Taxpayers may have to register for Oregon's new Corporate Activity Tax (CAT) as early as January 31, 2020.

Any person or unitary group with Oregon commercial activity exceeding $750,000 must register with the Oregon Department of Revenue within 30 days of exceeding $750,000.¹ This means if a person's or unitary group's commercial activity exceeds $750,000 on January 1, 2020, they have to register by January 31, 2020.

Commercial activity generally means a person's or unitary group's total amount realized from transactions and activity in the regular course of their trade or business, without deduction for expenses incurred.² Commercial activity is sourced to Oregon under market-based sourcing rules. Oregon commercial activity generally includes the:

• Sale, rental, lease, or license of real property located in Oregon
• Rental, lease, or license of tangible personal property located in Oregon
• Sale of tangible personal property delivered to a purchaser in Oregon
• Sale of a service delivered to a purchaser in Oregon
• Sale, rental, lease, or license of intangible property used in Oregon³

The CAT is imposed on persons that have substantial nexus with Oregon. Substantial nexus includes:

• "Bright-line" presence, which consists of having one or more of the following in the state during the calendar year: (i) $50,000 in property; (ii) $50,000 in payroll; (iii) $750,000 in commercial activity; or (iv) at least 25% of the person's total property, total payroll, or total commercial activity
• Other nexus with the state, to the extent that the person can be required to remit the CAT under the US Constitution

Persons obligated to register for the Oregon CAT can do so on the Oregon Department of Revenue's website. A taxpayer must provide its mailing address, the date it exceeded or expects to exceed $750,000 in Oregon commercial activity, a valid email address or current log-in, and its North American Industry Classification System (NAICS) code, which is often included on a taxpayer's federal income tax return.

Implications

Taxpayers that fail to timely register will be subject to a penalty. The penalty for late registrations is $100 per month that a person or unitary group has failed to register, capped at $1,000 in a calendar year.⁴

Further Information

Click here for additional information on the CAT from the Department, including its responses to frequently asked questions and draft/temporary rules.

EY will continue to monitor the CAT and issue additional Tax Alerts as warranted.

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ENDNOTES

¹ ORS 317A.131 (registration).

² ORS 317A.100(1) (defining commercial activity).

³ ORS 317A.128 (sourcing rules for commercial activity).

⁴ ORS 317A.131(3) (registration rules).