Relating to tax subtraction for compensation received by member of Armed Forces of the United States; creating new provisions; and amending ORS 316.680.


 
 
 
     75th OREGON LEGISLATIVE ASSEMBLY--2009 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 472
 
                         House Bill 2164
 
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
  Presession filed (at the request of Governor Theodore R.
  Kulongoski for Oregon Military Department)
 
 
                             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.
 
  Expands subtraction from taxable income for compensation to
member of Armed Forces of United States.
  Applies to tax years beginning on or after January 1, 2009.
 
                        A BILL FOR AN ACT
Relating to tax subtraction for compensation received by member
  of Armed Forces of the United States; creating new provisions;
  and amending ORS 316.680.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 316.680 is amended to read:
  316.680. (1) There shall be subtracted from federal taxable
income:
  (a) The interest or dividends on obligations of the United
States and its territories and possessions or of any authority,
commission or instrumentality of the United States to the extent
includable in gross income for federal income tax purposes but
exempt from state income taxes under the laws of the United
States. However, the amount subtracted under this paragraph shall
be reduced by any interest on indebtedness incurred to carry the
obligations or securities described in this paragraph, and by any
expenses incurred in the production of interest or dividend
income described in this paragraph to the extent that such
expenses, including amortizable bond premiums, are deductible in
determining federal taxable income.
  (b) The amount of any federal income taxes accrued by the
taxpayer during the taxable year as described in ORS 316.685,
less the amount of any refunds of federal taxes previously
accrued for which a tax benefit was received.
  (c)(A) If the taxpayer does not qualify for the subtraction
under subparagraph (B) of this paragraph, compensation (other
than pension or retirement pay) received for active service
performed by a member of the Armed Forces of the United States in
an amount not to exceed $6,000 per annum.  { + As used in this
subparagraph, ' active service' includes weekend drills, annual
training, summer camp, special school attendance and battle
assemblies. + }
  (B) For the tax year of initial draft or enlistment into the
Armed Forces of the United States or for the tax year of
discharge from or termination of full-time active duty for the
Armed Forces of the United States, compensation (other than
pension or retirement pay or pay for service when on military
reserve duty) paid by the Armed Forces of the United States for
services performed outside this state, if the taxpayer is on
active duty as a full-time officer, enlistee or draftee, with the
Armed Forces of the United States.
  (d) Amounts allowable under sections 2621(a)(2) and 2622(b) of
the Internal Revenue Code to the extent that the taxpayer does
not elect under section 642(g) of the Internal Revenue Code to
reduce federal taxable income by those amounts.
  (e) Any supplemental payments made to JOBS Plus Program
participants under ORS 411.892.
  (f)(A) Federal pension income that is attributable to federal
employment occurring before October 1, 1991. Federal pension
income that is attributable to federal employment occurring
before October 1, 1991, shall be determined by multiplying the
total amount of federal pension income for the tax year by the
ratio of the number of months of federal creditable service
occurring before October 1, 1991, over the total number of months
of federal creditable service.
  (B) The subtraction allowed under this paragraph applies only
to federal pension income received at a time when:
  (i) Benefit increases provided under chapter 569, Oregon Laws
1995, are in effect; or
  (ii) Public Employees Retirement System benefits received for
service prior to October 1, 1991, are exempt from state income
tax.
  (C) As used in this paragraph:
  (i) 'Federal creditable service' means those periods of time
for which a federal employee earned a federal pension.
  (ii) 'Federal pension' means any form of retirement allowance
provided by the federal government, its agencies or its
instrumentalities to retirees of the federal government or their
beneficiaries.
  (g) Any amount included in federal taxable income for the tax
year that is attributable to the conversion of a regular
individual retirement account into a Roth individual retirement
account described in section 408A of the Internal Revenue Code,
to the extent that:
  (A) The amount was subject to the income tax of another state
or the District of Columbia in a prior tax year; and
  (B) The taxpayer was a resident of the other state or the
District of Columbia for that prior tax year.
  (h) Any amounts awarded to the taxpayer by the Public Safety
Memorial Fund Board under ORS 243.954 to 243.974 to the extent
that the taxpayer has not taken the amount as a deduction in
determining the taxpayer's federal taxable income for the tax
year.
  (i) If included in taxable income for federal tax purposes, the
amount withdrawn during the tax year in qualified withdrawals
from a college savings network account established under ORS
348.841 to 348.873.
  (j) Any amount paid by the TRICARE military health care system
to a health care provider during the first two years that the
health care provider participates in the TRICARE system.
  (k) Any amounts included in the federal taxable income that are
attributable to income earned by an employee of the Oregon
Military Department for performing duties for the Oregon National
