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The Oregon Administrative Rules contain OARs filed through March 15, 2014
 
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DEPARTMENT OF REVENUE

 

DIVISION 305

GENERAL ADMINISTRATION OF REVENUE LAWS — MULTISTATE TAX COMPACT

150-305.100

Requirement for Social Security Numbers

(1) Pursuant to the authority provided by ORS 305.100 and 42 USC §405, tax returns, refund claims, applications, registrations, records, requests for information, reports, and other items of a similar nature filed with the Department of Revenue shall state the social security number or numbers of the taxpayer or taxpayers, homeowner or renter, applicant, reporting individual, or other person making the filing, as required by the item being filed. Social security numbers are used by the Department of Revenue as a part of providing expeditious and practicable processing systems in the administration of the laws by the department, including (but not limited to) such matters as the issuance of tax refunds, allocation or application of incoming payments by program, administration of applicable payroll taxes, personnel and payroll work, and other matters of a similar nature. A social security number submitted under any provision of the laws imposing a tax upon or measured by net income is subject to the confidentiality provisions of ORS 314.835 and 314.840. Penalties for violation of such confidentiality provisions are set forth in ORS 314.991.

(2) The department may require a taxpayer to provide the department with a copy of the taxpayer's Social Security card.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.100
Hist.: 12-27-74(Temp); 12-30-74; RD 12-1985, f. 12-16-85, cert. ef. 12-31-85

150-305.100-(A)

Notice of Rule Making

Prior to the adoption, amendment or repeal of any rule (except temporary rules adopted under ORS 183.335(5)), the Department of Revenue shall give notice of the proposed adoption, amendment or repeal:

(1) In the Secretary of State's Oregon Bulletin referred to in ORS 183.360, at least fifteen (15) days prior to the effective date.

(2) By mailing a copy of the Notice to persons on the Department of Revenue's mailing list established pursuant to ORS 183.335(7).

(3) By mailing or furnishing a copy of the notice to:

(a) Associated Press;

(b) The Capitol Press Room; and

(c) Persons and organizations which the department from time to time, and from its experience, knowledge and expertise, determines are interested persons under ORS 183.335(1)(a). A list of those persons and organizations, as amended from time to time, shall be maintained in the office of the Director of the Department of Revenue.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.100
Hist.: 10-20-75; 12-3-76; RD 5-1984, f. 12-5-84, cert. ef. 12-31-84; RD 4-1992, f. & cert. ef. 12-29-92; RD 2-1993, f. & cert. ef. 4-27-93

150-305.100-(B)

Applicable Dates

Administrative rules adopted by the department, unless specified otherwise by statute or by rule, shall be applicable for all periods open to examination.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.100
Hist.: RD 10-1986, f. & cert. ef. 12-31-86

150-305.100-(C)

Tax Amnesty

(1) Definitions. For purposes of Chapter 710, Oregon Laws 2009 (Senate Bill 880) and this rule:

(a) “Amnesty program” refers to the tax amnesty program created by Chapter 710, Oregon Laws 2009 (Senate Bill 880).

(b) “Amnesty period” refers to the time in which the application is required to be filed (October 1 through November 19, 2009).

(c) “Amnesty return” refers to the Oregon original or amended qualified tax return filed in accordance with section (3) of this rule.

(d) “Amnesty liability” is a liability that is reported on an original amnesty return or additional liability that is reported on an amended amnesty return filed in conjunction with the amnesty program.

(e) “Application” is the department-produced form entitled “Amnesty Application” that is referred to in Section 2, Chapter 710, Oregon Laws 2009 (Senate Bill 880).

(f) “Participant” means the person, entity, or corporation taking part in the amnesty program.

(g) “Post amnesty penalty” means the 25 percent penalty established by Section 4, Chapter 710, Oregon Laws 2009 (Senate Bill 880).

(h) “Tax program” means a type of tax that is collected and administered by the Department of Revenue and that is eligible for amnesty. The following are tax programs eligible for amnesty:

(A) Personal Income Tax;

(B) Corporate Income or Excise Tax;

(C) Inheritance Tax;

(D) Fiduciary (trust/estate) Tax;

(E) Transit District (self-employment) Tax.

(2) Applications. To be eligible for amnesty, a participant must have filed an application within the amnesty period on a form prescribed by the department. Applications were due on or before November 19, 2009 and must be complete and signed by the participant(s). Applications that were not complete or that were received after November 19, 2009 will not be accepted and the participant will not qualify for the amnesty being sought on that application.

(3) Amnesty Returns. Amnesty returns must have been filed no later than January 19, 2010. Amnesty returns that were not complete or are received after January 19, 2010 will not qualify for the amnesty being sought and all amnesty-related waivers of penalty and interest will be disallowed. Disqualified amnesty returns will be processed as if there had been no amnesty program.

(4) Installment Payments.

(a) Amnesty participants may enter into an installment payment agreement with the department to satisfy an amnesty liability by making regular monthly, or more frequent, payments over a designated period of time.

(A) No agreement may extend beyond May 31, 2011 and participant(s) must satisfy all amnesty liabilities on or by May 31, 2011.

(B) If an amnesty participant fails to fully comply with the terms of an installment payment agreement, all amnesty-related waivers of penalty and interest will be disallowed. However, the participant may ask the department to find that the failure to fully comply with the terms of the installment payment agreement was due to “reasonable cause” as that term is defined in subsection (b) of this section. If the department makes such a finding, the installment payment agreement may resume, notwithstanding the failure to fully comply, subject to further conditions satisfactory to the department and provided that full payment is received no later than May 31, 2011. Upon a department finding of “reasonable cause,” the participant will remain eligible for the penalty and interest waivers referred to in Section 2, Chapter 710, Oregon Laws 2009 (Senate Bill 880).

(b) For purposes of this section, “reasonable cause” exists when the participant exercises ordinary care and prudence in abiding by the terms of the installment agreement but was unable to comply with the agreement due to circumstances beyond the participant’s control. To determine if the participant used ordinary care and prudence, the department will consider the participant’s reasons for not abiding by the terms of the installment plan, and;

(A) The length of time between the event cited as a reason for the noncompliance and the missed or reduced installment payment(s); and

(B) Whether or not the participant could have reasonably anticipated the event(s) causing the noncompliance and taken reasonable steps to avoid it.

(c) The following nonexclusive list describes circumstances when reasonable cause may exist:

(A) Death or serious illness of the participant or a member of the participant’s immediate family;

(B) Destruction by fire, a natural disaster, or other casualty of the participant’s home, or place of business;

(C) Unavoidable and unforeseen absence of the participant from the state immediately prior to the due date of the missed or reduced installment payment;

(D) An unplanned and significant change in the participant’s financial circumstances, through no fault of the participant, such that the participant demonstrates to the department’s satisfaction that they are unable to meet reasonably necessary living expenses and also comply with the terms of the agreement; or

(E) Erroneous written information from the department, which caused the failure of the participant to timely pay.

(d) The following nonexclusive list describes circumstances that do not, in isolation, result in a determination of reasonable cause:

(A) Reliance on an employee or tax professional to pay on time; or

(B) Inability of, or failure of oversight by, the participant to pay the amnesty liability.

(5) The department will waive penalty and interest under Chapter 710, Oregon Laws 2009 (Senate Bill 880) only after the participant has paid all of the tax and one-half of the interest due.

(6) Closing Agreements.

(a) Policy. To assure that the amnesty program is administered efficiently and equitably, the department may waive penalties and interest for taxpayers entering into a closing agreement, under subsections (b) and (c) of this section, for the period of time immediately prior to, or during, the amnesty period. Or, if the taxpayer has filed a timely and complete application, a closing agreement may be executed through January 19, 2010.

(b) Interest waiver. Consistent with its authority under ORS 305.145(3) and notwithstanding OAR 150-305.145(3), the department may, when it determines that “good and sufficient cause” exists, based on the facts and circumstances of each case, waive up to 50% of the interest normally imposed. For purposes of this paragraph, “good and sufficient cause” exists when the department determines that entering into a closing agreement will result in an equity or efficiency by providing a streamlined alternative filing mechanism for taxpayers.

(c) Penalty waiver. Consistent with its authority under ORS 305.145(4) the department may, based on the facts and circumstances of each case and when it determines that entering into a closing agreement under this section will enhance the long-term effectiveness, efficiency or administration of the tax system, waive all, or a portion of, penalties otherwise imposed.

(7) Post amnesty penalty.

(a) The department will impose the post amnesty penalty on the total amount of unpaid tax for any tax year or reporting period for which the taxpayer meets any one of the conditions described in subparagraph (A) and either subparagraph (B) or (C):

(A) The taxpayer:

(i) Failed to file an application and amnesty return;

(ii) Filed an original or amended amnesty return that either failed to report or underreported tax liability;

(iii) Failed to file an original return where the department assesses a tax under ORS 305.265(10) or 314.400.

(B) The taxpayer could be subject to a penalty for one or more of the following (whether or not the penalty is actually imposed):

(i) ORS 314.402 (substantial understatement of income);

(ii) ORS 305.265(10) (failure to file a report or return with intent to evade the tax);

(iii) ORS 314.403, 314.404 or 314.406 (abusive tax avoidance transaction);

(iv) ORS 314.075 (evasion of any requirement of any law imposing income taxes);

(v) ORS 305.815 (false return, statement, or document);

(vi) ORS 305.265(13) (return falsely prepared and filed with intent to evade tax);

(vii) ORS 118.260, 305.992, or 314.400(2) or (3) (failure to file).

(C) The taxpayer claimed a credit on the return for which there was no reasonable basis in fact or law. “No reasonable basis in fact or law” means that the taxpayer knows or should have known that the department would disallow the credit being claimed because:

(i) The department adjusted a credit on a return previously filed by the taxpayer based on a substantially similar set of facts;

(ii) The credit being claimed is based on fraudulent substantiation;

(iii) The credit cannot be confirmed with a certifying agency, if applicable; or

(iv) The taxpayer takes a position in claiming the credit for which there is or was no substantial authority for such treatment.

(b) Exception. The post amnesty penalty will not be imposed when based upon a corresponding adjustment made to an Oregon tax return as a result of change or correction by the Internal Revenue Service (IRS) unless the IRS has also finally imposed a penalty under sections 6662, 6662A, 6663 or 7201 of the Internal Revenue Code upon the change. Nothing in this subsection precludes the department from assessing the post amnesty penalty if an adjustment is made on a return that is unrelated to an IRS change or correction.

(c) The post amnesty penalty will only be imposed on deficiencies or assessments that apply to tax years 2007 or earlier. The post amnesty penalty will not be imposed after January 1, 2014.

(d) Waiver. The department may waive the post amnesty penalty if the taxpayer demonstrates, to the department’s satisfaction, that the failure to participate in the amnesty program was due to circumstances beyond their control.

[Publications: Publications referenced are available from the agency]

Stat. Auth.: ORS 305.100, 305.145, 305.229
Stats. Implemented: Ch 710, 2009 OL (SB 880)
Hist.: REV 8-2009(Temp), f. & cert. ef. 10-15-09 thru 3-31-10; REV 4-2010, f. 3-15-10, cert. ef. 3-19-10

150-305.105

Declaratory Rulings

(1) Applicability of this rule. The provisions set forth in this rule shall apply to declaratory ruling requests with respect to the validity or applicability of:

(a) Tax and revenue laws of the State of Oregon to any person, property or state of facts.

(b) Any Department of Revenue administrative rule to any person, property or state of facts.

(2) Definitions for purposes of this rule.

(a) Declaratory Ruling. A declaratory ruling is an advisory opinion or order issued by the department specifying how a tax and revenue law of the State of Oregon or an administrative rule promulgated by the department is to be applied to any person, property or state of facts.

(b) Person. The term person includes an individual, a county assessor or tax collector, trust, estate, partnership, association, joint stock company, corporation, syndicate, group, pool, joint venture, or other unincorporated organization or group. Such term also includes a guardian, trustee, executor, administrator, trustee in bankruptcy, receiver, conservator, or any person acting in a fiduciary capacity.

(3) General practice. Upon petition by an interested person, the department has discretionary authority to issue declaratory rulings. This discretion shall be exercised in the light of all relevant circumstances, including the business or other reasons motivating the transaction, and with a view to issuing rulings only to the extent consistent with the proper administration of the tax laws.

(4) Examples of situations in which declaratory rulings shall not be issued. Generally, the department shall not issue declaratory rulings if:

(a) At the time the ruling is requested the identical issue is involved in a person's return for an earlier tax year and:

(A) That issue is being examined by the department or the courts;

(B) That issue has already been examined by the department and an opinion and order has been issued;

(C) That issue has been examined by the department and the statutory period of limitation for appealing the department's determination has not expired; or

(D) That issue has already been examined by the Oregon Tax Court and a decision has been issued.

(b) The person is considering alternative plans of proposed transactions or is requesting a ruling on a hypothetical situation.

(c) The administrative rule being considered is scheduled for amendment as it relates to the issue involved or, the legislature is considering, or has adopted, legislation which will necessitate revision to the rule as it applies to the tax year involved.

(d) The transaction to be ruled on will not be entered into until some indefinite future time.

(e) The legislature is considering a revision to the statute as it applies to the tax year involved.

(5) Instructions to person requesting a ruling.

(a) A request for a declaratory ruling shall be accompanied by a declaration in the following form: "Under penalties for false swearing, I declare that I have examined this request, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of the requested declaratory ruling are true, correct, and complete." The declaration shall be signed by the person or persons on whose behalf the request is made or by their representative. The person who signs for a corporation shall be an officer of the corporation, an authorized employee or an authorized representative of the corporation regularly employed by the corporation in tax matters who has personal knowledge of the facts. The officer or employee shall be one whose duties are not limited to obtaining a ruling from the department. The person signing for a trust, estate, or partnership shall be a fiduciary or partner who has personal knowledge of the facts.

(b) Each request for a declaratory ruling shall contain a complete statement of all of the facts relating to the transaction. Such facts include: names, addresses, telephone numbers, and personal identification numbers of all interested parties; a full and precise statement of the reasons for the transaction, and a carefully detailed description of the transaction. (The term "all interested parties" does not mean that a list is required of all shareholders of a widely-held corporation requesting a declaratory ruling or a list of employees where a larger number may be involved.) If the request deals with only one step of a larger integrated transaction, the facts, circumstances, etc. relating to the entire transaction must be submitted. In addition, true copies of all contracts, wills, deeds, agreements, instruments, and other documents in the transaction shall be submitted with the request. Original documents, such as contracts, wills, etc., should not be submitted because they become part of the department's file and will not be returned. All material facts and documents shall be included in the taxpayer's letter requesting a ruling or in supplemental letters, or attached to the letter. Material facts furnished to the department orally shall be promptly confirmed by letter to the department with a declaration in the form described in section (5)(a). This confirmation shall be furnished within 30 calendar days to be considered part of the request.

(c) The request shall contain a statement of whether, to the best of the knowledge of the person and the person's representative(s), if any, the identical issue is in a tax return of the person for an earlier tax year and, if so, whether the issue (1) is being examined by the department or (2) has been examined by the department and whether the statutory period of limitation for appealing the department's determination has expired. If, after the request is filed but before a declaratory ruling is issued, the person knows that an examination of the issue by the department has been started, the person shall notify the department of such action. If a return is filed before a ruling is received concerning the issue, a copy of the request shall be attached to the return. This alerts the department's processing center and avoids premature action on the issue.

(d) If the person advocates a particular conclusion, an explanation of the grounds for the assertion shall be furnished, together with a statement of relevant authorities in support of the person's views. The person is encouraged to inform the department and discuss the implications of any legislation, court decisions, or administrative rules that the person determines to be contrary to the position advanced. If the person determines that there are no contrary authorities, a statement to this effect would be helpful in the ruling request. Identification and discussion of contrary authorities will generally enable department personnel to arrive more quickly at a full understanding of the issue and the relevant authorities.

(e) A request for a declaratory ruling shall be sent to the Oregon Department of Revenue, Director's Office, Revenue Building, 955 Center St. N.E., Salem, OR 97301. The request shall clearly indicate what tax program is affected (i.e., personal income tax, corporate excise tax, property tax, timber tax, etc.).

(f) A person who wants to have a hearing on the issue or issues involved shall indicate this in writing when filing the request.

(6)(a) If a request for a declaratory ruling does not comply with all the provisions of this administrative rule, the request shall be acknowledged, and the requirements that have not been met shall be pointed out. If a request for a ruling lacks essential information, the person shall be notified in writing that if the information is not received within 30 calendar days, the request shall be closed. After 30 days, a letter shall be sent by the department to inform the taxpayer that a declaratory ruling will not be issued. If the information is received after the request is closed, it shall be reopened and treated as a new request as of the date the essential information is received.

(b) The department shall process requests for declaratory rulings as expeditiously as possible. Although consideration shall be given to requests for processing by a specified time, the department cannot give assurance that any ruling will be processed by the time requested.

(c) A person may obtain information regarding the status of a request by calling the department representative whose name and telephone number is shown on the acknowledgement of receipt of the request.

(d) A person who receives a declaratory ruling before filing a return about any transaction that has been consummated and that is relevant to the return being filed shall attach a copy of the ruling to the return when it is filed.

(7) Effect of declaratory rulings.

(a) A declaratory ruling issued by the department pertains only to the person, property or state of facts presented in the ruling request and is binding on the department and the requestor with respect to those facts. The ruling is not binding on the department if the facts and circumstances which the ruling addresses are different when the department is auditing a transaction once it has occurred.

(b) A change in the applicable statutory law or an amendment of administrative rules has the effect of an automatic revocation of a declaratory ruling to the extent that the declaratory ruling is inconsistent with the amended statute or administrative rule. The director may also revoke or modify a declaratory ruling by direct letter to the taxpayer.

(c) A person shall not rely on a ruling issued to another person unless that person has substantially identical facts or property as the person who received the prior declaratory ruling. If the person knows of a ruling issued to another person on a similar state of facts, such information shall be included in the declaratory ruling request. The department may use the prior declaratory ruling as a guide in issuing a subsequent declaratory ruling on a similar state of facts unless the circumstances explained at section (4)(c) of this rule exist.

(8)(a) Hearings. A person may request a department hearing on all issues to be addressed by a declaratory ruling. The request must be in writing. If tentative findings have been made by the director or the director's agents prior to the hearing, they will be made available to the petitioner for use at the hearing. At least 30 days before the declaratory ruling hearing, parties to the hearing shall be given written notice of the procedures to be followed in the hearing. The hearing procedures shall be those which the department determines are best suited for the particular issues to be decided.

(b) Oregon Tax Court. A person may appeal a declaratory ruling issued by the department in the Oregon Tax Court and Oregon Supreme Court in the manner provided by ORS 305.445.

(9) Oral advice to persons.

