Effect of underpayment of estimated tax
- • computation of underpayment
- • interest
- • when not imposed
(1) Except as provided in subsection (5) of this section, if an individual makes an underpayment of estimated tax, interest shall accrue at the rate established under ORS 305.220 (Interest on deficiency, delinquency or refunds) on the amount underpaid for the period the estimated tax or any installment remains unpaid. The penalty provisions contained in ORS chapter 314 for underpayment of tax shall not apply to underpayments of estimated tax under ORS 316.557 (Definition of “estimated tax”) to 316.589 (Application to short tax years and tax years beginning on other than January 1).
(2) For purposes of subsection (1) of this section, the amount of underpayment shall be the excess of the required installment over the amount (if any) of the installment paid on or before the due date for the installment.
(3) The period of underpayment shall run from the date the installment was due to the earlier of the following dates:
(a) The 15th day of the fourth month following the close of the taxable year; or
(b) With respect to any portion of the underpayment, the date on which the portion is paid.
(4) For purposes of subsection (3)(b) of this section, a payment of estimated tax shall be credited against unpaid required installments in the order in which such installments are required to be paid.
(5)(a) Interest accruing under subsection (1) of this section shall not be imposed if the individual was a resident of this state throughout the preceding taxable year and had no tax liability for that year, and the preceding taxable year was a taxable year of 12 months.
(b) Interest accruing under subsection (1) of this section shall not be imposed with respect to any underpayment of estimated tax to the extent that the Department of Revenue determines that by reason of casualty, disaster or other unusual circumstances the imposition of interest would be against equity and good conscience.
(c) Interest accruing under subsection (1) of this section shall not be imposed with respect to any underpayment of estimated tax if the department determines that:
(A) In the tax year the estimated tax payment was required to be made or in the tax year preceding such tax year, the taxpayer (i) retired after having attained age 62 or (ii) became disabled; and
(B) The underpayment was due to reasonable cause and not to willful neglect.
(d) Interest accruing under subsection (1) of this section shall not be imposed with respect to any underpayment of estimated tax attributable to the pro rata share of a shareholder of the income of an S corporation if:
(A) The income is taxable income for an initial year for which S corporation status is elected for the corporation; and
(B) The shareholder is a nonresident or for the preceding taxable year was a part-year resident for Oregon tax purposes.
(6) For purposes of this section, the estimated tax shall be computed without any reduction for the amount of credit estimated to be allowed to the individual for the taxable year under ORS 316.187 (Amount withheld is in payment of employee’s tax). The amount of the credit allowed under ORS 316.187 (Amount withheld is in payment of employee’s tax) for the taxable year shall be considered a payment of estimated tax. An equal part of the credit shall be considered paid on each installment date for the taxable year, unless the taxpayer establishes the date on which all amounts were actually withheld, in which case the amount so withheld shall be considered payment of estimated tax on the dates on which the amounts were actually withheld.
(7) For purposes of subsections (5) and (8) of this section, the term “tax” means the tax imposed by this chapter minus any credits against tax allowed for purposes of this chapter, other than the credit against tax provided by ORS 316.187 (Amount withheld is in payment of employee’s tax).
(8) For purposes of subsections (2) and (4) of this section, the term “required installment” means the amount of the installment that would be due if the estimated tax were equal to the least of:
(a) Ninety percent of the tax shown on the return for the taxable year (or, if no return is filed, 90 percent of the tax for such year);
(b) If the preceding taxable year was a taxable year of 12 months, the percentage of the tax shown on the return filed by the individual for the preceding taxable year that is established by the Department of Revenue by rule; or
(c) Ninety percent of the tax for the taxable year computed by placing on an annualized basis the taxable income for the months in the taxable year ending before the month in which the installment is required to be paid.
(9) For purposes of subsection (8) of this section:
(a) If an amended return is filed on or before the return due date (determined with regard to any extension of time granted to the taxpayer), then the term “return” means the amended return.
(b) If during initial processing of the return the department adjusts the amount of tax due, then the term “tax shown on the return” means the tax as adjusted by the department. This paragraph shall not apply if it is ultimately determined that the adjustment was improper.
(c) The department shall consider the provisions of section 6654 of the Internal Revenue Code. [1980 c.7 §22; 1982 s.s.1 c.16 §21; 1985 c.603 §8; 1987 c.293 §22a; 1989 c.625 §13b; 1991 c.457 §7h; 1993 c.726 §35a; 1995 c.556 §5; 1999 c.90 §18; 2001 c.660 §4; 2017 c.278 §11; 2017 c.315 §25]
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.