Fortress Tax Relief, is the only significant tax resolution service provider located in Oregon.
The Oregon Department of Revenue collects personal income tax, corporate income tax, marijuana tax, and several other business taxes. With so many different tax obligations, it can be easy to get behind.
Dealing with Oregon tax debt can cause a lot of stress, financial and otherwise, but you probably have more options for managing the situation than you think. To help you out, this guide outlines tax relief options for Oregon state tax debt. Then, it looks at what happens if you don’t pay your taxes.
As you’ll discover below, some tax relief options, typically for smaller or uncomplicated tax liabilities, are fairly simple to handle on your own. However, for more serious tax debts, you may find it best to work with an Oregon tax relief professional. To get help now, contact us at Fortress Tax Relief.
We’re based in Oregon and have extensive experience with the Oregon state tax relief services, but we can also help you resolve IRS tax debt as well as taxes in any other state. Note that, unlike other states, Oregon requires tax professionals representing Oregon taxpayers to be licensed in Oregon. So, if you are considering and out-of-state tax relief service provider, be sure that they have an authorized tax professional who is licensed in Oregon. Or just call us. It’s doubtful you will find an out of state professional who has anywhere near the amount of experience and expertise resolving Oregon state tax debts.
Oregon Tax Debt Relief Options
Regardless of your situation — or how high your tax debt has become — there is a relief option to help make your debt more manageable. To point you in the right direction, here is an overview of the main options in Oregon.
Payment Plans for Oregon Tax Debts
The Oregon Department of Revenue (DOR) offers payment plans for unpaid tax balances. When you set up a payment plan, you can get up to 36 months to pay your Oregon tax debt.
If you need more than 36 months to repay your tax debt, you face a very difficult challenge. Although OR DOR may say 36 months is the maximum repayment term, and they very well may stick to their guns, if you present an exceptionally strong and well-documented proposal along with rock-solid oral arguments proving that the longer repayment term is the very best you can do, and it is in Oregon’s best interests to agree to it, you might have a chance (though it would likely only be on a temporary basis for 6-18 months, followed by another financial review to see if you can pay more).
If that fails, the fallback position might be to send in the largest voluntary payments you can afford, and try to convince DOR not to garnish your wages and bank accounts. In other words, beg for mercy. Or you may be able take actions that are legal, but that will minimize the amount of money that DOR succeeds in taking from you by force. Find a very good tax relief professional if you know you cannot repay within 36 months.
In most cases, when you set up a payment plan, the DOR will not pursue collection actions against you. For instance, the agency won’t try to garnish your wages. However, the DOR will continue to assess interest and possibly penalties on your account.
Suspended Collections Status
Oregon offers suspended tax collection periods to some families with low incomes. However, the guidelines are very strict, and not all low-income households can qualify.
In addition to meeting income requirements, individuals must have wages that are protected from wage garnishment. For example, SSI or disability income is usually protected from garnishments, but regular wages from a job or business income could cause an automatic denial of this relief option. Additionally, to qualify, you can only have assets worth less than $5,000.
If you qualify for suspended collection status, the DOR will stop collections against you. You won’t have to worry about garnishments, bank account levies, or asset seizures. However, interest will continue to accrue on your account, and the DOR will revisit the situation in a year to see if your situation has improved. If your finances improve, the DOR will demand payment, and if you don’t set up payments, collection actions will resume against you.
Temporarily Uncollectible Status
If you don’t qualify for suspended collections status, achieving a temporary uncollectible status may be possible. This program is for taxpayers facing temporary financial hardship such as a job loss or short-term disability. To apply, you should contact the DOR directly.
If you’re approved for temporary uncollectible status, Oregan tax collection efforts will pause, including wage garnishments. However, you may still have a tax lien placed against your property. Additionally, the DOR can keep any state refunds that you earn in the future until your balance is paid in full, and the IRS may send your federal refund to the Oregon DOR as well.
In addition, you must pay all new tax obligations on time (including debt taxes accrued while under temporary uncollectable status). If you fail to do so, you may be removed from the program, and collection efforts will resume.
When your temporary financial situation improves, you must pay your past-due tax balance, or set up a payment plan. Interest will continue accruing while your account is under temporary uncollectible status.
Oregon State Tax Penalty Waivers
Oregon may forgive some tax-related penalties. Generally, the state will forgive penalties if you had reasonable cause for incurring the penalty. For instance, if you filed late due to a serious illness or death, you should be able to get a penalty waiver. The state also offers waivers to people who are normally compliant with tax regulations.
In some cases, the state may waive all of the penalties, but in other cases, you may have only part of a penalty waived. The department may waive penalties for filing or paying late as well as other penalties.
To request a penalty waiver, you can either log in to the department’s website or write a letter and send it by mail. In the letter, include your name, Social Security Number, tax period, type of penalty, and the reason you incurred the penalty. Also, include any documents to support your claim.
You can mail the request to:
Penalty Waiver Request
Oregon Department of Revenue
955 Center Street NE
Salem, OR 97301-2555
Consider seeking assistance from a tax relief professional to negotiate your Penalty Waiver, especially if you have a high dollar amount in penalties. Knowing which facts and circumstances will improve your chances, and which ones will reduce your chances could mean the difference between having your penalties waived or not. Including weak facts or ones that are legally irrelevant can water down your good facts. By simply excluding the weak or irrelevant facts, and sticking with the strong ones, you may improve your chances of succeeding.
It can take up to six months for Oregon to process your penalty waiver request. You will receive a letter in the mail when the department makes a decision. If your request is denied, you may request a reconsideration. Only reconsideration requests made within 30 days of the department’s decision will be granted.
