72nd OREGON LEGISLATIVE ASSEMBLY--2003 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 645
A-Engrossed
House Bill 2186
Ordered by the House April 1
Including House Amendments dated April 1
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for the Department of Revenue)
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.
Establishes connection date of December 31, 2002, for changes
to Internal Revenue Code that are unrelated to definition of
taxable income. { + Establishes tax year of taxpayer as
connection date for certain federal tax law changes after
December 31, 2005.
Allows Department of Revenue to prescribe by rule different due
date for returns filed in alternative format. + }
Restates type of compensation paid to certain nonresident
personnel performing duties on vessels operating in interstate
waters that is not considered income from sources within Oregon.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to taxation; creating new provisions; amending ORS
305.230, 305.494, 305.690, 307.130, 307.147, 310.140, 310.630,
310.800, 311.689, 314.011, 314.385, 315.004, 315.266, 315.274,
316.012, 316.014, 316.127, 316.162, 316.189, 316.681, 317.010,
317.013, 317.267 and 317.351; repealing ORS 316.729; and
prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 305.230 is amended to read:
305.230. Notwithstanding ORS 9.320:
(1) Any person who is duly qualified to practice law or public
accountancy in this state or the authorized employee of a
taxpayer who is regularly employed by the taxpayer in tax matters
may represent the taxpayer before a tax court magistrate or the
Department of Revenue in any conference or proceeding with
respect to the administration of any tax.
(2) Any person who is duly licensed by the State Board of Tax
Practitioners or who is exempt from such licensing requirement as
provided for and limited by ORS 673.610 may represent a taxpayer
before a tax court magistrate or the department in any conference
or proceeding with respect to the administration of any tax on or
measured by net income.
(3) Any shareholder of an S corporation, as defined in section
1361 of the Internal Revenue Code, as amended and in effect on
December 31, { - 2000 - } { + 2002 + }, may represent the
corporation in any proceeding before a tax court magistrate or
the department in the same manner as if the shareholder were a
partner and the S corporation were a partnership. The S
corporation must designate in writing a tax matters shareholder
authorized to represent the S corporation.
(4) Any person who is licensed as a real estate broker or
principal real estate broker under ORS 696.022 or is a state
certified appraiser or state licensed appraiser under ORS 674.310
or is a registered appraiser under ORS 308.010 may represent a
taxpayer before a tax court magistrate or the department in any
conference or proceeding with respect to the administration of
any ad valorem property tax.
(5) A general partner who has been designated by members of a
partnership as their tax matters partner under ORS 305.242 may
represent those partners in any conference or proceeding with
respect to the administration of any tax on or measured by net
income.
(6) In a small claims procedure, a taxpayer may be represented
by any of the persons described in subsections (1) to (5) of this
section or by any other person permitted by the tax court.
(7) No person shall be recognized as representing a taxpayer
pursuant to this section unless there is first filed with the
magistrate or department a written authorization, or unless it
appears to the satisfaction of the magistrate or department that
the representative does in fact have authority to represent the
taxpayer. A person recognized as an authorized representative
under rules or procedures adopted by the tax court shall be
considered an authorized representative by the department.
(8) A taxpayer represented by someone other than an attorney is
bound by all things done by the authorized representative, and
may not thereafter claim any proceeding was legally defective
because the taxpayer was not represented by an attorney.
(9) Prior to the holding of a conference or proceeding before
the tax court magistrate or department, written notice shall be
given by the magistrate or department to the taxpayer of the
provisions of subsections (6) and (8) of this section.
SECTION 2. ORS 305.494 is amended to read:
305.494. Notwithstanding ORS 9.320, any shareholder of an S
corporation as defined in section 1361 of the Internal Revenue
Code, as amended and in effect on December 31, { - 2000 - }
{ + 2002 + }, may represent the corporation in any proceeding
before the Oregon Tax Court in the same manner as if the
shareholder were a partner and the S corporation were a
partnership.
SECTION 3. ORS 305.690 is amended to read:
305.690. As used in ORS 305.690 to 305.753, unless the context
otherwise requires:
(1) 'Biennial years' means the two income tax years of
individual taxpayers that begin in the two calendar years
immediately following the calendar year in which a list is
certified under ORS 305.715.
(2) 'Commission' means the Oregon Charitable Checkoff
Commission.
(3) 'Department' means the Department of Revenue.
(4) 'Internal Revenue Code' means the federal Internal Revenue
Code as amended and in effect on December 31, { - 2000 - }
{ + 2002 + }.
SECTION 4. ORS 307.130 is amended to read:
307.130. (1) Upon compliance with ORS 307.162, the following
property owned or being purchased by art museums, volunteer fire
departments, or incorporated literary, benevolent, charitable and
scientific institutions shall be exempt from taxation:
(a) Except as provided in ORS 748.414, only such real or
personal property, or proportion thereof, as is actually and
exclusively occupied or used in the literary, benevolent,
charitable or scientific work carried on by such institutions.
(b) Parking lots used for parking or any other use as long as
that parking or other use is permitted without charge for no
fewer than 355 days during the tax year.
(c) All real or personal property of a rehabilitation facility
or any retail outlet thereof, including inventory. As used in
this subsection, 'rehabilitation facility' means either those
facilities defined in ORS 344.710 or facilities which provide
physically, mentally or emotionally disabled individuals with
occupational rehabilitation activities of an educational or
therapeutic nature, even if remuneration is received by the
individual.
(d) All real and personal property of a retail store dealing
exclusively in donated inventory, where the inventory is
distributed without cost as part of a welfare program or where
the proceeds of the sale of any inventory sold to the general
public are used to support a welfare program. As used in this
subsection, ' welfare program' means the providing of food,
shelter, clothing or health care, including dental service, to
needy persons without charge.
(e) All real and personal property of a retail store if:
(A) The retail store deals primarily and on a regular basis in
donated and consigned inventory;
(B) The individuals who operate the retail store are all
individuals who work as volunteers; and
(C) The inventory is either distributed without charge as part
of a welfare program, or sold to the general public and the sales
proceeds used exclusively to support a welfare program. As used
in this paragraph, 'primarily' means at least one-half of the
inventory.
(f) The real and personal property of an art museum that is
used in conjunction with the public display of works of art or
used to educate the public about art, but not including any
portion of the art museum's real or personal property that is
used to sell, or hold out for sale, works of art, reproductions
of works of art or other items to be sold to the public.
(g) All real and personal property of a volunteer fire
department that is used in conjunction with services and
activities for providing fire protection to all residents within
a fire response area.
(2) An art museum or institution shall not be deprived of an
exemption under this section solely because its primary source of
funding is from one or more governmental entities.
(3) An institution shall not be deprived of an exemption under
this section because its purpose or the use of its property is
not limited to relieving pain, alleviating disease or removing
constraints.
(4) As used in this section:
(a) 'Art museum' means a nonprofit corporation organized to
display works of art to the public.
(b) 'Internal Revenue Code' means the federal Internal Revenue
Code as amended and in effect on December 31, { - 2000 - }
{ + 2002 + }.
(c) 'Nonprofit corporation' means a corporation that:
(A) Is organized not for profit, pursuant to ORS chapter 65 or
any predecessor of ORS chapter 65; or
(B) Is organized and operated as described under section 501(c)
of the Internal Revenue Code.
(d) 'Volunteer fire department' means a nonprofit corporation
organized to provide fire protection services in a specific
response area.
SECTION 5. ORS 307.147 is amended to read:
307.147. (1) For purposes of this section:
(a) 'Internal Revenue Code' means the federal Internal Revenue
Code as amended and in effect on December 31, { - 2000 - }
{ + 2002 + }.
(b) 'Nonprofit corporation' means a corporation that:
(A) Is organized not for profit, pursuant to ORS chapter 65 or
any predecessor of ORS chapter 65; or
(B) Is organized and operated as described under section 501(c)
of the Internal Revenue Code.
(c) 'Senior services center' means property that:
(A) Is owned or being purchased by a nonprofit corporation; and
(B) Is actually and exclusively used to provide services and
activities (including parking) primarily to or for persons over
50 years of age; and
(C) Is open generally to all persons over 50 years of age; and
(D) Is not used primarily for fund-raising activities; and
(E) Is not a residential or dwelling place.
