USA Statutes : oregon
Title : TITLE 28 PUBLIC FINANCIAL ADMINISTRATION
Chapter : Chapter 314 Taxes Imposed Upon or Measured by Net Income
(1)
As used in this chapter, unless the context requires otherwise,
“department” means the Department of Revenue.

(2) As used in this chapter:

(a) Any term has the same meaning as when used in a comparable
context in the laws of the United States relating to federal income
taxes, unless a different meaning is clearly required or the term is
specifically defined in this chapter.

(b) Except where the Legislative Assembly has provided otherwise, a
reference to the laws of the United States or to the Internal Revenue
Code refers to the laws of the United States or to the Internal Revenue
Code as they are amended and in effect:

(A) On December 31, 2004; or

(B) If related to the definition of taxable income, as applicable
to the tax year of the taxpayer.

(c) With respect to ORS 314.105, 314.256 (relating to proxy tax on
lobbying expenditures), 314.260 (1)(b), 314.265 (1)(b), 314.302, 314.306,
314.330, 314.360, 314.362, 314.385, 314.402, 314.410, 314.412, 314.525,
314.742 (7), 314.750 and 314.752 and other provisions of this chapter,
except those described in paragraph (b) of this subsection, any reference
to the laws of the United States or to the Internal Revenue Code means
the laws of the United States relating to income taxes or the Internal
Revenue Code as they are amended on or before December 31, 2004, even
when the amendments take effect or become operative after that date,
except where the Legislative Assembly has specifically provided otherwise.

(3) Insofar as is practicable in the administration of this
chapter, the department shall apply and follow the administrative and
judicial interpretations of the federal income tax law. When a provision
of the federal income tax law is the subject of conflicting opinions by
two or more federal courts, the department shall follow the rule observed
by the United States Commissioner of Internal Revenue until the conflict
is resolved. Nothing contained in this section limits the right or duty
of the department to audit the return of any taxpayer or to determine any
fact relating to the tax liability of any taxpayer.

(4) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section refer to rules or
regulations prescribed by the Secretary of the Treasury, then such rules
or regulations shall be regarded as rules adopted by the department under
and in accordance with the provisions of this chapter, whenever they are
prescribed or amended.

(5)(a) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section are later
corrected by an Act or a Title within an Act of the United States
Congress designated as an Act or Title making technical corrections, then
notwithstanding the date that the Act or Title becomes law, those
portions of the Internal Revenue Code, as so corrected, shall be the
portions of the Internal Revenue Code incorporated by reference as
provided in subsection (2) of this section and shall take effect, unless
otherwise indicated by the Act or Title (in which case the provisions
shall take effect as indicated in the Act or Title), as if originally
included in the provisions of the Act being technically corrected. If, on
account of this subsection, any adjustment is required to an Oregon
return that would otherwise be prevented by operation of law or rule, the
adjustment shall be made, notwithstanding any law or rule to the
contrary, in the manner provided under ORS 314.135.

(b) As used in this subsection, “Act or Title” includes any
subtitle, division or other part of an Act or Title. [1957 c.632 §40;
1965 c.152 §24; 1971 c.215 §8; 1977 c.870 §39; 1987 c.293 §50; 1989 c.625
§25; 1991 c.457 §16; 1993 c.726 §10; 1995 c.556 §20; 1997 c.325 §32; 1997
c.839 §48; 1999 c.90 §1; 1999 c.224 §9; 2001 c.660 §32; 2003 c.77 §10;
2005 c.94 §74; 2005 c.519 §8; 2005 c.832 §23]Note: Section 10, chapter 519, Oregon Laws 2005, provides:

Sec. 10. The amendments to ORS 314.011 and 316.012 by sections 8
and 9 of this 2005 Act apply to:

(1) Tax years beginning on or after January 1, 2001; or

(2) Any tax year affected by any provision of the Military Family
Tax Relief Act of 2003 (P.L. 108-121). [2005 c.519 §10]
Notwithstanding ORS 314.013, for purposes of ORS chapter 316, a person
serving as a referee or assistant referee in a youth or adult
recreational soccer match shall be considered to be an independent
contractor. [2005 c.94 §73]Note: 314.013 was repealed by section 5, chapter 533, Oregon Laws
2005. The text of 314.015 was not amended by enactment of the Legislative
Assembly to reflect the repeal. Editorial adjustment of 314.015 for the
repeal of 314.013 has not been made. Except where the context requires
otherwise, this chapter is applicable to all laws of this state imposing 98-369)
and Simplification of Imputed Interest Rules of 1985 (P.L. 99-121) to
personal income tax. (1)(a) Notwithstanding ORS 316.012 (1983 Replacement
Part), and subject to all other provisions of ORS chapter 316 in effect
and applicable to transactions occurring on or after January 1, 1984, the
Deficit Reduction Act of 1984 (P.L. 98-369) insofar as it applies to
transactions occurring on or after January 1, 1984, shall apply to the
same transactions for Oregon tax purposes.

(b) Notwithstanding ORS 316.012 (1985 Replacement Part), and
subject to all other provisions of ORS chapter 316 in effect and
applicable to transactions occurring on or after January 1, 1985, the Act
described as the Simplification of Imputed Interest Rules of 1985 (P.L.
99-121) insofar as it applies to transactions occurring on or after
January 1, 1985, shall apply to the same transactions for Oregon tax
purposes. The amendments by the Act described as the Simplification of
Imputed Interest Rules of 1985 (P.L. 99-121) to section 168 of the
Internal Revenue Code apply to property placed in service after May 8,
1985, but do not apply to property to which section 105(b)(2) and (3) of
the Act (P.L. 99-121) apply.

(2)(a) If a deficiency is assessed against any taxpayer for a tax
year for which subsection (1) of this section applies and the deficiency,
or any portion thereof, is attributable to any retroactive treatment for
Oregon tax purposes given P.L. 98-369 or 99-121 under subsection (1) of
this section, then any interest or penalty assessed under ORS chapter
305, 314 or 316 with respect to the deficiency or portion shall be
canceled.

(b) If a refund is due any taxpayer for a tax year for which
subsection (1) of this section applies and the refund or any portion
thereof is due the taxpayer on account of any retroactive treatment given
P.L. 98-369 or 99-121 for Oregon tax purposes under subsection (1) of
this section, then notwithstanding ORS 314.415 or other law, the refund
shall be paid without interest.

(3)(a)(A) At the election of the taxpayer and if the taxpayer is
required to file an Oregon return for a tax year beginning in 1985, any
changes required on account of subsection (1)(a) of this section for a
tax year beginning prior to January 1, 1985, may be made either by filing
an amended return or be made on a tax return filed for a tax year
beginning in 1985 in the manner determined by the Department of Revenue
by rule. An election made under this paragraph shall apply to all changes
required on account of subsection (1)(a) of this section.

(B) Any changes required on account of subsection (1)(b) of this
section for a tax year beginning prior to January 1, 1987, shall be made
by filing an amended return within the time prescribed by law.

(b) Exercise of the election provided under paragraph (a)(A) of
this subsection shall not operate to modify any election made on the
return to which the change relates or on the return in which the change
is made unless otherwise provided by the department by rule.

(c) For purposes of paragraph (a)(A) of this subsection, if a
taxpayer is not required to file an Oregon return for a tax year
beginning in 1985, the taxpayer shall reflect the change in an amended
return for the tax year to which the change relates.

(d)(A) If a taxpayer fails to make an election under paragraph
(a)(A) of this subsection, the department shall make any changes under
paragraph (a)(A) of this subsection on the return to which the change or
changes relate within the period as specified for assessing a deficiency
or claiming a refund as otherwise provided by law with respect to that
return, or within one year after a 1985 return is filed, whichever period
expires later.

(B) If a taxpayer fails to file an amended return under paragraph
(a)(B) of this subsection, the department shall make any changes under
paragraph (a)(B) of this subsection on the return to which the change or
changes relate within the period as specified for assessing a deficiency
or claiming a refund as otherwise provided by law with respect to that
return, or within one year after a 1987 return is filed, whichever period
Note: 314.029 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.  
98-369)
and Simplification of Imputed Interest Rules of 1985 (P.L. 99-121) to
corporate excise and income tax. (1)(a) Notwithstanding ORS 317.010,
317.013 and 317.018 (all 1983 Replacement Part), and subject to all other
provisions of ORS chapters 317 and 318 in effect and applicable to
transactions occurring on or after January 1, 1984, the Deficit Reduction
Act of 1984 (P.L. 98-369) insofar as it applies to transactions occurring
on or after January 1, 1984, shall apply to the same transactions for
Oregon tax purposes.

(b) Notwithstanding ORS 317.010, 317.013 and 317.018 (all 1985
Replacement Part), and subject to all other provisions of ORS chapters
317 and 318 in effect and applicable to transactions occurring on or
after January 1, 1985, the Act described as the Simplification of Imputed
Interest Rules of 1985 (P.L. 99-121) insofar as it applies to
transactions occurring on or after January 1, 1985, shall apply to the
same transactions for Oregon tax purposes. The amendments by the Act
described as the Simplification of Imputed Interest Rules of 1985 (P.L.
99-121) to section 168 of the Internal Revenue Code apply to property
placed in service after May 8, 1985, but do not apply to property to
which section 105 (b)(2) and (3) of the Act (P.L. 99-121) apply.

(2)(a) If a deficiency is assessed against any taxpayer for a tax
year for which subsection (1) of this section applies and the deficiency,
or any portion thereof, is attributable to any retroactive treatment for
Oregon tax purposes given P.L. 98-369 or 99-121 under subsection (1) of
this section, then any interest or penalty assessed under ORS chapter
305, 314, 317 or 318 with respect to the deficiency or portion shall be
canceled.

(b) If a refund is due any taxpayer for a tax year for which
subsection (1) of this section applies and the refund or any portion
thereof is due the taxpayer on account of any retroactive treatment given
P.L. 98-369 or 99-121 for Oregon tax purposes under subsection (1) of
this section, then notwithstanding ORS 314.415 or other law, the refund
shall be paid without interest.

(3)(a)(A) At the election of the taxpayer and if the taxpayer is
required to file an Oregon return for a tax year beginning in 1985, any
changes required on account of subsection (1)(a) of this section for a
tax year beginning prior to January 1, 1985, may be made either by filing
an amended return or be made on a tax return filed for a tax year
beginning in 1985 in the manner determined by the Department of Revenue
by rule. An election made under this paragraph shall apply to all changes
required on account of subsection (1)(a) of this section.

(B) Any changes required on account of subsection (1)(b) of this
section for a tax year beginning prior to January 1, 1987, shall be made
by filing an amended return within the time prescribed by law.

(b) Exercise of the election provided under paragraph (a)(A) of
this subsection shall not operate to modify any election made on the
return to which the change relates or on the return in which the change
is made unless otherwise provided by the department by rule.

(c) For purposes of paragraph (a)(A) of this subsection, if a
taxpayer is not required to file an Oregon return for a tax year
beginning in 1985, the taxpayer shall reflect the change in an amended
return for the tax year to which the change relates.

(d)(A) If a taxpayer fails to make an election under paragraph
(a)(A) of this subsection, the department shall make any changes under
paragraph (a)(A) of this subsection on the return to which the change or
changes relate within the period as specified for assessing a deficiency
or claiming a refund as otherwise provided by law with respect to that
return, or within one year after a 1985 return is filed, whichever period
expires later.

(B) If a taxpayer fails to file an amended return under paragraph
(a)(B) of this subsection, the department shall make any changes under
paragraph (a)(B) of this subsection on the return to which the change or
changes relate within the period as specified for assessing a deficiency
or claiming a refund as otherwise provided by law with respect to that
return, or within one year after a 1987 return is filed, whichever period
expires later. [Formerly 317.021]Note: 314.031 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.
99-514). (1) For purposes of subsections (2) to (15) of this section,
“TRA” means the federal Tax Reform Act of 1986 (P.L. 99-514).

(2) Unless the context requires otherwise, the amendments, repeals
and new matter contained in chapter 293, Oregon Laws 1987, apply
generally to tax years beginning on or after January 1, 1987, or to
transactions occurring on or after January 1, 1987, in tax years
beginning on or after January 1, 1987. However, certain changes made by
the federal Tax Reform Act of 1986 (P.L. 99-514) and adopted by the
amendments to ORS 316.007, 316.012, 317.010, 317.013 and 317.018 by
sections 1, 2 and 31 to 33, chapter 293, Oregon Laws 1987, apply for
federal tax purposes as follows:

(a) To tax years beginning prior to January 1, 1987;

(b) To transactions occurring before, on or after December 31,
1986, in tax years ending after that date; or

(c) To transactions occurring prior to January 1, 1987, but with
tax consequences for federal purposes only for tax years beginning after
December 31, 1986.

(3) The changes described in subsection (2)(a) of this section, if
otherwise applicable for Oregon tax purposes, shall apply to and are
specifically adopted for tax years beginning prior to January 1, 1987.

(4) The changes described in subsection (2)(b) and (c) of this
section if otherwise applicable for Oregon tax purposes, shall apply to
and are specifically adopted for transactions occurring before, on or
after December 31, 1986, in tax years ending after December 31, 1986, or
beginning after December 31, 1986, whichever is applicable.

(5) The changes described in subsections (3) and (4) of this
section are exemplified by, but are specifically not limited to the
following:

(a) The amendments made by section 122 of the TRA (relating to
charitable and employee achievement awards) which apply to prizes and
awards granted after December 31, 1986.

(b) The amendments by section 123 of the TRA (relating to
scholarships and fellowships) which apply to tax years beginning after
December 31, 1986, but only in the case of scholarships and fellowships
granted after August 16, 1986.

(c) The amendments to the Internal Revenue Code relating to
depreciation and the expensing of certain depreciable business assets by
sections 201 and 202 of the TRA which apply generally for property placed
in service on or after January 1, 1987, in tax years ending on or after
that date. However, if an election is made under section 203(a)(1)(B) of
the TRA, that election shall be considered to be made for Oregon tax
purposes. In addition, the transitional rules contained in sections 203
and 204 of the TRA shall apply for Oregon purposes to the extent they can
be made applicable, in the same manner as for federal tax purposes.

(d) Section 611 of the TRA (reducing the dividends received
deduction for corporations) which applies to dividends received or
accrued after December 31, 1986, in tax years ending after that date. In
conjunction with this paragraph, the amendments to ORS 317.267 by chapter
293, Oregon Laws 1987, apply to dividends received or accrued after
December 31, 1986, in tax years ending after that date.

(e) Section 1103 of the TRA (relating to the deduction for a
spousal IRA), which applies to tax years beginning before, on or after
December 31, 1985.

(f) Section 1708(a) of the TRA (relating to Vietnam MIA’s) which
applies to tax years beginning after December 31, 1982.

(6) If the TRA allows or requires an adjustment to the federal tax
return filed for a tax year beginning prior to January 1, 1987, and such
an adjustment is made, the adjustment (if adopted for Oregon tax
purposes) shall also be made to the corresponding Oregon return
notwithstanding any law or rule to the contrary, in the manner provided
under ORS 314.135.

(7) If certain transactions are grandfathered by the TRA or the
changes in the federal law made by the TRA are otherwise made
inapplicable to those transactions, the same treatment shall be given
those transactions for Oregon tax purposes unless otherwise provided
under ORS chapter 316, 317, 318 or other law governing the determination
of Oregon personal income and Oregon corporate excise and income taxes.

(8) Subsections (2) to (6) of this section do not apply to the
amendments to ORS 316.021 and 317.021 by chapter 293, Oregon Laws 1987.

(9) Subsections (2) to (6) of this section do not apply to the
amendments to ORS 267.380, 307.380 and 310.630 made by sections 65, 66
and 69, chapter 293, Oregon Laws 1987.

(10) The amendments to ORS 310.630 by section 66, chapter 293,
Oregon Laws 1987, apply to property taxes billed or rent constituting
property taxes paid in calendar years beginning on or after January 1,
1987.

(11) Subsections (2) to (6) of this section do not apply to the
amendments creating a new paragraph (c) of subsection (3) of ORS 316.680.
The amendments to ORS 316.680 by section 23, chapter 293, Oregon Laws
1987, creating a new paragraph (c) of subsection (3) of ORS 316.680 apply
to tax years beginning on or after January 1, 1986.

(12) ORS 316.588 and the amendments to ORS 314.525, 316.579 and
316.587 by sections 22, 22a and 61a, chapter 293, Oregon Laws 1987, first
apply to estimated tax payments due for tax years beginning on or after
January 1, 1988.

(13) ORS 316.683 first applies to distributions made by regulated
investment companies or fiduciaries, including banks, savings
associations or credit unions, to the taxpayer for taxable years of the
taxpayer beginning on or after January 1, 1987.

(14) Subsections (2) to (6) of this section do not apply to the
amendments to ORS 314.385 and 314.395 by sections 59a and 59b, chapter
293, Oregon Laws 1987. The amendments to ORS 314.385 and 314.395 by
sections 59a and 59b, chapter 293, Oregon Laws 1987, apply to tax years
beginning on or after January 1, 1988.

(15) The amendments to ORS 317.476 by section 45d, chapter 293,
Oregon Laws 1987, first apply to losses occurring in tax years beginning
on or after January 1, 1987. [Formerly 316.023; 1997 c.99 §17]Note: 314.033, 314.035, 314.037, 314.039 and 314.041 were enacted
into law by the Legislative Assembly but were not added to or made a part
of ORS chapter 314 or any series therein by legislative action. See
Preface to Oregon Revised Statutes for further explanation.Note: Legislative Counsel has substituted “chapter 293, Oregon Laws
1987,” for the words “this Act” in sections 71, 72 and 73, chapter 293,
Oregon Laws 1987, compiled as 316.023 and renumbered 314.033 in 1993.
Specific ORS references have not been substituted, pursuant to 173.160.
These sections may be determined by referring to the 1987 Comparative
Section Table located in Volume 20 of ORS.(1) Except as
provided in subsections (2) to (4) of this section and sections 83 to 92,
chapter 625, Oregon Laws 1989, the amendments by chapter 625, Oregon Laws
1989, apply to transactions or activities occurring on or after January
1, 1989, in tax years beginning on or after January 1, 1989.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended by the
Tax Reform Act of 1986 (P.L. 99-514) and other Acts, relative to those
dates, contained in the Omnibus Budget Reconciliation Act of 1987 (P.L.
100-203) shall apply for Oregon personal income and corporate excise and
income tax purposes, to the extent they can be made applicable, in the
same manner as they are applied under the federal Internal Revenue Code
and related federal law.

(3) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended by the
Tax Reform Act of 1986 (P.L. 99-514) and other Acts, relative to those
dates, contained in the Family Support Act of 1988 (P.L. 100-485) shall
apply for Oregon personal income and corporate excise and income tax
purposes, to the extent they can be made applicable, in the same manner
as they are applied under the federal Internal Revenue Code and related
federal law.

(4) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended by the
Tax Reform Act of 1986 (P.L. 99-514) and other Acts, relative to those
dates, contained in the Technical and Miscellaneous Revenue Act of 1988
(P.L. 100-647) shall apply for Oregon personal income and corporate
excise and income tax purposes, to the extent they can be made
applicable, in the same manner as they are applied under the federal
Internal Revenue Code and related federal law.

(5)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 1989, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under chapter 625,
Oregon Laws 1989, then any interest or penalty assessed under ORS chapter
305, 314, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 1989, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under chapter 625,
Oregon Laws 1989, then notwithstanding ORS 314.415 or other law, the
refund shall be paid without interest.

(c) Any changes required on account of chapter 625, Oregon Laws
1989, for a tax year beginning prior to January 1, 1989, shall be made by
filing an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the change
or changes relate within the period as specified for issuing a notice of
deficiency or claiming a refund as otherwise provided by law with respect
to that return, or within one year after a 1989 return is filed,
Note: See first note under 314.033.Note: Legislative Counsel has substituted “chapter 625, Oregon Laws
1989,” for the words “this Act” in section 82, chapter 625, Oregon Laws
1989, compiled as 314.035. Specific ORS references have not been
substituted, pursuant to 173.160. These sections may be determined by
referring to the 1989 Comparative Section Table located in Volume 20 of
ORS. 101-140, Omnibus Budget Reconciliation
Act of 1989 (P.L. 101-239) and Omnibus Budget Reconciliation Act of 1991
(P.L. 101-508). (1) Except as provided in subsection (2) of this section
and sections 25a to 32, chapter 457, Oregon Laws 1991, the new material
and amendments by chapter 457, Oregon Laws 1991, apply to transactions or
activities occurring on or after January 1, 1991, in tax years beginning
on or after January 1, 1991.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in P.L. 101-140, the Omnibus Budget
Reconciliation Act of 1989 (P.L. 101-239) and the Omnibus Budget
Reconciliation Act of 1990 (P.L. 101-508) shall apply for Oregon personal
income and corporate excise and income tax purposes, to the extent they
can be made applicable, in the same manner as they are applied under the
federal Internal Revenue Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 1991, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under chapter 457,
Oregon Laws 1991, then any interest or penalty assessed under ORS chapter
305, 314, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 1991, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under chapter 457,
Oregon Laws 1991, then notwithstanding ORS 314.415 or other law, the
refund or portion thereof shall be paid without interest.

(c) Any changes required on account of chapter 457, Oregon Laws,
1991, for a tax year beginning prior to January 1, 1991, shall be made by
filing an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the change
or changes relate within the period as specified for issuing a notice of
deficiency or claiming a refund as otherwise provided by law with respect
to that return, or within one year after a 1991 return is filed,
whichever period expires later. [1991 c.457 §25]Note: See first note under 314.033.Note: Legislative Counsel has substituted “chapter 457, Oregon Laws
1991,” for the words “this Act” in section 25, chapter 457, Oregon Laws
1991, compiled as 314.037. Specific ORS references have not been
substituted, pursuant to 173.160. These sections may be determined by
referring to the 1991 Comparative Section Table located in Volume 20 of
ORS. 102-2, Comprehensive National Energy
Policy Act of 1992 (P.L. 102-486), Unemployment Compensation Amendments
of 1992 (P.L. 102-318), Tax Extension Act of 1991 (P.L. 102-227) and
Emergency Unemployment Compensation Act of 1991 (P.L. 102-164). (1)
Except as specifically provided otherwise, the new material enacted,
amendments and repeals made by chapter 726, Oregon Laws 1993, apply to
transactions or activities occurring on or after January 1, 1993, in tax
years beginning on or after January 1, 1993.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in P.L. 102-2, the Comprehensive
National Energy Policy Act of 1992 (P.L. 102-486), the Unemployment
Compensation Amendments of 1992 (P.L. 102-318), the Tax Extension Act of
1991 (P.L. 102-227) and the Emergency Unemployment Compensation Act of
1991 (P.L. 102-164) shall apply for Oregon personal income and corporate
excise and income tax purposes, to the extent they can be made
applicable, in the same manner as they are applied under the federal
Internal Revenue Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 1993, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under chapter 726,
Oregon Laws 1993, then any interest or penalty assessed under ORS chapter
305, 314, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 1993, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under chapter 726,
Oregon Laws 1993, then notwithstanding ORS 314.415 or other law, the
refund or portion thereof shall be paid without interest.

