Chapter 19 Oregon Laws 1999

Session Law

AN ACT

HB 2127

Relating to taxation; creating new provisions; amending ORS 321.267, 321.272, 321.273, 321.307, 321.347, 321.349, 321.353, 321.420, 321.421 and 321.485; and repealing ORS 321.357.

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

SECTION 1. ORS 321.267 is amended to read:

321.267. (1) The following timber and forest land are not subject to ORS 321.257 to 321.381:

(a) Timber and forest land assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665, 308.805 to 308.820 and 308.990.

(b) Except as provided in ORS 321.347, timber and land classified under ORS 321.705 to 321.765.

(d) Except as provided in ORS 321.347, land and Christmas trees which are grown or growing on that land which has been prepared by intensive cultivation and tilling and on which all unwanted plant growth is controlled continuously for the exclusive purpose of growing such Christmas trees.

(e) Except as provided in ORS 321.274, land and hardwood timber, including but not limited to hybrid cottonwood, which are:

(A) Grown or growing on land which has been prepared by intensive cultivation methods and which is cleared of competing vegetation for at least three years after tree planting;

(B) Of a species marketable as fiber for inclusion in the "furnish" for manufacturing paper products;

(D) Subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

(2) The tax imposed by ORS 321.273 shall be in addition to that levied by ORS 321.005 to 321.185 and 321.560 to 321.600.

(3) Nothing contained in ORS 321.257 to 321.381 shall prevent:

(a) The collection of ad valorem property taxes which became a lien prior to January 1, 1978.

(b) The collection of taxes levied by ORS 321.005 to 321.185 and 321.560 to 321.600.

(c) Except as provided in section 45, chapter 892, Oregon Laws 1977, the collection of amounts payable upon declassification described under ORS 321.705 to 321.765.

[(d) The collection of taxes imposed under ORS 321.255 to 321.360 (1975 Replacement Part).]

SECTION 2. ORS 321.272 is amended to read:

321.272. (1) Effective January 1, 1994:

(a) All timber in western Oregon shall be exempt from ad valorem taxation.

(b) For the privilege of harvesting timber from privately owned land in western Oregon a tax is imposed as provided in ORS 321.257 to 321.322.

(c) The tax imposed by paragraph (b) of this subsection is intended to recover the annuitized value of forgone property taxes on forestland.

(2) Effective July 1, 1994, all forestland in western Oregon shall be assessed and taxed and the value determined under ORS 308.205, 308.232, 321.348, 321.352[,] and 321.353 [and 321.357].

SECTION 3. ORS 321.273 is amended to read:

321.273. (1) For the privilege of harvesting timber from privately owned land in western Oregon, a privilege tax is imposed on taxpayers at the rates provided under subsection (2) [or (4)] of this section.

(2)(a) The rate of the privilege tax is 4.40 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 1994, and before January 1, 1995.

(b) The rate of the privilege tax is 3.80 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 1995, and before January 1, 1996.

(c) The rate of the privilege tax is 3.20 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 1996.

[(3) If the timber is harvested from land designated as reforestation land pursuant to ORS 321.255 to 321.360 (1975 Replacement Part) as of July 1, 1977, for the privilege of harvesting the timber, taxpayers in western Oregon shall pay a privilege tax on the stumpage value of timber harvested from such land at the rate provided under subsection (4) of this section.]

[(4)(a) The rate of the privilege tax is 5.75 percent of the stumpage value of timber harvested on or after January 1, 1994, and before January 1, 1995.]

[(b) The rate of the privilege tax is 4.82 percent of the stumpage value of timber harvested on or after January 1, 1995, and before January 1, 1996.]

[(c) The rate of the privilege tax is 3.20 percent of the stumpage value of timber harvested on or after January 1, 1996.]

SECTION 4. ORS 321.307 is amended to read:

321.307. (1) The revenue from the taxes imposed by ORS 321.273 shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Western Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Western Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.273 and for costs incurred by the State Forestry Department in carrying out ORS 315.104 and 321.705 to 321.765 for the period beginning July 1, 1997, and ending July 1, 1999.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed by ORS 321.273 is appropriated continuously to the department and shall be used by the department for the payment of all refunds of taxes imposed by ORS 321.273 which have been audited and approved by the department. This appropriation shall be from the Western Oregon Timber Tax Account. Any penalties, interest and taxes due from the taxpayer on account of taxes imposed by ORS 321.273 shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

