[Revenews] SB 1529

[LARIMER Jason * DOR]

Oregon Corporation Excise/Income Tax Update:
SB 1529 has been signed by Governor Brown and will become effective on June 2, 2018.
As a result of the passage of Public Law 115-97, enacted on December 22, 2017, IRC 965 is amended to require that taxpayers include the accumulated post-1986 deferred foreign income of foreign corporations in their federal taxable income for 2017 (deemed repatriation).

In response, the Oregon Legislature passed SB 1529 (2018). This legislation retroactively impacts tax year 2017 for corporations in the following ways:

A. Repeals the Oregon listed jurisdiction provisions at ORS 317.716 for tax years beginning on or after January 1, 2017.
B. Requires an Oregon addition related to the IRC 965 inclusion for tax year 2017.
C. Allows an Oregon subtraction related to the IRC 965 inclusion for tax year 2017.
D. Creates a credit related to the IRC 965 inclusion for tax year 2017.

A. Repeal of listed jurisdiction provisions.
SB 1529 repeals ORS 317.716 for tax years beginning on or after January 1, 2017. Accordingly, don't include the addition or subtraction required by ORS 317.716 on your tax year 2017 Oregon tax return. Corporations who paid Oregon tax because of the addition required by ORS 317.716 in tax years 2014, 2015, and/or 2016 may qualify for a tax credit. See more information below under Repatriation credit (due to IRC 965).

B. Repatriation addition (due to IRC 965)-addition code 184.
SB 1529 requires that the gross amount of the IRC 965 inclusion be included in Oregon taxable income. Compute this addition by adding to federal taxable income the amount included on Line 1 of your IRC 965 Transition Tax Statement. Include this addition on Schedule OR-ASC-CORP, using code 184. Include a copy of your federal IRC 965 Transition Tax Statement with your Oregon return.

Special note: The IRS allows tax on the repatriated income to be paid over eight years; however, Oregon isn't tied to this extension of time for paying the tax. The Oregon tax on the repatriated income is due by the due date of your return, excluding extensions.

C. Repatriation subtraction (due to IRC 965)-subtraction code 377.
SB 1529 allows an Oregon dividend received deduction against the Oregon repatriation addition. This subtraction is not computed using Form OR-DRD. Instead, if the repatriation is derived from a 20% owned corporation as described in ORS 317.267(2)(b), compute the subtraction by multiplying the repatriation addition by 80%. Otherwise, compute the subtraction by multiplying the amount of the repatriation addition by 70%. Include this subtraction on Schedule OR-ASC-CORP using code 377.

D. Repatriation credit (due to IRC 965)-credit code 870.
SB 1529 creates a tax year 2017 tax credit equal to the lesser of two amounts:
*         The Oregon tax attributable to the IRC 965 inclusion for tax year 2017.
*         The total Oregon tax attributable and imposed on the ORS 317.716 listed jurisdiction additions as filed or as adjusted for tax years 2014, 2015, and 2016.
The amount of the Oregon credit is computed using Oregon Form OR-REPAT-CR, Repatriation Credit, (Due to IRC 965). This form will be available July 2018 at www.oregon.gov/dor/forms<http://www.oregon.gov/DOR/forms/Pages/default.aspx>. OR-REPAT-CR must be included with your return to claim the credit. Claim this credit on Schedule OR-ASC-CORP, using code 870.

The department is currently drafting an administrative rule that will provide guidance as to how the repatriation credit is calculated. It is intended that the public comment period for this rule will begin on May 1, 2018 and will end on May 22, 2018. It is anticipated that this rule will be effective on July 1, 2018.

We encourage corporations impacted by SB 1529 to file on extension. However, remember that an extension of time is to file isn't an extension of time to pay the tax.

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