United States

City of Portland: Pay Ratio Surtax Rule Issued

Oct 16, 2017
From KPMG TaxWatch

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On December 7, 2016, the Portland City Council approved a City of Portland Business License Tax “pay ratio surtax.” The surtax applies to publicly traded-companies doing business in Portland that are subject to the SEC’s pay ratio reporting requirements. The pay ratio compares the compensation of the company CEO to the pay of the median employee. The rate of the surtax is dependent on the company’s reported ratio. If the reported ratio is at least 100:1, but less than 250:1, the surtax is 10 percent of a company’s City of Portland tax liability. If the company’s reported ratio is 250:1 or greater, the surtax rate is 25 percent. Recently, the City’s Revenue Division adopted Business Tax Administrative Rule 500.17-1, which provides guidance on the pay ratio surtax. The rule provides examples of how to calculate the surtax and clarifies that in some instances, it may be necessary to look to a parent corporation’s reported pay-ratio. Notably, if a subsidiary of a publicly-traded company is doing business in Portland, the parent corporation’s reported pay ratio is used to determine the subsidiary’s business license tax surtax. If a the taxpayer believes that using the parent’s reported pay ratio results in an assessment that does not fairly represent the taxpayer’s circumstances, the taxpayer may petition the Director to permit an exception based on the specific facts and circumstances. Please contact Rob Passmore at 503-820-6844 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.