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Foreign corporations
Corporations with headquarters outside Oregon
Who must file?
Corporations that are doing business in Oregon or have income from an Oregon source are required to file a return.
"Doing business" means being engaged in any profit-seeking activity in Oregon. A taxpayer having one or more of the following in this state is clearly doing business in Oregon:
  • 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 only

If you have tangible or intangible property or other assets being used in Oregon, any income you receive is Oregon-source income. Your company must file an Oregon Corporation Income Tax Return, Form 20-I. Public Law (Pub.L.) 86-272 provides exceptions to this requirement.
Oregon jurisdiction
Any corporation with substantial nexus in Oregon, and not protected by Pub.L. 86-272, must pay Oregon excise or income taxes. See Oregon Administrative Rule 150-317.010, Substantial Nexus Guidelines.
Nexus means a connection, tie, or link. The U.S. Constitution, through due process and commerce clauses, forbids states from imposing a tax unless nexus exists. Nexus ranges from very little connection to substantial connection with Oregon.
Due process and commerce clauses of the U.S. Constitution
The due process clause is contained in the 14th Amendment adopted in 1868. It states "nor shall any State deprive any person of life, liberty, or property, without due process of law... ." This passage means that a state must use sufficiently fair and just legal procedures whenever it asserts authority over a person. Thus, before a state can tax a person, there must be minimum connections between the person and the state that provide some benefit to the person. These are procedural or "process" rights.
The commerce clause is in Article I of the Constitution. It gives Congress the responsibility of regulating commerce between the states. The U.S. Supreme Court determined that in order for a state to subject an interstate activity to a tax, the activity must have substantial nexus with the taxing state. In addition, the tax must be fairly apportioned and must be fairly related to services provided by the state. The tax must not discriminate against interstate commerce.
Representational nexus
If your company receives a benefit from business transacted in Oregon, you might have nexus. Thus, if you contract with independent representatives to provide services for your customers, such as repair or warranty work, the activities of those representatives establish nexus for your corporation. Also, if you lease property to a customer who brings it into Oregon, this establishes nexus for your corporation.
Nexus-creating activities
Examples of activities that create nexus and a filing requirement in Oregon are included in the following list.
  • Your company has a:
    • Phone listing in Oregon,
    • Local Oregon phone number (even if calls are forwarded to your office outside of Oregon), or
    • Office in Oregon.
  • Your company owns, rents, or leases:
    • Raw land,
    • Inventory or other goods in an Oregon warehouse during the year,
    • Vehicles used in Oregon (except those used by certain sales staff), or
    • Equipment used in Oregon.
  • Your company:
    • Ships in-process inventory to any party in Oregon for processing,
    • Consigns goods for sale in Oregon,
    • Leases property to a party who uses it in Oregon,
    • Has any interest in partnerships, LLCs, or S-corporations operating in Oregon,
    • Holds title to Oregon property until contract price is paid,
    • Files a security interest in inventory in Oregon until it is sold,
    • Licenses trademarks to parties doing business in Oregon,
    • Regularly takes advantage of Oregon's economy to produce income,
    • Sells or licenses franchises to franchisees operating in Oregon, or
    • Sells services in Oregon.
  • Your employees or representatives conduct activities in Oregon, such as:
    • Accept orders,
    • Check credit,
    • Accept deposits,
    • Handle credit disputes,
    • Collect delinquent accounts,
    • Repossess property,
    • Perform installation, repair or warranty services in Oregon,
    • Supervise or inspect installation,
    • Conduct training, seminars, etc., more than two times per year except for training sales people whose activities are protected under Pub.L. 86-272,
    • Provide engineering or design services for Oregon customers,
    • Handle customer complaints in Oregon,
    • Pick up defective products or returned property, or
    • Telecommute from Oregon residences.
  • Third parties or agents perform these services on your behalf:
    • Fill orders from inventory,
    • Collect on accounts,
    • Check credit history of new Oregon customers
    • Repossess property in Oregon,
    • Provide maintenance and warranty services in Oregon,
    • Close mortgage loans (for out-of-state financial organizations), or
    • Service mortgage and consumer loans for out-of-state financial organization.

