Effective January 1, 2023, MultCo/Pdx will begin using market based sourcing as the methodology used to determine income taxable within their individual jurisdictions.
This change conforms to the State of Oregon, which began using market based sourcing in 2018. MultCo/PDX follows the apportionment and allocation provisions found in the Oregon revised statutes, chapter 314, 317, and 318 and related Oregon Administrative Rules.
How does this affect your business?
If your business is located INSIDE Multnomah County/PDX, some of your income may NO LONGER be subject to MultCo/PDX tax.
If your business is located OUTSIDE of Multnomah County/PDX, you may now have income that IS subject to MultCo/Pdx tax.
Beginning January 1, 2024 Casler Financial requires all business revenue to be broken out by income that IS subject to MultCo/Pdx tax and income that IS NOT subject to MultCo/Pdx tax. The guidelines for determining what income is subject to MultCo/Pdx tax vary depending on the type of service/product your business provides.
We have included the basic guidelines for in person services, sales of services or physical goods that are delivered, and professional services to help you determine what income is subject to MultCo/Pdx tax.
Please contact me if you have any questions or need assistance determining how these changes affect your individual business.
In person services are services that are physically provided in person by the taxpayer to the customer or the property of the customer. This includes services provided on behalf of the taxpayer by a third-party contractor.
In person services include but are not limited:
Medical and dental
Carpentry and construction
In person lessons
Note: professional services are NOT treated as in person services.
The gross receipts of all in person services that are performed in MultCo/PDX are subject to the tax.
Sales of services or physical goods that are delivered to a customer in MultCo/Pdx are subject to the tax, even if the service was performed outside of MultCo/Pdx or the product was shipped from outside MultCo/Pdx.
Example 1: Your factory is located in Oregon City, but ships items to a customer in MultCo/Pdx. The gross receipts from the sale are subject to the tax.
Example 2: Your factory is located in MultCo/Pdx but ships items to a customer in Oregon City. The gross receipts from the sale are not subject to the MultCo/PDX tax.
Professional services require specialized knowledge, and in some cases, a professional certification, license, or degree. Professional services include but are not limited to:
Credit card processing
Gross receipts from professional services to an individual customer are assigned:
First – to the customers primary residence, not the location where services are provided.
Second – to the billing address if the primary residence is unknown.
Gross receipts derived from professional services to a business customer are assigned:
First to the address of where the customer's business is principally managed.
Second, to the customer's place of order.
Third to the customer's billing address.
*Gross receipts from architectural or engineering services provided to an individual or business are assigned to the location that the plans are being drawn up for.
Example 3: Your law office is located in Oregon City, but your client lives in MultCo/Pdx. All meetings happen at your Oregon City office, no business is conducted in Multnomah county PDX. The gross amount collected from this client IS subject to the MultCo/Pdx business taxes.
Example 4: Your law office is located in MultCo/Pdx but your client lives in Oregon City. All meetings happen at your MultCo/Pdx office, no business is conducted in Oregon city. The gross amount collected from this client is not subject to the Multnomah county PDX taxes.
Example 5: Your architectural firm is located in MultCo/Pdx. You are drawing up plans for a home that will be built in Bend. The gross amount collected from this client is not subject to the MultCo/Pdx business taxes.
Example 6: Your architectural firm is located in Bend. Your are drawing up plans for a home that will be built in MultCo/Pdx. The gross amount collected from the client is subject to the MultCo/Pdx taxes.
I hope this information helps you to determine if some or all of your gross income is going to be subject to these new taxes. I know it's confusing and I'm sorry! I'm just the messenger. I am hear to help if you have questions about what income is and is not subject to the Multnomah County/City of Portland business taxes.
I also want to give a big thanks and shout out to Kari Mitchell of Kari Mitchell Accounting here in Oregon City. She typed up this helpful document for her clients and was kind enough to share it with me. Her and her firm have much more capacity and experience with larger companies and I highly recommend her and her team if you are looking for a full service CPA firm to handle your business accounting needs. (She is also well known and loved in our local community for generously allowing residents to park in her parking lot when there are events happening in downtown Oregon City.)