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BTAR 610.00-1 De Minimus Business Activity for Personal Service

City of Portland Revenue Bureau, License and Tax Division

Business Tax Administrative Rule 610.00-1

De Minimus Business Activity for Personal Services

“De minimus” means activity that is trivial or of little importance or significance. Activity that is not routine and continuing, and has little or no tie to the production of income is considered “de minimus”. If a person’s activities within the City of Portland or Multnomah County are defined as “de minimus”, taxes based upon or measured by net income shall not be collected. However, any business having a physical location, owning or leasing property, or maintaining any constant business presence within the City of Portland and/or Multnomah County will not be considered “de minimus”.

Personal services performed within a tax jurisdiction are generally considered sufficient contact to create nexus. However, for purposes of the City of Portland Business License Law and Multnomah County Business Income Tax Law, some minimal personal service activities may be considered “de minimus” -- assuming such activities are the sole income producing activities within Portland or Multnomah County.

If a business grosses less than $2,500 in personal service income from business activities within the City of Portland and/or Multnomah County and there are 10 or less business related physical contacts within the City of Portland and/or Multnomah County within a 12-month tax year, such business activity may generally be considered “de minimus”. Additionally, business activity that has little or no connection to the production of income may generally be considered “de minimus” — assuming such activity is the sole activity within Portland or Multnomah County.

If only a small portion of a single income producing activity (such as a contract for personal services) is performed within the City or County, that activity may also be “de minimus” if limited contacts occur and less than $2,500 in gross income is earned within the City or County. To determine if less than $2,500 in gross income is earned within the City or County, multiply the gross income earned from the single income producing activity by the fraction (percentage) of the income producing activity occurring within the City or County. This fraction may generally be determined by using hours of personal services performed within the City or County on the contract compared to total hours worked everywhere on the contract. Again, if this activity requires more than 10 physical contacts with the City or County, the activity will not be considered “de minimus”.

Example 1: A businessperson domiciled in Salem, who bills for personal service activity on an hourly basis, bills for 10 hours of work performed within Multnomah County. Such work was performed on 5 occasions. The work is billed at $200 per hour. No other business activity occurs in Multnomah County during the year. Such activity may be considered “de minimus” because less than $2,500 was grossed during the year and there were less than 10 contacts during the year.

Example 2: A businessperson domiciled in Beaverton, who bills for personal service activity on a contract by contract basis, makes 25 business related trips during the year into Multnomah County to meet with clients, deliver paperwork and perform other business related services. A review of all contracts indicates that the overwhelming majority of income producing activity on each contract was performed in Beaverton. It is estimated that less than $2,500 of income producing activity actually occurred within Multnomah County. This business activity may not be considered “de minimus”. The business activity in Multnomah County is routine and continuous.

Example 3: A businessperson domiciled in Oregon City engages in routine solicitation for clients within the City of Portland. Such solicitation includes performing some minimal services without compensation. When a client is ultimately engaged, all billable service activity for the client takes place within Oregon City. Such “pre-income production” or ancillary activity is considered “de minimus” since no compensation for the ancillary service was received and no activity is performed within the City or County once the client is engaged.

Adopted: 12/26/00

(PCC 7.02.610 A/ MCC 5.60.610 A)

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