Missive from the Oregon Association of Realtors:
Today 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. This is a huge victory for not only the REALTORS® in Portland, but for REALTORS® all over the state of Oregon!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.Following the City’s action, Portland REALTORS® Beth Proctor and Diane E. Rulien, with assistance and funding by the National, Oregon, and Portland Metropolitan Associations of REALTORS®, instituted a lawsuit in Multnomah County Circuit Court seeking a legal declaration that the City’s revised Business License Law could not be assessed against real estate brokers under state law. The Circuit Court disagreed with this assertion and held that, commencing in 2008 when the City amended its law, it became entitled to tax the business income of real estate brokers.Again with the assistance of the Association, Ms. Proctor and Ms. Rulien appealed to the Oregon Court of Appeals. The case was orally argued to the Court of Appeals on December 15, 2010. 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. The Court returned the case to the circuit court for it to assess the damages incurred by Ms. Proctor and Ms. Rulien.
Based on the Proctor decision, the City of Portland will no longer be able to tax the business income of real estate brokers within the City.