Is it true. That in the state of Oregon. You can Do a Hardship withdrawal on 401k and pay taxes on the amount you receive at the end of the tax year. Or is it mandated that you pay all taxes up front prior to withdrawal.

401K are governed by FEDERAL law which supercedes any state statutes. By federal law, the plan administrator is required to withhold 20% of any distribution prior to age 59 1/2 to cover federal taxes. This is a withholding just like what's taken from your salary. You can't pay the actual taxes until you file your return.

ScottGem is correct tha federal law is the guiding principle. However, in most cases, the 20% withholding is a down payment on the taxes owed. The fedeal taxes can hit 35%, plus whatever state taxes are imposed (which, in some states, can be as high as 11%).