IN THE OREGON TAX COURT MAGISTRATE DIVISION Income Tax
MELISSA L. MORGAN ) and SHAUN K. MORGAN, ) ) Plaintiffs, ) TC-MD 160015R ) v. ) ) DEPARTMENT OF REVENUE, ) State of Oregon, ) ) Defendant. ) FINAL DECISION1
Plaintiffs appeal Defendant’s Notices of Deficiency Assessment, dated December 1,
2014, and October 27, 2015, for the 2011, 2012, and 2013 tax years. A case management
conference was held on May 18, 2016, where the parties stipulated to narrow the issues to the
deductibility of Plaintiffs’ charitable contributions.
A trial was held by telephone on May 25, 2016. Melissa Morgan (Morgan) appeared and
testified on her own behalf. Madison Emerald (Emerald) testified on behalf of Plaintiffs. Peggy
Ellis (Ellis) appeared and testified on behalf of Defendant. Plaintiffs’ Exhibits 1 through 7 were
received without objection. Defendant’s Exhibits A through M were received without objection.
I. STATEMENT OF FACTS
Morgan made 23 non-cash charitable contributions to Goodwill and St. Vincent De Paul
in 2011, 2012, and 2013. Morgan’s donations consisted mostly of clothing, furniture, household
goods, electronics, and collectibles. Morgan testified that she used the “Its Deductible” program
through TurboTax to record the items she donated. Morgan further explained she used the “Its
1 The court entered its Decision in the above-entitled matter on September 21, 2016. Plaintiffs timely filed a Statement for Costs and Disbursements (Statement) on September 30, 2016, requesting their costs in the amount of $252. Defendant filed an objection to Plaintiff’s Statement on October 6, 2016. The court’s analysis and determination of Plaintiffs’ request for costs and disbursements is contained in section E. Plaintiffs also requested to reduce penalties and interest, to which Defendant objected. The court’s analysis and determination is contained in section F. The court’s Final Decision otherwise incorporates its Decision without change.
FINAL DECISION TC-MD 160015R 1 Deductible” program to determine the fair market value for most of the items she donated.
Morgan deducted almost all of her items using “high value” category. Plaintiffs’ witness,
Emerald, testified about the high quality of many of the items that Morgan donated. Morgan
utilized the comparable sales method to determine the fair market value for some of her items
such as an antique chair, antique furniture, and a harpsichord.
Morgan deducted on her 2011, 2012 and 2013 tax returns all of her non-cash charitable
contributions as follows:
2011Charitable Contributions2 Date Institution Amount 5-27-2011 Goodwill Industries Exhibit I-3/22 $1,071 7-13-2011 St. Vincent De Paul Exhibit I-4/22 $496 8-24-2011 Goodwill Industries Exhibit I-5/22 $4,172 9-7-2011 St. Vincent De Paul Exhibit I-6/22 $239 11-18-2011 St. Vincent De Paul Exhibit I-7/22 $1,505 11-25-2011 St. Vincent De Paul Exhibit I-8/22 **3 12-5-2011 St. Vincent De Paul Exhibit I-9/22 $3,190 Total $10,673
2012 Charitable Contributions Date Institution Amount 2-17-2012 St. Vincent De Paul Exhibit K-3/33 $4,490 3-2-2012 Goodwill Industries Exhibit K-6/33 $914 3-2-2012 Goodwill Industries Exhibit K-6/33 $1,250 4-26-2012 St. Vincent De Paul Exhibit K-5/33 $1,451 4-26-2012 St. Vincent De Paul Exhibit K-5/33 $1,950 5-16-2012 St. Vincent De Paul Exhibit K-3/33 $1,887 5-16-2012 St. Vincent De Paul Exhibit K-4/33 $4,000 8-28-2012 Goodwill Industries Exhibit K-2/33 $800 9-10-2012 Goodwill Industries Exhibit K-2/33 $3,750 9-14-2012 Goodwill Industries Exhibit K-4/33 $4,860 Total $24,529
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2 These tables were created from Def’s Ex M at 1. 3 No amount is listed in Plaintiffs’ or Defendant’s exhibits for this donation 4 Exhibit K-6/33 shows the donation as $1,341, however in Plaintiffs’ tax return two contributions are listed as $91 and $1,250. Ptfs’ Ex 2-22/73
