Tax Administration Policy - Refunds
It is the policy of the Revenue Division (“Division”) to timely process all requested refunds of overpayment for the City of Portland Business License Tax, Metro Supportive Housing Services Business and Personal Income Tax, Multnomah County Preschool for All Personal Income Tax, and Multnomah County Business Income Tax. If the Division determines that a taxpayer is entitled to a refund and fails to approve the refund by the dates outlined in Portland City Code Chapter 7.02.720, Metro Code 7.05.300 and Multnomah County Code §§ 11.538 and 12.720, the taxfiler is entitled to simple interest on their refund as prescribed in the aforementioned codes.
Interest on refunds begins four months after the later of:
- the original due date of the tax return,
- the date the tax return was filed or the refund was otherwise requested, or
- the date the tax was paid.
Requests for refunds are generally made by filing an original tax return or an amended tax return. In the case of refunds of penalties or interest pursuant to a waiver request, interest begins four months after the waiver request is received. In the case of refunds of penalties or interest pursuant to adoption of a written policy addressing a specific issue, interest begins four months after adoption of the written policy.
In determining the timing for refund interest eligibility, the Division defines one month as equal to 30 calendar days. For determining the date of when the return is filed or the refund was otherwise requested, the taxfiler must provide all required supporting tax pages and requested documentation for the filing to be complete. A tax return or refund request will not be considered valid until the Division has received a complete tax return for the tax period for which a refund is being requested.
If the requested information has not been provided to support a refund claim, the four-month refund interest period does not begin until the information is received. If the taxfiler does not respond to any requests for information within the timeframe listed in the Division’s written correspondence or by the date agreed upon by the Division and the taxfiler, the Division will deny the refund and the taxfiler will need to resubmit their refund request for the tax period.
Example 1: A calendar-year taxfiler files their tax return, with all required supporting tax pages, requesting a refund on February 17. The Division issues the refund on August 1. The taxfiler is not entitled to any refund interest because the refund was issued within four months of the original due date of the return.
Example 2: A calendar-year taxfiler files their timely tax return requesting a refund but fails to include supporting tax pages with their return. Three months later, on July 10, the taxfiler submits the required supporting tax pages. The refund interest calculation window would not begin until July 10, when the taxfiler provided the required supporting tax pages.
Example 3: A partnership files a timely tax return, with no supporting tax pages, requesting a refund. The partnership does not respond to any requests for information to verify the refund claim. The Division denies their refund request. The partnership would need to resubmit a refund claim with the required information. Since the refund was originally denied, the refund interest window will restart with the newly filed refund claim.
Credit Carryforward Requests
A taxpayer, who reports an overpayment on a period, may choose to make an irrevocable election on their original return filing to have the overpayment applied to the next open tax period as an estimated payment instead of being refunded to them. This payment will be credited as of the later of:
- The first quarterly due date (if on a timely filed return),
- The date the payment was made, or
- The due date of the next quarterly estimate date (if not on a timely filed return)
Once a credit carryforward election has been made on a return filing, an amended return cannot be submitted to reduce the amount of credit carryforward claimed on the original return.
The Division administers several taxes, fees, and regulatory programs that impose amounts due from businesses or individuals. Though more frequent in some programs than others, overpayments can occur in any of these programs. Overpayments are generally refunded and will only be refunded to the business or individual to whom an account belongs. Refunds issued will be in accordance with the code and/or rules of the applicable program.
The purpose of this policy is to enhance administrative efficiencies and minimize penalties and interest to a business or individual that may accrue on amounts due. A refund that a business or individual is entitled to, may be applied to any other amount owed by that business or individual. A refund may not be applied to the amounts due that belong to a different person. This policy does not include refunds of an amount paid to limit the accrual of interest during an appeal allowed under the applicable code.
The Division will apply City program refunds between all City programs and between the Multnomah County Business Income Tax and the Portland Business License Tax (per the Intergovernmental Agreement). The Division will apply a refund to an amount due unless the business or individual has a currently pending appeal of the amount due. As with any other payment on an amount due, a refund that is applied to another debt will be applied first to penalty, next to interest, and then to the debt.
In addition to the preceding, with the permission from a taxfiler, the Division may apply a refund between a taxfiler’s accounts for the following taxes. Permission must be received in writing.
- Multnomah County Business Income Tax (between it and Metro’s Business Income Tax)
- Metro Supportive Housing Services Business Income Tax (between it and either Multnomah County’s Business Income Tax or Portland’s Business License Tax)
- Portland Business License Tax (between it and Metro’s Business Income Tax)
- Multnomah County Preschool for All Personal Income Tax
- Metro Supportive Housing Services Personal Income Tax
Application of refunds will be made using the following guidelines and hierarchy. The oldest account means the account with the oldest setup date. If more than one account has the same setup date, the earliest year is the oldest account.
- First, to the oldest account within the program that has the refund.
- After all accounts are satisfied within the program that has the refund, applied to other programs within each tax jurisdiction (the City, the County, or Metro), oldest account first, using the following priorities and restrictions.
- Only with written permission, applied to taxfiler’s amounts due in another tax jurisdiction administered by the Division.
02/15/2023 Thomas Lannom