Sario v. Dept. of Rev.

ORDER DENYING PLAINTIFFS’ MOTION FOR STAY
OF PAYMENT OF INCOME TAX TC 5479 	Page 1 of 5
IN THE OREGON TAX COURT
REGULAR DIVISION
Income Tax
REBECCA SARIO and HARRY
ROBNETT,
Plaintiffs,
v.
DEPARTMENT OF REVENUE,
State of Oregon,
Defendant.
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TC 5479
ORDER DENYING PLAINTIFFS’
MOTION FOR STAY OF PAYMENT OF
INCOME TAX
Plaintiffs ask the court to stay their obligation to pay the tax, interest, and penalty
assessed with respect to one of three tax years under appeal. Defendant objects that Plaintiffs
have failed to prove that requiring payment at the outset of litigation in this division of the court
would be an undue hardship. The court agrees with Defendant, finds no undue hardship, and
will grant Plaintiffs 30 days to pay the tax, interest, and penalty assessed.
A. 	Procedural Facts
Defendant issued personal income tax assessments for tax years 2018, 2019, and 2020.
Plaintiffs appealed in the Magistrate Division, and the magistrate decided two primary issues.
First, as to all three tax years, the magistrate denied Plaintiffs’ claimed deductions for
depreciation of two dwellings, concluding that Plaintiffs had failed to satisfy a statutory
requirement to hold the properties for income-producing purposes. Second, as to tax year 2020,
the magistrate concluded that Plaintiffs were entitled to an adjustment in their favor to reduce the
amount of net gain on the sale of one of the properties during that year.

ORDER DENYING PLAINTIFFS’ MOTION FOR STAY
OF PAYMENT OF INCOME TAX TC 5479 	Page 2 of 5
Plaintiffs then appealed in this division of the court. They initially sought to do so by
filing a letter addressed to the magistrate dated February 5, 2025. Realizing their mistake, on or
about February 24, 2025, they filed a complaint in this division using the court’s one-page form
and attaching a materially identical letter, along with a handwritten explanation of their error.
On the one-page February 24 complaint form, Plaintiffs failed to fill in the first blank, thus
leaving unanswered which tax years their assessment or refund claim involved. The letter
attached to the February 24 complaint, too, fails to expressly specify the tax years at issue.
However, the letter exclusively discusses two issues that, according to the magistrate’s decision,
were common to all three tax years: whether the properties were “income-producing” and
whether the rent charged for both properties was at fair market value. The letter refers at several
points to 2018, 2019, and 2020 in sequence. (See Ptfs’ Amend Compl at 3, 4.) Based on the
letter, the court concludes that Plaintiffs have appealed to this division the assessments for all
three of the tax years 2018, 2019, and 2020.
Defendant reached the same conclusion and moved for dismissal of Plaintiffs’ claim as to
tax year 2020 on the ground that Plaintiffs have failed to pay the assessment for that tax year.1
Defendant submitted an employee declaration stating that the tax, penalties, and interest assessed
for the single tax year 2020 totaled $25,837.97 as of April 26, 2023. 	(See Def’s Decl of Warren
at 1.) Shortly thereafter, Plaintiffs sent Defendant an affidavit alleging that immediate payment
of that assessment would constitute an “undue hardship” as contemplated in ORS 305.419(3).
Plaintiffs failed to file the affidavit with the court, along with a motion to stay the payment
requirement, as contemplated by ORS 305.419(3) and Tax Court Rule (TCR) 18 C(3)(a). When
1 Defendant’s motion is silent as to whether Plaintiffs have paid the assessments for tax years 2018 or 2019
in whole or in part. However, Defendant has since clarified that Plaintiffs have paid the assessments for tax years
2018 and 2019, and that Defendant seeks dismissal only of Plaintiffs’ claim as to tax year 2020. (See Def’s Supp
(July 28, 2025).)

