OAR 150-305-0068
Discretionary Penalty Waivers

(1) Taxpayers who believe a penalty was imposed improperly may contest the penalty as provided in OAR 150-305-0060 (How to Appeal When the Department Denies a Request for Waiver of Penalty or Interest).
(2) For rules governing the waiver of penalty imposed under ORS 314.402 (Understatement of net tax), 316.177 (Reliance on withholding statement or exemption certificate) or 316.992 (Penalty for filing incorrect return that is based on frivolous position or is intended to delay or impede administration) see ORS 316.177 (Reliance on withholding statement or exemption certificate)(4); OAR 150-314-0205 (Substantial Understatement Penalty (SUP)); 150-316-0284 (Penalty), or 150-316-0650 (Waiver of Frivolous Return Penalty Imposed Under ORS 316.992).
(3)(a) The following penalties are eligible for waiver under this rule:
(A) The five percent penalty under ORS 314.400 (Penalty for failure to file report or return or to pay tax when due)(1) or 321.560 (Audit of returns)(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 (Penalty for failure to file report or return or to pay tax when due)(1) or 321.560 (Audit of returns)(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 (Penalty for failure to file report or return or to pay tax when due)(2)(a) or 321.560 (Audit of returns)(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 (Penalty for failure to file report or return or to pay tax when due)(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);
(E) The 100 percent penalty under ORS 305.992 (Civil penalty for failure to file return for three consecutive years) for failure to file three consecutive reports or returns by the due date of the third year (100 percent failure-to-file penalty); and
(F) The $100 penalty under ORS 316.202 (Reports by employer)(3) for failure to file an annual report (Form WR or statewide transit tax annual report).
(b) The following penalties are not eligible for waiver under this rule:
(A) The 100 percent penalty imposed under ORS 305.265 (Deficiency notice)(13), 314.400 (Penalty for failure to file report or return or to pay tax when due)(6), or 321.560 (Audit of returns)(4);
(B) Civil or criminal penalties imposed under ORS Chapter 323 (Cigarettes and Tobacco Products) (cigarette and other tobacco products);
(C) Any penalty if the taxpayer was involved in an “abusive tax shelter” as defined in ORS 314.402 (Understatement of net tax)(4) for the year at issue or any penalty imposed under ORS 314.403 (Listed transaction understatement), 314.404 (Penalty for failure to report reportable transaction), or 314.406 (Penalty for promotion of abusive tax shelter); or
(D) The Working Family Household and Dependent Care Credit penalty under ORS 315.264 (Working family household and dependent care expenses).
(4) Taxpayers, or a taxpayer’s representative authorized under ORS 305.230 (Qualifications of persons representing taxpayer), 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(s) 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 (Penalty for failure to file report or return or to pay tax when due)(1) (five percent failure-to-file or pay penalty), 314.400 (Penalty for failure to file report or return or to pay tax when due)(2)(a)(A) (25 percent failure-to-file penalty), or 321.560 (Audit of returns) (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) Any transit payroll tax program administered by the department under ORS 305.620 (Collection and distribution of local taxes on income and sales), income tax withholding under ORS 316.162 (Definitions for ORS 316.162 to 316.221) to 316.221 (Disposition of withheld amounts), the statewide transit tax under ORS 320.550 (Tax on wages);
(B) Forest Products Harvest Tax and Small Tract Forestland Severance Tax programs authorized under ORS Chapter 321 (Timber and Forestland Taxation); or
(C) Cigarette Tax and Other Tobacco Products Tax programs authorized under ORS Chapter 323 (Cigarettes and Tobacco Products).
(7) Payroll Tax Penalty Waivers. Taxes due under ORS 316.162 (Definitions for ORS 316.162 to 316.221) to 316.221 (Disposition of withheld amounts) and statewide transit tax due under ORS 320.550 (Tax on wages) 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 that are imposed on income tax withholding or transit payroll taxes due under ORS 316.162 (Definitions for ORS 316.162 to 316.221) to 316.221 (Disposition of withheld amounts) or statewide transit tax due under ORS 320.550 (Tax on wages) 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 (Penalty for failure to file report or return or to pay tax when due)(1) (five percent failure-to-file or pay penalty) or 314.400 (Penalty for failure to file report or return or to pay tax when due)(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 (Penalty for failure to file report or return or to pay tax when due)(1), 314.400 (Penalty for failure to file report or return or to pay tax when due)(2)(a)(A), and 314.400 (Penalty for failure to file report or return or to pay tax when due)(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 (Civil penalty for failure to file return for three consecutive years) as follows:
(A) The department will waive 70 percent of the 100 percent failure-to-file penalty if the taxpayer:
(i) Files an income tax withholding, transit payroll, or statewide transit tax 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 an income tax withholding, transit payroll, or statewide transit tax 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 income tax withholding or transit payroll taxes due under ORS 316.162 (Definitions for ORS 316.162 to 316.221) to 316.221 (Disposition of withheld amounts) or statewide transit tax due under ORS 320.550 (Tax on wages) 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 (Penalty for failure to file report or return or to pay tax when due)(1), 314.400 (Penalty for failure to file report or return or to pay tax when due)(2)(a)(A), and 314.400 (Penalty for failure to file report or return or to pay tax when due)(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 (Civil penalty for failure to file return for three consecutive years).
(b) The department will waive part of the 100 percent failure-to-file penalty imposed under ORS 305.992 (Civil penalty for failure to file return for three consecutive years) 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 payroll, income tax withholding, or statewide transit tax 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 (Penalty for failure to file report or return or to pay tax when due)(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.

