Or. Admin. R. 150-314-0427

Current through Register Vol. 63, No. 6, June 1, 2024

Section 150-314-0427 - Sales Factor; Numerator

(1) For purposes of this rule:

(a) "No activity" means that the foreign corporation has no property or employees carrying on the business of the corporation in Oregon. Telephone and catalog solicitation and delivery by common carrier of goods sold do not constitute activity in the state.

(b) "Due process nexus" arises, for purposes of this rule, when a corporation engages in activities in this state that are protected from state taxation by Public Law 86-272. The protection provided by Public Law 86-272 applies to taxpayers whose only Oregon activity is the solicitation of sales of tangible personal property.

(c) "Jurisdiction to tax" is acquired by Oregon, for purposes of this rule, when a corporation engages in activities in this state that are not protected from state taxation by Public Law 86-272, e.g., maintaining an office or warehouse in Oregon, salespersons who accept orders or payment, etc.

(2) The numerator of the sales factor shall include gross receipts attributable to this state and derived by the taxpayer from transactions and activity in the regular course of its trade or business. All interest income, service charges, carrying charges, or time-price differential charges incidental to such gross receipts shall be included regardless of the place where the accounting records are maintained or the location of the contract or other evidence of indebtedness.

(3) If a foreign corporation has no activity in Oregon prior to the date Oregon acquires jurisdiction to tax, the numerator of the sales factor shall only include Oregon sales from the date Oregon acquired jurisdiction to tax.

Example: Corporation A operates on a calendar year basis. From the beginning of 1988, Corporation A of California solicited sales in Oregon by telephone and delivered its product by common carrier. On September 1, 1988, Corporation A sent salespersons into Oregon to take and approve orders, accept payment, and handle complaints and returns. Corporation A shall include sales from September 1, 1988 through the end of 1988 in the numerator of the sales factor.

(4) If a foreign corporation had due process nexus in Oregon and Oregon acquired jurisdiction to tax during the year, the numerator of the sales factor shall include sales from the date due process nexus arose or the beginning of the tax year, whichever is later.

Example: Corporation B of Washington began sending missionary salespersons to Oregon to merely solicit sales in July, 1987. Corporation B operates on a calendar year basis. On September 1, 1988, Corporation B added collection of payment and maintenance of a small inventory to the duties of its salespersons. Corporation B shall include sales for the entire 1988 tax year in its sales factor numerator.

(5) If a foreign corporation had no prior activity in Oregon and due process nexus arose during the tax year, and later during the tax year Oregon acquired jurisdiction to tax, the numerator of the sales factor shall include sales from the date due process nexus arose.

Example: Corporation C of Idaho has had catalog sales in Oregon, shipped via common carrier since 1970. Corporation C operates on a calendar year basis. On June 1, 1988, Corporation C sent salespersons into Oregon to merely solicit sales. On September 1, 1988, Corporation C authorized the salespersons to approve sales and accept payment. Sales from June 1, 1988, through the end of 1988 shall be included in the numerator of the sales factor.

Or. Admin. R. 150-314-0427

12-70; RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 3-1995, f. 12-29-95, cert. ef. 12-31-95; Renumbered from 150-314.665(1)-(B), REV 35-2016, f. 8-12-16, cert. ef. 9/1/2016

Stat. Auth.: ORS 305.100

Stats. Implemented: ORS 314.665