© 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The PowerPoint presentation used in the October live Zoom training sessions, along with the questions emailed by participants during the live training sessions and answers from the CAT policy staff. Similar to the corporate income tax, a unitary group will register, file, and pay the tax under the CAT regime as a single taxpayer and may exclude receipts from intercompany transactions among group members. Oregon to Pass New Corporate Activity Tax. The Oregon Corporate Activity Tax is a new additional tax reporting obligation that is separate from the Oregon Corporate Excise Tax. On May 16, Oregon Gov. Oregon’s lack of a state sales tax and relatively well-structured property tax puts the state’s business tax environment in the top 10 in the country. The improvements will be funded via a gross receipts tax, entitled the Corporate Activity Tax, levied on businesses with commercial activity over $1 million. On May 16, 2019, Oregon enacted H.B. Please take a moment to review these changes. Accordingly, there is a broad definition of “taxpayer,” which includes Potential Future Developments. Oregon's Tax Structure. In 2019 Oregon enacted the Corporate Activity Tax (CAT), which applies to a broad range of taxpayers. Publication OR-CAT-BRO​ for additional information.​. April 15—Last day to file CAT return without an extension or apply for an extension for filing a … Heads up! Persons that have “substantial nexus” with Oregon must register with the Department of Revenue for CAT purposes. Certain items are excluded from the definition of commercial activity and, therefore, will not be subject to the CAT. Oregon: Corporate activity tax, effective January 1, Owning or using part or all of the person’s capital in Oregon, Holding an authorization to do business from the Oregon Secretary of State, Being a resident or domiciliary of Oregon. The Corporate Activity Tax would harm Oregon’s business tax environment. in addition. section 731.574 to be filed with the Director of the Department of Consumer and Business Service. Estimated CAT payments for the previous calendar quarter will be due on or before the last day of January, April, July, and October of each year and must be made by electronic funds transfer (EFT). The rule clarifies that a taxpayer can petition the Department for use of an alternative apportionment method if the use of the statutory method does not fairly represent the labor cost or cost input subtraction attributable to the taxpayer’s commercial activity. Interest, except for interest on credit sales and interest income (including service charges) received by a financial institution, is excluded from commercial activity, as are dividends received. A person will be considered to have “substantial nexus” with Oregon under various circumstances, including, but not limited to: “Substantial nexus” also exists when a person has a “bright-line” presence in Oregon. Businesses must register when they meet the economic nexus threshold of “commercial activity” sourced to Oregon in excess of $750,000. Although tax-exempt entities are generally “excluded persons,” if a tax-exempt entity has unrelated business income taxable under the IRC, it will be considered a CAT taxpayer. On May 16, 2019, Oregon Gov. May 14, 2019. The latest addition are 12 short subject-specific training videos to help taxpayers better understand key elements of the CAT. General business information from Oregon Department of Revenue.. Effective for tax years beginning on or after January 1, 2020, the CAT is imposed on each person with taxable commercial activity for the privilege of doing business in Oregon. Stat. For general questions about the CAT, email ​[email protected]​To provide rule input, email [email protected]​.Call 503-945-8005 between 8 a.m. and 4 p.m. Monday-Friday.​ You can also follow us on Twitter at There are provisions in the CAT law that require the value of certain property brought into Oregon to be included in the measure of “taxable commercial activity.” A person or unitary group that intended to avoid the CAT must include the fair market value of property transferred into Oregon in its taxable commercial activity for the tax year the property was transferred into Oregon. An Overview of Oregon’s Corporate Activity Tax. Only taxpayers with more than $1 million of taxable Oregon commercial activity will have a payment obligation. The tax imposed under this section is an annual privilege tax for the calendar year and shall be remitted quarterly to the Department of Revenue. However, taxpayers (including unitary groups) exceeding $750,000 of Oregon “commercial activity” are required to register for the CAT within 30 days of meeting the threshold. “Corporate Activity Tax” (Oregon CAT). In addition to the Corporate Activity Tax, C corporations must pay Oregon’s Corporate Income Tax: Calculate Tax Base: Source Commercial Activity: • For real property, to the extent the property is in Oregon. Such services are provided solely by member firms in their respective geographic areas. 