(a) The department shall not issue declaratory rulings from oral requests. The request must be in writing and contain the information required in Section (5). However, representatives of the department ordinarily will discuss with taxpayers or their representatives, inquiries regarding: substantive tax issues; whether the department will issue rulings on particular issues and questions relating to procedural matters about submitting ruling requests. Any discussion of substantive issues shall be at the discretion of the department and shall not be binding on the department.

(b) Oral advice from the department is advisory only and the department is not bound to recognize it in the examination of the person's return.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.105
Hist.: 1-64; 12-31-77; RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 13-1999, f. 12-30-99, cert. ef. 12-31-99; REV 8-2000, f. & cert. ef. 8-3-00

150-305.140

Release of Tax Lien and Clouds on Title

(1) Any request made to the Department for the release of a warrant, where such warrant is not in fact a lien on the title to the real property in question but merely a cloud on the title to such real estate, shall be accompanied by a statement. This statement shall show the facts affecting the title to the real property in question that render the Department's warrant a cloud on the title to such real property, and show the reasons the warrant does not actually constitute a lien thereon. Normally, such request should be accompanied by a current title report. However, the Department may require other documentary proof showing the present condition of the title of the property in question.

(2) Any request made to the Department for the release of the lien of any warrant shall be certified to be true by the taxpayer or by his authorized representative and shall disclose fully the circumstances relative to prior liens, including an estimate of the value of the property subject to the lien, a legal description of this property, a full and complete statement of the amount of all other liens prior to the Department's warrant and the date when such prior liens were acquired, an estimate of the amount to be recovered upon the sale of said property by foreclosure, and make reference to the subsection of ORS 305.140 on which reliance is placed as giving the Department the power to execute a release.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.140
Hist.: 1-64

150-305.140(3)(d)

Release of Lien

(1) The department may issue a release of a lien against real property if the department determines there is no value in the lien or the full value of the lien is realized. This release applies to the property described in the release only, the lien remains against all of the taxpayer's other property.

(2) A release may be requested by any party in interest to a transfer of real property that is subject to a lien of the department. The request must be in writing and state the reason for the release, the circumstances of the transfer and a description of the terms of the transaction. The request must be accompanied by a preliminary title report and a complete legal description of the property to be released. An escrow statement may be included to show the distribution of funds. Other supporting documentation may be required by the department.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.140
Hist.: RD 11-1985, f. 12-26-85, cert. ef. 12-31-85

150-305.145

How to Appeal When the Department Denies a Request for Waiver of Penalty or Interest

(1) Waivers in General. ORS 305.145 allows the department to reduce or cancel any part or all of the interest or penalties imposed by Oregon law in certain cases. If the taxpayer has requested that interest or penalty be waived and the department denies that request, the taxpayer may appeal the denial by requesting a conference with the department.

(2) Appealing a denial when the department exercised its discretionary authority. If the taxpayer agreed that the interest or penalties were lawfully imposed, but the department denied the taxpayer's request for a discretionary waiver of interest or penalties under ORS 305.145(3) or (4), the taxpayer may request a conference within 30 days of the date of the department's notice of denial. The request for conference must be filed with the department as described in OAR 150-305.265(5). If the conference results in a denial of the waiver request, that decision is final and may not be appealed to the Oregon Tax Court.

(3) Appeals based on the accuracy of penalty or interest charges. If a taxpayer believes the interest or penalties were incorrectly imposed or calculated, the taxpayer may request a conference with the department within 30 days of the date of the department's first notice assessing interest or penalty. The conference request must be filed as described in OAR 150-305.265(5). If the conference results in a denial, the taxpayer may appeal the decision to the Oregon Tax Court as provided by ORS 305.275.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.145
Hist.: RD 13-1987, f. 12-18-87, cert. ef. 12-31-87; REV 3-2005, f. 12-30-05, cert. ef. 1-1-06; REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

150-305.145(2)

Accrual of Interest After Waiver

(1) The Department of Revenue will notify the taxpayer in writing if interest is waived under ORS 305.145(1). The taxpayer must pay the amount of the assessment within the appropriate appeal period. If the taxpayer does not pay the balance in full within the applicable appeal period, interest will accrue from that time on the balance due as provided in ORS 314.400(4).

(2) If the balance due is based on a Notice of Assessment the appeal period is 90 days from the date on the notice. If the balance due is based on a Magistrate decision, the appeal period is 60 days from the date of thedecision. If the balance due is based on a Tax Court Judgment, the appeal period is 30 days from the date of the judgment.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.145
Hist.: RD 13-1987, f. 12-18-87, cert. ef. 12-31-87; REV 8-2002, f. & cert. ef. 12-31-02

150-305.145(3)

Discretionary Waiver of Interest

(1) General Policy. The department does not generally waive interest because interest represents a charge for the use of money.

(2) Interest may be waived for good and sufficient cause upon request of the taxpayer as required in OAR 150-305.145(4) section (4).

(a) The department will waive interest charges if the department determines the taxpayer did not have the use of the money on which the interest is charged.

Example 1: Sue mailed her Oregon tax payment to the Internal Revenue Service (IRS) by mistake. The IRS cashed the check and six months later sent the money back to Sue as an overpayment. Two months later, Sue mailed payment to the department. The department will waive interest for the six-month period that Sue did not have use of the money.

(b) The department will waive interest imposed for failure to pay state tax on or before the due date if the taxpayer:

(A) Files an Oregon tax return on or before the due date of the return, excluding extensions;

(B) Submits the Oregon tax return in the same transmission as a federal tax return, using a department-approved alternative to filing a paper return;

(C) Pays any federal tax shown as due on the transmitted federal return on or before the due date using an electronic form of payment such as a credit card, debit card, or electronic funds transfer (ACH Debit);

(D) Pays any tax shown as due on the Oregon return within 30 days of the date shown on the Notice of Assessment sent to the taxpayer;

(E) Establishes to the department's satisfaction that failure to pay Oregon tax was due to a good faith, mistaken belief of the taxpayer that the state tax had been paid; and

(F) Has not received relief under this subsection before.

(c) The waiver of interest provided by subsection (2)(b) of this rule applies only to interest otherwise imposed on unpaid tax and does not include interest imposed on the underpayment of estimated tax.

(3) When interest will not be waived.

(a) The department will not waive interest on a deficiency resulting from changes made to Oregon tax based on any adjustments reported by the Internal Revenue Service (IRS) or another state’s taxing authority, regardless of the time lapse between completion of the IRS or another state’s taxing authority adjustment and the completion of the Oregon audit report. ORS 314.380 and 314.410 require a taxpayer to report to the department a change in the taxpayer's net income as defined under OAR 150-314.380(2)-(B) resulting from an adjustment by the IRS or another taxing authority.

(b) The department will not waive interest to the extent the taxpayer earned interest on the money from another taxing authority.

Example 2: Don mailed his Oregon tax payment with his Idaho return by mistake. Idaho cashed the check and three months later refunded the $1,000 plus $25 of interest. One month later, Don mailed his payment to Oregon and requested a waiver of Oregon's interest charge of $35. The department will waive $10, which is the excess of interest charged over what Don received from Idaho.

(c) The department will not waive interest on underpayment of tax when the taxpayer requests that a refund shown on a delinquent return be applied to a later tax year. ORS 316.583 requires that a refund from a delinquent return that is applied to the next tax year is credited as an estimated payment as of the date the delinquent return was filed.

Example 3: Scott files his 2010 return on February 19, 2012 and requests that his tax year 2010 refund be applied to his tax year 2011 tentative tax. His 2010 tax return was due April 18, 2011. Because he filed his return late, the refund is credited as an estimated payment on February 19, 2012. The interest charged on the underpayment of 2011 estimated tax will not be waived because ORS 316.583 requires that the payment be credited as of the date the delinquent return is filed.

Stat. Auth.: ORS 305.100, 305.145
Stats. Implemented: ORS 305.145, 316.583
Hist.: REV 3-2005, f. 12-30-05, cert. ef. 1-1-06; REV 11-2007, f. 12-28-07, cert. ef. 1-1-08; REV 10-2013, f. 12-26-13, cert. ef. 1-1-14

150-305.145(3)-(A) [Renumbered to 150-305.145(4)(a)]

150-305.145(3)-(C) [Renumbered to 150-305.145(4)(c)]

150-305.145(4)

Discretionary Penalty Waivers

(1) Taxpayers who believe a penalty was imposed improperly may contest the penalty as provided in OAR 150-305.145.

(2) For rules governing the waiver of penalty imposed under ORS 314.402, 316.177 or 316.992 see OAR 150-314.402; ORS 316.177(4); OAR 150-316.177(2), or 150-316.992.

(3)(a) The following penalties are eligible for waiver under this rule:

(A) The five percent penalty under ORS 314.400(1) or 321.560(2) for failure to file a report or return by the due date (five percent failure-to-file penalty);

(B) The five percent penalty under ORS 314.400(1) or 321.560(2) for failure to pay a tax by the due date (five percent failure-to-pay penalty);

(C) The additional 20 percent penalty under ORS 314.400(2)(a) or 321.560(3) for failure to file a report or return within three months after the due date (25 percent failure-to-file penalty);

(D) The additional 25 percent penalty under ORS 314.400(2)(b) for failure to file a report or return more than three months after the due date and the taxpayer receives a Notice of Determination and Assessment (50 percent failure-to-file penalty); and

(E) The 100 percent penalty under ORS 305.992 for failure to file three consecutive reports or returns by the due date of the third year (100 percent failure-to-file penalty).

(b) The following penalties are not eligible for waiver under this rule:

(A) The 100 percent penalty imposed under ORS 305.265(13), 314.400(6), or 321.560(4);

(B) Civil or criminal penalties imposed under ORS Chapter 323 (cigarette and other tobacco products); or

(C) Any penalty if the taxpayer was involved in an "abusive tax shelter" as defined in ORS 314.402(4) for the year at issue or any penalty imposed under ORS 314.403, 314.404 or 314.406.

(4) Taxpayers, or a taxpayer's representative authorized under ORS 305.230, may request that a failure-to-file or failure-to-pay penalty listed in subsection (3)(a) of this rule be waived. A waiver request is timely filed if the department receives it any time before the tax, penalty, and interest are paid in full, or up to one year after the tax, penalty, and interest are paid in full. The department's decision will be based upon the facts and circumstances in each case. To qualify for waiver, the taxpayer must:

(a) Make a written request that explains the reason for the taxpayer's failure to file a return or failure to pay the tax as required by law;

(b) Pay the balance of the account (other than an amount equal to the penalty amount that may be waived under this rule) for the tax period for which waiver is requested; and

(c) Meet all filing requirements for the tax program that assessed the penalty. Filing requirements for the tax program that assessed the penalty may be found in forms, instructions, or other forms of media provided by the department.

(5) Penalty Waivers Due to Circumstance beyond Taxpayer Control. The department will waive all of any penalty listed in subsection (3)(a) of this rule for any tax program if there are circumstances beyond the taxpayer's control that caused the failure to file or pay. The circumstance must have existed at the time the return or payment was due. The return must be filed and the tax must be paid within a reasonable period of time depending on the facts and circumstances of each case.

(a) Circumstances that are accepted by the department as "circumstances beyond the taxpayer's control" include, but are not limited to:

(A) Death or serious illness of the taxpayer or a member of the taxpayer's immediate family;

(B) Destruction by fire, a natural disaster, or other casualty of the taxpayer's home, place of business, or records needed to prepare the returns.

(C) Unavoidable and unforeseen absence of the taxpayer from the state that began before the due date of the return;

(D) A department employee provided erroneous written information to the taxpayer that caused the taxpayer to incur the penalty if:

(i) The taxpayer's reliance on the erroneous written information caused the failure of the taxpayer to pay or file timely;

(ii) The taxpayer supplied the department with complete information connected with the erroneous written information given; and

(iii) The taxpayer could not reasonably be expected to be knowledgeable in the tax matter connected with the erroneous written information; or

(E) The taxpayer's reliance on incorrect advice from a professional the taxpayer could reasonably assume was knowledgeable and experienced in the tax involved if:

(i) The taxpayer's reliance on the advice caused the failure of the taxpayer to pay or file timely;

(ii) The taxpayer supplied the professional with complete information connected with the advice given; and

(iii) The taxpayer could not reasonably be expected to be knowledgeable in the tax matter connected with the erroneous advice.

(b) Circumstances that are not accepted by the department as "circumstances beyond the taxpayer's control" include, but are not limited to:

(A) Reliance on a professional to merely prepare a return on time;

(B) Reliance on an employee of the taxpayer to prepare a return on time;

(C) Inability of the taxpayer to pay the tax unless there is also a cause listed in subsection (5)(a) of this rule.

(6) One-time penalty waiver.

(a) When a taxpayer does not qualify for relief under section (5) of this rule, the department will consider for waiver all of the penalty imposed under ORS 314.400(1) (five percent failure to file or pay penalty), 314.400(2)(a)(A) (25 percent failure-to-file penalty), or 321.560 (five percent failure to file or pay penalty or the 25 percent failure-to-file penalty) for one tax period if the taxpayer has not already received relief under this section for any tax period in the tax program that assessed the penalty, or in a "closely-related" tax program defined in subsection (6)(b) of this rule; and

(A) The taxpayer did not know that the taxpayer was subject to the tax program in which the penalty was imposed; or

(B) Has a history of filing and paying on time.

(b) "Closely-related" tax programs are:

(A) Transit payroll and withholding tax programs authorized under ORS 316.162 to 316.221;

(B) Forest Products Harvest Tax and Small Tract Forestland Severance Tax programs authorized under ORS Chapter 321; or

(C) Cigarette tax and Other Tobacco Products tax programs authorized under ORS Chapter 323.

(7) Payroll Tax Penalty Waivers. Taxes due under ORS 316.162 to 316.221 are collected at the source of payment and are held in trust for eventual payment to the State of Oregon. Because failure to remit trust funds or timely file reports related to trust funds is considered a breach of fiduciary duty, the standards for waiver of penalties imposed for such failures are higher than standards for waiver of penalties for other tax programs. For penalties imposed on withholding or transit payroll taxes due under ORS 316.162 to 316.221 and that do not qualify for waiver under subsections (5) or (6) of this rule, the department will provide waiver of penalties as follows:

(a) The department will waive the entire penalty imposed under ORS 314.400(1) (five percent failure to file or pay penalty) or 314.400(2)(a)(A) (25 percent failure to file penalty) for the most recent quarter due if the taxpayer has not received a penalty in the eight quarters preceding the most recent quarter.

(b) The department will waive half of the penalties imposed under ORS 314.400(1), 314.400(2)(a)(A), and 314.400(2)(a)(B) (50 percent failure-to-file penalty) if a taxpayer files the tax return and pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of the date shown on the Notice of Determination and Tax Assessment.

(c) The department will waive part of the 100 percent failure-to-file penalty imposed under ORS 305.992 as follows:

(A) The department will waive 70 percent of the 100 percent failure-to-file penalty if the taxpayer

(i) Files a withholding or transit district return before receiving a Request to File Notice, Notice and Demand to File, Combined Failure-to-File Notice, or any combination of these notices from the department that relates to the return the taxpayer filed; and

(ii) Pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of filing the return.

(B) The department will waive 50 percent of the 100 percent failure-to-file penalty if a taxpayer:

(i) Files a withholding or transit payroll return after receiving a notice listed in section (7)(c)(A)(i) of this rule; and

(ii) Pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of the date on the most recent notice.

(C) The department will waive 25 percent of the 100 percent failure-to-file penalty if the taxpayer, after receiving a Notice of Determination and Assessment, files the tax return and pays the tax, penalty, and interest as provided in section (4)(b) of this rule within six months of the date of the notice.

(8) Additional Penalty Waivers. For penalties imposed on taxes other than withholding or transit payroll taxes due under ORS 316.162 to 316.221 and that do not qualify for waiver under subsections (5) or (6) of this rule, the department will provide waiver of penalties as follows:

(a) The department will waive half of the penalties imposed under ORS 314.400(1), 314.400(2)(a)(A), and 314.400(2)(a)(B) (50 percent failure-to-file penalty) if a taxpayer files the tax return within 30 days of the date shown on the Notice of Determination and Tax Assessment. The department will not waive this penalty for the tax program or "closely-related" tax program (as defined in subsection (6)(b) of this rule) that assessed the penalty if the taxpayer:

(A) Has not filed as required by the due date of the return (including extensions) for any three of the most recent six filing periods; or

(B) Has received the 100 percent failure-to-file penalty under ORS 305.992.

(b) The department will waive part of the 100 percent failure-to-file penalty imposed under ORS 305.992 as follows:

(A) The department will waive 70 percent of the 100 percent failure-to-file penalty if the taxpayer files a return before receiving a Request to File Notice, Notice and Demand to File, Combined Failure-to-File Notice, or any combination of these notices from the department that relates to the return the taxpayer filed.

(B) The department will waive 50 percent of the 100 percent failure-to-file penalty if the taxpayer files a return after receiving a notice listed in section (8)(b)(A) of this rule.

(C) The department will waive 25 percent of the 100 percent failure-to-file penalty if the taxpayer:

(i) Received a Notice of Determination and Assessment; and

(ii) Files the return (other than transit district or withholding returns) related to the Notice of Determination and Assessment.

(9) Late payments made in connection with electronic filing. The department will waive the entire five percent failure-to-pay penalty imposed under ORS 314.400(1) if the taxpayer:

(a) Files an Oregon tax return on or before the due date of the return, excluding extensions;

(b) Submits the Oregon tax return in the same transmission as a federal tax return, using a department-approved alternative to filing a paper return;

(c) Pays any federal tax shown as due on the transmitted federal return on or before the due date using an electronic form of payment such as a credit card, debit card, or electronic funds transfer (ACH Debit);

(d) Pays any tax shown as due on the Oregon return within 30 days of the date shown on the Notice of Tax Assessment sent to the taxpayer;

(e) Proves to the department that failure to pay Oregon tax was due to a good faith, mistaken belief of the taxpayer that the state tax had been paid; and

(f) Has not received relief under this section before.

(10) The provisions of this rule apply to discretionary waiver requests received on or after July 31, 2007.

Stat. Auth.: ORS 305.100, 305.145
Stats. Implemented: ORS 305.145
Hist.: REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

150-305.150

Closing Agreements

A closing agreement may relate to any taxable period ending prior or subsequent to the date of the agreement. With respect to taxable periods ended prior to the date of the agreement, the matter agreed upon may relate to the total tax liability of the taxpayer, or it may relate to one or more separate items affecting the tax liability of the taxpayer. With respect to any taxable period ending subsequent to the date of the closing agreement, such agreement is subject to any change in or modification of the law enacted subsequent to the date of execution and applicable to such taxable period and each such agreement shall so recite.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.150
Hist.: 1-64

150-305.155

Settlement Offer

(1) As used in this rule:

(a) "Settlement offer" means an offer made by a taxpayer or an authorized representative to satisfy a self-assessed tax liability or tax liability on which appeal rights have expired.

(b) "Completed settlement offer" means a settlement offer that has been accepted by the department and for which final payment of the offered amount has been made.

(c) "Tax liability" means one or more tax years and programs.

