The Oregon Senate recently approved House Bill 4202, which will provide much needed revisions to the original Commercial Activity Tax (CAT) legislation enacted last year. The Bill passed by a 26-1 vote after unanimous approval in the House and is now headed to Governor Brown for signature.
Significant revisions in the bill include:
- Taxable gross receipts can now be reduced by returns and allowances in arriving at taxable commercial activity. The original law did not provide for this reduction.
- The legislation provides fiscal year taxpayers the ability to compute their statutory subtraction using their most recent fiscal year-end.
- For farming operations that do not report cost of goods sold, the taxpayer’s operating expenses, excluding labor costs, can be used to compute the statutory subtraction.
- Taxpayers will now be required to register only once, instead of annually.
- Unitary groups can now exclude affiliated foreign entities if they have no Oregon commercial activity.
- The penalty for underpayment of quarterly estimated tax payments has been reduced to 5%, a safe-harbor was added, and the 80% threshold for estimated quarterly estimated tax payments has been extended through tax year 2021.