Heavy equipment rental tax (HERT)
In 2018, the Oregon Legislature passed House Bill 4139, establishing the heavy equipment rental tax. The rental tax is a 2 percent tax on the rental price of qualified heavy equipment and tools and includes an exemption from the current ad valorem property tax. The tax applies to heavy equipment rental providers primarily engaged in renting heavy equipment. This tax begins and must be applied by qualified heavy equipment providers on January 1, 2019.
The Department of Revenue is in the process of adopting several administrative rules related to the Heavy Equipment Rental Tax (HERT). The current rule, Oregon Administrative Rule 150-307-0900, is available on the Secretary of State website. Once finalized, the permanent administrative rules will also be published on the Secretary of State's website.
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Qualified heavy equipment rental providers
A rental provider meets the minimum threshold to be a qualified heavy equipment rental provider if more than 50 percent of gross rental income from the previous fiscal year came from the rental of mobile heavy equipment, attachments, associated trailers, and other equipment and tools that:
- Typically require an operator for use, and
- Can be used for construction, mining, earthmoving, or industrial activities.
When determining the percentage of qualifying rental income, exclude income the following transactions:
- Renting equipment with an operator,
- Renting equipment to an affiliate, and
- Renting equipment for a single defined term of 365 days or more.
A business that did not earn rental revenue during the prior year may register as a qualified heavy equipment rental provider with the Department of Revenue, if they certify that they expect to meet these requirements in the next year.
Once you meet the minimum requirements as a qualified heavy equipment rental provider, the heavy equipment rental tax applies to the rental price you received for any equipment and tools that can be used for construction, mining, earthmoving, or industrial activities.
The rental tax does not apply to:
- Equipment and tools that are rented for a defined term of 365 consecutive days or more,
- Delivery and pick-up fees,
- Damage waivers,
- Environmental mitigation fees, or
- The cost of an operator's services (if equipment is rented with an operator).
Qualified equipment and tools subject to the heavy equipment rental tax on July 1 are exempt from personal property tax for the entire property tax year. Qualified heavy equipment rental providers are required to file a property tax return with the proper county assessor for any personal property items that remain subject to property tax.
Qualified heavy equipment rental providers are required to register with the Oregon Department of Revenue annually. The registration period is open in early December. The deadline for 2019 registration is December 31, 2018.
To register for a heavy equipment rental tax account, go to Revenue Online and click on "Rental Providers."
You'll need the following information to complete the registration process:
- Name, mailing address, and federal tax identifier of the entity you are registering. The federal identifier may be a federal employer identification number (FEIN), Social Security number (SSN), or individual taxpayer identification number (ITIN).
- Name, mailing address, and federal identifier (FEIN, SSN, or ITIN) of all company owners and officers.
- The date you began renting taxable equipment after January 1, 2018.
- A Revenue Online account login or a valid email address to create a Revenue Online account.
Beginning January 1, 2019, qualified rental providers must report and remit the tax to the Department of Revenue quarterly.
||Quarter ending date
||Report due date|
|1st — Jan-Feb-Mar
|2nd — Apr-May-Jun
|3rd — Jul-Aug-Sep
|4th — Oct-Nov-Dec
Rental tax and property tax comparison
For the first two years after the rental tax goes into effect, the law requires all qualified heavy equipment rental providers to submit a personal property report listing equipment and tools subject to the rental tax to the Department of Revenue. The department will use these reports to complete a true-up, reconciling the amount of rental tax received with the estimated amount of property tax that would have been received for the exempt equipment. The difference will be refunded or billed to the qualified rental provider by location. Qualified rental providers must submit the first report on or before March 31, 2019. Supplemental billing and refunds for calendar year 2019 will be issued in April 2020.