Manual Review: Oregon Department of Revenue’s Refund Delay Tactic?

If you have an overpayment of over $5,000 on your Oregon tax return, be forewarned – the Oregon Department of Revenue may sit on your refund for up to six months while they “manually review” your return.

In the last year, we have witnessed a sharp increase in the number of clients who had their refund delayed by ODR.  The only common factor we can find is that they all had large overpayments.  In each case, the return was selected for “manual review”, and after weeks and sometimes months of waiting, ODR asks for something as simple as copies of the W-2s (which they should already have since employers are now required to efile W-2s to Oregon).  Even after you supply them with copies of the W-2s, the manual review and refund can often take weeks to process.  Even worse, when you call them, they offer very little information into why the manual review was triggered in the first place and cite their “policies” without letting you speak to a manager.

If I had to venture a guess as to the reason for these delays, I would point to the embarrassing $2.1 million dollar refund error that ODR made last year.  In fact, soon after that error is when our clients started encountering these manual review delays.  Could overreaction be the cause of these delays, or are they simply a fumbling bureaucracy that cannot process refunds in a reasonable period of time?

You can draw your own conclusion, but what I do know is that I am changing my tactics when I have a client with a large Oregon overpayment.  From now on, I am applying the entire overpayment to the next year and then the client can just pay less in estimates during the year.  That way, ODR can take an entire year manually reviewing the return to their hearts content and it will not delay refunds for my clients.

If your 2012 return has been selected for manual review, I would love to hear from you.  There is little advice I can give you other than calling ODR every other day, but the more taxpayers voicing concern about this, the better.  This needs to be given proper attention, as ODR is wasting the time and money of honest Oregon taxpayers and small business owners.

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About Brian Germer, CPA - Parsons & Germer CPAs, LLP

CPA with Parsons and Germer CPAs, LLP in Portland, OR

41 thoughts on “Manual Review: Oregon Department of Revenue’s Refund Delay Tactic?

  1. Hey Brian, the ODR is unlike any government agency I have ever dealt with and as a government worker for 15+ years I have worked with many. At this point I think I owe less than 1k in back taxes,

    When they told me they would call me back they didn’t (multiple times). I asked for a manager to respond and the person that was supposed to arrange for this neglected to do so. When I explained what happened to the manager they seemed to say “so what, someone forgot o send an email.” The day after talking to the manager I received a certified letter saying they would take future federal tax returns. They supposedly sent a fax that never arrived.

    Early on In my dealings with them I was confused about what I was supposed to do on one payment. According to them this showed a lack of good faith on my part and caused them to take draconian measures. During all of this time was on their side. Every delay hurt me and helped them to collect a trivial amount of money (to them) a bit faster.

    Strangely my experience with the IRS has been totally different. Every person has been so helpful and easy to work with.

    Something is wrong with that state agency.

  2. My husband is active duty Army and we are stationed in Fort Polk, Louisiana. Oregon as per their state tax law is not supposed to tax him as he is still a Oregon resident. But ever since moving to Louisiana our tax refund goes into “Manuel review” every year! This year we filed in March, it is now August and we can’t get any answers from the state of Oregon on when the review will be done. The refund isn’t over 2,000 but we feel he is being wrongly targeted for not actually living in the state.

  3. Hello Brian, my refund is $277 dollars, and it is in manual review. Will it do any good to
    walk-in ODR Salem. This is ridicules for a pittance. I am single with no deductions :(

  4. Just checked my status and it’s in Manual review… Very disappointed because I certainly don’t have an overpayment over $5,000. I’m not sure what to do because I really need this money.

  5. My return went into manual review last year and now this year’s return is in manual review as well. Last year’s refund took months to process, and I am expecting the same turn around time this year. I make under $10,000 a year, and both refunds are under $1000.

  6. Just became aware that my return is in manual review (after the website to check on refund status FINALLY came back online after benig unavailable for at least a week). I expect a refund of almost $900. We file jointly, have one dependent. The last two yearsweI have owed between $500-800 to the state after filing returns and have had to do payment plans to pay it off. I’m wondering if people that were on payment plans the years before get “manually reviewed” which is really unfair. I am extremely honest when doing our returns and probably actually should be getting more back that I have failed to claim credit for. We really need that refund right now and I am very disappointed to find out that we might have to wait months for it.

    • Both my husbands and my grandfathers are in manual review too. Neither is substantial. 10 plus weeks to review it! I dont understand why.