(c) Any changes required on account of chapter 726, Oregon Laws
1993, for a tax year beginning prior to January 1, 1993, shall be made by
filing an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the change
or changes relate within the period as specified for issuing a notice of
deficiency or claiming a refund as otherwise provided by law with respect
to that return, or within one year after a 1993 return is filed,
whichever period expires later. [1993 c.726 §53]Note: See first note under 314.033.Note: Legislative Counsel has substituted “chapter 726, Oregon Laws
1993,” for the words “this Act” in section 53, chapter 726, Oregon Laws
1993, compiled as 314.039. Specific ORS references have not been
substituted, pursuant to 173.160. These sections may be determined by
referring to the 1993 Comparative Section Table located in Volume 20 of
ORS.
103-66), the Uruguay Round Agreements Act (P.L. 103-465) and P.L. 104-7.
(1) Except as provided in subsection (2) of this section, ORS 314.304 and
sections 7, 7a, 28, 38 and 40, chapter 556, Oregon Laws 1995, the new
material enacted and amendments and repeals made by chapter 556, Oregon
Laws 1995, apply to transactions or activities occurring on or after
January 1, 1995, in tax years beginning on or after January 1, 1995.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in the Revenue Reconciliation Act of
1993 (P.L. 103-66), the Uruguay Round Agreements Act (P.L. 103-465) or
P.L. 104-7 shall apply for Oregon personal income and corporate excise
and income tax purposes, to the extent they can be made applicable, in
the same manner as they are applied under the federal Internal Revenue
Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 1995, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under chapter 556,
Oregon Laws 1995, then any interest or penalty assessed under ORS chapter
305, 314, 315, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 1995, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under chapter 556,
Oregon Laws 1995, then notwithstanding ORS 314.415 or other law, the
refund or portion thereof shall be paid without interest.

(c) Any changes required on account of chapter 556, Oregon Laws
1995, for a tax year beginning before January 1, 1995, shall be made by
filing an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the change
or changes relate within the period specified for issuing a notice of
deficiency or claiming a refund as otherwise provided by law with respect
to that return, or within one year after a 1995 return is filed,
whichever period expires later. [1995 c.556 §39]Note: See first note under 314.033.Note: Legislative Counsel has substituted “chapter 556, Oregon Laws
1995,” for the words “this Act” in section 39, chapter 556, Oregon Laws
1995, compiled as 314.041. Specific ORS references have not been
substituted pursuant to 173.160. These sections may be determined by
referring to the 1995 Comparative Section Table located in Volume 20 of
ORS. 104-88),
P.L. 104-117, Omnibus Consolidated Rescissions and Appropriations Act of
1996 (P.L. 104-134), Small Business Job Protection Act of 1996 (P.L.
104-188), Health Insurance Portability and Accountability Act of 1996
(P.L. 104-191) and Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (P.L. 104-193). (1) Except as specifically
provided otherwise, the new provisions enacted and amendments and repeals
of statutes made by chapter 839, Oregon Laws 1997, apply to transactions
or activities occurring on or after January 1, 1997, in tax years
beginning on or after January 1, 1997.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in the ICC Termination Act of 1995
(P.L. 104-88), P.L. 104-117, the Omnibus Consolidated Rescissions and
Appropriations Act of 1996 (P.L. 104-134), the Small Business Job
Protection Act of 1996 (P.L. 104-188), the Health Insurance Portability
and Accountability Act of 1996 (P.L. 104-191) and the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L.
104-193), shall apply for Oregon personal income and corporate excise and
income tax purposes, to the extent they can be made applicable, in the
same manner as they are applied under the federal Internal Revenue Code
and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 1997, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under chapter 839,
Oregon Laws 1997, then any interest or penalty assessed under ORS chapter
305, 314, 315, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 1997, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under chapter 839,
Oregon Laws 1997, then notwithstanding ORS 305.270 or 314.415 or other
law, the refund or portion thereof shall be paid without interest.

(c) Any changes required on account of chapter 839, Oregon Laws
1997, for a tax year beginning prior to January 1, 1997, shall be made by
filing an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the change
or changes relate within the period specified for issuing a notice of
deficiency or claiming a refund as otherwise provided by law with respect
to that return, or within one year after a 1997 return is filed,
whichever period expires later. [1997 c.839 §70; 1999 c.21 §32]Note: 314.043 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.Note: Legislative Counsel has substituted “chapter 839, Oregon Laws
1997,” for the words “this Act” in section 70, chapter 839, Oregon Laws
1997, compiled as 314.043. Specific ORS references have not been
substituted, pursuant to 173.160. The sections for which substitution
otherwise would be made may be determined by referring to the 1997
Comparative Section Table located in Volume 20 of ORS. 105-34),
Taxpayer Browsing Protection Act (P.L. 105-35), Balanced Budget Act of
1997 (P.L. 105-33), Internal Revenue Service Restructuring and Reform Act
of 1998 (P.L. 105-206), Transportation Equity Act for the 21st Century
(P.L. 105-178) and Tax and Trade Relief Extension Act of 1998 (P.L.
105-277). (1) Except as specifically provided in sections 4, 4b, 20 and
25b, chapter 90, Oregon Laws 1999, the new provisions enacted and
amendments to statutes made by chapter 90, Oregon Laws 1999, apply to
transactions or activities occurring on or after January 1, 1999, in tax
years beginning on or after January 1, 1999.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in the Taxpayer Relief Act of 1997
(P.L. 105-34), the Taxpayer Browsing Protection Act (P.L. 105-35), the
Balanced Budget Act of 1997 (P.L. 105-33), the Internal Revenue Service
Restructuring and Reform Act of 1998 (P.L. 105-206), the Transportation
Equity Act for the 21st Century (P.L. 105-178) and the Tax and Trade
Relief Extension Act of 1998 (P.L. 105-277) shall apply for Oregon
personal income and corporate excise and income tax purposes, to the
extent they can be made applicable, in the same manner as they are
applied under the federal Internal Revenue Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 1999, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under chapter 90,
Oregon Laws 1999, then any interest or penalty assessed under ORS chapter
305, 314, 315, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 1999, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under chapter 90, Oregon
Laws 1999, then notwithstanding ORS 305.270 or 314.415 or other law, the
refund or portion thereof shall be paid without interest.

(c) Any changes required on account of chapter 90, Oregon Laws
1999, for a tax year beginning before January 1, 1999, shall be made by
filing an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the changes
relate within the period specified for issuing a notice of deficiency or
claiming a refund as otherwise provided by law with respect to that
return, or within one year after a return for a tax year beginning on or
after January 1, 1999, and before January 1, 2000, is filed, whichever
period expires later. [1999 c.90 §37]Note: 314.045 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.Note: Legislative Counsel has substituted “chapter 90, Oregon Laws
1999,” for the words “this 1999 Act” in section 37, chapter 90, Oregon
Laws 1999, compiled as 314.045. Specific ORS references have not been
substituted, pursuant to 173.160. The sections for which substitution
otherwise would be made may be determined by referring to the 1999
Comparative Section Table located in Volume 20 of ORS.
106-170) and FSC Repeal and Extraterritorial Income Exclusion Act of 2000
(P.L. 106-519). (1) The amendments to statutes by sections 23 to 52,
chapter 660, Oregon Laws 2001, apply to transactions or activities
occurring on or after January 1, 2001, in tax years beginning on or after
January 1, 2001.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in the Tax Relief Extension Act of
1999 (P.L. 106-170) and the FSC Repeal and Extraterritorial Income
Exclusion Act of 2000 (P.L. 106-519), apply for Oregon personal income
and corporate excise and income tax purposes, to the extent they can be
made applicable, in the same manner as they are applied under the
Internal Revenue Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 2001, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under the
amendments to statutes by sections 23 to 52, chapter 660, Oregon Laws
2001, then any interest or penalty assessed under ORS chapter 305, 314,
315, 316, 317 or 318 with respect to the deficiency or portion thereof
shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 2001, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under the amendments to
statutes by sections 23 to 52, chapter 660, Oregon Laws 2001, then
notwithstanding ORS 305.270 or 314.415 or other law, the refund or
portion thereof shall be paid without interest.

(c) Any changes required on account of the amendments to statutes
by sections 23 to 52, chapter 660, Oregon Laws 2001, for a tax year
beginning before January 1, 2001, shall be made by filing an amended
return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the changes
relate within the period specified for issuing a notice of deficiency or
claiming a refund as otherwise provided by law with respect to that
return, or within one year after a return for a tax year beginning on or
after January 1, 2001, and before January 1, 2002, is filed, whichever
period expires later. [2001 c.660 §53]Note: 314.047 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.Note: Legislative Counsel has substituted “chapter 660, Oregon Laws
2001,” for the words “of this 2001 Act” in section 53, chapter 660,
Oregon Laws 2001, compiled as 314.047. Specific ORS references have not
been substituted, pursuant to 173.160. The sections for which
substitution otherwise would be made may be determined by referring to
the 2001 Comparative Section Table located in Volume 20 of ORS.(1) The amendments to statutes by
sections 1 to 22, chapter 77, Oregon Laws 2003, apply to transactions or
activities occurring on or after January 1, 2003, in tax years beginning
on or after January 1, 2003.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in the Economic Growth and Tax Relief
Reconciliation Act of 2001 (P.L. 107-16) and the Job Creation and Worker
Assistance Act of 2002 (P.L. 107-147) apply for Oregon personal income
and corporate excise and income tax purposes, to the extent they can be
made applicable, in the same manner as they are applied under the
Internal Revenue Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 2003, and the deficiency, or any portion
thereof, is attributable to any retroactive treatment under the
amendments to statutes by sections 1 to 22, chapter 77, Oregon Laws 2003,
then any interest or penalty assessed under ORS chapter 305, 314, 315,
316, 317 or 318 with respect to the deficiency or portion thereof shall
be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 2003, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under the amendments to
statutes by sections 1 to 22, chapter 77, Oregon Laws 2003, then
notwithstanding ORS 305.270 or 314.415 or other law, the refund or
portion thereof shall be paid without interest.

(c) Any changes required because of the amendments to statutes by
sections 1 to 22, chapter 77, Oregon Laws 2003, for a tax year beginning
before January 1, 2003, shall be made by filing an amended return within
the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the changes
relate within the period specified for issuing a notice of deficiency or
claiming a refund as otherwise provided by law with respect to that
return, or within one year after a return for a tax year beginning on or
after January 1, 2003, and before January 1, 2004, is filed, whichever
period expires later. [2003 c.77 §23]Note: 314.049 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.Note: Legislative Counsel has substituted “chapter 77, Oregon Laws
2003,” for the words “this 2003 Act” in section 23, chapter 77, Oregon
Laws 2003, compiled as 314.049. Specific ORS references have not been
substituted, pursuant to 173.160. The sections for which substitution
otherwise would be made may be determined by referring to the 2003
Comparative Section Table located in Volume 20 of ORS. 107-330),
Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27),
Military Family Tax Relief Act of 2003 (P.L. 108-121), Working Families
Tax Relief Act of 2004 (P.L. 108-311) and American Jobs Creation Act of
2004 (P.L. 108-357). (1) Except as provided in subsections (2) and (3) of
this section, ORS 316.821 and the amendments to statutes by sections 13
to 28 and 31, chapter 832, Oregon Laws 2005, apply to transactions or
activities occurring on or after January 1, 2005, in tax years beginning
on or after January 1, 2005.

(2) The effective and applicable dates, and the exceptions, special
rules and coordination with the Internal Revenue Code, as amended,
relative to those dates, contained in the Veterans Benefits Act of 2002
(P.L. 107-330), the Jobs and Growth Tax Relief Reconciliation Act of 2003
(P.L. 108-27), the Military Family Tax Relief Act of 2003 (P.L. 108-121),
the Working Families Tax Relief Act of 2004 (P.L. 108-311), the American
Jobs Creation Act of 2004 (P.L. 108-357) and other federal law amending
the Internal Revenue Code apply for Oregon personal income and corporate
excise and income tax purposes, to the extent they can be made
applicable, in the same manner as they are applied under the Internal
Revenue Code and related federal law.

(3)(a) If a deficiency is assessed against any taxpayer for a tax
year beginning before January 1, 2005, and the deficiency or any portion
thereof is attributable to any retroactive treatment under ORS 316.821
and the amendments to statutes by sections 13 to 28 and 31, chapter 832,
Oregon Laws 2005, then any interest or penalty assessed under ORS chapter
305, 314, 315, 316, 317 or 318 with respect to the deficiency or portion
thereof shall be canceled.

(b) If a refund is due any taxpayer for a tax year beginning before
January 1, 2005, and the refund or any portion thereof is due the
taxpayer on account of any retroactive treatment under ORS 316.821 and
the amendments to statutes by sections 13 to 28 and 31, chapter 832,
Oregon Laws 2005, then notwithstanding ORS 305.270 or 314.415 or other
law, the refund or portion thereof shall be paid without interest.

(c) Any changes required because of ORS 316.821 and the amendments
to statutes by sections 13 to 28 and 31, chapter 832, Oregon Laws 2005,
for a tax year beginning before January 1, 2005, shall be made by filing
an amended return within the time prescribed by law.

(d) If a taxpayer fails to file an amended return under paragraph
(c) of this subsection, the Department of Revenue shall make any changes
under paragraph (c) of this subsection on the return to which the changes
relate within the period specified for issuing a notice of deficiency or
claiming a refund as otherwise provided by law with respect to that
return, or within one year after a return for a tax year beginning on or
after January 1, 2005, and before January 1, 2006, is filed, whichever
period expires later. [2005 c.832 §32]Note: 314.051 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.Note: Legislative Counsel has substituted “chapter 832, Oregon Laws
2005,” for the words “this 2005 Act” in section 32, chapter 832, Oregon
Laws 2005, compiled as 314.051. Specific ORS references have not been
substituted, pursuant to 173.160. The sections for which substitution
otherwise would be made may be determined by referring to the 2005
Comparative Section Table located in Volume 20 of ORS.Note: Section 39, chapter 832, Oregon Laws 2005, provides:

Sec. 39. Public Law 109-1 applies for purposes of computing federal
taxable income for Oregon tax purposes under ORS chapter 316, 317 or 318.
[2005 c.832 §39] No person, or
officer or employee of a corporation or a member or employee of a
partnership, shall, with intent to evade any requirement of any law
imposing taxes upon or measured by net income or any lawful requirement
of the Department of Revenue thereunder:

(1) Fail to pay any tax or to make, sign or verify any return or to
supply any information required;

(2) Make, render, sign or verify any false or fraudulent return or
statement; or

(3) Supply any false or fraudulent information. [1957 c.632 §3
(enacted in lieu of 316.025, 316.030, 317.015 and 317.020)] For purposes of this
chapter and ORS chapters 315, 316, 317 and 318, a taxpayer claiming a
credit against tax must claim the maximum amount of any tax credit that
is allowed to the taxpayer for the tax year, to the extent of the tax
liability of the taxpayer. [2001 c.8 §2] The failure to do any
act required by or under any law imposing taxes upon or measured by net
income shall be deemed an act committed in part at the office of the
Department of Revenue in Oregon. [1957 c.632 §3 (enacted in lieu of
316.025, 316.030, 317.015 and 317.020)] (1) The taxable year of a partnership, REMIC
(real estate mortgage investment conduit), FASIT (financial asset
securitization investment trust) or taxpayer shall be the same as its
taxable year for federal income tax purposes.

(2) If the taxable year of a partnership, REMIC, FASIT or taxpayer
is changed for federal income tax purposes, that change in taxable year
shall also apply for purposes of state taxation. If a change in taxable
year results in a taxable period of less than 12 months, the personal
deductions and the personal exemption credits allowed by ORS chapter 316
shall be prorated under rules adopted by the Department of Revenue.

(3) Notwithstanding subsections (1) and (2) of this section, if the
department terminates the taxable year of a taxpayer under ORS 314.440,
the tax shall be computed for the period determined by such action. [1987
c.293 §55; 1997 c.839 §52](1) This section applies to a taxpayer who
was a member of the Armed Forces of the United States who was on active
duty for 90 consecutive days or more or who was a member of the Oregon
National Guard, the military reserve forces or the organized militia of
any other state or territory of the United States who performed service
in a status under Title 10 of the United States Code for a period of 90
consecutive days or more, and who died during the performance of that
service.

(2) If a taxpayer described in subsection (1) of this section had a
tax liability for a tax due under ORS chapter 316, the tax liability, and
all interest and penalties associated with any unpaid portion of the tax
liability, shall be discharged and shall be deemed wholly satisfied for
the taxpayer. [2005 c.519 §2]Note: Sections 3 and 4, chapter 519, Oregon Laws 2005, provide:

Sec. 3. Section 2 of this 2005 Act [314.088] applies to deaths of
taxpayers described in section 2 of this 2005 Act that occurred on or
after September 11, 2001. [2005 c.519 §3]

Sec. 4. Notwithstanding ORS 314.415 or any other law limiting the
period for which a claim for refund of taxes may be made, the liability
discharged under section 2 of this 2005 Act [314.088] may be allowed if
filed on or before December 31, 2006. [2005 c.519 §4](1) This section applies to a taxpayer who is a member of the
Armed Forces of the United States who is on active duty for 90
consecutive days or more or who is a member of the Oregon National Guard,
the military reserve forces or the organized militia of any other state
or territory of the United States who performs service in a status under
Title 10 of the United States Code for a period of 90 consecutive days or
more.

(2) If a taxpayer described in subsection (1) of this section has
an unpaid tax liability for a tax due under ORS chapter 316 that arose
during a period in which service is performed as described in subsection
(1) of this section, the unpaid tax liability, and all interest and
penalties associated with the unpaid tax liability, shall be held in
abeyance until a date that is six months after the date that the
taxpayer’s active duty or status under Title 10 of the United States Code
ceases. [2005 c.519 §6]Note: Section 7, chapter 519, Oregon Laws 2005, provides:

Sec. 7. Section 6 of this 2005 Act [314.091] applies to unpaid tax
liability of taxpayers described in section 6 of this 2005 Act that was
incurred during periods of military service that occurred on or after
September 11, 2001. [2005 c.519 §7]ADJUSTMENT OF RETURNS For purposes of ORS
314.105 to 314.135:

(1) “Determination” means:

(a) A decision by the Oregon Tax Court that has become final;

(b) A closing agreement made under ORS 305.150;

(c) A final disposition by the Department of Revenue of a claim for
refund. For purposes of this paragraph, a claim for refund shall be
deemed finally disposed of by the department as to items with respect to
which the claim was allowed, on the date of allowance of refund or credit
or on the date of mailing notice of disallowance (by reason of offsetting
items) of the claim for refund, and as to items with respect to which the
claim was disallowed, in whole or in part, or as to items applied by the
department in reduction of the refund or credit, on expiration of the
time for instituting suit with respect thereto (unless suit is instituted
before the expiration of such time); or

(d) Under regulations prescribed by the department, an agreement
for purposes of ORS 314.105 to 314.135 signed by the department and by
any person, relating to the liability of such person (or the person for
whom the person acts) in respect of a tax for any taxable period.

(2) “Related taxpayer” means a taxpayer who, with the taxpayer with
respect to whom a determination is made, stood, in the taxable year with
respect to which the erroneous inclusion, exclusion, omission, allowance,
or disallowance was made, in one of the following relationships:

(a) Husband and wife;

(b) Grantor and fiduciary;

(c) Grantor and beneficiary;

(d) Fiduciary and beneficiary, legatee, or heir;

(e) Decedent and decedent’s estate;

(f) Partner;

(g) Member of an affiliated group of corporations as defined in
section 1504 of the Internal Revenue Code; or

(h) Shareholder of an S corporation, as defined in section 1361 of
the Internal Revenue Code.

(3) “Taxpayer” means any person or entity subject to tax under an
applicable revenue law. [1971 c.248 §2; 1984 c.1 §15; 1985 c.602 §1; 1987
c.758 §11; 2005 c.94 §75](1) If a determination is described in ORS 314.125 and, on the
date of the determination, correction of the effect of the error referred
to in the applicable provision of ORS 314.125 is prevented by the
operation of any law or rule of law other than ORS 314.105 to 314.135 and
other than ORS 305.150, then the effect of the error shall be corrected
by an adjustment made in the amount and in the manner specified in ORS
314.135.

(2) Except in cases described in ORS 314.125 (3)(b) and (4), an
adjustment shall be made under this section only if:

(a) In case the amount of the adjustment would be credited or
refunded in the same manner as an overpayment under ORS 314.135, there is
adopted in the determination a position maintained by the Department of
Revenue; or

(b) In case the amount of the adjustment would be assessed and
collected in the same manner as a deficiency under ORS 314.135, there is
adopted in the determination a position maintained by the taxpayer with
respect to whom the determination is made, and the position maintained by
the department in the case described in paragraph (a) of this subsection
or maintained by the taxpayer in the case described in this paragraph is
inconsistent with the erroneous inclusion, exclusion, omission,
allowance, disallowance, recognition, or nonrecognition, as the case may
be.

(3) In the case of a determination described in ORS 314.125 (3)(b)
(relating to certain exclusions from income), adjustment shall be made
under this section only if assessment of a deficiency for the taxable
year in which the item is includable or against the related taxpayer was
not barred, by any law or rule of law, at the time the department first
maintained, in a notice of deficiency sent pursuant to ORS 305.265 or
before the Oregon Tax Court, that the item described in ORS 314.125
(3)(b) should be included in the gross income of the taxpayer for the
taxable year to which the determination relates.

(4) In the case of a determination described in ORS 314.125 (4)
(relating to disallowance of certain deductions and credits), adjustment
shall be made under ORS 314.105 to 314.135 only if credit or refund of
the overpayment attributable to the deduction or credit described in ORS
314.125 that should have been allowed to the taxpayer or related taxpayer
was not barred, by any law or rule of law, at the time the taxpayer first
maintained before the department or before the Oregon Tax Court, in
writing, that the taxpayer was entitled to such deduction or credit for
the taxable year to which the determination relates.

(5) In case the amount of the adjustment would be assessed and
collected in the same manner as a deficiency (except for cases described
in ORS 314.125 (3)(b)), the adjustment shall not be made with respect to
a related taxpayer unless the related taxpayer stands in such
relationship to the taxpayer at the time the latter first maintains the
inconsistent position in a return, claim for refund, or complaint in the
Oregon Tax Court for the taxable year with respect to which the
determination is made, or if such position is not so maintained, then at
the time of determination. [1971 c.248 §3; 1979 c.689 §24; 1997 c.325
§33; 2005 c.94 §76] The circumstances under which
the adjustment provided in ORS 314.115 is authorized are as follows:

(1) The determination requires the inclusion in gross income of an
item that was erroneously included in the gross income of the taxpayer
for another taxable year or in the gross income of a related taxpayer.

(2) The determination allows a deduction or credit that was
erroneously allowed to the taxpayer for another taxable year or to a
related taxpayer.

(3)(a) The determination requires the exclusion from gross income
of an item included in a return filed by the taxpayer or with respect to
which tax was paid and that was erroneously excluded or omitted from the
gross income of the taxpayer for another taxable year, or from the gross
income of a related taxpayer; or

(b) The determination requires the exclusion from gross income of
an item not included in a return filed by the taxpayer and with respect
to which the tax was not paid but that is includable in the gross income
of the taxpayer for another taxable year or in the gross income of a
related taxpayer.