(2) A settlement offer must be made in good faith. Fraud or misrepresentation on the part of the taxpayer or authorized representative may invalidate a settlement offer or a completed settlement offer.

(3) Prior to making a settlement offer, a taxpayer must be in compliance with filing requirements for all tax years and tax programs administered by the department. A taxpayer is "in compliance" when all required returns or reports have been filed, whether or not timely, or when, in the absence of a return, an assessment issued by the department under ORS 305.265(10) is considered correct and final by the taxpayer and the department.

(4) For settlement offers submitted on or after October 1, 2001, a taxpayer will only be allowed one completed settlement offer for which the 3-year future compliance requirement under subsection 10 has been satisfied.

(5) The settlement offer must be accompanied by a cashier's check or bankable funds in an amount equal to 5 percent of the total offer. This 5 percent payment will be deposited to the credit of the taxpayer's liability as part of the offer. This payment will not be refunded, even if the offer is not accepted. The taxpayer or authorized representative may withdraw their offer prior to the department's acceptance or rejection of the offer. The 5 percent payment will be refunded in such cases.

(6) The offer must be made by completing the "Application for Settlement Offer" form provided by the department. This form includes a calculation of an acceptable settlement offer, based upon a standard formula determined by the department.

(7) A settlement offer will be reviewed by the department and accepted or rejected based on the department's evaluation of the taxpayer's ability to pay and the anticipated costs of further collection work. Examples of facts and circumstances that may indicate the lack of an "ability to pay" include but are not limited to:

(a) The taxpayer's sources of income or assets are negligible in comparison to the outstanding liability.

(b) The taxpayer owns assets that, in total, are worth less than the settlement offer.

(c) The taxpayer demonstrates an inability to pay the account within two years.

(d) The taxpayer qualifies under "hardship" guidelines based on the financial statement.

(e) The taxpayer verifies an inability to borrow sufficient funds to pay the liability in full. Verification may be made by providing denial letters from lenders, providing a work history and by credit references.

(f) The taxpayer has little or no equity in personal assets, such as stocks, bonds or dividends; retirement funds; automobiles, truck, trailers or other vehicles; or equipment.

(g) The taxpayer has little or no equity in real property, such as a personal residence, farm, houseboat or bare land.

(8) A settlement offer will be deemed accepted when the department sends its written notification to the taxpayer or authorized representative. In the event an offer is rejected, the taxpayer or authorized representative will be promptly notified in writing.

(9) If the settlement offer is accepted, the taxpayer must pay the balance of the offered amount within 10 days of the date of the letter notifying the taxpayer of the acceptance. An election can be made to pay the balance in no more than six equal monthly installments. Payment must be in bankable funds.

(10) The terms of the settlement offer include but are not limited to:

(a) The taxpayer agrees to waive any appeal of the assessment of the tax liabilities that are the subject of the settlement offer under the provisions of ORS 305.280(3); and

(b) There is a 3-year future compliance period during which the taxpayer must file all tax returns that are due and must pay all amounts that have been assessed. The taxpayer must pay the amounts that have been assessed within 90 days of the date of the assessment unless paragraph (c) of this subsection applies. This compliance requirement includes all tax programs administered by the Oregon Department of Revenue. This 3-year compliance period begins when the taxpayer makes final payment of the amount offered.

(c) The taxpayer is not required to pay all amounts due within 90 days of the date they are assessed if the taxpayer files an appeal within 90 days of the assessment date. A taxpayer who files an appeal within 90 days of the assessment date must pay all amounts that are determined to be due within 90 days after the taxpayer's appeal rights have been exhausted or have expired and the liability has become final.

(d) An amount determined to be due under paragraph (c) of this subsection must be paid within 90 days after it has become final even if the appeal is finally resolved after the 3-year compliance period has expired.

(11) In the event that any of the requirements set forth in subsection (10) are violated, collection action may be reinstated on the full amount of the liabilities that were the subject of the settlement offer. See OAR 150-305.265(1) for settlement of disputed tax liabilities.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.155
Hist.: RD 10-1984, f. 12-5-84, cert. ef. 12-31-84; REV 7-1998, f. 11-13-98, cert. ef. 12-31-98; REV 4-2001, f. 9-28-01, cert. ef. 10-1-01

150-305.155(1)(d)

Cancellation of Liabilities Discharged in Bankruptcy

(1) Generally, all tax liabilities which are discharged in a bankruptcy proceeding under the Bankruptcy Reform Act of 1978 shall be cancelled upon the Department's records. The Department shall issue an order cancelling the tax, penalty and interest on such liabilities and all liens of record shall be released.

(2) An exception to this general policy will be made when the department has a recorded lien on real property retained by the taxpayer after the bankruptcy proceeding is closed. Although the department is stayed from taking collection action on the account, nothing prevents the department from receiving payment, as one of the property lienholders, at the time the taxpayer disposes of the property. If the department determines a sufficient opportunity exists to collect state debt at some point in the future, the account will not be canceled nor will the lien be released.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.155
Hist.: RD 16-1982, f. 12-6-82, cert.ef. 12-31-82; RD 10-1984, f. 12-5-84, cert. ef. 12-31-84; RD 4-1991, f. 12-30-91, cert. ef. 12-31-91

150-305.190

Subpoena Issued by the Department

(1) Definitions:

(a) As used in this rule "books and papers" shall mean and include any kind of written, printed, typed, or recorded matter of any kind or nature, however produced or reproduced, including but not limited to: all mechanical, electronic, sound or video recordings or their transcripts; microfilm and microfiche records; papers; service orders; repair orders; agreements; contracts; notes; memoranda; correspondence; letters; telegrams; statements; books; reports; studies; minutes; records; accounting books; maps; plans; drawings; diagrams; photographs; analyses or studies; and all drafts prepared in connection with such items. "Books and papers" also include electronic files and computer stored data.

(b) As used in this rule, "person" shall mean any individual, company, corporation, or other legal entity.

(c) As used in this rule, "director" shall mean the Director of the Oregon Department of Revenue or a designee as provided in ORS 305.057.

(d) As used in this rule, "third party" shall mean a person who is a stranger to a transaction, contract, or proceeding, but is in possession of books and papers or knowledge pertinent to the particular investigation.

(2) The director may issue subpoenas whenever necessary to fulfill the department's statutory responsibilities. ORS 305.190, 314.425.

(a) A subpoena may be issued to any person who: is an Oregon resident or domiciliary; earns income in this state; owns or has an interest in any real or personal property in Oregon; conducts business in Oregon; or has a registered agent in Oregon. A subpoena may also be issued to an officer, employee, or agent who has custody, possession, or control of the books and papers of such a person even if the officer, employee, or agent does not satisfy the conditions of this subsection.

(b) A subpoena issued by the director shall be limited to the needs of the particular investigation, including but not limited to, determining the correct fee or tax liability, collecting or resolving an account, or establishing an appropriate valuation or assessment. A subpoena is also subject to limitations found in ORS 192.550 through 192.590 referring to financial institutions.

(c) Generally, the director will issue a subpoena only after the department has made a written request, and the person has failed to comply within the time specified by the department. Exceptions to making prior written requests will be made if the director deems it necessary to protect the books and papers from destruction, or the department has an immediate need for the information being subpoenaed.

(d) The subpoenaed books and papers shall be produced at the location, time, and date required by the director.

(e) Within five business days from the date of service, the person subpoenaed may request from the director an extension of the time within which to comply with the subpoena.

(f) The department may compensate third parties for the cost of reproducing the books and records subpoenaed at the same rate per page as the department charges the public for reproducing department records (see OAR 150-192.440). The person may comply with the subpoena by providing the originals of the documents subpoenaed to the director. Copies will be made and the originals shall be returned to the person.

(g) At the director's option, electronic files and computer stored data shall be produced in printout form.

(h) The director has designated the department's division administrators as authorized to issue subpoenas.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.190
Hist.: RD 8-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.192

Disclosure of Confidential Information Provided to the Department of Revenue

(1) The definitions in OAR 150-305.190 shall apply to this rule.

(2) The department must notify the provider of the "books and papers" of an intended disclosure more than 33 days in advance of the intended disclosure.

(3) The notice will include a description identifying the documents intended to be disclosed. The taxpayer shall also be advised that any "books and papers" may be disclosed if requested in the judicial process.

(4) The disclosure will not occur until:

(a) Thirty-three days after the notice; or

(b) The date of the final decision of the Tax Court or Supreme Court on a request for an order limiting disclosure.

(5) A notice under this section shall be sent to the provider at its last known address by certified mail. The period for requesting a court order shall start from the date of the mailing of the notice.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.192
Hist.: RD 8-1991, f. 12-30-91, cert. ef. 12-31-91, Renumbered from 150-305.190-(A); RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-305.193

Implied Consent

(1) A "designee" as used in this rule is a person, firm, organization, or agency authorized by a taxpayer to receive the taxpayer's confidential information. Taxpayer consent for the department to disclose to a designee may be in writing, oral, or implied. See OAR 150-314.840.

(2) Without evidence of the filing of written consent to disclose the taxpayer's information, the department may determine that a person is authorized to receive confidential information with respect to a particular tax matter by that person representing to the department that they are authorized to receive the information and revealing to the department knowledge of tax information that is:

(a) Related to the tax matter that is the subject of the inquiry or communication;

(b) Of a nature that is generally known only to the taxpayer; and

(c) Of a nature that taxpayers ordinarily do not share with others except for the purpose of empowering the person to participate in the taxpayer's tax matters. Information disclosed by the department will be limited based on the nature of information a person presents.

(3) The following examples illustrate how the department may conclude that a taxpayer has given implied consent to the department to disclose confidential information.

Example 1: A Certified Public Accountant (CPA) calls the department, states that he is authorized to receive confidential tax information and reveals knowledge of Mary's private tax information from a department billing or notice. The department concludes that Mary has given the department implied consent to disclose information to the CPA relating to that issue since she presumably gave a copy of her billing or notice to the CPA.

Example 2: A Licensed Tax Consultant (LTC) calls the department while preparing Tom and Sue's tax return to confirm estimated tax payments made during the tax year. The practitioner, after representing that Tom and Sue have authorized disclosure, is able to provide the date and amount of each scheduled payment. The department concludes that Tom and Sue have given the department implied consent to confirm the payment information provided since they presumably gave the LTC their tax information.

Example 3: A lawyer qualified to practice in Oregon calls the department wanting to set up a payment arrangement for her client, Ashley. She states that she is representing Ashley and presents knowledge of the tax debt and Ashley's personal financial situation. The department concludes that Ashley has given implied consent to discuss and negotiate a payment plan with the lawyer.

Example 4: While speaking on the telephone with a department customer service representative, Margaret asks if she may have her daughter listen and participate in the conversation on another telephone extension or a speaker phone. The department concludes that Margaret has given consent to disclose her confidential information to her daughter during the telephone call.

Example 5: Carlos comes to the department's walk-in assistance center and brings a friend to help interpret his questions. The department concludes that Carlos has given implied consent to disclose his confidential tax information to his friend during that visit.

Example 6: Jerry, age 19, is stationed overseas with the U.S. Army. His mother calls the department indicating that she is authorized to receive Jerry's confidential tax information and with information from a billing notice issued to Jerry three months previously, along with a copy of Jerry's return. She offers to make full payment on the debt using her credit card, if the department will provide the payoff balance. The department concludes that Jerry has given the department implied consent to provide the balance due to his mother.

Example 7: Jim and Julie file Oregon personal income tax returns jointly, but Jim files a Lane Transit District Self-Employment Tax return in his name only for his Schedule C business. Julie calls the department to discuss a billing notice issued on the LTD return. She tells the department that she performs all bookkeeping services for his business and has the return, notices and knowledge of all business transactions. The department concludes that Jim has given implied consent for the department to disclose information to Julie to resolve the billing notice.

Example 8: Martin, representing that he is an employee in the tax section of XYZ, Inc. authorized to discuss the business's tax matters, calls the department with information from a department billing notice requesting a payoff amount. The department concludes that XYZ, Inc. has given the department implied consent to provide Martin with the payoff amount.

Example 9: ZYX Corporation contracts with Advent Payroll Service to perform all of its payroll functions, including remittance of payroll withholding deposits and quarterly payroll reports. Advent registers with the department to remit ZYX's payments via electronic funds transfer by filing required tax information. The department concludes that ZYX has given the department implied consent to disclose payment-related confidential information to Advent in order to process payments received.

Example 10: Connie, an Elderly Rental Assistance recipient, asks her caseworker from Senior and Disabled Services to contact the department regarding benefits she received from that agency. The caseworker indicates that Connie has authorized her to receive confidential information and demonstrates full knowledge of Connie's ERA claim. The department concludes that Connie has given implied consent for the department to discuss her claim with the caseworker.

Example 11: Joseph electronically filed his individual income tax return. Joseph’s tax return information is sent to an electronic return transmitter (e-file transmitter). The e-file transmitter in turn, sends it to the Internal Revenue Service (IRS) who then forwards it to the department. By receiving Joseph’s tax return information from the e-file transmitter (via the IRS), the department concludes that the taxpayer has provided implied consent for the department to discuss information about Joseph’s return with the transmitter. The types of disclosures the department may make to e-file transmitters about Joseph’s information include, but are not limited to: acknowledgement of the receipt of his e-filed return, the reason for any delay in processing, refund payment dates or delays, and any other information the taxpayer has given to the e-file transmitter for purposes of transmitting such information to the department.

(4) If the department is unable to sufficiently determine that a taxpayer has given express or implied consent to disclose confidential information, written consent will be required.

Example 12: Donna calls the department inquiring as to whether Avis, her mother, received tax refunds during the past two years. Donna indicates that Avis has authorized her to receive confidential information. Although Donna provides Avis' full name, address, and social security number, she does not demonstrate any knowledge of Avis' tax returns or filing history. She does not have any notices or department letters to Avis in her possession. The department concludes that Avis has not given the department implied consent to disclose her confidential tax information to Donna. To receive the information, Donna will need to provide the department with written consent to disclose from Avis.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.193
Hist.: REV 4-2003, f. & cert. ef. 12-31-03; Renumbered from 150-OL 2003, Ch. 541, Sec. 3, REV 5-2004, f. 7-30-04, cert. ef. 7-31-04; REV 6-2008, f. 8-29-08, cert. ef. 8-31-08

150-305.217

When Deduction for Amounts Paid as Wages or Remuneration Permitted

(1) An employer will not be allowed a deduction for wages or payments to individuals for personal services rendered if:

(a) The employer does not file any information returns, such as 1099's or W-2's, as required by federal law, ORS 314.360 or 316.202; or

(b) The employer files information returns for payments made to an individual as if the individual was an independent contractor and upon examination the individual is determined to have actually been an employee.

Example 1: Brian owns a convenience store. Brian hired Elmer to help stock shelves in the evenings. Brian did not issue W-2's for Elmer. Brian's expense for payments made to Elmer for services rendered are not deductible.

Example 2: Assume the same facts in Example 1, except that Brian issued a Form 1099 to Elmer. Upon examination of Brian's return it was determined that Elmer was actually an employee, subject to withholding. Brian's expense for the payments made to Elmer for services rendered are not deductible.

(2) In the case of a failure to file as described in subsection (1)(a) of this rule, the expense will be allowed if the employer can show there was a circumstance beyond the employer's control that caused the failure to file returns as required by law. Refer to OAR 150-305.145(4) for examples of situations that are accepted by the department as a circumstance beyond the employer's control.

(3) In the case of a misclassification as described under subsection (1)(b) of this rule, the expense will be allowed if the employer can show reasonable cause as to why the appropriate returns were not filed. Reasonable cause will be considered if the employer had relied on information from:

(a) Judicial precedents;

(b) Published rulings;

(c) Technical advice memorandums or letter rulings;

(d) Past IRS audits in which there were no assessments of employment tax for amount paid to other individuals who held a similar position;

(e) A recognized practice of the industry;

(f) Advice from someone who would be considered knowledgeable in tax matters; or

(g) Written advice from an employee of the Department of Revenue.

(4) The preceding are factors that would influence the department's decision regarding the existence of reasonable cause. It is not intended to be an exclusive list.

Example 3: Martha owns a hair salon employing Sam as an independent contractor. She issues Sam a Form 1099 at the end of each year showing the amount paid to Sam that year for services rendered. The Internal Revenue Service had examined Martha's payroll in a prior year and no changes or assessments were made to Martha's return regarding her wage expense. Martha produces the audit reports that show the Internal Revenue Service accepted her characterization of Sam as an independent contractor. Therefore, Martha had reasonable cause to classify Sam as an independent contractor.

(5) For the purposes of section (3) of this rule, the evidence of reasonable cause must be clear and convincing.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.217
Hist.: RD 9-1992, f. 12-29-92, cert. ef. 12-31-92; REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

150-305.220(1)

Interest on Deficiencies and Delinquencies

(1) Adjustment to statutory rate. For interest periods beginning on or after January 1, 2013, unless otherwise provided by law, every deficiency and delinquency arising under any law administered by the Department of Revenue will bear interest at the rate of 0.3333 percent per month (4 percent annually). For a fraction of a month, interest will be computed at 0.0110 percent per day. For historic interest rates, see section (4) of this rule.

(2) Interest starting date. The interest starting date for deficiencies and delinquencies will be one day after the due date of the return, excluding extensions.

(3) Interest periods. An interest period is each full month starting with the interest starting date and ending one day before the corresponding date one month later. Interest will be computed on a daily basis for a fraction of a month. The daily rate is based on a 365-day year.

(4) Interest rates. The following table shows interest rates and interest periods used by the Oregon Department of Revenue to compute interest due from taxpayers on deficiencies and delinquencies.

Percentage Rates

Effective date — Annual rate — Monthly rate — Daily rate

Prior to January 1, 1969 — 6 — 0.5 — ***

January 1, 1969 — 8 — 0.6667 — ***

September 13, 1975 — 12 — 1.0 — ***

June 1, 1982 — 18 — 1.5 — 0.0493

August 1, 1986 — 17 — 1.4167 — 0.0466

January 1, 1987 — 16 — 1.3333 — 0.0438

January 1, 1988 — 11 — 0.9167 — 0.0301

January 1, 1993 — 8 — 0.6667 — 0.0219

January 1, 1995 — 10 — 0.8333 — 0.0274

January 1, 1999 — 9 — 0.75 — 0.0247

January 1, 2001 — 10 — 0.8333 — 0.0274

February 1, 200 — 8 — 0.6667 — 0.0219

February 1, 2003 — 7 — 0.5833 — 0.0192

January 1, 2004 — 6 — 0.5 — 0.0164

January 1, 2005 — 5 — 0.4167 — 0.0137

January 1, 2006 — 7 — 0.5833 — 0.0192

January 1, 2007 — 9 — 0.75 — 0.0247

January 1, 2009 — 6 — 0.5 — 0.0164

January 1, 2010 — 5 — 0.4167 — 0.0137

January 1, 2013 — 4 — 0.3333 — 0.0110

(5) Decimal places used in computations. In all computations, the interest rate will consist of six decimal places.

