Oregon Statute: 316.848 Sunset Date: None Year Enacted: 1999
Corporation Personal Total
2011–13 Revenue Impact: Not Applicable Less than $100,000 Less than $100,000 2013–15 Revenue Impact: Not Applicable Less than $100,000 Less than $100,000 DESCRIPTION: Contributions, matching deposits (from fiduciary organizations), and account
earnings of individual development accounts (IDAs) for low income households are exempt from state income tax if funds are withdrawn for approved purposes. Contributions to the accounts by the account holder are subtracted from federal taxable income of the account holder as they are made, and the matching deposits and account earnings are exempt from taxation until withdrawn. If withdrawals from the account are for a qualified purpose, the entire withdrawal is exempt from taxation. For this subtraction, low income households are defined as those having a net worth less than $20,000 and income no greater than 80 percent of the area median
household income as determined by the U.S. Department of Housing and Urban Development.
The Oregon Housing and Community Services Department (OHCS) administers the Oregon IDA Initiative through the Neighborhood Partnership Fund, which selects fiduciary organizations to manage the IDAs. These fiduciary organizations may establish lower thresholds for income and net worth of account holders than prescribed by statute. Approved purposes for which withdrawals may be made include: acquiring postsecondary education; the first time purchase of a primary residence; certain improvements and repairs to a primary residence; purchase of equipment or training needed to obtain or maintain employment; and capitalization of a small business. Account holders may not accrue more than $3,000 of matching funds in any 12-month period. OHCS establishes a maximum total amount of state directed resources that may be used as matching funds for asset purchase for each individual development account.
Amounts remaining in accounts after asset purchase may be rolled over into qualified tuition savings program accounts. See 1.302, Oregon 529 College Savings Network. There are two other tax expenditures closely related to this program: 1.431,
Individual Development Account Contribution (Credit), provides a credit for individuals or businesses that make contributions to the Oregon IDA Initiative through Neighborhood Partnerships to support IDA programs; and 1.432, Individual Development Account Withdrawal (Credit), provides a credit for IDA withdrawals that are used to fund closing costs associated with the purchase of a primary residence.
PURPOSE: The statute that allows this expenditure does not explicitly state a purpose.
Presumably, the purpose is to help lower income Oregonians obtain the assets needed to become economically more resilient by instituting an asset-based prosperity strategy that promotes improved personal financial management and savings and the accumulation of key assets.
WHO BENEFITS: For tax year 2010, approximately 120 personal income taxpayers claimed an average subtraction of about $1,200 using this provision.
EVALUATION: Not evaluated.
1.313
OUT-OF-STATE FINANCIAL INSTITUTIONS
Oregon Statute: 317.057 Sunset Date: None Year Enacted: 1999
Corporation Personal Total
2011–13 Revenue Impact: Less than $100,000 Not Applicable Less than $100,000 2013–15 Revenue Impact: Less than $100,000 Not Applicable Less than $100,000 DESCRIPTION: This exclusion specifies that certain out-of-state financial institutions may engage in
limited mortgage activities in Oregon without being subject to certain tax and corporation laws. It provides a very limited exemption from Oregon corporation excise and income tax for, certain out-of-state banks, extra-national institutions and foreign associations that are not otherwise authorized to conduct banking business in Oregon. The exemption applies only to those entities described and engaging solely in the activity authorized under ORS 713.300. That statute allows an out-of-state bank, extra-national institution or foreign association the limited authority to take, acquire, hold, and enforce notes secured by mortgages or trust deeds, as long as the bank pays a fee and files a signed statement with the Department of Consumer and Business Services (DCBS). ORS 317.057 applies only to this type of entity whose activity in Oregon is limited to the activity described in ORS 713.300.
However, if the out-of-state bank, extra-national institution or foreign association acquires any property given as security for a mortgage or trust deed, all income accruing to the out-of-state bank, extra-national institution or foreign association solely from the ownership, sale or other disposition of such property is subject to taxation in the same manner and on the same basis as income of other financial institutions doing business in this state.
In other words, out-of-state entities can engage in activities that ordinarily would be considered "doing business" for tax purposes and, if the entities limit themselves to what is described, they won't be considered to be "doing business" in Oregon and are not subject to the excise or income tax. However, if the entities actually do take property in this state, such as through foreclosure, then any income derived from the property will be subject to tax.
These out-of-state financial institutions are required to designate the director of DCBS as attorney for purposes of service of process and pay a $200 annual licensing fee.
PURPOSE: The statute that allows this expenditure does not explicitly state a purpose. Presumably, the purpose is to provide that out-of-state financial institutions that engage in limited activity in Oregon are not considered to be “doing business” in Oregon for purposes of imposing the excise tax.