(2) Upon compliance with ORS 307.162, a senior services center
is exempt from ad valorem property taxation.
SECTION 6. ORS 310.140 is amended to read:
310.140. The Legislative Assembly finds that section 11b,
Article XI of the Oregon Constitution, was drafted by citizens
and placed before the voters of the State of Oregon by initiative
petition. Section 11b, Article XI of the Oregon Constitution,
uses terms that do not have established legal meanings and
require definition by the Legislative Assembly. Section 11b,
Article XI of the Oregon Constitution, was amended by section 11
(11), Article XI of the Oregon Constitution. This section is
intended to interpret the terms of section 11b, Article XI of the
Oregon Constitution, as originally adopted and as amended by
section 11 (11), Article XI of the Oregon Constitution,
consistent with the intent of the people in adopting these
provisions, so that the provisions of section 11b, Article XI of
the Oregon Constitution, may be given effect uniformly throughout
the State of Oregon, with minimal confusion and misunderstanding
by citizens and affected units of government. As used in the
revenue and tax laws of this state, and for purposes of section
11b, Article XI of the Oregon Constitution:
(1) 'Tax on property' means any tax, fee, charge or assessment
imposed by any government unit upon property or upon a property
owner as a direct consequence of ownership of that property, but
does not include incurred charges or assessments for local
improvements. As used in this subsection, 'property' means real
or tangible personal property, and intangible property that is
part of a unit of real or tangible personal property to the
extent that such intangible property is subject to a tax on
property.
(2) 'Direct consequence of ownership' means that the obligation
of the owner of property to pay a tax arises solely because that
person is the owner of the property, and the obligation to pay
the tax arises as an immediate and necessary result of that
ownership without respect to any other intervening transaction,
condition or event.
(3)(a) 'Incurred charge' means a charge imposed by a unit of
government on property or upon a property owner that does not
exceed the actual cost of providing goods or services and that
can be controlled or avoided by the property owner because:
(A) The charge is based on the quantity of the goods or
services used, and the owner has direct control over the
quantity;
(B) The goods or services are provided only on the specific
request of the property owner; or
(C) The goods or services are provided by the government unit
only after the individual property owner has failed to meet
routine obligations of ownership of the affected property, and
such action is deemed necessary by an appropriate government unit
to enforce regulations pertaining to health or safety.
(b) For purposes of this subsection, an owner of property may
control or avoid an incurred charge if the owner is capable of
taking action to affect the amount of a charge that is or will be
imposed or to avoid imposition of a charge even if the owner must
incur expense in so doing.
(c) For purposes of paragraph (a)(A) of this subsection, an
owner of property has direct control over the quantity of goods
or services if the owner of property has the ability, whether or
not that ability is exercised, to determine the quantity of goods
or services provided or to be provided.
(4) 'Specific request' means:
(a) An affirmative act by a property owner to seek or obtain
delivery of goods or services;
(b) An affirmative act by a property owner, the legal
consequence of which is to cause the delivery of goods or
services to the property owner; or
(c) Failure of an owner of property to change a request for
goods or services made by a prior owner of the property.
(5) 'Routine obligations of ownership' means a standard of
operation, maintenance, use or care of property established by
law, or if established by custom or common law, a standard that
is reasonable for the type of property affected.
(6) 'Assessment for local improvement' means any tax, fee,
charge or assessment that does not exceed the actual cost
incurred by a unit of government for design, construction and
financing of a local improvement.
(7)(a) 'Local improvement' means a capital construction
project, or part thereof, undertaken by a governmental unit,
pursuant to ORS 223.387 to 223.399, or pursuant to a local
ordinance or resolution prescribing the procedure to be followed
in making local assessments for benefits from a local improvement
upon the lots that have been benefited by all or a part of the
improvement:
(A) That provides a special benefit only to specific properties
or rectifies a problem caused by specific properties;
(B) The costs of which are assessed against those properties in
a single assessment upon the completion of the project; and
(C) For which the property owner may elect to make payment of
the assessment plus appropriate interest over a period of at
least 10 years.
(b) For purposes of paragraph (a) of this subsection, the
status of a capital construction project as a local improvement
is not affected by the accrual of a general benefit to property
other than the property receiving the special benefit.
(8) 'Single assessment' means the complete assessment process,
including preassessment, assessment or reassessment, for any
local improvement authorized by ORS 223.387 to 223.399, or a
local ordinance or resolution that provides the procedure to be
followed in making local assessments for benefits from a local
improvement upon lots that have been benefited by all or part of
the improvement.
(9) 'Special benefit only to specific properties' shall have
the same meaning as 'special and peculiar benefit' as that term
is used in ORS 223.389.
(10) 'Actual cost' means all direct or indirect costs incurred
by a government unit in order to deliver goods or services or to
undertake a capital construction project. The ' actual cost' of
providing goods or services to a property or property owner
includes the average cost or an allocated portion of the total
amount of the actual cost of making a good or service available
to the property or property owner, whether stated as a minimum,
fixed or variable amount. 'Actual cost' includes, but is not
limited to, the costs of labor, materials, supplies, equipment
rental, property acquisition, permits, engineering, financing,
reasonable program delinquencies, return on investment, required
fees, insurance, administration, accounting, depreciation,
amortization, operation, maintenance, repair or replacement and
debt service, including debt service payments or payments into
reserve accounts for debt service and payment of amounts
necessary to meet debt service coverage requirements.
(11) 'Bonded indebtedness' means any formally executed written
agreement representing a promise by a unit of government to pay
to another a specified sum of money, at a specified date or dates
at least one year in the future.
(12)(a) 'Exempt bonded indebtedness' means:
(A) Bonded indebtedness authorized by a specific provision of
the Oregon Constitution;
(B) Bonded indebtedness incurred or to be incurred for capital
construction or capital improvements that was issued as a general
obligation of the issuing governmental unit on or before November
6, 1990;
(C) Bonded indebtedness incurred or to be incurred for capital
construction or capital improvements that was issued as a general
obligation of the issuing governmental unit after November 6,
1990, with the approval of the electors of the issuing
governmental unit; or
(D) Bonded indebtedness incurred or to be incurred for capital
construction or capital improvements, if the issuance of the
bonds is approved by voters on or after December 5, 1996, in an
election that is in compliance with the voter participation
requirements of section 11 (8), Article XI of the Oregon
Constitution.
(b) 'Exempt bonded indebtedness' includes bonded indebtedness
issued to refund or refinance any bonded indebtedness described
in paragraph (a) of this subsection.
(13) 'Capital construction':
(a) For bonded indebtedness issued prior to December 5, 1996,
and for the proceeds of any bonded indebtedness approved by
electors prior to December 5, 1996, that were spent or
contractually obligated to be spent prior to June 20, 1997, means
the construction, modification, replacement, repair, remodeling
or renovation of a structure, or addition to a structure, that is
expected to have a useful life of more than one year, and
includes, but is not limited to:
(A) Acquisition of land, or a legal interest in land, in
conjunction with the capital construction of a structure.
(B) Acquisition, installation of machinery or equipment,
furnishings or materials that will become an integral part of a
structure.
(C) Activities related to the capital construction, such as
planning, design, acquisition of interim or permanent financing,
research, land use and environmental impact studies, acquisition
of permits or licenses or other services connected with the
construction.
(D) Acquisition of existing structures, or legal interests in
structures, in conjunction with the capital construction.
(b) For bonded indebtedness issued on or after December 5,
1996, except for the proceeds of any bonded indebtedness approved
by electors prior to December 5, 1996, that were spent or
contractually obligated to be spent before June 20, 1997, has the
meaning given that term in paragraph (a) of this subsection,
except that 'capital construction':
(A) Includes public safety and law enforcement vehicles with a
projected useful life of five years or more; and
(B) Does not include:
(i) Maintenance and repairs, the need for which could be
reasonably anticipated;
(ii) Supplies and equipment that are not intrinsic to the
structure; or
(iii) Furnishings, unless the furnishings are acquired in
connection with the acquisition, construction, remodeling or
renovation of a structure, or the repair of a structure that is
required because of damage or destruction of the structure.
(14) 'Structure' means any temporary or permanent building or
improvement to real property of any kind that is constructed on
or attached to real property, whether above, on or beneath the
surface.
