Public Tax Shaming

In 2019, the Oregon Legislature passed SB523, which authorized the Department of Revenue to publicly disclose the individual and business taxpayers who owe $50,000 or more. During the pandemic, the Department of Revenue put this program on hold.  However, with the worst of the pandemic in the rearview mirror, the Department is moving forward.

Taxpayers will receive notices that they will be on this list on or before Monday, May 22 and they will have 8 weeks to resolve the tax liability. If they can’t come to a resolution, the Department will publish information including their name, city and state of residence, type of debt, and amount due.

Please call your tax advisors immediately if you receive one of these notices.

California Franchise Tax Board attacks PL 86-272 safe harbor

By Valerie Sasaki and Jacob Landsberg

Earlier this month, California became the first state to publicly adopt the Multistate Tax Commission’s (“MTC”) August 2021 interpretation of Federal Public Law 86-272 (“PL 86-272’) in Technical Advice Memorandum 2022-01. (“TAM,” To access the TAM, click here) where it provided business scenarios and the tax treatment of the scenario.

The federal law, PL 86-272 (codified at 15 USC §§381-384) creates a safe harbor for companies that are doing business in other states. PL 86-272 was first enacted in 1959. It says that a state may not impose a tax based on net income on companies whose only activity in a state is the solicitation of sales of tangible personal property. Many states that have corporate income taxes have been trying to erode the protection that PL 86-272 affords to businesses, especially in the wake of the Supreme Court’s decision in South Dakota v. Wayfair in 2018.

We were concerned when we saw the MTC’s proposed rule come out in the fall of 2021, and we’re even more concerned now that California appears to be adopting the proposal. The new interpretation, if sustained in court, will greatly increase the number of companies that have to pay California’s state net income tax.

The MTC recommends the new interpretation of “doing business” the Supreme Court adopted in South Dakota v. Wayfair, Inc.: a company “may be present in a State in a meaningful way without that presence being physical in the traditional sense of the term.” Wayfair, 138 S. Ct. 2080, 2095 (2018). Many practitioners believe that Wayfair rejected the concept of judicial precedent in favor of a nexus interpretation that allows states to tax online commerce.

In the most recent TAM, California listed 12 business scenarios and its interpretation of the tax treatment for each of those scenarios. If a business engages in more than mere solicitation and delivery, there is no income tax immunity under PL 86-272. California’s TAM lists two scenarios that it says exceed the protection of PL 86-272 and will create income tax liability for the company at issue in California:

A business that regularly provides post-sale assistance to California customers via either electronic chat or email that customers initiate by clicking on an icon on the business’s website. (Example 2)

There are several questions the TAM does not address, for example: what about chat “bots?” These are computer programs that simulate human conversation. Many companies use them on their web sites to resolve customer service matters. It is a grey area that if a business does not staff its chat function with individuals but instead an algorithm and artificial intelligence is responding to client questions, is presence established? Another technological issue is treatment of phone support. Will that qualify as solicitation? Under the new interpretation, the treatment of phones is absent, but it is not significantly different than an email or chat function.

Finally, we are concerned that company-supported user forums may create taxable presence with California. These are online venues that are designed to allow end users of products to interact with other users – some of whom may be physically located in California. Does the company’s support and hosting of those forums create taxable presence with California?

We have heard from our own clients and peers that litigation over California’s new TAM is likely and will be monitoring this area for its impact on our Oregon and Washington business customers. If California applies the TAM in audits and the courts sustain that application, this represents a massive expansion of the number of businesses California can and will tax.

A business has a website that invites viewers in California to apply for non-sales positions with the business. The website enables viewers to fill out and submit an electronic application, and also to upload a cover letter and resume. (Example 4)

This example appears to be aimed at the strong trend we’ve witnessed around “digital nomad” workers during the COVID-19 pandemic. Tax directors and CFOs of businesses should confer with their human resources departments to confirm that they are not accidentally creating nexus with California by trying cast a broad net for qualified employees.

Businesses should be aware that California did not clarify to which tax years the Technical Advice Memo will apply. It is possible California will treat it as prospective guidance and it will be used for 2022 and forward. It is also possible that California may choose to apply these standards retroactively, to prior tax years. In either event, businesses should continue to monitor this evolving situation.

