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2015 Oregon New

Law Update

Table of Contents:

� 2015 New Information

� Substantial Understatement Penalty

� Surplus Refund Credit – “Kicker”

� Personal Income Tax Form Changes

� Pass-Through Entity Reduced Tax Rate

� Payment Voucher

� Electronic Filing

� Taxpayer Identity Theft

� Quarterly Withholding Reports

� 2015 Legislative Update

� Fall Rules

� 911 – Point of Sale

� Processing Center Changes

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2015 Oregon Tax Changes

� Eliminated Long Term Care Insurance Credit

� Substantial Understatement Penalty changed

� Surplus Refund Credit (Kicker)

� Form and code changes

� New tax rate calculation for Oregon Pass-through entity income

� Eliminated the Amended Schedule

Updated figures: Federal tax subtraction - $6,450 ($3,225 for MFS); Exemption Credit $194, and Oregon 529 $4,600MFJ ($2,300 all other filing status)

Substantial Understatement Penalty

� Beginning with tax year 2015 and forward, the Substantial Understatement Penalty is based on an understatement of net tax instead of an understatement of income.

� Must exceed $2,400 for Personal Income Tax

or

$3,500 for Corporations

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Surplus Refund Credit“Kicker”

� 2015 return: The kicker is a refundable personal income tax credit equal to the kicker percentage (5.6%) X 2014 tax liability before all credits except credit for taxes paid to another state

Example 1:

Sally has a 2014 single tax liability of $4,000 before credits. On her 2015 return, Sally would receive a kicker credit of $224.

Example 2:

Joe has a 2014 single tax liability of $1,500 before credits. Sue has a 2014 single tax liability of $2,900 before credits but has credit for taxes paid to another state of $1,300. Joe and Sue get married during 2015. On their 2015 joint return, the kicker will be $174. [Joe’s kicker of $84 – ($1,500 x 5.6%) plus Sue’s kicker of $90 – (($2,900 - $1,300) x 5.6%)]

Example 3:

Mark and Dianna file MFJ for tax year 2014. Their total AGI is $65,000. Their personal income tax liability is $5,000 and they do not have a credit for taxes paid to another state. Dianna’s portion of the total AGI is $45,500 (70%). Mark’s portion of the total AGI is $19,500 (30%). In 2015 Mark and Dianna divorce and neither remarries. A kicker is determined with a percentage amount of 5.6%. When Mark and Dianna file their separate 2015 Oregon income tax returns, they will calculate separate kicker credits based on their 2014 AGI. Dianna will claim a kicker credit of $196 ($5,000 x 5.6% x 70%) on her single return. Mark will claim a surplus credit of $84 ($5,000 x 5.6% x 30%) on his single return.

Election to Donate theKicker

� Taxpayer can elect to donate the entire kicker to the State School Fund.

� Enter -0- on the Kicker credit line (Form 40, line 35; Form 40N, line 60 or Form 40P, line 59)

� Check the box (Form 40, line 52; Form 40N, line 76 or Form 40P, line 75)

� Enter the kicker amount on the line (Form 40, line 52a; Form 40N, line 76a or Form 40P, line 75a)

THE ELECTION IS IRREVOCABLE!

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2014 Return Adjustments Impact to Kicker

� Do not amend the 2015 Oregon return, if the only change is the kicker change due to the 2014 tax return change.

� 2014 tax liability reduced – may owe additional tax for 2015.

� 2014 tax liability increased – may receive additional refund for 2015.

Personal Income Tax Form Changes

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Personal Income Tax Form Change Continued

Personal Income Tax Form Change Continued

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Personal Income TaxForm Change Continued

Personal Income TaxOR-ASC

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Personal Income TaxOR-ASC-N/P

Personal Income TaxPTE Reduced Tax Rate

� Begins with Tax Year 2015!

� Qualifications:

� Nonpassive income from partnership or S-Corporation;

� Must have materially participated in the business; and

� Partnership or S-Corporation must have employed at least one employee in Oregon for at least 1,200 hours.

� Tax rate begins at 7% on the first $250,000

� Election must be made on the original return.

Election is irrevocable!

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Personal Income TaxPTE Reduced Tax Rate Cont.

Personal Income TaxPayment Voucher

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New Electronic FilingOptions for 2015

� Form OC – Oregon Composite Return

� Form 65 – Oregon Partnership Return of Income

� Form 41 – Oregon Fiduciary Income Tax Return

� Transit Forms (LTD, TM, TSE)

� Form 706 – Oregon Estate Transfer Tax Return

� Personal Income Tax – Debit payments accepted

Form OC Changes

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Taxpayer Identity Theft

� If you think you’re a victim of ID theft, report to the IRS and Oregon!

� Beginning tax year 2013, ID theft alerts have been added to taxpayer’s accounts.

� Fraudulent return filed under a taxpayer’s SSN

� Taxpayer contacts the department (ID theft hotline or ID theft web form)

� Any account with an ID theft alert will suspend

� Fraud team ensures that the taxpayer filed the return.

� Identity Quiz

http://www.oregon.gov/dor/pages/id-theft.aspxHotline: 503-947-2000

Quarterly Withholding Reports

New – 1st Quarter Reports 2016

� Update Form 132

� New column for quarterly state income tax withholding

� Allows for real time withholding match

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2015 Legislative Update

� SB 63 - Reconnect to the Internal Revenue Code as of December 31, 2014.

� SB 296 – Elderly Rental Assistance Program ending December 2016.

� SB 777 – ABLE Account Subtraction beginning with tax year 2016.

