Chapter 299 Oregon Laws 2011

AN ACT

HB 3543

Relating to surplus refund methods; creating new provisions; amending ORS 291.349, 291.351 and 305.792; and repealing ORS 291.353.

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

SECTION 1. ORS 291.349 is amended to read:

291.349. (1) As soon as practicable after adjournment sine die of the regular session of the Legislative Assembly, the Oregon Department of Administrative Services shall report to the Emergency Board the estimate as of July 1 of the first year of the biennium of General Fund and State Lottery Fund revenues that will be received by the state during that biennium. The Oregon Department of Administrative Services shall base its estimate on the last forecast given to the Legislative Assembly before adjournment sine die of the regular session on which the printed, adopted budget prepared in the Oregon Department of Administrative Services is based, adjusted only insofar as necessary to reflect changes in laws adopted at that session. The report shall contain the estimated revenues from corporate income and excise taxes separately from the estimated revenues from other General Fund sources. The Oregon Department of Administrative Services may revise the estimate if necessary following adjournment sine die of any special or emergency session of the Legislative Assembly but any revision does not affect the basis of the computation described in subsection (3) or (4) of this section.

(2) As soon as practicable after the end of the biennium, the Oregon Department of Administrative Services shall report to the Emergency Board, or the Legislative Assembly if it is in session, the amount of General Fund revenues collected as of the last June 30 of the preceding biennium. The report shall contain the collections from corporate income and excise taxes separately from collections from other sources.

(3) If the revenues received from the corporate income and excise taxes during the biennium exceed the amounts estimated to be received from such taxes for the biennium, as estimated after adjournment sine die of the regular session, by two percent or more, the total amount of that excess shall be credited to corporate income and excise taxpayers in a percentage amount of prior year corporate excise and income tax liability as determined under subsection (5) of this section. However, no credit shall be allowed against tax liability imposed by ORS 317.090.

(4) If the revenues received from General Fund revenue sources, exclusive of those described in subsection (3) of this section, during the biennium exceed the amounts estimated to be received from such sources for the biennium, as estimated after adjournment sine die of the regular session, by two percent or more, [there shall be refunded from personal income tax revenues an amount equal to the total amount of that excess, reduced by the cost certified by the Department of Revenue under ORS 291.351 as being allocable to payments described under this subsection. The excess amount to be refunded shall be paid to personal income taxpayers in a percentage amount of prior year personal income tax liability as determined under subsection (6) of this section.] there shall be credited to personal income taxpayers an amount equal to the total amount of that excess, reduced by the cost certified by the Department of Revenue under ORS 291.351 as being allocable to credits described under this subsection. The excess amount to be credited shall be credited to personal income taxpayers in a percentage amount of prior year personal income tax liability as determined under subsection (5) of this section.

(5)(a) If there is an excess to be credited under subsection (3) or (4) of this section, or both, on or before October 1, following the end of each biennium, the Oregon Department of Administrative Services shall determine and certify to the Department of Revenue the percentage [amount] amounts of credit for purposes of subsection (3) or (4) of this section. The percentage [amount] amounts determined shall be [a] percentage [amount] amounts to the nearest one-tenth of a percent that will distribute the excess to be credited either to corporate excise and income taxpayers or to personal income taxpayers.

(b) The percentage amount applicable to subsection (3) of this section shall equal the amount distributed under subsection (3) of this section divided by the estimated total corporate income and excise tax liability for all corporate income and excise taxpayers for tax years beginning in the calendar year immediately preceding the calendar year in which the excess is determined.

(c) The amount of the surplus credit under subsection (3) of this section is determined by multiplying the percentage amount determined under paragraph (b) of this subsection by the total amount of a corporate income or excise taxpayer’s tax liability for the tax year beginning in the calendar year immediately preceding the calendar year in which the excess is determined in order to calculate the amount to be credited to the taxpayer.

(d) The percentage amount applicable to subsection (4) of this section shall equal the amount distributed under subsection (4) of this section divided by the estimated total personal income tax liability for all personal income taxpayers for tax years beginning in the calendar year immediately preceding the calendar year in which the excess is determined.

(e) The amount of the surplus credit under subsection (4) of this section is determined by multiplying the percentage amount determined under paragraph (d) of this subsection by the total amount of a personal income taxpayer’s tax liability for the tax year beginning in the calendar year immediately preceding the calendar year in which the excess is determined in order to calculate the amount to be credited to the taxpayer.

