Chapter 804 Oregon Laws 2003

AN ACT

HB 2368

Relating to tobacco; creating new provisions; amending ORS 166.715, 293.533, 305.130, 305.280, 305.514, 305.850, 323.010, 323.015, 323.030, 323.035, 323.040, 323.050, 323.055, 323.060, 323.065, 323.085, 323.105, 323.107, 323.130, 323.140, 323.160, 323.170, 323.220, 323.225, 323.240, 323.245, 323.335, 323.360, 323.401, 323.416, 323.420, 323.435, 323.455, 323.480, 323.482, 323.500, 323.505, 323.510, 323.520, 323.525, 323.530, 323.535, 323.540, 323.555, 323.560, 323.565, 323.575, 323.585, 323.595, 323.600, 323.605, 323.610, 323.615, 323.620, 323.625 and 323.635 and section 3, chapter 385, Oregon Laws 1995, section 28, chapter 442, Oregon Laws 1995, section 5, chapter 869, Oregon Laws 2001, and section 2, chapter 2, Oregon Laws 2002 (third special session); repealing ORS 323.135, 323.155, 323.545, 323.550, 323.580, 323.590 and 323.995; and appropriating money.

CIGARETTE TAX

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 323.010 is amended to read:

323.010. As used in ORS 323.005 to 323.482, unless the context requires otherwise:

(1) “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use and consists of or contains:

(a) Any roll of tobacco wrapped in paper or in any substance not containing tobacco;

(b) Tobacco, in any form, that is functional in the product and that, because of its appearance, the type of tobacco used in the filler or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or

(c) Any roll of tobacco that is wrapped in any substance containing tobacco and that, because of its appearance, the type of tobacco used in the filler or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in paragraph (a) of this subsection.

(2) “Cigarette activity in this state”:

(a) Means importing, storing or manufacturing cigarettes in this state, or exporting cigarettes out of this state, in order to sell the cigarettes either within or outside this state.

(b) Does not include importing, storing, manufacturing or exporting of cigarettes that are to be consumed by the person doing the importing, storing, manufacturing or exporting.

(3) “Contraband cigarettes” means cigarettes or packages of cigarettes:

(a) That do not comply with the requirements of ORS 323.005 to 323.482 or 323.856 or the cigarette tax laws of another state or the federal government; or

(b) That bear trademarks that are counterfeit under ORS 647.135 or other state or federal trademark laws.

[(3)] (4) “Department” means the Department of Revenue.

[(4)] (5) “Dealer” includes every person, other than a manufacturer or a person holding a distributor’s license, who engages in this state in the sale of cigarettes.

[(5)] (6) “Exporting” means the act of carrying or conveying goods from a point of manufacture or storage in this state to a location outside this state and may be further defined by the department by rule.

[(6)] (7) “Importing” means the act of bringing goods to a point of storage in this state from a location outside this state and may be further defined by the department by rule.

[(7)] (8) “In this state” means within the exterior limits of the State of Oregon and includes all territory within these limits owned by or ceded to the United States of America.

[(8)] (9) “Manufacturer” means any person who makes, manufactures or fabricates cigarettes for sale [to distributors].

[(9)] (10) “Package” means the individual package, box or other container in which retail sales or gifts of cigarettes are normally made or intended to be made.

[(10)] (11) “Person” includes any individual, firm, copartnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, trustee, syndicate, this state, any county, municipality, district or other political subdivision of the state, or any other group or combination acting as a unit.

[(11)] (12) “Sale” includes any transfer of title or possession for a consideration, exchange or barter, in any manner or by any means whatsoever, but does not include the sale of cigarettes by a manufacturer to a distributor.

(13) “Taxpayer” means a distributor or other person required to pay a tax under ORS 323.005 to 323.482, and includes a distributor required to prepay a tax under section 3 of this 2003 Act.

[(12)] (14) “Transporter” means any person importing or transporting into this state, or transporting in this state, cigarettes obtained from a source located outside this state, or from any person not licensed as a distributor under ORS 323.005 to 323.482. It does not include a licensed distributor, a common carrier to whom is issued a certificate or permit by the United States Surface Transportation Board to carry commodities in interstate commerce, or to a carrier of federal tax-free cigarettes in bond, [, a common carrier to whom is issued a certificate or permit by the United States Interstate Commerce Commission to carry commodities in interstate commerce, or to a carrier of federal tax-free cigarettes in bond,] or any person transporting no more than [200] 199 cigarettes at any one time.

[(13)] (15) “Untaxed cigarette” means any cigarette [which] that has not yet been distributed in such manner as to result in a tax liability under ORS 323.005 to 323.482.

[(14)] (16) “Use or consumption” includes the exercise of any right or power over cigarettes incident to the ownership thereof, other than the sale of the cigarettes or the keeping or retention thereof for the purpose of sale.

[(15)] (17) “Wholesaler” means any dealer who engages in the sale of cigarettes to any other dealer for purposes other than use or consumption.

SECTION 1a. If House Bill 2094 becomes law, ORS 323.010, as amended by section 1 of this 2003 Act, is amended to read:

323.010. As used in ORS 323.005 to 323.482, unless the context requires otherwise:

(1) “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use and consists of or contains:

(a) Any roll of tobacco wrapped in paper or in any substance not containing tobacco;

(b) Tobacco, in any form, that is functional in the product and that, because of its appearance, the type of tobacco used in the filler or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or

(c) Any roll of tobacco that is wrapped in any substance containing tobacco and that, because of its appearance, the type of tobacco used in the filler or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in paragraph (a) of this subsection.

(2) “Cigarette activity in this state”:

(a) Means importing, storing or manufacturing cigarettes in this state, or exporting cigarettes out of this state, in order to sell the cigarettes either within or outside this state.

(b) Does not include importing, storing, manufacturing or exporting of cigarettes that are to be consumed by the person doing the importing, storing, manufacturing or exporting.

(3) “Contraband cigarettes” means cigarettes or packages of cigarettes:

(a) That do not comply with the requirements of ORS 323.005 to 323.482 or 323.856 or the cigarette tax laws of another state or the federal government; [or]

(b) That bear trademarks that are counterfeit under ORS 647.135 or other state or federal trademark laws; or

(c) That have been sold, offered for sale or possessed for sale in this state in violation of section 11, chapter 801, Oregon Laws 2003 (Enrolled House Bill 2094).

(4) “Department” means the Department of Revenue.

(5) “Dealer” includes every person, other than a manufacturer or a person holding a distributor’s license, who engages in this state in the sale of cigarettes.

(6) “Exporting” means the act of carrying or conveying goods from a point of manufacture or storage in this state to a location outside this state and may be further defined by the department by rule.

(7) “Importing” means the act of bringing goods to a point of storage in this state from a location outside this state and may be further defined by the department by rule.

(8) “In this state” means within the exterior limits of the State of Oregon and includes all territory within these limits owned by or ceded to the United States of America.

(9) “Manufacturer” means any person who makes, manufactures or fabricates cigarettes for sale.

(10) “Package” means the individual package, box or other container in which retail sales or gifts of cigarettes are normally made or intended to be made.

(11) “Person” includes any individual, firm, copartnership, joint venture, association, social club, fraternal organization, corporation, estate, trust, receiver, trustee, syndicate, this state, any county, municipality, district or other political subdivision of the state, or any other group or combination acting as a unit.

(12) “Sale” includes any transfer of title or possession for a consideration, exchange or barter, in any manner or by any means whatsoever, but does not include the sale of cigarettes by a manufacturer to a distributor.

(13) “Taxpayer” means a distributor or other person required to pay a tax under ORS 323.005 to 323.482, and includes a distributor required to prepay a tax under section 3 of this 2003 Act.

(14) “Transporter” means any person importing or transporting into this state, or transporting in this state, cigarettes obtained from a source located outside this state, or from any person not licensed as a distributor under ORS 323.005 to 323.482. It does not include a licensed distributor, a common carrier to whom is issued a certificate or permit by the United States Surface Transportation Board to carry commodities in interstate commerce, or to a carrier of federal tax-free cigarettes in bond, or any person transporting no more than 199 cigarettes at any one time.

(15) “Untaxed cigarette” means any cigarette that has not yet been distributed in such manner as to result in a tax liability under ORS 323.005 to 323.482.

(16) “Use or consumption” includes the exercise of any right or power over cigarettes incident to the ownership thereof, other than the sale of the cigarettes or the keeping or retention thereof for the purpose of sale.

(17) “Wholesaler” means any dealer who engages in the sale of cigarettes to any other dealer for purposes other than use or consumption.

SECTION 2. ORS 323.015 is amended to read:

323.015. As used in ORS 323.005 to 323.482, unless the context requires otherwise:

(1) “Distribution” includes:

(a) The sale in this state of untaxed cigarettes.

(b) The use or consumption in this state of untaxed cigarettes.

(c) The receipt or retention in this state of untaxed cigarettes at a place of business where cigarettes are customarily sold or offered for sale to consumers.

(d) The placing of cigarettes in vending machines in this state.

(e) The use or consumption by the first person in possession in this state of untaxed cigarettes transported to the state in quantities of more than [200] 199 in a single shipment.

(f) Donations of sample cigarettes or gift cartons by the manufacturers [thereof] of the cigarettes, except sample packages containing not more than five cigarettes and labeled as “sample,” “not for sale” or with similar wording.

(g) The possession in this state of untaxed cigarettes that were transported to this state in quantities of more than 199, unless the person in possession of the untaxed cigarettes is in possession of the untaxed cigarettes in order to transport the cigarettes to a location outside this state.

(2) “Distributor” includes:

(a) [Every] Any person who [after July 1, 1966, and within the meaning of the term “distribution” as defined in this section,] distributes cigarettes.

(b) [Every] Any person who sells or accepts orders for cigarettes [which] that are to be transported from a point outside this state to a consumer within this state.

(c) Notwithstanding the provisions of ORS 323.010 [(4)] (5), any dealer who serves as the dealer’s own distributor or who buys directly from a manufacturer for resale in this state shall be deemed to be both a distributor and a dealer under ORS 323.005 to 323.482.

(3) “Distributor engaged in business in this state” includes any of the following:

(a) Any distributor maintaining, occupying or using, permanently or temporarily, directly or indirectly, or through a subsidiary or agent, by whatever name called, an office, place of distribution, sales or sample room or place, warehouse or storage place or any other place of business.

(b) A distributor having a representative, agent, salesperson, canvasser or solicitor operating in this state under the authority of the distributor or its subsidiary for the purpose of selling, delivering, or the taking of orders for cigarettes.

SECTION 3. Every distributor who sells or possesses for sale unstamped cigarettes in this state shall prepay all taxes imposed under ORS 323.005 to 323.482 prior to the sale of the cigarettes to any person in Oregon by purchasing cigarette tax stamps sold pursuant to ORS 323.005 to 323.482 and affixing those stamps to the unstamped packages of cigarettes.

SECTION 4. ORS 323.030 is amended to read:

323.030. (1) Every distributor shall pay a tax upon distributions of cigarettes at the rate of 29 mills for the distribution of each cigarette in this state.

(2) The taxes imposed by ORS 323.005 to 323.482 are in lieu of all other state, county or municipal taxes on the sale or use of cigarettes.

(3) Any cigarette with respect to which a tax has been prepaid under section 3 of this 2003 Act or has otherwise once been imposed under ORS 323.005 to 323.482 [shall] is not [be] subject upon a subsequent distribution to the taxes imposed by ORS 323.005 to 323.482.

SECTION 5. Section 3, chapter 385, Oregon Laws 1995, as amended by section 1, chapter 589, Oregon Laws 1997, section 10, chapter 1077, Oregon Laws 1999, and section 1, chapter 982, Oregon Laws 2001, is amended to read:

Sec. 3. (1) Notwithstanding ORS 323.030 (2) and in addition to and not in lieu of any other tax, every distributor[, as defined in ORS 323.015,] shall pay a tax upon distributions of cigarettes at the rate of five mills for the distribution of each cigarette in this state occurring prior to January 1, 2004.

(2) Any cigarette with respect to which a tax has been prepaid under section 3 of this 2003 Act or has otherwise once been imposed under ORS 323.005 to 323.482 [and this section shall] is not [be] subject upon a subsequent distribution to the taxes imposed by ORS 323.005 to 323.482 [and this section].

(3) All moneys received by the Department of Revenue from the tax imposed under this section shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of this section are continuously appropriated to the Department of Revenue from the suspense account.

[(3)] (4) After the payment of administrative and enforcement expenses and refunds, the moneys [received under this section] in the suspense account shall be paid over and credited to the General Fund and shall be used exclusively to fund the Oregon Health Plan as described under ORS 414.019.

SECTION 5a. Section 28, chapter 442, Oregon Laws 1995, is amended to read:

Sec. 28. Nothing in sections 1 (3) or 3 [(3)] (4), chapter 385, Oregon Laws 1995, requires the establishment of a dedicated fund account or a specific limitation for the expenditure of funds.

SECTION 5b. Section 5, chapter 869, Oregon Laws 2001, as amended by section 12, chapter 2, Oregon Laws 2002 (third special session), is amended to read:

Sec. 5. Notwithstanding ORS 323.455 and section 3, chapter 385, Oregon Laws 1995, if cigarette tax revenues for the biennium beginning July 1, 2001, that are dedicated to funding the Oregon Health Plan under ORS 323.455 (4) and section 3 [(3)] (4), chapter 385, Oregon Laws 1995, equal $175 million, any additional cigarette tax revenues raised during the biennium beginning July 1, 2001, from the taxes imposed under ORS 323.030 or section 3, chapter 385, Oregon Laws 1995, that otherwise would be distributed to the Oregon Health Plan shall be credited to the Senior Prescription Drug Assistance Fund established under ORS 414.348.

