9-14-11 Realtors Prevail on Portland Business License Tax

Realtors Prevail on Portland Business License Tax

On September 8, 2011, the Oregon Court of Appeals issued its decision in the case of Proctor and Rulien v. City of Portland, in which the Court held that the City of Portland’s Business License Law constitutes a “business license tax” that cannot legally be applied to real estate brokers.

History:

In 2008, the City amended its Business License Law and took the position that the business income of real estate brokers, and not merely principal real estate brokers, was subject to taxation under the revised law.

After fully considering the parties’ legal briefs and arguments, the Court of Appeals ruled in favor of realtors everywhere reasoning that the 2008 amendments to the City’s Business License Law did not change the fundamental nature of that law. The Court held that the City’s Business License Law continued to qualify as a “business license tax”, which could not under state law be applied to the income of real estate brokers.

Based on this decision, the City of Portland will no longer be able to tax the business income of real estate brokers within the City.

As of today, the City of Portland is still trying to work out how to address this issue and they will be posting information on their website when they have something to share. We are not yet clear if we can amend prior year returns and request refunds or not. We will keep you posted.

If you have any questions about this, please let us know.
 
 
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