Chapter 957 Oregon Laws 2001
AN ACT
SB 229
Relating to taxation;
creating new provisions; and amending ORS 285B.650, 285B.707, 285B.713, 314.752
and 318.031.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
ORS 285B.650 is amended to read:
285B.650. As used in ORS 285B.650 to 285B.728, unless the
context requires otherwise:
(1) “Business firm” means a person operating or conducting
one or more trades or businesses but does not include any governmental agency,
municipal corporation or nonprofit corporation.
(2) “Electronic
commerce” means engaging in commercial or retail transactions predominantly
over the Internet or a computer network, utilizing the Internet as a platform
for transacting business or facilitating the use of the Internet by other
persons for business transactions, and may be further defined by the Economic
and Community Development Department by rule.
[(2)] (3) “Eligible business firm” means a
firm engaged in an activity described under ORS 285B.707 which may file an
application for precertification under ORS 285B.719.
[(3)] (4) “Employee” means a person who
works more than 32 hours per week, but does not include persons with temporary
or seasonal jobs or persons hired solely to construct qualified property.
[(4)] (5) “Enterprise zone” means one of the
30 areas designated or terminated and redesignated by order of the Governor
under ORS 284.160 (1987 Replacement Part) before October 3, 1989, one of the 17
areas designated by the Director of the Economic and Community Development
Department under ORS 285B.653, areas designated under ORS 285B.677 and areas
designated under ORS 285B.689.
[(5)] (6) “First-source hiring agreement”
means an agreement between a precertified business firm and a publicly funded
job training provider whereby the job training provider refers qualified
candidates to the firm for new jobs and job openings in the firm.
[(6)] (7) “Modification” means
modernization, renovation or remodeling of an existing building or structure.
[(7)] (8) “Nonurban enterprise zone” means
an enterprise zone located outside a regional or metropolitan urban growth
boundary.
[(8)] (9) “Precertified business firm” means
an eligible business firm whose application for precertification has been
approved under ORS 285B.719 and which may apply for a property tax exemption
under ORS 285B.722.
[(9)] (10) “Publicly funded job training
provider” includes but is not limited to, community colleges, Job Training
Partnership Act service providers, and other similar programs.
[(10)] (11) “Qualified business firm” means a
business firm described in ORS 285B.704 whose application for a property tax
exemption has been approved under ORS 285B.722.
[(11)] (12) “Qualified property” means
property described under ORS 285B.713.
[(12)] (13) “Sponsor” means the city or
county that applied for and received approval of an enterprise zone under ORS
284.150 and 284.160 (1987 Replacement Part), under ORS 285B.656 and 285B.659,
under ORS 285B.677 or 285B.686 or under ORS 285B.689.
[(13)] (14) “Urban enterprise zone” means an
enterprise zone in a metropolitan statistical area, as defined by the most
recent federal decennial census, located inside a regional or metropolitan
urban growth boundary.
SECTION 2.
(1) A sponsor of an existing enterprise
zone may seek to have the zone designated for electronic commerce under this
section.
(2) The sponsor shall
file an application to have the zone designated for electronic commerce with
the Economic and Community Development Department. The application shall be in
the form and contain the information that the department by rule may require.
(3) The application
shall be accompanied by a copy of a resolution, adopted by the governing body
of the sponsor, requesting that the zone be designated for electronic commerce.
(4) The department shall
review applications for electronic commerce designation and shall approve no
more than four zones for electronic commerce designation. In approving zones
for electronic commerce designation, the department shall strive to approve
zones for electronic commerce designation in different geographic areas of this
state.
SECTION 2a.
Section 2b of this 2001 Act is added to
and made a part of ORS 285B.650 to 285B.728.
SECTION 2b.
(1) Notwithstanding sections 2 and 5 of
this 2001 Act, a city shall be designated for electronic commerce if the city:
(a) By resolution of the
governing body of the city, declares itself a city designated for electronic
commerce;
(b) As of the effective
date of this 2001 Act, has a population of more than 1,500 but less than 2,000;
(c) Is located less than
25 miles from a city with a population of more than 500,000; and
(d) Is located less than
10 miles from a city with a high concentration of high technology firms and
with a population that, as of the effective date of this 2001 Act, does not
exceed 85,000.
