example: A private car company maintains a capitalization threshold for its equipment accounts of $2000. The company frequently makes purchases of spare parts for its repair shops. One of these was a bulk purchase of miscellaneous car bearings for $1000, and the company expensed this item. The company also decided to upgrade half of its fleet with a $20,000 investment in specialized bearings which would allow the cars to travel at significantly higher speeds. This investment was capitalized. The expenditure of $1000 would be considered “ongoing maintenance and repair.” The expenditure of $20,000 would be considered an “improvement.” The fact that each expenditure is for bearings is not controlling.

(2) Application of Definitions:

(a) In the case of companies which do not keep fixed asset accounts, the department may make a reasonable analysis of reported assets using capitalization practices under accepted accounting principles.

(b) In cases where the Department of Revenue annual company reporting is based on aggregate account balances, the department will not undertake an item-by-item analysis of the amount and purpose of each expenditure within statutory appraisal timelines. Expensed items shall be considered “ongoing maintenance and repair” and net capitalized additions shall be considered “improvements.” The department may undertake an item-by-item analysis when the appraisal is challenged by the taxpayer in litigation or otherwise.

(c) Typical accounting policies include a “capitalization threshold” of a certain dollar amount for different types of expenditures. The department recognizes that certain assets which qualify as improvements under the law may be expensed as a matter of company policy. In these cases, the department shall presume that the minor construction thresholds defined in ORS 308.149 are addressed by this accounting convention. The department may make a reasonable adjustment when the application of this approach results in a material error.

(3) For purposes of computing maximum assessed value for centrally-assessed property, the aggregate Oregon net capitalized additions shall be adjusted to reflect their real market value as a result of wear, aging, and the impact of market conditions since placement in service. The net capitalized additions shall then be multiplied by the statewide maximum assessed value to real market value ratio for centrally-assessed property (always 1.00 or less). The maximum assessed value shall be compared to the real market value, and the lesser of the two shall be placed on the roll as the company’s assessed value.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.149
REV 16-2023, minor correction filed 10/16/2023, effective 10/16/2023
Renumbered from 150-308.149(5), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97

Or. Admin. R. 150-308-0160 Minor Construction

(1) Definition: "Minor construction" is an improvement to real property that results in an addition to real market value (RMV), but does not qualify as an addition to maximum assessed value (MAV) due to a value threshold. The value threshold causing an addition to MAV for an improvement or improvements is an RMV increase of more than $18,200 in any one assessment year or more than $45,000 for all cumulative additions made over five assessment years, as adjusted upward based on any increase in the Consumer Price Index (CPI) as described in section (2) of this rule.

(2) For each assessment year beginning on or after January 1, 2025, the department shall adjust the threshold dollar amounts in section (1) of this rule as follows:

(a) Divide the average CPI for All Urban Consumers, West Region, for the prior calendar year by the average CPI for All Urban Consumers, West Region, for 2024.

(b) Recompute the RMV thresholds under section (1) of this rule by multiplying $18,200 and $45,000 by any positive increase in the CPI determined under subsection (a) of this section.

(3) Minor construction does not include general ongoing maintenance and repairs.

(4) When testing the threshold for all cumulative additions made over five assessment years, use the cumulative RMV of all minor construction and major additions over a period not to exceed five consecutive assessment years.

(a) Minor construction and major addition values are not market trended.

(b) Values for retirements are not considered in the threshold test.

(c) Values for minor construction items that are removed or destroyed prior to being an adjustment to MAV are subtracted from the minor construction cumulative RMV.

(5) Once the threshold for all cumulative additions made over five assessment years is met, use the following steps to calculate the MAV adjustment:

(a) Use minor construction values that are not market trended.

(b) Make adjustments for any retirements from the prior assessment year. The net value of additions and retirements may not go below zero.

(d) Reset the cumulative RMV for minor construction to zero and restart the five-year period.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.149
REV 5-2024, amend filed 01/31/2024, effective 02/01/2024
Renumbered from 150-308.149(6), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
REV 8-2000, f. & cert. ef. 8-3-00
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-308-0170 Establishing a Changed Property Ratio

(1) The assessor must establish a CPR for property classes 0 through 8 each assessment year. For determining the ratio of the average maximum assessed value over the average real market value, only the first digit of the property class needs to be recognized. These ratios must be rounded to three decimals.

(a) Property classes may be combined to arrive at a ratio. The resulting ratio would become the CPR for each property class used to calculate the ratio.

(b) For specially assessed properties, only the non-specially assessed portion of value will be used to determine a ratio. For specially assessed properties such as farm or timber, the assessor may use either of the following methods to arrive at a CPR:

(A) The non-specially assessed portion of the unchanged 5-x-x or 6-x-x property classes may be used to create the CPR for those classes; or,

(B) The 4-x-x property class values may be combined with the non-specially assessed values from the 5-x-x and/or 6-x-x property classes to calculate the ratio. The resulting ratio would become the CPR for each property class used to calculate the ratio.

(2) Residential property class (1-x-x) includes all manufactured structures and floating homes not assigned to other property classes.

(3) For locally and centrally assessed property, the value of the CPR may not be greater than 1.000.

History

Statutory/Other Authority: ORS 305.100 & 308.156
Statutes/Other Implemented: ORS 308.156
Renumbered from 150-308.156, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 1-2003, f. & cert. ef. 7-31-03
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-308-0180 Definition of Affected

“Affected property” means property that is subject to one or more of the following events: partitioned or subdivided; added to the account as omitted property; rezoned and used consistent with the rezoning; disqualified from a special assessment, exemption, or partial exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.156
Renumbered from 150-308.156(5), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-308-0190 Subdivided and Partitioned Property MAV

For purposes of calculating maximum assessed value when a property is subdivided or partitioned, the portion of the property that is “affected” includes:

(1) The entire land that was subdivided or partitioned into smaller lots or parcels, if any.

(2) The improvements if one or more of the following apply:

(a) The act of subdividing or partitioning the land results in the apportionment of a single improvement (building or structure) to more than one tax lot.

Example 1: A lot improved with a duplex is partitioned such that the duplex is split into two single-family residences.

(b) The act of subdividing or partitioning the land changes the market’s perception of the value of the improvements.

Example 2: A partition includes a vacant warehouse that was previously part of a large industrial complex. Prior to the partition, the market perceived the warehouse as unnecessary to the industrial complex and of little or no value. After the partition, the warehouse is a stand-alone improvement no longer associated with the industrial complex. The market now perceives the warehouse as a property that can be used for many different purposes with considerable value. By contrast, there is no change in market perception regarding the remaining improvements in the industrial complex.

Example 3: The legal subdivision of an apartment building into condominium units.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.156
Renumbered from 150-308.156(5)-(A), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 6-2001, f. & cert. ef. 12-31-01
REV 4-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-308-0200 Rezoned Property — Calculating Maximum Assessed Value (MAV)

(1) For the purposes of determining MAV under ORS 308.142 to 308.166 and this rule, the following definitions apply:

(a) “Primary use” means an activity or combination of activities of chief importance on the site and is one of the main purposes for which the land or structures are intended, designed, or ordinarily used. A site may have more than one primary use, such as mixed use buildings with commercial use on the ground floor and residential use on upper floors.

(b) “Accessory use” means a use or activity that is incidental and subordinate to the primary use of the property. A use designated as “accessory “or “auxiliary” by an applicable zoning code is presumed to be accessory unless that designation is clearly inconsistent with the ordinary legal meaning of “accessory,” as determined by relevant criteria such as the relative size of the area used and the impact of the use on the surrounding neighborhood. Accessory uses may include, but are not limited to:

(A) In residential zones, recreational activities, hobbies, home businesses, or pet raising;

(B) In commercial office zones, cafeterias, health facilities, or other amenities primarily for employees;

(D) In industrial zones, storage, rail spurs, lead lines, or docks;

(E) Parking in any zone, unless commercial parking is designated or allowed as a primary use, such as for parking structures; and

(F) Accessory structures such as accessory dwelling units limited in size, garages, car ports, decks, fences, and storage sheds.

(d) “Floor area ratio” means the relationship of the total allowed area of above ground floors of a building to the total area of the parcel of land on which it is sited.

(e) “Site coverage ratio” means the relationship of the total area covered by the footprint of a building to the total area of the parcel of land on which it is sited.

(f) "Rezoned" means on or after July 1, 1995, the governmental body that regulates zoning:

(A) Made any change in the zone designation, including but not limited to an overlay, plan district, or floating zone designation, of the property;

(B) Made a change in one or more of the permitted primary types of use of the property; or

(i) The number of dwelling units, other than accessory dwelling units, allowed per acre, or other legal limitation on the number of dwelling units, other than accessory dwelling units, in a given area;

(ii) The allowed floor area ratio; or

(iii) The allowed site coverage ratio.

Example 1: The zone designation on a zoning map is changed from light industrial to commercial. Property has been rezoned.

Example 2: Prior to July 1, 1995, a city’s zoning ordinances allowed a small degree of office space, ordinarily a commercial use, in an industrial zone as accessory to industrial uses. No other commercial uses were permitted in that zone. The city later amends the zoning ordinances to allow office space as a primary use of property in those industrial zones. Because the zone now permits both commercial and industrial uses as primary uses, the permitted primary types of use of the property have changed. Property has been rezoned.

Example 3: Any amendment is made to the zoning ordinances increasing the number of dwelling units, other than accessory dwelling units, allowed per acre. Property has been rezoned.

(D) "Rezoned" does not include:

(i) Changes in the authorized uses of the property that were imposed before July 1, 1995, by the governmental body that regulates zoning of the property;

(ii) Satisfaction of conditions or restrictions on the authorized uses of the property that were imposed before July 1, 1995, by the governmental body that regulates zoning of the property;

(iii) Changes in the authorized types of use of the property imposed by a governmental body other than the governmental body that regulates zoning of the property; or

(iv) Changes in allowed accessory uses.

Example 4: The ordinances governing single-family residential zones are amended to allow a single accessory structure, designated as an “accessory dwelling unit.” The accessory dwelling unit is limited in size either to a maximum square footage or in proportion to the primary dwelling. The zoning amendment changes the allowed accessory uses of property. Property has not been rezoned.

Example 5: The ordinances governing single-family residential zones are amended to allow the operation of a home business in a residential zone. The amendment designates the home business as an “accessory use” and imposes limitations on the business to preserve the residential character of the zone in which it is conducted, such as limitations on the type of business conducted or the number of employees allowed. The business activity is incidental to the primary use of the home. Property has not been rezoned.

Example 6: An amendment is made to the zoning ordinance to allow high-technology manufacturing in a light industrial zone. The zone designation has not changed. Light industrial use and the new use of high-technology manufacturing are both within the same type of use, which is industrial. Property has not been rezoned.

Example 7: An amendment is made to the zoning ordinance to allow a beauty school in a commercial office zone. The zone designation has not changed. Commercial office use and the new use of a beauty school are both within the same type of use, which is commercial. Property has not been rezoned.

(g) “Used consistently with the rezoning” means the property is put to a newly permitted use under the rezoning. It does not include a use that was permitted under the prior zoning. It often includes, but does not require, a physical change to the property.

Example 8: Single-family dwellings are a permitted use under multi-family zoning. If a vacant parcel is rezoned from single- to multi-family, and a new single-family house is later constructed, the new use is not consistent with the rezoning because the use was allowed prior to the rezoning. The exception for property rezoned and used consistently with the rezoning has not occurred.

Example 9: A house in a residential zone is used as a commercial office. The residential zone is changed to a commercial zone in a later year. The property is used consistently with the rezoning because the commercial use was previously a nonconforming use, and is now a newly permitted use under the rezoning. The exception for property rezoned and used consistently with the rezoning has occurred.

Example 10: A city decides to revise their zoning code, and the zone designation for a commercial zone on a map is changed from “C5” to “GC.” However, there is no change to the permitted uses. Although property has been rezoned, no property will be “used consistently with the new zoning” because all of the uses were permitted under the prior zoning.

(2) For the purposes of calculating maximum assessed value when a property is rezoned and used consistently with the rezoning, the portion of the property that is “affected” includes:

(a) Improvements that are converted to the newly allowed use; and

(b) All land that supports a newly allowed use, including, but not limited to:

(A) Land under newly constructed or converted improvements put to the newly allowed use;

(B) Ingress and egress related to the newly allowed use;

(D) Landscaping;

(E) Yard areas; and

(F) Parking.

Example 11: A house in a neighborhood recently rezoned from residential to commercial is converted into a commercial office. The house is used consistently with the new zone and is affected property. All of the land is affected property, unless a portion is clearly distinguishable as “excess” land: land unrelated to the new commercial use.

(3) The assessor will calculate the MAV for the property tax account for the current assessment year under this subsection, if:

(a) The entire property has been rezoned;

(b) The entire property is used consistently with the rezoning; and

(c) Either (a) or (b), or both, took place after January 1 of the preceding assessment year and on or before January 1 of the current assessment year.

Example 12: In 1998, the zoning ordinance was amended to permit additional primary types of use in the zone. The designation on the zoning map did not change. Last year, the entire property was developed for one of the primary types of use first permitted under the 1998 amendment.

Prior Year Values: Real Market Value (RMV) = $250,000; MAV = $97,088; Assessed Value (AV) = $97,088.

Current year RMV of the affected portion = $750,000.

Current year changed property ratio (CPR) for this property type = .800.

Because the rezone affects the entire property, multiply the current year RMV of the entire property by the CPR. This is the MAV for the entire property.

$750,000 x .800 = $600,000 (Current year MAV for the entire property.)

(4) The assessor will calculate the MAV for the property tax account for the current assessment year under this subsection, if:

(a) The property or a portion of the property has been rezoned;

(b) A portion of the property is used consistently with the rezoning; and

(c) Either (a) or (b), or both, took place after January 1 of the preceding assessment year and on or before January 1 of the current assessment year. Use the following steps to determine the MAV for the property.

Example 13: Property was rezoned from residential to commercial two years ago. A one and a half acre lot has been developed into a bicycle sales and service shop. The shop, including all parking and landscaping, occupies half of an acre. The rest of the land remains undeveloped.

Prior year values: RMV = $150,000; MAV $97,088; AV = $97,088.

Prior year RMV of unaffected portion = $100,000.

Current year RMV of affected portion = $700,000.

Current year CPR for this property type = .800.

Step 1: Calculate the current year MAV as if the account had not changed.

Multiply the prior year AV by 1.03. Compare the result to the prior year MAV to determine the larger amount. This becomes the current year MAV as if the account had not changed.

Larger of: Prior year AV x 1.03 compared to prior year MAV = current year MAV of unchanged account.

Prior year AV x 1.03 = 97,088 x 1.03 = $100,000

Prior year MAV = $97,088

Current year MAV of the unchanged account = $100,000

Step 2: Calculate the percentage of the unaffected portion.

Determine the prior year's RMV for the unaffected portion of the property. Divide that value by the prior year RMV for the whole account. This is the percentage of the account that is unaffected by the change to the property.

Prior year RMV (unaffected portion) divided by prior year RMV (total account) = percentage of the property that is unaffected.

$100,000 = prior year RMV for the unaffected portion.

$150,000 = prior year RMV for the total account.

$100,000 / $150,000 = 66.7% (Percentage of the account that is unaffected.)

Step 3: Calculate the current year MAV for the unaffected portion.

Multiply the current year MAV (Step 1) by the percentage of the unaffected portion (Step 2). This is the current year MAV for the unaffected portion.

$100,000 x 66.7% = $66,700 (Current year MAV for the unaffected portion.)

Step 4: Calculate the MAV for the affected portion.

Multiply the current RMV of the affected portion by the CPR. This is the MAV for the affected portion.

$700,000 x .800 = $560,000 (Current year MAV for the affected portion.)

Step 5: Calculate the MAV for the account.

Add the MAV for the unaffected portion (step 3) and the MAV for the affected portion (step 4) to get the MAV for the account.

$66,700 + $560,000 = $626,700 (Current MAV for the account.)

History

Statutory/Other Authority: ORS 305.100 & 308.156
Statutes/Other Implemented: ORS 308.156
Renumbered from 150-308.156-(B), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-308.156(5)-(B), REV 6-2016, f. 7-28-16, cert. ef. 8-1-16
REV 6-2003, f. & cert. ef. 12-31-03
REV 8-2000, f. & cert. ef. 8-3-00
REV 4-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-308-0210 Omitted Property—Allocating Maximum Assessed Value (MAV)

(1) When omitted property is added to the property tax account after January 1 preceding the current assessment year and before January 1 of the current assessment year, only the omitted property portion is considered affected. The existing property is the unaffected portion. The intent is to correct the tax roll for current and prior years as if the omitted property had been a regular part of those tax rolls.

(2) To correct the first year’s Assessed Value (AV) when the omitted property is added to the roll :

(a) Multiply the real market value (RMV) of the omitted property for the first year it should have been added to the roll by that year’s appropriate changed property ratio (CPR) to determine MAV for the omitted property.

(b) Add the RMV and MAV of the omitted portion to the existing RMV and MAV to get a corrected RMV and MAV for the account.

(c) The lesser of the corrected RMV or MAV is the AV that should have been on the roll had the property been discovered timely.

EXAMPLE 1: Property was built in 2003 and should have been added to the 2004-05 tax roll. The assessor discovers the property in December 2004 and adds it to the 2004-05 tax roll. [Table not included. See ED. NOTE.]

(3) To correct the AV for subsequent years that omitted property should be added to the roll:

(a) Add the omitted property’s trended or recalculated RMV to the property’s existing RMV to get a corrected RMV for the account.

(b) Multiply the prior year’s corrected AV by 1.03 and compare to the prior year’s corrected MAV. The greater of the two will be the corrected MAV for the account.

EXAMPLE 2: Property was built in 2003 and should have been added to the 2004-05 tax roll. The assessor discovers the property in December 2008, and adds it to the 2004-05 through 2008-09 tax rolls. RMV trending is 5 percent per year. [Table not included. See ED. NOTE.]

[ED. NOTE: Tables referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.156
Renumbered from 150-308.156(5)-(C), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 5-2009, f. & cert. ef. 7-31-09
REV 4-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-308-0220 Exemption, Partial Exemption or Special Assessment Disqualification — Allocating MAV

When an exempt, partially exempt or specially assessed property is disqualified after January 1 of the assessment year preceding the current assessment year and before January 1 of the current assessment year, a new MAV for the account must be calculated. The new MAV total will be the MAV of any unchanged portion and the new MAV of any disqualified portion. The new MAV of the disqualified portion is the RMV multiplied by the appropriate changed property ratio.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.156
REV 32-2018, amend filed 12/31/2018, effective 01/01/2019
Renumbered from 150-308.156(5)-(D), REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-308.010, REV 58-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-308-0230 Calculation of Maximum Assessed Value (MAV) for Lot Line Adjustments

(1) For purposes of calculating MAV when properties are subject to a lot line adjustment, the portion of the property that is “affected” includes:

(a) All the land comprising the properties subject to the lot line adjustment.

(b) Buildings or structures when a new lot line divides the building or structure.

NOTE: An example of how to perform the mathematics of this rule is incorporated throughout the rule based upon the following information:

The zoning for both tax lot 100 and tax lot 200 is RR-5 (Rural Residential 5-acre minimum) requiring a minimum of five acres before a dwelling may be built.

Before the lot line adjustment, tax lot 100 was a vacant 4-acre lot that was unbuildable due to its size. Undersized lots sell for $7,000 per acre, making the real market value (RMV) of this unbuildable tax lot $28,000. The associated MAV for this tax lot was $22,400. Tax lot 200 is a vacant 8-acre lot that is buildable under the current zoning. Buildable lots sell for $15,000 per acre, making the RMV of this tax lot $120,000. The associated MAV for this tax lot is $96,000.

After the lot line adjustment both lots are 6 acres in size and are buildable under the current zoning. Because buildable lots sell for $15,000 per acre, it makes the RMV of each tax lot $90,000.

The changed property ratio (CPR) to be used in this example is .800.

(2) Calculate the total MAV of the affected portion before the lot line adjustment as follows:

(a) For each account subject to the lot line adjustment:

(A) Divide the affected portion’s RMV by the total RMV of the account.

Tax Lot (TL) 100: $28,000/$28,000 = 1.00

TL 200: $120,000/$120,000 = 1.00.

(B) Multiply the result of (A) by the property’s total MAV to determine the MAV attributable to the affected portion.

TL 100: 1.00 x $22,400 = $22,400.

TL 200: 1.00 x $96,000 = $96,000.

(b) Add the MAV attributable to the affected portion for each account to determine the total MAV of the affected portion before the lot line adjustment.

$22,400 + $96,000 = $118,400.

(3) Calculate the total MAV for the affected portion after the lot line adjustment as follows:

(a) For each account subject to the lot line adjustment, multiply the new RMV of the affected portion by the appropriate CPR to determine the MAV for the affected portion as follows.

TL 100: $90,000 x .800 = $72,000.

TL 200: $90,000 x .800 = $72,000.

(b) Add the MAV for the affected portion of each account to determine the total MAV of the affected portion after the lot line adjustment.

$72,000 + $72,000 = $144,000.

(4) Compare the total MAV of the affected portion before the lot line adjustment to the total MAV of the affected portion after the lot line adjustment as follows:

Before = $118,400. After = $144,000.

(a) If the total MAV of the affected portion after the lot line adjustment is equal to or lesser than the total MAV of the affected portion before the lot line adjustment: Add the MAV for the affected portion of each account to any unaffected MAV for that account to determine the total MAV for each account.

The example does not fit this description. Continue to paragraph (b).

(b) If the total MAV of the affected portion after the lot line adjustment is greater than the total MAV of the affected portion before the lot line adjustment, the MAV for the affected portion of each account must be proportionally reduced.

The example fits this description. Proceed to paragraph (A).

(A) Divide the total MAV of the affected portion before the lot line adjustment by the total MAV of the affected portion after the lot line adjustment to determine the proportionate reduction.

$118,400/$144,000 = .822222.

(B) Multiply the proportionate reduction by the MAV of the affected portion after the lot line adjustment for each account.

TL 100: .822222 x $72,000 = $59,200.

TL 200: .822222 x $72,000 = $59,200.

(C) Add the MAV of the affected portion after the proportionate reduction in (B) to any unaffected MAV for that account to determine the total MAV for each account.

TL 100: $59,200 + $0 = $59,200.

TL 200: $59,200 + $0 = $59,200.

History

Statutory/Other Authority: ORS 305.100 & 308.156
Statutes/Other Implemented: ORS 308.159
Renumbered from 150-308.159, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-308-0240 Real Property Valuation for Tax Purposes

(1) For purposes of this rule, these words and phrases have the following meanings:

(a) “Unit of property” means the item, structure, plant, or integrated complex as it physically exists on the assessment date.

(b) “Real property” means the real estate (physical land and appurtenances, including structures, and machinery and equipment, that comprise an integral part of the property or manufacturing operation) and all interests, benefits, and rights inherent in the ownership of the physical real estate.

(c) “Rural lands” means those lands with property classification 400, 401, 500, 501, 600, 601, 800, and 801 as defined by OAR 150-308-0310. They are distinguished from platted land as acreages in varying sizes and are either improved or unimproved.

(d) “Utility” means the quality or property of being useful, which may either add to or subtract from real market value.

(e) “Highest and best use” means the reasonably probable use of vacant land or an improved property that is legally permissible, physically possible, financially feasible, and maximally productive, which results in the highest real market value.

(f) “Just compensation to the owner” means the amount of compensation for a property that an owner would expect for the taking through condemnation of their property. Just compensation is the real market value of the property at its highest and best use.

(2) Methods and Procedures for Determining Real Market Value:

(a) For the valuation of real property all three approaches, sales comparison approach, cost approach, and income approach, must be considered. For a particular property, it may be that not all three approaches are applicable. However, each approach must be investigated for its merit in each appraisal.

(b) The real market value of a unit of property may not be determined from the market price of its component parts, such as wood, glass, concrete, furnaces, elevators, etc., each priced separately as an item of property, without regard to its being integrated into the total unit.

(c) In utilizing the sales comparison approach, only actual market transactions of property comparable to the subject, or adjusted to be comparable, may be used. All transactions utilized in the sales comparison approach must be verified to ensure they reflect arms-length market transactions. When non-typical market conditions of sale are involved in a transaction (duress, death, foreclosures, interrelated corporations or persons, etc.), the transaction may not be used in the sales comparison approach unless market-based adjustments can be made for the non-typical market condition.

(d) If there are no market transactions of property comparable to the subject, then it is still appropriate to use market value indications derived by the cost and income approaches.

(e) Sales on the basis of disposal at salvage or scrap levels are indicators of market value only when on the assessment date such disposal of the subject property is imminent, or has actually taken place.

(f) The cost approach must use the reproduction, replacement or used equipment technique. However, original historical cost may be used when appraising property under ORS 308.505 to 308.730. The value estimate must include all costs required to assemble and construct the unit of property.

(g) The income to be used in the income approach must be the economic rent that the property would most probably command in the open market as indicated by current rents being paid, and asked, for comparable space. Income from the operation of the property may be utilized for property types, such as industrial plants, that are not typically leased or rented.

(h) The real market value for rural lands is based on an average price per acre for each size of parcel. Adjustments to the value must be made to those acres with more or less utility. For improved parcels, the value of the site developments as defined by OAR 150-307-0010 must be added.

(i) Determining highest and best use for the unit of property is necessary for establishing real market value. This determination of highest and best use may include, among others, all possible uses that might result from retaining, altering, or ceasing the integrated nature of the unit of property.

(3) Valuation of Special Purpose Property:

(a) Special purpose property is property specially designed, equipped, and used for a specific operation or use. This may occur because the special purpose property is part of a larger total operation or because of the specific nature of the operation or use.

(b) Some, but not all, special purpose property may be designed without concern for marketability.

(c) Market sales data for the property at its highest and best use may not exist for a special purpose property, which is what is meant by the phrase “no immediate market value” in ORS 308.205(2)(c). Where there is no immediate market value, real market value is determined by estimating just compensation for loss to the owner of the unit of property through either the cost or income approaches, whichever is applicable, or a combination of both.

(4) Real market value for all personal property must be determined as of the date of assessment and must take into account the location and place in the level of trade of items of property in the hands of manufacturers, producers, wholesalers, distributors, retailers, users, and others.

History

Statutory/Other Authority: ORS 305.100 & 308.205
Statutes/Other Implemented: ORS 308.205
REV 15-2018, amend filed 06/26/2018, effective 07/01/2018
Renumbered from 150-308.205-(A), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-81
12-31-79
11-71
3-70
1-66
12-65
1-64
8-62
11-59
12-55
1-54

Or. Admin. R. 150-308-0245 Partial Exemptions and Special Assessments of Land

(1) Valuation of Land Under Improvements Having Only Partial Exemption. This rule does not apply to those cases where land is not eligible for inclusion in the exemption.

(a) The land under an improvement, when part of the improvement is receiving an exemption, is exempt in an amount of value that is proportional to the exempted and taxable portions of the improvement based on the real market value of each portion.

(b) Where an improvement does not fully occupy the land and where only a portion of the improvement and land are used for an exempt purpose, any portion of the land or improvement that is not used or developed, or that is being held for future expansion, is fully taxable.

(c) When an improvement is partially exempted and that improvement contains common areas (i.e., hallways, restrooms, conference rooms, etc.), the percentage of the total area of these common areas that receives exemption shall be the same as the percentage of the total net rentable area occupied by the exempt entity.

(2) Valuation of Land Under Improvements Having Only Partial Special Assessment: The procedures described in section (1) of this rule also apply to properties receiving a partial special assessment, such as a partial historical designation.

History

Statutory/Other Authority: ORS 305.100 & 308.205
Statutes/Other Implemented: ORS 308.205
REV 15-2018, adopt filed 06/26/2018, effective 07/01/2018

Or. Admin. R. 150-308-0250 Derivation of Capital Structure and Discount Rates for Valuing Industrial Properties and Department-Assessed Properties

(1) CAPITAL STRUCTURE. The capital structure of a company refers to the make-up of its financial structure, i.e., long-term debt and equity. For ad valorem appraisal purposes, the appropriate capital structure for a company is the typical capital structure for the industry group to which the property belongs based upon current market cost of debt and equity. If it can be shown that use of an industry capital structure would not reflect the market value of the property because of the unique nature of the property or its operation, the current owner’s capital structure may be used. The procedures to be followed in determining capital structure are as follows:

(a) Select industry group, i.e., electric utility, airline, railroad, lumber, food processing, etc.

(b) Determine if it is necessary to have industry sub groups. Sub groups are groupings of properties within an industry type that have similar characteristics and that are different from other sub groups within the industry type. Sub groups have similar qualities such as bond ratings, degree of risk if unrated, business activities and size.

(c) For each group or sub group, a sufficient number of companies should be selected that have publicly traded securities and similar debt ratings (e.g., Moody’s Aa, A, Baa, etc.). The company or companies whose property is subject to appraisal may be included as part of the data set.

(d) The appropriate capital structures shall be determined by a correlation of the capital structures of the companies in the selected group.

(e) Capital structures for companies with nonrated debt must be estimated from the best data available, such as balance sheets, public utility commission-approved structures, sales data, lenders’ opinions, industry recommendations, or patterns established by companies with rated debt within the same industry.

(2) BASIC DISCOUNT RATE. Basic discount rate, cost of capital, and capitalization rate are synonymous as used herein. The band-of-investment method is the preferred method for calculating basic discount rate. An example of this method, assuming a capital structure of 50 percent debt, 10 percent preferred stock, and 40 percent common equity, is shown below: [Table not included. See ED. NOTE.]

(a) The band-of-investment capitalization rate can readily be converted to an after-tax rate. The after-tax interest rate is substituted for the current cost of debt in the band-of-investment procedure. This after-tax cost of debt is calculated by multiplying the current cost of debt by one minus the corporate tax rate. When the after-tax cost of capital is used, the tax expense of the prospective purchaser must be deducted from the income to be capitalized as though the property had no tax shelter from debt interest to avoid double counting the deduction for income taxes.

(b) Cost of Debt. The cost of debt is the current market rate for new securities. The embedded rate on securities previously issued is not a proper measure. In order to determine the cost of debt the appraiser should:

(A) Refer to the rates for seasoned bond issues from Moody’s Utility, Industrial, and Transportation weekly news reports or other rating services for at least two months immediately prior to the appraisal date. This should be done by bond rating (Aa, A, Baa, etc.) and industry type.

(B) Obtain information on new bond issues by industry type and bond rating from Moody’s Bond Survey or other publications for at least two months immediately prior to the appraisal date.

(D) Select rates for each industry group by bond rating after analyzing the data in the steps above.

(d) Cost of Equity. The two preferred methods for determining the cost of equity capital are the Discounted Cash Flow (DCF) model and Capital Asset Pricing Model (CAPM). The appraiser should consider other models if circumstances and data justify their use.

(A) The DCF model, stated mathematically, is as follows: [Table not included. See ED. NOTE.] Information on the estimated annual dividend for the next period (year) and the expected rate of growth can be obtained from such financial publications as Value Line. The current price for the common stock is the average price near the appraisal date. The DCF equity rate for the industry group is determined by correlating equity rates of return computed for the companies in the industry capital structure group.

(B) The CAPM, stated mathematically, is as follows: [Table not included. See ED. NOTE.] Information on the risk free rate (Rf) can be obtained from the Federal Reserve Bulletin containing rates for U.S. Treasury notes or bonds as near the appraisal date as possible. Data for Beta (Bi) and the market rate (Rm) shall be obtained from a reliable source such as Value Line. A single number for risk premium (Rp) such as those published by Ibbotson Associates, Kidder Peabody, and others may be used. The CAPM equity rate for the industry group is determined by correlating equity rates of return computed for the companies in the industry capital structure group.

(3) EFFECTIVE DATE: This rule first applies to property valuations as of January 1, 1990.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.205
REV 9-2017, f. & cert. ef. 6-15-17
Renumbered from 150-308.205-(C), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 2-1990, f. & cert. ef. 3-15-90

Or. Admin. R. 150-308-0260 Industrial Property Valuation for Tax Purposes

(1) For the purposes of this rule, the following words and phrases have the following meaning:

(a) A "unit of property" is the item, structure, plant, or integrated complex as it physically exists on the assessment date.

(b) "Real property" means the real estate (physical land and appurtenances including structures, and machinery and equipment erected upon the land or attached to the land or structures) and all interests, benefits, and rights inherent in the ownership of the physical real estate.

(c) "Highest and best use" means the reasonably probable use of vacant land or an improved property that is legally permissible, physically possible, financially feasible, and maximally productive, which results in the highest real market value.

(2) If the highest and best use of the unit of property is an operating plant or an operating integrated complex, the real market value will be considered to be a "going concern." The going concern concept recognizes that the value of an assembled and operational group of assets usually exceeds the value of an identical group of assets that are separate or not operational.

(3) Methods and Procedures for Determining the Real Market Value of Industrial Property:

(a) For the valuation of industrial property all three approaches to value (sales comparison, cost, and income), must be considered. For a particular property, it may be that all three approaches cannot be applied, however, each must be investigated for its merit in each specific appraisal.

(b) The market value of a unit of property must not be determined from the market price of its component parts, such as wood, glass, concrete, furnaces, elevators, machines, conveyors, etc., each priced separately as an item of property, without regard to its being integrated into the total unit.

(c) In utilizing the sales comparison approach only actual market transactions of property comparable to the subject, or adjusted to be comparable, will be used. All transactions utilized in the sales comparison approach must be verified to ensure they reflect arms-length transactions. When non-typical market conditions of sale are involved in a transaction (duress, death, foreclosure, bankruptcy, liquidation, interrelated corporations or persons, etc.) the transaction will not be used in the sales comparison approach unless market-based adjustments can be made for the non-typical market condition.

(A) Properties utilized in the sales comparison approach, although not necessarily identical, at the very least must be similar in many respects. Adjustments must be made for differences in location, product, production capacity, and all other factors that may affect value. Excessively large adjustments or an excessive number of adjustments is an indication that the properties are not comparable.

(B) When utilizing the sales comparison approach, the appraiser must take into consideration difference between the subject and the comparable properties for physical condition, functional obsolescence and economic obsolescence. Adjustments must be made for differences between the subject and comparable properties for factors such as physical condition, functional deficiencies, operating efficiency, and economic obsolescence. If the properties are functionally or economically equivalent, verification of the equivalency must be included in the appraisal.

(f) Sales for the disposal of properties through auction, liquidation or scrap sales are indicators of market value only when on the assessment date such disposal of the subject property is imminent, or has actually taken place.

(g) The cost approach may utilize either the reproduction, replacement, or the used equipment technique. It is acceptable to use trended historical cost to estimate the reproduction cost new. The value estimate must include all costs required to assemble and construct the unit of property.

(h) When using the income approach, the income from the operation of the property may be utilized for industrial properties and other properties that are not typically leased or rented. When the income from the property's operation is used, the unit of property must be valued as a going concern. In utilizing the income approach for the valuation of industrial properties, the discounted cash flow technique is one of the appropriate methods to derive a value estimate. Consideration in the discounted cash flow technique is given to items such as the anticipated future free cash flow available to both, the debt and equity holders; inventory valuation methods, intangible assets, income taxes, net working capital, capital reinvestment, etc. When utilizing the discounted cash flow technique, the capitalization or discount rate must be derived in accordance with OAR 150-308-0250.

(i) Determining the highest and best use for the unit of property is necessary for establishing real market value. This determination of highest and best use may include, among others, all possible uses that might result from retaining, altering or ceasing the integrated nature of the unit of property.

(4) For machinery and equipment, in all the approaches to value, if the highest and best use is continued operation, adjustments must be made to account for the cost of integrating the machinery and equipment into the total unit of the property. These costs include, but are not limited to, freight, installation, wiring, piping and foundation costs.

(5) Basic information for an appraisal. Basic data and procedures in making appraisals normally include the following when applicable:

(a) Location of property by tax codes and tax lot numbers;

(b) Map or sketch of land owned and layout of plant;

(d) Reproduction or replacement cost computations, as applicable;

(e) Analysis of depreciation;

(f) Analysis of economics as they affect valuation;

(g) Analysis of sales data, when applicable;

(h) Field inspection;

(i) Research and familiarization with typical properties of the industry;

(j) Annual reports to stockholders;

(k) Fixed assets schedules;

(L) Income statements;

(m) Such other data that may affect value.

(6) Basic information for an appraisal utilizing the industrial property return. Basic data for an appraisal utilizing the industrial property return normally includes the following:

(a) Report of additions;

(b) Report of retirements;

(d) Trending factors:

(A) Separate factors for yard improvements, buildings, and equipment classified as real property must be developed.

(B) The development of the factors must use data published by the United States Department of Labor, the Oregon Building Construction Trades Council, and other sources the Department of Revenue deems to be reliable indicators of property value over time.

(C) Data developed by physical inspection together with appraising a segment of the total property or making a general review of the total value under certain circumstances may supplement the data utilized in (A) above.

(e) Depreciation allowances;

(f) Real market value for prior year.

(7) This rule is effective January 1, 2016.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.205
Renumbered from 150-308.205-(D), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0270 Valuation of Contaminated Property

(1) Definitions:

(a) “Contaminated site” means real property that, on the assessment date:

(A) Is on the National Priority List of the Environmental Protection Agency;

(B) Is included by the Department of Environmental Quality in an inventory of confirmed releases pursuant to ORS 465.225;

(D) Is demonstrated as provided under Section (2) of this rule to have had a release of a hazardous substance as defined in ORS 465.200.

(b) “Contaminated site” does not include any permitted release or permitted facility approved by the Department of Environmental Quality for storage or disposal of a hazardous substance.

(c) “Cost to cure” means the discounted present value of the estimated after tax cost of the remaining remedial work specific to the subject property to remove, contain, or treat the hazardous substance. Cost to cure may include the cost of environmental audits, surety bonds, insurance, monitoring costs, and engineering and legal fees. The costs must be directly related to the clean up or containment of a hazardous substance.

(2) Demonstrating Contamination of Site: A property is defined as a contaminated site under Section (1)(a)(D) above if it is shown that the property has had a release of a hazardous substance. This will be demonstrated through:

(a) The submission of reliable, objective information such as engineering studies, environmental audits, laboratory reports or historical records; or

(b) Evidence that the release has been reported to the Department of Environmental Quality.

(3) Appraising Contaminated Sites: The real market value of a contaminated site shall be determined in accord with this rule. The appraiser shall consider the Sales Comparison Approach, the Cost Approach, and the Income Approach. For a particular contaminated site, it may be that all three approaches cannot be applied, however, each shall be investigated for its merit. In all cases, actual market data are the most reliable indicators.

(a) The Sales Comparison Approach may be used to determine the real market value of a contaminated site by comparison with verified sales of similarly contaminated sites. If no sales exist of property similarly contaminated, a comparison may be made to sales of properties without contamination. Adjustment factors shall be developed to account for the influence of contamination based upon a cost to cure analysis. These factors shall be applied to the subject property. Adjustments shall be considered for the following:

(A) Limitations upon the use of the contaminated site due to the nature and extent of the contamination or due to governmental restrictions related to contamination;

(B) The increased cost to insure or finance the property;

(D) Governmental limitations and restrictions placed upon the transferability of all or any portion of the contaminated sites;

(E) Other market influences.

(b) The Cost Approach may be used to determine the value of the contaminated site without the contamination. The cost to cure may be deducted as a measure of functional obsolescence.

(c) The Income Approach should use market rental data. If market rental data are not available, the property’s actual income may be used.

(A) The income stream may be adjusted to reflect the estimated annual cost of remedial work specific to the subject property to remove, contain, or treat the hazardous substance during those years the cost is incurred. The annual cost of remedial work may include the cost of environmental audits, surety bonds, insurance, monitoring cots, and engineering and legal fees. The costs must be directly related to the clean up or containment of a hazardous substance.

(B) If the capitalization rate is derived from properties with similar contamination, no adjustment should be made to that rate. If the rate is developed from properties without contamination, or a built-up rate is used, consider adjustments for the increased present and contingent future risk of ownership, difficulties in future appreciation or depreciation, and the effect upon the ability to sell or transfer the property; that is, the liquidity of an investment in the property.

(C) Alternately, an income approach projecting the income stream as if the subject property was not contaminated, may be used when the cost to cure is deducted from the resultant value indicator.

(d) The market may respond to contamination in a variety of ways. In all cases, actual market sales and income data are the most reliable indicators.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.205
Renumbered from 150-308.205-(E), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0280 Measuring Functional Obsolescence in Industrial Property

(1) The procedure for estimating functional obsolescence for industrial property in the reproduction cost approach is as follows:

(a) The total functional obsolescence equals:

(A) The physically depreciated reproduction cost of the property with a deficiency requiring a substitution or modernization, or a superadequacy, less

(B) The physically depreciated cost of the replacement property with a deficiency requiring a substitution or modernization, or a superadequacy, plus

(b) For an industrial property with a deficiency requiring an addition follow the same steps as listed in subsection (1)(a), except step (A) equals zero.

(c) The result of (1)(a) equals the total functional obsolescence deduction in the reproduction cost approach attributable to the property with a deficiency or superadequacy.

(d) In specific situations, the procedure in subsection (1) can be simplified:

(A) For curable functional obsolescence caused by a deficiency requiring a substitution or modernization, or a superadequacy, functional obsolescence equals the physically depreciated reproduction cost of the property with a deficiency or superadequacy plus the excess cost to cure.

(B) For curable functional obsolescence caused by a deficiency requiring an addition, functional obsolescence equals the excess cost to cure.

(e) For purposes of measuring functional obsolescence, the property with a deficiency or superadequacy in subsection (1) of this rule can be the entire subject property or one or more portions of the property that are being analyzed for the existence of functional obsolescence. If the entire property has multiple deficiencies or superadequacies, multiple applications of the procedure in subsection (1) of this rule may be required to measure the total functional obsolescence.

(f) Some methods of measuring depreciation may capture more than just physical depreciation. The depreciation measured may include elements of functional and external obsolescence.

(A) If in subsection (1)(a)(A) an age-life method is used to estimate the total depreciation of the property with a deficiency or superadequacy, no additional functional obsolescence should be deducted from the depreciated reproduction cost of the individual assets.

(B) If in subsection (1)(a)(A) the selling price of used equipment is used to estimate the depreciation of the property with a deficiency or superadequacy, no additional functional obsolescence should be deducted from the depreciated reproduction cost of the individual assets.

(C) In situations where all functional obsolescence of individual assets is fully captured by the depreciation method used, there may be additional functional obsolescence due to the assemblage of the individual assets into the layout of the property. Functional obsolescence due to layout can be accurately measured using the procedures described in subsection (1) of this rule. However, care must be taken to avoid double counting the functional obsolescence.

(2) The deduction for functional obsolescence in the replacement cost approach equals the cost to cure or the value of the loss (if less).

(a) When using the procedure in subsection (1)(a) of this rule to estimate the deduction for functional obsolescence in the replacement cost approach, steps (A) and (B) must equal zero ($0).

(b) When using consistent estimates of reproduction and replacement cost new, physical depreciation, and functional and external obsolescence, the market value indicator from replacement cost approach must equal the market value indicator from the reproduction cost approach. (see example 3)

(3) Definitions:

(a) The reproduction cost approach is an appraisal method for estimating market value of the subject property. The formula for this method is:

Market Value equals the Reproduction Cost New less physical depreciation less functional obsolescence less external obsolescence.

(A) The reproduction cost new is the cost to construct a new replica of the subject property as of the appraisal date using the same materials, design, layout, quality of workmanship and embodying the deficiencies and superadequacies of the subject property.

(B) The appraisal approach where the appraiser estimates the depreciation based on the selling prices of used equipment is a reproduction cost approach when the used prices utilized in the appraisal are for pieces of equipment that are replicas of the subject equipment. The formula for this method is: Market Value equals the Reproduction Cost New less the depreciation from used equipment prices less the functional and external obsolescence not captured in the used equipment prices.

(C) The appraisal approach where the appraiser estimates the depreciation using an age-life method is a reproduction cost approach when the starting point is the reproduction cost new. The formula for this method is: Market Value equals the Reproduction Cost New less the depreciation from an age-life analysis less the functional and external obsolescence not captured in the age-life analysis.

(b) The replacement cost approach is an appraisal method for estimating the market value of the subject property as of the appraisal date. The formula for this method is:

Market Value equals the Replacement Cost New less physical depreciation less the cost to cure (or the value of the loss, if less) less external obsolescence. The replacement cost new is the cost, as of the appraisal date, to construct a property having equivalent utility to the subject property but built with the most cost-effective materials, design, and layout. The most cost effective materials, design, and layout is that combination of investment (cash out-flows) and the present value of anticipated after tax net income (cash in-flows) that produces the highest net present value.

(c) Functional Obsolescence is a loss in market value of a subject property when there is a reasonable feasibility of a typical prospective purchaser acquiring, without undue delay, a replacement property possessing an equivalent utility but is more cost-effective in terms of design, materials, or equipment. Functional obsolescence exists only by a comparison between the subject and the replacement property. There is no loss in value due to functional obsolescence unless the physically depreciated reproduction cost of the subject property minus the physically depreciated replacement cost of the replacement property plus the cost to cure (or value of the loss, if less) is greater than zero.

(A) Functional obsolescence due to a deficiency requiring a substitution or modernization is caused by an asset present in the subject property that is substandard compared to the replacement property.

(B) Functional obsolescence due to a deficiency requiring an addition is caused by a component that is missing from the subject property that is present in the replacement property

(C) Functional obsolescence due to a superadequacy is caused by an asset present in the subject property that is not present in the replacement property and does not contribute to value an amount equal to its cost.

(d) The physically depreciated reproduction cost of the property with a deficiency or superadequacy is the cost, as of the appraisal date, to construct a new replica of that property using the same materials, design, layout, quality of workmanship and embodying the deficiencies and superadequacies of that property less the amount of physical depreciation due to physical deterioration associated with wear and tear, the impact of the elements, and aging.

(e) The physically depreciated cost of the replacement property is the cost, as of the appraisal date, to construct a new property with the equivalent utility to the property with the deficiency or superadequacy using the most cost effective materials, design, and layout less the appropriate physical depreciation.

(A) For curable functional obsolescence, the appropriate percent of physical depreciation for the replacement property in subsection (1)(a)(B) is equal to the percent of physical depreciation of the replacement property included in the cost to cure in subsection (1)(a)(C) and (3)(h)(A). For example, if curable functional obsolescence is cured by purchasing and installing a new machine, the replacement property is also new (zero depreciation). (See example 3) However, if curable functional obsolescence is cured by purchasing and installing a used machine that is 70% physically depreciated, the replacement property also must be 70% depreciated. (See example 4)

(B) For incurable functional obsolescence, the appropriate percentage of physical depreciation for the replacement property in subsection (1)(a)(B) is the same percentage of physical depreciation as the percentage of physical depreciation of the property with a deficiency or superadequacy, as it exists in the uncured condition.

(f) Functional obsolescence is incurable if the cost to cure is greater than the value of the loss.

(g) Functional obsolescence is curable if the cost to cure is less than the value of the loss.

(A) To be considered curable, it must be physically possible, legally permissible, and financially feasible to cure the functional obsolescence.

(B) If curing functional obsolescence is required to allow the existing assets to continue to function at their highest and best use and the requirements of subsection (3)(g)(A) are met, the obsolescence is curable even if the cost to cure is greater than the value of the loss. (See Example 6)

(h) The cost to cure equals the net cash out-flow anticipated to be necessary to eliminate the deficiency or superadequacy. This equals:

(A) The physically depreciated replacement cost of the replacement property, plus

(B) The retrofitting cost associated with installing the replacement property in the subject property, plus

(D) The salvage value of the property with a deficiency or superadequacy.

(i) The excess cost to cure recognizes that installing an asset in an existing property may cost more than installing the same asset when a property is constructed new on the appraisal date. The excess cost to cure equals:

(A) The retrofitting cost associated with installing the replacement property in the subject property; plus

(B) The cost to remove the property with a deficiency or superadequacy; less

(j) Retrofitting cost is the cost as of the appraisal date to install an asset in the subject property less the cost as of the appraisal date to install the same asset as part of new construction.

(k) The value of the loss equals the present value of the after-tax loss in anticipated income from the continuing operation of the property with a deficiency or superadequacy compared to the projected operation of the replacement property. For industrial plants, this loss in income is often the result of excess operating costs due to inefficiencies in the subject plant compared to the subject property when cured of the functional obsolescence. The present value includes factors for the time period that the plant will continue to incur the loss in income and an appropriate discount rate. See OAR 150-308-0250 for the appropriate method of calculating the discount rate.

(4) Examples (Assume zero external obsolescence for all examples):

(a) Example 1: An example of incurable functional obsolescence due to a deficiency requiring a substitution or modernization. [Example not included, see ED. Note.]

(b) Example 2. An example of incurable functional obsolescence due to a superadequacy. [Example not included, see ED. Note.]

(c) Example 3: An example of curable functional obsolescence due to a deficiency requiring and addition. [Example not included, see ED. Note.]

(d) Example 4: An example of curable functional obsolescence due to a deficiency requiring a substitution. [Example not included, see ED. Note.]

(e) Example 5: An example of a deficiency in the subject plant that does not indicate the presence of functional obsolescence. [Example not included, see ED. Note.]

(f) Example 6: An example of curable functional obsolescence due to a deficiency requiring an addition. [Example not included, see ED. Note.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.205
REV 10-2017, f. & cert. ef. 6-15-17
Renumbered from 150-308.205-(F), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-308-0290 Effective Tax Rate

(1) Definitions for this rule:

(a) “Changed property ratio” (CPR) is the ratio, not greater than 1.00, of the average maximum assessed value over the average real market value for the assessment year in the same area and property class.

(b) “Nominal tax rate” is the tentative consolidated ad valorem property tax rate by code area described in ORS 310.147(2). When applicable, the nominal tax rate can be adjusted to reflect a reduction of tax to meet the limitations identified under Section 11b, Article XI of the Oregon Constitution

(c) “Effective tax rate” for any given property is the nominal tax rate, as described in subsection (1)(b), multiplied by the appropriate CPR, described in subsection (1)(a).

(2) The effective tax rate can be determined by the following methodology:

(a) Select the nominal tax rate known on the assessment date. For example, the assessment date of January 1, 2008 requires the nominal tax rate calculated for the prior tax year, 2007–08.

(b) Multiply the nominal rate by the CPR applicable to the assessment date, considering the subject property classification and location. The result is the effective tax rate.

Example 1: An apartment complex is being valued for assessment purposes, in an area with a changed property ratio of 65% or 0.65 and a nominal tax rate of $19.8615 per thousand of assessed value (1.98615%) or .0198615; the effective tax rate is calculated as follows: Changed Property Ratio (CPR) x Nominal Tax Rate (NTR) = Effective Tax Rate (ETR) 0.65 (CPR) x .0198615 (NTR) = 0.01291 (ETR) or 1.3%

History

Statutory/Other Authority: ORS 305.100, 308.205 & 308.724
Statutes/Other Implemented: ORS 308.205
Renumbered from 150-308.205-(G), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

Or. Admin. R. 150-308-0300 Valuation Review of State-appraised Industrial Property.

(1) The department may conduct valuation reviews of state-appraised industrial properties to verify the accuracy of the property's real market value and maximum assessed value.

(2) Valuation reviews will follow procedures adopted by the Department of Revenue.

(3) The real market value and maximum assessed value of a property may change for the current year and previous years following the requirements in ORS 311.205 and 311.216, as a result of the valuation review.

(4) The real market value and maximum assessed value of a property may change for subsequent tax years if the result of the valuation review is a change in valuation judgment.

(5) This rule is effective January 1, 2016.

History

Statutory/Other Authority: ORS 305.100 & 308.205
Statutes/Other Implemented: ORS 308.205
Renumbered from 150-308.205-(H), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-308.205(2), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 12-1998, f. 12-29-98, cert. ef. 12-31-98
REV 9-1998, f. 12-11-98, cert. ef. 12-31-98

Or. Admin. R. 150-308-0310 Real Market Value and Property Classification as Part of Assessment Roll

(1) In addition to the assessed value of property, the assessment roll must show:

(a) The real market value (RMV) of the land, excluding all buildings, structures, and improvements thereon;

(b) The RMV of all buildings, structures, and improvements; and

(d) For properties subject to ORS Chapter 100, for example, condominiums and time shares that are required to be assessed as a unit, the assessment roll must show the RMV as well as the assessed value of each unit.

(2) The assessment roll must include the property classification code number for each parcel of real property in the county, except for those properties assessed by the department under ORS 308.505 to 308.605. The assessor must classify and assign a property classification code number to each parcel as provided in section (8) of this rule.

(3) The assessor must maintain the proper classification on each parcel of property.

(4) A county must separately identify and adjust land and improvement values for each property class for each market area to bring real property to RMV. These adjustments to value must be developed from market studies or by any other method approved by the department as provided under ORS 309.200.

(5) The class code numbers that this rule establishes must be used for computing the real property class ratios required by ORS 309.200.

(6) An assessor must obtain written approval from the Department of Revenue before deviating from the basic property classes defined in section (8) of this rule.

(7)(a) All classification must be based upon highest and best use of the property. The term “highest and best use” is defined in OAR 150-308-0240. The class associated with the property may or may not be its current use.

(b) Unique properties can be classified under the “miscellaneous” category in section (8). The “miscellaneous” category can also be used for property requiring a separate trend.

(c) The property classification system must not be used to categorize market data that is more accurately described by other characteristics, such as the quality class of the improvements, market areas, or neighborhoods.

(d) The property class for mixed-use or transitional properties will be assigned based upon the use that contributes the most to the real market value on the current assessment date.

(A) A mixed-use property is one in which different parts of the property are used differently, such as a commercial use on one part, and a residential use on another part.

(B) A transitional use property is one in which the real market value on the current assessment date, at its current highest and best use, is being influenced in the market by an anticipated change in future use, such as residential property that is likely to sell for a commercial use in the future, but is not in commercial use on the assessment date.

(8) DEFINITIONS FOR PROPERTY CLASSIFICATION SYSTEM. [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 308.215
Statutes/Other Implemented: ORS 308.215
REV 32-2018, amend filed 12/31/2018, effective 01/01/2019
REV 77-2017, minor correction filed 12/28/2017, effective 12/28/2017
REV 35-2017, f. & cert. ef. 7-24-17
Renumbered from 150-308.215(1)-(A), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2006, f. & cert .ef. 7-31-06
REV 2-2005, f. 6-27-05, cert. ef 6-30-05
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
Renumbered from 150-308.215(1), RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
1-1-77
11-73
9-71
3-70

Or. Admin. R. 150-308-0320 Property With Multiple Leases Assessed as One Parcel

Properties with multiple leases must be assessed as one parcel except those properties covered by 307.110(2). The statutes have no provisions for assessing multiple leaseholds of undivided parcels of real property as separate tax accounts. It is not the assessor’s responsibility to divide the assessed values and tax amounts for each leasehold for the owner. The accounts shall be set up as one account and the appraisal card(s) shall reflect the value of the entire parcel. Only buildings, machinery and equipment or fixtures owned separately from other associated property shall be separately assessed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.215
Renumbered from 150-308.215(1)-(B), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0330 Contents of Assessment Roll for Condominiums

For purposes of the assessment roll for condominiums, the land, buildings, structures and improvements are to be considered together as a single value for the real market value. Where appropriate, the land, buildings, structures and improvements are to be considered together as a single value for the assessed value.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.215
Renumbered from 150-308.215(1)(g), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-308-0340 Printout or Microfiche Required When Assessment and Tax Rolls do not Constitute a Written Record

All information specified in the laws and administrative rules relating to the assessment roll, the tax roll and the June 30 Tax Collector’s Report must be on the printouts or microfiche. The information required on these printouts or microfiche is specified below.

(1) The tax roll must reflect the assessments as of September 25 and show all corrections, changes, and additions made to the data in the computer occurring between September 25 and the date the roll is delivered to the tax collector. In addition to the information specified under ORS 308.215 for the assessment roll, printouts or microfiche must contain the following information.

(a) Tax year;

(b) County;

(d) Building class;

(e) Manufactured structure “X” plate number or HUD identification number;

(f) All current year taxes extended;

(g) All delinquent taxes as specified in ORS 311.125.

(2) The June 30 Tax Collector’s Report must be prepared by July 15 and include all changes, corrections, and additions made to the roll since the preceding June 30 Tax Collector’s Report. The report must include all unpaid accounts. This includes all changes from the roll and all effects on tax monies on each account.

(3) The printouts referred to in ORS 308.219 are specifically the assessment roll, tax roll, and the June 30 Tax Collector’s Report. Any other listings used are supplemental documents and not part of the required rolls, microfiche or report printouts.

[PUBLICATIONS: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.219
Renumbered from 150-308.219, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-308-0350 Filing Requirements for Certain Delayed Annexations by Cities

(1) This rule applies to delayed annexations by cities allowed under ORS 222.750. In these annexations, all nonresidential zoned property and all residentially zoned property in nonresidential use become annexed immediately, while all properties zoned for and in residential use are annexed on a delayed basis, with the length of the delay specified by the ordinance or resolution. Properties subject to delay are annexed immediately upon transfer of ownership.

(2) For purposes of ad valorem taxation, the requirements for notification can be found in ORS 308.225, and the procedure is as follows:

(a) During initial submission of a code boundary change request for annexation of unincorporated territory subject to delayed annexation under ORS 222.750, the map and legal description must at a minimum describe the initially annexed properties. If describing the entire exterior boundary of the annexation in the initial submission, any areas subject to delayed annexation must be clearly excepted by separately describing the areas and noting them on the filed map.

(b) A code boundary change request must be submitted for any property subject to delayed annexation that becomes part of the city before the end of its delay period due to transfer of ownership.

(c) If not described in a previous submission, a code boundary change request must be submitted for any remaining properties at the conclusion of their delay.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.225
Renumbered from 150-308.225, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-308-0355 Filing Requirements for Boundary Changes

(1) A legal description and an accurate map are filed in “final approved form” when the Department of Revenue can approve them with no amendments or corrections needed.

(2) The legal description submitted to the department must comply with the requirements set out in ORS 308.225(2)(b) and the following:

(a) The point-of-beginning of the legal description must be clear. The point-of-beginning is best described by bearing and distance from a section corner, a donation land claim (DLC) corner, or another well-monumented corner.

(b) Bearings and distances must be given for each course around the boundary description unless the description uses the alternatives in ORS 308.225(2)(b)(A)(i) through (vi) or those in ORS 308.225(2)(b)(B).

(c) If a deed reference is used as a point-of-call, a copy of the deed must also be submitted. The description must be consistent with or derived from the most recently recorded deed(s) for the affected property.

(d) Tax lot numbers cannot be used for the legal description.

(e) If the area is large, township, range and section numbers, and quarter-quarter sections may be used in the legal description.

(f) If a point-of-call is to a highway or county road, the description must state to which edge or to the centerline.

(g) If a point-of-call is to a river or stream, the description must state whether it is on the mean high water, mean low water, thread, ordinary high water, or ordinary low water line. The bearing requirement can be dismissed along rivers and streams.

(h) If the boundary change involves a whole county, then the description can refer to its statutory description. Example: “All of Wallowa County as described in ORS 201.320.”

(3) The map required by ORS 308.225(2) must comply with the following:

(a) The base map(s) used must either be provided by the Department of Revenue, the county assessor, or downloaded from the ORMAP website (www.ormap.net).

(b) The map submitted by the taxing district must contain sufficient information to allow confirmation that the map is a true and correct representation of the legal description.

(c) If a deed reference is used as a point-of-call in the legal description, the deed number must be included on the map.

(4) A person, governing body, officer, administrative agency, or court that files a legal description and map for approval by the Department of Revenue must submit with them a copy of the ordinance, order, or resolution approving the boundary change, or other documentation, that shows the effective date of the boundary change.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.225
REV 32-2018, adopt filed 12/31/2018, effective 01/01/2019

Or. Admin. R. 150-308-0360 Appraisals of Real Property by Registered Appraisers

Only appraisers registered under ORS 308.010 shall appraise real property. If nonregistered appraisal assistants are utilized for gathering inventory data, it shall be only for gathering or recording factual inventory data or property characteristics. Any value estimates, or appraisal judgment decisions shall be made only by registered appraisers. Value estimates include lump sum dollar adjustments or percentage adjustments, depreciated replacement costs (DRC), land or site valuation. Judgment decisions include determination of quality class, quality adjustment, depreciation from all causes; or overimprovement or underimprovement and estimated market rent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.231
Renumbered from 150-308.231, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 6-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-308-0370 Determining Taxable Value for Assessment Charges on Property Exempt from Taxation

If a property that is exempt from ad valorem taxation is subject to assessment charges, the assessor shall determine the maximum amount of assessment charges by using the real market value of the property.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.232
Renumbered from 150-308.232, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-308-0380 Appraisal of Real Property

The following constitutes standards for the valuation of real property except for property assessed under ORS 308.505 to 308.665 and ORS 308.805 to 308.820.

(1) Industrial property. In the case of industrial properties, appraisals must conform with the following conditions:

(a) Basic data and supplemental data for an appraisal must be the same as required in ORS 308.290 and 308.411. Valid data in any previous appraisal such as property descriptions, inventory listing, maps, etc., may be used in the appraisal.

(b) An appraisal as provided by the industrial property return process is not an appraisal contemplated under ORS 308.234.

(c) A valuation review as provided in OAR 150-308-0300 is an appraisal as contemplated under ORS 308.234, if the valuation review meets the requirements of 308.411.

(d) Nothing in this rule is intended to invalidate any assessment that appears on the assessment roll.

(2) All other real property. Real property must be valued at its real market value (RMV) using methods approved by the department and the results must meet the performance standards required by this rule.

(a) The following definitions apply for the purposes of this rule:

(A) "Coefficient of dispersion" (COD) is the average absolute deviation of a group of numbers from the median expressed as a percentage of the median. In ratio studies, it refers to the average absolute deviation from the median ratio, expressed as a percent of the median ratio.

(B) "Homogeneous" describes a market area where the properties have a high degree of similarity in one or more of the following: type, use, quality, or condition.

(C) "Market area" is defined as a group of properties that share important characteristics affecting their value. It may be defined along physical/geographical or abstract boundaries or, as in the case of commercial property, according to use. Properties included in a market area do not have to be contiguous.

(D) "Nonhomogeneous" means market areas that do not meet the definition of "homogeneous."

(b) ORS 308.232 requires that all real property be valued at 100 percent of its RMV. Achieving and maintaining RMV is measured by the ratio study. Ratios must be computed for each market area, where possible. In market areas where the amount of sales data is insufficient for statistical analysis, one or more of the following actions should be taken to provide adequate data:

(A) A two-year sales sample may be used;

(B) Comparable market areas may be combined; or

(A) RMV at 100 percent.

(B) COD standards for measuring equity of RMV: [Formula not included. See ED. NOTE.]

(C) Exceptions to COD standards. When a market area does not meet the standards because of a market anomaly, the correction may be delayed until the following year, waived, or have alternate standards applied, as approved by the Department of Revenue.

(d) The department will determine compliance with standards of this rule by annual reviews of the results determined by the county.

(A) If compliance deficiencies are found, the department must make written notification to the assessor of the deficiencies and identify appropriate corrective action. Within 30 days of notification of the deficiencies, the assessor must respond in writing to the department as to the action to be taken to correct the identified deficiencies.

(B) In the event an assessor's program has been found to be deficient and the assessor does not take action to correct the deficiencies as outlined in the department's written notification, the department will take action as required by ORS 308.062.

[ED. NOTE: Formulas referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.234
Renumbered from 150-308.234, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2010, f. 7-23-10, cert. ef. 7-31-10
REV 6-2001, f. & cert. ef. 12-31-01
REV 12-1998, f. 12-29-98, cert. ef. 12-31-98
REV 9-1998, f. 12-11-98, cert. ef. 12-31-98
REV 4-1998, f. & cert. ef. 6-30-98
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
8-72
9-71
9-70
3-70
1-66
8-65

Or. Admin. R. 150-308-0390 Agricultural Land Devoted to Agricultural Purposes; Valuation for Ad Valorem Tax Purposes

(1) Agricultural land devoted to agricultural purposes as defined in OAR 150-307-0420 is real property and shall, insofar as possible, be valued by the methods provided in 150-308-0240. When practical, the value of comparable bare land shall be utilized as primary evidence.

(2) In the absence of comparable bare land sales, or when a partial appraisal is not feasible, the appraiser shall estimate the market value of the land and the deciduous trees, shrubs, plants and crops as a unit. The taxable value of the agricultural land devoted to agricultural purposes shall then be determined by deducting the market value of the deciduous trees, shrubs, plants and crops thereon from the total appraised market value. The market value of the deciduous trees, shrubs, plants and crops shall be determined by a method which considers:

(a) The cost of seed, shrub, nursery tree, or cutting as culture dictates.

(b) The cost of implanting the seed, shrub, nursery tree or cutting into the land as culture dictates.

(c) The loss of income from the land during the period of establishing the tree, shrub and plant in condition to produce a crop.

(d) The risk involved in establishing the tree, shrub and plant.

(e) The quality and quantity of the trees, shrubs, plants and crops.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.235
Renumbered from 150-308.235, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
9-71
3-70
1-66
11-59
1-58

Or. Admin. R. 150-308-0400 Stipulation Procedures

(1) The phrase “the convening of the board” in ORS 308.242(3)(b) means the first meeting of the year during which the Property Value Appeals Board (PVAB) officially opens the session under ORS 309.026.

(2) The assessor may change the roll after December 31 and without an order of the board when:

(a) A petition is filed with PVAB under ORS 309.100;

(b) The assessor and the petitioner sign a stipulation that specifies a reduction in value prior to the date the board convenes as required by ORS 309.110(2); and

History

Statutory/Other Authority: ORS 305.100 & 305.102
Statutes/Other Implemented: ORS 308.242 & 309.110
REV 16-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-308.242(3), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2005, f. 12-30-05, cert. ef. 1-1-06

Or. Admin. R. 150-308-0410 Cancellation of Personal Property Assessments

(1) The assessor must cancel the personal property assessment for any taxpayer whose taxable personal property in the county has a total assessed value (AV) below the threshold value computed annually under ORS 308.250(5)(a).

(2) The department will notify the assessor of the threshold value no later than March 1 of the tax year for which the threshold value applies.

(3) After the first year of cancellation, the taxpayer must complete and file Form 150-553-004, Confidential Personal Property Return, annually with the assessor by the personal property return due date under ORS 308.290. The taxpayer must check the box that indicates the assessor cancelled the AV the previous year and must include the following:

(a) Taxpayer’s name, address, and phone number;

(b) If applicable, the business name, address, and type of business;

(d) Assessor’s account number.

(4) The department will provide to the assessor the Confidential Personal Property Return on which the taxpayer may make the claim in subsection (3).

(5) If the taxpayer fails to file the form required in section (3) of this rule, the assessor will determine the AV of taxable personal property based on available information. Such information may be obtained from a phone call to the taxpayer or a review of taxpayer’s property or records. If the assessor finds that the total AV of the taxpayer’s property within the county is equal to or greater than the threshold value, the assessor must place the computed value on the next assessment and tax roll.

(6) The assessor may review the taxpayer’s taxable personal property or business records to verify that the value of the taxable personal property is less than the threshold value. If the assessor finds that the value of the taxable personal property is equal to or greater than the threshold value, the assessor must add the value of all taxable personal property to the assessment and tax roll.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.250 & 308.290
REV 2-2022, minor correction filed 04/29/2022, effective 04/29/2022
Renumbered from 150-308.250, REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-308-0420 Exemption of Watercraft Undergoing Repairs

(1) Watercraft owned or operated by centrally assessed water transportation companies and undergoing “major” repairs as defined in ORS 308.256(4), shall be deemed exempt from taxation if such repairs are in progress as of January 1, of the assessment year, but only upon receipt by the Department of Revenue of documentation included in the annual filing stating the nature, extent, and location of such repairs.

(2) All other assessable Watercraft undergoing “major” repairs as defined in ORS 308.256(4), shall be deemed exempt from taxation if such repairs are in progress as of January 1, of the assessment year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.256
Renumbered from 150-308.256(4), REV 57-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 2-1992, f. 5-28-92, cert. ef. 6-1-92

Or. Admin. R. 150-308-0430 Valuation of New Construction

New construction including additions, remodeling, and rehabilitation, not in the current reappraisal area, shall be valued using the same appraisal data used for the building classes in that area when last appraised. The resulting value for new construction shall then be adjusted from the base appraisal year in the same manner as similarly classed improvements in the area.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.275
Renumbered from 150-308.275(1), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
3-70
1-66
11-59
1-54

Or. Admin. R. 150-308-0440 Confidentiality — Returns of Taxable Property

Refer to OAR 150-192-0500 for clarification of what is confidential information and how to safeguard that material.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.290
Renumbered from 150-308.290, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80

Or. Admin. R. 150-308-0450 Industrial Property Returns — Incomplete Returns and Late Filing Penalties

(1) Industrial Property Returns are combined returns of real and personal property for state-appraised industrial property. The Industrial Property Return forms and instructions specify the information to be included in the return and submitted to the department.

(2) A taxpayer must submit a substantially complete return by the due date of the return. A return is substantially complete if it contains sufficient information to allow the return to be processed by the department. A return is not substantially complete if:

(a) It is submitted with blank or missing schedules unless the schedules are appropriately left blank and are labeled with an identifying notation such as "no", "none", or "not applicable"; or

(b) It is submitted with attachments that do not include required information as specified on the schedule.

(3) For the purposes of the late filing penalty imposed by ORS 308.295, a return that is not substantially complete will not be considered "filed".

(4) If a taxpayer submits a return that is not substantially complete, the department will send the return back to the taxpayer with a request that the return be filed with the required information. The taxpayer will be subject to a late filing penalty under ORS 308.295 if a substantially complete Industrial Property Return is not filed by the due date.

History

Statutory/Other Authority: ORS 305.100 & 308.290
Statutes/Other Implemented: ORS 308.290
Renumbered from 150-308.290-(B), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
Renumbered from 150-308.290(4)(b), REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 10-2002, f. & cert. ef. 12-31-02
REV 2-2002, f. 6-26-02, cert. ef 6-30-02
REV 4-1998, f. & cert. ef. 6-30-98

Or. Admin. R. 150-308-0470 County Contractors Having Access to Confidential Records

Each county must include in all vendor contracts, where a firm’s officers or employees may have access to confidential tax information, a clause prohibiting disclosure of information by any officer or employee of the vendor. The recommended clause follows: The disclosure of confidential information obtained from the administration of tax laws is unlawful. All reports, displays or discussions of confidential information must be clearly labeled and protected by all officers or employees of the firms. Specific reference is made to ORS 308.290 and 308.413.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.290
REV 72-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-308.290(7)-(A), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-31-94, Renumbered from 150-308.290(7)
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92, Renumbered from 150-308.290(5)

Or. Admin. R. 150-308-0480 Confidentiality of Property Tax Information for Centrally Assessed Companies; Exchange Under Reciprocal Agreements

(1) The following information must be held confidential by the department:

(a) Returns filed under ORS 308.290, 308.525, and 308.810;

(b) Appraisals containing information from returns filed under ORS 308.290, 308.525, and 308.810;

(c) Any data or information obtained during an inspection of the subject property or audit of a company subject to the filing requirements of ORS 308.290, 308.525, and 308.810;

(d) Trade secrets as defined in ORS 192.501(2).

(2) The following information will not be held confidential by the department:

(a) Information contained in the central assessment roll as defined in ORS 308.560;

(b) Appraisal conclusions developed or derived by the department for a company subject to the filing requirements of ORS 308.290, 308.525, and 308.810, including:

(A) Interstate allocation percentages;

(B) Capitalization rates;

(D) System values.

(3) For the purposes of exchange under reciprocal agreements authorized in ORS 308.290(7), subject to the limitations of section (4) of this rule, “property tax information” includes:

(a) Information contained in annual returns filed under ORS 308.290, 308.525, and 308.810;

(b) Appraisals conducted under ORS 308.290, 308.505 to 308.660, 308.705 to 308.730, and 308.805 to 308.820;

(c) Any information developed by the department in conjunction with such appraisals including, but not limited to, capitalization rates, market and sales studies, and cost and depreciation schedules;

(d) Any data or information obtained during an inspection of the subject property or audit of a company subject to the filing requirements of ORS 308.290, 308.525, and 308.810;

(e) Any other information regarding unitary valuation, allocation, or taxation.

(4) For the purposes of exchange under reciprocal agreements “property tax information” does not include:

(a) Trade secrets as defined in ORS 192.501(2);

(b) Information or data restricted by order of a court of competent jurisdiction.

(5) Any reciprocal agreement with the federal government or the several states entered into for the purposes of exchange of property tax information must require the reciprocating party to apply the confidentiality standards, limitations, and definitions contained in ORS 192.501, 308.290, 308.413, and this rule to any exchanged Oregon property tax information.

(6) Confidential information must not be exchanged under a reciprocal agreement with another state unless the reciprocal agreement meets the standards specified in section (4) of this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.290
Renumbered from 150-308.290(7)-(B), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2002, f. & cert. ef. 12-31-02
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0490 Appraisal and Valuation of Industrial Plants

(1) The preliminary survey is defined as gathering of data necessary to determine the methods and approaches to be used in the appraisal to value the plant. Data pertaining to the plant may be obtained from files in the Department of Revenue, from the county assessor’s office, from the company itself or from other sources. Information to be obtained may include but is not limited to:

(a) Type of industry;

(b) Chronological age of the plant;

(d) Production rates relative to plant capacity;

(e) Economic factors affecting the industry;

(f) Records of sales of comparable plants;

(2) Following the collection and analysis of data, a preliminary survey letter will be written to the taxpayer summarizing the information found in (2) above. The letter should describe the property with the following:

(a) Company name;

(b) Address;

(d) County;

(e) Account number;

(f) Code number. The letter will also indicate the approaches that will most likely be used in the appraisal of the property. If the appraiser has determined that the income approach is an appropriate appraisal technique to use, an “Initial Request for Financial Data” form will be included with the preliminary survey letter.

(3) Following receipt of the preliminary survey letter the plant owner or owner’s representative shall meet with the appraiser. This meeting may take place in person, or may take place as a telephone conversation. The purpose of the meeting is to clarify any points in the preliminary survey letter or the “Initial Request for Financial Data” and to assist the taxpayer in making a decision concerning the election options.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.411
Renumbered from 150-308.411-(A), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0500 Confidentiality of Industrial Plant Information

Any information furnished to the department and made confidential under ORS 308.411 shall be available to each officer and employee of the office of the county assessor who has been authorized by the county assessor. All authorized personnel shall have signed certificates required under 308.413(3). The county assessor shall prepare a written list of the personnel authorized to receive the information. The list shall be mailed to the Director, Department of Revenue. The assessor shall review the list annually and shall correct it by additions and deletions as appropriate. Any changes shall be mailed to the Director, Department of Revenue. The safeguard procedures set forth in OAR 150-192-0500 apply to the information made confidential under ORS 308.411.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.413
Renumbered from 150-308.413, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-308-0510 Definition of Destroyed or Damaged

“Destroyed or Damaged” means that the real or personal property is physically degraded by a qualifying fire or Act of God event. Property whose value is affected only by its proximity to another property physically degraded by a qualifying fire or Act of God event is not considered destroyed or damaged for purposes of proration of tax.

Example: A landslide caused by an Act of God occurs in a subdivision. Some properties in the subdivision are physically damaged or destroyed by the landslide. Other properties in the subdivision are not physically affected by the slide, but may have a degraded market value due to the market attaching a stigma to the subdivision. Only those properties in the subdivision, which were physically degraded by the slide, are “damaged or destroyed” and eligible for a proration of tax under ORS 308.425.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.425
Renumbered from 150-308.425, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-308-0520 Valuation of Nonprofit Homes for the Elderly

(1) Comparable Facilities includes both nonprofit and for-profit facilities with similar:

(a) Levels of care:

(A) Retirement living only: no meals are included in the rent; similar to apartment or condominium living.

(B) Retirement living: monthly rent can include meals; laundry; utilities; housekeeping; and, assistance with daily living activities.

(b) Age, quality, and building condition.

(d) Locational considerations.

(2) Qualified Operating Gross Income is income that meets the 95 percent test outlined in ORS 307.375, and tenant rent is competitive with other comparable facilities. If the tenant rent is not at market rent, then stabilized market rent is to be used. Periodic donations made solely to keep the facility solvent are excluded from the 95 percent test.

(3) Qualified Operating Gross Income includes the income generated from the following sources:

(a) Meals;

(b) Amortized entrance fees. The present worth of amortized entrance fees is based on both life expectancy and level of care provided according to GAAP. The interest rate is the same as calculated in (6).

(d) Pharmacy fees;

(e) Nursing fees;

(f) Income or fees received for space rent from vendors who provide social services, such as a bank, beauty parlor, gift shop, or post office.

(g) Recreational facility income from the publics participation and use of the facility.

(h) Service income from rented storage space, laundry machines, concessions, etc.

(4) Investment Income earnings from invested entry fees or other invested revenues is specifically excluded from the Qualified Operating Gross Income calculation ORS 307.375(2).

(5) For the purpose of determining net operating income, income and expenses must be adjusted to typical market levels for comparable facilities. If actual expenses are at typical market levels for comparable facilities, they may be used to calculate the net operating income. Expenses may include, but are not limited to, the following:

(a) Real Estate Taxes. If real estate taxes are a line item expense, they may not be included in the overall rate.

(b) Repairs and Maintenance. Charges may not include accounted for replacement reserves.

(d) Landscaping Maintenance;

(e) Replacement Reserve is based on current replacement costs. Items in this category are short lived and may include built-in appliances, carpeting, roofing, heating, air conditioning, elevator machinery, plumbing fixtures, and electrical fixtures. Reserves to replace personal property may be included in this category;

(f) Payroll;

(g) Management not included in payroll;

(h) Food;

(i) Supplies;

(j) Phones;

(k) Utilities such as gas, electricity, water, sewer, garbage;

(l) Housekeeping not included in payroll;

(m) Advertising. Does not include start-up costs;

(n) Publication and membership dues;

(o) Purchased Services other than those accounted for in listed categories;

(p) Nursing Services not included in payroll;

(q) Liability Insurance;

(r) Security;

(s) Other miscellaneous operating costs.

(6) Overall Rate. The appropriate overall rate is selected from the analysis of sales of comparable for-profit facilities. The overall rate includes the appropriate tax component.

(7) Additional Depreciation. Additional depreciation shall be calculated using age life tables and current cost information from commercial cost publications for the type and quality of structure being appraised. The amount of additional annual depreciation will be capitalized using the rate calculated in (6). This amount is deducted from the estimated real market value.

(8) Personal Property. The current assessed value of personal property is deducted from the estimated value. If there is no personal property account for the facility being appraised, no deduction shall be made.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.490
Renumbered from 150-308.490, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
3-70

Or. Admin. R. 150-308-0530 Defining “Communication Services”

(1) Irrespective of the origin of the property, it is the policy of the department to treat as “communications services,” for purposes of ORS 308.505 and the central assessment statutes, not merely the direct provision of communication services to customers, but also the indirect provision of such communication services through the leasing of communication facilities by tower aggregators.

(2) For purposes of centrally assessed property, “communication services” includes paging services and tower aggregators. Tower aggregators provide towers, poles, buildings or similar facilities that are used in providing centrally assessed wireless communication service. This rule shall first apply to tax year 2000.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.505
Renumbered from 150-308.505(6), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
REV 2-2000, f. 2-29-00, cert. ef. 3-1-00
RD 9-1997, f. & cert. ef. 12-31-97

Or. Admin. R. 150-308-0540 Assessment of Properties of Designated Utilities and Companies by Department of Revenue

(1) As required by ORS 308.510(5), 308.515, and 308.517, the Director shall make determinations as to which properties of companies engaged in any of the activities named in 308.515(1)(a) (herein referred to as “utility service”) shall be included on the assessment roll required under 308.560 and which shall be included on the several county assessment rolls. To document these determinations, the Department will issue serially numbered property classification memorandums (PCM’s) which describe the property and state that it is subject to the assessment jurisdiction of either the Department or the assessor of the county in which it is located.

(2) In reaching its determinations the Department will be guided by the following:

(a) Change in classification of property from state to county assessment or vice versa is made necessary by changes in use of the property. Under the statute, ORS 308.515, the controlling factor determining assessment responsibility is the use, present or intended, of the property. In accordance the Department will classify:

(A) Those properties being used in utility service as subject to the assessment jurisdiction of the Department.

(B) Those properties which are acquired or held for subsequent use in utility service but assigned to and used by another in a non-utility use as subject to assessment jurisdiction of the county assessor.

(C) Those properties which are acquired for use in utility service but not yet placed into such service and where no other use is being made of the property as subject to assessment by the county assessor or the Department of Revenue as may be determined by the department.

(D) Those properties no longer being used in utility service and not being held for future use in utility service as subject to the assessment jurisdiction of the county assessor. The status of a property as of January 1 shall be the determining fact in its classification for that assessment year.

(b) In the case of railroad properties, the law (ORS 308.510(4)(c)) has moved the classification a step away from use by stating “a rail transportation company shall be deemed the user of property situated within its station ground reservations or rights of way notwithstanding the fact that such property may be leased, rented or otherwise assigned by it for the use or benefit of another.” Thus in the case of railroad property the determining fact is whether or not a property is “within its station ground reservations or rights of way.” In making that determination the following definitions shall apply:

(A) Railroad Right of Way: The land owned or used by a rail transportation company as the site for its railroad. The term “railroad” includes rails, ties, ballast, tunnels, trestles, bridges, cuts, fills, drainage systems, signal systems, communication systems, power systems, equipment and employee service buildings and structures, and all other facilities needed in the business of rail transportation except station facilities. The dimensions of the right-of-way will vary depending on requirements imposed by function and terrain and no fixed size limits can be set.

(B) Railroad Station Ground Reservation: A parcel of land, usually contiguous to a railroad right-of-way, acquired for and used as a station site.

(C) Station Site: All land area reasonably necessary to provide for the transition from and to rail transportation of people and property is logically classifiable as station ground reservation.

(c) The Department will determine whether a particular parcel is includable within one of the definitions on the basis of the following rules:

(A) If the land is owned by a railroad and is being used or is held for use as a station site or as right-of-way as defined above, it shall be classified as station ground reservation or right-of-way.

(B) If the land is owned by a railroad but is leased to another for use as a station site it shall be classified as station ground reservation. Examples would include: leases to freight forwarding, express, and trucking companies for use in assembling small shipments for movement by rail; leases to grain buying and warehousing companies who buy small quantities to accumulate into bulk rail shipments; and leases to companies in the reverse activity of receiving bulk shipments by rail and selling in small quantity.

(C) Land owned by a railroad and not included in items (A) or (B) shall be classified as not being station ground reservation or right-of-way. Examples would include: Leases to retail sales organizations as store or parking lot sites; leases to farmers for agricultural uses (this would not include agricultural permits or casual, transitory or informal agricultural uses along rights-of-way); leases to manufacturing concerns as factory sites. In marginal cases, the Department will make its decision based on the primary use being made of the land.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.515
Renumbered from 150-308.515, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
TC 8-1981, f. 12-7-81, cert. ef. 12-31-81
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
1-69

Or. Admin. R. 150-308-0550 Property Used for Guide Service

(1) Water transportation property otherwise assessable by the department under ORS 308.515 will be excluded from department assessment if such property is used exclusively in “for hire” transportation of other persons in guide service.

(2) Guide service as used in ORS 308.515(2)(b) is the service provided by an individual or entity who for pay aids or assists, or offers to aid or assist, any person or persons to locate, angle for, hunt or trap wildlife.

(3) Property used exclusively in the provision of guide service is, unless otherwise provided by law, subject to the assessment jurisdiction of the assessor of the county in which it is located.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.515
Renumbered from 150-308.515(2)(b), REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-308-0560 Confidentiality of Appraisals of Designated Utilities and Companies by Department of Revenue

The files of designated utilities and companies appraised by Department of Revenue will be safeguarded in the manner stated in OAR 150-192-0500.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.525
Renumbered from 150-308.525, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80

Or. Admin. R. 150-308-0570 Computation of Changed Property Ratio for Centrally Assessed Property

The ratio of average maximum assessed value to real market value, also known as the changed property ratio, shall be rounded to two decimal places for purposes of assessed value calculation. See OAR 150-308-0140.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.540
Renumbered from 150-308-0540, REV 56-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-308-0580 Allocation of Mobile Aircraft Property Value

(1) The percent of the unit value of the mobile aircraft property of air transportation and air express companies assessed by the department pursuant to ORS 308.515 allocated to Oregon shall be determined by the following formula: [Formula not included. See ED. NOTE.]

(2) Definitions:

(a) Ground time is the amount of time between the moment an aircraft comes to rest from one flight until it first moves under its own power for purposes of another flight.

(b) Flight time is the amount of time between the moment an aircraft first moves under its own power for the purposes of flight until it comes to rest at the next point of landing. Oregon flight time is the product of the total flight time of a flight originating or terminating in Oregon multiplied by the Oregon percentage of the airport-to-airport distance of the flight.

(d) Tons enplaned and deplaned are the total number of tons (passengers and cargo) loaded on and unloaded from company aircraft. Passengers and cargo entering a carrier’s system on interchange flights are considered as enplaning or deplaning at the interchange point.

(e) Equated plane hours are calculated by multiplying the actual plane hours of an aircraft type by the ratio of the average value of that aircraft type to the base value. The base value is defined as the average value of one designated aircraft type for each air transportation company.

(f) Equated departures are calculated by multiplying the actual number of departures for an aircraft type by the ratio of the average value of that aircraft type to the base value.

(3) If, for a particular company, reliable data for all three factors in the formula are not available, the department shall determine the factors, for which the company provided inadequate data according to the best of its information and belief.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
REV 11-2017, f. & cert. ef. 6-15-17
Renumbered from 150-308.550(2)-(A), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 5-1990, f. 11-15-90, cert. ef. 12-1-90
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-308.550(2)
RD 7-1987, f. & cert. ef. 6-5-87
RD 2-1987(Temp), f. & cert. ef. 4-3-87

Or. Admin. R. 150-308-0585 Procedure for Determining Oregon Property Value for Private Railroad Car Companies

(1) Private car companies shall report the total miles their railroad cars traveled on the railroads in Oregon and the corresponding total system mileage for the prior two calendar years as part of their annual report to the Department of Revenue. If complete information for the most recent year is not available at the time the report is required, the company shall report its best estimate based on the information it has available at that time.

(2) The department shall determine Oregon’s equivalent number of railroad cars for allocation purposes by use of the ratio of Oregon mileage to the system total for the prior year. This ratio shall be adjusted for any corrections of the previous estimated mileage report. The resulting ratio shall be applied to the average number of cars in the fleet for which the mileage was reported to determine the average car presence in Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
Renumbered from 150-308.550(2)-(B), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-308-0590 Allocation of Centrally Assessed Electric Company Property Value

Electric companies. The value of the Oregon portion of a unit of property used by a company operating both within and without this state in the business of distributing electricity shall be allocated to this state by multiplying the total value of the unit by a percentage, which shall be the sum of the Oregon production plant percentage, the Oregon distribution plant percentage and the Oregon other plant percentage.

(1) The Oregon production plant percentage shall be the ratio the total original cost of the production plant of the unit bears to the total original cost of the unit times the sum of:

(a) The ratio the Oregon portion of the original cost of the production plant bears to the total unit original cost of the production plant times 75 percent;

(b) The ratio the Oregon portion of the unit’s capacity to generate electricity, measured in kilowatts, bears to the unit’s total capacity to generate electricity times 10 percent; plus

(c) The ratio the Oregon portion of the unit’s total energy generation during the prior year, measured in megawatt hours, bears to the unit’s total energy generation during the prior year times 15 percent.

(2) The Oregon distribution plant percentage shall be the ratio the total original cost of distribution plant of the unit bears to the total original cost of the unit times the sum of:

(a) The ratio the Oregon portion of the original cost of distribution plant bears to the total unit original cost of distribution plant times 50 percent;

(b) The ratio the Oregon portion of the unit’s energy production sold in the prior year, measured in kilowatt hours, bears to the unit’s total energy production sold times 10 percent; plus

(c) The ratio the Oregon portion of the unit’s revenue generated from the sale of energy for the prior year bears to the unit’s total revenue generated from the sale of energy for the prior year times 40 percent.

(3) The Oregon other plant percentage shall be the ratio the original cost of the remaining plant of the unit bears to the total original cost of the unit times the ratio the Oregon portion of the original cost of the remaining plant bears to the total original cost of the remaining plant of the unit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
Renumbered from 150-308.550(2)-(C), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0592 Defining Electrical Inspection for Community Solar

Date on which the electrical inspection for the project is completed and approved and eligible to claim the exemption granted under ORS 307.175(5) is the later of the date the utility company (the off-taker of the electricity) confirms completion of its first inspection following pre-certification or the date the local government having jurisdiction completes its final electrical inspection. The taxpayer applying for the community solar project exemption (the Project Manager) must provide to the Department of Revenue written confirmation from the utility and the local government that the electrical inspection has been completed and approved.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 307.175
REV 33-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-308-0595 Allocation of Centrally Assessed Gas Distribution Company Property Value

Gas distribution companies. The value of the Oregon portion of a unit of property used by a company operating both within and without this state in the business of distributing natural gas shall be allocated to this state by multiplying the value of the unit by a percentage, which shall be the sum of:

(1) The ratio the Oregon portion of the unit cost bears to the total unit cost times 75 percent;

(2) The ratio the Oregon portion of the unit’s total operating revenue for the prior year bears to the unit’s total operating revenue for the prior year times 15 percent; plus

(3) The ratio the Oregon portion of the unit’s net operating income from the prior year bears to the unit’s net operating income for the prior year times 10 percent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
Renumbered from 150-308.550(2)-(D), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0600 Allocation of Centrally Assessed Pipeline Company Property Value

Pipeline companies. The value of the Oregon portion of a unit of property used by a pipeline company operating both within and without this state shall be allocated to this state by multiplying the value of the unit by a percentage, which shall be the sum of the Oregon pipeline percentage and the Oregon other property percentage.

(1) The Oregon pipeline percentage shall be the ratio the cost of lines of pipe in the unit bears to the total cost of the unit times the sum of:

(a) The ratio the Oregon portion of the unit cost of lines of pipe bears to the total unit cost of lines of pipe times 75 percent;

(b) The ratio the Oregon portion of pipe line use, measured in barrel miles or thousand cubic foot miles (MCF miles), bears to the unit’s total pipe line use times 20 percent; plus

(c) The ratio the Oregon portion of the unit’s total terminal activity during the prior year, measured in barrels or thousand cubic feet, bears to the unit’s total terminal activity during the prior year times five percent.

(2) The Oregon other property percentage shall be the ratio the cost of all other property in the unit bears to the total cost of the unit times the ratio the cost of the Oregon portion of the other property of the unit bears to the total cost of other property of the unit.

(3) For natural gas pipelines, depreciated original cost shall be used. For other pipelines, undepreciated original cost shall be used.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
Renumbered from 150-308.550(2)-(E), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0605 Allocation of Centrally Assessed Railroad Company Property Value

Railroad companies. The value of the Oregon portion of a unit of property used in the business of railroad transportation by a company operating both within and without this state shall be allocated to this state by multiplying the value of the unit by a percentage, which shall be the sum of the following factors:

(1) The ratio the Oregon single track mileage of the unit bears to the total single track mileage of the unit times 20 percent.

(2) The ratio the Oregon car miles and locomotive miles traveled in the prior year bears to the total car and locomotive miles of the unit for the prior year times 20 percent. An Oregon car mile is the movement of any car, loaded or unloaded, the distance of one mile.

(3) The ratio the Oregon railway operating revenue for the prior year bears to the total railway operating revenue of the unit for the prior year times 20 percent.

(4) The ratio the Oregon property original cost bears to the total property original cost of the unit times 20 percent.

(5) The ratio the Oregon revenue freight ton-miles for the prior year bears to the total revenue freight ton-miles of the unit for the prior year times 20 percent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
Renumbered from 150-308.550(2)-(F), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0610 Allocation of Centrally Assessed Communication Company Property Value

(1) Definitions

(a) “Original Cost” means the cost of tangible property, plant and equipment as reported on the company’s financial statements including construction work in progress, property held for future use, land, and leasehold improvements.

(b) “Oregon operating revenue” means gross revenue from customers whose billing address is an Oregon address.

(2) The value of the Oregon portion of a unit of property used by a company operating both within and without this state in the communication business must be allocated to this state by multiplying the value of the unit by a percentage, which is the sum of:

(a) The ratio of the Oregon portion of the unit’s original cost to the total unit’s original cost, multiplied by 75 percent; plus

(b) The ratio of the Oregon portion of the unit’s total gross operating revenue for the prior year to the unit’s total gross operating revenue for the prior year, multiplied by 15 percent; plus

(c) The ratio of the total year-end Oregon customers for the prior year to the unit’s total year-end customers for the prior year, multiplied by 10 percent.

(3) If a company is not able to provide, or does not provide, the information required to compute the ratio in (2)(a), (b) or (c) of this rule, the department will proportionally increase the percentage of the unit’s remaining ratio(s) by the percentage(s) of the ratios not used.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
Renumbered from 150-308.550(2)-(G), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2009, f. & cert. ef. 7-31-09
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0615 Allocation of Centrally Assessed Water Transportation Company Property Value

Water transportation companies. The value of the Oregon portion of a unit of mobile watercraft property used by a company operating both within and without this state in the business of providing water transportation shall be calculated by multiplying the assessable value of the unit by a percentage, which shall be the sum of:

(1) The ratio the Oregon portion of the originating and terminating tons of the assessable unit for the prior year bears to the total originating and terminating tons of the unit for the prior year times 50 percent; plus

(2) The ratio the Oregon portion of the ton-miles of the assessable unit for the prior year bears to the unit’s total ton-miles for the prior year times 50 percent.

(3) The assessable unit of mobile watercraft property is defined as the value of all mobile watercraft property owned or used by the company less:

(a) That portion of value of any watercraft that ply the high seas or between the high seas and inland ports, such portion to be based on the ratio the days in service on the high seas or between the high seas and inland ports for the prior year bears to the total days available for service for the prior year (ORS 308.256(2)(b) and 308.515(3)(a)); and

(b) That portion of value of any watercraft engaged in locally assessable activities described in ORS 308.515(3)(b), such portion to be based on the ratio the days in service engaged in locally assessable activities described in 308.515(3)(b) for the prior year bears to the total days available for service for the prior year; and

(4) For companies primarily providing passenger or excursion service, trips shall replace tons and trip-miles shall replace ton-miles in sections (1) and (2).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.550
REV 21-2018, minor correction filed 11/07/2018, effective 11/07/2018
Renumbered from 150-308.550(2)-(H), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-308-0660 Unit Valuation of Centrally Assessed Properties

(1) ORS 308.555 authorizes the department to assess property by valuing the entire property as a unit. Determination of the proper unit of property to be valued is a question of fact to be decided by the appraiser under rules adopted pursuant to 308.655 and the guidelines in the WSATA Handbook, adopted in OAR 150-308-0690.

(2) For purposes of determining the assessed value of centrally assessed property appraised as a unit pursuant to ORS 308.505 to 308.665, the following definitions apply:

(a) “Controlling interest” means owning or holding more than 50 percent of the voting stock or shares in a company.

(b) “Holding company” means a company that is formed to own the stock in other companies,

(A) A holding company usually owns enough voting stock in another corporation to influence its board of directors and, therefore, to control its policies and management.

(B) A holding company’s operations are the operations of the companies in which it holds stock.

(d) “Unit” means all property, real and personal, tangible and intangible, as described in ORS 308.510, and used or held for future use by a company in providing the services and commodities listed in ORS 308.515.

(e) “Unit valuation” is the valuation of integrated assets functioning as an economic unit at their highest and best use.

(3) The department may consider a variety of facts to determine what property should be assessed as a unit. These include, but are not limited to:

(a) Functional integration, determined by looking at the operation of the property used in the business at its highest and best use,

(b) Integration of management, administration, marketing, financing, use of employees and other resources of the business in which the property is used;

(d) How both stock investors and investors acquiring all or a portion of the business assets or stock view investment in the property;

(e) Information in:

(A) Reports filed by publicly traded companies with the Securities and Exchange Commission;

(B) Filings with other governmental or nongovernmental agencies or organizations; and

(4) When valuing property as a unit:

(a) The department may include property used or held for future use by a parent company, holding company, subsidiary, or any other type of legal entity, including but not limited to partnerships, LLCs or joint ventures, when the department determines that the property of such business is operationally or financially integrated without regard to the physical location of the property, whether within or without the United States.

(b) The department will generally assess the property of each company on the roll (ORS 308.560) in the name of the parent corporation when the company unit includes more than one corporate entity.

NOTE: Publications: The publication referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).

History

Statutory/Other Authority: ORS 305.100 & 308.655
Statutes/Other Implemented: ORS 308.555 & 308.515
Renumbered from 150-308.555, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 14-2008, f. & cert. ef. 11-14-08

Or. Admin. R. 150-308-0670 Contents of the Utility Assessment Roll

For each company assessed, the department will include on the assessment roll according to the best information available, the following information:

(1) The name of the company;

(2) The name of a company contact or authorized agent;

(3) The last known address of the company or authorized agent;

(4) A general property description;

(5) The assessed value (AV), real market value (RMV), AV exceptions, and the RMV of exceptions;

(6) The values apportioned to each county where the property is located, including code areas, locations, county reference number, miles of track, wire or pipe, and values per mile, as applicable;

(7) Any penalty assessed under ORS 308.030;

(8) Any other information the department deems necessary for the counties to perform their duties as it pertains to the value determined for utility companies.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.560
Renumbered from 150-308.560, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 10-2002, f. & cert. ef. 12-31-02

Or. Admin. R. 150-308-0680 Contents of Department’s Journal

The department’s journal shall contain:

(1) A schedule of hearings conducted by the director during review of the tentative roll;

(2) The date the review is completed;

(3) The change property ratio for centrally assessed property;

(4) The name of each company assessed a late filing penalty and the amount of the penalty.

(5) The name of each company receiving a waiver of the late filing penalty from the director; and

(6) Any other information pertaining to the review of the tentative roll that the director deems appropriate.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.605
Renumbered from 150-308.605(2), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-308-0690 Centrally Assessed Property — Appraisal Guidelines

The 2009 Western States Association of Tax Administrators Appraisal Handbook: Unit Valuation of Centrally Assessed Properties is adopted as the official valuation guide for property assessed by the Oregon Department of Revenue under ORS 308.505 to 308.665 for ad valorem tax purposes.

History

Statutory/Other Authority: ORS 305.100 & 308.655
Statutes/Other Implemented: ORS 308.655
Renumbered from 150-308.655, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-308.205-(B), REV 11-2010, f. 7-23-10, cert. ef. 7-31-10
RD 2-1990, f. & cert. ef. 3-15-90
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79

Or. Admin. R. 150-308-0695 Removal of Certain Elected Exempt Property from Correlated System Real Market Value of Centrally Assessed Property

(1) Under ORS 308.671, a company may elect to have one of three types of property exempted from ad valorem property taxation.

(a) Licenses granted by the Federal Communication Commission (FCC),

(b) Franchises, or

(c) Satellites that are used to provide communication services directly to retail customers, or that are being constructed for such use, and FCC licenses related to the use of the satellites to provide communication services.

(2) ORS 308.555 authorizes the department to value all property of a centrally assessed company as a unit. Unit valuation means valuing an integrated group of assets functioning as an economic unit as “one thing,” without reference to the market value of any individual assets. To determine a company’s unit value, the department considers one or more of the cost, income and stock and debt approaches to value, reconciling the approaches to arrive at “unit value” also referred to as the “correlated system value.”

(3) Under ORS 308.671(3), the value of exempt property listed in section (1) above is equal to the cost of the property carried in the accounting records of the company, less accrued depreciation reserve for that property. This is the exempt property net book value (“exempt NBV”). A company must provide in its Annual Statement the book cost and accrued depreciation reserve for the elected exempt property to obtain the exemption.

(4) The department removes exempt property values of various types (for example motor vehicles) from a company’s correlated system value because the income, cost, or stock and debt approaches may be weighed and reconciled differently in any given tax year for any given company depending on the availability and quality of information. Because exempt NBV, for purposes of ORS 308.671, is a cost amount, the department will directly subtract that amount from the correlated system value if that value is based solely on the cost approach. Where the correlated system value is based on income and/or stock and debt approaches, as well as cost, the department must subtract the amount of exempt NBV that is actually reflected in the correlated system value. Consistent with the department’s long-standing market-to-book ratio method of subtracting exempt FCC licenses under the former OAR 150-307.126, a market-to-book ratio will be used for all of the exempt property under ORS 308.671.

(5) The market-to-book ratio is derived by dividing the company’s correlated system value by the total NBV of the company’s taxable property (including the exempt NBV). The resulting ratio is multiplied by the company’s exempt NBV, and that amount is then subtracted from the company’s correlated system value.

History

Statutory/Other Authority: ORS 305.100, 308.205 & 308.655
Statutes/Other Implemented: ORS 308.671
Renumbered from 150-308.671, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
Renumbered from 150-307.126, REV 6-2016, f. 7-28-16, cert. ef. 8-1-16
REV 17-2010, f. 12-17-10, cert. ef. 1-1-11

Or. Admin. R. 150-308-0700 Qualification of Property for Special Assessment as Government Restricted Multiunit Rental Housing

(1) Definitions:

(a) "Qualified income rental housing" means property subject to the occupancy by tenants who meet restricted incomes and rents as described in the government incentive program in which the owner of the property is participating.

(b) "Dwelling unit" means a structure or the part of a structure that is used as a home or residence.

(c) "Contiguous" means having a common boundary to some extent greater than a point. Tax lots are contiguous if separated by public or county roads, state highways, or non-navigable streams or rivers. Tax lots are not contiguous if they are separated by interstate freeways or navigable streams or rivers, except where there is direct connecting access, such as an underpass, for property separated by an interstate freeway.

(d) "Assisted Living Facility" means a building, complex or distinct part thereof, consisting of fully self-contained individual living units where six or more seniors and adult persons with disabilities may reside in homelike surroundings. The facility offers and coordinates a range of supportive services available on a 24-hour basis to meet the activities of daily living, health, and social needs of the residents. A program approach is used to promote resident self-direction and participation in decisions that emphasize choice, dignity, privacy, individuality, and independence.

(e) "Residential Care Facility" means a building, complex or distinct part thereof, consisting of shared or individual living units in a homelike surrounding where six or more seniors and adult persons with disabilities may reside. The facility offers and coordinates a range of supportive services available on a 24-hour basis to meet the activities of daily living, health, and social needs of the residents. A program approach is used to promote resident self-direction and participation in decisions that emphasize choice, dignity, individuality, and independence.

(f) "Services" means supervision or assistance provided in support of a resident's needs, preferences and comfort, including health care and activities of daily living, that help develop, increase, maintain, or maximize the resident's level of independent, psychosocial and physical functioning.

(2) To qualify for special assessment as government restricted multiunit rental housing, all of the following criteria must be met:

(a) The owner must file an application with the assessor in the county where the property is located;

(b) The property must be subject to a government restriction, which limits the use of the housing to qualified income rental housing, as of January 1 of the assessment year.

(c) The property owner must receive a government incentive for agreeing to limit the use of the property to qualified income rental housing. These incentives may include, but are not limited to:

(A) A low-income housing tax credit under section 42 of the Internal Revenue Code;

(B) Financing derived from exempt facility bonds for qualified residential rental projects under section 142 of the Internal Revenue Code;

(C) Financing derived from non-hospital bonds issued by entities that are tax-exempt pursuant to section 501(c)(3) of the Internal Revenue Code;

(D) A low interest loan under section 235 or section 236 of the National Housing Act (12 U.S.C. 1715Z or 1715Z-1) or under 42 U.S.C. 1485;

(E) A government rent subsidy;

(F) A government guaranteed loan; or

(G) A rural development 515 low interest multifamily loan.

(d) The property must be residential rental housing consisting of four or more dwelling units situated on the same or contiguous tax lots. If there are multiple residential structures, at least 50 percent of the structures must contain two or more dwelling units; and

(e) The property must not be an assisted living or residential care facility, or provide a program of assisted living or residential care services.

(3) Examples of properties that may qualify for special assessment as having four or more dwelling units include:

(a) Two duplexes on the same tax lot.

(b) Two tax lots, each having one duplex and separated by a local street.

(c) Two duplexes plus two single family units, one of which may be a manager's unit, with each structure on a separate but contiguous tax lot.

(4) Examples of properties that do not qualify for special assessment as having four or more dwelling units include:

(a) A triplex.

(b) Scattered, non-contiguous sites with no more than three units per site.

(d) Single family homes, regardless of how many, whether on a single or contiguous tax lots.

(e) Group homes.

(5) If a single housing project consists of some units that qualify under this rule, such as two duplexes on the same tax lot, plus some units that do not qualify, such as two more duplexes on non-contiguous tax lots, only those units that qualify under this rule may be subject to special assessment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 205.320, 308.027, 308.156, 308.205, 308.234, 308.704, 308.709, 308.712, 308.714, 311.806, 309.200 & 457.450
Renumbered from 150-308.704, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 10-2002, f. & cert. ef. 12-31-02
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-308-0710 Application and Election Process for Government Restricted Multiunit Rental Housing

(1) The property owner must file an application and election form with the county assessor to obtain a special assessment for government restricted multiunit rental housing (LIH) provided by ORS 308.701 to 308.724. The application and election form must be filed on or before April 1 of the assessment year. The application and election form may be filed after April 1 and on or before December 31, if accompanied by a late filing fee equal to the greater of $200 or one-tenth of one percent of the real market value (RMV) of the property described in the application filed. Any application and election form that is filed late must be accompanied with the late filing fee. If the fee is not paid, the special assessment will not be granted. If the special assessment is denied by the assessor, the late filing fee must be refunded to the applicant.

(2) At the time the application and election form is filed, the property owner must elect the method the assessor is to use to determine the specially assessed value (SAV) of the property.

(a) If the property owner elects the income approach method, the application and election form must be accompanied by income and expense documentation. The required documents are:

(A) The rent roll for the month of December immediately preceding the date of application. The rent roll must show the rents charged for each unit and which units, if any, are vacant; and

(B) Annual income and expense statements for at least the three most recent years. Audited statements should be submitted, but unaudited statements may be provided if audited statements are not available; or

(C) Pro forma income and expense statements, but only if the project is new and historical documents are not available; or

(D) A combination of actual and pro forma income and expense statements for at least three years, if the property is not more than three years old.

(E) For mixed-use property the applicant must provide income and expense statements only for the portion of the property used as government restricted multiunit rental housing. Mixed-use property is property that consists of both government restricted multiunit rental housing and property used for other purposes.

(b) If the property owner elects the ratio method, the application and election form must be accompanied by the rent roll for the month of December immediately preceding the date of application. The rent roll must show the rents charged for each unit and which units, if any, are vacant.

(3) When one of the following events occurs after the initial application and election form has been approved, the owner must submit additional information to the assessor:

(a) The property owner wishes to change the election of the method used to determine the SAV; or

(b) New property has been constructed at the site, or new improvements are made to the government restricted multiunit rental housing; or

(4) The county assessor will review the application and election form and accompanying documentation and determine if the property qualifies for special assessment.

(a) The application and election form must contain the information required under ORS 308.709 for the assessor to approve the special assessment. If the application and election forms are incomplete, the assessor may request additional information from the applicant in writing, as necessary, for completion or clarification. The applicant must submit the requested information, in writing, to the assessor within 15 days of the date of the request or by the filing deadline, whichever is later, for the assessor to accept the application as a timely filing. If the applicant does not submit the requested information within the time required, the assessor may deny the application.

(b) The assessor must notify the applicant of the determination, in writing, within 120 days of the date the application was filed with the assessor's office.

(A) If the application is denied, the notice to the property owner must include the instructions for appealing a denial of the special assessment by the assessor.

(B) If the application is approved, the assessor must add the following notation to the tax and assessment rolls each year: “LIH special assessment (potential penalty if disqualified).”

History

Statutory/Other Authority: ORS 305.100, 306.120, 308.709 & 308.724
Statutes/Other Implemented: ORS 308.709
Renumbered from 150-308.709, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2007, f. 7-30-07, cert. ef. 7-31-07
REV 10-2002, f. & cert. ef. 12-31-02
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-308-0720 Special Assessment of Government Restricted Multiunit Rental Housing Property

(1) The assessed value (AV) of government restricted multiunit rental housing property is the lower of:

(a) The specially assessed value (SAV);

(b) The maximum assessed value based on the special assessment (MSAV); or

(2) An owner of government restricted multiunit rental housing property may elect to have the property specially assessed using:

(a) An income approach method using actual income and stabilized expenses; or

(b) A ratio method.

(3) The income approach method: For the initial year of special assessment, the assessor must utilize the property's actual income statements for at least the prior three years if available. Pro forma statements may be used for recently constructed properties. Economic or market based rents cannot be used. A combination of actual and pro forma statements may be used.

(a) The goal of the income approach is to determine the value of only the real property. No personal property value should be included. The assessor may remove personal property value by one of the following methods:

(A) Include revenues and expenses for both the real and personal property. After the net operating income has been capitalized, deduct the value of the personal property; or

(B) Remove all income and expense generated by the personal property assets prior to capitalization.

(b) In determining the SAV, no income should be included for government income tax credits or mortgage interest subsidies.

(c) The assessor must use actual income (revenues) and stabilized expenses rather than market or economic rents. However for recently built or recent conversions to government restricted multi-unit rental housing, a combination of pro forma and actual rental income may be used.

(d) Actual revenues included are those that result from the operation of the property. They include the rent paid by tenants and any monthly rent subsidies. Also, rent for parking or other amenities must be included. Revenue not directly related to the property, such as interest income, should be excluded.

(e) Stabilized expenses are those that would be expected to be typical for the property, not those that reflect unusual or extraordinary circumstances. The assessor may use averages for the three years and may express expenses on a per-unit basis or as a percentage of revenue. Expenses for a particular year should be adjusted if they are atypical. The goal is to find the typical level of expenses.

(f) Expenses to include are those directly related to the operation of the property including, but not limited to, repairs and maintenance, utilities, government required tenant services, management, and insurance. Certain expenses such as depreciation, mortgage interest, payments to developers, and property taxes must be excluded. Reserves for replacements should be included, but any expense in the repair and maintenance category should be disallowed if it comes from the reserve account.

(g) The net operating income is determined from the above steps by subtracting the stabilized annual expenses from the actual annual revenues.

(h) The capitalization rate is estimated as follows:

(A) Factors to be considered in selecting a rate include the risks associated with multiunit rental housing subject to government restriction. These include diminished ownership control, income-generating potential, and liquidity. The assessor must also consider any other factors or risks typically taken into account when estimating a capitalization rate.

(B) The selected capitalization rate must be equal to or greater than the rate used by the assessor for similar unrestricted properties.

(C) To the selected rate, add the effective property tax rate for the code area where the property is located, as described in OAR 150-308-0290. This is the overall rate to use for capitalization.

(D) The value determined from the income approach is calculated by dividing the overall capitalization rate into the net operating income. This is the SAV. Notwithstanding the result of the calculation, the SAV of the real property land and improvements may not be less than $1,000 per dwelling unit.

(4) The ratio method: This method utilizes a ratio of restricted to market rents.

(a) The assessor estimates the RMV of the property as if unrestricted.

(b) The actual annual total rent, including subsidies, is determined.

(c) The annual market rent for the property, if unrestricted, is estimated. If insufficient county data is available, the assessor may look to regional data.

(d) The ratio of the actual rent to the market rent is calculated.

(e) The unrestricted value from step (4)(a) is multiplied by the ratio from step (4)(d). This is the SAV. Notwithstanding the result of the calculation, the SAV of the real property land and improvements may not be less than $1,000 per dwelling unit.

(5) Other issues of value, including unusual physical or functional circumstances affecting the property, are not considered in determining the SAV. They are appropriately addressed in estimating the property's RMV.

(6) Certain properties may have a mixed use. For example, a portion of the property may be used as government restricted multiunit rental housing property, while another portion may be commercial or retail. The special assessment applies only to the portion that is used as government restricted multiunit rental housing property. The assessment of the remainder of the property is unaffected by this rule.

(a) For mixed-use properties, a portion of the land value may be subject to special assessment as government restricted multiunit rental housing property. The remainder of the land value is not subject to this special assessment.

(b) The portion of the total land value subject to special assessment equals the portion that the gross square footage of the real property improvements used for government restricted multiunit rental housing bears to the total gross square footage of all the real property improvements, both restricted and unrestricted.

(7) The SAV must be allocated between land and improvements.

(a) The portion of the SAV allocated to the land is equal to the RMV of the land at its highest and best use.

(b) The remaining SAV is allocated to the improvements.

(c) If the SAV is equal to or less than the RMV of the land, a minimum value will be placed on the improvements and the remaining value will be assigned to the land.

(8) For the initial year of application, the MAV of the specially assessed property (MSAV) is found by multiplying the SAV determined using the method chosen by the property owner by the changed property ratio (CPR). The assessor must use the same CPR that is used for similar unrestricted multiunit housing.

(9) Following the initial year, the SAV may be redetermined using the income approach method or the ratio method (whichever the property owner elected) as follows:

(a) The property owner may request a redetermination of the SAV. The owner must make a written request to the assessor by April 1 of the assessment year and must provide necessary income statements.

(b) The assessor may decide to redetermine the SAV. No later than April 1 of the assessment year, the assessor will notify the property owner in writing and request income statements for the three most recent years (if not already provided).

(c) If the SAV is not redetermined under (9)(a) or (9)(b), the assessor may leave the SAV unchanged or may use an appropriate trend or index.

(10) For years after the initial year, the MSAV is 103% of the prior year's AV or 100% of the prior year's MSAV, whichever is greater.

(a) If omitted property is assessed or there is a lot line adjustment, the MSAV is calculated as provided in ORS 308.149 to 308.166.

(b) If new improvements are made to the property, and the owner applies for special assessment of the new improvements, the MSAV of the new improvements as determined by this rule is added to the existing MSAV.

(c) If the property is disqualified from special assessment, and the property is not requalified, a new MAV, based on RMV, will be determined under ORS 308.149 to 308.166.

(d) If the property is disqualified from special assessment, and the property is later requalified, the MSAV will be determined using the same method as prescribed in this rule for the initial application.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 205.320, 308.027, 308.156, 308.205, 308.234, 308.704, 308.709, 308.712, 308.714, 311.806, 309.200 & 457.450
Renumbered from 150-308.712, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 10-2002, f. & cert. ef. 12-31-02
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-308-0730 Special Assessment Disqualification Process

(1) The assessor must disqualify property from special assessment as government restricted multiunit rental housing if:

(a) The property is no longer multiunit rental housing subject to a government restriction on use; or

(b) An event described in ORS 308.146(3)(b) or (c) occurs with respect to the multiunit rental housing; or

(2) The property owner must notify the county assessor, in writing, within 60 days of a disqualifying event.

(3) Property disqualified from special assessment must be valued by ordinary appraisal methods in the tax year immediately following the disqualifying event.

(4) For any tax year following the tax year of disqualification, a property owner may reapply to the county assessor for special assessment if:

(a) The multiunit rental housing property again becomes subject to a government restriction on use; or

(b) An event described in ORS 308.146(3)(b) or (c) caused the disqualification.

(c) The property was voluntarily disqualified from special assessment and the owner is filing a new application under the conditions described in the voluntary disqualification rule.

(5) The following penalties apply if the property owner fails to notify the assessor within 60 days of the disqualifying event:

(a) If the property is disqualified because the multiunit rental housing is no longer subject to a government restriction on use, the penalty is the difference between the taxes imposed and those that would have been imposed had the property not been specially assessed, plus any applicable interest.

(b) If the property is disqualified because new property is constructed or new improvements are made to the qualified property, no penalty will be charged. The new property or improvements will be assessed as omitted property.

(c) If the property is disqualified because of an event described in ORS 308.146(3)(b) or (c), the penalty is the difference between the taxes imposed and those that would have been imposed had the property not been specially assessed, plus any applicable interest.

(d) If the property is disqualified at the owner’s request and none of the disqualifying events in (1)(a) or (1)(b) exist, there is no penalty.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 205.320, 308.027, 308.156, 308.205, 308.234, 308.704, 308.709, 308.712, 308.714, 309.200, 311.806, 309.200 & 457.450
Renumbered from 150-308.714-(A), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-308-0740 Process for Voluntary Disqualification from Special Assessment Program and Subsequent Application

(1) An owner may choose to remove their property from special assessment as government restricted multiunit rental housing at any time. The voluntary disqualification from special assessment becomes effective as follows:

(a) If the request for withdrawal from the program is filed with the assessor between January 1 and June 30 inclusive, the property will be removed from special assessment for the tax year beginning July 1 of the same calendar year.

(b) If the request for withdrawal from the program is filed with the assessor between July 1 and December 31 inclusive, the property will be removed from special assessment for the tax year beginning July 1 of the next calendar year.

(2) If a property is voluntarily disqualified from special assessment, the owner may file a new application and election form with the county assessor, on or before April 1 of any assessment year within 10 years immediately following the first tax year the property was first qualified for special assessment. If the application is approved, the property will be specially assessed for the next tax year.

(3) If a property has been voluntarily disqualified from special assessment, the property can qualify only one more time for special assessment. This subsequent qualification must occur within the 10 year period following the first tax year the property was first qualified for special assessment. Any applications for special assessment received by the assessor after the 10-year period will be denied.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 205.320, 308.027, 308.156, 308.205, 308.234, 308.704, 308.709, 308.712, 308.714, 309.200, 311.806, 309.200 & 457.450
Renumbered from 150-308.714-(B), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-308-0750 Payment of Taxes on Manufactured Structure That Allows Change from Real Property to Personal Property Status

When a manufactured structure that is currently assessed as real property under ORS 308.875 is being moved, the tax collector must allocate the taxes between the manufactured structure and the remainder of the property. The full payment of the taxes on the value attributable to the manufactured structure releases the manufactured structure from the property tax lien.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.865
Renumbered from 150-308.865, REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 7-2005, f. 12-30-05, cert. ef. 1-1-06
RD 5-1996, f. 12-23-96, cert. ef. 12-31-96

Or. Admin. R. 150-308-0760 Manufactured Structure Classified as Real or Personal Property

(1) When the records in the assessor's office or the ownership document issued by Building Codes Division of the Department of Consumer and Business Services (DCBS) do not identify the same ownership for a manufactured structure as for the land upon which the structure is located, the assessor must classify the manufactured structure as personal property. However, if the taxpayer submits documentation establishing that the ownership of the manufactured structure and land upon which the structure is located is the same, the assessor must classify the manufactured structure as real property.

Example 1: The land is in the name of Pat Public, Inc., a corporation, and the manufactured structure is in the name of Pat Public. Because a corporation is a different legal entity than an individual, the ownership is not the same, so the manufactured structure must be classified as personal property.

Example 2: Spouses in a marriage are owners of a parcel of land upon which a manufactured structure is located. The ownership document for the manufactured structure is in one spouse’s name only. The ownership is not the same and the manufactured structure must be classified as personal property.

Example 3: Pat Public owns a manufactured structure and is buying on contract the parcel of land upon which the structure is located. For purposes of ORS 308.875 the ownership is the same and the manufactured structure must be classified as real property.

(2) When the owner of a manufactured structure has a leasehold estate of 20 years or more, and the lease specifically permits the owner to record that lease in the county deed records, the owner may complete an application as prescribed by DCBS to have the home classified as real property. If the assessor determines that the manufactured structure qualifies for recording as required by ORS 446.626, and the lease has subsequently been recorded in the county deed records, the assessor must then classify the home as real property.

(3) When the owner of a manufactured structure is a member of a manufactured dwelling park nonprofit cooperative formed under ORS 62.800 to 62.815 that owns the land on which the manufactured structure is located, the owner may complete an application as prescribed by DCBS to have the home classified as real property. If the assessor determines that the manufactured structure qualifies for recording as required by ORS 446.626, the assessor must then classify the home as real property.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.875
REV 4-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-308.875-(A), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
RD 5-1996, f. 12-23-96, cert. ef. 12-31-96
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-308-0770 Real and Personal Manufactured Dwellings to be Assessed in Like Manner

All manufactured dwellings are assessable.

(1) Under ORS 308.875, the owner of a personal property manufactured dwelling need not file a personal property return on the structure.

(2) The personal property assessment cancellation provided in ORS 308.250 does not apply to such dwellings.

(3) They shall be assessed at 100 percent of real market value.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.875
Renumbered from 150-308.875-(B), REV 59-2016, f. 8-13-16, cert. ef. 9-1-16
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-308-1010 Farm Use Definitions, Inactivity Due to Illness, and Description of Lands in Non-Exclusive Farm Use

(1) This rule applies to land in non-exclusive farm use zones that may qualify for special assessment under ORS 308A.068.

(2) Definitions:

(a) “Farm unit” means a farming enterprise which includes all parcels being farmed by a single operator, whether the operator owns or leases the farmland.

(b) “Farm use” is defined in ORS 308A.056 and applies to land both inside and outside exclusive farm use zones.

(c) “Illness” means sickness, disease, injury, or disorder of body or mind which prevents the farmer or immediate family member from performing necessary farm operations.

(d) For purposes of subsection (2)(c): “Immediate family member” means the farmer's spouse, children, or any person for whom the farmer has a legal responsibility including, but not limited to, guardianship of a dependent parent or child.

(e) “Land” means land in its natural state, including any site developments (see ORS 307.010).

(A) “Land” includes all mines, minerals, quarries, dikes, banks, drainage tile, water rights, and the like. Since ORS 308A.056 relates only to land used for farming, any mineral reserves under the land continue to be assessed at real market value as defined by ORS 308.205. Minerals include oil and gas. Severed mineral interests, even though underlying zoned farmland, are assessed to the owner in accordance with ORS 308.115.

(B) For the purpose of assessment of land in farm use, “land” does not include buildings, structures, improvements (unless their contribution is an integral part of the income attributable to the land), machinery, equipment, land improvements for homesites, fixtures erected upon or affixed to the land itself, or land used for a non-farm residence or other non-farm purpose.

(f) “Wasteland” includes but is not limited to swamps, rock outcroppings, gullies, unusable overflow lands, and drainage ways.

(A) Wasteland does not include tillable lands left idle or uncultivated and non-tillable grazing lands left unused when the accepted farming practice is to utilize the land.

(B) Wasteland does include land described in paragraph (2)(f)(A), if the owner can show that it is uneconomical to utilize the land as part of the farm unit. Utilizing the land is uneconomical if the cost to raise crops or animals exceeds the value of the crops or animals. Examples in which it would not be economical to utilize the land include:

(i) An unfenced area of grazing land where the annualized cost of fencing would exceed the income derived from the land.

(ii) An area of a farm that was only profitable through irrigation that is now unused because the cost of electricity to operate the irrigation pumps increases expenses beyond the income that can be derived from that area of land.

(C) Wasteland caused by the taxpayer, owner, or person in control of the property is not entitled to special farm use assessment. Examples of taxpayer-created wasteland include “mined out” land where gravel, soil, or other minerals have been extracted, and mine tailing refuse areas.

(3)(a) The law seeks to give the benefits of ORS 308A.068 to that farmland which is operated primarily for the purpose of obtaining a profit in money.

(b) The assessor must consider all requirements of ORS 308A.056 and be convinced that the land is used in a manner that is reasonably designed and intended to obtain a profit in money by accepted farming practices. If the primary purpose of the current use of the land is not to obtain a profit in money, the land is not farm use land. This primary purpose of the land must be ascertained from overt acts. All pertinent facts will be considered to determine if property qualifies as farm use land. Pertinent information may include:

(A) Present and past use of the land.

(B) If the farming operation is conducted by another for the owner, the provisions of the oral or written agreement including the term, area let, consideration, and provisions for termination.

(D) Productivity of the land.

(E) Number of livestock or poultry (by type).

(F) Amount of last harvest of each crop.

(G) Money from products of farm use activity, the products of which come from the specially assessed land.

(H) Uses of the land for other than farming operation.

(I) Ratio of farm or agricultural use as against other uses of the land.

(4)(a) Farm inactivity for one year or less due to illness of the farmer or an immediate family member does not disqualify the property from farm use special assessment or continuation of abatement.

(A) Proof of illness must be provided to the assessor by a written statement from a licensed medical practitioner. The statement must identify the nature of the illness, the onset of the illness, and the extent of its debilitating nature.

(B) The timing of the illness must prevent farming practices.

(b) For meeting the farm income requirements of ORS 308A.071 and 308A.119, the year of farm inactivity due to illness is not counted as one of the five years for income or abatement determination.

(5) Notwithstanding section (3), any part of a farm unit that is employed in or supports a non-farm use does not qualify for special assessment. Examples of non-farm use include, but are not limited to:

(a) Land under retail stores, except for farm stands offering agricultural products for sale as described in ORS 215.213 and 215.283.

(b) Land under processing facilities, except processing facilities described by ORS 215.213 and 215.283.

(c) Land under areas used to encourage the use or enjoyment of agricultural products such as tasting rooms, banquet halls, public gathering areas, or public entertainment.

(d) Land under structures such as communication towers, and improvements that support the structures.

(e) Land under structures used for power generation or transmission such as wind turbines, substations, crane pads, and improvements that support the structures.

(f) Private roads not used primarily to support the farming operation such as those used to access structures listed in subsections (d) and (e).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.380 & 308A.056
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-308A.056, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 17-2008, f. 12-26-08, cert. ef. 1-1-09
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.380-(C)
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-308-1020 Disposal by donation to a local food bank or school

(1) Definitions for this rule

(a) “Local food bank” means any organization located in the state of Oregon, that is a charitable or not-for-profit organization that collects food and distributes it, without charge, to the needy, including children and families, homeless, unemployed, elderly or low income people. For the purposes of ORS 308A.056(1)(g) and this rule, “local food bank” includes regional food banks as defined under OAR 813-220-0005(6).

(b) “School” means a public or private educational institution, or a publicly or privately funded early childhood education program located in the state of Oregon.

(2) For the donation to a local food bank or school of products or by-products raised for human or animal use to constitute a “farm use” under ORS 308A.056, the owner, renter or operator of the land to be qualified for farm use special assessment shall document the donation in writing and shall submit that documentation to the county assessor, if requested.

(a) The documentation required by this subsection shall contain, at a minimum:

(A) The name, address, and phone number of the owner, renter or operator applying for or maintaining the land in special assessment.

(B) The description, date, and quantity of the donation.

(C) The description of the land upon which the product or by product was raised including either the county assessor’s tax lot number or tax account number.

(D) The signature of the director, supervisor, or other appropriate official, whether paid or volunteer, of the local food bank or school receiving the donation.

(E) The name and address of the local food bank or school receiving the donation.

(F) A signed statement by the owner, renter or operator of the land for which special assessment is requested or maintained verifying that the information provided is accurate.

(b) The owner, renter or operator may satisfy the documentation requirements of section (2) by submitting a completed Form 150-101-240 to the county assessor.

(c) If the owner, renter or operator does not produce the documentation described in this subsection in response to a request from the county assessor, then the land may be disqualified from special assessment.

(3) Nothing in ORS 308A.056(1)(g) or this rule shall constitute an exception to the income requirements for nonexclusive farm use zone farmland, as set forth in ORS 308A.071, and the value of donated products or by-products shall not be included in the calculation of either “gross income” under ORS 308A.071(7)(b), or “income from consumed products” under OAR 150-308-1050.

Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.056
REV 18-2020, minor correction filed 09/25/2020, effective 09/25/2020
Renumbered from 150-308A.056(1)(g), REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14

Or. Admin. R. 150-308-1030 Assessment of Farmlands Within Exclusive Farm Use (EFU) Zones

(1)(a) Zoned farm use land means land that is zoned as farm use land pursuant to ORS 215.010 to 215.190.

(b) Real market value is the basis for the assessment of farmland not qualified to be assessed at farm use value. Real market value is defined in ORS 308.205.

(2) Qualification and Disqualification Dates:

(a) To be entitled to farm use assessment, land must be qualified as of January 1 each year. Often, qualifying farm use land is not farmed during the winter months which include the qualifying date of January 1. If land is not employed in farm use on January 1, the assessor may look at the prior year’s usage of the land to determine qualification for January 1.

(b) Farm use disqualifications take effect July 1 following the disqualification.

(3) Appeal on the question of qualification for special assessment as farm use land: An appeal from a decision of the assessor concerning qualification for special assessment as farmland under ORS Ch. 308A is made directly to the Magistrate Division of the Tax Court under 305.275(1) (also see 305.280). It is not made through an appeal to the county Property Value Appeals Board.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.370 & 308A.062
REV 17-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-308A.062, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-308.370, REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
RD 9-1983, f. 12-20-83, cert. ef. 12-31-83
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79
12-31-77
12-75
11-73
9-71
3-70
2-68
1-66
12-63

Or. Admin. R. 150-308-1040 Assessment of Farmlands Outside of Exclusive Farm Use (EFU) Zones

(1)(a) To qualify for assessment at its farm use value, land not within an exclusive farm use zone:

(A) Must be currently employed in a qualifying farm use;

(B) Must have been used for farm use for the two years preceding the current assessment year;

(D) Must have an application filed with the assessor meeting the requirements of ORS 308A.077.

(b) Real market value is the basis for the assessment of farmland not qualified to be specially assessed at farm use value. Real market value is defined in ORS 308.205.

(2) Qualification and Disqualification Dates:

(a) To be entitled to farm use assessment, land must be qualified as of January 1 each year. Most land is not farmed during the winter months including January 1. If land is not employed in farm use on January 1, the assessor may look at the prior year’s usage of the land to determine qualification for January 1.

(b) All farm use disqualification takes effect July 1 following the disqualification.

(3) Effect of lease or option to buy surface rights. If any owner of land outside an EFU zone grants and has outstanding a lease or option to buy surface rights of such land that permits other than farm use of all or a portion of the land, that land subject to such other use is not qualified for special farm use assessment under ORS Ch. 308A. Leases for hunting, fishing, camping or other recreational use or the exploration of geothermal, mineral or other subsurface resources will not disqualify the land if the exploration, use, or possession does not interfere with the farm use of the farmland. The income derived from such leases will not be included for the income test.

(4) Appeal on the question of qualification for special assessment as farm use land: An appeal from a decision of the assessor concerning qualification for special farm use assessment under ORS Ch. 308A is made directly to the Magistrate Division of the Tax Court under 305.275(1) (also see 305.280). It is not made through an appeal to the county Property Value Appeals Board.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.380 & 308A.068
REV 18-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-308A.068, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-308.380-(B), REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 9-1997, f. & cert. ef. 12-31-97
RD 2-1997(Temp), f. & cert. ef. 9-15-97 thru 3-9-98
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-77
3-76
11-73
9-71
3-70
2-68
1-66
12-63

Or. Admin. R. 150-308-1050 Gross Income Requirement

(1) Income From Consumed Products. For purposes of the income requirement for farmland or a farm parcel outside an exclusive farm use zone, gross income includes the value of any crop or livestock used by the owner personally or in the farming operation. The owner must keep records accurately reflecting both the value and the use of the crop or livestock in a manner consistent with generally accepted accounting practices. The value of any crop or livestock used by the owner personally or in the farming operation is the amount of money the product would have been sold for in the normal marketing of the crop or livestock by the taxpayer. However, the value of products consumed, by the owner personally or in the farming operation, must constitute no more than 49 percent of gross income as required under ORS 308A.071.

(2) Adjusted Gross Income From Livestock. In determining gross income from livestock, the purchase cost must be deducted from the gross sales price.

(3) Burden of Proving Income. The burden of proving that property that is not within an exclusive farm use zone meets the gross income requirements of ORS 308A.071 is upon the owner or person claiming special assessment. This burden is met if information establishing sufficient gross income is supplied to the county assessor as provided below. A failure to provide the required income information to the county assessor constitutes grounds for disqualification under 308A.116(1)(c).

(4) Income Information. The following procedures apply if the assessor lacks sufficient information on March 1 to support a determination that land not in an EFU zone qualifies for special farm use assessment.

(a) On or before March 1, the assessor must send notice to the owner or person claiming special assessment of the need to provide income information for property subject to special assessment. The assessor must include an income information questionnaire with the notice. The property owner must use the questionnaire to provide income information to the county assessor. The property owner must provide the income information to the county assessor no later than April 15.

(b) The assessor must send the notice and the questionnaire to the last known address of record of the owner or person claiming special assessment for the subject property. The notice and questionnaire must be in a form approved by the Department of Revenue.

(c) If the information provided to the county assessor is sufficient to determine whether or not the subject property is qualified for special assessment, the assessor must take the appropriate action.

(d) If the information provided to the county assessor is insufficient to make a determination as to the qualification of the subject property for special assessment, or if no information is provided, the assessor must send a notice to the last known address of record for the owner or person claiming special assessment. The notice must be in a form approved by the Department of Revenue and must include:

(A) A statement of the assessor’s intent to disqualify the subject property; and

(B) A statement that within 30 days after the date of the mailing of the notice, the owner or person claiming special assessment may appear and show cause why the property should not be disqualified.

(e) In determining whether the subject property qualifies for special assessment, the assessor must take into consideration information obtained through the income information questionnaire, the show cause hearing and the county assessor’s records.

(f) If property is disqualified from special assessment solely because no income information was provided by April 15, or within the 30 days of assessor’s notice of intent to disqualify, the property owner may file an appeal with the Magistrate Division of the Tax Court.

(A) “Good and sufficient cause” has the meaning given in OAR 150-307-0500. The failure of the county assessor to provide the notice required in subsection (a) of this rule on or before March 1 constitutes good and sufficient cause for the owner’s failure to provide timely income information.

(B) The procedural requirements contained in this rule are in addition to the requirements of ORS 308A.718.

(C) Nothing contained in this rule alters the right of a person claiming special assessment to deferral and abatement of additional tax, pursuant to ORS 308A.119.

(D) Nothing contained in this rule precludes the assessor from continuing special assessment on farmland if the assessor determines that the property meets the qualifications.

(5) The assessor may send a copy of the income information received by the assessor under subsection (3) of this rule to the Department of Revenue.

(6) Examples: Satisfying income requirements:

(a) A ten acre parcel in an area not zoned EFU has never been used for farm purposes. For this parcel to qualify for special farm use assessment, the owner must develop an income history from farm uses of the parcel. The parcel will meet the income requirements of ORS 308A.071(2)(a) if it produces at least $1,000 gross income in each of the last three consecutive years or in any three of the last five consecutive years.

(b) A ten acre parcel was segregated from a larger farm one year ago. The land was not farmed during the year following segregation. In order to qualify for farm use assessment, the parcel must be farmed for two successive years (ORS 308A.068(1)) and meet the income requirement of at least $1,000 in one of the two years (assuming the large farm met the income requirement before the ten acre parcel was segregated).

(c) A four acre parcel in an area not zoned EFU has been farmed continually. The income has never exceeded $300. In order to qualify for special farm use assessment, the parcel must produce at least $650 in gross income per year for any three years during any consecutive five year period.

(d) A twenty two acre parcel in an area not zoned EFU includes a ten acre farm woodlot, four and one-half acres of three year old cherry trees, five acres of pasture, two acres of wasteland and a one-half acre non-farm homesite. The five acres of pasture must have produced at least $650 gross income in one of the last three years (assuming the property met the income requirement in the two years preceding the planting of the cherry trees) to remain qualified for special assessment. The one-half acre non-farm homesite (at market), the immature cherry orchard (see ORS 308A.056(3)(c)), the farm woodlot (see 308A.056(3)(h), and the wasteland (see 308A.074)) are not counted in determining the number of acres to be considered under 308A.071(2)(a). The wasteland in a non-EFU zone does not qualify because it is not currently employed under 308A.056(3), and should not be in the calculation for the income test.

NOTE: In order for the two acres of wasteland to be assessed at its farm use value under ORS 308A.074, and the homesite to be valued under ORS 308A.256, the owners must meet an adjusted gross income test and file an annual application.

(7) The farmland owner or the operator of the farm unit must file the required excise or income tax returns including a Schedule F and, if applicable, a schedule showing rental income or expenses of each farmland owner or the operator of the farm unit.

(a) The assessor may require the farmland owner or farm unit operator provide a copy of the income tax returns and schedules showing farm income. Failure to provide required income information including copies of the required tax returns and schedules is grounds for disqualification.

(b) Copies of income tax returns and schedules of farm income are confidential and must be safeguarded in accordance with OAR 150-192-0500.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.372 & 308A.071
REV 9-2024, amend filed 04/24/2024, effective 05/01/2024
Renumbered from 150-308A.071, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.372
RD 9-1997, f. & cert. ef. 12-31-97
RD 2-1997(Temp), f. & cert. ef. 9-15-97 thru 3-9-98
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-308-1060 Wasteland

“Wasteland” has the same meaning as defined in OAR 150-308-1010.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.074
Renumbered from 150-308A.074, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-308-1070 Acquired Land as Part of Farming Unit

Land not in an exclusive farm use zone (non-EFU) that is acquired by an owner of a qualifying farm unit may be added to the farm unit if:

(1) Newly acquired land is put to a farm use in a timely manner consistent with accepted farming practices. There is no requirement that a previous owner used the land for farming.

(2) The owner, described in ORS 308A.077(2)(b), files an application with the county assessor on or before April 1 preceding the first tax year for which special farm use assessment is requested.

(a) The first year the acquired property may be eligible for special assessment is the calendar year following acquisition.

Example: Non-EFU property acquired February 10, 1999. Calendar year 2000 is the first year after acquisition. Therefore, the first year that this property could receive special assessment is tax year 2000-01 and applications for tax year 2000-01 special farm use assessment are due April 1, 2000.

(b) There is no requirement that the taxpayer seek or receive special farm use assessment for the property for its first eligible tax year.

Example: Non-EFU property acquired February 10, 1999. Although the acquired property was put into farm use immediately after purchase, the owner decided to wait three years before applying for special assessment. For this property to be placed under special assessment for tax year 2003-04, the taxpayer must apply by April 1, 2003.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.374 & 308A.080
Renumbered from 150-308A.080, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.374
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-308-1080 Valuation of Certain Agricultural Land to Reflect Value for Farm Use Only

(1) Certain farm properties are set aside under a government payment program such as the federally administered Conservation Reserve Program (CRP). The payments received for farmlands placed in these conservation programs must not be used as income for computing farm use values. Income data from similar lands that are not included in the conservation programs should be used instead to compute farm use values. New farm use values must be computed each year as though the land in the conservation programs was being used for a farm use.

NOTE: Acreage that is not in an exclusive farm use zone, and is under a farm-related government conservation program, is not subject to the gross income requirements.

(2) Values for farm use are to be determined on the basis of highest and best agriculture use, regardless of how the land is currently used and employed in agriculture.

(3) If the owner of land assessed as farm use land contends the assessor's farm use value is not correct, the value may be appealed to the county Property Value Appeals Board as provided by ORS 309.100. An appeal from an adverse decision of the board may be filed with the Magistrate Division of the Tax Court as provided by 305.275(2) (also see 305.280).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.345 & 308A.092
REV 19-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-308A.092, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.345
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-308-1090 Calculation of MSAV When SAV Soil Classification is Changed

(1) Definitions:

(a) “MSAV” means maximum assessed value for property subject to special assessment (maximum specially assessed value).

(b) “SAV” means specially assessed value.

(c) “MSAV tables” are the tables that provide a maximum assessed value per acre equal to 103% of the maximum assessed value per acre from the previous assessment year. The county assessor is required to develop these tables for each assessment year under ORS 308A.107(3)(b).

(2) When an SAV soil classification as provided by the assessor in each county is changed, the MSAV must use corresponding soil classification values from the MSAV Table if:

(a) There is a physical change such as, but not limited to:

(A) Irrigation is added.

(B) Irrigation is removed.

(D) Soil is depleted indefinitely due to extended over use of crop.

(E) Soil is enhanced due to extensive additives to the soil.

(F) Trees are removed so that cultivation can take place and previous classification was based in part on the inability to cultivate.

(G) Rocks and other debris are removed to enhance cultivation.

(H) Site improvements are added including but not limited to drainage system, fill, contouring, leveling, and diking.

(b) There are specific non-physical changes such as:

(A) Comprehensive soil reclassification due to a new published government agency soil survey.

(B) Land class acreage adjustments to implement a GIS mapping system.

(C) The assessor reasonably determines that a property’s land is no longer in the same land class that it was in during the prior assessment year. The assessor’s determination that the land is no longer in the same land class cannot be arbitrary, but must be based on preexisting criteria for the respective land classes. The preexisting criteria for the respective land classes must be clear, objective, consistently applied and uniform within the county. Land classification changes must be the result of the reasonable application of the preexisting criteria to the actual condition of the land.

(3) The assessor must calculate the corresponding MSAV for new SAV soil classes using the following procedure:

(a) Divide the average MSAV for all soil types by the average SAV for all soil types to derive a changed property ratio.

(b) Multiply the SAV value of the new soil type by the changed property ratio to obtain the MSAV for the new soil class.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.370 & 308A.107
Renumbered from 150-308A.107, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.370(5)
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-308-1100 Disqualification of Exclusive Farm Use Farmland; Site Inspection and Notation

(1)(a) Before Exclusive Farm Use (EFU) land is disqualified from farm use assessment due to discovery by the assessor that the land is no longer being devoted to a farm use, the assessor must:

(A) Make a reasonable effort to contact the owner, owner’s agent or person using the land;

(B) Make a site inspection of the property; and

(b) The assessor must make a record of the inspection that includes when the inspection was made, who made the inspection, copy of contact letter(s) or record of other means of contact, information from the person contacted, and notations of the conditions found. Notations about the conditions found may include the farm uses being made of the property, areas having no apparent farm use, vegetation on the property and its condition, whether the property is fenced and the fence’s condition, and other conditions of the property that indicate a farm use or lack of farm use. The record of inspection must be retained in the assessor’s office for at least three years.

(2) If property disqualification is effective after June 30, the EFU property will remain valued for farm use on the assessment and tax roll until the following July 1.

(a) Disqualification for non-farm use occurs as of the January 1 assessment date and is effective as of June 30 if the disqualification notice is mailed on or before August 14.

(b) If EFU property disqualification is effective on or before June 30 for any reason other than for non-farm use, to be valid the notice must be mailed within 30 days after the date that land is disqualified.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.397 & 308A.113
Renumbered from 150-308A.113, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.397
RD 9-1997, f. & cert. ef. 12-31-97
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-308-1110 Disqualification of Non-Exclusive Farm Use (Non-EFU) Farmland; Site Inspection and Notation

(1)(a) Before non-EFU land is disqualified from farm use assessment due to discovery by the assessor that the land is no longer being devoted to a farm use, the assessor must;

(A) Make a reasonable effort to contact the owner, owner’s agent or person using the land;

(B) Make a site inspection of the property; and

(c) If the inspection indicates a farm activity being conducted which may not provide sufficient income to satisfy the income test, the assessor must demand that the landowner complete an income questionnaire.

(2) If property disqualification is effective after June 30, the non-EFU property will remain valued for farm use on the assessment and tax roll until the following July 1.

(a) Disqualification for non-farm use occurs as of the January 1 assessment date and is effective as of June 30 if the disqualification notice is mailed on or before August 14.

(b) If non-EFU property disqualification is effective on or before June 30 for any reason other than for non-farm use, to be valid the notice must be mailed within 30 days after the date that land is disqualified.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.390 & 308A.116
Renumbered from 150-308A.116, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-308.390, REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 9-1997, f. & cert. ef. 12-31-97
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79
12/31/77
11/73
9/71
3/70
2/68
1/66
8/64

Or. Admin. R. 150-308-1120 Definition of Specially Assessed Homesites

(1) “Homesite” as defined in ORS 308A.250(3) includes site developments as defined in OAR 150-307-0010 and amenities associated with the raw, undeveloped land such as topography that affords the site a particular view, river frontage, property access, and utility access.

(2) A forest homesite qualified under ORS 308A.253(1) must be located on a parcel of land with greater than 10 acres of specially assessed forestland, that is zoned exclusive farm use (EFU), forest use, or farm and forest use.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.229 & 308A.250
Renumbered from 150-308A.250, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.229
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-308-1130 Application for Specially Assessed Homesite

(1) An annual application must be filed with the assessor on or before April 15 of each year to receive the special assessment on a qualified homesite associated with a farm lot or parcel in a non-exclusive farm use (non-EFU) zone.

(2) An application is not required to receive the special assessment on a qualified homesite situated on:

(a) A farm use lot or parcel in an exclusive farm use (EFU) zone;

(b) A forestland lot or parcel in an EFU, forest use, or mixed farm and forest use zone and classified by the assessor as highest and best use forestland, designated forestland, or small tract forestland (STF); or

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.253
Renumbered from 150-308A.253, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-308-1140 Qualified Specially Assessed Homesite Valuation

(1) Definitions:

(a) “Parcel” is a quantity of land that is capable of being described in a single description by a closed traverse, or as one of a number of subsections or sections in a township(s), or as lots, blocks, or tracts in a subdivision. A “parcel” may consist of one or more tax lots.

(b) “Contiguous” means having a common boundary to some extent greater than a point. Parcels are contiguous if separated by public or county roads, state highways, or non-navigable streams or rivers. Parcels are not contiguous if they are separated by interstate freeways, or navigable streams or rivers, except where there is direct connecting access, such as an underpass, for property separated by an interstate freeway.

(d) “Land Improvements” is synonymous with “site developments.”

(e) “Same Ownership” — to be considered the “same ownership,” separate land accounts (tax lots) must have a common name in the property title. For example, a parcel owned by one person in his or her name is under the same ownership as a parcel owned jointly by spouses in a marriage. Properties do not have the “same ownership” if one parcel is owned by spouses in a marriage and the other parcel is owned by a corporation even though the corporation is owned by the spouses.

(f) “MSAV” means maximum assessed value for property subject to special assessment (maximum specially assessed value).

(2) Land comprising homesites for dwellings being used in conjunction with farm use in EFU zones, qualifying homesites outside the EFU zones, and qualified forest homesites must be valued at the special value provided by ORS 308A.256. Land comprising a non-qualifying homesite must be assessed at its real market value as defined in 308.205 pursuant to 308A.259.

(3) The method for determining the value for a qualified homesite is the same whether the homesite is located within an exclusive farm use (EFU) zone, an area not zoned for exclusive farm use (non-EFU), or for forest homesites as defined in ORS 308A.253(1).

(a) The first step in valuing a qualified homesite is to determine the total number of acres of the “parcel” and contiguous acres under the same ownership.

(b) The second step is to determine the bare land average per acre real market value (RMV) of the parcel. To do this:

(A) First, determine the total bare land RMV (including riverfront, view, etc.) for the parcel and contiguous acres under the same ownership on which the homesite is located.

(B) Second, divide the total bare land RMV of the parcel and contiguous acres under the same ownership by the total number of acres in the parcel and contiguous acres under the same ownership.

(c) The third step is to determine the specially assessed value (SAV) of the “land improvements.” The SAV of land improvements are to be valued at $4,000, or the depreciated replacement cost of the items that make up the land improvements, whichever is less.

(d) The average RMV of one acre of the land plus the land improvement SAV equals the total “homesite” SAV. However, the land improvement value must be carried as a separate item on the land record as specified in OAR 150-307-0010.

(4) Calculation of homesite MSAV.

(a) For the 1997–98 tax year, the MSAV on homesites qualified for the 1995–96 tax year and before equals the homesite’s SAV for the 1995–96 tax year reduced by 10 percent.

(b) For the 1997–98 and subsequent tax years, the MSAV of any newly qualified homesite equals the product of the residential rural property class 4-X-X changed property ratio multiplied by the farm or forest homesite SAV. The MSAV for a homesite first qualified for the 1996–97 tax year is calculated under this subsection for the 1997–98 tax year.

(c) Once the MSAV of a homesite has been established by subsection (a) or (b) above, the MSAV increases 3% each year thereafter.

(5) The assessed value of a qualified farm or forest homesite equals the lesser of the homesite’s SAV or the homesite’s MSAV.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.377 & 308A.256
REV 4-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-308A.256, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.377
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-308-1150 Ratio Calculation for Open Space Lands

(1) An open space ratio must be applied to the open space special assessed value of newly designated open space lands to determine a maximum specially assessed value. The Department of Revenue will annually calculate a statewide ratio for open space lands.

(a) Counties with 10 or more open space accounts must develop and apply their own ratio.

(b) Counties having less than 10 open space accounts must use the statewide ratio.

(2) The ratio is calculated by dividing:

(a) The total current year maximum specially assessed value of land for all open space accounts (prior year’s maximum specially assessed value multiplied by 103 percent), by

(b) The total current year specially assessed value of land for the same open space accounts.

(3) Only land that is specially assessed as open space may be used in the open space ratio calculation.

(4) Property that may not be used in developing the open space ratio calculation includes:

(a) Land that is valued under another special assessment program;

(b) Land that does not qualify for open space assessment;

(d) New open space accounts; and

(e) Disqualified accounts.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.315
Renumbered from 150-308A.315(4), REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02, Renumbered from 150-308.765
RD 9-1997, f. & cert. ef. 12-31-97

Or. Admin. R. 150-308-1500 Additional Tax Calculation and When to Impose Additional Tax

(1) For the purpose of this rule “lookback period” means the period established by ORS 308A.703(3).

(2) Effective August 15, 2018, to calculate the maximum assessed value (MAV) for the computation of the additional tax, multiply the real market value (RMV) of the special assessed land being disqualified for the earliest year in the lookback period by that year’s appropriate change property ratio (CPR) for the classification of the disqualified property as if it would not have been specially assessed. For each subsequent year, calculate the MAV as if the property had not been specially assessed per ORS 308.146.

(3) Under certain circumstances, farm use special assessment may be disqualified after July 1 and advance collection of additional taxes made. Disqualifications made under these circumstances are for the next tax year, therefore, the property will remain at its value for farm use on the tax roll until the following July 1. The collection of the additional tax is provided for in section (4). The specific circumstances for this type of disqualification are as follows:

(a) For non-exclusive farm use (Non-EFU) zoned farmland:

(A) Subdivision plats under Chapter 92;

(B) At the owner’s request.

(b) For exclusive farm use (EFU) zoned farmland, a non-farm dwelling under ORS 215.236.

(4)(a) Collection of Additional Tax: Advance collections of the additional tax made under the provisions of ORS 311.370 are entitled to the discount allowed by ORS 311.505 if the assessor can compute the exact amount of the additional tax at the time the taxes are paid. If the assessor is unable to determine the exact amount due, the discount is allowed when final settlement is made at the time taxes are regularly due, as provided by ORS 311.370.

(b) Any additional tax entered on the tax roll becomes part of the tax extended against the property and is collected in the same manner as other real property taxes. ORS 311.505 governs whether a discount is allowed or interest is charged.

(5) Distribution of Additional Tax: The total amount of the additional tax added to the tax roll must be apportioned between the taxing districts in which the property is located.

(a) The apportionment must be based on the ratio that the billing tax rate of each district bears to the total billing tax rates on the property, as shown on the tax roll on which the additional tax is entered.

(b) In preparing the certificate of the tax roll under ORS 311.105, the assessor must add the additional tax due to each taxing district to the total amount to be raised for each district under ORS 311.105. The amount of additional tax due to each taxing district must be included in the percentage distribution schedule computed by the tax collector under ORS 311.390.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.703
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-308A.703, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-308-1510 No Additional Tax; Notation Remains

(1) In any case where additional tax is deferred under ORS 308A.706, the assessor must continue to enter the notation “potential additional tax liability” on the assessment and tax roll.

(2)(a) When specially assessed farmland situated within an exclusive farm use (EFU) zone is transferred to a government ownership making it exempt, the assessor must continue to enter the notation “potential additional tax liability” on the assessment and tax roll.

(b) If the use of the land changes to a use inconsistent with a purpose to returning the land to farm use, the additional tax will not be imposed but will remain a lien since the government owner is exempt from taxation.

(3) If the disqualification results from the failure of the land to meet the gross income requirement, the additional taxes will not be imposed as long as the land continues to be used as farmland.

(4) If disqualification results solely because the land is no longer being devoted to a farm use and if the land is not being used for another use, the additional tax will not be imposed and the assessor must continue to enter the notation “potential additional tax liability” on the assessment and tax roll.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.706
Renumbered from 150-308A.706, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-308-1520 Deferred Additional Tax (ORS 308A.706); When to Collect

(1)(a) When a non-exempt owner acquires exclusive farm use (EFU) farmland that was exempt because it was government owned, any amount designated by the county assessor as potential additional taxes must be added to the next general tax roll by the tax collector if the land is used for purposes inconsistent with returning the land to farm use.

(b) Non-EFU farmland liens are collected regardless of use when a non-exempt owner acquires farmland that was disqualified under ORS 308A.116(1)(b) and had liens attached under 308A.703(5).

(2) For additional information on collection and distribution of additional tax, see OAR 150-308-1500.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308A.712
Renumbered from 150-308A.712, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-308-1530 Disqualification Notification Procedures

(1) Notice of Disqualification:

(a) A notation must be made on the assessment and tax roll on or before June 30 to indicate that a disqualification of farmland, forestland, or a homesite as listed in ORS 308A.718 has taken place. The assessor must mail notice to the owner or person claiming special assessment within 30 days after the date that land is disqualified.

(b) If the disqualification occurs because the land is no longer in farm or forest use, as described under ORS 308A.113(3) (Exclusive Farm Use), 308A.116(6) (Non-Exclusive Farm Use), 321.366 (Western Oregon forestland), or 321.845 (Eastern Oregon forestland), the disqualification is effective only if the notice of disqualification is mailed on or before August 14.

(2) The notice to the person claiming special assessment must state:

(a) That the subject property has been disqualified from special assessment;

(b) That the property will be assessed under ORS 308.156;

(c) The amount of the additional tax liability that will be imposed or if the land is not used for another use the amount of the potential additional tax liability (ORS 308A.706(1));

(d) Provisions and timing for change of type of special assessment under ORS 308A.724; and

(e) Appeal rights.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 308.399 & 308A.718
Renumbered from 150-308A.718, REV 25-2016, f. 8-12-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-308.399
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84

Division 309 EQUALIZATION OF PROPERTY TAXES

Or. Admin. R. 150-309-0010 Training for Property Value Appeals Board (PVAB) Members

(1) Each person appointed as a member of a PVAB pool must complete training approved by the department in the year they are first appointed and at least every other year thereafter. If there is a break in service for any member of any pool, the first year of the new appointment is considered the same as their original appointment year. Training must be specific to PVAB.

(2) PVAB pool members that have completed training approved by the department are eligible to sit on a board. However, if an untrained member is required to sit on a board in order to establish a quorum, the member must read the current PVAB Manual prior to sitting on a board and sign an affidavit stating they have done so. The affidavit is to be made a part of the record of the board and a copy sent to the department.

(3) The department may approve various types of training for board members based upon educational effectiveness, cost and accessibility to members. Approved training may include but not be limited to the following: in‐service training sponsored by the department; individual workbook with examination; EdNET; or interactive computer‐based multimedia training.

(4) Notwithstanding Section (1) of this rule, for years in which no petitions are filed, board members are not subject to PVAB training requirements for that year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.022
REV 20-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.022(1), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2002, f. & cert. ef. 12-31-02
RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-309-0020 Record of Property Value Appeals Board Meetings

An administrative record of the proceedings of the property value appeals board must be kept by the county clerk.

(1) The record must be kept in a manner that meets the retention requirements of OAR chapter 166.

(a) The record of board proceedings may be either a written summary or audio recording.

(b) The records must be organized in a manner that facilitates retrieval of a particular proceeding such as by date of meeting, name of petitioner, or assigned number.

(2) The administrative record of the board must include, but is not limited to:

(a) A copy of the order appointing board members to the pools described in ORS 309.067 or a copy of the minutes of the meeting of the county governing body during which the pools were appointed;

(b) Oaths of office of members;

(d) Designation of legal counsel, if appropriate;

(e) Affidavit of publication of notice of session and copies of all published notices;

(f) Record of appointment of board appraiser, if applicable;

(g) Daily or weekly agendas; and

(h) Summary of actions required by OAR 150‐309‐0260.

(3) The individual record of each meeting held during which the board makes a decision or obtains material that will be used in making a decision, must include, but is not limited to:

(a) The date of the meeting;

(b) A list of those present, including all members and any person who presents evidence;

(d) All material presented as evidence;

(e) All motions and who made them;

(f) Results of all votes and how each member voted;

(g) Petitions, marked with date received and assigned number;

(h) Authorizations to represent or powers of attorney;

(i) Defective petition notices, if applicable;

(j) Hearing notices, if applicable;

(k) The board's order, which must contain the original or facsimile signatures, including orders issued pursuant to stipulations filed at or after the time the board convenes;

(L) Stipulations filed at or after the time the board convenes;

(m) Stipulations filed with the clerk of the board under ORS 308.242(3); and

(n) Requests to withdraw a petition.

[Publications: The publication referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.024
REV 21-2024, minor correction filed 06/25/2024, effective 06/25/2024
REV 19-2020, minor correction filed 09/25/2020, effective 09/25/2020
Renumbered from 150-309.024, REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
Renumbered from OAR 150-309.012(5), RD 9-1997, f. & cert. ef. 12-31-02
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-309-0030 Limitations on Increase in Value by Property Value Appeals Board

For purposes of this rule;

(a) “Property tax account” means the administrative division of property used by the assessor for listing the property on the assessment roll.

(b) “Unit of property” is as defined within ORS 310.160(1).

(2) The property value appeals board (PVAB) lacks jurisdiction under ORS 309.026 to increase the total real market value (RMV), the total specially assessed value (SAV), the maximum assessed value (MAV), or assessed value (AV) of property because the statute specifies that PVAB may only hear petitions to reduce the value of property.

(3) When PVAB receives a petition requesting an increase in the value of property, the board must act on the petition in the following manner:

(a) When PVAB receives a petition requesting an increase or resulting in an increase in the total RMV, SAV, MAV or AV of property in a property tax account or accounts constituting a unit of property, the board must dismiss the petition for lack of jurisdiction.

(b) When PVAB receives a petition requesting an increase in the RMV of one or more components of a property tax account or accounts constituting a unit of property, the board may increase that component provided the change does not result in an increase to the total RMV, SAV, MAV, or AV of the property in the tax account, or unit of property.

(4) When PVAB receives a petition requesting a reduction in the value of property, the board must act on the petition in the following manner:

(a) When PVAB receives a petition requesting a reduction in total RMV that does not specify a reduction in value of one or more components of a property tax account or accounts that constitute a unit of property, the board may increase or decrease any or all components, provided the net result sustains or reduces the total RMV, SAV, MAV or AV of the property in the property tax account or unit of property.

(b) When PVAB receives a petition requesting a reduction in the RMV of one or more components of a property tax account or accounts that constitute a unit of property and no change to other component(s), or the petition is silent as to the requested value of the other components, at the request of the Assessor’s Office, the board may act on any or all components of the tax account or unit of property, or both.

(5) This rule is effective January 1, 2016.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.026
REV 22-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.026-(A), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-309.026(2)-(A), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 6-2009, f. & cert. ef. 7-31-09
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
Renumbered from 150-309.026(2), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92, Renumbered from 150-309.026(2)(e)
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-309-0040 PVAB Lack of Jurisdiction for Designated Utilities and Companies Assessed by the Department

The property value appeals board (PVAB) must dismiss, for lack of jurisdiction, petitions for the reduction of the assessed, specially assessed, real market, and maximum assessed value of designated utilities and companies assessed by the Department of Revenue under ORS 308.505 to 308.665 and 308.805 to 308.820, commonly referred to as centrally assessed property. The process for appealing the value of centrally assessed property is described in 308.595(3). The notification requirements of 309.100(5) do not apply to dismissal for lack of jurisdiction identified in this rule.

History

Statutory/Other Authority: ORS 305.100 & 306.115
Statutes/Other Implemented: ORS 309.026
REV 23-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.026(2)-(B), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2005, f. 6-27-05, cert. ef 6-30-05

Or. Admin. R. 150-309-0050 County Residents Appointed to Property Value Appeals Board (PVAB) Pools

As used in ORS 309.020(5) and 309.067(1)(b), a county resident is not:

(1) A member of the county governing body;

(2) A member of the governing body of any taxing district within the county;

(3) An elected official of the county;

(4) A person employed or hired by the county or any taxing district within the county;

(5) A former county assessor, or any appointee acting in the place of the assessor, that held the office or appointed position during the assessment or tax year subject to appeal to PVAB; or

(6) A person previously employed in or hired by the office of the assessor during the assessment or tax year subject to appeal to PVAB

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.067
REV 24-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.067(1), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-309.067(1)(b), REV 17-2008, f. 12-26-08, cert. ef. 1-1-09
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94, Renumbered from 150-309.010(1)-(d)
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-309-0060 Records Included in Journal of Governing Body

The following records from sessions of the property value appeals board shall be made a part of the journal of the county governing body:

(1) The date the members were appointed;

(2) The positions to which the members were appointed;

(3) A record of the date the board convened and the date the board adjourned.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.072
REV 25-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.072, REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-309-0070 Filing Petitions With The Property Value Appeals Board (PVAB)

(1) Only the county clerk or deputy clerk, acting as the clerk of PVAB, has authority to accept petitions to PVAB. No other county office can accept petitions.

(2) Petitions received prior to the filing dates must be returned to petitioner together with a notice of the proper filing dates. Petitions cannot be filed and clerks cannot accept petitions prior to the filing dates specified in ORS 309.100(2).

(3) Petitions to the property value appeals board filed under ORS 309.100 and transmitted electronically by facsimile (FAX) will be accepted as valid petitions to the board. If the FAX is unreadable with regard to any information required under OAR 150‐309‐0090, the petition is deficient under 150‐309‐0100.

(4) A faxed petition will be considered timely filed if it is received in the office of the county clerk by midnight of the filing deadline as evidenced by the electronic acknowledgment of receipt produced by the county’s FAX machine.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.100
REV 26-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100(2)-(A), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-309.100-(A), REV 10-2002, f. & cert. ef. 12-31-02
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 6-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-309-0080 Withdrawing Petitions Filed with a Property Value Appeals Board

(1) For purposes of this rule, ‘petitioner’ and ‘representative’ have the meaning given in OAR 150‐309‐ 0110.

(2) A petition filed with a property value appeals board may be withdrawn as described below for any reason prior to the time the board issues the order for the petition. A request for withdrawal must be in writing and filed with the clerk of the board.

(3) A petition signed by a petitioner may be withdrawn by:

(a) The petitioner; or

(b) A representative, if the representative provides written authorization signed by the petitioner after the date the petition was signed.

(4) A petition signed by a representative may be withdrawn by:

(a) The petitioner;

(b) The representative who signed the petition; or

(c) Another person representing the petitioner if that representative provides written authorization signed by the petitioner after the date the petition was signed by the original representative.

(5) The board must issue an order of dismissal for each petition for which a request for withdrawal has been submitted unless a stipulation has been filed under ORS 308.242(3) prior to the time the board convenes.

(6) The clerk of the board must keep the request for withdrawal and the board's order in the administrative record of the board described in OAR 150‐309‐0020.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.100
REV 27-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100(2)-(B), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
Renumbered from 150-309.100(1), REV 10-2002, f. & cert. ef. 12-31-02
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-309-0090 Contents of Property Value Appeals Board (PVAB) Petitions

(1) For purposes of this rule, “petitioner” is used as defined in OAR 150‐309‐0110.

(2) The purpose of a petition is to inform PVAB and the assessor of the nature of the claim for relief. For this reason, petitions must include the following information:

(a) Petitioner’s name and address.

(b) Facts on which the appeal is based.

(d) The value on the current tax roll that is being appealed. If a copy of the tax statement is attached, the value being appealed need not be included on the petition.

(e) The assessor’s account number for the property. The assessor’s account number may be a unique identification number or a map and tax lot number. If a copy of the tax statement is attached, the account number need not be included on the petition.

(f) For personal property, a list of the individual items, or categories and schedules that identifies the property being appealed and the values requested.

(g) The name of petitioner’s authorized representative (if applicable).

(h) The mailing address of the petitioner or the petitioner’s authorized representative where the hearing notice and order are to be mailed.

(i) Notation of whether the petitioner or petitioner’s authorized representative wishes to be present at the hearing.

(j) A written declaration that the contents of the petition are true and made subject to the statutory penalties for false swearing.

(k) The signature of petitioner or petitioner’s authorized representative.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.100
REV 28-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100(3)-(A), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-309.100, REV 10-2002, f. & cert. ef. 12-31-02
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92, Renumbered from 150-309.100(3)
RD 2-1992, f. 5-28-92, cert. ef. 6-1-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-309.100(2) to 150-309.100(3)
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-309-0100 Property Value Appeals Board (PVAB) Defective and Amended Petition Process

For purposes of this rule, "petitioner" is used as defined in OAR 150‐309‐0110.

(1) The clerk of PVAB will review the filed petitions for compliance with OAR 150‐309‐0090.

(2) If the petition is defective, the clerk will provide written notice to the petitioner unless a representative is named on the petition. If a representative is named on the petition, the clerk will provide written notice to the petitioner's representative. The notice may be personally delivered or mailed to the mailing address on the petition. If the petitioner's representative has not provided a mailing address and the notice cannot be personally delivered, the clerk will provide notice of the defective petition to the petitioner.

(3) The notice must include the following information:

(a) The nature of the defect,

(b) The time allowed by section (4) or section (6) of this rule to correct the defect, and

(c) A statement that failure to correct the defect within the time allowed will result in dismissal of the appeal without further notice.

(4) If the board clerk provides notice of a defective petition by mailing or personal delivery more than 20 days before the last day of the board session described in ORS 309.026, the petitioner or petitioner's representative has 20 days from the date the notice of defective petition was mailed or personally delivered, or until the last day for filing a petition with PVAB, whichever is later, to correct the defect. Time is computed from the first day following the date the written notice was mailed or personally delivered and includes the last day unless the last day falls on a legal holiday, Saturday, or Sunday. The time is then extended to the next working day. Corrected petitions may be faxed to the county clerk and will be considered timely filed under the guidelines listed in Section (4) of OAR 150‐ 309‐0070.

(5) If the board clerk provides notice of a defective petition by mailing or personal delivery within 20 days of the last day of the board session described in ORS 309.026, the board clerk may give the notice described in section (3) of this rule by any practical means such as telephone, fax, or letter. In this circumstance, the petitioner or petitioner's representative has until 3:00 p.m. of the last day of the board session to file an amended petition correcting the defect. However, if the petitioner or petitioner's representative appears at the hearing, all corrections must be made at that time.

(6) The board must dismiss the petition as defective if the petitioner or petitioner's representative does not correct the petition within the time periods prescribed in Sections (4) and (6) of this rule.

(7) In addition to amending a petition to comply with OAR 150‐309‐0090 under (4) above, any petition may be amended up to and including the time of the hearing for the following reasons:

(a) To add or delete land or improvements that are components of the account originally appealed.

(b) To add a separate account that together with the original account appealed creates a "parcel" within the meaning of OAR 150‐308‐1140. A petition may not be amended to include a separate account that is not part of an identified parcel.

(d) To designate or change an authorized representative.

(e) To change the value requested.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.100
REV 29-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100(3)-(B), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 6-2003, f. & cert. ef. 12-31-03
Renumbered from 150-309.100(1)-(A), REV 10-2002, f. & cert. ef. 12-31-02
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-309-0110 Those Authorized to Sign Petitions to the Property Value Appeals Board (PVAB)

(1) For purposes of appeals filed with PVAB,

(a) “Petitioner” means an owner of the property or person with an interest in the property that obligates the person to pay taxes imposed on the property.

(b) “Representative” means a person described in section (4) or (5) of this rule.

(2) If the petitioner is a business or other legal entity, a person who can legally bind the business or other legal entity may sign the petition. For example:

(a) For a corporation: officers such as president, vice‐president, secretary, treasurer, CEO, or managing officer.

(b) For a limited liability company (LLC): a member or the manager of an LLC.

(d) For an association: the president or managing officer.

(e) For a partnership: a general partner.

(f) For a sole proprietorship: the owner.

(g) For a trust: a trustee, managing member, or managing agent.

(h) For any business entity: an employee regularly employed in the tax matters of the business.

(3) If the petitioner is a person who holds an interest in the property that obligates the person to pay the taxes imposed on the property, proof of the obligation must accompany the petition to the board. An interest that obligates the person to pay the taxes:

(a) Includes a contract, lease, or other intervening instrumentality; but,

(b) Does not include mortgage agreements in which the mortgagee (the company that holds the mortgage) agrees to pay the taxes.

(4) An attorney at law authorized to practice in Oregon may represent a petitioner. Written authorization to represent is not required. The attorney’s assigned Oregon State Bar Association number must be included on the petition.

(5) The following persons may sign a petition and act as the petitioner’s representative before PVAB if they have written authorization from the petitioner or proper court appointment. The petition must be accompanied by a power of attorney, court appointment, or other signed authorization that specifically grants that person the authority to represent the petitioner in tax matters.

(a) Any relative of an owner of the property. For purposes of this rule, the term "relative" means any of the following:

(A) A spouse;

(B) A son, grandson, daughter, granddaughter, stepson or stepdaughter;

(D) A father, mother, stepfather, stepmother, or grandparent;

(E) A nephew or niece; or

(F) A son‐in‐law, daughter‐in‐law, father‐in‐law or mother‐in‐law.

(b) A person duly qualified to practice as a certified public accountant or public accountant in the State of Oregon. The accountant’s certificate or license number and state of issuance must be included on the petition.

(d) A real estate broker or principal real estate broker licensed under ORS 696.022.

(e) A state certified appraiser or state‐licensed appraiser licensed under ORS 674.310 or an appraiser registered under ORS 308.010.

(f) The lessee of the property.

(g) A person who holds a general power of attorney signed by an owner of the property. The person filing the petition must provide a copy of the general power of attorney with the petition.

(6) A board must issue a formal order dismissing any petition it receives that is not signed by a person authorized under ORS 309.100 or this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.100
REV 7-2025, amend filed 09/30/2025, effective 10/01/2025
REV 30-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100(3)-(C), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 6-2003, f. & cert. ef. 12-31-03
Renumbered from 150-309.100(2)-(C), REV 10-2002, f. & cert. ef. 12-31-02
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98
RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 2-1992, f. 5-28-92, cert. ef. 6-1-92
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
Renumbered from 150-309.100(2)(c), RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-309-0120 PVAB Hearing Notice Mailed to Representative

If a person listed under ORS 309.100(4)(a) is authorized to represent a petitioner at a property value appeals board hearing and the representative has requested to be present at the hearing, the PVAB clerk must mail or personally deliver the hearing notice to the representative. If the representative has not provided a mailing address and the notice cannot be personally delivered, the clerk will provide notice of the hearing to the petitioner.

History

Statutory/Other Authority: ORS 305.100 & 306.115
Statutes/Other Implemented: ORS 309.100
REV 31-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100(5), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-309-0130 Definition of Person Who Holds an Interest in the Property and Procedures for Transfers of Ownership or Interest

This rule supplements the definition of “petitioner” found in OAR 150‐309‐0110.

(1) The petitioner in an appeal to the property value appeals board (PVAB) under ORS 309.100 must possess or acquire legal standing to appeal during the petition filing period. The petition filing period begins the date following the date the tax statements are mailed for the current tax year and ends December 31 or the last day for filing a petition under ORS 305.820.

(2) For purposes of appealing to PVAB, a person who holds an interest in the property as described in subsection (3) of this rule, that obligates the person to pay the taxes imposed on the property shall be defined as a person or entity that:

(a) Holds an interest in the property that obligates the person or entity to pay all or a portion of the taxes imposed on the property for the current tax year at the time the petition is filed; or

(b) Has held an interest in the property that obligated the person or entity to pay all or a portion of the taxes imposed on the property for the current tax year after July 1 but prior to the time the petition is filed; or

(c) Will hold an interest in the property by the last day for filing a petition with PVAB that will obligate the person or entity to pay all or a portion of the taxes imposed on the property for the current tax year.

(3) Standing to appeal to PVAB as a person who holds an interest other than an ownership interest must be established through an intervening instrumentality such as a contract or lease that proves the person or entity is obligated to pay all or a portion of the taxes imposed on the property for the current tax year. Escrow instructions signed by a seller in a transaction that is consummated during the period from July 1 through the last day for filing a petition with PVAB may also be used to establish such an interest.

(4) When an ownership or other interest is transferred on or after July 1 but prior to the end of the petition filing period or a question arises regarding ownership or the existence of a present obligation to pay taxes, PVAB must determine whether the petitioner has standing to appeal. The following examples are intended to give guidance to the clerk for purposes of determining whether a Notice of Defective Petition should be sent under OAR 150‐309‐0100 and to the board in its final determination regarding the standing of the petitioner:

(5) Lenders that hold an interest in property as security against a loan generally lack standing to appeal to PVAB. See OAR 150‐309‐0110 subsection (3)(b). However, in the event of a default or foreclosure proceeding, the lender may acquire standing if specific language in the contract allows or requires the lender to assume the tax obligation or through actual assumption of ownership prior to the deadline for filing a petition.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.100
REV 32-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.100-(D), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10

Or. Admin. R. 150-309-0140 Property Value Appeals Board (PVAB) Procedures When Roll Changed after Petition is Filed

(1) If the assessor reduces the value of property under ORS 308.242(2) after a petition has been filed with PVAB, but prior to January 1 of the tax year, or under ORS 311.205, prior to the time the board convenes, and in neither case is a stipulation filed with the board prior to the time the board convenes, the board will act on the petition in the following manner:

(a) The board will schedule a hearing and notify the petitioner of the time and place the board will meet to resolve the petition.

(b) If the value requested in the petition is higher than or equal to the adjusted value, the board must issue an order dismissing the petition.

(c) If the value requested in the petition is lower than the adjusted value, the board must review the adjusted value and issue an order sustaining or correcting the adjusted value.

(2) Not withstanding (1)(b) of this rule, the board will issue an order to sustain or reduce the adjusted value if the petitioner amends the value requested pursuant to section 5 of OAR 150‐309‐0100 prior to or during the board hearing.

(3) This rule is effective January 1, 2016.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.110
REV 33-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.110-(A), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 4-2014, f. & cert. ef. 8-11-14
Renumbered from 150-309.110(1)-(E), REV 17-2008, f. 12-26-08, cert. ef. 1-1-09
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-309-0150 Contents of Board Order for Property not Specially Assessed

(1) Orders issued by the property value appeals board for property that is not specially assessed must contain the following information when the petitioner has appealed the real market value of the property:

(a) The real market value of each component (land, improvements, manufactured structure) and the total real market value of the property on the current tax roll.

(b) The real market value of each component (land, improvements, manufactured structure) and the total real market value of the property as found by the board.

(d) The real market value of the exception as found by the board, if applicable.

(e) The total maximum assessed value of the property on the current tax roll.

(f) The total maximum assessed value as found by the board.

(g) The total assessed value on the current tax roll.

(h) The total assessed value as found by the board.

(2) Orders issued by the property value appeals board for property that is not specially assessed must contain the following information when the petitioner has appealed the assessed value of the property, but has not appealed the real market value of the property:

(a) The total maximum assessed value of the property on the current tax roll.

(b) The total maximum assessed value as found by the board.

(d) The total assessed value as found by the board.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.110
Renumbered from 150-309.110(1), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 34-2024, minor correction filed 06/25/2024, effective 06/25/2024
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-309-0160 Mailing of Board Orders

(1) The clerk of the board will keep the order containing the original or facsimile signatures as the official record of the action of the board.

(2) The clerk of the board must mail a copy of the original order to the mailing address shown on the petition unless the order is personally delivered at the hearing.

(3) If a person listed under ORS 309.100(4)(a) is authorized to represent a petitioner at a property value appeals board hearing, the clerk of the board must mail or deliver a copy of the original order of the board to the representative. In such a case, the clerk of the board is not required to mail or deliver a copy of the order to the petitioner. If the representative has not provided a mailing address and the order cannot be personally delivered, the clerk will mail the order to the petitioner.

(4) Copies of orders mailed to petitioners or petitioners' representatives must be mailed within five days of the date issued and no later than five days after the board has adjourned.

(5) Copies of orders must be delivered to the officer in charge of the roll and the assessor on the same day they are mailed or delivered to the petitioner or the petitioner's representative.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.110
REV 35-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.110(1)-(A), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 6-2003, f. & cert. ef. 12-31-03
RD 9-1997, f. & cert. ef. 12-31-97
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 6-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-309-0170 Adjustments to Personal Property Value

Whenever the property value appeals board reduces personal property value, the order shall list the real market value of the individual items or categories/schedules as submitted on the petition, and the values ordered by the board.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.110
REV 36-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.110(1)-(C), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-309-0180 Disposition of Appeals of Property Assessed as an Undivided Interest

(1) Any owner of property assessed as an undivided interest may petition the property value appeals board for a reduction in the value of the property under ORS 309.100. An appeal filed by an owner of property assessed as an undivided interest will be treated as an appeal on behalf of all the owners of all the undivided interests in the property. The owner filing the appeal will be considered the primary petitioner.

(2) When the board receives a petition of the value of property assessed as an undivided interest, the board must:

(a) Determine the real market value of the whole property as if it were under single ownership.

NOTE: The assessor may issue separate tax statements for each undivided interest in real property (ORS 308.125), but the value attributed to each interest is not an issue that can be brought before the board.

(b) If the real market value determined under (a) is reduced, apportion the value by the proportional share of each undivided interest. Apportion a maximum assessed value and assessed value for each interest.

(c) Issue an order in the name of the primary petitioner that addresses both the value of the whole property and the value attributed to each interest. Mail a copy of the order to all other persons owning a percentage interest in the property.

(3) Refunds resulting from appeals of the value of property assessed as an undivided interest will be distributed according to the procedure outlined in Section (4) of OAR 150‐311‐0760.

(4) Notwithstanding (1) above, if the property is subject to a timeshare plan, an appeal of the value of the property must be filed by the managing entity as agent for the owners of the property as specified in ORS 94.808(3).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.110
REV 37-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.110(1)-(D), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-309-0190 Adjudicated Value Calculation for Centrally Assessed Property

Properties assessed under ORS 308.505 to 308.660 (centrally assessed property), which have adjudicated values, must be adjusted during the subsequent five year period to reflect changes in value due to additions, retirements, and economic trends.

(1) Because of the complex interactions of the numerous variables involved in the unitary appraisal of centrally assessed properties, the adjustment due to additions, retirements, and economic trends will be determined in the following manner:

(a) An appraisal of the property will be made by the department for the year for which the adjudicated value was established and for each of the subsequent years, following the methods and procedures used to develop the adjudicated value at the trial or hearing where the adjudicated value was determined.

(b) If no method or procedure was developed in reaching the adjudicated value, the methodology used should be consistent with that used for all similar properties. The value determined by the department’s appraisal for the current assessment year will be divided by the value determined by the department’s appraisal (not adjudicated value) for the assessment year immediately prior. This ratio will be applied to the “adjudicated” value of the prior assessment year to develop the “adjudicated” value for the current year’s assessment.

(2)(a) If no method or procedure was developed in reaching the adjudicated value, an alternate procedure will be used for closely regulated public utility properties. The properties to which this alternate procedure applies must meet both the following conditions:

(A) The property must be used to provide or distribute electricity, natural gas, or local telephone exchange service to the public; and

(B) Rates charged and revenues received by the property owners are regulated by an Oregon regulatory agency based on depreciated historical cost.

(b) The alternate procedure for determining the current year adjudicated value for the properties described in (a) is as follows:

(A) The book value of the unit of property, both within and outside Oregon, will be determined by the department for the year in which the adjudicated value was established and for each of the subsequent years.

(B) The book value for the current year will be divided by the book value for the prior year.

(C) The ratio determined above will be multiplied by the prior year adjudicated value (system basis) to develop the current year adjudicated value (system basis).

(D) The current year adjudicated value (system basis) will be allocated to Oregon using the department’s allocation methods used for similar properties.

(E) Adjustments will be made to the allocated value by adding taxable property not included in the system value or by subtracting noncentrally assessable property included in the system value. Adjustments must be made at the same percentage of book value as found for the current year adjudicated value (system basis).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.115
Renumbered from 150-309.115, REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2000, f. & cert. ef. 8-3-00
Repealed by RD 9-1997, f. & cert. ef. 12-31-97
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 3-1991, f. 12-30-91, cert. ef. 12-31-91
RD 4-1990, f. & cert. ef. 9-7-90

Or. Admin. R. 150-309-0200 Adjudicated Value Applied to Component Appealed

When the Property Value Appeals Board, the Department of Revenue, or the tax court issues a final order correcting the real market value of property that includes both land and improvements, and the final order corrects only the land component or only the improvement component, ORS 309.115 only applies to the component corrected as a result of the appeal.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.115
REV 38-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.115(1)-(C), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-309-0210 Trending and Indexing an Adjudicated Value

(1) “Adjudicated value” means a real market value that has been corrected by a final order of the Department of Revenue, the property value appeals board, the tax court or other court, and is adjusted only as allowed under ORS 309.115 for the subsequent five tax years.

(2) A single trend or index applied to all properties of a certain class in a market area shall be applied in the same manner to adjudicated values in the same property class and market area. For purposes of this rule, a market area may be identified to exist within a county or include properties in multiple counties. This section applies, but is not limited, to ratio studies conducted under ORS 309.200 and economic studies conducted for industrial properties appraised by the Department of Revenue under 306.126.

(3) Assessors may develop valuation models to determine the real market value of property in the same property class and in the same defined market area that rely on applying trending, indexing, and depreciation factors to multiple, identifiable property characteristics on file.

(4) The assessor shall apply the same adjustments to adjudicated values as those applied to values of other properties in the same property class in the same defined market area where valuation modeling for multiple property characteristics is used to calculate real market value.

(5) The adjudicated value in section (4) must be calculated using the method in either subsection (a) or (b) of this section. The methods in subsections (a) and (b) in this section are mathematically equivalent, although differences due to rounding may occur. Such differences are de minimus.

(a) Adjust the prior year’s adjudicated value proportionately to the change in value produced by the valuation model.

(A) Calculate the ratio of the real market value produced by the valuation model in the current year to the real market value produced by the valuation model in the prior year.

(B) Apply the ratio in paragraph (A) to the prior year’s adjudicated value.

(b) Adjust the real market value produced by the valuation model for the current year proportionately to the correction ordered in the first year of adjudication.

(A) Calculate the ratio of the adjudicated value to the real market value produced by the valuation model in the first year of adjudication,

(B) Apply the ratio to the real market value produced by the valuation model for the current year.

(6) Notwithstanding section (5), if the adjudicated value is the result of correcting a specific error in the description of property characteristics used in the valuation model, the real market value produced by the valuation model for the corrected property characteristics is the adjudicated value for the subsequent five years.

[ED. NOTE: Tables referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.115
REV 39-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.115(2), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-309.115(2)(b), REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-309-0220 Additions, Remodeling and Rehabilitation

For purposes of ORS 309.115(2)(e), “additions, remodeling and rehabilitation” does not include maintenance. Maintenance includes, but is not limited to, painting and replacement of defective components with components of like utility.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.115
Renumbered from 150-309.115(2)(e), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-309.115(2)(f) by REV 6-2003, f. & cert. ef. 12-31-03
RD 9-1997, f. & cert. ef. 12-31-97
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-309-0230 Assessor’s Ratio Study for Tax Purposes: Definitions

(1) Appraisal area is an area in a county generally composed of one or more school districts, a city or other political subdivision, or any other logical division established by the county assessor for conducting an orderly reappraisal of taxable property as required by ORS 308.234.

(2) A market area is a group of properties that generally shares important characteristics that influence value. Each market area should contain a sufficient number of accounts to ensure an adequate sale sample for analysis.

(3) Appraisal ratio is the percentage relationship between the real market value for the prior year and an estimate of the current year’s real market value made by a qualified appraiser for a particular property.

(4) Appraisal ratio study is a statistical compilation of appraisal ratios for a representative group of properties in the county randomly selected on a property class basis to produce an indication of the ratio of the prior year’s real market value to the current year’s real market value for all taxable properties in a particular class of property within the county, in a particular class of property within an appraisal area, or in a particular class of property within a market area.

(5) Assessor’s ratio study is required to be filed with the clerk of the property value appeals board.

(6) Class is a classification of property described in OAR 150‐308‐0310.

(7) Current assessment roll is the roll being prepared for the tax year beginning July 1, of the current calendar year.

(8) Current real market value is the property’s real market value, or for specially assessed properties the statutory value, as of the January 1, assessment date for which the roll is being prepared.

(9) New construction is a new structure or structures added to the current assessment roll or value added by completion of construction, remodeling, renovation or other physical improvement of existing property.

(10) Properties added to the roll are any properties on the current assessment roll which were not assessed on the prior year’s roll. They include value added by changed status of specially assessed properties and value added through partitioning or subdividing properties.

(11) Qualified appraiser is an appraiser registered pursuant to ORS 308.010 or who is licensed or certified under 674.310.

(12) Ratio study is a study which estimates:

(a) The percentage relationship between the total prior year’s real market value of each class of taxable property on the prior assessment roll and the total current real market value of the same properties in each class on the current assessment roll; and

(b) The percentage relationship between the total prior year’s real market value of each class of taxable property on the prior assessment roll and the total current real market value of the same properties in each class on the current assessment roll within each appraisal area, or market area.

(13) Sales ratio is the percentage relationship between the real market value for the prior assessment year and the selling price for a particular property.

(14) Sales ratio study is a statistical compilation of sales ratios designed to produce an indication of the real market value ratio of each property class, and the real market value ratio of each property class within each appraisal area, or market area.

(15) Taxable property includes all locally assessed property, real and personal, not exempt from taxation (whether appraised by the assessor or the Department of Revenue). It does not include properties assessed by the Department of Revenue pursuant to ORS 308.505 to 308.660.

(16) Real market value ratio is the percentage relationship between the prior year’s real market value of a class of taxable property on the prior assessment roll and the current real market value of the same property on the current assessment roll.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.200
REV 40-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.200-(A), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 2-1996, f. 12-23-96, cert. ef. 12-31-96
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79
REV 1-1975, f. 12-19-75

Or. Admin. R. 150-309-0240 Contents of the Assessor’s Certified Ratio Study

The Assessor’s Certified Ratio Study shall be prepared in accordance with OAR 150-309-0250, completed according to instructions provided by the Department of Revenue, and consist of the following items:

(1) Table of Contents.

(2) Certification of assessor’s ratio study and adjustment program.

(3) Analysis of valuation methods and procedures.

(4) Introduction (purpose of report, format of the report, etc.).

(5) Reconciliation of real market value forecast analysis.

(6) Time trend analysis.

(7) County map showing appraisal areas.

(8) Listing of property class codes and descriptions. If the county has not yet converted to basic property class codes, as required by OAR 150-308-0310, provide a cross reference listing.

(9) Ratio computations, conclusions and identification of each study area whether an adjustment will be made or not, with supporting data in conformance with the current edition of the Assessor’s Ratio Procedures Manual:

(a) Pertinent sales listings and supplemental studies.

(b) Computations of statistical data and conclusion explanations.

(10) Summary of the valuation plan indicating those areas to be revalued, reappraised, or recalculated.

(11) Summary of adjustments pages for all planned adjustments to bring all properties to 100% real market value (including all areas with no planned adjustments).

(12) An after ratio study for areas revalued, reappraised or recalculated. The after ratio study is a sales to real market value ratio study that is designed to test whether or not a county’s annual valuation program has produced real market values that meet the statutory requirement to bring all properties to 100% of real market value.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.200
Renumbered from 150-309.200-(B), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99
RD 2-1996, f. 12-23-96, cert. ef. 12-31-96
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79
REV 1-1975, f. 12-19-75

Or. Admin. R. 150-309-0250 Preparation of the Sales Ratio Study

(1) The collecting, recording, confirming, analyzing, and formatting of the sales data used in the sales ratio study and any other data to be used in preparing the certified ratio study must be done under the supervision of the county assessor in conformance with the current Assessor’s Ratio Procedure Manual published by the department.

(2) Deviations from the procedures contained in the manual must be approved by the department.

(3) The sales data file, if electronically maintained, must have the format required by OAR 150-306-0080.

(4) Counties must prepare and complete a Certified Ratio Study for all property classes each year on or before July 1. The assessor must file a copy of the study with the department no later than July 1 of each year. The department will consider an extension for cause, to last no later than August 1, if a request is filed in writing with the department prior to July 1.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.200
REV 11-2022, amend filed 06/24/2022, effective 07/01/2022
Renumbered from 150-309.200-(C), REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2001, f. & cert. ef. 12-31-01
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
TC 17-1979, f. 12-20-79, cert. ef. 12-31-79
REV 1-1975, f. 12-19-75

Or. Admin. R. 150-309-0260 Administration of Appeals Process

(1) The Property Value Appeals Board clerk shall summarize orders on a form provided by the Department of Revenue.

(2) The completed form shall be sent to the Department of Revenue within 45 days after adjournment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 309.360
REV 41-2024, minor correction filed 06/25/2024, effective 06/25/2024
Renumbered from 150-309.360, REV 26-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1997, f. & cert. ef. 12-31-97
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
Sunset on 09-28-2017
Reverted to Sunset on 09-28-2017
TC 3-1980(Temp), f. & cert. ef. 5-20-80
150-310(Note)

Division 310 LEVY OF PROPERTY TAX; TAX REDUCTION PROGRAMS

Or. Admin. R. 150-310-0020 Notice of Property Tax Levy to the Assessor

(1) “Entity” means a taxing district with the authority to levy ad valorem tax or any other tax on property that is required or authorized to be placed on the assessment and tax roll for the current fiscal year, a unit of government with the authority to place an amount on the assessment and tax roll, or a nongovernmental unit with the authority to place an amount on the assessment and tax roll.

(2) On or before July 15 of each year any entity placing an amount on the assessment and tax roll shall file the following with the county assessor:

(a) Two copies of the notice of categorization and certification, (form LB-50, ED-50 or UR-50),

(b) Two copies of the ordinances or resolutions to adopt the budget, to make appropriations, to levy the taxes, and to categorize the taxes.

(3) If the documentation described in subsection (2) cannot be filed by July 15, the entity must submit to the assessor by July 15 a written request for an extension of time to file (see OAR 150-294-0520 for details). The entity must file the required documents by the date extended.

(4) If any of the items of documentation are not submitted, or not complete in their entirety, notice to the assessor shall be considered incomplete and the entity must be notified by the assessor. The assessor must not place the tax levy or any other amount on the tax roll for any entity until the assessor has received the required copies of all documentation.

(5) The assessor must transmit one copy of the notice of categorization and certification (form LB-50, ED-50 or UR-50) and one copy of the ordinances or resolutions to the Department of Revenue within seven days of receipt of the complete documentation from the entity.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 310.060
Renumbered from 150-310.060-(A), REV 24-2016, f. 8-11-16, cert. ef. 9-1-16
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
RD 2-1994, f. 12-15-94, cert. ef. 12-31-94
RD 12-1987, f. 12-18-87, cert. ef. 12-31-87
Renumbered from 150-310.060, RD 11-1984, f. 12-5-84, cert. ef. 12-31-84
RD 15-1982, f. 12-6-82, cert. ef. 12-31-82
TC 18-1979, f. 12-20-79, cert. ef. 12-31-79
10-73

Or. Admin. R. 150-310-0030 Guidelines for Nongovernmental Units Using Assessment and Tax Roll

(1) “Property tax moneys” includes ad valorem taxes, taxes on property, as defined in ORS 310.140(1), and other amounts specifically authorized by law to be included on the roll that is certified for collection under 310.060. Property tax moneys shall be deposited in the unsegregated tax collections account as required under 311.385.

(2) An entity that is not a governmental unit that has specific statutory authority to place an amount on the assessment and tax roll must notify the county assessor of the amount no later than July 15 of each year as required under ORS 310.060. Notice of the amount must be on the forms prescribed by the Department of Revenue.

(3) Unless otherwise providedby law, the provisions of ORS 311.806 do not apply when any entity that is not a governmental unit certifies an amount specifically authorized by law to be included on the assessment and tax roll, and the amount on individual properties is calculated by the entity. Any claim for refund of such amount due to an error in calculation of the amount shall be made to the entity. The entity shall pay any refunds it determines to be due to errors in calculation of the amount out of the funds available to the entity. Such refunds shall not be paid from the unsegregated tax collections account, and the assessor shall not be required to redetermine the amount of other taxes imposed on the property for which the refund is made.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 310.060
Renumbered from 150-310.060(4), REV 24-2016, f. 8-11-16, cert. ef. 9-1-16
RD 4-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-310-0040 Excessive and Illegal Levies

(1) If any municipal corporation submits a tax levy to the assessor which exceeds constitutional or statutory limitations, the Department of Revenue shall notify the assessor and the excessive portion of the levy shall not be entered on the tax roll.

(2) If the Department of Revenue determines that the levy otherwise fails to meet the requirements provided by law, then upon the notification by the Department of Revenue the assessor shall not enter any tax levy upon the tax roll that does not meet statutory requirements.

(3) Upon discovery that a levy fails to meet the requirements provided by law, the Department of Revenue shall notify, by mail, the municipal corporation and the county assessor of the defects. The assessor shall change the levy in accordance with proper instructions. The municipal corporation shall comply by submitting a revised Form LB-50 reflecting the changes in the levy, plus an amended resolution and budget document to reflect the reduced revenue and appropriated expenditures.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 280.060 & 310.070
Renumbered from 150-310.070-(A), REV 24-2016, f. 8-11-16, cert. ef. 9-1-16
RD 11-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-310.070
RD 15-1982, f. 12-6-82, cert. ef. 12-31-82

Or. Admin. R. 150-310-0050 Tax Rate Computation

(1) The county assessor shall compute the tax rate for each district that levies an ad valorem tax by dividing the district’s levy after offsets by the assessed value used to compute the tax rate. The computed tax rate shall be carried to seven decimal places and truncated. A separate tax rate shall be calculated for each category of levy of a taxing district.

(2) In the event that total taxes extended against a property exceed the limitation imposed on a category of taxes defined by Subsection (1) of Section 11b, Article XI of the Oregon Constitution, the taxes imposed upon such property in that category shall be reduced evenly by the percentage necessary to meet the limitation for that category as defined in this rule.

(3) For each property in the county, those taxes to be imposed for the purpose of funding the public school system, but not to pay principal and interest on exempt bonded indebtedness, shall be limited to the amount provided in the following schedule for each $1,000 of real market value of the property: [Schedule not included. See ED. NOTE.]

(4) For each property in the county, those taxes to be imposed for the purpose of funding other government operations, but not to pay principal and interest on exempt bonded indebtedness, shall be limited to $10 for each $1,000 of real market value of the property.

(5) If the taxes in either category to be imposed on any property exceed the limit established for that category in Subsection (3) and (4) of this section, the assessor shall reduce the taxes by applying a reduction percentage. The reduction percentage shall be calculated by subtracting the limit for the category from the total taxes to be imposed in that category and dividing the difference by the amount of the combined tax in the category. The assessor shall then subtract from the taxes that would otherwise be imposed, that proportion of the taxes in the category obtained by multiplying the reduction percentage times the taxing unit’s total tax within the category.