� HB 2171 – End of session tax credit bill

� Tax Year 2015:

� Eliminates Long-Term care insurance premium credit.

� Expands the IDA and residential energy credit.

� Credits cannot be claimed against the Corporate Minimum Tax.

� Tax Year 2016:

� Eliminates CDC and WFC and creates WFCDCC.

� Eliminates Costs in lieu of Nursing Home Care, Elderly or Permanently Disabled, Loss of Use of Limbs, Employer-provided dependent care assistance, TRICARE for Health Care providers and University Venture Fund credit.

� Changes the rural medical practitioners’ credit.

� Certain military pay may not be taxable for tax year 2012 and forward.

2015 Legislative Update

� HB 2089 – Suspend collection for certain accounts.

� SB 55 – SSN and state agencies accounts receivable.

� SB 61 – Listed jurisdiction (Tax Havens).

� SB 864 – Natural resource tax credit on estate tax returns.

� HB 2960 – Oregon Retirement Security Board.

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2015 Legislative Update

� HB 2041 & SB 460 – “Cannabis” related legislation

� Moves the taxation from OLCC to DOR

� Changes the way tax is collected – point of sale

� Temporary provision for medical dispensaries to sell it

� No tax on sales until January 4, 2016

� Recreational retailers licensed by OLCC in October 2016

� Disconnect from IRC 280E for recreational dispensary sales beginning with tax year January 1, 2016

www.Oregon.gov/dor/marijuana

Personal Income TaxFall Rules

� Repeal

� 150-305.100 – Amnesty

� 150-315.521 – University Venture Fund Credit

� Form

� 150-314.297(6) – Farm Income Averaging

� 150-314.380(2)(B) – Amended Schedule

� 150-315.144 – Transfer of Biomass Tax Credit

� Legislation

� 150-314.402 – Substantial Understatement Penalty

� Application to Apply a Refund

� 150-316.583(2) – Estimated Tax: Application of a prior year refund

� Other Rules

� 150-314.400(1) – Delinquency Penalty

� 150-183.330(1) – Obtaining Information from the Department

� 150-192.440 – Public Records Request

� 150-305.120 – Public Notification of Delinquent Taxpayers

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Corporation Fall Rules

� New Rules

� 150-314.280-(O) – Sales of Commodities

� 150-317.152 – Calculation of Qualified Research Credit

� 150-317.717 – Stakeholder Feedback for Listed Jurisdictions Report

� Amended Rules

� 150-118.140 – Estate Tax Credit for Natural Resource Property

� 150-314.280-(N) – Definition of Investment Activity

� 150-314.665(1)-(A) – Effective Date for Exclusion of Sales Taxes from Sales Factor

� 150-317.705(3)(a) – Unitary Percentage for Listed Jurisdictions

� 150-314.515(2) – Modification of Corporate RAPP Provisions

� Repealed Rules

� 150-118.NOTE – Estate Tax Refunds

� 150-314.665(2)-(C) – Electricity and Natural Gas Sales

911 - Point of Sale

� October 1st, 2015 retail operations that sell prepaid wireless cards are responsible for:

� Collecting the $0.75 per transaction tax,

� Filing quarterly returns (4th quarter due by January 31st)

� Paying the tax (4th quarter due by January 31st)

� Returns must be completed and filed through Revenue Online

� Tax preparers can file for their clients

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Processing Center Changes

� New scanning and imaging software package.

� Allows paper and 2D returns to be processed quicker

� Allows the department to become paperless

� Allows correspondence to be routed to the appropriate person quicker

� Allows for all department employees to see the correspondence and returns

Processing Issues

� FEIN instead of BIN on W2

� Payments using the wrong voucher

� Make sure the correct box is checked on the voucher.

� Do not select multiple boxes on the payment voucher, this will slow down the process or the payment will not be applied correctly.

� If the payment is made online, don’t send in a voucher.

� Notes on returns

� Don’t add a note to the 2D or paper return unless absolutely necessary

� No federal return attached

� May be denied subtractions, modifications, or credits.

� Wrong codes

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Practitioner Connection

� Liaison Meetings

� LTP/LTC/OSCPA – 4th Friday of May, July, and October and the 1st Friday in December at the Revenue building in Salem

� Oregon State Bar (OSB) – meets three times yearly (contact the Tax Section for more information)

� Practitioner email help (general questions only, please) prac.revenue@oregon.gov

� ReveNews – A list serve for tax professionals to receive valuable information from DOR. http://listsmart.osl.state.or.us/mailman/listinfo/revenews

� Payrolltax-News – A list serve for employers to receive payroll tax information from DOR. http://www.oregon.gov/DOR/BUS/pages/payrolltaxnews.aspx

Tax Program help email addresses

Amusement device tax SPA.help@oregon.gov

Corporation excise and income tax corp.help.dor@oregon.gov

Corporation minimum tax minimumtax.help@oregon.gov

Estate tax estate.help.dor@oregon.gov

Hazardous substance fee SPA.help@oregon.gov

Inheritance and fiduciary tax estate.help.dor@oregon.gov

Lodging tax SPA.help@oregon.gov

Marijuana – marijuanatax.dor@oregon.gov

Nexus and voluntary disclosure nexus.help.dor@oregon.gov

Payroll withholding and transit payroll.help.dor@oregon.gov

Petroleum load fee SPA.help@oregon.gov

Transit self-employment tax TSE.help.dor@oregon.gov

Trust tax estate.help.dor@oregon.gov

W-2 electronic filing (iWire) iWire.dor@oregon.gov

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Questions