Oregon CAT: Oregon Department of Revenue Extends Time for Public Comment for Administrative Rule and New Oregon CAT Bill in Special Session

Schwabe, Williamson & Wyatt PC

Schwabe, Williamson & Wyatt PC

On June 23, 2020, the Oregon Department of Revenue (“DOR”) held its scheduled call-in hearing for its second batch of permanent rules. During that meeting, the DOR heard public comments regarding the following four Oregon Corporate Activity Tax (“CAT”) administrative rules:

  • OAR 150-317-1050 (Sourcing of Commercial Activity for Financial Institutions)
  • OAR 150-317-1140 (Wholesale Sale of Groceries Exclusion)
  • OAR 150-317-1160 (Farmer’s Sales to Agricultural Cooperatives)
  • OAR 150-317-1400 (Determining Property Resold Out of State and Methods of Determining)

We previously discussed OAR 150-317-1140 and OAR 150-317-1400 in our January 30, 2020 article, OAR 150-317-1050 in our May 5, 2020 article, and OAR 150-317-1160 in our June 1, 2020 article.

Dan Eller attended the June 23, 2020 call-in hearing and noted most of the oral testimony centered on OAR 150-317-1400. Those who commented focused primarily on the administrative burdens presented by the certifications required under that Rule, and requested the DOR consider other alternatives. The DOR indicated it would be taking those comments and any comments submitted in writing into account in finalizing that Rule.

Following the June 23, 2020 call-in hearing, the DOR announced that it would extend the deadline for public comment on OAR 150-317-1160 (Farmer’s Sales to Agricultural Cooperatives) to July 14, 2020, at 5:00 p.m. PST. Public comments may be sent to the DOR Rules Coordinator by email at rulescoordinator.dor@oregon.gov or fax at 503-945-8290.

In addition, on June 24, 2020, the Oregon Legislature (“Legislature”) convened for a special session. This was a welcomed, and somewhat anticipated, sight as the Legislature ended early on March 5, 2020, due to an unresolvable impasse between the Democratic majority and Republican minority regarding a climate change bill. As discussed in our March 9, 2020 article and March 17, 2020 article, the Legislature’s early stoppage meant certain tax bills, including HB 4009 and HB 4138, did not become law. Fortunately, the House introduced and passed HB 4202, which is nearly identical to HB 4009. The law modifies administrative provisions of the Oregon CAT, including: 

  • Exempting from taxation certain sales of milk and manufactured dwelling park nonprofit cooperatives;
  • Allowing a unitary group taxpayer to exclude members lacking ties to Oregon;
  • Defining cost inputs for a taxpayer engaged in farming operation, for purpose of calculation of subtraction;
  • Establishing methods for a taxpayer engaging in farming operation to demonstrate percentage of goods sold in Oregon compared to outside Oregon for purposes of determining commercial activity;
  • Specifying that a taxpayer is required to register for one time only;
  • Providing that returns and allowances are allowed as offset against commercial activity in year returns or allowances are made;
  • Prescribing methods for apportionment of subtraction;
  • Establishing penalties for failure to file annual return or failure to pay tax by due date of annual return; and
  • Requiring minimum payment per quarter, but barring payment if taxpayer makes payment equal to required installment for corresponding quarter of prior year.

As of the issuance of this update, HB 4202 is on the Senate Desk awaiting first reading.

We will continue to follow any updates related to OAR 150-317-1160, HB 4202, and all other developments related to the CAT.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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