As of January 1, 2019, large retailers doing business in Portland, Ore., are subject to a new 1% gross receipts tax dubbed the “Clean Energy Surcharge.” This new tax is imposed on all businesses subject to the Portland business license tax that have annual retail receipts of over $1 billion and at least $500,000 annual retail receipts attributable to Portland. This tax has complications that qualifying large retailers should keep in mind. For instance, the tax is unconventionally broad and applies to, among other things, services (generally, without enumeration), interest income from lending, and sales of houses by builders. The tax uses current-year receipts, as opposed to prior-year receipts, to determine whether the thresholds are met, so businesses that may not be sure in advance if they will meet the thresholds should take caution accordingly. Finally, as is often the case with localities, Portland intends to apply its business license tax apportionment rule (income-producing activity approach), which differs from that of the State (market-based sourcing).
(This article was originally published by Bloomberg’s Daily Tax Report: State.)
Recent developments in several key states, including Illinois, New York, Minnesota, and Oregon, will impact many captive insurance companies. These states are moving to include certain captives in corporate income tax combined returns with parents and affiliates. The effect of combination is to tax the captives’ investment income and to disallow the deductions for premiums paid to the captives. New York and Minnesota are also using the federal definitions of “insurance” to determine whether captive insurance companies are combinable and subject to corporate income tax.