(6) After application of the reduction percentage to the taxes within each category, the total amount of taxes to be imposed on the property in either category may be different from the maximum amount that may be imposed due to rounding. In such a case, the tax amount for the district that has the greatest amount of taxes in that category shall be adjusted so that the amount of taxes to be imposed is equal to the maximum that may be imposed.

(7) The reduction percentage shall be carried to at least seven (7) digits.

(8) Alternately, the county may use the reciprocal of the reduction percentage to determine the amount of taxes that may be imposed on a property. When using the reciprocal, the amount of taxes imposed is calculated by multiplying the taxes extended by the reciprocal percentage. The result is the amount of taxes imposed.

(9) The difference between the taxes imposed and the taxes extended is the amount of loss reported by the assessor under ORS 311.105(A).

(10) When computing additional taxes for specially assessed properties that were disqualified prior to June 30, 1991, no compression of taxes is required. If specially assessed property is disqualified for tax year beginning on or after July 1, 1991, the provisions of ORS 310.165(4) apply for computing the additional taxes. (The maximum tax will be based on the real market value of the property for each year of special assessment). [Example not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 310.090
REV 19-2017, f. & cert. ef. 6-28-17
Renumbered from 150-310.090, REV 24-2016, f. 8-11-16, cert. ef. 9-1-16
RD 3-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1988, f. 12-19-88, cert. ef. 12-31-88
RD 6-1988(Temp), f. & cert. ef. 9-2-88 thru 12-31-88
RD 12-1987, f. 12-18-87, cert. ef. 12-31-87

Or. Admin. R. 150-310-0060 Joint District Apportionment Formula

(1) When a taxing district extends into more than one county and it levies a dollar amount ad valorem levy, the total of the levy must be apportioned among the counties in which it lies according to the assessed value to be used to compute the tax rate of the district in each county. The percentage of value in each county must be calculated to enough digits so that the tax rate for that levy will be the same in each county when truncated at the seventh (7th) digit.

(2) Separate apportionments must be done for each category of levy subject to the limits of Section 11b, Article XI of the Oregon Constitution.

(3) Example: The example district lies in two counties and has a levy subject to the School Operations limit. The levy is $1,000. The example shows only one category of levy, if the district has more than one category, separate allocations would be done for each category of levy. [Example not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 310.110
REV 13-2017, f. & cert. ef. 6-15-17
Renumbered from 150-310.110, REV 24-2016, f. 8-11-16, cert. ef. 9-1-16
REV 10-2002, f. & cert. ef. 12-31-02
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
RD 3-1991, f. 12-30-91, cert. ef. 12-31-91
RD 12-1987, f. 12-18-87, cert. ef. 12-31-87, Renumbered from 150-310.105

Division 311 COLLECTION OF PROPERTY TAXES

Or. Admin. R. 150-311-0100 Applying Offsets to Ad Valorem Tax Levies

Offsets due to a district shall be deducted from the total of all ad valorem levies within each category certified by the district on the basis of the ratio that each category of levy bears to the total amount of all levies of the district.

Example: A county levies for general government, school operations (county school fund), and exempt debt service. This illustrates allocation of an offset of taxes paid under ORS 311.160 (1⁄4 of 1% offset).

Offset allocation formula: [Formula not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.105
REV 15-2017, f. & cert. ef. 6-15-17
Renumbered from 150-311.105(1)(b), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-311-0110 Form of Roll Changes and Notations

(1) The following procedures may be used to implement the alternate method for making roll notations and changes.

(2) Where the law speaks to corrections, additions, changes to or notations on the roll, whether made by written, electronic or other means, the county may enter these roll changes by using alpha-numeric identifiers that are supported by a voucher for each roll entry. The alpha-numeric identifier shall reference the supporting voucher.

(3) The voucher shall be numbered, dated, state what roll change is to be made, provide sufficient evidence indicating the propriety of or the law substantiating the roll change, and identify the tax account or accounts affected. The voucher shall be approved by the officer in charge of the roll or an authorized deputy.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.150
Renumbered from 150-311.150, REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-311-0140 What Is a Clerical Error

(1) Clerical errors are those procedural or recording errors which do not require the use of judgment or subjective decision making for their correction. A clerical error is an arithmetic or copying error or an omission on the roll or misstatement of property value that is apparent from assessor office records without speculation or conjecture, assumption or presumption, and that is correctable without the use of appraisal judgment or the necessity to view the property.

(2) Clerical errors are those which, had they been discovered by the assessor prior to the certification of the assessment and tax roll of the year of assessment, would have been corrected as a matter of course.

(3) An error is a clerical error or omission on the roll if all the facts necessary to correct the error or omission on the roll are contained in the records and could be readily determined by an impartial person examining these records.

(a) Records include, but are not limited to, field notes, the assessment roll, tax cards, deeds, vouchers and appraisal cards and jackets, which are regularly maintained by the assessor’s office and used to determine value.

Example 1: “A” owns a parcel of land with a house on it. “A” divides the land and sells part to “B,” but retains that part of the land with the house. The assessor places the value of the house on “B’s” land. The value of the house was placed upon the wrong tax lot. It was not, in the words of 311.207 “from any cause been omitted, in whole or in part, from assessment and taxation on the current assessment and tax rolls …” It’s on the roll but on the wrong account. Thus, the property was never actually omitted from the roll but clerically placed on the wrong parcel of land.

This comes within the definition of clerical error because it can be corrected solely from the records of the assessor as these records reflect the correct situation which, if discovered by the assessor before certification of the assessment and tax roll, would have been corrected as a matter or course and is correctable without the use of appraisal judgment or the necessity to view the property.

Example 2: A tract of land was zoned agricultural prior to April. Late in April of the same year, this property was rezoned to residential, appraised, and billed accordingly. In July of the same year, the Planning Commission again caused the property to be rezoned to agricultural. When it was reappraised in a later year, the appraiser overlooked the rezoning and appraised the tract on the basis of a residential zone, thus giving it a higher valuation.

Evidence shows that at the last appraisal the appraisal jacket of the taxpayer’s property had the residential zone still on the outside but that there was a note inside of the appraisal jacket indicating the agricultural zoning. Had the appraiser looked inside of the jacket, the appraiser would have seen the latest rezoning note and would not have relied on the residential zone on the outside of the jacket.

This comes within the definition of clerical error because it can be corrected solely from the records of the assessor as these records reflect the correct situation which, if discovered before certification of the assessment and tax roll, would have been corrected as a matter of course. The correction can be made without the use of appraisal judgment or the necessity to view the property because the correct value (i.e., value based on an agricultural zone) appears in the records of the assessor.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.205
Renumbered from 150-311.205(1)(a), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-311-0150 Error Corrections and Valuation Judgment Under ORS 311.205

(1) Except as provided in ORS 311.205(1)(b), and section (3) of this rule, the officer may not correct an error or omission on the roll of value of land; improvement; personal or other property; or of any part, parcel or portion of land, improvement, personal or other property, if the correction requires that the officer exercise judgment to determine the value, formulate an opinion as to value, or inquire into the state of mind of the appraiser. Mistakes of this nature may be:

(a) Thinking that a house has a basement when it does not;

(b) Making a mathematical error when computing the square footage, the acreage, or some other factor; or

(c) Errors made in calculating a real market value. For example, in appraising bare land, the appraiser may simply multiply the number of acres by the per acre value for that class of land. The appraiser may also then make adjustments to that result for size, shape, configuration, or other factors which affect the value of bare land. If the appraiser makes a mistake in any of these computations or assumptions of fact, these are mistakes that have entered into the appraiser's determination of judgment and are not subject to correction.

Example 1: Taxpayer owned some 33.07 acres of land. The assessor mistakenly carried the property on the roll as 37.63 acres. The assessor arrived at a value per acre for each classification and then multiplied the per acre value times the number of acres in the tract. Although the assessor used unit values in arriving at a total assessment, the assessor may also have made some adjustments in the final figure for special features or qualities peculiar to the property. The figures may be wrong but the assessor's judgment of the parcel's value may be right. Because it is the total assessment that is subject to question, and because more elements than simply the matter of acreage can be used to arrive at a total assessment, this is a case of value judgment and is not correctable.

Example 2: A taxpayer sold two acres of his 8.33 acre parcel. Upon notice of that sale, the assessor's office started the administrative process of setting up a new account and revising the value of the old account. The new account cards for the two-acre parcel were set up and the value put on the roll. However, in the administrative process, no change in the acreage and value was made on the old appraisal envelopes and cards for the remaining 6.33 acres. Consequently, the remaining 6.33 acres were placed upon the roll at the same values used prior to the sale. There are two errors to consider here. One is the fact that the assessor placed the original 8.33 acreage on the roll at the same value used prior to the sale. This is an error in valuation judgment, not a clerical error. Although this may appear to be a mathematical error due to the failure of one of the clerks, it could just as well be the assessor mistaken in fact and judgment. The situation is similar to that of an assessor mistaken as to the number of acres or the number of square feet in a given property. The figures may be wrong but the assessor's judgment of the parcel’s value may be right. Simply "subtracting" the prorated value of the two-acre parcel from the value of the 8.33 acre parcel does not necessarily result in the real market value for the 6.33 acre parcel. The appraiser must also look to the highest and best use, lay of the land, and other considerations that would affect value. In these circumstances, the statutory scheme requires that the taxpayer be sufficiently cognizant of his property values to object and appeal if necessary. Since both the appraisal cards and the assessment roll were not changed, it must be presumed that the assessor intended those values to be used, subject to appeal. The second error is the failure of the assessor to reduce the acreage on the original parcel from 8.33 to 6.33 acres. This is a clerical error because the correct facts are evident from the assessor records and there is no speculation or conjecture as to value.

Example 3: A parcel of land has been carried on the roll for several years as five acres. The parcel sells and the buyer requires a survey. The surveyor arrives at a measurement of 4.72 acres. This is an error in valuation judgment and is not correctable under ORS 311.205(1)(a) as a clerical error or under 311.205(1)(c) as an error or omission on the roll of any kind. Because it is the total assessment that is subject to question, and because more elements than simply the matter of acreage can be used to arrive at a total assessment, this is a case of value judgment and is not correctable. The assessor may correct the acreage on the next assessment and tax roll and reappraise the parcel for value, if necessary.

(2) If it is unclear whether an error or an omission on the roll is a clerical error or an error in valuation judgment, the error or omission on the roll shall be considered an error or omission in valuation judgment. For example, an error in acreage or square footage in the appraiser field notes or a failure to value or list a component upon physical reappraisal may not be corrected because the error may not necessarily have resulted in an error of real market value as finally determined and carried to the assessment and tax roll.

(3) As provided in ORS 311.205(1)(b), the officer in charge of the roll may correct an error in valuation judgment when a timely appeal has been filed in the Magistrate Division or Regular Division of the Oregon Tax Court alleging that the value on the roll is incorrect, if the correction results in a reduction of the tax owed on the account. The officer may not correct an error in valuation judgment under 311.205(1)(b) in response to an untimely appeal or an appeal that is otherwise not within the jurisdiction of the tax court.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.205
Renumbered from 150-311.205(1)(b)-(A), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
Renumbered from 150-311.205(1)(b), REV 6-2003, f. & cert. ef. 12-31-03
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-311-0160 Roll Correction for Nonexistent Property

Property or improvements, which did not exist, but were included on the assessment roll at the time of the last appraisal shall be corrected, when discovered, under ORS 311.205(1)(b) and 311.206.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.205
Renumbered from 150-311.205(1)(b)-(B), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-311.205(1)(c)-(A), REV 6-2003, f. & cert. ef. 12-31-03
Renumbered from 150-311.205(1)(c), RD 11-1990, f. 12-20-90, cert. ef. 12-31-90
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-311-0170 What is an “Error or Omission on the Roll of Any Kind”

(1) The officer may correct an error or omission on the roll of any kind if the correction does not require the exercise of valuation judgment. “Valuation judgment” includes but is not limited to selection of appraisal methodology or the estimation of functional and economic obsolescence adjustments. Errors or omissions that may be corrected under this subsection include, but are not limited to:

(a) The elimination of an assessment to one taxpayer of property belonging to another on the assessment date.

Example 1: If a deed of a sale is never recorded, the assessor records would not reflect the new ownership. Because the records do not reflect the correct information, it is not correctable as a clerical error but is correctable as an error or omission on the roll of any kind.

(b) The assessment of property more than once for the same year or assessment of nonexistent property.

(c) The placement of property on the assessment and tax roll of the wrong county or assessment on behalf of the wrong jurisdiction.

Example 2: A utility company reported certain wire and pipe mileage as being in one code area when it was in fact located in another area.

(d) The elimination or partial elimination of an assessment of property that is entitled to exemption from taxation or special assessment or entitled to partial exemption from taxation.

(e) The elimination or partial elimination of an assessment of personal property resulting from an error made by the taxpayer on a personal property return if the personal property is entitled to exemption or is otherwise not taxable.

(f) The correction of a value changed on appeal.

(g) The application of an incorrect trending or indexing factor.

Example 3: The trending factor developed for the property class in the area is 115. Through a transposition, a factor of 151 is incorrectly applied. This is a correctable error.

(h) The use of the wrong property classification.

Example 4: The property is an improved single family residential property that is classified 1-0-1. The property was incorrectly classed as a 2-0-1 and therefore received the wrong trend factor. Both the property classification and the trend factor may be corrected.

Example 5: The assessor has assessed farm property at market value on the belief that the zoning was not Exclusive Farm Use. Later the assessor discovers the land was in an Exclusive Farm Use Zone and should have been assessed at its farm use value. Because the records of the assessor failed to reflect the proper status of the property , this is not correctable as a clerical error. Because a correction can be made without the use of appraisal judgment, this is not a case of valuation judgment under ORS 311.205(1)(b) and is correctable as an error or omission on the roll of another kind.

(i) The correction of an error or omission in the computation or application of the tax rate.

Example 6: A tax rate error is correctable. A water district shares boundaries with a city. The city annexes property from the water district. The boundary change information was not filed timely with the assessor and the Department of Revenue and should not have been considered in the calculation of the taxes. The county should make the correction to the tax calculation and refund or assess the properties in the districts as appropriate so they have been assessed the correct amount of tax

(j) The correction of an error or omission on the roll that arises from inaccurate reporting of assets, or of facts about assets by a taxpayer on a return filed under ORS 308.290.

Example 7: A taxpayer reports a machinery asset on both its real and personal property accounts. The cost is double-reported for valuation purposes.

Example 8: A taxpayer reports assets transferred to the site at their net book value rather than original cost. The cost is inaccurately reported for valuation purposes.

This error or omission may be corrected only if the incorrect calculation of value was a result of a simple mathematical extension and does not require a new valuation judgment.

(A) The error or omission may be corrected if the taxpayer subsequently provides accurate asset information, and if no additional or different valuation judgment is required to make the correction.

(B) When a correction of inaccurate reporting of assets or of facts about assets by a taxpayer results in a reduction of tax and a refund under ORS 311.806, no interest is paid under 311.812.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.205
Renumbered from 150-311.205(1)(b)-(C), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150.311.205(1)(c)-(B), REV 6-2003, f. & cert. ef. 12-31-03
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-311-0180 Corrections to County Assessment and Tax Rolls Made Under ORS 311.206

When a county makes a change to the roll under ORS 311.205(1)(c) in response to direction from the Department of Revenue the change must be considered as being done by order of the department for purposes of 311.206. No additional notices to the taxpayer are required.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.205
Renumbered from 150-311.205(3), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-311-0190 Taxes Added to the Tax Roll as a Result of Error Correction; Including a Special Rule for Computing Interest

(1) When taxes other than levies under ORS 310.065 are added to the tax roll under 311.205, or the taxes already on the tax roll are increased under 311.205, the limitation(s) imposed by section 11b, Article XI of the Oregon Constitution must be determined for the year(s) to which the tax will be added for each installment as follows:

(a) If there is no change in value and the amount originally billed equals or exceeds the calculated limitation, new billing is not required.

(b) If the value is increased and the amount originally billed is less than the new calculated limitation, a new billing is required reflecting the correction.

(c) The additional taxes due shall be calculated based on the total taxes as corrected for the year being corrected and shall be the net amount due after the limitation is imposed.

(2) All payments received apply to the combined tax.

(3) For the purpose of determining the extent each installment has been paid, the additional or increased tax shall be added to the tax, if any, already extended to the same account.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.206
REV 13-2022, amend filed 06/24/2022, effective 07/01/2022
Renumbered from 150-311.206-(A), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-311.206, REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1983, f. 12-20-83, cert. ef. 12-31-83
12-31-77
12-19-75

Or. Admin. R. 150-311-0200 Definition of “Distribute in the Same Manner as Other ad Valorem Property Taxes Imposed on the Property” for Error Corrections

“Distributed in the same manner as other ad valorem property taxes imposed on the property” means to be deposited into the unsegregated tax collections account under ORS 311.385 for the year of billing. The amount of additional ad valorem taxes or penalties attributable to each district must be determined based on the percentage that the total ad valorem property billing tax rate of the district bears to the total billing tax rates for the code area in the year in which the additional taxes are billed. Any non ad valorem taxes, including penalties, must be attributed to the district for which the tax was imposed. In preparing the percentage distribution schedule under 311.390 the tax collector must include any additional taxes resulting from an error correction under 311.205 in the calculation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.206
Renumbered from 150-311.206-(B), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-311-0210 Property Subject to Assessment as Omitted Property

(1) Omitted property includes any real or personal property, or part thereof, that has been omitted from the certified assessment and tax roll for any reason. Omitted property may include, but is not limited to, a separate freestanding structure or improvement, an addition that increases the square footage of a structure or improvement, a remodel which increases a structure's real market value, or real or personal property machinery and equipment.

(2) Property may be added to the roll under ORS 311.216 if:

(a) Omitted due to the assessor's lack of knowledge of its existence,

(b) Improvements are added to or made a part of a property after that property has been physically appraised, and are later discovered by the assessor,

(d) Omitted from a return filed pursuant to ORS 308.290, including understatement of costs for new property or improvements to property, or

(e) Omitted for any other reason.

(3) Improvements which are in existence and are an integral part of property which is physically appraised may not later be revalued and added as omitted property under ORS 311.216. Undervaluation of a property due to the assessor’s failure to consider a portion of the property is not omitted property correctable under 311.216.

(4) When omitted property is discovered and its contribution to an account’s value is added under ORS 311.216, the value of the previously existing portion of the account cannot be adjusted.

Example 1: Two years after a reappraisal, a homesite is developed, and a new single family residence is constructed. The new construction and the site development are discovered on the next physical appraisal. The assessor adds the value of the single family residence and the site development as omitted property under ORS 311.216.

Example 2: “A” owns a parcel of land with a cabin on it. “A” divides the parcel and sells part to “B”, but retains the part with the cabin. The assessor incorrectly places the value of the cabin on “B’s” account. When the error is discovered, “B’s” value can be corrected under ORS 311.205, and “A’s” account must be corrected under ORS 311.216 as omitted property.

Example 3: During a physical appraisal the assessor adds no value contribution for a reinforced concrete floor, and a manger with steel stanchions in a loft barn. The assessor later realizes that the loft barn is undervalued. The reinforced concrete floor and manger with steel stanchions may not be added as omitted property under ORS 311.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.216
Renumbered from 150-311.216, REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-311.207
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 6-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-311-0220 Date Roll Corrected

For purposes of ORS 311.223(4) and 311.229 the "roll is corrected" on the date the assessor sends the notice to the taxpayer's last known address by first class mail as required in 311.223(2).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.223
Renumbered from 150-311.223(4), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01

Or. Admin. R. 150-311-0230 Definitions

(1) “Distributed in the same manner as other ad valorem property taxes imposed on the property” means to be deposited into the unsegregated tax collections account under ORS 311.385 for the year of billing. The amount of additional ad valorem taxes or penalties attributable to each district must be determined based on the percentage that the total ad valorem property billing tax rate of the district bears to the total billing tax rates for the code area in the year in which the additional taxes are billed. Any non ad valorem taxes, including penalties, must be attributed to the district for which the tax was imposed. In preparing the percentage distribution schedule under 311.390 the tax collector must include any additional taxes resulting from adding omitted property in the calculation.

(2) “Prior to completion of the next general property tax roll” for the purposes of accepting prepayments pursuant to ORS 311.370 means prior to the date on which the roll is next delivered by the assessor to the tax collector as provided in 311.115.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.229
Renumbered from 150-311.229, REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
Repealed by REV 8-2000, f. f. & cert. ef. 8-3-00
12-31-77; RD 9-1983, f. 12-20-83, cert. ef. 12-31-83; REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-311.213;

Or. Admin. R. 150-311-0240 Procedure to Correct MAV When Square Footage Error Exists

(1) To correct the maximum assessed value (MAV) of a property for an error in square footage, the assessor must receive a petition from either the current owner of the property or other person obligated to pay taxes imposed on the property. The petition must be filed with the county assessor on or before December 31 of the current tax year on a form prescribed by the department.

(2) The correction to MAV by the assessor for the earliest tax year in the petition must be in proportion to the correction to RMV due to the error in square footage for that tax year.

(3) To correct the MAV for subsequent tax years, multiply the prior year’s corrected assessed value (AV) by 1.03 and compare to the prior year’s corrected MAV. The greater of the two will be the corrected MAV for the account.

(4) Notwithstanding that a property's MAV has been corrected due to a square footage error, the corrected MAV remains subject to adjustments required by ORS 308.146 to 308.166.

(5) Roll corrections pursuant to ORS 311.234 are to be made using the procedures in 311.205.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.234
REV 43-2024, amend filed 06/25/2024, effective 07/01/2024
REV 32-2018, amend filed 12/31/2018, effective 01/01/2019
Renumbered from 150-311.234, REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02

Or. Admin. R. 150-311-0250 Contents of Property Tax Statements

The tax statement shall contain:

(1) The name of the county;

(2) The fiscal year being billed;

(3) The property type;

(4) The account number;

(5) For real property, an identifier which meets one of the requirements of ORS 308.240(1);

(6) For real property:

(a) The real market value of land, the real market value of improvements, and the total real market value of the account for the prior year and for the current year; or

(b) If the property is subject to special assessment, the specially assessed value of the account for the prior year and for the current year.

(7) For real property the total assessed value of the account for the prior year and for the current year;

(8) For personal property, the total real market value and the total assessed value for the current year;

(9) If the property is subject to additional taxes or a penalty upon disqualification from special assessment or exemption, notice to that effect;

(10) The amount of delinquent taxes including interest to the due date of the tax statement;

(11) The name of each entity and the total amount of taxes expressed in dollars and cents imposed on the property by the entity for general governmental purposes, for education purposes and for purposes not subject to the limits of section 11b, Article XI of the Oregon Constitution;

(12) The amount of late filing penalties;

(13) The total amount of current taxes and other charges due on the described property by category;

(14) The net amount of taxes for full payment, two thirds payment or one third payment by the due date;

(15) The place where payments of taxes are to be made;

(16) A warning that foreclosure proceedings will be commenced against real property accounts with an unpaid balance for specified tax years; and

(17) A notice that value may be appealed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.250
Renumbered from 150-311.250, REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-311-0260 Prepayment of Property Taxes

Unless authorized by law, no prepayments of property taxes which have not been certified by a taxing district, shall be collected or accepted.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.250
Renumbered from 150-311.250(4), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-1998, f. 11-13-98, cert. ef. 12-31-98, Renumbered from 150-311.250(5)
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-311-0350 Written Direction Required for Payment Application from Agents Who Pay Taxes on Behalf of Taxpayer

An agent who pays taxes on behalf of any taxpayer may provide written instructions with any payment as to how the payment is to be applied. An agent includes but is not limited to a mortgagee, beneficiary under a deed of trust, or vendor under a land sale contract. If no written directions accompany the payment the tax collector shall apply the payment as specified in ORS 311.356.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.356
Renumbered from 150-311.356(3)(c), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-311-0360 Monthly Tax Distributions to Districts

(1) The tax collector shall make a monthly statement of property tax moneys collected during those periods requiring quarterly statements if:

(a) The unsegregated tax collections account balance is more than $10,000 for any tax year; or

(b) A taxing district requests monthly distributions of taxes.

(2) Distribution shall be made to all governmental units by preparing the statement described in subsection (1) of this rule. The appropriate percentage distribution schedule shall be used for each tax year for which tax moneys are being distributed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.395
Renumbered from 150-311.395(1)(d), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-311-0500 Discount on Taxes as a Result of Addition of Current Year Value under ORS 311.208

(1) When value is added to the roll under ORS 311.208 any additional taxes due are eligible for the discount allowed under 311.507 if paid on or before the 15th of the month next following the month billed.

(2) Discount must be allowed on the payment of taxes resulting from additional value added to the current assessment and tax roll if the payment is sufficient to pay all outstanding taxes on the account plus the tax resulting from the additional value.

(a) A 3 percent discount is allowed on the entire additional property tax amount if it is paid on or before the 15th of the month following the month of the correction.

(b) A 2 percent discount is allowed on two-thirds of the additional property tax amount if it is paid on or before the 15th of the month following the month of the correction. The remaining one-third amount is due on or before the May trimester due date; otherwise interest will accrue on the balance due as specified in ORS 311.208.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.507
Renumbered from 150-311.507(1)(d), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-311.507, REV 7-2005, f. 12-30-05, cert. ef. 1-1-06
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-311-0520 Date Property Becomes Exempt when Foreclosed by City for Delinquent Assessment Liens

For purposes of determining the tax exemption of the property under ORS 307.090 and the exemption of interest and penalty under ORS 311.520, a city acquires title to the property immediately following the sale of the property to the city as a result of foreclosure for delinquent assessment liens.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.520
Renumbered from 150-311.520, REV 28-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-311-0530 Interest on City Foreclosed Property

(1) When a city sells real property for which there are unpaid principal amounts of taxes owing under ORS 311.520(1), interest begins to accrue on the principal amount beginning on the 16th of the month following the sale. Interest would accrue as provided in ORS 311.505(2). For example:

(a) City sells property with 1990 taxes owing on the property on July 1, 1993. Interest would begin on those taxes on July 16, 1993.

(b) City sells property with 1990 taxes owing on the property on July 17, 1993. Interest would begin on those taxes on August 16, 1993.

(2) When a city sells real property for which there are unpaid principal amounts of taxes owing under ORS 311.520(1), the property may be included in the first foreclosure list prepared after the transfer of the property to the taxable owner if three or more years have elapsed from the original date of delinquency of the taxes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.520
Renumbered from 150-311.520-(A), REV 28-2016, f. 8-12-16, cert. ef. 9-1-16

Or. Admin. R. 150-311-0540 “Certificate of Delinquency” Defined

“Certificate of Delinquency” means certificates sold for the amount of delinquent property taxes, penalties and accrued interest. Counties no longer issue certificates of delinquency. The notice of delinquent taxes served by the tax collector under ORS 311.545 is not a certificate of delinquency.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.525
Renumbered from 150-311.525, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-311-0550 Interest on State of Oregon Foreclosed Property

(1) When the State of Oregon sells real property for which there are unpaid principal amounts of taxes owing under ORS 311.525, interest begins to accrue on the principal amount beginning on the 16th of the month following the sale. For example:

(a) The State of Oregon sells property with 1990 taxes owing on the property on July 1, 1993. Interest would begin on those taxes on July 16, 1993.

(b) The State of Oregon sells property with 1990 taxes owing on the property on July 17, 1993. Interest would begin on those taxes on August 16, 1993.

(2) When the State of Oregon sells real property for which there are unpaid principal amounts of taxes owing under ORS 311.525, the property may be included in the first foreclosure list prepared after the transfer of the property to the taxable owner if three or more years have elapsed from the original date of delinquency of the taxes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.525
Renumbered from 150-311.525-(A), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16

Or. Admin. R. 150-311-0560 Fee for Service of Warrant Under ORS 311.605 to ORS 311.635

The fee for service of a warrant is not property tax money. When money is collected for service of a warrant it shall be deposited to the County General Fund.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.633
Renumbered from 150-311.633, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-311-0570 Charges on the Personal Property Warrant

Interest shall not be charged on nor added to the fee for service of a warrant allowed under ORS 311.633.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.635
Renumbered from 150-311.635, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-311-0650 Homestead Requirements

(1) For property to qualify for tax deferral under ORS 311.666 to 311.701, the property must be the homestead of the applicant while the property taxes are being deferred. This means all individual or joint applicants must live on the property.

(2) The only exception to section (1) is for situations in which the applicant is required to live away from the homestead by reason of the applicant’s health. “By reason of health” means that the applicant needs to be away from the property in order to facilitate or obtain medical care or to provide the applicant’s basic life needs. Basic life needs include but are not limited to preparation of meals, personal hygiene, or daily care of oneself.

(3) If the applicant in the deferral program is not living at the homestead for reasons of health, the applicant must provide a letter from a medical provider stating the applicant is unable to provide medical care or basic life needs for himself or herself.

(4) Neither the applicant nor the medical provider is required to give a specific date by which the applicant will return to the homestead.

(5) If the applicant is absent from the homestead by reason of the health of the applicant, the Oregon Department of Revenue will continue paying the property taxes as long as the property remains otherwise eligible or until one of the events under ORS 311.684 occurs.

Example 1: Jack and Jane are co-applicants and have been participants in the Senior Deferral program for five years. During a snowstorm in February, Jack fell and broke a hip. Jack has been sent to a nursing home for physical therapy and rehabilitation. Jane notified the department of the situation through a letter from Jack’s doctor. Because Jack and Jane both meet the homestead requirement, the Oregon Department of Revenue will continue to pay the property taxes to the county through the deferral program.

Example 2: Same basic scenario as in Example 1. Jane, Jack’s co-applicant, moves closer to the nursing home so she doesn’t have so far to travel to visit him. All applicants must either live on the property or meet “by reason of health” requirements. Because Jane does not meet the “by reason of health” exception and does not live on the property, the property will not qualify for the deferral program. Both co-applicants must meet the homestead requirements.

(6) An applicant who is away from the homestead by reason of health may rent or lease the homestead to another individual or individuals. This activity will not affect the payment of the property taxes by the department unless it causes the household income to exceed the maximum income allowed for the year in question.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.670
Renumbered from 150-311.670(1)(a), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-311.670(1), REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
REV 1-2013, f. & cert. ef. 3-28-13
REV 8-2012, f. 12-18-12, cert. ef. 1-1-13
REV 17-2008, f. 12-26-08, cert. ef. 1-1-09

Or. Admin. R. 150-311-0656 Deferral criteria when applying with a reverse mortgage

(1) For purposes of this rule:

(a) “Debt” means the current balances due on all liens, judgments, or other outstanding obligations or encumbrances of any kind against the property, regardless of priority.

(b) “Home value” means the real market value shown on the last certified tax roll for the homestead, adjusted by multiplying by the year-over-year percentage change in the Federal Housing Finance Agency House Price Index for Oregon, fourth quarter. Information provided by the deferral applicant for use in determining their home value may also be considered at the discretion of the department.

(2) For homesteads that were in the property tax deferral program before July 1, 2011 and subject to a reverse mortgage entered into before 2011, no equity test is required and sections (3) to (6) of this rule are not applicable.

(3) For homesteads subject to reverse mortgages entered into on or after July 1, 2011, and before January 1, 2017, the homestead must meet an equity test set forth in ORS 311.700(3)(b) at the time of application for deferral. The equity percentage of the property shall be determined as described in section (4) of this rule.

(4) Equity equals the home value minus the debt. The equity percentage is calculated by dividing the equity by the home value.

(5) To assist the department in calculating the equity percentage in the property, deferral program applicants must provide the department with all the following information along with the application:

(a) A mortgage statement for each mortgage currently secured against the house that is issued no more than one month prior to the date the application is submitted which shows the current balance due.

(b) The most recent statement(s) of all other debts secured against the property showing the current balance(s) due.

(6) The department may require a title encumbrance report issued by a title company be provided by the applicant at any time.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.700
REV 22-2020, adopt filed 11/30/2020, effective 12/01/2020

Or. Admin. R. 150-311-0660 Data Requirements for Property Description on Tax Deferral Application

(1) The county assessor’s office must complete the property description portion of the deferral application to include:

(a) Information about the current deed as follows:

(A) The document or instrument number;

(B) Year recorded;

(b) Information about the earliest deed showing applicant’s ownership as follows:

(A) The document of instrument number;

(B) Year recorded;

(d) Code area; and

(e) A description of the property as follows:

(A) For a property that is platted, the lot and block number and the addition name if the property is in a recorded subdivision;

(B) For a property that is unplatted a description that includes township, range, section and acres;

(C) For a manufactured structure, the model year, make, and home number assigned by the Building Codes Division of the Department of Consumer and Business Services.

(D) Multiunit property information:

(i) Notation if property contains multiple units:

(ii) The percentage of property to be deferred. This is determined by comparing the value of the taxpayer’s unit (excluding the land and common areas) with the total value of all the units located on the property.

(iii) The real market values of the taxpayer’s homestead. This is determined by comparing the percentage to be deferred with the real market value of the property.

(2) The county assessor must send the department a copy of the recorded deed if requested by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.672
Renumbered from 150-311.672(1)(a), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 6-2003, f. & cert. ef. 12-31-03
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
f. 10-14-92, ef. 12-31-92

Or. Admin. R. 150-311-0670 Deferred Taxes Paid by the Department

(1) When the department makes a deferral account payment to the county, the department will pay 97% of the amount of the tax assessed, and the county must credit that amount as full payment of such taxes, regardless of whether the department’s payment is before, on or after the payment deadline.

(2) The county may not charge the department interest on any deferral account payment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.676
Renumbered from 150-311.676, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 12-2007, f. 12-28-07, cert. ef. 1-1-08
REV 1-2003, f. & cert. ef. 7-31-03
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
RD 10-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-311-0680 Senior Citizen’s Deferred Tax Lien Estimate

(1) For all Senior Citizen Deferral accounts established under ORS 311.666 through 311.696, the department must record a lien estimate in the mortgage records of the appropriate county. The lien estimate is made from the following:

(a) Future deferred taxes based on the taxpayer-applicant’s life expectancy, as determined by actuarial tables, with an inflation factor added for the tax amount,

(b) Interest to be charged, and

(2) The amount owing on an account, at any one time, equals the actual deferred tax, interest on the account, and any lien recording, release or satisfaction fees.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.679
Renumbered from 150-311.679-(A), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-311.679, REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
12-31-92

Or. Admin. R. 150-311-0690 Timing and Repayment of Disqualified, Cancelled or Inactivated Accounts Under the Property Tax Deferral Program

(1) The Department of Revenue will pay property taxes to the county on behalf of each applicant that has been approved for the property tax deferral programs under ORS 311.666 to 311.701. Once the application is approved, the department will pay the taxes each year for as long as the property and deferral program applicant remain eligible. A lien will be placed on the property. The department tax-deferred property account will include the deferred taxes, lien fees, and interest on the deferred taxes.

(2) "Cancelled" means that the tax-deferred property has been removed from the deferral program at the written request of the tax-deferred property applicant, and not for reason of any of the events listed in ORS 311.684.

(a) If a tax-deferred property account is cancelled prior to September 1, the department will not pay the current year taxes to the county on behalf of the deferral program applicant.

(b) The department will pay the current year taxes to the county on behalf of the deferral program applicant if a tax-deferred property account is cancelled on or after September 1.

(c) A cancelled tax-deferred property account may be paid in full at any time after cancellation but no later than as required by ORS 311.686.

(3) "Disqualified" means the tax-deferred property is no longer subject to property tax deferral and the department will no longer pay taxes on behalf of the deferral program applicant. In addition, the department will send notice of disqualification to the deferral program applicant requiring repayment of all deferred taxes, fees and interest by August 15 of the year following the calendar year in which any one of the events set forth in ORS 311.684 occurs.

(4) “Inactivated” means the department has determined that the deferral program applicant or tax-deferred property has become ineligible for deferral of future property taxes due to failure to meet eligibility requirements. If a tax-deferred property account is inactivated, the department will send the deferral program applicant a notice of inactivation and not pay current or future year taxes to the county on behalf of the deferral program applicant, but the department’s lien for deferred property taxes will remain on the property.

(5) The department will seek to collect a deferral debt from a transferee, as defined in ORS 311.666, in the following circumstances.

(a) The transferee is occupying or using the tax-deferred property more than 90 days following the deferral program applicant’s date of death, including use of the property as a lessor, and is a potential recipient of the property under intestate succession or by devise,

(b) The transferee received the tax-deferred property from the estate of the deceased applicant, or

(6) If a probate proceeding has been initiated, the department shall suspend collection activity under subsections (5)(a) and (b) until the homestead has been transferred out of the estate.

(7) Notwithstanding section (5), bona fide purchasers or a person or entity that receives property outside of an estate, such as by operation of law, are not considered transferees unless they fall within section 5(c).

(8) The department may collect from a transferee or transferees the lesser of the following:

(a) The amount of the balance due per the department’s deferred property tax lien, including deferred taxes, interest and fees, or

(b) The positive amount remaining after subtracting outstanding debts under liens with higher priority than the department’s deferred property tax lien from the real market value on the last certified property tax roll preceding the disqualifying event for the county in which the property is located.

(9) The department will release its lien on the tax-deferred property only after all deferred taxes, interest and fees have been paid.

(a) Repayment of a disqualified account is due and payable to the department on or before August 15 of the year following the calendar year in which a disqualifying circumstance occurred.

(b) By itself, cancellation or inactivation of an account is not an event requiring repayment of all deferred taxes, interest and fees.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.666, 311.686 & 311.695
REV 32-2018, amend filed 12/31/2018, effective 01/01/2019
Renumbered from 150-311.684, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2013, f. & cert. ef. 3-28-13
REV 8-2012, f. 12-18-12, cert. ef. 1-1-13
REV 12-2007, f. 12-28-07, cert. ef. 1-1-08
REV 1-2003, f. & cert. ef. 7-31-03
TC 2-1979, f. & cert. ef. 3-5-79
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78

Or. Admin. R. 150-311-0700 Election by Spouse or Disabled Heir to Continue Tax Deferral

(1) Definitions. For purposes of this rule:

(a) “Disabled heir” means a person that is a disabled heir as described in ORS 311.666.

(b) “Surviving spouse” means:

(A) A person who is legally married to an applicant at the time of the applicant’s death; or

(B) A person who is joined in a registered domestic partnership with an applicant at the time of the applicant’s death.

(2) After the applicant’s death, a surviving spouse or disabled heir may continue the property in deferred tax status as active or inactive.

(a) When an account continues as active, the department continues to pay the yearly property taxes to the county. The account balance continues in deferral, and interest continues to accrue on all taxes paid.

(b) When an account continues in an inactive status, the department does not continue to pay property taxes to the county. The deferral account balance of past-deferred taxes, accrued interest, and recording fees remains deferred and interest continues to accrue on the past-deferred taxes.

(3) If a surviving spouse or disabled heir did not apply jointly with the now-deceased applicant for the original property tax deferral or was not eligible for deferral, they must file a new deferral application to continue the account as active or inactive.

(a) For the deferral account to remain active, in addition to the timely filing of a new deferral application all the following is required:

(A) The new applicant is:

(i) A surviving spouse that is at least 59-1/2 years of age on the date of the deceased applicant’s death,

(ii) A surviving spouse that is a person with a disability as defined in ORS 311.666(8) on the date of the deceased applicant’s death, or

(iii) A disabled heir.

(B) The property is the principal residence of the surviving spouse or disabled heir and they have–or anticipate obtaining within two years of the deceased applicant’s death–a recorded deed to the property in their name, and

(b) If a surviving spouse meets all the requirements of subsection (3)(a) of this rule except the age or disability requirement, the surviving spouse may only continue the deferral account in an inactive status by filing an initial application timely. The surviving spouse is responsible to pay all future property taxes to the county. The surviving spouse may later file a new application to change the deferral account status from inactive to active when by April 15 of any year the surviving spouse has turned 62 years of age or has become disabled and begins to receive or becomes eligible to receive federal Social Security disability benefits.

(4) In the case of a divorce or termination of a registered domestic partnership, if the initial applicant becomes deceased before the divorce or termination of the domestic partnership becomes final, then the surviving spouse remaining in the homestead may file an application to continue the deferral. The requirements of sections (2) and (3) of this rule determine if the account remains active or becomes inactive.

(5) All initial applications to continue deferral must be filed with the county assessor by April 15 following the death of the preceding applicant. The department may determine that good and sufficient cause exists to accept an application filed after April 15 but within 180 days after the department mails or delivers to the applicant the deferred tax due and payable notice. Late filing fees will not be charged on such applications.

(6) The department may request estate or trust information from a surviving spouse or disabled heir for purposes of substantiating their anticipated ownership in cases where they do not already have a recorded deed to the property. If such documentation is found by the department to indicate ownership will eventually rest in the surviving spouse or disabled heir, the department may reinstate deferral in active status. If such documentation fails to satisfy the department that ownership is anticipated to rest in the disabled heir or surviving spouse, the account may be placed in inactive deferral status pending confirmation of the deed.

(7) If a surviving spouse or disabled heir applying under ORS 311.688 does not obtain deed to the property within two years of the death of the preceding applicant, the account may be disqualified from deferral and the accrued balance, including taxes and interest deferred while awaiting confirmation of the deed, may become due and subject to collection.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.688
REV 23-2021, amend filed 12/16/2021, effective 01/01/2022
Renumbered from 150-311.688, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-311-0710 Voluntary Payments on Property Tax Deferral Accounts

(1) When the department receives voluntary payments, it will apply the payments in the following order:

(a) Against all accrued interest first;

(b) Then to the deferral tax balance until fully paid; and

(2) Subject to ORS 311.684 and 311.686(2), when the department receives full payment on the account and a written statement from the taxpayer asking for removal of the property from the deferral, the department will release the lien against the property. When the department receives full payment on a disqualified account, the department will release the lien against the property.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.690
Renumbered from 150-311.690(4), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 6-2003, f. & cert. ef. 12-31-03
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
10-14-92

Or. Admin. R. 150-311-0720 Taxes Unpaid Before Approval of Senior Deferral Application

(1) Delay of foreclosure is only available for real property. It is not available on personal property. To qualify for delay of foreclosure, the property owner’s household income must not exceed the limits allowed under ORS 311.668 for the immediately preceeding calendar year.

(2) When an application for property tax deferral has been submitted and approved by the department, the taxpayer is notified of that approval. If prior years’ taxes on the property subject to deferral remain unpaid on the date of approval, the applicant may apply for a delay of foreclosure by completing the appropriate application for all years in which unpaid taxes exist and submit that application to the county assessor, pursuant to ORS 311.693.

(a) Applications are accepted for delay of foreclosure only for delinquent taxes accumulated for tax years prior to the tax year for which property tax deferral is sought. An applicant may have several years’ worth of delinquent taxes covered under one or more delays of foreclosure.

(b) The delay of foreclosure will remain in effect until the property is disqualified under ORS 311.684, even if the homestead or taxpayer are inactivated from the deferral program for failure to meet one or more requirements under another deferral program statute.

Example 1: The taxpayer owed delinquent property taxes to the county for the 2009/10 tax year. The taxpayer first applied and was approved for the deferral program in 2010. At that time, the taxpayer applied for and was approved to have foreclosure delayed for the 2009/10 taxes. The Department of Revenue paid the 2010/11 deferred taxes to the county. Then, the taxpayer failed to meet the program qualifications for tax year 2011/12, and was inactivated from the deferral program, which meant that the department stopped paying property taxes to the county. But the delay of foreclosure for the 2009/10 taxes remained in effect, because the taxpayer and the homestead were not disqualified under ORS 311.684. The taxpayer did not pay the property taxes to the county for the 2011/12, 2012/13, and 2013/14 tax years. In 2014, the taxpayer reapplied for deferral and was approved for the property tax deferral program for tax year 2014/15. The taxpayer submitted and was approved for another delay of foreclosure for the 2011/12, 2012/13, and 2013/14 taxes.

(3) Interest will continue to accrue at the current county interest rate on any unpaid delinquent taxes covered under the delay of foreclosure.

(4) When the property is disqualified from the deferral program for an event listed in ORS 311.684, any deferred taxes plus interest and fees, along with the full amount of any delinquent taxes and applicable interest or other charges covered under the delay of foreclosure become due by August 15 the year following the disqualification.

Example 2: The taxpayer had received a delay of foreclosure when applying for the Senior Citizen Deferral program. The account was disqualified on July 15, 2008. The taxpayer has until August 15, 2009 to pay both the amounts due to the county for the delinquent taxes, interest any other charges that were subject to the delay of foreclosure and amounts due to the Department of Revenue for the deferred property taxes, and applicable interest and other charges.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.691
Renumbered from 150-311.691, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2014, f. & cert. ef. 7-31-14
REV 11-2009, f. 12-21-09, cert. ef. 1-1-10
REV 8-2000, f. & cert. ef. 8-3-00
RD 1-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-311-0730 Data Requirements for Property Description on Special Assessments Application

(1) The bonding district's officer must complete the property description portion of the application to include:

(a) The document or instrument number;

(b) Year recorded;

(d) Assessor's account number;

(e) Code area; and

(f) A description of the property as follows:

(A) For a property that is platted, the lot and block number and the addition name if the property is in a recorded subdivision;

(B) For a property that is unplatted, a description that includes township, range, section, and acres.

(C) For a manufactured structure, model year, make, and home number assigned by the Building Codes Division of the Department of Consumer and Business Services.

(2) The county assessor must send the department a copy of the recorded deed, if requested by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.708
Renumbered from 150-311.708, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 6-2003, f. & cert. ef. 12-31-03
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
10-14-92

Or. Admin. R. 150-311-0740 Recording Special Assessment Deferral Liens in County; Lien Constitutes Notice of State Lien

In each county in which there is deferred property for the payment of any deferred special assessment for local improvement, the department shall cause to be recorded in the mortgage book of records of the county, a list of the deferred special assessment properties. The list shall contain a description of the property as listed on the bond lien docket together with the name of the owner listed thereon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.711
Renumbered from 150-311.711, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-311-0750 Assessment District’s Responsibility to Collect Payments

(1) The Department of Revenue, upon being notified of the disqualification of a special assessment deferral account, will confirm the deferral account balance with the assessment district.

(2) The assessment district is responsible for collecting the deferred special assessment installments, along with any accrued interest, lien recording and releasee fees, and forwarding those amounts to the Department of Revenue. The district must remit any payment it collects in full to the department no later than August 15 of the year following the year of the disqualifying event or promptly after receipt.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.725
Renumbered from 150-311.725, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2002, f. 6-26-02, cert. ef. 6-30-02
10-14-92

Or. Admin. R. 150-311-0760 Process for Determining Recipient of Property Tax Refund

(1) Definitions: For the purpose of this rule:

(a) "Owner of record on the tax roll" means the owner or an owner of the property or each person in whose name the property is assessed on the last certified tax roll.

(b) "At the time of the refund" means the time at which the tax collector calculates the refund and any applicable interest.

(2) The tax collector must determine the recipients of a refund as follows:

(a) Whenever a refund is the result of an appeal, the refund for each year included in the petition must be made payable to, and be mailed or delivered to, the petitioner as shown on the petition.

(b) If an appeal results in a lowering of value under ORS 309.115 for a subsequent year that was not included in the petition and a refund results, the refund for each subsequent year must be made payable to, and be mailed or delivered to, the petitioner for each year in which that person was the owner, an owner, or the person in whose name the property was assessed; and to the current owner of record on the tax roll at the time of the refund for each year thereafter.

(c) Whenever taxes are collected against property not within the jurisdiction of the levying body, the refund must be made payable to, and be mailed or delivered to the owner of record on the tax roll at the time of the refund.

(d) Whenever taxes are paid on property in excess of the amount actually due the refund must be made payable to, and be mailed or delivered to, the owner of record on the tax roll at the time of the refund.

(e) Whenever taxes are paid on the property of another by mistake of any kind:

(A) The refund must be made payable to, and be mailed or delivered to, the payer of the tax.

(B) If the Department of Revenue pays the taxes on a deferral account under ORS 311.676, and the owner, or another party acting on behalf of the owner, also pays the tax for the same property, the department will determine the refund recipient for the overpayment based on information it deems appropriate. The department may contact the deferral applicant and the “other party” to make the determination.

(f) Pursuant to OAR 150‐309‐0180, a refund resulting from a petition to a Property Value Appeals Board, the Department of Revenue, or the tax court by one or more owners of property assessed as an undivided interest must be apportioned to all the owners of the property according to the percentage of interest owned.

(g) If a purchaser of business personal property pays a refundable compromise payment, and the total outstanding tax amount is subsequently paid as provided in ORS 311.642(4), upon notice to the county governing body, the refund of the compromise payment shall be paid to the purchaser who made the compromise payment.

(3) Notwithstanding section (2) of this rule, the refund will not be mailed or delivered to the petitioner, owner of record on the tax roll, or payer of the tax if:

(a) The refund is the result of an appeal as described in section (2)(a) or (2)(b) of this rule and the petitioner is represented by an attorney. The refund to which the petitioner is entitled must be made payable to the petitioner, or to someone else if directed by the petitioner in writing but must be mailed or delivered to the representing attorney.

(b) The refund is the result of an appeal as described in section (2)(f) of this rule and the petitioner who filed the appeal is represented by an attorney. The refund apportioned to the petitioner must be made payable to the petitioner, or to someone else if directed by the petitioner in writing but must be mailed or delivered to the representing attorney. The refund or refunds due to the other owners who did not file petitions must be made payable to and be mailed or delivered to those individual owners.

(c) The petitioner, owner of record, or payer of the tax named in section (2) of this rule is not represented by an attorney and instructs the tax collector, in writing, to make the refund payable to or to mail or deliver it to someone else. The tax collector must follow such instructions.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.806
REV 42-2024, minor correction filed 06/25/2024, effective 06/25/2024
REV 20-2021, amend filed 12/16/2021, effective 01/01/2022
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-311.806-(A), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2013, f. & cert. ef. 3-28-13
REV 8-2012, f. 12-18-12, cert. ef. 1-1-13
REV 12-2007, f. 12-28-07, cert. ef. 1-1-08
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 6-2003, f. & cert. ef. 12-31-03
REV 6-2001, f. & cert. ef. 12-31-01
12-31-92
12-31-87
12-31-84, Renumbered from 150-311.806 to 150-311.806-(A)
10-5-84

Or. Admin. R. 150-311-0770 Refunds Paid from the Unsegregated Tax Account

Refunds paid out of the unsegregated tax account provided in ORS 311.385 shall be drawn from the unsegregated tax account collections on hand for the current tax year, regardless of the tax year for which the refund was issued.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.806
Renumbered from 150-311.806-(B), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-311-0780 Credit Balance Adjustment

(1) Credit balances of $10 or less not required to be refunded shall be adjusted through creation of a category called “credit balance adjustment” per ORS 311.806(5).

(2) This category shall be used to adjust those accounts on which the amount collected exceeds the amount owed by not more than $10.

(3) This category shall not impact the certified tax balance nor the collection records; it is used only to eliminate the overpayment on the account.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.806
Renumbered from 150-311.806-(C), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16

Or. Admin. R. 150-311-0790 Refund Reserve Account

For tax years beginning on or after July 1, 1992, the anticipated annual refunds shall be the total dollar amount of refunds issued for the prior fiscal year. This amount may be increased or decreased for anticipated changes in appeals.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.807
Renumbered from 150-311.807, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94
RD 8-1992, f. 12-29-92, cert. ef. 12-31-92, Renumbered from 150-311.806
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-311-0800 Calculation of Interest on Refund

(1) Interest on refunds is based on the method the taxpayer used to pay taxes. Interest is calculated from the first trimester due date if full payment, or two-thirds payment, was made with a discount on or before November 15. If payments were made on the installment basis, interest is calculated on the amount overpaid as of each trimester due date or date of payment, whichever is later. Refund interest accrues at the rate specified in ORS 311.812(3) until paid.

(2) When the taxpayer pays in full, with discount, on or before the first trimester due date, interest is calculated on the amount overpaid from that date.

Example: The 2000–01 tax statement for $4,000 was corrected to $400 resulting in an overpayment of tax. The original tax less discount was paid in full October 17, 2000. The refund on the corrected tax is issued February 19, 2001 and includes interest calculated from the due date, November 15, 2000, to the date of refund, February 19, 2001. [Table not included. See ED. NOTE.]

(3) When the taxpayer chooses to pay in trimesters, interest is calculated on the amount overpaid on each trimester due date when there is no balance on the account. When there is a balance on the account in the year for which overpayment occurred, the overpayment is credited to the trimester(s) still outstanding. No refund interest is paid until the overpayment exceeds the total amount of corrected tax.

(a) When trimester payments are made timely, the overpayment is credited as follows:

Example: The 2000–01 tax statement for $3,000 was corrected to $2,400. Two trimester payments were made timely. The correction is made March 15, 2001. [Table not included. See ED. NOTE.]

(b) When two trimester payments are made after the due date and accrued interest has been calculated, the overpayment is credited as follows:

Example: The 2000–01 tax statement for $3,000 was corrected to $2,400. The first trimester payment was made November 20, 2000; the second trimester payment was made February 20, 2001; the account is corrected March 20, 2001. [Table not included. See ED. NOTE.]

(4) When timely payment for the first trimester is sufficient to pay two-thirds or more of the corrected tax, then the corresponding discount must be credited.

(a) When all three trimester payments have been made timely, the overpayment is credited as follows:

Example: The 2000–01 tax statement for $3,000 was corrected to $400. All trimester payments were made on or before the due dates. The correction is made June 15, 2001. The original payment for the first trimester covers the full corrected tax so the three percent discount is granted. [Table not included. See ED. NOTE.]

(b) When two trimester payments have been made timely, the overpayment is credited as follows:

Example: The 2000–01 tax statement for $3,000 was corrected to $300. Two trimester payments were made timely. The correction was made and the refund was issued on March 15, 2001. The original payment for the first trimester covered the full corrected tax so the three percent discount was granted. [Table not included. See ED. NOTE.]

Example: The 2000-01 tax statement for $2,400 was corrected to $1,200. The first trimester payment was made timely. The correction was made on January 15, 2001. Since the original payment for the first trimester payment covers the corrected first and second trimester payments, a 2% discount is calculated on the full original trimester payment. [Table not included. See ED. NOTE.]

(5) Refund interest is not paid on an overpayment of delinquent interest. Refund interest accrues only on the tax principal overpaid. Any difference between the original late payment interest and the correct late payment interest is also included in the amount to be refunded.

Example: The 2000-01 tax statement for $4,000 was corrected to $400. Full payment was made November 20, 2000. The refund was made March 19, 2001. [Table not included. See ED. NOTE.]

Interest on the overpayment is paid from DATE OF LATE PAYMENT to date of refund (11/20 to 3/19).

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.812
REV 16-2017, f. & cert. ef. 6-15-17
Renumbered from 150-311.812(3), REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-311-0810 Value Used to Activate Refund Reserve Account

ORS 311.814 authorizes the county governing body to establish a reserve account when the dollar difference between the assessed value asserted by the taxpayer and the assessed value asserted by the opposing party exceeds one-fourth of one percent (.0025) of the total assessed value in the county. The total assessed value used in the calculation shall be the total assessed value in the county as contained in the annual report of the assessment roll to the department for the previous tax year as required by ORS 309.330.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.814
Renumbered from 150-311.814, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-1999, f. 12-1-99, cert. ef. 12-31-99

Or. Admin. R. 150-311-0820 Prepayment of Ad Valorem Taxes, Computation of Accrued Interest, Allocation of Pay

(1) Interest Computation. The interest computed under ORS 311.860(1)(c) by the assessor on the payments made under the agreements to the taxing units shall be ordinary interest and not compounded. For the first year the facility is allowed a reduction in real market value for the purpose of computing the rate of levy, the interest shall be computed from the date of each payment to the November 15th due date for the tax roll for which the first value reduction is allowed. For each succeeding year, the interest shall be computed from November 16th to the following November 15th and shall be computed on that portion of the payments made by the facility which has not been used to fund a real market value reduction.

(2) Allocation of Payment to Real Market Value Reduction. Each year in which a reduction of real market value is allowed, the payments made by the facility and the interest accrued thereon shall each be charged to fund the reduction in the proportion that each is to the combined sum existing as of November 15th. The amount charged against the payment and interest shall be the gross amount of the ad valorem tax which would have been extended against the value reduction.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.860
Renumbered from 150-311.860, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-311-0830 Determination of the Real Market Value Reduction Amount

Each year in which a percentage value reduction is to be allowed, the assessor shall determine if sufficient unused moneys remain from the payments made by the facility to cover the amount of the reduction. This is to be done on the basis of multiplying the amount of assessed value represented by the real market value reduction by the rate percent of levy as extended on the most recent tax roll for each district which entered into the agreement. If sufficient moneys are not available to cover the agreed upon percentage reduction, the assessor shall reduce the percentage reduction to correspond with the available moneys.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 311.865
Renumbered from 150-311.865, REV 27-2016, f. 8-12-16, cert. ef. 9-1-16
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1983, f. 12-20-83, cert. ef. 12-31-83

Division 312 FORECLOSURE OF PROPERTY TAX LIENS

Or. Admin. R. 150-312-0010 Interest Calculated to the Date of Publication

(1) The foreclosure publication amount includes all interest accrued as of the date of publication. According to ORS 311.505(2), interest is charged and collected at a specific rate per month, or fraction of a month, until paid. This applies to all years shown in the publication.

(2) The statutes direct that foreclosure proceedings begin three months after the day of delinquency of taxes of the latest year (ORS 312.050(1)). Newspaper publication schedules may cause the date of publication to vary. This example is not meant to encourage deviation from compliance with the statutes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 312.030
REV 80-2017, minor correction filed 12/28/2017, effective 12/28/2017
REV 17-2017, f. & cert. ef. 6-15-17
Renumbered from 150-312.030(1)(d), REV 23-2016, f. 8-11-16, cert. ef. 9-1-16
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-312-0020 Monthly Interest Calculated on All Years in the Foreclosure Process Until Judgment Is Taken

Interest is calculated on all years in the foreclosure process, from the date of publication to the date the judgment and decree is granted, using the rate and process outlined in ORS 311.505(2) and Oregon Laws 1989, Chapter 796, Sections 10 and 22. Interest is charged and collected on the tax at a rate of one and one-third percent (1 1⁄3%) per month or fraction of a month until paid. To determine the amount of the additional interest to be included in the judgment and decree where the publication is late and/or judgment is granted late, the following chart provides examples of publication dates and the corresponding interest dates: [Chart not included. See ED. NOTE.] The statutes direct that foreclosure proceedings begin three months after the day of delinquency of taxes of the latest year (ORS 312.050(1)) with judgment and decree granted 30 days thereafter. Newspaper publication schedules may cause the date of publication to vary. This example is not meant to encourage deviation from compliance with the statutes.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 312.030
REV 18-2017, f. & cert. ef. 6-15-17
Renumbered from 150-312.030(2), REV 23-2016, f. 8-11-16, cert. ef. 9-1-16
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-312-0030 Mailing of Notice of Foreclosure Proceeding

Counties have the option to send the first-class mail notice prior to sending the certified mail notice, providing both notices are sent by August 15, or the date of application of judgment and decree, whichever is later.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 312.040
Renumbered from 150-312.040(1)(b), REV 23-2016, f. 8-11-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-312-0040 Five Percent Foreclosure Penalty

The 5 percent penalty is charged at the time the foreclosure list is submitted to the designated newspaper for publication. The penalty is not included in the published foreclosure list. The 5 percent penalty is computed on the total tax and interest owed. Add the tax and interest for each year shown on the foreclosure list, plus any additional interest that may have accrued since the publication, and multiply that total by 5 percent (.05) to determine the penalty amount. Once judgment and decree is granted, the penalty becomes a fixed amount calculated by multiplying the total amount shown in the judgment and decree by 5 percent (.05). Examples 1 & 2: [Examples not included. See ED. NOTE.] The statutes direct that foreclosure proceedings begin three months after the day of delinquency of taxes of the latest year (ORS 312.050(1)). Publication requirements may cause the date of publication to vary. This example is not meant to encourage deviation from compliance with the statutes.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 312.110
REV 20-2017, f. & cert. ef. 6-28-17
Renumbered from 150-312.110, REV 23-2016, f. 8-11-16, cert. ef. 9-1-16
RD 6-1993, f. 12-30-93, cert. ef. 12-31-93
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Division 314 INCOME TAXATION GENERALLY GENERAL PROVISIONS

Or. Admin. R. 150-314-0005 Period of Computation of Taxable Income

(1) General Rule: If the taxable year of an individual, partnership, Corporation, S corporation, trust, REMIC, or other taxpayer for federal income tax purposes is different than the taxable year for Oregon tax purposes, the Oregon tax year shall be changed to correspond to the federal tax year. In making this change or in changing from one tax year to another under ORS 314.085, Treas. Reg. Section 1.443-1 shall be followed.

(2)(a) Annualization of Modifications and Deductions: Where annualization is required for items of income and deductions under federal law, the modifications required by the provisions of ORS Chapters 314, 316 and 317 shall be annualized in the manner provided under Treas. Reg. Section 1.443-1. Where annualization is required, an individual must itemize deductions. The Oregon standard deduction is not available for such individuals.

(b) Computation of Personal Exemption Credit: Where a change in the taxable year results in the need to file a short-year return, personal exemption credits for individuals shall be prorated based on the number of months in the short year. The credit shall equal the dollar amount allowed pursuant to ORS 316.085 multiplied by the number of months in the short year divided by twelve.

(c) Computation of Oregon Tax Credits. Where a change in the taxable year results in the need to file a short-year return, and the taxpayer is entitled to an Oregon tax credit, the credit shall be allowed on each short-year return. The taxpayer shall not be required to annualize tax credits unless the credits are based on income. The taxpayer shall not be required to prorate tax credits unless required by the provisions of ORS 316.117 for nonresidents and part-year residents. A partner in a partnership or a shareholder in an S corporation is entitled to their pro rata share of any Oregon tax credit claimed on a short-year return filed by the partnership or the S corporation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.085
Renumbered from 150-314.085(2), REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-314-0010 Mitigation of Effect of Limitations and Other Provisions

The following rules shall apply:

(1) For determinations made on or before December 31, 1970, regulations promulgated prior to December 31, 1970, for ORS 314.110, 314.120 and 314.130 shall apply.

(2) For determinations made after December 31, 1970, paragraph (3) of this rule shall apply.

(3) Since the purpose of ORS 314.105 to 314.135 is to follow as closely as possible the provisions of subtitle A, chapter 1, subchapter Q, Part II of the Internal Revenue Code, dealing with the mitigation or affect of limitations and other Provisions, federal regulations under sections 1311 to 1314 of the Internal Revenue Code are persuasive authority in the interpretation of the Oregon law.

(4) Mitigation is not available solely due to a refund or deficiency arising as a result of a change in accounting method.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.105
Renumbered from 150-314.105, REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
11-71

Or. Admin. R. 150-314-0012 Determination by Agreement

(1) In General: A determination may take the form of an agreement made pursuant to this section. Such an agreement is intended to provide an expeditious method for obtaining an adjustment under ORS 314.105 to 314.135 and for offsetting deficiencies and refunds whenever possible. It shall not, in itself, establish the tax liability for the open year to which it relates, but it shall state the amount of tax for that year, as then determined. The tax may be the amount shown on the return as filed, or it may take into account any changes which have been made, or which are being made by documents executed concurrently with execution of the agreement.

(2) Contents of Agreement: An agreement under this section shall contain:

(a) A heading indicating that it is made pursuant to ORS 314.105(1)(d);

(b) A statement of tax liability for the open year, including reference to any document concurrently executed by which the tax liability is established or altered;

(d) A statement of how the item involved was treated in computing the tax liability set forth in the agreement; and

(e) A statement of the amount of the adjustment with respect to the erroneous prior treatment and any related adjustments.

(3) Execution of Agreement: The agreement under this section shall be signed by the taxpayer with respect to whom the determination is made. If an adjustment is made in a case of a related taxpayer, the agreement shall also be signed by the related taxpayer. Both the taxpayer and the related taxpayer may have the agreement signed on their behalf by an agent or attorney acting pursuant to a power of attorney on file with the Department. On the Department’s behalf, the agreement shall be approved by counsel and signed by the director.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.105
Renumbered from 150-314.105(1)(d), REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
9-74

Or. Admin. R. 150-314-0025 Pollution Control Facilities: Revocation of Certificate

Upon receipt of notice of revocation of a certificate, the Department shall issue a statement to the taxpayer of the amount of unpaid taxes due, together with interest from the time the taxes would have been due if the tax relief had not been granted. If, within 30 days of the date of such statement, the amount is not paid or protest received as to the accuracy of the billing, warrants will be issued pursuant to ORS 314.430, and such other collection procedures will be instituted as provided by law and deemed necessary by the Department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.255
Renumbered from 150-314.255(1), REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
6-68

Or. Admin. R. 150-314-0027 Pollution Control Facilities: Facilities Not Eligible for Tax Credit

Pollution control facilities, other than resource recovery facilities, constructed by or for the use of a governmental agency or public corporation, do not qualify for the tax credit, even if such a facility is subsequently acquired by a taxpayer and used for pollution control in a manner otherwise eligible for tax credit or tax exemption.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.255
Renumbered from 150-314.255(2), REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
6-68

Or. Admin. R. 150-314-0035 Formula for Apportionment of Lobbying Expenses Subject to Proxy Tax

The amount of lobbying expenses subject to the proxy tax under section 6033(e) of the Internal Revenue Code shall be apportioned to Oregon by multiplying the expenses by a fraction, the numerator of which is the amount of dues or other similar amounts received by the organization from Oregon residents during the tax year, and the denominator of which is the amount of all such amounts received during the tax year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.256
Renumbered from 150-314.256, REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-314-0040 Withholding on Real Property Conveyances

(1) For purposes of ORS 314.258 and this rule:

(a) “Authorized agent” does not include an employee of a transferee who merely makes payments to a transferor in connection with a conveyance, nor a person who performs services such as inspections, appraisals, drafting services, and recording services performed for the benefit of a transferor or transferee in a conveyance.

(b) “Consideration” includes any encumbrance that the transferee agrees to pay or assume as well as the fair market value of any property conveyed or transferred to a transferor, or the fair market value of any service provided to a transferor.

(2) Withholding requirements. Except as provided in subsection (2)(a) of this rule, an authorized agent must withhold tax for the year in which income is recognized for Oregon tax purposes and remit the tax withheld to the department.

(a) An authorized agent is not required to withhold if:

(A) The withholding amount calculated is less than $100 per transferor;

(B) The total consideration for the property is less than or equal to $100,000;

(C) The person making a conveyance is a resident of Oregon as defined in ORS 316.027 on the closing date of the conveyance;

(D) The person making a conveyance is a C-Corporation that is qualified to do business in Oregon on the closing date of the conveyance;

(E) The transferor delivers to the authorized agent a written assurance as required in IRC section 6045(e) that the entire gain qualifies for exclusion under IRC section 121;

(F) The transferor is an estate, certain trusts, S corporation, general partnership, or limited partnership, or a limited liability company that for purposes of Treasury Regulation section 301.7701-3 has not elected to be classified as an association taxable as a corporation and is not a disregarded entity the sole member of which is a transferor within the meaning of ORS 314.258(1)(f);

(G) The transferor is an entity not described in ORS 314.258(1)(f), such as a government agency or instrumentality, or a municipal or public corporation;

(H) The authorized agent is an attorney involved in a transaction where a licensed escrow agent is providing services for the conveyance; or

(I) The transferor or the transferor’s tax advisor executes a written affirmation under penalty of perjury that the conveyance is not likely to be taxable to the transferor under Oregon law during the tax year of the transferor in which the conveyance occurs. Examples of such transactions include, but are not limited to, a conveyance that constitutes or is accomplished as part of:

(i) A transfer that is the sale of a principal residence and the gain qualifies for exclusion under IRC section 121;

(ii) A transfer to a corporation controlled by the transferor for purposes of IRC section 351;

(iii) A transfer pursuant to a tax-free reorganization under IRC section 361;

(iv) A transfer by a tax-exempt entity that does not give rise to unrelated business taxable income to the transferor under IRC section 512;

(v) A transfer to a partnership in exchange for an interest in the partnership such that no gain or loss is recognized under IRC section 721;

(vi) A transfer that qualifies for nonrecognition under IRC section 1031 or 1033 and the transferor enters into such a transaction;

(vii) A transfer between spouses or incident to divorce for purposes of IRC section 1041; or

(viii) Any other transaction in which gain is not recognized for purposes of ORS Chapters 316, 317, and 318, as explained to the department in writing at the time the transaction is completed.

(b) The authorized agent must send the tax withheld to the department within 20 days of the date the proceeds from the conveyance are disbursed to the transferor.

(c) If there is more than one transferor for one parcel, the authorized agent must withhold tax on each non-exempt transferor as if all transferors had equal ownership in the real property unless the transferor establishes to the authorized agent the actual ownership percentage in the real property, such as through recorded documents, tenancy-in-common agreements, or other documents. If the transferor establishes other than equal ownership, the authorized agent must withhold in proportion to each non-exempt transferor’s actual ownership percentage in the real property.

(d) A transferor may claim the amount withheld by an authorized agent as a credit on the transferor’s corresponding personal income tax return or corporate income or excise tax return.

(e) If the transferor is a limited liability company, the sole member of which is a transferor within the meaning of ORS 314.258(1)(f) (2008), and the limited liability company is a disregarded entity for federal income tax purposes, the transferor is the single member for purposes of this rule.

(3) Calculation of amount to be withheld.

(a) An authorized agent is required to withhold from the consideration payable to the transferor and remit to the department the least of:

(A) Four percent of the consideration for the real property;

(B) Eight percent of the amount of gain on the conveyance that is includable in the transferor’s Oregon taxable income; or

(b) A transferor subject to withholding must deliver to an authorized agent at or before conveyance of the real property a written affirmation, signed under penalty of perjury, identifying the amount of withholding required by subsection (a) of this section. If the transferor fails to deliver the form timely, the authorized agent must withhold four percent of the amount of consideration, or if less, all the net proceeds.

Example 1: Anne sold her rental property for $300,000. Her federal and Oregon adjusted basis in the property is $250,000. She has an outstanding mortgage against the property of $157,000 and closing costs are $3,350. At closing, she determines she is not exempt from withholding so her escrow officer must withhold tax based on the least of four percent of the consideration, eight percent of the gain includable in Oregon taxable income, or all of the net proceeds.

Step 1) Determine four percent of the consideration. In this case, it is $12,000 ($300,000 x 0.04 = $12,000).

Step 2) Determine eight percent of the gain includable in Oregon taxable income as follows:

$300,000 Consideration less

$250,000 Federal and Oregon adjusted basis equals

$50,000 Gain

$4,000 ($50,000 x 0.08 = $4,000) is eight percent of the gain.

Step 3) Determine the “net proceeds” as follows:

$139,650 Net amount disbursed to seller ($300,000 consideration - $157,000 mortgage – $3,350 closing costs = $139,650) $139,650 is the “net proceeds” from this conveyance.

Step 4) Because eight percent of the gain ($4,000) is the lowest of the amounts calculated in steps one, two, or three, Anne’s escrow officer would withhold and remit $4,000.

(c) Installment sales. If a transferor elects to recognize income from the conveyance using the installment method under IRC section 453, the transferor may reduce the gain by the amount of the installment that will be recognized in future years. The withholding calculation is based on the entire consideration and net proceeds, or the modified gain to determine the lowest of the three methods provided in subsection (a) of this section.

Example 2: Assume the same facts as Example 1 except that Anne is selling the property on an installment basis and recognizing the income from the sale using the installment method under IRC section 453 over five years in equal installments. Because Anne is selling the property over time, the amount of gain includable in Oregon taxable income is $10,000 for the year of the conveyance ($50,000 ÷ 5 years = $10,000) and $10,000 in each year thereafter. Eight percent of the amount included in Oregon taxable income is $800. Anne’s escrow officer would withhold and remit $800 for the year of the conveyance because it is the least amount using the three methods provided in subsection (a) of this section.

(d) Deferred exchanges. If a transferor enters into a like-kind exchange under IRC section 1031, withholding is not necessary at the time the transferor relinquishes the property to a Qualified Intermediary (QI) unless part of the proceeds from the sale are disbursed to the transferor.

Example 3: Robert entered into an exchange under IRC section 1031 to defer tax on the gain from the sale of his rental property. The consideration for the property was $500,000. Robert’s federal and Oregon adjusted basis in the property is $150,000. He holds a first mortgage of $190,000 and he incurred $10,000 in costs related to the conveyance. Robert requested $50,000 from the consideration directly. Robert’s escrow officer transferred title of the property and $250,000 of the consideration to a QI and the escrow officer disbursed $50,000 directly to Robert as requested. The escrow officer is required to withhold on the amount disbursed to Robert as follows:

Step 1) Determine four percent of the consideration. In this case, it is $20,000 ($500,000 x 0.04 = $20,000).

Step 2) Determine eight percent of the gain includable in Oregon taxable income as follows:

$500,000 Consideration

$150,000 Federal and Oregon adjusted basis

$350,000 Gain

$300,000 Gain eligible for deferral under IRC section 1031

$50,000 gain includable in Oregon taxable income.

Eight percent of the gain is $4,000.

Step 3) Determine the “net proceeds” as follows:

$50,000 Net amount disbursed to seller shown on the settlement statement before reducing for withholding.

Step 4) The lowest of the amounts calculated in steps one, two, or three is $4,000 (8 percent of the gain). Robert’s escrow officer would withhold and remit $4,000.

(4) Written affirmation.

(a)(A) To claim exemption under subparagraph (2)(a)(I) of this rule, the transferor or the transferor’s tax advisor must complete and sign a written affirmation under penalty of perjury, that the transferor is exempt from withholding because the transferor is unlikely to owe Oregon tax as a result of the conveyance, before the funds related to the transaction are disbursed.

(B) To determine whether the transferor is unlikely to owe Oregon income tax as a result of the conveyance, the gain may not be offset against any other items of gain, loss, deduction, or credit the transferor expects to claim on the related tax return unless the item is directly related to the conveyance. For example, if an Oregon nonresident must pay tax on the gain from the sale of the Oregon property to both Oregon and the state of residency, and the Oregon nonresident must claim the credit for taxes paid to the state of residency on the Oregon nonresident return, the transferor established that he or she is unlikely to owe Oregon tax as a result of the conveyance.

(C) The transferor must provide the completed written affirmation to the authorized agent providing closing and settlement services.

(b) Basing withholding on the amount of includible gain. If the transferor is subject to withholding, the transferor may calculate tax based on the amount of gain includible in Oregon taxable income. The transferor must complete and sign the written affirmation under penalty of perjury that the calculation is true and accurate to the best of the transferor’s knowledge.

(c) Sale of a principal residence. The gain from the sale of a principal residence may qualify for exemption from withholding under either ORS 314.258(3)(e) or 314.258(3)(f). If the transferor is eligible to exclude the entire gain under IRC section 121, they must complete a written assurance similar to that found in IRC section 6045(e) pursuant to 314.258(3)(e) and this rule. If the transferor completes the written assurance, it is in lieu of the written affirmation required under 314.258(3)(f) and subsection (4)(a) of this rule and the transferor need not complete the written affirmation. However, the authorized agent must provide the information contained in the written assurance in the same manner as information contained in the written affirmation. If the gain is not fully excludible under IRC section 121, the transferor must complete the written affirmation calculating the gain under penalty of perjury.

(d) In addition to retaining the completed written affirmation or assurance in the authorized agent’s records, the authorized agent must send a copy of the affirmation or assurance to the department within 30 days of the date of the conveyance.

(5) Failure to withhold.

(a) An authorized agent who relies on the written representation made by the transferor that the transferor is either exempt from or not subject to withholding, is not liable for amounts required to be withheld under ORS 314.258. An authorized agent who relies on the calculation shown on the written affirmation provided by the transferor is not liable for the amount that was required to be withheld in excess of that shown on the written affirmation. The transferor is liable for the tax and may be subject to interest charged on the underpayment of estimated tax.

(b) Penalty assessment. The department may assess a failure-to-withhold penalty if an authorized agent fails to demonstrate to the department’s satisfaction that the authorized agent met the requirements of ORS 314.258.

(A) For conveyances that occurred before May 23, 2008, the department will not assess the failure-to-withhold penalty if an authorized agent met the requirements of either ORS 314.258 (2007) or 314.258 (2008).

(B) For conveyances that occurred on or after May 23, 2008, the department will not assess the failure-to-withhold penalty if an authorized agent met the requirements of ORS 314.258 (2008) and related rules.

(6) Failure to remit. If an authorized agent withholds tax from the transferor’s disbursal and fails to remit the same amount to the department timely, the authorized agent is liable to the State of Oregon for those amounts. The department may collect such amounts from the authorized agent together with interest under ORS 305.220.

[ED. NOTE: Tables referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & 314.258
Statutes/Other Implemented: ORS 314.258
Renumbered from 150-314.258, REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2008, f. & cert. ef. 9-23-08
REV 4-2008(Temp), f. & cert. ef. 5-23-08 thru 11-17-08
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08

Or. Admin. R. 150-314-0045 REMIC Filing Requirements

A real estate mortgage investment conduit (REMIC) receiving income from prohibited transactions, must file an Oregon Form 20-I and a copy of the complete federal return, including a Schedule Q (Notice to Residual Interest Holder of REMIC Income or Loss) for each residual interest holder. A REMIC must file an Oregon return only for tax years with income from prohibited transactions.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.260
Renumbered from 150-314.260, REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2002, f. & cert. ef. 12-31-02
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-314-0047 REMIC Income Taxable to Nonresidents

(1) Regular Interests.

(a) In general, dividends, interest, royalties, and other income from the use or ownership of intangible personal property used in a trade or business is includable in the taxable income of a nonresident if such property has a business situs in Oregon pursuant to ORS 316.127 and the rules thereunder.

(b) The income of a nonresident holder of a regular interest in a real estate mortgage investment conduit (REMIC) must be considered income from intangible personal property and subject to the provisions of ORS 316.127 and the corresponding rules. Thus, income attributable to regular interests in a REMIC will be taxable to nonresidents only if the taxpayer’s regular interest has acquired a business situs in Oregon.

(2) Residual Interests.

(a) The taxable income or loss of a nonresident holder of a residual interest in a real estate mortgage investment conduit (REMIC) will be the nonresident’s daily portion of the REMIC’s taxable income or loss, as determined in IRC section 860C, modified in accordance with the general rules of ORS 316.124. In determining the items of REMIC income, gain, loss, and deduction included in the taxable income of a nonresident, the following will apply:

(A) The nonresident must include only his or her daily portion of REMIC income or loss derived from or connected with sources within Oregon. The daily portion of REMIC income or loss includable for the taxable year will bear the same ratio to the nonresident’s total daily portion of REMIC income or loss as the REMIC net income or loss from Oregon sources bears to the REMIC net income or loss from all sources.

(B) When a REMIC has income from sources both within and without this state, the amount of apportionable income from sources within this state must be determined pursuant to ORS 314.280 and the rules thereunder.

(b) Disposition of Real Property: The gain, profit, or loss from the sale, exchange or disposition of any real property, incident to the foreclosure or default of the mortgage, must be used in the determination of the taxable income of a nonresident if the real property is located in Oregon. The gain or loss from the disposition of the real property must be included only to the extent of the nonresident’s daily portion of the REMIC income, gain, or loss in accordance with this rule and the general rules of ORS 316.124.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.260
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.260(4), REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-314-0055 Change in Methods of Accounting or Reporting

A taxpayer’s method of accounting for state income tax purposes must be the same as for federal tax purposes and it must clearly reflect the taxpayer’s income. If the taxpayer’s method of accounting does not clearly reflect the taxpayer’s income, the department shall compute the taxpayer’s taxable income in a manner consistent with the Treasury Regulations set forth under Internal Revenue Code Sections 446 through 483.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.276
Renumbered from 150-314.276, REV 29-2016, f. 8-12-16, cert. ef. 9-1-16
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-314-0060 Election to Use Alternative Apportionment Weightings by Taxpayers Engaged in Utilities or Telecommunications; Revocation of Election

(1) A taxpayer engaged in utilities or telecommunications as defined in ORS 314.280(3)(e)(A) and (B) may elect to use the double-weighted sales apportionment factor weightings in ORS 314.650 (1999 Edition).

(2) This election is made by completing schedule AP using the double-weighted sales apportionment factor weightings on the original or amended tax return for each tax year for which the election is made to use the alternative factor weightings. For processing purposes check the appropriate box in the information section.

(3) A taxpayer may revoke the election to use the double-weighted sales apportionment factor weightings. This revocation is made by completing schedule AP using the single-sales apportionment factor on the original tax return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280(3), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2013, f. 12-26-13, cert. ef. 1-1-14
REV 3-2005, f. 12-30-05, cert. ef 1-1-06
REV 8-2002, f. & cert. ef. 12-31-02

Or. Admin. R. 150-314-0062 Apportionment and Allocation of Income of Financial Organizations and Public Utilities from Business Activities Within and Without Oregon

(1) The several parts of OAR 150-314.280, as amended in 1965 and thereafter, shall apply for all tax years beginning on and after January 1, 1965. Apportionment of income for tax years beginning prior to January 1, 1965, shall be governed by the law and rules in effect with respect to such years.

(2) The provisions of ORS 314.650, as amended in 1989 and thereafter incorporated in the several parts of OAR 150-314.280, apply to all tax returns of financial organizations and public utilities for all tax years beginning on or after January 1, 1991.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280-(A), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
12-19-75
1-65

Or. Admin. R. 150-314-0064 Definitions

(1) The definitions of “apportionable income,” “commercial domicile,” “compensation,” “financial organization,” “nonapportionable income,” “public utility,” “sales,” and “state,” contained in ORS 314.610 and the related rules are by this reference incorporated herein and made a part of this OAR 150-314-0064.

(2) “Taxpayer” means a financial organization or a public utility.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280-(B), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
1-65; 12-19-75

Or. Admin. R. 150-314-0066 Apportionment and Allocation of Income Generally

The provisions of OAR 150-314-0345 to 150-314-0351, 150-314-0365 to 150-314-0369, 150-314-0380 and ORS 314.650 are by this reference incorporated herein and made a part of this OAR 150-314-0066.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280-(C), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
12-19-75
1-65

Or. Admin. R. 150-314-0068 Allocation of Income

The provisions of ORS 314.625 to 314.645, inclusive, are by this reference incorporated herein and made a part of this OAR 150-314-0068.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280-(D), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
1-65

Or. Admin. R. 150-314-0070 Apportionment Factors Generally

(1) Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved or the formula provided in ORS 314.280(3)(b) for qualifying utilities. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

(2) For purposes of the sales factor as used in OAR 150-314-0074 through -0084, “sales” means all gross receipts and revenues included in the taxpayer’s apportionable income.

(3) For financial organizations, the three factors are modified as provided in OAR 150-314-0088.

(4) Title insurance companies and health care service contractors are not classed as “domestic insurers” under ORS 317.010(11) and so may not apportion their income under ORS 317.660. These companies must apportion their income under the provisions of ORS 314.610 to 314.665, except that “sales” includes “gross premium receipts.”

(5) For public utilities (other than carriers of freight or passengers), companies engaged in sea transportation services, and companies engaged in interstate river transportation, the three factors are property, payroll, and sales.

(6) For companies engaged in sea transportation services and companies engaged in interstate river transportation, the three factors are modified property, payroll, and sales.

(7) For carriers of freight or passengers, the three factors are modified property, payroll, and sales. Modified factors for such carriers, sea transportation companies, and interstate river transportation companies are contained in OAR 150-314-0074 through 150-314-0084.

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280-(E), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
1-1-77
11-71
11-69
1-65

Or. Admin. R. 150-314-0072 Apportionment Factors

Property factor. Unless otherwise provided by rule, the provisions of ORS 314.655 and the rules pertaining thereto, are by this reference incorporated herein and made a part of this OAR 150-314.280-(F). Payroll factor. Unless otherwise provided by rule, the provisions of ORS 314.660 and the rules pertaining thereto, are by this reference incorporated herein and made a part of this 150-314.280-(F). Sales factor. Unless otherwise provided by rule, the provisions of ORS 314.665 and the rules pertaining thereto, are by this reference incorporated herein and made a part of this OAR 150-314.280

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280-(F), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
12-19-75
1-70
1-65

Or. Admin. R. 150-314-0074 Modified Factors for Carriers of Freight or Passengers: General Rule

(1) Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

(2) A substantial portion of the net income of taxpayers engaged in the transportation of freight or passengers within and without Oregon results from the movement of revenue-producing equipment, drivers, and other personnel. It is therefore necessary in calculating the apportionment factor of such carriers to reflect the results of the movement of such equipment and personnel by using revenue miles traveled both within and without the state. Thus, the apportionment formula of such transportation companies is to be computed as follows in tax years beginning before July 1, 2005:

(a) Tangible Property. Fixed properties, such as buildings and land used in the business, shop equipment, and cars and trucks used in gathering or delivering local freight, are assigned to the state in which such properties are located. The value of trucks or other equipment used in over-the-road hauling or other transportation is assigned to this state on a revenue miles basis. For example, if ten percent of a taxpayer’s revenue miles are in Oregon, then ten percent of the value of the revenue-producing equipment is included as part of the Oregon property factor.

(b) Payroll. The wages and salaries of employees assigned to fixed locations within this state are included in the Oregon payroll factor. The wages of over-the-road or other transportation equipment are assigned to this state upon the basis of revenue miles. The wages of such personnel are apportioned to Oregon in the proportion that revenue miles traveled within this state bear to total revenue miles traveled everywhere.

(c) Sales. Sales are assigned to this state in the proportion that the revenue miles traveled within the state bear to the total revenue miles traveled everywhere.

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280-(G), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 11-1992, f. 12-30-92, cert. ef. 12-31-92
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
12-31-82
12-19-75
12-70
1-65

Or. Admin. R. 150-314-0076 Modified Factors for Carriers of Freight or Passengers: Special Rules — Railroads

(1) In General. Where a railroad has income from sources both within and without this state, the amount of apportionable income from sources within this state must be determined pursuant to ORS 314.610 to 314.665 except as modified by this rule. In such cases, the first step is to determine what portion of the railroad’s income constitutes apportionable income and which portion constitutes nonapportionable income under ORS 314.610 and OAR 150-314-0335 and 150-314-0337. Nonapportionable income is directly allocable to specific states under ORS 314.625 to 314.645. Apportionable income is apportioned among the states in which the business is conducted pursuant to the property, payroll, and sales apportionment factors set forth in this rule. The sum of (1) the items of nonapportionable income directly allocated to this state, plus (2) the amount of apportionable income attributable to this state constitutes the amount of the taxpayer’s entire net income which is subject to tax by this state.

(2) Apportionable and Nonapportionable Income. For definitions, rules, and examples for determining apportionable and nonapportionable income, see OAR 150-314-0335 and 150-314-0337.

(3) Apportionment of Apportionable Income. Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

(a) In General. The property factor must be determined in accordance with ORS 314.655, the payroll factor in accordance with ORS 314.660, and the sales factor in accordance with ORS 314.665, except as modified in this rule.

(b) The Property Factor.

(A) Property Valuation. Owned property is valued at its original cost and property rented from others is to be valued at eight (8) times the net annual rental rate in accordance with ORS 314.655 and OAR 150-314-0400. Railroad cars owned and operated by other railroads and temporarily used by the taxpayer in its business and for which a per diem or mileage charge is made are not included in the property factor as rented property. Railroad cars owned and operated by the taxpayer and temporarily used by other railroads in their business and for which a per diem charge is made by the taxpayer are included in the property factor of the taxpayer.

(B) General Definitions. The following definitions are applicable to the numerator and denominator of the property factor:

(i) “Original cost” is deemed to be the basis of the property for federal income tax purposes (prior to any federal income tax adjustments except for subsequent capital additions, improvements thereto or partial dispositions); or, if the property has no such basis, the valuation of such property for Interstate Commerce Commission purposes. If the original cost of property is unascertainable under the foregoing valuation standards, the property is included in the property factor at its fair market value as of the date of acquisition by the taxpayer. (OAR 150-314-0398)

(ii) “Rent” does not include the per diem and mileage charges paid by the taxpayer for the temporary use of railroad cars owned or operated by another railroad.

(iii) The “value” of owned real and tangible personal property means its original cost. (ORS 314.655 and OAR 150-314-0398)

(iv) “Average value” of property means the amount determined by averaging the values at the beginning and ending of the tax period, but the department may require the averaging of monthly values during the tax period or such averaging as necessary to properly reflect the average value of the railroad’s property. (ORS 314.655 and OAR 150-314-0406)

(v) The “value” of rented real and tangible personal property means the product of eight (8) times the net annual rental rate. (ORS 314.655 and OAR 150-314-0400)

(vi) “Net annual rental rate” means the annual rental rate paid by the taxpayer less any annual rental rate received by the taxpayer from subrentals.

(vii) “Property used during the tax period” includes property which is available for use in the taxpayer’s trade or business during the tax period.

(viii) A “locomotive-mile” is the movement of a locomotive (a self-propelled unit of equipment designed solely for moving other equipment) a distance of one mile under its own power.

(ix) A “car-mile” is a movement of a loaded or unloaded unit of car equipment a distance of one mile.

(C) The Denominator and Numerator of the Property Factor. The denominator of the property factor is the average value of all of the taxpayer’s real and tangible personal property owned or rented and used during the tax period. The numerator of the property factor is the average value of the taxpayer’s real and tangible personal property owned or rented and used in this state during the tax period. In determining the numerator of the property factor, all property except mobile or movable property such as passenger cars, freight cars, locomotives, and freight containers which are located within and without this state during the tax period is included in the numerator of the property factor in accordance with ORS 314.655 and OAR 150-314-0396. Mobile or movable property such as passenger cars, freight cars, locomotives, and freight containers which are located within and without this state during the tax period is included in the numerator of the property factor in the ratio which “locomotive-miles” and “car-miles” in the state bear to the total everywhere.

(c) The Payroll Factor. The denominator of the payroll factor is the total compensation paid everywhere by the taxpayer during the tax period for the production of apportionable income (ORS 314.660 and OAR 150-314-0415). The numerator of the payroll factor is the total amount paid in this state during the tax period by the taxpayer for compensation. With respect to all personnel except the engine crew and train crew performing services on interstate trains, compensation paid to such employees is included in the numerator as provided in ORS 314.660 and OAR 150-314-0417. With respect to the engine crew and train crew performing services on interstate trains, compensation paid to such employees is included in the numerator of the payroll factor in the ratio which their services performed in this state bear to their services performed everywhere. Compensation for services performed in this state is deemed to be the compensation reported or required to be reported by such employees for determination of their income tax liability to this state.

(d) The Sales Factor.

(A) In General. All sales derived from transactions and activities in the regular course of the trade or business of the taxpayer which produces apportionable income are included in the denominator of the sales factor. (ORS 314.665 and OAR 150-314-0425) Per diem and mileage charges that are collected by the taxpayer are excluded from both the numerator and denominator of the sales factor. The numerator of the sales factor is the total sales of the taxpayer in this state during the tax period. The total sales of the taxpayer in this state during the tax period, other than sales from hauling freight, passengers, mail, and express, are attributable to this state in accordance with ORS 314.665 and OAR 150-314-0429.

(B) Numerator of Sales Factor from Freight, Mail, and Express. The total sales of the taxpayer in this state during the tax period for the numerator of the sales factor from hauling freight, mail, and express are attributable to this state as follows:

(i) All sales from shipments which both originate and terminate within this state; and

(ii) That portion of the sales from each movement or shipment passing through, into, or out of this state is determined by the ratio which the miles traveled by such movement or shipment in this state bears to the total miles traveled by such movement or shipment from point of origin to destination.

(i) All sales from the transportation of passengers (including mail and express handled in passenger services) which both originate and terminate within this state; and

(ii) That portion of sales from the transportation of interstate passengers (including mail and express handled in passenger service) determined by the ratio which revenue passenger miles in this state bear to the total everywhere.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280-(H), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
12-31-83
12-31-82
12-19-75
12-70
1-65

Or. Admin. R. 150-314-0078 Modified Factors for Carriers of Freight or Passengers: Special Rules — Airlines

(1) In General. Where an airline has income from sources both within and without this state, the amount of apportionable income from sources within this state is determined pursuant to ORS 314.610 to 314.665 except as modified by this rule.

(2) Apportionment of Apportionable Income. Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

(a) General Definitions. The following definitions are applicable to the terms used in the apportionment factor descriptions.

(A) “Value” of owned real and tangible personal property means its original cost. (ORS 314.655 and OAR 150-314-0398)

(B) “Cost of aircraft by type” means the average original cost or value of aircraft by type which are ready for flight.

(C) “Original cost” means the initial federal tax basis of the property plus the value of capital improvements to such property, except that, for this purpose, it is assumed that Safe Harbor Leases are not true leases and do not affect the original initial federal tax basis of the property.

(D) “Average value” of property means the amount determined by averaging the values at the beginning and ending of the income year, but the department may require the averaging of monthly values during the income year if such averaging is necessary to properly reflect the average value of the airline’s property. (ORS 314.655 and OAR 150-314-0406)

(E) The “value” of rented real and tangible personal property means the product of eight (8) times the net annual rental rate. (ORS 314.655 and OAR 150-314-0400)

(F) “Net annual rental rate” means the annual rental rate paid by the taxpayer.

(G) “Property used during the income year” includes property which is available for use in the taxpayer’s trade or business during the income year.

(H) “Aircraft ready for flight” means aircraft owned or acquired through rental or lease (but not interchange) which are in the possession of the taxpayer and are available for service on the taxpayer routes.

(I) “Revenue service” means the use of aircraft ready for flight for the production of revenue.

(J) “Transportation sales” means sales from transporting passengers, freight, and mail as well as liquor sales, pet crate rentals, etc.

(K) “Departures” for purposes of these regulations means all takeoffs, whether they be regularly scheduled or charter flights, that occur during revenue service.

(b) Property Factor.

(A) Property valuation. Owned aircraft must be valued at its original cost and rented aircraft must be valued at eight (8) times the net annual rental rate in accordance with ORS 314.655 and OAR 150-314-0400. The use of the taxpayer’s owned or rented aircraft in an interchange program with another air carrier does not constitute a rental of such aircraft by the airline to the other participating airline. Such aircraft are accounted for in the property factor of the owner. Parts and other expendables, including parts for use in contract overhaul work, are valued at cost.

(B) The denominator and numerator of the property factor. The denominator of the property factor is the average value of all of the taxpayer’s real and tangible personal property owned or rented and used during the income year. The numerator of the property factor is the average value of the tangible personal property owned or rented and used in this state during the income year. In determining the numerator of the property factor, all property except aircraft ready for flight are included in the numerator of the property factor in accordance with ORS 314.655 and OAR 150-314-0396. Aircraft ready for flight are included in the numerator of the property factor in the ratio calculated as follows: Departures of aircraft from locations in this state weighted as to the cost and value of aircraft by type compared to total departures similarly weighted.

(c) Payroll Factor. The denominator of the payroll factor is the total compensation paid everywhere by the taxpayer during the income year (ORS 314.660 and OAR 150-314-0415). The numerator of the payroll factor is the total amount paid in this state during the income year by the taxpayer for compensation. With respect to non-flight personnel, compensation paid to such employees is included in the numerator as provided in ORS 314.660 and OAR 150-314-0417. With respect to flight personnel (the air crew aboard an aircraft assisting in the operations of the aircraft or the welfare of passengers while in the air), compensation paid to such employees is included in the ratio that departures of aircraft from locations in this state, weighted as to the cost and value of aircraft by type, compared to total departures similarly weighted, multiplied by the total flight personnel compensation.

(d) Sales (Transportation Sales) Factor. The transportation sales derived from transactions and activities in the regular course of the trade or business of the taxpayer and miscellaneous sales of merchandise, etc., are included in the denominator of the sales factor (ORS 314.665 and OAR 150-314-0425). Passive income items such as interest, rental income, dividends, etc., are not included in either the numerator or the denominator nor are the proceeds or net gains or losses from the sale of aircraft included. The numerator of the sales factor is the total sales of the taxpayer in this state during the income year. The total sales of the taxpayer in this state during the income year is the result of the following calculation: The ratio of departures of aircraft in this state weighted as to the cost and value of aircraft by type, as compared to total departures similarly weighted, multiplied by the total transportation revenue. The product of this calculation is to be added to any nonflight sales directly attributable to this state.

[See PDF link below.]

(3) Records. The taxpayer must maintain the records necessary to arrive at departures by type of aircraft as used in these rules. Such records are to be subject to review by the state of Oregon or their agents.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
REV 36-2017, f. & cert. ef. 8-1-17
Renumbered from 150-314.280-(I), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 4-1997, f. 12-12-97, cert. ef. 12-31-97
Renumbered from 150-314.280-(I), 12/31/87
12/31/83
12/31/82
12/19/75
12/70
1/65

Or. Admin. R. 150-314-0080 Modified Factors for Carriers of Freight or Passengers: Special Rules — Trucking Companies

(1) In General. As used in this rule, the term “trucking company” means a motor common carrier, a motor contract carrier, or an express carrier that primarily transports tangible personal property of others by motor vehicle for compensation. Where a trucking company has income from sources both within and without this state, the amount of apportionable income from sources within this state must be determined pursuant to ORS 314.610 to 314.665 except as modified by this rule. In such cases, the first step is to determine what portion of the trucking company’s income constitutes apportionable income and what portion constitutes nonapportionable income under ORS 314.610 and the corresponding rules. Nonapportionable income is directly allocable to specific states pursuant to the provisions of ORS 314.625 through 314.645. Apportionable income is apportioned among the states in which the business is conducted pursuant to the property, payroll, and sales factors set forth in this rule. The sum of (a) the items of nonapportionable income directly allocated to this state plus (b) the amount of apportionable income attributable to this state constitutes the amount of the taxpayer’s entire net income which is subject to tax in this state.

(2) Apportionable and Nonapportionable Income. For definitions, rules, and examples for determining apportionable and nonapportionable income, see OAR 150-314-0335 through 150-314-0339.

(a) In General. The property factor is determined in accordance with ORS 314.655, the payroll factor in accordance with ORS 314.660, and the sales factor in accordance with ORS 314.665, except as modified in this rule.

(b) The Property Factor.

(A) Property Valuation. Owned property is valued at its original cost in accordance with ORS 314.655(2) and OAR 150-314-0398. Property rented from others is valued at eight times the net annual rental rate in accordance with ORS 314.655(2) and OAR 150-314-0400.

(B) General Definitions. The following definitions are applicable to the numerator and denominator of the property factor, as well as other apportionment factor descriptions:

(i) “Average value” of property means the amount determined by averaging the values at the beginning and end of the tax period, but the department may require the averaging of monthly values during the tax period or such averaging as is necessary to properly reflect the average value of the trucking company’s property (See OAR 150-314-0406).

(ii) “Mobile property” means all motor vehicles, including trailers, engaged directly in the movement of tangible personal property, other than support vehicles used predominantly in a local capacity.

(iii) A “mobile property mile” is the movement of a unit of mobile property a distance of one mile whether loaded or unloaded.

(iv) “Original cost” is deemed to be the basis of the property for federal income tax purposes (prior to any federal income tax adjustments, except for subsequent capital additions, improvements thereto, or partial dispositions); or, if the property has no such basis, the valuation of such property for Interstate Commerce Commission purposes. If the original cost of property cannot be ascertained under the foregoing valuation standards, the property is included in the property factor at its fair market value as of the date of acquisition by the taxpayer. (OAR 150-314-0398)

(v) “Property used during the tax period” includes property which is available for use in the taxpayer’s trade or business during the tax period.

(C) The Denominator and Numerator of the Property Factor. The denominator of the property factor is the average value of all the taxpayer’s real and tangible personal property owned or rented and used during the tax period. The numerator of the property factor is the average value of the taxpayer’s real and tangible personal property owned or rented and used in this state during the tax period. In the determination of the numerator of the property factor, all property, except mobile property as defined in this rule, is included in the numerator of the property factor in accordance with ORS 314.655 and the corresponding rules. Mobile property as defined in this rule, which is located within and without this state during the tax period is included in the numerator of the property factor in the ratio which mobile property miles in the state bear to the total mobile property miles.

(c) The Payroll Factor. The denominator of the payroll factor is the compensation paid everywhere by the taxpayer during the tax period for the production of apportionable income (see ORS 314.660 and the corresponding rules.). The numerator of the payroll factor is the total compensation paid in this state during the tax period by the taxpayer. With respect to all personnel, except those performing services within and without this state, compensation paid to such employees is included in the numerator as provided in ORS 314.660 and the corresponding rules. With respect to personnel performing services within and without this state, compensation paid to such employees is included in the numerator of the payroll factor in the ratio which their services performed in this state bear to their services performed everywhere based on mobile property miles.

(d) The Sales Factor.

(A) In General. All sales derived from transactions and activities in the regular course of the taxpayer’s trade or business which produce apportionable income are included in the denominator of the sales factor (see ORS 314.665(1) and OAR 150-314-0425). The numerator of the sales factor is the total sales of the taxpayer in this state during the tax period. The total state sales of the taxpayer, other than sales from hauling freight, mail, and express, are attributable to this state in accordance with ORS 314.665 and the corresponding rules.

(B) Numerator of the Sales Factor from Freight, Mail, and Express. The total sales of the taxpayer attributable to this state during the tax period from hauling freight, mail, and express is:

(i) Intrastate: All sales from any shipment which both originates and terminates within this state; and,

(ii) Interstate: That portion of the sales from movements or shipments passing through, into, or out of this state as determined by the ratio which the mobile property miles traveled by such movements or shipments in this state bear to the total mobile property miles traveled by movements or shipments from points of origin to destination.

(4) Records. The taxpayer must maintain the records necessary to identify mobile property and to enumerate by state the mobile property miles traveled by such mobile property as those terms are used in this rule. Such records are subject to review by the department or its agents.

(5) De Minimis Nexus Standards. Notwithstanding any provision contained herein, this rule does not apply to require the apportionment of income to this state if the trucking company during the course of the tax period neither:

(a) Owns nor rents any real or personal property in this state, except mobile property; nor

(b) Makes any pick-ups or deliveries within this state; nor

(c) Travels more than twenty-five thousand mobile property miles within this state; provided that the total mobile property miles traveled within this state during the tax period does not exceed three percent of the total mobile property miles traveled in all states by the trucking company during that tax period; nor

(d) Makes more than twelve trips into this state.

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280-(J), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-314-0082 Modified Factors for Companies Engaged in Sea Transportation Service

(1) Sea transportation services within this rule include the activities of steamship companies substantially engaged in interstate or international commerce which derive income within and partly from sources without the state. They do not include the activities of water transportation carriers operating mainly on the Columbia and Willamette Rivers or water transportation carriers operating primarily within Oregon waters.

(2) The Oregon income of a taxpayer carrying on the business of sea transportation services must be determined pursuant to ORS 314.610 to 314.665 except as modified by this rule. Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

(a) Property factor. The property factor is a fraction, the denominator of which includes the value of all real and tangible personal property, including ships owned, rented or leased by the taxpayer and used in the business. The numerator of this factor includes all real and personal property owned, rented, or leased by the taxpayer and used in the business, except ships, to the extent such assets are located in the state, and so much of the value of ships used in the business as is determined by applying the ratio that the voyage time which the ship was within this state during the tax period bears to the total voyage time of the ship during the tax period.

(A) The value of ships used in the business but not owned by the user, such as bareboat chartered vessels, is the same as their value for insurance purposes. There are generally three types of charters.

(i) “Bareboat” charters. The owner-charterer places the tanker at the complete use and control of the user. All operating costs are borne by the user, and the charter fee is purely for the use of the vessel. Bareboat charters are included in the property factor.

(ii) “Time and Demise” (long-term) charters. The owner-charterer provides, in addition to the vessel, all operational costs at the instruction of the user. Time and demise charter fees include a component for operating costs borne by the owner-charterer, such as insurance, port and docking fees, crew and master wages, fuel, and repairs. Time and demise charters are considered the purchase of transportation and are not included in the property factor.

(iii) “Single Voyage” charters. These are actually purchased transportation services that take the form of a charter. The owner-charterer has complete use and control of the vessel and merely contracts to deliver product between one or more ports of loading and discharge. Single voyages may be arranged on a consecutive voyage basis. Single voyage charters are not included in the property factor.

(B) Other rented or leased property is valued in the manner set out in ORS 314.655 and OAR 150-314-0400.

(C) The term “voyage time” means the time that a ship is in operation for the purpose of transporting cargo, freight, mail, passengers, etc. The time that a ship is in operation includes all sailing time, even though a ship is returning empty or is en route to a port of call to load passengers or cargo, all time in port while loading and unloading, all time awaiting cargo, and all time that the ship is laid up for ordinary repairs, refueling, or provisioning. A ship is not in operation when out of service or during the time that it is laid up for extensive repairs, overhaul, modification, or is in dry dock.

(D) The voyage time spent traveling on the Columbia River below mile post 309 is divided equally between Oregon and Washington. For purposes of this rule a vessel is not considered traveling on the Columbia River while remaining at a port even though the vessel moves from one terminal or dock to another within that port.

Example: Taxpayer A uses minutes to measure voyage time. The following table shows the vessel’s actions and the time attributable to Oregon between actions. [See PDF link below.]

(b) Payroll factor. The denominator of the payroll factor is the total compensation paid everywhere by the taxpayer during the tax period for the production of apportionable income (ORS 314.660 and OAR 150-314-0415). The numerator of the payroll factor is the total amount paid in this state during the tax period by the taxpayer for compensation. With respect to all personnel except ocean going personnel, compensation paid to such employees is included in the numerator as provided in ORS 314.660 and OAR 150-314-0417. The numerator contains so much of the compensation of oceangoing personnel as is determined by applying a fraction, the numerator being the voyage time the ship spent within this state during the tax period and the denominator being the total voyage time of the ship during the tax period.

(c) Sales factor. The sales factor is a fraction, the denominator of which includes all sales derived from carrying cargo, i.e., passengers, freight, mail, etc., and the sales incidental thereto. In calculating the numerator of the factor, such sales are assigned to this state in the proportion that the voyage time the ship spent within this state during the tax period bears to the total voyage time of the ship during the tax period. Sales from activities incidental to the transportation service, such as income from restaurants, locker rentals, etc., are assigned to the state or country in which the activity is carried on.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
REV 21-2017, f. & cert. ef. 6-28-17
Renumbered from 150-314.280-(K), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
12-31-87
12-31-84, Renumbered from 150-314.280(H)
12-70
1-65

Or. Admin. R. 150-314-0084 Modified Factors for Companies Involved in Interstate River Transportation Service

(1) A taxpayer involved in interstate river transportation will calculate its Oregon income under the provisions of ORS 314.610 to 314.665 except as modified by this rule. Apportionable income is apportioned to this state by the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.

(2) Sales factor. The sales factor is a fraction. The denominator of this factor includes all sales. The numerator of this factor includes all sales not derived from interstate river transportation, assigned to this state in accordance with ORS 314.665. The numerator also includes all sales derived from vessels engaged in river transportation between Oregon and other states as is determined by applying the Oregon Interstate Mobile Allocation Formula (IMAF).

(3) Payroll factor. The payroll factor is a fraction. The denominator is the amount of all compensation paid to officers and employees, including personnel engaged in river transportation. The numerator of this factor includes all compensation paid to officers and employees not engaged in interstate river transportation, assigned to this state in accordance with ORS 314.660. The numerator also includes so much of the compensation to personnel engaged in river transportation between Oregon and other states as is determined by applying the Oregon IMAF.

(4) Property factor. The property factor is a fraction. The denominator includes the value of all real and tangible personal property, including vessels owned, rented, or leased by the taxpayer and used in the business. The numerator of this factor includes all real and personal property owned, rented, or leased by the taxpayer and used in the business to the extent such assets are located in the state. The numerator also includes so much of the value of vessels engaged in river transportation between Oregon and other states and used in the business as is determined by applying the Oregon IMAF. The value of vessels used in the business but not owned by the user is the same as their value for insurance purposes. Property rented by the taxpayer is valued at eight times its net annual rental rate as set out in ORS 314.655 and OAR 150-314-0400.

(5) For purposes of this rule, the Oregon IMAF is the average of two factors. The two factors are the originating and terminating tons factor and the ton-miles factor. For purposes of computing both factors, only mileage and tonnage from those vessels that operate on some portion of a river that constitutes the border between Oregon and other states is included in the computation. For example: The ton-miles generated by vessels operating on the Mississippi River or exclusively on the Willamette River would not be included in the computation.

(a) The originating and terminating tons factor is a fraction. The denominator is the total number of tons handled by the vessels engaged in river transportation between Oregon and other states. The numerator is the number of tons assigned to Oregon. The tons attributed to a voyage from one Oregon port to another Oregon port are credited wholly to Oregon. The tons attributed to a voyage between ports in different states are credited equally to the two states. For this purpose each trip between two ports of call is treated as a separate voyage even though the cargo may be scheduled for later movement to one or more ports.

(b) The ton-miles factor is a fraction. The denominator is the total number of ton-miles generated by the vessels engaged in river transportation between Oregon and other states. The numerator of the fraction consists of those ton-miles assignable to Oregon. Ton-miles generated on the Willamette are credited wholly to Oregon. Ton-miles generated on that part of the Columbia above mile 309 are credited wholly to Washington. One-half of those ton-miles generated on the portion of a river that forms the boundary between Oregon and another state are credited to Oregon. Ton-miles are figured by multiplying tons carried for each movement by miles traveled.

Example 1: [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
REV 22-2017, f. & cert. ef. 6-28-17
Renumbered from 150-314.280-(L), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
RD 3-1992, f. 5-28-92, cert. ef. 6-1-92
12-31-87
12-31-84, Renumbered from 150-314.280-(J)
10-5-84

Or. Admin. R. 150-314-0086 Other Methods: Limited Application

(1) For taxpayers that are taxable both within and without Oregon, the provisions of ORS 314.280 will ordinarily require apportionment to arrive at a fair and accurate measure of net income from business activity in Oregon. If the taxpayer can show that no unitary relationship exists between its business activities within Oregon and those activities outside Oregon, then the taxpayer may use separate accounting.

(2) If the allocation and apportionment provisions of OAR 150-314-0062 to 150-314-0088 do not fairly and accurately reflect the net income of the business done within Oregon, based on the taxpayer’s business activity within Oregon, the department may require or the taxpayer may request an alternative method of apportionment and the department may approve that method of apportioning all or any part of the net income from the taxpayer’s business activity within Oregon:

(3) The request to use an alternative method of apportionment shall be filed in writing with the department. The request must be signed by the taxpayer or the taxpayer’s authorized representative and shall be filed separately from the taxpayer’s return. The request shall include a complete explanation of the alternative method as well as an explanation why the apportionment factors in OAR 150-314-0062 through 150-314-0088 should not be used. Upon receipt of the request, the department will review it and issue a letter either authorizing or denying the request. If denied, the taxpayer can appeal that action as provided in ORS 305.275. An alternative apportionment method may be used only after receiving written authorization from the department. The authorization may be revoked if, upon audit, it is determined that the alternative method does not arrive at a fair and accurate measure of net income from business activity in Oregon. Once an alternative method has been authorized, it shall be used until a request to change is made and approved by the department or until the authorization is revoked in an audit.

(4) Examples of alternative methods of apportionment include:

(a) The exclusion of any one or more of the factors;

(b) The inclusion of one or more additional factors which will fairly and accurately reflect the taxpayer’s net income from business activity in Oregon; or

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280-(M), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
Renumbered from 150-314.280-(I)
1-65

Or. Admin. R. 150-314-0088 Modified Factors for Financial Institutions

(1) This rule is based on a model regulation adopted by the Multistate Tax Commission to promote uniform treatment of this item by the states. A financial institution having income from business activity that is taxable both within and without this state must allocate and apportion its net income as provided in this rule. All items of nonapportionable income must be allocated pursuant to the provisions of ORS 314.610 through 314.645 and the rules thereunder. A financial institution organized under the laws of a foreign country, the Commonwealth of Puerto Rico, or a territory or possession of the United States whose effectively connected income (as defined under the Federal Revenue Code) is taxable both within this state and within another state, other than the state in which it is organized, must allocate and apportion its net income as provided in this rule.

(2)(a) For tax years beginning on or after January 1, 1991 and before May 1, 2003, all apportionable income must be apportioned to this state by multiplying the income by a fraction. The numerator of the fraction is two times the sales factor, as described in section (4) of this rule, plus the property factor, as described in section (5) of this rule, plus the payroll factor, as described in section (6) of this rule. The denominator of the fraction is four. If one of the factors is missing, the remaining factors are added and the sum is divided by three (divide by two if the missing factor is the sales factor). A factor is missing if both its numerator and denominator are zero, but it is not missing merely because its numerator is zero.

(b) For tax years beginning on or after May 1, 2003 and before July 1, 2005, all apportionable income must be apportioned to this state by multiplying the income by a multiplier equal to 80 percent of the sales factor described in section (4) of this rule plus 10 percent of the property factor described in section (5) of this rule plus 10 percent of the payroll factor described in section (6) of this rule.

(c) For tax years beginning on or after July 1, 2005, all apportionable income must be apportioned to this state by multiplying the income by a multiplier equal to 100 percent of the sales factor described in section (4) of this rule.

(d) Each factor must be computed according to the method of accounting (cash or accrual) used by the taxpayer for the taxable year.

(e) See OAR 150-314-0086 for other methods of apportionment and allocation or modification of the method in this rule that may be allowable.

(3) Definitions as used in this rule, unless the context otherwise requires:

(a) "Billing address" means the location indicated in the books and records of the taxpayer on the first day of the taxable year (or on such later date in the taxable year when the customer relationship began) as the address where any notice, statement, or bill relating to a customer's account is mailed.

(b) "Borrower or credit card holder located in this state" means:

(A) A borrower, other than a credit card holder, that is engaged in a trade or business that maintains its commercial domicile in this state; or

(B) A borrower that is not engaged in a trade or business or a credit card holder whose billing address is in this state.

(c) "Card issuer's reimbursement fee" means the fee a taxpayer receives from a merchant's bank because one of the persons to whom the taxpayer has issued a credit, debit, or similar type of card has charged merchandise or services to the card.

(d) "Commercial domicile" means:

(A) The headquarters of the trade or business, that is, the place from which the trade or business is principally managed and directed; or

(B) If a taxpayer is organized under the laws of a foreign country, or of the Commonwealth of Puerto Rico, or any territory or possession of the United States, such taxpayer's commercial domicile is deemed for the purposes of this rule to be the state of the United States or the District of Columbia from which such taxpayer's trade or business in the United States is principally managed or directed. It is presumed, subject to rebuttal, that the location from which the taxpayer's trade or business is principally managed and directed is the state of the United States or the District of Columbia to which the greatest number of employees are regularly connected or out of which they are working, no matter where the services of such employees are performed, as of the last day of the taxable year.

(e) "Credit card" means a card, or other means of providing information, that entitles the holder to charge the cost of purchases, or a cash advance, against a line of credit.

(f) “Debit card” means a card, or other means of providing information, that enables the holder to charge the cost of purchases, or a cash withdrawal, against the holder’s bank account or a remaining balance on the card.

(g) "Financial institution" is defined in ORS 314.610(4).

(h) "Loan" means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase, in whole or in part, of such extension of credit from another. Loans include participations, syndications, and leases treated as loans for federal income tax purposes. Loans do not include: loans representing property acquired in lieu of or pursuant to a foreclosure under IRC section 595; futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including purchased credit card relationships; noninterest bearing balances due from other depository institutions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interests in a REMIC, or other mortgage-backed or asset-backed security; and other similar items.

(i) "Loan secured by real property" means that 50 percent or more of the aggregate value of the collateral used to secure a loan or other obligation, when valued at fair market value as of the time the original loan or obligation was incurred, was real property.

(j) "Merchant discount" means the fee (or negotiated discount) charged to a merchant by the taxpayer for the privilege of participating in a program whereby a credit, debit, or similar type of card is accepted in payment for merchandise or services sold to the card holder, net of any cardholder charge-back and unreduced by any interchange transaction or issuer reimbursement fee paid to another for charges or purchases made its cardholder.

(k) "Participation" means an extension of credit in which an undivided ownership interest is held on a pro rata basis in a single loan or pool of loans and related collateral. In a loan participation, the credit originator initially makes the loan and then subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.

(L) "Person" means an individual, estate, trust, partnership, corporation, and any other business entity.

(m) "Principal base of operations" with respect to transportation property means the place of more or less permanent nature from which said property is regularly directed or controlled. With respect to an employee, the "principal base of operations" means the place of more or less permanent nature from which the employee regularly:

(A) Starts his or her work and to which the employee customarily returns in order to receive instructions from the employer, or

(B) Communicates with customers or other persons, or

(C) Performs any other functions necessary to the exercise of the employee's trade or profession at some other point or points.

(n) "Real property owned" and "tangible personal property owned" means real and tangible personal property, respectively,

(A) On which the taxpayer may claim depreciation for federal income tax purposes; or

(B) Property to which the taxpayer holds legal title and on which no other person may claim depreciation for federal income tax purposes (or could claim depreciation if subject to federal income tax). Real and tangible personal property do not include coin, currency, or property acquired in lieu of or pursuant to a foreclosure.

(o) "Regular place of business" means an office at which the taxpayer conducts business in a regular and systematic manner and that is continuously maintained, occupied, and used by employees of the taxpayer.

(p) "State" is defined in ORS 314.610(8).

(q) "Syndication" means an extension of credit in which two or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.

(r) "Taxable" is defined as "taxable in another state" in ORS 314.620.

(s) "Transportation property" means vehicles and vessels capable of moving under their own power, such as aircraft, trains, water vessels, and motor vehicles, as well as any equipment or containers attached to such property, such as rolling stock, barges, trailers, or the like.

(4) Sales Factor.

(a) In general. Except as provided elsewhere in OAR 150-314-0088, the sales factor is a fraction and includes only those receipts that are received from transactions and activity occurring in the regular course of the taxpayer’s trade or business and that are included in the computation of the apportionable income base for the taxable year.

(b) Receipts from the sale, rental, lease, or license of real property. The numerator of the receipts factor includes receipts from the sales, rental, lease, or license of real property owned by the taxpayer if and to the extent the property is in this state or receipts from the sublease of real property if the property is in this state.

(A) Except as described in paragraph (B) of this subsection, the numerator of the sales factor includes receipts from the lease or rental of tangible personal property owned by the taxpayer if the property is located within this state when it is first placed in service by the lessee.

(B) Receipts from the lease or rental of transportation property owned by the taxpayer are included in the numerator of the sales factor to the extent that the property is used in this state. The extent an aircraft is deemed to be used in this state is determined by multiplying the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this state and the denominator of which is the total number of landings of the aircraft. If the extent of the use of any transportation property within this state cannot be determined, then the property is deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle is deemed to be used wholly in the state in which it is registered.

(d) Interest, fees, and penalties imposed in connection with loans secured by real property.

(A) The numerator of the sales factor includes interest, fees, and penalties imposed in connection with loans secured by real property if the property is located within this state. If the property is located both within this state and one or more other states, the receipts described in this subsection are included in the numerator of the sales factor if more than 50 percent of the fair market value of the real property is located within this state. If more than 50 percent of the fair market value of the real property is not located within any one state, then the receipts described in this subsection must be included in the numerator of the sales factor if the borrower is located in this state.

(B) The determination of whether the real property securing a loan is located within this state is made as of the time the original agreement was made, and any and all subsequent substitutions of collateral are disregarded.

(e) Interest, fees, and penalties imposed in connection with loans not secured by real property. The numerator of the sales factor includes interest, fees, and penalties imposed in connection with loans not secured by real property if the borrower is located in this state.

(f) Net gains from the sale of loans. The numerator of the sales factor includes net gains from the sale of loans. Net gains from the sale of loans includes income recorded under the coupon stripping rules of IRC section 1286.

(A) The amount of net gains (but not less than zero) from the sale of loans secured by real property included in the numerator is determined by multiplying such net gains by a fraction, the numerator of which is the amount included in the numerator of the sales factor pursuant to subsection (d) of this section and the denominator of which is the total amount of interest, fees, and penalties imposed in connection with loans secured by real property.

(B) The amount of net gains (but not less than zero) from the sale of loans not secured by real property included in the numerator is determined by multiplying such net gains by a fraction, the numerator of which is the amount included in the numerator of the sales factor pursuant to subsection (e) of this section and the denominator of which is the total amount of interest, fees, and penalties imposed in connection with loans not secured by real property.

(g) Receipts from fees, interest, and penalties charged to card holders. The numerator of the sales factor includes fees, interest, and penalties charged to credit, debit, or similar card holders; including but not limited to, annual fees and overdraft fees, if the billing address of the card holder is in this state.

(h) Net gains from the sale of credit card receivables. The numerator of the sales factor includes all net gains (but not less than zero) from the sale of credit card receivables multiplied by a fraction, the numerator of which is the amount included in the numerator of the sales factor pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders.

(i) Card issuer's reimbursement fees. The numerator of the sales factor includes:

(A) All credit card issuer's reimbursement fees multiplied by a fraction, the numerator of which is the amount included in the numerator of the sales factor pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to credit card holders.

(B) All debit card issuer's reimbursement fees multiplied by a fraction, the numerator of which is the amount of fees, interest, and penalties charged to debit card holders included in the numerator of the receipts factor pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to debit card holders.

(C) All other card issuer's reimbursement fees multiplied by a fraction, the numerator of which is the amount of fees, interest, and penalties charged to all other card holders included in the numerator of the receipts factor pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to all other card holders.

(j) Receipts from merchant discount.

(A) If the taxpayer can readily determine the location of the merchant and if the merchant is in this state, the numerator of the receipts factor includes receipts from merchant discount.

(B) If the taxpayer cannot readily determine the location of the merchant, the numerator of the receipts factor includes such receipts from the merchant discount multiplied by a fraction:

(i) In the case of a merchant discount related to the use of a credit card, the numerator of which is the amount of fees, interest, and penalties charged to credit card holders that is included in the numerator of the receipts factor pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to credit card holders, and

(ii) In the case of a merchant discount related to the use of a debit card, the numerator of which is the amount of fees, interest, and penalties charged to debit card holders that is included in the numerator of the receipts factor pursuant to subsection (g) of this section, and the denominator of which is the taxpayer’s total amount of fees, interest, and penalties charged to debit card holders.

(iii) In the case of a merchant discount related to the use of all other types of cards, the numerator of which is the amount of fees, interest, and penalties charged to all other card holders that is included in the numerator of the receipts factor pursuant to subsection (g) of this section, and the denominator of which is the taxpayer’s total amount of fees, interest, and penalties charged to all other card holders.

(C) The taxpayer’s method for sourcing each receipt from a merchant discount must be consistently applied to such receipt in all states that have adopted sourcing methods substantially similar to subsections (A) and (B) of this section and must be used on all subsequent returns for sourcing receipts from such merchant unless the department permits or requires application of the alternative method.

(k) Receipts from ATM fees. The receipts factor includes all ATM fees that are not forwarded directly to another bank.

(A) The numerator of the receipts factor includes fees charged to a cardholder for the use at an ATM of a card issued by the taxpayer if the cardholder’s billing address is in this state.

(B) The numerator of the receipts factor includes fees charged to a cardholder, other than the taxpayer’s cardholder, for the use of such card at an ATM owned or rented by the taxpayer, if the ATM is in this state.

(L) Loan servicing fees.

(A) The numerator of the sales factor includes loan servicing fees derived from loans secured by real property multiplied by a fraction, the numerator of which is the amount included in the numerator of the sales factor pursuant to subsection (d) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.

(B) The numerator of the sales factor includes loan servicing fees derived from loans not secured by real property multiplied by a fraction, the numerator of which is the amount included in the numerator of the sales factor pursuant to subsection (e) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.

(C) In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, the numerator of the sales factor must include such fees if the borrower is located in this state.

(m) Receipts from services not otherwise apportioned under this rule. The numerator of the sales factor includes receipts from the sale of a service not otherwise apportioned under this rule, if and to the extent the service is delivered to a customer at a location in this state.

(A) Services Delivered to Individual Customers. In any instance in which the taxpayer’s customer is an individual customer, the state or states in which the service is delivered must be reasonably approximated as follows: the taxpayer must assign the receipts from a sale to the customer’s state of primary residence, or, if the taxpayer cannot reasonably identify the customer’s state of primary residence, to the state of the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from an individual customer, the taxpayer must identify the customer’s state of primary residence and assign the receipts from the service or services provided to that customer to that state.

(B) Services Delivered to Business Customers. In any instance in which the taxpayer’s customer is a business customer, the state or states in which the service is delivered must be reasonably approximated as follows: unless the taxpayer may use the safe harbor in paragraph (C) of this subsection, the taxpayer must assign the receipts from the sale as follows: (1) by assigning the receipts to the state where the contract of sale is principally managed by the customer; (2) if the place of customer management is not reasonably determinable, to the customer’s place of order; and (3) if the customer place of order is not reasonably determinable, to the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from a customer, the taxpayer is required to identify the state in which the contract of sale is principally managed by the customer.

(C) Safe Harbor; Large Volume of Transactions. Notwithstanding the rules set forth in paragraphs (A) and (B) of this subsection, a taxpayer may assign its receipts from sales to a particular customer based on the customer’s billing address in any taxable year in which the taxpayer (1) engages in substantially similar service transactions with more than 250 customers, whether individual or business, and (2) does not derive more than five percent of its receipts from sales of all services from that customer.

(D) Related Party Transactions. In any instance in which the professional service is sold to a related party, rather than applying the rule for professional services delivered to business customers in paragraph (B) of this subsection, the state or states to which the service is assigned is the place of receipt by the related party as reasonably approximated using the following hierarchy: (1) if the service primarily relates to specific operations or activities of a related party conducted in one or more locations, then to the state or states in which those operations or activities are conducted in proportion to the related party’s payroll at the locations to which the service relates in the state or states; or (2) if the service does not relate primarily to operations or activities of a related party conducted in particular locations, but instead relates to the operations of the related party generally, then to the state or states in which the related party has employees, in proportion to the related party’s payroll in those states. The taxpayer may use the safe harbor provided by paragraph (C) of this subsection provided that the department may aggregate the receipts from sales to related parties in applying the five percent rule if necessary or appropriate to avoid distortion.

(n) Receipts from the financial institution’s investment assets and activities and trading assets and activities.

(A) Interest, dividends (less Oregon dividend deduction), net gains (but not less than zero), and other income from investment assets and activities and from trading assets and activities that are reported on the taxpayer’s financial statements, call reports, or similar reports are included in the sales factor. Investment assets and activities and trading assets and activities include but are not limited to: investment securities, trading account assets, federal funds; securities purchased and sold under agreements to resell or repurchase, options, future contracts, forward contracts, notional principal contracts such as swaps, equities, and foreign currency transactions. With respect to the investment and trading assets and activities described in subparagraphs (i) and (ii) of this paragraph, the sales factor includes the amounts described in such subparagraphs.

(i) The sales factor includes the amount by which interest from federal funds sold and securities purchased under resale agreements exceeds interest expense on federal funds purchased and securities sold under repurchase agreements.

(ii) The sales factor includes the amount by which interest, dividends (less Oregon dividend deduction), gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, exceed amounts paid in lieu of interest, amounts paid in lieu of dividends, and losses from such assets and activities.

(B) The numerator of the sales factor includes interest, dividends (less Oregon dividend deduction), net gains (but not less than zero), and other income from investment assets and activities and from trading assets and activities described in paragraph (A) that are attributable to this state.

(i) The amount of interest, dividends (less Oregon dividend deduction), net gains (but not less than zero) and other income from investment assets and activities in the investment account to be attributed to this state and included in the numerator of the sales factor is determined by multiplying all such income from such assets and activities by a fraction, the numerator of which is the average value of such assets that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such assets.

(ii) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements attributable to this state and included in the numerator of the sales factor is determined by multiplying the amount described in subparagraph (i) of paragraph (A) from such funds and such securities by a fraction, the numerator of which is the average value of federal funds sold and securities purchased under agreements to resell that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such funds and such securities.

(iii) The amount of interest, dividends (less Oregon dividend deduction), gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, (but excluding amounts described in subparagraphs (i) and (ii) of this paragraph), attributable to this state and included in the numerator of the sales factor is determined by multiplying the amount described in subparagraph (ii) of paragraph (A) by a fraction, the numerator of which is the average value of such trading assets that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such assets.

(iv) For purposes of this paragraph, average value is determined using the rules for determining the average value of tangible personal property set forth in subsections (c) and (d) of section (5).

(C) In lieu of using the method set forth in paragraph (B) of this subsection, the taxpayer may elect, or the department may require in order to fairly represent the business activity of the taxpayer in this state, the use of the method set forth in this paragraph.

(i) The amount of interest, dividends (less Oregon dividend deduction), net gains (but not less than zero), and other income from investment assets and activities in the investment account to be attributed to this state and included in the numerator of the sales factor is determined by multiplying all such income from such assets and activities by a fraction, the numerator of which is the gross income from such assets and activities that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such assets and activities.

(ii) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements attributable to this state and included in the numerator of the sales factor is determined by multiplying the amount described in subparagraph (i) of paragraph (A) from such funds and such securities by a fraction, the numerator of which is the gross income from such funds and such securities that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such funds and such securities.

(iii) The amount of interest, dividends (less Oregon dividend deduction), gains, and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions (but excluding amounts described in subparagraphs (i) and (ii) of this paragraph) attributable to this state and included in the numerator is determined by multiplying the amount described in subparagraph (ii) of paragraph (A) by a fraction, the numerator of which is the gross income from such trading assets and activities that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such assets and activities.

(D) If the taxpayer elects or is required by the department to use the method set forth in paragraph (C) of this subsection, it must use this method on all subsequent returns unless the taxpayer receives prior written permission from the department, or the department requires the use of a different method.

(E) The taxpayer has the burden of proving that an investment asset or activity or trading asset or activity was properly assigned to a regular place of business outside of this state by demonstrating that the day-to-day decisions regarding the asset or activity occurred at a regular place of business outside this state. Where the day-to-day decisions regarding an investment asset or activity or trading asset or activity occur at more than one regular place of business, and one such regular place of business is in this state and one such regular place of business is outside this state, such asset or activity is considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established. Unless the taxpayer demonstrates to the contrary, such policies and guidelines are presumed to be established at the commercial domicile of the taxpayer.

(o) All other receipts. The numerator of the sales factor includes all other receipts described in (4)(a) and not sourced above as set forth below.

(A) Receipts derived from property, transactions, and activities having a connection to Oregon are included in the sales factor numerator. Receipts derived from the sale of tangible personal property have a connection to Oregon if the tangible personal property is delivered in Oregon or shipped from Oregon to a jurisdiction where the taxpayer is not taxable. Receipts derived from intangible personal property have a connection to Oregon if the intangible property is used or held for use in Oregon.

(B) A taxpayer must attach a statement to their return that describes each receipt and the property, transaction, or activity from which it is derived for any receipts to be considered “other receipts” for inclusion in either the numerator or denominator of the sales factor.

(p) Attribution of certain receipts to commercial domicile. All receipts that would be assigned under this section to a state in which the taxpayer is not taxable are included in the numerator of the sales factor if the taxpayer's commercial domicile is in this state.

(5) Property Factor.

(a) In general. The property factor is a fraction, the numerator of which is the average value of the taxpayer's real property, tangible personal property, loans, and credit card receivables located and used within this state during the taxable year and the denominator of which is the average value of all such property located and used both within and without this state during the taxable year.

(b) Property included. The property factor includes only property the income or expenses of which are included (or would have been included if not fully depreciated or expensed, or depreciated or expensed to a nominal amount) in the computation of the apportionable income base for the taxable year.

(A) The value of real property and tangible personal property owned by the taxpayer is the original cost or other basis of such property for federal income tax purposes without regard to depletion, depreciation, or amortization.

(B) Loans are valued at their outstanding principal balance, without regard to any reserve for bad debts. If a loan is charged off in whole or in part for federal income tax purposes, the portion of the loan charged off is not outstanding. A specifically allocated reserve established pursuant to regulatory or financial accounting guidelines that is treated as charged off for federal income tax purposes is treated as charged off for purposes of this section.

(C) Credit card receivables are valued at their outstanding principal balance, without regard to any reserve for bad debts. If a credit card receivable is charged off in whole or in part for federal income tax purposes, the portion of the receivable charged off is not outstanding.

(d) Average value of property owned by the taxpayer. See OAR 150-314-0398 and 150-314-0406.

(e) Average value of real property and tangible personal property rented to the taxpayer. See OAR 150-314-0400.

(f) Location of real property and tangible personal property owned by or rented to the taxpayer.

(A) Except as described in paragraph (B) of this subsection, real property and tangible personal property owned by or rented to the taxpayer is considered to be located within this state if it is physically located, situated, or used within this state.

(B) Transportation property is included in the numerator of the property factor to the extent that the property is used in this state. The extent an aircraft is deemed to be used in this state and the amount of value that is included in the numerator of this state's property factor is determined by multiplying the average value of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this state and the denominator of which is the total number of landings of the aircraft everywhere. If the extent of the use of any transportation property within this state cannot be determined, then the property is deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle is deemed to be used wholly in the state in which it is registered.

(g) Location of loans.

(A)(i) A loan is considered to be located within this state if it is properly assigned to a regular place of business of the taxpayer within this state.

(ii) A loan is properly assigned to the regular place of business with which it has a preponderance of substantive contacts. A loan assigned by the taxpayer to a regular place of business without the state is presumed to have been properly assigned if:

(I) The taxpayer has assigned, in the regular course of its business, such loan on its records to a regular place of business consistent with federal or state regulatory requirements;

(II) Such assignment on its records is based upon substantive contacts of the loan to such regular place of business; and

(III) The taxpayer uses said records reflecting assignment of loans for the filing of all state and local tax returns for which an assignment of loans to a regular place of business is required.

(iii) The presumption of proper assignment of a loan provided in subparagraph (A)(ii) of this section may be rebutted upon a showing by the department, supported by a preponderance of the evidence, that the preponderance of substantive contacts regarding such loan did not occur at the regular place of business to which it was assigned on the taxpayer's records. When such presumption has been rebutted, the loan is located within this state if:

(I) The taxpayer had a regular place of business within this state at the time the loan was made; and

(II) The taxpayer fails to show, by a preponderance of the evidence that the preponderance of substantive contacts regarding such loan did not occur within this state.

(B) In the case of a loan that is assigned by the taxpayer to a place without this state that is not a regular place of business, it is presumed, subject to rebuttal by the taxpayer on a showing supported by the preponderance of evidence, that the preponderance of substantive contacts regarding the loan occurred within this state if, at the time the loan was made, the taxpayer's commercial domicile, as defined by subsection (3)(c), was within this state.

(C) To determine the state in which the preponderance of substantive contacts relating to a loan have occurred, the facts and circumstances regarding the loan at issue will be reviewed on a case-by-case basis and consideration will be given to such activities as the solicitation, investigation, negotiation, approval, and administration of the loan. The terms "solicitation," "investigation," "negotiation," "approval," and "administration" are defined as follows:

(i) Solicitation. Solicitation is either active or passive. Active solicitation occurs when an employee of the taxpayer initiates the contact with the customer. Such activity is located at the regular place of business that the taxpayer's employee is regularly connected with or working out of, regardless of where the services of such employee were actually performed. Passive solicitation occurs when the customer initiates the contact with the taxpayer. If the customer's initial contact was not at a regular place of business of the taxpayer, the regular place of business, if any, where the passive solicitation occurred is determined by the facts in each case.

(ii) Investigation. Investigation is the procedure whereby employees of the taxpayer determine the credit-worthiness of the customer as well as the degree of risk involved in making a particular agreement. Such activity is located at the regular place of business that the taxpayer's employees are regularly connected with or working out of, regardless of where the services of such employees were actually performed.

(iii) Negotiation. Negotiation is the procedure whereby employees of the taxpayer and its customer determine the terms of the agreement (e.g., the amount, duration, interest rate, frequency of repayment, currency denomination, and security required). Such activity is located at the regular place of business that the taxpayer's employees are regularly connected with or working out of, regardless of where the services of such employees were actually performed.

(iv) Approval. Approval is the procedure whereby employees or the board of directors of the taxpayer make the final determination whether to enter into the agreement. Such activity is located at the regular place of business that the taxpayer's employees are regularly connected with or working out of, regardless of where the services of such employees were actually performed. If the board of directors makes the final determination, such activity is located at the commercial domicile of the taxpayer.

(v) Administration. Administration is the process of managing the account. This process includes bookkeeping, collecting the payments, corresponding with the customer, reporting to management regarding the status of the agreement, and proceeding against the borrower or the security interest if the borrower is in default. Such activity is located at the regular place of business that oversees this activity.

(h) Location of credit card receivables. For purposes of determining the location of credit card receivables, credit card receivables are treated as loans and are subject to the provisions of subsection (g) of this section.

(i) Period for which properly assigned loan remains assigned. A loan that has been properly assigned to a state, absent any change of material fact, remains assigned to that state for the length of the original term of the loan. Thereafter, the loan may be properly assigned to another state if the loan has a preponderance of substantive contact to a regular place of business there.

(6) Payroll factor. In general. The payroll factor is determined as provided in ORS 314.660 and the rules thereunder.

(7) The amendments to this rule are effective on January 1, 2018 and are applicable to tax years beginning on or after January 1, 2018.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.280
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280-(N), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2009, f. 12-21-09, cert. ef. 1-1-10
REV 5-2006, f. & cert. ef. 7-31-06
REV 3-2005, f. 12-30-05, cert. ef 1-1-06
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 2-2003, f. & cert. ef. 7-31-03
REV 8-2002, f. & cert. ef. 12-31-02
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-314-0090 Public Utilities: Sale of Commodities

(1) The sale of a commodity such as electricity, water, steam, oil, oil products or gas, including but not limited to natural and liquid gas, which is delivered or shipped to a purchaser with a contractually specified point of physical delivery in Oregon, is a sale in this state. It does not matter whether the purchaser uses the property in Oregon, transfers the property to another state, or resells the property in Oregon. If the contract states the point of delivery is at the Oregon border with another state, the sale is presumed to be in Oregon unless the taxpayer can demonstrate to the satisfaction of the department that delivery occurred in some other place.

Example 1: A provider of wholesale electricity enters into a contract to deliver a specified amount and duration of a supply of electricity to a purchaser who takes possession at a contractually specified point of physical delivery in Oregon. The sale is an Oregon sale.

(2) A taxpayer who contracts to sell electricity to and also buy electricity from the same entity during the same period or partial period of time will have an offsetting contractual amount, also known as a book-out transaction. The gross sales of electricity, without regard to the offsetting purchase amount, are considered to be Oregon sales if the contractually specified point of physical delivery is in Oregon.

Example 2: Company A signed a contract on January 2, 2016, to purchase 50 megawatts of electricity for a period of 10 hours starting November 15, 2016, from Company B with a delivery point of Malin, Oregon. For this same time period, Company A signed a contract on March 15, 2014, to sell 30 megawatts of electricity to Company B with a point of delivery at Malin, Oregon. The 30 megawatts of power is recorded as a book-out transaction on both companies’ books for reporting to Oregon. The offsetting transaction for the 30 megawatts is deemed to be delivered in Oregon for the purposes of computing the Oregon sales factor. Company A will report the sale of 30 megawatts in its Oregon sales factor numerator and Company B will report the sale of 50 megawatts (20 megawatts to complete the sales contract plus 30 megawatts from the book-out transaction) of electricity in its Oregon sales factor numerator.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
Renumbered from 150-314.280-(O), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
REV 5-2016, f. & cert. ef. 7-1-16
REV 1-2016(Temp), f. 1-25-16, cert. ef. 1-26-16 thru 7-23-16
REV 5-2015, f. 12-23-15, cert. ef. 1-1-16

Or. Admin. R. 150-314-0100 Disallowance of Certain Intercompany Transactions Involving Intangible Assets

(1) The provisions of section (3) of this rule apply in situations where:

(a) An intangible asset is owned by one corporation, organization, trade or business (the owner) and used by another (the user) for a royalty or other fee,

(b) Both the owner and the user are "owned by the same interests," as defined in Treas. Reg.§1.469-4T, paragraph (j),

(d) The separation of ownership of the intangible asset from the user of the intangible asset results in either:

(A) Evasion of tax, or

(B) A computation of Oregon taxable income that is not clearly reflective of Oregon apportionable income.

(2) For purposes of this rule, separation of the ownership and use of an intangible asset is for "evasion of taxes" when such separation has no effect on the operations of the user beyond payment of the royalty or other fee.

(3) The user of the intangible asset must add the royalty or other expense for such use to federal taxable income as an "other addition" on the Oregon tax return. The owner of the intangible asset must subtract the royalty or other income from such use from federal taxable income as an "other subtraction" on the Oregon tax return. The following example is for illustrative purposes only.

Example: Alpha Corporation (Alpha) uses a number of trademarks in its retail sales business. After developing the value of the trademarks over a period of 30 years, Alpha incorporated a subsidiary, Beta, Inc. (Beta) in Bermuda and transferred the trademarks to Beta for shares of newly issued Beta stock. Alpha paid royalties to Beta for use of the trademarks. Beta is not included in Alpha's consolidated federal and Oregon tax returns. After the transfer of the trademarks to Beta, Alpha uses the trademarks as it had before the transfer and the only change in its business operation is the payment of the royalty. The transfer of the trademarks does not change Alpha's business operations as they are readily apparent to or as they affect relations with customers, vendors, or other external parties. Alpha requires that Beta manage the trademarks as Alpha had before the transfer. Alpha must add the royalty deduction back to federal taxable income on its Oregon Corporation Excise Tax return. If Beta is subject to Oregon taxation, the royalty income must be subtracted from its federal taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.295
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.280(3), REV 33-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.295, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2009, f. & cert. ef. 7-31-09
REV 4-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-314-0105 Farm Income Averaging

(1)(a) Overview. An individual engaged in a farming business may elect to compute his or her current year (election year) income tax liability under ORS Chapter 316 by averaging, over the prior three-year period (base years), all or a portion of the individual's current year electable farm income (as defined in section (4) of this rule). To average farm income, the individual:

(A) Designates all or a portion of his or her elected farm income for the election year as elected farm income; and

(B) Allocates one-third of the elected farm income to each of the three base years; and

(i) The election year ORS Chapter 316 tax without regard to the elected farm income; plus

(ii) For each base year, the increase in ORS Chapter 316 tax attributable to the elected farm income allocated to each year.

(b) Individual engaged in a farming business. An individual engaged in a farming business includes a sole proprietor of a farming business, a partner in a partnership engaged in a farming business, and a shareholder of an S corporation engaged in a farming business. Estates and trusts may not use farm income averaging. An individual is not required to have been engaged in a farming business in any of the base years in order to make a farm income averaging election.

(c) Making, changing, or revoking an election. A farm income averaging election is made by indicating the election on an individual's timely filed (including extensions) Oregon income tax return for the election year.

(A) An individual who has an adjustment for an election year or any base year may make a late farm income averaging election, change the amount of elected farm income in a previous election, or revoke a previous election, if the period of limitation prescribed in ORS 314.415 has not expired for the election year. For purposes of this paragraph, an adjustment is any change in taxable income or tax liability that is permitted to be made by filing an amended Oregon income tax return or a change in taxable income or tax liability made as the result of an examination or a federal audit report received from the Internal Revenue Service.

(B) If the individual does not have an adjustment as described in paragraph (A), the individual may not make a late farm income averaging election, change the amount of elected farm income in a previous election, or revoke a previous election, without the consent of the department.

(2) Calculation of tax for the election year. Determine the tax for the election year by allocating elected farm income to the base years only after all other adjustments and determinations have been made. For example, any net operating loss (NOL) carryover or net capital loss carryover is applied to an election year before allocating elected farm income to the base year. Similarly, the determination of whether there is a net Section 1231 gain or loss in the election year and the determination of the character of the Section 1231 items are made before allocating elected farm income to the base years. The allocation of the elected farm income to the base years does not affect any determination with respect to the election year or the base years. For example, in calculating a deduction or tax credit for Oregon that is computed by using adjusted gross income or is limited by adjusted gross income, adjusted gross income for the election year includes any elected farm income allocated to the base years. Similarly, adjusted gross income for the base year is not recalculated to take into account the allocation of elected farm income. The calculation of tax on elected farm income allocated to a base year is made without any additional adjustments or determinations with respect to the base year. For example, if a base year had a partially used capital loss, the remaining capital loss may not be applied to reduce the elected farm income allocated of the base year. Similarly, if a base year had a partially used credit, the remaining credit may not be applied to reduce tax attributable to the elected farm income allocated to the base year.

(3) Base year was previously an election year or another base year. If a base year for a current farm income averaging election was previously an election year for another farm income averaging election, determine the base year’s Oregon tax after reducing the base year’s taxable income by the elected farm income for the prior election year. If a base year for a current farm income averaging election was previously a base year for another farm income averaging election, determine the base year’s Oregon tax after increasing the base year’s taxable income by the elected farm income allocated to that year by the prior election.

Example 1: In each of years 2015, 2016, and 2017, farmer Joe had taxable income of $15,000. In 2018, Joe had taxable income of $30,000 (prior to any farm income averaging election) and electable farm income of $9,000. Joe makes a farm income averaging election to average all $9,000 of his electable farm income for 2018. Thus, $3,000 of elected farm income is allocated to each of the tax years 2015, 2016, and 2017. Joe’s 2018 tax liability is the sum of:

(a) The Oregon tax on $21,000 (2018 taxable income minus elected farm income); plus

(b) For each of the tax years 2015, 2016, and 2017, the Oregon tax on $18,000 minus the Oregon tax on $15,000 (the increase in tax attributable to the elected farm income allocated to each year).

In 2019, Joe has taxable income of $50,000 and electable farm income of $12,000. Joe makes a farm income averaging election to allocate all $12,000 of his electable farm income for 2019. Thus, $4,000 of elected farm income is allocated to each of the tax years 2016, 2017, and 2018. Joe’s 2019 tax liability is the sum of:

(a) The Oregon tax on $38,000 (2019 taxable income minus elected farm income); plus

(b) For both 2016 and 2017, the Oregon tax on $22,000 ($15,000 + $3,000 + $4,000) minus the tax on $18,000 (the increase in Oregon tax attributable to the elected farm income allocated to these years after increasing each years’ taxable income by elected farm income allocated to each year by the 2018 farm income averaging election); plus

(c) For tax year 2018, the Oregon tax on $25,000 (the 2018 taxable income minus elected farm income plus the $4,000 allocated to this base year) minus the Oregon tax on $21,000 (the increase in tax attributable to the elected farm income allocated to this year after reducing this year’s taxable income by the 2018 elected farm income).

(4) Electable farm income.

(a) Farm income includes items of income, deduction, gain, and loss attributable to the individual’s farming business. Farm losses include an NOL carryover, or a net capital loss carryover to an election year that is attributable to a farming business. Income, gain, or loss from the sale of development rights, grazing rights, and other similar rights is not treated as attributable to a farming business. Farm income does not include wages.

(b) Gain or loss on sale or other disposition of property. Gain or loss from the sale or other disposition of property (other than land, but including a structure affixed to the land) that was regularly used in the individual’s farming business for a substantial period of time is treated as attributable to a farming business. Whether property was regularly used for a substantial period of time depends on all of the facts and circumstances.

(c) Cessation of a farming business. If gain or loss is realized on assets used in a farming business after the farming business stops, the gain or loss is treated as attributable to a farming business if the property is sold within a reasonable time after the business ceases operations. A sale or other disposition within one year of the end of business operations is considered to be within a reasonable time. Whether a sale or other disposition that occurs more than one year after the end of business operations is within a reasonable time depends on all of the facts and circumstances.

(d) Determination of amount that may be elected farm income. The maximum amount of income that an individual may elect to average (electable farm income) is the sum of any farm income and gain minus any farm deductions or losses (including loss carryovers and carrybacks) that are allowed as a deduction in computing the individual’s taxable income. Electable farm income may not exceed taxable income. Electable farm income from net capital gain attributable to a farming business cannot exceed total net capital gain. An individual who has both ordinary and net capital gain farm income may elect (up to electable farm income) any combination of such ordinary and net capital gain farm income.

Example 2: Andrew has farm gross receipts of $200,000 and farm ordinary deductions of $50,000. Andrew’s taxable income is $150,000 ($200,000 – $50,000). Andrew’s electable farm income is $150,000, all of which is ordinary income.

Example 3: Bailey has a farm capital gain of $50,000 and a nonfarm capital loss of $40,000. Bailey also has ordinary farm income of $60,000. Bailey has taxable income of $70,000 ($50,000 – $40,000 + $60,000). Bailey’s electable farm income is $70,000. Bailey can elect up to $10,000 of farm capital gain and up to $60,000 of farm ordinary income.

Example 4: Cameron has a nonfarm capital gain of $40,000 and a farm capital loss of $30,000. Cameron also has ordinary farm income of $100,000. Cameron has taxable income of $110,000 ($40,000 – $30,000 + $100,000). Cameron’s electable farm income is $100,000 ordinary farm income minus $30,000 farm capital loss, or $70,000, all of which is ordinary income.

(5) Miscellaneous rules.

(a) Short taxable year. If a base year or an election year is a short taxable year, the rules of IRC Section 443 and the regulations thereunder apply for purposes of calculating Oregon tax.

(A) Base year is a short taxable year. If a base year is a short taxable year, the increase in Oregon tax attributable to the elected farm income allocated to the base year is determined after the taxable income for the base year has been annualized.

(B) Election year is a short taxable year. If an election year is a short taxable year, any elected farm income is first annualized before being allocated to the base years. The increase in Oregon tax attributable to the elected farm income allocated to the base years is the part of the tax computed on an annual basis that bears the same ratio to the full amount as the number of months in the short election year bears to 12.

(b) Changes in filing status. An individual is not prohibited from making a farm income averaging election solely because the individual’s filing status is not the same in an election year and the base years. For example, an individual who files single in the election year, but filed married filing jointly in all of the base years, may still elect to average farm income.

(c) Changes in residency status. An individual is not prohibited from making a farm income averaging election solely because the individual’s residency status is not the same in the election year and the base years. If an individual’s filing status is as a part-year or nonresident in the election year, the taxpayer still may elect to average farm income. Only Oregon source farm income and Oregon source capital gains and losses are considered elected farm income. If an individual’s filing status is a full-year resident in the election year but some or all of the base years are filed as a part-year or nonresident, elected farm income is allocated over the three prior years and added to amounts in both the federal and state column. The Oregon percentage for allocating deductions and modifications and for apportioning tax is recomputed using the new amounts of income in the federal and Oregon columns. Exemption credits are not computed using the revised percentage.

[Publications: C ontact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 314.297
Statutes/Other Implemented: ORS 314.297
REV 74-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.297, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.297(6), REV 9-2015, f. 12-23-15, cert. ef. 1-1-16
REV 8-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-314-0110 Allocation of Oregon Modifications to Passive Activity Losses

(1) Oregon Passive Activity Loss. The Oregon passive activity loss shall be equal to the federal passive activity loss (defined in IRC Section 469(d)) as modified by the additions, subtractions, modifications or adjustments provided in ORS Chapters 314, 316, 317, and 318 as they relate to passive activities (defined in IRC Section 469(c)).

(2)(a) Modifications to Federal Passive Activity Losses. Modifications that may apply to passive activities of individuals include but are not limited to the following:

(A) The addition provided in ORS 316.680(2)(a) for interest or dividends on obligations of another state, provided the interest or dividends are derived in the ordinary course of the passive activity.

(B) The addition or subtraction provided in ORS 316.707 for differences in depreciation of assets used in the passive activity.

(C) The addition or subtraction provided in ORS 316.716 due to a difference in basis, upon the taxable sale, exchange or disposition by the taxpayer of an asset used in the passive activity.

(D) The addition provided in ORS 316.723 for public utility stock dividends and the subtraction for gain or loss on the sale of public utility stock where dividends were reinvested, provided the dividends and gain or loss are derived in the ordinary course of the passive activity.

(E) The addition provided by ORS 316.680(2)(d) for depletion in excess of the adjusted basis of property if the property is used in the passive activity.

(F) The subtraction provided in ORS 316.680(1)(a) for interest or dividends on obligations of the U.S. government if the interest or dividends are derived in the ordinary course of the passive activity.

(G) The subtraction for wage expense paid or accrued with respect to the passive activity but not deducted in arriving at federal taxable income because the federal targeted jobs credit under IRC Section 51 was claimed.

(H) The subtraction provided by ORS 314.210 for the elimination of excess profits on government contracts if such profits were derived in the ordinary course of the passive activity.

(I) The addition or subtraction provided in ORS 316.872 for deferral of gain on the sale of small business securities if the securities were held or sold in the ordinary course of the passive activity.

(J) The addition or subtraction provided in ORS 316.873 for deferral of gain on the sale of capital assets, if the assets were held or sold in the ordinary course of the passive activity.

(K) The subtraction provided in ORS 316.744 for energy conservation payments if the energy conservation measure was undertaken with respect to the passive activity.

(L) The addition provided in ORS 316.680(2)(e) for deferred gain on involuntary conversions or exchanges of Oregon property, the proceeds of which are reinvested in property outside Oregon. This modification applies if the property disposed of was used in the passive activity.

(M) The subtraction provided in ORS 316.056 for interest or dividends on obligations of Oregon political subdivisions, provided the interest or dividends are derived in the ordinary course of the passive activity.

Example: Mary has a post-1987 nonrental passive activity loss for federal purposes of $13,500. She shows an addition for depreciation for Oregon of $1,000 and a subtraction for a jobs credit of $600. The computation of Mary’s passive loss for Oregon is shown below:

Federal loss — ($13,500)

Oregon addition for depreciation — 1,000

Oregon subtraction for jobs credit — (600)

Passive loss for Oregon — $13,100

(b) Modifications that may apply to passive activities of a closely held corporation or personal service corporation include but are not limited to the following:

(A) The addition or subtraction provided in ORS 317.368 for differences in depreciation of assets used in the passive activity.

(B) The addition or subtraction provided in ORS 317.374 for differences in depletion if the property is used in the passive activity.

(C) The addition or subtraction provided in ORS 317.356 due to a difference in basis, upon the taxable sale, exchange or disposition by the taxpayer of an asset used in the passive activity.

(D) The addition or subtraction provided in ORS 317.319 for payments to or withdrawals from a capital construction fund if it is established in the ordinary course of the passive activity.

(E) The addition provided in ORS 317.326 for deferred gain from the exchange or involuntary conversion of Oregon property, the proceeds of which are reinvested in property outside Oregon. This modification applies if the property disposed of was used in the passive activity.

(F) The addition provided in ORS 317.309 for interest and dividends received from states and political subdivisions of states derived in the ordinary course of the passive activity.

(G) The dividend-received deduction provided in ORS 317.267 if the securities were held in the ordinary course of the passive activity.

(3)(a) Modifications of Passive Losses by a Nonresident: In the case of a nonresident, losses resulting from passive activities derived from or connected with Oregon sources as defined in ORS 316.127 are deductible for Oregon purposes, subject to the provisions of IRC Section 469. The loss is modified by the modifications, additions and subtractions provided for in ORS Chapters 314 and 316 allocable to the passive activity. Sections (2) and (4) of this rule shall be followed regarding which additions, subtractions and modifications are allocable and how the transition rules and passive activity credits are applied. Section (7) of this rule shall be followed regarding the computation of the Oregon passive activity loss.

Example: John is a nonresident of Oregon and has rental property in both Oregon and California. His loss from all rentals is $50,000 and from his Oregon rental $10,000. Federal law allows a deduction of up to $25,000 for rentals. John would show $25,000 loss in the federal column of Form 40N and $10,000 loss in the Oregon column of Form 40N. John claims the $10,000 loss for Oregon because the loss for a nonresident from Oregon sources is treated in the same manner as a passive loss for a full-year resident.

In the case of a nonresident, losses resulting from passive activities derived from or connected with sources outside Oregon are not deductible for Oregon purposes, regardless of a later change in the taxpayer’s residency.

Example: Tony is currently a full-year resident of Oregon. He moved to Oregon from California on December 15th of the prior year. In his last year in California, Tony incurred a passive loss from a California based investment. He was unable to claim the loss in the year incurred due to the passive loss limitations. Tony may not carry his loss forward to his Oregon return, because he was not a resident of Oregon in the year the loss was incurred and nonresidents can only carry forward passive losses from Oregon sources.

(b) Modification of Passive Losses by a Part-year Resident: In the case of a part-year resident, losses resulting from passive activities carried on during the period the taxpayer is a resident plus those derived from or connected with Oregon sources as defined in ORS 316.127 during the period the taxpayer is a nonresident are deductible for Oregon subject to the provisions of IRC Section 469. The loss is modified by additions, subtractions and modifications provided for in ORS Chapters 314 and 316 allocable to the passive activity. Sections (2) and (4) of this rule shall be followed regarding which additions, subtractions and modifications are allocable and how passive activity credits are applied. Section (7) of this rule shall be followed regarding the computation of the Oregon passive activity loss.

Example: Steve moved to Oregon on July 1 and is a part-year resident of Oregon. He has rentals in both Oregon and California. His loss from the California rental is $24,000 incurred ratably throughout the year ($2,000 per month). His loss from the Oregon rental is $10,000.

Steve would show the maximum $25,000 loss for rentals in the federal column of Form 40P. He would show $22,000 loss in the Oregon column of Form 40P. The Oregon loss consists of $10,000 loss for the Oregon rental and $12,000 loss ($2,000 x 6) for the California rental incurred from July 1 to December 31, the period in which Steve was a resident.

(4) Passive Activity Credits: Taxpayers may offset in full the tax credits provided in ORS Chapters 315, 316, 317, and 318 related to a passive activity against Oregon tax liability for the taxable year.

(5) Active Participants in Rental Real Estate Activities: The $25,000 offset for rental real estate activities provided in IRC Section 469(i) is not reduced by deduction equivalents (defined in IRC Section 469(j)(5)).

(6) Special Rules for Taxpayers in Real Property Business: Taxpayers who qualify under IRC 469(d)(7)(B) to treat any rental real estate activity as a non-passive activity for federal tax purposes shall use the same treatment for Oregon tax purposes.

(7) Computation of the Oregon Passive Activity Loss: Modify the federal passive activity loss by the additions, subtractions and modifications applicable to the passive activity. Apply the passive activity loss limitations specified in IRC Section 469 to the recomputed Oregon passive activity loss. Modify the Oregon return for the difference between the federal passive activity loss deducted and the allowable Oregon passive activity loss. Any amount of the Oregon passive activity loss not allowed in the tax year as a result of the application of the federal loss limitations may be carried forward to the following tax year.

Example 1: Tom has an adjusted gross income of under $100,000. He has a $26,000 passive activity loss from rental property acquired in 1987. The passive loss limitations in IRC Section 469 will allow Tom to use $25,000 of this loss to offset current year income from other sources. The remaining $1,000 will be carried forward for federal purposes.

Tom has $2,000 less depreciation for Oregon than for federal on the rental property. His Oregon passive activity loss is reduced to $24,000 (26,000 – 2,000). An addition of $1,000 is required on the Oregon return. This represents the difference between the allowable federal deduction of $25,000 and the allowable Oregon deduction of $24,000. The $1,000 addition is shown as an “Other addition … Oregon passive loss” on the Oregon return. Tom does not show an addition for depreciation. He will not carry forward any of the loss for Oregon purposes.

Example 2: Larry has an adjusted gross income of under $100,000. He has a $40,000 passive activity loss from rental property acquired in 1987. For federal purposes, Larry may use $25,000 of the loss to offset income from other sources. He carries forward the $15,000 balance.

Larry has $3,000 less depreciation for Oregon than for federal on the rental property. His Oregon passive activity loss is reduced to $37,000 (40,000 – 3,000). Larry then applies the federal passive loss limitations of section 469 of the Internal Revenue Code, and shows the maximum $25,000 loss on his Oregon return. Because this is the same passive loss shown on the federal return, no modification is needed. Larry may carry forward the $12,000 balance of the loss (37,000 – 25,000). Larry does not show an addition for depreciation on the return.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.300
Renumbered from 150-314.300, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-314-0115 Interest on Deferred Oregon Tax Liability with Respect to Installment Obligations

(1) Corporations with income from business activity taxable both within and without this state must compute interest on deferred Oregon tax liability with respect to installment obligations using the relevant apportionment and allocation provisions of ORS Chapter 314.

(2) Interest on deferred Oregon tax liability with respect to apportionable income from installment obligations must be computed using the Oregon apportionment factor for the year of the installment sale.

(3) Interest on deferred Oregon tax liability with respect to nonapportionable income from installment obligations must be computed using the allocation provisions that apply to the income from the installment sale.

Example 1: C Corp is a toy manufacturer doing business in Oregon and Washington. In 2016, C Corp sells a factory in Washington. The sales price is $11,000,000, the basis for Oregon tax purposes is $5,500,000, and the gross profit percentage is 50 percent. Under the terms of the sale, C Corp receives $1,000,000 in 2016 and a note for $10,000,000 (including $5,000,000 of unrecognized gain) to be paid in five equal annual installments. C Corp’s Oregon apportionment percentage for its 2016 calendar year return is 25 percent. The interest rules under IRC 453A and ORS 314.302 apply because the face amount of installment obligations remaining unpaid at the end of 2016 is greater than $5,000,000. The interest to report as tax on the 2016 Oregon return is computed as follows: [See PDF link below.]

Example 2: Assume the same facts as Example 1. In addition, during 2017, C Corp receives a payment of $2,000,000 on the 2016 installment obligation. This leaves an unpaid balance of $8,000,000 at the end of 2017, including unrecognized gain of $4,000,000. C Corp’s Oregon apportionment percentage for 2017 is 34 percent. The interest to report as tax on C Corp’s 2017 Oregon return is computed as follows: [See PDF link below.]

Example 3: Assume the same facts as in Examples 1 and 2, except that the property sold by C Corp in 2016 is nonbusiness property located in Washington. No interest on deferred Oregon tax liability will be reported to Oregon in either 2016 or 2017.

Example 4: Assume the same facts as in Example 3, except that the nonbusiness property sold is located in Oregon. The amount of interest to report as tax on the 2016 and 2017 Oregon tax returns is calculated as follows: [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.302
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
REV 37-2017, f. & cert. ef. 8-1-17
Renumbered from 150-314.302, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-314-0120 Reduction of Tax Attributes after Discharge of Debt

(1) A taxpayer who has excluded income from the discharge of indebtedness for federal tax purposes under IRC 108 must also exclude the income for Oregon purposes. Separate rules apply depending on whether the discharge is related to insolvency or qualified farm indebtedness, or to bankruptcy. The taxpayer must reduce Oregon tax attributes independently of the reduction made at the federal level.

Example 1: Henry realized income from the discharge of debt in the amount of $100,000. Henry may elect to exclude the income to the extent he is insolvent as defined under IRC 108. Henry determines that of the $100,000 of income, he may exclude $90,000 due to insolvency. The remaining $10,000 is included in Henry’s federal adjusted gross income. Henry is required to reduce certain tax attributes to the extent he has excluded the debt discharge from income. The election to exclude the income under IRC 108 is also effective for Oregon tax purposes. Assume Henry has the following tax attributes: [See PDF link below.]

(2) If an insolvent taxpayer or a taxpayer with discharged qualified farm indebtedness elects under IRC 108(b)(5) to reduce the basis of depreciable property first, the election is also effective for Oregon tax purposes.

(3) Oregon tax attributes resulting from a bankruptcy petition filed on or after October 17, 2005 are to be reduced according to the version of 11 USC 346(j), as in effect on December 31, 2016. A different version of 11 USC 346(j) applies to tax attributes that are reduced as a result of a bankruptcy petition filed before October 17, 2005. The amount of income from discharge of indebtedness that is excluded from federal taxable income as a result of a bankruptcy petition is subject to the apportionment provisions of ORS chapter 314. Oregon tax attributes are to be reduced in an amount equal to the amount of income from discharge of indebtedness that is apportioned to Oregon.

Example 2: Tom realized income from the discharge of debt equal to $40,000. The entire amount may be excluded from his income due to insolvency. For federal purposes, Tom has a net operating loss of $5,000 and rental property with a basis in the land of $50,000 and a basis in the building of $30,000. Tom elects to reduce the basis of his depreciable assets first under IRC 108(b)(5). For federal purposes, Tom absorbs the excluded income by reducing federal tax attributes as follows: [See PDF link below.]

Example 3: XYZ Corporation is bankrupt and under the supervision of the bankruptcy court. The corporation realized income from discharge of debt in the amount of $10,000,000. XYZ elects to exclude the income for federal purposes under the provisions of IRC 108. XYZ’s Oregon apportionment percentage is 10% in the year of debt discharge. Assume XYZ has the following tax attributes: [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.306
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
REV 40-2017, f. & cert. ef. 8-2-17
Renumbered from 150-314.306, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-314-0125 Listed Transaction Reporting Requirement

(1) For tax years beginning on or after January 1, 2007, taxpayers who engage in or receive a tax benefit from participation in reportable transactions as defined under section 2, chapter 568, Oregon Laws 2007 are required to report their participation on the Oregon tax return for the tax year in which the participation took place.

(2) In addition to any other applicable penalties, a taxpayer is subject to penalties as provided in section 9, chapter 568, Oregon Laws 2007 if the taxpayer fails to report the transaction as required on the Oregon return.

History

Statutory/Other Authority: ORS 305.100 & 314.308
Statutes/Other Implemented: ORS 314.308
Renumbered from 150-314.308, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08

Or. Admin. R. 150-314-0130 Definition: Final Determination

An order of the director of the department or a court decision becomes final after all periods of appeal have expired.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.330
Renumbered from 150-314.330(2), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-314-0135 Returns When Accounting Period Changed

(1) A return may not be made for a period of more than one year. A separate return for a fractional part of a year is therefore required whenever there is a change. If a change in accounting period requested by the taxpayer has been approved by the IRS for federal purposes, the change shall also be permitted for Oregon tax purposes. A copy of the approved application shall be sent to the Department. The Department will require proration of exemptions, dependency credits, etc., where the part-year return is based on a change of accounting periods. If the change is approved by the Internal Revenue Service, the return for the period necessary to effect the change shall be delinquent unless filed on or before the fifteenth day of the fourth month after the close of such period and the taxpayer shall thereafter make returns and compute income upon the basis of the new accounting period.

(2) A taxpayer’s taxable year for Oregon income tax purposes shall be the same as the taxpayer’s taxable year for federal income tax purposes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.355
Renumbered from 150-314.355, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
12-31-84
1958

Or. Admin. R. 150-314-0140 Information Returns

(1) Definition. As used in this rule:

(a) “Information return,” as used in ORS 314.360(4) and sections (7) and (8) of this rule, means a federal form W-2 or 1099.

(b) “Payer” means any person required to issue a 1099-MISC, 1099-G, 1099-R, W-2G, 1099-K, or a 1099-NEC.

(2) In general, taxpayers are required to file information returns as described in ORS 314.360 except as provided in this rule.

(3) Any person that issues one or more information returns, where the recipient, winner, or the payer has an Oregon address, is required to file the information returns electronically with the department by the federal due dates. For purposes of this rule, information returns required to be filed electronically include:

(a) 1099-MISC Miscellaneous Income;

(b) 1099-G Certain Government Payments;

(d) W-2G Certain Gambling Winnings;

(e) 1099-K Payment Card and Third-Party Network Transactions;

(f) 1099-NEC Non-Employee Compensation.

(4) For information regarding the reporting requirements of salaries and wages, see ORS 316.202 and related rules.

(5) The department may grant an exception to this filing requirement in section (3) upon a showing of undue hardship. Undue hardship is based on the facts and circumstances specific to each payer and determined on a case-by-case basis.

(6) For persons issuing fewer than 11 information returns:

(a) The requirement to file electronically begins with tax year 2017 forms due in 2018; and

(b) For information returns due before January 1, 2018, the department may require the filing of the return(s) as it deems necessary. If requested under this section, an information return that is due before January 1, 2018 must be provided within 30 days of the date of the department’s written request to be considered timely under ORS 305.217.

(7) Penalties. The department will assess penalties, as described in ORS 314.360(4), if a payer fails to file an information return with the department by the due date as required under subsections (3)(a) through (3)(d) of this rule or files an incorrect or incomplete information return. Penalties will be assessed if a payer fails to file an information return or files an incorrect or incomplete information return under subsections (3)(e) and (3)(f) of this rule beginning in tax year 2021 forms due in 2022.

(a) An information return is incorrect or incomplete if one or more of the following circumstances exist:

(A) Identifying employee information is missing from the information return, such as first or last name or social security number.

(B) The information return contains an incorrect statement of state income tax withheld, federal income, or state income amounts. Obvious math or clerical errors are not considered an incorrect statement for this purpose.

(b) A payer knowingly fails to file an information return by the due date if:

(A) The information return was not received by the department on or before the due date of the corresponding federal return for the tax year under consideration;

(B) The payer has been assessed the penalty under ORS 314.360(4)(a) for one or more filing periods preceding the period at issue; and

(C) The payer fails to file the information return upon written request to file the information return by the department; or

(D) The department determines that the facts and circumstances in the particular case warrant penalty assessment.

(A) A pattern of conduct exists by the payer of repeatedly filing incorrect information returns;

(B) The payer failed to correct the information return upon discovering incorrect information;

(C) The payer corrected the information return only upon written request to correct the information return by the department;

(D) The amount of the potential information return penalty is less than the cost of complying with the requirement to include correct information on the information return;

(E) The department determines that the facts and circumstances in the particular case warrant penalty assessment.

(d) A penalty may be assessed under ORS 314.360(4)(b) even though a prior penalty assessed under ORS 314.360(4)(a) was waived under OAR 150-305-0062.

(e) Payers issuing fewer than 11 information returns will not be assessed penalties imposed by this section for failing to file information returns due before January 1, 2018.

(8) If the payer fails to produce documentation to support the information return, as requested by the department, the department will use the best information available to determine the appropriate penalty assessment amount.

History

Statutory/Other Authority: ORS 305.100 & 314.360
Statutes/Other Implemented: ORS 314.360
REV 45-2020, amend filed 12/23/2020, effective 01/01/2021
REV 83-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-314.360, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 8-2010, f. 7-23-10, cert. ef. 7-31-10
RD 5-1994, f. 12-15-94, cert. ef. 12-31-9
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
Renumbered to 150-314.360?, RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
12-19-75
12-70
1958-59

Or. Admin. R. 150-314-0142 Brokers’ Information Returns

When required by the Department (but not otherwise), any person or organization that acted at any time as a broker or agent in stock, bond or commodity transactions (including a bank that cleared orders for depositors’ or custodians’ accounts) shall make a separate return of information for each customer, showing the total sales and the total purchases. In lieu of information with respect to each of the brokers’ customers, the Department may require returns of information with respect only to a specified customer or customers.

[ED. NOTE: With the adoption of Oregon Laws 1984, Ch. 1, (Enrolled HB 3029), ORS 314.363 was repealed. The administrative rules under this section will no longer be in effect for taxable years beginning on or after January 1, 1986. For all prior years, the rules under this section shall remain in full force and effect.]

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.360
Renumbered from 150-314.360(2), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
12-70
1958-1959

Or. Admin. R. 150-314-0150 Requirement to File Returns Electronically (Corporation E-file Mandate)

(1) All corporations required to electronically file their federal corporation tax return are required to electronically file their Oregon corporation tax return. A paper tax return filed by a corporation required to electronically file its Oregon corporation tax return may be rejected, unless a waiver request has been approved by the department prior to the filing of the paper return.

(2) Waivers.

(a) A waiver of the electronic filing requirement granted by the Internal Revenue Service (IRS) will be accepted by the department as a waiver to the mandate under section (1). The corporation must notify the department in writing when such a waiver is granted in accordance with the department’s instructions.

(b) In addition to a waiver allowed under subsection (a), the department may grant a waiver of the mandate in section (1) if the following conditions are met:

(A) The corporation requests a waiver in accordance with the department’s instructions; and

(B) The corporation’s facts and circumstances are such that complying with the mandate would cause the corporation an undue financial hardship. The corporation’s refusal to purchase or use the requisite software or computer equipment does not, in and of itself, satisfy the conditions for a waiver under this subsection.

(c) When circumstances warrant, the department may issue an administrative waiver of the mandate in section (1) when the department determines it is necessary to promote the effective and efficient administration of the tax system.

(3) If an electronic tax return cannot be accepted for processing electronically, the corporation must contact the department for assistance in correcting the rejected return errors. If the rejected return errors cannot be corrected, the corporation must receive authorization from the department prior to filing a paper return.

(4) This rule is applicable to corporation tax returns filed for tax years beginning on or after January 1, 2011.

History

Statutory/Other Authority: ORS 305.100 & 314.364
Statutes/Other Implemented: 314.364
REV 82-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-314.364(A), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.HB2071(A), REV 6-2012, f. 7-20-12, cert. ef. 8-1-12
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12

Or. Admin. R. 150-314-0152 Requirement to File Returns Electronically

(1) All paid tax preparers filing Oregon personal income tax returns in this state are required to file them by electronic means if the paid tax preparer is required to do so by federal law. See 26 USC § 6011 and Treasury Regulation §301.6011-7 for the federal mandate and relevant definitions.

(2) Waivers.

(a) A waiver granted by the Internal Revenue Service (IRS) pursuant to Treasury Regulation §301.6011-7(c)(1) or (2) will be accepted by the department as a waiver to the mandate under section (1). The paid preparer must notify the department in writing when such a waiver is granted in accordance with the department’s instructions.

(b) In addition to a waiver allowed under subsection (a), the department may grant a waiver of the mandate in section (1) if the following conditions are met:

(A) The paid preparer requests a waiver in advance of the preparation of personal income tax returns subject to the mandate in accordance with the department’s instructions; and

(B) The paid preparer’s facts and circumstances are such that complying with the mandate would cause the paid preparer an undue financial hardship. The paid preparer’s refusal to purchase or use the requisite software or computer equipment does not, in and of itself, satisfy the conditions for a waiver under this subsection.

(c) When circumstances warrant, the department may issue an administrative waiver of the mandate in section (1) to a paid preparer or group of paid preparers when the department determines it is necessary to promote the effective and efficient administration of the tax system.

(3) This rule is effective January 1, 2012 and applies to tax returns filed on or after that date.

NOTE: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(1)(b).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.364
Renumbered from 150-314.364(B), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.HB2071(B), REV 6-2013, f. & cert. ef. 12-26-13
Renumbered from 150-314.HB2071(B), REV 4-2012, f. 7-20-12, cert. ef. 8-1-12
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12

Or. Admin. R. 150-314-0160 Report of Changes in Federal Taxable Income

(1) Report Requirements. The report of change or correction required by ORS 314.380(2) must be:

(a) Filed in writing with the department;

(b) Signed by the taxpayer or the taxpayer's authorized representative; and,

(2) The report may be in the form of an amended return showing the adjustments and the recomputation of the tax. The report must include either a copy of the report of the Internal Revenue Service (IRS) adjustment, federal revenue agent's report or the audit report of the other state's taxing authority, whichever is applicable, or other information sufficient to inform the department of each item on the tax return that has been changed or corrected.

(3) If the taxpayer does not concede the accuracy of any change or correction made by the IRS or other state’s taxing authority, the report filed with the department must include a full explanation of the reason why the taxpayer believes such change or correction to be erroneous. If the report is not filed in the manner stated in this rule, the department will not be considered to have been notified by the taxpayer.

(4) A report of a change or correction is treated as a timely claim for refund, pursuant to ORS 314.415, if filed with the department within two years after the date of the IRS adjustment or the audit report of the other state’s taxing authority.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.380
Renumbered from 150-314.380-(A), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.380(2)(B), REV 9-2015, f. 12-23-15, cert. ef. 1-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 10-1986, f. & cert. ef. 12-31-86
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
12-70, Renumbered from 150-314.380(2)
6-68

Or. Admin. R. 150-314-0165 Filing Returns of Income: Due date

Returns of income must be filed with the department on or before the fifteenth day of the fourth month following the close of the tax year. For corporations, the due date is the 15th day of the month following the due date of the federal return. Thus, when the tax year is a calendar year, the return is due on or before the fifteenth day of April in the following year. Returns received after the due date are subject to late filing penalty as provided in ORS Chapter 314, except that returns received by mail are accepted without the imposition of such charges if postmarked before midnight of the due date (see ORS 293.660 and 305.820). When the due date falls on a Saturday, Sunday or a state legal holiday, the return is due on the next business day following such Saturday, Sunday or state legal holiday.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.385
Renumbered from 150-314.385(1)-(A), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
Renumbered from 150-314.385(1), RD 10-1986, f. 12-22-86, cert. ef. 12-31-86
12-31-83
12-31-82
12-31-81
12-31-80
12-31-78
1-1-77
11-73
9-71
1958-59

Or. Admin. R. 150-314-0167 Filing Returns of Income: Extensions, Chapters 316, 317 and 318

(1) If a taxpayer cannot file a return within the prescribed time, the department may grant the taxpayer an extension of time for filing but this does not extend the time for payment of the tax.

(2) Procedure when a federal extension is granted.

(a) The department will grant extension of time to file an Oregon return if the taxpayer has obtained an extension to file the federal return from the Internal Revenue Service. The taxpayer does not need to request an Oregon extension. The taxpayer must follow current tax return instructions to determine if a copy of an approved federal extension or a filed automatic federal extension request under Internal Revenue Code (IRC) section 6081 needs to be attached to the Oregon return to serve as evidence of an Oregon extension. If there is no requirement in the return instructions to attach the copy of the federal extension request, the taxpayer must retain the document with their records.

(b) An automatic extension of time for filing a return does not relieve the taxpayer of the responsibility to pay estimated tax or eliminate interest charges for failure to pay estimated tax. An extension also does not relieve the taxpayer of a late payment penalty provided under ORS 314.400, except when the requirements of section (3) of OAR 150-314-0195 are met.

(c) The Oregon extension is for the same length of time as the federal extension. If the Internal Revenue Service denies the taxpayer’s extension request, but grants the taxpayer a period of time from the date of the denial in which to file the return, the department will grant the taxpayer an equal period of time if a copy of the denied extension request is attached to the Oregon return at the time of filing.

(3) Procedure for requesting an extension for Oregon only.

(a) An individual may request an extension of time for Oregon only by completing and filing the appropriate Oregon form. The taxpayer must file the extension request and payment with the department on or before the original due date of the associated return.

(b) A corporation may request an extension of time for Oregon only by writing “For Oregon Only” on the top of a federal extension form, filing out the form with Oregon tax information, and attaching it to the Oregon return when it is filed. An extension payment must be sent to the department on or before the original due date of the return accompanied by the appropriate Oregon form.

(c) Insurance companies filing federal income tax returns on a fiscal year basis must request a separate extension for Oregon under subsection (b) of this section. The Oregon extension is for the same length of time that would be allowed if the insurance company filed a calendar year federal return and applied for a federal extension.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.385
REV 34-2022, amend filed 12/28/2022, effective 01/01/2023
Renumbered from 150-314.385(1)-(B), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
REV 8-2002, f. & cert. ef. 12-31-02
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
12-31-83
12-31-82
12-31-81
12-31-80
12-31-78
1-1-77
11-73
9-71
1958-59

Or. Admin. R. 150-314-0169 Standards for Substitute Tax Forms; Treatment of Forms Not Meeting the Standards; Treatment of Payments Received With Forms Not Meeting the Standards

(1) Definitions . For purposes of this rule:

(a) Official form . An official form is any payroll, income, excise tax, or corporate activity tax form prepared, printed, and distributed by or on behalf of the department pursuant to Oregon Revised Statutes (ORS) Chapters 310, 314, 315, 316, 317, 317A, 318, Lane Transit District (LTD) Ordinance 51, and Tri-County Metropolitan Transportation District (TRIMET) Ordinance 92.

(b) Substitute form . A substitute form is any payroll, income, excise tax, or corporate activity tax form authorized under ORS Chapters 310, 314, 315, 316, 317, 317A, 318, LTD Ordinance 51, or TRIMET Ordinance 92 that is intended to replace the official form.

(c) Tax Return . A tax return is a payroll, income, excise tax, or corporate activity tax form filed with the department by or on behalf of a taxpayer under the provisions of ORS Chapter 310, 314, 315, 316, 317, 317A, 318, LTD Ordinance 51, or TRIMET Ordinance 92.

(2) A tax return must be made on the department-prescribed forms, which may be obtained upon request from the department. Such forms are widely distributed, but a failure to receive any forms does not relieve the taxpayer from the responsibility to file any return required by statute.

(3) The department may accept a substitute form filed in lieu of an official form if the substitute form meets the standards set forth in this rule. It is the intent of the department to follow the National Association of Computerized Tax Processors (NACTP) standards as closely as is practical.

(4) Substitute form standards. A substitute form with or without optical character readable (OCR) scan lines must be a duplicate of the official form unless the variation is within the exceptions listed in section (5) of this rule. The overall format of substitute forms must match the format of official forms. Overall format includes text size and placement, graphics, location of lines, boxes, data entry symbols, spacing, 2-D barcode placement, and OCR scan line.

(a) A substitute form must be on paper of the same overall dimension (size) and weight and of a quality equal to or better than that used for the official form.

(b) Substitute forms and the filled-in data must be legible and must not have extra text or marks that do not appear on the official forms.

(d) If the substitute form has OCR scan lines, black nonreflective ink in OCR-A font must be used for printing the scan line.

(e) Substitute forms must contain a 2-D barcode for tax years beginning on or after January 1, 2006 if the substitute form is:

(A) Software generated; and

(B) Used for personal income tax purposes under ORS Chapters 314, 315, or 316.

(5) Exceptions . The substitute form may differ from the official form with respect to the exceptions listed in this section. However, the difference may delay processing of the tax return.

(a) Official forms that are printed on colored paper may be reproduced in black ink on white paper.

(b) Official forms that use both sides of the paper may be reproduced on one side only of two successive pages.

(d) Substitute forms that the department does not support in 2-D barcode format may be printed without 2-D barcode.

(6) Photocopies of official forms may be filed if the official form does not contain OCR printing.

(7)(a) Substitute forms must be approved by the department prior to use. Substitute forms that do not meet the requirements of this rule may not be filed in lieu of the official forms. The department may reject and return to the taxpayer tax returns using substitute forms that do not meet the requirements of this rule.

(b) A tax return that has been rejected under this rule does not meet the filing requirement of the applicable program. The taxpayer must file a tax return using an official form or a substitute form that meets the requirements of this rule in order to meet the filing requirement under the provisions of the personal income tax, corporate income tax, corporate excise tax, and corporate activity tax programs; the filing requirement under the TRIMET self-employment tax and LTD programs; or the filing requirement under ORS 314.724 for partnership returns. If the return is rejected, the taxpayer may be assessed penalty for failure to file a tax return as provided under ORS 314.400, 314.724 or as otherwise provided under Oregon law.

(8) If the department receives payment with a substitute form that does not meet the requirements of this rule, the department will treat the payment as an estimated tax payment under the provisions of ORS Chapters 314, 316, or 317A.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.385 & 317A.149
REV 9-2021, amend filed 06/28/2021, effective 07/01/2021
Renumbered from 150-314.385(3), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
REV 7-2006(Temp), f. & cert. ef. 9-29-06 thru 12-31-06
Renumbered from 150-314.385(1)-(D), Rev 4-2005, f. 12-30-05, cert. ef. 1-1-06
REV 1-2005, f. 6-27-05, cert. ef. 6-30-05
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1987, f. & cert. ef. 11-1-87
RD 9-1987(Temp), f. & cert. ef. 7-8-87

Or. Admin. R. 150-314-0171 Alternative Filing Methods

(1) As used in this rule:

(a) “Alternatively filed return” means an Oregon return submitted using a department-approved alternative filing method under section (2) of this rule.

(b) “IRS date of receipt” means the electronic time stamp indicating the date and time of receipt of the Oregon return by the Internal Revenue Service (IRS).

(2) The department may provide for filing of returns using electronic or other methods as an alternative to paper returns.

(3) Alternatively filed returns are deemed filed and received on:

(a) The date the return is received by the department as indicated by the department’s date stamp; or

(b) In the case of an electronically filed return, the earlier of:

(A) The IRS date of receipt, or

(B) The date of successful transmission.

(4) Alternatively filed returns must be verified pursuant to the rules of the department adopted under ORS 305.810.(5) If an alternatively filed return cannot be processed, a paper return must be filed with the department. If the paper return is filed within 30 days of the date of the successful transmission of the alternatively filed return, the date of the successful transmission of the alternatively filed return is considered the filing date of the paper return.

183.360(2) and 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 314.385
Statutes/Other Implemented: ORS 314.385
Renumbered from 150-314.385(4), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2013, f. & cert. ef. 12-26-13
REV 4-2012, f. 7-20-12, cert. ef. 8-1-12
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00

Or. Admin. R. 150-314-0173 Time Limitations Affected by Military Service

The Provision of ORS 316.020 (1967 Replacement Part), providing a moratorium for filing returns and payment of tax for certain members of the Armed Forces, was not made a part of ORS Chapter 316 (1969 Replacement Part). Utilizing the powers of the Director given by ORS 305.145, the Department will waive penalty and interest on account of late filing and late payment of personal income tax in those cases where penalty and interest are waived by the Internal Revenue Service on account of personal income, pursuant to IRC section 7508(a). Section 7508(a) reads in part as follows:

“(a) In the case of an individual serving in the Armed Forces of the United States, or serving in support of such Armed Forces, in an area designated by the President of the United States by Executive order as a ‘combat zone’ for purposes of section 112, at any time during the period designated by the President by Executive order as the period of combatant activities in such zone for purposes of such section, or hospitalized as a result of injury received while serving in such an area during such time, the period of service in such area, plus the period of continuous qualified hospitalization attributable to such injury, and the next 180 days thereafter, shall be disregarded in determining, under the internal revenue laws, in respect of any tax liability (including any interest, penalty, additional amount, or addition to the tax) of such individual:

“(1) Whether any of the following acts was performed within the time prescribed therefor:

“(A) Filing any return of income, estate, or gift tax (except income tax withheld at source and income tax imposed by subtitle C or any law superseded thereby);

“(B) Payment of any income, estate, or gift tax (except income tax withheld at source and income tax imposed by subtitle C or any law superseded thereby) or any installment thereof or of any other liability to the United States in respect thereof;…”

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.385
Renumbered from 150-314.385(c)-(A), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-316.407-(B)
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
1-1-77
1-69

Or. Admin. R. 150-314-0175 Time Limitations for Persons Outside United States

The Department will waive penalty (but not interest) for delinquent filing and delinquent payment of tax by taxpayers who qualify for the automatic two month extension for filing under Treasury Regulation 1.6081-5. This regulation grants an automatic extension of time, for federal purposes, to file a return and pay the tax due by the fifteenth day of the sixth month following the close of the tax year. To qualify, a taxpayer must reside outside the United States and Puerto Rico on the original due date of the return. A taxpayer must have filed a return and paid the tax due within the federal extension period in order to receive this waiver. This is not an extension of time for filing but only a waiver of the delinquency penalty. Accordingly, a return filed under these circumstances will be considered delinquent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.385
Renumbered from 150-314.385(c)-(B), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-314.407-(C)
TC 8-1980, f. 11-28-80, cert. ef. 12-31-80
12-70

Or. Admin. R. 150-314-0185 Payment of Tax; Interest on Delayed Return

See OAR 150-305-0140 for the rate of interest on a delayed payment of tax.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.395
Renumbered from 150-314.395, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
12-31-82
12-19-75
11-71
1-69

Or. Admin. R. 150-314-0187 Responsibility for Tax Payments

When an employer fails to withhold income tax from an employee under ORS 316.167, the employee is not relieved from paying income tax under Chapter 305, 314 and 316.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.395
Renumbered from 150-314.395(1), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-314-0195 Delinquency Penalty

(1) Although ORS 314.400(1) refers to a delinquency penalty for (A) failure to file a report or return by the due date or (B) failure to pay a tax due by the due date, only one five-percent penalty is added, even though there is a failure as to both requirements.

Example 1: Joe did not obtain an extension to file his tax return, which was due on April 15. On July 1, he filed the return and paid $2,000 of tax plus interest of $40. Joe will be charged a penalty of $100 ($2,000 x 5 percent).

(2)(a) The delinquency penalty is based on the tax required to be shown on the return, reduced by credits claimed on the return and by any amount of the tax that is paid on or before the due date for payment. If the department determines that the tax shown on the return is greater than the tax required to be shown, the lesser amount is used to determine the penalty.

Example 2: Jeanette filed her tax return on time. The tax shown on the return was $800. Jeanette claimed credits of $150, withholding of $150, and showed a balance due of $500. She did not pay the $500 with the filing of the return. The department determined in processing the return that the tax required to be shown on the return was $600. The delinquency penalty of $15 is based on five percent of $300 ($600 tax required to be shown on the return, less credits of $150 and withholding of $150).

(b) The 20-percent penalty is in addition to the five-percent penalty. A 20-percent penalty is charged when:

(A) A tax return that is required to be filed annually or for a one-year period is not filed within three months of the due date (determined with regard to any extension of time to file granted to the taxpayer); or

(B) A tax return that is required to be filed more frequently than annually is not filed within one month of the due date (determined with regard to extensions).

Example 3: Pierre did not request an extension to file his return, which was due on April 15. He filed the return on November 1, showing tax of $900, credits of $300, and withholding of $200. Pierre sent a check for the balance due of $400 with the tax return. A total penalty of $100 will be charged; $20 for failure to pay the tax when due ($400 x 5 percent), and $80 for failing to file the return within three months of the due date ($400 x 20 percent).

Example 4: Same facts as Example 3, except Pierre received an extension to file until October 15. Pierre will be charged a five-percent penalty for failure to pay the tax when due. The 20-percent penalty for failure to file the return will not be charged because Pierre filed the return within three months of the extended due date.

Example 5: French Bakery did not file its Oregon Quarterly Tax Report for 1st quarter 2008 withholding, which was due on April 30, 2008. It filed the return on July 1, 2008, showing tax of $800 and prepayments of $500. French Bakery sent a check for the balance due of $300 with the tax return. A total penalty of $75 will be charged; $15 for failure to pay the tax when due ($300 x five percent), and $60 for failing to file the return within one month of the due date ($300 x 20 percent).

(c) If a taxpayer is required to file a federal income tax return for a period of less than 12 months under section 443 of the Internal Revenue Code, the Oregon personal income or corporate excise or income tax return required to be filed for that period is considered an annual filing thus subject to the additional 20-percent penalty.

(d) If a return or report is required to be filed on a one-time basis such as with inheritance returns, the return or report is considered an annual filing thus subject to the 20-percent penalty.

(e) If a taxpayer fails to file a return and the department must determine and assess the amount of tax, the penalties are based on the tax required to be shown on the return. The tax required to be shown on the return is reduced by any credits that may be lawfully claimed on the return and by any amount of the tax that is paid on or before the due date for payment.

Example 6: Isabelle filed her 2005 tax return on July 1, 2007. The tax shown on the return was $800 and Isabelle claimed credits of $300 and withholding of $400. She paid the balance due of $100 when she filed the return. Isabelle will be charged a five-percent failure-to-pay penalty, plus a 20 percent penalty for filing the return more than three months after the due date. The total penalty of $25 is based on $100 ($800 tax shown on the return less credits of $300 and withholding of $400).

Example 7: Same facts as Example 6, except that Isabelle did not file her 2005 tax return after being requested to do so by the department. The department determined that the tax required to be shown on the return was $900, allowable credits were $150 and withholding was $400. The penalty will be based on $350.

(3) Exceptions to the penalty for failure to pay tax when due, pursuant to the authority provided by 305.229.

(a) Payment of 90 percent of the tax determined, after withholdings and credits are subtracted from the tax otherwise due, as shown on the return. Income and excise tax returns filed within the period of an extension granted are not considered delinquent with regard to the time of filing. However, an extension of time to file a return does not extend the time for paying the tax. Thus, if the tax is not paid by the original due date of the return, a delinquency penalty of five percent is added to the total unpaid tax unless the taxpayer has met all of the following conditions:

(A) Filed for a federal automatic extension of time to file or filed for a separate Oregon extension, in accordance with current Oregon tax return instructions;

(B) At least 90 percent of the tax after credits as shown on the return was paid on or before the original due date of the return;

(D) The balance of the tax as shown on the return is paid when the return is filed and any interest due is either paid when the return is filed or within 30 days of billing by the department.

Example 8: Henry filed an extension request with Oregon on April 15, along with a payment of $600. He filed his tax return on October 15. The tax shown on the return was $1,200 and Henry claimed total tax credits on the return of $200. Henry paid the balance due of $400 with the return. A five-percent penalty would be charged on the $400 paid on October 15 because Henry did not pay at least $900 (90 percent of the tax shown on the return {$1200}, less withholdings and credits {$200} or 90% of {$1200-$200}, which is $900), on or before the original due date of the return. Interest on the unpaid balance would be due from April 16 to  October 15.

Example 9: Jan was granted an extension to file her federal tax return until October 15. She filed her Oregon return on June 14. The tax shown on the return was $2,500 and she had made estimated tax payments totaling $2,300. Jan paid the $200 tax due with the return. The five-percent penalty will not be charged on the $200 paid on June 14 if interest from April 16 to June 14 accompanies the $200 payment or if Jan pays the interest due on the unpaid balance of $200 within 30 days of billing by the department.

(b) Amended tax returns. If a taxpayer (individual or corporate) files an amended income or excise tax return accompanied by less than full payment of tax and interest, the department must send a billing notice indicating the amount of tax plus accrued interest to be paid. If the taxpayer pays the full amount of tax plus interest within 30 days of the date on the billing notice, the five-percent penalty for failure to pay the tax with the amended return will not apply.

Example 10: ABC Corporation filed an amended income tax return showing a balance of tax due of $1,000. A payment of $1,000 was submitted with the return. The $1,000 payment is first applied to interest that has accrued from the original due date of the return. The department determines that $200 of interest has accrued on the $1,000 of additional tax. Because the corporation has underpaid the tax by $200, ($1,000 payment less $200 applied to interest equals $800 of tax paid with the return), a five-percent penalty applies to the $200 of tax due. However, if ABC Corporation pays the $200 of tax plus any additional interest within 30 days of the date on the billing notice, the five-percent penalty will not apply.

(c) Deficiencies. If the department issues a Notice of Deficiency and the taxpayer pays the full amount of tax plus interest within 30 days of the date on the Notice of Deficiency, the five-percent penalty for failure to pay the tax required to be shown on the return will not apply. If the taxpayer pays only a portion of the tax plus interest, the five-percent penalty for failure to pay the tax required to be shown on the return will apply only to the unpaid portion of the tax.

Example 11: Hanna filed her original return timely but the department issued a Notice of Deficiency for $500 plus $75 interest. Hanna paid $300 within 30 days of the Notice of Deficiency. The five-percent penalty will apply to the unpaid deficiency ($$575 deficiency plus interest - $300 payment = $275 unpaid deficiency) because she did not pay the deficiency plus interest in full within 30 days of the Notice of Deficiency.

(d) Differences in the amount of prepaid tax. If a taxpayer (individual or corporate) files an income tax return or an excise tax return and the taxpayer overstates the amount of tax that was paid on or before the due date, the department must send a billing notice indicating the amount of additional tax and interest due. If the taxpayer pays the full amount of tax plus interest within 30 days of the date on the billing notice, the five-percent penalty for failure to pay the tax by the due date does not apply.

