71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1235
Senate Bill 422
Printed pursuant to Senate Interim Rule 213.28 by order of the
President of the Senate in conformance with presession filing
rules, indicating neither advocacy nor opposition on the part
of the President (at the request of Governor John A. Kitzhaber,
M.D., for Department of Revenue)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Permits notice of deficiency for unpaid tobacco products tax to
be issued within five years after date return was due or filed,
if Department of Revenue determines 25 percent or more
understatement of gross purchases net of discounts as reported on
return.
Eliminates exception from confidentiality for cigarette tax
reports and returns.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to tobacco; creating new provisions; amending ORS
305.265 and 323.595; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Section 2 of this 2001 Act is added to and made
a part of ORS 323.500 to 323.640. + }
SECTION 2. { + If the Department of Revenue finds that an
amount of gross purchases net of discounts equal to 25 percent or
more of the gross purchases net of discounts as reported on the
taxpayer's tobacco products tax return has been omitted from the
return, the department may give notice of deficiency as
prescribed in ORS 305.265 at any time within five years after the
date the return was due or filed, whichever is later. + }
SECTION 3. { + Section 2 of this 2001 Act applies to tobacco
products tax reporting periods beginning on or after January 1,
2001. + }
SECTION 4. ORS 323.595 is amended to read:
323.595. { - (1) - } { + Except as otherwise provided in
ORS 323.500 to 323.640 or where the context requires
otherwise, + } the provisions of ORS chapters 305 and 314 as to
the audit and examination of returns, periods of limitations,
determination of and notices of deficiencies, assessments, liens,
delinquencies, claims for refund and refunds, conferences,
appeals to the Oregon Tax Court, stay of collection pending
appeal, confidentiality of returns and the penalties relating
thereto, and the procedures relating thereto,
{ - shall - } apply to the determinations of taxes, penalties
and interest under the Tobacco Products Tax Act { - , except
where the context requires otherwise - } .
{ - (2) The provisions of ORS chapters 305 and 314 relating
to the confidentiality of returns and the penalties relating
thereto do not apply to reports, returns or other information
submitted to the Department of Revenue with respect to a tobacco
product that is a cigarette as defined in ORS 323.853. - }
SECTION 5. ORS 305.265 is amended to read:
305.265. (1) Except as provided in ORS 305.305, the provisions
of this section { - shall - } apply to all reports or returns
of tax or tax liability including claims under ORS 310.630 to
310.706 filed with the Department of Revenue under the revenue
and tax laws administered by it, except those filed under ORS
chapter 320 { - and ORS 323.005 to 323.455 and 323.990 - } .
(2) As soon as practicable after a report or return is filed,
the department shall examine or audit it, if required by law or
the department deems such examination or audit practicable. If
the department discovers from an examination or an audit of a
report or return or otherwise that a deficiency exists, it shall
compute the tax and give notice to the person filing the return
of the deficiency and of the department's intention to assess the
deficiency, plus interest and any appropriate penalty. Except as
provided in subsection (3) of this section, the notice shall:
(a) State the reason for each adjustment;
(b) Give a reference to the statute, regulation or department
ruling upon which the adjustment is based; and
(c) Be certified by the department that the adjustments are
made in good faith and not for the purpose of extending the
period of assessment.
(3) When the notice of deficiency described in subsection (2)
of this section results from the correction of a mathematical or
clerical error and states what would have been the correct tax
but for the mathematical or clerical error, such notice need
state only the reason for each adjustment to the report or
return.
(4) With respect to any tax return filed under ORS chapter 314,
316, 317 or 318, deficiencies shall include but not be limited to
the assertion of additional tax arising from:
(a) The failure to report properly items or amounts of income
subject to or which are the measure of the tax;
(b) The deduction of items or amounts not permitted by law;
(c) Mathematical errors in the return or the amount of tax
shown due in the records of the department; or
(d) Improper credits or offsets against the tax claimed in the
return.
(5)(a) The notice of deficiency shall be accompanied by a
statement explaining the person's right to make written
objections, the person's right to request a conference and the
procedure for requesting a conference. The statement, and an
accompanying form, shall also explain that conference
determinations are routinely transmitted via regular mail and
that a person desiring to have conference determinations
transmitted by certified mail may do so by indicating on the form
the person's preference for certified mail and by returning the
form with the person's written objections as described in
paragraph (b) of this subsection.
(b) Within 30 days from the date of the notice of deficiency,
the person given notice shall pay the deficiency with interest
computed to the date of payment and any penalty proposed. Or
within that time the person shall advise the department in
writing of objections to the deficiency, and may request a
conference with the department, which shall be held prior to the
expiration of the one-year period set forth in subsection (7) of
this section.
(6) If a request for a conference is made, the department shall
notify the person of a time and place for conference and appoint
a conference officer to meet with the person for an informal
discussion of the matter. After the conference, the conference
officer shall send the determination of the issues to the person.
The determination letter shall be sent by regular mail, or by
certified mail if the person given notice has indicated a
preference for transmission of the determination by certified
mail. The department shall assess any deficiency in the manner
set forth in subsection (7) of this section. If no conference is
requested and written objections are received, the department
shall make a determination of the issues considering such
objections, and shall assess any deficiency in the manner
provided in subsection (7) of this section. The failure to
request or have a conference shall not affect the rights of
appeal otherwise provided by law.
(7) If neither payment nor written objection to the deficiency
is received by the department within 30 days after the notice of
deficiency has been mailed, the department shall assess the
deficiency, plus interest and penalties, if any, and shall send
the person a notice of assessment, stating the amount so
assessed, and interest and penalties. The notice of assessment
shall be mailed within one year from the date of the notice of
deficiency unless an extension of time is agreed upon as
described in subsection (8) of this section. The notice shall
advise the person of the rights of appeal.