Guard Youth Challenge Program in an amount not to exceed $6,000
per annum.
  (2) There shall be added to federal taxable income:
  (a) Interest or dividends, exempt from federal income tax, on
obligations or securities of any foreign state or of a political
subdivision or authority of any foreign state. However, the
amount added under this paragraph shall be reduced by any
interest on indebtedness incurred to carry the obligations or
securities described in this paragraph and by any expenses
incurred in the production of interest or dividend income
described in this paragraph.
  (b) Interest or dividends on obligations of any authority,
commission, instrumentality and territorial possession of the
United States that by the laws of the United States are exempt
from federal income tax but not from state income taxes. However,
the amount added under this paragraph shall be reduced by any
interest on indebtedness incurred to carry the obligations or
securities described in this paragraph and by any expenses
incurred in the production of interest or dividend income
described in this paragraph.
  (c) The amount of any federal estate taxes allocable to income
in respect of a decedent not taxable by Oregon.
  (d) The amount of any allowance for depletion in excess of the
taxpayer's adjusted basis in the property depleted, deducted on
the taxpayer's federal income tax return for the taxable year,
pursuant to sections 613, 613A, 614, 616 and 617 of the Internal
Revenue Code.
  (e) For taxable years beginning on or after January 1, 1985,
the dollar amount deducted under section 151 of the Internal
Revenue Code for personal exemptions for the taxable year.
  (f) The amount taken as a deduction on the taxpayer's federal
return for unused qualified business credits under section 196 of
the Internal Revenue Code.
  (g) The amount of any increased benefits paid to a taxpayer
under chapter 569, Oregon Laws 1995, under the provisions of
chapter 796, Oregon Laws 1991, and under section 26, chapter 815,
Oregon Laws 1991, that is not includable in the taxpayer's
federal taxable income under the Internal Revenue Code.
  (h) The amount of any long term care insurance premiums paid or
incurred by the taxpayer during the tax year if:
  (A) The amount is taken into account as a deduction on the
taxpayer's federal return for the tax year; and
  (B) The taxpayer claims the credit allowed under ORS 315.610
for the tax year.
  (i) Any amount taken as a deduction under section 1341 of the
Internal Revenue Code in computing federal taxable income for the
tax year, if the taxpayer has claimed a credit for claim of right
income repayment adjustment under ORS 315.068.
  (j) If the taxpayer makes a nonqualified withdrawal, as defined
in ORS 348.841, from a college savings network account
established under ORS 348.841 to 348.873, the amount of the
withdrawal that is attributable to contributions that were
subtracted from federal taxable income under ORS 316.699.
  (3) Discount and gain or loss on retirement or disposition of
obligations described under subsection (2)(a) of this section
issued on or after January 1, 1985, shall be treated for purposes
of this chapter in the same manner as under sections 1271 to 1283
and other pertinent sections of the Internal Revenue Code as if
the obligations, although issued by a foreign state or a
political subdivision of a foreign state, were not tax exempt
under the Internal Revenue Code.
  SECTION 2. ORS 316.680, as amended by section 2a, chapter 843,
Oregon Laws 2007, is amended to read:
  316.680. (1) There shall be subtracted from federal taxable
income:
  (a) The interest or dividends on obligations of the United
States and its territories and possessions or of any authority,
commission or instrumentality of the United States to the extent
includable in gross income for federal income tax purposes but
exempt from state income taxes under the laws of the United
States. However, the amount subtracted under this paragraph shall
be reduced by any interest on indebtedness incurred to carry the
obligations or securities described in this paragraph, and by any
expenses incurred in the production of interest or dividend
income described in this paragraph to the extent that such
expenses, including amortizable bond premiums, are deductible in
determining federal taxable income.
  (b) The amount of any federal income taxes accrued by the
taxpayer during the taxable year as described in ORS 316.685,
less the amount of any refunds of federal taxes previously
accrued for which a tax benefit was received.
  (c)(A) If the taxpayer does not qualify for the subtraction
under subparagraph (B) of this paragraph, compensation (other
than pension or retirement pay) received for active service
performed by a member of the Armed Forces of the United States in
an amount not to exceed $6,000 per annum.  { + As used in this
subparagraph, ' active service' includes weekend drills, annual
training, summer camp, special school attendance and battle
assemblies. + }
  (B) For the tax year of initial draft or enlistment into the
Armed Forces of the United States or for the tax year of
discharge from or termination of full-time active duty for the
Armed Forces of the United States, compensation (other than
pension or retirement pay or pay for service when on military
reserve duty) paid by the Armed Forces of the United States for
services performed outside this state, if the taxpayer is on
active duty as a full-time officer, enlistee or draftee, with the
Armed Forces of the United States.
  (d) Amounts allowable under sections 2621(a)(2) and 2622(b) of
the Internal Revenue Code to the extent that the taxpayer does
not elect under section 642(g) of the Internal Revenue Code to