(15) 'Capital improvements':
(a) For bonded indebtedness issued prior to December 5, 1996,
and for the proceeds of any bonded indebtedness approved by
electors before December 5, 1996, that were spent or
contractually obligated to be spent before June 20, 1997, means
land, structures, facilities, as that term is defined in ORS
288.805, machinery, equipment or furnishings having a useful life
longer than one year.
(b) For bonded indebtedness issued on or after December 5,
1996, except for the proceeds of any bonded indebtedness approved
by electors prior to December 5, 1996, that were spent or
contractually obligated to be spent before June 20, 1997, has the
meaning given that term in paragraph (a) of this subsection,
except that 'capital improvements':
(A) Includes public safety and law enforcement vehicles with a
projected useful life of five years or more; and
(B) Does not include:
(i) Maintenance and repairs, the need for which could be
reasonably anticipated;
(ii) Supplies and equipment that are not intrinsic to the
structure; or
(iii) Furnishings, unless the furnishings are acquired in
connection with the acquisition, construction, remodeling or
renovation of a structure, or the repair of a structure that is
required because of damage or destruction of the structure.
(16) 'Maintenance and repairs, the need for which could be
reasonably anticipated':
(a) Means activities, the type of which may be deducted as an
expense under the provisions of the federal Internal Revenue
Code, as amended and in effect on December 31, { - 2000 - }
{ + 2002 + }, and that keep the property in ordinarily
efficient operating condition, and that do not add materially to
the value of the property nor appreciably prolong the life of the
property;
(b) Does not include maintenance and repair of property that is
required by damage, destruction or defect in design, or that was
otherwise not reasonably expected at the time the property was
constructed or acquired, or the addition of material that is in
the nature of the replacement of property and that arrests the
deterioration or appreciably prolongs the useful life of the
property; and
(c) Does not include street and highway construction, overlay
and reconstruction.
(17) 'Supplies and equipment intrinsic to a structure ' means
the supplies and equipment that are necessary to permit a
structure to perform the functions for which the structure was
constructed, or that will, upon installation, constitute fixtures
considered to be part of the real property that is comprised, in
whole or part, of the structure and land supporting the
structure.
(18) 'Projected useful life' means the useful life, as
reasonably estimated by the unit of government undertaking the
capital construction or capital improvement project, beginning
with the date the property was acquired, constructed or
reconstructed and based on the property's condition at the time
the property was acquired, constructed or reconstructed.
SECTION 7. ORS 310.630 is amended to read:
310.630. As used in ORS 310.630 to 310.706:
(1) 'Contract rent' means rental paid to the landlord for the
right to occupy a homestead, including the right to use the
personal property located therein. 'Contract rent' does not
include rental paid for the right to occupy a homestead that is
exempt from taxation, unless payments in lieu of taxes of 10
percent or more of the rental exclusive of fuel and utilities are
made on behalf of the homestead. 'Contract rent' does not include
advanced rental payments for another period and rental deposits,
whether or not expressly set out in the rental agreement, or
payments made to a nonprofit home for the elderly described in
ORS 307.375. If a landlord and tenant have not dealt with each
other at arm's length, and the Department of Revenue is satisfied
that the contract rent charged was excessive, it may adjust the
contract rent to a reasonable amount for purposes of ORS 310.630
to 310.706.
(2) 'Department' means the Department of Revenue.
(3) 'Fuel and utility payments' includes payments for heat,
lights, water, sewer and garbage made solely to secure those
commodities or services for the homestead of the taxpayer. 'Fuel
and utility payments' does not include telephone service.
(4) 'Gross rent' means contract rent paid plus the fuel and
utility payments made for the homestead in addition to the
contract rent, during the calendar year for which the claim is
filed.
(5) 'Homestead' means the taxable principal dwelling located in
Oregon, either real or personal property, rented by the taxpayer,
and the taxable land area of the tax lot upon which it is built.
(6) 'Household' means the taxpayer, the spouse of the taxpayer
and all other persons residing in the homestead during any part
of the calendar year for which a claim is filed.
(7) 'Household income' means the aggregate income of the
taxpayer and the spouse of the taxpayer who reside in the
household, that was received during the calendar year for which
the claim is filed. 'Household income' includes payments received
by the taxpayer or the spouse of the taxpayer under the federal
Social Security Act for the benefit of a minor child or minor
children who are members of the household.
(8) 'Income' means 'adjusted gross income' as defined in the
federal Internal Revenue Code, as amended and in effect on
December 31, { - 2000 - } { + 2002 + }, even when the
amendments take effect or become operative after that date,
relating to the measurement of taxable income of individuals,
estates and trusts, with the following modifications:
(a) There shall be added to adjusted gross income the following
items of otherwise exempt income:
(A) The gross amount of any otherwise exempt pension less
return of investment, if any.
(B) Child support received by the taxpayer.
(C) Inheritances.
(D) Gifts and grants, the sum of which are in excess of $500
per year.
(E) Amounts received by a taxpayer or spouse of a taxpayer for
support from a parent who is not a member of the taxpayer's
household.
(F) Life insurance proceeds.
(G) Accident and health insurance proceeds, except
reimbursement of incurred medical expenses.
(H) Personal injury damages.
(I) Sick pay which is not included in federal adjusted gross
income.
(J) Strike benefits excluded from federal gross income.
(K) Worker's compensation, except for reimbursement of medical
expense.
(L) Military pay and benefits.
(M) Veteran's benefits.
(N) Payments received under the federal Social Security Act
which are excluded from federal gross income.
(O) Welfare payments, except as follows:
(i) Payments for medical care, drugs and medical supplies, if
the payments are not made directly to the welfare recipient;
(ii) In-home services authorized and approved by the Department
of Human Services; and
(iii) Direct or indirect reimbursement of expenses paid or
incurred for participation in work or training programs.
(P) Nontaxable dividends.
(Q) Nontaxable interest not included in federal adjusted gross
income.
(R) Rental allowance paid to a minister that is excluded from
federal gross income.
(S) Income from sources without the United States that is
excluded from federal gross income.
(b) Adjusted gross income shall be increased due to the
disallowance of the following deductions:
(A) The amount of the net loss, in excess of $1,000, from all
dispositions of tangible or intangible properties.
(B) The amount of the net loss, in excess of $1,000, from the
operation of a farm or farms.
(C) The amount of the net loss, in excess of $1,000, from all
operations of a trade or business, profession or other activity
entered into for the production or collection of income.
(D) The amount of the net loss, in excess of $1,000, from
tangible or intangible property held for the production of rents,
royalties or other income.
(E) The amount of any net operating loss carryovers or
carrybacks included in federal adjusted gross income.
(F) The amount, in excess of $5,000, of the combined deductions
or other allowances for depreciation, amortization or depletion.
(G) The amount added or subtracted, as required within the
context of this section, for adjustments made under ORS 316.680
(2)(d) and 316.707 to 316.737.
(c) 'Income' does not include any of the following:
(A) Any governmental grant which must be used by the taxpayer
for rehabilitation of the homestead of the taxpayer.
(B) The amount of any payments made pursuant to ORS 310.630 to
310.706.
(C) Any refund of Oregon personal income taxes that were
imposed under ORS chapter 316.
(9) 'Payments for heat' means those payments made to secure the
commodities or services to be used as the principal source of
heat for the homestead of the taxpayer and includes payments for
natural gas, oil, firewood, coal, sawdust, electricity, steam or
other materials that are capable of use as a primary source of
heat for the homestead.
(10) 'Statement of gross rent' means a declaration by the
applicant, under penalties of false swearing, that the amount of
contract rent and fuel and utility payments designated is the
actual amount both incurred and paid during the year for which
elderly rental assistance is claimed.
(11) 'Taxpayer' means an individual who is a resident of this
state on December 31 of the year for which elderly rental
assistance is claimed and whose homestead, as of the same
December 31 and during all or a portion of the year ending on the
same December 31, is rented and while rented is the subject,
directly or indirectly, of property tax levied by this state or a
political subdivision or of payments made in lieu of taxes.
SECTION 8. ORS 310.800 is amended to read:
310.800. (1) As used in this section:
(a) 'Authorized representative' means a senior citizen who is
authorized by a tax-exempt entity to perform charitable or public
service on behalf of a senior citizen who has entered into a
contract under subsection (2) of this section.
