Preparing for the New Corporate Activities Tax
A brand-new tax on
companies doing business
in Oregon kicks in
on January 1
ANTHONY K, SMITH
.... but if you're
looking for guidance from
the Oregon Department
of Revenue (DOR) about
how much you might owe
next year, you'll have to
wait a few more months.
The so-called Corporate
Activities Tax (CAT)
is a consumption-based,
business entity-level gross receipts tax,
passed by the Oregon Legislature during the
2019 legislative session. It raises more than
$1 billion in revenue annually to be directed
toward new K-12 education spending. Contrary
to what the name implies, all business
entities, regardless of business structure, are
subject to the new tax. That means C corps, S
corps, partnerships, LLC's, and sole proprietorships
all must register, file, and/or pay
the CAT, so long as they are not exempt.
The tax is $250 + 0.57% of a company's
Oregon sales in excess of $1 million if those
sales constitute "commercial activity," a defined
term in the legislation with many exclusions.
Businesses with $750,000 in commercial
activity must register with DOR,
even if they have no tax liability. Those businesses
with $750,000 or less in commercial
activity are exempt. The legislation also includes
a 35% subtraction against commercial
activity - the greater of cost inputs or labor
costs. Businesses with $1 million or more
in Oregon commercial activity must still file
a return, even if the 35% subtraction results
in no tax owed.
Sounds confusing? It is. And with less than
six months from the end of the legislative
session to the time that the CAT takes effect,
DOR has had precious little time to start
creating rules for administering this massive
new tax. Over the past two months, DOR
held a series of town hall meetings across the
state to seek input from business taxpayers
and tax preparers about the administrative
rules for the CAT.
Here's what we know at this point: DOR
will be releasing temporary rules in three
phases. A first round focused on the most
high-profile issues surrounding the CAT
will come out January 1. Likewise, a second
and third round will come out for medium
and lower priority issues on February 1 and
March 1, respectively. The permanent rulemaking
process will then commence, with
opportunities for public comment.
Some of the expected administrative rules
will be fairly straightforward. Will businesses
be taxed on their sales to out-of-state
customers? No, out-of-state sales fall outside
the definition of Oregon commercial activity
and are thus exempt. Will out-of-state
companies have to pay the tax on their sales
into Oregon? Yes, if they have $1 million or
more in commercial activity in Oregon, they
will have to pay, even if they've never had to
pay taxes in Oregon before. Does the CAT replace
Oregon corporate income tax? No, the
CAT is in addition to any other taxes owed
by a corporation. That means that C corporations
will continue to pay an income tax on
their profits, but they will also have to pay
the CAT if they have $1 million or more in
What are some of the most common types
of sales that are exempt from the definition
of commercial activity? This is where things
get complicated again, because DOR will
likely have to define many of the following
terms in their rules. Notable exemptions
include transportation fuel sales, wholesale
and retail sales of groceries, interest (except
interest on credit sales or service charges),
compensation to employees, gifts or charitable
contributions received, and property,
money and other amounts received or acquired
by an agent on behalf of another in
excess of the agent's commission, fee or other
How will DOR define an agent? Will businesses
be able to add the CAT to their invoices
or receipts, passing the increase on
to their customers? How will DOR deal with
agricultural cooperatives? These questions
all need answers, in addition to countless
others. Have a question or comment for
DOR? You can email them at cat.help.dor@
Will DOR be able to provide Oregon businesses
with enough guidance to start planning
for what they might owe in time? That
would be a herculean task to get right on
the first try, especially given the short timeframe.
One thing is certain though. Estimated
quarterly payments will be due starting
April 30, 2020.
Anthony K. Smith is Oregon state director for
Being Thankful Improves the Workplace
Focusing on the good things in our lives
helps refocus us in a positive way.
Being grateful is associated with greater happiness.
Goodbye summer. It's
time for autumn which
means Thanksgiving is
right around the corner. As
we near the Thanksgiving
season; food, family, and
a spirit of thankfulness
fill our heads like the
falling leaves fill the air.
Thankfulness is one way
to improve everyone's
experience at work, so why
only practice it once a year?
The overwhelming amount of cases of
anxiety and depression populate the news.
Suicide rates are up. The holidays only seem
to contribute to this with pressure to spend
money and with the stress of facing family
issues at social events.
Recent studies show whatever we focus on
in life grows. Focusing on the good things
in our lives, even if it is just the ability to
breathe, walk, have a job, or have a house
helps refocus us in a positive way. Being
grateful is associated with greater happiness.
What are tangible ways to express gratitude
that directly can affect our work?
By the way, thank you to Salem Business
Journal and Bruce Taylor for allowing me to
write a monthly column for over 10 years.
- 1. At the end of each workday write down
a few things that happened for which you
- 2. Write and personally deliver a letter of
thanks to someone who was particularly
kind or helpful to you that week.
- 3. Say thank you to your co-workers,
employers and employees. Research has
shown this makes people more motivated
to work harder.
- 4. Take time at work for "gratitude
sessions." Before a big project, job or
challenge, tell people why a project
means so much to your business. Thank
them for taking it on.
- 5. Meditate or think kindly of people. Research shows this can inform your behavior in the future.
Mary Louise VanNatta, APR, CAE is the CEO of
VanNatta Public Relations, a PR, event planning
and consulting firm in Salem, Oregon. prsalem.com
What to Know as a Young Pro
Better to overdress,
So, you are a new college
graduate, an established
young pro, or on the hunt
for your first "big" job. For
most, you are transitioning
from an organized,
structured school program
to an unpredictable,
chaotic world outside of
This change can be
shocking. The job search
is difficult and often results in repeated
rejection (kind of like my dating life).
Unfortunately, a number of college graduates
give up on their dreams after a few months of
failing and find themselves in dead-end jobs.
Don't let this happen. Eventually, you will
land the job you want and forget all the angst
This column will feature advice for current
and future young professionals as they
navigate and identify the best fit in their
MONTHLY TIP: Better to overdress,than underdress
I learned this one the hard way. There's
nothing like showing up to a suit-and-tie
event in jeans and a sweater (#regret). Don't
be like me.
This doesn't mean you need to dress
formally every day; simply dress
appropriately. Most offices have a business
casual dress code that you should generally
stick to. Slacks, dress shoes, and a nice
button-up work great for men and women.
Avoid blue jeans, sweaters, shorts, t-shirts,
sneakers or branded material. Even if you
have a casual Friday, don't take it too far.
People will judge you by what you wear. You
do not want to remembered for the wrong
In addition, young professionals sometimes
have issues determining what's appropriate
to wear and what's not. Avoid outfits that
show a lot of skin or hug the body too tightly.
A professional office is not the place to take
risks with your outfits. If you want to go out
dancing or to the gym, you should probably
change outfits after work. Don't be that
person dressing inappropriately at the office;
it's embarrassing for everyone and can lead
to awkward conversations. Keep it classy.
Keenan Emery works at VanNatta Public
Relations, a PR, Event Planning and Strategic
Communications firm located in Salem,
Oregon. PRSalem.com, Keenan@PRSalem.