Oregon CAT: Oregon Department of Revenue Adds Two New Draft Rules to Website That Will Be Filed as Permanent Rules

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On May 28, 2020, the Oregon Department of Revenue (“DOR”) added two new Oregon Corporate Activity Tax (“CAT”) draft rules, OAR 150-317-1050 (Sourcing of Commercial Activity for Financial Institutions) and OAR 150-317-1160 (Farmer’s Sales to Agricultural Cooperatives), to their website. The DOR indicated both of those rules will be filed as permanent rules alongside two other temporary rules, OAR 150-317-1140 (Wholesale Sale of Groceries Exclusion) and OAR 150-317-1400 (Determining Property Resold Out of State and Methods of Determining), that were filed with Oregon Secretary of State on February 1, 2020. 

We previously discussed OAR 150-317-1050 (Sourcing of Commercial Activity for Financial Institutions) in our May 5, 2020 article, and OAR 150-317-1140 (Wholesale Sale of Groceries Exclusion) and OAR 150-317-1400 (Determining Property Resold Out of State and Methods of Determining) in our January 30, 2020 article.

This is our first time seeing OAR 150-317-1160 (Farmer’s Sales to Agricultural Cooperatives). The rule provides guidance to taxpayers regarding the exclusion for a farmer’s sales to agricultural cooperatives under ORS 317A.100(1)(b)(TT). It sets forth the definition of “farmer’s sales” and provides two examples applying the definition. 

  • OAR 150-317-1160 defines “farmer’s sales” as: 

[A] taxpayer’s receipts from the sale of agricultural commodities, livestock, poultry, dairy products, and similar products or by-products produced through agricultural activity, to an agricultural cooperative in Oregon, provided it is a cooperative organization described in section 1381(a)(1) of the Internal Revenue Code.

  • The definition of “farmer’s sales” does not include:

[The] receipts of a taxpayer who is not in the trade or business of growing or raising agricultural commodities, livestock, poultry, dairy products, and similar products or by-products produced through agricultural activity, or receipts from the sale of any items that were not produced through activities [described in the definition above].

The official comment period for all four of these rules will begin on June 1, 2020. The DOR indicates public comments may be sent to the DOR via email to catrules.dor@oregon.gov, and via mail to 955 Center St. NE, Salem, OR 97301.

Finally, the public hearing date is set for June 23, 2020. At this time, the DOR anticipates the public hearing will be an in-person hearing. If, however, that changes to a call-in session due to COVID-19 as it did with respect to the May 26, 2020 public hearing, we will keep you updated.

As always, we will continue to follow any 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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