Businesses

Multistate Tax Compact apportionment election—protective refund claim

The income apportionment election from Article III of the Multistate Tax Compact isn’t available on an Oregon tax return (ORS 314.606). However, similar to the Gillette Company v. California Franchise Tax Board appeal in California, the Compact apportionment, this election is currently being challenged in Oregon tax court.

All corporation tax returns will be processed based on our long-standing position that the compact apportionment election isn’t available, but taxpayers can file a protective claim to secure the right to a refund. We’ll defer action on all protective claims for refund until the Oregon litigation is complete.
 
Protective claims for refund generally must be filed with us three years from either the due date of the original return or the date the original return was filed, whichever is later. 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: 
You have two options to file a protective claim. You can use the same form type as originally filed, check the "Amended" box, and show the computation of refund claim. You can also send a letter with the following:
  • 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.
  • Name of person to contact, phone number, and fax number.
  • An authorized signature.
  • "Protective Claim for Refund—Compact Apportionment Election" written at the top in ink. Don’t use red ink.
Mail to:
REFUND
Oregon Department of Revenue
PO Box 14777
Salem OR 97309-0960.
Retain a copy of the protective claim for your files.
 
IMPORTANT: Amended tax returns using the compact apportionment election will be denied unless identified and filed as a protective claim as shown above.

Oregon Supreme Court: Minimum tax can be reduced by credits

Only for tax years beginning before January 1, 2015.

The Oregon Supreme Court upheld the judgment of the Oregon Tax Court and ruled that a Business Energy Tax Credit (BETC) may be allowed against the corporation minimum tax. The decision (Con-way, Inc. & Affiliates v. Dept of Revenue, SC S060141) addressed only the BETC, but we’re interpreting the ruling to broadly apply to corporation tax credits allowed against taxes imposed under ORS Chapter 317. There are two credits that are specifically prohibited from being allowed against the minimum tax:
  • Contributions of computers or scientific equipment credit (ORS 317.151).
  • Surplus kicker credit (ORS 291.349).
If the refund statute of limitations is still open, you can file an amended corporation tax return to apply tax credits against the corporation minimum tax. We can process the amended return and issue a refund.
 
To file your amended return, use the form and instructions from the year you're amending. For tax years 2012 and prior, use the modifications below. You may need to override computations made by your software.
 
Form 20
Line 16 Excise tax: Enter the greater of calculated tax or minimum tax.
Lines 29 and 31 are no longer limited by minimum tax. Don’t enter less than zero.
 
Form 20-INS
Line 22 Excise tax: Enter the greater of calculated tax or minimum tax.
Line 29 is no longer limited by minimum tax. Do not enter less than zero.
 
Form 20-S
The $150 minimum tax for S corporations can’t be reduced by credits (ORS 314.752).
 
Attach a schedule showing the credit(s) being claimed. For more information, see each year's form instructions.

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’s measured by net income. Income tax is for corporations not carrying on or doing business in Oregon, but with income from an Oregon source.
 
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.

Filing information   

Are you looking for filing or entity type information? Search our Corporation tax forms to get specific instructions on topics such as:
  • Consolidated returns
  • Unitary business
  • Separate returns
  • Other entities
  • Assembling returns
  • Submitting returns
Get information on extension filing and due dates in our FAQ center.