United States

Oregon: Market-Based Sourcing Bill Passes Both Houses

Jun 26, 2017
From KPMG TaxWatch

Loading the player...

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:

  • In the case of a sale, rental, lease or license of real property, the sale will be attributed to Oregon if and to the extent the real property is located in Oregon
  • In the case of a rental, lease or license of tangible personal property, the sale will be attributed to Oregon if and to the extent the tangible personal property is located in Oregon
  • In the case of a sale of services, the sale will be attributed to Oregon if and to the extent the service is delivered to a location in Oregon
  • In the case of the sale, rental, lease or license of intangible property, the sale will generally be attributed to Oregon if and to the extent the intangible property is used in Oregon. There are special rules for certain types of intangibles. A contract right, government license or similar intangible property that authorizes the holder to conduct a business activity in a specific geographic area is deemed will be deemed to be used in Oregon if the geographic area includes all or part of the state. Intangible property sales that are contingent on the productivity, use or disposition of the intangible property will be treated as the rental, lease or licensing of intangible property.

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.


For more information about TWIST or to view archived episodes, please visit our TWIST homepage.

 Subscribe to TWIST via iTunes, or  Subscribe via RSS.

To receive TWIST e-mails each Monday morning, make sure that state, local and indirect is checked off as one of your topics of interest on the KPMG TaxWatch registration site.


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.