74th OREGON LEGISLATIVE ASSEMBLY--2007 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 1687
Senate Bill 39
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 Senate Interim Committee on
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.
Directs Department of Revenue to establish and promote
voluntary compliance initiative for taxpayers who utilize listed
transactions to underreport personal income or corporate income
or excise taxes.
Establishes reporting and registration requirements and
enhanced penalties for persons who use certain transactions, or
who serve as material advisors for certain transactions, to
underpay tax liability. Extends period for which notice of
deficiency may be issued in cases in which returns reflect use of
certain transactions to underpay tax liability.
Directs Department of Revenue to establish general tax amnesty
program of limited duration. Waives penalties for personal income
taxpayers who pay outstanding taxes. Increases penalties on
taxpayers who fail to fully participate. Sunsets amnesty program
January 2, 2012.
Requires mandatory withholding of income tax from distributions
from employer-sponsored retirement plans.
Allows Department of Revenue to disclose certain income tax
return information to local governments.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to tax compliance; creating new provisions; amending ORS
314.410, 314.415, 314.840 and 316.189; and prescribing an
effective date.
Be It Enacted by the People of the State of Oregon:
{ +
VOLUNTARY COMPLIANCE INITIATIVE + }
SECTION 1. { + Sections 2 to 16 of this 2007 Act are added to
and made a part of ORS chapter 314. + }
SECTION 2. { + As used in sections 2 to 13 of this 2007 Act:
(1) 'Listed transaction' means any of the following
transactions:
(a) A listed transaction under section 6707A of the Internal
Revenue Code.
(b) A transaction involving a real estate investment trust that
claims a deduction for consent dividends, the owners of which do
not report income with respect to the consent dividends, and:
(A) That does business in Oregon, is organized in Oregon or has
income from Oregon sources; or
(B) That is owned by an Oregon income or corporate excise
taxpayer.
(c) A transaction in which a corporation forms a controlled
regulated investment company under the Investment Company Act of
1940, and all of the following apply:
(A) The corporation transfers income-producing assets to the
regulated investment company;
(B) The regulated investment company claims a dividend-paid
deduction under section 561 of the Internal Revenue Code;
(C) The corporation claims a dividend-received deduction with
respect to the assets transferred under subparagraph (A) of this
paragraph; and
(D) The regulated investment company does business in Oregon,
is organized in Oregon or has income from Oregon sources or an
owner of the regulated investment company is an Oregon income or
corporate excise taxpayer.
(d) A transaction that is substantially similar to a
transaction described in paragraphs (a) to (c) of this
subsection.
(2) 'Reportable transaction' means a transaction:
(a) That is a reportable transaction under section 6707A of the
Internal Revenue Code; or
(b) That is a listed transaction. + }
SECTION 3. { + (1) If required by rules adopted by the
Department of Revenue:
(a) Any person who engages in a listed transaction as a buyer
or transferor shall report the transaction to the department.
(b) Any person who, as the result of a listed transaction,
acquires an interest in property, a present or future right to
income, a present or future right to claim a loss, deduction,
credit, exemption or other tax benefit or a present or future
right to an adjustment to basis shall report the transaction to
the department.
(c) Any person who is associated with a listed transaction in
an association that the department has by rule identified as an
association that requires reporting shall report the transaction
to the department.
(2) A listed transaction shall be reported to the department in
the time, form and manner prescribed by the department by rule.
Rules adopted by the department under this section may not apply
to a listed transaction occurring in a tax year beginning before
January 1, 2007. + }
SECTION 4. { + A person who is a material advisor to a
reportable transaction under section 6111 of the Internal Revenue
Code shall send a copy of the return required to be filed with
the Internal Revenue Service to the Department of Revenue within
20 days following the date the return is required to be filed
with the Internal Revenue Service, if the reportable transaction
reported on the return occurs in a tax year that begins on or
after January 1, 2007, and satisfies any of the following
conditions:
(1) The transaction occurs in this state; or
(2) At least one party to the transaction is an Oregon personal
income taxpayer or an Oregon corporate excise or income
taxpayer. + }
SECTION 5. { + A person who engages in a listed transaction in
this state as a seller or other transferor and who is required to
register with the taxing authority of another state or with the
Internal Revenue Service shall register with the Department of
Revenue within 60 days after the later of:
(1) The effective date of this 2007 Act;
(2) The date a person acts as a seller or transferor in a
listed transaction; or
(3) The date the transaction becomes a listed transaction. + }
SECTION 6. { + (1) In addition to and not in lieu of any other
penalty, a penalty may be imposed in an amount equal to 20
percent of that portion of an underpayment of tax that is
attributable to the use of a reportable transaction.
(2) A penalty may not be imposed under this section with
respect to any underpayment of tax if:
(a) The underpayment is not attributable to a listed
transaction;
(b) There was a reasonable cause for the underpayment;
(c) The taxpayer acted in good faith with respect to the
underpayment;
(d) There is substantial authority for the tax treatment of the
item that caused the underpayment; and
(e) The taxpayer reasonably believed that the tax treatment of
the item that caused the underpayment was more likely than not
the proper treatment.
(3)(a) For purposes of subsection (2)(e) of this section, a
taxpayer shall be treated as having a reasonable belief if:
(A) The treatment was based on facts and law that existed at
the time the return reporting the item was filed; and
(B) The belief relates solely to the taxpayer's chances of
success on the merits of the treatment and does not take into
account the possibility that the return will not be audited, that
issues over the treatment will not be raised on audit or that
these issues will be resolved through compromise or settlement if
raised.
(b) Reliance on the advice of a tax advisor does not constitute
grounds for reasonable belief if the tax advisor:
(A) Is a material advisor under section 4 of this 2007 Act with
respect to the transaction;
(B) Is compensated by a person who is a material advisor under
section 4 of this 2007 Act with respect to the transaction;
(C) Participates in the organization, management, promotion or
sale of a listed transaction;
(D) Is related, under section 267(b) of the Internal Revenue
Code, to a person who participates in the organization,
management, promotion or sale of a listed transaction;
(E) Has a contingent fee arrangement with respect to a listed
transaction that is contingent on all or part of the intended tax
benefits from the transaction being sustained; or
(F) Under rules adopted by the Department of Revenue, has a
continuing financial interest with respect to a listed
transaction.
