Scott v. Dept. of Rev

A party dissatisfied with a Magistrate Division decision may appeal by filing a complaint in the Regular Division of the Tax Court within 60 days after the date of entry of the written decision. ORS 305.501(5)(a). ORS 305.419(1) specifies that a condition precedent for appealing a tax decision is the payment of the tax assessed, and all penalties and interest due, on or before the filing of the complaint. However, ORS 305.419(3) provides an alternative to that condition, if the taxpayer establishes that payment of the taxes would be an undue hardship.

Taxpayer appealed a judgment of the Tax Court that dismissed his appeal for lack of jurisdiction. In 2012, the Department of Revenue issued notices of deficiency, Taxpayer appealed, and the Magistrate Division determined that Taxpayer had substantiated some claimed deductions that the department had disputed, but also that he had additional unreported income. Taxpayer appealed to the Regular Division. The department moved to dismiss Taxpayer’s complaint on the ground that the court lacked jurisdiction because Taxpayer had not complied with all requirements. The Tax Court granted the motion and dismissed the appeal. The Court limited their review "to errors or questions of law or lack of substantial evidence in the record to support the tax court’s decision or order.” Taxpayer argued that under ORS 305.419(3) he was not required to pay all due taxes because they presented an undue hardship. The Court ultimately agreed and found that the legislature intended to provide a taxpayer the opportunity to obtain an exemption from the otherwise applicable requirement of payment—if the taxpayer can establish undue hardship.The Court stressed that its holding in this case is limited to the question of whether, under ORS 305.419(3), taxpayer’s failure to file an affidavit of undue hardship with the complaint was a jurisdictional defect. The judgment of the Tax Court is reversed, and the case is remanded to the Tax Court for further proceedings.