Or. Admin. Code § 150-305-0290

Current through Register Vol. 63, No. 11, November 1, 2024

Section 150-305-0290 - 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.

Or. Admin. Code § 150-305-0290

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; Renumbered from 150-305.305, REV 46-2016, f. 8-13-16, cert. ef. 9/1/2016

Stat. Auth.: ORS 305.100

Stats. Implemented: ORS 305.305