Example 12: Maria filed her individual income tax return on April 15. The tax shown on the return was $1,300. She claimed credits of $300 and state income tax withholding of $600. The $400 balance of tax due as shown on the return was paid with the return. During processing of the return, the correct amount of state income tax withholding is determined to be $350. Because Maria did not pay $250 of tax by the due date, a five-percent penalty applies. If Maria pays the additional tax due of $250 plus any additional interest within 30 days of the date on the department's notice, the five-percent penalty will not be charged.

Example 13: Same facts as Example 12, except Maria did not pay the $400 balance due when she filed the return. A penalty of $20 ($400 x 5 percent) is charged for failure to pay the $400 of tax when due. The $250 of additional tax resulting from the error in the amount of withholding will not have a five-percent penalty added if Maria pays the $250 of tax plus additional interest within 30 days of the department's notice.

(4) The penalties provided under ORS 305.265(13) and 314.400(6) are not combined. Only one 100 percent penalty may be assessed on a particular report or return.

History

Statutory/Other Authority: ORS 305.100 & 305.229
Statutes/Other Implemented: ORS 314.400
Renumbered from 150-314.400, REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.400(1), REV 9-2015, f. 12-23-15, cert. ef. 1-1-16
REV 5-2008, f. 8-29-08
REV 3-2006, f. & cert .ef. 7-31-06
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 11-1987, f. & cert. ef. 11-1-87
RD 9-1987(Temp), f. & cert. ef. 7-8-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 16-1982, f. 12-6-82, cert. ef. 12-31-82
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
12-19-75
11-71

Or. Admin. R. 150-314-0197 Failure to File Penalty

A penalty of 20 percent of the tax required to be shown as tax on the return will be added if a return is not filed within three months after the due date. The three month period will be measured from the last day of any extension granted to file the return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.400
Renumbered from 150-314.400(2), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
12-19-75

Or. Admin. R. 150-314-0199 Interest on Deficiencies and Delinquencies

In general, interest is accrued on the unpaid tax from the due date of the return until paid. When additional tax is due as a result of a refund issued in error, a Notice of Deficiency will be issued for the tax and interest paid to the taxpayer. Interest then accrues on the total amount owed from the day after the check was issued until paid.

Example 1: John and Mary were issued a tax refund of $585 along with $11 interest on July 17, 2006. The department later determines that the refund was issued in error, and issues a Notice of Deficiency for $596 ($585 tax and $11 interest) on August 18, 2006. Interest then accrues on the $596 total amount owed beginning July 18, 2006, until the deficiency is paid.

Example 2: Ron and Nancy were issued a tax refund of $1,185 along with $42 interest on October 17, 2006. The department later determines that $395 of the refund was issued in error, and issues a Notice of Deficiency for $409 ($395 tax and $14 interest received on the improper refund) on December 18, 2006. Interest then accrues on the $409 total ($395 tax and $14 interest) beginning October 18, 2006, until the deficiency is paid.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.400
Renumbered from 150-314.400(4), REV 32-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2006, f. & cert .ef. 7-31-06
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-86, Renumbered from 150-314.400(3)
12-31-83
12-31-82
12-19-75
12-19-75, Renumbered, see 150-314.400(4)

Or. Admin. R. 150-314-0205 Substantial Understatement Penalty (SUP)

(1) The department will assess a penalty if a substantial understatement of net tax exists for any taxable year. The penalty is equal to 20 percent of the amount of any underpayment of net tax attributable to the understatement. A substantial understatement exists only if incurred on the return of the individual, corporation, or reporting entity required to file a return and pay tax.

(2) Net Tax. In determining if a substantial understatement of net tax exists, net tax equals the total tax as calculated in accordance with the applicable provisions of ORS chapters 314, 315, 316, 317, and 318, reduced by nonrefundable and refundable credits.

(3) Substantial Understatement of Net Tax. An understatement of net tax is substantial if the understatement exceeds the applicable threshold for the tax year, as adjusted for inflation. The department will publish the applicable threshold amount for each tax year on the department’s website.

(4) Penalty. The substantial understatement penalty is equal to 20 percent of the amount of the understatement of net tax.

(a) The total understatement of net tax is the amount of net tax due as determined by the department, minus:

(A) Net tax as reported on the return by the taxpayer for the taxable year,

(B) The tax attributable to any item for which there is or was substantial authority, and

(C) The tax attributable to any item for which the relevant facts affecting the item’s tax treatment are adequately disclosed on the return or in a statement attached to the return, and there is a reasonable basis for the tax treatment of the item by the taxpayer.

(b) Net tax as reported on the return is the amount of net tax reported by the taxpayer and determined before the taxpayer was first notified by the department concerning their tax liability. If the return shows no net income tax, the amount of net tax shown on the return is considered to be zero. In all cases, net tax as reported is computed without regard to:

(A) Withholdings;

(B) Estimated tax paid by the taxpayer; or

(5) The department will not impose a penalty under ORS 314.402 unless a return has been filed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.402
REV 8-2026, amend filed 06/29/2026, effective 07/01/2026
REV 27-2021, amend filed 12/27/2021, effective 01/01/2022
REV 37-2020, amend filed 12/23/2020, effective 01/01/2021
REV 9-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-314.402-(A), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.402(1), REV 9-2015, f. 12-23-15, cert. ef. 1-1-16
REV 16-2010, f. 12-17-10, cert. ef. 1-1-11
REV 19-2008, f. 12-26-08, cert. ef. 1-1-09
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-314-0207 Waiver of 20 Percent Substantial Understatement of Net Tax Penalty Imposed under ORS 314.402

(1) The department will waive the penalty if the taxpayer shows that there was reasonable cause for the understatement and that the taxpayer acted in good faith.

(2) The department will not waive the penalty if the taxpayer was involved in an abusive transaction as defined in ORS 314.402(4) for the tax year at issue.

(3) Reasonable cause and good faith. A taxpayer's reasonable cause and good faith for a substantial understatement of net tax is demonstrated by the extent of the taxpayer's efforts to determine the taxpayer's correct tax liability under the law.

(a) The following circumstances demonstrate reasonable cause and good faith:

(A) The taxpayer relied on a position contained in a proposed federal regulation or state rule.

(B) The taxpayer honestly misunderstood the facts or law affecting the understatement, and the misunderstanding was reasonable in light of the taxpayer's experience, knowledge and education.

(b) Generally, reliance on an information return, incorrect facts or advice of a professional does not demonstrate reasonable cause and good faith, unless under all the circumstances the taxpayer's reliance was reasonable. The following examples demonstrate reasonable cause and good faith:

Example 1: The taxpayer relied on erroneous information that was inadvertently included in the financial records of the taxpayer's business by others, if procedures existed that were designed to identify factual errors.

Example 2: The taxpayer relied on erroneous information reported on a Form 1099 provided by another person, if the taxpayer did not know or have reason to know that the information was incorrect.

(c) A taxpayer is considered to know or have reason to know that information is incorrect only if such information is inconsistent with other information reported to the taxpayer or is inconsistent with the taxpayer's knowledge of the underlying facts.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.402
Renumbered from 150-314.402-(C), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.402(6), REV 9-2015, f. 12-23-15, cert. ef. 1-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

Or. Admin. R. 150-314-0209 Substantial Authority, Adequate Disclosure and Reasonable Basis

(1) Definitions. For purposes of ORS 314.402, OAR 150-314-0205, and this rule:

(a) “Substantial authority” has the same meaning as used in Treasury Regulation 1.6662-4(d).

(b) “Adequate disclosure” has the same meaning as used in Treasury Regulation 1.6662-4(e)-(f).

(2) When determining if an understatement is substantial, the understatement does not include items for which:

(a) Substantial authority exists (or existed at the time the taxpayer claimed it on the return) for the tax treatment of the item in question; or

(b) The taxpayer adequately disclosed relevant facts for the tax treatment of the item in question on the Oregon return (or on a statement attached to the Oregon return), and the taxpayer had a reasonable basis for the tax treatment of the item.

(3) Items not adequately disclosed to the department before the taxpayer was first notified by the department concerning the tax liability will not be considered adequately disclosed on any subsequent filing by the taxpayer.

(4) Items attributable to an abusive tax shelter as defined in ORS 314.402(4)(a) do not qualify under this rule to be excluded from the understatement.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.402
Renumbered from 150-314.402(4)(b), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 19-2008, f. 12-26-08, cert. ef. 1-1-09
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 4-1988, f. 5-25-88, cert. ef. 6-1-88

Or. Admin. R. 150-314-0215 Listed Transaction Understatement; Penalty

(1) “Return of the taxpayer” for purposes of this penalty is defined as the original return filed with the department that contains a listed transaction understatement, or the most recent amended return filed with the department that contains a listed transaction understatement.

(2) “Net increase in taxable income” for purposes of this penalty is defined as an increase to taxable income or a decrease to a taxable loss.

Example 1: Taxpayer files an original 2006 return that contains a listed transaction understatement. Taxpayer amends the 2006 return and makes no changes to the treatment of the listed transaction. The Department, during an audit, discovers a listed transaction understatement on the taxpayer’s return. The listed transaction understatement penalty is based on the net increase in taxable income between the treatment of the listed transaction reported on the amended return and the correct treatment of the listed transaction.

Example 2: Taxpayer files an original 2007 return. Taxpayer amends the 2007 return to report the correct treatment of a listed transaction. The listed transaction understatement penalty is based on the net increase in taxable income between the amount of the listed transaction on the original return and the correct treatment of the listed transaction reported on the amended return.

History

Statutory/Other Authority: ORS 314.403 & 305.100
Statutes/Other Implemented: ORS 314.403
Renumbered from 150-314.403, REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2008, f. & cert. ef. 9-23-08

Or. Admin. R. 150-314-0220 Additional Assessments

(1) The filing of a ‘tentative return’ which does not reveal the details of income or deductions is not considered a filing within the meaning of ORS 314.410, and the statute of limitations upon an additional assessment does not begin to run until a detailed return, showing items of income and deductions, is filed. Beginning with the tax year 1994, a copy of the federal Form 1040, Form 1040A, Form 1040EZ, or 1040 PC, whichever is applicable, must be filed with Form 40, pursuant to ORS 316.457 and OAR 150-316-0460, or the return will be deemed incomplete.

(2) For tax years beginning on or after January 1, 1969 and before December 31, 1993, a complete copy of the federal income tax return, including all schedules, must be filed with the department.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.410
Renumbered from 150-314.410(1), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
11-71
6-68
1958-59

Or. Admin. R. 150-314-0222 Five-Year Statute of Limitations

(1) For tax years beginning before January 1, 2014, the term “gross income” as used in ORS 314.410(2) has the same meaning as provided under section 61 of the Internal Revenue Code. For tax years beginning on or after January 1, 2014, the term "gross income" as used in ORS 314.410(2) has the same meaning as provided under:

(a) Section 61 of the Internal Revenue Code as it relates to any income other than from the sale of goods or services in a trade or business, or

(b) Section 6501(e) of the Internal Revenue Code as it relates to a trade or business.

(2) An item shall not be considered as omitted from gross income if information sufficient to apprise the Department of the nature and amount of such item is disclosed in the return or in any schedule or statement attached to the return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.410
Renumbered from 150-314.410(2), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2014, f. & cert. ef. 7-31-14
11-71

Or. Admin. R. 150-314-0224 Time Limit to Make Adjustment

(1) The provisions of this rule that apply to a federal change or correction apply to reports that are received by the department on or after October 4, 1997. The provisions of this rule that apply to another state's change or correction apply to changes or corrections made on or after October 23, 1999.

(2) The department may mail a Notice of Deficiency at any time within two years after the department receives notification of a change or correction contained in:

(a) A report received from the Internal Revenue Service;

(b) A report received from another state's taxing authority; or

Example 1: Ron filed his 1996 federal and state returns on time. The Internal Revenue Service (IRS) audited and adjusted his federal return in March 2000. The department may mail a Notice of Deficiency within two years of receiving the report of the Internal Revenue Service adjustment.

(3) The department may mail a Notice of Deficiency if, at the time the change or correction by the Internal Revenue Service or another state’s taxing authority was made, an assessment or issuance of a refund of federal or other state's tax based on the change or correction was within the time permitted by federal tax law or the tax law of the other state, as applicable. This provision applies regardless of whether an adjustment to the return is allowable under any other provision of Oregon law.

Example 2: ABC Corporation was audited by the IRS for tax year 1991. ABC Corporation signed an agreement with the IRS to extend the period of time for assessing federal tax. No separate extension agreement was signed with Oregon. Following completion of the federal audit, the department may mail a Notice of Deficiency at any time within two years of receiving the report of the Internal Revenue Service adjustment.

Example 3: Sally filed a timely 1993 tax return. In 1999, the IRS determined that Sally had omitted an item of income that was more than 25 percent of the gross income shown on the return. The IRS assessed additional tax based on Internal Revenue Code section 6501(e), which allows an assessment to be issued within six years of the filing of the return when there is such an omission. The department may mail a Notice of Deficiency based on the federal RAR within two years of receiving that report.

(4) The department may not mail a Notice of Deficiency based on a federal adjustment or the audit report of another state if, at the time of the change or correction, the tax year was closed to adjustment for Oregon purposes and also closed for adjustment under federal tax law, or the law of the other state, whichever applies.

Example 4: Lester filed timely 1995, 1996 and 1997 federal and state tax returns. In 1999, the Internal Revenue Service issued an adjustment that indicated Lester had incorrectly figured a capital loss for 1995. However, the IRS did not assess additional federal tax for 1995 because the year was not open to adjustment under any provision of federal law. Because both the federal and state returns were closed to adjustment, the department may not use the provisions of ORS 314.410(3)(b) to issue a Notice of Deficiency based on the Internal Revenue Service adjustment.

(5) When the department is notified of a change or correction, the department is not limited to the adjustments reflected in the IRS report, the report of the other state's taxing authority, or the taxpayer's written report submitted in the format required by OAR 150-314-0160. The department may make any adjustments deemed necessary to properly reflect Oregon taxable income or Oregon tax liability for the year in question.

Example 5: Paul, a California resident, worked temporarily in Oregon in 1995 before returning to California. In April 1996, Paul filed a nonresident Oregon return for 1995 and claimed a credit for taxes paid to California. In March 2000, California audited his 1995 California return and in July 2000 Paul paid additional tax to California based on additional wages earned in Oregon. Paul filed a claim for refund with Oregon in November 2000, as allowed by ORS 314.380(2)(b). In reviewing the claim, the department allowed the increase in the credit for taxes paid to another state based on the increased wages. However, the department determined Paul had incorrectly calculated the political contribution credit and issued an adjusted refund.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.410
Renumbered from 150-314.410(4), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2013, f. 12-26-13, cert. ef. 1-1-14
Renumbered from 150-314.410(3), REV 8-2008, f. 8-29-08, cert. ef. 8-31-08
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-314-0226 Notification of Gain Realized Upon the Sale or Exchange of a Principal Residence

(1) The period for the assessment of any deficiency attributable to any part of the gain realized upon the sale or exchange of the taxpayer's principal residence shall not expire prior to three years from the date the department is notified by the taxpayer of:

(a) The cost of purchasing the new residence which the taxpayer claims results in nonrecognition of any part of such gain; or

(b) The taxpayer's intention not to purchase a new residence; or

(c) A failure to purchase a new residence within the prescribed period. The department is deemed to have been notified when the taxpayer provides this information to the department.

(2) Individuals who have deferred gain on the sale of a principle residence under Internal Revenue Code (IRC) Section 1034, or who have excluded gain on the sale of a residence under IRC 121, are not required to file notice directly with the department if:

(a) They have met any applicable reinvestment requirements; and

(b) Notification of the reinvestment has been filed with the Internal Revenue Service. In this case, the department is deemed to have been notified on the date the Internal Revenue Service is notified.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.410
Renumbered from 150-314.410(6), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.410(5), REV 8-2008, f. 8-29-08, cert. ef. 8-31-08
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

Or. Admin. R. 150-314-0228 Extension of Period for Assessment

Once the provisions of ORS 314.410(6) have been exercised, the Department and the taxpayer may, by written agreement, extend beyond the original agreed period the period for mailing a notice of deficiency or assessing a deficiency, provided the subsequent agreement is made before the original agreement expires.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 314.410
Renumbered from 150-314.410(7), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.410(6), REV 8-2008, f. 8-29-08, cert. ef. 8-31-08
12-31-77
11-71

Or. Admin. R. 150-314-0230 Effect of Federal Extension of Period for Assessment

If a taxpayer and the Commissioner of Internal Revenue, or the taxing authority of another state, enter into an agreement, or renewal thereof, extending the period of time for giving notices of deficiencies and assessing deficiencies of income tax, the Department may give notice of a deficiency within the limits set forth in subsections (1) to (7) of ORS 314.410 or within six months from the expiration date of the agreement, whichever period expires the later.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 314.410
Renumbered from 150-314.410(9), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.410(8), REV 8-2008, f. 8-29-08, cert. ef. 8-31-08
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
12-31-77
11-71
Repealed by REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-314-0240 Refunds Generally

(1) Refund Limitations - Time and Amount.

(a) If the amount of the tax imposed by the statute is less than the amount paid by the taxpayer and the taxpayer does not then owe any other tax or liability to the State of Oregon, such overpayment must be refunded. A refund may be made under ORS 314.415 in compliance with a claim for refund filed by the taxpayer under ORS 305.270 or by correction of the return by the department. To issue a refund based on an audit examination, an auditor's report showing the amount of refund must be completed and approved prior to the expiration of the applicable period set forth in the following paragraph.

(b) Except as provided in subsections (3), (4), (5) and (6) of ORS 314.415, a refund or credit may not be granted unless a correction by the department is approved or a claim is filed within three years after the return is filed, or within two years after part or all of the tax is paid, whichever period expires later. Under ORS 316.417(1) and 317.504, a return filed before the due date is considered as having been filed on the due date.

(c) If there is an amount due from the taxpayer, the refund otherwise allowable will be applied to the balance due. An appeal from an additional assessment paid by the taxpayer to stop the running of interest cannot be classed as a "refund" claim. Except as provided in ORS 314.415(5), the amount refunded cannot exceed the amount of tax paid during the applicable period of limitation before a correction by the department is approved or the filing of the claim.

Example: A taxpayer files a 2002 return on April 15, 2003, showing tax due in the amount of $100 and pays that amount at the time the return is filed. On April 1, 2006, additional tax of $50 is assessed by the department on the 2002 return and is paid by the taxpayer on May 1, 2006. Within two years the taxpayer files a claim for refund based on items not previously adjusted on the 2002 return. The refund claim shows an overpayment of $75 of the total $150 paid. The refund claim is limited to $50, the sum paid within the open period preceding the filing of the claim.

(2) Interest Start Date.

(a) When a refund of individual income tax is attributable to tax withheld by an employer, or when a refund of individual income tax, corporate excise tax, or corporate income tax is attributable to estimated taxes, the interest start date is 45 days after the return was due or 45 days after the return was filed, whichever is later.

(b) The interest start date for a refund of estate tax is 45 days after the return was due, 45 days after the original return was filed or 45 days after the tax was paid, whichever is later.

(c) The interest start date for a refund not described in subsection (2)(a) or (2)(b) of this rule is 45 days after the return was due or 45 days after the tax was paid, whichever is later.

(d) See OAR 150-305-0142 Interest on Refunds for information about interest periods and interest rates.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
REV 1-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-314.415, REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.415(1), REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 10-1986, f. & cert. ef. 12-31-86
12-31-82
12-31-77
12-19-75
1958-59

Or. Admin. R. 150-314-0242 Refunds

(1) The return of the taxpayer, filed timely and in the prescribed manner, constitutes a claim for refund under the provisions of this section. For the purpose of determining when the three-year period for claiming a refund expires, the due date of a return is the statutory due date, not the due date after extension.

(2) The department will refund the excess tax paid whenever the review required by statute is completed, even if the date of refund is more than three years after the due date of the return.

Example 1: Simon filed his 1999 Oregon personal income tax return on April 1, 2003, requesting a refund. The department reviewed and processed the return in mid-May of that year. Although the refund payment would be outside the three year statute for refunds, the department can make the payment because Simon filed his return within the statute of limitations period.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
Renumbered from 150-314.415(2)(b)-(A), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.415(1)(b)-(A), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
Renumbered from 150-314.415(1)(c), REV 4-2003, f. & cert. ef. 12-31-03
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-85, Renumbered from 150-314.415(1)(b)
12-31-83, Renumbered from 150-316.192 to 150-314.415(1)(b)
11-71
1-69

Or. Admin. R. 150-314-0244 Minimum Offset Amount

(1) The department is prohibited by statute from issuing refunds of less than the minimum allowed by ORS 314.415 after reduction for amounts owed. The department will not apply a refund less than the minimum to a subsequent year’s estimated tax account or to a charitable checkoff.

(2) Refunds from all tax programs may be offset against delinquent accounts as specified in OAR 150-314-0248.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.415(2)(b)-(B), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.415(1)(b)-(B), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
Renumbered from 150-314.415(1)(b), REV 4-2003, f. & cert. ef. 12-31-03
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
12-31-85, Renumbered from 150-314.415(1)(d)-(C)
10-5-83

Or. Admin. R. 150-314-0246 Interest Computation — Offset

(1) An overpayment of any tax imposed and interest on the overpayment, if any, must be offset against any tax, penalty, or interest then due from the taxpayer. “Tax, penalty or interest then due from the taxpayer” means any amount of tax that has been assessed before the date the refund is applied or proposed to be applied and any penalty or interest incurred in connection with the tax.

(2) If a Notice of Assessment is issued, the department must make the offset on the date the refund is issued.

(3) If a Notice of Deficiency is issued, the department may offset upon receiving written authorization from the taxpayer. If the taxpayer submits a written authorization to offset, the authorization must include the taxpayer’s name, social security number or other identifying number, current address, accounts (if known), and the signature of the taxpayer. The date on which the offset must be made is the date that either a net billing or a refund is issued, or the date a payment is received, whichever is earlier.

Example 1: On February 15, 1985 it was determined that a taxpayer had overpaid the 1982 tax by $500 and underpaid the 1983 tax by $800. Assume the underpaid account had not yet been assessed and on March 15, 1985 the department received a written authorization allowing the department to offset the refund to the nonassessed account. The net amount due from the taxpayer on April 15, 1985, the date the net billing is issued, is calculated as follows: [See PDF link below.]

Example 2: On February 1, 1985, it was determined that a taxpayer underpaid the 1983 tax by $800. On May 15, 1985, the account was assessed and a five (5) percent failure-to-pay penalty was imposed. On June 15, 1985, it was determined that the taxpayer overpaid the 1982 tax by $500. Since the 1983 account is an assessed account, the department may offset the total refund (including interest) to the assessed account on June 15, 1985. The net amount due from the taxpayer on June 15, 1985, the date the refund is offset to the assessed account, is calculated as follows: [See PDF link below.]

Example 3: On February 15, 1986 it was determined by a field audit that a taxpayer underpaid the 1984 tax by $1,000 and overpaid the 1983 tax by $500. On that date, the taxpayer signed an authorization to offset and paid $515. In this example, the offset is made at the date of payment, which is earlier than the date the net billing is issued. The amount due on February 15, 1986 is calculated as follows: [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
REV 72-2017, amend filed 12/22/2017, effective 01/01/2018
REV 23-2017, f. & cert. ef. 6-28-17
Renumbered from 150-314.415(2)(f)-(A), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.415(1)(e)-(A), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-87, Renumbered from 150-314.415(1)(d)-(A)
12-31-85
12-31-83
10-5-83

Or. Admin. R. 150-314-0248 Refund Offset Priority

(1) As used in this rule:

(a) “Appropriation accounts” means accounts that are established by an appropriation of the state legislature.

(b) “Nonassessed accounts” means: tax accounts for which the department has determined a deficiency exists but that have not yet been assessed.

(A) Tax accounts that have not been paid for which an appeal has not been made or is final and a written notice of assessment stating the amount so assessed has been issued to the taxpayer; and

(B) Self-assessed accounts that have not had a written notice of assessment issued to the taxpayer.

(d) “Oldest account” means the account with the earliest set-up date. If more than one account has the same set-up date, the earliest tax year is the oldest account.

(e) “Set-up date” means the date the account was established or created.

(2) The department will offset a refund to assessed accounts, unless the taxpayer has a currently pending appeal of the assessment. The department may also offset a refund to nonassessed accounts when the taxpayer sends the department a written authorization to offset the refund. Offsets will be made using the following guidelines:

(a) First offset to the oldest account within the program that has the refund.

(b) After all accounts are satisfied within the program that has the refund, offset to other programs, oldest account first, following the priorities shown in section (4) below.

(3) A taxpayer’s refund will be offset only to accounts owed by that taxpayer. An individual refund will not be offset to a corporate account nor a corporate refund offset to accounts of a subsidiary.

(4) The priority criteria are:

(a) Funds due the general fund, excluding funds due other state of Oregon agencies, and also includes all funds due from the cigarette and amusement device taxes that are allocated part to the general fund and part to local governments and all funds due the Fund for Student Success.

(b) Funds due an appropriation account that will revert to the general fund.

(d) Funds due a state of Oregon tax program for distribution to local governments.

(e) Funds due other state of Oregon agencies.

(f) Funds due local jurisdictions for which the department collects under ORS 293.250.

(g) Funds due entities which serve a garnishment or levy on the Department of Revenue.

(h) Funds due charitable check-off programs designated by the taxpayer in lieu of receiving a refund check.

(i) Funds due the federal government under the state reciprocal offset program under ORS 305.612.

(5) If the refund balance as adjusted by the department in processing and after other offsets is insufficient to pay the designated charitable check-off contributions in full, payment will be prorated. The proration will be the ratio of the designated contribution to a specific fund divided by the total contribution to all funds.

(6) State tax refunds will not be offset to accounts for TriMet Transportation District or the Lane Transit District without the written permission of the taxpayer. Refunds from these programs will be offset to accounts within the same program but not to an account for a different tax program.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
REV 23-2020, amend filed 11/30/2020, effective 12/01/2020
Renumbered from 150-314.415(2)(f)-(B), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2105, f. 12-23-15, cert. ef. 1-1-16
Renumbered from 150-314.415(1)(e)-(B), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
REV 2-2003, f. & cert. ef. 7-31-03
RD 7-1992, f. & cert. ef. 12-29-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-85, Renumbered from 150-314.415(1)(d)-(B)
12-31-83
10-5-83

Or. Admin. R. 150-314-0250 Refunds; Net Operating Loss and Net Capital Loss Carryback Claims

(1) Application. For purposes of this rule, provisions applying to individuals also apply to estates and trusts.

(2) Extended period for refund claim.

(a) A special period of limitations is provided under ORS 314.415(5)(a) to claim a refund or credit attributable to an individual net operating loss (NOL) or corporation net capital loss carryback. A refund claim for an individual net operating loss or corporation net capital loss carryback year must be filed within three years from the due date (including extensions) of the taxable year of the net operating loss or net capital loss which results in the carryback.

(b) The provision allowing refunds of tax within two years of the date of payment is not extended.

(3) Carryback periods for individuals. The total number of years to which an NOL may be carried back or forward is the same for Oregon and federal (including exceptions and limitations).

(4) Limitations on credit or refund.

(a) If a claim for a credit or refund is based on an overpayment attributable to an individual net operating loss or corporation net capital loss carryback, the credit or refund may exceed the amount of tax paid within three years of when the return was filed or within two years immediately preceding the filing of the claim but only to the extent the overpayment is attributable to the net operating loss or net capital loss carryback.

(b) If a claim for a credit or refund is based not only on an overpayment attributable to an individual net operating loss or corporation net capital loss carryback, but also on other items, the credit or refund may not exceed the sum of:

(A) The amount of the overpayment attributable to the individual net operating loss or corporation net capital loss carryback, and

(B) The balance of such overpayment not to exceed the amount of taxes paid within the periods provided in ORS 314.415(2)(a).

(c) Delinquent returns. If a taxpayer filed an original return after the three-year period for requesting a refund provided in ORS 314.415(2)(a), but amends the same return for an individual net operating or corporation net capital loss carryback within the period allowed by ORS 314.415(5)(a), a refund will be allowed. The refund will be limited to the amount of net tax liability shown on the original return. Any additional refund requested on the amended return is barred by ORS 314.415(2)(a).

(5) Treatment of carryover amounts. Although refunds for NOL years, individual net operating loss, or corporation net capital loss carryback years may be closed or limited under ORS 314.415 and this rule, the balance of any individual NOL or corporation net capital loss carryover amounts not fully absorbed in carryback years may be used in the computation of Oregon taxable income for all applicable carryover years to the same extent includable for federal.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
REV 28-2018, amend filed 12/28/2018, effective 01/01/2019
Renumbered from 150-314.415(5)(a), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
Renumbered from 150-314.415(4)(a), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-314-0252 Effect of Federal Extension of Period for Assessment

If a taxpayer and the Commissioner of Internal Revenue enter into an agreement, or renewal thereof, extending the period of time for giving notices of deficiencies and assessing deficiencies of federal income tax for tax years beginning on or after January 1, 1969, the period within which a refund claim may be filed or a refund allowed if no claim is filed shall be within the limits set forth in subsections (1) to (5) of ORS 314.415 or within six months from the expiration date of the federal agreement, whichever period expires the later.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
Renumbered from 150-314.415(6), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.415(5), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
12-31-77
11-71

Or. Admin. R. 150-314-0254 Separate Refunds When a Joint Return Has Been Filed

(1) The department may, as a convenience to taxpayers, issue separate refunds when either spouse submits a signed request. To issue separate refunds when a joint refund check has already been issued, the check must be returned uncashed. If either spouse has an amount owing to the state of Oregon, any refund due that person will be applied to the liability and the balance, if any, issued in a separate refund check.

(2) For purposes of this rule, the separate adjusted gross income (AGI) of each spouse is equal to each spouse's share of Oregon adjusted gross income.

Example 1: Ann and her husband Ian, both Idaho residents, filed a joint Oregon return claiming a $600. He owes a $500 debt to an Oregon city for unpaid parking tickets so the department withheld part of the joint $600 refund to pay the $500 debt and issued a $100 refund for the difference. Before they cashed the $100 refund, Ann sent it back requesting her share of the amount paid to the city in Oregon because she did not owe the debt. Ian reported $25,000 of wages of which he earned $10,000 in Oregon. Ann reported $15,000 of wages of which $5,000 she earned in Oregon. They had no other income to report. The department will apportion her refund based on her share of Oregon AGI as follows:

Federal column Oregon Column

Ian’s wages $25,000 $10,000

Ann’s wages $15,000 $5,000

Federal AGI $40,000 $15,000 (Oregon AGI)

$5,000 ÷ $15,000 = 1/3

$600 x 1/3 = $200

The department will apportion the $600 refund and issue a $200 refund to Ann. Ian’s portion of the refund was $400 thus he still owes the City of Portland $100.

(3) For purposes of this rule, items of income and deduction, separate adjusted gross income, and any refund claimed are determined without regard to community property law.

Example 2: Ethan and his wife Ava, both Washington residents, filed a joint Oregon return claiming a $1,500 refund. She owes a $1,200 debt to an Oregon university so the department withheld part of the joint refund and sent a $300 check for the difference. Before they cashed the $300 refund, Ethan sent it back requesting his share of the joint refund because he did not owe the debt and he claimed he owned half of the refund because he lives in a community property state. Ethan reported $50,000 of wages all of which he earned in Washington. Ava reported $25,000 of wages all of which she earned in Oregon. They had no other income to report. The department will apportion his refund based on his share of Oregon AGI without regard to community property law as follows:

Federal column Oregon Column

Ethan’s wages $50,000 $0

Ava’s wages $25,000 $25,000

Federal AGI $75,000 $25,000 (Oregon AGI)

Because Ethan does not have any share of the Oregon AGI and community property law is disregarded for this purpose, the entire refund belongs to Ava and the department will not apportion any of it to Ethan.

(4) If the refund is being held for application against an amount owed to an agency of the state of Oregon, the request for separate refunds must be mailed to the Department of Revenue within 30 days of the date of the Notice of Proposed Adjustment and/or Distribution. Separate refunds will not be made if the request is not received timely.

(5) Pursuant to ORS 18.665(2), the department cannot issue separate refunds when a garnishment or levy has been served on the department for one or both spouses.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
Renumbered from 150-314.415(7), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2013, f. & cert. ef. 12-26-13
REV 4-2012, f. 7-20-12, cert. ef. 8-1-12
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08
Renumbered from 150-314.415(6), REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
REV 3-2002, f. 6-26-02, cert. ef. 6-30-02
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87
12-31-85
1-1-77, Renumbered from 150-316.192(2)-(A)
12-19-75
11-71
1-69

Or. Admin. R. 150-314-0256 Refunds of Tax Overpayments to Spouse or Heirs

(1) For deaths which occur on or after September 9, 1995: Upon the death of a taxpayer entitled to a refund not in excess of $10,000, when the estate is not probated, refunds may be made to survivors by classes upon filing acceptable affidavits, in the following order of precedence: Surviving spouse; the trustee of a revocable inter vivos trust; children, and issue of a deceased child by right of representation (the grandchildren dividing share and share alike what their deceased parent would have taken if alive); parents; brothers and sisters; nephews and nieces. If a small estate affidavit is filed, a refund may be made in the amount of the difference between the value of other personal property in the small estate and $50,000. See ORS 114.515, 293.490 to 293.500.

(2) For deaths which occur prior to September 9, 1995: The refund limitation amount is $1,000 or less, and trustees are not allowed to claim the refund.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415
Renumbered from 150-314.415(8), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.415(7), REV 4-2005, f. 12-30-05, cert. ef. 1-1-06
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-85
12-31-84, Renumbered from 150-316.192(2)-(B)
11-73
1-69

Or. Admin. R. 150-314-0265 Model Recordkeeping and Retention

(1) Definitions. For purposes of this rule, these terms shall be defined as follows:

(a) “Database management system” means a software system that controls, relates, retrieves, and provides accessibility to data stored in a database.

(b) “Electronic data interchange” or “EDI technology” means the computer-to-computer exchange of business transactions in a standardized structured electronic format.

(d) “Machine-sensible record” means a collection of related information in an electronic format. Machine-sensible records do not include hard-copy records that are created or recorded on paper or stored in or by an imaging system such as microfilm, microfiche, or storage-only imaging systems.

(e) “Storage-only imaging system” means a system of computer hardware and software that provides for the storage, retention and retrieval of documents originally created on paper. It does not include any system, or part of a system, that manipulates or processes any information or data contained on the document in any manner other than to reproduce the document in hard copy or as an optical image.

(f) “Taxpayer” as used in this rule means any natural person, estate, trust, or beneficiary whose income is in whole or in part subject to the taxes administered by the department that tie to provisions in ORS chapter 314.

(2) Recordkeeping Requirement — General:

(a) A taxpayer shall maintain all records that are necessary to a determination of the correct tax liability under tax laws of this state that are administered by the department that tie to provisions in ORS chapter 314. All required records shall be made available on request by the department or its authorized representatives as provided for in ORS 314.425.

(b) If a taxpayer retains records required to be retained under this rule in both machine-sensible and hard-copy formats, the taxpayer shall make the records available to the department in machine-sensible format upon request of the department.

(c) Nothing in this rule shall be construed to prohibit a taxpayer from demonstrating tax compliance with traditional hard-copy documents or reproductions thereof, in whole or in part, whether or not such taxpayer also has retained or has the capability to retain records on electronic or other storage media in accordance with this rule. However, this subsection shall not relieve the taxpayer of the obligation to comply with subsection (2)(b) of this rule.

(3) Recordkeeping Requirements — Machine-Sensible Records:

(a) General Requirements:

(A) Machine-sensible records used to establish tax compliance shall contain sufficient transaction-level detail information so that the details underlying the machine-sensible records can be identified and made available to the department upon request. A taxpayer has discretion to discard duplicated records and redundant information provided its responsibilities under this rule are met.

(B) At the time of an examination, the retained records shall be capable of being retrieved and converted to a standard record format.

(C) Taxpayers are not required to construct machine-sensible records other than those created in the ordinary course of business. A taxpayer who does not create the electronic equivalent of a traditional paper document in the ordinary course of business is not required to construct such a record for tax purposes.

(b) Electronic Data Interchange Requirements:

(A) Where a taxpayer uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, shall be equivalent to that contained in an acceptable paper record. For example, the retained records should contain such information as vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, shipping detail, etc. Codes may be used to identify some or all of the data elements, provided that the taxpayer provides a method which allows the department to interpret the coded information.

(B) The taxpayer may capture the information necessary to satisfy subsection (3)(b)(A) at any level within the accounting system and need not retain the original EDI transaction records provided the audit trail, authenticity, and integrity of the retained records can be established. For example, a taxpayer using electronic data interchange technology receives electronic invoices from its suppliers. The taxpayer decides to retain the invoice data from completed and verified EDI transactions in its accounts payable system rather than to retain the EDI transactions themselves. Since neither the EDI transaction nor the accounts payable system captures information from the invoice pertaining to product description and vendor name (i.e., they contain only codes for that information), the taxpayer also retains other records, such as its vendor master file and product code description lists and makes them available to the department. In this example, the taxpayer need not retain its EDI transaction for tax purposes.

(c) Electronic Data Processing Systems Requirements — The requirements for an electronic data processing accounting system should be similar to that of a manual accounting system, in that an adequately designed accounting system should incorporate methods and records that will satisfy the requirements of this rule.

(d) Business Process Information:

(A) Upon the request of the department, the taxpayer shall provide a description of the business process that created the retained records. Such description shall include the relationship between the records and the tax documents prepared by the taxpayer and the measures employed to ensure the integrity of the records.

(B) The taxpayer shall be capable of demonstrating:

(i) The functions being performed as they relate to the flow of data through the system;

(ii) The internal controls used to ensure accurate and reliable processing; and

(iii) The internal controls used to prevent unauthorized addition, alteration, or deletion of retained records.

(i) Record formats or layouts;

(ii) Field definitions (including the meaning of all codes used to represent information);

(iii) File descriptions (e.g., data set name); and

(iv) Detailed charts of accounts and account descriptions.

(4) Records Maintenance Requirements:

(a) The department recommends but does not require that taxpayers refer to the National Archives and Record Administration’s (NARA) standards for guidance on the maintenance and storage of electronic records, such as the labeling of records, the location and security of the storage environment, the creation of back-up copies, and the use of periodic testing to confirm the continued integrity of the records.

(b) The taxpayer’s computer hardware or software shall accommodate the extraction and conversion of retained machine-sensible records.

(5) Access to Machine-Sensible Records:

(a) The manner in which the department is provided access to machine-sensible records as required in subsection (2)(b) of this rule may be satisfied through a variety of means that shall take into account a taxpayer’s facts and circumstances through consultation with the taxpayer.

(b) Such access will be provided in one or more of the following manners:

(A) The taxpayer may arrange to provide the department with the hardware, software and personnel resources to access the machine-sensible records.

(B) The taxpayer may arrange for a third party to provide the hardware, software and personnel resources necessary to access the machine-sensible records.

(C) The taxpayer may convert the machine-sensible records to a standard record format specified by the department including copies of files, on a magnetic medium that is agreed to by the department.

(D) The taxpayer and the department may agree on other means of providing access to the machine-sensible records.

(6) Taxpayer Responsibility and Discretionary Authority:

(a) In conjunction with meeting the requirements of section (3) of this rule, a taxpayer may create files solely for the use of the department. For example, if a database management system is used, it is consistent with this rule for the taxpayer to create and retain a file that contains the transaction-level detail from the database management system and that meets the requirements of section (3) of this rule. The taxpayer should document the process that created the separate file to show the relationship between that file and the original records.

(b) A taxpayer may contract with a third party to provide custodial or management services of the records. Such a contract shall not relieve the taxpayer of its responsibilities under this rule.

(7) Alternative Storage Media:

(a) For purposes of storage and retention, taxpayers may convert hard-copy documents received or produced in the normal course of business and required to be retained under this rule to microfilm, microfiche or other storage-only imaging systems and may discard the original hard-copy documents, provided the conditions of this section are met. Documents which may be stored on these media include, but are not limited to general books of account, journals, voucher registers, general and subsidiary ledgers, and supporting records of details, such as sales invoices, purchase invoices, exemption certificates, and credit memoranda.

(b) Microfilm, microfiche and other storage-only imaging systems shall meet the following requirements:

(A) Documentation establishing the procedures for converting the hard-copy documents to microfilm, microfiche or other storage-only imaging system shall be maintained and made available on request. Such documentation shall, at a minimum, contain a sufficient description to allow an original document to be followed through the conversion system as well as internal procedures established for inspection and quality assurance.

(B) Procedures shall be established for the effective identification, processing, storage, and preservation of the stored documents and for making them available for the period they are required to be retained under section (9) of this rule.

(C) Upon request by the department, a taxpayer shall provide facilities and equipment for reading, locating, and reproducing any documents maintained on microfilm, microfiche or other storage-only imaging system.

(D) When displayed on such equipment or reproduced on paper, the documents shall exhibit a high degree of legibility and readability. For this purpose, legibility is defined as the quality of a letter or numeral that enables the observer to identify it positively and quickly to the exclusion of all other letters or numerals. Readability is defined as the quality of a group of letters or numerals being recognizable as words or complete numbers.

(E) All data stored on microfilm, microfiche or other storage-only imaging systems shall be maintained and arranged in a manner that permits the location of any particular record.

(F) There is no substantial evidence that the microfilm, microfiche or other storage-only imaging system lacks authenticity or integrity.

(8) Effect on Hard-Copy Recordkeeping Requirements:

(a) Except as otherwise provided in this section, the provisions of this rule do not relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law and rules. Hard-copy records may be retained on a recordkeeping medium as provided in section (7) of this rule.

(b) If hard-copy records are not produced or received in the ordinary course of transacting business (e.g., when the taxpayer uses electronic data interchange technology), such hard-copy records need not be created.

(c) Hard-copy records generated at the time of a transaction using a credit or debit card shall be retained unless all the details necessary to determine correct tax liability relating to the transaction are subsequently received and retained by the taxpayer in accordance with this rule. Such details include those listed in subsection (3)(b)-(A).

(d) Computer printouts that are created for validation, control, or other temporary purposes need not be retained.

(e) Nothing in this section shall prevent the department from requesting hard-copy printouts in lieu of retained machine-sensible records at the time of examination.

(9) Records Retention — Time Period — All records required to be retained under this rule shall be preserved pursuant to ORS 314.425 unless the department has provided in writing that the records are no longer required.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.425
REV 13-2018, amend filed 06/26/2018, effective 07/01/2018
Renumbered from 150-314.425, REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98

Or. Admin. R. 150-314-0267 Requirement to Provide Copies of Documents

(1) Definitions for purposes of this rule.

(a) “Photocopy” (photocopied) means a copy or reproduction of an original document including books and papers; to make a photographic reproduction of any document, printed, pictorial, or other medium of information or recordkeeping.

(b) “Books and papers” has the same meaning as given in OAR 150-305-0100.

(2) Books and papers must be provided either as a photocopy, an electronic reproduction, or be made available for photocopying, scanning or other electronic reproduction at a specified time and place for the purposes of administering and verifying compliance with the tax laws. Photocopying is a benefit to both the department and the taxpayer as the photocopy provides objective evidence supporting a tax position and allows for expediting the audit.

(3) When books and papers are requested they will be relevant and reasonable documentation for the issues under examination. The request for information is relevant if it is germane to or applicable to an audit issue.

(4) All books and papers that are acquired during an audit or examination are confidential in accordance with ORS 314.835.

(5) If this requirement creates a hardship for a taxpayer, the auditor or agent will work with the taxpayer to come to a reasonable solution for both parties.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.425
Renumbered from 150-314.425-(B), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08

Or. Admin. R. 150-314-0275 Definition: Collection Charge

As used in ORS 314.430(1) “collection charge” includes:

(1) The fees and costs listed in ORS 18.999(4), related to recovery of expenses incurred in enforcing judgments, and

(2) All fees or charges of the Secretary of State imposed under ORS 305.184 incurred in filing, releasing, cancelling, or satisfying a warrant filed with the Secretary of State under ORS 305.182.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.430
Renumbered from 150-314.430(1)-(A), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2003, f. & cert. ef. 7-31-03
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 2-1989, f. 12-18-89, cert. ef. 12-31-89
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-314-0277 Payment Secured by Bond, Deposit or Otherwise

The issuance of a warrant to the sheriff to enforce collection of delinquent taxes will be stayed either by paying the amount of assessed taxes, penalties and accrued interest after it becomes due or by securing payment of that amount by bond, irrevocable letter of credit, deposit or otherwise. The bond or irrevocable letter of credit given by the taxpayer must be for an amount not less than the amount of the taxes assessed, plus penalties, plus interest for a reasonable period determined by the Department. The bond must be executed by a surety company which is registered with and under the supervision of the Insurance Commissioner of the State of Oregon; or by two or more individual sureties, each of whom shall be a resident and a householder or freeholder within the state and each of whom shall be worth the sum specified in the undertaking, exclusive of property exempt from execution and over and above all just debts and liabilities. However, the Department may allow more than two sureties to justify severally in amounts less than that expressed in the undertaking, if the whole justification is equivalent to that of two sufficient undertakings. The irrevocable letter of credit must be issued by a commercial bank as defined in ORS 706.005. Any one of the following items, or combination of items acceptable to the Department, equal in amount to the taxes, penalties and accrued interest thereon may be deposited with the Department of Revenue:

(1) A deposit of money;

(2) A certified check or checks on any state or national bank within the State of Oregon payable to the Department of Revenue;

(3) Satisfactory municipal bonds negotiable by delivery, or obligations of the United States Government negotiable by delivery; or

(4) Any other security satisfactory to the Department. The Department of Revenue may require additional security whenever in its opinion the value of the security pledged is no longer sufficient to adequately secure the Payment of the taxes, penalties and accrued interest thereon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.430
Renumbered from 150-314.430(1)-(B), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
12-31-83
12-19-75, Renumbered from 150-314.430(1)
1958-59

Or. Admin. R. 150-314-0279 Statute of Limitation on Tax Collection

No statute of limitation runs on a tax self-assessed or additionally assessed by the Department in the time allowed by ORS 314.410 and collectible by warrant. However, the statute of 10 years limitation on judgment liens begins to run on a tax lien as soon as the tax warrant is filed pursuant to ORS 314.430. Such lien may be renewed by court order without loss of priority.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 314.430
Renumbered from 150-314.430(2), REV 31-2016, f. 8-12-16, cert. ef. 9-1-16
1959

Or. Admin. R. 150-314-0285 Assessment of Withholding Tax Against Liable Officers

The provisions of this rule dealing with hearings apply to hearing requests filed with the Department of Revenue prior to September 1, 1997. See OAR 150-305.525 for information about hearing requests filed on or after September 1, 1997.

(1) Oregon Combined Tax Report Filed With Partial Or No Payment. Potentially responsible officers or employees have been assessed the amount of the unpaid tax when the Oregon combined tax report is filed (Pursuant to ORS 305.265 and 314.407). For the purpose of providing individual notice of the assessment, the department shall issue Notices of Liability to each potentially responsible officer or employee.

(2) No Oregon Combined Tax Report Filed. If a corporation fails to file an Oregon combined tax report when due, the department shall provide written notice, pursuant to ORS 314.400(2)(a)(B), to the corporation and to each potentially responsible officer or employee of the failure to file. If the failure to file is not remedied, then the department shall determine the tax and issue Notice of Determination and Assessment, to each potentially responsible officer and employee, pursuant to ORS 305.265(10) and 314.400(2)(a)(B).

(3) Understatement Of Tax Reported On Oregon Combined Tax Report. If an Oregon combined tax report shows tax amounts which upon audit and examination are determined to be understated, the department shall issue to each potentially responsible officer or employee and the corporation Notice of Deficiency pursuant to ORS 305.265(2) and Notice of Assessment pursuant to ORS 305.265(7).

(4) Appeals. The determinations and assessments issued under the procedures set forth above may be appealed under the provisions of ORS Chapter 305:

(a) Level 1, Conference: Within 30 days from the issuance of Notice of Liability, Notice of Deficiency or Notice of Determination and Assessment, the person given notice must advise the department in writing of objections to the assessment and request a conference. See ORS 305.265(5)

(b) Level 2, Hearing or Small Claims Division: Appeal of Notice of Determination and Assessment or Notice of Assessment must be filed within 90 days of the date of the notice. In the case of an appeal of a Notice of Determination and Assessment where a conference was requested, appeal must be filed within 90 days of the date of the conference officer’s decision letter. Ref. ORS 305.280(2). In the case of a Notice of Liability to which the person has not objected, appeal must be made within 120 days of the date of the original notice.

(A) The person given notice must provide the director, or an authorized agent of the department, with a written request for a hearing. The request shall state the facts relied upon for relief from the assessment(s) and shall bear the signature of the person filing the appeal or of their authorized representative. See ORS 305.275(5) and OAR 150-305.115(A) to (C).

(B) If the assessed tax is $5,000, or less, appeal may be taken directly to the Small Claims Division, Oregon Tax Court (ORS 305.280(5) and 305.515(3)(a)). After an election (either requesting a hearing from the department or appeal to Small Claims Division) is made, the choice is final. A change of appeal method chosen is not permitted. See ORS 305.530.

(C) If one or more of the individuals that may be held liable under ORS 316.162(3)(b) appeal an assessment of unpaid withholding taxes, a joint conference may be required by the department. See OAR 150-316.207(3)(a).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.446
Renumbered from 150-314.466-(B), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 4-1996, f. 12-23-96, cert. ef. 12-31-96
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-314-0290 Estimated Tax: When Estimates Are Required; Refunds Prior to Filing of Return

(1) Every corporation or group of corporations required to file an Oregon excise or income tax return and expecting to have a tax liability of $500 or more must make estimated tax payments. Estimated tax liability means the tax as computed under ORS Chapter 317 or 318, less allowable credits. For purposes of determining whether estimated tax liability exceeds $500, a credit resulting from overpayment of tax for a prior year is not taken into account.

(2) Generally, estimated tax payments will not be refunded prior to the taxpayer’s filing of the tax return for the year for which the estimated tax payments were made. The fact that the estimated tax payments made exceed the required payments based upon an exception to underpayment is not sufficient cause to refund such excess prior to the filing of the Oregon tax return. Where taxpayers establish to the satisfaction of the department that the facts warrant a refund, a refund of estimated taxes can be made prior to the filing of the tax return. Examples of fact situations that may be considered sufficient to warrant a refund are as follows:

Example 1: Estimated tax payments were made by a corporation that qualified as an S corporation for the entire tax year through the date the refund is requested.

Example 2: Estimated tax payments were made by a corporation that will not be required to file a return for the tax year for which the estimated tax payments were made.

Example 3: The estimated tax payments were intended for the Internal Revenue Service but were sent to the Department of Revenue in error.

Example 4: Taxpayer provides proof that the taxpayer intended the payment for another account or liability and the payment was misapplied to their estimated tax by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.505
Renumbered from 150-314.505-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 4-2003, f. & cert. ef. 12-31-03
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
12-1975
9-74

Or. Admin. R. 150-314-0292 Estimated Tax: When Estimates Are Required For Tax Exempt Corporations

Tax exempt corporations subject to tax on their “Unrelated Business Income” and that are required to file and pay federal income taxes, must also file an Oregon tax return. If their Oregon tax liability is more than $500, estimated tax payments must be made.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.505 & 317.920
Renumbered from 150-314.505-(B), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-314.505-(C)
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81

Or. Admin. R. 150-314-0294 Estimated Tax: Affiliated Corporations

(1) If two or more affiliated corporations file a consolidated state return as described in ORS 317.710 through 317.725, each shall be jointly and severally liable for the filing and payment of the estimated tax liability. Estimated tax shall be made on a consolidated basis.

(2) See OAR 150-314-0317 for an explanation of how to compute an underpayment of estimated taxes for corporations filing a consolidated Oregon return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.505
Renumbered from 150-314.505(2), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-314-0300 Estimated Tax: Due Dates of Payments for Short-Period Returns

If a return is filed for a short period of less than 12 months, the estimated tax payments are due as follows:

(1) If the period covered is less than four months, only one payment is required. It is equal to 100 percent of the estimated tax and is payable on the due date of the return.

(2) If the period covered is four months or longer but less than six months, two payments are required. One-half of the estimated tax is due on the 15th day of the fourth month. The balance is due on or before the due date of the tax return, not including extensions.

(3) If the period covered is six months or longer but less than nine months, three payments are required. One-third of the estimated tax is due on the 15th day of the fourth month, one-third on the 15th day of the sixth month and the balance on or before the due date of the tax return, not including extensions.

(4) If the period covered is nine months or longer, but less than twelve months, four payments are required. One-fourth of the estimated tax is due on the 15th day of the fourth month, one-fourth on the 15th day of the sixth month, one-fourth on the 15th day of the ninth month, and the balance on or before the due date of the tax return, not including extensions.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.515
Renumbered from 150-314.515, REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
Renumbered from 150-314.515-(A), RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
Repealed by RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
Renumbered from 150-314.515, TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
12-31-77
1-1-77
9-74

Or. Admin. R. 150-314-0302 Estimated Tax: Application of Payments

(1) Overpayments of tax

(a) Election. When a corporation files its completed excise or income tax return and the tax shown due thereon is less than the amounts previously paid for that year, the corporation may make an irrevocable election to have the overpayment of tax either refunded or applied as a payment of estimated tax. The election is made by entering the amount in the appropriate space provided on the corporation excise tax return or corporation income tax return.

(b) Application to estimated tax installment. For tax years beginning on or after January 1, 2016, the department will apply the elected overpayment, unless it is subject to an offset under ORS 314.415 and related rules, to the following year’s estimated tax payment due on the fifteenth day of the fourth month of the taxable year as described by ORS 314.515(1)(a), to the extent that the overpayment of tax is attributable to estimated tax payments received prior to the following year’s first quarter estimated tax due date. Payments received after the following year’s first quarter estimated tax due date will be applied to estimated tax as of the date the payment is received. In the case of an amended or delinquent return, the amount will be credited to the estimated tax installment as of the date the amended or delinquent return was filed or the date a payment was received, whichever is later.

(2) Payments of estimated tax. Except as otherwise specifically provided in section (1) of this rule, the department will credit estimated tax payments as of the date that they are received. The department will apply estimated tax payments to any prior underpayment and the remainder, if any, will be applied to the next required installment.

Example 1: Corporation A is a calendar year taxpayer. Corporation A's return is filed timely on May 15, 2017. Its 2016 tax after credits is $12,000. The corporation must make the following estimated tax payments on or before the indicated dates to avoid having an underpayment of estimated tax:

April 15, 2016 — $3,000.

June 16, 2016 — $3,000.

Sept. 15, 2016 — $3,000.

Dec. 15, 2016 — $3,000.

Corporation A pays as follows:

April 15, 2016 — $3,000.

June 16, 2016 — $3,000.

Sept. 15, 2016 — $0.

Sept. 30, 2016 — $3,500.

Dec. 15, 2016 — $0.

The $3,500 payment will be credited as of September 30, 2016. Of the $3,500 payment, $3,000 is applied to the payment due September 15, 2016. The $500 remainder is applied to the payment due December 15, 2016.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.415 & 314.515
REV 6-2018, minor correction filed 01/25/2018, effective 01/25/2018
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.515-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.515(2), REV 5-2015, f. 12-23-15, cert. ef. 1-1-16
REV 6-2014, f. 12-23-14, cert. ef. 1-1-15
REV 16-2008, f. 12-26-08, cert. ef. 1-1-09
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-314-0310 Requirement to Use Electronic Funds Transfer

(1) For tax years beginning on or after January 1, 2002, corporations are required to make estimated Oregon Corporation Excise or Income Tax payments by electronic funds transfer (EFT) if required to pay federal corporation estimated taxes by EFT.

(2) A taxpayer disadvantaged by the requirement to pay by EFT may request an exemption. The request must be in writing and sent to the address for EFT registration. The request must explain why the requirement to pay by EFT is a disadvantage to the taxpayer. An example of a disadvantage to the taxpayer is when the taxpayer’s bank or the bank of the taxpayer’s payroll service is unable to provide the service. Requests for an exemption will be evaluated on a case by case basis. If granted, the exemption will be for a period of 12 months, during which the taxpayer is expected to make arrangements to comply with the requirement to use EFT. The department will grant only one exemption period to a taxpayer.

(3) Corporations not meeting the requirement to pay by EFT may do so voluntarily by completing and submitting to the department an application for either ACH Debit or ACH Credit EFT. Applications can be requested from the department.

(4) After beginning to make payments electronically, a volunteer may discontinue electronic payments by sending a written request to stop paying to EFT. The request must be sent at least 30 days prior to the date the volunteer wishes to stop paying by EFT. If the volunteer has not reached the then current mandate threshold, the department shall allow the employer to discontinue electronic payments. The volunteer shall continue to make payments by EFT until 30 days after sending the request to the department or the volunteer receives notice from the department agreeing to the discontinuance, whichever occurs earlier.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.518
Renumbered from 150-314.518, REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
REV 6-1998, f. 11-13-98 cert. ef. 12-31-98

Or. Admin. R. 150-314-0315 Corporation Estimated Tax: Delinquent or Underestimated Payment or Both, Constitutes Underpayment

(1) An underpayment of corporation estimated tax exists when the payments received on or before a payment due date are less than the required payment due as determined under section (3) of this rule.

(2) For returns processed on or after January 1, 2001. If none of the exceptions as provided in section (3) of this rule are met, interest on underpayment of estimated tax is computed on the difference between the lowest amount determined under section (3) of this rule and the total estimated tax payments for the installment period made on or before the due date.

Example: Interest on underpayment of first installment

1999 tax liability on return filed April 15, 2001 — $2,000

1998 tax liability — 1,600

Amount determined under subsection (3)(a) of this rule ($2,000 x 25%) — 500

Amount determined under subsection (3)(b) of this rule ($1,600 x 25%) — 400

Amount determined under subsection (3)(c) of this rule — 375

Amount determined under subsection (3)(d) of this rule — 350

First quarter payment received by the first quarter installment due date — 100

Interest for the first quarter is calculated on $250, the difference between $350, the lowest amount determined under section (3) of this rule, and $100, the total payments received before the first quarter installment due date.

(3) Exceptions. Underpayment charges will not be imposed if each estimated tax payment is equal to or more than 25 percent (or the appropriate percentage of tax for short periods provided in OAR 150-314-0300) of any one of the following:

(a) One hundred percent of the tax for tax years beginning on or after January 1, 1996.

(b) One hundred percent of the tax shown on the return for the preceding tax year (after credits and any state surplus refund) provided that the preceding tax year was a period of twelve months and an Oregon return showing a liability was filed for such tax year.

(A) When applying this subsection to a current taxable year of less than 12 months, the tax for the preceding tax year is reduced by multiplying it by the number of months in the short tax year and dividing the resulting amount by 12.

(B) This subsection applies only to the first required estimated tax payment due for a tax year by a large corporation. When a large corporation’s first required payment is reduced under this subsection, the second required payment must be increased by the amount of the reduction. A large corporation is a corporation with federal taxable income, prior to net operating loss or capital loss deductions, of $1 million or more in any of the three prior tax years.

(c) An amount equal to 100 percent of the tax computed on annualized taxable income. Annualized taxable income is computed as provided in ORS 314.525(2)(c)(A) or using the same annualization periods as used for federal tax purposes. Tax credits available on the date of the payment may be deducted from the annualized tax. An estimated or anticipated tax credit may not be used.

(d) An amount equal to 100 percent of the amount obtained by applying Section 6655(e)(3)(C) of the Internal Revenue Code to Oregon taxable income for any corporation with seasonal income.

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
Renumbered from 150-314.525(1)-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2002, f. & cert ef. 12-31-02
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
Renumbered from 150-315.525(1)?, RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
1-1-77
9-74

Or. Admin. R. 150-314-0317 Estimated Tax: Consolidated Return Underpayments

(1) If a consolidated state return is filed, any underpayment shall be computed on a consolidated basis. In computing the underpayment on a consolidated basis, the tax and facts shown on the returns for the preceding year shall be aggregated regardless of whether consolidated or separate returns were filed.

Example 1: Corporation A and B file a consolidated state return in 1995. They filed separate returns in 1994 and for 1995 made separate estimated tax payments. [Example not included. See ED. NOTE.]

(2) If separate returns are filed and estimated tax is paid on a consolidated basis, then the payments and prior year’s tax may be divided between the various corporation’s liabilities in any manner designated by the Oregon taxpayers.

Example 2: In 1995, Corporations A and B are required to file separate state returns. They had filed consolidated in 1994 and made consolidated estimated tax payments for 1995. [Example not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
REV 38-2017, f. & cert. ef. 8-1-17
Renumbered from 150-314.525(1)-(B), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-314-0319 Estimated Tax: Apportioned Returns

Corporations that are required to apportion income between Oregon and other states, are required to use either the current period’s actual or the prior full year’s apportionment factor to meet the annualization exception to underpayment of estimated taxes. The prior year’s apportionment factor may only be used if the prior year’s return covered a full 12 months and the Oregon apportionment factor was greater than zero.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
Renumbered from 150-314.525(1)(c)-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-314-0321 Estimated Tax: Application of Net Loss, Annualized Income Exception

In computing the annualized income, the net loss from a prior year carried forward shall be applied in the same manner as in the Internal Revenue Service Revenue Ruling (RR) 67-93. The RR 67-93 provides that the net loss shall be applied in full against income for the appropriate period prior to annualization of the income for such period. For computation of the net loss to be carried forward refer to OAR 150-317-0460 or 150-314-0460.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
Renumbered from 150-314.525(1)(d), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-314-0323 Estimated Tax: Interest on Underpayment

(1) When an estimated tax payment is underpaid, as defined in OAR 150-314-0315, interest accrues on the underpaid amount at the rate provided in OAR 150-305-0140 from the due date of the payment to the earlier of the date the tax is paid or the date the tax return is due.

(2) Interest on underpayment of estimated tax (under ORS 314.525) will not be imposed if the tax on the prior year’s return was not over $10. A large corporation, as defined in ORS 314.525(5), may only use the exception for the first installment required.

(3) Underpayment interest will not be imposed for a quarter in which the annualized taxable income results in a net annualized tax of $10 or less.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
Renumbered from 150-314.525(2)-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 11-1992, f. 12-30-92, cert. ef. 12-31-92
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
Renumbered from 150-314.525(2)?, RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
1-1-77
12-19-75
9-74

Or. Admin. R. 150-314-0325 Estimated Tax: Computation of Underpayment

(1) Underpayment charges shall be assessed on the last filed return received before the due date for such return. That return shall be considered the “original return,” and the tax due shall be used as the basis for computing the underpayment charges.

(2) Once underpayment charges are assessed on the original return, an amended return, reducing the tax liability, shall not reduce the underpayment charges.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
Renumbered from 150-314.525(2)-(B), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 11-1992, f. 12-30-92, cert. ef. 12-31-92
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-314-0327 Underpayment of Estimated Tax; First and Second Installment for Large Corporations

(1) The first required installment is the lowest payment computed under ORS 314.525(2)(a) through (2)(d).

(2) If a large corporation qualifies for the exception to paying interest on underpayment of estimated tax for the first installment under ORS 314.525(2)(b), the second required installment is calculated by adding:

(a) The reduction to the first installment from using the amount determined under ORS 314.525(2)(b), and

(b) The required second installment determined without regard to ORS 314.525(2)(b).

(3) The reduction to the first installment from using the amount determined under ORS 314.525(2)(b) is:

(a) The lowest first installment determined under ORS 314.525(2) without regard to 314.525(2)(b), less

(b) The first installment determined under ORS 314.525(2)(b).

Example: Big, Inc. (Big) qualifies as a “large corporation” under ORS 314.525(5) and had tax, payments, and required payments under ORS 314.525(2) as follows: [Table not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.525
REV 24-2017, f. & cert. ef. 6-28-17
Renumbered from 150-314.525(5), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2003, f. & cert. ef. 7-31-03

Or. Admin. R. 150-314-0335 Apportionable and Nonapportionable Income Defined

(2) Apportionment and Allocation. ORS 314.610(1) and (5) require that every item of income be classified either as apportionable income or nonapportionable income. Income for purposes of classification as apportionable or nonapportionable includes gains and losses. Apportionable income is apportioned among jurisdictions by use of a formula. Nonapportionable income is specifically assigned or allocated to one or more specific jurisdictions pursuant to express rules. An item of income is classified as apportionable income if it falls within the definition of apportionable income. An item of income is nonapportionable income only if it does not meet the definitional requirements for being classified as apportionable income.

(3) Apportionable Income. Apportionable income means all income that is apportionable under the Constitution of the United States and is not allocated under the laws of this state, including:

(a) Income arising from transactions and activity in the regular course of the taxpayer’s trade or business; and

(b) Income arising from tangible and intangible property if the acquisition, management, employment, development or disposition of the property is or was related to the operation of the taxpayer’s trade or business; and

(c) Any income that would be allocable to this state under the Constitution of the United States, but that is apportioned rather than allocated pursuant to the laws of this state. The classification of income by the labels occasionally used, such as manufacturing income, compensation for services, sales income, interest, dividends, rents, royalties, gains, income derived from accounts receivable, operating income, non-operating income, etc., is of no aid in determining whether income is apportionable or nonapportionable income.

(4) “Trade or business,” as used in the definition of apportionable income and in the application of that definition means the unitary business of the taxpayer, part of which is conducted within Oregon.

(5) Transactional Test. Apportionable income includes income arising from transactions and activity in the regular course of the taxpayer’s trade or business.

(a) If the transaction or activity is in the regular course of the taxpayer’s trade or business, part of which trade or business is conducted within Oregon, the resulting income of the transaction or activity is apportionable income for Oregon. Income may be apportionable income even though the actual transaction or activity that gives rise to the income does not occur in Oregon.

(b) For a transaction or activity to be in the regular course of the taxpayer’s trade or business, the transaction or activity need not be one that frequently occurs in the trade or business. Most, but not all, frequently occurring transactions or activities will be in the regular course of that trade or business and will, therefore, satisfy the transactional test. It is sufficient to classify a transaction or activity as being in the regular course of a trade or business, if it is reasonable to conclude transactions of that type are customary in the kind of trade or business being conducted or are within the scope of what that kind of trade or business does. However, even if a taxpayer frequently or customarily engages in investment activities, if those activities are for the taxpayer’s mere financial betterment rather than for the operations of the trade or business, such activities do not satisfy the transactional test. The transactional test includes, but is not limited to, income from sales of inventory, property held for sale to customers, and services which are commonly sold by the trade or business. The transactional test also includes, but is not limited to, income from the sale of property used in the production of apportionable income of a kind that is sold and replaced with some regularity, even if replaced less frequently than once a year.

(6) Functional test. Apportionable income also includes income from tangible and intangible property, if the acquisition, management, employment, development, or disposition of the property is or was related to the operation of the taxpayer’s trade or business. “Property” includes any direct or indirect interest in, control over, or use of real property, tangible personal property and intangible property by the taxpayer. Property that is “related to the operation of the trade or business” refers to property that is or was used to contribute to the production of apportionable income directly or indirectly, without regard to the materiality of the contribution. Property that is held merely for investment purposes is not related to the operation of the trade or business. “Acquisition, management, employment, development or disposition” refers to a taxpayer’s activities in acquiring property, exercising control and dominion over property and disposing of property, including dispositions by sale, lease or license. Income arising from the disposition or other utilization of property which was acquired or developed in the course of the taxpayer’s trade or business constitutes apportionable income, even if the property was not directly employed in the operation of the taxpayer’s trade or business. Income from the disposition or other utilization of property which has been withdrawn from use in the taxpayer’s trade or business and is instead held solely for unrelated investment purposes is not apportionable. Property that was related to the operation of the taxpayer’s trade or business is not considered converted to investment purposes merely because it is placed for sale, but any property which has been withdrawn from use in the taxpayer’s trade or business for five years or more is presumed to be held for investment purposes.

Example 1: Taxpayer purchases a chain of 100 retail stores for the purpose of merging those store operations with its existing business. Five of the retail stores are redundant under the taxpayer’s business plan and are sold six months after acquisition. Even though the five stores were never integrated into the taxpayer’s trade or business, the income is apportionable because the property’s acquisition was related to the taxpayer’s trade or business.

Example 2: Taxpayer is in the business of developing adhesives for industrial and construction uses. In the course of its business, it accidentally creates a weak but non-toxic adhesive and patents the formula, awaiting future applications. Another manufacturer uses the formula to create temporary body tattoos. Taxpayer wins a patent infringement suit against the other manufacturer. The entire damages award, including interest and punitive damages, constitutes apportionable income.

Example 3: Taxpayer is engaged in the oil refining business and maintains a cash reserve for buying and selling oil on the spot market as conditions warrant. The reserve is held in overnight “repurchase agreement” accounts of U.S. treasuries with a local bank. The interest on those amounts is apportionable income because the reserves are necessary for the taxpayer’s business operations. Over time, the cash in the reserve account grows to the point that it exceeds any reasonably expected requirement for acquisition of oil or other short-term capital needs and is held pending subsequent business investment opportunities. The interest received on the excess amount is nonapportionable income.

Example 4: A manufacturer decides to sell one of its redundant factories to a real estate developer and transfers the ownership of the factory to a special purpose subsidiary, SaleCo (Taxpayer) immediately prior to its sale to the real estate developer. The parties elect to treat the sale as a disposition of assets under IRC 338(h)(10), resulting in Taxpayer recognizing a capital gain on the sale. The capital gain is apportionable income.

(a) Under the functional test, income from the disposition or other utilization of property is apportionable if the property is or was related to the operation of the taxpayer's trade or business. This is true even though the transaction or activity from which the income is derived did not occur in the regular course of the taxpayer's trade or business.

(b) Income that is derived from isolated sales, leases, assignments, licenses, and other infrequently occurring dispositions, transfers, or transactions involving property, including transactions made in the full or partial liquidation or the winding-up of any portion of the trade or business, is apportionable income, if the property is or was related to the taxpayer's trade or business. Income from the licensing of an intangible asset, such as a patent, copyright, trademark, service mark, know-how, trade secrets, or the like, that was developed or acquired for use by the taxpayer in its trade or business, constitutes apportionable income whether or not the licensing itself constituted the operation of a trade or business, and whether or not the taxpayer remains in the same trade or business from or for which the intangible asset was developed or acquired.

(c) Under the functional test, income from intangible property is apportionable income when the intangible property serves an operational function as opposed to solely an investment function.

(d) If the acquisition, management, employment, development, or disposition of the property is or was related to the operation of the taxpayer’s trade or business, then income from that property is apportionable income even though the actual transaction or activity involving the property that gives rise to the income does not occur in Oregon.

Example 5: A manufacturer purchases raw materials to be incorporated into the product it offers for sale. The nature of the raw materials is such that the purchase price is subject to extreme price volatility. In order to protect itself from extreme price increases (or decreases), the manufacturer enters into future contracts pursuant to which the manufacturer can either purchase a set amount of the raw materials for a fixed price, within a specified time period, or resell the future contracts. Any gain on the sale of the future contracts would be considered apportionable income, regardless of whether the contracts were either made or resold in Oregon.

Example 6: A national retailer produces substantial revenue related to the operation of its trade or business. It invests a large portion of the revenue in fixed income securities which are divided into three categories; (a) short-term securities held pending use of the funds in the taxpayer’s trade or business; (b) short-term securities held pending acquisition of other companies or favorable developments in the long-term money market, and (c) long-term securities held as an investment. Interest income on the short-term securities held pending use of the funds in the taxpayer’s trade or business (a) is apportionable because the funds represent working capital necessary to the operations of the taxpayer’s trade or business. Interest income derived from the other investment securities (b) and (c) is not apportionable as those securities were not held in furtherance of the taxpayer’s trade or business.

(e) If with respect to an item of property a taxpayer (i) takes a deduction from income that is apportioned to Oregon or (ii) includes the original cost in the property factor, it is presumed that the item or property is or was related to the operation of the taxpayer's trade or business. No presumption arises from the absence of any of these actions.

(f) Application of the functional test is generally unaffected by the form of the property (e.g., tangible or intangible property, real or personal property). Income arising from an intangible interest, as, for example, corporate stock or other intangible interest in an entity or a group of assets, is apportionable income when the intangible itself or the property underlying or associated with the intangible is or was related to the operation of the taxpayer's trade or business. Thus, while apportionment of income derived from transactions involving intangible property may be supported by a finding that the issuer of the intangible property and the taxpayer are engaged in the same trade or business, i.e., the same unitary business, establishment of such a relationship is not the exclusive basis for concluding that the income is subject to apportionment. It is sufficient to support the finding of apportionable income if the holding of the intangible interest served an operational rather than an investment function.

(7) Relationship of transactional and functional tests to U.S. Constitution. The Due Process Clause and the Commerce Clause of the U.S. Constitution restrict states from apportioning income that has no rational relationship with the taxing state. The protection against extra-territorial state taxation afforded by these Clauses is often described as the “unitary business principle.” The unitary business principle requires apportionable income to be derived from the same unitary business that is being conducted at least in part in Oregon. The unitary business that is conducted in Oregon includes both a unitary business that the taxpayer alone may be conducting and a unitary business the taxpayer may conduct with any other person or persons. Satisfaction of either the transactional test or the functional test complies with the unitary business principle, because each test requires that the transaction or activity (in the case of the transactional test) or the property (in the case of the functional test) be tied to the same trade or business that is being conducted within Oregon. Determination of the scope of the unitary business being conducted in Oregon is without regard to the extent to which Oregon requires or permits combined reporting.

(8) Nonapportionable income. Nonapportionable income means all income other than apportionable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.610
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.610(1)-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
8-73
12-70

Or. Admin. R. 150-314-0337 Apportionable and Nonapportionable Income; Application of Definitions

(1) This rule adopts a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states. This rule is applicable to tax years beginning on or after January 1, 2018, and applies the principles provided in OAR 150-314-0335 for determining whether particular income is apportionable or nonapportionable income. (The examples used throughout this rule are illustrative only and are limited to the facts they contain.)

(2) Rents from real and tangible personal property. Rental income from real and tangible property is apportionable income if the property with respect to which the rental income was received is or was used in the taxpayer’s trade or business and therefore is includable in the property factor under OAR 150-314-0390.

Example 1: The taxpayer operates a multistate car rental business. The income from car rentals is apportionable income.

Example 2: The taxpayer is engaged in the heavy construction business in which it uses equipment such as cranes, tractors, and earth-moving vehicles. The taxpayer makes short-term leases of the equipment when particular pieces of equipment are not needed on any particular project. The rental income is apportionable income.

Example 3: The taxpayer operates a multistate chain of men’s clothing stores. The taxpayer purchases a five-story office building for use in connection with its trade or business. It uses the street floor as one of its retail stores and the second and third floors for its general corporate headquarters. The remaining two floors are held for future use in the trade or business and are leased to tenants on a short-term basis in the meantime. The rental income is apportionable income.

Example 4: The taxpayer operates a multistate chain of grocery stores. It purchases as an investment an office building in another state with surplus funds and leases the entire building to others. The net rental income is not apportionable income of the grocery store trade or business. Therefore, the net rental income is nonapportionable income.

Example 5: The taxpayer operates a multistate chain of men’s clothing stores. The taxpayer invests in a 20-story office building and uses the street floor as one of its retail stores and the second floor for its general corporate headquarters. The remaining 18 floors are leased to others. The rental of the 18 floors is not done in furtherance of but rather is separate from the operation of the taxpayer’s trade or business. The net rental income is not apportionable income of the clothing store trade or business. Therefore, the net rental income is nonapportionable income.

Example 6: The taxpayer constructed a plant for use in its multistate manufacturing business and 20 years later the plant was closed and put up for sale. The plant was rented for a temporary period from the time it was closed by the taxpayer until it was sold 18 months later. The rental income is apportionable income and the gain on the sale of the plant is apportionable income.

(3) Gains or losses from sales of assets. Gain or loss from the sale, exchange or other disposition of real property or of tangible or intangible personal property constitutes apportionable income if the property while owned by the taxpayer was related to the operation of the taxpayer’s trade or business, or was otherwise properly included in the property factor of the taxpayer's trade or business.

Example 7: In conducting its multistate manufacturing business, the taxpayer systematically replaces automobiles, machines, and other equipment used in the trade or business. The gains or losses resulting from those sales constitute apportionable income.

Example 8: The taxpayer constructed a plant for use in its multistate manufacturing business and 20 years later sold the property at a gain while it was in operation by the taxpayer. The gain is apportionable income.

Example 9: Same as Example 8 except that the plant was closed and put up for sale but was not in fact sold until a buyer was found 18 months later. The gain is apportionable income.

Example 10: Same as Example 8 except that the plant was rented while being held for sale. The rental income is apportionable income and the gain on the sale of the plant is apportionable income.

(4) Interest. Interest income is apportionable income where the intangible with respect to which the interest was received arose out of or was created in the regular course of the taxpayer’s trade or business, or the purpose of acquiring and holding the intangible is related to the operation of the taxpayer's trade or business.

Example 11: The taxpayer operates a multistate chain of department stores, selling for cash and on credit. Service charges, interest, or time-price differentials and the like are received with respect to installment sales and revolving charge accounts. These amounts are apportionable income.

Example 12: The taxpayer conducts a multistate manufacturing business. During the year the taxpayer receives a federal income tax refund pertaining to the taxpayer’s trade or business and collects a judgment against a debtor of the business. Both the tax refund and the judgment bear interest. The interest income is apportionable income.

Example 13: The taxpayer is engaged in a multistate manufacturing and wholesaling business. In connection with that business, the taxpayer maintains special accounts to cover such items as worker’s compensation claims, rain and storm damage, machinery replacement, etc. The funds in those accounts earned interest. Similarly, the taxpayer temporarily invests funds intended for payment of federal, state and local tax obligations pertaining to the taxpayer’s trade or business. The interest income is apportionable income.

Example 14: The taxpayer is engaged in a multistate money order and traveler’s check business. In addition to the fees received in connection with the sale of the money orders and traveler’s checks, the taxpayer earns interest income by the investment of the funds pending their redemption. The interest income is apportionable income.

Example 15: The taxpayer is engaged in a multistate manufacturing and selling business. The taxpayer usually has working capital and extra cash totaling $200,000 which it regularly invests in short-term interest bearing securities. The interest income is apportionable income.

Example 16: In January the taxpayer sold all the stock of a subsidiary for $20,000,000. The funds are placed in an interest-bearing account pending a decision by management as to how the funds are to be utilized. The funds are not pledged for use in the business. The interest income for the entire period between the receipt of the funds and their subsequent utilization or distribution to shareholders is non-apportionable income.

(5) Dividends. Dividends are apportionable income where the stock with respect to which the dividends was received arose out of or was acquired in the regular course of the taxpayer’s trade or business or where the acquiring and holding the stock is or was related to the operation of the taxpayer's trade or business, or contributes to the production of apportionable income of the trade or business.

Example 17: The taxpayer operates a multistate chain of stock brokerage houses. During the year the taxpayer receives dividends on stock it owns. The dividends are apportionable income.

Example 18: The taxpayer is engaged in a multistate manufacturing and wholesaling business. In connection with that business, the taxpayer maintains special accounts to cover such items as worker’s compensation claims, etc. A portion of the funds in those accounts is invested in interest-bearing bonds. The remainder is invested in various common stocks listed on national stock exchanges. Both the interest income and any dividends are apportionable income.

Example 19: The taxpayer and several unrelated corporations own all of the stock of a corporation whose business consists solely of acquiring and processing materials for delivery to the corporate owners. The taxpayer acquired the stock in order to obtain a supply source of materials used in its manufacturing trade or business. The dividends are apportionable income.

Example 20: The taxpayer is engaged in a multistate heavy construction business. Much of its construction work is performed for agencies of the federal government and various state governments. Under state and federal laws applicable to contracts for these agencies, a contractor must have adequate bonding capacity, as measured by the ratio of its current assets (cash and marketable securities) to current liabilities. In order to maintain an adequate bonding capacity the taxpayer holds various stocks and interest-bearing securities. Both the interest income and any dividends received are apportionable income.

Example 21: The taxpayer receives dividends from the stock of its subsidiary or affiliate which acts as the marketing agency for products manufactured by the taxpayer. The dividends are apportionable income.

Example 22: The taxpayer is engaged in a multistate glass manufacturing business. It also holds a portfolio of stock and interest-bearing securities, the acquisition and holding of which are unrelated to the manufacturing business. The dividends and interest income received are nonapportionable income.

(6) Patent and copyright royalties. Patent and copyright royalties are apportionable income where the patent or copyright with respect to which the royalties were received arose out of or was created in the regular course of the taxpayer’s trade or business or where the acquiring and holding the patent or copyright is or was related to the operation of the taxpayer's trade or business, or contributes to the production of apportionable income of the trade or business.

Example 23: The taxpayer is engaged in the multistate business of manufacturing and selling industrial chemicals. In connection with that business, the taxpayer obtained patents on certain of its products. The taxpayer licensed the production of the chemicals in foreign countries, in return for which the taxpayer receives royalties. The royalties received by the taxpayer are apportionable income.

Example 24: The taxpayer is engaged in the music publishing trade or business and holds copyrights on numerous songs. The taxpayer acquires the assets of a smaller publishing company, including music copyrights. These acquired copyrights are thereafter used by the taxpayer in its trade or business. Any royalties received on these copyrights are apportionable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.610
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.610(1)-(B), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
8-73
12-70

Or. Admin. R. 150-314-0339 Proration of Deductions

(1) This rule adopts a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states.

(2) Proration of deductions. In most cases an allowable deduction of a taxpayer will be applicable only to the apportionable income arising from a particular trade or business or to a particular item of nonapportionable income. In some cases an allowable deduction may be applicable to the apportionable incomes of more than one trade or business or to several items of nonapportionable income. In such cases the deduction must be prorated among such trades or businesses and such items of nonapportionable income in a manner that fairly distributes the deduction among the classes of income to which it is applicable.

(3) Year to year consistency. In filing returns with this state, if the taxpayer departs from or modifies the manner of prorating any such deduction used in returns for prior years, the taxpayer must disclose in the return for the current year the nature and extent of the modification.

(4) State to state consistency. If the returns or reports filed by a taxpayer with all states to which the taxpayer reports under the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the application or proration of any deduction, the taxpayer must disclose in its return to this state the nature and extent of the variance.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.610
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.610(1)-(C), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
8-73
12-70

Or. Admin. R. 150-314-0345 Apportionment and Allocation of Income Generally

(1) If the business activity in respect to any trade or business of a taxpayer occurs both within and without this state, and if by reason of such business activity the taxpayer is taxable in another state, the portion of net income (or net loss) arising from such trade or business which is derived from sources within this state must be determined by apportionment in accordance with ORS 314.615 to 314.675. In such cases, the first step is to determine which portion of the taxpayer’s entire net income constitutes apportionable income and which portion constitutes nonapportionable income. The various items of nonapportionable income are then directly allocated to specific jurisdictions pursuant to the provisions of ORS 314.625 to 314.645. The apportionable income (or loss) of the taxpayer is divided between the jurisdictions in which the business is conducted pursuant to the property, payroll, and sales apportionment factors set forth in ORS 314.650 to 314.665 and ORS 314.675. The sum of (1) the items of nonapportionable income (or loss) directly allocated to this state, plus (2) the amount of apportionable income (or loss) attributable to this state by the apportionment formula constitutes the amount of the taxpayer’s entire net income which is subject to tax under the income tax laws of this state.

(2) In filing returns with this state, if the taxpayer departs from or modifies the manner in which income has been classified as apportionable income or nonapportionable income in returns for prior years, the taxpayer must disclose in the return for the current year the nature and extent of the modification. If the returns or reports filed by a taxpayer for all states to which the taxpayer reports under Article IV of the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the classification of income as apportionable or nonapportionable income, the taxpayer must disclose in its return to this state the nature and extent of the variance. ORS 314.605 to 314.667 exclude financial organizations and public utilities (as defined in ORS 314.610). For financial institutions not excluded, such as production credit associations and small loan companies, the three factors ordinarily will be property, payroll, and gross revenue. The definitions of “property” and “gross revenue” that appear in OAR 150-314-0070 are incorporated herein by reference.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.615-(A), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
12-19-75
8-73
12-70
1-65

Or. Admin. R. 150-314-0347 Application of ORS 314.610 to 314.667: Allocation

Any taxpayer subject to the taxing jurisdiction of this state shall allocate all of its nonapportionable income or loss within or without this state in accordance with ORS 314.625 to 314.645.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.615-(C), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
8-73
12-70
1-65

Or. Admin. R. 150-314-0349 Apportionment and Allocation for a Taxpayer Carrying on a Unitary Business

Where the taxpayer’s Oregon business activities are a part of a unitary business carried on both within and without the state, use of the apportionment method is mandatory to determine the portion of the unitary apportionable income attributable to Oregon. If the business activities within Oregon are integrated with, dependent upon, or contribute to the business activities outside the state, the entire operation is unitary in character, and the income from Oregon business activities is determined by the apportionment method. Whether the Oregon activities engaged in for financial profit actually result in a financial profit or loss is not determinative. A unitary business may be carried on by a single corporation or by a group of affiliated corporations.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.615-(D), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
12-31-77
8-73
12-70
1-65

Or. Admin. R. 150-314-0351 Two or More Businesses of a Single Taxpayer

(1) A taxpayer may have more than one “trade or business”. In such cases, it is necessary to determine the apportionable income attributable to each separate trade or business. The income of each business is then apportioned by an apportionment formula that takes into consideration the factors, both in and out of state that relate to the trade or business, the income of which is being apportioned.

Example: The taxpayer is a conglomerate with three operating divisions. One division is engaged in manufacturing aerospace items for the federal government. Another division is engaged in growing tobacco products. The third division produces and distributes motion pictures for theaters and television. There is no strong central management as each division operates independently of one another. Each division operates in this state as well as in other jurisdictions. In this case, it could be concluded that the taxpayer is engaged in three separate “trades or businesses.” Accordingly, the amount of apportionable income attributable to the taxpayer’s trade or business activities in this state is determined by applying an apportionment formula to the apportionable income of each business.

(2) The determination of whether the activities of the taxpayer constitute a unitary business will turn on the facts of each case. In general, the activities of the taxpayer will be considered unitary if there is evidence to indicate that the divisions under consideration are integrated with, dependent upon, or contribute to each other and to the operations of the taxpayer as a whole (see OAR 150-314-0349). The following factors are considered to be good indicia of a unitary business; and the presence of any of these factors creates a strong presumption that the activities of the taxpayer constitute a unitary business:

(a) Same type of business. A taxpayer is generally engaged in a unitary business when all of its activities are in the same general line. For example, a taxpayer operating a chain of retail grocery stores will most always be engaged in a unitary business.

(b) Steps in a vertical process. A taxpayer is almost always engaged in a unitary business when its various divisions are engaged in different steps in a large vertically structured enterprise. For example, a taxpayer that explores for and mines copper ores; concentrates, smelts, and refines the copper ores; and fabricates the refined copper into consumer products, is engaged in a unitary business regardless of the fact that the various steps in the process are operated substantially independently of each other with only general supervision from the taxpayer’s executive offices.

(c) Strong centralized management. A taxpayer which might otherwise be considered as engaged in more than one trade or business is properly considered a unitary business when there is a strong central management coupled with the existence of centralized departments for such functions as financing, advertising, research, or purchasing. Thus, some conglomerates may properly be considered a unitary business when the central executive officers are involved in the operations of the various divisions and there are centralized offices which perform for the divisions the normal matters which a truly independent business would perform for itself, such as accounting, personnel, insurance, legal, purchasing, advertising, or financing.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.615-(E), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
12-70; 8-73; 12-19-75; Material formerly contained in rule transferred to OAR 150-314.363-(A), (B), and (C). Former rule OAR 150-314.615-(F) renumbered (E).; REV 10-2007, f. 12-28-07, cert. ef. 1-1-08

Or. Admin. R. 150-314-0353 Apportionment for Long-Term Construction Contracts

(1) This rule adopts a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states. If a taxpayer elects to use the percentage of completion method of accounting, or the completed contract method of accounting for long-term contracts, and has income from sources both within and without this state, the amount of apportionable income derived from sources within this state, including income from such long-term contracts, is determined pursuant to this rule. In such cases, the first step is to determine what portion of the taxpayer’s income constitutes apportionable income and nonapportionable income under ORS 314.610 and the rules thereunder. Nonapportionable income is directly allocated to specific states pursuant to the provisions of ORS 314.625 to 314.645. The apportionable income of the taxpayer is divided between or among the states in which the business is conducted pursuant to the property, payroll, and sales apportionment factors set forth in this rule. The sum of (1) the items of nonapportionable income directly allocated to this state, plus (2) the amount of apportionable income attributable to this state, constitutes the taxpayer’s entire net income that is subject to tax. For definitions, rules, and examples for determining apportionable and nonapportionable income, see ORS 314.610 and the rules thereunder.

(2) Apportionment of Apportionable Income.

(a) In General. Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved.

(b) Percentage of Completion Method. Under this method of accounting for long-term contracts, the amount to be included each year as apportionable income from each contract is the amount by which the gross contract price that has been completed during the taxable year exceeds all expenditures made during the taxable year in connection with the contract. In so doing, account must be taken of the material and supplies on hand at the beginning and end of the taxable year for use in each such contract.

Example 1: A taxpayer using the percentage of completion method of accounting for long-term contracts, entered into a long-term contract to build a structure for $9,000,000. The contract allowed three years for completion and, as of the end of the second taxable year, the taxpayer’s books of account, kept on the accrual method, disclosed the following: [See PDF link below.]

(c) Completed Contract Method. Under this method of accounting, apportionable income derived from long-term contracts is reported for the taxable year in which the contract is finally completed and accepted. Therefore, a special computation is required to compute the amount of apportionable income attributable to this state from each completed contract (see section (3) below). Thus, all receipts and expenditures applicable to such contracts, whether completed or not as of the end of the taxable year, are excluded from apportionable income derived from other sources. For example, income from short-term contracts, interest, rents, royalties, etc., is apportioned by the regular three-factor formula of property, payroll, and sales.

(d) Property Factor. In general, the numerator and denominator of the property factor is determined as set forth in ORS 314.655 and the rules thereunder. However, the following special rules are also applicable:

(A) The average value of the taxpayer’s costs (including materials and labor) of construction in progress, to the extent such costs exceed progress billings (accrued or received depending on whether the taxpayer is on the accrual or cash basis for keeping its accounts) is included in the denominator of the property factor. The value of any such construction costs attributable to construction projects in this state are included in the numerator of the property factor.

Example 2: The taxpayer commenced a long-term construction project in this state as of the beginning of a given year. By the end of its second taxable year, its equity in the costs of production to be reflected in the numerator and denominator of its property factor for such year is computed as follows: [See PDF link below.]

Example 3: Same facts as in Example 2, except that progress billings exceeded construction costs. No value for the taxpayer’s equity in the construction project is shown in the property factor.

(B) Rent paid for the use of equipment directly attributable to a particular construction project is included in the property factor at eight times the net annual rental rate, even though such rental expense may be included in the cost of construction.

(C) The property factor is computed in the same manner regardless of which method of accounting for long-term contracts the taxpayer has elected and is computed for each taxable year, even though under the completed contract method of accounting, apportionable income is computed separately (see section (3) below).

(e) Payroll Factor. In general the numerator and denominator of the payroll factor is determined as set forth in ORS 314.660 and the rules thereunder. However, the following special rules are also applicable:

(A) Compensation paid employees that is attributable to a particular construction project is included in the payroll factor, even though it is included in the cost of construction.

(B) Compensation paid to employees engaged in performing services at a construction site are attributed to the state in which the services are performed. Compensation paid all other employees is governed by ORS 314.660(2).

Example 4: A taxpayer engaged in a long-term contract in state X assigns several key employees to that state to supervise the project. The taxpayer, for unemployment tax purposes, reports these employees to state Y where the main office is maintained and where the employees reside. For payroll factor purposes, such compensation is assigned to the numerator of state X.

(C) The payroll factor is computed in the same manner regardless of which method of accounting for long-term contracts the taxpayer has elected and is computed for each taxable year, even though under the completed contract method of accounting, apportionable income is computed separately (see section (3) below).

(f) Sales Factor. In general, the numerator and denominator of the sales factor is determined as set forth in ORS 314.665 and the rules thereunder. However, the following special rules are also applicable:

(A) Gross receipts derived from the performance of a contract are attributable to this state if the construction project is located in this state. If the construction project is located partly within and partly without this state, the gross receipts attributable to this state are based upon the ratio that construction costs for the project in this state bear to the total of such construction costs for the entire project during the taxable year. Any other method, such as engineering cost estimates, may be used if it provides a reasonable apportionment.

Example 5: A construction project was undertaken in this state by a calendar-year taxpayer that had elected one of the methods of accounting for long-term contracts. The following gross receipts (progress billings) were derived from the contract during the three taxable years the contract was in progress. [See PDF link below.]

Example 6: A taxpayer contracts to build a dam on a river at a point that lies half within this state and half within state X. During the taxpayer’s first taxable year, construction costs in this state were $2,000,000. Total construction costs for the project during the taxable year were $3,000,000. Gross receipts (progress billings) for the year were $2,400,000. Accordingly, gross receipts of $1,600,000 ($2,000,000 ÷ $3,000,000 = 66 2⁄3% x $2,400,000) are included in the numerator of the sales factor.

(B) If the percentage of completion method is used, the sales factor includes only that portion of the gross contract price that corresponds to the percentage of the entire contract completed during the taxable year.

Example 7: A taxpayer that elected the percentage of completion method of accounting entered into a long-term construction contract. At the end of its current taxable year (the first since starting the project) it estimated that the project was 30 percent completed. The bid price for the project was $9,000,000 and it had received $2,500,000 from progress billings as of the end of its current taxable year. The amount of gross receipts to be included in the sales factor for the current taxable year is $2,700,000 (30 percent of $9,000,000), regardless of whether the taxpayer uses the accrual method or the cash method for accounting for receipts and disbursements.

(C) If the completed contract method of accounting is used, the sales factor includes the portion of the gross receipts (progress billings) received or accrued, whichever is applicable, during the taxable year attributable to each contract.

Example 8: A taxpayer that entered into a long-term construction contract elected the completed contract method of accounting. By the end of its current taxable year (the second since starting the project) it had billed and accrued on its books a total of $5,000,000. Of that amount, $2,000,000 accrued in the first year the contract was undertaken, and $3,000,000 accrued in the current year. The amount of gross receipts to be included in the sales factor for the current taxable year is $3,000,000.

Example 9: Same facts as in Example 8 except that the taxpayer keeps its books on the cash basis and, as of the end of its current taxable year, had received only $2,500,000 of the $3,000,000 billed during the current year. The amount of gross receipts to be included in the sales factor for the current taxable year is $2,500,000.

(D) The sales factor, except as noted above in paragraphs (B) and (C), is computed in the same manner regardless of which method of accounting for long-term contracts the taxpayer has elected and is computed for each taxable year, even though under the completed contract method of accounting, apportionable income is computed separately.

(g) Apportionment Percentage. The apportionment percentage provided in ORS 314.650 is applied to apportionable income to establish the amount apportioned to Oregon.

(3) Completed Contract Method — Special Computation. The completed contract method of accounting requires that the reporting of income (or loss) be deferred until the year the construction project is completed and accepted. Accordingly, a separate computation is made for each such contract completed during the taxable year regardless of whether the project is located within or without this state in order to determine the amount of income attributable to sources within this state. The amount of income apportioned to this state from each contract completed during the taxable year, plus other apportionable income (such as interest income, rents, royalties, income from short-term contracts, etc.) apportioned to this state by the regular three factor formula, plus all nonapportionable income allocated to this state, is the measure of tax for the taxable year. The amount of income (or loss) from each contract derived from sources within this state using the completed contract method of accounting is computed as follows:

(a) In the taxable year the contract is completed, the income (or loss) therefrom is determined.

(b) The income (or loss) determined in (a) is apportioned to this state by the following method:

(A) A fraction is determined for each year the contract was in progress. The numerator is the amount of construction costs paid or accrued each year the contract was in progress, and the denominator is the total of all such construction costs for the project.

(B) Each percentage determined in (A) is multiplied by the apportionment formula percentage for that particular year as determined in section (2)(g) of this rule.

(C) The products determined at (B) for each year the contract was in progress are totaled. The amount of total income (or loss) from the contract determined in (a) is multiplied by the total percentage. The resulting income (or loss) is the amount of apportionable income from such contract derived from sources within this state.

Example 10: A taxpayer using the completed contract method of accounting for long-term contracts is engaged in three long-term contracts: Contract L in this state, Contract M in state X, and Contract N in state Y. In addition, it has other apportionable income (less expenses) during the taxable year 2016 from interest, rents, and short-term contracts amounting to $500,000, and nonapportionable income allocable to this state of $8,000. During 2016, it completed Contract M in state X at a profit of $900,000. Contracts L in this state and N in state Y were not completed during the taxable year. The apportionment percentages of the taxpayer as determined in subsection (g) of this rule and the percentages of contract costs as determined in subsection (b) above for each year Contract M in state X was in progress are as follows: [See PDF link below.]

Example 11: Same facts as in Example 10 except that Contract L was started in 2016 in this state, the first year the taxpayer was subject to tax in this state. Contract L in this state and Contract N in state Y are incomplete in 2016. The corporation’s net income subject to tax in this state for 2016 is computed as follows: [See PDF link below.]

Example 12: Same facts as in Example 10 except that the figures relate to Contract L in this state, and 2016 is the first year the corporation was taxable in another state (see ORS 314.615 and 314.620 and the rules thereunder). Contracts M and N in states X and Y were started in 2016 and are incomplete. The corporation’s net income subject to tax in this state for 2016 is computed as follows: [See PDF link below.]

(4) Computation for Year of Withdrawal, Dissolution or Cessation of Business — Completed Contract Method. Use of the completed contract method of accounting for long-term contracts requires that income derived from sources within this state from incomplete contracts in progress outside this state on the date of withdrawal, dissolution, or cessation of business in this state be included in the measure of tax for the taxable year during which the corporation withdraws, dissolves or ceases doing business in this state. The amount of income (or loss) from each such contract to be apportioned to this state by the apportionment method set forth in section (3)(b) of this rule must be determined as if the percentage of completion method of accounting were used for all such contracts on the date of withdrawal, dissolution, or cessation of business. The amount of apportionable income (or loss) for each such contract is the amount by which that portion of the gross contract price of each such contract that corresponds to the percentage of the entire contract that has been completed as the date of withdrawal, dissolution, or cessation of business exceeds all expenditures made in connection with each such contract. In so doing, account must be taken of the material and supplies on hand at the beginning and end of the income year for use in each such contract.

Example 13: A construction contractor qualified to do business in this state elected the completed contract method of accounting for long-term contracts. It was engaged in two long-term contracts. Contract L was started in Oregon in 2014 and completed at a profit of $900,000 on December 16, 2016. The taxpayer withdrew on December 31, 2016. Contract M was started in state X in 2015 and was incomplete on December 31, 2016. The apportionment percentages of the taxpayer as determined in section (2) of this rule, and percentages of construction costs as determined in section (3)(b) of this rule for each year during which Contract M in state X was in progress are as follows: [See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
REV 41-2017, f. & cert. ef. 8-2-17
Renumbered from 150-314.615-(F), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
REV 1-2001, f. 7-31-01, cert. ef. 8-1-01
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
Renumbered from OAR 150-314.670-(D) to OAR 150-314.615-(F), 12-31-85
f. 12-6-82, ef. 12-31-82

Or. Admin. R. 150-314-0355 Special Rules: Installment Sales

(1) Income from installment sales is reported at least in part in a year other than the year in which the sale took place. Apportionment of installment sale income on the basis of the factors in the years other than the year of sale would result in such income being apportioned by activities which had no connection with the earning of the income.

(2) This rule applies to taxpayers who use the installment method of reporting income from the sale of property and whose Oregon apportionment percentage for the year of the sale is different than that for any year in which proceeds from that sale are received by the taxpayer. A taxpayer shall apportion the income from the installment sale using the Oregon apportionment percentage of the year of sale.

Example: X is doing business in States A, B and C. During Year 1, the taxpayer sold a plant in State A and realized a $500,000 gain on the sale. The taxpayer elected to report the sale under the installment basis since two equal payments ($250,000 each) are to be received in years 2 and 3. The taxpayer’s apportionment factors were as follows:

Year — Apportionment Factor

1 — 11%

2 — 1%

3 — 32%

State A would realize a taxable gain of $55,000 ($500,000 x 11%) if the sale was not reported under the installment method. Since the apportionment factors have changed to 1 percent and 32 percent in years 2 and 3 respectively, a taxable gain of $2,500 is reported to State A in year 2 and $80,000 in year 3.

Use of the year of sale factor results in $27,500 gain being reported to State A in years 2 and 3 (total: $55,000).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 42-2017, f. & cert. ef. 8-2-17
Renumbered from 150-314.615-(G), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.670-(E), 12-31-85
12-31-84
12-5-84

Or. Admin. R. 150-314-0357 Modified Factors for Motion Picture and Television Film Producers

(1) This regulation applies to motion picture and television film producers and producers of television commercials.

(2) Definitions.

(a) “Film” means the physical embodiment of a play, story, or other literary, commercial, educational, or artistic work, as a motion picture, video tape, disc, or other similar medium, except that it does not include news or sports films produced for telecast. “Film” does not include video cassettes or discs intended for home viewing.

(b) Each episode of a series of films produced for television must constitute a separate film notwithstanding that the series relates to the same principal subject and is produced during one or more television seasons.

(c) “Release date” means the date on which a film is placed in service. A film is placed in service when it is first telecast or exhibited to the primary audience for which the film was created. Thus, a motion picture theater film is placed in service when it is first publicly exhibited for entertainment purposes and an educational film is placed in service when it is first exhibited for instructional purposes. Each episode of a television series is placed in service when it is first telecast. A film is not placed in service merely because it is completed and therefore in a condition or state of readiness and availability for telecast or exhibition, or merely because it is telecast or exhibited to prospective exhibitors, sponsors, or purchasers, or is shown in a “sneak preview” before a select audience.

(d) A “film” is deemed to be tangible personal property.

(e) “Rent” includes license fees for the exhibition or telecast of films.

(f) “Tangible personal property” used in the business, whether owned or rented, includes but is not limited to sets, props, wardrobes, and other similar equipment or property.

(g) A “subscriber” to a subscription television telecaster is the individual residence or other outlet which is the ultimate recipient of the transmission.

(h) “Telecast” means the transmission of an electronic signal by radiowaves or microwaves or by wires, lines, coaxial cables, wave guides, or other tangible conduits of communication.

(3) Apportionment of Apportionable Income. The property, payroll, and sales factor of the apportionment formula for Motion Picture and Television Film Producers shall be computed pursuant to ORS 314.655 through 314.665 and the regulations thereunder except as provided in this regulation.

(a) Property Factor.

(A) In General.

(i) In the case of rented studios, the net annual rental rate includes only the amount of the basic or flat rental charge by the studio for the use of a stage and other permanent equipment such as sound recording equipment, etc., except that additional equipment rented from other sources or from the studio not covered in the basic or flat rental charge and used for one week or longer (even though rented on a day-to-day basis) must be included. Lump-sum net rental payments for a period which encompasses more than a single income year is assigned ratably over the rental period.

(ii) The value of films must:

(I) Be the original cost of producing the film as determined for federal income tax purposes, before any adjustment for federal credits which have not been claimed for state purposes, and

(II) Include talent salaries.

(iii) The value of a film is not in the property factor until its release date.

(iv) Video cassettes and discs are in the property factor at their inventory cost as shown in the taxpayer’s books and records.

(B) Denominator.

(i) All real property and tangible personal property (other than films) whether owned or rented, which is used in the business, is included in the denominator.

(ii) Films, other than films the cost of which is expensed for Oregon tax purposes at the time of production, is included in the property factor at original cost for twelve years beginning with the release date.

(iii) Films of a topical nature including news or current event programs, sporting events or interview shows, the cost of which is expensed for Oregon tax purposes at the time of production, is included in the property factor at original cost for one year beginning with the release date.

(iv) All films, other than those included in the denominator under clause (ii) or (iii) of this subparagraph, are aggregated and treated as a single film property which must be included in the property factor. Such property is valued at eight times the gross receipts generated during the income year from theater distribution, television syndication, cable television, subscription television, and the marketing of video cassettes and discs through licensing or direct selling, or similar receipts, but in no event in an amount greater than the total original cost of such aggregated film property.

(i) If tangible personal property (other than films) is located or used in this state for part of the income year, its value is determined by applying the ratio which the number of days the property is located or used in this state bears to the total number of days such property was owned or rented during the income year.

(ii) The total value of films that are included in the property factor under subparagraph (B) of paragraph (3)(a) is attributed to this state in the same ratio in which the total Oregon receipts from such films as determined in subparagraphs (A), (B), and (C) of paragraph (3)(c) pertaining to the sales factor bears to the total of such receipts everywhere.

(iii) If a film producer sells copies of a film to an affiliated corporation for distribution, at a price which does not reflect the actual cost of producing the film, the cost of the film in the hands of the distributor is redetermined under the provisions in subparagraph (A)(ii) of this paragraph, as if the distributor was the producer.

(b) Payroll Factor.

(A) Denominator. The denominator includes all compensation paid to employees during the income years, including talent salaries. Residual and profit participation payments constitute compensation paid to employees.

(B) Numerator. Compensation of employees engaged in the production of a film on location is attributed to the state where the services are or were performed. Compensation of all other employees is governed by OAR 150-314-0417.

(c) Sales Factor Numerator. The numerator includes all gross receipts of the taxpayer from sources within this state including the following:

(A) Gross receipts from films in release to theaters and television stations located in this state.

(B) Gross receipts from films in syndicated release is attributed to this state in the ratio that the audience for such films located in Oregon bears to the total audience for the syndicated film everywhere. The audience is determined by rate card values published annually in the Television & Cable Factbook, Vol I, “Stations Volume,” Television Digest, Inc., Washington, D.C., if available, or by other published market surveys, or, if none is available, by population data published by the U.S. Bureau of the Census.

(C) Gross receipts from films in release to subscription television telecasters is attributed to this state in the ratio of the subscribers for such telecaster located in Oregon to the total subscribers of such telecaster everywhere. If the number of subscribers cannot be determined accurately from records maintained by the taxpayer, the ratio is determined on the basis of the applicable year’s statistics on subscribers published in Cable Vision, International Thompson Communications Inc., Denver, Colorado, if available, or by other published market surveys, or, if none is available, by population data published by the U.S. Bureau of the Census for all states in which the telecaster has subscribers.

(D) Receipts from sales and rentals of video cassettes and discs is included in the sales factor as provided in the rules under ORS 314.665.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.615
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.615-(H), REV 30-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-314-0365 Taxable in Another State; In General

Under ORS 314.615 the taxpayer is subject to the allocation and apportionment provisions of ORS 314.610 to 314.667 if it has income from business activity that is taxable both within and without this state. A taxpayer’s income from business activity is taxable without this state if such taxpayer, by reason of such business activity (i.e., the transactions and activity occurring in the regular course of a particular trade or business), is taxable in another state within the meaning of ORS 314.620. A taxpayer is “taxable in another state” if it meets either one of two tests:

(1) If by reason of business activity in another state the taxpayer is subject to one of the types of taxes specified in ORS 314.620(1), namely: a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, or a corporate stock tax; or

(2) If by reason of such business activity another state has jurisdiction to subject the taxpayer to a net income tax, regardless of whether or not that state imposes such a tax on the taxpayer. A taxpayer is not taxable in another state with respect to a particular trade or business merely because the taxpayer conducts activities in such other state pertaining to the production of nonapportionable income or business activities relating to a separate trade or business.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.620
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.620-(A), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0367 Taxable in Another State; When a Taxpayer is “Subject To” Tax Under ORS 314.620(1)

(1) A taxpayer is “subject to” one of the taxes specified in ORS 314.620(1) only if it carries on business activity in such state and such state imposes such a tax thereon. Any taxpayer which asserts that it is subject to one of the taxes specified in ORS 314.620(1) in another state shall furnish to the Department upon its request evidence to support such assertion. The Department may request that such evidence include proof that the taxpayer has filed the requisite tax return in such other state and has paid any taxes imposed under the law of such other state; the taxpayer’s failure to produce such proof may be taken into account in determining whether the taxpayer in fact is subject to one of the taxes specified in ORS 314.620(1) in such other state. If the taxpayer voluntarily files and pays one or more of such taxes when not required to do so by the laws of that state or pays a minimal fee for qualification, organization or for the privilege of doing business in that state, but (a) does not actually engage in business activity in that state, or (b) does actually engage in some business activity, not sufficient for nexus, and the minimum tax bears no relation to the taxpayer’s business activity within such state, the taxpayer is not “subject to” one of the taxes specified within the meaning of ORS 314.620(1).

Example: State A has a corporation franchise tax measured by net income, for the privilege of doing business in that state. Corporation X files a return and pays the $50 minimum tax, although it carries on no activity in State A. Corporation X is not “taxable” in State A.

(2) The concept of taxability in another state is based upon the promise that every state in which the taxpayer is engaged in business activity may impose an income tax even though every state does not do so. In states which do not, other types of taxes may be imposed as a substitute for an income tax. Therefore, only those taxes enumerated in ORS 314.620(1) which may be considered as basically revenue raising rather than regulatory measures shall be considered in determining whether the taxpayer is “subject to” one of the taxes specified in ORS 314.620(1) in another state.

Example (i): State A requires all nonresident corporations which qualify or register in State A to pay to the Secretary of State an annual license fee or tax for the privilege of doing business in the state regardless of whether the privilege is in fact exercised. The amount paid is determined according to the total authorized capital stock of the corporation; the rates are progressively higher by bracketed amounts. The statute sets a minimum fee of $50 and a maximum fee of $500. Failure to pay the tax bars a corporation from utilizing the state courts for enforcement of its rights. State A also imposes a corporation income tax. Nonresident Corporation X is qualified in State A and pays the required fee to the Secretary of State but does not carry on any business activity in State A (although it may utilize the courts of State A). Corporation X is not “taxable” in State A.

Example (ii): Same facts as Example (i) except that Corporation X is subject to and pays the corporation income tax. Payment is prima facie evidence that Corporation X is “subject to” the net income tax of State A and is “taxable” in State A.

Example (iii): State B requires all nonresident corporations qualified or registered in State B to pay to the Secretary of State an annual permit fee or tax for doing business in the state. The base of the fee or tax is the sum of (1) outstanding capital stock, and (2) surplus and undivided profits. The fee or tax base attributable to State B is determined by a three factor apportionment formula. Nonresident Corporation X which operates a plant in State B, pays the required fee or tax to the Secretary of State. Corporation X is “taxable” in State B.

Example (iv): State A has a corporation franchise tax measured by net income for the privilege of doing business in that state. Corporation X files a return based upon its business activity in the state but the amount of computed liability is less than the minimum tax. Corporation X pays the minimum tax. Corporation X is subject to State A’s corporation franchise tax.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.620
Renumbered from 150-314.620-(B), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0369 Taxable in Another State; When a State has Jurisdiction to Subject a Taxpayer to a Net Income Tax

The second test, that of ORS 314.620(2), applies if the taxpayer’s business activity is sufficient to give the state jurisdiction to impose a net income tax by reason of such business activity under the Constitution and statutes of the United States. Jurisdiction to tax is not present where the state is prohibited from imposing the tax by reason of the provisions of Public Law 86-272, 15 USCA Sections 381-385. In the case of any “state” as defined in subsection (8) of ORS 314.610, other than a state of the United States or political subdivision of such state, the determination of whether such “state” has jurisdiction to subject the taxpayer to a net income tax shall be made as though the jurisdictional standards applicable to a state of the United States applied in that “state.” If jurisdiction is otherwise present, such “state” is not considered as without jurisdiction by reason of the provisions of a treaty between that state and the United States.

Example: Corporation X is actively engaged in manufacturing farm equipment in State A and in foreign country B. Both State A and foreign country B impose a net income tax but foreign country B exempts corporations engaged in manufacturing farm equipment. Corporation X is subject to the jurisdiction of State A and foreign country B.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.620
Renumbered from 150-314.620-(C), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0371 Taxable in Another State; Washington Business and Occupation Tax

For the purposes of Oregon taxation, the Washington Business and Occupation (B & O) tax qualifies as a tax described in ORS 314.620(1). If the taxpayer is “subject to” the Washington B & O tax, it is not necessary that the business activity be of such a nature or of sufficient magnitude to cause the taxpayer to be subject to a net income tax. If the taxpayer is subject to the B & O tax, the requirement of taxability in Washington is met regardless of whether or not Public Law 86-272 would protect the taxpayer from an imposition of a Washington net income tax. It is important to note that the taxpayer must be “subject to” and not just making a minimal voluntary payment. OAR 150-314-0367 provides that the taxpayer will not be considered to be “subject to” the tax merely by making a voluntary minimal payment. The taxpayer must be filing returns and paying the tax. Oregon will follow the determinations by the State of Washington as to what activities create tax jurisdiction under the B & O tax.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.620
Renumbered from 150-314.620-(D), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-314-0380 Allocation of Interest and Dividends

(1) Where it appears to the department that a corporation using the apportionment method is improperly using interest deductions to avoid Oregon tax, the corporation will be required to include in apportionable income interest received to the extent of the deduction claimed for interest paid. See U.P.R.R. Co. et al v. Oregon State Tax Comm., 240 Or 628, 402 P2d 519 (June 3, 1965).

(2) Nonapportionable dividends are subtracted from modified federal income to compute apportionable income. The subtraction is net of the Oregon dividend deduction claimed for such dividends under ORS 317.267. Nonapportionable dividends allocated to Oregon, net of the Oregon dividend deduction, is added to income apportioned to Oregon.

Example: In 2017, Corporation D received $30,000 in dividends, $10,000 of which were nonapportionable dividends allocable to Oregon. Corporation D owned less than 20 percent of the stock in the corporations paying the dividends, so a 70 percent dividend received deduction is allowed on the Oregon return. In the computation of Oregon taxable income, $3,000 of nonapportionable dividends (net of the dividend deduction) are subtracted from net income before apportionment and then added to income apportioned to Oregon. The $3,000 is computed as follows:[See PDF link below.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.640
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
REV 25-2017, f. & cert. ef. 6-28-17
Renumbered from 150-314.640, REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
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Or. Admin. R. 150-314-0385 Apportionment Formula

(1) All apportionable income of each trade or business of the taxpayer must be apportioned to this state by use of the apportionment formula set forth in ORS 314.650. The apportionment formula includes the property factor provided in ORS 314.655 and the rules thereunder, the payroll factor provided in ORS 314.660 and the rules thereunder, and the sales factor provided in ORS 314.665 and the rules thereunder.

(2) For tax years beginning on or after July 1, 2005, apportionable income is apportioned using only the sales factor.

(3) For tax years beginning on or after July 1, 2005, the apportionment formula for a taxpayer in the forest products industry meeting the criteria provided in ORS 314.650(2)(a) is the formula provided in sections (5) and (7) of this rule.

(4) For tax years beginning on or after May 1, 2003 and before July 1, 2005, the apportionment formula is 10 percent of the property factor, plus 10 percent of the payroll factor, plus 80 percent of the sales factor.

(5) For tax years beginning on or after January 1, 1991 and before May 1, 2003, the numerator of the apportionment formula is the sum of the property factor, plus the payroll factor, plus two times the sales factor. The denominator of the apportionment formula is four.

(6) For tax years beginning before January 1, 1991, the numerator of the apportionment formula is the sum of the property factor, plus the payroll factor, plus the sales factor. The denominator of the apportionment formula is three.

(7) For tax years beginning on or after January 1, 1989 and before May 1, 2003, if the denominator of the property, payroll, or sales factor is zero, the denominator of the apportionment formula is reduced by the number of factors with a denominator of zero.

(8) The apportionment factors of a corporation that is a member of a partnership, limited liability company treated as a partnership, or unincorporated joint venture (i.e. the “related entity”), that is a part of the corporation’s overall business operations, must include the corporation’s share of the property, payroll, and sales of the related entity. For the purpose of computing the apportionment factors, transactions between the corporation and the related entity must be eliminated to the extent of the corporation’s percentage of interest in the related entity. The corporation’s share of the related entity’s property, payroll, and sales are based on its percentage of interest in the related entity that is equal to the ratio of its capital account plus its share of the related entity’s debt to the total of the capital accounts of all members of the related entity plus total related entity debt. The capital accounts of the members must reflect the average of the accounts for the period of the tax return. The average of the capital accounts may be computed by averaging the beginning and ending balances or monthly balances. Capital accounts of a related entity must be adjusted to reflect a member’s adjusted basis in contributed property, rather than fair market value. The corporation’s share of a related entity’s debt is determined under IRC 752(a) and 752(b) and the regulations thereunder, irrespective of whether or not the related entity is a true partnership.

(9) For the purpose of computing the apportionment factors for a consolidated Oregon return, inter-company transactions between a unitary affiliate of a partner or member and the related entity described in section (8) of this rule are treated the same as intercompany transactions directly between the affiliated corporations, to the extent of the corporate partner’s or member’s ownership share of the related entity. Inter-company transactions between affiliated corporations filing a consolidated Oregon return are eliminated as provided in section (3) of OAR 150-317-0620.

Example: Corporations A, B, and C file a consolidated Oregon return. A and B each own 50 percent of partnership P. P is part of the overall business operations of the three corporations. P buys 80 percent of its raw materials from C. The intercompany sales between P and C must be eliminated from the apportionment formula for the consolidated Oregon return of the corporations. Transactions between C and P are considered to be directly between the three corporations.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.650
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.650, REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
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Or. Admin. R. 150-314-0390 Property Factor; In General

The property factor of the apportionment formula for each trade or business of the taxpayer includes all real and tangible personal property owned or rented and used during the tax period in the regular course of such trade or business. The term “real and tangible personal property” includes land, buildings, machinery, stocks of goods, equipment, and other real and tangible personal property but does not include coin or currency. Property used in connection with the production of nonapportionable income is excluded from the property factor. Property used both in the regular course of taxpayer’s trade or business and in the production of nonapportionable income is included in the factor only to the extent the property is used in the regular course of taxpayer’s trade or business. The method of determining that portion of the value to be included in the factor will depend upon the facts of each case. The property factor must reflect the average value of property includable in the factor. See OAR 150-314-0406.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.665
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.655(1)-(A), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0392 Property Factor; Property Used for the Production of Apportionable Income

Property is included in the property factor if it is actually used or is available for or capable of being used during the tax period in the regular course of the trade or business of the taxpayer. Property held as reserves or standby facilities or property held as a reserve source of materials is included in the factor. For example, a plant temporarily idle or raw material reserves not currently being processed are includable in the factor. Property or equipment under construction during the tax period (except inventoriable goods in process) is excluded from the factor until such property is actually used in the regular course of the trade or business of the taxpayer. If the property is partially used in the regular course of the trade or business of the taxpayer while under construction, the value of the property to the extent used is included in the property factor. Property used in the regular course of the trade or business of the taxpayer remains in the property factor until its permanent withdrawal is established by an identifiable event such as its conversion to the production of nonapportionable income, its sale, or the lapse of an extended period of time (normally, five years) during which the property is held for sale.

Example 1: Taxpayer closed its manufacturing plant in State X and held such property for sale. The property remained vacant until its sale one year later. The value of the manufacturing plant is included in the property factor until the plant is sold.

Example 2: Same as above except that the property was rented until the plant was sold. The plant is included in the property factor until the plant is sold.

Example 3: Taxpayer closed its manufacturing plant and leased the building under a five-year lease. The plant is included in the property factor until the commencement of the lease.

Example 4: The taxpayer operates a chain of retail grocery stores. Taxpayer closed Store A, which was then remodeled into three small retail stores such as a dress shop, dry cleaning, and barber shop, which were leased to unrelated parties. The property is removed from the property factor on the date the remodeling of Store A commenced.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.655(1)-(B), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0394 Property Factor; Consistency in Reporting

In filing returns with this state if the taxpayer departs from or modifies the manner of valuing property, or of excluding or including property in the property factor, used in returns for prior years, the taxpayer shall disclose in the return for the current year the nature and extent of the modification. If the returns or reports filed by the taxpayer with all states to which the taxpayer reports under Article IV of the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the valuation of property and in the exclusion or inclusion of property in the property factor, the taxpayer shall disclose in its return to this state the nature and extent of the variance.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
Renumbered from 150-314.655(1)-(C), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0396 Property Factor; Numerator

The numerator of the property factor shall include the average value of the real and tangible personal property owned or rented by the taxpayer and used in this state during the tax period in the regular course of the trade or business of the taxpayer. Property in transit between locations of the taxpayer to which it belongs shall be considered to be at the destination for purposes of the property factor. Property in transit between a buyer and seller which is included by a taxpayer in the denominator of its property factor in accordance with its regular accounting practices shall be included in the numerator according to the state of destination. The value of mobile or movable property such as construction equipment, trucks or leased electronic equipment which are located within and without this state during the tax period shall be determined for purposes of the numerator of the factor on the basis of total time within the state during the tax period. An automobile assigned to a traveling employee shall be included in the numerator of the factor of the state to which the employee’s compensation is assigned under the payroll factor or in the numerator of the state in which the automobile is licensed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
Renumbered from 150-314.655(1)-(D), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0398 Property Factor; Valuation of Owned Property

(1) Property owned by the taxpayer shall be valued at its original cost. As a general rule “original cost” is deemed to be the basis of the property for federal income tax purposes (prior to any federal adjustments) at the time of acquisition by the taxpayer and adjusted by subsequent capital additions or improvements thereto and partial disposition thereof, by reason of sale, exchange, abandonment, etc.

Example (i): The taxpayer acquired a factory building in this state at a cost of $500,000 and 18 months later expended $100,000 for major remodeling of the building. Taxpayer files its return for the current taxable year on the calendar year basis. Depreciation deduction in the amount of $22,000 was claimed on the building for its return for the current taxable year. The value of the building includable in the numerator and denominator of the property factor is $600,000 as the depreciation deduction is not taken into account in determining the value of the building for purposes of the factor.

Example (ii): During the current taxable year, X Corporation merges into Y Corporation in a tax-free reorganization under the Internal Revenue Code. At the time of the merger, X Corporation owns a factory which X built five years earlier at a cost of $1,000,000. X has been depreciating the factory at the rate of two percent per year, and its basis in X’s hands at the time of the merger is $900,000. Since the property is acquired by Y in a transaction in which, under the Internal Revenue Code, its basis in Y’s hands is the same as its basis in X’s, Y includes the property in Y’s property factor at X’s original cost, without adjustment for depreciation, i.e., $1,000,000.

Example (iii): Corporation Y acquires the assets of Corporation X in a liquidation by which Y is entitled to use its stock cost as the basis of the X assets under Section 338 of the 1986 Internal Revenue Code (i.e. stock possessing 80 percent of voting power and stock value is purchased within a 12 month period.) Under these circumstances, Y’s cost of the assets is the purchase price of the X stock, prorated over the X assets.

(2) If original cost of property is unascertainable, the property is included in the factor at its fair market value as of the date of acquisition by the taxpayer.

(3) Inventory of stock of goods shall be included in the factor in accordance with the valuation method used for federal income tax purposes. Payments for extracted natural resources shall be included in the property factor as inventory.

(4) Property acquired by gift or inheritance shall be included in the factor at its basis for determining depreciation for federal income tax purposes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
Renumbered from 150-314.655(2)-(A), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
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Or. Admin. R. 150-314-0400 Property Factor; Valuation of Rented Property

(1) This rule adopts a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states.

(2) Property rented by the taxpayer is valued at eight times its net annual rental rate. The net annual rental rate for any item of rented property is the annual rental rate paid by the taxpayer for such property, less the aggregate annual subrental rates paid by subtenants of the taxpayer.

(3) Subrents are not deducted when the subrents constitute apportionable income because the property that produces the subrents is used in the regular course of a trade or business of the taxpayer when it is producing such income. Accordingly there is no reduction in its value.

Example 1: The taxpayer receives subrents from a bakery concession in a food market operated by the taxpayer. Since the subrents are apportionable income they are not deducted from rent paid by the taxpayer for the food market.

Example 2: The taxpayer rents a five-story office building primarily for use in its multistate business, uses three floors for its offices, and subleases two floors to various other businesses on a short-term basis because it anticipates it will need those two floors for future expansion of its multistate business. The rental of all five floors is integral to the operation of the taxpayer’s trade or business. Since the subrents are apportionable income, they are not deducted from the rent paid by the taxpayer.

Example 3: The taxpayer rents a 20-story office building and uses the lower two stories for its general corporation headquarters. The remaining 18 floors are subleased to others. The rental of the 18 floors is not integral to but rather is separate from the operation of the taxpayer’s trade or business. Since the subrents are nonapportioable income they are to be deducted from the rent paid by the taxpayer.

(4)(a) If the subrents taken into account in determining the net annual rental rate produce a negative or clearly inaccurate value for any item of property, another method that will properly reflect the value of rented property may be required by the department or requested by the taxpayer.

(b) In no case however may such value be less than an amount that bears the same ratio to the annual rental rate paid by the taxpayer for such property as the fair market value of that portion of the property used by the taxpayer bears to the total fair market value of the rented property.

Example 4: The taxpayer rents a 10-story building at an annual rental rate of $1,000,000. Taxpayer occupies two stories and sublets eight stories for $1,000,000 a year. The net annual rental rate of the taxpayer must not be less than two-tenths of the taxpayer’s annual rental rate for the entire year, or $200,000.

(c) If property owned by others is used by the taxpayer at no charge or rented by the taxpayer for a nominal rate, the net annual rental rate for such property must be determined on the basis of a reasonable market rental rate for such property.

(5) “Annual rental rate” is the amount paid as rental for the property for a 12-month period (i.e., the amount of the annual rent). Where property is rented for less than a 12-month period, the rent paid for the actual period of rental is the “annual rental rate” for the tax period. However, where a taxpayer has rented property for a term of 12 or more months and the current tax period covers a period of less than 12 months (due, for example, to a reorganization or change of accounting period), the rent paid for the short period must be annualized. If the rental term is for less than 12 months, the rent may not be annualized beyond its term. Rent may not be annualized because of the uncertain duration when the rental term is on a month-to-month basis.

Example 5: Taxpayer A, that ordinarily files its returns based on a calendar year, is merged into Taxpayer B on April 30. The net rent paid under a lease with five years remaining is $2,500 a month. The rent for the tax period January 1 to April 30 is $10,000. After the rent is annualized the net rent is $30,000 ($2,500 x 12).

Example 6: Same facts as in Example (5) except that the lease would have terminated on August 31. In this case the annualized net rent is $20,000 ($2,500 x 8).

(6) “Annual rent” is the actual sum of money or other consideration payable, directly or indirectly, by the taxpayer or for its benefit for the use of the property and includes:

(a) Any amount payable for the use of real or tangible personal property, or any part thereof, whether designated as a fixed sum of money or as a percentage of sales, profits, or otherwise.

Example 7: A taxpayer, pursuant to the terms of a lease, pays a lessor $1,000 per month as a base rental and at the end of the year pays the lessor one percent of its gross sales of $400,000. The annual rent is $16,000 ($12,000 plus one percent of $400,000 or $4,000).

(b) Any amount payable as additional rent or in lieu of rents, such as interest, taxes, insurance, repairs, or any other items that are required to be paid by the terms of the lease or other arrangement, not including amounts paid as service charges, such as utilities, janitor services, etc. If a payment includes rent and other charges unsegregated, the amount of rent must be determined by consideration of the relative values of the rent and the other items.

Example 8: A taxpayer, pursuant to the terms of a lease, pays the lessor $12,000 a year rent plus taxes in the amount of $2,000 and interest on a mortgage in the amount of $1,000. The annual rent is $15,000.

Example 9: A taxpayer stores part of its inventory in a public warehouse. The total charge for the year was $1,000 of which $700 was for the use of storage space and $300 for inventory insurance, handling and shipping charges, and C.O.D. collections. The annual rent is $700.

(7) “Annual rent” does not include:

(a) Incidental day-to-day expenses such as hotel or motel accommodations, daily rental of automobiles, etc.; and

(b) Royalties based on extraction of natural resources, whether represented by delivery or purchase. For this purpose, a royalty includes any consideration conveyed or credited to a holder of an interest in property that constitutes a sharing of current or future production of natural resources from such property, irrespective of the method of payment or how such consideration may be characterized, whether as a royalty, advance royalty, rental or otherwise.

(8) Payments for lease bonus and delay rental expensed in the current tax year must be treated as rental property and valued at eight times the amount paid.

(9) Leasehold improvements must, for the purposes of the property factor, be treated as property owned by the taxpayer regardless of whether the taxpayer is entitled to remove the improvements or the improvements revert to the lessor upon expiration of the lease. Hence, the original cost of leasehold improvements must be included in the factor.

History

Statutory/Other Authority: ORS 305.100, 305.653 & 314.605 - 314.667
Statutes/Other Implemented: ORS 314.655
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.655(2)-(B), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
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Or. Admin. R. 150-314-0402 Property Factor; Timber

The property factor includes all standing timber which the taxpayer owns and which is situated on land owned by the taxpayer, and includes timber which has been cut and has become a part of inventory. The factor does not include any standing timber to which the taxpayer has acquired cutting rights under a contract, regardless of when title passes under the terms of the contract.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
Renumbered from 150-314.655(2)-(C), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
12-31-81

Or. Admin. R. 150-314-0404 Property Factor; Intangible Drilling Costs

Intangible drilling costs incurred by oil and gas producing companies in connection with producing oil and gas properties located within a taxing jurisdiction are included in the property factor. An election to expense intangible drilling costs for federal tax purposes has no effect on their inclusion in the property factor.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
Renumbered from 150-314.655(2)-(E), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-314-0406 Property Factor; Averaging Property Value

(1) As a general rule the average value of property owned by the taxpayer shall be determined by averaging the values at the beginning and ending of the tax period. However, the Department may require or allow averaging by monthly values if such method of averaging is required to properly reflect the average value of the taxpayer’s property for the tax period. Averaging by monthly values will generally be applied if substantial fluctuations in the values of the property exist during the tax period or where property is acquired after the beginning of the tax period or disposed of before the end of the tax period.

Example: The monthly value of the taxpayer’s property was as follows: [Example not included. See ED. NOTE.]

(2) Averaging with respect to rented property is achieved automatically by the method of determining the net annual rental rate of such property as set forth in OAR 150-314-0400.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.655
REV 26-2017, f. & cert. ef. 7-21-17
Renumbered from 150-314.655(3), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
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Or. Admin. R. 150-314-0415 Payroll Factor; In General

(1) The payroll factor of the apportionment formula for each trade or business of the taxpayer includes the total amount of compensation paid by the taxpayer in the regular course of its trade or business during the tax period.

(2) The total amount “paid” to employees is determined upon the basis of the taxpayer’s accounting method. If the taxpayer has adopted the accrual method of accounting, all compensation properly accrued is deemed to have been paid. Notwithstanding the taxpayer’s method of accounting, at the election of the taxpayer, compensation paid to employees may be included in the payroll factor by use of the cash method if the taxpayer is required to report such compensation under such method for unemployment compensation purposes.

(3) The compensation of any employee on account of activities which are connected with the production of nonapportionable income is excluded from the factor.

Example 1: The taxpayer uses some of its employees in the construction of a storage building which, upon completion, is used in the regular course of taxpayer’s trade or business. The wages paid to those employees are treated as a capital expenditure by the taxpayer. The amount of such wages is included in the payroll factor.

Example 2: The taxpayer owns various securities which it holds as an investment separate and apart from its trade or business. The management of the taxpayer’s investment portfolio is the only duty of Mr. X, an employee. The salary paid to Mr. X is excluded from the payroll factor.

(4) The term “compensation” means wages, salaries, commissions, and any other form of remuneration paid to employees for personal services. Guaranteed payments representing compensation for services to a partnership are considered remuneration paid to employees for personal services. Other than this exception relating to guaranteed payments, payments made to an independent contractor or any other person not properly classifiable as an employee are excluded.

(5) Guaranteed payments which represent a return of capital, interest paid on a capital account, or for any purpose other than compensation for services are excluded. Only amounts paid directly to employees are included in the payroll factor. Amounts considered paid directly include the value of board, rent, housing, lodging, and other benefits or services furnished to employees by the taxpayer in return for personal services, provided that such amounts constitute income to the recipient under the federal Internal Revenue Code. In the case of employees not subject to the federal Internal Revenue Code, e.g., those employed in foreign countries, the determination of whether such benefits or services would constitute income to the employees is made as though such employees were subject to the federal Internal Revenue Code.

(6) The term “employee” means (1) any officer of a corporation, or (2) any individual who, under the usual common-law rules applicable in determining the employer-employee relationship, has the status of an employee. Generally, a person will be considered to be an employee if he is included by the taxpayer as an employee for purposes of the payroll taxes imposed by the Federal Insurance Contributions Act; except that, since certain individuals are included within the term “employees” in the Federal Insurance Contributions Act who would not be employees under the usual common-law rules, it may be established that a person who is included as an employee for purposes of the Federal Insurance Contributions Act is not an employee for purposes of this rule.

(7) In filing returns with this state, if the taxpayer departs from or modifies the treatment of compensation paid as used in returns for prior years, the taxpayer must disclose in the return for the current year the nature and extent of the modification.

(8) If the returns or reports filed by the taxpayer with all states to which the taxpayer reports under Article IV of the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the treatment of compensation paid, the taxpayer must disclose in its return to this state the nature and extent of the variance.

(9) The denominator of the payroll factor is the total compensation paid everywhere during the tax period. Accordingly, compensation paid to employees whose services are performed entirely in a state where the taxpayer is immune from taxation are included in the denominator of the payroll factor.

Example 3: A taxpayer has employees in its state of legal domicile (State A) and is taxable in State B. In addition the taxpayer has other employees whose services are performed entirely in State C where the taxpayer is immune from taxation by Public Law 86-272. As to these latter employees, the compensation will be assigned to State C where their services are performed (i.e., included in the denominator-but not the numerator-of the payroll factor) even though the taxpayer is not taxable in State C.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.660
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.660(1), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
8-73
12-70

Or. Admin. R. 150-314-0417 Payroll Factor; Numerator

(1) The numerator of the payroll factor is the total amount of compensation paid in this state during the tax period by the taxpayer. The tests in subsection (2) of ORS 314.660 to be applied in determining whether compensation is paid in this state are derived from the Model Unemployment Compensation Act. Accordingly, if compensation paid to employees is included in the payroll factor by use of the cash method of accounting or if the taxpayer is required to report such compensation under such method for unemployment compensation purposes, it shall be presumed that the total wages reported by the taxpayer to this state for unemployment compensation purposes constitutes compensation paid in this state except for compensation excluded under OAR 150-314-0415 above. The presumption may be overcome by satisfactory evidence that an employee’s compensation is not properly reportable to this state for unemployment compensation purposes.

(2) Guaranteed payments which represent compensation for services are included in the numerator of the factor if the compensation would have been subject to Oregon unemployment insurance tax if paid to an employee.

(3) Compensation is paid in this state if any one of the following tests, applied consecutively, are met:

(a) The employee’s service is performed entirely within the state.

(b) The employee’s service is performed both within and without the state, but the service performed without the state is incidental to the employee’s service within the state. The word “incidental” means any service which is temporary or transitory in nature, or which is rendered in connection with an isolated transaction.

(c) If the employee’s services are performed both within and without this state, the employee’s compensation will be attributed to this state:

(A) If the employee’s base of operations is in this state; or

(B) If there is no base of operations in any state in which some part of the service is performed, but the place from which the service is directed or controlled is in this state; or

(C) If the base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed but the employee’s residence is in this state.

(4) The term “base of operations” is the place of more or less permanent nature from which the employee starts work and to which the employee customarily returns in order to receive instructions from the taxpayer or communications from customers or other persons, or to replenish stock or other materials, repair equipment, or perform any other functions necessary to the exercise of the trade or profession.

(5) The term “place from which the service is directed or controlled” refers to the place from which the power to direct or control is exercised by the taxpayer.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.660
Renumbered from 150-314.660(2), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-70

Or. Admin. R. 150-314-0425 Sales Factor; Definition of Gross Receipts

(1) This rule adopts provisions of a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states. This rule applies to tax years beginning on or after January 1, 2018.

(2) “Gross receipts” are the gross amounts realized (the sum of money and the fair market value of other property or services received) on the sale or exchange of property, the performance of services, or the use of property or capital in a transaction which produces apportionable income, in which the income or loss is recognized (under the Internal Revenue Code (IRC), and, where the income of foreign entities is included in apportionable income, amounts which would have been recognized under the IRC if the relevant transactions or entities were in the United States.) Amounts realized on the sale or exchange of property are not reduced for the cost of goods sold or the basis of property sold.

(3) “Sales” means all gross receipts of the taxpayer that are not allocated under paragraphs of ORS 314.625 to 314.645 and that are received from transactions and activity in the regular course of the taxpayer’s trade or business. The following are additional rules for determining "sales" in various situations:

(a) In the case of a taxpayer engaged in manufacturing and selling or purchasing and reselling goods or products, "sales" includes all gross receipts from the sales of such goods or products (or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the tax period) held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business. Gross receipts for this purpose means gross sales less returns and allowances. Federal and state excise taxes (excluding sales taxes) will be included as part of such receipts if such taxes are passed on to or collected from the buyer or included as part of the selling price of the product. The exclusion of sales taxes from the sales factor is effective January 1, 2014 and applies to tax years beginning on or after that date.

(b) In the case of cost plus fixed fee contracts, such as the operation of a government-owned plant for a fee, “sales” includes the entire reimbursed cost plus the fee.

(c) In the case of a taxpayer engaged in providing services, such as the operation of an advertising agency or the performance of equipment service contracts or research and development contracts, "sales" includes the gross receipts from the performance of such services, including fees, commissions, and similar items.

(d) In the case of a taxpayer engaged in the sale of equipment used in the taxpayer’s trade or business, when the taxpayer disposes of the equipment under a regular replacement program, “sales” includes the gross receipts from the sale of this equipment. For example, a truck express company owns a fleet of trucks and sells its trucks under a regular replacement program; the gross receipts from the sale of the trucks would be included in “sales.”

(e) In the case of a taxpayer with insubstantial amounts of gross receipts arising from sales in the ordinary course of business, the insubstantial amounts may be excluded from the sales factor unless their exclusion would materially affect the amount of income apportioned to this state.

(f) The denominator of the sales factor will include the total gross receipts derived by the taxpayer from transactions and activity in the regular course of its trade or business except as provided by ORS 314.610(7) and the rules adopted thereto.

(g) Gross premium receipts. Gross premium receipts are all receipts paid in by the subscribers to the various coverages offered by the company and are assigned to the state of the domicile of the subscriber. In the case of a group policy, the assignment is to the state of the domicile of the employer-agent who collects and remits the premiums to the company.

(4) In the case of a taxpayer engaged in the operation of a casino, “gross drop” rather than “net drop” will be used in computing the gross receipts factor. “Gross drop” is computed as follows:

(a) Keno. Gross drop is the cumulative total cash paid in at the keno windows determined by totaling the amounts set forth on the customer’s tickets.

(b) Slots. Gross drop is the cumulative total of all coins removed from the machines, plus jackpots paid less the coins previously added to the machines.

(c) Table games. Gross drop is the cumulative total of all cash funds and credit slips dropped in the cash boxes. When the cash method is used, only credit slips relating to chips removed from the tables should be considered.

(5) Sales of a taxpayer from hedging transactions, or from holding cash or securities, or from the maturity, redemption, sale, exchange, loan, or other disposition of cash or securities, must be excluded. Sales arising from a business activity are receipts from hedging if the primary purpose of engaging in the business activity is to reduce the exposure to risk caused by other business activities. Whether events or transactions not involving cash or securities are hedging transactions must be determined based on the primary purpose of the taxpayer engaging in the activity giving rise to the receipts, including the acquisition or holding of the underlying asset. Gross receipts from the holding of cash or securities, or maturity, redemption, sale, exchange, loan, or other disposition of cash or securities are excluded from the definition of sales whether or not those events or transactions are engaged in for the purpose of hedging. The taxpayer’s treatment of the sales as hedging gross receipts for accounting or federal tax purposes may serve as indicia of the taxpayer’s primary purpose, but shall not be determinative.

(6) Sales of a taxpayer do not include the following items:

(a) Property or money received by an agent, intermediary, fiduciary, or other person acting in a similar capacity on behalf of another in excess of the recipient’s commission, fee, or other remuneration; or

(b) Amounts received from others and held in trust by the taxpayer.

(7) Sales, even if apportionable income, are presumed not to include such items as, for example:

(a) Damages and other amounts received as the result of litigation unless the transaction or activity that gave rise to the damages or other amounts was in the regular course of business;

(b) Tax refunds and other tax benefit recoveries;

(d) Income from forgiveness of indebtedness;

(e) Amounts realized from exchanges of inventory that are not recognized by the IRC; or

(f) Amounts realized as a result of factoring accounts receivable recorded on an accrual basis.

(8) Exclusion of an item from the definition of “sales” is not determinative of its character as apportionable or non-apportionable income. Certain gross receipts that are “sales” under the definition are excluded from the “sales factor” under ORS 314.665. Nothing in this definition is to be construed to modify, impair, or supersede any provision of or rule adopted pursuant to ORS 314.667.

(9) Security means any interest or instrument commonly treated as a security as well as other instruments which are customarily sold in the open market or on a recognized exchange, including, but not limited to, transferable shares of a beneficial interest in any corporation or other entity, bonds, debentures, notes, and other evidences of indebtedness, accounts receivable and notes receivable, cash and cash equivalents including foreign currencies, and repurchase and futures contracts.

(10) In filing returns with this state, if the taxpayer departs from or modifies the basis for excluding or including gross receipts in the sales factor used in returns for prior years, the taxpayer will disclose in the return for the current year the nature and extent of the modification.

(11) If the returns or reports filed by the taxpayer with all states to which the taxpayer reports under Article IV of the Multistate Tax Compact or the Uniform Division of Income for Tax Purposes Act are not uniform in the inclusion or exclusion of gross receipts, the taxpayer will disclose in its return to this state the nature and extent of the variance.

History

Statutory/Other Authority: ORS 305.100 & 314.665
Statutes/Other Implemented: ORS 314.665 & 314.667
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.665(1)-(A), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
REV 5-2015, f. 12-23-15, cert. ef. 1-1-16
REV 2-2014, f. & cert. ef. 7-31-14
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
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12-70

Or. Admin. R. 150-314-0427 Sales Factor; Numerator

(1) For purposes of this rule:

(a) “No activity” means that the foreign corporation has no property or employees carrying on the business of the corporation in Oregon. Telephone and catalog solicitation and delivery by common carrier of goods sold do not constitute activity in the state.

(b) “Due process nexus” arises, for purposes of this rule, when a corporation engages in activities in this state that are protected from state taxation by Public Law 86-272. The protection provided by Public Law 86-272 applies to taxpayers whose only Oregon activity is the solicitation of sales of tangible personal property.

(c) “Jurisdiction to tax” is acquired by Oregon, for purposes of this rule, when a corporation engages in activities in this state that are not protected from state taxation by Public Law 86-272, e.g., maintaining an office or warehouse in Oregon, salespersons who accept orders or payment, etc.

(2) The numerator of the sales factor shall include gross receipts attributable to this state and derived by the taxpayer from transactions and activity in the regular course of its trade or business. All interest income, service charges, carrying charges, or time-price differential charges incidental to such gross receipts shall be included regardless of the place where the accounting records are maintained or the location of the contract or other evidence of indebtedness.

(3) If a foreign corporation has no activity in Oregon prior to the date Oregon acquires jurisdiction to tax, the numerator of the sales factor shall only include Oregon sales from the date Oregon acquired jurisdiction to tax.

Example: Corporation A operates on a calendar year basis. From the beginning of 1988, Corporation A of California solicited sales in Oregon by telephone and delivered its product by common carrier. On September 1, 1988, Corporation A sent salespersons into Oregon to take and approve orders, accept payment, and handle complaints and returns. Corporation A shall include sales from September 1, 1988 through the end of 1988 in the numerator of the sales factor.

(4) If a foreign corporation had due process nexus in Oregon and Oregon acquired jurisdiction to tax during the year, the numerator of the sales factor shall include sales from the date due process nexus arose or the beginning of the tax year, whichever is later.

Example: Corporation B of Washington began sending missionary salespersons to Oregon to merely solicit sales in July, 1987. Corporation B operates on a calendar year basis. On September 1, 1988, Corporation B added collection of payment and maintenance of a small inventory to the duties of its salespersons. Corporation B shall include sales for the entire 1988 tax year in its sales factor numerator.

(5) If a foreign corporation had no prior activity in Oregon and due process nexus arose during the tax year, and later during the tax year Oregon acquired jurisdiction to tax, the numerator of the sales factor shall include sales from the date due process nexus arose.

Example: Corporation C of Idaho has had catalog sales in Oregon, shipped via common carrier since 1970. Corporation C operates on a calendar year basis. On June 1, 1988, Corporation C sent salespersons into Oregon to merely solicit sales. On September 1, 1988, Corporation C authorized the salespersons to approve sales and accept payment. Sales from June 1, 1988, through the end of 1988 shall be included in the numerator of the sales factor.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.665
Renumbered from 150-314.665(1)-(B), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-70

Or. Admin. R. 150-314-0429 Sales Factor; Sales of Tangible Personal Property in this State

The rule adopts provisions of a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states.

(1) For purposes of ORS 314.665 and the rules thereunder, “tangible personal property” means personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software.

(2) For purposes of apportioning income under ORS 314.665 and this rule, gross receipts from the sales of tangible personal property except sales to the United States Government; see OAR 150-314-0431 are in this state:

(a) If the property is delivered or shipped to a purchaser within this state (Oregon) regardless of the f.o.b. point or other conditions of sale; whether transported by seller, purchaser, or common carrier; or

(b) If the property is shipped from an office, store, warehouse, factory, or other place of storage in this state and the taxpayer is not taxable in the state of the purchaser.

Example 1: A seller with a place of business in State A is a distributor of merchandise to retail outlets in multiple states. A purchaser with retail outlets in several states, including Oregon, makes arrangements to hire a common carrier to pick up merchandise, f.o.b. plant, at the seller’s place of business and have it delivered to the purchaser’s outlet in Oregon. The seller, who is subject to Oregon excise tax, must treat this as a sale of property delivered or shipped to a purchaser in Oregon.

Example 2: A seller with a place of business in Oregon is a distributor of merchandise to retail outlets in multiple states. A purchaser with retail outlets in several states, including State A, sends its own truck to pick up the merchandise at the seller’s place of business and have it transported to the purchaser’s outlet in State A. The seller is taxable in State A. The seller must treat this as a sale of property delivered or shipped to a purchaser in State A.

(c) Notwithstanding subsection (2)(b) of this rule, for tax years beginning on or after January 1, 2006, the sale of goods from a public warehouse is not considered to take place in Oregon if:

(A) The taxpayer’s only activity in Oregon is the storage of the goods in a public warehouse prior to shipment; or

(B) The taxpayer’s only activities in Oregon are the storage of the goods in the public warehouse prior to shipment and the presence of employees within this state solely for purposes of soliciting sales of the taxpayer’s products.

(3) Property is deemed to be delivered or shipped to a purchaser within this state if the recipient is located in this state, even though the property is ordered from outside this state.

Example 3: The taxpayer, with inventory in State A, sold $100,000 of its products to a purchaser having branch stores in several states including Oregon. The order for the purchase was placed by the purchaser’s central purchasing department located in State B. $25,000 of the purchase order was shipped directly to purchaser’s branch store in Oregon. The branch store in this state is the “purchaser within this state” with respect to $25,000 of the taxpayer’s sales.

(4) Property is delivered or shipped to a purchaser within this state if the shipment terminates in this state, even though the property is subsequently transferred by the purchaser to another state.

Example 4: The taxpayer makes a sale to a purchaser who maintains a central warehouse in Oregon at which all merchandise purchases are received. The purchaser reships the goods to its branch stores in other states for sale. All of taxpayer’s products shipped to the purchaser’s warehouse in Oregon is property “delivered or shipped to a purchaser within this state.”

(5) The term “purchaser within this state” includes the ultimate recipient of the property if the taxpayer in Oregon, at the designation of the purchaser, delivers to or has the property shipped to the ultimate recipient within Oregon.

Example 5: A taxpayer in Oregon sold merchandise to a purchaser in State A. Taxpayer directed the manufacturer or supplier of the merchandise in State B to ship the merchandise to the purchaser’s customer in Oregon pursuant to purchaser’s instructions. The sale by the taxpayer is in Oregon.

(6) When property being shipped by a seller from the state of origin to a purchaser in another state is diverted while enroute to a purchaser in Oregon, the sales are in Oregon.

Example 6: The taxpayer, a produce grower in State A, begins shipment of perishable produce to the purchaser’s place of business in State B. While enroute the produce is diverted to the purchaser’s place of business in Oregon, in which state the taxpayer is subject to tax. The sale by the taxpayer is attributed to Oregon.

(7) If the taxpayer is not taxable in the state of the purchaser, the sale is attributed to Oregon if the property is shipped from an office, store, warehouse, factory, or other place of storage in Oregon.

(a) Sales to a purchaser in a state other than Oregon will not be attributed to Oregon if the other state imposes a net income tax on the seller.

(b) Sales to a purchaser in a state other than Oregon will not be attributed to Oregon if the other state would have jurisdiction to tax the seller on net income under the constitution of the United States and federal Public Law (P.L.) 86-272.

(c) OAR 150-314-0369 provides that sales and activities in a foreign country will be treated the same as those in another U.S. state for determining if the foreign country has jurisdiction to tax the seller on net income.

(d) The guidelines provided by federal P.L. 86-272 apply equally to activities regarding sales to unrelated parties and sales to affiliated corporations.

(e) The immunity provided by P.L. 86-272 is not lost when a business engages in de minimis activities unrelated to the solicitation of orders in a state or foreign country where its only other activities are those protected by P.L. 86-272. Examples of such immune activities include the following:

(A) The board of directors of a corporation based in Oregon holds a meeting at a hotel in another state or in a foreign country,

(B) The president of a parent corporation based in Oregon meets with the managers of a subsidiary in a foreign country to discuss the subsidiary’s five-year plan and capital acquisitions budget.

(C) The controller of a parent corporation based in Oregon meets with the accounting staff of a subsidiary in a foreign country to discuss federal financial reporting requirements.

Example 7: The taxpayer has its head office and factory in State A. It maintains a branch office and inventory in Oregon. Taxpayer’s only activity in State B is the solicitation of orders by a resident salesman. All orders by the State B salesman are sent to the branch office in Oregon for approval and are filled by shipment from the inventory in Oregon. Since taxpayer is immune under Public Law 86-272 from tax in State B, all sales of merchandise to purchasers in State B are attributed to Oregon, the state from which the merchandise was shipped.

Example 8: A parent company sells its product to a subsidiary, organized in a foreign country, that uses the parent’s product in manufacturing its product. Because of the parent-subsidiary relationship, orders are not solicited in the same way as sales to unrelated customers. Instead, the products are shipped as needed to the subsidiary. Officials from the parent company maintain a close liaison with the foreign subsidiary on the planning and design of the items sold. After the parties agreed on a contract in which the parent would manufacture and sell certain items to the subsidiary, the close working relationship continued between the technicians of both companies. Many of the parent’s employees made regular trips to the subsidiary after the contract was signed, to take care of such items as manufacturing problems, installation problems, repair work, redesign discussions, and/or production problems. Parent’s production engineers, production workers, metallurgists, quality control managers, and assembly supervisors were some of the personnel who spent several weeks of the year working closely with the foreign subsidiary. The foreign country does not impose an income tax on the parent corporation. Based upon the above facts, the parent is not considered to be protected under P.L. 86-272 and therefore is not required to attribute sales to Oregon.

Example 9: A subsidiary organized in a foreign country purchases products from its parent, a manufacturing company in Oregon. The subsidiary places a purchase order with the parent on an “as needed” basis. The parent, upon receipt of the purchase order, makes shipment to the subsidiary. The subsidiary, upon receipt of the product, makes payment to the parent. The parent has a relationship with its foreign subsidiary that is unrelated to the sale of its product. Officials from the parent company occasionally visit the foreign subsidiary to discuss matters unrelated to the sale of its product, including: (1) public relations, (2) personnel matters, and (3) government relations. The foreign country does not impose an income tax on the parent corporation. Based upon the above facts, the parent is considered to be protected under P.L. 86-272 and is required to attribute the sales to Oregon.

(8) If a taxpayer whose salesman operates from an office located in Oregon makes a sale to a purchaser in another state in which the taxpayer is not taxable and the property is shipped directly by a third party to the purchaser, the following rules apply, under authority of ORS 314.667:

(a) If the taxpayer is taxable in the state from which the third party ships the property, then the sale is in such state.

(b) If the taxpayer is not taxable in the state from which the property is shipped, then the sale is in Oregon.

Example 10: The taxpayer in Oregon sold merchandise to a purchaser in State A. Taxpayer is not taxable in State A. Upon direction of the taxpayer, the merchandise was shipped directly to the purchaser by the manufacturer in State B. If the taxpayer is taxable in State B, the sale is in State B. If the taxpayer is not taxable in State B, the sale is in Oregon.

Publications: Publications referenced are available from the Agency

History

Statutory/Other Authority: ORS 305.100 & 314.667
Statutes/Other Implemented: ORS 314.665
Renumbered from 150-314.665(2)-(A), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2011, f. & cert. ef. 3-21-11
REV 14-2010(Temp), f. & cert. ef. 12-1-10 thru 5-27-11
REV 5-2007, f. 7-30-07, cert. ef. 7-31-07
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
12-70

Or. Admin. R. 150-314-0431 Sales Factor; Sales of Tangible Personal Property to United States Government in this State

(1) Gross receipts from the sales of tangible personal property to the United States Government are in this state if the property is shipped from an office, store, warehouse, factory, or other place of storage in this state, except as prohibited in paragraph (2) of this rule. For the purposes of this rule, only sales for which the United States Government makes direct payment to the seller pursuant to the terms of its contract constitute sales to the United States Government. Thus, as a general rule, sales by a subcontractor to the prime contractor, the party to the contract with the United States Government, do not constitute sales to the United States Government.

Example 1: A taxpayer contracts with General Services Administration to deliver X number of trucks which were paid for by the United States Government. The sale is a sale to the United States Government.

Example 2: The taxpayer as a subcontractor to a prime contractor with the National Aeronautics and Space Administration contracts to build a component of a rocket for $1,000,000. A sale by the subcontractor to the prime contractor is not a sale to the United States Government.

(2) For tax years beginning on or after January 1, 1994, gross receipts from the sales of tangible personal property to the United States Government are not in this state if:

(a) The sales are properly included in the numerator of a formula used to apportion apportionable income to another state of the United States, a foreign country or the District of Columbia; and

(b) The other state, foreign country or the District of Columbia has properly imposed a tax on or measured by the apportioned business income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.665
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.665(2)-(B), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
8-73
12-70

Or. Admin. R. 150-314-0435 Sales Factor; Sales Other Than Sales of Tangible Personal Property in This State

(1) This rule adopts a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of this item by the states. This rule applies to tax years beginning on or after January 1, 2018. In general, ORS 314.665(4) provides for the inclusion of gross receipts arising from transactions other than sales of tangible personal property in the numerator of the sales factor.

(a) Market-Based Sourcing. Receipts, other than receipts described in ORS 314.665(2) (from sales of tangible personal property) are in Oregon within the meaning of ORS 314.665(4) and this rule if and to the extent that the taxpayer’s market for the sales is in Oregon. In general, the provisions in this section establish uniform rules for (1) determining whether and to what extent the market for a sale other than the sale of tangible personal property is in Oregon, (2) reasonably approximating the state or states of assignment where the state or states cannot be determined, and (3) excluding receipts from the sale of intangible property from the numerator and denominator of the sales factor pursuant to Oregon Laws 2017, chapter 549, section 2(3)(c).

(b) Outline of Topics.

(A) General Rules

(i) Market-Based Sourcing

(ii) Outline of Topics

(iii) Definitions

(iv) General Principles of Application; Contemporaneous Records

(v) Rules of Reasonable Approximation

(vi) Rules with respect to Exclusion of Receipts from the Sales Factor

(B) Sale, Rental, Lease, or License of Real Property

(D) Sale of a Service

(i) General Rule

(ii) In-Person Services

(iii) Services Delivered to the Customer or on Behalf of the Customer, or Delivered Electronically Through the Customer

(iv) Professional Services

(E) License or Lease of Intangible Property

(i) General Rules

(ii) License of a Marketing Intangible

(iii) License of a Production Intangible

(iv) License of a Mixed Intangible

(v) License of Intangible Property where Substance of the Transaction Resembles a Sale of Goods or Services

(F) Sale of Intangible Property: Assignment of Receipts

(G) Special Rules

(i) Software Transactions

(ii) Sales or Licenses of Digital Goods and Services

(A) “Billing address” means the location indicated in the books and records of the taxpayer as the primary mailing address relating to a customer’s account as of the time of the transaction as kept in good faith in the normal course of business and not for tax avoidance purposes.

(B) “Business customer” means a customer that is a business operating in any form, including a sole proprietorship. Sales to a non-profit organization, to a trust, to the U.S. Government, to a foreign, state, or local government, or to an agency or instrumentality of that government are treated as sales to a business customer and must be assigned consistent with the rules for those sales.

(D) “Individual customer” means a customer that is not a business customer.

(E) “Intangible property” generally means property that is not physical or whose representation by physical means is merely incidental and includes, without limitation, copyrights; patents; trademarks; trade names; brand names; franchises; licenses; trade secrets; trade dress; information; know-how; methods; programs; procedures; systems; formulae; processes; technical data; designs; licenses; literary, musical, or artistic compositions; information; ideas; contract rights including broadcast rights; agreements not to compete; goodwill and going concern value; securities; and, except as otherwise provided in this rule, computer software.

(F) “Place of order” means the physical location from which a customer places an order for a sale other than a sale of tangible personal property from a taxpayer, resulting in a contract with the taxpayer.

(G) “Population” means the most recent population data maintained by the U.S. Census Bureau for the year in question as of the close of the taxable period.

(H) “Related party” means:

(i) A stockholder who is an individual, or a member of the stockholder's family set forth in section 318 of the Code if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock;

(ii) A stockholder, or a stockholder's partnership, limited liability company, estate, trust, or corporation, if the stockholder and the stockholder's partnerships, limited liability companies, estates, trusts, and corporations own directly, indirectly, beneficially or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock; or

(iii) A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of the Code if the taxpayer owns, directly, indirectly, beneficially, or constructively, at least 50 percent of the value of the corporation's outstanding stock. The attribution rules of the Code apply for purposes of determining whether the ownership requirements of this definition have been met.

(iv) The provisions of this rule regarding sales between related parties do not apply to sales that are treated as intercompany transactions between affiliated corporations filing a consolidated Oregon return eliminated as provided in section (3) of OAR 150-314-0630.

(I) “State where a contract of sale is principally managed by the customer” means the primary location at which an employee or other representative of a customer serves as the primary contact person for the taxpayer with respect to the day-to-day execution and performance of a contract entered into by the taxpayer with the customer.

(d) General Principles of Application; Contemporaneous Records. In order to satisfy the requirements of this rule, a taxpayer’s assignment of receipts other than receipts from sales of tangible personal property must be consistent with the following principles:

(A) This rule provides various assignment rules that apply sequentially in a hierarchy. For each sale to which a hierarchical rule applies, a taxpayer must make a reasonable effort to apply the primary rule applicable to the sale before seeking to apply the next rule in the hierarchy (and must continue to do so with each succeeding rule in the hierarchy, where applicable). For example, in some cases, the applicable rule first requires a taxpayer to determine the state or states of assignment, and if the taxpayer cannot do so, the rule requires the taxpayer to reasonably approximate the state or states. In these cases, the taxpayer must attempt to determine the state or states of assignment (i.e., apply the primary rule in the hierarchy) in good faith and with reasonable effort before it may reasonably approximate the state or states.

(B) A taxpayer’s method of assigning its receipts, including the use of a method of approximation, where applicable, must reflect an attempt to obtain the most accurate assignment of receipts consistent with the regulatory standards set forth in this rule, rather than for tax avoidance purposes. A method of assignment that is reasonable for one taxpayer may not necessarily be reasonable for another taxpayer, depending upon the applicable facts.

(e) Rules of Reasonable Approximation.

(A) In General. In general, this rule establishes uniform rules for determining whether and to what extent the market for a sale other than the sale of tangible personal property is in Oregon. This rule also sets forth rules of reasonable approximation, which apply if the state or states of assignment cannot be determined. In some instances, the reasonable approximation must be made in accordance with specific rules of approximation prescribed in this rule. In other cases, the applicable rule permits a taxpayer to reasonably approximate the state or states of assignment using a method that reflects an effort to approximate the results that would be obtained under the applicable rules or standards set forth in this rule.

(B) Approximation Based Upon Known Sales. In an instance where, applying the applicable rules set forth in section (4) of this rule (Sale of a Service), a taxpayer can ascertain the state or states of assignment of a substantial portion of its receipts from sales of substantially similar services (“assigned receipts”), but not all of those sales, and the taxpayer reasonably believes, based on all available information, that the geographic distribution of some or all of the remainder of those sales generally tracks that of the assigned receipts, it must include receipts from those sales which it believes tracks the geographic distribution of the assigned receipts in its sales factor in the same proportion as its assigned receipts. This rule also applies in the context of licenses and sales of intangible property where the substance of the transaction resembles a sale of goods or services. See sections (5)(e) and (6)(c) of this rule.

(C) Related-Party Transactions – Information Imputed from Customer to Taxpayer. Where a taxpayer has receipts subject to this rule from transactions with a related-party customer, information that the customer has that is relevant to the sourcing of receipts from these transactions is imputed to the taxpayer.

(f) Rules with Respect to Exclusion of Receipts from the Sales Factor

(A) The sales factor only includes those amounts defined as sales under ORS 314.610(7) and applicable rules.

(B) Certain receipts arising from the sale of intangibles are excluded from the numerator and denominator of the sales factor pursuant to Oregon Laws 2017, chapter 549, section 2(3)(c). See section (6)(d) of this rule.

(C) Receipts of a taxpayer from hedging transactions, or from holding cash or securities, or from the maturity, redemption, sale, exchange, loan, or other disposition of cash or securities, must be excluded pursuant to ORS 314.610(7).

(2) Sale, Rental, Lease, or License of Real Property.In the case of a sale, rental, lease, or license of real property, the receipts from the sale are in Oregon if and to the extent that the property is in Oregon.

(3) Rental, Lease, or License of Tangible Personal Property.In the case of a rental, lease, or license of tangible personal property, the receipts from the sale are in Oregon if and to the extent that the property is in Oregon. If property is mobile property that is located both within and without Oregon during the period of the lease or other contract, the receipts assigned to Oregon are the receipts from the contract period multiplied by the fraction computed under OAR 150-314-0392 (as adjusted when necessary to reflect differences between usage during the contract period and usage during the taxable year).

(4) Sale of a Service.

(a) General Rule. The receipts from a sale of a service are in Oregon if and to the extent that the service is delivered to a location in Oregon. In general, the term “delivered to a location” refers to the location of the taxpayer’s market for the service, which may not be the location of the taxpayer’s employees or property. The rules to determine the location of the delivery of a service in the context of several specific types of service transactions are set forth at sections (4)(b)-(d) of this rule.

(b) In-Person Services.

(A) In General. Except as otherwise provided in section (4)(b) of this rule, in-person services are services that are physically provided in person by the taxpayer, where the customer or the customer’s real or tangible property upon which the services are performed is in the same location as the service provider at the time the services are performed. This rule includes situations where the services are provided on behalf of the taxpayer by a third-party contractor. Examples of in-person services include, without limitation, warranty and repair services; cleaning services; plumbing services; carpentry; construction contractor services; pest control; landscape services; medical and dental services, including medical testing, x-rays, and mental health care and treatment; child care; hair cutting and salon services; live entertainment and athletic performances; and in-person training or lessons. In-person services include services within the description above that are performed at (1) a location that is owned or operated by the service provider or (2) a location of the customer, including the location of the customer’s real or tangible personal property. Various professional services, including legal, accounting, financial and consulting services, and other similar services as described in section (4)(d) of this rule, although they may involve some amount of in-person contact, are not treated as in-person services within the meaning of section (4)(b) of this rule.

(B) Assignment of Receipts.

(i) Rule of Determination. Except as otherwise provided in section (4)(b)(B) of this rule, if the service provided by the taxpayer is an in-person service, the service is delivered to the location where the service is received. Therefore, the receipts from a sale are in Oregon if and to the extent the customer receives the in-person service in Oregon. In assigning its receipts from sales of in-person services, a taxpayer must first attempt to determine the location where a service is received, as follows:

(I) If the service is performed with respect to the body of an individual customer in Oregon (e.g. hair cutting or x-ray services) or in the physical presence of the customer in Oregon (e.g. live entertainment or athletic performances), the service is received in Oregon.

(II) If the service is performed with respect to the customer’s real estate in Oregon or if the service is performed with respect to the customer’s tangible personal property at the customer’s residence or in the customer’s possession in Oregon, the service is received in Oregon.

(III) If the service is performed with respect to the customer’s tangible personal property and the tangible personal property is to be shipped or delivered to the customer, whether the service is performed within or outside Oregon, the service is received in Oregon if the property is shipped or delivered to the customer in Oregon.

(C) Rule of Reasonable Approximation. In an instance in which the state or states where a service is actually received cannot be determined, the taxpayer must reasonably approximate such state or states.

(D) Examples. Note that for purposes of the examples it is irrelevant whether the services are performed by an employee of the taxpayer or by an independent contractor acting on the taxpayer’s behalf.

(A) In General. If the service provided by the taxpayer is not an in-person service within the meaning of section (4)(b) of this rule or a professional service within the meaning of section (4)(d) of this rule, and the service is delivered to or on behalf of the customer, or delivered electronically through the customer, the receipts from a sale are in Oregon if and to the extent that the service is delivered in Oregon. For purposes of section (4)(c) of this rule, a service that is delivered “to” a customer is a service in which the customer and not a third party is the recipient of the service. A service that is delivered “on behalf of” a customer is one in which a customer contracts for a service but one or more third parties, rather than the customer, is the recipient of the service, such as fulfillment services, or the direct or indirect delivery of advertising to the customer’s intended audience (see section (4)(c)(B)(i) of this rule and Example 4 under section (4)(c)(B)(i)(III) of this rule). A service can be delivered to or on behalf of a customer by physical means or through electronic transmission. A service that is delivered electronically “through” a customer is a service that is delivered electronically to a customer for purposes of resale and subsequent electronic delivery in substantially identical form to an end user or other third-party recipient.

(B) Assignment of Receipts. The assignment of receipts to a state or states in the instance of a sale of a service that is delivered to the customer or on behalf of the customer, or delivered electronically through the customer, depends upon the method of delivery of the service and the nature of the customer. Separate rules of assignment apply to services delivered by physical means and services delivered by electronic transmission. (For purposes of section (4)(c) of this rule, a service delivered by an electronic transmission is not a delivery by a physical means). If a rule of assignment set forth in section (4)(c) of this rule depends on whether the customer is an individual or a business customer, and the taxpayer acting in good faith cannot reasonably determine whether the customer is an individual or business customer, the taxpayer must treat the customer as a business customer.

(i) Delivery to or on Behalf of a Customer by Physical Means Whether to an Individual or Business Customer. Services delivered to a customer or on behalf of a customer through a physical means include, for example, product delivery services where property is delivered to the customer or to a third party on behalf of the customer; the delivery of brochures, fliers, or other direct mail services; the delivery of advertising or advertising-related services to the customer’s intended audience in the form of a physical medium; and the sale of custom software (e.g., where software is developed for a specific customer in a case where the transaction is properly treated as a service transaction for purposes of corporate taxation) where the taxpayer installs the custom software at the customer’s site. The rules in section (4)(c)(B)(i) of this rule apply whether the taxpayer’s customer is an individual customer or a business customer.

(I) Rule of Determination. In assigning the receipts from a sale of a service delivered to a customer or on behalf of a customer through a physical means, a taxpayer must first attempt to determine the state or states where the service is delivered. If the taxpayer is able to determine the state or states where the service is delivered, it must assign the receipts to that state or states.

(II) Rule of Reasonable Approximation. If the taxpayer cannot determine the state or states where the service is actually delivered, it must reasonably approximate the state or states.

(III) Examples:

(ii) Delivery to a Customer by Electronic Transmission. Services delivered by electronic transmission include, without limitation, services that are transmitted through the means of wire, lines, cable, fiber optics, electronic signals, satellite transmission, audio or radio waves, or other similar means, whether or not the service provider owns, leases, or otherwise controls the transmission equipment. In the case of the delivery of a service by electronic transmission to a customer, the following rules apply.

(I) Services Delivered By Electronic Transmission to an Individual Customer.

(I-a) Rule of Determination. In the case of the delivery of a service to an individual customer by electronic transmission, the service is delivered in Oregon if and to the extent that the taxpayer’s customer receives the service in Oregon. If the taxpayer can determine the state or states where the service is received, it must assign the receipts from that sale to that state or states.

(I-b) Rules of Reasonable Approximation. If the taxpayer cannot determine the state or states where the customer actually receives the service, but has sufficient information regarding the place of receipt from which it can reasonably approximate the state or states where the service is received, it must reasonably approximate the state or states. If a taxpayer does not have sufficient information from which it can determine or reasonably approximate the state or states in which the service is received, it must reasonably approximate the state or states using the customer’s billing address.

(II) Services Delivered By Electronic Transmission to a Business Customer.

(II-a) Rule of Determination. In the case of the delivery of a service to a business customer by electronic transmission, the service is delivered in Oregon if and to the extent that the taxpayer’s customer receives the service in Oregon. If the taxpayer can determine the state or states where the service is received, it must assign the receipts from that sale to the state or states. For purposes of section (4)(c)(B)(ii)(II) of this rule, it is intended that the state or states where the service is received reflect the location at which the service is directly used by the employees or designees of the customer.

(II-b) Rule of Reasonable Approximation. If the taxpayer cannot determine the state or states where the customer actually receives the service, but has sufficient information regarding the place of receipt from which it can reasonably approximate the state or states where the service is received, it must reasonably approximate the state or states.

(II-c) Secondary Rule of Reasonable Approximation. In the case of the delivery of a service to a business customer by electronic transmission where a taxpayer does not have sufficient information from which it can determine or reasonably approximate the state or states in which the service is received, the taxpayer must reasonably approximate the state or states as set forth in this rule. In these cases, unless the taxpayer can apply the safe harbor set forth in section (4)(c)(B)(ii)(II)(II-d) of this rule, the taxpayer must reasonably approximate the state or states in which the service is received as follows: first, by assigning the receipts from the sale to the state where the contract of sale is principally managed by the customer; second, if the state where the customer principally manages the contract is not reasonably determinable, by assigning the receipts from the sale to the customer’s place of order; and third, if the customer’s place of order is not reasonably determinable, by assigning the receipts from the sale using the customer’s billing address; provided, however, if the taxpayer derives more than five percent of its receipts from sales of services from any single customer, the taxpayer is required to identify the state in which the contract of sale is principally managed by that customer.

(II-d) Safe Harbor. In the case of the delivery of a service to a business customer by electronic transmission, a taxpayer may not be able to determine, or reasonably approximate under section (4)(c)(B)(ii)(II)(II-b) of this rule, the state or states in which the service is received. In these cases, the taxpayer may, in lieu of the rule stated at section (4)(c)(B)(ii)(II)(II-c) of this rule apply the safe harbor stated in this subsection. Under this safe harbor, a taxpayer may assign its receipts from sales to a particular customer based upon the customer’s billing address in a taxable year in which the taxpayer (1) engages in substantially similar service transactions with more than 250 customers, whether business or individual, and (2) does not derive more than five percent of its receipts from sales of all services from that customer. This safe harbor applies only for purposes of services delivered by electronic transmission to a business customer, and not otherwise.

(II-e) Related-Party Transactions. In the case of a sale of a service by electronic transmission to a business customer that is a related party, the taxpayer may not use the secondary rule of reasonable approximation in section (4)(c)(B)(ii)(II)(II-c) of this rule but may use the rule of reasonable approximation in section (4)(c)(B)(ii)(II)(II-b) of this rule, and the safe harbor in section (4)(c)(B)(ii)(II)(II-d) of this rule, provided that the department may aggregate sales to related parties in determining whether the sales exceed five percent of receipts from sales of all services under that safe harbor provision if necessary or appropriate to prevent distortion.

(III) Examples: In these examples, unless otherwise stated, assume that the taxpayer is not related to the customer to which the service is delivered. Also, assume if relevant, unless otherwise stated, that the safe harbor set forth at section (4)(c)(B)(ii)(II)(II-d) of this rule does not apply.

(iii) Services Delivered Electronically Through or on Behalf of an Individual or Business Customer. A service delivered electronically “on behalf of” the customer is one in which a customer contracts for a service to be delivered electronically but one or more third parties, rather than the customer, is the recipient of the service, such as the direct or indirect delivery of advertising on behalf of a customer to the customer’s intended audience. A service delivered electronically “through” a customer to third-party recipients is a service that is delivered electronically to a customer for purposes of resale and subsequent electronic delivery in substantially identical form to end users or other third-party recipients.

(I) Rule of Determination. In the case of the delivery of a service by electronic transmission, where the service is delivered electronically to end users or other third-party recipients through or on behalf of the customer, the service is delivered in Oregon if and to the extent that the end users or other third-party recipients are in Oregon. For example, in the case of the direct or indirect delivery of advertising on behalf of a customer to the customer’s intended audience by electronic means, the service is delivered in Oregon to the extent that the audience for the advertising is in Oregon. In the case of the delivery of a service to a customer that acts as an intermediary in reselling the service in substantially identical form to third-party recipients, the service is delivered in Oregon to the extent that the end users or other third-party recipients receive the services in Oregon. The rules in this subsection apply whether the taxpayer’s customer is an individual customer or a business customer and whether the end users or other third-party recipients to which the services are delivered through or on behalf of the customer are individuals or businesses.

(II) Rule of Reasonable Approximation. If the taxpayer cannot determine the state or states where the services are actually delivered to the end users or other third-party recipients either through or on behalf of the customer, it must reasonably approximate the state or states.

(III) Select Secondary Rules of Reasonable Approximation.

(III-a) If a taxpayer’s service is the direct or indirect electronic delivery of advertising on behalf of its customer to the customer’s intended audience, and if the taxpayer lacks sufficient information regarding the location of the audience from which it can determine or reasonably approximate that location, the taxpayer must reasonably approximate the audience in a state for the advertising using the following secondary rules of reasonable approximation. If a taxpayer is delivering advertising directly or indirectly to a known list of subscribers, the taxpayer must reasonably approximate the audience for advertising in a state using a percentage that reflects the ratio of the state’s subscribers in the specific geographic area in which the advertising is delivered relative to the total subscribers in that area. For a taxpayer with less information about its audience, the taxpayer must reasonably approximate the audience in a state using the percentage that reflects the ratio of the state’s population in the specific geographic area in which the advertising is delivered relative to the total population in that area.

(III-b) If a taxpayer’s service is the delivery of a service to a customer that then acts as the taxpayer’s intermediary in reselling that service to end users or other third-party recipients, and if the taxpayer lacks sufficient information regarding the location of the end users or other third-party recipients from which it can determine or reasonably approximate that location, the taxpayer must reasonably approximate the extent to which the service is received in a state by using the percentage that reflects the ratio of the state’s population in the specific geographic area in which the taxpayer’s intermediary resells the services, relative to the total population in that area.

(III-c) When using the secondary reasonable approximation methods provided above, with regard to the relevant specific geographic area, include only the areas where the service was substantially and materially delivered or resold. Unless the taxpayer demonstrates the contrary, it will be presumed that the area where the service was substantially and materially delivered or resold does not include areas outside the United States.

(IV) Examples:

(d) Professional Services.

(A) In General. Except as otherwise provided in section (4)(d) of this rule, professional services are services that require specialized knowledge and in some cases require a professional certification, license, or degree. These services include the performance of technical services that require the application of specialized knowledge. Professional services include, without limitation, management services, bank and financial services, financial custodial services, investment and brokerage services, fiduciary services, tax preparation, payroll and accounting services, lending services, credit card services (including credit card processing services), data processing services, legal services, consulting services, video production services, graphic and other design services, engineering services, and architectural services. Nothing in this rule applies to services provided by a financial institution that must apportion and allocate its income under ORS 314.280.

(B) Overlap with Other Categories of Services.

(i) Certain services that fall within the definition of “professional services” set forth in section (4)(d) of this rule are nevertheless treated as “in-person services” within the meaning of section (4)(b) of this rule and are assigned under the rules of that section. Specifically, professional services that are physically provided in person by the taxpayer such as carpentry, certain medical and dental services or child care services, where the customer or the customer’s real or tangible property upon which the services are provided is in the same location as the service provider at the time the services are performed, are “in-person services” and are assigned as such, notwithstanding that they may also be considered to be “professional services.” However, professional services where the service is of an intellectual or intangible nature, such as legal, accounting, financial, and consulting services, are assigned as professional services under the rules of section (4)(d) of this rule, notwithstanding the fact that these services may involve some amount of in-person contact.

(ii) Professional services may in some cases include the transmission of one or more documents or other communications by mail or by electronic means. In some cases, all or most communications between the service provider and the service recipient may be by mail or by electronic means. However, in these cases, despite this transmission, the assignment rules that apply are those set forth in (4)(d) of this rule, and not those set forth in section (4)(c) of this rule, pertaining to services delivered to a customer or through or on behalf of a customer.

(C) Assignment of Receipts. In the case of a professional service, it is generally possible to characterize the location of delivery in multiple ways by emphasizing different elements of the service provided, no one of which will consistently represent the market for the services. Therefore, the location of delivery in the case of professional services is not susceptible to a general rule of determination and must be reasonably approximated. The assignment of receipts from a sale of a professional service depends in many cases upon whether the customer is an individual or business customer. In any instance in which the taxpayer, acting in good faith, cannot reasonably determine whether the customer is an individual or business customer, the taxpayer must treat the customer as a business customer. For purposes of assigning the receipts from a sale of a professional service, a taxpayer’s customer is the person that contracts for the service, irrespective of whether another person pays for or also benefits from the taxpayer’s services.

(i) General Rule. Receipts from sales of professional services other than those services described in section (4)(d)(C)(ii) of this rule (architectural and engineering services) and section (4)(d)(C)(iv) of this rule (transactions with related parties) are assigned in accordance with section (4)(d)(C)(i) of this rule.

(I) Professional Services Delivered to Individual Customers. Except as otherwise provided in section (4)(d) of this rule (see in particular section (4)(d)(C)(iv) of this rule), in any instance in which the service provided is a professional service and the taxpayer’s customer is an individual customer, the state or states in which the service is delivered must be reasonably approximated as set forth in section (4)(d)(C)(i)(I) of this rule. In particular, the taxpayer must assign the receipts from a sale to the customer’s state of primary residence, or, if the taxpayer cannot reasonably identify the customer’s state of primary residence, to the state of the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from an individual customer, the taxpayer must identify the customer’s state of primary residence and assign the receipts from the service or services provided to that customer to that state.

(II) Professional Services Delivered to Business Customers. Except as otherwise provided in section (4)(d) of this rule, in any instance in which the service provided is a professional service and the taxpayer’s customer is a business customer, the state or states in which the service is delivered must be reasonably approximated as set forth in this section. In particular, unless the taxpayer may use the safe harbor set forth at section (4)(d)(C)(i)(III) of this rule, the taxpayer must assign the receipts from the sale as follows: first, by assigning the receipts to the state where the contract of sale is principally managed by the customer; second, if the place of customer management is not reasonably determinable, to the customer’s place of order; and third, if the customer place of order is not reasonably determinable, to the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from a customer, the taxpayer is required to identify the state in which the contract of sale is principally managed by the customer.

(III) Safe Harbor; Large Volume of Transactions. Notwithstanding the rules set forth in sections (4)(d)(C)(i)(I) and (II) of this rule, a taxpayer may assign its receipts from sales to a particular customer based on the customer’s billing address in any taxable year in which the taxpayer (1) engages in substantially similar service transactions with more than 250 customers, whether individual or business, and (2) does not derive more than five percent of its receipts from sales of all services from that customer. This safe harbor applies only for purposes of section (4)(d)(C)(i) of this rule and not otherwise.

(ii) Architectural and Engineering Services with respect to Real or Tangible Personal Property. Architectural and engineering services with respect to real or tangible personal property are professional services within the meaning of section (4)(d) of this rule. However, unlike in the case of the general rule that applies to professional services, (1) the receipts from a sale of an architectural service are assigned to a state or states if and to the extent that the services are with respect to real estate improvements located, or expected to be located, in the state or states; and (2) the receipts from a sale of an engineering service are assigned to a state or states if and to the extent that the services are with respect to tangible or real property located in the state or states, including real estate improvements located in, or expected to be located in, the state or states. These rules apply whether or not the customer is an individual or business customer. In any instance in which architectural or engineering services are not described in section (4)(d)(C)(ii) of this rule, the receipts from a sale of these services must be assigned under the general rule for professional services. See section (4)(d)(C)(i) of this rule.

(iii) Related-Party Transactions. In any instance in which the professional service is sold to a related party, rather than applying the rule for professional services delivered to business customers in section (4)(d)(C)(i)(II) of this rule, the state or states to which the service is assigned is the place of receipt by the related party as reasonably approximated using the following hierarchy: (1) if the service primarily relates to specific operations or activities of a related party conducted in one or more locations, then to the state or states in which those operations or activities are conducted in proportion to the related-party’s payroll at the locations to which the service relates in the state or states; or (2) if the service does not relate primarily to operations or activities of a related party conducted in particular locations, but instead relates to the operations of the related party generally, then to the state or states in which the related party has employees, in proportion to the related-party’s payroll in those states. The taxpayer may use the safe harbor provided by section (4)(d)(C)(i)(III) of this rule provided that the department may aggregate the receipts from sales to related parties in applying the five percent rule if necessary or appropriate to avoid distortion.

(iv) Examples: Unless otherwise stated, assume in each of these examples, where relevant, that the customer is not a related party and that the safe harbor set forth at section (4)(d)(C)(i)(III) of this rule does not apply.

(5) License or Lease of Intangible Property.

(a) General Rules.

(A) The receipts from the license of intangible property are in Oregon if and to the extent the intangible is used in Oregon. In general, the term “use” is construed to refer to the location of the taxpayer’s market for the use of the intangible property that is being licensed and is not to be construed to refer to the location of the property or payroll of the taxpayer. The rules that apply to determine the location of the use of intangible property in the context of several specific types of licensing transactions are set forth at sections (5)(b)-(e) of this rule. For purposes of the rules set forth in section (5) of this rule, a lease of intangible property is to be treated the same as a license of intangible property.

(B) In general, a license of intangible property that conveys all substantial rights in that property is treated as a sale of intangible property for purposes of this rule. See section (6) of this rule. Note, however, that for purposes of sections (5) and (6) of this rule, a sale or exchange of intangible property is treated as a license of that property where the receipts from the sale or exchange derive from payments that are contingent on the productivity, use, or disposition of the property.

(C) Intangible property licensed as part of the sale or lease of tangible property is treated under this rule as the sale or lease of tangible property.

(D) Nothing in section (5) of this rule is to be construed to allow or require inclusion of receipts in the sales factor that are not included in the definition of “sales” pursuant to ORS 314.610(7) or related rules, or that are excluded from the numerator and the denominator of the sales factor pursuant to Oregon Laws 2017, chapter 549, section 2(3)(c). For examples of the types of intangibles that are excluded pursuant to ORS 314.610(7), see OAR 150-314-0425. For examples of the types of intangibles that are excluded pursuant to Oregon Laws 2017, chapter 549, section 2(3)(c), see section (6)(d) of this rule. So, to the extent that the transfer of either a security, as defined in OAR 314-0425(9), or business “goodwill” or similar intangible property, including, without limitation, “going concern value” or “workforce in place,” may be characterized as a license or lease of intangible property, receipts from such transaction must be excluded from the numerator and the denominator of the taxpayer’s sales factor.

(b) License of a Marketing Intangible. Where a license is granted for the right to use intangible property in connection with the sale, lease, license, or other marketing of goods, services, or other items (i.e., a marketing intangible) to a consumer, the royalties or other licensing fees paid by the licensee for that marketing intangible are assigned to Oregon to the extent that those fees are attributable to the sale or other provision of goods, services, or other items purchased or otherwise acquired by consumers or other ultimate customers in Oregon. Examples of a license of a marketing intangible include, without limitation, the license of a service mark, trademark, or trade name; certain copyrights; the license of a film, television, or multimedia production or event for commercial distribution; and a franchise agreement. In each of these instances the license of the marketing intangible is intended to promote consumer sales. In the case of the license of a marketing intangible, where a taxpayer has actual evidence of the amount or proportion of its receipts that is attributable to Oregon, it must assign that amount or proportion to Oregon. In the absence of actual evidence of the amount or proportion of the licensee's receipts that are derived from Oregon consumers, the portion of the licensing fee to be assigned to Oregon must be reasonably approximated by multiplying the total fee by a percentage that reflects the ratio of the Oregon population in the specific geographic area in which the licensee makes material use of the intangible property to regularly market its goods, services, or other items relative to the total population in that area. If the license of a marketing intangible is for the right to use the intangible property in connection with sales or other transfers at wholesale rather than directly to retail customers, the portion of the licensing fee to be assigned to Oregon must be reasonably approximated by multiplying the total fee by a percentage that reflects the ratio of the Oregon population in the specific geographic area in which the licensee's goods, services, or other items are ultimately and materially marketed using the intangible property relative to the total population of that area. Unless the taxpayer demonstrates that the marketing intangible is materially used in the marketing of items outside the United States, the fees from licensing that marketing intangible will be presumed to be derived from within the United States.

(c) License of a Production Intangible. If a license is granted for the right to use intangible property other than in connection with the sale, lease, license, or other marketing of goods, services, or other items, and the license is to be used in a production capacity (a “production intangible”), the licensing fees paid by the licensee for that right are assigned to Oregon to the extent that the use for which the fees are paid takes place in Oregon. Examples of a license of a production intangible include, without limitation, the license of a patent, a copyright, or trade secrets to be used in a manufacturing process, where the value of the intangible lies predominately in its use in that process. In the case of a license of a production intangible to a party other than a related party where the location of actual use is unknown, it is presumed that the use of the intangible property takes place in the state of the licensee's commercial domicile (where the licensee is a business) or the licensee’s state of primary residence (where the licensee is an individual). If the department can reasonably establish that the actual use of intangible property pursuant to a license of a production intangible takes place in part in Oregon, it is presumed that the entire use is in this state except to the extent that the taxpayer can demonstrate that the actual location of a portion of the use takes place outside Oregon. In the case of a license of a production intangible to a related party, the taxpayer must assign the receipts to where the intangible property is actually used.

(d) License of a Mixed Intangible. If a license of intangible property includes both a license of a marketing intangible and a license of a production intangible (a “mixed intangible”) and the fees to be paid in each instance are separately and reasonably stated in the licensing contract, the department will accept that separate statement for purposes of this rule. If a license of intangible property includes both a license of a marketing intangible and a license of a production intangible and the fees to be paid in each instance are not separately and reasonably stated in the contract, it is presumed that the licensing fees are paid entirely for the license of the marketing intangible except to the extent that the taxpayer or the department can reasonably establish otherwise.

(e) License of Intangible Property where Substance of Transaction Resembles a Sale of Goods or Services.

(A) In general. In some cases, the license of intangible property will resemble the sale of an electronically-delivered good or service rather than the license of a marketing intangible or a production intangible. In these cases, the receipts from the licensing transaction are assigned by applying the rules set forth in sections (4)(c)(B)(ii) and (iii) of this rule, as if the transaction were a service delivered to an individual or business customer or delivered electronically through an individual or business customer, as applicable. Examples of transactions to be assigned under section (5)(e) of this rule include, without limitation, the license of database access, the license of access to information, the license of digital goods (see section (7)(b) of this rule), and the license of certain software (e.g., where the transaction is not the license of pre-written software that is treated as the sale of tangible personal property, see section (7)(a) of this rule).

(B) Sublicenses. Pursuant to section (5)(e)(A) of this rule, the rules of section (4)(c)(B)(iii) of this rule may apply where a taxpayer licenses intangible property to a customer that in turn sublicenses the intangible property to end users as if the transaction were a service delivered electronically through a customer to end users. In particular, the rules set forth at section (4)(c)(B)(iii) of this rule that apply to services delivered electronically to a customer for purposes of resale and subsequent electronic delivery in substantially identical form to end users or other recipients may also apply with respect to licenses of intangible property for purposes of sublicense to end users. For this purpose, the intangible property sublicensed to an end user shall not fail to be substantially identical to the property that was licensed to the sublicensor merely because the sublicense transfers a reduced bundle of rights with respect to that property (e.g., because the sublicensee’s rights are limited to its own use of the property and do not include the ability to grant a further sublicense), or because that property is bundled with additional services or items of property.

(6) Sale of Intangible Property. Assignment of Receipts. The assignment of receipts to a state or states in the instance of a sale or exchange of intangible property depends upon the nature of the intangible property sold. For purposes of section (6) of this rule, a sale or exchange of intangible property includes a license of that property where the transaction is treated for tax purposes as a sale of all substantial rights in the property and the receipts from transaction are not contingent on the productivity, use, or disposition of the property. For the rules that apply where the consideration for the transfer of rights is contingent on the productivity, use, or disposition of the property, see section (5)(a) of this rule.

(a) Contract Right or Government License that Authorizes Business Activity in Specific Geographic Area. In the case of a sale or exchange of intangible property where the property sold or exchanged is a contract right, government license, or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area, the receipts from the sale are assigned to a state if and to the extent that the intangible property is used or is authorized to be used within the state. If the intangible property is used or may be used only in this state, the taxpayer must assign the receipts from the sale to Oregon. If the intangible property is used or is authorized to be used in Oregon and one or more other states, the taxpayer must assign the receipts from the sale to Oregon to the extent that the intangible property is used in or authorized for use in Oregon, through the means of a reasonable approximation.

(b) Sale that Resembles a License (Receipts are Contingent on Productivity, Use, or Disposition of the Intangible Property). In the case of a sale or exchange of intangible property where the receipts from the sale or exchange are contingent on the productivity, use, or disposition of the property, the receipts from the sale are assigned by applying the rules set forth in section (5) of this rule (pertaining to the license or lease of intangible property).

(c) Sale that Resembles a Sale of Goods and Services. In the case of a sale or exchange of intangible property where the substance of the transaction resembles a sale of goods or services and where the receipts from the sale or exchange do not derive from payments contingent on the productivity, use, or disposition of the property, the receipts from the sale are assigned by applying the rules set forth in section (5)(e) of this rule (relating to licenses of intangible property that resemble sales of goods and services). Examples of these transactions include those that are analogous to the license transactions cited as examples in section (5)(e) of this rule.

(d) Excluded Receipts. Receipts from the sale of intangible property are not included in the sales factor in any case in which the transaction does not give rise to sales within the meaning of ORS 314.610(7). In addition, in any case in which the sale of intangible property does result in sales within the meaning of ORS 314.610(7), those sales are excluded from the numerator and the denominator of the taxpayer’s sales factor if the receipts are not referenced in Oregon Laws 2017, chapter 549, section 2(3)(a) or (b). The sale of intangible property that is excluded from the numerator and denominator of the taxpayer’s sales factor under this provision includes, without limitation, the sale of a partnership interest, the sale of business “goodwill,” the sale of an agreement not to compete, or similar intangible property.

(e) Examples.

(7) Special Rules.

(a) Software Transactions. A license or sale of pre-written software for purposes other than commercial reproduction (or other exploitation of the intellectual property rights) transferred on a tangible medium is treated as the sale of tangible personal property, rather than as either the license or sale of intangible property or the performance of a service. In these cases, the receipts are in Oregon as determined under the rules for the sale of tangible personal property set forth under ORS 314.665(2) and related rules. In all other cases, the receipts from a license or sale of software are to be assigned to Oregon as determined otherwise under this rule (e.g., depending on the facts, as the development and sale of custom software, see section (4)(c) of this rule, as a license of a marketing intangible, see section (5)(b) of this rule, as a license of a production intangible, see section (5)(c) of this rule, as a license of intangible property where the substance of the transaction resembles a sale of goods or services, see section (5)(e) of this rule, or as a sale of intangible property, see section (6) of this rule).

(b) Sales or Licenses of Digital Goods or Services. In general. In the case of a sale or license of digital goods or services, including, among other things, the sale of various video, audio, and software products, or similar transactions, the receipts from the sale or license are assigned by applying the same rules as are set forth in sections (4)(c)(B)(ii) or (iii) of this rule, as if the transaction were a service delivered to an individual or business customer or delivered through or on behalf of an individual or business customer. For purposes of the analysis, it is not relevant what the terms of the contractual relationship are or whether the sale or license might be characterized, depending upon the particular facts, as, for example, the sale or license of intangible property or the performance of a service. See sections (5)(e) and (6)(c) of this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.665 & 314.667
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.665(4), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2008, f. & cert. ef. 9-23-08
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-31-85, Renumbered from 150-314.665(4)
8-73
12-70

Or. Admin. R. 150-314-0437 Gross Receipts Related to Deferred Gain or Loss

(1) In general. In all cases where gain or loss is realized for accounting purposes in the year of the associated transaction, but not fully recognized for tax purposes in that year, the total gross receipts from the transaction must be included in the sales factor for the year of the transaction if the associated gain or loss is considered apportionable income or loss under ORS 314.610, except where:

(a) The gross receipts are excluded from “sales” under ORS 314.665(6)(a) and (6)(c); or

(b) The net gain rather than gross receipts is included in the sales factor under ORS 314.665(6)(b). Also see OAR 150-314-0355 regarding the apportionment of installment sale income and OAR 150-314-0385 regarding apportionment of deferred gain subject to tax in a year after the year of disposition.

Example 1: Big Equipment Sales Corporation (BESC) has locations in Oregon and Idaho. BESC sold a large piece of construction equipment in 2017 on an installment contract. The total sales price was $1,000,000. BESC must include the full sales price of $1,000,000 in the sales factor for tax year 2017.

(2) Gross receipts from deferred gain on exchanges of property. In regard to exchanges of property qualifying for the deferral of tax on the gain or loss under section ORS 317.327 and sections 1031 or 1033 of the Internal Revenue Code, “gross receipts” means the fair market value of the property acquired on the date of exchange.

Example 2: Major Manufacturing Corporation (MMC) exchanges tangible personal property used in its business activity in Oregon for property of like kind in California during tax year 2016. The fair market value of the acquired property is $800,000 on the date of the exchange. The gross receipts from the exchange of property are not excluded from MMC’s “sales” under ORS 314.665(6)(a) or (6)(c). MMC’s sales factor numerator and denominator for tax year 2016 must include $800,000, the gross receipts from the exchange as measured in 2016.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.665 & 317.327
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.665(5), REV 35-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-314-0455 Modified Factors for Publishing

(1) The following special rules are established with respect to the apportionment of income derived from the publishing, sale, licensing, or other distribution of books, newspapers, magazines, periodicals, trade journals, or other printed material. The rule adopts a model regulation recommended by the Multistate Tax Commission to promote uniform treatment of these items by the states.