(2) Only one city may be
designated for electronic commerce under this section, and that designation
shall be made without consideration of the numeric or geographic limitations
imposed by section 2 of this 2001 Act.
(3)(a) A city does not
need to be a sponsor of an enterprise zone to be designated for electronic
commerce under this section.
(b) The governing body
of a city designated for electronic commerce under this section does not have
to comply with the requirements of ORS 285B.650 to 285B.728, except that the
governing body must take all actions under ORS 285B.650 to 285B.728 with
respect to business firms that are required of a sponsor of a nonurban
enterprise zone.
(c) A business firm that
is located in a city designated for electronic commerce under this section and
that seeks an exemption under ORS 285B.698 must take all actions required of a
qualified business firm under ORS 285B.650 to 285B.728, except that the
business firm does not need to be located within an enterprise zone.
(4) For the purpose of
determining the boundaries of a city designated for electronic commerce, “city”
includes:
(a) Territory that is
annexed into the city, as of the date of the annexation;
(b) Land within the
urban growth boundary of the city; and
(c) Territory that is
added to the urban growth boundary described in paragraph (b) of this
subsection, as of the date the urban growth boundary is extended to such
territory.
SECTION 3.
ORS 285B.707 is amended to read:
285B.707. (1) Except as provided in subsections (3) and (4)
of this section, to be an eligible business firm, a business firm must be
engaged in the business of providing goods, products or services to other
businesses, and not to the general public for personal or household use or
consumption, through activities including, but not limited to, manufacturing,
assembly, fabrication, processing, shipping or storage.
(2) Businesses significantly engaged in business activities
within the enterprise zone such as retail sales or services, child care,
housing, retail food service, health care, tourism, entertainment, financial
services, professional services, leasing space to others, property management,
construction or other similar activities are not eligible business firms.
(3) Notwithstanding subsection (1) or (2) of this section,
a business firm that operates a hotel, motel or destination resort is an
eligible business firm regardless of the sale of services for personal
consumption, if allowed in the enterprise zone under ORS 285B.716.
(4) Notwithstanding any other provision of this section, if
a business firm described in subsection (2) of this section engages in an
activity described in subsection (1) of this section, the business firm is an
eligible business firm if the activity is performed at a location that is
separate from the activity of the firm that is described in subsection (2) of
this section. For purposes of determining whether a business firm described in
this subsection satisfies the requirements of ORS 285B.704, only the operations
of the firm that are described in subsection (1) of this section and employees
working a majority of their time in those operations shall be considered.
(5) Two or more business firms that otherwise meet the
requirements of this section may elect to be treated as one eligible business
firm if 100 percent of the equity interest in the business firms is owned by
the same person or persons, or if one of the business firms owns 100 percent of
the equity interest of the other or others.
(6) Notwithstanding subsection (1) or (2) of this section,
a business firm engaged in the activity of providing a retail or financial
service is an eligible business firm if:
(a) The activity serves customers by responding to orders
or requests received only by telephone, computer, the Internet or similar means
of telecommunications; and
(b) Not less than 90 percent of the customers or orders are
located and originate in an area from which long distance telephone charges, in
the absence of a toll-free number, would apply if the order were placed by
telephone.
(7) Notwithstanding subsection (1) or (2) of this section,
a business firm that makes an investment in qualified property at a facility
that serves statewide, regional, national or global operations of the firm
through administrative, design, financial, management, marketing or other
activities is an eligible business firm, without regard to the relationship of
such activities to any otherwise eligible activities within the enterprise zone
if:
(a) In approving the application for precertification, the
zone sponsor includes with the application a formal finding that the facility
complies with the requirements of this subsection and that the size of the
proposed investment, the employment at the facility or the nature of the
activities at the facility will significantly enhance the local economy, in
relation to the overall purpose and employment of the zone;
(b) The actual investment and facility of the firm are
consistent with the descriptions presented in the precertification application;
and
(c) For purposes of ORS 285B.704, all employees at the
facility constitute employment of the firm, as defined in ORS 285B.704.
