1 / 45

AN OVERVIEW OF OREGON CORPORATE EXCISE AND INCOME TAXES and other business taxes Legislative Revenue Office January 2

2. Common TermsTax LiabilityTax CollectionsApportionmentCreditsBusiness Taxation. 3. Corporate Tax Terms. Excise Tax vs. Income TaxUnitary reporting requirementApportionment vs. AllocationC-corporation vs. S-corporationCarry-back vs. Carry-forward. 4. Tax Liability. 5. STATES CORPORATE TOP

rodney
Download Presentation

AN OVERVIEW OF OREGON CORPORATE EXCISE AND INCOME TAXES and other business taxes Legislative Revenue Office January 2

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. 1 AN OVERVIEW OF OREGON CORPORATE EXCISE AND INCOME TAXES (and other business taxes) Legislative Revenue Office January 2007 Oregon is one of 46 states with an income-based tax on corporations. Unitary income reporting in Oregon requires that business operating in Oregon and filing a federal consolidated tax return (combining the income of an affiliated group of corporations) must also file a consolidated return for Oregon. The income of the consolidated group is subject to apportionment using the Oregon apportionment formula, as if it were earned by a single taxpayer. By definition a federal consolidated return excludes income earned by foreign affiliates. These provisions were adopted in 1984 in (special session) HB 3029. Oregon is one of 46 states with an income-based tax on corporations. Unitary income reporting in Oregon requires that business operating in Oregon and filing a federal consolidated tax return (combining the income of an affiliated group of corporations) must also file a consolidated return for Oregon. The income of the consolidated group is subject to apportionment using the Oregon apportionment formula, as if it were earned by a single taxpayer. By definition a federal consolidated return excludes income earned by foreign affiliates. These provisions were adopted in 1984 in (special session) HB 3029.

    2. 2 Oregon is one of 46 states with an income-based tax on corporations. Unitary income reporting in Oregon requires that business operating in Oregon and filing a federal consolidated tax return (combining the income of an affiliated group of corporations) must also file a consolidated return for Oregon. The income of the consolidated group is subject to apportionment using the Oregon apportionment formula, as if it were earned by a single taxpayer. By definition a federal consolidated return excludes income earned by foreign affiliates. These provisions were adopted in 1984 in (special session) HB 3029. Oregon is one of 46 states with an income-based tax on corporations. Unitary income reporting in Oregon requires that business operating in Oregon and filing a federal consolidated tax return (combining the income of an affiliated group of corporations) must also file a consolidated return for Oregon. The income of the consolidated group is subject to apportionment using the Oregon apportionment formula, as if it were earned by a single taxpayer. By definition a federal consolidated return excludes income earned by foreign affiliates. These provisions were adopted in 1984 in (special session) HB 3029.

    3. 3 Corporate Tax Terms Oregon is one of 46 states with an income-based tax on corporations. Unitary income reporting in Oregon requires that business operating in Oregon and filing a federal consolidated tax return (combining the income of an affiliated group of corporations) must also file a consolidated return for Oregon. The income of the consolidated group is subject to apportionment using the Oregon apportionment formula, as if it were earned by a single taxpayer. By definition a federal consolidated return excludes income earned by foreign affiliates. These provisions were adopted in 1984 in (special session) HB 3029. Oregon is one of 46 states with an income-based tax on corporations. Unitary income reporting in Oregon requires that business operating in Oregon and filing a federal consolidated tax return (combining the income of an affiliated group of corporations) must also file a consolidated return for Oregon. The income of the consolidated group is subject to apportionment using the Oregon apportionment formula, as if it were earned by a single taxpayer. By definition a federal consolidated return excludes income earned by foreign affiliates. These provisions were adopted in 1984 in (special session) HB 3029.

    4. 4 Tax Liability

    5. 5 STATES CORPORATE TOP TAX RATES (%) – Tax Year 2006 * indicates a state with multiple tax rates

    6. 6 History of Corporate Tax Liability

    7. 7 Annual Change in Tax Liability (Without Kicker)

