Oregon enacts corporate activity tax

Beginning Jan. 1, 2020, Oregon will impose a corporate activity tax (CAT). Businesses and individuals with greater than $750,000 in Oregon commercial activity in a calendar year will be required to register within 30 days of meeting this threshold. It applies to all taxpayers conducting business within the state, regardless of where the entity is physically located.

The tax is $250 plus 0.57% of gross receipts greater than $1 million after subtractions. A penalty of $100 per month may be assessed for failing to register, up to $1,000 per calendar year.

Additionally, estimated tax payments are required if a taxpayer expects more than $5,000 of CAT liability for the calendar year. Commercial activity for the year equal to $1,833,245 will equate to a CAT liability of $5,000. Due dates for estimated payments are April 30, July 31, Oct. 31, and Jan. 31 for the preceding calendar quarter.

Registration for Oregon’s CAT is open. In order to register, businesses and individuals will need:

• Their mailing address;
• The date they exceeded or expect to exceed $750,000 in Oregon commercial activity;
• A valid email address or current Revenue Online login, and;
• Their business activity code (refer to the current list of North American Industry Classification System codes found with their federal income tax return)

Taxpayers with commercial activity in Oregon in excess of $750,000 should evaluate if the CAT will apply to its sales and if registration is required. Before registering, they should also consider whether the CAT must be filed on a combined basis.

Note Oregon imposes an excise tax based on net income. Prior to registering for the CAT, taxpayers should look into any additional taxes (current or past) that could be owed in the state. Registration of one tax increases detection risk for other taxes.

Should you have questions regarding Oregon CAT or any state tax matter, please contact a member of the Baker Tilly state and local tax team to ensure you are well prepared and in compliance.