Chapter 77 Oregon Laws 2001

AN ACT

SB 426

Relating to taxation; creating new provisions; amending ORS 316.127 and 316.362; and prescribing an effective date.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 316.127 is amended to read:

316.127. (1) The adjusted gross income of a nonresident derived from sources within this state is the sum of the following:

(a) The net amount of items of income, gain, loss and deduction entering into the nonresident's federal adjusted gross income that are derived from or connected with sources in this state including (A) any distributive share of partnership income and deductions and (B) any share of estate or trust income and deductions; and

(b) The portion of the modifications, additions or subtractions to federal taxable income provided in this chapter and other laws of this state that relate to adjusted gross income derived from sources in this state for personal income tax purposes, including any modifications attributable to the nonresident as a partner.

(2) Items of income, gain, loss and deduction derived from or connected with sources within this state are those items attributable to:

(a) The ownership or disposition of any interest in real or tangible personal property in this state;

(b) A business, trade, profession or occupation carried on in this state; and

(c) A taxable lottery prize awarded by the Oregon State Lottery, including a taxable lottery prize awarded by a multistate lottery association of which the Oregon State Lottery is a member if the ticket upon which the prize is awarded was sold in this state.

(3) Income from intangible personal property, including annuities, dividends, interest and gains from the disposition of intangible personal property, constitutes income derived from sources within this state only to the extent that such income is from property employed in a business, trade, profession or occupation carried on in this state.

(4) Deductions with respect to capital losses, net long-term capital gains, and net operating losses shall be based solely on income, gains, losses and deductions derived from or connected with sources in this state, under regulations to be prescribed by the Department of Revenue, but otherwise shall be determined in the same manner as the corresponding federal deductions.

(5) Notwithstanding subsection (3) of this section, the income of an S corporation for federal income tax purposes derived from or connected with sources in this state does constitute income derived from sources within this state for a nonresident individual who is a shareholder of such a corporation, and a net operating loss of such corporation derived from or connected with sources in this state does constitute a loss or deduction connected with sources in this state for such a nonresident individual.

(6) If a business, trade, profession or occupation is carried on partly within and partly without this state, the determination of net income derived from or connected with sources within this state shall be made by apportionment and allocation under ORS 314.605 to 314.675.

(7) Compensation paid by the United States for service in the Armed Forces of the United States performed by a nonresident does not constitute income derived from sources within this state.

(8) Compensation paid by the United States to a nonresident for services performed by the nonresident as an employee of the United States at a hydroelectric facility does not constitute income derived from sources within this state if the hydroelectric facility:

(a) Is owned by the United States;

(b) Is located on the Columbia River; and

(9)(a) Retirement income received by a nonresident does not constitute income derived from sources within this state unless the individual is domiciled in this state.

(b) As used in this section, “retirement income” means retirement income as that term is defined in section 114, Title 4 of the United States Code, as amended and in effect for the tax period.

(10) Compensation paid to a nonresident does not constitute income derived from sources within this state if the individual:

(a) Is engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. 7101 or licensed or authorized under the laws of a state; or

(b) Performs regularly assigned duties while engaged as a master, officer or member of a crew on a vessel operating on the navigable waters of more than one state.

SECTION 2. The amendments to ORS 316.127 by section 1 of this 2001 Act apply to tax years beginning on or after January 1, 1986.

SECTION 3. (1) Any assessment of tax made by the Department of Revenue for a tax year beginning on or after January 1, 1986, that was based on compensation described in ORS 316.127 (10) and that remains unpaid on the effective date of this 2001 Act shall be canceled.

(2) A taxpayer may file a claim for refund of any amount of tax paid on compensation described in ORS 316.127 (10), plus any associated penalty and interest, if the tax was paid for a tax year beginning on or after January 1, 1986. A claim for refund under this subsection must be filed within the time period prescribed in ORS 314.415 (1)(b) or before January 1, 2003, whichever is later.

SECTION 4. ORS 316.127, as amended by section 1 of this 2001 Act, is amended to read:

316.127. (1) The adjusted gross income of a nonresident derived from sources within this state is the sum of the following:

(2) Items of income, gain, loss and deduction derived from or connected with sources within this state are those items attributable to:

(a) The ownership or disposition of any interest in real or tangible personal property in this state;

(b) A business, trade, profession or occupation carried on in this state; and

(7) Compensation paid by the United States for service in the Armed Forces of the United States performed by a nonresident does not constitute income derived from sources within this state.

(8) Compensation paid [by the United States] to a nonresident for services performed by the nonresident [as an employee of the United States] at a hydroelectric facility does not constitute income derived from sources within this state if the hydroelectric facility:

(a) Is owned by the United States;

(b) Is located on the Columbia River; and

(9)(a) Retirement income received by a nonresident does not constitute income derived from sources within this state unless the individual is domiciled in this state.

(b) As used in this section, “retirement income” means retirement income as that term is defined in section 114, Title 4 of the United States Code, as amended and in effect for the tax period.

(10) Compensation paid to a nonresident does not constitute income derived from sources within this state if the individual:

(a) Is engaged on a vessel to perform assigned duties in more than one state as a pilot licensed under 46 U.S.C. 7101 or licensed or authorized under the laws of a state; or

(b) Performs regularly assigned duties while engaged as a master, officer or member of a crew on a vessel operating on the navigable waters of more than one state.

SECTION 5. The amendments to ORS 316.127 by section 4 of this 2001 Act apply to tax years beginning on or after January 1, 1997.

SECTION 6. ORS 316.362 is amended to read:

316.362. (1) An income tax return with respect to the tax imposed by this chapter shall be made by the following:

(a) Every resident individual:

(A) Who is required to file a federal income tax return for the taxable year; or

(B) Who has federal net income of more than $600 if single or more than $1,200 if married; or

(C) Who, having attained the age of 65 before the close of a taxable year, has federal net income of more than $1,200 if single, more than $1,800 if married and the spouse of the individual has not attained the age of 65, or more than $2,400, if both have attained the age of 65, before the close of the taxable year.

(b) Every nonresident individual[:]

[(A)] who has federal gross income from sources in this state of more than [$600 if single and $1,200 if married; or]

[(B) Who, having attained the age of 65 before the close of a taxable year, has federal gross income from sources within this state of more than $1,200 if single, more than $1,800 if married and the spouse of the individual has not yet attained the age of 65, or more than $2,400 if both have attained the age of 65, before the close of the taxable year; or]

[(C) Who has any taxable income] the basic standard deduction allowed under ORS 316.695 (1)(c)(B).

(d) Every nonresident estate that has federal gross income of $600 or more for the taxable year from sources within this state.

(e) Every nonresident trust that for the taxable year has from sources within this state any taxable income, or gross income of $600 or more regardless of the amount of taxable income.

(2) Nothing contained in this section shall preclude the Department of Revenue from requiring any individual, estate or trust to file a return when, in the judgment of the department, a return should be filed.

SECTION 7. The amendments to ORS 316.362 by section 6 of this 2001 Act apply to tax years beginning on or after January 1, 2002.

SECTION 8. This 2001 Act takes effect on the 91st day after the date on which the regular session of the Seventy-first Legislative Assembly adjourns sine die.

Approved by the Governor April 13, 2001

Filed in the office of Secretary of State April 13, 2001

Effective date October 6, 2001

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