Corporate Taxes (Home)
Oregon follows the federal entity classification regulations. If an entity is classified or taxed as a corporation for federal income tax purposes, it will be treated as a corporation for Oregon tax purposes.
Oregon excise tax addition on Forms 20, 20-S, and 20-INS
Oregon Revised Statute (ORS) 317.314 requires that state taxes upon or measured by net income or profits that are deducted from income on the federal return must be added back to income on the Oregon return. In the past, Oregon has not differentiated between the corporation minimum tax and the calculated excise tax; both were required additions on the Oregon returns. However, based on the department's interpretation of a recent tax court decision the Oregon corporation minimum tax is not subject to the state tax add back provision of ORS 317.314. This change applies to all open tax years.
The change above does not apply to insurance companies that file an Oregon Form 20–INS because ORS 317.314 is not applicable to insurance companies. Insurance companies are, instead, subject to the add back provision of ORS 317.655, which requires the add back of any state income taxes deducted in computing net gain from operations. If an insurance company deducts the minimum tax on its annual statement the amount is required to be added back to income on the Form 20-INS.
|Multistate tax compact apportionment election—protective refund claim|
Per Oregon Revised Statute (ORS) 314.606, the income apportionment election provided in Article III of the Multistate Tax Compact (Compact) is not available on an Oregon tax return. However, similar to the Gillette Company v. California Franchise Tax Board appeal in California, the Compact apportionment election is currently being challenged in Oregon tax court.
All corporation tax returns will be processed based on the department's long-standing position that the Compact apportionment election is not available, but taxpayers may file a protective claim to secure the right to a refund. We will defer action on all protective claims for refund until the outcome of the Oregon litigation is known. Protective claims for refund generally must be filed with us by the later of three years from the due date of the original return, or the date the original return was filed. Otherwise the statute of limitations for refund may expire.
Filing original tax returns:
All original tax returns filed using the Compact apportionment election will be adjusted. To preserve your right to a refund, file a protective claim after your original return is filed.
Protective claim filing instructions:
IMPORTANT: Amended tax returns that use the Compact apportionment election will be denied unless identified and filed as a protective claim for refund as instructed above.
- Use the same form (i.e. Form 20) as originally filed, check the "Amended" box, and show the computation of refund claim, or
- Send a letter with authorized signature that includes:
- Taxpayer name, FEIN, and BIN as shown on original return,
- Tax years involved,
- The amount of the refund claim for each year,
- The detail of the apportionment formula used, and
- Name of person to contact, phone number, and fax number.
- Write the words "Protective Claim for Refund—Compact Apportionment Election" at the top in ink. Do not use red ink.
- Mail to: REFUND, PO Box 14777, Salem, Oregon 97309-0960.
- Retain a copy of the protective claim for your files.
|Corporate minimum tax reduced by credits—protective refund claim|
Our position on the application of tax credits to Oregon's corporate minimum tax
The Oregon Tax Court issued a decision on December 27, 2011, Con-Way, Inc. & Affiliates v. Department of Revenue TC5003, that suggests all corporate tax credits shall be applied against the corporate minimum tax if the tax credit is not specifically prohibited from doing so by statute. The two tax credits that are prohibited from being applied against the minimum tax are the corporate surplus kicker credit (ORS 291.349) and the credit for contribution of computer equipment (ORS 317.151).
The court's decision contradicts the department's long-standing position that credits cannot reduce corporation excise tax below the minimum tax. We have appealed the decision to the Oregon Supreme Court. Until the appeal is final, our long-standing position remains unchanged: taxpayers cannot use tax credits to reduce the corporate minimum tax.
However, taxpayers may file protective claims with us to secure the right to a refund pending the Supreme Court proceedings. We will defer action on all claims pending a final decision. Protective refund claims generally must be filed by the later of three years from: (1) the due date of the original return, or (2) the date the original return was filed. If no action is taken, earlier years' statutes of limitations may expire resulting in disallowance of refunds and disallowance of credits to carry forward.
Filing current year returns
Do not use credits to offset minimum tax on originally filed returns. If you use tax credits to reduce minimum tax, the return will be adjusted. To preserve your right to a refund pending the Supreme Court decision, file a protective claim after filing your original return.
Protective claim filing instructions:
Use the same form (i.e. Form 20) as originally filed, check the "Amended" box, and show computation of refund claim, or
Send a letter with authorized signature that includes:
- Write the words "Protective Claim for Refund–Con-Way Supreme Court Appeal" at the top. Do not use red ink.
- Mail to: REFUND, PO Box 14777, Salem, Oregon 97309-0960
- Retain a copy of the original protective claim for your files.
IMPORTANT: Amended returns filed consistent with the Con-Way decision will be denied unless identified and filed as a protective claim as instructed above.
|Excise or Income tax?|
|Oregon has two types of corporate taxes: excise and income. Excise tax is the most common. Most corporations don't qualify for Oregon's income tax. |
Excise tax is a tax for the privilege of carrying on or doing business in Oregon. It is measured by net income. All corporations doing business in Oregon must file an Oregon corporation excise tax return and pay the minimum excise tax. See Chapter 317 of the Oregon Revised Statutes.