(4) The determination disallows a deduction or credit that should
have been allowed to, but was not allowed to, the taxpayer for another
taxable year, or to a related taxpayer.

(5) The determination allows or disallows any of the additional
deductions allowable in computing the taxable income of estates or
trusts, or requires or denies any of the inclusions in the computation of
taxable income of beneficiaries, heirs or legatees, specified in sections
641 to 679 of the Internal Revenue Code, or corresponding provisions of
subsequent internal revenue laws, and the correlative inclusion or
deduction, as the case may be, has been erroneously excluded, omitted or
included, or disallowed, omitted or allowed, as the case may be in
respect of the related taxpayer.

(6) The determination allows or disallows a deduction (including a
credit) in computing the taxable income (or, as the case may be, net
income, normal tax net income or surtax net income) of a corporation, and
a correlative deduction or credit has been erroneously allowed, omitted
or disallowed, as the case may be, in respect of a related taxpayer
described in ORS 314.105 (2)(g).

(7)(a) The determination determines the basis of property, and in
respect of any transaction on which such basis depends, or in respect of
any transaction that was erroneously treated as affecting such basis,
there occurred, with respect to a taxpayer described in paragraph (b) of
this subsection, any of the errors described in paragraph (c) of this
subsection.

(b) The taxpayer with respect to whom the erroneous treatment
occurred must be:

(A) The taxpayer with respect to whom the determination is made;

(B) A taxpayer who acquired title to the property in the
transaction and from whom, mediately or immediately, the taxpayer with
respect to whom the determination is made derived title; or

(C) A taxpayer who had title to the property at the time of the
transaction and from whom, mediately or immediately, the taxpayer with
respect to whom the determination is made derived title, if the basis of
the property in the hands of the taxpayer with respect to whom the
determination is made is determined under section 1015(a) of the Internal
Revenue Code.

(c) With respect to a taxpayer described in paragraph (b) of this
subsection, there was an erroneous inclusion in, or omission from, gross
income, there was an erroneous recognition, or nonrecognition, of gain or
loss, or there was an erroneous deduction of an item properly chargeable
to capital account or an erroneous charge to capital account of an item
properly deductible. [1971 c.248 §4; 1983 c.162 §50; 1987 c.293 §52; 2005
c.94 §77](1)(a) In computing the amount
of an adjustment under ORS 314.105 to 314.135 there shall first be
ascertained the tax previously determined for the taxable year with
respect to which the error was made. The amount of the tax previously
determined shall be the excess of:

(A) The sum of the amount shown as the tax by the taxpayer on the
return of the taxpayer, if a return was made by the taxpayer and an
amount was shown as the tax by the taxpayer thereon, plus the amounts
previously assessed (or collected without assessment) as a deficiency,
over

(B) The amount of refunds (as defined in ORS 314.415) made.

(b) There shall then be ascertained the increase or decrease in tax
previously determined which results solely from the correct treatment of
the item in the computation of gross income, taxable income, and other
matters under ORS 316.317 or ORS chapter 317 or 318. A similar
computation shall be made for any other taxable year affected, or treated
as affected, by an Oregon net loss for prior years (as provided by ORS
317.476 or 317.478 and section 45b, chapter 293, Oregon Laws 1987), by a
net operating loss deduction (as defined in the federal Internal Revenue
Code) or by a capital loss carryback or carryover (as defined in the
federal Internal Revenue Code) determined with reference to the taxable
year with respect to which the error was made. The amount so ascertained
(together with any amounts wrongfully collected as additions to the tax
or interest, as a result of such error) for each taxable year shall be
the amount of the adjustment for that taxable year.

(2) The adjustment authorized in ORS 314.115 (1) shall be made by
assessing and collecting, or refunding or crediting, the amount thereof
in the same manner as if it were a deficiency determined by the
Department of Revenue with respect to the taxpayer as to whom the error
was made or an overpayment claimed by such taxpayer, as the case may be,
for the taxable year or years with respect to which an amount is
ascertained under subsection (1) of this section and as if on the date of
the determination one year remained before the expiration of the periods
of limitation upon assessment or filing claim for refund for such taxable
year or years. If, as a result of a determination described in ORS
314.105 (1)(d), an adjustment has been made by the assessment and
collection of a deficiency of the refund or credit of an overpayment, and
subsequently such determination is altered or revoked, the amount of the
adjustment ascertained under subsection (1) of this section shall be
redetermined on the basis of such alteration or revocation and any
overpayment or deficiency resulting from such redetermination shall be
refunded or credited, or assessed and collected, as the case may be, as
an adjustment under this part. In the case of an adjustment resulting
from an increase or decrease in a net operating loss or net capital loss
which is carried back to the year of adjustment, interest shall not be
collected or paid for any period prior to the close of the taxable year
in which the net operating loss or net capital loss arises.

(3) The amount to be assessed and collected in the same manner as a
deficiency, or to be refunded or credited in the same manner as an
overpayment, under ORS 314.105 to 314.135, shall not be diminished by any
credit or setoff based upon any item other than the one which was the
subject of the adjustment. The amount of the adjustment under ORS 314.105
to 314.135, if paid, shall not be recovered by a claim or suit for refund
or suit for erroneous refund based upon any item other than the one which
was the subject of the adjustment. [1971 c.248 §5; 1983 c.162 §51; 1987
c.293 §52a](1) Whenever there
has been an adjustment of federal income tax liability involving a
reallocation of any item of income or deduction between related
taxpayers, and when such adjustment results in the assessment of a tax
deficiency or the issuance of a refund check or both, then for Oregon
income tax purposes, whether or not the Department of Revenue effects a
similar reallocation of income or deduction for the same tax year, said
federal tax deficiency and additions thereto shall be deducted (to the
extent otherwise provided by law) by the taxpayer paying the same, and
said federal tax refund, including interest thereon, shall be returned
(to the extent otherwise required by law) by the taxpayer receiving the
same.

(2) If, however, the related taxpayers involved (or their
authorized representatives) so elect in accordance with subsection (3),
then the refund of one, with interest thereon, shall be treated as a
reduction of the deficiency of the other, including additions thereto, so
that only the net amount of deficiency shall be deducted or the net
amount of refund shall be returned, as the case may be.

(3) An election under subsection (2) shall be in writing, signed by
each related taxpayer or authorized representative, and filed with the
department prior to the expiration of the applicable period of limitation
with respect to the adjustment of the last open state return of either
related taxpayer affected by the federal tax deficiency or refund. Such
election shall constitute a waiver of any statute of limitations to
permit the adjustment of all returns of the related taxpayers for the
purpose only of effecting a reallocation of income or deductions similar
to that made by the federal tax authorities and to adjust the federal
income tax deductions resulting therefrom. [1953 c.702 §4]POLLUTION CONTROL FACILITIES(1) Upon receipt of notice of the revocation
of a certification of a pollution control facility pursuant to ORS
468.185 (1), the Department of Revenue immediately shall collect any
taxes due by reason of such revocation, and shall have the benefit of all
laws of this state pertaining to the collection of income and excise
taxes. No assessment of such taxes shall be necessary and no statute of
limitation shall preclude the collection of such taxes.

(2) No tax relief shall be allowed under ORS 307.405 or 315.304 for
any pollution control facility constructed or used by or for the benefit
of any governmental or quasi-governmental body or public corporation or
form thereof, except where such facilities are used for resource
recovery. [1967 c.592 §§16,17; 1969 c.493 §83; 1979 c.531 §5]LOBBYING EXPENDITURES (1) If a tax is imposed
upon an organization under section 6033(e) of the Internal Revenue Code
(proxy tax on lobbying expenditures) for any tax year, a like tax is
imposed for the tax year upon the same amount as taxed for federal tax
purposes, as allocated or apportioned to Oregon. The rate of the tax
shall be the rate specified in ORS 317.061. The tax shall be assessed and
collected under the applicable provisions of this chapter and ORS chapter
305.

(2) Any organization that is required to include on a federal
return the information described in section 6033(e)(1) of the Internal
Revenue Code shall file a copy of the federal return containing the
information with the Department of Revenue.

(3) The department may determine by rule the method by which the
tax described in subsection (1) of this section is allocated and
apportioned to Oregon.

(4) If section 6033(e) of the Internal Revenue Code (relating to
the proxy tax on lobbying expenditures) is repealed or otherwise
eliminated by Act of the United States, this section is repealed as of
the applicable date of the repeal or elimination of the proxy tax under
REMICS AND FASITS
(1)(a) An entity described in section 860D of the Internal Revenue Code
(a real estate mortgage investment conduit or REMIC) is not subject to a
tax under ORS chapter 316, 317 or 318 (and may not be treated as a
corporation, partnership or trust for purposes of ORS chapter 316, 317 or
318).

(b) If a REMIC engages in a prohibited transaction as defined in
section 860F(a)(2) of the Internal Revenue Code, the REMIC shall be
subject to a tax equal to six and six-tenths percent of the net income
derived from the prohibited transaction. The tax imposed under this
paragraph shall be assessed and collected under this chapter and ORS
chapter 305 and shall be credited to the General Fund to be made
available for general governmental expenses.

(2) The income of any REMIC shall be taxable to the holders of the
interests in the REMIC under ORS chapter 316, 317 or 318, whichever is
applicable.

(3) Taxable income or loss with respect to income received as the
holder of any interest in a REMIC shall be determined under sections 860A
to 860G of the Internal Revenue Code.

(4) To determine the portion of the income of a REMIC that is
taxable to a nonresident holder of an interest in the REMIC, there shall
be included only that part derived from or connected with sources in this
state, as such part is determined under rules adopted by the Department
of Revenue in accordance with the general rules in ORS 316.352 (1987
Replacement Part). [1987 c.293 §63; 2005 c.94 §79](1)(a) An entity described in section 860L of the Internal
Revenue Code (a financial asset securitization investment trust, or
FASIT) shall not be subject to a tax under ORS chapter 316, 317 or 318
(and shall not be treated as a corporation, partnership, trust or
mortgage pool for purposes of ORS chapter 316, 317 or 318).

(b) If a FASIT engages in a prohibited transaction as defined in
section 860L(e)(2) of the Internal Revenue Code, the FASIT shall be
subject to a tax equal to 6.6 percent of the net income derived from the
prohibited transaction. The tax shall be paid by the holder of the
ownership interest in the FASIT. The tax imposed under this paragraph
shall be assessed and collected under the applicable provisions of this
chapter and ORS chapter 305 and shall be credited to the General Fund to
be made available for general governmental expenses.

(2) The income of any FASIT shall be taxable to the holders of the
ownership interests in the FASIT under ORS chapter 316, 317 or 318,
whichever is applicable.

(3) Taxable income or loss, with respect to income received as the
holder of any interest in a FASIT, shall be determined under sections
860H to 860L of the Internal Revenue Code, as defined in ORS 316.012 or
317.010 and 317.018, and section 1621(e) of the Small Business Job
Protection Act of 1996 (P.L. 104-188), as otherwise determined and
modified under ORS chapter 316, 317 or 318, whichever is applicable, to
the FASIT interest holder.

(4) To determine the portion of the income of a FASIT that is
taxable to a nonresident holder of an interest in the FASIT, there shall
be included only that part derived from or connected with sources in this
state. [1997 c.839 §51]METHODS OF ACCOUNTING AND REPORTING INCOME (1) The method of accounting of a
partnership, REMIC (real estate mortgage investment conduit), FASIT
(financial asset securitization investment trust) or taxpayer shall be
the same as the method of accounting which the partnership, REMIC, FASIT
or taxpayer uses for federal income tax purposes for the taxable year.

(2) Notwithstanding subsection (1) of this section, if the method
of accounting used by the partnership, REMIC, FASIT or taxpayer does not
clearly reflect income, the computation of taxable income shall be made
under such method as the Department of Revenue may prescribe.

(3) If the method of accounting is changed for federal income tax
purposes, the partnership, REMIC, FASIT or taxpayer shall adopt the same
method of accounting for purposes of ORS chapter 316, 317 or 318 and
shall use that method beginning with the return filed which corresponds
to the first federal return filed which is required to use the new
method. Any adjustments required to prevent amounts from being duplicated
or omitted shall be taken into account for state tax purposes in the same
manner as for federal tax purposes.

(4) Subsections (1) and (3) of this section shall not apply with
respect to methods of accounting which are disallowed for purposes of ORS
chapter 316, 317 or 318. [1987 c.293 §57; 1997 c.839 §53](1)
If a taxpayer has income from business activity as a financial
organization or as a public utility (as defined respectively in ORS
314.610 (4) and (6)) which is taxable both within and without this state
(as defined in ORS 314.610 (8) and 314.615), the determination of net
income shall be based upon the business activity within the state, and
the Department of Revenue shall have power to permit or require either
the segregated method of reporting or the apportionment method of
reporting, under rules and regulations adopted by the department, so as
fairly and accurately to reflect the net income of the business done
within the state.

(2) The provisions of subsection (1) of this section dealing with
the apportionment of income earned from sources both within and without
the State of Oregon are designed to allocate to the State of Oregon on a
fair and equitable basis a proportion of such income earned from sources
both within and without the state. Any taxpayer may submit an alternative
basis of apportionment with respect to the income of the taxpayer and
explain that basis in full in the return of the taxpayer. If approved by
the department that method will be accepted as the basis of allocation.

(3)(a) Apportionment rules adopted by the department under this
section must apply the weightings used in ORS 314.650 to comparable
factors used to apportion income from business activity of taxpayers
subject to this section.

(b) Notwithstanding paragraph (a) of this subsection, a taxpayer
primarily engaged in utilities or telecommunications may elect to have
income from business activity apportioned by applying the weightings used
in ORS 314.650 (1999 Edition) to comparable factors used to apportion
such income.

(c) The election shall be made in the time and manner prescribed by
the department by rule. The election shall continue in force and effect
for the tax year for which the election is made and for each subsequent
tax year until the year in which the taxpayer revokes the election.

(d) An electing taxpayer may revoke the taxpayer’s election by
filing a revocation of election in the time and manner prescribed by the
department. The revocation shall apply to the tax year following the year
in which the election is made and to each subsequent tax year.

(e) As used in this subsection:

(A) “Telecommunications” means business operations that conduct,
maintain or provide for the transmission of voice data and text between
network termination points and telecommunications reselling. Transmission
facilities may be based on one technology or a combination of
technologies.

(B) “Utilities” means business operations that provide electric
power, natural gas, steam supply, water supply or sewage removal through
a permanent infrastructure of lines, mains and pipes. [1957 c.632 §4
(enacted in lieu of 316.205 and 317.180); 1963 c.319 §1; 1965 c.152 §22;
2001 c.933 §1] (1) In the computation of
state taxable income, costs allocable to inventory shall be the same as
those allocable to inventory under section 263A of the Internal Revenue
Code as of the close of the tax year for which a return is filed and
shall not be adjusted for any addition, subtraction, modification or
other adjustment contained in this chapter or ORS chapter 316, 317 or 318
or other law governing the imposition of state taxes imposed upon or
measured by net income.

(2) If any provision of ORS chapter 316, 317 or 318 appears to
require an adjustment to inventory costs contrary to the provisions of
this section, that adjustment shall not be made.

(3) The additions, subtractions, modifications or other adjustments
to federal taxable income required in determining Oregon taxable income
under ORS chapter 316, 317 or 318 shall be made to federal taxable income
notwithstanding that such adjustments are properly attributable to costs
allocable to inventory. [1987 c.293 §57b]In any case of two or more organizations, trades or businesses
(whether or not incorporated, whether or not organized in the United
States and whether or not affiliated) owned or controlled directly or
indirectly by the same interests, the Department of Revenue may
distribute, apportion or allocate gross income, deductions, credits or
allowances between or among such organizations, trades or businesses, if
it determines that such distribution, apportionment or allocation is
necessary in order to prevent evasion of taxes or clearly to reflect the
income of any of such organizations, trades or businesses. [1957 c.632
§10 (enacted in lieu of 316.560 and 317.375); 1991 c.457 §16b](1) As used in this section:

(a) “Farm income”:

(A) Means taxable income attributable to a farming business; and

(B) Includes gain from the sale or other disposition of property
(other than land) regularly used by the taxpayer in the farming business
for a substantial period of time.

(b) “Farming business” has the meaning given that term in section
263A(e)(4) of the Internal Revenue Code.

(c) “Taxable income” has the meaning given that term in ORS 316.022.

(d) “Taxpayer” means a person subject to tax under ORS chapter 316,
but does not include an estate or trust.

(2) A taxpayer may elect to have personal income taxes for the tax
year determined under this section in lieu of ORS chapter 316 if the
individual is engaged in a farming business for the tax year and has farm
income for the tax year.

(3) The taxpayer shall make the election in the manner provided by
the Department of Revenue. In making the election, the taxpayer shall
determine the amount of farm income that is to be considered elected farm
income. The election shall apply only to the tax year for which the
election is made.

(4) Upon making the election, the tax imposed under this section
shall equal:

(a) The tax computed under ORS chapter 316 on the taxable income of
the taxpayer reduced by the income that is elected farm income under
subsection (3) of this section; plus

(b) The cumulative increase in the tax computed under ORS chapter
316 that would result if the taxable income of the taxpayer for each of
the three prior tax years were increased by an amount equal to one-third
of the income that is elected farm income under subsection (3) of this
section.

(5) Any tax credit that would be allowable against the tax computed
under ORS chapter 316 may be allowed against the tax computed under this
section.

(6) The department shall:

(a) Prescribe the manner in which an election under this section is
made; and

(b) Adopt rules on:

(A) The order and manner in which items of income, gain, deduction,
loss or limitation on tax shall be taken into account in computing the
tax under this section; and

(B) The treatment of a short tax year for purposes of this section.
[2001 c.252 §2] For
purposes of applying section 469 of the Internal Revenue Code to the laws
of this state imposing taxes upon or measured by income:

(1) Passive activity loss shall be determined with respect to the
activities of the taxpayer under section 469 of the Internal Revenue Code
and related federal law and then shall be adjusted by the additions,
subtractions, modifications and other adjustments as allocated to passive
activity loss under subsection (2) of this section.

(2) Those additions, subtractions, modifications and other
adjustments required to be made to federal taxable income under this
chapter or ORS chapters 316, 317 and 318, or other law governing the
imposition of state taxes imposed upon or measured by income, shall be
allocated to passive activity loss as provided by rule of the Department
of Revenue.

(3) Passive activity loss, as determined under subsections (1) and
(2) of this section, shall not be allowed for the taxable year of the
taxpayer. Passive activity loss shall be treated as a deduction allocable
to passive activity in the next succeeding year, and except as otherwise
adjusted under subsection (1) of this section, shall be treated in the
same manner as passive activity loss is treated under section 469 of the
Internal Revenue Code, and related sections.

(4) For state personal income tax purposes, in the case of a
nonresident, passive activity loss attributable to Oregon sources shall
be treated in the same manner as described under subsections (1) to (3)
of this section. [1987 c.293 §64; 1995 c.556 §23](1) Subject to subsections (2) to (4) of
this section, if interest on deferred tax liability with respect to an
installment obligation is required to be paid for federal income tax
purposes under section 453A of the Internal Revenue Code, then interest
on that same deferred tax liability shall be paid in the same manner
(including the pledging rules under section 453A(d) of the Internal
Revenue Code) for state tax purposes and shall, in the amount added,
increase the tax imposed under ORS chapter 316, 317 or 318, whichever is
appropriate.

(2) Interest added to tax pursuant to subsection (1) of this
section shall be determined in the same manner as interest is determined
under section 453A(c) of the Internal Revenue Code except that in
determining the interest to be added using section 453A(c) of the
Internal Revenue Code:

(a) The interest rate in effect under ORS 305.220 for deficiencies
for the month with or within which the taxable year of the taxpayer ends
shall be substituted for the underpayment rate referred to in section
453A(c)(2)(B); and

(b) The maximum rate of tax in effect under ORS chapter 316, 317 or
318, whichever is appropriate, shall be substituted for the federal rates
of tax referred to in section 453A(c)(3)(B).

(3) The Department of Revenue shall adopt rules consistent with
those adopted under section 453A of the Internal Revenue Code and with
laws of this state as may be necessary to carry out the provisions of
this section, including rules providing for the application of this
subsection in the case of contingent payments, short taxable years,
pass-thru entities and derivation, attribution or apportionment of
installment obligations or income from installment obligations.

(4) In the case of a nonresident subject to taxation under ORS
chapter 316, in determining whether or not interest is to be added to tax
under this section, and the amount of interest to be added, only those
installment obligations that arise from dispositions of property in this
state shall be taken into consideration.

(5) For purposes of determining interest under ORS 314.395 or
penalties under ORS 314.400 or other law, and for purposes of refund,
estimated and other prepayments of tax, credits and all other purposes,
the interest added under this section shall be considered as any other
increase in the tax imposed under ORS chapter 316, 317 or 318, whichever
is appropriate.

(6) The interest added to tax imposed under this section shall be
assessed and collected under the applicable provisions of this chapter
and ORS chapters 305, 316, 317 and 318 and shall be paid over to the
State Treasurer and held in the General Fund as miscellaneous receipts
available generally to meet any expense or obligation of the State of
Oregon lawfully incurred. [1989 c.625 §57](1)
Notwithstanding ORS 314.415 or other law, if a taxpayer has made one or
both elections under Treas. Reg. §1.197-1T for federal income tax
purposes, the election or elections shall apply for Oregon tax purposes.
The taxpayer shall amend the taxpayer’s Oregon return to conform the
return with the corresponding federal return affected by the election or
elections. The amendment must be made on or before April 15, 1998.

(2) If, for taxable years beginning on or after January 1, 1993,
and before January 1, 1995, a taxpayer made the election described in
section 179(c) of the Internal Revenue Code, as amended by the Revenue
Reconciliation Act of 1993 (P.L. 103-66), on the taxpayer’s federal
income tax return, the taxpayer may amend the taxpayer’s corresponding
Oregon return. The amendment shall conform the return to the taxpayer’s
federal income tax return with respect to amounts subject to the section
179(c) election. Notwithstanding the provisions in section 179(c) and the
regulations thereunder that set forth the time for making the election,
the taxpayer’s amended return must be filed on or before April 15, 1998.
[1995 c.556 §42; 1999 c.21 §33]Note: 314.304 is repealed June 30, 2008. See section 34, chapter
21, Oregon Laws 1999.(1) If a taxpayer excludes an amount from federal gross
income by reason of the discharge of indebtedness of the taxpayer under
section 108(a)(1)(A) of the Internal Revenue Code (relating to discharge
of indebtedness in a bankruptcy declared under U.S.C. Title 11), then,
with respect to that portion of the excluded amount that is apportioned
to Oregon, the taxpayer shall apply the rules in 11 U.S.C. 346(j), as
amended and in effect on April 15, 1995.

(2) If a taxpayer excludes an amount from federal gross income by
reason of the discharge of indebtedness of the taxpayer under section
108(a)(1)(B) or (C) of the Internal Revenue Code (relating to discharge
of indebtedness in insolvency or discharge of qualified farm
indebtedness), then, with respect to that portion of the excluded amount
that is apportioned to Oregon, the following paragraphs shall apply, in
the following order:

(a) If the taxpayer has made the election under section 108(b)(5)
of the Internal Revenue Code to first reduce the basis of the depreciable
property of the taxpayer, the election shall also be effective for Oregon
tax purposes. A corresponding reduction in the basis of the depreciable
property of the taxpayer shall be made for Oregon tax purposes.

