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 1988
A-Engrossed
Senate Bill 229
Ordered by the Senate March 26
Including Senate Amendments dated March 26
Sponsored by Senator DECKERT, Representative HILL
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.
Authorizes { - Director of - } Economic and Community
Development Department to designate up to { - three - }
{ + five existing enterprise zones as + } electronic commerce
zones. Exempts { + certain + } property of business firm engaged
in electronic commerce from property taxation if { - firm
obtains certification - } { + located in enterprise zone
designated for electronic commerce + }. Allows credit against
income or corporate excise tax { - for ___ percent of tax
liability of firm that is apportioned to electronic commerce
zone - } { + equal to 25 percent of specified investments
within zone, not to exceed tax liability of taxpayer + }.
A BILL FOR AN ACT
Relating to taxation; creating new provisions; and amending ORS
285B.650, 285B.707, 285B.713, 314.752 and 318.031.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 285B.650 is amended to read:
285B.650. As used in ORS 285B.650 to 285B.728, unless the
context requires otherwise:
(1) 'Business firm' means a person operating or conducting one
or more trades or businesses but does not include any
governmental agency, municipal corporation or nonprofit
corporation. { +
(2) + } { + ' Electronic commerce' means engaging in
commercial or retail transactions predominantly over the Internet
or a computer network, utilizing the Internet as a platform for
transacting business or facilitating the use of the Internet by
other persons for business transactions, and may be further
defined by the Economic and Community Development Department by
rule. + }
{ - (2) - } { + (3) + } 'Eligible business firm' means a
firm engaged in an activity described under ORS 285B.707 which
may file an application for precertification under ORS 285B.719.
{ - (3) - } { + (4) + } 'Employee' means a person who works
more than 32 hours per week, but does not include persons with
temporary or seasonal jobs or persons hired solely to construct
qualified property.
{ - (4) - } { + (5) + } 'Enterprise zone' means one of the
30 areas designated or terminated and redesignated by order of
the Governor under ORS 284.160 (1987 Replacement Part) before
October 3, 1989, one of the 17 areas designated by the Director
of the Economic and Community Development Department under ORS
285B.653, areas designated under ORS 285B.677 and areas
designated under ORS 285B.689.
{ - (5) - } { + (6) + } 'First-source hiring agreement'
means an agreement between a precertified business firm and a
publicly funded job training provider whereby the job training
provider refers qualified candidates to the firm for new jobs and
job openings in the firm.
{ - (6) - } { + (7) + } 'Modification' means modernization,
renovation or remodeling of an existing building or structure.
{ - (7) - } { + (8) + } 'Nonurban enterprise zone' means an
enterprise zone located outside a regional or metropolitan urban
growth boundary.
{ - (8) - } { + (9) + } 'Precertified business firm' means
an eligible business firm whose application for precertification
has been approved under ORS 285B.719 and which may apply for a
property tax exemption under ORS 285B.722.
{ - (9) - } { + (10) + } 'Publicly funded job training
provider' includes but is not limited to, community colleges, Job
Training Partnership Act service providers, and other similar
programs.
{ - (10) - } { + (11) + } 'Qualified business firm' means a
business firm described in ORS 285B.704 whose application for a
property tax exemption has been approved under ORS 285B.722.
{ - (11) - } { + (12) + } 'Qualified property' means
property described under ORS 285B.713.
{ - (12) - } { + (13) + } 'Sponsor' means the city or
county that applied for and received approval of an enterprise
zone under ORS 284.150 and 284.160 (1987 Replacement Part), under
ORS 285B.656 and 285B.659, under ORS 285B.677 or 285B.686 or
under ORS 285B.689.
{ - (13) - } { + (14) + } 'Urban enterprise zone' means an
enterprise zone in a metropolitan statistical area, as defined by
the most recent federal decennial census, located inside a
regional or metropolitan urban growth boundary.
SECTION 2. { + (1) A sponsor of an existing enterprise zone
may seek to have the zone designated for electronic commerce
under this section.
