Oregon Updates IRC Conformity, Repeals Tax Haven Law

The Oregon governor signed a bill:

  • updating the state’s income tax Internal Revenue Code (IRC) conformity date to December 31, 2017;
  • altering the treatment of the federal temporary dividends received deduction; and
  • repealing the addition that unitary groups must make for income or losses from members incorporated in listed tax havens.

Oregon IRC Conformity

The previous conformity date was December 31, 2016. The updated conformity date applies to tax years beginning on or after January 1, 2018. If a taxpayer is entitled to a refund before January 1, 2018, because of any retroactive treatment from the amendments, the refund will be paid without interest.

Oregon Dividends Received Deduction

Taxpayers must add the amount of federal dividends received deduction related to repatriation to taxable income for tax years after January 1, 2017. There is now a state credit for the reported repatriated income for the 2017 tax year. The credit can not exceed the amount of:

  • Oregon tax attributable to income reported under IRC Sec. 965 as deferred foreign income for tax years beginning after December 31, 2016 and before January 1, 2018; or
  • the total amount of tax, if any, added under Oregon’s tax haven addition imposed for all tax years between December 31, 2013 and December 31, 2016.

In addition, the credit cannot exceed the taxpayer’s tax liability for the year and can be carried forward for five years.

Oregon Tax Haven Addition Repeal

Finally, the addition for income or losses of unitary group members located in listed tax havens is repealed. The repeal applies to tax years after December 31, 2016. The Department of Revenue must prepare a report comparing the efficacy of:

  • the repealed tax haven law; and
  • the federal law requiring shareholders of controlled foreign corporations to include global intangible low-taxed income (GILTI) in gross income.

S.B. 1529, Laws 2018, effective on the 91st day following adjournment of the 2018 legislative session

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