Relating to taxation; creating new provisions; amending ORS 314.256, 314.740, 314.742, 317.056, 317.061, 317.067, 317.070, 317.122 and 318.020; and providing for revenue raising that requires approval by a three-fifths majority.

 
 
 
     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 3887
 
                         House Bill 3055
 
Sponsored by Representative LEONARD
 
 
                             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 as
introduced.
 
  Increases corporate income and excise tax rates by tying
corporate rates to personal income tax rate and income bracket
structure.
  Applies rate changes to tax years beginning on or after January
1, 2002.
 
                        A BILL FOR AN ACT
Relating to taxation; creating new provisions; amending ORS
  314.256, 314.740, 314.742, 317.056, 317.061, 317.067, 317.070,
  317.122 and 318.020; and providing for revenue raising that
  requires approval by a three-fifths majority.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 317.061 is amended to read:
  317.061. The   { - rate of the - }  tax imposed by   { - and
computed under - }  this chapter   { - is six and six-tenths
percent - }  { +  shall be computed by applying to Oregon taxable
income the tax rates and income brackets set forth in ORS 316.037
that are in effect for the tax year of the taxpayer + }.
  SECTION 2. ORS 314.256 is amended to read:
  314.256. (1) If a tax is imposed upon an organization under
section 6033(e) of the Internal Revenue Code (proxy tax on
lobbying expenditures) for any tax year, a like tax is imposed
for the tax year upon the same amount as taxed for federal tax
purposes, as allocated or apportioned to Oregon. The rate of the
tax shall be the   { - rate specified in - }  { +  highest
marginal rate specified in ORS 316.037 that is applicable to
corporations under + } ORS 317.061. The tax shall be assessed and
collected under the applicable provisions of this chapter and ORS
chapter 305.
  (2) Any organization that is required to include on a federal
return the information described in section 6033(e)(1) of the
Internal Revenue Code shall file a copy of the federal return
containing the information with the Department of Revenue.
  (3) The department may determine by rule the method by which
the tax described in subsection (1) of this section is allocated
and apportioned to Oregon.
  (4) If section 6033(e) of the Internal Revenue Code (relating
to the proxy tax on lobbying expenditures) is repealed or
otherwise eliminated by Act of the United States, this section is
repealed as of the applicable date of the repeal or elimination
 
