Chapter 883
AN ACT
HB 3364
Relating to tax credits for reforestation; creating new provisions;
amending ORS 314.752, 315.104, 318.031, 526.450, 526.455, 526.465 and 526.475;
and repealing ORS 315.104, 315.106 and 315.108.
Be It Enacted by the People of
the State of
SECTION 1. ORS 315.104 is amended to read:
315.104. (1) A credit
against the taxes otherwise due under ORS chapter 316 (or if the taxpayer is a
corporation, under ORS chapter 317 or 318) shall be allowed in an amount equal
to 50 percent of reforestation project costs actually paid or incurred to
reforest underproductive Oregon forestlands. Such costs include, but are not
limited to, any fees established by the State Forester under ORS 315.106
(4), site preparation, tree planting and other silviculture treatments
considered necessary by the State Forester to establish commercial, hardwood or
softwood stands on appropriate sites. Subject to subsection (5) of this
section:
(a) One-half of the
credit shall be taken in the tax year for which the State Forester, after
physical inspection of the forestland, issues a preliminary certificate under
ORS 315.106 certifying that the land qualifies as underproductive Oregon
forestland and that the reforestation project undertaken meets the requirements
of this section and the specifications established by the State Forester and
the costs appear to be reasonable; and
(b) One-half of the
credit shall be taken in the tax year for which the State Forester, after
further physical inspection of the land and project, certifies that the new
forest is established in accordance with the specifications of the State
Forester.
(2) No credit shall be
allowed under either subsection (1)(a) or (b) of this section unless written
certification containing the following statements accompanies the claim for the
credit or is otherwise filed with the Department of Revenue:
(a) A preliminary
certificate issued by the State Forester under ORS 315.106 that the land and
project meet the preliminary specifications established by the State Forester
or that the new forest is established, whichever is applicable at the time.
(b) A statement by the
landowner or person in possession of the land that the land within the project
area will be used for the primary purpose of growing and harvesting trees of an
acceptable species.
(c) A statement that the
landowner or person in possession of the land is aware that maintenance
practices, including release, may be needed to insure that a new forest is
established and will remain established.
(3) For purposes of this
section, reforestation project costs shall not include:
(a) Costs paid or
incurred to reforest any forestland that has been commercially logged to the
extent that reforestation is required under the Oregon Forest Practices Act,
except costs paid or incurred to reforest forestland following a hardwood
harvest, conducted for the purposes of converting underproductive forestlands,
as determined by administrative rule.
(b) That portion of
costs or expenses paid through a federal or state cost share, financial assistance or other incentive program.
(c) Those costs paid or
incurred to grow Christmas trees, ornamental trees, shrubs or plants, or those
costs paid or incurred to grow hardwood timber described under ORS 321.267 (3)
or 321.824 (3).
(d) Any costs paid or
incurred to purchase or otherwise acquire the land.
(e) The cost of purchase
or other acquisition of tools and equipment with a useful life of more than one
year.
(4) To qualify for the
credit:
(a) The project must be
completed to specifications approved by the State Forester.
(b) The taxpayer’s
portion of the project costs must be $500 or more.
(c) The taxpayer must be
a private individual, corporation, group, Indian tribe or other native group,
association or other nonpublic legal entity owning, purchasing under recorded
contract of sale or leasing at least five acres of
(d) Prior to December
31, 2022, the taxpayer must file with the State Forester a written request for
preliminary certification under ORS 315.106.
(5) Any tax credit
otherwise allowable under this section which 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 such
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, but may not be carried forward for any tax year thereafter. In all cases
the taxpayer must be the person who made the investment into the project.
(6) The credit provided
by this section shall be in addition to and not in lieu of any depreciation or
amortization deduction to which the taxpayer otherwise may be entitled with
respect to the reforestation project and the credit shall not affect the
computation of basis for the property.
(7) In compliance with
ORS chapter 183, the Department of Revenue and the State Forestry Department
may adopt rules consistent with law for carrying out the provisions of this
section.
(8) As used in this
section, “underproductive
(9) If, for any reason
other than those specified in subsection (10) of this section, a new forest is
not established by the last day of the second taxable year following the
taxable year for which the preliminary certificate was issued, the State
Forester shall so report to the Department of Revenue. The report filed under
this subsection shall be the basis for the department to recover any credit
granted under subsection (1)(a) of this section. If,
however, the new forest is not established within the time required by this
subsection on account of the reasons specified in subsection (10) of this
section, any credit allowed under subsections (1)(a)
and (5) of this section shall not be recovered but no further credit as
provided under subsections (1)(b) and (5) of this section shall be allowed.
(10) Subject to
requalification under this section in the manner applicable for the original
claim, including obtaining a new preliminary certificate, a taxpayer may claim
an additional credit or credits for reestablishing a new planting in the event
that the new forest is destroyed by a natural disaster or is not established
for reasons beyond the control of the taxpayer, if the measures taken in
completing the original or earlier project would normally have resulted in
establishing the minimum number of trees per acre anticipated by the project.
(11) Any owner affected
by a determination, regarding the reforestation tax credit made by:
(a) The State Forester,
except for a denial of a request for a preliminary certificate due to the
annual reforestation credit cost limitation calculated under ORS 315.108, may
appeal that determination in the manner provided for in ORS 526.475 (1).
(b) The Department of
Revenue, may appeal that determination in the manner provided for in ORS
526.475 (2).