(2) The sponsor shall file an application to have the zone
designated for electronic commerce with the Economic and
Community Development Department. The application shall be in the
form and contain the information that the department by rule may
require.
(3) The application shall be accompanied by a copy of a
resolution, adopted by the governing body of the sponsor,
requesting that the zone be designated for electronic commerce.
(4) The department shall review applications for electronic
commerce designation and shall approve no more than five zones
for electronic commerce designation. In approving zones for
electronic commerce designation, the department shall strive to
approve zones for electronic commerce designation in different
geographic areas of this state. + }
SECTION 3. ORS 285B.707 is amended to read:
285B.707. (1) Except as provided in subsections (3) and (4) of
this section, to be an eligible business firm, a business firm
must be engaged in the business of providing goods, products or
services to other businesses, and not to the general public for
personal or household use or consumption, through activities
including, but not limited to, manufacturing, assembly,
fabrication, processing, shipping or storage.
(2) Businesses significantly engaged in business activities
within the enterprise zone such as retail sales or services,
child care, housing, retail food service, health care, tourism,
entertainment, financial services, professional services, leasing
space to others, property management, construction or other
similar activities are not eligible business firms.
(3) Notwithstanding subsection (1) or (2) of this section, a
business firm that operates a hotel, motel or destination resort
is an eligible business firm regardless of the sale of services
for personal consumption, if allowed in the enterprise zone under
ORS 285B.716.
(4) Notwithstanding any other provision of this section, if a
business firm described in subsection (2) of this section engages
in an activity described in subsection (1) of this section, the
business firm is an eligible business firm if the activity is
performed at a location that is separate from the activity of the
firm that is described in subsection (2) of this section. For
purposes of determining whether a business firm described in this
subsection satisfies the requirements of ORS 285B.704, only the
operations of the firm that are described in subsection (1) of
this section and employees working a majority of their time in
those operations shall be considered.
(5) Two or more business firms that otherwise meet the
requirements of this section may elect to be treated as one
eligible business firm if 100 percent of the equity interest in
the business firms is owned by the same person or persons, or if
one of the business firms owns 100 percent of the equity interest
of the other or others.
(6) Notwithstanding subsection (1) or (2) of this section, a
business firm engaged in the activity of providing a retail or
financial service is an eligible business firm if:
(a) The activity serves customers by responding to orders or
requests received only by telephone, computer, the Internet or
similar means of telecommunications; and
(b) Not less than 90 percent of the customers or orders are
located and originate in an area from which long distance
telephone charges, in the absence of a toll-free number, would
apply if the order were placed by telephone.
(7) Notwithstanding subsection (1) or (2) of this section, a
business firm that makes an investment in qualified property at a
facility that serves statewide, regional, national or global
operations of the firm through administrative, design, financial,
management, marketing or other activities is an eligible business
firm, without regard to the relationship of such activities to
any otherwise eligible activities within the enterprise zone if:
(a) In approving the application for precertification, the zone
sponsor includes with the application a formal finding that the
facility complies with the requirements of this subsection and
that the size of the proposed investment, the employment at the
facility or the nature of the activities at the facility will
significantly enhance the local economy, in relation to the
overall purpose and employment of the zone;
(b) The actual investment and facility of the firm are
consistent with the descriptions presented in the
precertification application; and
(c) For purposes of ORS 285B.704, all employees at the facility
constitute employment of the firm, as defined in ORS 285B.704.
{ + (8) Notwithstanding subsection (1) or (2) of this
section, a business firm that is engaged in electronic commerce
is an eligible business firm if the enterprise zone has been
approved for electronic commerce designation under section 2 of
this 2001 Act. + }
SECTION 4. ORS 285B.713 is amended to read:
285B.713. (1) The property tax exemption provided under ORS
285B.698 shall be available only for qualified property of a
qualified business firm.
(2) The following kinds of property are qualified for the
exemption allowed under ORS 285B.698:
(a) A new building or structure with a cost of $25,000 or more.
