Chapter 519 Oregon Laws 2005

AN ACT

HB 2933

Relating to tax liabilities of military personnel; creating new provisions; amending ORS 314.011 and 316.012; and prescribing an effective date.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Section 2 of this 2005 Act is added to and made a part of ORS chapter 314.

SECTION 2. (1) This section applies to a taxpayer who was a member of the Armed Forces of the United States who was on active duty for 90 consecutive days or more or who was a member of the Oregon National Guard, the military reserve forces or the organized militia of any other state or territory of the United States who performed service in a status under Title 10 of the United States Code for a period of 90 consecutive days or more, and who died during the performance of that service.

(2) If a taxpayer described in subsection (1) of this section had a tax liability for a tax due under ORS chapter 316, the tax liability, and all interest and penalties associated with any unpaid portion of the tax liability, shall be discharged and shall be deemed wholly satisfied for the taxpayer.

SECTION 3. Section 2 of this 2005 Act applies to deaths of taxpayers described in section 2 of this 2005 Act that occurred on or after September 11, 2001.

SECTION 4. Notwithstanding ORS 314.415 or any other law limiting the period for which a claim for refund of taxes may be made, the liability discharged under section 2 of this 2005 Act may be allowed if filed on or before December 31, 2006.

SECTION 5. Section 6 of this 2005 Act is added to and made a part of ORS chapter 314.

SECTION 6. (1) This section applies to a taxpayer who is a member of the Armed Forces of the United States who is on active duty for 90 consecutive days or more or who is a member of the Oregon National Guard, the military reserve forces or the organized militia of any other state or territory of the United States who performs service in a status under Title 10 of the United States Code for a period of 90 consecutive days or more.

(2) If a taxpayer described in subsection (1) of this section has an unpaid tax liability for a tax due under ORS chapter 316 that arose during a period in which service is performed as described in subsection (1) of this section, the unpaid tax liability, and all interest and penalties associated with the unpaid tax liability, shall be held in abeyance until a date that is six months after the date that the taxpayer’s active duty or status under Title 10 of the United States Code ceases.

SECTION 7. Section 6 of this 2005 Act applies to unpaid tax liability of taxpayers described in section 6 of this 2005 Act that was incurred during periods of military service that occurred on or after September 11, 2001.

SECTION 8. 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) Except where the Legislative Assembly has provided otherwise, a reference to the laws of the United States or to the Internal Revenue Code refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect:

(A) On December 31, 2002; or

(B) If related to the definition of taxable income and attributable to a change in the laws of the United States or in the Internal Revenue Code that is enacted after December 31, 2005, as applicable to the tax year of the taxpayer.

(c) A reference to the laws of the United States or to the Internal Revenue Code 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, if the reference relates to:

(A) 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; [or]

(B) The allowance and amount of a deduction 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 of the Internal Revenue Code or to the adjusted basis of an asset that is depreciated or expensed for federal tax purposes[.]; or

(C) The allowance of an exclusion for combat zone compensation received by a member of the armed forces and excluded from federal taxable income under section 112 of the Internal Revenue Code.

(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 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, 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 9. 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. Except where the Legislative Assembly has provided otherwise, any reference in this chapter to the laws of the United States or to the Internal Revenue Code:

(1) Refers to the laws of the United States or to the Internal Revenue Code as they are amended and in effect:

(a) On December 31, 2002; or

(b) If related to the definition of taxable income and attributable to a change in the laws of the United States or in the Internal Revenue Code that is enacted after December 31, 2005, as applicable to the tax year of the taxpayer.

(2) 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, if the reference relates to:

(a) 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; [or]

(b) The allowance and amount of a deduction 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 of the Internal Revenue Code or to the adjusted basis of an asset that is depreciated or expensed for federal tax purposes[.]; or

(c) The allowance of an exclusion for combat zone compensation received by a member of the armed forces and excluded from federal taxable income under section 112 of the Internal Revenue Code.

SECTION 10. The amendments to ORS 314.011 and 316.012 by sections 8 and 9 of this 2005 Act apply to:

(1) Tax years beginning on or after January 1, 2001; or

(2) Any tax year affected by any provision of the Military Family Tax Relief Act of 2003 (P.L. 108-121).

SECTION 11. Section 12 of this 2005 Act is added to and made a part of ORS chapter 316.

SECTION 12. Compensation, including death gratuity and other qualified military benefits described in section 134 of the Internal Revenue Code, received by a member of the Oregon National Guard, the military reserve forces or the organized militia of any other state or territory of the United States, that is attributable to service performed after a change in status from Title 32 to Title 10 of the United States Code, and before the termination of Title 10 status, is exempt from taxation under this chapter.

SECTION 13. Section 12 of this 2005 Act applies to tax years beginning on or after January 1, 2001.

SECTION 14. (1) Notwithstanding ORS 305.270 or 314.415 or other law limiting the period of time for which a refund of personal income tax may be made, a taxpayer may file a claim for refund of tax paid for a tax year beginning on or after January 1, 2001, and before January 1, 2002, if the claim for refund is based on the inclusion within gross income of compensation described in section 12 of this 2005 Act.

(2) The Department of Revenue shall refund amounts due for a claim described in subsection (1) of this section if the claim is allowable and the claim has been filed with the department before July 1, 2006.

SECTION 15. Section 14 of this 2005 Act is repealed on January 2, 2007.

SECTION 16. This 2005 Act takes effect on the 91st day after the date on which the regular session of the Seventy-third Legislative Assembly adjourns sine die.

Approved by the Governor July 15, 2005

Filed in the office of Secretary of State July 15, 2005

Effective date November 4, 2005

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