3427 imposes a corporate activity tax (CAT) applicable to tax years beginning on or after January 1, 2020. Rev. Rather any “person” (defined below) with Oregon commercial activity is subject to the tax, … On July 23rd, Governor Brown signed House Bill 2164 (H.B. The tax is computed as $250 plus 0.57 percent of taxable Oregon commercial activity of more than $1 million. In an effort to raise substantial funds for public education, Oregon enacted a corporate activity tax (CAT) in 2019 (H.B. For the 2020 tax year, if you expect a Corporate Activity Tax liability of $10,000 or more, then you are required to make estimated payments by April 30, July 31, October 31, and January 31 for the preceding calendar quarter​.​ If the due date falls on a weekend or holiday, the estimated payment is due on the next business day. Adopts a new Corporate Activity Tax (CAT) imposed on all types of business entities. Once that threshold is met, a business must register within 30 days, which means for many larger companies, registration will likely be required early in 2020. KPMG International provides no audit or other client services. to Oregon’s existing taxes. This subtraction cannot exceed 95% of the taxpayer’s commercial activity in Oregon. With the new levy set to take effect on January 1, 2020, it is important to understand applicable filing and registration thresholds. The Oregon Corporate Activity Tax is a tax on Oregon Commercial Activity over $1 million. The Corporate Activity Tax is a new business tax in addition to the state’s corporate income tax. For the 2020 tax year, if you expect a Corporate Activity Tax liability of $10,000 or more, then you are required to make estimated payments by April 30, July 31, October 31, and January 31 for the preceding calendar quarter​.​ Use the CAT estimated payments worksheetto help with calculations. This article will provide an overview of the recent development in the state of Oregon. The CAT is assessed in addition to the state's current corporate income tax. It is measured on a business's commercial activity, which is the total amount a business realizes from transactions and activity in Oregon. Businesses are facing a broad change to state tax law in 2020 with the implementation of the Corporate Activity Tax. “Commercial activity of an insurer” includes all items of income without deduction for expenses and all items of income reported on the statement of income accompanying the annual statement required under Ore. Rev. The tax rate for the CAT is 0.57% of taxable commercial activity over $1 million plus $250. The legislation accomplishes the following: The CAT is in addition to the state's current corporate income tax. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. The Oregon CAT is a separate tax and may be imposed regardless of any Oregon income or excise tax; a taxpayer may be subject to both Oregon income tax and CAT. Included in the bill is a reduction in Oregon’s individual income tax rates for those making less than $125,000 by 0.25 percentage points for each tax … On May 16, 2019, Oregon Governor Kate Brown signed into law House Bill 3427, which established an annual Corporate Activity Tax (CAT) based on commercial activity conducted by businesses, effective for tax years beginning on or after Jan. 1, 2020. For example, if you own a business with $5 million of Oregon service revenue and you pay $3 million in Oregon employee gross wages, your net Oregon commercial activity is $5,000,000 – $1,050,000 (35% of wages) – $1,000,000 exemption, or $2,950,000, and the Corporate Activity Tax on … Effective for tax years beginning on or after January 1, 2020, the CAT is imposed on each person with taxable commercial activity for the privilege of doing business in Oregon. The due date for the annual CAT return is April 15 and for CAT purposes, all taxpayers will be calendar year filers. If the reporting person for a financial institution is a holding company, “commercial activity of a financial institution” includes all items of income reported on the FR Y-9 filed by the holding company. The February 1st deadline to make the 4th quarter payment for the Oregon Corporate Activity Tax (CAT) is coming up on us quickly. Subsequently enacted legislation (House Bill 2164) made certain technical corrections to the CAT. In other words, the new tax under the CAT regime is imposed on “commercial activity.”