OAR 150-305-0208: Assessing Tax on Failure to File

(1) The law places an affirmative duty on the taxpayer to file a timely and correct return and directs the department to take steps to require compliance. (2) General. In the case of a failure by the taxpayer to file a return, the department must determine the tax liability of the taxpayer according to the best of its information and belief. “Best of its information and belief” means that the department must use evidence on which a reasonable person would rely in determining the tax to be assessed by the department because of the taxpayer’s failure to file a return. Sources of information include but are not limited to the taxpayer’s federal return for the year in question, state returns filed by the taxpayer, any partnership return naming the taxpayer as a partner, information returns, the income of returns of taxpayers similarly situated, or withholding returns (in the case of individual taxpayers). (3) Personal Income Tax. (a) The determination of income, exemptions, and other provisions must be made in accordance with Internal Revenue Code rules for the year in question. When the department has knowledge of a federal return having been filed jointly for the year in question, a joint assessment will be made. When the department’s best information indicates the taxpayer is married, and a joint federal return has not been filed, the filing status will be married filing separate. In all other cases the filing status will be single. (b) The standard deduction must be allowed unless itemized deductions are claimed on the taxpayer’s federal return. Also, a deduction will be allowed for the amount of federal tax computed on the federal return, or in absence of such a return, the allowable federal tax must be calculated by the department to provide an automatic deduction for the proper amount of accrued federal tax, whether paid or not. (c) An exemption credit(s) must be allowed based on the filing status determined under this rule. No other credit will be allowed in determining an assessment unless specific information that the taxpayer is entitled to a credit is available. (4) Income Tax Withholding and Statewide Transit Tax. When an employer or payer fails to file a combined tax report or a statewide transit tax report, the department must determine the tax liability of the employer or payer using information from Employment Department records, federal tax returns, returns filed by the employer or payer for prior reporting periods and any other information available. [Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).]