OAR 150-323-0010: Exemption of Cigarette Sales in Interstate or Foreign Commerce

The tax applies to all cigarettes sold within this state, but does not apply to sales of cigarettes which are: (1) Shipped to a point outside this state, pursuant to a contract of sale, by delivery by the seller to such out-of-state point by means of: (a) The United States mail; or (b) A common carrier licensed by the Interstate Commerce Commission; or (c) Facilities operated by the seller. Oregon distributors claiming exemption from the tax on cigarettes on the ground that shipments or deliveries were made in interstate commerce shall certify, under penalties for false swearing, the name and address of the persons receiving such shipments or deliveries in such foreign states, and that the Oregon distributors are in possession of delivery data of the following description: (A) A waybill, bill of lading or other evidence of shipment issued by a common carrier in the case of shipments by common carrier; or (B) an insurance receipt or registry receipt issued by the United States Postal Department, or a Post Office Department receipt in the case of shipments made by U.S. mail; or (C) a copy of the sellers invoice covering the sale, showing delivery by the seller at a designated out-of-state address, and signed by the purchaser or the purchaser’s agent in the case of shipments by facilities operated by the seller. The Department reserves the right to require such additional proof as it deems necessary in any particular case. (2) Sold to a foreign purchaser for shipment abroad and delivered to a ship, airplane, or other conveyance furnished by the purchaser for the purpose of carrying the cigarettes abroad and actually carried to a foreign destination. (3) Sold for use solely outside this state and delivered to a forwarding agent, export packer, or other person engaged in the business of preparing goods for export or arranging for their exportation, and actually delivered to a port outside the continental limits of the United States. (4) Sold for use as ship’s supplies which are to be consumed or resold on the high seas or in foreign countries. Reports of such exempt sales must be maintained as provided in OAR 150-323-0250. The tax applies to the transaction if the cigarettes are diverted in transit or for any other reason are not actually delivered outside the state pursuant to the contract of sale or are not shipped abroad to a foreign purchaser, regardless of documentary evidence held by the distributor. Cigarettes are not considered to be interstate commerce and therefore are not exempt under ORS 323.040 if they are received by a purchaser or agent (other than a common carrier) in this state. Failure to keep any reports, waybills, bills of lading or other documents required by this rule is justification for the Department of Revenue to impose a tax on any cigarettes claimed to be shipped out of Oregon and exempt under this rule. Any tax imposed on these grounds shall be cancelled upon actual proof to the Department that the reports, waybills, bills of lading or other documents were in fact issued and the cigarettes were in fact shipped out of Oregon and were exempt under this rule.