Oregon State Tax Audit Response

OREGON STATE TAX AUDIT RESPONSE — IDR / POSITION / TAXPAYER RIGHTS

TABLE OF CONTENTS

1. Audit Cover Sheet
2. Section A — IDR / Audit Information Request Response
3. Section B — Audit Position Statement
4. Section C — Taxpayer Bill of Rights and Privilege Objections
5. Section D — Closing Conference / "No-Change" Letter Request
6. Records Retention Schedule
7. Signature Block
8. Oregon Practice Notes
9. Sources and References

1. AUDIT COVER SHEET

2. SECTION A — IDR / AUDIT INFORMATION REQUEST RESPONSE

[DATE]

Oregon Department of Revenue
Attn: [AUDITOR NAME], [TITLE]
[OFFICE ADDRESS]

Sent via: ☐ Revenue Online (secure portal) ☐ Certified Mail RRR ☐ Encrypted Email ☐ Hand Delivery

Re: Response to Audit Information Request No. [IDR-#]
Taxpayer: [NAME] | FEIN/SSN: XXXX | Tax Periods: [YYYY–YYYY]

Dear [AUDITOR NAME]:

This letter responds to the Department's audit information request dated [__/__/____] ("the Request"). Taxpayer provides the following materials and reservations.

2.1 Documents Produced

2.2 Items Requiring Clarification or Extension

Taxpayer respectfully requests clarification of, or an extension of time to respond to, the following IDR items:

2.3 Items Withheld and Privilege Log

The following responsive materials are withheld pursuant to the assertions in Section C:

2.4 Reservation of Rights

Taxpayer reserves all rights under ORS 305.860 to 305.900 (Oregon Taxpayer Bill of Rights), including the rights to: (a) representation by counsel; (b) record any meeting or telephonic communication with the Department under ORS 305.880(2); (c) receive a written explanation of any proposed change to a return; and (d) timely informal conference and judicial appeal.

Production of any document does not waive Taxpayer's right to assert that the document is irrelevant, immaterial, privileged, or beyond the scope of permissible inquiry. Production is made under the implied protective treatment of confidential return information per ORS 314.835 and ORS 305.380–305.404.

Sincerely,

[________________________________]

[REPRESENTATIVE NAME] | OBA No. [####] (if attorney)
[FIRM NAME]

3. SECTION B — AUDIT POSITION STATEMENT

Re: Position Statement Regarding [ISSUE]

3.1 Issue Presented

Whether [describe issue — e.g., taxpayer's wholesale receipts qualify for the throwback exclusion under ORS 314.665(2)(b); whether the Section 199A QBI add-back applies; whether income is subject to apportionment vs. allocation].

3.2 Brief Answer

[Yes / No / Partly]. [One- or two-sentence summary].

3.3 Statement of Facts

[Insert chronological narrative, paragraph-numbered, with citations to produced exhibits / Bates numbers.]

3.4 Applicable Authority

3.5 Application

[Apply law to facts. Address Department's contrary view and rebut. Where the Department relies on a federal RAR, address the federal determination's substance, finality, and any pending federal appeal under ORS 305.305.]

3.6 Conclusion and Requested Action

For the foregoing reasons, Taxpayer respectfully requests that the Department: ☐ withdraw the proposed adjustment; ☐ reduce the adjustment to $[____]; ☐ defer the issue pending federal resolution; ☐ refer to the Conference Officer pursuant to ORS 305.265(5).

4. SECTION C — TAXPAYER BILL OF RIGHTS AND PRIVILEGE OBJECTIONS

Pursuant to ORS 305.860 to 305.900, Taxpayer asserts and invokes the following rights with respect to this examination:

4.1 Privilege and Confidentiality Objections

To the extent any audit request seeks production of materials covered by:

• Attorney-client privilege (Oregon Evidence Code, OEC 503; ORS 40.225);
• Work-product doctrine (ORCP 36 B(3); incorporated into Tax Court practice via TCR 36 B);
• Confidential communications with a tax practitioner under ORS 305.193 (state analog to IRC § 7525);
• Self-incrimination under U.S. Const. Amend. V and Or. Const. Art. I, § 12;
• Trade secrets / proprietary information (ORS 192.345);

Taxpayer objects and withholds production. A privilege log accompanies the response identifying date, author, recipient, and basis for withholding (see § 2.3).

4.2 Scope and Burden Objections

Taxpayer further objects to any request that: (a) seeks records outside the applicable period of limitation under ORS 314.410 / 314.425 absent a written agreement to extend; (b) is unduly burdensome or duplicative; (c) seeks records of unrelated entities; or (d) exceeds the auditor's authority under ORS 305.190 to "examine" books, papers, and records.

5. SECTION D — CLOSING CONFERENCE / "NO-CHANGE" LETTER REQUEST

[DATE]

[AUDITOR / SUPERVISOR NAME]
Oregon Department of Revenue

Re: Closing Conference — Audit No. [#]

Taxpayer requests a closing conference under ORS 305.265 prior to issuance of any Notice of Deficiency. Taxpayer further requests:

• ☐ A written "no-change" letter pursuant to Department audit policy;
• ☐ Scheduling of an exit conference at [location/format] on [__/__/____];
• ☐ Identification of all proposed adjustments with computation worksheets at least [14 / 30] days in advance of the conference;
• ☐ Identification of any penalties the Department intends to assert and the statutory basis for each;
• ☐ Discussion of installment / settlement options under ORS 305.155 (compromise authority).