FINAL DECISION TC-MD 160015R 2 2013 Charitable Contributions Date Institution Amount 1-17-2013 Goodwill Industries Exhibit L-2/12 $4,647 1-30-2013 Goodwill Industries Exhibit L-3/12 $3,389 10-1-2013 St. Vincent De Paul Exhibit L-8/12 $6,518 11-6-2013 Goodwill Industries Exhibit L-3/12 $484 12-31-2013 St. Vincent De Paul Exhibit L-8/12 $3,500 12-31-2013 No receipt -- $700 Total $19,238
Defendant audited Plaintiffs’ 2011 Oregon tax return for her claimed non-cash charitable
contributions and determined that they had only successfully substantiated two donations with a
fair market value below $500. (Def’s Ex E at 8.) Defendant found that Plaintiffs’ 2011 written
records successfully substantiated two charitable contributions: $239 donated on November 18,
2011, and $496 donated on July 13, 2011. (Def’s Ex D at 7-8.) An automatic adjustment was
made to the 2012 and 2013 Oregon tax returns for any similar items to those adjusted on the
2011 return. (Def’s Ex E at 8.) As a result, Defendant only allowed a $500 charitable
contribution deduction for 2012 and 2013. (Id.)
Ellis testified that Plaintiffs’ donations needed to be aggregated by similar genre or type,
and that Plaintiffs bear the burden of aggregating the items and calculating the correct amounts.
Ellis explained that since Plaintiffs donated clothing throughout one year, they needed to
aggregate the value of all clothing items donated and determine what written records were
necessary for that accumulated value for the year, not just the individual donation. Ellis further
testified that Plaintiffs failed to aggregate the items into similar types and categories, therefore
the Defendant only allowed a $500 deduction for 2012 and 2013. Plaintiffs supplied a large
number of receipts from Goodwill and St. Vincent De Paul acknowledging that items were
donated and a list of donations from the “Its Deductible” program as proof of the charitable
contributions made in 2011, 2012, and 2013. (Ptfs’ Ex 2.)
FINAL DECISION TC-MD 160015R 3 Plaintiffs’ receipts for their 2011 charitable deductions showed that they donated over
$500 worth of clothing, household goods, and decorations. (Ptfs’ Ex 2 at 7-17.) Plaintiffs
donated china with a $39 fair market value, artwork with a $13 fair market value, and tools with
a $23 fair market value. (Id.) Lastly, Plaintiffs donated jewelry with a $265 fair market value
and electronics with a $435 fair market value. (Id.)
Plaintiffs’ documentation for their 2012 charitable deductions showed that they donated
over $500 worth of clothing, household goods, electronics, and furniture. (Ptfs’ Ex 2 at 39-55.)
Plaintiffs’ receipts showed a donation for an antique chair with a fair market value of $800. (Id.
at 39.) Plaintiffs also donated $129 worth of exercise equipment. (Id. at 45.)
Plaintiffs’ documentation for their 2013 charitable deductions showed that they donated
over $5,000 worth of clothing. (Ptfs’ Ex 2 at 63-71.) Plaintiffs also donated over $500 worth of
household goods, electronics, and furniture. (Id.) In addition, Plaintiffs’ showed a donation of
jewelry with a $60 fair market value and automotive equipment with a $72 fair market value.
(Id.) Plaintiffs reported that they donated an antique desk that was purchased for $1,500, with a
fair market value of $700, and an antique harpsichord with a fair market value of $3,500. (Id. at
71.)
Morgan testified that she believed she did her due diligence in recording enough
information to deduct the non-cash charitable contributions from her 2011, 2012, and 2013
Oregon tax returns.
II. ANALYSIS
The issue before the court is whether Plaintiffs have successfully substantiated their
deductions for non-cash charitable contributions made during the tax years in issue.
