OAR 150-316-0090: Credit for Duplicative State Taxation Relating to Different Years

(1) If Oregon and another state impose a tax on the same income in different years or the other state’s tax is due in a year subsequent to the year or years to which it was originally related, the taxpayer may ask the department to allow a credit that provides relief from taxation of the same income by Oregon and the other state. (2) The request for a credit under this subsection must be in writing. It must include: (a) A complete copy of the other state’s income tax return(s); and (b) Proof of payment of the tax, such as: (A) A copy of the canceled check written to pay the tax at the time the other state’s return is filed; (B) Copies of the W-2 statements verifying the withholding paid to the other state; (C) A copy of a cashier’s check or other negotiable instrument; (D) A copy of a canceled check showing payment of tax or estimated tax payments; or (E) A receipt of tax payment. (c) An explanation of the reason for the duplicative taxation. The following are some examples of explanations: (A) Idaho law required recapture in 1995 of credits that previously reduced the Oregon credit in 1991 through 1994. (B) Current federal adjusted gross income includes installment gain that was taxed in full by Maryland in 1998. (3) The request may be filed: (a) With the department before the Oregon return for the year of the duplicative taxation is filed; or (b) With the Oregon return that reports the income that was previously taxed by another state; or (c) Within the time period to amend the Oregon return designated in (a) or (b) that reports income that was previously taxed by another state. (4) The department will consider all requests for a credit under this subsection and will allow a credit when necessary to avoid double taxation of income legitimately taxed in another state. The following are some situations where the department may provide a credit under this section. (a) The other state’s tax due is in the current year but was originally related to prior years. Example 1: Max, an Oregon resident, owns a business in Idaho. For each of four years he claimed the Idaho investment tax credit. For each of these years he also claimed an Oregon credit under ORS 316.082 that was calculated based upon the tax, net of credits, that he paid to Idaho. In the fifth year he sold an asset and was required by Idaho law to recapture, on that year’s Idaho return, some of the investment tax credit he had claimed in each of the previous four years. (b) Oregon and the other state tax the same income in different years. Example 2: Matt sold rental property in Maryland while he was a resident there for a gain of $100,000 and reported it as an installment sale for federal. He paid Maryland tax on the entire gain. Matt became an Oregon resident in the third year of the installment sale contract. The installment payments are part of his federal income, so will be taxed by Oregon. (5) The department will make a determination and notify the taxpayer of the amount of the credit and show the calculation of the credit if necessary. (6) If the taxpayer disagrees with the department’s determination, the taxpayer may request a conference or file a written objection within 30 days of the date of the department’s letter of determination. The request for conference or filing of a written objection must be filed with the department in the manner prescribed under OAR 150-305-0202.