If your tax return is audited by the Oregon Department of Revenue, you will likely receive a Notice of Deficiency at the conclusion of the audit. The Notice of Deficiency summarizes changes that have been made to your tax return (or returns) and informs you of your options for appealing the Department’s decision. You have two options to request an administrative appeal of the Notice of Deficiency: you can submit a written protest or you can request an appeals conference. You must choose one or the other, and you must submit your appeal in writing within 30 days of the date on the notice.
A written protest should detail each of your objections to the audit changes, and may include additional documentation to support your arguments. When you submit a written protest, it will be considered by the same person who conducted the audit. In many ways, the written protest is like an extension of the audit. If you were not happy with the way the audit was handled, an appeals conference may be a better option.
An appeals conference is an informal meeting between you, the auditor, and a conference officer—a more senior Department of Revenue employee with substantial audit experience. The conference can be held in person or by phone, and you will have the opportunity to submit additional documentation to the conference officer. Although a conference gives you the opportunity to have a second opinion from an experienced Department of Revenue employee, you should take note—conference officers are not independent of the Department, which means that their decisions should not be considered objective or unbiased.
At the conclusion of the administrative appeal, or if no administrative appeal is made within 30 days of the date on the Notice of Deficiency, the Department will issue a Notice of Assessment. This notice is particularly important because it begins the 90-day period to appeal to the Oregon Tax Court. If you do not appeal within that time frame, the adjustments become final and your options for challenging the tax are very limited.
While considering whether to appeal to the Tax Court during the 90-day period following the Notice of Assessment, it is important to be aware of the Department’s collection activities during that time frame. Thirty days after the Notice of Assessment goes out, the Department will send a Notice and Demand to Pay. While this letter seems threatening, it is the next notice that you should watch out for. Thirty days after the Notice and Demand to Pay is sent (now 60 days after the Notice of Assessment) the Department will send a Distraint Warrant. This document authorizes the Department to garnish your wages or bank account, or potentially seize other assets, without further notice. It is important to understand that the Department could take these actions even before your appeal rights have expired.
If you receive a Notice of Deficiency or Notice of Assessment, or any other notice from the Department of Revenue, consult with an experienced tax attorney who understands the assessment and collection process and who will advocate on your behalf. If you do not take appropriate steps to respond to the Department’s notices, your assets are at risk. Be proactive, talk to a professional, and educate yourself about your rights as a taxpayer.