For basic information on the Corporate Activity Tax, visit our frequently asked questions.
Any person, business, or unitary group of businesses doing business in Oregon may have obligations under the CAT. This includes such business entities as C and S corporations, partnerships, sole proprietorships, and other entities.
The CAT sets four thresholds to determine whether a business or unitary group has CAT obligations. These thresholds are based on the amount of commercial activity the business or unitary group earns in Oregon over the course of the year.
If you are unsure whether your business is part of a unitary group, please see our Unitary Group training videos and FAQ.
The Corporate Activity Tax (CAT) is an annual calendar year tax, established in 2019, and applicable to tax years beginning January 1, 2020. The CAT is imposed on taxpayers for the privilege of doing business in this state. The CAT is not a transactional tax, such as a retail sales tax, nor is it an income tax. Oregon's CAT is measured on a business's commercial activity—the total amount a business realizes from transactions and activity in the normal course of business in Oregon.
The CAT is applied to Oregon taxable commercial activity in excess of $1 million. The tax is computed as $250 plus 0.57 percent of Oregon commercial activity in excess of the $1 million threshold (ORS 317A.125).
Only taxpayers with more than $1 million of taxable Oregon commercial activity will have a payment obligation. The first tax filing is due April 15, 2021, and subsequent filings are due annually thereafter.
Certain items are excluded from the definition of commercial activity and, therefore, will not be subject to the CAT. In addition, Oregon's CAT allows a 35 percent subtraction for certain business expenses. General guidance on the CAT, including answers to FAQ, subject-specific training videos, and instructions on calculating a business's CAT liability is available on our webpage.
The Department of Revenue has implemented several administrative rules for the CAT program, and continues to develop additional guidance. Access CAT rules via the Oregon Administrative Rules Database (OARD) . Administrative rule notices can also be found on our website. We encourage all stakeholders to provide feedback. Please send any comments to email@example.com.
If you have questions regarding the Oregon CAT, please contact the CAT team directly at 503-945-8005 or Cat.firstname.lastname@example.org. If you would like to receive updates on the CAT, please subscribe to our mailing list.
Commercial activity is the total amount realized by a taxpayer from the transactions and activity in the regular course of their business in Oregon, without deduction for expenses incurred by the business [ORS 317A.100(1)(a)]. Commercial activity is realized according to the method of accounting used for federal income tax purposes. Oregon Administrative Rules provides detailed information and examples regarding the definition of commercial activity (OAR 150-317-1000).
While commercial activity includes most business receipts, receipts from certain items are excluded and are not subject to the CAT. For example, the following items are excluded:
The CAT legislation excludes certain types of business entities from any CAT liability, unless such business has unrelated business taxable income under federal law. Exempted entities include but are not limited to:
A business must register for the CAT within 30 days of realizing $750,000 in commercial activity for the year. A penalty of $100 per month may be assessed for failing to register, up to $1,000 per calendar year (ORS 317A.131). Once registered, re-registration in subsequent years is not required. Detailed registration instructions are available on the CAT training materials webpage.
No two taxpayers are exactly alike. The facts and circumstances of each taxpayer is unique, but every taxpayer will need the same information to determine their liability under the Corporate Activity Tax. Calculating CAT liability is also discussed in the Commercial Activity Subtraction video on the CAT training materials webpage. For further information, please refer to the general guidance on calculating a business’s CAT liability or use the CAT estimated payment calculation worksheet to estimate your liability. If you have additional questions, please send them to the CAT policy team at email@example.com.
Commercial activity is realized according to the method of accounting
used for federal income tax purposes.
The CAT is an annual calendar year tax. CAT returns are due each year on April 15. The 2020 return and instructions are available online in the Forms and Publications Library. Additional guidance is also available in the Return Instructions video on the CAT training materials webpage.
While returns must be filed annually, CAT taxpayers that meet the estimated payment threshold are required to make estimated quarterly payments throughout the tax year. Generally, estimated payments are due April 30, July 31, October 31, and January 31 for the preceding quarter. For further information on estimated payments, please refer to our “When are estimated payments required" FAQ.
Visit our website at https://www.oregon.gov/DOR/. Click on the "Business" link, then the "Corporate Activity Tax" in the "Information" column on the next page. We have a mailing list registration for future updates. Also, you can email your questions to Cat.firstname.lastname@example.org.
