316.587 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 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 to 316.589.
(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. The amount of the credit allowed under ORS 316.187 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.
(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]
Notes of Decisions
Ragsdale v. Department of Revenue (1992)
or
“Thus, although interest may accrue on the portion of taxes not pre-paid, ORS 316.587, the taxpayer is not subject to a delinquency penalty until the time fixed for filing the return has passed, ORS 314.”
Finley v. Department of Revenue (2012)
ortc · cites it 43×
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Finley v. Dept. of Rev. (2013)
ortc · cites it 43×
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
Woodland v. Dept. of Rev. (2022)
ortc
“ORS 316.587(1) (“if an individual makes an underpayment of estimated tax, interest shall accrue”).”
Ivelia v. Dept. of Rev. (2018)
ortc · cites it 3×
“Under ORS 316.587 and ORS 316.588, an amended return filed before the due date, including extensions, replaces or supplements the originally filed return becoming part of the original return.”
Sherman v. Dept. of Rev. (2022)
ortc · cites it 3×
“ORS 316.587. 3 Declarations of estimated taxes are not required from nonresident individuals unless they meet specific criteria.”
Woodland v. Dept. of Rev. (2022)
ortc · cites it 2×
“If a taxpayer underpays their estimated taxes for any tax year, the taxpayer is required by ORS 316.587(1) to pay interest on the underpayment.”
Deras v. Dept. of Rev. (2026)
ortc · cites it 2×
“086(7), (8) (credit for connecting to a geothermal heating system; allowing unused amount to be “carried forward and offset against the taxpayer’s tax liability” for subsequent years); see also ORS 316.587(4) (1985) (interest not to be imposed on underpayment by resident who…”
Ruden v. Dept. of Rev. (2019)
ortc
“The court held that “[u]nder ORS 316.587 and ORS 316.588, an amended return filed before the due date, including extensions, replaces or supplements the originally filed return becoming part of the original return.”
Kramert v. Department of Revenue (1990)
ortc · cites it 2×
“ORS 316.587(1). Plaintiff appealed to defendant, contending that interest on the underpayment should be waived.”
— Or. Rev. Stat. § 316.587(1) — 6 cases
Woodland v. Dept. of Rev. (2022)
ortc
“ORS 316.587(1) (“if an individual makes an underpayment of estimated tax, interest shall accrue”).”
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Woodland v. Dept. of Rev. (2022)
ortc
“If a taxpayer underpays their estimated taxes for any tax year, the taxpayer is required by ORS 316.587(1) to pay interest on the underpayment.”
— Or. Rev. Stat. § 316.587(2) — 3 cases
Sherman v. Dept. of Rev. (2022)
ortc
“ORS 316.587. 3 Declarations of estimated taxes are not required from nonresident individuals unless they meet specific criteria.”
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
— Or. Rev. Stat. § 316.587(3) — 1 case
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
— Or. Rev. Stat. § 316.587(4) — 1 case
Deras v. Dept. of Rev. (2026)
ortc
“086(7), (8) (credit for connecting to a geothermal heating system; allowing unused amount to be “carried forward and offset against the taxpayer’s tax liability” for subsequent years); see also ORS 316.587(4) (1985) (interest not to be imposed on underpayment by resident who…”
— Or. Rev. Stat. § 316.587(5)(a) — 1 case
Sherman v. Dept. of Rev. (2022)
ortc
“ORS 316.587. 3 Declarations of estimated taxes are not required from nonresident individuals unless they meet specific criteria.”
— Or. Rev. Stat. § 316.587(6) — 1 case
Deras v. Dept. of Rev. (2026)
ortc
“086(7), (8) (credit for connecting to a geothermal heating system; allowing unused amount to be “carried forward and offset against the taxpayer’s tax liability” for subsequent years); see also ORS 316.587(4) (1985) (interest not to be imposed on underpayment by resident who…”
— Or. Rev. Stat. § 316.587(8) — 5 cases
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
Woodland v. Dept. of Rev. (2022)
ortc
“If a taxpayer underpays their estimated taxes for any tax year, the taxpayer is required by ORS 316.587(1) to pay interest on the underpayment.”
— Or. Rev. Stat. § 316.587(8)(a) — 1 case
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
— Or. Rev. Stat. § 316.587(8)(b) — 3 cases
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Ivelia v. Dept. of Rev. (2018)
ortc
“Under ORS 316.587 and ORS 316.588, an amended return filed before the due date, including extensions, replaces or supplements the originally filed return becoming part of the original return.”
— Or. Rev. Stat. § 316.587(8)(c) — 1 case
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
— Or. Rev. Stat. § 316.587(9) — 2 cases
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
— Or. Rev. Stat. § 316.587(9)(a) — 3 cases
Ivelia v. Dept. of Rev. (2018)
ortc
“Under ORS 316.587 and ORS 316.588, an amended return filed before the due date, including extensions, replaces or supplements the originally filed return becoming part of the original return.”
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
— Or. Rev. Stat. § 316.587(9)(b) — 1 case
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
— Or. Rev. Stat. § 316.587(9)(c) — 2 cases
Finley v. Department of Revenue (2012)
ortc
“587(8) because Plaintiff‟s estimated tax obligation for 2009 should have been determined under the safe harbor provisions of subsection (8)(b) of ORS 316.587. (Id.) On July 14, 2011, Defendant issued a Notice of Abatement reducing the assessment of interest from $298,342.”
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
— Or. Rev. Stat. § 316.587(b) — 1 case
Finley v. Dept. of Rev. (2013)
ortc
“Subsection (2) of ORS 316.587 is con- cerned with timing only because the penalty for underpay- ment of estimated tax is an interest computation and all interest computations require a starting point in order to be completed.”
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