For the latest news and updates on Oregon state and local tax
April 15, 2022
Oregon Governor Signs Law Amending Various Individual Income, Corporate Income and Excise Tax Provisions
On March 24, 2022, the Oregon Governor signed into law Senate Bill 1524. The law provides the following measures:
- Raising the expense reimbursement percentages permitted to single film or single local media production projects, as related to Oregon Production Investment Fund contributions;
- Amending the state’s business alternative income tax SALT workaround by permitting specific amounts added back that meet the requirements for the use of elective rates and be treated as qualifying income in a proportion determined by the DOR;
- Appointing the DOR to implement rules offering penalty relief if appropriate estimated payments are made by a pass-through entity or its members; and
- Amending corporate activity tax (CAT) provisions to permit businesses to file CAT returns using a fiscal tax year rather than a calendar year.
March 11, 2022
Oregon Pass-Through Entity Tax Update
The Oregon Department of Revenue issued additional guidance on the new elective pass-through entity-level tax (PTE-E) in response to the federal state and local tax deduction cap of $10,000. The Department issued the following guidance:
- Entities taxed as S corporations, partnerships whose members/owners are all individuals, or pass-through entities owned by individuals, which are subject to Oregon’s personal income tax may elect to pay the new entity-level tax. The entity level tax election will need to be made on a timely filed return.
- The PTE-E is taxed at a rate of 9% on the first $250,000 of distributive proceeds and 9.9% tax on any amount exceeding $250,000. If the SALT deduction limitation expires or is repealed, this law will expire.
- Qualifying members of an electing PTE are eligible for a credit equal to 100% of the member’s distributive share of the PTE-E tax paid.
August 20, 2021
Oregon Bill Modifies Provisions of the Corporate Activity Tax
On July 19, 2021 Senate Bill 164 was signed into law, modifying certain provisions of the Oregon Corporate Activity Tax (“CAT”). Previously, all CAT taxpayers used the calendar year to file their corporate activity tax returns. Effective, September 25, 2021, and applicable to tax years that begin on or after January 1, 2021, taxpayers will use their federal income tax year as their tax for the CAT. Fiscal-year taxpayers will be required to file a short period return covering January 1, 2021, through the end of their fiscal tax year. These short year returns for 2021 will be due no later than April 15, 2022. Prospectively, CAT returns for fiscal-year taxpayers will be due on the 15th day of the fourth month following the end of the tax year.
August 4, 2021
Oregon’s Pass-Through Business Alternative Income Tax enacted
Effective on September 25, 2021, a pass-through entity may elect to be liable for and pay pass-through business alternative income tax if all members are individuals subject to Oregon personal income tax or are entities that are pass-through entities owned entirely by individuals subject to Oregon personal income tax. The election is applicable to tax years beginning on or after January 1, 2022 and before January 1, 2024. Pass-through entity owners will claim a credit for their pro-rata share of the tax paid by the pass through entity on their respective personal returns.
March 23, 2021
Oregon Update on Extension of Filing Deadline
The Oregon Department of Revenue announced it is joining the IRS and automatically extending the tax year 2020 filing due date for individuals from April 15, 2021 to May 17, 2021. Additionally, individual tax payments for the 2020 tax year due on April 15, 2021 can be postponed to May 17, 2021 without penalties and interest, regardless of the amount owed. The postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties and interest will begin to accrue on any remaining unpaid balances as of May 18, 2021. Taxpayers do not need to file any forms or call the department to qualify for this automatic tax filing and payment relief. Those needing additional time to file beyond the May 17 deadline can request a filing extension until October 15 by filing federal Form 4868 through their tax professional or tax software or by using the Free File link on IRS.gov. Oregon recognizes a taxpayer’s federal extension. An extension to file is not an extension to pay. ( Income Tax Filing, Payment Deadlines for Individuals Extended to May 17, Or. Dept. Rev., 03/17/2021 .)
March 21, 2020
Latest Tax Update Relating to COVID-19
Personal and corporate income tax
The Oregon Department of Revenue (“DOR” or “Department”) has received several questions asking if Oregon is going to provide similar relief to the IRS. Now that the Department knows what the IRS is providing, it is evaluating options and authority under the statutes to provide relief for Oregon and its taxpayers. A decision is expected to be made soon.
Corporate Activity Tax
Initial quarterly payments for the new Corporate Activity Tax (CAT) are due April 30, 2020. The Department understands that the pandemic may impact commercial activity, up or down, to an extent that makes it difficult for businesses to estimate their first payment. The Department will not assess underpayment penalties to taxpayers, making a good faith effort to estimate its first-quarter payments.
All other tax programs Department of Revenue administers
If an action of the IRS or a state-declared emergency will impair the ability of Oregon taxpayers to take action required within the time required by law, the Department may extend any statutory period of limitation on any tax that is collected by the DOR. If the Department makes such a decision, an order will be issued and announced, and filed with the Secretary of State.
March 17, 2020
Underpayment Penalties Will Not Be Assessed Amid Coronavirus Pandemic
Corporate Activity Tax Initial quarterly payments for the new Corporate Activity Tax (CAT) are due April 30, 2020. The department understands that the pandemic may impact commercial activity, up or down, to the extent that it makes it difficult for businesses to estimate their first payment. The department will not assess underpayment penalties to taxpayers, making a good faith effort to estimate their first-quarter payments.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
New CAT Tax
Effective for tax years January 1, 2020 and on, a new commercial activity tax (CAT) has been enacted in Oregon. This new tax applies to various taxpayers including corporations, individuals, partnerships, limited liability companies, federally disregarded entities, and ‘any other entities.’ Unitary groups register, file, and pay the tax as a single taxpayer. Once “Substantial Nexus” has been established then the taxpayer is required to file. More guidance is to come in the future.