In analyzing Oregon income tax cases, the court starts with several general guidelines.
First, the court is guided by the intent of the legislature to make Oregon’s “personal income tax
FINAL DECISION TC-MD 160015R 4 law identical in effect” to the federal Internal Revenue Code (IRC) for the purposes of
determining taxable income of individuals, where possible. ORS 316.007.5 Second, in cases
before the court, the party seeking affirmative relief bears the burden of proof and must establish
his or her case by a “preponderance of the evidence.” ORS 305.427. Third, allowable
deductions from taxable income are a “matter of legislative grace” and the burden of proof for
substantiation is place on the individual claiming the deductions. INDOPCO, Inc. v. Comm’r,
503 US 79, 84, 112 S Ct 1039, 117 L Ed 2d 226 (1992).
IRC section 170 allows deductions for non-cash charitable contributions if the taxpayer
maintains adequate receipts proving the existence and quality of the contribution. To
substantiate a contribution is “to establish the existence or truth of by proof or competent
evidence.” (Webster’s Third New Int’l Dictionary, 2280 (unabridged ed 2002)).
For purposes of determining substantiation thresholds for charitable contributions,
“property and all similar items of property donated to 1 or more donees shall be treated as 1
property.” IRC § 170(f)(11)(F). Similar items of property mean “property of the same generic
category or type.” Treas Reg 1.170A-13(c)(7). Property of the same generic category or type
can include books, clothing, jewelry, furniture, electronic equipment, household appliances, toys,
everyday kitchenware, china, crystal, or silver. Id.
IRC section 170 requires different levels of adequate written proof depending on the
value of the charitable contribution. For charitable contributions with a value of $250 or more:
“No deduction shall be allowed * * * for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B).”
IRC § 170(f)(8)(A).
5 The court’s references to the Oregon Revised Statutes (ORS) are to the 2011 edition.
FINAL DECISION TC-MD 160015R 5 A written acknowledgement must include, at a minimum, a description of the property
contributed:
“(i) amount of cash and a description, but not value, of any property other than cash contributed (ii) whether the donee organization provides any goods or services in consideration in whole or in part, for any property described in clause (i) (iii) a description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.”
IRC § 170(f)(8)(B). A written acknowledgment is contemporaneous if the “taxpayer obtains the
acknowledgment on or before the earlier of (i) the date on which the taxpayer files a return for
the taxable year in which the contribution was made or (ii) the due date (including extensions)
for filing such return.” IRC § 170(f)(8)(C).
If the item or aggregated items has a value of $250 or more, a taxpayer must include with
their tax return a contemporaneous written acknowledgment of the contribution required by IRC
§ 170(f)(8)(A) in addition to the requirements in Treas Reg 1.170A-13 which requires:
“(A) the name and address of the donee organization to which the contribution was made, (B) the date and location of the contribution (C) the description of the property in detail reasonable under the circumstances, including the value of the property (D) the fair market value of the property at the time the contribution was made and (E) method utilized in determining the fair market value.”
If the item or aggregated items has a value of $500 or more, then the taxpayer must
satisfy all substantiation requirements for $250 or more, and record: 1) “the manner of
acquisition”, 2) “the approximate date of acquisition of the property by the taxpayer”, and 3) “the
cost or other basis of the property.” Treas Reg 1.170A-13(b)(3)(i)(A) and (B). However, “[i]f a
taxpayer has reasonable cause for not being able to provide such information, the taxpayer shall
not be disallowed a charitable contribution deduction * * *.” Treas Reg 1.170A-13(b)(3)(iii).
Lastly, if the item or aggregated items have a value of $5,000 or more, then the taxpayer
must record all of the information required to substantiate a $500 donation, and taxpayer must
FINAL DECISION TC-MD 160015R 6 “obtain[] a qualified appraisal of such property.” IRC § 170(f)(11)(C); Treas Reg 1.170A-
13(c)(2)(i).
