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Monday, September 12, 2011

Realtors win round against City of Portland business tax

The Oregon court of appeals, reversing a Multnomah County circuit judge, has ruled that realtors other than "principal" real estate brokers can't be subjected by the City of Portland to the city's income-based business tax, because it conflicts with state law.

Indeed, the tax provisions in question were a blatant attempt by the city to circumvent state law, and they richly deserved to go down. As the court stated: "Bluntly, by imposing its business income tax on plaintiffs in this case, the city is subjecting plaintiffs to precisely the same harm that the 1987 Legislature intended to prevent." No kidding.

Keep that in mind, Portlanders, when you get your bill for the leaf removal "fee." It might just be a tax, and that tax might not be kosher under the city charter or state law.

Comments (7)

Does this mean refund checks are being mailed as I type??

Sue the bastards (er CoP) whenever possible. Maybe that will discourage them since seats on kiddie council are co-opted when they are not bought out right.

Is this the tax the City charges LL's who rent residential property in City? I have personal interest if that's the case. THX!

City charter, state laws, or the U.S. Constitution none of them really matter to those sitting in the seats.

No, this is not the landlord business tax. That is another issue. This was a tax treating each agent in an office as if he were operating a free standing business. Were insurance agents, stock brokers and the like also subject to that tax?

Kudos go to Jane Leo and the Portland Metro Area Realtors (PMAR) staff for yet another round of excellent advocacy for Realtors and homeowners. People don't realize it, but this professional association does more to fight taxes and encourage benefits for homeowners and residential industries than any other in the state. Jane and Darryl are brilliant and dedicated and largely unsung.

concordbridge - No, insurance agents were not subject because the industry largely stopped treating their brokers as independent contractors a while ago. This tax required that even if you lived and were officed outside of PDX, you had to pay PDX tax on the % of business you did in PDX. Try to enforce that on every plumber, graphic designer or what not that comes into the city to work for a client. Ridiculous from the start.

Does this mean that I cannot seek to have a court declare the exemption contained in PCC 7.02.100(C) -- "does not include wages earned as an employee" -- void, because it is repugnant to Section 20 of Article I of the Oregon Constitution?

Highly paid city employees get paid for "services performed by an individual for remuneration[.]" It too should be subject to the tax, the tax on income.

That is, treat "business tax" as an income tax for all, or alternatively as an excise tax only applicable to incorporated entities. (See ORS Chapter 317.)

The opinion was confined to "real estate brokers who worked as agents of principal real estate brokers."

They left unresolved the issue of taxing income of sole proprietor real estate brokers that do not operate via any corporation.

Portland defines business as "an enterprise, activity, profession or undertaking of any nature, whether related or unrelated, by a person in the pursuit of profit, gain, or the production of income, including services performed by an individual for remuneration, but does not include wages earned as an employee." PCC 7.02.100(C)

The goals of Oregon's tax code include a principal articulated in ORS 316.003(2)(e)(C):

"That it imposes approximately the same tax burden on all households earning the same income[.]"

This restates in simple terms a general constraint imposed on the legislature, as to taxes imposed on the income of individuals (natural persons), so as to conform with Section 20 of Article I of the Oregon Constitution.

The burden of me having to respond at all in any way, when highly paid city employees do not, is galling, to say the least.

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