(8) Notwithstanding
subsection (1) or (2) of this section, a business firm that is engaged in
electronic commerce is an eligible business firm if the enterprise zone has
been approved for electronic commerce designation under section 2 of this 2001
Act.
SECTION 4.
ORS 285B.713 is amended to read:
285B.713. (1) The property tax exemption provided under ORS
285B.698 shall be available only for qualified property of a qualified business
firm.
(2) The following kinds of property are qualified for the
exemption allowed under ORS 285B.698:
(a) A new building or structure with a cost of $25,000 or
more.
(b) An addition to or modification of an existing building
or structure. The total cost of qualifying additions or modifications to an
existing building or structure shall be at least $25,000 in one assessment year.
In order to satisfy the minimum investment requirement, the cost of two or more
additions or modifications made in one assessment year to a single building or
structure may be aggregated.
(c) Any real property machinery or equipment, whether new,
used or reconditioned, that is newly purchased, leased or transferred into the
enterprise zone from outside the county within which the zone is located and
installed in property owned or leased by a qualified business firm.
(d) Any single item of personal property machinery or
equipment, whether new, used or reconditioned, that is newly purchased, leased
or transferred into the enterprise zone from outside the county within which
the zone is located and installed in property owned or leased by a qualified
business firm and:
(A) That has a cost of at least $1,000 if the property is
used exclusively for producing tangible goods or is used in electronic commerce in a zone approved for electronic
commerce designation under section 2 of this 2001 Act; or
(B) That has a cost of at least $50,000.
(e) A new building and associated structures owned by a
governmental body that are leased to one or more qualified business firms.
(f) Any property otherwise described in this section that
is owned or leased and operated by a business firm operating a hotel, motel or
destination resort, to the extent that the property is located on the same site
as the hotel, motel or destination resort and is used primarily to serve
overnight guests of the hotel, motel or destination resort. For purposes of
this paragraph, property is primarily used to serve guests if at least 50
percent of any receipts from such use are paid by guests.
(g) Any property otherwise described in this section that
is owned or leased and operated by a business firm described in ORS 285B.707
(4), to the extent that the property is used exclusively in an activity
described in ORS 285B.707 (1).
(h) Any property
otherwise described in this section that is owned or leased and operated by a
business firm that is engaged in electronic commerce, if the enterprise zone in
which the property is located is a zone approved for electronic commerce
designation under section 2 of this 2001 Act.
(3) The following property is not qualified for exemption
under ORS 285B.698:
(a) Land.
(b) Self-propelled motorized vehicles.
(c) Property excluded under ORS 285B.698 (5).
SECTION 5.
Qualified property owned or leased and
operated by a qualified business firm engaged in electronic commerce may not
receive an exemption under ORS 285B.698 unless the electronic commerce
operations of the firm are located in an enterprise zone that has been approved
for electronic commerce designation under section 2 of this 2001 Act.
SECTION 6.
Sections 2 and 5 of this 2001 Act are
added to and made a part of ORS 285B.650 to 285B.728.
SECTION 7.
Section 8 of this 2001 Act is added to
and made a part of ORS chapter 315.
SECTION 8.
(1) A credit against the taxes that are
otherwise due under ORS chapter 316 or, if the taxpayer is a corporation, under
ORS chapter 317 or 318, shall be allowed to a taxpayer that is:
(a) A qualified business
firm engaged in electronic commerce in an enterprise zone that has been
approved for electronic commerce designation under section 2 of this 2001 Act;
or
(b) A business firm
engaged in electronic commerce in a city that has been designated for
electronic commerce under section 2b of this 2001 Act.
(2) The credit shall
equal 25 percent of the investments made by the business firm during the tax
year in electronic commerce operations within the area designated for
electronic commerce that are related to electronic commerce sales, customer
service, order fulfillment or broadband infrastructure.
