USA Statutes : oregon
Title : TITLE 28 PUBLIC FINANCIAL ADMINISTRATION
Chapter : Chapter 316 Personal Income Tax
This chapter may be cited as the Personal
Income Tax Act of 1969. [1969 c.493 §1; 1995 c.79 §164]
(1) The goals of the Legislative Assembly are to
achieve for Oregon’s citizens a tax system which recognizes:
(a) Fairness and equity as its basic values; and
(b) That the total tax system should use seven guiding principles
as measures by which to evaluate tax proposals.
(2) Those guiding principles are:
(a) Ability to pay;
(b) Fairness;
(c) Efficiency;
(d) Even distribution;
(e) The tax system should be equitable where the minimum aspects of
a fair system are:
(A) That it shields genuine subsistence income from taxation;
(B) That it is not regressive; and
(C) That it imposes approximately the same tax burden on all
households earning the same income;
(f) Adequacy; and
(g) Flexibility.
(3) To meet those goals of Oregon’s tax system, any tax must be
considered in conjunction with the effects of all other taxes on
Oregonians. [1991 c.457 §1a]Note: 316.003 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 316 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation. It is the intent of the Legislative Assembly, by
the adoption of this chapter, insofar as possible, to:
(1) Make the Oregon personal income tax law identical in effect to
the provisions of the Internal Revenue Code relating to the measurement
of taxable income of individuals, estates and trusts, modified as
necessary by the state’s jurisdiction to tax and the revenue needs of the
state;
(2) Achieve this result by the application of the various
provisions of the Internal Revenue Code relating to the definition of
income, exceptions and exclusions therefrom, deductions (business and
personal), accounting methods, taxation of trusts, estates and
partnerships, basis, depreciation and other pertinent provisions relating
to gross income as defined therein, modified as provided in this chapter,
resulting in a final amount called “taxable income”; and
(3) Impose a tax on residents of this state measured by taxable
income wherever derived and to impose a tax on the income of nonresidents
that is ascribable to sources within this state. [1969 c.493 §2; 1971
s.s. c.4 §1; 1987 c.293 §1; 1989 c.625 §1; 2003 c.46 §34]Any term used in this chapter 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. Except where the
Legislative Assembly has provided otherwise, any reference in this
chapter 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:
(1) On December 31, 2004; or
(2) If related to the definition of taxable income, as applicable
to the tax year of the taxpayer. [1969 c.493 §3; 1971 s.s. c.4 §2; 1975
c.672 §3; 1983 c.162 §59; 1985 c.802 §1; 1987 c.293 §2; 1989 c.625 §2;
1991 c.457 §1; 1993 c.726 §27; 1995 c.556 §1; 1997 c.839 §1; 1999 c.224
§7; 2001 c.660 §35; 2003 c.77 §14; 2005 c.519 §9; 2005 c.832 §27]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] Unless the
context requires otherwise and notwithstanding ORS 316.012, whenever, in
the calculation of Oregon taxable income, reference to the taxpayer’s
federal adjusted gross income is required to be made, the taxpayer’s
federal adjusted gross income shall be as determined under the provisions
of the Internal Revenue Code as they may be in effect for the tax year of
the taxpayer without any of the additions, subtractions or other
modifications or adjustments required under this chapter and other laws
of this state applicable to personal income taxation. [1985 c.802 §3a;
1999 c.580 §3](1) In the computation of state taxable income the net
operating loss, net operating loss carryback and net operating loss
carryforward shall be the same as that contained in the Internal Revenue
Code as it applies to the tax year for which the return is filed and
shall not be adjusted for any changes or modifications contained in this
chapter or by the case law of this state.
(2) In the case of a nonresident, the net operating loss deduction,
net operating loss carryback and net operating loss carryforward shall be
that described in subsection (1) of this section which is attributable to
Oregon sources.
(3) If any provision in ORS 316.047 or 316.127 appears to require
an adjustment to a net operating loss, net operating loss carryback or
net operating loss carryforward contrary to the provisions of this
section, that adjustment shall not be made. [1985 c.802 §18; 1997 c.839
§2; 2003 c.77 §15]
The Payment-in-Kind Tax Treatment Act of 1983 (P.L. 98-4, as amended by
section 1061 of P.L. 98-369) applies for purposes of determining Oregon
taxable income under this chapter, notwithstanding that the Act is not
part of the Internal Revenue Code. [1985 c.802 §42; 2003 c.46 §35] As used in this chapter, unless the
context requires otherwise:
(1) “Department” means the Department of Revenue.
(2) “Director” means the Director of the Department of Revenue.
(3) “Individual” means a natural person, including aliens and
minors.
(4) A “nonresident” means an individual who is not a resident of
this state.
(5) “Part-year resident” means an individual taxpayer who changes
status during a tax year from resident to nonresident or from nonresident
to resident.
(6) “Taxable income” means the taxable income as defined in
subsection (a) or (b), section 63 of the Internal Revenue Code, with such
additions, subtractions and adjustments as are prescribed by this chapter.
(7) “Taxpayer” means any natural person, estate, trust, or
beneficiary whose income is in whole or in part subject to the taxes
imposed by this chapter, or any employer required by this chapter to
withhold personal income taxes from the compensation of employees for
remittance to the state. [1969 c.493 §§4,5,6,7,9 and 1969 c.520 §42b;
1985 c.141 §2; 1987 c.293 §4]Section 243 of the Tax Reform Act of 1986 (P.L. 99-514) does not
apply for purposes of determining taxable income under this chapter.
[1987 c.293 §12a; 2003 c.46 §36] (1) For purposes of this chapter,
unless the context requires otherwise:
(a) “Resident” or “resident of this state” means:
(A) An individual who is domiciled in this state unless the
individual:
(i) Maintains no permanent place of abode in this state;
(ii) Does maintain a permanent place of abode elsewhere; and
(iii) Spends in the aggregate not more than 30 days in the taxable
year in this state; or
(B) An individual who is not domiciled in this state but maintains
a permanent place of abode in this state and spends in the aggregate more
than 200 days of the taxable year in this state unless the individual
proves that the individual is in the state only for a temporary or
transitory purpose.
(b) “Resident” or “resident of this state” does not include:
(A) An individual who is a qualified individual under section
911(d)(1) of the Internal Revenue Code for the tax year;
(B) A spouse of a qualified individual under section 911(d)(1) of
the Internal Revenue Code, if the spouse has a principal place of abode
for the tax year that is not located in this state; or
(C) A resident alien under section 7701(b) of the Internal Revenue
Code who would be considered a qualified individual under section
911(d)(1) of the Internal Revenue Code if the resident alien were a
citizen of the United States.
(2) For purposes of subsection (1)(a)(B) of this section, a
fraction of a calendar day shall be counted as a whole day. [1969 c.493
§8; 1987 c.158 §49; 1995 c.79 §165; 1999 c.1096 §1](1) The Department of Revenue shall
administer and enforce this chapter.
(2) 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.
(3) When portions of the Internal Revenue Code incorporated by
reference as provided in ORS 316.007 or 316.012 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.
(4)(a) When portions of the Internal Revenue Code incorporated by
reference as provided in ORS 316.007 or 316.012 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 ORS 316.007 or
316.012 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. [1969 c.493 §10;
1985 c.802 §1a; 1987 c.293 §5; 1997 c.839 §3] (1)(a) A tax is imposed for
each taxable year on the entire taxable income of every resident of this
state. The amount of the tax shall be determined in accordance with the
following table:
___________________________________________________________________________
___If taxable income is: The tax is:
Not over $2,000 5% of
taxable
incomeOver $2,000 but not
over $5,000
$100 plus 7%
of the excess
over $2,000Over $5,000 $310 plus 9%
of the excess
over $5,000
___________________________________________________________________________
___ (b) For tax years beginning in each calendar year, the Department
of Revenue shall adopt a table that shall apply in lieu of the table
contained in paragraph (a) of this subsection, as follows:
(A) The minimum and maximum dollar amounts for each rate bracket
for which a tax is imposed shall be increased by the cost-of-living
adjustment for the calendar year.
(B) The rate applicable to any rate bracket as adjusted under
subparagraph (A) of this paragraph shall not be changed.
(C) The amounts setting forth the tax, to the extent necessary to
reflect the adjustments in the rate brackets, shall be adjusted.
(c) For purposes of paragraph (b) of this subsection, the
cost-of-living adjustment for any calendar year is the percentage (if
any) by which the monthly averaged U.S. City Average Consumer Price Index
for the 12 consecutive months ending August 31 of the prior calendar year
exceeds the monthly averaged index for the second quarter of the calendar
year 1992.
(d) As used in this subsection, “U.S. City Average Consumer Price
Index” means the U.S. City Average Consumer Price Index for All Urban
Consumers (All Items) as published by the Bureau of Labor Statistics of
the United States Department of Labor.
(e) If any increase determined under paragraph (b) of this
subsection is not a multiple of $50, the increase shall be rounded to the
next lower multiple of $50.
(2) A tax is imposed for each taxable year upon the entire taxable
income of every part-year resident of this state. The amount of the tax
shall be computed under subsection (1) of this section as if the
part-year resident were a full-year resident and shall be multiplied by
the ratio provided under ORS 316.117 to determine the tax on income
derived from sources within this state.
(3) A tax is imposed for each taxable year on the taxable income of
every full-year nonresident that is derived from sources within this
state. The amount of the tax shall be determined in accordance with the
table set forth in subsection (1) of this section. [1969 c.493 §11; 1975
c.674 §1; 1977 c.872 §1; 1979 c.649 §1; 1983 c.684 §23; 1985 c.141 §1;
1987 c.293 §6; 1991 c.457 §1b; 2001 c.660 §11; 2003 c.46 §37] In the case of a
joint return of husband and wife, pursuant to ORS 316.122 or pursuant to
ORS 316.367, the tax imposed by ORS 316.037 shall be twice the tax which
would be imposed if the taxable income were cut in half. For purposes of
this section, a return of a head of household or a surviving spouse, as
defined in subsections (a) and (b) of section 2 of the Internal Revenue
Code, shall be treated as a joint return of husband and wife. [1969 c.493
§12; 1975 c.674 §2; 1987 c.293 §7; 1987 c.647 §10](1) As used in this section:
(a) “Farming” means:
(A) Raising, harvesting and selling crops;
(B) Feeding, breeding, managing or selling livestock, poultry,
fur-bearing animals or honeybees or the produce thereof;
(C) Dairying and selling dairy products;
(D) Stabling or training equines, including but not limited to
providing riding lessons, training clinics and schooling shows;
(E) Propagating, cultivating, maintaining or harvesting aquatic
species and bird and animal species to the extent allowed by the rules
adopted by the State Fish and Wildlife Commission;
(F) On-site constructing and maintaining equipment and facilities
used for the activities described in this subsection;
(G) Preparing, storing or disposing of, by marketing or otherwise,
the products or by-products raised for human or animal use on land
employed in activities described in this subsection; or
(H) Any other agricultural or horticultural activity or animal
husbandry, or any combination of these activities, except that “farming”
does not include growing and harvesting trees of a marketable species
other than growing and harvesting cultured Christmas trees or certain
hardwood timber described in ORS 321.267 (3) or 321.824 (3).
(b) “Section 1231 gain” has the meaning given that term in section
1231 of the Internal Revenue Code.
(2) Notwithstanding ORS 316.037, taxable income that consists of
net long-term capital gain shall be subject to tax under this chapter at
a rate of five percent if all of the following conditions apply:
(a) The gain is:
(A) Derived from the sale or exchange of capital assets consisting
of ownership interests in a corporation, partnership or other entity in
which, prior to the sale or exchange, the taxpayer owned at least a 10
percent ownership interest; or
(B) Section 1231 gain.
(b) The property that was sold or exchanged consisted of:
(A) Ownership interests in a corporation, partnership or other
entity that is engaged in the trade or business of farming; or
(B) Property that is predominantly used in the trade or business of
farming.
(c) The sale or exchange is to a person who is not related to the
taxpayer under section 267 of the Internal Revenue Code.
(d) The sale or exchange constitutes a substantially complete
termination of all of the taxpayer’s ownership interests in a trade or
business that is engaged in farming or a substantially complete
termination of all of the taxpayer’s ownership interests in property that
is employed in the trade or business of farming. Ownership of a farm
dwelling or farm homesite does not constitute ownership of property
employed in the trade or business of farming.
(3) If the taxpayer has net long-term capital gain derived in part
from the sale or exchange of property described in subsection (2)(b) of
this section and in part from the sale or exchange of all other property,
the net long-term capital gain that is subject to tax under this section
shall be determined as follows:
(a) Compute the net long-term capital gain derived from all
property described in subsection (2)(b) of this section that was sold or
exchanged during the tax year.
(b) Compute the net capital gain or loss from the sale or exchange
of all other property during the tax year.
(c) If the amount determined under paragraph (b) of this subsection
is a net capital gain, the gain that is subject to tax under subsection
(2) of this section shall be the amount determined under paragraph (a) of
this subsection.
(d) If the amount determined under paragraph (b) of this subsection
is a net capital loss, the gain that is subject to tax under subsection
(2) of this section shall be the amount determined under paragraph (a) of
this subsection minus the amount determined under paragraph (b) of this
subsection. [2001 c.545 §2; 2003 c.454 §123; 2003 c.621 §98a]If any provision of the Internal Revenue Code or of this
chapter requires that any amount be added to or deducted from federal
gross income or the net income taxable under this chapter that previously
had been added to or deducted from net income taxable under the Oregon
law in effect prior to the taxpayer’s taxable year as to which this
chapter is first effective, then, in such event, appropriate adjustment
shall be made to the net income for the year or years subject to this
chapter so as to prohibit the double taxation or the double deduction of
any such amount that previously had entered into the computation of
taxable income. Differences such as the difference in basis of property
used by the taxpayer for federal and Oregon income tax returns and on
account of the treatment of operating losses shall be resolved by
application of this principle. However, the Department of Revenue, in its
audit of a return, shall not apply any adjustment under this section
which, in its opinion, if applied would result in an increase or decrease
of tax liability of less than $25. [1969 c.493 §13; 1987 c.293 §8] The entire taxable income of a
resident of this state is the federal taxable income of the resident as
defined in the laws of the United States, with the modifications,
additions and subtractions provided in this chapter and other laws of
this state applicable to personal income taxation. [Formerly 316.062;
1999 c.580 §4]In addition to the other modifications to federal taxable
income contained in this chapter, there shall be subtracted from federal
taxable income the amount of any Social Security benefits, as defined in
section 86 of the Internal Revenue Code (Title II Social Security or tier
1 railroad retirement benefits) included in gross income for federal
income tax purposes under section 86 of the Internal Revenue Code. [1985
c.154 §2; 1997 c.839 §4]In addition to the modifications to federal
taxable income contained in this chapter, there shall be subtracted from
federal taxable income the interest or dividends on obligations of
counties, cities, districts, ports or other public or municipal
corporations or political subdivisions of this state, to the extent
includable in gross income for federal income tax purposes. However, the
amount subtracted under this section shall be reduced by any interest on
indebtedness incurred to carry the obligations or securities described in
this section, and by any expenses incurred in the production of interest
or dividend income described in this section. [1987 c.293 §23b; 1989
c.988 §1] (1) Any
compensation or gratuity received from any source by any individual by
reason of civilian or military service on and after February 28, 1961,
during the Vietnam conflict, for any month during any part of which such
individual is in a missing status as a result of that conflict, is exempt
from tax under this chapter. Any such compensation or gratuity is exempt
from tax without regard to:
(a) The identity of the recipient of the compensation or gratuity;
(b) The death of the individual whose service in a missing status
results in payment of the compensation or the gratuity; or
(c) A date of death established for the individual whose service in
a missing status results in payment of the compensation or the gratuity.
(2) As used in this section:
(a) “Compensation” does not include any pension or retirement
allowance.
(b) “Missing status” means the status of an individual who is
carried or determined to be in a status of missing; missing in action;
interned in a foreign country; captured, beleaguered or besieged by a
hostile force; or detained in a foreign country against the will of the
individual. “Missing status” does not include the status of an individual
for a period during which the individual is officially determined to be
absent from a post of duty without authority.
(3) In addition to the income tax relief provided by this section,
any provision in the laws of the United States or in the Internal Revenue
Code providing income tax relief for returning prisoners of war, persons
in a missing status, their spouses, heirs, devisees or executors shall
apply to the measurement of the taxable income of individuals, estates
and trusts. [1973 c.475 §§2,3; 1975 c.672 §4; 1997 c.839 §5]
(1) Any person who becomes licensed under ORS chapter 677 on or after
January 1, 1974, and prior to January 1, 1982, and enters the practice of
medicine in any medically disadvantaged area of this state may deduct as
an expense from income earned from the practice of medicine an amount
equal to the annual expense incurred for each year in attending medical
school, including tuition, fees, living expenses and other actual and
necessary expenses, but not to exceed $10,000 for any year.
(2) In order to qualify for the exemption granted by subsection (1)
of this section, the person must apply to the Department of Revenue on or
before April 15, following the first tax year for which the deduction is
claimed on a form prescribed by the department and accompanied by
evidence from the Board of Medical Examiners for the State of Oregon that
the area in which the person is practicing was medically disadvantaged
when the physician entered practice there.
(3) The deduction authorized by subsection (1) of this section
shall be applicable for four tax years. [1973 c.644 §6; 1979 c.699 §1]CREDITS(1) A resident individual shall be allowed a credit against
the tax otherwise due under this chapter in an amount equal to a
percentage of employment-related expenses allowable pursuant to section
21 of the Internal Revenue Code, notwithstanding the limitation imposed
by section 26 of the Internal Revenue Code. The percentage shall be
determined on the basis of federal taxable income, as defined in section
63 of the Internal Revenue Code and as reflected on the federal return,
whether or not a joint return, of the taxpayer for the taxable year, in
accordance with the following table:
___________________________________________________________________________
___If federal taxable
income is: The percentage is:
Not over $5,000 30%
Over $5,000 but not
over $10,000 15%
Over $10,000 but not
over $15,000 8%
Over $15,000 but not
over $25,000 6%
Over $25,000 but not
over $35,000 5%
Over $35,000 but not
over $45,000 4%
Over $45,000 0%
___________________________________________________________________________
___ (2) A nonresident individual shall be allowed the credit computed
in the same manner and subject to the same limitations as the credit
allowed a resident by subsection (1) of this section. However, the credit
shall be prorated using the proportion provided in ORS 316.117.
(3) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue terminates the
taxpayer’s taxable year under ORS 314.440, the credit allowed by this
section shall be prorated or computed in a manner consistent with ORS
314.085.
(4) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit allowed by
this section shall be determined in a manner consistent with ORS 316.117.
(5) Any tax credit otherwise allowable under this section which is
not used by the taxpayer in a particular year may be carried forward and
offset against the taxpayer’s tax liability for the next succeeding tax
year. Any credit remaining unused in such next succeeding tax year may be
carried forward and used in the second succeeding tax year, and likewise
any credit not used in that second succeeding tax year may be carried
forward and used in the third succeeding tax year, and any credit not
used in that third succeeding tax year may be carried forward and used in
the fourth succeeding tax year, and any credit not used in that fourth
succeeding tax year may be carried forward and used in the fifth
succeeding tax year, but may not be carried forward for any tax year
thereafter. [1975 c.672 §15a; 1977 c.872 §3; 1979 c.691 §4; 1983 c.684
§9; 1985 c.802 §4; 1987 c.293 §10; 1989 c.625 §7; 1989 c.1047 §11; 1991
c.457 §2; 1993 c.726 §28; 1997 c.839 §6; 1999 c.90 §8; 2001 c.660 §36] A $50 credit, against
income taxes owed, shall be allowed a taxpayer who as of the close of the
taxable year has suffered a permanent and complete loss of function of
both legs or both arms or one leg and one arm as certified to by a public
health officer. The certificate shall be in a form prescribed by the
Department of Revenue and shall be filed with the first return in which
the credit is claimed. [1973 c.120 §2] (1) A resident
individual shall be allowed a credit against the tax otherwise due under
this chapter for the amount of any income tax imposed on the individual,
or on an Oregon S corporation or Oregon partnership of which the
individual is a member (to the extent of the individual’s pro rata share
of the S corporation or distributive share of the partnership), for the
tax year by another state on income derived from sources therein and that
is also subject to tax under this chapter.
(2) The credit provided under this section shall not exceed the
proportion of the tax otherwise due under this chapter that the amount of
the modified adjusted gross income of the taxpayer derived from sources
in the other state bears to the entire modified adjusted gross income of
the taxpayer.
(3) The Department of Revenue shall provide by rule the procedure
for obtaining credit provided by this section and the proof required. The
requirement of proof may be waived partially, conditionally or
absolutely, as provided under ORS 315.063.
(4) No credit allowed under this section or ORS 316.292 shall be
applied in calculating tax due under this chapter if the tax upon which
the credit is based has been claimed as a deduction, unless the tax upon
which the credit is based is restored to income on the Oregon return.
(5) Credit shall not be allowed under this section for income taxes
paid to a state that allows a nonresident a credit against the income
taxes imposed by that state for taxes paid or payable to the state of
residence. It is the purpose of this subsection to avoid duplicative
taxation through use of a nonresident, rather than a resident, credit for
taxes paid or payable to another state.
(6) The Department of Revenue may adopt rules under this section
that provide a credit against the tax imposed by this chapter when the
department considers the credit necessary to avoid taxation of the same
income by this state and another state.
(7) As used in this section:
(a) “Modified adjusted gross income” means federal adjusted gross
income as modified by this chapter and the other laws of this state
applicable to personal income taxation.
(b) “Oregon partnership” means an entity that is treated as a
partnership for Oregon excise and income tax purposes.
(c) “Oregon S corporation” means a corporation that has elected S
corporation status for Oregon excise and income tax purposes.
(d) “State” means a state, district, territory or possession of the
United States.
(8) For purposes of this section:
(a) A direct tax imposed upon income of an Oregon S corporation is
an income tax imposed on the Oregon S corporation.
(b) An excise tax that is measured by income of an Oregon S
corporation is an income tax imposed on the Oregon S corporation.
(c) An excise tax is measured by income only if the statute
imposing the excise tax provides that the base for the excise tax:
(A) Includes revenue from sales and from services rendered, and
income from investments; and
(B) Permits a deduction for the cost of goods sold and the cost of
services rendered. [1969 c.493 §17; 1981 c.801 §3; 1987 c.647 §11; 1991
c.838 §6; 1993 c.726 §28a; 1995 c.54 §7; 1999 c.74 §5; 2001 c.9 §1] (1)(a) There shall be allowed a
personal exemption credit against taxes otherwise due under this chapter.
The credit shall equal $90 multiplied by the number of personal
exemptions allowed under section 151 of the Internal Revenue Code.
(b) In the case of an individual with respect to whom a credit
under paragraph (a) of this subsection is allowable to another taxpayer
for a taxable year beginning in the calendar year in which the
individual’s taxable year begins, the credit amount applicable to such
individual for such individual’s taxable year is zero.
(2)(a) A nonresident shall be allowed the credit provided under
subsection (1) of this section computed in the same manner and subject to
the same limitations as the credit allowed to a resident of this state.
However, the credit shall be prorated using the proportion provided in
ORS 316.117.
(b) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue terminates the
taxpayer’s taxable year under ORS 314.440, the credit allowed by this
section shall be prorated or computed in a manner consistent with ORS
314.085.
(c) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit allowed by
this section shall be determined in a manner consistent with ORS 316.117.
(3) The Department of Revenue shall recompute the dollar amount of
the personal exemption credit allowed for state personal income tax
purposes. The computation shall be as follows:
(a) Divide the monthly averaged U.S. City Average Consumer Price
Index for the 12 consecutive months ending August 31 of the prior
calendar year by the monthly averaged index for the first six months of
1986.
(b) Recompute the dollar amount of the personal exemption credit by
multiplying $90 by the appropriate indexing factor determined as provided
in paragraph (a) of this subsection. Round off the amount obtained under
this paragraph to the nearest $1.
(4) As used in this section, “U.S. City Average Consumer Price
Index” means the U.S. City Average Consumer Price Index for All Urban
Consumers (All Items) as published by the Bureau of Labor Statistics of
the United States Department of Labor.
(5) For purposes of determining if a personal exemption credit or
an additional personal exemption credit is allowable under this chapter
or determining the number of personal exemption credits allowed, section
151(d)(3) of the Internal Revenue Code shall be disregarded. [1985 c.345
§§2,3; 1987 c.293 §13; 1991 c.457 §2a; 1997 c.839 §8; 1999 c.90 §9; 2001
c.660 §12]
(1) A resident individual shall be allowed a credit against the tax
otherwise due under this chapter in an amount equal to 40 percent of the
credit for the elderly or the permanently and totally disabled allowable
pursuant to section 22 of the Internal Revenue Code, notwithstanding the
limitation imposed by section 26 of the Internal Revenue Code.
(2) A nonresident individual shall be allowed the credit computed
in the same manner and subject to the same limitations as the credit
allowed a resident by subsection (1) of this section. However, the credit
shall be prorated using the proportion provided in ORS 316.117.
(3) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue terminates the
taxpayer’s taxable year under ORS 314.440, the credit allowed by this
section shall be prorated or computed in a manner consistent with ORS
314.085.
(4) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit allowed by
this section shall be determined in a manner consistent with ORS 316.117.
(5) No credit shall be allowed under this section for the taxable
year if the taxpayer claims the credit allowed under ORS 316.157. [1969
c.493 §18; 1971 c.736 §2; 1977 c.872 §4; 1979 c.691 §5; 1983 c.684 §12;
1985 c.802 §5; 1987 c.293 §14; 1987 c.545 §1; 1989 c.625 §8; 1991 c.457
§3; 1991 c.823 §2; 1993 c.726 §29; 1997 c.839 §9; 1999 c.90 §10; 2001
c.660 §37] (1) A
resident individual shall be allowed a credit of $800 against the taxes
otherwise due under this chapter, for installing or connecting to a
sewage treatment works if:
(a) Required by an order issued, before July 1, 1989, under ORS
454.275 to 454.380 or ORS chapters 468, 468A and 468B;
(b) Required by a rule adopted, before July 1, 1989, by the
Environmental Quality Commission;
(c) Required by, installed or connected pursuant to the terms of an
intergovernmental agreement, entered into before July 1, 1989, between a
local governing body and the Environmental Quality Commission; or
(d) Required by an order under ORS 222.840 to 222.915 or 431.705 to
431.760 issued after January 1, 1988, and before July 1, 1995.
(2) To qualify for the credit under this section:
(a) Subject to subsection (4) of this section, the credit must be
claimed for the year in which the connection is made or the costs are
incurred. The credit applies to installations or connections made on or
after January 1, 1985.
(b) The taxpayer who is allowed the credit must be the person who
actually expended funds for construction or installation of the project.
(c) The treatment works must be required by an order or rule of the
Environmental Quality Commission, required by, installed or connected
consistent with an intergovernmental agreement between a local governing
body and the Environmental Quality Commission or required by an order or
finding under ORS 222.840 to 222.915 or 431.705 to 431.760.
(d) The residence connected to the treatment works must be the
principal residence of, and owned by, the taxpayer claiming the credit.
(3) The credit allowed in any one year shall not exceed one-fifth
of the total amount of the credit granted under this section per
qualifying residence or the tax liability of the taxpayer.
(4) Any tax credit otherwise allowable under this section that is
not used by the taxpayer in a particular year may be carried forward and
offset against the taxpayer’s tax liability for the next succeeding tax
year. Any credit remaining unused in that next succeeding tax year may be
carried forward and used in the second succeeding tax year, and likewise
any credit not used in that second succeeding tax year may be carried
forward and used in the third succeeding tax year, and any credit not
used in that third succeeding tax year may be carried forward and used in
the fourth succeeding tax year, and any credit not used in that fourth
succeeding tax year may be carried forward and used in the fifth
succeeding tax year, and any credit not used in that fifth succeeding tax
year may be carried forward and used in the sixth succeeding tax year,
and any credit not used in that sixth succeeding tax year may be carried
forward and used in the seventh succeeding tax year, and any credit not
used in that seventh succeeding tax year may be carried forward and used
in the eighth succeeding tax year, but may not be carried forward for any
tax year thereafter.
(5) A husband and wife who file separate returns for a taxable year
may each claim a share of the tax credit that would have been allowed on
a joint return in proportion to the contribution of each.
