Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 317 - CORPORATION EXCISE TAX ACT OF 1929: RULES AND GENERAL PROVISIONS › Section 150-317-1100 - Agent Exclusion

Current through Register Vol. 63, No. 7, July 1, 2024
(1) "Agent"
			 means a person who is acting on behalf of another and is subject to that other
			 person's control.
(2) All facts and
			 circumstances must be considered to determine if a person is an
			 agent.
(3) An agent may exclude the
			 fair market value of property, money and other amounts from their commercial
			 activity only to the extent the property, money and other amounts are received
			 or acquired on behalf of the person who controls the agent.
(4) An agent must include the agent's fee,
			 commission or remuneration in the agent's commercial activity. An agent's
			 commercial activity includes any property, money and other amounts that an
			 agent retains from the property, money and other amounts received on behalf of
			 the principal to pay the agent's commission, fee or remuneration.
(5)
Examples.
Example 1:
On June 30, 2020, York
				Escrow Company agrees to hold $60,000 for a real estate transaction down
				payment on behalf of Mr. Thomas. Mr. Thomas has the ability to direct payment
				of the real estate down payment. York Escrow Company charges Mr. Thomas a three
				percent fee ($1,800) for the escrow services. York Escrow Company does not
				include the $60,000 real estate down payment in its commercial activity.
				However, York Escrow Company must include the $1,800 fee in its commercial
				activity.
Example 2:
Human Resource
				Services, Inc. (HRS) provides payroll, human resources, and benefits services
				to XYZ Corporation for a fee. As part of its services provided to XYZ, HRS
				processes employee payroll; assists XYZ with hiring and firing, FMLA and OFLA
				regulations; and manages employee insurance benefits. XYZ pays fees to HRS for
				its services in a lump sum that includes the compensation amounts owed to XYZ's
				employees and other payroll amounts. Based on the totality of facts and
				circumstances, HRS acts as the agent of XYZ when paying wages and payroll
				amounts to XYZ's employees. Therefore, HRS does not include in its commercial
				activity the amount it receives from XYZ that corresponds to the compensation
				of XYZ's employees' wages and related payroll amounts, but it must include in
				its commercial activity the fees that it receives from XYZ for its
				services.
Example 3
: Staffing Solutions,
				Inc. provides workers to Office Works. Office Works has the right to control
				the workers as to the details and means of the work performed for Office Works.
				Staffing Solutions is responsible for paying the employees' wages and related
				payroll amounts, serves as the employer of record for taxes, and provides the
				workers with health insurance and other benefits. Office Works reimburses
				Staffing Solutions, according to its payroll schedule frequency, for wages paid
				to the workers and payroll taxes, plus a fee. Based on the totality of facts
				and circumstances, Staffing Solutions acts as the agent of Office Works in
				making payments of wages and payroll taxes to the workers performing services
				under the direction and control of Office Works. The reimbursement amounts paid
				for wages to the workers while on assignment at Office Works and related
				payroll taxes are not included in Staffing Solutions' commercial activity.
				Staffing Solutions must include in its commercial activity all other fees and
				amounts it receives from Office Works.
Example 4
:
Jones
				Corporation owns a plot of land in Oregon and enters into a fixed-price $10
				million contract with a general contractor, Strong-R Construction, to construct
				a mixed-use building on the land. Strong-R Construction agrees to provide
				specified services for the $10 million contract and bears all risks involved in
				completing the project in a cost-effective manner. Strong-R Construction may
				perform the necessary services itself, or it may bid out some or all the work
				to subcontractors. According to the terms of the contract, Strong-R
				Construction is solely responsible and liable for completing the project as
				agreed and does not need to inform or disclose to Jones Corporation any details
				as to the costs or the manner in which the work is conducted or completed.
				Based on the totality of the facts and circumstances, Strong-R Construction
				does not qualify as an agent for purposes of the agency exclusion and includes
				the entire $10 million in Oregon commercial activity.
Example 5
:
ABC
				Corporation (ABC) enters into a cost-reimbursable contract with DEF
				Construction (DEF) to construct or equip an office building in Oregon. ABC
				agrees to pay DEF for all costs incurred for completed work by subcontractors,
				plus a fee equal to five percent of the total project costs. Under the terms of
				the contract, DEF must act on behalf of and under the direction and control of
				ABC related to the use of subcontractors. Such direction and control includes,
				but is not limited to, the bidding and awarding of subcontracts, the setting of
				a schedule of activities and deliverables, and the management of project costs.
				DEF acts as a conduit regarding any payments made to the subcontractors, by
				remitting monies received from ABC to the subcontractors, provided that project
				deliverables are completed according to the terms of the subcontracts. ABC pays
				$10 million of project costs to DEF. If DEF turns around and remits the entire
				$10 million to the subcontractors for the total costs of the project work
				completed by the subcontractors, that amount may be excluded from commercial
				activity. However, any portion of the $10 million not remitted directly to the
				subcontractors that is used instead for other expenses such as materials or
				other labor must be included in commercial activity. Assume that DEF remits the
				entire $10 million directly to the subcontractors and collects a $500,000 fee
				($10,000,000 * 5%) from ABC as compensation for the services provided to ABC.
				Based on the totality of facts and circumstances, DEF includes only the
				$500,000 fee in its commercial activity.
Statutory/Other Authority: ORS
				  305.100 &
				  317A.143
Statutes/Other Implemented: ORS
				  317A.100