(3) A credit under this
section may not be allowed for an income tax year beginning in a property tax
year in which qualified property of the business firm is subject to property
tax.
(4) A credit allowed
under this section may not exceed the lesser of $2 million or the tax liability
of the taxpayer.
(5) Any tax credit
otherwise allowable under this section that is not used by the taxpayer in a
particular year may be carried forward and offset against the taxpayer's tax
liability for the next succeeding tax year. Any credit remaining unused in the
next succeeding tax year may be carried forward and used in the second
succeeding tax year, and likewise any credit not used in that second succeeding
tax year may be carried forward and used in the third succeeding tax year, and
any credit not used in that third succeeding tax year may be carried forward
and used in the fourth succeeding tax year, and any credit not used in that
fourth succeeding tax year may be carried forward and used in the fifth
succeeding tax year, but may not be carried forward for any tax year
thereafter.
(6) As used in this
section, “business firm,” “electronic commerce,” “qualified business firm” and
“qualified property” have the meanings given those terms in ORS 285B.650.
SECTION 9.
Sections 10 and 11 of this 2001 Act are
added to and made a part of ORS chapter 285B.
SECTION 10.
(1) As used in this section and section
11 of this 2001 Act:
(a) “Advanced
telecommunications facilities” means high-speed, dedicated or switched
broadband telecommunications infrastructure or equipment that enables users to
send or receive high quality voice, data or video telecommunications using any
technology.
(b) “Last mile
connection” means a communications channel from the feed from a connecting
bypassing intercity telecommunications carrier through a telecommunications
switching center, or an individual message distribution point, to a user
terminal.
(c) “Local exchange
carrier” means a person that holds a certificate of authority issued by the
Public Utility Commission under ORS 759.020 to provide intrastate
telecommunications service or local exchange telecommunications service within
this state.
(d) “Telecommunications
carrier” means a provider of telecommunications services, but does not include
an aggregator, as defined in 47 U.S.C. 226.
(2) A telecommunications
carrier seeking a tax credit under section 15 of this 2001 Act for the
installation of advanced telecommunications facilities, prior to incurring any
costs associated with the installation, shall apply to the Economic and
Community Development Department for certification of the facilities as
advanced telecommunications facilities.
(3) The application for
certification shall be in the form and shall contain the information required
by the department pursuant to rules adopted by the department for the
administration of the tax credit certification under this section, including
but not limited to:
(a) A complete
description of the installation project and the customers to be served by the
project;
(b) The expected costs
for completing the project;
(c) The expected start
date and the expected date on which the advanced telecommunications facilities
are to be placed in service;
(d) The geographic area
or areas in which the advanced telecommunications facilities are to be
installed; and
(e) A description of how
the facilities will be integrated into the operations of the intrastate
telecommunications services provided by the telecommunications carrier.
(4) The application for
certification shall be accompanied by technical documentation demonstrating
that the facilities will meet or exceed applicable minimum performance
standards established by the department under section 11 of this 2001 Act.
(5) The department may
approve or deny an application for certification or may request changes to the
application before issuing certification. Denial of an application may be
appealed to the department in the manner of a contested case under ORS 183.310
to 183.550.
(6) The department shall
approve an application and certify the facilities as advanced
telecommunications facilities if the facilities:
(a) Are to be located in
an area in which current minimum bandwidth service is not available to a
majority of customers;
(b) Improve access to
advanced telecommunications services for a majority of all customers in
unserved or underserved service areas; and
(c) Meet the minimum
performance standards to comply with section 11 of this 2001 Act.
(7) Upon approval of an
application, the department shall send to the applicant a written certification
of the facilities as advanced telecommunications facilities. The certification
shall state the date by which the facilities must be placed in service and the
cost of the facilities that are being certified.
(8) Notwithstanding
subsection (6) of this section, the department may not approve an application
and certify a facility if the cost of the facility plus the certified costs of
all other facilities that have been certified during the year exceeds $10
million.
