Voluntary Compliance

Information
Tax Administration Policy for City of Portland Business License Tax and Multnomah County Business Income Tax related to voluntary compliance.

Tax Administration Policy - Voluntary Compliance

The Revenue Division’s policy is to assist businesses with compliance and to encourage future compliance with Portland City Code 7.02, Multnomah County Code Chapters 11 and 12, and Metro Code Chapters 7.05, 7.06 and 7.07. A limitation on the number of prior year tax payments with a new, unsolicited return is appropriate in order to accomplish this objective.

A taxpayer seeking voluntary compliance for open years may do so using one of the two options below. To qualify for the penalty waiver described in either option the tax returns with payment of tax, interest (which may include quarterly underpayment interest), and applicable penalty must be filed and paid before the Revenue Division notifies the taxpayer of a potential filing requirement.

  1. Report and pay all taxes due, plus interest for all years of unreported business activity. Upon receipt of returns with payment of taxes and interest, penalties will be waived upon written request.
  2. Report and pay all taxes, interest and penalties for the current year plus three prior years only. In this case, the penalty will be limited to 25% of the taxes and/or fees due each year. The “current year” shall be defined as the most recent return that would have been required to be filed as determined by the Revenue Division.

Example: An application submitted in July 2024, with a start date of business in Portland of 2017 shall be considered in compliance if returns and payments for 2020, 2021 and 2022 are received with payment of tax, 25% penalty, and interest (including quarterly underpayment interest, if applicable) from the original due dates of the respective returns, and the 2023 return is filed with the correct penalty and interest (or extension is requested with at least a minimum tax payment).

If the Revenue Division verifies that notification has been sent to the business or business owner of the requirement for a tax filing prior to receipt of any return and payment, such return and payments are no longer qualified to take advantage of this voluntary compliance policy, and the business will be required to submit all open years, including all taxes, interest and penalties unless some other settlement is reached.

Where a taxpayer, or the taxpayer’s representative, contacts the Revenue Division about filing tax returns with payment of tax, interest, and appropriate penalty before filing those returns; the returns must be filed with payment by the due date, excluding extensions, for the current year’s tax return. The current year’s tax return and its due date, excluding extensions, will be based on the date contact is made with the Revenue Division.   

Note: This policy only limits the calculation of penalties and the number of years required to be filed. Nothing in this policy should be construed to limit or expand any other element in the tax calculation, including the owner’s compensation add back and deduction or net operating loss deductions. These calculations will be in accordance with provisions in the appropriate City, County, and Metro codes. The tax returns filed are subject to audit.

03/14/2024                            Tyler Wallace
Date                                        Director

Adopted: 5/25/94
Revised: 1999, 2001, 2003, July 2009, March 2024