(3)[(a)] The records of the department shall reflect the amount of revenue deposited in the Western Oregon Timber Tax Account which it has credited to the account of each taxing district. Subject to appropriations as provided in subsections (1) and (2) of this section and ORS 321.311 and transfers required under ORS 321.299, the department shall credit the entire balance of such revenue to such districts. The amount credited to each district from the revenue collected during each calendar quarter shall be determined by allocating the revenue collected in each calendar quarter to the several western Oregon counties and then by allocating the share of each county among the several participating taxing districts within that county. Seventy-five percent of the collections shall be allocated in the proportion that the average annual harvest value of timber harvested in each county during the last five calendar years preceding the fiscal year in which the collection occurs bears to the average annual harvest value of timber harvested in all western Oregon counties during the same period. Twenty-five percent of the collections shall be allocated in the proportion that the assessed value of forestland in each western Oregon county during the preceding fiscal year bears to the assessed value of forestland in all western Oregon counties during such fiscal year. The amounts as allocated shall be apportioned and credited to each participating district in each county as follows:

[(A)] (a) Seventy-five percent thereof shall be apportioned in the proportion that the average annual harvest value of timber harvested in the district during said five years, multiplied by the average of the district's rates of levy in the ad valorem tax roll for the five preceding fiscal years, bears to the average harvest value of timber harvested in all districts in the county multiplied by the corresponding average rate of levy in each district.

[(B)] (b) Twenty-five percent thereof shall be apportioned in the proportion that the assessed value of forestland in the district during the preceding fiscal year multiplied by the average of the district's rates of levy in the ad valorem tax roll for the five preceding fiscal years bears to the assessed value of forestland in all districts in the county multiplied by the corresponding average rate of levy in each district.

[(b) For purposes of this subsection, for fiscal years beginning before July 1, 1995, the average annual harvest value of timber harvested from land classified under ORS 321.255 to 321.360 (1975 Replacement Part) as reforestation land as of July 1, 1977, shall be adjusted. The adjustment shall be computed by dividing the total severance tax rate imposed upon timber harvested from such reforestation land by six and one-half percent. The resulting factor shall be multiplied by the value of timber harvested from the reforestation lands.]

(4) All moneys credited to the taxing districts pursuant to subsection (3) of this section are continuously appropriated to the districts in whose names they are credited, and the department shall remit the full amounts including interest remaining to the credit of each district as of the 10th day of the second month following the close of each calendar quarter to the county treasurers of the respective counties in which the districts are located on or before the last day of that month, together with the department's certification of the amount thereof which is for the credit of each such district. A working balance may be retained in the Western Oregon Timber Tax Account for the payment of administrative expenses provided by subsection (1) of this section.

SECTION 5. ORS 321.347 is amended to read:

321.347. For the purposes of ORS 321.257 to 321.381:

(1) All land in western Oregon valued as forestland for ad valorem tax purposes on January 1, 1977, shall retain that classification for the purposes of ORS 321.257 to 321.381 unless it is specifically excluded from the provisions thereof or unless it is removed from that classification as provided in ORS 321.359 or is no longer land the highest and best use of which is forestland.

(2) Land designated as forestland pursuant to ORS 321.605 to 321.680 (1975 Replacement Part) shall retain the original date of such designation.

(3) Lands classified as reforestation lands as of July 1, 1977, pursuant to ORS 321.255 to 321.360 (1975 Replacement Part) shall be considered to have been designated as forestland from the date of original classification as reforestation lands. Any lands so classified prior to February 1, 1972, shall be presumed to have been designated not earlier than February 1, 1972.[, for the purposes of additional taxes imposed by ORS 321.372.]

(4) Pursuant to the election of the owner, as provided in section 45, chapter 892, Oregon Laws 1977, land which, as of January 1, 1977, was designated under the provisions of ORS 321.705 to 321.765 shall be considered to have been designated as forestland for the purposes of ORS 321.257 to 321.381 from the date of the original designation under those provisions. Any lands so designated prior to January 1, 1972, shall be presumed to have been designated not earlier than January 1, 1972, for the purposes of additional taxes imposed by ORS 321.372.

SECTION 6. ORS 321.349 is amended to read:

321.349. (1) Subject to subsection [(3)] (2) of this section, land that is changed under ORS 321.960 from special assessment at its value for farm use under ORS 308.370 (1) or (2) to special assessment as forestland under ORS 321.257 to 321.381, at the election of the owner made under rules adopted by the Department of Revenue, shall not be valued under ORS 308.205, 308.232 and 321.257 to 321.381 for the tax year of the change and years thereafter in which such special forestland assessment is in effect for the land, but shall be valued under ORS 308.345, if:

(a) The land has been assessed under ORS 308.370 (1) or (2) for at least the 10 consecutive years immediately prior to the year for which the change is first effective;

(b) The planting of the timber takes place after October 15, 1983, and qualifies for the current tax year for special assessment as forestland under ORS 321.272 (2);

(d) The land is held by an owner having a total ownership of forestland in western Oregon not in excess of 2,000 acres, as determined under subsection [(4)] (3) of this section.

