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 3392
 
                         House Bill 3413
 
Sponsored by COMMITTEE ON REVENUE
 
 
                             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.
 
  Modifies formula used to apportion business income by requiring
use of payroll, property and double-weighted sales factors for
corporate taxpayers, including telecommunications and utilities
corporations and taxpayers in forest products industry.
  Applies to tax years beginning on or after January 1, 2010.
  Takes effect on 91st day following adjournment sine die.
 
                        A BILL FOR AN ACT
Relating to apportionment of business income for taxation
  purposes; creating new provisions; amending ORS 314.280 and
  314.650; prescribing an effective date; and providing for
  revenue raising that requires approval by a three-fifths
  majority.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 314.650 is amended to read:
  314.650. (1) All business income shall be apportioned to this
state by multiplying the income by   { - the sales factor - }
 { +  a fraction, the numerator of which is the property factor
plus the payroll factor plus two times the sales factor, and the
denominator of which is four + }.
    { - (2)(a) Notwithstanding subsection (1) of this section,
the business income of a taxpayer that is in the forest products
industry, that owns and manages 300,000 or more acres in this
state, but less than 400,000 acres, and that processes at least
20 percent of the taxpayer's total wood chip supply for
papermaking from sawmill residue generated within this state,
shall be apportioned to this state by multiplying the income by a
fraction, the numerator of which is the property factor plus the
payroll factor plus two times the sales factor, and the
denominator of which is four. - }
    { - (b) - }   { + (2) + } If the denominator of the property
factor, payroll factor or sales factor, as determined under ORS
314.650 to 314.665, is zero, then the denominator specified in
 { - paragraph (a) of this subsection - }   { + subsection (1) of
this section + } shall be reduced by the number of factors with a
denominator of zero.
  SECTION 2. ORS 314.280 is amended to read:
  314.280. (1) If a taxpayer has income from business activity as
a financial organization or as a public utility (as defined
respectively in ORS 314.610 (4) and (6)) which is taxable both
within and without this state (as defined in ORS 314.610 (8) and
314.615), the determination of net income shall be based upon the
business activity within the state, and the Department of Revenue
shall have power to permit or require either the segregated
method of reporting or the apportionment method of reporting,
under rules and regulations adopted by the department, so as
fairly and accurately to reflect the net income of the business
done within the state.
  (2) The provisions of subsection (1) of this section dealing
with the apportionment of income earned from sources both within
and without the State of Oregon are designed to allocate to the
State of Oregon on a fair and equitable basis a proportion of
such income earned from sources both within and without the
state. Any taxpayer may submit an alternative basis of
apportionment with respect to the income of the taxpayer and
explain that basis in full in the return of the taxpayer. If
approved by the department that method will be accepted as the
basis of allocation.
  (3)  { - (a) - }  Apportionment rules adopted by the department
under this section must apply the weightings used in ORS 314.650
to comparable factors used to apportion income from business
activity of taxpayers subject to this section.
    { - (b) Notwithstanding paragraph (a) of this subsection, a
taxpayer primarily engaged in utilities or telecommunications may
elect to have income from business activity apportioned by
applying the weightings used in ORS 314.650 (1999 Edition) to
comparable factors used to apportion such income. - }
    { - (c) The election shall be made in the time and manner
prescribed by the department by rule. The election shall continue
in force and effect for the tax year for which the election is
made and for each subsequent tax year until the year in which the
taxpayer revokes the election. - }
    { - (d) An electing taxpayer may revoke the taxpayer's
election by filing a revocation of election in the time and
manner prescribed by the department. The revocation shall apply
to the tax year following the year in which the election is made
and to each subsequent tax year. - }
    { - (e) As used in this subsection: - }
    { - (A) 'Telecommunications' means business operations that
conduct, maintain or provide for the transmission of voice data
and text between network termination points and
telecommunications reselling. Transmission facilities may be
based on one technology or a combination of technologies. - }
    { - (B) 'Utilities' means business operations that provide
electric power, natural gas, steam supply, water supply or sewage
removal through a permanent infrastructure of lines, mains and
pipes. - }
  SECTION 3.  { + The amendments to ORS 314.280 and 314.650 by
sections 1 and 2 of this 2009 Act apply to tax years beginning on
or after January 1, 2010. + }
  SECTION 4.  { + This 2009 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-fifth
Legislative Assembly adjourns sine die. + }
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