(b) 'Homestead' means an owner-occupied principal residence.
(c) 'Senior citizen' means a person who is 60 years of age or
older.
(d) 'Tax-exempt entity' means an entity that is exempt from
federal income taxes under section 501 (c) of the Internal
Revenue Code, as amended and in effect on December 31,
{ - 2000 - } { + 2002 + }.
(e) 'Taxing unit' means any county, city or common or union
high school district, community college service district or
community college district within this state with authority to
impose ad valorem property taxes.
(2) A tax-exempt entity may establish a property tax work-off
program pursuant to which a senior citizen may contract to
perform charitable or public service in consideration of payment
of property taxes extended against the homestead of the senior
citizen and billed to the senior citizen. For purposes of ORS
chapters 316 and 656, and notwithstanding ORS 670.600 or other
law, a senior citizen who enters into a contract under this
subsection shall be considered an independent contractor and not
a worker or employee with respect to the services performed
pursuant to the contract. Nothing in this section precludes a
taxing unit from being considered an employer, for purposes of
unemployment compensation under ORS chapter 657, of a senior
citizen who enters into a contract under this section.
(3) A taxing unit may enter into an agreement with a tax-exempt
entity that has established a property tax work-off program.
Pursuant to the agreement the taxing unit may accept, as
volunteer and public service, the services of a senior citizen
who has entered into a contract described in subsection (2) of
this section or an authorized representative.
(4) A taxing unit may provide funds or make grants to any
tax-exempt entity that has established a property tax work-off
program for use to carry out the program.
SECTION 9. ORS 311.689 is amended to read:
311.689. (1) Notwithstanding ORS 311.668 or any other provision
of ORS 311.666 to 311.701, if the individual or, in the case of
two or more individuals electing to defer property taxes jointly,
all of the individuals together, or the spouse who has filed a
claim under ORS 311.688, has federal adjusted gross income that
exceeds $32,000 for the tax year that began in the previous
calendar year, then for the tax year next beginning, the amount
of taxes for which deferral is allowed shall be reduced by $0.50
for each dollar of federal adjusted gross income in excess of
$32,000.
(2) Prior to June 1 of each year, and notwithstanding ORS
314.835, the Department of Revenue shall review returns filed
under ORS chapter 314 and 316 to determine if subsection (1) of
this section is applicable for a homestead for the tax year next
beginning. If subsection (1) of this section is applicable, the
department shall notify by mail the taxpayer or spouse electing
deferral, and the taxes otherwise to be deferred for the tax year
next beginning shall be reduced as provided in subsection (1) of
this section or, if federal adjusted gross income in excess of
$32,000 exceeds the amount of property taxes by a factor of two,
the property taxes shall not be deferred.
(3) If the taxpayer or spouse does not file a return for
purposes of ORS chapters 314 and 316 and the department has
reason to believe that the federal adjusted gross income of the
taxpayer or spouse exceeds $32,000 for the tax year that began in
the previous calendar year, the department shall notify by mail
the taxpayer or spouse electing deferral. If, within 30 days
after the notice is mailed, the taxpayer or spouse does not file
a return under ORS chapter 314 or 316 or otherwise satisfy the
department that federal adjusted gross income does not exceed
$32,000, the department shall again notify the taxpayer or
spouse, and the taxes otherwise to be deferred for the tax year
next beginning shall not be deferred.
(4) For tax years beginning on or after July 1, 2002, the
federal adjusted gross income limit set forth in subsections (1)
to (3) of this section shall be recomputed by multiplying $32,000
by the indexing factor described in ORS 311.668 (7)(a)(A), and
rounding the amount so computed to the nearest multiple of $500.
(5) Nothing in this section shall affect the continued deferral
of taxes that have been deferred for tax years beginning prior to
the tax year next beginning or the right to deferral of taxes for
a tax year beginning after the tax year next beginning if
subsection (1) is not applicable for that tax year for the
homestead.
(6) As used in this section, 'federal adjusted gross income'
means federal adjusted gross income of the individual or, in the
case of two or more individuals electing to defer property tax
jointly, the combined federal adjusted gross income of the
individuals, or the federal adjusted gross income of the spouse
who has filed a claim under ORS 311.688, all as determined for
the tax year beginning in the calendar year prior to which a
determination is required under subsection (2) of this section.
' Federal adjusted gross income' shall be determined under the
Internal Revenue Code, as amended and in effect on December 31,
{ - 2000 - } { + 2002 + }, without any of the additions,
subtractions or other modifications or adjustments required under
ORS chapter 314 or 316.
(7)(a) If, after an initial determination under this section
has been made by the department, upon audit or examination or
otherwise, it is discovered that the taxpayer or spouse had
federal adjusted gross income in excess of the limitation
provided under subsection (1) of this section, the department
shall determine the amount of taxes deferred that should not have
been deferred and give notice to the taxpayer or spouse of the
amount of taxes that should not have been deferred. The
provisions of ORS chapters 305 and 314 shall apply to a
determination of the department under this section in the same
manner as those provisions are applicable to an income tax
deficiency. The amount of deferred taxes that should not have
been deferred shall bear interest from the date paid by the
department until paid at the rate established under ORS 305.220
for deficiencies. A deficiency shall not be assessed under this
section if notice required under this section is not given to the
taxpayer or spouse within three years after the date that the
department has paid the deferred taxes to the county. Upon
payment of the amount assessed as deficiency, and interest, the
department shall execute a release in the amount of the payment
and the release shall be conclusive evidence of the removal and
extinguishment of the lien under ORS 311.666 to 311.701 to the
extent of the payment.
(b) If, after an initial determination under this section has
been made by the department, upon claim for refund, audit or
examination or otherwise, it is discovered that the taxpayer or
spouse had federal adjusted gross income in the amount of or less
than the limitation provided under subsection (1) of this
section, the department shall determine the amount of taxes
deferred that should have been deferred and give notice to the
taxpayer or spouse of the amount of taxes that should have been
deferred. The provisions of ORS chapters 305 and 314 shall apply
to a determination of the department under this section in the
same manner as those provisions are applicable to an income tax
refund. The amount of the taxes that should have been deferred
shall bear interest from the date paid by the taxpayer to the
county at the rate established under ORS 305.220 for refunds
until paid. Claim for refund under this paragraph must be filed
within three years after the earliest date that the taxpayer or
spouse is notified by the department that the taxes are not
deferred.
(8) This section applies to all tax-deferred property,
notwithstanding that election to defer taxes is made under ORS
311.666 to 311.701 before or after October 3, 1989.
SECTION 10. ORS 314.011 is amended to read:
314.011. (1) As used in this chapter, unless the context
requires otherwise, 'department' means the Department of Revenue.
(2)(a) As used in this chapter, any term has the same meaning
as when used in a comparable context in the laws of the United
States relating to federal income taxes, unless a different
meaning is clearly required or the term is specifically defined
in this chapter.
{ - (b) A reference to the laws of the United States or to
the Internal Revenue Code that relates to the definition of the
income on, in respect to or by which taxes imposed by ORS chapter
316, 317 or 318 are imposed or measured, refers to the laws of
the United States or the Internal Revenue Code as they are in
effect and applicable for the tax year of the taxpayer, except
where the Legislative Assembly has specifically provided
otherwise. - }
{ + (b) A reference to the laws of the United States or to
the Internal Revenue Code that relates to the allowance and
amount of a deduction for depreciation under section 167 or 168
or another provision of the Internal Revenue Code, to the
allowance and amount of a deduction for expensing depreciable
assets under section 179 or another provision of the Internal
Revenue Code or to the adjusted basis of an asset that is
depreciated or expensed for federal tax purposes, refers to the
laws of the United States or the Internal Revenue Code as they
are amended and in effect and applicable:
(A) On December 31, 2002; or
(B) If attributable to a change in the laws of the United
States or in the Internal Revenue Code that is enacted after
December 31, 2005, for the tax year of the taxpayer, except where
the Legislative Assembly has specifically provided otherwise.
