By Daniel Tay

Law360 (March 18, 2020, 7:24 PM EDT) -- An Oregon business group asked a special legislative committee on Wednesday to suspend collecting the state's new corporate activity tax while the state grapples with the COVID-19 outbreak.

The state should consider delaying implementation of the state's new corporate activity tax for at least the first quarter of 2020, Sandra McDonough, president and CEO of Oregon Business & Industry, told the state's Joint Special Committee on Coronavirus Response. The rules to implement the tax were not yet complete, McDonough said, adding that delaying the tax would help businesses deal with a cash-flow crisis.

"This is not something we got to lightly. It is not something we're doing because this is a tax that business doesn't particularly like anyway. This is real," McDonough said in the committee hearing.

Oregon Business & Industry represents 1,600 businesses comprising 370,000 workers in the state. 

The organization on Monday also sent a letter to Democratic Gov. Kate Brown, with 23 other organizations, including the Oregon Restaurant & Lodging Association, Oregon Trucking Associations and Oregon Homebuilders Association, requesting tax relief.

McDonough also asked the committee to consider asking local governments to put a hold on new tax measures until the COVID-19 pandemic is resolved. Additionally, she asked the legislature to consider incentives like tax credits to encourage companies to provide extended paid time off, remote work opportunities and other measures to employees.

The organizations in the letter also asked the legislature to extend tax filing deadlines and suspend payroll taxes for small businesses. Lawmakers could also consider transferring the state's corporate "kicker" refunds — triggered when revenue exceeds forecasts by over 2% for a biennial budget cycle — to the state's unemployment insurance fund, the groups said. 

The organizations also asked the legislature to consider reducing corporate minimum taxes for trucking firms, which the organization said are critical in delivering supplies during the virus' outbreak.

The first quarter estimated tax payment deadline for the state's corporate activity tax is April 30. The state Department of Revenue has implemented temporary rules for administering the tax and has said it will begin the permanent rulemaking process on April 1.

Brown signed the bill approving the corporate activity tax in May 2019. The law imposes a $250 tax on the first $1 million of a business's gross receipts and a 0.57% tax on gross receipts greater than $1 million, after qualifying subtractions. A business with over $750,000 in Oregon gross receipts for the year must register with the department; a business with $1 million in Oregon gross receipts must file a return; and a business with $1 million in taxable income after the state-allowed 35% subtraction for cost inputs, or cost of goods sold, must pay the tax.

Legislative leaders in the state on Monday called for a special session to implement an emergency response package. The statement was issued by House Speaker Tina Kotek, D-Portland, House Republican Leader Christine Drazan, R-Canby, and Senate President Peter Courtney, D-Salem, among others.

The state legislature had adjourned earlier than scheduled after Republicans boycotted the session when the Democratic majority declined to refer a bill on cap and trade to voters. Tayleranne Gillespie, a representative for the House Republican caucus, told Law360 there is currently no date scheduled for a session.

Brown's office did not respond to requests for comment. McDonough did not respond to requests for additional comment.

--Editing by Joyce Laskowski. 

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