Oregon Department of Revenue Issues Guidance for Corporate Activity Tax

Oregon Department of Revenue Issues Guidance for Corporate Activity Tax

The Oregon Department of Revenue has released draft temporary rules for the Corporate Activity Tax, effective January 1, 2020. The rules are intended to provide initial regulatory guidance for businesses on the following matters:

  • Substantial Nexus to Oregon: The substantial nexus rule generally tracks with the income tax rule for substantial nexus (OAR 150-317-0020). Businesses are subject to the tax if they regularly take advantage of the state economy and realize significant gross receipts.
  • Unitary Group Determination: The factors used to determine whether a group of businesses are engaged in a unitary business largely follows the Multistate Tax Commission model language and existing income tax rules (OAR 150-317-0510).
  • Agent Exclusion: Oregon will consider all facts and circumstances to determine if property, money and other amounts are received, in excess of a commission or fee received by an agent, qualifies for the exemption.
  • Property Brought into Oregon: Statute requires property transferred into the state within one year of receiving it outside Oregon to be included in commercial activity. The guidance specifies the real market value of the property must be used.
  • Estimated Payments: Businesses are required to pay quarterly estimated tax payments if they are expected to have a tax liability of $5,000 or more. Payments are due on the last day of the month following the end of a calendar quarter (April 30, July 31, October 31, and January 31).
  • Estimated Payments for Unitary Groups & Apportioned Returns: Businesses filing as a unitary group are required to pay estimated payments. Multistate and multinational businesses are required to use either their current period or prior full-year’s apportionment in calculating their estimated payments.
  • Delinquent or Underestimated Payments: Specifies that interest will not be charged on underpayments if each estimated tax payment is equal to or more than 25 percent of specified amounts for the initial tax year.
  • Filing Extensions: Specifies extensions will be allowed for “good cause,” defined as (1) death or serious illness, (2) destruction of home or place of business, (3) unavoidable absence from the state, or (4) information needed to complete the return is not available. Extensions will be granted for up to six months.
  • The department intends to issue additional temporary rules on February 1 and March 1, with a permanent rulemaking opening the summer. You can view this release and additional information on the Corporate Activity Tax website here.