73rd OREGON LEGISLATIVE ASSEMBLY--2005 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 1088
Senate Bill 439
Sponsored by Senator C STARR; Senators ATKINSON, BEYER, FERRIOLI,
GEORGE, KRUSE, MORSE, B STARR, WHITSETT, WINTERS,
Representatives KROPF, SCOTT
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.
Establishes automatic connection to changes in federal law that
are related to definition of taxable income. Establishes
connection date of December 31, 2004, for changes to Internal
Revenue Code that are unrelated to definition of taxable income.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to connection to federal tax law; 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, 315.004,
316.012 and 317.010; 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. (1) Notwithstanding ORS 9.320:
(a) Any person who is qualified to practice law or public
accountancy in this state, any person who has been granted active
enrollment to practice before the Internal Revenue Service and
who is qualified to prepare tax returns in this state or any
person who is the authorized employee of a taxpayer and 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.
(b) Any person who is 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.
(c) Any shareholder of an S corporation, as defined in section
1361 of the Internal Revenue Code, as amended and in effect on
December 31, { - 2002 - } { + 2004 + }, 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.
(d) 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.
(e) 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.
(f) In a small claims procedure, a taxpayer may be represented
by any of the persons described in paragraphs (a) to (e) of this
subsection or by any other person permitted by the tax court.
(2) { - No person shall - } { + A person may not + } 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.
(3) 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.
(4) 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 (1)(f) and (3) 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, { - 2002 - }
{ + 2004 + }, 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, { - 2002 - }
{ + 2004 + }.
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, { - 2002 - }
{ + 2004 + }.
(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, { - 2002 - }
{ + 2004 + }.
(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) '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.
(2) '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.
(3) '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.
(4) '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, including
planning, design, authorizing, issuing, carrying or repaying
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.
(5) '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.
(6) '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.
(7)(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.
(8)(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.
(9)(a) 'Local improvement' means a capital construction
project, or part thereof, undertaken by a local government,
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.
(10) '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, { - 2002 - }
{ + 2004 + }, 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.
(11) '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.
(12) '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.
(13) '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.
(14) '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.
(15) '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.
(16) '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.
(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) '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.
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, { - 2002 - } { + 2004 + }, 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,
{ - 2002 - } { + 2004 + }.
(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 314.013 or 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,
{ - 2002 - } { + 2004 + }, 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) Except where the Legislative Assembly has provided
otherwise, 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 to the Internal Revenue Code as
{ - they - } { + these laws + } 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. - }
{ - (d) - } { + (c) + } 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) - } { +
paragraph (b) + }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 - }
{ + these laws + } are amended on or before December 31,
{ - 2002 - } { + 2004 + }, 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 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 - }
{ + these laws + } are amended on or before December 31,
{ - 2002 - } { + 2004 + }, 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 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 { + means + }:
{ - (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. - }
{ + (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
these laws are in effect and applicable for the tax year of the
taxpayer, except where the Legislative Assembly has specifically
provided otherwise; or
(2) In the case of a reference for any other purpose, as these
laws are amended and in effect on December 31, 2004, except where
the Legislative Assembly has specifically provided otherwise. + }
SECTION 13. 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,' except where the Legislative
Assembly has provided otherwise: - }
{ - (a) 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. - }
{ - (b) 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. - }
{ + (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 these laws are in effect and
applicable for the tax year of the taxpayer, except where the
Legislative Assembly has specifically provided otherwise; or
(b) In the case of a reference for any other purpose, the laws
of the United States relating to income taxes as these laws are
amended and in effect on December 31, 2004, 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 14. { + (1) The amendments to statutes by sections 1
to 13 of this 2005 Act apply to transactions or activities
occurring on or after January 1, 2005, in tax years beginning on
or after January 1, 2005.
(2) The effective and applicable dates, and the exceptions to,
special rules of and coordination with the Internal Revenue Code,
as amended, relative to those dates, contained in the Veterans
Benefits Act of 2002 (P.L. 107-330), the Jobs and Growth Tax
Relief Reconciliation Act of 2003 (P.L. 108-27), the Military
Family Tax Relief Act of 2003 (P.L. 108-121), the Working
Families Tax Relief Act of 2004 (P.L. 108-311), the American Jobs
Creation Act of 2004 (P.L. 108-357) and other federal law
amending the Internal Revenue Code 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, 2005, and the deficiency or
any portion thereof is attributable to any retroactive treatment
under the amendments to statutes by sections 1 to 13 of this 2005
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, 2005, 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 13 of this 2005 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 13 of this 2005 Act for a tax year beginning
before January 1, 2005, 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, 2005, and before January 1, 2006, is filed, whichever
period expires later. + }
SECTION 15. { + 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. + }
----------