International Reporting Requirements and Senate Bill (SB) 851 (2019)
Note: The items described below are for Corporation Forms OR-20 and OR-20-INC.
During the 2019 Regular Legislative Session, Oregon lawmakers passed SB 851 to provide guidance to taxpayers for federal changes under the Tax Cuts and Jobs Act (TCJA). For corporation income and excise taxpayers, changes are retroactive to tax years that begin on or after January 1, 2018. Relevant changes and form instructions are below.
IMPORTANT: If you claim any of the modifications shown below on your 2018 Oregon return, you MUST file a paper return. These modification codes are not available for 2018 if you e-file your return. E-filers may use these codes for 2019 and forward.
Global Intangible Low-Taxed Income (GILTI) – addition code 186
SB 851 requires any amounts deducted as GILTI under IRC Section 250 to be included in Oregon income. Generally, the federal deduction is taken on line 29b of federal Form 1120 and does not impact the Oregon return. However, if any amount was omitted or deducted from federal income in determining federal income carried to your Oregon line 1, it must be added back before a subtraction can be claimed. Report the Oregon addition (if any) on Schedule OR-ASC-CORP using code number 186.
Global Intangible Low-Taxed Income (GILTI) – subtraction code 381
SB 851 allows an 80 percent subtraction of GILTI amounts under IRC Section 951A that are included in your Oregon income. Report the Oregon subtraction on Schedule OR-ASC-CORP using code number 381. Do not use Form OR-DRD for this subtraction.
Apportionment: You must exclude from your sales factor of your apportionment formula the amounts you subtracted from Oregon income. The remaining amounts of any dividend or GILTI may or may not be includable, depending on your specific facts and circumstances, and application of Oregon law. See ORS 314.280 and 314.605 to 314.675 and supporting administrative rules.
Foreign Derived Intangible Income (FDII) – subtraction code 382
Oregon is connected with the FDII deduction on your federal return for tax year 2018 and forward. Generally, the federal deduction amount is reported on federal Form 8993, Part IV, line 8. Report your Oregon subtraction on Schedule OR-ASC-CORP using code number 382. Do not use Form OR-DRD for this subtraction.
IRC Section 245A foreign source-portion dividends – subtraction code 383
Oregon allows a 100 percent subtraction of the foreign-source portion of dividends from certain foreign corporations under IRC Section 245A for tax year 2018 and forward. The subtraction is allowed only if the amount is included in federal taxable income reported on line 1 of your Oregon return. Generally, the federal deduction amount is reported on federal Form 1120, Schedule C, line 13. Report your Oregon subtraction on Schedule OR-ASC-CORP using code number 383. Do not use Form OR-DRD for this subtraction.
Refer to SB 851 for full context of these changes.
Federal Tax Reform (Public Law 115-97) and SB 1529 (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:
- Repeals the Oregon listed jurisdiction provisions at ORS 317.716 for tax years beginning on or after January 1, 2017.
- Requires an Oregon addition related to the IRC 965 inclusion for tax year 2017 – code 184.
- Allows an Oregon dividends received subtraction related to the IRC 965 inclusion for tax year 2017 – code 377.
- Creates a credit related to the IRC 965 inclusion for tax year 2017 – code 870.
Additionally, OAR 150-317-0652 allows a subtraction for listed jurisdiction amounts previously included in Oregon income (see below) – ASC code 399 (2017) and 380 (2018). Taxpayers may make an election between the OAR 150-317-0651 tax credit and the OAR 150-317-0652 subtraction.
Generally speaking, the repatriation receives no Oregon sales factor representation.
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. Information for individual filers can be found on the repatriated foreign income page.
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 percent-owned corporation as described in ORS 317.267(2)(b), compute the subtraction by multiplying the repatriation addition by 80 percent. Otherwise, compute the subtraction by multiplying the amount of the repatriation addition by 70 percent. 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). Form OR-REPAT-CR must be included with your return to claim the credit. Claim this credit on Schedule OR-ASC-CORP, using code 870.
See OAR 150-317-0651 for more information.
Listed jurisdiction amounts previously included in Oregon income – subtraction codes 399 and 380.
Additionally, OAR 150-317-0652 allows a subtraction for listed jurisdiction amounts previously included in Oregon income for 2014, 2015, or 2016. This subtraction is only allowed if taxpayer does not take the repatriation credit for 2017. The subtraction may be claimed on an original or amended tax return using Schedule OR-ASC-CORP and is available to Form OR-20 or Form OR-20-INC filers only. The subtraction code is 399 for tax year 2017 and 380 for tax year 2018.
Does the repatriation receive factor representation? Please see Oregon Revenue Bulletin 2018-01 for complete information.
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, 2018; however, Oregon is still disconnected from:
- Federal subsidies for prescription drug plans (IRC 139A; ORS 317.401).
- 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 108; IRC 168(k); and IRC 179; ORS 317.301).
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 ORS 314.665, ORS 314.666, and OAR 150-314-0435.
For more information on new law for a specific tax year, see the instructions for the corporation form you're filing (OR-20, OR-20-INC, OR-20-INS, or OR-20-S)