(c) A reference to the laws of the United States or to the
Internal Revenue Code that relates to pension, profit-sharing or
stock bonus plans, deferred compensation plans, employee stock
ownership plans, individual retirement accounts (including Roth
individual retirement accounts), medical savings accounts,
education IRAs, qualified tuition savings programs or other
tax-deferred or tax-exempt savings programs benefiting
individuals, refers to the laws of the United States or to the
Internal Revenue Code as they are amended and in effect and
applicable for the tax year of the taxpayer. + }
{ - (c) - } { + (d) + } With respect to ORS 314.105,
314.256 (relating to proxy tax on lobbying expenditures), 314.260
(1)(b), 314.265 (1)(b), 314.302, 314.306, 314.330, 314.360,
314.362, 314.385, 314.402, 314.410, 314.412, 314.525, 314.742
(7), 314.750 and 314.752 and other provisions of this chapter,
except those described in { - paragraph (b) - }
{ + paragraphs (b) and (c) + } of this subsection, any reference
in this chapter to the laws of the United States or to the
Internal Revenue Code means the laws of the United States
relating to income taxes or the Internal Revenue Code as they are
amended on or before December 31, { - 2000 - } { + 2002 + },
even when the amendments take effect or become operative after
that date, except where the Legislative Assembly has specifically
provided otherwise.
(3) Insofar as is practicable in the administration of this
chapter, the department shall apply and follow the administrative
and judicial interpretations of the federal income tax law. When
a provision of the federal income tax law is the subject of
conflicting opinions by two or more federal courts, the
department shall follow the rule observed by the United States
Commissioner of Internal Revenue until the conflict is resolved.
Nothing contained in this section limits the right or duty of the
department to audit the return of any taxpayer or to determine
any fact relating to the tax liability of any taxpayer.
(4) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section refer to
rules or regulations prescribed by the Secretary of the Treasury,
then such rules or regulations shall be regarded as rules adopted
by the department under and in accordance with the provisions of
this chapter, whenever they are prescribed or amended.
(5)(a) When portions of the Internal Revenue Code incorporated
by reference as provided in subsection (2) of this section are
later corrected by an Act or a Title within an Act of the United
States Congress designated as an Act or Title making technical
corrections, then notwithstanding the date that the Act or Title
becomes law, those portions of the Internal Revenue Code, as so
corrected, shall be the portions of the Internal Revenue Code
incorporated by reference as provided in subsection (2) of this
section and shall take effect, unless otherwise indicated by the
Act or Title (in which case the provisions shall take effect as
indicated in the Act or Title), as if originally included in the
provisions of the Act being technically corrected. If, on account
of this subsection, any adjustment is required to an Oregon
return that would otherwise be prevented by operation of law or
rule, the adjustment shall be made, notwithstanding any law or
rule to the contrary, in the manner provided under ORS 314.135.
(b) As used in this subsection, 'Act or Title' includes any
subtitle, division or other part of an Act or Title.
SECTION 10a. ORS 314.385 is amended to read:
314.385. (1)(a) For purposes of ORS chapter 316, returns shall
be filed with the Department of Revenue on or before the due date
of the corresponding federal return for the tax year as
prescribed under the Internal Revenue Code and the regulations
adopted pursuant thereto, except that the final return of a
decedent shall be filed at any time following the death of the
decedent, to and including the 15th day of the fourth month after
expiration of the regular tax year of the decedent.
(b) For purposes of ORS chapters 317 and 318, returns shall be
filed with the department on or before the 15th day of the month
following the due date of the corresponding federal return for
the tax year, as prescribed under the Internal Revenue Code and
the regulations adopted pursuant thereto.
(c) The department may allow further time for filing returns
equal in length to the extension periods allowed under the
Internal Revenue Code and its regulations.
(d) If no return is required to be filed for federal income tax
purposes, the due date or extension period for a return shall be
the same as the due date, or extension period, would have been if
the taxpayer had been required to file a return for federal
income tax purposes for the tax year. However, the due date for
returns filed for purposes of ORS chapter 317 or 318 shall be on
or before the 15th day of the month following what would have
been the federal return due date for the tax year.
(2) There shall be annexed to the return a statement verified
as provided under ORS 305.810 by a declaration of the taxpayer
making the return to the effect that the statements contained
therein are true.
(3) Returns shall be in such form as the department may, from
time to time, prescribe. The department shall prepare blank forms
for the returns and distribute them throughout the state. Such
forms shall be furnished the taxpayer upon request, but failure
to receive or secure a form shall not relieve the taxpayer from
the obligation of making any return required by law.
(4) { + (a) + } The department may by rule authorize the filing
of a return in alternative formats to those described in
subsection (3) of this section and may prescribe the conditions,
requirements and technical standards for a filing under this
subsection.
{ + (b) Notwithstanding subsections (1) to (3) of this
section, the department may by rule prescribe a different due
date for a return filed in an alternative format.
(c) The policy of the Legislative Assembly in granting the
department rulemaking authority under paragraph (b) of this
subsection is to have the department prescribe due dates that
mirror the due dates that apply to federal returns filed in
alternative formats for federal tax purposes. + }
SECTION 10b. { + The amendments to ORS 314.385 by section 10a
of this 2003 Act apply to returns filed in alternative formats
for tax years beginning on or after January 1, 2003. + }
SECTION 11. ORS 315.004 is amended to read:
315.004. (1) Except when the context requires otherwise, the
definitions contained in ORS chapters 314, 316, 317 and 318 are
applicable in the construction, interpretation and application of
the personal and corporate income and excise tax credits
contained in this chapter.
(2)(a) For purposes of the tax credits contained in this
chapter, any term has the same meaning as when used in a
comparable context in the laws of the United States relating to
federal income taxes, unless a different meaning is clearly
required or the term is specifically defined for purposes of
construing, interpreting and applying the credit.
(b) With respect to the tax credits contained in this chapter,
any reference to the laws of the United States or to the Internal
Revenue Code means the laws of the United States relating to
income taxes or the Internal Revenue Code as they are amended on
or before December 31, { - 2000 - } { + 2002 + }, even when
the amendments take effect or become operative after that date.
(3) Insofar as is practicable in the administration of this
chapter, the Department of Revenue shall apply and follow the
administrative and judicial interpretations of the federal income
tax law. When a provision of the federal income tax law is the
subject of conflicting opinions by two or more federal courts,
the department shall follow the rule observed by the United
States Commissioner of Internal Revenue until the conflict is
resolved. Nothing contained in this section limits the right or
duty of the department to audit the return of any taxpayer or to
determine any fact relating to the tax liability of any taxpayer.
(4) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (2) of this section refer to
rules or regulations prescribed by the Secretary of the Treasury,
then such rules or regulations shall be regarded as rules adopted
by the department under and in accordance with the provisions of
this chapter, whenever they are prescribed or amended.
(5)(a) When portions of the Internal Revenue Code incorporated
by reference as provided in subsection (2) of this section are
later corrected by an Act or a Title within an Act of the United
States Congress designated as an Act or Title making technical
corrections, then notwithstanding the date that the Act or Title
becomes law, those portions of the Internal Revenue Code, as so
corrected, shall be the portions of the Internal Revenue Code
incorporated by reference as provided in subsection (2) of this
section and shall take effect, unless otherwise indicated by the
Act or Title (in which case the provisions shall take effect as
indicated in the Act or Title), as if originally included in the
provisions of the Act being technically corrected. If, on account
of this subsection, any adjustment is required to an Oregon
return that would otherwise be prevented by operation of law or
rule, the adjustment shall be made, notwithstanding any law or
rule to the contrary, in the manner provided under ORS 314.135.
(b) As used in this subsection, 'Act or Title' includes any
subtitle, division or other part of an Act or Title.
SECTION 12. ORS 315.266 is amended to read:
315.266. (1) In addition to any other credit available for
purposes of ORS chapter 316, an eligible resident individual
shall be allowed a credit against the tax otherwise due under ORS
chapter 316 for the tax year in an amount equal to five percent
of the earned income credit allowable to the individual for the
same tax year under section 32 of the Internal Revenue Code.
(2) An eligible nonresident individual shall be allowed the
credit computed in the same manner and subject to the same
limitations as the credit allowed a resident by subsection (1) of
this section. However, the credit shall be prorated using the
proportion provided in ORS 316.117.
(3) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue
terminates the taxpayer's taxable year under ORS 314.440, the
credit allowed by this section shall be prorated or computed in a
manner consistent with ORS 314.085.
(4) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be determined in a manner
consistent with ORS 316.117.
