The Oregon Department of Revenue has released new guidance which allows sellers in Oregon to exclude certain income from Oregon’s Corporate Activity Tax (CAT). A seller may exclude receipts from a sale to a wholesaler in Oregon if the wholesaler can certify it has the intent to resell the property out of state. To do so, the wholesaler must provide an out-of-state resale certificate at the time of the sale. Any document may serve as an out-of-state resale certificate, provided it contains certain required information. Click here for an example certificate provided by ODR.1 Required information includes:
- The wholesaler’s legal name and Oregon address;
- The wholesaler’s federal tax identification number;
- The date of the purchase;
- The total amount of purchased property;
- The purchase price paid by the wholesaler;
- The dollar amount of purchased property that the wholesaler will resell outside of Oregon; and
- The signature of the wholesaler, their authorized representative, or employee, certifying that the entity is a wholesaler, as that term is defined in Oregon Laws 2019, Chapter 122, Section 58(20), as amended by Oregon Laws 2019, chapter 579, Section 50.
It is the responsibility of the wholesaler to determine the amount of purchased property that will be resold outside of Oregon. This is to be done at the time of purchase. If the wholesaler is unable to do so at the time of purchase, it may estimate the amount of property to be sold out of state using the approximation ratio:
Commercial Activity from Oregon Sales in the Prior Year ÷ Commercial Activity from All Sales in the Prior Year
If the approximation ratio does not apply, a wholesaler may use a reasonable alternative. Click here for more details.1
As a reminder, the 1st Quarter Estimates for the CAT are due on April 30th. Quarterly estimates are required for any business that will owe at least $5,000 in Corporate Activity Tax for the year. The following worksheet can be used to calculate the estimated CAT liability: https://www.oregon.gov/dor/programs/businesses/Documents/CAT/worksheet-or-cat_106-007_2020.pdf
Registration for the CAT is required for any business with $750,000 in Oregon commercial activity and those businesses must register within 30 days of reaching the $750,000 threshold. Please visit the Oregon Department of Revenue website for items excluded from the calculation of Oregon commercial activity. Registration is available through Revenue Online.
For example situations of out-of-state resales, and answers to frequently asked questions, click here.2
For updates on new CAT rulings, subscribe to the CAT mailing list here.3