Jun 26, 2017
From KPMG TaxWatch
Under current Oregon law, receipts from sales other than sales of tangible personal property are sourced the state if a greater proportion of the income-producing activity is performed in Oregon than in any other state, based on costs of performance. In the past, in certain circumstances, the Department of Revenue has interpreted the income-producing activity test in a manner that essentially resulted in market-based sourcing. Recently, Senate Bill 28, which adopts market-based sourcing effective for tax years beginning on or after January 1, 2018, passed both houses of the Oregon legislature. Under the bill, sales, other than sales of tangible personal property, will be sourced to Oregon if the taxpayer’s market for the sale is in Oregon. Specific rules apply in determining whether the market for certain types of sales will be deemed to be in Oregon:
Any receipts from a sale of intangible property not specifically described in the statute will be excluded from the numerator and the denominator of the sales factor entirely. If a taxpayer cannot source any type of receipt using the rules discussed above, taxpayers must reasonably approximate the state or states to which the receipts should be assigned. The new market-based sourcing rules would not apply to taxpayers required to apportion under Oregon Revised Statutes section 314-280, which addresses financial institutions and public utilities. Please contact Rob Passmore at (503) 820-6844 or Chris Canale at (503) 820-6862 with questions.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.