In some cases, Oregon may also forgive interest. Usually, this only happens if the interest was related to penalties that were waived or if you paid/filed late due to incorrect advice from the state. You can contact the Oregon DOR or a local tax professional to find out if you qualify for waived interest fees.
Appealing Oregon Tax Debt
Oregon State laws say that taxpayers have the right to appeal decisions made by the Oregon DOR. The department will include information about your right to appeal and how the appeal process works in every letter of determination that you receive.
For example, say that your return is being audited. The auditor decides to disallow a claim on your return, and they send you a notice of determination showing the changes and the updated tax liability. You have the right to appeal this assessment.
The appeal period is 30 days, but if you haven’t filed for an appeal within 30 days, you may still appeal to the Magistrate Division of the Oregon Tax Court (with the exception of penalty waiver determinations). Appeal forms are available at the Oregon Tax Court, but rather than tackling this confusing process on their own, many taxpayers choose to have a tax attorney guide them.
Oregon Tax Settlement Offer
In some situations, you may settle your tax debt for less than you owe. Some states (and the IRS) call this type of settlement an Offer in Compromise, commonly incorrectly referred to as an Offer of Compromise. However, not everyone qualifies to settle their Oregon tax debt this way.
To apply, file Form OR-SOA (Settlement Offer Application). Oregon is most likely to accept a tax settlement offer if you don’t have assets to liquidate and your income indicates that you don’t have the ability to make payments or pay the full tax debt in the future. Here are some reasons Oregon may accept an offer on your tax debt.
- You receive public assistance or live on a low, fixed income.
- The value of your assets will not cover your entire tax debt.
- Your income has been reduced (for example, if you have been recently diagnosed with a long-term disability and cannot work).
Keep in mind that even if you meet any of the above criteria, your offer may be rejected by the Oregon DOR. This can happen if your appeal rights have not yet expired or if you haven’t filed tax returns for previous years.
There are also other scenarios that will cause the department to deny your tax settlement offer. Consulting with an Oregon tax relief professional can help you determine if a settlement offer is right for you. A professional can also help you with the negotiating process so you won’t pay more than necessary.
What Happens If You Don’t Pay Taxes in Oregon
Now that you have an understanding of the relief options for unpaid state taxes, let’s look at what happens if you don’t pay your taxes in Oregon. The exact consequences vary based on the situation, but here’s an overview.
Before anything else happens, the DOR will assess penalties on your account. Here are the most common. They’re all based on a percentage of your tax liability.
- Failure-to-File Penalty (5%): Applied when you do not file or report your tax return by the due date.
- Failure-to-Pay Penalty (5%): Applied when you have not paid Oregon taxes by the due date
- Additional 20% Penalty: Applied when a tax return has not been filled filed or reported three or more months after the due date
- Additional 25% Penalty: Applied when an Oregon tax return is not filed or reported within 30 days of receiving a Notice of Assessment Letter because you failed to file
- 100% Penalty: Applies when required annual reports or tax returns have not been filed for three consecutive years
- Underpayment Penalty (5%): Applies when estimated taxes are underpaid
To give you an example, imagine that you owe $2,000 on a state tax return and you file more than three months late. Then, the 20% penalty will apply, and it will be $400. That’s 20% of $400.
Loss of Tax Refunds
The OR DOR will take your tax refund if you have unpaid taxes. Say you file a tax return in 2021 showing that you owe $3,000 but you don’t pay. Then, for 2022, you file a state return with a $2,000 refund. The state will keep those funds and apply them to your bill. This is true even if you set up a payment plan.
Once you get behind, the DOR can issue a state tax lien. This attaches to all of your assets, and it gives the state the right to collect the proceeds if you sell the asset. A lien also starts to lay the legal groundwork for a tax levy (seizure).
The DOR may also file a Uniform Commercial Code (UCC) lien. This attaches to all of your business assets. It can make it hard to sell or borrow against your property. It can also make lenders reluctant to loan your business money.
The DOR can garnish your wages. They can also take funds that are owed to you by other parties. For example, if you have tenants who pay you rent or clients who pay you on a 1099 basis, the state can jump in and intercept those payments.
Additionally, the state can seize your real or personal property. This includes cars, boats, RVs, money in safe deposit boxes, and real estate, but it does not include your home. In Oregon, the DOR will not take your primary residence. If you own a business, the DOR can take the money out of your cash register or seize your inventory.
Professional License Suspension
The state can also suspend your professional business license. If this happens, you won’t be able to work to pay off your tax debt. If the state is threatening this type of action, you should contact a tax pro for help as soon as you can.
Publication of Your Tax Debt
If you owe over $50,000, the state may publish your name or business name on a delinquent taxpayer list. This can be very embarrassing, and for businesses, it damages your brand reputation. Note also that tax liens are public records, and they are available to anyone who wishes to access them.
Get Help With Oregon Tax Debt Relief
The consequences can be dire if you don’t pay your tax bill. But it is not always easy to determine which tax debt relief option is best for your situation, and some options have complex rules and processes. Because it’s so complicated, it is usually more cost-efficient to hire a tax relief expert than to navigate the situation on your own. Also, owing a large tax debt can be extremely stressful. Having an experienced professional on your side might be worth it simply to help alleviate your stress.
Whether you want to appeal a decision, set up monthly payments, or settle a large an Oregon tax debt, or an IRS tax debt, qualified expert can help. Fortress Tax Relief provides expert tax relief services nationwide and a money-back guarantee. To learn more, contact us today for a free consultation.