OAR 150-317-0020
Substantial Nexus Guidelines

(1)

The State of Oregon imposes taxes on or measured by net income to the extent allowed under state statutes, federal Public Law 86-272, and the Oregon and U.S. Constitutions. For purposes of determining whether Oregon has jurisdiction to impose an excise tax for the privilege of doing business in the state under ORS Chapter 317 (Corporation Excise Tax) or tax on income from sources within this state under ORS Chapter 318 (Corporation Income Tax), there must exist a substantial nexus between the state and the activity or income it seeks to tax.

(2)

“Substantial nexus” for corporate excise and income tax jurisdiction purposes, under the Commerce Clause of the U.S. Constitution, does not require a taxpayer to have a physical presence in Oregon. Substantial nexus exists where a taxpayer regularly takes advantage of Oregon’s economy to produce income for the taxpayer and may be established through the significant economic presence of a taxpayer in the state.

(3)

In determining whether a taxpayer has a substantial nexus with Oregon the department may consider whether the taxpayer:

(a)

Maintains continuous and systematic contacts with Oregon’s economy or market;

(b)

Conducts deliberate marketing to or solicitation of Oregon customers;

(c)

Files or is required to file reports or returns with Oregon regulatory bodies;

(d)

Receives significant gross receipts attributable to customers in Oregon;

(e)

Receives significant gross receipts attributable to the use of taxpayer’s intangible property in Oregon; or

(f)

Receives benefits provided by the state, such as:

(A)

Laws providing protection of business interests or regulating consumer credit;

(B)

Access to courts and judicial process to enforce business rights, including debt collection and intellectual property rights;

(C)

Highway or transportation system access for transport of taxpayer’s goods or services;

(D)

Access to educated workforce in Oregon; or

(E)

Police and fire protection for property in Oregon that displays taxpayer’s intellectual or intangible property.

(4)

The list of possible facts in section (3) that the department may consider in determining whether a taxpayer has a substantial nexus with Oregon is meant to be nonexclusive, and those facts should be considered only to the extent they are relevant. The department may consider any other relevant facts and circumstances.

(5)

The provisions in sections (1) through (4) of this rule, as well as the provisions in OAR 150-314-0365 (Taxable in Another State; In General), 150-314-0367 (Taxable in Another State; When a Taxpayer is “Subject To” Tax Under ORS 314.620(1)), and 150-314-0369 (Taxable in Another State; When a State has Jurisdiction to Subject a Taxpayer to a Net Income Tax), must be applied in determining if a taxpayer has substantial nexus in a state other than Oregon.
Example 1: Credit Card Company (CC) has, for several years, provided credit card lending services over the internet and by mail to over 25,000 Oregon customers. Solicitations for such credit cards have been mailed three or four times a year for the last three years to prospective Oregon customers in six Oregon cities. CC has substantial nexus in Oregon.
Example 2: IS Company (IS), headquartered in San Francisco, operates a website supporting internet sales, primarily to Asian country customers. IS made approximately 50 sales, at $6.95 per sale, to residents of Oregon during the tax year. IS contracts with an Oregon mailing service to make deliveries of the merchandise in Oregon (all sales are final). IS does not have substantial nexus in Oregon. Even though activities in greater volume might be sufficient for nexus, the amount of sales is de minimis.
Example 3: WB Distributing Company (WB) has for many years distributed wine and beer throughout Oregon, through Oregon licensed distributors with whom WB has distribution agreements. WB is required to obtain and maintain a wholesaler’s license from the Oregon Liquor Control Commission (OLCC). A condition of the license is that WB must make monthly reports of sales volumes to the OLCC. WB also periodically seeks advice and approval from the OLCC for special event activities in Oregon, at which no sales are solicited by the corporation. WB has substantial nexus in Oregon.
Example 4: IP Company (IP), organized under Delaware law and wholly owned by FP Company (FP) a foreign parent, owns intellectual property including trade marks, trade names, and logos. RS Company (RS), also wholly owned by FP but not unitary with IP, operates retail stores in Oregon that prominently and beneficially use the intellectual property owned by IP. By agreement, RS pays IP five percent of its gross sales for the right to use the intellectual property. IP has substantial nexus in Oregon.

