No. 16 March 24, 2016 795

IN THE SUPREME COURT OF THE

STATE OF OREGON

Leslie SCOTT,

Plaintiff-Appellant,

v.

DEPARTMENT OF REVENUE,

Defendant-Respondent.

(TC 5192, SC S062085)

On appeal from the Oregon Tax Court.*

Submitted on the briefs and the record July 16, 2015.

Orrin L. Grover, Woodburn, filed the briefs for appellant.

Vanessa A. McDonald, Assistant Attorney General, 

Salem, filed the brief for respondent. With her on the brief 

was Ellen F. Rosenblum, Attorney General.

Before Balmer, Chief Justice, and Kistler, Walters, 

Landau, Brewer, and Baldwin, Justices, and Linder, Senior 

Judge, Justice pro tempore.**

BALMER, C. J.

The judgment of the Tax Court is reversed, and the case 

is remanded to the Tax Court for further proceedings.

Case Summary: The Tax Court dismissed taxpayer’s complaint on the basis 

that the taxpayer had not satisfied (as an alternative to the prerequisite in ORS 

305.419(1) that the taxes assessed be paid on or before the filing of a complaint) 

the requirement in ORS 305.419(3) to file “an affidavit alleging undue hardship 

with the complaint,” which the court deemed jurisdictional. Held: (1) The filing 

of an affidavit alleging undue hardship with the complaint, as ORS 305.419(3) 

provides, is legally required but is not jurisdictional; (2) it is the failure to establish undue hardship, not the failure to file an affidavit with the complaint, that is 

cause for dismissal; and (3) the Tax Court erred in dismissing taxpayer’s appeal 

on the ground upon which it relied.

The judgment of the Tax Court is reversed, and the case is remanded to the 

Tax Court for further proceedings.

______________

** On appeal from the Oregon Tax Court, Henry C. Breithaupt, Judge. 21 

OTR 313 (2013)

** Nakamoto, J., did not participate in the consideration or decision of this 

case.
796 Scott v. Dept. of Rev.

BALMER, C. J.

Taxpayer appeals a judgment of the Regular 

Division of the Tax Court that dismissed his appeal from 

the Magistrate Division to the Regular Division for lack of 

jurisdiction. For the reasons set out below, we reverse the 

judgment of the Tax Court and remand to the Tax Court for 

further proceedings.

The facts, which are undisputed in all respects 

save one, are taken from the Tax Court decision and the 

record. In 2012, the Department of Revenue issued notices 

of deficiency assessments against taxpayer relating to his 

personal income taxes for the tax years 2007 and 2008. 

Taxpayer appealed, and the Magistrate Division of the Tax 

Court determined that taxpayer had substantiated some 

claimed deductions that the department had disputed, but 

also that he had additional unreported income.1

 Following 

the proceedings in the Magistrate Division, the department 

assessed additional income taxes for 2007 and 2008, and 

issued notices of liability balances to that effect. Taxpayer 

appealed to the Regular Division. The Tax Court received 

taxpayer’s complaint, a declaration of mailing, a motion for 

a stay of the requirement to pay the taxes owed, and the 

filing fee for the complaint. The Tax Court did not, however, 

receive from taxpayer an affidavit, with the complaint, alleging that payment of the disputed amounts pending appeal 

would cause him undue hardship.

The department moved to dismiss taxpayer’s 

complaint on the ground that the court lacked jurisdiction over the subject matter because taxpayer had not 

complied with the requirements of ORS 305.4192

 and

1 Because of the procedural posture of this case, the Magistrate Division’s 

decision is not relevant to any issue currently before us, and we do not discuss it 

further. 

2 Throughout this opinion, we cite and apply the 2011 version of the applicable statutes and rules.

ORS 305.419 (2011) provides, in part:

“(1) Except as provided in subsection (3) of this section, in any appeal 

from an order, act, omission or determination of the Department of Revenue 

involving a deficiency of taxes imposed upon or measured by net income, the 

tax assessed, and all penalties and interest due, shall be paid to the department on or before the filing of a complaint with the regular division of the 
Cite as 358 Or 795 (2016) 797

TCR 18 C.3 Those provisions generally require that, as a 

precondition to appealing certain orders involving income 

tax deficiencies, the taxpayer must pay the taxes assessed 

and all penalties and interest due, or, alternatively, “file 

an affidavit alleging undue hardship with the complaint.” 

