DOR Guidance for CAT Tax
As advertised, the Oregon Department of Revenue (“DOR”) was able to issue additional guidance in late December. Additionally, the DOR issued all of its temporary guidance last week. A comprehensive update of those issuances will follow later this week.
In the meantime, I am touching base now to quickly go over CAT guidance the DOR issued yesterday in the form of frequently asked questions (“FAQs”). All of the FAQs issued to date, including the following three new FAQs may be found here.
- Can you pass the CAT on to your customers? The DOR reiterated the OR CAT statutes do not prohibit businesses from recovering all or a portion of the CAT from its customers. The DOR notes, however, the business must include any CAT in its measure of commercial activity. This is the so-called “CAT on the CAT” we have discussed in the past.
- How do you estimate the amount of CAT attributable to a sale if you were to pass it along? The DOR recommended you contact me for this answer. Well, not me specifically, but your “own legal advisors or tax professionals.” It should be noted the CAT is computed on an annualized basis, taking into account facts that may not be known until year-end. In such cases—which may be all cases—estimating the CAT on your commercial activities of today may be difficult.
- How do motor vehicle dealers account for the CAT? Here the DOR focuses on motor vehicle dealers that transfer vehicles to other dealers. The DOR notes receipts from the sale or transfer of motor vehicles between dealers may be excluded from the computation of the CAT if the transfer is made (a) for the purpose of resale by the transferee dealer and (b) based on the transferee dealer’s need to meet a specific customer’s preference. In those cases, dealers must obtain a resale certificate, which can be in any form of document, so long as it contains certain information. The DOR provides a form of resale certificate here.
Look for another update later this week as I delve into the additional guidance issued in late December and last week. On that point, though, I want to note my understanding is the temporary rules issued last week are substantively the same as the guidance issued by the DOR to this point.