I received a notice from the State of Oregon

I received a notice from the State of Oregon dealing with a delinquent filing. They appear to have made an assessment of taxes that I owe and the tax liability has a large penalty. To compound matters, I don’t have the money to pay the taxes. What to do?

The Oregon Department of Revenue (ODR) is capable of filing what is called a statutory filing based on third party information from the federal government or other third parties. That filing does not attempt to represent your actual income – only the income that was reported to ODR. To that end, these filings are often inaccurate.

You need to gather your information and file a tax return that accurately represents all your income, expenses and personal deductions that may apply. (See Number 5 above for the process of putting the returns together.)

Following you will need to deal with setting up an installment agreement. This is a lot more challenging than dealing with IRS as ODR typically wants payment within a year.  A financial statement is typically required for plans extending past a year. Before you complete the installment agreement, you will need to challenge the penalty assessed for the failure to file.

This is completed by a request for an abatement of the non-filing penalty.  The penalty when reduced is applied to the balance at the back end of your payment plan. Thus your balance owed will be the entire balance that was assessed.  When the balance is reduced to the balance owed with the penalty subtracted, you will have paid all the taxes owing.

Keep in mind that ODR has an offer in compromise program similar to IRS called a Settlement Offer. This may allow you to reduce your taxes for the inability to pay.