(5) The credit allowed under this section may not exceed the
tax liability of the taxpayer and may not be carried forward to a
succeeding tax year.
(6) The Department of Revenue may adopt rules for purposes of
this section, including but not limited to rules relating to
proof of eligibility and the furnishing of information regarding
the federal earned income credit claimed by the taxpayer for the
tax year.
(7) Refunds attributable to the earned income credit allowed
under this section shall not bear interest.
{ - (8) Notwithstanding ORS 315.004, as used in this section,
' Internal Revenue Code' means the federal Internal Revenue Code
as amended and in effect on June 8, 2001. - }
SECTION 13. ORS 315.274 is amended to read:
315.274. (1) For purposes of this section, 'qualified adoption
expenses' has the meaning given that term in section 23 of the
Internal Revenue Code.
(2) A taxpayer shall be allowed a credit against the taxes
otherwise due under ORS chapter 316 in an amount determined under
subsection (3) of this section for qualified adoption expenses
paid or incurred by the taxpayer during the tax year.
(3) The amount of the credit allowed under this section shall
be equal to the lesser of:
(a) The qualified adoption expenses paid or incurred by the
taxpayer during the tax year less the credit allowed to the
taxpayer under section 23 of the Internal Revenue Code;
(b) $1,500; or
(c) The credit allowed to the taxpayer for qualified adoption
expenses under section 23 of the Internal Revenue Code.
(4) In the case of a credit allowed under this section:
(a) A nonresident shall be allowed the credit under this
section in the proportion provided in ORS 316.117.
(b) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be determined in a manner
consistent with ORS 316.117.
(c) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue
terminates the taxpayer's taxable year under ORS 314.440, the
credit allowed under this section shall be prorated or computed
in a manner consistent with ORS 314.085.
(5) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular tax year may be
carried forward and offset against the taxpayer's tax liability
for the next succeeding tax year. Any credit remaining unused in
such 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, but may not be carried forward
for any tax year thereafter.
{ - (6) Notwithstanding ORS 315.004, as used in this section,
' Internal Revenue Code' means the federal Internal Revenue Code
as amended and in effect on June 8, 2001. - }
SECTION 14. ORS 316.012 is amended to read:
316.012. Any term used in this chapter has the same meaning as
when used in a comparable context in the laws of the United
States relating to federal income taxes, unless a different
meaning is clearly required or the term is specifically defined
in this chapter. Any reference in this chapter to the laws of the
United States or to the Internal Revenue Code { - means - } :
{ - (1) In the case of a reference relating to the definition
of the income on, in respect to or by which the tax imposed by
this chapter is imposed or measured, the laws of the United
States relating to income taxes or the Internal Revenue Code as
they are in effect and applicable for the tax year of the
taxpayer, except where the Legislative Assembly has specifically
provided otherwise; or - }
{ + (1) That relates to the allowance and amount of a
deduction for depreciation under section 167 or 168 or another
provision of the Internal Revenue Code, to the allowance and
amount of a deduction for expensing depreciable assets under
section 179 or another provision of the Internal Revenue Code or
to the adjusted basis of an asset that is depreciated or expensed
for federal tax purposes, refers to the laws of the United States
or the Internal Revenue Code as they are amended and in effect
and applicable:
(a) On December 31, 2002; or
(b) If attributable to a change in the laws of the United
States or in the Internal Revenue Code that is enacted after
December 31, 2005, for the tax year of the taxpayer, except where
the Legislative Assembly has specifically provided otherwise; or
(2) That relates to pension, profit-sharing or stock bonus
plans, deferred compensation plans, employee stock ownership
plans, individual retirement accounts (including Roth individual
retirement accounts), medical savings accounts, education IRAs,
qualified tuition savings programs or other tax-deferred or
tax-exempt savings programs benefiting individuals, refers to the
laws of the United States or to the Internal Revenue Code as they
are amended and in effect and applicable for the tax year of the
taxpayer; or + }
{ - (2) - } { + (3) Means, + } in the case of a reference
for any other purpose, as these laws are amended and in effect on
December 31,
{ - 2000 - } { + 2002 + }, except where the Legislative
Assembly has specifically provided otherwise.
SECTION 15. ORS 316.014 is amended to read:
316.014. (1) In the computation of state taxable income the net
operating loss, net operating loss carryback and net operating
loss carryforward shall be the same as that contained in the
Internal Revenue Code as it { - exists at the close of - }
{ + applies to + } the tax year for which the return is filed
and shall not be adjusted for any changes or modifications
contained in this chapter or by the case law of this state.
(2) In the case of a nonresident, the net operating loss
deduction, net operating loss carryback and net operating loss
carryforward shall be that described in subsection (1) of this
section which is attributable to Oregon sources.
(3) If any provision in ORS 316.047 or 316.127 appears to
require an adjustment to a net operating loss, net operating loss
carryback or net operating loss carryforward contrary to the
provisions of this section, that adjustment shall not be made.
SECTION 16. ORS 316.162 is amended to read:
316.162. As used in ORS 316.162 to 316.212:
(1) 'Number of withholding exemptions claimed' means the number
of withholding exemptions claimed in a withholding exemption
certificate in effect under ORS 316.182, except that if no such
certificate is in effect, the number of withholding exemptions
claimed is considered to be zero.
(2) 'Wages' means remuneration for services performed by an
employee for an employer, including the cash value of all
remuneration paid in any medium other than cash, except that '
wages' does not include remuneration paid:
(a) For active service in the Armed Forces of the United States
as to which no withholding is required by the Internal Revenue
Code.
(b) To an employee of a common carrier to the extent that 49
U.S.C. 14503 and 40116 prohibit the remuneration from withholding
for state income taxes.
(c) For domestic service in a private home, a local college
club or a local chapter of a college fraternity or sorority.
(d) For casual labor not in the course of the employer's trade
or business.
(e) To an employee whose services to the employer consist
solely of labor in connection with the planting, cultivating or
harvesting of seasonal agricultural crops if the total amount
paid to such employee is less than $300 annually.
(f) To seamen who are exempt from garnishment, attachment or
execution under title 46 of the United States Code.
(g) To persons temporarily employed as emergency forest fire
fighters.
(h) To employees' trusts exempt from tax under provisions of
the federal Internal Revenue Code.
(i) For services performed by a duly ordained, commissioned or
licensed minister of a church in the exercise of the minister's
ministry or by a member of a religious order in the exercise of
religious duties required by such order, which duties are not
commercial in nature.
(j) For services performed by an independent contractor, as
that term is defined in ORS 670.600.
{ + (k) To or on behalf of an employee, a beneficiary of an
employee or an alternate payee under or to an eligible deferred
compensation plan that, at the time of the payment, is a plan
described in section 457(b) of the Internal Revenue Code and that
is maintained by an eligible employer described in section
457(e)(1)(A) of the Internal Revenue Code. + }
{ - (k) - } { + (L) + } When the remuneration is exempt
from taxation under this chapter.
(3) 'Employer' means:
(a) A person who is in such relation to another person that the
person may control the work of that other person and direct the
manner in which it is to be done; or
(b) An officer or employee of a corporation, or a member or
employee of a partnership, who as such officer, employee or
member is under a duty to perform the acts required of employers
by ORS 316.167, 316.182, 316.197, 316.202 and 316.207.
SECTION 17. ORS 316.189 is amended to read:
316.189. (1) As used in this section:
(a) 'Commercial annuity' means an annuity, endowment or life
insurance contract issued by an insurance company authorized to
transact insurance in the State of Oregon.
(b) 'Department' means the Oregon Department of Revenue.
(c) 'Designated distribution' means any distribution or payment
from or under an employer deferred compensation plan, an
individual retirement plan or a commercial annuity. 'Designated
distribution' does not include any amount treated as wages as
defined in ORS 316.162, the portion of any distribution or
payment that is not includable in the gross income of the
recipient or any distribution or payment made under section
404(k)(2) of the Internal Revenue Code.
(d) 'Employer deferred compensation plan' means any pension,
annuity, profit-sharing or stock bonus plan or other plan
deferring the receipt of compensation.
(e) 'Individual retirement plan' means an individual retirement
account described in section 408(a) of the Internal Revenue Code
or an individual retirement annuity described in section 408(b)
of the Internal Revenue Code.