(2) In General. Except as specifically modified by this rule, when a person in the business of publishing, selling, licensing, or distributing newspapers, magazines, periodicals, trade journals, or other printed material has income from sources both within and without this state, the amount of apportionable income from sources within this state from such business activity will be determined pursuant to ORS 314.650 through 314.665 and the rules thereunder.

(3) Definitions. The following definitions are applicable to the terms contained in this rule.

(a) "Outer-jurisdictional property" means certain types of tangible personal property, such as orbiting satellites, undersea transmission cables and the like, that are owned or rented by the taxpayer and used in the business of publishing, licensing, selling, or otherwise distributing printed material, but that are not physically located in any particular state.

(b) "Print or printed material" includes, without limitation, the physical embodiment or printed version of any thought or expression including, without limitation, a play, story, article, column, or other literary, commercial, educational, artistic, or other written or printed work. The determination of whether an item is or consists of print or printed material will be made without regard to its content. Printed material may take the form of a book, newspaper, magazine, periodical, trade journal, or any other form of printed matter and may be contained on any medium or property.

(c) "Purchaser" and "subscriber" mean the individual, residence, business, or other outlet that is the ultimate or final recipient of the print or printed material. Neither of such terms will mean or include a wholesaler or other distributor of print or printed material.

(d) "Terrestrial facility" will include any telephone line, cable, fiber optic, microwave, earth station, satellite dish, antennae, or other relay system or device that is used to receive, transmit, relay, or carry any data, voice, image or other information that is transmitted from or by any outer-jurisdictional property to the ultimate recipient thereof.

(4) Apportionment of Apportionable Income.

(a) The Property Factor.

(A) Property Factor Denominator. All real and tangible personal property, including outer-jurisdictional property, whether owned or rented, that is used in the business will be included in the denominator of the property factor.

(B) Property Factor Numerator.

(i) All real and tangible personal property owned or rented by the taxpayer and used in this state during the tax period will be included in the numerator of the property factor.

(ii) Outer-jurisdictional property owned or rented by the taxpayer and used in this state during the tax period will be included in the numerator of the property factor in the ratio that the value of such property that is attributable to its use by the taxpayer in business activities in this state bears to the total value of such property that is attributable to its use in the taxpayer's business activities everywhere. The value of outer-jurisdictional property to be attributed to the numerator of the property factor of this state will be determined by the ratio that the number of uplinks and downlinks (sometimes referred to as "half-circuits") that were used during the tax period to transmit from this state and to receive in this state any data, voice, image, or other information bears to the total number of uplinks and downlinks or half-circuits that the taxpayer used for transmissions everywhere. Should information regarding such uplink and downlink or half-circuit usage not be available or should such measurement of activity not be applicable to the type of outer-jurisdictional property used by the taxpayer, the value of such property to be attributed to the numerator of the property factor of this state will be determined by the ratio that the amount of time (in terms of hours and minutes of use) or such other measurement of use of outer-jurisdictional property that was used during the tax period to transmit from this state and to receive in this state any data, voice, image, or other information bears to the total amount of time or other measurement of use that was used for transmissions everywhere.

(iii) Outer-jurisdictional property will be considered to have been used by the taxpayer in its business activities within this state when such property, wherever located, has been employed by the taxpayer in any manner in the publishing, sale, licensing or other distribution of books, newspapers, magazines, or other printed material and any data, voice, image, or other information is transmitted to or from this state either through an earth station or terrestrial facility located in this state.

Example: One example of the use of outer-jurisdictional property is where the taxpayer either owns its own communications satellite or leases the use of uplinks, downlinks or circuits, or time on a communications satellite for the purpose of sending messages to its newspaper printing facilities or employees in a state. The state or states in which any printing facility that receives the satellite communications is located and the state from which the communications were sent would, under this rule, apportion the cost of the owned or rented satellite to their respective property factors based upon the ratio of the in-state use of said satellite to its total usage everywhere.

Assume that ABC Newspaper Co. owns a total of $400,000,000 of property everywhere and that, in addition, it owns and operates a communication satellite for the purpose of sending news articles to its printing plant in this state, as well as for communicating with its printing plants and facilities or news bureaus, employees, and agents located in other states and throughout the world. Also assume that the total value of its real and tangible personal property that was permanently located in this state for the entire income year was valued at $3,000,000. Assume also that the total original cost of the satellite is $100,000,000 for the tax period and that of the 10,000 uplinks and downlinks of satellite transmissions used by the taxpayer during the tax period, 200 or two percent are attributable to its satellite communications received in and sent from this state.

Assume further that the company's mobile property that was used partially within this state, consisting of 40 delivery trucks, was determined to have an original cost of $4,000,000 and such mobile property was used in this state for 95 days.

The total value of property to be attributed to this state would be determined as follows:

Value of property permanently in state: $3,000,000

Value of mobile property:

95/365 (or .260274) x $4,000,000= $1,041,096

Value of leased satellite property used in-state:

.02 x $100,000,000= $2,000,000

Total value of property attributable to state= $6,041,096

Total property factor %: $6,041,096/$500,000,000= 1.2082%

(b) The Payroll Factor. The payroll factor will be determined in accordance with OAR 150-314-0415 and the rules thereunder.

(A) Sales Factor Denominator. The denominator of the sales factor will include the total gross receipts derived by the taxpayer from transactions and activity in the regular course of its trade or business, except receipts that may be excluded under ORS 314.665 and the rules thereunder.

(B) Sales Factor Numerator. The numerator of the sales factor will include all gross receipts of the taxpayer from sources within this state, including, but not limited to, the following:

(i) Gross receipts derived from the sale of tangible personal property, including printed materials, delivered or shipped to a purchaser or a subscriber in this state.

(ii) Except as provided in subsection (4)(c)(B)(iii), gross receipts derived from advertising and the sale, rental or other use of the taxpayer's customer lists or any portion thereof will be attributed to this state as determined by the taxpayer's "circulation factor" during the tax period. The circulation factor will be determined for each individual publication by the taxpayer of printed material containing advertising and will be equal to the ratio that the taxpayer's in-state circulation to purchasers and subscribers of its printed material bears to its total circulation to purchasers and subscribers everywhere. The circulation factor for an individual publication will be determined by reference to the rating statistics as reflected in such sources as Audit Bureau of Circulations or other comparable sources, provided that the source selected is consistently used from year to year for such purpose. If none of the foregoing sources are available, or, if available, none is in form or content sufficient for such purposes, then the circulation factor will be determined from the taxpayer's books and records.

(iii) When specific items of advertisements can be shown, upon clear and convincing evidence, to have been distributed solely to a limited regional or local geographic area in which this state is located, the taxpayer may petition, or the department may require, that a portion of such receipts be attributed to the sales factor numerator of this state on the basis of a regional or local geographic area circulation factor and not upon the basis of the circulation factor provided by subparagraph (4)(c)(B)(ii). Such attribution will be based upon the ratio that the taxpayer's circulation to purchasers and subscribers located in this state of the printed material containing such specific items of advertising bears to its total circulation of such printed material to purchasers and subscribers located within such regional or local geographic area. This alternative attribution method will be permitted only upon the condition that such receipts are not double counted or otherwise included in the numerator of any other state.

(iv) In the event that the purchaser or subscriber is the United States Government or that the taxpayer is not taxable in a state, the gross receipts from all sources, including the receipts from the sale of printed material, from advertising and from the sale, rental or other use of the taxpayer's customer's lists, or any portion thereof that would have been attributed by the circulation factor to the numerator of the sales factor for such state, will be included in the numerator of the sales factor of this state if the printed material or other property is shipped from an office, store, warehouse, factory, or other place of storage or business in this state.

History

Statutory/Other Authority: ORS 305.100 & 314.667
Statutes/Other Implemented: ORS 314.667
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.667-(A), REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
Renumbered from 150-314.670-(A), REV 5-2016, f. & cert. ef. 7-1-16
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-314-0460 Apportionment of Net Loss

(1) When a corporation or consolidated group of corporations is taxable both within and without this state, their Oregon net loss must be computed using the apportionment provisions in ORS 314.280, or 314.610 through 314.667.

(2) If a corporation filed a combined return (prior to 1986) or a separate (not consolidated) return in the year of the loss, and files a consolidated return in the year to which the loss is carried, the net loss deduction may be limited. The allowable net loss deduction cannot exceed the Oregon net income attributed to the corporation with the net loss carryover. For the purpose of determining the net loss deduction allowable, the consolidated Oregon net income must be attributed to the corporation based on its share of the Oregon apportionment percentage. The following example demonstrates the application of this section: [Example not included. See ED NOTE].

(3) If a corporation was included in a consolidated return in the year of the net loss and now files a separate return, or is included in a different consolidated return in the year to which the net loss is carried, the consolidated Oregon net loss must be apportioned to the corporations included in the net loss return for purposes of determining the allowable net loss carryover. The consolidated Oregon net loss must be apportioned to the corporations with taxable activities in Oregon, based upon their Oregon apportionment percentages. The net losses computed can be carried forward and deducted in subsequent years’ returns (subject to the carryover limitations specified in OAR 150-317-0460. The following example demonstrates the application of this section: [Example not included. See ED NOTE].

(4) Net losses that are attributed to corporations which continue to be included in the same consolidated Oregon return can be deducted fully against the Oregon consolidated net income. [Example not included. See ED NOTE].

(5) Paragraphs (2), (3) and (4) of this rule apply to Oregon net losses carried forward and deducted in tax years beginning on or after January 1, 1986.

(6) The net loss carryover to a consolidated return when the loss is from a separate return of a prior year in which the taxpayer should have filed a combined or consolidated return must be recalculated as if the taxpayer had filed a combined or consolidated return.

Example: Corporation A reported a loss in 1999 on a separate return. Corporation A should have filed a consolidated return with Corporation B in 1999 A 1999 consolidated return would have resulted in net income. The net loss carryover for Corporation A from 1999 is zero.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.675
REV 43-2017, f. & cert. ef. 8-2-17
Renumbered from 150-314.675, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
1-65

Or. Admin. R. 150-314-0465 Sales Factor for Interstate Broadcasters

This rule applies to tax years beginning before January 1, 2014.

(1) In general, if a taxpayer broadcasts to subscribers or to an audience that is located both within and without this state and the broadcaster is taxable in another state under the provisions of ORS 314.620, then the interstate broadcaster is required to use an audience factor to determine the amount of gross receipts from broadcasting attributable to this state.

(2) The audience factor for television, radio, or network programming shall be determined by the ratio that the taxpayer’s in-state viewing or listening audience bears to its total United States viewing or listening audience. In the case of television, the audience factor shall be determined by reference to the rating statistics as reflected in such sources as Arbitron, Nielsen or other comparable resources or by the average circulation statistics published annually in the Television and Cable Factbook, “Stations Volume” by Television Digest, Inc., Washington, D.C., provided that the source selected is consistently used from year to year for such purpose. In the case of radio, the audience factor shall be determined by reference to rating statistics as reflected in such sources as Arbitron, Birch/Scarborough Research, or other comparable resources, provided that the source selected is consistently used from year to year for such purpose.

(3) If none of the forgoing sources are available, or if available, none is in form or content sufficient for such purposes, then the audience factor shall be determined by the ratio that the population of the broadcast area located within this state bears to the population of the broadcast area in all states.

(4) Gross receipts from live telecasts and films in release to or by a cable television system shall be attributed to this state in the ratio (hereafter “audience factor”) that the number of subscribers located in this state for such cable television system bears to the total number of subscribers of such cable television system in the United States. If the number of subscribers cannot be accurately determined from the records maintained by the taxpayer, the audience factor ratio shall be determined on the basis of the applicable year’s subscription statistics published in Cable Vision, International Thompson Communications, Inc., Denver, Colorado, if available, or, if not available, by other published market surveys.

(5) If none of the foregoing resources are available, or, if available, none is in form or content sufficient for such purposes, then the audience factor shall be determined by the ratio that the population of the area served by the cable system service located within this state bears to the population of the area served by the cable system in all states in which the cable system has subscribers.

(6) To the extent that the gross receipts from such live television broadcasting, film, or radio programming, as determined pursuant to paragraphs (2) through (5), include receipts derived from broadcasts to audiences located outside the United States (“foreign-based receipts”), the total gross receipts against which the audience factor shall be applied shall be modified so that such foreign-based receipts are not used to affect the amount of receipts that are to be apportioned to the state. Such modification shall consist of deducting from total receipts, prior to the application thereto of the audience factor, that amount of receipts derived from broadcasts to audiences located outside the United States.

(7) Receipts from the sale, rental, licensing or other disposition of audio or video cassettes, discs, or similar medium intended for home viewing or listening shall be included in the sales factor as provided in OAR 150-314-0429 and 150-314-0431.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.684
REV 1-2022, amend filed 01/24/2022, effective 01/24/2022
Renumbered from 150-314.684(4), REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-314-0466 Definition of Programming and Subscription Services

(1) For purposes of Oregon Laws 2021, Chapter 74, Section 2(1)(a), broadcasting sales result from the transmission of programming in the course of “broadcasting” as defined by Oregon Laws 2021, Chapter 74, Section 2(1)(a).

(2) Programming, as used by Oregon Laws 2021, Chapter 74, Section 2(1)(a), means one (1) or more performance, event, or production, or segments of performances, events, or productions, intended to be distributed for visual and/or auditory perception, including, but not limited to, news, entertainment, sporting events, plays, stories, or other literary, commercial, educational, or artistic works.

(3) A subscription service, for purposes of Oregon Laws 2021, Chapter 74, Section 2(3), means a service provided by a cable service provider, a direct broadcast satellite system, an internet content distributor or any other distributor that charges viewers for access to any programming.

(4) The election allowed under Oregon Laws 2021, Chapter 74, Section 2(4) is available to any taxpayer with any broadcasting sales.

(5) The provisions of this rule apply to tax years beginning on or after January 1, 2020.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.605 - 314.675
REV 19-2021, adopt filed 12/16/2021, effective 01/01/2022

Or. Admin. R. 150-314-0470 Interstate Broadcasters: Net Income Attributable to this State

(1) The allocation and apportionment provisions in ORS 314.610 to 314.667 as modified by ORS 314.684, are required for interstate broadcasters unless the application of those provisions does not fairly and accurately reflect the extent of the taxpayer’s business activities in this state. The burden is on the taxpayer to show that the allocation and apportionment provisions do not fairly and accurately reflect their activities within the state.

(2) If the application of the allocation and apportionment provisions do not fairly and accurately reflect the extent of the taxpayer’s business activities in this state, Oregon net income shall be computed using segregated accounting.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.686
Renumbered from 150-314.686, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-314-0475 Consistent Treatment of Partnership Items

(1) General Rule.

(a) In general, the treatment of a partnership item on the partner’s return must be consistent with the treatment of that item by the partnership in all respects including the amount, timing, and characterization of the item. The following examples illustrate instances of inconsistent treatment:

Example 1: B is a partner of Partnership P. Both B and P use the calendar year as the taxable year. In December 1993, P receives an advance payment for services to be performed in 1994 and reports this amount as income for calendar year 1993. However, B reports B’s distributive share of that amount on B’s income tax return for 1994 and not on B’s return for 1993. B’s treatment of this partnership item is inconsistent with the treatment of the item by P.

Example 2: Partnership P incurred certain start-up costs before P was actively engaged in business. P capitalized these costs. C, a partner in P, deducted C’s proportionate share of these start-up costs. C’s treatment of the partnership expenditure is inconsistent with the treatment of the item by P.

(b) If a partner does not treat a partnership item on the partner’s return in a manner that is consistent with the treatment of that item by the partnership, and the partner does not notify the department in the manner described in section (2) of this rule, the department may conform the partner’s return to the partnership return and assert against the partner a deficiency as described in ORS 305.265. The notice of deficiency may be issued in this case without the department opening a formal examination or an audit of either the partnership return or the partner’s return.

(c) Partner notification of an inconsistent treatment of a partnership item does not bind the department into acceptance of the partner’s treatment of that item.

(2) Manner of Notification of Inconsistency. If a partner does not treat a partnership item on the partner’s return in a manner that is consistent with the treatment of that item by the partnership, the partner must notify the department of the inconsistent treatment. Such notification shall be made by attaching a statement to the partner’s return. The statement must contain the following information:

(a) Partner name and identification number;

(b) Partnership name and identification number;

(d) Beginning and ending date of partnership’s tax year;

(e) A description of each inconsistently treated item. Include whether the inconsistent treatment is in the amount, timing or characterization of the item;

(f) The amount of each inconsistent item as shown on Schedule K-1;

(g) The amount of each inconsistent item as reported on the partner’s return;

(h) A complete explanation as to the reason for treating the items in an inconsistent manner.

(3) Multiple Inconsistencies. A partner who reports the inconsistent treatment of partnership items on the partner’s return is protected from computational adjustments under section (1) of this rule only with respect to those partnership items the inconsistent treatment of which is reported. Thus, if a partner notifying the department with respect to one item fails to report the inconsistent treatment of another item, the partner is subject to a computational adjustment with respect to that latter item.

Example: Partner A of Partnership P treats a deduction and a capital gain arising from P and A’s return in a manner that is inconsistent with the treatment of those items by P. A reports the inconsistent treatment of the deduction but not of the capital gain. A is subject to a computational adjustment under section (1) of this rule with respect to the capital gain.

(4) Adjustments Not Limited. If the department conducts a formal examination or audit of a return of a partner whose partnership items have been reported as being treated inconsistently, the department is not limited to making adjustments that merely conform the partner’s return to the partnership return.

Example: Partnership P allocates to E, one of its partners, a loss of $8,000. E. however, claims a loss of $9,000 and reports the inconsistent treatment. As a result of an examination of E’s return, the department may issue a deficiency notice which could include reducing the loss to $3,000.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.714
Renumbered from 150-314.714(3), REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-314-0480 Publicly Traded Partnerships Taxed as Corporations

(1) “Publicly traded partnership” means a partnership with interests traded on an established securities market or readily tradable on a secondary market (or its substantial equivalent), including master limited partnerships, under the provisions of IRC 7704. Oregon adopted the provisions of IRC 7704 retroactively.

(2) Publicly traded partnerships deriving less than 90 percent of their gross income from qualifying passive-type income sources are treated as corporations for federal and Oregon tax purposes. Examples of qualifying income sources include interest, dividends, real property rents, gain from the disposition of real property, mining and natural resource income, and gain from the disposition of capital assets or IRC 1231(b) property held for the production of such income.

(3) A publicly traded partnership that was not an existing partnership on December 17, 1987, shall be treated as a corporation for tax years beginning after December 31, 1987.

(4) A publicly traded partnership that was an existing partnership on December 17, 1987, shall be treated as a corporation for tax years beginning after December 31, 1997.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.722
Renumbered from 150-314.722, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-314-0485 Partnership Information Returns

(1) Partnership required to file. A partnership must file for Oregon an information return of its business activity and include other information as required by section (2) of this rule if the partnership:

(a) Has income that is derived from or connected with sources within Oregon; or

(b) Has one or more Oregon resident partners during the taxable year of the partnership.

(2) Information Required. Every partnership required to file a return under section (1) of this rule must file with Oregon:

(a) An Oregon Form OR-65 (Oregon Partnership Return of Income).

(b) An Oregon Depreciation Schedule if Oregon depreciation is different than federal.

(c) A copy of federal Form 1065 (U.S. Partnership Return of Income) or federal Form 1065-B (U.S. Return of Income for Electing Large Partnerships) and all attachments filed for federal. See section (3) for information regarding the submission of federal Schedule K-1s (Partner’s Share of Income, Credits, Deductions, etc.).

(d) A schedule showing the disposition of all assets and liabilities if this is the final return of a terminated partnership. The schedule must include each asset’s Oregon adjusted basis and fair market value.

(3) Federal Schedule K-1.

(a) The partnership must include a copy of each partner’s federal Schedule K-1 if any of the following occurs during the partnership’s taxable year:

(A) The partnership incurs a net loss (including capital losses or passive losses);

(B) There are changes to either the ownership structure or the profit/loss sharing percentages of the partnership; or

(C) Any Oregon modifications or amounts shown on the federal Schedule K (including guaranteed payments) are not divided according to each partner’s partnership share of profits and losses.

(b) Exception. Partnerships that have no income connected with or derived from sources within Oregon and have no activity within Oregon must file a copy of the partner’s federal Schedule K-1 only when:

(A) The partner was an Oregon resident partner at some time during the taxable year of the partnership; and

(B) Any of the situations described in paragraph (3)(a) occur. All other filing requirements of section (2) of this rule must still be satisfied.

(c) Substitute Schedule K-1. If the number of Schedule K-1s required to be included with the Oregon return exceeds ten, the partnership must include a summary of partner information in lieu of submitting each partner’s Schedule K-1. The summary must include each partner’s name, social security number or federal identification number, address, and profit/loss sharing percentage.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.724
REV 85-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-314.724, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-314-0487 Partnership Penalty

(1) A penalty is assessable against a partnership that transacts business in Oregon, but fails to timely file a partnership return (including extensions) or fails to show the required information as defined in ORS 314.724. Under ORS 305.229, a penalty will not be imposed unless the partnership fails to file or to supply required filing information after requested in writing by the department to do so.

(2) The penalty is $50 per month or part of a month that the partnership return is late or incomplete up to a maximum of five months. The penalty amount is multiplied by the total number of partners in the partnership during any part of the tax year for which the return is due. Although the penalty is assessed against the partnership each partner is individually liable for the penalty to the extent that the partner is liable for partnership debts generally.

Example 1: A partnership return for 2006 is due April 17, 2007. However, the return is not filed until July 3, 2007. No penalty will be assessed even though the partnership return is filed late.

Example 2: A partnership return for 2006 is due April 17, 2007. After written requests to file by the department, the partnership still does not file a return. The partnership has one general partner and three limited partners. Penalty will be assessed for failure to file a return. The penalty computation is shown below:

$50 - 5 months - 4 partners = $1,000 penalty

(3) The penalty described above is in addition to any other penalty provided by law. Any partnership assessed with this penalty may appeal to the director as provided in ORS 305.275.

(4) The department may waive all or any part of the penalty if the partnership can show that there was a circumstance beyond the partnership’s control that caused the failure to file a complete or timely return. See OAR 150-305-0068.

[ED. NOTE: Computations referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.724
Renumbered from 150-314.724(3), REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-316.467
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-314-0495 Corporation Tax Credits — Converting a C Corporation to an S Corporation

Tax credits carried forward from a tax year of C corporation status are only available to offset corporate tax liabilities when S corporation status is elected. They are not available for pass through to S corporation shareholders. In addition, Oregon corporate taxes attributable to an S corporation’s built-in gains or C corporation taxes following termination of S corporation status can be offset by such carryover credits. S corporation taxes attributable to excess net passive investment income cannot be offset by carryover credits.

Example: Corporation Z is a C corporation in 1988 with a $6,000 tax liability. Corporation Z qualifies for a $7,000 tax credit for investment in a dependent care facility. The $1,000 unused tax credit is carried forward to 1989. Corporation Z elects to be an S corporation in 1989 and has a corporate tax liability of $5,000 from built-in gains. Corporation Z shall offset its tax with the $1,000 credit carry forward. The credit carry forward is not available for pass through to the shareholders.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.732
Renumbered from 150-314.732(2)(c), REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-314-0497 Corporation Tax Credits — Converting an S Corporation to a C Corporation

Tax credits passed through to shareholders and not used entirely to offset the shareholders’ tax liabilities in the year of pass-through shall be carried forward by the shareholders. Such unused credits may not offset corporation tax liabilities in future years when C corporation status has been elected.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.732
Renumbered from 150-314.732(2)(d), REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-314-0510 Definitions for Composite Tax Returns and Pass-through Entity Withholding

The following definitions apply for purposes of ORS 314.775 to 314.784, this rule, and OAR 150-314-0515 to 150-314-0525:

(1) “Apportionable income” means apportionable income as defined in ORS 314.610(1).

(2) “Corporate owner” is an owner that is a corporation taxed under ORS chapter 317 or 318.

(3) “Disregarded entity” is an entity that is not recognized as a separate entity for income tax purposes such that all items related to the entity are reported on the owner’s income tax return. Examples of disregarded entities are:

(a) Single member limited liability company (LLC) that does not elect to be classified as an association under Treasury Regulation section 301.7701-2, and

(b) Grantor trusts.

(4) "Distributive income" means the net amount of income, gain, deduction, or loss of a pass-through entity (PTE) for the tax year of the PTE and includes those items directly related to the PTE that are considered in determining the federal taxable income of the owner or, in the case of an owner that is a corporation, would be included in its federal taxable income if the corporation were an individual.

(5) "Electing owner" means a nonresident owner that elects to participate in an Oregon composite tax return filed by a pass-through entity. When a disregarded entity owns an interest in the PTE, the “owner” refers to the owner of the disregarded entity.

(6) "Modified distributive income" means the PTE’s distributive income as defined in section (4) of this rule, with the modifications provided in ORS chapter 316 and other Oregon law that directly relate to those items taken into consideration by the PTE in arriving at its distributive income. Such modifications include, but are not limited to, any Oregon modification necessary for depreciation, depletion, or gain or loss on the sale of depreciable property, and any modification for federal tax credits, and do not include the federal tax subtraction, itemized deductions, and the Oregon standard deduction. Guaranteed payments are treated as an apportionable income component of the PTE's distributive income and attributed directly to the owner receiving the payment.

(7) "Oregon-source distributive income" means the portion of the PTE's modified distributive income that is derived from or connected with Oregon sources. For PTEs operating in Oregon and one or more other states, Oregon-source distributive income is determined by attributing to Oregon sources that portion of the modified distributive income of the PTE, as defined in section (6) of this rule, determined in accordance with the allocation and apportionment provisions of ORS 314.280 or ORS 314.610 to 314.675.

(8) "PTE" means any entity that is recognized as a separate entity for federal income tax purposes, for which the owners are required to report income, gains, losses, deductions, or credits from the entity for federal income tax purposes. Examples include:

(a) A partnership;

(b) An S corporation;

(d) A trust that has been established or maintained primarily for tax avoidance purposes, including: an abusive tax shelter as defined in ORS 314.402, an entity subject to a penalty for promoting an abusive tax shelter under IRC section 6700, and a tax shelter as defined under IRC section 6662 and related Treasury regulations.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.775 & 314.778
REV 14-2019, amend filed 12/13/2019, effective 01/01/2020
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-314.775, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10
REV 2-2006, f. & cert. ef. 7-31-06, Renumbered from 150-2005 OL, Ch. 387
REV 3-2005, f. 12-30-05, cert. ef 1-1-06

Or. Admin. R. 150-314-0515 Oregon Composite Tax Return

(1) A pass-through entity (PTE) doing business in or deriving income from sources within this state is required to file an Oregon composite tax return if requested by one or more nonresident owners.

(a) Computation of tax. Each PTE filing a composite return on behalf of electing nonresident owners must calculate the tax for each owner. The tax liability for each nonresident owner included on the composite return, determined without regard to the tax credits allowed under subsection (1)(b) of this rule, is calculated by applying the Oregon tax rates based on the owner's filing status to the difference between the owner's share of the entity's Oregon-source distributive income for the taxable year and, if applicable, the owner's self-employment tax deduction, as provided for in subsection (1)(b) of this rule. If distributive income is apportioned, the deduction must also be apportioned by multiplying the owner's federal deduction for one-half self-employment tax (attributable to the owner's share of the entity's net earnings from self-employment), if applicable, by the apportionment percentage provided in ORS 314.650 through 314.675. The PTE will report on the Oregon composite return the tax computed for each electing owner and total amounts for all electing owners.

(b) Credits and deductions. Below is a list of items that may or may not be allowed for the electing owners. [See PDF link below]

(c) Net operating losses for Oregon nonresidents subject to tax under ORS chapter 316 are computed under ORS 316.028. A PTE that has filed an Oregon composite tax return on behalf of nonresident individual owners may file amended returns to carry back the Oregon net operating losses incurred by the PTE. A schedule must be retained by the PTE indicating the taxpayers affected and calculations of the loss amounts and made available to the department upon request. These losses may also be carried forward. The allowed carryback and carryforward periods (including elections to forego the carryback period) are the same as provided under Internal Revenue Code section 172. The election to forego the carryback period must be made by attaching a statement to the Oregon composite return filed on or before the due date (including extensions) of the return for the loss year. Corporations are not allowed to carry back a net operating loss (ORS 317.476).

(2) Election to participate in an Oregon composite tax return. The following provisions apply:

(a) The owner must make a separate election for each tax year;

(b) The owner must have been a nonresident of Oregon during the owner's entire tax year;

(c) The owner is considered to have made the election on the date the PTE files the composite return that includes the owner;

(d) By making the election, the owner elects to have the owner's Oregon tax liability on the owner’s share of distributive income from Oregon sources paid and reported by the PTE;

(e) The owner is ultimately liable for tax, penalty and interest if the PTE fails to file a composite tax return or pay the tax on behalf of the owner; and

(f) The election to participate in an Oregon composite tax return is irrevocable after the due date of the composite return, including extensions.

(3)(a) Disregarded entities. The PTE must look to the owner of a disregarded entity to determine whether the owner of the disregarded entity may choose to join in the composite filing.

(b) Corporate owners.

(A) A corporate owner’s distributive income may be included in a composite return only when its distributive share is not required to be included in the corporate owner’s apportionable income. A PTE filing a composite return should assume a corporate owner’s distributive share is required to be included in the corporate owner’s apportionable income unless the corporate owner notifies the PTE in writing that it is not.

(B) If it is determined by the department that the corporate owner’s distributive share should be included in the corporation’s apportionable income, the corporate owner’s election to be included in the composite return is invalid. The corporate owner must notify the PTE, and the PTE may file an amended composite return for a refund of tax that was paid on the corporate owner’s distributive share included in the composite return subject to the limitations provided in ORS 314.415. The PTE may file a transfer request to move the tax paid for the corporate owner to the owner’s account instead of having the tax refunded to the PTE. In the absence of the amended return, the department may adjust the composite return subject to the limitations provided in ORS 314.415.

(C) The PTE must include an indirect corporate owner’s share of distributive income in the composite return unless the PTE can reasonably determine that the indirect corporate owner’s share of income is required to be included in the indirect corporate owner’s apportionable income.

(D) Income includable in an indirect corporate owner’s apportionable income may be considered as reasonably determined if the PTE has received written notice from the indirect corporate owner that the indirect corporate owner’s distributive share of income is required to be included in the indirect corporate owner’s apportionable income.

(4) Filing and payment requirements.

(a) Due date. The Oregon composite tax return is due the 15th day of the fourth month after the close of the tax year of the majority of the number of electing owners.

(b) Payment of amounts due. Payment of the amount due is made by the PTE on the owner's behalf and must accompany the filing of the Oregon composite tax return. The payment must include the tax due plus any penalty or interest provided by Oregon law.

(c) Refund of tax made pursuant to a composite return filed after the due date, including extensions and filed under these provisions will be paid to the PTE, except as provided in Section 5, regardless of changes in ownership or changes in the identity of nonresidents participating in an Oregon composite filing.

(d) Extensions of time to file. If the entity is granted a federal or Oregon extension of time to file the entity's return (partnership return or S corporation return), an extension for filing the Oregon composite return is allowed. This is true even if the composite return reports the income in a different tax year than the entity’s partnership or S corporation return. The entity must keep a copy of the federal extension with its tax records. The extension to file the composite return is 6 months from the composite return due date.

(e) A nonresident owner may file a separate tax return and elect to join in the filing of a composite return. The income reported on the composite return is subtracted on the owner’s separate return and tax is paid only on the Oregon-source income not reported on the composite return.

(5) Ineligibility or revoking an election to participate in a composite return.

(a) One or more owners may revoke the election to join in the Oregon composite tax return after the Oregon composite tax return has been filed and before the due date of the composite return, including extensions. To revoke a previous election and transfer tax paid:

(A) Upon notification of the revocation, the PTE must file an amended Oregon composite return removing the owner and request a transfer of any payment made on the owner’s behalf to the revoking owner’s account, and

(B) The revoking owner must file a separate return with the department showing all items of income and deduction from the PTE. If the owner did not previously file a return for the year, this separate return will be treated as an original return and, if filed after the due date, any tax liability shown on the return is subject to interest and penalties in the same manner as any other delinquently filed original return.

(b) If an owner becomes ineligible, revokes an election before the due date of the return, including extensions, or declines to participate in filing an Oregon composite return, and the PTE made tax payments on the owner's behalf with a composite return, the PTE may submit a written transfer request using forms and instructions provided by the department. The department will transfer the tax payment to the account of the owner only if the PTE submits such a written request to the department.

(c) An owner who does not or cannot elect to participate in an Oregon composite tax return is subject to withholding on the owner's share of the Oregon source distributive income under ORS 314.781 and OAR 150-314-0520.

(6) Payment of tax on behalf of nonresident owners. Estimated tax payments are required for the composite return if the total Oregon tax due for any owner is expected to be $1,000 or more for an individual; or $500 or more for a corporation. The tax liability required to be paid is the sum of each owner's estimated tax liability for that quarter that is attributable to each owner's interest in the entity. In determining the electing owner's tax liability, the provisions of ORS 314.505 to 314.525 or 316.579 to 316.589 regarding calculation of estimated tax apply. The PTE must remit the tax payments to the department using forms and instructions provided by the department.

[Publications: Publications referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.778
REV 35-2022, amend filed 12/28/2022, effective 01/01/2023
REV 14-2019, amend filed 12/13/2019, effective 01/01/2020
Renumbered from 150-314.778, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-314-0520 Pass-through Entity Withholding Requirements

(1) Withholding requirement. A pass-through entity with Oregon-source distributive income and one or more nonresident owners that have no other Oregon-source income, is required to withhold tax on behalf of the owner unless that owner makes an election as described in OAR 150-314-0515, the pass-through entity elects to pay the pass-through entity elective tax, or meets an exception described in 150-314-0525. “Tax payment” or “owner payment” means pass-through entity withholding, which is an estimated tax payment sent on behalf of the owner. The entity must withhold tax as follows:

(a) For nonelecting owners subject to tax under ORS Chapter 316, each owner's share of estimated Oregon-source distributive income for the taxable year multiplied by the highest percent in 316.037; and

(b) For nonelecting owners subject to tax under ORS Chapter 317 or 318, each owner's share of estimated Oregon-source distributive income for the taxable year multiplied by the rates in 317.061.

(2) Information retention requirement. The pass-through entity must retain in its records the information listed in this section and submit it to the Department of Revenue on request:

(a) Calculation of the amount required to be withheld pursuant to this rule;

(b) Whether payments were submitted in addition to the quarterly withholding tax amounts required to be remitted under section (4) of this rule; and

(c) A detailed summary of the nonelecting owner's share of the aggregate withholding tax payments made by the pass-through entity for the taxable year and the nonelecting owner's share of the aggregate additional withholding tax liability paid. See the annual report requirement in section (5) of this rule.

(3) Information reporting to owner requirement. The pass-through entity, by the due date of its information return, must provide each applicable nonelecting owner with an information statement containing the owner's share of the entity's withholding tax payments to be claimed as estimated tax payments on the owner’s tax return.

(4) Periodic remittance requirement.

(a) The entity must remit amounts required to be withheld to the department on a quarterly basis using a method approved by the department. The quarterly withholding tax remittance amounts are generally the sum of:

(A) The highest marginal tax rate for the end of the entity’s tax year in ORS 316.037 multiplied by the sum of the noncorporate nonelecting owner's estimated share of the entity's Oregon-source distributive income and then multiplied by 25 percent; and

(B) The applicable rate in ORS 317.061 multiplied by the sum of the corporate nonelecting owner's estimated share of the entity's Oregon-source distributive income and then multiplied by 25 percent.

(b) The due dates of these required payments are the 15th day of the 4th, 6th, 9th, and 12th month of the entity’s tax year. Due dates are moved to the next business day when they occur on a weekend or legal holiday. Exception: Fiscal year entities whose owners are all noncorporate taxpayers using a calendar tax year can elect to use the due dates for the owners’ calendar tax year instead. This is the 15th day of the 4th, 6th, and 9th month of the tax year and the 1st month of the succeeding tax year for the calendar year containing the entity’s fiscal year end.

(5) Annual report requirement. For estimated tax payments due on or after January 1, 2013, the entity will submit an annual report. The report is due the last day of the second month following the close of the entity’s tax year. The report will have the following information for each owner included in the pass-through entity withholding payments: owner’s name, owner’s federal tax identification number, owner’s mailing address, owner’s share of each payment made on the owner’s behalf, and any additional information requested by the department in the filing instructions. The department may request other information as needed. The owners will not receive credit for payments made on their behalf until the annual report has been filed by the entity.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.781
REV 35-2022, amend filed 12/28/2022, effective 01/01/2023
Renumbered from 150-314.781, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2013, f. & cert. ef. 3-28-13
REV 9-2012, f. 12-18-12, cert. ef. 1-1-13
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-314-0521 Pass-through entity elective tax: Estimated tax; interest on underpayment of estimated tax; waiver of underpayment interest for individual members.

(1) Definitions.

(a) “PTE-E tax” means the pass-through entity elective tax that may be paid by an electing pass-through entity pursuant to 2021 Oregon Laws Chapter 589, as amended by 2022 Oregon Laws Chapter 82.

(b) “Electing entity” means a pass-through entity that elects or plans to elect to pay the PTE-E tax.

(c) “Distributive income” means the income of an electing entity from Oregon sources that will be distributed to members and used to calculate the PTE-E tax.

(d) “Calendar year” means a twelve-month year beginning on January 1 and ending on December 31.

(e) “Tax year” means the twelve-month year that an electing entity uses for accounting purposes. A tax year may be a calendar year or a year that ends in a month other than December.

(f) “Required annual payment” means the total amount of required estimated PTE-E tax to be paid by an electing entity for the tax year for which an election will be made.

(g) “Required installment payment” means the amount of the payment that is due for each of the four payment periods for the calendar year for which the election will be made.

(h) “Installment period” means the portion of the tax year consisting of the following months:

(A) The first installment period consists of the first three months of the tax year.

(B) The second installment period consists of the fourth and fifth months of the tax year.

(D) The fourth installment period consists of the ninth, tenth, eleventh, and twelfth months of the tax year.

(i) “Payment period” means the portion of the calendar year consisting of the following months:

(A) The first payment period is January, February, and March.

(B) The second payment period is April and May.

(D) The fourth payment period is September, October, November, and December.

(j) “Underpayment” means the excess of the required installment amount over the amount paid on or before the due date for that installment.

(k) “Underpayment period” means the period of time that runs from the date a required installment payment was due to the earlier of the due date of the PTE-E tax return (without extensions) or, with respect to any portion of the underpayment, the date the underpaid amount is paid.

(2) Electing entities must make payments of estimated PTE-E tax if the tax to be shown on the electing entity’s return will be $1,000 or more.

(3) The due dates for making estimated payments of PTE-E tax are the same as the due dates for making estimated payments of personal income tax under ORS 316.579(2), for the calendar year for which the election will be made.

(4) The amount of estimated PTE-E tax to be paid is calculated using the sum of the electing entity’s distributive proceeds from Oregon sources for the tax year that ends during the calendar year for which the election will be made.

(5) To determine the amount of estimated PTE-E tax to be paid, the electing entity must first determine the required annual payment, then determine the amount of the required installment payments.

(a) The required annual payment is the lesser of:

(A) Ninety percent of the PTE-E tax shown on the return for the calendar year for which the election is made; or

(B) One hundred percent of the tax shown on the electing entity’s PTE-E tax return for the prior year, if the election to pay PTE-E tax was made for the prior calendar year and the prior tax year consisted of 12 months.

(b) The required installment payment amount is the lesser of the amounts determined using the regular installment method or the annualized income installment method.

(A) Regular installment method: Each regular installment payment is 25 percent of the required annual payment.

(B) Annualized income installment method: The required annualized income installment payment is the “applicable percentage” of the required annual payment, minus the amount of any required installments for prior periods of the same year. The applicable percentages are:

(i) 22.5 percent for the first installment period;

(ii) 45 percent for the first and second installment periods;

(iii) 67.5 percent for the first, second, and third installment periods; and

(iv) 90 percent for the first through fourth installment periods.

(c) If an electing entity uses the annualized income installment method to determine a required installment payment, the difference between that amount and the amount that would have been due if the regular installment method had been used must be added to the regular installment payment for the subsequent period.

(6) An electing entity that uses a tax year other than a calendar year for accounting purposes calculates the required annual payment and required installment payments using the installment periods of its tax year.

(7) Interest on an underpayment of estimated tax will accrue at the rate established under ORS 305.220 on any unpaid portion of a required installment payment for the underpayment period.

(8) Estimated tax payments may be refunded upon request by an electing entity that makes one or more estimated PTE-E tax payments but ultimately does not elect to be liable for and pay the PTE-E tax. The refund request shall contain information and be in the form prescribed by the Department of Revenue.

(9) Interest shall be computed at the rate established under ORS 305.220 on a refund of estimated PTE-E tax payments starting 45 days after the date the return or request for refund is filed, or 45 days after the due date of the return (without extension), whichever is later.

(10) If an electing entity pays at least 90 percent of the tax shown on the PTE-E tax return before the return is filed, an individual member of the electing entity (or of an entity that is a member of the electing entity) who does not make estimated payments of personal income tax on the member’s share of distributive proceeds from the electing entity may request that interest on such underpayment be waived in the manner prescribed by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 2021 Oregon Laws ch. 589 & 2022 Oregon Laws ch. 82 § 4
REV 35-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-314-0522 Pass-through entity elective tax: Electing entities using a fiscal year; when addition and credit claimed by member.

(1) The pass-through entity elective tax (PTE-E tax) program is available on a calendar-year basis for tax years beginning on or after January 1, 2022 and before January 1, 2026.

(2) Partnerships and S corporations (and limited liability companies (LLCs) electing to be taxed as partnerships or S corporations) that use a fiscal year other than a calendar year for accounting purposes under section 441 of the Internal Revenue Code may elect to be liable for and pay the PTE-E tax for the calendar year that includes the last day of the electing entity’s fiscal year, provided that the electing entity’s fiscal year begins on or after January 1, 2022 but before January 1, 2026.

(3) A personal income taxpayer who is a member of an electing entity, or of an entity that is a member of an electing entity, will report the taxpayer’s distributive share of the following items on the personal income tax return filed for the tax year of the taxpayer that includes the last day of the electing entity’s fiscal year:

(a) The addition for PTE tax deducted under section 164 of the Internal Revenue Code on a federal return filed by the electing entity for the entity’s fiscal year.

(b) The credit against tax due under ORS chapter 316 for the PTE-E tax paid by the electing entity for the calendar year for which it makes the election.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 2021 Oregon Laws ch. 589 & 2022 Oregon Laws ch. 82 § 3
REV 24-2023, amend filed 12/26/2023, effective 01/01/2024
REV 35-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-314-0525 Exceptions to Pass-through Entity Withholding Requirements

(1) A pass-through entity may be required to withhold tax on behalf of an owner unless the owner makes an election as described in OAR 150-314-0515 or meets an exception described in this rule.

(2) A pass-through entity is not required to withhold income taxes for an owner if:

(a) The owner is an electing owner as defined in OAR 150-314-0510;

(b) The owner's share of Oregon-source distributive income from the entity is less than $1,000;

(c) The owner made estimated tax payments the prior tax year based on the owner's share of Oregon-source distributive income from the entity and continues to make estimated tax payments for the current tax year;

(d) The entity is a publicly traded partnership, as defined in Internal Revenue Code section 7704(b), that:

(A) Is treated as a partnership for federal tax purposes; and

(B) Files an annual information report including the nonresident's name, address, social security number or taxpayer identification number, ownership percentage, and share of the federal income; or

(e) The owner files with the Department of Revenue a signed affidavit that contains:

(A) The owner's name, address, and social security number or tax identification number (i.e. federal employer identification number or Oregon business identification number);

(B) The entity's name and tax identification number;

(D) A statement that the owner agrees to file the owner's Oregon income or excise tax return and make timely payments of all taxes imposed with respect to the owner's share of the Oregon income of the entity; and

(E) Acknowledgement that the owner is subject to the jurisdiction of the State of Oregon for purposes of collection of unpaid income tax, penalties, and interest.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.784
Renumbered from 150-314.784, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-314-0530 Divulging Particulars of Returns and Reports Prohibited

(1) This section applies generally to deputies, agents, officers, or other employees of the Department of Revenue. Disclosure of information from a taxpayer’s filed return or report to a third person is prohibited under this statute, it being essential to encourage voluntary reporting and payment of taxes and to assure taxpayers that they will not suffer any adverse consequences of being frank and honest on their return. Other persons or entities having acquired information disclosed in a taxpayer’s filed return or report pursuant to ORS 314.840(2) are bound by the same rules of secrecy under this section as any member of the Department of Revenue and are subject to the same penalties for violation of 314.835.

(2) Except as provided by ORS 314.840, it is illegal to divulge in any manner any particular set forth or disclosed in any report or return filed with the department in compliance with any law imposing a tax upon or measured by net income. Penalties are those provided in ORS 314.991. The meaning of “any particular” must be interpreted in its broadest concept to include, but not necessarily limited to, such items as the taxpayer’s name, address, telephone number, any item or amount of income, deductions, refund amount, amount due, any information entering into the computation of tax, including the tax itself, or any credit or debit card number, card expiration date, personal identification number, password, bank account number and routing number if that information was obtained from a report or return to which ORS 314.835(1) applies.

(3) The disclosure of information from a report includes not only such reports as are required to be filed with the individual’s return, but any report required under a law imposing a tax upon or measured by gross or net income, such as quarterly and reconciliation withholding reports filed by employers. Any information obtained from sources not covered by the prohibitions of ORS 314.835 or any other confidentiality provision in any law administered by the department may be released at the department’s discretion, provided the information requested is necessary and is to be used for lawful purposes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.835
Renumbered from 150-314.835, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
12-19-75
11-73
11-71

Or. Admin. R. 150-314-0535 Information That May Be Furnished

(1) Definitions. For purposes of ORS 314.840 and this rule:

(a) "Taxpayer," includes:

(A) The executor or personal representative of a decedent's estate or a person who is appointed or authorized by law to pay the taxes of a decedent, and a trustee or other person who, by law, must pay the income taxes of a trust, and

(B) Any entity required to file a return with the department.

(b) An "authorized representative" is a person authorized to represent the taxpayer under ORS 305.230 and any of its related administrative rules.

(c) A "designee" is a person, firm, organization, or agency designated by a taxpayer to receive the taxpayer's confidential information. For entities, designations are to be made by an individual authorized by law to act for the entity.

(2) As permitted by law, the department may disclose and give access to information described in ORS 314.835 to certain categories of persons, including, but not limited to:

(a) Department of Human Services:

(A) Under provisions of ORS 412.094, the Department of Human Services may request in writing any information contained in the department's tax files as to the location, income, and property of parents who, according to the Department of Human Services, have abandoned or deserted or are failing to support their children receiving public assistance. The request must clearly specify the information desired and must supply the information the department requires. The request must contain a certification by the Department of Human Services that the information is being requested pursuant to ORS 412.094. The information must be used only for the purposes specified by the law authorizing the disclosure.

(B) Upon written request of the Department of Human Services, the department will disclose the names, addresses and social security numbers of applicants for elderly rental assistance under ORS 310.630 to 310.706 as authorized by ORS 314.860. The department must maintain a record of all requests for such disclosure. The information must be used only for the purposes specified by the laws authorizing the disclosure.

(b) Division of Child Support. Under the provisions of ORS 412.094 and 180.320, the Division of Child Support of the Department of Justice may request any information contained in the department's tax files for the purposes and under the limitations set forth in that statute. The rules set forth in paragraph (2)(a)(A) of this rule for supplying information to the Department of Human Services will be followed in complying with any such requests. The information must be used only for the purposes specified by the laws authorizing the disclosure.

(c) District Attorneys. Under provisions of ORS 412.094 , the District Attorney of any county in the state may request any information contained in the department's tax files for the purposes and under the limitations set forth in that statute. The rules set forth in paragraph (2)(a)(A) of this rule for supplying information to the Department of Human Services will be followed in complying with any such requests. The information must be used only for the purposes specified by the law authorizing the disclosure.

(d) Corporations. The returns of a corporation will be open to inspection by any officer of the corporation or its authorized representative.

(e) Partnerships and Limited Liability Partnerships (LLPs). The return of a partnership or LLP will be open to inspection by any person who was a partner during any part of the tax year covered by the return, provided that a showing satisfactory to the department is made that the person was a partner during the tax year covered by the return. In the event of the death of a partner, the return of the partnership or LLP will be open to inspection by the executor as defined in ORS 118.005 who is responsible for filing an inheritance tax return with respect to the deceased partner. Any person requesting information under this subsection must make known to the department the reason for the request and the use to be made of the information.

(f) Limited Liability Companies (LLCs). Under ORS 63.810, an LLC is classified for tax purposes in the same manner as it is classified for federal income tax purposes. Therefore:

(A) If an LLC is classified as a corporation for tax purposes, the returns may be disclosed as provided in subsection (2)(d) above. Any manager or member-manager will be treated in the same manner as an officer except as otherwise provided in the LLC’s organizational documents.

(B) If an LLC is classified as a partnership for tax purposes, the returns may be disclosed as provided in subsection (2)(e) above.

(g) Registered Agents. The department may serve an entity that has a registered agent any notice, demand, or process required or permitted by law to be served on the entity by serving the notice, demand, or process to the entity’s registered agent on file with the Secretary of State or as otherwise determined by law.

(3) Conflicting Claims to a Dependency Deduction. The returns of two taxpayers claiming the same dependent(s) will be open to inspection by those two taxpayers as allowed in ORS 305.215.

(4) Husband and Wife Filing Separately. If a husband and wife have filed separate tax returns, neither spouse nor authorized representative will be permitted to inspect the separate return of the other spouse or to obtain any information from it or any related report without first having obtained written consent to do so from such other spouse except as provided in section (3) above.

(5) Taxpayer, Authorized Representative, or Designee. Upon request and unless otherwise prohibited by an Internal Revenue Service agreement, the department will permit the taxpayer, the taxpayer's authorized representative, or the taxpayer's designee to obtain copies of the taxpayer's income tax returns filed with the department for any tax year, copies of reports filed by the taxpayer in connection with such returns, and any other information that the department considers necessary in the administration of the tax laws. Upon request and payment of the charges set forth in OAR 150-192-0400, the department will furnish copies of these documents. Such requests may be made in person, in writing, or by telephone, e-mail or other generally used means of communication.

(6) Taxpayer Authorization and Designation. Taxpayer authorization to disclose to a designee may be in writing, verbal, or implied. See OAR 150-305-0120.

(a) The department will recognize that a person is authorized to represent the taxpayer upon the filing with the department or magistrate division of a document signed by the taxpayer clearly authorizing such representation, or if the magistrate division is satisfied that the person is so authorized. If the magistrate division accepts a document signed by a person on behalf of a taxpayer, or has issued an order declaring that the person is authorized to represent the taxpayer, the department will consider the magistrate division to be satisfied that the person is an authorized representative. Unless a written authorization by the taxpayer clearly provides otherwise, the department will presume the person is authorized to represent the taxpayer only with respect to the proceeding before the department or the magistrate division and will disclose only documents and information relating to the tax years at issue in that proceeding.

(b) Only the tax information that relates to the duty of an executor, a decedent estate's personal representative, a person who is appointed by law to pay the taxes of a decedent, or a trustee or other person who, by law, must pay the income taxes of a trust may be disclosed.

(c) Power of Attorney. The department may accept a signed power of attorney as consent from the taxpayer to disclose confidential information. The department may accept a signed power of attorney as a taxpayer's designation to appoint another individual as their agent. The department will not accept a federal power of attorney Form 2848 unless the taxpayer has specifically indicated that it applies to the Oregon Department of Revenue.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.840, 63.810 & 63.130
Renumbered from 150-314.840, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10
REV 4-2003, f. & cert. ef. 12-31-03
REV 8-2002, f. & cert. ef. 12-31-02
REV 6-2002(Temp), f. & cert. ef. 10-3-02 thru 3-31-03
REV 2-1998, f. & cert. ef. 5-1-98
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
1-1-77
12-19-75
11-73
11-71

Or. Admin. R. 150-314-0540 Rewards for Information

The Department, under the secrecy clause, ORS 314.835, cannot reveal to an informer whether or not the information offered is useful to the Department, and the Department can make no payment of an award until the additional tax recovered by virtue of the information has actually been paid and received. Informers must be advised in advance that they must rely on the Department for fair treatment and have no recourse, and that payments of rewards may be long delayed while issues involved in determination of tax liability are finally resolved.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.855
Renumbered from 150-314.855, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
1955

Or. Admin. R. 150-314-0545 Combat Zone Benefits

The rule under OAR 150-316-0605 shall be followed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.870
Renumbered from 150-314.870, REV 34-2016, f. 8-12-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-314-0733 Partnership Pays Election After Federal Centralized Partnership Audit Adjustments

(1) An audited partnership may elect to pay at the partnership level under ORS 314.733(4). The election to have the partnership report adjustments and pay tax is irrevocable after the due date for the election. To rescind the election prior to the due date for providing notice of the election to the department, the partnership must:

(a) Before the due date for the election, provide written notice to the department that it is rescinding its election; and

(b) Provide all notices, file all reports, and pay the tax, penalty, and interest due relating to a composite return as required by ORS 314.733(3)(a).

(2) A tiered partner’s share of adjustments under ORS 314.733(4) does not include the following adjustments specified in ORS 314.733(4)(b)(C)(iii):

(a) The share of adjustments allocable to indirect partners exempt from tax under ORS 316.277(2) or 317.080, other than amounts that are unrelated business taxable income.

(b) An indirect corporate partner’s share of adjustments listed under ORS 314.733(5)(b) excluded from a tiered partner’s share of adjustments, which is the share of adjustments that the audited partnership can reasonably determine is required to be included in the apportionable income of the indirect corporate partner. Adjustments includable in the indirect corporate partner’s apportionable income may be considered reasonably determined if the audited partnership has received written notice from the indirect corporate partner that the indirect corporate partner’s distributive share of income is required to be included in the indirect corporate partner’s apportionable income, if the indirect corporate partner or its agents directly or indirectly have the right to control the audited partnership, or if the audited partnership has access to information about the relationship between the indirect corporate partner’s business and the audited partnership’s business to reasonably determine that the indirect corporate partner’s distributive share of adjustments must be included in that partner’s apportionable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.733
REV 42-2020, adopt filed 12/23/2020, effective 01/01/2021

Division 315 PERSONAL INCOME TAX CREDITS

Or. Admin. R. 150-315-0005 Tax credit uniformity transfer provisions

(1) Tax credits may be transferred only by the entity or individual that received the original certification.

(2) There are two general groups of transferable credits, those that must be claimed in one year and those that must be claimed over multiple years. The following applies to transfers of these credits:

(a) For credits that are claimed for only one tax year (excluding carry forward provisions), transfer of the entire credit is not required. A portion may be transferred to another taxpayer and the remaining amount of the one year credit may be claimed on the transferor’s return.

(b) For credits that are claimed over multiple tax years (excluding carry forward provisions), the full amount of the credit for each tax year may be transferred to one or more transferees and the transferor may not claim any portion of that tax year’s credit.

History

Statutory/Other Authority: ORS 305.100 & 315.056
Statutes/Other Implemented: ORS 315.056
REV 31-2020, adopt filed 12/23/2020, effective 01/01/2021

Or. Admin. R. 150-315-0010 Claim of Right Credit

(1) Credit qualifications. If you repaid income that was taxed in a prior year, you may be eligible for a credit on your Oregon return. This rule applies to repayments made on or after January 1, 2013 that are claimed on returns filed after the effective date of this rule. To claim the credit, you must:

(a) Claim a federal credit or deduction under Internal Revenue Code (IRC) section 1341; and

(b) Have paid Oregon tax in a prior year on the income that you repaid.

(2) Credit calculation. Your Oregon claim of right credit is the difference between the Oregon tax you paid in the prior year and the Oregon tax you would have paid without including the repaid income. Calculate your credit as follows:

(a) Refigure the Oregon tax before credits in the year the income was originally taxed by determining the tax for the year in which the income was originally taxed without the repaid income. Do not change the federal tax subtraction or any other items on the Oregon return.

(b) Subtract the refigured tax before credits from the Oregon tax before credits as filed (or amended or adjusted, if applicable). This is your claim of right credit.

Example 1: In 2012, Jerry was required to repay $10,000 of the unemployment compensation he had received in 2011. He claimed the claim of right credit on his federal return, so he can also claim the credit for Oregon. For 2011, Jerry had federal adjusted gross income (AGI) of $50,000 and Oregon tax before credits of $3,568. Jerry refigures his 2011 Oregon tax before credits without the repaid income. He reduces his federal AGI compared to what was included in his original 2011 federal return by the amount repaid, $10,000. All other Oregon items stay the same (including the federal tax subtraction). The recalculated Oregon tax before credits is $2,668. The difference between the refigured and original tax before credits is $900 ($3,568 minus $2,668). Jerry’s claim of right credit is $900.

(3) Federal deduction. If you claim a deduction under IRC § 1341 on your federal return, you can allow the deduction to flow through or you can claim a credit on your Oregon return. Determine by comparing the following amounts:

(a) Calculate Oregon tax before credits for the year of repayment with the deduction.

(b) Add back the federal deduction and figure your Oregon tax before credits. Then subtract the Oregon claim of right credit.

(c) If the tax in (a) is less, allow the deduction for Oregon also. If the tax in (b) is less, add back any deduction as required under ORS 316.680(2)(i) and claim the Oregon credit.

Example 2: In 2012, Shannon had to repay wages of $3,800 from tax year 2010. She qualifies to claim itemized deductions and chooses to claim the deduction on her federal return. Oregon allows this deduction to flow through or allows her to claim the credit instead. Her itemized deductions are mostly Oregon taxes, so her Oregon itemized deductions are less than the standard deduction. Therefore, she will not claim itemized deductions for Oregon and will claim the credit instead.

In 2010, she had federal AGI of $45,000 and her 2010 tax was $2,988. If Shannon had not received the $3,800 she had to repay, her 2010 tax would have been $2,679. Her 2012 credit is the difference of $342, which she will claim on her 2012 Oregon return as a claim of right credit. There’s no addition required because she claimed the standard deduction for Oregon, so the federal deduction did not flow through.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.068
Renumbered from 150-315.068, REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
Reverted to REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
REV 4-2013(Temp), f. & cert. ef. 6-5-13 thru 12-2-13
REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
REV 8-2001, f. & cert. ef. 12-31-01
REV 5-2000, f. & cert. ef. 8-3-00
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-315-0012 Qualified Reforestation Costs

(1) For credits first claimed in tax years beginning on or after January 1, 2001, a credit is allowed in an amount equal to 50 percent of reforestation project costs paid or incurred to reforest underproductive Oregon forest lands. Qualified reforestation project costs are determined in accordance with Oregon State Department of Forestry rules, chapter 629, division 023 (e.g., Oregon Administrative Rules 629-023-410 to 629-023-460) and by ORS 315.104. Qualified project costs do not include amounts paid through federal or state cost share, financial assistance or other incentive programs.

(2) Subject to the credit carryover provisions of ORS 305.104(5), one-half of the credit must be taken in the tax year for which the Department of Forestry issues a preliminary certificate certifying that certain conditions exist as stated in ORS 315.104(1). The balance of the credit must be taken in the tax year for which the forest is certified as being established.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.104
Renumbered from 150-315.104(1), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2009, f. & cert. ef. 7-31-09
REV 8-2001, f. & cert. ef. 12-31-01
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(1)
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
TC 8-1980, f. 11-28-80, cert. ef. 12-31-80

Or. Admin. R. 150-315-0014 Procedure for Claiming the Reforestation Credit

(1) The Oregon Department of Revenue will accept the preliminary certificate issued by the Department of Forestry as evidence of completion of the project. In addition to the preliminary certificate, the taxpayer shall obtain a statement from the landowner or person in possession of the land:

(a) That the land within the project area will be used primarily for the growing and harvesting of trees of an acceptable species as provided in ORS 315.104; and

(b) That the taxpayer is aware that maintenance practices, including release, may be needed to insure that a new forest is established and will remain established.

(2) Upon request of the department, the taxpayer will provide copies of the certificate(s) issued by the Department of Forestry for any year in which the credit is claimed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.104
Renumbered from 150-315.104(2), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01, Renumbered from 150-315.104(2)-(A)
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(2)
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
TC 8-1980, f. 11-28-80, cert. ef. 12-31-80, Renumbered from 150-316.094(2)(a)

Or. Admin. R. 150-315-0016 Change of Ownership

If there is a change of ownership between when the project is completed and when the forest is established, only the initial owner (investor) will qualify for the total credit. If the forest is not established, the initial owner must repay the initial credit. The new owner does not qualify for any credit for the project the initial owner started.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.104
Renumbered from 150-315.104(5), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(6)
TC 8-1980, f. 11-28-80, cert. ef. 12-31-80

Or. Admin. R. 150-315-0018 Reforestation Credit: Reasons Beyond the Taxpayer’s Control

For purposes of reforestation credit, the Department of Revenue adopts the definition of "reasons beyond the taxpayer's control" defined in Department of Forestry rule OAR 629-23-420 filed 8-1-08 and certified effective 9-1-08.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.104
Renumbered from 150-315.104(10), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 4-2009, f. & cert. ef. 7-31-09
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.094(10)
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-315-0040 Fish Screening Device Credit; Substantiation

(1) The fish screening device credit can be claimed for devices installed in tax years beginning on or after January 1, 1990.

(2) Upon request of the department, the taxpayer shall provide a copy of the final certificate issued by the State Department of Fish and Wildlife in the initial year in which the credit is claimed. The taxpayer will provide a statement which contains the computation of the allowed credit if this information is not contained in the final certificate.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.138
Renumbered from 150-315.138(9), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.139(9)
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-315-0050 Transfer of Biomass Credit

(1) As provided by ORS 315.053, a person that has obtained a tax credit under ORS 315.141 may transfer the credit to:

(a) A C corporation;

(b) An S corporation; or

(2) Transfers. The value of the credit earned under ORS 315.141 is the greater of the market value upon transfer or the minimum discounted rate established by the Department of Energy. A credit may be transferred or sold only once. In order for the transfer to be effective:

(a) The Department of Energy must certify the credit;

(b) The person who earned the credit must complete the transfer schedule on the back of the certificate provided by the Department of Energy and retain the schedule with their records;

(c) The person who earned the credit and the taxpayer claiming the credit must complete and file a joint statement on a form provided by the Department of Revenue to be filed with the department within 30 days of the transfer. Both parties must retain a copy with their records; and,

(d) The credit must be transferred on or before the due date of the tax return (including extensions) for the first tax year in which the credit may first be claimed. After that date, no portion of the credit allowed under ORS 315.141 may be transferred.

History

Statutory/Other Authority: ORS 305.100 & 315.144
Statutes/Other Implemented: ORS 315.144
Renumbered from 150-315.144, REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2015, f. 12-23-15, cert. ef. 1-1-16
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-315-0060 Crop Gleaning Credit: Information Required

(1) In addition to the items listed under ORS 315.156(2), the form may require:

(a) The social security number, federal employer identification number, or phone number of the grower;

(b) Name and address to identify the gleaning cooperative, food bank, or other charitable organization; or

(2) For tax years beginning on or after January 1, 1994. The form required by this section should not be attached to the tax return, but must be kept with the taxpayer's records. Upon audit or examination, the information must be made available to the department to verify any credit claimed under this section.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.156
Renumbered from 150-315.156, REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
REV 8-2001, f. & cert. ef. 12-31-01
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.091
TC 2-1980, f. & cert. ef. 5-20-80
TC 15-1979(Temp), f. & cert. ef. 12-18-79

Or. Admin. R. 150-315-0065 Higher Education Savings (529) and Achieving A Better Life Experience (ABLE) account credit recapture

(1) If an unqualified withdrawal under ORS 315.653(1) is made from a 529 or ABLE account, the taxpayer who received tax benefit of the contribution must forfeit that benefit.

(2) To determine whether a forfeiture is necessary, the amount of non-benefit contribution must be determined. The amount of non-benefit contribution is the total of:

(a) Deposits into a 529 or ABLE account for which no corresponding tax benefit was received and;

(b) Any interest earned in a 529 or ABLE account.

(3) The amount of unqualified withdrawal in excess of the non-benefit contribution calculated in section (2) is subject to recapture.

(4) The amount of the recapture is based on the tax benefit received on the most recent contribution and must be reported in the tax year in which the withdrawal took place.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 316.650
Statutes/Other Implemented: ORS 315.650
REV 1-2021, renumbered from 150-305-0065, filed 01/07/2021, effective 01/07/2021
REV 50-2020, adopt filed 12/24/2020, effective 01/01/2021

Or. Admin. R. 150-315-0070 Agriculture Workforce Housing Credit

(1) General Information.

(a) A credit is available to taxpayers who construct, install, or rehabilitate housing for agricultural workers and their immediate families.

(b) The credit is available for agriculture workforce housing projects that are physically begun on or after January 1, 1990.

(c) Depreciation and amortization expenses associated with the agriculture workforce housing project are not decreased by the amount of the tax credit allowed.

(d) The taxpayer's adjusted basis in the housing project is not decreased by any tax credits allowed.

(e) For tax years beginning on or after January 1, 2004, ORS 315.167 provides that the owner or operator of agriculture workforce housing or a contributor as described in ORS 315.163(6) must apply to the Oregon Housing and Community Services Department (OHCSD) for a letter of credit approval no later than six months after beginning an agriculture workforce housing project.

(2) Qualifications for the Tax Credit.

(a) The agriculture workforce housing project must be located in Oregon to qualify for the credit.

(b) The housing project must be limited to occupancy by agricultural workers during the tax year in order to qualify for the credit. If the housing is occupied at any time during the year by persons other than agricultural workers and their immediate families, the housing will not qualify for the credit. Nor can the housing be used for any other function except housing for agricultural workers.

(A) Obtain a letter of credit approval from the OHCSD; and

(B) Certify on an annual basis that any units that were occupied during the tax year were occupied only by agricultural workers or their immediate families. The letter of credit approval and the certification must be maintained in the taxpayer's records and made available to the department on request.

(d) The OHCSD administers the application and eligibility process for this credit. See chapter 813, divisions 41 and 42 of the Oregon Administrative Rules, and contact OHCSD for more information.

(3) Computation of the Tax Credit For Projects Completed in Tax Years Beginning On or After January 1, 2002

(a) The credit is equal to 50 percent of the costs directly associated with the construction or rehabilitation of the agriculture workforce housing project including costs for financing, construction, excavation, installation, and permits. Construction includes acquisition of new or used prefabricated or manufactured housing. Acquisition costs of land and existing improvements on that land used for the project are not included in the computation.

(b) The credit first may be claimed in the year the project is completed or in any of the nine succeeding tax years. No more than 20 percent of the total credit may be claimed in any one tax year. The housing is not required to be occupied prior to the end of the tax year in which the project is completed in order for the credit to be claimed.

(c) Tax credits not used in a tax year may be carried forward for up to nine years. Any credit carried forward is used first, before the allowable current year credit.

(d) Costs of rehabilitation include capital expenditures only. The allowable costs are those incurred for additions or improvements to property (or related facilities) with a useful life of five years or more. Rehabilitation costs do not include the cost of acquiring the building or an interest in the building.

(4) Computation of the Tax Credit for Projects Completed in Tax Years Beginning before January 1, 2002. The credit is equal to 30 percent of costs described in subsection (3)(a) if completed after December 31, 1995, and 50 percent if completed before December 31, 1995. The credit is claimed in equal installments over a consecutive five-year period beginning in the year the agriculture workforce housing project is completed. The credits may be carried forward for up to five years. Otherwise, the computation of the credit is the same as specified in section (3) of this rule.

(5) Disallowance and Forfeiture of Tax Credit. The tax credit will be disallowed and any prior years' credits forfeited in the case of:

(a) Fraud or misrepresentation by the taxpayer to obtain the credit.

(b) A taxpayer who is an owner or operator who fails to substantially comply with occupational health and safety rules, regulations, or standards. The Department of Consumer and Business Services will notify the department of any agriculture workforce housing project failing to substantially comply with these standards.

(c) A taxpayer who is an owner or operator who fails to obtain required registration as an agriculture workforce camp with the Department of Consumer and Business Services.

(d) A taxpayer who is an owner or operator of an agriculture workforce housing project that is not operated by a person who holds a valid endorsement as a farmworker camp operator, if required under ORS 658.730.

(6) Sale of Agriculture Workforce Housing Project. If the agriculture workforce housing project is sold, the original investor may continue to claim the tax credit, provided all other provisions are met.

(7) Transfers of the credit must comply with ORS 315.056 and OAR 150-315-0005.

History

Statutory/Other Authority: ORS 305.100 & 315.169
Statutes/Other Implemented: ORS 315.164 & 315.169
REV 32-2020, amend filed 12/23/2020, effective 01/01/2021
REV 85-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-315.164, REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2014, f. & cert. ef. 7-31-14
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 8-2002, f. & cert. ef. 12-31-02
REV 8-2001, f. & cert. ef. 12-31-01
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
Renumbered from 150-316.154, RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
Renumbered from 150-316.116(Note)-(B), RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
12-31-89
9-20-89

Or. Admin. R. 150-315-0071 Appeal from a Notice of Denial or Adjustment: Application for Agricultural Employer Overtime Tax Credit.

(1) An employer that applied for the Agricultural Employer Overtime Tax Credit may appeal to the department if the department denies or adjusts the application submitted.

(2) An appeal request must be emailed to the email address provided in the Notice of Agricultural Employer Overtime Tax Credit Application Denial or Notice of Agricultural Employer Overtime Tax Credit Application Adjustment.

(3) An appeal must be submitted to the department within 30 days of the date on the Notice of Agricultural Employer Overtime Tax Credit Application Denial or Notice of Agricultural Employer Overtime Tax Credit Application Adjustment. The appeal must include:

(a) The reason for the appeal;

(b) An explanation of the disagreement; and

(4) The department’s appeal determination results may be appealed to the Oregon Tax Court.

History

Statutory/Other Authority: ORS 305.100 & ORS 315.133
Statutes/Other Implemented: ORS 315.133
REV 8-2025, amend filed 10/02/2025, effective 10/02/2025
REV 26-2023, adopt filed 12/26/2023, effective 01/01/2024

Or. Admin. R. 150-315-0072 Agricultural Employer Overtime Tax Credit Full-Time Equivalency (FTE) Calculation

(1) Definitions. For purposes of this rule:

(a) Eligible employer. A producer of crops, animals, or aquaculture that employs agricultural workers directly, or indirectly through contract with a labor contractor.

(b) Employee. A person employed for wages or salary.

(2) For purposes of determining the applicable percentage of the credit allowed under Oregon Laws 2022, chapter 115, section 9, an eligible employer’s number of full-time equivalent (FTE) employees is equal to the total hours worked by all employees of the eligible employer during the calendar year divided by 2,080. The total hours include all hours worked by agricultural employees subject to overtime compensation requirements, and:

(a) Agricultural employees exempt from overtime compensation requirements under Oregon Laws 2022, chapter 115, section 4a, such as managerial employees and immediate family members of the eligible employer;

(b) Employees that do not perform services in agriculture; and

(3) For purposes of this rule, hours worked by agricultural workers employed by a farm labor contractor on behalf of an eligible employer are considered hours worked by an employee of the eligible employer.

History

Statutory/Other Authority: ORS 305.100 & 2022 Oregon Laws Chapter 115, Section 9
Statutes/Other Implemented: 2022 Oregon Laws Chapter 115, Section 9
REV 26-2023, adopt filed 12/26/2023, effective 01/01/2024

Or. Admin. R. 150-315-0073 Filing and Corrections of Agricultural Employer Overtime Credit Application.

(1) Agricultural employer overtime tax credit applications must be submitted electronically with the department.

(2) Corrections.

(a) An applicant may correct information submitted to the department no later than January 31 following the calendar year for which the applicant seeks credit.

(b) A corrected application must be submitted electronically with the department.

History

Statutory/Other Authority: ORS 305.100 & 2022 Oregon Laws Chapter 115, Section 9
Statutes/Other Implemented: 2022 Oregon Laws Chapter 115
REV 26-2023, adopt filed 12/26/2023, effective 01/01/2024

Or. Admin. R. 150-315-0100 Child Care Division Contribution Credit

The form required by this section should not be attached to the tax return, but kept with the taxpayer’s records. Upon audit or examination, the information must be made available to the department to verify any credit claimed under this section.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.213
Renumbered from 150-315.213(4), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2002, f. 6-26-02, cert. ef. 6-30-02

Or. Admin. R. 150-315-0110 Scholarship Tax Credit

The form required by this section should not be attached to the tax return, but must be kept with the taxpayer’s records. Upon audit or examination, the information must be made available to the department to verify any credit claimed under this section.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.237
Renumbered from 150-315.237(8), REV 45-2016, f. 8-12-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-315-0121 Working Family Household and Dependent Care Credit

(1) As used in this rule, references to the Internal Revenue Code (IRC) mean the IRC as in effect on the date specified in ORS 315.004.

(2) Definitions for the purposes of ORS 315.264 and this rule:

(a) “Employment-related expenses” means employment-related expenses as defined in IRC section 21, without regard to the limitation in IRC section 21(c).

(b) “Earned income” means earned income as used for the purposes of IRC section 21.

(d) “Federal poverty level” means the federal poverty level for the same tax year as determined by the federal Department of Health and Human Services.

(e) “Dependent care benefits” means:

(A) Expenses paid with amounts excluded from income as dependent care benefits under IRC section 129;

(B) Expenses paid from dependent care benefits provided as part of a cafeteria plan under IRC section 125; or

(f) “Household size” generally means the number of individuals, not to exceed eight, who are related by birth, marriage, or adoption, living in the home, and are allowed as exemptions on the taxpayer’s federal return. There are exceptions for disabled qualifying individuals and children whose parents are divorced, legally separated, or permanently living apart. See section (8) of this rule for those household exceptions.

Example 1 . Adam and Maggie are married and have one qualifying individual. Maggie is a full-time student for 12 months in 2016. They paid $4,000 in employment-related expenses. Their adjusted gross income is $39,000, which is Adam’s wages. Maggie has no earned income. Because Maggie was a full-time student for 12 months of the year, she is considered to have $3,000 ($250 x 12) in attributable earned income. Their credit amount will be a percentage of $3,000, which is the least of their employment-related expenses ($4,000), the expense limitation ($12,000 for one qualifying individual), his earned income ($39,000), or her earned income ($3,000).

Example 2 : Sophia and Tyler live together but are not married; they file separate tax returns. They are the parents of two children, Ken and Leah. Sophia and Tyler provide equal support to the children. However, because Sophia’s adjusted gross income is higher than Tyler’s, neither Ken nor Leah is a qualifying child of Tyler unless Sophia releases the exemption for that child to Tyler. Sophia releases the exemption for Ken to Tyler, but not for Leah. Sophia claims Leah and has a household size of two. Tyler claims Ken and has a household size of two. Each parent may only claim one dependent in their household size. Sophia is not able to claim Ken and Tyler is not able to claim Leah in the household size because the other parent is already claiming that child.

Example 3 : Marcus and Erin are married and have three children and also support Marcus’s parents who do not live with Marcus and Erin in their home. Because they meet the federal tests for claiming individuals not living with them, their federal return allows seven exemptions. Marcus and Erin cannot increase their household size by the people they claim as dependents on their federal return that do not live with them. Their household size for purposes of the Working Family Household and Dependent Care Credit is five.

(3) To claim the credit, the taxpayer must provide all information requested on the form prescribed by the department and file the form with the tax return. Failure to file the completed form with the department may result in denial of the Working Family Household and Dependent Care Credit.

(4) The amount of employment-related expenses that may be taken into account for any taxable year cannot exceed –

(a) $12,000 if there is one qualifying individual with respect to the taxpayer for the taxable year, or

(b) $24,000 if there are two or more qualifying individuals with respect to the taxpayer for the taxable year.

(5) The amount determined under section (4)(a) or (4)(b) (whichever is applicable) is reduced by the total amount of dependent care benefits.

Example 4 : Jenny has one qualifying individual; therefore, the $12,000 dependent care expense limitation applies. She paid a total of $13,000 in employment-related expenses in 2017, of which $5,000 was used in a flexible spending arrangement. Her employer reports $5,000 of dependent care benefits in box 10 of her W-2. Jenny’s limitation on dependent care expenses is reduced to $7,000 (the $12,000 limitation minus the $5,000 dependent care benefits).

(6) Employment-related expenses must be paid by the taxpayer claiming the credit. Payments made by an entity or individual other than the taxpayer claiming the credit, including federal or state assistance agencies (such as the Department of Human Services or the Employment-Related Day Care program) are not payments made by the taxpayer.

Example 5 . Leslie works full time and qualifies for state assistance in paying his child care expenses. The child care provider charges Leslie $600 per month to care for his two children ($7,200 per year). Of the $600 per month, the state pays $450 and Leslie has a copay of $150. Leslie cannot claim the entire $7,200 because he did not pay it. He can only claim $1,800 ($150 x 12), the amount he actually paid.

(7) If medical expenses are claimed as qualified expenses for the credit and as a deduction, the amount of medical expenses claimed as both shall be added to the taxable income for Oregon tax purposes.

(8) Household size exceptions:

(a) Disabled qualifying individuals can be included in the household size calculation even if they are not related to the taxpayer by birth, marriage, or adoption. An otherwise qualifying individual can be included in the household size if the taxpayer is not able to claim the individual as a dependent on their return for one of the following reasons:

(A) The individual had gross income equal to or more than the federal exemption amount for the corresponding tax year;

(B) The individual filed a joint return; or

Example 6. Carey’s disabled parents live with her. They would otherwise qualify to be claimed as Carey’s dependents on her return, except that they are married and file their own joint return. For this reason, Carey does not claim them on her return. Her parents qualify as her qualifying individuals for the credit. Her household size for the purpose of this credit is three.

(b) For taxpayers who are divorced, legally separated, or permanently living apart, an otherwise qualifying individual cannot be counted in the household size on more than one tax return.

Example 7 . Branden and Shannon are divorced with two children, Dustin and Natalie. Dustin lives with Branden and Natalie lives with Shannon. Each parent pays the child care expenses for the child that lives with that parent. Shannon releases the dependent exemption for Natalie to Branden under IRC section 152(e). For purposes of the Working Family Household and Dependent Care credit, Natalie is counted in Shannon’s household size and Dustin is counted in Branden’s household size. Branden and Shannon each have a household size of two for purposes of this credit. Branden claims the employment-related expenses he paid for Dustin and Shannon claims the employment-related expenses she paid for Natalie on their returns.

History

Statutory/Other Authority: ORS 305.100 & 315.264
Statutes/Other Implemented: ORS 315.264
REV 74-2017, amend filed 12/22/2017, effective 01/01/2018
REV 86-2016, f. 12-28-16, cert. ef. 1-1-17

Or. Admin. R. 150-315-0125 Working Family Household and Dependent Care Penalty

(1) Definitions. For the purposes of this rule and ORS 315.264, “knowingly” means the individual claimed, attempted to claim, or assisted someone else in claiming the credit for an ineligible amount, acting with awareness that the individual or other person was ineligible for all or a portion of the credit claimed, as demonstrated by the particular facts and circumstances, including, but not limited to, facts such as that the individual:

(a) Previously received the penalty imposition,

(b) Previously claimed, attempted to claim, or assisted someone else in claiming the credit for an ineligible amount, or

(2) When a subsequent penalty is imposed, the reason for the subsequent penalty does not need to be the same reason a prior penalty was imposed.

(3) The penalty may be imposed in the following amounts:

(a) For taxpayers knowingly claiming an ineligible credit amount:

(A) For the first offense, an amount equal to 10 percent of the amount of the credit claimed; and

(B) For any subsequent offense, an amount equal to 25 percent of the amount of the credit claimed.

(b) For individuals assisting taxpayers in making an ineligible claim, an amount equal to 25 percent of the credit claimed by the taxpayers.

Example 1: Jackie claimed a credit in the amount of $2,500. She knowingly claimed the credit for an ineligible amount. The department adjusted her credit down to $1,000. The department determines that Jackie meets the penalty requirements. Because this is Jackie’s first offense, she will be charged a penalty in the amount of $250 (10 percent of the amount claimed).

(4) The penalty imposed is not eligible for a discretionary penalty waiver under ORS 305.145.

(5)(a) The department will provide notice of penalty to the individual receiving the penalty. The notice will include the penalty amount accompanied by a statement of the individual’s right to appeal the penalty, along with an explanation of the procedure for written objection or conference as specified in ORS 305.265(5).

(b) Assessments and billings will be final after the expiration of the appeal period specified in ORS 305.280, excluding ORS 305.280(3).

(6) Mailing of notice to the individual at the individual’s last-known address will constitute giving of notice as prescribed in this rule.

History

Statutory/Other Authority: ORS 305.100 & 315.264
Statutes/Other Implemented: ORS 315.264 & 305.145
REV 86-2016, f. 12-28-16, cert. ef. 1-1-17

Or. Admin. R. 150-315-0140 Pollution Control Facilities: Types of Facilities Eligible for Certification

(1) Tax relief provisions to encourage the construction of pollution control facilities were first enacted by the 1967 legislature, and were substantially amended in subsequent legislative sessions.

(2) Under the 1967 law (ORS 316.092) and the 1969 law (316.097), the types of facilities eligible for certification were those a substantial purpose of which was to prevent, control, or reduce air or water pollution. Under the 1974 special session amendments (Chapter 37) to ORS 449.625 (since renumbered as 468.165), the types of eligible facilities were expanded to include facilities which utilize solid wastes to produce a useable source of power or other item of real economic value.

(3) Every facility certified prior to the October 5, 1973, effective date of the 1973 amendments is bound by the law in effect prior to that date (see Oregon Laws 1973, Chapter 831, Sec. 11); except that the amendments by Chapter 37 of the 1974 special session are effective May 26, 1974.

(4) Under the 1977 law, facilities built on or after January 1, 1977, for control of noise pollution are eligible for certification. Also, the definition of a solid waste facility is expanded to include certain subsequent additions, either to a facility already certified or to an operation that would have qualified as a facility but for the fact that it was built prior to January 1, 1973. The addition must be one that increases the production or recovery of useful materials or energy over the amount produced or recovered by the original facility. However, the 1977 law also sets additional eligibility requirements for solid waste facilities on which construction is commenced during the period January 1, 1981, up to December 31, 1983. These added requirements are found in ORS 468.170(9)(b).

(5) A 1983 amendment provided that hazardous waste facilities built on or after January 1, 1984 will not be required to produce a useable source of power or other item of real economic value to be eligible for certification.

(6) Facilities built on or after September 26, 1987, that use solid waste to produce a useable source of power, are not eligible for the pollution control facility credit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(1)(a), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
12-31-93
12-31-92, Renumbered from 150-316.097(1)(a)
12-31-83
12-31-81
12-31-77
1-1-77

Or. Admin. R. 150-315-0142 Pollution Control Facilities: Information to be Furnished Upon Request

Upon request of the department, each taxpayer claiming a pollution control facility tax credit shall provide a statement containing the following information for each facility:

(1) The certificate serial number assigned under ORS 468.170.

(2) The computation of the amount of the tax credit allowable for the tax year covered by the return. For each facility show:

(a) The actual cost certified;

(b) The portion of actual cost allocable to pollution control and the percentage of cost available as a credit for the current year;

(d) The total amount of credit claimed for this facility on prior returns.

(3) The amount and computation of each carry-over credit claimed under ORS 315.304 as to each facility. In computing the tax credit attributable to a particular facility, the taxpayer may have to apportion the total credit used in a particular year to each separate certification of a facility or facilities. Where a part of a facility or of a group of facilities under one certificate has been sold, exchanged, or otherwise disposed of, appropriate adjustments must be made for the total prior credits claimed.

(4) The date of erection, construction, or installation.

(5) The facts showing compliance with the requirements of ORS 315.304 as to ownership (or purchase under contract), lease, conduct of the trade or business under agreement, or having a beneficial interest in a resource recovery facility. A copy of the certificate issued by the Department of Environmental Quality and copies of agreements for the conduct of a trade or business shall be attached to the statement.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(1)(b), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-31-93
12-31-83, Renumbered from 150-316.097(1)(b)
12-31-81

Or. Admin. R. 150-315-0144 Pollution Control Facilities: Computation of Credit

(1) Definitions. For purposes of ORS 315.304 and this rule:

(a) “Certified cost” means that portion of total costs that the Environment Quality Commission (EQC) determines is allocable to a pollution control facility.

(b) “Facility” refers to one or more facilities certified under one certificate, with one serial number and with the same allowable percentages used in determining the certified costs and the maximum allowable credit.

(d) “Useful life” is the remaining years of expected useful life at the time the facility is certified, but not more than 10 years.

(e) “Tax liability” is the amount of tax that is due after any offsets or other tax credits are taken, such as those permitted under ORS 316.082, 316.087, 316.102, 315.104, 315.354, and 315.324.

(2) The credit is equal to the lesser of:

(a) The applicable percentage multiplied by the certified cost and divided by the useful life of the property; or

(b) The taxpayer’s tax liability after other credits.

(3) If additional costs are incurred after a pollution control certificate is issued and a revised certificate including those additional costs is issued, the credit for the additional costs may not be claimed prior to the year in which the revised certificate is issued. The credit for those additional costs must be spread equally over the remaining years on the original certificate.

(4) A pollution control facility’s useful life is determined as of the date it is certified and may not be changed unless additional certified costs have been incurred. If a facility becomes obsolete and is abandoned before the end of its expected useful life, no remaining unused credit is allowable. If the life of a pollution control facility is extended by repair, which is not eligible for additional tax credit, the taxpayer continues to claim the original credit over the original useful life. If an error in the actual amount spent prior to certification by the EQC is later discovered and the EQC issues a revised certificate, the taxpayer must amortize the correct certified cost over the original useful life, and amend returns for those years for which credits have been claimed that are still open. Any cost incurred and certified after the original certification may be amortized over the new remaining useful life to the extent that the total life of the facility over which credits are claimed does not exceed ten years. The additional credit may be claimed beginning in the year in which certification for the additional cost was obtained.

(5) If a pollution control facility’s certification is revoked by the EQC pursuant to ORS 468.185(1)(b), the allowable credit for the tax year must be prorated. The amount for the portion of the tax year before the certification is revoked is allowed. If no appeal is made, the certificate is considered revoked on the date the revocation is issued.

Example 1: A calendar year taxpayer has a pollution control facility certified January 1, 1996. The credit otherwise allowable for 2000 is $500. On June 30, 2000, the facility’s certification was revoked by the EQC. The credit allowable for 2000 is computed as follows: [See PDF link below.]

(6) When a certification is reinstated by the EQC under ORS 468.185(5) because the facility has been brought into compliance with the EQC’s guidelines, the certificate is reinstated for the remaining period of certification, less the period of revocation. The period of revocation is from the date the revocation is issued to the date of reinstatement. The credit for the period of revocation is lost.

Example 2: Assume the same facts as in Example 1, except that the facility’s certification was reinstated September 30, 2000. The credit allowable for 2000 is computed as follows: [See PDF link below.]

(7) If a pollution control facility’s certificate is revoked by the EQC pursuant to ORS 468.185(1)(a), because the certification was obtained by fraud or misrepresentation, all tax relief allowed in prior years is forfeited. The credit forfeited will be added to any other excise or income tax due from the taxpayer who had claimed the credit, for the tax year in which the certification is revoked.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
REV 39-2017, f. & cert. ef. 8-1-17
Renumbered from 150-315.304(2), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
REV 8-2001, f. & cert. ef. 12-31-01
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-31-93
12-31-89, Renumbered from 150-316.097(2)
12-31-88
12-31-87
12-31-84
12-31-83
12-31-81
12-31-77
1-77

Or. Admin. R. 150-315-0146 Pollution Control Facilities: To Whom Is Credit Allowable

(1) With the exception of a facility used for resource recovery certified on or after November 1, 1981, and pulp, paper and paperboard facilities discussed in paragraph (2), the credit is allowable only to the taxpayer who owns or conducts the trade or business which utilizes the facility. Therefore, if the owner of the facility also carries on the trade or business which uses the facility, such owner is entitled to the credit. But if the owner of the facility leases the property to someone who carries on a trade or business using the leased property, then the lessee is the one entitled to the credit during the period of the lease agreement.

(2) If an application for certification of a pulp, paper or paperboard facility is filed with the Department of Environmental Quality on or after January 1, 1999, the credit may be claimed by the facility’s owner/lessor, including a contract purchaser, or lessee. The owner need not operate the facility or conduct the trade or business that utilizes the property to qualify for the credit.

(3)(a) For a resource recovery facility certified on or after November 1, 1981, and prior to September 27, 1987, the credit is allowable to taxpayers who own, lease, or have a beneficial interest in the facility. “Beneficial interest” refers to the right to receive a profit, benefit, or other advantage from the facility. That right must be conveyed by a contract or other written document. A capital investment is required. Beneficial interest includes but is not limited to a partner’s interest in a partnership owning part or all of the facility, or a contract purchaser’s interest in a facility. If more than one taxpayer has an interest in the facility, the cost may be allocated between them. It is not necessary that the cost be allocated according to percentage of interest. The total costs allocated cannot exceed the total certified cost.

(b) For a resource recovery facility certified on or after September 27, 1987, the credit is allowable only to the taxpayer who owns, or leases the facility. An allocation of the costs is not allowed for these facilities.

(c) For purposes of (a) and (b), it is not necessary that the taxpayer receiving the credit operate or use the facility in the business.

(d) The taxpayer to whom the certificate is issued must file a written statement with the Department of Revenue not later than the final day of the first tax year for which a tax credit is claimed. For resource recovery facilities certified prior to September 27, 1987, the statement must designate the persons to whom the certified costs have been allocated and the cost allocated to each. For resource recovery facilities certified on or after September 27, 1987, the statement filed with the Department of Revenue must designate the taxpayer claiming the credit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(4), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
12-31-93
12-31-87, Renumbered from 150-316.097(4)
12-31-86
12-31-85
12-31-81, Renumbered from 150-316.097(5) to 150-316.097(4)
1-1-77

Or. Admin. R. 150-315-0148 Pollution Control Facilities: Years in Which Credit May Be Claimed

The credit may be claimed beginning in the tax year in which the facility is certified but not beyond the 10-year certification period provided in ORS 468.170(7), except as to the carry-forward credit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(5), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-31-93
Renumbered from 150-316.097(5)
12-31-86
12-31-85
12-31-77, Renumbered from 150-316.097(6) to 150-316.097(5)
1-1-77

Or. Admin. R. 150-315-0150 Pollution Control Facilities: Transfer of Facilities

(1) A transferee of a facility previously certified and for which tax credits had been allowed in the hands of the transferor shall, in addition to the information required under OAR 150-315-0142, include in the statement the following:

(a) The identification of each pollution control facility by the serial number issued to the transferor and the number issued to the transferee.

(b) A computation of the total amount of tax credit claimed as available for each facility.

(2) A transferee of a pollution control facility shall not claim the credit until the transferee obtains a new certificate as required by ORS 315.304(8) and 468.170.

(a) If a sole proprietorship or partnership obtains a pollution control facility certificate and the business subsequently incorporates, the new corporation must obtain a new certificate before it may claim any remaining credit for the facility. A new certificate is required even if the facility is transferred in a tax-free exchange.

(b) When two or more domestic corporations merge or consolidate, or when one or more domestic corporations and one or more foreign corporations merge or consolidate, the successor corporation is not required to apply for a new certificate.

(c) If a foreign corporation authorized to transact business in Oregon is merged or consolidated into another foreign corporation, the laws of the state in which the successor corporation is incorporated will govern the rights of the successor corporation and, hence, determine the transferability of the certificate.

(3) When a facility is sold, the seller may claim a credit for the year of sale prorated to that portion of the tax year during which the seller owned and operated the facility. The buyer also may claim a credit for the year of purchase prorated to the period of ownership and operation of the facility, provided the buyer applies for and receives a new certificate as required by ORS 315.304(8) and 468.170. If the seller’s tax year does not coincide with the purchaser’s, each taxpayer’s credit is based upon the portion of each taxpayer’s own tax year in which that taxpayer owned the facility.

Example. Taxpayer A sold a certified facility to taxpayer B on July 1. Taxpayer B is a fiscal year taxpayer with a tax year ending March 31. Taxpayer A’s credit would be limited to 50 percent of a full year’s credit (facility owned January 1 through June 30). Assuming taxpayer B applied for and received a new certificate taxpayer B would be entitled to 75 percent of a full year’s credit (facility owned July 1 through March 31).

(4) Since ORS 315.304(8) provides that “the tax credit available to such transferee shall be limited to the amount of credit not claimed by the transferor,” it is necessary that the seller disclose to the buyer the amount of maximum allowable credit not yet claimed, based on 50 percent, or lesser applicable percentage, of the original certificate holder’s investment in the facility. The transferee shall amortize the available credit over the shorter of the remaining useful life, as of the date of the new certificate, or ten years.

(5) When a facility is sold, any credit carryforward from tax years prior to the sale cannot be sold or otherwise transferred to the buyer. Such credit shall be carried forward by the seller.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(8), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
12-31-93
12-31-88, Renumbered from 150-316.097(8)
12-31-85
12-31-84, Renumbered from 150-316.097(10) to 150-316.097(8)
12-31-83
12-31-81
1-1-77
7-76
10-73
1-69

Or. Admin. R. 150-315-0152 Pollution Control Facilities: Tax Credit Carry Forward

(1) The amount of pollution control facility tax credit that may be carried forward to a succeeding tax year is the sum of credits that exceed the tax liability, after other credits, for all prior tax years that are within the carryover period.

Example 1: A corporate excise taxpayer built a pollution control facility in 1995 at a certified cost of $80,000. The certified percentage allocable to pollution control is 50 percent and the facility has a useful life of eight years. The maximum credit allowed in one tax year is calculated as follows: The $80,000 certified cost is multiplied by the 50 percent allocable to pollution control, yielding $40,000 as the total amount of credit to be claimed over the eight year life of the facility. The $40,000 divided by eight equals $5,000, the maximum yearly credit. See ORS 315.304(2). The taxpayer claimed the maximum credit on tax returns for 1995 and 1996. On the taxpayer's 1997 return, the taxpayer is subject to a corporate excise tax of $1,000 that is offset by $1,000 of the pollution control facility tax credit, leaving $4,000 of credit to be carried forward.

(2) If a credit carried forward from a prior year and a current year's credit are available, the taxpayer must use the credit from a previous year first and then the current year's credit.

(3) If a credit carried forward from a prior year and a current year's credit are available, the two credits may be combined and taken up to the amount of tax liability for the year.

Example 2: The taxpayer described in the prior example computes a tax of $8,000 for 1998. The taxpayer will offset that tax with $8,000 of credit ($4,000 carried over from 1997 plus $4,000 of the current year's $5,000 credit), leaving $1,000 of the 1998 credit to be carried forward.

(4) When a facility is sold, the amount of unused credit carried forward from tax years before the sale is retained by the seller to offset tax in future years.

Example 3: Calendar year taxpayer A sold a facility to taxpayer B on January 1, 2001. A's allowable pollution control facility credit for 2000 was $500, but A had a net loss and no tax liability to offset. The unused 2000 credit will be carried forward by A to offset A's future taxes.

(5) A taxpayer that has unexpired credits at the beginning of tax year 2001 may carry those credits forward for up to three additional tax years, but only if the facility is in use and operation during the tax year to which the credit is carried.

Example 4: Calendar year corporation taxpayer B received certification for a pollution control facility with a 10 year asset life and was first eligible to claim the credit in tax year 1996. B reported losses for tax years 1996 through 2000 and was not able to claim the allowable credits for those years. The credit allowed for 1996 was carried forward to 1997, 1998, and 1999 and expired. The credit allowed for 1997 was carried forward to 1998, 1999, and 2000 and expired. The credits allowed for tax years 1998 through 2005 were unexpired at the beginning of B's 2001 tax year and are eligible to be carried forward for up to six years.

Example 5: Taxpayer B from Example 4 reports a loss in tax year 2002 and closes the pollution control facility on December 31, 2002. B's unused credits from 1998 and 1999 may not be carried forward to 2003 because the facility was not in use and operation during the tax year to which the credit is carried and the three year period for carryover expired in 2001 and 2002 respectively. The credits for tax years 2000, 2001, and 2002 are eligible to be carried forward for up to three years. No credits may be computed for tax years 2003, 2004, and 2005, but the unused credits carried forward from 2000, 2001, and 2002 may be claimed in the three later years.

Example 6: Corporation taxpayer C's pollution control facility is certified on January 1, 2001. C is able to offset only half of its allowable credit against tax on its 2001 return. The balance of the 2001 credit may only be carried forward for up to three years. C did not have unexpired credits at the beginning of its tax year beginning in 2001.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(9), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2013, f. 12-26-13, cert. ef. 1-1-14
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-31-93
12-31-88, Renumbered from 150-316.097(9)
12-31-86
12-31-85
1-1-77, Renumbered from 150-316.097(11) to 150-316.097(9)
7-76
10-73
1-69

Or. Admin. R. 150-315-0154 Pollution Control Facilities: Adjustment of Basis

When computing adjusted basis for a facility certified in a tax year beginning before January 1, 1977, original basis is reduced by the amount of depreciation that was not deducted due to claiming the credit and by the amount of credit claimed in tax years beginning before January 1, 1977.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.304
Renumbered from 150-315.304(10), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
12-31-93
12-31-85, Renumbered from 150-316.097(10)
12-31-81, Renumbered from 150-316.097(12) to 150-316.097(10)
12-31-77
1-69

Or. Admin. R. 150-315-0170 Business Energy Tax Credit: Transfer of Facilities

(1)(a) When a facility is sold, the seller may claim a credit for the year of sale prorated to the portion of the tax year that the seller owned and operated the facility. The buyer also may claim a credit for the year of purchase prorated to the period of ownership and operation of the facility if the buyer applies for and receives a new certificate as required by ORS 315.354(5)(a) and 469.215. If the seller’s tax year is not the same as the purchaser’s, each taxpayer’s credit is based upon the portion of each taxpayer’s own tax year in which that taxpayer owned the facility.

Example: Taxpayer A, a calendar year taxpayer, sold a certified facility to Taxpayer B on July 1. Taxpayer B is a fiscal year taxpayer with a tax year ending March 31. Taxpayer A’s credit would be limited to 50 percent of a full year’s credit (facility owned January 1 through June 30). Assuming Taxpayer B applied for and received a new certificate, Taxpayer B would be entitled to 75 percent of a full year’s credit (facility owned July 1 through March 31).

(b) ORS 315.354(5)(a) provides that the tax credit available to the new owner is limited to the amount of credit not claimed by the former owner or, for a new lessor, the amount of credit not claimed by the lessor under all previous leases. Therefore, it is necessary for the seller to disclose to the buyer the amount of allowable credit not yet claimed based on the original certificate holder’s investment in the facility.

(2) When the credit is available to co-owners of a facility and one owner purchases the interest of another, the credit must be prorated between purchaser and seller. The method of prorating partnership income when a partnership interest is sold that is provided in Internal Revenue Code Section 706(d) must be used to prorate the credit.

(3) When a facility is sold, any credit carryforward from tax periods prior to the sale cannot be sold or otherwise transferred to the buyer. Such credit carry forwards may only be used by the seller.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.354
Renumbered from 150-315.354(5), REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
REV 8-2001, f. & cert. ef. 12-31-01
12-31-93
12-31-92, Renumbered from 150-317.104(5)
12-31-89
9-20-89

Or. Admin. R. 150-315-0180 Oregon Tax Credit Auctions

(1) Definitions.

(a) “Tax Credit” means the credit authorized by ORS 315.514 and ORS 315.643.

(b) “Qualified Bid” means a bid that is eligible for consideration in the tax credit auction because it meets all applicable statutory requirements and:

(A) It is submitted in a manner and time prescribed by the department’s instructions and this rule;

(B) It is submitted for no less than the reserve bid announced by the department for the particular auction, the reserve bid amount shall be the minimum reserve amount established by statute;

(c) “Non-qualified Bid” means a bid that is not eligible to participate in the auction because it does not meet the requirements of section (1)(b) of this rule.

(d) “Invalid or Insufficient Payments” are payments that are:

(A) Not received by the department by 5:00 p.m. (PT) on the date for payment set by the department;

(B) In a form other than one listed in section (4) of this rule;

(D) Less than the full amount of the corresponding bid received by the department; or

(E) Not submitted in a manner consistent with department’s instructions (including attaching the required completed forms).

(e) “PT” means Pacific Time (Daylight or Standard as dictated by the time of year).

(2) Auction Bidding Period. The tax credits auction bidding period is no less than three business days, not to exceed 7 business days; with specific dates as announced by the department.

(3) Tax Credit Certificates. The Oregon Office of Film and Television and the Higher Education Coordinating Commission will issue tax credit certificates for the prevailing qualified bids. A taxpayer to whom a certificate is issued may claim a credit in the amount shown on the certificate against Oregon personal income or corporate income or excise tax otherwise due for that tax year. The tax credit may not exceed the liability of the taxpayer in any one year. Any credit amount unused by the taxpayer may be carried forward to offset tax liabilities in the next three succeeding tax years. No transfer of the certificate (or the credit that it represents) is allowed.

(4) Determination of Qualifying Bids and Payments.

(a) Bids must be submitted on-line in a manner consistent with the department’s instructions and within the bidding period as outlined in section (2). Bids received before or after the bidding period will be considered a non-qualified bid. The department will determine the order of bids received by the electronic date and time stamp.

(b) A bidder may submit multiple separate bids.

(c) After a bid is submitted, a bidder must send, and the department must receive, a payment for the total amount bid. Invalid or insufficient payments will be returned to the bidder and the associated bid considered non-qualified. All bid payments must be received by the department no later than 5:00 p.m. (PT) on the payment date. The department will date stamp payments when they are received. The department will not consider postmarks when determining if the payment has been timely received. It is the bidder’s responsibility to ensure that the department receives the payment by the deadline. The method of payment is limited to the following:

(A) Financial institution-issued certified check;

(B) Financial institution-issued cashier’s check; or

(d) All payments will be held until the outcome of the auction is determined. As soon as practicable, the department will return payments to bidders that do not prevail at the auction. No interest will be paid on payments.

(e) A bid, once submitted, is irrevocable and may not be changed. A payment will only be returned if a bid does not result in the issuance of a tax credit certificate.

(5) Determination of the Prevailing Bid(s). After the payment deadline has passed, the department will determine the prevailing bids by placing the qualifying bids in order from highest bid amount to lowest bid amount. The department will allot tax credit certificates to the highest qualifying bids. In the event that two or more qualifying bids have identical bid amounts for the last tax credit increment (or increments) available, the prevailing qualifying bid will be the one the department received first as determined under section (4).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 315.514 & 315.643
REV 14-2020, amend filed 07/24/2020, effective 07/29/2020
Renumbered from 150-315.514, REV 44-2016, f. 8-12-16, cert. ef. 9-1-16
REV 6-2013, f. & cert. ef. 12-26-13
REV 4-2012, f. 7-20-12, cert. ef. 8-1-12
REV 3-2012(Temp), f. 5-17-12, cert. ef. 6-1-12 thru 7-31-12
REV 3-2006, f. & cert .ef. 7-31-06

Or. Admin. R. 150-315-0181 Oregon Kids Credit: Calculation of losses to be added back.

(1) For the purpose of calculating the modified adjusted gross income for the Oregon Kids Credit, each type of loss shall be considered individually. To determine individual losses, combine all income or loss from each separate source. If a net loss results from such combination, the net loss is used to calculate total losses.

(2) Oregon modifications to federal profits and losses are taken into account when calculating loss limits of the credit. For example, subtractions for marijuana or psilocybin business expenses (other than cost of goods sold) are allowed for Oregon per ORS 316.680(1)(i)-(j) but are not claimed on a Schedule C due to Section 280E of the Internal Revenue Code. These subtractions need to be included in Schedule C profit or loss for the purpose of calculating the modified adjusted gross income for the Oregon Kids Credit. Other subtractions for Oregon that modify federal gains, profits, or losses and that must be used in the calculation of modified adjusted gross income include Oregon-only passive losses, suspended losses, net operating losses, losses due to basis or depreciation differences, and pass-through entity adjustments.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 2023 Oregon Laws ch. 538 § 2
REV 27-2023, adopt filed 12/26/2023, effective 01/01/2024

Or. Admin. R. 150-315-0195 Research Conducted by Semiconductor Company Tax Credit

(1) The semiconductor company research and development tax credit applies to tax years beginning on or after January 1, 2024, and to tax years that are deemed to begin on or after January 1, 2024, pursuant to Treasury Regulation §1.441-2(c).

(2) The IRC §41(c)(4) alternative simplified credit method may be elected for purposes of calculating and claiming the ORS 315.518 tax credit.

(3) A taxpayer who calculates and claims the semiconductor research and development tax credit using the alternative simplified credit method must use the percentages specified in IRC §41(c)(4)(A) or IRC §41(c)(4)(B), as applicable, in place of the percentage specified in ORS 315.518(2)(a).

(4) The IRC §41(c)(4) alternative simplified credit method may be elected and revoked in conformity with Treasury Regulation §1.41-9(b), except that “director or their designee” shall be substituted in place of “Commissioner,” “Oregon Schedule OR-RESEARCH 150-102-130” shall be substituted for “Form 6765”, and “ORS 314.410(1)” shall be substituted for “Section 6501(a).”

(5) References to “gross receipts” in IRC §41(c) means the total sales of the taxpayer in this state as calculated under ORS 314.665, or, if the taxpayer apportions income under a method different from the method prescribed by ORS 314.650 to 314.665, Oregon sales as defined in OAR 150-317-0170 if the taxpayer were subject to ORS 317.090.

(6) References to “qualified research expenses” in IRC §41 means the sum of the in-house research expenses and contract research expenses for research conducted in Oregon and paid or incurred by a qualified semiconductor company during the taxable year.

(7) Companies claiming the semiconductor company research and development credit must calculate the refundable portion of the credit, if any, under ORS 315.519(2). The non-refundable portion of the tax credit equals the total tax credit minus the refundable portion of the tax credit.

(a) The non-refundable portion of the tax credit shall be applied first to the taxpayer’s regular tax liability calculated under ORS 317.061. Other payments shall then be subtracted from the regular tax liability calculated under ORS 317.061 before applying the refundable portion of the tax credit. Any non-refundable portion of the tax credit that remains unused may be carried forward to future tax years. The non-refundable portion of the tax credit may not be used to satisfy any ORS 317.090 minimum tax obligation.

(b) The refundable portion of the tax credit may be used to satisfy the minimum tax under ORS 317.090. The refundable portion of the tax credit also may be offset against any taxes or other debt collected by the department pursuant to ORS 293.250 prior to sending any refund to the taxpayer.

(8) A taxpayer claiming the semiconductor research and development tax credit must submit any form prescribed by the department’s forms and instructions applicable to the tax with their return.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 315.518
Statutes/Other Implemented: ORS 315.518 & 315.519
REV 1-2025, minor correction filed 01/02/2025, effective 01/02/2025
REV 49-2024, adopt filed 12/19/2024, effective 01/01/2025

Division 316 PERSONAL INCOME TAX GENERAL PROVISIONS

Or. Admin. R. 150-316-0006 Application of Capital Losses and Capital Loss Carryforwards

(1) Part-year resident and nonresident returns.

(a) A nonresident is allowed a capital loss or capital loss carryforward on the Oregon return when attributable to Oregon sources.

(b) A part-year resident is allowed a capital loss or capital loss carryforward on the Oregon return if the loss was incurred while a nonresident and is attributable to Oregon sources or if the loss was incurred while a resident.

(c) The amount of the capital loss or capital loss carryforward that is not attributable to Oregon sources may not be included as Oregon taxable income on the Oregon tax return. The capital loss or capital loss carryforward not attributable to Oregon sources cannot be used to reduce a capital gain attributable to Oregon sources.

Example 1 : Taxpayer is an Arizona resident and incurs a capital loss from Oregon sources. Taxpayer is allowed the capital loss to determine Oregon taxable income.

Example 2 : Taxpayer moves to Oregon and becomes a resident as of June 1. Prior to becoming a resident, taxpayer incurs a non-Oregon source capital loss of $50,000. Taxpayer is allowed to deduct a $3,000 loss on the federal return. Taxpayer may not include the $3,000 loss in the Oregon column on the Oregon return.

Example 3 : The same scenario as example 2, except taxpayer recognizes a capital gain of $70,000 as of August 1. On the federal return, taxpayer offsets the $70,000 gain with the $50,000 loss for a net gain of $20,000. The $50,000 loss may not be included in Oregon taxable income and may not be used to offset the capital gain recognized while the taxpayer was an Oregon resident.

(2) Full-year resident return.

(a) A resident is allowed a capital loss or capital loss carryforward on the Oregon return if the loss was incurred while a nonresident and was attributable to Oregon sources or if the loss was incurred while a resident.

(b) The amount of capital loss or capital loss carryforward that is not attributable to Oregon sources is added back on the Oregon tax return when determining Oregon taxable income. The capital loss or capital loss carryforward not attributable to Oregon sources cannot be used to reduce a capital gain attributable to Oregon sources and is added back on the Oregon tax return when determining Oregon taxable income.

Example 4 : In tax year 2017, taxpayer is a nonresident and incurs a non-Oregon source capital loss of $50,000 and has a $47,000 carryforward. As of January 1, 2018, taxpayer is a full-year Oregon resident. Taxpayer claims a $3,000 loss on the 2018 federal return attributable to the $47,000 capital loss carryforward. Taxpayer must add back the $3,000 loss on the Oregon return to determine Oregon taxable income.

Example 5 : The same scenario as example 4, except on March 5, 2018, taxpayer recognizes a $100,000 capital gain. On the 2018 federal return, taxpayer offsets the $100,000 gain with the $47,000 capital loss carryforward for a net gain of $53,000 on the federal return. The $47,000 capital loss carryforward must be added back on the 2018 Oregon return to determine Oregon taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.007
REV 74-2017, adopt filed 12/22/2017, effective 01/01/2018

Or. Admin. R. 150-316-0007 Policy — Application of Various Provisions of the Federal Internal Revenue Code

The policy of the State of Oregon is to follow the Internal Revenue Code as closely as possible relating to the computation of taxable income of individuals. Other areas, such as tax credits, special tax computations, and administrative provisions are not tied to federal law because they do not relate to the computation of taxable income.

(1) Claim of right: See Chapter 1007, Oregon Laws 1999 for provisions allowing recovery of state tax paid on items of income that are repaid.

(2) Installment sale reporting: A taxpayer may report a loss on the sale of an asset for federal purposes. The same sale can result in a gain at the Oregon level because of differences in the basis of the asset. The taxpayer cannot use the installment reporting method for federal purposes if the asset is sold at a loss for federal purposes. However, for Oregon tax purposes, the taxpayer may report the gain using the installment method. The difference between the loss claimed on the federal return and the Oregon gain will be an adjustment on the Oregon return.

(3) Beneficiaries of a qualified Subchapter S trust. ORS 316.007 provides that Oregon law is made identical in effect to the provisions of federal law. Under IRC section 1361(d)(1)(B), a beneficiary of a qualified Subchapter S trust (QSST) is treated as the owner of that portion of the trust which consists of stock in an S corporation with respect to which the QSST election was made. For purposes of Chapter 316, the beneficiary of a qualified Subchapter S Trust (QSST) shall be treated as if the beneficiary were a shareholder of the S corporation whose stock is owned by the trust.

Example 1: Mr. Bishop is the trustee and sole income beneficiary of the Bishop Trust, a qualified Subchapter S trust. The trust owns 100 shares (15 percent) of the common stock of United Lumber, an S corporation. United paid income taxes during the current year to other states on income that was also taxable by Oregon. Mr. Bishop, as beneficiary of the QSST, is treated as the owner of the S corporation shares owned by the QSST. As such, Mr. Bishop is entitled to claim a credit for taxes paid by United to other states under ORS 316.082.

Example 2: Ms. Johnson is a beneficiary of a trust that owns shares of an S corporation. The S corporation is one of several partners that own and operate a waste co-generation plant. The facility placed into service equipment that qualifies for a business energy credit under ORS 315.354. As beneficiary of the QSST, Ms. Johnson is entitled to claim the portion of the credit attributable to S corporation shares owned by the trust.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.007
Renumbered from 150-316.007-(A), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-316-0009 Policy — Application of Various Provisions of Tax Law to Domestic Partners

(1) As used in this rule:

(a) "Domestic partner" means a “partner” as that term is defined in ORS 106.310.

(b) "Fringe benefits" means employee benefits provided to an employee's domestic partner that are tax exempt when provided to an employee's spouse. Fringe benefits typically include, but are not limited to:

(A) Health insurance;

(B) Tuition payments; and

(c) "Imputed value" means the amount included in federal taxable income of the employee because the fringe benefits are provided to the domestic partner rather than a spouse.

(2) The imputed value of certain fringe benefits provided by an employer to an employee's domestic partner is exempt from Oregon income tax if those benefits are exempt from federal income tax for married individuals.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.023
REV 2-2025, amend filed 04/29/2025, effective 05/01/2025
Renumbered from 150-316.007-(B), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2009, f. & cert. ef. 1-5-09
REV 19-2008, f. 12-26-08, cert. ef. 1-1-09
REV 10-2006, f. 12-27-06, cert. ef. 1-1-07
REV 9-2000, f. 8-15-00, cert. ef. 9-1-00
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-316-0015 Adoption of Federal Law

With the adoption of the Personal Income Tax Act of 1969, Oregon personal income tax law was tied to the Federal Internal Revenue Code of 1954 with certain modifications. However, there have been periods during which Oregon law did not automatically adopt federal law amendments and enactments. The most recent of these periods and the federal law date to which each referenced period is connected are:

(1) For the period beginning January 1, 1985, Oregon personal income tax law is tied to federal law in effect, amended or enacted on or before December 31, 1984 with certain technical corrections, specifically Internal Revenue Code Sections 274(d) and 280F.

(2) For the period beginning January 1, 1987, Oregon personal income tax law is tied to the Federal Internal Revenue Code of 1986, as amended on or before December 31, 1986, with certain modifications.

(3) For the period beginning January 1, 1989, Oregon personal income tax law is tied to the Federal Internal Revenue Code of 1986, as amended on or before December 31, 1988, with certain modifications.

(4) For the period beginning January 1, 1991, Oregon personal income tax law is tied to the Federal Internal Revenue Code of 1986, as amended on or before December 31, 1990, with certain modifications.

(5) For the period beginning January 1, 1993, Oregon personal income tax law is tied to the Federal Internal Revenue Code of 1986, as amended on or before December 31, 1992, with certain modifications.

(6) For the period beginning January 1, 1995, Oregon personal income tax law is tied to the Federal Internal Revenue Code of 1986, as amended on or before April 15, 1995, with certain modifications.

(7) For the period beginning January 1, 1997, Oregon personal income tax law is tied to the Federal Internal Revenue Code of 1986 or as in effect for that tax year of the taxpayer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.012
Renumbered from 150-316.012, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
Repealed by TC 9-1981, f. 12-7-81, cert. ef. 12-31-81

Or. Admin. R. 150-316-0020 Tax Reform Act of 1984 Adjustments

(1) Any adjustments to a taxpayer’s 1984 Oregon taxable income due to modifications required under ORS 316.021 shall be made using either of the following methods:

(a) The taxpayer may amend the 1984 Oregon tax return and include such adjustments as increases or decreases to the taxpayer’s 1984 Oregon taxable income; or

(b) The taxpayer may include the amount computed in (C) below as an increase or decrease in the taxpayer’s 1985 Oregon tax liability. (This method is available to taxpayers who are required to file a 1985 Oregon tax return.)

(A) Compute the taxpayer’s 1984 Oregon tax liability without regard to the adjustments required in this subsection.

(B) Compute the taxpayer’s 1984 Oregon tax liability with regard to the adjustments required in this subsection.

(D) If the amount computed in (C) is less than zero then the difference computed in (C) decreases the taxpayer’s 1985 Oregon tax liability. If the amount computed in (C) is greater than zero, then the difference computed in (C) increases the taxpayer’s 1985 Oregon tax liability.

(2) For purposes of this rule, “taxpayer” means any natural person, estate, trust, or beneficiary whose income is in whole or in part subject to the taxes imposed by ORS Chapter 316.

(3) Any adjustments necessary to a partner’s 1984 Oregon tax return due to the provisions of this subsection, shall be reflected on the corresponding partnership return to which such adjustment applies.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.029
Renumbered from 150-316.021, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0025 Definition: “Resident”

(1) For purposes of ORS 316.027(1):

(a) “Domicile” means the place an individual considers to be the individual’s true, fixed, permanent home. Domicile is the place a person intends to return to after an absence. A person can only have one domicile at a given time. It continues as the domicile until the person demonstrates an intent to abandon it, to acquire a new domicile, and actually resides in the new domicile. Factors that contribute to determining domicile include family, business activities and social connections.

Example 1: Ron maintains a home in Oregon and works in Oregon. He purchased a summer home in Nevada and each year thereafter spent about three or four months in that state. He continued to spend six or seven months of each year in Oregon. He continued to maintain his home and his social, club and business connections in Oregon, but established his bank accounts in Nevada. The months not spent in Nevada or Oregon he spent traveling in other states or countries. Ron is domiciled in Oregon and is taxed as a resident of Oregon because he has not demonstrated intent to abandon his Oregon domicile nor has he shown an intent to make Nevada his permanent home.

(b) “Permanent place of abode” means a dwelling place permanently maintained by the taxpayer, whether or not owned by the taxpayer, and generally includes a dwelling place owned or leased by the taxpayer’s spouse. To constitute a permanent place of abode, the taxpayer must maintain a fixed place of abode over a sufficient period of time to create a well-settled physical connection with a given locality. It is distinguishable from “domicile” in that an individual may have several residences (or abodes), but only one domicile, at any given time.

(A) Rented or leased premises. A person is deemed to have a permanent place of abode even in rented premises, which he or she is free to leave at will, but from which the person has no present intent or desire to change. Factors that contribute to permanence include the amount of time spent in the locality, the nature of the place of abode, activities in the locality and the taxpayer’s intentions with regard to the length and nature of the stay.

(B) Other residential property. Generally, residential property, such as a house, condominium, or apartment, is not considered a permanent place of abode if the individual never uses the property as a dwelling. For example, if the taxpayer acquires residential property for investment or rental purposes, as the result of an estate settlement, or as part of a settlement in a divorce proceeding, and the property is never used by the taxpayer or the taxpayer’s family, the property is not considered a permanent place of abode for the taxpayer. For purposes of this rule, family includes the taxpayer, the taxpayer’s spouse, and lineal ascendants and descendants of the taxpayer. If the property is used during the tax year by the taxpayer, even if for just a day, and also used by the taxpayer’s family for a sufficient period of time to create a well-settled physical connection, then it is generally deemed to be a permanent place of abode for the taxpayer. However, use of the residential property by a family member will generally not be attributed to the taxpayer if the residential property is rented to the relative for fair rental value in an arm’s-length transaction or if the taxpayer never uses the property as a dwelling during the tax year at issue.

(C) Vacation home. A camp or cottage that is suitable for and used only for vacations is not a permanent place of abode. A dwelling that does not contain facilities ordinarily found in a dwelling, such as facilities for cooking and bathing, is generally not considered a permanent place of abode. A second home that contains all the amenities found in a primary residence does not constitute a camp or cottage even if it is located in a vacation area. Therefore, a second home that contains cooking and bathing facilities and is suitable for year-round living may constitute a permanent place of abode even though used primarily for vacations or on weekends.

(D) Temporary stay. A place of abode, whether in Oregon or elsewhere, is not deemed permanent if it is maintained only during a temporary stay of short duration for the accomplishment of a particular purpose.

Example 2: Wayne is a long-haul truck driver for an Oregon company. His work requires that he travel throughout the United States. He is domiciled in Oregon but does not maintain a permanent place of abode in Oregon. Wayne spends less than 31 days in Oregon during the year. Wayne’s only residence is in his truck, which has a sleeper unit, closet and refrigerator. Except for two weeks vacation each year, Wayne stays in any given locale only temporarily and only for the purpose of delivering or picking up a load. Because Wayne does not maintain a permanent place of abode elsewhere, he is taxable as a resident of Oregon.

Example 3: Douglas has lived and worked in Oregon all his life. On January 1, he retired, sold his personal residence, and began traveling throughout the United States. He has not established a new domicile outside of Oregon nor does he intend to give up his Oregon domicile. Because Douglas does not maintain a fixed place of abode over a sufficient period of time to create a well-settled physical connection with a given locality, he is considered not to have a permanent place of abode elsewhere. Thus, Douglas is taxed as an Oregon resident.

Example 4: James is domiciled in Oregon. After retiring, James sold his Oregon home and purchased a recreational vehicle (RV). James rents space year-round at an RV park in Arizona where he spends 7 to 9 months each year. James spends the remainder of his time traveling in the United States, including Oregon, but he does not remain in any particular locality more than thirty days. James is considered to have a permanent place of abode in Arizona, as his stay at the Arizona RV park constitutes the maintenance of a fixed place of abode over a sufficient period of time to create a well-settled physical connection with that locality. James is taxed as a nonresident as long as he does not establish a permanent place of abode in Oregon and he spends less than 31 days in this state.

(E) Military personnel. For purposes of this rule, an individual serving in the military is considered to have a permanent place of abode elsewhere during the time the individual resides outside of Oregon.

(2) For purposes of ORS 316.027(1)(a)(B), “temporary or transitory” means that a person’s stay in Oregon is not permanent and is not expected to last indefinitely. Generally, an individual who is domiciled elsewhere and who is simply passing through this state on the way to another state or country, is here for a brief rest or vacation, or to complete a particular transaction that requires presence in this state only for a short period, is treated as being in this state for temporary or transitory purposes, and is not considered a resident by virtue of physical presence here. Whether a person’s stay is temporary or transitory depends to a large extent upon the facts and circumstances of each particular case.

Example 5: Mark and Kim are domiciled in Minnesota. They maintain their family home there. Each October they come to the Oregon coast and stay through April, spending more than 200 days here during the year. Originally they rented an apartment or house for the duration of their stay. Three years ago they purchased a house in Oregon. The house is either rented or put in the charge of a caretaker from May to October. Mark has retired from active control of a Minnesota business but still keeps office space and nominal authority in it. Mark and Kim belong to clubs in Minnesota, but none in Oregon. Mark and Kim have no business interest in Oregon. Mark and Kim are not taxed as Oregon residents because their presence here is temporary or transitory.

Example 6: Juan is domiciled in Illinois. Following graduation from high school, he moved to Oregon to attend college. Juan works in Oregon during the summer and returns to Illinois to visit family several times each year. Juan is taxed as a nonresident as his stay in Oregon is for a temporary or transitory purpose.

(a) Temporary employment in Oregon. An individual domiciled in another state may be assigned to work in Oregon for a fixed and limited period, after which the person is to return to the permanent location. If the person takes an apartment or other housing in Oregon during this period, the individual is not deemed a resident, even though the individual spends more than 200 days of the taxable year in Oregon, because the person’s stay in Oregon is temporary or transitory. The individual will be taxable as a nonresident on income from Oregon sources.

Example 7: Don, a computer consultant, is domiciled in New York where he owns a home in which his family lives and where he keeps the bulk of his personal belongings. He votes in New York, maintains bank accounts there and returns to his home whenever possible. He accepts a position in Oregon with a large corporation with the expectation that the work will take one and one-half years. He spends virtually the entire time in Oregon, living in a house built by the employer, where his wife and family join him in the summer. He intends to return to New York when the job is completed. During this period he will be taxed as a nonresident, even though he is in the state more than 200 days during the year, because he is in the state for a temporary or transitory purpose.

(b) Indefinite employment in Oregon. If a work assignment in Oregon is not for a fixed and limited period, the person is not considered to be present in Oregon for a temporary or transitory purpose. If a permanent place of abode is maintained in Oregon, and the person is in this state for more than 200 days during the tax year, then the person is taxed as a resident of Oregon.

Example 8: Fran is domiciled in California. In January, she accepts a transfer to her employer’s Medford, Oregon office and rents an apartment there. The length of her assignment is indefinite, although Fran believes she may be able to obtain a promotion and transfer back to California within three years. Fran’s husband and children remain at the California residence and Fran returns there on weekends and holidays. Fran is taxable as a resident of Oregon because she maintains a permanent place of abode in Oregon, spends more than 200 days here, and her presence is not temporary or transitory.

Example 9: Li is domiciled in Idaho and works as a sales person for a manufacturing company. She spends her workweek traveling in a motor home in Oregon meeting with existing and potential customers. She returns to her Idaho home when it is convenient, but may be in Oregon for 2 or 3 months at a time. Li’s assignment is indefinite and thus she is not in Oregon for a temporary or transitory purpose. However, she does not maintain a permanent place of abode in Oregon, as she does not remain in any place for a sufficient period of time to create a well-settled physical connection with a given locality. Li is taxed as a nonresident.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.027
Renumbered from 150-316.027(1), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-316.027
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
1-69

Or. Admin. R. 150-316-0027 Status of Individuals in a Foreign Country

(1) General. For purposes of ORS Chapter 316, a nonresident includes a person who is a foreign nonresident as defined by this rule.

(2) “Foreign nonresident” means:

(a) An individual who is a “qualified individual” under Internal Revenue Code section 911(d)(1); and

(b) An individual who would be considered a “qualified individual” under IRC 911(d)(1) except that the person is not a U.S. citizen.

Example 1: Ricardo, a citizen of Mexico, is domiciled in Oregon. He has established his tax home & bona fide residence in Canada. Even though he is not a “qualified individual” under IRC 911(d)(1) because he is not a U.S. citizen, he is considered a foreign nonresident for Oregon tax purposes.

(3) To be considered a “qualified individual” under IRC 911, a person must maintain a tax home in a foreign country or countries and, for the same period of time, meet either:

(a) The bona fide residence test described in subsection (4); or

(b) The physical presence test described in subsection (5).

(4) To meet the requirements of the “bona fide residence” test, the taxpayer must:

(a) Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide residence in a foreign country or countries, and

(b) Maintain bona fide residence for an uninterrupted period of time that includes a full tax year.

Example 2: Sandra is a calendar year taxpayer. She establishes bona fide residence in Russia on November 12, 1997. She is transferred back to the United States on December 30, 1998. She does not meet this test as the period of bona fide residence does not include a full tax year (i.e., all of a calendar year). Sandra may qualify under the physical presence test if she meets its requirements.

Example 3: Assume the same facts as in Example 2, except that Sandra is transferred to England on December 30, 1998. She establishes bona fide residence in England where she continues to work until October 9, 1999 before returning to the United States. She qualifies under the bona fide residence test & will be taxed as an Oregon nonresident from November 12, 1997 to October 9, 1999.

(5) Physical presence test. To meet the “physical presence” test, the taxpayer’s tax home must be in a foreign country and the taxpayer must be physically present in a foreign country or countries for 330 full days out of a 12 consecutive month period.

(a) A full day means a period of 24 consecutive hours beginning at midnight.

(b) The 12-month period may begin on any day of the calendar month and ends with the day before the corresponding calendar day twelve months later. For example, a period beginning July 1 will end June 30 of the next year. If the period begins on February 29, it will end February 28 of the next year.

Example 4: John arrives in England on April 24, 1998, at noon. He remains in Europe until 2 p.m. on March 21, 1999 when he returns to the United States. John is present in a foreign country for 330 full days during at least two twelve-month periods: April 25, 1998 through April 24, 1999 & March 21, 1998 through March 20, 1999. John qualifies for foreign nonresident treatment from April 25, 1998 through March 20, 1999.

(6) Federal employees. Amounts paid by the U.S. government to its employees are not foreign earned income, and thus, do not qualify for a foreign earned income exclusion or a housing exclusion. However, if federal or military employees meet the bona fide residence test or the physical presence test, they may be taxed as foreign nonresidents for Oregon purposes.

(7) Spouses of foreign nonresidents. A spouse who does not qualify as a foreign nonresident shall be treated as a nonresident only if the spouse does not maintain a principal place of abode in Oregon for the tax year.

Example 5: Henry accepts an overseas assignment & leaves Oregon in July 1998. His wife remains in Portland at the family residence. Henry may be treated as a foreign nonresident if he meets the tests previously described. However, his wife will be taxed as a full year Oregon resident since her principal place of abode was not outside of Oregon.

(8) Effective date: The provisions of this rule are effective for tax years beginning on or after January 1, 1995. Claims for refund based on retroactive application of the changes to ORS 316.027 may be filed at any time.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.027
Renumbered from 150-316.027(1)(b), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-316-0035 Oregon Net Operating Losses — Treatment After 1984

(1) Applicability of this rule. This rule applies to the computation of a net operating loss (NOL) occurring in loss years beginning after December 31, 1984; and a net operating loss deduction (NOLD) allowed or allowable in tax years beginning after December 31, 1984.

(2) Definitions for purposes of this rule.

(a) “Prohibited amounts” means those amounts that the state of Oregon is prohibited from taxing, such as all stocks, bonds, Treasury notes, and other obligations of the United States as provided in 31 United States Code Section 3124. Prohibited amounts do not include such items as federally taxable social security benefits since Oregon is not prohibited from indirectly taxing such types of income.

(b) “Oregon Adjusted Gross Income (Oregon AGI)” for a full-year resident is generally the same as federal adjusted gross income (federal AGI). For a nonresident, “Oregon AGI” means the items included in federal AGI as defined in IRC Section 62 that relate to Oregon sources without modifications.

(c) “Modified Oregon taxable income” for a full-year resident is generally the same as federal taxable income as modified in IRC Section 172(d). For a nonresident, it means Oregon AGI reduced by the sum of the following:

(A) Federal itemized or standard deductions;

(i) Federal itemized deductions. For part-year and nonresident taxpayers, only the Oregon percentage of federal itemized deductions are used; or

(ii) Federal standard deduction. For part-year and nonresident taxpayers, only the Oregon percentage of the federal standard deduction is used;

(B) Federal personal exemption(s); and

(3) NOL for a full-year resident.

(a) For Oregon purposes, a resident’s NOL is computed in the same manner as for federal purposes without Oregon modifications. Generally, the Oregon NOL is the same as the federal NOL. The only modification necessary is to subtract prohibited amounts.

(b) The computation of the Oregon NOL begins with the Oregon AGI to arrive at modified Oregon taxable income. Modified Oregon taxable income is then adjusted as required by IRC Section 172(d).

(4) Application of an NOL for a full-year resident.

(a) General rule. An Oregon NOL for any loss years is applied in the same manner as the federal NOL as provided in IRC Section 172(b). If the loss was not attributable to Oregon sources and was incurred while the taxpayer was a nonresident, there is no Oregon NOL to carry over even if the taxpayer later becomes an Oregon resident. In such cases, the amount of the NOL carryover that is not attributable to Oregon sources is added back on the Oregon resident tax return. If a taxpayer carries back a federal NOL, the taxpayer is treated as carrying the loss back for Oregon purposes as well. If a taxpayer makes an election to carry over the federal NOL, the taxpayer is treated as making the same irrevocable election for Oregon purposes as well.

(b) Exceptions.

(A) If a taxpayer has an Oregon NOL but does not have a federal NOL, the taxpayer may elect to carry the Oregon NOL over to the next succeeding year. This is an irrevocable election that a taxpayer makes on a timely filed Oregon loss year return (including extensions). If no such election is made, then the taxpayer may only carry the Oregon loss forward or back in the same manner as provided in IRC Section 172(b).

(B) If a taxpayer is not required to file an Oregon return for all years to which the federal NOLD is applied, the Oregon NOL is carried to the year in which the loss may be first applied.

(C) The total number of years to which an NOL may be carried back or forward is the same for Oregon and federal (including exceptions and limitations).

(5) NOLD carryback and carryover amount for a full-year resident.

(a) A taxpayer’s NOLD, carryback, and carryover amount is computed in the same manner as for federal purposes. The method to compute the carryback and carryover amount is not modified for Oregon purposes.

(b) For a full-year resident, generally an NOLD, carryback, and carryover amount is the same as for federal purposes except that prohibited amounts as defined in section (2)(a) of this rule are not taken into consideration.

(6) NOL for a part-year resident and a nonresident.

(a) A nonresident is allowed an Oregon NOL for any loss year when the NOL is attributable to Oregon sources. A taxpayer is not allowed an NOL or carryover on the Oregon return if the loss was incurred while the taxpayer was a nonresident and the loss was not attributable to Oregon. The computation of the allowable NOL for Oregon purposes begins with Oregon AGI as defined in this rule, which is generally income after federal adjustments in the Oregon column.

(b) Next, calculate federal modified taxable income as it relates to Oregon. Starting with Oregon AGI, subtract federal itemized or standard deductions as multiplied by the Oregon percentage (as calculated on the Oregon return). Note: Federal exemptions are not required to be used in this calculation and may be ignored, because they always have a net effect.

(c) Add back any modifications provided in IRC Section 172(d) applied to all items of income and deduction included in Oregon AGI or federal deductions. The IRC Section 172(d) modifications attributable to Oregon sources are the following:

(A) Oregon NOLD from prior years included in Oregon income after adjustments.

(B) Net Oregon capital loss deduction.

(C) Excess of nonbusiness deductions over nonbusiness income that are from Oregon sources. Do not include the standard deduction or itemized deductions or non-Oregon items in this calculation.

(D) Nonbusiness federal itemized deductions or standard deduction multiplied by the Oregon percentage.

(d) Add back prohibited amounts as defined in this rule.

(7) Application of an NOL for a part-year resident and a nonresident.

(a) General rule. An Oregon NOL for any loss years is applied in the same manner as the federal NOL as provided in IRC Section 172(b). If the loss was not attributable to Oregon sources and was incurred while the taxpayer was a nonresident, there is no Oregon NOL to carry over. If a taxpayer carries back a federal NOL, the taxpayer is treated as carrying the loss back for Oregon purposes as well. If a taxpayer makes an election to carry over the federal NOL, the taxpayer is treated as making the same irrevocable election for Oregon purposes as well.

(b) Exceptions.

(A) If a taxpayer has an Oregon NOL but does not have a federal NOL, the taxpayer may elect to carry the Oregon NOL forward or back in the same manner as provided in IRC Section 172(b).

(B) If a taxpayer is not required to file an Oregon return for all years to which the federal NOLD is applied, the Oregon NOL is carried to the year in which the loss may be first applied.

(C) The total number of years to which an NOL may be carried back or forward is the same for Oregon and federal (including exceptions and limitations).

(8) NOLD carryback and carryover amount for a part-year resident and a nonresident.

(b) A part-year resident and a nonresident use the federal method without modifications, except that prohibited amounts are not taken into consideration, and the NOLD, carryback and carryover are based only upon amounts attributable to Oregon sources.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.028
REV 28-2018, amend filed 12/28/2018, effective 01/01/2019
Renumbered from 150-316.028, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-316.014, REV 6-2013, f. & cert. ef. 12-26-13
Renumbered from 150-316.014, REV 4-2012, f. 7-20-12, cert. ef. 8-1-12
REV 10-2010, f. 7-23-10, cert. ef. 7-31-10
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1986, f. & cert. ef. 12-31-86
RD 4-1986(Temp), f. & cert. ef. 7-29-86

Or. Admin. R. 150-316-0040 Administrative and Judicial Interpretations

As used in ORS 316.032(2) “administrative and judicial interpretations of the federal income tax law” include interpretive regulations promulgated by the Secretary of the Treasury, Revenue Rulings and Revenue Procedures issued by the Commissioner of Internal Revenue, and decisions of the federal courts interpreting those provisions of the Internal Revenue Code that are incorporated into Oregon law under ORS 316.007, regardless of the date of promulgation or issuance of the regulation, ruling, procedure or decision.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.032
Renumbered from 150-316.032(2), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0043 Qualified Business Income Reduced Tax Rate (QBIRTR)

(1) Definitions. For purposes of ORS 316.043 and this rule:

(a) “Employee” means an individual in the service of another under any contract of hire, express or implied, oral or written, where the person for whom the service is performed has the power or right to control and direct the individual in the material details of how the work is to be performed.

(b) “Disregarded Entity” means an entity with only one owner that is not recognized for tax purposes as an entity separate from its owner.

(d) “Original return” is the first return filed for the tax year or the latest subsequent return filed by the due date of the return. If a timely extension was filed, the due date is the extended due date.

(2) Timing of Election. The Qualified Business Income Reduced Tax Rate (QBIRTR) is irrevocable and must be made on the original return filed on or before the due date with regard to extensions.

(3) Multi-tiered Entities. If a partnership or S corporation is an upper-tier partner in a lower-tier partnership and the lower-tier partnership meets the employee requirement, nonpassive income from the lower-tier partnership that passes through to the upper-tier entity and in turn to a partner or shareholder of the upper-tier partnership or S corporation may qualify for the QBIRTR, so long as the partner or shareholder of the upper-tier entity materially participates in the lower-tier partnership’s trade or business and makes an election on the partner or shareholder’s original return.

(4) Employees of disregarded entities are treated as employees of the owner of the disregarded entities.

(5) Employee Requirement.

(a) Leased employees include workers who are paid by a professional employer organization (PEO) that enters into a contract with a contracting company. The workers subsequently perform their services for the contracting company, which has the right to control and direct the leased employee in the material details of how the work is to be performed. The contracting company pays the PEO amounts of wages and other benefits due the workers, plus a fee for the PEO’s services. The PEO directly pays the workers’ wages for the services performed for the contracting company. Since the employees are performing services as employees for the contracting company and the contracting company is a common law employer responsible for paying their wages, these employees may be included as employees of the contracting company for purposes of the QBIRTR.

(b) Persons performing services for another not as employees, but as independent contractors may not be used to qualify for the QBIRTR.

(6) Individuals. All members are pass-through entities subject to the personal income tax imposed by ORS chapter 316 and have elected to pay the pass-through business alternative income tax. The pass-through entity will have an addition in their Oregon tax in order to be considered for the QBIRTR and a tax credit may be taken by the individual for taxes paid by the entity.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.043
REV 35-2022, amend filed 12/28/2022, effective 01/01/2023
REV 33-2020, adopt filed 12/23/2020, effective 01/01/2021

Or. Admin. R. 150-316-0045 Taxable Income of Nonresidents and Part-year Residents

(1) The taxable income of a nonresident is the taxpayer's federal taxable income from Oregon sources as defined in ORS 316.127, with the modifications provided in ORS Chapter 316 and other Oregon laws as they relate to nonresidents. In computing taxable income, nonresident taxpayers are allowed a proportionate share of all deductions, with required modifications. This includes the accrued federal tax deduction, and itemized deductions or the optional standard deduction. The fraction to be used in making the proration of deductions is provided in OAR 150-316-0135.

(2) The taxable income of a part-year resident is the taxpayer's federal taxable income, as defined in the laws of the United States, modified and adjusted by ORS Chapter 316 and other Oregon laws. The tax on the entire taxable income of part-year residents is multiplied by the fraction provided in OAR 150-316-0135 to determine the tax on income derived from Oregon sources.

(3) For purposes of determining the proration of tax under ORS 316.117, a part-year Oregon resident includes in Oregon source income the sum of:

(a) All guaranteed payments and taxable cash distributions from a partnership or S corporation received while the partner or shareholder was an Oregon resident, plus

(b) Payments or distributions received from an entity that has business activity in Oregon while the taxpayer was not an Oregon resident. The payments or distributions are subject to the allocation and apportionment provisions of ORS 314.605 to 314.675.

Example: Joe was a California resident all of 2000 and a partner in a California partnership. The partnership has no property, payroll, or sales in Oregon. Joe moved to Oregon March 1, 2001. He files calendar year returns. He receives $1,000 each month as a guaranteed payment. The payments received through February, 2001 are not Oregon source income because they were received prior to the date Joe became an Oregon resident from an entity with no business activity in Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.037
Renumbered from 150-316.037, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08
REV 3-2002, f. 6-26-02, cert. ef. 6-30-02
REV 7-2001(Temp), f. & cert. ef. 12-31-01 thru 6-28-02
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-316.037(1)(b)
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-316-0050 Farm Capital Gain

(1) Definitions. For purposes of ORS 316.045 and this rule:

(a) “Substantially complete termination” means the taxpayer is:

(A) No longer involved, directly or indirectly, in a trade or business engaged in farming, or

(B) No longer owns, directly or indirectly, property used in the trade or business of farming.

(b) “A trade or business engaged in farming” means a distinct farming operation separately run from the taxpayer’s other businesses. Businesses that share employees, equipment, buildings, or land are not separate businesses. Businesses that share records, accounts, registration, identification numbers, or a business name are also not separate businesses.

(2) A taxpayer’s net long-term capital gain qualifies for the reduced tax rate if all four of the following tests are met:

(a) Asset Test. The gain is derived from either IRC section 1231 assets or an ownership interest of at least 10 percent in an entity.

(b) Use Test. The property that was sold consisted of:

(A) An ownership interest in an entity engaged in the trade or business of farming; or

(B) Property that was predominantly used in the trade or business of farming.

(d) Termination Test. The sale is a substantially complete termination of all of the taxpayer’s ownership interests in:

(A) A trade or business engaged in farming; or

(B) Property that is predominantly used in the trade or business of farming.

(3) Asset Test. The part of the taxpayer’s net long-term capital gain that is eligible for the reduced rate must be from capital assets under IRC section 1231 or a 10 percent or more ownership interest in an entity engaged in the trade or business of farming (see section (13) for related examples).

Example 1: Sofie owns 50 acres of land. Of the 50 acres, she used 10 acres for her hobby of showing horses. She had a small arena and stables on the land for her horses. Sofie sold the entire 50 acres to her neighbor. The gain from the sale does not qualify for the reduced tax rate because the asset does not meet the asset test. The land was not used in a trade or business, thus the asset was not an IRC section 1231 asset. If Sofie had been in the trade or business of showing horses, the land used would have been a qualifying asset and Sofie would then be required to look at the other three tests to determine whether she qualifies for the reduced tax rate.

Example 2: Forty years ago, Wayne and Patty purchased an orchard next to their home. They did not regularly harvest the fruit, care for the trees, or file farm schedules with any of their tax returns. They mostly used the property for themselves and the horses they owned for personal use and usually gave extra fruit away to family and friends. Every two or three years they held U-Pick sales at the orchard, and claimed the not-for-profit income as required. Last year, the urban growth boundary moved to include their parcel. Wayne and Patty wanted to sell the property to developers so they had all the trees removed and sold the property. The sale of the orchard does not qualify for the reduced rate because it was not held as a trade or business thus it was not an IRC section 1231 asset. It was land held for investment and personal use.

(4) Use Test. The asset that was sold must be predominantly used in the trade or business of farming. Any other use of the asset must be incidental to, and not interfere with, the primary purpose of being engaged in the trade or business of farming.

(a) Property used 80 percent or more in a farming trade or business. Property used 80 percent or more in the trade or business of farming is considered and presumed to be predominant use. Accepted farming practices common to the type of farming activity and region, such as land lying fallow for one year, are included in the trade or business of farming.

(b) Property used more than 50 percent but less than 80 percent in a farming trade or business. Upon review of the facts and circumstances of each case, property used more than 50 percent but less than 80 percent in the trade or business of farming qualifies as predominant if the difference between the actual percentage use in a farming trade or business and 80 percent use in a farming trade or business is incidental. Incidental use does not include holding property as an investment, using property for personal (non-business) use, or using property for another business. Incidental use includes, but is not limited to:

(A) Farmland that is bordered by or contains a waterway;

(B) Land that consists of terrain that cannot be farmed (i.e. marshland, desert);

(D) The period of the time when the farm property or business was “actively for sale” immediately prior to the sale. A property was “actively for sale” if the property was listed and advertised for sale for a price comparable to similar properties and the seller did not reject any reasonable offers.

(c) Property used for personal or business activities that take place on the land concurrently and do not interfere with the primary farming trade or business use are considered incidental use.

(d) Allocation. Property that is used less than 80 percent in a farm trade or business may be allocated between the actual portion that is predominantly used in the business of farming and the portion not predominantly used in the business of farming.

Example 3: Cinda raised corn and beans on 500 acres the entire time she owned the acreage. She used the cornfields as a corn maze after she harvested all the corn. She sold the 500 acres of corn and bean fields to the cannery and recognized a capital gain. Assuming the gain from the sale meets the other three tests, the gain from the sale of Cinda’s farm qualifies for the reduced tax rate because Cinda used the property predominantly (80 percent or more) in the trade or business of farming even though Cinda used the farmland for an incidental purpose after the harvest.

Example 4: Hilda and Steve owned and operated a 30 acre farm. Their farm had a waterway and riparian land that was not farmed which took up 10 acres of the farm. Assuming they meet the other three tests, Hilda and Steve qualify for the reduced tax rate because their property was predominantly used in the business of farming. The farm use qualifies as predominant for the entire 30 acres because their farm use was more than 50 percent, but less than 80 percent and the 33 percent (10 acres/30 acres) not used for farming was incidental.

Example 5: Deborah sold 20 acres of land. While she owned the land, she leased out 15 acres to a farmer who grew crops. She used the remaining 5 acres as a motor cross training area where she ran a business giving riding lessons and charging people to use it for practice. Assuming Deborah meets the other three tests, the 15 acres used for farming qualifies for the reduced tax rate. If Deborah had used the 5 acres for personal use instead of a separate business, she still would qualify for the reduced tax rate on the 15 acres used for farming.

Example 6: Lois inherited some land 20 years ago. At that time, a farmer was leasing the land and continued to farm the land until he retired 5 years later. For the last 15 years, Lois held the land for investment and did not use the land in the trade or business of farming. Lois does not qualify for the reduced tax rate because she only used the property in the business of farming for 25 percent of the time she owned it (5/20 years = .25 or 25%).

(5) Relationship test. The gain from the sale of an asset does not qualify for the reduced tax rate if the asset is sold to a related taxpayer under IRC section 267 even if all of the other three tests are met.

Example 7: Claudia and Janie are cousins who own a farm together as a partnership. They decide to sell the business to Darren, Claudia’s brother (and Janie’s cousin). Assume the sale meets the other three tests. Janie’s qualifying capital gain is eligible for the reduced tax rate. Claudia’s capital gain is not eligible because Darren is a related party according to IRC section 267.

(6) Termination Test. If a taxpayer sold the taxpayer’s interest in a trade or business that is engaged in farming, the taxpayer may not be directly or indirectly engaged in that farming trade or business. The sale of the taxpayer’s interests through an installment sale constitutes a substantially complete termination for purposes of ORS 316.045 and this rule. A taxpayer has substantially terminated his interests in the trade or business of farming even though the taxpayer retained a portion of the farm for personal use.

Example 8: Rich and Darcy own 20 acres. They grow corn and squash on 15 acres, and have a five-acre apple orchard. They operate their orchard and crops as one business. They sell the five-acre apple orchard for a gain of $50,000 and retain the other 15 acres. The gain from the sale of the apple orchard does not qualify for the reduced rate because they did not substantially terminate all of their interests in a trade or business engaged in farming. If Rich and Darcy had sold the entire business including all of their property used in the trade or business of farming and the other three tests were met, the gain from the sale would qualify for the reduced tax rate.

Example 9: Bill and Sharon owned a dairy operation and a hops farm. The two businesses were completely separate. They had separate employees, equipment, and records. The two businesses also had different names, records, and federal identification numbers. Bill and Sharon sold the dairy farm. After selling all of their dairy equipment and dairy cows (Holstein), they realized a capital gain of $350,000. They decided not to sell the hops farm. Their gain on the sale of the dairy operation qualifies for the reduced tax rate. Even though Bill and Sharon still own the hops farm, they have sold their entire dairy business.

Example 10: Shawn sold 18 of his 20 acres in which he farmed Christmas Trees. The 2 acres Shawn still owns are for personal use and he does not sell the trees produced on his personal farm. Assuming the other three tests are met, Shawn is no longer in the business of farming and he qualifies for the reduced tax rate on the capital gain from the sale.

(7) A sale that includes the farm dwelling or homesite. The sale of a homesite and the land and structures consistently and routinely used in conjunction with the home at the same time as the sale of a farming activity requires allocation of the gain between the homesite and the other assets. The proceeds from the sale of the homesite is not property employed in the trade or business of farming and do not qualify for the reduced tax rate.

Example 11: Homer and Ruth raised various crops on 80 acres of farmland they owned. Homer and Ruth lived close to town so they rented the farm home that was located on a parcel next to the acreage. Homer and Ruth retired from the farming business and sold the farmland and the rental for a gain of $1 million ($400,000 attributed to the farmland and $600,000 attributed to the homesite and structures and land associated with the homesite). Because the sale of the 80 acres met each of the four tests, the $400,000 capital gain from the sale of the farmland qualifies for the reduced tax rate. The proceeds from the sale of the rental do not qualify for the reduced rate because rental real estate is not employed in the trade or business of farming.

Example 12: Assume the same facts as Example 11 except that when Homer and Ruth sold the farm, they had lived in the home that was adjacent to the farmland for the entire twenty-five years. The gain from the sale that is attributable to the farmland, or $400,000, qualifies for the reduced rate. The gain of $600,000 on the sale of the residence does not qualify for the reduced rate; however, a portion of it may qualify for the principal residence exclusion under IRC section 121.

(8) Depreciation Recapture. IRC section 1231 gain may be treated as ordinary income under IRC sections 1245 and 1250 recapture rules. If the capital asset is subject to depreciation recapture under IRC sections 1245 or 1250, the portion of the gain that is treated as ordinary income does not qualify for the reduced tax rate.

Example 13: Frank sold his farm, which included three silos, and all four tests were met. The silos are capital assets subject to IRC section 1245 recapture. The part of the gain from the sale of the silos that is treated as ordinary income is not eligible for the reduced tax rate. However, the part of the gain from the sale of the silos that is treated as long-term capital gain on the federal return is eligible for the reduced tax rate on the Oregon return.

(9) Capital loss. If all four tests are met and the taxpayer is reporting a capital loss, it could affect the capital gain eligible for the reduced tax rate. Compute the net capital gain or loss from all other property sales or exchanges for the year that are taxable to Oregon. If this is a net capital loss, the amount eligible for the reduced tax rate is the qualifying farm capital gain minus the net capital loss from other property sales or exchanges taxable to Oregon.

Example 14: Ron sold his farming business for a net long-term capital gain of $800,000. During the year, he also sold other property for a net capital loss of $150,000. Assuming his sale of a farm business meets all four tests, he is only eligible for the reduced tax rate on $650,000 (net farm long-term capital gain minus other net capital loss) of his taxable income.

(10) Installment Method under IRC §453. Installment sales are eligible for the reduced tax rate if the sale meets all four tests as explained in section (2) of this rule. The amount of capital gain eligible for the reduced tax rate must be determined each year. The percentage of gain eligible for the reduced tax rate is equal to the qualifying farm long-term capital gain from the sale divided by all capital gain from the sale. Apply this percentage to the capital gain from the sale reported each year to determine the amount that qualifies for the reduced tax rate. If there is capital loss from the sale of other property as described in section (9) of this rule, during a tax year that the installment sale is reported, this may reduce the gain eligible for the reduced tax rate.

Example 15: Larry sells his farm in 2007 and meets all four tests to receive the reduced tax rate. He elects to recognize the income from the sale using the installment method under IRC §453. Larry will receive half of the sale price in 2007 and one-fourth of the sale price each in 2008 and 2009 plus interest. Of the capital gain from the sale, $300,000 qualifies for the reduced tax rate and $100,000 does not. Larry’s percentage eligible for the reduced tax rate is $300,000 of eligible capital gain divided by $400,000 of total capital gain, or 75 percent. The buyer also paid interest to Larry, but it is claimed separately on the return. In 2007, Larry will claim his capital gain from the sale of $200,000. Of that amount, 75 percent or $150,000 is eligible for the reduced tax rate. In 2008 and 2009, Larry will claim the farm capital gain rate for $75,000 ($100,000 x 75 percent) of capital gain from the sale reported each year.

Example 16: Assume the same facts as example 15 except that Larry has a net capital loss of $40,000 in 2008 from the sale of other property. In 2008, the amount eligible for the reduced tax rate is $35,000 (qualifying net long-term capital gain minus other capital loss) of his capital gain.

(11) Like-kind Exchanges. Like-kind exchanges may be eligible for the reduced tax rate when the gain is recognized assuming all four tests are met. The taxpayer must keep detailed records to show that the property would have qualified for the reduced tax rate if it had been a sale instead of an exchange.

Example 17: Morgan had farmland and decided to exchange it for land that he wants to hold for investment. The exchange meets all four tests. If Morgan had sold the property, he would have had capital gain of $400,000 that would have qualified for the reduced tax rate. Later Morgan sells the investment property and claims capital gain of $700,000. Of this amount, $400,000 is eligible for the reduced tax rate for farm capital gain, because it would have been eligible if he had not deferred it.

(12) Sale of property by pass-through entities. Trust, partnership, or S corporation sale of farm property may be eligible for the reduced tax rate. To qualify, each individual beneficiary, partner, or shareholder (as the case may be) must meet all four tests as described in section (2) of this rule.

Example 18: Becky, Martha, and Jessica are equal owners of a partnership. The partnership sold its only farm property to Jessica’s father for a gain of $600,000. The sale was to a related party of Jessica, so Jessica does not meet all four tests even though her father was not a related party to the partnership. Becky and Martha are eligible for the reduced tax rate for their share of the gain. If the partnership still owned other farm property that was part of the same farm business as the property that was sold, none of the owners would be eligible for the reduced tax rate.

Example 19: Kendra owns 5 percent of an S-corporation that owns a cattle ranch and a crop operation. The cattle ranch and crop operation are completely separate businesses. The S-corporation sold the cattle ranch to a party unrelated to Kendra. The 1231 gain from the sale of a farming business flows through to Kendra and she is eligible for the reduced tax rate.

(13) Sale of interest in pass-through entity. Sale of interest in a pass-through entity (partnership or S-corporation) that is in the business of farming, may qualify for the reduced tax rate. All four tests must be met and the taxpayer must be a 10 percent owner of the pass-through entity to qualify. Assuming all four tests are met, the amount of gain eligible for the reduced tax rate is the amount of farming business of the entity divided by all business of the entity. The amount of capital gain eligible for the reduced tax rate can be determined using the “income method.” The taxpayer may use a different method if the department determines it reasonably reflects the entity’s income and expenses.

(a) Income method is the entity’s farm income divided by the entity’s total income as shown on the partnership or S-corporation return the year the interest is sold. Multiply this percentage by the capital gain reported from the sale of interest in the entity.

Example 20: Ian sold his entire partnership interest of 25 percent to an unrelated party during the year. The partnership had various businesses, most were farming activities, but some were not. That year, the partnership reported farming income of $600,000 and total income of $800,000. Ian will report his share of the partnership income before the sale and the long-term capital gain from the sale of his interest in the partnership. Of the long-term capital gain from the sale, 75 percent ($600,000 divided by $800,000) qualifies for the reduced tax rate.

Example 21: Darlene owned shares in an S-corporation that were 10 percent of the total shares. The S-corporation sold a partnership that grew crops. The S-corporation owned 50 percent of the partnership and sold all of its interests. The partnership interest was sold to someone unrelated to Darlene and Darlene has no other interests in the partnership. The gain from Darlene’s ownership interest in the partnership does not qualify for the reduced tax rate. Darlene was only a 5 percent owner of the partnership (10% x 50% = 5%). If the S-corporation had owned the business, Darlene would have been eligible for the reduced rate on her portion of the 1231 gain.

(14) Sale in more than one tax year. Prior-year sales of farm property or a farming business sold over more than one year may be eligible for the reduced tax rate. It can take more than one year to sell a farming business or all of a taxpayer’s property used in farming because the property is sold to more than one buyer. To qualify for the reduced tax rate, all farm property (or all property from a farming business) must be actively for sale from the year of the first sale until the year of the final sale. Each sale is separately considered to see if it meets the requirements to qualify for the reduced tax rate, but all farm property or property from a farming business must be sold within a reasonable amount of time (usually no more than three tax years from the first sale to the final sale of qualifying farm property) for any of the prior year sales to qualify. The reduced tax rate on the prior year sales cannot be claimed until the taxpayer has sold all farm property or all property from a farming business. A property is “actively for sale” if the property was listed and advertised for sale for a price comparable to similar properties and the seller did not reject reasonable offers.

Example 22: Deanna wants to retire from farming. She owns 100 acres of farmland in four different locations all run as one business and all property is actively for sale. She sells 20 acres to an unrelated neighbor in 2006. She files her 2006 tax return and cannot claim the reduced tax rate on the gain because she is not out of the business of farming. In 2007, she gave one farm to her daughter and sold one farm to an unrelated party. She files her 2007 tax return and again cannot claim the reduced tax rate because she is still in the business of farming. Finally, in September 2008 Deanna sells the remaining farmland and equipment and is out of the business of farming. The long-term capital gain from three of the sales qualifies for the reduced tax rate because the property was actively for sale the entire time. The gift to a related party does not stop the other sales from qualifying for the reduced tax rate. Deanna may now amend her tax returns for 2006 and 2007 and claim the reduced tax rate on the qualifying capital gain from the earlier sales that qualify.

Example 23: Gary owned two farms and operated them as one business. He sold one of his farms in March 2006 to the farmer who had been leasing the property. In 2007, his health worsened and he decided to retire from farming and put his remaining farm up for sale. In 2008, he finds a buyer and sells the remaining farm and equipment. The sale in 2006 does not qualify for the reduced tax rate because Gary did not have his remaining farm property actively for sale and he had not sold all of the property from his farming business. The sale in 2008 does qualify for the reduced tax rate because Gary is now out of the business of farming.

(15) Sold farm property and then bought another. If a taxpayer sells farm property and then buys other farm property, they may qualify for the reduced tax rate. The taxpayer must meet all four tests as described in section (2) of this rule with the sale of farm property before purchasing other farm property to qualify for the reduced tax rate.

Example 24: Jeanine sold her farm and equipment so she could start a retail business. After difficulty getting started, she decided to go back to farming and purchased another farm. Jeanine qualifies for the reduced tax rate because she had completely terminated her interest in property used in farming at the time of the sale and met the other tests.

Example 25: Frances put her farm up for sale, but before it sold, her father died and she inherited some of his farming property. She decided not to sell the inherited property, but to continue to farm it as a separate business after her original farm was sold. Frances qualifies for the reduced tax rate because she sold a farming business.

History

Statutory/Other Authority: ORS 305.100 & 316.045
Statutes/Other Implemented: ORS 316.045
Renumbered from 150-316.045, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08

Or. Admin. R. 150-316-0055 Transitional Provision to Prevent Doubling Income or Deductions

(1) This section allows and requires adjustments to the taxpayer’s net income to alleviate inconsistent treatment of income and deductions resulting from the transition from the Personal Income Tax Act of 1953 to the Internal Revenue Code.

(2) The section allows and requires adjustments to prevent income items from being doubly taxed and deduction items from being deducted twice. In addition adjustments are allowed or required to prevent income from escaping taxation or the loss of a deduction due to the inconsistent treatment.

(3) This section will not apply unless it can be shown that failure to allow or require an adjustment will result in the taxation of income or allowance of a deduction that had already entered into the computation of Oregon income in years beginning prior to January 1, 1969, or, failure to allow or require an adjustment will result in income escaping taxation or loss of a deduction that had already entered into the computation of federal income in years beginning prior to January 1, 1969 and would have been taxed or deducted on an Oregon return if it were not for the change in the Oregon Law. This section does not allow or require adjustments to account for items that are not solely transitional, viz., it does not allow or require adjustments for items of income or deductions not otherwise taxable or deductible under the Internal Revenue Code in years beginning prior to January 1, 1969 or beginning on and after January 1, 1969.

Example 1: Federal taxes on telephone and telegraph tolls were deductible in years beginning prior to January 1, 1969 for Oregon purposes under the Personal Income Tax Act of 1953. They are not deductible under the Internal Revenue Code and, therefore, not deductible for Oregon purposes for tax years beginning on or after January 1, 1969.

No adjustment is allowed under ORS 316.047 to deduct these taxes for Oregon purposes. The item is not transitional. They were not deductible under the Internal Revenue Code for tax years beginning before January 1, 1969 nor for tax years beginning on or after January 1, 1969.

Example 2: A net operating loss as defined in section 172, Internal Revenue Code, was realized in 1968 for both state and federal purposes. The loss was carried back three years and deducted for federal purposes with none to be carried forward to subsequent years. Oregon law for tax years beginning prior to January 1, 1969 allowed a five year carry-forward and no carry-back. An adjustment is allowed under this section to carry the net operating loss forward for five years. The amount of the net operating loss and the amount deductible in each year shall be determined under section 172, Internal Revenue Code, without regard to the carry-back provisions. This is a deduction that had entered into the computation of federal net income in years beginning prior to January 1, 1969 and would have been deducted on an Oregon return if it were not for the change in the Oregon law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.047
Renumbered from 150-316.047-(A), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
12-19-75
11-73
1-69

Or. Admin. R. 150-316-0060 Taxable Income of Resident

(1) Definition. The taxable income of a resident of this state is taxable income as defined in the laws of the United States, modified and adjusted by ORS Chapter 316 and other laws of this state applicable to personal income taxation. Such laws have the general effect of incorporating all the provisions of the federal Internal Revenue Code with regard to the measurement of personal taxable income except as otherwise specifically provided by Oregon law. For example, the Oregon standard deduction is not deductible in the same amount as the federal standard deduction amount.

(2) Oregon Adjusted Gross Income Defined.

(a) For tax years beginning prior to January 1, 1985, Oregon adjusted gross income is federal adjusted gross income as defined under IRC Section 62 as of the dates specified in ORS 316.012. Oregon adjusted gross income incorporates any differences between the federal definition of adjusted gross income and the Oregon definition of adjusted gross income for any given year.

(b) For tax years beginning after December 31, 1984, Oregon adjusted gross income is federal adjusted gross income without any of the modifications, additions, or subtractions required under ORS Chapter 316.

(3) Transfers of property between spouses or incident to divorce. The transfer of property from one spouse to another incident to a divorce property settlement is considered a nontaxable event for Oregon purposes. The basis of the property transferred in the hands of the transferor shall carry over and become the basis of the property in the hands of the transferee.

(4) Community property income. An Oregon resident whose spouse resides in a community property state is taxable upon the share of the spouse’s community property income that is considered earned by the Oregon resident according to the laws of the community property state. Credit for taxes paid to another state under ORS 316.082 is allowed to Oregon residents whose share of community property income is taxed by Oregon and another state. See ORS 316.082 and the rules thereunder for computation of the credit.

Example 1: Van and Lisa are married. Lisa lives and works in Salem, Oregon. Van lives and works in Seattle, Washington. Van and Lisa each deposit their separate paychecks into a joint Oregon checking account that is used to pay living expenses for both of them. They visit each other frequently. They are not permanently separated by a legal decree and have no intention of filing for divorce. Under Washington law, all property acquired after marriage by either spouse in the marriage or both, other than by gift, bequest or inheritance, is community property. Because Van’s wages are community property under Washington law, and Van and Lisa are not permanently separated, Lisa must include one-half of Van’s Washington earnings in Oregon income. Lisa may not claim a credit for taxes paid to another state because there is no state income tax imposed on the earnings by both Oregon and Washington.

Example 2: Juan and Maria are married. Juan receives a promotion and moves to Boise, Idaho, to live and work until retirement. Maria stays in Medford, Oregon, and continues her job until she can retire in five years. They are not permanently separated by a legal decree and have no intention of filing for divorce. Under Idaho law, earnings of spouses domiciled in Idaho are community property absent a written agreement that provides otherwise. Since Juan and Maria are not permanently separated and have not agreed to treat their earnings as separate income, Maria must include one-half of Juan’s Idaho wages in her Oregon income. Maria would be entitled to claim credit for taxes paid to another state based on the income that is taxed by both Oregon and Idaho.

(5) Distribution of a trust’s income accumulation. See ORS 316.737 and OAR 150-316-0575 for the treatment of trust income accumulation distributions.

(6) Retirement benefit plans.

(a) Resident taxpayers must include in Oregon taxable income all amounts received from retirement benefit plans. For tax years beginning on or after January 1, 1996, and before January 1, 2000, nonresidents are not taxed by Oregon on retirement income. For tax years beginning after December 31, 1999, nonresidents who retain their Oregon domicile are taxable on Oregon source retirement income. See ORS 316.127(a).

(b) Conversion of a traditional IRA to a Roth IRA under IRC Section 408A is deemed a distribution for federal tax purposes. The amount included in federal taxable income is taxable to an Oregon resident. A taxpayer who is an Oregon resident for a part of tax year 1998 and who elects to recognize the conversion amount over four years, must include a prorated amount in Oregon income. If the election to recognize income over four years is not made, the converted amount must be included in income if the taxpayer is an Oregon resident at the date of conversion.

Example 1: Sam was a resident of Nevada at the time he converted his traditional IRA to a Roth IRA in 1998. The total amount of the 1998 distribution was $2,000. Sam will recognize the IRA distribution over the four-year period beginning with 1998. In Oct. 1, 1999, Sam established permanent residency in Oregon. The 1998 IRA distribution will be recognized in taxable income as follows:

Year — Federal — Oregon

1998 — $500 — $0

1999 — $500 — $125 (prorated for Oregon residency period)

2000 — $500 — $500

2001 — $500 — $500

(c) Conversion of traditional IRAs to Roth IRAs after 1998. For tax years after 1998, converted amounts must be included in Oregon taxable income if, at the time the conversion is made, the taxpayer is an Oregon resident.

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.048
REV 3-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.048, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2001, f. 7-31-01, cert. ef. 8-1-01
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
REV 7-1998, f. 11-13-98 cert. ef. 12-31-98
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
Renumbered from 150-316.062, TC 9-1978, f. 12-5-78, cert. ef. 12-31-78
1-1-77
12-19-75
11-73
12-70
1-69

Or. Admin. R. 150-316-0065 Social Security and Railroad Retirement Benefits Eligible for Subtraction

A subtraction from federal taxable income is allowed for social security and tier I railroad retirement benefits as defined under Internal Revenue Code Section 86. Other benefits paid by the Railroad Retirement Board (tier II, windfall, vested dual, supplemental annuities, unemployment, and sickness) are also allowed as a subtraction from federal taxable income. In all cases, the subtraction is allowed only to the extent that such benefits are included in federal taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.054
Renumbered from 150-316.054, REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2003, f. & cert. ef. 12-31-03
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-316-0080 Credit for Income Taxes Paid to Another State

(1) General: A taxpayer may claim a credit against income tax imposed under Chapter 316 when:

(a) Another state has jurisdiction to impose an income tax; and

(b) The other state imposes an income tax on an item of income that is also subject to Oregon tax.

(2) The credit may only be used to reduce tax and cannot be claimed as an offset against interest or penalty charges imposed by Oregon.

(3) The credit is limited to taxes imposed upon income, but may be claimed with respect to gross income taxes as well as net income taxes.

(4) Definitions. For purposes of ORS 316.082 and ORS 316.131:

(a) “Income tax” means either a gross income tax, a net income tax, or an excise tax or franchise tax that is measured by income of an S corporation.

(b) “Gross income tax” means a tax imposed on gross income.

(c) “Gross income” generally means gross receipts less cost of goods sold, and is further defined in U.S. Treasury Regulation Section 1.61-3.

(d) “State” includes the Commonwealth of Puerto Rico, and a territory or possession of the United States.

(5) Payments for which a credit is not allowed include, but are not limited to:

(a) Taxes imposed on gross receipts, gross revenue, or gross sales (e.g. Washington Business and Occupation Tax);

(b) Property, transactions, sales or consumption taxes;

(c) Amounts paid for the privilege of doing business unless imposed upon income or measured by an S corporation’s income;

(d) Interest or penalties paid in connection with a law imposing an income tax;

(e) Amounts paid as a minimum tax unless imposed upon or measured by income. Idaho’s Permanent Building Fund tax is an example of a minimum tax that is not imposed upon or measured by income.

Example 1: An Oregon S corporation with net income of $5,000 paid California franchise tax of $800, the minimum tax amount for a corporation doing business in California. If the California franchise tax rate were 9.3%, $465 ($5,000 x .093) would qualify as other state income tax for purposes of this credit. The balance of $335 ($800-445) is not an income tax paid to another state, because it is a minimum tax that is imposed without regard to income of the corporation.

(f) The Texas franchise tax to the extent the tax is based on net taxable capital. Credit may be allowed on the portion of the total franchise tax that is considered imposed on net taxable earned surplus.

Example 2: Ivan is a shareholder in Ronco, an Oregon S Corporation. Ronco pays a Texas franchise tax of $3,600. The franchise tax is composed of a tax on net taxable capital of $500 ($200,000 of net taxable capital times 0.25 percent) and a tax on net taxable earned surplus of $3,100 ($80,000 of net taxable earned surplus times 4.5 percent, less the amount of the tax on net taxable capital). Only the $3,100 qualifies as a tax based on income for purposes of figuring the credit for taxes paid to another state.

(6) A minimum tax is not considered imposed on or measured by income solely because income must rise to a certain level for the tax to apply.

Example 3: Assume State X allows a deduction for capital gains equal to 50% of such gains. If a taxpayer’s adjusted gross income exceeds $250,000, then State X imposes a minimum tax equal to 3% of the deduction. State X’s minimum tax is not considered a tax imposed on or measured by income for purposes of ORS 316.082.

(7) The burden of proving that credit is due must be assumed by the taxpayer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.082
Renumbered from 150-316.082(1)-(A), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
12-31-93

Or. Admin. R. 150-316-0082 Credit for Taxes Paid to Another State When Paid by a Pass-Through Entity

(1) An individual who owns an interest in a pass-through entity may claim a credit for tax paid to another state by the entity if:

(a) The individual is an Oregon resident;

(b) The portion of the tax for which credit is claimed is computed upon the proportionate share of the entity's income which is taxable to the individual under ORS 316.048; and

(c) An addition is made on the individual's Oregon return for the individual’s share of any tax paid or accrued, that relates to the credit taken, and that is deducted on the entity’s or individual’s federal income tax return in determining federal taxable income.

(2) The individual must attach a statement to the Oregon return on which the credit is claimed showing:

(a) The amount(s) of mutually taxed income, tax paid, and credit claimed for each state; and

(b) The tax year(s) the taxes were due and the date(s) the entity paid the taxes for those states.

(3) The individual must compute the amount of the credit under the provisions of OAR 150-316-0084.

(4) "Pass-through entity" means a corporation, partnership, or limited liability company that is characterized for Oregon excise and income tax purposes as an S corporation or as a partnership.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.082
Renumbered from 150-316.082(1)-(B), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 19-2008, f. 12-26-08, cert. ef. 1-1-09
REV 5-2000, f. & cert. ef. 8-3-00
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
12-31-93
12-31-87, Renumbered from 150-316.082(1)
10-5-87

Or. Admin. R. 150-316-0084 Credit for Income Taxes Paid to Another State — Computation

(1) General: This rule explains the computation of the credit for taxes paid to another state on mutually taxed income.

(a) Residents: An Oregon resident is allowed a credit for taxes paid to another state on mutually taxed income if the other state does not allow the credit. See section (3) of this rule for information on calculating the credit for an Oregon resident.

(b) Nonresidents: Under ORS 316.131, an Oregon nonresident is allowed the credit if the state of residence allows Oregon residents to claim a credit for mutually taxed income on the nonresident return filed with that state. See section (4) of this rule for information on calculating the credit for an Oregon nonresident.

(c) Part-year residents: A person who is a resident for a part of the taxable year and a nonresident for the rest of the year figures the credit under section (3) of this rule for the portion of the year the individual was a resident and under section (4) of this rule for the nonresident portion of the year.

(2) Definitions. For purposes of this rule, the following definitions apply:

(a) “Adjusted gross income” means federal adjusted gross income as defined in the Internal Revenue Code section 62 and the corresponding regulations.

(b) “Modified adjusted gross income” means adjusted gross income as modified under ORS Chapter 316, but only as to items related to federal adjusted gross income.

(c) “Items related to federal adjusted gross income” means items of income, gain, loss, exclusion or deduction that are used to arrive at federal adjusted gross income. It does not include items that are unrelated to determining federal adjusted gross income, such as the federal income tax subtraction under ORS 316.695 or the additional medical expense deduction provided by ORS 316.695(1)(d)(B).

(d) “Mutually taxed income” means that portion of modified adjusted gross income that is both reported to and taxed by Oregon and another state.

(e) “Total income on the return of the other state” means the other state’s taxable income plus any amounts subtracted for itemized deductions, a standard deduction, or exemptions.

(f) “Net tax” means state income tax liability (whether Oregon or the other state) after all credits except the credit for taxes paid to another state, the surplus refund under ORS 291.349, the claim of right income repayment credit, the credit for taxes imposed by another jurisdiction on gain from the sale of a personal residence, and the pass-through entity elective tax credit.

(g) “Oregon tax based on mutually taxed income” means that portion of Oregon net tax that is attributable to mutually taxed income. It is figured using this formula:

(h) “Other state’s tax based on mutually taxed income” means that portion of net tax of the other state that is attributable to mutually taxed income. It is figured using this formula:

(3) Computing the credit for an Oregon resident. An Oregon resident figures the credit as the lesser of:

(a) The Oregon tax based on mutually taxed income; or

(b) The tax actually paid to the other state.

(4) Computing the credit for a nonresident. The credit allowed to a nonresident is the lesser of the following amounts:

(a) Oregon tax based on mutually taxed income (as defined under (2)(g));

(b) The other state’s tax based on mutually taxed income (as defined under (2)(h));

(d) Oregon net tax.

(5) Special Filing Status. Filing status may affect the computation of the credit allowed by ORS 316.082. If a husband and wife file separate returns for Oregon and also file separate returns for another state, the credit is limited. Each spouse may claim only his or her portion of the actual taxes he or she paid to the other state (subject to all other limitations provided under this rule) in computing the allowable credit.

(6) If one spouse is a resident of Oregon and the other is a resident of a community property state and files a separate return in that state, the Oregon resident may be entitled to a credit for taxes paid to the other state on mutually taxed income. For purposes of this rule, the mutually taxed income is that which is earned and reported to the other state by the nonresident but included in the income of the Oregon resident by virtue of the laws of the community property state. The amount of the other state’s tax paid on mutually taxed income is determined using the following ratio:

(7) If a husband and wife file a joint return for Oregon, the entire amount of taxes either or both spouse paid to the other state (subject to all other limitations provided under this rule) may be claimed for purposes of computing the credit allowed under this statute. It does not matter which filing status the taxpayers use for the other state.

(8) If a husband and wife file separate returns for Oregon but file a joint return for another state, the allowable credit is limited as follows. Each spouse may claim a credit for taxes paid to another state (subject to all other limitations provided under this rule) based on the following ratio:

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.082
REV 44-2024, amend filed 06/25/2024, effective 07/01/2024
REV 2-2024, temporary amend filed 01/16/2024, effective 01/16/2024 through 07/09/2024
REV 1-2024, temporary amend filed 01/12/2024, effective 01/12/2024 through 07/09/2024
REV 35-2022, amend filed 12/28/2022, effective 01/01/2023
Renumbered from 150-316.082(2), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2006, f. & cert. ef. 7-31-06
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
REV 5-2000, f. & cert. ef. 8-3-00
12-31-93

Or. Admin. R. 150-316-0086 Credit for Income Taxes Paid to Other States — Proof Required and Procedure for Obtaining the Credit

(1) The taxpayer must retain in their tax records and provide to the department upon request the following items:

(a) A complete copy of the other state’s income tax return; and

(b) Proof of payment of the tax, such as:

(A) A copy of the check written to pay the tax at the time the other state’s return is filed;

(B) Copies of W-2 statements verifying withholding paid to the other state;

(D) A copy of a canceled check showing payment of tax or estimated tax payments; or

(E) A receipt of tax payment.

(2) If the taxpayer is required to amend per section (5) of this rule, the taxpayer must retain a copy of the other state’s amended return or audit report, whichever is applicable, and provide it to the department upon request.

(3) The credit may be claimed either at the time of filing the original Oregon return or subsequently. The timeliness of a claim for refund is determined by ORS 314.380 and 314.415.

Example 1: Ben, an Oregon resident, files his 2013 tax return and reports a loss from rental property he owns in Idaho. After an audit by Idaho, certain expenses related to the rental are disallowed resulting in taxable income from the rental. Ben files the amended Oregon return more than three years from the date he filed his 2013 tax return. Notwithstanding the limitations of ORS 314.415, Ben will receive the credit if the amended return is received by the department within two years after the date Idaho issues the audit report that disallowed the expenses.

(4) A taxpayer is allowed a credit for taxes paid to another state when the other state’s taxes have been paid. If the other state’s taxes have not been paid before the credit is claimed on the Oregon tax return, no credit shall be allowed. Once the other state’s taxes have been paid, the taxpayer may file a refund claim in order to receive the credit on the Oregon return. Any refund due to the credit is subject to the limitations provided by ORS 314.415.

(5) If a subsequent change or correction is made to the taxpayer’s liability that also changes the credit allowed under ORS 316.082 or 316.131, the taxpayer must amend to correct the Oregon return for which such credit was originally allowed.

Example 2: In 2016, Gary and Joanne file their 2015 joint income tax return and claim a credit for taxes paid to Montana in 2015 of $500. In 2017, after Montana audits their tax return, they receive a refund of the entire $500 (the amount of credit they originally claimed). Gary and Joanne must amend their 2015 Oregon tax return to show that no credit is available for taxes paid to Montana in 2015.

History

Statutory/Other Authority: ORS 305.100 & 316.082
Statutes/Other Implemented: ORS 316.082
REV 86-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-316.082(3), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 10-1986, f. & cert. ef. 12-31-86
12-31-84, Renumbered from 150-316.082
12-31-81
12-70
1-69

Or. Admin. R. 150-316-0088 Addition of Taxes Paid to Another State Claimed as an Itemized Deduction

(1) If a taxpayer claims a credit for taxes paid to another state and the tax is also included as an itemized deduction, the taxpayer must restore to Oregon income the lesser of:

(a) The amount of the other state’s net tax liability for the year in which the Oregon credit is claimed; or

(b) The amount of the other state’s tax for that year that is included in itemized deductions.

Example 1: On his Oregon tax return, Joe claims a credit for taxes paid to Idaho of $100. His tax liability to Idaho for the same year is $150. He also claims an itemized deduction of $200 for taxes that Idaho withheld from his wages. Joe must add $150 to Oregon income, which is the lesser of his Idaho tax liability or the amount claimed as an itemized deduction for that year.

(2) If the credit for taxes paid to another state is based on a tax liability that is paid in two different tax years, the taxpayer may be required to restore the deduction to Oregon income in two different tax years.

Example 2: Jim claims a credit of $250 on his Oregon tax return. His net tax liability to Idaho is $250. Jim deducts $200 tax withheld by Idaho as an itemized deduction on his Oregon return. He must add $200 to Oregon income, which is the lesser of his Idaho liability or the amount claimed as an itemized deduction that year. If Jim claims the $50 balance owing to Idaho as an itemized deduction for Oregon in the year he pays it, he must add that amount to Oregon income in that same year.

Example 3: Lois makes her fourth quarter estimated tax payment of $400 for 1999 to Montana on January 18, 2000. Her 1999 Montana tax liability is $350 and she claims a credit of $350 on her 1999 Oregon return. In 2000, Lois made $700 of estimated payments to Montana for tax year 2000. Her 2000 Montana tax liability is $950 and she claims a credit of $950 on her 2000 Oregon return. For tax year 2000, Lois claims $1,100 in Montana tax as an itemized deduction ($400 plus $700). Lois’s addition on the 2000 Oregon return is $1,050: $350 tax liability for 1999 plus $700 of estimated payments for 2000.

Example 4: Same facts as in Example 3, with the following additional facts: Lois makes her 2000 fourth quarter estimated tax payment of $250 on January 16, 2001. During 2001, Lois pays $1,500 in estimated tax. She claims $1,750 as an itemized deduction ($250 plus 1,500). Her 2001 Montana tax liability is $1,400 and she claims a credit of $1,400 on the 2001 Oregon return. Lois’s addition to income for 2001 is $1,650: $250 from tax year 2000 and $1,400 from tax year 2001.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.082
Renumbered from 150-316.082(4), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
12-31-78
12-5-78

Or. Admin. R. 150-316-0090 Credit for Duplicative State Taxation Relating to Different Years

(1) If Oregon and another state impose a tax on the same income in different years or the other state’s tax is due in a year subsequent to the year or years to which it was originally related, the taxpayer may ask the department to allow a credit that provides relief from taxation of the same income by Oregon and the other state.

(2) The request for a credit under this subsection must be in writing. It must include:

(a) A complete copy of the other state’s income tax return(s); and

(b) Proof of payment of the tax, such as:

(A) A copy of the canceled check written to pay the tax at the time the other state’s return is filed;

(B) Copies of the W-2 statements verifying the withholding paid to the other state;

(D) A copy of a canceled check showing payment of tax or estimated tax payments; or

(E) A receipt of tax payment.

(A) Idaho law required recapture in 1995 of credits that previously reduced the Oregon credit in 1991 through 1994.

(B) Current federal adjusted gross income includes installment gain that was taxed in full by Maryland in 1998.

(3) The request may be filed:

(a) With the department before the Oregon return for the year of the duplicative taxation is filed; or

(b) With the Oregon return that reports the income that was previously taxed by another state; or

(c) Within the time period to amend the Oregon return designated in (a) or (b) that reports income that was previously taxed by another state.

(4) The department will consider all requests for a credit under this subsection and will allow a credit when necessary to avoid double taxation of income legitimately taxed in another state. The following are some situations where the department may provide a credit under this section.

(a) The other state’s tax due is in the current year but was originally related to prior years.

Example 1: Max, an Oregon resident, owns a business in Idaho. For each of four years he claimed the Idaho investment tax credit. For each of these years he also claimed an Oregon credit under ORS 316.082 that was calculated based upon the tax, net of credits, that he paid to Idaho. In the fifth year he sold an asset and was required by Idaho law to recapture, on that year’s Idaho return, some of the investment tax credit he had claimed in each of the previous four years.

(b) Oregon and the other state tax the same income in different years.

Example 2: Matt sold rental property in Maryland while he was a resident there for a gain of $100,000 and reported it as an installment sale for federal. He paid Maryland tax on the entire gain. Matt became an Oregon resident in the third year of the installment sale contract. The installment payments are part of his federal income, so will be taxed by Oregon.

(5) The department will make a determination and notify the taxpayer of the amount of the credit and show the calculation of the credit if necessary.

(6) If the taxpayer disagrees with the department’s determination, the taxpayer may request a conference or file a written objection within 30 days of the date of the department’s letter of determination. The request for conference or filing of a written objection must be filed with the department in the manner prescribed under OAR 150-305-0202.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.082
Renumbered from 150-316.082(6), REV 60-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-316-0115 Disabled Child Exemption Credit

(1) For tax years beginning on or after January 1, 2005, an additional personal exemption credit is allowed for dependent children who are disabled on the last day of the tax year.

(2) For tax years beginning before January 1, 2005, an additional personal exemption credit is allowed for dependent children who are age 17 or younger and are disabled on the last day of the tax year.

(3) For all years, the child with a disability must be certified annually by a state department of education to be eligible for early intervention services or an individualized education program (IEP) under the federal program for Individuals with Disabilities Education Act (IDEA).

(4) Upon request of the department, the taxpayer claiming the personal exemption credit for a disabled child must provide the first sheet of the applicable year’s IEP or Individualized Family Service plan showing the child’s name, disability, and education eligibility for each year the credit is claimed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.099
Renumbered from 150-316.099, REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-316-0120 Credit for Political Contributions

(1) In General: To qualify for the political contribution credit, the contribution must be a voluntary contribution of money made to one of the following:

(a) A major political party or its political committees, or a minor political party or its political committees;

(b) A candidate for federal, state or local office; or

(2) Contributions to political parties. For purposes of this rule, a major political party is defined in ORS 248.006. A minor political party is defined in ORS 248.008. Contributions to any of these parties, or their political committees, qualify for the credit.

Example 1: In 2012, Jim contributes $50 to the Republican National Party, $50 to the Republican Committee to Re-elect U.S. Senators, $50 to the Democratic National Party Committee to Re-elect Senator Jones of California and $50 to the Libertarian Party. All contributions qualify for the political contribution credit. Jim will be able to claim a credit of $50 on his 2012 income tax return. If he files a joint return with his spouse, they may claim a $100 credit.

(3) Contributions to candidates. Qualifying contributions are those made directly to the candidate or the principal campaign committee of the candidate.

(a) A principal campaign committee (PCC) means a candidate's political committee. The PCC must have met the filing requirements contained in ORS Chapter 260.

(b) Candidates do not have to appear on a ballot in this state in the same year the contribution is made for the credit to be claimed. However, if the candidate is not on a ballot, at least one of the following must have occurred in the same year the contribution is made:

(A) A prospective petition is filed;

(B) A declaration of candidacy is filed;

(D) A designation of a principal campaign committee is filed.

Example 2: Amanda filed a declaration of candidacy in November 2011 and appeared on the ballot for the 2012 primary election as a candidate for Oregon state senator. Contributions made in 2011 or 2012 to Amanda, or her principal campaign committee, will qualify for the credit.

(4) Contributions to political committees. Contributions made to a political committee will qualify only if the committee has certified the name of its treasurer to the appropriate filing officer in the manner provided in ORS Chapter 260. As used in this rule, "filing officer" means:

(a) For a political committee whose purpose is to support or oppose a candidate or measure in an election concerning an irrigation district formed under ORS Chapter 545, the county clerk or secretary of the irrigation district as provided under ORS 260.005(9)(b).

(b) For all other purposes, the Secretary of State as provided under ORS 260.005(9)(a).

(A) No measure appears on the ballot in the same year the contribution is made;

(B) The contribution is made to reduce a deficit from a prior year; or

Example 3: Royal is a member of the Association of Certified Engineers of America. The association forms a Political Action Committee (PAC) in Oregon, certifies the name of its treasurer to the Secretary of State, and solicits voluntary donations from individual members. The PAC states in its material that it is organized and operated to support or oppose any political candidates or measures the directors of the association determine will impact its members. Contributions made to the PAC will qualify for the credit.

Example 4: Debra belongs to a trade union that engages in political activities. The union informs Debra that a certain percentage of her monthly dues is used for political purposes. No part of her dues payment will qualify for the credit because it is not a voluntary payment of money to a candidate or a political committee.

Example 5: Same facts as Example 4, but the union also solicits voluntary political contributions from its members. These funds are placed directly into a separate PAC, which is not subsidized in any way by the union, and are used for political activities. In January 1999, Debra signs up for a payroll deduction of $5 to be taken from her monthly checks. She may claim a credit of up to $50 on her tax return, or a credit of $60 (12 months x $5) if she files jointly with her spouse.

(5) The amount of the contribution must be reduced by the fair market value of any items or services received in exchange for the contributions.

Example 6: A political committee solicits donations and offers T-shirts in return for contributions of $50 or more. Douglas contributes $50 and receives a T-shirt valued at $10. He may claim a political contribution credit of $40.

Example 7: Same facts as Example 6, except that Douglas contributes $100. He is entitled to a credit of $50 on a single return, or $90 on a joint return.

(6) A partnership or S corporation may make political contributions on behalf of its partners or shareholders. The credit may be claimed on the individual tax return, subject to all of the limitations in ORS 316.102 and this rule.

(7) Proof of the credit, such as a canceled check or receipt, should not be attached to the tax return but should be kept with the taxpayer's records. Upon audit or examination, the taxpayer must provide documentation to verify the credit.

History

Statutory/Other Authority: ORS 305.100 & 316.102
Statutes/Other Implemented: ORS 316.102
REV 3-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.102, REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 2-1984, f. & cert. ef. 2-21-84
RD 6-1983(Temp), f. 12-20-83, cert. ef. 12-31-83
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78
12-19-77
12-19-75
11-73
12-70
1-69

Or. Admin. R. 150-316-0125 Credit for the Gain on the Sale of a Residence Taxed by Another State

A credit will be allowed if the gain on the sale of a taxpayer’s personal residence is taxed by both Oregon and another state or country. The credit is the lesser of:

(1) Mutually taxed gain: [See PDF link below.]; or

(2) 8 percent of the gain taxed by the other state.

Mutually taxed gain is the total gain reduced by any allowable deductions or exclusions (i.e., capital gains deduction, differences in allowable depreciation due to business use of home, etc.).

Total income on other state’s return is the other state’s taxable income before subtractions for itemized deductions (or standard deduction) and exemptions.

To claim the credit, the taxpayer must send a copy of the other state or country’s return and proof of payment.

A taxpayer may not claim both this credit and a credit under ORS 316.082 or 316.131 for taxes paid on the same gain.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.109
REV 28-2017, f. & cert. ef. 7-21-17
Renumbered from 150-316.109, REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
12-31-79

Or. Admin. R. 150-316-0130 Credit for Installation of Alternative Energy Devices

(1) As provided by ORS 469B.103, the Oregon Department of Energy administers provisions related to the eligibility, verification and certification of an alternative energy device for purposes of the tax credit under ORS 316.116. Refer to ORS 469B.100 through 469B.118 and Oregon Administrative Rules 330-070-0010 through 330-070-0097 or contact the Department of Energy for additional information.

(2) Each taxpayer that qualifies for the credit may apply the allowable credit to the current year’s tax liability. Any unused credit balance may be applied to the following year’s tax liability for up to five successive years. If two or more taxpayers qualify for the credit, they must apportion the allowable credit between them based on their investment in the device or ownership in the property.

(3) No adjustment to the basis of property is required as a result of claiming a credit for an alternative energy device.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.116
Renumbered from 150-316.116, REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
TC 12-1979, f. & cert. ef. 5-18-79
TC 6-1979(Temp), f. & cert. ef. 3-5-79
12-31-77

Or. Admin. R. 150-316-0135 Proration of Income and Deductions for Nonresidents and Part-Year Residents

(1) As used in this rule, “fraction” means the Oregon percentage. The Oregon percentage is the fraction established for proration under ORS 316.117.

(2) For tax years beginning on or after January 1, 1983, the numerator of the fraction is the taxpayer’s federal adjusted gross income from Oregon sources, with the Oregon modifications to that income, which relate to adjusted gross income.

(3) The denominator of the fraction is the taxpayer’s federal adjusted gross income, from all sources, with the Oregon modifications to that income, which relate to adjusted gross income.

(4) For the fiduciary returns of estates and trusts, the numerator of the fraction is the federal taxable income of the fiduciary from Oregon sources, with the Oregon modifications to that income. The denominator of the fraction is the federal taxable income of the fiduciary, from all sources, with Oregon modifications to that income.

(5) Oregon modifications related to adjusted gross income are the Oregon additions, subtractions, and modifications that affect:

(a) Amounts included in or excluded from adjusted gross income; or

(b) Deductions allowed in arriving at adjusted gross income.

(6) Under no circumstances may the percentage exceed 100 percent.

(7) If the taxpayer has positive modified Oregon income and negative or zero modified federal adjusted gross income, the allowable percentage is 100 percent. If the taxpayer’s modified federal adjusted gross income from Oregon sources and modified federal adjusted gross income are both losses, the allowable percentage will be computed as follows:

(a) If the Oregon loss is smaller than the federal loss, 100 percent.

(b) If the Oregon loss is greater than the federal loss, divide the federal loss by the Oregon loss.

(8) If the taxpayer has negative or zero modified Oregon income and positive modified federal adjusted gross income, the allowable percentage is zero.

(9) Nonresident taxpayers shall prorate the following deductions and modifications not relating to adjusted gross income using the fraction provided in this rule:

(a) The greater of:

(A) Net Oregon itemized; or

(B) The standard deduction.

(b) Federal tax liability.

(d) Gambling losses (itemized).

(e) Federal income tax refunds from amended or audited returns.

(f) Car loan interest.

(g) Charitable contributions not included in itemized deductions.

(10) Nonresident taxpayers shall not prorate the following deductions and modifications not relating to adjusted gross income.

(a) Art object donation;

(b) Fiduciary adjustment;

(d) Overtime compensation (See OAR 150-316-0136).

(11) Under no circumstances may the percentage used in computing the allowable portion of the deductions exceed 100 percent.

(12) For part-year residents Oregon source income is:

(a) For the portion of the year the taxpayer is a resident see OAR 150-316-0060.

(b) For the portion of the year the taxpayer is a nonresident see ORS 316.127 and the rules pertaining thereto.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.117
REV 12-2025, amend filed 12/23/2025, effective 01/01/2026
REV 46-2017, f. & cert. ef. 8-2-17
Renumbered from 150-316.117-(A), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-87
12-31-86, Renumbered from 150-316.117
12-31-85
12-31-84
12-31-83
12-31-78
12-19-75
11-73
12-70

Or. Admin. R. 150-316-0136 Nonresident Deductions Limited to Oregon Sources

(1) Nonresident individuals who are allowed the following deductions for federal purposes shall also be allowed a deduction, not to exceed 100 percent of the federal deduction, for Oregon purposes:

(a) Tips under IRC 224; and

(b) Overtime compensation under IRC 225.

(2) For tips, the deduction for Oregon is equal to the federal deduction calculated using only tips attributable to Oregon sources.

(3) For overtime compensation, the deduction for Oregon is equal to the federal deduction calculated using only overtime compensation attributable to Oregon sources.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.130
REV 12-2025, adopt filed 12/23/2025, effective 01/01/2026

Or. Admin. R. 150-316-0145 Proration for Pass-through Entity Income of Part Year Oregon Residents

A part-year Oregon resident with an ownership interest in a partnership or S corporation includes in Oregon adjusted gross income the sum of:

(1) All income derived from the ownership interest while the taxpayer was an Oregon resident. The amount included in Oregon income must be determined consistently with Internal Revenue Code sections 1366, 1377, 702, 704 and the corresponding Treasury Regulations and must reasonably reflect the taxpayer's share of income derived from the taxpayer's ownership interest, plus

(2) That portion of income derived from the ownership interest as a nonresident from an entity with business activity in Oregon. The taxpayer's share of the income is subject to the allocation and apportionment provisions of ORS 314.605 to 314.675 during the time that the taxpayer was not an Oregon resident.