of the proxy tax under section 6033(e) of the Internal Revenue
Code.
  SECTION 3. ORS 314.740 is amended to read:
  314.740. (1) If, for any taxable year beginning in the
recognition period, an S corporation has a net recognized
built-in gain, there is hereby imposed a tax on the income of
such corporation for such taxable year.
  (2) The amount of the tax imposed under subsection (1) of this
section shall be computed by applying the   { - rate of tax
specified in - }   { + highest marginal rate specified in ORS
316.037 that is applicable to corporations under + } ORS 317.061
to the net recognized built-in gain of the S corporation for the
taxable year.
  (3) The tax imposed under subsection (1) shall be considered a
tax imposed under ORS chapter 317 or 318, whichever is
applicable, and shall be returned, estimated, assessed and
collected and otherwise treated in the same manner as the tax
imposed under ORS chapter 317 or 318. The allocation and
apportionment rules of this chapter and ORS chapter 305 apply to
the income subject to the tax imposed under this section. The
proceeds from the tax shall be distributed in the same manner as
the tax imposed under ORS chapter 317 or 318, whichever is
applicable.
  (4) ORS 317.476, 317.478 and 317.479 shall not apply to the tax
imposed under this section. Notwithstanding ORS 314.732 (2)(c),
any net operating loss carryforward arising in a taxable year for
which the corporation was a C corporation shall be allowed for
purposes of the tax imposed under this section as a deduction
against the net recognized built-in gain of the S corporation for
the taxable year. For purposes of determining the amount of any
such loss which may be carried to any of the 15 subsequent
taxable years, the amount of the net recognized built-in gain
shall be treated as taxable income.
  (5)(a) Except for estimated and other advance tax payments and
except as provided under paragraph (b) of this subsection, no
credits shall be allowed against the tax imposed under this
section.
  (b) Notwithstanding ORS 314.732 (2)(c), any credit carryforward
under ORS chapter 317 or 318 arising in a taxable year for which
the corporation was a C corporation shall be allowed as a credit
against the tax imposed under this section in the same manner as
if it were the tax imposed under ORS chapter 317 or 318.
  (6) To the extent applicable, the definitions, special rules
and interpretations and other provisions of section 1374 of the
Internal Revenue Code that relate to the measurement of built-in
gain shall apply to the tax imposed under this section.
  SECTION 4. ORS 314.742 is amended to read:
  314.742. (1) If for the taxable year an S corporation has the
following, then there is hereby imposed a tax on the income of
such corporation for the taxable year:
  (a) Accumulated earnings and profits at the close of the
taxable year; and
  (b) Gross receipts more than 25 percent of which are passive
investment income.
  (2) The tax imposed under subsection (1) of this section shall
be computed by multiplying the excess net passive income by the
 { - rate specified - }   { + highest marginal rate specified in
ORS 316.037 that is applicable to corporations + } under ORS
317.061.
  (3) The tax imposed under subsection (1) shall be considered a
tax imposed under ORS chapter 317 or 318, whichever is
applicable, and shall be returned, estimated, assessed and
collected and otherwise treated in the same manner as the tax
imposed under ORS chapter 317 or 318. The allocation and
apportionment of income rules of this chapter and ORS chapter 305
apply to the income subject to the tax imposed under this
section.  The proceeds from the tax shall be distributed in the
same manner as the tax imposed under ORS chapter 317 or 318,
whichever is applicable.
  (4) Notwithstanding subsection (6) of this section, the amount
of passive investment income shall be determined by not taking
into account any recognized built-in gain or loss of the S
corporation for any taxable year in the recognition period. Terms
used in the preceding sentence shall have the same respective
meanings as when used in ORS 314.738.
  (5) Except for estimated and other advance tax payments, no
credits shall be allowed against the tax imposed under this
section.
  (6) To the extent applicable, the definitions, special rules
and interpretations and other provisions of section 1375 of the
Internal Revenue Code that relate to the measurement of excess
net passive income shall apply to the tax imposed under this
section.
  (7) Section 1375(d) shall apply to the tax imposed under this
section, except that 'department' shall be substituted for the
word 'secretary' wherever that word appears.
  SECTION 5. ORS 317.056 is amended to read:
  317.056. Except as otherwise required by federal law, every
financial corporation located within this state shall be subject
to county, city, district, political subdivision and all other
local taxes imposed generally on a nondiscriminatory basis
throughout the jurisdiction of the taxing authority, at the same
rates and in all respects in the same manner and to the same
extent as are mercantile, manufacturing and business
corporations, and shall pay annually to the state an excise tax
according to or measured by its Oregon taxable income, to be
computed in the manner provided by this chapter at the   { - rate
provided in - }  { +  rates applicable to corporations pursuant
to + } ORS 317.061.
  SECTION 6. ORS 317.067 is amended to read:
  317.067. (1) A tax is hereby imposed for each taxable year on
the homeowners association taxable income of every homeowners
association at the   { - rate provided in - }  { +  rates
applicable to corporations pursuant to + } ORS 317.061 and as
though the homeowners association were a corporation.
  (2) As used in this section, 'homeowners association' has the
meaning given that term in section 528(c) of the Internal Revenue
Code.
  SECTION 7. ORS 317.070 is amended to read:
  317.070. Every centrally assessed corporation, the property of
which is assessed by the Department of Revenue under ORS 308.505
to 308.665, and every mercantile, manufacturing and business
corporation doing business within this state, except as provided
in ORS 317.080 and 317.090, shall annually pay to this state, for
the privilege of carrying on or doing business by it within this
state, an excise tax according to or measured by its Oregon
taxable income, to be computed in the manner provided by this
chapter, at the   { - rate provided in - }  { +  rates applicable
to corporations pursuant to + } ORS 317.061.
  SECTION 8. ORS 317.122 is amended to read:
  317.122. (1) A credit against taxes imposed by this chapter
shall be allowed insurers for the gross premium tax paid on fire
insurance premiums in accordance with ORS 731.820.
  (2) A credit against the taxes otherwise due under this chapter
shall be allowed to an insurer. The amount of the credit shall be
the lesser of:
  (a) The amount of any assessments paid by the insurer during
the tax year pursuant to ORS 656.612; or
  (b) The total profit attributable to the workers' compensation
line of business, net of reinsurance and including all investment
gain attributable to the workers' compensation line of business,
determined in the manner prescribed under ORS 731.574 by the
Director of the Department of Consumer and Business Services,
with the modifications under ORS 317.655 attributable to the
workers' compensation line of business, and then apportioned in
accordance with ORS 317.660 and multiplied by the   { - corporate
tax rate set forth in - }   { + rates applicable to corporations
pursuant to + } ORS 317.061. In making the apportionment under
ORS 317.660 for purposes of this paragraph, the factors shall be
determined using only items attributable to the workers'
compensation line of business.
  SECTION 9. ORS 318.020 is amended to read:
  318.020. (1) There hereby is imposed upon every corporation for
each taxable year a tax at the   { - rate provided in - }
 { + rates applicable to corporations pursuant to + } ORS 317.061
upon its Oregon taxable income derived from sources within this
state, other than income for which the corporation is subject to
the tax imposed by the Corporation Excise Tax Law of 1929 (ORS
chapter 317) according to or measured by its Oregon taxable
income.
  (2) Income from sources within this state includes income from
tangible or intangible property located or having a situs in this
state and income from any activities carried on in this state,
regardless of whether carried on in intrastate, interstate or
foreign commerce.
  SECTION 10.  { + The amendments to ORS 314.256, 314.740,
314.742, 317.056, 317.061, 317.067, 317.070, 317.122 and 318.020
by sections 1 to 9 of this 2001 Act apply to tax years beginning
on or after January 1, 2002. + }
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