Oregon Suspends Use of Tax Credits to Satisfy Minimum Tax Liability

Beginning in tax year 2009, Oregon imposed a minimum tax on corporations based on gross receipts. The voter-approved law allowed taxpayers to satisfy the minimum tax liability with several credits, including credits purchased from other entities.

However, language inserted in Oregon House Bill (HB) 2171 on June 30, 2015, imposes a six-year suspension on the use of tax credits to satisfy the minimum tax liability, which increases the tax liability of many corporations.

Effective January 1, 2015

The new law applies to tax years beginning on or after January 1, 2015, and before January 1, 2021. Under the law, the minimum tax liability for this period may not be:

  • Reduced
  • Paid
  • Satisfied through the use of any tax credit

The bill was signed into law July 20, 2015, by Governor Kate Brown.

Important Considerations

Corporations that included available credits to compute their Oregon tax liability in making estimated tax payments for tax years beginning on or after January 1, 2015, may now be underpaid. HB 2171 doesn’t include a waiver or abatement of any interest on the consequent underpayment of estimated tax.

Tax credits may again be used to satisfy the minimum tax liability for tax years beginning on or after January 1, 2021.

Oregon law, however, limits carryover periods for many credits. HB 2171 restricts the use of these credits but doesn’t provide for an extension of the carryover period. Taxpayers with credit carryovers may need to evaluate any credit balances included in financial statements.

We're Here to Help

For more information about taxation in Oregon and other states, or for help determining what the implications are for your business, email statetax@mossadams.com.