Example A: A 2002 return is filed and a tax of $500 is paid on February 25, 2006. Interest is computed as follows:

4/16/2003 - 1/15/2004 9 mos. @ .5833% = $ 26.25

1/16/2004 - 1/15/2005 12 mos. @ .5% = 30.00

1/16/2005 - 1/15/2006 12 mos. @ .4167% = 25.00

1/16/2006 - 2/15/2006 1 month @ .5833% = 2.92

2/16/2006 - 2/25/2006 10 days @ .0192% = .96

Total interest $ 85.13

The new interest rate, even though effective on the first day of a month, does not apply until the first day of the first interest period that begins after the effective date. In this example, the first interest period begins on the 16th of the month.

Stat. Auth.: ORS 305.100 & 305.220
Stats. Implemented: ORS 305.220
Hist.: RD 2-1986, f. 7-2-86, cert. ef. 8-1-86; RD 8-1986, f. & cert. ef. 12-31-86; RD 14-1987, f. 12-18-87, cert. ef. 1-16-88; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 7-1992, f. & cert. ef. 12-29-92; RD 5-1993, f. 12-30-93, cert. ef. 12-31-93; RD 7-1994, f. 12-15-94, cert. ef. 12-30-94; REV 7-1998, f. 11-13-98, cert. ef. 12-31-98; REV 12-2000, f. & cert. ef. 12-29-00, cert. ef. 12-31-00; REV 9-2001, f. 12-31-01, cert. ef. 2-1-02; REV 9-2002, f. 12-31-02, cert. ef. 1-31-03; REV 4-2003, f. & cert. ef. 12-31-03; REV 10-2004, f. 12-29-04 cert. ef. 12-31-04; REV 5-2005, f. 12-30-05, cert. ef. 1-1-06; REV 11-2006, f. 12-27-06, cert. ef. 1-1-07; REV 16-2008, f. 12-26-08, cert. ef. 1-1-09; REV 9-2009, f. 12-21-09, cert. ef. 1-1-10; REV 10-2012, f. 12-18-12, cert. ef. 1-1-13; REV 3-2013, f. & cert. ef. 3-28-13

150-305.220(2)

Interest on Refunds

(1) Adjustment to statutory rate. For interest periods beginning on or after January 1, 2013, unless specifically provided by statute or by rule, every refund arising under any law administered by the Department of Revenue will bear interest at the rate of 0.3333 percent per month (4 percent annually). For a fraction of a month, interest will be computed at 0.0110 percent per day. For historic rates, see section (6) of this rule.

(2) Interest starting date.

(a) As provided in OAR 150-314.415, the interest starting date for refunds of individual income tax, corporate excise tax, or corporate income tax, is 45 days after the date the tax was paid, 45 days after the return was due or 45 days after the original return was filed, whichever is latest.

(b) The interest starting date for refunds not described in (2)(a) is 45 days after the return was due or 45 days after the date the tax was paid, whichever is later.

(3) Interest periods. An interest period is each full month starting with the interest starting date and ending one day before the corresponding date one month later. Interest will be computed on a daily basis for a fraction of a month. The daily rate is based on a 365 day year.

(4) Interest rates. For interest periods beginning on or after June 1, 1983, the interest rate paid on refunds will be the same as the interest rate charged on deficiencies and delinquencies.

(5) Decimal places used in computations. In all computations, the interest rate will consist of six decimal places.

(6) The following table shows interest rates used by the Oregon Department of Revenue to compute interest due to taxpayers on refunds.

Percentage Rates

Effective date — Annual rate — Monthly rate — Daily rate

January 1, 1969 — 8 — 0.6667 — ***

September 13, 1975 — 6 — 0.5 — ***

June 1, 1982 — 12 — 1.0 — 0.0329

June 1, 1983 — 18 — 1.5 — 0.0493

August 1, 1986 — 17 — 1.4167 — 0.0466

January 1, 1987 — 16 — 1.3333 — 0.0438

January 1, 1988 — 11 — 0.9167 — 0.0301

January 1, 1993 — 8 — 0.6667 — 0.0219

January 1, 1995 — 10 — 0.8333 — 0.0274

January 1, 1999 — 9 — 0.75 — 0.0247

January 1, 2001 — 10 — 0.8333 — 0.0274

February 1, 2002 — 8 — 0.6667 — 0.0219

February 1, 2003 — 7 — 0.5833 — 0.0192

January 1, 2004 — 6 — 0.5 — 0.0164

January 1, 2005 — 5 — 0.4167 — 0.0137

January 1, 2006 — 7 — 0.5833 — 0.0192

January 1, 2007 — 9 — 0.75 — 0.0247

January 1, 2009 — 6 — 0.5 — 0.0164

January 1, 2010 — 5 — 0.4167 — 0.0137

January 1, 2013 — 4 — 0.3333 — 0.0110

Example 1: Debby files her 2002 return on April 15, 2003. Debby later files a 2002 amended return on May 15, 2005, asking for a refund of $500. The refund is paid on July 22, 2005. The interest is computed as follows:

5/30/2003 -1/29/2004 8 mos. @ .5833% = $23.33

1/30/2004 - 1/29/2005 12 mos. @ .5% = 30.00

1/30/2005 - 6/29/2005 5 mos. @ .4167% = 10.42

6/30/2005 - 7/22/2005 23 days @ .0137% = 1.58

Total interest $65.33

The new interest rate, even though effective on the first day of a month, does not apply until the first day of the first interest period that begins after the effective date. In this example, the first interest period begins on the 30th of the month.

Example 2: Tom filed his 2004 return and paid the tax due on April 6, 2005. On November 1, 2006, Tom filed a 2004 amended return to claim a refund of $1,000. The refund was paid on December 11, 2006. The interest starting date is May 30, 2005, the 45th day after the return was due. The interest is computed as follows:

5/30/2005 - 01/29/2006 8 mos. @ .4167% = 33.34

1/30/2006 - 11/29/2006 10 mos. @ .5833% = 58.33

11/30/2006 - 12/11/2006 12 days @ .0192% = 2.30

Total interest $ 93.97

Stat. Auth.: ORS 305.100 & 305.220
Stats. Implemented: ORS 305.220
Hist.: 5-5-82, 6-15-82; 12-31-82, Renumbered from Ch. 16. Or Laws 1982 (2nd SS) to 150-314.415(1)(a); 12-31-85; 12-31-86; Renumbered from 150-314.415(1)(a); RD 15-1987, f. 12-10-87, cert. ef. 12-31-87, Renumbered from 305.220; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91; RD 7-1992, f. & cert. ef. 12-29-92; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93; RD 7-1994, f. 12-15-94, cert. ef. 12-30-94; REV 7-1998, f. 11-13-98, cert. ef. 12-31-98; REV 12-2000, f. & cert. ef. 12-29-00, cert. ef. 12-31-00; REV 9-2001, f. 12-31-01, cert. ef. 2-1-02; REV 9-2002, f. 12-31-02, cert. ef. 1-31-03; REV 4-2003, f. & cert. ef. 12-31-03; REV 10-2004, f. 12-29-04 cert. ef. 12-31-04; REV 5-2005, f. 12-30-05, cert. ef. 1-1-06; REV 11-2006, f. 12-27-06, cert. ef. 1-1-07; REV 11-2007, f. 12-28-07, cert. ef. 1-1-08; REV 16-2008, f. 12-26-08, cert. ef. 1-1-09; REV 9-2009, f. 12-21-09, cert. ef. 1-1-10; REV 10-2012, f. 12-18-12, cert. ef. 1-1-13; REV 3-2013, f. & cert. ef. 3-28-13

150-305.220(3)

Interest Rate Formula Rule

(1) Once a year the director will compare the Oregon interest rate used for deficiencies, delinquencies, and refunds with the interest rate charged by the Internal Revenue Service for deficiencies and delinquencies to which one percent has been added. If the Oregon rate is one percent or more different from the modified federal rate, the director will revise the Oregon rate to the federal rate plus one percent. The comparison will be conducted in July and will use the rates charged by the Internal Revenue Service for the 3rd calendar quarter.

(2) Interest rates established under section (1) will be effective for interest periods beginning on or after January 1, 2004 and for interest periods beginning on or after January 1 of each year thereafter.

Stat. Auth.: ORS 305.100 & 305.220(3)(a)
Stats. Implemented: ORS 305.220
Hist.: RD 10-1984, f. 12-5-84, cert. ef. 12-31-84; RD 8-1986, f. & cert. ef. 12-31-86; RD 14-1987, f. 12-18-87, cert. ef. 1-16-88; RD 2-1989, f. 12-18-89, cert. ef. 12-31-89; RD 4-1991, f. 12-30-91, cert. ef. 12-31-91; REV 9-2002, f. 12-31-02, cert. ef. 1-31-03; REV 2-2003, f. & cert. ef. 7-31-03

150-305.222

Defines Order for Purposes of Interest Rate Increase

(1) If tax is not paid within 60 days after the date an individual is notified of a tax delinquency, the interest rate imposed by ORS 305.220 is increased by one-third of one percent per month (4% annually.) The interest is also increased after 60 days for tax due, if not paid or appealed, on a notice of assessment following a deficiency, or a final order issued by the Tax Court or Supreme Court that affirms the deficiency.

(2) For purposes of ORS 305.222, an order is defined as:

(a) A Decision and Judgment issued under a small claims procedure in the Magistrate Division of the Oregon Tax Court,

(b) Any Decision or Stipulated Judgment issued by the Magistrate Division of the Oregon Tax Court,

(c) A Judgment issued by the Regular Division of the Oregon Tax Court, or

(d) A Judgment issued by the Oregon Supreme Court.

Example 1: Clyde timely files his current year return on April 15, but does not pay the tax shown as due. The department processes the return and sends a notice of tax due on April 28. Additional interest is charged beginning on the 61st day (June 28) after the department issues the notice.

Example 2: Assume the same facts as Example 1, except the return is adjusted in processing and Clyde receives a notice of deficiency for additional tax due. No payment is received and a notice of assessment is issued 30 days later. The interest rate is increased beginning 61 days from the assessment date if the tax is not paid or appealed.

Example 3: Assume the same facts as Example 2, except that Clyde appeals the assessment to the Magistrate Division of the Oregon Tax Court and chooses a small claims procedure. The Decision and Judgment issued by the Magistrate affirms the tax due. If payment of the tax is not made within 60 days of the Decision and Judgment, interest is increased on the 61st day.

Example 4: Assume the same facts as Example 3, except that Clyde appeals to the Magistrate Division of the Oregon Tax Court and chooses a standard case. The Magistrate Division issues a Decision that upholds the assessment. Additional interest is charged beginning 61 days after the date of the Decision, if the tax is not paid and no appeal is filed.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.222
Hist.: REV 8-2002 f. & cert. ef. 12-31-02

150-305.222(3)

Interest Rate Increase -- Jurisdictional Only Appeals

For purposes of ORS 305.222(3), an appeal to the Oregon Tax Court must be one in which there is jurisdiction to consider the merits of the issue. In an appeal where the court must first determine whether it has jurisdiction to consider the issues, the increased rate of interest will commence on the 61st day after the date of the assessment. If it is determined that the court has jurisdiction to consider the merits of the issue, the rate of interest will be retroactively adjusted to the lower rate until a final decision is made.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.222
Hist.: RD 7-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 7-1999, f. 12-1-99, cert. ef. 12-31-99

150-305.228

Penalty for Dishonored Checks

(1) A penalty on dishonored checks will be assessed in the amount of $25.00 or three times the amount of the check, whichever is greater, but not to exceed $500.00. This is in addition to all other penalties provided by statute.

(2) This penalty will be imposed on a dishonored check if a prior dishonored has been tendered by any individual, firm, corporation, company, association, copartnership, estate, trust, trustee, receiver syndicate or any group or combination acting as a unit to the Department of Revenue within the immediately preceding two years. Checks tendered in the same envelope will be considered a single occurrence for the purpose of determining if a prior dishonored check has been received.

(3) This penalty will be assessed on all dishonored checks to the department including, but not limited to:

(a) Advance deposits on withholding accounts.

(b) Estimated tax payments for personal income and corporate excise tax.

(c) Payments to the department for transfer to other agencies or governmental units.

(4) For the purposes of this rule, "check" includes checks, drafts, orders and electronic funds transfers.

(5) The department may waive all of the penalty if reasonable basis exists. "Reasonable basis" means any situation in which circumstances beyond the taxpayer's reasonable ability to control resulted in the refusal to honor the check. In determining reasonable basis for waiving the penalty the department will examine all facts and circumstances. Examples of reasonable basis for waiver include, but are not limited to:

(a) The bank returns the check to the payee in error.

(b) The taxpayer issues a stop payment order for presumably lost or stolen checks that are later located and processed.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.228
Hist.: RD 11-1985, f. 12-26-85, cert. ef. 12-31-85; RD 4-1991, f. 12-30-91, cert. ef. 12-31-91; REV 6-1998, f. 11-13-98, cert. ef. 12-31-98; REV 8-2001, f. & cert. ef. 12-31-01

150-305.230

Representation of Taxpayers before the Department of Revenue

(1) Application of ORS 305.230. The provisions of ORS 305.230 apply to all administrative proceedings before the Department of Revenue. Only those individuals who qualify under ORS 305.230 and this rule may represent the taxpayer.

(2) Individuals Authorized to Represent by Department Rule. The following individuals may represent the taxpayer before the department unless the individual is prohibited from representing the taxpayer by other Oregon law:

(a) An adult immediate family member of the taxpayer may represent the taxpayer.

(b) The taxpayer's registered domestic partner may represent the taxpayer.

(c) A regular full-time employee of an individual employer may represent the employer.

(d) A general partner or a regular full-time employee of a partnership may represent the partnership. For general representation rules for partnerships see OAR 150-305.242(2) and 150-305.242(5).

(e) An officer or a regular full-time employee of a corporation (including a parent, subsidiary, or other affiliated corporation), association, or organized group may represent the corporation, association, or organized group.

(f) Any shareholder in an S corporation may be designated to represent that S corporation as the tax matters shareholder.

(g) Any tax matters shareholder or any shareholder of an S corporation may represent another shareholder or group of shareholders of that S corporation in matters related to adjustments of items that flow through from the S corporation to the shareholder’s return.

(h) Limited Liability Company (LLC) classified as a corporation. A member-manager, a non-member manager, or a regular full-time employee of the LLC may represent the LLC.

(i) Limited Liability Company classified as a partnership. Any member with management authority may represent the LLC (including a member in a member-managed LLC). Any regular, full-time employee of the LLC may represent the LLC. If the LLC has no members with management authority, then any member may represent the LLC (see ORS 63.130 and Treas. Reg. § 301.6231(a)(7)-2).

(j) A regular full-time employee of a trust, receivership, guardianship, or estate may represent the trust, receivership, guardianship, or estate.

(k) An officer or a regular employee of a governmental unit, agency, or authority may represent the governmental unit, agency, or authority in the course of his or her official duties.

(l) An individual may represent any individual or entity that is outside the United States before department personnel when such representation takes place outside the United States.

(m) An individual who prepares and signs a taxpayer's tax return as the preparer, or who prepares a tax return but is not required (by the instructions to the tax return or by rule) to sign the tax return, may represent the taxpayer during an examination of the tax year or period covered by that tax return. This provision does not permit such individuals to represent taxpayers, regardless of the circumstances, before conference officers, revenue agents, legal counsel or similar department employees.

(n) A taxpayer's authorized agent may represent the taxpayer in proceedings relating to the property tax assessment of designated utilities and companies by the Oregon Department of Revenue under ORS 308.505 through 308.665 and 308.805 through 308.820. For purposes of this rule, an "authorized agent" means a person who is authorized by a company assessed under ORS 308.505 to 308.665 and 308.805 to 308.820 to transact all business related to the filing or processing of an annual statement filed as required by ORS 308.525 or all business related to the filing of a request for a director's conference under ORS 308.595.

(o) Persons authorized to represent in an ad valorem property tax conference or proceeding under ORS 305.230(1)(d), any person licensed by the Oregon State Board of Tax Practitioners, and consulting foresters may represent a taxpayer in any proceeding with respect to taxes imposed under ORS Chapter 321. For purposes of this rule, "consulting forester" means a person who is engaged by the taxpayer to render expert or professional advice in forest management related matters.

(p) The director may, subject to restrictions imposed under other Oregon law, authorize an individual who is not otherwise eligible under this rule to represent a taxpayer before the department. The sole fact that an individual does not qualify under another section of this rule is not an adequate reason to request special permission to represent a taxpayer.

(3) Revocation of Authorization. The department, in its discretion, may revoke the authority to represent a taxpayer granted under section (2) of this rule.

(4) Representation by a Tax Matters Shareholder.

(a) A tax matters shareholder may be designated to represent an S corporation before the Department of Revenue in any conference or proceeding with respect to the administration of any tax on or measured by net income.

(b) An S corporation that elects to designate a tax matters shareholder as its authorized representative in proceedings before the department for issues relating to the S corporation adjustments on a Notice of Deficiency must make the designation as provided in this rule.

(c) The tax matters shareholder designated for Oregon purposes may be the federal tax matters shareholder or may be another shareholder, and must be a shareholder who is:

(A) A shareholder in the S corporation at some time during the taxable year to which the Notice of Deficiency pertains; or

(B) A shareholder in the S corporation at the time the designation is made.

(d) In order to designate a tax matters shareholder, an S corporation must file a signed statement with the department. The statement must:

(A) Identify the shareholders making the designation by name, address, and social security number;

(B) Identify the S corporation and the designated shareholder by name, address, and taxpayer identification number;

(C) Declare that the statement is a designation of a tax matters shareholder for the taxable year to which the Notice of Deficiency relates; and

(D) Authorize the tax matters shareholder as a qualified representative under ORS 305.230 and identify the taxable year(s) of authorization.

(e) Only one tax matters shareholder may be designated and authorized to represent the corporation for each examination at the S corporation level which results in a Notice of Deficiency to the corporation.

(f) If a notice explaining the S corporation adjustments is mailed by the department to the tax matters shareholder with respect to any S corporation taxable year, the tax matters shareholder must supply the department with the name, address, ownership percentage and taxpayer identification number of each person who was a shareholder in the S corporation at any time during the taxable year, unless that information was provided in the S corporation return for that year.

(g) The tax matters shareholder for Oregon will bind the S corporation with respect to the proceedings between the department and the S corporation whose tax liability is in dispute. When appealing on behalf of the S corporation, the tax matters shareholder may exercise any administrative remedy before the department allowed by Oregon law.

(h) Other actions of the tax matters shareholder that are binding on the S corporation include, but are not limited to:

(A) Consent to the extension of the statute of limitations regarding an S corporation return.

(B) Making a settlement offer to the department.

(C) Acceptance of a closing agreement with the department.

(D) Consent to time and place of any appeals proceedings.