A. 2011 Charitable Contributions
Items that are similar in nature must be aggregated together. Thus, although, many of the
items Plaintiffs claimed as donations were individually value at less than $250, collectively their
value is higher. Accordingly, a higher level of proof or substantiation is required for the
contribution to be deductible. Plaintiffs donated over $500 worth of clothing, household goods,
and decorations. Plaintiffs did include the name and address of the donee organization, the date,
and location of contribution, the description of the property in detail reasonable under the
circumstances, including the value of the property, the fair market value of the property in
addition to the method used to determine fair market value. Plaintiffs did not include the manner
and date of acquisition, or the cost basis for any items donated in 2011, nor did they provide a
reasonable explanation of why that information was unavailable. Therefore, they did not
successfully substantiate their donation of clothing, household goods, or decorations, all of
which had an aggregate value above $500.
However, Plaintiffs did successfully substantiate the items that had an aggregate value
less than $500. It is not necessary to record the manner of acquisition and date, and cost basis to
substantiate a donation with a fair market value below $500. In order to substantiate a non-cash
contribution with a value less than $250, a taxpayer needs a receipt from the donee showing, “(i)
the name of the donee (ii) the date and location of the contribution (iii) a description of the
property in detail reasonable sufficient under the circumstances.” Treas Reg 1.170A-13(b)(1).
Plaintiffs donated china with a value of $39, artwork with a value of $13, and tools with a
value of $23. Plaintiffs substantiated those items with a written receipt that included the name of
donee, the date, and location of the contribution and a description of the property. Plaintiffs also
FINAL DECISION TC-MD 160015R 7 donated jewelry with a value of $265 and electronics with a value of $435. Plaintiffs included
contemporaneous written acknowledgment for both the donated jewelry and the donated
electronics for the year 2011. The written acknowledgment included a description of the
property, that the donee organization provided no goods or service for consideration, and a good
faith estimate using “Its Deductible.” Therefore, Plaintiffs successfully substantiated their
donation of china, electronics, jewelry, artwork, and tools with a total value of $775 for the 2011
tax year.
B. 2012 Charitable Contributions
Plaintiffs did not successfully substantiate their donation of clothing, furniture,
electronics, collectibles, or household goods because they failed to record the date and manner of
acquisition in addition to the cost basis, or provide an explanation of why that information was
unavailable.
The antique chair is not aggregated into the furniture category with Plaintiffs’ other
donations because it was unique. Plaintiffs’ written record included the name and address of
donee organization, date, and location of contribution, detailed description of the property, and
the fair market value at the time of contribution, which was $800. The receipt also included the
method utilized for determining fair market value, which was comparable sales, the manner of
acquisition, which was a gift and the date it was given, January 2001, and the cost basis for the
item which was $1,200. Plaintiffs have successfully substantiated the antique chair.
In addition, Plaintiffs are able to deduct their donation of exercise equipment with a fair
market value of $129. Plaintiffs donated an aerobic stepper, jump rope, stationary bike, and
several yoga mats. The donation of exercise equipment is less than $250 and only requires a
written receipt, which included the name of donee, the date, and location of the contribution and
FINAL DECISION TC-MD 160015R 8 a description of the property. Therefore, Plaintiffs successfully substantiated their donation of an
antique chair and exercise equipment with a total value of $929 for the 2012 tax year.
C. 2013 Charitable Contributions
Plaintiffs did not successfully substantiate their donation of clothing, electronics,
furniture, or household goods because they failed to record the date and manner of acquisition in
addition to the cost basis. The clothing alone had an aggregate value above $5,000. Plaintiffs
did not obtain a qualified appraisal for those items, and therefore did not successfully
substantiate any item of clothing for 2013.
Electronics, furniture, and household goods all had an aggregate value above $500 for
2013. Plaintiffs did not successfully substantiate those items because they did not include the
manner and date of acquisition or the cost basis for any of those items. Therefore, Plaintiffs did
not successfully substantiate clothing, household goods, electronics, or furniture in 2013.
Plaintiffs did substantiate their donation of automotive equipment and jewelry in 2013.
