(1) If an employee provides the employer with a withholding statement or exemption certificate under ORS 316.182, the employer may rely upon the instruction provided by the employee. If the employee instructs the employee’s employer to withhold an amount of tax from the employee’s pay or claim exemption from withholding, and as of the time the instruction was made there was no reasonable basis for the instruction, the Department of Revenue shall assess and collect from the employee a penalty of $500.
(2) The penalty imposed under this section is in addition to any other penalty imposed by law. Any employee against whom a penalty is assessed under this section may appeal to the tax court as provided in ORS 305.404 to 305.560. If the penalty is not paid within 10 days after the order of the tax court becomes final, the department may record the order and collect the amount assessed without interest in the same manner as income tax deficiencies are recorded and collected under ORS 314.430.
(3) The department may waive all or any part of the penalty imposed under subsection (1) of this section if the income tax liability of the employee for the taxable year is equal to or less than the sum of:
(a) The credits against taxes allowed for purposes of this chapter; and
(b) The payments of estimated tax which are considered payments on account of the tax liability of the employee under ORS 316.579 and 316.583.