Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Oregon.
October 11, 2024
Oregon – Subpart F Income May Require Sales Factor Denominator Representation
Authored by: Katerine Velasquez and Penny Sweeting, CPA
On September 24, 2024, the Oregon tax court considered the 20% Subpart F repatriation included in state taxable income, which may need to be included in the denominator of the Oregon sales factor under OR. Rev. Stat. 314.665(6). Denominator representation for the 20% Subpart F inclusion is required when the payor is a controlled foreign corporation (CFC) involved in a unitary business with a water’s edge group. A unitary relationship is proved by the CFC and the water’s edge group engaging in similar and/or related lines of business.
If you have questions about how states treat Subpart F income, please reach out to a member of the Withum SALT Team.
August 14, 2024
Oregon Provides Guidance for Research and Development Tax Credit for Semiconductors
Authored by: Brandon Mejia and Penny Sweeting, CPA
On July 1, 2024, the Oregon Business Development Department adopted Or. Admin. R. §§ 123-401-0100 through 123-401-0600, which provide guidance on previously enacted tax credits. The Oregon Legislature established the Research and Development Tax Credit for Semiconductors on July 18, 2023, with Chapter 298, Oregon Laws 2023, which can apply a credit of up to 15 percent to offset personal and corporate income taxes. The administrative regulations provide further guidance on the taxpayers that qualify for the tax credit and instructions on applying for the credit.
For additional information, please refer to Oregon Secretary of State Administrative Rules.
If you have questions about the Oregon Research and Development Tax Credit for Semiconductors, please reach out to a member of the Withum SALT Team.
May 8, 2024
Oregon PTE-E Tax Filers May Have Incorrect Interest or Underpayment
Authored by: Brandon Spinella and Katie Nguyen, CPA
An error in the calculation of underpayment of estimated tax (UND) for certain Pass-through Entity Elective Tax (PTE-E) filers has been identified by the Oregon Department of Revenue. Filers whose prior year tax liability is less than 90% of the current year’s tax liability were charged UND based on the higher current year amount in error. Estimated payments are required when PTE-E tax is $1,000 or more unless an exception is met. The required annual payment is the lesser of 90% of tax after credits shown on your 2023 PTE-E return or 100% of the tax after credits shown on your 2022 PTE-E return. UND is charged for each installment period when the estimated tax is underpaid or paid late. If the state sends a notice of adjustment and it seems to be in error, the taxpayer may submit an appeal through their Oregon online tax account.
To submit an appeal, the taxpayer will log into their Revenue Online account, select the “Submit an appeal or waiver” link, and follow the instructions. The letter ID on the notice will be required when referencing the penalty for appeal.
If you need assistance resolving state tax notices, please reach out to a member of the Withum SALT Team.
March 28, 2024
City of Portland Updated Tax Policies
Authored by: Penny Sweeting, CPA
The City of Portland’s Revenue Division recently issued an updated policy to allow taxpayers to request a waiver of interest on the underpayment of tax in 2023. Due to a change in the City’s apportionment method from cost of performance to market-based sourcing, taxpayers may have underestimated their tax liability under new sourcing methods. A written request may be submitted to waive all interest for the 2023 tax year only. The request for a waiver also applies to Multnomah County and Metro SHS taxes.
Additional information can be found on the city’s website.
June 16, 2023
Oregon Extends IRC Conformity
Authored by:Katie Szymanski, CPA and Brandon Mejia
On June 7, 2023, Governor Tina Kotek signed L.2023, S141 into law, updating the state’s Internal Revenue Code (IRC) conformity date from December 31, 2021, to December 31, 2022, for tax years beginning on or after January 1, 2023.
For additional details, please refer to L.2023, S141.
If you have state tax conformity questions, please reach out to a member of the Withum SALT Team.
April 15, 2022
Oregon Governor Signs Law Amending Various Individual Income, Corporate Income and Excise Tax Provisions
On March 24, 2022, the Oregon Governor signed into law Senate Bill 1524. The law provides the following measures:
- Raising the expense reimbursement percentages permitted to single film or single local media production projects, as related to Oregon Production Investment Fund contributions;
- Amending the state’s business alternative income tax SALT workaround by permitting specific amounts added back that meet the requirements for the use of elective rates and be treated as qualifying income in a proportion determined by the DOR;
- Appointing the DOR to implement rules offering penalty relief if appropriate estimated payments are made by a pass-through entity or its members; and
- Amending corporate activity tax (CAT) provisions to permit businesses to file CAT returns using a fiscal tax year rather than a calendar year.
March 11, 2022
Oregon Pass-Through Entity Tax Update
The Oregon Department of Revenue issued additional guidance on the new elective pass-through entity-level tax (PTE-E) in response to the federal state and local tax deduction cap of $10,000. The Department issued the following guidance:
- Entities taxed as S corporations, partnerships whose members/owners are all individuals, or pass-through entities owned by individuals, which are subject to Oregon’s personal income tax may elect to pay the new entity-level tax. The entity level tax election will need to be made on a timely filed return.