(4) Penalties imposed under this section shall be added to the
tax liability of the taxpayer. + }
SECTION 7. { + (1) In addition to and not in lieu of any other
penalty, an accuracy-related penalty may be imposed in an amount
equal to 20 percent of that portion of an underpayment of tax due
under ORS chapter 316, 317 or 318 that is attributable to:
(a) Negligence or disregard of tax law;
(b) A substantial understatement of tax;
(c) A substantial valuation misstatement that affects the
amount of tax due under ORS chapter 316, 317 or 318; or
(d) A substantial overstatement of pension liabilities.
(2) The penalty imposed under this section shall be determined
in accordance with sections 6662 and 6664 of the Internal Revenue
Code.
(3) If there is an underpayment of tax that is attributable to
a gross valuation misstatement, as that term is defined under
section 6662 of the Internal Revenue Code, the penalty under this
section shall be equal to 40 percent of that portion of the
underpayment to which the gross valuation misstatement is
attributable.
(4) Penalties imposed under this section shall be added to the
tax liability of the taxpayer. + }
SECTION 8. { + (1) If a taxpayer has a listed transaction
understatement for a tax year, there shall be added to the tax
liability of the taxpayer for the tax year a penalty equal to 40
percent of the amount of the understatement.
(2) The penalty imposed under this section is in addition to
and not in lieu of any other penalty.
(3) As used in this section, 'listed transaction
understatement' means the sum of:
(a) The amount determined by multiplying the highest rate of
tax imposed on the taxpayer under ORS chapter 316 or, if the
taxpayer is a corporation, under ORS chapter 317 or 318, by any
net increase in taxable income that results from a difference
between the proper tax treatment of a listed transaction and the
treatment of the transaction on the return of the taxpayer; and
(b) The amount of any decrease in the aggregate amount of
credits determined for purposes of ORS chapter 316 or, if the
taxpayer is a corporation, for purposes of ORS chapter 317 or
318, that results from the taxpayer's treatment of a listed
transaction and the proper tax treatment of that transaction.
(4) The Department of Revenue may by rule further define '
listed transaction understatement' consistent with section 2 of
this 2007 Act and subsection (3) of this section. + }
SECTION 9. { + (1) Notwithstanding section 7 or 8 of this 2007
Act, the Department of Revenue may elect to impose penalties
under section 7 of this 2007 Act or under section 8 of this 2007
Act with respect to the same taxpayer and the same tax year, but
may not impose penalties under both sections 7 and 8 of this 2007
Act on the same taxpayer for the same tax year.
(2) Notwithstanding section 6, 7 or 8 of this 2007 Act or ORS
314.402, the total amount of penalties imposed under sections 6,
7 and 8 of this 2007 Act and ORS 314.402 may not exceed 60
percent of the amount of any underpayment of tax due. + }
SECTION 10. { + (1)(a) A person is liable for a penalty
determined under this subsection if the person fails to furnish a
copy of a return that is required to be furnished to the
Department of Revenue under section 4 of this 2007 Act on or
before the date on which the copy is required to be furnished.
(b) The amount of the penalty shall be determined by the
department. The penalty may not exceed the greater of:
(A) $10,000; or
(B) Twenty-five percent of the gross income that the person
derived from the reportable transactions reflected on returns
required to be furnished under section 4 of this 2007 Act.
(2)(a) A person is liable for a penalty determined under this
subsection if the person fails to comply with the registration
requirements under section 5 of this 2007 Act by the date on
which registration is required.
(b) The amount of the penalty shall be determined by the
department. The penalty may not exceed the greater of:
(A) $10,000; or
(B) Twenty-five percent of the gross income that the person
derived from the listed transactions.
(3) The penalties imposed under subsection (1) or (2) of this
section do not apply until the 60th day following the date the
department issues a notice under section 11 of this 2007 Act
demanding compliance with section 4 or 5 of this 2007 Act.
(4) A penalty imposed under this section is in addition to and
not in lieu of any other penalty. + }
SECTION 11. { + (1) If the Department of Revenue believes that
a person is required to file a copy of a federal return under
section 4 of this 2007 Act and has failed to do so by the date
required under section 4 of this 2007 Act, the department shall
send a written notice to the person demanding compliance with
section 4 of this 2007 Act.
(2) If the department believes that a person is required to
register under section 5 of this 2007 Act and the person has
failed to register by the date prescribed in section 5 of this
2007 Act, the department shall send a written notice to the
person demanding compliance with section 5 of this 2007 Act.
(3) A person receiving a notice under this section may appeal
to the Oregon Tax Court. Notwithstanding ORS 305.565, an appeal
does not stay the collection of a penalty imposed under section
10 of this 2007 Act. + }
SECTION 12. { + (1) A penalty shall be imposed on a person who
promotes a tax shelter if:
(a) The person is or would be subject to a penalty for
promoting an abusive tax shelter under section 6700 of the
Internal Revenue Code; and
(b) The tax shelter satisfies any of the following conditions:
(A) The tax shelter is organized in this state.
(B) The tax shelter is doing business in this state.
(C) The tax shelter derives income from sources in this state.
(D) At least one investor in the tax shelter is an Oregon
personal income taxpayer or an Oregon corporate excise or income
taxpayer.
(2) The amount of the penalty shall equal 100 percent of the
amount of gross income derived by the person in promoting the tax
shelter.
(3) A penalty imposed under this section shall be in addition
to and not in lieu of any other penalty. + }
SECTION 13. { + Moneys collected under section 10 or 12 of
this 2007 Act shall be considered net revenue from the tax
imposed under ORS chapter 316 for purposes of ORS 316.502. + }
SECTION 14. { + (1) The Department of Revenue shall develop
and administer a voluntary compliance initiative to be conducted
during the period beginning on the later of the effective date of
this 2007 Act or November 1, 2007, and ending 90 days thereafter.
(2) The voluntary compliance initiative shall apply to tax
liabilities attributable to listed transactions for tax years
beginning on or after January 1, 1999, and prior to January 1,
2007.
(3) The department shall publicize the voluntary compliance
initiative so as to maximize public awareness of and
participation in the initiative.
(4) The department may prescribe forms, issue instructions,
conduct public meetings and undertake any other action necessary
to maximize public participation in and compliance with the
initiative and the collection of tax liabilities to which the
initiative applies.
