7.02.610 Apportionment of Income.

City Code Section

(Amended by Ordinances 182427, 184597, 187339 and 191010, effective October 28, 2022.)  

  1. This Section applies to tax years beginning prior to January 1, 2023. For Tax years beginning on or after January 1, 2023, see Section 7.02.611.
  2. A. “Jurisdiction to tax” occurs when a person engages in business activities in a jurisdiction that are not protected from taxation by Public Law 86-272.  Public Law 86-272 applies to interstate sales of tangible personal property.  For purposes of the Business License Law, the limits imposed by Public Law 86-272 for interstate jurisdiction to tax shall also be presumed to apply on an intrastate basis.  If a taxpayer’s business is based in Portland, a taxpayer must have business activity outside Portland that results in a jurisdiction to tax outside Portland to apportion the income of the business.  Without jurisdiction to tax outside Portland, all income of a business is taxable by Portland.
  3. B. “Business activity” means any of the elements of doing business. The income reportable as income earned from business activity within the City of Portland will include all business incomes from sources within the City of Portland that are taxable incomes under Oregon tax laws and regulations unless otherwise exempted or excluded in this Chapter.
  4. C. In computing the business license tax, taxfilers that have income from business activity both within and without the City must determine the income apportioned to the City by multiplying the total net income from the taxfiler’s business by a fraction, the numerator of which is the total gross income of the taxfiler from business activity in the City during the tax year, and the denominator of which is the total gross income of the taxfiler from business activity everywhere during the tax year.
  5. D. In determining the apportionment of gross income within the City under Subsection 7.02.610 C.:
    1. 1. Sales of tangible personal property are deemed to take place in the City if the property is delivered or shipped to a purchaser within the City regardless of the f.o.b. point or other conditions of sale.  If sales of tangible personal property are shipped from the City to a purchaser located where the taxfiler is not taxable, those sales are not apportioned to the City.
    2. 2. Sales other than sales of tangible personal property are deemed to take place in the City if the income producing activity is performed in the City.
  6. E. Certain industries or incomes are subject to specific apportionment methodologies.  Such methodologies are described in administrative rules adopted in accordance with Section 7.02.210.  Industry specific or income specific apportionment methodologies required by Oregon Revised Statutes for apportionment of gross sales, will be used in cases where no rule has been adopted by the Division regarding the apportionment of such industry or income.  When gross sales as reported to Oregon are used for apportionment purposes, such gross sales will be defined as gross income for apportionment purposes herein.  All apportionment methodologies directed under this Subsection will be a single factor gross income apportionment as directed under Subsections 7.02.610 C. and 7.02.610 D.  In those specific cases where Oregon has directed allocation of income, such income will be apportioned for purposes of this Chapter, unless allocation is otherwise allowed in this Chapter.
  7. F. If the apportionment provisions of Subsection C. do not fairly represent the extent of the taxfiler’s business activity in the City and result in the violation of the taxfiler’s rights under the Constitution of this State or the United States, the taxfiler may petition the Division to permit the taxfiler to:
    1. 1. Utilize the method of apportionment used by the taxfiler under the applicable laws of the State of Oregon imposing taxes upon or measured by net income; or
    2. 2. Utilize any other method to effectuate an equitable apportionment of the taxfiler’s income.