SECTION 5c. Section 2, chapter 2, Oregon Laws 2002 (third special session), is amended to read:

Sec. 2. (1) Notwithstanding ORS 323.030 (2) and in addition to and not in lieu of any other tax, every distributor shall pay a tax upon distributions of cigarettes at the rate of 30 mills for the distribution of each cigarette in this state.

(2) Any cigarette for which a tax has once been imposed under ORS 323.005 to 323.482 may not be subject upon a subsequent distribution to the taxes imposed by ORS 323.005 to 323.482.

(3) Moneys received under this section shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of this section are continuously appropriated to the Department of Revenue from the suspense account. After the payment of administrative and enforcement expenses and refunds:

(a) 29.37/30 of the moneys shall be credited to the Oregon Health Plan Fund established under section 9 [of this 2002 third special session Act], chapter 2, Oregon Laws 2002 (third special session);

(b) .14/30 of the moneys are continuously appropriated to the Oregon Department of Administrative Services for distribution to the cities of this state;

(c) .14/30 of the moneys are continuously appropriated to the Oregon Department of Administrative Services for distribution to the counties of this state;

(d) .14/30 of the moneys are continuously appropriated to the Department of Transportation to be distributed and transferred to the Elderly and Disabled Special Transportation Fund established under ORS 391.800; and

(e) .21/30 of the moneys shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

(4)(a) Moneys distributed to cities and counties under this section shall be distributed to each city or county using the proportions used for distributions made under ORS 323.455.

(b) Moneys shall be distributed to cities, counties and the Elderly and Disabled Special Transportation Fund at the same time moneys are distributed to cities, counties and the Elderly and Disabled Special Transportation Fund under ORS 323.455.

SECTION 5d. Section 3, chapter 385, Oregon Laws 1995, as amended by section 1, chapter 589, Oregon Laws 1997, section 10, chapter 1077, Oregon Laws 1999, section 1, chapter 982, Oregon Laws 2001, and section 5 of this 2003 Act, is amended to read:

Sec. 3. (1) Notwithstanding ORS 323.030 (2) and in addition to and not in lieu of any other tax, every distributor shall pay a tax upon distributions of cigarettes at the rate of five mills for the distribution of each cigarette in this state occurring prior to January 1, 2004.

(2) Any cigarette with respect to which a tax has been prepaid under section 3 of this 2003 Act or has otherwise once been imposed under ORS 323.005 to 323.482 is not subject upon a subsequent distribution to the taxes imposed by ORS 323.005 to 323.482.

(3) All moneys received by the Department of Revenue from the tax imposed under this section shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. [Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of this section are continuously appropriated to the Department of Revenue from the suspense account.]

(4) After the payment of [administrative and enforcement expenses and] refunds, the moneys in the suspense account shall be paid over and credited to the General Fund and shall be used exclusively to fund the Oregon Health Plan as described under ORS 414.019.

SECTION 5e. Section 2, chapter 2, Oregon Laws 2002 (third special session), as amended by section 5c of this 2003 Act, is amended to read:

Sec. 2. (1) Notwithstanding ORS 323.030 (2) and in addition to and not in lieu of any other tax, every distributor shall pay a tax upon distributions of cigarettes at the rate of 30 mills for the distribution of each cigarette in this state.

(2) Any cigarette for which a tax has once been imposed under ORS 323.005 to 323.482 may not be subject upon a subsequent distribution to the taxes imposed by ORS 323.005 to 323.482.

(3) Moneys received under this section shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. [Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of this section are continuously appropriated to the Department of Revenue from the suspense account.] After the payment of [administrative and enforcement expenses and] refunds:

(a) 29.37/30 of the moneys shall be credited to the Oregon Health Plan Fund established under section 9, chapter 2, Oregon Laws 2002 (third special session);

(b) .14/30 of the moneys are continuously appropriated to the Oregon Department of Administrative Services for distribution to the cities of this state;

(c) .14/30 of the moneys are continuously appropriated to the Oregon Department of Administrative Services for distribution to the counties of this state;

(d) .14/30 of the moneys are continuously appropriated to the Department of Transportation to be distributed and transferred to the Elderly and Disabled Special Transportation Fund established under ORS 391.800; and

(e) .21/30 of the moneys shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

(4)(a) Moneys distributed to cities and counties under this section shall be distributed to each city or county using the proportions used for distributions made under ORS 323.455.

(b) Moneys shall be distributed to cities, counties and the Elderly and Disabled Special Transportation Fund at the same time moneys are distributed to cities, counties and the Elderly and Disabled Special Transportation Fund under ORS 323.455.

SECTION 6. ORS 323.035 is amended to read:

323.035. The taxes imposed by ORS 323.005 to 323.482 [shall] do not apply to distributions of cigarettes by the manufacturer to a licensed distributor.

SECTION 7. ORS 323.040 is amended to read:

323.040. The taxes imposed by ORS 323.005 to 323.482 [shall] do not apply to the sale of cigarettes by a distributor to a common carrier engaged in interstate or foreign passenger service or to a person authorized to sell cigarettes on the facilities of [such] the carrier. Whenever cigarettes are sold by distributors to common carriers engaged in interstate or foreign passenger service for use or sale on facilities of the carriers, or to persons authorized to sell cigarettes on those facilities, the tax imposed by this section [shall] may not be levied with respect to sales of the cigarettes by the distributors, but a tax is hereby levied upon the carriers or upon the persons authorized to sell cigarettes on the facilities of the carriers, as the case may be, for the privilege of making [such] these sales in Oregon at the same rate that is imposed upon the distribution of cigarettes in this state for each cigarette sold. [Such] The common carriers and authorized persons shall pay the tax imposed by this section and file reports with the Department of Revenue as provided in ORS 323.355.

SECTION 8. ORS 323.050 is amended to read:

323.050. The taxes imposed by ORS 323.005 to 323.482 [shall] do not apply to cigarettes stored in a bonded warehouse and [which] that are nontax paid under the provisions of chapter 52 of the Internal Revenue Act of 1954, as amended.

SECTION 9. ORS 323.055 is amended to read:

323.055. The taxes imposed by ORS 323.005 to 323.482 [shall] do not apply to:

(1) The sale of cigarettes to United States Army, Air Force, Navy, Marine Corps, or Coast Guard exchanges and commissaries and Navy or Coast Guard ships’ stores, the United States Department of Veterans Affairs, ships’ stores maintained under federal bond, or to any person [which] that by virtue of the constitution or statutes of the United States cannot be made the subject of taxation by this state.

(2) The sale or gift of federally tax-free cigarettes when the cigarettes are delivered directly from the manufacturer under Internal Revenue bond to a veterans’ home or a hospital or domiciliary facility of the United States Department of Veterans Affairs for gratuitous issue to veterans receiving hospitalization or domiciliary care. The tax [shall] may not be imposed with respect to the use or consumption of [such] these cigarettes by the institution or by the veteran patients or domiciliaries.

SECTION 10. ORS 323.060 is amended to read:

323.060. (1) The taxes imposed by ORS 323.005 to 323.482 [shall] do not apply to the use or consumption of untaxed cigarettes transported to this state in a single lot or shipment of not more than [200] 199 cigarettes, or of not more than [200] 199 untaxed cigarettes obtained at one time from any of the instrumentalities listed in ORS 323.055 (1).

(2) [The] Any taxes resulting from a distribution of cigarettes [within the meaning of ORS 323.015 (1)(b)] for personal use or consumption in a quantity of more than 199 cigarettes shall be paid by the user or consumer.

SECTION 11. ORS 323.065 is amended to read:

323.065. Any claim for exemption from tax under ORS 323.005 to 323.482 shall be made to the Department of Revenue in [such] the manner [as it shall prescribe] the department prescribes.

SECTION 12. ORS 323.085 is amended to read:

323.085. (1) Unless the contrary is established, it shall be presumed that all cigarettes acquired by a distributor are untaxed cigarettes, and that all cigarettes manufactured in this state or transported to this state, and no longer in the possession of the distributor, have been distributed.

(2) All taxes paid pursuant to the provisions of ORS 323.005 to 323.482 [shall be presumed] are intended to be direct taxes on the retail consumer [precollected for the purpose of] for which required prepayment, through the purchase and affixation of tax stamps, is only to achieve convenience and facility [only] in the collection and administration of the tax. When the tax is paid by any [other] person[, such] other than the retail consumer, the payment shall be considered [as] an advance payment [and shall] to be added to the price of the cigarette and recovered from the [ultimate] retail consumer [or user]. Except for a person selling cigarettes through a vending machine or machines, any person selling cigarettes at retail shall state or separately display in the retail premises a notice of the amount of the tax included in the selling price and charged or payable pursuant to ORS 323.005 to 323.482. The provisions of this subsection [shall in no way] do not affect the method of [collection] prepayment of [such] the tax as provided by ORS 323.005 to 323.482.

SECTION 13. ORS 323.105 is amended to read:

323.105. (1) [Every] Any person [desiring] engaging or seeking to engage in the sale of cigarettes as a distributor[, except a person who desires merely to sell or accept orders for cigarettes which are to be transported from a point outside this state to a consumer within this state,] shall file an application for a distributor’s license with the Department of Revenue [an application, in such form as the department may prescribe, for a distributor’s license]. The application shall be on a form prescribed by the department.

(2) A distributor shall apply for and obtain a license for each place of business at which the distributor engages in the business of distributing cigarettes. [No fee shall be charged for such] A fee may not be charged for the license. For the purposes of this section, a vending machine in and of itself[, shall not be deemed] is not a place of business.

(3) A person may not engage in the business of distributing cigarettes to other persons in this state without a license.

SECTION 14. ORS 323.107 is amended to read:

323.107. (1) [Every] Any person [desiring] engaging or seeking to engage in the sale of cigarettes as a wholesaler shall file an application for a wholesaler’s license with the Department of Revenue. [an application, in such form as the department may prescribe, for a wholesaler’s license. No person shall] The application shall be on a form prescribed by the department. A person may not engage in business as a wholesaler without a license. A wholesaler’s license may be canceled, suspended, revoked or reinstated by the department as in the case of a distributor’s license pursuant to ORS 323.140.

(2) A wholesaler is subject to all the requirements of ORS 323.005 to 323.482 imposed upon distributors relating to making, preserving and supplying records necessary to effective administration by the department.

(3) A wholesaler is subject to all penalties applicable to a distributor for a violation of the provisions of ORS 323.005 to 323.482.

SECTION 15. ORS 323.130 is amended to read:

323.130. (1) Upon receipt of a completed application and [such] bonds or other security [as may be] required by the Department of Revenue under ORS 323.005 to 323.482, the department [shall] may issue a distributor’s license to the applicant [a license as a distributor]. A separate license shall be issued for each place of business of the distributor within the state. A license is valid only for engaging in business as a distributor at the place designated [thereon, and it] on the license. The license shall at all times be conspicuously displayed at the place for which issued. The license is not transferable and is valid until [canceled,] suspended or revoked.

(2) The department may not issue a license to an applicant if the department determines or has reason to believe that the applicant will not comply with the provisions of ORS 323.005 to 323.482 or any other state or federal cigarette tax law.

(3) Notwithstanding ORS 305.280 or 323.416, a decision by the department not to issue a license to an applicant may be appealed by the applicant to the magistrate division of the tax court within 30 days of the date of the decision of the department in the manner prescribed in ORS 305.404 to 305.560.

(4) For purposes of this section, an application to renew a distributor’s license shall be considered the same as an application for an initial distributor’s license.

SECTION 16. Notwithstanding ORS 323.403, information on the license of a distributor or wholesaler is not confidential. The Department of Revenue may publicly disclose or publish a list of names of distributors or wholesalers, along with any other information set forth on a license.

SECTION 17. ORS 323.140 is amended to read:

323.140. (1) [Whenever any distributor fails to comply with any provision of ORS 323.005 to 323.482 or any rule or regulation of the Department of Revenue prescribed and adopted under ORS 323.005 to 323.482,] The Department of Revenue may cancel, revoke or suspend the license held by [the] a distributor whenever the distributor fails to:

(a) Pay any tax or penalty due under ORS chapter 323;

(b) Otherwise comply with any provision of ORS chapter 323 or any rule thereunder; or

(c) Comply with any other state or federal cigarette tax law.

(2) The department [shall] may not issue a new license to a distributor whose license has been revoked unless [it] the department is satisfied that the distributor will comply with the provisions of ORS [323.005 to 323.482] chapter 323 and the rules [and regulations] of the department.

[(2)] (3) [Where] If the department [proposes] decides to refuse to [issue or] renew a license, or [proposes] decides to suspend or revoke a license, [opportunity for hearing shall be accorded as provided in ORS 305.501] the distributor may appeal to the tax court.

[(3) Judicial review of orders under subsection (1) of this section or under ORS 323.135 shall be as provided in ORS 305.445 and 305.501.]

(4) Notwithstanding ORS 305.280 or 323.416, an appeal of a decision of the department under subsection (1) of this section may be made to the magistrate division of the tax court within 30 days of the decision in the manner provided in ORS 305.404 to 305.560.

SECTION 18. ORS 323.160 is amended to read:

323.160. (1) The Department of Revenue shall furnish cigarette tax stamps for sale to distributors required under section 3 of this 2003 Act to prepay the taxes imposed under ORS 323.005 to 323.482.

[(1)] (2) Stamps shall be designed according to specifications and denominations prescribed by the department [of Revenue]. The department shall prescribe by rule the method and manner in which stamps are to be affixed to packages of cigarettes and may provide for the cancellation of stamps.

