Businesses

Tie to federal tax law

In general, Oregon income tax law is based on federal income tax law. Oregon is tied to the federal definition of taxable income as of December 31, 2016; however, Oregon is still disconnected from:
  • Federal subsidies for prescription drug plans (Internal Revenue Code [IRC] Section 139A; ORS 317.401).
  • Domestic production activities (QPAI) (IRC Section 199; ORS 317.398).
  • Deferral of certain deductions for tax years beginning on or after January 1, 2009 and before January 1, 2011 may require subsequent Oregon modifications (IRC Section 108; IRC Section 168(k); and IRC Section 179; ORS 317.301).

Bankrupt taxpayer’s tax attributes

A taxpayer who realized discharge of indebtedness income as a result of a corporate bankruptcy must reduce their Oregon tax attributes pursuant to the version of 11 USC 346(j) as amended and in effect on December 31, 2016 if the bankruptcy petition was filed on or after October 17, 2005. See ORS 314.306 and SB 29 (2017) for more details.

E-filers ​​​

Beginning January 1, 2017, a paper 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 us prior to the filing of the paper return.​

Insurers ​​​

The 2017 Oregon Legislature passed SB 153 which contains a number of provisions that change or clarify Oregon law related to the taxation of insurers with a separate return filing requirement, and their noninsurance affiliates, under ORS 317.710(5) and (7). The provisions apply to returns subject to audit or adjustment by the Department of Revenue, returns subject to appeal, and refund claims made on or after October 6, 2017.
In summary, SB 153 (2017) provides the following: 
  1. Insurers with a separate return filing requirement under ORS 317.710(5) and (7) may not be included in an Oregon consolidated return and shall determine its Oregon corporate excise tax on a separate basis,
  2. The remaining affiliates in the Oregon consolidated return shall compute their modified federal consolidated taxable income after exclusion of the insurer with the separate return filing requirement, and​
  3. The remaining affiliates in the Oregon consolidated return shall receive a dividends-received deduction of 100 percent if the dividend is paid by an insurer that would have been included in the Oregon consolidated return of the remaining affiliates but for the operation of ORS 317.710(5) and (7).

Interstate broadcasters

For tax years beginning on or after January 1, 2014 and before January 1, 2017 an interstate broadcaster’s apportionment was determined based on the broadcaster’s customers who are domiciled in Oregon. For tax years beginning on or after January 1, 2017, the method of apportionment of business income for an interstate broadcaster has reverted to pre-January 1, 2014 law and is based on an estimate of Oregon’s national audience or subscribers’ share (ORS 314.684 and 314.680). For more information, see “Special filing requirements.”

Manufactured dwelling park tenant payments​

The 2017 Oregon Legislature increased the amount of mobile home park closure payments and the subtraction amount. See HB 2008 (2017) for more information.

Overpayments

For tax years beginning on or after January 1, 2016, a C corporation’s tax refund (overpayment) elected to be applied to the following year’s estimated tax installment payment will be applied as follows:​ ​​
  • Overpayment of tax received prior to the following year’s first quarter estimated tax due date will be applied as of the following year’s first quarter, and​
  • Overpayment of tax received after the following year’s first quarter estimated tax due date will be applied as of the date the payment is received.

Protective claims​

We have a new form for filing a protective claim for refund. Use Oregon Form OR-PCR, Protective Claim for Refund, 150-101-184, when your claim to a refund is contingent on a pending court decision or legislative action. Notify us within 90 days of the final determination by filing an amended return. Don’t file an amended return before the pending action is final.

Credits

Rural technology workforce development tax credit
The rural technology workforce development tax credit is a new tax credit that equals 12 percent of a taxpayer’s expenses that are incurred to establish and implement an employee training program. A qualifying employee training program must be operated in collaboration with a local community college operated under ORS Chapter 341. In addition, the rural technology workforce development program must be operated in a qualifying county.
 
The term qualifying county is defined in statute. The employee training tax credit applies to tax years beginning on or after January 1, 2017. See Sections 18–20 of HB 2066 (2017).​
 
Extended credits
  • Fish screening devices tax credit is extended to tax years beginning before January 1, 2024 (ORS 315.138).
  • Oregon affordable housing lender’s credit is extended to tax years beginning before January 1, 2026 (ORS 317.097). The maximum credits allowed for each fiscal year has also increased from $17 million to $25 million.
  • Oregon production investment fund (auction) credit is extended to tax years beginning before January 1, 2024 (ORS 315.514).
  • Reservation enterprise zones tax credit is extended to tax years beginning before January 1, 2028 (ORS 285C.309).​

Looking ahead

General​

Apportionable income

For tax years beginning on or after January 1, 2018, the current term “business income” becomes “apportionable income” and “nonbusiness income” becomes “nonapportionable income.” See HB 2275 (2017).​​

Listed foreign jurisdictions

The 2017 Oregon Legislature made no changes to Oregon’s listed jurisdiction law (ORS 317.716). Accordingly, the list of countries used in tax years 2015 and 2016 to compute the listed jurisdiction modification hasn’t changed for tax years 2017 and 2018. See Appendix C for the list of countries.

Market-based sourcing
For tax years beginning on or after January 1, 2018, Oregon corporate excise taxpayers must apportion their income from sales of services and intangible property according to market-based sourcing principles rather than cost of performance. See SB 28(2017).

Sales factor computation
For tax years beginning on or after January 1, 2018, Oregon corporate excise taxpayers must exclude functional type income from the computation of their Oregon sales factor. 

Unitary determination

For tax years beginning on or after January 1, 2018, any facts related to any affiliated corporation may be used to determine whether a domestic US corporation is part of a unitary consolidated group. Currently, Oregon law prevents any facts related to foreign corporations from being used to determine if a domestic US corporation is part of a unitary consolidated group unless tax avoidance or evasion is at issue. See SB 30 (2017).​

Credits

Bovine manure tax credit

The bovine manure tax credit is a new tax credit that equals $3.50 for each wet ton of bovine manure and may only be claimed once for each wet ton of bovine manure. The credit is certified by the Oregon Department of Agriculture and applies to tax years beginning January 1, 2018. It’s scheduled to sunset on January 1, 2022. See Sections 6 through 11 of HB 2066 (2017) for more details. 

Tax credit sunsets
Beginning January 1, 2018, the following tax credits are no longer available, except for applicable carryforward purposes:
  • Biomass production/collection (ORS 315.141).
  • Electronic commerce zone investment (ORS 315.507).
  • Energy conservation projects (ORS 315.331).
  • Fire insurance gross premiums tax (ORS 317.122).
  • Long-term rural enterprise zone facilities (June 30, 2018)(ORS 317.124).*
  • Qualified research activities and Alternative qualified research activities (ORS 317.152 and 317.154).​
  • Renewable energy development contributions (ORS 315.326).
  • Transportation projects (ORS 315.336).

*​The credit for long-term rural enterprise zone facilities must be certified on or before June 30, 2018.​

Credits can't offset minimum excise tax
For tax years beginning on or after January 1, 2015, credits can't be used to reduce minimum excise tax for corporations (ORS 317.090). 

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