      • Ditto to what Sarah said except mine is 1150. How frustrating! I had been working in Washington state without income tax for the past several years and forgot how much Oregon taxed. My previous experience with Oregon is their 10% off the top and prob still owing. I always was pretty close to breaking even or owing a couple hundred. This year I lowered my deductions and voila I’m actually get some money, but technically not if there going to hold it for months and then tax me again next year on the money received. Ugh! Apparently they don’t want to give the money back

  7. I too am under manual review. My refund is only $970. And am not aware of any overpayments. What adds to the stress of this, is that a lot of us are using our returns to pay other outstanding bills that will end up costing us more than our returns would pay anyway. If I was planning on trying to be fraudulent I sure wouldn’t be doing it for $970.

  8. Sorry to hear about all these manual reviews, and it is surprising given that it is so early in tax season. Keep in mind, having a large overpayment is only one of the many triggers of an ODR manual review. I sure they look at many other factors, so it is tough to ascertain anything without knowing all the circumstances.

    I would definitely recommend calling as often as you can and demanding an explanation for the manual review. With the last few manual reviews that I helped clients with, I eventually got someone at ODR with some compassion that would give me more than a standard answer. However, it still takes a lot time even after the review is completed.

    Often, the hold up is that they need you to fax copies of the W-2s, so call right away to see if that is the case, since that is such an easy thing to clear up.

    Some advice going forward:

    * If you are paper filing the OR return, always staple copies of the W-2s to the return (even if not required). That way they cannot use this as an excuse when it is in manual review.

    * If you are a W2 wage earner, you can always claim a different number of exemptions for Fed & State, so I would recommend increasing your exemptions on the State level to minimize this issue. I agree with some of the comments – better to owe on April 15th then have a refund held up for weeks and weeks.

    Again, sorry that you are having to deal with these delays. I understand some manual reviews are necessary (if the taxpayer has garnishments, federal tax debt, or other circumstances related to poor financial decision making), but responsible taxpayers that are filing timely, correct returns should not subject to these reviews.

  9. We to are in a manual review. We live in Washington and my husband worked most of the year in Oregon. We are supposed to get about 600.00 back. Our federal was fine just like ever year. This is the first time we had to file in Oregon and there keeping most of what he payed so please just give us the little bit u owe us back. It’s crap that we don’t get it all back we don’t live there.

    • We’re in the same boat. We live in Washington and my husband worked a construction contract in Oregon part of the year (his company sent him there). Not only did we lose money that should have gone into his local union during that time, but we can’t get our $1000 Oregon tax refund. The return was accepted on March 7 and went into “Manual Review” sometime after that.

      Note to hubby: Don’t work in Oregon anymore. :)

      • *UPDATE – AUGUST 15, 2014*
        We got our return today – hooray! That only took five months. At least they paid us .8% interest.

  10. I’m a new Oregonian. Moved here from Alaska in May 2013. I filed partial year since I moved here in May. I assumed that was why they put into Manual Review. I’m only getting back $153. 00. Haha really if it’s that big of a deal they can keep it. I’m not going to stress over it.

  11. I too am now in manual review. Is there not a legal route we could take if we all got together and hired a lawyer? I would think these types of tactics would be considered fraud by the state. Also, if your in review for more than 45 days you are supposed to earn interest on those days. Oregon conveniently forgets this each year. If we all got together and for a class action suit against the state of Oregon we could stop this BS.

  12. This is the 4th year in a row that I am in manual review. This is the only year that I am expecting a return! It is over 5k which makes sense. Thank god I was counting on owing Oregon and made no plans for a refund.

    • Well still now word from ODR about my return that was filed early February. I received a letter asking for our W2’s that show our Oregon withholding and have verified that they received them. At this point Oregon owes interest on the holding of our return (it has been past 45 days since we filed) Does anyone know the interest rate they claim they will pay so I can send them a bill. I am quite agitated as I got charged interest last year because I filed in February and didn’t pay my taxes owed until April (over 2k). We always owe so it figures that the one year we don’t they would hold it :)

  13. Last year we went through manual review (and are stuck there again this year, too). Last year, after weeks of politely checking in, I finally told them that I expected to receive an interest payment on our refund amount. Our refund was magically released within a week.