- The PTE-E is taxed at a rate of 9% on the first $250,000 of distributive proceeds and 9.9% tax on any amount exceeding $250,000. If the SALT deduction limitation expires or is repealed, this law will expire.
- Qualifying members of an electing PTE are eligible for a credit equal to 100% of the member’s distributive share of the PTE-E tax paid.
Additional FAQ’s can be found here https://www.oregon.gov/dor/programs/businesses/Pages/Pass-Through-Entity-Elective-Tax.aspx.
August 20, 2021
Oregon Bill Modifies Provisions of the Corporate Activity Tax
On July 19, 2021 Senate Bill 164 was signed into law, modifying certain provisions of the Oregon Corporate Activity Tax (“CAT”). Previously, all CAT taxpayers used the calendar year to file their corporate activity tax returns. Effective, September 25, 2021, and applicable to tax years that begin on or after January 1, 2021, taxpayers will use their federal income tax year as their tax for the CAT. Fiscal-year taxpayers will be required to file a short period return covering January 1, 2021, through the end of their fiscal tax year. These short year returns for 2021 will be due no later than April 15, 2022. Prospectively, CAT returns for fiscal-year taxpayers will be due on the 15th day of the fourth month following the end of the tax year.
August 4, 2021
Oregon’s Pass-Through Business Alternative Income Tax enacted
Effective on September 25, 2021, a pass-through entity may elect to be liable for and pay pass-through business alternative income tax if all members are individuals subject to Oregon personal income tax or are entities that are pass-through entities owned entirely by individuals subject to Oregon personal income tax. The election is applicable to tax years beginning on or after January 1, 2022 and before January 1, 2024. Pass-through entity owners will claim a credit for their pro-rata share of the tax paid by the pass through entity on their respective personal returns.
March 23, 2021
Oregon Update on Extension of Filing Deadline
The Oregon Department of Revenue announced it is joining the IRS and automatically extending the tax year 2020 filing due date for individuals from April 15, 2021 to May 17, 2021. Additionally, individual tax payments for the 2020 tax year due on April 15, 2021 can be postponed to May 17, 2021 without penalties and interest, regardless of the amount owed. The postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties and interest will begin to accrue on any remaining unpaid balances as of May 18, 2021. Taxpayers do not need to file any forms or call the department to qualify for this automatic tax filing and payment relief. Those needing additional time to file beyond the May 17 deadline can request a filing extension until October 15 by filing federal Form 4868 through their tax professional or tax software or by using the Free File link on IRS.gov. Oregon recognizes a taxpayer’s federal extension. An extension to file is not an extension to pay. ( Income Tax Filing, Payment Deadlines for Individuals Extended to May 17, Or. Dept. Rev., 03/17/2021 .)
March 21, 2020
Latest Tax Update Relating to COVID-19
Personal and corporate income tax
The Oregon Department of Revenue (“DOR” or “Department”) has received several questions asking if Oregon is going to provide similar relief to the IRS. Now that the Department knows what the IRS is providing, it is evaluating options and authority under the statutes to provide relief for Oregon and its taxpayers. A decision is expected to be made soon.
Corporate Activity Tax
Initial quarterly payments for the new Corporate Activity Tax (CAT) are due April 30, 2020. The Department understands that the pandemic may impact commercial activity, up or down, to an extent that makes it difficult for businesses to estimate their first payment. The Department will not assess underpayment penalties to taxpayers, making a good faith effort to estimate its first-quarter payments.
All other tax programs Department of Revenue administers
If an action of the IRS or a state-declared emergency will impair the ability of Oregon taxpayers to take action required within the time required by law, the Department may extend any statutory period of limitation on any tax that is collected by the DOR. If the Department makes such a decision, an order will be issued and announced, and filed with the Secretary of State.
March 17, 2020
Underpayment Penalties Will Not Be Assessed Amid Coronavirus Pandemic
Corporate Activity Tax Initial quarterly payments for the new Corporate Activity Tax (CAT) are due April 30, 2020. The department understands that the pandemic may impact commercial activity, up or down, to the extent that it makes it difficult for businesses to estimate their first payment. The department will not assess underpayment penalties to taxpayers, making a good faith effort to estimate their first-quarter payments.
More on Taxes and the Coronavirus Pandemic.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
July 2019
New CAT Tax
Effective for tax years January 1, 2020 and on, a new commercial activity tax (CAT) has been enacted in Oregon. This new tax applies to various taxpayers including corporations, individuals, partnerships, limited liability companies, federally disregarded entities, and ‘any other entities.’ Unitary groups register, file, and pay the tax as a single taxpayer. Once “Substantial Nexus” has been established then the taxpayer is required to file. More guidance is to come in the future.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
Contact Us
The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
