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Oregon Tax Bill Includes IRC Conformity – Tax & Accounting Blog

The Oregon House passed a tax bill that updates the state’s Internal Revenue Code (IRC) conformity date. The bill would:

  • update the conformity date to December 31, 2017;
  • change how the federal temporary dividends received deduction is treated; and
  • repeal the addition required when unitary group members are located in listed tax havens.

IRC Conformity Date Would Change

Currently, the IRC conformity date is December 31, 2016. The updated conformity date would apply 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.

Addition for Dividends Received Deduction

The bill requires an addition for the amount of the federal temporary dividends received deduction for income repatriated as deferred foreign income. The addition to the amount of federal taxable income would be required for tax years after January 1, 2017.

A state credit would be created for reported repatriated income for the 2017 tax year. The credit could not exceed the amount of:

  • Oregon tax attributable to income reported 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.

The credit could be carried forward for five years.

Tax Haven Addition Repeal

Finally, the bill would repeal the addition that unitary groups must make for income or losses from members incorporated in listed tax havens. The repeal would apply to tax years after December 31, 2016.

The Department of Revenue will prepare a report comparing which is more effective:

  • the repealed tax haven law; and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

Tax Bill Ready for Governor

The Oregon Senate concurred in the House amendments. As a result, the bill can be sent to the Governor.

S.B. 1529, as passed by the Oregon House on March 2, 2018

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Author: CCHTaxGroup

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