State ex Rel Nicholas Kristof: What is an Oregonian?

Ordinarily, we stay out of politics, for that way lies madness. From time to time though, a case comes out of the political arena that is relevant to the lives of normal people. Such is the case of State ex Rel Nicholas Kristof v. Shemia Fagan.

Kristof, a Pulitizer-prize winning New York Times columnist co-authored a particularly bleak book looking at poverty in rural America with a focus on rural Yamhill County where he grew up. Kristof left the New York Times in October of 2021 and announced that he would run for Governor of Oregon that same month.

To qualify as an Oregon gubernatorial candidate, the Oregon Constitution requires that a candidate be a United States citizen, be thirty or more years old, and have been a resident of Oregon for at least three years before the candidate’s election. (Oregon Constitution, Article V, Section 2) On January 6, 2022, Oregon Secretary of State Shemia Fagan announced that Kristof was ineligible to run for Governor because he was not a resident of Oregon for sufficient time. Kristof appealed this determination on January 14 directly to the Oregon Supreme Court. Today, Secretary Fagan filed her response brief.

Why does this matter to ordinary Oregonians who care about tax matters? It is very likely that whatever factors the Oregon Supreme Court uses to evaluate Kristof’s residency will play a part in our discussions about tax residency for years to come.

Oregon taxes its residents on their worldwide income. Nonresidents are only taxed on their income from Oregon sources. The statute sets out a fairly mechanical test for residency once you know whether someone is an Oregon domiciliary. Oregon law defines a resident for purposes of personal income taxes under ORS 316.027 as either: (1) an Oregon domiciliary, unless that individual maintains no permanent place of abode in Oregon, does maintain a permanent place of abode elsewhere, and spends not more than 30 days in the state; or (2) a non-domiciliary who maintains a permanent place of abode in the state and spends an aggregate of more than 200 days of the taxable year in Oregon, unless the individual proves that the individual is in the state for only a temporary or transitory purpose. We understand a domiciliary of Oregon to be an individual who regards Oregon as their “true, fixed, permanent home.” OAR 150-316-0025(1)(a). So, there is a clear line between what it means to be a domiciliary resident and a non-domiciliary resident. It is also well-settled for tax purposes that you can be a resident of many jurisdictions but may only a domiciliary in one jurisdiction.

The Secretary of State’s brief would blur this line for election purposes. Secretary Fagan argues that Kristof was “Domiciled in New York – not Oregon – until at least December 2020.” Her brief notes that “plaintiff voted in New York, held a New York driver’s license, owned a primary residence in New York, lived and worked in New York, paid income taxes in New York, and sent his children to public schools in New York. Most telling is plaintiff’s voting record: Even for the November 2020 election, when he was apparently physically present in Oregon and Oregon voters faced important choices in Yamhill County and statewide, plaintiff voted by absentee ballot in New York.” Because the constitutional test is whether someone has been a “resident” for three years prior to the election, the Secretary Fagan’s brief makes the interesting assertion that “resident” in this context is synonymous with “domiciled.” Also interestingly, the brief refers to his Oregon tax returns but does not analyze whether they were filed correctly.

For his part, Kristof argues that the residency requirement is more akin to occasional physical presence and an emotional connection with the state. Neither addresses the test set out in the income tax statutes. He also argues that he never intended to abandon his Oregon residency and has always considered himself an Oregon resident.

Most Oregonians (or putative Oregonians) won’t run for Governor. However, many folks pay personal income taxes to the state under the law noted above if they are non-domiciliary residents. The state’s argument that resident and domiciliary should be read interchangeably opens an interesting window for discussion about what factors the courts will consider when they decide who gets to call themselves an Oregonian. It also raises the question of whether and why it’s logical to argue that the terms mean different things for tax purposes but mean the same thing for election qualification.

Additionally, the Supreme Court’s analysis of Kristof’s argument that he never abandoned his Oregon domicile will be instructive to those Oregonians who are evaluating whether they have taken adequate steps to abandon their own Oregon tax domicile. This is particularly important for our clients who, due to the ongoing pandemic, are now living and working outside of the state of Oregon.

