Personal and Corporate Income or Excise Tax Credits
(1)(a) In addition to any other credit available for purposes of ORS chapter 316, an eligible resident individual shall be allowed a credit against the tax otherwise due under ORS chapter 316 for the tax year in an amount equal to nine percent of the earned income credit allowable to the individual for the same tax year under section 32 of the Internal Revenue Code.
(b)Notwithstanding paragraph (a) of this subsection, for a taxpayer with a dependent under the age of three at the close of the tax year, the credit allowed under this section shall be in an amount equal to 12 percent of the earned income credit allowable to the individual for the same tax year under section 32 of the Internal Revenue Code.
(2)An eligible nonresident individual shall be allowed the credit computed in the same manner and subject to the same limitations as the credit allowed a resident by subsection (1) of this section. However, the credit shall be prorated using the proportion provided in ORS 316.117 (Proration between Oregon income and other income for nonresidents, part-year residents and trusts).
(3)If a change in the taxable year of a taxpayer occurs as described in ORS 314.085 (Taxable year), or if the Department of Revenue terminates the taxpayer’s taxable year under ORS 314.440 (Tax as debt), the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085 (Taxable year).
(4)If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117 (Proration between Oregon income and other income for nonresidents, part-year residents and trusts).
(5)If the amount allowable as a credit under this section, when added to the sum of the amounts allowable as payment of tax under ORS 316.187 (Amount withheld is in payment of employee’s tax) or 316.583 (Effect of payment of estimated tax or installment), other tax prepayment amounts and other refundable credit amounts, exceeds the taxes imposed by ORS chapters 314 and 316 for the tax year after application of any nonrefundable credits allowable for purposes of ORS chapter 316 for the tax year, the amount of the excess shall be refunded to the taxpayer as provided in ORS 316.502 (Distribution of revenue to General Fund).
(6)The Department of Revenue may adopt rules for purposes of this section, including but not limited to rules relating to proof of eligibility and the furnishing of information regarding the federal earned income credit claimed by the taxpayer for the tax year.
(7)Refunds attributable to the earned income credit allowed under this section do not bear interest. [1997 c.692 §3; 2001 c.114 §33; 2001 c.660 §56; 2003 c.77 §12; 2005 c.832 §§54,57,59; 2007 c.880 §2; 2013 s.s. c.5 §6d; 2016 c.98 §1; 2019 c.579 §31]
Notes of Decisions
State could not recalculate tax for tax year closed to review in order to prevent elective carry forward of tax credit to tax year subject to review. Smurfit Newsprint Corp. v. Dept. of Revenue, 329 Or 591, 997 P2d 185 (2000)