The most overlooked tax savings opportunity that I've encountered is the non-apportioning of gross receipts. What does that mean? Businesses only need to pay tax on a percentage of their income based on their relative percentage of sales to customers located in Portland/Multnomah County. However, there's one caveat: sales of tangible personal property may be apportioned only if a business has payroll or property outside the jurisdiction . In other words, if the company doesn't have payroll or property outside of Portland/Multnomah County it must to pay tax on 100% of its income to Portland/Multnomah county even if 99% or even 100% of its sales are to customers outside of these jurisdictions. Conversely, a company could be based out of Portland/Multnomah County and have a small presence outside of the jurisdictions, and if 100% of its sales are to customers outside of the jurisdictions, then the company would only pay the minimum taxes of $100 each to Portland/Multnomah County.
Establishing a property presence outside the jurisdiction can be done very easily through renting a PO box or even data storage outside of Portland/Multnomah County. In tax terminology, this typically refereed to a establishing "Nexus" or a taxable presence.
Let's run through a scenario. Imagine an cannabis producer located in the city Portland and Multnomah County. This grower has an exclusive contract with a processor/extractor in Clackamas County. The company's Portland/Multnomah County taxable income is $1,000,000. If the company has not established nexus outside of Portland/Multnomah County, it would pay tax on 100% of this income resulting in $36,500 in tax.
Now, let run the numbers to see what the tax liability if the company did have property outside of the jurisdiction. The same company would have a Portland/Multnomah County tax liability of only $200 if it had established nexus outside of the jurisdiction.
This may seem too good to be true, however it is an often overlooked opportunity by many unsuspecting taxpayers based in Portland/Multnomah County.
The same concept may often be applied at the state level in order to minimize the income allocated to higher tax states and shift to lower tax rate states. For example, an Oregon based company would want to establish Nexus in Washington (which has no business income tax) in order to shift a portion of its income based on the relative gross receipts to Washington.