[(2)] (3) An appropriate stamp shall be affixed to each package of cigarettes prior to the distribution of the cigarettes.

SECTION 18a. ORS 323.170, as amended by section 10, chapter 2, Oregon Laws 2002 (third special session), is amended to read:

323.170. (1) Stamps shall be sold to a licensed distributor at their denominated values less a sum allowed as compensation to a distributor for services in affixing stamps to packages as required by ORS 323.005 to 323.482. Payment for stamps shall be made at the time of purchase, provided that a licensed distributor, subject to the conditions and provisions of ORS 323.005 to 323.482, may be permitted to defer stamp payments.

(2) The compensation to each distributor for each Oregon stamp sold during the calendar year shall be $0.004 per stamp.

(3) Payment for stamps shall be made in the form required by the Department of Revenue.

SECTION 19. ORS 323.220 is amended to read:

323.220. [Every] Any distributor and [every] any person dealing in, transporting or storing cigarettes in this state shall keep, on the premises [such records], receipts, invoices[,] and other pertinent [papers with respect thereto] records related to cigarette transactions, transportation or storage, in such form as the Department of Revenue may require[, and each such paper]. Each record shall be preserved for [four] five years from the time to which it relates. During the [four-year] five-year period and at any time prior to destruction of records, the department may give written notice to a distributor not to destroy records described in the notice without written permission from the department. Notwithstanding other provisions of law, reports and returns filed with the department shall be preserved by [it for four] the department for at least five years [and thereafter until the department orders them destroyed].

SECTION 20. ORS 323.225 is amended to read:

323.225. (1) Any transporter [desiring] seeking to possess or acquire untaxed cigarettes for transportation or transport upon the highways, roads or streets of this state shall obtain a permit from the Department of Revenue authorizing [such] the transporter to possess or acquire for transportation or transport the untaxed cigarettes, and shall have the permit in the transporting vehicle during the period of transportation of the cigarettes. The application for the permit shall be in such form and shall contain such information as may be prescribed by the department. The department may issue a permit for a single load or shipment or for a number of loads or shipments to be transported under specified conditions.

(2) Each transporter who [shall transport or possess or acquire] transports, or possesses or acquires for the purpose of transporting, untaxed cigarettes upon the highways, roads or streets of this state is required to have within the transporting vehicle invoices or bills of lading covering the shipment of cigarettes being transported [which shall show] that show the name and address of the consignor or seller, the name and address of the consignee or purchaser and the quantity and brands of cigarettes transported.

SECTION 21. ORS 323.240 is amended to read:

323.240. Whenever the Department of Revenue has good reason to believe that any cigarettes are being kept, sold, offered for sale or given away in violation of the provisions of ORS 323.005 to 323.482 or [regulations] rules issued under its authority, it may make affidavit of [such] that fact, describing the place or thing to be searched, before any judge of any court in this state, and such judge shall issue a search warrant directed to the sheriff, any constable, police officer, or duly authorized agent of the department, commanding the sheriff, constable, police officer or duly authorized agent of the department to enter and diligently search any building, room in a building, place or vehicle as may be designated in the affidavit and search warrant, and to seize such cigarettes together with any vending machine or receptacle containing them and any vehicle carrying them, and to arrest the person in possession or control thereof. If, upon the return of such warrant, it shall appear that tax payable upon the cigarettes seized has not been paid or prepaid, if prepayment is required under section 3 of this 2003 Act, the cigarettes, containers and vehicle, if any, shall be forfeited to the state and [sold] disposed of pursuant to ORS 323.245 or section 29 of this 2003 Act.

SECTION 22. ORS 323.245 is amended to read:

323.245. (1) Whenever the Department of Revenue discovers any cigarettes subject to tax under ORS 323.005 to 323.482 and with respect to which the tax has not been paid or prepaid, if prepayment is required under section 3 of this 2003 Act, it is hereby authorized and empowered forthwith to seize and take possession of [such] the untaxed cigarettes together with any vending machine or receptacle in which they are held for sale and any vehicle in which they are being transported. [Such] The seized cigarettes, vending machine, [or] receptacle[, and] or vehicle, not including money contained in [such] the vending machine or receptacle, shall be forfeited to the state, and the clear proceeds shall be deposited with the State Treasury in the Common School Fund. The department may, within a reasonable time thereafter, by public notice at least 20 days before the date of sale, sell [such forfeited cigarettes, vending machines or receptacles, and vehicle,] the forfeited vending machines, receptacles and vehicles at public sale. Forfeited cigarettes constitute contraband cigarettes subject to section 29 of this 2003 Act.

(2) Notwithstanding the provisions of subsection (1) of this section, the person from whom cigarettes were seized may redeem [the cigarettes and] any vending machine, [or] receptacle [and] or vehicle seized [therewith] at the time the cigarettes are seized, within 20 days from the date of seizure, by the payment of the tax due together with a penalty of 100 percent thereof and the costs incurred in [such] the seizure proceeding, which total payment [shall] may not be less than $100[; however, such]. The seizure, sale or redemption [shall] does not relieve [any such] the person from fine or imprisonment as provided for violation of any provision of ORS 323.005 to 323.482.

(3) Notwithstanding the provisions of subsection (1) of this section, the owner of [such seized cigarettes,] a seized vending machine, receptacle or vehicle shall have the right of redemption provided in subsection (2) of this section for a period of 60 days from the date of [such] the seizure if the owner claims [such] that right prior to the redemption provided for in subsection (2) of this section.

(4) Notwithstanding the provisions of subsections (1), (2) and (3) of this section, the owner of a vending machine [which] that is seized for failure to comply with ORS 323.211 may redeem the seized vending machine [and its contents] within a period of 60 days from the date of [such] the seizure by the payment of $25 plus costs of $15 or the actual costs incurred in [such] the seizure proceedings, whichever is greater.

SECTION 23. ORS 323.335 is amended to read:

323.335. (1) Each distributor shall, along with the report filed as prescribed under ORS 323.340, submit quarterly a remittance payable to the Department of Revenue for the amount of tax due, but not yet paid or prepaid, under ORS 323.005 to 323.482.

(2) [For taxpayers other than licensed distributors, when] If the tax imposed under ORS 323.005 to 323.482 is not [paid] prepaid through the use of stamps, the tax shall be due and payable monthly on or before the 20th day of the month following the calendar month in which a distribution of cigarettes occurs.

(3) In the case of a sale of cigarettes on the facilities of a common carrier for which the tax is imposed pursuant to ORS 323.040, the tax shall be due and payable monthly on or before the 20th day of the month following the calendar month in which a sale of cigarettes on the facilities of the carrier occurs.

SECTION 24. ORS 323.360 is amended to read:

323.360. [Every] Any consumer or user subject to the tax resulting from a distribution of cigarettes [within the meaning of ORS 323.015 (1)(b)] and from whom the tax has not been [collected under ORS 323.075] paid shall on or before the 20th day of the month following receipt of cigarettes file with the Department of Revenue a report of the amount of cigarettes received by the consumer or user in the preceding calendar month in [such] the detail and form as the department may prescribe, submitting with the report the amount of tax due.

SECTION 25. ORS 323.401 is amended to read:

323.401. (1) The Department of Revenue is authorized to enter into a cigarette tax refund agreement with the governing body of any Indian reservation in Oregon. The agreement may provide for a mutually agreed upon amount as a refund to the governing body of any cigarette tax [precollected] prepaid on sales of cigarettes to Indians upon the reservation and paid into the State Treasury [after April 27, 1976]. This provision is in addition to other laws allowing tax refunds.

(2) There is [annually] continuously appropriated to the Department of Revenue from the suspense account established under ORS 293.445 and 323.455, the amounts necessary to make the refunds provided by subsection (1) of this section.

SECTION 25a. ORS 323.416 is amended to read:

323.416. (1) Except as otherwise provided in ORS 323.005 to 323.482, any person aggrieved by an act or determination of the Department of Revenue or its authorized agent under ORS 323.005 to 323.482 may appeal to the Oregon Tax Court in the time and manner provided in ORS 305.404 to 305.560. [The appeals rights provided herein shall be the exclusive remedy available to determine the liability of such person] These appeal rights shall be the exclusive remedy available to determine the person’s liability for the taxes imposed by ORS 323.005 to 323.482.

(2) An appeal to the Oregon Tax Court under ORS 323.005 to 323.482 [shall not stay] stays proceedings to collect any unpaid tax [if] unless the tax court believes the collection of the tax will be jeopardized by delay[, unless it be otherwise ordered by the court] or otherwise orders collection proceedings to continue.

SECTION 26. ORS 323.420 is amended to read:

323.420. (1) The [failure to do any act required by or under the provisions] violation of any provision of ORS 323.005 to 323.482 or any rule adopted thereunder shall be deemed an act committed in part at the office of the Department of Revenue in Salem, Oregon, and venue shall lie in Marion County, Oregon.

(2) The certificate of the department to the effect that a tax has not been prepaid or paid, that a return has not been filed or that information has not been supplied, as required by or under the provisions of ORS 323.005 to 323.482, shall be prima facie evidence that [such] the tax has not been prepaid or paid, [or that such] that the return has not been filed or that [such] the information has not been supplied.

SECTION 27. ORS 323.435 is amended to read:

323.435. (1) In addition to all other remedies specified in ORS 323.005 to 323.482, action may be brought by the Attorney General, at the [instance] request of the Department of Revenue, in the name of the state, to recover the amount of any taxes, penalties and interest due under ORS 323.005 to 323.482, if the action for recovery is commenced within three years from the time the tax is due to be paid.

(2) The Attorney General shall have authority to investigate any criminal violation of ORS 323.005 to 323.482.

SECTION 27a. ORS 323.455 is amended to read:

323.455. (1) All moneys received by the Department of Revenue from the tax imposed by ORS 323.030 (1) shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of ORS 323.005 to 323.482 are continuously appropriated to the Department of Revenue from the suspense account. After the payment of administrative and enforcement expenses and refunds, 89.65 percent shall be credited to the General Fund, 3.45 percent is appropriated to the cities of this state, 3.45 percent is appropriated to the counties of this state and 3.45 percent is continuously appropriated to the Department of Transportation for the purpose of financing and improving transportation services for elderly and disabled individuals as provided in ORS 391.800 to 391.830.

(2) The moneys so appropriated to cities and counties shall be paid on a monthly basis within 35 days after the end of the month for which a distribution is made. Each city shall receive such share of the money appropriated to all cities as its population, as determined under ORS 190.510 to 190.590 last preceding such apportionment, bears to the total population of the cities of the state, and each county shall receive such share of the money as its population, determined under ORS 190.510 to 190.590 last preceding such apportionment, bears to the total population of the state.

(3) The moneys appropriated to the Department of Transportation under subsection (1) of this section shall be distributed and transferred to the Elderly and Disabled Special Transportation Fund established by ORS 391.800 at the same time as the cigarette tax moneys are distributed to cities and counties under this section.

(4) Of the moneys credited to the General Fund under this section 51.92 percent shall be dedicated to funding the maintenance and expansion of the number of persons eligible for medical assistance under the Oregon Health Plan, or to funding the maintenance of the benefits available under the Oregon Health Plan, or both, and 5.77 percent shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

SECTION 27b. ORS 323.455, as amended by section 27a of this 2003 Act, is amended to read:

323.455. (1) All moneys received by the Department of Revenue from the tax imposed by ORS 323.030 (1) shall be paid over to the State Treasurer to be held in a suspense account established under ORS 293.445. [Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of ORS 323.005 to 323.482 are continuously appropriated to the Department of Revenue from the suspense account.] After the payment of [administrative and enforcement expenses and] refunds, 89.65 percent shall be credited to the General Fund, 3.45 percent is appropriated to the cities of this state, 3.45 percent is appropriated to the counties of this state and 3.45 percent is continuously appropriated to the Department of Transportation for the purpose of financing and improving transportation services for elderly and disabled individuals as provided in ORS 391.800 to 391.830.

(2) The moneys so appropriated to cities and counties shall be paid on a monthly basis within 35 days after the end of the month for which a distribution is made. Each city shall receive such share of the money appropriated to all cities as its population, as determined under ORS 190.510 to 190.590 last preceding such apportionment, bears to the total population of the cities of the state, and each county shall receive such share of the money as its population, determined under ORS 190.510 to 190.590 last preceding such apportionment, bears to the total population of the state.

(3) The moneys appropriated to the Department of Transportation under subsection (1) of this section shall be distributed and transferred to the Elderly and Disabled Special Transportation Fund established by ORS 391.800 at the same time as the cigarette tax moneys are distributed to cities and counties under this section.

(4) Of the moneys credited to the General Fund under this section 51.92 percent shall be dedicated to funding the maintenance and expansion of the number of persons eligible for medical assistance under the Oregon Health Plan, or to funding the maintenance of the benefits available under the Oregon Health Plan, or both, and 5.77 percent shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

SECTION 28. ORS 323.480 is amended to read:

323.480. (1)(a) A civil penalty may be imposed [in the manner provided in ORS 183.090] by the Department of Revenue on any person who violates any provision of ORS 323.005 to 323.482. [A civil penalty imposed under this subsection may not exceed $1,000 per violation.]

(b) A civil penalty imposed under this subsection may not exceed $1,000 per violation.

(c) A penalty imposed under this section may be appealed to the magistrate division of the tax court. Appeal of a magistrate decision may be made as provided in ORS 305.445 and 305.501.