(b) The amount, if any, by which the following attributes are
reduced under section 108(b)(1) of the Internal Revenue Code for federal
tax purposes shall be added back for Oregon tax purposes:

(A) Federal net operating loss.

(B) Capital loss carryover.

(C) Basis of the property of the taxpayer, excluding amounts
subject to the election under section 108(b)(5) of the Internal Revenue
Code.

(D) Passive activity loss carryover.

(c) Excluding amounts subject to the election in section 108(b)(5)
of the Internal Revenue Code:

(A) Any Oregon net operating loss of an individual or corporate
taxpayer, including a net operating loss carryover to the taxpayer, shall
be reduced by the amount of discharged indebtedness.

(B) Any net capital loss for the taxable year of the discharge, and
any capital loss carryover to the taxable year, shall be reduced by the
amount of discharged indebtedness minus the total amount taken into
account under subparagraph (A) of this paragraph.

(C) The basis of the property of the taxpayer shall be reduced by
the amount of discharged indebtedness minus the total amount taken into
account under subparagraphs (A) and (B) of this paragraph.

(D) The passive activity loss carryover under section 469(b) of the
Internal Revenue Code from the taxable year of the discharge shall be
reduced by the amount of discharged indebtedness minus the total amount
taken into account under subparagraphs (A), (B) and (C) of this
LIABILITY OF TRANSFEREE OR OWNER OF TRUST(1) When a taxpayer ceases to exist or is no longer subject to
the jurisdiction of this state (although subject to the courts of a state
having comity or reciprocity with the State of Oregon), being indebted
for taxes upon or measured by net income, the transferee of the money or
property of the taxpayer shall be liable for any such tax or deficiency
in tax, including penalties and interest, imposed by law on the taxpayer
and accruing or accrued upon the date of transfer, to the extent of the
amount of money or value of the property received by the transferee.
Property received by the transferee shall be valued at the fair market
value of said property at the time of transfer to the initial transferee
by the taxpayer.

(2) The amount for which a transferee of the property of a taxpayer
is liable in respect of any such tax or deficiency in tax, including
penalties and interest, whether shown on the return of the taxpayer or
determined as a deficiency in the tax, shall be assessed against such
transferee and collected and paid in the same manner and subject to the
same provisions and limitations as would apply to the taxpayer had the
taxpayer or it continued subject to the jurisdiction of this state,
except as provided in this section.

(3) As used in this section, the term “transferee” means one not a
bona fide purchaser for value and includes an heir, legatee, devisee,
distributee of an estate of a deceased person, the shareholder of a
dissolved corporation, the assignee or donee of an insolvent person, the
successor of a corporation which is a party to a corporate
reorganization, and persons acting on behalf of such transferees in a
fiduciary capacity.

(4) The period of limitation for assessment of any such liability
of a transferee shall be as follows:

(a) In the case of the liability of an initial transferee of the
property of the taxpayer, within one year after the expiration of the
period of limitation for assessment against the taxpayer.

(b) In the case of the liability of a transferee of a transferee of
the property of the taxpayer, within one year after the expiration of the
period of limitation for assessment against the preceding transferee, but
not more than three years after the expiration of the period of
limitation for assessment against the taxpayer.

(c) If, before the expiration of the period of limitation for the
assessment of the liability of the transferee, as set forth in paragraph
(a) or (b) of this subsection, a court proceeding for the collection of
the tax or liability in respect thereof has been filed against the
taxpayer or last preceding transferee, then the period of limitation for
assessment of the liability of the transferee shall expire one year after
final judgment has been rendered in the court proceedings.

(d) If, before the expiration of the time prescribed in paragraph
(a), (b) or (c) of this subsection for the assessment of the liability,
both the Department of Revenue and the transferee have consented in
writing to its assessment after such time, the liability may be assessed
at any time prior to the expiration of the period of extension agreed
upon. The period so agreed upon may be further extended by subsequent
agreements in writing made before the expiration of the period of
extension previously agreed upon.

(5) For the purposes of this section, if the taxpayer is deceased,
or in the case of a corporation, has terminated its existence, the period
of limitation for assessment against the taxpayer shall be the period
which would be in effect had death or termination of existence not
occurred.

(6) In the absence of notice to the Department of Revenue of the
existence of a fiduciary relationship, notice of liability enforceable
under this section in respect of a tax or deficiency in tax, including
penalties and interest thereon, imposed upon or measured by net income,
if mailed to the last-known address of the person subject to the
liability, shall be sufficient for the purposes of this section even if
such person is deceased, or is under a legal disability, or, in the case
of a corporation, has terminated its existence. [1955 c.367 §2; 1969
c.493 §86; 1995 c.453 §4; 1997 c.325 §35](1) If a final determination treats the grantor of a trust or any
other person as the owner of any portion of a trust pursuant to sections
671 to 679 of the federal Internal Revenue Code or any other law, the
lien of the State of Oregon imposed by ORS 314.417 shall attach to all
property and rights to property, whether real or personal, of that
portion of the trust. The lien may be foreclosed pursuant to ORS 314.419
or collected by warrant pursuant to ORS 314.430.

(2) For the purposes of subsection (1) of this section, “final
determination” means:

(a) An assessment which has become final due to failure to exercise
or exhaust rights of appeal to the Oregon Tax Court.

(b) A decision of the Oregon Tax Court which has become final.

(c) A decision of the Oregon Supreme Court. [1985 c.149 §§2,3; 1995
c.556 §24; 1995 c.650 §31]RETURNS If a taxpayer changes the
tax year on the basis of which net income is computed, the taxpayer
shall, at the time and in the manner the Department of Revenue
prescribes, make a separate return of net income received during the
period intervening between the end of the former income year of the
taxpayer and the beginning of the new income year. [1957 c.632 §6
(enacted in lieu of 316.520); 1987 c.293 §58] (1) Fiduciaries required to make
returns under laws imposing tax upon or measured by net income,
proprietorships, partnerships, corporations, joint stock companies or
associations or insurance companies, having places of business in this
state, in whatever capacity acting, including lessees or mortgagors of
real or personal property, fiduciaries, employers, purchasers of stumpage
and all officers and employees of the state or of any political
subdivisions of the state, having the control, custody, disposal or
payment of interest (other than interest coupons payable to bearer),
rent, dividends, salaries, fees, wages, the purchase price of stumpage,
emoluments or other fixed or determinable annual or periodical gains,
profits and income, paid or payable, during any year to any taxpayer,
shall make return thereof, under oath, to the Department of Revenue,
under such regulations and in such form and manner and to such extent as
it may prescribe.

(2)(a) Every person doing business as a broker shall, when required
by the department, render a correct return duly verified under oath,
under such rules and regulations as the department may prescribe, showing
the names of customers for whom such person has transacted any business,
with such details as to the profits, losses, or other information which
the department may require, as to each of such customers, as will enable
the department to determine whether all income tax due on profits or
gains of such customers has been paid.

(b) Every person who is required to file a return with respect to a
real estate transaction under section 6045(e) of the Internal Revenue
Code shall file a copy of that return with the department.

(3) The department may prescribe circumstances under which the
filing requirements under this section are waived. [1957 c.632 §7
(enacted in lieu of 316.535); 1959 c.305 §1; 1987 c.293 §59; 1987 c.366
§3; 1997 c.839 §54](1) The information return and the employer’s annual return,
described in ORS 314.360 and 316.202 (3) shall be filed on magnetic media
or other machine-readable form if the corresponding federal return is
required to be filed on magnetic media or other machine-readable form by
section 6011 (e) of the Internal Revenue Code and the regulations,
revenue rulings and revenue procedures adopted pursuant to that section.

(2) The Department of Revenue may, by administrative rule, adopt
the regulations, revenue rulings or revenue procedures which are adopted
pursuant to section 6011 (e) of the Internal Revenue Code whenever such
regulations, revenue rulings or revenue procedures may be adopted.

(3) The department may require that the magnetic media or other
machine-readable forms filed with it meet specifications prescribed by
the department. The department may allow an alternative method of filing
if the person filing the return is unable to meet the specifications
prescribed by the department. [1987 c.366 §2; 1991 c.457 §17; 1993 c.726
§12; 1995 c.556 §25; 1997 c.839 §55] If the
Department of Revenue is of the opinion that a taxpayer has failed to
file a return, or to include in a return filed, either intentionally or
through error, items of taxable income, it may require from the taxpayer
a return or supplementary return, under oath, in such form as it shall
prescribe, of all the items of income which the taxpayer received during
the year for which the return is made, whether or not taxable under the
provisions of the applicable tax law. If from a supplementary return, or
otherwise, the department finds that any items of taxable income have
been omitted from the original return it may require the items so omitted
to be disclosed under oath of the taxpayer, and to be added to the
original return. Such supplementary return and the correction of the
original return shall not relieve the taxpayer from any of the penalties
to which the taxpayer may be liable under any provisions of law whether
or not the department required a return or a supplementary return under
this section. [1957 c.632 §9 (enacted in lieu of 316.555)](1) Every
taxpayer shall, upon request of the Department of Revenue, furnish a copy
of the return for the corresponding year, which the taxpayer has filed or
may file with the federal government, showing the taxpayer’s net income
and how obtained and the several sources from which derived. Every
taxpayer shall, upon request of the department, furnish a copy of any
federal revenue agent’s report or other audit report made upon any audit
or adjustment of the taxpayer’s federal income tax return or income tax
return of another state.

(2)(a) The taxpayer shall report to the department any change in
the taxpayer’s taxable income that is subject to tax by this state or any
change in the taxpayer’s tax liability paid to or owing this state
because:

(A) The Internal Revenue Service or other competent authority has
changed or corrected the amount of a taxpayer’s taxable income, tax
credit or other amount taken into account in determining the taxpayer’s
tax liability as reported on a federal income tax return or an income tax
return of another state for any taxable year; or

(B) The taxpayer:

(i) Files an original or amended return that is accepted by the
Internal Revenue Service or the taxing authority of another state; or

(ii) Is assessed tax by the Internal Revenue Service or the taxing
authority of another state for the failure to file a return as required.

(b) In the case of a change or correction made by the Internal
Revenue Service or by the taxing authority of another state, the report
shall either concede the accuracy of the determination or state wherein
the taxpayer believes it to be erroneous. The report may be treated by
the department as a claim for refund pursuant to ORS 314.415 if the
department determines that the taxpayer’s correct Oregon tax liability is
a reduction from the taxpayer’s Oregon tax liability prior to the filing
of the report. Notwithstanding the limitations of ORS 314.415, a claim
for refund under this paragraph shall be deemed timely if received by the
department within two years after the federal or other state correction
was made.

(c) In the case of a taxpayer filing an original or amended federal
or other state return that reports a change in the taxpayer’s taxable
income that is subject to tax by this state or that results in a change
in the taxpayer’s tax liability paid to or owing this state, the report
required by this subsection shall be an amended Oregon return. The
taxpayer shall file the amended return with the department within 90 days
thereafter.

(3) For purposes of this section:

(a) A change or correction of a taxpayer’s taxable income is deemed
to be made on the date of the audit report making the change or
correction; and

(b) The date on which an original or amended return is accepted by
the Internal Revenue Service or other state taxing authority is the date
the original or amended return is filed if the return is subsequently
accepted by the Internal Revenue Service or other state taxing authority.

(4) The provisions of ORS 305.305 shall constitute the exclusive
remedy of a person whose notice of deficiency or assessment is based upon
a change or correction of the person’s taxable income under this section.
[1957 c.632 §11 (enacted in lieu of 316.565 and 317.380); 1963 c.509 §1;
1985 c.602 §3; 1989 c.414 §7; 1997 c.100 §2; 1999 c.74 §1; 2001 c.9 §4](1)(a) For purposes of ORS chapter 316, returns shall be
filed with the Department of Revenue on or before the due date of the
corresponding federal return for the tax year as prescribed under the
Internal Revenue Code and the regulations adopted pursuant thereto,
except that the final return of a decedent shall be filed at any time
following the death of the decedent, to and including the 15th day of the
fourth month after expiration of the regular tax year of the decedent.

(b) For purposes of ORS chapters 317 and 318, returns shall be
filed with the department on or before the 15th day of the month
following the due date of the corresponding federal return for the tax
year, as prescribed under the Internal Revenue Code and the regulations
adopted pursuant thereto.

(c) The department may allow further time for filing returns equal
in length to the extension periods allowed under the Internal Revenue
Code and its regulations.

(d) If no return is required to be filed for federal income tax
purposes, the due date or extension period for a return shall be the same
as the due date, or extension period, would have been if the taxpayer had
been required to file a return for federal income tax purposes for the
tax year. However, the due date for returns filed for purposes of ORS
chapter 317 or 318 shall be on or before the 15th day of the month
following what would have been the federal return due date for the tax
year.

(2) There shall be annexed to the return a statement verified as
provided under ORS 305.810 by a declaration of the taxpayer making the
return to the effect that the statements contained therein are true.

(3) Returns shall be in such form as the department may, from time
to time, prescribe. The department shall prepare blank forms for the
returns and distribute them throughout the state. Such forms shall be
furnished the taxpayer upon request, but failure to receive or secure a
form shall not relieve the taxpayer from the obligation of making any
return required by law.

(4)(a) The department may by rule authorize the filing of a return
in alternative formats to those described in subsection (3) of this
section and may prescribe the conditions, requirements and technical
standards for a filing under this subsection.

(b) Notwithstanding subsections (1) to (3) of this section, the
department may by rule prescribe a different due date for a return filed
in an alternative format.

(c) The policy of the Legislative Assembly in granting the
department rulemaking authority under paragraph (b) of this subsection is
to have the department prescribe due dates that mirror the due dates that
apply to federal returns filed in alternative formats for federal tax
purposes. [1957 c.632 §12 (enacted in lieu of 316.545 and 317.355); 1959
c.156 §1; last sentence of subsection (1) derived from 1959 c.156 §3;
1963 c.281 §1; 1987 c.293 §59a; 1989 c.625 §55; 1991 c.457 §17a; 1997
c.84 §1; 1997 c.839 §56; 2003 c.77 §10a] (1)
The tax shall be paid to the Department of Revenue at the time fixed by
ORS 314.385 for filing the return without regard to extensions.

(2) When the time for filing a return of income is extended at the
request of the taxpayer, interest at the rate established under ORS
305.220 for each month or fraction of a month from the time the return
was originally required to be filed to the time of payment shall be added
and paid. [1969 c.166 §2; 1971 c.354 §3; 1973 c.402 §17; 1975 c.593 §13;
1980 c.20 §24; 1982 s.s.1 c.16 §6; 1987 c.293 §59b] The tax may be paid with uncertified
check under any rules as the Department of Revenue shall adopt, but if a
check so received is not paid by the financial institution on which it is
drawn, the taxpayer by whom the check is tendered remains liable for the
payment of the tax and for all legal penalties the same as if the check
had not been tendered. [1989 c.625 §61 (enacted in lieu of 316.407); 1997
c.631 §451](1) If a taxpayer
fails to file a report or return or fails to pay a tax by the date on
which the filing or payment is due, the Department of Revenue shall add
to the amount required to be shown as tax on the report or return a
delinquency penalty of five percent of the amount of the unpaid tax.

(2) If the failure to file a report or return continues for a
period in excess of three months after the due date:

(a)(A) There shall be added to the amount of tax required to be
shown on the report or return a failure to file penalty of 20 percent of
the amount of the tax; and

(B) Thereafter the department may send a notice and demand to the
person to file a report or return within 30 days of the mailing of the
notice. If after the notice and demand no report or return is filed
within the 30 days, the department may determine the tax according to the
best of its information and belief, assess the tax with appropriate
penalty and interest plus an additional penalty of 25 percent of the tax
deficiency determined by the department and give written notice of the
determination and assessment to the person required to make the filing.

(b) But the report or return is filed before a notice of
determination and assessment is issued by the department, the failure to
file penalty referred to in paragraph (a)(A) of this subsection shall be
added to the amount of tax shown on the report or return.

(3) A penalty equal to 100 percent of any deficiency determined by
the department shall be assessed and collected if:

(a) There is a failure to file a report or return with intent to
evade the tax;

(b) A report or return was falsely prepared and filed with intent
to evade the tax; or

(c) A false claim was intentionally filed under ORS 310.635,
310.657 and 310.706.

(4) Interest shall be collected on the unpaid tax at the rate
established under ORS 305.220 for each month or fraction of a month,
computed from the time the tax became due, during which the tax remains
unpaid.

(5) Each penalty imposed under this section is in addition to any
other penalty imposed under this section. However, the total amount of
penalty imposed under this section and ORS 305.265 (13) with respect to
any deficiency shall not exceed 100 percent of the deficiency.

(6) For purposes of subsections (1) and (2) of this section, the
amount of tax required to be shown or that is shown on the report or
return shall be reduced by the amount that is paid on or before the date
prescribed for payment of the tax and by the amount of any credit against
the tax that is claimed on the report or return. If the amount required
to be shown as tax on the report or return is less than the amount that
is actually shown as tax on the report or return, this subsection shall
be applied by substituting the lower amount.

(7) Notwithstanding subsection (1) of this section, the five
percent penalty for failure to file a report or return or pay a tax at
the time the tax becomes due may not be imposed if:

(a) The taxpayer pays the full amount of the tax plus accrued
interest within 30 days of the date shown on the department’s notice sent
to the taxpayer; and

(b)(A) The taxpayer had filed an amended individual tax return or
an amended corporate return of income or excise tax accompanied by less
than full payment of the tax shown on the return plus accrued interest; or

(B) The department issues a notice of tax deficiency to the
taxpayer under ORS 305.265. [1971 c.354 §2; 1975 c.593 §14; 1977 c.870
§41; 1980 c.7 §25; 1981 c.724 §4; 1982 s.s.1 c.16 §7; 1985 c.602 §4; 1987
c.158 §48a; 1993 c.726 §13; 1995 c.780 §5; 1997 c.170 §26; 2005 c.335 §1] Notwithstanding ORS
314.395 and 314.400, if the balance of tax due as shown on the report or
return filed by the taxpayer for the tax year is less than $1, payment of
the amount shown shall not be required. [1999 c.73 §2](1) If the Department of Revenue determines that there is a
substantial understatement of taxable income for any taxable year under
any law imposing a tax on or measured by net income, there shall be added
to the amount of tax required to be shown on the return a penalty equal
to 20 percent of the amount of any underpayment of tax attributable to
the understatement of taxable income.

(2) A substantial understatement of taxable income exists for any
taxable year if the amount of the understatement for the taxable year
exceeds:

(a) Except as provided in paragraph (b) of this subsection, $15,000.

(b) In the case of a corporation other than an S corporation, as
defined in section 1361 of the Internal Revenue Code, or a personal
holding company, as defined in section 542 of the Internal Revenue Code,
$25,000.

(3) In the case of any item attributable to an abusive tax shelter:

(a) No reduction of the amount of the understatement shall be made
with regard to that item regardless of the existence of substantial
authority for the treatment of the item by the taxpayer.

(b) No reduction of the amount of the understatement shall be made
with regard to that item regardless of the disclosure of the facts
affecting the tax treatment of the item unless, in addition to the
disclosure, the taxpayer reasonably believed that the tax treatment of
the item was more likely than not the proper treatment.

(4) As used in this section:

(a) “Abusive tax shelter” means any partnership, corporation or
other organization or entity, any investment plan or arrangement or any
other plan or arrangement, which has as its principal purpose the evasion
or improper avoidance of federal or state income tax. “Abusive tax
shelter” includes any investment or activity in connection with which tax
benefits derived by investors are not clearly intended under the tax laws
or any investment or activity that involves little or no economic
reality, making use of unrealistic allocations of income or expenses,
inflated appraisals of asset values, losses substantially in excess of
investment, mismatching of income and expenses, financing techniques that
do not conform to standard commercial business practice or
mischaracterization of the substance of the investment or activity.

(b) “Understatement” means the excess of the amount of the taxable
income required to be shown on the return for the taxable year over the
amount of the taxable income which is shown on the return, reduced by any
portion of the understatement that is attributable to:

(A) The tax treatment of any item by the taxpayer if there is or
was substantial authority for such treatment; or

(B) Any item with respect to which:

(i) The relevant facts affecting the item’s tax treatment are
adequately disclosed in the return or in a statement attached to the
return; and

(ii) There is a reasonable basis for the tax treatment of the item
by the taxpayer.

(5) The penalty imposed under this section is in addition to any
other penalty imposed by law. A penalty imposed under this section shall
be treated for all purposes as an additional deficiency subject to the
provisions of ORS 305.265, but shall not bear interest.

(6) The department may waive all or any part of the penalty imposed
under this section on a showing by the taxpayer that there was reasonable
cause for the understatement, or any portion thereof, and that the
taxpayer acted in good faith. [1987 c.843 §9; 1995 c.556 §25a]COLLECTING DELINQUENT TAXES; LIENS; INTEREST AND ADDITIONS TO TAX; REFUNDSFor the purposes of ORS 314.407
and 314.417 to 314.423:

(1) In the case of a return submitted to the Department of Revenue
with payment of less than the amount of tax computed to be due, the
difference between the tax computed to be owing by the taxpayer and the
tax submitted with the return is considered as “assessed” on the due date
of the return (determined with regard to any extension of time granted
for the filing of the return) or the date the return is filed, whichever
is later.

(2) The term “time of assessment” means:

(a) In the case of an assessment made under ORS 305.265 and
314.410, 30 days after the date the notice of assessment is mailed to the
taxpayer;

(b) In the case of an assessment made under ORS 314.440, five days
after the date the notice of assessment is mailed to the taxpayer; or

(c) In the case of a tax assessed as described in subsection (1) of
this section, the due date of the return (determined with regard to any
extension of time granted for the filing of the return) or the date the
return is filed, whichever is later.

(3) Unless a warrant has been recorded in the County Clerk Lien
Record in the county in which property is located, no warrant shall be
considered as a lien with respect to that property. [1971 c.215 §2; 1977
c.870 §42; 1987 c.586 §39; 1995 c.79 §154](1) At any time
within three years after the return was filed, the Department of Revenue
may give notice of deficiency as prescribed in ORS 305.265.

(2) If the department finds that gross income equal to 25 percent
or more of the gross income reported has been omitted from the taxpayer’s
return, notice of the deficiency may be given at any time within five
years after the return was filed.

(3)(a) The limitations to the giving of notice of a deficiency
provided in this section shall not apply to a deficiency resulting from
false or fraudulent returns, or in cases where no return has been filed.

(b)(A) If the Commissioner of Internal Revenue or other authorized
officer of the federal government or an authorized officer of another
state’s taxing authority makes a change or correction as described in ORS
314.380 (2)(a)(A) and, as a result of the change or correction, an
assessment of tax or issuance of a refund is permitted under any
provision of the Internal Revenue Code or applicable law of the other
state, or pursuant to an agreement between the taxpayer and the federal
or other state taxing authority that extends the period in which an
assessment of federal or other state tax may be made, then notice of a
deficiency under any Oregon law imposing tax upon or measured by income
for the corresponding tax year may be mailed within two years after the
department is notified by the taxpayer or the commissioner or other tax
official of the correction, or within the applicable three-year or
five-year period prescribed in subsections (1) and (2) of this section,
whichever period expires later.

