​​​​​​​​​​Beyond the FAQ​

High-level summaries of the rules and topics to help with taxpayer compliance

​​​​No two businesses are exactly alike. The facts and circumstances of each business is unique, but every business will need the same information to determine its liability under the Corporate Activity Tax. Please read the general guidance on how to calculate a business’s CAT liability​. If you have additional questions, please send them to the CAT policy team at

​A unitary group is a group of entities that form a unitary business enterprise in which members share or exchange value. A unitary group of entities is united by more than 50% common ownership.

In addition, a unitary business enterprise exists if at least one of the following conditions is met:

  • Centralized management or a common executive force;
  • Centralized administrative services or functions resulting in economies of scale; or
  • Flow of goods, capital resources or services demonstrating functional integration.

Members of a unitary group may be in the same general line of business, such as manufacturing, wholesaling or retailing. Or, members may be in multiple lines of business that constitute steps in a vertically integrated process, such as the steps involved in the production of natural resources, which might include exploration, mining, refining, and marketing.

Unitary groups must register, file, and pay as a single taxpayer.

​​A taxpayer expecting $10,000 or more of Corporate Activity Tax liability for the 2020 tax year must make estimated payments. CAT liability of $10,000 for the year corresponds with taxable commercial activity equal to $2,710,526. 

Taxable commercial activity is Oregon-source commercial activity less the subtraction allowed for a percentage of eligible costs. 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. 

A taxpayer expecting less than $10,000 of CAT liability for the 2020 tax year doesn't need to make estimated payments but still must file an annual return and pay CAT liability no later than April 15 of the following calendar year. 
For purposes of the CAT, a person has nexus with Oregon to the extent the person can be required under the U.S. Constitution to remit the tax imposed by the CAT. The department will not apply a bright line nexus test for the CAT.
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 a person is acting as an agent is based on a consideration of the facts and circumstances surrounding the relationship between the agent and the principal. A contract purporting to establish an agent-principal relationship is just one relevant fact to consider when determining if an agent-principal relationship exists.

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.

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.

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 will be forthcoming.


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:

  1. The transfer is made for the purpose of resale by the transferee motor vehicle dealer; and
  2. The transfer is made based on the transferee motor vehicle dealer’s need to meet a specific customer’s preference.

Motor vehicle dealers who qualify to take the exclusion must retain a CAT resale certificate documenting that the applicable vehicle transfer meets these requirements. Any document may serve as a resale certificate, provided it contains all of the following information:

  • Name, address, federal identification number, and dealer license number for both motor vehicle dealers involved in the trade.
  • A description of the vehicle including the vehicle identification number (VIN), serial number, or other identifying number, make, model, and year of the vehicle.
  • A statement, signed by the transferee motor vehicle dealer, their employee, or authorized representative, affirming that the vehicle described in the document was purchased or transferred for the purpose of resale and to meet a specific customer’s preference.

The Oregon Department of Revenue has provided a sample CAT resale certificate that motor vehicle dealers may use to document exempt dealer trades. Vehicle dealers are not required to use this form. Any form of documentation with the information listed above can be used as a dealer trade resale certificate for CAT.

Do not submit the certificate to the Oregon Department of Revenue unless requested.

The laws establishing the CAT (Oregon Revised Statutes, Chapter 317A) 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.
The Oregon Department of Revenue does not provide guidance on how businesses may estimate the amount of CAT attributable to a specific transaction. Businesses should confer with their own legal advisers or tax professionals.
Cost inputs are defined as cost of goods sold as calculated in arriving at federal taxable income under the Internal Revenue Code. Taxpayers can refer to IRS Publication 538, Accounting Periods and Methods, for more information.
​Estimated payments can be made using one of these options:

Under the law, receipts from the retail or wholesale sale of groceries are excluded. For further explanation of the exclusion, including how groceries are defined, and the requirements that must be met for receipts to be excluded, read this fact sheet. ​

Sales to a wholesaler for resale outside of Oregon may be excluded from Oregon commercial activity under the Corporate Activity Tax. You can find information for sellers, 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. Also provided is a sample of an Out-of-State Resale Certificate for Sales to Wholesalers​.

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.

The law that established the CAT, specifically ORS 317A.119, allows taxpayers to subtract 35% from commercial activity sourced to Oregon of the greater of cost inputs or labor costs. A subtraction is not allowed for expenses from transactions among members of a unitary group, as defined under ORS 317A.106, or cost inputs or labor costs associated with receipts from items excluded from commercial activity.

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 as described in 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:

  • Partners in a partnership who receive guaranteed payments or distributive income.
  • Members in a limited liability company (LLC) who receive guaranteed payments or distributive income.
  • Statutory employees described in the Internal Revenue Code (IRC) Section 3121(d)(3).
  • Independent contractors as defined in ORS 670.600.

​​​Due to the impact of the COVID-19 pandemic, the department has adjusted the Corporate Activity Tax estimated payment requirements for 2020. If businesses know they'll 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?"

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. To demonstrate a good-faith effort, business taxpayers should keep documentation showing:

  • The taxpayer was unable to pay a full quarterly installment because of insufficient funds due to COVID-19.
  • The taxpayer could not reasonably calculate a quarterly payment or annual tax liability due to the impact of COVID-19 on their business.
  • The taxpayer can show that they had no ability to determine whether they will have CAT liability for the 2020 tax year, after taking into consideration exclusions and subtractions provided in ORS Chapter 317A. 
  • The taxpayer made a reasonable estimate of the quarterly installment based on information available to them at the time.
  • The taxpayer relied on information contained in a proposed administrative rule.

Taxpayers must use the best information available, and document all information and assumptions relied upon. Taxpayers are not required to submit documentation to the department unless requested.

For general information on CAT penalties, please see "When will the department impose interest and penalti​es?" below.

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 above "Will penalty or interest be assessed if a business fails to make a quarterly estimated payment or underestimates the required quarterly payment in 2020?" FAQ 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. 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. 

CAT taxpayers are allowed to subtract 35% of the greater of their cost inputs or their labor costs that are attributable to commercial activity. The amount of an EIDL emergency advance or PPP loan (forgiven or not) 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 or PPP loan (forgiven or not) used to pay labor costs or cost inputs may be included when calculating the 35% subtraction, if and to the extent those costs or cost inputs are attributable to commercial activity, including eligible labor costs as described above.

For basic information on the Corporate Activity Tax, visit our frequently asked questions​.​