Oregon — Sales & Use Tax

Oregon does not impose a general state sales tax. The state relies primarily on personal income tax, corporate excise tax, and property tax for revenue. Oregon voters have rejected sales tax proposals at the ballot at least ten times since 1910, but there is no constitutional provision that explicitly prohibits the legislature from enacting a sales tax. Oregon is one of five states—along with New Hampshire, Montana, Alaska, and Delaware—that does not levy a statewide general sales tax.

Source: Oregon Department of Revenue — Sales Tax in Oregon Source: Oregon Blue Book — Oregon's Economy: Revenue and Taxes

The City of Ashland imposes a 5% tax on sales of prepared food and non-alcoholic beverages sold by restaurants, caterers, grocery store delis, and coffee shops, including takeout and delivery. The tax applies to items prepared for immediate consumption. Voters approved the tax in 1993; it is scheduled to expire on December 31, 2030.

Source: City of Ashland — Your Taxes at Work

Oregon imposes a 1.5% state transient lodging tax on the total retail price charged for occupancy of transient lodging, effective July 1, 2020. The tax applies to hotels, motels, vacation rentals, bed-and-breakfasts, campgrounds, and similar temporary accommodations. Transient lodging providers and transient lodging intermediaries (including online platforms) must collect the tax and file quarterly returns with the Oregon Department of Revenue. Certain facilities, including hospitals and long-term care facilities, are exempt. Cities and counties may impose additional local transient lodging taxes.

Source: ORS 320.305 | Oregon Department of Revenue — Transient Lodging Tax

Oregon does not impose a general sales tax or use tax. Oregonians purchasing goods or services online do not owe use tax to Oregon on those purchases. However, Oregon does impose a vehicle use tax that applies to new vehicles purchased outside the state, which must be paid before the vehicle can be titled and registered in Oregon.

Source: Oregon Department of Revenue — Sales Tax in Oregon

Oregon imposes a 0.5% vehicle use tax on taxable motor vehicles purchased at retail from any seller and then stored, used, or otherwise consumed in Oregon. The tax applies specifically to vehicles purchased from dealers outside Oregon that must be registered and titled in Oregon. The tax took effect January 1, 2018, as part of House Bill 2017's transportation funding package.

What vehicles are taxable

A motor vehicle is taxable only if it meets all of the following criteria under ORS 320.400(5):

• Has a gross vehicle weight rating (GVWR) of 26,000 pounds or less
• If equipped with an odometer, has been driven 7,500 miles or fewer; if not equipped with an odometer, is sold with a manufacturer's certificate of origin (MCO) or manufacturer's statement of origin (MSO)
• Has never been registered or titled in Oregon, except as a dealer demonstrator
• Was purchased from a dealer (or someone who is or would be required to register as a dealer in Oregon)
• Was purchased on or after January 1, 2018

Vehicles exceeding 7,500 miles or 26,000 pounds GVWR are not subject to the tax. Trailers required to be registered in Oregon are taxable if they meet these criteria.

Tax base and computation

The use tax is computed at 0.5% (one-half of one percent) of the retail sales price of the taxable motor vehicle. "Retail sales price" means the total price paid at retail, exclusive of any excise, privilege, or use tax, and includes down payments and the value of property taken in trade, reduced by discounts and rebates given at the time of sale. The retail sales price does not include the retail value of modifications necessary for a person with a disability to enter, drive, or operate the vehicle, or customized industrial modifications to medium-duty truck chassis (GVWR 10,000–26,000 pounds).

Credit for taxes paid to other jurisdictions

The use tax is reduced—but not below zero—by the amount of any privilege, excise, sales, or use tax imposed by any jurisdiction on the sale or on the storage, use, or other consumption of the taxable motor vehicle. The reduction is allowed only upon a showing by the purchaser that such a tax has been paid.

Collection and payment

Out-of-state dealers with a physical presence in Oregon (sufficient to create substantial nexus for tax purposes) must collect the vehicle use tax from purchasers. Physical presence is generally created by employees or independent contractors who regularly work in Oregon, or ownership of real property in Oregon. Out-of-state dealers without physical presence may voluntarily collect and remit the tax, but if they do so, they must collect it on all taxable motor vehicles they sell.

If the out-of-state dealer collects the tax, the dealer must remit it quarterly to the Oregon Department of Revenue and provide the purchaser a receipt. If the dealer does not collect the tax, the purchaser must pay it directly to the Department of Revenue within 30 days of purchase. The purchaser receives a Vehicle Use Tax Payment Certificate (containing an "L number") that must be presented to the Oregon DMV before the vehicle can be titled and registered.

A 5% penalty applies if the tax is not paid by the due date. A 20% penalty is charged for not filing a return within 30 days of the purchase date. Interest accrues on any unpaid tax from the time the tax is due.

