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Tax Impacts
Bulletin JULY 2017 | ISSUE 43
Oregon Transportation Deal Creates New “Privilege Tax” for Dealers For any questions or additional clarification, please contact your tax advisor or a member of the Perkins & Co Dealer Services team: Chris Loughran, Shareholder & Director of Tax (503) 221-7565
[email protected] Blake Seabaugh, Tax Manager (503) 221-7514
[email protected] Karen Liska, Tax Manager (503) 802-8608
[email protected] Kathy Murphy, Shareholder (503) 221-7515
[email protected]
On July 6th, 2017 the Oregon legislature passed the $5.3 billion transportation package (Oregon House Bill 2017) which is expected to be signed into law by Gov. Kate Brown. The bill, in part, raises revenue through a 0.5% excise (privilege) tax on dealers for the “privilege of engaging in the business of selling” new cars in Oregon. Author: Blake Seabaugh, CPA, Tax Manager
WHAT YOU NEED TO KNOW ABOUT HB 2017: •
Dealers are subject to a 0.5% “privilege tax” on new vehicle retail sales occuring on or after January 1, 2018.
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Dealers are allowed to (not required to) collect the amount of privilege tax payable from the retail customer.
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Dealers can collect from the customer in the same manner as document processing fees (does not count against cap) and the privilege tax may be excluded from the capitalized cost and offering price of the vehicle.
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The privilege tax does not apply with respect to a sale to a nonresident of Oregon or to a business that will use the vehicle primarily outside Oregon. Customers will have to provide a written statement affirming either and dealer will need to retain record to report an exempt sale.
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The bill provides “use tax” relief to the customer if a dealer remits the privilege tax.
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Dealers are required to file, to the Department of Revenue, quarterly returns due Jan 31, April 30, July 31, & October 31. Failure to file penalties and late payment interest charges will apply.
This is potentially a significant burden if privilege tax collection efforts are not made at time of sale beginning in January. A dealer selling 1,000 units per year at an average price of $34,000, would face an additional $170,000 of Oregon tax in 2018. For more information regarding the new dealer business privilege tax, contact a Perkins & Co Dealer Services team member today.
www.perkinsaccounting.com
This bulletin is a summary and is not intended as tax or legal advice. You should consult with your tax advisor to obtain specific advice with respect to your fact pattern. Based on the most recent “best practice” standards for tax advisors issued by the Treasury Department, commonly referred to as Circular 230, we wish to advise you that this bulletin has not been prepared to be used, and cannot be used, to provide assurance that penalties which may be assessed by the IRS or other taxing authority (including specifically section 6662 understatement penalties) will not be upheld.