(B) A notice of deficiency mailed pursuant to this paragraph may
assert any adjustment necessary to arrive at the correct amount of Oregon
taxable income and Oregon tax liability for the tax year for which the
federal or other state change or correction is made.

(c) If the taxpayer files an original or amended federal or other
state return as described in ORS 314.380 (2)(a)(B), the department may
reduce any claim for refund as a result of a change in Oregon tax
liability related to the original or amended federal or other state
return, but may not give notice of a deficiency for an adjustment to
Oregon tax liability following the expiration of the applicable period
prescribed in subsections (1) and (2) of this section and paragraph (a)
of this subsection.

(4) The tax deficiency must be assessed and notice of tax
assessment mailed to the taxpayer or authorized representative, who is
authorized in writing, within one year from the date of the notice of
deficiency unless an extension of time is agreed upon as prescribed in
subsection (6) of this section.

(5) Notwithstanding other provisions of this section, the period
for the assessment of any deficiency attributable to any part of the gain
realized upon the sale or exchange of the taxpayer’s principal residence,
as provided in section 1034 of the Internal Revenue Code (as in effect
prior to the repeal of section 1034 of the Internal Revenue Code by the
Taxpayer Relief Act of 1997 (P.L. 105-34)), does not expire prior to the
expiration of three years from the date the department is notified by the
taxpayer of:

(a) The cost of purchasing the new residence which the taxpayer
claims results in nonrecognition of any part of such gain;

(b) The taxpayer’s intention not to purchase a new residence; or

(c) A failure to purchase a new residence within the period
prescribed in section 1034 of the Internal Revenue Code (as in effect
prior to the repeal of section 1034 of the Internal Revenue Code by the
Taxpayer Relief Act of 1997 (P.L. 105-34)).

(6) If, prior to the expiration of any period of time prescribed in
this section for giving of notice of deficiency or of assessment, the
department and the taxpayer consent in writing to the notice of
deficiency being mailed or deficiency being assessed after the expiration
of such prescribed period, notice of such deficiency may be mailed or the
deficiency assessed at any time prior to the expiration of the period
agreed upon. The period so agreed upon may be extended by subsequent
agreements in writing made before the expiration of the period agreed
upon.

(7) In the case of a deficiency attributable to the application to
the taxpayer of a net operating loss carryback, notice of such deficiency
may be mailed at any time before the expiration of the period within
which notice of a deficiency for the taxable year of the net operating
loss which results in such carryback may be mailed.

(8) Notwithstanding the other provisions of this section, if any
taxpayer agreed with the United States Commissioner of Internal Revenue
or the taxing authority of another state for an extension, or renewals
thereof, of the period for giving notices of deficiencies and assessing
deficiencies in income tax for any year, the period for mailing notices
of deficiencies of tax for such years and the period for filing a claim
for refund under ORS 314.380 (2)(b) shall expire on the later of:

(a) The expiration of an applicable period described in subsections
(1) to (7) or (9) of this section; or

(b) Six months after the date of the expiration of the agreed
period for assessing a deficiency.

(9)(a) Notwithstanding the other provisions of this section and ORS
314.415, the period for claiming a refund or giving a notice of
deficiency with respect to an item that is shown or required to be shown
on a taxpayer’s return and that is attributable to a pass-through entity
does not expire prior to three years from the date of the filing of the
pass-through entity return to which the item on the taxpayer’s return
relates.

(b) As used in this subsection, “pass-through entity” means any
entity that is recognized as a separate entity for federal income tax
purposes, for which the owners are required to report income, gains,
losses, deductions or credits from the entity for federal income tax
purposes. [1957 c.632 §14 (enacted in lieu of 316.610 and 317.410); 1959
c.212 §2; 1959 c.591 §20; subsection (8) derived from 1959 c.212 §3 and
1959 c.591 §21; 1963 c.509 §2; 1963 c.627 §1 (referred and rejected);
1969 c.405 §1; 1969 c.493 §§88,88a; 1971 c.507 §1; 1977 c.870 §43; 1983
c.162 §53; 1985 c.602 §5; 1993 c.726 §14; 1997 c.100 §3; 1999 c.74 §3;
1999 c.90 §4a; 2001 c.9 §5; 2005 c.54 §1]Notwithstanding ORS 314.410, the period for
issuing any notice of deficiency attributable to any part of the gain
realized upon an involuntary conversion as provided in the federal
Internal Revenue Code which applies to the Personal Income Tax Act of
1969 or as provided in the corporate excise tax or corporate income tax
laws, shall not expire prior to the expiration of three years from the
date the Department of Revenue is notified by the taxpayer of:

(1) The replacement of the converted property which the taxpayer
claims results in nonrecognition of any part of such gains; or

(2) The taxpayer’s intention not to replace such property; or

(3) A failure of the taxpayer to replace the property within the
period prescribed in the federal Internal Revenue Code which applies to
the Personal Income Tax Act of 1969, in the corporation excise tax laws
or in the corporation income tax laws, whichever is applicable. [1975
c.705 §2; 1989 c.626 §3] (1) If the Department of
Revenue determines pursuant to ORS 305.270 that the amount of the tax due
is less than the amount theretofore paid, the excess shall be refunded by
the department with interest at the rate established under ORS 305.220,
for each month or fraction of a month during a period beginning 45 days
after the due date of the return or the date the tax was paid, whichever
is the later, to the time the refund is made.

(2)(a) The department may not allow or make a refund after three
years from the time the return was filed, or two years from the time the
tax (or a portion of the tax) was paid, whichever period expires later,
unless before the expiration of this period a claim for refund is filed
by the taxpayer in compliance with ORS 305.270. In any case, if the
original return is not filed within three years of the due date,
excluding extensions, of the return, the department may allow or make a
refund only of amounts paid within two years from the date of the filing
of the claim for refund. If a refund is disallowed for the tax year
during which excess tax was paid for any reason set forth in this
subsection, the department may not allow the excess as a credit against
any tax occurring on a return filed for a subsequent year.

(b) The department may not make a refund if the tax owed after
offsets for all amounts owed the state, or a county pursuant to a
judgment obtained under ORS 169.151, is less than $1.

(c) If a taxpayer would qualify under section 6511(h) of the
Internal Revenue Code for a suspension of the running of the periods
specified for filing a claim for refund of federal income tax, the period
specified in paragraph (a) of this subsection shall also be suspended.

(d) The department may not pay an employee interest on a refund of
a tax withheld by an employer if the interest would be for any period
prior to the time the employee files a personal income tax return for the
tax year involved or for any period prior to the day that is 45 days
after the date when the employee’s annual return for that year was filed
or was due, whichever is later.

(e) The department may not pay interest on a refund of estimated
tax paid under ORS 314.505 to 314.525 or 316.557 to 316.589 if the
interest would be for any period prior to the time the taxpayer files a
tax return for the tax year involved or for any period prior to the day
that is 45 days after the date when the tax return for that year was
filed or was due, whichever is later.

(f) The amount of the refund, exclusive of interest on the refund,
may not exceed the portion of the tax paid during the period preceding
the filing of the claim or, if no claim is filed, then during the period
preceding the allowance of the refund during which a claim might have
been filed. Where there has been an overpayment of any tax imposed, the
amount of the overpayment and interest on the overpayment shall be
credited against any tax, penalty or interest then due from the taxpayer,
and only the balance shall be refunded.

(g) Except as provided in ORS 305.265 (12), if, pursuant to a
notice of deficiency or assessment, the taxpayer pays the amount
specified in the notice, or any part thereof, and if, upon appeal, the
Oregon Tax Court or the Oregon Supreme Court orders that all or any part
of the deficiency amount specified in the notice and paid by the taxpayer
be refunded, the amount so ordered to be refunded shall bear interest at
the rate established for refunds in ORS 305.220. Interest shall be
computed from the date of payment to the department. Nothing in this
subsection shall require that interest be paid upon any amount for any
period for which interest upon the same amount for the same period is
required to be paid under ORS 305.419.

(3)(a) Notwithstanding any provision to the contrary in ORS 305.265
or 305.270 or subsection (1) or (2) of this section, if, prior to the
expiration of the period prescribed in subsection (2) of this section,
the department and the taxpayer consent in writing to the refund of tax
after the expiration of the period prescribed:

(A) The department shall make the refund prior to the expiration of
the period agreed upon; and

(B) The department may not make or allow a refund after the
expiration of the period agreed upon unless a claim for refund is filed
by the taxpayer before the expiration of the period agreed upon in
compliance with the manner prescribed by the department. The period so
agreed upon may be extended by subsequent agreements in writing made
before the expiration of the period previously agreed upon.

(b) The department may consent to extend the period during which a
refund may be made only if the taxpayer has consented to the assessment
of additional tax, if additional taxes are determined upon audit, after
the expiration of the applicable three-year or five-year period
prescribed in ORS 314.410 (1) and (2).

(4)(a) If the claim for credit or refund relates to an overpayment
on account of the deductibility by the taxpayer, or by a partnership, of
the worthlessness of a share of stock in a corporation, of the right to
subscribe for or to receive a share of stock in a corporation, or of a
debt, in lieu of the three-year period of limitation prescribed in
subsection (2) of this section, the period shall be seven years from the
date prescribed by law for the filing of the return for the year with
respect to which the claim is made.

(b) If the claim described in paragraph (a) of this subsection is
made after the expiration of the three-year period prescribed in
subsection (2) of this section, the department may not allow interest
with respect to any credit or refund determined to be due upon the claim
for the period beginning at the close of the three-year period prescribed
in subsection (2) of this section and ending at the expiration of six
months after the date on which the claim is filed.

(5)(a) If the claim for credit or refund relates to an overpayment
attributable to a net operating loss carryback or a net capital loss
carryback, in lieu of the three-year period of limitation prescribed in
subsection (2) of this section, the period shall be the period that ends
three years after the time prescribed by law for filing the return
(including extensions) for the taxable year of the net operating loss or
net capital loss that results in such carryback. In the case of such a
claim, the amount of the credit or refund may exceed the portion of the
tax paid within the period provided in subsection (1), (2) or (3) of this
section, whichever is applicable, to the extent of the amount of the
overpayment attributable to the carryback. If the allowance of a credit
or refund of an overpayment of tax attributable to a net operating loss
carryback or a net capital loss carryback is otherwise prevented by the
operation of any law or rule of law other than ORS 305.150, relating to
closing agreements, the credit or refund may be allowed or made if the
claim for credit or refund is filed within the period provided in this
subsection. To the extent that the carryback was not an issue in any
proceeding in which the determination of a court, including the Oregon
Tax Court, has become final, the claimed credit or refund applicable to
that carryback may be allowed or made under this subsection.

(b) For purposes of subsection (1) or (2) of this section, if any
overpayment of tax results from a carryback of a net operating loss or
net capital loss, the overpayment shall be deemed not to have been made
prior to the later of:

(A) The due date of the return for the taxable year in which such
net operating loss or net capital loss arises;

(B) The date the return for the year in which the net operating
loss or net capital loss arises is filed; or

(C) The date of filing of the return for the year to which the net
operating loss or net capital loss is carried back.

(6) Notwithstanding any provision to the contrary in ORS 305.265 or
305.270 or this section, if the taxpayer has agreed with the United
States Commissioner of Internal Revenue for an extension, or a renewal of
an extension, of the period for proposing and assessing deficiencies in
federal income tax for any year, the period within which a claim for
credit or refund may be filed or credit or refund allowed or made if no
claim is filed shall be the period provided within subsections (1) to (5)
of this section or six months after the date of the expiration of the
agreed period for assessing deficiency in federal income tax, whichever
period expires later.

(7) If a joint return is filed, the department may make separate
refunds at the request of either spouse. The separate refunds shall bear
the same proportion to the total refund as the adjusted gross income of
each spouse bears to the adjusted gross income of both spouses, or as
otherwise determined by the department.

(8) If a taxpayer entitled to a refund under subsection (1) of this
section dies, the department may issue a draft for payment of such refund
under the terms and conditions set out in ORS 293.490 to 293.500
exercising the same powers and subject to the same restrictions pursuant
to which the State Treasurer is authorized to pay the amounts of
warrants, checks or orders under those statutes. [1957 c.632 §15 (enacted
in lieu of 316.615 and 317.415); 1969 c.166 §4; 1969 c.405 §2; 1971 c.354
§5; 1971 c.507 §2; 1975 c.593 §16; 1977 c.870 §44; 1982 s.s.1 c.16 §8;
1983 c.162 §54; 1985 c.61 §3; 1985 c.602 §6; 1985 c.603 §1; 1985 c.802
§19; 1987 c.293 §60; 1987 c.647 §1; 1989 c.626 §4; 1991 c.457 §17b; 1993
c.726 §16; 1995 c.650 §32; 1999 c.73 §4; 1999 c.90 §1a; 2001 c.641 §3;
2005 c.48 §1; 2005 c.210 §2]Note: Section 3, chapter 210, Oregon Laws 2005, provides:

Sec. 3. The amendments to ORS 314.415 by sections 1 and 2 of this
2005 Act apply to requests for apportionment made on or after the
effective date of this 2005 Act [November 4, 2005]. [2005 c.210 §3] If
any person neglects or refuses to pay an income tax at the time of
assessment, or fails to pay to the Department of Revenue any amount
required to be withheld under ORS 316.167 and 316.172, the amount of the
unpaid tax including interest and penalty thereon shall be a lien in
favor of the State of Oregon upon all property and rights to property,
whether real or personal, belonging to the person. The lien shall arise
at the time of assessment or the time the amount withheld is to be paid
to the department and the lien shall continue until the liability for the
taxes, with interest and penalty, is satisfied. [1971 c.215 §3; 1981
c.546 §1] In addition to any other remedy
provided by law the lien created by ORS 314.417 may be foreclosed in the
following manner:

(1) The Director of the Department of Revenue shall issue an order
directed to the sheriff of the county in which the property or interest
in property subject to the lien is located, describing the property
subject to the lien, and commanding the sheriff to seize the property
specified and sell it to pay the amount shown on the order to be due. In
the discretion of the director an order of like terms, force and effect
may be issued and directed to any agent authorized to collect income
taxes, and in the execution thereof the agent shall have all the powers
conferred by law upon sheriffs but is entitled to no fee or compensation
in excess of actual expenses paid in the performance of such duty.

(2) If the property seized by the sheriff is personal property the
sheriff shall utilize the procedures under ORS 311.640 to effect
collection of the amount due.

(3) If the property seized by the sheriff is real property the
sheriff shall proceed to sell the real property in the same manner that
real property is sold under a writ of execution.

(4) Any property which has been sold under this section may be
redeemed from the purchaser by the taxpayer or any junior lienor within
120 days from the date of the sale by paying to the purchaser the full
purchase price paid plus an additional 20 percent of the purchase price.

(5) In any proceeding under this section to sell property to
foreclose a lien, the taxpayer may claim any exemption to which the
taxpayer is entitled under the laws of this state relating to property
exempt from execution. [1971 c.215 §4]The lien imposed by ORS 314.417 shall not
be valid as against any purchaser, holder of a security interest,
mechanic’s lienor or judgment creditor until a warrant is issued and
recorded under ORS 314.430. [1971 c.215 §5; 1987 c.586 §40] (1) After a warrant has been recorded under
ORS 314.430, the lien imposed by ORS 314.417 shall be subordinate to:

(a) Any interest in real property to the same extent that a
judgment recorded in the County Clerk Lien Record under ORS 18.152 at the
same time the warrant was recorded would be subordinate to the interest;
and

(b) Any interest in personal property to the same extent that a
security agreement filed under the Uniform Commercial Code at the same
time the warrant was filed would be subordinate to the interest.

(2) After a warrant has been recorded under ORS 314.430, the lien
imposed by ORS 314.417 shall not be valid as to a purchaser, security
interest holder or lienholder in a sale, security agreement or lien
arising out of the following types of property or property transactions
unless the purchaser, security interest holder or lienholder had actual
knowledge of the lien:

(a) Securities as defined in ORS 78.1020;

(b) Retail purchases in the ordinary course of business;

(c) Casual sales of personal property;

(d) Attorney’s liens;

(e) Insurance contract loans; or

(f) Passbook loans. [1971 c.215 §§6,7; 1987 c.586 §41; 1997 c.325
§36; 2003 c.576 §230] (1) The Department of
Revenue, for the purpose of ascertaining the correctness of any return or
for the purpose of making an estimate of the taxable income of any
taxpayer, may examine or cause to be examined by an agent or
representative designated by it for the purpose, any books, papers,
records or memoranda bearing upon the matter required to be included in
the return, and may require the attendance of the taxpayer or officer or
agent or any other person having knowledge in the premises, and may take
testimony and require proof material for the information, with power to
administer oaths to such persons. The department shall have authority, by
order or subpoena to be served with the same force and effect and in the
same manner that a subpoena is served in a civil action in the tax court,
to require the production at any time and place it may designate of any
books, papers, accounts or other information necessary to the carrying
out of any law imposing tax on or measured by net income.

(2) If any person fails to comply with any subpoena or order of the
department or to produce or permit the examination or inspection of any
books, papers or documents pertinent to any investigation or inquiry
under this section, or to testify to any matter regarding which the
person may be lawfully interrogated, the department may apply to the tax
court for the county in which the person resides for an order to the
person to attend and testify, or otherwise comply with the demand or
request of the department. The application to the court shall be by ex
parte motion upon which the court shall make an order requiring the
person against whom it is directed to comply with the request on demand
of the department within 10 days after service of the order (or such
further time as the court may grant) or to justify the failure within
that time. The order shall be served upon the person to whom it is
directed in the manner required by this state for service of process,
which service shall be required to confer jurisdiction upon the court.
Failure to obey any order issued by the court under this section is
contempt of court. The remedy provided by this section shall be in
addition to other remedies, civil or criminal, existing under the tax
laws or other laws of this state. [1957 c.632 §17 (enacted in lieu of
316.625 and 317.425); 1995 c.650 §33] (1) If any tax imposed
under ORS chapter 118, 316, 317 or 318 or any portion of the tax is not
paid within 30 days after the date that the written notice and demand for
payment required under ORS 305.895 is mailed (or within five days after
the tax becomes due, in the case of the termination of the tax year by
the Department of Revenue under the provisions of ORS 314.440) and no
provision is made to secure the payment thereof by bond, deposit or
otherwise, pursuant to regulations promulgated by the department, the
department may issue a warrant directed to the sheriff of any county of
the state commanding the sheriff to levy upon and sell the real and
personal property of the taxpayer found within that county, for the
payment of the amount of the tax, with the added penalties, interest,
collection charge and the sheriff’s cost of executing the warrant, and to
return such warrant to the department and pay to it the money collected
by virtue thereof by a time to be therein specified, not less than 60
days from the date of the warrant. A copy of the warrant shall be mailed
or delivered to the taxpayer by the department at the taxpayer’s
last-known address.

(2) The sheriff shall, within five days after the receipt of the
warrant, record with the clerk of the county a copy thereof, and
thereupon the clerk shall enter in the County Clerk Lien Record the name
of the taxpayer mentioned in the warrant, and the amount of the tax or
portion thereof and penalties for which the warrant is issued and the
date when such copy is recorded. Thereupon the amount of the warrant so
recorded shall become a lien upon the title to and interest in property
of the taxpayer against whom it is issued in the same manner as a
judgment duly recorded. The sheriff thereupon shall proceed upon the same
in all respects, with like effect and in the same manner prescribed by
law in respect to executions issued against property upon judgment of a
court of record, and shall be entitled to the same fees for services in
executing the warrant, to be added to and collected as a part of the
warrant liability.

(3) In the discretion of the department a warrant of like terms,
force and effect may be issued and directed to any agent authorized to
collect taxes, and in the execution thereof the agent shall have all the
powers conferred by law upon sheriffs, but is entitled to no fee or
compensation in excess of actual expenses paid in the performance of such
duty.

(4) If a warrant is returned not satisfied in full, the department
shall have the same remedies to enforce the claim for taxes against the
taxpayer as if the people of the state had recovered judgment against the
taxpayer for the amount of the tax, and shall balance the assessment
record of the taxpayer by transferring the unpaid deficiency to the
taxpayer’s delinquent record. [1957 c.632 §18 (enacted in lieu of 316.630
and 317.430); 1959 c.74 §1; 1959 c.234 §1; 1975 c.593 §17; 1983 c.696
§12; 1985 c.85 §12; 1985 c.761 §15; 1987 c.586 §42; 1989 c.625 §62; 1997
c.99 §52](1) Every tax imposed by any law imposing a tax upon
or measured by net income, and all increases, interest and penalties
thereon shall become, from the time such liability is incurred, a
personal debt, due the State of Oregon, from the person or persons liable
therefor.

(2) If the Department of Revenue finds that a taxpayer designs
quickly to depart from the state or to remove the property of the
taxpayer therefrom, or to do any other act tending to prejudice or to
render wholly or partially ineffectual proceedings to collect the tax for
any past tax year or the tax year then current unless such proceedings be
brought without delay, the department shall declare the current taxable
period for such taxpayer immediately terminated and shall cause notice of
such finding and declaration to be given the taxpayer. Simultaneously,
the department, on the basis of the best information available to it,
shall assess a tax for such terminated period and for the preceding tax
year (if no return has been filed therefor, whether or not the time
otherwise allowed by law for filing such return and paying the tax has
expired), and shall assess additional tax for any years open to
assessment under the provisions of the applicable law. The department
shall give notice to the taxpayer of all taxes so assessed. Such taxes
shall thereupon become immediately due and payable as soon as the notice
and findings are issued to the taxpayer or mailed to the last-known
address of the taxpayer. In any proceeding in court brought to enforce
payment of taxes made due and payable by virtue of the provisions of this
section the findings of the department, made as provided in this section,
whether made after notice to the taxpayer or not, shall be for all
purposes presumptive evidence of the taxpayer’s design and the
certificate of the department of the mailing or issuing of the notice and
findings specified in this section is presumptive evidence that the
notice and findings were mailed or issued. [1957 c.632 §20 (enacted in
lieu of 316.640, 317.440 and 317.445)]The provisions of ORS chapter 305 as to the
audit and examination of reports and returns, determination of
deficiencies, assessments, claims for refund, conferences and appeals to
the Oregon Tax Court, and the procedures relating thereto, shall apply to
the determination of taxes, penalties and interest imposed under this
chapter and ORS chapters 315, 316, 317 and 318, except where the context
requires otherwise. [1977 c.870 §23 (enacted in lieu of 314.405, 314.455,
314.460 and 314.465); 1995 c.650 §34]ESTIMATED TAX PROCEDURE (1) Every
corporation expecting to have a tax liability under either ORS chapter
317 or 318 of $500 or more shall make an estimate of tax liability for
the corporation’s tax year and pay the amount of tax determined as
provided in ORS 314.515.

(2) The Department of Revenue shall by rule provide for the payment
of estimated tax liability by a group of affiliated corporations filing a
consolidated return.

(3) As used in ORS 314.505 to 314.525, the term “estimated tax
liability” means the tax computed under ORS chapter 317 or 318 less the
credits allowed for purposes of ORS chapter 317 or 318. [1973 c.292 §1;
1984 c.1 §16; 1993 c.730 §41; 1997 c.299 §5] (1) A
corporation required under ORS 314.505 to make payments of estimated tax
shall make the payments to the Department of Revenue in installments as
follows:

(a) One-quarter or more of the estimated tax shall be paid on or
before the 15th day of the fourth month of the taxable year.

