How to avoid or pay for penalties and interest
To avoid penalty and interest, you must pay any tax owed by the original due date of the tax return. You must also mail your tax return by the original due date, or by the extended due date if a valid extension is attached.
You can pay tax, penalties, and interest using Revenue Online. If you mail your payment and return separately, include Form OR-20-V, Oregon Corporation Tax Payment Voucher, with your payment.
Penalties may include:
- 5 percent late pay, or failure-to-pay, penalty on tax not paid by the original due date, even if there's a valid extension. More time to file doesn't mean more time to pay.
- Exception: If you have an extension, penalty won't be charged if you:
- Pay at least 90 percent of the tax due by the original due date of the return, and
- Pay the balance of the tax when you file within the extension period, and
- Pay any interest due when you file or within 30 days of our billing notice.
- 20 percent late filing, or failure-to-file, penalty on tax not paid in full by the original due date and the return is filed more than three months after the original or extended due date. This is in addition to the 5 percent failure-to-pay penalty.
- 20 percent substantial understatement of net tax penalty. This penalty is in addition to all other penalties.
- 100 percent late payment and late filing penalty if you don’t file returns for three consecutive years by the original or extended return filing due date of the third year.
Your penalty total can’t be more than 100 percent of the tax due, with the exception of the substantial understatement of net tax penalty, which may be added on top of all other penalties.
If you don't pay your tax balance by the original filing due date, you must pay interest on your unpaid taxes. Interest starts accruing the day after the original filing due date and ends on the day you pay in full. Even if you get an extension to file, you still owe interest if you pay after the return’s original due date.
If you file an amended return and have tax to pay, we’ll charge interest starting the day after the due date of the original return until the date you pay in full.
If your taxable income changes because of a federal or state audit and you owe more tax, we’ll charge interest from the due date of the original return until the date you pay in full.
An interest period is each full month, starting with the day after the due date of the original return. Interest is figured daily for a fraction of a month, based on a 365-day year.
Interest rates may change once a calendar year and are the same for refunds and tax due.
Interest increases by one-third of 1 percent per month, up to 4 percent yearly, on delinquencies if:
- You file a return showing tax due, or we assessed an existing deficiency; and
- The assessment isn’t paid within 60 days of when the notice of assessment is issued; and
- You don’t file a timely appeal.