ORDER DENYING PLAINTIFFS’ MOTION FOR STAY
OF PAYMENT OF INCOME TAX TC 5479 	Page 3 of 5
counsel for Defendant alerted the court to the affidavit, the court issued a notice to Plaintiffs
informing them that no affidavit had been filed and ordered them to file any affidavit and
accompanying motion to stay the payment requirement on or before May 9, 2025.
Plaintiffs filed their motion and affidavit timely, but on June 5, 2025, Defendant objected
that the facts stated in the affidavit did not support a conclusion of undue hardship. By order
dated June 9, 2025, the court allowed Plaintiffs an additional 30 days to either pay the
assessment for tax year 2020 or show cause, by means of a supplemental affidavit, for their
inability to do so. On June 24, 2025, Plaintiffs filed a supplemental affidavit, to which
Defendant objected in a reply dated July 3, 2025.2
B. 	Facts and Analysis Related to Undue Hardship Allegation
The court agrees with Defendant that the facts stated in Plaintiffs’ affidavit and
supplemental affidavit fail to prove that immediate payment of the amounts assessed for tax year
2020 would constitute an undue hardship justifying a stay under ORS 305.419(3). The court has
described the “undue hardship” requirement as follows:
“Based on its review of the text, context and legislative history of
ORS 305.419(3), the court concludes that the legislature in 1982 and 1985 viewed
the prepayment requirement as an important source of immediate revenue, any
undoing of which would incur at least a short-term cost. The legislature decided
to create only one basis for relief from the prepayment requirement, and to vest
the court with discretion to administer that relief. Although the legislature
adopted the undue hardship criterion without any stated standard, the court infers
from the text and context of the law that the legislature certainly intended the
court to grant hardship relief where immediate payment of the tax would prevent
a taxpayer from maintaining a minimal standard of living. Furthermore, the
legislature authorized the court to consider other potential factors, such as an
excessive, permanent loss that would be caused when a taxpayer would have to
sell off property at a distress sale price. Implicitly, by using the word ‘undue,’
the legislature also authorized the court to weigh the public policy of ensuring
2 In its July 18, 2025, order, the court directed Defendant to clarify its position as to the tax year or years,
and the total amount of the assessment, sought to be dismissed. Both parties responded to this order, but Plaintiffs’
submission, filed August 8, 2025, did not add facts or argument relevant to their motion to stay the payment
requirement.

ORDER DENYING PLAINTIFFS’ MOTION FOR STAY
OF PAYMENT OF INCOME TAX TC 5479 	Page 4 of 5
public access to an appeal against the public benefit of an immediate collection
(and elimination of the corresponding risk of abuse by taxpayers seeking
primarily to delay).”
Lamka v. Dept. of Rev., 23 OTR 566, 573 (2019) (emphasis added). In this case, the court finds
no evidence that paying the assessment immediately would prevent Plaintiffs from maintaining a
minimal standard of living, require them to sell off property at a distress sale price, or cause them
comparable suffering.
As stated in Defendant’s June 5, 2025, objection, Plaintiffs’ affidavit, using the form
available on the court’s website, lists monthly income in excess of their monthly expenses.
(Ptfs’ Aff at 2-3.) It shows accounts at two financial institutions that together include an amount
well in excess of the assessment. (Id. at 2.) The affidavit also lists real property with a value
well in excess of the amount owed. (Id. at 3.) Defendant’s objection alleges that Plaintiffs could
pay the assessment out of their listed accounts, or by taking a home equity loan secured by their
real property, and that neither event would reduce their monthly net income.
Plaintiffs’ supplemental affidavit fails to refute Defendant’s objections. Plaintiffs cite
age-related health issues that have led to emergency room visits and other treatment, but the
supplemental affidavit does not include new dollar amounts that change or qualify the amounts
shown on the original affidavit. Plaintiffs state that they face uncertainty because health events
may increase their medical costs, their Social Security benefits may be reduced by action of the
federal government, and they may be obliged to pay for care for their disabled adult child if the
child’s Social Security and Medicaid benefits are reduced.
The court finds it understandable that Plaintiffs are deeply concerned with conserving
their assets for the benefit of their own potential care and that of their adult child. However, the
court concludes that these concerns do not fit within the legislature’s intended meaning of
“undue hardship.” As analyzed in Lamka, an undue hardship requires a more immediate, more

ORDER DENYING PLAINTIFFS’ MOTION FOR STAY
OF PAYMENT OF INCOME TAX TC 5479 	Page 5 of 5
severe, and more verifiable adverse consequence than the concerns about the future that
Plaintiffs have expressed. This is particularly so in the context of ORS 305.419(3): if Plaintiffs
prevail in their challenge of the assessment, then Defendant will be required to refund it to them,
with statutory interest. ORS 314.415(1). And if Plaintiffs do not prevail in their challenge of the
assessment, then they will have simply paid an amount they owed anyway.
C. 	Conclusion
The court finds that requiring Plaintiffs to pay the assessment for tax year 2020 will not
create an undue hardship. Now, therefore,
IT IS ORDERED that on or before September 10, 2025, Plaintiffs must pay the amount
of tax and penalty assessed for tax year 2020, with interest through the date of payment.
Failure to do so will be cause to grant Defendant’s motion to dismiss.
Dated this 11th day of August, 2025.