74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
Enrolled
Senate Bill 179
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Governor Theodore R.
Kulongoski for Department of Revenue)
CHAPTER ................
AN ACT
Relating to insurance company income apportionment; creating new
provisions; amending ORS 317.122 and 317.660; and prescribing
an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 317.660 is amended to read:
317.660. { + (1) + } { - In lieu of the provisions of ORS
314.280, - } If the income of an insurer is derived from
business done both within and without this state, the
determination of Oregon taxable income shall be arrived at by
apportionment based upon an averaging of the following three
factors:
{ + (a) + } { - (1) Insurance sales factor: The percentage
obtained by dividing (a) - } { + An insurance sales factor, the
numerator of which is + } the direct premiums (excluding
reinsurance accepted and without deduction of reinsurance ceded)
received by the insurer during the
{ - taxable - } { + tax + } year on policies and contracts
{ - which - } { + that + } are allocated to this state and to
other jurisdictions in which the insurer is not authorized to do
business { - by (b) - } { + , and the denominator of which
is + } the total of such premiums received by the insurer during
the { - taxable - } { + tax + } year on policies and
contracts that had been sold within and without this state. For
purposes of this { - subsection - } { + paragraph + },
'premiums' means sums properly included in { - appropriate - }
{ + those + } schedules of the annual statement filed by the
insurer with the Director of the Department of Consumer and
Business Services { - , which - } { + that appropriately + }
allocate premiums by jurisdiction. { - If the exclusion of
reinsurance premiums results in an apportionment formula that
does not fairly represent the extent of the taxpayer's activity
in this state, the taxpayer may petition for and the Department
of Revenue may permit, or the Department of Revenue may require,
the inclusion of reinsurance premiums in the insurance sales
factor. - }
{ + (b) + } { - (2) Wage and commission factor: The
percentage obtained by dividing (a) - } { + A wage and
commission factor, the numerator of which is + } the total of
Enrolled Senate Bill 179 (SB 179-A) Page 1
wages, salaries, commissions and other compensation for personal
services paid in this state during the tax period to employees
and insurance { - salesmen - } { + producers + }in
connection with the business of the insurer, { - by (b) - }
{ + and the denominator of which is + } the total wages,
salaries, commissions and other compensation for personal
services paid everywhere during the tax period to employees and
insurance { - salesmen - } { + producers + }in connection
with the business of the insurer. For { - determining the place
of payment - } { + purposes of this paragraph + }, the
procedure set forth in ORS 314.660 (2) shall { - apply - }
{ + be used to determine the place of payment + }.
{ + (c) + } { - (3) Real estate income and interest factor:
The percentage obtained by dividing (a) - } { + A real estate
income and interest factor, the numerator of which is + }the
total net income
{ - (after deducting from gross rental income real estate
expenses, property taxes and depreciation attributable thereto,
which are included in appropriate schedules of the annual
statement filed by the insurer with the Department of Consumer
and Business Services) - } received from real property within
this state plus gross interest received on loans secured by real
property within this state during the { - taxable year, by
(b) - } { + tax year, and the denominator of which is + } the
total net income received from real property within and without
this state plus gross interest received on loans secured by real
property within and without this state during the
{ - taxable - } { + tax + } year. { + For purposes of this
paragraph:
(A) 'Total net income received from real property' means gross
rental income from real property reduced by all of the following
items attributable to the property, as reported by the insurer in
the annual statement filed with the Department of Consumer and
Business Services:
(i) Rental real estate expenses;
(ii) Rental real estate property taxes; and
(iii) Rental real estate depreciation.
(B) Any imputed rent from property owned and occupied by the
company shall be excluded from total net income received from
real property.
(C) If the denominator of the factor is less than zero, the
factor shall be zero.
(D) Unless subparagraph (C) of this paragraph applies, if the
numerator is greater than the denominator, the factor shall be
one.
(2) If application of the apportionment formula described in
subsection (1) of this section, including but not limited to the
exclusion of reinsurance premiums from the insurance sales factor
under subsection (1)(a) of this section, results in an
apportionment that does not fairly and equitably represent the
taxpayer's insurance business activity in this state, the
taxpayer may petition the Department of Revenue for and the
department may permit, or the department may require, to achieve
an apportionment that fairly and equitably represents the
taxpayer's insurance business activity:
(a) The exclusion of any one or more factors;
(b) The inclusion of one or more additional factors that will
fairly and equitably represent the taxpayer's business activity
in this state;
Enrolled Senate Bill 179 (SB 179-A) Page 2
(c) The inclusion of reinsurance premiums in the insurance
sales factor; or
(d) The employment of any other method to achieve a fair and
equitable apportionment of the taxpayer's income. + }
SECTION 2. ORS 317.122 is amended to read:
317.122. (1) A credit against taxes imposed by this chapter
shall be allowed insurers for the gross premium tax paid on fire
insurance premiums in accordance with ORS 731.820.
(2) A credit against the taxes otherwise due under this chapter
shall be allowed to an insurer. The amount of the credit shall be
the lesser of:
(a) The amount of any assessments paid by the insurer during
the tax year pursuant to ORS 656.612; or
(b) The total profit attributable to the workers' compensation
line of business, net of reinsurance and including all investment
gain attributable to the workers' compensation line of business,
determined in the manner prescribed under ORS 731.574 by the
Director of the Department of Consumer and Business Services,
with the modifications under ORS 317.655 attributable to the
workers' compensation line of business, and then apportioned in
accordance with ORS 317.660 and multiplied by the corporate tax
rate set forth in ORS 317.061. In making the apportionment under
ORS 317.660 for purposes of this paragraph, the { - factors - }
{ + insurance sales factor + } shall be determined using only
items attributable to the workers' compensation line of business.