For purposes of the CAT, a person is an agent if the person acts on behalf of and subject to the control of another person (a principal). A determination of whether an agency relationship exists is based on a consideration of all the facts and circumstances. A contract purporting to establish an agent-principal relationship is just one relevant fact to consider when determining if an agent-principal relationship exists. For additional information and helpful examples, please refer to Oregon Administrative Rules (OAR 150-317-1100).
A unitary group is a group of business entities or separate parts of a single entity that are united by more than 50 percent direct or indirect common ownership and engaged in a unitary business enterprise in which members share or exchange value [ORS 317A.100(19)].
More than 50 percent common ownership means directly or indirectly owning more than 50 percent of the voting power and value of the ownership interest of an entity with the ability to control or determine the management of the entity. A stock or ownership interest may be constructively owned.
The sharing or exchange of value requires interdependency of the parts of the business and requires more than a passive investment of funds.
A unitary business exists if at least one of the following conditions exists directly or indirectly between the members or parts of the enterprise:
Generally, business activities that are in the same general line of business, such as manufacturing, wholesaling, or retailing constitute a unitary business. Or business activities may be part of a vertically integrated process, such as the steps involved in the production of natural resources, which might include exploration, mining, refining, and marketing.
Receipts from transactions between unitary group members are excluded from commercial activity. A subtraction from commercial activity is not allowed for any amount of expenses from transactions among members of a unitary group.
Refer to Oregon Administrative Rule 150-317-1020 for more information about common ownership and unitary business determination.
For further information on unitary groups, please refer to the Unitary Group video on the CAT training materials webpage. For specific information on registering and filing as a unitary group please refer to the “How do unitary groups register and file?" FAQ below. Further information for unitary groups with non-U.S. members is also available in the “Can unitary groups with non-US members exclude the non-US members from a group return?" FAQ below.
For tax year 2020, a taxpayer expecting $10,000 or more of Corporate Activity Tax liability for the current 2020 tax year must make estimated payments. A taxpayer expecting less than $10,000 for the 2020 tax year is not required to make estimated payments but must still file an annual return and pay the CAT no later than April 15, 2021.
For tax years 2021 and on, a taxpayer expecting $5,000 or more of CAT liability must make estimated payments. A taxpayer expecting less than $5,000 for tax year 2021 and on will not be required to make estimated payments but must still file an annual return and pay the CAT no later than April 15 of the subsequent year.
Estimated payments, which can be calculated using a worksheet, are due April 30, July 31, October 31, and January 31 for the preceding calendar quarter. Please see the chart located in the FAQ “How Often Am I Required to Pay and File?" above for a detailed breakdown of payment and filing dates.
Additional information is available in rule (OAR 150-317-1300, 150-317-1310, and 150-317-1320).
Yes. The first CAT returns are due April 15, 2021. An extension of up to six months will be allowed to file a CAT return. An extension will be granted on the basis of good cause, which is defined as circumstances beyond a taxpayer's control or if the taxpayer lacks the information needed to file an accurate CAT return. The extension of time to file should be requested in the form prescribed by the department on or before the due date of the return. The extension form and instructions are available on our Forms website. Select “Form OR-CAT-EXT," form number 150-106-006.
Motor vehicle dealers sell or transfer vehicles to other motor vehicle dealers for a variety of reasons. Receipts from the sale or transfer of a motor vehicle between two vehicle dealers are excluded from CAT, provided that the following requirements are met:
See also OAR 150-317-1410.
The laws establishing the CAT do not prohibit any business from recovering a business expense when setting the total price for the sale, lease, or license of an item or the sale of a service. The CAT is imposed on the entity doing business in Oregon and is considered part of the business's expenses. A business may include the CAT with other business expenses when setting the total price charged to customers. However, the total price charged (including any amount estimated to be attributable to the CAT) is included in the business's commercial activity.
Cost inputs are defined as cost of goods sold as calculated in arriving at federal taxable income under the Internal Revenue Code [ORS 317A.100(2)]. Taxpayers can refer to IRS Publication 538, Accounting Periods and Methods, for more information.
For taxpayers engaged in farming operations doing business under NAICS code 111 (crop production), 112 (animal production and aquaculture), or 115 (support activities for agriculture and forestry) who are not required to report cost of goods sold for federal tax purposes, “cost inputs" means the taxpayer's operating costs excluding labor costs.
