OAR 150-305-0198
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.

Source: Rule 150-305-0198 — Reopening an Audit, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-305-0198.

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 150-305-0198’s source at or​.us