Preparation of Oregon Tax Returns

[Lee B]

Oregon has now adopted rules similar to California.

The preparation of Oregon Tax Returns for residents or a business residing or located in Oregon

by preparers located outside of Oregon

is considered to be Oregon Income subject to Oregon Tax.

[BulldogTom]

Not a surprise.  But based on your earlier email they are not going to have out of state EA preparers anyways because they don't recognize our licensure.   I don't have any OR clients, and I guess I never will.   I will send anyone who asks to you Lee.

Tom
Longview, TX

[jklcpa]

Do you know if a final PY return for a taxpayer that moved from OR be considered a "resident" return for this purpose?

[Lee B]

12 minutes ago, jklcpa said:

Do you know if a final PY return for a taxpayer that moved from OR be considered a "resident" return for this purpose?

My understanding is that it would be based on where the client is residing at the time the return was prepared.

[Sara EA]

This might not be as bad as it sounds.  The income threshold to file a return for OR nonresidents is about $2,700 single and $5.500 MFJ.  That one OR client who pays you $500 is not going to trigger your filing in OR.  Or is there some other rule governing tax preparers?  EAs don't have to worry about it at all since those who reside in other states can't prepare OR returns anyway.  So if you're a CPA preparing an OR return, be sure to keep your price at $5,495.

[Lee B]

16 hours ago, Sara EA said:

This might not be as bad as it sounds.  The income threshold to file a return for OR nonresidents is about $2,700 single and $5.500 MFJ.  That one OR client who pays you $500 is not going to trigger your filing in OR.  Or is there some other rule governing tax preparers?  EAs don't have to worry about it at all since those who reside in other states can't prepare OR returns anyway.  So if you're a CPA preparing an OR return, be sure to keep your price at $5,495.

However, depending on where your client resided your income could be subject to Self Employment Tax from a Transit District or a City.

Over $400 of Self Employment Income related to a client living in Eugene would require the filing of a Lane Transit District SE Tax Return

and the filing of a City of Eugene SE Tax Return.

[Lee B]

On the other hand, these rules strongly suggest that if I prepare any tax returns for residents of Nevada or Washington (states with no income tax)

then that income would not be Oregon Income or subject to Oregon Tax. Hmm

[DANRVAN]

On 5/16/2025 at 10:19 AM, jklcpa said:

Do you know if a final PY return for a taxpayer that moved from OR be considered a "resident" return for this purpose?

The proposed rule 800-002-0000 states "(1) An out-of-state unregistered tax preparation business whose employees or contractors are not exempt from licensure under ORS 673.610 may not contract to, and may not solicit or advertise to, prepare Oregon Personal Income Tax Returns for Oregon residents, or maintain a physical or electronic Oregon drop box location for delivery and pick up of materials pertaining to preparation of Oregon Personal Income Tax Returns for Oregon residents, unless the out-of-state tax preparation business registers with the Board and maintains an Oregon Licensed Resident Tax Consultant(s) on its payroll who is assigned to supervise the preparation of all Oregon personal income tax returns. ¶

So it in that situation is sounds to me that since the taxpayer is no longer an Oregon resident the rule would not apply; even if he/she had been a full time resident for the tax year, but moved out of state and were nonresidents at the time of filing.

[DANRVAN]

On 5/17/2025 at 3:37 PM, Lee B said:

On the other hand, these rules strongly suggest that if I prepare any tax returns for residents of Nevada or Washington (states with no income tax)

then that income would not be Oregon Income or subject to Oregon Tax.

I am not following you on this.  If they have Oregon source income what has changed?  They can have their returns prepared out of state, but still subject to Oregon tax as I  see it.

[DANRVAN]

Per the proposed rule notice:

NEED FOR THE RULE(S) The proposed new and amended rules were made necessary, among other things, by changes in the technology that may be used by tax preparation businesses for the preparation of personal income taxes. Oregon Tax Preparation Businesses, who take in more work than their trained preparers can handle have, more than occasionally, been found to be reaching out not to other Oregon Licensed tax practitioners for assistance but to tax preparation businesses located outside of the State of Oregon – businesses whose employees have no training or expertise in the preparation of Oregon personal income taxes and as such pose a significant consumer protection risk to unwitting Oregon taxpayers who thought they were turning their tax information over to an Oregon Licensed Tax practitioners for the preparation of their Oregon Personal Income Taxes.

[Lee B]

11 minutes ago, DANRVAN said:

I am not following you on this.  If they have Oregon source income what has changed?  They can have their returns prepared out of state, but still subject to Oregon tax as I  see it.

I just took a CPE class where the presenters were ODR employees called "DOR Tax Professional Liaison."

This was under a topic called Market Based Sourcing.

My post was paraphrase was what the presenter said.

Please see pages 2, 3, & 4.

https://www.oregon.gov/dor/programs/taxpro/SiteAssets/Pages/meetings/Handout B%26W.pdf

[DANRVAN]

I am still not following you on this 

On 5/17/2025 at 3:37 PM, Lee B said:

these rules strongly suggest that if I prepare any tax returns for residents of Nevada or Washington (states with no income tax)

then that income would not be Oregon Income or subject to Oregon Tax

Still subject to Oregon tax, but not subject to the Oregon Preparer rules as I see it.

[Lee B]

1 hour ago, DANRVAN said:

I am still not following you on this 

Still subject to Oregon tax, but not subject to the Oregon Preparer rules as I see it.

Here is a Tax Advisor article about "Market Based Sourcing" which explains what the DOR presenter was discussing:

https://www.thetaxadviser.com/issues/2012/nov/schadewald-nov2012/

[DANRVAN]

On 5/17/2025 at 3:37 PM, Lee B said:

On the other hand, these rules strongly suggest that if I prepare any tax returns for residents of Nevada or Washington (states with no income tax)

then that income would not be Oregon Income or subject to Oregon Tax

 I think I follow what you are saying now.   For example you prepare a tax return for a Washington resident.  You are saying your fee is not subject to Oregon Income tax?   Your not talking about whether the client has Oregon sourced income but whether you do for your services?