SECTION 3. ORS 317.660, as amended by section 1 of this 2007
Act, is amended to read:
317.660. (1) { + (a) + } If the income of an insurer is derived
from business done both within and without this state, the
determination of Oregon taxable income shall be arrived at by
{ - apportionment based upon an averaging of the following
three factors: - } { + multiplying the insurer's net income by
the insurance sales factor. + }
{ - (a) - } { + (b) + } { - An insurance sales
factor, - } { + The insurance sales factor shall consist of a
fraction, + }the numerator of which is the { + amount of + }
direct premiums (excluding reinsurance accepted and without
deduction of reinsurance ceded) received { + or earned + } by
the insurer during the tax year on policies and contracts that
are allocated to this state and to other jurisdictions in which
the insurer is not authorized to do business, and the denominator
of which is the total of such premiums received { + or
earned + } by the insurer during the tax year on policies and
contracts that had been sold within and without this state.
{ + (2) + } For purposes of this { - paragraph, - }
{ + section:
(a) 'Net income' means net income properly recorded in the
statement of income reported in the annual statement filed by the
insurer with the Director of the Department of Consumer and
Business Services.
(b) + } ' Premiums' means sums properly included in those
schedules of the annual statement filed by the insurer with the
Director of the Department of Consumer and Business Services that
appropriately allocate premiums by jurisdiction. { + If the
exclusion of reinsurance premiums results in an insurance sales
factor that does not fairly represent the extent of the
taxpayer's activity in this state, the taxpayer may petition for
and the Department of Revenue may permit, or the Department of
Revenue may require, the inclusion of reinsurance premiums in the
insurance sales factor. If the annual statement of the insurer
Enrolled Senate Bill 179 (SB 179-A) Page 3
does not report received premiums then the insurance sales factor
shall be determined based on earned premiums.
(3) If application of the apportionment formula described in
subsection (1) of this section results in an apportionment that
does not fairly and equitably represent the taxpayer's insurance
business activity in this state, the taxpayer may petition the
Department of Revenue for and the department may permit, or the
department may require, to achieve an apportionment that fairly
and equitably represents the taxpayer's insurance business
activity:
(a)(A) The exclusion of the insurance sales factor; and
(B) The inclusion of one or more additional factors that will
fairly and equitably represent the taxpayer's business activity
in this state;
(b) The inclusion of the insurance sales factor and one or more
additional factors that will fairly and equitably represent the
taxpayer's business activity in this state; or
(c) The employment of any other method to achieve a fair and
equitable apportionment of the taxpayer's income. + }
{ - (b) A wage and commission factor, the numerator of which
is the total of wages, salaries, commissions and other
compensation for personal services paid in this state during the
tax period to employees and insurance producers in connection
with the business of the insurer, and the denominator of which is
the total wages, salaries, commissions and other compensation for
personal services paid everywhere during the tax period to
employees and insurance producers in connection with the business
of the insurer. For purposes of this paragraph, the procedure set
forth in ORS 314.660 (2) shall be used to determine the place of
payment. - }
{ - (c) A real estate income and interest factor, the
numerator of which is the total net income received from real
property within this state plus gross interest received on loans
secured by real property within this state during the tax year,
and the denominator of which is the total net income received
from real property within and without this state plus gross
interest received on loans secured by real property within and
without this state during the tax year. For purposes of this
paragraph: - }
{ - (A) 'Total net income received from real property' means
gross rental income from real property reduced by all of the
following items attributable to the property, as reported by the
insurer in the annual statement filed with the Department of
Consumer and Business Services: - }
{ - (i) Rental real estate expenses; - }
{ - (ii) Rental real estate property taxes; and - }
{ - (iii) Rental real estate depreciation. - }
{ - (B) Any imputed rent from property owned and occupied by
the company shall be excluded from total net income received from
real property. - }
{ - (C) If the denominator of the factor is less than zero,
the factor shall be zero. - }
{ - (D) Unless subparagraph (C) of this paragraph applies, if
the numerator is greater than the denominator, the factor shall
be one. - }
{ - (2) If application of the apportionment formula described
in subsection (1) of this section, including but not limited to
the exclusion of reinsurance premiums from the insurance sales
factor under subsection (1)(a) of this section, results in an
apportionment that does not fairly and equitably represent the
Enrolled Senate Bill 179 (SB 179-A) Page 4
taxpayer's insurance business activity in this state, the
taxpayer may petition the Department of Revenue for and the
department may permit, or the department may require, to achieve
an apportionment that fairly and equitably represents the
taxpayer's insurance business activity: - }
{ - (a) The exclusion of any one or more factors; - }
{ - (b) The inclusion of one or more additional factors that
will fairly and equitably represent the taxpayer's business
activity in this state; - }
{ - (c) The inclusion of reinsurance premiums in the
insurance sales factor; or - }
{ - (d) The employment of any other method to achieve a fair
and equitable apportionment of the taxpayer's income. - }
SECTION 4. { + The amendments to ORS 317.660 by section 1 of
this 2007 Act apply to tax years beginning before January 1,
2007. + }
SECTION 5. { + The amendments to ORS 317.122 and 317.660 by
sections 2 and 3 of this 2007 Act apply to tax years beginning on
or after January 1, 2007. + }
SECTION 6. { + This 2007 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-fourth
Legislative Assembly adjourns sine die. + }
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Passed by Senate June 7, 2007
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House June 15, 2007
...........................................................
Speaker of House
Enrolled Senate Bill 179 (SB 179-A) Page 5
Received by Governor:
......M.,............., 2007
Approved:
......M.,............., 2007
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2007
...........................................................
Secretary of State
Enrolled Senate Bill 179 (SB 179-A) Page 6