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Corporate Activity Tax: Rules & Regulations
On December 9, the Oregon Department of Revenue released temporary rules for the Corporate Activity Tax, effective January 1, 2020. The rules are intended to provide initial regulatory guidance for businesses on the following matters:
On December 20, the Oregon Department of Revenue released four additional temporary rules for the Corporate Activity Tax. The rules follow a batch of rules released only two weeks ago that provided initial guidance to businesses subject to the tax.
On January 28, the Oregon Department of Revenue released four additional temporary rules for the Corporate Activity Tax. The rules begin addressing transactions and exemptions for specific industries.
- Retail Sale of Groceries Exclusion: Specifies the exclusion only applies to the sale of groceries intended for home consumption and establishes rules for stores with dining facilities.
Wholesale Sale of Groceries Exclusion: Describes the requirements to be met to exclude the wholesale sale of food from the tax, providing the transaction is a wholesale sale, meets the definition of groceries and is sold to the final consumer for home consumption.
Property Resold Outside of Oregon Certificates: Outlines multiple processes wholesalers can use to certify amounts for property purchased for resale outside the state, including a method for using a reasonable approximation.
Motor Vehicle Resale Certificate: Specifies sales or transfer of motor vehicles between dealers are excluded if the sale or transfer is for resale.
On February 24, the Oregon Department of Revenue released two additional temporary rules for the Corporate Activity Tax, continuing to address more targeted areas of implementing the law.
- Labor Cost Subtraction: Defines “employees” for purposes of calculating the subtraction for labor costs, specifying costs attributable to distributive income, statutory employees under IRC § 3121(d)(3), and independent contractors are not allowed for the subtraction.
- Single-Family Residential Construction Exclusion: Defines “single-family residential construction” as “the construction of 3 new single-family housing such as single-family detached or semidetached houses and townhouses.”
These rules complete the temporary administrative regulations for the Corporate Activity Tax. The department will now begin its process for permanent rulemaking and may change the application of these provisions after receiving comments from taxpayers and tax preparers.
You can view these rules and additional information on the Corporate Activity Tax website here.