State Of Oregon ~ IG162001 ~ Marijuana Tax Collection Agreement IC CC)
MARIJUANA TAX COLLECTION AGREEMENT
This Marijuana Tax Collection Agreement("Agreement")is entered into between the
State of Oregon,acting by and through its Department of Revenue(the"Department")and the
City of Tigard("City"),under the authority of ORS 305.620.
In consideration of the conditions and promises hereinafter contained,it is mutually
agreed by the parties that the Department shall supervise and administer,according to the terms
and conditions set forth in this Agreement,the Local Tax on sales of marijuana items by
Marijuana Retailers authorized under ORS 475B.345 and approved by the voters of City.
(1)Definitions. As used in this Agreement the following terms have the meanings
ascribed to them:
(a)"Confidential Information"means the information on Local Tax returns administered
pursuant to ORS 305.620,any information in the reports required under Sections 8 and 9 of this
Agreement from which information about a particular Local Taxpayer is discernable from the
report due to a small number of Local Taxpayers in City or similar factors,and any other
information exchanged between the Department and City related to this Agreement,that is
confidential under ORS 314.835.
(b)"Fees"means collectively the Administrative Services Fee,the Business Fee and the
Core Systems Replacement Fee described in Section 5 of this Agreement.
(c)"Local Government"means a city or county that has entered into a form of this
agreement with the Department under the authority of ORS 305.620 for the Department to
collect Local Taxes authorized under ORS 475B.345.
(d)"Local Tax"or"Local Taxes"means the Marijuana Tax imposed by City,together
with any additional interest or penalties provided for by statute or the Department's rules; it does
not include any additional penalties or fees that City may assess against its Local Taxpayers.
(e)"Local Taxpayer"means a licensed Marijuana Retailer located in the taxing
jurisdiction of City.
(f)"Marijuana Retailer"has the meaning given in ORS 475B.015.
(g)"Marijuana Tax"means the tax imposed on sales of marijuana items by Marijuana
Retailers pursuant to ORS 475B.345.
(h)"Marijuana Taxpayer"means a licensed Marijuana Retailer that is subject to the
Marijuana Tax imposed by a Local Government.
(i)"Ordinance"means the ordinance adopted by the governing body of City and
approved by the voters of City on 11/8/2016,a copy of which is attached hereto as Exhibit B and
by this reference incorporated herein.
(2)General Administration. The Department shall be responsible for all aspects of
Local Tax administration,including,but not limited to,adopting administrative rules;auditing
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returns; assessing deficiencies and collecting the Local Tax and penalties and interest under
applicable statutes,including but not limited to ORS 305.265, ORS 305.220,and ORS 314.400;
making refunds;holding conferences with Local Taxpayers;handling appeals to the Oregon Tax
Court;issuing warrants for the collection of unpaid taxes;determining the minimum amount of
Local Tax economically collectible; and taking any other action necessary to administer and
collect the Local Taxes. The Department has adopted rules addressing the requirements for
paying taxes with currency and other matters related to the taxation of marijuana under ORS
chapter 475B. City understands and agrees that such rules will be applied to Local Taxpayers.
(3)Level of Service. In performing its duties,the Department may in its sole discretion
determine what action shall be taken to enforce provisions of the law and to collect the Local
Tax. In exercising its discretion,the Department shall provide a level of services that are
comparable to the level of services it provides in the administration of the State of Oregon
marijuana tax laws and the collection of such taxes owed to the State of Oregon. If the
Department deems it necessary to vary substantially from this standard,the Department shall
first notify City of the need and obtain City's consent. The Department shall provide all forms
necessary for implementation of the Local Tax,including forms for Marijuana Tax returns,
exemptions and refunds.
(4)Transfer of Taxes to City. Beginning at the end of the first full quarter after
execution of this Agreement,the Department shall remit to City the amount of Local Taxes
collected in the preceding quarter less amounts withheld to pay the Department's Fees and other
costs as described in this Agreement within 60 days of the return due date for the quarter. The
Department shall notify City if,because of inability to move funds electronically or otherwise
through the banking system,a force majeure event described in Section 26 of this Agreement or
other exigent circumstance,the Department is unable to transfer the Local Tax collected to City
as provided in this Section. In that event,the Department shall provide an estimate,if possible,
of when it expects to be able to transfer the Local Taxes collected to City. The Department may
enter into an agreement with another state government agency to fulfill the requirements of this
Section 4,provided that said government agency can comply with the requirements of this
section.
