71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1911
A-Engrossed
House Bill 2281
Ordered by the House April 18
Including House Amendments dated April 18
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Representative Bill Witt)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Modifies formula used to apportion business income under
Uniform Division of Income for Tax Purposes Act by changing
formula to 100 percent sales factor.
Applies to tax years beginning on or after { - January 1,
2001 - } { + July 1, 2003 + }.
{ - Takes effect on 91st day following adjournment sine
die. - }
A BILL FOR AN ACT
Relating to taxation; creating new provisions; amending ORS
314.650, 314.655, 314.660 and 317.660; and repealing ORS
314.655 and 314.660.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 314.650 is amended to read:
314.650. { - (1) - } All business income shall be
apportioned to this state by multiplying the income by { - a
fraction, the numerator of which is the property factor plus the
payroll factor plus two times the sales factor, and the
denominator of which is four - } { + the sales factor
determined under ORS 314.665 + }.
{ - (2) If the denominator of the property factor, payroll
factor or sales factor, as determined under ORS 314.650 to
314.665, is zero, then the denominator specified in subsection
(1) of this section shall be reduced by the number of factors
with a denominator of zero. - }
SECTION 2. { + The amendments to ORS 314.650 by section 1 of
this 2001 Act apply to tax years beginning on or after July 1,
2003. + }
SECTION 3. ORS 314.655 is amended to read:
314.655. (1) The property factor is a fraction, the numerator
of which is the average value of the taxpayer's real and tangible
personal property owned or rented and used in this state during
the tax period and the denominator of which is the average value
of all the taxpayer's real and tangible personal property owned
or rented and used during the tax period.
(2) Property owned by the taxpayer is valued at its original
cost. Property rented by the taxpayer is valued at eight times
the net annual rental rate. Net annual rental rate is the annual
rental rate paid by the taxpayer less any annual rental rate
received by the taxpayer from subrentals.
(3) The average value of property shall be determined by
averaging the values at the beginning and ending of the tax
period but the Department of Revenue may require the averaging of
monthly values during the tax period if reasonably required to
reflect properly the average value of the taxpayer's property.
{ + (4) The property factor does not apply to the
apportionment of business income under ORS 314.650 to 314.665 in
tax years beginning on or after July 1, 2003. + }
SECTION 4. ORS 314.660 is amended to read:
314.660. (1) The payroll factor is a fraction, the numerator of
which is the total amount paid in this state during the tax
period by the taxpayer for compensation, and the denominator of
which is the total compensation paid everywhere during the tax
period.
(2) Compensation is paid in this state if:
(a) The individual's service is performed entirely within the
state; { - or - }
(b) The individual's service is performed both within and
without the state, but the service performed without the state is
incidental to the individual's service within the state; or
(c) Some of the service is performed in the state and (A) the
base of operations or, if there is no base of operations, the
place from which the service is directed or controlled is in the
state, or (B) the base of operations or the place from which the
service is directed or controlled is not in any state in which
some part of the service is performed, but the individual's
residence is in this state.
{ + (3) The payroll factor does not apply to the
apportionment of business income under ORS 314.650 to 314.665 in
tax years beginning on or after July 1, 2003. + }
SECTION 5. ORS 317.660 is amended to read:
317.660. In lieu of the provisions of ORS 314.280, if the
income of an insurer is derived from business done both within
and without this state, the determination of Oregon taxable
income shall be arrived at by apportionment based upon an
averaging of the following three factors:
(1) Insurance sales factor: The percentage obtained by dividing
(a) the direct premiums (excluding reinsurance accepted and
without deduction of reinsurance ceded) received by the insurer
during the taxable year on policies and contracts which are
allocated to this state and to other jurisdictions in which the
insurer is not authorized to do business by (b) the total of such
premiums received by the insurer during the taxable year on
policies and contracts that had been sold within and without this
state. For purposes of this subsection, 'premiums' means sums
properly included in appropriate schedules of the annual
statement filed by the insurer with the Director of the
Department of Consumer and Business Services, which allocate
premiums by jurisdiction. If the exclusion of reinsurance
premiums results in an apportionment formula that does not fairly
represent the extent of the taxpayer's activity in this state,
the taxpayer may petition for and the Department of Revenue may
permit, or the Department of Revenue may require, the inclusion
of reinsurance premiums in the insurance sales factor.
(2) Wage and commission factor: The percentage obtained by
dividing (a) the total of wages, salaries, commissions and other
compensation for personal services paid in this state during the
tax period to employees and insurance salesmen in connection with
the business of the insurer, by (b) the total wages, salaries,
commissions and other compensation for personal services paid
everywhere during the tax period to employees and insurance
salesmen in connection with the business of the insurer.
{ - For determining the place of payment, the procedure set
forth in ORS 314.660 (2) shall apply. - } { + Compensation is
paid in this state if:
(a) The individual's service is performed entirely within the
state;
(b) The individual's service is performed both within and
without the state, but the service performed without the state is
incidental to the individual's service within the state; or
(c) Some of the service is performed within the state and:
(A) The base of operations or the place from which the service
is directed or controlled is within the state; or
(B) The base of operations or the place from which the service
is directed or controlled is not within any state in which some
part of the service is performed, but the residence of the
individual is in this state. + }
(3) Real estate income and interest factor: The percentage
obtained by dividing (a) the total net income (after deducting
from gross rental income real estate expenses, property taxes and
depreciation attributable thereto, which are included in
appropriate schedules of the annual statement filed by the
insurer with the Department of Consumer and Business Services)
received from real property within this state plus gross interest
received on loans secured by real property within this state
during the taxable year, by (b) the total net income received
from real property within and without this state plus gross
interest received on loans secured by real property within and
without this state during the taxable year.
SECTION 6. { + ORS 314.655 and 314.660 are repealed on
December 31, 2008. + }
SECTION 7. { + The repeal of ORS 314.655 and 314.660 by
section 6 of this 2001 Act does not affect the apportionment of
business income under ORS 314.650 to 314.665 in a tax year
beginning before July 1, 2003. + }
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