Example 1: Ralph was an Oregon resident who moved to Nevada on August 16. During the same year, Ralph was a shareholder of an Idaho S corporation with no business activity in Oregon. From January 1 to March 31, he owned 250 of 500 total issued shares. Additional shares were issued on April 1, giving Ralph 300 of 800 total shares. On July 1, more shares were issued and traded, giving him 450 of 1000 total shares. The S corporation's federal income is $365,000; Ralph's share of federal income is $161,925. Ralph determines his Oregon income of $99,825 as follows:

Step 1. S corporation income assigned to each day:

$365,000 / 365 days = $1,000

Step 2. Figure per share, per day amount (per day amount / outstanding shares):

Jan 1–Mar 31 — $1,000 per day/500 shares = $2.00 per share, per day

Apr 1–Jun 30 — $1,000 per day/800 shares = $1.25 per share, per day

Jul 1–Dec 31 — $1,000 per day/1000 shares = $1.00 per share, per day

Step 3. Figure shareholder income (per share, per day):

Jan 1–Mar 31 — 90 days x 250 shares x $2.00 = $45,000

Apr 1–Jun 30 — 91 days x 300 shares x $1.25 = $34,125

Jul 1–Aug 15 — 46 days x 450 shares x $1.00 = $20,700

Aug 16–Dec 31 — Nonresident, no Oregon activity — $0

Oregon income: $99,825

Example 2: Assume the same facts as in Example 1, except that the S corporation also did business in Oregon and computed an Oregon apportionment percentage of 40 percent. Ralph's proportional share of this income reported to Oregon for the entire year is calculated as follows:

Jan 1–Mar 31 — 90 days x 250 shares x $2.00 = $45,000

Apr 1–Jun 30 — 91 days x 300 shares x $1.25 = $34,125

Jul 1–Aug 15 — 46 days x 450 shares x $1.00 = $20,700

Aug 16–Dec 31 — 138 days x 450 shares x $1.00 x 40% = $24,840

Oregon income: $124,665

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.119
Renumbered from 150-316.119, REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08

Or. Admin. R. 150-316-0150 Separate or Joint Federal Returns for Spouses in a Marriage

(1) For tax years beginning on or after January 1, 1987, ORS 316.122 contains exceptions to the general rule that the filing status of the federal return, whether joint or separate, determines the filing status on the Oregon return. If a joint federal income tax return is filed and one or both of the spouses is not a full-year resident, each spouse must file a separate state return unless they elect to file a joint state return.

(2) The income to be included by the spouses in computing their joint Oregon taxable income is determined as follows:

(a) A full-year resident spouse shall include all income received during the year as determined in OAR 150-316-0060.

(b) A part-year resident spouse shall include:

(A) For the portion of the year the spouse is a resident all income as determined under OAR 150-316-0060.

(B) For the portion of the year the spouse is a nonresident the Oregon source income as determined under ORS 316.127 and the rules thereunder.

(c) A nonresident spouse shall include all Oregon source income as determined under ORS 316.127 and the rules thereunder.

(d) The Oregon source net operating loss of a part-year resident included in the filing of a joint return is determined as follows:

(A) For the portion of the year the spouse is a resident any loss determined under OAR 150-316-0035.

(B) For the portion of the year the spouse is a nonresident any loss determined under OAR 150-316-0035 as it relates to nonresidents.

(3) This election to file a joint state return may not be revoked after the due date of the return for the tax year. An amended return filed prior to the due date is considered an original return and may contain a change from a joint return to separate returns.

(4) Spouses may change from separate state returns to a joint state return within the time prescribed by law for filing amended returns. The change to a joint return shall not be made if the change would not be allowable under Internal Revenue Code Section 6013(b).

(5) In the event the election to file a joint return for Oregon tax purposes is not made, then each spouse with income subject to Oregon tax must compute an “as if” federal return on the basis of the separate federal adjusted gross income of the taxpayer.

(6) If the taxpayers can clearly segregate their itemized deductions, each taxpayer may claim his or her own deductions instead of apportioning them by income. The burden of proof for substantiating the segregation rests with the taxpayer. See OAR 150-316-0555 for treatment of itemized deductions on separate returns when one spouse is not required to file in Oregon.

(7) If a joint federal return has been filed, the federal tax deducted in arriving at Oregon taxable income on the separate state return shall be computed by apportioning the total accrued federal tax liability of both spouses. Apportionment shall be made on the basis of the separate federal adjusted gross incomes of both spouses. The result is subject to the $1,500 limitation of the federal tax deduction for each spouse for tax years beginning on or after January 1, 1987. See OAR 150-316-0535.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.122
REV 3-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.122, REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
Renumbered from 150-316.122(3)?, RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78
12-19-75
11-73
12-70

Or. Admin. R. 150-316-0155 Nonresident Partners: Guaranteed Payments

(1) Guaranteed payments paid to nonresident partners of a partnership that has business activity in the state of Oregon are treated as a distributive share of partnership income for Oregon tax purposes. In order to determine the income attributable to Oregon sources, each nonresident partner’s entire distributive share, including the guaranteed payments, is then subject to the allocation and apportionment provisions of ORS 314.605 to 314.675.

Example 1: Frank is a 25 percent partner in the law firm DC & H, Associates, a calendar year partnership. DC & H’s main office is in Washington, but it also has a branch office in Oregon. Frank lives in Seattle and works in the Washington branch of the firm.

For tax year 1992, Frank received $100,000 in guaranteed payments from the partnership. Frank’s 25 percent share of partnership profits after the deduction of guaranteed payments was $50,000. DC & H calculated an Oregon apportionment percentage of 20 percent. Frank’s 1992 Oregon source income attributable to the law firm is calculated as follows: [See PDF link below.]

(2) The inclusion of guaranteed payments into a nonresident partner’s share of apportionable income is irrespective of that partner’s percentage interest in the profit or loss of the partnership.

Example 2: Assume the same facts as in Example 1, except that Frank does not share in the profits or loss of the partnership. Frank’s 1992 Oregon source income attributable to the law firm is calculated as follows:[See PDF link below.]

(3) See ORS 314.610 and the Administrative Rules thereunder for a definition of Oregon business activity.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.124
REV 29-2017, f. & cert. ef. 7-21-17
Renumbered from 150-316.124(2), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-316-0157 Nonresident Partners: Other Methods of Allocation and Apportionment

(1) ORS 314.605 to 314.667 are designed to allocate and apportion to Oregon, in a fair and equitable manner, a nonresident partner’s items of partnership income, gain, loss and deduction attributable to a business, trade, profession or occupation carried on partly within and partly without the state of Oregon. If the methods provided under those sections do not so allocate and apportion these items, the department may permit a nonresident partner to allocate and apportion those items under an alternative method as proposed by the partner. An alternative method will be allowed only in limited and specific cases. ORS 316.124(4) may be invoked only in unusual fact situations (which ordinarily will be unique and nonrecurring). These are situations which will generally violate a nonresident partner’s rights under the constitution of Oregon or of the United States.

(2) An application to use an alternative method of allocation and apportionment must be made in writing. The request must a) specify why the standard method does not fairly represent the extent of the partnership’s Oregon business activity; b) specify how the standard method of allocation and apportionment violates the nonresident partner’s constitutional rights; and c) must include a detailed description of the alternative method.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.124
Renumbered from 150-316.124(4), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-316-0165 Gross Income of Nonresidents; Personal Services

(1) Personal service.

(a) Except as provided in section (2) of this rule, the gross income of a nonresident (who is not engaged in the conduct of the nonresident's own trade or business, but receives compensation for services as an employee) includes compensation for personal services only to the extent that the services were performed in this state.

(b) Compensation for personal services performed by a nonresident employee wholly outside this state and in no way connected with the management or conduct of a business in this state is excluded from gross income. This compensation is excluded even if payment is made from a point within this state or the employer is a resident individual, partnership, or corporation.

(c) Compensation for personal services performed by a nonresident wholly within this state is included in gross income although payment is received at a point outside this state or from a nonresident individual, partnership, or corporation.

(2) Exception: Various federal laws affecting certain nonresidents are explained separately. See OAR 150-316-0173 or 150-316-0185.

(3) Allocation of personal services.

(a) Where compensation is received for personal services that are performed partly within and partly without this state, that part of the income allocable to this state is included in gross income. In general, income is allocable to this state to the extent the employee is physically present in this state at the time the service is performed. Physical presence is determined by the actual physical location of the employee performing the services and not by the location of the employer or the location where compensation is paid. Employees who work in Oregon and at an alternate work site located outside of Oregon may allocate their compensation under the provisions of this rule.

Example 1: Dick, a nonresident, works as a medical transcriptionist for an Oregon employer. During the year, Dick spends about 80 percent of his time working from his home in Washington. Dick spends the remainder of his work time in the Portland office. Only the time Dick spends at the Portland office is considered time worked in Oregon.

(A) The gross income from commissions earned by a nonresident for services performed or sales made, (whose compensation is a specified commission on each sale made or services performed), includes the specific commissions earned on sales made or services performed in this state. Allowable deductions must be computed on the same basis.

(B) If nonresident employees work within and without this state, the portion of total compensation for personal services allocable to Oregon is the total number of actual working days employed within the state divided by the total number of working days both within and without the state.

(C) If nonresident employees work part of a day in Oregon and part of a day outside Oregon, the portion of total compensation for personal services allocable to Oregon is the number of hours worked in Oregon divided by the total number of hours worked within and without the state.

Example 2: Rod is a nonresident of Oregon. He works for ACE Cell Tower, Inc and is paid to work 40 hours each week. Some days he works both in Oregon and Idaho. Rod earned $64,000 in 2012. Rod’s employer requires him to keep a detailed log of his travel. At the end of 2012 he had worked a total of 1,850 hours and his log and information from his employer shows that 962 of those hours were worked in Oregon. His compensation taxable to Oregon is computed as follows:

Hours worked in Oregon -- divided by -- Total hours worked x Total compensation = Oregon compensation

0.520 (962 hours divided by 1,850 hours) x $64,000 = $33,280

Rod’s compensation subject to Oregon tax is $33,280.

(D) If the employees are paid on a mileage basis, the gross income from sources within this state includes that portion of the total compensation for personal services which the number of miles traveled in Oregon bears to the total number of miles traveled within and without the state.

(E) If the employees are paid on some other basis, the total compensation for personal services must be apportioned between this state and other states and foreign countries in such a manner as to allocate to Oregon that portion of the total compensation which is reasonably attributable to personal services performed in this state.

(b) The gross income of all other nonresident employees, including corporate officers, includes that portion of the total compensation for services which the total number of actual working days employed within this state bears to the total number of actual working days employed both within and without this state during the taxable period.

Example 3: Jan is a nonresident of Oregon. She works for A Corp. Jan manages offices in Oregon and Washington. A Corp. pays her a salary of $30,000 for the management of both offices. She worked in Oregon 132 days. She would figure her compensation subject to Oregon tax as follows:

Days worked in Oregon — divided by — Total days worked x Total compensation = Oregon compensation

0.600 (132 days divided by 220 days) x $30,000 = $18,000

Jan's compensation subject to Oregon tax is $18,000.

An exception to this general rule is made when the compensation is received for performance of services that, by their nature, have an objective or an effect that takes place within this state. In the case of corporate officers and executives who spend only a portion of their time within this state, but whose compensation paid by a corporation operating in Oregon is exclusively for managerial services performed by such officers and executives, the entire amount of compensation so earned is taxable without apportionment.

Example 4: Cade is a nonresident of Oregon. He works for Best Engineering. Cade manages Best Engineering's only office, which is located in Oregon. Best Engineering pays him a salary exclusively for managerial services in the total amount of $58,000. Even though Cade may perform some administrative duties from his home, the compensation he receives is for managing the Oregon office. The entire $58,000 is taxable to Oregon.

(c) Total compensation for personal services includes sick leave pay, holiday pay, and vacation pay. Sick leave days, holidays, and vacation days are not considered actual working days either in or out of this state and are to be excluded from the calculation of the portion of total compensation for personal services taxable to this state.

Example 5: Joan is a nonresident of Oregon. She actually worked a total of 220 days during the year and was paid for 40 non-working days (holidays, sick days and vacation days). She worked 110 days in Oregon. Her compensation (including compensation for holidays, sick leave and vacations) was $26,000. She would figure her compensation subject to Oregon tax as follows:

Days worked in Oregon — divided by — Total days worked x Total compensation = Oregon compensation

0.500 (110 days divided by 220 days) x $26,000 = $13,000

Joan’s compensation subject to Oregon tax is $13,000.

(d) Payment in forms other than money. Total compensation for personal services includes amounts paid in a form other than money. To the extent the payments are recognized as compensation income for federal income tax purposes, the payments will be recognized as compensation income for Oregon tax purposes and must be apportioned as provided in section (3) of this rule. Examples include but are not limited to, non-statutory stock options, taxable fringe benefits such as personal use of a business asset, and employer-paid membership fees.

(A) Non-statutory stock options with a readily ascertainable fair market value. Compensation income will be allocated to Oregon in the year an option is required to be reported on the federal return if a nonresident taxpayer performed services in connection with the grant of such option in Oregon during the year in which the option was granted and:

(i) Is required to report under IRC section 83(a) as compensation income the value of a non-statutory stock option granted in connection with the performance of services that has a "readily ascertainable fair market value," as described in Treasury Regulation 1.83-7(b), as of the date the option was granted; or

(ii) Elects under IRC 83(b) to report the value of such an option as of the date the option was granted. If a nonresident taxpayer performed personal services partly within and partly without Oregon in the year in which the option was granted, the taxpayer must use the allocation applied to the taxpayer's other compensation under section (3) of this rule for the tax year in which the option was granted and apply that ratio to the compensation income required to be reported on the federal return. For example, if the taxpayer allocates his income under subsection (3)(a) of this rule and worked 25 percent of his time in Oregon during the year the option was granted, he must include in Oregon income 25 percent of the compensation income related to the option included in federal taxable income. Generally, Oregon will not tax the subsequent gain or loss on the sale of the stock unless the stock has acquired a business situs in Oregon. See OAR 150-316-0171.

(B) Non-statutory stock options without a readily ascertainable fair market value that are taxable at exercise, or in a pre-exercise disposition. If a non-statutory stock option granted in connection with performance of services that does not have a readily ascertainable fair market value at the date of the grant is recognized as compensation income for federal tax purposes and the taxpayer worked in Oregon during the year the option was granted, the taxpayer must allocate the compensation related to the option to Oregon in the same year it is taxable for federal purposes. The income that is recognized for federal purposes must be allocated to Oregon if the taxpayer worked in Oregon during the tax year the option was granted. Compute the amount of compensation includable in Oregon source income using the following formula:

Total days worked in Oregon from date of grant to date of federal recognition — divided by — Total days worked everywhere from date of grant to date of federal recognition x Compensation related to option exercise = Amount taxable by Oregon

Any further appreciation or depreciation in the value of the stock after the date of exercise represents investment income or loss and is not includable in the Oregon source income of a nonresident unless the stock acquired a business situs in Oregon (see OAR 150-316-0171).

(C) Treatment of taxable fringe benefits. Income recognized for federal purposes must be allocated to Oregon if the nonresident worked in Oregon during the tax year the benefit was received. The nonresident must use the same allocation rules applicable to the taxpayer's other compensation under section (3) of this rule to the taxable fringe benefits. For example, if the taxpayer allocates his income under subsection (3)(a) of this rule and worked 55 percent of his time in Oregon, 55 percent of the amount of the taxable fringe benefit that is included in federal taxable income is included in Oregon taxable income.

(e) Unemployment compensation. Total compensation includes unemployment compensation benefits to the extent the benefits pertain to the individual's employment in Oregon. If unemployment compensation benefits are received by a nonresident for employment in Oregon and in one or more other states, the unemployment compensation benefits must be apportioned to Oregon using any method that reasonably reflects the services performed in Oregon.

Example 6: Gary, a nonresident, worked in Oregon and Washington for the last 5 years. On January 1, 2014, he was laid off by his employer and received unemployment compensation of $2,000. Gary may use the Oregon wages as a percentage of total wages reported on his nonresident tax return for the prior year (2013) to determine the percentage of unemployment benefits to be included in Oregon income for 2014. In 2013, Gary earned a total of $40,000 of which $26,000 was earned in Oregon. The unemployment compensation taxable to Oregon is $1,300, computed as follows:

Oregon prior year wages — divided by — Total prior year wages x Total current year unemployment compensation = Oregon unemployment compensation 0.650 ($26,000 divided by $40,000) x $2,000 = $1,300. Oregon will tax $1,300 of Gary's unemployment compensation even though he received it in a tax year when he did not work in Oregon because the unemployment compensation is based on Oregon employment. He may not allocate the unemployment based on time worked in Oregon in 2014 because it does not reasonably reflect services performed in Oregon.

(f) Severance pay. Compensation includes severance pay to the extent the pay is attributable to services performed in Oregon. For purposes of this rule, "severance pay" means compensation payable on voluntary termination or involuntary termination of employment based on length of service, a percentage of final salary, a contract between the employer and the employee, a lump sum payment based on accumulated paid leave, or some other method but does not include "retirement income" as defined in ORS 316.127(9). If severance pay is received for employment within and without Oregon, the severance pay is allocated to Oregon using any method that reasonably reflects the services performed in Oregon. For lump sum payments based on accumulated leave, leave allocated to Oregon will be calculated using a first-in-first-out (FIFO) method, unless documentation establishes that another method of allocation more reasonably reflects the services performed in Oregon. Severance pay and other similar distributions are taxable to Oregon even though a taxpayer received it in a tax year when the taxpayer did not work in Oregon if the severance pay is based on Oregon employment.

Example 7: JT, a nonresident, worked for Plumbing Inc. for twenty years: eight years in Idaho and twelve years in Oregon. At the end of his 20th year, Plumbing Inc. reorganized and eliminated JT’s position. Because of JT’s loyalty to the company for his twenty years of service, the company gave JT a lump-sum payment of $36,000. This lump-sum was based on 3 percent of his final annual salary ($60,000 x 3% = $1,800) multiplied by his number of years of service (20). The lump-sum payment was made because of prior services, thus it is allocable to Oregon to the extent the services were performed in Oregon. JT will include $36,000 in federal taxable income and $21,600 in Oregon taxable income, computed as follows:

Years worked in Oregon for company — divided by — Total years worked for company x Total compensation = Oregon compensation 0.600 (12 years divided by 20 years) x $36,000 = $21,600

Example 8: Shawn, a nonresident, worked in Oregon for XYZ Foods, Inc. for six years before resigning from the company. XYZ Foods, Inc. and Shawn entered into a termination agreement that provided $25,000 for Shawn to release a specific claim he may have against the company for wrongful termination or other potential claims. The termination agreement also provided $10,000 to require that Shawn not work for any other food chain within a 100 mile radius of XYZ Foods, Inc. for a period of 36 months. No employment agreement, benefit plan, or any facts or circumstances indicate that Shawn is entitled to a payment for services he performed prior to resigning from the company. The payment that Shawn receives pursuant to the termination agreement is in exchange for the release of the wrongful termination claim and the covenant not to compete and is not allocable to Oregon because it is not based on services performed in Oregon.

Example 9: Assume the same facts in Example 8 except that the termination agreement also provided for a lump-sum payment of one month's salary per year worked ($30,000) in addition to a $25,000 payment for release of a wrongful termination claim and $10,000 payment for the covenant not to compete. No employment agreement, benefit plan, or other agreement indicates that Shawn is entitled to a payment for services he performed prior to resigning from the company. The $25,000 payment for the release of the wrongful termination claim and the $10,000 payment for the covenant not to compete are not allocable to Oregon because neither is based on services performed in Oregon. The $30,000 lump-sum cash payment based on Shawn's salary and years of service associates the payment with the employer-employee relationship. It is 100 percent allocable to Oregon because Shawn worked in Oregon and the facts and circumstances indicate that it is paid because of prior performance of services and no other reason.

Example 10: Natalie, a nonresident, worked for Chocolate Inc. for 14 years: 12 years and 8 months in Idaho and in Oregon for the last 16 months of her employment with the company. Upon her resignation, her hourly wage was $20 and she had 400 hours of paid vacation leave available. Natalie received 8 hours of paid vacation leave per month, her 400 hours of leave represents 50 months of work (400/8=50). Chocolate Inc paid a lump sum payment for her accumulated and accrued vacation leave balance of 400 hours- totaling $8,000. Using the first-in-first-out method of allocation, the 400 hours in her leave balance when she terminated will be treated as having been earned in her most recent 50 months of employment; 34 months in Idaho (68%) and 16 months in Oregon (32%). Natalie will include in the Oregon column of her Oregon nonresident return all of her wages from Chocolate Inc for the year and $2,560 ($8,000 x 32%) of the lump sum payment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127-(A), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2014, f. & cert. ef. 7-31-14
REV 4-2009, f. & cert. ef. 7-31-09
REV 1-2006, f. & cert. ef. 1-20-06
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
REV 7-1998, f. 11-13-98 cert. ef. 12-31-98
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-87, Renumbered from 150-316.127 to 150-316.127-(A)
12-31-85
12-31-84, Renumbered from 150-316.127(1) to 150-316.127
12-31-81
1-1-77
12-19-75
11-73
1-69

Or. Admin. R. 150-316-0167 Gross Income of Nonresidents; Pensions and Retirement Income Received by Oregon Domiciliaries

The provisions of this rule apply to pension and retirement income received after December 31, 1999, by persons who are domiciled in Oregon but who are taxed as nonresidents under Oregon law.

(1) Definitions.

(a) Qualified Employer Retirement Benefit Plan. “Qualified employer retirement benefit plan” means any employer-related plan that is defined and administered pursuant to part I of subchapter D of chapter 1 of subtitle A of the Internal Revenue Code. This includes, but is not limited to, the following employer administered plans: qualifying pension and profit sharing plans, annuity plans, cash or deferred compensation arrangements, or tax-shelter annuity plans.

(b) Qualified Employee Retirement Benefit Plan. “Qualified employee retirement benefit plan” means any plan established and maintained solely by an employee or on the employee’s behalf that is defined and administered pursuant to part I of subchapter D of chapter 1 of subtitle A of the Internal Revenue Code. This includes, but is not limited to, the following employee-related plans: individual retirement accounts, individual retirement annuities, simplified employee pension plans, or self-employed retirement plans.

(2)(a) General provisions. In general, Oregon nonresident taxpayers who have not given up their Oregon domicile must include in Oregon taxable income distributions received from qualified employer and employee retirement benefit plans that are derived from or connected with services performed in Oregon. Only contributions made to a retirement plan while the employee was performing services in Oregon are considered Oregon source income when received by the nonresident taxpayer. Resident taxpayers include in Oregon taxable income the same amount of the distribution as included for federal purposes regardless of where the services were performed or when the contributions were made to the plan.

Example 1: Joanne lived in Oregon and worked in Washington during her employment years. Upon her retirement, she moved her domicile to Florida. Her retirement income is not Oregon source income and is not subject to Oregon tax, because the job services were not performed in Oregon. Any retirement income actually or constructively received while an Oregon resident is subject to Oregon tax under ORS 316.048.

Example 2: Doug always lived and worked in Colorado. Subsequent to his retirement, he moved to Oregon and became an Oregon resident. While he remains an Oregon resident, all of his retirement distributions are subject to Oregon tax under ORS 316.048. If he later moves out of Oregon, none of the distributions received after his change of residence are subject to Oregon tax.

(b) Exception. If the compensation is not taxable by Oregon due to federal Public Law (P.L.) 101-322, then the related retirement benefits are not taxable. See OAR 150-316-0173 regarding P.L. 101-322.

(3) Qualified Employer Retirement Benefit Plans.

(a) General. Contributions or compensation paid by an employer pursuant to any qualified employer’s retirement benefit plan must be included in Oregon taxable income when received by a nonresident taxpayer who is domiciled in Oregon if such contribution or compensation is derived from or attributable to Oregon sources. For purposes of this subsection, “taxpayer” means the employee or any other beneficiary of the employee’s interest in the plan. This income is from Oregon sources if it relates to services performed in Oregon.

(b) If the employee is receiving a single-life annuity, the employee must first compute the expected return using the tables set forth in Treas. Reg. Section 1.72-9, and then make the applicable allocations set forth below to determine the Oregon source amount. Once the Oregon source amount is determined, use Example 4 under subsection (3)(d) of this rule to determine the amount of income to be reported to Oregon each year. If the retirement account also contained employee contributions, the employee must compute and apply the Oregon exclusion ratio defined in subsection (3)(d)(B) of this rule.

(c) The next two examples are intended to help define Oregon source income and are based on the assumption that the employee is receiving distributions from a profit sharing account that contains only the employer’s contributions, plus interest earnings. Because profit sharing distributions may be irregular in both the timing and amount of the distribution, at the employee’s election, expected return cannot be computed for these accounts.

Example 3: Sam lived and worked in Oregon until retirement in January 2000. At retirement he kept his Oregon domicile and moved to Arizona on a temporary basis, intending to return to Oregon in a few years. Sam is taxed as a nonresident under the provisions of ORS 316.027. His retirement account balance at retirement was $100,000. This included $30,000 in employer contributions and $70,000 in earnings. Of this amount, $30,000 is Oregon source income and is subject to Oregon tax as long as he remains domiciled in Oregon. Earnings on the account are not subject to Oregon tax if they were not actually or constructively received until after he left Oregon. Sam files an Oregon nonresident return and reports 30 percent of each distribution each year until $30,000 has been reported to Oregon.

(d) If an employee, while performing services within Oregon, makes contributions to a qualified employer retirement benefit plan, those contributions are considered part of the taxpayer’s basis to the extent the employee has received no tax benefit with respect to such contributions. For purposes of the following examples, the following phrases are defined.

(A) Employee contributions. “Employee contributions” means those contributions made to a qualified employer retirement benefit plan by an employee while the employee was performing services in Oregon.

(B) Oregon exclusion ratio. “Oregon exclusion ratio” means the ratio of the total employee contributions plus total earnings to the total expected return. Total expected return is to be calculated using the tables set forth in Treas. Reg. Section 1.72-9.

(C) Oregon annual exclusion amount. “Oregon annual exclusion amount” means the product of the total distributions received during a taxable period and the Oregon exclusion ratio.

(D) Oregon receipts. “Oregon receipts” mean the excess of the total distributions received during a taxable period over the Oregon annual exclusion amount.

(E) Oregon taxable percentage. “Oregon taxable percentage” means the ratio of the total Oregon source distributions to the total expected return net of the employee’s contributions. The total Oregon source distributions means the amount subject to Oregon tax. This includes the employer contributions or compensation amounts relating to services performed within Oregon.

(F) Amount currently taxable for Oregon purposes. “Amount currently taxable for Oregon purposes” means the product of the Oregon receipts and the Oregon taxable percentage.

Example 4: Assume the same facts as in Example 3, except that Sam receives his benefits in the form of a single-life annuity to be paid at $1,200 per month for the rest of his life. His expected return using the annuity tables pursuant to Treas. Reg. Section 1.72-9 is $216,000 ($1,200/mo. x 12 months x 15.0 (from Table I)). The amount of income he reports to Oregon for each payment is $167 ($1,200/mo. x ($30,000 ÷ $216,000)) or $2,000 annually until the entire $30,000 has been reported to Oregon.

(4) Qualified Employee Retirement Benefit Plans. Distributions from qualified employee retirement benefit plans must be included in Oregon taxable income to the extent a tax benefit was received for Oregon purposes with respect to the contributions made by the taxpayer. Interest or other income earned on such contributions is taxable by Oregon only to the extent distributed while the taxpayer was an Oregon resident. Oregon taxable income includes all distributions until the taxpayer has recovered the total amount of distribution subject to Oregon tax.

Example 5: Assume the same facts as Example 3, except that Sam also invested in an individual retirement arrangement (IRA) while living and working in Oregon His balance in the IRA at retirement is $63,000 ($20,000 of his tax deductible contributions and $43,000 of earnings). Any IRA distribution included in federal taxable income will also be taxable to Oregon until Sam has reported a total of $20,000 to Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127-(B), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-87
12-31-85
12-31-84, Renumbered from 150-316.127(1) to 150-316.127
12-31-81
1-1-77
12-19-75
11-73
1-69

Or. Admin. R. 150-316-0169 Gross Income of Nonresidents; Apportionable Income

(1)(a) General. The gross income of a nonresident (other than one who is employed by another, as distinguished from doing business on the nonresident’s own account) from a business, trade, profession or occupation (including independent contractor) is determined in the same manner as is the gross income of a resident from a similar activity, but includes only income from the business, trade, profession or occupation carried on in this state. Net income from Oregon sources shall be determined by apportionment in a manner consistent with ORS 314.605 through 314.667 and the rules adopted thereunder.

(b) Exception: Various federal laws affect the application of Oregon tax laws to income received by nonresidents from rail, motor, air and water carriers. See OAR 150-316-0173.

(2) Rents. The gross income of a nonresident from rents includes all rents received from property, whether real or personal, located within this state.

(3) S Corporations. The taxable income of an S corporation that elects to be taxed under the provisions of IRC Section 1362 which is derived from or connected with sources from this state is taxable income to nonresident shareholders for tax years beginning after December 31, 1972. Net operating losses of an S corporation derived from or connected with sources from this state are deductible by nonresident shareholders. Net operating losses shall be determined under IRC Section 1366. If an S corporation of Oregon commercial domicile is liquidated any gain or loss from liquidation is Oregon source income. Nonresident shareholders shall report their proportionate share of the gain or loss on their individual Oregon income tax returns as income from Oregon sources.

(4) Fiduciary fees. Oregon source income of a nonresident includes compensation received for services performed as a fiduciary of an Oregon estate or trust.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
REV 9-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-316.127-(C), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-87
12-31-85
12-31-84, Renumbered from 150-316.127(1) to 150-316.127
12-31-81
1-1-77
12-19-75
11-73
1-69

Or. Admin. R. 150-316-0171 Gross Income of Nonresidents; Other Income and Sale of Property

(1) Income from intangible personal property.

(a) Business situs. Intangible personal property, including money or credits, of a nonresident has a situs for taxation in Oregon when used in the conduct of the taxpayer’s business, trade, or profession in Oregon. Income from the use of such property, including dividends, interest, royalties, and other income from money or credits, constitutes a part of the income from a business, trade, or profession carried on in Oregon when such property is acquired or used in the course of such business, trade, or profession as a capital or current asset and is held in that capacity at the time the income arises.

(b) If a nonresident pledges stocks, bonds, or other intangible personal property in Oregon as security for the payment of indebtedness, taxes, etc., incurred in connection with a business in this state, the property has a business situs here. Thus, if a nonresident maintains a branch office here and a bank account on which the agent in charge of the branch office may draw for the payment of expenses in connection with the activities in this state, the bank account has a business situs here. If intangible personal property of a nonresident has acquired a business situs here, the entire income from the property, including gains from the sales of the property, regardless of where the sale is consummated, is income from sources within this state and is taxable to the nonresident.

(2) Sales of property.

(a) Tangible property. The gain from any sale, exchange, or other disposition by a nonresident of real or tangible personal property located in Oregon is taxable, even though it is not connected with a business carried on in this state. The loss from such a transaction is deductible if it is a business loss or a transaction entered into for profit. The gain or loss from the sale, exchange, or other disposition of real property or tangible personal property located in Oregon is determined in the same manner and recognized to the same extent as the gain or loss from a similar transaction by a resident.

(b) Intangible property. The gain from the sale, exchange, or other disposition of intangible personal property, including stocks, bonds, and other securities is not taxable unless the intangible personal property has acquired a business situs in Oregon. See section (1) of this rule. Likewise, losses from the sale, exchange, or other disposition of such property are not deductible, unless they are losses incurred in a business carried on within Oregon by the nonresident taxpayer.

(c) S corporation stock. In general, a nonresident’s gain or loss from the sale, exchange, or disposition of S corporation stock is not attributable to a business carried on in this state and is not Oregon source income. The gain or loss from the S corporation stock may not be used in the determination of Oregon taxable income unless the stock has acquired a business situs in this state. See section (1) of this rule.

(d) General Partnership Interests. A nonresident’s gain or loss from the sale, exchange, or disposition of a general partnership interest in an Oregon partnership is attributable to a business carried on in Oregon and is Oregon source income. The gain or loss is allocated as provided in ORS 314.635.

(e) Limited Partnership Interests. In general, a nonresident’s gain or loss from the sale, exchange, or disposition of a limited partnership interest is not attributable to a business carried on in Oregon and is not Oregon source income. The gain or loss from the sale of the interest will not be used in the determination of Oregon taxable income unless the limited partnership interest has acquired a business situs in this state (see section (1) of this rule.).

(f) Limited Liability Company Interests. The taxation of a nonresident’s gain or loss from the sale, exchange, or disposition of an interest in a limited liability company (LLC) operating in Oregon is Oregon source income and is taxed in the same manner as:

(A) The sale of a general partnership interest under subsection (2)(d) of this rule if the selling member is a member-manager of the LLC; or

(B) The sale of a limited partnership interest under subsection (2)(e) of this rule if the selling member is not a member-manager of the LLC.

(C) For purposes of this rule, a person is a “member-manager” of an LLC if that member has the right to participate in the management and conduct of the LLC’s business. For an LLC that is designated as a member-managed LLC in its articles of organization, all members of the LLC will be member-managers. For an LLC that is designated as a manager-managed LLC in its articles of organization, only those persons who are both members of the LLC and are designated as a manager in the LLC's operating agreement (or elected as managers by the LLC members pursuant to the operating agreement) will be member-managers.

(g) Limited Liability Partnership Interests. A nonresident's gain or loss from the sale, exchange, or disposition of an interest in a limited liability partnership is taxed in the same manner as if it were a general partnership interest under subsection (2)(d) of this rule.

(3) Interest income received on contract sale of property. Interest income received by a nonresident from the sale of Oregon property is not Oregon source income. The source of the income is not from the sale of the property but rather from the use of the money permitted the buyer in an installment contract.

(4) Distribution of a trust’s income accumulation to a nonresident. See ORS 316.737 and OAR 150-316-0575 for the treatment of trust income accumulation distributions.

(5) Net operating losses. See OAR 150-316-0005 and 150-316-0035 for the treatment of net operating losses.

(6) Passive activity losses. See OAR 150-314-0110 for the treatment of passive activity losses.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127-(D), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2006, f. & cert. ef. 1-20-06
REV 4-2003, f. & cert. ef. 12-31-03
REV 1-2001, f. 7-31-01, cert. ef. 8-1-01
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
2-31-87
12-31-85
12-31-84, Renumbered from 150-316.127(1) to 150-316.127
12-31-81
1-1-77
12-19-75
11-73
1-69

Or. Admin. R. 150-316-0173 Gross Income of Nonresidents; Federal Laws Affecting Nonresident Employees of Motor, Rail, Air and Water Carriers

(1) General: Various federal laws affect the application of Oregon tax laws to nonresident employees of motor carriers, rail carriers, and air carriers. Specific requirements for motor carriers, rail carriers, and air carriers are discussed separately below. For purposes of this rule the following definitions apply to motor carriers, rail carriers, and air carriers:

(a) "Person" means a corporation, company, association, firm, partnership, or individual.

(b) "Common carrier" means:

(A) Any person who transports persons or property for hire or who publicly purports to be willing to transport persons or property for hire; or

(B) Any person who leases, rents or otherwise provides a motor vehicle to the public and who in connection therewith in the regular course of business provides, procures or arranges for, directly, indirectly or by course of dealing, a driver or operator therefor.

(c) "Regularly assigned duties in more than one state" means duties that are performed on a regular basis in more than one state, e.g., daily, weekly, or monthly assignment. Duties that are performed on an "on-call" or "as-needed" basis, or duties that are performed on a sporadic or intermittent basis during the year, are not considered to be "regularly assigned duties."

(d) "Property" means the cargo or load being transported.

(e) "Exempt" means that the Amtrak Act prohibits the imposition of Oregon income tax.

(2) Motor carrier employees. Federal Public Law (P.L.) 101-322, the Amtrak Reauthorization and Improvement Act of 1990, and Public Law 104-88, the ICC Termination Act of 1995, provide that no part of the compensation paid by a motor carrier or a motor private carrier to a nonresident employee who performs regularly assigned duties in more than one state is subject to Oregon tax (49 USC §14503). For purposes of this subsection, the following definitions apply:

(a) "Employee" means an individual who:

(A) Directly affects commercial motor vehicle safety in the course of employment; and

(B) Is not an employee of the United States Government, a State, or a political subdivision of a State acting in the course of the employment by the Government, State, or political subdivision of a State; and

(D) Is not covered under the overtime requirements of the Fair Labor Standards Act (if the employee is properly listed as "non-exempt" in personnel and payroll records. This means that the employee is covered under the rules of the Fair Labor Standards Act and thus is not subject to the jurisdiction of the Secretary of Transportation); and

(E) Is one of the following:

(i) An operator of a commercial motor vehicle (including an independent contractor) who, if working for a motor carrier, transports property or passengers, and if working for a motor private carrier, transports property; or

(ii) A mechanic; or

(iii) A freight handler; or

(iv) An individual not an employer.

(b) "Employer" means a person engaged in a business affecting interstate commerce that owns or leases a commercial motor vehicle in connection with that business, or assigns an employee to operate it.

(c) "Motor carrier" means a person providing motor vehicle transportation of passengers or property for another for compensation. Motor carriers are required to be licensed as such with the Secretary of Transportation.

(d) "Motor private carrier" means a person, other than a motor carrier, transporting property by commercial motor vehicle when:

(A) The transportation is between two states;

(B) The person is the owner, lessee, or bailee of the property being transported; and

(D) The person is required to be licensed as such with the Secretary of Transportation.

(e) "Commercial motor vehicle" means a self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property if the vehicle:

(A) Has a gross vehicle weight rating of 10,001 or more pounds;

(B) Is designed or used to transport passengers for compensation, but excluding vehicles providing taxicab service that:

(i) Have a capacity of not more than 8 passengers; and

(ii) Are not operated on a regular route or between specified places;

(C) Is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or

(D) Is used in transporting material found to be hazardous under Title 49 USC 5103 in a quantity requiring placarding under regulations prescribed under Title 49 USC 5103.

(f) "Directly affects" means that the employee is required by his or her regularly assigned routine and duties to work directly with a commercial motor vehicle or its contents. The duties must be of a direct, hands-on nature that requires the employee to physically move, touch or affect the vehicle or its contents. Supervisory, managerial, consulting, or other duties, which indirectly affect the safety of a motor vehicle, do not meet the definition of "directly affects."

(g) "Driver leasing company" means an employer that employs drivers and leases them to motor carriers or motor private carriers. A driver leasing company is not an employer subject to the jurisdiction of the Secretary of Transportation.

(3) The following examples illustrate the application of sections (1) and (2) of this rule.

Example 1 Subsection 1(c), Regularly Assigned Duties: Adam, a nonresident, works for an Oregon based interstate trucking carrier as a driver. He has a regular route from Idaho to Oregon and picks up or delivers products in Oregon. Adam's compensation is exempt from Oregon taxation.

Example 2 Subsection 1(c), Regularly Assigned Duties: Brenda, a nonresident, works for an interstate trucking carrier as a driver. She has a regular route from Portland to Vancouver, Washington. It is a daily or weekly route. However, the Portland-Vancouver route only takes about 2 to 3 hours. Brenda has a regular route from Portland to Salem for the remaining time. Brenda is considered to be performing "regularly assigned duties in more than one state" since the Portland-Vancouver assignment is on a regular basis. Therefore, her compensation is exempt from Oregon taxation.

Example 3 Subsection 1(c), Regularly Assigned Duties: Carl, a nonresident, works for an Oregon based interstate trucking carrier as a driver. The company's customers are mostly lumber mills located in Oregon and Washington. Carl picks up his truck every morning in Washington and receives delivery assignments for the day. Depending on where the lumber needs to be delivered, Carl may not have to come to Oregon on a daily basis. He may pick up and deliver lumber products all within Washington or may do so all within Oregon. However, Carl does drive to Oregon at least once a month due to the company's customer base. Due to the nature of the business, the company may not be able to assign regular duties to Carl. The company itself does not even know what the delivery route will be until the customers notify the trucking company. Although Carl may not have a regular route in Washington and Oregon, he does drive to Oregon at least once a month. Carl is considered to have "regularly assigned duties in more than one state" as long as all the routes (including interstate routes) are assigned indiscriminately among all drivers on a regular basis. Carl's compensation is exempt from Oregon taxation.

Example 4 Subsection 1(c), Regularly Assigned Duties: Dave, a nonresident, works for an interstate trucking carrier as a driver. All of his routes are within Oregon, mainly from Portland to Pendleton. However, the company requires that Dave drive to Washington before reaching the destination in Oregon (Pendleton in this case). The company has no business reason for this requirement. There is no product waiting for pick-up or delivery in Washington. Dave's compensation is taxable by Oregon. He does not have "regularly assigned duties in more than one state." Dave may drive to Washington every day, but there is no business reason to drive to Washington.

Example 5 Subsection 1(c), Regularly Assigned Duties: Frieda, a nonresident, works for an Oregon retail store as a freight handler. Her regularly assigned duties are to load and unload freight. Occasionally, Frieda is asked to fill in as a driver and, over the course of a year, may drive several routes in and out of Oregon. Frieda does not have "regularly assigned duties in more than one state" and her Oregon-sourced compensation is taxable by Oregon.

Example 6 Subsection 1(c), Regularly Assigned Duties: George, a nonresident, works as a mechanic for an interstate trucking firm. He is assigned to the Portland terminal and performs the majority of his work there. His job duties require that he be available to perform minor repair work away from the terminal on an "as-needed" basis. Several times during a given year, he may be required to travel to Washington to repair a flat tire, do minor engine work, etc. George does not have "regularly assigned duties in more than one state" and his Oregon-sourced compensation is taxable by Oregon.

Example 7 Subsection 2(a), Driver, Mechanic, Freight Handler: Edward, a nonresident, works for an Oregon trucking carrier as a clerk. The company has one terminal in Oregon and one terminal in Washington. Edward regularly works in both terminals, i.e. works in two states. Edward is not considered an employee for purposes of P.L. 101-322. He is not a driver, a mechanic, or a freight handler. His duties do not directly affect the safety of the vehicle. Therefore, the Oregon source income is taxable by Oregon.

Example 8 Subsections 2(a) and 2(b), Employer: Mary Lou, a nonresident, is a supervisor who regularly assigns drivers as an interstate trucking firm's Portland and Vancouver terminals. She tracks the hours each driver works to ensure compliance with the Secretary of Transportation's safety regulations regarding maximum hours worked. Though Mary Lou works in two different states and does have an impact on safety, she is considered an employer, not an employee, and must pay Oregon tax on that portion of work performed at the Portland terminal.

Example 9 Subsections 2(a)(A) and 2(f), Directly Affects Safety: Harold, a nonresident, is employed by an interstate trucking firm. Harold's duties include: authorizing and ordering drug testing for employees; road testing a driver's abilities; investigating accidents involving company vehicles; ordering repairs to motor vehicles; removing vehicles from service; and approving and implementing safety programs and policies. While Harold may be responsible for vehicles, and his work may have a significant impact upon safety, that impact is not direct, but is implemented through others. He does not meet the requirement that he "directly affect" the safety of a commercial motor vehicle and his Oregon-sourced compensation is taxable by Oregon.

Example 10 Subsections 2(a)(A) and 2(f), Directly Affects Safety: Garrett, a nonresident, works as a freight handler in the Portland terminal of a trucking company. His duties also require him to attend daylong staff meetings at the company's headquarters in Vancouver, Washington each month. Although Garrett has "regularly assigned duties in more than one state," only the duties he performs at the Portland terminal directly affect the safety of a commercial motor vehicle. Garrett does not have "regularly assigned duties in more than one state" that "directly affect" the safety of a commercial motor vehicle. His compensation related to services performed in Oregon is taxable by Oregon.

Example 11 Subsections 1(d) and 2(d), Property and Motor Private Carrier: Roberto, a nonresident, works for a small furniture manufacturing company located in Oregon. Roberto drives a commercial motor vehicle, and his employer is licensed with the Secretary of Transportation. His job requires him to drive to various states to buy hardwood for use in building the furniture. Roberto is exempt from Oregon taxation on his wages because he transports a product between states to further a commercial business, and his employer meets the other requirements of a motor private carrier.

Example 12: Subsections 1(d) and 2(d), Property and Motor Private Carrier: Barbara, a nonresident, works as a refrigeration mechanic for a dairy. She drives a large repair vehicle to service her employer's refrigerators at all company locations, including those out of state. Even though Barbara drives outside Oregon to repair equipment, she does not transport property to further a commercial business, and is therefore not exempt from Oregon taxation.

Example 13 Subsection 2(e), Commercial Motor Vehicle: Ken, a nonresident, works as a line repairman for a utility company. He uses a company truck with a gross vehicle weight rating in excess of 10,000 pounds when making service calls in both Oregon and Washington. Ken is not exempt from Oregon taxation because he does not drive a "commercial motor vehicle" (i.e., a motor vehicle used to transport passengers or property).

Example 14 Subsection (2)(e), Commercial Motor Vehicle: Julie, a nonresident, works as a truck driver for a furniture store. She drives a truck with a gross vehicle weight rating in excess of 10,000 pounds to deliver furniture on a regular basis to residents and nonresident customers who make purchases at her employer's stores. Julie is exempt from Oregon taxation because she directly affects the safety of a commercial motor vehicle and works for a motor private carrier transporting property in interstate commerce.

Example 15 Subsections 2(a)(C) and 2(a)(D), Subject to Jurisdiction of the Secretary of Transportation: Connie Sue, a nonresident, works for an interstate motor carrier on a regular basis at her company's Oregon and Washington yards. She has a variety of duties, including helping with the loading of trucks. Her employer pays her overtime because she is properly listed as "non-exempt" (covered) under the provisions of the Fair Labor Standards Act and thus subject to its requirements. Because she is covered under the Fair Labor Standards Act rather than being subject to the jurisdiction of the Secretary of Transportation, Connie Sue does not meet the requirements for the Amtrak exclusion.

Example 16 Subsection 2(g), Driver Leasing Companies: Larry, a nonresident, is employed by JobProviders, a temporary employment agency. Larry has a commercial driver's license, drives a commercial motor vehicle between states on a regular basis, and is leased by his company exclusively to WeMoveU, a motor carrier properly licensed with the Secretary of Transportation. Larry is under the direction and control of WeMoveU at all times, though he receives his paycheck from JobProviders. Larry is exempt from Oregon taxation. Though he may be considered an employee of JobProviders for other federal tax purposes, he is considered an employee of WeMoveU, a motor carrier, for Amtrak Act purposes.

Example 17 Subsection 2(g), Driver Leasing Companies: Randy, a nonresident, is employed by MechanicalGenius, an Oregon employer, as a truck mechanic. MechanicalGenius leases his services exclusively to OnTheRoad, an interstate motor carrier. Twice per month, Randy must travel to Washington to perform inspections and repairs of OnTheRoad's trucks. Randy is under the direction and control of his supervisor at MechanicalGenius. Even though Randy travels on a regular basis between two states, only repairs on OnTheRoad's trucks, and has a direct effect on the safety of OnTheRoad's commercial motor vehicles, he is subject to Oregon taxation. Randy is considered an employee of MechanicalGenius, which is not a motor carrier, motor private carrier, or other employer subject to the jurisdiction of the Secretary of Transportation.

(4) Changes in exempt status. The determination of whether an employee is exempt under these provisions is generally made for each portion of the year an employee performs a given set of specific job duties.

(a) If an employee does not change job duties during the year and meets the requirements of this section for the taxable year, the individual's compensation is exempt from Oregon taxation for the entire tax year.

(b) If an employee changes job duties during the taxable year, each change in job duties must be considered separately to determine whether the compensation received for that particular set of job duties is exempt from Oregon taxation.

Example 18: Rob, a nonresident, worked through June 30, as a mechanic for an Oregon trucking firm. All of his job duties were performed at the company's Portland terminal. On July 1, Rob began a new job for the same company as a commercial interstate truck driver. Rob's compensation as a mechanic is not exempt from Oregon taxation, because he did not have regularly assigned duties in two states. For that portion of the year when Rob's duties were performed as a commercial interstate truck driver, his compensation as a truck driver is exempt from Oregon taxation if he meets all other requirements.

Example 19: Ivan, a nonresident, works as a driver for an interstate trucking company. From January 1 through June 30, his regular route is entirely within Oregon. On July 1, Ivan is assigned to a route from Seattle to Spokane that will last for two years. Neither his job duties during the first part of the year nor the last part of the year required him to drive between states. Because Ivan drove only intra-state during each portion of the year, his compensation earned on the Oregon route is not exempt from Oregon taxation. His compensation earned on the Washington route is not taxable by Oregon because it was earned by a nonresident employee for services provided outside Oregon.

(5) Rail carrier employees. Federal Public Law (P.L.) 101-322, the Amtrak Reauthorization and Improvement Act of 1990, and Public Law 104-88, the ICC Termination Act of 1995, provide that no part of the compensation paid by a rail carrier to a nonresident who performs regularly assigned duties on a railroad in more than one state is subject to Oregon income tax (see 49 USC §11502). For purposes of this subsection, the following definitions apply:

(a) "Rail carrier" means a person providing a common carrier railroad transportation for compensation.

(b) "Railroad" includes:

(A) A bridge, car float, lighter, and ferry used by or in connection with a railroad;

(B) The road used by a rail carrier and owned by it or operated under an agreement; and

(C) A switch, spur, track, terminal, terminal facility, and a freight depot, yard, and ground, used or necessary for transportation.

(6) Air carrier employees: Federal law provides that the pay of a nonresident employee of an air carrier having regularly assigned duties on aircraft in more than one state is subject to Oregon income tax only if the employee earns more than 50 percent of that pay in Oregon (see 49 USC §40116). The employee is deemed to earn 50 percent or more of the pay in Oregon if, for the calendar year, the employee's scheduled flight time in Oregon is more than 50 percent of the employee's total scheduled flight time. For purposes of this subsection, the following definitions apply:

(a) "Air carrier" means a citizen of the United States, as defined in 49 USC §40102, undertaking by any means, directly or indirectly, to provide air transportation.

(b) "Air transportation" means the interstate or foreign transportation of passengers or property by aircraft as a common carrier for compensation, or the interstate or foreign transportation of mail by aircraft.

Example 20: Jean, a nonresident, works as a pilot for an Oregon-based corporation. Jean transports the corporation's executives to various job locations in the United States. Jean is not exempt from Oregon tax, as she is not employed by an "air carrier" that provides "air transportation." Her wages are subject to Oregon tax to the extent services are performed in Oregon.

Example 21: James, a nonresident, is employed by an air carrier as an office manager. Each calendar year, he works as a substitute pilot outside of Oregon in order to log the minimum amount of flight time required to retain his license. James does not qualify as exempt from Oregon income tax because his "regularly assigned duties" are not on an aircraft, but as a manager in an office.

(7) Substantiation. To claim exemption from income under Federal Public Law (P.L.) 101-322, the Amtrak Reauthorization and Improvement Act of 1990, or Public Law 104-88, the ICC Termination Act of 1995, (49 USC §14503), a taxpayer must maintain records that adequately establish that the taxpayer qualifies for the income exemption.

Example 22: Jason, a nonresident, works for a motor carrier as a Vice President. His typical duties are to travel behind the company’s truck drivers to ensure that the drivers follow Department of Transportation (DOT) laws, federal and state safety laws, and company policy. He does random checks of the trucks as the drivers take breaks to ensure the trucks are safe and the drivers are following all applicable federal and state laws. Occasionally, he is required to deliver a truckload himself when the company is short of drivers. He claims the Amtrak deduction on his Oregon nonresident return. He kept no record of his duties that show he has regularly assigned duties in more than one state or that his duties directly affect the safety of a motor vehicle. Because he cannot provide any documentation that he qualifies for the income exemption, his deduction is not allowed.

Example 23: Assume the same facts as in Example 22 except that Jason provides a copy of his Commercial Driver’s license, his Department of Transportation (DOT) log books, and verification from the destination that he is in more than one state performing duties. He provides his job description that shows he is required to spot-check whether trucks are safely on the road. He also provides copies of reports that show he has written up employees for failure to comply with safety standards. He has adequately established that he directly affects the safety of commercial motor vehicles. Thus, the exemption from income is allowed.

Example 24: Peter, a nonresident, works for a motor private carrier as a long-haul truck driver. He claims the Amtrak deduction on his Oregon nonresident return. He does not provide any driving logs or documentation to establish that he drives a commercial vehicle in more than one state. Because he does not provide any documentation to establish that he qualifies for the Amtrak deduction, the deduction he claimed is not allowed.

Example 25: Same facts as Example 24 except that Peter provides copies of his Department of Transportation log books, a copy of his bid shift from his employer, as well as receipts that show he is in more than one state at various truck stops while he is on the road. Peter provides enough information to establish he qualifies for income exemption, thus the exemption from income is allowed.

History

Statutory/Other Authority: ORS 305.100 & 314.815
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127-(E), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08
REV 8-2001, f. & cert. ef. 12-31-01
REV 5-2000, f. & cert. ef. 8-3-00
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
12-31-93

Or. Admin. R. 150-316-0175 Gross Income of Nonresidents; Compensation Received by Nonresident Professional Athletes

(1)(a) General. Oregon source income of a nonresident individual who is a member of a professional athletic team includes that portion of such individual’s total compensation for services rendered as a member of a professional athletic team during the taxable year which, the number of duty days spent within Oregon rendering services for the team in any manner during the taxable year, bears to the total number of duty days spent both within and without Oregon during the taxable year.

(b) Special rule. Travel days that do not involve either a game, practice, team meeting, promotional caravan or other similar team event are not considered duty days spent in Oregon. However, such travel days shall be considered duty days spent within and without Oregon.

(2) Definitions. For purposes of this rule:

(a) The term “professional athletic team” includes, but is not limited to, any professional baseball, basketball, football, soccer or hockey team.

(b) The term “member of a professional athletic team” shall include those employees who are active players, players on the disabled list and any other persons required to travel and who do travel with and perform services on behalf of a professional athletic team on a regular basis. This includes but is not limited to coaches, managers and trainers.

(c)(A) The term “duty days” shall mean all days during the taxable year from the beginning of the professional athletic team’s official pre-season training period through the last game in which the team competes or is scheduled to compete.

(B) Duty days shall also include days on which a member of a professional athletic team renders a service for a team on a date which does not fall within the aforementioned period (e.g., participation in instructional leagues, the “Pro Bowl” or promotional “caravans”). Rendering a service includes conducting training and rehabilitation activities, but only if conducted at the facilities of the team.

(C) Included within duty days, shall be game days, practice days, days spent at team meetings, promotional caravans and pre-season training camps, and days served with the team through all post-season games in which the team competes or is scheduled to compete.

(D) Duty days for any person who joins a team during the season shall begin on the day such person joins the team, and for any person who leaves a team shall end on the day such person leaves the team. Where a person switches teams during the taxable year, a separate duty day calculation shall be made for the period such person was with each team.

(E) Days for which a member of a professional athletic team is not compensated and is not rendering services for the team in any manner, including days when such member of a professional athletic team has been suspended without pay and prohibited from performing any services for the team, shall not be treated as duty days.

(F) Days for which a member of a professional athletic team is on the disabled list shall be presumed not to be included in total duty days spent within and without the state.

(G) The provisions of this paragraph can be illustrated by the following examples:

Example 1: Kelly, a member of a professional athletic team, is a nonresident of Oregon. Kelly’s contract for such team requires Kelly to report to the team’s training camp and to participate in all exhibition, regular season, and playoff games. Kelly has a contract which covers seasons that occur during year 1/year 2 and year 2/year 3. Kelly’s contract provides that he will receive $500,000 for the year 1/year 2 season and $600,000 for the year 2/year 3 season. Assuming Kelly receives $550,000 from such contract during taxable year 2 ($250,000 for one-half the year 1/year 2 season and $300,000 for one-half the year 2/year 3 season), the portion of such compensation received by Kelly for taxable year 2, attributable to Oregon, is determined by multiplying the compensation Kelly receives during the taxable year ($550,000) by a fraction. The numerator of such fraction is the total number of duty days Kelly spends rendering services for the team in Oregon during taxable year 2 (attributable to both the year 1/year 2 season and the year 2/year 3 season). The denominator of such fraction is the total number of Kelly’s duty days spent both within and without Oregon for the entire taxable year.

Example 2: Sam, a member of a professional athletic team, is a nonresident of Oregon. During the season, Sam is injured and is unable to render services for Sam’s team. While Sam is undergoing medical treatment at a clinic in Oregon, Sam’s team travels to Oregon for a game. The number of days Sam’s team spends in Oregon for practice, games, meetings, etc. while Sam is present at such clinic in Oregon shall not be considered duty days spent in Oregon for Sam for that tax year for purposes of this section, but such days are considered to be included within total duty days spent within and without Oregon.

Example 3: Jean, a member of a professional athletic team, is a nonresident of Oregon. During the season, Jean is injured and is unable to render services for Jean’s team. Jean performs rehabilitation exercises at the facilities of Jean’s team in Oregon as well as at personal facilities in Oregon. Days Jean performs rehabilitation exercises in the facilities of Jean’s team are considered duty days spent in Oregon for Jean for that tax year for purposes of this section. However, days Jean spends in private facilities in Oregon shall not be considered duty days spent in Oregon for Jean for that tax year for purposes of this section, but such days are considered to be included within total duty days spent within and without Oregon.

Example 4: Terry, a member of a professional athletic team, is a nonresident of Oregon. During the season, Terry travels to Oregon to participate in the annual all-star game as a representative of Terry’s team. The number of days Terry spends in Oregon for practice, the game, meetings, etc., shall be considered duty days spent in Oregon for Terry for that tax year for purposes of this section, as well as included within total duty days spent within and without Oregon.

Example 5: Assume the same facts as given in example 4, except that Terry is not participating in the all-star game and is not rendering services for Terry’s team in any manner. Terry is traveling to and attending such game solely as a spectator. The number of days Terry spends in Oregon for such game shall not be considered duty days spent in Oregon for purposes of this section.

(d)(A) The term “total compensation for services rendered as a member of a professional athletic team” means the total compensation received during the taxable year for services rendered: (i) from the beginning of the official pre-season training period through the last game in which the team competes or is scheduled to compete during that taxable year; and (ii) during the taxable year on a date which does not fall within the aforementioned period (e.g., participation in instructional leagues, the “Pro Bowl” or promotional “caravans”). Such compensation shall include, but is not limited to, salaries, wages, bonuses as described in subparagraph (B) of this paragraph and any other type of compensation paid during the taxable year to a member of a professional athletic team for services performed in that year. Such compensation shall not include strike benefits, severance pay, termination pay, contract or option year buy-out payments, expansion or relocation payments, or any other payments not related to services rendered to the team.

(B) For purposes of this paragraph, “bonuses” included in “total compensation for services rendered as a member of a professional athletic team” subject to the allocation described in subdivision (1)(a) of this section are:

(i) Bonuses earned as a result of play (i.e., performance bonuses) during the season, including bonuses paid for championship, playoff or “bowl” games played by a team, or for selection to all-star league or other honorary positions; and

(ii) Bonuses paid for signing a contract, unless all of the following conditions are met:

(I) The payment of the signing bonus is not conditional upon the signee playing any games for the team, or performing any subsequent services for the team, or even making the team;

(II) The signing bonus is payable separately from the salary and any other compensation; and

(III) The signing bonus is nonrefundable.

(iii) This section is designed to apportion to Oregon, in a fair and equitable manner, a nonresident member of a professional athletic team’s total compensation for services rendered as a member of a professional athletic team. It is presumed that application of the foregoing provisions of this section will result in a fair and equitable apportionment of such compensation. Where it is demonstrated that the method provided under this section does not fairly and equitably apportion such compensation, the Department of Revenue may require such member of a professional athletic team to apportion such compensation under such method as the department prescribes, as long as the prescribed method results in a fair and equitable apportionment. A nonresident member of a professional athletic team may submit a proposal for an alternative method to apportion such compensation, where they demonstrate that the method provided under this section does not fairly and equitably apportion such compensation. If approved, the proposed method must be fully explained in the nonresident member of a professional athletic team’s nonresident personal income tax return for Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127-(F), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-316-0179 Student Loan Interest Deduction — for Part-Year and Nonresidents

Individuals who are allowed a deduction for student loan interest for federal purposes shall be allowed a deduction for Oregon purposes. The allowable Oregon deduction is limited to a percentage of the federal deduction (not to exceed 100 percent). The qualifying interest paid while a nonresident of Oregon must be prorated based on the ratio of total Oregon source income while a nonresident to total income while a nonresident, determined without deduction for student loan interest. The qualifying interest paid while a resident is deductible in full. See the example for the alimony adjustment under OAR150-316-0195. The total Oregon deduction cannot exceed the amount allowed under federal law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127(1)(a)-(A), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-316-0181 Moving Expense Deduction — for Part-year and Nonresidents

(1) Moving expenses must be deductible on the federal return to be deducted on the Oregon return.

(2) To be deductible from the Oregon portion of federal adjusted gross income, moving expenses must be connected with employment within Oregon. Thus, for a part-year or nonresident taxpayer, the moving expenses incurred are deductible only if the taxpayer’s new principal place of work is within Oregon. Moving expenses incurred by a part-year or nonresident taxpayer for the purpose of beginning work at a new principal place of employment outside of Oregon are not deductible.

(3) Taxable reimbursement of moving expenses shall be included in the Oregon portion of federal adjusted gross income if the moving expenses are connected to Oregon employment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
REV 9-2026, amend filed 06/29/2026, effective 07/01/2026
REV 28-2018, amend filed 12/28/2018, effective 01/01/2019
Renumbered from 150-316.127(3)(a), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-316-0183 Gross Income of Nonresidents; Retirement Income Derived from Oregon Sources

(1) Federal law (PL 104-95) prohibits states from taxing retirement income received after December 31, 1995, by individuals who are not residents of this state or who are not domiciled in this state.

(a) Individuals who have Oregon as their domicile are taxed on all their retirement income, unless they meet the requirements to be taxed as nonresidents, as provided in ORS 316.027(1)(a)(A).

(b) Under Oregon law, Oregon source retirement income received after December 31, 1995, and before January 1, 2000, is exempt from tax if the person receiving the income is taxed as a nonresident under ORS 316.027(1)(a)(A), regardless of where the person's domicile is located.

(c) Beginning January 1, 2000, Oregon source retirement income is taxable if received by a person who is taxed as a nonresident but who is domiciled in Oregon. See OAR 150-316-0167 for information on calculating the amount of the Oregon source retirement income that is subject to tax.

Example 1: Sam lived and worked in Oregon until his retirement in 1997. At retirement he gave up his Oregon domicile and moved to Arizona. Following Sam's change of domicile to Arizona, none of Sam's pension income is taxable by Oregon.

Example 2: Douglas has lived and worked in Oregon all his life. On January 1, 1999, he retired, sold his personal residence, and took a temporary job working in Alaska. He plans to work for several years and then return to Oregon to live. He has not established a new domicile outside of Oregon, nor does he intend to give up his Oregon domicile. Douglas meets the requirements to be taxed as a nonresident under ORS 316.027(1)(a)(A). However, beginning January 1, 2000, his Oregon source pension will be taxable by Oregon because he has retained Oregon as his domicile. Douglas will follow the provisions of OAR 150-316-0167 to determine the amount taxable to Oregon.

(2) Definitions.

(a) "Domicile" means the place an individual considers to be the individual's true, fixed, permanent home. Domicile is the place a person intends to return to after an absence. A person can only have one domicile. It continues as the domicile until the person demonstrates an intent to abandon it, to acquire a new domicile, and actually resides in the new domicile. Factors that contribute to determining domicile include family, business activities and social connections.

(b) "Retirement income" has the same meaning as in 4 USC 114 and means income from:

(A) Qualifying employer pension and profit sharing plans exempt from tax under Internal Revenue Code (IRC) Section 401(a), such as corporate retirement plans and "Keogh" plans;

(B) Annuity plans (IRC 403(a) and IRC 403(b));

(D) Simplified employee pension plans ("SEPs") under IRC 408(k);

(E) Individual retirement arrangements ("IRAs") and Roth IRAs under IRC 408(a), 408(b), and 408A;

(F) Plans established and maintained by federal, state or local government for the benefit of employees (IRC 414(d));

(G) Any retired or retainer pay of a member or former member of a uniform service computed under chapter 71 of Title 10 of the United States Code;

(H) Trusts, as described in IRC 501(c)(18), that were created before June 25, 1959, that meet the specific requirements of that IRC section;

(I) Simple retirement account under IRC 408(p);

(J) Payments received from nonqualified deferred compensation plans (as described in IRC 3121(v)(2)(C)) if the payments:

(i) Are part of a series of substantially equal periodic payments that are made for the life or life expectancy of the recipient (or the joint lives or joint life expectancies of the recipient and the designated beneficiary of the recipient), or for a period of at least 10 years; or

(ii) Are received after termination of employment and are paid under a plan, program, or arrangement maintained solely for the purpose of providing retirement benefits that exceed the amounts allowed under the qualified retirement plans described in paragraph 1 of this rule.

(c) Retirement income does not include income received from stock options, restructured stock plans, severance plans, or unemployment benefits.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127-(9), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 19-2008, f. 12-26-08, cert. ef. 1-1-09
REV 5-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-316-0185 Gross Income of Nonresidents: Waterway Workers

(1) General Policy. The State of Oregon imposes taxes on Oregon source income of nonresidents to the extent allowed under Oregon and federal law and exempts Oregon source income of nonresidents to the extent provided under federal law: 46 USCA 11108. Under both federal and state law, compensation of a nonresident waterway worker is exempt from Oregon taxation to the extent the compensation is paid to an individual engaged on a vessel and performing assigned duties as a licensed pilot in more than one State or to an individual performing regularly assigned duties while engaged as a master, officer, or crewman on a vessel operating on the navigable waters in two or more states.

(2) For purposes of ORS 316.127(10) and this rule:

(a) "Master" is the commander of a merchant vessel, who is in charge of the vessel, its crew, its passengers, and the care and control of the vessel and cargo.

(b) "Member of a crew" or "crew member" is an individual carried on board a vessel who is not required to obtain a license (though they may be required to obtain certification) who provides services such as navigation and maintenance of the vessel, its machinery, systems, or services essential for propulsion and safe navigation or to provide services for passengers on board.

(c) "Navigable waters" are waters that are subject to the ebb and flow of the tide and waters that are presently used, or were used in the past, to transport interstate or foreign commerce.

(d) "Officer" is an individual carried on board the vessel who must obtain a specialized license and who provides navigation and maintenance of the vessel, its machinery, systems, and arrangements essential for propulsion and safe navigation.

(e) "Passenger" is a person on board a vessel other than:

(A) The master, a member of the crew, or other person employed or engaged in any capacity in the business of the vessel; or

(B) A child under one year of age.

(f) "Regularly assigned duties" are those duties performed on a regular basis (i.e. daily, weekly, or monthly). Duties that are performed on sporadically or intermittently as occurs when serving on an "on-call" or "as-needed" basis are not "regularly assigned duties."

(g) "Vessel" is watercraft used, or capable of being used, as a means of transportation on navigable waters in 2 or more states for business purposes.

(h) "Waterway worker" is a nonresident who is:

(A) Engaged on a vessel to perform assigned duties in more than one State as a pilot licensed under section 7101 of Title 46 of the United States Code or licensed or authorized under the laws of a State, or

(B) An individual who performs regularly assigned duties while engaged as a master, officer, or member of a crew on a vessel operating on the navigable waters in two or more states.

Example 1: Ben, a resident of Washington, is a crew member and works on a dredging vessel on the Willamette River in Oregon and the Cowlitz River in Washington six months of the year. The other six months of the year Ben works in the company’s office in Portland, Oregon. Only six months of compensation from his employer is exempt because it’s for services Ben performed on the dredging vessel and is not taxable by Oregon. The remaining six months of compensation is taxable by Oregon.

Example 2: Kirk, a nonresident, works for a log mill located on the Oregon shore of the Columbia River. He spends 6 hours a day piloting a tugboat on the river carrying logs to the mill. For the remaining 2 hours of his shift, he works in the mill doing maintenance on mill equipment as well as other tasks. Kirk’s compensation for his time working on the tugboat is not subject to Oregon tax. However, the time he spent working in the mill in Oregon is Oregon-source income and subject to Oregon tax. Kirk may exclude 75 percent (6 divided by 8) of his total compensation from this employer from Oregon taxation. He will only report 25 percent of his wages in the Oregon column of his nonresident return.

Example 3: Remy, a nonresident, is a crew member and works on a vessel plying the Columbia and Willamette rivers. Remy makes weekly trips from Hood River to Tualatin and back, hauling cargo on the vessel. Each trip entails three days on the Columbia River and two days on the Willamette River. All of Remy’s income is exempt and is not taxable to Oregon.

Example 4: Jim, a nonresident, works in Oregon for a water transportation company that plies the waters of the Columbia River. On occasion, he is called upon to work as a member of a crew for a full day on one of the company's vessels when they are short-handed. His income is taxable by Oregon, even for the days he works on the vessel, because his work on the vessel is on an as-needed, sporadic, or intermittent basis.

Example 5: Ken, a Washington resident, works in Oregon as a manager for a water transportation company whose two vessels traverse the Columbia River. Once every quarter, Ken boards the company's vessels to check on the employees working on the vessel. Ken's income is taxable by Oregon, even for the days that he spends on board a vessel because he is not a pilot, master, officer, or crew member of the vessel.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.127
Renumbered from 150-316.127(10), REV 62-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
REV 11-2007, f. 12-28-07, cert. ef. 1-1-08

Or. Admin. R. 150-316-0195 Alimony Deduction — for Part-Year and Nonresidents

(1) For divorce decrees and separation agreements entered into before January 1, 2019, this rule still applies unless the divorce decree or separation agreement is modified after December 31, 2018, and expressly states that the alimony is not deductible to the payer or includible in the income of the recipient. If the divorce decree or separation agreement is entered into after December 31, 2018 this rule will not apply.

(2) Full-year nonresidents shall follow the rules under ORS 316.130(2)(c) in determining deductibility of alimony payments.

(3) In determining income from Oregon sources, part-year residents shall not deduct any alimony or separate maintenance payments, as defined in IRC 215(b) and 71(b), made to residents during the portion of the year the part-year resident was a nonresident.

(4) A nonresident’s alimony deduction must be prorated for the portion of the year that they are a nonresident of Oregon if they have income from other than Oregon sources. The alimony paid while a nonresident is to be prorated based on the ratio of their Oregon source income while a nonresident to their total income while a nonresident without deduction for alimony. Alimony paid is deductible in full once residency is established.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.130 & 316.117
REV 36-2020, amend filed 12/23/2020, effective 01/01/2021
REV 47-2017, f. & cert. ef. 8-2-17
Renumbered from 150-316.130(2)(c)-(A), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
Repealed by RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-316-0197 Nonresident Deduction for Contributions to IRA, Keogh, or Qualified Medical Savings Accounts

(1) Nonresident individuals who are allowed a deduction for contributions made to Keoghs, SEPs, individual retirement accounts (IRAs), and qualified savings accounts (MSA) for federal purposes shall also be allowed a deduction for Oregon purposes. The deduction for Oregon is limited to a percentage of the federal deduction (not to exceed 100 percent).

(2) For contributions made to a qualified Keogh or SEP plan under section 401 of the Internal Revenue Code, the deduction for Oregon is equal to the federal deduction times the ratio of Oregon earned income over earned income from all source. In general, “earned income” is the net earnings from self-employment in a trade, business, or profession in which the taxpayer performs personal service.

(3) For contributions made to an IRA account under section 219 of the Internal Revenue Code, the deduction for Oregon is equal to the federal deduction times the ratio of Oregon compensation over compensation from all sources. In general, “compensation” includes alimony, wages, professional fees, or other amounts derived from or received from personal services rendered and included in gross income for the tax year. It does not include pensions, annuities, or other forms of deferred compensation.

Example: Assume a nonresident taxpayer had a $2,000 IRA deduction for federal purposes. His federal and Oregon wages were $40,000 and $20,000, respectively. His Oregon deduction would be equal to $1,000 or ($2,000 x (20,000/40,000)).

(4) For contributions made to a MSA under section 220 of the Internal Revenue Code, the deduction for Oregon is equal to the federal deduction times the ratio of Oregon compensation over compensation from all sources.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.130
Renumbered from 150-316.130(3), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-86, Renumbered from 150-316.127(1)(a)-(C)
9-22-86

Or. Admin. R. 150-316-0205 Credit for Taxes Paid to State of Residence

(1) General: An Oregon nonresident is allowed a credit for taxes paid to the state of residence if the taxpayer’s state of residence allows residents of Oregon to claim a credit for mutually taxed income on the nonresident return filed with that state.

Example: Elizabeth, a California resident, receives income from Oregon property. Because California allows Oregon residents to claim a credit for mutually taxed income on the California nonresident return, Elizabeth is allowed to claim the credit on the Oregon nonresident return.

(2) Computation. OAR 150-316-0084 subsection (4) shall be followed.

(3) Proof required and procedure for obtaining credit. OAR 150-316-0086 and 150-316-0080 shall be followed.

(4) Special filing status. OAR 150-316-0084 subsections (5), (6), (7), and (8) shall be followed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.131
Renumbered from 150-316.131(1), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
12-31-93
10-15-93

Or. Admin. R. 150-316-0225 Retirement Income Credit

(1) Definitions.

(a) Retirement Income. Retirement income includes distributions from any:

(A) U.S. Government pension;

(B) State public pension;

(D) IRA or KEOGH;

(E) Deferred compensation plan;

(F) Employee annuity plan which is included in federal taxable income.

(b) Age. If taxpayers are married filing a joint return, the spouse receiving the pension income must meet the age requirement in order to claim the tax credit. In order to claim the credit, the taxpayer must meet the following age requirement before the end of the tax year:

(A) The individual must be 58 years old for tax years beginning on or after January 1, 1991, and prior to January 1, 1993.

(B) The individual must be 59 years old for tax years beginning on or after January 1, 1993, and prior to January 1, 1995.

(C) The individual must be 60 years old for tax years beginning on or after January 1, 1995, and prior to January 1, 1997.

(D) The individual must be 61 years old for tax years beginning on or after January 1, 1997, and prior to January 1, 1999.

(E) The individual must be 62 years old for tax years beginning on or after January 1, 1999.

(c) Base. The base is equal to $7,500 if the taxpayer files as single, head of household, qualifying widower, or married filing a separate return. The base is equal to $15,000 if the taxpayer is married filing a joint return.

(d) Social Security. Social Security is the taxable and nontaxable benefits received by the individual who is receiving retirement income. In the case of a married filing joint return, social security is the taxable and nontaxable benefits received by both spouses.

(e) For purposes of this credit, household income is the total income of the taxpayer and the taxpayer’s spouse, regardless of which spouse received the income or of the source. Household income does not include any taxable or nontaxable Social Security benefits received by either the taxpayer or the taxpayer’s spouse.

(2) Credit. Eligible individuals receiving retirement pay are allowed a credit for tax years beginning on or after January 1, 1991. The credit is equal to nine (9) percent of the lesser of:

(a) Retirement income or;

(b) The base, reduced by any Social Security received and by the household income limitation.

(3) Household Income Limitation. If a taxpayer filing a joint return has more than $30,000 of household income, the base is reduced dollar for dollar by the amount that the taxpayer’s household income exceeds $30,000. If a taxpayer files as single, head of household, qualifying widower, or married filing a separate return and has more than $15,000 in household income, the base will be reduced by household income in excess of $15,000. For purposes of this credit, benefits received from Social Security or Railroad Retirement are not included in computing the household income limitation.

Example 1: John’s retirement income totals $6,000. John’s wife, Mary, has retirement income totaling $2,000. John and Mary file a joint return. John and Mary’s total retirement income is $8,000 ($2,000 + $6,000) and is all taxable on their Oregon return. They receive Social Security benefits which total $4,000 for the year. Their household income equals $31,000 not including Social Security. The base of $15,000 is reduced by $4,000 (Social Security benefits) and by $1,000 (the excess household income over $30,000). This equals $10,000 ($15,000 – $4,000 – $1,000). The credit is equal to nine (9) percent of the lesser of $10,000 or $8,000 (the total of their retirement income). John and Mary’s retirement credit is $720 (.09 x $8,000).

(4) Part-year Resident. The credit is calculated in the same manner as the credit allowed a resident in section (2) but is based only on retirement income that is taxable by Oregon.

Example 2: Use the facts in Example 1 except assume that John and Mary are filing as part-year residents. Assume that of John’s $6,000 of retirement income, $1,500 is retirement from services performed in California and is all received before they move to Oregon. Also assume that $2,000 is compensation sourced to Oregon but received before they move to Oregon. The balance, $2,500 [$6,000 – ($1,500 + $2,000)], is compensation received after they moved to Oregon. Mary’s $2,000 of retirement income is all received after they move to Oregon and is all taxable by Oregon. The base of $15,000 is reduced by $4,000 (Social Security benefits) and by $1,000 (the excess household income over $30,000). The product of the formula is $10,000 ($15,000 – $4,000 – $1,000). The credit is equal to nine (9) percent of the lesser of $10,000 or $4,500 (retirement income taxable by Oregon). John and Mary’s retirement credit is $405 (.09 x $4,500).

(5) Nonresident. Retirement income received after December 31, 1995 by a nonresident is not includible in Oregon taxable income and may not be used to claim the retirement income credit.

(6) In no event will a taxpayer be allowed the credit in excess of the taxpayer’s tax liability or be allowed to carry any excess over to the following tax year.

(7) The provisions of this rule apply to retirement income received after December 31, 1995. Prior to January 1, 1996, the retirement income credit was based on retirement income included in federal taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.157
REV 72-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-316.157, REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0230 Subtraction for Previously Taxed Contributions

(1)(a) For tax years beginning on or after January 1, 1991, Oregon will allow resident taxpayers a subtraction for distributions from an individual retirement account, Keogh plan or Simplified Employee Pension plan for the contributions to the plan that have already been taxed by another state. The subtraction is allowed only if all of the following conditions are met:

(A) The distributions consist of contributions made during a period in which the taxpayer was a nonresident of Oregon;

(B) The distributions consist of contributions made during a period in which the taxpayer was a resident of a state that imposes an income tax;

(C) The distributions consist of contributions for which no deduction, exclusion or exemption for the contributions was allowed or allowable in the state in which the taxpayer was a resident prior to becoming an Oregon resident; and

(D) No deduction, exclusion, subtraction or other tax benefit has been allowed for the distributions by another state before the taxpayer becomes a resident of Oregon.

Example 1: In 1997 Sam was a resident of a state that imposes no income tax. He made a deductible IRA contribution in 1997. In 1998 Sam converted his regular IRA of $2,000 to a Roth IRA. The distribution will be reported over a 4-year period. Sam became a permanent Oregon resident on April 1, 1998. Sam is not entitled to a subtraction because the contributions were not previously taxed. Sam will be taxed on $375 (3/4 of $500 for the period April through December 1998) on his 1998 part year Oregon return. If Sam remains an Oregon resident he will be taxed on $500 in 1999, 2000 and 2001.

(b) If any portion of the distributions received by a resident of Oregon qualify for the subtraction, those distributions first received by the taxpayer are allowed to be subtracted. The subtraction continues until the distributions that qualify for the subtraction are recovered. Any distributions received after that are fully taxable to the Oregon resident.

(A) Contributions made during a period when the taxpayer was a nonresident required to file an Oregon return to the extent that a deduction or exclusion was allowable for those contributions; or

(B) Contributions made during a period when the taxpayer was a resident of a state that does not impose an income tax; or

Example 2: Taxpayer is a resident of California from 1980 to 1990 and qualifies to make contributions to an individual retirement account for both federal and California. Taxpayer contributes $1,500 in 1980 and 1981 and from 1982 to 1990 contributes $2,000 per year. Both California and federal allowed a maximum $1,500 deduction for 1980 and 1981. For 1982 through 1986, federal allowed a maximum $2,000 deduction while California only allowed a maximum deduction of $1,500. For 1987 through 1990, both federal and California allowed a maximum deduction of $2,000. Taxpayer made contributions of $2,500 ($500 ¥ 5 years) while a California resident for which no deduction was allowed on the California return.

Taxpayer retires and moves to Oregon in June 1991 and begins to receive payments from the IRA account established in California. Oregon taxes all of the IRA distributions received after June 1991 but will allow the taxpayer a subtraction on the Oregon return for the $2,500 of contributions which were not deductible.

Taxpayer receives 7 payments of $350 in 1991 for a total of $2,450 ($350 ¥ 7). Taxpayer would claim a subtraction of $2,450 for 1991. In 1992, the taxpayer received 12 payments of $350 for a total of $4,200 ($350 ¥ 12). The taxpayer would be able to subtract the balance of $50 ($2,500 – $2,450). From that point on, no subtraction is allowed on the Oregon return for recovery of contributions.

(2) If the taxpayer has already received distributions from an IRA, Keogh or SEP that is a recovery of contributions that meet the provisions of Section (1), then the taxpayer will be allowed a subtraction in 1991 for those contributions. Taxpayer will then be allowed a subtraction each year until all qualifying contributions are recovered. From that point on, no subtraction is allowed on the Oregon return for recovery of contributions.

Example 3: Use the same facts as Example 2, except that the taxpayer retires and moves to Oregon in June 1989. Taxpayer made contributions while a California resident for which no deduction was allowed of $2,500 ($500 ¥ 5 years). The taxpayer has already received $2,450 ($350 ¥ 7 months) of IRA distributions in 1989 and $4,200 ($350 ¥ 12) of IRA distributions in 1990. For tax year 1991, taxpayer may claim a subtraction of $2,500, the full amount of contributions for which no deduction was allowed on the California return. The $2,500 subtraction consists of recovery of contributions of $2,450 in 1989 and $50 of recovery of contributions in 1990. After that, no subtraction is allowed on the Oregon return for recovery of contributions since the taxpayer has recovered all $2,500 of qualifying contributions.

Example 4: Use the same facts as Example 3. The taxpayer retires and moves to Oregon in June 1989 but instead of receiving periodic payments, the taxpayer withdraws the entire balance of the IRA from California as a lump-sum distribution. The lump-sum distribution is taxable by both Oregon and California. Taxpayer made contributions while a California resident for which no deduction was allowed of $2,500 ($500 ¥ 5 years). For tax year 1991, the taxpayer will claim a one time subtraction for all contributions for which no deduction was allowed on the California return. The subtraction is limited to federal adjusted gross income and cannot create a net operating loss. If the taxpayer does not claim a subtraction for all of the contributions for which no deduction was allowed due to the federal adjusted gross income limitation, no subtraction may be claimed in subsequent years for the balance of the contributions. Taxpayer has adjusted gross income of $18,000 so may claim the full subtraction of $2,500 in 1991.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.159
Renumbered from 150-316.159, REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98 cert. ef. 12-31-98
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0234 “Withholding Statement” and “Exemption Certificate”

(1) For purposes of ORS 316.177 and ORS 316.182:

(a) “Exemption certificate” means a form prescribed by the department containing an employee’s instruction to an employer certifying that the employee has no Oregon withholding requirement.

(b) “Withholding statement” means a form prescribed by the department containing an employee’s instruction to an employer of the requested amount of income tax to withhold from an employee’s wages or other income. A withholding statement includes:

(A) The Oregon Form OR-W-4;

(B) An Oregon-only version of the 2019 or prior federal Form W-4; or

(2) Beginning January 1, 2020, changes made to an employee’s withholding statement or exemption certificate must be made using Form OR-W-4.

(3) If an employee’s Oregon withholding is determined based upon the withholding statement described in (1)(b)(C), and the employee submits a 2020 or later version of the federal Form W-4 to the employer without also providing Form OR-W-4, the employer must withhold for Oregon at a rate of eight percent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.177 & 316.182
REV 13-2019, adopt filed 12/12/2019, effective 01/01/2020

Or. Admin. R. 150-316-0235 Withholding: Basis of Amount Withheld

(1) Remuneration includes merchandise, stocks, bonds, room, board, or other consideration passing to the employee in payment for services.

(2) The cash value must be based upon sound principles and the department reserves the right to determine standard valuations for such items as meals, lodging, etc. If room is furnished in addition to board, no additional value will ordinarily be placed upon the room. If room and board are furnished at hotels, resorts or lodges, or if a room only, an apartment, a house or any other consideration is provided, the value, for income tax withholding and statewide transit tax purposes, will be the actual value of this remuneration. (Living quarters or meals furnished to the employee for the convenience of the employer are excluded from income pursuant to section 119 of the IRC and the regulations pertaining thereto.)

(3) Amounts paid as reimbursable expenses to an employee are not subject to income tax withholding or statewide transit tax; however, such payments must be identified either by making a separate payment or by specifically indicating the separate amount where both wages and reimbursement of expenses are made in a single payment. If an employee receives a definite weekly, monthly, or annual salary, withholding for income taxes and statewide transit taxes is required upon the entire amount even though the amount may be fixed by including an estimate of expenses which will necessarily be incurred by the employee on behalf of the employer. Only reimbursement based upon actual expenses is exempted from income tax withholding and statewide transit tax. Sickness disability benefits and other disability pensions paid by an employer to an employee are emoluments unless they fall within exemptions of sections 104 to 106 of the IRC.

(4) Where an employer-employee relationship exists between spouses in a marriage, the employing spouse must withhold income taxes and statewide transit taxes. Sums received by unemancipated minors which are not gifts, but compensation for bona fide personal services rendered to parents, require withholding for income taxes and statewide transit taxes.

(5) Withholding for income taxes and statewide transit taxes is required from distributions from a deferred compensation plan as defined in IRC 457 or a nonqualified plan under IRC 403 if the contributions to the plan or payments from the plan are wages.

(6) Wages due but not yet paid at the date an employee dies are not considered wages and are not subject to withholding for income taxes or statewide transit taxes.

(7) Withholding for income taxes and statewide transit taxes is required from accrued vacation pay, even though disbursed after termination of employment.

History

Statutory/Other Authority: ORS 305.100 & 320.550
Statutes/Other Implemented: ORS 316.162 & 320.550
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
REV 3-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.162(2)-(A), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1998, f. 11-13-98, cert. ef. 12-31-98
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1992, f. & cert. ef. 12-29-92
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
11-71
1-69

Or. Admin. R. 150-316-0237 Employees Exempt from Withholding

(1) Expiration for election. An election for exemption from withholding expires on February 15 of the calendar year following the year of the election. An individual must provide a new exemption certificate to the employer to claim an exemption from withholding for any subsequent tax year.

(2) Exemption requirements. An individual claiming exemption from withholding must meet one of the following requirements:

(a) The individual’s wages must be exempt from Oregon taxation; or

(b) The individual must meet the qualification for having no tax liability.

(3) Qualifications for no tax liability. An individual claiming exemption from withholding due to no tax liability must meet the following conditions:

(a) For the previous tax year, the individual had the right to a refund of all Oregon tax withheld because the individual had no tax liability; and

(b) For the current tax year, the individual expects a refund of all Oregon income tax withheld because the individual expects to have no tax liability.

(4) Specific Employees Exempt from Withholding.

(a) Military pay in the Armed Forces of the United States. See ORS 316.792.

(b) Common carrier employees. Public Law 101-322 and ORS 316.162(2)(b) exempt from state withholding railroad, motor, and air carrier employees unless they are Oregon residents. OAR 150-316-0173 contains definitions and examples of common carrier employees. Public Law 91-569 and ORS 316.162(2)(b) exempt from state withholding nonresident air carrier employees unless they earn 50 percent or more of their compensation in Oregon. Employees whose scheduled flight time in Oregon is more than half of their total flight time for the year are considered to have earned more than half of their compensation in Oregon. The employees covered are those actually involved in transportation activities in more than one state.

(c) Domestic service. The exemption in ORS 316.162(2)(c) does not apply to wages paid to an employee who performs both domestic and business services, such as the chauffeur who also transports his employer’s business clients, the domestic cook who also prepares meals for other employees or the paying public, etc.

(d) Casual labor. Withholding is not required from wages paid for casual labor not in the course of the employer’s trade or business. Withholding is required from wages for substantial labor not in the regular course of the employer’s trade or business, such as the construction of a private home where the owner is the employer. Labor which is both casual and not in the course of the business or trade of the employer is exempt from withholding requirements. “Business,” as used in this section, is given a broader interpretation than “activity for profit” and includes governmental as well as proprietary functions of the state government or any of its political subdivisions.

(e) Agricultural services. Labor rendered solely in connection with the planting, cultivating, or harvesting of “seasonal agricultural crops” is exempt from withholding if the total annual wages paid the employee are less than $300. If at least $300 is received by the employee during the calendar year, the withholding and payments must have been timely made.

(A) A “seasonal agricultural crop” is a crop dependent upon an annual or less season for its fruition, and which is harvested at the termination of its season or shortly thereafter.

(B) Seasonal agricultural crops include:

(i) Field and forage crops.

(ii) The seeds of grasses, cereal grains, vegetable crops and flowers.

(iii) The bulbs and tubers of vegetable crops.

(iv) Any vegetable or fruit used for food or feed.

(v) Holly cuttings harvested annually for Christmas sales.

(i) Forest products.

(ii) Landscaping.

(iii) Nursery stock as defined in ORS 571.005(5) unless planted, cultivated, and harvested within an annual period.

(iv) Raising, shearing, feeding, caring for, training or management of livestock, bees, poultry, fur-bearing animals or wildlife.

(D) Withholding is required as to the entire wages of “regular” farm employees even though, as a part of their duties, they engage in planting, cultivating, or harvesting. Withholding is required as to all wages paid in such seasonal activities as canning, or other food processing, logging, and sheep shearing, because they are not solely in connection with the planting, cultivating, or harvesting of seasonal agricultural crops. Withholding is required as to all wages paid in such agricultural activities as the care of poultry or livestock, and dairy farming, because they are not in connection with the planting, cultivating or harvesting of seasonal agricultural crops.

(f) Minister. Withholding is not required from wages paid to a duly ordained, commissioned, or licensed minister of a church when performing the duties of the minister’s ministry, or from wages of a member of a religious order in performance of the religious duties required by the order, when the duties are not commercial in nature. Any amounts received from services performed outside of the order, and where a legal relationship of employer and employee exists between a member of a religious order or a minister and a third party, are considered income and are subject to withholding. For example, a member of a religious order has been hired by a school to teach a class for a fee. That member becomes an employee of the school and the wages are subject to withholding (pursuant to IRS Publication 525).

(g) Real Estate Salespeople. Withholding is not required from services provided to real estate brokers by real estate salespeople if there is a written contract providing the salesperson will not be treated as an employee by the real estate broker with respect to the services provided for Oregon tax purposes. Their income from commissions is not subject to state withholding taxes.[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.162, 316.177 & 316.182
REV 13-2019, amend filed 12/12/2019, effective 01/01/2020
Renumbered from 150-316.162(2)-(B), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
REV 6-1998, f. 11-13-98 cert. ef. 12-31-98
RD 5-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1992, f. & cert. ef. 12-29-92
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
12-31-77
12-19-75
9-74
11-73
11-71
1-69

Or. Admin. R. 150-316-0239 Withholding on Fringe Benefits

(1) A fringe benefit is not subject to withholding for Oregon purposes if it is not subject to Oregon income tax.

(2) When a fringe benefit is subject to withholding, the rate of withholding is determined by Oregon withholding tax tables considering total income for the payroll period.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.162
Renumbered from 150-316.162(2)-(C), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0241 Independent Contractor Definition

(1) As used in the various provisions of ORS Chapters 316, 656, 657, 671 and 701, an individual or business entity that performs labor or services for remuneration shall be considered to perform the labor or services as an "independent contractor" if the standards of ORS 670.600 are met. See OAR 150-670-0010 for definitions related to independent contractors.

(2) The Construction Contractors Board, Employment Department, Landscape Contractors Board, Department of Consumer and Business Services, and Department of Revenue of the State of Oregon, under the authority of ORS 670.605, will cooperate as necessary in their compliance and enforcement activities to ensure among the agencies the consistent interpretation and application of ORS 670.600.

History

Statutory/Other Authority: ORS 305.100 & 670.605
Statutes/Other Implemented: ORS 670.600 & 316.162
Renumbered from 150-316.162(2)(j), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2007, f. & cert. ef. 2-1-07
REV 6-2005, f. 12-30-05, cert. ef. 1-1-06
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
RD 7-1992, f. & cert. ef. 12-29-92

Or. Admin. R. 150-316-0243 Personal Liability of Responsible Officers, Members, or Employees for Taxes Withheld

(1) To be held personally liable for unpaid income tax withholding or statewide transit tax under ORS 316.162, a person must have been considered to have been an “employer.” In addition, the person must have been in a position to pay the income tax withholding or statewide transit tax or direct the payment of the income tax withholding or statewide transit tax at the time the duty arose to withhold or pay over the taxes. Additionally, the person must have been aware, or have been in a position that should have been aware, that the income tax withholding or statewide transit tax was not paid to the department. An employer cannot avoid personal liability by delegating their responsibilities to another.

(2) “Employer” includes, but is not limited to an officer, member or employee of a corporation, partnership or other business entity, if, among other duties, that individual has:

(a) Authority to see that the income tax withholding or statewide transit taxes are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees’ working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign payroll tax or statewide transit tax reports;

(g) Authority to make fiscal decisions for the business;

(h) Authority to incur debt on behalf of the business; or

(i) Performed duties other than those outlined by the corporate bylaws or partnership agreement.

(3) The following factors do not preclude a finding that the individual is liable for the payment of taxes which were required to be withheld:

(a) Whether the failure to pay over the required income tax withholding or statewide transit tax was willful;

(b) Whether the individual received remuneration;

(d) The department considers another individual liable for the same income tax withholding or statewide transit tax;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and to set working conditions and schedules; or

(i) Whether any functions indicating liability have been delegated to another.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.162
REV 4-2022, amend filed 06/03/2022, effective 06/03/2022
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.162(3), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2005, f. 6-27-05, cert. ef. 6-30-05, Renumbered from 150-316.162(4)
REV 8-2001, f. & cert. ef. 12-31-01, Renumbered from 150-316.162(3)
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0250 Bonding Requirements for Delinquent Withholding Employers

(1) As used in this section, a surety bond means a bond that guarantees payment of future income tax withholding or statewide transit taxes of employers. In order for a surety bond to be acceptable, it must be issued by a company authorized to do business in Oregon by the Oregon Division of Financial Regulation.

(2) As used in this section, an irrevocable letter of credit means an irrevocable letter of credit issued by a commercial bank. “Commercial bank” is defined as a bank, a savings bank, a stock savings bank, a national bank, a foreign institution or an extranational institution.

(3) The department may require an employer to post a bond or irrevocable letter of credit if the employer becomes delinquent for three calendar quarters and the tax amount exceeds $2,500.00. The amount of the bond or irrevocable letter of credit must be at least equal to the amount that should have been withheld from wages for four calendar quarters.

(4) If an employer elects to pay over income tax withholding or statewide transit taxes within three banking days of each payday, the employer will not be required to post a bond or irrevocable letter of credit. Employers electing this option must continue making payments in this manner until all delinquent amounts are paid in full and they have had no further delinquent returns or payments for four consecutive calendar quarters.

(5) As used in ORS 316.164(4), “other methods of collection” means billing notices, collection letters, and telephone calls.

(6) All bonds or irrevocable letters of credit become the property of the department and must be used solely to guarantee payment of income tax withholding or statewide transit taxes. The department may, at any time, apply any part or all of the bond or irrevocable letter of credit to any delinquency accrued after the bond or irrevocable letter of credit was posted. However, the employer must maintain the original amount of the bond or irrevocable letter of credit at all times.

(7) The bond or irrevocable letter of credit, or unused portion must be returned to an employer when:

(a) The employer stops doing business as an employer and all delinquent amounts are paid in full; or

(b) The employer pays all delinquent amounts in full and has no further delinquent returns or payments for four consecutive calendar quarters.

(8) The department may proceed with action through the Oregon Tax Court to require compliance from any employer who fails to comply with this section.

(9) Any appeal by an employer will not relieve an employer of posting a bond or irrevocable letter of credit or making accelerated payments, if required to do so by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.164
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.164, REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0255 Withholding by Employers

(1) The term “employer” includes any person or organization for whom an individual performs any service as an employee. An employer may be an individual, corporation, partnership, estate, trust, association, joint venture, or other unincorporated organization. The term also includes religious, educational, charitable, and social organizations or societies even though such organizations are themselves exempted from payment of taxes. It includes governmental agencies, including federal, state, and local subdivisions, such as towns and counties. The federal government agencies withhold under an agreement sanctioned by the Act of Congress of July 17, 1952, and Executive Order 10407, dated December 6, 1952. It includes employers who engage only in interstate commerce.

(2) No statutory distinction is made as to the location of the employer. The withholding provision applies generally to any employer within the jurisdiction of the State of Oregon. Withholding is required of employers situated outside the state upon wages, commissions, or other emoluments paid to an employee or agent for services performed within the state, even though the employee or agent may be a nonresident and their Oregon employment may be of short duration. The department may, upon the written petition of an out-of-state employer, relieve such employer of the duty to withhold where it can be shown to the satisfaction of the department that the nonresident employee or agent temporarily serving within Oregon is not acting in the regular course of the employer’s business or their stay within Oregon will be extremely short and income resulting therefrom will not create a potential Oregon individual income tax liability as to the employee. Both in-state and out-of-state employers may be relieved of the duty to withhold where it can be shown to the satisfaction of the department that each individual employee serving within Oregon will receive $300 or less in wages from that employer within a calendar year.

(3) Withholding is required as to all wages paid by resident and nonresident employers doing business in Oregon for services performed by any employee within the state. For services performed by a resident partly or entirely outside of Oregon the Department of Revenue may authorize special withholding arrangements in hardship cases where it can be shown that withholding tax is being paid to another state on such employee. An employer who is located outside of the state and has no Oregon business activity cannot be required to withhold Oregon tax from the wages of an Oregon resident working outside the state. However, such employer may register and withhold as a convenience to the employee. All wages paid to nonresidents (persons domiciled outside Oregon) for services performed in Oregon are subject to withholding. If the nonresident earns wages both in and outside of Oregon, such as a salesperson, only that part of the wages earned in Oregon is subject to withholding.

(4) If the employer, in violation of the provisions of ORS 316.167, fails to deduct and withhold the tax, the employer nevertheless is liable to remit to the department the amount which should have been withheld. The employer shall be relieved of such liability if and when the employer can show by proper evidence and proof satisfactory to the department that the employee’s income tax against which such sum would have been credited has been paid without reduction through failure to withhold. Such waiver shall not operate to relieve the employer from liability for penalties, additions, or interest provided in the Act. The moneys withheld by employers from the wages of employees must be remitted promptly on the due date and no extension of time for such remittance is provided by statute or can be granted by the department. The funds involved are held by the employer in trust for the State of Oregon, and any use thereof by the employer amounts to an illegal conversion. The employer may not regard such funds as being in the same category as their own personal income tax indebtedness.

(5) An “employee” is any individual who performs services for another individual or organization having the right to control the employee as to the services to be performed and as to the manner of performance. Designation of an individual as an employee for purposes of industrial accident insurance, unemployment compensation, federal social security, or federal withholding will establish that individual as an employee for purposes of the Oregon withholding tax unless facts can be shown to the contrary.

(6) If the relationship of employer and employee actually exists, a different description of the relationship by the parties is immaterial; thus, it is of no consequence that the employee may be designated as a partner or independent contractor, contrary to fact. Family relationships or the fact that compensation may be based upon an agreed percentage of profits or other indeterminate measure, are of no consequence in determining the relationship of employer to employee. No distinction is made between classes or grades of employees; administrative and executive personnel and corporate officers are employees. Persons who are in business solely for themselves are not employees. However, professional people organized under Oregon’s Professional Corporation Act, ORS Chapter 58, will be treated as employees of the corporation. By incorporating and rendering services, the professional person generally creates an employment relationship with the corporation.

(7) As used in this rule, the definition of worker leasing company is identical to the definition found in ORS Chapter 656. The relationship of employer to employee exists between worker leasing companies and the workers for which they act as lessor. The relationship of employer to employee does not exist between leased workers and the lessee if the following conditions are met:

(a) The worker leasing company has a valid license under ORS Chapter 656 and;

(b) There is a valid written worker leasing contract between the worker leasing company and the lessee. If these conditions are not met, the department may determine that the lessee is the employer of the leased workers. Statements in contractual agreements concerning employer tax liabilities are not sufficient to transfer liabilities between worker leasing companies and lessors.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.167
Renumbered from 150-316.167(1), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83
12-31-82
12-1-75, Renumbered to 150-316.167(1)
1-69 as 150-316.167-(A), 150-316.167-(B), 150-316.167-(C), 150-316.197-(A)

Or. Admin. R. 150-316-0257 Employer’s Election of Method of Computing Withholding

(1) Employers have the option of using either the tax tables or the formulas developed and furnished by the department in computing the amount to be withheld from regular wage payments. The tax tables and formulas are published by the department. Employers may not modify the published tables or formulas.

(2) If a supplemental wage payment is made on or after January 1, 2020, the employer may compute the amount to be withheld by using the tax tables or formulas, or may withhold at a flat rate of 8 percent. Supplemental wage payments include bonuses, premiums, awards, gifts and other payments made to an employee, on the condition of their employment, occurring no more than twice a year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.167
REV 13-2019, amend filed 12/12/2019, effective 01/01/2020
Renumbered from 150-316.167(2), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1998, f. 11-13-98, cert. ef. 12-31-98
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83
12-19-75, Renumbered;
1969 as 150-316.167-(D)

Or. Admin. R. 150-316-0265 Withholding Payments: Cash Basis

All withholding is on a cash basis and must be reported on a cash basis.

Example: If services are performed in January but not compensated until April, withholding on the wages for those services is reported on the report for the quarter ending June 30.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.168
Renumbered from 150-316.168(1)-(A), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0267 Additional Time to File Reports

Oregon does not allow additional 10 day federal extension to file the quarterly tax report when all payments are paid when due. Information provided by the taxpayer on the tax report is essential to providing timely payment of Unemployment Insurance benefits.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.168
Renumbered from 150-316.168(2), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1998, f. 11-13-98, cert. ef. 12-31-98
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0275 Treatment of Payroll Based Program Overpayments

(1) If an employer has overpaid income tax withholding, statewide transit tax withholding, or transit district payroll taxes due for a quarter and files an original or amended combined quarterly tax return or an original or amended statewide transit tax return, the department will refund the overpayment or apply the overpayment (roll over) toward the employer’s liability for the current or prior quarter if the employer responds to the department’s notice within 14 calendar days of the date of the notice.

(2) If an employer has overpaid income tax withholding, statewide transit tax withholding, or transit district payroll taxes due for a quarter and does not instruct the department how the credit will be treated within the timeframe established in section (1) of this rule, the overpayment will be rolled over as a payment toward the employer’s liability for that tax program for the subsequent quarter.

(3) If the department records show that the employer is no longer in business, and all returns have been filed, the overpayment will be refunded.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.171 & 320.555
REV 13-2018, amend filed 06/26/2018, effective 07/01/2018
Renumbered from 150-316.171, REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-316-0282 Exemptions for Military Personnel

In addition to the withholding exemptions that a member of the Armed Forces may claim for federal income tax withholding purposes, such person who is a resident of the State of Oregon shall be allowed to claim a sufficient number of personal exemptions to equal the amount of active duty military pay that is permitted to be subtracted from gross income on the member’s Oregon personal income tax return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.177
Renumbered from 150-316.177(1)-(B), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.177-(B)
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.177-(B)
12-31-83
12-31-77, Renumbered from 150-316.177

Or. Admin. R. 150-316-0284 Penalty

(1) Definitions for the purposes of ORS 316.177 and this rule:

(a) “Frivolous position” includes, but is not limited to:

(A) Reference to a spurious constitutional argument;

(B) Reliance on a “gold standard” or “war tax” deduction;

(D) An argument that the Sixteenth Amendment to the United States Constitution was not properly adopted; or

(E) An argument that “unenfranchised, sovereign, free men or natural persons” are not subject to the tax laws.

(b) “Reasonable basis” includes, but is not limited to:

(A) An employee filed a withholding statement or exemption certificate for the first time, and attempted, but failed, to correctly calculate the withholding rate in accordance with the instructions on the withholding statement or exemption certificate;

(B) An employee computed the withholding rate in accordance with the instructions on the withholding statement or exemption certificate, but due to unforeseen events, the withholding rate claimed is incorrect. Unforeseen events are events that could not have reasonably been anticipated and affect the taxpayer’s taxable income or deductions for the tax year;

(C) An employee filed a withholding statement or exemption certificate because the employee relied upon the advice of an individual who is qualified to practice law or public accounting in this state or an individual who is licensed by the State Board of Tax Practitioners and the employee supplied the individual with complete information connected with the advice given.

(2) A penalty is assessable against an employee when:

(a) The employee claims exemption from withholding and the employee does not meet the exemption requirements provided in OAR 150-316-0237 and the department has determined there is no reasonable basis for such a claim; or

(b) The department has determined the employee’s withholding is materially deficient, as defined in OAR 150-316-0290, and the withholding rate is corrected by notice to the employer and employee under OAR 150-316-0290.

(3) A penalty shall not be assessed against an employee who, at the time the withholding statement or exemption certificate is filed, has a reasonable basis for the withholding statement or exemption certificate.

(4) A penalty shall be assessed against an employee filing a withholding statement or exemption certificate in reliance on a frivolous position or with the apparent intent to delay or impede the administration of the income tax laws of this state.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.177
REV 8-2021, amend filed 06/28/2021, effective 07/01/2021
Renumbered from 150-316.177(2), REV 61-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.177(4)
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.177(4)
RD 4-1988, f. 5-25-88, cert. ef. 6-1-88

Or. Admin. R. 150-316-0290 Procedure for Correcting the Filing of Withholding Statements or Exemption Certificates

(1) For the purposes of this rule, “materially deficient” withholding includes, but is not limited to:

(a) When the employee has filed an exemption certificate with the employer and the department determines the employee does not meet the exemption requirements given in OAR 150-316-0237;

(b) When the employee has filed a withholding statement with the employer and the department has determined the employee incorrectly calculated their withholding rate with no reasonable basis for the calculation, or has claimed a frivolous position, as defined in OAR 150-316-0284.

(c) When the employee has not filed an Oregon personal income tax return and the department has assessed tax owing, after withholding and estimated payments are credited, in two of the past three filing tax years under ORS 305.265(10);

(d) When the employee has filed an Oregon personal income tax return for the past three filing tax years and owed more than $1,000 in net tax to pay, after withholding and estimated payments are credited, for each of those tax years.

(2) An employer may use an exemption certificate that claims an exempt status for state purposes when the employee meets the exemption requirements provided in OAR 150-316-0237.

(3) An employer shall not use a withholding statement or exemption certificate for state income tax withholding purposes if:

(a) The certificate claims an exempt status for state withholding purposes and the employer determines the employee does not meet the exemption requirements provided in OAR 150-316-0237; or

(b) The withholding statement or exemption certificate is filed with the employer for use in determining state withholding, and the Department of Revenue has instructed the employer to change the employee’s withholding statement or exemption certificate under section (5) of this rule.

(4) If subsection (3) of this rule applies:

(a) the employer shall withhold at the flat rate of eight percent of taxable wages until such time as the employee files a new withholding statement. The employer shall give prompt notice to the employee that an exemption certificate claiming an exempt status for state purposes is not acceptable because there is no applicable provision under state law for such exempt status; or

(b) In the event the department has instructed the employer to change the employee’s withholding statement or exemption certificate under section (5) of this rule, the employer shall withhold at the rate determined by the department.

(5) The department may make a change in an employee’s withholding statement or exemption certificate when it determines that the employee’s withholding is materially deficient as defined in section (1) of this rule. The department shall notify the employer and employee in writing of the change. Upon receipt of the notice, the employer shall withhold according to the department’s determination. The employee may appeal the action of the department as provided in ORS 305.275.

(a) If the employee seeks to have less withholding than allowed by the department or wants to submit an exemption certificate for state withholding purposes, the employee must provide satisfactory evidence of a personal or financial change affecting their tax situation. To report the change that affects their tax situation and to request that the department consider the new information, the employee shall submit a new withholding statement or exemption certificate to the department requesting a redetermination. The withholding statement or exemption certificate shall be accompanied by all information required by the department. The employer shall continue to withhold according to the department’s most recent determination until the department authorizes a subsequent change in withholding or fully releases the withholding determination for the employee.

(b) If the employee files a new withholding statement with the employer requesting more withholding for Oregon than the determination made by the department, the employer may withhold according to the newly filed withholding statement. Once a new withholding statement that increases Oregon withholding is accepted by the employer, the employer shall not honor subsequent withholding statements that seek to lower withholding below the department’s determination unless the employee has followed the process given in section (5)(a) of this rule and the department has authorized the reduced withholding.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.182
REV 8-2021, amend filed 06/28/2021, effective 07/01/2021
Renumbered from 150-316.182, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1992, f. & cert. ef. 12-29-92
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
RD 6-1982, f. & cert. ef. 5-5-82
RD 3-1982(Temp), f. & cert. ef. 2-11-82
TC 2-1980, f. & cert. ef. 5-20-80
TC 15-1979(Temp), f. & cert. ef. 12-18-79

Or. Admin. R. 150-316-0295 Credit for Tax Withheld

If the tax has actually been withheld at the source and reported to the Department of Revenue, credit or refund shall be made to the recipient of the income even though such tax has not been paid to the Department by the employer. Where the employer has neither reported nor paid the tax required to be withheld from an employee’s wages but the employee submits evidence proving to the satisfaction of the Department that the employer actually did withhold such a tax, the Department shall allow the employee credit or refund for the amount so proved. Ordinarily, minimum satisfactory evidence shall consist of a statement from the employer showing the amount of tax withheld and an affidavit of the employee as to the facts upon which the claim for credit or refund is based.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.187
Renumbered from 150-316.187-(A), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
12-70
1-69

Or. Admin. R. 150-316-0297 Where Taxpayer Reports on Fiscal Year Basis

Taxes withheld during any calendar year shall be allowed as a credit for the taxable year of the taxpayer which begins in that calendar year. For example, where an employee is on a fiscal year ending June 30, 1969, he would credit the tax withheld on his wages for the calendar year 1968.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.187
Renumbered from 150-316.187-(B), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
1-69

Or. Admin. R. 150-316-0305 Withholding Income Taxes on IRAs, Annuities, and Compensation Plans

(1) The withholding of income taxes from commercial annuities, employer deferred compensation plans, and individual retirement plans is mandatory. However, an individual may elect, under certain circumstances, to have no withholding of income taxes. Such an election will remain in effect until revoked by the individual.

(2) An individual may not make an election to have no withholding of income taxes from the amount of a payment from a plan which is wages as defined in ORS 316.162. Therefore, an individual may not make an election if the individual is receiving payments from an employer deferred compensation plan as defined in IRC 457 or a nonqualified plan under IRC 403 if the contributions to the plan or payments from the plan are wages.

(3) The payer of any periodic payment must withhold income taxes as if the payment were wages using the withholding tables prepared and furnished by the department. The exemptions for state withholding purposes will be the same as listed on federal Form W-4P. If no withholding election form has been filed by the payee, the withholding status is single and the number of exemptions is zero.

(4) The payer of any nonperiodic distribution must withhold income taxes from such a payment at a rate of eight percent of the amount of money or the fair market value of other property received in the distribution.

(5) The minimum amount of income tax withholding per payee must be no less than 10 dollars per distribution. The payer is not required to determine benefits subject to Oregon tax when figuring income tax withholding.

(6) If an individual has elected to have no federal income tax withholding from payments or distributions, there must be no state income tax withholding unless the individual notifies the payer, in writing, otherwise.

(7) The payer must provide a form to each payee, prior to the first periodic payment, which must explain the payee’s right to elect to have no income tax withheld. A completed form must be returned to the payer no later than 30 days after the mailing date. If the payee does not elect out of income tax withholding, it is the payee’s responsibility to provide the payer with a completed Form W-4P which properly reflects the income tax withholding needed for Oregon purposes. If a completed Form W-4P is not provided, the payer must withhold income taxes as directed in sections (3) to (5) of this rule. A separate election form must be provided to the payee prior to each nonperiodic distribution. The election form must be returned to the payer no later than 30 days but can be returned as early as necessary to meet the date of distribution. If a completed form is not returned, the payer must withhold income tax at the established rate. The payer may use federal Form W-4P or a form that includes the same information as the Form W-4P.

(8) The payee may revoke the election to have income tax withholding or may change the amount of income tax withholding. The payee must send a written request to the payer using federal Form W-4P or an appropriate form furnished by the payer. The revocation or change will be effective within 45 days after receipt by the payer.

(9) The payer must be considered an employer and subject to the same income tax withholding rules as are imposed under ORS 316.162 to 316.212 for withholding of income taxes from wages. The department must provide appropriate forms, instructions and an account identification number necessary for reporting and remitting payments.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.189
REV 27-2018, amend filed 12/28/2018, effective 01/01/2019
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.189, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1992, f. & cert. ef. 12-29-92
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0307 Withholding Income Taxes on IRAs, Annuities, and Compensation Plans

Oregon’s requirements to withhold income taxes from IRAs, annuities, and deferred compensation plans will be consistent with the provisions of Internal Revenue Code (IRC) Section 3405 except that mandatory backup withholding of income taxes will not be required for a rollover from one qualifying plan to another qualifying plan under circumstances that would require such withholding of income taxes for federal purposes.

Example: On July 1, 2016, Fred Smith removed his IRA account from Bank A and two days later placed it with Bank B. Since Fred didn’t have Bank A do a direct transfer of funds to a new IRA account with Bank B, IRC 3405 requires Bank A to withhold 20 percent in payment of any income taxes that may be due if Fred failed to roll the funds into a new qualifying plan (which would cause the funds to be includible in taxable income). For Oregon, Bank A is not required to withhold income taxes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.189
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.189(6), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-316-0315 Alternative Withholding Payment Method for Employers to Avoid Undue Burden

(1) ORS 316.191 allows alternate methods for making withholding payments when an undue burden is caused by the present withholding method. The following are two examples of “undue burden:”

(a) The employer is required to make Oregon tax withholding payments to the state of Oregon based on its nationwide payroll more often than it would based on payroll for its employees working in the state of Oregon.

(b) Oregon resident performs services outside the state and the employer is asked to register and withhold, voluntarily, as a convenience to the employee and the state of Oregon.

(2) Employers who believe that federal withholding methods create an undue burden for them which is not shared by most other similar employers, may request a different method of withholding tax payments by writing to the Payroll Tax Program, Department of Revenue, 955 Center Street, NE, Salem, OR 97310. The request shall contain the following information: Business name of employer; Oregon Business Identification Number (BIN), nature of burden; remedy requested; and proposed effective date of modified withholding method.

(3) An example for an alternate method indicated in (a) above would be to base the out-of-state employer’s withholding method on their Oregon payroll only.

(4) Only those employers whose withholding accounts are current may request an alternative withholding method. No alternative withholding method shall be used before the Department of Revenue has approved the request in writing and has designated the effective date of the change.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.191
Renumbered from 150-316.191, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0320 Voluntary Withholding for Retired Members of the Uniformed Services

(1) Upon written request to the appropriate retired pay office of uniformed service, a member may request voluntary state withholding tax. This request shall include the following information:

(a) Member’s full name;

(b) Social Security number;

(d) The state to receive withheld monies;

(e) Member’s current address;

(f) Signature of member, or in the case of incompetence, the signature of his or her guardian or trustee.

(2) Retired members of uniformed service should send their requests for with-holding to the appropriate retired pay office. Their addresses can be obtained from the Department of Revenue.

(3) The minimum amount of monthly withholding per retiree shall be no less than $10 and the amount of the request for state tax withholding shall be an even dollar amount.

(4) A permanent withholding tax account shall be established in the name of each branch of the uniformed service for deposit of monies withheld by the request of the retirees. An account number and appropriate reporting forms shall be issued to each branch at the inception of its account.

(5) Reporting shall be done in a medium that complies with state reporting standards applicable to employers in general. For Oregon Department of Revenue purposes, reporting shall be required on the withholding portions of the Oregon Quarterly Combined Tax Report. This return shall be filed by the appropriate branch of service within 30 days after the end of each quarterly payroll period.

(6) Payment of withholding trust funds shall be made at the same time the quarterly return is filed. Payment shall be accompanied by appropriate identifying documentation, i.e., Form OTC (Oregon Tax Coupon).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.193
Renumbered from 150-316.193, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0325 Voluntary Withholding for Civil Service Annuitants

(1) Upon written or telephone request to the U.S. Office of Personnel Management, a civil service annuitant may request voluntary state tax withholding.

(2) A permanent withholding tax account shall be established in the name of the U. S. Office of Personnel Management for deposit of monies withheld by the request of civil service annuitants. An account number and appropriate reporting forms shall be supplied at the inception of said account.

(3) Reporting shall be done in a medium that complies with state reporting standards applicable to employers in general. For Oregon Department of Revenue purposes, reporting shall be required on the withholding portions of the Oregon Quarterly Combined Tax Report. This return shall be filed by the U.S. Office of Personnel Management within 30 days after the end of each quarterly payroll period.

(4) Payment of withholding trust funds shall be made at the same time the quarterly return is filed.

(5) Reporting shall be done in a medium that complies with state reporting standards applicable to employers in general. For Oregon Department of Revenue purposes, reporting shall be required on the withholding portions of the Oregon Quarterly Combined Tax Report. This return shall be filed by the U. S. Office of Personnel Management within 30 days after the end of each quarterly payroll period.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.196
Renumbered from 150-316.196, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0330 Semiannual Reports and Payments

Purposes of semiannual reporting the calendar year will be divided into two six-month periods; the first period being January through June with the return and any payment due on or before July 31; the second period being July through December with the return and any payment due on or before January 31 of the following year. No other semiannual reporting periods will be permitted. Employers reporting on the semiannual method must file an annual report before February 16 as required of all employers under ORS 316.202(2). No semiannual returns will be allowed for periods after December 31, 1989. All returns due on, and subsequent to, January 1, 1990, shall be reported on the Oregon Quarterly Combined Tax Report form.

For rules governing annual agricultural filing, see OAR 150-316-0361.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.197
Renumbered from 150-316.197(1)(a)-(A), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83, Renumbered from 150-316.197(1)-(A)
12-31-82
12-19-75

Or. Admin. R. 150-316-0332 Withholding: Payment Due Dates

(1) Oregon withholding tax payment due dates are determined by corresponding federal due dates as outlined in the following rules:

Rule 1 — If the federal tax due is less than $1,000 at the end of any calendar quarter the Oregon tax due must be paid by the end of the month following the end of the quarter.

Rule 2 — If the federal tax liability is $50,000 or less in the lookback period, the Oregon tax due must be paid by the 15th of the month following, unless the employer meets the conditions under Rule 1 or Rule 4.

Rule 3 — If the federal tax liability is more than $50,000 in the lookback period, the Oregon tax due must be paid on the following semi-weekly schedule, unless the employer meets the conditions under Rule 1 or Rule 4:

If the payday is on Wednesday, Thursday or Friday, the Oregon tax must be paid by the following Wednesday.

If the payday is on Saturday, Sunday, Monday or Tuesday, the Oregon tax must be paid by the following Friday.

Rule 4 — If the federal tax due is $100,000 or more at the end of any pay period, the Oregon tax must be paid by the close of the next banking day.

NOTE: If at any time an employer becomes subject to Rule 4, they immediately become a semi-weekly payer for the remainder of the calendar year and for the following calendar year, except for payments due within one banking day.

(2) Lookback period is the twelve-month period ended the preceding June 30 for nonagricultural employers. For agricultural employers the lookback period is the calendar year preceding the calendar year just ended.

(3) A legal holiday that falls between the end of the pay period and the payment due date extends the due date by one banking day.

(4) A banking day is any day that is not a Saturday, Sunday or a legal holiday. A legal holiday is a holiday in the District of Columbia.

(5) Federal tax is the sum of the federal withholding plus FICA plus Medicare taxes.

(6) ORS 316.197 establishes payment due dates only and does not incorporate the federal “safe harbor” rule for deposit shortfalls. If the full amount of the state tax withheld is not paid when the federal deposit is due the unpaid balance is delinquent.

(7) Payment due date examples:

(a) MONTHLY DEPOSITS: For employers whose total federal liability during the lookback period did not exceed $50,000. Lookback period is defined for 1998 as July 1, 1996 to June 30, 1997 (January 1, 1996 to December 31, 1996 for agricultural employers). [Table not included. See ED. NOTE.]

NOTE: If the federal tax liability for a payroll period exceeds $100,000, the federal and Oregon deposits are due the next banking day. Once an employer reaches $100,000 in federal tax during a payroll period, they are no longer considered to be a monthly depositor. For the rest of the calendar year and all of the following calendar years, all deposits are due semi-weekly, or within one banking day, if the federal tax is over $100,000.

(b) SEMI-WEEKLY DEPOSITS: For employers whose total federal liability during the lookback period exceeds $50,000. Lookback period is defined for 1998 as July 1, 1996 to June 30, 1997 (January 1, 1996 to December 31, 1996 for agricultural employers). [Table not included. See ED. NOTE.]

NOTE: If any federal tax liability for a payroll period exceeds $100,000, the federal and Oregon deposits are due the next banking day.

*An extra day is allowed due to a holiday during the period following the payroll date.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.197
REV 48-2017, f. & cert. ef. 8-2-17
Renumbered from 150-316.197(1)(a)-(B), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1998, f. 11-13-98 cert. ef. 12-31-98
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
12-31-84, Renumbered from 150-316.197(2)
12-31-83
10-5-83

Or. Admin. R. 150-316-0334 Withholding Tax Payment Requirements for Agricultural Employers

An employer of agricultural employees is required to pay Oregon taxes withheld at the same time as federal tax is deposited. Federal tax is the sum of withholding, FICA (social security) and Medicare taxes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.197
Renumbered from 150-316.197(1)(b), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 316.197(1)-(B)

Or. Admin. R. 150-316-0336 Employee’s Rights

Recourse against an employer in regard to taxes on wages withheld and reported, but not paid to the Department of Revenue, is exclusively that of the state. An employee’s rights as to any such tax withheld, reported and unpaid are those of a tax credit or refund as provided in ORS 316.187 and OAR 150-316-0295.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.197
Renumbered from 150-316.197(2), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.197(3)
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.197(3)
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83
12-31-75
1-69 as 150-316.197-(B)

Or. Admin. R. 150-316-0345 Requirement to use Electronic Funds Transfer

(1) An employer required to make payment of Oregon combined payroll taxes and assessments under ORS 316.162 through 316.216 shall do so by electronic funds transfer (EFT) if the employer is required to make federal payroll tax payments electronically.

(2) A taxpayer disadvantaged by the requirement to pay by EFT may request an exemption. The request must be in writing and sent to the address for EFT registration. The request must explain why the requirement to pay by EFT is a disadvantage to the taxpayer. An example of circumstances where the requirement is a disadvantage to the taxpayer is when the taxpayer’s bank or the bank of the taxpayer’s payroll service is unable to provide the service. Requests for an exemption will be evaluated on a case by case basis. If granted, the exemption will be for a period of 12 months, during which the taxpayer is expected to make arrangements to comply with the requirement to use EFT. The department will grant only one exemption period to a taxpayer.

(3) An exception to paying by electronic funds transfer is explained in OAR 150-316-0315. The exception is available if this payment method will cause an undue burden to the employer. Additionally, an employer with limited activity in Oregon that is required to pay federal payroll taxes by electronic funds transfer need not do so for Oregon tax if the total of the annual payments to Oregon will not exceed $1,000.

(4) Employers not meeting the requirement to pay by EFT may voluntarily do so by completing and submitting to the department an application for either ACH Debit or ACH Credit EFT. Applications can be requested from the department.

(5) After beginning to make payments electronically, a volunteer may discontinue electronic payments by sending a written request to stop paying by EFT. The request must be sent at least 30 days prior to the date the volunteer wishes to stop paying by EFT. If the volunteer has not reached the then current mandate threshold, the department shall allow the employer to discontinue electronic payments. The volunteer shall continue to make payments by EFT until 30 days after sending the request to the department or the volunteer receives notice from the department agreeing to the discontinuance, whichever occurs earlier.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.198
Renumbered from 150-316.198, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
REV 6-1998, f. 11-13-98 cert. ef. 12-31-98

Or. Admin. R. 150-316-0347 Electronic Funds Transfer. Payroll taxes and corporation estimated income and excise taxes not combined in determining mandate. Payments to be included.

(1) For the purpose of determining whether payment of combined quarterly payroll taxes and assessments is required to be made by electronic funds transfer (EFT), only the payments for related business activities shall be combined. The employer will not add combined payroll taxes paid with corporate income or excise taxes when making the determination. The employer will include combined payroll tax billing payments and amended payroll payments when making the determination.

(2) For the following examples, assume the current mandate threshold above which employers are required to pay by EFT is $1 million of annual payments.

Example 1: Business A is an insurance company. The business has registered twice with the department to pay by EFT, once for their employees’ payroll tax payments and once for their withholdings on insurance payments to claimants. Each registration is under its own department Business Identification Number. Business A has annual deposits of combined quarterly payroll taxes and assessments under ORS 316.197 totaling $900,000 based on their status as an employer. Business A also pays withholding totaling $150,000 annually based on payments to their insurance claimants. Business A would not be mandated to pay by EFT.

Example 2: Business B is a retail chain. Business B has registered with the department three times. Each registration is under its own department Business Identification Number. Business B has registered once for their auto parts stores, once for their apparel stores and once for their restaurants. Payments of combined taxes and assessments are $280,000, $450,000 and $600,000 respectively. Business B would be mandated to pay by EFT because the payments made separately for each of their registrations are for payment of taxes and assessments based on their employee payroll.

Example 3: Business C is an incorporated grocery retailer. Annually, the business pays combined payroll taxes and assessments based on wages of its employees totaling $900,000 Additionally, Business C annually pays $400,000 in corporate excise taxes. Business C is not mandated to pay by EFT because payment of corporate excise taxes and payment of combined employer payroll taxes are unrelated, even though the taxes are paid under the same business identification number.

[ED. NOTE: Formulas referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.198
Renumbered from 150-316.198-(A), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1998, f. 11-13-98 cert. ef. 12-31-98

Or. Admin. R. 150-316-0355 Withholding: Payment and Reports

It is the responsibility of a new employer to register with the department. A registration number must be assigned by the department for use in its administration of the income tax withholding, transit payroll, and statewide transit tax laws. Employers must use the registration number on all reports and payments filed with the department which are for tax programs on the Oregon Quarterly Combined Tax Report and the Statewide Transit Tax Report. A registered employer must submit a report for each reporting period, even though the employer may not have had any payroll during that period. Failure by an employer to obtain remittance forms will not constitute an excuse for failure to report total compensation paid and to remit the tax withheld within the time required by law. This responsibility ceases only after the employer notifies the department that the employer no longer has employees subject to income tax withholding, transit payroll, or statewide transit taxes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.202
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.202(1), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83, Renumbered from 150-316.202(1)-(A)
12-19-75
1-69

Or. Admin. R. 150-316-0357 Waiver of Termination Reports

For the purposes of waiver of termination reports, the Department of Revenue adopts the successor-in-interest definition as found in Employment Division OAR 471-031-0140, Filed 12-23-77 and Effective 1-1-78.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.202
Renumbered from 150-316.202(2), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83, Renumbered from 150-316.202(2)-(A)
12-19-75
1-69 as 150-316.202(1)-(B)

Or. Admin. R. 150-316-0359 Withholding: Annual Report by Employer

(1) Definitions. As used in this rule:

(a) “Employer” has the meaning given that term in ORS 316.162 and also includes lenders, sureties, and other persons subject to withholding and reporting requirements under ORS 316.169.

(b) “Payer” has the meaning given that term in ORS 316.189(1)(g).

(c) “Payroll service provider” is any person that prepares payroll tax returns on behalf of another person for remuneration.

(d) “Periodic payment” has the meaning given that term in ORS 316.189(1)(h).

(e) “W-2” means the federal Form W-2 required to be filed under 26 USC § 6051 with the addition of the information required under section (3) of this rule.

(f) “Wages” has the meaning given that term in ORS 316.162.

(2) W-2 reports.

(a) Every employer or other payer must complete an individual W-2 for each employee. The W-2 must contain the same information as is required to be reported on a federal W-2 including:

(A) Total state and local wages;

(B) State and local tax withheld during the calendar year; and

(b) The employer or other payer must use a federal W-2 for purposes of section (2) of this rule. If the employer or other payer is withholding from certain periodic payments, the employer or payer must use federal Form 1099-R for purposes of section (2) of this rule.

(c) The employer or other payer must provide a copy of the W-2 to the employee within 31 days of the close of the calendar year. If an employee is terminated and requests a copy of the W-2, the employer must provide the form to the employee within 30 days of either the request or the final wage payment, whichever is later.

(d) The information in the W-2 must be filed electronically with the department.

(e) Under ORS 314.385, the due date for electronic filing of W-2s for Oregon purposes is the same as the federal due date for electronically filed W-2s.

(3) Reporting for Statewide Transit Tax Withheld.

(a) Employers must report statewide transit tax withheld in Box 14 of the W-2 with the designation ORSTT W/H in addition to the requirements in subsection (2)(a) of this rule.

(b) Subsection (3)(a) of this rule is effective for tax years beginning on or after January 1, 2019.

(4) Employer Reconciliation Reports (Form WR and Statewide Transit Tax Annual Report).

(a) Every employer must file a summary of total compensation paid, Oregon income tax withheld, and statewide transit tax withheld for each employee. Each reconciliation report must include a reconciliation of income tax and statewide transit tax remitted to the department by the employer for the calendar year to the total of income tax and statewide transit tax withheld from employees’ pay for the calendar year.

(b) The reconciliation reports for income tax withholding and statewide transit tax must be filed electronically with the department.

(c) If the reconciliation reports for income tax withholding and statewide transit tax are not filed within 30 days of the department’s notice to the employer of a failure to file, a $100 failure-to-file penalty applies for each instance.

(d) If there is a difference between the amount paid to the department by the employer and the amount withheld by the employer from the employees' wages, the employer must explain the difference on the report.

(e) The due date for each reconciliation report is the same as the due date of the corresponding federal report for income tax withholding. If the employer ceases doing business, each reconciliation report is due within 30 days of termination of business.

(f) Subsection (4)(b) is effective for tax years beginning on or after January 1, 2019 for income tax withholding and statewide transit tax reconciliation reports.

(5) Payer Reconciliation Reports.

(a) Every payer must file a summary of total periodic payments paid and Oregon income tax withheld for each payee. Each reconciliation report must include a reconciliation of income tax remitted to the department by the payer for the calendar year to the total of income tax withheld from payees’ pay for the calendar year.

(b) The reconciliation report for income tax withholding must be filed electronically with the department.

(c) If the reconciliation reports for income tax withholding are not filed within 30 days of the department’s notice to the payer of a failure to file, a $100 failure-to-file penalty applies for each instance.

(d) If there is a difference between the amount paid to the department by the payer and the amount of income tax withheld by the payer from the payees’ periodic payments, the payer must explain the difference.

(e) The due date for each reconciliation report is the same as the due date of the corresponding federal report for income tax withholding. If the payer ceases doing business, each reconciliation report is due within 30 days of termination of business.

(f) Subsection (5)(b) is effective for tax years beginning on or after January 1, 2019 for income tax withholding reconciliation reports.

(6) Penalties. The department will assess penalties, as described in ORS 316.202(5), if an employer or other payer fails to file W-2s by the due date as required under subsection (2)(e) of this rule or the employer or other payer files incorrect or incomplete W-2s.

(a) A W-2 is incorrect or incomplete if one or more of the following occur:

(A) Identifying employee information is missing, such as the first or last name or social security number.

(B) The W-2 contains an incorrect statement of state income tax withheld, federal income, or state income amounts. Obvious math or clerical errors are not considered an incorrect statement for this purpose.

(b) An employer or other payer knowingly fails to file a W-2 by the due date if:

(A)(i) The W-2 was not received by the department on or before the due date of the corresponding federal Form W-2 for the tax year under consideration;

(ii) The employer or other payer has been assessed the penalty under ORS 316.202(5)(a) for one or more filing periods preceding the period at issue; and

(iii) The employer or other payer fails to file the W-2 upon written request to file by the department; or

(B) The department determines that the facts and circumstances in the particular case warrant penalty assessment.

(c) An employer or other payer knowingly files an incomplete, false, or misleading W-2 if one or more of the following occur:

(A) The employer or other payer has a pattern of repeatedly filing incorrect W-2s;

(B) The employer or other payer failed to correct the W-2 upon discovering incorrect information;

(D) The amount of the potential penalty is less than the cost of complying with the requirement to include correct information on the W-2;

(E) The department determines that the facts and circumstances in the particular case warrant penalty assessment.

(d) A penalty may be assessed under ORS 316.202(5)(b) even though a prior penalty assessed under ORS 316.202(5)(a) was waived under OAR 150-305-0062.

(7) If the employer or other payer fails to produce documentation to support the information on the W-2 or the number of W-2s required to be filed, the department will use the best information available to determine the appropriate penalty assessment amount.

(8) The department may grant an exception to the filing requirements in sections (2), (4), or (5) of this rule upon a showing of undue hardship. Undue hardship is based on the facts and circumstances specific to each employer or payer and determined on a case-by-case basis.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.202 & 320.550
REV 13-2019, amend filed 12/12/2019, effective 01/01/2020
REV 27-2018, amend filed 12/28/2018, effective 01/01/2019
REV 3-2018, temporary amend filed 01/01/2018, effective 01/01/2018 through 06/29/2018
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
REV 83-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-316.202(3), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14
REV 16-2008, f. 12-26-08, cert. ef. 1-1-09
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-316.202(2)-(B)
RD 7-1992, f. & cert. ef. 12-29-92
RD 13-1987, f. 12-18-87, cert. ef. 12-31-87
RD 10-1984, f. 12-5-84, cert. ef. 12-31-84
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83
12-19-75, Renumbered
12-74
11-73
1-69 as 150-316.202(2)

Or. Admin. R. 150-316-0361 Combined Reports and Statewide Transit Tax Reports: Agricultural Employers

(1) If an agricultural employer is subject to a tax program (in addition to withholding tax) for example, Tri-Met or Lane Transit tax, the employer is required to file the Oregon Combined Payroll Tax Report quarterly. The withholding portions of the Oregon Combined Payroll Tax Report may still be filed annually on Form WA. The annual agricultural return is due by January 31 of the following year.

(2) An agricultural employer subject to the statewide transit tax must file the Statewide Transit Tax Report annually regardless of subjectivity to any other tax program.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.202
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.202(4), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0370 Liability for Unpaid Withholdings

(1) It is the employer’s duty to hold in trust any amount of income tax withholding and statewide transit tax withheld from employee wages and to assume custodial liability for amounts to be paid to the department. Any employer who fails to pay the tax when due is subject to penalties as provided in ORS Chapter 314, the same as any other taxpayer who fails to file a return or pay a tax when due.

(2) If a corporation or partnership is absorbed by another corporation or partnership in a statutory merger or consolidation, the resulting entity is regarded as the same employer as the absorbed entity. The new entity is liable for payment of income tax and statewide transit taxes withheld.

(3) If a corporation or partnership fails to file returns, or to pay the tax withheld when due, any or all officers, members, and employees who are responsible for exercising the duties of an employer may be held personally responsible for the returns and payments together with any interest and penalties due. Whether the person has actually exercised the duties or not is immaterial.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.207
REV 10-2022, minor correction filed 06/06/2022, effective 06/06/2022
REV 5-2022, amend filed 06/03/2022, effective 06/03/2022
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.207, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2005, f. 6-27-05, cert. ef. 6-30-05
RD 4-1991, f. 12-30-91, cert. ef. 12-31-91
12-19-75
11-71

Or. Admin. R. 150-316-0372 Officer Liability: Joint Determination of Liability Conference

(1) If one or more of the persons who may be held liable under ORS 316.162 to 316.212 or ORS 320.550 appeals an assessment of unpaid income tax withholding or statewide transit tax, a joint conference may be required by the department. It is the department’s policy to notify all persons against whom liability may be asserted to attend the joint conference.

(2) If any of the persons notified fail to appear at the conference, the department may proceed with the conference.

(3) Notification of the conference may be mailed to each person against whom the department may assert liability. Mailing may be made by regular mail unless the person notified has requested that mail be sent certified.

(4) A finding at the conference that a person or persons are liable does not preclude a later finding that other persons are also liable.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.207
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.207(3)(a), REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2003, f. & cert. ef. 7-31-03
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0380 Withholding Penalties

See ORS 305.228, 305.990, 305.992, 314.400, 314.410, 314.440, 314.991, 316.992 and the corresponding rules for provisions regarding penalties, misdemeanors, and jeopardy assessments applicable to income tax withholding, statewide transit tax and associated reports.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.212
REV 78-2017, amend filed 12/28/2017, effective 01/01/2018
Renumbered from 150-316.212, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
RD 7-1992, f. & cert. ef. 12-29-92
1-69

Or. Admin. R. 150-316-0385 Nonresident Alternate Filing

(1) Out-of-state employers may elect an alternate method of filing, reporting or calculating tax liability for payroll earned in Oregon by nonresident employees for a payroll period not to exceed 200 days in one calendar year.

(2) Notice of election of alternative method shall be given on Oregon Department of Revenue form, Application for Alternative Filing Method for Temporary Employers, available from Oregon Department of Revenue, 955 Center Street, NE, Salem OR 97310.

(3) The Oregon Department of Revenue shall furnish the employer with Oregon Withholding Tax forms and instructions for filing and paying tax. The employer shall remit payment(s) and file completed Oregon quarterly combined tax reports as required by ORS 316.168 and 316.197.

(4) An employer electing the alternative method of withholding shall notify its employees of such election at the time withholding is made.

(5) If a qualifying nonresident employee files a personal income tax return under the allowed alternative method, the return also serves as a closing agreement. The amount of withholding is considered to be the amount of income tax owing for the tax year and is not subject to change by the taxpayer or the department unless it is determined that the taxpayer was not a “qualifying nonresident employee” while working for the nonresident employer.

(6) A nonresident employee who is working for an out-of-state employer which elects the alternative method under this rule, may elect to report and pay personal income tax on income earned by the employee in connection with the employee’s performance of temporary services within this state in the same manner as any other nonresident.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.223
Renumbered from 150-316.223, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-316.216, REV 8-2010, f. 7-23-10, cert. ef. 7-31-10
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-316.857
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0390 Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return

Certain deductions may not be taken on both the Oregon inheritance tax return (Form IT-1) and the Oregon fiduciary income tax return (Form 41). See OAR 150-118-0040 for details.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.272
Renumbered from 150-316.272, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 2-2004(Temp), f. 4-30-04 cert. ef. 5-1-04 thru 9-30-04

Or. Admin. R. 150-316-0395 Tax Treatment of Unincorporated Organization

Except as otherwise provided by statute, regulations under Internal Revenue Code Section 7701 that allow unincorporated entities to elect to be classified as corporations or partnerships for federal tax purposes shall also be effective for Oregon tax purposes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.277
Renumbered from 150-316.277, REV 63-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

Or. Admin. R. 150-316-0400 Resident and Nonresident Estates and Trusts

(1) For the purposes of the taxes imposed upon the income of estates and trusts and paid by the fiduciary thereof, estates and trusts are classified as either resident or nonresident.

(2) An estate is a resident if the fiduciary was appointed by an Oregon court or, where there is no appointment by an Oregon court, if the administration is carried on in Oregon. An estate of a decedent is but one taxable entity although there may be two or more fiduciaries appointed by courts of two or more states or countries. In such a case, the fiduciary appointed by the Oregon court (or administering the estate in Oregon) is required to file an Oregon state income tax return and is liable for any Oregon state income tax of the estate. The Oregon state income tax is determined by the status of the principal administration as to its resident or nonresident character, and shall be computed on an Oregon return required to be filed by the fiduciary of the principal administration. If the principal administration, considered without regard to other administrations, is an Oregon resident estate, all income of the estate, including that of nonresident fiduciaries, is taxable as that of an Oregon resident. If the principal administration, considered without regard to other administrations, is a nonresident of Oregon, the Oregon state income tax liability is to be computed as that of a nonresident.

(3) A trust is a resident if the fiduciary is a resident of Oregon or if it is administered in Oregon.

(4) A trust is a nonresident only if there is no Oregon resident trustee and the administration is not carried on in Oregon. See ORS 316.307 and the rules thereunder regarding treatment of nonresident trusts.

(5) If the trustee is a corporate fiduciary engaged in interstate trust administration, the trust is considered to be a resident of Oregon and the place of administration for that trust is considered to be Oregon if the trustee conducts the major part of its administration of the trust in Oregon. In this context, “administration” relates to fiduciary decision making of the trust and not to the incidental execution of such decisions. Incidental functions include, but are not limited to, preparing tax returns, executing investment trades as directed by account officers and portfolio managers, preparing and mailing trust accountings, and issuing disbursements from trust accounts as directed by account officers.

Example 1: X Trust Company, with its headquarters in Oregon, serves as trustee for trusts in Oregon and Washington. For its Washington trusts, account officers with offices in Washington: (a) serve as X’s primary contact with beneficiaries, (b) hire lawyers, accountants, and other professionals for the trust, and (c) make the majority of fiduciary decisions, which include when to make distributions and where to invest trust assets. Assets are invested in common trust funds or in mutual funds on the advice of either an affiliate of X located in Oregon or by unaffiliated investment companies located in Oregon or other states. A committee of X’s senior managers, including some stationed in Oregon, oversees the account officer’s activities. Various incidental functions for the Washington trusts are performed by X’s personnel in Oregon. Because the majority of the fiduciary decisions for the Washington trusts are made in Washington, those trusts are not administered in Oregon.

Example 2: Same facts as Example (1), except that the majority of fiduciary decisions for Washington trusts are made by account officers of X stationed in Oregon. Because the majority of fiduciary decisions are made in Oregon, the Washington trusts are administered in Oregon, and therefore are Oregon resident trusts.

Example 3: Same facts as Example (1), except that X and an Oregon resident serve as co-trustees of a Washington trust. Because the Washington trust has an Oregon resident trustee, that trust is an Oregon resident trust.

(6) The tax liability of a resident estate or trust is computed generally by utilizing the same principles as those governing individuals, except that in lieu of the modifications allowed to individuals by ORS 316.680 and 316.697 the estate or trust may be allowed a “fiduciary adjustment” as set forth in 316.287.

(7) For the purpose of determining whether income of an estate or trust which is deductible as a distribution deduction on its return is taxable on the Oregon return of a beneficiary, it is immaterial whether the estate or trust is a resident or nonresident. The income deductible as a distribution deduction on the return of an estate or trust is included in the net income of the beneficiary and is taxed in the same manner as if it had been received directly by the beneficiary without the intervention of the estate or trust. Its character is determined by the provisions of the Internal Revenue Code and not necessarily by the character or source of the money or property distributed.

(8) The amount of income to be reported by a beneficiary, including the allocation in case there is more than one beneficiary, is determined by:

(a) Residency status of the beneficiary;

(b) Allocation of the “fiduciary adjustment” as provided in ORS 3l6.287;

(d) The provisions of Subchapter J of Subtitle A of the Internal Revenue Code.

(9) For rules on accumulated income distributions from a trust to a resident or nonresident beneficiary, see OAR 150-316-0575 and 150-316-0415.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.282
Renumbered from 150-316.282, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-19-75
11-71

Or. Admin. R. 150-316-0402 Oregon Qualified Trust Tax Return

(1) General Rule. A trustee who has met certain conditions set forth in IRC Section 685, and has elected to file returns as a qualified funeral trust for federal purposes, must file an Oregon Form 41 (Oregon Fiduciary Income Tax Return) as a resident funeral trust.

(2) Filing requirements. The trustee may file a single, composite Oregon resident funeral trust return for some or all trusts for which the trustee has filing responsibility, including trusts that had a short tax year.

(3) Computation of Tax. When filing a composite return, the trustee must compute the tax separately for each trust and enter the total on the form. If an individual trust would require a tax rate above the minimum tax rate, the trustee must attach a schedule showing how the Oregon tax is computed for each trust.

(4) Due Date. The Oregon resident funeral trust return is due the 15th day of the fourth month after the close of the tax year.

(5) Effective Date. The provisions of this rule apply to tax years beginning on or after January 1, 2004.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.282
Renumbered from 150-316.282(4), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-316-0410 Fiduciary Adjustment

The modifications applicable to individuals described in ORS Chapter 316 may or may not be applied in computing the income tax liability of an estate or trust, depending on the treatment of distributable net income of the estate or trust in the Internal Revenue Code. No modification may be added or deducted separately. Neither may trust principles of accounting or statutory provisions governing allocations of receipts and disbursements by the fiduciary be applied in allocating the tax burdens or benefits arising from modifications. The net amount of all modifications constitutes the “fiduciary adjustment,” which must be allocated between the fiduciary and any beneficiaries as required in ORS 316.287(2). However, the share of a fiduciary adjustment allowable in reduction of the taxable income of a beneficiary shall be limited to the amount of the distribution deduction taxable on his individual federal return. The share of a fiduciary adjustment increasing taxable income of a beneficiary shall be limited to an amount computed by deducting the amount of income of the estate or trust taxable on his individual Oregon return from the total amount of money and the value of property distributed or required to be distributed to him during its current taxable year by the estate or trust. Any amounts not allocated to a beneficiary solely by reason of these limitations shall be added to the share of the estate or trust. A computation of the federal distributable net income must be shown on a copy of the federal Form 1041 attached to the Oregon fiduciary Form 41, unless it is clearly evident from the character of the estate or trust and the income that either

(1) There is no distributable net income as defined in the Internal Revenue Code;

(2) All distributable net income is taxable to the beneficiary; or

(3) No distributable net income is deductible on the federal fiduciary return as a distribution deduction.

Example: An estate had ordinary income and capital gains. A property worth in excess of the ordinary income was distributed to a residuary beneficiary in the taxable year. The total net fiduciary adjustment, including federal income tax paid on capital gains, is allocated to the distributee, although the personal representative must charge the federal income tax against principal. Thus, the tax benefit is granted to the beneficiary receiving current distribution while the eventual economic burden of payment falls on the residuary beneficiaries ratably. On the other hand, the beneficiary receiving a current distribution has been burdened with both federal and Oregon tax liability arising from ordinary income. Had he received no distribution the liability for tax would have fallen on the estate and the eventual economic burden on the residuary beneficiaries ratably. However, if the estate has federal taxable income which is not subject to Oregon income taxation, such as interest from the United States bonds, to include in the fiduciary adjustment to bring the total fiduciary adjustment up to an amount in excess of the value of the property distributed, the beneficiary may deduct on his individual return only the amount of fiduciary adjustment necessary to offset the income of the estate included in his taxable income. Similarly, if a U.S. income tax refund was claimed by and allowed to the estate in an amount to bring the total fiduciary adjustment up to an addition to income in excess of the value of the property distributed, the beneficiary need include only the amount of the fiduciary adjustment that, when added to the income of the estate included in his taxable income, equals the value of the property distributed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.287
Renumbered from 150-316.287, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
12-19-75
11-71

Or. Admin. R. 150-316-0415 Accumulation Distribution Credit for Oregon Taxes Paid by Trust During Income Accumulation Years

(1) The accumulation distribution credit is determined by calculating the amount of tax that would have been paid by the trust if the distribution had been made in the year the income was earned, and then subtracting that amount from the tax that the trust actually paid in that year. The total available credit is distributed to the beneficiaries pro rata.

(2) Trusts, whose Oregon taxable income in the year of income accumulation included capital gains that were not part of its distributable net income (DNI), must determine the amount of Oregon tax paid on ordinary income to arrive at the maximum Oregon tax credit available to the beneficiary. For purposes of this computation, the percentage of Oregon taxable income representing capital gains not included in DNI must be determined.

Example 1: This example is a continuation of the first example in OAR 150-316-0575. A review of the facts in that example would be helpful. Based on the facts in the example in OAR 150-316-0575, the maximum credit available to the beneficiary for the Oregon tax paid by the trust is calculated as follows: [Example not included. See ED. NOTE.]

(3) The credit allowable to the beneficiary cannot reduce the beneficiary’s tax below that which would have otherwise been due, without regard to the addition of the accumulation distribution.

Example 2: The beneficiary’s total 1993 tax is $150. The total tax calculated without inclusion of the accumulation distribution in taxable income is $100. Although the maximum calculated credit is $71, the beneficiary can only claim a credit of $50 (the difference between $150 and $100).

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.298
REV 49-2017, f. & cert. ef. 8-2-17
Renumbered from 150-316.298, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-316-0420 Taxable Income of Nonresident Estate or Trust

(1) The determination of the taxable income of a nonresident estate or trust differs from that of a nonresident individual in that there is no provision for proration of items of income, deductions or exemptions. Taxable income must be determined by first recomputing the fiduciary’s net taxable income under the Internal Revenue Code using only those items of income, gain, loss and deductions derived from or connected with sources in Oregon, including the full amount of the personal exemption allowable in determining federal taxable income. This computation may be made on a federal Form 1041 and accompanying schedules if they are clearly marked as state schedules. Regardless of the form of the computation, a copy of the federal Form 1041, and all accompanying schedules, as filed with the Internal Revenue Service must be attached to the Oregon Fiduciary Form 41.

(2) To arrive at the fiduciary’s Oregon taxable income, the recomputed federal net taxable income, limited to items derived from or connected with sources in Oregon, is increased or decreased by the “fiduciary adjustment” provided in ORS 316.287 and the transitional adjustment, if any, provided for in ORS 316.047. The “fiduciary adjustment” is computed in the same manner as that used for resident estates or trusts except that only items of income, gain, loss and deductions that are derived from or connected with sources in Oregon and a portion of any accrued federal income tax liability or refund are included in the computation. The amount of each federal income tax item of the fiduciary adjustment is computed by multiplying the accrued liability or refund by the percentage that the recomputed federal net income from Oregon sources bears to the federal net taxable income from all sources. Both factors in this computation must include only those items taken into account in determining net taxable income of the tax year to which the liability or refund applies.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.307
Renumbered from 150-316.307, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
11-71

Or. Admin. R. 150-316-0425 Oregon Multiple Funeral Trust Tax Return

(1) General Rule. A trust established as a “funeral trust” and filing a fiduciary return under federal law as a grantor trust may join in filing an Oregon multiple funeral trust tax return.

(2) Election. The election provided in this rule is made each tax year. It is deemed to be made by the trustee of the funeral trust as of the date the multiple trust tax return is filed. The trustee of an individual funeral trust may elect not to join in filing an Oregon multiple funeral trust tax return by filing a separate Oregon fiduciary tax return under the trust name used for federal filing purposes.

(3) Filing Requirements:

(a) The Oregon multiple funeral trust return shall be made and filed on Oregon Form 41 (Oregon Fiduciary Income Tax Return) by the authorized fiduciary. If two or more fiduciaries are acting jointly, the return may be made by any one of them. If an Oregon multiple funeral trust tax return is not filed, the trustee of each individual funeral trust must file an Oregon fiduciary return for such trust under the usual filing requirements of ORS 316.362.

(b) The Form 41 (Oregon Fiduciary Income Tax Return) filed for the Oregon multiple funeral trust shall include the trustee’s name in the name of the trust.

Example:

Name of trust: Serene Acres Funeral Home Trusts.

Name of fiduciary (trustee): Serene Acres Funeral Home

(c) The Form 41 for the Oregon multiple funeral trust tax return shall include a statement on the face of the return to the effect that under the terms of the trust instruments, the trusts included in the multiple filing are grantor trusts and all income is taxable to the grantors under the Internal Revenue Code.

(d) The Oregon multiple funeral trust tax return will not require a Federal Identification Number. The Department of Revenue will assign a Business Identification Number (BIN) to the multiple return. The BIN will be made available to the fiduciary of the multiple funeral trust return on request for identification purposes.

(e) In addition to the Form 41 required to be filed by the multiple funeral trust, a schedule shall be attached to the return. The schedule shall report the following information for each trust included in the multiple funeral trust tax return: The name, address and social security number of the grantor, the name and address of the trustee, the name and address of the funeral home, the trust federal identification number, the trust taxable year, the beneficiary’s social security number, and the amount and description of income earned by the trust during the taxable year.

(4) Due Date: The Oregon multiple funeral trust tax return is due the 15th day of the fourth month after the close of the tax year.

(5) Estimated Payments: Under ORS 316.559, trusts are not required to make estimated payments.

(6) Effective Date: The provisions of this rule shall apply to qualifying grantor funeral trusts that join in filing Oregon multiple funeral trust tax returns for tax years beginning on or after January 1, 1994.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.362
REV 50-2017, f. & cert. ef. 8-2-17
Renumbered from 150-316.362(1)(c), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

Or. Admin. R. 150-316-0427 Persons Required to Make Returns

A person having income taxable by this state which is not included in federal taxable income is required to file a return. For example, a return must be filed reporting interest on obligations of any foreign state or territorial possession of the United States which by the laws of the United States is exempt from federal income taxation but not from state income taxation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.362
Renumbered from 150-316.362(2), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-316.362(6)
12-70

Or. Admin. R. 150-316-0435 Petitioning Department to Equally Split Joint Liability

(1) A tax liability incurred by spouses filing a joint tax return is joint and several. Each spouse is responsible for the entire liability. However, the department may split a joint tax liability equally between two separated or divorced spouses. Either spouse may file a petition to split the joint liability equally between the spouses. In order to split the liability, the department must be satisfied that payment of the entire liability by the petitioning spouse will cause undue hardship on the petitioner and petitioner's household. Mere inconvenience is insufficient to establish hardship. A statement in the divorce decree is also insufficient to relieve either spouse of the liability.

(2) The conditions listed below may constitute hardship. The examples given are not intended to be all-inclusive.

(a) Annual household income of the petitioning spouse, number of dependents and limited assets within the household are such that petitioner could not, in the department's opinion, pay the entire liability within five years.

Example 1: The petitioning spouse receives social security income with no other income and only minimal assets.

Example 2: The petitioning spouse earns $20,000 annually, is not receiving child or spousal support, and is the sole support of three adolescent dependents. Household assets are minimal. The liability owed jointly with the petitioner's ex-spouse is $4,000.

(b) Major medical problems or a prolonged illness of either the petitioning spouse or a family member that either severely limits petitioning spouse's earning ability or creates an extreme financial burden on household resources.

Example 3: Petitioning spouse or family member has a major illness and has been forced to retire. The only household income is from social security.

Example 4: The petitioning spouse has a major illness and family is living on disability and attempting to meet high medical costs.

(3) Included within the petition must be:

(a) An explanation of how payment of the entire liability will cause undue hardship on the petitioner and petitioner's household;

(b) The current address of the non-petitioning spouse (if known);

(d) A copy of the legal separation or divorce decree; and

(e) An explanation of how the petitioner will pay the remaining liability.

(4) Following review of the petition, the department will either:

(a) Accept the petition, cause the liability to be split equally between spouses and notify both spouses of the action; or

(b) Notify the petitioning spouse the petition has not been accepted.

(5) Acceptance by the department of the petition is discretionary. If the department denies a petition to split a joint liability, the petitioner may appeal that denial to the Magistrate Division of the Oregon Tax Court.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.368
REV 85-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-316.368, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14
RD 7-1994, f. 12-15-94, cert. ef. 12-30-94
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-316-0440 Innocent Spouse, Separation of Liability, and Equitable Relief Provisions

(1) Internal Revenue Service (IRS) Determination Made to Grant Relief. The department will grant relief from liability for tax under ORS 316.369 if the person seeking relief provides proof that the IRS has made a determination under IRC §6015 that relieved the person of liability for federal taxes for the same tax year. As soon as the determination is made regarding the request for relief, the department will send a letter to each spouse informing them of the department’s determination.

(2)(a) No IRS Determination Made or IRS Denied Relief. A taxpayer who has filed an Oregon joint return may seek relief from liability by applying to the Department of Revenue even if the taxpayer has not applied for relief to the IRS. Or, if the IRS has denied relief, the taxpayer may ask the department to make a separate determination for relief from state liability. To request innocent spouse relief under the provisions of section (4), allocation of liability under the provisions of section (5), or equitable relief under the provisions of section (6), the taxpayer must write a letter to the department that includes the taxpayer's name, address, Social Security number, the taxpayer's spouse's (or former spouse's) name and Social Security number, the tax years for which the taxpayer is requesting relief for, and the type of relief the taxpayer is requesting. The department will treat the request for relief from liability as also constituting a request for any applicable refund. A taxpayer may file a request for innocent spouse relief, allocation of liability, or equitable relief with the department at any time. There is no statute of limitation on requesting relief under these provisions.

(b) The department will send a letter to the nonrequesting spouse if relief is requested from joint and several liability on a joint return and will allow the nonrequesting spouse to submit information related to the determination of the request for relief from liability. As soon as the determination is made regarding the request for relief, the department will send a letter to each spouse informing them of the department’s determination.

(3) Definitions. For purposes of this rule:

(a) Understatement of Tax. An understatement of tax generally is the difference between the total amount of tax that should have been shown on the taxpayer's Oregon return and the amount of tax that actually was shown on the Oregon return. This includes a deficiency that arises in the original processing of the return and a deficiency due to an audit.

(b) Erroneous Items. Erroneous items include unreported income and an incorrectly reported deduction, credit, or basis. Unreported income is any gross income item the spouse of the requesting taxpayer received but did not report. An incorrectly reported deduction, credit, or basis is any improper deduction, credit, or property basis the spouse of the requesting taxpayer claims.

(4) Innocent Spouse. Innocent spouse relief is available only for deficiencies or assessed deficiencies. This provision does not authorize relief from liabilities that taxpayers reported properly on the joint return but did not pay. If the following four conditions are met, the individual will qualify for innocent spouse relief. The department will relieve the individual of state liability for tax in whole or in part (including interest, penalties, and other amounts) for the taxable year.

(a) Conditions:

(A) The requesting spouse filed a joint return for the taxable year for which relief is sought;

(B) On such return there is an understatement of tax attributable to erroneous items of the spouse with whom the requesting spouse filed the return;

(C) The requesting spouse establishes that he or she did not know, and had no reason to know, of the understatement when signing the return;

(D) Taking into account all of the facts and circumstances, it is unreasonable in the department’s judgment to hold the requesting spouse liable for the deficiency attributable to the understatement.

(b) If the taxpayer seeking relief asks for a refund of state tax payments, the taxpayer also must provide proof that he or she made the payments to the Oregon Department of Revenue. If the department grants relief, it will refund payments made by the requesting spouse according to the procedures and refund limitations of ORS 305.270 and 314.415. This applies to any requests for relief received by the department on or after August 1, 2004.

(5) Allocation of liabilities for taxpayers no longer married, legally separated, or no longer living together. Relief is available only for deficiencies or assessed deficiencies. This provision does not authorize relief from liabilities that taxpayers reported properly on the joint return but did not pay.

(a) An individual may apply to allocate a deficiency if the following two conditions are met:

(A) The requesting spouse filed a joint return for the taxable year for which relief is sought; and

(B) At the time of the request, the requesting spouse is no longer married to, is legally separated from, or has not been a member of the same household as the other spouse at any time during the 12-month period ending on the filing date of the request.

(b) Relief under allocation of liability is subject to several limitations:

(A) A request will be denied if assets were transferred between the requesting spouse and the other spouse as part of a fraudulent scheme.

(B) Relief is not available if the department can demonstrate that the requesting spouse had actual knowledge when he or she signed the return of an item that gave rise to a deficiency.

(C) Relief will only be available if the liability exceeds the value of any disqualified assets (as defined in Internal Revenue Code §6015(c)(4)(B)) transferred to the requesting spouse by the nonrequesting spouse.

(D) The department will not refund payments made by the requesting spouse on the liability for which relief was granted if those payments were made before relief was granted. This applies to any requests for relief the department receives on or after August 1, 2004.

(6) Equitable relief. Equitable relief is available for unpaid liabilities that were reported properly on the joint return and for understatements of tax.

(a) To be eligible for equitable relief, all of the following conditions must be satisfied:

(A) The requesting spouse filed a joint return for the taxable year for which relief is sought;

(B) Relief is not available under either the innocent spouse or allocation of liability provisions;

(C) No assets were transferred between the spouses filing the joint return as part of a fraudulent scheme by the spouses;

(D) There were no disqualified assets transferred to the requesting spouse by the other spouse; and

(E) The requesting spouse did not file the return with fraudulent intent.

(b) The department will grant equitable relief generally in cases where all of the following elements are satisfied:

(A) At the time relief is requested, the requesting spouse is no longer married to the other spouse, or is legally separated from the other spouse, or has not been a member of the same household as the other spouse at any time during the 12-month period ending on the date relief was requested;

(B) When the requesting spouse signed the return, the requesting spouse had no knowledge or reason to know that the tax would not be paid; and

(C) The requesting spouse will suffer economic hardship if relief is not granted. The department will determine economic hardship by taking into account all of the facts and circumstances concerning the requesting spouse's financial situation, including but not limited to:

(i) Ability to pay now and in the future;

(ii) Personal assets such as stocks, bonds, dividends, retirement accounts, automobiles, equipment, etc.;

(iii) Ability to borrow funds;

(iv) Financial statements provided by the taxpayer; and

(v) Any other financial information that the department requests.

(c) The following is a partial list of the positive and negative factors that the department will take into account in determining whether to grant relief. No single factor will be determinative of whether equitable relief will or will not be granted in any particular case. All factors will be considered and weighed appropriately. The list includes but is not limited to the following:

(A) Factors in favor of relief.

(i) Marital status. The requesting spouse is separated (whether legally separated or living apart) or divorced from the nonrequesting spouse.

(ii) Economic hardship. The requesting spouse would suffer economic hardship if relief from liability is not granted.

(iii) Abuse. The requesting spouse was abused by the nonrequesting spouse, but such abuse did not amount to duress.

(iv) No knowledge or reason to know. In the case of a liability that was properly reported but not paid, the requesting spouse did not know and had no reason to know that the liability would not be paid. In the case of a liability that arose from a deficiency, the requesting spouse did not know and had no reason to know of the items giving rise to the deficiency.

(v) Other spouse's legal obligation. The other spouse has a legal obligation as part of a divorce decree or agreement to pay the outstanding liability. This will not be a factor weighing in favor of relief if the requesting spouse knew or had reason to know, when the divorce decree or agreement was entered into that the other spouse would not pay the liability.

(vi) Attributable to the nonrequesting spouse. The liability for which relief is sought is solely attributable to the nonrequesting spouse.

(B) Factors weighing against relief.

(i) Attributable to the requesting spouse. The unpaid liability or item giving rise to the deficiency is attributable to the requesting spouse.

(ii) Knowledge or reason to know. When the requesting spouse signed the return, the requesting spouse knew or had reason to know of the item giving rise to a deficiency or that the reported liability would not be paid.

(iii) Significant benefit. The requesting spouse has significantly benefited from the unpaid liability or items giving rise to the deficiency.

(iv) Lack of economic hardship. The requesting spouse will not experience economic hardship if relief from the liability is not granted.

(v) Noncompliance with Oregon income tax laws. The requesting spouse has not made a good faith effort to comply with Oregon income tax laws in the tax years following the tax year or years to which the request for relief relates.

(vi) Requesting spouse's legal obligation. The requesting spouse has a legal obligation as part of a divorce decree or agreement to pay the liability. If, taking into account all the facts and circumstances, the department determines that it would be unreasonable, in the department’s judgment, to hold the requesting spouse liable for the liability, the department may relieve a requesting spouse of all or part of the joint liability.

(d) If the taxpayer seeking relief asks for a refund of state tax payments, the taxpayer also must provide proof that he or she made the payments to the Oregon Department of Revenue. If the department grants relief, it will refund only payments the requesting spouse made after the request for relief was filed with the department. Refunds are subject to the refund procedures and limitations of ORS 305.270 and 314.415. This applies to any request for relief the department receives on or after August 1, 2004.

(7) Appeal Rights. If the department denies the relief requested under any of the provisions described above, the department will send the requesting spouse a conference decision letter that will have appeal rights. To appeal the conference decision, the requesting spouse must file an appeal with the Magistrate Division of the Oregon Tax Court within 90 days of the date of the conference decision letter. Whether or not relief was granted, the nonrequesting spouse can not appeal the determination.

(8) Time Period For Requesting Relief. A taxpayer may request relief from liability for tax at any time. There is no statute of limitation on requesting relief. However, the department will not grant relief under any provision of ORS 316.369 if the requesting spouse has entered into a closing agreement or settlement agreement with the department or if the year at issue has been litigated at the Oregon Tax Court, and the requesting spouse was a party to the litigation.

(9) Relief provided under ORS 316.368. If the requesting spouse does not qualify for relief under 316.369, the department will determine if relief can be granted under 316.368.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.369
Renumbered from 150-316.369, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 8-2001, f. & cert. ef. 12-31-01, Renumbered from 150-316.369(2)
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85
RD 10-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-316-0445 Liability of Fiduciaries

A fiduciary is required to file a return reporting all of the income of the estate or trust even though such income may not in whole or in part be taxable to the estate or trust. If an estate or trust is exempt from filing under federal Internal Revenue Code regulations, it is also exempt from filing for Oregon unless notice to file is given by the Oregon Department of Revenue. The fiduciary also is required to pay the taxes on the income taxable to the estate or trust. Liability for the payment of the tax attaches to the person of the estate’s personal representative up to and after discharge, where prior to distribution and discharge, personal representative failed to file a return as required by law or failed to exercise due diligence in determining and satisfying the tax obligation. Liability for the tax also follows the estate itself. When by reason of the distribution of the estate and the discharge of the personal representative it appears that collection of tax cannot be made from the personal representative, legatees or distributees must account for their proportionate share of the tax due and unpaid to the extent of the distributive share received by them. See ORS 314.310. The same considerations apply in the case of trusts. See also ORS 316.387.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.382
Renumbered from 150-316.382, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
5-5-82
2-11-82(Temp)
12-19-75
1-69

Or. Admin. R. 150-316-0450 Decedent’s Estate: Request for a Final Tax Determination

(1) The representative of a decedent’s estate has an affirmative duty to file any returns which the decedent failed to file or was unable to file (e.g., the return required for the part of the tax year prior to death, or returns required for previous tax years which weren’t filed due to the final illness of the decedent) and to pay the indicated tax, penalties and interest, if any, from the funds of the estate. The state has no duty to watch for printed notices to creditors or to file a creditor’s claim with the decedent’s representative.

(2) The representative of a decedent’s estate may make an election for a final tax determination of any returns required to be filed under chapter 316 during the period of estate administration from a decedent or a decedent’s estate. The election must be in writing and may be made by filing Department of Revenue Form 150-101-151 “Election for Final Tax Determination.” The election is applicable to:

(a) All individual income tax returns filed by the decedent for which the statute of limitations is open for adjustment at the time the election is filed;

(b) The decedent’s final individual income tax return;

(c) Any individual income tax returns the representative of a decedent’s estate is required to file on behalf of the decedent because the decedent failed to file the required returns prior to their death; and

(d) Any fiduciary income tax returns filed during the period of estate administration. The election must be filed with the return(s) for which the election is applicable.

(3) The Department of Revenue may give notice of deficiency as described in ORS 305.265 within 18 months after a written election for final tax determination is made by the representative of the decedent’s estate. If the Department of Revenue fails to give notice of deficiency within the 18 month period, the statute of limitations for the returns covered by the election for final tax determination will expire, except as described in paragraph (4). The Department of Revenue has no affirmative duty to respond to the election for final tax determination in any way other than the giving of notice of deficiency within 18 months.

(4) The limitations to the giving of a notice of deficiency provided in this section shall not apply in the following circumstances:

(a) If the department finds that gross income equal to 25 percent or more of the gross income reported has been omitted from the taxpayer’s return, notice of deficiency may be given at any time within five years after the return was filed;

(b) If the department finds that false or fraudulent returns were filed, or that no returns were filed but returns were required to be filed, notice of deficiency, or notice of assessment in the case of failure to file, may be given at any time after the department makes that finding;

(c) If the Commissioner of Internal Revenue makes a correction resulting in a change of the decedent’s or the estate of the decedent’s tax, then notice of deficiency may be given within one year after the department is notified of such federal correction, or within the applicable 18-month or five-year period, whichever period expires later.

(5) The representative of a decedent’s estate may choose to close the estate administration at the earliest date practicable, even though the period for giving notice of deficiency has not expired. If the department then gives notice of deficiency, the transferees of the money or property of the estate shall be liable for the tax, penalties and interest imposed against the decedent or the decedent’s estate.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.387
Renumbered from 150-316.387(1), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 8-1987, f. & cert. ef. 6-5-87
RD 3-1987(Temp), f. & cert. ef. 4-3-87
12-19-75
11-73
12-70
1-69

Or. Admin. R. 150-316-0452 Decedents’ Estate: Application for Discharge from Personal Liability for Tax on Decedent’s Income

(1) The representative of a decedent’s estate may make written application to the department for discharge from personal liability for tax on the decedent’s income. This application must be made after filing the decedent’s final individual income tax return, or any individual income tax returns the representative of a decedent’s estate is required to file on behalf of the decedent because the decedent failed to file the required returns prior to their death.

(2) The written application must include the following information:

(a) The name of the decedent;

(b) The decedent’s Social Security Number;

(c) A list of the tax years for which the representative of a decedent’s estate filed individual income tax returns on behalf of the decedent during the period of estate administration. The representative of a decedent’s estate must also provide a copy of the document which shows they were appointed to represent the estate.

(3) The discharge becomes effective nine months after the department receives the application for discharge, if the representative of a decedent’s estate has received no notification of tax liability during that time, or if notification of tax liability was received and paid during that time.

(4) The discharge does not apply to tax liability resulting from assets of the decedent’s estate which are still in the possession or control of the representative of a decedent’s estate.

(5) The failure of a representative of a decedent’s estate to make application under this subsection does not affect the protection available to the representative under ORS 116.113(2), 116.123 and 116.213.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.387
Renumbered from 150-316.387(4), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-316-0465 Estimated Tax

(1)(a) No declaration of estimated tax is required if the estimated tax as defined ORS 316.557 is less than $1,000.

(b) A required declaration shall contain information and be in the form prescribed by the Department of Revenue. Federal forms are not acceptable.

(2) A taxpayer may amend the declaration of estimated tax by recalculating the estimated tax due for the year, subtracting the payments already made and dividing the balance by the remaining payment dates.

(3) Generally, estimated tax payments will not be refunded prior to the taxpayer’s filing of the tax return for the year for which the estimated tax payments were made. Where taxpayers establish to the satisfaction of the department that the facts warrant a refund, a refund of estimated taxes can be made prior to the filing of the tax return. Examples of fact situations which will be considered sufficient to warrant a refund are as follows:

(a) Estimated tax payments were made by an individual who will not be required to file a return for the tax year for which the estimated tax payments were made.

(b) The estimated tax payments were intended for the Internal Revenue Service but were sent to the Department of Revenue in error. The fact that the estimated tax payments made exceed the required payments based upon an exception to underpayment is not sufficient cause to refund such excess prior to the filing of the Oregon tax return.

(4) Estimated tax payments cannot be used to pay additional tax liabilities for prior or current tax years, regardless of whether the liability is created by the taxpayer filing an amended return or by adjustment of the return by the department.

Example 1: Douglas has made estimated tax payments for 1998 totaling $2,000. His 1996 tax return was audited & a deficiency of $500 was imposed. No part of the $2,000 payments may be used to pay the deficiency.

(5) Interest shall be computed on excess estimated tax payments starting 45 days after the return is filed, or 45 days after the due date of the return, whichever is later.

(6) An individual with a taxable year of less than 12 months may be required to file a declaration of estimated tax and pay estimated tax.

(a) No declaration is needed for a short taxable year that is:

(A) Less than four months.

(B) At least four months but less than six months and the declaration filing requirements of ORS 316.563 are met after the first day of the fourth month.

(C) At least six months but less than nine months and the requirements to file the declaration are met after the first day of the sixth month.

(D) At least nine months and the requirements to file the declaration are met after the first day of the ninth month.

(b) If the taxpayer is required to file the declaration, the declaration must be filed on or before:

(A) The 15th day of the fourth month if the requirements to file are met before the second day of the fourth month.

(B) The 15th day of the sixth month if the requirements to file are first met after the first day of the fourth month but before the second day of the sixth month.

(C) The 15th day of the ninth month if the requirements to file are first met after the first day of the sixth month but before the second day of the ninth month.

(D) The 15th day of the first month of the succeeding year if the requirements to file are first met after the first day of the ninth month but before the last day of the year unless the return for such tax year is filed on or before the last day of the first month of the succeeding year.

(c) The estimated tax shall be paid in equal installments. The amount of each installment depends on the length of the short taxable year and the date during the year when the requirements to file and pay estimated tax are first met.

Example 2. Tom has a short taxable year beginning January 1, 1998 & ending October 31, 1998. The requirements to filing a declaration of estimated tax are first met prior to April 2, 1998. The estimated tax is payable in four equal payments on April 15, June 15, September 15 & November 15, 1998. Each payment would equal one-fourth of the total estimated tax due. If, on the other hand, the requirements to filing a declaration of estimated tax were first met after April 1 but before June 2, the estimated tax would be payable in three equal payments of one-third of the total estimated tax. The payment dates would be June 15, September 15 & November 15, 1998.

Example 3. A five-month short taxable year beginning January 1, 1998, & ending May 31, 1998, & the requirements to file were met on March 31, 1998, Tom must file & pay:

1/2 of the estimated tax on April 15, 1998

1/2 of the estimated tax on June 15, 1998

Example 4. A seven-month short taxable year from April 1, 1998, through October 31, 1998, and the requirements to file are met on July 1, 1998. Tom must file and pay:

1/3 of the estimated tax on July 15, 1998

1/3 of the estimated tax on September 15, 1998

1/3 of the estimated tax on November 15, 1998

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.563
Renumbered from 150-316.563, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86, Renumbered from 150-316.563(1)?
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
RD 14-1982, f. 12-6-82, cert. ef. 12-31-82
TC 9-1981, f. 12-7-81, cert. ef. 12-31-81
12-31-80

Or. Admin. R. 150-316-0470 Allocation of Joint Estimated Tax Payments

(1) Spouses in a marriage may make joint estimated tax payments for any part of the tax year although they may elect to file separate tax returns. If separate returns are filed the joint estimated tax payments may be treated as the estimated tax of either the husband or wife or may be divided between the spouses in such manner as they agree.

(2) If the spouses do not agree on how to divide their joint estimated tax payments, the payments shall be allocated between them by the department. Spouses will be considered not to have agreed on a method for dividing their joint estimated payments when both spouses file separate returns claiming credit for estimated tax payments which when combined do not equal the amount of joint estimated tax payments received by the department during the tax year.

(3) The department shall divide the joint estimated tax payments by allocating to each spouse an amount of the payments in the proportion that the spouses’ separate tax liability computed after credits, other than the credits for withholding and estimated tax payments, bears to the combined separate tax liabilities of both spouses.

The formula to be used is:

Separate tax liability

— (divided by) —

(Combined separate tax liabilities x joint estimated tax payments)

During 20XX, Adam and Betty make joint estimated tax payments of $2,000, Betty also has tax withholding of $1,000. Adam and Betty decide to file separate returns for 20XX but fail to agree on how to divide their 20XX joint estimated tax payments. Adam has a separate tax liability after credits of $1,500. Betty has a separate tax liability of $1,100 before credit for withholding of $1,000. Using the formula stated above, Adam’s share of the estimated tax payments is $1,154 ($1,500 ÷ $2,600 x $2,000). Betty’s share of the estimated tax payments is $846 ($1,100 ÷ $2,600 x $2,000). Adam will owe a net amount of $346 ($1,154 – $1,500) and Betty will receive a refund of $746 ($846 + $1,000 – $1,100).

(4) If spouses in a marriage make joint estimated tax payments and the department issues a notice of assessment against either or both of the spouses under the provisions of ORS 305.265(10), the department shall allocate the estimated tax payments between the spouses. The allocation of payments shall be made using the best information available to the department.

(5) In the event one of the spouses received credit for more than their allocable share of the joint estimated tax payments as determined by the department, the difference between their allocable share and the amount for which credit was received when the return was processed, shall be remitted to the department. This amount shall be remitted with the filing of an amended return or through payment of a notice of deficiency issued by the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.567
REV 3-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.567, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0475 Estimated Tax: Farmer’s and Fisher’s

For the purpose of declaring estimated tax, gross income is determined using sources within and without this state.

Example: John is a resident of the state of Washington and owns a farm which is located in Oregon. All of his other income is from nonfarm sources within the state of Washington. The total farm income from Oregon sources is $50,000. The total gross income from within and without Oregon is $90,000. Since the gross income from farming is not equal to or greater than two-thirds of John’s total gross income, the exception for farmers and fishers to making estimated tax payments is not met.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.573
Renumbered from 150-316.573, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-316-0480 Estimated Tax: Application of Prior Year Overpayment (Refund)

(1) Definitions for purposes of this rule:

(a) “Open estimated tax account” is an account to which estimated tax installments may be made under ORS 316.579.

(b) “Estimated tax underpayment period” is the period after the due date for the fourth estimated tax installment but prior to the due date for filing the related tax return, excluding extensions, for that period. This period is generally January 16 through April 15 (when the taxable year is a calendar year).

(2) If a taxpayer elects on a return to have an overpayment of tax applied to an estimated tax account, the department generally will apply the overpayment to the subsequent year’s open estimated tax account.

(3) Exceptions:

(a) Before the taxpayer’s overpayment is applied to the open estimated tax account, the overpayment will first be subject to offset under ORS 314.415 and related rules.

(b) If there are two open estimated tax accounts for the same taxpayer (between January 1 and January 15 when the taxable year is the calendar year), any amount requested to be applied to an estimated tax account will be posted to the tax year which is the later of the two open estimated tax accounts unless the taxpayer has requested in writing that the overpayment be applied to the earlier of the two open estimated tax accounts.

(c) If a taxpayer files a delinquent or amended return claiming a refund between the due date for a subsequent tax year’s fourth estimated tax installment and the due date for filing the return for the subsequent tax year, excluding extensions (between January 16 and April 15 when the taxable year is the calendar year), any amount requested to be applied to an estimated tax account will be posted to the open estimated tax account unless the taxpayer has requested in writing to have the overpayment applied against the estimated tax underpayment period to reduce interest on any underpayment of the estimated tax liability.

(4) Refunds from original returns. If a taxpayer requests to apply an overpayment from an original return filed on or before the return due date (including extensions), the department will apply the overpayment as of the first estimated tax installment due date of the open estimated tax account (generally April 15) or the date the overpayment was made, whichever is later.

Example 1: The taxpayer files their 2017 Oregon personal income tax return on March 31, 2018. The return shows a refund due. The payment that created an overpayment was made on January 15, 2018. The taxpayer elects on the return to have the refund applied to an estimated tax account. The overpayment is credited to the open estimated tax account as of April 16, 2018, which is the later of the due date of the first installment of estimated tax due for tax year 2018 or the date the payment creating the overpayment was made.

Example 2: The taxpayer files their 2017 Oregon personal income tax return under extension on October 12, 2018. The return shows a refund due. The payment that created an overpayment was made on July 6, 2018. The taxpayer elects on the return to have the refund applied to an estimated tax account. The overpayment is credited to the 2018 estimated tax account as of July 6, 2018, which is the later of the due date of the first installment of estimated tax due for tax year 2018 or the date the payment creating the overpayment was made.

(5) Refunds from delinquent returns. If a taxpayer requests to apply an overpayment from a delinquent return to an open estimated tax account, the department will apply the overpayment to the estimated tax account as of the date the delinquent return is filed or the date the overpayment was made, whichever is later.

Example 3: The taxpayer files a 2017 Oregon personal income tax return late, on October 25, 2018, showing a refund due. The payment that created an overpayment was made on April 10, 2018. The taxpayer elects on the delinquent return to have the refund be applied to the taxpayer’s estimated tax account. The overpayment is credited to the 2018 estimated tax account as of October 25, 2018, which is the later of the date the delinquent return was filed or the date the overpayment was made. The refund is applied to the fourth installment of estimated tax due for tax year 2018.

Example 4: The taxpayer files a 2016 Oregon personal income tax return on January 10, 2018, showing a refund due. The payment that created the overpayment was made on October 15, 2017. The taxpayer elects on the delinquent return to have the refund applied to the taxpayer’s estimated tax account. As of January 10, 2018, there are two open estimated tax accounts for the taxpayer: 1) the fourth installment for tax year 2017 and 2) the first installment for tax year 2018. The refund is credited as of January 10, 2018, toward the first installment of estimated tax due for tax year 2018, due April 16, 2018. After the return has processed, the taxpayer writes to the department and requests that the 2016 refund instead be applied to the fourth installment for tax year 2017. The department moves the estimated tax payment from tax year 2018 to tax year 2017. The payment is applied as of January 10, 2018, toward the fourth installment for tax year 2017.

Example 5: The taxpayer files a 2016 Oregon personal income tax return on March 1, 2018, showing a refund due. The payment creating an overpayment was made on February 20, 2017. The taxpayer elects on the delinquent return to have the refund applied to the taxpayer’s estimated tax account. The taxpayer has not yet filed their 2017 Oregon personal income tax return. The overpayment is credited consistent with section (3)(c) of this rule to the 2018 estimated tax account as of March 1, 2018. After the 2016 Oregon return has processed, the taxpayer writes to the department to indicate they would like the refund applied to the 2017 estimated tax underpayment period. The department moves the application from tax year 2018 to tax year 2017 and applies the payment as of March 1, 2018.

(6) Refunds from amended returns. If the taxpayer elects on an amended return to have an overpayment applied to estimated tax, the department will apply the overpayment to an open estimated tax account. The overpayment shall be applied as of the date the amended return is filed or the date the payment is made, whichever is later. If interest is due on the overpayment, the interest will stop accruing on the date the amended return is filed.

Example 6: A taxpayer files a 2017 Oregon personal income tax original return timely on March 13, 2018. The taxpayer then files a 2017 Oregon amended return on October 15, 2018, claiming a $500 overpayment and electing to have the entire refund applied to the open estimated tax account. The payment creating the overpayment was made on February 1, 2018. The refund is applied to the taxpayer’s 2018 estimated tax account as of October 15, 2018, the later of the date the amended return was filed or the date the overpayment was made. Interest on the overpayment is calculated starting June 2, 2018, 45 days after the return due date (excluding extension), and ending October 15, 2018, the date the return was filed.

History

Statutory/Other Authority: ORS 305.100 & 316.583
Statutes/Other Implemented: ORS 316.583, 316.579 & 314.415
REV 73-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-316.583, REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-316.583(2), REV 9-2015, f. 12-23-15, cert. ef. 1-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-316-0485 Tax Used to Compute Underpayment of Estimated Tax

Any interest due for underpaying estimated taxes is computed using the total tax shown on the return. If the return is adjusted in initial processing, the recomputed tax must be used for determining any underpayment interest. Prior to October 6, 2001, subsequent amendments to the tax will not affect the underpayment interest amount unless the amended return is received prior to the statutory due date of the original return. Amended returns filed on or after October 6, 2001 will not affect the underpayment interest amount unless the amended return is received by the statutory due date of the original return or within the extension period granted for the original return.

Example 1: Mary files an Oregon income tax return on a calendar year basis. She filed a return for tax year 2000 on February 15, 2001, showing a tax liability of $1,700. On April 10, 2001, she filed an amended return for tax year 2000 showing a tax liability of $1,450. The return for the taxable year for purposes of computing any interest on underpayment of estimated tax is the amended return filed on April 10, 2001.

Example 2: Using the same facts as given in Example 1 except that Mary's amended return was filed on May 20, 2001. The original return filed on February 15, 2001, is the return for the taxable year for purposes of computing any interest on underpayment of estimated tax.

Example 3: Mark files an Oregon income tax return on a calendar year basis and had an extension to October 15, 2008 in which to file his 2007 return. He filed his 2007 return on May 1, 2008 showing a tax liability of $2,150. On October 15, 2008, he filed an amended return for 2007 showing a tax liability of $1,375. The return for the taxable year for purposes of computing any interest on underpayment of estimated tax is the amended return filed on October 15, 2008.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.587
Renumbered from 150-316.587(1), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2006, f. & cert .ef. 7-31-06
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
REV 8-2001, f. & cert. ef. 12-31-01
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-316-0487 Estimated Tax: Underpayment Interest Not Imposed if There is a Casualty, Disaster or Other Unusual Circumstances

(1) No interest for underpayment of estimated tax will be imposed on any portion of the underpayment that is caused by reason of casualty, disaster or other unusual circumstances where it would be against equity and good conscience to impose interest. The determination of whether unusual circumstances exist is made on a case-by-case basis, taking into account all pertinent facts and circumstances. The most important factor is the extent of the effort required by the taxpayer to comply with the law and make the required installments.

(2) The following are examples of situations that will be accepted by the department as unusual circumstances for not imposing interest.

(a) Where the failure to make the necessary estimated tax payment was caused by death or serious illness of the taxpayer, or death or serious illness in the taxpayer’s immediate family.

(b) Where the taxpayer’s books and records are destroyed by fire, flood or other natural disaster and therefore, the taxpayer is unable to determine the correct estimated tax payment.

(d) Where the failure to make the necessary estimated tax payment was caused by the unavoidable and unforeseen absence of the taxpayer from the state immediately prior to the due date of the estimated tax payment.

(3) Example: Sharon filed her 2003 Oregon income tax return and had tax to pay of $2,500. Interest on underpayment of estimated tax was imposed. Sharon’s house was destroyed by fire on August 5, 2003 and all of her tax records were destroyed. The department will not impose the interest on underpayment of estimated tax for the third and fourth installment periods due to the casualty.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.587
Renumbered from 150-316.587(5)(b), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0489 Estimated Tax: Underpayment Interest Not Imposed If There Is Reasonable Cause

(1) No interest for underpayment of estimated tax will be imposed on any portion of the underpayment if in or prior to the tax year the estimated tax payment was required to be made, the taxpayer retired after attaining age 62 or became disabled, and the underpayment was due to reasonable cause and not to willful neglect. The determination of whether the taxpayer’s actions were due to reasonable cause and not willful neglect is made on a case-by-case basis, taking into account all pertinent facts and circumstances. The most important factor is the extent of the effort required by the taxpayer to assess the taxpayer’s proper liability.

(2) The following are examples of situations that will be accepted by the department as reasonable cause for not imposing interest.

(a) Where the failure to make the necessary estimated tax payment or failure to pay the correct amount of estimated tax was caused by the unavoidable and unforeseen absence of the taxpayer from the state immediately prior to the due date of the estimated tax payment.

(b) Where the failure to make the necessary estimated tax payment or failure to pay the correct amount of estimated tax was caused by reliance on an information return or other facts, if under all the circumstances, such reliance was reasonable and the taxpayer acted in good faith. Reliance on information reported on a Form W-2, Form 1099 or other information is reasonable if the taxpayer did not know or have reason to know that the information was incorrect. Generally, a taxpayer knows or has reason to know that the information on an information return is incorrect if such information is inconsistent with other information reported or otherwise furnished to the taxpayer, or with the taxpayer’s knowledge of the transaction.

(c) Where the failure to make the necessary estimated tax payment or failure to pay the correct amount of estimated tax was caused by incorrect professional advice and:

(A) The taxpayer relied upon the advice of an individual who the taxpayer could reasonably assume was knowledgeable and experienced in the tax involved;

(B) The taxpayer supplied the individual with complete information connected with the advice given; and

(C) The taxpayer could not reasonably be expected to be knowledgeable in the tax matter connected with the erroneous advice.

(d) Where the taxpayer exercised ordinary business care and prudence and nevertheless was unable to make the necessary estimated tax payment or to pay the correct amount of estimated tax.

(e) Where the taxpayer is unable to obtain records necessary to determine the amount of estimated tax due, for reasons beyond the taxpayer’s control.

(f) Where the taxpayer failed to pay the tax based on erroneous written information received from an employee of the Department of Revenue.

(g) Examples:

(A) Bob, age 65, retired from his job on March 30, 2003. Bob did not request that Oregon state tax be withheld from his retirement income and he didn’t know that he needed to make estimated tax payments. When Bob filed his 2003 tax return he found he owed $1,500 of tax. Since the underpayment was not due to reasonable cause, interest on underpayment of estimated tax will be imposed.

(B) Grace, age 62, retired from her job on February 1, 2003. Before Grace retired she consulted her tax consultant for advice on when to retire and what payment elections to make. Grace turned all her paperwork over to her tax consultant to fill out. The tax consultant neglected to have Oregon state tax withheld from Grace’s retirement income. Because the underpayment was due to reasonable cause, interest on underpayment of estimated tax will not be imposed.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.587
Renumbered from 150-316.587(5)(c), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0491 Estimated Tax: Partnership and S Corporation Income of Part-year Residents and Nonresidents

For purposes of imposing interest on underpayment of estimated tax, an exception exists for part-year and nonresidents receiving income from an S corporation. No interest will be imposed on the underpayment attributable to the shareholders pro rata share of the S corporation income if the income is for the initial year in which S corporation status is elected and the shareholder is a nonresident or for the prior tax year was a part-year resident for Oregon. This exception applies to tax years beginning on or after January 1, 1987.

Example: Frank and Ethel move to Oregon in August, 2006. Frank is a partner in an Oregon partnership. The partnership incorporates in 2007 and elects S corporation status. For 2007, Frank and Ethel file as full-year Oregon residents and report their share of the S corporation income. No interest is imposed on any underpayment attributable to Frank's share of the S corporation income because they meet the exception. They are part-year residents for 2006; 2007 is the initial year of election of S corporation status.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.587
Renumbered from 150-316.587(5)(d), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2009, f. & cert. ef. 7-31-09
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.587(5)
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-87, Renumbered from 150-316.587(4)(A)
12-31-85, Renumbered from 150-316.587(4)
10-7-85

Or. Admin. R. 150-316-0493 Required Installments for Estimated Tax

(1) Definitions.

(a) “Required annual payment” means the total amount of required installment payments for the tax year.

(b) “Required installment payment” means the amount of the payment that is due for each of the four payment periods during the tax year.

(2) There are two steps to determine estimated tax payments. The first step is to determine the required annual payment, and the second step is to determine the amount of the required installment payments.

(3) Determination of required annual payment amount.

(a) The required annual payment is the lesser of:

(A) Ninety percent of the tax shown on the return for the taxable year (or, if no return is filed, ninety percent of the tax for such year); or

(B) One hundred percent of the tax shown on the prior year's return, if qualified. This is sometimes referred to as ‘safe harbor.’ To use the prior year’s tax to determine the required annual payment, the prior year’s return must be filed before the current year’s return, and the prior tax year must consist of 12 months.

Example 1: Amanda’s adjusted gross income on her 2012 return was $30,000 and her Oregon tax liability after credits was $2,000. Amanda’s 2013 Oregon tax liability after credits is $2,800. Ninety percent of the 2013 tax after credits is $2,520. She can use the prior year tax and pay 2013 estimated tax payments equal to 100 percent of her 2012 tax liability ($500 on each installment due date).

(b) A part-year resident may use the prior year tax unless disqualified for a reason described in this section.

Example 2: Michael moved to Oregon from California on July 1, 2012 and filed as a part-year resident. His 2012 Oregon tax after credits was $1,500. Even though his 2012 return shows 6 months of Oregon residency, his taxable year for 2012 was 12 full months. He qualifies to use safe harbor (prior year tax) to determine his required annual payment for 2013. This is less than 90 percent of his 2013 tax, so he will use that to determine his required annual payment. His required installment payments in 2013 are $375 for each period (25% of $1,500) for regular installment payments, or the applicable percentage if using the annualized income installment payments, in order to avoid interest on underpayment of estimated tax for 2013.

(c) Use the amounts from the original return to determine the payments unless an amended return was filed before the due date, including extensions. In that case, use the amounts from the amended return to determine the required annual payment. Amended returns filed after the due date of the original return, including extensions, cannot be used to determine the required annual payment.

Example 3: Aliyah’s original tax return showed a tax liability after all credits of $1,400. Aliyah did not file an extension. In July, the return was amended and the tax liability after credits was $1,200. Aliyah bases her required annual payment on the $1,400 tax shown on the original return.

Example 4: Shaylee’s original tax return was filed June 29, 2012 with an approved extension to October 15, 2012 showing a tax liability of $1,975. On October 09, 2012 the return was amended and the tax liability was reduced to $1,245. In 2013, if Shaylee chooses to use the prior year’s tax, the required annual payment is based on the $1,245 tax shown on the amended return filed within the extension period.

(d) Estimated tax payments are not required if the amount of the required annual payment minus Oregon tax withheld is less than $1,000. For information about additional exceptions, see ORS 316.563 through 316.588, and OAR 150-316-0475 through 150-316-0491.

Example 5: Brandon and Michelle are married and have three children. Brandon is self-employed. Michelle works part-time. They want to know if they are required to make estimated tax payments. Their estimated 2013 adjusted gross income is $75,000, their estimated net itemized deductions are $13,500 and they expect to have $630 withheld from Michelle’s wages.[Table not included. See ED. NOTE.]

(4) Determination of the required installment payment amount.

(a) The required installment payment for each of the four tax periods is the lesser of the payment due under one of the following two methods for determining the amount of an installment payment:

(A) Regular Installment: The required installment payment for each period is 25 percent of the required annual payment.

(B) Annualized Income Installment: The required annualized income installment payment is the “applicable percentage” of the required annual payment for the taxable year minus the amount of any required installments paid for prior periods during the tax year. The applicable percentages are:

(i) 22.5% for the first period;

(ii) 45% for the first and second periods;

(iii) 67.5% for the first, second and third periods; and

(iv) 90 % for the first through fourth periods.

(b) If the taxpayer shows that the annualized income installment for a period (as determined from the annualized income worksheet) is less than the regular installment for that period, the amount of the required installment payment for that period is the annualized income installment.

(c) If the annualized income installment method is used to determine a required installment payment, the difference between that amount and the amount that would have been due if the regular installment method had been used must be added to the required installment payment for the next succeeding period.

(d) Generally, credits based on income or deductions are figured on the annualized income or deductions for each period.

(e) Credits computed as a percentage of income must be based upon the annualized income for the period.

(f) Credits that use income as a basis for determining an applicable percentage or for otherwise limiting the allowable credit must be based upon the total annualized income before allocation to the installment period.

Example 6: Richard and Terrie are married with no dependents. They had adjusted gross income of $14,000 for the period of January 1, 2013 to March 31, 2013. For the same period, they had itemized deductions of $2,810. For the period of January 1, 2013to May 31, 2013, they had adjusted gross income of $27,000 and itemized deductions of $4,300. For the period of January 1, 2013 to August 31, 2013, they had adjusted gross income of $41,000 and itemized deductions of $6,300. For the period January 1, 2013 to December 31, 2013, they had adjusted gross income of $69,000 and itemized deductions of $14,100. Their 2012 return showed tax after credits of $3,155. For purposes of computing the required installment, the following computations are necessary: Actual income from January 1 to March 31 x 4. Actual income from January 1 to May 31 x 2.4. Actual income from January 1 to August 31 x 1.5. Actual income from January 1 to December 31 x 1.0. First Estimated Tax Payment.[Table not included. See ED. NOTE.]

(g) Pass-through entity (PTE) income may be annualized following the methodology provided under Internal Revenue Code (IRC) section 6654, Treasury Regulation section 1.6654-2 and all other related regulations and rules, if annualizing more accurately reflects the fluctuations in income to the shareholder from the entity. Solely for purposes of annualizing, the shareholder or partner may recognize the distributable share of income or loss from the PTE for the months in the PTE’s taxable year ending within the taxable year of the shareholder or partner that precede the month in which the estimated tax installment is due.

Example 7: Ed’s Catering, Inc. (ECI) is a calendar year S corporation that is in the catering business. ECI has limited business outside of the busy holiday party season. The majority of its business occurs in October, November, and December. In 2013, ECI’s income was $30,000 from January 1–March 31; $25,000 from April 1–June 30; $20,000 from July 1–September 30; and $450,000 October 1 to December 31. An ECI shareholder who receives most of his or her income during the last quarter in ECI’s tax year may choose to use the annualized income installment method for purposes of determining estimated tax payments.