Plaintiffs donated automotive equipment, which included floor mats, license plate cover, seat
cover, and a wheel cover, with a fair market value of $72 and jewelry with a fair market value of
$60. Both donations are under $250. Plaintiffs only need a written receipt from donee to
substantiate that donation, which they have included in their exhibits.
In addition, Plaintiffs donated an antique desk with a fair market value of $700 and an
antique harpsichord with a fair market value of $3,500. Plaintiffs donated an antique desk on
December 31, 2013. (Ptfs Ex 2 at 71.) The receipt includes the name and address of St. Vincent
De Paul, the date and location of the contribution is Central Point, Oregon on December 31,
2013. (Id.) The description of the property on the receipt is “antique inlaid mahogany desk.”
The antique desk is unique and therefore does not fall under a generic category for aggregation
purposes. The fair market value is noted on the receipt at $700. Plaintiffs included the method
FINAL DECISION TC-MD 160015R 9 utilized for determining fair market value: $700 was the value that the consignment shop
assigned the item. Lastly, Plaintiffs included on their Form 8283 the date they purchased the
item, which was June 1 2008, with a cost basis of $1,500. (Id. at 62.) The receipt in addition to
the Form 8283 successfully substantiates the item.
Furthermore, even if it did fall under a generic category for furniture, Plaintiffs only
donated $1,770 worth of furniture in 2013 including the antique desk. Therefore, Plaintiffs have
successfully substantiated the antique desk and can deduct the items fair market value of $700 in
their 2013 return.
Plaintiffs also donated an antique harpsichord on December 31, 2013. (Ptfs’ Ex 2 at 71.)
The receipt includes the name and address of the St. Vincent De Paul, the date and location of
the contribution is Central Point, OR on December 31, 2013. The description of the property
says antique harpsichord and includes pictures of the donation. The fair market value of $3,500
is listed on the receipt along with the method used for utilizing the fair market value; Plaintiffs
used comparative sales. Lastly, the Plaintiffs included on their Form 8283 the date they
purchased the item and its cost basis at the time which was June 2012 for $4,000. (Id. at 61.)
The receipt and additional information from Form 8283 is a successful recording of information
to substantiate the charitable contribution. Furthermore, because this is the only musical
instrument donated in 2013, it is not aggregated with any other item. Therefore, Plaintiffs have
successfully substantiated their donation of an antique desk, automotive equipment, jewelry, and
an antique harpsichord with a total value of $4,332 that they can deduct on their 2013 tax return.
D. Substantial Compliance Doctrine
The doctrine of substantial compliance is meant to avoid hardships where a taxpayer does
all that they think is reasonably adequate, but fails to comply with the specific requirements of a
provision. Durden v. Comm’r., 103 TCM (CCH) 1762 (2012), 2012 WL 1758655 at *3 (US Tax
FINAL DECISION TC-MD 160015R 10 Ct). In Bond v. Commissioner, 100 TC 32 (1993), 1993 WL 7551 at *41 (US Tax Ct), the US
Tax Court held that the reporting requirements of Treasury Regulation section 1.170A-13 were
directory, not mandatory and the requirements could be met by substantial, rather than strict
compliance. However, for donations with a value of $5,000 or more, Bond does not remove the
need for an appraisal, but rather allows the deduction where the appraisal exists, but was not
attached to the return. Id.
In Bond, taxpayers failed to attach their qualified appraisal to their tax returns for the
blimps they donated. Bond, 1993 WL 7551 at *35. The court found that they had substantially
complied with the statute, because even though they did not attach the appraisal to the tax return,
they received a qualified appraisal and used that appraisal when completing their return. Id. at
*42.
On the other hand, in Friedman v. Comm’r, 99 TCM (CCH) 1175 (2010), 2010 WL
845949 at *3 (US Tax Ct), taxpayers failed not only to attach the appraisal to their tax return, but
failed to get a qualified appraisal at all. The US Tax Court held that the taxpayers’ documents
failed to provide an adequate description of the items or the condition of the donated items for
purposes of an appraisal. Id. at *4. Moreover, the taxpayers also failed to provide the manner of
acquisition of the items donated and the items cost basis. Id. The court held that taxpayers had
not substantially complied with the statute, because they failed to provide enough information for
an adequate appraisal and failed to provide the manner of acquisition of the items donated. Id.