(6) The tax claim for tax credit shall be substantiated by
submission, with the tax return, of receipt of payment by the taxpayer.
For purposes of this subsection, “receipt of payment” means a canceled
check or an actual receipt for payment issued by the installing or
constructing entity and issued on the date the payment is or was actually
acknowledged. The requirement for substantiation may be waived partially,
conditionally or absolutely, as provided under ORS 315.063.
(7) This section applies for costs actually incurred for installing
or connecting to a sewage treatment works pursuant to an order, rule or
intergovernmental agreement of the Environmental Quality Commission under
ORS 454.275 to 454.380 or ORS chapters 468, 468A and 468B. [1987 c.890
§§2,3; 1989 c.953 §1; 1991 c.781 §1; 1995 c.54 §8; 2003 c.46 §38](1) As used in this section, unless
the context requires otherwise:
(a) “Early intervention services” means programs of treatment and
habilitation designed to address a child’s developmental deficits in
sensory, motor, communication, self-help and socialization areas.
(b) “Disabled child” means a qualifying child under section 152 of
the Internal Revenue Code who has been determined eligible for early
intervention services or is diagnosed for the purposes of special
education as being mentally retarded, multidisabled, visually impaired,
hearing impaired, deaf-blind, orthopedically impaired or other health
impaired or as having autism, emotional disturbance or traumatic brain
injury, in accordance with State Board of Education rules.
(c) “Special education” means specially designed instruction to
meet the unique needs of a disabled child, including regular classroom
instruction, instruction in physical education, home instruction and
instruction in hospitals, institutions and special schools.
(2) The State Board of Education shall adopt rules further defining
“disabled child” for purposes of this section. A diagnosis obtained for
the purposes of entitlement to special education or early intervention
services shall serve as the basis for a claim for the additional credit
allowed under subsection (3) of this section.
(3) In addition to the personal exemption credit allowed by this
chapter for state personal income tax purposes for a dependent of the
taxpayer, there shall be allowed an additional personal exemption credit
for a disabled child if the child is a disabled child at the close of the
tax year. The amount of the credit shall be equal to the amount allowed
as the personal exemption credit for the dependent for state personal
income tax purposes for the tax year.
(4) Each taxpayer qualifying for the additional personal exemption
credit allowed by this section may claim the credit on the personal
income tax return. However, the claim shall be substantiated by any proof
of entitlement to the credit as may be required by the state board by
rule. [1985 c.531 §2; 1987 c.293 §15; 1989 c.224 §50a; 1989 c.491 §1;
1993 c.777 §7; 1993 c.813 §6; 1999 c.989 §29; 2001 c.114 §35; 2005 c.832
§28] (1) A credit against
taxes shall be allowed for voluntary contributions in money made in the
taxable year:
(a) To a major political party qualified under ORS 248.006 or to a
committee thereof or to a minor political party qualified under ORS
248.008 or to a committee thereof.
(b) To or for the use of a person who must be a candidate for
nomination or election to a federal, state or local elective office in
any primary election, general election or special election in this state.
The person must, in the calendar year in which the contribution is made,
either be listed on a primary election, general election or special
election ballot in this state or have filed in this state one of the
following:
(A) A prospective petition;
(B) A declaration of candidacy;
(C) A certificate of nomination; or
(D) A designation of a principal campaign committee.
(c) To a political committee, as defined in ORS 260.005, if the
political committee has certified the name of its treasurer to the filing
officer, as defined in ORS 260.005, in the manner provided in ORS chapter
260.
(2) The credit allowed by subsection (1) of this section shall be
the lesser of:
(a) The total contribution, not to exceed $50 on a separate return;
the total contribution, not to exceed $100 on a joint return; or
(b) The tax liability of the taxpayer.
(3) The claim for tax credit shall be substantiated by submission,
with the tax return, of official receipts of the candidate, agent,
political party or committee thereof or political committee to whom
contribution was made. [1969 c.432 §2; 1973 c.119 §3; 1975 c.177 §1; 1977
c.268 §1; 1979 c.190 §413; 1985 c.802 §6; 1987 c.293 §16; 1989 c.986 §1;
1993 c.797 §27; 1995 c.1 §19; 1995 c.712 §104; 1999 c.999 §27](1) If gain on the sale of residential property is
taxed under this chapter, the adjusted basis of the property for purposes
of this chapter shall be the same as its adjusted basis for federal
income tax purposes.
(2) A credit against the tax otherwise due under this chapter shall
be allowed to the taxpayer for the amount of any taxes imposed on the
taxpayer by another state of the United States, a foreign country or the
District of Columbia which tax is attributable to gain that is subject to
tax as described in subsection (1) of this section.
(3) The amount of the credit allowed under subsection (2) of this
section may not exceed the amount of the gain taxed by the other taxing
jurisdiction multiplied by eight percent.
(4) The Department of Revenue shall provide by rule the procedure
for obtaining credit provided by subsection (2) of this section and the
proof required. The requirement of proof may be waived partially,
conditionally or absolutely, as provided under ORS 315.063.
(5) Any credit allowed under subsection (2) of this section may not
be applied in calculating tax due under this chapter if the tax upon
which the credit is based has been claimed as a deduction for Oregon
personal income tax purposes, unless the tax is restored to income on the
Oregon return. [1979 c.579 §2; 1981 c.705 §2; 1995 c.54 §10; 2001 c.114
§36](1)(a) A resident individual shall be
allowed a credit against the taxes otherwise due under this chapter for
costs paid or incurred for construction or installation of an alternative
energy device in a dwelling.
(b) A resident individual shall be allowed a credit against the
taxes otherwise due under this chapter for costs paid or incurred to
modify or purchase an alternative fuel vehicle or related equipment.
(c) A resident individual shall be allowed a credit against the
taxes otherwise due under this chapter for costs paid or incurred for
construction or installation of a solar electric system in a dwelling.
(2)(a) Except in the case of an alternative fuel device or a solar
electric system, the credit shall be based upon the first year energy
yield of the alternative energy device that qualifies under ORS 469.160
to 469.180. The amount of the credit shall be the same whether for
collective or noncollective investment.
(b) The credit allowed under this section for each dwelling shall
not exceed the lesser of:
(A) $1,500 or the first year energy yield in kilowatt hours per
year multiplied by 60 cents per dwelling utilizing the alternative energy
device used for space heating, cooling, electrical energy or domestic
water heating for tax years beginning on or after January 1, 1990, and
before January 1, 1996.
(B) $1,200 or the first year energy yield in kilowatt hours per
year multiplied by 48 cents per dwelling utilizing the alternative energy
device used for space heating, cooling, electrical energy or domestic
water heating for tax years beginning on or after January 1, 1996, and
before January 1, 1998.
(C) $1,500 or the first year energy yield in kilowatt hours per
year multiplied by 60 cents per dwelling utilizing the alternative energy
device used for space heating, cooling, electrical energy or domestic
water heating for tax years beginning on or after January 1, 1998.
(c) For an alternative energy device used for swimming pool, spa or
hot tub heating, the credit allowed under this section shall be based
upon 50 percent of the cost of the device or the first year’s energy
yield in kilowatt hours per year multiplied by 15 cents, whichever is
lower, up to:
(A) $1,500 for tax years beginning on or after January 1, 1990, and
before January 1, 1996.
(B) $1,200 for tax years beginning on or after January 1, 1996, and
before January 1, 1998.
(C) $1,500 for tax years beginning on or after January 1, 1998.
(d) For an alternative fuel device, the credit allowed under this
section is 25 percent of the cost of the alternative fuel device but the
total credit shall not exceed $750 if the device is placed in service on
or after January 1, 1998.
(e)(A) For a solar electric system, the credit allowed under this
section shall equal $3 per watt of installed output, but the installed
output that is used to determine the amount of credit under this
paragraph may not exceed 2,000 watts.
(B) Notwithstanding subparagraph (A) of this paragraph, the amount
of the credit allowed in any one tax year may not exceed the tax
liability of the taxpayer or $1,500, whichever is less. Unused credit
amounts may be carried forward as provided in subsection (7) of this
section, but may not be carried forward to a tax year that is more than
five tax years following the first tax year for which any credit was
allowed with respect to the solar electric system that is the basis for
the credit.
(C) Notwithstanding subparagraph (A) of this paragraph, the total
amount of the credit allowed under this paragraph may not exceed 50
percent of the total installed cost of the solar electric system.
(3)(a) In the case of a credit for an alternative energy device
that is an energy efficient appliance, the credit allowed to a resident
individual under this section shall equal:
(A) 48 cents per first year kilowatt hour saved, or the equivalent
for other fuel saved, not to exceed $1,200 for each tax year beginning on
or after January 1, 1998, and before January 1, 1999; and
(B) 40 cents per kilowatt hour saved, or the equivalent for other
fuel saved, not to exceed $1,000 for each tax year beginning on or after
January 1, 1999.
(b) Notwithstanding paragraph (a) of this subsection, the credit
allowed for an energy efficient appliance shall not exceed 25 percent of
the cost of the appliance.
(4) To qualify for a credit under this section, all of the
following are required:
(a) The alternative energy device or solar electric system must be
purchased, constructed, installed and operated in accordance with ORS
469.160 to 469.180 and a certificate issued thereunder.
(b) Except for credits claimed for alternative fuel devices, the
taxpayer who is allowed the credit must be the owner or contract
purchaser of the dwelling or dwellings served by the alternative energy
device or solar electric system or the tenant of the owner or of the
contract purchaser and must:
(A) Use the dwelling or dwellings served by the alternative energy
device or solar electric system as a principal or secondary residence; or
(B) Rent or lease, under a residential rental agreement, the
dwelling or dwellings to a tenant who uses the dwelling or dwellings as a
principal or secondary residence, unless the basis for the credit is the
installation of an energy efficient appliance. If the basis for the
credit is the installation of an energy efficient appliance, the credit
shall be allowed only to the taxpayer who actually occupies the dwelling
as a principal or secondary residence.
(c) In the case of an alternative fuel device, if the device is a
fueling station necessary to operate an alternative fuel vehicle, unless
the verification form and certificate are transferred as authorized under
ORS 469.170 (8), the taxpayer who is allowed the credit must be the
contractor who constructs the dwelling that incorporates the fueling
station into the dwelling or installs the fueling station in the
dwelling. If the alternative energy device is an alternative fuel
vehicle, the credit must be claimed by the owner as defined under ORS
801.375 or contract purchaser. If the alternative energy device is
related equipment, the credit may be claimed by the owner or contract
purchaser.
(d) The credit must be claimed for the tax year in which the
alternative energy device or solar electric system was purchased if the
device or system is operational by April 1 of the next following tax year.
(5) The credit provided by this section does not affect the
computation of basis under this chapter.
(6) The credit allowed under this section in any one year may not
exceed the tax liability of the taxpayer.
(7) Any tax credit otherwise allowable under this section that is
not used by the taxpayer in a particular year may be carried forward and
offset against the taxpayer’s tax liability for the next succeeding tax
year. Any credit remaining unused in the next succeeding tax year may be
carried forward and used in the second succeeding tax year, and likewise
any credit not used in that second succeeding tax year may be carried
forward and used in the third succeeding tax year, and any credit not
used in that third succeeding tax year may be carried forward and used in
the fourth succeeding tax year, and any credit not used in that fourth
succeeding tax year may be carried forward and used in the fifth
succeeding tax year, but may not be carried forward for any tax year
thereafter.
(8) A nonresident shall be allowed the credit under this section in
the proportion provided in ORS 316.117.
(9) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue terminates the
taxpayer’s taxable year under ORS 314.440, the credit allowed by this
section shall be prorated or computed in a manner consistent with ORS
314.085.
(10) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit allowed by
this section shall be determined in a manner consistent with ORS 316.117.
(11) A husband and wife who file separate returns for a taxable
year may each claim a share of the tax credit that would have been
allowed on a joint return in proportion to the contribution of each.
However, a husband or wife living in a separate principal residence may
claim the tax credit in the same amount as permitted a single person.
(12) As used in this section, unless the context requires otherwise:
(a) “Collective investment” means an investment by two or more
taxpayers for the acquisition, construction and installation of an
alternative energy device for one or more dwellings.
(b) “First year energy yield” has the meaning given in ORS 469.160.
(c) “Noncollective investment” means an investment by an individual
taxpayer for the acquisition, construction and installation of an
alternative energy device for one or more dwellings.
(13) As used in this section, “taxpayer” includes a transferee of a
verification form under ORS 469.170 (8).
(14) Notwithstanding any provision of subsection (1) or (2) of this
section, the sum of the credit allowed under subsection (1) of this
section plus any similar credit allowed for federal income tax purposes
shall not exceed the cost to the taxpayer for the acquisition,
construction and installation of the alternative energy device or solar
electric system. [1977 c.196 §8; 1979 c.670 §2; 1981 c.894 §3; 1983 c.684
§14; 1983 c.768 §1; 1987 c.492 §1; 1989 c.626 §6; 1989 c.880 §§9,11; 1995
c.746 §19; 1997 c.325 §41; 1997 c.534 §3; 1999 c.21 §41; 1999 c.623 §1;
2005 c.832 §5]Note: Section 5a, chapter 832, Oregon Laws 2005, provides:
Sec. 5a. A taxpayer may not be allowed a credit under ORS 316.116
if the first tax year for which the credit would otherwise be allowed
with respect to an alternative energy device, solar electric system or
alternative fuel vehicle or related equipment is on or after January 1,
2016. [2005 c.832 §5a]Note: Section 12, chapter 832, Oregon Laws 2005, provides:
Sec. 12. The amendments to ORS 316.116, 469.160, 469.165, 469.170,
469.172, 469.176 and 469.180 by sections 5, 6 to 8 and 9 to 11 of this
2005 Act apply to alternative energy devices and solar electric systems
certified by the State Department of Energy on or after January 1, 2006.
[2005 c.832 §12]TAXATION OF NONRESIDENTS(1) Except as provided
under subsection (2) of this section, the proportion for making a
proration for nonresident taxpayers of the standard deduction or itemized
deductions, the personal exemption credits and any accrued federal or
foreign income taxes, or for part-year resident taxpayers of the amount
of the tax, between Oregon source income and income from all other
sources is the federal adjusted gross income of the taxpayer from Oregon
sources divided by the taxpayer’s federal adjusted gross income from all
sources. If the numerator of the fraction described in this subsection is
greater than the denominator, the proportion of 100 percent shall be used
in the proration required by this section. As used in this subsection,
“federal adjusted gross income” means the federal adjusted gross income
of the taxpayer with the additions, subtractions and other modifications
to federal taxable income that relate to adjusted gross income for
personal income tax purposes.
(2) For part-year resident trusts, the proration made under this
section shall be made by reference to the taxable income of the
fiduciary. [1969 c.493 §21; 1971 c.672 §1; 1973 c.269 §1; 1975 c.672 §5;
1977 c.872 §5; 1981 c.801 §4; 1983 c.684 §15; 1985 c.141 §5; 1987 c.293
§17; 1999 c.580 §5](1) The pro rata share of S corporation income of a
nonresident shareholder constitutes income or loss derived from or
connected with sources in this state as provided in ORS 316.127 (5).
(2) In determining the pro rata share of S corporation income of a
nonresident shareholder, there shall be included only that part derived
from or connected with sources in this state of the shareholder’s
distributive share of items of S corporation income, gain, loss and
deduction (or item thereof) entering into the federal adjusted gross
income of the shareholder, as such part is determined under rules adopted
by the Department of Revenue in accordance with the general rules under
ORS 316.127.
(3) Any modifications, additions or subtractions to federal taxable
income described in this chapter that relates to an item of S corporation
income, gain, loss or deduction (or item thereof) shall be made in
accordance with the shareholder’s pro rata share, for federal income tax
purposes of the item to which the modification, addition or subtraction
relates, but limited to the portion of such item derived from or
connected with sources in this state.
(4) A nonresident shareholder’s pro rata share of items of income,
gain, loss or deduction (or item thereof) shall be determined under ORS
314.734 (1). The character of shareholder items for a nonresident
shareholder shall be determined under ORS 314.734 (2). [1989 c.625 §52;
1991 c.877 §11](1) Except as provided in subsection (2) of this section, for
purposes of ORS 316.117, the adjusted gross income of a part-year
resident from Oregon sources is the sum of the following:
(a) For the portion of the year in which the taxpayer was a
resident of Oregon, the taxpayer’s entire adjusted gross income.
(b) For the portion of the year in which the taxpayer was a
nonresident, the taxpayer’s adjusted gross income derived from sources
within this state, as determined under ORS 316.127.
(2) For purposes of ORS 316.117, the adjusted gross income of a
part-year resident with federal adjusted gross income that includes an
item of income, gain, loss, deduction or credit from a pass-through
entity shall include the sum of the following:
(a) The total amount of the item that is taken into account in
federal adjusted gross income, multiplied by the ratio of the number of
days the taxpayer was a resident of Oregon during the tax year of the
entity over the total number of days in the tax year of the entity; and
(b) The total amount of the item that is taken into account in
federal adjusted gross income and that is derived from or connected with
sources within this state, as determined under ORS 316.127, multiplied by
the ratio of the number of days the taxpayer was a nonresident of Oregon
during the tax year of the entity over the total number of days in the
tax year of the entity.
(3) As used in subsection (2) of this section:
(a) “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.
(b) “Tax year of the entity” means the tax year of the pass-through
entity that ends within the tax year of the taxpayer. [1993 c.726 §31;
2005 c.55 §1]Note: Section 2, chapter 55, Oregon Laws 2005, provides:
Sec. 2. The amendments to ORS 316.119 by section 1 of this 2005 Act
apply to:
(1) Tax years beginning on or after January 1, 2002; and
(2) Any tax year for which a return is subject to audit or
adjustment by the Department of Revenue on or after the effective date of
this 2005 Act [November 4, 2005], any tax year for which a return is the
subject of an appeal on or after the effective date of this 2005 Act and
any tax year for which a claim for refund may be made on or after the
effective date of this 2005 Act. [2005 c.55 §2](1) If the federal taxable income of husband and wife (one being a
part-year resident and the other a nonresident) is determined on a joint
federal return, their taxable income in this state shall be separately
determined, unless they elect to file a joint return, in which case their
tax on their joint income shall be determined in this state pursuant to
ORS 316.037 (3).
(2) If the federal taxable income of husband and wife (one being a
full-year resident and the other a part-year resident) is determined on a
joint federal return, their taxable income in this state shall be
separately determined, unless they elect to file a joint return, in which
case their tax on their joint income shall be determined in this state
pursuant to ORS 316.037 (2).
(3) If the federal taxable income of husband and wife (one being a
full-year resident and the other a nonresident) is determined on a joint
federal return, their taxable income in the state shall be separately
determined, unless they elect to file a joint return, in which case their
tax on their joint income shall be determined in this state pursuant to
ORS 316.037 (3).
(4) For purposes of computing the tax of a husband and wife under
this section, if one of the spouses is a full-year resident individual,
then as used in ORS 316.037 (2) or (3), that spouse’s taxable income
derived from Oregon sources is that spouse’s entire federal taxable
income, defined in the laws of the United States, with the modifications,
additions and subtractions provided in this chapter and other laws of
this state applicable to personal income taxation.
(5) The provisions of ORS 316.367 with respect to joint returns
apply if both husband and wife are part-year residents or full-year
nonresidents. [1969 c.493 §22; 1985 c.802 §8; 1987 c.647 §3; 1999 c.580
§6](1) In determining the adjusted gross income of a nonresident
partner of any partnership, there shall be included only that part
derived from or connected with sources in this state of the partner’s
distributive share of items of partnership income, gain, loss and
deduction (or item thereof) entering into the federal adjusted gross
income of the partner, as such part is determined under rules adopted by
the Department of Revenue in accordance with the general rules in ORS
316.127.
(2) In determining the sources of a nonresident partner’s income,
no effect shall be given to a provision in the partnership agreement
which:
(a) Characterizes payments to the partner as being for services or
for the use of capital, or allocated to the partner, as income or gain
from sources outside this state, a greater proportion of the partner’s
distributive share of partnership income or gain than the ratio of
partnership income or gain from sources outside this state to partnership
income or gain from all sources, except as authorized in subsection (4)
of this section; or
(b) Allocates to the partner a greater proportion of a partnership
item of loss or deduction connected with sources in this state than the
proportionate share of the partner, for federal income tax purposes, of
partnership loss or deduction generally, except as authorized in
subsection (4) of this section.
(3) Any modification to federal taxable income described in this
chapter that relates to an item of partnership income, gain, loss or
deduction (or item thereof) shall be made in accordance with the
partner’s distributive share, for federal income tax purposes of the item
to which the modification relates, but limited to the portion of such
item derived from or connected with sources in this state.
(4) The department may, on application, authorize the use of such
other methods of determining a nonresident partner’s portion of
partnership items derived from or connected with sources in this state,
and the modifications related thereto, as may be appropriate and
equitable, on such terms and conditions as it may require.
(5) A nonresident partner’s distributive share of items of income,
gain, loss or deduction (or item thereof) shall be determined under ORS
314.714 (2). The character of partnership items for a nonresident partner
shall be determined under ORS 314.714 (1). [1989 c.625 §32 (enacted in
lieu of 316.352)] (1) The adjusted
gross income of a nonresident derived from sources within this state is
the sum of the following:
(a) The net amount of items of income, gain, loss and deduction
entering into the nonresident’s federal adjusted gross income that are
derived from or connected with sources in this state including (A) any
distributive share of partnership income and deductions and (B) any share
of estate or trust income and deductions; and
(b) The portion of the modifications, additions or subtractions to
federal taxable income provided in this chapter and other laws of this
state that relate to adjusted gross income derived from sources in this
state for personal income tax purposes, including any modifications
attributable to the nonresident as a partner.
(2) Items of income, gain, loss and deduction derived from or
connected with sources within this state are those items attributable to:
(a) The ownership or disposition of any interest in real or
tangible personal property in this state;
(b) A business, trade, profession or occupation carried on in this
state; and
(c) A taxable lottery prize awarded by the Oregon State Lottery,
including a taxable lottery prize awarded by a multistate lottery
association of which the Oregon State Lottery is a member if the ticket
upon which the prize is awarded was sold in this state.
(3) Income from intangible personal property, including annuities,
dividends, interest and gains from the disposition of intangible personal
property, constitutes income derived from sources within this state only
to the extent that such income is from property employed in a business,
trade, profession or occupation carried on in this state.
(4) Deductions with respect to capital losses, net long-term
capital gains, and net operating losses shall be based solely on income,
gains, losses and deductions derived from or connected with sources in
this state, under regulations to be prescribed by the Department of
Revenue, but otherwise shall be determined in the same manner as the
corresponding federal deductions.
(5) Notwithstanding subsection (3) of this section:
(a) The income of an S corporation for federal income tax purposes
derived from or connected with sources in this state constitutes income
derived from sources within this state for a nonresident individual who
is a shareholder of the S corporation; and
(b) A net operating loss of an S corporation derived from or
connected with sources in this state constitutes a loss or deduction
connected with sources in this state for a nonresident individual who is
a shareholder of the S corporation.
(6) If a business, trade, profession or occupation is carried on
partly within and partly without this state, the determination of net
income derived from or connected with sources within this state shall be
made by apportionment and allocation under ORS 314.605 to 314.675.
(7) Compensation paid by the United States for service in the Armed
Forces of the United States performed by a nonresident does not
constitute income derived from sources within this state.
(8) Compensation paid to a nonresident for services performed by
the nonresident at a hydroelectric facility does not constitute income
derived from sources within this state if the hydroelectric facility:
(a) Is owned by the United States;
(b) Is located on the Columbia River; and
(c) Contains portions located within both this state and another
state.
(9)(a) Retirement income received by a nonresident does not
constitute income derived from sources within this state unless the
individual is domiciled in this state.
(b) As used in this section, “retirement income” means retirement
income as that term is defined in 4 U.S.C. 114, as amended and in effect
for the tax period.
(10) Compensation for the performance of duties described in this
subsection that is paid to a nonresident does not constitute income
derived from sources within this state if the individual:
(a) Is engaged on a vessel to perform assigned duties in more than
one state as a pilot licensed under 46 U.S.C. 7101 or licensed or
authorized under the laws of a state; or
(b) Performs regularly assigned duties while engaged as a master,
officer or member of a crew on a vessel operating on the navigable waters
of more than one state. [1969 c.493 §23; 1971 c.672 §2; 1973 c.269 §2;
1975 c.705 §4; 1983 c.684 §15a; 1989 c.625 §9; 1997 c.654 §6; 1997 c.839
§10; 1999 c.143 §4; 1999 c.556 §1; 1999 c.580 §7; 2001 c.77 §§1,4; 2001
c.114 §37; 2003 c.77 §24]
(1) The taxable income for a full-year nonresident individual is adjusted
gross income attributable to sources within this state determined under
ORS 316.127, with the modifications (except those provided under
subsection (2) of this section) as otherwise provided under this chapter
and other laws of this state applicable to personal income taxation, less
the deductions allowed under subsection (2) of this section.
(2)(a) A full-year nonresident individual shall be allowed the
deduction for a standard deduction or itemized deductions allowable to a
resident under ORS 316.695 (1) in the proportion provided in ORS 316.117.
(b) A full-year nonresident individual shall be allowed to deduct
the amount of any accrued federal income taxes and foreign country income
taxes as provided in ORS 316.690 in the proportion provided in ORS
316.117.
(c)(A) A full-year nonresident individual shall be allowed to
deduct the amount of any alimony or separate maintenance payments paid
during such individual’s taxable year in the proportion provided in ORS
316.117 except that in determining the proportion the taxpayer’s adjusted
gross income shall not include a deduction for alimony. For purposes of
this paragraph, “alimony or separate maintenance payment” has the meaning
given the phrase in section 215 of the Internal Revenue Code.
(B) No deduction shall be allowed under this paragraph if the
alimony or separate maintenance payment is not includible in the gross
income of the nonresident individual for federal income tax purposes
under section 682 of the Internal Revenue Code.
(3)(a) A full-year nonresident who is a self-employed individual
shall be allowed to deduct that individual’s contributions to a qualified
plan, deductible on that individual’s federal income tax return pursuant
to section 401 of the Internal Revenue Code, in the proportion that the
individual’s earned income from Oregon sources bears to the individual’s
earned income from all sources. “Earned income” has the meaning given in
section 401(c)(2) of the Internal Revenue Code. If the numerator of the
fraction described in this paragraph is greater than the denominator, the
proration of 100 percent shall be used.
(b) A full-year nonresident shall be allowed to deduct that
individual’s qualified retirement contributions, deductible on that
individual’s federal income tax return pursuant to section 219 of the
Internal Revenue Code, in the proportion that the individual’s
compensation from Oregon sources bears to the individual’s compensation
from all sources. “Compensation” has the meaning given in section
219(f)(1) of the Internal Revenue Code.
(c) A full-year nonresident individual shall be allowed to deduct
the aggregate amounts paid in cash to a medical savings account,
deductible on the individual’s federal income tax return pursuant to
section 220 of the Internal Revenue Code, in the proportion that the
individual’s compensation from Oregon sources bears to the individual’s
compensation from all sources. Distributions from a medical savings
account, if excluded from income for federal income tax purposes, shall
be excluded for Oregon income tax purposes. Distributions from a medical
savings account, if included in income for federal tax purposes, shall be
included in income for Oregon tax purposes to the extent that an
exclusion has been allowed for contributions to the medical savings
account for Oregon tax purposes in a previous year. [1985 c.141 §4; 1987
c.293 §18; 1987 c.647 §12; 1989 c.626 §7; 1997 c.839 §11a; 1999 c.580 §8](1) A nonresident shall be allowed a credit against
the taxes otherwise due under this chapter for income taxes imposed by
and paid to the state of residence (not including any preference,
alternative or minimum tax) on income taxable under this chapter, subject
to the following conditions:
(a) The credit shall be allowed only if the state of residence
either:
(A) Does not tax the income of residents of this state derived from
sources within that state; or
(B) Allows residents of this state a credit against income taxes
imposed by that state on income for tax paid or payable under this
chapter.
(b) The credit may not be allowed for taxes paid to a state that
allows its residents a credit against the taxes imposed by that state for
income tax paid or payable under this chapter irrespective of whether its
residents are allowed a credit against the taxes imposed by this chapter
for income taxes paid to that state.