Source: Rule 150-317-0020 — Substantial Nexus Guidelines, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-317-0020.

150‑317‑0010
Procedure for Handling State Surplus Refund 150‑317‑0020
Substantial Nexus Guidelines 150‑317‑0030
Definition: “Doing Business” 150‑317‑0040
Taxable Income of Regulated Investment Companies and Real Estate Investment Trusts 150‑317‑0050
Foreign Corporations Subject to Tax 150‑317‑0060
Capital Losses — Carrybacks and Carry-overs 150‑317‑0070
Administrative and Judicial Interpretations 150‑317‑0080
Adoption of Federal Law 150‑317‑0090
Policy — Application of Various Provisions of the Federal Internal Revenue Code 150‑317‑0100
Periods of Less than 12 Months Are Tax Years 150‑317‑0110
Tax Reform Act of 1984 Adjustments 150‑317‑0120
Farm Capital Gain 150‑317‑0130
Tax on Homeowner’s Association Income 150‑317‑0140
Imposition of the Tax: Mercantile, Manufacturing and Business Corporations 150‑317‑0150
Adoption of Federal Exempt Organizations 150‑317‑0160
Exemption and Return Requirements 150‑317‑0170
Minimum Tax 150‑317‑0190
Affordable Housing Credit 150‑317‑0200
Commercial Lending Institution Loans for Underground Storage Tanks or Soil Remediation 150‑317‑0210
Carryover of the Lender’s Credit for Weatherization Loans 150‑317‑0220
Lender’s Credit: Loans to Wood Heat and Fuel Oil Heat Customers 150‑317‑0230
Lender’s Credit: Computation 150‑317‑0240
Lender’s Credit: Definitions 150‑317‑0245
Commencement of Long Term Enterprise Zone Tax Credit 150‑317‑0250
Long Term Enterprise Zone Distributions 150‑317‑0260
Lender’s Credit for Agriculture Workforce Housing 150‑317‑0270
Credit for Contributions of Computers, Scientific Equipment, and Research 150‑317‑0280
Qualified Research Credit 150‑317‑0290
Research Tax Credit: Notice of Election 150‑317‑0300
Research Tax Credit: Alternative Computation 150‑317‑0310
Bad Debt Reserve of Financial Institutions Not Qualifying as Large Banks that Have Differences in Reserve for Federal and Oregon Tax Purposes 150‑317‑0320
Modification of Federal Taxable Income: Dividends from Certain Subsidiaries 150‑317‑0330
Modification for Dividends Received 150‑317‑0340
Modification of Federal Taxable Income: Internal Revenue Code Subpart F Income 150‑317‑0350
Oregon Subtraction Where Charitable Contribution Is Reduced Under Federal Law 150‑317‑0360
Definition of “State” 150‑317‑0370
Bad Debt Reserve of Financial Institutions that Have Changed From Reserve Method to Specific Charge-off Method 150‑317‑0380
Taxes on Net Income or Profits Imposed by any State or Foreign Country 150‑317‑0390
IRC Section 338: Application to Oregon 150‑317‑0400
Payments Received Under Federal Safe Harbor Lease Agreements For Transactions Entered Into in Tax Years Beginning on or After January 1, 1983 150‑317‑0410
Payments Received Under Federal Safe Harbor Lease Agreements for Transactions Entered Into in Tax Years Beginning Prior to 1983 150‑317‑0420
Modification of Federal Taxable Income: Difference Between Oregon and Federal Bases on Assets Sold, Exchanged or Otherwise Disposed Of 150‑317‑0430
Modification of Federal Taxable Income: Timber Cut but Unsold 150‑317‑0440
Depletion Allowance 150‑317‑0450
Depletion of Metal Mines 150‑317‑0460
Limitation on Oregon Net Loss Deduction 150‑317‑0470
