Salar v. Metro. Service Dist.

• Court: Oregon Tax Court
• Decided: September 24, 2025
• Docket: TC-MD 250167R
• Status: Unpublished

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Local Income Tax

VIKRANT SALAR, ) ) Plaintiff, ) TC-MD 250167R ) v. ) ) METROPOLITAN SERVICE DISTRICT ) and CITY OF PORTLAND, ) ) Defendants. ) DECISION OF DISMISSAL

This matter came before the court on Defendant Metropolitan Service District’s (Metro)

Motion to Dismiss, filed May 7, 2025, and Defendant City of Portland’s (City) Motion to

Dismiss, filed May 21, 2025, both alleging that Plaintiff failed to first exhaust the available

administrative remedies as necessary to give this court jurisdiction in this matter. Plaintiff’s

appeal arises from a letter he received from the City’s Office of Management and Finance

Revenue and Financial Services Division (Revenue Division), addressing his requests for refund

and exemption from the Supportive Housing Services (SHS) tax imposed by Metro. Plaintiff

responded to both Motions to Dismiss. This matter is now ready for decision.

I. STATEMENT OF FACTS

Plaintiff seeks a refund for the SHS tax Plaintiff paid for the 2022 and 2023 tax years and

a prospective exemption from the SHS tax for the 2024 tax year moving forward. (Compl at 7,

33.) Plaintiff also seeks a declaration from this court that the SHS tax is unconstitutional. (Id. at

33.)

DECISION OF DISMISSAL TC-MD 250167R 1 A. Background on SHS Tax

The SHS tax emerged from Metro’s Supportive Housing Services Ballot Measure 26-

210, which voters of the region approved on May 19, 2020, and which authorizes Metro to

impose a business income tax and personal income tax to fund Supportive Housing Services.

(McGair Decl, Ex 1 at 1.) The SHS tax is imposed at a rate of one percent on taxable income of

$200,000 or greater for Metro taxpayers filing a joint return, and $125,000 or greater for single

filers. Metropolitan Service District Code (Metro Code) § 7.06.040. 1 Metro is the taxing

jurisdiction imposing the tax, and the City, via an Intergovernmental Agreement between the

City and Metro for the Collection of Business and Personal Income Taxes (IGA), acts as Metro’s

tax administrator. (Id. at 4.) The City, through its Revenue Division, determines a taxpayer’s

liability, issues refunds, and reviews or denies claims made by taxpayers regarding the SHS tax,

all pursuant to Metro Code chapter 7.05, administrative rules, and the IGA. (See McGair Decl,

Exs 1-2.) The City’s Revenue Division Appeals Board (RDAB) 2 adjudicates appeals filed by

SHS income tax filers from final determinations made by the Administrator regarding the SHS

tax. (McGair Decl, Ex 1 at 5.)

B. Facts in this Matter

On May 9, 2024, Plaintiff filed returns for the 2022 and 2023 tax years and paid SHS

taxes, plus penalties and interest, for both years. (Compl, Exs B and C.) On March 18, 2025,

1 Unless otherwise noted, the court’s references to the Metro Code are to 2024. 2 The City’s Motion indicates the RDAB was formerly known as the Business License Appeals Board. (City Mot to Dismiss at 2 n 2.)

DECISION OF DISMISSAL TC-MD 250167R 2 Plaintiff sent a letter to the RDAB asking for, among other things, a refund of his 2022 and 2023

tax payments as well as a prospective determination of exemption for tax year 2024 and beyond.

(Compl, Ex A at 1-15.) At that time, Plaintiff had not filed amended returns for the 2022 and

2023 tax year, or an original return for the 2024 year. (Id.)

On April 4, 2025, the Revenue Division, via its audit supervisor, sent Plaintiff a

responsive letter. (Compl, Ex H.) The audit supervisor explained that, under Metro Code

section 7.05.150, “the Administrator may * * * grant refunds during any time within the period

allowed under Oregon Revised Statutes, chapter 314.” (Id. at 1.) However, as she further

explained, “[t]he division requires requests for refunds to be made by filing an amended return

for the year(s) at issue.” (Id.) The audit supervisor explained that, because the Administrator

had not issued any determination, “there is currently nothing to appeal” to the RDAB. (Id.) The

audit supervisor cited to Metro Code section 7.05.160, which explains the process for protesting

an Administrator’s determination. (Id.)