[(2)(a)] (2) Any person required to obtain a license as a distributor under ORS 323.005 to 323.482 who[, with the intent to defeat or evade the requirement that the person be licensed,] knowingly engages in business as a distributor without a license or after a license has been [canceled,] suspended or revoked[, and each officer of any corporation that engages in business with that intent,] is guilty of a Class C felony.

[(b) This subsection does not apply to a person who distributes fewer than 60,000 cigarettes.]

(3) Any person required to make, render, sign or verify any report under ORS 323.005 to 323.482 who makes any false report with the intent to [defeat or evade any requirement imposed on the person by ORS 323.005 to 323.482] defraud is guilty of a Class C felony.

(4)(a) Any transporter who knowingly violates the provisions of ORS 323.225 [with the intent to defeat or evade a requirement imposed by ORS 323.225, or with the intent to aid another to defeat or evade the determination or payment of a cigarette tax imposed under ORS 323.005 to 323.482,] is guilty of a Class C felony.

(b) This subsection does not apply to a transporter who transports or possesses or acquires for the purpose of transporting fewer than 60,000 cigarettes.

(5) Any person who knowingly violates any provisions of ORS 323.005 to 323.482, except as otherwise provided in this section, [with the intent to defeat or evade a requirement imposed on the person by ORS 323.005 to 323.482,] is guilty of a Class A misdemeanor.

(6) [A] Any person who files a fraudulent refund claim under ORS 323.320 is guilty of a Class C felony.

(7) Any person who, with intent to defraud, makes, alters, forges or utters a false receipt or invoice recording a sale of cigarettes in this state is guilty of a Class C felony.

[(7)] (8) In addition to any other sentence the court may impose upon a conviction under this section, the court may order the forfeiture of the instrumentalities used in violating [this section] ORS 323.005 to 323.482 and the proceeds resulting from a violation of [this section] ORS 323.005 to 323.482.

SECTION 29. (1) Any contraband cigarettes found by an authorized representative of the Department of Revenue or any law enforcement agency may be immediately seized and subject to forfeiture. If seized and forfeited under this subsection, the cigarettes shall be destroyed.

(2) Notwithstanding ORS 305.280 or 323.416, a seizure and forfeiture made under this section may be appealed to the magistrate division of the tax court within 30 days of the date of the seizure in the manner provided in ORS 305.404 to 305.560.

SECTION 30. ORS 323.482 is amended to read:

323.482. (1) A person commits the crime of unlawful distribution of cigarettes if the person knowingly sells or distributes, possesses or transports for sale or distribution or imports for sale or distribution cigarettes that do not comply with ORS 323.005 to 323.482 or 323.850 to 323.862, the Federal Cigarette Labeling and Advertising Act (15 U.S.C. 1331 et seq.), 19 U.S.C. 1681a or section 5754 of the Internal Revenue Code, or implementing regulations of the federal laws listed in this subsection.

(2) The offense of unlawful distribution of cigarettes is [a Class A misdemeanor.] classified as follows:

(a) If the number of cigarettes involved in the offense over a 90-day period totals 12,000 or less, the offense is a Class A misdemeanor.

(b) If the number of cigarettes involved in the offense over a 90-day period totals more than 12,000 but 60,000 or less, the offense is a Class C felony classified as crime category 3 of the sentencing guidelines grid of the Oregon Criminal Justice Commission.

(c) If the number of cigarettes involved in the offense over a 90-day period totals more than 60,000 but 120,000 or less, the offense is a Class C felony classified as crime category 5 of the sentencing guidelines grid of the Oregon Criminal Justice Commission.

(d) If the number of cigarettes involved in the offense over a 90-day period totals more than 120,000, the offense is a Class B felony classified as crime category 7 of the sentencing guidelines grid of the Oregon Criminal Justice Commission.

(3) Cigarettes sold, distributed, possessed, transported or imported in violation of subsection (1) of this section are contraband and subject to seizure and forfeiture. If seized and forfeited under this subsection, the cigarettes shall be destroyed.

(4) In addition to any other sentence the court may impose upon a conviction under this section, the court may order the forfeiture of the instrumentalities used in violating this section and the proceeds resulting from a violation of this section.

(5) A person who manufactures, distributes or sells cigarettes and who sustains a direct economic or commercial injury as a result of a violation of subsection (1) of this section may bring in good faith an action for appropriate injunctive relief.

(6) The penalties set forth in this section are in addition to and not in lieu of any other applicable penalties or sanctions.

TOBACCO PRODUCTS TAX

SECTION 31. ORS 323.500 is amended to read:

323.500. As used in [the Tobacco Products Tax Act] ORS 323.500 to 323.640, unless the context otherwise requires:

(1) “Business” means any trade, occupation, activity or enterprise engaged in for the purpose of selling or distributing tobacco products in this state.

(2) “Cigar” means a roll for smoking that is of any size or shape and that is made wholly or in part of tobacco, irrespective of whether the tobacco is pure or flavored, adulterated or mixed with any other ingredient, if the roll has a wrapper made wholly or in greater part of tobacco and if 1,000 of these rolls collectively weigh more than three pounds. “Cigar” does not include a cigarette, as defined [under] in ORS 323.010 [(1)].

(3) “Consumer” means any person who purchases tobacco products in this state for the person’s use or consumption or for any purpose other than for reselling the tobacco products to another person.

(4) “Contraband tobacco products” means tobacco products or packages containing tobacco products:

(a) That do not comply with the requirements of ORS 323.500 to 323.640;

(b) That do not comply with the requirements of the tobacco products tax laws of the federal government or of other states; or

(c) That bear trademarks that are counterfeit under ORS 647.135 or other state or federal trademark laws.

[(3)] (5) “Department” means the Department of Revenue.

(6) “Distribute” means:

(a) Bringing, or causing to be brought, into this state from without this state tobacco products for sale, storage, use or consumption;

(b) Making, manufacturing or fabricating tobacco products in this state for sale, storage, use or consumption in this state;

(c) Shipping or transporting tobacco products to retail dealers in this state, to be sold, stored, used or consumed by those retail dealers;

(d) Storing untaxed tobacco products in this state that are intended to be for sale, use or consumption in this state;

(e) Selling untaxed tobacco products in this state; or

(f) As a consumer, being in possession of untaxed tobacco products in this state.

[(4)] (7) “Distributor” means:

(a) Any person engaged in the business of selling tobacco products in this state who brings, or causes to be brought, into this state from without the state any tobacco products for sale;

(b) Any person who makes, manufactures or fabricates tobacco products in this state for sale in this state; [or]

(c) Any person engaged in the business of selling tobacco products without this state who ships or transports tobacco products to [retailers] retail dealers in this state, to be sold by those [retailers] retail dealers;

(d) Any person, including a retail dealer, who sells untaxed tobacco products in this state; or

(e) A consumer in possession of untaxed tobacco products in this state.

[(5)] (8) “Manufacturer” means a person who manufactures [and sells] tobacco products for sale.

[(6)] (9) “Place of business” means any place where tobacco products are sold or where tobacco products are manufactured, stored or kept for the purpose of sale or consumption, including any vessel, vehicle, airplane, train or vending machine.

[(7)] (10) “Retail dealer” means [every] any person[, other than a distributor, manufacturer or subjobber] who is engaged in the business of selling or otherwise dispensing [to ultimate consumers any tobacco product] tobacco products to consumers. The term also includes the operators of or recipients of revenue from all places such as smoke shops, cigar stores and vending machines, where tobacco products are made or stored for ultimate sale to consumers.

[(8)] (11) “Sale” means any transfer, exchange or barter, in any manner or by any means [whatsoever], for a consideration, and includes and means all sales made by any person. It includes a gift by a person engaged in the business of selling tobacco products, for advertising, as a means of evading the provisions of ORS 323.500 to 323.645, or for any other [purposes whatsoever] purpose.

[(9) “Subjobber” means any person, other than a manufacturer or distributor, who buys tobacco products from a distributor and sells them to persons other than the ultimate consumers.]

(12) “Taxpayer” includes a distributor or other person required to pay a tax imposed under ORS 323.500 to 323.640.

[(10)] (13) “Tobacco products” means cigars, cheroots, stogies, periques, granulated, plug cut, crimp cut, ready rubbed and other smoking tobacco, snuff, snuff flour, cavendish, plug and twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking, but shall not include cigarettes as defined in ORS 323.010 [(1)].

[(11) “Wholesale sales price” means the established price for which a manufacturer sells a tobacco product to a distributor, after any discount or other reduction for quantity or cash.]

(14) “Untaxed tobacco products” means tobacco products for which the tax required under ORS 323.500 to 323.640 has not been paid.

(15) “Wholesale sales price” means the price paid for untaxed tobacco products to or on behalf of a seller by a purchaser of the untaxed tobacco products.

SECTION 32. ORS 323.505, as amended by section 48, chapter 46, Oregon Laws 2003 (Enrolled House Bill 2424), is amended to read:

323.505. (1) A tax is hereby imposed upon the [sale, storage, use, consumption, handling or] distribution of all tobacco products in this state. The tax imposed by this section is intended to be a direct tax on the consumer, for which payment upon distribution is required to achieve convenience and facility in the collection and administration of the tax. The tax shall be imposed on [distributors] a distributor at the time the distributor[:] distributes tobacco products.

[(a) Brings, or causes to be brought, into this state from without the state tobacco products for sale, storage, use or consumption;]

[(b) Makes, manufactures or fabricates tobacco products in this state for sale, storage, use or consumption in this state; or]

[(c) Ships or transports tobacco products to retail dealers in this state, to be sold, stored, used or consumed by those retail dealers.]

(2) The tax imposed under this section shall be imposed at the rate of:

(a) Sixty-five percent of the wholesale sales price of cigars, but not to exceed 50 cents per cigar; or

(b) Sixty-five percent of the wholesale sales price of all tobacco products that are not cigars.

(3) If the tax imposed under this section does not equal an amount calculable to a whole cent, the tax shall be equal to the next higher whole cent. However, the amount remitted to the Department of Revenue by the taxpayer for each quarter shall be equal only to 98.5 percent of the total taxes due and payable by the taxpayer for the quarter.

(4) No tobacco product shall be subject to the tax if the base product or other intermediate form thereof has previously been taxed under this section.

[(5) Notwithstanding any provision of the Tobacco Products Tax Act to the contrary, the tax imposed by this section may be paid by the manufacturer or any other person or entity instead of the taxpayer from whom such tax would otherwise be due. In the event of payment by another person or entity, the taxpayer shall be excused from payment of the amount of the tax that has been so paid if, together with the return required under ORS 323.510, the taxpayer supplies evidence satisfactory to the department or in a form prescribed by the department showing that such tax has been so paid.]

SECTION 33. ORS 323.510 is amended to read:

323.510. (1) Except as otherwise provided in [the Tobacco Products Tax Act] ORS 323.500 to 323.640, the tax imposed by ORS 323.505 and 323.565 shall be paid by each distributor and each common carrier or authorized person specified in ORS 323.565 to the Department of Revenue on or before the last day of January, April, July and October of each year for the preceding calendar quarter.

(2) With each quarterly payment, the taxpayer shall submit a return to the department, in such form and containing such information as the department shall prescribe.

(3) The tax, penalties and interest imposed by [the Tobacco Products Tax Act] ORS 323.500 to 323.640 shall be a personal debt, from the time liability is incurred, owed by the taxpayer to the State of Oregon until paid.

(4) The returns required of distributors and common carriers or authorized persons specified in ORS 323.565 under this section shall be filed by [all such] the distributors, common carriers or authorized persons regardless of whether any tax is owed by them.

(5) The department for good cause may extend [for not to exceed one month] the time for making any return under [the Tobacco Products Tax Act] ORS 323.500 to 323.640. The extension may be granted at any time if a written request [therefor] is filed with the department within or prior to the period for which the extension may be granted. The department may not grant an extension of more than one month. When the time for filing a return is extended at the request of a taxpayer, interest at the rate established under ORS 305.220, for each month, or fraction of a month, from the time the return was originally required to be filed to the time of payment, shall be added and paid.

SECTION 34. ORS 323.520 is amended to read:

323.520. (1) [Every] Any person [desiring] engaging or seeking to engage in the sale of tobacco products as a distributor [or subjobber, except a person who desires merely to sell or accept orders for tobacco products which are to be transported from a point outside this state to a consumer within this state, shall file with the Department of Revenue an application, in such form as the department may prescribe, for a license] shall file an application for a distributor’s license with the Department of Revenue. The application shall be on a form prescribed by the department. A distributor [or subjobber] shall apply for and obtain a license for each place of business at which the distributor [or subjobber] engages in the business of distributing tobacco products. [No fee shall] A fee may not be charged for [such] the license. For the purposes of this section, a vending machine in and of itself[, shall not be deemed] is not a place of business.

(2) A person may not engage in the business of distributing tobacco products in this state without a license.

SECTION 35. ORS 323.525 is amended to read:

323.525. (1) [If the Department of Revenue considers such action necessary to insure compliance with the Tobacco Products Tax Act, it may require any person subject to the Tobacco Products Tax Act] The Department of Revenue may require any person subject to ORS 323.500 to 323.640 to place with the department [such] an amount of security [as the department may determine] that the department determines is necessary to ensure compliance with ORS 323.500 to 323.640.

(2) The amount of the security shall be fixed by the department but, except as provided in subsection (3) of this section, may not be greater than twice the estimated tax liability of a person for the reporting period under [the Tobacco Products Tax Act] ORS 323.500 to 323.640, determined in [such manner as] a manner the department considers proper.

(3) In case of a person who, pursuant to ORS 323.535, [has been given notice of proposed revocation or suspension of permit,] has appealed the decision of the department to suspend or revoke a license, the amount of the security may not be greater than twice the tax liability of the person for the reporting period under [the Tobacco Products Tax Act] ORS 323.500 to 323.640, determined in [such manner as] a manner the department considers proper, or $10,000, whichever is greater.

