The Oregon Administrative Rules contain OARs filed through July 15, 2015







Purpose and Scope

This division of administrative rules specifies matters related to areas designated for electronic commerce and the tax incentives especially available in them, including but not limited to the electronic commerce overlay of an enterprise zone:

(1) In such areas businesses engaged in Electronic Commerce are not only eligible for the standard enterprise zone exemption, but they may also qualify for a state income tax credit based on their Electronic Commerce investment.

(2) These administrative rules:

(a) Have no bearing on any enterprise zone aside from its having electronic commerce status;

(b) Do not control the fiscal parameters for tax abatements by the Department of Revenue; and

(c) Are not intended to supersede applicable administrative rules in OAR chapter 150.

Stat. Auth.: ORS 285A.075, 285C.050(5), 285C.060(1) & 285C.095(2)
Stats. Implemented: ORS 285C.050, 285C.095, 285C.100, 285C.135, 285C.180, 285C.185, 315.507 & 315.508
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10


Definition of Electronic Commerce

OAR 123-001 (Procedural Rules) defines terms used in this division of administrative rules, unless the context clearly indicates otherwise; in addition, for purposes of “Electronic Commerce” under ORS 285C.050(5):

(1) “E-commerce zone” means any of the enterprise zones designated for electronic commerce under ORS 285C.095 or the area so designated under ORS 285C.100, as described in OAR 123-662-1200.

(2) “Predominantly” means that more than 50 percent of applicable transactional activity is Internet-based in terms of receipts, number of orders, clients served or like measures, as opposed to activity handled directly or primarily through other means such as by telephone or e-mail.

(3) Applicable business activity and related investments must:

(a) Locate and occur inside the E-commerce zone;

(b) Involve dealings with customers, suppliers, clients or other transactional entities that are external to the eligible business firm, predominantly over the Internet itself or on a computer network that utilizes the Internet as a platform; and

(c) Entail, support or relate to the sale or purchase of goods, property or services, whether conducted on a wholesale, commercial, business-to-business, retail or other basis.

(4) It also includes facilities, equipment, services, networks, software, broadband infrastructure, or the like that are produced or operated inside the E-commerce zone by a third party, who facilitates, fosters or makes possible business transactions by means consistent with sections (2) and (3) of this rule. Such a third party is eligible for purposes of tax abatement if other businesses or organizations represent 75 percent or more of its customers or gross receipts.

(5) Beyond the initiation or consummation of the sale, purchase or arms-length exchange, it also encompasses elements of the transaction’s overall completion or delivery, if that element:

(a) Is conducted in the E-commerce zone by means consistent with sections (2) and (3) of this rule, including but not limited to customer service, technical support, claims processing, client evaluation, performance measurement and so forth, even if the actual sale, purchase or contract originated outside the zone or through other means; or

(b) Naturally serves, underpins or arises from the sale or purchase of goods, property or services inside the E-commerce zone by means consistent with sections (2) and (3) of this rule, including but not limited to distribution, made-to-order assemblage, direct after-sale support, shipping, warehousing, warranty service or any similar operation or order fulfillment-type activity.

(6) One way to understand subsection (5)(b) of this rule is by means of a flowchart representing the totality of Electronic Commerce operations in the zone, such that if a critical node in that flowchart is handled by means consistent with sections (2) and (3) of this rule, then:

(a) Substantially related activities both upstream and downstream of the node are also included for purposes of this rule; and

(b) Associated qualified property or investments in capital assets shall generate their respective tax benefits subject to applicable requirements.

Stat. Auth.: ORS 285A.075, 285C.050(5) & 285C.060(1)
Stats. Implemented: ORS 285C.050, 285C.135, 285C.180, 285C.185 & 315.507
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10


Electronic Commerce Status and Application

For purposes of an enterprise zone authorized/designated for electronic commerce under ORS 285C.095:

(1) It may be any enterprise zone in existence, regardless of whether it is urban or rural, but the effective date by which the enterprise zone came into existence as described in OAR 123-650 or 123-656 must precede or coincide with its designation as an E-commerce zone.

(2) Electronic commerce status fully overlays the entire area of an E-commerce zone inclusive of areas added by a subsequent change to the zone’s boundary.

(3) The sponsor of an enterprise zone may revoke its status as an E-commerce zone by resolution(s), pursuant to which the Director shall order and set the effective date of revocation, and that enterprise zone may never again be an E-commerce zone.