The Commercial Activity Subtraction video on the CAT training materials webpage provides information to assist taxpayers in determining their cost inputs for purposes of CAT's 35 percent subtraction. Farming operations may also refer to the Cost Inputs for Farming Operations training video on the CAT training materials webpage which provides specific information for the agricultural sector.
Under the law, receipts from the retail or wholesale sale of groceries are excluded [ORS 317A.100(1)(b)(EE)].
For further explanation of the exclusion, including how groceries are defined, and the requirements that must be met for receipts to be excluded, please refer to this fact sheet. Information on this exclusion is also available in the Exclusion for Retail and Wholesale Grocery Sales video on the CAT training materials webpage.
Sales to a wholesaler for resale outside of Oregon may be excluded from Oregon commercial activity under the Corporate Activity Tax. A taxpayer may exclude receipts from sales to Oregon wholesalers if the wholesaler provides the taxpayer with an out-of-state resale certificate showing that the purchased items will be resold out of the state. All excluded sales must be documented with an Out-of-State Resale Certificate for Sales to Wholesalers. Any document may serve as an out-of-state resale certificate, provided that it contains:
This certificate must be retained by the seller along with their transaction records. Do not submit the certificate to the Oregon Department of Revenue unless requested to do so. A sample of an Out-of-State Resale Certificate for Sales to Wholesalers is also available..
You can find information for sellers and wholesalers, a pair of examples, two methods by which to approximate the percentage of goods to be resold outside of Oregon, and an explanation of the required documentation by reviewing this fact sheet. Information on this exclusion is also available in the Exclusion for Sales to Wholesalers video on the CAT training materials webpage.
Farming operations taxpayers seeking information about obtaining certificates from a broker or wholesaler for sales of agricultural commodities, or who want to use industry average percentages, should consult the “How can farming operations selling agricultural commodities demonstrate out-of-state-sales?" FAQ below.
Estimated payments can be made using one of these options:
Under the laws governing the CAT, taxpayers can subtract 35 percent of the greater of cost inputs or labor costs from commercial activity sourced to Oregon (ORS 317A.119). A subtraction is not allowed for expenses from transactions among members of a unitary group or cost inputs or labor costs associated with receipts from items excluded from commercial activity (ORS 317A.106).
Taxpayers with commercial activity in and outside of Oregon, as well as those with excluded items, may have to apportion their cost inputs or labor costs (OAR 150-317-1200).
Labor costs include most types of compensation paid to employees, such as wages, health insurance benefits, retirement benefits, and any other fringe benefits, but it does not include employees' payroll taxes or compensation in excess of $500,000 paid to any single employee.
For purposes of the CAT, "employee" means an individual who provides services under the control of another person or organization. Generally, an individual will be considered to be an employee if the person or organization that receives the services is subject to industrial accident insurance, unemployment compensation, federal Social Security, or federal tax withholding for that individual.
"Employees" do not include:
For tax years 2020 and 2021, taxpayers who fail to pay at least 80 percent of any quarterly balance may be assessed a penalty of 5 percent on the amount of the underpayment of estimated tax. For tax years beginning on or after January 1, 2022, the required minimum quarterly installment amount increases to 90 percent to avoid the 5 percent penalty. Refer to the FAQ "Is penalty relief available for 2020?" FAQ below for further information regarding penalty relief for businesses impacted by the COVID-19 pandemic in 2020.
The department will not charge interest on underpayment of estimated tax that results solely from the operation of ORS 317A.100 to 317A.158.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently passed by Congress provides federal assistance to small businesses, including forgivable Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loan (EIDL) emergency advances, and Small Business Administration (SBA) debt relief for certain business loans. The CARES Act also provides direct support to farmers and ranchers through the U.S. Department of Agriculture's Coronavirus Food Assistance Program (CFAP). Generally, an EIDL emergency advance, SBA debt relief payment, or forgivable PPP loan (whether or not forgiven) received by a business from these federal relief programs is not commercial activity and thus is not subject to the Corporate Activity Tax.
Similarly, direct support payments to farmers and ranchers issued under the Direct Assistance to Farmers component of the CFAP are generally not considered commercial activity. CAT taxpayers are allowed to subtract 35 percent of the greater of their cost inputs or their labor costs that are attributable to commercial activity. The amount of an EIDL emergency advance, PPP loan (forgiven or not), or CFAP direct assistance payment that is used to pay labor costs or cost inputs incurred over the year can be included in the taxpayer's costs eligible for the subtraction so long as those costs are attributable to commercial activity.