(4) The limitations provided in this section apply regardless of the type of security placed with the department. The required amount of the security may be increased or decreased by the department subject to the limitations provided in this section.

SECTION 36. ORS 323.530 is amended to read:

323.530. (1) Upon receipt of a completed application and [such security as may be] any security required by the Department of Revenue under [the Tobacco Products Tax Act] ORS 323.500 to 323.640, the department shall issue [to the applicant a license as a distributor or subjobber] a distributor’s license to an applicant. A separate license shall be issued for each place of business of the distributor [or subjobber] within the state. Each license issued by the department shall include an identification number for the license. A license is valid only for engaging in business as a distributor [or subjobber] at the place designated thereon, and it shall at all times be conspicuously displayed at the place for which issued. The license is not transferable and is valid until canceled, suspended or revoked.

(2) The department may not issue a license to an applicant if the department determines or has reason to believe that the applicant will not comply with the provisions of ORS chapter 323 or any other state or federal tobacco products tax law.

(3) Notwithstanding ORS 305.280, a decision by the department not to issue a license to an applicant may be appealed by the applicant to the magistrate division of the tax court within 30 days of the date of the decision of the department in the manner prescribed in ORS 305.404 to 305.560.

(4) For purposes of this section, an application to renew a distributor’s license shall be considered the same as an application for an initial distributor’s license.

SECTION 36a. Notwithstanding ORS 323.595, information on the license of a distributor is not confidential. The Department of Revenue may publicly disclose or publish a list of names of distributors, along with any other information set forth on a license.

SECTION 37. ORS 323.535 is amended to read:

323.535. (1) [If any person fails to comply with any provision of the Tobacco Products Tax Act relating to the tax or any rule of the Department of Revenue relating to the tax adopted under the Tobacco Products Tax Act, the department may suspend or revoke the permit or permits held by the person. The department shall not issue a new permit after the revocation of a permit unless it is satisfied that the former holder of the permit will comply with the provisions of the Tobacco Products Tax Act relating to the tax and the rules of the department.] The Department of Revenue may cancel, suspend or revoke a license issued to a distributor if the distributor fails to:

(a) Pay any tax or penalty due under ORS chapter 323;

(b) Otherwise comply with any provision of ORS chapter 323 or any rule adopted thereunder; or

(c) Comply with any other state or federal tobacco products tax law.

(2) [If the department proposes to refuse to issue or renew a permit, or proposes to suspend or revoke a permit, the department shall give notice of the proposed refusal, suspension or revocation at least 30 days before the refusal, suspension or revocation will be final. Appeal following the notice of the determination may be taken to the tax court in the manner provided in ORS 305.404 to 305.560.] Notwithstanding ORS 305.280, a decision by the department to cancel, suspend or revoke a license may be appealed by the distributor to the magistrate division of the tax court within 30 days of the date of the decision of the department under subsection (1) of this section, in the manner provided in ORS 305.404 to 305.560.

SECTION 38. ORS 323.540 is amended to read:

323.540. (1) [Every] Any distributor, and [every] any person dealing in, transporting or storing tobacco products, shall keep at each registered place of business complete and accurate records for that place of business, including itemized invoices, of tobacco products held, purchased, manufactured, brought in or caused to be brought in from without the state or shipped or transported to retail dealers in this state, and of all sales of tobacco products made, except sales to [the ultimate consumer] consumers.

(2) The records required by subsection (1) of this section shall show the names and addresses of purchasers[, the inventory of all tobacco products on hand on January 1, 1986,] and other pertinent papers and documents relating to the purchase, sale or disposition of tobacco products.

(3) When a licensed distributor sells tobacco products exclusively to [the ultimate consumer] consumers at the address given in the certificate[, no invoice of those sales shall be required, but] and sells only tobacco products for which taxes imposed under ORS 323.500 to 323.640 have been paid prior to sale, an invoice of any individual sale of less than 100 cigars or of tobacco products with a wholesale sales price of less than $50 is not required. Itemized invoices [shall be made] of all tobacco products transferred to other places of business owned or controlled by that licensed distributor shall be made and retained.

(4)(a) All books, records and other papers and documents required by this section to be kept shall be preserved for a period of at least five years after the initial date of the books, records and other papers or documents, or the date of entries appearing therein, unless the Department of Revenue, in writing, authorizes their destruction or disposal at an earlier date.

(b) The department or its authorized representative, upon oral or written demand, may make such examinations of the books, papers, records and equipment required to be kept under this section as it may deem necessary in carrying out the provisions of [the Tobacco Products Tax Act] ORS 323.500 to 323.640.

(c) If the department, or any of its agents or employees, are denied free access or are hindered or interfered with in making such examination, the license of the distributor at such premises shall be subject to cancellation, suspension or revocation by the department.

SECTION 39. (1) A sales invoice for the wholesale sale of tobacco products in this state, including a sales invoice required under ORS 323.540, shall contain the following:

(a) The name and address of the seller, the name and address of the purchaser, the date of the sale of tobacco products, the quantity and product description of tobacco products, the price paid for tobacco products and any discount applied in determining the price paid for tobacco products;

(b) The applicable license identification number for the distributor;

(c) A certified statement by the distributor of the tobacco products that all taxes due under ORS 323.500 to 323.640 have been or will be paid; and

(d) Any other information the Department of Revenue may prescribe by rule.

(2) A distributor must provide a copy of the sales invoice to the purchaser of the tobacco product and the purchaser shall retain a copy of the invoice for five years following the date of purchase.

(3) Each purchaser that then sells the tobacco products to a subsequent purchaser shall provide the subsequent purchaser with a sales invoice that meets the requirements of this section.

(4)(a) A purchaser in possession of tobacco products who is unable to present a sales invoice that meets the requirements of this section is presumed to be in possession of tobacco products for which the tax imposed under ORS 323.500 to 323.640 has not been paid.

(b) In the case of a purchaser in possession of untaxed tobacco products, the tax is due immediately, along with a penalty equal to 100 percent of the tax due. Amounts due under this paragraph may be collected as provided in ORS 323.605.

(c) If the purchaser in possession of untaxed tobacco products is a retail dealer, the Department of Revenue may impose a civil penalty for the possession of untaxed tobacco products. A civil penalty imposed under this paragraph may not exceed $1,000 per violation. A penalty imposed under this paragraph may be appealed to the magistrate division of the tax court in the time and manner prescribed in ORS 305.404 to 305.560.

(5) This section does not apply to a consumer in possession of less than 100 cigars or tobacco products with a wholesale sales price of less than $50.

NOTE: Section 40 was deleted by amendment. Subsequent sections were not renumbered.

SECTION 41. ORS 323.555 is amended to read:

323.555. Records of all deliveries or shipments of tobacco products from any public warehouse of first destination in this state shall be kept by the warehouse and be available to the Department of Revenue for inspection. [They] The records shall show the name and address of the consignee, the date, the quantity of tobacco products delivered and [such] any other information [as] the department may require. These records shall be preserved for five years from the date of delivery of the tobacco products.

SECTION 42. ORS 323.560 is amended to read:

323.560. [Where] When tobacco products, upon which the tax imposed [by ORS 323.505] under ORS 323.500 to 323.640 has been reported and paid, are shipped or transported by the distributor to retail dealers [without the] outside this state, to be sold by those retail dealers, or are returned to the manufacturer by the distributor or destroyed by the distributor, credit [of such] for the paid tax may be made to the distributor.

SECTION 43. ORS 323.565 is amended to read:

323.565. The taxes imposed by [the Tobacco Products Tax Act shall] ORS 323.500 to 323.640 do not apply to the sale of tobacco products by a distributor to a common carrier engaged in interstate or foreign passenger service or to a person authorized to sell tobacco products on the facilities of [such] a common carrier. Whenever tobacco products are sold by distributors to common carriers engaged in interstate or foreign passenger service for use or sale on facilities of the carriers, or to persons authorized to sell tobacco products on those facilities, the tax imposed by this section [shall] may not be levied with respect to sales of the tobacco products by the distributors, but a tax is hereby levied upon the carriers or upon the persons authorized to sell tobacco products on the facilities of the carriers, as the case may be, for the privilege of making [such] these sales in Oregon at the same rate that is imposed upon the distribution of tobacco products in this state. [Such] The common carriers and authorized persons shall pay the tax imposed by this section and file returns with the Department of Revenue as provided in ORS 323.510.

SECTION 44. ORS 323.575 is amended to read:

323.575. The Department of Revenue shall administer and enforce [the Tobacco Products Tax Act] ORS 323.500 to 323.640. The department is authorized to establish those rules and procedures for the implementation and enforcement of [the Tobacco Products Tax Act] ORS 323.500 to 323.640 that are consistent with its provisions and [as are] considered necessary and appropriate.

SECTION 45. ORS 323.585 is amended to read:

323.585. The provisions of ORS 314.400 apply to a person who fails to file a return required under [the Tobacco Products Tax Act or who] ORS 323.500 to 323.640 or fails to pay a tax at the time the tax becomes due, and no extension is granted under ORS 323.510, or if the time granted as an extension has expired and the person fails to file a return or pay a tax.

SECTION 46. (1) Except as otherwise provided in ORS 323.500 to 323.640, any person aggrieved by an act or determination of the Department of Revenue or its authorized agent under ORS 323.500 to 323.640 may appeal to the Oregon Tax Court in the time and manner provided in ORS 305.404 to 305.560. These appeal rights shall be the exclusive remedy available to determine the person’s liability for the taxes imposed under ORS 323.500 to 323.640.

(2) An appeal to the Oregon Tax Court under ORS 323.500 to 323.640 stays proceedings to collect any unpaid tax unless the tax court believes the collection of the tax will be jeopardized by delay or otherwise orders collection proceedings to continue.

SECTION 47. ORS 323.595 is amended to read:

323.595. Except as otherwise provided in ORS 323.500 to 323.640 or where the context requires otherwise, the provisions of ORS chapters 305 and 314 as to the audit and examination of returns, periods of limitations, determination of and notices of deficiencies, assessments, liens, delinquencies, claims for refund and refunds, conferences, appeals to the Oregon Tax Court, stay of collection pending appeal, confidentiality of returns and the penalties relating thereto, and the procedures relating thereto, apply to the determinations of taxes, penalties and interest under [the Tobacco Products Tax Act] ORS 323.500 to 323.640.

SECTION 48. ORS 323.600 is amended to read:

323.600. If, under [the Tobacco Products Tax Act] ORS 323.500 to 323.640, the Department of Revenue is not satisfied with the return of the tax or as to the amount of tax required to be paid to this state by any person, it may compute and determine the amount required to be paid upon the basis of the facts contained in the return or upon the basis of any information within its possession or that may come into its possession. One or more deficiency determinations may be made of the amount due for one or for more than one period. Notices of deficiency shall be given and interest on deficiencies shall be computed as provided in ORS 305.265. Subject to ORS 314.421 and 314.423, liens for taxes or deficiencies [shall] arise at the time of assessment, [shall] continue until the taxes, interest and penalties are fully satisfied and may be recorded and collected in the manner provided for the collection of delinquent income taxes.

SECTION 49. ORS 323.605 is amended to read:

323.605. If the Department of Revenue believes that the collection of any tax imposed under [the Tobacco Products Tax Act] ORS 323.500 to 323.640 or any amount of the tax required to be [collected and] paid to the state or of any determination will be jeopardized by delay, it shall make a determination of the tax or amount of tax required to be collected, noting that fact upon the determination. The amount determined is immediately due and payable and the department shall assess the taxes, notify the person and proceed to collect the tax in the same manner and using the same procedures as for the collection of income taxes under ORS 314.440.

SECTION 50. ORS 323.610 is amended to read:

323.610. (1) If any tax imposed under [the Tobacco Products Tax Act] ORS 323.500 to 323.640, or any portion of the tax, is not paid within the time provided by law and no provision is made to secure the payment of the tax by bond, deposit or otherwise, pursuant to rules adopted by the Department of Revenue, the department may issue a warrant directed to the sheriff of any county of the state commanding the sheriff to levy upon and sell the real and personal property of the taxpayer found within the county, for the payment of the amount of the tax, with the added penalties, interest and the sheriff’s cost of executing the warrant, and to return the warrant to the department and pay to it the money collected from the sale, within 60 days after the date of receipt of the warrant.

(2) The sheriff shall, within five days after the receipt of the warrant, record with the clerk of the county a copy of the warrant, and the clerk shall immediately enter in the County Clerk Lien Record the name of the taxpayer mentioned in the warrant, the amount of the tax or portion of the tax and penalties for which the warrant is issued and the date the copy is recorded. The amount of the warrant so recorded shall become a lien upon the title to and interest in real property of the taxpayer against whom it is issued in the same manner as a judgment duly docketed. The sheriff immediately shall proceed upon the warrant in all respects, with like effect and in the same manner prescribed by law in respect to executions issued against property upon judgment of a court of record, and shall be entitled to the same fees for services in executing the warrant, to be added to and collected as a part of the warrant liability.

(3) In the discretion of the department a warrant of like terms, force and effect may be issued and directed to any agent authorized to collect the taxes imposed by [the Tobacco Products Tax Act] ORS 323.500 to 323.640. In the execution of the warrant, the agent shall have all the powers conferred by law upon sheriffs, but is entitled to no fee or compensation in excess of actual expenses paid in the performance of such duty.

(4) If a warrant is returned not satisfied in full, the department shall have the same remedies to enforce the claim for taxes against the taxpayer as if the people of the state had recovered judgment against the taxpayer for the amount of the tax.