(5) Notwithstanding any other provision of law, the department
may enter into closing agreements or installment payment
agreements to facilitate the collection of tax liabilities to
which the initiative applies.
(6) Notwithstanding section 22 (2) of this 2007 Act, the
provisions of sections 22 to 25 of this 2007 Act apply to any
taxpayer that participates in the voluntary compliance initiative
during the period described in section 15 (1) of this 2007
Act. + }
SECTION 15. { + (1) The voluntary compliance initiative
described in section 14 of this 2007 Act applies to any taxpayer
that, during the period beginning on the later of the effective
date of this 2007 Act or November 1, 2007, and ending 90 days
thereafter:
(a) Files an amended return for each tax year for which the
taxpayer has previously filed a return that reflected the use of
a listed transaction to underreport the tax liability of the
taxpayer for the tax year;
(b) For each return described in paragraph (a) of this
subsection, reports all income from all sources, without regard
to the listed transaction;
(c) Identifies on each return described in paragraph (a) of
this subsection, or as otherwise prescribed by the Department of
Revenue, that the return is being filed under the voluntary
compliance initiative; and
(d) Except as authorized under section 14 (5) of this 2007 Act,
pays in full all taxes and interest due.
(2) With respect to each return filed in compliance with
subsection (1) of this section:
(a) All penalties that would otherwise be imposed shall be
waived; and
(b) A taxpayer may file a subsequent amended return seeking a
refund of tax and may otherwise appeal the amount of tax or
interest due with respect to any item reported on the amended
return.
(3)(a) After the conclusion of the period described in
subsection (1) of this section, the department may issue a notice
of deficiency and impose any penalty, interest or other sanction
with respect to the difference between the amount shown on a
return filed under subsection (1) of this section and the correct
amount of tax.
(b) A taxpayer may make written objections to the deficiency or
request a conference as prescribed in ORS 305.265.
(c) If no written objection or request is received by the
department, or as otherwise authorized by ORS 305.265, the
department shall assess the deficiency as prescribed in ORS
305.265 and the taxpayer may appeal the assessment as prescribed
in ORS 305.265.
(4) Notwithstanding subsection (1) of this section, a taxpayer
may not participate in the voluntary compliance initiative if,
prior to November 1, 2007, the department has issued a notice of
deficiency to the taxpayer or has assessed a tax with respect to
any tax year for which the taxpayer could otherwise file an
amended return under this section. + }
SECTION 16. { + The definitions in section 2 of this 2007 Act
apply to sections 14 and 15 of this 2007 Act. + }
SECTION 17. { + Sections 14, 15, 16 and 19 of this 2007 Act
are repealed on January 2, 2014. + }
SECTION 18. ORS 314.410 is amended to read:
314.410. (1) At any time within three years after the return
was filed, the Department of Revenue may give notice of
deficiency as prescribed in ORS 305.265.
(2) If the department finds that gross income equal to 25
percent or more of the gross income reported has been omitted
from the taxpayer's return, notice of the deficiency may be given
at any time within five years after the return was filed.
{ + (3) If the department finds that a return reports or
reflects the use of a listed transaction or a reportable
transaction, as defined in section 2 of this 2007 Act, notice of
a deficiency may be given at any time within six years after the
return was filed. + }
{ - (3)(a) - } { + (4)(a) + } The limitations to the giving
of notice of a deficiency provided in this section
{ - shall - } { + do + } not apply to a deficiency resulting
from false or fraudulent returns, or in cases where no return has
been filed.
(b)(A) If the Commissioner of Internal Revenue or other
authorized officer of the federal government or an authorized
officer of another state's taxing authority makes a change or
correction as described in ORS 314.380 (2)(a)(A) and, as a result
of the change or correction, an assessment of tax or issuance of
a refund is permitted under any provision of the Internal Revenue
Code or applicable law of the other state, or pursuant to an
agreement between the taxpayer and the federal or other state
taxing authority that extends the period in which an assessment
of federal or other state tax may be made, then notice of a
deficiency under any Oregon law imposing tax upon or measured by
income for the corresponding tax year may be mailed within two
years after the department is notified by the taxpayer or the
commissioner or other tax official of the correction, or within
the applicable { - three-year or five-year - } period
prescribed in subsections (1) { - and (2) - } { + to (3) + }
of this section, whichever period expires later.
(B) A notice of deficiency mailed pursuant to this paragraph
may assert any adjustment necessary to arrive at the correct
amount of Oregon taxable income and Oregon tax liability for the
tax year for which the federal or other state change or
correction is made.
(c) If the taxpayer files an original or amended federal or
other state return as described in ORS 314.380 (2)(a)(B), the
department may reduce any claim for refund as a result of a
change in Oregon tax liability related to the original or amended
federal or other state return, but may not give notice of a
deficiency for an adjustment to Oregon tax liability following
the expiration of the applicable period prescribed in subsections
{ - (1) and (2) - } { + (1) to (3) + } of this section and
paragraph (a) of this subsection.
{ - (4) - } { + (5) + } The tax deficiency must be assessed
and notice of tax assessment mailed to the taxpayer or authorized
representative, who is authorized in writing, within one year
from the date of the notice of deficiency unless an extension of
time is agreed upon as prescribed in subsection { - (6) - }
{ + (7) + } of this section.
{ - (5) - } { + (6) + } Notwithstanding other provisions of
this section, the period for the assessment of any deficiency
attributable to any part of the gain realized upon the sale or
exchange of the taxpayer's principal residence, as provided in
section 1034 of the Internal Revenue Code (as in effect prior to
the repeal of section 1034 of the Internal Revenue Code by the
Taxpayer Relief Act of 1997 (P.L. 105-34)), does not expire prior
to the expiration of three years from the date the department is
notified by the taxpayer of:
(a) The cost of purchasing the new residence which the taxpayer
claims results in nonrecognition of any part of such gain;
(b) The taxpayer's intention not to purchase a new residence;
or
(c) A failure to purchase a new residence within the period
prescribed in section 1034 of the Internal Revenue Code (as in
effect prior to the repeal of section 1034 of the Internal
Revenue Code by the Taxpayer Relief Act of 1997 (P.L. 105-34)).