(5)Costs. In order to recover its costs to collect and transfer the Local Tax as provided
in this Agreement the Department shall be paid the following three fees:
(a)"Administrative Services Fee":Pays for the establishment and maintenance of
financial systems needed to administer and distribute Local Taxes. The fee shall be calculated
annually as a percentage of the equivalent of 60 hours of work conducted for the Department of
Revenue by the Department of Administrative Services,divided among the Local Governments
in proportion to the number of Marijuana Taxpayers in each Local Government.
(b)"Business Fee":Pays for the Local Tax administration activities set forth in this
Agreement. The fee shall be calculated as a percentage of the Department's Business Division
annual expenses for the administration of all marijuana taxes, with the total fee increasing in
direct proportion to the number of Local Taxpayers. The total amount per Local Taxpayer billed
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to City under the Business Fee shall not exceed 0.05 percent of the Department's Business
Division expenses for the administration of all marijuana taxes;
(c)"Core Systems Replacement fee": Charged only one time after execution of this
Agreement and calculated as a flat fee per Local Taxpayer. The total Core Systems Replacement
Fee shall not exceed two hundred dollars($200.00)per Local Taxpayer in the first full quarter
following execution of this Agreement.
FOR EXAMPLE,in a hypothetical with the following assumptions:
250 Marijuana Taxpayers
50 Local Taxpayers in the City of Mainville
2 Local Taxpayers in the City of Middletown
Business Division's Marijuana Expenses:$500,000 per year
Hourly DAS rate: $99/hour
The fees would be calculated as follows:
Administrative Services Fee=($99/hour* 60 hours)/250 Marijuana Taxpayer=
$23.76 per Local Taxpayer per year
Business Fee=$500,000 in marijuana expenses per year*0.05%=$250 per
Local Taxpayer per year
Core Systems Replacement Fee=$200 per Local Taxpayer,one time
City of Mainville,year 1:($23.76 Administrative Services Fee+$250 Business
Fee+$200 Core Systems Replacement Fee) * 50 Local Taxpayers=$23,688 in
costs
City of Mainville,subsequent years: ($23.76 Administrative Services Fee+$250
Business Fee) * 50 Local Taxpayers=$13,688 in costs
City of Middletown,year 1: ($23.76 Administrative Services Fee+$250 Business
Fee+$200 Core Systems Replacement Fee) *2 Local Taxpayers=$947.52 in
costs
City of Middletown,subsequent years: ($23.76 Administrative Services Fee+
$250 Business Fee) *2 Local Taxpayers=$547.52 in costs
(e)In addition to the Fees described above,the Department may withhold or invoice City
for the Department's costs to administer extraordinary services not described in this Agreement
related to the Local Tax;such extraordinary costs may include,without limitation,requests for
audits from City that exceed the scope of the Department's normal audit procedures,requests for
research or advice from the Department or the Oregon Department of Justice attorneys,or
specially appointed counsel, regarding the Local Tax.
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(f)If the Department determines that its costs cannot be covered by the maximum fees
outlined in this Section 5,the Department will notify City of the amount by which the
Department has determined the Fees must increase. If the Department and City do not agree
upon a Fee increase and related amendment to this Agreement,then this Agreement may be
terminated by either party in accordance with Section 16 of this Agreement.
(g)The Department shall not collect more in fees than its costs to administer the Local
Tax,per ORS 305.620(5). It is using the above formula in the interests of producing its best
estimate of costs.