(f) 'Nonperiodic distribution' means any designated
distribution which is not a periodic payment.
(g) 'Payer' means any payer of a designated distribution doing
business in or making payments or distributions from sources in
this state.
(h) 'Periodic payment' means a designated distribution which is
an annuity or similar periodic payment.
(i) 'Plan administrator' means a plan administrator as
described in section 414(g) of the Internal Revenue Code, who is
the administrator of a plan created by an Oregon employer.
(j) 'Qualified total distribution' means any designated
distribution made under a retirement { + , + } { - or - }
annuity { + or deferred compensation + } plan described in
section 401(a) { + , + } { - or - } 403(a) { + or 457(b) + }
of the Internal Revenue Code, { - which - } { + that + }
consists of the balance to the credit of the employee, exclusive
of accumulated deductible employee contributions, made within one
{ - taxable - } { + tax + } year of the recipient.
(2)(a) The payer of any periodic payment shall withhold from
such payment the amount which would be required to be withheld
from such payment under ORS 316.167 if the payment were wages
paid by an employer to an employee. The time and manner of
payment of withheld amounts to the department shall be the same
as that required under ORS 316.197 for withholding of income
taxes from wages.
(b) The payer of any nonperiodic distribution shall withhold
from such distribution an amount determined under tables
prescribed by the department.
(c) The maximum amount to be withheld under this section on any
designated distribution shall not exceed 10 percent of the amount
of money and the fair market value of other property received in
the distribution. If the distribution is not subject to
withholding for federal income tax purposes under section 3405 of
the Internal Revenue Code, it shall not be subject to withholding
under this section.
(3)(a) Except as provided in paragraph (b) of this subsection,
the payer of a designated distribution shall withhold and be
liable for payment of amounts required to be withheld under this
section.
(b) In the case of any plan described in section
401(a) { + , + } { - or section - } 403(a) { + or 457(b) + }
of the Internal Revenue Code, or section 301(d) of the Tax
Reduction Act of 1975, the plan administrator shall withhold and
be liable for payment of amounts required to be withheld under
this section, unless the plan administrator has directed the
payer to withhold the tax and has provided the payer with the
information required by rule of the department.
(4)(a) An individual may elect to have no withholding by a
payer under subsection (2) of this section. If an individual has
elected to have no federal withholding from payments or
distributions described in this section the individual shall be
deemed to have elected no withholding for state purposes, unless
the individual notifies the payer otherwise.
(b) An election made under this subsection shall be effective
as provided under rules promulgated by the department. The rules
required under this paragraph shall provide the manner in which
an election may be revoked and when such revocation shall be
effective.
(5) The payer of any periodic payment or nonperiodic
distribution shall give notice to the payee of the right to make
an election to have no state withholding from the payment or
distribution. The department shall provide by rule for the time
and manner of giving the notice required under this subsection.
(6) Any rules permitted or required to be promulgated by the
department under this section shall, insofar as is practicable,
be consistent with corresponding provisions of section 3405 of
the Internal Revenue Code and regulations promulgated thereunder.
(7) Any designated distribution shall be treated as if it were
wages paid by an employer to an employee within the meaning of
ORS 316.162 to 316.212 for all other purposes of ORS 316.162 to
316.212. In the case of any designated distribution not subject
to withholding by reason of an election under subsection (4) of
this section, the amount withheld shall be treated as zero.
SECTION 18. ORS 316.681 is amended to read:
316.681. ORS 316.680 (1)(a) shall apply to the interest or
dividends described under ORS 316.680 (1)(a) to the extent such
interest or dividends are includable in arriving at federal
taxable income as distributions from plans to benefit the
self-employed or from individual retirement accounts described
under sections 401 to { - 408 - } { + 408A + } of the
Internal Revenue Code.
SECTION 19. ORS 317.010 is amended to read:
317.010. As used in this chapter, unless the context requires
otherwise:
(1) 'Centrally assessed corporation' means every corporation
the property of which is assessed by the Department of Revenue
under ORS 308.505 to 308.665.
(2) 'Department' means the Department of Revenue.
(3)(a) 'Consolidated federal return' means the return permitted
or required to be filed by a group of affiliated corporations
under section 1501 of the Internal Revenue Code.
(b) 'Consolidated state return' means the return required to be
filed under ORS 317.710 (5).
(4) 'Doing business' means any transaction or transactions in
the course of its activities conducted within the state by a
national banking association, or any other corporation; provided,
however, that a foreign corporation whose activities in this
state are confined to purchases of personal property, and the
storage thereof incident to shipment outside the state, shall not
be deemed to be doing business unless such foreign corporation is
an affiliate of another foreign or domestic corporation which is
doing business in Oregon. Whether or not corporations are
affiliated shall be determined as provided in section 1504 of the
Internal Revenue Code.
(5) 'Excise tax' means a tax measured by or according to net
income imposed upon national banking associations, all other
banks, and financial, centrally assessed, mercantile,
manufacturing and business corporations for the privilege of
carrying on or doing business in this state.
(6) 'Financial institution' or 'financial corporation ' means a
bank or trust company organized under ORS chapter 707, national
banking association or production credit association organized
under federal statute, building and loan association, savings and
loan association, mutual savings bank, and any other corporation
whose principal business is in direct competition with national
and state banks.
(7) 'Internal Revenue Code' { - means - } :
{ - (a) In the case of a reference relating to the definition
of the income on, in respect to or by which the tax imposed by
this chapter is imposed or measured, the laws of the United
States relating to income taxes as they are in effect and
applicable for the tax year of the taxpayer; or - }
{ + (a) In the case of a reference that relates to the
allowance and amount of a deduction for depreciation under
section 167 or 168 or another provision of the Internal Revenue
Code, to the allowance and amount of a deduction for expensing
depreciable assets under section 179 or another provision of the
Internal Revenue Code or to the adjusted basis of an asset that
is depreciated or expensed for federal tax purposes, refers to
the laws of the United States or the Internal Revenue Code as
they are amended and in effect and applicable:
(A) On December 31, 2002; or
(B) If attributable to a change in the laws of the United
States or in the Internal Revenue Code that is enacted after
December 31, 2005, for the tax year of the taxpayer, except where
the Legislative Assembly has specifically provided otherwise; or
(b) In the case of a reference that relates to pension,
profit-sharing or stock bonus plans, deferred compensation plans,
employee stock ownership plans, individual retirement accounts
(including Roth individual retirement accounts), medical savings
accounts, education IRAs, qualified tuition savings programs or
other tax-deferred or tax-exempt savings programs benefiting
individuals, refers to the laws of the United States or to the
Internal Revenue Code as they are amended and in effect and
applicable for the tax year of the taxpayer; or + }
{ - (b) - } { + (c) Means, + } in the case of a reference
for any other purpose, the laws of the United States relating to
income taxes
{ - as they - } { + or the Internal Revenue Code as these
laws + } are amended and in effect on December 31, { - 2000 - }
{ + 2002 + }, except where the Legislative Assembly has
specifically provided otherwise.
(8) 'Oregon taxable income' means taxable income, less the
deduction allowed under ORS 317.476, except as otherwise provided
with respect to insurers in subsection (11) of this section and
ORS 317.650 to 317.665.
(9) 'Oregon net loss' means taxable loss, except as otherwise
provided with respect to insurers in subsection (11) of this
section and ORS 317.650 to 317.665.
(10) 'Taxable income or loss' means the taxable income or loss
determined, or in the case of a corporation for which no federal
taxable income or loss is determined, as would be determined,
under chapter 1, Subtitle A of the Internal Revenue Code and any
other laws of the United States relating to the determination of
taxable income or loss of corporate taxpayers, with the
additions, subtractions, adjustments and other modifications as
are specifically prescribed by this chapter except that in
determining taxable income or loss for any year, no deduction
under ORS 317.476 or 317.478 and section 45b, chapter 293, Oregon
Laws 1987, shall be allowed. If the corporation is a corporation
to which ORS 314.280 or 314.605 to 314.675 (requiring or
permitting apportionment of income from transactions or
activities carried on both within and without the state) applies,
to derive taxable income or loss, the following shall occur:
(a) From the amount otherwise determined under this subsection,
subtract nonbusiness income, or add nonbusiness loss, whichever
is applicable.