Source: Rule 150-305-0068 — Discretionary Penalty Waivers, .

150‑305‑0010
Requirement for Social Security Numbers 150‑305‑0014
Applicable Dates 150‑305‑0016
Electronic Filing 150‑305‑0018
Acceptance of Cash Payments 150‑305‑0030
Declaratory Rulings 150‑305‑0040
Public Notification of Delinquent Taxpayers 150‑305‑0050
Release of Tax Lien and Clouds on Title 150‑305‑0052
Release of Lien 150‑305‑0060
How to Appeal When the Department Denies a Request for Waiver of Penalty or Interest 150‑305‑0062
Discretionary Penalty Waivers for Information Returns 150‑305‑0064
Accrual of Interest After Waiver 150‑305‑0066
Discretionary Waiver of Interest 150‑305‑0068
Discretionary Penalty Waivers 150‑305‑0070
Interest Waivers Due to COVID-19 Pandemic Emergency 150‑305‑0080
Closing Agreements 150‑305‑0085
Financial Institution Data Match 150‑305‑0090
Settlement Offer 150‑305‑0092
Suspended Collection Status 150‑305‑0094
Cancellation of Liabilities Discharged in Bankruptcy 150‑305‑0100
Subpoena Issued by the Department 150‑305‑0110
Disclosure of Confidential Information Provided to the Department of Revenue 150‑305‑0120
Implied Consent 150‑305‑0130
When Deduction for Amounts Paid as Wages or Remuneration Permitted 150‑305‑0140
Interest on Deficiencies and Delinquencies 150‑305‑0142
Interest on Refunds 150‑305‑0144
Interest Rate Formula Rule 150‑305‑0150
Defines Order for Purposes of Interest Rate Increase 150‑305‑0152
Interest Rate Increase — Jurisdictional Only Appeals 150‑305‑0160
Penalty for Dishonored Checks 150‑305‑0170
Representation of Taxpayers before the Department of Revenue 150‑305‑0180
Designation of Oregon Tax Matters Partner 150‑305‑0182
Binding Actions of the Tax Matters Partner 150‑305‑0190
Compromise of a Disputed Liability 150‑305‑0192
Appeals of Interest Charged on the Underpayment of Estimated Tax 150‑305‑0194
“Deficiency” Defined 150‑305‑0196
Notices of Deficiency and Assessment Mailed When Authorization to Represent Signed 150‑305‑0198
Reopening an Audit 150‑305‑0200
Adjustments Included in Deficiency Notice When Federal Audit Report Received 150‑305‑0202
Language Used to Request a Conference or File Written Objections 150‑305‑0204
Conferences: Purpose and Procedure 150‑305‑0206
Written Objections: Procedures 150‑305‑0208
Assessing Tax on Failure to File 150‑305‑0210
Last Known Address 150‑305‑0212
Interest on Deficiency 150‑305‑0214
Penalties 150‑305‑0216
Appeal from a Notice of Deficiency: Periods of Limitation 150‑305‑0218
Waiver of a Conference or Written Objection 150‑305‑0230
Claim for Refund 150‑305‑0232
Notices of Proposed Refund Adjustment Mailed When Authorization to Represent Signed 150‑305‑0234
Written Objections to a Proposed Refund Adjustment 150‑305‑0236
Date of Notice 150‑305‑0238
Audit Period for Refunds Issued without Examination 150‑305‑0240
Proposed Refund Adjustment 150‑305‑0260
Relief for Subsequent Tax Years 150‑305‑0270
Beneficial Ownership 150‑305‑0272
Cancellation of Doubtful Liabilities 150‑305‑0274
Refund of Penalty and Interest 150‑305‑0276
Appeal Time Frame 150‑305‑0290
Concurrent Appeals 150‑305‑0300
“Methods of Collection” Defined 150‑305‑0302
Contracts Requiring Certificate of Compliance with Oregon Tax Laws 150‑305‑0304
Certificate of Compliance With Oregon Tax Laws 150‑305‑0306
Circumstances Not in Violation of Oregon Tax Laws 150‑305‑0308
Annual Certification Requirement 150‑305‑0320
Mediation 150‑305‑0330
Appeal Procedures 150‑305‑0340
Stay of Collection: When Collection Action Won’t Be Stayed 150‑305‑0350
Offset of State Debt Through U.S. Treasury Offset Program 150‑305‑0360
Rules Application 150‑305‑0362
Appearance Procedure — Local Taxes Administered by the Department of Revenue 150‑305‑0370
Use of Checkoff Resources 150‑305‑0380
Application and Signature Due Dates 150‑305‑0390
Certification of Nonprofit Entities for Instruction Listing 150‑305‑0392
Definitions of the Terms “Affiliated and “Central Office” 150‑305‑0394
Signatures Must Be on Department’s Form 150‑305‑0396
Signature Gathering Period 150‑305‑0410
Charitable Checkoff Financial Reporting Requirements 150‑305‑0420
Costs of Administration 150‑305‑0430
Method of Distribution from Check-off Contributions and Reimbursement of Administrative Expenses 150‑305‑0450
Depositing Refunds into College Savings Account 150‑305‑0460
Verification of Returns, Statements, or Documents Filed Under Tax Law 150‑305‑0470
Date When Writing or Remittance Deemed Received by Department of Revenue 150‑305‑0480
Returns Not Filed for Three Consecutive Years
Last Updated

Jun. 8, 2021

Rule 150-305-0068’s source at