Credits Can No Longer Be Applied Against Oregon’s Minimum Tax

On August 2, 2017, Governor Kate Brown signed House Bill (HB) 2066, permanently barring C corporations from applying earned or purchased tax credits against Oregon minimum tax liabilities.

Background

Oregon’s minimum tax is assessed on Oregon-sourced gross receipts of C corporations, with a current cap of $100,000 per year for those with Oregon receipts of $100 million or more. Prior to 2015, a wide variety of tax credits were allowed as offsets to the minimum tax.

In 2015, Oregon imposed a six-year suspension on credits for tax years beginning on or after January, 1 2015 with the suspension set to expire for tax years beginning on or after January 1, 2021. HB 2066 removed the sunset of that suspension, permanently prohibiting C corporations from using tax credits to offset their minimum tax liabilities.

Impact

There’s no immediate impact on the Oregon tax liabilities of C corporations because the suspension period enacted under previous law wasn’t set to sunset until 2021. However, C corporations with significant Oregon credit carryover balances included in deferred tax assets may need to determine whether a valuation allowance is now required. 

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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 or visit our services page.

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