(8) If, prior to the expiration of any period of time
prescribed in subsection (7) of this section for giving of notice
of assessment, the department and the person consent in writing
to the deficiency being assessed after the expiration of such
prescribed period, such deficiency may be assessed at any time
prior to the expiration of the period agreed upon. The period so
agreed upon may be extended by subsequent agreements in writing
made before the expiration of the period agreed upon.
(9) The failure to hold a requested conference within the
one-year period prescribed in subsection (5) of this section
shall not invalidate any assessment of deficiency made within the
one-year period pursuant to subsection (7) of this section or
within any extension of time made pursuant to subsection (8) of
this section, but shall invalidate any assessment of interest or
penalties attributable to the deficiency. After an assessment has
been made, the department and the person assessed may still hold
a conference within 90 days from the date of assessment. If a
conference is held, the 90-day period under ORS 305.280 (2) shall
run from the date of the conference officer's written
determination of the issues.
(10)(a) In the case of a failure to file a report or return on
the date prescribed therefor (determined with regard to any
extension for filing), the department shall determine the tax
according to the best of its information and belief, assess the
tax plus appropriate penalty and interest, and give written
notice of the failure to file the report or return and of the
determination and assessment to the person required to make the
filing. The amount of tax shall be reduced by the amount of any
part of the tax which is paid on or before the date prescribed
for payment of the tax and by the amount of any credit against
the tax which may be lawfully claimed upon the return.
(b) Notwithstanding subsection (14) of this section and ORS
305.280, and only to the extent allowed by rules adopted by the
department, the department may accept the filing of a report or
return submitted by a person who has been assessed a tax under
paragraph (a) of this subsection.
(c) The department may reject a report or return:
(A) That is not verified as required by ORS 305.810;
(B) That the department determines is not true and correct as
to every material matter as required by ORS 305.815; or
(C) If the department may impose a penalty under ORS 316.992
(1) with respect to the report or return.
(d) If the department rejects a report or return of a person
assessed a tax under paragraph (a) of this subsection, the
department shall issue a notice of rejection to the person. The
person may appeal the rejection to the magistrate division of the
Oregon Tax Court only if:
(A) The report or return was filed within 90 days of the date
the department's assessment under paragraph (a) of this
subsection was issued; and
(B) The appeal is filed within 90 days of the date shown on the
notice of rejection.
(e) If the person assessed under paragraph (a) of this
subsection submits a report or return to the department and
appeals the assessment to the tax court, the department may
request a stay of action from the court pending review of the
report or return. If the department:
(A) Accepts the filing of the report or return, the appeal
shall be dismissed as moot.
(B) Rejects the report or return, the stay of action on the
appeal shall be lifted.
(f) If the department accepts the filing of a report or return,
the department may reduce the assessment issued under paragraph
(a) of this subsection. A report or return filed under this
subsection that is accepted by the department, whether or not the
assessment has been reduced, shall be considered a report or
return described in subsection (1) of this section and shall be
subject to the provisions of this section, including but not
limited to examination and adjustment pursuant to subsection (2)
of this section.
(g) The department may refund payments made with respect to a
report or return filed and accepted pursuant to this subsection.
If the report or return is filed within three years of the due
date for filing the report or return, excluding extensions, the
refund shall be made as provided by ORS 305.270 and 314.415. If
the report or return is not filed within three years of the due
date for filing the report or return, excluding extensions, the
refund shall be limited to payments received within the two-year
period ending on the date the report or return is received by the
department. Interest shall be paid at the rate established under
ORS 305.220 for each month or fraction of a month from the date
the report or return is received by the department to the time
the refund is made.
(11) Mailing of notice to the person at the person's last-known
address shall constitute the giving of notice as prescribed in
this section.
(12) If a return is filed with the department accompanied by
payment of less than the amount of tax shown on or from the
information on the return as due, the difference between the tax
and the amount submitted is considered as assessed on the due
date of the report or return (determined with regard to any
extension of time granted for the filing of the return) or the
date the report or return is filed, whichever is later. For
purposes of this subsection, the amount of tax shown on or from
the information on the return as due shall be reduced by the
amount of any part of the tax that is paid on or before the due
date prescribed for payment of the tax, and by any credits
against the tax that are claimed on the return. If the amount
required to be shown as tax on a return is less than the amount
shown as tax on the return, this subsection shall be applied by
substituting the lesser amount.
(13) Every deficiency shall bear interest at the rate
established under ORS 305.220 for each month or fraction of a
month computed from the due date of the return to date of
payment. If the return was falsely prepared and filed with
intent to evade the tax, a penalty equal to 100 percent of the
deficiency shall be assessed and collected. All payments received
shall be credited first to penalty, then to interest accrued, and
then to tax due.
(14) If the deficiency is paid in full before a notice of
assessment is issued, the department is not required to send a
notice of assessment, and the tax shall be considered as assessed
as of the date which is 30 days from the date of the notice of
deficiency or the date the deficiency is paid, whichever is the
later. A partial payment of the deficiency shall constitute only
a credit to the account of the person assessed. Assessments and
billings of taxes shall be final after the expiration of the
appeal period specified in ORS 305.280, except to the extent that
an appeal is allowed under ORS 305.280 (3) following payment of
the tax.
(15) Appeal may be taken to the tax court from any notice of
assessment. The provisions of this chapter with respect to
appeals to the tax court { - shall - } apply to any
deficiency, penalty or interest assessed.
SECTION 6. { + This 2001 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-first
Legislative Assembly adjourns sine die. + }
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