SECTION 51. ORS 323.615 is amended to read:

323.615. (1) The Director of the Department of Revenue is authorized to enter into a tobacco products tax refund agreement with the governing body of any Indian reservation in Oregon. The agreement may provide for a mutually agreed upon amount as a refund to the governing body of any tobacco tax collected under [the Tobacco Products Tax Act] ORS 323.500 to 323.640 in connection [with the sale, use, storage or consumption of tobacco products on the Indian reservation.] with the sale of tobacco products to Indians on the Indian reservation, or the use, storage or consumption of tobacco products by Indians on the Indian reservation. This provision is in addition to other laws allowing tax refunds.

(2) There is [annually] continuously appropriated to the director, from the suspense account established under ORS 293.445 and 323.625, the amounts necessary to make the refunds provided by subsection (1) of this section.

SECTION 52. ORS 323.620 is amended to read:

323.620. The remedies of the state provided for in [the Tobacco Products Tax Act] ORS 323.500 to 323.640 are cumulative.[, and] No action taken by the Department of Revenue or Attorney General constitutes an election by the state to pursue any remedy to the exclusion of any other remedy for which provision is made in [the Tobacco Products Tax Act] ORS 323.500 to 323.640.

SECTION 53. ORS 323.625 is amended to read:

323.625. All moneys received by the Department of Revenue under [the Tobacco Products Tax Act] ORS 323.500 to 323.640 shall be deposited in the State Treasury and credited to a suspense account established under ORS 293.445. Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of ORS 323.500 to 323.640 are continuously appropriated to the Department of Revenue from the suspense account. After payment of [administration expenses incurred by the department in the administration of the Tobacco Products Tax Act] administrative and enforcement expenses and of refunds or credits arising from erroneous overpayments, the balance of the money shall be credited to the General Fund. Of the amount credited to the General Fund under this section 41.54 percent shall be dedicated to funding the maintenance and expansion of the number of persons eligible for medical assistance under the Oregon Health Plan, or to funding the maintenance of the benefits available under the Oregon Health Plan, or both, and 4.62 percent shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

SECTION 53a. ORS 323.625, as amended by section 53 of this 2003 Act, is amended to read:

323.625. All moneys received by the Department of Revenue under ORS 323.500 to 323.640 shall be deposited in the State Treasury and credited to a suspense account established under ORS 293.445. [Amounts necessary to pay the expenses incurred by the Department of Revenue and to reimburse the Oregon State Police and the Department of Justice for the administration and enforcement of ORS 323.500 to 323.640 are continuously appropriated to the Department of Revenue from the suspense account.] After payment of [administrative and enforcement expenses and of] refunds or credits arising from erroneous overpayments, the balance of the money shall be credited to the General Fund. Of the amount credited to the General Fund under this section 41.54 percent shall be dedicated to funding the maintenance and expansion of the number of persons eligible for medical assistance under the Oregon Health Plan, or to funding the maintenance of the benefits available under the Oregon Health Plan, or both, and 4.62 percent shall be credited to the Tobacco Use Reduction Account established under ORS 431.832.

SECTION 54. ORS 323.635 is amended to read:

323.635. The penalties provided in [ORS 323.995] sections 56 and 58 of this 2003 Act are additional to all other penalties provided under [the Tobacco Products Tax Act] ORS 323.500 to 323.640.

SECTION 55. (1) The violation of any provision of ORS 323.500 to 323.640 or any rule adopted thereunder shall be deemed an act committed in part at the office of the Department of Revenue in Salem, Oregon, and venue shall lie in Marion County, Oregon.

(2) The certificate of the department to the effect that a tax has not been paid, that a return has not been filed or that information has not been supplied, as required by or under the provisions of ORS 323.500 to 323.640, shall be prima facie evidence that the tax has not been paid, that the return has not been filed or that the information has not been supplied.

SECTION 56. (1)(a) A civil penalty may be imposed by the Department of Revenue on any person who violates any provision of ORS 323.500 to 323.640.

(b) A civil penalty imposed under this subsection may not exceed $1,000 per violation.

(c) A penalty imposed under this subsection may be appealed to the magistrate division of the tax court in the time and manner prescribed in ORS 305.404 to 305.560.

(2) Any person required to obtain a license as a distributor under ORS 323.500 to 323.640 who knowingly engages in business as a distributor without a license or after a license has been suspended or revoked is guilty of a Class C felony.

(3) Any person required to make, render, sign or verify any report under ORS 323.500 to 323.640 who makes any false report with the intent to defraud is guilty of a Class C felony.

(4) Any transporter who knowingly violates the provisions of ORS 323.570 is guilty of a Class C felony.

(5) Any person who knowingly violates any provision of ORS 323.500 to 323.640, except as otherwise provided in this section, is guilty of a Class A misdemeanor.

(6) Any person who, with intent to defraud, makes, alters, forges or utters a false receipt or invoice recording a sale of tobacco products in this state is guilty of a Class C felony.

(7) In addition to any other sentence the court may impose upon a conviction under this section, the court may order the forfeiture of the instrumentalities used in violating ORS 323.500 to 323.640 and the proceeds resulting from a violation of 323.500 to 323.640.

SECTION 57. (1) Any contraband tobacco products found by an authorized representative of the Department of Revenue or any law enforcement agency may be immediately seized and subject to forfeiture. If seized and forfeited under this subsection, the tobacco products shall be destroyed.

(2) Notwithstanding ORS 305.280, a seizure and forfeiture made under this section may be appealed to the magistrate division of the tax court within 30 days of the date of the seizure in the manner prescribed in ORS 305.404 to 305.560.

SECTION 58. (1) A person commits the crime of unlawful distribution of tobacco products if the person knowingly sells or distributes, possesses or transports for sale or distribution or imports for sale or distribution tobacco products that do not comply with ORS 323.500 to 323.640.

(2) The offense of unlawful distribution of tobacco products is classified as follows:

(a) If the amount of tobacco products tax avoided in committing the offense over a 90-day period totals less than $1,000, the offense is a Class A misdemeanor.

(b) If the amount of tobacco products tax avoided in committing the offense over a 90-day period totals $1,000 or more, but less than $5,000, the offense is a Class C felony classified as crime category 3 of the sentencing guidelines grid of the Oregon Criminal Justice Commission.

(c) If the amount of tobacco products tax avoided in committing the offense over a 90-day period totals $5,000 or more, but less than $10,000, the offense is a Class C felony classified as crime category 5 of the sentencing guidelines grid of the Oregon Criminal Justice Commission.

(d) If the amount of tobacco products tax avoided in committing the offense over a 90-day period totals $10,000 or more, the offense is a Class B felony classified as crime category 7 of the sentencing guidelines grid of the Oregon Criminal Justice Commission.

(3) As used in this section, “tobacco products tax” means the amount of tax due under ORS 323.500 to 323.640, if the tax were timely paid upon first distribution of the tobacco products in this state.

SECTION 59. (1) In addition to all other remedies specified in ORS 323.500 to 323.640, action may be brought by the Attorney General, at the request of the Department of Revenue, in the name of the state, to recover the amount of any taxes, penalties and interest due under ORS 323.500 to 323.640, if the action for recovery is commenced within three years from the time the tax is due to be paid.

(2) The Attorney General shall have authority to investigate any criminal violation of ORS 323.500 to 323.640.

MISCELLANEOUS

SECTION 60. (1) Sections 3, 16 and 29 of this 2003 Act are added to and made a part of ORS 323.005 to 323.482.

(2) ORS 323.401 is added to and made a part of ORS 323.005 to 323.482.

SECTION 61. (1) Sections 36a, 39, 46, 55, 56, 57, 58 and 59 of this 2003 Act are added to and made a part of ORS 323.500 to 323.640.

(2) ORS 323.645 is added to and made a part of ORS 323.500 to 323.640.

SECTION 62. ORS 323.500 to 323.640 are added to and made a part of ORS chapter 323.

SECTION 63. ORS 305.130 is amended to read:

305.130. (1) The Department of Revenue may be made a party in any action in any court of this state or of the United States having jurisdiction of the subject matter to quiet title to, to remove a cloud from the title to, or for the foreclosure of a mortgage or other lien upon, any real property or personal property, or both, upon which the State of Oregon has or claims to have a lien under ORS 311.673, 311.679, 311.771, 314.430[, 321.570 or the Tobacco Products Tax Act (ORS 323.500 to 323.640)] or 321.570 or ORS chapter 323, and the judgment in such action shall be conclusive and binding upon the State of Oregon and such department.

(2) The complaint in such action shall set forth with particularity the nature of any such lien had or claimed by the State of Oregon. The summons in such action, together with a copy of the complaint therein, shall be served on such department in the manner prescribed by ORCP 7 D(3)(d), and such summons shall require such department to appear and answer the complaint within 60 days from the date of such service.

SECTION 63a. ORS 305.280 is amended to read:

305.280. (1) Except as otherwise provided in this section, an appeal under ORS 305.275 (1) or (2) shall be filed within 90 days after the act, omission, order or determination becomes actually known to the person, but in no event later than one year after the act or omission has occurred, or the order or determination has been made. An appeal under ORS 308.505 to 308.665 shall be filed within the time prescribed under ORS 308.595. An appeal from a supervisory order or other order or determination of the Department of Revenue shall be filed within 90 days after the date a copy of the order or determination or notice of the order or determination has been served upon the appealing party by mail as provided in ORS 306.805.

(2) An appeal under ORS 323.416 or section 46 of this 2003 Act or from any notice of assessment or refund denial issued by the Department of Revenue with respect to a tax imposed under ORS chapter 118, 308, 308A, 310, 314, 316, 317, 318, 321 or this chapter, or collected pursuant to ORS 305.620, shall be filed within 90 days after the date of the notice. An appeal from a proposed adjustment under ORS 305.270 shall be filed within 90 days after the date the notice of adjustment is final.

(3) Notwithstanding subsection (2) of this section, an appeal from a notice of assessment of taxes imposed under ORS chapter 314, 316, 317 or 318 may be filed within two years after the date the amount of tax, as shown on the notice and including appropriate penalties and interest, is paid.

(4) Except as provided in subsection (2) of this section or as specifically provided in ORS chapter 321, an appeal to the tax court under ORS chapter 321 or from an order of a county board of property tax appeals shall be filed within 30 days after the date of the notice of the determination made by the department or date of mailing of the order, date of publication of notice of the order or date of mailing of the notice of the order to the taxpayer, whichever is applicable.

(5) If the tax court denies an appeal made pursuant to this section on the grounds that it does not meet the requirements of this section or ORS 305.275 or 305.560, the tax court shall issue a written decision rejecting the petition and shall set forth in the decision the reasons the tax court considered the appeal to be defective.

SECTION 64. ORS 305.514 is amended to read:

305.514. (1) A plaintiff may elect to file a small claims procedure in the following classes of cases:

(a) A proceeding for refund or to set aside additional taxes assessed or taxes assessed when no return was filed in any case involving taxes imposed under ORS chapters 314, 316, 317 and 318, with respect to any year for which the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(b) A proceeding by a taxpayer in any property tax case in which a taxpayer has the right to appeal and that involves only the question of the assessed or specially assessed value of real or personal property, where a board of property tax appeals (by order of the board), an assessor or a tax collector has determined that the assessed or specially assessed value of:

(A) A parcel of land is not in excess of $250,000;

(B) The improvement on a parcel of land is not in excess of $250,000;

(C) Both a parcel of land and the improvement are not in excess of $250,000; or

(D) Personal property is not in excess of $250,000.

(c) A proceeding for the refund or the revision of taxes imposed by ORS chapter 118 where the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(d) A proceeding for the elderly rental assistance authorized under ORS 310.635 without limitation to the amount in controversy.

(e) A proceeding by a taxpayer in any case authorized by ORS 321.560 where the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(f) A proceeding for refund or the revision of taxes imposed by [the Tobacco Products Tax Act] ORS chapter 323 where the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(g) A proceeding for refund or to set aside additional taxes assessed or taxes assessed when no return was filed in any case involving taxes administered by a state agency or department under ORS 305.620 with respect to any year in which the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(h) A proceeding for refund or to set aside interest or penalties assessed in connection with any tax administered by the Department of Revenue, where the amount in controversy does not exceed $5,000. This paragraph does not apply to the denial of a request for the discretionary waiver of interest or penalties.

(2) Under a small claims procedure, the hearing shall not be recorded and the parties shall have no right to appeal the determination of the magistrate.

(3)(a) If the plaintiff elects a small claims procedure in a property tax case involving only the question of the assessed or specially assessed value of real property, the plaintiff may elect, in lieu of a hearing in the magistrate division, to have the property appraised as provided in this subsection.

(b) The election by the taxpayer may be included in the petition, or may be made by a separate petition in a form and filed as prescribed by the rules of the tax court. The clerk of the court shall give notice of the election by the taxpayer to the applicable county assessor.

(c) If the taxpayer elects as provided under this paragraph to have the real property appraised, there shall be no hearing in the magistrate division and the magistrate shall appoint an independent fee appraiser to appraise the property. The appraisal by the appointed appraiser shall be in writing and signed by the appraiser. For the purpose of the proceeding, the appraisal shall constitute the real market or specially assessed value of the property and shall be incorporated in the determination of the magistrate of the property’s assessed or specially assessed value.

(d) The taxpayer shall pay to the appraiser appointed under paragraph (c) of this subsection a reasonable fee for the appraisal services rendered by the appraiser.