(c) Credit shall be allowed only for the proportion of the taxes
paid to the state of residence (not including preference, alternative or
minimum taxes) as the adjusted gross income taxable under this chapter
and also subject to taxes in the state of residence bears to the entire
adjusted gross income upon which the taxes paid to the state of residence
are imposed.
(d) The credit may not exceed the proportion of the tax payable
under this chapter that the modified adjusted gross income subject to tax
in the state of residence and also taxable under this chapter bears to
the entire modified adjusted gross income of the taxpayer.
(2) For purposes of this section, the amount of income taxes paid
to another state includes the taxpayer’s pro rata share of any taxes on,
or according to, or measured by, income or profits paid or accrued that
were paid by an S corporation.
(3) Notwithstanding subsection (1) of this section, credit may not
be allowed under this section for taxes paid by a nonresident on
qualifying compensation.
(4) As used in this section:
(a) “Modified adjusted gross income” means federal adjusted gross
income as modified by this chapter and the other laws of this state
applicable to personal income taxation.
(b) “Qualifying compensation” has the meaning given that term in
section 1, chapter 559, Oregon Laws 2005.
(c) “State” means a state, district, territory or possession of the
United States. [1991 c.838 §5; 2001 c.9 §2; 2005 c.559 §6] As used in ORS
316.147 to 316.149, unless the context requires otherwise:
(1) “Eligible taxpayer” includes any individual who must pay taxes
otherwise imposed by this chapter and:
(a) Who pays or incurs expenses for the care of a “qualified
individual,” as defined in subsection (2) of this section, through a
payment method determined by rule of the Department of Revenue; and
(b) Who has a “household income,” as defined by ORS 310.630, for
the taxable year, not to exceed the maximum amount of household income
allowed in ORS 310.640 (1989 Edition) for a homeowner or renter refund.
(2) “Qualified individual” includes an individual at least 60 years
of age on the date that the expenses described in subsection (1)(a) of
this section are paid or incurred by the eligible taxpayer:
(a) Whose household income, as defined by ORS 310.630, does not
exceed $7,500 for the calendar year in which the taxable year of the
taxpayer begins;
(b) Who is eligible for home care services under Oregon Project
Independence provided by the Department of Human Services;
(c) Who is certified by the Department of Human Services; and
(d) Whose care or any portion thereof is not paid for under ORS
chapter 414. [1979 c.494 §2; 1991 c.786 §5; 1997 c.170 §28](1) A credit against the taxes otherwise due under this
chapter shall be allowed to an eligible taxpayer with respect to food,
clothing, medical care and transportation expenses paid or incurred by
the taxpayer during the taxable year on behalf of a qualified individual
in order that the qualified individual is not placed or maintained in a
nursing home unnecessarily. The amount of the credit shall be $250 or
eight percent of the expenses paid or incurred during the taxable year,
whichever is less.
(2) No credit shall be allowed under this section for expenses paid
or incurred for any period of time in which the qualified individual is a
resident in a nursing home or is receiving aid from Oregon Project
Independence. [1979 c.494 §3] Evidence of payments
made or expenses incurred that form the basis of the credit allowed under
ORS 316.147 to 316.149 shall be submitted to the Department of Revenue in
accordance with any rules adopted by the department relative to the
submission of evidence of such payments. [1979 c.494 §4](Mobile Homes; Moving Expense)(1) As used in this section:
(a) “Federal poverty guideline” means the United States Department
of Health and Human Services poverty guidelines set forth on page 8374 of
Volume 70 of the 2005 Federal Register.
(b) “Household” has the meaning given that term in ORS 310.630.
(c) “Household income” has the meaning given that term in ORS
310.630.
(d) “Involuntary move” means a move forced on an owner due to the
termination of the owner’s rental agreement for a facility space
resulting from the closure of the facility, or portion of the facility,
as defined in ORS 90.100.
(e) “Mobile home” has the meaning given “manufactured dwelling” in
ORS 446.003, and includes only a mobile home that is involuntarily moved
from a facility space located in this state and that has a fair market
value of $110,000 or less on the date that the mobile home is
involuntarily moved.
(f) “Qualified individual” means an individual who:
(A) Owns and occupies as a principal residence, on the date of the
involuntary move, a mobile home involuntarily moved; and
(B) Has a household income of $60,000 or less for the tax year in
which the mobile home is involuntarily moved.
(2) A qualified individual is allowed a credit against the taxes
otherwise due under this chapter. The amount of the credit is the lesser
of:
(a) $10,000; or
(b) The actual cost of moving and setting up the mobile home after
subtracting any payments or reimbursements received by the qualified
individual under ORS 90.630 (5) and (6).
(3)(a) Except as provided in subsection (4) of this section,
one-third of the total amount of credit allowed under this section must
be claimed by the qualified individual for the tax year in which the
mobile home is involuntarily moved and one-third of the credit in each of
the two tax years immediately following.
(b) Any credit which is not used by the taxpayer in a particular
year may be carried forward and offset against the taxpayer’s tax
liability for the next succeeding tax year. Any credit remaining unused
in the next succeeding tax year may be carried forward and used in the
second succeeding tax year, and likewise any credit not used in that
second succeeding tax year may be carried forward and used in the third
succeeding tax year, and any credit not used in that third succeeding tax
year may be carried forward and used in the fourth succeeding tax year,
and any credit not used in that fourth succeeding tax year may be carried
forward and used in the fifth succeeding tax year, but may not be carried
forward for any tax year thereafter.
(c) The credit allowed to a qualified individual is available for
only one involuntary move of a mobile home.
(d) If the taxpayer is married at the close of the tax year, the
credit shall be allowed to only one taxpayer if the spouses file separate
returns for the tax year. Marital status shall be determined as provided
under section 21 (e)(3) and (4) of the Internal Revenue Code.
(4) If, in the year of the involuntary move, the household income
of the qualified individual is not more than 200 percent of federal
poverty guideline gross annual income for a family unit of the same size
as the qualified individual’s household, the total amount allowable to
the taxpayer as a credit under subsection (2) of this section may be
claimed as a credit in the year of the involuntary move. If the amount of
the credit, when added to the sum of the amounts allowable as payment of
tax under ORS 316.187 (withholding), ORS 316.583 (estimated tax), other
tax prepayment amounts and other refundable credit amounts, exceeds the
taxes imposed by this chapter or ORS chapter 314 for the tax year
(reduced by any nonrefundable credits allowable for purposes of this
chapter for the tax year), the amount of the excess shall be refunded to
the taxpayer as provided in ORS 316.502. [1991 c.846 §2; 1995 c.556 §3;
1995 c.559 §54; 1997 c.839 §12; 1999 c.90 §11; 1999 c.676 §27; 2001 c.596
§50; 2001 c.660 §38; 2005 c.826 §1]Note: Section 3, chapter 846, Oregon Laws 1991, provides:
Sec. 3. ORS 316.153 applies to tax years beginning on or after
January 1, 1992, and on or before December 31, 2001, and to tax years
beginning on or after January 1, 2006, and before January 1, 2008. [1991
c.846 §3; 1995 c.746 §45; 2005 c.826 §3]Note: Section 2, chapter 826, Oregon Laws 2005, provides:
Sec. 2. The amendments to ORS 316.153 by section 1 of this 2005 Act
apply to tax credits allowed for a mobile home involuntary movement
occurring in tax years that begin on or after January 1, 2006, and before
January 1, 2008. [2005 c.826 §2](Retirement Income) (1) In the case of an
eligible individual, there shall be allowed as a credit against the taxes
otherwise due under this chapter for the taxable year an amount equal to
the lesser of the tax liability of the taxpayer or nine percent of net
pension income.
(2) For purposes of this section:
(a) “Eligible individual” means any individual who is receiving
pension income and who has attained the following age before the close of
the taxable year:
(A) For taxable years beginning on or after January 1, 1991, and
before January 1, 1993, the individual must attain 58 years of age before
the close of the taxable year.
(B) For taxable years beginning on or after January 1, 1993, and
before January 1, 1995, the individual must attain 59 years of age before
the close of the taxable year.
(C) For taxable years beginning on or after January 1, 1995, and
before January 1, 1997, the individual must attain 60 years of age before
the close of the taxable year.
(D) For taxable years beginning on or after January 1, 1997, and
before January 1, 1999, the individual must attain 61 years of age before
the close of the taxable year.
(E) For taxable years beginning on or after January 1, 1999, the
individual must attain 62 years of age before the close of the taxable
year.
(b) “Household income” has that meaning given in ORS 310.630 except
that “household income” shall not include Social Security benefits
received by the taxpayer or the spouse of the taxpayer.
(c) “Net pension income” means:
(A) For eligible individuals filing a joint return, the lesser of
the pension income of the eligible individuals received during the
taxable year or the excess, if any, of $15,000 over the sum of the
following amounts:
(i) Any Social Security benefits received by the eligible
individual, or by the spouse of the individual, during the taxable year;
and
(ii) The excess, if any, of household income over $30,000.
(B) For an eligible individual filing a return other than a joint
return, the lesser of the pension income of the eligible individual
received during the taxable year or the excess, if any, of $7,500 over
the sum of the following amounts:
(i) Any Social Security benefits received by the eligible
individual during the taxable year; and
(ii) The excess, if any, of household income over $15,000.
(d) “Pension income” means income included in Oregon taxable income
from:
(A) Distributions from or pursuant to an employee pension benefit
plan, as defined in section 3(2) of the Employee Retirement Income
Security Act of 1974, which satisfies the requirements of section 401 of
the Internal Revenue Code;
(B) Distributions from or pursuant to a public retirement system of
this state or a political subdivision of this state, or a public
retirement system created by an Act of this state or a political
subdivision of this state, or the public retirement system of any other
state or local government;
(C) Distributions from or pursuant to a federal retirement system
created by the federal government for any officer or employee of the
United States, including any person retired from service in the United
States Civil Service, the Armed Forces of the United States or any agency
or subdivision thereof;
(D) Distributions or withdrawals from or pursuant to an eligible
deferred compensation plan which satisfies the requirements of section
457 of the Internal Revenue Code;
(E) Distributions or withdrawals from or pursuant to an individual
retirement account, annuity or trust or simplified employee pension which
satisfies the requirements of section 408 of the Internal Revenue Code;
and
(F) Distributions or withdrawals from or pursuant to an employee
annuity, including custodial accounts treated as annuities, subject to
section 403 (a) or (b) of the Internal Revenue Code.
(e) “Social Security benefits” means Social Security benefits, as
defined in section 86 of the Internal Revenue Code (Title II Social
Security or tier 1 railroad retirement benefits).
(3) If a change in the taxable year of the eligible individual
occurs as described in ORS 314.085, or if the Department of Revenue
terminates the tax year of the eligible individual under ORS 314.440, the
credit allowed by this section shall be prorated or computed in a manner
consistent with ORS 316.085.
(4) If a change in the status of the eligible individual from
resident to nonresident or from nonresident to resident occurs, the
credit allowed by this section shall be determined in a manner consistent
with subsection (1) of this section. [1991 c.823 §5; 1997 c.839 §13; 1999
c.90 §12; 2001 c.660 §39](1) It is the intent of the Legislative Assembly that no
part of ORS 316.157 be the law if any part of ORS 316.157 is held to be
invalid or unconstitutional. However, no amended return or payment of
additional taxes shall be required for any year prior to the year in
which any part of ORS 316.157 is held to be invalid or unconstitutional
by a court of last resort.
(2) Except as provided in subsection (1) of this section, it is the
intent of the Legislative Assembly that the provisions of ORS 238.445,
310.635, 316.087, 316.157, 316.158, 316.680 and 316.695 be severable as
provided in ORS 174.040. [1991 c.823 §9]Note: 316.158 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 316 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1)(a) In addition to other modifications to
federal taxable income contained in this chapter, there shall be
subtracted from federal taxable income of a resident individual the
distributions received by the individual from a plan or trust described
under subsection (2) of this section to the extent that:
(A) The distributions consist of contributions made in a tax period
during which the individual was a nonresident; and
(B) The distributions consist of contributions made in a tax period
for which no deduction, exclusion or exemption for the contributions was
allowed or allowable to the individual for purposes of a state personal
net income tax imposed during the period by the state of which the
individual was a resident; and
(C) No deduction, exclusion, subtraction or other tax benefit has
been allowed for the distributions by another state before the individual
becomes a resident of this state.
(b) For purposes of this section, if any distributions (lump sum or
periodic) received by a resident individual from a plan or trust
described in subsection (2) of this section meet the requirements of
paragraph (a) of this subsection, then for purposes of the subtraction
allowed by this section, those distributions shall be considered to be
the distributions first received by the individual after the individual
has become a resident of this state.
(c) For purposes of ORS 316.082 (credit for taxes paid to another
state), any distributions received by a resident individual from a plan
or trust described in subsection (2) of this section which meet the
requirements of paragraph (a) of this subsection shall be considered
income subject to tax under this chapter notwithstanding the exclusion
under this section.
(2) A plan or trust is described in this section if:
(a) The plan or trust is an individual retirement account described
in section 408 of the Internal Revenue Code;
(b) The trust forms part of a pension or profit-sharing plan that
provides contributions or benefits for employees, some or all of whom are
owner-employees, as defined under section 401(c)(3) of the Internal
Revenue Code;
(c) The plan or trust is an annuity contract purchased on behalf of
an employee of a charitable organization or public school as described
under section 403(b) of the Internal Revenue Code; or
(d) The plan or trust is an eligible deferred compensation plan
established and maintained by an employer that is a state or local
government, a political subdivision thereof, or a tax exempt
organization, on behalf of an employee of the employer, as described
under section 457 of the Internal Revenue Code.
(3) The following contributions are not contributions to which the
subtraction under subsection (1) of this section is accorded:
(a) Contributions made during a tax period, or portion thereof, for
which the taxpayer was a nonresident required to file an Oregon return,
to the extent that a deduction or exclusion was allowable under this
chapter for those contributions; or
(b) Contributions for which the taxpayer was allowed a credit for
taxes paid to another state under ORS 316.082.
(4) A subtraction shall not be allowed under this section for
interest or other income arising from investment of contributions made to
a plan or trust described in subsection (2) of this section.
(5) For purposes of the subtraction allowed under subsection (1) of
this section:
(a) Distributions received by the taxpayer from a plan or trust
described in subsection (2) of this section shall be considered to
initially consist of a recovery of contributions.
(b) Once the distributions equal the cumulative contributions, all
further distributions shall constitute interest or other income arising
from investment of the contributions.
(6) The Department of Revenue may adopt rules requiring
substantiation of the contributions and tax treatment upon which the
subtraction under this section is based. Failure to provide
substantiation as required under the rules shall result in denial of the
subtraction otherwise allowed under this section. The requirement for
substantiation may be waived partially, conditionally or absolutely, as
provided under ORS 315.063. [1991 c.838 §2; 1995 c.54 §11; 1995 c.815 §6]COLLECTION OF TAX AT SOURCE OF PAYMENT(Generally) As used in ORS
316.162 to 316.221:
(1) “Number of withholding exemptions claimed” means the number of
withholding exemptions claimed in a withholding exemption certificate in
effect under ORS 316.182, except that if no such certificate is in
effect, the number of withholding exemptions claimed is considered to be
zero.
(2) “Wages” means remuneration for services performed by an
employee for an employer, including the cash value of all remuneration
paid in any medium other than cash, except that “wages” does not include
remuneration paid:
(a) For active service in the Armed Forces of the United States as
to which no withholding is required by the Internal Revenue Code.
(b) To an employee of a common carrier to the extent that 49 U.S.C.
14503 and 40116 prohibit the remuneration from withholding for state
income taxes.
(c) For domestic service in a private home, a local college club or
a local chapter of a college fraternity or sorority.
(d) For casual labor not in the course of the employer’s trade or
business.
(e) To an employee whose services to the employer consist solely of
labor in connection with the planting, cultivating or harvesting of
seasonal agricultural crops if the total amount paid to such employee is
less than $300 annually.
(f) To seamen who are exempt from garnishment, attachment or
execution under title 46 of the United States Code.
(g) To persons temporarily employed as emergency forest fire
fighters.
(h) To employees’ trusts exempt from tax under provisions of the
federal Internal Revenue Code.
(i) For services performed by a duly ordained, commissioned or
licensed minister of a church in the exercise of the minister’s ministry
or by a member of a religious order in the exercise of religious duties
required by such order, which duties are not commercial in nature.
(j) For services provided by an independent contractor, as defined
in ORS 670.600.
(k) To or on behalf of an employee, a beneficiary of an employee or
an alternate payee under or to an eligible deferred compensation plan
that, at the time of the payment, is a plan described in section 457(b)
of the Internal Revenue Code and that is maintained by an eligible
employer described in section 457(e)(1)(A) of the Internal Revenue Code.
(L) When the remuneration is exempt from taxation under this
chapter.
(3) “Employer” means:
(a) A person who is in such relation to another person that the
person may control the work of that other person and direct the manner in
which it is to be done; or
(b) An officer or employee of a corporation, or a member or
employee of a partnership, who as such officer, employee or member is
under a duty to perform the acts required of employers by ORS 316.167,
316.182, 316.197, 316.202 and 316.207. [1969 c.493 §24; 1971 c.690 §1;
1973 c.229 §1; 1977 c.604 §1; 1981 c.705 §3; 1985 c.87 §3; 1989 c.762 §2;
1997 c.839 §15; 1999 c.21 §42; 1999 c.90 §13; 1999 c.580 §9; 2001 c.660
§40; 2003 c.77 §16; 2003 c.704 §6; 2005 c.533 §7](1) Except as provided in subsection (3) of this section, if
the Department of Revenue makes the findings required under subsection
(2) of this section, the department may require any employer subject to
ORS 316.162 to 316.221, except the state or its political subdivisions,
to post a surety bond, or irrevocable letter of credit issued by an
insured institution, as defined in ORS 706.008, with the department, to
secure future payment of amounts required to be withheld and paid over to
the department under ORS 316.162 to 316.221. The bond or letter of credit
shall be in an amount equal to the amounts required to be withheld upon
the wages paid or estimated to be paid by the employer for a period of
four calendar quarters. The bond or letter of credit shall be in a form
acceptable to the department. Posting of the bond or letter of credit
shall not relieve the employer from withholding and paying over amounts
based on wages paid by the employer under any provision of ORS 316.162 to
316.221. The department may, in its discretion, at any time apply such
bond or letter of credit or part thereof to the delinquencies or
indebtedness of the employer arising under any provision of ORS 316.162
to 316.221 and accruing after the date the bond or letter of credit was
posted. Appeal of an action of the department under this section shall
not relieve an employer of the requirement during the pendency of the
appeal.
(2) Before requiring an employer to post a bond or irrevocable
letter of credit under subsection (1) of this section, the department
shall determine that the employer has failed to make payment to the
department of amounts required to be withheld and paid over under any
provision of ORS 316.162 to 316.221 for at least three calendar quarters,
and the total amount of delinquent payments exceeds $2,500, exclusive of
interest or penalties. For purposes of this subsection, a payment shall
not be considered delinquent if the employer’s liability to withhold is
subject to appeal to the tax court.
(3) The department shall not require a bond or irrevocable letter
of credit to be posted under this section if the employer elects to
notify the department of the times of payment of wages to the employees
of the employer, and, notwithstanding ORS 316.197, to pay over amounts
withheld within three banking days after the dates the wages were paid.
(4) Before requiring an employer to post a bond or irrevocable
letter of credit or make payment of amounts required to be withheld in
the manner prescribed in subsection (3) of this section, the department
shall attempt to obtain payment of delinquent amounts through other
methods of collection, however, the department is not required to seize
or sell real or personal property in order to comply with the
requirements of this subsection.
(5) Any bond or irrevocable letter of credit required under
subsection (1) of this section shall become the sole property of the
department and shall be held by the department to guarantee payment of
withholding taxes by the employer. The bond or letter of credit shall be
held for the benefit of the State of Oregon, subject only to the
provisions of subsection (6) of this section. The bond or letter of
credit shall be prior to all other liens, claims or encumbrances and
shall be exempt from any process, attachment, garnishment or execution.
(6) If an employer ceases to be an employer subject to ORS 316.162
to 316.221, the department shall, upon receipt of all payments due from
the employer for withheld amounts, cancel any bond or irrevocable letter
of credit given under this section. Such bonds or letters of credit held
for the benefit of the State of Oregon shall first be applied to any
indebtedness or deficiencies due from the employer under ORS 316.162 to
316.221 and accruing after the date the bond or letter of credit was
posted before any return is made to the employer. The employer shall have
no interest in such bond or letter of credit prior to full compliance
with this section and all provisions of ORS 316.162 to 316.221.
(7) If an employer required to post a bond or irrevocable letter of
credit or make payment of amounts withheld in the manner prescribed under
this section makes full payment of all delinquent amounts due and owing
at the time the bond, letter of credit or accelerated payment schedule
was required and makes payment of amounts due under ORS 316.162 to
316.221 and files returns required in connection with those payments in a
timely manner for the succeeding four calendar quarters, the department
shall release the employer from the requirement to post the bond or
letter of credit or make accelerated payments of amounts withheld.
(8) If any employer fails to comply with subsections (1) to (7) of
this section, the Oregon Tax Court, upon commencement of an action by the
department for that purpose, may order the employer to post the required
bond or irrevocable letter of credit or make accelerated payments of
amounts withheld. The employer’s failure to obey an order of the court is
punishable by contempt. If the Oregon Tax Court determines that an order
of compliance enforceable by contempt proceedings will not assure the
payment of withheld taxes by the employer, the court may enjoin the
employer from further employing individuals in this state or continuing
in business therein until the employer has complied with subsections (1)
to (7) of this section. [1985 c.406 §§2,3; 1991 c.331 §143; 1995 c.650
§36; 1997 c.631 §§453,454](1) Every employer at the time of the payment of wages to any
employee shall deduct and retain from such wages an amount determined, at
the employer’s election, either (a) by a “percentage method” withholding
table or (b) by “wage bracket” withholding tables, prepared and furnished
under the rules and regulations of the Department of Revenue. However, in
the case of wages paid to an employee whose services to the employer
consist solely of labor in connection with the planting, cultivating or
harvesting of seasonal agricultural crops, the employer may elect to
withhold two percent of the total wages paid without regard to any
withholding exemptions.
(2) Except in the case of an agricultural employee, the amount
withheld shall be computed on the basis of the total amount of the wages
and the number of withholding exemptions claimed by the employee, without
deduction for any amount withheld.
(3) If a lender, surety or other person who supplies funds to or
for the account of an employer for the purpose of paying wages of the
employees of such employer has actual notice or knowledge that such
employer does not intend to or will not be able to make timely payment or
deposit of the tax required to be deducted and withheld, such lender,
surety or other person shall be liable to the State of Oregon in a sum
equal to the taxes together with interest which are not timely paid over
to the department. Such liability shall be limited to the principal
amount supplied by such lender, surety or other person, and any amounts
so paid to the department shall be credited against the liability of the
employer.
(4) With the approval of the Oregon Department of Administrative
Services, the department may enter into contracts with banking
institutions including but not limited to Federal Reserve Banks,
incorporated banks, trust companies, domestic building and loan
associations, savings and loan associations or credit unions authorizing
them to receive as financial agents of the department any tax required to
be withheld and paid to the department. [1969 c.493 §25; 1975 c.394 §1;
1977 c.604 §2; 1982 s.s.1 c.1 §1]
(1) Except as otherwise provided by law, every employer subject to the
provisions of ORS 316.162 to 316.221, 656.506 and ORS chapter 657, or a
payroll-based tax imposed by a mass transit district and administered by
the Department of Revenue under ORS 305.620, shall make and file a
combined quarterly tax and assessment report upon a form prescribed by
the department.
(2) The report shall be filed with the Department of Revenue on or
before the last day of the month following the quarter to which the
report relates and shall be deemed received on the date of mailing, as
provided in ORS 305.820.
(a) The report shall be accompanied by payment of any tax or
assessment due and a combined tax and assessment payment coupon
prescribed by the department. The employer shall indicate on the coupon
the amount of the total payment and the portions of the payment to be
paid to each of the tax or assessment programs.
(b) The Department of Revenue shall credit the payment to the tax
or assessment programs in the amounts indicated by the employer on the
coupon and shall promptly remit the payments to the appropriate taxing or
assessing body.
(c) If the employer fails to allocate the payment on the coupon,
the department shall allocate the payment to the proper tax or assessment
programs on the basis of the percentage the payment bears to the total
amount due.
(d) The Department of Revenue shall distribute copies of the
combined quarterly tax and assessment report and the necessary tax or
assessment payment information to each of the agencies charged with the
administration of a tax or assessment covered by the report.
(e) The Department of Revenue, the Employment Department and the
Department of Consumer and Business Services shall develop a system of
account numbers and assign to each employer a single account number
representing all of the tax and assessment programs included in the
combined quarterly tax and assessment report. [1989 c.901 §2; 1993 c.760
§2](1) If a lender, surety or other person who is not an
employer with respect to an employee pays wages directly to the employee,
or to an agent on behalf of the employee, the lender, surety or other
person shall deduct and retain from the wages, and shall be liable to
this state for, an amount equal to the amount required to be withheld
from the employee’s wages by the employer under ORS 316.167.
(2) A lender, surety or other person described under this section
shall file a combined quarterly tax report and make payment of the tax or
assessment that is due in the time and manner prescribed for employers
under ORS 316.168.
(3) Amounts paid under this section shall be credited against the
liability of the employer under ORS 316.167.
(4) A lender, surety or other person described under this section
shall be considered to be an employer with respect to withholdings made
under this section or required to be made under this section for purposes
of ORS 316.191, 316.197, 316.202, 316.207 and 316.212.
(5) The employer of an employee that receives wages from a lender,
surety or other person shall not be discharged from any liability or
other obligation under ORS 316.162 to 316.221 except as provided for in
subsection (3) of this section. [1997 c.133 §6]Except as provided in this section and ORS 314.840, 316.168,
316.197, 316.202 and 657.571, the statutes and regulations applicable to
each agency, requiring a report and imposing a tax, shall govern the
audit and examination of reports and returns, determination of
deficiencies, assessments, claims for refund, penalties, interest,
administrative and judicial appeals and the procedures relating thereto.
[1989 c.901 §3] (1)
The Department of Revenue shall prepare a table for use with the
percentage method that provides for the deduction and withholding of a
tax equal to a specific percent (to be determined by the department) of
the amount by which the wages for a given payroll period (daily, weekly,
biweekly, semimonthly, monthly, quarterly, semiannually or annually, as
the case may be) exceed the number of withholding exemptions claimed,
multiplied by the amount of one such exemption for each payroll period
(such amount being determined by the department for each such period).
The determinations of the department shall result, so far as is
practicable, in withholding from the employee a sum substantially
equivalent to the amount of the tax that the employee will be required to
pay under this chapter upon such wages. To accomplish this purpose, the
department may make special provision for employees who are in the state
for limited periods of time.
(2) The department shall prepare tables for use in computing
withholding of tax by wage brackets. The wage brackets shall be graduated
so that the amount withheld is, as far as practicable, substantially
equivalent to the amount of the tax that the employee will be required to
pay under this chapter upon such wages. [1969 c.493 §26; 1973 c.402 §20](1) If an employee does not claim a different
number of withholding exemptions for state withholding purposes, the
employee shall be entitled to the same number of withholding exemptions
as the number of withholding exemptions to which the employee is entitled
for federal income tax withholding purposes. If an employee does not
claim a different number of withholding exemptions for state withholding
purposes, the employer may rely upon the number of federal withholding
exemptions claimed by the employee, or authorized or specified under the
Internal Revenue Code. If the employee does claim a different number of
withholding exemptions for state withholding purposes, the employer shall
rely on the number specified on that claim.
(2) If any employee makes a statement for federal income tax
withholding purposes which claims more than 10 withholding exemptions, or
claims exemption from withholding and the employee’s income is expected
to exceed $200 per week for both federal and state purposes, or claims
exemption from withholding for state purposes but not for federal
purposes, and as of the time the statement was made there was no
reasonable basis for the statement, the Department of Revenue shall
assess and collect from the employee a penalty of $500.
(3) The penalty imposed under this section is in addition to any
other penalty imposed by law. Any employee against whom 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 without interest in the same manner
as income tax deficiencies are recorded and collected under ORS 314.430.
