S054694, Opinion — Thomas Creek Lumber and Log Co. v. Dept. of Rev.

131
Argued and submitted January 3, decision of Tax Court affirmed
February 14, 2008
THOMAS CREEK LUMBER AND LOG CO.,
PlaintiffAppellant,
v.
DEPARTMENT OF REVENUE,
Defendant-Respondent.
(TC 4761; SC S054694)
l78 P3d 2 1 7
CJS, Interest and Usury; Consumer Credit § 37.
En Banc
On Appeal from the Oregon Tax Court.*
Henry C. Breithaupt, Judge.
Jeffrey K. Hanson, Yazbeck Cloran & Hanson, LLC,
Portland, argued the cause and filed the brief for plaintiff
appellant. With him on the brief was Heather McNamee.
Douglas M. Adair, Assistant Attorney General, Salem,
argued the cause and filed the brief for defendant
respondent. With him on the brief were Hardy Myers,
Attorney General, and Mary H. Williams, Solicitor General.
19 OTR 259 (2007).

132 Thomas Creek Lumber and Log Co. v. Dept. of Rev.
BALMER, J.
The decision of the Tax Court is affirmed.

Cite as 344 Or 131 (2008) 133
BALMER, J.
This appeal from a decision of the Oregon Tax Court
presents the question whether the Department of Revenue
(department) may assess a penalty interest rate on deficien
cies for taxes owed under the Western Oregon Forestland
and Privilege Tax, ORS 321.257 to 321.390,1 and the Forest
Harvest Privilege Tax, ORS 321 .005 to 32 1. 185 (collectively,
timber taxes) . The Tax Court held that the department prop
erly applied the penalty interest rate statute. For the reasons
discussed below, we affirm the decision of the Tax Court.
Taxpayer failed to pay the full amount of its timber
taxes due for tax years 1996, 1997, 1998, 1999, and 2000.
E ach year, the department issued a notice of assessment
specifying the deficiency for that year. The department
assessed interest on those deficiencies for the periods of their
delinquency. The department applied the interest rate estab
lished under ORS 305.2202 for the first 60 days of each defi
ciency and, for periods beyond 60 days, an interest rate that
was one-third of one percent per month higher than that
rate, pursuant to the penalty interest rate statute, ORS
305.222(2).
Taxpayer challenged the department's application of
the penalty interest rate statute in the Tax Court. The par
ties did not dispute (1) that taxpayer was deficient because it
failed to pay the full amounts owed for tax years 1996-2000,
(2) the amount of the deficiencies, (3) that the deficiencies
were delinquent for more than 60 days , or ( 4) the interest
rate applicable to the first 60 days of each delinquency. The
only issue before the court was the interest rate to be applied
to those deficiencies for the time period beyond the first 60
days of each delinquency. The department argued that the
penalty interest rate applied to taxpayer's deficiencies for the
period of the delinquencies beyond the first 60 days. Tax
payer responded that the lower rate established by ORS
1 The Western Oregon Forestland and Privilege Tax, ORS 32 1 .273 (2001), was
repealed i n 2003. Or Laws 2003, ch 621, § 22b.
ORS 305.220(1) provides for an interest rate of five-sixths of one percent per
month, unless the department adopts, by rule, a different rate pursuant to ORS
305.220(3). Pursuant to that subsection, the department has adopted rates lower
than the rate set in the statute for seven of the last 10 years.

134 Thomas Creek Lumber and Log Co. v. Dept. of Rev.
305.220( 1 ) applied to the deficiencies for the entire period of
the delinquency and that ORS 305.222(2) did not apply to
deficient timber taxes.
The Magistrate Division of the Tax Court affirmed
the decision of the department to use the higher interest rate
provided by ORS 305.222(2), and taxpayer appealed to the
Regular Division. On cross-motions for summary judgment,
the Tax C ourt affirmed. Thomas Creek Lumber and Log Co.
u. Dept. of Rev. , 19 OTR 259 (2007). Taxpayer appealed that
decision to this court.
We begin by examining the text of the relevant stat
utes. The penalty interest rate provision, ORS 305.222,
which the department argues should apply here, provides, in
part:
"For purposes of determining the interest rate estab
lished under ORS 305.220:
"( 1 ) In the case of a refund of tax ordered by the
Oregon Tax Court or the Oregon Supreme Court and aris
ing under any law administered by the Department of Rev
enue, if the refund is not paid by the department within 60
days after the date of the order, the interest rate provided
under ORS 305.220 shall be one-third of one percent
greater than that so provided under ORS 305.220, but only
with respect to interest periods that begin 61 days after the
date the order is entered.
"(2)(a) In the case of a notice of assessment pursuant
to any law administered by the department, if the defi
ciency is not paid within 60 days after the date of the notice
of assessment, the interest rate provided under ORS
305.220 shall be one-third of one percent greater than that
so provided under ORS 305.220, but only for interest
periods that begin 6 1 days after the date of notice of
assessment.
"(b) In the case of an assessment under ORS
305.265(12),131 if the delinquency is not paid within 60 days
:i ORS 305.265(12) provides:
"If a return is filed with the department accompanied by payment ofless
than the amount of tax shown on or from the information on the return as due,
the difference between the tax and the amount submitted is considered as
assessed on the due date ofthe report or return ( determined with regard to any
extension of time granted for the filing of the return) or the date the report or

