Current through Register Vol. 63, No. 9, September 1, 2024
(1) Sea
transportation services within this rule include the activities of steamship
companies substantially engaged in interstate or international commerce which
derive income within and partly from sources without the state. They do not
include the activities of water transportation carriers operating mainly on the
Columbia and Willamette Rivers or water transportation carriers operating
primarily within Oregon waters.
(2)
The Oregon income of a taxpayer carrying on the business of sea transportation
services must be determined pursuant to ORS
314.610 to
314.665 except as modified by
this rule. 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) Property factor. The property factor is a
fraction, the denominator of which includes the value of all real and tangible
personal property, including ships owned, rented or leased by the taxpayer and
used in the business. The numerator of this factor includes all real and
personal property owned, rented, or leased by the taxpayer and used in the
business, except ships, to the extent such assets are located in the state, and
so much of the value of ships used in the business as is determined by applying
the ratio that the voyage time which the ship was within this state during the
tax period bears to the total voyage time of the ship during the tax period.
(A) The value of ships used in the business
but not owned by the user, such as bareboat chartered vessels, is the same as
their value for insurance purposes. There are generally three types of
charters.
(i) "Bareboat" charters. The
owner-charterer places the tanker at the complete use and control of the user.
All operating costs are borne by the user, and the charter fee is purely for
the use of the vessel. Bareboat charters are included in the property
factor.
(ii) "Time and Demise"
(long-term) charters. The owner-charterer provides, in addition to the vessel,
all operational costs at the instruction of the user. Time and demise charter
fees include a component for operating costs borne by the owner-charterer, such
as insurance, port and docking fees, crew and master wages, fuel, and repairs.
Time and demise charters are considered the purchase of transportation and are
not included in the property factor.
(iii) "Single Voyage" charters. These are
actually purchased transportation services that take the form of a charter. The
owner-charterer has complete use and control of the vessel and merely contracts
to deliver product between one or more ports of loading and discharge. Single
voyages may be arranged on a consecutive voyage basis. Single voyage charters
are not included in the property factor.
(B) Other rented or leased property is valued
in the manner set out in ORS
314.655 and OAR
150-314-0400.
(C) The term "voyage
time" means the time that a ship is in operation for the purpose of
transporting cargo, freight, mail, passengers, etc. The time that a ship is in
operation includes all sailing time, even though a ship is returning empty or
is en route to a port of call to load passengers or cargo, all time in port
while loading and unloading, all time awaiting cargo, and all time that the
ship is laid up for ordinary repairs, refueling, or provisioning. A ship is not
in operation when out of service or during the time that it is laid up for
extensive repairs, overhaul, modification, or is in dry dock.
(D) The voyage time spent traveling on the
Columbia River below mile post 309 is divided equally between Oregon and
Washington. For purposes of this rule a vessel is not considered traveling on
the Columbia River while remaining at a port even though the vessel moves from
one terminal or dock to another within that port.
Example:Taxpayer A uses minutes to measure voyage
time. The following table shows the vessel's actions and the time attributable
to Oregon between actions. [See PDF link below.]
(b) Payroll factor. The denominator of the
payroll factor is the total compensation paid everywhere by the taxpayer during
the tax period for the production of apportionable income (ORS
314.660 and OAR 150-314-0415).
The numerator of the payroll factor is the total amount paid in this state
during the tax period by the taxpayer for compensation. With respect to all
personnel except ocean going personnel, compensation paid to such employees is
included in the numerator as provided in ORS
314.660 and OAR 150-314-0417.
The numerator contains so much of the compensation of oceangoing personnel as
is determined by applying a fraction, the numerator being the voyage time the
ship spent within this state during the tax period and the denominator being
the total voyage time of the ship during the tax period.
(c) Sales factor. The sales factor is a
fraction, the denominator of which includes all sales derived from carrying
cargo, i.e., passengers, freight, mail, etc., and the sales incidental thereto.
In calculating the numerator of the factor, such sales are assigned to this
state in the proportion that the voyage time the ship spent within this state
during the tax period bears to the total voyage time of the ship during the tax
period. Sales from activities incidental to the transportation service, such as
income from restaurants, locker rentals, etc., are assigned to the state or
country in which the activity is carried on.