[(d)] (f) The credit shall be determined based on the tax liability as shown on the return of the taxpayer or as corrected by the Department of Revenue.

[(e)] (g) The credit shall be computed after the allowance of a credit provided under ORS 316.082, 316.131 or 316.292, but before the allowance of any other credit or offset against tax liability allowed or allowable under any provision of law of this state, and before the application of estimated tax payments, withholding or other advance tax payments.

[(f)] (h) For corporate income and excise taxpayers, if a credit applied against tax liability as described in paragraph [(e)] (g) of this subsection reduces tax liability to zero and an amount of the credit remains unused, the remaining unused amount shall be carried forward and applied against tax liability as prescribed in paragraph [(e)] (g) of this subsection in the succeeding tax year. Following application of the credit against tax liability in a succeeding tax year, any amount continuing to remain unused shall be carried forward and applied against tax liability in a succeeding tax year until all remaining amounts of unused credit are offset against tax liability.

(i) For personal income taxpayers, if a credit applied against tax liability as described in paragraph (g) of this subsection reduces tax liability to zero and an amount of the credit remains unused, the remaining unused amount shall be refunded to the taxpayer. For purposes of ORS chapters 305 and 314, 315 and 316, refunds issued under this paragraph are refunds of an overpayment of tax imposed under ORS chapter 316.

[(g)] (j) Notwithstanding paragraph [(e)] (g) of this subsection, if an excess is credited under subsection (3) of this section for a tax year and an unused credit amount from a prior tax year is carried forward to the tax year as prescribed under paragraph [(f)] (h) of this subsection, the amount of the carry forward credit shall be applied against tax liability prior to applying the new credit.

[(h) The Department of Revenue may prescribe by rule the manner of calculating and claiming a credit if the filing status of a corporation changes between the tax year described in paragraph (b) of this subsection and the succeeding tax year.]

(k) The Department of Revenue may prescribe by rule the manner of calculating and claiming a credit if the filing status of a taxpayer changes between the tax year for which a credit may be claimed and the succeeding tax year.

[(6)(a) If there is an excess to be refunded under subsection (4) of this section, on or before September 15, following the end of each biennium, the Oregon Department of Administrative Services shall determine and certify to the Department of Revenue the percentage amount of refund payment for purposes of subsection (4) of this section. The percentage amount so determined shall be a percentage amount to the nearest one-hundredth of a percent that will distribute the excess to be refunded to personal income taxpayers under subsection (4) of this section. The percentage amount shall equal the amount distributed under subsection (4) of this section divided by the estimated total personal income tax liability for all personal income taxpayers for tax years beginning in the calendar year immediately preceding the calendar year in which the excess is determined.]

[(b) The Department of Revenue shall multiply the percentage amount determined under paragraph (a) of this subsection by the total amount of a personal income taxpayer’s tax liability for the tax year beginning in the calendar year immediately preceding the calendar year in which the excess is determined in order to calculate the amount of the refund to be made to the taxpayer. For purposes of this paragraph, the taxpayer’s tax liability is the amount as shown on the return of the taxpayer or as corrected by the Department of Revenue, and is determined:]

[(A) After the allowance of a credit provided under ORS 316.082, 316.131 or 316.292;]

[(B) Before the allowance of any other credit or offset against tax liability allowed or allowable on the return for the tax year; and]

[(C) Before the application of estimated tax payments, withholding or other advance tax payments.]

[(c) The refund described under this subsection shall be mailed by the Department of Revenue to personal income taxpayers eligible for the payment on or before December 15 following the end of the biennium for which the payment described under this subsection is being made.]

[(d) Notwithstanding paragraph (c) of this subsection, the Department of Revenue shall mail the refund at the earliest date of practicable convenience in the case of a return:]

[(A) For a tax year beginning in the calendar year immediately preceding the calendar year in which the excess is determined for which refund is being made; and]

[(B) That is first filed on or after August 15 after the end of the biennium.]

[(7)] (6) [No refund shall be made] A refund may not be made under this section to a taxpayer if[, after making the calculation described under subsection (6) of this section, the amount calculated] the amount of the refund is less than $1.