In response to Plaintiff’s request for exemption, the audit supervisor cited Metro Code

section 7.05.040. (Compl, Ex H.) That section imposes the SHS personal income tax on the

entire Oregon taxable income of a resident of the district and allows for limited exemptions. The

letter concluded: “the issues presented in your letter do not allow the Revenue Division to grant

an exemption.” (Id.)

On April 12, 2025, Plaintiff filed his Complaint with this court. (Compl at 1.) On April

15, 2025, Plaintiff filed amended SHS returns for the 2022 and 2023 tax years, requesting

DECISION OF DISMISSAL TC-MD 250167R 3 refunds for overpayment of the SHS tax. (Ptf’s Resp to Def City’s Mot to Dismiss, Exs K – L.)3

Plaintiff also filed his 2024 return on the same date. (Id., Ex M.)

On April 23, 2025, the Revenue Division issued Notices of Correction (Notices) for

Plaintiff’s 2022, 2023, and 2024 returns. (Id., Exs O – Q.) Each Notice adjusted the employer

withholding Plaintiff had initially provided on his returns, and each stated that Plaintiff had “30

days from the date of this letter to protest this determination under Metro Code 7.05.160.” (Id.)

In May 2025, Defendants both moved for dismissal of Plaintiff’s Complaint on the

grounds that the Tax Court lacks jurisdiction over the matter. (Def Metro ’s Mot to Dismiss at 1;

Def City’s Mot to Dismiss at 3.) In response, Plaintiff asserts that the letter he claims denied his

refund requests and exemption was a “constructive final administrative act, vesting this court

with full authority to conduct [a] de novo review[.]” (Ptf’s Resp in Opp to Def City’s Mot to

Dismiss at 2-3.)

II. ANALYSIS

Plaintiff challenges the Revenue Division’s response to his request for refunds and

exemption regarding the SHS tax. Plaintiff claims he is aggrieved by the imposition and

collection of the SHS tax for tax years 2022 and 2023 , and that he is exempt for the 2024 tax

year and beyond. Plaintiff also asks the court to declare that the SHS tax is unconstitutional.

The issues before the court are whether Plaintiff is aggrieved by any of Defendants’ acts,

omissions, orders or determinations; whether Plaintiff properly exhausted all of the

3 Plaintiff did not request leave to amend his Complaint but rather included his amended returns in his Response to the City’s Motion to Dismiss.

DECISION OF DISMISSAL TC-MD 250167R 4 administrative remedies available prior to filing this appeal; and whether the court may provide

the declaratory relief Plaintiff seeks. Aggrievement will be addressed first.

A. Aggrievement

Any person aggrieved by and affected by an act, omission, order or determination of a

local government in its administration of a local income tax may appeal to the Magistrate

Division of the Oregon Tax Court. ORS 305.275(1)(a)(E); ORS 305.410(3).4 Like state and

federal income taxes, local income taxes such as the SHS tax are based on self-assessment;

taxpayers file returns based on their own analysis of their income, deductions, and any taxes

owned. In accordance with the concept of self-assessment, this court has held that a taxpayer is

not aggrieved by their own return. See, e.g., Beesley v. Dept. of Rev., TC-MD 021084C, 2003

WL 21235445 at *1 (Or Tax M Div Mar 18, 2003) (dismissing taxpayer’s appeal to change

filing status from that taken on original return because department did not adjust taxpayer’s

return so taxpayer was not aggrieved); Ruiz-Galicia v. Dept. of Rev., TC-MD 100768D, 2010

WL 3706449 at *1 (Or Tax M Div Sept 22, 2010) (dismissing taxpayer’s appeal of “self -

assessed state income tax for tax year 2005” due in part to “no appealable action”). A taxpayer

wishing to change an original return may do so by filing an amended return. Therefore, Plaintiff

is not aggrieved by the SHS taxes he paid based on the original 2022 and 2023 returns he filed.

