Ace Hardware, La Grande, is passing the Corporate Activity Tax on to its customers.

UNION COUNTY — It has been seven months since the Corporate Activity Tax went into effect, and customers at select stores are beginning to see the tax appear on their receipts.

Stacia Webster visited ACE Hardware in La Grande July 7, and noticed the tax marked on her receipt. When she asked the cashier about it, she was told it was the Corporate Activity Tax.

“I consider myself well read in city, county, state and federal issues, but this is one that apparently slipped by me, as well as other taxpayers,” Webster said.

Gov. Kate Brown signed House Bill 3427 into law May 16, 2019, after it passed in the Oregon Legislature due to the Democratic majority. The law went into effect Jan. 1, 2020. Only select businesses include this tax as part of a sale’s total, and the funding for the tax goes to establishing a fund for student success.

According to the Oregon Department of Revenue, companies and businesses that make $1 million or more in commercial activity have to pay the tax, although there are some exemptions. Nonprofit organizations, farmers cooperatives, if under section 521, governmental entities, state tuition programs under section 529 and hospitals and long-term care facilities that are Medicare providers are exempt from paying this tax.

A majority of businesses cannot pass the CAT on to customers, and the ones that are allowed to pass it on cannot do so as a line item. Oregon Department of Revenue considers it a business expense. Oregon law, however, allows businesses to pass those on to the customer either in displaying the price of goods or later on the receipt.

“CAT is a tax on the business for the privilege of doing business in Oregon,” Rich Hoover, Oregon Department of Revenue’s public information officer, said. “Taxes on businesses are allowed to be passed on to customers as long as the statute does not prohibit them from doing so. Determining how they choose to do so is outside the authority of the Department of Revenue.”

The tax amount is calculated as 0.57% of total commercial activity after $1 million, plus $250.

The money from this tax goes to K-12 education. The state’s school fund receives $200 million annually and any remaining funds go into three accounts: the Early Learning Account, the Student Investment Account and the Statewide Education Initiatives Account.