Taxpayer opposed the department’s motion and submitted a declaration by his counsel that, according to counsel’s recollection, he had printed and assembled a packet 

for mailing to the Tax Court that included a complaint, 

a declaration of mailing, a motion for a stay, a hardship 

declaration, and a filing fee. Taxpayer’s counsel further 

declared that the file origin data on his computer indicated that the complaint, motion, and declaration were 

all “last modified” within five minutes of each other on 

August 23, 2013, the date that he mailed the package. 

Counsel also submitted a copy of taxpayer’s hardship declaration that he claimed he had included with the complaint.4

 The Tax Court held a telephonic hearing on the 

Oregon Tax Court under ORS 305.560 or before a complaint specially designated for hearing in the regular division under ORS 305.501 is heard. The 

complaint shall be filed as a claim for refund.

“* ****

“(3) Where payment of the tax, penalties and interest would be an undue 

hardship, plaintiff may file an affidavit alleging undue hardship with the 

complaint. If the tax court finds undue hardship, the tax court judge may 

stay all or any part of the payment of tax, penalty and interest required 

under subsection (1) of this section. If the tax court judge finds no undue 

hardship, the tax court judge may grant the plaintiff up to 30 days from the 

date of determination to pay the taxes, penalties and interest. Failure by the 

plaintiff to pay the taxes, penalties and interest or to establish undue hardship will be cause for dismissing the complaint.”

3 TCR 18 C (2011) provides, in part:

“In all income tax cases where the plaintiff is the taxpayer, the complaint 

must allege that the assessed taxes, penalties, and interest have been paid, 

and the requested relief should be for a refund. If the taxes, penalties, and 

interest have not been paid because payment would be an undue hardship, 

the complaint should so allege and seek to have the assessment set aside. 

Complaints alleging undue hardship must be accompanied by (1) a motion 

for stay of payment and (2) an affidavit setting forth the specific facts and 

circumstances which establish undue hardship. See ORS 305.419.” 

4 The hardship declaration that plaintiff ultimately filed was on the form 

used by the Tax Court to determine whether a taxpayer is eligible to have the filing fee waived. Although that form generally provided the same information that 

would be included in an affidavit of hardship under ORS 305.419(3), it is not, in 

fact, an affidavit. The Tax Court noted that distinction, but did not rely upon it in 

deciding this case, and we do not address the issue.
798 Scott v. Dept. of Rev.

department’s motion, giving the parties an opportunity 

to elaborate on the factual and legal arguments made in 

their previously filed memoranda.

Ultimately, the Tax Court granted the department’s 

motion. Scott v. Dept. of Rev., 21 OTR 313, 315 (2013). The 

court stated that, to satisfy the jurisdictional requirements 

of the tax statutes, taxpayer was required to file an affidavit alleging undue hardship with the complaint. Id. at 

314. It determined that, in context, the permissive “may” 

in ORS 305.419(3) (“plaintiff may file an affidavit alleging 

undue hardship with the complaint”) becomes a mandatory 

requirement when the taxpayer does not pay the tax in full, 

as required by ORS 305.419(1). Id. Turning to the factual 

question of whether taxpayer had filed an affidavit with the 

complaint, the Tax Court noted that it had received all of 

the items taxpayer’s counsel claimed he had sent, except 

for the hardship declaration. Id. The Tax Court observed 

that counsel for taxpayer stated only that, to the best of his 

recollection, he had included taxpayer’s hardship declaration in the packet he mailed to the court. Id. at 315. The 

Tax Court stressed that, at the hearing on the department’s 

motion, counsel for taxpayer “stated that he did not know 

why the court did not receive the declaration, but that he 

may be mistaken about his best recollection that it was in 

the packet sent to the court.” Id. at 314.

The Tax Court concluded that taxpayer had not provided evidence that, more probably than not, the hardship 

declaration was sent but misplaced by the court. Id. at 315. 