{ - (6) - } { + (7) + } If, prior to the expiration of any
period of time prescribed in this section for giving of notice of
deficiency or of assessment, the department and the taxpayer
consent in writing to the notice of deficiency being mailed or
deficiency being assessed after the expiration of such prescribed
period, notice of such deficiency may be mailed or the deficiency
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.
{ - (7) - } { + (8) + } In the case of a deficiency
attributable to the application to the taxpayer of a net
operating loss carryback, notice of such deficiency may be mailed
at any time before the expiration of the period within which
notice of a deficiency for the taxable year of the net operating
loss which results in such carryback may be mailed.
{ - (8) - } { + (9) + } Notwithstanding the other
provisions of this section, if any taxpayer agreed with the
United States Commissioner of Internal Revenue or the taxing
authority of another state for an extension, or renewals thereof,
of the period for giving notices of deficiencies and assessing
deficiencies in income tax for any year, the period for mailing
notices of deficiencies of tax for such years and the period for
filing a claim for refund under ORS 314.380 (2)(b) shall expire
on the later of:
(a) The expiration of an applicable period described in
subsections (1) to { - (7) or (9) - } { + (8) or (10) + } of
this section; or
(b) Six months after the date of the expiration of the agreed
period for assessing a deficiency.
{ - (9)(a) - } { + (10)(a) + } Notwithstanding the other
provisions of this section and ORS 314.415, the period for
claiming a refund or giving a notice of deficiency with respect
to an item that is shown or required to be shown on a taxpayer's
return and that is attributable to a pass-through entity does not
expire prior to three years from the date of the filing of the
pass-through entity return to which the item on the taxpayer's
return relates.
(b) As used in this subsection, 'pass-through entity' means any
entity that is recognized as a separate entity for federal income
tax purposes, for which the owners are required to report income,
gains, losses, deductions or credits from the entity for federal
income tax purposes.
SECTION 19. { + Notwithstanding ORS 314.410 (3), if the
Department of Revenue finds that a return reports or reflects the
use of a listed transaction or a reportable transaction, both as
defined in section 2 of this 2007 Act, notice of a deficiency may
be given at any time before the expiration of the later of the
following periods:
(1) Six years after the return was filed; or
(2) Two years after the conclusion of the period described in
section 15 (1) of this 2007 Act. + }
SECTION 20. ORS 314.415 is amended to read:
314.415. (1) If the Department of Revenue determines pursuant
to ORS 305.270 that the amount of the tax due is less than the
amount theretofore paid, the excess shall be refunded by the
department with interest at the rate established under ORS
305.220, for each month or fraction of a month during a period
beginning 45 days after the due date of the return or the date
the tax was paid, whichever is the later, to the time the refund
is made.
(2)(a) The department may not allow or make a refund after
three years from the time the return was filed, or two years from
the time the tax (or a portion of the tax) was paid, whichever
period expires later, unless before the expiration of this period
a claim for refund is filed by the taxpayer in compliance with
ORS 305.270. In any case, if the original return is not filed
within three years of the due date, excluding extensions, of the
return, the department may allow or make a refund only of amounts
paid within two years from the date of the filing of the claim
for refund. If a refund is disallowed for the tax year during
which excess tax was paid for any reason set forth in this
subsection, the department may not allow the excess as a credit
against any tax occurring on a return filed for a subsequent
year.
(b) The department may not make a refund if the tax owed after
offsets for all amounts owed the state, or a county pursuant to a
judgment obtained under ORS 169.151, is less than $1.
(c) If a taxpayer would qualify under section 6511(h) of the
Internal Revenue Code for a suspension of the running of the
periods specified for filing a claim for refund of federal income
tax, the period specified in paragraph (a) of this subsection
shall also be suspended.
(d) The department may not pay an employee interest on a refund
of a tax withheld by an employer if the interest would be for any
period prior to the time the employee files a personal income tax
return for the tax year involved or for any period prior to the
day that is 45 days after the date when the employee's annual
return for that year was filed or was due, whichever is later.
(e) The department may not pay interest on a refund of
estimated tax paid under ORS 314.505 to 314.525 or 316.557 to
316.589 if the interest would be for any period prior to the time
the taxpayer files a tax return for the tax year involved or for
any period prior to the day that is 45 days after the date when
the tax return for that year was filed or was due, whichever is
later.
(f) The amount of the refund, exclusive of interest on the
refund, may not exceed the portion of the tax paid during the
period preceding the filing of the claim or, if no claim is
filed, then during the period preceding the allowance of the
refund during which a claim might have been filed. Where there
has been an overpayment of any tax imposed, the amount of the
overpayment and interest on the overpayment shall be credited
against any tax, penalty or interest then due from the taxpayer,
and only the balance shall be refunded.
(g) Except as provided in ORS 305.265 (12), if, pursuant to a
notice of deficiency or assessment, the taxpayer pays the amount
specified in the notice, or any part thereof, and if, upon
appeal, the Oregon Tax Court or the Oregon Supreme Court orders
that all or any part of the deficiency amount specified in the
notice and paid by the taxpayer be refunded, the amount so
ordered to be refunded shall bear interest at the rate
established for refunds in ORS 305.220. Interest shall be
computed from the date of payment to the department. Nothing in
this subsection shall require that interest be paid upon any
amount for any period for which interest upon the same amount for
the same period is required to be paid under ORS 305.419.
(3)(a) Notwithstanding any provision to the contrary in ORS
305.265 or 305.270 or subsection (1) or (2) of this section, if,
prior to the expiration of the period prescribed in subsection
(2) of this section, the department and the taxpayer consent in
writing to the refund of tax after the expiration of the period
prescribed:
(A) The department shall make the refund prior to the
expiration of the period agreed upon; and
(B) The department may not make or allow a refund after the
expiration of the period agreed upon unless a claim for refund is
filed by the taxpayer before the expiration of the period agreed
upon in compliance with the manner prescribed by the department.
The period so agreed upon may be extended by subsequent
agreements in writing made before the expiration of the period
previously agreed upon.
(b) The department may consent to extend the period during
which a refund may be made only if the taxpayer has consented to
the assessment of additional tax, if additional taxes are
determined upon audit, after the expiration of the applicable
{ - three-year or five-year - } period prescribed in ORS
314.410 (1)
{ - and (2) - } { + to (3) + }.
