Oregon Administrative Rules › Chapter 150 - DEPARTMENT OF REVENUE › Division 316 - PERSONAL INCOME TAX GENERAL PROVISIONS › Section 150-316-0489 - Estimated Tax: Underpayment Interest Not Imposed If There Is Reasonable Cause

Current through Register Vol. 63, No. 7, July 1, 2024
(1) No interest
			 for underpayment of estimated tax will be imposed on any portion of the
			 underpayment if in or prior to the tax year the estimated tax payment was
			 required to be made, the taxpayer retired after attaining age 62 or became
			 disabled, and the underpayment was due to reasonable cause and not to willful
			 neglect. The determination of whether the taxpayer's actions were due to
			 reasonable cause and not willful neglect is made on a case-by-case basis,
			 taking into account all pertinent facts and circumstances. The most important
			 factor is the extent of the effort required by the taxpayer to assess the
			 taxpayer's proper liability.
(2)
			 The following are examples of situations that will be accepted by the
			 department as reasonable cause for not imposing interest.
(a) Where the failure to make the necessary
			 estimated tax payment or failure to pay the correct amount of estimated tax was
			 caused by the unavoidable and unforeseen absence of the taxpayer from the state
			 immediately prior to the due date of the estimated tax payment.
(b) Where the failure to make the necessary
			 estimated tax payment or failure to pay the correct amount of estimated tax was
			 caused by reliance on an information return or other facts, if under all the
			 circumstances, such reliance was reasonable and the taxpayer acted in good
			 faith. Reliance on information reported on a Form W-2, Form 1099 or other
			 information is reasonable if the taxpayer did not know or have reason to know
			 that the information was incorrect. Generally, a taxpayer knows or has reason
			 to know that the information on an information return is incorrect if such
			 information is inconsistent with other information reported or otherwise
			 furnished to the taxpayer, or with the taxpayer's knowledge of the transaction.
(c) Where the failure to make the
			 necessary estimated tax payment or failure to pay the correct amount of
			 estimated tax was caused by incorrect professional advice and:
(A) The taxpayer relied upon the advice of an
			 individual who the taxpayer could reasonably assume was knowledgeable and
			 experienced in the tax involved;
(B) The taxpayer supplied the individual with
			 complete information connected with the advice given; and
(C) The taxpayer could not reasonably be
			 expected to be knowledgeable in the tax matter connected with the erroneous
			 advice.
(d) Where the
			 taxpayer exercised ordinary business care and prudence and nevertheless was
			 unable to make the necessary estimated tax payment or to pay the correct amount
			 of estimated tax.
(e) Where the
			 taxpayer is unable to obtain records necessary to determine the amount of
			 estimated tax due, for reasons beyond the taxpayer's control.
(f) Where the taxpayer failed to pay the tax
			 based on erroneous written information received from an employee of the
			 Department of Revenue.
(g)
			 Examples:
(A) Bob, age 65, retired from his
			 job on March 30, 2003. Bob did not request that Oregon state tax be withheld
			 from his retirement income and he didn't know that he needed to make estimated
			 tax payments. When Bob filed his 2003 tax return he found he owed $1,500 of
			 tax. Since the underpayment was not due to reasonable cause, interest on
			 underpayment of estimated tax will be imposed.
(B) Grace, age 62, retired from her job on
			 February 1, 2003. Before Grace retired she consulted her tax consultant for
			 advice on when to retire and what payment elections to make. Grace turned all
			 her paperwork over to her tax consultant to fill out. The tax consultant
			 neglected to have Oregon state tax withheld from Grace's retirement income.
			 Because the underpayment was due to reasonable cause, interest on underpayment
			 of estimated tax will not be imposed.