(4) The Department shall seek applications from zone sponsors respective to such revocation or to termination of an existing E-commerce zone’s underlying enterprise zone. Such a preexisting enterprise zone needs to reapply for electronic commerce in order to be re-designated, as described in sections (5) to (11) of this rule.

(5) An application by an enterprise zone in accordance with ORS 285C.095 must consist of at least two items:

(a) Copy of a resolution newly adopted by each governing body of the zone sponsor that requests designation for electronic commerce, consistent with its charter, by-laws or ordinances; and

(b) A completed form as prescribed by and available from the Department and supporting materials.

(6) An applicant zone sponsor shall use the form to respond to the following factors:

(a) Significance associated with the location and attributes of the cities, business sites and so forth that are in the current zone boundary, as well as future boundary change requests (to be considered, any such boundary change must be acknowledged in sponsor resolutions);

(b) Strategic or marketing plans, resources and readiness of the enterprise zone for local development relating to Electronic Commerce, including but not limited to being a result of public investments;

(c) Past success in using the statutory and local incentives of the enterprise zone for inducing business development or comparable programs or tools;

(d) Interest and support among local businesses, community organizations and the general public for having the enterprise zone obtain electronic commerce status; and

(e) Other local assets that support and complement Electronic Commerce activity or investments (for example, training institutions, telecommunication infrastructure, environmental initiatives).

(7) For designation of an applicant enterprise zone for electronic commerce, the Department shall evaluate the factors in section (6) of this rule, especially as necessary to compare multiple applicants.

(8) According to a policy prescribed by and available from the Department, as hereby incorporated and made part of these administrative rules by reference, the Director may accept applications for and make designation for electronic commerce contingent on the readiness of a business firm for authorization under ORS 285C.140 respective to substantial Electronic Commerce investments.

(9) The Director may set aside section (8) of this rule in the case of a zone sponsor reapplying for an enterprise zone to terminate by operation of law and seeking continuation of an electronic commerce designation that will be less than three years old.

(10) The Director shall make a final determination, which is not subject to appeal, about whether to order electronic commerce designation for an applicant zone and shall prescribe an effective date for the designation, which may not be earlier than receipt of a complete application.

(11) The Department shall promptly give written notification to any applicant zone sponsor rejected for electronic commerce designation.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.095(2)
Stats. Implemented: ORS 285C.095
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10


Designated Areas

(1) If the Legislature allows additional electronic commerce designations under ORS 285C.095, which are currently limited to 10 enterprise zones, the Department will seek applications in accordance with OAR 123-662-1000 through the local zone managers of all existing enterprise zones that are not already E-commerce zones.

(2) The Department shall maintain and publicize information identifying which enterprise zones are currently E-commerce zones.

(3) The termination for any reason under ORS 285C.245 of an enterprise zone that is an E-commerce zone shall immediately allow another enterprise zone to receive their electronic commerce designation in accordance with OAR 123-662-1000.

(4) The City of North Plains in Washington County is a city designated for electronic commerce under ORS 285C.100 effective on March 4, 2002, such that

(a) All areas then or later inside the city limits or urban growth boundary of the City of North Plains are equivalent to an “E-commerce zone,” as used in this division of administrative rules, but only for purposes of Electronic Commerce and business firms that are eligible on that basis under ORS 285C.050 to 285C.250 and 315.507.

(b) The city shall act as the effective zone sponsor and take responsibility for all duties of a zone sponsor as they apply to an Electronic Commerce business firm seeking to utilize areas of the city for special benefits.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 285A.075, 285C.050(5), 285C.060(1) & 285C.095(2)
Stats. Implemented: ORS 285C.095, 285C.100 & 285C.135
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10; OBDD 14-2012, f. & cert. ef. 8-15-12


Enterprise Zone Business Eligibility

Respective to the standard exemption from property taxes under ORS 285C.175:

(1) A business firm engaged in Electronic Commerce will likely be eligible in other ways under ORS 285C.135, but it shall not be subject to the requirements or restrictions of those other ways once the enterprise zone is effectively an E-commerce zone.

(2) If an eligible business firm that originally sought eligibility based on Electronic Commerce does not satisfy that definition, it may still receive authorization and exemption subject to another way’s requirements or restrictions, except in an area described in OAR 123-662-1200(3).

(3) The following may occur only once the enterprise zone is effectively an E-commerce zone:

(a) Authorization and qualification of a firm that is eligible based only on Electronic Commerce; or

(b) Exemption of personal property permissible only under ORS 285C.185(1)(b)(B).

