Oregon Corporate Activity Tax Update
Filed under:Construction, Family Business, Healthcare, Private Companies, Small Business Services, Tax Advisory: Oregon
ALERT: The Oregon Department of Revenue is adjusting requirements of businesses making estimated quarterly payments of the Corporate Activity Tax.
Beginning immediately, the Oregon Department of Revenue has revised OAR 150-317-1300, dated April 27, 2020, to reflect a change in the threshold for making estimated tax payments from $5,000 of annual tax liability to $10,000 of annual tax liability for the first year of the tax. This means businesses that will owe less than $10,000 are not required to make quarterly estimated tax payments during 2020.
Revenue also won’t assess penalties for underestimated quarterly payments or for not making a quarterly payment, if businesses don’t have the financial ability to make the estimated payment.
If businesses know they’ll owe $10,000 or more in annual Corporate Activity Tax in 2020 and can pay, they should make estimated quarterly payments and comply with the law to the fullest extent possible.
Information and a worksheet for calculating quarterly payments can be found on the CAT page of the agency website [oregon.gov] under the Beyond the FAQ “When are estimated payments required?” The information has recently been updated to reflect the higher threshold of $10,000 or more.
The Department of Revenue will honor a business taxpayer’s good-faith efforts to comply and not assess penalties if they document their efforts to comply, including how COVID-19 has impacted their business.
If businesses have been impacted by COVID-19 and are finding it difficult to calculate or pay an estimated quarterly payment, they should keep documentation showing:
- Their inability to pay a quarterly payment because of insufficient funds due to COVID-19.
- Their inability to reasonably calculate a quarterly payment or annual tax liability due to their business being impacted by COVID-19.
- That the taxpayer is unclear at this time whether the business will owe Corporate Activity Tax in April 2020 due to COVID-19 impacts, after taking into consideration exclusions and subtractions in the law.
Businesses uncertain about their economic future due to the COVID-19 crisis, or those that have been closed during this crisis and have no ability to determine that they will owe a tax this year, won’t be penalized.
Stakeholders can direct questions or comments about the CAT to the Oregon Department of Revenue via email or by phone 503-945-8005.
Here are some helpful links:
- Registration Portal on the Oregon Revenue Online website
- Frequently Asked Questions (FAQs) about the Oregon CAT
Please make sure you are consulting with your tax advisor in regard to the Oregon Corporate Activity Tax and its relevancy to your tax situation.