(4)(a) If the claim for credit or refund relates to an
overpayment on account of the deductibility by the taxpayer, or
by a partnership, of the worthlessness of a share of stock in a
corporation, of the right to subscribe for or to receive a share
of stock in a corporation, or of a debt, in lieu of the
three-year period of limitation prescribed in subsection (2) of
this section, the period shall be seven years from the date
prescribed by law for the filing of the return for the year with
respect to which the claim is made.
(b) If the claim described in paragraph (a) of this subsection
is made after the expiration of the three-year period prescribed
in subsection (2) of this section, the department may not allow
interest with respect to any credit or refund determined to be
due upon the claim for the period beginning at the close of the
three-year period prescribed in subsection (2) of this section
and ending at the expiration of six months after the date on
which the claim is filed.
(5)(a) If the claim for credit or refund relates to an
overpayment attributable to a net operating loss carryback or a
net capital loss carryback, in lieu of the three-year period of
limitation prescribed in subsection (2) of this section, the
period shall be the period that ends three years after the time
prescribed by law for filing the return (including extensions)
for the taxable year of the net operating loss or net capital
loss that results in such carryback. In the case of such a claim,
the amount of the credit or refund may exceed the portion of the
tax paid within the period provided in subsection (1), (2) or (3)
of this section, whichever is applicable, to the extent of the
amount of the overpayment attributable to the carryback. If the
allowance of a credit or refund of an overpayment of tax
attributable to a net operating loss carryback or a net capital
loss carryback is otherwise prevented by the operation of any law
or rule of law other than ORS 305.150, relating to closing
agreements, the credit or refund may be allowed or made if the
claim for credit or refund is filed within the period provided in
this subsection. To the extent that the carryback was not an
issue in any proceeding in which the determination of a court,
including the Oregon Tax Court, has become final, the claimed
credit or refund applicable to that carryback may be allowed or
made under this subsection.
(b) For purposes of subsection (1) or (2) of this section, if
any overpayment of tax results from a carryback of a net
operating loss or net capital loss, the overpayment shall be
deemed not to have been made prior to the later of:
(A) The due date of the return for the taxable year in which
such net operating loss or net capital loss arises;
(B) The date the return for the year in which the net operating
loss or net capital loss arises is filed; or
(C) The date of filing of the return for the year to which the
net operating loss or net capital loss is carried back.
(6) Notwithstanding any provision to the contrary in ORS
305.265 or 305.270 or this section, if the taxpayer has agreed
with the United States Commissioner of Internal Revenue for an
extension, or a renewal of an extension, of the period for
proposing and assessing deficiencies in federal income tax for
any year, the period within which a claim for credit or refund
may be filed or credit or refund allowed or made if no claim is
filed shall be the period provided within subsections (1) to (5)
of this section or six months after the date of the expiration of
the agreed period for assessing deficiency in federal income tax,
whichever period expires later.
(7) If a joint return is filed, the department may make
separate refunds at the request of either spouse. The separate
refunds shall bear the same proportion to the total refund as the
adjusted gross income of each spouse bears to the adjusted gross
income of both spouses, or as otherwise determined by the
department.
(8) If a taxpayer entitled to a refund under subsection (1) of
this section dies, the department may issue a draft for payment
of such refund under the terms and conditions set out in ORS
293.490 to 293.500 exercising the same powers and subject to the
same restrictions pursuant to which the State Treasurer is
authorized to pay the amounts of warrants, checks or orders under
those statutes.
SECTION 21. { + Sections 2 to 16 of this 2007 Act apply to tax
years beginning on or after January 1, 1999. + }
{ +
GENERAL TAX AMNESTY PROGRAM + }
SECTION 22. { + (1) The Department of Revenue shall develop
and administer a tax amnesty program for personal income
taxpayers.
(2) The tax amnesty program shall be conducted during the
period beginning July 1, 2008, and ending September 30, 2008.
(3) The tax amnesty program applies to tax years for which the
department could issue a notice of deficiency under ORS 314.410,
as amended and in effect on the day before the effective date of
this 2007 Act.
(4) The department shall publicize the tax amnesty program so
as to maximize public awareness of and participation in the
program.
(5) The department may prescribe forms, issue instructions,
conduct public meetings and undertake any other action necessary
to maximize public participation in and compliance with the tax
amnesty program and the collection of tax liabilities to which
the program applies. + }
SECTION 23. { + (1) A personal income taxpayer who meets all
of the following requirements during the period beginning July 1,
2008, and ending September 30, 2008, may participate in the tax
amnesty program:
(a) The taxpayer was required to file a tax return under ORS
chapter 314 or 316 or pay a tax imposed under ORS chapter 316 for
a tax year that begins before January 1, 2007;
(b) The taxpayer files a completed amnesty application with the
Department of Revenue, signed under penalty of perjury, to
participate in the tax amnesty program; and
(c) Within 60 days after the conclusion of the tax amnesty
program, the taxpayer does all of the following:
(A) Files a completed tax return for all tax years described in
paragraph (a) of this subsection for which the taxpayer had not
previously filed a completed tax return;
(B) Files a completed amended tax return for all tax years
described in paragraph (a) of this subsection for which the
taxpayer underreported or underpaid the tax liability of the
taxpayer; and
(C) Pays in full the taxes and interest due for all tax years
described in paragraph (a) of this subsection or applies for an
installment payment agreement under subsection (6) of this
section that applies to the taxes and interest due for all tax
years described in paragraph (a) of this subsection for which
taxes remain unpaid.
(2) Notwithstanding subsection (1) of this section, a taxpayer
may not participate in the tax amnesty program for any tax year
for which the taxpayer is eligible to participate in the
voluntary compliance initiative described in section 14 of this
2007 Act. The department shall give notice to any taxpayer
seeking amnesty under this section who the department determines
is eligible to participate in the voluntary compliance initiative
that the application for amnesty is being denied. At the
discretion of the department and notwithstanding the deadline for
filing an amended return or paying amounts due under section 15
of this 2007 Act, a taxpayer receiving a notice under this
subsection has an additional 60 days after the date of the notice
in which to comply with section 15 of this 2007 Act.
(3) Notwithstanding subsection (1) of this section, a taxpayer
may not participate in the tax amnesty program if, prior to July
1, 2008, the department has issued a notice of deficiency to the
taxpayer or has assessed a tax for a tax year for which the
taxpayer could otherwise apply for amnesty under this section.
