For more than a year, I have been discussing the potential that Oregon lawmakers will pass a corporate gross receipts tax. On May 26, 2017, we discussed recent events that would lead a reasonable person to believe that the dream of a corporate gross receipts tax was definitely alive and well in Oregon. In fact, the passage of it certainly appeared to be gaining steam in the legislature. Maybe that is not the case – at least for now.
Late yesterday, Oregon Democrats announced that they are abandoning any efforts to enact a corporate gross receipts tax this year as they have been unable to garner adequate legislative support to pass such a measure. Article IV, Section 25 of the Oregon Constitution requires a three-fifths majority of all members elected to each house of the legislative assembly to pass bills for raising revenue and that the presiding officer of each respective house sign the bill or resolution. So, it appears a three-fifths vote in favor of a corporate receipts tax in each the house and the senate is not currently attainable.
Per the announcement, it seems that all revenue raising efforts, at least for the remainder of the current legislative session, will be focused on several measures aimed at filling in a few of the many holes in the budget. If Oregon lawmakers truly follow this path, they will not attempt to enact an entirely new tax or even raise current tax rates this legislative session. Given Oregon budgetary issues, however, it is likely that several tax generating measures, stand-alone or inter-mixed among other measures, will surface before the session concludes.
Does this mean that the notion of an Oregon corporate gross receipts tax is completely dead or does it mean that the possibility of a corporate receipts tax in Oregon is temporarily stalled? I think the latter is likely the case. In fact, Governor Kate Brown indicated in a statement yesterday that the focus for the 2019 legislative session will be making structural changes to our tax system to bring balance to our budget. Several lawmakers (e.g., Senator Mark Hass and Representative Mark Johnson) believe a corporate gross receipts tax will cure Oregon’s budgetary woes. So, I think it is a safe bet that we will see future attempts to enact a corporate gross receipts tax in Oregon. The lingering question is whether our political climate in 2019 will be any different than it is today – in other words, will a corporate gross receipts tax be received more favorably by lawmakers in 2019?
Time will tell.
Larry J. Brant
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.
Upcoming Speaking Engagements
- "A Good Look At The Limitations to Code Section 1031 and Other Possible Deferral Alternatives," OSCPA 2021 Annual Real Estate ConferenceVirtual Event, 6.9.21
- To be rescheduled