My company manufactures products that salespeople sell in Oregon

Your company does business in Oregon, but federal law forbids states from taxing out-of-state companies that manufacture or sell tangible property, and do no more than solicit sales within the state. For more information, see Title 15 USC 381.
Public Law 86-272
Federal Pub.L. 86-272, enacted in 1959, limits a state’s right to tax out-of-state companies selling of tangible personal property. This does not protect corporations that profit from the use of intangible property or the sale of services in Oregon. It does not protect businesses incorporated in Oregon.
Pub.L. 86-272 prohibits Oregon from imposing net income taxes on out-of-state companies selling tangible personal property whose business activities in Oregon are limited to the solicitation of orders by their employees or representatives. This protection is available only if the orders are approved outside Oregon and the merchandise is shipped or delivered from a location outside Oregon.
The U.S. Supreme Court narrowly interpreted Pub.L. 86-272 to protect only the actual solicitation of orders and activities entirely ancillary to the solicitation of orders. For more information, read the "Statement of Information Concerning Practices of Multistate Tax Commission and Signatory States Under Public Law 86-272." This statement is available in the publication "Model Regulations, Statutes and Guidelines" at the website www.mtc.gov.
An out-of-state company that sells or solicits orders through an independent contractor in Oregon may be protected under Pub.L. 86-272 even if the independent contractor has an office in Oregon. An independent contractor is one who is engaged in selling or soliciting orders for the sales of tangible personal property for more than one principal, and who is held out as such in the regular course of conducting business activities [15 USCA Subsection 381(d)(1)].
An out-of-state company has nexus and is considered to be "doing business" in Oregon if activities (not protected by Pub.L. 86-272) performed in Oregon on behalf of the taxpayer are significantly associated with the taxpayer’s ability to establish and maintain a market in Oregon.
For example: Nexus exists when in-state repair and warranty services provided by an independent contractor on behalf of a direct marketing computer company are advertised as part of its standard warranty or as an option that can be separately purchased. The extension of immunity for activities by independent contractors under Pub.L. 86-272 does not include repair and warranty service.

Voluntary disclosure agreement

If your business isn't in compliance with Oregon tax laws, we encourage you to voluntarily come forward to register and pay prior tax obligations. Our Voluntary Disclosure Program is designed to help resolve prior tax liabilities.
If you haven't been contacted by us or the Multistate Tax Commission, you may ask to enter into a voluntary disclosure agreement (VDA). You may make this request anonymously by going through a third party, such as an accountant or lawyer.
Your VDA request must be in writing and include the following:
  • A description of the company including entity type and the business activity conducted in Oregon.
  • The date that the business activity began in Oregon.
  • The reasons for not filing tax returns with Oregon.
  • The approximate level of activity in Oregon compared to total activities (percentage of property, payroll, and receipts attributable to Oregon activities for the last three years).
  • The potential or estimated tax liability to Oregon for the last three years.
  • The company’s year-end date (calendar or fiscal year).
  • Specific statement of relief requested or proposal being made.
  • Statement indicating whether the company or an affiliate has been contacted by the Multistate Tax Commission or the Oregon Department of Revenue with respect to the tax for which the company is requesting a voluntary disclosure.
  • Statement indicating why the company did not apply for Oregon's Tax Amnesty program that concluded November 19, 2009 and applied to tax years 2007 and earlier.
As policy, the department does not waive interest charges. However, a VDA may specify that penalties and charges for the underpayment of estimated tax will be waived.
Send requests for participation in a VDA to:
Nexus Unit manager
Oregon Department of Revenue
Corporation Audit Section
955 Center Street NE
Salem OR 97301-2555
If you have nexus in more than one state where you have not filed tax returns, the Multistate Tax Commission (MTC) can help. They will contact the states for you to fulfill your filing requirements. You will remain anonymous until requirements are met. For more information, see www.mtc.gov.

For specific questions relating to nexus or the voluntary disclosure process, please e-mail nexus.help.dor@oregon.gov
For general corporation excise and income tax questions, contact us by e-mail at corp.help.dor@oregon.gov
We will answer most inquiries within two business days.