While recent polls indicate support for Measure 97 may have softened, there’s still a strong chance it will pass in November.
This measure imposes an unlimited 2.5 percent minimum tax on Oregon gross receipts of entities taxed as C-corporations in excess of $25 million, removing the current cap on Oregon’s minimum tax of $100,000 per year. Pass-through entities such as limited liability companies and S-corporations aren’t subject to this tax. C-corporations that qualify as “benefit companies” in Oregon will remain subject to the current minimum tax structure. If passed, the new law becomes effective for tax years beginning on or after January 1, 2017.
Next Steps
If your company is taxed as a C-corporation, the first step is to determine how Measure 97’s tax increase will impact your company. If you expect your Oregon sales to be in excess of $25 million, the next step is to identify and analyze various strategies to mitigate this increase, which may include:- Service and intangible income sourcing and apportionment study
- Minimum tax pass-through opportunities
- State and local nexus evaluations
- Agricultural cooperative exemption applicability
- Deconsolidation of federal income tax return
- Unitary group analysis
- Separate incorporation of business units
- Converting from a gross receipts model to a commission model
- Electing S-corporation status or other entity strategies
- Qualification as an Oregon benefit company
- Moving certain parts or all of your company out of state
We're Here to Help
Moss Adams can help you determine Measure 97’s impact on your organization as well as analyze and implement mitigating strategies. We’ll also identify and quantify other implications associated with possible alternatives, such as federal income tax implications from deconsolidating a federal income tax return or additional state reporting requirements resulting from a nexus study. Additionally, Moss Adams can keep you informed of any proposed legislative changes that could impact strategies you may be considering.
For more information, contact your Moss Adams professional or email statetax@mossadams.com.