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 1789
 
                         House Bill 2746
 
Sponsored by Representative DINGFELDER, Senator RINGO;
  Representative HASS
 
 
                             SUMMARY
 
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
 
  Reduces Oregon deductions, subtractions and credits by three
percent in computing personal income tax or corporate excise or
income tax.
  Applies to tax years beginning on or after January 1, 2003, and
before January 1, 2005.
  Takes effect on 91st day following adjournment sine die.
 
                        A BILL FOR AN ACT
Relating to taxation; prescribing an effective date; and
  providing for revenue raising that requires approval by a
  three-fifths majority.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Section 2 of this 2003 Act is added to and made
a part of ORS chapter 316. + }
  SECTION 2.  { + Notwithstanding any other law for determining
personal income taxes under the tax laws of this state:
  (1) A personal income taxpayer shall compute the total amount
of Oregon deductions being claimed for the tax year as a positive
number, prior to taking into account any Oregon additions. The
total amount of Oregon deductions must include the basic standard
deduction described in ORS 316.695 if the basic standard
deduction is being claimed by the taxpayer. The taxpayer shall
reduce the total amount of Oregon deductions by three percent,
and then shall deduct the reduced total amount of Oregon
deductions from taxable income allocated or apportioned to
Oregon. The taxpayer shall then add any applicable additions to
taxable income.
  (2) After application of subsection (1) of this section, the
taxpayer shall compute the total amount of Oregon subtractions
claimed for the tax year as a positive number, prior to taking
into account any Oregon additions not taken into account under
subsection (1) of this section. The taxpayer shall reduce the
total amount of Oregon subtractions by three percent, and then
shall subtract the reduced total amount of Oregon subtractions
from taxable income allocated or apportioned to Oregon. The
taxpayer shall then add any applicable additions to taxable
income that were not taken into account under subsection (1) of
this section to arrive at Oregon taxable income.
  (3) If, after applying subsections (1) and (2) of this section,
the taxpayer has negative or zero Oregon taxable income and the
taxpayer is not claiming a refundable tax credit, the taxpayer
does not owe any personal income tax for the tax year.  The
taxpayer shall still comply with any filing requirements that,
but for this section, would be applicable.
  (4) If, after applying subsections (1) and (2) of this section,
the taxpayer has positive Oregon taxable income and is not
applying for a refundable credit, the taxpayer shall compute a
positive amount that is equal to the total amount of credits
claimed for the tax year, and then shall reduce that amount by
three percent. The taxpayer shall then subtract the reduced total
amount of credits from the tax liability computed after
application of subsections (1) and (2) of this section. If the
tax liability of the taxpayer as computed under this section is:
  (a) A negative amount or zero, the taxpayer does not owe any
tax for the tax year. The taxpayer shall still comply with any
filing requirements that, but for this section, would be
applicable.
  (b) A positive amount, that amount is the taxpayer's tax
liability for the tax year.
  (5) If the taxpayer is claiming a refundable credit for the tax
year, the taxpayer shall ascertain whether Oregon taxable income
after application of subsections (1) and (2) of this section is a
positive number, a negative number or zero. If Oregon taxable
income is:
  (a) A negative number or zero, the taxpayer shall compute a
positive amount equal to the total amount of refundable credit to
be claimed and shall reduce the total amount of refundable credit
by three percent. The reduced amount of the refundable credit
shall be the amount to be refunded to the taxpayer.
  (b) A positive number, the taxpayer shall compute the
taxpayer's tax liability as prescribed under subsection (4) of
this section without regard to whether the computed tax liability
is a positive number, a negative number or zero. If the
taxpayer's tax liability under subsection (4) of this section is:
  (A) A negative number or zero, the taxpayer shall compute a
positive amount equal to the total amount of refundable credit to
be claimed, and then shall reduce the total amount of refundable
credit by three percent. The reduced amount of the credit shall
be the amount to be refunded to the taxpayer.
  (B) A positive number, the taxpayer shall compute a positive
amount equal to the total amount of refundable credit to be
claimed, and then shall reduce the total amount of refundable
credit by three percent. The taxpayer shall then subtract the
reduced total amount of refundable credit from the taxpayer's tax
liability after application of subsection (4) of this section. If
the amount computed under this subparagraph is:
  (i) A positive amount, that amount is the taxpayer's tax
liability for the tax year.
  (ii) A negative amount, that amount shall be the amount
refunded to the taxpayer.
  (iii) Zero, a refund may not be made to the taxpayer. + }
  SECTION 3.  { + Section 2 of this 2003 Act applies to tax years
beginning on or after January 1, 2003, and before January 1,
2005. + }
  SECTION 4.  { + Section 5 of this 2003 Act is added to and made
a part of ORS chapter 317. + }
  SECTION 5.  { + Notwithstanding any other law for determining
corporate excise taxes under the tax laws of this state:
  (1) A corporate excise taxpayer shall compute the total amount
of Oregon deductions being claimed for the tax year as a positive