(9) The department may
establish by rule the amount of fees charged to applicants seeking
certification of facilities as advanced telecommunications facilities. Revenues
from the fees shall be used to offset the costs incurred by the department in
administering the tax credit certification under this section.
SECTION 11.
(1) The Economic and Community
Development Department shall adopt rules setting minimum performance standards
that facilities must meet to be certified as advanced telecommunications
facilities. The rules must establish minimum performance standards in the following
areas:
(a) Enhancement of
individual and business access to advanced telecommunications services at an
economically reasonable cost;
(b) Development and
transition to a fully competitive telecommunications marketplace;
(c) Provision of
bidirectional bandwidth capabilities to customers;
(d) Accessibility to
competitive local exchange carriers;
(e) Improvement in
access by public and private educational institutions, rural health clinics and
libraries to advanced telecommunications services;
(f) Improvement in
telecommunications connections between communities in this state;
(g) Improvement in last
mile connections within this state; and
(h) Improvement in
access by Oregon health care providers to interactive video and other health
care applications requiring advanced telecommunications services.
(2) In order for
facilities to be certified under section 10 of this 2001 Act, the facilities
must meet or exceed the minimum performance standards in at least one of the
areas set forth in subsection (1) of this section.
SECTION 12.
The Economic and Community Development
Department may issue certifications under section 10 of this 2001 Act on or
after January 1, 2002, and before December 31, 2005.
SECTION 13.
The Oregon Economic and Community
Development Commission shall report to the Seventy-third Legislative Assembly
on the effectiveness of the tax credit provided under section 15 of this 2001
Act in improving advanced telecommunications capability in underserved areas of
this state and in achieving the other purposes for which the credit was
established. The commission shall report to the Seventy-third Legislative
Assembly on or before March 15, 2005.
SECTION 14.
Section 15 of this 2001 Act is added to
and made a part of ORS chapter 315.
SECTION 15.
(1) There shall be allowed a credit
against the taxes otherwise due under ORS chapter 316 (or, if the taxpayer is a
corporation, under ORS chapters 317 and 318) for advanced telecommunications
facilities, as defined in section 10 of this 2001 Act, that have been certified
by the Economic and Community Development Department.
(2) The amount of the
credit shall equal 20 percent of the certified cost of the facilities that was
actually paid or incurred by the taxpayer, except that:
(a) The amount of the credit
may not include facility costs that were paid using moneys withdrawn from the
taxpayer's Telecommunications Infrastructure Account established pursuant to
ORS 759.405; and
(b) Revenues forgone by
the taxpayer upon the taxpayer's waiver of installation charges for advanced
telecommunications facilities to schools, rural health clinics or libraries may
be added to the amount of the credit.
(3) The credit may be
claimed by the taxpayer for the tax year in which the advanced
telecommunications facilities are placed in service.
(4) The credit allowed
under this section may not exceed the tax liability of the taxpayer and may not
be carried forward to a succeeding tax year.
(5) In the case of a
credit allowed under this section:
(a) A nonresident shall
be allowed the credit under this section in the proportion provided in ORS
316.117.
(b) If a change in the
status of a taxpayer from resident to nonresident or from nonresident to
resident occurs, the credit allowed by this section shall be determined in a
manner consistent with ORS 316.117.
(c) If a change in the
taxable year of a taxpayer occurs as described in ORS 314.085, or if the
Department of Revenue terminates the taxpayer's taxable year under ORS 314.440,
the credit allowed under this section shall be prorated or computed in a manner
consistent with ORS 314.085.
(6) The credit shall be
claimed on a form prescribed by the Department of Revenue and containing any
information as may be required by the department. The taxpayer shall attach a
copy of the certification to the return for the tax year for which the credit
is claimed.
SECTION 16.
Section 17 of this 2001 Act is added to
and made a part of ORS chapter 759.
SECTION 17.
The Public Utility Commission may not
require a reduction in a rate or a schedule of rates as a result of a tax
credit under section 15 of this 2001 Act being allowed to a telecommunications
utility.