Cite as 344 Or
after the date of the assessment, the interest rate provided
under ORS 305.220 shall be one-third ofone percent greater
than that so provided under ORS 305.220. The increased
rate shall apply only for interest periods that begin 61 days
after the date of notice of the delinquency."
(Emphases added.)
The interest rate statute that generally applies to
tax deficiencies and tax refunds, ORS 305.220, provides, in
part:
"( 1) Unless specifically provided otherwise by statute or
by rule of the Director of the Department of Revenue
adopted pursuant to subsection (3) of this section, every
deficiency or delinquency arising under any law adminis
tered by the Department of Revenue shall bear simple
interest at the rate of five-sixths of one percent per month
or fraction thereof.
"(2) Unless specifically provided otherwise by statute
or by rule of the director adopted pursuant to subsection (3)
of this section, every refund arising under any law admin
istered by the department shall, subject to subsections (3)
and (5) of this section and ORS 305.222, bear simple
interest at the rate of five-sixths of one percent per month,
or fraction thereof."
(Emphasis added. )
The other statute applicable here i s ORS 321 .560(6),
which provides that, for taxes assessed under ORS chapter
321, including the timber taxes at issue in this case, " [a]
delinquent tax or a deficiency shall bear interest at the rate
established under ORS 305.220 for each month, or any frac
tion thereof, from the time the return was due." The depart
ment argues that the reference to ORS 305.220 in the statute
with respect to interest on timber tax deficiencies incorpo
rates the penalty interest rate of ORS 305.222(2) for deficien
cies that are delinquent more than 60 days.
return is filed, whichever is later. For purposes of this subsection, the amount
of tax shown on or from the information on the return as due shall be reduced
by the amount of any part of the tax that is paid on or before the due date pre
scribed for payment of the tax, and by any credits against the tax that are
claimed on the return. If the amount required to be shown as tax on a return is
less than the amount shown as tax on the return, this subsection shall be
applied by substituting the lesser amount."

136 Thomas Creek Lumber and Log Co. v. Dept. of Rev.
The plain text of the statutes supports the depart
ment's position. As noted, ORS 305.220( 1 ) provides, in part,
that "every deficiency or delinquency arising under any law
administered by the Department of Revenue shall bear sim
ple interest at the rate of five-sixths ofone percent per month
or fraction thereof." That directive, however, is qualified by
the words " [u]nless specifically provided otherwise by statute
or by rule of the Director of the Department of Revenue
adopted pursuant to subsection (3) of this section[.] " ORS
305.222 provides, in part, "For purposes of determining the
interest rate established under ORS 305.220" a higher inter
est rate than that determined in ORS 305.220 will apply to
deficiencies that are more than 60 days past due. ORS
305.222 thus "specifically provides otherwise" for the interest
rate that applies after 60 days because it refers to ORS
305 .220 and "provides" an interest rate that is different than
that provided by ORS 305.220. The statutory text inescapa
bly supports the department's interpretation.
Taxpayer nevertheless contends that because ORS
305.220(2), the subsection of the statute that establishes the
interest calculation on refunds from the state to a taxpayer,
does refer to ORS 305.222, while ORS 305.220( 1), the subsec
tion that establishes the interest calculation on delinquent
and deficient tax payments, does not refer to ORS 305.222,
the legislature must have intended that ORS 305.222 not
apply to the interest calculation to delinquent and deficient
tax payments. 4 Taxpayer notes that the refund subsection
and the tax deficiency subsection are phrased identically,
except that the refund subsection includes the additional
clause, "subject to subsections (3) and (5) of this section and
ORS 305.222[.]" That difference, taxpayer argues, must
mean that the refund subsection incorporates ORS 305.222,
while the tax deficiency subsection does not.
Taxpayer argues that the context of the deficiency
interest statutes contradicts the textual interpretation we
have outlined above, because that interpretation renders the
specific reference to ORS 305 .222 in ORS 305.220(2) redun
dant. If the words " [u]nless specifically provided otherwise"
in the tax deficiency interest rate subsection of ORS
,, Taxpayer makes several arguments which do not require discussion.

