SB 1529 has been signed by Governor Brown and will become effective on June 2, 2018.
As a result of the passage of Public Law 115-97, enacted on December 22, 2017, IRC 965 is amended to require that taxpayers include the accumulated post-1986 deferred foreign income of foreign corporations in their federal taxable income for 2017 (deemed repatriation).
In response, the Oregon Legislature passed SB 1529 (2018). In relevant part, this legislation:
A. Repeals the Oregon listed jurisdiction provisions at ORS 317.716 for tax years beginning on or after January 1, 2017.
B. Requires an Oregon addition related to the IRC 965 inclusion for tax year 2017.
C. Allows an Oregon subtraction related to the IRC 965 inclusion for tax year 2017.
D. Creates a credit related to the IRC 965 inclusion for tax year 2017.
A. Repeal of listed jurisdiction provisions.
SB 1529 repeals ORS 317.716 for tax years beginning on or after January 1, 2017. Accordingly, don’t include the addition or subtraction required by ORS 317.716 on your tax year 2017 Oregon tax return. Taxpayers who paid Oregon tax because of the addition required by ORS 317.716 in tax years 2014, 2015, and/or 2016 may qualify for a tax credit. See more information below under Repatriation credit (due to IRC 965).
B. Repatriation addition (due to IRC 965)—addition code 184.
SB 1529 requires that the gross amount of the IRC 965 inclusion be included in Oregon taxable income. Compute this addition by adding to federal taxable income the amount included on Line 1 of your IRC 965 Transition Tax Statement. Include this addition on Schedule OR-ASC-CORP, using code 184. Include a copy of your federal IRC 965 Transition Tax Statement with your Oregon return.
Special note: The IRS allows tax on the repatriated income to be paid over eight years; however, Oregon isn’t tied to this extension of time for paying the tax. The Oregon tax on the repatriated income is due by the due date of your return, excluding extensions.
C. Repatriation subtraction (due to IRC 965)—subtraction code 377.
SB 1529 allows an Oregon dividend received deduction against the Oregon repatriation addition. This subtraction is not computed using Form OR-DRD. Instead, if the repatriation is derived from a 20% owned corporation as described in ORS 317.267(2)(b), compute the subtraction by multiplying the repatriation addition by 80%. Otherwise, compute the subtraction by multiplying the amount of the repatriation addition by 70%. Include this subtraction on Schedule OR-ASC-CORP using code 377.
D. Repatriation credit (due to IRC 965)—credit code 870.
SB 1529 creates a tax year 2017 tax credit equal to the lesser of two amounts:
- The Oregon tax attributable to the IRC 965 inclusion for tax year 2017.
- The total Oregon tax attributable and imposed on the ORS 317.716 listed jurisdiction additions as filed or as adjusted for tax years 2014, 2015, and 2016.
The amount of the Oregon credit is computed using Oregon Form OR-REPAT-CR, Repatriation Credit, (Due to IRC 965). This form will be available soon at www.oregon.gov/dor/forms
. OR-REPAT-CR must be included with your return to claim the credit. Claim this credit on Schedule OR-ASC-CORP, using code 870.
The department is currently drafting an administrative rule that will provide guidance as to how the repatriation credit is calculated. It is intended that the public comment period for this rule will begin on May 1, 2018 and will end on May 22, 2018. It is anticipated that this rule will be effective on July 1, 2018.
We will update this page with information about the SB 1529 tax credit when that information becomes available.
We encourage taxpayers impacted by SB 1529 to file on extension. However, remember that an extension of time is to file isn’t an extension of time to pay the tax.
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.
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.
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:
- 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,
- 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
- 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).
For tax years beginning on or after January 1, 2014 and before January 1, 2019 an interstate broadcaster’s apportionment is determined based on the broadcaster’s customers who are domiciled in Oregon. For more information, see “Special filing requirements” in the Form OR-20 instructions.
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.
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.
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.
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).
- 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).
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).
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.
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).
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).