OAR 150-307-0490: Oregon Food Processor Property Tax Exemption

(1) Definitions: (a) “Assessor” means the county assessor, or the Oregon Department of Revenue (DOR) if DOR is responsible for the appraisal of the facility under ORS 306.126. (b) “Certified” means that Oregon Department of Agriculture (ODA) has inspected the qualified machinery and equipment (M&E) and has provided written verification to the food processor that the M&E is eligible for exemption under ORS 307.455. (c) "Newly acquired" means new or used M&E that is first purchased or leased by a food processor not more than two years (24 months) prior to placing it into service. Leased equipment may be exempt only if the food processor is responsible for the payment of the property taxes under the terms of the lease agreement. Newly acquired property does not include existing equipment that has been refurbished or reconditioned in the time frame provided by this rule. (d) "Placed into service" means the date the M&E is first used or in such condition that it is readily available and operational for its intended commercial use. It does not include property that is being tested or is in the process of being erected or installed on the January 1 assessment date. (e) “Qualified M&E” means property, whether new or used, that is newly acquired by a food processor and placed into service prior to January 1 preceding the first tax year for which an exemption under this section is sought, and that consists of: (A) Real property M&E that is used by a food processor in the primary processing of raw or fresh fruit, vegetables, nuts, legumes, grains, bakery products, dairy products, eggs or seafood; or (B) Personal property M&E that is used in an integrated processing line for the primary processing of raw or fresh fruit, vegetables, nuts, legumes, grains, bakery products, dairy products, eggs or seafood. (f) “Real Market Value” (RMV) of the property, for the purpose of determining the late filing fee pursuant to ORS 307.455, means the invoice cost of the qualified M&E, installation, engineering, and all miscellaneous costs including machinery process piping, foundations, power wiring, interest during installation, and freight. (2) A food processor seeking an exemption under ORS 307.455 must make a request to ODA for certification. The request must: (a) Be made in writing on a form provided by ODA and pursuant to ODA administrative rules; (b) Include a listing on the Food Processor Certification of Qualified Machinery and Equipment form provided by DOR of all qualified M&E for which certification is sought; (c) Be made at any time after M&E becomes “qualified M&E”; and (d) Be filed with ODA at least two weeks prior to March 1 in order that ODA may certify the property prior to the March 1 deadline for timely filing of the exemption claim with the assessor. Later requests for certification may be made, but the resulting certification may be after the March 1 claim filing deadline. (3) Upon receiving the request for certification, ODA will: (a) Schedule a site visit with the food processor; (b) Inspect the M&E that is the subject of the listing submitted to ODA for which certification is sought; (c) Determine if the subject M&E constitutes qualified M&E; and (d) Provide written certification to the food processor approving or denying the subject M&E as qualified M&E. The written certification is provided by ODA on the listing of qualified M&E submitted by the food processor. (e) Denial of certification of certain property by the ODA is a contested case for the purpose of ORS Chapter 183. (4) Following the certification process, the food processor must file an exemption claim form with the assessor. The claim must: (a) Be filed on a completed Food Processor Exemption Claim form provided by DOR; (b) Include the written certification signed and dated by ODA; and (c) Be filed on or before March 1, or under section (8) of this rule. (5) The filing of an exemption claim form is separate from the filing of a property tax return. (6) The assessor will return any exemption claim form not meeting the requirements of subsection (4)(a) and (b) of this rule to the food processor. (7) If the assessor returns an exemption claim form for completion, the food processor must return the exemption claim form to the assessor by March 1 for the claim to be considered as timely filed. (8) An exemption claim form that is filed after March 1, and on or before December 31 of the assessment year during which the exemption is claimed, must be accompanied by a late filing fee pursuant to ORS 307.455(2)(b). If the late filing fee is not included with the claim form, no exemption will be allowed. (a) The late filing fee is the greater of $200 or one-tenth of one percent of RMV of the property that is the subject of the claim form. (b) The certified listing required by subsection (4)(b) of this rule that is included with a late filed exemption claim must show the RMV of each piece of qualified M&E. The RMV is reported on the certified listing form, as directed by that form’s instructions. (9) Upon the assessor’s receipt of a completed exemption claim form, and late filing fee if applicable, the assessor will compare the certified listing of all qualified M&E with the schedule of real and personal property M&E included on the property tax return. The property tax return must clearly identify the M&E that has been certified as qualified M&E by ODA. (10) Eligible M&E is exempt for the first qualifying tax year and the following four tax years as long as it continues to qualify as of January 1 of each year. (a) Qualified M&E that is used to process grains or bakery products must in total, based on the certifications for the site for the initial exemption year, have a cost of initial investment of $100,000 or more to be exempted. (b) In addition to subsection (10)(a), qualified M&E that is used to process bakery products may be exempted: (A) Based on processing to create bakery products, even if not from raw or fresh ingredients, (B) If not used to additionally process or re-process previously created bakery products, and (C) If processed at a site where 10 percent or less of total sales at the site are retail sales. (c) The food processor must notify the assessor if any of the exempt M&E becomes ineligible for the exemption. Property becomes ineligible when it no longer constitutes qualified M&E as defined in this rule. (d) The assessor may require verification of the M&E’s continued qualification for exemption. (11) Denial of the exemption may be appealed to the Oregon Tax Court pursuant to 305.275. [Publications: Publications referenced are available from the agency.]