{"id":896042,"date":"2019-06-20T13:46:25","date_gmt":"2019-06-20T19:46:25","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=896042"},"modified":"2019-06-20T13:46:32","modified_gmt":"2019-06-20T19:46:32","slug":"oregon-gross-receipts-tax-special-challenge-construction-projects","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/oregon-gross-receipts-tax-special-challenge-construction-projects\/","title":{"rendered":"New Oregon Gross Receipts Tax Presents Special Challenges for Construction Projects Located in Oregon"},"content":{"rendered":"\n

Lewis Horowitz and Eric Kodesch | Lane Powell<\/a> | June 10, 2019<\/p>\n\n\n\n

Oregon has enacted a\u00a0new gross receipts tax<\/em>\u00a0(the \u201cOregon CAT\u201d), largely based on the Ohio commercial activity tax (\u201cOhio CAT\u201d), but with significant differences.\u00a0 We issued a\u00a0legal update\u00a0with a detailed summary of the Oregon CAT and its effect on businesses with Oregon-sourced receipts \u2014 for the construction industry that includes projects located in Oregon.\u00a0 Generally, the Oregon CAT\u00a0imposes a 0.57% tax<\/em>\u00a0on \u201ctaxable commercial activity\u201d in excess of $1 million, with a subtraction for 35% of the greater of (a)\u00a0\u201ccost inputs\u201d or (b)\u00a0\u201clabor costs,\u201d apportioned to Oregon.\u00a0 Taxable commercial activity is generally defined as Oregon-source gross receipts.\u00a0 The Oregon CAT goes into effect on January 1, 2020.<\/p>\n\n\n\n

The Oregon CAT could prove especially burdensome for the construction industry, particularly for general contractors and design professionals, because a substantial portion of gross revenue received often is dedicated to the payment of subcontractors, suppliers and subconsultants (who each will again pay the Oregon CAT on their Oregon-source gross receipts).  Further, the statute does not provide transition relief <\/em>for contracts entered into before the Oregon CAT could be factored into bids and contract prices.  <\/p>\n\n\n\n

Potential Exclusion<\/h3>\n\n\n\n

The Oregon CAT excludes from gross receipts, \u201c[p]roperty, money and other amounts received or acquired by an agent on behalf of another in excess of the agent\u2019s commission, fee or other remuneration<\/em>.\u201d  The scope of this exclusion has not been defined for purposes of the Oregon CAT and the Oregon Department of Revenue (ODOR) may provide guidance about the exclusion. <\/p>\n\n\n\n

In Ohio, an identical exclusion may<\/em> apply to amounts received by a general contractor or design professional and paid to a subcontractor, supplier or subconsultant, depending on the contractual relationships between the owner, contractor\/design professional, and subcontractor\/supplier\/subconsultant.  Specifically, the Ohio Department of Revenue has issued administrative rules generally indicating that: <\/p>\n\n\n\n