The Tax Court also rejected taxpayer’s legal argument that 

his counsel’s action in signing the motion for stay of payment should be considered the affidavit of plaintiff because, 

under TCR 17, an attorney’s signature certifies the accuracy of factual assertions contained in the motion—in this 

case, the factual basis for plaintiff’s claim of hardship. Id. at

314-15. Taxpayer then filed a motion for reconsideration of 

the order and judgment, which the Tax Court denied. The 

Tax Court subsequently entered a judgment against taxpayer dismissing his complaint and sustaining the department’s notices of tax assessment and liability balance for the 

2007 and 2008 tax years.
Cite as 358 Or 795 (2016) 799

Taxpayer now appeals the dismissal of his complaint. Our review is “limited to errors or questions of law or 

lack of substantial evidence in the record to support the tax 

court’s decision or order.” ORS 305.445.

A party dissatisfied with a Magistrate Division 

decision may appeal by filing a complaint in the Regular 

Division of the Tax Court within 60 days after the date of 

entry of the written decision. ORS 305.501(5)(a). See generally Village at Main Street Phase II v. Dept. of Rev., 356 

Or 164, 167-68, 339 P3d 428 (2014) (explaining differences 

between Magistrate Division and Regular Division). We first 

consider whether the filing of an affidavit of hardship with 

the complaint, as described in ORS 305.419(3), is a jurisdictional requirement for an appeal to the Regular Division 

of the Tax Court when a taxpayer challenges a department 

order assessing an income tax deficiency, if the taxpayer 

fails to pay the tax assessed on or before the date the complaint is filed.5

 Because we conclude that the filing of an affidavit of hardship with the complaint is not a jurisdictional 

requirement, we need not consider taxpayer’s arguments 

that he met that statutory requirement. Instead, we reverse 

and remand for further proceedings before the Tax Court 

consistent with this opinion.

Taxpayer suggests that the Tax Court wrongly 

decided the case on which the department relies, Curtis I 

v. Dept. of Rev., 19 OTR 123 (2006), which held that failure to comply with the alternative requirements of ORS 

305.419(3) is a jurisdictional defect that requires dismissal. 

In turn, Curtis relied in part on this court’s decision in 

Leffler Industries v. Dept of Rev., 299 Or 481, 704 P2d 97 

(1985). In Leffler, this court held that the requirement in 

5 We note that the statute at issue here was amended in 2015, and that 

the situation in which taxpayer finds himself is unlikely to arise in the future. 

Subsection (3) of ORS 305.419 now provides:

“Where payment of the tax, penalty and interest would be an undue 

hardship, plaintiff may file an affidavit alleging undue hardship within the 

time described in subsection (1) of this section. A plaintiff’s failure to file 

an affidavit alleging hardship is not grounds for dismissal of the complaint, 

provided the plaintiff files the affidavit within 30 days after receiving notice 

of lack of an affidavit alleging undue hardship from the court.”

Or Laws 2015, ch 45, §1. The 2015 amendments took effect October 5, 2015 and 

do not apply to taxpayer’s appeal in this case.
800 Scott v. Dept. of Rev.

ORS 305.419(1)—to pay all taxes assessed, plus penalties 

and interest, on or before the filing of a complaint with 

the Tax Court—was a jurisdictional requirement. Leffler, 

299 Or at 485-86. Following Leffler, the Tax Court held, 

as noted, that the alternative to paying the tax owed—

establishing undue hardship by filing an affidavit to that 

effect with the complaint, as provided in ORS 305.419(3)—

also is jurisdictional. Smith v. Dept. of Rev., 16 OTR 44 

(2002) (so holding); see also Curtis (same).

Taxpayer urges that “the underpinning of Curtis 

must be carefully analyzed,” and stresses that Curtis does 

not bind this court in determining whether or how Leffler

applies. Taypayer observes that ORS 305.419(1), which 

requires that a taxpayer appealing an order involving 

an income tax deficiency pay the amount owed, uses the 

mandatory command “shall.” In contrast, ORS 305.419(3), 

which provides the alternative of filing an affidavit of undue 

hardship, uses the permissive term “may.” For that reason, 

he suggests that Curtis was wrongly decided. Taxpayer 

argues that he adequately complied with any jurisdictional 

requirement in ORS 305.419 and that the Tax Court erred 

by dismissing his complaint for failure to comply with that 

statute.