SECTION 65. ORS 305.850 is amended to read:

305.850. (1) Notwithstanding any provision to the contrary in ORS 9.320 and 305.610, the Director of the Department of Revenue may engage the services of a collection agency to collect any taxes, interest and penalties resulting from an assessment of taxes or additional taxes imposed by ORS [chapters] chapter 118, 310, 314, 316, 317, 318, 320, 321[, ORS 323.005 to 323.482 and the Tobacco Products Tax Act (ORS 323.500 to 323.640)] or 323 and any other tax laws administered by the Department of Revenue. The director may engage the services of a collection agency by entering into an agreement to pay reasonable charges on a contingent fee or other basis.

(2) The director shall cause to be collected, in the same manner as provided in subsection (1) of this section, assessments, taxes and penalties due under ORS chapter 656. All amounts collected pursuant to this subsection shall be credited as provided in ORS 293.250.

(3) The director may assign to the collection agency, for collection purposes only, any of the taxes, penalties, interest and moneys due the state.

(4) The collection agency may bring such action or take such proceedings, including but not limited to attachment and garnishment proceedings, as may be necessary.

SECTION 66. ORS 166.715 is amended to read:

166.715. As used in ORS 166.715 to 166.735, unless the context requires otherwise:

(1) “Documentary material” means any book, paper, document, writing, drawing, graph, chart, photograph, phonograph record, magnetic tape, computer printout, other data compilation from which information can be obtained or from which information can be translated into usable form, or other tangible item.

(2) “Enterprise” includes any individual, sole proprietorship, partnership, corporation, business trust or other profit or nonprofit legal entity, and includes any union, association or group of individuals associated in fact although not a legal entity, and both illicit and licit enterprises and governmental and nongovernmental entities.

(3) “Investigative agency” means the Department of Justice or any district attorney.

(4) “Pattern of racketeering activity” means engaging in at least two incidents of racketeering activity that have the same or similar intents, results, accomplices, victims or methods of commission or otherwise are interrelated by distinguishing characteristics, including a nexus to the same enterprise, and are not isolated incidents, provided at least one of such incidents occurred after November 1, 1981, and that the last of such incidents occurred within five years after a prior incident of racketeering activity. Notwithstanding ORS 131.505 to 131.525 or 419A.190 or any other provision of law providing that a previous prosecution is a bar to a subsequent prosecution, conduct that constitutes an incident of racketeering activity may be used to establish a pattern of racketeering activity without regard to whether the conduct previously has been the subject of a criminal prosecution or conviction or a juvenile court adjudication, unless the prosecution resulted in an acquittal or the adjudication resulted in entry of an order finding the youth not to be within the jurisdiction of the juvenile court.

(5) “Person” means any individual or entity capable of holding a legal or beneficial interest in real or personal property.

(6) “Racketeering activity” includes conduct of a person committed both before and after the person attains the age of 18 years, and means to commit, to attempt to commit, to conspire to commit, or to solicit, coerce or intimidate another person to commit:

(a) Any conduct that constitutes a crime, as defined in ORS 161.515, under any of the following provisions of the Oregon Revised Statutes:

(A) ORS 59.005 to 59.451, 59.660 to 59.830, 59.991 and 59.995, relating to securities;

(B) ORS 162.015, 162.025 and 162.065 to 162.085, relating to bribery and perjury;

(C) ORS 162.235, 162.265 to 162.305, 162.325, 162.335, 162.355 and 162.365, relating to obstructing governmental administration;

(D) ORS 162.405 to 162.425, relating to abuse of public office;

(E) ORS 162.455, relating to interference with legislative operation;

(F) ORS 163.095 to 163.115, 163.118, 163.125 and 163.145, relating to criminal homicide;

(G) ORS 163.160 to 163.205, relating to assault and related offenses;

(H) ORS 163.225 and 163.235, relating to kidnapping;

(I) ORS 163.275, relating to coercion;

(J) ORS 163.670 to 163.696, relating to sexual conduct of children;

(K) ORS 164.015, 164.043, 164.045, 164.055, 164.057, 164.075 to 164.095, 164.125, 164.135, 164.140, 164.215, 164.225 and 164.245 to 164.270, relating to theft, burglary, criminal trespass and related offenses;

(L) ORS 164.315 to 164.335, relating to arson and related offenses;

(M) ORS 164.345 to 164.365, relating to criminal mischief;

(N) ORS 164.395 to 164.415, relating to robbery;

(O) ORS 164.865, 164.875 and 164.868 to 164.872, relating to unlawful recording or labeling of a recording;

(P) ORS 165.007 to 165.022, 165.032 to 165.042 and 165.055 to 165.070, relating to forgery and related offenses;

(Q) ORS 165.080 to 165.109, relating to business and commercial offenses;

(R) ORS 165.485 to 165.515, 165.540 and 165.555, relating to communication crimes;

(S) ORS 166.180, 166.190, 166.220, 166.250, 166.270, 166.275, 166.410, 166.450 and 166.470, relating to firearms and other weapons;

(T) ORS 164.377 (2) to (4), as punishable under ORS 164.377 (5)(b), 167.007 to 167.017, 167.062 to 167.080, 167.087, 167.090, 167.122 to 167.137, 167.147, 167.164, 167.167, 167.212, 167.355, 167.365 and 167.370, relating to prostitution, obscenity, gambling, computer crimes involving the Oregon State Lottery, animal fighting and related offenses;

(U) ORS 171.990, relating to legislative witnesses;

(V) ORS 260.575 and 260.665, relating to election offenses;

(W) ORS 314.075, relating to income tax;

(X) ORS chapter 323, relating to cigarette and tobacco products taxes;

(Y) ORS 411.630, 411.675, 411.690 and 411.840, relating to public assistance payments, and ORS 411.990 (2) and (3);

(Z) ORS 462.140, 462.415 and 462.420 to 462.520, relating to racing;

(AA) ORS 463.995, relating to boxing and wrestling, as defined in ORS 463.015;

(BB) ORS 471.305, 471.360, 471.392 to 471.400, 471.403, 471.404, 471.405, 471.425, 471.442, 471.445, 471.446, 471.485, 471.490 and 471.675, relating to alcoholic liquor, and any of the provisions of ORS chapter 471 relating to licenses issued under the Liquor Control Act;

(CC) ORS 475.005 to 475.285 and 475.940 to 475.999, relating to controlled substances;

(DD) ORS 480.070, 480.210, 480.215, 480.235 and 480.265, relating to explosives;

(EE) ORS 819.010, 819.040, 822.100, 822.135 and 822.150, relating to motor vehicles;

(FF) ORS 658.452 or 658.991 (2) to (4), relating to farm labor contractors;

(GG) ORS chapter 706, relating to banking law administration;

(HH) ORS chapter 714, relating to branch banking;

(II) ORS chapter 716, relating to mutual savings banks;

(JJ) ORS chapter 723, relating to credit unions;

(KK) ORS chapter 726, relating to pawnbrokers;

(LL) ORS 166.382 and 166.384, relating to destructive devices;

(MM) ORS 165.074;

(NN) ORS 59.840 to 59.965, relating to mortgage bankers and mortgage brokers;

(OO) ORS chapter 496, 497 or 498, relating to wildlife;

(PP) ORS 163.355 to 163.427, relating to sexual offenses;

(QQ) ORS 166.015, relating to riot;

(RR) ORS 166.155 and 166.165, relating to intimidation;

(SS) ORS chapter 696, relating to real estate and escrow;

(TT) ORS chapter 704, relating to outfitters and guides;

(UU) ORS 165.692, relating to making a false claim for health care payment;

(VV) ORS 162.117, relating to public investment fraud;

(WW) ORS 164.170 or 164.172;

(XX) ORS 647.140, 647.145 or 647.150, relating to trademark counterfeiting;

(YY) ORS 164.877;

(ZZ) ORS 167.312 and 167.388; or

(AAA) ORS 164.889.

(b) Any conduct defined as “racketeering activity” under 18 U.S.C. 1961 (1)(B), (C), (D) and (E).

(7) “Unlawful debt” means any money or other thing of value constituting principal or interest of a debt that is legally unenforceable in the state in whole or in part because the debt was incurred or contracted:

(a) In violation of any one of the following:

(A) ORS chapter 462, relating to racing;

(B) ORS 167.108 to 167.164, relating to gambling; or

(C) ORS 82.010 to 82.170, relating to interest and usury.

(b) In gambling activity in violation of federal law or in the business of lending money at a rate usurious under federal or state law.

(8) Notwithstanding contrary provisions in ORS 174.060, when this section references a statute in the Oregon Revised Statutes that is substantially different in the nature of its essential provisions from what the statute was when this section was enacted, the reference shall extend to and include amendments to the statute.

APPLICABILITY AND OPERATIVE DATES

SECTION 67. (1) Sections 3 and 29 of this 2003 Act and the amendments to statutes and uncodified law by sections 1, 1a, 2, 4 to 5c, 6 to 15, 17 to 27a, 28 and 30 of this 2003 Act apply to distributions of cigarettes occurring in cigarette tax reporting periods beginning on or after January 1, 2004.

(2) Sections 39, 46 and 55 to 59 of this 2003 Act and the amendments to statutes by sections 31 to 36, 37, 38, 41 to 45, 47 to 53 and 54 of this 2003 Act apply to distributions of tobacco products occurring in tobacco products tax reporting periods beginning on or after January 1, 2004.

(3) The amendments to section 3, chapter 385, Oregon Laws 1995, and section 2, chapter 2, Oregon Laws 2002 (third special session), and ORS 323.455 and 323.625 by sections 5d, 5e, 27b and 53a of this 2003 Act become operative January 1, 2008.

REPEALS

SECTION 68. ORS 323.135 and 323.155 are repealed.

SECTION 69. The repeal of ORS 323.135 and 323.155 by section 68 of this 2003 Act does not alter or affect the collection of cigarette taxes or the administration of ORS 323.005 to 323.482 in cigarette tax reporting periods beginning before the effective date of this 2003 Act.

SECTION 70. ORS 323.545, 323.550, 323.580, 323.590 and 323.995 are repealed.

SECTION 71. (1) The repeal of ORS 323.545, 323.550 and 323.590 by section 70 of this 2003 Act does not alter or affect the collection of tobacco products taxes or the administration of ORS 323.500 to 323.640 in tobacco tax reporting periods beginning before the effective date of this 2003 Act.

(2) The repeal of ORS 323.580 and 323.995 by section 70 of this 2003 Act does not alter or affect the imposition of any penalty or conviction imposed under ORS 323.580 or 323.995 prior to the effective date of this 2003 Act, or any proceeding or prosecution commenced prior to or after the effective date of this 2003 Act and related to a violation of ORS 323.500 to 323.640 occurring in a tobacco tax reporting period beginning prior to the effective date of this 2003 Act.

TOBACCO DELIVERY SALES:

REQUIREMENTS AND RESTRICTIONS

SECTION 72. Sections 73 to 82 of this 2003 Act are added to and made a part of ORS chapter 323.

SECTION 73. As used in sections 73 to 82 of this 2003 Act:

(1) “Consumer” means an individual who is not a licensed distributor of tobacco or a licensed tobacco retailer.

(2) “Delivery sale”:

(a) Means a sale of tobacco to a consumer in this state in which:

(A) The purchaser submits the order for the sale by means of a telephone or other method of voice transmission, a delivery service or the Internet or other on-line service; or

(B) The tobacco is delivered by use of a delivery service.

(b) Includes any sale of tobacco described in paragraph (a) of this subsection, regardless of whether the seller is located within Indian country or is otherwise within or outside of this state.

(c) Does not include any sale to a licensed distributor or licensed tobacco retailer in this state.

(3) “Delivery service” means any person that is engaged in the commercial delivery of letters, packages or other containers.

(4) “Indian country” has the meaning given that term in 18 U.S.C. 1151.

(5) “Legal minimum purchase age” means the minimum age at which an individual may purchase tobacco in this state.

(6) “Mail” means the use of the United States Postal Service for delivery of letters, packages or other containers.

(7) “Person accepting a purchase order for a delivery sale” means a person who fills a tobacco purchase order given by a consumer and processes the order for mail, shipping or other delivery, or who contracts with another party to provide delivery service.

(8) “Purchase order” means a written or electronic document authorizing a seller to provide goods.

(9) “Sale of tobacco to a consumer” means any sale of tobacco to an individual in this state, unless the individual is licensed as a distributor or retailer of tobacco by the Department of Revenue.

(10) “Shipping container” means a container in which tobacco is packaged in connection with a delivery sale.

(11) “Shipping documents” means bills of lading, airbills or any other documents used to evidence the undertaking by a delivery service to deliver letters, packages or other containers.

(12) “Tobacco” means cigarettes, as defined in ORS 323.010, or tobacco products, as defined in ORS 323.500.

SECTION 74. A person may not make a delivery sale of tobacco to a person who is under the legal minimum purchase age.

SECTION 75. A person accepting a purchase order for a delivery sale, prior to the first mailing, shipment or other delivery of tobacco to a consumer, shall comply with:

(1) The age verification requirements set forth in section 76 of this 2003 Act;

(2) The distributor license requirements set forth in section 76a of this 2003 Act;

(3) The disclosure requirements set forth in section 77 of this 2003 Act;

(4) The mailing or shipping requirements set forth in section 78 of this 2003 Act;

(5) The reporting requirements set forth in section 79 of this 2003 Act; and

(6) All other laws of this state applicable to sales of tobacco that occur entirely within Oregon, including but not limited to ORS 293.535, 323.005 to 323.482 and 323.500 to 323.640.