"Doing business" means carrying on or being engaged in any profit-seeking activity in Oregon not protected by Federal Public Law 86-272. A taxpayer with an Oregon address or having one or more of the following in this state is clearly doing business in Oregon:
Income tax is for corporations not carrying on or doing business in Oregon, but with income from an Oregon source. If you have tangible or intangible property or other assets that you are using in Oregon, any income you receive is Oregon source income. See Chapter 318 of the Oregon Revised Statutes.
- A stock of goods.
- An office.
- A place of business (other than an office) where affairs of the corporation are regularly conducted.
- Employees or representatives providing services to customers as the primary business activity (such as accounting or personal services), or services incidental to the sale of tangible or intangible personal property (such as installation, inspection, maintenance, warranty, or repair of a product).
- An economic presence through which the taxpayer regularly takes advantage of Oregon's economy to produce income.
"Oregon source income" is income from tangible or intangible property or other assets being used in Oregon. If you have Oregon source income, generally, your company must file an Oregon Corporation Tax Return. Public Law 86-272 provides exceptions to this requirement. For a more detailed explanation see Foreign Corporations with Headquarters outside of Oregon (Nexus).
Any corporation doing business in Oregon is required to register with the Secretary of State Corporation Division and file corporate excise tax returns.
If your registered corporation or insurance company isn't carrying on or doing business in Oregon and has no Oregon-source income, then you don't need to file a corporation tax return.
|Tie to federal tax law|
|Oregon's calculation of taxable income for C corporations begins with federal taxable income. It is modified as required under Oregon tax law. |
Oregon has a rolling connection to the federal definition of taxable income beginning January 1, 2011 with certain exceptions relevant to corporation tax law, including:
Note: The disconnect from federal law for tax years 2009 and 2010 may have affected reporting differences between federal and Oregon expenses for subsequent years. If you had assets placed in service for a year beginning on or after January 1, 2009, and before January 1, 2011, and bonus depreciation on your federal return created an addition on your Oregon return, you will likely have modifications to Oregon income.
- No connection to the qualified production activities income (QPAI) deduction (IRC §199; ORS 317.398). An addition to the Oregon return is required, effective January 1, 2005; and
- No connection to certain subsidies excluded under IRC 139A for prescription drug plans (IRC §139A; ORS 317.401). An addition to the Oregon return is required, effective January 1, 2008.
|Extensions and due dates|
For an Oregon extension when you're also filing for a federal extension: Send the federal extension with the Oregon return when you file. Check the "Extension" checkbox on your Oregon return. The Oregon extension due date is the 15th day of the month following the federal extension's due date. Do not send the extension until you file your Oregon return.
If you need an extension for Oregon only, answer question 1 on federal Form 7004, write "For Oregon Only" at the top of the form, and include it with your Oregon return when you file. Check the "Extension" checkbox on your Oregon return. The Oregon extension due date is the 15th day of the month following what would be the federal extension's due date. Do not send the extension before you file your Oregon return.
More time to file does not mean more time to pay your tax. To avoid penalty and interest, mail any tax due with Form 20-V on or before the original due date of your return. Please note: Although Form 20-V payment voucher can be sent with an extension payment do not send a Form 20-V payment voucher as an extension of time to file or to pay tax.
Returns for calendar year filers, including all insurance companies, are due on or before April 15. Returns for fiscal year filers are due the 15th day of the month following the due date of your federal corporation return. When the 15th falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.
|Consolidated, Unitary, and Separate returns|
|Consolidated returns (ORS 317.705-317.725). If a corporation is a member of an affiliated group of corporations that filed a consolidated federal return, it must file an Oregon return based on that federal return. |
A consolidated Oregon return is required when two or more affiliated corporations are:
Unitary business. A business that has, directly or indirectly between members or parts of the enterprise, either a sharing or an exchange of value shown by:
- Included in a consolidated federal return;
- Unitary; and
- At least one of the affiliated corporations must be doing business in Oregon or have an Oregon-source income.
Corporations that are not unitary are excluded from the consolidated Oregon return.
- Centralized management or a common executive force.
- Centralized administrative services or functions resulting in economies of scale.
- Flow of goods, capital resources, or services showing functional integration.
Separate returns. Any corporation that files a separate federal return must file a separate Oregon return if they are doing business in Oregon or have income from an Oregon source.
A corporation subject to Oregon taxation must also file a separate Oregon return if it was included in a consolidated federal return, but was not unitary with any of the other affiliates. Oregon taxable income is calculated by subtracting the income of the nonunitary affiliates from the taxable income from the consolidated federal return.
|Other business structures|
Publicly traded partnerships
A "publicly traded partnership" is a partnership treated as a corporation for federal tax purposes under IRC 7704.