(4) In addition to the other requirements in subsection (1) of
this section, a taxpayer who has filed a petition for bankruptcy
protection under Title 11 of the United States Code may
participate in the tax amnesty program if the taxpayer submits an
order from a United States Bankruptcy Court allowing the taxpayer
to participate in the tax amnesty program.
(5) A taxpayer who participates in the tax amnesty program
described in this section may not request a refund with respect
to any tax paid under the tax amnesty program and waives any
right to appeal any tax reported on a tax return filed or paid
under subsection (1) of this section or pursuant to an
installment payment agreement entered into under subsection (6)
of this section.
(6)(a) A taxpayer may apply for an installment payment
agreement for the payment of taxes reported and due under
subsection (1) of this section. The application shall be made on
a form prescribed by the department and shall be due at the time
the taxpayer applies for amnesty under subsection (1) of this
section.
(b) The department shall enter into an installment payment
agreement with a taxpayer who has applied under paragraph (a) of
this subsection and shall establish a payment schedule if the
department concludes that the agreement will facilitate the
efficient collection of the outstanding tax liability.
(c) Any amount that remains unpaid under an installment payment
agreement shall bear interest at the rate established under ORS
305.220 for each month, or fraction of a month, for which the
amount remains unpaid.
(d) Under any installment payment agreement entered into under
this subsection, all outstanding taxes and interest must be paid
on or before December 31, 2009. + }
SECTION 24. { + (1) The Department of Revenue shall waive all
applicable penalties that would otherwise apply to the taxes
being reported and paid under section 23 of this 2007 Act for any
taxpayer who fully complies with the tax amnesty program
described in section 23 of this 2007 Act, including criminal
penalties that would otherwise apply under ORS 314.075 and
314.991 (1).
(2)(a) If the department has entered into an installment
payment agreement with the taxpayer, the failure of the taxpayer
to fully comply with the terms of the installment payment
agreement shall render the waiver of penalties under subsection
(1) of this section and the installment payment agreement
void. The total amount of tax, interest and all applicable
penalties shall become immediately due and payable.
(b) This subsection does not apply if the department determines
that the failure to fully comply with the terms of the
installment payment agreement is due to reasonable causes. + }
SECTION 25. { + (1) For any tax that was due for a tax year
for which amnesty could be sought under section 23 of this 2007
Act and for which the taxpayer failed to file a return and failed
to apply for amnesty, an amount equal to 25 percent of the total
amount of unpaid tax that is otherwise due shall be added to the
amount of outstanding tax liability.
(2) If, following the closure of the amnesty period specified
in section 23 of this 2007 Act, the Department of Revenue issues
a notice of deficiency with respect to an unreported or
underreported tax liability, as shown on an original or amended
tax return filed in conjunction with an amnesty application filed
under section 23 of this 2007 Act, an amount equal to 25 percent
of the total amount of unpaid tax that is otherwise due shall be
added to the amount of outstanding tax liability.
(3) The penalties imposed under this section are in addition to
and not in lieu of any other penalty. + }
SECTION 26. { + Sections 22 to 25 of this 2007 Act are
repealed on January 2, 2012. + }
SECTION 27. { + Sections 22 to 25 of this 2007 Act are added
to and made a part of ORS chapter 314. + }
{ +
WITHHOLDING + }
SECTION 28. ORS 316.189 is amended to read:
316.189. (1) As used in this section:
(a) 'Commercial annuity' means an annuity, endowment or life
insurance contract issued by an insurance company authorized to
transact insurance in the State of Oregon.
(b) 'Department' means the Oregon Department of Revenue.
(c) 'Designated distribution' means any distribution or payment
from or under an employer deferred compensation plan, an
individual retirement plan or a commercial annuity. 'Designated
distribution' does not include any amount treated as wages as
defined in ORS 316.162, the portion of any distribution or
payment that is not includable in the gross income of the
recipient or any distribution or payment made under section
404(k)(2) of the Internal Revenue Code.
(d) 'Employer deferred compensation plan' means any pension,
annuity, profit-sharing or stock bonus plan or other plan
deferring the receipt of compensation.
(e) 'Individual retirement plan' means an individual retirement
account described in section 408(a) of the Internal Revenue Code
or an individual retirement annuity described in section 408(b)
of the Internal Revenue Code.
(f) 'Nonperiodic distribution' means any designated
distribution which is not a periodic payment.
(g) 'Payer' means any payer of a designated distribution doing
business in or making payments or distributions from sources in
this state.
(h) 'Periodic payment' means a designated distribution which is
an annuity or similar periodic payment.
(i) 'Plan administrator' means a plan administrator as
described in section 414(g) of the Internal Revenue Code, who is
the administrator of a plan created by an Oregon employer.
(j) 'Qualified total distribution' means any designated
distribution made under a retirement, annuity or deferred
compensation plan described in section 401(a), 403(a) or 457(b)
of the Internal Revenue Code, that consists of the balance to the
credit of the employee, exclusive of accumulated deductible
employee contributions, made within one tax year of the
recipient.
(2)(a) The payer of any periodic payment shall withhold from
{ - such - } { + the + } payment the amount { - which - }
{ + that + } would be required to be withheld from
{ - such - } { + the + } payment under ORS 316.167 if the
payment were wages paid by an employer to an employee. The time
and manner of payment of withheld amounts to the department shall
be the same as that required under ORS 316.197 for withholding of
income taxes from wages.
(b) The payer of any nonperiodic distribution shall withhold
from { - such - } { + the + } distribution an amount
determined under tables prescribed by the department.
(c) The maximum amount to be withheld under this section on any
designated distribution shall not exceed 10 percent of the amount
of money and the fair market value of other property received in
the distribution. If the distribution is not subject to
withholding for federal income tax purposes under section 3405 of
the Internal Revenue Code, it shall not be subject to withholding
under this section.
(3)(a) Except as provided in paragraph (b) of this subsection,
the payer of a designated distribution shall withhold and be
liable for payment of amounts required to be withheld under this
section.
(b) In the case of any plan described in section 401(a), 403(a)
or 457(b) of the Internal Revenue Code, or section 301(d) of the
Tax Reduction Act of 1975, the plan administrator shall withhold
and be liable for payment of amounts required to be withheld
under this section, unless the plan administrator has directed
the payer to withhold the tax and has provided the payer with the
information required by rule of the department.