(b) One-quarter or more of the estimated tax shall be paid on or
before the 15th day of the sixth month of the taxable year.

(c) One-quarter or more of the estimated tax shall be paid on or
before the 15th day of the ninth month of the taxable year.

(d) The balance of the estimated tax shall be paid on or before the
15th day of the 12th month of the taxable year.

(2) Any payment of estimated tax received by the department for
which the corporation has made no designation of the quarterly
installment to which the payment is to be applied, shall first be applied
to underpayments of estimated tax due for any prior quarter of the
taxable year. Any excess amount shall be applied to the installment that
next becomes due after the payment was received. [1973 c.292 §2; 1981
c.678 §4; 1985 c.603 §2](1) A corporation required to make a payment of
estimated tax under ORS 314.505 to 314.525 shall make the payment by
means of electronic funds transfer if:

(a) For payment periods beginning on or after July 1, 2001, and
before January 1, 2002, the corporation’s annual total amount of
estimated tax liability exceeds $50,000.

(b) For payment periods beginning on or after January 1, 2002, the
corporation is required to make federal estimated tax payments
electronically.

(2) The Department of Revenue may adopt rules that provide
exemptions from the requirement that estimated tax be paid by electronic
funds transfer when the taxpayer is disadvantaged by required payment by
electronic funds transfer.

(3) The Department of Revenue may accept electronically filed
payments voluntarily submitted by a corporation that is not required to
pay by means of electronic funds transfer.

(4) As used in this section, “electronic funds transfer” has the
meaning given that term in ORS 293.525. [1997 c.299 §4; 1999 c.21 §35;
2001 c.28 §5; 2001 c.114 §30]ORS 314.505, 314.518 and 316.198 do not alter the
authority under ORS 293.525 of a state agency to require by rule that
certain payments to the agency be made by electronic funds transfer.
[1997 c.299 §6; 2001 c.114 §39; 2005 c.28 §2]Note: 314.520 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1) An underpayment of estimated tax under ORS 314.505 to
314.525 will be considered to have occurred if the estimated tax is not
paid as required.

(2) Notwithstanding subsection (1) of this section, there shall be
no underpayment of estimated tax if the estimated tax paid equals or
exceeds the amount described in any one of the following paragraphs:

(a) The amount which would be required to be paid if the estimated
tax liability were equal to 100 percent of the tax shown on the return
for the taxable year or, if no return was filed, 100 percent of the tax
for such taxable year.

(b) The amount which would be required to be paid if the estimated
tax liability were equal to 100 percent of the tax shown on the return
for the preceding taxable year, and the preceding taxable year was a
taxable year of 12 months.

(c)(A) An amount equal to 100 percent of the tax for the taxable
year computed by placing on an annualized basis the taxable income:

(i) For the first three months of the taxable year, in the case of
the installment required to be paid in the fourth month;

(ii) For the first three months or for the first five months of the
taxable year, in the case of the installment required to be paid in the
sixth month;

(iii) For the first six months or for the first eight months of the
taxable year in the case of the installment required to be paid in the
ninth month; and

(iv) For the first nine months or for the first 11 months of the
taxable year, in the case of the installment required to be paid in the
12th month of the taxable year.

(B) For purposes of this paragraph the taxable income shall be
placed on an annualized basis by:

(i) Multiplying by 12 the taxable income referred to in
subparagraph (A) of this paragraph; and

(ii) Dividing the resulting amount by the number of months in the
taxable year (3, 5, 6, 8, 9 or 11, as the case may be) referred to in
subparagraph (A) of this paragraph.

(d) An amount equal to 100 percent of the amount obtained by
applying section 6655(e) (3)(C) of the Internal Revenue Code to Oregon
taxable income.

(e) An election made under section 6655(e) (2)(C) of the Internal
Revenue Code (relating to annualization periods) for federal tax purposes
shall also apply for purposes of estimated tax under ORS 314.505 to
314.525.

(3) Interest shall accrue on the underpayment of estimated tax
under ORS 314.505 to 314.525 at the rate established under ORS 305.220,
for each month or fraction thereof during which period the estimated tax
or any installment thereof remains unpaid. The penalty provisions
contained in this chapter and ORS chapters 317 and 318 for underpayment
of tax shall not apply to underpayments of estimated tax under ORS
314.505 to 314.525.

(4) For purposes of subsection (3) of this section, the
underpayment of estimated tax shall be the excess of:

(a) The amount of the installment which would be required to be
paid if the estimated tax were equal to the lowest of the payments
required under subsection (2) of this section (and allowed to be made by
the taxpayer under subsection (5) of this section), over

(b) The amount, if any, of the installment paid on or before the
last date prescribed for payment.

(5) In the case of a large corporation, subsection (2)(b) of this
section shall apply only to determine the amount of the first required
installment for any taxable year. Any reduction in the first installment
by reason of this subsection shall be added to the amount of the next
required installment determined without regard to subsection (2)(b) of
this section. For purposes of this subsection, a “large corporation” is
any corporation that had federal taxable income, determined without
regard to any amount carried to any of the three taxable years under
section 172 or 1212(a) of the Internal Revenue Code, of $1 million or
more in any of the three taxable years immediately preceding the taxable
year involved.

(6) The application of this section to taxable years of less than
12 months shall be in accordance with rules adopted by the Department of
Revenue. [1973 c.292 §3; 1981 c.678 §5; 1982 s.s.1 c.16 §9; 1983 c.162
§78; 1985 c.603 §3; 1987 c.293 §61a; 1989 c.625 §63; 1995 c.556 §26; 1997
c.839 §57; 2001 c.660 §33]DIVISION OF INCOME FOR TAX PURPOSES(General Provisions)(1) ORS 314.605 to 314.675 may
be cited as the Uniform Division of Income for Tax Purposes Act.

(2) ORS 314.610 to 314.670 shall be so construed as to effectuate
its general purpose to make uniform the law of those states which enact
it. [1965 c.152 §§20,21]In any case in which the provisions of ORS
314.605 to 314.675 are inconsistent with the provisions of ORS 305.655,
the provisions of ORS 314.605 to 314.675 shall control. [1993 c.726 §20] As used in ORS
314.605 to 314.675, unless the context otherwise requires:

(1) “Business income” means income arising from transactions and
activity in the regular course of the taxpayer’s trade or business and
includes income from tangible and intangible property if the acquisition,
the management, use or rental, and the disposition of the property
constitute integral parts of the taxpayer’s regular trade or business
operations.

(2) “Commercial domicile” means the principal place from which the
trade or business of the taxpayer is directed or managed.

(3) “Compensation” means wages, salaries, commissions and any other
form of remuneration paid to employees for personal services.

(4) “Financial organization” means any financial institution or
trust company, as those terms are defined in ORS 706.008, any industrial
bank, land bank, safe deposit company, private banker, cooperative bank,
investment company, or any type of insurance company.

(5) “Nonbusiness income” means all income other than business
income.

(6) “Public utility” means any business entity whose principal
business is ownership and operation for public use of any plant,
equipment, property, franchise, or license for the transmission of
communications, transportation of goods or persons, or the production,
storage, transmission, sale, delivery, or furnishing of electricity,
water, steam, oil, oil products or gas.

(7) “Sales” means all gross receipts of the taxpayer not allocated
under ORS 314.615 to 314.645.

(8) “State” means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, any territory or possession of
the United States, and any foreign country or political subdivision
thereof. [1965 c.152 §2; 1997 c.631 §452]
Any taxpayer having income from business activity which is taxable both
within and without this state, other than activity as a financial
organization or public utility or the rendering of purely personal
services by an individual, shall allocate and apportion the net income of
the taxpayer as provided in ORS 314.605 to 314.675. Taxpayers engaged in
activities as a financial organization or public utility shall report
their income as provided in ORS 314.280 and 314.675. [1965 c.152 §3; 2001
c.793 §6; 2001 c.933 §5] For
purposes of allocation and apportionment of income under ORS 314.280 and
314.605 to 314.675, a taxpayer is taxable in another state if:

(1) In that state the taxpayer is subject to a net income tax, a
franchise tax measured by net income, a franchise tax for the privilege
of doing business, or a corporate stock tax; or

(2) That state has jurisdiction to subject the taxpayer to a net
income tax regardless of whether, in fact, the state does or does not.
[1965 c.152 §4](Allocation of Nonbusiness Income) Rents and
royalties from real or tangible personal property, capital gains,
interest, dividends, patent or copyright royalties, or prizes awarded by
the Oregon State Lottery, to the extent that they constitute nonbusiness
income, shall be allocated as provided in ORS 314.625 to 314.645. [1965
c.152 §5; 1995 c.79 §155; 1999 c.143 §1] (1)
Net rents and royalties from real property located in this state are
allocable to this state.

(2) Net rents and royalties from tangible personal property are
allocable to this state (a) if and to the extent that the property is
utilized in this state, or (b) in their entirety if the taxpayer’s
commercial domicile is in this state and the taxpayer is not organized
under the laws of or taxable in the state in which the property is
utilized.

(3) The extent of utilization of tangible personal property in a
state is determined by multiplying the rents and royalties by a fraction,
the numerator of which is the number of days of physical location of the
property in the state during the rental or royalty period in the taxable
year and the denominator of which is the number of days of physical
location of the property everywhere during all rental or royalty periods
in the taxable year. If the physical location of the property during the
rental or royalty period is unknown or unascertainable by the taxpayer,
tangible personal property is utilized in the state in which the property
was located at the time the rental or royalty payer obtained possession.
[1965 c.152 §6] (1)
Capital gains and losses from sales of real property located in this
state are allocable to this state.

(2) Capital gains and losses from sales of tangible personal
property are allocable to this state if (a) the property had a situs in
this state at the time of the sale, or (b) the taxpayer’s commercial
domicile is in this state and the taxpayer is not taxable in the state in
which the property had a situs.

(3) Except in the case of the sale of a partnership interest,
capital gains and losses from sales of intangible personal property are
allocable to this state if the taxpayer’s commercial domicile is in this
state.

(4) Gain or loss from the sale of a partnership interest is
allocable to this state in the ratio of the original cost of partnership
tangible property in the state to the original cost of partnership
tangible property everywhere, determined at the time of the sale. In the
event that more than 50 percent of the value of a partnership’s assets
consists of intangibles, gain or loss from the sale of the partnership
interest shall be allocated to this state in accordance with the sales
factor of the partnership for its first full tax year immediately
preceding its tax year during which the partnership interest was sold.
[1965 c.152 §7; 1989 c.625 §64]
Interest and dividends are allocable to this state if the taxpayer’s
commercial domicile is in this state. [1965 c.152 §8] (1) Prizes
awarded by the Oregon State Lottery are allocable to this state.

(2) A prize awarded by a multistate lottery association of which
the Oregon State Lottery is a member is allocable to this state if the
ticket upon which the prize is awarded was sold in this state. [1999
c.143 §2]
(1) Patent and copyright royalties are allocable to this state (a) if and
to the extent that the patent or copyright is utilized by the payer in
this state, or (b) if and to the extent that the patent or copyright is
utilized by the payer in a state in which the taxpayer is not taxable and
the taxpayer’s commercial domicile is in this state.

(2) A patent is utilized in a state to the extent that it is
employed in production, fabrication, manufacturing, or other processing
in the state or to the extent that a patented product is produced in the
state. If the basis of receipts from patent royalties does not permit
allocation to states or if the accounting procedures do not reflect
states of utilization, the patent is utilized in the state in which the
taxpayer’s commercial domicile is located.

(3) A copyright is utilized in a state to the extent that printing
or other publication originates in the state. If the basis of receipts
from copyright royalties does not permit allocation to states or if the
accounting procedures do not reflect states of utilization, the copyright
is utilized in the state in which the taxpayer’s commercial domicile is
located. [1965 c.152 §9](Apportionment of Business Income) The Legislative Assembly finds and declares it to
be the policy of this state to carry out a comprehensive review of
business income apportionment whenever federal legislation changes the
nexus standard for state imposition of taxes based on business activity
within state borders. [2001 c.793 §12]Note: 314.647 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. (1) All business income
shall be apportioned to this state by multiplying the income by the sales
factor.

(2)(a) Notwithstanding subsection (1) of this section, the business
income of a taxpayer that is in the forest products industry, that owns
and manages 300,000 or more acres in this state, but less than 400,000
acres, and that processes at least 20 percent of the taxpayer’s total
wood chip supply for papermaking from sawmill residue generated within
this state, shall be apportioned to this state by multiplying the income
by a fraction, the numerator of which is the property factor plus the
payroll factor plus two times the sales factor, and the denominator of
which is four.

(b) If the denominator of the property factor, payroll factor or
sales factor, as determined under ORS 314.650 to 314.665, is zero, then
the denominator specified in paragraph (a) of this subsection shall be
reduced by the number of factors with a denominator of zero. [1965 c.152
§10; 1989 c.626 §5; 1989 c.1088 §1; 1995 c.79 §156; 2001 c.793 §1; 2003
c.739 §§1,5; 2005 c.832 §§48,49]Note: Section 48a, chapter 832, Oregon Laws 2005, provides:

Sec. 48a. The amendments to ORS 314.650 by section 48 of this 2005
Act apply to tax years beginning on or after July 1, 2005. [2005 c.832
§48a] (1) As used in ORS
314.650, the property factor is a fraction, the numerator of which is the
average value of the taxpayer’s real and tangible personal property owned
or rented and used in this state during the tax period and the
denominator of which is the average value of all the taxpayer’s real and
tangible personal property owned or rented and used during the tax period.

(2) Property owned by the taxpayer is valued at its original cost.
Property rented by the taxpayer is valued at eight times the net annual
rental rate. Net annual rental rate is the annual rental rate paid by the
taxpayer less any annual rental rate received by the taxpayer from
subrentals.

(3) The average value of property shall be determined by averaging
the values at the beginning and ending of the tax period but the
Department of Revenue may require the averaging of monthly values during
the tax period if reasonably required to reflect properly the average
value of the taxpayer’s property. [1965 c.152 §§11,12,13; 2001 c.793 §3;
2001 c.933 §2] (1) As used in ORS
314.650, the payroll factor is a fraction, the numerator of which is the
total amount paid in this state during the tax period by the taxpayer for
compensation, and the denominator of which is the total compensation paid
everywhere during the tax period.

(2) Compensation is paid in this state if:

(a) The individual’s service is performed entirely within the
state; or

(b) The individual’s service is performed both within and without
the state, but the service performed without the state is incidental to
the individual’s service within the state; or

(c) Some of the service is performed in the state and (A) the base
of operations or, if there is no base of operations, the place from which
the service is directed or controlled is in the state, or (B) the base of
operations or the place from which the service is directed or controlled
is not in any state in which some part of the service is performed, but
the individual’s residence is in this state. [1965 c.152 §§14,15; 2001
c.793 §4; 2001 c.933 §3](1) As used in ORS 314.650, the sales factor is a fraction,
the numerator of which is the total sales of the taxpayer in this state
during the tax period, and the denominator of which is the total sales of
the taxpayer everywhere during the tax period.

(2) Sales of tangible personal property are in this state if:

(a) The property is delivered or shipped to a purchaser, other than
the United States Government, within this state regardless of the f.o.b.
point or other conditions of the sale; or

(b) The property is shipped from an office, store, warehouse,
factory, or other place of storage in this state and the purchaser is the
United States Government or the taxpayer is not taxable in the state of
the purchaser. For purposes of this paragraph:

(A) The sale of goods shipped from a public warehouse is not
considered to take place in this state if:

(i) The taxpayer’s only activity in Oregon is the storage of the
goods in the public warehouse prior to shipment; or

(ii) The taxpayer’s only activities in Oregon are the storage of
the goods in the public warehouse prior to shipment and the presence of
employees within this state solely for purposes of soliciting sales of
the taxpayer’s products; and

(B) “Taxpayer” means a taxpayer as defined in section 7701 of the
Internal Revenue Code, an affiliate of the person storing goods in a
public warehouse or a person that is related under section 267 of the
Internal Revenue Code to the person storing goods in a public warehouse.

(3) Subsection (2)(b) of this section shall not apply to sales of
tangible personal property if:

(a) The sales are included in the numerator of a formula used to
apportion business income to another state of the United States, a
foreign country or the District of Columbia; and

(b) The other state, a foreign country or the District of Columbia
has imposed a tax on or measured by the apportioned business income.

(4) Sales, other than sales of tangible personal property, are in
this state if (a) the income-producing activity is performed in this
state; or (b) the income-producing activity is performed both in and
outside this state and a greater proportion of the income-producing
activity is performed in this state than in any other state, based on
costs of performance.

(5) Where the sales apportionment factor is determined by
administrative rule pursuant to ORS 314.682, 314.684, 317.660 or other
law, the Department of Revenue shall adopt rules that are consistent with
the determination of the sales factor under this section.

(6) For purposes of this section, “sales”:

(a) Excludes gross receipts arising from the sale, exchange,
redemption or holding of intangible assets, including but not limited to
securities, unless those receipts are derived from the taxpayer’s primary
business activity.

(b) Includes net gain from the sale, exchange or redemption of
intangible assets not derived from the primary business activity of the
taxpayer but included in the taxpayer’s business income.

(c) Excludes gross receipts arising from an incidental or
occasional sale of a fixed asset or assets used in the regular course of
the taxpayer’s trade or business if a substantial amount of the gross
receipts of the taxpayer arise from an incidental or occasional sale or
sales of fixed assets used in the regular course of the taxpayer’s trade
or business. Insubstantial amounts of gross receipts arising from
incidental or occasional transactions or activities may be excluded from
the sales factor unless the exclusion would materially affect the amount
of income apportioned to this state.

(7) The department may determine that a warehouse that meets the
definition of “public warehouse” under this section may not be treated as
a public warehouse if the warehouse is being used primarily for tax
avoidance purposes or if transactions related to the use of the warehouse
are primarily for tax avoidance purposes.

(8) As used in this section, “public warehouse”:

(a) Means a warehouse owned or operated by a person that does not
own the goods stored in the warehouse; and

(b) Does not include a warehouse that is owned by a person that is
related to the person that owns goods that are stored in the warehouse,
as determined under section 267 of the Internal Revenue Code, or an
affiliate of the person that owns goods that are stored in the warehouse.
[1965 c.152 §§16,17,18; 1993 c.813 §4; 1995 c.176 §1; 1999 c.143 §8; 2001
c.793 §5; 2001 c.933 §4; 2005 c.832 §3]Note: Section 4, chapter 832, Oregon Laws 2005, provides:

Sec. 4. The amendments to ORS 314.665 by section 3 of this 2005 Act
apply to tax years beginning on or after January 1, 2006. [2005 c.832 §4](Procedure Where Ordinary Determination Not Satisfactory)(1) If the application of the allocation and
apportionment provisions of ORS 314.605 to 314.675 do not fairly
represent the extent of the taxpayer’s business activity in this state,
the taxpayer may petition for and the Department of Revenue may permit,
or the department may require, in respect to all or any part of the
taxpayer’s business activity:

(a) Separate accounting;

(b) The exclusion of any one or more of the factors;

(c) The inclusion of one or more additional factors which will
fairly represent the taxpayer’s business activity in this state; or

(d) The employment of any other method to effectuate an equitable
allocation and apportionment of the taxpayer’s income.

(2) The department may adopt rules to promote uniformity and
consistency with other states in the application of the Uniform Division
of Income for Tax Purposes Act. [1965 c.152 §19; 1984 c.1 §17; 1995 c.79
§157; 1999 c.143 §9](Apportionment of Net Loss)
If the operations of a taxpayer subject to ORS 314.280 or 314.615 result
in a net loss, that net loss shall be apportioned in the same manner as
the net income so as fairly and accurately to reflect the net loss of the
business done within this state. The net loss applicable to Oregon income
pursuant to this section shall then become the net loss deduction for
subsequent years which may be deducted from apportioned net income in the
same manner as set forth in the Personal Income Tax Act of 1969, and in
ORS chapters 317 and 318. The limitations as to the amount deductible and
the time limitations in those statutes shall apply to the apportioned net
loss deduction computed pursuant to this section. [1965 c.152 §23; 1969
c.493 §89; 1983 c.162 §55](Apportionment of Income of Interstate Broadcasters) As used in
ORS 314.680 to 314.690, unless the context requires otherwise:

(1) “Broadcasting” means the activity of transmitting any one-way
electronic signal by radio waves, microwaves, wires, coaxial cables, wave
guides or other conduits of communications.

(2) “Gross receipts from broadcasting” means all gross receipts of
an interstate broadcaster from transactions and activities in the regular
course of its trade or business except receipts from sales of real or
tangible personal property.

(3) “Interstate broadcaster” means a taxpayer that engages in the
for-profit business of broadcasting to subscribers or to an audience
located both within and without this state. The audience or subscribers
ratio shall be determined by rule of the Department of Revenue. [1989
c.792 §3; 1995 c.79 §159]
(1) Notwithstanding any provisions of ORS 314.605 to 314.675 to the
contrary, ORS 314.680, 314.684 and 314.686 shall apply to the
apportionment of the income of an interstate broadcaster.

(2) Except as provided in subsection (1) of this section, all other
provisions of ORS 314.605 to 314.675 shall apply to the apportionment of
the income of an interstate broadcaster. [1989 c.792 §2; 1995 c.79 §160] (1) The sales factor for an
interstate broadcaster shall be determined as provided in this section.

(2) The denominator of the sales factor shall include the total
gross receipts derived by the interstate broadcaster from transactions
and activities in the regular course of its trade or business, except
receipts excluded under rules of the Department of Revenue.

(3) The numerator of the sales factor shall include all gross
receipts attributable to this state, with gross receipts from
broadcasting to be included as specified in subsection (4) of this
section.

(4) Gross receipts from broadcasting of an interstate broadcaster
which engages in income-producing activity in this state shall be
included in the numerator of the sales factor in the ratio that the
interstate broadcaster’s audience or subscribers located in this state
bears to its total audience and subscribers located both within and
without this state. [1989 c.792 §4]If an interstate broadcaster has gross receipts from
broadcasting, the determination of net income taxable by this state shall
be based upon the business activity within this state, and the Department
of Revenue shall require either the segregated method of reporting or the
apportionment method of reporting described in ORS 314.680 to 314.690,
under the rules adopted by the department, so as fairly and accurately to
reflect the net income of the interstate broadcaster’s business done
within this state. [1989 c.792 §5; 1995 c.79 §161] The Department of Revenue may adopt such rules as it
deems necessary for the administration and enforcement of ORS 314.680 to
314.690. [1989 c.792 §6; 1995 c.79 §162]The provisions of ORS 314.680 to
314.688 are not intended to change the meaning of the terms
“income-producing activity,” “sources within this state,” “business
activity” taxable in this state or “doing business” in this state
contained in this chapter or ORS chapter 317 or 318. [1989 c.792 §7](Application) The
provisions of ORS 314.280 and 314.605 to 314.675 apply to the allocation
and apportionment of the income of corporations and nonresident
individuals, and do not apply to the income of resident individuals,
resident estates, and resident trusts taxable as provided in the Personal
Income Tax Act of 1969. [1967 c.60 §2; 1969 c.493 §90]EFFECT OF MULTISTATE TAX COMPACTAny taxpayer electing in any year to report and pay an
income tax on the basis of a percentage of sales volume, pursuant to
Article III, section 2 of the Multistate Tax Compact, shall pay a tax
computed at one-fourth of one percent of the dollar volume of gross sales
in Oregon, except that if the taxpayer’s return on sales for its business
is less than five percent, it shall pay a tax computed on the basis of
one-eighth of one percent of such volume. [1967 c.242 §2] The
provisions of Articles III and IV of the Multistate Tax Compact apply to
the allocation and apportionment of the income of corporations and
nonresident individuals and do not apply to income of resident
individuals, resident estates and resident trusts, taxable as provided in
the Personal Income Tax Act of 1969. [1967 c.242 §7; 1969 c.493 §91]TAXATION OF PARTNERSHIPS AND S CORPORATIONS(Partnerships) (1)
Except as provided in ORS 314.722 or 314.723, a partnership as such is
not subject to the tax imposed by ORS chapter 316, 317 or 318.
Partnership income shall be computed pursuant to section 703 of the
Internal Revenue Code, with the modifications, additions and subtractions
provided in this chapter and ORS chapter 316. Persons carrying on
business as partners are liable for the tax imposed by ORS chapter 316,
317 or 318 on their distributive shares of partnership income only in
their separate or individual capacities.