The partners in a publicly traded partnership are not subject to tax on their distributive shares of partnership income. A publicly traded partnership taxed as a corporation must file an Oregon Corporation Excise Tax Return, Form 20, if doing business in Oregon, or an Oregon Corporation Income Tax Return, Form 20-I, if not doing business in Oregon but the publicly traded partnership is receiving Oregon-source income.
REMICs (ORS 314.260)
A REMIC (Real Estate Mortgage Investment Conduit) must file an Oregon Corporation Income Tax Return, Form 20-I. if it gets prohibited transaction income from Oregon sources or has any resident holders of a residual interest. Income is from an Oregon source if it comes from tangible property located in Oregon or from intangible property used in an Oregon business.
All REMICs required to file must file Form 20-I and attach a complete copy of federal Form 1066.
The REMIC must also attach a federal Schedule Q for each residual interest holder for each quarter of the tax year. Enter the amount of net income from prohibited transactions from federal Form 1066, Schedule J.
Limited liability companies (LLC)
Oregon follows federal law in determining how an LLC is taxed. Federal law does not recognize an LLC as a classification for federal tax purposes. An LLC business entity must file a corporation, partnership or sole proprietorship tax return, depending on elections made by the LLC and the number of members. An LLC is always classified under federal law as one of these types of taxable entities.
A multi-member LLC can be taxed as a partnership or a corporation, including an S corporation. A single member LLC (SMLLC) can be either a corporation or a single member "disregarded entity." Refer to federal law for more information and requirements.
An LLC taxed as a corporation must file an Oregon Corporation Excise Tax Return, Form 20, if doing business in Oregon, or an Oregon Corporation Income Tax Return, Form 20-I, if not doing business in Oregon, but the LLC is receiving Oregon-source income. The LLC must file an Oregon S Corporation Tax Return, Form 20-S, if the entity files federal Form 1120-S.
An LLC taxed as a partnership must file an Oregon Partnership Return, Form 65, if doing business in Oregon, or is receiving income from an Oregon source, or if it has any Oregon resident members. If the LLC has a corporate member, the member is taxed on its share of the LLC's Oregon income.
If an LLC is part of a corporation's overall business operations and is treated as a partnership, include the corporation's ownership share of LLC property, payroll, and sales in the apportionment percentage calculation on Schedule AP. (OAR 150-314.650)
Foreign LLCs are identified as unincorporated associations organized under the laws of a state other than Oregon, or a foreign country. Oregon's definition of a foreign LLC includes an unincorporated association organized under the laws of a federally recognized American Indian tribe, no matter when organized.
Additional business structures
Nonprofit and Tax-Exempt Organizations including Cooperatives and Homeowners' Associations
|Assembling and submitting returns|
|Please organize and submit your Oregon tax return forms (if applicable) in this order: |
- Oregon Form 20, 20-I, 20-S, or 20-INS;
- Schedule AP, Apportionment of Income;
- Schedule AF, Schedule of Affiliates (not applicable for Form 20-S);
- Schedule ASC-CORP, Oregon Adjustments;
- Form 37, Underpayment of Oregon Corporation Estimated Tax;
- Form 24, Oregon Like-Kind Exchanges/Involuntary Conversions;
- Worksheet FCG-20, Farm Liquidation Long-Term Capital Gain Tax Rate (not applicable to Form 20-INS);
- Other Oregon statements;
- Oregon credit forms including notice of credit transfers;
- Federal extension, Form 7004;
- Copy of federal tax return and schedules (not applicable to Form 20-INS);
- Form 20-S filers, also include:
Form 20-INS filers, also include the following pages from the Annual Statement:
- Federal Schedule K-1s, if less than 11 shareholders during the year; or
- K-1 Summary if more than 10 shareholders. Your summary must include each shareholder's name, SSN or FEIN, address, profit/loss sharing percentage, and Oregon modifications and credits. We prefer summaries and K-1s on CD. Label the CD with the entity's FEIN, name, and tax year. If your CD is password protected, mail the password separately or e-mail it to firstname.lastname@example.org. Include the S corporation name and identification number with the password.
Life Insurance companies:
- Page 4—Summary of Operations;
- Page 11, Exhibit 3—General Expenses;
- Page E-01—Schedule A, Part 1;
- Page E-03 Schedule A -Part 3;
- Page 8—Exhibit of Net Investments; and
- Page 50, Schedule T—Premiums and Annuity Considerations.
Property and Casualty Insurance companies:
- Page Supp 6—Part II Allocation to Lines of Business Net of Reinsurance;
- Page 4—Statement of Income;
- Page 11—Underwriting and Investment Exhibit;
- Page E-01 and E-03—Schedule A, Part 1;
- Page 12—Exhibit of Net Investment Income; and
- Page 95, Schedule T—P&C Schedule of Premiums Written.
Tax-due returns, mail to:
Oregon Department of Revenue
PO Box 14790
Salem OR 97309-0470
Refunds or No tax-due returns, mail to:
Oregon Department of Revenue
PO Box 14777
Salem OR 97309-0960