OAR 150-291-0300
Procedures for Handling State Personal Income Tax Surplus Credit
(1)
Surplus Credit Generally. This rule applies for biennia beginning on or after July 1, 2011, when personal income taxpayers are credited a surplus of tax revenues under ORS 291.349 (Revenue estimate)(4). Taxpayers claim the credit in odd-numbered tax years and calculate the credit based on the tax return information for the immediately preceding even-numbered tax year (base tax year).(2)
Surplus Credit Procedure. No later than October 15 following the end of the biennium for which a surplus is determined, the department will make publicly available to taxpayers the applicable surplus percentage amounts and information giving guidance on the calculation of the surplus credit.(a)
Personal income taxpayers calculate their surplus credit by multiplying the applicable surplus percentage amount by their total personal income tax liability for the base tax year.(b)
The total personal income tax liability is determined after allowing a credit for income taxes paid to another state (under ORS 316.082 (Credit for taxes paid another state), 316.131 (Credit allowed to nonresident for taxes paid to state of residence), and 316.292 (Credit for taxes paid another state)) and before any other credit or offset against tax liability, allowed or allowable.(c)
If a surplus credit reduces tax liability to zero, the department will refund any unused surplus credit amount as an overpayment of tax. The department may offset an overpayment of tax due to any unused surplus credit amount to pay debts owing to the State of Oregon or other parties as indicated in ORS 314.415 (Refunds) and 293.250 (Collections Unit). The department will issue a notice when this occurs. The department will offset any unused surplus credit amount consistent with the priority set out in OAR 150-314-0248 (Refund Offset Priority).(3)
Changes in filing status or spouse/registered domestic partner (RDP). A taxpayer who files returns using a different filing status in the base tax year and the immediately succeeding tax year, when claiming a surplus credit, or who files jointly with a different taxpayer in the base tax year and the immediately succeeding tax year, when claiming a surplus credit, must compute their surplus credit as follows:(a)
From another filing status to married/RDP filing jointly. The surplus credit allowed on the joint return is the combination of the surplus credits as calculated based on each taxpayer’s separate return from the base tax year.(b)
From married/RDP filing jointly to another filing status. The surplus credits claimed by each taxpayer on their separate returns must bear the same proportion to the total surplus credit calculated according to ORS 291.349 (Revenue estimate)(5) as the federal adjusted gross income of each taxpayer bears to the federal adjusted gross income of both taxpayers on the joint return for the base tax year.(c)
From married/RDP filing jointly to married/RDP filing jointly with a different spouse/RDP. The provisions of this subsection apply to a taxpayer who files a joint return with one spouse/RDP for the base tax year and then divorces, marries a different spouse/RDP during the immediately succeeding tax year, and files a joint return with their new spouse/RDP for the immediately succeeding tax year. The surplus credit allowed on the joint return with the new spouse/RDP is the combination of the surplus credits as calculated based on each taxpayer’s separate return from the base tax year.(d)
Death of a taxpayer. The provisions of this subsection apply when a taxpayer dies during the base or immediately succeeding tax year and personal income taxpayers are credited a surplus of tax revenues after the end of that biennium. The taxpayer’s representative may file a return on their behalf to claim the surplus credit. If one of the two taxpayers on a jointly filed return from the base tax year dies, the surviving taxpayer from the joint return may claim the full amount of the surplus credit.(4)
Surplus Credit and subsequent increase in tax liability. If a taxpayer claims a surplus credit and subsequently there is an increase in the tax liability for the base tax year, the taxpayer must recalculate and apply their surplus credit in the following manner:(a)
Determine the revised surplus credit under section (2) of this rule using the total personal income tax liability as determined in an audit or review or as self-assessed by the taxpayer if an amended return is filed with the department;(b)
If within the time allowed by law, adjust or amend the return for the odd-numbered tax year to include the revised surplus credit.(5)
Surplus Credit and subsequent decrease in liability. If a taxpayer claims a surplus credit and subsequently there is a decrease in tax liability for the base tax year, the taxpayer must recalculate and apply their surplus credit in the following manner:(a)
Determine the revised surplus credit under section (2) of this rule using the total personal income tax liability as determined in an audit or review or as self-assessed by the taxpayer if an amended return is filed with the department;(b)
If within the time allowed by law, adjust or amend the return for the odd-numbered tax year to include the revised surplus credit.(6)
Interest accrual.(a)
Interest accrues according to ORS 314.415 (Refunds) on a refund of any unused surplus credit amount under subsection (2)(c) of this rule.(b)
Interest accrues according to ORS 314.400 (Penalty for failure to file report or return or to pay tax when due)(7) on the amount of any surplus credit that a taxpayer must pay back under section (5) of this rule.(7)
Tax determined by the department on behalf of a delinquent taxpayer. If a taxpayer fails to file a return, the department may determine the taxpayer’s tax liability under ORS 314.400 (Penalty for failure to file report or return or to pay tax when due). If the department determines a taxpayer’s tax liability for a tax year in which personal income taxpayers are credited a surplus of tax revenues under 291.349 (Revenue estimate)(4), the amount of surplus credit will not be included in the department’s calculation of tax liability until:(a)
The taxpayer files a return with the department for the base tax year;(b)
The taxpayer accepts the tax liability assessed by the department for the base tax year; or(c)
The taxpayer’s liability is determined by the court for the base tax year.(8)
Returns and the statute of limitations. The department will refund any unused surplus credit amount as an overpayment of tax only as the limitations under ORS 314.415 (Refunds) will allow.(9)
Claiming a surplus credit when a taxpayer otherwise has no requirement to file. The provisions of this section apply to taxpayers who are not otherwise required to file a return. If a taxpayer files a return and has, or the department determines the taxpayer has, a personal income tax liability for the base tax year, the taxpayer must file a return in the immediately succeeding tax year in order to claim a surplus credit and receive a refund.(10)
Joint return apportionment of refund. If two taxpayers together file a joint return claiming a surplus credit and either spouse requests the department make separate refunds under ORS 314.415 (Refunds)(7), the department will apportion the total refund according to 314.415 (Refunds)(7) and OAR 150-314-0254 (Separate Refunds When a Joint Return Has Been Filed). The following is an example applying this section and subsection (3)(a) of this rule:
Source:
Rule 150-291-0300 — Procedures for Handling State Personal Income Tax Surplus Credit, https://secure.sos.state.or.us/oard/view.action?ruleNumber=150-291-0300.