71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
 
                            Enrolled
 
                         Senate Bill 426
 
Printed pursuant to Senate Interim Rule 213.28 by order of the
  President of the Senate in conformance with presession filing
  rules, indicating neither advocacy nor opposition on the part
  of the President (at the request of Governor John A. Kitzhaber,
  M.D., for Department of Revenue)
 
 
                     CHAPTER ................
 
 
                             AN ACT
 
 
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
 
 
Enrolled Senate Bill 426 (SB 426-A)                        Page 1
 
 
 
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
  (c) Contains portions located within both this state and
another state.
  (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. + }
 
 
Enrolled Senate Bill 426 (SB 426-A)                        Page 2
 
 
 
  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:
  (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
 
 
 
Enrolled Senate Bill 426 (SB 426-A)                        Page 3
 
 
 
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
  (c) Contains portions located within both this state and
another state.
  (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) + }.
  (c) Every resident estate or trust that is required to file a
federal income tax return.
  (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
 
 
 
Enrolled Senate Bill 426 (SB 426-A)                        Page 4
 
 
 
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. + }
                         ----------
 
 
Passed by Senate February 2, 2001
 
 
      ...........................................................
                                              Secretary of Senate
 
      ...........................................................
                                              President of Senate
 
Passed by House February 26, 2001
 
 
      ...........................................................
                                                 Speaker of House
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enrolled Senate Bill 426 (SB 426-A)                        Page 5
 
 
 
 
 
Received by Governor:
 
......M.,............., 2001
 
Approved:
 
......M.,............., 2001
 
 
      ...........................................................
                                                         Governor
 
Filed in Office of Secretary of State:
 
......M.,............., 2001
 
 
      ...........................................................
                                               Secretary of State
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enrolled Senate Bill 426 (SB 426-A)                        Page 6