reduce federal taxable income by those amounts.
  (e) Any supplemental payments made to JOBS Plus Program
participants under ORS 411.892.
  (f)(A) Federal pension income that is attributable to federal
employment occurring before October 1, 1991. Federal pension
income that is attributable to federal employment occurring
before October 1, 1991, shall be determined by multiplying the
total amount of federal pension income for the tax year by the
ratio of the number of months of federal creditable service
occurring before October 1, 1991, over the total number of months
of federal creditable service.
  (B) The subtraction allowed under this paragraph applies only
to federal pension income received at a time when:
  (i) Benefit increases provided under chapter 569, Oregon Laws
1995, are in effect; or
  (ii) Public Employees Retirement System benefits received for
service prior to October 1, 1991, are exempt from state income
tax.
  (C) As used in this paragraph:
  (i) 'Federal creditable service' means those periods of time
for which a federal employee earned a federal pension.
  (ii) 'Federal pension' means any form of retirement allowance
provided by the federal government, its agencies or its
instrumentalities to retirees of the federal government or their
beneficiaries.
  (g) Any amount included in federal taxable income for the tax
year that is attributable to the conversion of a regular
individual retirement account into a Roth individual retirement
account described in section 408A of the Internal Revenue Code,
to the extent that:
  (A) The amount was subject to the income tax of another state
or the District of Columbia in a prior tax year; and
  (B) The taxpayer was a resident of the other state or the
District of Columbia for that prior tax year.
  (h) Any amounts awarded to the taxpayer by the Public Safety
Memorial Fund Board under ORS 243.954 to 243.974 to the extent
that the taxpayer has not taken the amount as a deduction in
determining the taxpayer's federal taxable income for the tax
year.
  (i) If included in taxable income for federal tax purposes, the
amount withdrawn during the tax year in qualified withdrawals
from a college savings network account established under ORS
348.841 to 348.873.
  (2) There shall be added to federal taxable income:
  (a) Interest or dividends, exempt from federal income tax, on
obligations or securities of any foreign state or of a political
subdivision or authority of any foreign state. However, the
amount added under this paragraph shall be reduced by any
interest on indebtedness incurred to carry the obligations or
securities described in this paragraph and by any expenses
incurred in the production of interest or dividend income
described in this paragraph.
  (b) Interest or dividends on obligations of any authority,
commission, instrumentality and territorial possession of the
United States that by the laws of the United States are exempt
from federal income tax but not from state income taxes. However,
the amount added under this paragraph shall be reduced by any
interest on indebtedness incurred to carry the obligations or
securities described in this paragraph and by any expenses
incurred in the production of interest or dividend income
described in this paragraph.
  (c) The amount of any federal estate taxes allocable to income
in respect of a decedent not taxable by Oregon.
  (d) The amount of any allowance for depletion in excess of the
taxpayer's adjusted basis in the property depleted, deducted on
the taxpayer's federal income tax return for the taxable year,
pursuant to sections 613, 613A, 614, 616 and 617 of the Internal
Revenue Code.
  (e) For taxable years beginning on or after January 1, 1985,
the dollar amount deducted under section 151 of the Internal
Revenue Code for personal exemptions for the taxable year.
  (f) The amount taken as a deduction on the taxpayer's federal
return for unused qualified business credits under section 196 of
the Internal Revenue Code.
  (g) The amount of any increased benefits paid to a taxpayer
under chapter 569, Oregon Laws 1995, under the provisions of
chapter 796, Oregon Laws 1991, and under section 26, chapter 815,
Oregon Laws 1991, that is not includable in the taxpayer's
federal taxable income under the Internal Revenue Code.
  (h) The amount of any long term care insurance premiums paid or
incurred by the taxpayer during the tax year if:
  (A) The amount is taken into account as a deduction on the
taxpayer's federal return for the tax year; and
  (B) The taxpayer claims the credit allowed under ORS 315.610
for the tax year.
  (i) Any amount taken as a deduction under section 1341 of the
Internal Revenue Code in computing federal taxable income for the
tax year, if the taxpayer has claimed a credit for claim of right
income repayment adjustment under ORS 315.068.
  (j) If the taxpayer makes a nonqualified withdrawal, as defined
in ORS 348.841, from a college savings network account
established under ORS 348.841 to 348.873, the amount of the
withdrawal that is attributable to contributions that were
subtracted from federal taxable income under ORS 316.699.
  (3) Discount and gain or loss on retirement or disposition of
obligations described under subsection (2)(a) of this section
issued on or after January 1, 1985, shall be treated for purposes
of this chapter in the same manner as under sections 1271 to 1283
and other pertinent sections of the Internal Revenue Code as if
the obligations, although issued by a foreign state or a
political subdivision of a foreign state, were not tax exempt
under the Internal Revenue Code.
  SECTION 3.  { + The amendments to ORS 316.680 by sections 1 and
2 of this 2009 Act apply to tax years beginning on or after
January 1, 2009. + }
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