The New Corporate (Commercial) Activity Tax

Click image to download CAT calculator example.

What is the Commercial Activity Tax (CAT)?
The new Commercial Activity Tax is imposed only after a taxpayer exceeds $1 million of taxable commercial activity. Once they pass that threshold, the tax is $250 plus 0.57% on gross receipts greater than $1 million after subtractions. Proceeds of the tax are directed by statute to boost funding for public schools. The Department of Revenue's website includes a list of frequently asked questions (FAQs) for tax payers to better understand what the tax is and who is subject to the tax. 

Latest Updates from the Department of Revenue

• Jan. 13 - A new draft administrative rule has been added to the CAT page on the DOR website and is the first of the second group of temporary rules which will be officially filed with the Oregon Secretary of State February 1. All of the administrative rules for the CAT will originally be filed with the Secretary of State as temporary rules with the permanent rules process scheduled to begin April 1.
• Jan. 6 - General guidance on how to calculate a business’s CAT liability has been added to the FAQ page of DOR's website. The guidance uses two hypothetical examples and includes what information a business will need to figure its CAT liability and how to use the labor or cost subtraction.
• Jan. 2 - The first group of administrative rules governing the new CAT have been officially filed with the Secretary of State. The 12 temporary rules can be found on the Secretary of State’s website; search current rules for Chapter 150, Division 317. DOR officials said they will begin the permanent rulemaking process on April 1. 
• Dec. 19 - The frequently asked questions portion of the CAT page on DOR’s website has been updated. The CAT FAQ includes high level summaries of the first rules and topics which were determined not to need a rule.
• Dec. 9 - Drafts of eight CAT rules now available on Department of Revenue website
  The agency has identified nearly three dozen issues which may need to be addressed with administrative rules. Those issues have been prioritized into three groups. The first group of rules, including estimated payments and what establishes nexus between a business and Oregon, will be officially filed with the Secretary of State on Jan. 1, 2020.
• Dec. 5 - Registration for Oregon’s new Commercial Activity Tax (CAT) is now open through the Department of Revenue’s Revenue Online system 
  The new law requires businesses with Oregon commercial activity in excess of $750,000 to register for the tax. Once they reach that threshold businesses must register within 30 days.

​Resources & Webinars to Help You Understand the CAT
The Commercial Activity Tax is complicated and calculating your potential tax can be confusing. Therefore, ORLA has created a CAT calculator example to help our members understand how to calculate the tax. This exercise is only meant to help you project what your tax liability could be; as always, be sure to consult your tax advisors.

ORLA hosted two members-only informational webinars on Nov. 19 and Dec. 3 that explained the new tax, the Department’s implementation plans and what you can expect as a business owner. Tax experts with accounting firm Moss Adams LLP in Portland also provided some best tax practices for the hospitality industry. ORLA members can access the slide deck from the presentation by logging into the Member Portal on ORLA's website and clicking the Resource Library.

How the Commercial Activities Tax Came About
This was one of the 2019 Legislative Session bills having the biggest impact on businesses. ORLA was opposed to this bill as it raised taxes on commercial activity for businesses with gross revenues of over one million dollars. ORLA, along with others in the business community, was able to amend the original bill to include a deduction for labor or cost of goods sold. The association will work during the rule making session to ensure hospitality businesses will be able to include the tax increase on receipts so customers can see the impact of the tax.

Some additional information to know:

• The tax begins on January 1, 2020. It includes all business entity types, including C and S corporations, partnerships, sole proprietorships, etc.
• CAT returns will be due each year on April 15. Estimated payments for the CAT will be due quarterly.
• You must register within 30 days of when you are aware you will hit the $750,000 registration requirement. If you do not register, there may be a penalty of $100 per month up to $1,000 per year. Online registration will open through Revenue in December.
• According to the Department of Revenue, temporary rules will be published January – March 2020, with permanent rules being established April – June of 2020. Items identified as “critical” by the Department of Revenue will be posted first in January, including instructions for estimated payments, calculations, and registration.
• More information on Oregon.gov/DOR. You can provide input any time by emailing DOR at cat.help.dor@oregon.gov​

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DOR Sought Industry Input in CAT Rule Making
The Department of Revenue (DOR) held a series of town hall meetings across the state in September-October to seek input from business taxpayers about the administrative rules for Oregon’s new Commercial Activity Tax (CAT). Nearly 900 business taxpayers and tax professionals took part in these public forums or participated in video conferences and conference calls. More information is now available on the CAT page of DOR website.

• Summary of conversations during meetings
• DOR's CAT Town Hall Schedule

If you have any questions, please email Greg Astley, Director of Government Affairs, at Astley@OregonRLA.org.​ ​​

This is for general informational purposes only. The information is not, and should not be relied upon or regarded as, legal advice. Please consult with your legal advisors.