Example 8: Wedding Planner’s, Inc. (WPI), an S corporation, has a fiscal year ending July 31st. The majority of its business occurs in May, June, and July. In fiscal year beginning 2012, WPI’s income was $30,000 from August 1, 2012–October 31, 2012; $25,000 from November 1, 2012–January 31, 2013; $20,000 from February 1, 2013–April 30, 2013; and $450,000 May 1, 2013 to July 31, 2013. The shareholder must include the income attributable to WPI as follows when determining the required installment for the shareholder’s calendar year 2013 using the annual method:

The 1st required installment is based on PTE income/loss from August 1st of the prior year to March 31st. Date payment is due is April 15th. The 2nd required installment is based on PTE income/loss from August 1st of the prior year to May 31st. Date payment is due is June 15th. The 3rd required installment is based on PTE income/loss from August 1st of the prior year to July 31st. Date payment is due is September 15th. The 4th required installment would already include the entire amount from the PTE received in the tax year of the shareholder but should not increase the underpayment for the 4th quarter since it was fully included by the third payment.

[ED. NOTE: Tables referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 316.587
Statutes/Other Implemented: ORS 316.587
REV 5-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.587(8)-(A), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2014, f. & cert. ef. 7-31-14
REV 16-2010, f. 12-17-10, cert. ef. 1-1-11
REV 6-2008, f. 8-29-08, cert. ef. 8-31-08
REV 3-2006, f. & cert .ef. 7-31-06
REV 8-2001, f. & cert. ef. 12-31-01
REV 9-1999, f. 12-30-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0495 Estimated Tax: Joint Return to Single or Separate Return

For estimated tax payments due for tax years beginning on or after January 1, 1988, in computing the required installment for the current year, the tax liability for the prior year may be used even though the current year is a single or separate return and the prior year's return is a joint return. The prior year's return must be filed timely including extensions and must cover 12 months. The prior year's tax will be allocated in the following manner:

(1) Recompute the prior year's tax liability as if each spouse had filed a single or separate return; and

(2) Multiply the joint tax liability for the prior year by a ratio of each spouse's single or separate liability to the combined single or separate liabilities.

Example: Dan and Jessica filed a joint return for the calendar year 2008 showing taxable income of $63,000 and a tax after credits of $4,084. Of the $63,000 taxable income, $38,000 was attributable to Dan and $25,000 was attributable to Jessica. Dan and Jessica will file separate returns in 2009. The tax shown on the return for the preceding taxable year, for determining the required installments for 2009, is determined as follows: [Formula not included. See ED. NOTE.]

[ED. NOTE: Formulas referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.587
Renumbered from 150-316.587(8)-(B), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2009, f. & cert. ef. 7-31-09
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0497 Estimated Tax: Single or Separate Returns to Joint Return

For estimated tax payments beginning on or after Jan. 1, 1988, in computing the required instalment for the current year, the tax liability for the prior year may be used even though the current year is a joint return and the prior year’s returns are single or separate returns. This is done by combining the net income tax amounts from the previous year’s returns of both spouses. The previous year’s returns of both spouses must be filed timely including extensions, must have a tax liability, and must cover 12 months.

Example: Al and Darlene filed separate income tax returns for the calendar year 1987, showing tax liabilities of $2,640 and $350, respectively. In 1988 they elected to file a joint return. For the purpose of determining the required instalment mentioned above, the previous year’s net income tax would be $2,990 ($2,640 plus $350).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.587
Renumbered from 150-316.587(8)-(C), REV 65-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-87, Renumbered from 150-316.587(4)-(B)
10-5-87

Or. Admin. R. 150-316-0505 Oregon Lottery Winnings and Losses

(1) For purposes of this rule:

(a) “Oregon lottery losses” means the amount of wagering losses defined in Internal Revenue Code Section 165(d) that is attributable to the Oregon State Lottery which was includable in federal taxable income.

(b) “Oregon lottery” means all games administered by the Oregon State Lottery Commission including those games jointly administered by Oregon and other states.

(2)(a) For purposes of Ch. 316, Oregon lottery winnings referred to in Ch. are not included in Oregon taxable income, if:

(A) The ticket was purchased before January 1, 1998; or

(B) The ticket was purchased on or after January 1, 1998 and the winnings from that ticket minus the purchase price are $600 or less.

(b) Oregon lottery losses and other wagering losses are allowable for Oregon purposes to the extent that total wagering losses do not exceed total wagering earnings included in Oregon taxable income.

Example: Angela is receiving lottery prize payments of $20,000 per year for the next 15 years from a Powerball ticket purchased before 1998. She also has winnings from three Oregon lottery tickets she bought after 1997. Those three tickets paid $300, $400 and $750, respectively. During the current year, Angela won $800 in other gambling winnings. She spent $1,000 on Oregon lottery tickets and had $1,300 in other gambling losses. Angela determines her net Oregon adjustment to be a subtraction of $19,950, as follows: [Table not included. See ED. NOTE.]

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
REV 51-2017, f. & cert. ef. 8-3-17
Renumbered from 150-316.680-(A), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0507 Modification of Federal Taxable Income: Interest and Dividends

(1) The character of interest and dividends received by an intermediary entity which owns the underlying obligations shall flow through to a taxpayer receiving a distribution from the intermediary entity.

(2) Oregon law allows the character of the interest or dividends to flow through to the taxpayer as if the taxpayer had received the interest or dividends directly from the obligor. If federal or Oregon law allows the character of such interest or dividends to flow through to the taxpayer, then such laws shall determine whether the distributions are taxable or nontaxable for Oregon purposes.

(3) No modifications will be allowed on the taxpayer’s Oregon return if the intermediary entity is the guarantor of the taxpayer’s principle and interest. See Example 6.

Example 1: Bill and Fay invested in a mutual fund in 1987 that invests in federal Series E obligations. The mutual fund holds title to the obligations. The mutual fund qualifies under ORS 316.683 to pay state exempt-interest dividends from the fund. Because the state exempt-interest dividends are treated as an item of interest described in ORS 316.680(1)(a), Bill and Fay may subtract those dividends from federal taxable income.

Example 2: Frank is a shareholder in an S corporation (qualifying as such for Oregon purposes after 12/31/82) which purchased some federal Series E obligations. Frank’s share of income from the S corporation includes interest income from the Series E obligations. Federal law, IRC §1366, allows the character of the interest to flow through to Frank. Therefore, ORS 316.680(1)(a) allows Frank to subtract his share of the Series E interest from federal taxable income.

Example 3: Mary is a shareholder in a mutual fund. The mutual fund invests solely in obligations of this state. The mutual fund qualifies under IRC §852(b)(5) to pay exempt-interest dividends. Mary received a distribution of exempt-interest dividends from the fund. The exempt-interest dividends retain the character given to them by the underlying obligations owned by the fund. Therefore, since federal and Oregon law do not tax such income, Mary is not required to make a modification to her federal taxable income for such distributions.

Example 4: Susan is a shareholder in a mutual fund. The mutual fund invests solely in obligations of states (other than Oregon). The mutual fund qualifies under Internal Revenue Code Section 852(b)(5) to pay exempt-interest dividends. Susan received a distribution of the federally exempt-interest dividends from the fund. Since exempt-interest dividends retain the character given to them by the underlying obligations owned by the fund, and ORS 316.680(2) requires interest from other states’ obligations to be added to federal taxable income, Susan shall add the amount of the distribution from the fund to her federal taxable income.

Example 5: Barbara is a shareholder in a mutual fund. The mutual fund invests solely in obligations of territories and possessions of the United States. The mutual fund qualifies under IRC §852(b)(5) to pay exempt-interest dividends. Barbara received a distribution of the exempt-interest dividends from the fund. The exempt-interest dividends retain the character given to them by the underlying obligations owned by the fund. The dividends retain the exempt character and are not taxed by federal. Federal law also prohibits states or other authorities from taxing interest on such obligations. Barbara is not required to make any modification to her federal taxable income for the distribution.

Example 6: Leo invests $500 in an interest bearing obligation issued by an investment firm. The obligation issued by the firm is a certificate entitling Leo to $1,000 payable by the firm in 1995. Although the firm makes investments in various securities, including U.S. government obligations, none of the interest received by Leo will qualify for subtraction on the Oregon return. The investment firm is liable for making repayment of the principal and interest, not the U.S. government.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
Renumbered from 150-316.680-(B), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0509 U.S. Government Obligations

(1) Interest and dividend income on obligations of the federal government which are exempt from state income taxation but not from federal income taxation shall be subtracted from federal taxable income in arriving at Oregon taxable income.

(2) Amounts that may not be subtracted include:

(a) Timely payments of interest by the insurer of obligations backed by the U.S. government;

(b) Interest received on federal tax refunds.

Example: Paul and Margaret filed a joint income tax return and received a federal tax refund from the U.S. Treasury Department for $1,200. This amount included $1,000 tax and $200 interest. The $200 interest amount does not qualify for the subtraction for interest or dividend income on U.S. government obligations as provided under ORS 316.680(1)(a).

(c) Interest received on obligations of territories and possessions of the United States. Interest on these obligations is not taxable for federal or state purposes and is not included in federal adjusted gross income so no subtraction is made on the Oregon return. Interest on the following obligations is not subtracted under ORS 316.680(1)(c):

(A) Territory of Guam

(B) Commonwealth of Puerto Rico

(D) Territory of Samoa

(E) Territory of Virgin Islands

(d) Income received from repurchase agreements. These are agreements in which a seller other than the United States sells securities (which can be federal obligations), and agrees to repurchase the same or similar securities at a price that includes interest for the period of the sale. The seller, in this case, is the true owner; and, the buyer merely receives interest under a contract with the seller. It is not interest paid by the United States, but it is income (or the equivalent to interest) paid by the seller at the time of repurchase.

(3) For interest received from organizations that invest in U.S. government securities refer to OAR 150-316-0507.

(4) If expenses connected with U.S. government obligations are claimed as an itemized deduction, an adjustment is required. These expenses include interest on indebtedness incurred to carry the bonds or notes and expenses incurred in the production of income from the bonds or notes. Oregon doesn’t allow a deduction for these expenses, since the income from the bonds or notes is exempt from Oregon tax. The subtraction allowable under ORS 316.680(1)(a) shall be reduced by the amount of the expenses deducted in arriving at federal taxable income.

Example: Charles reported $500 interest income from Series EE Bonds. He borrowed $6,000 to purchase the bonds. During the year he paid $200 interest on the amount he borrowed. He claimed the $200 interest expense as an itemized deduction. His allowable subtraction under ORS 316.680(1)(a) of $300 is computed as follows: [Formula not included. See ED. NOTE.]

(5) Below is a list of obligations that may or may not qualify for the subtraction permitted under ORS 316.680(1)(a). [List not included. See ED. NOTE.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
REV 30-2017, f. & cert. ef. 7-21-17
Renumbered from 150-316.680(1)(a), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-316-0511 Addition for Original Issue Discount (OID)

(1) The “original issue discount” (OID), as defined in section 1273 of the Internal Revenue Code, is considered as paid in lieu of interest on state and municipal obligations of other states, and is taxable for Oregon purposes.

(2) Holders of state and municipal bonds of other states (foreign states) shall include in income the sum of the daily portion of original issue discount determined for each day during the taxable year the bond is held. The original issue discount (OID) shall be prorated over the life of the bond using the federal rules for taxable securities under Section 1272 of the Internal Revenue Code and corresponding regulations.

Example: On July 1, 1987, Jack purchased a California municipal bond for $800. The bond matures in two years and has a stated redemption price of $1,000. The bond contains $200 of original issue discount (stated redemption price of $1,000 less issue price of $800). Because the bond does not provide for periodic payments of interest, a six-month accrual period ending December 31 and June 30 of each calendar year is used to determine the semiannual yield factor of 5.74 percent ($800 compounded semiannually for two years at 5.74 percent is $1,000). The amount of the original issue discount included in income for the period ending December 31, 1987, is the issue price ($800), multiplied by the semiannual yield factor of 5.74 percent, or $45.90. The adjusted issue price (basis) at the beginning of the second accrual period is equal to the issue price plus the portion of original issue discount included in the first accrual period ($845.90 = $800 + $45.90). The includable original issue discount and basis is determined for each subsequent period in the same manner. [Table not included. See ED. NOTE.]

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
REV 52-2017, f. & cert. ef. 8-3-17
Renumbered from 150-316.680(2)(a), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0513 Modification of Federal Taxable Income: Adding Interest or Dividends of the United States Exempted by Federal Income Tax Law

Interest or dividend income attributable to obligations of any authority, commission, instrumentality or territorial possession of the United States, which by the laws of the United States is exempt from federal income taxation but not from state income taxation, shall be added to federal taxable income. Costs incurred to carry the income-producing securities may be deducted, to the extent those costs are not already deducted in arriving at federal taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
Renumbered from 150-316.680(2)(b), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
12-31-83
12-70, Renumbered from 150-316.097(2)(b)
1-69

Or. Admin. R. 150-316-0515 Modification of Federal Taxable Income: Adding Federal Estate Tax Attributable to Income in Respect of a Decedent Not Taxable by Oregon

The deduction allowed in the computation of federal taxable income for federal estate tax attributable to income in respect of a decedent must be added to federal taxable income to the extent that the deduction is allocable to income not taxable by Oregon. The federal estate tax deduction allowed in arriving at federal taxable income is computed in accordance with section 691(c) of the Internal Revenue Code and section 1.691(c)-1 of the Treasury Regulations. The amount thus computed must be allocated to the income in respect of a decedent not taxable by Oregon. The following formula will be used in determining the amount to be added to federal taxable income on the Oregon return: [See PDF link below.]

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the office of the Secretary of State or Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
REV 31-2017, f. & cert. ef. 7-21-17
Renumbered from 150-316.680(2)(c), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
12-31-83
12-31-80, Renumbered from 150-316.067(2)(c)
11-73, Renumbered from 150-316.067(2)(g)

Or. Admin. R. 150-316-0519 Gain or Loss Upon the Sale of State and Municipal Bonds of Other States (Foreign States)

(1) Holders of state and municipal bonds of other states (foreign states) shall determine the gain or loss upon the sale or disposition of the bonds by following the federal rules for taxable securities under Internal Revenue Code sections 1271 to 1283 inclusive.

(2) Adjusted Issue Price: The adjusted issue price or basis of the bonds shall be the issue price increased by the total amount of original issue discount (OID) included in Oregon taxable income using the rules for federal taxable securities in section 1272 of the Internal Revenue Code and corresponding regulations. See OAR 150-316-0511 for example.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.680
Renumbered from 150-316.680(5), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0525 U.S. Government Interest in Retirement Accounts

(1) Interest or dividends on U.S. obligations under ORS 316.680(1)(a) included in distributions from self-employed plans or individual retirement accounts as described under sections 401 to 408 of the Internal Revenue Code shall be subtracted from federal taxable income to determine Oregon taxable income.

(2) Annuities: The amount of the subtraction shall be determined by applying a “state exempt-interest ratio” to distributions received as annuity payments to the extent the payments are included in federal adjusted gross income for the taxable year. The “state exempt-interest ratio” is the year-to-date balance of qualifying interest or dividends under ORS 316.680(1)(a) included in the account balance prior to the current year distribution divided by the account balance prior to the current year distribution. The year-to-date balance of qualifying interest or dividends is equal to the cumulative total of those earnings less any prior year’s subtraction. The ratio shall be applied on the later of the annuity starting date or the date on which the taxpayer established residency. The annuity starting date shall be the date determined under Treas. Reg. Section 1.72-4(b).

(3) Lump-sum distributions: For lump-sum distributions from individual retirement accounts and self-employed retirement plans, the subtraction shall be equal to the total qualifying interest under ORS 316.680(1)(a) included in the account balance at the time of distribution.

(4) Change of status from nonresident to resident: Nonresidents who become residents sometime after the annuity starting date shall use the same formula for computation of the ratio as if they were residents at the annuity starting date. For purposes of the formula shown in subsection (2)(a), “a” will equal the year-to-date balance of qualifying interest or dividends which is equal to the cumulative total of those earnings less any prior years deemed or actual subtraction.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.681
REV 40-2020, amend filed 12/23/2020, effective 01/01/2021
REV 53-2017, f. & cert. ef. 8-3-17
Renumbered from 150-316.681, REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0530 Pool of Assets that Qualify to Pay State Exempt-Interest Dividends

As used in ORS 316.683(1), a “pool of assets” means funds that are managed by financial institutions acting in a fiduciary capacity for the benefit of trust beneficiaries. Financial institutions shall include, but not be limited to banks, savings associations, or credit unions. The pool of assets need not be incorporated as a regulated investment company in order to pay state exempt-interest dividends to its beneficiaries.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.683
Renumbered from 150-316.683(1), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-316-0535 Federal Tax Deduction: Accrual Method of Accounting Required; Deductions Allowable to Cash Basis Taxpayers; Refunds to Be Included

(1) Regardless of the method of accounting used by the taxpayer to report income to the federal government and to the State of Oregon, the federal income tax deduction for tax years beginning on or after January 1, 1969, shall be computed under the accrual method of accounting. Under ORS 316.685, an individual’s federal income tax for the year must first be computed. The amount of federal income tax for that year will be the taxpayer’s deduction on the Oregon income tax return for the same year. Time of actual payment will not be significant.

(2) For tax years beginning January, 1979, or later, any additional federal tax for a prior year shall be deducted when the tax is paid or when the adjustment is finally determined, whichever is later.

(3) If a person receives a refund of federal income taxes previously deducted on an Oregon return, the amount received shall be added to income in the year in which the refund was received. However, a taxpayer should add only those refunds for which a prior tax benefit has been received.

(4) Federal Tax Deduction:

(a) For tax years beginning on or after January 1, 1987, the federal tax deduction on each return is limited to the lesser of:

(A) The amount of federal tax accrued attributable to the current year; or

(B) $3,000 ($1,500 if married filing separately).

(b) Refunds of federal tax for a prior year for which a previous tax benefit was received are included as income in the year received. The amount of the addition on the Oregon return is the amount of tax benefit received. Tax benefit is the amount of federal tax deducted in a prior year for which you received a refund in a later year.

(c) Additional tax for a prior year. The deduction for additional federal income taxes paid or determined for tax years beginning on or after January 1, 1987, is the lesser of:

(A) The amount of federal tax accrued attributable to the current year plus any deficiencies paid or determined for prior years during the current year; or

(B) $3,000 ($1,500 if married filing separately).

(d) If additional federal income taxes are paid or determined in tax years beginning on or after January 1, 1987, for tax years beginning on or before December 31, 1986, the deduction for the additional tax is the lesser of:

(A) The difference between the federal tax deducted on the original return and $7,000 ($3,500 if married filing separately); or

(B) The actual amount of additional federal income taxes paid or determined.

(5) If husband and wife change from separate returns to joint returns after the original return is filed, the federal tax subtraction to be claimed on the amended return shall be the amount of combined federal tax liability shown on the original returns subject to the dollar limitation in effect for the taxable year. Any additional tax due or refund from the amended federal return shall be reported on the Oregon return in the year paid or received.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.685
REV 41-2020, amend filed 12/23/2020, effective 01/01/2021
REV 56-2017, f. & cert. ef. 8-8-17
Renumbered from 150-316.685(1), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
12-31-83
12-31-79, Renumbered from 150-316.072(1)
12-31-78, Renumbered from 150-316.072
12-31-77
11-19-76
12-19-75
9-74
11-73
12-70
1-69

Or. Admin. R. 150-316-0537 Adjustment of Federal Tax Liability

The federal tax liability accrued shall be the correct federal tax based on all information on the return. If, during processing, the Department recomputes and adjusts the federal tax liability, the adjusted tax shall be the amount accrued for that year.

Example 1: Because of a computation error on their joint federal return, A and B overstated their federal tax liability on both their federal and Oregon returns. When the Department processed the return, the federal tax liability was recomputed and reduced from the $500 reported on the return to $300. The $300 is the 1979 tax accrued and deducted in 1979. If the taxpayers receive a federal refund for the same $200, that amount should not be added to income in the year received.

Example 2: On their 1979 return, A and B claimed a federal tax subtraction of $1,000, which was the amount of federal tax withheld from their wages. Their federal tax liability was actually $2,500. When the Department processes the return, the federal tax deduction shall be increased to $2,500.

Example 3: A and B claimed a federal tax deduction of $5,000 for 1979. When their Oregon return was processed, the Department computed their correct federal tax liability to be $6,000. Their 1979 federal tax accrued in 1979 is $6,000.

In 1980, they are required to pay the additional federal tax of $1,000. Since the taxpayers have already received a benefit for the additional 1979 tax, they cannot deduct it in 1980.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.685
Renumbered from 150-316.685(2), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
12-31-83
5-20-80, Renumbered from 150-316.072(2)
12-18-79(Temp)

Or. Admin. R. 150-316-0545 Election to Include Child’s Unearned Income — Addition Required

An addition to federal taxable income is required for taxpayers who elect to include a minor child’s unearned income on their federal return. For federal purposes, unearned income in excess of a dependent’s standard deduction, but less than twice that amount, is taxed at a special rate on a separate schedule and is not included in taxable income of the parent. For Oregon, this amount must be added to federal taxable income. The excess unearned income already included in the parent’s federal taxable income requires no addition to the parent’s return.

Example 1: Bob and Phyllis file a joint federal return for tax year 1997. Their son Ray has $1,700 interest income from a trust account. Bob and Phyllis elect to include Ray’s unearned income in excess of the $650 exclusion on their 1997 federal return. For federal purposes, $650 is taxed at a special rate and $400 is included in taxable income. For Oregon, Bob and Phyllis must add $650 to federal taxable income. This is the $650 of Ray’s unearned income that was taxed at the special federal rate. Since the remaining $400 is included in federal taxable income, no addition is required for this amount.

Example 2: Assume the same facts above, except that Ray’s unearned income is only $750. For federal purposes, Bob and Phyllis exclude the first $650. The remaining $100 is taxed at the special federal rate. For Oregon, Bob and Phyllis must add $100 to federal taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.687
Renumbered from 150-316.687, REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-316-0550 Special Oregon Medical Subtraction

(1) Eligible Expenses. Expenses eligible for this subtraction are those authorized under IRC §213. Medical and dental expenses not allowed for this subtraction include expenses:

(a) Otherwise deducted in the calculation of Oregon taxable income for any tax period; or

(b) Paid on behalf of any other individual who is not an eligible taxpayer or eligible spouse of the taxpayer under ORS 316.693.

Example 1: Sam (age 66) and Rebecca (age 60) file a joint return and claim Rebecca’s 80-year-old mother as a dependent. During the year, Sam and Rebecca paid $4,000 in medical and dental expenses: $1,000 for Sam, $1,000 for Rebecca and $2,000 for Rebecca’s mother. Sam’s medical expenses are the only medical expenses that qualify for the special Oregon medical subtraction because Rebecca does not meet the age requirement and Rebecca’s mother is a dependent.

Example 2: Shannon and Dustin, both age 66, file a joint return with Oregon itemized deductions. During the year, Shannon and Dustin paid $18,900 in unreimbursed medical and dental expenses: $6,900 for self-employed health insurance premiums (claimed on the front of Form 1040), $10,000 for health insurance for two employees (claimed on Schedule C), and $2,000 of unreimbursed medical and dental expenses (claimed on Schedule A, line 1). Only the medical and dental expenses on Schedule A, line 1 ($2,000) can be used in the calculation of eligible expenses for the special Oregon medical subtraction because deduction for the self-employed health insurance was already used in the calculation of Oregon taxable income and employee insurance is not an eligible expense.

(2) Calculation of Eligible Expenses.

(a) General rule. The general rule is that if the expenses can be attributed to a particular individual, only that individual can claim those expenses.

Example 3: Mary (age 59) and Steve (age 66). Mary and Steve each have their own insurance policy and do not cover each other on the individual policies. Mary’s premium is $350 per month and Steve’s premium is $400 per month. The only expenses that are eligible to be considered for this subtraction are Steve’s premiums, ($4,800). Depending on his income and the portion of Steve’s premiums already included in itemized deductions on Schedule A, Steve may claim up to $1,800 as a special Oregon medical subtraction.

(b) Expenses that cannot be attributed to a particular individual. A taxpayer that cannot determine to whom the expense is attributable must prorate the expense using a method that is reasonable based on the taxpayer’s particular facts and circumstances. Common examples of expenses that are not attributable to a particular individual include, but are not limited to, medical, dental or long-term care insurance premiums. Depending on the facts and circumstances, reasonable methods of proration for such expenses may include:

(A) Dividing the eligible expenses that are for more than one person by the number of individuals covered by the policy.

(B) In the case of spouses filing separate returns, splitting any eligible expenses paid out of a joint checking account in which the taxpayer and the taxpayer’s spouse have the same interest equally, unless you can show otherwise.

Example 4: Branden (age 66) and Natalie (age 61) file a joint return with Oregon itemized deductions and three dependent children. During the year, Branden and Natalie paid $19,380 in medical expenses: $16,600 in health insurance premiums for a plan that covered Branden, Natalie, and all three children; $500 in dental expenses for Branden; $1,500 in medical expenses for Natalie; and $780 in medical and dental expenses for the children. Natalie and the children‘s medical and dental expenses do not qualify for this subtraction because Natalie does not meet the age requirement and the children are dependents. For Branden and Natalie, a reasonable method to calculate the joint expenses attributable to Branden is to divide the total health insurance premiums paid ($16,600) by the number of insured (5) to arrive at $3,320 for Branden’s portion of the joint expenses. Add the additional medical expenses attributable to Branden, $500, to arrive at a total of $3,820 of eligible expenses.

(3) Taxpayer who itemizes deductions. If a taxpayer has already claimed a portion of the eligible expenses as an itemized deduction on federal schedule A, line 4, the taxpayer must make an adjustment for those eligible expenses already deducted. Only medical and dental expenses for an age-qualifying taxpayer that are not already deducted in the calculation of Oregon taxable income are eligible for the subtraction. The taxpayer must prorate medical and dental expenses included in itemized deductions to determine what portion is eligible for this subtraction.

Example 5: Jeff and Maggie, both age 64, file a joint return with Oregon itemized deductions and federal Adjusted Gross Income (AGI) of $55,000. Jeff and Maggie also claim Maggie’s 84-year-old mother as a dependent. During the year, Jeff and Maggie paid $12,300 in unreimbursed medical and dental expenses: $3,400 for self-employed health insurance premiums (claimed on the front of the 1040), $1,200 for Jeff, $4,200 for Maggie, $1,500 for Maggie’s mother, and $2,000 in long-term care insurance premiums for Jeff and Maggie.

Jeff and Maggie deduct the entire self-employed health insurance premiums on the federal return; therefore, they do not include those expenses in the calculation of the subtraction. They can only include the $8,900 of medical expenses claimed on Schedule A, line 1, to calculate the subtraction ($1,200 for Jeff, $4,200 for Maggie, $1,500 for Maggie’s mother, and $2,000 in long-term care insurance premiums for Jeff and Maggie).

For Jeff and Maggie, a reasonable method to calculate their joint expenses is to divide by two the total long-term care insurance premiums paid ($2,000) to arrive at $1,000 for each individual. Add the additional medical expenses attributable to Jeff and Maggie to arrive at total eligible expenses before calculating the subtraction. Jeff’s expenses total $2,200 ($1,200 + $1,000) and Maggie’s expenses total $5,200 ($4,200 + $1,000).

Jeff’s expenses claimed on the Schedule A are 24.7% of the total expenses ($2,200 divided by $8,900). Maggie’s expenses claimed on the Schedule A are 58.4% of the total expenses ($5,200 divided by $8,900). Jeff and Maggie could not deduct $5,500 of their expenses on Schedule A because of the AGI limitation. Jeff’s portion of the expenses that were not deducted are $1,359 ($5,500 x 24.7%; rounded). Maggie’s portion of the expenses that were not deducted is $3,212 ($5,500 x 58.4%). Based on their federal AGI, each of their expenses may not exceed $1,400 for this subtraction. Jeff’s expenses are less than the limit, so his subtraction is limited to $1,359. Maggie’s expenses are more than the limit, so her subtraction is $1,400. They will claim a $2,759 special Oregon medical subtraction on their return.

History

Statutory/Other Authority: ORS 305.100 & 316.693
Statutes/Other Implemented: ORS 316.693
Renumbered from 150-316.693, REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14

Or. Admin. R. 150-316-0555 Modification of Federal Taxable Income: Itemized vs. Standard Deduction

(1) The election of an Oregon taxpayer to itemize or claim a standard deduction is independent of the federal election. Beginning on or after January 1, 1978, a taxpayer may claim the greater of the Oregon standard deduction or net itemized deductions

(2) The standard deduction is zero for Oregon taxpayers in the following cases

(a) Married persons filing separate returns and their spouse itemizes;

(b) Nonresident noncitizens of the United States;

(d) Estates and trusts;

(e) A common trust fund;

(f) A partnership.

(3) Taxpayer claimed as a dependent.

(a) For a taxpayer who can be claimed as a dependent on another person’s return, the standard deduction claimed by the dependent is limited to the lesser of:

(A) The amount allowed to a dependent under the Internal Revenue Code Section 63(c)(5) for the tax year; or

(B) The standard deduction amount as provided in ORS 316.695.

(b) In addition to the standard deduction, a taxpayer claimed as a dependent on another person’s return can also claim the additional deduction amounts under ORS 316.695(7) if they are blind or age 65 or older.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.695
REV 9-2023, minor correction filed 03/14/2023, effective 03/14/2023
Renumbered from 150-316.695(1), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-83
12-31-80, Renumbered from 150-316.068(1)

Or. Admin. R. 150-316-0557 Modification of Federal Taxable Income: Oregon Income Tax Claimed as an Itemized Deduction

Beginning in tax year 1991, if the taxpayer itemizes deductions for Oregon, the itemized deductions will be subject to the same phase-out requirement as required for federal income tax purposes under IRC Section 68. Oregon law allows federal itemized deductions, after the phase-out, reduced by any Oregon income tax that has been itemized for federal income tax purposes. To determine the amount of phased-out Oregon income tax that must be removed from total itemized deductions, taxpayers will use the following formula: [Formula not included. See PDF link below.]

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.695
REV 81-2017, minor correction filed 12/28/2017, effective 12/28/2017
REV 57-2017, f. & cert. ef. 8-8-17
Renumbered from 150-316.695(1)(c)-(A), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-316-0559 Modification of Federal Taxable Income: Previously Taxed Contributions to Pension or Annuity

If part of the contributions toward the purchase of a pension or annuity was taxed by the state of Oregon and not taxed by the federal government, that part taxed by Oregon shall be subtracted from federal taxable income on the Oregon return. The subtraction allowed by this section shall be taken each year to the extent any amount is included in federal taxable income until the total amount taxed by Oregon and not taxed by the federal government in years beginning prior to January 1, 1969, has been recovered. Thereafter, the distribution will be taxed for Oregon income tax purposes in the same manner and amount as taxed for federal purposes.

Example: A retired employee began receiving benefits from a pension plan on January 1, 1975. In tax years beginning prior to January 1, 1969, Oregon taxed $3,000 of the contributions to the pension plan. None of the contributions were taxed for federal purposes. The taxpayer is receiving $2,000 each year, all of which is taxable for federal purposes. In 1975 the taxpayer will subtract $2,000 and in 1976 $1,000 from federal taxable income in arriving at Oregon taxable income. In subsequent years, Oregon will tax the same amount taxed for federal purposes.

This section applies to tax years ending on or after September 13, 1975.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.695
Renumbered from 150-316.695(2), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-316.695(3)
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-83
12-19-75, Renumbered from 150-316.068(3)

Or. Admin. R. 150-316-0565 Basis of Depreciable Assets Moved into Oregon

(1) For purposes of this rule taxpayer means an individual, S corporation, or partnership.

(2) Taxpayers not subject to the apportionment provision of ORS 314.280 or 314.605 to 314.675.

(a) For Assets First Brought into Oregon’s Taxing Jurisdiction in Tax Years Beginning After 1982 and Prior to Tax Years Beginning January 1, 1985.

(A) If a taxpayer first brings a depreciable asset into Oregon’s taxing jurisdiction in tax years beginning after December 31, 1982 and prior to tax years beginning January 1, 1985, the asset shall be treated as if it is being converted from personal use to business use. The asset’s Oregon basis shall be the lower of the federal unadjusted basis or fair market value. However, in no instance shall the asset’s Oregon basis be greater than the lower of:

(i) The federal unadjusted basis less Oregon depreciation previously allowed for Oregon tax purposes; or

(ii) The fair market value less Oregon depreciation previously allowed for Oregon tax purposes.

(B) The federal unadjusted basis of an asset is its original basis prior to any adjustments (including, but not limited to, reductions for investment tax credits, depreciation, depletion, amortization, or amounts properly expensed under IRC Section 179). The asset’s fair market value and its expected useful life shall be determined as of the time the asset was brought into Oregon’s taxing jurisdiction. The taxpayer shall depreciate the asset using a method consistent with federal tax law as of December 31, 1980.

Example 1: A nonresident taxpayer has a business in California. The taxpayer has a light truck that is used only for business purposes. The truck was purchased on June 1, 1981 at a cost of $10,000. The truck was depreciated in California over a life of three years. The taxpayer moved to Oregon on September 1, 1983. The fair market value of the truck was $6,000 on this date. The expected useful life of the truck on September 1, 1983 was four years. The taxpayer elected to depreciate the truck using the straight-line method for Oregon purposes over four years. The amount of depreciation the taxpayer can claim in 1983 for Oregon purposes is $500 (4⁄12 x 1⁄4 x 6,000).

Example 2: Assume the same facts as in Example 1 above. The taxpayer sold the asset for $11,000 on January 1, 1985. The taxpayer shall recognize a total Oregon gain of $7,000. The type and amount of gain the taxpayer shall recognize for Oregon purposes is computed as follows: [Formula not included. See ED. NOTE.]

(b) For Assets First Brought into Oregon’s Taxing Jurisdiction in Tax Years Beginning After 1984. Assets first brought into Oregon’s taxing jurisdiction in tax years beginning after December 31, 1984, shall be allowed to use the Accelerated Cost Recovery System (ACRS) method of depreciation as defined and allowed in IRC Section 168 for Oregon purposes, if such assets were first placed in service in tax years beginning after December 31, 1984 pursuant to the conditions set forth in OAR 150-316-0567. The basis of all assets first brought into Oregon’s taxing jurisdiction beginning after December 31, 1984, shall be computed as if the asset is being converted from personal use to business use. The asset’s Oregon basis shall be the lower of the federal unadjusted basis or fair market value. However, in no instance shall the asset’s Oregon basis be greater than the lower of:

(A) The federal unadjusted basis less Oregon depreciation previously allowed for Oregon tax purposes; or

(B) The fair market value less Oregon depreciation previously allowed for Oregon tax purposes. The allowable depreciation method for Oregon purposes shall be determined as of the time the asset was first placed in service as defined in OAR 150-316-0567.

Example 3: Mike is a California resident. He has owned a beanery business in Yreka since 1984. Mike purchased an office building for $100,000 and placed it in service on April 1, 1984. For federal purposes, the building qualifies as 18-year real property and is being depreciated using the applicable percentages allowed under ACRS. On January 1, 1988, Mike purchased his only other asset, a light truck, for $10,000. For federal purposes, the truck qualifies as a 5-year property and is being depreciated using the applicable percentages allowed under MACRS. On January 1, 1990, Mike moved to Ashland, Oregon and continued his California business in Yreka. Since Mike has moved into Oregon’s taxing jurisdiction, Mike must determine his Oregon adjusted basis in the building and the truck in order to depreciate the assets for Oregon. The Oregon adjusted basis is computed as follows: [Formula not included. See ED. NOTE.]

The Oregon basis for depreciation of the building is the lesser of the net basis of $100,000 or fair market value of $115,000. The basis for Oregon depreciation is $100,000. Since Oregon did not adopt ACRS for assets first placed in service in tax years beginning before January 1, 1985, Mike must use an allowable depreciation method available for such assets using the federal laws in effect as of December 31, 1980. Mike elects for Oregon purposes to depreciate the building using the straight-line method over a useful life of 14 years.

Truck: The Oregon basis for depreciation of the truck is the lesser of the net basis of $10,000 or fair market value of $6,000. The basis for Oregon depreciation is $6,000. Since Oregon adopted ACRS for assets first placed in service in tax years beginning after December 31, 1984, and subsequently MACRS for assets placed in service in tax years beginning after December 31, 1986, Mike will use MACRS for his Oregon and federal depreciation deduction.

(3) For taxpayers subject to the apportionment provisions of ORS 314.280 or 314.605 to 314.675. The basis for depreciation on a previously acquired asset shall be computed as if the taxpayer had always been subject to Oregon tax. The original unadjusted basis shall be reduced by the depreciation allowable in previous years, using a method acceptable for Oregon tax purposes in the year the asset is placed in service. The remaining basis of the asset shall be depreciated over the remainder of its original useful life, using the same allowable method.

Example 4: Alpha, Ltd. is a partnership that started operation in Washington. On January 1, 1984, the partnership purchased a building in Seattle for $100,000. For federal purposes, the partnership is depreciating the building under ACRS as 15-year property. The partnership expanded and began doing business in Oregon on July 1, 1986. In 1984 Oregon did not allow the ACRS depreciation method. For Oregon purposes, the partnership elected to depreciate the building under the straight-line method over a 20-year life. Since the partnership is subject to the apportionment rules, the basis of the building for Oregon will be as if the building was depreciated for Oregon tax purposes using the straight-line method from the date of purchase.[See PDF link below.] For purposes of determining Oregon taxable income, the partnership will depreciate the building using an Oregon basis of $87,500 and the straight-line method over the remaining life. For purposes of determining federal taxable income, the partnership will continue to depreciate the building under ACRS.

(4) Bringing assets into Oregon’s taxing jurisdiction. A taxpayer may bring assets into Oregon’s taxing jurisdiction in several different manners. First, a nonresident may become an Oregon resident and physically bring business assets into Oregon. Second, a nonresident taxpayer may become an Oregon resident and leave the assets in the other state. Third, a nonresident may open a business operation in Oregon and transfer business assets from a different state to the Oregon business.

(5) Applicable dates. Section (2) of this rule applies to tax years beginning after December 31, 1982.

(6) Five year provision. If for any period of five consecutive calendar years beginning on or after January 1, 1985, the Oregon and federal depreciation methods are identical, the Oregon basis for depreciation may be the same as the federal basis at the option of the taxpayer. This election applies only to assets first brought into Oregon’s taxing jurisdiction upon the expiration of the five-year period.

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.707
REV 58-2017, f. & cert. ef. 8-8-17
Renumbered from 150-316.707(1)-(A), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 10-1986, f. & cert. ef. 12-31-86
RD 2-1984, f. & cert. ef. 2-21-84, Renumbered from 150-316.707
12-31-83(Temp)
12-20-83

Or. Admin. R. 150-316-0567 Property Subject to Accelerated Cost Recovery System

(1)(a) In general, the Accelerated Cost Recovery System (ACRS) is available to recovery property placed in service in tax years beginning on or after January 1, 1985. “Recovery Property” means tangible property of a character subject to the allowance for depreciation. This property must be used in a trade or business or be held for the production of income.

(b) Property is considered placed in service when it is in a condition or state of readiness and availability for a specifically assigned function whether in a trade or business, in the production of income, in a tax-exempt activity, or in a personal activity. Where property was placed in service for personal use in a tax year which begins before 1985 and is thereafter converted to business or income producing use, the property is not recovery property for Oregon purposes.

Example: Beth Muhlenberg purchased her personal residence in 1978. She is a calendar year taxpayer. On November 15, 1985 she converted her residence to rental property. The residence is considered to be placed in service when it is in a condition of readiness for a specifically assigned function whether in a trade or business, for the production of income, in a personal activity, etc. This occurred in 1978. Thus, the rental property is not considered recovery property for Oregon purposes.

(2) Property Excluded from ACRS Treatment.

(a) Recovery property does not include property which is placed in service by the taxpayer prior to the taxpayer’s tax year which begins in 1985.

(b) Recovery property does not include property which is the subject of transactions referred to in Internal Revenue Code (IRC) Section 168(e)(4). For purposes of this rule, the following dates shall be substituted for dates used in IRC Sections 168(e)(4):

(A) For “after December 31, 1980” substitute “in taxable years beginning on or after January 1, 1985;”

(B) For “1980” substitute “the taxpayer’s tax year which begins in 1984;” and

Example 1: Dr. Randall Farwell purchased and placed in service $20,000 of dental equipment on January 18, 1984. Dr. Farwell is a calendar year taxpayer. The equipment is IRC Section 1245 class property. On June 1, 1985, Dr. Farwell decides to sell the equipment to Laura Ryan by contract under which Dr. Farwell will lease back and use the same dental equipment. Laura Ryan, is precluded from using the ACRS method because Dr. Farwell used the same equipment in a tax year prior to 1985.

Example 2: Dee Brinlee purchased a house which she used as rental property in 1979. Dee is a calendar year taxpayer. Since 1984, she has been trying to sell her rental house. On July 2, 1985, she sold her rental house to her daughter Jennifer. Jennifer uses the house as rental property. The house is not recovery property to Jennifer since Jennifer bought the property from a “related person” who used it in tax years prior to January 1, 1985.

Example 3: In 1980 through 1984, Gary Humphrey was in business as a sole proprietorship. Gary is a calendar year taxpayer and incorporates his business during 1985 with Gary as the sole shareholder. The depreciable personal and real property, having an adjusted basis of $50,000, was transferred to the corporation in a nontaxable transfer under IRC Section 351. Since the adjusted basis of the transferred property is carried over to the corporation, the corporation may not use ACRS with respect to the $50,000 transferred basis.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.707
Renumbered from 150-316.707(1)-(B)(1) General, REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0569 Adjustment to Income for Basis Differences

On the return for the first taxable year beginning after December 31, 1995, federal taxable income shall be increased or decreased by an amount equal to the difference between the property’s adjusted federal basis as determined for regular tax purposes and its adjusted Oregon basis due to the use of different federal and Oregon depreciation methods, periods, or conventions, as defined by IRC 168. If the adjusted Oregon basis is less than the adjusted federal basis, the modification shall be an addition. If the adjusted Oregon basis is greater than the adjusted federal basis, the modification shall be a subtraction. For tax years beginning after December 31, 1996, no modifications to depreciation expense shall be made as a result of using different depreciation methods, periods, or conventions prior to January 1, 1996.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.707
Renumbered from 150-316.707(1)-(C), REV 64-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95

Or. Admin. R. 150-316-0575 Amount Specially Taxed Under Federal Law to Be Included in Computation of State Taxable Income: Accumulation Distributions

(1) Oregon law contains no alternate method of calculating tax in the manner provided by the Internal Revenue Code for the federal tax treatment of accumulation distributions. Therefore, income from an accumulation distribution must be added to Oregon taxable income.

(2) Distribution of a trust’s income accumulation must be included in the income of the Oregon resident beneficiary for the taxable year that such income is distributed by the trust. The distributions are included in Oregon income in the same manner and to the same extent that the trust’s income accumulations are includable in the taxable income of the beneficiary under federal law. The change in the Oregon fiduciary adjustment will also be distributed to the beneficiary.

Example 1: In 1987, the ABC trust had $27,596 of gross income. Of this amount, $15,496 was included in distributable net income (DNI). The other $12,100 was capital gain income, which was not included in DNI. The trust made a distribution of $9,460 to the beneficiary, leaving $6,036 in undistributed net income (UNI). After the $9,460 distribution deduction and the $100 exemption, the trust’s federal taxable income was $18,036 ($12,000 capital gain plus $6,036 UNI).

On the Oregon return, the total fiduciary adjustment was ($10,862), of which the beneficiary’s share was ($6,626), leaving ($4,236) as the fiduciary’s share. The fiduciary’s Oregon taxable income was $13,800 ($18,036 minus $4,236), and the Oregon tax was $1,102.

In 1993, the trust distributed more DNI to the beneficiary than the current year’s DNI amount, resulting in a distribution of the 1987 accumulated income. The addition to Oregon income is the taxable accumulation distribution as defined in the Internal Revenue Code, Sections 665–668. The beneficiary is also allowed an additional fiduciary adjustment amount, based on the additional 1987 DNI distributed in 1993. This additional amount is calculated as follows: [Formula not included. See ED. NOTE.]

(3) See OAR 150-316-0410 for the limitations imposed on the portion of the fiduciary subtraction allowed to the beneficiaries.

(4) The change in fiduciary adjustment will be distributed to the beneficiaries in the same allocable portions as the income was distributed, according to the provisions in the trust instrument.

Example 2: If there’s only one beneficiary, they will receive the entire $2,064 subtraction calculated in the previous example. If there are two beneficiaries who each get one-half of the income, they will each get one-half of the additional fiduciary adjustment.

(5) Income accumulation distributions of a trust must be included in the income of a nonresident beneficiary for the taxable year that distribution is actually made by the trust. The distributions are included in the adjusted gross income of a nonresident in accordance with the provisions of ORS 316.127. The nonresident will also be allowed the change in fiduciary adjustment to the extent this change is applicable to Oregon source income.

(6) A copy of the Schedule J of federal Form 1041, “Allocation of Accumulation Distribution,” shall be attached to the Oregon fiduciary return for the taxable year of distribution, and a copy of federal Form 4970, “Tax on Accumulation Distribution of Trust,” shall be attached to the Oregon return of the beneficiary.

(7) For information about calculating the accumulation distribution credit for Oregon taxes paid by a trust during income accumulation years, see OAR 150-316-0415.

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.737
REV 54-2017, f. & cert. ef. 8-3-17
Renumbered from 150-316.737, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-316-0580 Definition for Severely Disabled Exemption

“Physical or mental condition” means an impairment of the body which is of such gravity as to prevent a person from engaging in normal activity without the aid of special equipment or assistance.

Examples of severe disabilities include cerebral palsy, multiple sclerosis, and brain damage. These disabilities may or may not be permanent. Disabilities due to surgery, hospitalization, disease, or injury or acute infectious diseases do not qualify where a person can be expected to resume a normal life within a generally accepted recovery period.

If the disabled person was employed in a substantially gainful occupation, the fact that a physical or mental condition will not permit the resumption in the same occupation will not, in and of itself, qualify the taxpayer for the exemption.

Example: A baseball player was injured in an accident and was unable to resume that occupation. Subsequently, the player was employed full time as a sales representative of a sports company. The player received disability compensation from the former employer. The taxpayer is not eligible for the exemption.

“Orthopedic or medical equipment” means special equipment approved and recommended by a physician. The equipment should alleviate some or all of the difficulties which result from the physical or mental condition and contribute to the person’s mobility and independence. Examples of such equipment includes, but are not limited to, wheelchairs, special braces, prosthesis or special crutches. Special equipment does not include: glasses, ordinary crutches, hearing aids and protective gloves.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.752
Renumbered from 150-316.752, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1997, f. 12-12-97, cert. ef. 12-31-97
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-83
12-31-82, Renumbered from 150-316.135
12-6-82

Or. Admin. R. 150-316-0585 Exemption for Blind and Severely Disabled

(1) Oregon allows a personal exemption credit (in the amount determined under ORS 316.085) multiplied by the number of personal exemptions claimed under IRC Section 151. If a taxpayer or spouse qualifies for the additional standard deduction for blindness as defined under ORS 316.695(8)(d), the taxpayer or spouse also qualifies for the credit for severely disabled as defined under ORS 316.752(1)(c).

(2) The additional personal exemption will be allowed even if the taxpayer can be claimed on another taxpayer’s return and is unable to claim their own personal exemption.

Example: Sam is 23 years old and blind. He qualifies as a dependent on his parents’ return. Because Sam is over the age of 17, his parents cannot claim the additional exemption for their dependent disabled child allowed under ORS 316.099. Sam invests in a partnership and is required to file a tax return for federal and state purposes. Since his parents are eligible to claim him on their return, he cannot claim his own personal exemption. Sam is allowed to claim the additional exemption for being severely disabled allowed under ORS 316.758 and the additional standard deduction for being blind.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.758
Renumbered from 150-316.758, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-316-0590 Substantiation for Permanently Severely Disabled

(1) Upon audit, taxpayers who are permanently severely disabled shall have available a letter from a physician, which substantiates their disability. The letter must:

(a) State the nature and extent of the physical disability in layman’s terms; and

(b) Confirm that the disability is of a permanent nature according to the requirements for permanent severe disability stated below.

(2) “Permanently severely disabled” taxpayer means a taxpayer who:

(a) Meets and continues to meet the qualifications for severely disabled under ORS 316.752; and

(b) Has a disability that is reasonably certain to continue throughout the life of the taxpayer; and

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.771
Renumbered from 150-316.771, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
12-31-83
12-31-82, Renumbered from 150-316.138
12-6-82

Or. Admin. R. 150-316-0595 Exempt Income of Native Americans

(1) ORS 316.777 exempts from Oregon taxation certain income earned by an enrolled member of a federally recognized Indian tribe. To qualify under these provisions, at the time the income is earned the tribal member must reside in "Indian country" in Oregon, and the income must be derived from sources within Indian country in Oregon. A tribal member who resides outside of Indian country can not exclude income from Oregon tax under the provisions of ORS 316.777. The person is subject to the statutes and rules governing Oregon residents and nonresidents and is taxed accordingly.

(2) Definitions: For purposes of this rule:

(a) “Current reservation boundaries” means the boundaries in existence at the time of the transaction.

(b) "Indian country" means any federally recognized Indian reservation in Oregon or other land in Oregon that has been set aside for the residence of tribal Indians under federal protection, and includes:

(A) Any land within the current reservation boundaries of a federally recognized reservation regardless of ownership.

(B) Tribal- or member-owned land outside current reservation boundaries if held in trust for the benefit of the tribe or its members.

(C) Land that the federal government allotted to a tribal member that since the time of the allotment has been continuously either:

(i) Held in trust by the federal government for the benefit of an individual tribal member(s), i.e. a trust allotment; or

(ii) Owned by a tribal member(s) with continuing federal restrictions against sale of the land, i.e., a restricted allotment.

(3) Income derived from sources within Indian country includes:

(a) Wages earned for work performed in Indian country;

(b) Income from a business or real estate located in Indian country;

(c) Distributions, including earnings, from retirement plans, if the contributions to the plan were derived from or connected with services performed in Indian country;

(d) Unemployment compensation, if the benefits are received as a result of work performed in Indian country;

(e) Interest, dividends, capital gain from the sale of stock, and other income from intangibles regardless of the location of the bank accounts or other intangible assets.

(4) To be exempted from Oregon personal income tax withholding, a tribal member whose wages are exempt from Oregon tax must furnish the member's employer with an extract from the tribal rolls as proof of enrolled status. Any employer of a qualified exempt tribal member who has documentary proof under this rule must keep this proof as part of the employer's payroll records.

(5) The following examples illustrate the provisions of this rule:

Example 1: Margaret, an enrolled member of the Confederated Tribes of Warm Springs, lives and works on the reservation of the Confederated Tribes of the Umatilla Indian Reservation. Under ORS 316.777, her income is exempt from state income tax.

Example 2: Claire, an enrolled member of the Coquille Indian Tribe, resides on reservation land in Oregon and works as an accountant for the city of Coos Bay at City Hall. Claire’s income is taxable by Oregon because she resides on, but does not work on, Indian country on Oregon.

Example 3: Charles, an enrolled member of the Confederated Tribes of the Umatilla Indian Reservation, resides on the reservation of the Confederated Tribes of the Umatilla Indians. For six months of each year, he works on a fishing trawler off the Alaska coast. During the remaining six months, he is employed as a forester by the Blue Mountain Timber Company. None of his work is performed in Indian country. Charles owns a Certificate of Deposit, (CD), at a bank in Portland, Oregon. Charles is taxed on the income he earns fishing in Alaska and on his wages from the timber company because none of that income is earned in Indian country. Charles is not taxed on the interest from the CD because that income is considered to be earned on the reservation on which he lives.

Example 4: Using the facts in Example 3, assume that Charles is retired and receives a pension from the lumber company. His pension income is subject to state tax because the contributions made to the plan were not related to services performed in Indian country.

Example 5: William, an enrolled member of the Navajo Nation, is a resident of the Navajo Nation reservation in Arizona. During the summer months, he temporarily lives and works on the reservation of the Burns Paiute Tribe in Oregon. Under ORS 316.777, Oregon will not tax any of William’s wages earned on the reservation of the Burns Paiute Tribe because he lives and works in Indian country in Oregon and he is an enrolled member of a federally recognized Indian tribe.

Example 6: John, an enrolled member of the Confederated Tribes of the Grande Ronde, resides on land that he inherited from his father’s estate. The land came into John’s family through an allotment by the federal government to tribal members. The federal government holds the land in trust for the benefit of John. It is allotment land. As long as John lives on allotment land and works in Indian country, his income is exempt from Oregon tax.

Example 7: Ben, an enrolled member of the Confederated Tribes of the Grande Ronde, lives on land that a prior owner, who was also a tribal member, received from the federal government in an allotment. Ben owns the land, but the federal restrictions prohibit him from selling it. Those restrictions have been in place since the federal government allotted the land, but they will be lifted next month. The land is allotment land now, but it will not be after the restrictions are lifted. Once the federal restrictions are lifted, all of Ben’s income is taxed by Oregon. The land is no longer Indian country and Ben may sell the land.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.777
Renumbered from 150-316.777, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94
RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-316-0600 Oregon Investment Advantage Apportionable Income Exemption

(1) Definitions. For purposes of ORS 316.778 and this rule, “business firm’s income” has the meaning given the term “apportionable income” in ORS 314.610(1) and OAR 150-314-0335.

(2) Computing exempt income. Any ratio contained in the formulas outlined in ORS 316.778 may not be greater than 100 percent or less than zero.

(3) Method of determining the business firm’s income derived from the activities at the certified facility. A business firm’s income derived from the firm’s activities at a certified facility is determined by multiplying the total apportionable income of the business firm by a fraction, the numerator of which is the total sales from the certified facility during the tax period, and the denominator of which is the total sales of the business firm everywhere during the tax period.

(4) Intra-firm transfers. If a business firm transfers product from a certified facility to a non-certified facility without a sale actually occurring (intra-firm transfer), the business firm must impute sales to the product transferred from the certified facility to use the method prescribed in section 3 of this rule.

(a) Imputing sales value for transferred production when part of total production is transferred. If a business firm transfers some of its production at the certified facility to a non-certified facility without a sale actually occurring (intra-firm transfer), the business firm needs to impute the sales value of the transferred production. This is necessary in order to determine sales from the certified facility. To impute the sales value, the taxpayer must first compute a ratio, the numerator of which is the total sales for all other items sold from the certified facility and the denominator of which is the cost of goods sold (COGS) for all other items sold from the certified facility. This ratio is then multiplied by the COGS of the transferred product to determine its imputed sales value.

(b) Imputing sales for transferred production when all product is transferred. If a business firm transfers all of its production at the certified facility to a non-certified facility without a sale actually occurring (intra-firm transfer), the business firm must impute the sales value attributed to the production transferred in order to determine sales from the certified facility. To impute the sales value for product transferred, the taxpayer uses a ratio of COGS of the transferred production over COGS of all production. This ratio is then multiplied by total sales for the non-certified facility.

(c) Alternate approach for imputing sales value. If a taxpayer's circumstances do not substantially meet the standards for imputing sales value in this rule, the taxpayer must consult with the department on an appropriate allocation approach based on that taxpayer’s facts and circumstances.

History

Statutory/Other Authority: ORS 305.100 & 316.778
Statutes/Other Implemented: ORS 316.778
REV 9-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-316.778, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2006, f. & cert .ef. 7-31-06

Or. Admin. R. 150-316-0605 Military Pay Subtraction

(1) Definitions.

(a) “Uniformed services” refers only to services under the orders of the President of the United States and means the commissioned corps of the National Oceanic and Atmospheric Administration (i.e., the Coast and Geodetic Survey) and the Public Health Service (regular and reserve), consistent with 10 USC § 101(a)(5)(B) and (5)(C). Other members of the National Oceanic and Atmospheric Administration and the Public Health Service, or members of these organizations not under the orders of the President, are not included in this definition and would not qualify for an Oregon military pay subtraction.

(b) “Home of the taxpayer” is where the taxpayer does any of the following:

(A) Maintains his or her primary residence;

(B) Lives with his or her family; or

(C) Incurs continuing living expenses, such as mortgage or rent, utilities, and real and personal property taxes and insurance.

(2) Military pay subtraction. A member of the Armed Forces as defined in ORS Chapter 316 and this rule may subtract the following from their taxable military pay:

(a) Year of entry-Year of discharge. Military pay earned for services performed outside of Oregon.

(A) Year of discharge includes termination of full-time active duty from the Armed Forces of the United States.

(B) Year of entry is for initial enlistment or draft and only allowed one time per taxpayer, but the subtraction for year of discharge is allowed each time a taxpayer is discharged.

(b) Service outside Oregon. Military pay earned for service performed outside of Oregon from August 1, 1990, to the date set by the President as the end of combat activities in the Persian Gulf Desert Shield area can be subtracted (Executive Order 12744).

(c) Reserve component members away from home overnight. The taxpayer is “away from home” when the taxpayer is required to stay in a temporary location that is not a home of the taxpayer and is not allowed to go home while at the temporary location. The pay earned while away from home for 21 days or longer may only be subtracted by someone who is a member of a reserve component; reserves or National Guard.

(d) Oregon National Guard service. For tax years beginning on or after January 1, 2021, military pay earned by a member of the Oregon National Guard while in active service of the state or on state active duty, as those terms are defined in section 2, chapter 122, Oregon Laws 2023, may be subtracted.

(e) Other military pay. Any taxable military pay that is not eligible for one of the above subtractions may be subtracted up to $6,000. The military pay subtraction may not exceed the taxable military pay on the return. If both taxpayers on a joint tax return are eligible for a military pay subtraction, each person’s subtraction is separately figured before adding them together to report on the return.

(3) Combat zone benefits.

(a) Additional time to file and pay. Members of the Armed Forces who served in a combat zone are allowed extra time to take care of their Oregon income tax matters. Taxpayers are allowed the statutory filing period of 3 months and 15 days following the close of the tax year plus at least 180 days after the later of:

(A) The last day the person was in a combat zone (or the last day the area qualifies as a combat zone); or

(B) The last day of any continuous qualified hospitalization for injury from service in the combat.

(b) Eligible actions. The following are some of the income tax actions that can be extended:

(A) Filing any return of income tax (except withholding taxes);

(B) Paying any income tax (except withholding taxes);

(D) Filing a refund claim;

(E) Collection of any income tax due by the Department of Revenue.

(c) For purposes of this subsection (3), “income tax” includes the taxes imposed upon the income of estates and trusts and paid by the fiduciary thereof.

History

Statutory/Other Authority: ORS 305.100 & 316.792
Statutes/Other Implemented: ORS 316.792
REV 25-2023, amend filed 12/26/2023, effective 01/01/2024
Renumbered from 150-316.792, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2013, f. 12-26-13, cert. ef. 1-1-14

Or. Admin. R. 150-316-0607 First-time Home Buyer Savings Account

(1) An account holder cannot have more than one first-time home buyer savings account at a time, even if the accounts have different beneficiaries.

(2) An account holder may withdraw funds from a first-time home buyer savings account and deposit the funds into a new first-time home buyer savings account at the same or a different financial institution. To avoid the penalty for early withdrawal (five percent of the withdrawal) and the requirement to add back previously subtracted amounts, transfer of funds withdrawn from the existing account into the new account must be completed within 60 calendar days of the withdrawal. If all of the funds are not transferred into the new account, the account holder may avoid the penalty and add back on the funds kept in the old account if those funds are spent on eligible costs within the 60-day period or if the account holder is exempt from imposition of the penalty.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.797
REV 52-2024, amend filed 12/26/2024, effective 01/01/2025
REV 28-2018, adopt filed 12/28/2018, effective 01/01/2019

Or. Admin. R. 150-316-0608 First-time Home Buyer Savings Account – Cost-of-Living Adjustment

(1) For tax years beginning after December 31, 2023, for each calendar year, the subtraction limits in ORS 316.800(1) will be adjusted by multiplying each limit amount by a cost-of-living adjustment for the calendar year.

(2) For purposes of this rule, the cost-of-living adjustment for any calendar year is the percentage, if any, by which the monthly averaged U.S. City Average Consumer Price Index for the 12 consecutive months ending August 31 of the prior calendar year exceeds the monthly averaged index for the 12 consecutive months ending August 31, 2019.

(3) As used in this rule, “U.S. City Average Consumer Price Index” means the U.S. City Average Consumer Price Index for All Urban Consumers (All Items) as published by the Bureau of Labor Statistics of the United States Department of Labor.

(4) If any resulting increase is not a multiple of $5, the increase will be rounded to the next highest multiple of $5.

History

Statutory/Other Authority: ORS 305.100 & 316.800
Statutes/Other Implemented: ORS 316.800
REV 46-2024, adopt filed 10/02/2024, effective 10/02/2024

Or. Admin. R. 150-316-0610 Road Construction Worker’s Travel Expenses

(1) As used in ORS 316.806(1), the term “construction job site” includes a roadway.

(2) As used in ORS 316.806(2), the term “structure” includes a road or railway.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.806
Renumbered from 150-316.806, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-316-0615 Substantiation Required for Construction Worker and Loggers Expenses

Upon audit, the taxpayer may be required to provide the same substantiation that would be necessary for a travel expense deduction allowable under IRC 162(a).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.818 & 316.832
REV 5-2017, f. 5-31-17, cert. ef. 6-1-17
Renumbered from 150-316.818, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
12-31-83
12-31-78, Renumbered from 150-316.059
11-6-78(Temp)

Or. Admin. R. 150-316-0625 (Miscellaneous) Valuation of Forest Land or “Farm Use” Land for Oregon Inheritance Tax Purposes

(1) Real property appraised under ORS 308.370 as land for farm use and passing by reason of death, is valued for purposes of Oregon inheritance tax as farm use land and the value used is the same as appraised for ad valorem purposes. ORS 308.370 provides for the assessment of farmland as “farm use” rather than “the highest and best use.” See OAR 150-118.155.

(2) For deaths occurring on or after October 3, 1979, land which received special assessment as forest land or land classified under the Western Oregon small tract option tax law is valued as provided in ORS 118.155(3) and (4).

(3) The valuation for Oregon inheritance tax purposes may not be the same as the valuation for federal estate tax purposes. The difference in values may result in a required modification under this section. Federal will value the land at fair market value upon the date of death of the decedent under IRC Section 1014 or the alternate valuation date under IRC Section 2032.

(4) If the real property is subsequently disposed of, the difference in taxable gain or loss computed from the disposition using the federal valuation and the taxable gain or loss that would have been computed using the valuation for Oregon inheritance tax purposes, must be added to federal taxable income as gain or reduction of loss. The addition to a fiduciary return is not included as part of the fiduciary adjustment. It is a separate adjustment to federal net income of the fiduciary. In the case of forest land and Western Oregon small tract option land, the addition is applicable only to dispositions occurring on or after November 1, 1981.

(5) The adjustment to federal taxable income is required not only when gain or loss is realized by the beneficiary on the inherited property, but is also required when:

(a) Gain or loss is realized on other property which, in the computation of its basis, the basis of the inherited property is used. Examples of this type of property is that received as a result of a fully or partially nontaxed exchange or involuntary conversion where there has been a proper reinvestment.

(b) A taxpayer, other than the beneficiary, may realize gain or loss on the disposition of inherited property, or property the basis of which is computed in whole or in part with respect to such inherited property, when the basis of the beneficiary is used. For example: property under this section received as a gift from a donor who acquired it by inheritance. The adjustment must be made to the donee’s tax return at the time the donee disposes of the property in a manner that results in a taxable event.

(6) This rule applies to gains and losses from disposition of property acquired from a decedent, or from property the basis of which is computed in whole or in part with respect to property acquired from a decedent, whose death occurred before January 1, 1987.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.844
Renumbered from 150-316.844, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-83
12-31-82, Renumbered from 150-316.081
12-31-81
12-19-75
11-73

Or. Admin. R. 150-316-0630 Scholarship Awards used for Housing Expenses

(1) If a scholarship award is used to pay housing expenses, the taxpayer may subtract the amount paid for such expenses from federal taxable income, but not in excess of the amount of the award included in federal taxable income.

(2) For purposes of ORS 316.846 and this rule, “housing expenses” are the reasonable expenses paid or incurred during the taxable year by an individual for housing for the individual. The term includes expenses attributable to the housing (such as utilities and insurance) and not otherwise taken into account as a deduction on the federal income tax return of the individual. Housing expenses will be treated as reasonable to the extent the department determines the expenses are neither lavish nor extravagant under the circumstances.

Example 1: Jasmine, a student at Oregon State University, receives a scholarship award that she includes in her federal taxable income. She buys a house close to the school. She uses part of the scholarship award to pay the mortgage interest and property taxes. She also uses part of the scholarship award to buy food and to fix the roof. Jasmine may subtract the mortgage interest and property taxes from her federal taxable income on her Oregon return if she does not claim them as itemized deductions on her federal return, but not in excess of the amount of the award included in federal taxable income. She may not subtract the food purchases and the cost of fixing the roof.

Example 2: Louis, a student at Portland State University, receives a scholarship award that he includes in his federal taxable income. He rents an apartment with a roommate about three blocks from school. In addition to the rent he is responsible for half of the electric bill and for a monthly parking fee at the apartment complex. He also pays for half of the monthly fee to Rent-A-Center to rent a sofa and loveseat. He uses part of the scholarship award to pay for these housing expenses. Louis may subtract from his federal taxable income on his Oregon return the sum of his portion of the rent, his portion of the electric bill, the parking fees, and his portion of the monthly fees for renting a sofa and loveseat, to the extent such sum does not exceed the amount of the award included in federal taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.846
Renumbered from 150-316.846, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2008, f. & cert. ef. 9-23-08

Or. Admin. R. 150-316-0635 Subtraction for Land Contributed to Educational Institutions

(1) General. A taxpayer who donates land, or who sells land at less than its fair market value, to a qualified educational institution may claim a subtraction from income. The subtraction is limited to a specific percentage of the taxpayer’s contribution base. Any subtraction not allowed because it exceeds the specified percentage of the contribution base may be carried forward for a maximum of 15 years. An individual’s contribution base is defined in section 170 of the Internal Revenue Code as federal adjusted gross income computed without regard to any net operating loss carryback.

(2) Donations of land. If land is donated to a qualified entity, the Oregon subtraction cannot exceed 50 percent of the taxpayer’s contribution base.

Example 1: Sandy’s contribution base is $100,000. Sandy donates land with a fair market value of $60,000 to a public school district. Sandy’s subtraction on the Oregon return is limited to $50,000.

(3) Reduced sale of land. If land is sold to a qualified entity for less than its fair market value, the Oregon subtraction cannot exceed 25 percent of the contribution base.

Example 2: Mary has a contribution base of $100,000. Mary sells land worth $175,000 to a local school district for $120,000 cash. Mary is limited to a subtraction on the Oregon return of $25,000.

(4) Add-back of amounts claimed as a federal deduction. If the taxpayer has claimed a deduction for the donation or reduced sale of land for federal purposes, the amount deducted from federal income must be added to Oregon income if a subtraction is taken under this provision.

Example 3: Singh’s contribution base is $100,000. He contributes $27,000 to a church and land worth $40,000 to a university. Singh must consider two limitations in figuring his charitable contribution deduction for federal purposes. First, his total charitable contribution deduction cannot exceed 50 percent of his contribution base, or $50,000 (50 percent of $100,000). Second, the donation of land, which is capital gain property, cannot exceed 30 percent of his contribution base, or $30,000. Singh’s contribution of land worth $40,000 is limited to a deduction of $23,000, which is the unused portion of the overall $50,000 deduction limit after taking into account his $27,000 cash donation. To figure the Oregon subtraction, Singh restores $23,000, the amount of federal deduction he received for his qualifying land donation, to federal income by showing it as an addition to income on his Oregon return. He then computes the Oregon subtraction for the land donation as the lesser of:

(a) $50,000 (50 percent of his contribution base of $100,000); or

(b) $40,000 (fair market value of the land that is the qualified donation).

Singh benefits from the full $40,000 donation on his Oregon return in the year of donation.

(5) If the taxpayer’s itemized deductions for Oregon are limited because of the phase-out requirements under section 68 of the Internal Revenue Code, the amount of the addition will be computed using the formula shown at OAR 150-316-0557.

Example 4: Max has a contribution base of $100,000. During the tax year he gave $35,000 cash to a 50 percent limitation charitable organization. He owned land with a fair market value (FMV) of $75,000 near an Oregon public high school. The school wanted the property for a sports field. Max agreed to exchange his property for a piece of property owned by the school district with a FMV of $25,000. His contribution from this qualifying reduced sale is $50,000; that is, $75,000 fair market value given up less $25,000 fair market value received. For federal purposes, his contribution of the land is limited to 30 percent of his contribution base, $30,000, and is further limited to $15,000, the unused portion of 50 percent of his contribution base, $50,000, after taking into account his $35,000 cash donation. His federal charitable deduction for the land is $15,000 with a five-year carryover of the remaining $35,000. On his Oregon return he first restores the $15,000 to income by showing an Oregon addition for that amount. He then computes his Oregon subtraction for the qualified bargain sale of land as 25 percent of his $100,000 contribution base. His Oregon subtraction is $25,000 with a fifteen-year carryover of the remaining $25,000.

History

Statutory/Other Authority: ORS 305.100
Renumbered from 150-316.852, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-316-0650 Waiver of Frivolous Return Penalty Imposed Under ORS 316.992

The department will waive 50 percent of the $250 penalty if the taxpayer:

(1) Submits a timely written request for waiver as required in OAR 150-305-0068;

(2) Files a return for that same tax year that is not frivolous under ORS 316.992; and

(3) Pays the balance of the account (other than the penalty amount that may be waived under this rule) for the tax period for which waiver is requested, or has entered into and is in compliance with a department-approved plan for payment of the amounts.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.992
Renumbered from 150-316.992, REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

Or. Admin. R. 150-316-0652 Frivolous Return Penalty

(1) A $250 penalty shall be assessed if a taxpayer takes a “frivolous position” in respect to preparing the taxpayer’s return. A return is considered frivolous if a taxpayer does not provide information on which the substantial correctness of the self-assessment may be judged or if the return contains information that on its face indicates that the self-assessment is substantially incorrect.

(2) Some additional examples where a “frivolous position” is considered to have been taken include but are not limited to:

(a) An argument that wages or salary are not included in taxable income. This can occur when the taxpayer alters lines on the return to recharacterize wages or salary as nontaxable or takes deductions on Schedule C equal to income and characterizes the deductions as the total of business expenses or cost of goods sold.

(b) An argument that the law directs “taxpayers” to file a return and they aren’t a taxpayer.

(c) An argument that by filing a return their rights of nonself-incrimination under the Fifth Amendment to the United States Constitution will be violated. An example of this is when a taxpayer writes “object” or “object — self-incrimination” in the amount columns or across the face of the return.

(d) An argument that requiring a taxpayer to file a return violates their right to prohibition of involuntary servitude provided in the Thirteenth Amendment to the United States Constitution.

(e) Submitting a return that may show an address, be signed and have W-2’s attached but has zeros, object, Fifth Amendment or self-incriminating written in the columns or on the face of the return.

(f) An argument that the tax system is discriminatory.

(g) An argument that the taxpayer’s right to free speech as provided by the First Amendment to the United States Constitution has been violated by requiring a return or by providing the information required on the return.

(h) An argument that a check which can only be redeemed in Federal Reserve Notes is not taxable income. The taxpayer’s argument is that only gold and silver can be taxed and that Federal Reserve Notes are not income because they can’t be redeemed for gold or silver. Also, that the Federal Reserve Notes should be considered accounts receivable that do not have to be reported as income until they are paid in gold or silver.

(i) An argument that a graduated tax is unconstitutional.

(j) Taking unauthorized deductions or credits based on a percentage of the national debt used for defense (war tax) or abortions.

(k) Taking unauthorized deductions or credits based on the declining value of the dollar to reflect the difference between the face value and the fair market value of Federal Reserve Notes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 316.992
Renumbered from 150-316.992(5), REV 66-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1988, f. 5-25-88, cert. ef. 6-1-88

Or. Admin. R. 150-316-0662 Voluntary Self-Identification of Race and Ethnicity: Use of Tax Return and Account Information

(1) For tax years beginning on or after January 1, 2024, the department must provide a schedule (form), as required under ORS 316.366, for Oregon taxpayers and non-filing Oregonians to provide information about their race and ethnicity voluntarily (“Voluntary Self-Identification” or “VSI” data).

(2) Filing the form and providing the VSI data is voluntary.

(3) The department will use VSI data collected for only the following purposes:

(a) The development of racial impact statements;

(b) The analysis of proposed administrative rules and budget requests; and

(4) If the form is completed and filed, the department may use the filers’ Social Security numbers (SSN) or individual taxpayer identification numbers (ITIN) to match tax return and account information to VSI data for the purposes described in section (3) of this rule. If no form is filed, the department will not use SSNs or ITINs for those purposes.

(5) The staff of the Legislative Revenue Office and the division of the Oregon Department of Administrative Services that serves as office of economic analysis data may also access and use VSI data in the analysis of revenue policy.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.686, 305.687, 305.688 & 316.366
REV 54-2024, adopt filed 12/26/2024, effective 01/01/2025

Or. Admin. R. 150-316-0663 Voluntary Self-Identification of Race and Ethnicity; Policies and Procedures for Filing Schedule

(1) The Oregon Department of Revenue will make available an annual schedule which individuals may use to self-identify their race or ethnicity.

(a) The schedule will be known as the Voluntary Self-Identification of Race and Ethnicity schedule. The schedule will be made available as an attachment to the Oregon personal income tax return.

(b) The schedule will contain a list of race and ethnicity categories from which an individual may select for their self-identification. Each category in the list will be designated using a three-digit code.

(c) The list of race and ethnicity categories on the schedule will follow the uniform standards adopted by the Oregon Health Authority by rule pursuant to ORS 413.161, as amended and in effect on January 1 of the calendar year corresponding to the schedule year.

(2) Using the annual schedule made available by the department, individuals may choose to self-identify their race or ethnicity by selecting up to three of the listed categories.

(a) The choice of whether to provide the information requested on the schedule is voluntary for all individuals and will have no effect on an individual’s liabilities or accounts with the department.

(b) The choice is made on an annual basis and may be amended only as described in subsection (5) of this rule.

(c) One selected category will be designated as the individual’s primary race or ethnicity unless the individual indicates that none of their selections is their primary self-identification.

(d) Married individuals or registered domestic partners who are filing a joint personal income tax return and who choose to provide the requested information will make the choice independently of each other and use separate schedules.

(e) Tax professionals or individuals filing the taxpayer’s return must give the taxpayer the option to fill out the schedule.

(3) Individuals may file the schedule with their personal income tax return using any method normally available for filing returns, including but not limited to:

(a) Electronic filing, using tax software approved by the department.

(b) Direct File Oregon on the department’s website.

(c) Traditional paper using forms provided by the department or two-dimensional (2-D) barcode forms approved by the department.

(4) Individuals without a return filing requirement, or those who would like to provide their race or ethnicity information separately from their personal income tax return, may choose to provide the information using Revenue Online on the department’s website.

(a) The information may be provided with or without a Revenue Online account.

(b) Individuals without a Revenue Online account must provide all of the following:

(A) First and last name;

(B) Social Security number or an individual taxpayer identification number issued by the Internal Revenue Service;

(D) Birth year; and

(E) Oregon residency status for the year.

(5) Return or schedule amendments. An individual may change their self-identified race or ethnicity after their information has been provided for the year.

(a) If an individual files a personal income tax return with or without the schedule attached, and the return is later amended, an original or amended schedule may be filed with the amended return. The schedule may be filed with the amended return if:

(A) The schedule was not filed with the original return, but the individual chooses to provide the information on an original schedule filed with the amended return.

(B) The schedule was filed with the original return, and the individual wants to change the information provided on the original schedule when the amended return is filed.

(b) The schedule does not need to be included with an amended return if the schedule was filed with the original return and there are no changes to the information provided on the original schedule.

(c) An individual who is not amending a personal income tax return may use Revenue Online to make changes to the race or ethnicity information already provided for the year.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.686, 305.687, 305.688 & 316.366
REV 54-2024, adopt filed 12/26/2024, effective 01/01/2025

Or. Admin. R. 150-316-0664 Voluntary Self-Identification of Race and Ethnicity; Policies and Procedures on Use and Security of Data

(1) Tax preparation software development . To be approved by the department, software vendors must agree to and comply with the requirements outlined in the annual Oregon Department of Revenue Income Tax Letter of Intent.

(2) Prohibition on use of race and ethnicity data by tax software vendors and professionals. Information about a taxpayer's race or ethnicity obtained for the purpose of completing the schedule cannot be used or retained beyond the extent necessary to assist the taxpayer in preparing or filing the taxpayer's return.

(a) Prohibited actions include, but are not limited to:

(A) Transmission of a taxpayer's race or ethnicity information to a third party;

(B) Use of a taxpayer's race or ethnicity information for marketing purposes; or

(b) Engaging in any prohibited action is a violation of the agreement to the terms of the Letter of Intent, which may result in the department revoking an approved software provider status and rejecting any electronic or paper returns submitted using its product.

(c) Tax professionals are prohibited from filing the schedule without their customers’ consent and must only include race and ethnicity information directly provided by the taxpayer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 305.686, 305.687, 305.688 & 316.366
REV 54-2024, adopt filed 12/26/2024, effective 01/01/2025

Division 317 CORPORATION EXCISE TAX ACT OF 1929: RULES AND GENERAL PROVISIONS

Or. Admin. R. 150-317-0010 Procedure for Handling State Surplus Refund

(1) For purposes of determining underpayment of estimated tax for tax years beginning on or after January 1, 1985 the credit allowed for the state surplus refund shall be used to reduce the amount of the current year “net excise or income tax” of the taxpayer. Net excise or income tax means the total tax minus any credits against tax.

(2) Whenever the taxpayer’s excise or income tax liability for tax years beginning on or after January 1, 1985 is either increased or decreased, the amount of the credit for the state surplus refund shall be adjusted accordingly.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.Note
Renumbered from 150-317.NOTE, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0020 Substantial Nexus Guidelines

(1) The State of Oregon imposes taxes on or measured by net income to the extent allowed under state statutes, federal Public Law 86-272, and the Oregon and U.S. Constitutions. For purposes of determining whether Oregon has jurisdiction to impose an excise tax for the privilege of doing business in the state under ORS Chapter 317 or tax on income from sources within this state under ORS Chapter 318, there must exist a substantial nexus between the state and the activity or income it seeks to tax.

(2) “Substantial nexus” for corporate excise and income tax jurisdiction purposes, under the Commerce Clause of the U.S. Constitution, does not require a taxpayer to have a physical presence in Oregon. Substantial nexus exists where a taxpayer regularly takes advantage of Oregon’s economy to produce income for the taxpayer and may be established through the significant economic presence of a taxpayer in the state.

(3) In determining whether a taxpayer has a substantial nexus with Oregon the department may consider whether the taxpayer:

(a) Maintains continuous and systematic contacts with Oregon’s economy or market;

(b) Conducts deliberate marketing to or solicitation of Oregon customers;

(d) Receives significant gross receipts attributable to customers in Oregon;

(e) Receives significant gross receipts attributable to the use of taxpayer’s intangible property in Oregon; or

(f) Receives benefits provided by the state, such as:

(A) Laws providing protection of business interests or regulating consumer credit;

(B) Access to courts and judicial process to enforce business rights, including debt collection and intellectual property rights;

(D) Access to educated workforce in Oregon; or

(E) Police and fire protection for property in Oregon that displays taxpayer’s intellectual or intangible property.

(4) The list of possible facts in section (3) that the department may consider in determining whether a taxpayer has a substantial nexus with Oregon is meant to be nonexclusive, and those facts should be considered only to the extent they are relevant. The department may consider any other relevant facts and circumstances.

(5) The provisions in sections (1) through (4) of this rule, as well as the provisions in OAR 150-314-0365, 150-314-0367, and 150-314-0369, must be applied in determining if a taxpayer has substantial nexus in a state other than Oregon.

Example 1: Credit Card Company (CC) has, for several years, provided credit card lending services over the internet and by mail to over 25,000 Oregon customers. Solicitations for such credit cards have been mailed three or four times a year for the last three years to prospective Oregon customers in six Oregon cities. CC has substantial nexus in Oregon.

Example 2: IS Company (IS), headquartered in San Francisco, operates a website supporting internet sales, primarily to Asian country customers. IS made approximately 50 sales, at $6.95 per sale, to residents of Oregon during the tax year. IS contracts with an Oregon mailing service to make deliveries of the merchandise in Oregon (all sales are final). IS does not have substantial nexus in Oregon. Even though activities in greater volume might be sufficient for nexus, the amount of sales is de minimis.

Example 3: WB Distributing Company (WB) has for many years distributed wine and beer throughout Oregon, through Oregon licensed distributors with whom WB has distribution agreements. WB is required to obtain and maintain a wholesaler’s license from the Oregon Liquor Control Commission (OLCC). A condition of the license is that WB must make monthly reports of sales volumes to the OLCC. WB also periodically seeks advice and approval from the OLCC for special event activities in Oregon, at which no sales are solicited by the corporation. WB has substantial nexus in Oregon.

Example 4: IP Company (IP), organized under Delaware law and wholly owned by FP Company (FP) a foreign parent, owns intellectual property including trade marks, trade names, and logos. RS Company (RS), also wholly owned by FP but not unitary with IP, operates retail stores in Oregon that prominently and beneficially use the intellectual property owned by IP. By agreement, RS pays IP five percent of its gross sales for the right to use the intellectual property. IP has substantial nexus in Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.010
Renumbered from 150-317.010, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2008, f. & cert. ef. 5-5-08

Or. Admin. R. 150-317-0030 Definition: “Doing Business”

(1) A taxpayer is doing business when it engages in any profit-seeking activity in the State of Oregon. What transaction or transactions need be entered into within this state in the course of such an activity to constitute the doing or carrying on of business within the state is primarily a question of fact, depending upon the circumstances in each case.

Example 1: The taxpayer is clearly doing business within this state if it occupies, has, maintains or operates an office, shop, store, warehouse, factory, agency or other place within this state where some of its affairs are systematically and regularly carried on, notwithstanding the fact that it may also enter into transactions outside this state.

Example 2: A corporation engaged in the sale of tangible personal property is doing business within this state if sales activities are regularly carried on within this state by an employee or agent of the seller, and if either a stock of goods is maintained within this state, or an office or other place of business where affairs of the corporation are regularly carried on is maintained within this state.

Example 3: A foreign corporation consigns goods to one or more consignees within Oregon who then sell the goods. The foreign corporation is doing business in Oregon since it has sales activity and a stock of goods within Oregon.

(2) A foreign corporation whose business is providing services is "doing business" in this state if it has employees providing those services in Oregon. It does not matter whether the services are provided on the client's property or on the corporation's own property since it is engaged in a profit seeking activity in Oregon.

(3) If a foreign corporation's business activities in this state are confined to purchase and storage of personal property incident to shipment outside the state, the corporation is not deemed to be doing business for corporation excise tax purposes if the following conditions are met:

(a) The personal property remains in the exact state or form as it was when purchased during the time it is located within Oregon.

(b) The foreign corporation is not an affiliate of another foreign or domestic corporation, as defined in section 1504 of the Internal Revenue Code, which is doing business in Oregon.

(4) The fact that a corporation has no employees in Oregon does not mean the corporation is not doing business in this state. If activities are performed in Oregon by a third party on behalf of the corporation, and the activities are not protected under Public Law 86-272, the corporation is doing business in Oregon.

Example 4: The provision of in-state repair and warranty services by an independent contractor for a direct marketing computer company, advertised as part of its standard warranty or as an option that can be separately purchased, contribute significantly to the company's ability to establish and maintain its market for computer hardware sales in Oregon. Therefore, the computer company is doing business in Oregon. The extension of immunity for activities by independent contractors under Public Law 86-272 does not include repair and warranty service.

(5) A corporation that is not "doing business" in Oregon may still be subject to tax in this state. The Oregon corporation income tax under ORS Chapter 318 imposes tax on corporations that have income derived from sources within Oregon. See OAR 150-318-0040 for a list and description of the activities that, if conducted in Oregon, will result in a corporation being subject to the corporation income tax.

[Publications: The publication(s) referred to in this rule is available from the agency pursuant to ORS 183.360(2) and 183.355(6).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.010
Renumbered from 150-317.010(4), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2013, f. 12-26-13, cert. ef. 1-1-14
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
1-1-77, Renumbered from 150-317.010(8)
1959

Or. Admin. R. 150-317-0040 Taxable Income of Regulated Investment Companies and Real Estate Investment Trusts

(1) In the case of a corporation that is treated for federal tax purposes as a regulated investment company under IRC Section 851, for purposes of ORS 317.010(10) taxable income under Chapter 1, Subtitle A of the Internal Revenue Code means “investment company taxable income,” as defined in IRC Section 852.

(2) In the case of an entity that is treated for federal tax purposes as a real estate investment trust under IRC Section 856, for purposes of ORS 317.010(10) taxable income under Chapter 1, Subtitle A of the Internal Revenue Code means “real estate investment trust taxable income” as defined in IRC Section 857(b)(2), except that the adjustments provided by IRC Sections 857(b)(2)(D) and (F) shall not be allowed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.010
Renumbered from 150-317.010(10), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
Reverted to RD 1-1984, f. & cert. ef. 2-21-84
RD 3-1984(Temp), f. & cert. ef. 4-9-84
RD 1-1984, f. & cert. ef. 2-21-84

Or. Admin. R. 150-317-0050 Foreign Corporations Subject to Tax

(1) Generally, foreign corporations doing business in Oregon that are exempt from federal income taxes pursuant to treaties between the United States and a foreign country are not exempt from Oregon corporation excise and income taxes.

(2) For foreign corporations to be exempt from the Oregon corporation excise or income tax, the federal treaty must specifically contain a provision exempting them from state corporation taxes upon or measured by net income.

(3) Oregon taxable income is determined by calculating the corporation’s federal taxable income as if the corporation was subject to federal income taxes and making certain modifications as provided by Oregon law. As provided under ORS 317.625, income from outside the United States is accounted for in the computation of Oregon taxable income without regard to IRC sections 861 to 864. Income classified as income from outside the United States and excluded from federal taxable income must be added to the federal taxable income calculation required by this rule as an “other addition.”

(4) Oregon has adopted the federal IRC provisions for computing taxable income, but did not adopt the federal provisions that define exempt corporations. Oregon law in ORS 317.080 lists those corporations that are exempt from Oregon corporate taxes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.010
Renumbered from 150-317.010(10), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-317-0060 Capital Losses — Carrybacks and Carry-overs

(1) Federal law applies to capital losses.

(a) Capital losses are deducted to the extent of capital gains in the same tax year.

(b) Capital losses in excess of capital gains must be carried back three tax years. Capital losses that do not fully offset capital gains for a year to which the losses are carried back may be carried forward for up to five tax years after the tax year in which the capital losses were incurred.

(c) Capital loss carrybacks and carryovers can only be used to reduce capital gains in the tax years to which they are carried.

(d) A capital loss carryback cannot be used to create or increase a net loss in the tax year to which it is carried.

(e) If a capital loss is not carried to tax years in the order provided in subsections (1)(b) through (1)(d), the amount of net capital loss that should have been utilized to decrease capital gain net income cannot be used to offset capital gains in other taxable years.

(2) Oregon provisions, such as the requirement that corporations be unitary to be included in the consolidated Oregon return and the apportionment and allocation provisions, may result in differences between the Oregon and federal capital loss deductions and carryovers.

(a) A federal capital loss deduction used to determine a taxpayer’s federal taxable income or loss must be added to the taxpayer’s taxable income or loss determined pursuant to ORS 317.010(10) before calculating the Oregon capital loss deduction using the provisions of this rule.

(b) When a corporation or consolidated group of corporations is taxable within and without this state, its Oregon net capital loss carryback and carryover must be computed using the allocation or apportionment provisions. The Oregon capital loss is computed using the apportionment factor for the tax year of the loss if the loss is apportionable and not allocated. The capital loss is applied to the Oregon capital gains for the year of carryback or carryover. Oregon capital gains are computed using the apportionment factor for the tax year of the gain if the gain is apportionable.

(c) Oregon net capital losses that are attributed to corporations that continue to be included in the same consolidated Oregon return may be deducted fully against the Oregon consolidated net capital gain of the tax years to which such losses are carried.

(3) If a corporation is included in a combined return, separate return or in a different consolidated return in the year of the capital loss and the capital loss is carried into a year when a consolidated Oregon return is filed, the Oregon capital loss carryover may be subject to the federal separate return limitation year (SRLY) limitations in Treas. Reg. Sec. 1.1502-22.

(a) If a net capital loss is reported on a separate Oregon return by a corporation doing business only in Oregon, the SRLY limitation applies if the loss is carried to a tax year in which a consolidated return is filed, apportionment is not required, and the corporation with the loss (the limited member) is not the parent corporation. To compute the Oregon SRLY limitation, first recompute the consolidated net capital gain by excluding the capital gains and losses and the IRC Sec. 1231 gains and losses of the limited member. Then subtract the recomputed consolidated net capital gain from the total consolidated net capital gain (computed without regard to any net capital loss carryover or carrybacks).

(b) If a corporation is included in a consolidated Oregon return in the year of the consolidated net capital loss and files a separate Oregon return or is included in a different consolidated Oregon return in the year to which the net capital loss is carried, the Oregon consolidated net capital loss is attributed to the corporations with net capital losses for purposes of determining the allowable net capital loss carryover. The portion of an Oregon consolidated net capital loss attributable to a member of a consolidated group is an amount equal to such Oregon consolidated net capital loss multiplied by a fraction, the numerator of which is the net capital loss of such member and the denominator of which is the sum of the net capital losses of those members of the consolidated group having net capital losses.

(c) If corporations carry their net capital losses to a tax year in which separate tax returns are filed, the net capital losses can be deducted by each corporation only if a net capital gain is shown on the separate tax return. The net capital loss deduction is further limited by the amount of the net capital gain attributable to Oregon based on the Oregon apportionment factor.

(d) If a group of unitary corporations, taxable within and without this state, filed a consolidated return for the year of the net capital loss and carries the net capital loss after apportionment back to a year in which a combined return is filed, the net capital loss must be allocated among the corporations as provided under the SRLY limitations in Treas. Reg. Sec. 1.1502-22. The net capital gain of the unitary group in the combined year must be apportioned among the corporations based on each corporation’s Oregon apportionment percentage.

(4) If a corporation, taxable within and without this state, filed a separate return or was included in a different consolidated return for the year of the net capital loss and carries the net capital loss after apportionment to a year in which a consolidated return is filed, the net capital loss can be deducted only to the extent that the same corporation has a net capital gain which is attributed to Oregon. If the consolidated group in the carryover year is subject to the apportionment provisions, the net capital gain of the member must be attributed to Oregon based on the consolidated Oregon apportionment factor.

[ED. NOTE: To view attachments referenced in rule text, click here for PDF copy.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.010 & 317.476
REV 29-2022, amend filed 12/20/2022, effective 01/01/2023
Renumbered from 150-317.013, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2010, f. 7-23-10, cert. ef. 7-31-10
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-317-0070 Administrative and Judicial Interpretations

As used in ORS 317.013(2) “administrative and judicial interpretations of the federal income tax law” include interpretive regulations promulgated by the Secretary of the Treasury, Revenue Rulings and Revenue Procedures issued by the Commissioner of Internal Revenue, and decisions of the federal courts interpreting those provisions of the Internal Revenue Code that are incorporated into Oregon law under ORS 317.013(1), regardless of the date of promulgation or issuance of the regulation, ruling, procedure or decision.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.013
Renumbered from 150-317.013(2), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0080 Adoption of Federal Law

Generally, Oregon corporation excise tax law, as related to the definition of taxable income, is tied to federal tax law as applicable to the tax year of the taxpayer. Changes enacted to the definition of federal taxable income are effective for Oregon tax purposes in the same manner as for federal tax purposes, unless otherwise provided in Oregon tax law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.018
Renumbered from 150-317.018, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-85
12-31-83
10-5-83

Or. Admin. R. 150-317-0090 Policy — Application of Various Provisions of the Federal Internal Revenue Code

(1) The policy of the State of Oregon is to follow the Internal Revenue Code as closely as possible relating to the computation of taxable income of corporations. Other areas, such as tax credits, special tax computations, and administrative provisions are not tied to federal law because they do not relate to the computation of taxable income.

(2) The provisions of this rule concerning “Claim of right” apply to tax years beginning before January 1, 1998. For tax years beginning on or after January 1, 1998, a credit is allowed to a taxpayer for a claim of right income repayment under section 2, Chapter 1007, Or Laws 1999.

(3) Claim of right: IRC section 1341 allows a deduction on the federal return for amounts repaid by a taxpayer on income previously reported under a claim of right. This deduction is also allowed on the Oregon return. If the amount repaid exceeds $3,000 in the year of repayment, IRC section 1341 allows the taxpayer to instead use a special tax computation rather than claim a deduction. If the taxpayer uses this special tax computation on the federal return, the taxpayer may not make a special tax computation for Oregon. However, the taxpayer may claim any repayments as a subtraction on the Oregon return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.018
Renumbered from 150-317.018(1), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-317-0100 Periods of Less than 12 Months Are Tax Years

(1) Under Oregon’s tie to federal accounting periods, an Oregon return shall cover the same period as the corresponding federal return. See also OAR 150-314-0005.

(2) Internal Revenue Code Regulation 1.1502-76 provides that any period of less than 12 months for which either a separate return or a consolidated return is filed shall be considered as a separate taxable year.

Example: Corporation X and its federal consolidated subsidiaries have a fiscal year end of June 30. On January 31, 1989, Corporation X sold Corporation Y (one of its 100 percent owned subsidiaries included in its consolidated returns) to Corporation Z. Corporation Z has a fiscal year ending May 31, 1988 and Corporation Y is required to change its tax year to be the same.

Corporation Y must file two short-period returns for federal and Oregon tax purposes (one for July 1, 1988, through January 31, 1989, and another for February 1 through May 31, 1989). Each short-period return shall count as a tax year for purposes of net operating loss and tax credit carryovers. If Corporation Y was not unitary with Corporation X or Corporation Z, it shall file separate Oregon returns for the two periods. For tax years beginning before January 1, 1986, Corporation Y was allowed by the department to file one Oregon return with the two short-period federal returns attached.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.018
Renumbered from 150-317.018(2), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-317-0110 Tax Reform Act of 1984 Adjustments

The rule under OAR 150-316-0020 shall be followed in determining how adjustments due to adoption of effective dates in the federal Tax Reform Act of 1984 shall be reported.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 314.031
Renumbered from 150-317.021, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0120 Farm Capital Gain

(1) This rule is effective July 31, 2010 and applies to all tax years open to examination.

(2) Definitions. For purposes of ORS 317.063 and this rule:

(a) “Substantially complete termination” means the taxpayer is:

(A) No longer involved, directly or indirectly, in a trade or business engaged in farming, or

(B) No longer owns, directly or indirectly, property used in the trade or business of farming.

(3) A taxpayer’s net long-term capital gain qualifies for the reduced tax rate if all four of the following tests are met:

(a) Asset Test. The gain is derived from either IRC section 1231 assets or an ownership interest of at least 10 percent in an entity.

(b) Use Test. The property that was sold consisted of:

(A) An ownership interest in an entity engaged in the trade or business of farming; or

(B) Property that was predominantly used in the trade or business of farming.

(d) Termination Test. The sale is a substantially complete termination of all of the taxpayer’s ownership interests in:

(A) A trade or business engaged in farming; or

(B) Property that is predominantly used in the trade or business of farming.

(4) Asset Test. The part of the taxpayer’s net long-term capital gain that is eligible for the reduced rate must be from capital assets under IRC section 1231 or a 10 percent or more ownership interest in an entity engaged in the trade or business of farming.

Example 1: Forty years ago, Corporation A purchased an orchard next to the company’s row crop farm. The company did not regularly harvest the fruit or care for the trees but allowed its employees and their families to use the fruit. Last year, the urban growth boundary moved to include the company’s parcel. Corporation A wanted to sell the property to developers so it had all the trees removed and sold the property. The sale of the orchard does not qualify for the reduced rate because it was not held as a trade or business; thus, it was not an IRC section 1231 asset. It was land held for investment and personal use.

(5) Use Test. The asset sold must be predominantly used in the trade or business of farming. Any other use of the asset must be incidental to, and not interfere with, the primary purpose of being engaged in the trade or business of farming.

(a) Property used 80 percent or more in the trade or business of farming is considered and presumed to be predominant use. Accepted farming practices common to the type of farming activity and region, such as land lying fallow for one year, are included in the trade or business of farming.

(b) Property used more than 50 percent but less than 80 percent in a farming trade or business, qualifies as predominant if the difference between the actual percentage use in a farming trade or business and 80 percent use in a farming trade or business is incidental. Incidental use does not include holding property as an investment, using property for personal (non-business) use, or using property for another business. Incidental use includes, but is not limited to:

(A) Farmland that is bordered by or contains a waterway;

(B) Land that consists of terrain that cannot be farmed (i.e. marshland, desert);

(c) Property used for personal or business activities that take place on the land concurrently and do not interfere with the primary farming trade or business use are considered incidental use.

Example 2: BJ Farms raised corn and beans on 500 acres the entire time it owned the acreage. BJ Farms used the cornfields as a corn maze after the corn was harvested. BJ Farms sold the 500 acres to CJ Farms and recognized a capital gain. Assuming the gain from the sale meets the other three tests, the gain from the sale qualifies for the reduced tax rate because BJ Farms used the property predominantly (80 percent or more) in the trade or business of farming even though the company used the farmland for an incidental purpose after the harvest.

Example 3: D & D, Inc owned and operated a 30 acre farm. The farm had a waterway and riparian land that was not farmed, which took up 10 acres of the farm. Assuming the company meets the other three tests, D & D, Inc qualifies for the reduced tax rate because the property was predominantly used in the business of farming. The farm use qualifies as predominant for the entire 30 acres because the farm use was more than 50 percent, but less than 80 percent and the 33 percent (10 acres/30 acres) not used for farming was incidental.

Example 4: John B. Dairy, Inc sold 20 acres of land. The company owned the land and leased out 15 acres to a farmer who grew crops. The remaining 5 acres was made into baseball fields where the company allowed local Little League teams to use it for practices and games. Assuming John B. Dairy, Inc meets the other three tests, the 15 acres used for farming qualifies for the reduced tax rate.

(6) Relationship test. The gain from the sale of an asset does not qualify for the reduced tax rate if the asset is sold to a related taxpayer under IRC section 267 even if all of the other three tests are met.

Example 5: Green Beans Inc and Sweet Corn Inc own a farm together as a partnership. The partnership decides to sell the business to BJ Farms, (the parent company). Assume the sale meets the other three tests. The Green Beans Inc and Sweet Corn Inc capital gain does not qualify for the reduced tax rate because Green Beans Inc and Sweet Corn Inc are related to BJ Farms under IRC section 267.

(7) Termination Test. If a taxpayer sold an interest in a trade or business that is engaged in farming, the taxpayer may not be directly or indirectly engaged in that farming trade or business after the sale. The sale of the taxpayer’s interests through an installment sale constitutes a substantially complete termination for purposes of ORS 317.063 and this rule. A taxpayer has substantially terminated its interests in the trade or business of farming even though the taxpayer retained a portion of the farm for personal use.

Example 6: Happy Cow Dairy Inc, (Parent Corporation) owned two subsidiaries, a dairy operation and a hop farm. The two businesses were completely separate. They had separate employees, equipment, and records. The two businesses also had different names, records, and federal identification numbers. Happy Cow Dairy Inc sold the dairy farm. After selling all of the dairy equipment and dairy cows, the company realized a capital gain of $350,000. The company decided not to sell the hop farm. The gain on the sale of the dairy operation qualifies for the reduced tax rate. Even though the company still owned the hop farm, it had sold the entire dairy business.

Example 7: JD Inc sold its farm, which included three silos. All four tests were met. The silos are capital assets subject to IRC section 1245 recapture. The part of the gain from the sale of the silos that is treated as ordinary income is not eligible for the reduced tax rate. However, the part of the gain from the sale of the silos that is treated as long-term capital gain on the federal return is eligible for the reduced tax rate on the Oregon return.

(9) Capital loss. If all four tests are met and the taxpayer is reporting a capital loss, it could affect the capital gain eligible for the reduced tax rate. Compute the net capital gain or loss from all other property sales or exchanges for the year that are taxable to Oregon. If it results in a net capital loss, the amount eligible for the reduced tax rate is the qualifying farm capital gain minus the net capital loss from other property sales or exchanges that are taxable to Oregon.

Example 8: B Inc sold a farming business for a net long-term capital gain of $800,000. During the year, the company also sold other property for a net capital loss of $150,000. Assuming the sale of the farm business meets all four tests, B Inc is only eligible for the reduced tax rate on $650,000 (net farm long-term capital gain minus other net capital loss) of the taxable income.

(10) Installment Method under IRC section 453. Installment sales are eligible for the reduced tax rate if the sale meets all four tests as explained in section (2) of this rule. The amount of capital gain eligible for the reduced tax rate must be determined each year. The percentage of gain eligible for the reduced tax rate is equal to the qualifying farm long-term capital gain from the sale divided by all capital gain from the sale. Apply this percentage to the capital gain from the sale reported each year to determine the amount that qualifies for the reduced tax rate. If there is capital loss from the sale of other property as described in section (8) of this rule, during a tax year that the installment sale is reported, this may reduce the gain eligible for the reduced tax rate.

Example 9: Green Acres Inc sells its row crop farm in 2007 and meets all four tests to receive the reduced tax rate. The company elects to recognize the income from the sale using the installment method under IRC section 453. Green Acre Inc will receive half of the sale price in 2007 and one-fourth of the sale price each in 2008 and 2009 plus interest. Of the capital gain from the sale, $300,000 qualifies for the reduced tax rate and $100,000 does not. The company’s percentage eligible for the reduced tax rate is $300,000 of eligible capital gain divided by $400,000 of total capital gain, or 75 percent. The buyer also paid interest to Green Acres Inc, which is reported separately on the return. In 2007, the company will claim the capital gain from the sale of $200,000. Of that amount, 75 percent or $150,000 is eligible for the reduced tax rate. In 2008 and 2009, the company will claim the farm capital gain rate for $75,000 ($100,000 x 75 percent) of capital gain from the sale reported each year.

(11) Like-kind Exchanges. Like-kind exchanges may be eligible for the reduced tax rate when the gain is recognized, assuming all four tests are met. The taxpayer must keep detailed records to show that the property would have qualified for the reduced tax rate if it had been a sale instead of an exchange.

Example 10: Dee Farms decided to exchange farmland for investment property. The exchange meets all four tests. Dee Farms deferred $400,000 of capital gain. Later, Dee Farms sells the investment property and reports capital gain of $700,000. Of this amount, $400,000 is eligible for the reduced tax rate for farm capital gain, because it would have been eligible if the company had not deferred it.

(12) Sale in more than one tax year. Prior-year sales of farm property, or a farming business sold over more than one year, may be eligible for the reduced tax rate. It can take more than one year to sell a farming business or all of a taxpayer’s property used in farming because the property is sold to more than one buyer. To qualify for the reduced tax rate, the taxpayer must be actively trying to sell all farm property (or all property from a farming business) from the year of the first sale until the year of the final sale. Each sale is separately considered to see if it meets the requirements to qualify for the reduced tax rate, but all farm property or property from a farming business must be sold within a reasonable amount of time (usually no more than three tax years from the first sale to the final sale of qualifying farm property) for any of the prior year sales to qualify. The reduced tax rate on the prior year sales cannot be claimed until the taxpayer has sold all farm property or all property from a farming business. A property is “actively for sale” if the property was listed and advertised for sale for a price comparable to similar properties and the seller did not reject reasonable offers.

Example 11: Sunshine Grass Seed Inc owns 1,000 acres of farmland in four different locations. The properties are treated as one business and all of the property is actively for sale. The company sells 200 acres to a neighboring farmer in 2006. Sunshine Grass Seed Inc files its 2006 tax return but cannot claim the reduced tax rate on the gain because it is not out of the business of farming. In November 2007, the company sells the remaining 800 acres of farmland to Dees Farms (an unrelated party). Sunshine Grass Seed Inc, files its 2007 tax return and the long-term capital gain from the sales qualifies for the reduced tax rate because the property was actively for sale the entire time. Sunshine Grass Seed Inc may now amend its tax return for 2006 and claim the reduced tax rate on the qualifying capital gain from the earlier sale.

(13) If a taxpayer sells farm property and then buys other farm property, the taxpayer may qualify for the reduced tax rate. The taxpayer must meet all four tests described in section (3) of this rule with the sale of farm property before purchasing other farm property to qualify for the reduced tax rate.

Example 12: JB Farms, sold the company’s farm and equipment to start a retail business. After some difficulty in getting started, the company decides to go back to farming and purchased another farm. JB Farms qualifies for the reduced tax rate because the company had completely terminated its interest in property used in farming at the time of the sale and met the other tests.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & 317.063
Statutes/Other Implemented: ORS 317.063
Renumbered from 150-317.063, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-317-0130 Tax on Homeowner’s Association Income

Homeowners associations, such as condominium management associations and residential real estate management associations, may elect to be treated as tax-exempt organizations for taxable years beginning on and after January 1, 1978. But this tax-exempt status will protect the association from tax only on its exempt function income, such as membership dues, fees, and assessments received from member-owners of residential units in the particular condominium or subdivision involved. The homeowners association taxable income will be taxed at the corporate rates provided in ORS 317.061. To qualify for the election, the association must meet the following conditions:

(1) A copy of the federal Form 1120-H filed with the Internal Revenue Service must be filed with the Oregon Department of Revenue no later than the time prescribed by law for filing the return.

(2) It must be organized and operated as provided in section 528(c) of the Internal Revenue Code.

(3) "Homeowners association taxable income" is determined pursuant to section 528(d) of the Internal Revenue Code and pertinent federal regulations. However, net capital gains shall be included in the computation of homeowners association taxable income and shall receive no special treatment.

(4) “Exempt function income” is determined pursuant to section 528(d) of the Internal Revenue Code and pertinent federal regulations.

(5) If a homeowners association that elects to be treated as a tax exempt organization has positive homeowners association taxable income, it shall be reported on an Oregon Corporation Excise Tax Return, Form 20and the association is subject to the greater of the calculated corporation excise tax or the minimum tax.

(6) If a homeowners association that elects to be treated as a tax-exempt organization does not have positive homeowners association taxable income, the association is not required to file an Oregon Corporation Excise Tax Return, Form 20 and is not subject to the minimum tax.

[Publications: Publications referenced are available from the agency pursuant to ORS 183.360(2) and 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.067
Renumbered from 150-317.067, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2013, f. 12-26-13, cert. ef. 1-1-14
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
TC 9-1978, f. 12-5-78, cert. ef. 12-31-78, Renumbered from 150-317.080(6)(b)
10-7-77

Or. Admin. R. 150-317-0140 Imposition of the Tax: Mercantile, Manufacturing and Business Corporations

A corporation excise tax is imposed for the privilege of doing business in Oregon during the year prior to that in which the tax is due and payable. The tax is measured by the corporation’s Oregon taxable income as computed in accordance with the provisions of this chapter. A foreign corporation is authorized to do business in this state if it is qualified to do business here. A domestic corporation is authorized to do business if a certificate of incorporation has been issued to it, even though the details of corporate organization have not been completed and no business has been transacted. If a corporation is subject to Oregon jurisdiction and is a part of a unitary group, as defined in ORS 317.705, the determination of the taxable income attributable to Oregon shall be made in accordance with ORS 314.605 to 314.675, 317.705 to 317.720, and the rules thereunder, although the corporation itself may be taxable only by Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.070
Renumbered from 150-317.070(1), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
1-1-77
12-70
11-69
1958

Or. Admin. R. 150-317-0150 Adoption of Federal Exempt Organizations

NOTE: Health Maintenance Organizations. With the adoption of Oregon Laws 1987, Ch. 293, Section 36, (Enrolled HB 2225), Oregon exempts the same organizations from Oregon corporation income or excise tax as tax exempt for federal tax purposes, with the exception of health maintenance organizations (HMOs). HMOs are not exempt from the Oregon Corporation income or excise tax for tax years beginning prior to January 1, 1989, if a substantial part of their activities consists of providing commercial type insurance. For tax years beginning on or after January 1, 1989, HMOs are exempt for Oregon tax purposes to the same extent they are exempt for federal tax purposes. For taxable years beginning prior to January 1, 1987, the law and corresponding rules applicable for those years shall remain in full force and effect.

Insurance Companies. For tax years beginning on or after January 1, 1987 and before January 1, 1997, corporations exempt from Oregon corporation excise or income tax include; 1) Foreign or alien insurance companies and foreign or alien interinsurance and reciprocal exchanges, upon which a tax on premiums is levied; 2) Domestic insurance companies organized after January 1, 1971, owned or controlled by a foreign insurance company or by a foreign corporation owning or controlling a foreign insurance company, upon which a tax on premiums is levied. Effective for tax years beginning on or after January 1, 1997, foreign or alien insurance companies are exempt from the corporation excise tax only with respect to the underwriting profit derived from writing wet marine and transportation insurance subject to tax under ORS 731.824 and ORS 731.828.

Other Exempt Corporation. Oregon specifically exempts those corporations listed under ORS 317.080, including: 1) Corporations organized and operated primarily for the purpose of furnishing permanent residential, recreational and social facilities primarily for elderly persons; 2) People’s utility districts established under ORS Chapter 261; 3) Charitable risk pools described in section 501(n) of the Internal Revenue Code; and 4) Qualified state tuition programs described in section 529 of the Internal Revenue Code.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.080
Renumbered from 150-317.080, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-317-0160 Exemption and Return Requirements

(1) For taxable years beginning on or after January 1, 1987, corporations exempt for federal tax purposes, will no longer need to submit an affidavit or a federal determination letter to the department as previously required. This does not, however, preclude the department from requesting information regarding the activities or other information from the exempt corporation.

(2) In order to establish its exemption and thus be relieved of the duty of filing returns and paying taxes, each organization claiming exemption for Oregon purposes but which is not exempt for federal purposes must file with the department:

(a) An affidavit showing the character of the organization, the purpose for which it was organized, its actual activities, the sources and the disposition of its income, whether or not any of its income is credited to surplus or may inure to the benefit of any private stockholder or individual (see below), and in general all other facts relating to its operations which affect its right to exemption;

(b) A copy of the articles of association or incorporation;

(d) The latest financial statement showing the assets, liabilities, receipts and disbursements of the organization. The articles should clearly indicate the disposition to be made of surpluses in the event of termination.

(3) When an organization has established its right to exemption and does not have unrelated business taxable income, it need not thereafter voluntarily make a return or any further showing with respect to its status unless it changes the character of its organization or operations from the purpose for which it is organized, or unless the department requests the filing of returns or the furnishing of other information.

(4) As provided in ORS 317.920, a corporation otherwise exempt from tax shall be subject to Oregon Corporation Excise Tax on its unrelated business taxable income, and shall file a return in any tax year the corporation has unrelated business taxable income.

(5) Organizations exempt under federal law, but not exempt under Oregon law, must attach a copy of the organization’s federal Form 990 or 990T to the Oregon return in lieu of a federal Form 1120.

(6) Organizations which devote a substantial amount of their time or funds to promote legislation or support political candidates are not exempt within any section of ORS 317.080.

(7) The exempt status granted to organizations by the Internal Revenue Service (IRS) or the department may be reviewed at a later date. If the department finds that the exempt status was granted in error due to misstatements or fraud in the application for exemption, or a mistake on a point of law by an employee of the department or the IRS, the exemption will be retroactively revoked to the date the exemption was granted. If the department finds that the exemption was justified when granted, but that subsequent activities disqualified the organization for the exemption, the exemption shall be revoked as of the date such disqualifying activities began.

(8) If an organization’s exemption is revoked by the IRS, the department shall revoke the exemption for Oregon tax purposes with the same effective date as the IRS.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.080
Renumbered from 150-317.080, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-82
12-19-75
6-68
1953

Or. Admin. R. 150-317-0170 Minimum Tax

(1)(a) For tax years beginning on or after January 1, 2009, the tax liability of an affiliated group of corporations filing a consolidated return may not be less than the minimum tax as defined in ORS 317.090. Only one minimum tax is charged per return, regardless of the number of corporations in the group that are doing business in Oregon.

Example 1: X Corporation and its only subsidiary, Y Corporation, are doing business in Oregon and file a consolidated Oregon excise tax return showing a net loss for the 2009 tax year. The consolidated Oregon excise tax return properly shows Oregon sales for X of $500,000 and for Y of $250,000. The minimum tax for the year is $500 based on Oregon sales of $750,000.

(b) For tax years beginning on or after January 1, 2006, and before January 1, 2009 the tax liability of an affiliated group of corporations filing a consolidated return may not be less than the $10 minimum tax multiplied by the number of corporations in the group that are doing business in Oregon.

Example 2: Alpha Corporation and its only subsidiary, Beta Corporation, are doing business in Oregon and file a consolidated Oregon excise tax return showing a net loss for the 2006 tax year. The Oregon minimum tax for the year is $20.

(c) For consolidated returns filed for tax years beginning before January 1, 2006, the department determines that a $10 minimum tax is due for the consolidated group, and the $10 minimum tax due for each affiliate included in the return doing business in Oregon is cancelled. This determination is made under authority of ORS 305.145(3).

Example 3: On July 1, 2006, Corporation A and affiliates filed an amended tax return for 2005. The return included three affiliates doing business in Oregon and showed a net loss for the tax year. Although ORS 317.090 provides that each of the four corporations owes $10 of minimum tax, the department will cancel the tax attributable to the affiliates and only one $10 tax is owed by Corporation A and affiliates.

(2) For tax years beginning on or after January 1, 1999, the excise tax is measured by the corporation's Oregon taxable income as computed in accordance with the provisions of the statute, but the tax cannot be less than the specified minimum. The minimum tax is due even though the corporation had a net loss and it must be paid in full even though the taxpayer was subject to the statute for only a part of the year, except that it may be apportioned in the case of a change of accounting periods. A corporation with no business activity in Oregon is not subject to the minimum tax.

(3) For tax years beginning before January 1, 1999, the provisions of section (2) of this rule apply, except that a corporation qualified to do business in Oregon, but engaging in no business activity in the state, is subject to the $10 minimum tax.

(4) Definition of “Oregon Sales”. For tax years beginning on or after January 1, 2009, the minimum excise tax is determined by referencing the taxpayer’s “Oregon sales.” Corporations using the apportionment method described in ORS 314.650 to 314.665 compute Oregon sales as provided under ORS 314.665. For corporations that apportion apportionable income using a method different from that prescribed by ORS 314.650 to 314.665, "Oregon sales" means the numerator of the sales factor for:

(a) Carriers of freight or passengers in general, as provided in OAR 150-314-0074;

(b) Railroads, as provided in OAR 150-314-0076;

(d) Trucking companies, as provided in OAR 150-314-0080;

(e) Companies engaged in sea transportation service, as provided in OAR 150-314-0082;

(f) Companies involved in interstate river transportation service, as provided in OAR 150-314-0084;

(g) Public utilities (other than those provided for in subsections (a) through (f)), as provided in OAR 150-314-0070, 150-314-0072, and ORS 314.650;

(h) Financial organizations, as defined in ORS 314.610(4), as provided in OAR 150-314-0088;

(i) Taxpayers with income from long-term construction contracts, as provided in OAR 150-314-0353;

(j) Motion picture and television film producers, as provided in OAR 150-31-0357;

(k) Publishers, as provided in OAR 150-314-0455;

(L) Interstate broadcasters, as provided in ORS 314.684;

(m) Insurers (as defined in ORS 317.010(11)), as provided in ORS 317.660(1); and

(n) Title insurers, and health care service contractors not classed as insurers under ORS 317.010(11), as provided in OAR 150-314-0070, including gross premium receipts.

History

Statutory/Other Authority: ORS 305.100 & 317.090
Statutes/Other Implemented: ORS 317.090
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.090, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2010, f. & cert. ef. 2-19-10
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
REV 8-2006(Temp), f. 11-20-06, cert. ef. 11-21-06 thru 12-31-06
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
TC 19-1979, f. 12-20-79, cert. ef. 12-31-79
1953

Or. Admin. R. 150-317-0190 Affordable Housing Credit; Definitions; Transfers; Carry Forward of Unused Credit

(1) Definitions, as used in ORS 317.097.

(a) Community Rehabilitation Program. A "community rehabilitation program" is a program sponsored by a nonprofit corporation or local government unit for the rehabilitation of low income housing.

(b) Project. A "project" is one or more units of housing that will be sold or rented to households whose incomes are less than 80 percent of the area median income.

(c) Time the qualified loan for housing construction, development, acquisition or rehabilitation is made. The "time the qualified loan for housing construction, development, acquisition or rehabilitation is made" is the date a note is signed for a loan and the interest rate becomes effective with the closing of the loan, or the date a conversion loan becomes a permanent loan. Either date may be used to determine the interest rate on nonsubsidized loans made under like terms and conditions as the qualifying affordable housing loan.

(2) If a qualifying loan is transferred by a lending institution to another entity, the transferee's credit must be computed in the same way and subject to the same limitations as the prior lending institution's credit. The transferee cannot claim a credit on the loan beyond the 20 year period that started with the date the loan was originally made.

(3) Unused credits from tax years starting before January 1, 1995 may be carried forward 15 years. Unused credits from tax years starting on or after January 1, 1995 may be carried forward 5 years.

(4) See OAR 813-110-0005 through 813-110-0040 for Housing and Community Development Department rules relating to the Oregon Affordable Housing Tax Credit Program.

History

Statutory/Other Authority: ORS 305.100 & 317.097
Statutes/Other Implemented: ORS 317.097
Renumbered from 150-317.097, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2009, f. 12-21-09, cert. ef. 1-1-10
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 1-1990, f. & cert. ef. 3-15-90

Or. Admin. R. 150-317-0200 Commercial Lending Institution Loans for Underground Storage Tanks or Soil Remediation

(1) ORS 317.099 was repealed December 31, 1991. On January 1, 1992, any finance charge that would have been eligible for a tax credit to a commercial lending institution under ORS 317.099 on the outstanding term of any loan made under ORS 317.099, shall cease to be eligible for a tax credit. Such finance charges accrued after December 31, 1991, shall be eligible for reimbursement by the Department of Environmental Quality, under the provisions of ORS 466.705 to 466.835.

(2) A commercial lending institution with a fiscal tax year ending after January 1, 1992, shall receive a tax credit on all eligible finance charges received or accrued before that date.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.099
Renumbered from 150-317.099, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-317-0210 Carryover of the Lender’s Credit for Weatherization Loans

An excess Lender’s Credit may be carried forward for up to 15 years. Carryovers from tax years beginning in 1977 may not be claimed on the taxpayer’s 1985 or 1986 corporation excise tax returns. Carryovers from tax years beginning in 1978 may not be claimed on the taxpayer’s 1986 corporation excise tax return. For purposes of computing the remaining carryover from tax years beginning in 1977 and 1978, the years in which the credit carryover was not allowed reduces the number of carryover years remaining. Credit carryovers from tax years beginning in 1979 and later may be claimed in tax years beginning in 1985 and 1986. In addition to the Lender’s Credit Form (150-102-125) a separate schedule showing how the amount of unused credit carryover is computed shall be attached to the return for tax years that the unused credit carryover is being claimed.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.111
Renumbered from 150-317.111, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0220 Lender’s Credit: Loans to Wood Heat and Fuel Oil Heat Customers

(1) A credit is available to commercial lending institutions for tax years beginning on or after January 1, 1982, for low interest loans made to wood heat and fuel oil heat customers to finance energy conservation measures. To qualify, the loans must be made on or after January 1, 1982.

(2) The amount of the credit is equal to the difference between the interest charged on a qualifying loan, at an interest rate of 6 percent, and the interest that would have been charged if the loan had been issued at the lending institution’s normal fixed interest rate. The fixed interest rate cannot exceed a maximum rate set by the director of the Office of Energy. The normal fixed interest rate is the rate that would have been charged on a similar loan made on the same day as the qualifying loan. The initial rate of interest charged on variable rate loans may be substituted for the fixed rate if the lending institution does not make fixed rate nonsubsidized loans. If the credit exceeds the commercial lending institution’s tax liability, the balance may be carried forward for up to 15 years.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.112
Renumbered from 150-317.112, REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2001, f. & cert. ef. 12-31-01
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-317.099(Note)-(B)-(1)
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90, Renumbered from 150-317.090(Note)-(B)-(1)
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-317.100(Note)-(A)
12-31-87
12-31-82
12-6-82

Or. Admin. R. 150-317-0230 Lender’s Credit: Computation

The credit is computed as follows:

Step 1: Calculate the interest that would have been charged during the tax year if the qualifying loans had been issued at the commercial lending institution’s normal fixed rate of interest at the time the loans were made.

Step 2: Determine the actual interest charged on the qualifying loans during the tax year at an interest rate of 6 1⁄2 percent.

Step 3: Subtract the interest charged as determined in Step 2 from the interest calculated in Step 1. The difference is the available lender’s credit.

Normal loan fees and prepayment penalties do not affect the eligibility of a low interest loan. Loan fees financed as part of the qualifying loan are includable in computing the interest that would have been charged at the lending institution’s normal interest rate as well as the actual interest charged on the qualifying loan. If a qualified loan is terminated because of a prepayment or default, interest is computed from the start of the tax year through the date of termination at both the 6 1⁄2 percent rate and the normal fixed interest rate determined at the time the loan was made. The amount by which the interest charged at the normal fixed interest rate exceeds the interest charged at 6 1⁄2 percent is included in computing the available lender’s credit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.112
Renumbered from 150-317.112(1), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-317.099(Note)-(B)-(3)
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90, Renumbered from 150-317.090(Note)-(B)-(3)
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-317.100(Note)-(C)
RD 15-1987, f. 12-10-87, cert. ef. 12-31-8
12-31-82
12-6-82

Or. Admin. R. 150-317-0240 Lender’s Credit: Definitions

(1) Fuel oil is defined under rules adopted by the Office of Energy.

(2) “Commercial lending institution” is defined in Section 22, Chapter 894, Oregon Laws 1981 to include state and federal credit unions maintaining an office in the state. Although credit unions are included in the definition, they are exempt from the Oregon Corporate Excise Tax by ORS 317.080(12). Section 28, Chapter 894, Oregon Laws 1981 grants a credit “…against taxes otherwise due under this chapter for the taxable year.” Therefore, unless a credit union loses its exemption from the Oregon Corporation Excise Tax by either paying more than 8 percent interest on share accounts or by having unrelated business taxable income, it would not be eligible for the refundable credit.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.112
Renumbered from 150-317.112(7), REV 67-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1999, f. 12-1-99, cert. ef. 12-31-99
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-317.099(Note)-(B)-(2)
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90, Renumbered from 150-317.090(Note)-(B)-(2)
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-317.100(Note)-(B)
12-31-82
12-31-81, Renumbered from 150-317.100(Note)

Or. Admin. R. 150-317-0245 Commencement of Long Term Enterprise Zone Tax Credit

For purposes of determining the commencement of the tax credit under ORS 317.124, a facility is “placed in service” when a certified business has received a permit to occupy and use the building for its intended purpose.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.124
REV 5-2019, adopt filed 12/11/2019, effective 01/01/2020

Or. Admin. R. 150-317-0250 Long Term Enterprise Zone Distributions

(1) Distributions from the Long Term Enterprise Zone Fund to local taxing districts under ORS 317.131 include only corporate tax liability payments received prior to the department’s calculation of the distribution for the year.

(2) Any reduction of corporate tax liability of a taxpayer for a tax year, which is recognized and accepted subsequent to the deposit of that taxpayer’s tax payments for the tax year into the Fund, will not be considered when determining the amount of the distribution to local taxing districts.

(3) If the department errs when calculating the correct amount of a distribution, the department may adjust the erroneous distribution and may require the return of any erroneously distributed payments made to local taxing districts.

(4) If the department requires the return of erroneously distributed payments made to local taxing districts; the department shall, if practicable, subtract the amount of the erroneously distributed payment to the local taxing district from the next distribution to the local taxing district. Otherwise, the department shall bill the local taxing district for any amount of an erroneously distributed payment that the department is unable to recover from the local taxing district by subtracting funds from the next distribution to the local taxing district.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.131
Renumbered from 150-317.131, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2014, f. 12-23-14, cert. ef. 1-1-15

Or. Admin. R. 150-317-0260 Lender's Credit for Agriculture Workforce Housing

(1) A credit is available to commercial lending institutions that make low interest loans to finance the construction or rehabilitation of agriculture workforce housing.

(2) Qualifications for the Tax Credit:

(a) The agriculture workforce housing must be located in Oregon.

(b) The interest rate charged by the lending institution cannot exceed 13.5 percent per annum. If the interest rate exceeds 13.5 percent for a short period of time, but the annual rate for the year is 13.5 percent or less, the credit would not be lost for that year. Each year will stand alone in determining whether the credit is available for the year.

(3) Computation of the Tax Credit:

(a) For loans made in tax years beginning on or after January 1, 2002, the credit is equal to 50 percent of the interest income earned. For loans made in tax years beginning on or after January 1, 1996, and before January 1, 2002, the credit is equal to 30 percent of the interest income earned. For loans made in tax years beginning before January 1, 1996, the credit is equal to 50 percent of the interest actually received by the commercial lending institution on loans certified by the borrower to finance the construction or rehabilitation of agriculture workforce housing. Construction includes acquisition of new or used prefabricated or manufactured housing. Interest that has been accrued but not actually received may not be included in computing the credit.

(b) Interest on loans to finance the acquisition of land and existing improvements on that land does not qualify for the credit. If a loan is made to cover the acquisition and construction or rehabilitation costs, only interest on the portion of the loan attributable to the construction and rehabilitation costs qualifies for the credit.

(c) Loan fees and other charges imposed and collected by the lending institution may not be included in the computation of the credit.

(d) The tax credit must be claimed over the term of the loan or 10 tax years, whichever is shorter.

(4) If a qualifying loan is transferred by the original lender to another commercial lending institution, the transferee may not claim a credit on the loan beyond the 10-year period that started with the tax year the loan was originally made. The transferee's credit must be computed in the same way and subject to the same limitations as the original lender's credit.

(5) If a qualifying loan is transferred by the original lender to another person, the transferor may retain the right to claim the credit if it also retains the responsibility for servicing the loan.

(6) For tax years beginning on or after January 1, 2002, a lending institution that is not subject to tax under ORS Chapter 317 may sell or otherwise transfer its allowable credit to a taxpayer that is subject to taxation under ORS Chapter 317. The transferee of the credit may claim the credit for the same tax years the transferor would have been allowed to claim the credit. The transferee and the transferor must attach to the return on which the credit is claimed by the transferee, a statement that includes the following information:

(a) The transferor's name, federal employer ID number (FEIN) and Oregon business identification number (BIN);

(b) The transferee's name, FEIN and BIN;

(d) The amount of any proceeds received for the transfer; and

(e) Signatures of a corporate officer of the transferor and a corporate officer of the transferee.

(7) A single unit of housing can qualify as an agriculture workforce housing project.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.147
Renumbered from 150-317.147, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 1-2014, f. & cert. ef. 7-31-14
REV 8-2001, f. & cert. ef. 12-31-01
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-317.145(Note)-(C)-(2)
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-317-0270 Credit for Contributions of Computers, Scientific Equipment, and Research

(1) In General. Charitable contributions of tangible personal property shall not be eligible for the credit if the donee educational institution does not use the property primarily for the education of students in Oregon. The requirement that the property be used primarily for the education of students in Oregon is met if the donee provides the donor (taxpayer) with a written statement that the property’s use is in accordance with this requirement. Such written statement shall be made available to the department upon request. For purposes of this rule “primarily” means at least 80 percent.

(2) Substantiation of Fair Market Value.

(a) When the taxpayer files its Oregon return claiming a credit under this section, a schedule shall be attached to the Oregon return listing the following information:

(A) The name and address of the donee;

(B) A description of the property contributed;

(D) The fair market value of the donation.

(b) Upon audit, the taxpayer may be required to provide the same substantiation of fair market value that would be necessary for a charitable contribution deduction allowable under Internal Revenue Code Section 170.

(3) Effective Date.

(a) The credit for qualified charitable contributions of tangible personal property or maintenance agreements is effective for contributions made in tax years beginning on or after January 1, 1986, and prior to January 1, 2004.

(b) The credit for qualified charitable contributions of monies made under a contract or agreement for scientific or engineering research is effective for contributions of monies made under a contract or agreement entered into in taxable years beginning on or after January 1, 1986, and prior to January 1, 2004. If the contract or agreement was entered into in a taxable year beginning prior to January 1, 2004, but the monies aren’t contributed until a taxable year beginning on or after January 1, 2004, the credit shall be allowed for the taxable year the monies are contributed to the qualifying educational institution.

(4) Carryover. Credits otherwise allowable for tax years beginning on or after January 1, 1993, which are not used by the taxpayer in a particular year may be carried forward for up to five years.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.151
Renumbered from 150-317.151, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1997, f. 9-12-97, cert. ef. 12-31-97
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-317.102(Note)-(B)
12-31-89, Renumbered from 150-317.102(NOTE) to 150-317.102(Note)-(B)
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
12-31-87
12-31-85
10-7-85

Or. Admin. R. 150-317-0280 Qualified Research Credit

(1) This rule applies to tax years beginning on or after January 1, 1989 and before January 1, 2018.

(2) The Qualified Research credit may be calculated in any manner allowed under the applicable version of IRC 41. The applicable percentage for Oregon purposes is 5% regardless of the method used to calculate the credit.

History

Statutory/Other Authority: ORS 305.100 & ORS 317.152
Statutes/Other Implemented: ORS 317.152
REV 18-2021, amend filed 12/15/2021, effective 01/01/2022
Renumbered from 150-317.152, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2015, f. 12-23-15, cert. ef. 1-1-16

Or. Admin. R. 150-317-0290 Research Tax Credit: Notice of Election

The election to compute the credit under ORS 317.152 or 317.154 shall be made on the Oregon return for the tax year in which the credit is claimed. The election can be changed on an amended return subject to the limitations provided in 314.410 and 314.415.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.153
Renumbered from 150-317.153, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-317.145(Note)-(B)-(1)
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
12-31-89, Renumbered from 150-317.145(Note)-(B) to 150-317.145(Note)-(B)-(1)
9-20-89

Or. Admin. R. 150-317-0300 Research Tax Credit: Alternative Computation

(1) The research credit based on Oregon sales is the lesser of the following:

(a) Five percent of the amount by which the qualified research expenses exceed 10 percent of Oregon sales,

(b) $10,000 times the number of percentage points by which the qualifying research expenses exceed 10 percent of Oregon sales; or

(2) For tax years beginning on or after January 1, 2006, the credit may not exceed $2,000,000. The limit applies to the consolidated group when a consolidated Oregon return is filed.

(3) For tax years beginning on or after January 1, 1995 and before January 1, 2006, the credit may not exceed $500,000. The limit applies to the consolidated group when a consolidated Oregon return is filed.

(4) For tax years beginning before January 1, 1995, the credit may not exceed $50,000 or one-third of the excise tax liability of the taxpayer before credits, whichever is less. These limits apply to the consolidated group when a consolidated Oregon return is filed.

(5) Credits otherwise allowable for tax years beginning before January 1, 1995 and not used in such years may not be carried forward. Credits otherwise allowable for tax years beginning on or after January 1, 1995 and not used in such years may be carried forward for up to 5 years.

Example: A corporation has 1994 Oregon sales of $40,000,000, qualified research expenses of $4,900,000 and Oregon excise tax of $264,000 before credits. The allowable 1994 credit is calculated as follows:

Credit before limitations:

Qualified research expenses — $4,900,000

Less: Oregon sales — $40,000,000 x .10

10% of Oregon sales — (4,000,000)

Excess — $900,000 x .05

Credit before limitations — $45,000

Limitations:

Qualified research expenses in

excess of 10% of Oregon sales — $900,000

Divide by Oregon sales — ÷ 40,000,000

Excess percentage points — 2.25

Multiply by $10,000 — x $10,000

$22,500

Maximum credit amount — $50,000

One-third of excise tax liability before credits ($264,000 ÷ 3) $88,000

The credit allowed is $22,500.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.154
Renumbered from 150-317.154, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2006, f. & cert. ef. 7-31-06
REV 8-2001, f. & cert. ef. 12-31-01
RD 3-1995, f. 12-29-95, cert. ef. 12-31-95
12-31-93
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-317-0310 Bad Debt Reserve of Financial Institutions Not Qualifying as Large Banks that Have Differences in Reserve for Federal and Oregon Tax Purposes

(1) For tax years beginning on or after January 1, 1987, Oregon has adopted the federal provisions for treatment of bad debts of financial institutions provided in Sections 585(a) and 585(b) of the Internal Revenue Code (IRC). These provisions apply to financial institutions not considered large banks, as defined in IRC 585(c)(2).

(2) For Oregon tax purposes, the allowable addition to the reserve for bad debts shall be computed using the method provided in IRC 585(b), starting with the ending balance in the bad debt reserve calculated for Oregon tax purposes for the 1986 tax year.

(a) For 1987 tax years, the federal law provides that the addition to reserve for bad debts shall be the greater of the amounts computed using the percentage method in IRC 585(b)(2) or the experience method in IRC 585(b)(3), as revised in 1986.

(b) For tax years beginning on or after January 1, 1988, federal law provides that the addition to reserve for bad debts shall be no greater than the amount computed using the experience method in IRC 585(b)(2).

(c) An Oregon addition modification shall be made if the federal addition exceeds the Oregon addition to the reserve for bad debts for the tax year. An Oregon subtraction modification shall be made if the Oregon addition exceeds the federal addition to the reserve for bad debts for the tax year.

Example: Small Bank, Inc., must calculate its 1991 addition to its reserve for bad debts based on the following information:

Base Year—1987

Federal reserve balance, 12/31/87—$600

Oregon reserve balance, 12/31/87—$400

Bad debts charged against Oregon and federal reserves during 1991—$500

Federal reserve balance, 12/31/91—$300

Oregon reserve balance, 12/31/91—$200

Total bad debts, after recoveries, sustained in current and 5 preceding years—$2,500

Outstanding loans, 12/31/87—$150,000

Outstanding loans, 12/31/91—$180,000

Sum of loans outstanding at end of current and 5 preceding years—$960,000

Using the experience method, the addition to the reserves for bad debts for 1991 is computed as follows:[Table not included. See ED. NOTE.]

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.259
REV 59-2017, f. & cert. ef. 8-8-17
Renumbered from 150-317.259-(A), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-317-0320 Modification of Federal Taxable Income: Dividends from Certain Subsidiaries

(1) For taxable years beginning before January 1, 1986, a corporation owning 50 percent or more of the voting stock of another corporation is allowed to subtract from federal taxable income amounts included as dividends from the subsidiary. The subtraction is limited, however, to the extent that the payor corporation is subject to Oregon tax.

Example: Corporation S is a wholly-owned subsidiary of Corporation P. Corporation P does business only in Oregon, but Corporation S has activities within and without the state and an Oregon apportionment factor of 10 percent. In 1983, S pays dividends of $10,000, all of which are included in P’s federal taxable income. The allowable subtraction for P is $1,000 ($10,000 x 10 percent).

(2) For tax years beginning on or after January 1, 1985, Oregon does not recognize any transaction between a corporation and a related domestic international sales corporation (DISC) or foreign sales corporation (FSC). Therefore, any dividends received in these years from a related DISC or FSC that are included in federal taxable income shall be subtracted to derive Oregon taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.267
Renumbered from 150-317.267-(A), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83, Renumbered from 150-317.267

Or. Admin. R. 150-317-0330 Modification for Dividends Received

(1) For dividends received or accrued after December 31, 1987, in tax years ending after December 31, 1987, a corporation is allowed to subtract from federal taxable income 80 percent of dividends received or deemed received from another corporation. Dividends deemed received includes subpart F income included in federal taxable income pursuant to IRC section 951. In order to take the Oregon dividends received deduction, however, the taxpayer must first add back the federal dividend received deductions allowed by IRC sections 243 and 245 and the dividends eliminated under the federal consolidation rules. Exceptions to this general rule are as follows:

(a) Dividends received from corporations owned less than 20 percent by the recipient must be reduced by a 70 percent rather than 80 percent dividends received deduction for dividends received or accrued after December 31, 1987.

(b) Dividends received from a foreign sales corporation and deducted under IRC section 245(c) are not added back. These dividends are totally excluded from Oregon taxable income.

(c) Dividends received from a related domestic international sales corporation are totally excluded from Oregon taxable income. A subtraction is allowed for these dividends to the extent they are included in federal taxable income.

(d) Dividend income included in federal taxable income pursuant to the “gross-up” provisions of IRC section 78 is not taxable by Oregon. These dividends are subtracted in full under ORS 317.273.

(e) Dividends eliminated under IRC section 243(a)(3) are not added back to federal taxable income on the Oregon return if the recipient and the payer corporations are both members of the same unitary group filing an Oregon consolidated tax return. If they are not members of the same Oregon consolidated group, the 100 percent federal dividend deduction is added back to federal taxable income and the appropriate Oregon dividends received deduction is subtracted.

(2) Unlike the federal dividend received deduction, the Oregon deduction is permitted on dividends received or deemed received from foreign as well as domestic corporations. Income included in federal taxable income pursuant to IRC section 951(a) qualifies for the dividend received deduction. Such income is a dividend “deemed received.” Dividends from tax exempt corporations and dividends that qualify for a federal dividend deduction limited to a certain measure of income qualify for the full Oregon dividend deduction. An example of the latter is a dividend from a Federal Home Loan Bank.

(3) An Oregon dividends received deduction is not allowed with respect to “dividends” that are not treated as dividends under federal law or dividends that are not included in federal taxable income as provided in ORS 317.267(1). For tax years beginning on or after January 1, 2006, ORS 317.267(2)(b) provides that a dividend that is not treated as a dividend under IRC section 243(d) or 965(c)(3) may not be treated as a dividend for purposes of the Oregon dividends received deduction.

Example: L Corporation received $10,000 in “dividend” income from a mutual savings bank. L Corporation does not own stock in the bank. The $10,000 represents interest income on funds deposited in the mutual savings bank, and not dividend income. Since these “dividends” are not treated as dividends for purposes of the federal dividends received deduction under the provisions of IRC section 243(d)(1), they are not eligible for the Oregon dividends received deduction.

(4) For tax years beginning on or after January 1, 2006, a taxpayer may not claim an Oregon dividend received deduction for a dividend if the federal dividends received deduction is not allowed because of IRC section 246(a) or (c).

(5) In the case of dividends on debt-financed portfolio stock, the percentage of the Oregon dividend received deduction will be reduced in the same manner as the federal deduction under IRC section 246A.

(6) For tax years beginning before January 1, 2007, a dividends received deduction allowed under IRC section 965 for federal tax purposes is allowed in determining taxable income under ORS chapter 317 for the same tax year as the deduction is allowed for federal tax purposes. IRC section 965 provides a temporary dividends received deduction for cash dividends received from controlled foreign corporations.

(7) In the case of any dividend received from an alien, domestic, or foreign insurer that would be included in the taxpayer’s consolidated Oregon return but for the application of ORS 317.710 (5) or (7), the Oregon dividends received deduction is 100%.

[Publications: C ontact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.267
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.267-(B), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 2-2003, f. & cert. ef. 7-31-03
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0340 Modification of Federal Taxable Income: Internal Revenue Code Subpart F Income

A taxpayer that owns stock in a “Controlled Foreign Corporation,” as defined in IRC Section 957, may be required to include in federal taxable income its pro rata share of the subpart F income (as defined in IRC Section 952) of the foreign corporation. If the foreign corporation is included with the taxpayer in a combined report permitted or required under ORS 314.363, any subpart F income attributable to the foreign subsidiary shall be subtracted from federal taxable income in arriving at Oregon taxable income.

NOTE: With the adoption of Oregon Laws 1984, Ch. 1, (Enrolled HB 3029), ORS 317.288 was repealed. This rule will no longer be in effect for taxable years beginning on or after January 1, 1986. For all prior years, this rule shall remain in full force and effect.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.288
Renumbered from 150-317.288, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-317-0350 Oregon Subtraction Where Charitable Contribution Is Reduced Under Federal Law

Under IRC section 170(d)(2)(B), a corporation’s current year charitable contribution must be reduced by a corresponding increase in the corporation’s NOL carryover. To derive Oregon taxable income, the amount by which a corporation reduces its charitable contribution shall be subtracted from federal taxable income.

Example: ABC corporation has current year federal taxable income (pre-NOL application) of $100,000 and NOL carry forward amounts from prior years of $120,000. The corporation has a current year charitable contribution of $15,000. Since the NOL application exceeds taxable income, ABC’s otherwise deductible $10,000 charitable contribution is converted to an additional NOL carry forward under IRC section 170(d)(2)(B). The remaining $5,000 excess contribution may be carried forward for five years under IRC section 170(d)(2)(A).

For Oregon, ABC corporation reports federal taxable income (pre-NOL application) of $100,000 in the current year. The $10,000 reduction of the federal charitable contribution is shown as an “other subtraction” on the Oregon return. The remaining $5,000 excess charitable contribution is carried forward as under federal law.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.307
Renumbered from 150-317.307, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96

Or. Admin. R. 150-317-0360 Definition of “State”

For purposes of ORS 317.309, the term “state” shall mean any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and a territory or possession of the United States, and any foreign country or political subdivision thereof.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.309
Renumbered from 150-317.309, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0370 Bad Debt Reserve of Financial Institutions that Have Changed From Reserve Method to Specific Charge-off Method

(1) For tax years beginning on or after January 1, 1987, Oregon has adopted the federal provisions for treatment of bad debts of financial institutions provided in Section 585(c) of the Internal Revenue Code (IRC). Financial institutions considered large banks, defined in IRC 585(c)(2), must recapture the balance in their reserve for bad debts over a four-year period unless they elect the federal “cut-off” method.

(a) The recapture provisions of IRC 585(c)(3) shall be applied to the ending reserve balance calculated for Oregon tax purposes for the 1986 tax year.

(b) For each of the four recapture years, an Oregon addition modification shall be made if the Oregon reserve recaptured exceeds the federal reserve recaptured. An Oregon subtraction modification shall be made if the federal reserve recaptured exceeds the Oregon reserve recaptured.

Example: Lending Corp., a calendar year filer, has a bad debt reserve of $5,000,000 for federal and $3,000,000 for Oregon tax purposes on December 31, 1986. Lending Corp. qualifies as a large bank. It elects to recapture 10 percent of the bad debt reserve as income on its 1987 federal return. An Oregon subtraction modification of $200,000 is calculated as follows: [Table not included. See ED. NOTE.]

(c) Financially troubled banks don’t have to recapture existing bad debt reserves as long as their nonperforming loans exceed seventy-five percent of the average of their equity capital for the year.

(2) Oregon also adopted the cut-off method provided under IRC 585(c)(4) for tax years beginning on or after January 1, 1987. If the financial institution elects the cut-off method, the ending balance of the reserve for bad debts for the 1986 tax year shall not be recaptured. Instead, bad debts in tax years after 1986 shall be charged to the reserve rather than deducted from income. When the entire reserve has been depleted, bad debts shall be deducted as they occur.

(a) The provisions in IRC 585(c)(4) shall be applied to the ending reserve balance calculated for Oregon tax purposes for the 1986 tax year.

(b) The ending balance of the reserve for bad debts as of December 31, 1986, may be greater for federal purposes than it is for Oregon. If so, the Oregon reserve will be depleted before the federal reserve. An Oregon subtraction modification shall be made when the Oregon deduction for bad debts exceeds the federal deduction for the tax year.

Example: Large Bank, Inc., elected the cut-off method of treating its reserve for bad debts, starting in 1987. The reserve balance on January 1, 1991, was $100,000 for federal purposes and $50,000 for Oregon purposes. During 1991, $150,000 of bad debts were written off. An Oregon subtraction modification of $50,000 is calculated as follows: [Table not included. See ED. NOTE.]

(c) The ending balance of the reserve for bad debts as of December 31, 1986, may be greater for Oregon purposes than it is for federal. If so, the federal reserve will be depleted before the Oregon reserve. An Oregon addition modification shall be made when the federal deduction for bad debts exceeds the Oregon deduction for the tax year.

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.310
REV 60-2017, f. & cert. ef. 8-8-17
Renumbered from 150-317.310(2), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-317-0380 Taxes on Net Income or Profits Imposed by any State or Foreign Country

For purposes of ORS 317.314, “net income” is income subject to taxation after allowable deductions and exemptions have been subtracted from gross or total income. This rule shall apply to all taxable years which are open to examination.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.314
Renumbered from 150-317.314, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-317-0390 IRC Section 338: Application to Oregon

(1) Internal Revenue Code (IRC) Section 338 applies when at least 80 percent of the voting power and total value of the stock of a target corporation is acquired by a purchasing corporation. Under the election provided by IRC 338(g), the acquiring corporation treats the purchase of the target corporation’s stock as the purchase of its assets. The target’s assets are given a stepped-up basis and the target reports gain as if its assets were sold at fair market value. The seller recognizes a gain on the sale of stock.

(2) For all Oregon apportionment computations discussed in this rule, the gross receipts from the deemed sale of assets are not included in the target’s sales factor.

(3) If the target filed a separate federal return for the period ending with the date of acquisition, the gain from the deemed sale of assets must be included in the separately filed final return of the target corporation for the period which ends on the date of acquisition.

(a) For Oregon apportionment purposes, the apportionment factors computed on the separate Oregon return for the period ending with the date of acquisition must be used.

(b) The deemed gain on sale of assets is subject to Oregon apportionment if the target is doing business in Oregon.

(c) The gain on sale of stock is taxed by Oregon to the selling corporation through apportionment if the stock is considered a business asset and the seller is doing business in Oregon.

(d) The gain on sale of stock is taxed by Oregon to the selling corporation through allocation if the stock is considered a nonbusiness asset and the seller’s commercial domicile is in Oregon.

Example: S Corporation, a calendar year filer, and its nonunitary subsidiary, T Corporation, file separate federal returns. T does business in Oregon. S does not. On July 31, 2002, P Corporation purchases all of T’s stock from S and makes an election under IRC 338. T files a separate short period Oregon return through July 31, 2002, and apportions income, including the deemed sale of assets, to Oregon using its apportionment factors for the year to date. S’s gain on the sale of T’s stock, an intangible, is not taxed by Oregon.

(4) If the acquired target corporation is the common parent of an affiliated group, the group may elect to file a consolidated federal return. The final return of the common parent is also the final return of each subsidiary, which is considered to be acquired on the same date. The deemed sale of assets for each consolidated corporation must be reported on the consolidated return for the period ending on the date of acquisition. The apportionment factors computed on the Oregon return for the period ending with the date of acquisition must be used to apportion the income including the gain from the deemed sale of assets. The property factor must reflect the corporation’s basis prior to the step-up in basis under IRC 338.

(5) If the acquired corporation was purchased from an affiliated group with which it was unitary and elects to file a consolidated federal return, it must be included in the consolidated Oregon return of the selling group through the date of acquisition. However, the deemed gain from the sale of assets must be included on a separately filed single transaction return unless an election is made under IRC 338(h)(10). (See Section 6 of this rule for further information concerning the IRC 338(h)(10) election). For Oregon purposes, the deemed gain must be attributed to Oregon using the apportionment factors from the consolidated Oregon return for the period ending with the date of acquisition.

(6) An election may be made jointly by the selling and acquiring corporations under IRC 338(h)(10). If a corporation makes the election under IRC 338(h)(10) on its federal return, that election applies to the Oregon return.

(a) If a selling corporation making the election under IRC 338(h)(10) files a consolidated Oregon return including the target corporation, that return must include the gain or loss from the deemed sale of the target’s assets in income to be apportioned. The gain or loss from the sale of the target’s stock will not be recognized. The apportionment factors for the target must be included through the date of the stock sale. The property factor must reflect the target’s basis in its assets prior to the step-up in basis under IRC 338.

(b) If a selling corporation making an election under IRC 338(h)(10) does not file a consolidated Oregon return with the target corporation, and the target corporation is doing business in Oregon, the gain or loss from the target’s deemed sale of assets must be reported on the target’s separately filed Oregon return.

(c) If the selling corporation has not made an election under IRC 338(h)(10) on its federal return, the election will not be accepted by Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.329
Renumbered from 150-317.329, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2003, f. & cert. ef. 7-31-03
RD 6-1996, f. 12-23-96, cert. ef. 12-31-96
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-317-0400 Payments Received Under Federal Safe Harbor Lease Agreements For Transactions Entered Into in Tax Years Beginning on or After January 1, 1983

(1) Oregon law provides that safe harbor lease transactions will not be treated as a lease, or in “any other way” be recognized for Oregon tax purposes. Therefore, for safe harbor lease transactions entered into in tax years beginning on or after January 1, 1983, the following Oregon modifications are required:

(a) Seller-Lessee:

(A) A depreciation subtraction is allowable based upon the original cost of the safe harbor lease property.

(B) Lease payments made to the purchaser-lessor and deducted for federal tax purposes must be added to income.

(C) Interest payments received from the purchaser-lessor and included in income for federal tax purposes must be subtracted from income.

(b) Purchaser-Lessor:

(A) Depreciation deducted for federal tax purposes must be added to income.

(B) Lease payments received from the seller-lessee and included for federal tax purposes must be subtracted from income.

(2) Legal fees, accounting costs or similar expenses incurred or paid to third parties in connection with safe harbor leases are deductible.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.349
Renumbered from 150-317.349-(A), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-317-0410 Payments Received Under Federal Safe Harbor Lease Agreements for Transactions Entered Into in Tax Years Beginning Prior to 1983

(1) Oregon has not adopted the safe harbor lease provisions contained in the federal Economic Recovery Tax Act of 1981 (IRC 168(f)(8)). Sale and leaseback transactions must meet the prior federal sale and leaseback provisions to qualify as a sale and leaseback for Oregon corporation tax purposes. The Oregon treatment of a safe harbor lease transaction for safe harbor lease transactions entered into in tax years beginning prior to January 1, 1983 is as follows:

(a) The down payment received by the seller-lessee is not taxable as income in the year received or accrued.

(b) The down payment made by the purchaser-lessor is not deductible from income. The payment is considered a payment in lieu of federal income taxes which are not deductible under ORS Chapters 317 and 318.

(c) The purchaser-lessor is not taxable in Oregon under ORS Chapter 317 or 318 solely due to federal tax ownership under a safe harbor lease agreement.

(d) The property subject to the safe harbor lease agreement is considered property of the seller-lessee. Depreciation is allowed based upon the original cost less the down payment received.

(e) If the corporation is doing business within and without Oregon and the apportionment provisions (ORS 314.650 through 314.667) apply, the property subject to the safe harbor lease agreement is included in the property factor of the seller-lessee. Lease payments made by the seller-lessee under the agreement are not included in the computation of the property factor.

(2) Since Oregon does not recognize the transaction as a true sale and leaseback, it is necessary to reverse the effect of such treatment in preparing the Oregon tax returns of the seller-lessee, and the purchaser-lessor. Adjustments are as follows:

(a) Seller-Lessee:

(A) A depreciation deduction is allowed based upon the original cost reduced by the down payment received. The deduction is computed using the methods allowable under ORS 317.285 and 318.044.

(B) The lease payments made to the purchaser-lessor are not deductible except to the extent they exceed the principal and interest payments received from the purchaser-lessor.

(C) Interest payments received are includible in income only to the extent the principal and interest payments received exceed the lease payments made to the purchaser-lessor.

(b) Purchaser-Lessor:

(A) No depreciation deduction is allowed for the property purchased and leased under a federal safe harbor lease agreement.

(B) Lease payments received from the seller-lessee are not includible in income.

(3) Legal fees, accounting costs or similar expenses incurred or paid to third parties in connection with safe harbor leases are deductible.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.349
Renumbered from 150-317.349-(B), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 12-1984, f. 12-5-84, cert. ef. 12-31-84
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
8-1-83, Renumbered from 317.105(1)
4-5-83(Temp)

Or. Admin. R. 150-317-0420 Modification of Federal Taxable Income: Difference Between Oregon and Federal Bases on Assets Sold, Exchanged or Otherwise Disposed Of

(1) Oregon law and federal law differ substantially with respect to allowable methods of depreciation, depletion, or other cost recovery. Therefore, the adjusted basis of a particular asset for Oregon tax purposes will often differ from federal adjusted basis. Upon the sale, exchange, or other disposition of such an asset, federal taxable income must be increased or decreased by the difference in depreciation, depletion, etc., allowed or allowable in previous years for Oregon and federal tax purposes.

Example. B corporation purchased property in 1982 for $5,000. For federal tax purposes, B elected to expense the total cost under IRC Section 179 and, therefore, had a basis in the property of zero. For Oregon tax purposes, B had claimed $3,000 of depreciation on the property in 1982 and 1983, and had an adjusted basis of $2,000 in the property when it was sold in 1983. Federal taxable income for 1983 must be reduced by $2,000 ($5,000–3,000) in arriving at Oregon taxable income.

(2) Effective for tax years ending after December 31, 1986, for property dispositions after February 28, 1986, the provisions of section 453C of the Internal Revenue Code concerning the proportionate disallowance rule have been adopted by Oregon as part of its tie to federal accounting methods. Under the federal provisions, a taxpayer’s average indebtedness is treated as an installment payment in the ratio of the face amount of installment obligations receivable to the adjusted basis in all assets.

(3) In computing Oregon taxable income, a modification shall be made to reflect the difference in deemed installment income created for federal and Oregon tax purposes by the proportionate disallowance rule. Such a difference arises when the basis of assets for federal and Oregon tax purposes is not the same. If the Oregon deemed income is greater than the federal, the difference shall be an addition. If the Oregon deemed income is less than the federal, the difference shall be a subtraction.

(4) Oregon has also adopted the repeal of IRC Section 453C through its tie to federal accounting methods. The repeal applies to dispositions in taxable years beginning after December 31, 1987.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.356
Renumbered from 150-317.356, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-317-0430 Modification of Federal Taxable Income: Timber Cut but Unsold

(1) For federal tax purposes, a taxpayer may elect under Section 631(a) of the Internal Revenue Code to treat the cutting of timber as a sale or exchange of such timber, even if it remains unsold at the end of the tax year. For Oregon tax purposes, the gain is not included in income until the actual sale takes place.

(2) The gain from the sale or cutting of timber that is included as capital gain income for federal tax purposes under IRC 631(a) does not automatically qualify as capital gain income for Oregon tax purposes. Gain from the sale or cutting of timber not qualifying as capital assets under IRC 1221 shall not be used to offset capital losses. However, such gain may be used as an offset to ordinary losses.

(3) In order to modify federal taxable income to reverse the effects of IRC Section 631(a), the taxpayer must compare the amount of Section 631(a) gain in beginning and ending inventory. If the amount of such gain in ending inventory exceeds the amount in beginning inventory, the difference is subtracted from federal taxable income. If the amount of Section 631(a) gain in beginning inventory exceeds the amount in ending inventory, the difference must be added to federal taxable income in arriving at Oregon taxable income.

[Publications: Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.362
Renumbered from 150-317.362, REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-317-0440 Depletion Allowance; Method of Computation

Except in the case of metal mines with respect to which percentage depletion is allowed, the computation of the allowance for depletion of mines, oil and gas wells, other natural deposits and timber, for a given year shall be based upon the number of units of the particular class removed during that year and the unit cost for depletion purposes of such deposits or timber. The unit cost for depletion purposes of any taxable period is to be determined by dividing the sum of the amount to be recovered by depletion of the particular class at the beginning of the taxable period and the additions at cost during the period by the sum of the units of the particular class on hand at the beginning of the taxable period and the number of units acquired during such period. As to capitalization of carrying charges (items of expenses which do not add to the value of the property, such as interest and taxes), see IRC Section 266.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.374
Renumbered from 150-317.374(2), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
6-68, Renumbered from 150-317.290(2)

Or. Admin. R. 150-317-0450 Depletion of Metal Mines

In the case of metal mines, a taxpayer may compute its depletion allowance based on the cost of the property, as provided in ORS 317.374(2), or by using percentage depletion. For purposes of this section, metal mines include those mines where the metal being extracted occurs in a pure state, such as gold or silver, or where it is found in combination with other substances, such as in the case of aluminum obtained from bauxite. The percentage depletion allowance is equal to 15 percent of the gross income from the property during the tax year, but shall not in any case exceed 50 percent of the net income of the taxpayer (computed without allowance for depletion) from the property. In its first return made under the tax law, the taxpayer must state, as to each property with respect to which it has any item of income or deduction (in case of metal mines), whether it elects to have the depletion allowance for each such property for the tax year computed with or without reference to percentage depletion. An election once exercised under this paragraph cannot thereafter be changed by the taxpayer, and the depletion allowance in respect to each such property will for all succeeding tax years be computed in accordance with the election so made.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.374
Renumbered from 150-317.374(3), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
12-31-83, Renumbered from 150-317.290(3)
6-68

Or. Admin. R. 150-317-0460 Limitation on Oregon Net Loss Deduction

(1) The Oregon net loss which is deductible in any year is the Oregon net loss of a prior year reduced by taxable income, if any, in the intervening tax year or years between the year of loss and the succeeding tax year in which the Oregon net loss deduction is claimed. Net losses occurring in tax years beginning prior to January 1, 1987, can be carried forward five tax years. Net losses occurring in tax years beginning on or after January 1, 1987, can be carried forward fifteen tax years. See the limitation on “apportioned” taxpayers in ORS 314.675. In computing the taxable income which will reduce the Oregon net loss which is carried forward, any refund of an expense used in computing the Oregon net loss which is excluded from gross income shall be added to and included in the taxable income of an intervening tax year.

(2) If a consolidated Oregon return is filed in tax years beginning on or after January 1, 1986, the separate return limitation year (SRLY) rules as defined in Treasury Regulation §1.1502-1, shall be followed. Oregon net losses incurred in tax years beginning prior to January 1, 1986, shall be considered losses from a separate return limitation year. Therefore, the Oregon net losses from those years can be deducted in tax years beginning on or after January 1, 1986, only to the extent the same corporation that incurred the loss has Oregon net income on a separate basis. This limitation does not apply to a corporation that qualifies as a common parent. The provisions of this paragraph are demonstrated by the following examples: [Example not included. See ED. NOTE.]

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.476
REV 32-2017, f. & cert. ef. 7-21-17
Renumbered from 150-317.476(4), REV 68-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
12-31-83
1-69, Renumbered from 150-317.297(4)

Or. Admin. R. 150-317-0470 Pre-change and Built-in Losses

(1) Pre-change and built-in losses, other than capital losses, which the taxpayer elects to carry back under federal law, must be carried forward and subtracted in computing Oregon taxable income to the extent that such losses are apportioned or allocated to Oregon. All limitations imposed under ORS 317.478 apply to the loss carryforward amount. If the pre-change or built-in loss carried back for federal purposes is a capital loss, the provisions of OAR 150-317-0060 apply.

(2) When the assets of a corporation are acquired by another corporation and the provisions of IRC section 382 apply, the Oregon apportionment factors of the old loss corporation for the reporting period ending on the date of ownership change are considered the Oregon apportionment factors of the new loss corporation existing at the time of the change in ownership. These apportionment factors must be used to compute the IRC section 382 limitation applicable to Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.478
Renumbered from 150-317.478, REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2000, f. & cert. ef. 8-3-00
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92

Or. Admin. R. 150-317-0480 Definition of “Premiums” in the Insurance Sales Factor

For purposes of computing the Insurance Sales Factor, the term “premiums” shall mean “premiums written” as required to be reported in the Annual Statement filed with the Department of Consumer and Business Services, Insurance Division.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.660
Renumbered from 150-317.660(1), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-317-0490 Insurers; Wage and Commission Factor

(1) For tax years beginning on or after January 1, 2007, ORS 317.660 provides that the apportionment factor for insurance companies consists of only the insurance sales factor.

(2) For tax years beginning prior to January 1, 2007, the wages, salaries, commissions and other compensation for personal services included in the wage and commission apportionment factor denominator for insurers are the amounts required to be included in appropriate schedules of the annual report filed with the Insurance Division of the Department of Consumer and Business Services.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.660
Renumbered from 150-317.660(2), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08
REV 5-2000, f. & cert. ef. 8-3-00

Or. Admin. R. 150-317-0500 Applicable Date

OAR 150-317-0500 to 150-317-0670, concerning consolidated Oregon returns, apply to tax years beginning on or after January 1, 1986.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.705
Renumbered from 150-317.705, REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0510 Unitary Business

(1) This rule is based partially on a model regulation adopted by the Multistate Tax Commission to promote uniform treatment of the unitary business principle by the states. Sections (3) through (10) of this rule apply to tax years beginning on or after January 1, 2007. However, the principles outlined in those sections may also be applied to years prior to 2007 to the extent that they reflect case history and department policy.

(2) The presence of all of the factors described in ORS 317.705(3) will demonstrate that a unitary business exists, but the presence of one or two such factors may also demonstrate the flow of value requisite for a unitary business determination.

(3) The Concept of a Unitary Business. A unitary business is a single economic enterprise that is made up either of separate parts of a single business entity or of a commonly controlled group of business entities that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide a synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts. This flow of value to a business entity located in Oregon that comes from being part of a unitary business conducted both within and without Oregon is what provides the constitutional due process "definite link and minimum connection" necessary for Oregon to apportion apportionable income of the unitary business, even if that income arises in part from activities conducted outside of Oregon. The apportionable income of the unitary business is then apportioned to Oregon using the apportionment formula set forth in ORS 314.650. This sharing or exchange of value may also be described as requiring that the operation of one part of the business be dependent upon, or contribute to, the operation of another part of the business. Phrased in the disjunctive, the foregoing means that if the activities of one business either contributes to the activities of another business or are dependent upon the activities of another business, those businesses are part of a unitary business.

(4) Constitutional Requirement for a Unitary Business. The sharing or exchange of value described in section (3) that defines the scope of a unitary business requires more than the mere flow of funds arising out of a passive investment or from the financial strength contributed by a distinct business undertaking that has no operational relationship to the unitary business. In Oregon, the unitary business principle will be applied to the fullest extent allowed by the U.S. Constitution. The unitary business principle will not be applied where the result would not be allowed by the U.S. Constitution.

(5) Separate Trades or Businesses Conducted within a Single Entity. A single entity may have more than one unitary business. In such cases it is necessary to determine the apportionable income attributable to each separate unitary business as well as its nonapportionable income, which is specifically allocated. The apportionable income of each unitary business is then apportioned by a formula that takes into consideration the in-state and the out-of-state factors that relate to the respective unitary business whose income is being apportioned.

(6) Unitary Business Unaffected by Formal Business Organization. A unitary business may exist within a single business entity or among a commonly controlled group of business entities.

(7) Determination of a Unitary Business. A unitary business is characterized by significant flows of value evidenced by factors such as those described in Mobil Oil Corp. v. Vermont, 445 U.S. 425 (1980): centralization of management, economies of scale, and functional integration. These factors provide evidence of whether the business activities operate as an integrated whole or exhibit substantial mutual interdependence. Facts suggesting the presence of the factors mentioned above should be analyzed in combination for their cumulative effect and not in isolation. A particular business operation may be suggestive of one or more of the factors mentioned above.

(8) Description and Illustration of Centralization of Management, Economies of Scale, and Functional Integration.

(a) Centralization of Management. Centralization of management exists when directors, officers, and/or other management employees jointly participate in the management decisions that affect the respective business activities and that may also operate to the benefit of the entire economic enterprise. Centralization of management can exist whether the centralization is effected from a parent entity to a subsidiary entity, from a subsidiary entity to a parent entity, from one subsidiary entity to another, from one division within a single business entity to another division within a business entity, or from any combination of the foregoing. Centralization of management may exist even when day-to-day management responsibility and accountability has been decentralized, so long as the management has an ongoing operational role with respect to the business activities. An operational role can be effected through mandates, consensus building, or an overall operational strategy of the business, or any other mechanism that establishes joint management.

(A) Facts Providing Evidence of Centralization of Management. Evidence of centralization of management is provided when common officers participate in the decisions relating to the business operations of the different segments. Centralization of management may exist when management shares or applies knowledge and expertise among the parts of the business. Existence of common officers and directors, while relevant to a showing of centralization of management, does not alone provide evidence of centralization of management. Common officers are more likely to provide evidence of centralization of management than are common directors.

(B) Stewardship Distinguished. Centralized efforts to fulfill stewardship oversight are not evidence of centralization of management. Stewardship oversight consists of those activities that any owner would take to review the performance of or safeguard an investment. Stewardship oversight is distinguished from those activities that an owner may take to enhance value by integrating one or more significant operating aspects of one business activity with the other business activities of the owner. For example, implementing reporting requirements or mere approval of capital expenditures may evidence only stewardship oversight.

(b) Economies of Scale. Economies of scale refers to a relation among and between business activities resulting in a significant decrease in the average per unit cost of operational or administrative functions due to the increase in operational size. Economies of scale may exist from the inherent cost savings that arise from the presence of functional integration or centralization of management. The following are examples of business operations that can support the finding of economies of scale. The order of the list does not establish a hierarchy of importance.

(A) Centralized Purchasing. Centralized purchasing designed to achieve savings due to the volume of purchases, the timing of purchases, or the interchangeability of purchased items among the parts of the business engaging in the purchasing provides evidence of economies of scale.

(B) Centralized Administrative Functions. The performance of traditional corporate administrative functions, such as legal services, payroll services, pension and other employee benefit administration, in common among the parts of the business may result in some degree of economies of scale. A business entity that secures savings in the performance of corporate administrative services due to its affiliation with other business entities that it would not otherwise reasonably be able to secure on its own because of its size, financial resources, or available market, provides evidence of economies of scale.

(c) Functional integration: Functional integration refers to transfers between, or pooling among, business activities that significantly affect the operation of the business activities. Functional integration includes, but is not limited to, transfers or pooling with respect to the unitary business's products or services, technical information, marketing information, distribution systems, purchasing, and intangibles such as patents, trademarks, service marks, copyrights, trade secrets, know-how, formulas, and processes. There is no specific type of functional integration that must be present. The following is a list of examples of business operations that can support the finding of functional integration. The order of the list does not establish a hierarchy of importance.

(A) Sales, exchanges, or transfers (collectively "sales") of products, services, and/or intangibles between business activities provide evidence of functional integration. The significance of the intercompany sales to the finding of functional integration will be affected by the character of what is sold and/or the percentage of total sales or purchases represented by the intercompany sales. For example, sales among business entities that are part of a vertically integrated unitary business are indicative of functional integration. Functional integration is not negated by the use of a readily determinable market price to affect the intercompany sales, because such sales can represent an assured market for the seller or an assured source of supply for the purchaser.

(B) Common Marketing. The sharing of common marketing features among business entities is an indication of functional integration when such marketing results in significant mutual advantage. Common marketing exists when a substantial portion of the business entities' products, services, or intangibles are distributed or sold to a common customer, when the business entities use a common trade name or other common identification, or when the business entities seek to identify themselves to their customers as a member of the same enterprise. The use of a common advertising agency or a commonly owned or controlled in-house advertising office does not by itself establish common marketing that is suggestive of functional integration. Such activity, however, is relevant to determining the existence of economies of scale and/or centralization of management.

(C) Transfer or Pooling of Technical Information or Intellectual Property. Transfers or pooling of technical information or intellectual property, such as patents, copyrights, trademarks and service marks, trade secrets, processes or formulas, know-how, research, or development, provide evidence of functional integration when the matter transferred is significant to the businesses' operations.

(D) Common Distribution System. Use of a common distribution system by the business entities, under which inventory control and accounting, storage, trafficking, and/or transportation are controlled through a common network provides evidence of functional integration.

(E) Common Purchasing. Common purchasing of substantial quantities of products, services, or intangibles from the same source by the business entities, particularly where the purchasing results in significant cost savings or where the products, services or intangibles are not readily available from other sources and are significant to each entity's operations or sales, provides evidence of functional integration.

(F) Common or Intercompany Financing. Significant common or intercompany financing, including the guarantee by or the pledging of the credit of, one or more business entities for the benefit of another business entity or entities provides evidence of functional integration, if the financing activity serves an operational purpose of both borrower and lender. Lending which serves an investment purpose of the lender does not necessarily provide evidence of functional integration. See subsection (8)(a) for discussion of centralization of management.

(9) Indicators of a Unitary Business.

(a) Same Type of Business. Business activities that are in the same general line of business generally constitute a single unitary business, as, for example, a multistate grocery chain.

(b) Steps in a Vertical Process. Business activities that are part of different steps in a vertically structured business almost always constitute a single unitary business. For example, a business engaged in the exploration, development, extraction, and processing of a natural resource and the subsequent sale of a product based upon the extracted natural resource, is engaged in a single unitary business, regardless of the fact that the various steps in the process are operated substantially independently of each other with only general supervision from the business's executive offices.

(c) Strong Centralized Management. Business activities which might otherwise be considered as part of more than one unitary business may constitute one unitary business when there is a strong central management, coupled with the existence of centralized departments for such functions as financing, advertising, research, or purchasing. Strong centralized management exists when a central manager or group of managers makes substantially all of the operational decisions of the business. For example, some businesses conducting diverse lines of business may properly be considered as engaged in only one unitary business when the central executive officers are actively involved in the operations of the various business activities and there are centralized offices which perform for the business activities the normal matters which a truly independent business would perform for itself, such as personnel, purchasing, advertising, or financing.

(10) Commonly Controlled Group of Business Entities. Separate corporations can be part of a unitary business only if they are members of a commonly controlled group.

(a) A "commonly controlled group" means any of the following:

(A) A parent corporation and any one or more corporations or chains of corporations, connected through stock ownership (or constructive ownership) with the parent, but only if:

(i) The parent owns stock possessing more than 50 percent of the voting power of at least one corporation, and, if applicable,

(ii) Stock cumulatively possessing more than 50 percent of the voting power of each of the corporations, except the parent, is owned by the parent, one or more corporations described in subparagraph (i), or one or more other corporations that satisfy the conditions of this subparagraph.

(B) Any two or more corporations, if stock possessing more than 50 percent of the voting power of the corporations is owned, or constructively owned, by the same person.

(i) For purposes of this paragraph, "stapled entities" means any group of two or more corporations if more than 50 percent of the ownership or beneficial ownership of the stock possessing voting power in each corporation consists of stapled interests.

(ii) Two or more interests are stapled interests if, by reason of form of ownership, restrictions on transfer, or other terms or conditions, in connection with the transfer of one of the interests the other interest or interests are also transferred or required to be transferred.

(D) Any two or more corporations, if stock possessing more than 50 percent of the voting power of the corporations is cumulatively owned (without regard to the constructive ownership rules of paragraph (A) of subsection (10)(d)) by, or for the benefit of, members of the same family. Members of the same family are limited to an individual, his or her spouse, parents, brothers or sisters, grandparents, children and grandchildren and their respective spouses.

(b)(A) If, in the application of subsection (a) of this section, a corporation is a member of more than one commonly controlled group of corporations, the corporation must elect to be treated as a member of only the commonly controlled group (or part thereof) with respect to which it has a unitary business relationship. If the corporation has a unitary business relationship with more than one of those groups, it must elect to be treated as a member of only one of the commonly controlled groups with respect to which it has a unitary business relationship. This election must remain in effect until the unitary business relationship between the corporation and the rest of the members of its elected commonly controlled group is discontinued, or unless revoked with the approval of the department.

(B) Membership in a commonly controlled group must be treated as terminated in any year, or fraction thereof, in which the conditions of subsection (a) of this section are not met, except as follows:

(i) When stock of a corporation is sold, exchanged, or otherwise disposed of, the membership of a corporation in a commonly controlled group cannot be terminated, if the requirements of subsection (a) of this section are again met immediately after the sale, exchange, or disposition.

(ii) The department may treat the commonly controlled group as remaining in place if the conditions of subsection (a) of this section are again met within a period not to exceed two years.

(c) A taxpayer may exclude some or all corporations included in a "commonly controlled group" by reason of paragraph (a)(D) of this section by showing that those members of the group are not controlled directly or indirectly by the same interests, within the meaning of the same phrase in IRC section 482. For purposes of this subsection, the term "controlled" includes any kind of control, direct or indirect, whether legally enforceable, and however exercisable or exercised.

(d) Except as otherwise provided, stock is "owned" when title to the stock is directly held or if the stock is constructively owned.

(A) An individual constructively owns stock that is owned by any of the following:

(i) His or her spouse.

(ii) Children, including adopted children, of that individual or the individual's spouse, who have not attained the age of 21 years.

(iii) An estate or trust, of which the individual is an executor, trustee, or grantor, to the extent that the estate or trust is for the benefit of that individual's spouse or children.

(B) Stock owned by a corporation, or a member of a controlled group of which the corporation is the parent corporation, is constructively owned by any shareholder owning stock that represents more than 50 percent of the voting power of the corporation.

(C) In the application of paragraph (a)(D) of this section (dealing with stock possessing voting power held by members of the same family), if more than 50 percent of the stock possessing voting power of a corporation is, in the aggregate, owned by or for the benefit of members of the same family, stock owned by that corporation must be treated as constructively owned by members of that family in the same ratio as the proportion of their respective ownership of stock possessing voting power in that corporation to all of such stock of that corporation.

(D) Except as otherwise provided, stock owned by a partnership is constructively owned by any partner, other than a limited partner, in proportion to the partner's capital interest in the partnership. For this purpose, a partnership is treated as owning proportionately the stock owned by any other partnership in which it has a tiered interest, other than as a limited partner.

(E) In any case where a member of a commonly controlled group, or shareholders, officers, directors, or employees of a member of a commonly controlled group, is a general partner in a limited partnership, stock held by the limited partnership is constructively owned by a limited partner to the extent of its capital interest in the limited partnership.

(F) In the application of paragraph (a)(D) of this section (dealing with stock possessing voting power held by members of the same family), stock held by a limited partnership is constructively owned by a limited partner to the extent of the limited partner's capital interest in the limited partnership.

(e) For purposes of the definition of a commonly controlled group, each of the following must apply:

(A) "Corporation" means a subchapter S corporation, any other incorporated entity, or any entity defined or treated as a corporation (including but not limited to a limited liability company).

(B) "Person" means an individual, a trust, an estate, a qualified employee benefit plan, a limited partnership, or a corporation.

(C) "Voting power" means the power of all classes of stock entitled to vote that possess the power to elect the membership of the board of directors of the corporation.

(D) "More than 50 percent of the voting power" means voting power sufficient to elect a majority of the membership of the board of directors of the corporation.

(E) "Stock possessing voting power" includes stock where ownership is retained but the actual voting power is transferred in either of the following manners:

(i) For one year or less.

(ii) By proxy, voting trust, written shareholder agreement, or by similar device, where the transfer is revocable by the transferor.

(F) In the case of an entity treated as a corporation under paragraph (e)(A) of this section (e), "stock possessing voting power" refers to an instrument, contract, or similar document demonstrating an ownership interest in that entity that confers power in the owner to cast a vote in the selection of the management of that entity.

(G) In the general application of this section, if an entity may elect to be treated as a partnership or as a corporation under the laws of this state (or under IRC section 7701), and elects to be treated as a partnership, that entity must be treated as a general partnership. If, however, contractual agreements, member agreements, or other restrictions limit the power of some or all of the members to participate in the vote of stock possessing voting power owned by that entity (similar to the restrictions of limited partners in a limited partnership), the department may permit or require that entity to be treated as a limited partnership.

(f) The department may prescribe any regulations as may be necessary or appropriate to carry out the purposes of this section, including, but not limited to, regulations that do the following:

(A) Prescribe terms and conditions relating to the election described by subsection (b), and the revocation thereof.

(B) Disregard transfers of voting power not described by paragraph (E) of subsection (e).

(D) Treat warrants, obligations convertible into stock, options to acquire or sell stock, and similar instruments as stock.

(E) Treat holders of a beneficial interest in, or executor or trustee powers over, stock held by an estate or trust as constructively owned by the holder.

(F) Prescribe rules relating to the treatment of partnership agreements which authorize a particular partner or partners to exercise voting power of stock held by the partnership.

(G) Treat limited partners as constructive owners of stock possessing voting power held by the limited partnership, in proportion to their interest in the partnership.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.705
REV 29-2020, amend filed 12/23/2020, effective 01/01/2021
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.705(3)(a), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2009, f. & cert. ef. 7-31-09
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 10-1986, f. & cert. ef. 12-31-86
12-31-85, Renumbered from 150-317.705 to 150-317.705 (3)(a)
10-7-85

Or. Admin. R. 150-317-0520 Direct or Indirect Relationships

In determining whether a unitary business exists, all direct and indirect relationships may be considered. This is true even when the relationships extend to corporations not includable in the consolidated return.

Example 1: Corporation M is a U.S. company engaged in the marketing of oil and oil products. It has two wholly-owned domestic subsidiaries, Corporations E and R. Corporation E is a drilling company involved in exploration for oil. Corporation R buys the crude oil from E, refines it, and sells the refined oil to M. Although the operations of Corporations E and M are not directly related, they are part of a unitary business by virtue of their indirect relationship through Corporation R.

Example 2: Assume the same facts as in Example 1, except that the refining company, Corporation R, is jointly owned by Corporation M and another oil company (50 percent each). Although Corporation R is no longer includable in the consolidated return (due to less than 80 percent ownership), Corporations E and M are still considered part of a unitary business.

Example 3: Assume the same facts as in Example 1, except that the refining company, Corporation R, is a foreign subsidiary of Corporation M doing business only in Mexico. In determining whether Corporations E and M are part of a unitary business, the relationships and transactions with Corporation R may be considered.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.705
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.705(3)(b), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 10-2007, f. 12-28-07, cert. ef. 1-1-08
12-31-86
12-31-85, Renumbered from 150-317.705
10-7-85

Or. Admin. R. 150-317-0530 Corporations Doing Business Outside the United States

A corporation included in a consolidated federal return shall not be excluded from a consolidated Oregon return simply because its business operations are conducted outside the United States.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.705
Renumbered from 150-317.705(3)(c), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

Or. Admin. R. 150-317-0540 Consolidated Oregon Return: Format and Information Required

(1) Generally, the consolidated Oregon return must be filed by and in the name of the common parent corporation. If the common parent corporation is not a member of the affiliated group filing the consolidated Oregon return or is not subject to Oregon taxation, the return must be filed in the name of a member of the affiliated group doing business in Oregon as defined under ORS 317.010(4). If more than one member is doing business in Oregon, the name of the member having the greatest presence in Oregon must be used. If the name under which a prior year’s consolidated Oregon return was filed is changed, a statement must be attached to the current year’s return advising the department of the name change.

(2) If the affiliated group filing a consolidated federal return consists of more than one unitary group, each unitary group that includes an Oregon taxpayer must file a separate consolidated Oregon return.

(3) For purposes of this section “having the greatest presence” means having the largest Oregon property value as determined under ORS 314.655.

(4) The consolidated Oregon return must be prepared in columnar form reflecting separately, for each member of the affiliated group, and in total, the federal consolidated taxable income, the modifications required by ORS 317.259, the tax credits, and any other information requested by the department. If taxable income is determined under ORS 317.010(10)(a) to (c), the nonapportionable income or loss and apportionment formula must also be reflected separately for each member of the affiliated group and in total.

(5) A schedule of corporations subject to Oregon’s jurisdiction to tax must be attached to the consolidated Oregon return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.710
REV 68-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.710(5)(a)-(A), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 10-1986, f. & cert. ef. 12-31-86
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85, Renumbered from 150-317.710(5)(a)-(A)

Or. Admin. R. 150-317-0550 Consolidated Oregon Return: Affiliated Group

(1) A corporation filing a consolidated federal return must file a consolidated Oregon return. The consolidated Oregon return must include the same affiliated group included in the consolidated federal return, except as provided in this section.

(2) The following taxpayers included in consolidated federal returns must not file consolidated Oregon returns:

(a) A corporation that is not a member of a unitary group (as defined under ORS 317.705(2)) with any other corporation included in the consolidated federal return;

(b) A corporation that is permitted or required under ORS 314.667 to determine its Oregon taxable income on a separate basis;

(c) A corporation that is permitted or required by rule or statute to use different apportionment factors than are applicable to other members of the affiliated group; or

(d) Alien, domestic, or foreign insurers required by ORS 317.710 (5) or (7) to file separately from the taxpayer’s federal consolidated group.

(3) Insurance companies that are unitary members of a federal consolidated return but neither do business in Oregon nor file an annual statement with the Oregon Insurance Division of the Department of Consumer and Business Services must be included in an Oregon consolidated return.

(4) A newly organized member of a unitary group, included in an affiliated group filing a consolidated federal return, must be included in the consolidated Oregon return in the taxable year the new member is organized.

(5) A newly acquired member of an affiliated group must be excluded from the consolidated Oregon return until completion of the first full taxable year in which the new member is a unitary member of the affiliated group. However, if a newly acquired member is unitary on or near the acquisition date, it must be included in the consolidated Oregon return.

(a) The newly acquired member’s net income, for the period from the acquisition date to the end of the affiliated group’s taxable year, must be included in Oregon consolidated net income.

(b) The newly acquired member’s property, payroll, and sales, for the period from the acquisition date to the end of the affiliated group’s taxable year, must be included in the computation of the Oregon apportionment percentage. The average value of the newly acquired member’s assets in the property factor must be computed as provided in OAR 150-314-0406. The monthly property value must be zero for the newly acquired member for each of the months prior to acquisition.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.710
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.710(5)(a)-(B), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 12-1990, f. 12-20-90, cert. ef. 12-31-90
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-317-0560 Consolidated Oregon Return: Credits

The amount of credit that may offset tax on a consolidated Oregon return is not limited to the tax attributable to the corporation earning the credit. This provision applies to credits carried forward from years in which a separate or combined report is filed to years in which a consolidated return is filed, as well as current year credits.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.710
Renumbered from 150-317.710(5)(a)-(C), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-317-0570 Different Apportionment Factors for Purposes of ORS 317.710(5)(b)

(1) An Oregon taxpayer that is permitted or required to use different apportionment factors under Oregon law cannot be included in an Oregon consolidated return with another Oregon taxpayer using the standard apportionment factor provided in ORS 314.650. This restriction only applies when both corporations using different apportionment factors are subject to Oregon tax under ORS Chapters 317 or 318. The only corporations that are permitted or required to use different apportionment factors are:

(a) Insurers required to apportion income as provided in ORS 317.660; and

(b) Taxpayers primarily engaged in utilities or telecommunications that elect to have income from business activity apportioned by applying the weightings used in ORS 314.650 (1999 Edition) for tax years beginning on or after May 1, 2003.

(2) Corporations other than those listed in subsections 1(a) and 1(b) of this rule use specific applications of the standard apportionment factor provided in ORS 314.650.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.710
REV 5-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-317.710(5)(b), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2011, f. 12-30-11, cert. ef. 1-1-12
REV 5-2006, f. & cert. ef. 7-31-06
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0580 Consolidated Oregon Return: Copy of Federal Return Required

(1) A complete copy of the taxpayer’s federal return must be attached to the Oregon return.

(2) If an affiliated group filing a consolidated federal return is required to file more than one Oregon return under ORS 317.710(5), a copy of the consolidated federal return need not be attached to each Oregon return. Instead, one complete copy of the consolidated federal return may be attached to one of the Oregon returns filed. A statement shall be attached to the other Oregon returns advising the department that a copy of the complete consolidated federal return is being provided with the Oregon return of another taxpayer. The statement must include the corporation’s name and federal identification number used on the Oregon return to which the complete copy of the consolidated federal return is attached.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.710
Renumbered from 150-317.710(6), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 10-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-317-0590 Interinsurance and Reciprocal Exchanges

(1) Affiliated interinsurance and reciprocal exchanges may elect to file a consolidated return under ORS 317.710(7). The election shall be made by attaching a statement to the timely filed (including extensions) consolidated tax return for the tax year in question. The statement shall contain the names and identifying number of the members, and shall clearly indicate that the members are electing to file a consolidated tax return.

(2) An election, once made, shall remain in effect until revoked. Revocation of the election shall be clearly indicated on a statement attached to each timely filed (including extensions) separate excise tax return filed by the members. The statement shall also include a scheduled allocating consolidated estimated tax payment to the members.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.710
Renumbered from 150-317.710(7), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-1998, f. 11-13-98 cert. ef. 12-31-98

Or. Admin. R. 150-317-0600 Limitations on Deduction of Group Losses

(1) Oregon has adopted the provisions of IRC Section 1503(f) that apply to corporations filing consolidated returns and limit the use of group losses to offset income of a subsidiary paying dividends on preferred stock.

(2) The new limitations apply in tax years ending after November 17, 1989.

(3) Only the income or losses of those corporations included in the Oregon consolidated return will be included in the computation of the “group losses” and “separately computed taxable income.”

(4) Oregon modifications that apply should be made prior to computing “group losses,” and “separately computed taxable income.”

(5) The following examples demonstrate the application of the limitation for Oregon:

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and ORS 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.713
REV 82-2017, minor correction filed 12/28/2017, effective 12/28/2017
REV 55-2017, f. & cert. ef. 8-3-17
Renumbered from 150-317.713, REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1992, f. 12-29-92, cert. ef. 12-31-92
RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

Or. Admin. R. 150-317-0610 Modified Federal Consolidated Taxable Income

Federal consolidated taxable income must be modified if the affiliated group of corporations consists of more than one unitary group or includes any alien, domestic, or foreign insurer that is excluded from the consolidated state return under ORS 317.710 (5) or (7). The separate taxable income determined under the provisions set forth in the treasury regulations under Internal Revenue Code (IRC) section 1502 attributable to an affiliated corporation, which does not belong to the unitary group of which the corporation subject to tax under this chapter is a member, or attributable to insurers excluded from the federal consolidated state return under ORS 317.710 (5) or (7), must be subtracted from federal consolidated taxable income.

Example: Corporations M, G, P, and W file a consolidated federal return. Corporations M, P, and W are engaged in a single unitary business. Corporation G's business activities are separate and unrelated. Corporation P is an insurance company doing business in Oregon and is required to be excluded from the federal consolidated return by ORS 317.710. Modified federal consolidated taxable income is computed by subtracting, from federal consolidated taxable income, Corporation G and P’s separate taxable incomes and by reversing the necessary adjustments pursuant to the provisions set forth in the treasury regulations under IRC section 1502 attributable to Corporations G and P.

[ Publications : Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.715
REV 71-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-317.715(3)-(A), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-317.715(2)-(A), REV 2-2014, f. & cert. ef. 7-31-14
Renumbered from 150-317.715(2), RD 7-1991, f. 12-30-91, cert. ef. 12-31-91
RD 15-1987, f. 12-10-87, cert. ef. 12-31-87
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0620 Modified Federal Consolidated Taxable Income — Contribution Deduction for the Oregon Consolidated Group

(1) In general. The contribution deduction allowed corporations subject to taxation under Oregon Revised Statutes (ORS) Chapter 317 or 318, that file federal consolidated returns, is limited to the lesser of:

(a) The contributions made by the members of the unitary group; or

(b) 10 percent of the modified federal consolidated taxable income of the members of the unitary group.

Example 1: Corporation A files a consolidated federal return for tax year 2010. A's federal return consists of two unitary groups of corporations, one of which is required to file an Oregon return. Corporation B is a member of the unitary group of corporations required to file a 2010 Oregon return. B contributed $1,000,000 to charities. No other corporation included in A's consolidated federal return made contributions in 2010. For tax year 2010, A has federal consolidated taxable income of $20,000,000 before any contribution deduction. The unitary group required to file the Oregon return has modified federal consolidated taxable income of $500,000 before any contribution deduction.

Under Treasury Regulations adopted under section 1502 of the Internal Revenue Code (IRC), A is allowed to claim a contribution deduction of $1,000,000 (the lesser of the amount paid by all members of the federal consolidated group or 10 percent of the federal consolidated taxable income of the entire group before the contribution deduction). For Oregon purposes, however, the unitary group is allowed a contribution deduction of $50,000 (the lesser of the $1,000,000 paid by members of the unitary group or 10 percent of the $500,000 modified federal consolidated taxable income before the contribution deduction).

Example 2: Assume the same facts as in Example 1 except that the unitary group required to file an Oregon return has modified federal consolidated net loss of $100,000. This unitary group has no allowable contribution deduction even though A will be permitted to deduct the entire contribution on its 2010 consolidated federal return.

Example 3: Assume the same facts as in Example 1 except that no member of the unitary group required to file an Oregon return made any contribution and members of the nonunitary group made the $1,000,000 contribution. For federal purposes, the consolidated group is permitted to claim a deduction for the contributions made by any member of the group. However, for Oregon purposes, no deduction is allowed.

(2) Carryover of excess contributions.

(a) Any contribution not used in the tax year is carried over to the next tax year. In no case shall a contribution be carried over for more than five succeeding tax years. Any contribution not used is lost.

(b) Contribution carryovers for any consolidated return tax year shall consist of any excess contributions of the unitary group, plus any excess contributions of members of the group arising in separate return tax years of such members and which may be carried over to the taxable year pursuant to the principles of IRC section 170. However, such consolidated contribution carryovers shall not include any excess contributions apportioned to a corporation for a separate return tax year pursuant to Treasury Regulations adopted under section 1502 of the IRC.

Example 4: Assume the same facts as in Example 1 except that the unitary group has modified federal consolidated taxable income of $5,000. The allowable contribution deduction is limited to $500 (the lesser of the $1,000,000 contributed or 10 percent of the group's $5,000 modified federal consolidated taxable income). The unitary group is allowed to carry over $999,500 to the group's next tax year, 2011. None of the amount may be carried over beyond tax year 2015 (five years from the tax year in which the amount was contributed).

Example 5: Assume the same facts as in Example 4 except that in tax year 2010 A acquired Corporation C. C will be included in A's 2011 consolidated federal return and is unitary with the group required to file an Oregon return. In 2010, C had a contribution carryover of $200,000. Its income and deductions were used in computing the unitary group's 2011 Oregon consolidated taxable income. Since C is unitary with the group required to file an Oregon return, the unitary group's carryover for tax year 2011 is $1,199,500 ($999,500 plus $200,000).

(c) Excess contribution carryovers are applied to a given tax year in the same manner as provided under IRC sections 170 and 381 as they apply to the unitary group required to file an Oregon return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.715
Renumbered from 150-317.715(3)-(B), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-317.715(2)-(B), REV 2-2014, f. & cert. ef. 7-31-14
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

Or. Admin. R. 150-317-0630 Oregon Return: Apportionment Formula

(1) Each member of an affiliated group of corporations must be treated as a separate corporation for purposes of determining whether it is subject to the tax jurisdiction of Oregon. A corporation is subject to the tax jurisdiction of Oregon if it is "doing business" in Oregon as defined under ORS 317.010(4) or has income from Oregon sources taxable under 318.020.

(2) In applying the apportionment provisions of ORS 314.280 or 314.605 to 314.667, each corporation subject to the tax jurisdiction of Oregon must be considered separately.

(3) The factors included in the apportionment formula of an Oregon return must be computed by eliminating transactions between members of the affiliated group filing the Oregon return. See OAR 150-314-0385 regarding transactions between members of an affiliated group filing an Oregon return and related pass-through entities such as partnerships and S corporations owned by other members of that affiliated group.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.715
REV 18-2021, amend filed 12/15/2021, effective 01/01/2022
Renumbered from 150-317.715(4)(b), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-317.715(3)(b), REV 2-2014, f. & cert. ef. 7-31-14
REV 11-2004, f. 12-29-04, cert. ef. 12-31-04
REV 1-2001, f. 7-31-01, cert. ef. 8-1-01
RD 10-1986, f. & cert. ef. 12-31-86
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0640 Member of a Unitary Group Incorporated in a Listed Foreign Jurisdiction

The following provisions are intended as guidance for any corporation doing business in this state that is part of a unitary group that includes a member incorporated in a foreign jurisdiction listed in subsection (2)(b) of ORS 317.715.

(1) To determine the computation of income (or loss) for a unitary corporation that is incorporated in a listed foreign jurisdiction and that is not otherwise required to file a consolidated federal return, use the foreign corporation’s net income (or loss) as reported on line 18, Schedule C of federal Form 5471.

(2) Unless specifically prescribed by other law, the income of the foreign corporation is not to be double taxed by this state. If any portion of the foreign corporation’s income that is added to federal taxable income pursuant to subsection (2)(a) of ORS 317.715 was already included in the taxpayer’s Oregon taxable income, the taxpayer is allowed a subtraction for the portion of the income that previously was included in Oregon taxable income. The taxpayer must attach a schedule to the return and explain how the income was previously included in Oregon taxable income and how the subtraction amount was determined.

(3) Unless specifically prescribed by other law, items of expense or loss of the foreign corporation are not to be double deducted by the taxpayer. If any portion of the foreign corporation’s loss or expense that is required to be included in the determination of federal taxable income pursuant to subsection (2)(a) of ORS 317.715 was already included in the computation of the taxpayer’s Oregon taxable income, the taxpayer must reduce the loss or expense by the amount previously included in the computation of Oregon taxable income. The taxpayer must attach a schedule to the return and explain how the loss was previously included in the computation of Oregon taxable income and how the reduction amount was determined.

History

Statutory/Other Authority: ORS 305.100 & 317.715
Statutes/Other Implemented: ORS 317.715
Renumbered from 150-317.715(5), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14

Or. Admin. R. 150-317-0651 Repatriation Tax Credit

(1)(a) For tax years beginning on or after January 1, 2017, and before January 1, 2018 (the 2017 tax year), a repatriation tax credit is allowed under ORS chapter 317 or 318 for Oregon tax attributable to income reported under section 965 of the Internal Revenue Code as post-1986 deferred foreign income. The amount of the credit equals the lesser of the amount of Oregon tax for the 2017 tax year attributable to the section 965 mandatory repatriation or the total amount of Oregon tax for the 2014, 2015, and 2016 tax years attributable to the addition required under ORS 317.716, if any.

(b) No tax credit is available unless an addition under ORS 317.716 was required for at least one of tax years 2014, 2015, or 2016.

(c) The method for determining the amount of Oregon tax attributable to the section 965 mandatory repatriation is set forth in section (2) below. The method for determining the total amount of Oregon tax attributable to the addition required by ORS 317.716 for tax years 2014, 2015, and 2016 is set forth in section (3) below.

(2)(a) The amount of Oregon tax for the 2017 tax year attributable to the mandatory repatriation under section 965 equals the excess of the Oregon tax for tax year 2017 determined with the section 965 mandatory repatriation, over the Oregon tax for tax year 2017 determined without the section 965 mandatory repatriation.

(b) The Oregon tax for the 2017 tax year determined with the section 965 mandatory repatriation is calculated by including in taxable income under ORS 317.010(10) income reported under section 965(a) as post-1986 deferred foreign income, modifying taxable income with respect to the repatriation income as provided in ORS 317.267(1) and (2), and computing Oregon tax before the allowance of any Oregon tax credit. The resulting tax amount before the allowance of any Oregon tax credit is the Oregon tax for tax year 2017 determined with the section 965 mandatory repatriation.

(c) The Oregon tax for tax year 2017 determined without the section 965 mandatory repatriation is calculated as if IRC section 965 did not apply, by excluding from taxable income the amount of the section 965 mandatory repatriation from income, applying ORS 317.267(1) and (2) without regard to the mandatory repatriation, and computing Oregon tax before the allowance of any Oregon tax credit. The resulting tax amount before the allowance of any Oregon tax credit is the Oregon tax for tax year 2017 determined without the section 965 mandatory repatriation.

