Well, I survived another brutal tax season, and unfortunately I still have a ton of extended returns to get out in the next week, but the last thing I need is ODR wasting my time with incorrect notices to clients that force me to double and triple check OR PTE calculations. I had to post this really quick in case there is anyone else out there with this scenario:
- Filed an OR 40P Part-Year Resident return for 2015?
- Was Schedule OR-PTE-PY included?
If both apply to you and you have received a letter from ODR with a proposed refund adjustment, then there is a good chance that their adjustment is incorrect – especially if they are proposing a lower tax amount that is equal to the tax on the OR-PTE-PY form, Section B, line 19a multiplied by your Oregon percentage from Form 40P, line 35.
The OR-PTE-PY is new this year, and the worksheet in Section B can be very confusing the first time through, but the most important thing is the the worksheet already multiplies the tax amounts by the Oregon percentage and the Oregon non-passive percentage, so by the time you get to line 19a, it is already pro-rated. For this very reason, ODR lists specific instructions below line 19a “Don’t multiply the tax by the Oregon percentage as instructed on line 48 of the Form 40P.” . However, on the notice I received, they have done just that in their proposed tax number – they have multiplied the amount on line 19a from OR-PTE-PY Section B by the Oregon percentage, which is incorrect. We had even clearly marked box 47c on Form 40P as they requested, but they still made the error.
The thing that frustrated me is that the return was transmitted on 4/14/16 and they had a letter sent out on 4/22/16, which means a machine is likely kicking these out without any manual review and this could result in a large number of erroneous tax refunds. This is a waste of everyone’s time and money, and coupled with the disastrous late release of OTTER 2016, I am starting to think Oregon needs to following Intel’s lead and clean house at ODR and OED.
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.
It is this time every year that I start getting advertisements from different political action commitees advertising the Oregon political contribution credit while requesting contributions to their PAC. Many people just toss these mailings; however, if you haven’t already made a polictical contribution during the year – giving $50 ($100 if married filing joint) to a PAC is not a bad idea.
If you file without extension, will have tax liability with Oregon, and have withholding or estimates paid to Oregon, then you should take advantage of this credit every year because a contribution of $100 in late December will be returned in the refund after you file a few months later. Basically, you are able to give the $50 ($100) to a politcal organization and then you get the money back with your refund. Honestly, it is a shame more people do not take advantage of this last minute opportunity as the State of Oregon is basically going to pick up the tab and you get to help out an organization that you support simply by going without the money for a few months.
Of course, it was a big election year, so many of you already have the full political contribution credit. However, please remember this credit for future years – especially non-election years – so you can make a difference by taking advantage of this great opportunity.
For more info, please visit ODR’s explanation of the credit.