Relation to the vehicle privilege tax

The vehicle use tax is distinct from Oregon's vehicle privilege tax. The privilege tax is imposed on Oregon dealers for the privilege of selling taxable vehicles at retail in Oregon; the use tax is imposed on purchasers of vehicles bought from dealers outside Oregon. Both taxes are imposed at 0.5% of the retail sales price. Purchases from Oregon dealers do not require a Vehicle Use Tax Payment Certificate because the Oregon dealer pays the privilege tax instead.

Source: ORS 320.410 Source: ORS 320.400 (Definitions) Source: ORS 320.420 (Collection of use tax) Source: Oregon Department of Revenue — Vehicle Privilege and Use Taxes

Cities and counties in Oregon may impose local transient lodging taxes on the same base as the state transient lodging tax: the sale, service, or furnishing of transient lodging. "Local transient lodging tax" is defined under ORS 320.300 as a tax imposed by a unit of local government on the sale, service, or furnishing of transient lodging. Local rates vary by jurisdiction and are set by local ordinance. Many Oregon cities and counties impose such taxes, though not all do.

July 1, 2003 moratorium and grandfathering

ORS 320.350 imposes strict limitations on new or increased local transient lodging taxes enacted after July 1, 2003. A unit of local government that did not impose a local transient lodging tax on July 1, 2003 may not impose such a tax on or after July 2, 2003, unless the imposition was approved on or before July 1, 2003. Similarly, a locality that already had a local transient lodging tax on July 1, 2003 may not increase the rate above the rate in effect on July 1, 2003, unless the increase was approved on or before that date. These moratorium provisions effectively froze the landscape of local transient lodging taxes as of mid-2003, barring new taxes or rate increases unless they were already approved by that cutoff date.

The moratorium does not apply if all net revenue from the new or increased tax (after deducting the collection reimbursement charge) is used for the permitted purposes described below and complies with the revenue-use requirements of ORS 320.350(5) and (6).

Required revenue uses: 70% tourism / 30% other

For any new or increased local transient lodging tax subject to ORS 320.350, at least 70% of net revenues must be used for tourism promotion or tourism-related facilities, and no more than 30% may be used for other permitted purposes. ORS 320.350(5) allows the net revenues to be used to fund tourism promotion, tourism-related facilities, or city or county services, or to finance or refinance debt of tourism-related facilities. ORS 320.350(6) imposes the 70/30 allocation requirement on those uses.

Local governments that had a local transient lodging tax in place on July 1, 2003 may not decrease the percentage of total local tax revenues actually expended for tourism promotion or tourism-related facilities after that date. A locality that agreed on or before July 1, 2003 to increase the tourism-promotion percentage must continue to honor that commitment.

The statute contains a grandfathering provision for localities that were financing debt with local transient lodging tax revenues as of November 26, 2003; those localities may continue to use the revenues to service that debt until retirement, even if the tax would not otherwise be permitted under the moratorium.

Collection reimbursement charge

ORS 320.345 mandates that a unit of local government imposing a new local transient lodging tax on or after January 1, 2001 must allow the transient lodging tax collector (the provider or intermediary) to retain a collection reimbursement charge of at least 5% of all collected local transient lodging tax revenues. A locality that already allowed a reimbursement charge as of December 31, 2000 may not decrease the rate of that charge. If a locality increases an existing local transient lodging tax on or after January 1, 2001, the 5% minimum reimbursement applies to the entire tax collected, not just the incremental portion.

Administration: state-collected vs. locally collected

The Oregon Department of Revenue administers local transient lodging taxes on behalf of participating cities and counties under intergovernmental agreements authorized by ORS 305.620 and ORS 320.365. ORS 320.365 directs the DOR to collect participating local transient lodging taxes on a local (not regional) basis, in the manner prescribed by the intergovernmental agreement.

Transient lodging tax collectors in participating jurisdictions report and remit both the state and participating local taxes on a single combined return filed with the DOR. The DOR's transient lodging tax webpage maintains a transient lodging administration table listing cities and counties that have entered into such agreements. For those jurisdictions, the local tax is reported on the same quarterly return as the state tax, due on or before the last day of the month following the end of each calendar quarter.

Cities and counties that do not have an intergovernmental agreement with the DOR collect and administer their local transient lodging tax independently. Providers and intermediaries in those jurisdictions must file separate returns directly with the local government, following the due dates and procedures specified in the local ordinance. The DOR webpage notes that the administration table will indicate whether a given locality's tax is administered by the state or must be filed separately with the local government.

Finding the local rate

Because local rates vary widely and are set by individual city or county ordinances, the Oregon Department of Revenue instructs taxpayers to contact the city and/or county directly for the applicable local transient lodging tax rate. The DOR does not publish a comprehensive statewide rate table. Practitioners operating in multiple Oregon jurisdictions must check each locality's ordinance or contact the local tax administrator to confirm the current rate and filing procedures.

Source: ORS 320.300 Source: ORS 320.350 Source: ORS 320.345 Source: ORS 320.365 Source: Oregon Department of Revenue — Transient Lodging Tax