(3)(a) The total amount of Oregon tax attributable to the addition required under ORS 317.716 for all tax years beginning on or after January 1, 2014, and before January 1, 2017 (the listed jurisdiction addition for tax years 2014, 2015, and 2016) equals the excess of the total Oregon tax for tax years 2014, 2015, and 2016 determined with the listed jurisdiction addition for those three years, over the total Oregon tax for tax years 2014, 2015, and 2016 determined without the listed jurisdiction addition for those three years.

(b) The total Oregon tax for tax years 2014, 2015, and 2016 determined with the listed jurisdiction addition is the sum of the Oregon tax for each tax year in which an addition under ORS 317.716 was required (an applicable year) and included on a taxpayer’s return as filed or adjusted. The amount of tax for each applicable year is computed by including taxable income or taxable loss of any corporation in a listed jurisdiction that was part of the same unitary group as the taxpayer (within the meaning of ORS 317.705(2)) in the applicable year and computing Oregon tax before the allowance of any Oregon tax credit. The resulting tax amount before the allowance of any Oregon tax credit is the Oregon tax for the applicable year determined with the addition required under ORS 317.716. This calculation is based on a taxpayer’s 2014, 2015 and 2016 returns as filed or adjusted.

(c) The total Oregon tax for tax years 2014, 2015, and 2016 determined without the listed jurisdiction addition is the sum of the Oregon tax for each applicable year described in subsection (b). The amount of tax for each applicable year is computed by excluding taxable income or loss of any corporation in a listed jurisdiction otherwise required to be added under ORS 317.716 and included on a taxpayer’s return as filed or adjusted. Any receipts of a corporation in a listed jurisdiction included in the sales factor for purposes of subsection (b) must be removed from the sales factor for purposes of computing the total Oregon tax determined without the listed jurisdiction addition. The resulting tax amount before the allowance of any Oregon tax credit is the Oregon tax for the applicable year determined without the addition under ORS 317.716.

(d) The total amount of Oregon tax attributable for tax years 2014, 2015, and 2016 under (3)(a) equals the sum total of tax computed under (3)(b) minus the sum total of tax computed under (3)(c).

[See PDF link below.]

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: 2018 Oregon Laws, chapter 101
REV 14-2018, adopt filed 06/26/2018, effective 07/01/2018

Or. Admin. R. 150-317-0652 Modification for Listed Jurisdiction Amounts Previously Included in Income; Election in Lieu of Claiming the Repatriation Tax Credit

(1) A taxpayer may elect to claim a modification under ORS 317.038 for tax year 2017, 2018, or, when applicable, both years, to subtract listed jurisdiction income amounts included in income due to the mandatory repatriation under IRC section 965, as amended by Section 14103 of H.R. 1 (2017) (an IRC 965 repatriation), to the extent those amounts were previously included in income for tax year 2014, 2015, or 2016 pursuant to ORS 317.715(2) (2013) or ORS 317.716 (2015). The election to claim the modification is made in lieu of claiming the repatriation tax credit under section 33 of SB 1529 (2018). The election may be claimed on an original or amended tax return.

(2)(a) A taxpayer may elect to claim a modification under section (1) of this rule or a repatriation tax credit under section 33 of SB 1529 (2018), but not both.

(b) A taxpayer who has an IRC 965 repatriation in tax years 2017 and 2018 must use the modification in both tax years if the taxpayer elected the modification described in section (1) in one tax year. The election by a taxpayer with an IRC 965 repatriation for tax years 2017 and 2018 to use the modification described in section (1) may not be changed on an amended tax return if the taxpayer’s return for either one of tax years 2017 or 2018 is closed to refund or adjustment.

(3) The modification is claimed on Schedule OR-ASC-CORP using the subtraction code prescribed by department instructions for tax year 2017 or 2018. Use of the subtraction code prescribed by department instructions on Schedule OR-ASC-CORP signifies a taxpayer’s election and agreement to claim the modification in lieu of the repatriation tax credit.

(4)The modification, if elected, affects the calculation of the amount of IRC 965 repatriation income eligible for subtraction under ORS 317.267(2) for tax years 2017 and 2018. When computing the subtraction under ORS 317.267(2) that is attributable to IRC 965 repatriation income, the repatriation income amount (upon which the dividend received subtraction percentage is applied) must be reduced by the amount of the modification.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.038
REV 24-2018, adopt filed 12/28/2018, effective 01/01/2019
REV 18-2018, temporary adopt filed 10/15/2018, effective 10/15/2018 through 04/12/2019

Or. Admin. R. 150-317-0660 Computation of Taxable Income; Excess Loss Accounts

An Oregon subtraction is allowed for the amount of excess loss account included in federal taxable income under the provisions of Treasury Regulation subsection 1.1502-19 if:

(1) The losses did not offset unitary income in the year incurred; or

(2) The excess losses were attributable to losses incurred in tax years beginning prior to January 1, 1986.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.720
REV 83-2017, minor correction filed 12/28/2017, effective 12/28/2017
REV 61-2017, f. & cert. ef. 8-8-17
Renumbered from 150-317.720, REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

Or. Admin. R. 150-317-0670 Application for Relief

If the application of ORS 317.715 is unduly burdensome or produces an inequitable or unreasonable result, the taxpayer may request relief under this section. The request for relief must be made in writing to the Oregon Department of Revenue, Business Division. The request for relief must be filed within 180 days after the beginning of the tax year for which the relief is being requested, and must include the following information:

(1) A statement that the request for relief is made under the provisions of ORS 317.725(1)(b);

(2) A concise statement of the facts on which the request is based;

(3) A statement of the proposed solution; and

(4) A statement of the impact of the proposed solution on the tax liability of the taxpayer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.725
Renumbered from 150-317.725(1)(b), REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2000, f. 12-29-00, cert. ef. 12-31-00
RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

Or. Admin. R. 150-317-0680 Tax Imposed on Unrelated Business Income of Certain Exempt Corporations

(1) ORS 317.920 to ORS 317.950 apply to those corporations which earn unrelated business income although normally exempt under ORS 317.080.

(2) For purposes of ORS 317.920, the term “unrelated business income” shall have the same meaning as it is given in section 512 of the Internal Revenue Code.

(3) Such income shall be reported on an Oregon Corporation Excise Tax Return, Form 20, with a full copy of the Federal Form 990T or other required federal return attached.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 317.920
Renumbered from 150-317.920, REV 69-2016, f. 8-15-16, cert. ef. 9-1-16
RD 11-1988, f. 12-19-88, cert. ef. 12-31-88
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
12-31-77
1959

Or. Admin. R. 150-317-1000 Definition of Commercial Activity

(1) “Commercial activity” means the fair market value of all amounts realized in the regular course of a taxpayer’s trade or business that meet the “transactional test” in OAR 150-314-0335(5).

(2) “Amounts realized” means all items of value received in a trade or business, including but not limited to money, property received, debt forgiven and services rendered.

(3) Commercial activity does not include amounts that meet the “functional test” in OAR 150-314-0335(6) unless the amount in question meets the definition of commercial activity pursuant to section (1) of this rule.

(4) The definition of commercial activity is not based on or tied to the definition of gross income in IRC section 61.

(5) Commercial activity is realized when a taxpayer realizes the amount in question pursuant to the method of accounting used by a taxpayer for federal income tax purposes.

[Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS Chapter 317A
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1010 Substantial Nexus Guidelines for the Corporate Activity Tax (CAT)

(1) For purposes of ORS 317A.116, substantial nexus exists if a connection between the person and Oregon is sufficient to establish nexus under the U.S. Constitution.

(2) “Substantial nexus” for corporate activity tax jurisdiction purposes, under the Commerce Clause of the U.S. Constitution, does not require a person to have a physical presence in Oregon. Substantial nexus exists where a person regularly takes advantage of Oregon’s economy to realize commercial activity for the person and may be established through the significant economic presence of the person in the state.

(3) When determining whether a person has substantial nexus with Oregon, the department may consider whether the person:

(a) Maintains continuous and systematic contacts with Oregon’s economy or market;

(b) Conducts deliberate marketing to, or solicitation of, Oregon customers;

(d) Realizes significant gross receipts attributable to customers in Oregon;

(e) Realizes significant gross receipts attributable to the use of the person’s intangible property in Oregon; or

(f) Receives benefits provided by the state, such as:

(A) Laws providing protection of business interests or regulating consumer credit;

(B) Access to courts and judicial process to enforce business rights including debt collection and intellectual property rights;

(D) Access to an educated workforce in Oregon; or

(E) Police and fire protection for property in Oregon that displays the person’s intellectual or intangible property.

(4) The list of possible facts in section (3) that the department may consider in determining whether a person has substantial nexus with Oregon is meant to be nonexclusive, and those facts should be considered only to the extent they are relevant. The department may consider any other relevant facts and circumstances.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.116
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1015 Short Tax Period Return Requirements

(1)(a) “Short tax period” means a period of less than 12 months. Taxpayers that were not in existence for an entire taxable year must determine their short period under subsection (b). For all other taxpayers, the short period begins on the first day after the close of the prior taxable year and ends on the day before the day designated as the first day of the new taxable year.

(b) If the taxpayer began business mid-tax period the taxpayer’s short period begins on the day the taxpayer began business and ends on the day before the day designated as the first day of the taxpayer’s next taxable year. If the taxpayer ceases business mid-tax period the taxpayer’s short period begins on the first day after the close of the prior taxable year and ends on the day the taxpayer dissolved or ceased business.

(2) If a change in accounting period requested by the taxpayer is approved by the Internal Revenue Service for federal purposes, the change shall also be permitted for Oregon corporate activity tax purposes. A taxpayer shall thereafter make returns and compute commercial activity upon the basis of the new accounting period.

(3) If a unitary group appoints a new designated entity for filing corporate activity tax returns and that designated entity uses a different tax year than what was previously used by the unitary group’s designated entity, the unitary group must file a short tax period return.

(4) Due dates of short period returns.

(a) Except as required under subsection (b), a short tax period return shall be filed on or before the fifteenth day of the fifth month following the end of the short tax period.

(b) A taxpayer that joins a unitary group mid-tax period must file the short period return by the earlier of:

(A) The due date of the taxpayer’s annual twelve-month return if it had not been acquired by or joined the unitary group.

(B) The due date of the unitary group’s annual twelve-month return.

(5)(a) Except as required under subsection (b), taxpayers who must file a return for a short tax period must prorate, for the number of days in the short period tax return as defined under section (1) of this rule, the $750,000 commercial activity registration threshold under ORS 317A.131, the $1 million tax rate threshold under ORS 317A.125, and the $1 million return filing threshold in ORS 317A.137. The proration percentage shall be calculated to the nearest fourth decimal point.

(b) Newly formed taxpayers that begin doing business mid-tax period and taxpayers that cease business mid-tax period do not prorate when filing the first or final short period return.

(6) The corporate activity tax subtraction shall be based on the expenses allowed per ORS 317A.119 that are associated with the commercial activity reported in the short tax period.

(a) Labor Costs . Taxpayers shall prorate, for the number of days in the short period tax return as defined under section (1) of this rule, the $500,000 cap on employee compensation to a single employee in determining their eligible labor costs.

(b) Cost Inputs . Taxpayers shall determine their cost inputs based on the method used for determining their cost of goods sold as calculated in arriving at federal taxable income under the Internal Revenue Code.

(7) Due dates of payments for short tax period returns . If a CAT taxpayer expects to have a tax liability of $5,000 or more and is required to file a return for a short tax period, estimated tax payments are due as follows:

(a) If the period covered is less than three months, only one payment is required. It is equal to 100 percent of the estimated tax and is payable on the due date of the return.

(b) If the period covered is three months or longer but less than six months, two payments are required. One-half of the estimated tax is due on the last day of the fourth month, and the balance, if any, is due on or before the due date of the tax return, not including extensions.

(c) If the period covered is six months or longer but less than nine months, three payments are required. One-third of the estimated tax is due on the last day of the fourth month, one-third on the last day of the seventh month and the balance, if any, is due on or before the due date of the tax return, not including extensions.

(d) If the period covered is nine months or longer, but less than twelve months, four payments are required. One-fourth of the estimated tax is due on the last day of the fourth month, one-fourth on the last day of the seventh month, one-fourth on the last day of the tenth month, and the balance, if any, on or before the due date of the tax return, not including extensions.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100, 317A.103, 317A.143 & Oregon Laws 2021, chapter 572, section 2
Statutes/Other Implemented: ORS 317A.103 & Oregon Laws 2021, chapter 572, section 2
REV 5-2026, amend filed 04/20/2026, effective 05/01/2026
REV 15-2021, adopt filed 12/15/2021, effective 01/01/2022

Or. Admin. R. 150-317-1020 Corporate Activity Tax Unitary Business Factors, Common Ownership and Filing Requirements for Unitary Groups

(1) Definition. As used in this rule, the term “entity” or “business entity” refers to any individual or legal entity described in ORS 317A.100(14).

(2) The presence of all of the factors described in ORS 317A.100(19)(a)(A)-(C) will demonstrate that a unitary business exists, but the presence of one or two such factors may also demonstrate the flow of value requisite for a unitary business determination.

(3) The Concept of a Unitary Business . A unitary business is a single economic enterprise that is made up either of separate parts of a single entity or a commonly owned group of entities that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide a synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts. This sharing or exchange of value may also be described as requiring that the operation of one part of the business be dependent upon, or contribute to, the operation of another part of the business. In other words, if the activities of one business either contribute to the activities of another business or are dependent upon the activities of another business, those businesses are part of a unitary business.

(4) Requirement for a Unitary Business . The sharing or exchange of value described in section (3) that defines the scope of a unitary business requires more than the mere flow of funds arising out of a passive investment or from the financial strength contributed by a distinct business undertaking that has no operational relationship to the unitary business. In Oregon, the unitary business principle will be applied to the fullest extent allowed by the U.S. Constitution.

(5) Separate Trades or Businesses Conducted within a Single Entity . A single entity may have more than one unitary business. In such cases, it is necessary to determine the commercial activity attributable to each separate unitary business for purposes of sourcing commercial activity to Oregon under ORS 317A.128, and the subtraction under ORS 317A.119.

(6) Unitary Business Unaffected by Formal Business Organization . A unitary business may exist within a single entity or among a commonly owned group of entities.

(7) Determination of a Unitary Business . A unitary business is characterized by significant flows of value evidenced by factors such as those described in Mobil Oil Corp. v. Vermont , 445 U.S. 425 (1980) and ORS 317A.100(19)(a)(A) to (C): centralization of management, economies of scale, and functional integration. These factors provide evidence of whether the business activities operate as an integrated whole or exhibit substantial mutual interdependence. Facts suggesting the presence of the factors mentioned above should be analyzed in combination for their cumulative effect and not in isolation. A particular business operation may be suggestive of one or more of the factors mentioned above.

(8) Description and Illustration of Centralization of Management, Economies of Scale, and Functional Integration.

(a) Centralization of Management . Centralization of management exists when officers, directors, partners, members, managers, or others jointly participate in the management decisions that affect the respective business activities and that may also operate to the benefit of the entire economic enterprise. Centralization of management can exist whether the centralization is effected from a parent entity to a subsidiary entity, from a subsidiary entity to a parent entity, from one subsidiary entity to another, from one division within a single entity to another division within an entity, or from any combination of the foregoing. Centralization of management may exist even when day-to-day management responsibility and accountability has been decentralized, so long as the management has an ongoing operational role with respect to the business activities. An operational role can be effected through mandates, consensus building, or an overall operational strategy of the business, or any other mechanism that establishes joint management.

(A) Facts Providing Evidence of Centralization of Management . Evidence of centralization of management is provided when common officers, directors, partners, members, managers, or others participate in the decisions relating to the business operations of the different segments. Centralization of management may exist when management shares or applies knowledge and expertise among the parts of the business. Existence of common officers, directors, partners, members, managers, or others, while relevant to a showing of centralization of management, does not alone provide evidence of centralization of management. Common officers are more likely to provide evidence of centralization of management than are common directors.

(B) Stewardship Distinguished . Centralized efforts to fulfill stewardship oversight are not evidence of centralization of management. Stewardship oversight consists of those activities that any owner would take to review the performance of or safeguard an investment. Stewardship oversight is distinguished from those activities that an owner may take to enhance value by integrating one or more significant operating aspects of one business activity with the other business activities of the owner. For example, implementing reporting requirements or mere approval of capital expenditures may evidence only stewardship oversight.

(b) Economies of Scale . Economies of scale refers to a relation among and between business activities resulting in a significant decrease in the average per unit cost of operational or administrative functions due to the increase in operational size. Economies of scale may exist from the inherent cost savings that arise from the presence of functional integration or centralization of management. The following are examples of business operations that can support the finding of economies of scale. The order of the list does not establish a hierarchy of importance.

(A) Centralized Purchasing . Centralized purchasing designed to achieve savings due to the volume of purchases, the timing of purchases, or the interchangeability of purchased items among the parts of the business engaging in the purchasing provides evidence of economies of scale.

(B) Centralized Administrative Functions . The performance of traditional administrative functions, such as legal services, payroll services, pension and other employee benefit administration, in common among the parts of the business may result in some degree of economies of scale. A business entity that secures savings in the performance of corporate administrative services due to its affiliation with other business entities that it would not otherwise reasonably be able to secure on its own because of its size, financial resources, or available market, provides evidence of economies of scale.

(c) Functional Integration . Functional integration refers to transfers between, or pooling among, business activities that significantly affect the operation of the business activities. Functional integration includes, but is not limited to, transfers or pooling with respect to the unitary business's products or services, technical information, marketing information, distribution systems, purchasing, and intangibles such as patents, trademarks, service marks, copyrights, trade secrets, know-how, formulas, and processes. There is no specific type of functional integration that must be present. The following is a list of examples of business operations that can support the finding of functional integration. The order of the list does not establish a hierarchy of importance.

(A) Sales, exchanges, or transfers (collectively "sales") of products, services, or intangibles between business activities provide evidence of functional integration. The significance of the intercompany sales to the finding of functional integration will be affected by the character of what is sold and/or the percentage of total sales or purchases represented by the intercompany sales. For example, sales among business entities that are part of a vertically integrated unitary business are indicative of functional integration. Functional integration is not negated by the use of a readily determinable market price to affect the intercompany sales, because such sales can represent an assured market for the seller or an assured source of supply for the purchaser.

(B) Common Marketing . The sharing of common marketing features among business entities is an indication of functional integration when such marketing results in significant mutual advantage. Common marketing exists when a substantial portion of the business entities’ products, services, or intangibles are distributed or sold to a common customer, when the business entities use a common trade name or other common identification, or when the business entities seek to identify themselves to their customers as a member of the same enterprise. The use of a common advertising agency or a commonly owned or controlled in-house advertising office does not by itself establish common marketing that is suggestive of functional integration. Such activity, however, is relevant to determining the existence of economies of scale or centralization of management.

(C) Transfer or Pooling of Technical Information or Intellectual Propert y. Transfers or pooling of technical information or intellectual property, such as patents, copyrights, trademarks and service marks, trade secrets, processes or formulas, know-how, research, or development, provide evidence of functional integration when the matter transferred is significant to the businesses' operations.

(D) Common Distribution System . Use of a common distribution system by the business entities, under which inventory control and accounting, storage, trafficking, or transportation are controlled through a common network provides evidence of functional integration.

(E) Common Purchasing . Common purchasing of substantial quantities of products, services, or intangibles from the same source by the business entities, particularly where the purchasing results in significant cost savings or where the products, services or intangibles are not readily available from other sources and are significant to each entity’s operations or sales, provides evidence of functional integration.

(F) Common or Intercompany Financing . Significant common or intercompany financing, including the guarantee by or the pledging of the credit of, one or more business entities for the benefit of another business entity or entities provides evidence of functional integration, if the financing activity serves an operational purpose of both borrower and lender. Lending which serves an investment purpose of the lender does not necessarily provide evidence of functional integration.

(9) Indicators of a Unitary Business.

(a) Same Type of Business . Business activities that are in the same general line of business generally constitute a single unitary business, as, for example, a multistate grocery chain.

(b) Steps in a Vertical Process . Business activities that are part of different steps in a vertically structured business almost always constitute a single unitary business. For example, a business engaged in the exploration, development, extraction, and processing of a natural resource and the subsequent sale of a product based upon the extracted natural resource, is engaged in a single unitary business, regardless of the fact that the various steps in the process are operated substantially independently of each other with only general supervision from the business's executive offices.

(c) Strong Centralized Management. Business activities which might otherwise be considered as part of more than one unitary business may constitute one unitary business when there is a strong central management, coupled with the existence of centralized departments for such functions as financing, advertising, research, or purchasing. Strong centralized management exists when a central manager or group of managers makes substantially all of the operational decisions of the business. For example, some businesses conducting diverse lines of business may properly be considered as engaged in only one unitary business when the central executive officers are actively involved in the operations of the various business activities and there are centralized offices which perform for the business activities the normal matters which a truly independent business would perform for itself, such as personnel, purchasing, advertising, or financing.

(10) More Than 50 Percent Common Ownership. If a person owns, directly or indirectly, more than 50 percent of the voting power and value of the ownership interest of an entity, then the person and entity are under common ownership, and the person and entity are included in a unitary group if they are also engaged in a unitary business. The provisions of this section (10) apply to all persons and entities described in ORS 317A.100(14) other than entities described in ORS 317A.100(4)(a) to (i),(k), and (L).

(a) For purposes of the definition of common ownership, each of the following apply:

(A) "Voting power" means:

(i) the power of all classes of stock entitled to vote that possess the power to elect the membership of the board of directors of a corporation, or

(ii) in the case of an entity that is not a corporation, the power of all ownership interests with the right to control or determine the management of the entity.

(B) "More than 50 percent of the voting power of the ownership interest" means voting power equal to more than 50 percent of all outstanding voting stock or other ownership interests with the ability to control or determine the management of the entity.

(C) "Ownership interest" includes an ownership interest where ownership is retained but the actual voting power is transferred in the following manner:

(i) For one year or less, or

(ii) By proxy, voting trust, written shareholder agreement, or by similar device, where the transfer is revocable by the transferor.

(b) "Common ownership" in a group of persons means any of the following:

(A) A parent entity and any one or more entity or chains of entities, connected through direct ownership (or constructive ownership) with the parent entity, but only if:

(i) The parent owns stock or other ownership interest possessing more than 50 percent of the voting power of at least one entity, and, if applicable;

(ii) Ownership interests cumulatively possessing more than 50 percent of the voting power of each of the entities, except the parent entity, is owned by the parent, or one or more entities described in subparagraph (i).

(B) Any two or more entities, if stock or ownership interest possessing more than 50 percent of the voting power of the entities is owned, or constructively owned, by the same person.

(i) For purposes of this paragraph, "stapled entities" means any group of two or more entities if more than 50 percent of the ownership or beneficial ownership of the stock or other ownership interest possessing voting power in each entity consists of stapled interests.

(ii) Two or more interests are stapled interests if, by reason of form of ownership, restrictions on transfer, or other terms or conditions, in connection with the transfer of one of the interests, the other interest or interests are also transferred or required to be transferred.

(c) Membership in a commonly owned group must be treated as terminated in any year, or fraction thereof, in which the conditions of subsection (b) of this section are not met, except as follows:

(A) When stock or an ownership interest of an entity is sold, exchanged, or otherwise disposed of, the membership of an entity in a commonly owned group cannot be terminated, if the requirements of subsection (b) of this section are again met immediately after the sale, exchange, or disposition.

(B) The department may treat the commonly owned group as remaining in place if the conditions of subsection (b) of this section are again met within a period not to exceed two years.

(d) Except as otherwise provided, stock or an ownership interest is "owned" when title to the stock or ownership interest is directly or indirectly held, or if the stock or ownership interest is constructively owned.

(A) An individual constructively owns stock or an ownership interest that is directly owned by any of the following: spouse, parents, brothers or sisters, grandparents, children, grandchildren, and an estate or trust, of which the individual is an executor, trustee, or grantor, to the extent that the estate or trust is for the benefit of that individual's spouse or children.

(B) If an ownership interest in an entity is owned directly or indirectly by or for any person, such person shall be considered as owning any stock or other ownership interest owned directly or indirectly by or for such entity, in that proportion which the value of the entity interest that such person owns bears to the value of all ownership interests in that entity.

(C) In the case of a partnership, a person owning more than 50 percent of the capital or profits interest in the partnership is treated as a common owner in the partnership.

(D) In the case of a grantor trust to which IRC § 677 applies, the grantor is treated as the owner of stock or ownership interest held by the trust.

(E) In the case of a trust to which IRC § 678 applies, the person, other than the trust, described in IRC § 678 is treated as the owner of stock or ownership interest held by the trust.

(11) Member of More Than One Unitary Group.

(a) If, in the application of the constructive ownership rules in section (10), an entity is included in more than one unitary group, the entity must file annually as a member of the unitary group that realizes the greatest amount of Oregon commercial activity, after the exclusions described under ORS 317A.100(1)(b) and without deduction for any cost inputs or any labor costs attributable to the subtraction provided in ORS 317A.119.

(b) If there are receipts from transactions that would be excluded under ORS 317A.100(1)(b)(FF), the exclusion is taken into account in determining the unitary group with which the entity must file under section (11)(a). However, once it is determined pursuant to section (11)(a) that an entity is not included in the Corporate Activity Tax return of a unitary group, that unitary group may not exclude receipts from transactions with the entity that would otherwise be excluded from commercial activity under ORS 317A.100(1)(b)(FF).

(12) Filing requirements. In accordance with ORS 317A.106, persons who compose a unitary group, as defined in ORS 317A.100(19), shall register, file, and pay the corporate activity tax as a single taxpayer based on the commercial activity of all members of the unitary group, if at least one member of the unitary group has substantial nexus with Oregon (refer to OAR 150-317-1010: Substantial Nexus). Unitary groups with non-U.S. members that have no commercial activity in Oregon, or that realize commercial activity that is excluded from the definition of Oregon commercial activity may elect to modify unitary group membership to exclude such non-U.S. members as provided in OAR 150-317-1025.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100, 317A.106 & 317A.116
REV 6-2024, amend filed 02/28/2024, effective 03/01/2024
REV 2-2023, minor correction filed 01/26/2023, effective 01/26/2023
REV 9-2021, amend filed 06/28/2021, effective 07/01/2021
REV 4-2021, temporary amend filed 02/22/2021, effective 03/01/2021 through 08/27/2021
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1022 Unitary Group Tax Year

(1) Effective Date. The provisions of this rule apply to tax years beginning on or after January 1, 2021.

(2) Annual Accounting Period. A taxpayer’s method of accounting for commercial activity, costs inputs and labor costs for a tax year shall be the same as the taxpayer’s method of accounting for federal income tax purposes for the taxpayer’s federal tax year that includes the tax year. For a unitary group:

(a) If all members of the unitary group use the same annual accounting period for federal income tax purposes, the unitary group’s tax year is the annual accounting period used by all members for federal income tax purposes under section 441 of the Internal Revenue Code.

(b) If the unitary group includes members with different accounting periods and two or more members of the unitary group file a federal consolidated return, the unitary group’s tax year is the annual accounting period of the federal consolidated group under section 441 of the Internal Revenue Code.

(c) In all other instances, the unitary group’s tax year is the accounting period used by the unitary group’s designated reporting entity.

(3) Members with Different Annual Accounting Periods.

(a) If a member’s annual accounting period for federal income tax purposes differs from the annual accounting period of the unitary group, the member will determine the portion of that member’s taxable commercial activity under ORS 317A.100(16) to be included by preparing a separate statement based on federal income tax reporting methods for the member’s accounting period that includes the unitary group’s tax year. The statement must be made available to the department upon request of the department.

(b) If the unitary group has more than one federal consolidated group and a consolidated group’s accounting period under section 441 of the Internal Revenue Code differs from the unitary group’s designated reporting entity, the consolidated group will determine the portion of taxable commercial activity under ORS 317A.100(16) to be included by preparing a separate statement based on federal income tax reporting methods for the consolidated group’s accounting period that includes the designated reporting entity’s tax year. The statement must be made available to the department upon request of the department.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100, 317A.103 & 317A.143
Statutes/Other Implemented: ORS 317A.103
REV 15-2021, adopt filed 12/15/2021, effective 01/01/2022

Or. Admin. R. 150-317-1023 Unitary Group Designated Reporting Entity

(1) Effective Date. The provisions of this rule apply to tax years beginning on or after January 1, 2021.

(2) General Rule. Unitary groups must designate a single member of the unitary group with substantial nexus to this state under ORS 317A.116 and OAR 150-317-1010 as the group’s reporting entity to register, file and pay the corporate activity tax on behalf of the unitary group.

(3) Groups with Two or More Federal Consolidated Return Members. If a unitary group has two or more members that file a federal consolidated return, the unitary group may designate any member of the group as the group’s reporting entity that:

(a) has substantial nexus to this state under ORS 317A.116 and OAR 150-317-1010; and

(b) uses the annual accounting period of the federal consolidated group under section 441 of the Internal Revenue Code.

(4) Change in Designated Reporting Entity. The unitary group must change the designated reporting entity if the designated entity no longer meets the applicable provisions of sections (2) or (3) of this rule. If the designated reporting entity merges or consolidates with another entity or changes its name, the unitary group must notify the department of the merger, consolidation, or name change. A unitary group may change the designated reporting entity to another member of the group provided that the member meets the provisions of sections (2) and (3) of this rule.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100, 317A.106 & 317A.143
Statutes/Other Implemented: ORS 317A.106
REV 1-2026, minor correction filed 01/30/2026, effective 01/30/2026
REV 15-2021, adopt filed 12/15/2021, effective 01/01/2022

Or. Admin. R. 150-317-1025 Corporate Activity Tax: Election to Exclude Non-U.S. Members from Unitary Group

(1) General Rule. For purposes of the Corporate Activity Tax (CAT), a unitary group is defined as a group of persons with more than 50 percent common ownership, either direct or indirect, that is engaged in business activities that constitute a unitary business. Unitary group members include entities formed in the United States and entities formed outside the United States (“non-U.S. members”). Generally, a unitary group must file a group return that includes all members that are part of the unitary group unless a modified unitary group election is made pursuant to and sections (2) and (3) of this rule.

(2) Modified Unitary Group Election. A unitary group may elect to modify unitary group membership to exclude all non-U.S. members from the unitary group that:

(a) have no commercial activity sourced to Oregon under ORS 317A.128; and

(b) have no commercial activity excluded under ORS 317A.100(1)(b) that would otherwise be sourced to Oregon if it were included in commercial activity, including, but not limited to, ORS 317A.100(1)(b)(FF) (receipts from transactions among members of a unitary group). If a unitary group makes an election under section (3), it may not include in the unitary group any non-U.S. member that meets the criteria for exclusion under this section.

(3)(a) A unitary group must make an election to exclude all non-U.S. members described in section (2) of this rule on an original or amended return filed on or before the due date including extensions or an original return filed after the due date of the return including extensions in accordance with forms and instructions. The election is an annual election and must be made separately for each tax year. An election under this rule is binding for and applicable to the tax year it is made.

(b) For purposes of the subtraction under ORS 317A.119 and OAR 150-317-1200, the unitary group’s labor costs or cost inputs attributable to receipts from an item that is commercial activity and any amounts used to apportion costs to Oregon in the manner provided in ORS 317A.119(3) or (4) may not include any amounts of a non-U.S. member excluded from the unitary group under this section.

(4) If a unitary group excludes non-U.S. members from the unitary group under section (3) of this rule, the group must maintain a list of excluded non-U.S. members and keep the list in the unitary group’s records. The list must include the name of the excluded entity, the tax identification number of the excluded entity (including federal tax identification number, if applicable), contact information for the excluded entity, and any other identifying information related to the excluded entity specified in forms or instructions. The list must be made available to the department upon request of the department.

(5) Upon examination of the return that is filed, the department may determine the election to exclude one or more non-U.S. members from the unitary group is not proper and may disallow the election in whole or in part. Such determination may be based on consideration of all facts and circumstances with respect to the election and may include, but is not limited to:

(a) whether any member of the unitary group fails to comply with any provisions of this rule; or

(b) whether a member was excluded from the unitary group with a substantial objective of avoiding the CAT.

(6) Notwithstanding sections (2) and (3) of this rule, if property is transferred into Oregon under ORS 317A.109(1)(b) that is included in taxable commercial activity of the modified unitary group, the group must maintain information about any member, including non-U.S. members excluded by election, that transferred property to or received property in a location outside this state within one year before the transfer of the property into this state. The information must be made available to the department upon request of the department.

History

Statutory/Other Authority: ORS 305.100, 317A.106 & 317A.143
Statutes/Other Implemented: ORS 317A.106, 317A.119, 317A.134 & 317A.137
REV 12-2021, minor correction filed 11/09/2021, effective 11/09/2021
REV 23-2020, amend filed 11/30/2020, effective 12/01/2020
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020

Or. Admin. R. 150-317-1030 Sourcing Commercial Activity to Oregon from Sales of Tangible Personal Property

(1) Definitions .

(a) “Purchaser within Oregon” includes the ultimate recipient of property if the taxpayer, at the designation of the purchaser, delivers property to the ultimate recipient within Oregon.

(b) “Tangible personal property” means personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software.

(2) Gross receipts from the sales of tangible personal property are sourced to Oregon if the property is delivered to a purchaser within Oregon regardless of the f.o.b. point or other conditions of sale, whether transported by seller, purchaser, or common carrier.

(3) Property is deemed to be delivered to a purchaser within Oregon if the recipient is located in Oregon, even though the property is ordered from outside of Oregon.

(4) Property is delivered to a purchaser within Oregon if the delivery terminates in Oregon, even though the property is subsequently transferred by the purchaser to another state.

(5) When property being delivered by a seller from the state of origin to a purchaser in another state is diverted while enroute to a purchaser in Oregon, the sale is in Oregon.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.128
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1040 Sourcing Commercial Activity to Oregon of Other than Sales of Tangible Personal Property

General Rule . Receipts, other than receipts from sale of tangible personal property, are sourced to Oregon under ORS 317A.128, section (1)(a), (b), (d), and (e), as described in this rule. This rule does not address sourcing of receipts of financial institutions or insurers as defined in ORS 317A.100. In general, the provisions in this rule establish uniform rules for determining whether receipts other than receipts from the sale of tangible personal property are sourced to this state and reasonably approximating the state or states of assignment where the state or states cannot be determined.

(a) Outline of Topics.

(A) General Rules

(i) Outline of Topics

(ii) Definitions

(iii) General Principles of Application; Contemporaneous Records

(iv) Rules of Reasonable Approximation

(B) Sale, Rental, Lease, or License of Real Property

(D) Sale of Service

(i) General Rule

(ii) In-Person Services

(iii) Services Delivered to the Customer or on Behalf of the Customer, or Delivered Electronically Through the Customer

(iv) Professional Services

(E) License or Lease of Intangible Property

(i) General rule

(ii) License of a Marketing Intangible

(iii) License of a Production Intangible

(iv) License of a Mixed Intangible

(v) License of Intangible Property where Substance of the Transaction Resembles a Sale of Goods or Services

(F) Sale of Intangible Property: Assignment of Receipts

(G) Special Rules

(i) Software Transactions

(ii) Sales or Licenses of Digital Goods and Services

(b) Definitions.

(D) “Intangible property” generally means property that is not physical or whose representation by physical means is merely incidental and includes, without limitation, copyrights; patents; trademarks; trade names; brand names; franchises; licenses; trade secrets; trade dress; information; know-how; methods; programs; procedures; systems; formulae; processes; technical data; designs; licenses; literary, musical, or artistic compositions; information; ideas; contract rights including broadcast rights; agreements not to compete; goodwill and going concern value; securities; and, except as otherwise provided in this rule, computer software.

(E) “Place of order” means the physical location from which a customer places an order for a sale other than a sale of tangible personal property from a taxpayer, resulting in a contract with the taxpayer.

(F) “Population” means the most recent population data maintained by the U.S. Census Bureau for the year in question as of the close of the taxable period.

(G) “Related party” means:

(i) A stockholder who is an individual, or a member of the stockholder's family set forth in section 318 of the Internal Revenue Code if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially, or constructively, in the aggregate, at least 50 percent of the value of the taxpayer's outstanding stock;

(iii) A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of the Internal Revenue Code if the taxpayer owns, directly, indirectly, beneficially, or constructively, at least 50 percent of the value of the corporation's outstanding stock. The attribution rules of the Internal Revenue Code apply for purposes of determining whether the ownership requirements of this definition have been met.

(iv) The provisions of this rule regarding sales between related parties do not apply to sales that are excluded from commercial activity under ORS 317A.100 (1)(b)(FF) as transactions among members of a unitary group.

(H) “State where a contract of sale is principally managed by the customer” means the primary location at which an employee or other representative of a customer serves as the primary contact person for the taxpayer with respect to the day-to-day execution and performance of a contract entered into by the taxpayer with the customer.

(c) General Principles of Application; Contemporaneous Records . In order to satisfy the requirements of this rule, a taxpayer’s assignment of receipts other than receipts from sales of tangible personal property must be consistent with the following principles:

(A) This rule provides various assignment rules that apply sequentially in a hierarchy. For each sale to which a hierarchical rule applies, a taxpayer must make a reasonable effort to apply the primary rule applicable to the sale before seeking to apply the next rule in the hierarchy (and must continue to do so with each succeeding rule in the hierarchy, where applicable). For example, in some cases, the applicable rule first requires a taxpayer to determine the state or states of assignment, and if the taxpayer cannot do so, the rule requires the taxpayer to reasonably approximate the state or states. In these cases, the taxpayer must attempt to determine the state or states of assignment (that is, apply the primary rule in the hierarchy) in good faith and with reasonable effort before it may reasonably approximate the state or states.

(d) Rules of Reasonable Approximation.

(A) In General . In general, this rule establishes uniform rules for determining whether and to what extent receipts other than receipts from the sale of tangible personal property are sourced to Oregon. This rule also sets forth rules of reasonable approximation, which apply if the state or states of assignment cannot be determined. In some instances, the reasonable approximation must be made in accordance with specific rules of approximation prescribed in this rule. In other cases, the applicable rule permits a taxpayer to reasonably approximate the state or states of assignment using a method that reflects an effort to approximate the results that would be obtained under the applicable rules or standards set forth in this rule.

(B) Reasonable Approximation Based Upon Known Sales . In an instance where, applying the applicable rules set forth in section (4) of this rule (Sale of a Service), a taxpayer can ascertain the state or states of assignment of a substantial portion of its receipts from sales of substantially similar services (“assigned receipts”), but not all of those sales, and the taxpayer reasonably believes, based on all available information, that the geographic distribution of some or all of the remainder of those sales generally tracks that of the assigned receipts, it must source receipts from those sales which it believes tracks the geographic distribution of the assigned receipts in the same proportion as its assigned receipts. This rule also applies in the context of licenses and sales of intangible property where the substance of the transaction resembles a sale of goods or services.

(C) Related-Party Transactions – Information Imputed from Customer to Taxpayer . Where a taxpayer has receipts subject to this rule from sales with a related-party customer, information that the customer has that is relevant to the sourcing of receipts from these transactions is imputed to the taxpayer.

(2) Sale, Rental, Lease, or License of Real Property. In the case of a sale, rental, lease, or license of real property, the receipts are sourced to Oregon if and to the extent that the property is in Oregon.

(3) Rental, Lease, or License of Tangible Personal Property . In the case of a rental, lease, or license of tangible personal property, the receipts are sourced to Oregon if and to the extent that the property is in Oregon. If property is mobile property that is located both within and without Oregon during the period of the lease or other contract, the receipts assigned to Oregon are the receipts from the contract period multiplied by a fraction where the numerator is the number of days used in Oregon and the denominator is the total number of days of the rental, lease, or license.

(4) Sale of a Service.

(a) General Rule. The receipts from a sale of a service are in Oregon if and to the extent that the service is delivered to a location in Oregon. In general, the term “delivered to a location” refers to the location of the taxpayer’s market for the service, which may not be the location of the taxpayer’s employees or property. The rules to determine the location of the delivery of a service in the context of several specific types of service transactions are set forth at sections (4)(b)-(d) of this rule.

(b) In-Person Services .

(A) In General. Except as otherwise provided in section (4)(b) of this rule, in-person services are services that are physically provided in person by the taxpayer, where the customer or the customer’s real or tangible property upon which the services are performed is in the same location as the service provider at the time the services are performed. This rule includes situations where the services are provided on behalf of the taxpayer by a third-party contractor. Examples of in-person services include, without limitation, warranty and repair services; cleaning services; plumbing services; carpentry; construction contractor services; pest control; landscape services; medical and dental services, including medical testing, x-rays, and mental health care and treatment; child care; hair cutting and salon services; live entertainment and athletic performances; and in-person training or lessons. In-person services include services within the description above that are performed at (1) a location that is owned or operated by the service provider or (2) a location of the customer, including the location of the customer’s real or tangible personal property. Various professional services, including legal, accounting, financial and consulting services, and other similar services as described in section (4)(d) of this rule, although they may involve some amount of in-person contact, are not treated as in-person services within the meaning of section (4)(b) of this rule.

(B) Assignment of Receipts - Rule of Determination . Except as otherwise provided in section (4)(b)(B) of this rule, if the service provided by the taxpayer is an in-person service, the service is delivered to the location where the service is received. Therefore, the receipts from a sale are in Oregon if and to the extent the customer receives the in-person service in Oregon. In assigning its receipts from sales of in-person services, a taxpayer must first attempt to determine the location where a service is received, as follows:

(i) If the service is performed with respect to the body of an individual customer in Oregon (e.g. hair cutting or x-ray services) or in the physical presence of the customer in Oregon (e.g. live entertainment or athletic performances), the service is received in Oregon.

(ii) If the service is performed with respect to the customer’s real estate in Oregon or if the service is performed with respect to the customer’s tangible personal property at the customer’s residence or in the customer’s possession in Oregon, the service is received in Oregon.

(iii) If the service is performed with respect to the customer’s tangible personal property and the tangible personal property is to be delivered to the customer, whether the service is performed within or outside Oregon, the service is received in Oregon if the property is delivered to the customer in Oregon.

(C) Rule of Reasonable Approximation . In an instance in which the state or states where a service is actually received cannot be determined, the taxpayer must reasonably approximate such state or states.

(D) Examples. Note that for purposes of the examples it is irrelevant whether the services are performed by an employee of the taxpayer or by an independent contractor acting on the taxpayer’s behalf.

(A) In General. If the service provided by the taxpayer is not an in-person service within the meaning of section (4)(b) of this rule or a professional service within the meaning of section (4)(d) of this rule, and the service is delivered to or on behalf of the customer, or delivered electronically through the customer, the receipts from a sale are in Oregon if and to the extent that the service is delivered in Oregon. For purposes of section (4)(c) of this rule, a service that is delivered “to” a customer is a service in which the customer and not a third party is the recipient of the service. A service that is delivered “on behalf of” a customer is one in which a customer contracts for a service but one or more third parties, rather than the customer, is the recipient of the service, such as fulfillment services, or the direct or indirect delivery of advertising to the customer’s intended audience. (See section (4)(c)(B)(i) of this rule and Example 7 under section (4)(c)(B)(i)(III) of this rule.) A service can be delivered to or on behalf of a customer by physical means or through electronic transmission. A service that is delivered electronically “through” a customer is a service that is delivered electronically to a customer for purposes of resale and subsequent electronic delivery in substantially identical form to an end user or other third-party recipient.

(B) Assignment of Receipts. The assignment of receipts to a state or states in the instance of a sale of a service that is delivered to the customer or on behalf of the customer, or delivered electronically through the customer, depends upon the method of delivery of the service and the nature of the customer. Separate rules of assignment apply to services delivered by physical means and services delivered by electronic transmission. (For purposes of section (4)(c) of this rule, a service delivered by an electronic transmission is not a delivery by a physical means.) If a rule of assignment set forth in section (4)(c) of this rule depends on whether the customer is an individual or a business customer, and the taxpayer acting in good faith cannot reasonably determine whether the customer is an individual or business customer, the taxpayer must treat the customer as a business customer.

(i) Delivery to or on Behalf of a Customer by Physical Means Whether to an Individual or Business Customer. Services delivered to a customer or on behalf of a customer through a physical means include, for example, product delivery services where property is delivered to the customer or to a third party on behalf of the customer; the delivery of brochures, fliers, or other direct mail services; the delivery of advertising or advertising-related services to the customer’s intended audience in the form of a physical medium; and the sale of custom software (e.g., where software is developed for a specific customer in a case where the transaction is properly treated as a service transaction for purposes of the corporate activity tax) where the taxpayer installs the custom software at the customer’s site. The rules in section (4)(c)(B)(i) of this rule apply whether the taxpayer’s customer is an individual customer or a business customer.

(I) Rule of Determination . In assigning the receipts from a sale of a service delivered to a customer or on behalf of a customer through a physical means, a taxpayer must first attempt to determine the state or states where the service is delivered. If the taxpayer is able to determine the state or states where the service is delivered, it must assign the receipts to that state or states.

(II) Rule of Reasonable Approximation . If the taxpayer cannot determine the state or states where the service is actually delivered, it must reasonably approximate the state or states.

(III) Examples :

(ii) Delivery to a Customer by Electronic Transmission . Services delivered by electronic transmission include, without limitation, services that are transmitted through the means of wire, lines, cable, fiber optics, electronic signals, satellite transmission, audio or radio waves, or other similar means, whether or not the service provider owns, leases, or otherwise controls the transmission equipment. In the case of the delivery of a service by electronic transmission to a customer, the following rules apply.

(I) Services Delivered By Electronic Transmission to an Individual Customer.

(I-a) Rule of Determination. In the case of the delivery of a service to an individual customer by electronic transmission, the service is delivered in Oregon if and to the extent that the taxpayer’s customer receives the service in Oregon. If the taxpayer can determine the state or states where the service is received, it must assign the receipts from that sale to that state or states.

(I-b) Rules of Reasonable Approximation . If the taxpayer cannot determine the state or states where the customer actually receives the service, but has sufficient information regarding the place of receipt from which it can reasonably approximate the state or states where the service is received, it must reasonably approximate the state or states. If a taxpayer does not have sufficient information from which it can determine or reasonably approximate the state or states in which the service is received, it must reasonably approximate the state or states using the customer’s billing address.

(II) Services Delivered By Electronic Transmission to a Business Customer.

(II-a) Rule of Determination . In the case of the delivery of a service to a business customer by electronic transmission, the service is delivered in Oregon if and to the extent that the taxpayer’s customer receives the service in Oregon. If the taxpayer can determine the state or states where the service is received, it must assign the receipts from that sale to the state or states. For purposes of section (4)(c)(B)(ii)(II) of this rule, it is intended that the state or states where the service is received reflect the location at which the service is directly used by the employees or designees of the customer.

(II-b) Rule of Reasonable Approximation . If the taxpayer cannot determine the state or states where the customer actually receives the service, but has sufficient information regarding the place of receipt from which it can reasonably approximate the state or states where the service is received, it must reasonably approximate the state or states.

(II-c) Secondary Rule of Reasonable Approximation . In the case of the delivery of a service to a business customer by electronic transmission where a taxpayer does not have sufficient information from which it can determine or reasonably approximate the state or states in which the service is received, the taxpayer must reasonably approximate the state or states as set forth in this rule. In these cases, unless the taxpayer can apply the safe harbor set forth in section (4)(c)(B)(ii)(II)(II-d) of this rule, the taxpayer must reasonably approximate the state or states in which the service is received as follows: first, by assigning the receipts from the sale to the state where the contract of sale is principally managed by the customer; second, if the state where the customer principally manages the contract is not reasonably determinable, by assigning the receipts from the sale to the customer’s place of order; and third, if the customer’s place of order is not reasonably determinable, by assigning the receipts from the sale using the customer’s billing address; provided, however, if the taxpayer derives more than five percent of its receipts from sales of services from any single customer, the taxpayer is required to identify the state in which the contract of sale is principally managed by that customer.

(II-d) Safe Harbor . In the case of the delivery of a service to a business customer by electronic transmission, a taxpayer may not be able to determine, or reasonably approximate under section (4)(c)(B)(ii)(II)(II-b) of this rule, the state or states in which the service is received. In these cases, the taxpayer may, in lieu of the rule stated at section (4)(c)(B)(ii)(II)(II-c) of this rule, apply the safe harbor stated in this subsection. Under this safe harbor, a taxpayer may assign its receipts from sales to a particular customer based upon the customer’s billing address in a taxable year in which the taxpayer (1) engages in substantially similar service transactions with more than 250 customers, whether business or individual, and (2) does not derive more than five percent of its receipts from sales of all services from that customer. This safe harbor applies only for purposes of services delivered by electronic transmission to a business customer, and not otherwise.

(II-e) Related-Party Transactions . In the case of a sale of a service by electronic transmission to a business customer that is a related party, the taxpayer may not use the secondary rule of reasonable approximation in section (4)(c)(B)(ii)(II)(II-c) of this rule but may use the rule of reasonable approximation in section (4)(c)(B)(ii)(II)(II-b) of this rule, and the safe harbor in section (4)(c)(B)(ii)(II)(II-d) of this rule, provided that the department may aggregate sales to related parties in determining whether the sales exceed five percent of receipts from sales of all services under that safe harbor provision if necessary or appropriate to prevent distortion.

(III) Examples . In these examples, unless otherwise stated, assume that the taxpayer is not related to the customer to which the service is delivered. Also, assume if relevant, unless otherwise stated, that the safe harbor set forth at section (4)(c)(B)(ii)(II)(II-d) of this rule does not apply.

(iii) Services Delivered Electronically Through or on Behalf of an Individual or Business Customer . A service delivered electronically “on behalf of” the customer is one in which a customer contracts for a service to be delivered electronically but one or more third parties, rather than the customer, is the recipient of the service, such as the direct or indirect delivery of advertising on behalf of a customer to the customer’s intended audience. A service delivered electronically “through” a customer to third-party recipients is a service that is delivered electronically to a customer for purposes of resale and subsequent electronic delivery in substantially identical form to end users or other third-party recipients.

(I) Rule of Determination . In the case of the delivery of a service by electronic transmission, where the service is delivered electronically to end users or other third-party recipients through or on behalf of the customer, the service is delivered in Oregon if and to the extent that the end users or other third-party recipients are in Oregon. For example, in the case of the direct or indirect delivery of advertising on behalf of a customer to the customer’s intended audience by electronic means, the service is delivered in Oregon to the extent that the audience for the advertising is in Oregon. In the case of the delivery of a service to a customer that acts as an intermediary in reselling the service in substantially identical form to third-party recipients, the service is delivered in Oregon to the extent that the end users or other third-party recipients receive the services in Oregon. The rules in this subparagraph apply whether the taxpayer’s customer is an individual customer or a business customer and whether the end users or other third-party recipients to which the services are delivered through or on behalf of the customer are individuals or businesses.

(II) Rule of Reasonable Approximation. If the taxpayer cannot determine the state or states where the services are actually delivered to the end users or other third-party recipients either through or on behalf of the customer, it must reasonably approximate the state or states.

(III) Select Secondary Rules of Reasonable Approximation .

(IV) Examples :

(d) Professional Services.

(A) In General . Except as otherwise provided in section (4)(d) of this rule, professional services are services that require specialized knowledge and in some cases require a professional certification, license, or degree. These services include the performance of technical services that require the application of specialized knowledge. Professional services include, without limitation, management services, bank and financial services, financial custodial services, investment and brokerage services, fiduciary services, tax preparation, payroll and accounting services, lending services, credit card services (including credit card processing services), data processing services, legal services, consulting services, video production services, graphic and other design services, engineering services, and architectural services. Nothing in this paragraph applies to services provided by a financial institution described in ORS 317A.100(5).

(B) Overlap with Other Categories of Services.

(C) Assignment of Receipts . In the case of a professional service, it is generally possible to characterize the location of delivery in multiple ways by emphasizing different elements of the service provided, no one of which will consistently represent the market for the services. Therefore, the location of delivery in the case of professional services is not susceptible to a general rule of determination and must be reasonably approximated. The assignment of receipts from a sale of a professional service depends in many cases upon whether the customer is an individual or business customer. In any instance in which the taxpayer, acting in good faith, cannot reasonably determine whether the customer is an individual or business customer, the taxpayer must treat the customer as a business customer. For purposes of assigning the receipts from a sale of a professional service, a taxpayer’s customer is the person that contracts for the service, irrespective of whether another person pays for or also benefits from the taxpayer’s services.

(i) General Rule . Receipts from sales of professional services other than those services described in section (4)(d)(C)(ii) of this rule (architectural and engineering services) and section (4)(d)(C)(iii) of this rule (transactions with related parties) are assigned in accordance with section (4)(d)(C)(i) of this rule.

(I) Professional Services Delivered to Individual Customers . Except as otherwise provided in section (4)(d) of this rule (see in particular section (4)(d)(C)(iii) of this rule), in any instance in which the service provided is a professional service and the taxpayer’s customer is an individual customer, the state or states in which the service is delivered must be reasonably approximated as set forth in section (4)(d)(C)(i)(I) of this rule. In particular, the taxpayer must assign the receipts from a sale to the customer’s state of primary residence, or, if the taxpayer cannot reasonably identify the customer’s state of primary residence, to the state of the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from an individual customer, the taxpayer must identify the customer’s state of primary residence and assign the receipts from the service or services provided to that customer to that state.

(II) Professional Services Delivered to Business Customers . Except as otherwise provided in section (4)(d) of this rule, in any instance in which the service provided is a professional service and the taxpayer’s customer is a business customer, the state or states in which the service is delivered must be reasonably approximated as set forth in this section. In particular, unless the taxpayer may use the safe harbor set forth at section (4)(d)(C)(i)(III) of this rule, the taxpayer must assign the receipts from the sale as follows: first, by assigning the receipts to the state where the contract of sale is principally managed by the customer; second, if the place of customer management is not reasonably determinable, to the customer’s place of order; and third, if the customer place of order is not reasonably determinable, to the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from a customer, the taxpayer is required to identify the state in which the contract of sale is principally managed by the customer.

(III) Safe Harbor; Large Volume of Transactions . Notwithstanding the rules set forth in sections (4)(d)(C)(i)(I) and (II) of this rule, a taxpayer may assign its receipts from sales to a particular customer based on the customer’s billing address in any taxable year in which the taxpayer (1) engages in substantially similar service transactions with more than 250 customers, whether individual or business, and (2) does not derive more than five percent of its receipts from sales of all services from that customer. This safe harbor applies only for purposes of section (4)(d)(C)(i) of this rule and not otherwise.

(ii) Architectural and Engineering Services with respect to Real or Tangible Personal Property. Architectural and engineering services with respect to real or tangible personal property are professional services within the meaning of section (4)(d) of this rule. However, unlike in the case of the general rule that applies to professional services, (1) the receipts from a sale of an architectural service are assigned to a state or states if and to the extent that the services are with respect to real estate improvements located, or expected to be located, in the state or states; and (2) the receipts from a sale of an engineering service are assigned to a state or states if and to the extent that the services are with respect to tangible or real property located in the state or states, including real estate improvements located in, or expected to be located in, the state or states. These rules apply whether or not the customer is an individual or business customer. In any instance in which architectural or engineering services are not described in section (4)(d)(C)(ii) of this rule, the receipts from a sale of these services must be assigned under the general rule for professional services. See section (4)(d)(C)(i) of this rule.

(iii) Related-Party Transactions . In any instance in which the professional service is sold to a related party, rather than applying the rule for professional services delivered to business customers in section (4)(d)(C)(i)(II) of this rule, the state or states to which the service is assigned is the place of receipt by the related party as reasonably approximated using the following hierarchy: (1) if the service primarily relates to specific operations or activities of a related party conducted in one or more locations, then to the state or states in which those operations or activities are conducted in proportion to the related-party’s payroll at the locations to which the service relates in the state or states; or (2) if the service does not relate primarily to operations or activities of a related party conducted in particular locations, but instead relates to the operations of the related party generally, then to the state or states in which the related party has employees, in proportion to the related-party’s payroll in those states. The taxpayer may use the safe harbor provided by section (4)(d)(C)(i)(III) of this rule provided that the department may aggregate the receipts from sales to related parties in applying the five percent rule if necessary or appropriate to avoid distortion.

(iv) Examples : Unless otherwise stated, assume in each of these examples, that the safe harbor set forth at section (4)(d)(C)(i)(III) of this rule does not apply.

(5) License or Lease of Intangible Property .

(a) General Rules.

(A) Receipts from the license of intangible property are in Oregon if and to the extent the intangible is used in Oregon. In general, the term “use” is construed to refer to the location of the taxpayer’s market for the use of the intangible property that is being licensed and is not to be construed to refer to the location of the property or payroll of the taxpayer. The rules that apply to determine the location of the use of intangible property in the context of several specific types of licensing transactions are set forth at sections (5)(b)-(e) of this rule. For purposes of the rules set forth in section (5) of this rule, a lease of intangible property is to be treated the same as a license of intangible property.

(C) Intangible property licensed as part of the sale or lease of tangible property is treated under this rule as the sale or lease of tangible property.

(b) License of a Marketing Intangible . Where a license is granted for the right to use intangible property in connection with the sale, lease, license, or other marketing of goods, services, or other items (i.e., a marketing intangible) to a consumer, the royalties or other licensing fees paid by the licensee for that marketing intangible are assigned to Oregon to the extent that those fees are attributable to the sale or other provision of goods, services, or other items purchased or otherwise acquired by consumers or other ultimate customers in Oregon. Examples of a license of a marketing intangible include, without limitation, the license of a service mark, trademark, or trade name; certain copyrights; the license of a film, television, or multimedia production or event for commercial distribution; and a franchise agreement. In each of these instances the license of the marketing intangible is intended to promote consumer sales. In the case of the license of a marketing intangible, where a taxpayer has actual evidence of the amount or proportion of its receipts that is attributable to Oregon, it must assign that amount or proportion to Oregon. In the absence of actual evidence of the amount or proportion of the licensee's receipts that are derived from Oregon consumers, the portion of the licensing fee to be assigned to Oregon must be reasonably approximated by multiplying the total fee by a percentage that reflects the ratio of the Oregon population in the specific geographic area in which the licensee makes material use of the intangible property to regularly market its goods, services, or other items relative to the total population in that area. If the license of a marketing intangible is for the right to use the intangible property in connection with sales or other transfers at wholesale rather than directly to retail customers, the portion of the licensing fee to be assigned to Oregon must be reasonably approximated by multiplying the total fee by a percentage that reflects the ratio of the Oregon population in the specific geographic area in which the licensee's goods, services, or other items are ultimately and materially marketed using the intangible property relative to the total population of that area. Unless the taxpayer demonstrates that the marketing intangible is materially used in the marketing of items outside the United States, the fees from licensing that marketing intangible will be presumed to be derived from within the United States.

(c) License of a Production Intangible . If a license is granted for the right to use intangible property other than in connection with the sale, lease, license, or other marketing of goods, services, or other items, and the license is to be used in a production capacity (a “production intangible”), the licensing fees paid by the licensee for that right are assigned to Oregon to the extent that the use for which the fees are paid takes place in Oregon. Examples of a license of a production intangible include, without limitation, the license of a patent, a copyright, or trade secrets to be used in a manufacturing process, where the value of the intangible lies predominately in its use in that process. In the case of a license of a production intangible to a party other than a related party where the location of actual use is unknown, it is presumed that the use of the intangible property takes place in the state of the licensee's commercial domicile (where the licensee is a business) or the licensee’s state of primary residence (where the licensee is an individual). If the department can reasonably establish that the actual use of intangible property pursuant to a license of a production intangible takes place in part in Oregon, it is presumed that the entire use is in this state except to the extent that the taxpayer can demonstrate that the actual location of a portion of the use takes place outside Oregon. In the case of a license of a production intangible to a related party, the taxpayer must assign the receipts to where the intangible property is actually used.

(d) License of a Mixed Intangible . If a license of intangible property includes both a license of a marketing intangible and a license of a production intangible (a “mixed intangible”) and the fees to be paid in each instance are separately and reasonably stated in the licensing contract, the department will accept that separate statement for purposes of this rule. If a license of intangible property includes both a license of a marketing intangible and a license of a production intangible and the fees to be paid in each instance are not separately and reasonably stated in the contract, it is presumed that the licensing fees are paid entirely for the license of the marketing intangible except to the extent that the taxpayer or the department can reasonably establish otherwise.

(e) License of Intangible Property where Substance of Transaction Resembles a Sale of Goods or Services .

(A) In general. In some cases, the license of intangible property will resemble the sale of an electronically-delivered good or service rather than the license of a marketing intangible or a production intangible. In these cases, the receipts from the licensing transaction are assigned by applying the rules set forth in sections (4)(c)(B)(ii) and (iii) of this rule, as if the transaction were a service delivered to an individual or business customer or delivered electronically through an individual or business customer, as applicable. Examples of transactions to be assigned under section (5)(e) of this rule include, without limitation, the license of database access, the license of access to information, the license of digital goods (see section (7)(b) of this rule), and the license of certain software (e.g., where the transaction is not the license of pre-written software that is treated as the sale of tangible personal property, see section (7)(a) of this rule).

(B) Sublicenses . Pursuant to section (5)(e)(A) of this rule, the rules of section (4)(c)(B)(iii) of this rule may apply where a taxpayer licenses intangible property to a customer that in turn sublicenses the intangible property to end users as if the transaction were a service delivered electronically through a customer to end users. In particular, the rules set forth at section (4)(c)(B)(iii) of this rule that apply to services delivered electronically to a customer for purposes of resale and subsequent electronic delivery in substantially identical form to end users or other recipients may also apply with respect to licenses of intangible property for purposes of sublicense to end users. For this purpose, the intangible property sublicensed to an end user shall not fail to be substantially identical to the property that was licensed to the sublicensor merely because the sublicense transfers a reduced bundle of rights with respect to that property (e.g., because the sublicensee’s rights are limited to its own use of the property and do not include the ability to grant a further sublicense), or because that property is bundled with additional services or items of property.

(6) Sale of Intangible Property: Assignment of Receipts . The assignment of receipts to a state or states in the instance of a sale or exchange of intangible property depends upon the nature of the intangible property sold. For purposes of this section (6), a sale or exchange of intangible property includes a license of that property where the transaction is treated for tax purposes as a sale of all substantial rights in the property and the receipts from the transaction are not contingent on the productivity, use, or disposition of the property. For the rules that apply where the consideration for the transfer of rights is contingent on the productivity, use, or disposition of the property, see section (5)(a) of this rule.

(a) Contract Right or Government License that Authorizes Business Activity in Specific Geographic Area. In the case of a sale or exchange of intangible property where the property sold or exchanged is a contract right, government license, or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area, the receipts from the sale are assigned to a state if and to the extent that the intangible property is used or is authorized to be used within the state. If the intangible property is used or may be used only in this state, the taxpayer must assign the receipts from the sale to Oregon. If the intangible property is used or is authorized to be used in Oregon and one or more other states, the taxpayer must assign the receipts from the sale to Oregon to the extent that the intangible property is used in or authorized for use in Oregon, through the means of a reasonable approximation.

(b) Sale that Resembles a License (Receipts are Contingent on Productivity, Use, or Disposition of the Intangible Property) . In the case of a sale or exchange of intangible property where the receipts from the sale or exchange are contingent on the productivity, use, or disposition of the property, the receipts from the sale are assigned by applying the rules set forth in section (5) of this rule (pertaining to the license or lease of intangible property).

(c) Sale that Resembles a Sale of Goods and Services . In the case of a sale or exchange of intangible property where the substance of the transaction resembles a sale of goods or services and where the receipts from the sale or exchange do not derive from payments contingent on the productivity, use, or disposition of the property, the receipts from the sale are assigned by applying the rules set forth in section (5)(e) of this rule (relating to licenses of intangible property that resemble sales of goods and services). Examples of these transactions include those that are analogous to the license transactions cited as examples in section (5)(e) of this rule.

(d) If receipts from the sale of intangible property used in Oregon are not sourced as provided elsewhere in this section and the sale was a transaction or activity in the regular course of the taxpayer’s business, the receipts are sourced to Oregon if and to the extent the property is used in Oregon.

(7) Special Rules.

(a) Software Transactions . A license or sale of pre-written software for purposes other than commercial reproduction (or other exploitation of the intellectual property rights) transferred on a tangible medium is treated as the sale of tangible personal property, rather than as either the license or sale of intangible property or the performance of a service. In these cases, the receipts are in Oregon as determined under ORS 317A.128 and related rules for the sale of tangible personal property. In all other cases, the receipts from a license or sale of software are to be assigned to Oregon as determined otherwise under this rule (e.g., depending on the facts, as the development and sale of custom software, see section (4)(c) of this rule; as a license of a marketing intangible, see section (5)(b) of this rule; as a license of a production intangible, see section (5)(c) of this rule; as a license of intangible property where the substance of the transaction resembles a sale of goods or services, see section (5)(e) of this rule; or as a sale of intangible property, see section (6) of this rule).

(b) Sales or Licenses of Digital Goods or Services . In general. In the case of a sale or license of digital goods or services, including, among other things, the sale of various video, audio, and software products, or similar transactions, the receipts from the sale or license are assigned by applying the same rules as are set forth in sections (4)(c)(B)(ii) or (iii) of this rule, as if the transaction were a service delivered to an individual or business customer or delivered through or on behalf of an individual or business customer. For purposes of the analysis, it is not relevant what the terms of the contractual relationship are or whether the sale or license might be characterized, depending upon the particular facts, as, for example, the sale or license of intangible property or the performance of a service. See sections (5)(e) and (6)(c) of this rule.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100, 317A.128 & 317A.143
Statutes/Other Implemented: ORS 317A.128
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1050 Sourcing of Commercial Activity for Financial Institutions in This State

(1) General Rule. Commercial activity for financial institutions is sourced to this state if it is from business conducted in this state. Commercial activity for financial institutions is the items of income as reported on the form required under ORS 317A.100(1)(a)(B)(i)-(iii). The provisions in this rule establish uniform rules for determining whether the items of income as reported on the appropriate form filed by a financial institution are sourced to this state.

(2) A taxpayer may request an alternative method, and the Department of Revenue may require or permit an alternative method under ORS 317A.128(2)-(3).

(3) Definitions as used in this rule, unless context otherwise requires:

(a) “Billing address” means the location indicated in the books and records of the taxpayer on the first day of the taxable year (or such later dates in the taxable year when the customer relationship began) as the address where any notice, statement, or bill relating to a customer account is mailed.

(b) A borrower “located in this state” means:

(A) A borrower that is engaged in a trade or business that maintains its commercial domicile in this state; or

(B) A borrower that is not engaged in a trade or business whose billing address is in this state.

(c) “Card issuer’s reimbursement fee” means the fee a taxpayer receives from a merchant’s bank because one of the persons to whom the taxpayer has issued a credit, debit, or similar type of card has charged merchandise or services to the card.

(d) “Credit card” means a card, or other means of providing information, that entitles the holder to charge the cost of purchase, or a cash advance, against a line of credit.

(e) “Debit card” means a card, or other means of providing information, that enables the holder to charge the cost of purchases, or a cash withdrawal, against the holder’s bank account or a remaining balance on the card.

(f) “Financial institution” means a person, corporation, or other business entity under ORS 314.610, excluding credit unions.

(g) “Form” means forms FR Y-9 filed by a holding company or a call report filed by a bank organization.

(h) “Items of income” means the individual items reported on the form filed by a holding company or bank organization, or items reported by a nonbank financial organization in accordance with generally accepted accounting principles under ORS 314.605. If such individual items are net for the purposes of the form, those individual items are net for the purpose of this tax under ORS 317A.100(1)(a)(B)(i)-(iii).

(i) “Loan” means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase, in whole or in part, of such extension of credit from another. Loans include participations, syndications, and leases treated as loans for federal income tax purposes. Loans do not include: futures or forward contracts; options; notional principal contracts such as swaps; credit card receivables, including purchased credit card relationships; noninterest bearing balances due from other depository institutions; cash items in the process of collection; federal funds sold; securities purchased under agreements to resell; assets held in a trading account; securities; interests in a REMIC, or other mortgage-backed or asset-backed security; and other similar items.

(j) “Loan secured by real property” means that 50 percent or more of the aggregate value of the collateral used to secure a loan or other obligation, when valued at fair market value as of the time the original loan or obligation was incurred, was real property.

(k) “Merchant discount” means the fee (or negotiated discount) charged to a merchant by the taxpayer for the privilege of participating in a program whereby a credit, debit, or similar type of card is accepted in payment for merchandise or services sold to the card holder, net of any cardholder charge-back and unreduced by any interchange transaction or issuer reimbursement fee paid to another for charges or purchases made by its cardholder.

(L) “Participation” means an extension of credit in which an undivided ownership interest is held on a pro-rata basis in a single loan or pool of loans and related collateral. In a loan participation, the credit originator initially makes the loan and then subsequently resells all or a portion of it to other lenders. The participation may or may not be known to the borrower.

(m) “Person” means an individual, estate, trust, partnership, corporation, or any other business entity.

(n) “Principal base of operations” with respect to transportation property means the place of more or less permanent nature from which said property is regularly directed or controlled. With respect to an employee, the “principal base of operations” means the place of more or less permanent nature from which the employee regularly:

(A) Starts his or her work and to which the employee customarily returns in order to receive instructions from the employer; or

(B) Communicates with customers or other persons; or

(C) Performs any other functions necessary to the exercise of the employee’s trade or profession at some other point or points.

(o) “Real property owned” and “tangible personal property owned” means real and tangible personal property, excluding coins, currency, or property acquired in lieu of or pursuant to a foreclosure, on which the taxpayer:

(A) May claim depreciation for federal income tax purposes; or

(B) Holds legal title and on which no other person may claim depreciation for federal income tax purposes (or could claim depreciation if subject to federal income tax).

(p) “Regular place of business” means an office at which the taxpayer conducts business in a regular and systematic manner and that is continuously maintained, occupied, and used by employees of the taxpayer.

(q) “State” is defined in ORS 314.610(8).

(r) “Syndication” means an extension of credit in which two or more persons fund and each person is at risk only up to a specified percentage of the total extension of credit or up to a specified dollar amount.

(s) “Transportation property” means vehicles and vessels capable of moving under their own power, such as aircraft, trains, water vessels, and motor vehicles, as well as any equipment or containers attached to such property, such as rolling stock, barges, trailers, or the like.

(4) Sourcing.

(a) In general . Except as provided elsewhere in OAR 150-317-1050, commercial activity for financial institutions is sourced to this state as indicated below.

(b) Receipts from the sale, rental, lease, or license of real property . Receipts from the sales, rental, lease, or license of real property owned by the taxpayer are sourced to this state if and to the extent the property is in this state or receipts from the sublease of real property if the property is in this state.

(A) Except as described in subparagraph (B) of this subsection, receipts from the lease or rental of tangible personal property owned by the taxpayer are sourced to this state if the property is located within this state when it is first placed in service by the lessee.

(B) Receipts from the lease or rental of transportation property owned by the taxpayer are sourced to this state to the extent that the property is used in this state. The extent an aircraft is deemed to be used in this state is determined by multiplying the receipts from the lease or rental of the aircraft by a fraction, the numerator of which is the number of landings of the aircraft in this state and the denominator of which is the total number of landings of the aircraft. If the extent of the use of any transportation property within this state cannot be determined, then the property is deemed to be used wholly in the state in which the property has its principal base of operations. A motor vehicle is deemed to be used wholly in the state in which it is registered.

(d) Interest, fees, and penalties imposed in connection with loans secured by real property.

(A) Interest, fees, and penalties imposed in connection with loans secured by real property are sourced to this state if the property is located within this state. If the property is located both within this state and one or more other states, the receipts described in this subsection are sourced to this state if more than 50 percent of the fair market value of the real property is located within this state. If more than 50 percent of the fair market value of the real property is not located within any one state, then the receipts described in this subsection must be sourced to this state if the borrower is located in this state.

(e) Interest, fees, and penalties imposed in connection with loans not secured by real property . Interest, fees, and penalties imposed in connection with loans not secured by real property are sourced to this state if the borrower is located in this state.

(f) Net gains from the sale of loans . Net gains (but not less than zero) from the sale of loans are sourced to this state as specified below. Net gains (but not less than zero) from the sale of loans includes income recorded under the coupon stripping rules of IRC section 1286.

(A) The amount of net gains (but not less than zero) from the sale of loans secured by real property is sourced to this state by multiplying such net gains by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (d) of this section and the denominator of which is the total amount of interest, fees, and penalties imposed in connection with loans secured by real property.

(B) The amount of net gains (but not less than zero) from the sale of loans not secured by real property is sourced to this state by multiplying such net gains by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (e) of this section and the denominator of which is the total amount of interest, fees, and penalties imposed in connection with loans not secured by real property.

(g) Receipts from fees, interest, and penalties charged to card holders . Fees, interest, and penalties charged to credit, debit, or similar card holders; including but not limited to, annual fees and overdraft fees, are sourced to this state if the billing address of the card holder is in this state.

(h) Net gains from the sale of credit card receivables . All net gains (but not less than zero) from the sale of credit card receivables are sourced to this state by multiplying such net gains by a fraction, the numerator of which is the amount sourced to this statepursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of interest and fees or penalties in the nature of interest from credit card receivables and fees charged to card holders.

(i) Card issuer's reimbursement fees .

(A) All credit card issuer's reimbursement fees, interest, and penalties charged to credit card holders are sourced to this state by multiplying such fees, interest and penalties by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to credit card holders.

(B) All debit card issuer's reimbursement fees, interest, and penalties charged to debit card holders are sourced to this state by multiplying such fees, interest and penalties by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to debit card holders.

(C) All other card issuer's reimbursement fees, interest, and penalties charged to all other card holders are sourced to this state by multiplying such fees, interest and penalties by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to all other card holders.

(j) Receipts from merchant discount.

(A) If the taxpayer can readily determine the location of the merchant, receipts from merchant discount are sourced to this state if the merchant is in this state.

(B) If the taxpayer cannot readily determine the location of the merchant, such receipts from the merchant discount are sourced to this state as follows:

(i) In the case of a merchant discount related to the use of a credit card, such receipts multiplied by a fraction the numerator of which is the amount of fees, interest, and penalties charged to credit card holders that is sourced to this state pursuant to subsection (g) of this section and the denominator of which is the taxpayer's total amount of fees, interest, and penalties charged to credit card holders, and

(ii) In the case of a merchant discount related to the use of a debit card, such receipts multiplied by a fraction the numerator of which is the amount of fees, interest, and penalties charged to debit card holders that is sourced to this state pursuant to subsection (g) of this section and the denominator of which is the taxpayer’s total amount of fees, interest, and penalties charged to debit card holders.

(iii) In the case of a merchant discount related to the use of all other types of cards, such receipts multiplied by a fraction the numerator of which is the amount of fees, interest, and penalties charged to all other card holders that is sourced to this state pursuant to subsection (g) of this section and the denominator of which is the taxpayer’s total amount of fees, interest, and penalties charged to all other card holders.

(k) Receipts from ATM fees . All ATM fees that are not forwarded directly to another bank are sourced to this state as follows:

(A) All fees charged to a cardholder for the use at an ATM of a card issued by the taxpayer are sourced to this state if the cardholder’s billing address is in this state.

(B) All fees charged to a cardholder, other than the taxpayer’s cardholder, for the use of such card at an ATM owned or rented by the taxpayer are sourced to this state if the ATM is in this state.

(L) Loan servicing fees.

(A) Loan servicing fees derived from loans secured by real property are sourced to this state by multiplying such fees by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (d) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans secured by real property.

(B) Loan servicing fees derived from loans not secured by real property are sourced to this state by multiplying such fees by a fraction, the numerator of which is the amount sourced to this state pursuant to subsection (e) of this section and the denominator of which is the total amount of interest and fees or penalties in the nature of interest from loans not secured by real property.

(C) In circumstances in which the taxpayer receives loan servicing fees for servicing either the secured or the unsecured loans of another, such fees are sourced to this state if the borrower is located in this state.

(m) Receipts from services not otherwise sourced under this rule . Receipts from the sale of a service not otherwise sourced under this rule are sourced to this state, if and to the extent the service is delivered to a customer at a location in this state.

(A) Services Delivered to Individual Customers. In any instance in which the taxpayer’s customer is an individual customer, the state or states in which the service is delivered must be reasonably approximated as follows: the taxpayer must assign the receipts from a sale to the customer’s state of primary residence, or, if the taxpayer cannot reasonably identify the customer’s state of primary residence, to the state of the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from an individual customer, the taxpayer must identify the customer’s state of primary residence and assign the receipts from the service or services provided to that customer to that state.

(B) Services Delivered to Business Customers. In any instance in which the taxpayer’s customer is a business customer, the state or states in which the service is delivered must be reasonably approximated as follows: unless the taxpayer may use the safe harbor in paragraph (C) of this subsection, the taxpayer must assign the receipts from the sale as follows: (1) by assigning the receipts to the state where the contract of sale is principally managed by the customer; (2) if the place of customer management is not reasonably determinable, to the customer’s place of order; and (3) if the customer place of order is not reasonably determinable, to the customer’s billing address; provided, however, in any instance in which the taxpayer derives more than five percent of its receipts from sales of all services from a customer, the taxpayer is required to identify the state in which the contract of sale is principally managed by the customer.

(C) Safe Harbor; Large Volume of Transactions. Notwithstanding the rules set forth in paragraphs (A) and (B) of this subsection, a taxpayer may source its receipts from sales to a particular customer based on the customer’s billing address in any taxable year in which the taxpayer (1) engages in substantially similar service transactions with more than 250 customers, whether individual or business, and (2) does not derive more than five percent of its receipts from sales of all services from that customer.

(D) Related Party Transactions.

(i) In any instance in which the professional service is sold to a related party, rather than applying the rule for professional services delivered to business customers in paragraph (B) of this subsection, the items sourced to this state which the service is assigned is the place of receipt by the related party as reasonably approximated using the following hierarchy: (1) if the service primarily relates to specific operations or activities of a related party conducted in one or more locations, then those operations or activities are conducted in proportion to the related party’s payroll at the locations to which the service relates in this state; or (2) if the service does not relate primarily to operations or activities of a related party conducted in particular locations, but instead relates to the operations of the related party generally, to this state in which the related party has employees. The taxpayer may use the safe harbor provided by paragraph (C) of this subsection provided that the department may aggregate the receipts from sales to related parties in applying the five percent rule if necessary or appropriate to avoid distortion.

(ii) The provisions of this section regarding sales between related parties do not apply to sales that are excluded from commercial activity under ORS 317A.100(1)(b)(FF) as transactions among members of a unitary group.

(n) Receipts from the financial institution’s investment assets and activities and trading assets and activities.

(A) Interest, dividends, net gains (but not less than zero), and other income from investment assets and activities and from trading assets and activities that are reported on the taxpayer’s financial statements, call reports, or similar reports are sourced to this state if it is from business conducted in this state. Investment assets and activities and trading assets and activities include but are not limited to: investment securities, trading account assets, federal funds; securities purchased and sold under agreements to resell or repurchase, options, future contracts, forward contracts, notional principal contracts such as swaps, equities, and foreign currency transactions.

(i) The amount of interest, net gains (but not less than zero) and other income from investment assets and activities in the investment account to be sourced to this state is determined by multiplying all such income from such assets and activities by a fraction, the numerator of which is the average value of such assets that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such assets.

(ii) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements sourced to this state is determined by multiplying these amounts by a fraction, the numerator of which is the average value of federal funds sold and securities purchased under agreements to resell that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such funds and such securities.

(iii) The amount of interest, net gains (but not less than zero), and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions, (but excluding amounts described in subparagraphs (i) and (ii) of this paragraph), sourced to this state is determined by multiplying these amounts by a fraction, the numerator of which is the average value of such trading assets that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such assets.

(iv) For purposes of this paragraph, average value is determined using the rules for determining the average value of tangible personal property set forth in OAR 150-314-0088(5)(c) and (d).

(B) In lieu of using the method set forth in paragraph (A) of this subsection, the taxpayer may elect, or the department may require in order to fairly represent the business activity of the taxpayer in this state, the use of the method set forth in this paragraph.

(i) The amount of interest, net gains (but not less than zero), and other income from investment assets and activities in the investment account to be sourced to this state is determined by multiplying all such income from such assets and activities by a fraction, the numerator of which is the gross income from such assets and activities that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such assets and activities.

(ii) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements sourced to this state is determined by multiplying these amounts by a fraction, the numerator of which is the gross income from such funds and such securities that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such funds and such securities.

(iii) The amount of interest, net gains (but not less than zero), and other income from trading assets and activities, including but not limited to assets and activities in the matched book, in the arbitrage book, and foreign currency transactions (but excluding amounts described in subparagraphs (i) and (ii) of this paragraph) sourced to this state and included in the numerator is determined by multiplying these amounts by a fraction, the numerator of which is the gross income from such trading assets and activities that are properly assigned to a regular place of business of the taxpayer within this state and the denominator of which is the gross income from all such assets and activities.

(C) If the taxpayer elects or is required by the department to use the method set forth in paragraph (B) of this subsection, it must use this method on all subsequent returns unless the taxpayer receives prior written permission from the department, or the department requires the use of a different method.

(D) The taxpayer has the burden of proving that an investment asset or activity or trading asset or activity was properly assigned to a regular place of business outside of this state by demonstrating that the day-to-day decisions regarding the asset or activity occurred at a regular place of business outside this state. Where the day-to-day decisions regarding an investment asset or activity or trading asset or activity occur at more than one regular place of business, and one such regular place of business is in this state and one such regular place of business is outside this state, such asset or activity is considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established.

(o) All other receipts. All other receipts described in (1) and not sourced above are sourced as set forth below.

(A) Receipts derived from property, transactions, and activities having a connection to Oregon are sourced to this state. Receipts derived from the sale of tangible personal property have a connection to Oregon if the tangible personal property is delivered in Oregon. Receipts derived from intangible personal property have a connection to Oregon if the intangible property is used or held for use in Oregon.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100 & 317A.128
REV 5-2021, minor correction filed 03/19/2021, effective 03/19/2021
REV 13-2020, adopt filed 07/24/2020, effective 07/29/2020

Or. Admin. R. 150-317-1060 Definition of Insurers’ Gross Premiums Receipts

(1) For purposes of determining an insurer’s commercial activity subject to the Corporate Activity Tax, “insurance premiums” are the following premiums received by an insurer, unless otherwise excluded under ORS 317A.100:

(a) All gross direct life, gross direct accident and health, and gross direct property and casualty insurance premiums written, as reported on the statement of premiums accompanying the annual statement required to be filed with the Director of the Department of Consumer and Business Services under ORS 731.574 that allocate premiums by jurisdiction.

(b) The gross amount of surplus lines insurance premiums written on Oregon home state risks, as shown in the report required by ORS 735.465.

(2) The Corporate Activity Tax described in ORS 317A.100(1)(a)(C) applies to insurers that meet that definition under ORS 317A.100(10) and that receive the insurance premiums described in section (1) of this administrative rule; for tax year 2020, the provisions in ORS 731.840 do not apply to the Corporate Activity Tax.

(3) For tax years beginning on or after January 1, 2021, foreign and alien insurers that are subject to the retaliatory tax imposed under ORS 731.854 and 731.859 are “excluded persons” and are not subject to the Corporate Activity Tax.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100, 317A.128 & 317A.143
Statutes/Other Implemented: ORS 317A.100 & 317A.128
REV 17-2021, amend filed 12/15/2021, effective 01/01/2022
REV 9-2021, adopt filed 06/28/2021, effective 07/01/2021
REV 3-2021, temporary adopt filed 01/27/2021, effective 02/01/2021 through 07/30/2021

Or. Admin. R. 150-317-1070 Sourcing of Motor Carrier Transportation Services

(1) Definitions . For purposes of this rule, the following definitions apply:

(a) “Highway” means any road, street, or way, whether on public or private property, open to public travel. “Open to public travel” means that the road section is available, except during scheduled periods, extreme weather or emergency conditions, passable by four-wheel standard passenger cars, and open to the general public for use without restrictive gates, prohibitive signs, or regulation other than restrictions based on size, weight, or class of registration. Toll plazas of public toll roads are not considered restrictive gates.

(b) “Mobile property mile” is the movement of a unit of mobile property a distance of one mile whether loaded or unloaded.

(c) “Mobile property” means all motor vehicles, including trailers, engaged directly in the movement of tangible personal property, other than support vehicles used predominantly in a local capacity.

(d) “Motor carrier” means any person providing motor vehicle transport of persons or property for compensation, or who publicly purports to be willing to provide motor vehicle transport of persons or property for compensation.

(e) “Motor vehicle” means a vehicle, machine, tractor, trailer (including truck trailers transported by rail), or semitrailer propelled or drawn by mechanical power and used on a highway in the transportation of persons or property, or any combination thereof, but does not include a vehicle, locomotive, or car operated only on a rail or rails, or a trolley bus operated by electric power from a fixed overhead wire, furnishing local passenger transportation similar to street-railway service.

(2) Amounts realized from motor carrier transportation services are sourced to this state if and to the extent the service is delivered to a location in this state. A transportation service is delivered in this state to the extent that the transportation occurs within the borders of the state.

(3) The total commercial activity from motor carrier transportation services sourced to this state during the tax period includes:

(a) All receipts from any transportation service which both originates and terminates within this state;

(b) That portion of receipts from transportation services, other than hauling freight, mail, and express, passing through, into, or out of this state, as determined by the ratio which the miles traveled in this state bear to the total miles traveled from points of origin to destination; and

(c) That portion of receipts from hauling freight, mail, and express from movements or shipments passing through, into, or out of this state, as determined by the ratio which the mobile property miles traveled by such movements or shipments in this state bear to the total mobile property miles traveled by movements or shipments from points of origin to destination.

(4) Notwithstanding section (3), receipts sourced to this state may not include receipts from transportation services to the extent sourcing such receipts to this state is prohibited by the Constitution or laws of the United States, including, but not limited to, 49 U.S. Code § 14505.

History

Statutory/Other Authority: ORS 305.100, 317A.128 & 317A.143
Statutes/Other Implemented: ORS 317A.128
REV 11-2021, amend filed 09/28/2021, effective 10/01/2021
REV 23-2020, adopt filed 11/30/2020, effective 12/01/2020

Or. Admin. R. 150-317-1080 Sourcing of Rail Carrier Transportation Services

(1) Definition. For purposes of this rule, “rail carrier” means a person providing railroad transportation of persons or property for compensation.

(2) In General . Amounts realized from rail carrier transportation services are sourced to this state if and to the extent the service is delivered to a location in this state. A transportation service is delivered to a location in this state to the extent that the transportation occurs within the borders of the state.

(3) The total commercial activity sourced to this state during the tax period from rail carrier transportation services includes:

(a) All receipts realized from any rail carrier transportation service which both originates and terminates within this state; and

(b) That portion of the receipts realized from each movement or shipment passing through, into, or out of this state as determined by the ratio which the miles traveled by such movement or shipment in this state bears to the total miles traveled by such movement or shipment from points of origin to destination. Per diem and mileage charges that are collected by the taxpayer are excluded from both the numerator and denominator of the ratio.

History

Statutory/Other Authority: ORS 305.100, 317A.143 & 317A.143
Statutes/Other Implemented: ORS 317A.128
REV 7-2021, adopt filed 06/28/2021, effective 07/01/2021

Or. Admin. R. 150-317-1090 Sourcing of Sea Transportation Services

(1) Sea transportation services within this rule include the activities of steamship companies substantially engaged in interstate or international commerce which derive receipts within and partly from sources without the state. They do not include the activities of water transportation carriers operating mainly on the Columbia and Willamette Rivers or water transportation carriers operating primarily within Oregon waters.

(2)The Oregon commercial activity of a taxpayer carrying on the business of sea transportation services during the tax period must be determined pursuant to ORS 317A.128 except as modified by this rule.

(3) Receipts derived from interstate sea transportation services are sourced to this state using a sales factor. The sales factor is a fraction, the denominator of which includes all sales derived from carrying cargo, i.e., passengers, freight, mail, etc., and the sales incidental thereto. In calculating the numerator of the factor, such sales are assigned to this state in the proportion that the voyage time the ship spent within this state during the tax period bears to the total voyage time of the ship during the tax period. Sales from activities incidental to the transportation service, such as income from restaurants, locker rentals, etc., are assigned to the state or country in which the activity is carried on.

(a) The term “voyage time” means the time that a ship is in operation for the purpose of transporting cargo, freight, mail, passengers, etc. The time that a ship is in operation includes all sailing time, even though a ship is returning empty or is en route to a port of call to load passengers or cargo, all time in port while loading and unloading, all time awaiting cargo, and all time that the ship is laid up for ordinary repairs, refueling, or provisioning. A ship is not in operation when out of service or during the time that it is laid up for extensive repairs, overhaul, modification, or is in dry dock.

(b) The voyage time spent traveling on the Columbia River below mile post 309 is divided equally between Oregon and Washington. For purposes of this rule a vessel is not considered traveling on the Columbia River while remaining at a port even though the vessel moves from one terminal or dock to another within that port.

History

Statutory/Other Authority: ORS 305.100, 317A.128 & 317A.143
Statutes/Other Implemented: ORS 317A.128
REV 16-2021, adopt filed 12/15/2021, effective 01/01/2022

Or. Admin. R. 150-317-1095 Sourcing of River Transportation Services

(1) The Oregon commercial activity of a taxpayer involved in river transportation services during the tax period must be determined pursuant to ORS 317A.128 except as modified by this rule.

(2) Receipts derived from interstate river transportation are sourced to this state using a sales factor. The sales factor is a fraction, the denominator of which includes all sales. The numerator of this factor includes all sales not derived from interstate river transportation. The numerator also includes all sales derived from vessels engaged in river transportation between Oregon and other states as is determined by applying the Oregon Interstate Mobile Allocation Formula (IMAF).

(3) For purposes of this rule, the Oregon IMAF is the average of two factors. The two factors are the originating and terminating tons factor and the ton-miles factor. For purposes of computing both factors, only mileage and tonnage from those vessels that operate on some portion of a river that constitutes the border between Oregon and other states is included in the computation. For example: The ton-miles generated by vessels operating on the Mississippi River or exclusively on the Willamette River would not be included in the computation.

(a) The originating and terminating tons factor is a fraction. The denominator is the total number of tons handled by the vessels engaged in river transportation between Oregon and other states. The numerator is the number of tons assigned to Oregon. The tons attributed to a voyage from one Oregon port to another Oregon port are credited wholly to Oregon. The tons attributed to a voyage between ports in different states are credited equally to the two states. For this purpose, each trip between two ports of call is treated as a separate voyage even though the cargo may be scheduled for later movement to one or more ports.

History

Statutory/Other Authority: ORS 305.100, 317A.128 & 317A.143
Statutes/Other Implemented: ORS 317A.128
REV 16-2021, adopt filed 12/15/2021, effective 01/01/2022

Or. Admin. R. 150-317-1100 Agent Exclusion

(1) “Agent” means a person who is acting on behalf of another and is subject to that other person’s control.

(2) All facts and circumstances must be considered to determine if a person is an agent.

(3) An agent may exclude the fair market value of property, money and other amounts from their commercial activity only to the extent the property, money and other amounts are received or acquired on behalf of the person who controls the agent.

(4) An agent must include the agent’s fee, commission or remuneration in the agent’s commercial activity. An agent’s commercial activity includes any property, money and other amounts that an agent retains from the property, money and other amounts received on behalf of the principal to pay the agent’s commission, fee or remuneration.

(5) Examples.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1120 Exclusion for subcontracting payments

(1) Definition. For the purposes of ORS 317A.122, single-family residential construction means the construction of new single-family housing such as single-family detached or semidetached houses and townhouses or row houses where each housing unit:

(a) Is separated from the adjacent unit by a ground-to-roof wall;

(b) Has no housing units constructed above or below;

(d) Does not share utilities.

(2) Additional allowance. The exclusion defined in ORS 317A.122 is allowed in addition to the subtraction defined in ORS 317A.119.

History

Statutory/Other Authority: ORS 305.100, 317A.122 & 317A.143
Statutes/Other Implemented: ORS 317A.122
REV 13-2021, minor correction filed 11/09/2021, effective 11/09/2021
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 3-2020, temporary adopt filed 03/04/2020, effective 03/06/2020 through 09/01/2020

Or. Admin. R. 150-317-1130 Property Brought into Oregon

(1) ORS 317A.109 requires a person or unitary group to include the value of property transferred into Oregon for use in the business of the person or unitary group if:

(a) The person or unitary group received the property outside Oregon and transferred it into Oregon for use in the business of the person or unitary group within one year of receiving it outside Oregon, and

(b) The receipt of the property outside Oregon and its subsequent transfer into Oregon was intended, in whole or in part, to avoid the Corporate Activity Tax (CAT).

(2) A person or unitary group who intended to avoid the CAT must include the fair market value of property transferred into Oregon in their taxable commercial activity for the tax year the property was transferred into Oregon.

(3) Section (2) of this rule does not apply to the extent the sale of the property transferred into Oregon is excluded from the definition of commercial activity by law.

(4) A person or unitary group should not include in their taxable commercial activity the fair market value of property transferred into Oregon within a year of receipt outside Oregon if the transfer of property into Oregon within a year of receipt outside Oregon was not intended to avoid the CAT in whole or in part.

(5) A person or unitary group who omits from commercial activity the fair market value of property transferred into Oregon within a year of receipt outside Oregon is required to include the fair market value upon a showing by the department that the taxpayer intended to avoid the CAT in whole or in part.

History

Statutory/Other Authority: ORS 305.100, 317A.109 & 317A.143
Statutes/Other Implemented: ORS 317A.109
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 1-2020, temporary adopt filed 01/03/2020, effective 01/03/2020 through 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1140 Wholesale Sale of Groceries Exclusion

(1) Definitions.

(a) “Processing” means transforming or changing the physical characteristics of an item, including incorporation or consumption of an item as an ingredient or component in the production or manufacture of another item. “Processing” includes activities such as (but not limited to): baking, canning, churning, cooking, concentrating, cutting, dehydrating, drying, extracting, freezing, heating, grinding, mixing, pasteurizing, preserving, or otherwise altering, manufacturing, or producing an item. For purposes of this rule, “processing” does not include activities conducted by a retail store in assembling, cleaning, preparing, storing, handling or displaying groceries for retail sale to the final consumer for home consumption. Retail store activities such as preparing filleted or gutted fish, produce trimming, and processed meat and cheese slicing, are not processing as defined in this rule, provided that such activities are conducted by a retail store as part of the services they offer to their customers.

(b) “Store” for purposes of this rule, refers to the location from which a taxpayer sells goods at retail to the final consumer for home consumption. “Store” includes both physical locations and online storefronts.

(c) “Wholesale sale” is the sale of goods to a purchaser for the purpose of resale without further processing in the regular course of the purchaser’s trade or business. A wholesale sale of groceries, for purposes of the exclusion in ORS 317A.100(1)(b)(EE), may be determined by using factors such as (but not limited to):

(A) The sale is of grocery items in a quantity usable for resale, or materially in excess of the total quantity of goods that are, on average, purchased by a member of the consuming public.

(B) The items are sold at a discounted price from the fair market value of the items if sold at retail.

(2) The list of factors in sections (1)(c)(A) through (1)(c)(C) are nonexclusive. The factors will be considered based on facts and circumstances and only to the extent that they are relevant. The department may consider any other relevant factors and circumstances.

(3) Excludable Receipts from Wholesale Sales. A person may exclude receipts realized from the wholesale sale of groceries, as that term is defined in ORS 317A.100(8), provided that the sales transaction meets the following requirements:

(a) The transaction is a wholesale sale;

(b) The items sold in the transaction are food or food products that meet the definition of groceries, in a form that may be resold to the final consumer for home consumption without processing;

(d) The wholesale seller obtains written verification from the purchaser that the purchased groceries will be resold without processing, by a store that typically sells groceries to the final consumer for home consumption.

(4) Documentation Required for Verification. A wholesale seller must retain sufficient documentation to demonstrate the requirements in section (3) have been met. Any document may serve as verification, provided that it contains the following information:

(a) The purchaser’s name and address;

(b) The date of the purchase, the item(s) purchased, and the amount purchased; and

(c) Verification from the purchaser of the amount of the purchase that will be resold, without processing, to the final consumer for home consumption.

(5) Safe Harbor for Wholesale Sales. A wholesale seller is not required to obtain separate verification from the purchaser if:

(a)(A) The purchaser is a qualified Supplemental Nutrition Assistance Program (SNAP) retailer with a current permit to accept SNAP benefits issued by the U.S. Department of Agriculture; or

(B) The purchaser is a store that meets the definition of a retail food store for purposes of the SNAP under 7 U.S.C. 2012(o)(1), (2), (4) or (5); and

(b) The purchase was made for the purpose of resale of groceries, without further processing, at a store that meets the requirement in subsection (a). The wholesale seller must retain sufficient documentation to demonstrate that the sale was made to a store that meets the requirements in subsection (a).

(6) Examples.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100(1)(b)(EE) and (8)
REV 13-2020, adopt filed 07/24/2020, effective 07/29/2020
REV 2-2020, temporary adopt filed 01/27/2020, effective 02/01/2020 through 07/29/2020

Or. Admin. R. 150-317-1150 Retail Sale of Groceries Exclusion

(1) Definitions. For purposes of this rule, the following definitions apply:

(a) “Store” means the location from which a taxpayer sells goods at retail to the final consumer for home consumption. “Store” includes both physical locations and online storefronts.

(b) “Consignment” refers to a model whereby groceries sold at retail are owned by one person, but the sale of such products is effected by a separate person which receives a commission or fee from the product owner for their role in effecting the sale.

(2) Excludable receipts from retail sales. Receipts from retail sales of groceries, including groceries sold by consignment, are excludable from a taxpayer’s commercial activity under ORS 317A.100(1)(b)(EE). The exclusion applies only to receipts from the sale of groceries as that term is defined in ORS 317A.100(8), which are sold at retail to the final consumer for home consumption. The determination as to whether an item is sold to a consumer for home consumption is based on the type of item sold and the circumstances of the sale. The determination is based on whether the seller typically expects that the sale of food from a specific store is purchased for home consumption.

(3) Factors indicating home consumption . The determination as to whether a store typically sells groceries for home consumption rests on specific facts and circumstances. When determining whether a store typically makes grocery sales for home consumption, the department will consider factors such as (but not limited to):

(a) Whether the store’s average gross receipts from the sale of hot food is greater than the average gross receipts from the sale of groceries.

(b) Whether the store offers on-site dining facilities, and if so, whether the percentage of total floor space allotted to dining facilities for customers is greater than the percentage of floor space dedicated to shelves displaying groceries available to customers for retail sale.

(4) The list of factors in section (3) is nonexclusive, and the factors will be considered only to the extent that they are relevant. The department may consider any other relevant facts and circumstances.

(5) Examples.

(6) Safe Harbor for Stores Authorized as Retail Food Stores Under 7 U.S.C. 2012(o) or Qualifying as Retail Food Stores for Purposes of the Supplemental Nutrition Assistance Program (SNAP). The sale of a grocery item, as defined in ORS 317A.100(8), by a store authorized as a retail food store under 7 U.S.C. 2012(o), with a valid permit as a SNAP qualified retail food store from the U.S. Department of Agriculture, is considered the retail sale of groceries for home consumption and excluded from the taxpayer’s commercial activity. Receipts from the sale of groceries realized by a store that meets the requirements to qualify as a retail food store under 7 U.S.C. 2012(o), regardless of whether the store holds a permit as a SNAP qualified retail food store from the U.S. Department of Agriculture, are also considered the retail sales of groceries for home consumption and are excluded from the taxpayer’s commercial activity, provided that the taxpayer can demonstrate that the store meets the requirements to qualify as a retail food store under 7 U.S.C. 2012(o).

(7) A store may not exclude receipts under ORS 317A.100(1)(b)(EE), if the store’s receipts from the sale of hot food or hot prepared food constitutes 80 percent or more of the total receipts that the store realized from the sale of all food items. The fact that the store’s receipts are at least 80 percent from sales of hot food or hot prepared food is evidence that the store does not intend to sell, or typically sell, groceries to the final consumer for home consumption; therefore, sales from the store are not excludable as retail sales of groceries.

[ Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100(1)(b)(EE) & 317A.100(8)
REV 17-2021, amend filed 12/15/2021, effective 01/01/2022
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 2-2020, temporary adopt filed 01/27/2020, effective 02/01/2020 through 07/29/2020

Or. Admin. R. 150-317-1160 Farmer’s Sales to Agricultural Cooperatives

(1) For purposes of the exclusion provided under ORS 317A.100(1)(b)(TT), “farmer’s sales” means a taxpayer’s receipts from the sale of agricultural commodities, livestock, poultry, dairy products, and similar products or by-products produced through agricultural activity, to an agricultural cooperative in Oregon, provided it is a cooperative organization described in section 1381of the Internal Revenue Code.

(2) “Farmer’s sales” does not include:

(a) receipts of a taxpayer who is not in the trade or business of growing or raising agricultural commodities, livestock, poultry, dairy products, and similar products or by-products produced through agricultural activity; or

(b) receipts from the sale of any items that were not produced through activities described in section (1) of this rule.

(3) Examples.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100(1)(b)(TT)
REV 13-2020, adopt filed 07/24/2020, effective 07/29/2020

Or. Admin. R. 150-317-1170 Farming Operations: Clarifying Definitions for Agricultural Commodities, Farming Operations, Out of State Sales Based on Industry Averages

(1)(a) General rule: A taxpayer that is engaged in a farming operation, as defined in ORS 317A.102(1)(c), that sells agricultural commodities to a broker, wholesaler, or processor may demonstrate the amount of the taxpayer’s goods sold in this state compared to outside this state, for purposes of determining commercial activity, by:

(A) Obtaining an out-of-state resale certificate as provided in OAR 150-317-1400;

(B) Obtaining a certificate from the broker, wholesaler, or processor receiving an agricultural commodity from the taxpayer that states the percentage of the taxpayer’s goods sold in this state compared to outside this state; or

(C) Using an industry average percentage for sales of the agricultural commodity made the previous tax year, based on the most recent information from the United States Department of Agriculture National Agricultural Statistics Service and other sources of sales information.

(b) The phrase “other sources of sales information” includes any publication by a governmental entity or trade association that publishes agricultural commodity sales information.

(c) “Agricultural commodities” include all agricultural, horticultural, viticultural, and vegetable products, including bees and honey, regardless of the state in which they were produced.

(2) Certificate Requirements : A farming operation taxpayer that seeks to demonstrate the percentage of the taxpayer’s goods sold in this state compared to outside this state by obtaining a certificate, pursuant to section (1)(a)(B) of this rule, from the broker, wholesaler, or processor, must obtain the certificate by the due date of the return, including extensions. The certificate provided by the broker, wholesaler, or processor to the seller must contain:

(a) The broker, wholesaler, or processor’s legal name and Oregon address;

(b) The broker, wholesaler, or processor’s federal tax identification number;

(d) The total amount of purchased property;

(e) The purchase price paid by the broker, wholesaler, or processor;

(f) The percentage of purchased property that the broker, wholesaler, or processor will resell outside of Oregon; and

(g) The signature of the broker, wholesaler, or processor, their authorized representative, or employee, certifying that the person is a broker, as that term is defined in ORS 317A.102(1)(b), a wholesaler, as that term is defined in ORS 317A.100(21), or a processor, as that term is defined in ORS 317A.102(1)(d).

(3) Industry Average Statistics : A farming operation taxpayer that seeks to demonstrate the percentage of the taxpayer’s goods sold in this state compared to outside this state by using industry average statistics, pursuant to section (1)(a)(C) of this rule, must rely on statistics for the specific sub-type of agricultural commodity sold, where available, or may rely on statistics for the general type of agricultural commodity where sub-type statistics are unavailable for the specific agricultural commodity.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.102
REV 17-2023, amend filed 10/20/2023, effective 11/01/2023
REV 3-2023, minor correction filed 01/26/2023, effective 01/26/2023
REV 23-2020, adopt filed 11/30/2020, effective 12/01/2020

Or. Admin. R. 150-317-1180 Eligible Pharmacy Exclusion

(1) Definitions. For purposes of excluding receipts from the sales of prescription drugs from commercial activity, as provided under ORS 317A.123, the following definitions apply:

(a)“Common ownership”has the meaning given that term in Oregon Administrative Rule 150-317-1020 (10).

(b) “Caters primarily to veterinary customers” means that a person, or group of persons in the case of a unitary group, receives more than 50 percent of their total gross receipts attributable to prescription drug sales from prescription drug sales to veterinary customers for the taxable year.

(2) This rule is applicable to tax years beginning on or after January 1, 2022 and ending before January 1, 2026.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100 & 317A.123
REV 10-2024, minor correction filed 06/06/2024, effective 06/06/2024
REV 14-2022, adopt filed 09/29/2022, effective 10/01/2022

Or. Admin. R. 150-317-1185 Definition of Precious Metal Dealer

(1) A “dealer of precious metal” means a person or business engaged in the business of buying items of precious metal for the purpose of reselling such metal, regardless of its form.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100(1)(b)(WW)(i)
REV 7-2024, adopt filed 02/28/2024, effective 03/01/2024

Or. Admin. R. 150-317-1200 Cost Input or Labor Cost Subtraction

(1) The subtraction provided in ORS 317A.119 includes all labor costs or cost inputs of a taxpayer, whichever is greater, regardless of the place the labor cost or cost input is incurred, except for cost inputs or labor costs that are attributable to the taxpayer’s receipts from an item that is not commercial activity. For purposes of the subtraction, a unitary group, as determined pursuant to ORS 317A.106, must include the labor costs or cost inputs of all members of the unitary group, regardless of where incurred, except for expenses from transactions among members of the group as provided in ORS 317A.119(2)(a) for which receipts are excluded under ORS 317A.106.

(2) Determining Costs Eligible for Subtraction . Costs described in ORS 317A.119(2)(a) and (b) (“ineligible costs”) are not eligible for subtraction. “Eligible costs” equals 35 percent of the greater of the excess of total labor costs over the amount of labor costs that are ineligible costs or the excess of total cost inputs over the amount of cost inputs that are ineligible costs.

(a) If a taxpayer can reasonably determine, from the taxpayer’s books and records maintained in the ordinary course of business, how much of its total labor costs or cost inputs are ineligible costs or that it has no ineligible costs, the taxpayer may calculate the subtraction using the appropriate method under section (3), unless otherwise permitted or required under this rule.

(b) A taxpayer who cannot reasonably determine how much of either its total labor costs or cost inputs are ineligible costs based on its books and records may use a reasonable method to approximate eligible costs. The taxpayer must document the approximation method used and retain the documentation in the taxpayer’s records. Documentation must be provided to the department upon request. The department may disallow the approximation method used by the taxpayer under this section if the department determines the method does not reasonably approximate the taxpayer’s eligible costs.

(3) General Rule. Computation of subtraction for eligible costs after reduction of ineligible costs.

(a) If all the taxpayer’s commercial activity is sourced to Oregon, the taxpayer’s subtraction equals its eligible costs.

(b) If the taxpayer has commercial activity both within and without Oregon, the taxpayer must apportion the taxpayer’s eligible costs as follows, unless the taxpayer elects to use the substitute rule under section (4).

(A) If the corporate activity taxpayer is identical to the entity or group of entities reporting on the apportionment schedule filed for purposes of Oregon income or excise tax under ORS chapters 314, 316, 317, or 318, that taxpayer must multiply its eligible costs by the apportionment factor percentage from the taxpayer’s Oregon apportionment schedule filed under ORS chapters 314, 316, 317, or 318 to calculate the subtraction amount. The taxpayer must use the apportionment schedule filed with the most recent return covering a 12-month period filed with the department.

(B) If a corporate activity taxpayer is not identical to the entity or group of entities reporting on the apportionment schedule filed for purposes of Oregon income or excise tax under ORS chapters 314, 316, 317, or 318, the taxpayer must compute its Oregon apportionment factor percentage using the applicable apportionment method under ORS chapters 314 or 317, except as otherwise required or permitted under this rule. The taxpayer must multiply its eligible costs by the computed apportionment factor percentage.

(c) Notwithstanding section (3)(b) of this rule, unitary group taxpayers with members subject to multiple apportionment methods under ORS chapters 314 or 317 must compute the group’s eligible costs as follows, except as otherwise required or permitted under this rule.

(A) Separate the unitary group into subgroups . Each subgroup consists of members that use the same apportionment method under ORS chapter 314 or 317.

(B) Each subgroup must separately determine eligible costs as required under section (2) of this rule.

(C) Each subgroup must separately compute their apportionment factor using the applicable apportionment method under ORS chapter 314 or 317, except that transactions between all unitary group members must be eliminated, regardless of whether transactions are between or among unitary group members subject to sales factor apportionment under ORS 314.650 or those subject to another apportionment method under ORS chapter 314 or 317.

(D) Each subgroup must multiply its eligible costs, as determined under section (2) of this rule, by the subgroup’s apportionment factor percentage determined under subsection (3)(c)(C).

(E) The unitary group’s subtraction is the sum of the apportioned eligible costs of each subgroup.

(4) Substitute Rule. A taxpayer may, in lieu of calculating and apportioning eligible costs as required in sections (2) and (3) of this rule, elect to approximate and apportion eligible costs by means of the commercial activity ratio.

(a) Costs for commercial activity ratio . A taxpayer’s costs under the commercial activity ratio (“applicable costs”) equal 35 percent of the greater of total cost of goods everywhere or total labor costs everywhere, as those costs are determined before application of ORS 317A.119(2)(b). Expenses from transactions among members of a unitary group must be excluded.

(b) Commercial Activity Ratio. The commercial activity ratio is a fraction, the numerator of which is the taxpayer’s commercial activity sourced to Oregon and the denominator of which is the sum of the taxpayer’s total commercial activity everywhere plus amounts excluded under ORS 317A.100(1)(b)(Q), ORS 317A.100(1)(b)(Y), ORS 317A.100(1)(b)(AA), ORS 317A.100(1)(b)(DD), ORS 317A.100(1)(b)(EE), ORS 317A.100(1)(b)(TT), ORS 317A.100(1)(b)(VV), ORS 317A.100(1)(b)(WW)(i) and ORS 317A.123(2). Receipts from transactions among unitary group members are not included in either the numerator or denominator.

(c) Subtraction. For purposes of the substitute rule, the taxpayer’s subtraction is calculated by multiplying the applicable costs under subsection (a) by the taxpayer’s commercial activity ratio under subsection (b).

(5) If a unitary group is made up of members that report cost of goods sold (COGS) for federal income tax purposes and members that are engaged in farming operations, as defined under ORS 317A.102, that do not report COGS for federal income tax purposes, the unitary group taxpayer must calculate the cost inputs as the sum of: (1) COGS of the members that report COGS for federal income tax purposes; and (2) the operating expenses, excluding labor costs, of the members that are engaged in farming operations and do not report COGS for federal income tax purposes.

(6) Fiscal Year Election. For purposes of this rule, fiscal year means a period of 12 consecutive months ending on the last day of any month other than December or any taxpayer or unitary group that has made an election under IRC § 441 for a fiscal year which varies from 52 to 53 weeks. A taxpayer or unitary group may elect to use the taxpayer’s or unitary group’s most recent fiscal year information for purposes of determining the subtraction under this rule. An election under this section must be made on a timely filed, original return including extensions. An election under this section is binding for and applicable to the tax year in which it is made. This section is repealed for tax years beginning on or after January 1, 2021.

(7) Limitations.

(a) The subtraction may not exceed 95 percent of the taxpayer’s Oregon commercial activity.

(b) Labor costs may not include total compensation paid to a single employee in excess of $500,000.

(c) Expenses from transactions among members of a unitary group with respect to receipts that are excluded under ORS 317A.106 and ORS 317A.100(1)(b)(FF) are not included in the calculation of the subtraction.

(d) A unitary group required to apportion the amount of the subtraction shall include all members of the unitary group for purposes of determining the group’s subtraction amount and apportionment ratio, except that the unitary group may not include members excluded from the unitary group pursuant to an election under ORS 317A.106(2).

(8) Alternative Apportionment. A taxpayer may petition the department for alternative apportionment, or the department may require alternative apportionment if the application of sections (3) to (6) of this rule does not fairly represent the costs of taxpayer’s commercial activity in Oregon.

(a) A petition to use an alternative method of apportionment under section (8) of this rule must be filed in writing with the department. The request must be signed by the taxpayer or the taxpayer’s authorized representative and must be filed separately from the taxpayer’s return. The request must include a complete explanation of the alternative method as well as an explanation why the application of section (3) to (6) should not be used. Upon receipt of the request, the department will review the request and issue a letter either authorizing or denying the request. If denied, the taxpayer can appeal that action as provided in ORS 305.275. An alternative apportionment method may be used only after receiving written authorization from the department. The authorization may be revoked if, upon audit, the department determines that the alternative method does not fairly represent the costs of taxpayer’s commercial activity in Oregon. Once an alternative method has been authorized, that method must be used until a request to change is made and approved by the department or until the authorization is revoked after audit.

(b) Factors considered in approving alternative methods of apportionment include but are not limited to whether a modification:

(A) Will fairly and accurately reflect the taxpayer’s costs attributable to receipts from commercial activity in Oregon; and

(B) Will effectuate an equitable apportionment of the taxpayer’s costs attributable to receipts from commercial activity.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.106 & 317A.119
REV 11-2024, minor correction filed 06/07/2024, effective 06/07/2024
REV 8-2024, amend filed 02/28/2024, effective 03/01/2024
REV 18-2023, amend filed 10/20/2023, effective 11/01/2023
REV 1-2023, amend filed 01/25/2023, effective 02/01/2023
REV 17-2021, amend filed 12/15/2021, effective 01/01/2022
REV 23-2020, amend filed 11/30/2020, effective 12/01/2020
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1220 Employee Compensation: Labor Cost Subtraction

(1) Definitions. For purposes of the labor cost subtraction, as calculated under OAR 150-317-1200:

(a) “Employee” has the meaning given that term in OAR 150-316-0255(5). “Employee” does not include:

(A) Partners in a partnership who receive guaranteed payments or distributive income;

(B) Members in a Limited Liability Company (LLC) who receive guaranteed payments or distributive income;

(D) Independent contractors, as defined in ORS 670.600.

(b) “Compensation” has the meaning given that term in ORS 317A.100(1)(b)(H).

(2) The labor cost subtraction, as calculated under OAR 150-317-1200, does not include:

(a) Compensation in excess of $500,000 paid to any single employee;

(b) Payroll taxes, including but not limited to, Social Security, Medicare, and Federal unemployment.

History

Statutory/Other Authority: ORS 305.100 & 317A.100
Statutes/Other Implemented: ORS 316.167, 317A.100 & 670.600
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 3-2020, temporary adopt filed 03/04/2020, effective 03/06/2020 through 09/01/2020

Or. Admin. R. 150-317-1300 Estimated Tax: When Estimated Payments Are Required

(1) Estimated tax liability means the tax as computed under ORS chapter 317A, less allowable credits.

(2) Every person required to file an Oregon Corporate Activity Tax (CAT) return and expecting to have a tax liability of $5,000 or more must make estimated tax payments. For purposes of determining whether estimated tax liability exceeds $5,000, a credit balance resulting from overpayment of tax for a prior year is not taken into account.

(3) Estimated tax payments are required, regardless of when a taxpayer exceeds $1 million of taxable commercial activity.

(4) Payments are due on the last day of the 4th, 7th, and 10th months of the tax year, and the first month immediately following the end of the tax year.

(5) Due dates of payments for short-period returns. If a return is filed for a short period of less than 12 months, estimated tax payments are due as follows:

(a) If the period covered is less than three months, only one payment is required. It is equal to 100 percent of the estimated tax and is payable on the due date of the return.

(6) Tax-exempt persons that have “Unrelated Business Income,” as defined in the Internal Revenue Code, must also register, file an Oregon CAT return, and pay the tax, if such person is otherwise subject to those requirements under ORS 317A.100 to 317A.161. If their expected Oregon tax liability is $5,000 or more, estimated tax payments must be made.

(7) Refunds prior to filing of return. Generally, estimated tax payments will not be refunded prior to the taxpayer’s filing of the tax return for the year for which the estimated tax payments were made. The fact that the estimated tax payments made exceed the required payments based upon an exception to underpayment is not sufficient cause to refund such excess prior to the filing of the Oregon CAT return. On a case-by-case basis, if a taxpayer establishes to the satisfaction of the department that the facts warrant a refund, the department may issue a refund of estimated taxes prior to the filing of the tax return.

(8) Overpayments of tax.

(a) Election. When a person files a completed CAT return and the tax calculated on the return is less than the amounts previously paid for that year, the person may make an irrevocable election to have the overpayment of tax either refunded or applied as a payment of estimated tax. The election is made by entering the amount in the appropriate space provided on the CAT return.

(b) Application to estimated tax installment. The department will apply the elected overpayment, unless it is subject to an offset under ORS 314.415 and related rules, to the following year’s estimated tax payment due on the last day of the fourth month of the taxable year, to the extent that the overpayment of tax is attributable to estimated tax payments received prior to the following year’s first quarter estimated tax due date. Payments received after the following year’s first quarter estimated tax due date will be applied to estimated tax as of the date the payment is received. In the case of an amended or delinquent return, the amount will be credited to the estimated tax installment as of the date the amended or delinquent return was filed or the date a payment was received, whichever is later.

(9) Payments of estimated tax. Except as otherwise specifically provided in section (8) of this rule, the department will credit estimated tax payments as of the date that they are received. The department will apply estimated tax payments to any prior underpayment and the remainder, if any, will be applied to the next required installment.

(10) Requirement to use electronic funds transfer. For tax years beginning on or after January 1, 2020, persons or entities that are required by other tax programs to make estimated payments by electronic funds transfer (EFT) are also required to use that same method for the CAT.

(11) Any person or entity that is not required by other tax programs to make estimated tax payments by EFT may use any other method available to make estimated tax payments for the CAT.

(12) Notwithstanding section (2) of this rule, taxpayers that expect their annual tax liability for tax year 2020 to be less than $10,000 are not required to make quarterly estimated payments for tax year 2020.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 314.415, 314.505, 314.515, 314.518, 317A.137 & 317A.149
REV 17-2021, amend filed 12/15/2021, effective 01/01/2022
REV 23-2020, amend filed 11/30/2020, effective 12/01/2020
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1310 Estimated Tax Payments: Delinquent or Underestimated Payment or Both, Constitutes Underpayment

(1) An underpayment of Corporate Activity Tax (CAT) estimated tax exists when the payments received on or before a payment due date are less than the required installment due as determined under section (3) of this rule.

(2) If none of the exceptions, as provided in section (3) of this rule, are met, the department will assess a five percent penalty of the underpayment amount for any quarter for which an underpayment exists.

(3) Required installments and exceptions. Underpayment charges will not be imposed if:

(a) No estimated payments are required, as provided in OAR 150-317-1300;

(b) The taxpayer has paid an amount equal to at least the taxpayer’s required installment for the corresponding quarter of the preceding tax year; or

(c) Each estimated tax installment is equal to or more than 25 percent (or the appropriate percentage of tax for short periods provided in OAR 150-317-1300) of any one of the following:

(A) For tax years beginning on or after January 1, 2020 and ending before January 1, 2022, 80 percent of the tax for the tax year.

(B) For tax years beginning on or after January 1, 2022, 90 percent of the tax for the tax year.

(C) For tax years beginning on or after January 1, 2020 and ending before January 1, 2022, an amount equal to 80 percent of the tax computed on annualized taxable commercial activity. For purposes of this computation, tax credits available on the date of the payment may be deducted from the annualized tax. An estimated or anticipated tax credit may not be used. Annualized taxable commercial activity is computed by entering the taxable commercial activity on an annualized basis:

(i) For the first three months of the taxable year, in the case of the installment required to be paid in the fourth month;

(ii) For the first six months of the taxable year, in the case of the installment required to be paid in the seventh month;

(iii) For the first nine months of the taxable year, in the case of the installment required to be paid in the tenth month; and

(iv) For the 12 months of the taxable year, in the case of the installment required to be paid in the first month of the following taxable year.

(D) An amount equal to 100 percent of the amount obtained by applying Section 6655(e)(3)(C) of the Internal Revenue Code to Oregon taxable commercial activity for any person with seasonal commercial activity.

(E) For tax years beginning on or after January 1, 2022, an amount equal to 90 percent of the tax computed on annualized taxable commercial activity. For purposes of this computation, tax credits available on the date of the payment may be deducted from the annualized tax. An estimated or anticipated tax credit may not be used. Annualized taxable commercial activity is computed by entering the taxable commercial activity on an annualized basis:

(i) For the first three months of the taxable year, in the case of the installment required to be paid in the fourth month;

(ii) For the first six months of the taxable year, in the case of the installment required to be paid in the seventh month;

(iii) For the first nine months of the taxable year, in the case of the installment required to be paid in the tenth month; and

(iv) For the 12 months of the taxable year, in the case of the installment required to be paid in the first month of the following taxable year.

(F) For tax years beginning on or after January 1, 2021, 100 percent of the tax shown on the return for the preceding tax year (after credits), provided that the preceding tax year was a period of twelve months and an Oregon return showing a liability was filed for such tax year. When applying this subsection to a current taxable year of less than 12 months, the tax for the preceding tax year is reduced by multiplying it by the number of months in the short tax year and dividing the resulting amount by 12.

(4) Unitary group returns. If a unitary group CAT return is filed, any underpayment shall be computed on a combined basis. In computing the underpayment on a combined basis, the tax and facts shown on the returns for the preceding year must be aggregated, regardless of whether combined or separate returns were filed.

(5) If separate returns are filed and estimated tax is paid on a combined basis, the payments and prior year’s tax may be divided between the various persons’ liabilities in any manner designated by the taxpayers.

(6) Underpayment penalties shall be assessed on the last return filed and received before the due date, including extensions, for such return. That return shall be considered the “original return,” and the tax due shall be used as the basis for computing the underpayment charges.

(7) Once underpayment charges are assessed on the original return, an amended return reducing the tax liability will not reduce the underpayment charges.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.137, 317A.149, 317A.161 & Oregon Laws 2020 (1st special session), Chapter 2, Sections 9, 10, and 11
REV 26-2020, amend filed 12/23/2020, effective 01/01/2021
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1320 Estimated Tax: Unitary Groups and Apportioned Returns

(1) If two or more entities file a single Corporate Activity Tax (CAT) return as a unitary group, as described in ORS 317A.100(20), each shall be jointly and severally liable for the filing and payment of the estimated tax liability. Estimated tax payments shall be made on a combined basis.

(2) See OAR 150-317-1310 for an explanation of how to compute an underpayment of estimated tax for entities filing a single CAT return as a unitary group.

(3) Persons that are required to apportion the amount of the cost input or labor cost subtraction under ORS 317A.119 between Oregon and other states, are required to use either the current period’s actual or the prior full-year’s apportionment factor, as calculated under OAR 150-317-1200, to meet the annualization exception to underpayment of estimated taxes. The prior year’s apportionment factor may only be used if the prior year’s return covered a full 12 months.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 314.505, 314.525, 317A.106, 317A.113, 317A.137 & 317A.149
REV 5-2023, minor correction filed 01/26/2023, effective 01/26/2023
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1330 Extension of Time to File

(1) Definition.

(a) For purposes of this rule, “good cause” means:

(A) Death or serious illness of the taxpayer or a member of the taxpayer’s immediate family;

(B) Destruction by fire, a natural disaster, or other casualty of the taxpayer’s home, place of business, or records needed to prepare the returns;

(D) Information required to complete the return is not available or is not in the proper form.

(b) Circumstances that are not accepted by the department as “good cause” include, but are not limited to:

(A) Reliance on a professional to merely prepare a return on time;

(B) Reliance on an employee of the taxpayer to prepare a return on time;

(2)Time granted by extension.

(a) Effective for tax years beginning on or before December 31, 2023, the time for making or filing an annual corporate activity tax return may be extended for six months after the date prescribed for filing the return under this chapter, if the taxpayer files an application in accordance with section (3) of this rule.

(b) Effective for tax years beginning on or after January 1, 2024, the time for making or filing an annual corporate activity tax return may be extended for seven months after the date prescribed for filing the return under this chapter, if the taxpayer files an application in accordance with section (3) of this rule.

(3) To request an extension of time to file, a taxpayer must:

(a) Submit a completed application for an extension of time to file on a form prescribed by the department;

(b) File the application with the department before the date prescribed for filing the return; and

(4) “Good cause” must have existed at the time the return was due, excluding the extension.

(5) The good cause requirements of this rule are not in effect for tax years beginning on or after January 1, 2023.

(6) Procedure when a federal income tax extension is granted.

(a) For tax years beginning on or after January 1, 2024, the department will grant a seven-month extension of time to file an Oregon Corporate activity tax return if the taxpayer has obtained an extension to file the federal income tax return from the Internal Revenue Service. For tax years beginning on or after January 1, 2023, the department will grant a six-month extension of time to file an Oregon corporate activity tax return.

(b) The taxpayer does not need to request an Oregon corporate activity tax extension if a federal income tax extension has been granted. The taxpayer must follow current Oregon corporate activity tax return instructions and retain the federal document with their records.

(7) Procedure for requesting an extension for Oregon only. For tax years beginning on or after January 1, 2023. A taxpayer or unitary group designated entity may request an extension of time to file for Oregon only by completing and filing the appropriate Oregon form. The taxpayer or designated entity must file the extension request and pay any tax due on or before the original due date.

(8) An extension of time for filing a corporate activity tax return does not relieve the taxpayer of the requirement to pay estimated tax or eliminate the penalty for underpayment of estimated tax imposed under ORS 317A.161. Nor does an extension relieve the taxpayer of a failure to pay penalty provided under ORS 314.400.

History

Statutory/Other Authority: ORS 305.100, 317A.137 & 317A.143
Statutes/Other Implemented: ORS 317A.137
REV 19-2023, amend filed 10/27/2023, effective 11/01/2023
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 15-2019, temporary adopt filed 12/30/2019, effective 01/01/2020 through 06/28/2020

Or. Admin. R. 150-317-1400 Determining Property Resold Out of State, and Methods of Determining

(1) Out-of-State Resale Certificate. A wholesaler purchasing property for the purpose of resale may, at the time the purchase is made, provide the seller of the property with an out-of-state resale certificate declaring the amount of purchased property that the wholesaler will resell out of Oregon. The out-of-state resale certificate qualifies as the certification required under ORS 317A.100(1)(b)(DD). Any document provided by the wholesaler to the seller at the time of the sale may serve as an out-of-state resale certificate provided that the document contains:

(a) The wholesaler’s legal name and Oregon address;

(b) The wholesaler’s federal tax identification number;

(d) The total amount of purchased property;

(e) The purchase price paid by the wholesaler;

(f) The dollar amount of purchased property that the wholesaler will resell outside of Oregon; and

(g) The signature of the wholesaler, their authorized representative, or employee, certifying that the person is a wholesaler as that term is defined in ORS 317A.100(21).

(2) Reasonable Methods to Determine the Amount of Purchased Property Sold Out of State. The wholesaler must determine the amount of purchased property that will be sold out of Oregon based on the facts available at the time the wholesaler purchases the property from the seller. If, at the time of purchase, the wholesaler is unable to determine the amount of the purchased property that the wholesaler will resell out of Oregon, the wholesaler may use the approximation ratio prescribed in section (3) of this rule to estimate the amount of purchased property that will be sold in Oregon and out of state.

(3) Approximation Ratio to Estimate Out-of-State Sales. The approximation ratio is a fraction. The numerator is the amount of commercial activity the wholesaler realized from sales to Oregon customers in the prior year. The denominator is the amount of commercial activity the wholesaler realized from all sales during the prior year. Wholesalers located in multiple states may only include in the numerator and denominator their commercial activity realized from property delivered from their Oregon locations. Sales of property delivered from the wholesaler’s locations outside of Oregon are not included in the ratio.

(4) Alternative Methods of Determining Out-of-State Sales. If the wholesaler knows or reasonably should have known at the time of the wholesaler’s purchase that the approximation ratio in section (3) does not fairly and accurately approximate the wholesaler’s in-state and out-of-state sales, the wholesaler may not use the ratio in section (3) but may use a reasonable alternative method of approximation. The wholesaler must document the method used, including a complete explanation of the alternative method, how the method was determined, and why the approximation ratio method prescribed in section (3) of this rule is not a fair approximation of the wholesaler’s sales. Once an alternative method has been used, the wholesaler must continue to use the same method, unless the alternative method is no longer a fair and accurate approximation of the in-state and out-of-state sales. All changes to the alternative method must be documented and retained in the wholesaler’s records.

(5) If the department, upon audit, determines that the wholesaler’s approximation ratio under section (3) or alternative method of approximation under section (4) does not fairly and accurately reflect the wholesaler’s in-state and out-of-state sales, the wholesaler must immediately discontinue use of the ratio or alternative method.

(6) Taxpayers engaged in farming operations that sell agricultural commodities to wholesalers and brokers may also refer to OAR 150-317-1170 for additional methods of demonstrating the amount of the taxpayer’s goods subsequently sold in this state compared to outside this state.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100(1)(b)(DD)
REV 6-2023, minor correction filed 01/26/2023, effective 01/26/2023
REV 23-2020, amend filed 11/30/2020, effective 12/01/2020
REV 13-2020, adopt filed 07/24/2020, effective 07/29/2020
REV 2-2020, temporary adopt filed 01/27/2020, effective 02/01/2020 through 07/29/2020

Or. Admin. R. 150-317-1410 Motor Vehicle Resale Certificate – Documentation Required

(1) Definition. For the purposes of this rule, “new vehicle” has the definition given to it in 15 U.S.C. Section 2821(8).

(2) Receipts from the sale or transfer of a motor vehicle between motor vehicle dealers are excluded from commercial activity, provided that the transfer occurs for the purpose of resale and is based on the transferee’s need to meet a specific customer’s preference or the transfer is of a new vehicle between franchised dealerships.

(3) Motor vehicle dealers excluding receipts from the sale or transfer of a motor vehicle between dealers for resale to meet a specific customer’s preference must retain a resale certificate documenting the excluded transaction provided under ORS 317A.100(1)(b)(W). A resale certificate is not required for transfers of new vehicles between franchised dealerships.

(4) Any document provided before or at the time the seller bills the purchaser may serve as a resale certificate if it contains the following information:

(a) The seller’s name, address, federal identification number, and dealer license number from the appropriate licensing jurisdiction;

(b) The purchaser’s name, address, federal identification number, and dealer license number from the appropriate licensing jurisdiction;

(c) A description of the vehicle, including the vehicle identification number, serial number, or other identifying number, and the make, model, and year of the vehicle;

(d) A statement, signed by the purchaser, their employee, or authorized representative, affirming that the vehicle described in the document is purchased or transferred for resale to meet a specific customer’s preference; and

(e) The date ownership of the vehicle is transferred.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.100(1)(b)(W)
REV 17-2021, amend filed 12/15/2021, effective 01/01/2022
REV 11-2020, adopt filed 06/24/2020, effective 06/28/2020
REV 2-2020, temporary adopt filed 01/27/2020, effective 02/01/2020 through 07/29/2020

Or. Admin. R. 150-317-1420 Damages Received as the Result of Litigation

(1) Damages, including settlement proceeds, received by a taxpayer as a result of litigation are commercial activity to the extent they reimburse the taxpayer for transactions and activity during the regular course of the taxpayer’s trade or business.

(2) To the extent receipts stem from damages received as the result of litigation and those receipts are in excess of what would have been received had the taxpayer not been involved in litigation, the taxpayer may exclude the amount in excess from its calculation of commercial activity.

(3) Damages not excluded by ORS 317A.100(1)(b)(L) are subject to the corporate activity tax in the year those amounts are realized, regardless of when the litigation was initiated.

(4) All facts and circumstances may be considered to determine if the damages were received as result of litigation.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS317A.100(1)(b)(L)
REV 4-2023, minor correction filed 01/26/2023, effective 01/26/2023
REV 27-2020, adopt filed 12/23/2020, effective 01/01/2021

Or. Admin. R. 150-317-1500 Good Faith Effort

(1) Good Faith Effort. A taxpayer’s good faith effort to comply with ORS 317A.137(2) is demonstrated by the extent of the taxpayer’s efforts to accurately estimate and pay the quarterly installment as required under ORS 317A, and OARs 150-317-1300, 150-317-1310, and 150-317-1320.

(a) For tax years beginning on or after January 1, 2020, the following circumstance demonstrates good faith: The taxpayer made a reasonable estimate of the quarterly installment based on information available to the taxpayer at the time the quarterly installment was due.

(b) For the tax year beginning January 1, 2020 and ending before January 1, 2021, the following circumstances demonstrate good faith:

(A) The taxpayer cannot reasonably determine, at the time the quarterly installment is due, whether the taxpayer will have CAT liability for the 2020 tax year, due to the negative impact of COVID-19, after taking into consideration the exclusions and subtractions provided in ORS 317A;

(B) The taxpayer did not have sufficient funds to pay the required installment for the quarter, due to the impact of the COVID-19 pandemic on the taxpayer’s business; or

(C) The taxpayer cannot reasonably calculate the required quarterly installment or annual tax liability due to the impact of the COVID-19 pandemic on the taxpayer’s business.

(2) The department will not assess the penalty imposed under ORS 317A.161(2) for nonpayment, underpayment, or underreporting of the estimated tax installment for any quarter of tax year 2020 if the taxpayer demonstrates a good faith effort, as defined in Section 1 of this rule, to accurately estimate and pay the quarterly installment required under ORS 317A.137.

(3) Documentation. The department may require documentary proof to substantiate assertions of good faith. Taxpayers must retain documentation showing good faith effort as defined in section (1). Taxpayers are not required to submit this documentation to the department, unless requested by the department.

History

Statutory/Other Authority: ORS 305.100 & 317A.143
Statutes/Other Implemented: ORS 317A.137 & 317A.161
REV 23-2020, adopt filed 11/30/2020, effective 12/01/2020
REV 10-2020, temporary adopt filed 06/04/2020, effective 06/05/2020 through 12/01/2020

Division 318 CORPORATION INCOME TAX ACT OF 1955: RULES

Or. Admin. R. 150-318-0010 Incorporation by Reference of Rules of ORS Chapters 314, 316 and 317

So far as they may be pertinent, the rules approved by the Department of Revenue pertaining to ORS Chapter 314, Income Taxation generally, and to ORS Chapter 317, The Corporation Excise Tax Act of 1929, are incorporated herein by reference and made applicable to like sections of ORS Chapter 318.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 318.031
Renumbered from 150-318.000, REV 52-2016, f. 8-13-16, cert. ef. 9-1-16
1-69
1-65
1955

Or. Admin. R. 150-318-0020 Effective Date of Act

ORS Chapter 318 became law on August 3, 1955.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 318.010
Renumbered from 150-318.010, REV 52-2016, f. 8-13-16, cert. ef. 9-1-16
1955

Or. Admin. R. 150-318-0030 Relation of Act to ORS Chapter 317

If a corporation is “doing business” in Oregon and is therefore subject to ORS Chapter 317, The Corporation Excise Tax Act of 1929, the income taxed under Chapter 317 is not subject to taxation under ORS Chapter 318. A foreign or domestic corporation which is authorized to do business within this state, having qualified with the Corporation Commissioner, which is not “doing business,” but nevertheless receives income ascribable to Oregon, is subject to ORS Chapter 318. There is no provision for election as to which Act is applicable as to what income; the facts will govern in each instance.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 318.020
Renumbered from 150-318.020(1), REV 52-2016, f. 8-13-16, cert. ef. 9-1-16
1-65
1955

Or. Admin. R. 150-318-0040 Income Subject to Tax Under ORS Chapter 318

(1) The Oregon Corporation Income Tax is imposed on corporations with income derived from sources within this state. The term “income derived from sources within this state” means income from activities in this state that are insufficient to constitute “doing business.” “Doing business” is defined in ORS 317.010(4).

(2) Oregon’s jurisdiction to tax is limited by the Due Process Clause of the U.S. Constitution, which requires the existence of some minimum connection between the state and the person, property or transaction it seeks to tax. This minimum connection, making income subject to the Oregon income tax, may be satisfied by:

(a) Maintaining tangible or intangible property in Oregon;

(b) Entering into franchising or licensing agreements for use of a franchise or license in Oregon;

(d) Selling or otherwise disposing of a franchise or license used in Oregon;

(e) Selling or otherwise transferring tangible personal property pursuant to a franchise or license to a franchisee or licensee within the state; or

(f) An isolated sale of real property in this state.

(3) A corporation with receipts from royalties or franchise fees or the sale or transfer of tangible personal property pursuant to franchise or license agreements may be subject to the Corporation Excise Tax if the corporation engages in activities that rise to the level of doing business in Oregon. Such activities include inspection of the franchisees’ businesses or records and providing training in Oregon to franchisees. Such a corporation is not subject to the Corporation Income Tax.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 318.020
Renumbered from 150-318.020(2), REV 52-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07
REV 2-2003, f. & cert. ef. 7-31-03
REV 7-1998, f. 11-13-98, cert. ef. 12-31-98
RD 7-1989, f. 12-18-89, cert. ef. 12-31-89
RD 7-1983, f. 12-20-83, cert. ef. 12-31-83
1-65
1955

Or. Admin. R. 150-318-0050 U.S. Government Obligations

According to Title 31, United States Code, section 3124, interest and dividend income from obligations of the federal government are exempt from state income tax. Oregon Administrative Rule 150-316-0509 identifies the types of income that qualify and do not qualify for a subtraction from Oregon taxable income.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 318.060
Renumbered from 150-318.060, REV 52-2016, f. 8-13-16, cert. ef. 9-1-16
REV 11-2006, f. 12-27-06, cert. ef. 1-1-07

Division 320 PROVISIONS APPLICABLE TO PRIVILEGE TAX

Or. Admin. R. 150-320-0012 Location of Amusement Devices

(1) For purposes of the increased tax on amusement devices imposed under ORS 320.012, the increased tax is imposed for each device present at a location as of the date the applicable net receipts threshold is reached under either ORS 320.012(1) or (2).

(2) A video lottery game terminal that is not operating because the terminal has been disabled for consumer play by the Oregon Lottery and that has not been removed by Oregon Lottery from the amusement device operator’s premises is not considered “present at a location” for purposes of the increased tax imposed under ORS 320.012.

(3) This rule applies to increased taxes that become due on or after April 1, 2020.

History

Statutory/Other Authority: ORS 305.100, 320.012 & 320.110
Statutes/Other Implemented: ORS 320.012
REV 46-2020, adopt filed 12/23/2020, effective 01/01/2021
REV 12-2020, temporary adopt filed 07/24/2020, effective 07/29/2020 through 01/24/2021

Or. Admin. R. 150-320-0030 Waiver of Penalty

The provisions of OAR 150-305-0068 shall be followed to determine when the department may waive a penalty charged for failure to file or pay tax by the due date.

History

Statutory/Other Authority: ORS 305.100 & 320.110
Statutes/Other Implemented: ORS 320.075 & 320.080
REV 4-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-320.080, REV 36-2016, f. 8-12-16, cert. ef. 9-1-16
RD 7-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-320-0040 State Lodging Tax

(1) Definitions. For purposes of ORS 320.305 and 320.308 and the rules thereunder:

(a) The definitions contained in ORS 320.300 are incorporated herein and made a part of this rule.

(b) “Managing agent” means a person that:

(A) facilitates the rental or sale of transient lodging;

(B) collects the consideration charged for occupancy; and

(i) marketing,

(ii) cleaning,

(iii) on-site troubleshooting,

(iv) day-to-day maintenance, or

(v) serving as the point of contact during a guest’s stay.

(c) “Nonprofit facility” means a lodging facility that is owned by an IRC 501(c) exempt organization or an organization described in ORS 65.001(31) and that is not operated for profit.

(d) "Transient lodging provider" includes a person who operates a facility, whether in the capacity of owner, managing agent, lessee, sub-lessee, mortgagee in possession, licensee, concessionaire, or any other capacity.

(2) Providers and Intermediaries Must Collect the Tax. Transient lodging providers and transient lodging intermediaries that collect consideration charged for temporary human occupancy are required to collect state lodging tax and report and remit the tax to the Department of Revenue. The state lodging tax applies to consideration charged for dwelling units and recreational vehicle and tent spaces used for temporary human occupancy that are provided by public or private persons. It applies to dwelling units and recreational vehicle and tent spaces offered by state and local governments and to dwelling units and spaces offered for temporary human occupancy on federal lands operated by a concessionaire on a contract basis with a federal agency, such as the U.S. Forest Service, Bureau of Land Management, and the National Parks Service.

(3) Providers and Intermediaries Report and Remit Tax Quarterly. State lodging tax is due from the transient lodging customer when occupancy ends and must be reported by the provider or intermediary for the quarter in which the last day of occupancy occurs.

(4) Services Included in the Fee for Lodging.

(a) If a separate fee is charged for a service and the service is optional, that fee is not subject to the state lodging tax. Examples of optional services include, but are not limited to: pay-per-view movies, room service, use of an honor bar or restaurant meals charged to the room.

(b) If a separate fee is charged for a service and the service is not optional, or if the value of a service is included in the standard lodging rate, the amount allocated to the service is subject to the state lodging tax. Examples of fees for non-optional services include, but are not limited to: cleaning service fees, pet charges, fee for providing an extra bed, service fees and processing fees. Examples of services that are included in the standard lodging rate include, but are not limited to: free breakfast and free transportation to the airport.

(c) If the provider offers a lodging package that includes something that is not associated with the actual lodging or is provided by a third party, only the regular lodging rate that would have been charged absent the package item is subject to the state lodging tax. Examples of lodging packages include, but are not limited to: a golf package consisting of one night of lodging and a round of golf for two, or a romance package that includes one night of lodging, a bottle of wine and dinner at a local restaurant.

(5) Use of a Managing Agent. If the owner of transient lodging uses a managing agent that is not an employee, the managing agent is considered the transient lodging provider for the purposes of the state lodging tax and has the same duties and liabilities as the operator. Compliance with the provisions of the state lodging tax by either the lodging provider or the managing agent is considered compliance by both.

(6) Penalty Imposed. The person submitting the return required by ORS 320.315 must sign the return and is subject to the penalty for false swearing under ORS 162.075, which is a Class A misdemeanor.

History

Statutory/Other Authority: ORS 305.100 & 320.315
Statutes/Other Implemented: ORS 320.305
REV 11-2019, amend filed 12/11/2019, effective 01/01/2020
REV 78-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-320.305, REV 36-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2008, f. & cert. ef. 9-23-08
REV 3-2005, f. 12-30-05, cert. ef. 1-1-06
REV 3-2004, f. & cert. ef. 6-25-04
REV 3-2003(Temp), f. 12-15-03, cert. ef. 1-1-04 thru 6-28-04

Or. Admin. R. 150-320-0041 Liability for Unpaid State Lodging Taxes

(1) For purposes of this rule, “transient lodging tax collector” has the meaning given under ORS 320.300 and includes, but is not limited to, an officer, member, or employee of the transient lodging tax collector that provides the sale, service, or furnishing of transient lodging, if, among other duties, that individual has:

(a) Authority to see that the state lodging taxes are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees’ working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign state lodging tax returns;

(g) Authority to make fiscal decisions for the business; or

(h) Authority to incur debt on behalf of the business.

(2) It is the duty of a transient lodging tax collector to hold in trust any amount of state lodging tax collected from the sale, service, or furnishing of transient lodging and to assume custodial liability for amounts to be paid to the department. Any transient lodging tax collector who fails to pay the state lodging tax when due is subject to penalties, as provided by law, as any other taxpayer who fails to file a return or pay a tax when due.

(3) If a transient lodging tax collector fails to file returns or to pay any collected tax when due, any or all officers, members, and employees may be held personally responsible, as provided in this rule, for the returns and payments together with any interest and penalties, that are due.

(4) To be held personally liable for unpaid states lodging tax, a person must be a transient lodging tax collector. In addition, the person must be in a position to pay the state lodging tax or direct the payment of the state lodging tax at the time the duty arises to collect or pay over the state lodging taxes. The person may be held personally liable if the individual was, or should have been aware, that the state lodging taxes were not paid to the department. A transient lodging tax collector cannot avoid personal liability by delegating their responsibilities to another.

(5) The following factors do not preclude a finding that an individual is liable for the payment of state lodging taxes:

(a) Lack of willfulness in failing to pay over the required state lodging tax;

(b) The individual’s receipt of remuneration;

(d) Another individual is also liable for the same state lodging taxes;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and to set working conditions and schedules; or

(i) Delegation to another person any functions indicating liability.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 320.325
REV 6-2022, adopt filed 06/03/2022, effective 06/03/2022

Or. Admin. R. 150-320-0050 State Lodging Tax Exemptions

(1) The following are exempt from the state lodging tax:

(a) Health care facilities certified, licensed or registered by the Department of Human Services.

(b) Drug and alcohol abuse and mental health treatment facilities.

(d) Dwelling units at a nonprofit facility.

(e) Dwelling units occupied by:

(A) The same person for a consecutive period of 30 days or more during the year. “Person” means either the occupant of the dwelling unit or the one who pays for the transient lodging. After 30 consecutive days, the person is considered a tenant and is no longer considered an occupant of transient lodging. In this case, the 30 days must be consecutive.

(B) A person who pays for lodging on a monthly basis, regardless of the number of days in the month.

(D) Persons with diplomatic immunity.

(f) Dwelling units used by the general public for less than 30 days in a calendar year. Even if a dwelling unit becomes temporarily exempt under subsection (1)(e) of this rule, that period of usage applies toward the 30 calendar days of use under this subsection. However, this exemption does not apply when the dwelling unit is rented using a transient lodging intermediary platform on or after September 29, 2019.

(2) If a member or employee of a non-profit organization stays at a facility that is subject to the state lodging tax, they are not exempt from the state lodging tax and are required to pay the tax.

(3) Employees of state and local governments of Oregon or any other state are not exempt from the state lodging tax.

History

Statutory/Other Authority: ORS 305.100 & 320.308
Statutes/Other Implemented: ORS 320.308
REV 11-2019, amend filed 12/11/2019, effective 01/01/2020
REV 16-2018, minor correction filed 08/09/2018, effective 08/09/2018
Renumbered from 150-320.308, REV 36-2016, f. 8-12-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08, cert.ef. 8-31-08

Or. Admin. R. 150-320-0060 Lodging Tax Information Sharing with Local Governments

(1) The Department of Revenue and units of local government will exchange transient lodging tax information quarterly as authorized in ORS 320.332.

(2)(a) A unit of local government may receive access to information received by the department under ORS 320.305 to 320.340 upon written request. The request must be on the form provided by the department.

(b) By submitting the written request, the unit of local government agrees this is a reciprocal exchange of transient lodging tax information.

(3) The unit of local government will comply with the Department of Administrative Services Statewide Information Security Standards.

(4) A unit of local government that receives state transient lodging tax information is required to notify the state transient lodging taxpayers, in the event that there is a breach of the local government’s computer as required in ORS 646A.604.

(5) The unit of local government may use state transient lodging tax information described in ORS 320.332 for the administration of the local transient lodging tax. Unlawful use of the information is prohibited as a violation of ORS 314.835 and ORS 320.332. Such use will terminate participation in the transient lodging tax information exchange. Conditions of the termination will be determined on a case by case basis.

(6) The unit of local government will limit access to the state transient lodging tax information to those officers, employees, and agents with a need to know in order to perform their duties.

(7)(a) The unit of local government will provide the department with valid secrecy certificates signed by all officers, employees, and agents who may have access to the state transient lodging tax information before the department will allow access.

(b) To maintain compliance with ORS 320.332, the unit of local government must provide the department with the valid signed secrecy certificates within 30 days for all newly hired officers, employees, and agents who may have access to the state transient lodging tax information.

(8)(a) The department will provide the unit of local government a limited number of accesses for the purpose of exchanging transient lodging tax information.

(b) The unit of local government must electronically access their account to download the state transient lodging tax information and upload the local government’s transient lodging tax information using a template provided by the department.

(9) The unit of local government must submit a written request to cease participation in the transient lodging tax information exchange on a form prescribed by the department unless automatically terminated by a violation of any provision of this rule.

History

Statutory/Other Authority: ORS 305.100 & 320.332
Statutes/Other Implemented: ORS 314.835, 314.840 & 320.332
REV 29-2018, adopt filed 12/28/2018, effective 01/01/2019

Or. Admin. R. 150-320-0365 Administration of Local Lodging Taxes

Unless the context requires otherwise, the department will apply the same rules to administer local transient lodging taxes under agreements with local governments as are used in the administration of the state transient lodging tax program. See OAR 150-320-0040 to OAR 150-320-0060 for rules adopted under ORS 320.300 to 320.330. In addition, the provisions of rules adopted pursuant to ORS Chapters 305, 314, or 320 as to the audit and examination of reports and returns, periods of limitation, determination of and notices of deficiencies, assessments, collections, liens, delinquencies, claims for refund and refunds, conferences, appeals to the Oregon Tax Court, stays of collection pending appeal, confidentiality of returns and penalties related thereto, and the procedures relating thereto, apply to the determination of taxes, penalty, and interest under local transient lodging taxes statutes and ordinances.

History

Statutory/Other Authority: ORS 305.100 & 320.065
Statutes/Other Implemented: ORS 305.620 & 305.365
REV 6-2021, adopt filed 06/28/2021, effective 07/01/2021
REV 2-2021, temporary adopt filed 01/07/2021, effective 01/07/2021 through 07/05/2021

Or. Admin. R. 150-320-0400 Definitions for purposes of the transportation project taxes imposed under ORS 320.405 to 320.415

(1) “Retail sales price” means the total consideration given by, or on behalf of, a retail purchaser to a seller for a taxable motor vehicle, including any down payments and the value of any property taken by a seller in trade, reduced for any discounts, rebates, and other similar price reductions given at the time of sale.

(a) “Retail sales price” includes, but is not limited to:

(A) The price charged for a motor vehicle as equipped by the manufacturer;

(B) Any charges for transportation of a motor vehicle before its sale;

(C) Any charges for accessories, parts, or other products that are sold with a motor vehicle, as well as any charges included for installation or application labor;

(b) “Retail sales price” does not include:

(A) Any charges for preparation or submission of documents submitted pursuant to ORS 822.043, which are separately stated on the invoice, bill of sale, or similar document given to the purchaser at the time of sale.

(B) Any charges or fees that are payable to or collected on behalf of governmental agencies and necessary for the transfer of any interest in a motor vehicle or for the use of a motor vehicle, and which are separately stated on the invoice, bill of sale, or similar document given to the purchaser at the time of sale.

(C) Optional service contracts or extended warranties, which are separately stated on the invoice, bill of sale, or similar document given to the purchaser at the time of sale.

(D) Any privilege, excise, sales, or use tax imposed by any jurisdiction on the sale, or on the storage, use, or other consumption, of the taxable motor vehicle, which is separately stated on the invoice, bill of sale, or similar document given to the purchaser at the time of sale.

(E) Retail value of modifications to a vehicle necessary for a person with a disability to enter or drive or to otherwise operate or use the vehicle as determined by:

(i) the actual price charged for the modifications on an invoice that are separately stated from the price charged for the vehicle as equipped without modifications,

(ii) subtracting the retail value of the vehicle as specified by a generally relied upon published automobile reference book or guide listing values of new and used vehicles without modifications, from the total price charged for the vehicle with the modifications installed, or

(iii) subtracting the manufacturer suggested retail price specified for the modifications on the Monroney sticker or window sticker, from the total price charged for the vehicle as equipped with manufacturer installed modifications.

(F) Retail value of aftermarket modifications made by any person other than the original chassis manufacturer, to a truck chassis with a gross vehicle weight rating of at least 10,000 pounds but not more than 26,000 pounds.

(2) “All-terrain vehicle” means a Class I, Class II, Class III, or Class IV all-terrain vehicle as defined by ORS 801.190 to 801.194 that may not be registered under ORS 803.350.

(3) “New bicycle” means a bicycle that has not previously been owned by a purchaser.

History

Statutory/Other Authority: ORS 305.100 & 320.480
Statutes/Other Implemented: ORS 320.400
REV 3-2024, amend filed 01/24/2024, effective 02/01/2024
REV 10-2018, adopt filed 06/01/2018, effective 06/02/2018
REV 79-2017, temporary adopt filed 12/28/2017, effective 01/01/2018 through 06/29/2018

Or. Admin. R. 150-320-0410 Vehicle Use Tax – Proof of Payment of Tax

(1) As provided in ORS 803.203, the Oregon Driver and Motor Vehicle Services Division (DMV) administers provisions related to vehicle title and registration and proof of payment of the vehicle use tax imposed under ORS 320.410. Refer to ORS 803.203 and OAR 735-030-0025, or contact the DMV for additional information.

(2) Any seller who sells a taxable motor vehicle to a purchaser who is subject to the vehicle use tax imposed under ORS 320.410, and who collects the vehicle use tax from the purchaser, must hold the use tax in trust for the State of Oregon. The seller must report and pay the use tax quarterly to the Oregon Department of Revenue. In addition, the seller may request a confirmation documentation from the department that the use tax has been collected from the purchaser and has been or will be paid to the department. The seller or purchaser must provide that confirmation to the DMV prior to registration and titling. Document requests must be submitted electronically through the seller’s online taxpayer account.

History

Statutory/Other Authority: ORS 305.100, 320.420 & 320.480
Statutes/Other Implemented: ORS 320.410 & 320.420
REV 10-2018, adopt filed 06/01/2018, effective 06/02/2018
REV 79-2017, temporary adopt filed 12/28/2017, effective 01/01/2018 through 06/29/2018

Or. Admin. R. 150-320-0420 Resale Certificate – Documentation Required

Any document provided by a purchaser to a seller of a taxable vehicle prior to or at the time the seller bills the purchaser for the vehicle, qualifies as a resale certificate with respect to the sale of the taxable vehicle described in the document, if it contains all of the following information:

(1) The seller’s name and address;

(2) The purchaser’s name and address;

(3) The purchaser’s federal tax identification number;

(4) A statement that the taxable vehicle described in the document is purchased for resale. The document must contain the phrase “for resale.”

(5) A description of the particular taxable vehicle to be purchased for resale, including the vehicle identification number, if one exists;

(6) The signature of the purchaser, purchaser’s employee, or authorized representative of the purchaser; and

(7) Date of execution of the document.

History

Statutory/Other Authority: ORS 305.100, 320.425 & 320.480
Statutes/Other Implemented: ORS 320.425
REV 10-2018, adopt filed 06/01/2018, effective 06/02/2018
REV 79-2017, temporary adopt filed 12/28/2017, effective 01/01/2018 through 06/29/2018

Or. Admin. R. 150-320-0430 Vehicle Use Tax Alternative Filing Format

(1) A person with a valid vehicle dealer certificate issued under ORS 822.020 who participates in the Driver and Motor Vehicle Services Division of the Department of Transportation (DMV) Electronic Vehicle Registration (EVR) Program, may report vehicle use tax imposed by ORS 320.410, on form OR-591-D - Oregon Vehicle Use Tax Quarterly Return.

(2) If a person described in section (1) of this rule elects to file a quarterly return, under ORS 305.229, the department will not impose a late payment or late filing penalty added to the amount of tax by ORS 314.400, unless the return is filed or payment is made later than the due date prescribed in ORS 320.445.

History

Statutory/Other Authority: ORS 305.100, 305.145, 305.229, 314.385 & 320.480
Statutes/Other Implemented: ORS 305.145, 305.229, 314.385, 320.455 & 320.480
REV 25-2018, adopt filed 12/28/2018, effective 01/01/2019
REV 19-2018, temporary adopt filed 10/26/2018, effective 10/26/2018 through 04/23/2019

Or. Admin. R. 150-320-0510 Statewide Transit Tax Employer Penalty

(1) In addition to penalties assessed under ORS chapters 305 and 314, the department must assess penalties, as described in ORS 320.550(10), when an employer knowingly fails to deduct and withhold statewide transit tax.

(2) An employer knowingly fails to deduct and withhold statewide transit tax if the employer fails to file any delinquent statewide transit tax report and fails to pay statewide transit tax within 30 days of a written request to file by the department; and

(a) The employer fails to file a statewide transit tax report to the department on or before the due date of the report, as described in OAR 150-316-0700, and fails to pay statewide transit tax on or before the due date, as described in OAR 150-316-0332, for two or more consecutive tax periods; or

(b) The employer has a history of repeatedly failing to file reports and paying statewide transit tax to the department on or before the due date.

(3) Penalties assessed under ORS 320.550(10) are not eligible for discretionary waiver consideration under OAR 150-305-0068.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 320.550
REV 1-2018, renumbered from 150-316-0710, filed 01/01/2018, effective 01/01/2018
REV 78-2017, adopt filed 12/28/2017, effective 01/01/2018

Or. Admin. R. 150-320-0520 Statewide Transit Tax: Reporting and Payment Due Dates

(1) An employer required to withhold and remit statewide transit taxes to the department under ORS 320.550 must submit a statewide transit tax return and any schedules required to be filed with the return by the due date in section (4) of this rule.

(2) The statewide transit tax return and any schedules required to be filed with the return may be filed using electronic or paper options.

(3) When the due date for filing a statewide transit tax return and associated schedules falls on a Saturday, Sunday, or a state legal holiday, the filing of a return and associated schedules is due on the next business day following the Saturday, Sunday, or state legal holiday.

(4) Statewide transit tax payments are due on or before the last day of the month following the end of each calendar quarter.

(5) Notwithstanding sections (1) and (4) of this rule, returns with schedules and payments of statewide transit tax for agricultural employers are due on or before the filing due dates in OAR 150-316-0361.

(6) Notwithstanding sections (1) and (4) of this rule, an employer may request in writing authorization from the department to file annual returns with schedules and make annual payments of statewide transit tax in lieu of quarterly filing and payment under section (4) of this rule if:

(a) The employer would otherwise be required to file returns with schedules and pay statewide transit tax under section (4) of this rule; and

(b) The employer’s annual statewide transit tax liability is not expected to exceed $50.00.

(7) OAR 150-316-0359 establishes reporting due dates for statewide transit tax annual reconciliation reports required to be filed under ORS 320.550(8).

(8) Oregon residents subject to the tax imposed under ORS 320.550 who have wages earned outside of Oregon from an employer not doing business within Oregon, and whose tax was not withheld by the employer, must file a return and pay statewide transit tax due on or before the due date of the personal income tax return under ORS 314.385(1) for the tax year that includes the calendar quarters for which transit tax is due.

(a) The transit tax is calculated by adding all wages, as defined in ORS 316.162(2), from Box 16 for all Forms W-2 issued to the taxpayer for the tax year and multiplying by one-tenth of one percent (.001).

(b) The return required under this section must be submitted on a form and in the manner as instructed by the department in forms and instructions.

History

Statutory/Other Authority: ORS 320.550
Statutes/Other Implemented: ORS 320.550
REV 10-2019, amend filed 12/11/2019, effective 01/01/2020
REV 2-2019, amend filed 08/19/2019, effective 09/01/2019
REV 13-2018, adopt filed 06/26/2018, effective 07/01/2018

Division 321 TIMBER TAXES

Or. Admin. R. 150-321-0010 Establishing Legal Taxpayer for FPHT

(1) It is the policy of the department to use the following sequential criteria to establish the identity of the taxpayer responsible for the Forest Products Harvest Tax (FPHT):

(a) The party holding title to timber as evidenced in a written agreement.

(b) If the element of (a) is not present, the party indicated on the “Notification of Operations” as the timber owner.

(c) If the elements of (a) and (b) are not present, then the party receiving payment for logs delivered to a conversion center.

(d) If the elements of (a), (b), and (c) are not present, then the owner of land from which harvest occurred is the responsible taxpayer.

(2) The following examples of transactions are a guide in determining the responsible taxpayer: [Example not included. See ED. NOTE.]

(3) The department will consider the following elements when it is necessary to interpret a written agreement in order to establish identity of the taxpayer:

(a) Type of agreement — i.e., a contract for the performance of services vs. a contract that transfers the ownership of property.

(b) The intent of the agreement.

(d) Which party bears the loss in a catastrophic event?

(e) The timing of and manner of payment.

(4) Whenever an agreement is so ambiguous that identity of the taxpayer cannot be reasonably determined, the last party known to hold title to timber or logs will be deemed the taxpayer.

[ED. NOTE: Examples referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.005
Renumbered from 150-321.005(9), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2009, f. & cert. ef. 7-31-09
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0020 Timber Subject to the Forest Products Harvest Tax: Measurement Standards

(1) Timber subject to the Forest Products Harvest Tax is the following:

(a) All logs which can be measured in board feet and meet the requirements of utility cull or better.

(A) Logs must be measured in western Oregon by the current edition of Official Rules for the following Log Scaling and Grading Bureaus: Columbia River, Northern California, Pacific Rim, Southern Oregon, Yamhill, developed by the Northwest Log Rules Advisory Group (NWLRAG). All sections of the publication are recognized including the Appendix.

(B) Logs must be measured in eastern Oregon by the Scribner Decimal "C" Eastside Short Log Rule, using the NWLRAG Eastside Log Scaling Handbook, First Edition 2003.

(b) Logs chipped in the woods, except chips produced from material not meeting log merchantability standards in subsection (a) above and used as hog fuel.

(c) Loads of logs measured in tons and sold by the weight that contain utility grade and better logs. Logs must be reported on the timber tax return by thousand board feet (MBF). Logs must be converted from tons to MBF using conversion factors established by the Department of Revenue. These conversion factors are listed on the tax forms and instructions sent out annually by the department:

(A) When less than 10 percent of the load’s log count comes from logs that have an 8-inch or larger scaling diameter, the “Chip Log” conversion factor will be used for converting tons to MBF for tax reporting.

(B) When 10 percent or more of the load’s log count comes from logs that have an 8-inch or larger scaling diameter, the “Small Saw Logs” conversion factor will be used for converting tons to MBF for tax reporting.

(2) Timber not subject to Forest Products Harvest Tax is secondary products, other than chips, manufactured in the woods and produced from logs normally left in the forest or burned as slash. Examples are shake or shingle bolts, fence posts, firewood, and arrow bolts.

(3) When timber is harvested from the eastside, but scaled using westside log scaling rule, the volume must be adjusted to reflect the eastside log scaling rule volume. Taxpayers may use their own conversion factors if they are supported by statistically sound sample data; otherwise, the westside volume must be multiplied by 1.28 to get the equivalent eastside scaled volume.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.005
Renumbered from 150-321.005(12), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321-005, REV 2-2005, f. 6-27-05, cert. ef 6-30-05
REV 6-2003, f. & cert. ef. 12-31-03
RD 8-1991, f. 12-30-91, cert. ef. 12-31-91
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87
12-31-85
10-7-85

Or. Admin. R. 150-321-0030 Estimated Tax Payments for FPHT

(1) Any taxpayer required to report and pay estimated tax as determined by ORS 321.045(4) must file a return and pay a tax of at least 25 percent of the estimated liability for the calendar year for which the report is made.

(2) The provisions of ORS 321.045(5) are not elections or alternate methods of determining the amount of estimated tax liability, but rather standards against which estimated payments are tested for adequacy with respect to application of penalty in the form of interest.

(3) A taxpayer not required to file a return or to pay a tax for the prior calendar year is not relieved of the responsibility to pay an estimated tax. Such taxpayers must make payment equal to 100 percent of the actual liability on the timber harvested during the calendar quarter for which the report is made or at least 20 percent of the liability due for the calendar year for which the report is made.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.045
Renumbered from 150-321.045, REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2003, f. & cert. ef. 12-31-03
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0200 Forestland Valuation Rule

(1) Purpose: The purpose of this rule is to describe the process used to develop the annual preliminary forestland values and to clarify the establishment of the final certified forestland values (ORS 321.216).

(2) General Principles and Definitions:

(a) For the purpose of this rule, “forestland” has the meaning provided in ORS 321.257(2) for Western Oregon, and ORS 321.805(4) for Eastern Oregon.

(b) Values developed by this rule are the values of bare forestland.

(c) The mix of sales of highest and best use forestland in Western Oregon will approximate, over the long term, the percentage distribution of acres in each land productivity class in Western Oregon.

(d) The department will rely on market sale evidence as the primary appraisal method for determining forestland values in both Eastern Oregon and Western Oregon.

(e) Sales of forestland in Eastern Oregon often include the influence of non-forestland values. Non-forestland values include, but are not limited to, values associated with grazing, hunting or other recreational uses.

(3) Forestland Sales Data:

(a) The department will collect and verify forestland sales data. Only sales with the following characteristics will be considered:

(A) The current or immediate future use of the land is the growing and harvesting of timber,

(B) The improvement values and other non-forestland values can be accurately extracted from the sale price to give a land residual value,

(D) The purchase consideration is cash or a financing method standard to the real estate market,

(E) The bare land value is greater than $0, and

(F) The sale is 20 acres or larger of productive forestland.

(b) The department will compile the sales data in a forestland sales database.

(c) The department will analyze calendar year (January 1 to December 31) sales data to determine a single per acre Western Oregon Average Value (WAV) and a single per acre Eastern Oregon Average Value (EAV). The acres to be included in the denominator for each sale are productive forestland acres only, that is, land in classes FA through FG in Western Oregon and land not classed as wasteland in Eastern Oregon.

(d) The WAV and EAV will be determined only from data where sales identified as a statistical outlier have been rejected.

An outlier is defined as a sale with a price that is outside of the range of plus or minus two standard deviations from the seven year average of all sales in Western Oregon or plus or minus two standard deviations from the seven year average for all sales in Eastern Oregon. For the purpose of determining whether a sale is an outlier, the department will consider all sales from the prior seven years, including any outliers identified from prior years’ analysis. If a sale is an outlier for three consecutive years, the sale will be treated as an outlier in all subsequent years.

(e) In the absence of sales for the current year, the department will average the two prior years to get an average for the year. For a previous year with no sales the department will average the year prior and the next year going forward.

(f) The resulting average per acre values calculated for Western and Eastern Oregon in subsection (c) above will be further processed as follows:

(4) Western Oregon Process.

(a) For each of the seven calendar years of sales data immediately prior to the January 1 assessment date, calculate the WAV for each year. WAV is the arithmetic mean of the individual sales’ average value per acre of forestland for the calendar year.

(b) Sum the current plus six immediately prior years WAV from subsection (3)(c) of this rule and divide by seven to obtain the seven-year average for Western Oregon (7YAVWO).

(c) Multiply the resulting 7YAVWO by the Western Forestland Class Spread (WFCS), see below, [ED. NOTE: Tables referenced are available from the agency.] For each productivity class (FA through FX) to obtain the value for each productivity class.

(d) The value obtained in subsection (4)(c) of this rule, rounded to the nearest whole dollar, is the preliminary value by productivity class for the January 1 assessment date.

(5) Eastern Oregon Process:

(a) For each of the seven calendar years of sales data immediately prior to the January 1 assessment date, calculate the EAV for each year.

(b) Calculate a least squares regression line of seven EAV’s established in subsection (5)(a) of this rule for Eastern Oregon to determine the annual value change ratio (delta V) for the sales data collection period. The annual change ratio (delta V) is the calculated value along the regression line at year 7 divided by the calculated value at year 6.

(c) The annual rate of change in subsection (5)(b) of this rule will be applied to the certified immediately prior year SAV for Eastern Oregon (EOR PSAV) for a preliminary estimate of the current year SAV:

EOR PSAV x (delta V) = Preliminary current year EOR SAV.

(d) The value obtained in subsection (5)(c) of this rule, rounded to the nearest whole dollar, is the preliminary value for the January 1 assessment date.

(6) Response to Preliminary Values:

(a) Data pertinent to the forestland valuation process that was not evaluated previously may be collected during a review by the Forestland Value Advisory Committee (ORS 321.213) or through written comments submitted during the public hearing on proposed specially assessed forestland values (ORS 321.210). Pertinent data may be added to the forestland database to recalculate the WAV and EAV described in subsection (3)(c) of this rule, to then obtain revised preliminary values.

(b) The department will consider the revised preliminary values and any other information provided by additional research by the department, the Forestland Value Advisory Committee, submitted written comments, or the hearing process to determine the final values to be certified under ORS 321.216.

[ED. NOTE: Tables referenced are available from the agency.]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100 & 321.207
Statutes/Other Implemented: ORS 321.805, 321.257, 321.207, 321.210 & 321.213
Renumbered from 150-321.207-(A), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.207(1), REV 4-2015, f. 12-23-15, cert. ef. 1-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 6-2003, f. & cert. ef. 12-31-03
REV 10-2002, f. & cert. ef. 12-31-02

Or. Admin. R. 150-321-0210 Forestland Classification

The forestland classification for western Oregon is as follows: [See PDF link below.] Site class is based on Bulletin #201 tables dated 1930 and James King 50 year index tables dated 1966, topographical features, vegetation and soil types.

[Publications: The publication(s) referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).]

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.257
REV 33-2017, f. & cert. ef. 7-21-17
Renumbered from 150-321.257(3), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.353(1), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

Or. Admin. R. 150-321-0300 Redetermination of Forestland Land Classes

(1) The department will change forestland land classes described under ORS 321.348(1) upon the request of an owner of forestland if the department’s investigation reveals that the land class is now inaccurate.

(2) If an owner of forestland believes his or her property is not classed correctly, the owner may request a review by the department.

(a) The request must be submitted to the department in writing stating the basis of the request. Information that may be submitted as a basis for the request includes, but is not limited to:

(A) A third party evaluation;

(B) Soil surveys;

(D) Narrative that describes geographical characteristics that influence site class.

(b) The request must identify the property, including:

(A) County;

(B) Property tax account number;

(D) Total forestland acres; and

(E) Physical location and number of forestland acres to be reviewed.

(3) The department must receive requests by April 1 in order to have a redetermination of land classes reflected on the tax roll for the tax year beginning the following July 1. If the department receives the request after April 1, any resulting redetermination will take effect with respect to the tax year commencing July 1 of the following calendar year.

(4) The department will review the information submitted, other reference materials (contour maps, aerial photos, soil surveys, land class cards, or site tree data), and may conduct a field inspection of the property.

(5) The department will send written notice of its decision to the owner. Any redetermination of land class will be immediately certified to the county assessor. This will be done prior to July 15 of the tax year for which the review decision first applies.

(6) Pursuant to ORS 305.275, the owner may appeal the department’s determination described in section (5) to the Magistrate Division of the Oregon Tax Court. This appeal must be made within 90 days of the date of the written notice.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.348
Renumbered from 150-321.348(2), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-321-0310 Requirements to Qualify Certain Forestland for Special Assessment at Farm Use Values Under ORS 308A.092

(1) For forestland to qualify for special farm use assessment valuation under ORS 308A.092, the following conditions must be met:

(a) The owner must request the land be changed from a farm use to forestland designation by filing an application under ORS 308A.724 with the county assessor;

(b) Trees must have been planted after October 15, 1983;

(d) The average age of the timber on the land must be less than 40 years;

(e) The land must have been specially assessed under ORS 308A.092 for at least 10 consecutive years before the request for special assessment as forestland;

(f) The owner of land applying for this special assessment may not own more than 2,000 acres of forestland in Western Oregon.

(2) Application forms for this special assessment program shall must be designed by the Department of Revenue. A copy of the prescribed form shall be distributed to each county assessor for in-county duplication as needed.

(3) Planting defined — planting is defined as the setting of young plants or seeds in the ground. Timber stands established naturally do not qualify as “planted.”

(4) The time for filing an application for this special assessment is governed by ORS 308A.077.

(5) The farm use value for the land must be based on land class irrespective of any vegetation cover.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.349
Renumbered from 150-321.349, REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 9-1983, f. 12-20-83, cert. ef. 12-31-83

Or. Admin. R. 150-321-0320 Common Ownership of Forestland for Large Landowners

Definitions:

(1) “Person” means an individual, a public or private corporation, a limited liability company, a limited liability partnership, an unincorporated association, a partnership, a government or a governmental instrumentality.

(2) “Majority interest” means an interest of greater than 50 percent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.354
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-321.354, REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-Ch. 1078 Sec. 2 & 35 1999, REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0330 Date of Acquisition

In answering the question on the application for designation as forestland concerning date of acquisition, the applicant must list the exact date of acquisition if the forestland was acquired within the five year period immediately preceding the date of the application. If the forestland was acquired more than five years before the date of the application, that fact must be stated, but dates are not required.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.358
Renumbered from 150-321.358(3)(b)-(A), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
3-16-78, Renumbered from 150-321.358(2)(b), REV 6-2003, f. & cert. ef. 12-31-03
3-70
2-68

Or. Admin. R. 150-321-0340 Minimum Stocking and Acreage Requirements for Designation as Forestland in Western Oregon

(1) “Contiguous acres” means acres touching along a boundary or at a point.

(a) Includes acres separated by a public or county road, state highway or any stream other than a large stream as identified by the state forester using the water classification system in OAR 629-635-0200.

(b) Does not include acres separated by an interstate highway or large stream.

(2) To qualify, the land must have growing upon it at least the number of established trees per acre set by the state forester in OAR 629-610-0020. The established trees must be of a marketable species acceptable to the state forester as described or set forth in OAR 629-610-0050.

(3) If the land does not meet the minimum requirements of section (2) of this rule, the owner must give the assessor a written management plan for establishing trees to meet the minimum stocking requirements. The plan must contain and meet the following requirements:

(a) A description of the area that states the location, number of acres, ground cover, present stocking, steepness of slope, and aspect (the direction the slope faces).

(b) A list of needed site preparation requirements prior to planting. Examples include brush or grass removal, rodent eradication, disease and insect problem resolution, slash disposal, protection from grazing or browsing animals, and tillage of soil.

(c) Planting information that lists the species to be planted, time of year that planting will take place, number of trees per acre to be planted, and method of planting.

(d) At least 20 percent, but not less than two acres, of the area in the plan must be planted by December 31 of the first assessment year that the land is designated as forestland. Each additional year thereafter, a minimum of 20 percent of the area must be planted. At the end of the fifth year after the assessor approves the designation, 100 percent of the area in the plan must be planted. The assessor may grant extensions to fulfilling planting requirements if a loss of planted stock occurs due to conditions beyond the control of the landowner.

(4) To qualify, the area to be designated must be at least two contiguous acres in common ownership. All other property located within the same county that is owned by the same common owner of at least two contiguous acres may also qualify for forestland designation if it meets the stocking requirements.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.358
REV 4-2017, f. 5-31-17, cert. ef. 6-1-17
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-321.358(4), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.358(2), REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 3-1996, f. 12-23-96, cert. ef. 12-31-96
12-31-82
12-6-82

Or. Admin. R. 150-321-0350 Acceptable Uses of Western Oregon Forestland

Certain lands do not support sufficient minimum stocking of trees to qualify for designation as forestland. However, when the use of these lands supports desirable forestry management practices on surrounding lands to promote the state policy of encouraging forestry, they may be designated as forestland.

(1) Rock Pits. Forest roads, except principal exterior access roads, are recognized as forestland under ORS 308.236. Fills, ballast, bridges, culverts, drains, and surfacing are included in the definition of forest roads. Since rock is necessary to maintain or improve the usefulness of these roads, rock pits and adjacent rock storage areas are an acceptable use and are eligible for designation as forestland under the following conditions:

(a) The rock pit comprises less than 5 percent of the total forestland of the owner in the area served by the pit.

(b) The rock from the pit is used on land defined as forestland under ORS 321.257(2).

(c) The rock produced from the pit is not commercially sold, but is used on forestland of the owner of the pit, or traded to other forestland owners in the area for in-kind products to be used at economically distant locations.

(d) The forestland owner maintains appropriate records to be available at the request of the Assessor to substantiate forest management use of rock pits and other similar items.

(2) Easements. Some lands are encumbered by easements for road or transmission line rights-of-way which prohibit establishment of commercial forests. Such lands may be valued and assessed as forestland when:

(a) Application for designation as forestland has been made.

(b) The lands are adjacent to, and an integral part of, the forest property of the owner.

(d) Not more than 20 percent of the forestland of the owner is encumbered by easements.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.358
Renumbered from 150-321.358(4)(b), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.358(3)(b), REV 6-2003, f. & cert. ef. 12-31-03
RD 3-1996, f. 12-23-96, cert. ef. 12-31-96
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0360 Notification by Assessor of Denial of Application

The assessor will send the written notice denying the application, in whole or in part, for designation of forestland to the applicant by certified mail.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.358
Renumbered from 150-321.358(5), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.358(4), REV 6-2003, f. & cert. ef. 12-31-03
3-16-78
3-70
2-68

Or. Admin. R. 150-321-0500 Procedure to Ensure Timber Tax Return Filing

(1) As used in this rule, “owner” or “taxpayer” means the “owner of timber” as defined in ORS 321.005.

(2) The Department of Revenue shall notify the owner, as identified on a Notification of Operation received from the Department of Forestry, of the owner’s requirement to file a timber tax return. It is the responsibility of the owner to ensure that the correct owner name is listed on the Notification of Operation.

(3) Notices required under section (2) of this rule shall be mailed unless the owner elects to be notified by an alternative method allowed by the department. Alternative methods may be elected by the owner:

(a) Indicating through the owner’s online filing account the owner’s preference to have all notifications to file a return be delivered by email and to access and file a return online;

(b) Requesting verbally or in writing that the department email or fax a return form to the owner or an authorized representative on a one-time basis; or

(4) Return forms that are mailed or otherwise delivered by an alternative method shall serve as a notice to the owner of the owner’s requirement to file a return.

(5) The department shall document by tax program and reporting period:

(a) Which taxpayers were sent timber tax returns; and

(b) Receipt of tax returns filed.

(6) Taxpayers who fail to file a timber tax return will be mailed a Notice of Failure to File which shall include:

(a) The timber tax program(s) for which taxpayer has failed to file;

(b) A statement that the tax return is due even if no harvest occurred; and

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.550 & 321.733
REV 12-2019, amend filed 12/11/2019, effective 01/01/2020
Renumbered from 150-321.550, REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0510 Notice of Intent to Harvest

(1) The owner of timber before it is cut, severed or removed, is required to give notice of intent to harvest.

(2) Notice is given to the Oregon State Department of Forestry which then issues a “Notification of Operations” — commonly called a “logging permit.”

(3) Whenever title to timber is transferred to a new owner prior to being cut, severed or removed, the new owner is required to give notice of intent to harvest.

Example 1: Landowner “A” logs timber on the owner’s property and decks the logs at roadside. Trucker “B” buys “A”s logs for $10,000 then hauls and sells the logs to a mill.

“B” acquired the title to logs still on “A”s property prior to removal, therefore “B” must give notice of intent to harvest.

Example 2: Owner “A” sells standing timber to “B” on a recovery basis. “B” agrees to pay “A” $125/Net MBF for all timber removed. In the contract for the sale of the timber “A” agrees to pay any tax due as the result of the harvest.

“B” acquired title to the timber and must give notice of intent to harvest before cutting, severing or removing the timber. The fact that “A” agreed to pay the taxes has no bearing on who must give notice.

(4) Once made, the notification expires on the last day of December in the year taken. Any continuation of harvest in a new calendar year requires renewal of the notification.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.550
Renumbered from 150-321.550(1), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0520 Penalty for Failure to Obtain Notification of Operations

(1) The penalty shall be applied for each violation occurring.

(2) The penalty shall be assessed against the owner of the timber at the time the return is filed.

(3) No violation occurs if the volume cut is less than 5000 board feet.

(4) A violation occurs if separate notice is not given for cutting operations on private lands when:

(a) The operations are on noncontiguous parcels under the same ownership or;

(b) The operations are on parcels under different ownership or;

(d) The operations are conducted by different loggers.

(5) Each sale harvested from public lands shall be considered a single cutting operation.

(6) The department shall not impose a penalty under this section without first having notified an owner by letter, sent to the most current known address, of a violation. Subsequent violations occurring after the date the notice has been sent by the department will be subject to the penalty provided under this section.

(7) The penalty provided under this section shall first apply to violations occurring on or after January 1, 1990.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.550
Renumbered from 150-321.550(3)(a), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0530 Prescribed Filing of Timber Harvest Returns

(1) Owners must file a harvest return as prescribed by the department.

(2) The department may reject returns that do not meet its requirements. The department will send a notice of rejection to the taxpayer.

(3) A taxpayer must refile a return if the department rejected the original filing.

(4) A taxpayer is considered not to have filed a tax return until approved by the department.

(5) The taxpayer may be assessed penalties for failure to file a tax return as provided under ORS 321.560.

(6) If the department receives payment with a return that does not meet the requirements, the payment must be banked and credited to the taxpayer’s account for the timber tax program indicated on the taxpayer’s remittance or submitted return.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.560
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-321.560(2), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
RD 16-1987, f. 12-10-87, cert. ef. 12-31-87

Or. Admin. R. 150-321-0540 Check Scaling at the Point of First Measurement

(1) The department must be given access to any location where timber is first measured at any time the site is open for business in order to inspect or check scale the grading and measuring practices for timber subject to ORS 321.005 to 321.185, 321.560 to 321.600 and 321.700 to 321.754.

(2) Scalers or companies controlling the sites must make all pertinent information for the check scale available to the department.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.609
Renumbered from 150-321.609(1), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-321-0550 Measuring Harvested Timber

(1) Definitions for purposes of this rule:

(a) “Check Scaling” is the procedure for verifying that an entity’s scaling practices comply with the Official Log Scaling Rules.

(b) “Grading” means determining the quality of logs, considering such factors as gross diameter, length of log, surface characteristics, annual ring count, slope of grain and other factors as reflected in the Official Log Scaling Rules.

(c) “Harvest Unit” is a contiguous geographical area from which timber is harvested that has the following characteristics:

(A) The unit is entirely within one county;

(B) The unit is not larger than 320 acres;

(D) The unit is limited to harvest by one method (e.g., clearcut, thinning); and

(E) Operations within a harvest unit may not be farther than one mile apart.

(F) The department may grant exceptions to these criteria upon written request.

(d) “Measuring” means the determination of the quantity and quality of logs. Measuring must happen at the time of transfer of ownership of the logs and is the responsibility of the timber owner.

(e) “Official Log Scaling Rules” are those rules developed by the Northwest Log Rules Advisory Group as reflected in the most current edition of Official Rules for the following Log Scaling and Grading Bureaus: Columbia River, Northern California, Pacific Rim, Southern Oregon, Yamhill.

(f) “Sample Scaling” means to measure a portion of a weighed log inventory and apply the statistical information of the selection to the entire inventory.

(g) “Scaling” means the measurement of the gross and net volume of logs as determined by using the Official Log Scaling Rules.

(2) Measurement of scaled logs must:

(a) Be done using the Official Log Scaling Rules and must be determined by one of the following persons:

(A) Scalers of third party scaling organizations that:

(i) Assure its scalers produce consistent scaling results;

(ii) Assure its scalers will exercise independent judgment;

(iii) Have a training and certification program for its scalers;

(iv) Check scale a minimum of eight loads every two months for each employee scaling and grading logs subject to timber taxes under ORS 321.005–185, 321.700–754, and 321.805–855 within a 5 percent tolerance of the log volumes; and

(v) Make check-scale records available to the department upon request.

(B) Scalers employed by companies who are check scaled by a third-party scaling organization, or company check scalers employed by a company that:

(i) Meets all the requirements listed in paragraph (2)(a)(A) of this rule; and

(ii) Provides a rescale and training in the event of an unsatisfactory check scale;

(iii) Provides total volume by grade and species by harvest unit for the period between an unsatisfactory check scale and the next satisfactory check scale at the request of the department; and

(iv) Allows the department to independently check scale.

(C) Scalers employed by companies with less than four scalers who each scale less than 50 thousand board feet per week if approved by the department. The company must:

(i) Make a written request to the department which includes:

(I) Name, duties and experience of the scaler;

(II) Type of logs scaled;

(III) Scaling instructions;

(IV) A description of the scaling location;

(V) An explanation of how the scaling information is secured to prevent loss or tampering of information; and

(VI) Provisions for check scaling.

(ii) If requested by the department, provide training specific to the type of logs delivered to the scaling point.

(D) Check scalers who meet the following qualifications:

(i) Be a qualified scaler with five plus years experience scaling logs;

(ii) Participate in an effective training and certification program that is recognized by one of the bureaus that is a member of the Northwest Log Rules Advisory Group;

(iii) Demonstrate proficiency with the Official Log Scaling Rules; and

(iv) Makes record of qualifications, training and certification available upon request.

(b) Be recorded on original scaling and grading load tickets that contain the following information:

(A) Name of log seller (taxpayer);

(B) Date of measurement;

(D) Log brand;

(E) Log species;

(F) Log Grade;

(G) Number of logs;

(H) Gross log measurements, deductions and net volume; and

(I) Trip ticket number.

(3) Measurement of weighed logs must:

(a) Be done by an employee of a delivery facility who has been instructed on the proper use of the equipment listed in subsection (3)(b) of this rule.

(b) Use weigh instruments or devices that are tested, certified or licensed by the Oregon State Department of Agriculture under ORS 618.020, 618.016, 618.121 and 618.151.

(A) Name of log seller (taxpayer);

(B) Name of log purchaser;

(D) Trip ticket (or woods trip receipt number);

(E) Date of measurement;

(F) Location of measurement;

(G) Scaling organization or company doing the weighing;

(H) Weight ticket number;

(I) Gross, tare and net weights.

(4) A taxpayer may use “sample scaling” to determine the volume and grade of logs harvested.

(a) Sample scaling must be done on a harvest unit basis and the following criteria must be met:

(A) Must meet the criteria of section (2) of this rule;

(B) The number of loads scaled (the sample intensity) must ensure that 95 percent of the time the average volume of a scaled load falls within 5 percent of the average volume of all sampled loads for the harvest unit.

(D) Samples must be taken over the entire period of harvest.

(E) Once a load has been selected for the sample, it cannot be removed.

(b) Sampling methodology that does not meet the criteria of subsection (4)(a) of this rule may be used if submitted in writing and approved by the department prior to use.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.609
Renumbered from 150-321.609(1)-(A), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2005, f. 6-27-05, cert. ef 6-30-05

Or. Admin. R. 150-321-0560 Timber Harvest Records

Every owner must keep records of harvested timber that is subject to the Small Tract Forestland Severance Tax and the Forest Products Harvest Tax. These records must be retained as described in OAR 150-321-0590. Timber harvest records required to be retained include:

(1) Contractual or financial agreements relative to the ownership and harvest of timber.

(2) Location of the harvest unit, including a map of the unit.

(3) The quantity of harvested timber.

(4) Log brands used by location and date.

(5) Log load trip tickets by harvest unit by accounting period.

(6) Original records of scaling, measuring, and grading of forest products harvested.

(7) Any other bills, receipts, invoices, data processing tapes, or other documents of original entry supporting the entries in the books of account, as well as all schedules and work papers used in the preparation of the tax returns.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.609
Renumbered from 150-321.609(2)-(A), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04
RD 3-1996, f. 12-23-96, cert. ef. 12-31-96
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-80, Renumbered from 150-321.342(2)-(A)
12-31-79, Renumbered from 150-321.342
12-31-77

Or. Admin. R. 150-321-0570 Use of Microfilm and Microfiche Records

Microfilm and microfiche records of original records and supporting data are acceptable provided the following conditions are met:

(1) Microfilm and microfiche show beginning and ending numbers and be indexed, cross referenced and labeled as to contents.

(2) The microfilm or microfiche contain the complete original records and identification can be made in respect to time of harvest and harvest area.

(3) Proper facilities including modern projectors for viewing and copying are provided during regular business hours for the ready inspection and location of the particular records. Otherwise, the microfilm or microfiche shall be made available at the Department’s facilities for inspection.

(4) The taxpayer agrees to provide access to any information contained on the film or fiche which may be required for purposes of verification of the tax liability.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.609
Renumbered from 150-321.609(2)-(B), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88, Renumbered from 150-321.342(2)-(B)
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80
12-31-79, Renumbered from 150-321.342
12-31-77

Or. Admin. R. 150-321-0580 Records Kept by Automated Data Processing

(1) The Department of Revenue will accept records kept by automated data processing systems if:

(a) Supporting source documents are identified and kept on file so that a complete audit of the automated data processing records can be performed.

(b) Computer programs, program documentation, and program flow charts showing embedded formulas and the resulting computations are available for examination by the department.

(2) The department may verify the accuracy of any automated data processing programs used for computing log grading and scaling volumes for timber subject to ORS 321.005 to 321.185, 321.560 to 321.600 and 321.700 to 321.754.

(3) The department may perform tests to verify the accuracy of automated data processing programs using the equipment used to supply the service.

(a) Tests will consist of mock scale tickets prepared by the department with a maximum of 500 logs for each scaling method.

(b) Test printouts will be in scale ticket form, individual log detail form and in load summary form as produced for the timber owner.

(c) The test data must be run and the information sent to the department within thirty days after the date that the department sends the mock scale tickets.

(d) All testing will be at the expense of the party using automated data processing for log grading and scaling.

(4) Automated data processing records are to be retained as prescribed in OAR 150-321-0590.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.609
Renumbered from 150-321.609(2)-(C), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88, Renumbered from 150-321.243(2)-(C)
TC 7-1980, f. 11-28-80, cert. ef. 12-31-80
12-31-79, Renumbered from 150-321.342
12-31-77

Or. Admin. R. 150-321-0590 Preservation of Records and Their Reproductions

All records or reproductions of records pertaining to scaling, measuring, grading and reporting of a timber harvest(s) subject to the Small Tract Forestland Severance Tax and the Forest Products Harvest Tax must be maintained for inspection. These records must be maintained for six years from the completion of a harvest or until final resolution of an appeal from an assessment relating to such harvest, whichever is later.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.609
Renumbered from 150-321.609(2)-(D), REV 70-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04
RD 3-1996, f. 12-23-96, cert. ef. 12-31-96
RD 8-1988, f. 12-19-88, cert. ef. 12-31-88
12-31-80, Renumbered from 150-321.342(2)-(D)
12-31-79, Renumbered from 150-321.342 to 150-321.342(2)-(D)
12-31-77

Or. Admin. R. 150-321-0600 Requests for Confidential Information

(1) Request for information under ORS 321.684(1)(a) must:

(a) Be made in writing.

(b) Identify the type of return or report and the year or years requested.

(2) Request for information under ORS 321.684(2) must:

(a) Be made in writing including a statement:

(A) Describing the records and information in detail reasonably sufficient to enable the department to identify and locate the information.

(B) Agreeing that the information requested will not be divulged or used for any purpose other than that authorized in ORS 321.684.

(b) Describe the intended use of the reports or returns requested.

(3) Requests for information made under ORS 321.684(2)(b) through (f) will be provided only upon receipt of a statement certifying that requestor has read and had explained to them the provisions of ORS 321.682 and is aware of the penalty provisions imposed under ORS 321.686.

(4) Charges for copies of records requested under this rule will be handled as set out in OAR 150-192-0400.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.684
Renumbered from 150-321.684-(A), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
RD 3-1996, f. 12-23-96, cert. ef. 12-31-96
RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-321-0610 Information Which May Be Furnished

A taxpayer or authorized representative will be permitted to inspect any return or report filed by the taxpayer in connection with the return.

(1) Information can be provided by telephone by an employee of the department regarding a pending refund claim, an audit report, the status of an account, a general inquiry from a taxpayer, or a request from the department, if the caller clearly establishes identification as the taxpayer or an authorized representative of the taxpayer. If a caller cannot establish a right to information, the information shall not be provided except upon receipt of a written request, and the information shall then only be provided by mail addressed to the taxpayer or other persons who have filed with the department, a general power of attorney, a special power of attorney that authorizes the disclosure of information related to the tax period or periods and tax programs, or the Department of Revenue’s form titled “Authorization to Represent the Taxpayer.”

(2) An “authorized representative” as used in this rule is a person designated in a written authorization executed by a taxpayer, to receive tax information on behalf of the taxpayer. The department must receive the authorization before tax information will be released to the representative.

(3) A person who is “recognized” as being authorized under ORS 305.230 to represent a taxpayer in a proceeding before a tax court magistrate or in a conference before the department may receive confidential information related to the taxpayer and to the proceeding or conference, unless otherwise prohibited by an Internal Revenue Service agreement. A person shall be “recognized” as being authorized to represent the taxpayer upon:

(a) The filing with the tax magistrate division or with the department of a document apparently signed by the taxpayer clearly authorizing such representation; or

(b) The filing with the tax magistrate division of a document signed by the representative that clearly states that the representative is authorized to represent the taxpayer with respect to the particular proceeding, and to receive from the department confidential records of the taxpayer relating to the proceeding, provided that such a statement also is in accordance with a rule of the tax magistrate division that is consistent with this rule; or

(4) In case of audit or compliance activity, a written authorization is required unless it appears to the satisfaction of the department that the representative does in fact have authority to represent the taxpayer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.684
Renumbered from 150-321.684(1), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-1998, f. 12-29-98, cert. ef. 12-31-98
REV 9-1998, f. 12-11-98, cert. ef. 12-31-98

Or. Admin. R. 150-321-0620 Common Ownership of Small Tract Forestlands

(1) For purposes of ORS 321.700(1), “Direct ownership” means ownership of forestland by one or more individuals or control of property rights in forestland granted under a real estate contract, trust or other written agreement.

(2) “Majority interest” means an interest greater than 50 percent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.700
REV 17-2018, minor correction filed 08/31/2018, effective 08/31/2018
Renumbered from 150-321.700(1), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from OL 2003, Ch 454, Sec. 1(1), REV 4-2004, f. 7-30-04 cert. ef. 7-31-04
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0630 Establishing the Identity of the Taxpayer for Severance Tax

For purposes of establishing the identity of the taxpayer for the severance tax, OAR 150-321-0010 applies.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.700
Renumbered from 150-321.700(12), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-Oregon Laws 2003, Ch. 454, Section 1(12), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0640 Timber Subject to the Small Tract Forestland Severance Tax

(1) Timber subject to the Small Tract Forestland Severance Tax is the following:

(a) All logs that can be measured in board feet and meet the requirements of sawmill grades or better.

(B) Logs must be measured in eastern Oregon by the Scribner Decimal "C" Eastside Short Log Rule, using the NWLRAG Eastside Log Scaling Handbook, First Edition 2003.

(b) Logs measured in tons and sold by the weight when they meet the conditions of (A) or (B) below. Logs must be reported on the timber tax return by thousand board feet (MBF). Logs must be converted from tons to MBF using conversion factors established by the Department of Revenue. These conversion factors are listed on the tax forms & instructions sent out annually by the department.

(A) The loads of logs contain a minimum of 20 percent of the log count at 5-inch, 6-inch and 7-inch scaling diameter. The “Chip Logs” conversion factor will be used to convert this type of load from tons to thousand board feet (MBF) for tax reporting.

(B) Loads of logs in which all logs measure 5-inch scaling diameter and larger, or the load contains three or more logs with 8-inch or larger scaling diameter. The “Small Saw Logs” conversion factor will be used to convert this type of load from tons to MBF for tax reporting.

(c) Logs chipped in the woods, except chips produced from material not meeting log merchantability standards in subsection (a) above and used as hog fuel.

(2) Timber not subject to Small Tract Forestland Severance Tax is secondary products, other than chips, manufactured in the woods and produced from logs normally left in the forest or burned as slash. Examples are shake or shingle bolts, fence posts, firewood and arrow bolts.

