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Oregon Department of Revenue to Increase Estimated Tax Payment Threshold from $5,000 to $10,000, and Other Changes Related to the Oregon Corporate Activity Tax

April 27, 2020

Overview

In a letter dated April 24, 2020, Governor Kate Brown (“Governor Brown”) responded to an apparent request from Oregon Business and Industry (“OBI”) to postpone the implementation of the Oregon Commercial Activity Tax (“Oregon CAT”) in light of the COVID-19 pandemic. In that letter, Governor Brown detailed a few instructions she had made to the Oregon Department of Revenue (“DOR”) with respect to the implementation and collection of the Oregon CAT. Those instructions and changes are as follows:

  • Governor Brown instructed the DOR to raise the threshold for making estimated tax payments from $5,000 of annual tax liability to $10,000 of annual tax liability for the first year of tax. This means businesses that will owe under $10,000 are not required to make quarterly estimated payments during 2020. Such businesses that have not made their first quarter payment do not need to make such payment.
  • The DOR will not assess penalties for underestimated quarterly payments or for not making a quarterly payment if businesses do not have the financial ability to make the estimated payment.
  • If a business knows it will owe more than $10,000 in annual Oregon CAT in 2020, and the business has the ability to pay, then the business should make estimated quarterly payments and comply with the law to the fullest extent possible.
  • The DOR will honor a business taxpayer’s good faith efforts to comply and not assess a penalty if the taxpayer documents the taxpayer’s efforts to comply, including how the COVID-19 pandemic has impacted the taxpayer’s business. We recommend that taxpayers keep documentation in their records that supports their circumstances.

Given the informal nature of this “guidance,” we will continue to track these issues and look for more official pronouncements. If you have any questions or comments about the Oregon CAT, or other state and federal tax issues, please do not hesitate to contact Dan Eller or Alee Soleimanpour.

Please visit Schwabe’s COVID-19 resource page for additional information.

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