(4) The department may waive all or any part of the penalty imposed
under subsection (2) of this section if the income tax liability of the
employee for the taxable year is equal to or less than the sum of:
(a) The credits against taxes allowed for purposes of this chapter;
and
(b) The payments of estimated tax which are considered payments on
account of the tax liability of the employee under ORS 316.579 and
316.583. [1969 c.493 §27; 1987 c.293 §19; 1987 c.843 §20; 1993 c.730 §42;
1995 c.650 §37] (1) Subject to subsection (2) or (3)
of this section and if the employee does not claim a different number of
withholding exemptions for purposes of this chapter, an employer shall
use the exemption certificate filed by the employee with the employer
under the income tax withholding provisions of the Internal Revenue Code
for determining the number of withholding exemptions to be used in
computing the tax to be withheld under ORS 316.167 and 316.172. If a new
exemption certificate is not filed as provided under section 1581 of the
Tax Reform Act of 1986 (P.L. 99-514) for federal purposes, the employer
shall use the same number of withholding exemptions as used for purposes
of the Internal Revenue Code for determining the amount of tax to be
withheld under ORS 316.167 and 316.172.
(2) The Department of Revenue may require an exemption certificate
to be filed on a form prescribed by the department in any circumstance
where the department finds that an exemption certificate filed for
purposes of the Internal Revenue Code does not properly reflect the
number of withholding exemptions allowable under this chapter.
(3) No exemption certificate need be procured from an employee
whose wages consist of wages as defined in ORS 316.162 (2)(e). [1969
c.493 §28; 1987 c.293 §20; 1997 c.839 §16; 2001 c.660 §41] The
amounts deducted from the wages of an employee during any calendar year
in accordance with ORS 316.167 and 316.172 shall be considered to be in
part payment of the tax on such employee’s income for the taxable year
which begins within such calendar year, and the return made by the
employer pursuant to ORS 316.202 shall be accepted by the Department of
Revenue as evidence in favor of the employee of the amounts so deducted
from the employee’s wages. [1969 c.493 §29](1) As used in this section:
(a) “Commercial annuity” means an annuity, endowment or life
insurance contract issued by an insurance company authorized to transact
insurance in the State of Oregon.
(b) “Department” means the Oregon Department of Revenue.
(c) “Designated distribution” means any distribution or payment
from or under an employer deferred compensation plan, an individual
retirement plan or a commercial annuity. “Designated distribution” does
not include any amount treated as wages as defined in ORS 316.162, the
portion of any distribution or payment that is not includable in the
gross income of the recipient or any distribution or payment made under
section 404(k)(2) of the Internal Revenue Code.
(d) “Employer deferred compensation plan” means any pension,
annuity, profit-sharing or stock bonus plan or other plan deferring the
receipt of compensation.
(e) “Individual retirement plan” means an individual retirement
account described in section 408(a) of the Internal Revenue Code or an
individual retirement annuity described in section 408(b) of the Internal
Revenue Code.
(f) “Nonperiodic distribution” means any designated distribution
which is not a periodic payment.
(g) “Payer” means any payer of a designated distribution doing
business in or making payments or distributions from sources in this
state.
(h) “Periodic payment” means a designated distribution which is an
annuity or similar periodic payment.
(i) “Plan administrator” means a plan administrator as described in
section 414(g) of the Internal Revenue Code, who is the administrator of
a plan created by an Oregon employer.
(j) “Qualified total distribution” means any designated
distribution made under a retirement, annuity or deferred compensation
plan described in section 401(a), 403(a) or 457(b) of the Internal
Revenue Code, that consists of the balance to the credit of the employee,
exclusive of accumulated deductible employee contributions, made within
one tax year of the recipient.
(2)(a) The payer of any periodic payment shall withhold from such
payment the amount which would be required to be withheld from such
payment under ORS 316.167 if the payment were wages paid by an employer
to an employee. The time and manner of payment of withheld amounts to the
department shall be the same as that required under ORS 316.197 for
withholding of income taxes from wages.
(b) The payer of any nonperiodic distribution shall withhold from
such distribution an amount determined under tables prescribed by the
department.
(c) The maximum amount to be withheld under this section on any
designated distribution shall not exceed 10 percent of the amount of
money and the fair market value of other property received in the
distribution. If the distribution is not subject to withholding for
federal income tax purposes under section 3405 of the Internal Revenue
Code, it shall not be subject to withholding under this section.
(3)(a) Except as provided in paragraph (b) of this subsection, the
payer of a designated distribution shall withhold and be liable for
payment of amounts required to be withheld under this section.
(b) In the case of any plan described in section 401(a), 403(a) or
457(b) of the Internal Revenue Code, or section 301(d) of the Tax
Reduction Act of 1975, the plan administrator shall withhold and be
liable for payment of amounts required to be withheld under this section,
unless the plan administrator has directed the payer to withhold the tax
and has provided the payer with the information required by rule of the
department.
(4)(a) An individual may elect to have no withholding by a payer
under subsection (2) of this section. If an individual has elected to
have no federal withholding from payments or distributions described in
this section the individual shall be deemed to have elected no
withholding for state purposes, unless the individual notifies the payer
otherwise.
(b) An election made under this subsection shall be effective as
provided under rules promulgated by the department. The rules required
under this paragraph shall provide the manner in which an election may be
revoked and when such revocation shall be effective.
(5) The payer of any periodic payment or nonperiodic distribution
shall give notice to the payee of the right to make an election to have
no state withholding from the payment or distribution. The department
shall provide by rule for the time and manner of giving the notice
required under this subsection.
(6) Any rules permitted or required to be promulgated by the
department under this section shall, insofar as is practicable, be
consistent with corresponding provisions of section 3405 of the Internal
Revenue Code and regulations promulgated thereunder.
(7) Any designated distribution shall be treated as if it were
wages paid by an employer to an employee within the meaning of ORS
316.162 to 316.221 for all other purposes of ORS 316.162 to 316.221. In
the case of any designated distribution not subject to withholding by
reason of an election under subsection (4) of this section, the amount
withheld shall be treated as zero. [1985 c.87 §9; 2003 c.77 §17]Note: 316.189 was added to and made a part of ORS chapter 316 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation.Notwithstanding the provisions of ORS 316.197:
(1) When adherence to the federal withholding system creates an
undue burden on an employer, the employer may request and the Department
of Revenue may permit that taxes be withheld and paid over within a time
and in a manner other than that required under federal law.
(2) If the department permits the modification of the time and
manner of withholding and payment of taxes under this section the method
of withholding and payment permitted shall, whenever possible, provide
for withholding and payment in a manner similar to that required for
other employers required to deduct and retain similar amounts of income
taxes from wages paid to their employees in Oregon.
(3) The department shall adopt rules establishing the manner in
which an employer may request a modification under this section, and may
by rule prescribe a modification of the time and manner of withholding
and payment of taxes in such instances as it considers necessary. The
department may adopt by rule any exceptions to federal withholding
requirements that have been adopted by the Internal Revenue Service.
[1985 c.87 §2](1) The Department of Revenue may
enter into an agreement with the appropriate United States agency or
instrumentality for the voluntary withholding of state income taxes from
the retired pay of members of the uniformed services under the provisions
of section 654, Public Law 98-525. The department is hereby authorized to
do all acts and comply with any requirements necessary to enable retired
members of the uniformed services to elect voluntary withholding of state
income taxes from their retired pay.
(2) The department may establish by rule a minimum monthly amount
to be withheld and paid over for any member electing voluntary
withholding of state income taxes under an agreement entered into under
subsection (1) of this section.
(3) Notwithstanding ORS 314.835 or 314.840, the department may
disclose to the Department of Defense the name, address or Social
Security number of any member electing voluntary withholding of state
income taxes whenever necessary to enable the Department of Defense to
implement such withholding under the terms of an agreement entered into
under subsection (1) of this section.
(4) As used in this section:
(a) “Member” means any person retired from a regular or reserve
component of one of the uniformed services, who has Oregon personal
income tax liability in connection with the receipt of retired pay.
(b) “Retired pay” means pay and benefits received based on
conditions of the federal retirement law, pay grade, years of service,
date of retirement, transfer to Fleet Reserve or Fleet Marine Corps
Reserve or disability.
(c) “Uniformed services” means the Army, Navy, Air Force, Marine
Corps, Coast Guard, commissioned corps of the United States Public Health
Service and the commissioned corps of the National Oceanic and
Atmospheric Administration. [1985 c.87 §8]Note: 316.193 was added to and made a part of ORS chapter 316 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation. (1) If a lottery
prize payment for a prize is $5,000 or more, and the payment is made to
an individual, the Oregon State Lottery Commission shall withhold eight
percent of the payment. A payment made to a partnership, estate, trust or
corporation shall not be subject to the withholding of tax.
(2) The commission shall pay to the Department of Revenue any
amounts withheld under this section in the time and manner provided by
the department by rule.
(3) If a prize exceeds $600, the commission shall provide the prize
recipient an income reporting form indicating the amount of the prize
payment being made. At the request of the prize recipient or the
department, the commission shall provide the requester a copy of an
income reporting form provided under this subsection. [1997 c.849 §4;
1999 c.43 §1; 1999 c.143 §5; 2003 c.48 §1](1) The Department of Revenue may enter
into an agreement with the United States Office of Personnel Management
for the voluntary withholding of state income taxes from the retirement
pay of United States civil service annuitants under the provisions of
section 1705 of Public Law 97-35. The department is hereby authorized to
do all acts and comply with any requirements necessary to enable retired
United States civil servants to elect voluntary withholding of state
income taxes from their retirement pay.
(2) The department shall establish by rule a procedure under which
a United States civil service annuitant may request voluntary withholding
under an agreement entered into under subsection (1) of this section. The
procedure may include a minimum monthly amount to be withheld and paid
over to the state.
(3) Notwithstanding ORS 314.835 or 314.840, the department may
disclose to the United States Office of Personnel Management the name,
address or Social Security number of any United States civil service
annuitant electing voluntary withholding of state income taxes whenever
necessary to enable the United States Office of Personnel Management to
implement such withholding under the terms of an agreement entered into
under subsection (1) of this section.
(4) As used in this section:
(a) “Civil service annuitant” means any person retired from the
federal civil service who has Oregon personal income tax liability in
connection with the receipt of retirement pay. “Civil service annuitant”
includes a survivor annuitant within the meaning of Title 5, United
States Code, section 8331.
(b) “Retirement pay” means regular, recurring monthly annuity
payments received based on conditions of federal retirement law, but does
not include retired pay as defined in ORS 316.193. [1985 c.87 §7]Note: 316.196 was added to and made a part of ORS chapter 316 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation.(1)(a) Except as provided under ORS 316.191 or paragraph (b) of
this subsection, within the time that each employer is required to pay
over taxes withheld for federal income tax purposes for any period, the
employer shall pay over to the Department of Revenue or to a financial
agent of the department the amounts required to be withheld under ORS
316.167 and 316.172 for the same period. Any employer not required to
withhold federal income taxes for any period but who is required to
deduct and retain amounts from wages paid to an employee under ORS
316.167 and 316.172 for the same period shall pay over to the department
or financial agent of the department, taxes withheld for the period,
within the time and in the manner, as if the employer were required to
withhold taxes for the period under federal law.
(b) Notwithstanding the provisions of paragraph (a) of this
subsection, any employer of agricultural employees who is not required to
withhold federal income taxes for any period but who is required to
deduct and retain amounts from wages paid to those employees under ORS
316.167 and 316.172 shall pay over to the department, or financial agent
of the department, taxes so withheld at the same time and for the same
period for which the employer is required to pay over employer and
employee taxes under chapter 21 of the Internal Revenue Code (Federal
Insurance Contributions Act).
(2) Every amount so paid over shall be accounted for as part of the
collections under this chapter. No employee has any right of action
against an employer in respect of any moneys deducted from wages and paid
over in compliance or intended compliance with this section.
(3) If any amount required to be withheld and paid over to the
department is delinquent, interest shall accrue at the rate prescribed
under ORS 305.220 on that amount from the last day of the month following
the end of the calendar quarter within which the amount was required to
be paid to the department to the date of payment. The provisions of this
subsection shall not relieve any employer from liability for a late
payment penalty under any other provision of law. [1969 c.493 §31; 1975
c.594 §1; 1982 s.s.1 c.1 §2; 1983 c.697 §1; 1985 c.87 §4; 1989 c.901 §7] (1)
An employer required to make a combined quarterly tax and assessment
payment under ORS 316.168 shall make the payment by means of electronic
funds transfer if the employer is required to make federal payroll tax
payments electronically.
(2) The Department of Revenue may adopt rules that provide
exemptions from the requirement that combined quarterly tax and
assessment payments 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 an employer who is not required to pay
by means of electronic funds transfer.
(4) As used in this section, the term “electronic funds transfer”
has the meaning given that term in ORS 293.525. [1997 c.299 §2; 2001 c.28
§6](1) With each payment made to the Department of Revenue, every
employer shall deliver to the department, on a form prescribed by the
department showing the total amount of withheld taxes in accordance with
ORS 316.167 and 316.172, and supply such other information as the
department may require. The employer is charged with the duty of advising
the employee of the amount of moneys withheld, in accordance with such
regulations as the department may prescribe, using printed forms
furnished or approved by the department for such purpose.
(2) Except as provided in subsection (4) of this section, every
employer shall submit a combined quarterly return to the department on a
form provided by it showing the number of payments made, the withheld
taxes paid during the quarter and an explanation of federal withholding
taxes as computed by the employer. The report shall be filed with the
department on or before the last day of the month following the end of
the quarter.
(3) The employer shall make an annual return to the department on
forms provided or approved by it, summarizing the total compensation paid
and the taxes withheld for all employees during the calendar year and
shall file the same with the department on or before the due date of the
corresponding federal return for the year for which report is made.
Failure to file the annual report without reasonable excuse on or before
the 30th day after notice has been given to the employer of failure
subjects the employer to a penalty of $100. The department may by rule
require additional information the department finds necessary to
substantiate the annual return, including but not limited to copies of
federal form W-2 for individual employees, and may prescribe
circumstances under which the filing requirement imposed by this
subsection is waived.
(4) Notwithstanding the provisions of subsection (2) of this
section, employers of agricultural employees may submit returns annually
showing the number of payments made and the withheld taxes paid. However,
such employers shall make and file a combined quarterly tax report with
respect to other tax programs, as required by ORS 316.168. [1969 c.493
§32; 1973 c.83 §1; 1982 s.s.1 c.1 §3; 1983 c.697 §2; 1987 c.366 §4; 1989
c.901 §8; 1993 c.593 §5; 1995 c.815 §1](1) Every employer who deducts and retains any amount under ORS
316.162 to 316.221 shall hold the same in trust for the State of Oregon
and for the payment thereof to the Department of Revenue in the manner
and at the time provided in ORS 316.162 to 316.221.
(2) At any time the employer fails to remit any amount withheld,
the department may enforce collection by the issuance of a distraint
warrant for the collection of the delinquent amount and all penalties,
interest and collection charges accrued thereon. Such warrant shall be
issued, recorded and proceeded upon in the same manner and shall have the
same force and effect as is prescribed with respect to warrants for the
collection of delinquent income taxes.
(3)(a) In the case of an employer that is assessed pursuant to the
provisions of ORS 305.265 (12) and 314.407 (1), the department may issue
a notice of liability to any officer, employee or member described in ORS
316.162 (3)(b) of such employer within three years from the time of
assessment. Within 30 days from the date the notice of liability is
mailed to the officer, employee or member, such officer, employee or
member shall pay the assessment, plus penalties and interest, or advise
the department in writing of objections to the liability and, if desired,
request a conference. Any conference shall be governed by the provisions
of ORS 305.265 pertaining to a conference requested from a notice of
deficiency.
(b) After a conference or, if no conference is requested, a
determination of the issues considering the written objections, the
department shall mail the officer, employee or member a conference letter
affirming, canceling or adjusting the notice of liability. Within 90 days
from the date the conference letter is mailed to the officer, employee or
member, such officer, employee or member shall pay the assessment, plus
penalties and interest, or appeal to the tax court in the manner provided
for an appeal from a notice of assessment.
(c) If neither payment nor written objection to the notice of
liability is received by the department within 30 days after the notice
of liability has been mailed, the notice of liability becomes final. In
such event, the officer, employee or member may appeal the notice of
liability to the tax court within 90 days after it became final in the
manner provided for an appeal from a notice of assessment.
(4)(a) In the case of a failure to file a withholding tax report on
the due date, governed by the provisions of ORS 305.265 (10) and 314.400,
the department, in addition to the provisions of ORS 305.265 (10) and
314.400, may send notices of determination and assessment to any officer,
employee or member described in ORS 316.162 (3)(b) any time within three
years after the assessment of an employer described in ORS 316.162
(3)(a). The time of assessment against such officer, employee or member
shall be 30 days after the date the notice of determination and
assessment is mailed. Within 30 days from the date the notice of
determination and assessment is mailed to the officer, employee or
member, such officer, employee or member shall pay the assessment, plus
penalties and interest, or advise the department in writing of objections
to the assessment, and if desired, request a conference. Any conference
shall be governed by the provisions of ORS 305.265 pertaining to a
conference requested from a notice of deficiency.
(b) After a conference or, if no conference is requested, a
determination of the issues considering the written objections, the
department shall mail the officer, employee or member a conference letter
affirming, canceling or adjusting the notice of determination and
assessment. Within 90 days from the date the conference letter is mailed
to the officer, employee or member, such officer, employee or member
shall pay the assessment, plus penalties and interest, or appeal in the
manner provided for an appeal from a notice of assessment.
(c) If neither payment nor written objection to the notice of
determination and assessment is received by the department within 30 days
after the notice of determination and assessment has been mailed, the
notice of determination and assessment becomes final. In such event, the
officer, employee or member may appeal the notice of determination and
assessment to the tax court within 90 days after it became final in the
manner provided for an appeal from a notice of assessment.
(5)(a) More than one officer or employee of a corporation may be
held jointly and severally liable for payment of withheld taxes.
(b) Notwithstanding the provisions of ORS 314.835, 314.840 or
314.991, if more than one officer or employee of a corporation may be
held jointly and severally liable for payment of withheld taxes, the
department may require any or all of the officers, members or employees
who may be held liable to appear before the department for a joint
determination of liability. The department shall notify each officer,
member or employee of the time and place set for the determination of
liability.
(c) Each person notified of a joint determination under this
subsection shall appear and present such information as is necessary to
establish that person’s liability or nonliability for payment of withheld
taxes to the department. If any person notified fails to appear, the
department shall make its determination on the basis of all the
information and evidence presented. The department’s determination shall
be binding on all persons notified and required to appear under this
subsection.
(d)(A) If an appeal is taken to the Oregon Tax Court pursuant to
ORS 305.404 to 305.560 by any person determined to be liable for unpaid
withholding taxes under this subsection, each person required to appear
before the department under this subsection shall be impleaded by the
plaintiff. The department may implead any officer, employee or member who
may be held jointly and severally liable for the payment of withheld
taxes. Each person impleaded under this paragraph shall be made a party
to the action before the tax court and shall make available to the tax
court such information as was presented before the department, as well as
such other information as may be presented to the court.
(B) The court may determine that one or more persons impleaded
under this paragraph are liable for unpaid withholding taxes without
regard to any earlier determination by the department that an impleaded
person was not liable for unpaid withholding taxes.
(C) If any person required to appear before the court under this
subsection fails or refuses to appear or bring such information in part
or in whole, or is outside the jurisdiction of the tax court, the court
shall make its determination on the basis of all the evidence introduced.
All such evidence shall constitute a public record and shall be available
to the parties and the court notwithstanding ORS 314.835, 314.840 or
314.991. The determination of the tax court shall be binding on all
persons made parties to the action under this subsection.
(e) Nothing in this section shall be construed to preclude a
determination by the department or the Oregon Tax Court that more than
one officer, employee or member are jointly and severally liable for
unpaid withholding taxes. [1969 c.493 §33; 1985 c.406 §4; 1989 c.423 §3;
1993 c.593 §6; 1995 c.650 §38; 1997 c.839 §17; 2001 c.660 §42; 2005 c.688
§4]Note: Section 5, chapter 688, Oregon Laws 2005, provides:
Sec. 5. The amendments to ORS 316.207 by section 4 of this 2005 Act
apply to appeals taken to the Oregon Tax Court on or after the effective
date of this 2005 Act [November 4, 2005]. [2005 c.688 §5](1) For
purposes of ORS 316.162 to 316.221, in the case of services performed as
a qualified real estate broker, qualified principal real estate broker or
as a direct seller:
(a) The individual performing the services shall not be treated as
an employee; and
(b) The person for whom the services are performed shall not be
treated as an employer.
(2) As used in this section, “qualified real estate broker” or
“qualified principal real estate broker” means any individual if:
(a) The individual is a real estate licensee under ORS 696.010 to
696.495, 696.600 to 696.785, 696.800 to 696.870 and 696.995;
(b) Substantially all of the remuneration (whether or not paid in
cash) for the services performed by the individual as a real estate
licensee is directly related to sales or other output (including the
performance of services) rather than to the number of hours worked; and
(c) The services performed by the individual are performed pursuant
to a written contract between the individual and the real estate broker,
principal real estate broker or real estate appraiser for whom the
services are performed and the contract provides that the individual will
not be treated as an employee with respect to the services for Oregon tax
purposes.
(3) As used in this section, “direct seller” means any individual
if:
(a) The individual is:
(A) Engaged in the trade or business of selling, or soliciting the
sale of, consumer products to any buyer on a buy-sell basis, a
deposit-commission basis or any similar basis, which the Department of
Revenue prescribes by rule, for resale by the buyer or any other person,
in the home or otherwise than in a permanent retail establishment; or
(B) Engaged in the trade or business of selling, or soliciting the
sale of, consumer products in the home or otherwise than in a permanent
retail establishment;
(b) Substantially all the remuneration (whether or not paid in
cash) for the performance of the services described in paragraph (a) of
this subsection is directly related to sales or other output (including
the performance of services) rather than to the number of hours worked;
and
(c) The services performed by the individual are performed pursuant
to a written contract between the individual and the person for whom the
services are performed and the contract provides that the individual will
not be treated as an employee with respect to the services for Oregon tax
purposes. [1983 c.597 §3; 2001 c.300 §61]The provisions of the income tax laws
in ORS chapters 305 and 314 and this chapter, relating to penalties,
misdemeanors and jeopardy assessments, apply to employers subject to the
provisions of ORS 316.162 to 316.221, and for these purposes any amount
deducted or required to be deducted and remitted to the Department of
Revenue under ORS 316.162 to 316.221 is considered the tax of the
employer and with respect to such amount the employer is considered as a
taxpayer. [1969 c.493 §34; 1982 s.s.1 c.16 §10; 1985 c.87 §5](Professional Athletic Teams) (1) As used in ORS
316.213 to 316.219:
(a) “Duty days” means the days during the tax year from the
beginning of the official preseason training period of a professional
athletic team through the last game in which the professional athletic
team competes or is scheduled to compete during the tax year.
(b) “Member of a professional athletic team” means an athlete or
other individual rendering service to a professional athletic team if the
compensation of the athlete or other individual exceeds $50,000 in a tax
year.
(2) The Department of Revenue may further define by rule the terms
defined in this section in a manner consistent with this section. [2003
c.808 §6](1) A person who transacts business in the State of
Oregon and who pays wages, salary, bonuses or other taxable income to a
member of a professional athletic team, in lieu of the withholding
requirements under ORS 316.167, shall withhold eight percent of the
income as provided in this section and by rule of the Department of
Revenue.
(2) The person withholding amounts under this section shall pay the
amounts withheld to the Department of Revenue at the time and in the
manner prescribed by the department by rule.
(3) If the member of a professional athletic team is a resident of
the State of Oregon, all compensation paid to the member, whether or not
attributable to duty days, is subject to withholding under this section.
(4) If the member of a professional athletic team is not a resident
of the State of Oregon, a portion of the compensation paid to the member
is subject to withholding under this section. The portion subject to
withholding is that portion of compensation received for the tax year
that bears the same ratio to total compensation received for the tax year
as the number of duty days within this state bears to the total number of
duty days spent both within and outside this state during the tax year.
(5) Notwithstanding the description of the portion of compensation
subject to withholding in subsection (4) of this section, the Department
of Revenue may provide by rule alternative methodologies for determining
the portion of compensation subject to withholding under this section
that the department determines to be fair and equitable. [2003 c.808 §7](1) In addition to other reports and returns required by
law or rule, a person required to withhold compensation under ORS 316.214
shall file an annual report with the Department of Revenue reporting:
(a) The total amount of compensation paid during the year to the
members of the professional athletic team for which the report is being
made.
(b) A roster of the members of the professional athletic team for
which the report is being made who were members at any time during the
year, that lists for each member:
(A) A taxpayer identification number;
(B) Compensation paid to the member; and
(C) The number of duty days in this state and the total number of
duty days for the year.
(c) The amount withheld under ORS 316.214 for the year.
(d) Other information the department may require by rule.
(2) The report must be filed with the department on or before April
15 following the year for which the report is being made or at another
time as the department may require by rule. [2003 c.808 §8] (1) The Department of Revenue may adopt
administrative rules the department determines are necessary to:
(a) Implement the duties of the department under ORS 316.213 to
316.219; and
(b) Carry out the purposes of ORS 316.213 to 316.221.
(2) The rules may include, but are not limited to:
(a) Rules providing alternative methodologies for determining the
portion of compensation subject to withholding under ORS 316.214 (4) that
the department determines to be fair and equitable; and
(b) Rules construing ORS 316.162 to 316.221 in a manner that is
consistent and compatible with the withholding provisions of ORS 316.213
to 316.219. [2003 c.808 §8a](Qualifying Film Productions)(1) A person who has
obtained a written certificate under section 1, chapter 559, Oregon Laws
2005, who is engaged in a qualifying film production and who pays
qualifying compensation shall withhold, in lieu of the state personal
income tax withholding requirements under ORS 316.167, 6.2 percent of the
qualifying compensation paid.
(2) For tax years beginning on or after January 1, 2007, the
Department of Revenue may by rule prescribe a withholding percentage that
reflects the department’s best estimate of state personal income tax
attributable to qualifying compensation. If a withholding percentage is
established by rule, a person described in subsection (1) of this section
shall withhold at the percentage established by rule in lieu of
subsection (1) of this section and the state personal income tax
withholding requirements under ORS 316.167.
(3) A person who withholds amounts under this section shall pay the
amounts withheld to the Department of Revenue and shall file combined
quarterly tax and assessment reports in accordance with ORS 316.168.
(4) A person who is required to withhold amounts under this section
shall file, in addition to any other reports required by law, a report
with the Oregon Film and Video Office, reporting:
(a) The total amount of qualifying compensation paid by the person;
(b) The names, taxpayer identification numbers and amounts of
qualifying compensation paid to each employee receiving qualifying
compensation during the period during which the qualifying film
production was produced;
(c) The total amount withheld under this section for the period
during which the qualifying film production was produced; and
(d) Any other information required by the office.
(5) The report must be filed with the office as soon as is
practicable following completion of the qualifying film production or, in
the case of a qualifying film production that consists of commercials,
annually on or before January 31 of the year following the year in which
the commercials were produced. The office shall report the total amount
reported by each person under subsection (4)(c) of this section to the
department.
(6) Notwithstanding ORS 316.171 or other law governing claims for
refund of withheld amounts under ORS 316.162 to 316.221, a person who
withholds amounts under this section may not file a claim for refund with
respect to any amount shown as having been withheld or any payment
accompanying a report filed under ORS 316.162 to 316.221 for a reporting
period that overlaps a period for which a report is filed under
subsection (4) of this section. [2005 c.559 §4] (1) Notwithstanding ORS
316.168 or 316.502, the Department of Revenue shall deposit into a
suspense account established under ORS 293.445 amounts that are withheld
and paid to the department under ORS 316.220 and that equal the amounts
reported to the department by the Oregon Film and Video Office under ORS
316.220 (5).
(2) Notwithstanding ORS 314.835 or 314.840 or other law concerning
the disclosure of tax information, the department may send copies of
withholding reports filed under ORS 316.162 to 316.221 by a certificate
holder and statements of the amounts actually withheld by a certificate
holder to the Oregon Film and Video Office.
(3) Amounts necessary to reimburse the department for the expenses
of the department in administering this section and ORS 316.220, not to
exceed one-half of one percent of amounts deposited in the suspense
account described in subsection (1) of this section, are continuously
appropriated to the department from the suspense account. The balance of
the suspense account shall be transferred to the Greenlight Oregon Labor
Rebate Fund established under section 2, chapter 559, Oregon Laws 2005.