SECTION 2. The amendments to ORS 315.104 by section 1
of this 2007 Act apply to tax credits claimed for tax years beginning on or
after January 1, 2008.
SECTION 3. 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 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
285C.309 (tribal taxes on reservation enterprise zones), [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 and 315.169 (farmworker housing), ORS
315.204 (dependent care assistance), ORS 315.208 (dependent care facilities),
ORS 315.213 (contributions for child care), 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
315.507 (electronic commerce), ORS 315.511 (advanced telecommunications
facilities), ORS 315.604 (bone marrow transplant expenses) and ORS 317.115
(fueling stations necessary to operate an alternative fuel vehicle).
SECTION 4. ORS 318.031 is amended to read:
318.031. It being the
intention of the Legislative Assembly that this chapter and ORS chapter 317
shall be administered as uniformly as possible (allowance being made for the
difference in imposition of the taxes), ORS 305.140 and 305.150, ORS chapter
314 and the following sections are incorporated into and made a part of this
chapter: ORS 285C.309, [315.104,]
315.134, 315.156, 315.204, 315.208, 315.213, 315.254, 315.304, 315.507, 315.511
and 315.604 (all only to the extent applicable for a corporation) and ORS
chapter 317.
SECTION 5. ORS 526.450 is amended to read:
526.450. ORS [315.104,] 318.031 and 526.450 to 526.475
may be cited as the “Woodland Management Act of 1979.”
SECTION 6. ORS 526.455 is amended to read:
526.455. As used in ORS
[315.104,] 318.031 and 526.450 to
526.475, unless the context requires otherwise:
(1) “Approved forest
management practice” means and includes site preparation, tree planting,
precommercial thinning, release, fertilization, animal damage control, insect
and disease management or such other young growth management practices that
increase wood growth as the State Forester shall approve or determine proper
generally with regard to any particular applicant.
(2) “Board” means State
Board of Forestry.
(3) “Commercial
forestland” means land for which a primary use is the growing and harvesting of
forest tree species and other forest resource values.
(4) “Eligible owner”
means any private individual, group, Indian tribe or other native group,
association, corporation or other nonpublic legal entity owning 10 to 500 acres
of Oregon commercial forestland.
(5) “Forest management
plan” means an operation plan to reach landowner objectives and assures public
benefits as they relate to producing timber and other values. It shall include
a cover map, basic forest stand description data, treatment opportunities,
landowner objectives and a schedule for implementing the forest management
plan.
(6) “Forest management
practices” means and includes site preparation, tree planting, precommercial
thinning, release, fertilization, animal damage control, insect and disease
management and other young growth management practices that increase wood
growth.
(7) “Industrial private
forestlands” means lands capable of producing crops of industrial wood, greater
than 10 acres and owned by other than an eligible owner.
(8) “Industrial wood”
means forest products used to sustain a sawmill,
plywood mill, pulp mill or other forest industry related manufacturing
facility.
(9) “Landowner” means
any private individual, group, Indian tribe or other native group, association,
corporation or other legal entity, owning both the forestland and any timber
thereon.
(10) “Nonindustrial
private forestlands” means lands capable of producing crops of industrial wood
and owned by an eligible owner.
(11) “State Forester”
means the individual appointed pursuant to ORS 526.031, or the authorized
representative of the State Forester.
(12) “Timber” means wood
growth, mature or immature, growing or dead, standing or down of species
acceptable for regeneration under the Oregon Forest Practices Act.
(13) “Underproductive
forestlands” means commercial forestlands not meeting the minimum stocking
standards of the Oregon Forest Practices Act.
SECTION 7. ORS 526.465 is amended to read:
526.465. The purpose of
ORS [315.104,] 318.031 and 526.450 to
526.475 is to encourage long term forestry investments that lead to increased
management of
[(1) Providing the forest owner with tax relief
during the timber growth period.]
[(2)] (1) Promoting programs that provide forest credit on
young stands and encourage harvesting of mature forest crops.
[(3)] (2) Promoting the establishment of new forest crops on
cutover, denuded or underproductive privately owned forestlands.
[(4)] (3) Protecting the public interest by assuring that the
citizens of the state and future generations shall have the benefits to be
derived from the continuous production of forest products from the private
forestlands of Oregon, including jobs, taxes, water, erosion control and
habitat for wild game.
SECTION 8. ORS 526.475 is amended to read:
526.475. (1) Any owner
affected by a determination of the State Forester made under ORS [315.104,] 318.031 and 526.450 to 526.475
may appeal to the State Board of Forestry under such rules as it may adopt. An
appeal to set aside any decision of the board with respect to ORS [315.104 or] 318.031 may be taken within
60 days of the decision to the Oregon Tax Court in the manner provided for tax
cases under ORS chapter 305.
(2) Any owner affected
by a determination of the Department of Revenue made under ORS [315.104 or] 318.031 may appeal directly
to the tax court under ORS 305.404 to 305.560.
SECTION 9. ORS 315.104, 315.106 and 315.108 are
repealed on January 2, 2028.
SECTION 10. The amendments to ORS 314.752, 318.031,
526.450, 526.455, 526.465 and 526.475 by sections 3 to 8 of this 2007 Act
become operative on January 2, 2028.
Approved by the Governor August 3, 2007
Filed in the office of Secretary of State August 3, 2007
Effective date January 1, 2008
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