If the Department issues a Notice of Deficiency, Taxpayer reserves the right to file a written objection within 30 days under ORS 305.265(5) and to appeal to the Oregon Tax Court within 90 days under ORS 305.280 / 305.560.

6. RECORDS RETENTION SCHEDULE

7. SIGNATURE BLOCK

Date: [__/__/____]

Respectfully submitted,

[________________________________]

[REPRESENTATIVE NAME]
[FIRM NAME]
Oregon State Bar No. [####] (if attorney) / CPA License No. [####] / EA No. [####]
[STREET ADDRESS]
[CITY, STATE ZIP]
Telephone: [NUMBER]
Email: [EMAIL]

8. OREGON PRACTICE NOTES

• No general sales tax. Oregon is one of five states (with AK, DE, MT, NH) without a general state retail sales tax. Audit practice is therefore concentrated in income, corporate excise, withholding, the Corporate Activity Tax (CAT), the Statewide Transit Tax, and the Vehicle Privilege/Use Tax. Sales-tax-style "Wayfair" nexus issues do not arise for Oregon, but economic nexus issues are very much alive for income/excise and CAT.
• Statute of limitations. General three-year period from filing under ORS 314.410(1). Five years for substantial (25% +) omissions of income; unlimited for false/fraudulent returns or non-filers (ORS 314.425). Carefully diary the limitations expiration; signed waivers (Form OR-1180-WAIVER) extend the period only as written.
• Federal "piggyback." ORS 305.305 obligates taxpayers to notify the Department of any federal RAR within a fixed window (generally 90 days from finality). The Department then may assess based on the federal change. Engaging the federal proceeding is often the most efficient defense.
• Confidentiality. Returns and audit information are confidential under ORS 314.835 and ORS 305.380–305.404. Unauthorized disclosure is a Class C felony under ORS 314.991.
• Recording rights. Taxpayer may record any audit interview after 24-hour notice to the auditor under ORS 305.880(2). The Department may also record but must inform taxpayer.
• Conference vs. appeal. A Department conference under ORS 305.265 is an informal, internal review. It does not start the 90-day Tax Court appeal clock — the Conference Decision (or Notice of Assessment if no objection) does.
• Compromise authority. The Director may compromise any tax liability under ORS 305.155 in cases of doubt as to liability, doubt as to collectability, or to promote effective tax administration. Compromise offers may be made before or during examination.
• Oregon Tax Court Article VII court. Any judicial appeal proceeds exclusively through the Oregon Tax Court (Magistrate Division → Regular Division → Oregon Supreme Court). See companion template state_income_tax_protest.md.
• Penalties. Watch for negligence (ORS 305.265(13)), substantial-understatement (ORS 314.402), failure-to-file/pay (ORS 314.400), and 100% civil fraud (ORS 314.402(1)(b)). Reasonable cause / good-faith defenses parallel federal § 6664 standards in practice.
• CAT-specific note. The Corporate Activity Tax (ORS Ch. 317A) is administered under general ORS Chapters 305 and 314 procedures by virtue of ORS 317A.149. Audit responses for CAT track the format above; substitute CAT-specific authorities (ORS 317A.116, 317A.122, 317A.125, 317A.128).

9. SOURCES AND REFERENCES

• ORS Chapter 305 — Administration of Revenue and Tax Laws — https://www.oregonlegislature.gov/bills_laws/ors/ors305.html
• ORS Chapter 314 — Taxes Imposed on or Measured by Net Income (procedural rules) — https://www.oregonlegislature.gov/bills_laws/ors/ors314.html
• ORS 305.860 to 305.900 — Taxpayer Bill of Rights — https://oregon.public.law/statutes/ors_305.860
• ORS 305.875 — Rights in meetings/communications — https://oregon.public.law/statutes/ors_305.875
• ORS 305.880 — Right to representation; recording — https://oregon.public.law/statutes/ors_305.880
• ORS 305.265 — Notice of deficiency procedures — https://oregon.public.law/statutes/ors_305.265
• ORS 305.305 — Federal/other-state audit reports — https://oregon.public.law/statutes/ors_305.305
• ORS 314.425 — Periods of limitation — https://oregon.public.law/statutes/ors_314.425
• ORS 305.155 — Compromise authority — https://oregon.public.law/statutes/ors_305.155
• ORS 305.193 — Tax practitioner privilege — https://oregon.public.law/statutes/ors_305.193
• Oregon DOR — Taxpayer Bill of Rights — https://www.oregon.gov/dor/Pages/taxpayer-bill-of-rights.aspx
• Oregon DOR — Audit Process information — https://www.oregon.gov/dor/programs/individuals/Pages/audit.aspx
• Form OR-AUTH (Tax Information Authorization) — https://www.oregon.gov/dor/forms/FormsPubs/form-or-auth_150-800-005.pdf

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Oregon must review and customize this document before use. Audit deadlines and document obligations are time-sensitive; verify all citations and applicable deadlines before responding.