[2005 c.559 §5]NONRESIDENT REPORTING(1) As used in this section:
(a) “Nonresident employer” means an employer who:
(A) Has no permanent place of business within this state; and
(B) Employs qualifying nonresident employees to perform temporary
services in this state.
(b) “Qualifying nonresident employee” means an employee or
independent contractor who:
(A) Is not a resident or part-year resident of this state;
(B) Performs temporary services in this state for one or more
nonresident employers; and
(C) Has no income from Oregon sources other than income earned in
connection with the performance of temporary services for one or more
nonresident employers.
(c) “Temporary services” means services performed during a limited
period of time, not to exceed 200 days in one calendar year.
(2) The Department of Revenue shall provide for alternate methods
of filing, reporting or calculating tax liability, to be used by
nonresident employers and qualifying nonresident employees to report and
pay Oregon personal income tax on income earned in connection with the
employees’ performance of temporary services in this state. In providing
for an alternate filing, reporting or calculating method, the department
shall have the power to:
(a) Prescribe forms to be filed by nonresident employers to satisfy
withholding registration, quarterly filing and account termination filing
requirements under ORS 316.162 to 316.221, or employee estimated tax
requirements under ORS 316.557 to 316.589.
(b) Prescribe forms to be filed by qualifying nonresident employees
to satisfy annual personal income tax return requirements under ORS
316.362.
(c) Determine, based upon the circumstances, the amount of
withholding or estimated tax payments necessary to result in a sum
substantially equivalent to the amount of tax that a qualifying
nonresident employee will be required to pay under this chapter.
(d) Enter into agreements pursuant to ORS 305.150 for the purpose
of finally determining the Oregon personal income tax liability of
qualifying nonresident employees.
(e) Determine whether and to what extent other provisions of this
chapter shall be applied to nonresident employers or qualifying
nonresident employees.
(3)(a) Except as provided in paragraph (b) of this subsection, a
nonresident employer shall comply with the requirements of ORS 316.162 to
316.221 in the same manner as any other employer.
(b) A nonresident employer may elect to employ an alternate method
established by the department pursuant to this section by notifying the
department in the time and manner established by rule of the department.
Any nonresident employer giving notice of election under this paragraph
shall not be required to comply with the requirements of ORS 316.162 to
316.221.
(4)(a) Notwithstanding the election of a nonresident employer to
employ the alternate method established by the department under this
section, a qualifying nonresident employee may elect to report and pay
Oregon personal income tax on income earned by the employee in connection
with the employee’s performance of temporary services in this state in
the same manner as any other nonresident.
(b) If a nonresident employer does not make the election permitted
under subsection (3) of this section, the qualifying nonresident
employees of the employer shall report and pay Oregon personal income tax
on income earned in connection with their performance of temporary
services within this state in the same manner as any other nonresident.
(5) The department may adopt any rules it considers necessary to
carry out the provisions of this section. [Formerly 316.216]ESTATES AND TRUSTS(Generally) The
tax imposed by this chapter on individuals applies to the taxable income
of estates and trusts, except for trusts taxed as corporations under ORS
chapter 317 or 318. [1969 c.493 §39; 1973 c.115 §3] The taxable
income of an estate or trust shall be computed in the same manner as in
the case of an individual except as otherwise provided by this chapter.
The tax shall be paid by the fiduciary. [1969 c.493 §40; 1983 c.684 §21]
(1) An association, trust or other unincorporated organization that is
taxable as a corporation for federal income tax purposes is not subject
to tax under this chapter, but is taxable as a corporation under ORS
chapter 317 or 318, or both, as provided therein.
(2) An association, trust or other unincorporated organization that
is not taxable as a corporation for federal income tax purposes but by
reason of its purposes or activities is exempt from federal income tax
except with respect to its unrelated business taxable income, is taxable
under this chapter on such federally taxable income. [1969 c.493 §41;
1973 c.402 §21] A
domestic or foreign business trust of the type defined in ORS 128.560 is
subject to tax under ORS chapter 317 or 318 and amounts distributed by it
to its shareholders shall be treated as distributions by a corporation
for the purposes of this chapter and ORS chapters 317 and 318, except
that distributions that are treated as unrelated business taxable income
under section 856(h)(3)(C) (pension-held REITs) of the Internal Revenue
Code for federal tax purposes shall also be treated as unrelated business
taxable income for state tax purposes. [1973 c.115 §2; 1995 c.556 §4](Resident Estates and Trusts) (1) As
used in this chapter:
(a) “Qualified funeral trust” has the meaning given that term in
section 685 of the Internal Revenue Code.
(b) “Resident estate” means an estate of which the fiduciary is
appointed by an Oregon court or the administration of which is carried on
in Oregon.
(c) “Resident funeral trust” means a qualified funeral trust that,
at the time of the initial funding of the trust:
(A) Is required to be established under the laws of this state; or
(B) Is established by a contract, the terms of which state that a
service or merchandise is to be provided by a funeral home or cemetery
located in this state.
(d) “Resident trust” means a trust, other than a qualified funeral
trust, of which the fiduciary is a resident of Oregon or the
administration of which is carried on in Oregon. In the case of a
fiduciary that is a corporate fiduciary engaged in interstate trust
administration, the residence and place of administration of a trust both
refer to the place where the majority of fiduciary decisions are made in
administering the trust.
(2) The taxable income of a resident estate, resident trust or
resident funeral trust is its federal taxable income modified by the
addition or subtraction, as the case may be, of its share of the
fiduciary adjustment determined under ORS 316.287.
(3) The Department of Revenue shall adopt rules defining “trust
administration” for purposes of subsection (1)(d) of this section that
include within the definition activities related to fiduciary decision
making and that exclude from the definition activities related to
incidental execution of fiduciary decisions.
(4) The department shall adopt rules providing for simplified
reporting of resident funeral trusts having a single trustee and of
resident funeral trusts that are terminated during the tax year. [1969
c.493 §§42, 43; 1997 c.100 §7; 1997 c.325 §42; 2003 c.50 §1]
(1) The “fiduciary adjustment” is the net amount of the modifications to
federal taxable income described in this chapter (ORS 316.697 being
applicable if the estate or trust is a beneficiary of another estate or
trust) that relates to its items of income or deduction of an estate or
trust.
(2) The respective shares of an estate or trust and its
beneficiaries (including solely for the purpose of this allocation,
nonresident beneficiaries) in the fiduciary adjustment shall be in
proportion to their respective shares of federal distributable net income
of the estate or trust. If the estate or trust has no federal
distributable net income for the taxable year, the share of each
beneficiary in the fiduciary adjustment shall be in proportion to the
share of the estate or trust income of the beneficiary for such year,
under state law or the terms of the instrument, that is required to be
distributed currently and any other amounts of such income distributed in
such year. Any balance of the fiduciary adjustment shall be allocated to
the estate or trust.
(3) The Department of Revenue may by regulation authorize the use
of such other methods of determining to whom the items comprising the
fiduciary adjustment shall be attributed, as may be appropriate and
equitable, on such terms and conditions as the department may require.
[1969 c.493 §44; 1975 c.705 §6] (1) For purposes of
this section, an estate or trust is considered a resident of the state
which taxes the income of the estate or trust irrespective of whether the
income is derived from sources within that state.
(2) Notwithstanding the limitations contained in ORS 316.082 and
316.131, if an estate or trust is a resident of this state and also a
resident of another state, the estate or trust shall be allowed a credit
against the taxes imposed under this chapter for income taxes imposed by
and paid to the other state, subject to the following conditions:
(a) Credit shall be allowed only for the proportion of the taxes
paid to the other state as the income taxable under this chapter and also
subject to tax in the other state bears to the entire income upon which
the taxes paid to the other state are imposed.
(b) The credit shall not exceed the proportion of the tax payable
under this chapter as the income subject to tax in the other state and
also taxable under this chapter bears to the entire income taxable under
this chapter. [1969 c.493 §45; 1985 c.802 §10; 1991 c.838 §7] (1) A resident
beneficiary of a trust whose adjusted gross income includes all or part
of an accumulation distribution by such trust, as defined in section 665
of the Internal Revenue Code, shall be allowed a credit against the tax
otherwise due under this chapter for all or a proportionate part of any
tax, paid by the trust under this chapter for any preceding taxable year,
that would not have been payable if the trust had in fact made
distribution to its beneficiaries at the times and in the amounts
specified in section 666 of the Internal Revenue Code.
(2) The credit under this section shall not reduce the tax
otherwise due from the beneficiary under this chapter to an amount less
than would have been due if the accumulation distribution or part thereof
were excluded from the adjusted gross income of the beneficiary. [1969
c.493 §46; 1997 c.839 §18; 1999 c.90 §14; 2001 c.660 §43](Nonresident Estates and Trusts) For purposes of this
chapter, a “nonresident estate or trust” means an estate or trust that is
not a resident. [1969 c.493 §47; 1997 c.325 §43] For purposes of ORS
316.302 to 316.317:
(1) Items of income, gain, loss and deduction mean those derived
from or connected with sources in this state.
(2) Items of income, gain, loss and deduction entering into the
definition of federal distributable net income include such items from
another estate or trust of which the first estate or trust is a
beneficiary.
(3) The source of items of income, gain, loss or deduction shall be
determined under regulations prescribed by the Department of Revenue in
accordance with the general rules in ORS 316.127 as if the estate or
trust were a nonresident individual.
(4) The income of a nonresident estate or trust consists of:
(a) Its share of items of income, gain, loss and deduction that
enter into the federal definition of distributable net income;
(b) Increased or reduced by the amount of any items of income,
gain, loss or deduction that are recognized for federal income tax
purposes but excluded from the federal definition of distributable net
income of the estate or trust;
(c) Less the amount of the deduction for its federal exemption.
[1969 c.493 §48; 1983 c.684 §22] (1) The share of a
nonresident estate or trust of items of income, gain, loss and deduction
entering into the definition of distributable net income and the share
for purpose of ORS 316.127 of a nonresident beneficiary of any estate or
trust in estate or trust income, gain, loss and deduction shall be
determined as follows:
(a) To the amount of items of income, gain, loss and deduction that
enter into the definition of distributable net income there shall be
added or subtracted, as the case may be, the modifications to federal
taxable income described in this chapter to the extent they relate to
items of income, gain, loss and deduction that also enter into the
definition of distributable net income. No modification shall be made
under this section that has the effect of duplicating an item already
reflected in the definition of distributable net income.
(b) The amount determined under paragraph (a) of this subsection
shall be allocated among the estate or trust and its beneficiaries
(including, solely for the purpose of this allocation, resident
beneficiaries) in proportion to their respective shares of federal
distributable net income. The amounts so allocated have the same
character as for federal income tax purposes. If an item entering into
the computation of such amounts is not characterized for federal income
tax purposes, it has the same character as if realized directly from the
source from which realized by the estate or trust, or incurred in the
same manner as incurred by the estate or trust.
(c) If the estate or trust has no federal distributable net income
for the taxable year, the share of each beneficiary in the net amount
determined under paragraph (a) of this subsection shall be in proportion
to the beneficiary’s share of the estate or trust income for such year,
under state law or the terms of the instrument, that is required to be
distributed currently and any other amounts of such income distributed in
such year. Any balance of such net amount shall be allocated to the
estate or trust.
(2) The Department of Revenue may by regulation establish such
other method or methods of determining the respective shares of the
beneficiaries and of the estate or trust in its income derived from
sources in this state, and in the modifications related thereto, as may
be appropriate and equitable. [1969 c.493 §49; 1975 c.705 §7] A
nonresident beneficiary of a trust whose adjusted gross income derived
from sources in this state includes all or part of an accumulation
distribution by such trust, as defined in section 665 of the Internal
Revenue Code, shall be allowed a credit against the tax otherwise due
under this chapter, computed in the same manner and subject to the same
limitation as provided by ORS 316.298 with respect to a resident
beneficiary. [1969 c.493 §50]RETURNS; PAYMENTS; REFUNDS (1) An income tax return
with respect to the tax imposed by this chapter shall be made by the
following:
(a) Every resident individual:
(A) Who is required to file a federal income tax return for the
taxable year; or
(B) Who has gross income greater than the sum of:
(i) The basic standard deduction allowed under ORS 316.695
(1)(c)(B);
(ii) Any additional standard deduction allowed to the taxpayer
under ORS 316.695 (7); and
(iii) An amount equal to the income equivalent of one personal
exemption credit under ORS 316.085 (3)(b) if unmarried, or equal to the
income equivalent of two personal exemption credits under ORS 316.085
(3)(b) if married.
(b) Every nonresident individual who has federal gross income from
sources in this state of more than the basic standard deduction allowed
under ORS 316.695 (1)(c)(B).
(c) Every resident estate or trust that is required to file a
federal income tax return.
(d) Every nonresident estate that has federal gross income of $600
or more for the taxable year from sources within this state.
(e) Every nonresident trust that for the taxable year has from
sources within this state any taxable income, or gross income of $600 or
more regardless of the amount of taxable income.
(2) Nothing contained in this section shall preclude the Department
of Revenue from requiring any individual, estate or trust to file a
return when, in the judgment of the department, a return should be filed.
(3) For purposes of this section, the income equivalent of a
personal exemption credit under ORS 316.085 (3)(b) shall be determined as
follows:
(a) Divide the personal exemption credit amount by the rate
applicable to the lowest income bracket under ORS 316.037.
(b) If the resulting quotient is less than the maximum amount of
income subject to the rate used in paragraph (a) of this subsection, the
quotient is the income equivalent.
(c) If the resulting quotient is more than the maximum amount of
income subject to the rate used in paragraph (a) of this subsection:
(A) Multiply the maximum amount of income subject to the rate used
in paragraph (a) of this subsection by the rate used in paragraph (a) of
this subsection.
(B) Determine the difference between the product calculated under
subparagraph (A) of this paragraph and the personal exemption credit
amount.
(C) Divide the difference determined in subparagraph (B) of this
paragraph by the rate applicable to the income bracket that is the next
succeeding the lowest income bracket under ORS 316.037.
(D) Add the quotient determined in subparagraph (C) of this
paragraph to the maximum amount of income subject to the rate used in
paragraph (a) of this subsection. The sum is the income equivalent. [1969
c.493 §54; 1983 c.740 §90; 2001 c.77 §6; 2001 c.660 §15] The instructions to the individual
state income tax return form required to be filed by this chapter shall:
(1) Be written in simple words used in their commonly understood
senses that convey meanings clearly and directly;
(2) Be written in primarily simple, rather than compound or
complex, sentences that are as short as possible;
(3) Limit the use of definitions to definitions of words that
cannot be properly explained or qualified in the text;
(4) Include an index at the beginning of the instructions to
provide a useful guide to the use of the form. The index shall give a
comprehensive listing of return form parts in a logical sequence, and the
index listings shall clearly state the contents of each section;
(5) Have the text of the instructions printed in roman type at
least as large as 10-point modern type, two points leaded;
(6) Have margins that are adequate for purposes of readability, and
have a line length of the text not exceeding four inches for a column;
(7) Have section headings printed in a contrasting color, typeface
or size; and
(8) Be printed so that the contrast and legibility of the ink and
paper used is substantially the equivalent of black ink on white paper.
[1977 c.736 §2] (1) The
instructions to an individual state income tax return form shall have a
total Flesch Reading Ease Score of 60 or higher.
(2) As used in this section:
(a) “Flesch Reading Ease Score” means 206.835 - (x + y) where x
equals average sentence length multiplied by 1.015 and y equals average
word length multiplied by 84.6.
(b) “Average sentence length” means the total number of words in
the instructions to the state income tax return form divided by the total
number of sentences in the instructions.
(c) “Average word length” means the total number of syllables in
the instructions to the state income tax return form divided by the total
number of words in the instructions. [1977 c.736 §3] A husband and wife may
make a joint return with respect to the tax imposed by this chapter even
though one of the spouses has neither gross income nor deductions, except
that:
(1) No joint return shall be made under this chapter if the spouses
are not permitted to file a joint federal income tax return;
(2) If the federal income tax liability of either spouse is
determined on a separate federal return, their income tax liabilities
under this chapter shall be determined on separate returns;
(3) If the federal income tax liabilities of husband and wife are
determined on a joint federal return, they shall file a joint return
under this chapter and their tax liabilities shall be joint and several;
and
(4) If neither spouse is required to file a federal income tax
return and either or both are required to file an income tax return under
this chapter, they may elect to file separate or joint returns and
pursuant to such election their liabilities shall be separate or joint
and several. [1969 c.493 §55; 1985 c.802 §9]Notwithstanding ORS 316.367, upon petition to the
Director of the Department of Revenue by one spouse who has filed a joint
tax return, the Department of Revenue may terminate the joint and several
liability of each spouse and divide the liability equally between both
spouses for the tax, penalty and interest due for the tax year that is
the subject of the joint return. No petition shall be granted unless at
the time of the petition, the spouses are living apart and are legally
separated or divorced, and the petitioner satisfies the department that
the petitioner is unable to pay the entire liability due to financial
hardship. The department shall adopt rules establishing the manner in
which a petitioner shall show financial hardship. [1993 c.593 §8]If a joint return has been made under this chapter for a tax
year, a spouse shall be relieved of liability for tax, including
interest, penalties and other amounts, for the tax year:
(1) If the Internal Revenue Service has made a determination that
relieved the spouse of liability for federal taxes for the same tax year
under Internal Revenue Code provisions that provide for spouse relief
from liability; or
(2) If the Internal Revenue Service has not made a determination
that relieved the spouse of liability for the tax year, but the spouse
qualifies to be relieved of state tax liability under rules adopted by
the Department of Revenue. In adopting rules under this subsection, the
department shall consider the provisions of the Internal Revenue Code and
regulations issued thereunder that provide for spouse relief from
liability for federal taxes. [1983 c.627 §§2,3; 1985 c.802 §9a; 1999 c.90
§15; 2001 c.660 §7](1) Except as provided in subsection (2)
of this section, a minor shall file a return and include therein all
items of income, including income attributable to personal services, and
such income shall not be included on the return of the parent. All
expenditures by the parent or the minor attributable to such income are
considered to have been paid or incurred by the minor. However, any tax
assessed against the minor, to the extent, attributable to income from
personal services, if not paid by the minor, for all purposes shall be
considered as having also been properly assessed against the parent. For
the purposes of this section the term “parent” includes an individual who
is entitled to the services of a minor by reason of having parental
rights and duties in respect of such minor.
(2) If a parent is eligible to elect and elects to include the
interest and dividend income of a child on the parent’s federal income
tax return under section 1(g)(7)(B) of the Internal Revenue Code, the
parent shall be considered to have elected to include the interest and
dividend income of the child on the return filed by the parent for the
same taxable period for purposes of this chapter. The child need not in
such case file a return for purposes of this chapter for the taxable
period to which the election applies. [1969 c.493 §56; 1989 c.625 §13a;
1991 c.457 §7a] An income tax return for an
individual who is unable to make a return by reason of minority or other
disability shall be made and filed by a duly authorized agent of the
individual, guardian, conservator, fiduciary or other person charged with
the care of the person or property of the individual other than a
receiver in possession of only a part of the individual’s property. [1969
c.493 §57; 1985 c.761 §13] (1) An income tax return, in the
name of the decedent, for any deceased individual shall be made and filed
by a personal representative or other person charged with the care of the
property, and this duty extends to any unfiled return prior to decedent’s
death. The tax shall be levied upon and collected from the estate. A
final return of a decedent shall be due when it would have been due if
the decedent had not died.
(2) The income tax return of an estate or trust shall be made and
filed by the fiduciary thereof, whether the income is taxable to the
estate or trust or to the beneficiaries thereof. If two or more
fiduciaries are acting jointly, the return may be made by any one of
them. [1969 c.493 §58; 1975 c.705 §9](1) In the case
of any tax for which a return is required under this chapter from a
decedent or a decedent’s estate during the period of administration, the
Department of Revenue may give notice of deficiency as described in ORS
305.265 within 18 months after a written election for a final tax
determination is made by the personal representative, administrator,
trustee or other fiduciary representing the estate of the decedent. This
election must be filed after the return is made and filed in the form and
manner as may be prescribed by the department by rule.
(2) Notwithstanding the provisions of subsection (1) of this
section, 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) The limitations to the giving of a notice of 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.
If the Commissioner of Internal Revenue or other authorized official of
the federal government makes a correction resulting in a change of the
decedent’s or the estate of the decedent’s tax for state income tax
purposes, then notice of a deficiency under any law imposing tax upon or
measured by income for the corresponding tax year may be mailed within
one year after the department is notified by the fiduciary or the
commissioner of such federal correction, or within the applicable
18-month or five-year period prescribed in subsections (1) and (2) of
this section, respectively, whichever period later expires.
(4) After filing the decedent’s return, the personal
representative, administrator, trustee or other fiduciary may apply in
writing for discharge from personal liability for tax on the decedent’s
income. After paying any tax for which the personal representative,
administrator, trustee or other fiduciary is subsequently notified, or
after expiration of nine months since receipt of the application and
during which no notification of tax liability is made, the discharge
becomes effective. A discharge under this subsection does not discharge
the personal representative, administrator, trustee or other fiduciary
from liability to the extent that assets of the decedent’s estate are
still in the possession or control of the personal representative,
administrator, trustee or other fiduciary. The failure of a personal
representative to make application and otherwise proceed under this
subsection shall not affect the protection available to the personal
representative under ORS 116.113 (2), 116.123 and 116.213.
(5) For the purpose of facilitating the settlement and distribution
of estates held by fiduciaries, the department, on behalf of the state,
may agree upon the amount of taxes at any time due or to become due from
such fiduciaries under this chapter or transferees of an estate as
provided in ORS 314.310 with respect to a tax return or returns of or for
a decedent individual or an estate or trust, and payment in accordance
with such agreement shall be in full satisfaction of the taxes to which
the agreement relates. [1969 c.493 §59; 1971 c.333 §3; 1995 c.453 §5] Every
receiver, trustee in bankruptcy, assignee for benefit of creditors or
other like fiduciary, shall give notice of qualification as such to the
Department of Revenue, as may be required by regulation. [1969 c.493 §60] (1) A
return filed before the last day prescribed by law for the filing thereof
is considered as filed on the last day. An advance payment of any portion
of the tax made at the time the return was filed is considered as made on
the last day prescribed by law for the payment of the tax or, if the
taxpayer elected to pay the tax in installments, on the last day
prescribed for the payment of the first installment. The last day
prescribed by law for filing the return or paying the tax shall be
determined without regard to any extension of time granted the taxpayer
by the Department of Revenue.
(2) ORS 305.820 applies to returns filed by mail or private express
carrier and to due dates that fall on a Saturday, Sunday or legal
holiday. [1969 c.493 §64; 1993 c.44 §3] If directed
to do so by the Department of Revenue, through regulations or
instructions upon the state income tax return form, every taxpayer
required by this chapter to file an income tax return with the department
shall also file with such return a true copy of the federal tax return
filed by the taxpayer pursuant to the requirements of the Internal
Revenue Code for the same taxable year. The department may, in its
discretion, promulgate regulations or instructions that permit taxpayers
to submit specified excerpts from federal returns in lieu of submitting
copies of the entire federal return. The federal return or any part
thereof required to be filed with the state income tax return is
incorporated in and shall be a part of the state income tax return. [1969
c.493 §66; 1977 c.872 §6] Any election expressly authorized by
this chapter may be changed on such terms and conditions as the
Department of Revenue may prescribe by regulation. [1969 c.493 §67](1) The tax treatment of common trust funds and participants
therein, under this chapter, is governed by the provisions of the
Internal Revenue Code.
(2) Every financial institution or trust company maintaining a
common trust fund shall make a return to the Department of Revenue for
each tax year, stating specifically, with respect to such fund, the items
of gross income and deductions, and shall include in the return
information sufficient to identify the trusts and estates entitled to
share in the net income of the common trust fund and the amount of the
proportionate share of each such participant. The return shall be made at
such time as is designated by the department. [1969 c.493 §69; 1997 c.631
§456](1) Individual taxpayers who file an Oregon income tax return for
purposes of this chapter and who will receive a tax refund from the
Department of Revenue may designate that a contribution be made to the
Alzheimer’s Disease Research Fund by marking the appropriate box printed
on the return pursuant to subsection (2) of this section.
(2) The Department of Revenue shall print on the face of the Oregon
income tax form a space for taxpayers to designate that a contribution be
made to the Alzheimer’s Disease Research Fund from their income tax
refund. The space for designating the contribution shall provide for
checkoff boxes as indicated under ORS 305.749.
(3) A designation under subsection (1) of this section shall be
made with respect to any taxable year on the returns for that taxable
year, and once made shall be irrevocable. [1987 c.902 §2; 1989 c.987 §25](1) Personal income taxpayers who file an
Oregon income tax return and who will receive a tax refund from the
Department of Revenue may designate that a contribution of all or a
portion of the refund be made to the Oregon Military Emergency Financial
Assistance Program by marking the appropriate box printed on the return
pursuant to subsection (2) of this section.
(2)(a) Subject to paragraph (b) of this subsection, the Department
of Revenue shall print on the face of the Oregon personal income tax
return form a space for a taxpayer to designate that a contribution be
made to the Oregon Military Emergency Financial Assistance Program from
the taxpayer’s income tax refund. The space for designating the
contribution shall provide for checkoff boxes as indicated under ORS
305.749.
(b) If space limitations make listing the Oregon Military Emergency
Financial Assistance Program on the return form impracticable without the
removal of a checkoff program listing described in ORS 316.490, 316.493
or 496.380, the Oregon Military Emergency Financial Assistance Program
may be given an instruction listing as described in ORS 305.727. ORS
305.727 (3) does not apply to the Oregon Military Emergency Financial
Assistance Program.
(3) Moneys contributed to the Oregon Military Emergency Financial
Assistance Program through the checkoff program described in subsection
(1) of this section shall be deposited in the Oregon Military Emergency
Financial Assistance Fund. [2005 c.836 §11]Note: 316.491 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 316 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(1) Recognizing that children are Oregon’s most valuable
resource and that child abuse and neglect is a threat to the physical,
mental and emotional health of children; and further recognizing that the
incidence of validated cases of reported child abuse and neglect has been
increasing at an alarming rate in Oregon and represents an enormous
threat to the welfare of our community, the Legislative Assembly hereby
provides an additional opportunity to taxpayers to assist in child abuse
and neglect prevention by means of an income tax checkoff.
(2) Any individual taxpayer who files an Oregon income tax return
and who will receive a tax refund from the Department of Revenue may
designate that a contribution be made to the holder of the subaccount
established pursuant to section 36 (2), chapter 1084, Oregon Laws 1999,
or a successor subaccount, account or fund by marking the appropriate box
printed on the return pursuant to subsection (3) of this section.
(3) The department shall print on the face of the Oregon income tax
form a space for taxpayers to designate that a contribution be made for
the prevention of child abuse and neglect from their income tax refund.
The space for designating the contribution shall provide for checkoff
boxes as indicated under ORS 305.749.
(4) The Department of Revenue shall transfer to the subaccount
established pursuant to section 36 (2), chapter 1084, Oregon Laws 1999,
or a successor subaccount, account or fund an amount as credited to the
subaccount or its successor under ORS 305.749. [1987 c.771 §2; 1989 c.987
§19; 1999 c.1084 §40]DISTRIBUTION OF REVENUE(1) The net revenue from the tax imposed by
this chapter, after deducting refunds, 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.
(2) A working balance of unreceipted revenue from the tax imposed
by this chapter may be retained for the payment of refunds, but such
working balance shall not at the close of any fiscal year exceed the sum
of $1 million.
(3) Moneys are continuously appropriated to the Department of
Revenue to make:
(a) The refunds authorized under subsection (2) of this section;
(b) The refund payments in excess of tax liability authorized under
ORS 315.262 and 315.266; and
(c) The refund payments in excess of tax liability authorized under
ORS 316.153 (4). [1969 c.493 §70; 1977 c.761 §2; 2003 c.473 §12; 2005
c.826 §4; 2005 c.832 §55]Note 1: The amendments to 316.502 by section 4a, chapter 826, Oregon Laws
2005, apply to tax years beginning on or after January 1, 2008. See
section 4b, chapter 826, Oregon Laws 2005. The text that applies to tax
years beginning on or after January 1, 2008, and before January 1, 2011,
is set forth for the user’s convenience.