///

Unless otherwise noted, the court’s references to the Oregon Revised Statutes (ORS) are to 2023. 4

ORS 305.410(3) grants this court jurisdiction over “all questions of law and fact arising under any taw law of a local government that is imposed upon or measured by net income.”

DECISION OF DISMISSAL TC-MD 250167R 5 Plaintiff appeals from an April 4, 2025, letter from the Revenue Division, which he

characterizes as a denial of his 2022 and 2023 refund requests. Here, the Revenue Division did

not deny Plaintiff’s requested refunds in its letter dated April 4, 2025. Instead, the audit

supervisor explained that the Revenue Division requires requests for refunds to be made by filing

an amended return. Because Plaintiff paid the taxes owed under his self -assessed 2022 and 2023

returns, the returns did not create a dispute about amounts owed or to be refunded. The Revenue

Division’s letter did not provide a determination on Plaintiff’s request, but rather pointed him to

the proper administrative steps to follow. Thus, it does not appear Plaintiff is aggrieved by the

Division’s April 4, 2025, letter. Even if Plaintiff were aggrieved by the Division’s letter, his

appeal to this court is premature because he did not exhaust administrative remedies.

B. Exhaustion of Administrative Remedies

As noted above, ORS 305.275(1)(a)(E) permits an appeal to this court for any person

aggrieved by and affected by an act, omission, order or determination of a local government in

its administration of a local income tax. However, to appeal a local income tax issue to this

court, a taxpayer must “* * * first exhaust[] all remedies provided before the local government.”

ORS 305.275(1)(a)(E). To exhaust one’s remedies “* * * requires that the issues of the dispute

be submitted to the administrative agency for consideration of the merits of the dispute.” See

Lake County v. Teamsters Local Union #223, 208 Or App 271, 277, 145 P3d 187 (2006)

(discussing the doctrine of exhaustion, generally). The exhaustion requirement “is intended to

promote ‘orderly procedure and good administration.’ ” Miller v. City of Portland, 356 Or 402,

420, 338 P3d 685 (2014) (quoting Marbet v. Portland Gen. Elect., 277 Or 447, 456, 561 P2d 154

DECISION OF DISMISSAL TC-MD 250167R 6 (1977)). Taxpayers must first engage with the appropriate administrative agency and give the

agency the opportunity to address the dispute and provide a final determination. Once a final

determination is reached, a taxpayer may then appeal to this court. See Miller, 356 Or at 420;

ORS 305.275.

The necessary steps for a taxpayer to challenge a Revenue Division determination are

provided in the Metro Code. When an original or amended income tax return is filed with the

Revenue Division, the Administrator may review and audit the return, then make a determination

whether to grant or deny a claimed refund. See Metro Code § 7.05.150(a). If the taxpayer

disagrees with the Administrator’s determination, they may protest within 30 days. Metro Code

§ 7.05.160. The protest must explain the general grounds for the protest, and the Administrator

must respond within 180 days with a final determination. The final determination must include

the reasons for the determination and the time and manner for an appeal. A taxpayer may then

appeal the final determination to the appeals board—the RDAB. The decision of the RDAB is

final, and there is no further administrative appeal. Metro Code § 7.05.150(g). At that point,

either the taxpayer or the Revenue Division may appeal to this court.

Plaintiff argues that the City’s April 4, 2025, letter, even if not a final determination, was

a constructive denial under ORS 305.275(4). However, that provision requires that the taxpayer

be “aggrieved by and affected by an act, omission, order or determination” of the taxing

authority. Courts have interpreted this to require some form of finality or refusal to act. Here,

the Revenue Division did not refuse to act or remain silent; rather, it responded promptly and

directed Plaintiff to the appropriate administrative process—namely, the filing of amended

DECISION OF DISMISSAL TC-MD 250167R 7 returns. Because the Division’s response did not constitute a final determination or a refusal to

act, it does not qualify as an appealable act or omission under ORS 305.275. While the concept

of “deemed denial” exists under the Administrative Procedures Act (APA) (ORS 183.490), the

APA does not apply to local tax administration and is therefore inapposite.

