Dear XXXXXX:
Thank you for contacting JustAnswer.com.
The short answer to your question is, "It depends." While there is generally a statute of limitations of 3 years on assessing taxes, penalties, and/or interest on tax returns that were timely filed, there is not a statute of limitations on the collection of taxes that were left unpaid. If you filed your 1998 income tax return, and they made changes to it within the 3 years of the filing, or 2-years after the IRS made changes to your federal return, you are not likely to get out of paying the $2,200.00.
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Dear ccino,
You may be able to convince the Oregon Department of Revenue that you are unable to pay due to extenuating circumstances. See Oregon Application for Settlement Offer at http://www.oregon.gov/DOR/PERTAX/docs/101-157.pdf . Please pay very careful attention to the provisions on page 3, "Under what conditions will the department accept my offer?"
With that said, I have never heard of an instance where a taxpayer that had the means to pay their taxes was relieved of liability because the amount had been outstanding so long or they had not received a bill.
You may be able ask that a portion of the interest be reduced, because through no fault of yours, the Department did not contact you. In order to establish that you were not at fault, you would need to establish that although your address may have changed, you have ALWAYS kept the Department informed of your correct address, and they just failed to inform you. This strategy is really a bit of a crap shoot. It is not extremely likely to work, but it may be worth your while to try.
A local EA or CPA would be very useful in helping you to determine if either of the strategies above have merit in your specific case.
Please let me know if you have any further questions.
De De
Enrolled Agent
10 years of public and industry accounting. Enrolled to practice before the IRS since 1998.