316.502. (1) The net revenue from the tax imposed by this chapter,
after deducting refunds, 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.
(2) A working balance of unreceipted revenue from the tax imposed
by this chapter may be retained for the payment of refunds, but such
working balance shall not at the close of any fiscal year exceed the sum
of $1 million.
(3) Moneys are continuously appropriated to the Department of
Revenue to make:
(a) The refunds authorized under subsection (2) of this section; and
(b) The refund payments in excess of tax liability authorized under
ORS 315.262 and 315.266.Note 2: The amendments to 316.502 by section 60, chapter 832, Oregon Laws
2005, apply to tax years beginning on or after January 1, 2011. See
section 61, chapter 832, Oregon Laws 2005. The text that applies to tax
years beginning on or after January 1, 2011, is set forth for the user’s
convenience.
316.502. (1) The net revenue from the tax imposed by this chapter,
after deducting refunds, 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.
(2) A working balance of unreceipted revenue from the tax imposed
by this chapter may be retained for the payment of refunds, but such
working balance shall not at the close of any fiscal year exceed the sum
of $1 million.
(3) Moneys are continuously appropriated to the Department of
Revenue to make:
(a) The refunds authorized under subsection (2) of this section; and
(b) The refund payments in excess of tax liability authorized under
ORS 315.262.PAYMENT OF ESTIMATED TAXES As used in ORS 316.557 to
316.589, “estimated tax” means the amount of income tax imposed under
this chapter for the taxable year, as estimated by the individual, minus
the sum of any credits as estimated by the individual against tax
provided by this chapter. [1980 c.7 §4; 1985 c.603 §4; 1997 c.839 §21;
1999 c.90 §16; 2001 c.660 §44](1) Except as provided in
subsection (2) of this section, every individual shall declare an
estimated tax for the taxable year if:
(a) The gross income for the taxable year can be reasonably
expected to include more than $1,000 from sources other than wages as
defined in ORS 316.162 (2); or
(b) The gross income for the taxable year can be reasonably
expected to exceed:
(A) $20,000 in the case of:
(i) A single individual, including a head of household as defined
in section 2 (b) of the Internal Revenue Code, or a surviving spouse as
defined in section 2 (a) of the Internal Revenue Code; or
(ii) A married individual entitled under ORS 316.567 to file a
joint declaration with a spouse, but only if the spouse has not received
wages, as defined in ORS 316.162 (2) for the taxable year; or
(B) $10,000 in the case of a married individual entitled under ORS
316.567 to file a joint declaration with a spouse, but only if each
spouse has received wages as defined in ORS 316.162 (2) for the taxable
year; or
(C) $5,000 in the case of a married individual not entitled under
ORS 316.567 to file a joint declaration with a spouse.
(2) No declaration is required if the estimated tax as defined in
ORS 316.557 is less than the amount established by rule of the Department
of Revenue. The department shall consider the provisions of section 6654
of the Internal Revenue Code in determining the amount.
(3) An individual with a taxable year of less than 12 months shall
make a declaration in accordance with rules adopted by the Department of
Revenue.
(4) An individual may amend the declaration filed during the
taxable year under rules prescribed by the department.
(5) The declaration shall contain information required by the
department by rule. [1980 c.7 §§2,2a,5,8; 1981 c.678 §1a; 1987 c.293 §21;
1997 c.839 §22; 1999 c.90 §17; 2001 c.660 §45](1) Except as provided in subsection (2) of this
section, a husband and wife may make a single declaration jointly under
ORS 316.557 to 316.589. The liability of the husband and wife making such
a declaration shall be joint and several.
(2) A husband and wife may not make a joint declaration:
(a) If either the husband or the wife is a nonresident alien;
(b) If they are separated under a judgment of divorce or of
separate maintenance; or
(c) If they have different taxable years.
(3) If a husband and wife make a joint declaration but not a joint
return for the taxable year, the husband and wife may, in such manner as
they may agree, and after giving notice of the agreement to the
Department of Revenue:
(a) Treat the estimated tax for the year as the estimated tax of
either the husband or of the wife; or
(b) Divide the estimated tax between them.
(4) If a husband and wife fail to agree, or fail to notify the
department of the manner in which they agree, to the treatment of
estimated tax for a taxable year for which they make a joint declaration
but not a joint return, the payments shall be allocated between them
according to rules adopted by the department. Notwithstanding ORS
314.835, 314.840 or 314.991, the department may disclose to either the
husband or the wife the information upon which an allocation of estimated
tax was made under this section. [1980 c.7 §3; 1985 c.603 §5; 2003 c.576
§432] No declaration
shall be required of a nonresident individual under ORS 316.557 to
316.589 unless:
(1) Withholding under this chapter is made applicable to the wages,
as defined in ORS 316.162, of the nonresident individual; or
(2) The nonresident individual has income, other than compensation
for personal services subject to deduction and withholding under ORS
316.162, which is effectively connected with the conduct of a trade or
business within this state. [1980 c.7 §10; 1985 c.603 §6] (1) An
individual need not file a declaration of estimated tax required by ORS
316.563 (1), if:
(a) The estimated gross income of the individual from farming or
fishing, including oyster farming, for the taxable year is at least
two-thirds of the total estimated gross income from all sources for the
taxable year; or
(b) The gross income of the individual from farming or fishing,
including oyster farming, shown on the return of the individual in the
preceding taxable year is at least two-thirds of the total gross income
from all sources shown on such return.
(2) For purposes of computing gross income under this section, an
individual who is a stockholder of one or more electing small business
corporations for federal income tax purposes shall consider his or her
share of the gross income of the electing small business corporation as
his or her individual income. The electing small business corporation
gross income shall be classed as farming, fishing, nonfarming or
nonfishing as the case may be in carrying out the provisions of this
section. [1980 c.7 §12] Except as provided in ORS
316.573, declarations of estimated tax required by ORS 316.563 (1) from
individuals who are neither farmers nor fishermen for the purpose of that
section shall be filed on or before April 15 of the taxable year, except
that if the requirements of ORS 316.563 (1) are first met:
(1) After April 1 and before June 2 of the taxable year, the
declaration shall be filed on or before June 15 of the taxable year;
(2) After June 1 and before September 2 of the taxable year, the
declaration shall be filed on or before September 15 of the taxable year;
or
(3) After September 1 of the taxable year, the declaration shall be
filed on or before January 15 of the succeeding year. [1980 c.7 §11; 1981
c.678 §2; 1983 c.162 §64; 2003 c.46 §41](1) An individual
required to make a declaration of estimated tax under ORS 316.563 shall
pay the estimated tax as provided in subsections (2) to (6) of this
section.
(2) If the declaration is filed on or before April 15 of the
taxable year, the estimated tax shall be paid in four equal installments.
The first installment shall be paid at the time of the filing of the
declaration, the second and third on June 15 and September 15 of the
taxable year, and the fourth on January 15 of the succeeding year.
(3) If the declaration is filed after April 15 and not after June
15 of the taxable year, and is not required by ORS 316.577 to be filed on
or before April 15 of the taxable year, the estimated tax shall be paid
in three equal installments. The first installment shall be paid at the
time of the filing of the declaration, the second on September 15 of the
calendar year, and the third on January 15 of the succeeding taxable year.
(4) If the declaration is filed after June 15 and not after
September 15 of the taxable year, and is not required by ORS 316.577 to
be filed on or before June 15 of the taxable year, the estimated tax
shall be paid in two equal installments. The first installment shall be
paid at the time of filing of the declaration, and the second on January
15 of the succeeding taxable year.
(5) If the declaration is filed after September 15 of the taxable
year and is not required by ORS 316.577 to be filed on or before
September 15 of the taxable year, the estimated tax shall be paid in full
at the time of filing of the declaration.
(6) If the declaration is filed after the time prescribed in ORS
316.577, subsections (3) to (5) of this section shall not apply. Instead,
there shall be paid at the time of filing all installments of estimated
tax that would have been payable on or before such time if the
declaration had been filed within the time prescribed in ORS 316.577, and
the remaining installments shall be paid at the times at which, and in
the amounts in which, they would have been payable if the declaration had
been so filed.
(7) If a taxpayer does not file a declaration but files a return on
or before January 31 of the succeeding year and pays in full the amount
stated as due on the return:
(a) If the declaration is not required to be filed during the
taxable year, but is required to be filed on or before January 15, the
return shall be considered as the declaration; and
(b) If the tax shown on the return, as reduced by the sum of the
credits against the tax allowed for purposes of this chapter, is greater
than the estimated tax shown in an earlier declaration, or in the last
amendment thereof, the return shall be considered as the amendment of the
declaration permitted by ORS 316.563 (4) to be filed on or before January
15.
(8) In the application of this section to a taxable year beginning
on any date other than January 1, there shall be substituted for the 15th
or last day of the month specified in this section, the 15th or last day
of the corresponding month.
(9) An individual may pay an installment of the estimated tax
before the date prescribed for its payment.
(10) Any payment of estimated tax received by the Department of
Revenue shall first be applied to underpayments of estimated tax due for
any prior installment due for the taxable year. Any excess amount shall
be applied to the installment that next becomes due after the payment was
received. [1980 c.7 §§16,20; 1981 c.678 §3; 1985 c.603 §7; 1987 c.293
§22; 1993 c.730 §43; 2003 c.46 §42](1) Payment of the estimated income
tax or any installment shall be considered payment on account of the
income taxes imposed by this chapter for the taxable year.
(2) If there is an overpayment of income tax for a taxable year,
the taxpayer may elect on a timely filed return for that taxable year
(determined with regard to any extension of time for filing) to have the
overpayment credited against an installment of estimated tax for the
subsequent taxable year. The amount credited shall be deemed paid as
estimated tax on the first date prescribed for payment of the estimated
tax.
(3) If there is an overpayment of income taxes for a taxable year,
and the taxpayer elects on a return (including an amended return) for
that taxable year filed after the due date (determined with regard to any
extension of time for filing) to have the overpayment credited against an
installment of estimated tax for a subsequent taxable year, the
overpayment shall be credited against that installment of estimated tax.
The amount credited shall be deemed paid as estimated tax on the date the
return was filed.
(4) The Department of Revenue may adopt rules which enable the
taxpayer or department to credit against the estimated income tax the
amount the taxpayer or the department determines to be an overpayment of
the income tax for a preceding taxable year. [1980 c.7 §§19,21; 1993
c.726 §35](1) Except as provided in
subsection (5) of this section, if an individual makes an underpayment of
estimated tax, interest shall accrue at the rate established under ORS
305.220 for each month, or fraction thereof, on the amount underpaid for
the period the estimated tax or any installment remains unpaid. The
penalty provisions contained in ORS chapter 314 for underpayment of tax
shall not apply to underpayments of estimated tax under ORS 316.557 to
316.589.
(2) For purposes of subsection (1) of this section, the amount of
underpayment shall be the excess of the required installment over the
amount (if any) of the installment paid on or before the due date for the
installment.
(3) The period of underpayment shall run from the date the
installment was due to the earlier of the following dates:
(a) The 15th day of the fourth month following the close of the
taxable year; or
(b) With respect to any portion of the underpayment, the date on
which the portion is paid.
(4) For purposes of subsection (3)(b) of this section, a payment of
estimated tax shall be credited against unpaid required installments in
the order in which such installments are required to be paid.
(5)(a) Interest accruing under subsection (1) of this section shall
not be imposed if the individual was a resident of this state throughout
the preceding taxable year and had no tax liability for that year, and
the preceding taxable year was a taxable year of 12 months.
(b) Interest accruing under subsection (1) of this section shall
not be imposed with respect to any underpayment of estimated tax to the
extent that the Department of Revenue determines that by reason of
casualty, disaster or other unusual circumstances the imposition of
interest would be against equity and good conscience.
(c) Interest accruing under subsection (1) of this section shall
not be imposed with respect to any underpayment of estimated tax if the
department determines that:
(A) In the tax year the estimated tax payment was required to be
made or in the tax year preceding such tax year, the taxpayer (i) retired
after having attained age 62 or (ii) became disabled; and
(B) The underpayment was due to reasonable cause and not to willful
neglect.
(d) Interest accruing under subsection (1) of this section shall
not be imposed with respect to any underpayment of estimated tax
attributable to the pro rata share of a shareholder of the income of an S
corporation if:
(A) The income is taxable income for an initial year for which S
corporation status is elected for the corporation; and
(B) The shareholder is a nonresident or for the preceding taxable
year was a part-year resident for Oregon tax purposes.
(6) For purposes of this section, the estimated tax shall be
computed without any reduction for the amount of credit estimated to be
allowed to the individual for the taxable year under ORS 316.187. The
amount of the credit allowed under ORS 316.187 for the taxable year shall
be considered a payment of estimated tax. An equal part of the credit
shall be considered paid on each installment date for the taxable year,
unless the taxpayer establishes the date on which all amounts were
actually withheld, in which case the amount so withheld shall be
considered payment of estimated tax on the dates on which the amounts
were actually withheld.
(7) For purposes of subsections (5) and (8) of this section, the
term “tax” means the tax imposed by this chapter minus any credits
against tax allowed for purposes of this chapter, other than the credit
against tax provided by ORS 316.187.
(8) For purposes of subsections (2) and (4) of this section, the
term “required installment” means the amount of the installment that
would be due if the estimated tax were equal to the lesser of:
(a) Ninety percent of the tax shown on the return for the taxable
year (or, if no return is filed, 90 percent of the tax for such year);
(b) If the preceding taxable year was a taxable year of 12 months,
the percentage of the tax shown on the return filed by the individual for
the preceding taxable year that is established by the Department of
Revenue by rule; or
(c) Ninety percent of the tax for the taxable year computed by
placing on an annualized basis the taxable income for the months in the
taxable year ending before the month in which the installment is required
to be paid.
(9) For purposes of subsection (8) of this section:
(a) If an amended return is filed on or before the return due date
(determined with regard to any extension of time granted to the
taxpayer), then the term “return” means the amended return.
(b) If during initial processing of the return the department
adjusts the amount of tax due, then the term “tax shown on the return”
means the tax as adjusted by the department. This paragraph shall not
apply if it is ultimately determined that the adjustment was improper.
(c) The department shall consider the provisions of section 6654 of
the Internal Revenue Code. [1980 c.7 §22; 1982 s.s.1 c.16 §21; 1985 c.603
§8; 1987 c.293 §22a; 1989 c.625 §13b; 1991 c.457 §7h; 1993 c.726 §35a;
1995 c.556 §5; 1999 c.90 §18; 2001 c.660 §4] (1) Interest
accruing under ORS 316.587 shall not be imposed for any taxable year if
the tax shown on the return for the taxable year (or, if no return is
filed, the tax), minus the sum of any credits allowable for purposes of
this chapter, including the credit allowable under ORS 316.187, is less
than the amount established by rule adopted under ORS 316.563 (2).
(2) For purposes of this section:
(a) If an amended return is filed on or before the return due date
(determined with regard to any extension of time granted to the
taxpayer), then the term “return” means the amended return.
(b) If during initial processing of the return the Department of
Revenue adjusts the amount of tax due, then the term “tax shown on the
return” means the tax as adjusted by the department. This paragraph shall
not apply if it is ultimately determined that the adjustment was
improper. [1987 c.293 §22c; 1993 c.726 §35b; 1999 c.90 §19; 2001 c.660 §5](1) The application of ORS 316.557 to 316.589 to
taxable years of less than 12 months shall be in accordance with rules
adopted by the Department of Revenue.
(2) In the application of ORS 316.557 to 316.589 to a taxable year
beginning on any date other than January 1 there shall be substituted,
for the months specified in ORS 316.557 to 316.589, the months which
correspond thereto. [1980 c.7 §§14,15; 1985 c.603 §9]MODIFICATIONS OF TAXABLE INCOME(Generally) (1) There shall be
subtracted from federal taxable income:
(a) The interest or dividends on obligations of the United States
and its territories and possessions or of any authority, commission or
instrumentality of the United States to the extent includable in gross
income for federal income tax purposes but exempt from state income taxes
under the laws of the United States. However, the amount subtracted under
this paragraph shall be reduced by any interest on indebtedness incurred
to carry the obligations or securities described in this paragraph, and
by any expenses incurred in the production of interest or dividend income
described in this paragraph to the extent that such expenses, including
amortizable bond premiums, are deductible in determining federal taxable
income.
(b) The amount of any federal income taxes accrued by the taxpayer
during the taxable year as described in ORS 316.685, less the amount of
any refunds of federal taxes previously accrued for which a tax benefit
was received.
(c)(A) If the taxpayer does not qualify for the subtraction under
subparagraph (B) of this paragraph, compensation (other than pension or
retirement pay) received for active service performed by a member of the
Armed Forces of the United States in an amount not to exceed $3,000 per
annum.
(B) For the tax year of initial draft or enlistment into the Armed
Forces of the United States or for the tax year of discharge from or
termination of full-time active duty for the Armed Forces of the United
States, compensation (other than pension or retirement pay or pay for
service when on military reserve duty) paid by the Armed Forces of the
United States for services performed outside this state, if the taxpayer
is on active duty as a full-time officer, enlistee or draftee, with the
Armed Forces of the United States.
(d) Amounts allowable under sections 2621(a)(2) and 2622(b) of the
Internal Revenue Code to the extent that the taxpayer does not elect
under section 642(g) of the Internal Revenue Code to reduce federal
taxable income by those amounts.
(e) Any supplemental payments made to JOBS Plus Program
participants under ORS 411.892.
(f)(A) Federal pension income that is attributable to federal
employment occurring before October 1, 1991. Federal pension income that
is attributable to federal employment occurring before October 1, 1991,
shall be determined by multiplying the total amount of federal pension
income for the tax year by the ratio of the number of months of federal
creditable service occurring before October 1, 1991, over the total
number of months of federal creditable service.
(B) The subtraction allowed under this paragraph applies only to
federal pension income received at a time when:
(i) Benefit increases provided under chapter 569, Oregon Laws 1995,
are in effect; or
(ii) Public Employees Retirement System benefits received for
service prior to October 1, 1991, are exempt from state income tax.
(C) As used in this paragraph:
(i) “Federal creditable service” means those periods of time for
which a federal employee earned a federal pension.
(ii) “Federal pension” means any form of retirement allowance
provided by the federal government, its agencies or its instrumentalities
to retirees of the federal government or their beneficiaries.
(g) Any amount included in federal taxable income for the tax year
that is attributable to the conversion of a regular individual retirement
account into a Roth individual retirement account described in section
408A of the Internal Revenue Code, to the extent that:
(A) The amount was subject to the income tax of another state or
the District of Columbia in a prior tax year; and
(B) The taxpayer was a resident of the other state or the District
of Columbia for that prior tax year.
(h) Any amounts awarded to the taxpayer by the Public Safety
Memorial Fund Board under ORS 243.954 to 243.974 to the extent that the
taxpayer has not taken the amount as a deduction in determining the
taxpayer’s federal taxable income for the tax year.
(i) If included in taxable income for federal tax purposes, the
amount withdrawn during the tax year in qualified withdrawals from a
college savings network account established under ORS 348.841 to 348.873.
(2) There shall be added to federal taxable income:
(a) Interest or dividends, exempt from federal income tax, on
obligations or securities of any foreign state or of a political
subdivision or authority of any foreign state. However, the amount added
under this paragraph shall be reduced by any interest on indebtedness
incurred to carry the obligations or securities described in this
paragraph and by any expenses incurred in the production of interest or
dividend income described in this paragraph.
(b) Interest or dividends on obligations of any authority,
commission, instrumentality and territorial possession of the United
States that by the laws of the United States are exempt from federal
income tax but not from state income taxes. However, the amount added
under this paragraph shall be reduced by any interest on indebtedness
incurred to carry the obligations or securities described in this
paragraph and by any expenses incurred in the production of interest or
dividend income described in this paragraph.
(c) The amount of any federal estate taxes allocable to income in
respect of a decedent not taxable by Oregon.
(d) The amount of any allowance for depletion in excess of the
taxpayer’s adjusted basis in the property depleted, deducted on the
taxpayer’s federal income tax return for the taxable year, pursuant to
sections 613, 613A, 614, 616 and 617 of the Internal Revenue Code.
(e) For taxable years beginning on or after January 1, 1985, the
dollar amount deducted under section 151 of the Internal Revenue Code for
personal exemptions for the taxable year.
(f) The amount taken as a deduction on the taxpayer’s federal
return for unused qualified business credits under section 196 of the
Internal Revenue Code.
(g) The amount of any increased benefits paid to a taxpayer under
chapter 569, Oregon Laws 1995, under the provisions of chapter 796,
Oregon Laws 1991, and under section 26, chapter 815, Oregon Laws 1991,
that is not includable in the taxpayer’s federal taxable income under the
Internal Revenue Code.
(h) The amount of any long term care insurance premiums paid or
incurred by the taxpayer during the tax year if:
(A) The amount is taken into account as a deduction on the
taxpayer’s federal return for the tax year; and
(B) The taxpayer claims the credit allowed under ORS 315.610 for
the tax year.
(i) Any amount taken as a deduction under section 1341 of the
Internal Revenue Code in computing federal taxable income for the tax
year, if the taxpayer has claimed a credit for claim of right income
repayment adjustment under ORS 315.068.
(j) If the taxpayer makes a nonqualified withdrawal, as defined in
ORS 348.841, from a college savings network account established under ORS
348.841 to 348.873, the amount of the withdrawal that is attributable to
contributions that were subtracted from federal taxable income under ORS
316.699.
(3) Discount and gain or loss on retirement or disposition of
obligations described under subsection (2)(a) of this section issued on
or after January 1, 1985, shall be treated for purposes of this chapter
in the same manner as under sections 1271 to 1283 and other pertinent
sections of the Internal Revenue Code as if the obligations, although
issued by a foreign state or a political subdivision of a foreign state,
were not tax exempt under the Internal Revenue Code. [Formerly 316.067;
1985 c.345 §7; 1985 c.802 §11; 1987 c.293 §23; 1987 c.647 §13; 1991 c.457
§7b; 1991 c.823 §3; 1995 c.556 §8; 1995 c.561 §17; 1995 c.746 §59; 1995
c.816 §32; 1997 c.99 §18; 1999 c.90 §22; 1999 c.403 §1; 1999 c.746 §12;
1999 c.981 §16; 1999 c.1005 §3; 1999 c.1007 §3; 2001 c.13 §1; 2001 c.212
§1; 2001 c.509 §18; 2003 c.280 §3]ORS 316.680 (1)(a) shall apply to the
interest or dividends described under ORS 316.680 (1)(a) to the extent
such interest or dividends are includable in arriving at federal taxable
income as distributions from plans to benefit the self-employed or from
individual retirement accounts described under sections 401 to 408A of
the Internal Revenue Code. [1985 c.738 §2; 2003 c.77 §18] (1) A regulated investment
company, or a pool of assets managed by a fiduciary, including a
financial institution, shall be qualified to pay state exempt-interest
dividends, as defined in subsection (2) of this section, to its
shareholders or beneficiaries.
(2) The term “state exempt-interest dividend” means any dividend or
part thereof (other than a capital gain dividend, as defined in section
852(b) of the Internal Revenue Code) paid by a regulated investment
company, or any pool of assets managed by a fiduciary, including but not
limited to a financial institution, and designated by it as a state
exempt-interest dividend in a written notice mailed to its shareholders
or beneficiaries not later than 60 days after the close of its taxable
year. If the aggregate amount so designated with respect to a taxable
year (including state exempt-interest dividends paid after the close of
the taxable year in the manner described in section 855 of the Internal
Revenue Code) is greater than the excess of (a) the amount of interest
and dividends received on obligations described in ORS 316.680 (1)(a),
over (b) the sum of the amount of any deductible interest on indebtedness
incurred to carry such obligations and the amount of any deductible
expenses incurred in the production of interest and dividend income from
such obligations, the portion of such distribution which shall constitute
a state exempt-interest dividend shall be only that proportion of the
amount so designated as the amount of such excess for such taxable year
bears to the amount so designated. The exemption created by this section
shall not exceed the portion of the dividend which is attributable to
items of interest described in ORS 316.680 (1)(a).
(3) A state exempt-interest dividend shall be treated by a
shareholder or beneficiary for all purposes as an item of interest
described in ORS 316.680 (1)(a). The shareholder or beneficiary shall
subtract from federal taxable income the state exempt-interest dividends
received with respect to the shares of a regulated investment company or
any pool of assets managed by a fiduciary, including but not limited to a
financial institution. However, the amount subtracted under this section
shall be reduced (but not below zero) by an amount equal to any
deductible interest on indebtedness incurred to carry such shares
multiplied by the state exempt-interest dividends and divided by the
total dividends on such shares for the taxable year.
(4) If a shareholder of a regulated investment company, or a
beneficiary of a pool of assets managed by a fiduciary, including a
financial institution, receives a state exempt-interest dividend with
respect to any share, and the share is held by the taxpayer for six
months or less, then any loss on the sale or exchange of the share shall,
to the extent of the amount the state exempt-interest dividend, be
disallowed. The Department of Revenue may adopt rules that reduce the
holding period requirements to less than six months.
(5) As used in this section, “financial institution” means a
financial institution as defined in ORS 706.008. [1987 c.293 §12b; 1989
c.988 §2; 1993 c.18 §81; 1993 c.229 §24; 1993 c.318 §13; 1997 c.631 §457](1)(a) The federal
income tax deduction provided by ORS 316.680 shall be as reported on the
taxpayer’s original return and shall be computed on the accrual method of
accounting. Any adjustments to the federal income tax deduction now or
hereafter required by Oregon law, including but not limited to the
elimination of the self-employment tax, also shall be computed and
eliminated according to the accrual method of accounting.
(b) For purposes of calculating the amount of the deduction for
federal income taxes provided under ORS 316.680, the taxpayer shall not
take into account any amount of the earned income credit provided under
section 32 of the Internal Revenue Code that reduced the amount of the
taxpayer’s federal income tax liability for the tax year.
(2) If refunds or additional assessments result from an adjustment
whether initiated by the federal or state government or the taxpayer
after the filing of the original return by the taxpayer, any additional
federal taxes shall be deductible by the Oregon taxpayer under this
section in the year in which the adjustment is finally determined or paid
whichever is later. In the case of a refund the tax reduction shall be
added to the taxpayer’s income in the year in which the refund is
received.
(3) For purposes of this chapter, federal income tax does not
include the following:
(a) Taxes, contributions or other payments paid by employees in
pursuance of federal laws relating to Social Security, railroad
retirement, unemployment compensation or old age benefits.
(b) Taxes paid pursuant to the Self-Employment Contribution Act,
subtitle A, chapter 2, Internal Revenue Code. [Formerly 316.072; 1987
c.293 §24; 1997 c.692 §4]There
shall be added to federal taxable income of a parent who makes an
election under section 1(g)(7)(B) of the Internal Revenue Code any amount
in excess of the standard deduction allowed for a child under ORS 316.695
(8) but not in excess of the amount described in section 1(g)(7)(B)(i) of
the Internal Revenue Code (twice the amount in effect for the taxable
year under section 63(c)(5)(A) of the Internal Revenue Code). The
addition under this section shall be made for each child whose income is
included in the taxable income of the parent under section 1(g)(7)(B) of
the Internal Revenue Code. [1989 c.625 §13; 1991 c.457 §7c; 1997 c.839
§23; 1999 c.917 §2] (1) Subject to subsection (2) of this
section, in addition to other modifications provided in this chapter, and
if a taxpayer elects to take foreign income taxes imposed for the taxable
year by a foreign country as a credit on the federal income tax return or
does not itemize personal deductions on the federal income tax return,
there shall be subtracted from federal taxable income in the computation
of state taxable income the amount of foreign income taxes imposed for
the taxable year by a foreign country.
(2) The deduction for foreign country income taxes provided by this
section shall be limited as follows:
(a) Except as provided in paragraph (b) of this subsection, the sum
of foreign country income taxes deducted in computing state taxable
income and the modification for federal income taxes authorized by ORS
316.680 (1)(b) as limited by ORS 316.695 (3) shall not exceed $3,000.
