Current through Register Vol. 63, No. 9, September 1, 2024
(1) In
General. As used in this rule, the term "trucking company" means a motor common
carrier, a motor contract carrier, or an express carrier that primarily
transports tangible personal property of others by motor vehicle for
compensation. Where a trucking company has income from sources both within and
without this state, the amount of apportionable income from sources within this
state must be determined pursuant to ORS
314.610 to
314.665 except as modified by
this rule. In such cases, the first step is to determine what portion of the
trucking company's income constitutes apportionable income and what portion
constitutes nonapportionable income under ORS
314.610 and the corresponding
rules. Nonapportionable income is directly allocable to specific states
pursuant to the provisions of ORS
314.625 through
314.645. Apportionable income is
apportioned among the states in which the business is conducted pursuant to the
property, payroll, and sales factors set forth in this rule. The sum of (a) the
items of nonapportionable income directly allocated to this state plus (b) the
amount of apportionable income attributable to this state constitutes the
amount of the taxpayer's entire net income which is subject to tax in this
state.
(2) Apportionable and
Nonapportionable Income. For definitions, rules, and examples for determining
apportionable and nonapportionable income, see OAR 150-314-0335 through
150-314-0339.
(3) Apportionment of
Apportionable Income. Apportionable income is apportioned to this state by use
of the formula provided in ORS
314.650 as it applies to the tax
year involved. For tax years beginning on or after July 1, 2005, ORS
314.650 provides for
apportionment using only the sales factor.
(a) In General. The property factor is
determined in accordance with ORS
314.655, the payroll factor in
accordance with ORS 314.660, and the sales factor in
accordance with ORS 314.665, except as modified in
this rule.
(b) The Property Factor.
(A) Property Valuation. Owned property is
valued at its original cost in accordance with ORS
314.655(2) and
OAR 150-314-0398. Property rented from others is valued at eight times the net
annual rental rate in accordance with ORS
314.655(2) and
OAR 150-314-0400.
(B) General
Definitions. The following definitions are applicable to the numerator and
denominator of the property factor, as well as other apportionment factor
descriptions:
(i) "Average value" of property
means the amount determined by averaging the values at the beginning and end of
the tax period, but the department may require the averaging of monthly values
during the tax period or such averaging as is necessary to properly reflect the
average value of the trucking company's property (See OAR
150-314-0406).
(ii) "Mobile
property" means all motor vehicles, including trailers, engaged directly in the
movement of tangible personal property, other than support vehicles used
predominantly in a local capacity.
(iii) A "mobile property mile" is the
movement of a unit of mobile property a distance of one mile whether loaded or
unloaded.
(iv) "Original cost" is
deemed to be the basis of the property for federal income tax purposes (prior
to any federal income tax adjustments, except for subsequent capital additions,
improvements thereto, or partial dispositions); or, if the property has no such
basis, the valuation of such property for Interstate Commerce Commission
purposes. If the original cost of property cannot be ascertained under the
foregoing valuation standards, the property is included in the property factor
at its fair market value as of the date of acquisition by the taxpayer. (OAR
150-314-0398)
(v) "Property used
during the tax period" includes property which is available for use in the
taxpayer's trade or business during the tax period.
(C) The Denominator and Numerator of the
Property Factor. The denominator of the property factor is the average value of
all the taxpayer's real and tangible personal property owned or rented and used
during the tax period. The numerator of the property factor is the average
value of the taxpayer's real and tangible personal property owned or rented and
used in this state during the tax period. In the determination of the numerator
of the property factor, all property, except mobile property as defined in this
rule, is included in the numerator of the property factor in accordance with
ORS 314.655 and the corresponding
rules. Mobile property as defined in this rule, which is located within and
without this state during the tax period is included in the numerator of the
property factor in the ratio which mobile property miles in the state bear to
the total mobile property miles.
(c) The Payroll Factor. The denominator of
the payroll factor is the compensation paid everywhere by the taxpayer during
the tax period for the production of apportionable income (see ORS
314.660 and the corresponding
rules.). The numerator of the payroll factor is the total compensation paid in
this state during the tax period by the taxpayer. With respect to all
personnel, except those performing services within and without this state,
compensation paid to such employees is included in the numerator as provided in
ORS 314.660 and the corresponding
rules. With respect to personnel performing services within and without this
state, compensation paid to such employees is included in the numerator of the
payroll factor in the ratio which their services performed in this state bear
to their services performed everywhere based on mobile property
miles.
(d) The Sales Factor.
(A) In General. All sales derived from
transactions and activities in the regular course of the taxpayer's trade or
business which produce apportionable income are included in the denominator of
the sales factor (see ORS
314.665(1) and
OAR 150-314-0425). The numerator of the sales factor is the total sales of the
taxpayer in this state during the tax period. The total state sales of the
taxpayer, other than sales from hauling freight, mail, and express, are
attributable to this state in accordance with ORS
314.665 and the corresponding
rules.
(B) Numerator of the Sales
Factor from Freight, Mail, and Express. The total sales of the taxpayer
attributable to this state during the tax period from hauling freight, mail,
and express is:
(i) Intrastate: All sales
from any shipment which both originates and terminates within this state;
and,
(ii) Interstate: That portion
of the sales from movements or shipments passing through, into, or out of this
state as determined by the ratio which the mobile property miles traveled by
such movements or shipments in this state bear to the total mobile property
miles traveled by movements or shipments from points of origin to
destination.
(4) Records. The taxpayer must maintain the
records necessary to identify mobile property and to enumerate by state the
mobile property miles traveled by such mobile property as those terms are used
in this rule. Such records are subject to review by the department or its
agents.
(5) De Minimis Nexus
Standards. Notwithstanding any provision contained herein, this rule does not
apply to require the apportionment of income to this state if the trucking
company during the course of the tax period neither:
(a) Owns nor rents any real or personal
property in this state, except mobile property; nor
(b) Makes any pick-ups or deliveries within
this state; nor
(c) Travels more
than twenty-five thousand mobile property miles within this state; provided
that the total mobile property miles traveled within this state during the tax
period does not exceed three percent of the total mobile property miles
traveled in all states by the trucking company during that tax period;
nor
(d) Makes more than twelve
trips into this state.
Statutory/Other Authority: ORS
305.100 &
314.280
Statutes/Other Implemented: ORS
314.280