C. Impact of Amended Returns Filed During Pendency of Appeal

Plaintiff filed amended returns for 2022 and 2023 immediately after filing his Complaint

with this court. That action has no bearing on this case. Even if the court construes the amended

returns as also amending Plaintiff’s Complaint, which it does not, Plaintiff would yet find no

resolution in this venue until first exhausting his administrative remedies. Once the Revenue

Division makes determinations on Plaintiff’s amended returns, Metro Code section 7.05.160

allows him 30 days to protest. The same is true if a determination is made on any subsequently

filed 2024 original or amended return. Plaintiff’s recently-filed amended returns do not create a

cause of action in this court.

D. Declaratory Relief

In addition to his challenge of the Revenue Division’s response regarding his requested

refunds and exemption, Plaintiff seeks a declaration from this court that the SHS tax is

unconstitutional. (Compl at 33.) As discussed, Plaintiff did not exhaust his administrative

remedies, as required for this court to have jurisdiction. Such exhaustion is required before

Plaintiff may challenge the tax’s constitutionality. See Dennehy v. Dept. of Rev., 295 Or 574,

579, 668 P2d 1210, 1213 (1983) (finding that “[s]tatutorily required administrative review may

not be ignored simply because the issue is a question of law”) (internal citations omitted). The

DECISION OF DISMISSAL TC-MD 250167R 8 Oregon Supreme Court has explained, “it is clear from the statutory scheme establishing the tax

court that it is to decide whether to set aside administrative orders or determinations and not to

proceed without any such order or determination[.]” Dennehy, Or at 579. An administrative

determination is first required before Plaintiff may challenge the constitutionality of the SHS tax

in this court.

Even had Plaintiff exhausted his administrative remedies, this division of the court may

not provide declaratory relief. Only a court of record can issue declaratory relief . See ORS

28.010. As set out in the Declaratory Judgments Act, ORS 28.010 provides “[c]ourts of

record within their respective jurisdictions shall have power to declare rights, status, and other

legal relations, whether or not further relief is or could be claimed.” (Emphasis added.) The

“Magistrate Division is not a court of record; proceedings before it are informal and are not

subject to the rules of evidence.” Village at Main St. Phase II, LLC v. Dept. of Rev., 356 Or 164,

167, 339 P3d 428 (2014), citing ORS 305.430(1) (stating “[p]roceedings before the magistrate

division shall not be reported”). Declaratory relief may only be sought in the Regular Division

of this court. See Tax Court Rule (TCR) 1 (C)(1)(a) (providing that “[p]etitions or complaints

for declaratory judgment under ORS chapter 28” must be filed directly with the Regular

Division).

III. CONCLUSION

Plaintiff is not aggrieved by the 2022 and 2023 SHS taxes he self-assessed and paid, or

by the Revenue Division’s responsive letter. Plaintiff also failed to exhaust all available

administrative remedies as required by ORS 305.275 before filing his Complaint. Finally,

DECISION OF DISMISSAL TC-MD 250167R 9 Plaintiff’s request for declaratory relief is unavailable in the Magistrate Division of this court.

Therefore, this court does not have jurisdiction to decide this matter, and Plaintiff’s Complaint

must be dismissed. Now, therefore,

IT IS THE DECISION OF THIS COURT that Defendants’ Motions to Dismiss are

granted and that Plaintiff’s Complaint is dismissed.

RICHARD D. DAVIS MAGISTRATE

If you want to appeal this Decision, file a complaint in the Regular Division of the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563; or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR.

Your complaint must be submitted within 60 days after the date of this Decision or this Decision cannot be changed. TCR-MD 19 B.

This document was signed by Magistrate Richard D. Davis and entered on September 24, 2025.

DECISION OF DISMISSAL TC-MD 250167R 10