Oregon Vehicle Privilege & Use Tax Guide | Sales & Use Tax in Oregon Explained

Sales and Use Tax Basics in Oregon

Sales Tax

The State of Oregon is one of the rare US states that has never imposed a sales tax. Unlike Delaware, which does not have a state-wide or local sales and use tax but implements a gross receipts tax, Oregon does not have a tax similar to a sales or gross receipts tax. Oregon and Delaware are two of the five NOMAD states that do not impose sales and use tax.

Nevertheless, in 2018, Oregon implemented a Vehicle Privilege Tax, a tax on the privilege of selling vehicles in Oregon.

Use Tax

Although Oregon does not impose a general use tax, it does impose a vehicle use tax on new vehicles purchased out of state, and excise taxes are applied to products such as cigarettes and marijuana.

Oregon Vehicle Privilege and Use Tax Rates

A 0.5% tax rate applies to the retail price of any taxable vehicle. A vehicle is taxable in Oregon if it meets all specified conditions. 

Therefore, it must have been purchased on or after January 1, 2018, from a dealer or someone required to register as a dealer in the state. Additionally, the vehicle must have either been driven 7,500 miles or less if it has an odometer, or be sold with a manufacturer’s certificate of origin if it does not have one. 

Furthermore, the vehicle must have a gross weight rating of 26,000 pounds or less and not have been previously registered or titled in Oregon. The only exemption is when the vehicle is used as a dealer demonstrator. 

Tax-Exempt Transactions

Oregon does not have sales or use taxes and does not issue exemption certificates. However, under the vehicle use tax exemption rules, transactions are tax-exempt when the vehicle is sold to a buyer who is regularly engaged in selling vehicles, and the seller obtains a resale certificate from that buyer.

Exemptions apply to the vehicle privilege tax in several specific cases. For example, when the vehicle is sold to businesses outside Oregon, when the sale occurs at a short-term public auction event lasting less than seven days, or when the buyer provides a resale certificate and regularly sells vehicles.

Nexus Rules in Oregon

Due to the lack of sales and use tax rules and regulations, the only relevant type of presence in Oregon is physical presence. Therefore, taxable persons must pay attention to the rules defined for corporations doing business in Oregon and nexus-creating activities. However, these rules are essential for registering for and paying excise or income tax.

Physical Nexus

Taxable persons that stock goods, have an office or other place of business, have employees or representatives providing service to consumers and customers as the primary business activity, or services incidental to the sale of tangible or intangible personal property, are considered as taxable persons that are doing business in Oregon.

Nexus-creating activities include having a phone listing in Oregon or a local phone number, even if it is only used to forward calls to an out-of-state office. Furthermore, owning, renting, or leasing raw or undeveloped land, inventory, or other goods in an in-state warehouse, vehicles, or equipment used in the state, also contributes to having a nexus in Oregon.

Nexus is also created when taxable persons ship in-process inventory to be processed there, consign goods for sale, lease property used in Oregon, or have interests in partnerships, Limited Liability Companies (LLCs), or S corporations operating within the state.

Taxable Goods and Services in Oregon

Goods and services are not subject to sales and use tax in Oregon. Therefore, no taxes are added to store, restaurant, or retailer receipts. The only relevant rule is that vehicle use tax must be paid before the vehicle can be titled and registered in Oregon.

E-Commerce Framework

Oregon is one of the few states not influenced by the Wayfair ruling. Therefore, consumers buying goods or services online generally are not required to pay sales tax. Also, e-commerce sellers that make supplies to in-state buyers are not required to charge, collect, and remit sales or use tax.

However, if Oregon online sellers sell goods and services to consumers in other US states, they must be aware of statewide and local sales and use tax rules and requirements.

Marketplace Rules

There are no rules for remote or out-of-state sellers and no economic and marketplace nexus rules, so marketplace sellers are not required to collect and remit taxes on their sales to local consumers.

Digital Goods and Services

Oregon does not tax digital goods and services, meaning that consumers can buy digital products and services without adding the cost of sales and use tax. However, the Oregon regulatory framework provides insight into what is considered a digital good or service.

Therefore, selling or licensing various video, audio, and software products is considered selling or licensing digital goods and services. Although these transactions are not subject to sales and use tax, they are subject to other taxes, such as income tax.

Digital Marketplace

The lack of sales and use tax regulations and no marketplace facilitator rules in place reduced the burden on digital marketplace operators for registering, collecting, and remitting taxes. While in most US states, except in so-called NOMAD states, marketplace facilitators or providers must register for, collect, and remit sales tax on behalf of their sellers, there is no such obligation in Oregon.

However, Oregon-based marketplace operators or facilitators providing their services to marketplace sellers selling goods and services to consumers in other US states must collect and remit sales tax if they meet the requirements.

Filing and Payment Requirements in Oregon

Since vehicle privilege and use tax were mentioned in the context as being similar to sales and use tax, the filing and payment requirements must be pointed out. To pay the vehicle use tax and obtain the required payment certificate, consumers must complete and submit an online form, as these returns cannot be filed by phone. Tax returns and payments of due taxes are typically required every quarter.

Out-of-state or remote dealers can voluntarily collect the vehicle use tax from customers. In that case, they must clearly show the tax amount separately on the sales receipt or proof of sale and provide it to the buyer, register for a vehicle use tax account with the Oregon Department of Revenue, report and pay the tax quarterly for all qualifying vehicle sales.

Penalties for Non-Compliance with Sales and Use Tax Requirements

If the vehicle use tax is not paid on time, a 5 percent penalty applies, and if a return is not filed within 30 days of the vehicle purchase, a 20 percent penalty is added. In addition to penalties, interest is charged on any owed tax starting from the due date.