The State of Oregon recently enacted a gross receipts-type tax on all businesses (including self-employed people) with commercial activity in Oregon. This tax is in addition to Oregon’s corporate and personal income taxes. Oregon does not levy a sales tax.
The tax applies to businesses having commercial activity over $1 million and includes financial institutions and insurance companies. The tax on the first million is $250, and the tax on amounts over $1 million is 0.57%. Certain companies such as nonprofits and hospitals are exempt.
The tax base is generally a business’ gross receipts from operations minus 35% of the greater of the company’s apportioned cost of goods sold or apportioned labor costs. There are over 40 specific exclusions from gross receipts. These exclusions are generally receipts not normally considered gross receipts from operations, such as interest and dividends, gifts, proceeds from loans, and contributions to capital, but there are other exclusions as well.
An in-state business must register for the tax if the company’s total gross receipts equal or exceed $750,000. An out-of-state business must register if the business has Oregon gross receipts of at least $750,000, or one of the following:
- The business has $50,000 in property or annual payroll in Oregon
- 25% of the business’ property, payroll, or sales are in Oregon
Returns will be due on April 15 of the following year. Payments are due within a month after the end of each calendar quarter. The tax will be effective for tax years beginning on or after January 1, 2020. Registration with the Department of Revenue will be required. A penalty of up to $100 per month may be imposed for failure to register.
If you would like to learn more about how this tax might affect your business, please reach out to one of Clark, Schaefer, Hackett’s State and Local Tax Advisors.