[(2) If land described in subsection (1) of this section was classified as reforestation land under ORS 321.255 to 321.360 (1975 Replacement Part) on July 1, 1977, the percentage provided in ORS 321.357 shall be applied to the value determined under subsection (1) of this section.]

[(3)] (2) If timber on land valued under subsection (1) of this section reaches, for any tax year, an average age of 40 years or more, this section shall cease to apply. However, without application and without any additional tax, interest or penalty, the land shall for that tax year and for each year thereafter for which the land is qualified, be valued under ORS 308.205, 308.232 and 321.257 to 321.381.

[(4)] (3) In computing a forestland owner's acreage for purposes of subsection (1) of this section, all of the owner's forestland, as defined in ORS 321.257, in western Oregon shall be included. As used in this subsection, "total ownership" includes (a) forestland owned by the owner individually; and (b) forestland owned by any corporate or other group owner in which the owner holds a share of ownership of 10 percent or more. No owner may have forestland valued under subsection (1) of this section if the owner, or any individual having a share in the owner, has a spouse, brother, sister, ancestor or lineal descendant who is an owner, or who holds a share in an owner having forestland valued under subsection (1) of this section. However, the county assessor may grant exceptions to this requirement if the owner satisfactorily demonstrates that the combination of ownership with the indicated relatives arose from bona fide business reasons other than a desire to circumvent the 2,000 acre limitation imposed under subsection (1) of this section.

SECTION 7. ORS 321.353 is amended to read:

321.353. (1) The assessed value of forestland in western Oregon shall be determined as provided in subsection (8) of this section.

(2) Notwithstanding ORS 308.205, 308.232[,] or 321.352[, 321.357] or other law and subject to subsection (3) of this section, for the tax year beginning July 1, 1995, and for each tax year thereafter, forestland in western Oregon shall be considered to have a specially assessed value per acre in accordance with the following schedule:

___________________________________________________________________

Land Class Value Per Acre

FA............................................. $720

FB............................................. $619

FC............................................. $396

FD............................................. $299

FE............................................. $171

FF.............................................. $42

FG............................................. $7

FX............................................. $1

___________________________________________________________________

(3)(a) For the tax year beginning July 1, 1995, and for each tax year thereafter, the values per acre of forestland as determined under subsection (2) of this section shall be adjusted according to the change calculated under this subsection.

(b) The Department of Revenue shall determine the assessed values of forestland by multiplying the assessed values of the forestland for the previous year by the value index calculated by the department and certified to the appropriate county assessors under subsection (4) of this section. For the tax year beginning July 1, 1995, the "assessed values of the forestland for the previous year" means the values set forth in subsection (2) of this section.

(c) As used in this subsection, "value index" means the number 1.0 plus the decimal equivalent of 50 percent of the change, whether positive or negative, in the Average Western Oregon Log Value for:

(A) The current and seven preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1995;

(B) The current and nine preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1996;

(C) The current and 11 preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1997; and

(D) The current and 13 preceding six-month periods when compared with a similar calculation made one year previously for all tax years beginning on or after July 1, 1998.

(d) As used in this subsection, "current" means the six-month period last ending before the calculation is made.

(e) For purposes of determining forestland values under this section, forestland in western Oregon shall be divided into those land market areas as the department shall establish by rule.

(4) Prior to July 1 of each tax year, the department shall determine and certify to the appropriate county assessor the values of forestland in western Oregon. Except as provided in ORS 321.352 [(7)] (6), the county assessor shall use the value so certified in the preparation of the assessment and tax rolls of the county each tax year.

(5) ORS 321.352 (5) to [(9)] (7) apply to the forestland values determined under this section.

(6) For the tax year beginning July 1, 1995, and for each tax year thereafter, forestland in western Oregon shall be subject to ad valorem taxation at the same rates as nonforestland similarly situated. However, the assessed value for taxation of such forestland shall not exceed 20 percent of its value determined under ORS 321.352 to 321.381.

(7) For each land class described in subsection (2) of this section, the forestland maximum assessed value per acre shall equal 103 percent of the forestland maximum assessed value per acre for the preceding assessment year.

(8) The assessor shall compute the assessed value of forestland by taking the lesser of the value established under subsection (6) of this section or subsection (7) of this section and multiplying the value by the acreage of the forestland.