Plaintiffs argued that they have satisfied their burden of proof by providing adequate
records of their non-cash charitable contributions through their receipts and records kept on the
“Its Deductible” program through TurboTax. Plaintiffs felt that they used a program that was
used by many other taxpayers and they felt they provided enough evidence to prove that they
FINAL DECISION TC-MD 160015R 11 substantially complied with the required statutes, even if they failed to comply with the specific
provisions required by the US Tax Code and Treasury Regulations.
Unlike in Bond, Plaintiffs did not get the items appraised and do not have a list with the
every item’s cost basis and manner and date of acquisition that they simply failed to attach to
their tax return. Instead, and similarly to Friedman, Plaintiffs did not get an appraisal and do not
know the manner and date of acquisition for all of their donations in addition the item’s cost
basis. If Plaintiffs did know this information, it would have been brought forward. Therefore,
because Plaintiffs simply do not have an adequate record to substantiate most of their donated
items, they have failed to substantially comply with the required statute IRC section 170.
E. Request for Costs
The Magistrate Division has discretionary authority under ORS 305.490(2) to award
costs and disbursements to a prevailing party. Wihtol I v. Dept. of Rev. (Wihtol I), 21 OTR 260,
267–68 (2013). As required under TCR-MD 16 C(1), Plaintiffs filed their Statement for Costs
and Disbursements on September 30, 2016, requesting that the court award costs and
disbursements totaling $252. Defendant filed a written objection on October 6, 2016. Neither
party requested that the court schedule a hearing “to consider issues and evidence related to the
request for costs and disbursements.” TCR-MD 16 C(3). Under TCR-MD 16 B, “costs may be
awarded only to the prevailing party.” Wihtol v. Multnomah County Assessor (Wihtol), TC-MD
120762N, WL 274126 at *2 (Jan 24, 2014). “To determine who is the prevailing party * * * a
court must weigh ‘what was sought by each party against the result obtained.’ ” Beggs v. Hart,
221 Or App 528, 537–38, 191 P3d 747 (2008). Plaintiffs’ complaint sought to allow all of their
non-cash charitable deductions for the three tax years at issue totaling $54,440. After audit,
Defendant reduced Plaintiffs’ non-cash charitable deductions to a total of $1,735. In its
Decision, the court found that Plaintiffs were entitled to $6,036 in non-cash charitable deductions
FINAL DECISION TC-MD 160015R 12 for the tax years at issue. Plaintiffs argue that they are the prevailing party because the court’s
Decision found they were entitled to more than they obtained after Defendant’s audit. In its
opposition, Defendant argues that it was the prevailing party because the court upheld its
adjustments “99.5% for 2011; 98.2% for 2012; and 79.7% for 2013.” (Def’s Obj at 1.)
Because “[t]he award of costs and disbursements is entirely discretionary with the
court[,]” the question is whether the court should, in its discretion, award Plaintiffs’ claimed
costs and disbursements. Wihtol, 2014 WL 274126 at *4 (internal citations omitted). In
Wihtol I, this court addressed considerations the court may take into account in deciding whether
to exercise its discretion to award costs and disbursements. Considerations such as whether
“taxpayers fail to timely and properly file returns or fail to take advantage of available
administrative review” are used to determine whether the taxpayer “took adequate steps to avoid
the necessity of litigation.” See id. at *5–*6. Wihtol I also suggested “that certain errors and
shortcomings” in documentation produced by the taxpayer “that resulted in an initial inaccurate
assessment could be reason to deny a discretionary award of costs and disbursements.” Id. at *5;
Benj. Franklin Savings and Loan v. Dept. of Rev., 310 Or 651, 670–71, 801 P2d 771 (1990).
Defendant’s argument, based solely on percentages, is not persuasive. The court views
an award of costs as equitable in nature. Indeed, factors against Defendant’s position are its
implementation of automatic adjustments for the 2012 and 2013 non-cash charitable deductions.