(5) S corporation Shareholder Representation.

(a) When the treatment of S corporation items on a shareholder's return is consistent with the treatment of that item on the S corporation return and results in a deficiency, a tax matters shareholder or any shareholder of that S corporation may be designated to represent a shareholder or group of shareholders of that S corporation before the Department of Revenue in any conference or proceeding with respect to the administration of any tax on or measured by net income. All shareholders or groups of shareholders are not required to designate the same representative.

(b) A shareholder or group of shareholders that elect to designate an authorized representative in proceedings before the department for issues relating to the S corporation adjustments on a Notice of Deficiency must make the designation as provided in this rule.

(c) If the representative designated for Oregon purposes is a shareholder, the representative may be the tax matters shareholder or another shareholder, and must be a shareholder who is:

(A) A shareholder in the S corporation at some time during the taxable year to which the Notice of Deficiency pertains; or

(B) A shareholder in the S corporation at the time the designation is made.

(d) In order to designate a representative, a shareholder or group of shareholders of an S corporation must file a signed statement with the department. The statement must be signed by each shareholder electing that representative and:

(A) Identify the name, address, and social security number of each shareholder electing the representative;

(B) Identify the S corporation and the representative by name, address, and taxpayer identification number;

(C) Declare that the statement is a designation for the taxable year to which the Notice of Deficiency relates; and

(D) Authorize the representative as a qualified representative under ORS 305.230 and identify the taxable year(s) of authorization. The shareholder or group of shareholders may authorize the representative to represent the shareholders for issues other than S corporation issues that are heard during the same appeal with any S corporation adjustments.

(e) A shareholder or group of shareholders may not designate more than one representative for an appeal. While different shareholders can designate different representatives, each cannot not have more than one representative.

(f) If a group of shareholders has the same representative and has filed an appeal requesting a conference for the same S corporation adjustment the appeal will be resolved in a single conference.

(g) Shareholders who do not designate a representative as provided in this rule may appeal their Notice of Deficiency by following the administrative remedies under ORS 305.265 and the related rules.

(h) The representative will bind all shareholders who have made the designation under this section to all actions with respect to the proceedings between the department and the shareholder whose tax liability is in dispute. Any shareholder who has designated a representative may participate in any level of the administrative proceedings.

Example: Assume an S corporation with 10 shareholders has been examined and each shareholder receives a Notice of Deficiency. If 8 shareholders designate the same representative, their appeal will be heard collectively. If the representative requests a conference, the conference decision will apply to all 8 shareholders (all 8 shareholders may participate). The other 2 shareholders may appeal their cases individually because they did not make the election to be represented by the same representative.

(i) Other actions of the representative that are binding on the shareholders who have made the designation include, but are not limited to:

(A) Consent to the extension of the statute of limitations regarding S corporation items with respect to all electing shareholders.

(B) Making a settlement offer to the department.

(C) Acceptance of a closing agreement with the department.

(D) Consent to time and place of any appeals proceedings.

(6) Limited Liability Companies. When a limited liability company (LLC) has elected to be classified as a corporation and has made an S corporation election, section (4) applies to the LLC. When applying section (4) to an LLC, LLC members are treated as shareholders.

Stat. Auth.: ORS 305.100, 305.230
Stats. Implemented: ORS 305.230; ORS 63.810
Hist.: 12-31-88; RD 8-1983, f. 12-20-83, cert. ef. 12-31-83; RD 5-1986, f. & cert. ef. 12-31-86; RD 2-1988, f. 1-11-88, cert. ef. 1-15-88; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 3-2005, f. 12-30-05, cert. ef. 1-1-06; REV 10-2006, f. 12-27-06, cert. ef. 1-1-07; REV 10-2010, f. 7-23-10, cert. ef. 7-31-10; REV 10-2013, f. 12-26-13, cert. ef. 1-1-14

150-305.242(2)

Designation of Oregon Tax Matters Partner

(1) A partner who elects to designate a tax matters partner as their authorized representative in proceedings before the Department of Revenue for issues relating to the partnership adjustments on a notice of deficiency shall make the designation as provided in this rule.

(2) The tax matters partner designated for Oregon purposes may be the federal tax matters partner or may be another partner, but the designation for Oregon shall only be made in accordance with ORS 305.242(2) and this rule. The tax matters partner shall be a partner who is:

(a) A general partner in the partnership at some time during the taxable year to which the notice of deficiency pertains; or

(b) A general partner in the partnership at the time the designation is made.

(3) Information required. The partner shall designate a tax matters partner by filing with the Department of Revenue within 30 days of the date on the Notice of Deficiency a signed statement. The statement shall:

(a) Identify the partner making the designation by name, address, and social security number.

(b) Identify the partnership and the designated partner by name, address, and taxpayer identification number.

(c) Declare that the statement is a designation of a tax matters partner for the taxable year to which the notice of deficiency relates.

(d) Authorize the tax matters partner as a qualified representative under ORS 305.230 and identify the taxable year(s) of authorization. The partner may authorize the tax matters partner to represent the partner for issues other than partnership issues only by making the election with this authorization.

(4) Only one tax matters partner shall be designated and authorized to represent the partners for each examination at the partnership level which results in a notice of deficiency to the partners.

(5) Partners who do not designate a tax matters partner as provided in this rule may appeal their notice of deficiency by following the administrative remedies under ORS 305.265 and the rules pertaining thereto.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.242
Hist.: RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.242(5)

Binding Actions of the Tax Matters Partner

The provisions of this rule dealing with hearings apply to hearing requests filed with the Department of Revenue prior to September 1, 1997. See OAR 150-305.525 for information about hearing requests filed on or after September 1, 1997.

(1) The tax matters partner for Oregon shall bind all partners who have made the designation under ORS 305.242(1) to all actions of the tax matters partner with respect to the proceedings between the Department of Revenue and the partner whose tax liability is in dispute. When appealing on behalf of the partners, the tax matters partner may exercise any administrative remedy before the department allowed by Oregon law except that all electing partners are considered to have appealed under the same action. Any partner who has designated a tax matters partner may participate in any level of the administrative proceedings.

Example: Assume a partnership with 100 partners has been examined and each partner receives a notice of deficiency. If 90 partners designate a tax matters partner, their appeal will be heard collectively. If the tax matters partner chooses a conference, the conference decision will apply to all 90 partners (all 90 partners may participate). If the partners want to appeal the conference decision, they must appeal at a partnership level proceeding. If the tax matters partner requests a hearing, the hearing decision will apply to all 90 partners. The other 10 partners must appeal their cases individually because they did not make the election to be represented by the tax matters partner within 30 days of the notice.

(2) Other actions of the tax matters partner that are binding on the partners who have made the designation include, but are not limited to:

(a) Consent to the extension of the statute of limitations with respect to all electing partners;

(b) Making a settlement offer to the Department of Revenue;

(c) Acceptance of a closing agreement with the Department of Revenue;

(d) Consent to time and place of any appeals proceedings.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.242
Hist.: RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-305.265(1)

Compromise of a Disputed Liability

(1) A disputed liability is one where the taxpayer sends written objection to a notice of deficiency, appeals a notice of assessment, or appeals a determination by the director of the Department of Revenue.

(2) Compromise of a disputed liability cannot be accomplished by submitting a conditional partial payment. If a partial conditional payment is made in an attempt to compromise a disputed liability prior to a written compromise having been agreed upon, and the payment is inadvertently processed by the Department, the amount of the conditional partial payment shall be refunded with interest. A partial payment that is submitted without conditions and that does not purport to be in full satisfaction of the disputed liability may be retained by the department and applied against the disputed liability pending resolution of the dispute.

(3) This rule doesn't preclude settlement by negotiation and signing of a closing agreement. For compromise of an undisputed liability, see OAR 150-305.155. See ORS 305.150 for closing agreements.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 12-1984, f. 12-5-84, cert. ef. 12-31-84; RD 10-1986, f. & cert. ef. 12-31-86; REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

150-305.265(1)-(B)

Appeals of Interest Charged on the Underpayment of Estimated Tax

(1) Appeals based on accuracy. Interest on underpayment of estimated tax imposed under the provisions of ORS 316.587 or 314.525 must be appealed as if it were a deficiency, as defined in OAR 305.265(2)-(A). A taxpayer who disagrees with either the correctness of the imposition or the calculation of interest may request a conference or file a written objection with the department. The conference request or written objection must be made in the manner prescribed under OAR 150-305.265(5). If the taxpayer does not agree with the result of the conference or the written objection, the taxpayer may appeal the decision to the Oregon Tax Court as provided by ORS 305.275.

(2) Discretionary waiver. A taxpayer who agrees that interest on underpayment of estimated tax was correctly imposed, but who believes there is good and sufficient cause for a waiver of all or part of the interest, may file a request for waiver of interest under OAR 150-305.145(3). A denial by the department of a discretionary waiver request under that provision is final and may not be appealed to the Oregon Tax Court.

(3) Effective date: The provisions of this rule apply to appeals of interest on underpayment of estimated tax filed with the department on or after January 1, 1998.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: Rev 5-1998, f. 7-14-98, cert. ef. 7-15-98; REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

150-305.265(2)-(A)

"Deficiency" Defined

A deficiency is the amount by which the tax as correctly computed exceeds the tax, if any, reported by the taxpayer. If, after the original deficiency has been assessed, subsequent information shows the correct amount of tax to be greater than previously determined, an additional deficiency arises.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: 12-31-77; RD 12-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-305.265(2)?

150-305.265(2)-(B)

Notices of Deficiency and Assessment Mailed When Authorization to Represent Signed

(1) If a written authorization to represent the taxpayer is filed with the department, original Notices of Deficiency (as referred to by ORS 305.265(2)) and original Notices of Assessment (as referred to by ORS 305.265(7)) shall be sent directly to the taxpayer at the last-known address as required by ORS 305.265(11). Where the taxpayer has a guardian or conservator, Notices of Deficiency and Assessment shall be sent to the guardian or conservator.

(2) If the authorized representative has a fiduciary relationship to the taxpayer, original Notices of Deficiency and original Notices of Assessment will be sent to the personal representative as defined in ORS 111.005.

(3) For trusts, original Notices of Deficiency and original Notices of Assessment shall be sent directly to the trustee.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

150-305.265(2)-(C)

Reopening an Audit

(1) Policy. When an issue has been audited, a position taken, and the case closed, that issue may be reopened for audit if there is evidence of fraud, malfeasance, concealment, misrepresentation of material fact, omission of income, or collusion either by the tax payer or by the taxpayer and a representative of the department. If income or expenses are claimed on a return from an outside entity, those items of income or expenses may be adjusted if the entity is later audited and adjustments are made.

(2) Definitions. Audited. An issue is not considered to have been "audited" unless the department has examined the issue and verified supporting documentation. Requesting a copy of a federal schedule is not an audit.

Example 1: A taxpayer reports $18,000 income from self-employment on a 1987 return. The department examines the return and reconstructs income using a T-account analysis. An adjustment of $5,000 is made to the return for underreported income.

In 1989, the department receives a federal audit report (RAR). The IRS discovered $15,000 of unreported income. Because the case involves omitted income, that issue may be reaudited by the department.

Example 2: A taxpayer claims a credit for household and dependent care expenses on a 1987 Oregon return. The taxpayer did not attach a copy of the required federal form 2441 to the return. The return suspends in processing and the department denies the credit and adjusts the return. The taxpayer submits the required form in response to a department notice and the credit is allowed.

In 1989, the department receives a federal audit report (RAR). The IRS disallowed the household and dependent care credit because the taxpayer could not document expenses claimed in computing the credit. This issue was not previously "audited" by the department since dependent care expenses had not been examined or verified. The household and dependent care credit may be audited by the department.

Example 3: A taxpayer claims a $14,000 casualty loss on a 1987 return. Upon request by the department, the taxpayer provides substantiation of the loss in the form of written records, insurance documents, etc. After an examination and review of documentation, the department allows the casualty loss in full. No adjustments are made to the return.

In 1989, the department receives a federal audit report (RAR) in which the IRS has allowed a casualty loss of only $10,000 on the 1987 return. Additionally, $3,000 of employee business expenses have been disallowed by the IRS. Because the department has previously audited the casualty loss, and there is not evidence of fraud, malfeasance, collusion, concealment, misrepresentation, or omission of income, the department will not reaudit that issue. The employee business expenses may be audited by the department.

Example 4: In 1990, the department audits the taxpayer's 1988 personal income tax return. As a shareholder in an S corporation, the taxpayer claimed a loss from the S corporation return. As part of the audit, the auditor looks at the S corporation return and verifies that the taxpayer has sufficient basis to deduct the loss. The auditor does not audit the S corporation return nor is the loss from the S corporation audited.

In November, 1990 the S corporation return for tax year 1988 is audited by the department. Due to the adjustments to the S corporation return, the taxpayer no longer has sufficient basis to deduct the 1988 loss. The taxpayer's 1988 return will be adjusted to disallow the loss. Even though the taxpayer's return has previously been audited, the S corporation return had not been audited. The adjustments made to the S corporation return will flow through and be made on the individual shareholder's return.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

150-305.265(4)(a)

Adjustments Included in Deficiency Notice When Federal Audit Report Received

See OAR 150-314.410(4) which explains what adjustments can be included in a Notice of Deficiency when a federal audit report is received.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 7-1989, f. 12-18-89, cert. ef. 12-31-89

150-305.265(5)

Language Used to Request a Conference or File Written Objections

(1) Requesting a Conference. A conference request shall be in writing, and shall be mailed to the department within 30 days of the date on the Notice of Deficiency. It shall be addressed to the Oregon Department of Revenue, 955 Center Street NE, Salem, OR 97301, and shall state the reason for the protest as well as stating in what respect the determination is erroneous. Any language indicating that a taxpayer is requesting an opportunity to meet with a department representative to discuss an adjustment shall be considered a conference request.

(2) Filing Written Objections.

(a) If a taxpayer disagrees with a deficiency notice, and does not want a conference, the taxpayer may file written objections with the department.

(b) To file a written objection, the taxpayer shall write to the department within 30 days of the date on the deficiency notice. This protest shall be addressed to the Oregon Department of Revenue, 955 Center Street NE, Salem, OR 97301, and shall explain the reason for the disagreement.

(c) Any language indicating that a taxpayer disagrees with an adjustment but which doesn't convey an intent to meet with a department representative shall be construed as written objections.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 12-1985, f. 12-16-85, cert. ef. 12-31-85; RD 10-1986, f. & cert. ef. 12-31-86, Renumbered from 150-305.265(5)-(B); RD 7-1991, f. 12-30-91, cert. ef. 12-31-91; REV 5-2000, f. & cert. ef. 8-3-00

150-305.265(6)-(A)

Conferences: Purpose and Procedure

(1) A conference is a meeting with a department conference officer who reviews the reasons for the adjustment with the taxpayer. The purpose of a conference is to allow a person to obtain an informal department review of a deficiency notice or other department action if the person believes the notice or action is incorrect. Assessments related to personal income tax, corporate excise tax, or corporate income tax, including assessments issued under ORS 305.265(10) for failure to file a report or return, generally cannot be appealed using the conference process but must instead be appealed to the Oregon Tax Court. This provision does not prohibit use to the conference process for assessments issued for failure to file a withholding tax report. See ORS 316.207(4)(a).

(2) A conference may be requested by a taxpayer in any of the following instances:

(a) From a determination of tax deficiency, interest, or penalty arising under ORS Chapters 118, 119, 314, 316, 317, 318, or 321.

(b) From a denial in whole or in part of a refund requested under ORS 305.270 or of an elderly rental assistance claim under 310.657.

(c) From a determination of cigarette tax under ORS Chapter 323.

(d) From a department action concerning any program administered by the department.

(3) Payment of a deficiency to stop the accumulation of interest will not affect a conference request or decision. If a conference decision favors the taxpayer, the amount of the payment determined to be owed to the taxpayer is refunded with interest.

(4) Conferences are informal. The taxpayer may raise any point of fact or law that has a bearing on the matter. The taxpayer may use witnesses. Any competent person with relevant information may be allowed to testify. A witness qualified as an expert by knowledge, skill, experience, training, or education may give an opinion.

(5) A taxpayer may be represented by himself or herself, an attorney-at-law, certified public accountant, licensed tax consultant, public accountant, or other person authorized under ORS 305.230.

(6) For purposes of ORS 305.265(6), the department employee who made the adjustment to the taxpayer's return may not also conduct a conference related to the adjustment. However, the employee may attend the conference if so requested by the conference officer.

(7) Conferences are held in person in Salem or such other place as may be designated by the department or by telephone. The conference officer directs the conference proceedings. The person requesting the conference is given an opportunity to explain the facts, as the individual knows them, and to ask relevant questions of any conference participant. In all cases involving a conference granted under this rule, a written decision will be sent to the taxpayer. The decision will generally be sent by regular mail unless the taxpayer requests that the letter be sent by certified mail.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: 12-31-77; TC 10-1978, f. 12-5-78, cert. ef. 12-31-78; RD 12-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-305.265(6); RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91; REV 5-2000, f. & cert. ef. 8-3-00

150-305.265(6)-(B)

Written Objections: Procedures

(1) When the department receives written objections, a department representative shall review the objections and try to resolve the disagreement. The representative shall then reach a decision regarding the written objections.

(2) Once a decision has been reached the department shall advise the taxpayer of the decision by letter.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 12-1985, f. 12-16-85, cert. ef. 12-31-85; RD 7-1991, f. 12-30-91, cert. ef. 12-31-91

150-305.265(10)

Assessing Tax on Failure to File

(1) The law places an affirmative duty on the taxpayer to file a timely and correct return and directs the department to take steps to require compliance.

(2) General. In the case of a failure by the taxpayer to file a return, the department shall determine the tax liability of the taxpayer according to the best of its information and belief. "Best of its information and belief" means that the department shall use evidence on which a reasonable person would rely in determining the tax to be assessed by the department because of the taxpayer's failure to file a return. Sources of information include but are not limited to the taxpayer's federal return for the year in question, state returns filed by the taxpayer, any partnership return naming the taxpayer as a partner, information returns, the income of returns of taxpayers similarly situated, or withholding returns (in the case of individual taxpayers).

(3) Personal Income Tax.

(a) The determination of income, exemptions, and other provisions shall be made in accordance with Internal Revenue Code rules for the year in question. When the department has knowledge of a federal return having been filed jointly for the year in question, a joint assessment shall be made. When the department's best information indicates the taxpayer is married, and a joint federal return has not been filed, the filing status shall be married filing separate. In all other cases the filing status shall be single.

(b) The standard deduction shall be allowed unless itemized deductions are claimed on the taxpayer's federal return. Also, a deduction shall be allowed for the amount of federal tax computed on the federal return, or in absence of such a return, the allowable federal tax shall be calculated by the department to provide an automatic deduction for the proper amount of accrued federal tax, whether paid or not.