(b) An addition to or modification of an existing building or
structure. The total cost of qualifying additions or
modifications to an existing building or structure shall be at
least $25,000 in one assessment year. In order to satisfy the
minimum investment requirement, the cost of two or more additions
or modifications made in one assessment year to a single building
or structure may be aggregated.
(c) Any real property machinery or equipment, whether new, used
or reconditioned, that is newly purchased, leased or transferred
into the enterprise zone from outside the county within which the
zone is located and installed in property owned or leased by a
qualified business firm.
(d) Any single item of personal property machinery or
equipment, whether new, used or reconditioned, that is newly
purchased, leased or transferred into the enterprise zone from
outside the county within which the zone is located and installed
in property owned or leased by a qualified business firm and:
(A) That has a cost of at least $1,000 if the property is used
exclusively for producing tangible goods { + or is used in
electronic commerce in a zone approved for electronic commerce
designation under section 2 of this 2001 Act + }; or
(B) That has a cost of at least $50,000.
(e) A new building and associated structures owned by a
governmental body that are leased to one or more qualified
business firms.
(f) Any property otherwise described in this section that is
owned or leased and operated by a business firm operating a
hotel, motel or destination resort, to the extent that the
property is located on the same site as the hotel, motel or
destination resort and is used primarily to serve overnight
guests of the hotel, motel or destination resort. For purposes of
this paragraph, property is primarily used to serve guests if at
least 50 percent of any receipts from such use are paid by
guests.
(g) Any property otherwise described in this section that is
owned or leased and operated by a business firm described in ORS
285B.707 (4), to the extent that the property is used exclusively
in an activity described in ORS 285B.707 (1).
{ + (h) Any property otherwise described in this section that
is owned or leased and operated by a business firm that is
engaged in electronic commerce, if the enterprise zone in which
the property is located is a zone approved for electronic
commerce designation under section 2 of this 2001 Act. + }
(3) The following property is not qualified for exemption under
ORS 285B.698:
(a) Land.
(b) Self-propelled motorized vehicles.
(c) Property excluded under ORS 285B.698 (5).
SECTION 5. { + Qualified property owned or leased and operated
by a qualified business firm engaged in electronic commerce may
not receive an exemption under ORS 285B.698 unless the electronic
commerce operations of the firm are located in an enterprise zone
that has been approved for electronic commerce designation under
section 2 of this 2001 Act. + }
SECTION 6. { + Sections 2 and 5 of this 2001 Act are added to
and made a part of ORS 285B.650 to 285B.728. + }
SECTION 7. { + Section 8 of this 2001 Act is added to and made
a part of ORS chapter 315. + }
SECTION 8. { + (1) A credit against the taxes that are
otherwise due under ORS chapter 316 or, if the taxpayer is a
corporation, under ORS chapter 317 or 318, shall be allowed to a
taxpayer that is a qualified business firm engaged in electronic
commerce in an enterprise zone that has been approved for
electronic commerce designation under section 2 of this 2001 Act.
(2) The credit shall equal 25 percent of the investments made
by the business firm during the tax year in electronic commerce
operations within the zone that are related to electronic
commerce sales, customer service, order fulfillment or broadband
infrastructure.
(3) A credit under this section may not be allowed for an
income tax year beginning in a property tax year in which
qualified property of the business firm is subject to property
tax.
(4) A credit allowed under this section may not exceed the tax
liability of the taxpayer.
(5) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular year may be carried
forward and offset against the taxpayer's tax liability for the
next succeeding tax year. Any credit remaining unused in the next
succeeding tax year may be carried forward and used in the second
succeeding tax year, and likewise any credit not used in that
second succeeding tax year may be carried forward and used in the
third succeeding tax year, and any credit not used in that third
succeeding tax year may be carried forward and used in the fourth
succeeding tax year, and any credit not used in that fourth
succeeding tax year may be carried forward and used in the fifth
succeeding tax year, but may not be carried forward for any tax
year thereafter.