SECTION 76. A person may not mail or ship tobacco in connection with a delivery sale order unless the person, before mailing or shipping the tobacco, does all of the following:

(1) Obtains a certification from the prospective consumer that includes a written statement signed by the prospective consumer that:

(a) Certifies the prospective consumer’s address and that the prospective consumer is at least the legal minimum purchase age; and

(b) Confirms that the prospective consumer understands that signing another person’s name to the certification is illegal, that the sale of tobacco to individuals under the legal minimum purchase age is illegal and that the purchase of tobacco by individuals under the legal minimum purchase age is illegal under ORS 167.401;

(2) Verifies the information contained in the certification against a commercially available database of government-collected information showing the age or date of birth of the individual placing the order and obtains a photocopy or other image of a valid, government-issued identification stating the age or date of birth of the individual placing the order;

(3) Provides a notice to the prospective consumer, via electronic mail or other means, that meets the requirements of section 77 of this 2003 Act; and

(4) In the case of an order for tobacco placed through an Internet website, receives payment for the delivery sale from the prospective purchaser by a credit or debit card that has been issued in the name of the prospective purchaser or by a personal check issued by the prospective purchaser.

SECTION 76a. (1) Each person seeking to engage in delivery sales of tobacco to purchasers in this state shall apply for and obtain:

(a) A cigarette distributor’s license under ORS 323.105, if the person intends to engage in cigarette delivery sales; and

(b) A tobacco products distributor’s license under ORS 323.520, if the person intends to engage in tobacco products delivery sales.

(2) A person may not engage in delivery sales in this state without first obtaining each applicable distributor’s license under subsection (1) of this section.

SECTION 76b. Notwithstanding section 76a of this 2003 Act, a person that engaged in delivery sales within three months preceding the effective date of this 2003 Act may continue to engage in delivery sales for 60 days following the effective date of this 2003 Act without meeting the licensing requirements described under section 76a of this 2003 Act.

SECTION 77. The notice required under section 76 (3) of this 2003 Act shall include:

(1) A prominent and clearly legible statement that tobacco sales to persons under the legal minimum purchase age are illegal;

(2) A prominent and clearly legible statement that sales of tobacco are restricted to those individuals who provide verifiable proof of age in accordance with section 76 of this 2003 Act; and

(3) A prominent and clearly legible statement that sales of cigarettes are subject to tax under ORS 323.005 to 323.482 and that sales of other tobacco products are subject to tax under ORS 323.500 to 323.640, and an explanation of how the applicable tax has been paid or is to be paid.

SECTION 78. (1) Each person accepting a purchase order for a delivery sale, in connection with the delivery sale order, shall:

(a) Include as part of the shipping documents a clear and conspicuous statement providing as follows: “TOBACCO: OREGON LAW PROHIBITS SHIPPING TO INDIVIDUALS UNDER 18 AND REQUIRES THE PAYMENT OF ALL APPLICABLE TAXES”; and

(b) Use a method of mail, shipping or other delivery of tobacco described in this paragraph as follows:

(A) Unless subparagraph (B) of this paragraph applies, use a method of shipping or other delivery that obligates the delivery service to require:

(i) The consumer placing the delivery sale order, or another individual of at least the legal minimum purchase age who resides at the residence of the consumer, to sign to accept delivery of the shipping container; and

(ii) Proof, in the form of a valid, government-issued identification bearing a photograph of the individual who signs to accept delivery of the shipping container, demonstrating that the individual who signs to accept delivery:

(I) Is either the consumer or another individual residing at the residence of the consumer; and

(II) Is at least the legal minimum purchase age, except that proof of age is required only if the individual appears to be under 27 years of age.

(B) If the person is fulfilling a purchase order for a delivery sale by mailing tobacco, to the extent permitted by the United States Postal Service, use a method of mailing that requires the postal service to require:

(i) The consumer placing the delivery sale order, or another individual of at least the legal minimum purchase age residing at the residence of the consumer, to sign to accept delivery of the shipping container; and

(ii) Proof, in the form of a valid, government-issued identification bearing a photograph of the individual who signs to accept delivery of the shipping container, demonstrating that the individual who signs to accept delivery:

(I) Is either the consumer or another individual residing at the residence of the consumer; and

(II) Is at least the legal minimum purchase age, except that proof of age is required only if the individual appears to be under 27 years of age.

(2) If the person accepting a purchase order for a delivery sale delivers the tobacco without using a delivery service or the United States Postal Service, the person shall comply with all requirements of sections 73 to 82 of this 2003 Act that apply to a delivery service and shall be in violation of this section if the person fails to comply with all requirements applicable to a delivery service.

SECTION 79. (1) Prior to delivering, mailing or shipping tobacco in connection with a delivery sale, a person who accepts purchase orders for delivery sales shall file a statement with the Department of Revenue. The statement shall set forth the name, trade name and address of the principal place of business of the seller and any other place of business of the seller.

(2) Not later than the 10th day of each calendar month, each person that has made a delivery sale or delivered, mailed or shipped tobacco or contracted with another party for delivery service in connection with a delivery sale made during the previous calendar month shall file a memorandum of sale or a copy of the delivery sales invoice with the Department of Revenue. The memorandum or delivery sales invoice shall provide, for each delivery sale made during the previous calendar month:

(a) The name and address of the consumer to whom the delivery sale was made;

(b) The brand or brands of the tobacco that were sold in the delivery sale; and

(c) The quantity of tobacco that was sold in the delivery sale.

(3) A person that satisfies the requirements of 15 U.S.C. 376 is deemed to meet the requirements of this section.

SECTION 80. (1) A person that accepts a purchase order for a delivery sale of cigarettes may not make a delivery sale of cigarettes to a person in this state if the packages in which the cigarettes are contained do not bear the proper tax stamps required to be affixed to the packages of cigarettes under ORS 323.005 to 323.482.

(2) A person that accepts a purchase order for a delivery sale of tobacco products may not make a delivery sale of tobacco products in this state if the sales invoice for the delivery sale does not comply with section 39 of this 2003 Act.

SECTION 81. (1) Except as otherwise provided in this section:

(a) The first time a person violates a provision of sections 73 to 82 of this 2003 Act, the person shall be subject to a penalty of $1,000 or five times the retail value of the tobacco involved in the violation, whichever is greater; and

(b) In the case of a second or subsequent violation of sections 73 to 82 of this 2003 Act, the person shall be subject to a penalty of $5,000 or five times the retail value of the tobacco involved in the violation, whichever is greater.

(2) A person who knowingly violates a provision of sections 73 to 82 of this 2003 Act or who knowingly submits a false certification under section 76 of this 2003 Act under the name of another person:

(a) Shall be subject to a penalty of $10,000 or five times the retail value of the tobacco involved, whichever is greater; or

(b) May be imprisoned for a period of not more than five years.

(3) A person who accepts a purchase order for a delivery sale and, in connection with the sale, fails to pay a tax due under ORS 323.005 to 323.482 or 323.500 to 323.640 shall pay a penalty of five times the amount of tax due and not timely paid under ORS 323.005 to 323.482 or 323.500 to 323.640.

(4) The penalties prescribed under this section are in addition to and not in lieu of any other penalty applicable under the laws of this state.

(5) Any tobacco sold or attempted to be sold in a delivery sale that does not meet the requirements of sections 73 to 82 of this 2003 Act may be immediately seized and subject to forfeiture. Tobacco seized and forfeited under this subsection shall be destroyed.

(6) Any fixtures, equipment, materials or other personal property on the premises of a person who violates sections 73 to 82 of this 2003 Act may be immediately seized and subject to forfeiture. Property seized and forfeited under this subsection may be sold or destroyed.

SECTION 82. The Attorney General or any person that holds a permit, issued under section 5713 of the Internal Revenue Code, to engage in business as a manufacturer or importer of tobacco products or as an export warehouse proprietor, may bring an action to enforce the provisions of sections 73 to 82 of this 2003 Act or to prevent or restrain violations of sections 73 to 82 of this 2003 Act.

SECTION 83. Sections 73 to 82 of this 2003 Act apply to delivery sales of tobacco made on or after January 1, 2004.

TOBACCO RETAIL SALES

SECTION 84. (1) A person having authority over the location of cigarettes and other tobacco products in a retail store may not locate cigarettes or other tobacco products in a location in the store where the cigarettes or other tobacco products are accessible by store customers without assistance by a store employee.

(2) Violation of subsection (1) of this section is a Class B violation. Each day of violation constitutes a separate offense.

(3) Subsections (1) and (2) of this section do not apply if the location at which the cigarettes or tobacco products are sold is a store or other establishment at which persons under 18 years of age are prohibited.

SECTION 85. Section 84 of this 2003 Act becomes operative on January 1, 2005.

CIVIL ACTIONS AGAINST

TOBACCO PRODUCT MANUFACTURERS

SECTION 86. Section 87 of this 2003 Act is added to and made a part of ORS 293.530 to 293.535.

SECTION 87. (1) The provisions of this section apply only to civil actions against a tobacco product manufacturer, or against an affiliate or successor of a tobacco product manufacturer, in which:

(a) The tobacco product manufacturer is subject to the requirements of ORS 293.535; and

(b) The state is not a plaintiff.

(2) In any civil action described in subsection (1) of this section, the supersedeas undertaking required of the tobacco product manufacturer, or of an affiliate or successor of the tobacco product manufacturer, as a condition of a stay of judgment throughout all appeals or discretionary appellate review, shall be established in the manner provided by the laws and court rules of this state applicable to supersedeas undertakings, but the amount of the supersedeas undertaking may not exceed $150 million.

(3) If at any time after the posting of the supersedeas undertaking pursuant to the provisions of this section the court determines that a tobacco product manufacturer, affiliate or successor, outside of the ordinary course of its business, is purposely dissipating or diverting assets for the purpose of avoiding payment on final judgment in the action, the court may condition continuance of the stay on an order requiring that the tobacco product manufacturer, affiliate or successor post a supersedeas undertaking in an amount up to the full amount of the judgment.

(4) The provisions of this section apply to any supersedeas undertaking required for a judgment entered by a court of this state and to any security required as a condition of staying enforcement of a foreign judgment under the provisions of ORS 24.135 (2).

SECTION 88. Section 87 of this 2003 Act applies to all civil actions described in section 87 (1) of this 2003 Act, whether commenced before, on or after the effective date of this 2003 Act or filed under the provisions of ORS 24.105 to 24.125, 24.135 and 24.155 to 24.175 before, on or after the effective date of this 2003 Act.

SECTION 89. ORS 293.533 is amended to read:

293.533. As used in ORS 293.530 to 293.535:

(1) “Adjusted for inflation” means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement.

(2)(a) “Affiliate” means a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, another person.

(b) For purposes of defining “affiliate”:

(A) The terms “owns,” “is owned” and “ownership” mean ownership of an equity interest, or the equivalent thereof, of 10 percent or more; and

(B) The term “person” means an individual, partnership, committee, association, corporation or any other organization or group of persons.

(3) “Allocable share” means Allocable Share as that term is defined in the Master Settlement Agreement.

(4)(a) “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:

(A) Any roll of tobacco wrapped in paper or in any substance not containing tobacco;

(B) Tobacco, in any form, that is functional in the product and that because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or

(C) Any roll of tobacco wrapped in any substance containing tobacco that, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subparagraph (A) of this paragraph.

(b) The term “cigarette” includes “roll-your-own tobacco” (i.e., tobacco that, because of its appearance, type, packaging or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes). For purposes of this paragraph, 0.09 ounces of roll-your-own tobacco shall constitute one individual cigarette.

(5) “Master Settlement Agreement” means the settlement agreement (and related documents) entered into on November 23, 1998, by the State of Oregon and leading United States tobacco product manufacturers.

(6) “Qualified escrow fund” means an escrow arrangement with a federally or state chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least $1 billion where such arrangement requires that such financial institution hold the escrowed funds’ principal for the benefit of releasing parties and prohibits the tobacco product manufacturer who is placing the funds into escrow from using, accessing or directing the use of the escrowed funds’ principal except as consistent with ORS 293.535 (2)(b).

(7) “Released claims” means Released Claims as that term is defined in the Master Settlement Agreement.

(8) “Releasing parties” means Releasing Parties as that term is defined in the Master Settlement Agreement.

(9)(a) “Tobacco product manufacturer” means an entity that, after October 23, 1999, directly (and not exclusively through any affiliate):

(A) Manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer (except where such importer is an Original Participating Manufacturer (as that term is defined in the Master Settlement Agreement) that will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of subsection II(mm) of the Master Settlement Agreement and that pays the taxes specified in subsection II(z) of the Master Settlement Agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States);

(B) Is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or

(C) Becomes a successor of an entity described in subparagraph (A) or (B) of this paragraph.

(b) The term “tobacco product manufacturer” does not include an affiliate of a tobacco product manufacturer unless such affiliate is itself a tobacco product manufacturer under subparagraph (a)(A), (a)(B) or (a)(C) of this paragraph.

(10) “Units sold” means the number of individual cigarettes sold in the State of Oregon by the applicable tobacco product manufacturer (whether directly or through a distributor, retailer or similar intermediary or intermediaries) during the year in question, as measured by excise taxes collected by the State of Oregon on packs (or roll-your-own tobacco containers) bearing the excise tax stamp of this state. The Department of Revenue shall promulgate such rules as are necessary to ascertain the amount of state excise tax paid on the cigarettes of such tobacco product manufacturer for each year.

CAPTIONS

SECTION 90. The unit captions used in this 2003 Act are provided only for the convenience of the reader and do not become part of the statutory law of this state or express any legislative intent in the enactment of this 2003 Act.

Approved by the Governor September 24, 2003

Filed in the office of Secretary of State September 24, 2003

Effective date January 1, 2004

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