Oregon Office of Taxpayer Advocate: House Bill 3373


In early 2021, Representative Fahey sponsored HB3373 in an effort to establish the office of the Taxpayer Advocate in the Department of Revenue. The bill is currently awaiting the governor’s signature and the office will become an active office in the Department of Revenue on January 1st, 2022.

The purpose of the Office of Taxpayer Advocate is to provide understandable and concise information to taxpayers to answer common questions about tax policy, Department of Revenue policies and procedures, audits, collections, and appeals. The office will also assist with questions about preparation and filing of returns and locate documents filed with those returns and audits. Semi-annual reports will be provided to the legislature on any identified issues relating to issues or barriers of equitable and fair collection of taxes. The Taxpayer Advocate office will also be responsible for receiving and evaluating any complaints of improper, abusive, or inefficient service by employees of the department and recommending appropriate action to the director.

The Office will be particularly helpful for low-income Oregonians, says Alicia Temple of the Oregon Law Center in their April 15th testimony letter. Temple points out that many low-income Oregonians have a fear of the Department of Revenue and taxes in general and see the Department as “an agency that is simply out to take their money”. The Office of Taxpayer Advocate is anticipated to appease those fears by increasing transparency and developing trust between taxpayers and the Department of Revenue, which should prove beneficial to all Oregonian taxpayers and tax practitioners. The Office will benefit practitioners by making available additional materials about common tax issues and providing an additional, accessible pathway to relief for clients.

In addition to the creation of the Taxpayer Advocate Office, the bill now authorizes the Oregon Tax Court to order attorney’s fees if an opposing party disobeys any court order or makes claims and assertions without an objectively reasonable basis. Attorney’s fees can now also be awarded in cases involving transit self-employment taxes.

The bill is expected to have no revenue impact, a $571,682 fiscal impact for the 2021-2023 biennium, and a $758,937 fiscal impact for the 2023-2025 biennium. This cost includes furniture and equipment, legal costs, all salaries, and anticipated related expenses.

New Podcast from Chris Cline at Riverview Trust Company

One of the #silverlinings of the 2020 COVID-19 situation is that people are doing some really creative things to help educate folks and make their communities better. In this occasional series, we like to highlight the neat things that friends of our firm are doing.

Christopher Cline is the President and CEO of Riverview Trust Company. Chris has been an important part of the local Trusts and Estates community for quite some time and we have a number of common clients. He just started a podcast to explain some of the basics of estate planning in a really user-friendly way. I like it because these are questions that clients may think are too basic to ask, but really need to know. I’m going to encourage my Mom to take a listen. Chris’s podcast is on Spotify now and will be on and Apple and Google soon. Definitely check it out!

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.

Helpful Video on Paycheck Protection Program Forgiveness Application

Senior Loneliness Line

We’ve been getting a lot of questions about the Paycheck Protection Program (PPP) and how our clients can maximize the amount that is forgiven. While this is a bit of a moving target, our friends at Geffen Mesher have put together a helpful video on working through the Small Business Association’s (SBA) PPP Forgiveness Application that we wanted to commend to your attention. View the video here.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.

Because Your Government CARES

Valerie Sasaki, of Samuels Yoelin Kantor, LLP facilitated a “Cocktails and Conversation” discussion with the Portland Chapter of Women in Insurance and Financial Services, which explored the recent Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act is Congress’ comprehensive legislation to provide relief to individuals, families, and businesses that are adversely affected by the Coronavirus pandemic. Despite frequent news coverage and criticism, the scope and effect of the CARES Act can seem impenetrable because it contains so many separate moving parts. In this discussion, Ms. Sasaki walked through the different components of the CARES Act and explained how each works to combat the economic hardship brought about by the Coronavirus epidemic.

The CARES Act is a $2 trillion economic relief package that creates new aid programs and expands existing programs. State and local governments will receive $339.8 billion, the majority of which goes to specific COVID-19 response efforts. The rest of the state and local government relief is divided between education, community development, and family assistance programs.