(b) In the case of a husband and wife filing separate tax returns,
the sum described in paragraph (a) of this subsection shall be limited to
$1,500. [Formerly 316.071; 1985 c.345 §8; 1987 c.293 §24a] (1) In addition
to the modifications to federal taxable income contained in this chapter,
there shall be added to or subtracted from federal taxable income:
(a) If, in computing federal income tax for a taxable year, the
taxpayer deducted itemized deductions, as defined in section 63(d) of the
Internal Revenue Code, the taxpayer shall add the amount of itemized
deductions deducted (the itemized deductions less an amount, if any, by
which the itemized deductions are reduced under section 68 of the
Internal Revenue Code).
(b) If, in computing federal income tax for a taxable year, the
taxpayer deducted the standard deduction, as defined in section 63(c) of
the Internal Revenue Code, the taxpayer shall add the amount of the
standard deduction deducted.
(c)(A) From federal taxable income there shall be subtracted the
larger of (i) the taxpayer’s itemized deductions or (ii) a standard
deduction. Except as provided in subsection (8) of this section, for
purposes of this subparagraph, “standard deduction” means the sum of the
basic standard deduction and the additional standard deduction.
(B) For purposes of subparagraph (A) of this paragraph, the basic
standard deduction is:
(i) $3,280, in the case of joint return filers or a surviving
spouse;
(ii) $1,640, in the case of an individual who is not a married
individual and is not a surviving spouse;
(iii) $1,640, in the case of a married individual who files a
separate return; or
(iv) $2,640, in the case of a head of household.
(C)(i) For purposes of subparagraph (A) of this paragraph for tax
years beginning on or after January 1, 2003, the Department of Revenue
shall annually recompute the basic standard deduction for each category
of return filer listed under subparagraph (B) of this paragraph. The
basic standard deduction shall be computed by dividing the average U.S.
City Average Consumer Price Index for the second quarter of the current
calendar year by the average U.S. City Average Consumer Price Index for
the second quarter of 2002, then multiplying that quotient by the amount
listed under subparagraph (B) of this paragraph for each category of
return filer.
(ii) If any change in the maximum household income determined under
this subparagraph is not a multiple of $5, the increase shall be rounded
to the next lower multiple of $5.
(iii) As used in this subparagraph, “U.S. City Average Consumer
Price Index” means the U.S. City Average Consumer Price Index for All
Urban Consumers (All Items) as published by the Bureau of Labor
Statistics of the United States Department of Labor.
(D) For purposes of subparagraph (A) of this paragraph, the
additional standard deduction is the sum of each additional amount to
which the taxpayer is entitled under subsection (7) of this section.
(E) As used in subparagraph (B) of this paragraph, “surviving
spouse” and “head of household” have the meaning given those terms in
section 2 of the Internal Revenue Code.
(F) In the case of the following, the standard deduction referred
to in subparagraph (A) of this paragraph shall be zero:
(i) A husband or wife filing a separate return where the other
spouse has claimed itemized deductions under subparagraph (A) of this
paragraph;
(ii) A nonresident alien individual;
(iii) An individual making a return for a period of less than 12
months on account of a change in his or her annual accounting period;
(iv) An estate or trust;
(v) A common trust fund; or
(vi) A partnership.
(d) For the purposes of paragraph (c)(A) of this subsection, the
taxpayer’s itemized deductions are the sum of:
(A) The taxpayer’s itemized deductions as defined in section 63(d)
of the Internal Revenue Code (reduced, if applicable, as described under
section 68 of the Internal Revenue Code) minus the deduction for Oregon
income tax (reduced, if applicable, by the proportion that the reduction
in federal itemized deductions resulting from section 68 of the Internal
Revenue Code bears to the amount of federal itemized deductions as
defined for purposes of section 68 of the Internal Revenue Code); and
(B) The amount that may be taken into account under section 213(a)
of the Internal Revenue Code, not to exceed seven and one-half percent of
the federal adjusted gross income of the taxpayer, if the taxpayer has
attained the following age before the close of the taxable year, or, in
the case of a joint return, if either taxpayer has attained the following
age before the close of the taxable year:
(i) For taxable years beginning on or after January 1, 1991, and
before January 1, 1993, a taxpayer must attain 58 years of age before the
close of the taxable year.
(ii) For taxable years beginning on or after January 1, 1993, and
before January 1, 1995, a taxpayer must attain 59 years of age before the
close of the taxable year.
(iii) For taxable years beginning on or after January 1, 1995, and
before January 1, 1997, a taxpayer must attain 60 years of age before the
close of the taxable year.
(iv) For taxable years beginning on or after January 1, 1997, and
before January 1, 1999, a taxpayer must attain 61 years of age before the
close of the taxable year.
(v) For taxable years beginning on or after January 1, 1999, a
taxpayer must attain 62 years of age before the close of the taxable year.
(2)(a) There shall be subtracted from federal taxable income any
portion of the distribution of a pension, profit-sharing, stock bonus or
other retirement plan, representing that portion of contributions which
were taxed by the State of Oregon but not taxed by the federal government
under laws in effect for tax years beginning prior to January 1, 1969, or
for any subsequent year in which the amount that was contributed to the
plan under the Internal Revenue Code was greater than the amount allowed
under this chapter.
(b) Interest or other earnings on any excess contributions of a
pension, profit-sharing, stock bonus or other retirement plan not
permitted to be deducted under paragraph (a) of this subsection shall not
be added to federal taxable income in the year earned by the plan and
shall not be subtracted from federal taxable income in the year received
by the taxpayer.
(3)(a) Except as provided in paragraph (b) of this subsection and
subsection (4) of this section, there shall be added to federal taxable
income the amount of any federal income taxes in excess of $5,500,
accrued by the taxpayer during the taxable year as described in ORS
316.685, less the amount of any refund of federal taxes previously
accrued for which a tax benefit was received.
(b) In the case of a husband and wife filing separate tax returns,
the amount added shall be in the amount of any federal income taxes in
excess of $2,750, less the amount of any refund of federal taxes
previously accrued for which a tax benefit was received.
(c)(A) For a calendar year beginning on or after January 1, 2008,
the Department of Revenue shall make a cost-of-living adjustment to the
federal income tax threshold amount described in paragraphs (a) and (b)
of this subsection.
(B) The cost-of-living adjustment for a calendar year is the
percentage by which the monthly averaged U.S. City Average Consumer Price
Index for the 12 consecutive months ending August 31 of the prior
calendar year exceeds the monthly averaged index for the period beginning
September 1, 2005, and ending August 31, 2006.
(C) As used in this paragraph, “U.S. City Average Consumer Price
Index” means the U.S. City Average Consumer Price Index for All Urban
Consumers (All Items) as published by the Bureau of Labor Statistics of
the United States Department of Labor.
(D) If any adjustment determined under subparagraph (B) of this
paragraph is not a multiple of $50, the adjustment shall be rounded to
the next lower multiple of $50.
(E) The adjustment shall apply to all tax years beginning in the
calendar year for which the adjustment is made.
(4)(a) In addition to the adjustments required by ORS 316.130, a
full-year nonresident individual shall add to taxable income a proportion
of any accrued federal income taxes as computed under ORS 316.685 in
excess of $5,500 in the proportion provided in ORS 316.117.
(b) In the case of a husband and wife filing separate tax returns,
the amount added under this subsection shall be computed in a manner
consistent with the computation of the amount to be added in the case of
a husband and wife filing separate returns under subsection (3) of this
section. The method of computation shall be determined by the Department
of Revenue by rule.
(5) Subsections (3)(b) and (4)(b) of this section shall not apply
to married individuals living apart as defined in section 7703(b) of the
Internal Revenue Code.
(6)(a) For tax years beginning on or after January 1, 1981, and
prior to January 1, 1983, income or loss taken into account in
determining federal taxable income by a shareholder of an S corporation
pursuant to sections 1373 to 1375 of the Internal Revenue Code shall be
adjusted for purposes of determining Oregon taxable income, to the extent
that as income or loss of the S corporation, they were required to be
adjusted under the provisions of ORS chapter 317.
(b) For tax years beginning on or after January 1, 1983, items of
income, loss or deduction taken into account in determining federal
taxable income by a shareholder of an S corporation pursuant to sections
1366 to 1368 of the Internal Revenue Code shall be adjusted for purposes
of determining Oregon taxable income, to the extent that as items of
income, loss or deduction of the shareholder the items are required to be
adjusted under the provisions of this chapter.
(c) The tax years referred to in paragraphs (a) and (b) of this
subsection are those of the S corporation.
(d) As used in paragraph (a) of this subsection, an S corporation
refers to an electing small business corporation.
(7)(a) The taxpayer shall be entitled to an additional amount, as
referred to in subsection (1)(c)(A) and (D) of this section, of $1,000:
(A) For himself or herself if he or she has attained age 65 before
the close of his or her taxable year; and
(B) For the spouse of the taxpayer if the spouse has attained age
65 before the close of the taxable year and an additional exemption is
allowable to the taxpayer for such spouse for federal income tax purposes
under section 151(b) of the Internal Revenue Code.
(b) The taxpayer shall be entitled to an additional amount, as
referred to in subsection (1)(c)(A) and (D) of this section, of $1,000:
(A) For himself or herself if he or she is blind at the close of
the taxable year; and
(B) For the spouse of the taxpayer if the spouse is blind as of the
close of the taxable year and an additional exemption is allowable to the
taxpayer for such spouse for federal income tax purposes under section
151(b) of the Internal Revenue Code. For purposes of this subparagraph,
if the spouse dies during the taxable year, the determination of whether
such spouse is blind shall be made immediately prior to death.
(c) In the case of an individual who is not married and is not a
surviving spouse, paragraphs (a) and (b) of this subsection shall be
applied by substituting “$1,200” for “$1,000.”
(d) For purposes of this subsection, an individual is blind only if
his or her central visual acuity does not exceed 20/200 in the better eye
with correcting lenses, or if his or her visual acuity is greater than
20/200 but is accompanied by a limitation in the fields of vision such
that the widest diameter of the visual field subtends an angle no greater
than 20 degrees.
(8) In the case of an individual with respect to whom a deduction
under section 151 of the Internal Revenue Code is allowable for federal
income tax purposes to another taxpayer for a taxable year beginning in
the calendar year in which the individual’s taxable year begins, the
basic standard deduction (referred to in subsection (1)(c)(B) of this
section) applicable to such individual for such individual’s taxable year
shall equal the lesser of:
(a) The amount allowed to the individual under section 63(c)(5) of
the Internal Revenue Code for federal income tax purposes for the tax
year for which the deduction is being claimed; or
(b) The amount determined under subsection (1)(c)(B) of this
section. [Formerly 316.068; 1985 c.141 §6; 1985 c.345 §9; 1985 c.802 §12;
1987 c.293 §25; 1989 c.625 §14; 1989 c.626 §8; 1991 c.457 §7d; 1991 c.823
§12; 1995 c.556 §9; 1997 c.99 §2; 1999 c.917 §1; 2001 c.221 §1; 2001
c.660 §14; 2002 s.s.3 c.8 §1]Note: Section 3, chapter 8, Oregon Laws 2002 (third special
session), provides:
Sec. 3. (1) Notwithstanding ORS 316.695 (3)(a) and except as
otherwise provided in this section, there shall be added to federal
taxable income the amount of any federal income taxes in excess of the
amount set forth in this subsection that is accrued by the taxpayer
during the tax year as described in ORS 316.685, less the amount of any
refund of federal taxes previously accrued for which a tax benefit was
received:
(a) For tax years beginning on or after January 1, 2002, and before
January 1, 2003, $3,250.
(b) For tax years beginning on or after January 1, 2003, and before
January 1, 2004, $3,500.
(c) For tax years beginning on or after January 1, 2004, and before
January 1, 2005, $4,000.
(d) For tax years beginning on or after January 1, 2005, and before
January 1, 2006, $4,500.
(e) For tax years beginning on or after January 1, 2006, and before
January 1, 2007, $5,000.
(2) Notwithstanding ORS 316.695 (3)(b), in the case of a husband
and wife filing separate tax returns, the amount added to federal taxable
income shall be the amount of any federal income taxes in excess of the
amount set forth in this subsection, less the amount of any refund of
federal taxes previously accrued for which a tax benefit was received:
(a) For tax years beginning on or after January 1, 2002, and before
January 1, 2003, $1,625.
(b) For tax years beginning on or after January 1, 2003, and before
January 1, 2004, $1,750.
(c) For tax years beginning on or after January 1, 2004, and before
January 1, 2005, $2,000.
(d) For tax years beginning on or after January 1, 2005, and before
January 1, 2006, $2,250.
(e) For tax years beginning on or after January 1, 2006, and before
January 1, 2007, $2,500.
(3)(a) Notwithstanding ORS 316.695 (4), in addition to the
adjustments required by ORS 316.130, a full-year nonresident individual
shall add to taxable income a proportion of any accrued federal taxes as
computed under ORS 316.685 in excess of the amount set forth in this
subsection in the proportion provided in ORS 316.117:
(A) For tax years beginning on or after January 1, 2002, and before
January 1, 2003, $3,250.
(B) For tax years beginning on or after January 1, 2003, and before
January 1, 2004, $3,500.
(C) For tax years beginning on or after January 1, 2004, and before
January 1, 2005, $4,000.
(D) For tax years beginning on or after January 1, 2005, and before
January 1, 2006, $4,500.
(E) For tax years beginning on or after January 1, 2006, and before
January 1, 2007, $5,000.
(b) In the case of a husband and wife filing separate tax returns,
the amount added under this subsection shall be computed in a manner
consistent with the computation of the amount to be added in the case of
a husband and wife filing separate returns under subsection (2) of this
section. The method of computation shall be determined by the Department
of Revenue by rule. [2002 s.s.3 c.8 §3]Note: 316.695 (4) and (5) were enacted into law by the Legislative
Assembly but were not added to or made a part of ORS chapter 316 or any
series therein by legislative action. See Preface to Oregon Revised
Statutes for further explanation. There shall be added to or subtracted
from federal taxable income, as the case may be, the taxpayer’s share of
the fiduciary adjustment determined under ORS 316.287. [Formerly 316.077]
If the amount received as a labor rebate under section 1, chapter 559,
Oregon Laws 2005, is included in federal taxable income for federal tax
purposes, then the amount shall be subtracted from federal taxable income
for purposes of determining Oregon taxable income under this chapter.
[2005 c.559 §8](1) There shall be subtracted
from federal taxable income the amount contributed to a college savings
network account established under ORS 348.841 to 348.873.
(2) Notwithstanding subsection (1) of this section, a subtraction
under this section may not exceed the lesser of:
(a) $2,000 for the tax year or, in the case of a married individual
filing separately, $1,000 for the tax year; and
(b) If an amount is carried forward to a succeeding tax year under
subsection (3) of this section, the balance in the college savings
network account at the close of the tax year for which the subtraction is
being made.
(3) Any amounts contributed to a college savings network account
that are not subtracted from federal taxable income because of the
monetary limitations imposed by subsection (2) of this section may be
carried forward for four succeeding tax years and subtracted from federal
taxable income in any of those succeeding tax years in an amount that
does not exceed the monetary limitations imposed by subsection (2) of
this section.
(4) The amount contributed to a college savings network account may
be subtracted from a preceding tax year if the contribution is made
before the taxpayer files a return or before the 15th day of the fourth
month following the closing of the taxpayer’s tax year, whichever is
earlier. [2003 c.280 §2](1) To the extent that the amount allowed as a deduction
under section 168 of the Internal Revenue Code (Accelerated Cost Recovery
System) exceeds, or is less than, the amount that would be allowed as a
deduction for depreciation for the property under the federal Internal
Revenue Code as amended and in effect on December 31, 1980, the
difference shall be added to, or subtracted from federal taxable income,
whichever is applicable.
(2) The modifications required by subsection (1) of this section
apply only to the differences in the computation of depreciation
(reasonable allowance for exhaustion, wear, tear and obsolescence) under
the Accelerated Cost Recovery System and the other methods of
depreciation. Nothing in this section shall be construed to govern the
eligibility of property for depreciation, or other provisions of the
Internal Revenue Code which do not directly govern the computation of the
deduction amount for recovery property.
(3) There shall be added to federal taxable income any amount
deducted under section 179 of the Internal Revenue Code (election to
expense certain depreciable business assets). However, any asset with
respect to which this section applies may be depreciated as otherwise
provided under this chapter.
(4) Income included in federal taxable income by a shareholder of
an S corporation pursuant to sections 1366 to 1368 of the Internal
Revenue Code shall be adjusted for purposes of determining Oregon taxable
income as required by the provisions of this section.
(5) This section shall not apply to property placed in service in
taxable years beginning on or after January 1, 1985. [1983 c.162 §67;
1985 c.802 §13] (1) Upon
the taxable sale, exchange or disposition of any asset in a tax year
beginning on or after January 1, 1983, federal taxable income shall be
increased or decreased by an amount which will reflect one or more of the
following:
(a) The difference in basis which results from the difference in
depreciation or cost recovery, or expense claimed under section 179 of
the Internal Revenue Code, allowed or allowable on the Oregon return and
that allowed or allowable on the federal return for that asset;
(b) The difference in basis which results when a taxpayer has taken
a federal credit, which requires as a condition of the use of the federal
credit the reduction of the basis of an asset, and the federal credit is
not allowable for Oregon tax purposes;
(c) The difference in basis as a result of any deferral of gain
which has been granted under federal tax law but not under Oregon tax law
or granted under Oregon law but not granted under federal law;
(d) The difference in basis under federal and Oregon tax law at the
time the asset was acquired; or
(e) Any other differences in the basis of the asset which are due
to differences between federal and Oregon tax law.
(2) There shall be added to or subtracted from federal taxable
income any amount necessary to carry out the purposes of subsection (1)
of this section.
(3) If a taxpayer has taken a federal credit, which requires as a
condition of the use of the federal credit the reduction of a
corresponding deduction, and the federal credit is not allowable for
Oregon purposes, the taxpayer shall be allowed the deduction for Oregon
tax purposes. [1983 c.162 §69; 1985 c.802 §14]If a taxpayer has taken a deduction
to arrive at federal taxable income for the purpose of having that income
taxed in a manner different from the taxation of federal taxable income,
the amount which was deducted and specially taxed shall be added to
federal taxable income in the computation of state taxable income.
However, if any portion of the amount added was treated as capital gain
in arriving at federal taxable income, that portion shall be treated as
capital gain in the computation of state taxable income. [1983 c.162 §76;
1987 c.293 §27](1) If gain
is deferred upon the voluntary or involuntary disposition of property in
an exchange that qualifies for deferral under section 1031 or 1033 of the
Internal Revenue Code, and the property acquired in the exchange has a
situs outside of this state, upon the sale or other disposition of the
acquired property in a transaction in which gain or loss is recognized
for federal tax purposes but is not taken into account in computing
federal taxable income for Oregon tax purposes, there shall be added to
federal taxable income the difference between:
(a) The adjusted basis of the acquired property on the date the
exchange under section 1031 or 1033 of the Internal Revenue Code was
completed; and
(b) The lesser of:
(A) The fair market value of the acquired property on the date the
exchange under section 1031 or 1033 of the Internal Revenue Code was
completed; or
(B) The fair market value of the acquired property on the date gain
or loss from the sale or other disposition of the acquired property is
recognized for federal tax purposes.
(2) If the adjusted basis described in subsection (1)(a) of this
section is larger than either value described in subsection (1)(b) of
this section, the difference computed under subsection (1) of this
section shall be subtracted from federal taxable income instead of being
added to federal taxable income.
(3) The Department of Revenue may require taxpayers owning property
acquired in an exchange under section 1031 or 1033 of the Internal
Revenue Code that has a situs outside of this state to file an annual
report on the acquired property, and may adopt rules to implement
reporting requirements under this section. [2001 c.509 §15] Any amount received
as a cash payment for energy conservation measures under ORS 469.631 to
469.687 is exempt from the tax imposed under this chapter. [Formerly
316.069; 1985 c.802 §16](Additional Personal Exemption Credits) For purposes of ORS
316.752 to 316.771:
(1) A person is “severely disabled” if the person:
(a) Has lost the use of one or more lower extremities;
(b) Has lost the use of both hands; or
(c) Has a physical or mental condition that limits the abilities of
the person to earn a living, maintain a household or provide personal
transportation for the person without employing special orthopedic or
medical equipment or outside help.
(2) “Orthopedic or medical equipment” includes, but is not limited
to, wheelchairs, braces, prostheses or special crutches.
(3) “Outside help” includes, but is not limited to, unrelated
individuals whom the severely disabled taxpayer employs to keep house,
maintain the house or yard, or to transport the taxpayer. [Formerly
316.135; 1987 c.158 §50; 1989 c.224 §51]In addition to the personal exemption credit allowed by this
chapter for state personal income tax purposes, there shall be allowed an
additional personal exemption credit for the taxpayer if the taxpayer is
severely disabled at the close of the taxable year. The amount of the
credit shall be equal to the amount allowed as the personal exemption
credit for the taxpayer for state personal income tax purposes for the
taxable year. [Formerly 316.136; 1985 c.345 §10; 1987 c.293 §28](1) An additional personal exemption credit
in the same amount as allowed under ORS 316.758 for a severely disabled
taxpayer shall be allowed for the spouse of the taxpayer if a separate
return is made by the taxpayer, and if the spouse:
(a) Is severely disabled;
(b) Has no gross income for the calendar year in which the taxable
year of the taxpayer begins; and
(c) Is not the dependent of another taxpayer.
(2) In the case of a joint return, each spouse who is severely
disabled shall be allowed the additional credit in the amount provided
under ORS 316.758 if the spouse otherwise qualifies under this section.
(3) For purposes of this section, the determination of whether the
spouse is severely disabled shall be made as of the close of the taxable
year of the taxpayer except that if the spouse dies during such taxable
year such determination shall be made as of the time of the death of the
spouse. [Formerly 316.137; 1985 c.345 §11; 1987 c.293 §29] Each person
qualifying for the additional personal exemption credit allowed in ORS
316.758 and 316.765 may claim the credit on the personal income tax
return. However, the claim shall be substantiated by a letter from a
licensed physician or osteopath describing the nature and extent of the
physical disability. The requirement for substantiation may be waived
partially, conditionally or absolutely, as provided under ORS 315.063.
[Formerly 316.138; 1985 c.345 §12; 1987 c.293 §30; 1995 c.54 §12](Exemptions)(1) Any income derived from sources
within the boundaries of federally recognized Indian country in Oregon by
any enrolled member of a federally recognized American Indian tribe
residing in federally recognized Indian country in Oregon at the time the
income is earned is exempt from tax under this chapter.
(2) An extract from the tribal rolls or other documentary proof of
the taxpayer’s enrolled status and other additional proofs as may be
required by the Department of Revenue, shall be attached to or accompany
any return for any year for which exemption under subsection (1) of this
section is claimed. The requirement of proof may be waived partially,
conditionally or absolutely, as provided under ORS 315.063. [Formerly
316.049; 1985 c.317 §1; 1995 c.54 §17] (1) For
each tax year in which a business firm receives an annual certification
under ORS 285C.506, the income of the taxpayer apportionable to the
certified facility of the business firm shall be exempt from tax under
this chapter.
(2) The income of a resident taxpayer that is exempt under this
section shall be determined by:
(a) Multiplying the federal taxable income of the taxpayer by the
ratio of the taxpayer’s federal adjusted gross income derived from the
business firm over the taxpayer’s federal adjusted gross income; and
(b) Multiplying the amount determined under paragraph (a) of this
subsection by the ratio of the business firm’s income derived from the
firm’s activities at the certified facility over the business firm’s
income from all business activities.
(3) The income of a nonresident or part-year resident taxpayer that
is exempt under this section shall be determined by:
(a) Multiplying the Oregon-sourced federal taxable income of the
taxpayer by the ratio of the taxpayer’s federal adjusted gross income
derived from the business firm over the taxpayer’s federal adjusted gross
income; and
(b) Multiplying the amount determined under paragraph (a) of this
subsection by the ratio of the business firm’s income derived from the
firm’s activities at the certified facility over the business firm’s
income from all business activities.
(4) The Department of Revenue shall by rule prescribe a method by
which a business firm determines the extent to which the firm’s income is
derived from the firm’s activities at the certified facility.
(5)(a) A partnership or S corporation shall report the information
necessary to compute exempt income under this section to the firm’s
owners within 30 days following the issuance of the annual certification
to the partnership or S corporation under ORS 285C.506.
(b) The department may permit extensions of time for reporting the
information required under this subsection.
(6) As used in this section:
(a) “Business firm” has the meaning given that term in ORS 285C.500.
(b) “Certified facility” means a facility, as defined in ORS
285C.500, for which an annual certification under ORS 285C.506 has been
issued. [2001 c.944 §6]
Amounts received as condemnation awards as a result of condemnation by
the federal government of Indian tribal lands are exempt from the tax
imposed by this chapter. [Formerly 316.050]
Income derived from the exercise of rights of any Indian tribe to fish
secured by treaty, Executive order or Act of Congress is exempt from the
tax imposed by this chapter if section 7873 of the Internal Revenue Code
does not permit a like federal tax to be imposed on such income. [1989
c.625 §5]Amounts paid to an eligible individual (persons of Japanese
ancestry and Aleut civilian residents of the Pribilof Islands and the
Aleutian Islands) under section 1989b-4, Title I, or 1989c-5, Title II,
of the Civil Liberties Act of 1988 (P.L. 100-383) shall be treated for
purposes of this chapter as damages for human suffering and shall be
exempt from the taxes imposed under this chapter. [1989 c.625 §4] (1)
Compensation received for active service as a member in the Armed Forces
of the United States outside this state during any month beginning on or
after August 1, 1990, and before the date designated by the President of
the United States as the date of termination of combatant activities in
the Persian Gulf Desert Shield area is excluded from gross income for
purposes of this chapter.
(2) To the extent included in arriving at federal taxable income,
there shall be subtracted from the federal taxable income of a resident
or nonresident individual any compensation described in subsection (1) of
this section that is not entitled to subtraction under ORS 316.127,
316.680 or other law.
(3) For purposes of this section, “compensation” does not include
pension or retirement pay. [1991 c.177 §2]
Compensation, including death gratuity and other qualified military
benefits described in section 134 of the Internal Revenue Code, received
by 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, that is attributable to service performed after a change in
status from Title 32 to Title 10 of the United States Code, and before
the termination of Title 10 status, is exempt from taxation under this
chapter. [2005 c.519 §12]Note: Sections 13 to 15, chapter 519, Oregon Laws 2005, provide:
Sec. 13. Section 12 of this 2005 Act [316.791] applies to tax years
beginning on or after January 1, 2001. [2005 c.519 §13]
Sec. 14. (1) Notwithstanding ORS 305.270 or 314.415 or other law
limiting the period of time for which a refund of personal income tax may
be made, a taxpayer may file a claim for refund of tax paid for a tax
year beginning on or after January 1, 2001, and before January 1, 2002,
if the claim for refund is based on the inclusion within gross income of
compensation described in section 12 of this 2005 Act [316.791].
(2) The Department of Revenue shall refund amounts due for a claim
described in subsection (1) of this section if the claim is allowable and
the claim has been filed with the department before July 1, 2006. [2005
c.519 §14]
Sec. 15. Section 14 of this 2005 Act is repealed on January 2,
(Temporary provisions relating to exemption for certain sales of
manufactured dwelling parks)Note: Sections 6 and 7, chapter 826, Oregon Laws 2005, provide:
Sec. 6. Amounts received as a result of the sale of a manufactured
dwelling park to a tenants’ association, facility purchase association or
tenants’ association supported nonprofit organization as described in ORS
90.820, to a community development corporation as described in ORS
458.210 or to a housing authority as defined in ORS 456.005 are exempt
from the tax imposed by this chapter [ORS chapter 316]. [2005 c.826 §6]
Sec. 7. Section 6 of this 2005 Act applies to tax years beginning
on or after January 1, 2006, and before January 1, 2008. [2005 c.826 §7](Additional Modifications of Taxable Income) As used in ORS
316.806 to 316.818:
(1) “Construction job site” means the specific location of a
construction project.
(2) “Construction project” means the construction, alteration,
repair, improvement, moving or demolition of a structure and
appurtenances thereto.
(3) “Construction worker” means a person who is a member of a
recognized construction trade, craft, union or industrial occupation and
who is lawfully engaged in the performance of labor, pursuant to contract
or subcontract, at a construction project.
(4) “Traveling expenses” means daily transportation expenses that:
(a) Are not otherwise deductible under the federal Internal Revenue
Code.
(b) Are incurred by a construction worker in job-related travel
between a construction job site located more than 50 miles from the
principal residence of the construction worker.