Our task is to discern the legislature’s intent in 

enacting ORS 305.419(3). ORS 174.020(1)(a). In interpreting a statute, we give primary weight to text and 

context. State v. Gaines, 346 Or 160, 171, 206 P3d 1042 

(2009). For convenience, we again set out the text of ORS 

305.419(3):

“Where payment of the tax, penalties and interest 

would be an undue hardship, plaintiff may file an affidavit alleging undue hardship with the complaint. If the tax 

court finds undue hardship, the tax court judge may stay 

all or any part of the payment of tax, penalty and interest required under subsection (1) of this section. If the tax 

court judge finds no undue hardship, the tax court judge 

may grant the plaintiff up to 30 days from the date of determination to pay the taxes, penalties and interest. Failure 

by the plaintiff to pay the taxes, penalties and interest or to 

establish undue hardship will be cause for dismissing the 

complaint.”
Cite as 358 Or 795 (2016) 801

Taxpayer makes no substantive argument as to how 

the legislature intended ORS 305.419(3) to operate, beyond 

noting the use of the permissive word “may” in the phrase 

“may file an affidavit.” The department, for its part, relies 

on the Tax Court’s decision in Curtis, arguing that the affidavit was required to have been filed “with” the complaint, 

in a temporal sense, and that taxpayer’s failure to do so is a 

jurisdictional defect fatal to his appeal.

This court is responsible for determining the correct meaning of a statutory provision, regardless of whether 

that interpretation is asserted by the parties. Stull v. Hoke, 

326 Or 72, 77, 948 P2d 722 (1997). In the past, we have distinguished between statutes that are mandatory and those 

that are directory only. McFarlane v. Cornelius, 43 Or 513, 

525-28, 73 P 325 (1903) (statute requiring proof of service 

of a summons by publication be made by affidavit of newspaper printer within six months after last day of publication is directory only; upholding service even though affidavit was filed outside the six-month window). However, in 

Anaconda Company v. Dept. of Rev., 278 Or 723, 727, 565 

P2d 1084 (1977), we observed that the words “mandatory” 

and “directory” are labels applied to conclusions about the 

effect attached to noncompliance with statutory requirements. We pointed out that use of those labels can confuse 

two distinct issues: first, the intended effect of a particular 

statutory requirement; second, whether the failure to follow a required procedure may nevertheless be excused. Id.

at 726-27. That compliance with a statutory requirement is 

obligatory (i.e., legally required) says little about whether 

a procedural failure is fatal. Id. at 727. That latter question necessarily is based on the particular statutory enactment and involves determining the legislature’s intent. Id.

at 727-28.

With that background, we first address whether taxpayer was required to file “an affidavit alleging undue hardship with the complaint.” ORS 305.419(3). Ordinarily, the 

use of the word “may” in a statute is permissive; it denotes 

permission, authority, or liberty to do something. See Nibler 

v. Dept. of Transportation, 338 Or 19, 26-27, 105 P3d 360 

(2005) (considering dictionary definitions of word “may”). 
802 Scott v. Dept. of Rev.

Thus, ORS 305.419(3), by itself, authorizes, but does not 

require, the filing of an affidavit. But the choice of whether 

to file an affidavit comes with consequences. In that regard, 

ORS 305.419(1) provides context for ORS 305.419(3). The 

former subsection requires the payment of the tax assessed, 

along with penalties and interest, “on or before the filing of 

a complaint.” ORS 305.419(1). The only exception to the payment requirement is “as provided in subsection (3) of this 

section[.]” Id. Accordingly, to be relieved from the payment 

requirement, a taxpayer must comply with the affidavit 

requirement in ORS 305.419(3).

Stated another way, the filing of an affidavit is permissive in the sense that it is not required to be filed in all 

circumstances; but it is legally required (in a sense, “mandatory”) in situations where a taxpayer wishes to be exempted 

from the otherwise applicable obligation to pay the taxes 

assessed in order for the Regular Division of the Tax Court 

to have jurisdiction over the taxpayer’s appeal. In the latter 

instance, the filing of an affidavit alleging undue hardship, 

as permitted by ORS 305.419(3), is obligatory. See McCain 

v. State Tax Com., 227 Or 486, 489, 360 P2d 778 (1961), 

overruled on other grounds by Stroh v. SAIF, 261 Or 117, 

120, 492 P2d 472 (1972). (“We think that the word ‘may’ 

in this context is permissive in the sense that it expresses 

the grant of a remedy which, but for the statute, would not 

have existed. But the means designated for making the 

remedy available to the taxpayer are an integral part of the 

grant.”).

