New Oregon Business Tax Beginning January 1, 2020

Oregon Corporate Activity Tax

Oregon has implemented a new business tax effective 1/1/2020. This new tax is associated with doing business in Oregon and is unrelated to your annual income taxes.

  • There is NO extension for the April 15th filing deadline

Entities doing business in Oregon will be taxed based on their transactions in Oregon. Reductions based on Cost of Goods Sold or Labor Costs, whichever is greater, will be allowed against those transactions.

All entities doing business in Oregon are subject to the tax with a few exceptions. If you have any business transactions in Oregon and meet the criteria to be subject to the tax, it is important the following data be tracked as accurately as possible:

•Sales in Oregon

  • All business activity in Oregon must be identified and tracked by location;

  • Only include actual income transactions related to Oregon activities;

  • Do not include any non-business-related income in the Sales.

•Cost of Goods Sold

  • It is important to maintain current and accurate COGS each quarter.

•Labor Costs

  • Accurately report total compensation paid via payroll;

  • Exclude compensation at or over $500,000 if paid to a single employee.

Please Be Aware:

  • This is a required quarterly tax process that requires an annual return submission by April 15th to the State of Oregon;

  • Please inform your bookkeeper of the need to track the accounts above accordingly;

  • This tax is separate from your annual Oregon Income tax reporting;

  • This tax is not included in the tax processes for your annual Oregon Income tax reporting.

Additional Information:

Oregon has confirmed that the law does not prohibit any business subject to the CAT from passing the tax along to its customers.

Oregon is in the process of preparing a draft of rules which will become available over the course of the next three months. Further instructions will become available either through these rules or in the form’s instructions. On 12/9/19 Oregon issued the first round of administrative guidance. There are eight sections as follows, and detail can be found at www.oregon.gov/dor:

The eight drafts posted on the agency’s website this week address:

  • Estimated payments.

  • Estimated payments for unitary groups.

  • Underpayment of or delinquent estimated payments.

  • What establishes nexus between a business and Oregon.

  • What constitutes a unitary group for the CAT.

  • Property brought into Oregon.

  • The definition of agent.

  • Filing extensions.

Oregon has decided to open registration early for businesses wishing to do so. A business reaching $750,000 in activity transactions in Oregon must register within 30 days of doing so. To help businesses who anticipate meeting the criteria early in 2020, they have the option to register now.

The following information is needed [to register]:

  • Legal name;

  • Federal EIN;

  • Mailing address;

  • Valid email;

  • Business Activity Code – per the North American Industry Classification System;

  • Date they exceeded or expect to exceed $750,000 in Oregon activity transactions.

This information is based on information provided by Oregon as of 12/10/19. Any additional information will be provided by Oregon as it is available. We will be in contact if any significant changes are made.

If you have questions and want additional information, please let us know. As always, we look forward to serving you.

Sincerely, 

Lewis Group CPAS