If you meet an exception, you may not have to pay interest on your underpayment. Enter the exception number on your tax return if you meet one of the following exceptions; don’t use Form 10:
Exception 1—Farmers and commercial fishermen. If at least two-thirds (66.7 percent) of your 2012 or 2013 gross income is from farming or fishing, you will not have to pay underpayment interest.
Exception 2—Prior year. You do not need to pay interest on the underpayment of estimated tax if you met all of the following qualifications:
- You had no Oregon tax liability* for 2012, or you were not required to file an Oregon return, and
- Your taxable year was a full 12-month period, and
- You were a full-year Oregon resident for 2012.
* Your Oregon tax liability is your liability after tax credits, but before withholding and estimated tax payments.
Exception 3—You retired at age 62 or older or became disabled in 2012 or 2013, and your underpayment was for a reasonable cause. Include a statement with your return explaining the cause to be considered for the exception.
Exception 4—Underpayment was due to a casualty, disaster, or other unusual circumstances, and it would be unfair to impose underpayment interest. Include a statement with your return explaining the unusual circumstance.*
* Unusual circumstance is not the same as reasonable cause.
Exception 5—First year S corporation shareholders who are nonresidents or were part-year residents. No interest is due on underpayment of S corporation income as a shareholder if:
- The income is for the first year S corporation status is elected, and
- You’re a nonresident for 2013, or
- You were a part-year resident for 2012.
Keep a copy of your exception explanation with your tax records.