Our conclusion that ORS 305.419(3) requires a taxpayer to file an affidavit alleging undue hardship with his 

complaint (as an alternative to paying the taxes owed) as a 

condition of pursuing his appeal does not make such a filing 

necessarily jurisdictional. Rather, for the reasons discussed 

below, we conclude that the filing of an affidavit alleging 

undue hardship with the complaint is not jurisdictional.

We return to the wording of the statute. The first 

sentence provides that “[w]here payment of the tax *** 

would be an undue hardship, plaintiff may file an affidavit alleging undue hardship with the complaint.” That sentence permits a taxpayer to file a hardship affidavit with the 
Cite as 358 Or 795 (2016) 803

complaint “where” payment of the tax “would be an undue 

hardship.” The sentence does not indicate who makes the 

determination that payment of the tax “would be” an undue 

hardship. However, because the statute authorizes the taxpayer to take a specific action—to file an affidavit—the only 

reasonable inference is that, at least in the first instance, 

it is the taxpayer who does so, if the taxpayer asserts that 

payment of the tax “would be an undue hardship.” The next 

two sentences are directed at the Tax Court and make clear 

that, the taxpayer’s claim of hardship notwithstanding, the 

court renders the ultimate decision concerning whether payment of the tax would, in fact, be an undue hardship for 

the taxpayer. If the Tax Court finds undue hardship, the 

court “may stay all or any part of the payment of tax[.]” 

Conversely, if the Tax Court does not find undue hardship, 

the court “may grant the plaintiff up to 30 days from the 

date of determination to pay the taxes[.]”

The fourth and final sentence specifies the consequences of a taxpayer’s failure to take certain action. A taxpayer’s failure to pay the taxes “or to establish undue hardship will be cause for dismissing the complaint.” (Emphasis 

added). From that sentence, we glean two things.

First, the alternative to not paying the taxes due 

on or before filing the complaint is not merely the filing of 

an affidavit; instead, the taxpayer must “establish” undue 

hardship. To be sure, a taxpayer may seek to establish 

undue hardship through the filing of an affidavit. But the 

emphasis on a taxpayer’s need to “establish” undue hardship suggests the necessity for a procedure that provides an 

opportunity for the taxpayer to meet that requirement and 

for the Tax Court to determine whether the taxpayer has 

done so.

And, indeed, the Tax Court established just such a 

procedure when it promulgated TCR 18 C. That rule requires 

complaints alleging undue hardship to be accompanied by a 

motion for stay of payment as well as an affidavit “setting 

forth the specific facts and circumstances which establish 

undue hardship.” The rule goes on to state:

“In such cases, the following procedures shall apply:
804 Scott v. Dept. of Rev.

“C(1) The defendant may file objections to the motion 

for stay of payment within 30 days following service of the 

motion. If the defendant objects to the motion and the court 

cannot determine from the plaintiff’s affidavit whether 

payment of the tax, penalty, and interest would be an 

undue hardship, the court may require the plaintiff to submit further proof of hardship in writing or the court may 

schedule a hearing for that purpose. All hardship hearings 

shall be conducted by telephone and recorded, unless the 

court determines that the circumstances require the parties to appear personally.

“C(2) If the court finds undue hardship, an order 

will be entered staying payment of all or a portion of the 

assessed tax, penalty, and interest pending final judgment 

in the case. Defendant shall file a response to the complaint 

within 10 days following the date of the order staying 

payment.

“C(3) If the tax court finds no undue hardship, the 

court shall issue an order granting the plaintiff up to 30 

days from the date of the order to pay the tax, penalty, and 

interest. Failure of the plaintiff to pay the tax, penalty, 

and interest and to submit proof of payment within the 

time allowed by the court will be cause for dismissal of the 

complaint.” 