Pre-change and Built-in Losses 150‑317‑0480
Definition of “Premiums” in the Insurance Sales Factor 150‑317‑0490
Insurers 150‑317‑0500
Applicable Date 150‑317‑0510
Unitary Business 150‑317‑0520
Direct or Indirect Relationships 150‑317‑0530
Corporations Doing Business Outside the United States 150‑317‑0540
Consolidated Oregon Return: Format and Information Required 150‑317‑0550
Consolidated Oregon Return: Affiliated Group 150‑317‑0560
Consolidated Oregon Return: Credits 150‑317‑0570
Different Apportionment Factors for Purposes of ORS 317.710(5)(b) 150‑317‑0580
Consolidated Oregon Return: Copy of Federal Return Required 150‑317‑0590
Interinsurance and Reciprocal Exchanges 150‑317‑0600
Limitations on Deduction of Group Losses 150‑317‑0610
Modified Federal Consolidated Taxable Income 150‑317‑0620
Modified Federal Consolidated Taxable Income — Contribution Deduction for the Oregon Consolidated Group 150‑317‑0630
Oregon Return: Apportionment Formula 150‑317‑0640
Member of a Unitary Group Incorporated in a Listed Foreign Jurisdiction 150‑317‑0650
Stakeholder feedback regarding listed jurisdictions 150‑317‑0651
Repatriation Tax Credit 150‑317‑0652
Modification for Listed Jurisdiction Amounts Previously Included in Income 150‑317‑0660
Computation of Taxable Income 150‑317‑0670
Application for Relief 150‑317‑0680
Tax Imposed on Unrelated Business Income of Certain Exempt Corporations 150‑317‑1000
Definition of Commercial Activity 150‑317‑1010
Substantial Nexus Guidelines for the Corporate Activity Tax (CAT) 150‑317‑1020
Corporate Activity Tax Unitary Business Factors, Common Ownership and Filing Requirements for Unitary Groups 150‑317‑1025
Corporate Activity Tax: Election to Exclude Non-U.S. Members from Unitary Group 150‑317‑1030
Sourcing Commercial Activity to Oregon from Sales of Tangible Personal Property 150‑317‑1040
Sourcing Commercial Activity to Oregon of Other than Sales of Tangible Personal Property 150‑317‑1050
Sourcing of Commercial Activity for Financial Institutions in This State 150‑317‑1060
Definition of Insurers’ Gross Premiums Receipts 150‑317‑1070
Sourcing of Motor Carrier Transportation Services 150‑317‑1100
Agent Exclusion 150‑317‑1120
Exclusion for subcontracting payments 150‑317‑1130
Property Brought into Oregon 150‑317‑1140
Wholesale Sale of Groceries Exclusion 150‑317‑1150
Retail Sale of Groceries Exclusion 150‑317‑1160
Farmer’s Sales to Agricultural Cooperatives 150‑317‑1170
Farming Operations: Clarifying Definitions for Agricultural Commodities, Farming Operations, Out of State Sales Based on Industry Averages 150‑317‑1200
Cost Input or Labor Cost Subtraction 150‑317‑1220
Employee Compensation: Labor Cost Subtraction 150‑317‑1300
Estimated Tax: When Estimated Payments Are Required 150‑317‑1310
Estimated Tax Payments: Delinquent or Underestimated Payment or Both, Constitutes Underpayment 150‑317‑1320
Estimated Tax: Unitary Groups and Apportioned Returns 150‑317‑1330
Extension of Time to File 150‑317‑1400
Determining Property Resold Out of State, and Methods of Determining 150‑317‑1410
Motor Vehicle Resale Certificate – Documentation Required 150‑317‑1420
Damages Received as the Result of Litigation 150‑317‑1500
Good Faith Effort
Last Updated

Jun. 8, 2021

Rule 150-317-0020’s source at or​.us