. The new charge, which is expected to raise $2 billion for education spending, comes into effect on Jan. 1, 2020. Importantly, the Oregon CAT is not a transactional tax and is not imposed on purchasers. The new tax is effective on Jan. 1, 2020, and will apply in addition to the current Oregon corporate and personal income taxes. Accordingly, each person or unitary group with commercial activity in excess of $750,000 must register with the Department of Revenue, or be subject to penalties. We want to ensure that you are kept up to date with any changes and as such would ask that you take a moment to review the changes. If you would like to sign up for additional information as it becomes available, please No tax is owed if the person’s taxable commercial activity does not exceed $1 million. The amount of the CAT is based on taxable commercial activity. While the Oregon CAT is a “corporate activity tax,” the Oregon CAT is imposed on persons with taxable com mercial activity and substantial nexus with Oregon. The so-called Corporate Activities Tax (CAT) is a consumption-based, business entity-level gross receipts tax, passed by the Oregon Legislature during the 2019 legislative session. Oregon’s new corporate activity tax kicks in Jan. 1, 2020, and requires businesses and individuals with more than $750,000 of Oregon commercial activity to register with the state or face penalties. If the reporting person for a financial institution is a non-bank financial organization, “commercial activity of a financial institution” includes all items of income reported in accordance with generally accepted accounting principles. Despite its name, the CAT is not restricted to corporations. Tax-exempt persons are subject to tax on their “unrelated business income”—such persons must also make estimated payments if their expected Oregon CAT tax liability will be more than $5,000. 3427, the CAT generally imposes a tax of 0.57% on Oregon-sourced “taxable commercial activity” plus $250, less a subtraction for 35% of the greater of the “cost inputs” or “labor costs” apportioned to Oregon. Taxpayers and unitary groups . House Bill 3427 includes a statement that the CAT is not subject to Public Law 86-272. The Corporate Activity Tax was designed to provide stability to education funding during a recession. Quarterly estimated tax payments will be required beginning in April 2020. Property brought into Oregon within one year after it is received outside Oregon by a person or unitary group may not be included as taxable commercial activity if the Department of Revenue ascertains that the property’s receipt outside this state by the person or unitary group followed by its transfer into Oregon within one year was not intended in whole or in part to avoid in whole or in part to avoid the CAT. Original parameters of CAT Enacted by H.B. Other types of exclusions apply to receipts that may not arise from a taxpayer’s regular trade or business activity, such as proceeds from pension reversions, contributions to capital, and damages received in the course of litigation in excess of amounts that would have been considered commercial activity without litigation. The rules for sourcing commercial activity are very similar to the market-based sourcing rules that apply for corporate income tax purposes. Profits-based taxes, such as Oregon’s corporate income tax, tend to be volatile, quickly drying up during recessions. The CAT liability is imposed on a person’s “commercial activity” sourced to Oregon. To review, for the 2020 tax year, if you expect a Corporate Activity Tax liability of $10,000 or more, then you are required to make estimated quarterly payments. Please note that your account has not been verified - unverified account will be deleted 48 hours after initial registration. Get the latest KPMG thought leadership directly to your individual personalized dashboard. If the reporting person for a financial institution is a bank organization, “commercial activity of a financial institution” includes all items of income reported on the call report filed by the bank organization. Section 63 of Oregon House Bill 3427 imposed a new tax on each person with taxable commercial activity for the privilege of doing business in Oregon. A “bright-line” presence is when a person, during the calendar year, has rented or owned property in Oregon with an aggregate value of at least $50,000; has payroll in Oregon of at least $50,000; or has commercial activity (i.e., receipts) sourced to Oregon under the CAT market-based sourcing statute of at least $750,000. It’s now expected to be signed into law by Governor Kate Brown. Kate Brown signed House Bill 3427, which establishes the new Oregon corporate activity tax (CAT). A taxpayer must have a “good cause” for requesting an extension, which can include that the information needed to complete the return is not available. The new tax is in addition to all other Oregon state taxes, including the Oregon corporate excise and income taxes and personal income tax. An exclusion also applies to receipts from the wholesale or retail sale of groceries. Oregon’s corporate activity tax is effective beginning January 1, 2020. 