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Oregon Commercial Activity Tax

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It has been an entire year since the Oregon Commercial Activity Tax (CAT) took effect January 1, 2020. Many businesses have already registered and are making the required estimated tax payments. Now the first annual tax return will be filed this year for the 2020 tax year.

As a refresher, here are some high level highlights of the tax:

  • The tax is imposed at a rate of 0.57% on a taxpayer’s taxable commercial activity in excess of $1 million plus a flat amount of $250.
  • Commercial activity is the gross receipts from transactions and activities in the regular course of a trade or business, without deductions, but there are certain items that are excluded.
  • A deduction of 35% of the greater of either cost inputs or compensation is allowed against a taxpayers commercial activity.
  • Taxpayers with $750,000 or more in commercial activity are required to register with the state, but are not subject to the tax until their taxable commercial activity exceeds $1 million.
  • Unitary groups are treated as a single taxpayer and needs to be disclosed.

At this point you might be scratching your head and wondering “ok, so is my business subject to this tax?” Well as everything is in the tax world, the answer to that is, it depends. So where do you start? The best place to start is to determine your sales to Oregon based customers. Please note, if you own multiple businesses you may have a unitary group where you will have to aggregate Oregon sales across all entities to determine your potential CAT obligations. If this amount is close to or exceeds $750,000 you should start a conversation with your tax advisor so you can plan appropriately or you might be lucky and your type of gross receipts are exempt.

As this is still a fairly new tax that businesses are adjusting to and tax professionals are still wading through the guidance, we wanted to remind taxpayers of the upcoming due dates. Note: All due dates in bold refer to 2021 unless other specified.

  • February 1st 2020 4th Quarter Estimate
  • April 15th2020 Form OR-CAT or Request Extension
  • April 30th2021 1st Quarter Estimate
  • August 2nd2021 2nd Quarter Estimate
  • October 15th Extended 2020 Form OR-CAT
  • November 1st2021 3rd Quarter Estimate
  • February 1, 2022 — 2021 4th Quarter Estimate

If you have questions about the OR CAT or the upcoming due dates, please contact your Berntson Porter representative at 425-454-7990.

Berntson Porter is here to help businesses navigate these challenging times. Visit our Resource Center for up-to-date information about COVID-19 legislation that impacts you and your business


     

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