(c) An exemption credit(s) shall be allowed based on the filing status determined under this rule. No other credit shall be allowed in determining an assessment unless specific information that the taxpayer is entitled to a credit is available.

(4) Withholding Tax. When an employer fails to file a combined tax report, the department shall determine the withholding tax liability of the employer using information from Employment Department records, federal tax returns, returns filed by the employer for prior reporting periods and any other information available.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: 12-31-77; RD 12-1985, f. 12-16-85, cert. ef. 12-31-85, Renumbered from 150-305.265(9)?; RD 7-1994, f. 12-15-94, cert. ef. 12-30-94; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-305.265(11)

Last Known Address

(1) Notices of Deficiency and Notices of Assessment are required to be mailed to the last known address.

(2) The department shall use the address on the most recently filed return as the last known address unless the taxpayer has notified the department in writing or through a documented phone call that this address is incorrect. A documented phone call is a contemporaneous record of the substance of the phone call, made by the taxpayer, the taxpayer's authorized representative or an employee of the department and must include the date and time of the call and the names of the parties involved in the conversation.

(3) When the department receives information that the last known address is incorrect or outdated, the department may use the following to determine the last known address:

(a) Address Information Request which is a letter sent to the United States Postal Service by the Department of Revenue verifying the taxpayer's address.

(b) IRS information when the date of the IRS information is more recent than the department's information.

(c) Address information received from the United States Postal Service or from a service using an address-updating method approved by the United States Postal Service.

(d) Any other third party information can be accepted only after contact is made with the taxpayer and the taxpayer has verified that it is a permanent address.

Example 1: The department sends a letter to X Company to obtain employment information regarding Alice, a taxpayer that is employed by X Company. When X Company responds, they indicate a new address for Alice. The department must contact Alice to verify that the new address is correct before Alice's last known address is changed.

(4) If a taxpayer has never filed an income tax return with the department, or if the most recently filed income tax return was filed more than two years prior to the date the notice is mailed, the department may, in addition to those procedures described in paragraph (3)(d) of this rule, use address information received from another government agency to determine last known address. That agency must follow strict policies regarding address verification, such as:

(a) Address documentation shall be written and signed by the taxpayer.

(b) The agency shall have procedures such as those described in paragraph (3)(d) of this rule to verify address changes.

Example 2: Tom has not filed income tax returns with Oregon for the last two years. He holds a business license regulated by a governmental agency that meets the criteria above. The department may use an address provided by the other agency as Tom's last known address. The department may send notices of deficiency and notices of assessment to Tom at this address.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 9-1992, f. 12-29-92, cert. ef. 12-31-92; RD 6-1996, f. 12-23-96, cert. ef. 12-31-96; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-305.265(12)-(B)

Interest on Deficiency

If a refund is allowed due to a net operating loss carryback and subsequently it is determined that the amount of the net operating loss was in error, interest shall be computed on the amount of the incorrectly received refund (tax and interest) beginning on the day after the date the refund was issued.

Example: A taxpayer carried a 1983 net operating loss of $10,000 back to the 1980 return and received a refund of $1,000 tax plus $200 interest. During an audit of the 1983 return it was determined that the correct loss to carryback was $4,000 resulting in a corrected refund of $400 plus interest. The taxpayer will need to repay $600 of the refund and $120 (60 percent) of the interest for a total of $720. Interest shall be computed on this amount beginning the day after the date the refund was issued by the Department.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 12-1984, f. 12-5-84, cert. ef. 12-31-84

150-305.265(13)

Penalties

(1) A fraud penalty imposed pursuant to ORS 305.265(13) is separate and distinct from delinquency penalties as it relates to the nature of the deficiency itself. Such penalty normally will be imposed with the issuance of the initial notice of deficiency. Thereafter, if the deficiency is not paid when due, a delinquency penalty may also be imposed.

(2) The penalties provided under ORS 305.265(13) and 314.400(6)(b) shall not be combined. Only one 100% penalty may be assessed on a particular report or return.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: 12-31-77, Renumbered from 305.265(12); TC 19-1979, f. 12-20-79, cert. ef. 12-31-79; RD 12-1985, f. 12-16-85, cert. ef. 12-31-85, Renumbered from 150-305.265(12)-(A)?; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.265(14)

Appeal from a Notice of Deficiency: Periods of Limitation

(1) Date of assessment if taxpayer does not file a timely appeal with the department. If a taxpayer pays a deficiency in full before the department issues a notice of assessment and does not send a timely written objection or request for a conference, the deficiency is considered assessed on the date the deficiency is paid or 30 days from the date of the notice, whichever is later. A taxpayer has 90 days from the date of assessment in which to appeal to the Magistrate Division of the Oregon Tax Court. If a taxpayer does not appeal to the Magistrate Division of the Oregon Tax Court within the 90-day period, the assessment is final, unless the taxpayer appeals under ORS 305.280(3) following payment of the tax.

(2) Date of assessment if taxpayer files a timely appeal with the department. If a taxpayer files a timely request for a conference or written objections, the deficiency is not considered assessed until the department sends a written determination of the issues to the taxpayer. Also, if a timely conference request or written objections accompany or follow the payment of a deficiency, the department will not assess the deficiency until it sends a written determination of the issues to the taxpayer. Payment of the deficiency is a credit to the taxpayer's account. If the balance is zero, the written determination of the issues is considered the notice of assessment.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: 12-31-77; 12-31-79; 12-31-84, Renumbered from 150-305.265(13); RD 12-1985, f. 12-16-85, cert. ef. 12-31-85; RD 10-1986, f. & cert. ef. 12-31-86; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90, Renumbered from 150-305.265(14); RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 5-2000, f. & cert. ef. 8-3-00; Renumbered from 150.305.265(14)-(A) by REV 9-2012, f. 12-18-12, cert. ef. 1-1-13; Renumbered from 150.305.265(14)-(A) by REV 2-2013, f. & cert. ef. 3-28-13

150-305.265(14)-(A) [Renumbered to 150-305.265(14)]

150-305.265(15)

Waiver of a Conference or Written Objection; Direct Appeal of Deficiency

(1) A taxpayer may waive a conference or written objection and request immediate assessment of a deficiency for purposes of filing a direct appeal with the Magistrate Division of the Oregon Tax Court.

(2) In general. Any request for a direct appeal from a notice of deficiency must meet general requirements. The request must:

(a) Be in writing and be filed with the department within 30 days of the date on the notice of deficiency.

(b) Contain language that requests a waiver of a conference or written objection.

(c) Contain language that requests the department to assess the deficiency.

(d) Inform the department of the taxpayer's intent to appeal to the Magistrate Division of the Oregon Tax Court.

(3) The department will assess the deficiency with any applicable penalty and interest. Payment of the deficiency is a credit to the taxpayer's account; only the balance of the account will be assessed.

(4) A request for assessment and appeal from a notice of deficiency that does not satisfy the requirements of this rule is considered a request for a conference or written objection, whichever is applicable, and the corresponding administrative remedies under ORS 305.265 apply.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 7-1999, f. 12-1-99, cert. ef. 12-31-99; REV 6-2007, f. 7-30-07, cert. ef. 7-31-07

150-305.270(3)-(A)

Claim for Refund

A claim for refund is not required to be submitted on a particular form. A claim for refund may be submitted as an original return or report claiming a refund, an amended return or report claiming a refund, or any other refund computation setting forth a claim for refund. A claim for refund shall include the taxpayer's name, address, social security number or other identifying number, the tax year(s) or period(s) involved, the basis for the claim for refund and the amount of refund asserted to be due the taxpayer.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.265
Hist.: RD 12-1984, f. 12-5-84, cert. ef. 12-31-84, Renumbered from 150-305.270(3)

150-305.270(3)-(B)

Notices of Proposed Refund Adjustment Mailed When Authorization to Represent Signed

(1) If a written authorization to represent the taxpayer is filed with the department, the original Notice of Proposed Refund Adjustment (as referred to by ORS 305.270(3)) shall be sent directly to the taxpayer at the last-known address as required by ORS 305.265(11). Where the taxpayer has a guardian or conservator, Notices of Proposed Refund Adjustment shall be sent to the guardian or conservator.

(2) If the authorized representative has a fiduciary relationship to the taxpayer, original Notices of Proposed Refund Adjustment will be sent to the personal representative as defined in ORS 111.005.

(3) For trusts, original Notices of Proposed Refund Adjustment shall be sent directly to the trustee.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.270
Hist.: RD 15-1987, f. 12-10-87, cert. ef. 12-31-87

150-305.270(4)-(A)

Written Objections to a Proposed Refund Adjustment

(1) Written Objection Procedures.

(a) If a taxpayer disagrees with a notice of proposed refund adjustment, and does not want a conference, the taxpayer may file written objections with the department.

(b) The taxpayer must write to the department within 30 days from the date on the notice of proposed refund adjustment and explain the reasons for any objections in the letter.

(c) When the department receives the written objections, a department representative will review the objections to try to resolve the disagreement. The department representative will then reach a decision regarding the written objections and either:

(A) Send the refund originally requested;

(B) Send an adjusted refund;

(C) Issue a notice of refund denial; or

(D) Issue a notice of deficiency.

(d) The department must send the taxpayer a letter explaining the decision. The letter must also explain the taxpayer's appeal rights. If the taxpayer receives a notice of refund denial or notice of an adjusted refund, the taxpayer may appeal the department's decision as described below. If the taxpayer receives a notice of deficiency, the taxpayer must follow the remedies as set forth in ORS 305.265 and the corresponding rules.

(2) Appeal to the Magistrate Division of the Oregon Tax Court. An appeal to the Magistrate Division must be in writing and filed with the Oregon Tax Court within 90 days of the date of the notice of refund denial or notice of an adjusted refund.

(3) Direct Appeals. If the taxpayer disagrees with a notice of proposed refund adjustment and submits a written request for a direct appeal to the Magistrate Division in lieu of a conference or written objection, OAR 150-305.270(10) applies.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.270
Hist.: RD 4-1985(Temp), f. & cert. ef. 9-20-85; RD 8-1985, f. 12-26-85, cert. ef. 12-31-85, Renumbered from 150-305.270(4); RD 15-1987, f. 12-10-87, cert. ef. 12-31-87; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 5-2000, f. & cert. ef. 8-3-00; REV 10-2007, f. 12-28-07, cert. ef. 1-1-08

150-305.270(4)-(B)

Date of Notice

(1) For purposes of ORS 305.270(4), the term "date of the notice of proposed adjustment" means the date the notice was mailed.

(2) The date the notice was mailed shall be deemed to be the date printed on the notice unless the addressee can establish by proof satisfactory to the department that such notice was mailed on a date other than the date printed on the notice.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.270
Hist.: RD 10-1986, f. & cert. ef. 12-31-86

150-305.270(8)

Audit Period for Refunds Issued without Examination

The department shall have the periods of limitation as provided in ORS 314.410 or one year from the date the refund check is issued, whichever period expires the later, to examine or audit the refund claim and issue a notice of deficiency. The refund claim can be adjusted to -0- but a deficiency in excess of the refund previously issued or requested cannot be asserted if the statute of limitations has expired. This subsection applies to amended returns filed on or after September 20, 1985 (the effective date of Chapter 266, OR Laws 1985).

Example 1: Benjamin files a timely 1982 income tax return on April 15, 1983. He later files an amended return on August 30, 1985. The department issues the refund check two months later. Because the amended return is filed before September 20, 1985, ORS 305.270(8) doesn't apply.

Example 2: Use the same facts that appear in Example 1, except that Benjamin files his amended return on September 30, 1985. The department issues the refund check on January 15, 1986, without having audited or examined the refund claim. Because the amended return is filed after September 20, 1985, ORS 305.270(8) applies. The department may examine or audit Benjamin's return until January 15, 1987, one year after the refund check is issued. The audit period is open until January 15, 1987 because it is later than the expiration of the three-year period in ORS 314.410(1). If Benjamin's return is adjusted prior to April 16, 1986, a deficiency may be asserted in excess of the refund previously issued. If the return is adjusted after April 15, 1986, a deficiency shall not exceed the refund previously issued.

Example 3: Rob files a timely 1984 income tax return on April 15, 1985. He later files an amended return on January 15, 1987 and the department issues a refund check on March 15, 1987, without having audited or examined the refund claim. The department may examine or audit Rob's return until April 15, 1988, the expiration of the three-year period in ORS 314.410(1). The audit period is open until April 15, 1988, because it expires later than one year after the refund check date. A deficiency may be asserted during this period in excess of the refund previously issued.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.270
Hist.: RD 12-1985, f. 12-16-85, cert. ef. 12-31-85; RD 15-1987, f. 12-10-87, cert. ef. 12-31-87; RD 11-1988, f. 12-19-88, cert. ef. 12-31-88

150-305.270(10)

Proposed Refund Adjustment

(1) A taxpayer may waive a conference or written objection and appeal a notice of proposed refund adjustment as provided in this rule.

(2) In general. Any request for a direct appeal from a notice of proposed refund adjustment must meet general requirements. The request must:

(a) Be in writing;

(b) Be filed with the department within 30 days of the date on the notice of proposed refund adjustment;

(c) Contain language that requests a waiver of a conference or written objection; and.

(d) Contain language that requests the department to issue a refund denial.

(3) Direct Appeal to the Magistrate of the Oregon Tax Court. For the purpose of direct appeal under this rule, the taxpayer must first file a request as described in section (2) before an appeal can be taken to the Magistrate Division. If the requirements of this section are met, the department will send the taxpayer a notice of refund denial, which constitutes the department's final administrative appeal action. The taxpayer then has 90 days from the date on the notice of refund denial to appeal to the Magistrate Division.

(4) A written appeal from a notice of proposed refund adjustment that does not satisfy the requirements of this rule is considered a request for a conference or a written objection, whichever is applicable, and the corresponding administrative remedies under ORS 305.270 apply.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.270
Hist.: RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 5-2000, f. & cert. ef. 8-3-00; REV 10-2007, f. 12-28-07, cert. ef. 1-1-08

150-305.285

Relief for Subsequent Tax Years

(1) ORS 305.285 provides an additional procedural remedy for a taxpayer. It precludes the need for filing a protective petition during the pendency of petition for a previous year. While ORS 305.285 extends the period for filing petition it does not automatically entitle the taxpayer to the substantive relief requested.

(2) The taxpayer shall make his or her request for relief in a subsequent year to the department on or before December 15 of the year in which the final determination was made, or within six months of the mailing date of the final determination, whichever is later. Subsequent year is defined as any tax year following the tax year that is the subject of the final determination.

(3) The request shall state the name of the taxpayer, the property's account number and the county in which it is located, the year or years for which relief is requested, and the mailing date of the final determination. For purposes of this section, a final determination includes only those cases where there has been a decision on the merits (including stipulations). A copy of this final determination shall be attached to the request.

Stat. Auth.: 305.100
Stat. Implemented: 305.285
Hist.: RD 9-1985, f. 12-26-85, cert. ef. 12-31-85; RD 5-1986, f. & cert. ef. 12-31-86; RD 10-1990, f. 12-20-90, cert. ef. 12-31-90; RD 6-1991, f. 12-30-91, cert. ef. 12-31-91; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 4-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-305.285; REV 1-2003, f. & cert. ef. 7-31-03, Renumbered from 150-306.115-(B); REV 9-2013, f. 12-26-13, cert. ef. 1-1-14

150-305.295(1)(c)

Beneficial Ownership

(1) An employer is any business entity which has employees.

(2) A business entity's activity shall not be considered to have ceased doing business if the employer has changed its name and still the business activity continues under the same beneficial ownership. Listed below are examples of business entity changes that do not change the beneficial ownership:

(a) A sole proprietorship becomes a partnership.

(b) A partnership becomes a corporation.

(c) The remaining part of a corporation after a corporation split.

(d) A corporation becomes a partnership.

(e) A partnership becomes a sole proprietorship.

(f) A sole proprietorship changes its name.

(g) There is a change in corporate officers.

(h) A corporation is sold.

(i) Corporation stock is sold.

(j) A corporation changes its name.

(k) The remaining part of a business after a portion is sold.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.295
Hist.: RD 13-1987, f. 12-18-87, cert. ef. 12-31-87

150-305.295(1)(d)

Cancellation of Doubtful Liabilities

(1) This procedure is intended for those cases where the tax assessment set up by the department exceeds the taxpayer's correct tax liability by at least $100.

(2) For purposes of this rule, the correct tax is the amount of tax determined by the department as supported by facts and documentation.

(3) It shall be the policy of the Department to provide a means for cancellation of all or a portion of tax, penalty, or interest for a specific tax year in cases where all other statutory appeal periods have expired, and where all of the following provisions are met:

(a) After an objective review of the facts and documentation, the department representative concludes that the department would have reduced or canceled the assessment if the taxpayer had objected to the assessment within the statutory time period.

(b) Taxpayer has a completed return or a report computing tax that supports cancellation or reduction of an assessment which could include:

(A) Written documentation made at the time income was received or expense was incurred;

(B) Records maintained by independent third parties; or

(C) Any documentation that the department representative considers reliable.

(c) The department representative determines the taxpayer:

(A) Has filed returns and reports as required for all tax programs administered by the department; and

(B) Has submitted full payment of the amount of tax, interest and penalty determined to be correct by the department, or has entered into and fulfilled an acceptable installment agreement for payment of such amounts.

(4) If relief is denied under these provisions, the taxpayer's only right of appeal is directly to the Director of the Department of Revenue. The decision of the Director shall be final and may not be appealed further under this statute or any other statute pertaining to appeals of department assessments.

(5) In cases where the taxpayer has appealed an assessment to either the department or a court of this state, and a decision that determines the liability of the taxpayer has been issued, no relief shall be granted under the provisions of this section.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.295
Hist.: RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 7-1998, f. 11-13-98 cert. ef. 12-31-98; REV 2-1999(Temp), f. & cert. ef. 7-6-99 thru 12-31-99; REV 7-1999, f. 12-1-99, cert. ef. 12-31-99, Renumbered from 150-305.295

150-305.295(4)

Refund of Penalty and Interest

(1) The department shall refund penalty and interest when it has been determined that it has been paid but was not legally due. Interest shall be computed on the amount of tax plus penalty and interest not legally due. The interest starting date shall be 45 days after the date the deficiency was paid or 45 days after the return was filed, whichever is later.

Example 1: The taxpayer files a delinquent return and pays the tax, penalty and interest due. Subsequently, it is determined that the taxpayer is not required to file an Oregon income tax return. The amount of tax, penalty and interest paid shall be refunded and interest computed on the entire amount beginning 45 days after the date the return was filed.

Example 2: The taxpayer pays the tax, penalty and interest based on a Notice of Assessment. The assessment is subsequently determined to be erroneous. The amount of tax, penalty and interest paid shall be refunded and interest computed on the entire amount beginning 45 days after the date the assessment was paid.

Example 3: The taxpayer files a delinquent return and pays the tax, penalty and interest due. Subsequently, the taxpayer amends the return to claim a refund from a net operating loss carryback. The penalty and interest paid with the delinquent return shall not be refunded since this amount was legally due.