In its Notice of Deficiency Assessment for the 2012 tax year, Defendant stated “an automatic
adjustment is being made to the 2012 return for any similar items to those adjusted on the 2011
return.” (Def’s Ex E at 8.) It appears similar reasoning was used for the 2013 tax year. Yet,
Defendant could have reasonably differentiated items of clothing from items such as antiques
and musical instruments, which would have resulted in more allowances to Plaintiffs. Plaintiffs
might not have chosen to litigate this issue had Defendant more diligently reviewed Plaintiffs’
FINAL DECISION TC-MD 160015R 13 evidence. However, Plaintiffs have not shown that they are the prevailing party or that equity
demands an award of costs in this case. Plaintiffs obtained a very low percentage of the amounts
they were originally seeking. Additionally, Plaintiffs’ evidence at trial about the quantity and
value of the clothing they contributed to charity was not persuasive. The court finds that
Plaintiffs were not the prevailing party and are not entitled to recover their costs.
F. Request to Reduce Penalties and Interest
Plaintiffs request that the court use its equitable powers to reduce or eliminate penalties
and interest in this case. ORS 305.560(1)(a) allows an appeal to be taken to this court under
ORS 305.275, subject to an exception that prohibits a taxpayer from appealing to this court from
an order denying the discretionary waiver of penalty or interest. ORS 305.560(1)(a) provides, in
part:
“Except for an order, or portion thereof, denying the discretionary waiver of penalty or interest by the Department of Revenue, an appeal under ORS 305.275 may be taken by filing a complaint with the clerk of the Oregon Tax Court * * *.”
In other words, an order denying the discretionary waiver of penalty or interest by
Defendant is not appealable to this court. See, Pelett v. Dept. of Rev. (Pelett), 11 OTR 364, 365
(1990); Gorin v. Dept. of Rev., TC-MD 140042N, WL 3533936 at *2 (July 17, 2014). The court
clarified that it has the authority to review whether a penalty was correctly imposed, but not
whether Defendant should have waived the penalty. Pelett, 11 OTR at 365.
Plaintiffs did not present any evidence at trial showing that Defendant made an error in
calculating penalties and interest in this case. Plaintiffs have also not demonstrated any legal
authority showing this court has the equitable discretion to reduce penalties and interest.
III. CONCLUSION
After careful review and consideration of the evidence and testimony presented, the court
concludes that Plaintiffs are not entitled to a deduction for the full amount claimed in charitable
FINAL DECISION TC-MD 160015R 14 contributions for the years 2011, 2012, and 2013, because they failed to keep adequate records to
substantiate their non-cash charitable contributions for their tax returns.
The court also concludes that Plaintiffs have successfully substantiated some of their non-
cash charitable contributions with adequate written records. Now, therefore,
IT IS THE DECISION OF THIS COURT that, for the 2011 tax year, Plaintiffs are
allowed to deduct $775 in charitable contributions that were substantiated.
IT IS FURTHER DECIDED that, for the 2012 tax year, Plaintiffs are allowed to deduct
$929 in non-cash charitable contributions that were substantiated.
IT IS FURTHER DECIDED that, for the 2013 tax year, Plaintiffs are allowed to deduct
$4,332 in non-cash charitable contributions that were substantiated.
IT IS FURTHER DECIDED that, Plaintiffs’ request for costs and fees is denied.
IT IS FURTHER DECIDED that, Plaintiffs’ request for a reduction in penalties and
interest is denied.
Dated this day of October 2016.
RICHARD DAVIS MAGISTRATE
This Decision is the court’s determination of the merits. Any claim of error in regard to this Decision may be raised in an appeal of the court’s final decision as stated in ORS 305.501.
Any request under Tax Court Rule – Magistrate Division (TCR-MD) 16 must be filed within 14 days of the date of this Decision. A final decision will be issued 14 days from the date of this Decision if no request is filed under TCR-MD 16.
This document was filed and entered on October 13, 2016.
FINAL DECISION TC-MD 160015R 15