Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 314 - INCOME TAXATION GENERALLY GENERAL PROVISIONS › Section 150-314-0367 - Taxable in Another State; When a Taxpayer is "Subject To" Tax Under ORS 314.620(1)

Current through Register Vol. 63, No. 7, July 1, 2024
(1) A
			 taxpayer is "subject to" one of the taxes specified in ORS
			 314.620(1) only
			 if it carries on business activity in such state and such state imposes such a
			 tax thereon. Any taxpayer which asserts that it is subject to one of the taxes
			 specified in ORS 314.620(1) in
			 another state shall furnish to the Department upon its request evidence to
			 support such assertion. The Department may request that such evidence include
			 proof that the taxpayer has filed the requisite tax return in such other state
			 and has paid any taxes imposed under the law of such other state; the
			 taxpayer's failure to produce such proof may be taken into account in
			 determining whether the taxpayer in fact is subject to one of the taxes
			 specified in ORS 314.620(1) in
			 such other state. If the taxpayer voluntarily files and pays one or more of
			 such taxes when not required to do so by the laws of that state or pays a
			 minimal fee for qualification, organization or for the privilege of doing
			 business in that state, but (a) does not actually engage in business activity
			 in that state, or (b) does actually engage in some business activity, not
			 sufficient for nexus, and the minimum tax bears no relation to the taxpayer's
			 business activity within such state, the taxpayer is not "subject to" one of
			 the taxes specified within the meaning of ORS
			 314.620(1).
Example:
State A has a corporation franchise tax
				measured by net income, for the privilege of doing business in that state.
				Corporation X files a return and pays the $50 minimum tax, although it carries
				on no activity in State A. Corporation X is not "taxable" in State
				A.
(2) The concept of
			 taxability in another state is based upon the promise that every state in which
			 the taxpayer is engaged in business activity may impose an income tax even
			 though every state does not do so. In states which do not, other types of taxes
			 may be imposed as a substitute for an income tax. Therefore, only those taxes
			 enumerated in ORS 314.620(1)
			 which may be considered as basically revenue raising rather than regulatory
			 measures shall be considered in determining whether the taxpayer is "subject
			 to" one of the taxes specified in ORS
			 314.620(1) in
			 another state.
Example (i): State A requires
			 all nonresident corporations which qualify or register in State A to pay to the
			 Secretary of State an annual license fee or tax for the privilege of doing
			 business in the state regardless of whether the privilege is in fact exercised.
			 The amount paid is determined according to the total authorized capital stock
			 of the corporation; the rates are progressively higher by bracketed amounts.
			 The statute sets a minimum fee of $50 and a maximum fee of $500. Failure to pay
			 the tax bars a corporation from utilizing the state courts for enforcement of
			 its rights. State A also imposes a corporation income tax. Nonresident
			 Corporation X is qualified in State A and pays the required fee to the
			 Secretary of State but does not carry on any business activity in State A
			 (although it may utilize the courts of State A). Corporation X is not "taxable"
			 in State A.
Example (ii): Same
			 facts as Example (i) except that Corporation X is subject to and pays the
			 corporation income tax. Payment is prima facie evidence that Corporation X is
			 "subject to" the net income tax of State A and is "taxable" in State A.
Example (iii): State B requires
			 all nonresident corporations qualified or registered in State B to pay to the
			 Secretary of State an annual permit fee or tax for doing business in the state.
			 The base of the fee or tax is the sum of (1) outstanding capital stock, and (2)
			 surplus and undivided profits. The fee or tax base attributable to State B is
			 determined by a three factor apportionment formula. Nonresident Corporation X
			 which operates a plant in State B, pays the required fee or tax to the
			 Secretary of State. Corporation X is "taxable" in State B.
Example (iv): State A has a corporation
			 franchise tax measured by net income for the privilege of doing business in
			 that state. Corporation X files a return based upon its business activity in
			 the state but the amount of computed liability is less than the minimum tax.
			 Corporation X pays the minimum tax. Corporation X is subject to State A's
			 corporation franchise tax.