    8. 8

    9. 9 Number of C-Corporations with Positive Taxable Income (Tax Year 2004) “S” corporations generally do not pay corp. income tax. Instead the income is divided among the shareholders and reported on their personal income tax returns. However “S” corporations must file a corp. tax return and pay the $10 minimum tax. “S” corps. must have <75 shareholders, all individs. and U.S. residents. Cannot be a financial institution, insurance co., or a domestic int’l. sales corp. All corps. that do not elect to be an “S” corp. are “C” corporations. “C” corps. are “Oregon only” if they have no taxable activities in any other state or foreign country. If they are taxable by another state or country they are termed a “Multistate corporation.” “C” corps. pay a state tax of 6.6% of net income, or if they owe no tax, a $10 minimum tax. Note: In 1998, of about 77,400 total corp. tax returns: 49% (37,913) of the total were C-corps. 14% (11,078) of the total were Multistate C-corps. 35% (26,835) of the total were OR-only C-corps. 51% (39,473) were S-corp. returns“S” corporations generally do not pay corp. income tax. Instead the income is divided among the shareholders and reported on their personal income tax returns. However “S” corporations must file a corp. tax return and pay the $10 minimum tax. “S” corps. must have <75 shareholders, all individs. and U.S. residents. Cannot be a financial institution, insurance co., or a domestic int’l. sales corp. All corps. that do not elect to be an “S” corp. are “C” corporations. “C” corps. are “Oregon only” if they have no taxable activities in any other state or foreign country. If they are taxable by another state or country they are termed a “Multistate corporation.” “C” corps. pay a state tax of 6.6% of net income, or if they owe no tax, a $10 minimum tax. Note: In 1998, of about 77,400 total corp. tax returns: 49% (37,913) of the total were C-corps. 14% (11,078) of the total were Multistate C-corps. 35% (26,835) of the total were OR-only C-corps. 51% (39,473) were S-corp. returns

    10. 10 Tax Liability of C-Corporations with Positive Taxable Income (Tax Year 2004) “S” corporations generally do not pay corp. income tax. Instead the income is divided among the shareholders and reported on their personal income tax returns. However “S” corporations must file a corp. tax return and pay the $10 minimum tax. “S” corps. must have <75 shareholders, all individs. and U.S. residents. Cannot be a financial institution, insurance co., or a domestic int’l. sales corp. All corps. that do not elect to be an “S” corp. are “C” corporations. “C” corps. are “Oregon only” if they have no taxable activities in any other state or foreign country. If they are taxable by another state or country they are termed a “Multistate corporation.” “C” corps. pay a state tax of 6.6% of net income, or if they owe no tax, a $10 minimum tax. Note: In 1998, of about 77,400 total corp. tax returns: 49% (37,913) of the total were C-corps. 14% (11,078) of the total were Multistate C-corps. 35% (26,835) of the total were OR-only C-corps. 51% (39,473) were S-corp. returns“S” corporations generally do not pay corp. income tax. Instead the income is divided among the shareholders and reported on their personal income tax returns. However “S” corporations must file a corp. tax return and pay the $10 minimum tax. “S” corps. must have <75 shareholders, all individs. and U.S. residents. Cannot be a financial institution, insurance co., or a domestic int’l. sales corp. All corps. that do not elect to be an “S” corp. are “C” corporations. “C” corps. are “Oregon only” if they have no taxable activities in any other state or foreign country. If they are taxable by another state or country they are termed a “Multistate corporation.” “C” corps. pay a state tax of 6.6% of net income, or if they owe no tax, a $10 minimum tax. Note: In 1998, of about 77,400 total corp. tax returns: 49% (37,913) of the total were C-corps. 14% (11,078) of the total were Multistate C-corps. 35% (26,835) of the total were OR-only C-corps. 51% (39,473) were S-corp. returns

    11. 11 Average Net Tax (2004)

    12. 12 C-Corporate Returns By Income Group ($000s) (Oregon Only and Multi-State - 2004)

    13. 13 C-Corporate Liability By Income Group ($000s) (Oregon Only and Multi-State - 2004)

    14. 14

    15. 15 Tax Collections

    16. 16 History of Corporate Tax Collections

    17. 17 Annual Change in Tax Collections

    18. 18

    19. 19 Collections for Selected Sectors 12-Month Moving Totals

    20. 20 Dollar Change ($M) and Percent Change in Collections for Selected Sectors (FY01 to FY06)

    21. 21 Collections for Tax Year 2004

    22. 22 Collections for Tax Year 2001

    23. 23 Collections for Tax Year 2006

    24. 24 Collections for Tax Year 2006

    25. 25 Multi-State Apportionment

    26. 26

    27. 27 Oregon’s Apportionment Formula Applies only to multi-state corporations 21% of all corporations in 2004 Roughly 12,000 C-corporations and 5,600 S-corporations Three Exceptions to SSF Insurance companies use equal-weighted formula Utilities and Telecom. corporations may use double-weighted sales factor Certain wood products corporations must use double-weighted sales factor

    28. 28 Corporations Affected by Single Sales Factor (2004 Number and Tax) All Corporations 83,704 $311.3 Less Oregon-only 66,174 $42.5 Less Multi-State Ins. Cos. 1,130 $32.1 Less Multi-State S-corps 5,637 $1.0 Less Multi-State C, min tax 6,521 $0.1 Equals Corps Affected 4,242 $235.7

    29. 29 e.g., Multistate Corp “A” doing bus. in OR and WA w/ $5 mil. net income total payroll is $40 mil., of which $12 mil. is in OR, so the corp’s. OR payroll factor is (12/40) or 30%. Similarly, the property factor is 40%, and sales factor is 20%. The average of the three factors is 30%, so 30% of the $5 mil. total income, or $1.5 mil. is apportioned to OR. The remaining 70% is apportioned to WA. Thus all the income is apportioned, although only $1.5 mil. of income is taxed. Oregon Tax on $1.5 mil. @ 6.6% is $99,000.e.g., Multistate Corp “A” doing bus. in OR and WA w/ $5 mil. net income total payroll is $40 mil., of which $12 mil. is in OR, so the corp’s. OR payroll factor is (12/40) or 30%. Similarly, the property factor is 40%, and sales factor is 20%. The average of the three factors is 30%, so 30% of the $5 mil. total income, or $1.5 mil. is apportioned to OR. The remaining 70% is apportioned to WA. Thus all the income is apportioned, although only $1.5 mil. of income is taxed. Oregon Tax on $1.5 mil. @ 6.6% is $99,000.