History

Statutory/Other Authority: ORS 305.100, 321.609 & 321.700
Statutes/Other Implemented: ORS 321.700
Renumbered from 150-321.700(13), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2005, f. 6-27-05, cert. ef 6-30-05
Renumbered from 150-Oregon Laws 2003, Ch. 454, Section 1(13), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0650 Definition of Owner for Small Tract Forestland Purposes

“Owner” as used in ORS 321.706 to 321.716 means one or more individuals, a public or private corporation, a limited liability company, a limited liability partnership, an unincorporated association, a partnership, an estate, a trust, a government, a governmental instrumentality, or any combination of these or similar entities.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.706
Renumbered from 150-321.706, REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 8-2004, f. & cert. ef. 9-15-04

Or. Admin. R. 150-321-0660 Required Signatures for Small Tract Forestland Application

(1) Small Tract Forestland applications must be signed by all owners, as defined by OAR 150-321-0650, that hold the land that is the subject of the application in common ownership, as defined in ORS 321.700(1).

(2) Acceptable signatures of the forestland owner(s) are as follows:

(a) For an individual, every person with an ownership interest must sign. If applicable, a person with legal guardianship or power of attorney to represent an individual may sign.

(b) For a partnership, a general partner designated by the partnership as authorized to represent the partnership.

(d) For an estate or trust, the trustee, executor, or other authorized representative.

(e) For a C corporation, an officer of the corporation authorized to represent the C corporation.

(f) For a limited liability company (LLC) or limited liability partnership (LLP), a member designated by the LLC or LLP as authorized to represent the LLC or LLP.

(3) A contract purchaser(s) may sign if they have authority to make the application under the terms of the purchase contract.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.706
Renumbered from 150-321.706(2), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 7-2005, f. 12-30-05, cert. ef. 1-1-06
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04

Or. Admin. R. 150-321-0670 Powers Delegated to County Assessor

Pursuant to ORS 321.706(4) the department delegates to the county assessor the authority to:

(1) Require any person to furnish any information the assessor deems necessary to determine whether forestland is qualified for small tract forestland designation.

(2) Enter upon and inspect the land included in a small tract forestland application and any contiguous parcels under common ownership as identified in ORS 321.700(3).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.706
Renumbered from 150-321.706(4), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04

Or. Admin. R. 150-321-0680 Definition of Taxpayer for Appeal of Small Tract Forestland Application Denial

“Taxpayer,” as used in ORS 321.706(7), means an owner of forestland that is the subject of an application for qualification as small tract forestland.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.706
Renumbered from 150-321.706(7), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04

Or. Admin. R. 150-321-0690 Contiguous Parcels Held in Common Ownership

The following examples illustrate when contiguous parcels under common ownership must be included in an application for small tract forestland assessment as required by ORS 321.709(1)(b). For purposes of this rule, all parcels are designated forestland or highest and best use forestland.

(1) Example 1: Parcel # 1 is owned by three individuals, Bob, John and Greg. Parcel # 2 is contiguous to Parcel # 1 and is owned by husband and wife (Bob and Julie). Parcel # 3 is contiguous to Parcel # 2 and is owned by Julie. Parcels # 1 and # 3 are not contiguous.

(a) Parcel # 1 is the subject of an application for small tract forestland. Parcel # 2 must be included in the application as a contiguous parcel, since Bob has an ownership interest as an individual in both parcels. Parcel # 3 is not required to be included in the application, since Julie does not have an ownership interest as an individual in Parcel # 1.

(b) Parcel # 2 is the subject of an application for small tract forestland. Parcel # 1 must be included in the application as a contiguous parcel, since Bob has an ownership interest as an individual in Parcels # 1 and # 2. Parcel # 3 must also be included in the application as a contiguous parcel, since Julie has an ownership interest as an individual in Parcels # 2 and # 3.

(c) Parcel # 3 is the subject of an application for small tract forestland. Parcel # 2 must be included in the application as a contiguous parcel, since Julie has an ownership interest as an individual in Parcels # 2 and # 3. Parcel # 1 is not required to be included in the application, since Julie does not have an ownership interest as an individual in Parcel # 1.

(2) Example 2: Parcel # 4 is owned by a partnership, 3 J’s Partnership. The three partners, Bob, John and Greg, each have a 1/3 ownership interest. Parcel # 5 is contiguous to Parcel # 4 and is owned by husband and wife (Bob and Julie). Parcel # 6 is contiguous to Parcel # 5 and is owned by Bob. Parcels # 6 and # 4 are not contiguous.

(a) Parcel # 4 is the subject of an application for small tract forestland. Parcels # 5 and # 6 are not required to be included in the application, since Bob does not own a majority interest in 3 J’s Partnership.

(b) Parcel # 5 is the subject of an application for small tract forestland. Parcel # 6 must be included in the application as a contiguous parcel, since Bob has an ownership interest as an individual in Parcels # 5 and # 6. Parcel # 4 is not required to be included in the application, since Bob does not own a majority interest in 3 J’s Partnership.

(c) Parcel # 6 is the subject of an application for small tract forestland. Parcel # 5 must be included in the application as a contiguous parcel, since Bob has an ownership interest as an individual in Parcels # 5 and # 6. Parcel # 4 is not required to be included in the application, since Bob does not own a majority interest in 3 J’s Partnership.

(3) Example 3: Parcel # 7 is owned by a corporation, Bob and Julie Inc. Bob has a 60 percent interest in the corporation. Parcel # 8 is contiguous to Parcel # 7 and is owned by a partnership, 3 J’s Partnership. Bob has a 2/3 ownership interest in the partnership. John and Greg each have a 1/6 interest. Parcel # 9 is contiguous to Parcel # 8 and is owned by 2 J’s LLC. Bob and Julie each have a 50 percent interest in the LLC. Parcels # 9 and # 7 are not contiguous.

(a) Parcel # 7 is the subject of an application for small tract forestland. Parcel # 8 must be included in the application as a contiguous parcel, since Bob owns a majority interest in both Bob and Julie Inc. and 3 J’s Partnership. Parcel # 9 is not required to be included in the application, since Bob does not own a majority interest in 2 J’s LLC.

(b) Parcel # 8 is the subject of an application for small tract forestland. Parcel # 7 must be included in the application as a contiguous parcel, since Bob owns a majority interest in both Bob and Julie Inc. and 3 J’s Partnership. Parcel # 9 is not required to be included in the application, since Bob does not own a majority interest in 2 J’s LLC.

(c) Parcel # 9 is the subject of an application for small tract forestland. Parcels # 7 and # 8 are not required to be included in the application, since Bob does not own a majority interest in 2 J’s LLC. If Bob owned a majority interest in 2 J’s LLC, Parcel # 8 and Parcel # 7 would be deemed held in common ownership and contiguous because Bob would have owned a majority interest in all three parcels.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.709
Renumbered from 150-321.709(1)(b), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04

Or. Admin. R. 150-321-0700 Minimal Stocking and Species Requirements for Small Tract Forestland Assessment

(1) To qualify, the land must have growing upon it at least the number of established trees per acre according to OAR 629-610-0020(4)–(8) established by the state forester. Also, for the land to qualify, the established trees must be of a marketable species acceptable to the state forester as established in OAR 629-610-0050.

(2) If the land does not meet the minimum requirements of subsection (1), the owner must present to the assessor a written plan for establishing trees to meet the minimum requirements for stocking. The plan must contain and meet the following requirements:

(a) A description of the area that shows the location, number of acres, ground cover, present stocking, steepness of slope, and direction slope faces.

(b) A list of needed site preparation requirements prior to planting. An example would be brush or grass removal, rodent eradication, disease and insect problems, slash disposal, protection from grazing or browsing animals, and tillage of soil.

(c) Planting information that lists the species to be planted, time of year that planting will take place, number of trees per acre to be planted, and method of planting.

(d) At least one-fifth (20 percent), but not less than two acres, of the area in the plan must be planted by December 31 of the first assessment year that the land is designated as forestland. Each additional year thereafter a minimum of one-fifth (20 percent) of the area must be planted, in addition to the previous year’s requirements. At the end of the fifth year after the assessor approves designation, 100 percent of the area in the plan must be planted. Extensions to planting requirements may be granted by the assessor if a loss of planted stock occurs due to conditions beyond the control of the landowner.

History

Statutory/Other Authority: ORS 305.100, 321.609 & 321.709
Statutes/Other Implemented: ORS 321.709
Renumbered from 150-321.709(1)(c), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-Oregon Laws 2003, Ch. 454, Sec. 4 (1)(c), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0710 Notation on Assessment and Tax Roll

The assessment and tax roll must show the notation “Small Tract Forestland — Potential Additional Tax Liability” for each parcel of land that is assessed as small tract forestland.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.709
Renumbered from 150-321.709(3), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-OL 2003, Ch. 454, Section 4(3), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0720 Notification to County Assessor by Small Tract Forestland Owner

(1) ORS 321.712(1) requires a small tract forestland owner(s) to give written notice to the county assessor when:

(a) The owner acquires tax lots that are contiguous to small tract forestland they own, or

(b) The owner acquires or sells forestland that results in their owning less than 10 or more than 5,000 acres of Oregon forestland, or

(2) This written notification must be made within 90 days of the date of acquisition, sale or change of use.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.712
Renumbered from 150-321.712(1), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2004, f. 7-30-04 cert. ef. 7-31-04

Or. Admin. R. 150-321-0730 Common Ownership for Sale of Small Tract Forestland

“Person” means an individual, a public or private corporation, a limited liability company, a limited liability partnership, an unincorporated association, a partnership, a government, or a governmental instrumentality.

History

Statutory/Other Authority: ORS 305.100 & 321.609
Statutes/Other Implemented: ORS 321.719
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-321.719(1), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-OL 2003, Ch. 621, Section 109(1), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0750 Distribution of Severance Tax Receipts for Western Oregon

Monies distributed under ORS 321.751(3) are distributed to each Western Oregon county in the same proportion that the assessed value of small tract forestland in that county bears to the total assessed value of small tract forestland in Western Oregon. The department will use the small tract forestland values reported by the county assessors or information supplied on the most recent Summary of Assessment and Levies (SAL) report to make this computation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.751
Renumbered from 150-321.751(3), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-321-0760 Distribution of Severance Tax Receipts for Eastern Oregon

Monies distributed under ORS 321.754(3) are distributed to each Eastern Oregon county in the same proportion that the assessed value of small tract forestland in that county bears to the total assessed value of small tract forestland in Eastern Oregon. The department will use the small tract forestland values reported by the county assessors or information supplied on the most recent Summary of Assessment and Levies (SAL) report to make this computation.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.754
Renumbered from 150-321.754(3), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-321-0770 Definition of “Sound Management Practices”

For the purpose of ORS 321.805(4), “Sound management practices,” in addition to growing trees may include but are not limited to: range management, fire protection, soil erosion control, stream protection, cooperative wildlife management, and road access control.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.805
Renumbered from 150-321.805(4), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

Or. Admin. R. 150-321-0780 Common Ownership for Special Assessment of Forestland for Large Landowners

Definitions:

(2) “Majority interest” means an interest of greater than 50 percent.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.833
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-321.833, REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.812, REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
Renumbered from 150-Ch. 1078 Sec. 2 & 35 1999 Session to 150-321.812, REV 6-2003, f. & cert. ef. 12-31-03

Or. Admin. R. 150-321-0790 Notation on Tax Roll: “Forestland — Potential Additional Tax Liability”

The county assessor must make the notation “Forestland – Potential Additional Tax Liability” on the tax roll for each parcel of land the assessor approved as designated forestland under ORS 321.839. The notation is not made with respect to parcels classified by the county assessor as highest and best use forestland.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.839
Renumbered from 150-321.839, REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2006, f. & cert .ef. 7-31-06

Or. Admin. R. 150-321-0800 Date of Acquisition

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.839
Renumbered from 150-321.839(3)(b), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.815(3)-(b), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
Renumbered from 150-321.815(2)(b), REV 6-2003, f. & cert. ef. 12-31-03
11-71

Or. Admin. R. 150-321-0810 Minimum Stocking and Acreage Requirements for Designation as Forestland in Eastern Oregon

(1) “Contiguous acres” means acres touching along a boundary or at a point.

(b) Does not include acres separated by an interstate highway or large stream.

(a) A description of the area that states the location, number of acres, ground cover, present stocking, steepness of slope, and aspect (the direction the slope faces).

(c) Planting information that lists the species to be planted, time of year that planting will take place, number of trees per acre to be planted, and method of planting.

(d) At least 20 percent, but not less than two acres, of the area in the plan must be planted by December 31 of the first assessment year that the land is designated as forestland. Each additional year thereafter, a minimum of 20 percent of the area must be planted. At the end of the fifth year after the assessor approves the designation, 100 percent of the area in the plan must be planted. The assessor may grant extensions to planting requirements if a loss of planted stock occurs due to conditions beyond the control of the landowner.

(4) Certain lands do not support sufficient stocking requirements; however, when the use of these lands supports sound management practices and the harvest of forest crops on surrounding lands, these lands may be designated as forestland. Examples of such lands include:

(a) Roads, landings, and rock pits used for forest roads that are necessary for forest management and the harvest of forest crops.

(b) Land that is subject to power transmission and distribution easements or gas line easements that are not centrally assessed under ORS 308.505-308.665 or 308.805-308.820 if the lands would otherwise qualify for designation as forestland if, but for the easement, sufficient stocking of trees would be permitted.

(5) To qualify for designation, the land must meet the minimum stocking requirements of sections (2) or (3) of this rule. However, when the circumstances listed in section (4) of this rule are present, and at least 80 percent of the total area applied for meets the minimum stocking requirements, the total area of the application will be assessed as designated forestland.

(6) To qualify, the area to be designated must be at least two contiguous acres in common ownership. All other property located within the same county that is owned by the same common owner of at least two contiguous acres may also qualify for forestland designation if it meets the stocking requirements.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.805
REV 4-2017, f. 5-31-17, cert. ef. 6-1-17
REV 80-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-321.839(4), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.805, REV 12-2004, f. 12-29-04, cert. ef. 12-31-04
REV 11-2000, f. 12-29-00, cert. ef. 12-31-00
RD 3-1996, f. 12-23-96, cert. ef. 12-31-96
RD 9-1989, f. 12-18-89, cert. ef. 12-31-89
RD 15-1982, f. 12-6-82, cert. ef. 12-31-82
TC 10-1978, f. 12-5-78, cert. ef. 12-31-78
11-71

Or. Admin. R. 150-321-0820 Notification by Assessor of Denial of Application

The assessor will send the written notice denying the application, in whole or in part, for designation of forestland to the applicant by certified mail.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 321.839
Renumbered from 150-321.839(5), REV 71-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-321.815(5), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
Renumbered from 150-321.815(4), REV 6-2003, f. & cert. ef. 12-31-03
11-71

Division 323 CIGARETTE TAXES

Or. Admin. R. 150-323-0010 Exemption of Cigarette Sales in Interstate or Foreign Commerce

The tax applies to all cigarettes sold within this state, but does not apply to sales of cigarettes which are:

(1) Shipped to a point outside this state, pursuant to a contract of sale, by delivery by the seller to such out-of-state point by means of:

(a) The United States mail; or

(b) A common carrier licensed by the Interstate Commerce Commission; or

(c) Facilities operated by the seller. Oregon distributors claiming exemption from the tax on cigarettes on the ground that shipments or deliveries were made in interstate commerce shall certify, under penalties for false swearing, the name and address of the persons receiving such shipments or deliveries in such foreign states, and that the Oregon distributors are in possession of delivery data of the following description:

(A) A waybill, bill of lading or other evidence of shipment issued by a common carrier in the case of shipments by common carrier; or

(B) an insurance receipt or registry receipt issued by the United States Postal Department, or a Post Office Department receipt in the case of shipments made by U.S. mail; or

(C) a copy of the sellers invoice covering the sale, showing delivery by the seller at a designated out-of-state address, and signed by the purchaser or the purchaser’s agent in the case of shipments by facilities operated by the seller. The Department reserves the right to require such additional proof as it deems necessary in any particular case.

(2) Sold to a foreign purchaser for shipment abroad and delivered to a ship, airplane, or other conveyance furnished by the purchaser for the purpose of carrying the cigarettes abroad and actually carried to a foreign destination.

(3) Sold for use solely outside this state and delivered to a forwarding agent, export packer, or other person engaged in the business of preparing goods for export or arranging for their exportation, and actually delivered to a port outside the continental limits of the United States.

(4) Sold for use as ship’s supplies which are to be consumed or resold on the high seas or in foreign countries. Reports of such exempt sales must be maintained as provided in OAR 150-323-0250. The tax applies to the transaction if the cigarettes are diverted in transit or for any other reason are not actually delivered outside the state pursuant to the contract of sale or are not shipped abroad to a foreign purchaser, regardless of documentary evidence held by the distributor. Cigarettes are not considered to be interstate commerce and therefore are not exempt under ORS 323.040 if they are received by a purchaser or agent (other than a common carrier) in this state. Failure to keep any reports, waybills, bills of lading or other documents required by this rule is justification for the Department of Revenue to impose a tax on any cigarettes claimed to be shipped out of Oregon and exempt under this rule. Any tax imposed on these grounds shall be cancelled upon actual proof to the Department that the reports, waybills, bills of lading or other documents were in fact issued and the cigarettes were in fact shipped out of Oregon and were exempt under this rule.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.030
Renumbered from 150-323.030, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
8-75, Renumbered from 150-323.055
1-73
9-71, Renumbered
6-66 as 150-323.040

Or. Admin. R. 150-323-0020 Allowance of Sales within this State of Cigarettes Stamped with other States’ Indicia

(1) Generally, cigarettes sold by a wholesale cigarette distributor within this state must be stamped with an Oregon cigarette stamp. If sold to a retailer of another state, the cigarettes shall be stamped with the other state’s indicia and must be transported by U. S. Mail, a licensed interstate common carrier or by the seller to a point outside this state.

(2) An exception is made for the sale to and self-service pickup by a licensed retailer of another state who will immediately transport the cigarettes out of this state. In such an event, the distributor must, at the time of sale and shipment, obtain from the purchaser a signed, sworn statement under penalties for false swearing. The statement shall be on the invoice. The statement shall attest (a) that the purchaser is a retailer licensed to sell cigarettes in the other state, (b) that the cigarettes are being purchased for resale in the state for which the cigarettes are stamped and (c) that the purchaser will immediately transport the cigarettes out of this state to the state for which the cigarettes are stamped.

(3) The seller shall keep a copy of the invoice in the seller’s possession. Failure to retain the invoice or to obtain the sworn statement shall cause the distributor to be liable for the Oregon Cigarette Tax, together with any penalty and interest accrued, on the product sold. It shall be the seller’s duty to ensure the purchaser is a licensed retailer of the other state.

(4) The department reserves the right to require such additional proof as it deems necessary in any particular case.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.030
Renumbered from 150-323.030-(B), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
RD 4-1994, f. 12-15-94, cert. ef. 12-31-94

Or. Admin. R. 150-323-0030 When Distributor’s License Required

A distributor's license is required for each place of business at which a person engages in the distribution of cigarettes as defined in ORS 323.015(2). A distributor's license is required for any person distributing cigarettes in Oregon, including:

(1) Every cigarette manufacturer selling cigarettes in this state to persons other than licensed distributors;

(2) Every person who imports cigarettes into this state for sale;

(3) Every person who obtains untaxed cigarettes from a cigarette manufacturer for resale; and

(4) Common carriers engaged in interstate or foreign passenger service who sell cigarettes on their facilities in Oregon, and persons authorized to sell cigarettes on the facilities of such common carriers. For the purpose of this rule "facilities of a common carrier" are limited to the mobile equipment of the carrier used for the transportation of passengers.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.105
Renumbered from 150-323.105, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
TC 9-1980, f. 11-28-80, cert. ef. 12-31-80
9-71
6-66

Or. Admin. R. 150-323-0040 Certification Applicant Will Comply with Requirements

(1) A person who files an application for a distributor's license under ORS 323.105 must include with the application a written statement certifying that the person will comply with 180.435 and 180.440 pertaining to cigarettes of certain nonparticipating manufacturers.

(2) Cigarette distributor license applications are certified under ORS 323.106 by:

(a) Hand signing the application.

(b) An electronic signature (as defined in ORS Chapter 84) associated with an application filed in electronic (as defined in ORS Chapter 84) form and successfully transmitted to the department, by the applicant.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.106
Renumbered from 150-323.106, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14

Or. Admin. R. 150-323-0050 When Cigarette Wholesaler’s License is Required; Denial of Application

(1) Any person selling cigarettes as defined in ORS 323.010(17) must obtain a cigarette wholesaler’s license. A wholesaler must obtain a license for each place of business at which the wholesaler engages in the sale of cigarettes.

(2) The Department of Revenue may deny a license application under ORS 670.280 if there is false or incomplete information on the application or if the department determines that the applicant will not comply with the provisions of 323.005 to 323.482. When deciding whether to deny a wholesaler's license, the department may consider, but is not limited to, the following factors:

(a) Whether the applicant has previously failed to pay a tobacco related tax or any other tax administered by the Oregon Department of Revenue;

(b) Whether the applicant has engaged in conduct punishable as a crime under ORS Chapter 323 or any other state's or federal tobacco laws; or

(3) If the applicant is other than an individual, the department will apply the factors described in subsection (2) both to the applicant and, if the applicant is an organization, to the individual(s) within the organization with the primary responsibility for ensuring compliance with cigarette tax laws;

(4) If the department denies a license application, the applicant has 30 calendar days from the date of denial to file an appeal in the manner provided in ORS 305.404 to 305.560.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.107
Renumbered from 150-323.107, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 9-2010, f. 7-23-10, cert. ef. 7-31-10
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0060 Security Bond Requirements for Cigarette Distributors

(1) A purchase may not exceed a bond or other security amount if a licensee or applicant for a license elects to pay for cigarette tax stamps on deferred status. The amount of the bond or other security will be equal to the total maximum deferred payment purchase that may be made in any one calendar month.

(2) If at any time the distributor reaches its bond or security limit, the bond or security becomes ineffective, or the surety cancels the bond or security, then the distributor may only purchase stamps on a cash basis until the bond or security is renewed.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.110
Renumbered from 150-323.110, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0070 Denial of a Cigarette Distributor’s License

(1) Any person engaging or seeking to engage in the sale of cigarettes as a distributor as defined in ORS 323.015 must obtain a cigarette distributor’s license. A distributor must obtain a license for each place of business at which the distributor engages in the sale of cigarettes.

(2) The Department of Revenue may deny a license application if there is false or incomplete information on the application or if the department determines that the applicant will not comply with the provisions of ORS 323.005 to 323.482. When deciding whether to deny a distributor's license, the department may consider, but is not limited to, the following factors:

(a) Whether the applicant has previously failed to pay a tobacco related tax or any other tax administered by the Oregon Department of Revenue;

(b) Whether the applicant has engaged in conduct punishable as a crime under ORS Chapter 323 or any other state's or federal tobacco laws; or

(3) If the applicant is other than an individual, the department will apply the factors described in subsection (1) both to the applicant and, if the applicant is an organization, to the individual(s) within the organization with the primary responsibility for the payment of the cigarette taxes on behalf of the applicant;

(4) If the department denies a license application the applicant has 30 calendar days from the date of denial to file an appeal in the manner provided in ORS 305.404 to 305.560.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.130
Renumbered from 150-323.130, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 9-2010, f. 7-23-10, cert. ef. 7-31-10
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0080 Notification of Proposed Suspension or Revocation of Cigarette Distributor or Wholesaler License; Appeal; Final Notification

The Department of Revenue may suspend or revoke a distributor or wholesaler license if the department determines that the distributor or wholesaler will not comply with the provisions of ORS 323.005 to 323.482. When deciding whether to suspend or revoke a license the department may consider, but is not limited to, the following factors:

(1) Whether the distributor has failed to pay a tobacco related tax;

(2) Whether the distributor or wholesaler has engaged in conduct punishable as a crime under ORS Chapter 323 or any other state’s or federal tobacco laws; and

(3) Whether the distributor or wholesaler has violated any part of ORS Chapter 323 or any rule adopted under that chapter.2) When the department decides to suspend or revoke an existing valid distributor or wholesaler license, the department will send a notice to the distributor or wholesaler of the suspension or revocation, stating the reasons for such action. The distributor or wholesaler has 30 calendar days from the date on the notice to file an appeal under ORS 305.404 to 305.560.

(4) If a distributor or wholesaler requests a hearing within the appeal period in subsection (2), the license suspension or revocation will not become effective until a final determination of the appeal by the Tax Court or the Oregon Supreme Court.

(5) If a distributor or wholesaler does not request a hearing within the appeal period in subsection (2), suspension or revocation becomes effective on the 31st day after the date on the notice of suspension or revocation.

(6) The notices described in sections (2) and (4) will be mailed to the distributor or wholesaler by certified mail, return receipt requested, using the last known address of the distributor or wholesaler. Return of the notice as undeliverable or because the distributor or wholesaler fails or refuses to pick up or accept the notices will not extend the appeal period or delay the action specified in the final notice.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.140
Renumbered from 150-323.140, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 8-2002, f. & cert. ef. 12-31-02

Or. Admin. R. 150-323-0090 Tax Stamp Units of Sale; Minimum Sales

(1) The Department of Revenue will sell cigarette tax stamps only to licensed distributors and their properly authorized employees whose signature cards are in the possession of the designated agent of the department. The department has set the minimum unit purchases for each sale as follows:

(2)(a) Heat-applied decal tax stamps for the denominated value of 20 units per pack are sold in rolls containing 30,000 stamps. The stamps are sold in full rolls only and the smallest sale unit is one roll.

(b) Heat-applied decal tax stamps for the denominated value of 25 units per pack are sold in rolls containing 7,200 stamps. The stamps are sold in full rolls only and the smallest sale unit is one roll.

(c) Heat-applied decal tax stamps for the denominated value of 20 units per pack are sold in pads containing 10 sheets of 100 stamps per sheet. The stamps are sold in full pads and the smallest sale unit is one pad of 10 sheets totaling 1,000 stamps.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.160
Renumbered from 150-323.160(1), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2013, f. & cert. ef. 3-28-13
REV 10-2012, f. 12-18-12, cert. ef. 1-1-13
REV 5-2007, f. 7-30-07, cert. ef. 7-31-07
REV 2-2007(Temp), f. & cert. ef. 3-21-07 thru 7-30-07
Renumbered from 150-323.155, REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 11-1999, f. 12-30-99, cert. ef. 12-31-99
RD 5-1993, f. 12-30-93, cert. ef. 12-31-93
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
9-71
6-66

Or. Admin. R. 150-323-0100 Manner of Affixing Stamps

(1) The department will sell the following cigarette tax stamp types and denominations:

(a) A heat-applied decal tax stamp with the denominated value of 20 units per pack.

(b) A heat-applied decal tax stamp with the denominated value of 25 units per pack.

(2) Stamps must be affixed to each individual package of cigarettes, as distinguished from cartons or large containers, in an aggregate denomination not less than the amount of tax upon the contents therein.

(3) Stamps must be affixed to the bottoms of such packages in a manner that is clearly visible to subsequent purchasers. No other stamp, label, decal, mark or sign shall be affixed to or displayed on the bottom of a package of cigarettes without prior written approval from the department. If packaging is different from the typical 20 or 25 cigarette packages, written department approval specifying where the stamp(s) will be affixed is required before stamps can be affixed to the packaging. Such approval will be given only to licensed cigarette agents who agree to purchase such indicia from the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.160
Renumbered from 150-323.160(2), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2013, f. & cert. ef. 3-28-13
REV 10-2012, f. 12-18-12, cert. ef. 1-1-13
REV 5-2007, f. 7-30-07, cert. ef. 7-31-07
Renumbered from 150-323.160, REV 7-2004, f. & cert. ef. 8-11-04
REV 8-2002, f. & cert. ef. 12-31-02
REV 11-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-323-0110 Definition of “Appropriate Stamp”

As required by ORS 323.160(3), an appropriate stamp must be affixed to each package of cigarettes prior to the distribution of the cigarette; for purposes of that requirement an “appropriate stamp” is considered to be more than 50 percent of a single required Oregon tax stamp.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.160
Renumbered from 150-323.160(3)-(A), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
Suspended by REV 2-2004(Temp), f. 4-30-04 cert. ef. 5-1-04 thru 9-30-04
REV 1-2004(Temp), f. & cert. ef. 4-1-04 thru 8-1-04

Or. Admin. R. 150-323-0120 Responsibility for Affixing of Tax Stamps

(1) The distributor that first distributes cigarettes to anyone in the state of Oregon must affix the required tax stamps to the packs of cigarettes. This requirement applies to distributors that are physically located inside or outside of Oregon.

Example 1: If a distributor sells cigarettes to a dealer in Oregon, the distributor must affix the required tax stamps.

Example 2: If distributor A sells cigarettes to distributor B who is within Oregon, distributor A must affix the required tax stamps.

(2) If the distributor that first distributes cigarettes in Oregon fails to affix the required tax stamps, any subsequent distributor possessing unstamped cigarettes must affix the required tax stamps before distributing those cigarettes in Oregon.

(3) A distributor that fails to affix the tax stamps as required by section (1) may be subject to civil and criminal penalties as provided in ORS 323.480 to 323.482.

(4) Distributors are not required to affix tax stamps to cigarettes that are free from tax under ORS 323.040, 323.050, 323.055, or 323.060.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.160
Renumbered from 150-323.160(3)-(B), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-323.160(2), REV 5-2004, f. 7-30-04, cert. ef. 7-31-04
REV 8-2002, f. & cert. ef. 12-31-02

Or. Admin. R. 150-323-0130 Payment Type for Cigarette Stamps

Every licensed distributor purchasing tax stamps from the department must pay for the stamps with cash, cashier’s check, money order, or an electronic form of payment such as credit card, debit card, or electronic funds transfer (ACH Debit).

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.170
REV 79-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-323.170, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0140 Deferred Payment Purchases; Bond Requirement; Credit Authorization; Return of Bond

(1) To purchase tax stamps on a deferred payment basis a distributor must file an application with the Department of Revenue on a form prescribed by the department.

(2) A security bond must accompany the application and is to be deposited with the department as provided in ORS 323.110, or the application must be accompanied by cash or securities to be deposited with the State Treasurer as provided as provided in ORS 323.120. The amount of the bond, cash or security deposited will be the fixed amount of deferred payment purchases the distributor may make in any one calendar month.

(3) If a distributor’s license is revoked by the department, or is withdrawn by the licensee, the department will direct the State Treasurer to return any security that may be held by the State Treasurer under ORS 323.120, to the former licensee after the department has determined that all liabilities owed by the distributor to the department have been paid in full.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.175
Renumbered from 150-323.175, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-1999, f. 12-1-99, cert. ef. 12-31-99
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
9-71
6-66

Or. Admin. R. 150-323-0150 Written Authorization for Cigarette Stamp Purchases

A distributor shall authorize those persons who may order stamps for the distributor’s account. Authorization must be submitted electronically, through the distributor’s online taxpayer account. The distributor’s authorization to the named persons shall continue in effect until notice of revocation of the authority is received by the department. Revocation of authority to purchase stamps must also be submitted electronically, through the distributor’s online taxpayer account.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.180
REV 79-2016, f. 12-28-16, cert. ef. 1-1-17
Renumbered from 150-323.180, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1999, f. 12-1-99, cert. ef. 12-31-99
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
9-71
6-66

Or. Admin. R. 150-323-0160 Restoration of Deferred Payment Plan Privileges for Purchasing Cigarette Tax Stamps

When the privilege of purchasing tax stamps on the deferred payment plan has been suspended by the Department of Revenue as provided in ORS 323.190, the suspension will remain in effect until the department issues written notice that the deferred payment plan has been restored. Paying the delinquency alone will not necessarily restore the privilege of utilizing the deferred payment plan.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.190
Renumbered from 150-323.190, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
9-71
6-66

Or. Admin. R. 150-323-0170 Vending Machine Visibility Requirements

Packages of cigarettes shall be placed in vending machines in such a manner that, if any package is visible while in the machine, the state cigarette tax stamp affixed thereto also shall be clearly visible. Any vending machine operator who uses a machine in which the cigarette tax stamps are not visible will be required to repurchase from the Department all cigarettes purchased from his machine by the Department’s agent for inspection purposes.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.211
Renumbered from 150-323.211, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-1999, f. 12-1-99, cert. ef. 12-31-99
TC 9-1980, f. 11-28-80, cert. ef. 12-31-80
9-71, Renumbered from 150-323.230-(B)
6-66

Or. Admin. R. 150-323-0180 Segregation of Cigarette Inventories

(1) The following rules apply to inventories of cigarettes held by distributors:

(a) Untaxed cigarettes must be stored in an area separate from cigarettes bearing tax stamps.

(b) Cigarettes stamped with the tax stamp of another state must be stored in a separate area from cigarettes bearing an Oregon tax stamp.

(2) Any dealer who serves as the dealers own distributor or who buys directly from a manufacturer and is licensed as a distributor must maintain strict separation of the wholesale and retail stocks of cigarettes and must maintain separate records of the wholesale portion of the business and keep such records, including invoices, separate and apart for the inspection of the wholesale business by the Department of Revenue. The records must show the amount of stamps purchased, stamps affixed, records of purchases of cigarettes and of all sales, whether the dealer is also acting as a distributor or retailer or selling to another retailer.

(3) The requirement to segregate cases or cartons of cigarettes under subsections (1) and (2) of this rule is satisfied if the distributor or dealer keeps the stocks of cigarettes separated by clearly marking the cases or cartons of cigarettes indicating whether the packs of cigarettes inside are taxed or untaxed, and whether they are wholesale or retail stock.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.220
Renumbered from 150-323.220-(A), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2013, f. & cert. ef. 3-28-13
REV 10-2012, f. 12-18-12, cert. ef. 1-1-13
Renumbered from 150-323.220, REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 6-1999, f. 12-1-99, cert. ef. 12-31-99
9-71
6-66

Or. Admin. R. 150-323-0190 Cigarette Invoice Requirements

(1) Any “distributor” as defined in ORS 323.015(2) and any “dealer” as defined in 323.010(5) in this state must keep sales invoices related to cigarette transactions.

(2) The required sales invoice must contain the following:

(a) Name and address of the seller;

(b) Name and address of the purchaser;

(d) Quantity and description of cigarette products;

(e) Price paid for cigarette products; and

(f) The applicable license identification number of the distributor and/or wholesaler.

(3) Records must be preserved for five years from the time to which it relates and must be made available for inspection by representatives of the department. Per ORS 323.245, failure to comply could result in forfeiture of cigarettes.

History

Statutory/Other Authority: ORS 305.100 & 323.220
Statutes/Other Implemented: ORS 323.220
Renumbered from 150-323.220-(B), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2013, f. & cert. ef. 3-28-13
REV 10-2012, f. 12-18-12, cert. ef. 1-1-13

Or. Admin. R. 150-323-0200 Permit Required for Transportation of Untaxed Cigarettes Inside Oregon

(1) Transporters, as defined in ORS 323.010(9), must apply to the department for a permit to transport untaxed cigarettes on Oregon highways, roads or streets. This application must be on the form prescribed by the department and must be submitted to the department no less than one working day before the first transportation of untaxed cigarettes. The application must include:

(a) The applicant’s name, address and telephone number;

(b) The beginning and ending dates of the period to be covered by the permit;

(d) The method of transportation;

(e) The location of detailed records concerning the transportation of untaxed cigarettes under the permit, including where each shipment of untaxed cigarettes was picked up and delivered; and

(f) The name and telephone number of the person the department can contact to examine the records referred to in subparagraph (e).

(2) The department will either approve or deny the application and return it to the applicant before the first shipment is made under the permit. An approved application constitutes a permit. The original or a photocopy of the permit must be carried in the vehicle transporting the untaxed cigarettes. The permit holder must notify the department of any change in the information required on the application before the first transportation of untaxed cigarettes after such information changes. A new permit must be obtained if the name of the permit holder changes.

(3) No transporter may transport untaxed cigarettes in this state without a permit from the department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.225
Renumbered from 150-323.225, REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
REV 4-2000, f. & cert. ef. 5-1-00
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
9-71
6-66

Or. Admin. R. 150-323-0210 Cigarettes Damaged in Transit

The following procedure may be used in lieu of payment of tax and claim for refund:

(1) Untaxed cigarettes damaged while being transported from the manufacturer to a bonded warehouse may be:

(a) Returned to the manufacturer without the imposition of any tax; or

(b) Accepted by a bonded warehouse for the manufacturer who must affix tax paid indicia before they may be returned to the carrier for salvage. Cigarettes damaged to the extent that indicia cannot be affixed and not returned to the manufacturer or otherwise disposed of outside of Oregon, must be accepted and retained by the warehouse until they can be destroyed in the presence of a representative of the Department.

(2) Untaxed cigarettes damaged while being transported between a bonded warehouse and a licensed distributor must be accepted by the distributor for the purpose of affixing tax paid indicia. They may be returned to the carrier for salvage purposes only after such indicia has been affixed. Cigarettes damaged to the extent that indicia cannot be affixed and not returned to the manufacturer or otherwise disposed of outside of Oregon, must be accepted and retained by the distributor until they can be destroyed in the presence of a representative of the Department.

(3) Untaxed cigarettes damaged while being transported from a point outside Oregon to a consignee, other than a bonded warehouse within Oregon, may either be returned to the consignor without the imposition of any tax, or may be accepted by the consignee for the purpose of affixing tax indicia before being returned to the carrier for salvage purposes. Cigarettes damaged to the extent that indicia cannot be affixed and which are not returned to the consignor or otherwise disposed of outside of Oregon must be accepted and retained by the consignee until they can be destroyed in the presence of a representative of the Department.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.320
Renumbered from 150-323.320-(A), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
12-31-80, Renumbered from 150-323.230
9-71
6-66

Or. Admin. R. 150-323-0220 Refund of Value of Unused or Mutilated, but Identifiable, Stamps

When accompanied by a properly executed claim for refund, on forms supplied by the Department, a refund equal to the denominated value, less the discount allowed, will be made on all returned, unused or mutilated, but identifiable, cigarette revenue stamps.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.320
Renumbered from 150-323.320-(B), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-323.320(1), REV 8-2008, f. 8-29-08, cert. ef. 8-31-08
REV 6-1999, f. 12-1-99, cert. ef. 12-31-99
12-19-75

Or. Admin. R. 150-323-0230 Refund Value of Stamps on Unsalable and Misstamped Cigarette Packages and Cartons

(1) Refund provisions of the cigarette tax act apply only to duly licensed Oregon cigarette distributors. Unsalable stamped cigarettes may include product no longer approved for sale in Oregon, stale product, or product inventory of a closed business. Refund certification appointments are scheduled at the discretion of the department. Misuse of this provision may cause license revocation. Cigarette stamp refunds outside of Oregon must be certified by an appointed representative of the department. A refund equal to the face value, less the discount allowed, on identifiable stamps affixed to unsalable packages of cigarettes may be obtained as follows:

(2) Unsalable stamped cigarette packages re-stamped for sale outside Oregon. An appointment for refund certification must be made with the department. A department representative will cancel the Oregon indicia in such a manner as to permanently identify the packages. Indicia from the state into which those packages will be sold must be affixed to the packages during the certification appointment. The request for refund must be sent to the department and be accompanied by the properly executed certification completed by the department.

(3) Unsalable stamped cigarette packages to be sold outside Oregon. An appointment for refund certification must be made with the department. A department representative will cancel the Oregon indicia in such a manner as to permanently identify the packages. The request for refund must be sent to the department and be accompanied by a copy of the shipping document used to send the cigarettes to the purchasing party, and any other proof of the cigarettes not being used for smoking in the State of Oregon.

(4) Unsalable stamped cigarette packages to be destroyed. An appointment for refund certification must be made with the department. A department representative will cancel the Oregon indicia in such a manner as to permanently identify the packages. Packages of cigarettes must be destroyed during the certification appointment and in the presence of an appointed representative of the department. The request for refund must be sent to the department and be accompanied by the properly executed certification completed by the department.

(5) Unsalable stamped cigarette packages returned to the manufacturer. The claim for refund must be sent to the department on a form supplied by the department and be accompanied by a properly executed manufacturer's statement of returned cigarettes and a copy of the shipping document used to return the cigarettes to the manufacturers.

(6) Misstamped cigarette packages, where at least fifty percent of a stamp is affixed to a cigarette package. An appointment for refund certification must be made with the department. A department representative will cancel the partial indicia inadvertently affixed to packages of cigarettes in a manner as to permanently identify the packages. Indicia from the state into which those packages will be sold must be affixed to the packages during the certification appointment. The request for refund must be sent to the department and be accompanied by the properly executed certification completed by the department.

(7) Misstamped cigarette packages, where more than one stamp is affixed to a cigarette package. An appointment for refund certification must be made with the department. A department representative will cancel the duplicated indicia inadvertently affixed to packages of cigarettes in a manner as to permanently identify the packages. The request for refund must be sent to the department and be accompanied by the properly executed certification completed by the department.

(8) Misstamped, where stamps are affixed to packaging. The request for refund must be sent to the department and be accompanied by the packaging to which indicia was inadvertently affixed.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.320
Renumbered from 150-323.320-(C), REV 72-2016, f. 8-15-16, cert. ef. 9-1-16
Renumbered from 150-323.320(2), REV 5-2008, f. 8-29-08
REV 6-1999, f. 12-1-99, cert. ef. 12-31-99
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84
12-19-75

Or. Admin. R. 150-323-0240 Refund of Overpayments

Refund of overpayments on a Distributor’s Cigarette Tax Account may be made when an audit determines a net overpayment has been made during the audit period, and the distributor files a claim for such refund within six months of the date the determination was made. No refund shall be allowed after three years from the date of any overpayment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.325
Renumbered from 150-323.325, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
12-31-81

Or. Admin. R. 150-323-0250 Distributor’s Reports — Generally

(1) On or after January 1, 2000, every distributor shall quarterly file, on or before the 20th day of April, July, October and January, on forms prescribed by the department, reports containing such information as is required on the form including:

(a) Information as to the acquisition by the distributor of cigarettes which, at the date of receipt by the distributor, have not had the tax stamps affixed as required by ORS 323.160.

(b) Information as to the disposition by the distributor of cigarettes which are not subject to the tax imposed by this chapter. (Example: Cigarettes transported from the State of Oregon to points within another state). A separate report will be required for each state or tax exempt unit to which shipments are made.

(c) Information regarding the purchase and distribution of cigarettes, showing the number of cigarettes on hand at the beginning and end of the period, the number of cigarettes purchased during the period and the number of cigarettes distributed during the period.

(d) Information regarding the inventory of stamps, showing the number of stamps at the beginning and end of the period, the number of cigarettes purchased during the period and the number affixed during the period.

(2) Any person or firm classified as a distributor under ORS 323.015(1)(d) and 323.015(2)(a) solely by reason of operating one or more vending machines will not be required to file any reports specified in this section unless requested to do so by the department if:

(a) The distributor purchases only tax-paid cigarettes as evidenced by properly affixed indicia from distributors licensed by this state;

(b) The distributor engages solely in the activity of placing cigarettes in such vending machines;

(d) The distributor is not otherwise a licensed distributor authorized to receive and handle untaxed cigarettes as a distributor.

(3) The distributor shall retain the detailed documents including, but not limited to, purchase invoices, sales invoices and bills of lading, used in preparing the reports required by this section. In the case of cigarettes for foreign export, copies of the Shippers Export Declaration filed with the Collector of Customs or other documentary evidence of export shall also be retained. All documents so retained shall be made available for inspection by authorized employees of the Department of Revenue.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.340
Renumbered from 150-323.340, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 11-1999, f. 12-30-99, cert. ef. 12-31-99, Renumbered from 150-323.340-(A)
9-71
6-66

Or. Admin. R. 150-323-0260 Reports of Cigarette Tax Activity in Oregon

(1) A person who engages in cigarette tax activity in this state, as defined in ORS 323.010(2) and this rule, but who is not licensed to distribute cigarettes in Oregon, must file with the Department of Revenue reports prescribed by the department on or before the 20th day of January, April, July and October. Those reports must contain the following information regarding each shipment of cigarettes that occurred during the quarter:

(a) The business name, address and identification number of the person engaging in cigarette activity;

(b) The source and destination of the shipment of cigarettes;

(d) The dates the cigarettes were shipped;

(e) The total number of cigarettes shipped into and the total number of cigarettes shipped out of Oregon;

(f) The number of cigarettes in the taxpayer’s inventory that were located in Oregon at the beginning of the quarter and the number of cigarettes in the taxpayer’s inventory that were located in Oregon at the end of the quarter; and

(g) Other information requested on the department’s form.

(2) For purposes of this rule, the following are presumed not to constitute “cigarette tax activity in this state”:

(a) Transporting a sealed shipment of cigarettes through Oregon in a continuous process under authority of a Motor Property Carrier and Broker Certificate of Authority issued by the Federal Motor Carrier Safety Administration; or

(b) Storing a sealed shipment of cigarettes in a public warehouse or other public storage facility that is owned by a person who is not the owner of the cigarettes and who has no intent to sell the cigarettes either within or without this state.

(3) For purposes of this rule, transferring or breaking up a shipment of cigarettes to more than one vehicle or more than one carrier or unsealing a sealed shipment of cigarettes in Oregon is presumed to show intent to sell cigarettes either within or without this state.

Example 1: AB Partnership is not licensed to distribute cigarettes in Oregon. The partnership purchases cigarettes in California and transports them by common carrier from California to Washington State. The load is sealed at the point of departure in California and is transported to Washington where it is unsealed and the contents verified with the bill of lading. AB Partnership is not required to file a report under this provision.

Example 2: Same facts as Example 1, except that the trailer containing the shipment is dropped at the carrier’s terminal in Medford, Oregon where it is picked up by another driver or carrier and transported to Washington state where it is unsealed and the contents verified. No report is required under this provision.

Example 3: Same facts as Example 2, except that the shipment is unsealed at the Medford terminal and reloaded into smaller delivery vans. Part of the original shipment is sent to Washington and part is sent to Idaho. The owner of the cigarettes, AB Partnership, is required to file a report under this provision because the continuous process of transportation through the state was broken when the shipment was unsealed while in Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.343
Renumbered from 150-323.343, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2002, f. 6-26-02, cert. ef. 6-30-02

Or. Admin. R. 150-323-0270 Extension of Time for Reports

The time for making or filing a cigarette tax report under this chapter may be extended for one month providing the taxpayer provides a written request for extension within or prior to the period for which an extension may be granted, and certain conditions are met, including but not limited to:

(1) Information required to complete the report is not available or is not in the proper form;

(2) Unexpected or unavoidable absence of the person responsible for preparing the report; or

(3) For other reasons beyond the taxpayer’s control the report cannot be submitted timely.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.365
Renumbered from 150-323.365(1), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0280 Collection of Unsecured, Unpaid Tax After Deficiency or Jeopardy Determination; Collection Charge; Warrants

The provisions of OAR 150-314-0277 shall be followed to secure payment of deficiency determinations given under ORS 323.380(6) and of taxes determined under ORS 323.385. The amount of the deficiency or tax shall be the “amount assessed” referred to in OAR 150-314-0277.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.390
Renumbered from 150-323.390(1), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 8-1984, f. 12-5-84, cert. ef. 12-31-84

Or. Admin. R. 150-323-0290 Civil Penalties for Violation of Cigarette Tax Provisions

(1) The Department of Revenue may impose civil penalties on any person who violates any provision of cigarette tax law. The violations include, but are not limited to, those described under subsection (3) of this rule.

(2) The following civil penalties will be imposed on a per incident basis for the violations in subsection (3) of this rule:

Incident — Penalty not to exceed

First — Warning notice

Second — $250

Third — $500

Fourth and subsequent — $1,000

(3) The civil penalties outlined in subsection (2) of this rule may be imposed for the following violations of ORS 323.005 to 323.482:

(a) ORS 323.060: Failure by a user or consumer to pay tax;

(b) ORS 323.105: Failure by a distributor to apply for and obtain a distributor’s license;

(c) ORS 323.107: Failure by a wholesaler to apply for and obtain a wholesaler’s license and make, preserve and supply records;

(d) ORS 323.130: Failure to display a license at the business location for which it was issued;

(e) ORS 323.165(1): Failure to obtain written approval from the Department of Revenue before selling, exchanging, or transferring unaffixed stamps to another person;

(f) ORS 323.170: Failure by a distributor to pay for stamps as provided in ORS 323.005 to 323.482 and failure by a distributor to notify the department of the number of packages of cigarettes to which the distributor affixes a stamp;

(g) ORS 323.185(1): Failure of the distributor to make payments of amounts owing for stamps purchased on the deferred-payment basis;

(h) ORS 323.205: Failure of manufacturers selling and shipping cigarettes into this state to other than a licensed distributor to:

(A) Deliver a written statement with each sale or consignment of cigarettes;

(B) Deliver a duplicate of that statement to the Department of Revenue; and

(C) File each cancellation or modification of the written statement and any other information necessary to the reconciliation of accounts with the Department of Revenue;

(i) ORS 323.211: Failure of distributors, dealers, and other persons engaging in the sale of cigarettes through the use of a vending machine(s) to affix the statutorily required card or decal in a conspicuous place on each machine;

(j) ORS 323.215: Failure of distributors, dealers, and other persons selling cigarettes through a vending machine(s) to keep detailed records of each machine showing the location of the machine and the date the machine was placed in that location;

(k) ORS 323.220: Failure of distributors and persons dealing in, transporting or storing cigarettes in this state to:

(A) Keep on premises records, receipts, invoices, and other pertinent papers; and

(B) Refrain from destroying records if so ordered by the Department of Revenue;

(l) ORS 323.225: Failure of transporters seeking to possess or acquire untaxed cigarettes for transportation or transport upon highways, roads, or streets of this state to:

(A) Obtain and keep a permit in the transporting vehicle during the transportation of the cigarettes; and

(B) Have the required invoices or bill of lading in the transporting vehicle;

(m) ORS 323.335: Failure of:

(A) Distributors to pay tax;

(B) Taxpayers other than licensed distributors to pay tax; and

(n) ORS 323.340(1): Failure of licensed distributors to file reports;

(o) ORS 323.343: Failure of any person not a distributor, who had cigarette activity in this state, to file a report;

(p) ORS 323.355: Failure of common carriers and persons authorized to sell cigarettes on the facilities of common carriers to file reports and submit payment of tax due with the reports; and

(q) ORS 323.360: Failure of a consumer or user subject to the tax resulting from a distribution of cigarettes to file reports and submit payment of the tax due with the reports.

(4) The department may consider the following factors when deciding the civil penalty under this rule:

(a) Number of previous inspections held by the Department of Revenue at the place of business;

(b) Number of previous violations of Chapter 323 provisions;

(d) Any other factors or information the department considers relevant to its determination.

(5) A civil penalty authorized by ORS 323.480(1) and this rule may be imposed on any person, as defined in ORS 323.010, who is responsible for complying with ORS 323.005 to 323.482.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.480
Renumbered from 150-323.480(1)-(A), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 3-2002, f. 6-26-02, cert. ef. 6-30-02; REV 1-2004(Temp), f. & cert. ef. 4-1-04 thru 8-1-04, Renumbered from 150-323.480(1); REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0300 Civil Penalties for Violation of Cigarette Tax Stamping Provisions

(1) The Department of Revenue may assess a civil penalty against any person who is required to comply with ORS 323.005 to 323.482 and who:

(a) Fails to prepay cigarette taxes by purchasing stamps from the department and affixing the stamps to unstamped packages of cigarettes prior to distributing those cigarettes, as required by ORS 323.068; or

(b) Fails to affix an appropriate stamp to each package of cigarettes prior to distribution of the cigarettes, as required by ORS 323.160(3).

(2) For purposes of ORS 323.480 and this rule, each pack of cigarettes distributed in violation of ORS 323.005 to 323.482 constitutes a separate violation and is subject to penalty as follows:

(a) Incident—Penalty not to exceed—Minimum Penalty

First—Warning notice

Second—$10 per pack—$1,000

Third—$50 per pack—$1,000

Fourth—$100 per pack—$1,000

Fifth and subsequent—$1,000 per pack—$1,000

(b) Distributors will be assessed a minimum penalty of $1,000 for the second and any subsequent incidents.

(3) The department may consider the following factors when determining the civil penalty under this rule:

(a) Number of previous inspections by the Department of Revenue held at the business;

(b) Number of previous violations of ORS chapter 323 provisions;

(d) Size of business; and

(e) Any other information the department considers relevant to its determination.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.480
Renumbered from 150-323.480(1)-(B), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 1-2004(Temp), f. & cert. ef. 4-1-04 thru 8-1-04

Or. Admin. R. 150-323-0305 Inhalant Delivery Systems

(1) Definitions.

(a) Except as otherwise specifically defined in this rule, the definitions in ORS 323.500 apply to this rule.

(b) “Form 531” means the Oregon Quarterly Tax Return for Tobacco Products (for non-licensed individual or business).

(c) “Seed-to-sale tracking system” means the system developed and maintained by the Oregon Liquor Control Commission under ORS 475B.177.

(2) Reporting existing inventory.

(a) A retail dealer in possession of untaxed inhalant delivery systems on or after January 1, 2021 is responsible for reporting the inhalant delivery systems in their possession using Form 531 by April 30, 2021, and for paying the tobacco products tax on those inhalant delivery systems by the same date. Retail dealers in possession of these items must maintain records sufficient to demonstrate that these inhalant delivery systems have been reported and the tax on such inhalant delivery systems has been paid.

(b) Examples of records sufficient to show the tax has been paid on inhalant delivery systems include sales invoices accompanied by a log of items in the possession of the retail dealer on January 1, 2020. A retail dealer that does not have sales invoices from the acquisition of inhalant delivery systems in their inventory must determine the wholesale sales price using the method prescribed by OAR 150-323-0330.

(3) A retail dealer in possession of untaxed inhalant delivery systems on or after May 1, 2021 may be subject to civil penalties as described in OAR 150-323-0420 and OAR 150-323-0430, assessment of tobacco tax and penalty under ORS 323.538(4), or a declaration that their inventory is contraband and subject to seizure and destruction.

(4) Inhalant delivery systems that are taxed as Marijuana Items under ORS chapter 475B and tracked in the Oregon Liquor Control Commission seed-to-sale tracking system are not subject to Tobacco Products Tax under ORS 323.505 or required to be reported on Form 531.

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.505
REV 47-2020, adopt filed 12/23/2020, effective 01/01/2021

Or. Admin. R. 150-323-0307 Oral Nicotine Products

(1) Definitions.

(a) In addition to the definitions in ORS 323.500, the following definitions apply to this rule.

(b) “Department” means the Oregon Department of Revenue.

(d) “Noncombustible” means the oral nicotine product is designed and marketed to be consumed via the oral cavity by means other than combustion, vaporization, or aerosolization.

(e) “Package” means the smallest separable container of discrete consumable units.

(2) Reporting existing inventory.

(a) A retail dealer in possession of untaxed oral nicotine products on or after January 1, 2026, is responsible for reporting the oral nicotine products in their possession using Form 531 by April 30, 2026, and for paying the tobacco products tax on those oral nicotine products by the same date. Retail dealers in possession of these items must maintain records sufficient to demonstrate that these oral nicotine products have been reported and the tax on such oral nicotine products has been paid.

(b) Examples of records sufficient to show the tax has been paid on oral nicotine products include sales invoices or receipts accompanied by a log of items in the possession of the retail dealer on January 1, 2026.

(3) A retail dealer in possession of untaxed oral nicotine products on or after May 1, 2026, may be subject to one or more of the following.

(a) Civil penalties as described in OAR 150-323-0420 and OAR 150-323-0430;

(b) Assessment of tobacco tax and penalty under ORS 323.538(4); or

(4) A retail dealer or licensed tobacco distributor shall determine the amount of tax due for each package as described in this section.

(a) For each package containing 20 or fewer noncombustible discrete consumable units, the tax due to the department shall be calculated by multiplying the number of packages distributed during the quarter by $0.65 (65 cents).

(b) For each package containing more than 20 noncombustible discrete consumable units, the tax due to the department shall be calculated by multiplying the total number of noncombustible discrete consumable units in each package by $0.0325 (3.25 cents), rounded to the nearest whole cent, and then multiplied by the number of packages distributed during the quarter.

(c) If multiple sealed packages of noncombustible discrete consumable units are marketed or sold together, the tax due is calculated by determining the rate applicable to each individually sealed package of noncombustible discrete consumable units. For example, five separately sealed packages of 15 noncombustible discrete consumable units that are sold together as a five-pack is taxed at the rate applicable to five packages of 15 noncombustible discrete consumable units (5 x $0.65= $3.25).

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.500 & Oregon Laws 2025 Chapter 581
REV 11-2025, adopt filed 12/23/2025, effective 01/01/2026

Or. Admin. R. 150-323-0310 Definition of Moist Snuff

(1) The provisions of this rule apply to distributions of tobacco products that occur after June 30, 2010.

(2) For purposes of ORS 323.500 through 323.645, “moist snuff” means:

(a) Any finely cut, ground, milled or powdered tobacco product that is not intended to be smoked or placed in the nasal cavity. It may or may not be contained within small, tea-bag like pouches. Words such as long cut, mid cut, fine cut and snus only describe minor differences of product that fit within this tobacco category.

(b) Any other products containing tobacco that are not intended to be consumed by combustion. Examples include, but are not limited to:

(A) Dissolvable tobacco, which consists of finely-processed tobacco developed in such a way as to allow the substance to dissolve on the tongue or in the mouth and includes strips, sticks, orbs, and compressed tobacco lozenges.

(B) Other chewing tobacco and other leaf tobacco products to which artificial or natural substances have been added during processing. Such substances may include but are not limited to: sweeteners, sugars, molasses, licorice, mint, eucalyptus, tobacco leaf extract, betel nut, catchu, lime, saffron, thickeners, humectants, emulsifiers, colorants, texturizers, preservatives, taste enhancers, firming agents, adhesives, and punk ash. Examples include, but are not limited to:

(i) Shredded tobacco leaves, such as those sweetened and packaged loosely in aluminum lined pouches;

(ii) Plug tobacco, such as enriched tobacco leaves flavored and sweetened with licorice and formed into bricks or flat blocks; and

(iii) Twist tobacco, such as tobacco that is spun and rolled into rope-like strands and to which tobacco leaf extract has been added.

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.500
Renumbered from 150-323.500(9), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 18-2010, f. 12-17-10, cert. ef. 1-1-11
Reverted to REV 10-2009, f. 12-21-09, cert. ef. 1-1-10
REV 7-2010(Temp), f. 5-27-10, cert. ef. 6-30-10 thru 12-27-10
REV 10-2009, f. 12-21-09, cert. ef. 1-1-10
REV 7-2009(Temp), f. & cert. ef. 10-7-09 thru 3-31-10

Or. Admin. R. 150-323-0315 Little Cigars

(1) Definitions.

(a) Except as otherwise specifically defined in this rule, the definitions in ORS 323.010 apply to this rule.

(b) “Little cigar” means a roll for smoking that is of any size or shape and that is made wholly or in part of tobacco, irrespective of whether the tobacco is pure or flavored, adulterated or mixed with any other ingredient, if the roll has a wrapper made wholly or in greater part of tobacco and if 1,000 of these rolls collectively weigh not more than three pounds.

(c) “Unstamped” means any sealed package of cigarettes, including little cigars, that does not have a valid cigarette stamp affixed.

(2) A dealer in possession of unstamped little cigars on or after January 1, 2021 may be subject to civil penalties as described in OAR 150-323-0290 and their inventory of unstamped little cigars declared contraband and subject to seizure and destruction.

History

Statutory/Other Authority: ORS 305.100 & 323.440
Statutes/Other Implemented: ORS 323.010, 323.015 & 323.030
REV 48-2020, adopt filed 12/23/2020, effective 01/01/2021

Or. Admin. R. 150-323-0320 Quarterly Tax Discount

Each tobacco distributor shall retain one and one-half percent of the tax due and payable each quarter as an allowance to offset the distributor’s cost of recordkeeping and reporting.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.505
Renumbered from 150-323.505, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0330 Determining Wholesale Sales Price

(1) In a transaction between parties who are not related or affiliated and who are presumed to have roughly equal bargaining power, the wholesale sales price is the price paid by the purchaser for the untaxed tobacco products.

(2) If a seller and purchaser are related or affiliated or presumed not to have roughly equal bargaining power, the wholesale sales price is determined based upon comparable wholesale distributors' arm’s-length wholesale transactions of similar tobacco products sold to retailers that meet the requirements of section (1).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.505
Renumbered from 150-323.505(2), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 5-2008, f. 8-29-08, cert. ef. 8-31-08

Or. Admin. R. 150-323-0340 Extension of Time for Filing Returns

The time for making or filing a Tobacco Tax Return as required by this chapter may be extended for one month providing the taxpayer provides a written request for extension within or prior to the period for which an extension may be granted, and certain conditions are met, including but not limited to:

(1) Information required to complete the return is not available or is not in the proper form;

(2) Unexpected or unavoidable absence of the person responsible for preparing the return; or

(3) For other reasons beyond the taxpayer’s control the return cannot be submitted timely.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.510
Renumbered from 150-323.510, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0350 Exemptions Defined

The taxes imposed by the Tobacco Products Tax Act shall not apply to tobacco products which are stored in a bonded warehouse and which are nontax paid under the provisions of chapter 52 of the Internal Revenue Act of 1954, as amended, or which are sold to United States Army, Air Force, Navy, Marine Corps, or Coast Guard exchanges or commissaries and Navy or Coast Guard ship’s stores, and United States Veterans Administration ship’s stores maintained under federal bond.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.515
Renumbered from 150-323.515, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0360 When Tobacco Product Distributor’s License Required

A distributor's license is required for each place of business at which a person engages in the distribution of tobacco products as defined in ORS 323.500. A tobacco product distributor's license is required for any person distributing tobacco products in Oregon, including:

(1) Bringing or causing to be brought, into this state, tobacco products for sale, storage, use or consumption;

(2) Making, manufacturing, or fabricating tobacco products in this state for sale, storage, use or consumption in this state;

(3) Shipping or transporting tobacco products to retail dealers in this state, to be sold, stored, used or consumed by those retail dealers in this state;

(4) Storing untaxed tobacco products in this state that are intended to be for sale, use or consumption in this state; or

(5) Selling untaxed tobacco products in this state.

(6) A person who files an application for a distributor's license under ORS 323.520 must include with the application a written statement certifying that the person will comply with ORS 180.483 and 180.486 pertaining to tobacco of certain nonparticipating manufacturers.

(7) Tobacco distributor license applications are certified under ORS 323.520 by:

(a) Hand signing the application.

(b) An electronic signature (as defined in ORS chapter 84) associated with an application filed in electronic (as defined in ORS chapter 84) form and successfully transmitted to the department, by the applicant.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.520
Renumbered from 150-323.520, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 2-2014, f. & cert. ef. 7-31-14
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0370 Bonding Requirement

(1) The following entities are required to post security in the form of a surety bond in an amount equal to twice the licensee’s average quarterly tobacco tax liability:

(a) A licensee that fails to furnish a tobacco tax return in two consecutive calendar quarters; or

(b) A licensee that fails to pay the tobacco products tax in full in two consecutive calendar quarters

(2) The following entities are required to post security in the form of a surety bond in an amount equal to twice the licensee’s average quarterly tobacco tax liability as determined by the licensee’s projected sales or in the amount of $1,000, whichever is greater:

(a) An unlicensed individual or business that is seeking an initial license;

(b) A new licensee who has not previously filed a tobacco product tax return that fails to furnish a tobacco tax return in two consecutive quarters; or

(c) A new licensee who has not previously filed a tobacco product tax return that fails to pay the tobacco products tax in full in two consecutive calendar quarters.

(3) If any of the following circumstances occur, the department may increase the current required bond amount to an amount equal to twice the licensee’s average quarterly tobacco tax liability:

(a) The distributor reaches its bond or security limit;

(b) The bond or security becomes ineffective; or

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.525
REV 49-2020, amend filed 12/23/2020, effective 01/01/2021
Renumbered from 150-323.525, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0380 Other Tobacco Product (OTP) Distributor License Application Denial

(1) Any person engaging or seeking to engage in the sale of other tobacco products as a distributor, as defined in ORS 323.500(6), must obtain an OTP distributor’s license. A distributor must obtain a license for each place of business at which the distributor engages in the sale of other tobacco products.

(2) The Department of Revenue may deny a license application if there is false or incomplete information on the application or if the department determines that the applicant will not comply with the provisions of ORS 323.500 to 323.640. When deciding whether to issue or deny a distributor's license, the department may consider, but is not limited to, the following factors:

(a) Whether the applicant has previously failed to pay a tobacco related tax or any other tax administered by the Oregon Department of Revenue;

(b) Whether the applicant has engaged in conduct punishable as a crime under ORS Chapter 323 or any other state's or federal tobacco laws;

(4) If the department denies a license application, the distributor has 30 calendar days from the date of denial to file an appeal in the manner provided in ORS 305.404 to 305.560.

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.530
Renumbered from 150-323.530, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 9-2010, f. 7-23-10, cert. ef. 7-31-10
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0390 Suspension or Revocation of Other Tobacco Product Distributors License; Appeal; Final Notification

(1) The Department of Revenue may suspend or revoke a distributor license if the department determines that the distributor will not comply with the provisions of ORS 323.500 to 323.640. When deciding whether to suspend or revoke a license the department may consider, but is not limited to, the following factors:

(a) Whether the distributor has failed to pay a tobacco related tax;

(b) Whether the distributor has engaged in conduct punishable as a crime under ORS Chapter 323 or any other state’s or federal tobacco law; and

(2) When the department decides to suspend or revoke an existing valid license, the department will send a notice to the distributor of the suspension or revocation, stating the reasons for such action. The distributor has 30 calendar days from the date on the notice to file an appeal under ORS 305.404 to 305.560.

(3) If a distributor requests a hearing within the appeal period in subsection (2), the license suspension or revocation will not become effective until a final determination of the appeal by the Tax Court or the Oregon Supreme Court.

(4) If a distributor does not request a hearing within the appeal period in subsection (2) suspension or revocation becomes effective on the 31st day after the date on the notice of suspension or revocation.

(5) The notices described in sections (2) and (4) will be mailed to the distributor by certified mail, return receipt requested, using the last known address of the distributor. Return of the notice as undeliverable or because the distributor fails or refuses to pick up or accept the notices will not extend the appeal period or delay the action specified in the final notice.

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.535
Renumbered from 150-323.535, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0400 Definitions

As used in ORS 323.540, “pertinent papers” includes invoices of purchase or sale, bills of lading, receipts, reports of tax exempt shipments, and Tobacco Tax returns.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.540
Renumbered from 150-323.540, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0410 Credit for Tobacco Tax Paid; Refund

(1) Credit for tax paid will be allowed when tobacco products are:

(a) Shipped to a point outside this state, pursuant to a contract of sale, and delivered by the seller to such out-of-state point by means of:

(A) The United States mail; or

(B) A common carrier licensed by the Federal Highway Administration; or

(b) Sold to a foreign purchaser for shipment abroad and delivered to a ship, airplane, or other conveyance furnished by the purchaser for the purpose of carrying the tobacco products abroad and actually carried to a foreign destination.

(c) Sold for use solely outside this state and delivered to a forwarding agent, export packer, or other person engaged in the business of preparing goods for export or arranging for their exportation, and actually delivered to a port outside the continental limits of the United States.

(d) Sold for use as ship’s supplies which are to be consumed or resold on the high seas or in foreign countries.

(2) Oregon distributors claiming credit for tax on tobacco products on the ground that shipments or deliveries were made in interstate commerce must certify, under penalties for false swearing, the name and address of the persons receiving such shipments or deliveries outside this state. Also, the Oregon distributors must be in possession of delivery data of the following descriptions:

(a) A waybill, bill of lading or other evidence of shipment issued by a common carrier in the case of shipments by common carrier; or

(b) An insurance receipt or registry receipt issued by the United States Postal Service; or

(c) A copy of the sellers invoice covering the sale, showing delivery by the seller at a designated out-of-state address, and signed by the purchaser or the purchaser’s agent in the case of shipments by facilities operated by the seller. The department reserves the right to require such additional proof as it deems necessary in any particular case.

(3) Reports of such exempt sales must be maintained as provided in ORS 323.510. The tax applies to the transaction if the tobacco products are diverted in transit or for any other reason are not actually delivered outside the state pursuant to the contract of sale or are not shipped abroad to a foreign purchaser, regardless of documentary evidence held by the distributor.

(4) Tobacco products are not considered to be sold in interstate commerce and therefore are not exempt from tobacco tax if the product is received by a purchaser or agent (other than a common carrier) in this state.

(5) Failure to keep any reports, waybills, bills of lading, or other documents required by this rule is justification for the Department of Revenue to impose a tax on any tobacco products claimed to be shipped out of Oregon and exempt under this rule. Any tax imposed on these grounds will be cancelled upon actual proof to the department that the reports, waybills, bills of lading or other documents were in fact issued and the tobacco products were in fact shipped out of Oregon and were exempt under this rule.

(6) Credit claimed as provided in this rule will be in the form of a deduction on the next regularly scheduled quarterly tobacco tax return. Whenever a tobacco distributor ceases operation as a licensed tobacco distributor any credit accrued but not yet claimed may be deducted on the final tax return. Refund of overpayments on a distributor’s tobacco tax account is allowed when an audit determines a net overpayment has been made during the audit period. Refunds are also allowed if a distributor determines a net overpayment has been made and claims the refund by filing an amended tobacco tax return for the period in which the overpayment occurred. No refund is allowed after three years from the date of any overpayment.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 323.560
Renumbered from 150-323.560, REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2000, f. & cert. ef. 8-3-00
RD 3-1986, f. & cert. ef. 7-2-86
RD 1-1986(Temp), f. & cert. ef. 4-25-86
RD 6-1985, f. 12-26-85, cert. ef. 12-31-85

Or. Admin. R. 150-323-0420 Civil Penalties for Violation of Other Tobacco Products Tax

(1) The Department of Revenue may impose civil penalties on any person who violates any provision of Other Tobacco tax law. The violations include, but are not limited to, those described under subsection (3) of this rule.

(2) The following civil penalties will be imposed on a per incident basis for the violations in subsection (3) of this rule:

Incident — Penalty not to exceed

First — Warning notice

Second — $250

Third — $500

Fourth and subsequent — $1,000

(3) The civil penalties outlined in subsection (2) of this rule may be imposed for the following violations of ORS 323.500 to 323.645:

(a) ORS 323.520: Failure by a distributor to apply for and obtain a distributor’s license;

(b) ORS 323.530: Failure to display a license at the business location for which it was issued;

(A) Name and address of the seller;

(B) Name and address of the purchaser;

(D) Price paid for the tobacco products;

(E) Any discount applied in determining the price paid for the tobacco products;

(F) The applicable license identification number for the distributor;

(G) A certified statement by the distributor that all taxes due under ORS 323.500 to 323.645 have been or will be paid.

(d) ORS 323.540: Failure of distributors or any persons dealing in, transporting or storing tobacco products in this state to:

(A) Keep on premises records, receipts, and invoices of product held, purchased, manufactured, brought in or caused to be brought in from outside this state or shipped or transported to retail dealers in this state, and of all sales of tobacco products made , except to consumers; and

(B) Keep all books and records for the required five years after initial date of sale.

(4) The department may consider the following factors when deciding the civil penalty under this rule:

(a) Number of previous inspections held by the Department of Revenue at the place of business;

(b) Number of previous violations of Chapter 323 provisions;

(d) Any other factors or information the department considers relevant to its determination.

(5) A civil penalty authorized by ORS 323.630 and this rule may be imposed on any distributor, as defined in ORS 323.500(7), who is responsible for complying with ORS 323.500 to 323.645.

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.630
Renumbered from 150-323.630-(A), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04
REV 2-2004(Temp), f. 4-30-04, cert. ef. 5-1-04 thru 9-30-04

Or. Admin. R. 150-323-0430 Civil Penalties for Failure to Pay Other Tobacco Products Tax

(1) The Department of Revenue may assess a civil penalty against any person who is required to comply with ORS 323.500 to 323.645 and who fails to pay the other tobacco products tax.

(2) For purposes of ORS 323.630 and this rule, each tobacco product distributed in violation of ORS 323.500 to 323.645 constitutes a separate violation and is subject to penalty as follows:

(a) Incident — Penalty not to exceed — Minimum Penalty

First — Warning notice

Second — $10 per item — $1,000

Third — $50 per item — $1,000

Fourth — $100 per item — $1,000

Fifth and subsequent — $1,000 per item — $1,000

(b) Distributors will be assessed a minimum penalty of $1,000 for the second and any subsequent incidents.

(3) The department may consider the following factors when determining the civil penalty under this rule:

(a) Number of previous violations of ORS Chapter 323 provisions;

(b) Frequency of violations and time since the last violation; and

History

Statutory/Other Authority: ORS 305.100 & 323.575
Statutes/Other Implemented: ORS 323.630
Renumbered from 150-323.630-(B), REV 73-2016, f. 8-15-16, cert. ef. 9-1-16
REV 6-2004, f. 7-30-04, cert. ef. 7-31-04

Or. Admin. R. 150-323-0500 Tobacco Products and Inhalant Delivery System Retail Licensure: Application, Renewal, Fee

(1) Definitions

(a) The definitions in ORS 431A.190 apply to the terms used in this rule, in addition to the following definitions.

(b) “Annual DOR license application fee” means the fee adopted by the department in this rule to be paid by a retailer of tobacco products or inhalant delivery systems at the time that the retailer submits an application under this rule.

(c) “Application” includes the application form and any additional documentation or information requested by the department from a retailer to verify compliance with local law prior to issuance of a tobacco retail license.

(d) “Department” means the Oregon Department of Revenue.

(e) “Initial application” means the first application for a tobacco retail license from a retailer for the premises included in the application.

(f) “Local fee” means a fee adopted by a city or governing body of a local public health authority adopted by an ordinance to be paid by a retailer.

(g) “Local law” includes any ordinance or code enacted by the governing body of a local public health authority regulating the qualifications for engaging in the retail sale of tobacco products or of inhalant delivery systems.

(h) “Local tobacco retail license” means a valid license issued by a city or governing body of a local public health authority to a retailer.

(i) “Oregon Health Authority fee” means the fee adopted by the Oregon Health Authority to be paid by a retailer at the same time the annual DOR license application fee is paid.

(j) “Renewal application” means an application for a license from a retailer for the premises included in the application other than an initial application.

(k) “Retailer” means a person or entity, as that term is defined in ORS 60.001, that sells for consideration, offers for retail sale, holds for sale, or exchanges or offers to exchange tobacco products or inhalant delivery systems or that distributes free or low-cost samples of tobacco products or inhalant delivery systems from a premises.

(l) “Tobacco retail license” or “annual tobacco retail license” means a license issued by the department to a retailer for the sale of tobacco products or inhalant delivery systems.

(m) “Tobacco retail license fee” means the fee adopted by the department in this rule, any applicable Oregon Health Authority fee, and any local fee adopted by a city or governing body of a local public health authority where a retailer is located.

(2) Tobacco Retail License Initial Application

(a) An application for a tobacco retail license shall be submitted to the department on behalf of each retailer that is not subject to a local tobacco retail license issued by a city or governing body of a local public health authority. A retailer may not engage in the retail sale of tobacco products prior to receiving a tobacco retail license from the department.

(b) The department will not consider an application for a tobacco retail license complete until the department receives the payment of the tobacco retail license fee in full for each premises included on the application and any documentation required to be submitted to the department by the retailer to demonstrate compliance with local law regulating the qualifications for engaging in the retail sale of tobacco products or inhalant delivery systems.

(A) If a retailer submits an application for a tobacco retail license without payment of the tobacco retail license fee in full for each premises on the application the department will notify the retailer that the application is incomplete.

(B) If the retailer does not remit full payment of the tobacco retail license fee for each premises on the application within 14 calendar days from the date of the notice, the department will consider the application incomplete and refund any amount paid.

(C) A retailer required to possess a tobacco retail license may not engage in the retail sale of tobacco products or inhalant delivery systems until the department approves the completed application of the retailer and issues a tobacco retail license to the retailer.

(c) Completed applications for a tobacco retail license will be effective for a one-year period from the date the completed application is received, reviewed, and approved by the department through the end of the calendar month of the issuance date.

(3) Annual DOR License Application Fee. The department shall review the annual DOR license fee amount annually. The fee shall be calculated based on the effective date of the license and charged at the rate listed below.

(a) Application Effective Date:

(b) January 1, 2022, through December 31, 2025: $230;

(4) Tobacco Retail License Renewal Application. A retailer may apply for a renewal of their annual tobacco retail license beginning the first day of the calendar month of expiration. A retailer must submit the full tobacco license fee in effect at the time of renewal.

(5) Annual DOR License Application Fee Nonrefundable. If the Department issues a tobacco retail license to a retailer, then that annual DOR license application fee is nonrefundable. If the Department denies an initial or renewal application for a tobacco retail license, and that denial becomes final, then the Department will refund that annual DOR license application fee.

History

Statutory/Other Authority: ORS 305.100 & 431A.198
Statutes/Other Implemented: ORS 431A.198
REV 10-2025, amend filed 12/23/2025, effective 01/01/2026
REV 14-2021, adopt filed 11/23/2021, effective 12/01/2021

Or. Admin. R. 150-323-0510 Tobacco Products and Inhalant Delivery System Retail Licensure: Premises Requiring License

(1) Definitions

(a) The definitions in Oregon Laws 2021, chapter 586, section 1, and OAR 150-323-0500 apply to the terms used in this rule, in addition to the following definitions.

(b) “Unique Address” means the physical location of the premises where tobacco products or inhalant delivery systems are sold and may be designated by a street number and name, unit, rural route number, or other designation as recognized by the United States Postal Office.

(c) “Business” means a person engaging in the retail sale of tobacco products or inhalant delivery systems, or partnership, joint stock company, unincorporated association or society, or municipal or other corporation of any character whatsoever.

(d) “Premises” means the real property, as designated by a unique address, on which a business that makes retail sales of tobacco products or inhalant delivery systems is located.

(2) Tobacco Retail License Required

(a) A retailer must apply for a separate tobacco retail license for each premises where tobacco products or inhalant delivery systems are sold by that retailer.

(b) If more than one business that engages in the retail sale of tobacco products or inhalant delivery systems is located at a shared premises each business must apply for a separate tobacco retail license.

(3) Tobacco Retail License Location Fixed and Permanent.A retailer may not sell tobacco products or inhalant delivery systems from a premises other than the premises listed on the application for the tobacco retail license. A retailer may not transfer a retail tobacco license from one premises to another premises or to another retailer.

(4) Tobacco Retail License Display.A retailer must display the tobacco retail license conspicuously in a location and in such a fashion that the tobacco retail license can be seen from an area accessible by the public.

(5) Suspension or Other Notice

(a) A retailer that receives a warning notice, a notice of sales restriction, a notice of license suspension, or any other notice from the department shall post such notice conspicuously in a location and in such a fashion that the notice can be seen from an area accessible by the public.

(b) A retailer must stop selling tobacco products during the period that the retailer’s tobacco retail license is suspended or otherwise restricted by the department. A retailer must remove all tobacco products and inhalant delivery systems from view of the public during such time as the retailer’s tobacco retail license is suspended or otherwise restricted by the department, if the license suspension or other restriction exceeds a period of 14 days.

History

Statutory/Other Authority: ORS 305.100 & Chapter 586, 2021 Oregon Laws Section 5
Statutes/Other Implemented: Chapter 586, 2021 Oregon Laws Section 5; Section 6
REV 14-2021, adopt filed 11/23/2021, effective 12/01/2021

Or. Admin. R. 150-323-0520 Tobacco Products and Inhalant Delivery System Retail Licensure: Civil Penalties, Penalties on the License, Penalties for Unlicensed Retail Activity

(1) Definitions

(a) The definitions in Oregon Laws 2021, chapter 586, section 1 apply to the terms used in this rule, in addition to the following definitions.

(b) The definitions in OAR 150-323-0500 for “Initial application”, “Renewal application”, “Retailer”, and “Tobacco retail license” apply to the terms used in this rule.

(c) “Like-kind violation” means multiple occurrences of the same violation of a provision of ORS 323 found by the department in a single inspection at a premises.

(d) “Notice of Sales Restriction” means a notice from the department to a retailer that prohibits the sale of tobacco products or inhalant delivery systems for a period of time determined by the department.

(e) “Premises” has the same meaning given that term in OAR 150-323-0510.

(2) Civil Penalties for Licensed Retailers

(a) The Department of Revenue may impose civil penalties on any licensed retailer who:

(A) violates a provision of Oregon Laws 2021, chapter 586, sections 1 to 14, a rule adopted under Oregon Laws 2021, chapter 586, sections 1 to 14, any other state law or rule or federal law or regulation that governs the retail sale of tobacco products or inhalant delivery systems, or state taxation;

(B) makes a false statement to the department; or

(C) does not post proof of the tobacco retail license as required by Oregon Laws 2021, chapter 586, section 6, and any rule adopted by the department to implement Oregon Laws 2021, chapter 586, section 6.

(b) The following civil penalties will be imposed on a per incident basis for the violations in subsection (a) of this section:

(A) The department will issue a warning notice for a retailer’s first violation within a five-year-period.

(B) The department will issue a civil penalty not to exceed $250 for a retailer’s second violation within a five-year-period.

(C) The department will issue a civil penalty not to exceed $500 for a retailer’s third violation within a five-year-period.

(D) The department will issue a civil penalty not to exceed $1,000 for a retailer’s fourth and any subsequent violations within a five-year-period.

(c) The department may consider the following factors when deciding the amount of the civil penalty to be issued under this rule:

(A) Number of previous violations of Oregon Laws 2021, chapter 586;

(B) Whether the retailer operates multiple licensed premises; and

(d) A civil penalty may not be imposed under this provision if a civil penalty for the same violation has been imposed against a retailer under OAR 150-323-0290; 150-323-0300; 150-323-0420; or 150-323-0430.

(e) If the department assesses a penalty under this section, the penalty assessment may be appealed as a contested case under ORS chapter 183 within 30 days of the date on the notice of penalty assessment.

(3) Civil Penalties for the Unlicensed Retail Sale of Tobacco Products or Inhalant Delivery Systems

(a) The department may impose a civil penalty on any retailer who holds tobacco products or inhalant delivery systems for sale at or from a premises that is required by Oregon Laws 2021, chapter 586, section 5 to be licensed by the department and for which a tobacco retail license has not been issued by the department.

(b) Penalty for operating without a license for a period of less than sixty-one days:

(A) If a retailer is found to have offered tobacco products or inhalant delivery systems for retail sale without a tobacco retail license for a period of zero to sixty days, the department may impose a $250 civil penalty against that retailer and issue a notice of sales restriction for the premises.

(B) In addition to the $250 civil penalty, the retailer must apply for a tobacco retail license within 30 days of the date of the notice of sales restriction. If the retailer does not apply for a tobacco retail licensed within 30 days, the penalty amount shall be increased from $250 to $1,000.

(C) The retailer must cease any sales of tobacco products or inhalant delivery systems from such premises and remove such products from view of the public until the department issues the premises a tobacco retail license.

(D) If after 30 days the retailer has not applied for a tobacco retail license and the retailer continues to hold tobacco products or inhalant delivery systems at the premises for sale, the department may declare the tobacco products or inhalant delivery systems are contraband products. The department may seize and destroy contraband products.

(E) A retailer who has received a notice of sales restriction may provide the department a written declaration, under penalty of perjury, that the retailer will no longer hold tobacco products or inhalant delivery systems for sale in lieu of applying for a state tobacco license. If a retailer who has submitted such a written declaration subsequently holds tobacco products or inhalant delivery systems for sale, the department may issue an additional $1,000 civil penalty and declare the tobacco products or inhalant delivery systems to be contraband products. The department may seize and destroy contraband products.

(A) If the retailer is found to have offered tobacco products or inhalant delivery systems for retail sale without a tobacco retail license for a period of greater than sixty days, in lieu of the penalty in subsection (b), the department may impose a $1,000 civil penalty against that retailer and issue a notice of sales restriction for the premises.

(B) In addition to the $1,000 civil penalty the retailer must apply for a tobacco retail license within 30 days of the date of the notice of sales restriction.

(D) If after 30 days the retailer has not applied for a tobacco retail license and the retailer continues to hold tobacco products or inhalant delivery systems for sale at the premises, the department may declare the tobacco products or inhalant delivery systems to be contraband products. The department may seize and destroy contraband products.

(E) A retailer who has received a notice of sales restriction may provide the department a written declaration, under penalty of perjury, that the retailer will no longer hold tobacco products or inhalant delivery systems for sale in lieu of applying for a state tobacco license. If a retailer who has submitted a written declaration is found to hold tobacco products or inhalant delivery systems for sale after submitting a written declaration the department may issue an additional $1,000 civil penalty and declare the tobacco products or inhalant delivery systems to be contraband products. The department may seize and destroy contraband products.

(d) If the department assesses a penalty under this section, the penalty assessment may be appealed as a contested case under ORS chapter 183 within 30 days of the date on the notice of penalty assessment.

(e) If the department seizes contraband tobacco products or inhalant delivery system under this section, the retailer has 30 days from the date of seizure to contest the seizure in the manner provided in ORS 305.404 to 305.560.

(4) Tobacco Retail License Suspension, Revocation

(a) In addition to assessing a civil penalty, the department shall suspend a retailer’s tobacco retail license if the department also finds that the retailer that holds or seeks the tobacco retail license, an individual who participates in the management of the premises for which the tobacco retail license has been or would be issued or an individual who is employed for the purpose of making retail sales at the premises, has committed three or more of the following violations within a five-year period from the date the department issued a finding of the first violation:

(A) violations of Oregon Laws 2021, chapter 586, sections 1 to 14, a rule adopted under Oregon Laws 2021, chapter 586, sections 1 to 14, any other state law or rule or federal law or regulation that governs the retail sale of tobacco products or inhalant delivery systems, or state taxation;

(B) violations of a local law or rule enacted for purposes related to public health and safety by the governing body of a local public health authority that governs the retail sale of tobacco products or inhalant delivery systems; or

(b) The department shall impose a suspension under subsection (a) of this section as follows:

(A) The department will issue a warning notice for a retailer’s first and second violation within a five-year period.

(B) The department will issue a 14-day notice of suspension for a retailer’s third violation within a five-year period.

(C) the department will issue a 30-day notice of suspension for a retailer’s fourth and any subsequent violations within a five-year period.

(c) Violations found by the department apply to the premises found to have committed the violation and do not apply to any other premises to which the retailer holds a tobacco retail license.

(d) If the Oregon Health Authority has issued a civil penalty to a licensee under ORS 431A.175(2), the department may find that violation has also occurred for the purposes of a determination under subsection (a) of this section, unless the licensed retailer provides evidence that the authority has cancelled its penalty assessment.

(e) Notwithstanding subsection (a) of this section, the department may suspend or revoke the tobacco retail license of a retailer for any single violation described in subsection (a) if the department determines there are aggravating circumstances. Aggravating circumstances include, but are not limited to:

(A) Efforts to conceal a violation;

(B) Intentionally committing a violation;

(D) A violation involving a juvenile; or

(E) A violation resulting in injury or death.

(f) The department may consider the following factors when deciding whether to suspend or revoke a license for a violation described in subsection (e) of this rule:

(A) Number of previous inspections held by the department at the place of business;

(B) Number of previous violations of ORS Chapter 323 provisions or of Oregon Laws 2021, chapter 586 section 1 to 14;

(D) Any other factors or information the department considers relevant to its determination.

(g) For the purpose of determining the number of violations committed by a retailer in subsection (a) of this rule, the department will consider multiple like-kind violations of ORS Chapter 323 provisions that are discovered during one inspection as one violation.

(h) The decision of the department to suspend or revoke a tobacco retail license may be appealed as a contested case under ORS chapter 183 within 30 days of the date listed on the notice of proposed suspension.

(5) Refusal to Issue or Renew a State Tobacco Retail License

(a) The department must deny an initial or renewal application for a tobacco retail license if:

(A) The location proposed to be licensed is prohibited by Oregon Laws 2021, chapter 586, section 5(2) from being licensed.

(B) The location proposed to be licensed is located on reservation or tribal trust land of a federally recognized Indian tribe.

(C) The location proposed to be licensed is located in an area subject to the jurisdiction of a city or local public health authority that continues to enforce a requirement that a retailer who makes retail sales of tobacco products or inhalant delivery systems hold a license or other authorization issued by the city or local public health authority, as allowed by Oregon Laws 2021, chapter 586, section 18.

(b) The department may deny an initial or renewal application for a tobacco retail license if the retailer has previously been found by the department, the Oregon Health Authority, or a local public health authority to have committed a violation described in Oregon Laws 2021, chapter 586, section 7(1) at the premises seeking a renewal of a state tobacco retail license or another premises licensed by the department or had a license suspended or revoked under subsection (4)(e) of this rule for a premises listed on the application.

(c) The department may consider the following factors when deciding whether to refuse to issue or renew as described in subsection (b) of this section:

(A) Number of previous inspections held by the department at the place of business;

(B) Number of previous violations of ORS Chapter 323 provisions or of Oregon Laws 2021, chapter 586 section 1 to 14;

(D) Any other factors or information the department considers relevant to its determination.

(d) If the department denies an initial or renewal application for a tobacco retail license, the applicant has 30 calendar days from the date of denial to file an appeal as a contested case under ORS chapter 183.

History

Statutory/Other Authority: ORS 305.100 & Oregon Laws 2021, chapter 586, section 7
Statutes/Other Implemented: Oregon Laws 2021, chapter 586, section 7, section 8, section 9
REV 14-2021, adopt filed 11/23/2021, effective 12/01/2021

Division 324 OIL AND GAS TAX

Or. Admin. R. 150-324-0010 Applicability Limited to Natural Gas Production

OAR 150-324-0010 to 150-324-0035 are applicable to natural gas production within the State of Oregon.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 324.050
Renumbered from 150-324.050-(A), REV 51-2016, f. 8-13-16, cert. ef. 9-1-16
12-31-81

Or. Admin. R. 150-324-0015 Production Unit for Calculation and Reporting

(1) The “net gas produced and saved” from an individual well is the total gas produced and saved from that well less that gas used for purposes enumerated in ORS 324.110(3).

(2) Production of natural gas shall be measured and reported in therms. One therm equals 100,000 British Thermal Units (BTUs).

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 324.050
Renumbered from 150-324.050-(B), REV 51-2016, f. 8-13-16, cert. ef. 9-1-16
12-31-81

Or. Admin. R. 150-324-0020 Gross Sales Value Subject to Production Tax

(1) “Sales price” is the per therm price due the producer at the well head determined as follows: Sales Price (or well head price) = Commodity Price less Delivery Charge.

(2) Definitions:

(a) “Commodity Price” is the Oregon Public Utility Commissioner approved price which the using gas distribution company may pay for natural gas delivered to its lines.

(b) “Delivery Charge” is the cost of moving and processing the natural gas from the originating well head to the lines of the using gas distribution company.

(3) Excluded from the delivery charge is any allowance for anticipated gas production tax.

(4) “Monthly unadjusted gross sales value” is the product of the therms of net gas produced and saved from a well during a month, less the therm equivalent of exempt royalty or other interest owned by municipal or political subdivisions, times the sales price.

(5) “Quarterly unadjusted gross sales value” is the sum of monthly unadjusted gross sales values for the months in the calendar quarter for which the tax is being determined.

(6) The gross sales value subject to production tax is the quarterly unadjusted gross sales value less $3,000 as provided in ORS 324.080.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 324.050
REV 1-2019, minor correction filed 07/01/2019, effective 07/01/2019
Renumbered from 150-324.050-(C), REV 51-2016, f. 8-13-16, cert. ef. 9-1-16
12-31-81; RD 6-1986, f. & cert. ef. 12-31-86

Or. Admin. R. 150-324-0025 Purchaser’s Filing Responsibility

(1) “Purchaser” means the first purchaser of the gas regardless of the physical point at which ownership changes.

(2) A purchaser of gas shall remit the tax due for the calendar quarter of purchase to the department on or before May 15, August 14, November 14, and February 14 following the end of the first through fourth quarters of the calendar year respectively.

(3) A producer or other agent may pay the production tax on behalf of any or all purchasers of the taxable natural gas.

(a) Such producer payments must identify the purchaser and the purchaser’s account number on whose behalf payment is being remitted.

(b) Responsibility for timely payment remains with the purchaser as provided in ORS 324.110.

(4) A purchaser shall file the quarterly production tax return, using forms prescribed by the department, showing calculations of tax liability regardless of whether they pay or another party is paying on their behalf.

(5) A purchaser’s data report shall be made for each well that produced any gas purchased by the reporting purchaser during the quarter covered by the report.

(6) It is the producer’s responsibility to provide to the purchaser, on a timely basis, the required data so that the purchaser’s data report may be filed with the production tax return.

History

Statutory/Other Authority: ORS 305.100 & 324.320
Statutes/Other Implemented: ORS 324.050, 324.110 & 324.120
REV 32-2018, amend filed 12/31/2018, effective 01/01/2019
Renumbered from 150-324.050-(D), REV 51-2016, f. 8-13-16, cert. ef. 9-1-16
12-31-81

Or. Admin. R. 150-324-0030 Producers Filing Responsibility

(1) A producer of gas shall remit to the department on or before May 15, August 14, November 14 and February 14 following the end of the first through the fourth quarter of the calendar year respectively the tax due on any net gas produced and saved during the calendar quarter but not sold.

(2) A producer of gas shall file a natural gas production tax return with the remittance of tax due for gas produced and saved but not sold.

(3) A producer of gas shall file a producer’s data report with the department on or before May 15, August 14, November 14, and February 14 following the end of the first through fourth quarters of the calendar year respectively.

(4) A producer’s data report shall be made for each well in production at any time during the calendar quarter covered by the report. An explanatory statement shall be included for each well reported in production during the preceding calendar quarter and not in production during the quarter covered by the report.

(5) It is the responsibility of the producer to provide to the purchaser on a timely basis that information needed by the purchaser to prepare the report required in ORS 324.120.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 324.050
Renumbered from 150-324.050-(E), REV 51-2016, f. 8-13-16, cert. ef. 9-1-16
12-31-81

Or. Admin. R. 150-324-0035 Credit for or Refund of Ad Valorem Taxes Paid

(1) Certain ad valorem taxes paid must be allowed as a credit against the production tax imposed. ORS 324.090 identifies those properties whose ad valorem tax may qualify for credit. The termination point for qualifying machinery, appliances, and equipment is the discharge valve at a producing well.

(2) Ad valorem taxes paid must be prorated and claimed as credits equally over the calendar quarters of the ad valorem tax year for which returns are filed.

(3) Parties that may claim a credit for qualifying ad valorem taxes paid on the quarterly production tax return are:

(a) The purchaser,

(b) The producer in the event that gas is not sold at the time of production, or

(4) The credit claimed for a calendar quarter is limited to the lesser of either:

(a) The production tax due for the quarter; or

(b) The ad valorem tax paid for the quarter of production on the qualified property used in production, plus any credit carry forward in the same tax year.

(5) Claims for credit must be supported by sufficient data to identify the property upon which the ad valorem tax was levied and the amount of tax on each property.

(a) Interest or other costs resulting from ad valorem tax delinquencies are not allowable credits.

(b) The department will make whatever review is necessary to validate ad valorem tax credits claimed.

(6) It is the responsibility of the producer to ensure that the entity preparing the quarterly natural gas production tax return is informed on a timely basis of the ad valorem tax credit to be claimed and that data in support of the credit claimed is available for filing with the return.

(7) Any adjustment to the amount of credit claimed will be made by refund of tax paid or collection of additional tax.

(8) Credit for ad valorem tax will not be allowed for any calendar quarter for which production tax has not been paid.

(9) Carry forward of credit or refund deficiencies, if any, resulting from insufficient production will not be allowed beyond the ad valorem tax year.

History

Statutory/Other Authority: ORS 305.100 & 324.320
Statutes/Other Implemented: ORS 324.050, 324.090 & 324.110
REV 67-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-324.050-(F), REV 51-2016, f. 8-13-16, cert. ef. 9-1-16
12-31-81

Division 403 TELEPHONE EXCISE TAX

Or. Admin. R. 150-403-0010 Communication Systems Taxes — Definitions and Administrative Provisions

(1) “Communication systems taxes” include both the 9-1-1-emergency communication tax and the 9-8-8-coordinated crisis services tax. “Communication systems” refers to the 9-1-1 emergency communication system and the 9-8-8 coordinated crisis services system.

(2) The communication systems taxes do not apply to:

(a) Federal, state, and municipal government bodies or public corporations as defined in section (2).

(b) Counties and political subdivisions.

(d) Federally recognized Native-American Tribes and tribal members who live within federally recognized Indian country and are enrolled members of the tribe with sovereignty over that Indian country.

(e) Foreign government offices and representatives that are exempt from state taxation by treaty provisions.

(f) Regional housing authorities exempt from all state taxes and assessments by ORS 307.092.

(g) The connection between utilities that is used to provide service. This includes the connection between radio common carriers and the interexchange carrier as well as between two or more utilities.

(h) Solely with respect to the 9-8-8 coordinated crisis services tax under ORS 403.200(1)(b), services provided under the plan of assistance established under section 6, chapter 290, Oregon Laws 1987 (Oregon Lifeline).

(3) For purposes of this rule, "public corporation" means a corporation formed by a state or local government authority for the public's benefit or for a public purpose.

(4) Any other agency, organization, or person claiming an exemption is required to identify the authority for its claim to a provider. If a provider is unable to determine the status of a subscriber, the department will determine whether the subscriber is exempt.

(5) "Provider" means any corporation, individual, group of individuals, or other person or entity providing telecommunication access to the 9-1-1 emergency communication system.

(a) A radio common carrier that leases telephone exchange access lines from a wire telephone company is a provider if the carrier sells that access to its customers. Access for this purpose includes (but is not limited to) traditional telephone services (“POTS”), cellular telephone service, personal communications system service (PCS), personal communications network service (PCN), cable/broadband service, private branch exchanges (PBX), and mobile radio common carriers. A carrier that has access to the 9-1-1 emergency communication system and does not resell the access is not considered to be a provider; instead it is considered to be a subscriber and must pay the taxes.

(b) A cellular telephone service company is a provider that provides access to the 9-1-1 emergency communication system through various switching mechanisms between cellular radio sites and exchange access services.

(6) “Seller” has the meaning given under ORS 403.105.

(7) Prepaid wireless telecommunications service. The following telecommunications services are not sold in predetermined units or dollar amounts and therefore must not be considered prepaid wireless telecommunications services:

(a) Telecommunications services that are sold pursuant to term contracts or subscriptions,

(b) Telecommunications services, the charges for which are billed or otherwise collected on a monthly basis from a subscriber, consumer, or any other person.

(8) The return required by ORS 403.200(1)(a) and (b) must be signed by the taxpayer or an authorized agent and made under penalties for false swearing. Returns received after the due date are subject to delinquency charges as provided in ORS Chapters 305, 314, and 316 the same as if the tax were a tax imposed upon or measured by net income. Returns received by mail are accepted without imposition of such charges if postmarked before midnight of the due date.

(9) If a provider elects to pay the taxes based on the amount actually collected as payment for communication systems access services during the quarter and the provider receives only a partial payment from a subscriber, the provider must apply the payment proportionately to the communication systems taxes and to all other charges appearing on the subscriber’s bill.

(10) When a provider proceeds to write off, charge off, or cancel an uncollectible account, the provider must submit with its quarterly return to the department the name, address, telephone or service number of the subscriber, and the amount of communication systems taxes owing on the account.

History

Statutory/Other Authority: ORS 305.100 & 403.228
Statutes/Other Implemented: ORS 403.200 & 403.205
REV 4-2024, amend filed 01/24/2024, effective 02/01/2024
REV 70-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-403.205, REV 38-2016, f. 8-12-16, cert. ef. 9-1-16
2-11-82(Temp); 5-5-82; 12-31-84, Renumbered from 150-401.000 Note (Or. Laws 1981, Ch. 533) to 150-401.000 Note (Or. Laws 1981, Ch. 533)-(A); 12-31-85; RD 7-1994, f. 12-15-94, cert. ef. 12-30-94; RD 5-1995, f. 12-29-95, cert. ef. 12-31-95, Renumbered from 150-401.000 Note (Or. Laws 1981, Ch. 533); Renumbered to 150-401.794, REV 11-2006, f. 12-27-06, cert. ef. 1-1-07; Renumbered from 150-401.794 by REV 8-2015, f. 12-23-15, cert. ef. 1-1-16

Or. Admin. R. 150-403-0011 Liability for Unpaid Communication Systems Taxes

(1) For the purpose of this rule, “communication systems,” “communication systems taxes,” “provider,” and “seller” have the same meaning as used in OAR 150-403-0010.

(2) Provider and seller include, but are not limited to, an officer, member or employee of a corporation, partnership or other business entity that provides or sells telecommunications services or products, if, among other duties, that individual has:

(a) Authority to see that the communication systems taxes are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees’ working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign communication systems tax returns;

(g) Authority to make fiscal decisions for the business; or

(h) Authority to incur debt on behalf of the business.

(3) It is the duty of a communication systems provider or seller to hold in trust any amount of communication systems taxes collected from providing telecommunications or voice over internet protocol (VoIP) service with access to the communication systems or selling prepaid wireless services or products to consumers. The provider or seller assumes custodial liability for collected tax amounts to be paid to the department. Any communication systems provider or seller who fails to pay the communication systems taxes when due is subject to penalties as provided by law.

(4) If an communication systems provider or seller fails to file returns or to pay any collected taxes when due, any or all officers, members, and employees may be held personally responsible, as provided in this rule, for the returns and payments together with any interest and penalties, that are due.

(5) To be held personally liable for unpaid communication systems taxes, a person must be a communications provider or seller. In addition, the person must be in a position to pay or direct the payment of the communication systems taxes at the time the duty arises to collect or pay over the communication systems taxes. The person may be held personally liable if the individual was, or should have been, aware that the communication systems taxes were not paid to the department. A communication systems provider or seller cannot avoid personal liability by delegating their responsibilities to another.

(6) The following factors do not preclude a finding that an individual is liable for the payment of communication systems taxes:

(a) Lack of willfulness in failing to pay over the required communication systems taxes;

(b) The individual’s receipt of remuneration;

(d) Another individual is also liable for the communication systems taxes;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and set working conditions and schedules; or

(i) Delegation to another person any functions indicating liability.

History

Statutory/Other Authority: ORS 305.100 & 403.228
Statutes/Other Implemented: ORS 403.225
REV 4-2024, amend filed 01/24/2024, effective 02/01/2024
REV 7-2022, adopt filed 06/03/2022, effective 06/03/2022

Division 418 TAX COMPLIANCE FOR CHILD-CARING AGENCIES

Or. Admin. R. 150-418-0010 Tax Compliance Certificates (Child-Caring Agencies)

A child-caring agency, as defined under ORS 418.205, must apply for a certificate of tax compliance as required by ORS 418.255 pursuant to OAR 150-305-0304.

History

Statutory/Other Authority: ORS 305.100 & 418.255
Statutes/Other Implemented: ORS 418.255
REV 20-2023, amend filed 12/11/2023, effective 12/11/2023
REV 11-2023, temporary amend filed 06/09/2023, effective 06/15/2023 through 12/11/2023
REV 83-2016, f. 12-28-16, cert. ef. 1-1-17

Division 457 URBAN RENEWAL

Or. Admin. R. 150-457-0400 Certification of Urban Renewal Frozen Value and Apportioning Value to Tax Code Areas

(1) “Frozen value” as used in this rule has the same meaning as in OAR 150-457-0420.

(2) All certified statements and amendments filed under ORS 457.430 before September 29, 1991, continue to remain in effect, unless subsequently amended pursuant to this rule. The total true cash value contained in those certified statements constitutes the total assessed value for purposes of this section.

(3) The certified statement of the total assessed value of all taxable real and personal property contained in the urban renewal area (the frozen value), that is filed by the assessor pursuant to ORS 457.430 must include totals by code area and by taxing district.

(4) If an urban renewal agency wants to limit future collections for a plan by permanently increasing the plan’s frozen value pursuant to ORS 457.455(2), the agency must do so by completing the portion of Department of Revenue Form UR-50 Notice to Assessor that is provided for that purpose, stating the plan name and the new frozen value amount.

(5) If an agency with an Option Three plan notifies the assessor to permanently increase the plan’s frozen value under section (4) of this rule, the formal action taken by the agency to authorize the notice must not be in the form of an ordinance or an amendment to the certified statement filed under ORS 457.430.

(6) If an agency notifies the assessor to permanently increase a plan’s frozen value, the assessor must amend the certified statement filed under ORS 457.430, using the frozen value stated by the agency on Form UR-50.

(7) The assessor must apportion to the tax code areas in the plan area, the total frozen value stated by the agency in its notice, in the same proportions as the most recent previously certified frozen value was distributed among the code areas.

(8) The notice described in section (4) of this rule must be submitted to the assessor by July 15 to apply to the next tax roll.

(9) If the location of property that is centrally assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665 or 308.805 to 308.820 cannot be determined, the assessor must apportion the assessed value of that property among the code areas in the same proportions as the assessed value of all real property is distributed among the code areas on the last roll certified.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & 457.470
Statutes/Other Implemented: ORS 457.430
Renumbered from 150-457.430, REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2010, f. 7-23-10, cert. ef. 7-31-10
RD 3-1991, f. 12-30-91, cert. ef. 12-31-91
RD 9-1990, f. 12-20-90, cert. ef. 12-31-90

Or. Admin. R. 150-457-0410 Notice to Assessor of Amounts to be Raised for Urban Renewal

(1) “Frozen value,” “increment value,” “increment value used” and “maximum authority” as used in this rule have the same meanings as in OAR 150-457-0420.

(2) The notice to the assessor required by ORS 457.440(2) must be made using Department of Revenue Form UR-50 Notice to Assessor.

(3) An urban renewal agency with an Option One plan may request on Form UR-50:

(a) One hundred percent of the amount available to the plan from division of tax under ORS 457.440 plus, if the amount estimated to be received from 457.440 is not sufficient to meet the budgeted obligations of the plan, a special levy in any amount up to the remainder of the plan’s maximum authority, or

(b) An amount of increment value used that the agency estimates will raise some lesser amount of division of tax, as provided under ORS 457.455(1).

(4) If an agency with an Option One plan requests one hundred percent of the division of tax under subsection (3)(a) of this rule, a request for a special levy must state the dollar amount to be raised or the percentage of the remainder of the plan’s maximum authority that the agency wants.

(5) If an urban renewal agency with an Option One plan requests an amount of increment value used under subsection (3)(b) of this rule, the plan may not request a special levy.

(6) An urban renewal agency with an Option Three plan may request:

(a) The amount of division of tax stated in the ordinance adopted under ORS 457.435 selecting Option Three, plus a special levy; or

(b) An amount of increment value used that the agency estimates will raise some lesser amount of division of tax as provided under ORS 457.455(1), plus a special levy.

(7) If an urban renewal agency with an Option Three plan requests an amount of increment value used, under subsection (6)(b) of this rule and a special levy:

(a) The amount of special levy requested may not exceed the amount calculated by subtracting the amount of division of tax stated in the ordinance adopted under ORS 457.435 selecting Option Three from the plan’s maximum authority as limited by 457.435(3).

(b) The request for a special levy must state the dollar amount to be raised or the percentage of the amount calculated in subsection (7)(a) of this rule that the agency wants.

(8) An urban renewal agency with a plan other than an Option One plan or an Option Three plan may request:

(a) One hundred percent of the amount available to the plan from division of tax under ORS 457.440; or

(b) An amount of increment value used that the agency estimates will raise some lesser amount of division of tax, as provided under ORS 457.455(1) or 457.470.

(9) If an urban renewal agency requests a permanent increase in the amount of frozen value in the certification filed by the assessor under ORS 457.430, as provided in 457.455(2), the agency must notify the assessor of the new frozen value by completing the portion of the Form UR-50 provided for that purpose, stating the plan name and the new frozen value amount. The form must be submitted to the assessor in accordance with OAR 150-457-0400.

(10) If an urban renewal agency with an Option One plan notifies the assessor to permanently increase the plan’s frozen value under section (9) of this rule, the plan may never again request a special levy.

(11) If an agency with an Option Three plan notifies the assessor to permanently increase the plan’s frozen value under section (9) of this rule, the formal action taken by the agency to authorize the notice must not be in the form of an ordinance or an amendment to the certified statement filed under ORS 457.430.

(12) If Portland Public School District wishes to exclude from urban renewal division of tax for the current fiscal year that portion of its permanent tax rate limitation by which that limitation was increased upon retirement of the district’s gap bonds, the district must notify the assessors of each county in which division of tax is calculated using the district’s permanent rate. This notification must be submitted to the assessors with Department of Revenue Form ED-50 Notice to Assessor and show both the tax rate to be excluded from division of tax and the tax rate under the district’s permanent rate limitation that the district wishes to impose for district operations. The maximum rate that can be excluded from division of tax is $0.5038 per $1,000 of assessed value.

[ED. NOTE: Forms referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & ORS 457.470
Statutes/Other Implemented: ORS 457.010, 457.440, 457.455 & 457.470.
Renumbered from 150-457.440(2), REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 11-2010, f. 7-23-10, cert. ef. 7-31-10

Or. Admin. R. 150-457-0420 Urban Renewal Certification, Calculation and Distribution

(1) Definitions: For purposes of this rule:

(a) "Consolidated billing tax rate" means:

(A) For reduced rate plans, the total of all taxing district billing tax rates used to extend taxes, after any adjustments to reflect tax offsets, but does not include:

(i) Any urban renewal special levy rate;

(ii) Any local option tax rate if the tax was approved by the voters after October 6, 2001;

(iii) Any exempt bonded indebtedness tax rate (except for Portland Police and Fire Pension and Disability bonds, if so issued) approved by the voters after October 6, 2001; or

(iv) The portion of Portland Public School District’s permanent rate levy described in OAR 150-457-0410 section (13) that the district notifies the assessor to exempt from division of tax.

(B)(i) For standard rate plans, the total of all taxing district billing tax rates used to extend taxes, after any adjustments to reflect tax offsets, but does not include any urban renewal special levy rate or rates of new local option taxes.

(ii) Notwithstanding paragraph (1)(a)(B)(i), if an urban renewal agency filed an impairment certificate under ORS 457.445 with respect to a standard rate plan, the rates of new local option taxes that were identified in the impairment certificate must be included in the total.

(b) "Division of tax" means:

(A) For purposes of determining the amount of division of tax to use in tax calculation, the amount calculated by multiplying the tax rate for each taxing district levy in a code area by the increment value used in that code area and summing the product for all code areas in the plan area. Only those taxing district tax rates that are part of the consolidated billing tax rate for that plan are used for this calculation.

(B) For purposes of computing the estimate of the division of tax portion of the maximum authority for existing plans, the amount calculated by multiplying the consolidated billing tax rate for the code area by the increment value used in the code area and summing the product for all code areas in the plan. Only those taxing district tax rates that are part of the consolidated billing tax rate are used for this calculation.

(c) "Division of tax rate" means the rate determined for each taxing district levy within the consolidated billing tax rate for an urban renewal plan. This rate is calculated by dividing the division of tax amount by the taxable assessed value of any shared property for that district. This is the rate that is multiplied by the taxable assessed value of any shared property of the district to determine the amount of division of tax extended before compression on that property from that levy for that plan.

(d) "Existing plan" means an urban renewal plan that provides for a division of ad valorem property taxes as described under ORS 457.420 to 457.460, adopted by ordinance before December 6, 1996, that meets the conditions of 457.010(4).

(e) "Frozen value" means:

(A) The assessed value of the property in an urban renewal plan area at the plan’s inception, as certified by the assessor under ORS 457.430 and OAR 150-457-0400; or

(B) The value stated by the agency in the notice to the assessor pursuant to ORS 457.455(2).

(f) "Increment value" means the positive value obtained by subtracting the frozen value in a plan area from the total assessed value in a plan area, calculated code area by code area. Negative results are disregarded, resulting in the code area having zero increment value.

(g) "Increment value used" means:

(A) For an Option Three existing plan, that portion of the increment value in the plan area necessary to raise the amount of division of tax stated in the ordinance selecting Option Three that was adopted by the urban renewal agency under ORS 457.435, or a lesser amount of increment value specified by the agency under paragraph (B) of this subsection.

(B) For plans for which the urban renewal agency specifies, pursuant to ORS 457.455(1) or 457.470, an amount of assessed value less than the full increment amount that is available, the amount of increment value specified. The assessor must apportion to the code areas in the plan area the amount of increment specified by the agency.

(h) "Maximum authority" means the limitation on the amount of revenue to be raised for the year for an existing plan area, as described in ORS 457.435(3). Only plans that are existing plans have a maximum authority amount. The maximum authority is adjusted each year to reflect growth in assessed value within the plan area as provided in ORS 457.435(3)(b).

(i) “New local option tax” means a local option tax described in ORS 457.445(5) that is approved by taxing district electors after January 1, 2013.

(j) "Rate computation value" means the total assessed value in an ad valorem taxing district, plus the value of Fish and Wildlife properties and of Non-Profit Housing properties, minus urban renewal increment value used.

(k) "Reduced rate plan" means any urban renewal plan that is:

(A) Adopted before December 6, 1996, designated as an existing plan, and also designated as an Option One plan;

(B) Adopted before December 6, 1996, was an existing plan designated as an Option One plan on October 6, 2001, and was substantially amended as described in ORS 457.085(2)(i)(A) or (B) on or after October 6, 2001;

(D) Adopted before December 5, 1996, and the governing body of the city or county that adopted the plan irrevocably elects to change the plan from being a standard rate plan to a reduced rate plan, pursuant to ORS 457.445(4), and provides the assessor by July 15 of the first tax year it is effective, a copy of the resolution or ordinance making the election.

(l) "Shared property" is property that is both within a taxing district that overlaps an urban renewal plan area, and within the boundaries of a municipality that activated an urban renewal agency. It also includes any area of a plan that extends beyond the boundaries of the activating municipality for that plan.

(m) "Standard rate plan" means an urban renewal plan that is not a reduced rate plan.

(2) Urban renewal agencies making use of tax increment financing must certify their tax increment financing request to the county assessor under ORS 310.060 and pursuant to OAR 150-457-0410 by July 15 using Department of Revenue Form UR-50 Notice to Assessor for the current tax year. The assessor may, for cause, grant an extension of this date up to October 1.

(3) The assessor must separately calculate the estimated revenue to be raised from each plan area within the territory of a taxing district. To make this calculation the assessor must:

(a) Determine whether the plan is a standard rate plan or a reduced rate plan. Calculate the consolidated billing tax rate accordingly;

(b) Determine the maximum authority of an existing plan by multiplying last year's maximum authority by the percentage growth in plan increment value this year as provided in ORS 457.435(3);

(c) Determine the estimated amount to be raised by the division of tax for the plan. For each code area within the plan area, multiply the consolidated billing tax rate by the increment value used in the code area. Add the amounts of all code areas within a plan; and

(d) Determine the maximum amount of the special levy, if any, for each existing urban renewal plan by subtracting the estimated amount to be raised by the division of tax from the maximum authority of the plan. The maximum special levy cannot be less than zero.

(4) If the plan is an Option One plan:

(a) The assessor must calculate the maximum amount of urban renewal taxes to be raised through the division of tax as provided in section (3) of this rule, or a lesser amount of division of tax using the increment value used that is specified by the agency, according to the agency’s certification on Form UR-50.

(b) If the agency requests one hundred percent of the division of tax and a special levy amount on Form UR-50, the assessor must calculate and extend a special levy for the amount certified, provided the total amount of the special levy plus the estimated division of tax amount is equal to or less than the maximum authority of the plan as determined under subsection (3)(b) of this rule.

(c) If the total of the special levy certified for the plan area plus the estimated division of tax amount computed for the plan by the assessor exceeds the maximum authority of the plan, the assessor must reduce the amount of the special levy until the total of the special levy and the estimated division of tax amount equals the maximum authority for the plan.

(d) If, instead of requesting one hundred percent of division of tax, an agency certifies on Form UR-50 an amount of increment value used, the assessor must not calculate a special levy for that plan.

(5) If the plan is an Option Three plan:

(a) The agency must certify on Form UR-50 the amount stated in the ordinance selecting Option Three as the amount to be collected through the division of taxes, or the amount of increment value that the agency estimates will raise some lesser amount of division of tax.

(b) If the agency certifies the amount of division of tax stated in the ordinance selecting Option Three, the assessor must calculate the amount of increment value necessary to raise the division of tax amount stated in the ordinance. The amount calculated by the assessor is the increment value used.

(c) If the agency certifies the amount of increment value that the agency estimates will raise some lesser amount of division of tax, the amount specified is the increment value used.

(d) If the agency certifies a special levy and certifies the amount of division of tax stated in the ordinance selecting Option Three, and the total special levy plus the estimated division of tax amount computed for the plan by the assessor exceeds the maximum authority of the plan, the assessor must reduce the special levy until the total of the two equals the maximum authority.

(e) If the agency certifies a special levy and certifies an amount of increment value used that the agency estimates will raise an amount of division of tax that is less than the amount stated in the ordinance selecting Option Three, and the total of the special levy plus the estimated division of tax amount computed by the assessor using that amount of increment value exceeds the total that would have been available under the plan’s maximum authority had the agency certified the amount of division of tax stated in the ordinance selecting Option Three, the assessor must reduce the special levy amount so that the total of the special levy and the estimated division of tax equals the total that would have been available under the plan’s maximum authority, had the agency certified the amount of division of tax stated in the ordinance selecting Option Three.

(6) If the plan is not an existing plan, the agency must certify on Form UR-50:

(a) One hundred percent of the amount of division of tax; or

(b) The amount of increment value used that the agency estimates will raise some lesser amount of division of tax, pursuant to ORS 457.455(1) or 457.470.

(7) The assessor must:

(a) Apportion the increment value used to the code areas in the plan area in the same proportions as the increment value is distributed among those code areas.

(b) If the full increment value in a code area is less than the amount of increment value used that is apportioned to the code area under subsection (7)(a) of this rule, the assessor must calculate the division of tax using the full increment value. No increment value is then used in calculating the taxes of the ad valorem taxing districts for the year.

(c) If the full increment value exceeds the amount of the increment value used, the assessor must use the remaining increment value in calculating the taxes of the ad valorem taxing districts for the current year.

(8) The assessor must:

(a) Use the rate computation value in calculating taxes for a taxing district that has an urban renewal plan area within its boundaries and whose rate is part of the consolidated billing tax rate for the plan.

(b) Calculate the urban renewal special levy tax rate for each plan area using the current year taxable value of all taxable property in the municipality that adopted the plan and any portion of the urban renewal plan area outside of the municipality. Current year taxable value includes the value of Non-profit Housing properties, Fish and Wildlife properties and urban renewal increment value.

(c) Calculate urban renewal special levy tax rates on a plan area by plan area basis. If one plan area of an agency extends beyond the boundary limits of the activating municipality, only the special levy rate for that plan area is extended beyond the boundaries of the municipality.

(d) Unless otherwise specifically provided by law, no tax offset applies to the special levy rate.

(9) The assessor must determine the tax rate for each code area for each tax levy that an ad valorem district certifies as follows:

(a) Determine the rate certified by the district for tax rate levies or calculate a tax rate for dollar amount levies;

(b) Subtract any offsets as applicable; and

(c) Subtract any division of tax rate for that district applicable to that code area from the result of subsection (9)(b) of this rule.

(10) The assessor must calculate a total division of tax rate for each code area. This is the total of the division of tax rates from all of the levies from all taxing districts with shared property in that code area, if such rates are in the consolidated billing tax rate.

(11) The division of tax rate may have two components. One is the total of rates derived from any local option tax levies. The other component is the total of rates derived from any other levies. The assessor must treat the amount of taxes derived from each of the two total rates separately for purposes of determining compliance with the limitations of section 11(b) Article XI of the Oregon Constitution.

(12) The assessor must calculate the amount of tax on each account that is distributed to each urban renewal agency as follows:

(a) For each property within a shared property area the assessor must calculate the division of tax amount extended by multiplying the taxable assessed value of the account by the division of tax rate for each plan area.

(b) For each property within a shared property area that has an urban renewal special levy, the assessor must calculate the amount extended for the special levy by multiplying the taxable assessed value of the account by the rate calculated for each urban renewal special levy.

(c) If taxes exceed the limitations in either category of section 11(b) Article XI of the Oregon Constitution, the assessor must reduce the taxes to the category limit. The division of tax portion derived from local option levies must be reduced proportionately with all other similarly categorized local option levies before any other taxes in the category are reduced.

(13) The special levy and the division of tax must be imposed on all taxable property in the municipality that activated the urban renewal agency and any portion of the urban renewal plan area outside of the municipality that is shared property for that plan.

(14) The tax statement must display at a minimum for each agency, under the applicable limitation category, the total combined dollar amount imposed for the urban renewal special levy and the division of tax for that account.

(15) In preparing the percentage distribution schedule under ORS 311.390, the tax collector must use the dollar amount generated for urban renewal division of tax and the dollar amount imposed for urban renewal special levy for each urban renewal agency.

[ED. NOTE: Forms and Publications referenced are available from the agency.]

History

Statutory/Other Authority: ORS 305.100 & 457.470
Statutes/Other Implemented: ORS 457.440, 457.445 & 457.470
Renumbered from 150-457.440(9), REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2013, f. 12-26-13, cert. ef. 1-1-14
REV 5-2013(Temp), f. 7-1-13, cert. ef. 7-15-13 thru 1-1-14
REV 11-2010, f. 7-23-10, cert. ef. 7-31-10
REV 7-2008, f. 8-29-08, cert. ef. 8-31-08
REV 1-2002, f. & cert. ef. 5-23-02
REV 13-1999, f. 12-30-99, cert. ef. 12-31-99

Or. Admin. R. 150-457-0430 Minimum Public Information on Division of Tax

(1) The assessor of a county in which any taxing district has urban renewal excess value must make available to the public information concerning the urban renewal division of tax amounts. The information must be readily accessible to the public in either print or electronic form.

(a) The content must include:

(A) The name of the county;

(B) The number of urban renewal agencies in the county;

(C) The total dollar amount of taxes imposed by all taxing districts that was allocated to all of the urban renewal agencies in the county for the tax year immediately prior to the current tax year; and

(D) The total dollar amount of taxes imposed for the urban renewal agencies in the county as special levies, if any, for the tax year immediately prior to the current tax year.

(b) The following example meets the information requirements:

Example: Some of the taxes imposed for the taxing districts in County X were allocated to two urban renewal agencies. For tax year 2000-2001, $3,820,268 out of a total $229,299,593 taxes imposed by all taxing districts in the county were allocated to the urban renewal agencies. In addition, $1,254,320 was imposed for the urban renewal agencies as special levies.

(2) The county must also describe where additional information about urban renewal may be obtained.

Example: Anyone interested in obtaining more information about the amount of money distributed to urban renewal may contact the assessor’s office at (telephone number) or through e-mail at (e-mail address) or (urban renewal agency name) at (telephone number) or (e-mail address).

(3) Nothing in this rule prohibits a county from making available to the public more information about urban renewal.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 457.440
Renumbered from 150-457.440(9)-(A), REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 3-2001, f. 7-31-01, cert. ef. 8-1-01

Or. Admin. R. 150-457-0440 Calculation of Urban Renewal with City Rate Phase-in

(1) Applicability: This rule must be used in conjunction with OAR 150-457-0420 when an urban renewal agency sponsored by a city has certified a request for tax increment financing to the assessor under ORS 457.440 and the city has adopted an annexation ordinance under ORS 222.111 with a rate phase-in provision that is applicable to the city’s taxes for the tax year.

(2) When the conditions described in section (1) are present, the assessor must modify the calculations under OAR 150-457-0420 as follows, or by using a method allowed under section (3):

(a) The division of tax rate derived from the city’s taxes must be calculated separately for the area of the city that is subject to rate phase-in and for the area of the city not subject to rate phase-in. This is relevant for determining proper division of tax rates to use by code area under OAR 150-457-0420 subsection (1)(c) and sections (9), (10), (11), and (12).

(A) Calculate the division of tax rate applicable to the shared property that is not subject to rate phase-in by dividing the total division of tax amount from city taxes by the sum of:

(i) The taxable assessed value of the shared property that is not in the phase-in area, and

(ii) The product of the taxable assessed value of the shared property that is in the phase-in area multiplied by the phase-in percentage.

(B) Calculate the division of tax rate applicable to the shared property that is subject to rate phase-in by multiplying the phase-in percentage by the division of tax rate from paragraph (A) of subsection (2)(a).

(b) Division of tax rates derived from taxes of taxing districts other than the city with rate phase-in remain calculated in accordance with OAR 150-457-0420 and without modification due to the city tax phase-in.

(3) A county may use a different calculation method if approved by the Department of Revenue, it provides an equivalent phase-in of the division of tax rate derived from the city taxes, and the taxes to be raised for the urban renewal agency and city remain comparable to the calculations under section (2).

History

Statutory/Other Authority: ORS 305.100 & 457.470
Statutes/Other Implemented: ORS 457.440
Renumbered from 150-457.440(9)-(B), REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 7-2014, f. 12-23-14, cert. ef. 1-1-15

Or. Admin. R. 150-457-0450 Distribution of Remaining Tax Increment Funds

(1) For purposes of this rule “taxing district” includes only those districts that have ad valorem taxes divided with an urban renewal agency pursuant to ORS 457.440.

(2) An urban renewal agency must give the notice required by ORS 457.450(2) to each county assessor that had calculated division of tax amounts for the agency. As soon as practicable, each assessor that is notified will:

(a) Discontinue calculating division of tax and urban renewal special levy amounts under ORS 457.440 and 457.435 for the plan area; and

(b) Notify the county treasurer in writing to discontinue any future distributions to the agency for this plan from any division of tax or urban renewal special levy.

(3) When unexpended moneys in the agency special fund for a plan must be turned over to the county treasurer under ORS 457.450(3), the agency must apportion the moneys between each county that had calculated division of tax amounts for the agency in proportion to the amount received from each county for the plan in the last fiscal year before the notice required by 457.450(2). The agency must turn over each amount that was apportioned to a county to that county’s treasurer.

(4) After the county treasurer is notified by the assessor under section (2) of this rule about a plan or the county treasurer receives money from an urban renewal agency under ORS 457.450(3) regarding a plan, the treasurer must:

(a) Discontinue any future distributions to the agency for that plan from the division of tax and any special levy;

(b) Prepare a schedule to allocate for each taxing district that levied within that plan area on the last tax roll any unexpended moneys returned by the agency under ORS 457.450(3) plus any future moneys that otherwise would be distributed for that plan. Allocation percentages must be in proportion to the amounts calculated to be raised from division of tax from each taxing district for that plan on the last tax roll;

(c) Distribute to the taxing districts based on the schedule prepared under subsection (4)(b) of this rule any money that otherwise would be distributed for that urban renewal plan, or that has been returned by the agency for the plan under ORS 457.450(3); and

(d) If a special levy for that plan was combined with special levies for other plans of the same agency and tax had been imposed through one special levy rate, allocate and distribute special levy collections for that plan as follows:

(A) Prepare a schedule to allocate the combined special levy collections for the plans that continue to receive distributions and the plan that will no longer receive distributions. Using the last tax roll on which that plan’s special levy was combined with other special levies of the agency, determine the allocation percentage for that plan by dividing that plan’s portion of the combined special levy amount by the total special levy amount for the agency. Apply this allocation percentage to allocate an amount for that plan from collections of special levy amounts for any years that the combined special levy included an amount for that plan.

(B) Distribute the special levy amount allocated for that plan to the taxing districts instead of to the urban renewal agency based on the schedule prepared under subsection (4)(b) of this rule. Distribute the remainder of the special levy moneys to the urban renewal agency.

Example 1: Preparation of Schedule under Subsection (4)(b) of this Rule: On September 20, 2006, the assessor notifies the county treasurer under section (2) of this rule to discontinue distributions for the “Example Plan.” The treasurer prepares an allocation schedule based on information supplied by the assessor from the 2005-06 roll, which is the last fiscal year for which tax money was turned over to the urban renewal agency for the plan, as follows: [Tables not included. See ED. NOTE.]

Note that the Urban Renewal Special Levy was imposed in the code area, but taxes derived from an urban renewal special levy are never divided. Therefore, the special levy is not part of the special distribution schedule. This example assumes all of the other ad valorem taxes in this code area are divided between the district that imposed them and the urban renewal plan area. Some urban renewal plans may not have all tax levies divided. Any tax levy not divided should be treated like the urban renewal special levy.

Example 2: Distribution of Moneys under Subsection (4)(c) of this Rule:

The county treasurer received $25,000 that otherwise would be distributed to the agency for the plan area from current year and delinquent taxes. Instead, the treasurer will distribute these taxes as follows using the percentages from Example 1: [Tables not included. See ED. NOTE.]

Example 3: Preparation of Special Levy Schedule under Subsection (4)(d), Paragraph (A) of this Rule: This assumes the agency has two plans with special levies, the “Example Plan,” which is being discontinued, and the “Continuing Plan,” which will still be using tax increment financing. The last fiscal year the agency requested a special levy for the Example Plan was 2005-06. Both plans have imposed special levies since 2002-03, and the county combined the special levy rate each year. [Tables not included. See ED. NOTE.]

(5) Nothing in this rule is intended to prevent the county from using a different allocation procedure if it results in the same distribution to the taxing districts.

[ED. NOTE: To view attachments referenced in rule text, click here to view rule.]

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 457.450
REV 62-2017, f. & cert. ef. 8-8-17
Renumbered from 150-457.450, REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 9-2006, f. 12-27-06, cert. ef. 1-1-07
REV 6-2001, f. & cert. ef. 12-31-01

Or. Admin. R. 150-457-0460 Notice of Plan Adoption or Area Change

An urban renewal agency’s notice to the assessor of a plan adoption or amendment to a plan area must provide the following information:

(1) A legal description of the plan area boundary, or the boundary of the amended area of the plan, that includes the information required by ORS 308.225(2)(b);

(2) An accurate map showing the boundary line of the plan area or the boundary of the amended area of the plan;

(3) The date the plan or plan amendment was approved; and

(4) The name of the plan area.

History

Statutory/Other Authority: ORS 305.100.
Statutes/Other Implemented: ORS 457.450(1).
Renumbered from 150-457.450(1), REV 39-2016, f. 8-12-16, cert. ef. 9-1-16
REV 2-2005, f. 6-27-05, cert. ef 6-30-05

Division 465 HAZARDOUS WASTE AND HAZARDOUS MATERIALS

Or. Admin. R. 150-465-0010 Bulk Facility Defined; Cargo Tank Defined; Load Fee

As used in OAR 150-465-0020–465-0090, and 150-324-0300:

(1) A bulk facility is a terminal facility to which a refined petroleum product is delivered primarily by pipeline, barge or rail and from which refined petroleum product is withdrawn and delivered into a cargo tank or barge. A bulk facility must receive some petroleum from pipeline, barge or rail. Bulk facility does not mean an intermediate storage facility. An intermediate storage facility is a facility to which petroleum product is delivered primarily by means other than pipeline, barge or rail.

(2) A single cargo tank may have one or more holding compartments and those compartments may comprise one or more separate tanks and are attached to the same motor. A single cargo tank may not be more than one rail car.

(3) “Fee” or “Load fee” includes the underground storage tank regulatory fee, the petroleum products delivery fee, and the petroleum products import delivery fee.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.101
Renumbered from 150-465.101, REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 4-1989, f. 12-18-89, cert. ef. 12-31-89
RD 1-1989(Temp), f. & cert. ef. 8-31-89 thru 12-31-89

Or. Admin. R. 150-465-0020 Vessels in Interstate or Foreign Commerce

Petroleum products sold to vessels engaged in interstate or foreign commerce are not subject to the fee. The seller of a petroleum product shall not charge the fee if the person ordering the withdrawal from bulk verifies that the product will be used in a vessel engaged in interstate or foreign commerce. Verification can be a copy of a federal permit, license or registration. Vessels engaged in interstate commerce include barges and tugboats licensed as carriers by the Interstate Commerce Commission.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.101
Renumbered from 150-465.101(5), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 7-1992, f. & cert. ef. 12-29-92, Renumbered from 150-465.104(5)
RD 4-1989, f. 12-18-89, cert. ef. 12-31-89
RD 1-1989(Temp), f. & cert. ef. 8-31-89 thru 12-31-89

Or. Admin. R. 150-465-0030 Definition of “Petroleum Product”

As used in ORS 465.101 through 465.131, “petroleum product” includes blends of petroleum products mandated by ORS 646.905 through 646.963, such as diesel that contains a percentage of biodiesel, or gasoline that contains a percentage of ethanol.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.101
Renumbered from 150-465.101(5)-(B), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
REV 18-2010, f. 12-17-10, cert. ef. 1-1-11
REV 13-2010(Temp), f. & cert. ef. 8-19-10 thru 2-14-11

Or. Admin. R. 150-465-0040 Payment of Fee by Seller

The owner of the petroleum product is considered to be the seller. The seller must pay the fee when the product is withdrawn from the seller’s bulk facility for sale or use in the seller’s own distribution chain.

For example, Company A owns a bulk facility in Portland and a chain of service stations throughout the state. Company A also owns its own truck-trailers. Company A must pay the fee at the time it withdraws product from its bulk facility into its truck-trailers for distribution to its service stations.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.104
Renumbered from 150-465.104(1)-(A), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 4-1989, f. 12-18-89, cert. ef. 12-31-89
RD 1-1989(Temp), f. & cert. ef. 8-31-89 thru 12-31-89

Or. Admin. R. 150-465-0041 Liability for Unpaid Petroleum Load Fees

(1) For purposes of this rule, “seller” has the meaning given under OAR 150-465-0040 and includes, but is not limited to, an officer, member or employee of a corporation, partnership or other business entity that sells petroleum product from a bulk facility, if, among other duties, that individual has:

(a) Authority to see that the petroleum load fees are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees’ working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign Oregon Petroleum load fee registration forms;

(g) Authority to make fiscal decisions for the business; or

(h) Authority to incur debt on behalf of the business.

(2) It is the duty of the seller to hold in trust any amount of petroleum load fee collected from the sale of petroleum product and to assume custodial liability for amounts to be paid to the department. Any seller who fails to pay the petroleum load fee when due is subject to penalties, as provided by law, as any other taxpayer who fails to file a return or pay a tax when due.

(3) If a seller fails to file returns or to pay any collected tax when due, any or all officers, members, and employees may be held personally responsible, as provided in this rule, for the returns and payments together with any interest and penalties, that are due.

(4) To be held personally liable for unpaid petroleum load fees, a person must be a seller of petroleum product from a bulk facility. In addition, the person must be in a position to pay the petroleum load fee or direct the payment of the petroleum load fee at the time the duty arises to collect or pay the petroleum load fees. The person may be held personally liable if the individual was, or should have been aware, that the petroleum load fees were not paid to the department. A seller cannot avoid personal liability by delegating their responsibilities to another.

(5) The following factors do not preclude a finding that an individual is liable for the payment of petroleum load fees:

(a) Lack of willfulness in failing to pay over the required petroleum load fee;

(b) The individual’s receipt of remuneration;

(d) Another individual is also liable for the same petroleum load fee;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and to set working conditions and schedules; or

(i) Delegation to another person any functions indicating liability.

History

Statutory/Other Authority: ORS 305.100 & 465.121
Statutes/Other Implemented: ORS 465.112
REV 8-2022, adopt filed 06/03/2022, effective 06/03/2022

Or. Admin. R. 150-465-0050 Product Exchange Agreements

When a product exchange occurs, the seller of the petroleum product that was exchanged must charge the fee.

For example, Company A owns product in a terminal facility. Company A enters into an exchange agreement with Company B whereby Company A will provide Company A’s product to Company B’s customers. Company B must charge the fee on the withdrawal of product from Company A’s bulk facility by Company B’s customer.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.104
Renumbered from 150-465.104(1)-(B), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 4-1989, f. 12-18-89, cert. ef. 12-31-89
RD 1-1989(Temp), f. & cert. ef. 8-31-89 thru 12-31-89

Or. Admin. R. 150-465-0060 Multiple Withdrawals in a Single Load; Load, Split Load Defined

The fee is to be paid for each load of petroleum products withdrawn from a terminal. A “load” is the total amount of petroleum products withdrawn prior to delivery into a storage tank not connected to another bulk facility, regardless of how many different petroleum products make up the load.

For example, if a cargo tank makes a withdrawal from a bulk facility of gasoline into one tank and diesel into another tank without making any deliveries between the withdrawals, only one load fee is to be charged.

If one load of petroleum products came from different sellers at different bulk facilities or from different sellers at the same facility, the load is a “split load” and only one fee is due for the split load. If each seller collects a fee, the person ordering the withdrawal can receive a credit or refund from the seller by verifying that the withdrawals were a split load. The verification must be submitted to one of the sellers on forms approved by the Department of Revenue.

The person ordering the withdrawal is responsible for paying the fee to the Department of Revenue in the event of fraudulent or improper verification to a seller.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.104
Renumbered from 150-465.104(1)-(C), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 4-1989, f. 12-18-89, cert. ef. 12-31-89
RD 1-1989(Temp), f. & cert. ef. 8-31-89 thru 12-31-89

Or. Admin. R. 150-465-0070 Importer Defined; Delivery Defined

An importer is one who causes petroleum products to be brought into the state from outside Oregon for delivery into one or more storage tanks not connected to a bulk facility. A common carrier that provides transportation service for shippers of petroleum products and that does not own the product is not an importer. Delivery means the offloading into one or more storage tanks not connected to a bulk facility, of one or more petroleum products from a cargo tank or barge. Only one import fee is due for each cargo tank load or barge load of petroleum products delivered in Oregon.

For example, if an importer brings petroleum products into Oregon in a cargo tank and delivers the products to three customers, the importer shall pay one import fee for the load, regardless of the number of customers receiving product.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.104
Renumbered from 150-465.104(2), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 4-1989, f. 12-18-89, cert. ef. 12-31-89
RD 1-1989(Temp), f. & cert. ef. 8-31-89 thru 12-31-89

Or. Admin. R. 150-465-0080 Exemption for Export of Petroleum Products; Claim for Refund

(1) Where the ultimate destination for a petroleum load being shipped by cargo tank or barge is outside of Oregon, the load is exempt from the load fee. To avoid being charged the fee, the person making the withdrawal for delivery out of Oregon must verify the exemption to the seller. The verification may be in the form of a separate account with the seller for which the person making the withdrawal certifies that all withdrawals charged on this account will be delivered out of state. The person making the withdrawal is responsible for paying the fee to the Department of Revenue for any load or partial load delivered in Oregon for which the person previously received an export exemption.

(2) If the person making the withdrawal does not first verify to the seller that the load being withdrawn will be delivered out of state, the fee shall be charged. The person may then request a credit or refund from the seller by verifying the exemption to the seller on a form approved by the Department of Revenue.

(3) If any portion of a cargo tank load or barge load of petroleum products is to be delivered in Oregon, there is no export exemption and the load fee shall be charged.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.104
Renumbered from 150-465.104(3), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1989(T), f. & cert. ef. 8-31-89 thru 12-31-89; RD 4-1989, f. 12-18-89, cert. ef. 12-31-89

Or. Admin. R. 150-465-0090 Due Dates for Payment of Fees

After January 1, 1990, all fees collected during a calendar quarter are due on the last day of the month following the end of the calendar quarter. The due dates will be January 31, April 30, July 31, and October 31.

History

Statutory/Other Authority: ORS 305.100
Statutes/Other Implemented: ORS 465.104
Renumbered from 150-465.104(4), REV 50-2016, f. 8-13-16, cert. ef. 9-1-16
RD 1-1989(T), f. & cert. ef. 8-31-89 thru 12-31-89; RD 4-1989, f. 12-18-89, cert. ef. 12-31-89

Division 468 ENVIRONMENTAL QUALITY

Or. Admin. R. 150-468-2001 Oil Tank Railroad Car Fee Reporting and Payment Due Date

(1) The definitions contained in OR Laws 2019, chapter 581, section 13b are incorporated herein and made a part of this rule.

(2) Every owner of oil transported by loaded tank railroad car in Oregon must file a report with the Department of Revenue. The report will be on a form provided by the department and include the number of tank railroad cars loaded with oil that are transported in Oregon each month of the calendar quarter. The report will calculate the amount of fees imposed on the owner of oil transported by loaded tank railroad car in Oregon. A report is required regardless of whether any fees are owed.

(3) Every owner of oil transported by loaded tank railroad car in Oregon that is required to submit a report, must file the report and remit the fees to the department on or before the last day of the month following the end of each calendar quarter. The due dates are January 31, April 30, July 31 and October 31. When the due date for filing a report or payment of fees falls on a Saturday, Sunday, or a state legal holiday, the report and payment are due on the next business day.

(4) This administrative rule becomes operative on the effective date of the administrative rule adopted by office of the State Fire Marshal or Department of Environmental Quality to establish the amount of the fee imposed on owners of oil transported by loaded tank railroad car in Oregon.

History

Statutory/Other Authority: ORS 305.100 & OR Laws 2019, chapter 581, section 13c
Statutes/Other Implemented: OR Laws 2019, chapter 581, section 13c
REV 6-2019, adopt filed 12/11/2019, effective 01/01/2020

Division 475 CONTROLLED SUBSTANCES

Or. Admin. R. 150-475-2010 Marijuana Tax: Due Dates

(1) For purposes of all Division 475 department rules, “marijuana retailer” has the meanings given under ORS 475C.009 and includes:

(a) A registered medical marijuana dispensary that elects to sell limited marijuana retail products, as defined under section 2, chapter 784, Oregon Laws 2015, from January 4, 2016 through December 31, 2016; or

(b) A marijuana retailer licensed by the Oregon Liquor and Cannabis Commission who sells marijuana items on or after January 4, 2016.

(2) A marijuana retailer that sells marijuana items, as defined in ORS 475C.009, must pay all marijuana taxes due for each tax period by the due dates described in ORS 475C.682 and this rule. When the due date falls on a Saturday, Sunday or a state legal holiday, the deposit or payment is due on the next business day following such Saturday, Sunday or state legal holiday.

(3) A marijuana retailer must pay the marijuana tax due in three monthly deposits for each calendar quarter. The first monthly deposit is due on or before the last day of the second month of the calendar quarter; the second monthly deposit is due on or before the last day of the third month of the calendar quarter; and the third monthly deposit is due on or before the last day of the month following the close of the calendar quarter.

(4) If a marijuana retailer does not make any sales of marijuana items in a particular month of a calendar quarter, the marijuana retailer is not required to remit payment of marijuana tax for that month.

(5) The marijuana retailer may retain two percent of the amount of tax collected on sales of marijuana items as provided under ORS 475C.710.

(6) A marijuana tax deposit for each month in a tax period, as established in subsection (3) of this rule, consists of the total amount of retail sales of marijuana items for that month multiplied by the associated tax rates as defined in ORS 475C.674 less two percent referenced in section (5) of this rule.

History

Statutory/Other Authority: ORS 305.100 & ORS 475C.714
Statutes/Other Implemented: ORS 475C.682
REV 19-2022, minor correction filed 12/06/2022, effective 12/06/2022
Renumbered from 150-475B.710-(A), REV 74-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2016, f. & cert. ef. 7-1-16
REV 2-2015(Temp), f. 12-8-15, cert. ef. 1-4-16 thru 7-1-16

Or. Admin. R. 150-475-2020 Filing Extension for Marijuana Tax Return

(1) For purposes of this rule, “good cause” means circumstances beyond the control of the marijuana retailer as established under section (5)(a) of OAR 150-305-0068.

(2) For purposes of this rule, “good cause” does not include:

(a) Circumstances established in section (5)(b) of OAR 150-305-0068;

(b) Lack of knowledge about filing deadlines or requirements;

(3) If, for good cause, a marijuana retailer is unable to file a marijuana tax return within the statutorily prescribed time, the department may grant the marijuana retailer an extension of time for filing the return. The extension for filing a return does not extend the time for payment of the marijuana tax.

(4) A marijuana retailer may request a 30-day extension to file a return of marijuana tax by submitting a written request for extension to the department. The marijuana retailer must file the extension request and remit the marijuana tax on or before the due date for the tax period for which the extension is requested. The department’s decision whether to grant an extension request for good cause will be based upon the facts and circumstances in each case.

(5) Each written request for an extension to file a marijuana tax return must contain the name of the marijuana retailer, the marijuana retailer’s business identification number, the tax period associated with the request, and an explanation of the reason for requesting additional time to file the return.

(6) If the extension to file a marijuana tax return is granted, the marijuana retailer must file the return within 30 days of the original due date of the return.

(7) The department may require documentary proof to substantiate assertions of good cause when making a determination whether an extension to file a return is warranted.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.682
REV 20-2022, minor correction filed 12/06/2022, effective 12/06/2022
Renumbered from 150-475B.710-(B), REV 74-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2016, f. & cert. ef. 7-1-16
REV 2-2015(Temp), f. 12-8-15, cert. ef. 1-4-16 thru 7-1-16

Or. Admin. R. 150-475-2030 Marijuana Tax: Registration of Marijuana Retailers

(1) A marijuana retailer must register with the department as a marijuana tax collector. A marijuana retailer must use a department assigned identification number or an Oregon Liquor Control Commission issued license number on all reports and payment vouchers filed with the department that are associated with the marijuana tax. Registration with the department is required to schedule an appointment to make marijuana tax cash deposits or payments with the department.

(2) The department will make forms available for reports and payment vouchers for use by marijuana retailers in reporting and paying marijuana tax.

(3) A marijuana retailer must notify the department in writing if the status of the marijuana retailer changes including, but not limited to, ownership changes, address changes, or the marijuana retailer no longer sells limited marijuana retail products or marijuana items.

[Publications: Contact the Oregon Department of Revenue to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).]

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.682
REV 21-2022, minor correction filed 12/06/2022, effective 12/06/2022
REV 69-2017, amend filed 12/22/2017, effective 01/01/2018
Renumbered from 150-475B.710-(C), REV 74-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2016, f. & cert. ef. 7-1-16
REV 2-2015(Temp), f. 12-8-15, cert. ef. 1-4-16 thru 7-1-16

Or. Admin. R. 150-475-2040 Liability for Unpaid Marijuana Tax

(1) For purposes of this rule, "marijuana retailer" has the meaning given under OAR 150-475-2010 and includes, but is not limited to, an officer, member, or employee of a corporation, partnership, or other business entity that makes retail sales of marijuana items to consumers, if, among other duties, that individual has:

(a) Authority to see that the marijuana taxes are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees' working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign marijuana tax reports;

(g) Authority to make fiscal decisions for the business; or

(h) Authority to incur debt on behalf of the business.

(2) It is the duty of a marijuana retailer to hold in trust any amount of marijuana tax collected from the sale of limited retail marijuana products or marijuana items and to assume custodial liability for amounts to be paid to the department. Any marijuana retailer who fails to pay the marijuana tax when due is subject to penalties, as provided by law, as any other taxpayer who fails to file a return or pay a tax when due.

(3) If a marijuana retailer fails to file returns or to pay any collected marijuana tax when due, any or all officers, members, and employees may be held personally responsible, as provided in this rule, for the returns and payments together with any interest and penalties due.

(4) To be held personally liable for unpaid marijuana tax under ORS 475C.688, a person must be a marijuana retailer. In addition, the person must be in a position to pay the marijuana tax or direct the payment of the marijuana tax at the time the duty arises to collect or pay over the marijuana taxes. The person may be personally liable if the individual was, or should have been aware, that the marijuana taxes were not paid to the department. A marijuana retailer cannot avoid personal liability by delegating their responsibilities to another.

(5) The following factors do not preclude a finding that an individual is liable for the payment of marijuana taxes:

(a) Lack of willfulness in failing to pay over the required marijuana tax;

(b) The individual’s receipt of remuneration;

(d) Another individual is also liable for the same marijuana taxes;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and to set working conditions and schedules; or

(i) Delegation to another person any functions indicating liability.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.688 & 475C.722
REV 9-2022, amend filed 06/03/2022, effective 06/03/2022
Renumbered from 150-475B.715, REV 74-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2016, f. & cert. ef. 7-1-16

Or. Admin. R. 150-475-2050 Model Recordkeeping and Retention Regulation (Marijuana Tax)

(1) Definitions. For purposes of this rule, these terms shall be defined as follows:

(a) “Database Management System” means a software system that controls, relates, retrieves, and provides accessibility to data stored in a database.

(b) “Electronic Data Interchange” or “EDI technology” means the computer-to-computer exchange of business transactions in a standardized structured electronic format.

(f) “Marijuana retailer” has the meanings given under ORS 475C.009 and OAR 150-475-2010.

(g) “Marijuana items” includes all categories in ORS 475C.674.

(h) “Medical marijuana card” means a valid registry identification card under ORS 475C.783 or a valid identification card under ORS 475C.783 (5)(b).

(i) “Seed-to-sale tracking system” is the system developed and maintained by the Oregon Liquor and Cannabis Commission under ORS 475C.177.

(2) Recordkeeping Requirement — General:

(a) A marijuana retailer must maintain all records and any information and data required to be entered into the seed-to-sale tracking system that are necessary to a determination of the correct tax liability under ORS 475C.670 to 475C.734. All required records shall be made available on request by the Department of Revenue or its authorized representatives as provided for in ORS 475C.692 and 475C.694.

(b) A marijuana retailer must maintain records of all tax-exempt sales of marijuana items to medical marijuana cardholders, in accordance with Section 2, Chapter 91, Oregon Laws 2016. These records shall include:

(A) The date of the sale;

(B) The medical marijuana card number;

(C) The taxed marijuana product category under ORS 475C.674, or the product category used in the seed-to-sale tracking system;

(D) The name of the marijuana product;

(E) The unit price of the marijuana product;

(F) The number of units sold; and

(G) The total amount of the sale.

(c) If a marijuana retailer retains records required to be retained under this rule in both machine-sensible and hard-copy formats, the marijuana retailer shall make the records available to the department in machine-sensible format upon request.

(d) Nothing in this rule shall be construed to prohibit a marijuana retailer from demonstrating tax compliance with traditional hard-copy documents or reproductions thereof, in whole or in part, whether or not such marijuana retailer also has retained or has the capability to retain records on electronic or other storage media in accordance with this rule. However, this section shall not relieve the marijuana retailer of the obligation to comply with section (2)(c) of this rule.

(3) Recordkeeping Requirements — Machine-Sensible Records:

(a) General Requirements:

(A) Machine-sensible records used to establish tax compliance shall contain sufficient transaction-level detail information so that the details underlying the machine-sensible records can be identified and made available to the department upon request. A marijuana retailer has discretion to discard duplicated records and redundant information provided its responsibilities under this rule are met.

(B) The retained records shall be capable of being retrieved and converted to a standard record format.

(C) Marijuana retailers are not required to construct machine-sensible records other than those created in the ordinary course of business. A marijuana retailer who does not create the electronic equivalent of a traditional paper document in the ordinary course of business is not required to construct such a record for tax purposes.

(b) Electronic Data Interchange Requirements:

(A) Where a marijuana retailer uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, shall be equivalent to that contained in an acceptable paper record. The retained records should contain such information as vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, shipping detail, and any other pertinent information required by the department. Codes may be used to identify some or all of the data elements, provided that the marijuana retailer provides a method which allows department to interpret the coded information.

(B) The marijuana retailer may capture the information necessary to satisfy section (3)(b)(A) of this rule at any level within the accounting system and need not retain the original EDI transaction records provided the audit trail, authenticity, and integrity of the retained records can be established. For example, a marijuana retailer using electronic data interchange technology receives electronic invoices from its suppliers. The marijuana retailer decides to retain the invoice data from completed and verified EDI transactions in its accounts payable system rather than to retain the EDI transactions themselves. Since neither the EDI transaction nor the accounts payable system captures information from the invoice pertaining to product description and vendor name (i.e., they contain only codes for that information), the marijuana retailer also retains other records, such as its vendor master file and product code description lists and makes them available to the department. In this example, the marijuana retailer need not retain its EDI transaction for tax purposes.

(d) Business Process Information:

(A) Upon the request of the department, the marijuana retailer shall provide a description of the business process that created the retained records. Such description shall include the relationship between the records and the tax documents prepared by the marijuana retailer and the measures employed to ensure the integrity of the records.

(B) The marijuana retailer shall be capable of demonstrating:

(i) The functions being performed as they relate to the flow of data through the system;

(ii) The internal controls used to ensure accurate and reliable processing; and

(iii) The internal controls used to prevent unauthorized addition, alteration, or deletion of retained records.

(i) Record formats or layouts;

(ii) Field definitions (including the meaning of all codes used to represent information);

(iii) File descriptions (e.g., data set name); and

(iv) Detailed charts of accounts and account descriptions.

(4) Records Maintenance Requirements:

(a) The department recommends but does not require that marijuana retailers refer to the National Archives and Record Administration's (NARA) standards for guidance on the maintenance and storage of electronic records, such as the labeling of records, the location and security of the storage environment, the creation of back-up copies, and the use of periodic testing to confirm the continued integrity of the records.

(b) The marijuana retailer's computer hardware or software shall accommodate the extraction and conversion of retained machine-sensible records.

(5) Access To Machine-Sensible Records:

(a) The manner in which department is provided access to machine-sensible records as required in section (2)(c) of this rule may be satisfied through a variety of means that shall take into account a marijuana retailer's facts and circumstances through consultation with the marijuana retailer.

(b) Such access will be provided in one or more of the following ways:

(A) The marijuana retailer may arrange to provide the department with the hardware, software and personnel resources to access the machine-sensible records.

(B) The marijuana retailer may arrange for a third party to provide the hardware, software and personnel resources necessary to access the machine-sensible records.

(C) The marijuana retailer may convert the machine-sensible records to a standard record format specified by the department, including copies of files, on a magnetic medium that is agreed to by the department.

(D) The marijuana retailer and the department may agree on other means of providing access to the machine-sensible records.

(6) Marijuana retailer Responsibility and Discretionary Authority:

(a) In conjunction with meeting the requirements of section (3) of this rule, a marijuana retailer may create files solely for the use of the department. For example, if a data base management system is used, it is consistent with this rule for the marijuana retailer to create and retain a file that contains the transaction-level detail from the data base management system and that meets the requirements of section (3) of this rule. The marijuana retailer should document the process that created the separate file to show the relationship between that file and the original records.

(b) A marijuana retailer may contract with a third party to provide custodial or management services for the records. Such a contract shall not relieve the marijuana retailer of its responsibilities under this rule.

(7) Alternative Storage Media:

(a) For purposes of storage and retention, marijuana retailers may convert hard-copy documents received or produced in the normal course of business and required to be retained under this rule to microfilm, microfiche or other storage-only imaging systems and may discard the original hard-copy documents, provided the conditions of this section are met. Documents that may be stored on these media include, but are not limited to general books of account, journals, voucher registers, general and subsidiary ledgers, and supporting records of details, such as sales invoices, purchase invoices, exemption certificates, and credit memoranda.

(b) Microfilm, microfiche and other storage-only imaging systems shall meet the following requirements:

(C) Upon request by the department, a marijuana retailer shall provide facilities and equipment for reading, locating, and reproducing any documents maintained on microfilm, microfiche or other storage-only imaging system.

(E) All data stored on microfilm, microfiche or other storage-only imaging systems shall be maintained and arranged in a manner that permits the location of any particular record.

(F) There is no substantial evidence that the microfilm, microfiche or other storage-only imaging system lacks authenticity or integrity.

(8) Hard-Copy Recordkeeping Requirements:

(a) Except as otherwise provided in this section, the provisions of this rule do not relieve marijuana retailers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law and rules. Hard-copy records may be retained on a recordkeeping medium as provided in section (7) of this rule.

(b) If hard-copy records are not produced or received in the ordinary course of transacting business (e.g., when the marijuana retailer uses electronic data interchange technology), such hard-copy records need not be created.

(c) Hard-copy records generated at the time of a transaction using a credit or debit card shall be retained unless all the details necessary to determine correct tax liability relating to the transaction are subsequently received and retained by the marijuana retailer in accordance with this rule. Such details include those listed in section (3)(b)(A) of this rule.

(d) Computer printouts that are created for validation, control, or other temporary purposes need not be retained.

(e) Nothing in this section shall prevent the department from requesting hard-copy printouts in lieu of retained machine-sensible records at the time of examination.

(9) Records Retention — Time Period — All records required to be retained under this rule shall be preserved pursuant to ORS 475C.670 to 475C.734 unless the department has provided in writing that the records are no longer required.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.692 & 475C.678
REV 22-2022, minor correction filed 12/06/2022, effective 12/06/2022
REV 4-2018, minor correction filed 01/24/2018, effective 01/24/2018
Renumbered from 150-475B.720, REV 75-2016, f. 9-28-16, cert. ef. 10-1-16
REV 4-2016, f. & cert. ef. 7-1-16

Or. Admin. R. 150-475-2060 Refund of Excess Marijuana Tax for Consumers

(1) If a consumer determines that the actual amount of marijuana tax the consumer paid to a marijuana retailer was computed on an amount that is not taxable or is in excess of the correct tax amount, the consumer may request a refund of the overpayment of marijuana tax in writing to the marijuana retailer where the excess marijuana tax was paid. The request must be mailed or delivered to the marijuana retailer within 30 days of the date of the excess tax payment.

(2) Written notification of excess marijuana tax paid and any request for refund must include the marijuana retailer’s business name, nature of the excess marijuana tax paid, remedy requested and a receipt clearly identifying the date of purchase and proof of payment of the excess marijuana tax.

(3) If, within 60 days of the date of the original request for refund established in section (1), the marijuana retailer does not return the excess tax to the consumer, the consumer may appeal to the Department of Revenue by filing a written appeal within 120 days of the date of the original request for refund. An appeal to the department requires written notification to the department as outlined in section (2) of this rule.

(4) The department must refund excess marijuana taxes to a consumer when shown by satisfactory proof that:

(a) The consumer paid excess marijuana tax to a marijuana retailer;

(b) The excess marijuana tax was not refunded to the consumer by the marijuana retailer; and

(5) The department or marijuana retailer may not consider any request for refund of excess marijuana tax if the consumer is unable to provide a receipt that clearly identifies the date of purchase and proof of payment of the excess marijuana tax.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.722
REV 23-2022, minor correction filed 12/06/2022, effective 12/06/2022
Renumbered from 150-475B.740, REV 74-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2016, f. & cert. ef. 7-1-16

Or. Admin. R. 150-475-2070 100 Percent Penalty for Failure to File Marijuana Tax Returns

(1) The Department of Revenue may impose the 100 percent penalty under ORS 305.992 if:

(a) The taxpayer was required to file Oregon marijuana tax returns in at least one quarter during each tax year of three or more consecutive years; and

(b) All Oregon marijuana tax returns due during the three-year period are not filed by the due date (including extensions) of the return required for the fourth quarter of the third consecutive year. Assessments under ORS 305.265(10) are not returns for the purpose of the penalty under ORS 305.992.

(2) The filing due dates of Oregon marijuana tax returns are established under ORS 475C.682.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.722
REV 24-2022, minor correction filed 12/06/2022, effective 12/06/2022
Renumbered from 150-475B.755, REV 74-2016, f. 8-13-16, cert. ef. 9-1-16
REV 4-2016, f. & cert. ef. 7-1-16

Or. Admin. R. 150-475-2080 Marijuana Retailer Receipt Requirements

(1) Definitions:

(a) For purposes of this rule, “marijuana retailer” means:

(A) A registered medical marijuana dispensary that elects to sell limited marijuana retail products, as defined under section 21, chapter 83, Oregon Laws 2016, or any employee or representative of a registered medical marijuana dispensary, between and including January 4, 2016 and December 31, 2016, or;

(B) A marijuana retailer licensed by the Oregon Liquor and Cannabis Commission, or any employee or representative of a marijuana retailer, who sells marijuana items on or after January 4, 2016.

(b) “Early Start” means the tax imposed under sections 21a and 24, chapter 699, Oregon Laws 2015.

(d) “Category of taxed product” means each of the marijuana items listed in ORS 475C.674 (2)(a) through (g) for the Marijuana Retail Tax, and each of the limited marijuana retail products listed in section 21, chapter 83, Oregon Laws 2016, for Early Start.

(e) “Medical marijuana card” means a registry identification card held by either a patient or a designated primary caregiver, as described in ORS 475C.783

(f) “Seed-to-sale tracking system” is the system developed and maintained by the Oregon Liquor Control Commission under ORS 475C.177.

(2) A marijuana retailer must provide customers a written or printed receipt at the point-of-sale of all marijuana items or limited marijuana retail products that includes, but is not limited to:

(a) The marijuana retailer’s business name and address;

(b) An identification of items or products on which tax was charged;

(c) The category of taxed product for each item or product sold, either as a heading for a group of items or products or as information associated with the item or product name;

(d) The total amount of the sale prior to tax;

(e) The total state tax amount;

(f) The total local tax amount, if applicable;

(g) The total cost to the customer at the point-of-sale; and

(h) An alphanumeric or numeric identification that differs on each receipt issued.

(3) Notwithstanding Section (2)(c) of this rule, a retailer may include the product category used in the seed-to-sale tracking system in place of the category of taxed product.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.674
REV 25-2022, minor correction filed 12/06/2022, effective 12/06/2022
REV 75-2016, f. 9-28-16, cert. ef. 10-1-16

Or. Admin. R. 150-475-2090 Marijuana Retailer Requirements for Validating Medical Marijuana Cards

(1) Definitions:

(a) For purposes of this rule, “marijuana retailer” means a marijuana retailer licensed by the Oregon Liquor and Cannabis Commission, or any employee or representative of a marijuana retailer, who sells marijuana items on or after January 4, 2016.

(b) “Marijuana Retail Tax” means the tax imposed under ORS 475C.674.

(c) “Medical marijuana card” means a registry identification card held by either a patient or a designated primary caregiver, as described in ORS 475C.783.

(2) Marijuana retailers shall require any individual claiming exemption from the Marijuana Retail Tax to present the individual’s medical marijuana card and a valid photographic identification at the time of purchase. Acceptable valid photographic identification includes:

(a) State driver’s license;

(b) State identification card;

(d) U.S. military identification card; or

(e) Official tribal photographic identification.

(3) The marijuana retailer must confirm that the name and date of birth listed on the valid photo identification is the same as that provided on the medical marijuana card. The marijuana retailer must also confirm that the medical marijuana card is currently effective and not expired.

(4) A marijuana retailer must deny the exemption if the medical marijuana card and photographic identification of the purchaser do not meet the requirements of this rule. Purchasers may appeal the tax charged as described in OAR 150-475-2060.

(5) The marijuana retailer must retain a record of the tax-exempt purchase as described in section (2)(b) of OAR 150-475-2050.

History

Statutory/Other Authority: ORS 305.100 & 475C.678
Statutes/Other Implemented: ORS 475C.678
REV 26-2022, minor correction filed 12/06/2022, effective 12/06/2022
REV 5-2018, minor correction filed 01/24/2018, effective 01/24/2018
REV 75-2016, f. 9-28-16, cert. ef. 10-1-16

Or. Admin. R. 150-475-2100 Marijuana Tax: Categorization of Product Types

(1) Definitions:

(a) Except as otherwise specifically defined in this rule, the definitions in ORS 475C.009 apply to the same terms as used in this rule.

(b) “Blended pre-roll” means a combination of buds and shake/trim in some sort of plain, non-infused wrapping, and which is designed for smoking.

(d) “Capsule” means a small soluble container, usually made of gelatin that encloses a dose of a cannabinoid product, concentrate, or extract intended for human ingestion.

(e) “Combined product” means any product that combines buds and shake/trim with concentrate and/or extract, or combines concentrate with extract.

(f) “Infused pre-roll” means usable marijuana combined with one or more other marijuana items other than plain, non-infused wrapping or filter/tips, and which is designed for smoking.

(g) “Marijuana retailer” means a marijuana retailer licensed by the Oregon Liquor and Cannabis Commission, or any employee or representative of a marijuana retailer, who sells marijuana items on or after January 4, 2016.

(h) “Medical marijuana card” means a registry identification card held by either a patient or a designated primary caregiver, as described in ORS 475C.783.

(i) “Shake” and “trim” are included within the definition of “marijuana leaves” in ORS 475C.009 (26).

(j) “Suppository” means a small soluble container designed to melt at body temperature within a body cavity other than the mouth, especially the rectum or vagina containing a cannabinoid product, concentrate, or extract.

(k) “Tincture” means a solution exempt from the Liquor Control Act under ORS 471.035 that combines alcohol and cannabinoid concentrate or extract. A tincture may or may not include other ingredients intended for human consumption or ingestion.

(L) “Topical” means a cannabinoid product intended to be applied to skin or hair.

(m) “Transdermal patch” means an adhesive substance applied to human skin that contains a cannabinoid product, concentrate, or extract for absorption into the bloodstream.

(2) The following classifications apply to sales in tax periods beginning on or after January 1, 2020. A marijuana retailer must charge tax on products purchased by an individual that does not present a valid medical marijuana card at the following rates:

(a) Shake/trim, buds, and blended pre-rolls are taxed at the rate in ORS 475C.674 (2)(a).

(b) Seeds and immature marijuana plants are taxed at the rate in ORS 475C.674 (2)(b).

(d) Concentrates are taxed at the rate in ORS 475C.674 (2)(d).

(e) Extracts are taxed at the rate in ORS 475C.674 (2)(e).

(f) Topicals and transdermal patches are taxed at the rate in ORS 475C.674 (2)(f).

(g) Capsules, suppositories, and combined products, including infused pre-rolls, are taxed at the rate in ORS 475C.674 (2)(g).

(3) If a marijuana retailer sells a marijuana item that is not listed in Section 2 of this rule, then the business must make a determination about which tax category applies to the item. In making the determination, a marijuana retailer should take into account how items with a similar method of consumption are taxed, and may request guidance from the Department of Revenue under those circumstances.

History

Statutory/Other Authority: ORS 305.100 & 475C.714
Statutes/Other Implemented: ORS 475C.674
REV 27-2022, minor correction filed 12/06/2022, effective 12/06/2022
REV 7-2019, amend filed 12/11/2019, effective 01/01/2020
REV 69-2017, adopt filed 12/22/2017, effective 01/01/2018

Or. Admin. R. 150-475-4010 Psilocybin Tax: Payment Due Dates

(1) (a) For the purposes of all Division 475 Rules, “Client,” “Psilocybin Service Center,” “Psilocybin Service Center Operator,” “Psilocybin Products,” and “Psilocybin Services” have the same meanings given under ORS 475A.220.

(b) For the purposes of all Division 475 Rules, “Psilocybin Tax” means the tax levied by ORS 475A.662.

(2) A psilocybin service center operator that sells psilocybin products, as defined in ORS 475A.220, must pay all psilocybin taxes due for each tax period by the due dates described in ORS 475A.666 and this rule.

(3) A psilocybin service center operator must pay the psilocybin tax due on or before the last day of the month following the end of each calendar quarter.

(4) When the due date falls on a Saturday, Sunday or a state legal holiday, the deposit or payment is due on the next business day following such Saturday, Sunday or state legal holiday.

(5) If a psilocybin service center does not make any sales of psilocybin products in a particular calendar quarter, the psilocybin service center is not required to remit payment of psilocybin tax for that quarter.

(6) The psilocybin service center operator may retain two percent of the amount of tax collected on sales of psilocybin products as provided under ORS 475A.698.

(7) A psilocybin tax deposit for each quarter, as established in subsection (4) of this rule, consists of the sum of the total amount of the retail sales price of psilocybin products sold to clients during sessions occurring that quarter multiplied by the associated tax rate as provided in ORS 475A.662, less two percent referenced in section (6) of this rule.

History

Statutory/Other Authority: ORS 305.100, 475A.666 & 475A.702
Statutes/Other Implemented: ORS 475A.666
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-4020 Psilocybin Tax: Filing Extension

(1) For purposes of this rule, “good cause” means circumstances beyond the control of the psilocybin service center as established under section (5)(a) of OAR 150-305-0068.

(2) For purposes of this rule, “good cause” does not include:

(a) Circumstances established in section (5)(b) of OAR 150-305-0068;

(b) Lack of knowledge about filing deadlines or requirements;

(3) If, for good cause, a psilocybin service center operator is unable to file a psilocybin tax return within the statutorily prescribed time, the department may grant the psilocybin service center an extension of 30 days for filing the return. The extension for filing a return does not extend the time for payment of the psilocybin tax.

(4) A psilocybin service center operator may request a 30-day extension to file a return of psilocybin tax by submitting a written request for extension to the department. The psilocybin service center operator must file the extension request and remit the psilocybin tax on or before the due date for the tax period for which the extension is requested. The department’s decision whether to grant an extension request for good cause will be based upon the facts and circumstances in each case.

(5) Each written request for an extension to file a psilocybin tax return must contain the name of the psilocybin service center, the psilocybin service center operator’s business identification number, the tax period associated with the request, and an explanation of the reason for requesting additional time to file the return.

(6) If the department grants an extension to file a psilocybin tax return, the psilocybin service center must file the return within 30 days of the original due date of the return.

(7) The department may require documentary proof to substantiate assertions of good cause when making a determination whether an extension to file a return is warranted.

History

Statutory/Other Authority: ORS 305.100, 475A.666 & 475A.702
Statutes/Other Implemented: ORS 475A.666
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-4030 Psilocybin Tax: Registration of Service Centers

(1) A psilocybin service center operator must register electronically with the department as a psilocybin tax collector. A psilocybin service center operator must use a department assigned identification number or an Oregon Health Authority issued license number on all reports and payment vouchers filed with the department that are associated with the psilocybin tax. Registration with the department is required to schedule an appointment to make psilocybin tax payments with the department.

(2) The department will make forms available for reports and payment vouchers for use by psilocybin service center operators in reporting and paying psilocybin tax.

(3) A psilocybin service center operator must notify the department in writing if the status of the psilocybin service center changes. Specifically, a psilocybin service center must notify the department when an individual or entity acquires a greater than 50% financial interest in the ownership of the psilocybin service center, address changes of the psilocybin service center, or if the psilocybin service center operator permanently ceases the sale of psilocybin products from a particular psilocybin service center.

History

Statutory/Other Authority: ORS 305.100 & 475A.702
Statutes/Other Implemented: ORS 475A.666
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-4040 Psilocybin Tax: Liability for Unpaid Psilocybin Tax

(1) For purposes of this rule, "psilocybin service center operator" has the meaning given under OAR 150-475-4010 and includes, but is not limited to, an officer, member or employee of a corporation, partnership, or other business entity that makes retail sales of psilocybin items to consumers if, among other duties, that individual has:

(a) Authority to see that the psilocybin taxes are paid when due;

(b) Authority to prefer one creditor over another;

(d) Authority to set employees' working conditions and schedules;

(e) Authority to sign or co-sign checks;

(f) Authority to compute and sign psilocybin tax reports;

(g) Authority to make fiscal decisions for the business; or

(h) Authority to incur debt on behalf of the business.

(2) It is the duty of a psilocybin service center operator to hold in trust any amount of psilocybin tax collected from the sale of psilocybin products and to assume custodial liability for amounts to be paid to the department. Any psilocybin service center operator who fails to pay the psilocybin tax when due is subject to penalties, as provided by law, as any other taxpayer who fails to file a return or pay a tax when due.

(3) If a psilocybin service center operator fails to file returns or to pay any collected psilocybin tax when due, any or all officers, members, and employees may be held personally responsible, as provided in this rule, for the returns and payments together with any interest and penalties due.

(4) To be held personally liable for unpaid psilocybin tax under ORS 475A.674, a person must be a psilocybin service center operator. In addition, the person must be in a position to pay the psilocybin tax or direct the payment of the psilocybin tax at the time the duty arises to collect or pay over the psilocybin taxes. The person may be personally liable if the individual was, or should have been aware, that the psilocybin taxes were not paid to the department. A psilocybin service center operator cannot avoid personal liability by delegating their responsibilities to another.

(5) The following factors do not preclude a finding that an individual is liable for the payment of psilocybin taxes:

(a) Lack of willfulness in failing to pay over the required psilocybin tax;

(b) The individual’s receipt of remuneration;

(d) Another individual is also liable for the same psilocybin taxes;

(e) A corporate bylaw or partnership agreement position description to the contrary;

(f) Absence of signatory authority on a business bank account;

(g) Absence of bookkeeping or recordkeeping duties;

(h) Absence of authority to hire, fire, and to set working conditions and schedules; or

(i) Delegation to another person any functions indicating liability.

History

Statutory/Other Authority: ORS 305.100 & 475A.702
Statutes/Other Implemented: ORS 475A.674
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-4050 Psilocybin Tax: Model Recordkeeping

(1) Definitions. For purposes of this rule, these terms shall be defined as follows:

(a) “Database Management System” means a software system that controls, relates, retrieves, and provides accessibility to data stored in a database.

(b) “Electronic Data Interchange” or “EDI technology” means the computer-to-computer exchange of business transactions in a standardized structured electronic format determined by the department.

(f) “Psilocybin service center operator” has the meanings given under ORS 475A.220 and OAR 150-475-4010.

(g) “Psilocybin tracking system” is the system developed and maintained by the Oregon Health Authority under ORS 475A.400.

(2) Recordkeeping Requirement — General:

(a) A psilocybin service center operator must maintain all records and any information and data required to be entered into the psilocybin tracking system that are necessary to a determination of the correct tax liability under ORS 475A.658 to 475A.714. All required records shall be made available on request by the Department of Revenue, or its authorized representatives, as provided for in ORS 475A.678 and 475A.682.

(b) If a psilocybin service center operator retains records required to be retained under this rule in both machine-sensible and hard-copy formats, the psilocybin service center operator shall make the records available to the department in machine-sensible format upon request.

(c) Nothing in this rule shall be construed to prohibit a psilocybin service center operator from demonstrating tax compliance with traditional hard-copy documents or reproductions thereof, in whole or in part, whether or not such psilocybin service center operator also has retained or has the capability to retain records on electronic or other storage media in accordance with this rule. However, this section shall not relieve the psilocybin service center operator of the obligation to comply with section (2)(b) of this rule.

(3) Recordkeeping Requirements — Machine-Sensible Records:

(a) General Requirements:

(A) Machine-sensible records used to establish tax compliance shall contain sufficient transaction-level detail information so that the details underlying the machine-sensible records can be identified and made available to the department upon request. A psilocybin service center operator has discretion to discard duplicated records and redundant information provided its responsibilities under this rule are met.

(B) The retained records shall be capable of being retrieved and converted to a standard record format.

(C) Psilocybin service center operators are not required to construct machine-sensible records other than those created in the ordinary course of business. A psilocybin service center operator who does not create the electronic equivalent of a traditional paper document in the ordinary course of business is not required to construct such a record for tax purposes.

(b) Electronic Data Interchange Requirements:

(A) Where a psilocybin service center operator uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, shall be equivalent to that contained in an acceptable paper record. The retained records should contain such information as vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, shipping detail, and any other pertinent information required by the department. Codes may be used to identify some or all of the data elements, provided that the psilocybin service center operator provides a method which allows department to interpret the coded information.

(B) The psilocybin service center operator may capture the information necessary to satisfy section (3)(b)(A) of this rule at any level within the accounting system and need not retain the original EDI transaction records provided the audit trail, authenticity, and integrity of the retained records can be established. For example, a psilocybin service center operator using electronic data interchange technology receives electronic invoices from its suppliers. The psilocybin service center operator decides to retain the invoice data from completed and verified EDI transactions in its accounts payable system rather than to retain the EDI transactions themselves. Because neither the EDI transaction nor the accounts payable system captures information from the invoice pertaining to product description and vendor name (i.e., they contain only codes for that information), the psilocybin service center operator also retains other records, such as its vendor master file and product code description lists and makes them available to the department. In this example, the psilocybin service center operator need not retain its EDI transaction for tax purposes.

(c) Electronic Data Processing Systems Requirements: The requirements for an electronic data processing accounting system should be similar to that of a manual accounting system, in that an adequately designed accounting system should incorporate methods and records that will satisfy the requirements of this rule.

(d) Business Process Information:

(A) Upon the request of the department, the psilocybin service center operator shall provide a description of the business process that created the retained records. Such description shall include the relationship between the records and the tax documents prepared by the psilocybin service center operator and the measures employed to ensure the integrity of the records.

(B) The psilocybin service center operator shall be capable of demonstrating to the department:

(i) The functions being performed as they relate to the flow of data through the system;

(ii) The internal controls used to ensure accurate and reliable processing; and

(iii) The internal controls used to prevent unauthorized addition, alteration, or deletion of retained records.

(i) Record formats or layouts;

(ii) Field definitions (including the meaning of all codes used to represent information);

(iii) File descriptions (e.g., data set name); and

(iv) Detailed charts of accounts and account descriptions.

(4) Records Maintenance Requirements:

(a) The department recommends but does not require that psilocybin service center operators refer to the National Archives and Record Administration's (NARA) standards for guidance on the maintenance and storage of electronic records, such as the labeling of records, the location and security of the storage environment, the creation of back-up copies, and the use of periodic testing to confirm the continued integrity of the records.

(b) The psilocybin service center operator's computer hardware or software shall accommodate the extraction and conversion of retained machine-sensible records.

(5) Access To Machine-Sensible Records:

(a) The manner in which department is provided access to machine-sensible records as required in section (2)(b) of this rule may be satisfied through a variety of means that shall take into account a psilocybin service center operator's facts and circumstances through consultation with the psilocybin service center operator.

(b) Such access will be provided in one or more of the following ways:

(A) The psilocybin service center operator may arrange to provide the department with the hardware, software and personnel resources to access the machine-sensible records.

(B) The psilocybin service center operator may arrange for a third party to provide the hardware, software and personnel resources necessary to access the machine-sensible records.

(C) The psilocybin service center operator may convert the machine-sensible records to a standard record format specified by the department, including copies of files, on a magnetic medium that is agreed to by the department.

(D) The psilocybin service center operator and the department may agree on other means of providing access to the machine-sensible records.

(6) Psilocybin service center operator Responsibility and Discretionary Authority:

(a) In conjunction with meeting the requirements of section (3) of this rule, a psilocybin service center operator may create files solely for the use of the department. For example, if a data base management system is used, it is consistent with this rule for the psilocybin service center operator to create and retain a file that contains the transaction-level detail from the data base management system and that meets the requirements of section (3) of this rule. The psilocybin service center operator should document the process that created the separate file to show the relationship between that file and the original records.

(b) A psilocybin service center operator may contract with a third party to provide custodial or management services for the records. Such a contract shall not relieve the psilocybin service center operator of its responsibilities under this rule.

(7) Alternative Storage Media:

(a) For purposes of storage and retention, psilocybin service center operators may convert hard-copy documents received or produced in the normal course of business and required to be retained under this rule to microfilm, microfiche or other storage-only imaging systems and may discard the original hard-copy documents, provided the conditions of this section are met. Documents that may be stored on these media include, but are not limited to general books of account, journals, voucher registers, general and subsidiary ledgers, and supporting records of details, such as sales invoices, purchase invoices, exemption certificates, and credit memoranda.

(b) Microfilm, microfiche and other storage-only imaging systems shall meet the following requirements:

(C) Upon request by the department, a psilocybin service center operator shall provide facilities and equipment for reading, locating, and reproducing any documents maintained on microfilm, microfiche or other storage-only imaging system.

(E) All data stored on microfilm, microfiche or other storage-only imaging systems shall be maintained and arranged in a manner that permits the location of any particular record.

(F) There is no substantial evidence that the microfilm, microfiche or other storage-only imaging system lacks authenticity or integrity.

(8) Hard-Copy Recordkeeping Requirements:

(a) Except as otherwise provided in this section, the provisions of this rule do not relieve psilocybin service center operators of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law and rules. Hard-copy records may be retained on a recordkeeping medium as provided in section (7) of this rule.

(b) If hard-copy records are not produced or received in the ordinary course of transacting business (e.g., when the psilocybin service center operator uses electronic data interchange technology), such hard-copy records need not be created.

(c) Hard-copy records generated at the time of a transaction using a credit or debit card shall be retained unless all the details necessary to determine correct tax liability relating to the transaction are subsequently received and retained by the psilocybin service center operator in accordance with this rule. Such details include those listed in section (3)(b)(A) of this rule.

(d) Computer printouts that are created for validation, control, or other temporary purposes need not be retained.

(e) Nothing in this section shall prevent the department from requesting hard-copy printouts in lieu of retained machine-sensible records at the time of examination.

(9) Records Retention — Time Period — All records required to be retained under this rule shall be preserved pursuant to ORS 475A.658 to 475A.714 unless the department has provided in writing that the records are no longer required.

History

Statutory/Other Authority: ORS 305.100 & 475A.702
Statutes/Other Implemented: ORS 475A.678
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-4060 Psilocybin Tax: Refund of Excess Psilocybin Tax to Clients

(1) If a psilocybin service center client determines that the actual amount of psilocybin tax the client paid to a psilocybin service center operator was computed on an amount that is not taxable or exceeds the correct tax amount, the client may request a refund of the overpayment of psilocybin tax in writing to the psilocybin service center operator where the excess psilocybin tax was paid. The request must be mailed or delivered to the psilocybin service center operator within 30 days of the date of the excess tax payment.

(2) Written notification of excess psilocybin tax paid and any request for refund must include the name of the psilocybin service center or psilocybin service center operator’s business name, nature of the excess psilocybin tax paid, the remedy requested, and a copy of the receipt clearly identifying the date of purchase and proof of payment of the excess psilocybin tax.

(3) If, within 60 days of the date of the original request for refund established in section (1), the psilocybin service center operator does not return the excess tax to the client, the client may file a written appeal to the Department of Revenue within 120 days of the date of the original request for refund. An appeal to the department requires written notification to the department as outlined in section (2) of this rule.

(4) The department must refund excess psilocybin taxes to a client when shown by satisfactory proof that:

(a) The client paid excess psilocybin tax to a psilocybin service center operator;

(b) The excess psilocybin tax was not refunded to the client by the psilocybin service center operator; and

(5) The department or psilocybin service center operator may not consider any request for refund of excess psilocybin tax if the client is unable to provide a receipt that clearly identifies the date of purchase and proof of payment of the excess psilocybin tax.

History

Statutory/Other Authority: ORS 305.100 & 475A.702
Statutes/Other Implemented: ORS 475A.694
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-4080 Psilocybin Tax: Psilocybin Service Center Receipt Requirements

A psilocybin service center operator must provide clients a written or printed receipt at the point-of-sale of all psilocybin products that includes:

(1) The psilocybin service center operator’s business name;

(2) The address of the psilocybin service center;

(3) The separately stated total amount of the price of psilocybin services.

(4) The separately stated total amount of the sales price of psilocybin products prior to tax;

(5) The total state tax amount;

(6) The total cost to the client at the point-of-sale; and

(7) An alphanumeric or numeric identification unique to each receipt issued.

History

Statutory/Other Authority: ORS 305.100 & 475A.702
Statutes/Other Implemented: ORS 475A.662
REV 36-2022, adopt filed 12/28/2022, effective 01/01/2023

Or. Admin. R. 150-475-6010 Kratom Processor Definitions; Annual Registration

(1) Definitions. The definitions in Oregon Laws 2022, chapter 41, section 2 apply to the terms used in OAR 150-475-6010, OAR 150-475-6020, and OAR 150-475-6030, in addition to the following definitions.

(a) “Dangerous non-kratom substance” means any substance present in a finished kratom product formulation or unfinished kratom product that exceeds the amount allowable in OAR 150-475-6020 (3).

(b) “Department” means the Oregon Department of Revenue.

(c) “Finished kratom product” means a food, food product, food ingredient, dietary ingredient, dietary supplement, or beverage that has been produced or processed by a kratom processor in its final state as intended for sale to a consumer.

(d) “Finished kratom product formulation” means a combination of unfinished kratom products with another substance or unfinished kratom products altered from their original state into a final form to be sold to a consumer.

(e) “Kratom processor annual registration fee” or “annual fee” means the fee adopted by the department in this rule to be paid by kratom processors at the time the registrant submits a registration under this rule.

(f) “Registration” means the registration form and any additional documentation or information requested by the department from a kratom processor to verify compliance with this rule and includes both the initial registration and any renewal registrations submitted by a kratom processor.

(g) “Unfinished kratom product” means any part of the plant Mitragyna speciosa that has not been processed into a finished kratom product or kratom product formulation and that is intended to be sold, distributed, or exposed for sale to a consumer in its original state.

(2) Kratom Processor Initial Registration

(a) Each kratom processor engaging in the sale, distribution, or exposure for sale in the state of Oregon must submit a registration form to the department on an annual basis. Beginning on and after July 1, 2023, a kratom processor may not sell, distribute, or expose for sale kratom products on a wholesale or retail basis in the state of Oregon without first receiving a certificate of registration described in subsection (d) of this section.

(b) The department will not consider a registration submitted as complete until the kratom processor has paid the kratom processor annual registration fee in full for each registration form submitted to the department.

(A) If a kratom processor submits a registration without full payment of the kratom processor annual registration fee, the department will notify the kratom processor the registration is incomplete.

(B) If the kratom processor does not remit full payment of the registration fee within 14 days of the notice, the department will consider the registration withdrawn and refund any amount paid.

(c) The department will not consider a registration submitted for review unless the kratom processor certifies that all kratom products that will be distributed, sold, or exposed for sale by the kratom processor will be third-party tested for dangerous non-kratom substances in compliance with the requirements of OAR 150-475-6020 and Oregon Laws 2022, Chapter 41, Section 3.

(d) If the department determines the registration is complete, it will provide the kratom processor a certificate of registration.

(e) Completed registrations that are received prior to July 1, 2023, will be effective from July 1, 2023, through June 30, 2024. Completed registrations received after July 1, 2023, will be effective for a one-year period from the issuance date on the certificate of registration through the end of the calendar month of the issuance date.

(3) Kratom Processor Annual Registration Fee. The kratom processor annual registration fee for registrations effective beginning on or after July 1, 2023, is $460. The department shall review the registration fee amount annually.

(4) Kratom Processor Registration Renewal. A kratom processor may renew its registration beginning the first day of the calendar month of expiration. A kratom processor must remit the full kratom processor annual registration fee in effect at time the kratom processor submits its registration renewal.

(5) Kratom Processor Annual Registration Fee Nonrefundable. If the department verifies that a kratom processor’s registration is complete, then any kratom processor annual registration fee submitted with the registration is nonrefundable.

History

Statutory/Other Authority: Oregon Laws 2022, chapter 41, section 7
Statutes/Other Implemented: Oregon Laws 2022, chapter 41, section 7 & Oregon Laws 2022, chapter 41, section 3
REV 10-2023, adopt filed 05/10/2023, effective 06/01/2023

Or. Admin. R. 150-475-6020 Kratom Processor Testing

(1) Finished Processed Kratom Product Batches.

(a) For the purposes of this rule, a “product formulation batch” of finished kratom products means all kratom products of a unique finished kratom product formulation produced on the same day in the same facility by a manufacturer of finished kratom products.

(b) A kratom processor that distributes, sells, or exposes for sale a finished kratom product on a wholesale or retail basis must ensure that each product formulation batch is tested as described in section (3) of this rule.

(2) Unfinished Kratom Product Testing.

(a) A kratom processor processing unfinished kratom must separate the unfinished kratom products into a lot or batch of no more than 1,000 pounds for testing.

(b) A kratom processor that distributes, sells, or exposes for sale unfinished kratom products on a wholesale or retail basis must ensure each batch of unfinished kratom products is tested as described in section (3) of this rule.

(3) Third-Party testing. As required in sections (1)(b) and (2)(b) of this rule, a kratom processor must ensure a minimum of 0.5 percent by volume of each batch of kratom products is tested by a third party to ensure the products do not contain dangerous non-kratom substances. A batch of kratom products must be tested for the following contaminants in a manner consistent with the standards in the referenced administrative rules:

(a) Microbiological contaminants under the standards in OAR 333-007-0390.

(b) Pesticides under the standards in OAR 333-007-0400.

(d) Heavy metals under the standards in OAR 333-007-0415.

(e) Mycotoxins under the standards in OAR 333-007-0425.

(4) Kratom processors must retain records of third-party test results for a period of 3 years from the date of the test results or while the kratom products are in their possession, whichever is longer, and provide the records to the Department upon request. Records may be kept in hard copy or machine-sensible format as those terms are defined in OAR 150-475-2050.

(5) Kratom processor’s obligations when product has been tested by another registered Kratom processor.

(a) If a kratom processor acquires finished or unfinished kratom products from a registered Oregon kratom processor at wholesale, and those kratom products have been tested in accordance with section (3) of this rule, the kratom processor wholesaler may satisfy the testing requirements of section (3) of this rule by:

(A) retaining copies of the seller’s test results for the previously tested batches purchased by the kratom processor, or;

(B) by retaining invoices for the kratom products that include the Oregon kratom processor’s registration certificate number of the seller on the invoice and a statement that all kratom products on the invoice have been tested in accordance with OAR 150-475-6020.

(b) The following examples illustrate the requirements of subsection (a) of this section.

(c) Notwithstanding subsection (a) of this section, a Kratom processor may satisfy the requirements of section (3) of this rule by retesting kratom products acquired from a registered Oregon kratom processor. If a kratom processor elects to retest kratom products acquired from another Oregon kratom processor, the kratom processor must retain records of those third-party test results in accordance with section (4) of this rule. A processor that elects to test products that have been previously tested by another Oregon kratom processor under this subsection must test a minimum of 0.5 percent by volume of each finished kratom product formulation or unfinished kratom product from the invoice retained in accordance with section (4) of the rule.

History

Statutory/Other Authority: Oregon Laws 2022, chapter 41, section 7
Statutes/Other Implemented: Oregon Laws 2022, chapter 41, section 7 & Oregon Laws 2022, chapter 41, section 3
REV 10-2023, adopt filed 05/10/2023, effective 06/01/2023

Or. Admin. R. 150-475-6030 Civil Penalties for Unregistered Kratom Processors

(1) The Department of Revenue may impose civil penalties on any person who sells, distributes, or exposes for sale kratom products on a wholesale basis to a retailer without first registering as a Kratom Processor under OAR 150-475-6010.

(2) The following civil penalties will be imposed on a per incident basis for a violation listed in section (1) of this rule.

(a) The department will issue a civil penalty of $500 for a kratom processor’s first violation.

(b) The department will issue a civil penalty of $1,000 for a kratom processor’s second and each subsequent violation.

(3) Each sales invoice or other document indicating a sale of kratom will be considered a separate incident for determining the penalty imposed under subsection (2) of this rule.

(4) If the department assesses a penalty under this administrative rule, the penalty assessment may be appealed as a contested case under ORS chapter 183 within 30 days of the date on the notice of penalty assessment.

History

Statutory/Other Authority: Oregon Laws 2022, chapter 41, section 7
Statutes/Other Implemented: Oregon Laws 2022, chapter 41, section 3
REV 10-2023, adopt filed 05/10/2023, effective 06/01/2023

Division 670 INDEPENDENT CONTRACTOR

Or. Admin. R. 150-670-0010 Independent Contractor

(1) Purpose of Rule. The Landscape Contractors Board, Department of Revenue, Department of Consumer and Business Services, Employment Department, and Construction Contractors Board must adopt rules together to carry out ORS 670.600. ORS 670.600 defines “independent contractor” for purposes of the programs administered by these agencies. This rule is intended to ensure that all five agencies apply and interpret 670.600 in a consistent manner; to clarify the meaning of terms used in 670.600; and, to the extent possible, to enable interested persons to understand how all five agencies will apply 670.600.

(2) Statutory Context.

(a) ORS 670.600 generally establishes three requirements for “independent contractors”. One requirement is that an “independent contractor” must be engaged in an “independently established business.” Another requirement is related to licenses and certificates that are required for an “independent contractor” to provide services. A third requirement is that an “independent contractor” must be “free from direction and control over the means and manner” of providing services to others.

(b) The specific focus of this rule is the “direction and control” requirement. See ORS 670.600 for the requirements of the “independently established business” test and for licensing and certification requirements.

(3) Direction and Control Test.

(a) ORS 670.600 states that an "independent contractor" must be "free from direction and control over the means and manner" of providing services to others. The agencies that have adopted this rule will use the following definitions in their interpretation and application of the “direction and control” test:

(A) “Means” are resources used or needed in performing services. To be free from direction and control over the means of providing services an independent contractor must determine which resources to use in order to perform the work, and how to use those resources. Depending upon the nature of the business, examples of the "means" used in performing services include such things as tools or equipment, labor, devices, plans, materials, licenses, property, work location, and assets, among other things.

(B) “Manner” is the method by which services are performed. To be free from direction and control over the manner of providing services an independent contractor must determine how to perform the work. Depending upon the nature of the business, examples of the "manner" by which services are performed include such things as work schedules, and work processes and procedures, among other things.

(C) “Free from direction and control” means that the independent contractor is free from the right of another person to control the means or manner by which the independent contractor provides services. If the person for whom services are provided has the right to control the means or manner of providing the services, it does not matter whether that person actually exercises the right of control.

(b) Right to specify results to be achieved. Specifying the final desired results of the contractor’s services does not constitute direction and control over the means or manner of providing those services.

(4) Application of “direction and control” test in construction and landscape industries.

(a) The provisions of this section apply to:

(A) Architects licensed under ORS 671.010 to 671.220;

(B) Landscape architects licensed under ORS 671.310 to 671.479;

(D) Engineers licensed under ORS 672.002 to 672.325; and

(E) Construction contractors licensed under ORS chapter 701.

(b) A licensee described in (4)(a), that is paying for the services of a subcontractor in connection with a construction or landscape project, will not be considered to be exercising direction or control over the means or manner by which the subcontractor is performing work when the following circumstances apply:

(A) The licensee specifies the desired results of the subcontractor’s services by providing plans, drawings, or specifications that are necessary for the project to be completed.

(B) The licensee specifies the desired results of the subcontractor’s services by specifying the materials, appliances or plants by type, size, color, quality, manufacturer, grower, or price, which materials, appliances or plants are necessary for the project to be completed.

(C) When specified by the licensee’s customer or in a general contract, plans, or drawings and in order to specify the desired results of the subcontractor’s services, the licensee provides materials, appliances, or plants, including, but not limited to, roofing materials, framing materials, finishing materials, stoves, ovens, refrigerators, dishwashers, air conditioning units, heating units, sod and seed for lawns, shrubs, vines, trees, or nursery stock, which are to be installed by subcontractors in the performance of their work, and which are necessary for the project to be completed.

(D) The licensee provides, but does not require the use of, equipment (such as scaffolding or fork lifts) at the job site, which equipment is available for use on that job site only, by all or a significant number of subcontractors requiring such equipment.

(E) The licensee has the right to determine, or does determine, in what sequence subcontractors will work on a project, the total amount of time available for performing the work, or the start or end dates for subcontractors working on a project.

(F) The licensee reserves the right to change, or does change, in what sequence subcontractors will work on a project, the total amount of time available for performing the work, or the start or end dates for subcontractors working on a project.

History

Statutory/Other Authority: ORS 305.100 & 670.605
Statutes/Other Implemented: ORS 670.600
Renumbered from 150-670.600, REV 40-2016, f. 8-12-16, cert. ef. 9-1-16
REV 1-2007, f. & cert. ef. 2-1-07