Or. Admin. R. 123-662-2500 - State Income Tax Credit for E-commerce Investment

For purposes of a business firm receiving and using the credit under ORS 315.507 to offset state personal or corporate income/excise tax liabilities:

(1) Respective to an enterprise zone's designation as an E-commerce zone, relevant investments in Electronic Commerce capital assets under ORS 315.507(2) must be:
(a) Made in an income or corporate excise tax year, during or after which the designation took effect.
(b) In use, placed in service or completed in terms of construction or installation only on or after the effective date of designation.
(2) The business firm must make:
(a) Application for authorization before the effective date of revocation of the zone's electronic commerce designation or termination of the underlying enterprise zone.
(b) The relevant investment on or before the date, on which the enterprise zone terminates, irrespective of:
(A) Prior revocation of the zone's electronic commerce status; or
(B) Any continuing receipt or access to the standard property tax exemption after termination.
(3) The business firm engaged or preparing to engage in Electronic Commerce may make relevant investments only:
(a) During or after an income/excise tax year, in which the firm applies for authorization by submission of its application to the zone sponsor, that ends before July 1 of the first property tax year of exemption; or
(b) In an income/excise tax year that begins on or within less than a year's time preceding July 1 of any property tax year, in which the business firm remains qualified and associated qualified property is subject to exemption under ORS 285C.175.
(4) The third year after a credit was claimed for a year described in subsection (3)(a) of this rule must be a year described in subsection (3)(b) of this rule, in order for the firm to receive and keep the tax credit.
(5) Aside from their relation to Electronic Commerce and other requirements, the capital assets that generate the tax credit:
(a) Comprise new acquisitions, investments or costs of the business firm that are depreciable for purposes of federal income taxation, even if they are allowed to be and are, in fact, expensed on the corresponding tax return.
(b) Must, consistent with sections (3) and (4) of this rule, be associated concurrently with qualified property that is successfully claimed for exemption from property taxes under ORS 285C.175, and inasmuch as such assets are qualified property and are actually used to earn the credit, they must in general (aside from incidental oversights) also subsequently qualify for the exemption; nevertheless:
(A) Such assets may consist entirely or partially of items or costs that are not qualified property or otherwise not allowed for exemption, including but not limited to property exempt under another law such as certain intangible personal property (though not ORS 307.123 or 285C.409), as well as property previously used inside the E-commerce zone, or items located elsewhere in the zone apart from the site identified in the authorization application but connected to on-site Electronic Commerce activities; and
(B) Associated qualified property may consist entirely or partially of items or costs that are unusable for the credit, including but not limited to property distinct from Electronic Commerce activities, in excess of the annual limit in subsection (7)(c) of this rule, or subject to use and occupancy by the qualified business firm through a (non-capitalized) lease.
(6) The business firm will claim the credit as an amount entered with carryforward credits on the taxpayer's state tax return, for which:
(a) The first such income/excise tax year must have begun before January 1, 2018, as prescribed under section 3, chapter 913, Oregon Laws 2009, and amended in 2011 [c.730 ยง5] (notwithstanding unused credit amounts that are carried forward), and
(b) There is no prescribed form or worksheet.
(7) The firm shall be responsible for maintaining tax records under ORS 315.508, including but not limited to:
(a) Annual qualification for exemption under ORS 285C.175, such as copies of forms filed with the county assessor and evidence of avoided property taxes, sufficient zone employment, and so forth;
(b) Methods used to determine the basis and extent, by which the firm/taxpayer attributes capital assets to Electronic Commerce for purposes of calculating the credit; and
(c) The actual cost of investments in terms of such calculations, as well as the annual limit under ORS 315.507(4) of effectively up to $8 million in relevant costs in any one income/excise tax year.
(8) The tax credit is inapplicable with the exemption under ORS 285C.409 (Long-Term Rural Tax Enterprise Zone Facility Incentives).
(9) In terms of capital assets for Electronic Commerce (in contrast to property taxes, which typically relate to new physical vesting), to "make an investment" means:
(a) As a matter of timing, to financially incur costs or binding liability in payment for the asset, for example, by entering into a construction contract or by having booked an order to buy equipment.
(b) Not only capital that is new to the E-commerce zone, but it may also include the firm's acquisition of assets already existing and previously subject to use and occupancy in the enterprise zone.


Or. Admin. R. 123-662-2500
OBDD 25-2010, f. & cert. ef. 6-14-10; OBDD 10-2015, f. & cert. ef. 10/5/2015; OBDD 10-2020, amend filed 08/12/2020, effective 8/12/2020

Statutory/Other Authority: ORS 285A.075, 285C.050(5) & 285C.060(1)

Statutes/Other Implemented: ORS 285C.060, 285C.095, 285C.100, 315.507 & 315.508

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