    30. 30 Several states have recently adopted more heavily sales-weighted apportionment factors. This is usually part of a strategy to attract investment and jobs, since these are less heavily factored into a ‘super-sales weighted’ apportionment formula (e.g 1999 SB 1275). The example shows single-sales apportionment (only sales is considered in the calculation). A corporation with an Oregon sales factor that is relatively smaller than its property and payroll factors would have a smaller average apportionment factor and would pay less tax under super-weighted sales apportionment. E.g. for corp. A, super-weighting sales further reduces the average apportionment factor, Oregon income and tax. Conversely A corporation with an Oregon sales factor that is relatively larger than its property and payroll factors would pay more tax under super-weighted sales apportionment. Note: The effect of income and tax from sales ‘thrown-back’ under the throwback rule is magnified with increased sales weighting.Several states have recently adopted more heavily sales-weighted apportionment factors. This is usually part of a strategy to attract investment and jobs, since these are less heavily factored into a ‘super-sales weighted’ apportionment formula (e.g 1999 SB 1275). The example shows single-sales apportionment (only sales is considered in the calculation). A corporation with an Oregon sales factor that is relatively smaller than its property and payroll factors would have a smaller average apportionment factor and would pay less tax under super-weighted sales apportionment. E.g. for corp. A, super-weighting sales further reduces the average apportionment factor, Oregon income and tax. Conversely A corporation with an Oregon sales factor that is relatively larger than its property and payroll factors would pay more tax under super-weighted sales apportionment. Note: The effect of income and tax from sales ‘thrown-back’ under the throwback rule is magnified with increased sales weighting.

    31. 31 The Impact of the Single Sales Factor by income class, tax year 2004

    32. 32 Impact on Tax (2004) if SSF

    33. 33 The Impact of the Single Sales Factor Selected Sectors, tax year 2004

    34. 34 Average Impact of Single Sales Factor (Tax Years 1999 to 2004)

    35. 35 Credits

    36. 36

    37. 37 Share of Credits Used and Unused Tax Years 1998 - 2004

    38. 38 Corporate Tax Credits Used

    39. 39 Trends in C Corporations’ Use of Major Tax Credits – 2001-2004

    40. 40 Trends in C Corporations’ Unused Tax Credits 2001-2004

    41. 41 Business Income Taxation Sole Propietors Partnerships General Limited Liability Corporations C-Corporations S-Corporations Limited Liability Companies

    42. 42 Business Income Tax Returns Proprietors file federal schedule C with their PIT. Farm proprietors file federal schedule F with their PIT. Miscellaneous includes rents, royalties, estates, trusts, S-corporations and partnerships (including LLCs). Those receiving income from these sources file federal schedule E with their PIT. S-corporations file separate returns but pass distributed business income through to share holders, who report it on Schedule E with their PIT. C-corporations file Oregon excise tax returns and pay tax on net income at the business level. Proprietors file federal schedule C with their PIT. Farm proprietors file federal schedule F with their PIT. Miscellaneous includes rents, royalties, estates, trusts, S-corporations and partnerships (including LLCs). Those receiving income from these sources file federal schedule E with their PIT. S-corporations file separate returns but pass distributed business income through to share holders, who report it on Schedule E with their PIT. C-corporations file Oregon excise tax returns and pay tax on net income at the business level.

    43. 43 Business Income by Business Type ($000s) Proprietors file federal schedule C with their PIT. Farm proprietors file federal schedule F with their PIT. Miscellaneous includes rents, royalties, estates, trusts, S-corporations and partnerships (including LLCs). Those receiving income from these sources file federal schedule E with their PIT. S-corporations file separate returns but pass distributed business income through to share holders, who report it on Schedule E with their PIT. C-corporations file Oregon excise tax returns and pay tax on net income at the business level. Proprietors file federal schedule C with their PIT. Farm proprietors file federal schedule F with their PIT. Miscellaneous includes rents, royalties, estates, trusts, S-corporations and partnerships (including LLCs). Those receiving income from these sources file federal schedule E with their PIT. S-corporations file separate returns but pass distributed business income through to share holders, who report it on Schedule E with their PIT. C-corporations file Oregon excise tax returns and pay tax on net income at the business level.

    44. 44 Percent of Total Returns by Income Group and Business Type – Tax Year 2004

    45. 45

More Related