Opinion ID: 6534259
Heading Depth: 2
Heading Rank: 3

Heading: Corporate Income Tax: Text and Context

Text: We turn then to the substantive question: whether the banks were subject to taxation under Oregon's corporate income tax. The text of the relevant statutory provision states: (1) There hereby is imposed upon every corporation for each taxable year a tax at the rate provided in ORS 317.061 upon its Oregon taxable income derived from sources within this state, other than income for which the corporation is subject to the tax imposed by ORS chapter 317 according to or measured by its Oregon taxable income. (2) Income from sources within this state includes income from tangible or intangible property located or having a situs in this state and income from any activities carried on in this state, regardless of whether carried on in intrastate, interstate or foreign commerce. ORS 318.020.  The question that taxpayer presents is whether the banks have income derived from sources within this state under ORS 318.020(1). 6 Taxpayer has stipulated that the banks charged Oregonians almost $150 million in fees for each of tax years at issue, and it does not dispute that those fees qualify as income within the meaning of the corporate income tax. As for whether that income was derived from sources within this state, taxpayer does not propose that any of those words has a technical legal meaning; thus, we generally give those terms their ordinary meaning. See, e.g. , PGE v. Bureau of Labor and Industries , 317 Or. 606 , 611, 859 P.2d 1143 (1993) ([W]ords of common usage typically should be given their plain, natural, and ordinary meaning.). We see no need to belabor the ordinary meaning of the phrase. A source can be an individual, company, or corporation initiating a payment. Webster's New Int'l Dictionary 2405 (2d ed. unabridged 1961). If customers located in Oregon are paying money to a taxpayer, then taxpayer would appear to have income derived from sources within this state, within the ordinary sense of those words. Taxpayer argues, however, that the statutory context shows that the meaning of the phrase is actually much narrower. The legislature provided a list of three examples of what constitutes income from sources within this state in ORS 318.020(2) : 7 income from property located here, income from property with a situs here, and income from activities here. Taxpayer correctly recognizes that the examples in ORS 318.020(2) are not exclusive, because of the connotation of the term includes, and asserts that our understanding of income derived from sources within this  state should be informed by what it considers the common characteristic of all the examples. Specifically, taxpayer contends that each [example] involves income derived from the taxpayer's physical presence in the  state. (Emphasis in original.) Thus, taxpayer asserts, we should conclude that income derived from sources within this state requires a taxpayer to have a physical presence in Oregon. We agree with taxpayer that the examples in subsection (2) are context for understanding the meaning of the phrase income derived from sources within this state. We often apply the interpretive rule noscitur a sociis ('it is known by its associates') to help us determine the meaning of a word or phrase by considering other words in the same sentence or provision. Bates v. Bankers Life and Casualty Co. , 362 Or. 337 , 346, 408 P.3d 1081 (2018) (citation omitted). In Daniel N. Gordon, PC v. Rosenblum , 361 Or. 352 , 393 P.3d 1122 (2017), we explained that noscitur a sociis was the relevant rule for interpreting a word or phrase when the legislature had provided a nonexclusive list of examples: [T]he maxim noscitur a sociis reminds us that the meaning of words in a statute may be clarified or confirmed by reference to other words in the same sentence or provision. Id. at 365 , 393 P.3d 1122 (internal quotation marks and citation omitted). In accordance with that interpretive rule, we ask whether the examples share a common characteristic. See State v. Kurtz , 350 Or. 65 , 76, 249 P.3d 1271 (2011) (internal quotation marks, citation, and emphasis omitted). However, we do not find in the examples set out in ORS 318.020(2) the common characteristic that taxpayer asserts. What is common to all the examples-income from tangible or intangible property located or having a situs in this state and income from any activities carried on in this state-is that the source of the income -the property or the activities-are in this state. The examples imply only the taxpayer's existence as recipient of the income, and they say nothing about where the taxpayer must be located. The common characteristic that we find thus accords with the ordinary meaning of the text: there must be income from sources within this state, and the taxpayer must receive that income. Nothing about the statutory text or context  suggests that the taxpayer must also have some physical presence here. 8