(b) Multiply the amount determined under paragraph (a) of this
subsection by the Oregon apportionment percentage defined under
ORS 314.280, 314.650 or 314.670, whichever is applicable. The
resulting product shall be Oregon apportioned income or loss.
(c) To the amount determined as Oregon apportioned income or
loss under paragraph (b) of this subsection, add nonbusiness
income allocable entirely to Oregon under ORS 314.280 or 314.625
to 314.645, or subtract nonbusiness loss allocable entirely to
Oregon under ORS 314.280 or 314.625 to 314.645. The resulting
figure is 'taxable income or loss' for those corporations
carrying on taxable transactions or activities both within and
without Oregon.
(11) As used in ORS 317.122 and 317.650 to 317.665, ' insurer'
means any domestic, foreign or alien insurer as defined in ORS
731.082 and any interinsurance and reciprocal exchange and its
attorney in fact with respect to its attorney in fact net income
as a corporate attorney in fact acting as attorney in compliance
with ORS 731.458, 731.462, 731.466 and 731.470 for the reciprocal
or interinsurance exchange. However, 'insurer' does not include
title insurers or health care service contractors operating
pursuant to ORS 750.005 to 750.095.
SECTION 20. ORS 317.013 is amended to read:
317.013. (1) Those portions of { - chapter 1 and subchapter
A, chapter 6, Subtitle A and chapter 79, Subtitle F, - } { +
the + } Internal Revenue Code, and any other laws of the United
States pertaining to the determination of taxable income of
corporate taxpayers, are adopted by reference as a part of this
chapter. Those portions of the Internal Revenue Code and other
laws of the United States have full force and effect under this
chapter unless modified by other provisions of this chapter.
(2) Insofar as is practicable in the administration of this
chapter, the Department of Revenue shall apply and follow the
administrative and judicial interpretations of the federal income
tax law. When a provision of the federal income tax law is the
subject of conflicting opinions by two or more federal courts,
the department shall follow the rule observed by the United
States Commissioner of Internal Revenue until the conflict is
resolved. Nothing contained in this section limits the right or
duty of the department to audit the return of any taxpayer or to
determine any fact relating to the tax liability of any taxpayer.
(3) When portions of the Internal Revenue Code incorporated by
reference as provided in subsection (1) of this section refer to
rules or regulations prescribed by the Secretary of the Treasury,
they are regarded as rules adopted by the department under and in
accord with the provisions of this chapter, whenever they are
prescribed or amended.
(4)(a) When portions of the Internal Revenue Code incorporated
by reference as provided in subsection (1) of this section are
later corrected by an Act or Title within an Act of the United
States Congress designated as an Act or Title making technical
corrections, then notwithstanding the date that the Act or Title
becomes law, those portions of the Internal Revenue Code, as so
corrected, shall be the portions of the Internal Revenue Code
incorporated by reference as provided in this section or ORS
317.010 or 317.018 and shall take effect, unless otherwise
indicated by the Act or Title (in which case the provisions shall
take effect as indicated in the Act or Title) as if originally
included in the Act being technically corrected. If, on account
of this subsection, any adjustment is required to an Oregon
return that would otherwise be prevented by operation of law or
rule, the adjustment shall be made, notwithstanding any law or
rule to the contrary, in the manner provided under ORS 314.135.
(b) As used in this subsection, 'Act or Title' includes any
subtitle, division or other part of an Act or Title.
SECTION 21. ORS 317.267 is amended to read:
317.267. (1) To derive Oregon taxable income, there shall be
added to federal taxable income amounts received as dividends
from corporations deducted for federal purposes pursuant to
section 243 or 245 { + of the Internal Revenue Code + }, except
245(c) { + of the Internal Revenue Code + }, amounts paid as
dividends by a public utility or telecommunications utility and
deducted for federal purposes pursuant to section 247 of the
Internal Revenue Code or dividends eliminated under Treasury
Regulations adopted under section 1502 of the Internal Revenue
Code that are paid by members of an affiliated group that are
eliminated from a consolidated federal return pursuant to ORS
317.715 (2).
(2) To derive Oregon taxable income, after the modification
prescribed under subsection (1) of this section, there shall be
subtracted from federal taxable income an amount equal to 70
percent of dividends (determined without regard to section 78 of
the Internal Revenue Code) received or deemed received from
corporations if such dividends are included in federal taxable
income. However:
(a) In the case of any dividend on debt-financed portfolio
stock as described in section 246A of the Internal Revenue Code,
the subtraction allowed under this subsection shall be reduced
under the same conditions and in same amount as the dividends
received deduction otherwise allowable for federal income tax
purposes is reduced under section 246A of the Internal Revenue
Code.
(b) No subtraction shall be allowed under this subsection if
the dividends received or deemed received are from the Oregon
Capital Corporation established pursuant to ORS 284.750 to
284.770.
(c) In the case of any dividend received from a 20 percent
owned corporation, as defined in section 243(c) of the Internal
Revenue Code, this subsection shall be applied by substituting '
80 percent' for '70 percent. '
(3) There shall be excluded from the sales factor of any
apportionment formula employed to attribute income to this state
any amount subtracted from federal taxable income under
subsection (2) of this section.
SECTION 22. ORS 317.351 is amended to read:
317.351. Notwithstanding ORS 317.349, finance leases as
described in section 168(f)(8) of the Internal Revenue Code { + ,
as that section was amended and in effect for purposes of ORS
317.349, + } shall be accorded the same treatment for Oregon tax
purposes as they are for federal tax purposes.
SECTION 23. { + (1) The amendments to statutes by sections 1
to 22 of this 2003 Act apply to transactions or activities
occurring on or after January 1, 2003, in tax years beginning on
or after January 1, 2003.
(2) The effective and applicable dates, and the exceptions,
special rules and coordination with the Internal Revenue Code, as
amended, relative to those dates, contained in the Economic
Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16)
and the Job Creation and Worker Assistance Act of 2002 (P.L.
107-147) apply for Oregon personal income and corporate excise
and income tax purposes, to the extent they can be made
applicable, in the same manner as they are applied under the
Internal Revenue Code and related federal law.
(3)(a) If a deficiency is assessed against any taxpayer for a
tax year beginning before January 1, 2003, and the deficiency, or
any portion thereof, is attributable to any retroactive treatment
under the amendments to statutes by sections 1 to 22 of this 2003
Act, then any interest or penalty assessed under ORS chapter 305,
314, 315, 316, 317 or 318 with respect to the deficiency or
portion thereof shall be canceled.
(b) If a refund is due any taxpayer for a tax year beginning
before January 1, 2003, and the refund or any portion thereof is
due the taxpayer on account of any retroactive treatment under
the amendments to statutes by sections 1 to 22 of this 2003 Act,
then notwithstanding ORS 305.270 or 314.415 or other law, the
refund or portion thereof shall be paid without interest.
(c) Any changes required because of the amendments to statutes
by sections 1 to 22 of this 2003 Act for a tax year beginning
before January 1, 2003, shall be made by filing an amended return
within the time prescribed by law.
(d) If a taxpayer fails to file an amended return under
paragraph (c) of this subsection, the Department of Revenue shall
make any changes under paragraph (c) of this subsection on the
return to which the changes relate within the period specified
for issuing a notice of deficiency or claiming a refund as
otherwise provided by law with respect to that return, or within
one year after a return for a tax year beginning on or after
January 1, 2003, and before January 1, 2004, is filed, whichever
period expires later. + }
SECTION 24. 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
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:
(a) The income of an S corporation for federal income tax
purposes derived from or connected with sources in this state
constitutes income derived from sources within this state for a
nonresident individual who is a shareholder of the S corporation;
and
(b) A net operating loss of an S corporation derived from or
connected with sources in this state constitutes a loss or
deduction connected with sources in this state for a nonresident
individual who is a shareholder of the S corporation.
(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 to a nonresident for services performed
by the nonresident 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 4 U.S.C. 114, as
amended and in effect for the tax period.
(10) Compensation { + for the performance of duties described
in this subsection that is + } 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 25. { + The amendments to ORS 316.127 by section 24 of
this 2003 Act apply to tax years beginning on or after January 1,
1999. + }
SECTION 26. { + ORS 316.729 is repealed. + }
SECTION 27. { + This 2003 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-second
Legislative Assembly adjourns sine die. + }
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