Eligible labor costs attributable to commercial activity may include vacation, personal leave, sick leave, family leave, and compensation to retain employees when the taxpayer's operations are closed or substantially curtailed due to the COVID-19 pandemic, if and to the extent those employees' duties are attributable to commercial activity but for the pandemic.
Please refer to our “How to Calculate CAT Liability" FAQ for further information on using the commercial activity ratio to apportion costs. For CAT taxpayers who elect to use the separate accounting method to determine costs eligible for subtraction, the amount of an EIDL emergency advance, CFAP direct assistance payment, or PPP loan (forgiven or not) used to pay labor costs or cost inputs may be included when calculating the 35 percent subtraction, if and to the extent those costs or cost inputs are attributable to commercial activity, including eligible labor costs as described above.
A taxpayer is required to include the value of property transferred into Oregon within a year of purchase outside Oregon if the purchase outside Oregon and transfer into Oregon was intended, in whole or in part, to avoid the CAT. Omitting the value of property purchased outside of Oregon and transferred into Oregon within one year of purchase will be considered a representation by the taxpayer that there was no intent to avoid the CAT. This is subject to review by the department (OAR 150-317-1130).
Otherwise, the taxpayer should include as commercial activity on its CAT return the value of property transferred into Oregon within a year of the purchase outside Oregon.
Taxpayers engaged in farming operations doing business under NAICS code 111 (crop production), 112 (animal production and aquaculture), or 115 (support activities for agriculture and forestry) may use this Out-of-State Certificate for sales of agricultural commodities to wholesalers or brokers.
Alternatively, farming operations taxpayers may use an industry average, for sales of the agricultural commodity made the previous tax year, that is based on the most recent information from publications by government entities or trade associations such as the United States Department of Agriculture's National Agricultural Statistics Service (USDA NASS). Information is also provided for farming operations selling agricultural commodities to wholesalers or brokers (OAR 150-317-1170).
Unitary groups must register, file, and pay as a single taxpayer (ORS 317A.106).
A unitary group taxpayer must designate a single member (designated CAT entity) to register, file and pay CAT. Taxpayers can register for CAT through Revenue Online using the designated CAT entity name and FEIN.
A full list of all unitary group members is not required at registration. However, the unitary group's designated CAT entity must file a combined CAT return and submit the CAT affiliate schedule (OR-AF-CAT), listing all unitary group members with Oregon commercial activity.
Yes, unitary groups with non-U.S. members may elect to exclude all non-U.S. members from the group return that:
The election must be made annually on the unitary group's combined CAT return. The election is binding for, and applicable to, the tax year it is made.
A unitary group that elects to exclude any non-U.S. member must maintain a list of excluded non-U.S. members. The unitary group must retain the list in their records and provide to the department upon request.
Further information on the unitary group election is available in rule (OAR 150-317-1025).
Due to the impact of the COVID-19 pandemic, the department has adjusted the Corporate Activity Tax estimated payment requirements for 2020. If taxpayers know they will owe $10,000 or more in annual corporate activity tax in 2020 and can pay, they should make estimated quarterly payments and comply with the law. For questions about calculating estimated payments for 2020, please see "When are estimated payments required?" above.
The department will not assess penalties for underestimating quarterly payments if the business has made a good faith effort to comply. The department also will not assess a penalty for failure to make a quarterly payment if a business doesn't have the financial ability to make the estimated payment. A good-faith effort can be demonstrated by the extent of the taxpayer's efforts to accurately estimate and pay the required quarterly installment (OAR 150-317-1500). To demonstrate a good-faith effort, business taxpayers should keep documentation showing:
Groups of persons that meet the common ownership requirements or constructively own stock or other ownership interest with the ability to control or determine the management of the entity, as described in Temporary OAR 150-317-1020(10), must also analyze the unitary business factors of functional integration, economies of scale, or centralized management to determine if a unitary relationship exists between the groups of persons. Entities that meet the common ownership requirements and share a unitary relationship with more than one unitary group must register, file, and pay the CAT as a member of only one unitary group. Entities meeting the criteria for inclusion in more than one unitary group must file with the unitary group that realizes the greatest amount of Oregon commercial activity, after exclusions. Refer to Temporary OAR 150-317-1020 for more information.