OAR 150-305-0238: Audit Period for Refunds Issued without Examination

The department shall have the periods of limitation as provided in ORS 314.410 or one year from the date the refund check is issued, whichever period expires the later, to examine or audit the refund claim and issue a notice of deficiency. The refund claim can be adjusted to -0- but a deficiency in excess of the refund previously issued or requested cannot be asserted if the statute of limitations has expired. This subsection applies to amended returns filed on or after September 20, 1985 (the effective date of Chapter 266, OR Laws 1985). Example 1: Benjamin files a timely 1982 income tax return on April 15, 1983. He later files an amended return on August 30, 1985. The department issues the refund check two months later. Because the amended return is filed before September 20, 1985, ORS 305.270(8) doesn’t apply. Example 2: Use the same facts that appear in Example 1, except that Benjamin files his amended return on September 30, 1985. The department issues the refund check on January 15, 1986, without having audited or examined the refund claim. Because the amended return is filed after September 20, 1985, ORS 305.270(8) applies. The department may examine or audit Benjamin’s return until January 15, 1987, one year after the refund check is issued. The audit period is open until January 15, 1987 because it is later than the expiration of the three-year period in ORS 314.410(1). If Benjamin’s return is adjusted prior to April 16, 1986, a deficiency may be asserted in excess of the refund previously issued. If the return is adjusted after April 15, 1986, a deficiency shall not exceed the refund previously issued. Example 3: Rob files a timely 1984 income tax return on April 15, 1985. He later files an amended return on January 15, 1987 and the department issues a refund check on March 15, 1987, without having audited or examined the refund claim. The department may examine or audit Rob’s return until April 15, 1988, the expiration of the three-year period in ORS 314.410(1). The audit period is open until April 15, 1988, because it expires later than one year after the refund check date. A deficiency may be asserted during this period in excess of the refund previously issued.