(2) For deficiencies on refunds issued under ORS 310.630 to 310.690, the department shall refund any penalty and interest when it has been determined that it has been paid but was not legally due. Interest shall be computed on the amount of refund paid plus penalty and interest not legally due. The interest starting date shall be 45 days after the date the deficiency was paid or the date 45 days after the return or claim was filed, whichever is later.

Example 4: The taxpayer files a homeowner and renter refund claim and a check is issued. One year later the department audits the refund claim and issues a notice of deficiency. The taxpayer pays the deficiency plus interest. The deficiency is later determined to be erroneous. The amount the taxpayer paid shall be refunded and interest shall be computed on the entire amount beginning 45 days after the date the deficiency was paid.

Example 5: Same facts as Example 4 except that the notice of deficiency is assessed and a 5 percent penalty is imposed. The amount of refund, penalty and interest paid by the taxpayer shall be refunded. Interest is computed on the entire amount beginning 45 days after the date the assessment was paid.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.295
Hist.: RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.295(6)

Appeal Time Frame

If a taxpayer wishes to appeal denial of a request for cancellation of assessment or refund, the appeal shall be made within 90 days of notice of denial.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.295
Hist.: RD 13-1987, f. 12-18-87, cert. ef. 12-31-87

150-305.305

Concurrent Appeals

(1) Applicability of ORS 305.305.

(a) Any reference in this rule to the appeal provisions in ORS 305.305 refers to deficiencies of Oregon tax based on:

(A) A federal revenue agent's report; or

(B) The audit report of another state's taxing authority.

(b) The appeal provisions in ORS 305.305 apply to and constitute the exclusive remedy for appealing an Oregon tax deficiency based on adjustments contained in a federal revenue agent's report or the audit report of another state that also asserts a deficiency. These provisions do not apply to a taxpayer when adjustments contained in the federal revenue agent's report or the audit report of another state result in:

(A) A refund of federal or other state's tax; or

(B) No change in federal tax liability or the tax liability to the other state. See ORS 314.380 and corresponding administrative rules for procedures to claim a refund based upon a federal adjustment or adjustment of another state.

(c) The appeal provisions in ORS 305.305 apply to and constitute the exclusive remedy of a taxpayer who timely appeals a federal adjustment or the adjustment of another state. These provisions do not apply to a taxpayer who, by choice or default, does not file a timely appeal.

(d) The appeal provisions in ORS 305.305 are the exclusive remedy of a taxpayer who appeals a department billing based on a federal or other state audit adjustment that:

(A) Asserts a deficiency, and

(B) Is timely appealed at the federal level or the other state level by the taxpayer.

Example 1: Taxpayer is audited by IRS and receives a federal revenue agent's report showing tax due, interest and a penalty for substantial understatement of income. Taxpayer agrees with the tax and interest due but appeals the penalty. Oregon does not automatically impose the same penalties as federal but may assert the penalty for substantial understatement of income under ORS 314.402. The Oregon deficiency does not include the federal penalty for substantial understatement of income. Since the Oregon deficiency is not asserted based on an adjustment timely appealed by the taxpayer for federal purposes, the appeal provisions of ORS 305.305 do not apply. The taxpayer must follow the appeal procedures in ORS 305.265.

Example 2: Taxpayer is audited by IRS and receives a federal revenue agent's report showing two adjustments to income--an increase to interest income from U.S. government obligations and a decrease to the charitable contributions deduction. Taxpayer agrees with the adjustment to charitable contributions but appeals the adjustment to interest income. The notice of deficiency issued by the department will contain only the adjustment to charitable contributions since under ORS 316.680 interest from U.S. government obligations is not taxable. Since the Oregon deficiency is not asserted based on an adjustment timely appealed by the taxpayer at the federal level, the appeal provisions of ORS 305.305 do not apply. The taxpayer must follow the appeal procedures in ORS 305.265.

(e) The taxpayer may not elect to follow other appeal procedures in ORS Ch. 305 instead of those described above.

(2) Oregon Deficiency based on Federal Report or Audit Report of Another State.

(a) The appeal provisions in ORS 305.305 apply only to an Oregon deficiency based upon a federal revenue agent's report or the audit report of another state. A deficiency is based on such a report if it refers to the federal report or the report of the other state for its authority or justification. An Oregon deficiency which does not refer to the federal report or the report of the other state in this way is not based on the federal or other state's audit report, even if both the Oregon and federal or other state adjustments are based on the same tax items.

(b) If the Oregon deficiency results from adjustments that are based both on a federal or other state adjustment, and adjustments independently determined by the department, the department will allow the taxpayer to follow the appeal procedures in ORS 305.265 in appealing the deficiency based on the independently determined adjustments.

(3) Method of Department Assessment. As used in ORS 305.305, the phrase "department assesses the deficiency" includes assessments initiated by full payment of the Oregon deficiency under ORS 305.265(14).

(4) IRS Settlement. In some cases, the IRS may reach a settlement agreement with a taxpayer during the federal appeal process. If this occurs, the department is not required to accept a settlement agreement also. The department may still resolve the appeal case based on its merits.

(5) Proof of IRS Appeal and Assessment.

(a) Proof of IRS Appeal. Proof of a timely request for a federal appeal may be demonstrated by:

(A) Submission of a copy of the IRS letter notifying the taxpayer of the time allowed for administrative appeal, together with a copy of the taxpayer's written request for appeal and the IRS acknowledgment, or

(B) If the correspondence in (A) is unavailable, submission of any other materials that demonstrate that a timely filed appeal is pending before the IRS or a federal court.

(b) Proof of IRS Assessment. Proof of an IRS assessment may be demonstrated by:

(A) Submission of a copy of the IRS 10-day letter; or

(B) If the billing described in (A) is unavailable, submission of any other materials that demonstrate that the federal adjustment is final and can no longer be appealed.

(6) A taxpayer must notify the department within 30 days after the taxpayer's federal appeal has been resolved. The department will review the issues in the appeal and issue a refund, a notice of denial of a refund, or a notice of additional amounts due. A taxpayer that disagrees with a decision issued before October 6, 2001, must file an appeal with the Magistrate Division of the Oregon Tax Court within 60 days of the department's decision. A taxpayer that disagrees with a decision issued on or after October 6, 2001, must file an appeal with the Magistrate Division of the Oregon Tax Court within 90 days of the department's decision.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.305
Hist.: 9-20-85(Temp); 12-31-85, Renumbered from 150-305.265(5)-(A); RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 9-1999, f. 12-30-99, cert. ef. 12-31-99; REV 8-2001, f. & cert. ef. 12-31-01

150-305.385(4)(a)-(A)

"Methods of Collection" Defined

Methods of collection include but are not limited to seizure of wages, bank accounts, personal property, business property, stocks, bonds, dividends and real property to the extent it is determined to be cost effective by the department.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.305
Hist.: RD 7-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-305.385(4)(a)

150-305.385(6)-(A)

Contracts Requiring Certificate of Compliance with Oregon Tax Laws

(1) An agency must obtain a certificate of compliance with Oregon tax laws from providers before entering into certain contracts. Those contracts or agreements under which goods, services, or real estate space will be provided directly to such agencies in the future require certification.

(a) For purposes of this rule, "agency" means any department, board, commission, division or authority of the State of Oregon, or any political subdivision of this state which imposes a local tax administered by the Department of Revenue under ORS 305.620. See 305.380(1).

(b) For purposes of this rule, "tax" means those programs listed in ORS 305.380(4). Examples include the state inheritance tax, personal income tax, withholding tax, corporation income and excise taxes, amusement device tax, timber taxes, cigarette tax, other tobacco tax, 9-1-1 emergency communications tax, the homeowners and renters property tax relief program and local taxes administered by the Department of Revenue (Lane Transit District Self-Employment Tax, Lane Transit District Employer Payroll Tax, Tri-Metropolitan Transit District Employer Payroll Tax, and Tri-Metropolitan Transit District Self-Employment Tax).

(c) For purposes of this rule, "provider" means any individual, corporation, association, firm, partnership, or joint stock company who contracts to supply goods, services, or real estate space to an agency. See ORS 305.380(3). Out of state and nonprofit entities are included in this definition. The term provider shall not include the United States, its territories or possessions, state, local, or foreign governments, and the political subdivisions and agencies thereof.

(2) The following contracts do not require contractor certification:

(a) Purchase orders and contract release orders issued by state agencies to vendors or providers.

(b) Credit card purchases. The contract requiring a certificate of compliance with Oregon tax laws is between the agency in whose name the credit card is issued and the issuer of the credit card; not the agency and the vendor of goods and services purchased with the credit card.

(c) Third party contracts and purchases. Many agencies pay for goods or services that are provided to third parties. Some examples are:

(A) Adult and Family Services (AFS) pays physicians directly for service provided to AFS clients.

(B) Senior Services Division (SSD) enters into "provider agreements" with nursing homes for the benefit of elderly residents of those nursing homes. Payment is made directly by SSD to the nursing home.

(C) Reimbursement of travel expenses. State agencies make payments to their employees to reimburse travel expenses such as meals, lodging, airfare, and automobile expenses. The costs have been incurred by the employee directly.

(d) Emergency contracts as provided in ORS 279.015(3) and OAR 125-310-0030.

(e) Contracts with a consideration of no more than $1,000.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.385
Hist.: RD 1-1990, f. & cert. ef. 3-15-90; RD 6-1996, f. 12-23-96, cert. ef. 12-31-96

150-305.385(6)-(B)

Certificate of Compliance With Oregon Tax Laws

(1) Each certificate of compliance with Oregon tax laws and local taxes administered by the department shall contain the following elements:

(a) For individuals, including sole proprietors, a statement certifying under penalty of perjury that the individual is, to the best of the individual's knowledge, in compliance with Oregon tax laws.

(b) For corporations, partnerships, estates and trusts, a statement by an authorized individual certifying under penalty of perjury that the vendor is, to the best of the representative's knowledge, in compliance with Oregon tax laws.

(c) A list of the Oregon tax laws referred to in ORS 305.380(4).

(2) Notarization by a notary public is not required.

(3) An example of an acceptable format for the certificate is: [Form not included. See ED. NOTE.]

[ED. NOTE: Forms referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.385
Hist.: RD 1-1990, f. & cert. ef. 3-15-90; RD 6-1996, f. 12-23-96, cert. ef. 12-31-96; REV 7-1999, f. 12-1-99, cert. ef. 12-31-99

150-305.385(6)-(C)

Circumstances Not in Violation of Oregon Tax Laws

(1) For purposes of ORS 305.385(6), a taxpayer complying with an acceptable payment arrangement for satisfaction of an unpaid tax obligation is not in violation of the tax laws as they relate to that unpaid tax. Any taxpayer complying with an acceptable payment arrangement may sign the certificate of compliance in good faith if no other Oregon tax laws have been violated. A provisional certificate of good standing, provided by ORS 305.385(5), is not necessary.

(2) A taxpayer is not in violation of the tax laws as they relate to an unpaid tax, if that unpaid tax is under appeal as provided under ORS Chapter 305.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.385
Hist.: RD 1-1990, f. & cert. ef. 3-15-90

150-305.385(7)

Annual Certification Requirement

(1) An agency shall obtain a written certification of compliance with the tax laws listed in ORS 305.380(4) from each provider of goods, services, or real estate space. The written certification may be obtained either:

(a) Annually; or

(b) With each contract or other agreement entered into, renewed or extended if the agency does not anticipate contracting with the provider frequently (i.e., one time only or less than once a year).

(2) A certificate shall be obtained prior to entering into a price agreement with a provider. Certificates do not need to be obtained with individual contract release orders executed under the price agreement.

Example: The Department of General Services enters into a price agreement with the Tree Paper Company for the purchase of paper and obtains a written certification of compliance with the tax laws. During the next two years the Department of Revenue executes contract release orders (CROs) with Tree Paper Company for additional paper. The Department of Revenue does not need to obtain a certificate for any CRO delivered to Tree Paper Company that is under the original price agreement.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.385
Hist.: RD 1-1990, f. & cert. ef. 3-15-90

150-305.501

Mediation

Any statements made during mediation will be confidential except as provided for in ORS 314.840.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.501
Hist.: REV 1-2001, f. 7-31-01, cert. ef. 8-1-01

150-305.525

Appeal Procedures

(1) The Department of Revenue shall give notice to the taxpayer to reflect that final department actions may only be appealed to the Magistrate Division of the Oregon Tax Court.

(2) Time for Filing Appeals:

(a) Under ORS 305.280(2), an appeal from a notice of assessment or refund denial with respect to a tax imposed under ORS Chapter 118, 305, 308, 310, 314, 316, 317, 318 or 321 shall be filed within 90 days after the date of the notice.

(b) Under ORS 305.280(3), an appeal from a notice of assessment with respect to a tax assessed under Chapters 314, 316, 317 or 318 may also be filed within two years of the date of payment of the tax, penalty and interest shown on the Notice of Assessment.

(c) Under ORS 305.280(2), an appeal from a proposed refund adjustment made under ORS 305.270 shall be filed within 90 days after the date on which the adjustment is final (i.e., within 30 days after the date of the notice of proposed adjustment, as provided in ORS 305.270(5)(b)).

(d) Under ORS 305.280(4), an appeal from an order of the county board of property tax appeals, must be filed with the Tax Court within 30 days after the order is mailed to the appellant. If, pursuant to ORS 309.110(1), the order is personally delivered to the appellant, then the appeal must be filed with the Tax Court within 30 days after the date the order is personally delivered.

(3) Federal Appeals or Appeals of Audit Adjustments Made by Other States: Providing proof of a timely federal appeal or appeal of another state's audit adjustment will extend the time the taxpayer can appeal to Tax Court. The taxpayer must notify the department in writing within 30 days after the appeal is resolved. The department shall review the issues raised by the appeal and make a determination of the effect on the taxpayer's Oregon tax liability. If there is a disagreement, the taxpayer has 60 days from the department's determination to appeal to the Tax Court.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.525
Hist.: RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97; REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

150-305.565(2)(a)

Stay of Collection: When Collection Action Won't Be Stayed

(1) The department may continue to collect delinquent taxes during the pendency of an appeal if it becomes known the taxpayer is preparing to depart from the state or move assets out of the state to avoid paying taxes. In addition, the department may continue collection if the taxpayer does any other act tending to prejudice or to render wholly or partially ineffectual proceedings to collect tax. These acts include but are not limited to:

(a) Communication has been received that acts of the taxpayer indicate the taxpayer will cease employment or change jobs to avoid paying the taxes.

(b) Communication has been received that acts of the taxpayer indicate the taxpayer will sell, convey, give away, hide, or destroy an asset rather than having it seized.

(c) The taxpayer actually begins to sell, convey, give away, hide, or destroy real or personal property subsequent to taking of an appeal to the director.

(2) Also, if there exists documented evidence the taxpayer has changed jobs or has sold, conveyed, given away, hidden, or destroyed assets in the past to avoid garnishment or seizure, collection action may be continued.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.565
Hist.: RD 7-1992, f. & cert. ef. 12-29-92

150-305.612

Offset of State Debt Through U.S. Treasury Offset Program

(1) The Department of Revenue may submit liquidated state income tax debt for offset against federal tax refunds through the "Treasury Offset Program" under 26 USC 6402(e) and 31 CFR 285.8. For purposes of this rule, liquidated means legally enforceable because:

(a) The liability is assessed, either self-assessed by the taxpayer or department-assessed;

(b) The department has made written demand for payment of the liability and issued a warrant as provided for in ORS 305.895 and 314.430;

(c) The taxpayer is not in bankruptcy; and

(d) All relevant appeal periods for contesting the liability have expired.

(2) Notice of intent to offset. Before submitting an Oregon tax debt to Financial Management Service, U.S. Treasury for offset against a federal refund, the Department of Revenue must send written notice of intent to offset to the taxpayer by certified mail.

(3) Disagreement procedures. If a taxpayer disagrees with the notice of intent to offset and wants reconsideration, the taxpayer must submit a letter of disagreement within 60 days of the date shown on the notice of intent to offset. The taxpayer must provide, and the department will limit consideration to, evidence that the tax debt scheduled for offset is not:

(a) Past due; or

(b) Legally enforceable.

(4) If the taxpayer claims that the debt is not legally enforceable because the taxpayer is an enrolled member of an Indian tribe whose income is not subject to Oregon tax under ORS 316.777 or 316.785, the department will consider the merits of such a claim unless the issue has already been finally adjudicated by a court in a proceeding to which the department is a party.

(5) Review of disagreement. For each letter of disagreement, the department will:

(a) Review all evidence provided by the taxpayer, and

(b) Remove taxpayer's name from the federal refund offset list for this debt if evidence supports the taxpayer's position that the debt is not past due or legally enforceable.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.612
Hist.: REV 5-2002(Temp), f. & cert. ef. 9-23-02 thru 3-1-03; REV 8-2002 f. & cert. ef. 12-31-02

150-305.620(1)-(A)

Rules Application

Unless the context requires otherwise, the department will apply the same rules to administer transit district payroll tax programs as are used in the administration of the withholding tax program. See rules adopted under ORS 316.162 to 316.212. In addition, the provisions of rules adopted pursuant to ORS Chapters 305 and 314 as to the audit and examination of reports and returns, determination of deficiencies, assessments, claims for refund, conferences, appeals, and the procedures relating thereto, shall apply to the determination of taxes, penalty and interest, imposed under transit district payroll tax programs.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.620
Hist.: RD 10-1983, f. 12-20-83, cert. ef. 12-31-83; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; RD 5-1997, f. 12-12-97, cert. ef. 12-31-97

150-305.620(4)

Appearance Procedure -- Local Taxes Administered by the Department of Revenue

A political subdivision may intervene in any conference held by the department in connection with a local tax administered by the department under an agreement with that political subdivision.

(1) The department will notify a political subdivision of each significant conference request arising from the department's administration of that subdivision's local tax. Whether a conference request is "significant" is determined by the program manager's evaluation of the possible impact on the tax program.

(2) If appropriate under subsection (1), the department will notify the political subdivision of the conference request by letter. A copy of the conference request will be provided with the letter subject to the limitations imposed by ORS 314.840.

(3) A political subdivision desiring to intervene must notify the department by letter of its intent to intervene within 14 days of the date the department mails the copy of the conference request. The political subdivision must serve a petition of intervention upon all the parties and the department not more than 30 days after notifying the department of its intent to intervene. The petition must state the grounds for intervention, the political subdivision's position on each issue raised in the appeal, and whether or not the political subdivision desires to be represented at the conference.

(4) The conference officer will serve the political subdivision with a copy of any conference decision in a case where the political subdivision has intervened. Service will be made at the same time and in the same manner that the decision is served upon the petitioner.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.620
Hist.: RD 8-1983, f. 12-20-83, cert. ef. 12-31-83; RD 15-1987, f. 12-10-87, cert. ef. 12-31-87; RD 1-1997(Temp), f. 6-13-97, cert. ef. 7-4-97 thru 12-31-97; REV 12-2000, f. 12-29-00, cert. ef. 12-31-00

Multistate Tax Compact

150-305.720(1)(a)

Use of Checkoff Resources

Entities receiving checkoff resources are restricted in the manner in which the resources may be used by the organization.

