86- 272 may provide protection from state income taxes for a seller of tangible personal property whose sole activity outside of its home state is the solicitation of its product. In many cases, a seller of tangible personal property may not have a filing requirement for purposes of income tax in the many states but may be subject to these taxes based on the same level of activity, because they are not income taxes and are not, therefore, protected by P.L. 86- 272 does not provide protection from the CAT. Wholesalers and retailers of tangible personal property should specifically examine their level of activity and sales in Oregon especially because P.L. Additionally, persons that use part or all of their capital in the state, companies that are authorized to do business in the state by Oregon's secretary of state, or companies that are domiciled in the state have nexus for purposes of the CAT (Or. 86- 272, the Interstate Income Act of 1959, does not exempt taxpayers, as the CAT is a transactional tax (Or. At least 25% of the total property, total payroll, or total commercial activity in the state of Oregon at any time.Commercial activity sourced to Oregon of at least $750,000.Property in Oregon with a value of at least $50,000.NexusĪ person has nexus in a given year for purposes of the CAT if it has any of the following during the calendar year (Or. Transactions among members of the unitary group are excluded from the CAT. Since the statute refers to "persons" in its discussion of a unitary group, it appears a unitary group includes all entity types: individuals, passthrough entities, and C corporations. The ownership threshold for filing as a unitary group is a group of persons with more than 50% common ownership, either direct or indirect, that is engaged in business activities that constitute a unitary business (Or. A unitary business may include a group of associated companies engaged in the same general line of business, or it may involve steps in a vertically integrated process. A "unitary business" is one in which there exists centralized management centralized administrative services or functions resulting in economies of scale or flow of goods, capital resources, or services demonstrating functional integration (Or. The new Oregon CAT filing will be imposed on a unitary basis. As the tax is an entity- level tax, individual owners of out- of- state passthrough entities will likely not receive a credit for taxes paid on their home state individual tax return for the CAT. While its name, "corporate" activity tax, appears to suggest it may only apply to corporations, the tax applies to corporations, partnerships, limited liability companies, S corporations, and the business activity of individuals, estates, and trusts. In this case, Oregon even places a tax burden on businesses without physical presence in the state, while mitigating the effects of the tax on the in- state voting base through the reduction in individual income tax rates. To offset some of the effect of the new tax on Oregon residents, the bill provides for a reduction of up to 0.25 percentage point for certain Oregon individual income taxpayers (Or. The tax appears to be another example of a state "outsourcing the tax base" by placing an increasingly higher relative burden on out- of- state persons and businesses. 1, 2020, with the first returns due April 15, 2021. The tax will be assessed on a calendar- year basis beginning on Jan. The CAT is assessed in addition to the state's current corporate income tax. Quarterly estimated tax payments will be required beginning in April 2020. Kate Brown signed House Bill 3427, which establishes the new Oregon corporate activity tax (CAT).
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