(2) If a partner engages in a transaction with a partnership other
than in the partner’s capacity as a member of the partnership, the
transaction shall be treated in the manner described in section 707 of
the Internal Revenue Code.

(3) If a partnership is an electing large partnership under section
775 of the Internal Revenue Code, the modifications of law applicable to
an electing large partnership for federal tax purposes are applicable to
the electing large partnership for purposes of the tax imposed by this
chapter or ORS chapter 316, 317 or 318. [1989 c.625 §28 (enacted in lieu
of 316.342); 1999 c.90 §5](1)
Each item of partnership income, gain, loss or deduction has the same
character for a partner as it has for federal income tax purposes. If an
item is not characterized for federal income tax purposes, it has the
same character for a partner as if realized directly from the source from
which realized by the partnership or incurred in the same manner as
incurred by the partnership.

(2) A partner’s distributive share of an item of partnership
income, gain, loss or deduction (or item thereof) shall be that partner’s
distributive share of partnership income, gain, loss or deduction (or
item thereof) for federal income tax purposes as determined under section
704 of the Internal Revenue Code and adjusted for the modifications,
additions and subtractions provided in this chapter and ORS chapters 316,
317 and 318.

(3) A partner shall, on the partner’s return, treat a partnership
item in a manner that is consistent with the treatment of the partnership
item on the partnership return, unless the partner notifies the
Department of Revenue of the inconsistency. The department shall
prescribe by rule the method for notification of an inconsistency. A
partner of an electing large partnership under section 775 of the
Internal Revenue Code must treat a partnership item in a manner that is
consistent with the treatment of the partnership item on the partnership
return. [1989 c.625 §30 (enacted in lieu of 316.347); 1993 c.726 §22;
1999 c.90 §6](1) The adjusted basis of a partner’s interest in a
partnership shall be determined pursuant to the method described in
sections 704(c)(1)(B)(iii), 705 and 733 of the Internal Revenue Code, and
shall be increased or decreased as provided in this chapter and ORS
chapter 316, 317 or 318, whichever is applicable.

(2) Upon the sale or exchange of an interest in a partnership, gain
or loss shall be recognized to the transferor partner pursuant to section
741 of the Internal Revenue Code.

(3) If a partnership elects to adjust the basis of its assets under
section 754 of the Internal Revenue Code, then upon a transfer of an
interest in the partnership by sale or exchange or upon a death of a
partner, that election shall also be effective for Oregon income tax
purposes. [1989 c.625 §36; 1991 c.457 §19] (1) Amounts paid
or incurred to organize a partnership may be deducted in the manner
provided in section 709(b) of the Internal Revenue Code.

(2) No gain or loss shall be recognized upon a contribution of
property to a partnership in exchange for an interest in a partnership,
unless allowed pursuant to section 721(b) of the Internal Revenue Code.

(3) The partnership’s basis in property contributed to it by a
partner is the adjusted basis of the property to that partner at the time
of the contribution, plus the amount (if any) of gain recognized by that
partner as a result of the transfer of property to the partnership. The
partnership’s holding period includes the period during which the
property was held by the partner.

(4) Any increase in a partner’s share of partnership liabilities
shall be considered as a contribution of money by the partner to the
partnership, pursuant to section 752 of the Internal Revenue Code.

(5) Section 724 of the Internal Revenue Code shall be applied in
determining the character of gain or loss recognized by a partnership
upon the disposition of contributed unrealized receivables, inventory
items and capital loss property. [1989 c.625 §37] (1) Gain or
loss shall not be recognized by a partner upon a distribution by a
partnership to that partner, except to the extent provided in section 731
of the Internal Revenue Code.

(2) The character of gain or loss on the disposition by a
distributee partner of unrealized receivables or inventory items shall be
determined pursuant to section 735 of the Internal Revenue Code.

(3) The basis of property (other than money) distributed by a
partnership to a partner shall be determined pursuant to sections
704(c)(1)(B)(iii) and 732 of the Internal Revenue Code, and shall be
increased or decreased as provided in ORS chapter 316.

(4) If a partnership makes the election to adjust the basis of its
assets under section 754 of the Internal Revenue Code, then upon a
distribution of property to a partner, that election shall also be
effective for Oregon income tax purposes.

(5) Payments made by a partnership in liquidation of the interest
of a retiring partner or a deceased partner shall be accorded the
treatment provided under section 736 of the Internal Revenue Code.

(6) Any decrease in a partner’s share of partnership liabilities or
any decrease in a partner’s individual liabilities by reason of the
assumption by the partnership of the partner’s individual liabilities,
shall be considered to be a distribution of money to the partner by the
partnership under section 752 of the Internal Revenue Code. [1989 c.625
§38; 1991 c.457 §20; 1995 c.556 §29] (1) As
used in this section, “publicly traded partnership” means a partnership
treated as a corporation for federal income tax purposes under section
7704 of the Internal Revenue Code for the tax year.

(2) Persons carrying on business as partners in a publicly traded
partnership are not subject to tax under ORS chapter 316, 317 or 318 on
their distributive shares of partnership income, but the publicly traded
partnership is taxable as a corporation under ORS chapter 317 or 318 as
provided under ORS chapter 317 or 318. [1989 c.625 §39] (1) If a
partnership is an electing large partnership under section 775 of the
Internal Revenue Code and an adjustment is made with respect to a
partnership item for federal tax purposes that results in partnership
liability to the United States Internal Revenue Service for payment of
the federal tax under section 6242 of the Internal Revenue Code, the
amount subject to federal tax at the partnership level shall also be
subject to a state tax, to the extent the amount is allocated or
apportioned to the State of Oregon.

(2) The rate of tax shall be the highest marginal rate of tax
applicable to personal income taxpayers under ORS 316.037 for the tax
year for which the adjustment is taken into account for federal tax
purposes under section 6242 of the Internal Revenue Code.

(3) The Department of Revenue may determine by rule the method by
which the amount described in this section is allocated and apportioned
to the State of Oregon. [1999 c.90 §3] (1) Every partnership having a
resident partner or having any income derived from sources in this state,
determined in accordance with the applicable rules as in the case of a
nonresident individual, shall make a return for the taxable year setting
forth all items of income, gain, loss and deduction, and the names and
addresses of the individuals (whether residents or nonresidents) who
would be entitled to share in the net income, if distributed, and the
amount of the distributive share of each individual, and such other
pertinent information as the Department of Revenue may prescribe by
regulations and instructions. Such return shall be filed on or before the
15th day of the fourth month following the close of each taxable year.
For purposes of this section, “taxable year” means a year or period which
would be a taxable year of the partnership if it were subject to tax
under ORS chapter 316.

(2) If a partnership transacting business in this state is required
to make a return under subsection (1) of this section and fails to file
the return or files a return which fails to show the information required
under subsection (1) of this section, the Department of Revenue shall
assess a penalty against the partnership in the amount specified in
subsection (3) of this section for each month or part of a month during
which the failure continues.

(3) The amount of the penalty imposed under subsection (2) of this
section shall be determined by the department by rule. However, the
amount of the penalty imposed for each month shall not exceed the product
of $50 multiplied by the number of persons who were partners in the
partnership during any part of the taxable year, and the total amount of
the penalty shall not exceed five times the monthly penalty.

(4) The penalty imposed under this section is in addition to any
other penalty provided by law. Any partnership against which a penalty is
assessed under this section may appeal to the tax court as provided in
ORS 305.404 to 305.560. If the penalty is not paid within 10 days after
the order of the tax court becomes final, the department may record the
order and collect the amount assessed in the same manner as income tax
deficiencies are recorded and collected under ORS 314.430.

(5) The department may waive all or any part of the penalty imposed
under this section if the failure was due to reasonable cause. [Formerly
316.467; 1995 c.650 §35] ORS 314.724 shall apply to both
corporate and noncorporate partners. [1989 c.625 §34] The Department
of Revenue may disclose to a partner of a partnership those items of
partnership gain, loss or other particulars relating to the partnership
that are necessary to determine or administer the tax imposed by ORS
chapter 316, 317 or 318 if the department considers the disclosure
necessary to facilitate the audit of the partner’s income or excise tax
return. [1997 c.100 §5](S Corporations)For purposes of this chapter
and ORS chapters 316, 317 and 318:

(1) “C corporation” means, with respect to any taxable year, a
corporation which is not an S corporation for such year.

(2) “S corporation” means, with respect to any taxable year, a
corporation for which an election under section 1362(a) of the Internal
Revenue Code is in effect for such year. [1989 c.625 §41](1) Except as otherwise provided in ORS
314.740, 314.742 and 317.090, an S corporation shall not be subject to
the taxes imposed by ORS chapter 316, 317 or 318.

(2)(a) Subject to paragraphs (b) to (d) of this subsection, the
taxable income of an S corporation shall be computed pursuant to section
1363(b) of the Internal Revenue Code, with the modifications, additions
and subtractions provided in this chapter and ORS chapter 316.

(b) Except as otherwise provided under this chapter and ORS chapter
316, 317 or 318, and except as inconsistent with ORS 314.730 to 314.752,
subchapter C, chapter 1, Internal Revenue Code, shall apply to an S
corporation and its shareholders for Oregon tax purposes. For Oregon tax
purposes, the provisions of section 1371 of the Internal Revenue Code
shall apply, subject to the modifications, additions and subtractions
under this chapter or ORS chapter 316, 317 or 318 and any provisions to
the contrary in this chapter or ORS chapter 316, 317 or 318.

(c) Notwithstanding ORS 317.476, 317.478 or 317.479, no
carryforward, arising for a taxable year for which a corporation is a C
corporation, may be carried to a taxable year for which such corporation
is an S corporation.

(d) Notwithstanding ORS 317.476 or other law, no carryforward, and
no carryback, shall arise at the corporate level for a taxable year for
which a corporation is an S corporation. [1989 c.625 §42; 1991 c.457 §21](1) The shareholder’s pro rata share of
the income of an S corporation is subject to tax under ORS chapter 316.
In determining the tax imposed under ORS chapter 316 of a shareholder for
the shareholder’s taxable year in which the taxable year of the S
corporation ends (or for the final taxable year of a shareholder who
dies, or of a trust or estate that terminates, before the end of the
corporation’s taxable year), there shall be taken into account the
shareholder’s pro rata share of the corporation’s separately stated items
of income, loss or deduction and nonseparately computed income or loss,
as determined under or for purposes of section 1366 of the Internal
Revenue Code (including but not limited to section 1366(d) and (e) of the
Internal Revenue Code), with the modifications, additions and
subtractions provided under this chapter and ORS chapter 316.

(2) Each item of shareholder income, gain, loss or deduction has
the same character for a shareholder under this chapter and ORS chapter
316 as it has for federal income tax purposes. If an item is not
characterized for federal income tax purposes, it has the same character
for a shareholder as if realized directly from the source from which
realized by the S corporation or incurred in the same manner as incurred
by the S corporation.

(3) In any case where it is necessary to determine the gross income
of a shareholder for purposes of ORS chapter 316, such gross income shall
include the shareholder’s pro rata share of the gross income of the S
corporation.

(4) If any tax is imposed under ORS 314.740 for any taxable year on
an S corporation, for purposes of subsection (1) of this section, the
amount of each recognized built-in gain for such taxable year shall be
reduced by its proportionate share of such tax.

(5) If any tax is imposed under ORS 314.742 on an S corporation,
for purposes of subsection (1) of this section, each item of passive
investment income shall be reduced by an amount which bears the same
ratio to the amount of such tax as the amount of such item bears to the
total passive investment income for the taxable year. [1989 c.625 §43;
1991 c.457 §22; 1997 c.839 §60] A distribution
of property made by an S corporation with respect to its stock shall be
treated in the manner provided under section 1368 of the Internal Revenue
Code, subject to modifications, additions and subtractions under ORS
chapter 316, 317 or 318. [1989 c.625 §44] (1) For purposes
of employee fringe benefits, and subject to this chapter and ORS chapters
305, 316, 317 and 318 and ORS 314.712 to 314.722, 314.726 and 316.124,
section 1372 of the Internal Revenue Code shall apply to an S corporation
and its shareholders.

(2) For purposes of foreign income, and subject to this chapter and
ORS chapters 305, 316, 317 and 318 and ORS 314.712 to 314.722, 314.726
and 316.124, section 1373 of the Internal Revenue Code shall apply to an
S corporation and its shareholders. [1989 c.625 §45] (1) If, for any taxable year
beginning in the recognition period, an S corporation has a net
recognized built-in gain, there is hereby imposed a tax on the income of
such corporation for such taxable year.

(2) The amount of the tax imposed under subsection (1) of this
section shall be computed by applying the rate of tax specified in ORS
317.061 to the net recognized built-in gain of the S corporation for the
taxable year.

(3) The tax imposed under subsection (1) shall be considered a tax
imposed under ORS chapter 317 or 318, whichever is applicable, and shall
be returned, estimated, assessed and collected and otherwise treated in
the same manner as the tax imposed under ORS chapter 317 or 318. The
allocation and apportionment rules of this chapter and ORS chapter 305
apply to the income subject to the tax imposed under this section. The
proceeds from the tax shall be distributed in the same manner as the tax
imposed under ORS chapter 317 or 318, whichever is applicable.

(4) ORS 317.476, 317.478 and 317.479 shall not apply to the tax
imposed under this section. Notwithstanding ORS 314.732 (2)(c), any net
operating loss carryforward arising in a taxable year for which the
corporation was a C corporation shall be allowed for purposes of the tax
imposed under this section as a deduction against the net recognized
built-in gain of the S corporation for the taxable year. For purposes of
determining the amount of any such loss which may be carried to any of
the 15 subsequent taxable years, the amount of the net recognized
built-in gain shall be treated as taxable income.

(5)(a) Except for estimated and other advance tax payments and
except as provided under paragraph (b) of this subsection, no credits
shall be allowed against the tax imposed under this section.

(b) Notwithstanding ORS 314.732 (2)(c), any credit carryforward
under ORS chapter 317 or 318 arising in a taxable year for which the
corporation was a C corporation shall be allowed as a credit against the
tax imposed under this section in the same manner as if it were the tax
imposed under ORS chapter 317 or 318.

(6) To the extent applicable, the definitions, special rules and
interpretations and other provisions of section 1374 of the Internal
Revenue Code that relate to the measurement of built-in gain shall apply
to the tax imposed under this section. [1989 c.625 §46; 1997 c.839 §61] (1) If for the taxable
year an S corporation has the following, then there is hereby imposed a
tax on the income of such corporation for the taxable year:

(a) Accumulated earnings and profits at the close of the taxable
year; and

(b) Gross receipts more than 25 percent of which are passive
investment income.

(2) The tax imposed under subsection (1) of this section shall be
computed by multiplying the excess net passive income by the rate
specified under ORS 317.061.

(3) The tax imposed under subsection (1) shall be considered a tax
imposed under ORS chapter 317 or 318, whichever is applicable, and shall
be returned, estimated, assessed and collected and otherwise treated in
the same manner as the tax imposed under ORS chapter 317 or 318. The
allocation and apportionment of income rules of this chapter and ORS
chapter 305 apply to the income subject to the tax imposed under this
section. The proceeds from the tax shall be distributed in the same
manner as the tax imposed under ORS chapter 317 or 318, whichever is
applicable.

(4) Notwithstanding subsection (6) of this section, the amount of
passive investment income shall be determined by not taking into account
any recognized built-in gain or loss of the S corporation for any taxable
year in the recognition period. Terms used in the preceding sentence
shall have the same respective meanings as when used in ORS 314.738.

(5) Except for estimated and other advance tax payments, no credits
shall be allowed against the tax imposed under this section.

(6) To the extent applicable, the definitions, special rules and
interpretations and other provisions of section 1375 of the Internal
Revenue Code that relate to the measurement of excess net passive income
shall apply to the tax imposed under this section.

(7) Section 1375(d) shall apply to the tax imposed under this
section, except that “department” shall be substituted for the word
“secretary” wherever that word appears. [1989 c.625 §47; 1997 c.839 §62] (1) Subject
to subsection (2) of this section, if the Internal Revenue Code requires
or permits an election or revocation to be made by an S corporation, then
that election or revocation shall apply for Oregon tax purposes. If the
Internal Revenue Code requires or permits an election or revocation to be
made by a shareholder or shareholders of an S corporation, then that
election or revocation shall apply for Oregon tax purposes.

(2) The Department of Revenue may adopt rules that contravene
subsection (1) of this section if the election or revocation does not
carry out the purposes of this chapter and ORS chapter 305, 316, 317 or
318. [1989 c.625 §48]The definitions and special and transitional rules of sections 1377
and 1379 of the Internal Revenue Code apply for Oregon tax purposes.
[1989 c.625 §49] The
Department of Revenue may disclose to the shareholder of an S corporation
those items of S corporation gain, loss or other particulars relating to
the S corporation that are necessary to administer the tax imposed by ORS
chapter 316, 317 or 318 if the department considers the disclosure
necessary to facilitate the audit of the shareholder’s income tax return.
[1997 c.100 §6]Note: 314.749 was added to and made a part of ORS chapter 314 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation. (1) Any increase in tax by
reason of section 1363(d) of the Internal Revenue Code (recapture of LIFO
benefits) shall be payable in four equal installments.

(2) The first installment shall be paid on or before the due date
(determined without regard to extensions) for the return of the tax for
the last taxable year for which the corporation was a C corporation and
the three succeeding installments shall be paid on or before the due date
(as so determined) for the corporation’s return for the three succeeding
taxable years.

(3) Notwithstanding ORS 314.400 (4), for purposes of ORS 314.400
(4), interest on each installment that is not paid on or before the date
prescribed under subsection (2) of this section for payment of that
installment shall accrue only from the due date for that installment.

(4) This section applies in the case of S corporation elections
made after December 17, 1987. No refund or interest shall accrue to any
taxpayer on account of the retroactive application under this subsection.
[1989 c.625 §58] (1) Except
as provided in ORS 314.740 (5)(b), the tax credits allowed or allowable
to a C corporation for purposes of ORS chapter 317 or 318 shall not be
allowed to an S corporation. The business tax credits allowed or
allowable for purposes of ORS chapter 316 shall be allowed or are
allowable to the shareholders of the S corporation.

(2) In determining the tax imposed under ORS chapter 316, as
provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder’s pro rata
share of business tax credit (or item thereof) that would be allowed to
the corporation (but for subsection (1) of this section) or recapture or
recovery thereof. The credit (or item thereof), recapture or recovery
shall be passed through to shareholders in pro rata shares as determined
in the manner prescribed under section 1377(a) of the Internal Revenue
Code.

(3) The character of any item included in a shareholder’s pro rata
share under subsection (2) of this section shall be determined as if such
item were realized directly from the source from which realized by the
corporation, or incurred in the same manner as incurred by the
corporation.

(4) If the shareholder is a nonresident and there is a requirement
applicable for the business tax credit that in the case of a nonresident
the credit be allowed in the proportion provided in ORS 316.117, then
that provision shall apply to the nonresident shareholder.

(5) As used in this section, “business tax credit” means a tax
credit granted to personal income taxpayers to encourage certain
investment, to create employment, economic opportunity or incentive or
for charitable, educational, scientific, literary or public purposes that
is listed under this subsection as a business tax credit or is designated
as a business tax credit by law or by the Department of Revenue by rule
and includes but is not limited to the following credits: ORS 285C.309
(tribal taxes on reservation enterprise zones), ORS 315.104 (forestation
and reforestation), ORS 315.134 (fish habitat improvement), ORS 315.138
(fish screening, by-pass devices, fishways), ORS 315.156 (crop gleaning),
ORS 315.164 and 315.169 (farmworker housing), ORS 315.204 (dependent care
assistance), ORS 315.208 (dependent care facilities), ORS 315.213
(contributions for child care), ORS 315.254 (youth apprenticeship
sponsorship), ORS 315.304 (pollution control facility), ORS 315.324
(plastics recycling), ORS 315.354 and ORS 469.207 (energy conservation
facilities), ORS 315.507 (electronic commerce), ORS 315.511 (advanced
telecommunications facilities), ORS 315.604 (bone marrow transplant
expenses) and ORS 317.115 (fueling stations necessary to operate an
alternative fuel vehicle). [1991 c.877 §36; 1993 c.730 §5; 1997 c.170
§34; 1997 c.534 §2; 1999 c.21 §36; 2001 c.674 §11; 2001 c.868 §9; 2001
c.932 §10; 2001 c.957 §18; 2005 c.80 §1; 2005 c.94 §80](Nonresident Return by Shareholder or Partner)A nonresident shareholder of an S corporation or a nonresident
partner may join in the filing of an Oregon multiple nonresident S
corporation or partnership return, subject to rules adopted by the
Department of Revenue. If a multiple nonresident return is filed, the S
corporation or partnership as agent for the electing shareholders or
partners shall make the payments of tax, including estimated tax,
additions to tax, interest and penalties otherwise required to be paid by
the electing shareholders or partners. [1989 c.625 §54]Note: 314.760 is repealed January 2, 2008. See section 8, chapter
387, Oregon Laws 2005.Note: Sections 7 and 9, chapter 387, Oregon Laws 2005, provide:

Sec. 7. A nonresident shareholder of an S corporation or a
nonresident partner may not join in the filing of an Oregon multiple
nonresident S corporation or partnership return for a tax year beginning


Sec. 9. Nothing in the repeal of ORS 314.760 by section 8 of this
2005 Act affects the filing of an Oregon multiple nonresident S
corporation or partnership return for a tax year beginning before January
1, 2006. [2005 c.387 §9]PASS-THROUGH ENTITIES As used in ORS
314.775 to 314.784:

(1) “Distributive income” means the net amount of income, gain,
deduction or loss of a pass-through entity for the tax year of the entity.

(2) “Lower-tier pass-through entity” means a pass-through entity,
an ownership interest of which is held by another pass-through entity.

(3) “Nonresident” means:

(a) An individual who is not a resident of this state;

(b) A corporation, partnership or other business entity that has a
commercial domicile, as defined in ORS 314.610, that is outside this
state; or

(c) A trust that is not a resident trust or qualified funeral trust
under ORS 316.282.

