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Oregon Provides New Guidance for CAT Revenue Sourcing to Trucking Companies

In May 2019, the Oregon Department of Revenue signed into law a new Corporate Activity Tax (CAT) for tax years beginning on or after Jan. 1, 2020. This tax is in addition to the income tax that has been historically imposed by Oregon. While many unanswered questions are still pending, the state recently finalized guidance on how to source commercial activity for companies providing motor carrier transportation services by means of Oregon Administrative Rule 150-317-1070.

Under this rule, activity is generally sourced to Oregon to the extent that the transportation service is delivered to a location in the state. However, Oregon receipts now explicitly include the following revenue:

  • Receipts from transportation services which both originate and terminate within Oregon (intrastate)
  • The portion of receipts from transportation services, other than hauling freight, mail, and express, passing through, into, or out of Oregon, as determined by the ratio which the miles traveled in Oregon bear to the total miles traveled from points of origin to destination (interstate); and
  • The portion of receipts from transportation services as determined by the ratio of Oregon mileage to total mileage from points of origin to destination (interstate)

Transportation companies have asked for further guidance related to sourcing brokerage revenue in which miles traveled by state is not often a metric documented for other tax calculations. The rather generic response from Oregon states that it is acceptable to use “a reasonable approximation based on the points of origin and termination.” Documentation supporting the approximation method and amount is essential. Additional details on this ruling  can be found near the end of the Oregon Department of Revenue’s Q&A page.

While the language with respect to apportioning transportation services is similar to other states, the CAT calculation incorporates some unique deductions and specific limitations. To ensure your company is properly prepared for the impact of Oregon’s CAT, please consult your KSM advisor or contact us with any questions.

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