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Q&AOn January 6, I presented a new White Paper, The Oregon Corporate Activity Tax – You Can Run and You Can Hide, but This New Tax Is Effective January 1, 2020, at the Oregon Society of Certified Public Accountants Annual State and Local Tax Conference.  We had a large number of attendees, including representatives of the Oregon Department of Revenue (the “DOR”).  Based upon the numerous questions I received (during and after the presentation), it is clear that tax practitioners are busy thinking about this new tax regime and how it applies to their clients.  Unfortunately, in this particular case, I do not believe the curiosity will kill the CAT.  It looks like it is here to stay.

Recent Announcements

The Oregon Department of Revenue (the “Department”) has made several recent announcements regarding Oregon’s new Commercial Activity Tax (the “CAT”).

In an email dated December 4, 2019, the Department said it anticipated sharing initial drafts of the first batch of temporary administrative rules on its website in December 2019.

In the same email, the Department also announced that some issues will not be addressed in its rules. For example, the Department has determined that there is no way to provide guidance with respect to how businesses may properly estimate the amount of CAT liability attributable to particular transactions. The Department goes on to tell us, however, that many frequently asked questions will be addressed in forms, instructions, publications and/or FAQs on the Department’s website.

Importantly, the Department has made it clear that the CAT “does not prohibit any business subject to the CAT from passing the tax along to its customers.”

PhoneIn recent months, we have written extensively about Oregon’s new Corporate Activity Tax (the “CAT”).  As discussed in our last post, the Oregon Department of Revenue (the “Department”) recently announced that it would hold a dial-in meeting to solicit input regarding the Department’s rulemaking process from stakeholders located out of state or who otherwise could not attend the town hall meetings.  Peter Evalds attended the telephone meeting, which was held on Friday, October 25, 2019. 

This post continues our coverage of the CAT with an overview of new information we learned during the call.  This post also addresses questions and answers that the Department recently uploaded to the Frequently Asked Questions (“FAQs”) section of its CAT website.

We have written at length about Oregon’s new Corporate Activity Tax (the “CAT”). As discussed in our last post, the Oregon Department of Revenue (the “Department”) recently concluded a series of 12 town hall meetings around the state to solicit input from stakeholders regarding the Department’s rulemaking process.

As we talked about in our last post, the Department stated at the Portland town hall meeting its plan to conduct additional dial-in meetings for people who are located out of state or who otherwise could not attend the town hall meetings.

St. Johns Bridge - Portland, OregonWe have been covering Oregon’s new Corporate Activity Tax (the “CAT”) over the past few months.  As previously discussed, the Oregon Department of Revenue (the “Department”) has been conducting town hall meetings with stakeholders across Oregon.  The last meeting was held in Salem on October 4, 2019. 

In this post, we continue our coverage of the CAT with a discussion of the Department’s town hall meeting that Peter Evalds attended in Portland, Oregon on October 3, 2019.  We address significant issues discussed at the Portland meeting that were not discussed at the Beaverton meeting we covered a few weeks ago.

What We Learned from one of the Oregon Department of Revenue’s Town Hall Meetings

Over the past few months, we have written extensively on the blog about Oregon’s new Corporate Activity Tax (the “CAT”). As announced in our last post, the Oregon Department of Revenue (the “Department”) is in the process of conducting town hall meetings with stakeholders across Oregon. Peter Evalds attended the Department’s town hall meeting in Beaverton, Oregon on Thursday, September 19, 2019. In this post, we highlight some of the more significant issues that were discussed at that meeting.

CATWe have recently discussed in several blog posts Oregon’s new Corporate Activity Tax (“CAT”), a gross receipts tax that will become effective January 1, 2020. As we announced in our most recent post on this topic, the Oregon Department of Revenue (the “Department”) will soon commence the rule drafting process. In order to obtain input from taxpayers and tax advisors, it will hold town hall meetings around the state.

Yesterday, the Department announced the schedule of these meetings. Surprisingly, the first meeting is scheduled for tonight in Newport, and meetings will take place later this week in Corvallis and Beaverton. Additional meetings throughout the state will occur over the next few weeks. The meeting in Portland will take place at the Portland State Office Building in the Lloyd District on Thursday, October 3, 2019, from 5:30 pm to 7:00 pm.

Big CATAs discussed in recent blog posts, the Oregon Legislative Assembly recently enacted a Corporate Activity Tax (“CAT”). Governor Kate Brown signed the legislation into law, effective January 1, 2020. Put in simplest terms, the CAT is a gross receipts tax on businesses with greater than $1 million of “commercial activity sourced to this state.”

Given the broadness of the new law and the many anticipated difficulties that taxpayers, tax advisors and the government will likely encounter determining what constitutes “commercial activity sourced to this state,” the need for the Oregon Department of Revenue (the “Department”) to adopt administrative rules on the new law is evident.

sailboat in stormAs we reported in our June 4 blog post, Oregon lawmakers had recently enacted a “corporate activity tax” (“CAT”) that applies to certain Oregon businesses. The new law, absent challenge, becomes effective January 1, 2020.

We also recently reported that a prominent group of Oregon businesses planned to challenge the CAT. It appears, however, that the momentum for a challenge has recently died.

In this blog post, we discuss the reasons causing the death of the challenge. In addition, we cover some technical changes in the new law that are currently awaiting Governor Kate Brown’s signature.

magicianEarlier this week, a local tax practitioner asked us whether it was true that the City of Portland no longer allows depreciation deductions resulting from an election under Section 754 of the Internal Revenue Code of 1986, as amended (the “Code”), for purposes of computing tax under the City of Portland Business License Tax (“BLT”) and the Multnomah County Business Income Tax (“BIT”).  The answer we gave was “yes.”  Of course, the response we received from the practitioner was “why.”  That question is more difficult to answer than the original question.  Nevertheless, we present this blog post to remind tax practitioners of the City’s position on this issue and to discuss the implications of the City’s new position.

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Larry J. Brant
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Larry J. Brant is a Shareholder in Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; and Beijing, China. Mr. Brant practices in the Portland office. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.

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