71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
CCA to B-Eng. HB 2281
LC 1911/HB 2281-B19
CONFERENCE COMMITTEE AMENDMENTS TO
B-ENGROSSED HOUSE BILL 2281
July 2
Amended Summary
Modifies formula used to apportion business income under
Uniform Division of Income for Tax Purposes Act { - by changing
formula to 100 percent sales factor - } . { + Permits public
utilities to elect alternative apportionment methods. + }
Applies to tax years beginning on or after { - July - } { +
May + } 1, 2003.
{ - Permits telecommunications or utility corporation to
elect to use apportionment method that considers property and
payroll as well as sales. - }
{ - Applies right to elect alternate apportionment method to
tax years beginning on or after January 1, 2003. - }
Speaker Simmons:
Your Conference Committee to whom was referred B-engrossed
House Bill 2281, having had the same under consideration,
respectfully reports it back with the recommendation that the
House concur in the Senate amendments dated May 31 and that the
bill be amended as follows and repassed.
On page 1 of the printed B-engrossed bill, line 2, after the
second semicolon delete the rest of the line and line 3 and
insert ' and amending ORS 314.615, 314.650, 314.655, 314.660 and
314.665.'.
Delete lines 5 through 24 and delete pages 2 and 3 and insert:
' { + 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 - } { + multiplier equal to 80
percent of the sales factor plus 10 percent of the property
factor plus 10 percent of the payroll factor + }.
' { - (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 May 1, 2003. + }
' { + SECTION 3. + } ORS 314.655 is amended to read:
' 314.655. (1) { + As used in ORS 314.650 and section 9 of
this 2001 Act, + } 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.
' { + SECTION 4. + } ORS 314.660 is amended to read:
' 314.660. (1) { + As used in ORS 314.650 and section 9 of
this 2001 Act, + } 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.
' { + SECTION 5. + } ORS 314.665 is amended to read:
' 314.665. (1) { + As used in ORS 314.650 and section 9 of
this 2001 Act, + } the sales factor is a fraction, the numerator
of which is the total sales of the taxpayer in this state during
the tax period, and the denominator of which is the total sales
of the taxpayer everywhere during the tax period.
' (2) Sales of tangible personal property are in this state if:
' (a) The property is delivered or shipped to a purchaser,
other than the United States Government, within this state
regardless of the f.o.b. point or other conditions of the sale;
or
' (b) The property is shipped from an office, store, warehouse,
factory, or other place of storage in this state and (A) the
purchaser is the United States Government or (B) the taxpayer is
not taxable in the state of the purchaser.
' (3) Subsection (2)(b) of this section shall not apply to
sales of tangible personal property if:
' (a) The sales are included in the numerator of a formula used
to apportion business income to another state of the United
States, a foreign country or the District of Columbia; and
' (b) The other state, a foreign country or the District of
Columbia has imposed a tax on or measured by the apportioned
business income.
' (4) Sales, other than sales of tangible personal property,
are in this state if (a) the income-producing activity is
performed in this state; or (b) the income-producing activity is
performed both in and outside this state and a greater proportion
of the income-producing activity is performed in this state than
in any other state, based on costs of performance.
' (5) Where the sales apportionment factor is determined by
administrative rule pursuant to ORS 314.682, 314.684, 317.660 or
other law, the Department of Revenue shall adopt rules that are
consistent with the determination of the sales factor under this
section.
' (6) For purposes of this section, 'sales':
' (a) Excludes gross receipts arising from the sale, exchange,
redemption or holding of intangible assets, including but not
limited to securities, unless those receipts are derived from the
taxpayer's primary business activity.
' (b) Includes net gain from the sale, exchange or redemption
of intangible assets not derived from the primary business
activity of the taxpayer but included in the taxpayer's business
income.
' (c) Excludes gross receipts arising from an incidental or
occasional sale of a fixed asset or assets used in the regular
course of the taxpayer's trade or business if a substantial
amount of the gross receipts of the taxpayer arise from an
incidental or occasional sale or sales of fixed assets used in
the regular course of the taxpayer's trade or business.
Insubstantial amounts of gross receipts arising from incidental
or occasional transactions or activities may be excluded from the
sales factor unless the exclusion would materially affect the
amount of income apportioned to this state.
' { + SECTION 6. + } ORS 314.615 is amended to read:
' 314.615. Any taxpayer having income from business activity
which is taxable both within and without this state, other than
activity as a financial organization or public utility or the
rendering of purely personal services by an individual, shall
allocate and apportion the net income of the taxpayer as provided
in ORS 314.605 to 314.675. Taxpayers engaged in activities as a
financial organization or public utility shall report their
income as provided in ORS 314.280 and 314.675. { + A taxpayer
engaged in activities as a public utility may report the
taxpayer's income, at the election of the taxpayer, as provided
in ORS 314.650 or section 9 of this 2001 Act. + }
' { + SECTION 7. + } { + The amendments to ORS 314.615 by
section 6 of this 2001 Act apply to tax years beginning on or
after May 1, 2003. + }
' { + SECTION 8. + } { + Sections 9 and 10 of this 2001 Act
are added to and made a part of ORS 314.650 to 314.665. + }
' { + SECTION 9. + } { + (1) If a public utility elects to
apportion business income under this section, all business income
of the utility shall be apportioned to this state by multiplying
the income by a multiplier equal to 50 percent of the sales
factor plus 25 percent of the property factor plus 25 percent of
the payroll factor.
' (2) The election shall be made as prescribed in section 10 of
this 2001 Act. + }
' { + SECTION 10. + } { + (1) A public utility may elect to
apportion the business income under ORS 314.650 or under section
9 of this 2001 Act in lieu of reporting the income as provided in
ORS 314.280 and 314.675.
' (2) The election shall be made in the time and manner
prescribed by the Department of Revenue by rule. The election
shall continue in force and effect for the tax year for which the
election is made and for each subsequent tax year until the year
in which the public utility revokes the election.
' (3) A public utility may revoke the election by filing a
revocation of election in the time and manner prescribed by the
department. The revocation shall apply to the tax year following
the year in which the election is made and to each subsequent tax
year.
' (4) Upon revocation, a public utility shall report income as
provided in ORS 314.280 and 314.675. + }
' { + SECTION 11. + } { + Sections 9 and 10 of this 2001 Act
apply to tax years beginning on or after May 1, 2003. + }
' { + SECTION 12. + } { + The Legislative Assembly finds and
declares it to be the policy of this state to carry out a
comprehensive review of business income apportionment whenever
federal legislation changes the nexus standard for state
imposition of taxes based on business activity within state
borders. + } ' .
/sBill Witt
Representative
/sMark Hass
Representative
/sDeborah Kafoury
Representative
/sDonna Nelson
Representative
/sLane Shetterly
Representative
/sTed Ferrioli
Senator
/sLee Beyer
Senator
/sCharles Starr
Senator
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