    • Hi All – here’s an update:
      I emailed ODR again this year, explained the situation, and said we expected an interest payment in addition to our refund. In my experience, the Tax Specialists that I’ve emailed with (this year as well as last year) have been very helpful. They let me know that ODR was *scheduled* to send me a letter requesting copies of documents (we e-file). Now I’m able to fax those documents over – instead of having to wait for their letter. This alone will probably speed up the process by a couple of weeks. I’ll stay in contact with the Tax Specialists and I’m guessing that this will expedite our refund (but I’m not counting on an interest payment).
      The email address for the Tax Specialists is available on the ODR website (I think it’s on the ‘Where’s My Refund’ page). Your results may vary. Good luck!

  14. I have never been put into manual review, and this year, both myself and my fiancé are receiving that message when we check on the status. Why? We are both W-2 earners, with simple tax returns. 10+ weeks to review? Seriously?

  15. I have been put in manual review, I am getting $5000 back. I work in WA but for an OR company, so I get back everything I pay in. Is this a bigger problem than ever before? I have been doing it this way for a long time and never been sent for manual review! I can not believe it takes this long to get a refund? Will it seriously take up to 6 months?

  16. Wait, Can this be legal? Why am I under :manual review”. My Federal refund was higher than my state, and now I am begging for my own money. I wont’ allow the state to get away with this. They can’t sit on my fund without paying me interest. Time for us little people to fight back!

  17. Hi everyone, I posted about a month ago and I have a bit of an update. I filed taxes in early February via turbo tax online. Discovered after about two weeks of waiting that I was in manual review for OR. I got a letter on Feb 19 from Oregon DOR and they were requesting documentation regarding the Working Families Child Care Credit that we claimed. I get it, they want to make sure that I actually qualify for the credit. But the amount of documentation and detail they require is substantial and a pain in the arse to gather together and to send. AND if you don’t send it, they threaten no refund. Carbon copies and cancelled copies of ALL checks written to child care provider (or a bank statement showing the times when I took out cash to pay child care provider, copies of all receipts from child care provider and copies of all paystubs for myself and my husband for 2013 (that’s 24 paystubs for me and about 20 for him). Ok, maybe it’s not that much, but once I had copies of everything, it felt like a small manuscript! I sent it priority mail because I didn’t want to spend that much on faxing nearly 50 pages of documentation. And in the process of collecting all the documentation, I realized I claimed $1000 less in childcare expenses than I should have. So, OR might actually owe me more! It made me think a lot about those people who are maybe not as organized as us or who can’t read well (because the letter is super specific and wordy and confusing). I guess I’m glad that the OR DOR is crossing t’s and dotting i’s, so no one gets away with a fraudulent $2,000,000 refund again, but honestly, I have been filing taxes for nearly 20 years and have always been completely honest and paid as agreed. It’s really frustrating to have this going on. Feels pretty targeting and unfair.

  18. I thought I was being proactive filing my Oregon return in early February – Federal received last week, Checked and my Oregon return is going to manual review! Not 100% sure why as it’s a $946 refund and I am being 100% honest in my return. I have all the relevant documentation to back up any queries. Q: if anyone can answer – At what point can I request interest paid on the late return from the State – the date I filed or the notification of manual review? I am disgusted at the customer service though where the onus is on the taxpayer to prepare taxes by a specified due date, yet I have to ‘dig; to find out that my return is delayed up to 10 weeks. Where is the courtesy letter? Shame on the State of Oregon!

  19. Thank you Sarah for taking the time to explain your experiences. I called them, and this is what I was told. I was informed the following.

    I asked why am I under manual review? He told me that 10% of all filings are randomly selected.

    I asked, does this mean I am being audited? I was told No, just a random pick, there was no reason noted on my file thus far, and no letters mailed out,so they couldn’t tell me anymore.And also,he told me that there might a chance there will be nothing requested.

    I asked,how long will you sit on my refund of $1131.00 interest free? I was told 45 days from receiving the return.

    On a side note, I too have child care expenses as well. My neighbor watched my son, so I paid her cash weekly. She filed her returned, and claimed the amount that i reported I paid. I don’t have hard receipts, but have cash withdraw from my checking account and her filing to show she reported that income. I also have a transcript via FB to show the total amount we agreed upon that needed to be filed per her income. This is BS, but what can we little people do.

  20. I lived in Oregon for seven years and filed just fine. I moved this year, and only had income part of the year in OR so I guess that triggered my manual review. I received no notification and had to find out online. I will definitely call them tomorrow after reading all this.