SECTION 18.
ORS 314.752 is amended to read:
314.752. (1) Except as provided in ORS 314.740 (5)(b), the
tax credits allowed or allowable to a C corporation for purposes of ORS chapter
317 or 318 shall not be allowed to an S corporation. The business tax credits
allowed or allowable for purposes of ORS chapter 316 shall be allowed or are
allowable to the shareholders of the S corporation.
(2) In determining the tax imposed under ORS chapter 316,
as provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder's pro rata share
of business tax credit (or item thereof) that would be allowed to the
corporation (but for subsection (1) of this section) or recapture or recovery
thereof. The credit (or item thereof), recapture or recovery shall be passed
through to shareholders in pro rata shares as determined in the manner
prescribed under section 1377(a) of the Internal Revenue Code.
(3) The character of any item included in a shareholder's
pro rata share under subsection (2) of this section shall be determined as if
such item were realized directly from the source from which realized by the
corporation, or incurred in the same manner as incurred by the corporation.
(4) If the shareholder is a nonresident and there is a
requirement applicable for the business tax credit that in the case of a
nonresident that the credit be allowed in the proportion provided in ORS
316.117, then that provision shall apply to the nonresident shareholder.
(5) As used in this section, “business tax credit” means a
tax credit granted to personal income taxpayers to encourage certain investment,
to create employment, economic opportunity or incentive or for charitable,
educational, scientific, literary or public purposes that is listed under this
subsection as a business tax credit or is designated as a business tax credit
by law or by the Department of Revenue by rule and includes but is not limited
to the following credits: ORS 315.104 (forestation and reforestation), ORS
315.134 (fish habitat improvement), ORS 315.138 (fish screening, by-pass
devices, fishways), ORS 315.156 (crop gleaning), ORS 315.164 (farmworker
housing), ORS 315.204 (dependent care assistance), ORS 315.208 (dependent care
facilities), ORS 315.234 (child development program contributions), ORS 315.254
(youth apprenticeship sponsorship), ORS 315.304 (pollution control facility),
ORS 315.324 (plastics recycling), ORS 315.354 and ORS 469.207 (energy
conservation facilities), ORS 315.504 (Oregon Capital Corporation), ORS 315.604
(bone marrow transplant expenses) and ORS 317.115 (fueling stations necessary
to operate an alternative fuel vehicle) and
section 8 of this 2001 Act (electronic commerce) and section 15 of this 2001
Act (advanced telecommunications facilities).
SECTION 19.
ORS 318.031 is amended to read:
318.031. It being the intention of the Legislative Assembly
that this chapter and the Corporation Excise Tax Law of 1929 shall be
administered as uniformly as possible (allowance being made for the difference
in imposition of the taxes and the operative date of this chapter), the
provisions of ORS 305.140 and 305.150 and ORS chapter 314 and of the following
sections of ORS chapter 315 or 317, as amended on or before August 3, 1955, and
as they may thereafter be amended, are incorporated into this chapter by this
reference and made a part hereof: ORS 315.104, 315.134, 315.156, 315.204,
315.208, 315.234, 315.254, 315.304, 315.504 and 315.604and section 15 of this 2001 Act (all only to the extent applicable
for a corporation) and ORS 317.010, 317.013, 317.018 to 317.022, 317.030,
317.035, 317.038, 317.080, 317.152 to 317.154, 317.259 to 317.303, 317.310 to
317.386, 317.476 to 317.485, 317.510 to 317.635 and 317.705 to 317.725 and
section 40, chapter 835, Oregon Laws 1997, and section 4, chapter 358, Oregon
Laws 1999, and section 8 of this 2001
Act.
SECTION 20.
Sections 8 and 15 of this 2001 Act and
the amendments to ORS 314.752 and 318.031 by sections 18 and 19 of this 2001
Act apply to tax years beginning on or after January 1, 2002.
Approved by the Governor
August 10, 2001
Filed in the office of
Secretary of State August 13, 2001
Effective date January 1,
2002
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