Business Tax Policy: Exemption for Certain Foster Care Payments
Certain foster care providers are exempt from filing returns under the Business License Tax and Business Income Tax Laws ONLY when the provider's entire gross income arises solely from certain foster care payments defined in Internal Revenue Code Section 131. The foster care provider loses this filing exemption if the provider has gross income from non-qualifying foster care payments or any other business activity subject to Business License or Business Income Tax Laws. Gross incomes from qualified foster care payments are considered with other business gross receipts to qualify for the exemption based upon gross receipts. The net income as reported in the Federal Schedule C has already excluded qualifying payments. This net income is taxable income for both the City of Portland and Multnomah County if the total gross income of both qualified and non-qualified gross receipts is equal to or exceeds $50,000.
Example: Paul Green, a foster care provider has gross income from qualified foster care payments $56,400 a year and also receives $23,600 in gross foster care payments that are not qualified under Internal Revenue Code Section 131. He has expenses of $15,000 resulting in a net income of $8,600 ($23,600 less $15,000). The foster care facility is located within the County and City.
Mr. Green is not exempt from payment of the City Business License Tax and County Business Income Tax because his gross receipts from all business activity exceed $50,000. He will be required to pay City and County tax upon the $8,600 net income of his foster care business.
6/28/11 Thomas Lannom
Date Director, Revenue Bureau
Revised 2010, 2011