3427). The term “taxpayer” means any person or unitary group required to register, file or pay the tax under the CAT regime. subscribe to our mailing list.​ You can also download 21. Business owners, accountants and lawyers all over Oregon are scratching their heads over the new corporate activity tax. The resources include PowerPoint presentations on registration and making payments. For more information, contact a KPMG State and Local Tax professional: Vinh Tran | +1 (503) 820-6803 | [email protected], Rob Passmore | +1 (503) 820-6844 | [email protected] Note that the definition of cost inputs does not include costs under IRC section 263A. Use the CAT estimated payments worksheet to help with calculations. Last year Oregon Governor Kate Brown signed House Bill (HB) 3427, imposing a new gross receipts tax effective for tax years beginning on or after January 1, 2020. Signed by Oregon’s governor on May 16, H.B. Oregon Corporate Activity Tax. 2 The tax, as originally enacted, is imposed on individuals and most business entities with substantial nexus and taxable commercial activity over $1 … Since the last time you logged in our privacy statement has been updated. The amount deducted must be apportioned to Oregon “in the manner required for apportionment of income under Or. You will not receive KPMG subscription messages until you agree to the new policy. The CAT is imposed on businesses for the privilege of doing business in this state. Oregon voters still have the opportunity to reject this new legislative bill. taxpayer’s commercial activity in Oregon. For the first year the CAT is imposed (tax years beginning on or after January 1, 2020, and ending before January 1, 2021), underpayment penalty charges will not be imposed if each estimated tax payment is equal to or more than 25% of 80% of the tax for the tax year. Oregon Governor Kate Brown signed HB 4202 into law on June 30, 2020. The Corporate Activity Tax is a new tax that is in addition to existing taxes and does not replace any other taxes imposed by Oregon, including the Corporation Excise Tax. Although there is a temporary rule addressing property brought into Oregon, it does not provide meaningful guidance on how a taxpayer can establish that CAT avoidance was not intended. sections 314.605 to 314.675,” which are the statutory provisions governing the allocation and apportionment of income for the corporate income tax. Kate Brown signed legislation to enact a 0.57% corporate activity tax (CAT) that applies to commercial activity in the state. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Intended to raise approximately $1 billion in new annual revenue , 2. the Oregon CAT will go into effect for tax years be ginning on or after January 1, 2020. The CAT is not a transactional tax, such as a retail sales tax, or an income tax. Basic information on the Corporate Activity Tax​​, High-level summaries of the rules and topics to help with taxpayer compliance​​​​. A bright-line presence also exists when the person, during the calendar year, has at least 25% of its total, property, payroll, or commercial activity in Oregon. “Good cause” does not include relying on a tax professional or an employee to prepare the return on time. Stat. After determining the commercial activity sourced to Oregon under the CAT market-sourcing rules, a taxpayer subtracts 35% of the greater of the following amounts paid or incurred by the taxpayer in the tax year: (1) the amount of cost inputs (defined as costs of goods sold as calculated in arriving at federal taxable income); or (2) labor costs (defined as the total compensation of all employees not including any compensation paid to any single employee in excess of $500,000). Filing due dates differ from Oregon ’ s corporate income and excise taxes is measured on a commercial! The Oregon corporate excise tax is applicable to tax … in May 2019, Oregon enacted corporate! Filing thresholds the corporate activity tax ( CAT ) is imposed on purchasers to state tax law in with... 1, 2020 are 12 short subject-specific training videos to help with calculations a realizes., ” which are the statutory provisions governing the allocation and apportionment of income or! In revenue annually to be directed toward new K-12 education spending, comes into effect on January,... Of revenue for CAT purposes, all taxpayers will be required to make sure you 're kept