The International Law Section consists of more than 150 attorneys, all of whom are members of the Oregon State Bar. Most of the ILS members also are members of various other international law organizations. Consistent with its Mission Statement, the ILS was formed with the intent of fostering the study of international law among the members of the Oregon State Bar, and with educating and assisting the public at large with international legal matters. The ILS members engage in private international law, international alternative dispute resolution, international commercial transactions, immigration law, and a wide variety of associated fields. We trust and hope this web site will assist you with your endeavors.
The activities of the Section are governed by an annually-elected Executive Committee of members, who are dedicated to organizing and providing educational programs for members of the Section and the public on relevant topics of international law, business, and world affairs. This website is maintained by the Executive Committee of the International Law Section as a service to members of the Section as well as the public. It is one means by which they can contact the Executive Committee and members of the Section as well as a vehicle for accessing information useful to attorneys’ legal practices.
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Oregonians May Not Have to Addback the Federal Deduction for the Deemed Repatriation
Despite Oregon Department of Revenue Guidance Stating Otherwise
Eric Kodesch, Lane Powell
The December 2017 federal tax reform law, commonly (but incorrectly) referred to as the Tax Cuts and Jobs Act or TCJA, included a one-time deemed repatriation from certain non-U.S. corporations – generally, but not exclusively, a non-US corporation treated as a “controlled foreign corporation” or “CFC.” Generally, each affected U.S. shareholder included in income the shareholder’s pro rata share of the corporation’s earnings and profits not previously taxed by the United States. U.S. tax law then allows taxpayers a deduction so that the tax on the deemed repatriation, applying the 35% maximum corporate tax rate in effect before the TCJA, is (a) 15.5% for cash and cash equivalents included in the deemed repatriation and (b) 8% for the other portions of the deemed repatriation. Although this deemed repatriation tax is primarily part of the TCJA’s corporate tax reform, Congress did not limit the deemed repatriation to corporations.
Oregon taxes Oregon residents on worldwide income, with Oregon taxable income based on the resident’s federal taxable income, to which the modifications required by Oregon law then apply. Accordingly, the deemed repatriation net of the deduction is included in Oregon taxable income. A question arises as to whether Oregon law requires an add-back of the deduction. No provision in Oregon personal income tax law specifically requires an add-back of the deduction (this is in contrast, for example, to OR Laws 2018, c. 108, s. 10 which specially requires an add-back of the new IRC Section 199A deduction created by the TCJA). Nonetheless, the Department of Revenue announced in a March 19, 2018 Revenews, available at http://listsmart.osl.state.or.us/pipermail/revenews/2018q1/000211.html, that individuals must add-back the deduction. The Department apparently based this on ORS 316.737. That law, however, only requires an addback for an “amount which was deducted and specially taxed” – the amount deducted for the deemed repatriation is not specially taxed. Accordingly, individuals who added back the deduction should consider filing an amended return claiming a refund.