(1) Checkoff resources received by an entity may only be used to fund:

(a) Existing programs. Checkoff resources may only be used to fund existing programs to the extent that the checkoff funds serve to augment the existing program. Checkoff resources may not be used to replace existing funding that would allow a shift of entity resources to another unrelated purpose.

(b) New programs. Checkoff resources may be used to fund new programs, but only if the new program has a close connection to an existing program. The existing program after which the new program is patterned must have a proven record of success in providing substantial and direct benefit to the state.

(2) Checkoff resources may not be used to meet the administrative expenses of the entity. Included in this prohibition are any increased fixed or variable administrative expenses that are a direct result of the new or augmented program funded by the checkoff resources.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.702
Hist.: RD 7-1993, f. 12-30-93, cert. ef. 12-31-93

150-305.725(1)

Application and Signature Due Dates

Completed applications and completed signature petitions for tax instruction booklet listing must be received by the Charitable Checkoff Commission by June 1 of the tax year for which the entity seeks listing.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.725
Hist.: REV 1-2000, f. & cert. ef. 2-1-00; REV 13-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-305.725

150-305.727

Certification of Nonprofit Entities for Instruction Listing

For purposes of Section 2, Chapter 1032, Oregon Laws 1999, the date the instructions for the forms must be prepared shall be September 1 of each calendar year. Entities that are certified to the department by the commission on or before that date shall be listed in the instruction material of the Oregon income tax returns for that tax year.

Stat. Auth.: ORS 305.100

Stats. Implemented: ORS 305.727

Hist.: REV 9-1999, f. 12-30-99, cert. ef. 12-31-99

150-305.727(3)(a)

Definitions of the Terms "Affiliated and "Central Office"

For purposes of the statutes and rules relating to the charitable checkoff system:

(1) The term "central office" means an organization that the Internal Revenue Service recognizes to be an exempt organization under Internal Revenue Code §501(c)(3). It must have written bylaws or other written provisions that describe its structure and purpose. It must also have the same primary purpose as that of its affiliates. It must be located in Oregon and a substantial proportion of the funds that it collects must remain in Oregon, benefiting the state and its residents, as required by ORS 305.720(1)(b).

(2) The phrase "affiliated entities" means entities with a relationship documented in writing. Each affiliate must share a specific primary purpose and that purpose must be charitable. Each affiliated entity must be recognized by the Internal Revenue Service to be an exempt organization under Internal Revenue Code §501(c)(3). Affiliated entities must be located in Oregon and a substantial proportion of the funds that they collect must remain in Oregon, benefiting the state and its residents, as required by ORS 305.720(1)(b).

Stat. Auth.: ORS 305.100 & 305.751
Stats. Implemented: ORS 305.725 & 305.727
Hist.: REV 1-2000, f. & cert. ef. 2-1-00; REV 13-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-305.727-(A)

150-305.727(3)(b)

Signatures Must Be on Department's Form

(1) For purposes of meeting the requirement that an entity gather the signatures of 10,000 registered Oregon voters, signatures must be collected and submitted on the department's designated form. The signatures must include all the information requested on that form.

(2) The submitter of such signatures must swear that, to the best of the submitter's knowledge and belief, all the signatures that the submitter is presenting to the commission on behalf of the organization are those of registered Oregon voters.

(3) If an entity fails to meet any of the requirements listed within this rule, commission may reject the entity's application or may deem the applying entity unqualified to receive a charitable checkoff listing.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.727
Hist.: REV 1-2000, f. & cert. ef. 2-1-00; REV 13-2000, f. 12-29-00, cert. ef. 12-31-00, Renumbered from 150-305.727-(B)

150-305.727(3)(b)-(B)

Signature Gathering Period

The signature gathering period for any tax year for which an entity seeks listing begins June 1 of the tax year prior to the year in which listing is sought and extends through May 31 of the tax year listing is sought. For example: if an entity seeks listing for tax year 2001, the signature gathering period is from June 1, 2000, through May 31, 2001.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.727
Hist.: REV 13-2000, f. 12-29-00, cert. ef. 12-31-00; REV 2-2001, f. 7-31-01, cert. ef. 8-1-01

150-305.730

Charitable Checkoff Financial Reporting Requirements

It is the commission's responsibility to properly consider all applicants to the checkoff program and participants in the program approved by the commission. In order to carry out this responsibility, the commission finds that it is necessary to receive additional financial information. This information will also be used to determine the use of any funds received through the checkoff program.

(1) Financial statements and budget documents shall be required.

(a) The financial statements and budget documents must cover the most recent three years or the length of time the entity has been in existence.

(b) The financial statements and budget documents must be submitted by July 1 of each even numbered year.

(2) All documents shall be verified as provided in ORS 305.810 by a principal of the entity, a principal in the solicitation activities of the entity, or the executive officer of the entity.

(3) If the documents submitted by July 1 do not contain the necessary information, documentation, or verification the commission shall notify the applicant of the deficiency within 15 days. The commission will provide a reasonable opportunity after the notification to submit the necessary materials. Failure to submit the necessary materials when requested may result in disqualification.

(4) The provisions of this administrative rule will be effective for applications received on or after January 1, 1992.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.730
Hist.: RD 7-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.747

Costs of Administration

(1) The department shall estimate the fixed and variable costs to administer each of the personal income tax checkoff programs which have been approved by the Oregon Legislature or the Oregon Charitable Checkoff Commission for each biennium. The department shall set aside in an administrative expense reserve account 10 percent of the monthly contributions for each program until the fund balance equals the estimated fixed and variable costs for each checkoff program. No further charges to that program shall be made for the year.

(2) For purposes of this rule, examples of fixed costs include accounting time, programming time, and tax booklet revision. An example of a variable cost is data entry charges, which are dependent upon the number of returns filed contributing to the checkoff.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.747
Hist.: RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.749(3)

Method of Distribution from Check-off Contributions and Reimbursement of Administrative Expenses

For programs which have been approved for charitable contribution checkoff for each biennium by the Oregon Legislature or the Oregon Charitable Checkoff Commission, the department will maintain a record of contributions received and distribute the respective amounts, minus administrative expenses to each entity at the beginning of each month.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.749
Hist.: RD 7-1988, f. 12-19-88, cert. ef. 12-31-88; Renumbered from 305.835(1), RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; Renumbered from 150-305.749(2), RD 12-1990, f. 12-20-90, cert. ef. 12-31-90

150-305.796

Depositing Refunds into College Savings Account

A taxpayer electing to make contributions authorized by ORS 305.796 to one or more accounts established under 348.857:

(1) May contribute to a maximum of four accounts;

(2) Must contribute at least $25 per account; and

(3) May deduct contributions made under this section on the subsequent year’s tax return in accordance with ORS 316.699.

Stat. Auth.: ORS 305.100 & 305.796
Stats. Implemented: ORS 305.796
Hist.: REV 9-2012, f. 12-18-12, cert. ef. 1-1-13; REV 2-2013, f. & cert. ef. 3-28-13

150-305.810

Verification of Returns, Statements, or Documents Filed Under Tax Law

(1) The declaration under ORS 314.385(2) that a return, statement, or document is made under penalties for false swearing and is true, complete, and correct must be verified by the taxpayer or by an authorized agent, and in the case of a joint personal income tax return, by each taxpayer or authorized agent for such taxpayer.

(2) Personal income tax returns for individuals are verified by:

(a) Signing the return.

(b) A signed statement, such as Oregon Form EF, submitted to the department if requested.

(c) Any verification method allowed by the IRS when electronically filing the federal return with the Oregon return, such as a federal personal identification number.

(d) Submission of an electronically filed return submitted without the use of a federal signature method (unlinked) by the taxpayer, tax preparer, or an authorized representative of the taxpayer.

(3) Corporate income and excise tax returns are verified by:

(a) Signing the return.

(b) For tax year 2011 and earlier forms:

(A) Any verification method allowed by the IRS when electronically filing the federal return with the Oregon return, such as a federal personal identification number.

(B) A signed and scanned Corporation E-file Signature Form included with the electronic return when electronically filing without the use of a federal signature method or when the Oregon filer is different than the federal filer.

(c) For tax year 2012 and later forms, submission of an electronically filed return by the taxpayer, tax preparer, or an authorized representative of the taxpayer.

(4) For Oregon Quarterly Payroll Tax reports, the declaration under ORS 314.385(2), must be verified by the taxpayer or an authorized agent by:

(a) Signing the return or similar statement.

(b) Transmitting a payroll tax return using the state’s online payroll reporting method. The return is considered signed when the return is transmitted to the state by an authorized person. An “authorized person” is any person certified by the employer and the Oregon Employment Department as allowed to file the return using the state’s reporting system.

(5) All other returns are verified by:

(a) Signing the return.

(b) Any verification method allowed by the IRS when electronically filing the federal return with the Oregon return, if applicable; otherwise only a signed return is accepted.

Stat. Auth.: ORS 305.100 & 305.810
Stats. Implemented: ORS 305.810
Hist.: REV 1-2005, f. 6-27-05, cert. ef. 6-30-05; REV 1-2012(Temp), f. 1-31-12, cert. ef. 2-1-12 thru 7-29-12; REV 4-2012, f. 7-20-12, cert. ef. 8-1-12; REV 6-2013, f. & cert. ef. 12-26-13

150-305.820

Date When Writing or Remittance Deemed Received by Department of Revenue

(1) The term "due date" means the last date or the last day of the period prescribed for filing the writing or remittance and includes any extension of time granted for such filing.

(2) Any writing or remittance received after the due date bearing a legible postmark dated on or before the due date will be considered timely filed if properly mailed and the postmark is that of the United States Postal Service. If the postmark is other than that of the United States Postal Service, the writing or remittance will be considered timely filed if it has been properly mailed and is received not later than the time a writing or remittance postmarked by the United States Postal Service at the same point of origin on the due date would ordinarily be received. If the writing or remittance is not received within the period of time, it must be shown by satisfactory proof to the Department that the writing or remittance was placed in the hands of the United States Postal Service or in the hands of a private express carrier on or before the due date.

(a) Satisfactory proof will consist of one or more of the following:

(A) If sent by United States registered mail, the date of registration shall be treated as the postmark date.

(B) If sent by United States certified mail and the sender's receipt is postmarked by a postal employee, the date of the United States postmark on such receipt shall be treated as the postmark date of the writing or remittance.

(C) If sent by private express carrier, the date recorded on the transmittal receipt shall be treated as the postmark date.

(D) If the writing or remittance bears a postmark date that is not legible or bears a postmark date dated later than the due date, it will be treated as having been mailed on or before the due date provided the person who is required to file the writing or remittance establishes by sworn affidavit that it was actually deposited on or before the due date in the hands of a private express carrier or in a government mail receptacle before the last collection of mail for the place in which it was deposited.

(E) Any writing or remittance having a legible postmark other than that of the United States Postal Service and bearing a proper due date is considered timely filed although not received by the Department within the ordinary delivery time for such class mail if it is established that the delay was due to a delay in the transmission of the mail.

(b) If the department has no record of receiving a return, the taxpayer may be able to establish satisfactory proof of timely mailing. Examples of evidence the department will consider include:

(A) A history of timely filing returns with the department;

(B) Proof of timely filed federal returns;

(C) Written documentation from the taxpayer which would indicate that the taxpayer had timely filed. Such documentation may include correspondence to the department about refunds not received, or about checks for payment of tax which remain uncashed.

(3) If the person required to file the document has reason to believe that the mailing of the writing or remittance is so close to the deadline that it could possibly fail to meet the requirements of timely filing, the writing or remittance should be mailed by registered or certified mail so that the sender will be able to obtain an official receipt in verification of the date the document was mailed.

(4) In order for a writing or remittance to be considered "properly mailed" it must have been placed in a properly addressed envelope or other appropriate wrapper, postage duly prepaid, and placed in the hands of a private express carrier or deposited in a government mail receptacle.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.820
Hist.: 11-71; 12-19-75; RD 7-1993, f. 12-30-93, cert. ef. 12-31-93; RD 5-1994, f. 12-15-94, cert. ef. 12-31-94

150-305.992

Returns Not Filed for Three Consecutive Years; 100 Percent Penalty

(1) General requirements. The 100 percent penalty under ORS 305.992 may be imposed if:

(a) The taxpayer was required to file returns for each tax year of three or more consecutive years including returns for tax periods of less than 12 months; and

(b) All returns due during the three-year period are not filed by the due date (including extensions) of the return required for the third consecutive year. Assessments under ORS 305.265(10) are not returns for the purpose of the penalty under ORS 305.992.

Example 1: On July 1, 2008, Mary filed her Oregon individual income tax returns for 2004, 2005, and 2007. In 2006, Mary was a nonresident and had no Oregon source income. Mary was not required to file an Oregon return for each of three or more consecutive taxable years because she had no Oregon source income in 2006. The 100 percent penalty will not be imposed on the 2004, 2005, or 2007 returns.

Example 2: Assume the same facts as Example 1 except that Mary had income from Oregon sources in 2006 and was required to file a return for 2006 but did not. The requirement that tax returns for three consecutive years were not filed by the due date of the third consecutive year was met and the 100 percent penalty will be imposed on the 2004, 2005, 2006, and 2007 returns.

(2) Under authority granted in ORS 305.229, the department will not impose the 100 percent penalty under ORS 305.992 for returns filed or a Notice of Tax Determination and Assessment (NTDA) that have been assessed a lower failure-to-file penalty.

Example 3: Laurie did not file returns for tax years 2003, 2004, or 2005. In 2005, the department issued NTDAs for tax years 2003 and 2004. The 2003 and 2004 NTDAs reflect a 50 percent failure-to-file penalty under ORS 314.400. In 2006, the department issues a NTDA for tax year 2005. The 2005 NTDA reflects the 100 percent failure-to-file penalty under ORS 305.992. The department will not assess a 100 percent penalty for the NTDAs issued for tax years 2003 and 2004 because a penalty was previously assessed. Thus, the penalty would remain at 50 percent for tax years 2003 and 2004.

Example 4: In November 2007, Hilda filed her 2003 and 2004 tax returns. The department asserted a 25 percent failure-to-file penalty on both the 2003 and 2004 returns. In January 2008, she filed her 2005 and 2006 tax returns. The department asserted the 100 percent failure-to-file penalty on both the 2005 and 2006 returns because the 2003, 2004, and 2005 returns were all filed after the due date for the 2005 return and the 2004, 2005, and 2006 returns were all filed after the due date for the 2006 return. Even though the 2003 and 2004 returns were subject to the 100 percent penalty, the department will not increase the penalty to 100 percent because a lower penalty was previously assessed. Thus, the penalty would remain at 25 percent for tax years 2003 and 2004.

(3) Net tax liability. The penalty is 100 percent of the net tax liability determined for each taxable year. The net tax liability is the tax remaining after subtracting credits, withholding, and other prepayments from the tax required to be shown on the return. A net tax liability may be determined by the taxpayer, an assessment under ORS 305.265(10), an examination, or audit of a return by the department.

Example 4: On September 27, 2007, Jack filed Oregon income tax returns for 2005 and 2006. The 2006 return showed Oregon tax of $450, state withholding of $700 and a refund of $250. The 2005 return has a net tax liability of $325. Jack was required to file a return for 2004 but did not file a return. Because Jack did not file all returns due during the three-year period by the due date of the 2006 return, the penalty may be assessed on 100 percent of the net tax liability for 2005.

Example 5: Assume the same facts as in Example 4 except that upon examination, the department adjusted the refund claim for 2006 and asserted a deficiency. The penalty may be assessed on 100 percent of the net tax liability for taxable years 2005 and 2006.

Example 6: Assume the same facts as in Example 5 except that the department assessed a tax under ORS 305.265(10) for 2004. The penalty may be imposed on 100 percent of the net tax liability for each taxable year: 2004, 2005, and 2006.

Example 7: Assume the same facts as in Example 4 except that the department asserted a deficiency one year later for tax year 2006 as the result of an audit. The auditor recomputed Oregon tax to be $1,017. After application of withholding and refunds already received, the taxpayer owed an additional $567 of tax. The 100 percent penalty may be assessed on the net tax liability of $317 for tax year 2006 (the corrected tax of $1,017 less the $700 of withholding) and on the net tax liability of $325 for tax year 2005.

Example 8: Assume the same facts as in Example 4 except that Jack was granted a federal extension to file the 2006 return until October 15, 2007. The 100 percent penalty does not apply. The returns for 2005 and 2006 were filed before the due date of the return required for the third year (October 15, 2007).

(4) Timber tax returns. Timber tax returns are those required to be filed under ORS 321.045 and 321.733 (2003) and 321.322 and 321.435 (2001). A timber tax return is required to be filed if a taxpayer:

(a) Harvested timber; or

(b) Obtained a Notification of Operations (permit) indicating the taxpayer would harvest. Obtaining a permit will cause the department to generate returns. There does not need to be a harvest to meet the filing qualification because non-harvests require a "NO HARVEST" filing.

Example 9: A taxpayer was required to file returns for 2003, 2004 and 2005 after harvesting timber in each of those years. If all three returns are not filed by January 31, 2006, the 100 percent penalty may be applied to any net tax liability for each of the three years.

Example 10: In 2003 and 2004 a taxpayer obtained permits to harvest; no harvest occurred for either year and the taxpayer did not file returns. In 2005 the taxpayer did not obtain a permit, but harvested timber. If a return is not filed by January 31, 2006, the 100 percent penalty may be applied to the 2005 net tax liability.

(5) Oregon withholding tax payment due dates are determined by the corresponding federal due dates. Generally, withholding tax reports are filed for four quarters per year. The 100 percent penalty will apply if the taxpayer failed to file 12 consecutive quarters representing three consecutive years.

Example 11: After February 1, 2006, an employer filed withholding tax reports for first through fourth quarter 2005, first through fourth quarter 2004 and first through fourth quarter 2003. The taxpayer is subject to the 100 percent penalty on all of the late reports.

Example 12: On May 30, 2007, an employer files withholding tax reports for first quarter 2007, fourth quarter 2006, and second quarter 2005. All other quarters have been filed timely. The 100 percent penalty is not assessed because the taxpayer was not delinquent for 12 consecutive quarters (three years).

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 305.992
Hist.: RD 11-1988, f. 12-19-88, cert. ef. 12-31-88; RD 7-1989, f. 12-18-89, cert. ef. 12-31-89; RD 12-1990, f. 12-20-90, cert. ef. 12-31-90; RD 6-1996, f. 12-23-96, cert. ef. 12-31-96; REV 3-2005, f. 12-30-05, cert. ef. 1-1-06; REV 11-2007, f. 12-28-07, cert. ef. 1-1-08

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