(4) Property that due to section (3) of this rule does not qualify for exemption by January 1 of the first year, for which a business firm may claim the exemption, may not qualify later.

(5) After an area’s status as an E-commerce zone effectively ceases, a business firm shall enjoy the following protection for exemption on qualified property respective to Electronic Commerce eligibility, notwithstanding that the firm might be eligible in another way:

(a) Under ORS 285C.245(1)(a), (b) and (c), consistent with applicable elements of OAR 123-674-8100 and 123-674-8200, if for whatever reason the underlying enterprise zone terminates and the location of the qualified property is outside of a subsequent enterprise zone.

(b) Only under ORS 285C.245(1)(a), consistent with OAR 123-674-8100(1)(b) regardless that the firm was already authorized or qualified, upon:

(A) Revocation of the zone’s electronic commerce designation; or

(B) Termination of the underlying enterprise zone and designation of the location of qualified property in another enterprise zone without electronic commerce status.

Stat. Auth.: ORS 285A.075, 285C.050(5) & 285C.060(1)
Stats. Implemented: ORS 285C.095, 285C.100, 285C.135, 285C.140, 285C.180, 285C.185 & 285C.245
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10


State Income Tax Credit for E-commerce

For purposes of a business firm receiving and using the credit under ORS 315.507 to offset state personal or corporate income/excise tax liabilities:

(1) Respective to an enterprise zone’s designation as an E-commerce zone, the applicable investments in Electronic Commerce capital assets under ORS 315.507(2) must:

(a) Be made in an income or corporate excise tax year, during or before which the designation took effect.

(b) Not be in use, placed in service or completed in terms of construction or installation before that effective date.

(2) The business firm must make:

(a) Application for authorization before the effective date of either revocation of the zone’s electronic commerce designation or termination of the underlying enterprise zone.

(b) The applicable investment on or before the enterprise zone effectively terminates, irrespective of:

(A) Prior revocation of the zone’s electronic commerce status; or

(B) Any continuing receipt or access to the standard property tax exemption after termination.

(3) The business firm engaged or preparing to engage in Electronic Commerce may make applicable investments only:

(a) During the remainder of the income/excise tax year, after the firm has received authorization by approval of its application from the zone sponsor and county assessor;

(b) In an income/excise tax year that begins while the firm is actively authorized and ends before July 1 of the first property tax year of exemption; or

(c) In an income/excise tax year that begins on or less than a year’s time prior to July 1 of a property tax year, in which the business firm remains qualified and qualified property is exempt under ORS 285C.175.

(4) The third year after a credit is claimed as described in subsection (3)(a) or (b) of this rule must be a year described in subsection (3)(c) of this rule, in order for the firm to receive and keep the tax credit.

(5) The capital assets that generate the credit do not necessarily correspond to qualified property exempt under ORS 285C.175, although there will likely be some overlap, and such assets consistent with sections (3) and (4) of this rule must concurrently relate to such qualified property.

(6) The business firm will claim the credit as an amount entered with “other credits” on the taxpayer’s state tax return for an income/excise tax year (beginning before the date prescribed under section 3, chapter 913, Oregon Laws 2009), in which it makes the Electronic Commerce investment; there is no prescribed form or worksheet.

(7) The firm shall be responsible for maintaining tax records under ORS 315.508, including but not limited to:

(a) Annual qualification for exemption under ORS 285C.175, such as copies of forms filed with the county assessor and evidence of avoided property taxes, sufficient zone employment, and so forth;

(b) Methods used to determine the basis and extent, by which the firm/taxpayer attributes capital assets to Electronic Commerce for purposes of calculating the credit; and

(c) The actual cost of investments in terms of such calculations, as well as the annual limit under ORS 315.507(4) of effectively up to $8 million in relevant costs in any one income/excise tax year.

(8) The tax credit is inapplicable in conjunction with the exemption under ORS 285C.409 (Long-Term Rural Tax Incentives).

(9) In terms of capital assets for Electronic Commerce (in contrast to property tax terms, which typically relate to new physical vesting), to “make an investment” means:

(a) As a matter of timing, to incur costs or binding liability in payment for the asset, for example, by entering into a construction contract or by having booked an order to acquire machinery & equipment.

(b) Not only capital that is new to the E-commerce zone, but also the firm’s acquisition of assets already existing in the zone.

Stat. Auth.: ORS 285A.075, 285C.050(5) & 285C.060(1)
Stats. Implemented: ORS 285C.095, 285C.100 315.507 & 315.508
Hist.: OBDD 25-2010, f. & cert. ef. 6-14-10

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