(5) “Traveling expenses” includes gas, oil and automobile repairs
and maintenance, but does not include meals unless the construction
worker is required by the employer to stay overnight at the construction
job site. [Formerly 316.057] In addition to the
modifications to federal taxable income contained in this chapter, there
shall be subtracted from federal taxable income traveling expenses, as
defined in ORS 316.806, incurred by a construction worker during the
first year of continuous employment on the same construction job site.
However, if employment on the same construction job site is temporarily
interrupted for any reason whatsoever, the period of interruption shall
not be taken into account in determining the one-year period. [Formerly
316.058] The modification to federal taxable
income by ORS 316.812 shall be substantiated by any proof required by the
Department of Revenue by rule. The requirement for substantiation may be
waived partially, conditionally or absolutely, as provided under ORS
315.063. [Formerly 316.059; 1995 c.54 §13](1) A taxpayer that elects to deduct state and local sales
taxes under section 164(b)(5) of the Internal Revenue Code for federal
tax purposes must make the same election for purposes of the tax imposed
by this chapter.
(2) A taxpayer that elects to deduct state and local sales taxes
under section 164(b)(5) of the Internal Revenue Code for federal tax
purposes shall add the amount deducted to federal taxable income for
purposes of the tax imposed by this chapter. [2005 c.832 §30] As used in ORS
316.824 and 316.832:
(1) “Forest products” means any merchantable form including but not
limited to logs, poles and piling, into which a fallen tree may be cut
before it undergoes manufacturing.
(2) “Logger” means a person commonly known as a faller or bucker
who furnishes and maintains personal equipment in the commercial
harvesting of forest products and who is paid on a per-unit cut basis.
(3) “Logging operation site” means the specific location of the
commercial harvesting of forest products.
(4) “Traveling expenses” means daily transportation expenses that:
(a) Are not otherwise deductible under the federal Internal Revenue
Code.
(b) Are incurred by a logger in job-related travel between a
logging operation site located more than 50 miles from the principal
residence of the logger.
(5) “Traveling expenses” includes gas, oil and automobile repairs
and maintenance but does not include meals or lodging. [Formerly 316.061] (1) In addition to the
modifications to federal taxable income contained in this chapter, there
shall be subtracted from federal taxable income traveling expenses, as
defined in ORS 316.824, incurred by a logger in job-related travel.
(2) The modification to federal taxable income by subsection (1) of
this section shall be substantiated by any proof required by the
Department of Revenue by rule. The requirement for substantiation may be
waived partially, conditionally or absolutely, as provided under ORS
315.063. [Formerly 316.063; 1995 c.54 §14]In addition to the modifications to federal taxable
income contained in this chapter, there shall be subtracted from federal
taxable income the amount of any underground storage tank pollution
prevention or essential services grant made by the Department of
Environmental Quality under section 6, chapter 863, Oregon Laws 1991, to
any taxpayer. [1991 c.863 §33] A taxpayer that is
allowed a deduction for qualified production activities income under
section 199 of the Internal Revenue Code for federal tax purposes shall
add the amount deducted to federal taxable income for purposes of the tax
imposed by this chapter. [2005 c.832 §41]Note: Section 46, chapter 832, Oregon Laws 2005, provides:
Sec. 46. Sections 41 [316.836] and 44 [317.398] of this 2005 Act
apply to tax years beginning on or after January 1, 2005. [2005 c.832 §46]A taxpayer that is allowed an
exclusion from gross income under section 139A of the Internal Revenue
Code for federal tax purposes shall add the amount excluded to federal
taxable income for purposes of the tax imposed by this chapter. [2005
c.832 §42]Note: Section 47, chapter 832, Oregon Laws 2005, provides:
Sec. 47. Sections 42 [316.837] and 44 [317.401] and 45 of this 2005
Act apply to tax years beginning on or after January 1, 2008. [2005 c.832
§47] (1) If an art object has not been
previously sold or otherwise transferred by its creator and the creator
makes a charitable contribution of the art object that qualifies for the
deduction allowed by section 170 of the Internal Revenue Code for the
taxable year, there shall be subtracted from federal taxable income any
positive amount obtained by subtracting:
(a) The amount otherwise deductible on the Oregon tax return of the
taxpayer-creator for the taxable year as charitable contributions from
(b) The amount that would have been deductible by the
taxpayer-creator if the deduction for charitable contributions had been
computed without reduction in amount under section 170 (e) of the
Internal Revenue Code for the art object charitably contributed by its
creator.
(2) As used in this section, “art object” means a painting,
sculpture, photograph, graphic or craft art, industrial design, costume
or fashion design, tape or sound recording or film.
(3) No additional subtraction shall be allowed to the
taxpayer-creator under this section unless the tax return is accompanied
by a copy of an appraisal report showing the fair market value of the art
object at the time the contribution was made. [Formerly 316.064; 1989
c.938 §1](1) Notwithstanding any other provision of this chapter, when gain
or loss that is included in federal taxable income is derived from the
disposition of property and the gain, loss or basis computed with respect
to that disposition involves, in whole or in part, property that was
valued at the property’s value for farm use or as forestland under ORS
118.155 (1995 Edition), then there shall be added to federal taxable
income the difference between the taxable gain or loss that would
otherwise be determined under this chapter and the gain or loss that
would be taxable had the basis for federal tax purposes been computed
using the forest or farm use value provided for under ORS 118.155 (1995
Edition) instead of the basis computed pursuant to section 1014 of the
Internal Revenue Code.
(2) This section applies to gains and losses from dispositions of
property acquired from a decedent, or from property the basis of which is
computed in whole or in part with respect to property acquired from a
decedent, whose death occurred before January 1, 1987. [Formerly 316.081;
1987 c.646 §13; 1997 c.99 §19]ORS 316.844 shall not apply in
any case in which a carryover basis for certain property acquired from a
decedent dying after December 31, 1976, is provided by section 1014 of
the Internal Revenue Code. [Formerly 316.083] (1) There
shall be subtracted from federal taxable income amounts received from a
scholarship awarded to the taxpayer or a dependent of the taxpayer that
are used for housing expenses of the scholarship recipient at the time
the scholarship recipient is attending an accredited community college,
college, university or other institution of higher education.
(2) A subtraction may not be allowed under this section if the
amounts described in subsection (1) of this section:
(a) Are not included in the taxpayer’s federal gross income for the
tax year; or
(b) Are taken into account as a deduction on the taxpayer’s federal
income tax return for the tax year. [1999 c.747 §2] (1) In addition to the
other modifications to federal taxable income contained in this chapter,
there shall be subtracted from federal taxable income the amount of
taxpayer deposits to an individual development account established by the
taxpayer under ORS 458.685.
(2) Matching deposits made by a fiduciary organization to an
individual development account, and interest accruing on account holder
deposits and matching deposits, are exempt from taxation until withdrawn
by the taxpayer.
(3) Moneys withdrawn by the taxpayer from an individual development
account for an approved purpose, as described under ORS 458.685, are
exempt from taxation under this chapter. A withdrawal by a taxpayer for a
purpose other than an approved purpose is taxable under this chapter.
[1999 c.1000 §10]
(1) As used in this section:
(a) “Contribution base” has the meaning given that term in section
170 of the Internal Revenue Code.
(b) “Educational institution” means:
(A) A public common or union high school district;
(B) A private school that has been registered under ORS 345.505 to
345.575 and that is an organization described in section 501(c)(3) of the
Internal Revenue Code;
(C) An accredited public community college, college or university
located in this state; or
(D) An accredited private community college, college or university
located in this state that is an organization described in section
501(c)(3) of the Internal Revenue Code.
(c) “Qualified donation” means a transfer of a fee estate in land
from a taxpayer to an educational institution without consideration of
any kind given to the taxpayer by the educational institution in exchange
for the land.
(d) “Qualified reduced sale” means a transfer of a fee estate in
land by a taxpayer to an educational institution for consideration paid
by the educational institution that is less than the fair market value of
the land at the time of transfer.
(2) There shall be added to federal taxable income the amount that
otherwise would be taken into account as a charitable contribution
deduction for a qualified donation or a qualified reduced sale pursuant
to section 170 of the Internal Revenue Code.
(3) In the case of a qualified donation made by the taxpayer during
the tax year, the fair market value of the qualified donation shall be
subtracted from federal taxable income.
(4) In the case of a qualified reduced sale made by the taxpayer
during the tax year, the difference between the fair market value of the
land and the sale price of the land shall be subtracted from federal
taxable income.
(5) Notwithstanding subsections (3) and (4) of this section, the
subtraction allowed under this section may not exceed:
(a) In the case of a qualified donation, 50 percent of the
taxpayer’s contribution base for the tax year; or
(b) In the case of a qualified reduced sale, 25 percent of the
taxpayer’s contribution base for the tax year.
(6) Any subtraction not allowed because of the limitations imposed
under subsection (5) of this section may be carried forward and claimed
as a subtraction in the next succeeding tax year. Any amount remaining
unused in the next succeeding tax year may be carried forward and used in
the second succeeding tax year, and likewise until the 15th succeeding
tax year, but may not be carried beyond the 15th succeeding tax year.
(7) If a partnership or S corporation makes a qualified donation or
qualified reduced sale during the tax year, each partner or shareholder
shall be allowed a subtraction under this section in proportion to their
ownership interest in the partnership or S corporation. [1999 c.358 §2]Note: Section 6, chapter 358, Oregon Laws 1999, provides:
Sec. 6. Sections 2 and 4 of this 1999 Act [316.852 and 317.488]
apply to donations and reduced sales occurring in tax years beginning on
or after January 1, 2000, and before January 1, 2008. [1999 c.358 §6]DEFERRAL OF REINVESTED GAIN
(1) “Consideration” includes money, property or securities. If
consideration is for other than money, consideration shall mean the
amount equal to the adjusted basis to the corporation of the property
received reduced by any liability to which the property was subject or
which was assumed by the corporation as of the time the property was
received.
(2) “Security” means any security as defined in ORS 59.015.
(3) “Small business corporation” means a corporation that:
(a) Is organized in this state or authorized to transact business
in this state under the Oregon Business Corporation Act and which has its
primary place of business or commercial domicile in Oregon as determined
under the administrative rule of the Department of Revenue.
(b) Had total employment of no more than 200 employees, as measured
by the number of employees covered by federal unemployment insurance on
December 31 of the year preceding issuance of the small business stock, a
majority of which employees were covered by Oregon unemployment insurance
on December 31 of the year preceding acquisition of the small business
stock. However, if more than 50 percent of the outstanding equity
securities of all classes are held by another corporation, the employment
of the controlling corporation shall be counted as employment of the
eligible corporation for purposes of this paragraph.
(c) Had gross receipts for its tax year ending in the calendar year
previous to the calendar year in which the tax year of the taxpayer
claiming the credit under ORS 316.872, begins of which not more than 25
percent were obtained from royalties, rents, dividends, interest,
annuities and sales and exchanges of property. However, this restriction
does not apply to companies whose primary business is the sale or
development of computer software.
(d) Is not engaged primarily in the business of managing, holding,
buying or selling real property.
(e) Has not issued small business securities for consideration in
excess of $1 million. Any small business securities issued by affiliates
of the corporation as defined in section 1504 of the Internal Revenue
Code shall be aggregated with the small business securities issued by the
corporation for purposes of the $1 million limit.
(4) “Small business security” means a security issued by a small
business corporation and purchased by a taxpayer directly from the same
small business corporation, or purchased by a taxpayer from an
underwriter which is selling the securities as part of a plan to raise
new debt or equity capital for the small business corporation. The
Department of Revenue shall, upon request, designate those small business
security issues which fit the definition set forth in this paragraph.
[1985 c.715 §2; 1987 c.293 §9; 1993 c.18 §82; 1997 c.772 §30] (1)
If a small business security owned by a taxpayer is sold by the taxpayer,
and within six months from the date of sale, another small business
security is purchased by the taxpayer, gain from the sale shall only be
recognized to the extent that the sales price of the small business
security sold exceeds the cost of purchasing the new small business
security.
(2) Where the purchase of a new small business security results,
under subsection (1) of this section, in the nonrecognition of gain on
the sale of an old small business security, in determining the basis of
the new small business security, the basis shall be reduced by an amount
equal to the amount of the gain not so recognized on the sale of the old
small business security.
(3) Federal taxable income shall be modified to the extent
necessary to carry out the provisions of this section. [1985 c.715 §3;
1987 c.647 §15]Note: Section 4, chapter 715, Oregon Laws 1985, provides:
Sec. 4. This Act [316.871 and 316.872] applies to small business
securities acquired during tax years beginning on or after January 1,
1986, and prior to January 1, 1990. [1985 c.715 §4]Note: Section 16, chapter 647, Oregon Laws 1987, provides:
Sec. 16. The amendments to section 3, chapter 715, Oregon Laws 1985
[316.872], by section 15 of this Act apply to small business security
acquired during tax years beginning on or after January 1, 1986, and
prior to January 1, 1990. [1987 c.647 §16] As used in ORS
316.873 to 316.884:
(1) “Capital asset” means an asset defined as a capital asset under
section 1221 of the Internal Revenue Code, except that it includes
property, used in the taxpayer’s trade or business, of a character that
is subject to the allowance for depreciation provided in section 167 of
the Internal Revenue Code, or real property used in the taxpayer’s trade
or business.
(2) “Commercial domicile” means commercial domicile as defined
under ORS 314.610.
(3) “Expansion share” means a unit of ownership of a business that
meets all of the following criteria:
(a) The unit has unlimited voting rights and the right to receive a
share of the net assets of the business upon dissolution, or may at the
option of the holder of the share be converted into shares with these
characteristics.
(b) The unit is issued directly to the taxpayer, or to a
partnership, limited liability company or S corporation of which the
taxpayer is, at the time the unit is issued, a partner, member or
shareholder.
(c) The business has less than $5 million in revenues during the 12
full months immediately preceding the date of the first equity investment
in the business by the taxpayer.
(d) At the time the unit is issued, the business has a net equity,
adjusted by adding back all dividends or distributions made by the
business, that is equal to or less than the sum of all previous equity
investments.
(e) At the time the unit is issued, no unit of ownership of the
business is publicly traded.
(f) The unit is issued in exchange for money or property to be used
in the operations of the business. A unit, the proceeds received by the
business of which are used by the business to reacquire an ownership
interest or other security of the business, shall not constitute an
expansion share.
(4) “Gain” or “deferred gain” means gain as determined for federal
income tax purposes with the modifications contained in this chapter.
(5) “Qualified business interest” means an ownership interest in a
business conducting a qualified business activity.
(6) “Qualified business activity” means a business that is owned by
an individual, partnership, limited liability company, S corporation or C
corporation, the activity of which meets all of the following criteria:
(a) The activity is an activity listed in the Standard Industrial
Classification Manual, 1987 (SIC), as published by the Office of
Management and Budget, Executive Office of the President, as being any of
the following:
(A) Agriculture, forestry or fishing (Division A).
(B) Mining (Division B).
(C) Construction (Division C).
(D) Manufacturing (Division D).
(E) Transportation, communications, electric, gas or sanitary
service (Division E).
(F) Wholesale trade (Division F).
(G) Retail trade (Division G).
(H) Personal services (Major Group 72, Division I).
(I) Business services (Major Group 73, Division I).
(J) Automotive repair, services or parking (Major Group 75,
Division I).
(K) Miscellaneous repair services (Major Group 76, Division I).
(L) Engineering, accounting, research, management or related
services (Major Group 87, Division I).
(b) The business generates income from investment property only as
an incidental effect of the management of working capital. For purposes
of ORS 316.873 to 316.884, ownership interests in entities controlled by
the business or directly involved in the support of the qualified
business activity of the business do not constitute investment property.
(c) The commercial domicile of the business is in this state.
(d)(A) The employment base of the business in this state is at
least as large as the employment base of the business outside this state.
(B) For purposes of this paragraph, the employment base of a
business shall be the sum of the number of full-time equivalent employees
and the number of full-time equivalent independent contractors located in
this state or outside this state, as the case may be.
(7) “Qualified business asset” means a capital asset held for use
in this state in a qualified business activity.
(8) “Related party” means an individual who is a member of the
taxpayer’s family, as that term is defined in section 267 (c)(4) of the
Internal Revenue Code.
(9) “Qualified investment fund” means a partnership, limited
liability company or S corporation formed solely for the purpose of
acquiring qualified business interests or qualified business assets and
that:
(a) Invests in qualified business interests or qualified business
assets; or
(b) Acquires investment property only on an interim basis or an
incidental basis until a suitable qualified business interest or
qualified business asset may be located by the fund.
(10) “Investment property” means property that has the capacity to
produce gross income from:
(a) Interest, annuities or royalties not derived in the ordinary
course of a trade or business; or
(b) Dividends, except that investment property does not include
expansion shares. [1995 c.809 §2; 1997 c.839 §25](1)
In addition to any other modifications to federal taxable income made for
purposes of this chapter, and upon the filing by the taxpayer of a
declaration described under ORS 316.877 (1), a taxpayer who has income
for federal income tax purposes, from gain on the sale or other
disposition of a capital asset may defer recognition of all or part of
the gain in determining the taxes imposed under this chapter by
reinvesting the proceeds of the sale or other disposition in a qualified
business interest, qualified investment fund or qualified business asset
within six months of the date on which the gain would otherwise have been
recognized.
(2) For purposes of ORS 316.873 to 316.884, gain shall be
considered to be reinvested in a qualified business interest, qualified
investment fund or qualified business asset in the same proportion that
the proceeds from the sale or other disposition of the capital asset (net
of federal income taxes paid or owing as a result of the sale or other
disposition) are reinvested.
(3) Upon the sale or other disposition of a qualified business
interest, interest in a qualified investment fund or a qualified business
asset with respect to which gain was previously deferred under this
section as the result of a prior sale or disposition, the previously
deferred gain may continue to be deferred:
(a) Only to the extent that an amount equal to the total of all
gain deferred under this section is reinvested in one or more qualified
business interests or qualified business assets; and
(b) Only if a new declaration described under ORS 316.877 (1) is
filed with the Department of Revenue.
(4) Gain resulting from the sale or other disposition of a
qualified business interest, interest in a qualified investment fund or a
qualified business asset that the taxpayer may not continue to defer
under subsection (1) of this section shall be added to federal taxable
income in the manner provided under ORS 316.879 (3).
(5) The Department of Revenue may by rule further refine the method
by which a taxpayer determines whether a transaction constitutes the sale
or disposition of a qualified business interest, interest in a qualified
investment fund or a qualified business asset with respect to which gain
has been deferred. [1995 c.809 §3]
The following types of gain or income may not be deferred under ORS
316.873 to 316.884:
(1) Gain from the sale or other disposition of property received in
lieu of salary, wages or other compensation for services performed by the
taxpayer, to the extent of the fair market value of the property at the
time of receipt by the taxpayer.
(2) Gain or income from the sale of inventory, except gain derived
from the bulk sale of inventory not in the ordinary course of a trade or
business.
(3) Gain from the sale of property that is not held for the
production of income.
(4) Gain from investment property.
(5) Gain that is treated or characterized as ordinary income under
any provision of the Internal Revenue Code. [1995 c.809 §4](1) A declaration shall accompany the income tax
return of a taxpayer seeking to defer gain under ORS 316.873 to 316.884.
The declaration shall state the source and the amount of the gain to be
deferred and shall declare the intent of the taxpayer to reinvest the
gain in a qualified business interest, qualified investment fund or a
qualified business asset within six months of the date of sale or other
disposition from which the gain is derived.
(2) A taxpayer who has filed a declaration of intent to reinvest
shall, with the income tax return for the tax year of reinvestment, file
a statement that the reinvestment has occurred. The statement shall be on
such form as the Department of Revenue may prescribe and shall:
(a) Identify the qualified business interest, interest in a
qualified investment fund or qualified business asset acquired;
(b) State the basis for qualification as a qualified business
interest, qualified investment fund or qualified business asset; and
(c) Give the purchase price or other consideration given for the
qualified business interest, interest in the qualified investment fund or
qualified business asset acquired.
(3) The statement described in subsection (2) of this section shall
reference the specific declaration of intent to reinvest that is being
fulfilled. [1995 c.809 §5]The basis of
the taxpayer in a qualified business interest, qualified investment fund
or qualified business asset shall not be reduced by the amount of gain
deferred under ORS 316.873 to 316.884. [1995 c.809 §6](1) If a taxpayer is granted a deferral under ORS 316.873
to 316.884, the amount of the deferred gain that is reinvested in a
qualified business interest, qualified investment fund or qualified
business asset shall be an adjustment to federal taxable income
notwithstanding ORS 316.874 when any of the following occur:
(a) The asset ceases to be a qualified business asset.
(b) The investment fund ceases to be a qualified investment fund.
(c) The business ceases day-to-day operations or ceases to be a
qualified business.
(d) The current asset value of the qualified business is reduced 50
percent or more as a result of the withdrawal of:
(A) Capital assets from the business; or
(B) Proceeds from the sale or other disposition of capital assets
of the business.
(2) For purposes of subsection (1)(b) of this section, a qualified
investment fund may not be disqualified upon the disqualification of one
or more of the qualified business activities in which the fund holds
interests, if the fund divests itself of the fund’s interests in the
disqualified business activity within 12 months of the date of
disqualification. If the qualified investment fund does not divest itself
of the fund’s interests in a disqualified business activity within 12
months of the disqualification, only that portion of the gain previously
deferred under ORS 316.873 to 316.884 that is attributable to the
interest in the disqualified business activity shall be an adjustment to
the federal taxable income of the owners of the fund.
(3)(a) Except as provided in paragraph (b) of this subsection, upon
the occurrence of an event described in subsection (1) of this section
requiring recognition of deferred gain, the deferred gain shall be added
to federal taxable income for the tax year in which the event occurs.
Except for adjustments required for purposes of this chapter other than
in ORS 316.873 to 316.884, no other adjustment to federal taxable income
shall be made as a result of an event requiring recognition of deferred
gain described in subsection (1) of this section.
(b) A taxpayer who does not own a controlling interest in a
business with respect to which an event occurs requiring recognition of
gain as described in subsection (1)(a), (b) and (c) of this section may
continue to defer gain by timely filing a declaration of intent to
reinvest as described in ORS 316.877.
(c) If a qualified investment fund fails to divest itself of the
fund’s interests in a disqualified business activity within the 12-month
period described in subsection (2) of this section, the deferred gain
that is required to be recognized by subsection (2) of this section shall
be added to federal taxable income for the tax year in which expires the
12-month period for divestment. [1995 c.809 §7](1) If a taxpayer sells or otherwise disposes of a qualified business
interest or qualified business asset, the statutory period prescribed in
ORS 314.410 for assessing a deficiency attributable to any part of the
gain deferred under ORS 316.873 to 316.884 shall not expire prior to the
expiration of three years after the latest of the following dates:
(a) The date of receipt by the Department of Revenue of the
statement described in ORS 316.877 (2).
(b) The date of receipt by the department of a statement from the
taxpayer declaring an intent not to reinvest.
(c) The date that is six months after the date of sale or
disposition resulting in possible deferred gain.
(2) Any gain deferred under ORS 316.873 to 316.884 that is later
required to be added to federal taxable income under ORS 316.873 to
316.884 shall be added to federal taxable income for the tax year in
which the event causing the addition occurs. Any deficiency attributable
to any portion of deferred gain may be assessed before the expiration of
the latest date described under subsection (1) of this section.
(3) A taxpayer who files a declaration of intent to reinvest but
fails to reinvest as required by ORS 316.874 shall be liable for unpaid
taxes on the deferred amount and for interest at the rate established
under ORS 305.220 for deficiencies from the date that the tax on the
deferred gain would have been due had the declaration not been filed to
the date of payment. [1995 c.809 §8](1) If, on
account of death or disability of the taxpayer, a related party succeeds
to a qualified business interest, interest in a qualified investment fund
or qualified business asset upon the acquisition of which gain was
deferred under ORS 316.873 to 316.884, then at the election of the
related party, the death or disability of the taxpayer shall not result
in the addition to federal taxable income of the deferred gain.
(2) The related party who succeeds to the qualified business
interest, interest in a qualified investment fund or qualified business
asset may dispose of the interest or asset without addition of the
deferred gain to federal taxable income if the requirements of
reinvestment and other requirements of ORS 316.873 to 316.884 are met.
(3) If a taxpayer dies, and the death does not result in the
addition of the deferred gain to federal taxable income because of an
election under this section, at the time the deferred gain is added to
federal taxable income, the amount of gain shall be determined using the
basis that the deceased taxpayer had in the qualified business interest,
qualified investment fund or qualified business asset. [1995 c.809 §9]The Department of Revenue may adopt rules under ORS 316.873 to
316.884 including rules that define what constitutes an interim holding
of investment property by a qualified investment fund and an incidental
holding of investment property by a qualified business activity or a
qualified investment fund. [1995 c.809 §10]Note: Section 11, chapter 809, Oregon Laws 1995, provides:
Sec. 11. (1) Sections 2 to 10 of this Act [316.873 to 316.883]
apply to gain incurred from the sale or other disposition of a capital
asset in tax years beginning on or after January 1, 1997, and to
investments in qualified business interests, qualified investment funds
or qualified business assets that occur on or before December 31, 1999.
(2)(a) The Department of Revenue, in conjunction with the Economic
and Community Development Department and the Legislative Revenue Officer,
shall prepare a report regarding the economic impact of sections 2 to 10
of this Act and shall present the report to those committees of the
Seventieth Legislative Assembly to which revenue matters are assigned.
The purpose of the report is to analyze the job creation and tax
implications of sections 2 to 10 of this Act.
(b) The confidentiality requirements applicable to tax returns and
the information contained therein shall not be applicable to the Economic
and Community Development Department and the Legislative Revenue Officer
for purposes of preparing the report described in paragraph (a) of this
subsection. [1995 c.809 §11](1) For gain
incurred from the sale or other disposition of a capital asset in tax
years beginning on or after January 1, 1996, and before January 1, 1997,
ORS 316.873 to 316.884 apply, as modified by this section.
(2) A taxpayer may defer recognition of gain on the sale or other
disposition of a capital asset as provided for under ORS 316.874 (2),
except that the reinvestment must be in a qualified business interest or
a qualified business asset.
(3) Recognition of gain may be deferred under this section only if
the taxpayer’s reinvestment:
(a) Consists of a qualified business interest in a C corporation; or
(b) Relates to a qualified business activity in which the taxpayer
materially participates, as that term is defined in section 469 of the
Internal Revenue Code and the regulations thereunder.
(4) For purposes of calculating the amount of gain that shall be
considered to be reinvested under this section, ORS 316.874 (2) shall not
apply and the amount of gain that shall be considered to be reinvested
shall be the lesser of:
(a) The amount of the gain incurred from the sale or other
disposition of a capital asset by the taxpayer; or
(b) The amount of the reinvestment. [1995 c.809 §12] This chapter is
intended to supersede any conflicting provisions of law in effect on
August 22, 1969, to the extent of such conflict. [Formerly 316.802]PENALTIES(1) The Department of Revenue shall assess a penalty of $250
against any individual who files what purports to be a return of the tax
imposed by this chapter but which:
(a) Does not contain information on which the substantial
correctness of the self-assessment may be judged; or
(b) Contains information that on its face indicates that the
self-assessment is substantially incorrect.
(2) A penalty may be imposed under subsection (1) of this section
only if the conduct referred to in subsection (1) of this section is due
to:
(a) A position which is frivolous; or
(b) An intention, apparent on the face of the purported return, to
delay or impede the administration of the income tax laws of this state.
(3) The penalty imposed under this section is in addition to any
other penalty imposed by law. Any person against whom 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.
(4) If an assessment of tax due for the taxable year with respect
to which a penalty is imposed under this section is under appeal at the
same time that an appeal is filed under this subsection, the tax court
may consolidate the appeals into a single proceeding.
(5) As used in this section, “a position which is frivolous”
includes, but is not limited to:
(a) Reference to a spurious constitutional argument;
(b) Reliance on a “gold standard” or “war tax” deduction;
(c) An argument that wages or salary are not includable in taxable
income;
(d) An argument that the Sixteenth Amendment to the United States
Constitution was not properly adopted; or
(e) An argument that “unenfranchised, sovereign, freemen or natural
persons” are not subject to the tax laws. [1987 c.843 §11; 1995 c.650 §39]
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