Current through Register Vol. 63, No. 9, September 1, 2024
(1)General. For purposes of
ORS Chapter 316, a nonresident includes a person who is a foreign nonresident
as defined by this rule.
(2) "Foreign nonresident"
means:
(a) An individual who is a
"qualified individual" under Internal Revenue Code section 911(d)(1);
and
(b) An individual who would be
considered a "qualified individual" under IRC 911(d)(1) except that the person
is not a U.S. citizen.
Example 1: Ricardo, a
citizen of Mexico, is domiciled in Oregon. He has established his tax home
& bona fide residence in Canada. Even though he is not a "qualified
individual" under IRC 911(d)(1) because he is not a U.S. citizen, he is
considered a foreign nonresident for Oregon tax purposes.
(3) To be considered a "qualified
individual" under IRC 911, a person must maintain a tax home in a foreign
country or countries and, for the same period of time, meet either:
(a) The bona fide residence test described in
subsection (4); or
(b) The
physical presence test described in subsection (5).
(4) To meet the requirements of the "bona
fide residence" test, the taxpayer must:
(a)
Establish, to the satisfaction of the Secretary of the U.S. Treasury, bona fide
residence in a foreign country or countries, and
(b) Maintain bona fide residence for an
uninterrupted period of time that includes a full tax year.
Example 2: Sandra is a calendar year
taxpayer. She establishes bona fide residence in Russia on November 12, 1997.
She is transferred back to the United States on December 30, 1998. She does not
meet this test as the period of bona fide residence does not include a full tax
year (i.e., all of a calendar year). Sandra may qualify under the physical
presence test if she meets its requirements.
Example 3: Assume the same facts as in
Example 2, except that Sandra is transferred to England on December 30, 1998.
She establishes bona fide residence in England where she continues to work
until October 9, 1999 before returning to the United States. She qualifies
under the bona fide residence test & will be taxed as an Oregon nonresident
from November 12, 1997 to October 9, 1999.
(5)Physical presence test.
To meet the "physical presence" test, the taxpayer's tax home must be in a
foreign country and the taxpayer must be physically present in a foreign
country or countries for 330 full days out of a 12 consecutive month period.
(a) A full day means a period of 24
consecutive hours beginning at midnight.
(b) The 12-month period may begin on any day
of the calendar month and ends with the day before the corresponding calendar
day twelve months later. For example, a period beginning July 1 will end June
30 of the next year. If the period begins on February 29, it will end February
28 of the next year.
(c) The
12-month period may begin before or after arrival in a foreign country and may
end before or after departure.
Example 4:
John arrives in England on April 24, 1998, at noon. He remains in Europe until
2 p.m. on March 21, 1999 when he returns to the United States. John is present
in a foreign country for 330 full days during at least two twelve-month
periods: April 25, 1998 through April 24, 1999 & March 21, 1998 through
March 20, 1999. John qualifies for foreign nonresident treatment from April 25,
1998 through March 20, 1999.
(6)Federal employees.
Amounts paid by the U.S. government to its employees are not foreign earned
income, and thus, do not qualify for a foreign earned income exclusion or a
housing exclusion. However, if federal or military employees meet the bona fide
residence test or the physical presence test, they may be taxed as foreign
nonresidents for Oregon purposes.
(7)Spouses of foreign
nonresidents. A spouse who does not qualify as a foreign nonresident
shall be treated as a nonresident only if the spouse does not maintain a
principal place of abode in Oregon for the tax year.
Example 5: Henry accepts an overseas
assignment & leaves Oregon in July 1998. His wife remains in Portland at
the family residence. Henry may be treated as a foreign nonresident if he meets
the tests previously described. However, his wife will be taxed as a full year
Oregon resident since her principal place of abode was not outside of
Oregon.
(8)Effective date: The
provisions of this rule are effective for tax years beginning on or after
January 1, 1995. Claims for refund based on retroactive application of the
changes to ORS 316.027 may be filed at any
time.
Stat. Auth.: ORS
305.100
Stats. Implemented: ORS
316.032