Thus, TCR 18 C does three things: (1) It adds a requirement 

not found in the statute (the filing of a motion for stay of 

payment); (2) it fleshes out what the affidavit must contain 

(the specific facts and circumstances which establish undue 

hardship); and (3) it sets out a procedure that enables the 

Tax Court to obtain additional information from which to 

evaluate a taxpayer’s assertion of undue hardship (objections from the defendant; “further proof” from the taxpayer 

in writing or at a hearing). Accordingly, the filing of an affidavit is not the sole determinant of whether a taxpayer has 

complied with the alternative to the payment of taxes on or 

before the filing of the complaint.

Second, the final sentence of ORS 305.419(3) identifies the consequences of noncompliance with the statute: 

dismissal of the complaint. It is the failure to establish 

undue hardship, however, not the failure to file an affidavit 

with the complaint, that is cause for dismissal.
Cite as 358 Or 795 (2016) 805

Statutory requirements related to court procedures 

are jurisdictional if the legislature intended them to be, 

Frederick v. Douglas Co. et al., 176 Or 54, 63-64, 155 P2d 

925 (1945), and we generally look at the purpose of a statute 

to determine whether the legislature intended compliance 

with a statutory provision to be a jurisdictional requirement. 

See Hood River County v. Dabney, 246 Or 14, 22-23, 423 P2d 

954 (1967) (in enacting tax foreclosure statutes, legislature 

had two opposing interests to consider, interest of taxpayers 

in receiving notice, and interests of counties and purchasers 

at foreclosure sales in marketable title; concluding that all 

defects in tax foreclosure proceedings are nonjurisdictional 

unless taxpayer deprived of due process).

Returning to ORS 305.419, we note at the outset 

that that statute does not authorize a taxpayer to appeal 

anything. Compare State v. Nix, 356 Or 768, 773-74, 345 

P3d 416 (2015) (statute providing that in any appeal appellate court may review claim that sentencing court failed to 

comply with requirements of law does not authorize state 

to appeal anything; instead, statute refers to issues that 

may be reviewed in a case otherwise appealable). Rather, 

it is ORS 305.501(5)(a) that authorizes a taxpayer’s appeal. 

(“Any party dissatisfied with a written decision of a magistrate may appeal the decision to the judge of the tax court 

by filing a complaint in the regular division of the tax court 

within 60 days after the date of entry of the written decision.”).6

 ORS 305.419(1) instead specifies a condition precedent for the subset of Tax Court appeals that involve income 

tax disputes: payment of the tax assessed, and all penalties 

and interest due, on or before the filing of the complaint. And 

ORS 305.419(3) then provides an alternative to that condition, if the taxpayer establishes that payment of the taxes 

would be an undue hardship. The legislature intended to 

provide a taxpayer the opportunity to obtain an exemption 

from the otherwise applicable requirement of payment of the 

assessed income taxes while the appeal is pursued—if the 

taxpayer can establish undue hardship. We hesitate to deem 

6 See also ORS 305.570(1)(a) (“Any person * ** aggrieved by and affected by 

a written decision of a tax court magistrate issued under ORS 305.501 * ** may 

appeal to the regular division of the Oregon Tax Court, and appeal shall be perfected in the manner provided in ORS 305.404 to 305.560.”). 
806 Scott v. Dept. of Rev.

as jurisdictional a statutory requirement that is designed to 

allow someone without funds access to the courts to pursue 

their statutory appeal rights. That is especially true when 

nothing in the text of ORS 305.419(3) appears to reflect any 

considered legislative intent to make the filing of an affidavit with the complaint jurisdictional. As noted earlier, what 

makes the taxpayer’s complaint subject to dismissal is the 

failure to establish undue hardship, not the failure to file an 

affidavit with the complaint.

Our holding is limited to the question of whether, 

under ORS 305.419(3), taxpayer’s failure to file an affidavit 

of undue hardship with the complaint was a jurisdictional 

defect. Because it was not, the Tax Court erred in dismissing taxpayer’s appeal on that ground. We express no opinion 

as to any other procedural or substantive aspect of taxpayer’s appeal. We reverse and remand for further proceedings 

consistent with this opinion.

The judgment of the Tax Court is reversed, and the 

case is remanded to the Tax Court for further proceedings.