(4)(a) An individual may elect to have no withholding by a
payer under subsection (2) of this section. If an individual has
elected to have no federal withholding from payments or
distributions described in this section the individual shall be
deemed to have elected no withholding for state purposes, unless
the individual notifies the payer otherwise.
(b) An election made under this subsection shall be effective
as provided under rules promulgated by the department. The rules
required under this paragraph shall provide the manner in which
an election may be revoked and when such revocation shall be
effective.
{ + (c) An election may not be made under this subsection
with respect to any distribution for which federal income taxes
are to be withheld or are required to be withheld under section
3405 of the Internal Revenue Code. + }
(5) The payer of any periodic payment or nonperiodic
distribution { + for which an election may be made under
subsection (4) of this section + } shall give notice to the payee
of the right to make { - an election to have no state
withholding from the payment or distribution - } { + the
election + }. The department shall provide by rule for the time
and manner of giving the notice required under this subsection.
(6) Any rules permitted or required to be promulgated by the
department under this section shall, insofar as is practicable,
be consistent with corresponding provisions of section 3405 of
the Internal Revenue Code and regulations promulgated thereunder.
(7) Any designated distribution shall be treated as if it were
wages paid by an employer to an employee within the meaning of
ORS 316.162 to 316.221 for all other purposes of ORS 316.162 to
316.221. In the case of any designated distribution not subject
to withholding by reason of an election under subsection (4) of
this section, the amount withheld shall be treated as zero.
SECTION 29. { + The amendments to ORS 316.189 by section 28 of
this 2007 Act apply to distributions made on or after January 1,
2008. + }
{ +
DISCLOSURE OF TAX INFORMATION + }
SECTION 30. ORS 314.840 is amended to read:
314.840. (1) The Department of Revenue may:
(a) Furnish any taxpayer, representative authorized to
represent the taxpayer under ORS 305.230 or person designated by
the taxpayer under ORS 305.193, upon request of the taxpayer,
representative or designee, with a copy of the taxpayer's income
tax return filed with the department for any year, or with a copy
of any report filed by the taxpayer in connection with the
return, or with any other information the department considers
necessary.
(b) Publish lists of taxpayers who are entitled to unclaimed
tax refunds.
(c) Publish statistics so classified as to prevent the
identification of income or any particulars contained in any
report or return.
(d) Disclose a taxpayer's name, address, telephone number,
refund amount, amount due, Social Security number, employer
identification number or other taxpayer identification number to
the extent necessary in connection with collection activities or
the processing and mailing of correspondence or of forms for any
report, return or claim required in the administration of ORS
310.630 to 310.706, any local tax under ORS 305.620, or any law
imposing a tax upon or measured by net income.
(2) The department also may disclose and give access to
information described in ORS 314.835 to:
(a) The Governor of the State of Oregon or the authorized
representative of the Governor:
(A) With respect to an individual who is designated as being
under consideration for appointment or reappointment to an office
or for employment in the office of the Governor. The information
disclosed shall be confined to whether the individual:
(i) Has filed returns with respect to the taxes imposed by ORS
chapter 316 for those of not more than the three immediately
preceding years for which the individual was required to file an
Oregon individual income tax return.
(ii) Has failed to pay any tax within 30 days from the date of
mailing of a deficiency notice or otherwise respond to a
deficiency notice within 30 days of its mailing.
(iii) Has been assessed any penalty under the Oregon personal
income tax laws and the nature of the penalty.
(iv) Has been or is under investigation for possible criminal
offenses under the Oregon personal income tax laws. Information
disclosed pursuant to this paragraph shall be used only for the
purpose of making the appointment, reappointment or decision to
employ or not to employ the individual in the office of the
Governor.
(B) For use by an officer or employee of the Oregon Department
of Administrative Services duly authorized or employed to prepare
revenue estimates, or a person contracting with the Oregon
Department of Administrative Services to prepare revenue
estimates, in the preparation of revenue estimates required for
the Governor's budget under ORS 291.201 to 291.226, or required
for submission to the Emergency Board, or if the Legislative
Assembly is in session, to the Joint Committee on Ways and Means,
and to the Legislative Revenue Officer under ORS 291.342, 291.348
and 291.445. The Department of Revenue shall disclose and give
access to the information described in ORS 314.835 for the
purposes of this subparagraph only if:
(i) The request for information is made in writing, specifies
the purposes for which the request is made and is signed by an
authorized representative of the Oregon Department of
Administrative Services. The form for request for information
shall be prescribed by the Oregon Department of Administrative
Services and approved by the Director of the Department of
Revenue.
(ii) The officer, employee or person receiving the information
does not remove from the premises of the Department of Revenue
any materials that would reveal the identity of a personal or
corporate taxpayer.
(b) The Commissioner of Internal Revenue or authorized
representative, for tax purposes only.
(c) The proper officer of any state { + , + } { - or - } the
District of Columbia { + or any local government of a state + },
or their authorized representatives, for tax purposes only, if
{ - such - } { + the + } state { + , + } { - or - }
district { + or local government + } has a provision of law
{ - which - } { + that + } meets the requirements of any
applicable provision of the Internal Revenue Code as to
confidentiality.
(d) The Multistate Tax Commission or its authorized
representatives, for tax purposes only. However, the Multistate
Tax Commission may make such information available to the
Commissioner of Internal Revenue or the proper officer of any
state or the District of Columbia, or their authorized
representatives, for tax purposes only, if the state or district
has a provision of law which meets the requirements of any
applicable provision of the Internal Revenue Code as to
confidentiality.
(e) The Attorney General, assistants and employees in the
Department of Justice, or other legal representative of the State
of Oregon, to the extent the department deems disclosure or
access necessary for the performance of the duties of advising or
representing the department pursuant to ORS 180.010 to 180.240
and the tax laws of this state.
(f) Employees of the State of Oregon, other than of the
Department of Revenue or Department of Justice, to the extent the
department deems disclosure or access necessary for such
employees to perform their duties under contracts or agreements
between the department and any other department, agency or
subdivision of the State of Oregon, in the department's
administration of the tax laws.