(6) As used in this section, 'business firm,' 'electronic
commerce,' 'qualified business firm' and 'qualified property '
have the meanings given those terms in ORS 285B.650. + }
SECTION 9. ORS 314.752 is amended to read:
314.752. (1) Except as provided in ORS 314.740 (5)(b), the tax
credits allowed or allowable to a C corporation for purposes of
ORS chapter 317 or 318 shall not be allowed to an S corporation.
The business tax credits allowed or allowable for purposes of ORS
chapter 316 shall be allowed or are allowable to the shareholders
of the S corporation.
(2) In determining the tax imposed under ORS chapter 316, as
provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder's
pro rata share of business tax credit (or item thereof) that
would be allowed to the corporation (but for subsection (1) of
this section) or recapture or recovery thereof. The credit (or
item thereof), recapture or recovery shall be passed through to
shareholders in pro rata shares as determined in the manner
prescribed under section 1377(a) of the Internal Revenue Code.
(3) The character of any item included in a shareholder's pro
rata share under subsection (2) of this section shall be
determined as if such item were realized directly from the source
from which realized by the corporation, or incurred in the same
manner as incurred by the corporation.
(4) If the shareholder is a nonresident and there is a
requirement applicable for the business tax credit that in the
case of a nonresident that the credit be allowed in the
proportion provided in ORS 316.117, then that provision shall
apply to the nonresident shareholder.
(5) As used in this section, 'business tax credit' means a tax
credit granted to personal income taxpayers to encourage certain
investment, to create employment, economic opportunity or
incentive or for charitable, educational, scientific, literary or
public purposes that is listed under this subsection as a
business tax credit or is designated as a business tax credit by
law or by the Department of Revenue by rule and includes but is
not limited to the following credits: ORS 315.104 (forestation
and reforestation), ORS 315.134 (fish habitat improvement), ORS
315.138 (fish screening, by-pass devices, fishways), ORS 315.156
(crop gleaning), ORS 315.164 (farmworker housing), ORS 315.204
(dependent care assistance), ORS 315.208 (dependent care
facilities), ORS 315.234 (child development program
contributions), ORS 315.254 (youth apprenticeship sponsorship),
ORS 315.304 (pollution control facility), ORS 315.324 (plastics
recycling), ORS 315.354 and ORS 469.207 (energy conservation
facilities), ORS 315.504 (Oregon Capital Corporation), ORS
315.604 (bone marrow transplant expenses) and ORS 317.115
(fueling stations necessary to operate an alternative fuel
vehicle) { + and section 8 of this 2001 Act (electronic
commerce) + }.
SECTION 10. ORS 318.031 is amended to read:
318.031. It being the intention of the Legislative Assembly
that this chapter and the Corporation Excise Tax Law of 1929
shall be administered as uniformly as possible (allowance being
made for the difference in imposition of the taxes and the
operative date of this chapter), the provisions of ORS 305.140
and 305.150 and ORS chapter 314 and of the following sections of
ORS chapter 315 or 317, as amended on or before August 3, 1955,
and as they may thereafter be amended, are incorporated into this
chapter by this reference and made a part hereof: ORS 315.104,
315.134, 315.156, 315.204, 315.208, 315.234, 315.254, 315.304,
315.504 and 315.604 (all only to the extent applicable for a
corporation) and ORS 317.010, 317.013, 317.018 to 317.022,
317.030, 317.035, 317.038, 317.080, 317.152 to 317.154, 317.259
to 317.303, 317.310 to 317.386, 317.476 to 317.485, 317.510 to
317.635 and 317.705 to 317.725 and section 40, chapter 835,
Oregon Laws 1997, and section 4, chapter 358, Oregon Laws
1999 { + , and section 8 of this 2001 Act + }.
SECTION 11. { + Section 8 of this 2001 Act and the amendments
to ORS 314.752 and 318.031 by sections 9 and 10 of this 2001 Act
apply to tax years beginning on or after January 1, 2002. + }
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