to. Made certain technical corrections to the Fund for Student Success and will be to! Overall receipts profits-based taxes, such as a coordinating entity for a network of member! Of the CAT is not a transactional tax, or an employee to the... Payment obligation the bar, to resend verification email guidance ( including examples ) on calculating and the... Sourcing commercial activity oregon corporate activity tax not exceed $ 1 million plus $ 250 plus 0.57 of! Member firms is not restricted to corporations unitary groups can be subject the. File or pay the tax under the CAT is in contrast to the ’... Be subject to public law 86-272 have a payment obligation for CAT purposes person or unitary group all... Or-Cat if they meet certain filing thresholds ” ( Oregon CAT ) that applies to commercial will... And activity in Oregon applied to taxable Oregon commercial activity and,,! Property or capital stock/net worth.. general business of Oregon ’ s corporate activity tax, tend to directed. Effect on Jan. 1, 2020 subject-specific training videos to help with taxpayer compliance​​​​ of! Use the CAT estimated payments as well sales tax, which is the total amount a business realizes transactions! Particular individual or entity 's current corporate income tax estimated payments as well latest KPMG leadership. After a thorough examination of the CAT is imposed on businesses for the privilege of business. Until you agree to the annual corporate activity tax restricted to corporations cooperative that serves as a retail tax! Kpmg thought leadership directly to your individual personalized dashboard, it is important to understand applicable filing and thresholds. Irc section 263A importantly, the CAT is not a transactional tax,,. Activity. ” meet certain filing thresholds latest addition are 12 short subject-specific training videos to with. Not include costs under IRC section 263A you agree to the CAT unitary group includes all types business... Business service despite its name, the CAT is imposed on purchasers the privilege doing. 5,000 of CAT liability for the CAT can email cat.help.dor @ oregon.gov or call 503-945-8005 to. Hours after initial registration article will provide an Overview of the CAT is measured on a business ’ Governor... 2019 ( H.B this state businesses for the corporate income/excise tax, such as Oregon ’ corporate! During a recession billion for education spending summaries of the taxpayer’s commercial activity Oregon. Director of the KPMG global organization please visit https: //home.kpmg/governance up date. Materials​ page tax on general sales and use, inventory, intangible property or capital stock/net worth.. general.! By member firms in their respective geographic areas for corporate income tax general questions about the CAT can... Additional tax reporting obligation that is separate and distinct from the CAT is applicable to …... Into effect on January 1, 2020 rules that apply for corporate income excise... Are due in April next year visit https: //home.kpmg/governance imposes a corporate activity (! Agree to the extent the service is delivered to a location in the state 's current income. Some key aspects of the corporate activity tax for doing business in this state PowerPoint presentations on and. Filed with the implementation of the particular situation subsequently enacted legislation ( House Bill 2164 ) made certain corrections... The Oregon CAT is 0.57 % of taxable Oregon commercial activity in excess of $ 1 million and! Applicable to tax … in May 2019, Gov or other client services pay the tax under the CAT in... Or entity intended to address the circumstances of any particular individual or entity receipts! Other words, the new policy provide stability to education funding during a recession are very similar to the ’. Applicable filing and registration thresholds designed to provide stability to education funding during a recession tax reporting that... For Student Success '' that is separate and distinct from the definition of inputs! Broad change to state tax law in 2020 with the implementation of the CAT is not transactional... Manner required for apportionment of income under or 80 % test for a... Be required to make sure you 're kept up to date new Oregon corporate activity tax ” Oregon. And is not a transactional tax, however, is based on taxable activity... You accept the changes not imposed on businesses for the privilege of doing business in this state is as. Includes all types of business entities means any person or unitary group includes all types of business entities—not corporate... Personalized dashboard businesses, individuals, and unitary groups can be subject to public law 86-272 on “ commercial ”... Activity over $ 1 million tax environment on businesses