  21. This is ridiculous. I have been employed full-time and supplemented my income by way of freelance photography/graphic design/marketing for 14 years and have never had an issue with the ODR or the IRS. My federal return came in several weeks ago, now my state return has gone into manual review and it’s only $500 – not $5000. I understand times are rough as far as government funding goes and they are likely having to make do with less staff, but one would think there are fatter fish to fry? I barely make enough to live and not nearly enough to even mention, but I hustle to pay my bills and try and save a little each month, and I pay my taxes…this is beyond silly.

  22. I called ODR this morning to check on my refund that was in manual review. The lady said my witholding doesnt match my W2. I double checked my W2 while she was on the phone. The amount matches, I believe this is a delay tactic! I mailed my return, because I work for an Oregon company, but work from home in Washington. There is no reason for error. They have EVERYTHING! She was very polite until I asked her at what point do they pay ME interest….not until 45 days after April 15th.

  23. I also have had issues with my state refund this year. I am only getting back less than $500 and it’s gone into Manual review ( I filed my taxes on Feb. 2nd). I had my federal back on the 14th of February. My parents filed their return (also in Oregon) in late February and had both their state and federal returns back within a week. This is absolutely ridiculous and perhaps it’s time I called them.

  24. Another update from someone who filed in early Feb. And is still waiting. After having sent in all my mounds of documentation required to get the working family child care credit, I finally heard back from the DOR. They decided that my calculations were incorrect and actually stated (despite all the evidence I sent them showing otherwise), that my husband and I were not working or in school while we paid for childcare. That is a complete inaccuracy. We both worked every month last year and had to have childcare while we work, which we paid for! We provided everything they asked for in documentation and they refuse to tell me what it is that was missing to make them make a decision that triggered a notice of deficiency and that I now owe DOR just under $900, vs the original refund of appx $900 I was expecting to get. I claimed and showed proof of over $5000 in childcare expenses. They said I only had $541. They tell me I can appeal, which I am doing. But in the meantime, I have to pay what they say I have to pay and the appeal could take 4-6 months for a decision to be made. This is ridiculous and very difficult for us!

  25. I accepted a new job in March of 2013 while I was a resident of Washington that required a move to Oregon after I completed training for the position. I completed training (which required trips to California, Japan and Louisiana) and moved to Oregon in June of 2013.

    I filed my Oregon return via turbotax on Jan 28 with return due of $2,884. On April 4th I received a request for additional information which included a signed letter from my company showing my time working in and out of Oregon and the obligatory copy of my W2. This was faxed on april April 20th.

    I just emailed the DOR so hopefully I will get a response soon.

    One thing I noticed is the interest payment is based on 45 days from the filing date or the return due date (4/15) whichever is later. So it looks like they have my money interest-free until June 1st.

    • They have had my return in “manual review” for many months. Are you saying that they have to pay us interest if it is not processed to us in the 45 days/June1?

  26. ODR has manually reviewed and changed my return done by (Turbo Tax Software) for the last 4 years. This year is number 5. I am retired and live in Washington state while my wife still works in Oregon. We have no property in Oregon, Washington being our primary residence. Our refunds have never been more then $900 yet Oregon audits our return each year. It appears to me they are targeting Non-resident returns and yes I agree with the author who asked for posts. What a waste of Oregon resources.

  27. I’m still waiting on my refund for a return that was accepted on Feb 2. They finally requested my W-2 last month and have received it. Called again today and was told 6 more weeks minimum to process the refund. Still no explanation as to why. I was told that it was “the luck of the draw.” Apparently, I’ve been “lucky” two years in a row. :( A word of caution, do not mail your W-2. I initially did this and was told that they have no way to verify receipt of it unless it was faxed. I am faxing them again tomorrow to request interest if my refund is not received by May 30, which won’t even cover the faxing fees. Beyond frustrated!

    • **Update**
      Emailed and was told that my return is still in manual review and to expect at least 10 more weeks for processing. Grrrrr. They did advise that they would pay interest after the 45 day mark. Hah. I’ll believe that when I see it. I can’t even imagine how much they will have to spend in additional funding to pay interest fees to everyone. I am changing my withholdings. I would rather owe a little bit than wait this long for a refund of money that shouldn’t have been paid to the state in the first place.

  28. We have been waiting for our return since March. We work with a very reputable Accountant and have never had any issues. We’ve always used accountants. Last year was tough as we started a business that didn’t show profit in 2013. We had a tough year but had paid taxes accordingly. We received a notice in May saying we were in manual review and we had to send in our w-2’s and Federal return. Since then we have heard NOTHING. I check the website and all it tells me is that our return is in manual review. Same for phone calls. We got our very large Fed return in 10 days…WTH?

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