(9) For the first assessment year for which property is designated as forestland, the forestland's assessed value shall be determined as provided in subsection (8) of this section.

SECTION 8. ORS 321.420 is amended to read:

321.420. (1) Effective January 1, 1994:

(a) All timber in eastern Oregon shall be exempt from levy and collection of the general ad valorem real property tax.

(b) For the privilege of harvesting timber from privately owned land in eastern Oregon a tax is imposed as set forth in ORS 321.405 to 321.520.

(c) The tax imposed by paragraph (b) of this subsection is intended to recover the annuitized value of forgone property taxes on forestland.

(2) Effective July 1, 1994, all forestland in eastern Oregon shall be assessed and taxed and the value determined under ORS 308.205, 308.232[, 321.357] and 321.810 or 321.811.

SECTION 9. ORS 321.421 is amended to read:

321.421. (1) For the privilege of harvesting timber from privately owned land in eastern Oregon, a privilege tax is imposed upon taxpayers at the rates provided under subsection (2) [or (4)] of this section.

(2)(a) The rate of the privilege tax is 3.30 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 1994, and before January 1, 1995.

(b) The rate of the privilege tax is 2.90 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 1995, and before January 1, 1996.

(c) The rate of the privilege tax is 1.80 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 1996.

[(3) If the timber is harvested from land designated as reforestation land pursuant to ORS 321.255 to 321.360 (1975 Replacement Part) as of July 1, 1977, for the privilege of harvesting the timber, taxpayers in eastern Oregon shall pay a privilege tax on the immediate harvest value of timber harvested from such land at the rate provided under subsection (4) of this section.]

[(4)(a) The rate of the privilege tax is 5.61 percent of the immediate harvest value of timber harvested on or after January 1, 1994, and before January 1, 1995.]

[(b) The rate of the privilege tax is 4.78 percent of the immediate harvest value of timber harvested on or after January 1, 1995, and before January 1, 1996.]

[(c) The rate of the privilege tax is 1.80 percent of the immediate harvest value of timber harvested on or after January 1, 1996.]

SECTION 10. ORS 321.485 is amended to read:

321.485. (1) The revenue from the taxes imposed by ORS 321.405 to 321.520 shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Eastern Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Eastern Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.405 to 321.520 and for costs incurred by the State Forestry Department in carrying out the provisions of ORS 526.425 by providing assistance to nonindustrial private forest landowners in eastern Oregon.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed under ORS 321.405 to 321.520 is appropriated continuously to the department from the suspense account referred to in subsection (1) of this section, and shall be used by the department for the payment of all refunds of taxes imposed under ORS 321.405 to 321.520 which have been audited and approved by the department. Any penalties, interest and taxes then due from the taxpayer shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

(3) Subject to subsections (1) and (2) of this section, the records of the department shall reflect each county's credit which shall be proportionate to the total credit in the same proportion that each county's total appraised timber valuation bears to the total appraised timber valuation for eastern Oregon. Appraised valuations of timber for purposes of ORS 321.405 to 321.520 shall be those determined in accordance with the provisions of ORS 306.127 (1961 Replacement Part), as adjusted by the department, or with the department's approval, as of July 1 of each year. After July 1, 1964, however, the appraised values as of that date shall serve as the basis for the allocation of privilege tax revenues under ORS 321.405 to 321.520, except [that readjustments in such appraised values shall be made annually for the purpose of subtracting or adding the appraised valuations of timber on reforestation lands which have been on or before July 1 of each year classified or declassified and] for the purpose of subtracting or adding the appraised valuations of timber which before July 1 of each year has been transferred into or out of ownerships exempt from taxation.

(4) All moneys and interest earned thereon credited to the counties pursuant to subsection (3) of this section are continuously appropriated to the counties in whose names they are credited, and the full amounts remaining to the credit of each county as of the 10th day of the second month following the close of each of the calendar quarters designated in ORS 321.435 shall be remitted to the county treasurers of the respective counties on or before the last day of that month. Remittances shall be made by the Department of Revenue from the suspense account referred to in subsection (1) of this section. A working balance may be retained in the Eastern Oregon Timber Tax Account for the payment of administrative expenses provided by subsection (1) of this section.

SECTION 11. The amendments to ORS 321.267, 321.272, 321.273, 321.307, 321.347, 321.349, 321.353, 321.420, 321.421 and 321.485 by sections 1 to 10 of this 1999 Act apply to property tax years and privilege tax reporting periods beginning on or after July 1, 1999.

SECTION 12. ORS 321.357 is repealed.

Approved by the Governor April 16, 1999

Filed in the office of Secretary of State April 19, 1999

Effective date October 23, 1999

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