(g) Other persons, partnerships, corporations and other legal
entities, and their employees, to the extent the department deems
disclosure or access necessary for the performance of such
others' duties under contracts or agreements between the
department and such legal entities, in the department's
administration of the tax laws.
(h) The Legislative Revenue Officer or authorized
representatives upon compliance with ORS 173.850. Such officer or
representative shall not remove from the premises of the
department any materials that would reveal the identity of any
taxpayer or any other person.
(i) The Department of Consumer and Business Services, to the
extent the department requires such information to determine
whether it is appropriate to adjust those workers' compensation
benefits the amount of which is based pursuant to ORS chapter 656
on the amount of wages or earned income received by an
individual.
(j) Any agency of the State of Oregon, or any person, or any
officer or employee of such agency or person to whom disclosure
or access is given by state law and not otherwise referred to in
this section, including but not limited to the Secretary of State
as Auditor of Public Accounts under section 2, Article VI of the
Oregon Constitution; the Department of Human Services pursuant to
ORS 314.860 and 418.135; the Division of Child Support of the
Department of Justice and district attorney regarding cases for
which they are providing support enforcement services under ORS
25.080; the State Board of Tax Practitioners, pursuant to ORS
673.710; and the Oregon Board of Accountancy, pursuant to ORS
673.415.
(k) The Director of the Department of Consumer and Business
Services to determine that a person complies with ORS chapter 656
and the Director of the Employment Department to determine that a
person complies with ORS chapter 657, the following employer
information:
(A) Identification numbers.
(B) Names and addresses.
(C) Inception date as employer.
(D) Nature of business.
(E) Entity changes.
(F) Date of last payroll.
(L) The Director of Human Services to determine that a person
has the ability to pay for care that includes services provided
by the state institutions as described in ORS 179.321 or the
Department of Human Services or to collect any unpaid cost of
care as provided by ORS chapter 179.
(m) Employees of the Employment Department to the extent the
Department of Revenue deems disclosure or access to information
on a combined tax report filed under ORS 316.168 is necessary to
performance of their duties in administering the tax imposed by
ORS chapter 657.
(n) The State Fire Marshal to assist the State Fire Marshal in
carrying out duties, functions and powers under ORS 453.307 to
453.414, the employer or agent name, address, telephone number
and standard industrial classification, if available.
(o) Employees of the Department of State Lands for the purposes
of identifying, locating and publishing lists of taxpayers
entitled to unclaimed refunds as required by the provisions of
chapter 694, Oregon Laws 1993. The information shall be limited
to the taxpayer's name, address and the refund amount.
(p) In addition to the disclosure allowed under ORS 305.225,
state or local law enforcement agencies to assist in the
investigation or prosecution of the following criminal
activities:
(A) Mail theft of a check, in which case the information that
may be disclosed shall be limited to the stolen document, the
name, address and taxpayer identification number of the payee,
the amount of the check and the date printed on the check.
(B) The counterfeiting, forging or altering of a check
submitted by a taxpayer to the Department of Revenue or issued by
the Department of Revenue to a taxpayer, in which case the
information that may be disclosed shall be limited to the
counterfeit, forged or altered document, the name, address and
taxpayer identification number of the payee, the amount of the
check, the date printed on the check and the altered name and
address.
(q) The United States Postal Inspection Service or a federal
law enforcement agency, including but not limited to the United
States Department of Justice, to assist in the investigation of
the following criminal activities:
(A) Mail theft of a check, in which case the information that
may be disclosed shall be limited to the stolen document, the
name, address and taxpayer identification number of the payee,
the amount of the check and the date printed on the check.
(B) The counterfeiting, forging or altering of a check
submitted by a taxpayer to the Department of Revenue or issued by
the Department of Revenue to a taxpayer, in which case the
information that may be disclosed shall be limited to the
counterfeit, forged or altered document, the name, address and
taxpayer identification number of the payee, the amount of the
check, the date printed on the check and the altered name and
address.
(r) The United States Financial Management Service, for
purposes of facilitating the reciprocal offsets described in ORS
305.612.
(s) A municipal corporation of this state for purposes of
assisting the municipal corporation in the administration of a
tax of the municipal corporation that is imposed on or measured
by income, wages or net earnings from self-employment. Any
disclosure under this paragraph may be made only pursuant to a
written agreement between the Department of Revenue and the
municipal corporation that ensures the confidentiality of the
information disclosed.
(3)(a) Each officer or employee of the department and each
person described or referred to in subsection (2)(a), (e) to (k)
or (m) to (p) of this section to whom disclosure or access to the
tax information is given under subsection (2) of this section or
any other provision of state law, prior to beginning employment
or the performance of duties involving such disclosure or access,
shall be advised in writing of the provisions of ORS 314.835 and
314.991, relating to penalties for the violation of ORS 314.835,
and shall as a condition of employment or performance of duties
execute a certificate for the department, in a form prescribed by
the department, stating in substance that the person has read
these provisions of law, that the person has had them explained
and that the person is aware of the penalties for the violation
of ORS 314.835.
(b) The disclosure authorized in subsection (2)(q) of this
section shall be made only after a written agreement has been
entered into between the Department of Revenue and the person
described in subsection (2)(q) of this section to whom disclosure
or access to the tax information is given, providing that:
(A) Any information described in ORS 314.835 that is received
by the person pursuant to subsection (2)(q) of this section is
confidential information that may not be disclosed, except to the
extent necessary to investigate or prosecute the criminal
activities described in subsection (2)(q) of this section;
(B) The information shall be protected as confidential under
applicable federal and state laws; and
(C) The United States Postal Inspection Service or the federal
law enforcement agency shall give notice to the Department of
Revenue of any request received under the federal Freedom of
Information Act, 5 U.S.C. 552, or other federal law relating to
the disclosure of information.
(4) The Department of Revenue may recover the costs of
furnishing the information described in subsection (2)(k), (L)
and (n) to (p) of this section from the respective agencies.
{ +
CAPTIONS + }
SECTION 31. { + The unit captions used in this 2007 Act are
provided only for the convenience of the reader and do not become
part of the statutory law of this state or express any
legislative intent in the enactment of this 2007 Act. + }
{ +
EFFECTIVE DATE + }
SECTION 32. { + This 2007 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-fourth
Legislative Assembly adjourns sine die. + }
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