[(8) For purposes of ORS chapters 305 and 314 to 318, refunds issued under subsection (6) of this section are refunds of an overpayment of tax imposed under ORS chapter 316, but do not bear interest.]

(7) Not later than October 15 following the end of the biennium, the Department of Revenue shall provide information and guidance to taxpayers relating to the calculation of the credit. The department may make the information and guidance available electronically or otherwise.

(8) The Department of Revenue may adopt rules specifying the manner for issuing refunds under this section to taxpayers who filed returns in the tax year on which the credit is computed but who are not required to file returns in the year in which the credit could be claimed.

SECTION 2. ORS 305.792 is amended to read:

305.792. (1) The Department of Revenue shall [cause a checkoff box to be printed on the] provide a means by which personal income and corporate income or excise tax [returns for the appropriate tax year, by which a taxpayer] return filers may indicate that a surplus refund [payment or] credit [that] to which the taxpayer may otherwise be entitled to under ORS 291.349 shall instead be used for funding education.

[(2)(a) A personal income taxpayer may elect to donate a surplus refund payment to be made under ORS 291.349 to public elementary and secondary school education. The taxpayer may make the election by checking the appropriate checkoff box on the taxpayer’s return indicating the taxpayer’s intention to donate the surplus refund payment to public elementary and secondary education.]

[(b) Once made, the election is irrevocable for any surplus refund payments received until a subsequent return is filed for a later tax year, and on which the checkoff box is not checked.]

[(3)(a)] (2)(a) A personal income or corporate excise or income taxpayer may elect not to [not] claim a surplus refund credit that the taxpayer would otherwise be entitled to pursuant to ORS 291.349, in order to achieve a corresponding transfer of such moneys from the General Fund to the State School Fund for the support of public elementary and secondary school education. The taxpayer may make the election [by checking the appropriate checkoff box on the taxpayer’s return and by not using the surplus refund credit percentage to reduce the taxpayer’s tax liability] in the form and manner prescribed by the department by rule.

(b) A taxpayer that [checks the appropriate checkoff box indicating] indicates that the credit will not be claimed but that nevertheless claims the credit in determining the taxpayer’s tax liability shall be considered to not have [not] made the election under this subsection.

[(4) After the determination that surplus refund payments are to be made under ORS 291.349 (4) and (6), the department shall determine the total amount of such payments for which an election to donate to public elementary and secondary education has been made and shall certify this amount to the State Treasurer. Following the department’s certification to the State Treasurer, an election to donate that biennium’s surplus refund payments under subsection (2) of this section is irrevocable.]

[(5)] (3) Following the determination to credit personal income or corporate income and excise taxes pursuant to ORS 291.349 [(3) and (5)], the department shall annually certify to the State Treasurer the total amount of allowable credits that have not been claimed pursuant to an election made under subsection [(3)] (2) of this section. The certification shall be made on or before December 31 of each year, until the tax year for which the credit would otherwise be claimed becomes a closed tax year.

SECTION 3. ORS 291.351 is amended to read:

291.351. If, based on the report made under ORS 291.349 (2), [refund will be made] an amount will be credited under ORS 291.349 (4), the Department of Revenue shall certify the costs that are incurred in calculating and [making the refunds] administering the credits under ORS 291.349 (4). The amount of the costs certified by the department under this section may not exceed $250,000.Costs shall be certified by the department within 15 days of the date the report under ORS 291.349 (2) is made. As used in this section, “costs” means and is limited to those costs that, absent the requirement of [making a refund] providing credits under ORS 291.349 (4), would not be incurred by the department.

SECTION 4. For purposes of determining the amount to be certified to the State Treasurer under ORS 305.792, surplus refund payment elections made under ORS 305.792 (2009 or earlier edition) shall be considered surplus refund credit elections.

SECTION 5. ORS 291.353 is repealed.

SECTION 6. Amounts in the Surplus Kicker Cost Account on the effective date of this 2011 Act shall be transferred to the General Fund.

SECTION 7. The amendments to ORS 291.349, 291.351 and 305.792 by sections 1 to 3 of this 2011 Act and the repeal of ORS 291.353 by section 5 of this 2011 Act apply to biennia beginning on or after July 1, 2011.

Approved by the Governor June 9, 2011

Filed in the office of Secretary of State June 9, 2011

Effective date January 1, 2012

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