number, prior to taking into account any Oregon additions. The
taxpayer shall reduce the total amount of Oregon deductions by
three percent, and then shall deduct the reduced total amount of
Oregon deductions from taxable income allocated or apportioned to
Oregon. The taxpayer shall then add any applicable additions to
taxable income.
  (2) After application of subsection (1) of this section, the
taxpayer shall compute the total amount of Oregon subtractions
claimed for the tax year as a positive number, prior to taking
into account any Oregon additions not taken into account under
subsection (1) of this section. The taxpayer shall reduce the
total amount of Oregon subtractions by three percent, and then
shall subtract the reduced total amount of Oregon subtractions
from taxable income allocated or apportioned to Oregon. The
taxpayer shall then add any applicable additions to taxable
income that were not taken into account under subsection (1) of
this section to arrive at Oregon taxable income.
  (3) If, after applying subsections (1) and (2) of this section,
the taxpayer has negative or zero Oregon taxable income, the
taxpayer does not owe any corporate excise tax for the tax year.
The taxpayer shall still comply with any filing requirements
that, but for this section, would be applicable.
  (4) If, after applying subsections (1) and (2) of this section,
the taxpayer has positive Oregon taxable income, the taxpayer
shall compute a positive amount equal to the total amount of
credits claimed for the tax year, and then shall reduce that
amount by three percent. The taxpayer shall then subtract the
reduced total amount of credits from the tax liability computed
after application of subsections (1) and (2) of this section. If
the tax liability of the taxpayer as computed under this section
is:
  (a) A negative amount or zero, the taxpayer does not owe any
tax for the tax year. The taxpayer shall still comply with any
filing requirements that, but for this section, would be
applicable.
  (b) A positive amount, that amount is the taxpayer's tax
liability for the tax year. + }
  SECTION 6.  { + Section 5 of this 2003 Act applies to tax years
beginning on or after January 1, 2003, and before January 1,
2005. + }
  SECTION 7.  { + Section 8 of this 2003 Act is added to and made
a part of ORS chapter 318. + }
  SECTION 8.  { + Notwithstanding any other law for determining
corporate income taxes under the tax laws of this state:
  (1) A corporate income taxpayer shall compute the total amount
of Oregon deductions being claimed for the tax year as a positive
number, prior to taking into account any Oregon additions. The
taxpayer shall reduce the total amount of Oregon deductions by
three percent, and then shall deduct the reduced total amount of
Oregon deductions from taxable income allocated or apportioned to
Oregon. The taxpayer shall then add any applicable additions to
taxable income.
  (2) After application of subsection (1) of this section, the
taxpayer shall compute the total amount of Oregon subtractions
claimed for the tax year as a positive number, prior to taking
into account any Oregon additions not taken into account under
subsection (1) of this section. The taxpayer shall reduce the
total amount of Oregon subtractions by three percent, and then
shall subtract the reduced total amount of Oregon subtractions
from taxable income allocated or apportioned to Oregon. The
taxpayer shall then add any applicable additions to taxable
income that were not taken into account under subsection (1) of
this section to arrive at Oregon taxable income.
  (3) If, after applying subsections (1) and (2) of this section,
the taxpayer has negative or zero Oregon taxable income, the
taxpayer does not owe any tax for the tax year. The taxpayer
shall still comply with any filing requirements that, but for
this section, would be applicable.
  (4) If, after applying subsections (1) and (2) of this section,
the taxpayer has positive Oregon taxable income, the taxpayer
shall compute a positive amount equal to the total amount of
credits claimed for the tax year, and then shall reduce that
amount by three percent. The taxpayer shall then subtract the
reduced total amount of credits from the tax liability computed
after application of subsections (1) and (2) of this section. If
the tax liability of the taxpayer as computed under this section
is:
  (a) A negative amount or zero, the taxpayer does not owe any
tax for the tax year. The taxpayer shall still comply with any
filing requirements that, but for this section, would be
applicable.
  (b) A positive amount, that amount is the taxpayer's tax
liability for the tax year. + }
  SECTION 9.  { + Section 8 of this 2003 Act applies to tax years
beginning on or after January 1, 2003, and before January 1,
2005. + }
  SECTION 10.  { + Section 11 of this 2003 Act is added to and
made a part of ORS 314.505 to 314.525. + }
  SECTION 11.  { + For tax years beginning on or after January 1,
2003, and before January 1, 2004, any interest or penalty imposed
on a taxpayer for the underpayment of estimated tax may not
exceed the amount of penalty or interest that would have been
imposed on the taxpayer if section 2, 5 or 8 of this 2003 Act had
not been enacted. + }
  SECTION 12.  { + Section 13 of this 2003 Act is added to and
made a part of ORS 316.162 to 316.212. + }
  SECTION 13.  { + For tax years beginning on or after January 1,
2003, and before January 1, 2004, any interest or penalty imposed
on a taxpayer for the underpayment of withholding tax may not
exceed the amount of penalty or interest that would have been
imposed on the taxpayer if section 2, 5 or 8 of this 2003 Act had
not been enacted. + }
  SECTION 14.  { + 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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