NEIGHBORHOOD STORE ASSOCIATION
Vol. 6 No. 1
Many Internet retailers that sell cigarettes to Oregon consumers do not currently have a system for verifying the age of the consumer and do not pay the required Oregon cigarette tax. The failure to pay cigarette tax costs the state millions of dollars in lost tobacco tax revenue. Further, this illegal conduct places Oregon youth at risk and places the state's honest tobacco retailers at a competitive disadvantage.
The Oregon Legislature enacted new laws in 2003 (HB 2368) enhancing the protection of minors from illegal tobacco sales and requiring Internet tobacco sellers to pay their fair share of Oregon 's tobacco tax. The news laws have three key provisions:
1) Internet retailers selling cigarettes to Oregon residents are required to provide safeguards to ensure consumers are at least 18 years old;
2) Internet retailers must be licensed as a distributor under Oregon law; and
3) Internet retailers must affix a tax stamp to each cigarette pack, demonstrating that the Oregon tobacco tax is paid.
The Oregon Tobacco Tax Compliance Task Force, a multi-agency workgroup including the Oregon Department of Revenue, the Oregon State Police, and the Oregon Department of Justice, has developed a plan to educate Internet tobacco retailers on Oregon law and take appropriate enforcement action against any non-compliant retailers.
A large number of Internet retailers that sell cigarettes to Oregon consumers have been identified. The Department of Justice and the Oregon State Police plan to conduct undercover operations to purchase cigarettes via the Internet. If the Internet retailer sells tobacco products to underage consumers, is not licensed as a distributor, or has not affixed Oregon the legally required cigarette tax stamps, the Department of Justice will pursue civil and criminal penalties. Each violation is punishable by a $1,000 fine or five times the value of cigarettes purchased, whichever is greater. Subsequent violations are punishable by fines of $5,000 or five times the value of the cigarettes purchased, whichever is greater. Each violation may also be punished criminally by up to five years in prison.
Internet retailers are required to provide the Oregon Department of Revenue with the name and address of each customer in Oregon who has purchased cigarettes, as well as the brand of cigarette and the quantity purchased. If the retailer does not pay the required Oregon tax, the Oregon resident purchasing the cigarettes is required by law to file a return and pay the cigarette tax by the 20th of the month following the purchase. Failure to file and pay the tax may result in collection action by the Department of Revenue against the Oregon consumer, including imposition of applicable interest and penalties. Additional information and filing forms are available at: http://www.dor.state.or.us/tobacco/tobform.html.
Source: Oregon Department of Justice, May 21, 2004
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