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LIC-11.16 - Discretionary Penalty Waivers


Administrative Rule Adopted by Revenue Division Pursuant to Rule-Making Authority



As provided in Penalties, the Division may waive or reduce penalties for “good cause”. The Division defines “good cause” by using the following criteria:

The Division will waive penalties if there are circumstances beyond the taxfiler's control that caused the failure to file or pay, as defined below. The circumstance must have existed at the time the return or payment was due. The return must be filed and the tax must be paid within a reasonable period of time depending on the facts and circumstances of each case. Circumstances that are accepted by the Division as "circumstances beyond the taxfiler's control" include:

1) Death or serious illness of the taxfiler or a member of the taxfiler's immediate family;

2) Destruction by fire, a natural disaster, or other casualty of the taxfiler's home, place of business, or records needed to prepare the returns.

3) Unavoidable and unforeseen absence of the taxfiler from the City that began before the due date of the return; and

4) A Division employee provided erroneous written information to the taxfiler that caused the taxfiler to incur the penalty if:

a) The taxfiler's reliance on the erroneous written information caused the failure of the taxfiler to pay or file timely;

b) The taxfiler supplied the Division with complete information connected with the erroneous written information given; and

c) The taxfiler could not reasonably be expected to be knowledgeable in the tax matter connected with the erroneous written information.

Circumstances that are not accepted by the Division as "circumstances beyond the taxfiler's control" include, but are not limited to:

a) Reliance on a professional to merely prepare a return on time;

b) Reliance on an employee of the taxfiler to prepare a return on time;

c) Inability of the taxfiler to pay the tax unless there is also a cause listed in 1) through 4) above.

The Division may require verification of the taxfiler’s statements regarding facts and circumstances prior to approving a penalty waiver.

When a taxfiler does not qualify for relief under 1) through 4) above, the Division will consider a penalty waiver for one tax period only as long as the taxfiler has not already received a penalty waiver for any other tax period; and

a) The taxfiler moved into the City during the tax year on which the penalty was assessed; or

b) The taxfiler has a history of filing and paying on time.

Discretionary penalty waiver and/or reduction requests are not subject to the protest process or timeline outlined in Protests. The taxfiler must file a written request with the Division detailing why a penalty should be waived within 30 days of receipt of a billing notice that assesses a penalty. The Division must respond to requests to reduce and/or waive penalties within 60 days from the date the written request is received. If the taxfiler has requested that penalties be waived and the Division denies the taxfiler's request for this discretionary waiver of penalties, the taxfiler may request a conference with the Director (or designee) within 30 days of the date of the Division’s notice of denial. If the conference with the Director results in a denial of the penalty waiver request, that decision is final and may not be appealed.



Adopted by Director of Revenue Division May 8, 2015.

Filed for inclusion in PPD May 12, 2015.