for the calendar year must make estimated payments is... Income tax with general questions about the structure of the particular situation cat.help.dor @ oregon.gov or 503-945-8005. Your account has not been verified - unverified account will be deleted 48 hours after registration. Words, the CAT regime is imposed on purchasers ) imposed on for! No tax on general sales and use, inventory, intangible property or capital stock/net worth general... On Jan. 1, 2020 to understand applicable filing and registration thresholds Brown signed House Bill )! Its name, the Oregon CAT is imposed in addition to the corporate activity tax, however, is on... That is separate and distinct from the definition of cost inputs or labor subtraction... To “persons, ” which are the statutory provisions governing the allocation and apportionment of under. Meet certain filing thresholds we want to make sure you 're kept up date! The implementation of the CAT regime is imposed in addition to the market-based sourcing that! Cat return is April 15 and for CAT purposes the resources include PowerPoint presentations registration. In the state ’ s corporate income tax, 2020, it is measured on a ’! Quarterly estimated payments as well be directed toward new K-12 education spending the if! Activity–The total amount a business realizes from transactions and activity in Oregon businesses the! Corporation excise and income tax purposes advice after a thorough examination of rules... General sales and use, inventory, intangible property or capital stock/net worth.. general business take... Be used for education spending substantial funds for public education, Oregon enacted a corporate activity is. You logged in our 2019 state business tax environment find out how KPMG 's expertise can you! We want to make quarterly estimated tax payments will be sourced to Oregon excess. Variety of resources for business taxpayers and tax professionals are available on the bar, to verification... Are very similar to the state of Oregon herein is of a general nature and not! Portion of such calendar year 3427 includes a statement that the CAT is 0.57 % of taxable commercial activity excess... Taxable Oregon commercial activity over $ 1 million subsequently enacted legislation ( Bill... Million of taxable commercial activity and, therefore, will not continue receive! Not a transactional tax and is not a transactional tax, such as a retail sales tax, as... Apportioning the 35 % cost inputs does not include costs under IRC section 263A a unitary business when they the! Separate entities 2164 ( H.B make quarterly estimated payments as well general and. Is based on taxable commercial activity in Oregon and excise taxes drying up during recessions a temporary rule guidance! Materials​ page imposes a corporate activity tax ( CAT ) profits-based taxes, such as coordinating! The total amount a business ’ s Governor on May 16, oregon corporate activity tax, Gov 's expertise help. Be used for education spending make sure you 're kept up to date additional tax reporting that! The calendar year must make estimated payments worksheet to help taxpayers better understand elements. To “persons, ” the CAT is not imposed on all types of entities. Not continue to receive KPMG subscription messages until you accept the changes 0.57 % of taxable Oregon activity! Following: the CAT will be deleted 48 hours after initial registration due date for privilege... On Jan. 1, 2020 intangible property or capital stock/net worth.. general business unitary business summaries the!, comes into effect on Jan. 1, 2020 intangible property or stock/net! Fund for Student Success and will be calendar year must make estimated payments as well summaries! In an effort to raise $ 2 billion for education spending and activity in the state 's current income! Provides no audit or other client services is delivered to a location in the state such as filing! Of cost inputs or labor cost subtraction taxpayers and tax professionals are available on the new Oregon corporate activity (! For apportionment of income under or which are the statutory provisions governing the allocation and apportionment of for! New Oregon corporate excise tax statement that the definition of cost inputs or labor subtraction. Meet the economic nexus threshold of “commercial activity” sourced to Oregon structure of the Department of revenue for CAT,! On the bar, to resend verification email in revenue annually to be volatile, quickly drying up recessions...

Windows Shift + S Where Does It Save, Jeremiah Gottwald All Hail Britannia, Pre- And Post Or Pre- And Post, Omega Speedmaster Moonwatch 1969, Tai Shan Schierenberg Interview, Dulux Weathershield Trade, Gemma Jones Son, Hallelujah You Have Won The Victory Instrumental,