Cite as 344 Or 1 3 1 137
305.220( 1 ) allow the use of the penalty interest rate, tax
payer asserts, then those same words in the tax refund inter
est rate subsection, ORS 305.220(2), should mean the same
thing. But that interpretation, taxpayer contends, would ren
der the specific reference to the penalty interest statute in
ORS 305.220(2) redundant.
Taxpayer's argument that the reference to ORS
305.222 in ORS 305.220(2) indicates that the legislature
intended to exclude the use of that statute in ORS 305.220 ( 1 )
draws some support from precedent. This court has stated,
" 'the use of a term in one section and not in another section of
the same statute indicates a purposeful omission.' " Jordan v.
SAIF, 343 Or 208, 2 1 7 , 167 P3d 451 (2007) (quoting PGE v.
Bureau of Labor and Industries, 3 1 7 Or 606, 6 1 1 , 859 P2d
1 143 ( 1993)).5 However, although the department's interpre
tation of ORS 305.220(1 ) and (2) does lead to a redundancy in
subsection (2), taxpayer's interpretation more problematic
because it is inconsistent with two other applicable rules of
statutory construction. First, taxpayer's interpretation-that
the words "specifically provided otherwise by statute" in sub
section ( 1 ) do not allow application of a statute, ORS 305.222,
that does specifically provide otherwise-impermissibly
"omit [s] what has been inserted[.]" ORS 174. 0 10. Second,
taxpayer's interpretation renders ORS 305.222(2) entirely
without effect, contrary to another rule of statutory construc
tion. See Vaughn v. Pacific Northwest Bell Telephone, 289 Or
73, 83, 6 1 1 P2d 281 (1980) ("This court will avoid a con
struction which * * * renders one statute ineffective."); ORS
174.010 ("[W]here there are several provisions or particulars
In Jordan, this court determined that the Workers' Compensation Board's
"own motion" authority did not include the power to suspend temporary disability
payments when the claimant failed to comply with a treatment regimen. 343 Or at
2 10. There, however, the statute in question, ORS 656.278(1 ) ( 1999), granted the
board several specific powers, which did not include the power to suspend benefits,
and that power to suspend was specifically granted by another statute to the Direc
tor of the Department of Consumer and Business Services. Id. The "purposeful
omission" in ,Jordan involved whether a statute that listed certain specific powers
also authorized the board to exercise a different specific power that was expressly
granted to another authority in a different statute. The parties have not directed
our attention to any case where this court analyzed a situation such as the one
before the court here, where the "purposeful omission" issue involves both a spe
cific reference to another statute and a general reference to statutes that "other
wise provide."

138 Thomas Creek Lumber and Log Co. v. Dept. of Rev.
such construction is, if possible, to be adopted as will give
effect to all."). Following the logic of taxpayer's argument,
ORS 305.222(2) would never apply to any deficiency or delin
quency. The parties agree that there is no specific reference
to ORS 305.222 in any statute other than ORS 305.220(2).
The department argues that all deficiencies (with two excep
tions not applicable here) are determined pursuant to stat
utes that refer to ORS 305.220 for the calculation of the inter
est rate to apply to deficient tax payments. One such statute,
ORS 305.265( 13), for example, provides that "[e]very defi
ciency shall bear interest at the rate established under ORS
305.220 * * *." If the differences between subsections (1) and
(2) of ORS 305.220 preclude application of the penalty inter
est rate for the calculation of interest determined under ORS
305.220( 1), then the department never could apply ORS
305.222(2), rendering that subsection completely ineffective.
We therefore reach the same conclusion that the Tax
Court reached. The department's interpretation makes some
words in ORS 305.220(2) redundant. But nothing prohibits
the legislature from saying the same thing twice or, as here,
from providing two different statutory paths to impose a
higher interest rate on tax refunds that are more than 60
days overdue. While our goal is to give effect to every provi
sion of a statute, Dept. of Transportation u. Stallcup , 341 Or
93, 101, 138 P3d 9 (2006), the department's interpretation,
which we adopt, is preferable to taxpayer's interpretation,
which would render all of ORS 305.222(2) ineffective and
would omit words from ORS 305.220( 1). We conclude that the
department correctly applied ORS 305.222(2) when deter
mining the interest rate for deficiencies and delinquencies
pursuant to ORS 305.220( 1 ) because that "construction * * *
will give effect to" more of the "provisions or particulars" of
both statutes than taxpayer's proposed interpretation.
The decision of the Tax Court is affirmed.