Aid to individuals totals around $560 billion. More than half the aid for individuals will come in the form of recovery rebates more commonly known as stimulus payments. In addition, the Act provides for a temporary $600 per week increase to employment benefits.  Independent contractors are eligible for direct government assistance through the end of 2020. On the public health side, the Act mandates that private insurance plans must cover COVID-19 treatments and vaccines and offer tests free of charge.

The second largest component of the Act is $500 billion for large businesses. Most of the relief to big businesses comes in the form of fully refundable tax credits available for 50{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of payroll compensation, although there is a substantial allotment of given directly to airlines. These larger business relief funds, however, comes with limitations (the “stick” to the “carrot”), which include: a 1-year ban on stock buybacks; additional reporting requirements; and, oversight by a Special Inspector General.

The $377 billion fund for small business is mostly allocated to the Payroll Protection Program (PPP). The PPP is a massive effort to provide forgivable loans to companies with less than 500 employees. To qualify for forgiveness, the companies must use 75{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} of the loan for payroll. The Act also creates a substantial expansion of Economic Injury Disaster Loans (EIDL), an existing program designed to help small business meet expenses during a disaster. The Act reduces interest rates and provides emergency cash advances to EIDL recipients.

For more information about the CARES Act see the slides from Ms. Sasaki’s talk.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.


Notice and Comment Period for Proposed Corporate Activity Tax (“CAT”) Rules Ends

Time marches on and the time to comment on several of the Oregon Department of Revenue’s Corporate Activity Tax (“CAT”) rules ends today, May 26 at 5pm. While the Oregon State Bar Taxation Section did not officially comment on the rules, three attorneys, including Samuels Yoelin Kantor, LLP’s Valerie Sasaki, did submit comments on the math problem that is Proposed OAR 150-317-1200. Essentially, the CAT is only imposed on a taxpayer’s Oregon receipts. The question of how to calculate that though, has led to what we believe are some unintended, flawed results for taxpayers that have costs and labor concentrated relative to certain income streams.

While the section did not officially comment, several folks whose names don’t appear on the final comments contributed to discussing the comments and accompanying examples, which you can find below as downloads. We are proud to practice as a part of a community that values good tax policy, even in difficult times.

View comments on OAR 150-317-1200 and examples.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.

The COVID-19 Oregon Special Session

For those of you who are following the Oregon Legislature’s response to the COVID-19 pandemic, we expect the Governor to announce a special session in the next day or two. Topics that we expect the legislature to address include: provisions for rent and mortgage assistance, bans on evictions, loans to small businesses, food benefits, and expanded healthcare access. The Salem Statesman Journal has been doing a great job tracking the proposals for this emergency session:

We also expect that the Oregon Laws Commission’s remote notary proposal to be included in the proposal.

As expected, it doesn’t sound like Oregon corporate activity estimates made the cut to address, so Q1 estimates will need to made as usual.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.

Changes to Charitable Giving Limits in the CARES Act

The newly passed Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) contains two provisions that will be of interest to folks who want to help their communities this year.  Section 2104 creates an above the line deduction of up to $300 for contributions made in 2020. This is important because after the Tax Cuts and Jobs Act (TCJA) a couple years ago, many folks no longer itemize, which means that they are not eligible to receive a tax benefit for the charitable deductions that they make over the course of the year. So, if you now claim the standard deduction, individual taxpayers can claim a deduction for the amounts up to $300 that they donate to charity. They don’t let you double-dip though, so if you itemize, you would claim your deductions on Schedule A as usual.

Additionally, Section 2105 of the CARES  Act eliminates the cap on individual charitable contributions. Previously, taxpayers couldn’t deduct contributions over 60 percent of their adjusted gross income.  The corporate cap was raised from 10 percent to 25 percent (including the food donation cap, which had been 15{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6}). Section 2105 only applies to contributions made in 2020.

A link to the two sections is here.

Valerie Sasaki specializes in jurisdictional tax consulting, working closely with Fortune 50 companies involved in audits before the Oregon or Washington Departments of Revenue. She also works with business owners on tax, business, and estate planning issues in Oregon or Southwest Washington.