Oregon Corporate Activity Tax registration and returns

What the Oregon Corporate Activity Tax is

Despite the name, the CAT is not only for corporations. The Oregon Department of Revenue says it applies to any person, business or unitary group doing business in Oregon, which includes C corporations, S corporations, partnerships and sole proprietorships. A unitary group is a set of related businesses that are owned and run together, and the CAT treats them as one taxpayer.

The tax is based on Oregon commercial activity, which in plain terms means your gross receipts from Oregon. It is not an income tax, so a company can owe CAT in a year when it made little or no profit. The Department of Revenue is also clear that it is not a retail sales tax. The law puts the tax on the business, not the customer, and it is an annual tax rather than a charge on each transaction.

Some organizations are outside the CAT entirely, including nonprofits such as 501(c)(3) organizations, government entities, farmers cooperatives that are exempt from federal income tax, and certain hospitals and long term care facilities.

Oregon CAT thresholds: when to register, file and pay

There are three numbers to watch. The first is $750,000. Once your Oregon commercial activity for the year reaches $750,000, you must register for the CAT within 30 days. The Department of Revenue charges $100 a month for failing to register, up to $1,000 per calendar year.

The second is $1 million. Businesses with more than $1 million of Oregon commercial activity must file a CAT return. The third is the payment line: only taxpayers with more than $1 million of taxable Oregon commercial activity actually owe tax.

That gap between registering and paying confuses a lot of owners. A Portland contractor or wholesaler can cross $750,000 in the spring, register, and still owe nothing for the year if receipts stay under the filing line. It is still worth registering on time, since the late registration penalty adds up month by month.

How the tax is calculated

The Department of Revenue states the tax as $250 plus 0.57% of taxable Oregon commercial activity of more than $1 million. Before that rate applies, you get to take a subtraction.

The subtraction is 35% of the greater of your cost inputs or your labor costs, applied to Oregon sourced commercial activity. Labor costs leave out payroll taxes and any compensation over $500,000 paid to a single employee. Choosing the right side of that test, and documenting it, is where a CPA earns their fee on a CAT return.

Some receipts are excluded from commercial activity in the first place. Examples on the Department of Revenue list include motor vehicle fuel sales, wholesale and retail grocery sales, sales of items or services delivered outside Oregon, transactions between members of a unitary group, and distributive income from pass through entities.

Estimated payments and the CAT calendar

For tax years 2021 and later, the Department of Revenue requires quarterly estimated CAT payments when you expect to owe $5,000 or more for the year. The payments are due on the last day of the 4th, 7th and 10th months of the tax year and the last day of the first month after the year ends. For a calendar year business that means 4/30, 7/31, 10/31 and 1/31.

The annual return is due on the 15th day of the fourth month after the tax year ends, which is 4/15 for a calendar year business, moved to the next business day if it falls on a weekend or holiday. For tax years beginning on or after 1/1/2024, a seven month extension to file is available, but it does not extend the time to pay.

CAT returns cannot be filed through Revenue Online. The Department of Revenue accepts them by mail or through an approved electronic filing vendor, so your CPA will use professional software for the return.

Who in the Portland area tends to need CAT help

We hear most often from growing companies that have just passed the registration line: general contractors working across Washington, Clackamas and Multnomah counties, distributors selling to Oregon retailers, medical and dental groups, and restaurant groups with several locations. Many of them already pay the City of Portland and Multnomah County business taxes and are surprised to find a separate state tax based on receipts rather than profit.

Businesses based in Vancouver or elsewhere that sell into Oregon also ask about the CAT, since it reaches anyone doing business in Oregon, not only companies based here. Sourcing rules decide how much of those receipts count as Oregon commercial activity.

Tell us what you need and a licensed CPA who works with people like you gets in touch with a clear, fixed quote.

What a CPA does on a CAT engagement

The CPA you are matched with will start by measuring your Oregon commercial activity properly, taking out excluded receipts and sorting Oregon from out of state sales. They will then compare cost inputs against labor costs to find the larger subtraction, and check whether related companies belong in a unitary group.

From there they can register you if needed, set up an estimated payment plan, and prepare and file the annual return. If you missed registration or filing in an earlier year, they can help you get current with the Department of Revenue.

Common questions