(4) “Owner” means a person that owns an interest in a pass-through
entity.

(5) “Pass-through entity” means any entity that is recognized as a
separate entity for federal income tax purposes, for which the owners are
required to report income, gains, losses, deductions or credits from the
entity for federal income tax purposes. “Pass-through entity” does not
include any trust, as defined in ORS 128.005, except a form of trust that
the Department of Revenue has determined by rule to have been established
or maintained primarily for tax avoidance purposes.

(6) “Upper-tier pass-through entity” means a pass-through entity
that owns an interest in another pass-through entity. [2005 c.387 §1]Note: Section 5, chapter 387, Oregon Laws 2005, provides:

Sec. 5. Sections 1 to 4 of this 2005 Act [314.775 to 314.784] apply
to tax years beginning on or after January 1, 2006. [2005 c.387 §5]Note: 128.005 was repealed by section 128, chapter 348, Oregon Laws
2005. The text of 314.775 was not amended by enactment of the Legislative
Assembly to reflect the repeal. Editorial adjustment of 314.775 for the
repeal of 128.005 has not been made.(1) A pass-through entity
having distributive income attributable to Oregon sources shall file a
composite return of personal income and corporate income and excise tax
on behalf of owners that elect to be included in the composite return
filed by the entity.

(2) A pass-through entity shall file a composite return under this
section only if one or more owners that are nonresidents make an election
under this section.

(3) The election shall be made by owners in the time, form and
manner prescribed by the Department of Revenue.

(4) The composite return shall report the share of distributive
income of each electing owner, the share of distributive income from
Oregon sources of each electing owner, the amount of tax withheld under
ORS 314.781 on behalf of each electing owner and any other information
required by the department. The composite return shall be filed with the
department in the time, form and manner prescribed by the department.

(5)(a) An electing owner may file a nonresident personal income tax
return or a corporate excise or income tax return for the tax year of the
electing owner in which the electing owner’s share of distributive income
reported on the composite return is properly reportable.

(b) An electing owner that files a return under this subsection
shall receive credit for any tax paid on behalf of the owner by the
Note: See first note under 314.775.(1) A pass-through entity shall withhold tax as
prescribed in this section if:

(a) The pass-through entity has distributive income from Oregon
sources; and

(b) One or more owners of the entity are nonresidents and do not
have other Oregon source income.

(2) For each taxpayer described in subsection (1)(b) of this
section who is subject to tax under ORS chapter 316, the entity shall
withhold tax at the highest marginal rate applicable for the tax year
under ORS 316.037. The withheld tax shall be computed based on the
taxpayer’s share of the entity’s distributive income from Oregon sources
for the entity’s tax year.

(3) For each corporation described in subsection (1)(b) of this
section, the entity shall withhold tax at the rate applicable for the tax
year under ORS 317.061 and 318.020. The tax shall be computed based on
the corporation’s share of the entity’s distributive income from Oregon
sources for the entity’s tax year.

(4) A pass-through entity that is required to withhold tax under
this section shall file a withholding return or report with the
Department of Revenue setting forth the share of Oregon source
distributive income of each nonresident owner, the amount of tax withheld
under this section and any other information required by the department.
The return shall be filed with the department on the form and in the time
and manner prescribed by the department. Taxes withheld under this
section shall be paid to the department in the time and manner prescribed
by the department.

(5) A pass-through entity that is required to withhold tax under
this section shall furnish a statement to each owner on whose behalf tax
is withheld. The statement shall state the amount of tax withheld on
behalf of the owner for the tax year of the entity. The statement shall
be made on a form prescribed by the department and shall contain any
other information required by the department.

(6) The department shall apply taxes withheld under this section by
a lower-tier pass-through entity on distributions to an upper-tier
pass-through entity to the withholding required by the upper-tier
pass-through entity under this section.

(7) A pass-through entity is liable to the State of Oregon for
amounts of tax required to be withheld and paid under this section. A
pass-through entity is not liable to an owner of the pass-through entity
for amounts required to be withheld under this section that were paid to
Note: See first note under 314.775.(1) A pass-through entity is not required to withhold
taxes under ORS 314.781 on behalf of a nonresident owner if:

(a) The nonresident owner has a share of distributive income that
is less than $1,000 for the tax year of the pass-through entity;

(b) Withholding is not required pursuant to a rule adopted under
this section;

(c) The owner makes a timely election under ORS 314.778 to have
taxes on the owner’s distributive share of income paid and reported on
the composite return described in ORS 314.778, and the composite return
is filed by the pass-through entity;

(d) The pass-through entity is a publicly traded partnership, as
defined in section 7704(b) of the Internal Revenue Code, that is treated
as a partnership for federal tax purposes and that agrees to file an
annual information return on the form and in the time and manner
prescribed by the Department of Revenue and containing the information
required by the department, including but not limited to the name,
address and taxpayer identification number of each person with an
ownership interest in the entity that results in the person receiving
Oregon source income of more than $500; or

(e) The nonresident owner files an affidavit with the department,
in the form and manner prescribed by the department, under which the
nonresident owner agrees to allow the department and the courts of this
state to have personal jurisdiction over the nonresident owner for the
purpose of determining and collecting any taxes imposed under ORS chapter
316, 317 or 318 that are attributable to the nonresident owner’s
distributive share of taxable income from the pass-through entity. The
department may reject the affidavit if the taxpayer fails to comply with
Oregon law requiring the filing of a tax return or the payment of any tax.

(2) The department may adopt rules setting forth circumstances
under which pass-through entities are not required to withhold taxes
under ORS 314.781. [2005 c.387 §4]Note: See first note under 314.775.ADMINISTRATIVE PROVISIONSThe Department of Revenue shall administer and
enforce the tax imposed by any law imposing tax upon or measured by net
income. For this purpose the department may divide the state into
districts. In each district a branch office may be established. The
department may, from time to time, change the limits of such districts.
[1957 c.632 §27 (enacted in lieu of 316.705 and 317.505)] All
officers empowered by law to administer oaths, the Director of the
Department of Revenue and any agents, auditors and other employees as the
director may designate, shall have the power to administer an oath to or
take the acknowledgment of any person in respect of any return or report
required by statute or the rules and regulations of the department. [1957
c.632 §29 (enacted in lieu of 316.715); 1999 c.21 §37] The Department of Revenue may, from
time to time, make such rules and regulations, not inconsistent with
legislative enactments, that it considers necessary to enforce income tax
laws. [1957 c.632 §30 (enacted in lieu of 316.720 and 317.505)]
(1) Except as otherwise specifically provided in rules adopted under ORS
305.193 or in other law, it shall be unlawful for the Department of
Revenue or any officer or employee of the department to divulge or make
known in any manner the amount of income, expense, deduction, exclusion
or credit or any particulars set forth or disclosed in any report or
return required in the administration of ORS 310.630 to 310.706, required
in the administration of any local tax pursuant to ORS 305.620, or
required under a law imposing a tax upon or measured by net income. It
shall be unlawful for any person or entity to whom information is
disclosed or given by the department pursuant to ORS 314.840 (2) or any
other provision of state law to divulge or use such information for any
purpose other than that specified in the provisions of law authorizing
the use or disclosure. No subpoena or judicial order shall be issued
compelling the department or any of its officers or employees, or any
person who has acquired information pursuant to ORS 314.840 (2) or any
other provision of state law to divulge or make known the amount of
income, expense, deduction, exclusion or credit or any particulars set
forth or disclosed in any report or return except where the taxpayer’s
liability for income tax is to be adjudicated by the court from which
such process issues.

(2) As used in this section:

(a) “Officer,” “employee” or “person” includes an authorized
representative of the officer, employee or person, or any former officer,
employee or person, or an authorized representative of such former
officer, employee or person.

(b) “Particulars” includes, but is not limited to, a taxpayer’s
name, address, telephone number, Social Security number, employer
identification number or other taxpayer identification number and the
amount of refund claimed by or granted to a taxpayer. [1957 c.632 §34
(enacted in lieu of 316.740 and 317.535); 1971 c.682 §1; 1975 c.789 §13;
1979 c.690 §1; 1993 c.726 §25; 1999 c.580 §1; 2003 c.541 §4](1) The Department of Revenue may:

(a) Furnish any taxpayer, representative authorized to represent
the taxpayer under ORS 305.230 or person designated by the taxpayer under
ORS 305.193, upon request of the taxpayer, representative or designee,
with a copy of the taxpayer’s income tax return filed with the department
for any year, or with a copy of any report filed by the taxpayer in
connection with the return, or with any other information the department
considers necessary.

(b) Publish lists of taxpayers who are entitled to unclaimed tax
refunds.

(c) Publish statistics so classified as to prevent the
identification of income or any particulars contained in any report or
return.

(d) Disclose a taxpayer’s name, address, telephone number, refund
amount, amount due, Social Security number, employer identification
number or other taxpayer identification number to the extent necessary in
connection with collection activities or the processing and mailing of
correspondence or of forms for any report, return or claim required in
the administration of ORS 310.630 to 310.706, any local tax under ORS
305.620, or any law imposing a tax upon or measured by net income.

(2) The department also may disclose and give access to information
described in ORS 314.835 to:

(a) The Governor of the State of Oregon or the authorized
representative of the Governor:

(A) With respect to an individual who is designated as being under
consideration for appointment or reappointment to an office or for
employment in the office of the Governor. The information disclosed shall
be confined to whether the individual:

(i) Has filed returns with respect to the taxes imposed by ORS
chapter 316 for those of not more than the three immediately preceding
years for which the individual was required to file an Oregon individual
income tax return.

(ii) Has failed to pay any tax within 30 days from the date of
mailing of a deficiency notice or otherwise respond to a deficiency
notice within 30 days of its mailing.

(iii) Has been assessed any penalty under the Oregon personal
income tax laws and the nature of the penalty.

(iv) Has been or is under investigation for possible criminal
offenses under the Oregon personal income tax laws. Information disclosed
pursuant to this paragraph shall be used only for the purpose of making
the appointment, reappointment or decision to employ or not to employ the
individual in the office of the Governor.

(B) For use by an officer or employee of the Oregon Department of
Administrative Services duly authorized or employed to prepare revenue
estimates, or a person contracting with the Oregon Department of
Administrative Services to prepare revenue estimates, in the preparation
of revenue estimates required for the Governor’s budget under ORS 291.201
to 291.226, or required for submission to the Emergency Board, or if the
Legislative Assembly is in session, to the Joint Committee on Ways and
Means, and to the Legislative Revenue Officer under ORS 291.342, 291.348
and 291.445. The Department of Revenue shall disclose and give access to
the information described in ORS 314.835 for the purposes of this
subparagraph only if:

(i) The request for information is made in writing, specifies the
purposes for which the request is made and is signed by an authorized
representative of the Oregon Department of Administrative Services. The
form for request for information shall be prescribed by the Oregon
Department of Administrative Services and approved by the Director of the
Department of Revenue.

(ii) The officer, employee or person receiving the information does
not remove from the premises of the Department of Revenue any materials
that would reveal the identity of a personal or corporate taxpayer.

(b) The Commissioner of Internal Revenue or authorized
representative, for tax purposes only.

(c) The proper officer of any state or the District of Columbia, or
their authorized representatives, for tax purposes only, if such state or
district has a provision of law which meets the requirements of any
applicable provision of the Internal Revenue Code as to confidentiality.

(d) The Multistate Tax Commission or its authorized
representatives, for tax purposes only. However, the Multistate Tax
Commission may make such information available to the Commissioner of
Internal Revenue or the proper officer of any state or the District of
Columbia, or their authorized representatives, for tax purposes only, if
the state or district has a provision of law which meets the requirements
of any applicable provision of the Internal Revenue Code as to
confidentiality.

(e) The Attorney General, assistants and employees in the
Department of Justice, or other legal representative of the State of
Oregon, to the extent the department deems disclosure or access necessary
for the performance of the duties of advising or representing the
department pursuant to ORS 180.010 to 180.240 and the tax laws of this
state.

(f) Employees of the State of Oregon, other than of the Department
of Revenue or Department of Justice, to the extent the department deems
disclosure or access necessary for such employees to perform their duties
under contracts or agreements between the department and any other
department, agency or subdivision of the State of Oregon, in the
department’s administration of the tax laws.

(g) Other persons, partnerships, corporations and other legal
entities, and their employees, to the extent the department deems
disclosure or access necessary for the performance of such others’ duties
under contracts or agreements between the department and such legal
entities, in the department’s administration of the tax laws.

(h) The Legislative Revenue Officer or authorized representatives
upon compliance with ORS 173.850. Such officer or representative shall
not remove from the premises of the department any materials that would
reveal the identity of any taxpayer or any other person.

(i) The Department of Consumer and Business Services, to the extent
the department requires such information to determine whether it is
appropriate to adjust those workers’ compensation benefits the amount of
which is based pursuant to ORS chapter 656 on the amount of wages or
earned income received by an individual.

(j) Any agency of the State of Oregon, or any person, or any
officer or employee of such agency or person to whom disclosure or access
is given by state law and not otherwise referred to in this section,
including but not limited to the Secretary of State as Auditor of Public
Accounts under section 2, Article VI of the Oregon Constitution; the
Department of Human Services pursuant to ORS 314.860 and 418.135; the
Division of Child Support of the Department of Justice and district
attorney regarding cases for which they are providing support enforcement
services under ORS 25.080; the State Board of Tax Practitioners, pursuant
to ORS 673.710; and the Oregon Board of Accountancy, pursuant to ORS
673.415.

(k) The Director of the Department of Consumer and Business
Services to determine that a person complies with ORS chapter 656 and the
Director of the Employment Department to determine that a person complies
with ORS chapter 657, the following employer information:

(A) Identification numbers.

(B) Names and addresses.

(C) Inception date as employer.

(D) Nature of business.

(E) Entity changes.

(F) Date of last payroll.

(L) The Director of Human Services to determine that a person has
the ability to pay for care that includes services provided by the state
institutions as described in ORS 179.321 or the Department of Human
Services or to collect any unpaid cost of care as provided by ORS chapter
179.

(m) Employees of the Employment Department to the extent the
Department of Revenue deems disclosure or access to information on a
combined tax report filed under ORS 316.168 is necessary to performance
of their duties in administering the tax imposed by ORS chapter 657.

(n) The State Fire Marshal to assist the State Fire Marshal in
carrying out duties, functions and powers under ORS 453.307 to 453.414,
the employer or agent name, address, telephone number and standard
industrial classification, if available.

(o) Employees of the Department of State Lands for the purposes of
identifying, locating and publishing lists of taxpayers entitled to
unclaimed refunds as required by the provisions of chapter 694, Oregon
Laws 1993. The information shall be limited to the taxpayer’s name,
address and the refund amount.

(p) In addition to the disclosure allowed under ORS 305.225, state
or local law enforcement agencies to assist in the investigation or
prosecution of the following criminal activities:

(A) Mail theft of a check, in which case the information that may
be disclosed shall be limited to the stolen document, the name, address
and taxpayer identification number of the payee, the amount of the check
and the date printed on the check.

(B) The counterfeiting, forging or altering of a check submitted by
a taxpayer to the Department of Revenue or issued by the Department of
Revenue to a taxpayer, in which case the information that may be
disclosed shall be limited to the counterfeit, forged or altered
document, the name, address and taxpayer identification number of the
payee, the amount of the check, the date printed on the check and the
altered name and address.

(q) The United States Postal Inspection Service or a federal law
enforcement agency, including but not limited to the United States
Department of Justice, to assist in the investigation of the following
criminal activities:

(A) Mail theft of a check, in which case the information that may
be disclosed shall be limited to the stolen document, the name, address
and taxpayer identification number of the payee, the amount of the check
and the date printed on the check.

(B) The counterfeiting, forging or altering of a check submitted by
a taxpayer to the Department of Revenue or issued by the Department of
Revenue to a taxpayer, in which case the information that may be
disclosed shall be limited to the counterfeit, forged or altered
document, the name, address and taxpayer identification number of the
payee, the amount of the check, the date printed on the check and the
altered name and address.

(r) The United States Financial Management Service, for purposes of
facilitating the reciprocal offsets described in ORS 305.612.

(s) A municipal corporation of this state for purposes of assisting
the municipal corporation in the administration of a tax of the municipal
corporation that is imposed on or measured by income, wages or net
earnings from self-employment. Any disclosure under this paragraph may be
made only pursuant to a written agreement between the Department of
Revenue and the municipal corporation that ensures the confidentiality of
the information disclosed.

(3)(a) Each officer or employee of the department and each person
described or referred to in subsection (2)(a), (e) to (k) or (m) to (p)
of this section to whom disclosure or access to the tax information is
given under subsection (2) of this section or any other provision of
state law, prior to beginning employment or the performance of duties
involving such disclosure or access, shall be advised in writing of the
provisions of ORS 314.835 and 314.991, relating to penalties for the
violation of ORS 314.835, and shall as a condition of employment or
performance of duties execute a certificate for the department, in a form
prescribed by the department, stating in substance that the person has
read these provisions of law, that the person has had them explained and
that the person is aware of the penalties for the violation of ORS
314.835.

(b) The disclosure authorized in subsection (2)(q) of this section
shall be made only after a written agreement has been entered into
between the Department of Revenue and the person described in subsection
(2)(q) of this section to whom disclosure or access to the tax
information is given, providing that:

(A) Any information described in ORS 314.835 that is received by
the person pursuant to subsection (2)(q) of this section is confidential
information that may not be disclosed, except to the extent necessary to
investigate or prosecute the criminal activities described in subsection
(2)(q) of this section;

(B) The information shall be protected as confidential under
applicable federal and state laws; and

(C) The United States Postal Inspection Service or the federal law
enforcement agency shall give notice to the Department of Revenue of any
request received under the federal Freedom of Information Act, 5 U.S.C.
552, or other federal law relating to the disclosure of information.

(4) The Department of Revenue may recover the costs of furnishing
the information described in subsection (2)(k), (L) and (n) to (p) of
this section from the respective agencies. [1957 c.632 §35 (enacted in
lieu of 316.745 and 317.540); 1959 c.114 §1; 1971 c.682 §2; 1973 c.106
§1; 1975 c.368 §9; 1975 c.789 §19; 1977 c.430 §3; 1979 c.690 §2; 1981
c.827 §1; 1985 c.605 §20; 1987 c.94 §102; 1987 c.647 §9; 1987 c.884 §1;
1989 c.348 §15; 1989 c.901 §6; 1991 c.362 §3; 1991 c.374 §1; 1991 c.882
§14; 1993 c.18 §76; 1993 c.694 §42; 1993 c.726 §26; 1997 c.170 §43; 1999
c.224 §3; 1999 c.580 §2; 1999 c.656 §1; 2001 c.3 §1; 2001 c.28 §4; 2003
c.541 §5]Note: Legislative Counsel has substituted “chapter 694, Oregon Laws
1993,” for the words “this 1993 Act” in section 42, chapter 694, Oregon
Laws 1993, which amended 314.840. Specific ORS references have not been
substituted, pursuant to 173.160. These sections may be determined by
referring to the 1993 Comparative Section Table located in Volume 20 of
ORS. The certificate of
the Department of Revenue to the effect that a tax has not been paid,
that a return has not been filed or that information has not been
supplied, as required by or under any law imposing a tax upon or measured
by net income, shall be prima facie evidence that the tax has not been
paid, that the return has not been filed or that the information has not
been supplied. [1957 c.632 §36 (enacted in lieu of 316.750 and 317.545)] The Department of Revenue shall prepare and
publish annually statistics, reasonably available, with respect to the
operation of income tax laws, including amounts collected, classification
of taxpayers and other facts considered pertinent and valuable. [1957
c.632 §37 (enacted in lieu of 316.755)] The Department of Revenue may pay
rewards to persons, other than officers or employees of the department,
furnishing information that leads to the recovery of tax from other
persons guilty of violating the provisions of income tax laws. Such
rewards shall not exceed 10 percent of the net amount of tax, penalty and
interest recovered by suit or otherwise and shall be paid only in cases
where such evasions of tax would not be disclosed by the audit of returns
or from other information available to the department. [1957 c.632 §38
(enacted in lieu of 316.760 and 317.550)](1) The Department of Revenue may disclose
certain information relative to applicants for elderly rental assistance
to the Director of Human Services or to employees of the Department of
Human Services. The information disclosed by the Department of Revenue
shall be confined to the names, addresses and Social Security numbers of
applicants under ORS 310.630 to 310.706 for the current and preceding
calendar year. The information requested shall be confined to those
names, addresses and Social Security numbers which will assist in the
collection of debts due and owing to the State of Oregon arising from
client-caused overpayments of public assistance and shall be used solely
for such purpose and shall not be used or disclosed for any other
purpose. Any person who violates this prohibition against disclosure,
upon conviction, is punishable as provided in ORS 314.991 (2).

(2) Disclosure under this section shall be given only upon written
request of the Director of Human Services. The form for the request shall
be prescribed by the Director of Human Services and approved by the
Director of the Department of Revenue.

(3) The Department of Revenue shall keep on file the requests for
disclosure made pursuant to this section. The requests constitute a
public record within the meaning of ORS 192.410 to 192.505. [1979 c.690
§18; 1997 c.170 §27]Note: 314.860 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.
A person granted access to information described in ORS 314.835 under ORS
314.840 (2)(a)(B) for the purpose of preparing revenue estimates shall
not knowingly or intentionally use the information disclosed or the
information to which access is given for any purpose if the effect of the
use is private pecuniary benefit for the person or for a member of the
person’s household. [1981 c.827 §2]Note: 314.865 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 314 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1) Section 7508 of the Internal Revenue Code,
insofar as it describes periods of time to be disregarded with respect to
the performance of acts relative to federal income tax liability of an
individual (or individual and spouse) who performs service in an area
designated as a combat zone, or is hospitalized as a result of injury
received while serving in such area, shall apply as appropriate to the
same or similar acts for purposes of the tax imposed by this chapter and
ORS chapter 316.

(2) If an individual is entitled to the benefits of subsection (1)
of this section with respect to any return and if the return is timely
filed (determined after the application of subsection (1) of this
section), then notwithstanding ORS 314.415 or other law, any overpayment
of tax with respect to such return shall bear interest from the due date
of the return (determined without the application of subsection (1) of
this section).

(3) If the federal income tax liability of any taxpayer is forgiven
under section 692 of the Internal Revenue Code for any tax period, then
the Oregon income tax liability for the same tax period shall be forgiven
in the same manner. [1991 c.177 §4; 1997 c.839 §63; 1999 c.224 §10]PENALTIES (1) A person or an officer or employee of a
corporation or a member or employee of a partnership who violates ORS
314.075 is liable to a penalty of not more than $1,000, to be recovered
by the Attorney General, in the name of the state, by action in any court
of competent jurisdiction, and is also guilty of a Class C felony. The
penalties provided in this subsection shall be additional to all other
penalties in this chapter.

(2) Violation of ORS 314.835 is a Class C felony. If the offender
is an officer or employee of the state the offender shall be dismissed
from office and shall be incapable of holding any public office in this
state for a period of five years thereafter. [1957 c.632 §39 (enacted in
lieu of 316.990 and 317.990); 1971 c.682 §3; 1973 c.402 §26; 1981 c.724
§1]

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