(6)Withholding for Fees and Rebate. The Department shall withhold from the Local
Taxes collected and each transfer to City an amount equal to four percent(4%) of the Local
Taxes collected. In the first quarter of each calendar year the Department will reconcile the
amounts withheld in the previous year with the total fees assessed,and provide such
reconciliation in the Department's annual report described in Section 9 of this Agreement. If the
amount withheld in a calendar year exceeds the amount of the Department's Fees,the
Department will rebate the balance of the Local Taxes withheld to City by the end of the first
quarter following the year of withholding. If the amount withheld does not cover the
Department's Fees for the preceding year,the amount of the shortfall will be withhold from
subsequent transfers of Local Taxes collected until the Department's Fees are fully paid,or in its
discretion the Department may invoice City for the unpaid amount of the Department's Fees.
('n Recovery of Overpayments. If the amount of Local Taxes paid to City under this
Agreement,exceed the amount to which City is entitled,the Department may, after notifying
City in writing,withhold from later payments due City under this Agreement, such amounts,
over such periods of time,as are necessary to recover the amount of the overpayment.
(8)Department Quarterly Reports. Beginning with the first full calendar quarter after
the execution of this Agreement and continuing each calendar quarter thereafter,within sixty
(60)days after the due date for quarterly Local Tax returns,the Department shall provide City
with a report indicating the amount of Local Taxes collected,any extraordinary costs assessed,
the amount withheld under Section 6 of this Agreement and the cumulative amount of delinquent
Local Taxes for each Marijuana Retailer in City's jurisdiction. The information in this report
must be treated as potentially revealing Confidential Information,and shall be protected as
described in Section 15. City should make all efforts to prevent Confidential Information from
being released. The Department and City shall disclose any non-confidential information in a
report when required to do so by law,including the Oregon Public Records Law, ORS 192.410
to 192.505.
(9)Department Annual Reports. In the first calendar quarter of each year,the
Department shall make a written annual report of the preceding calendar year to City showing
the total amount of Local Taxes collected,refunds paid,the expenses of administering and
collecting the Local Tax,and other pertinent information. The report shall show the total amount
withheld by the Department under Section 6 of this Agreement, and shall show the Department's
expenses by its Fee categories. In such report,the Department shall also make recommendations
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concerning changes in Local Tax Ordinances,procedures,policies,Local Tax administration and
related matters,as the Department deems necessary and appropriate. The information in this
report must be treated as potentially Confidential Information,and shall be protected as
described in Section 15. City should make all efforts to prevent Confidential Information from
being released. The Department and City shall disclose any non-confidential information in the
report when required to do so by law, including the Oregon Public Records Law, ORS 192.410
to 192.505.
(10)City Reports. Within sixty(60)days of the effective date of this Agreement, City
shall provide the Department with a list of Local Taxpayers in its jurisdiction and a list of zip
code areas that are within its jurisdiction for purposes of imposing the Local Tax. City shall
provide an updated list of Local Taxpayers to the Department each calendar quarter thereafter.
City shall review all reports and reconciliations provided by the Department and promptly notify
the Department of any perceived errors or omission in such reports.
(11)Records Maintenance and Access. Each party shall maintain its records relevant to
this Agreement,the Local Taxes and Local Taxpayers for the period of time specified and in the
manner required under the document retention and archiving requirements applicable to it that
are established under ORS 192.005 to 192.170. Upon written request,each party may examine
the records of the other party at a time and location that is convenient and without extra cost to
the holder to the records;provided,however,any requests for records made in connection with
litigation or other efforts to collect the Local Tax shall be immediately provided in the time and
manner requested.
(12)Ordinance and Notification of Changes. Contemporaneous with the execution of
this Agreement,City shall provide a copy of the Ordinance to Department for incorporation into
this Agreement as Exhibit B. In order to insure consistency in administration of the Local Tax,
each party shall notify the other of any change in the Ordinance and any state or local regulations
or rulings interpreting the Local Tax or the Ordinance,any changes in rates or changes in the
City's boundary at least ninety(90)days prior to the effective change,unless it is not legally
possible to provide ninety(90)days' notice or both parties mutually agree to effect such changes
in less than ninety(90)days. Each party shall notify the other of any change in administration of
the Local Tax under this Agreement. The parties shall cooperate in amending the Ordinance or
in seeking amendments to ORS 475B.345 or ORS 305.620 which they deem necessary.
(13)Information. The parties will cooperate in the exchange of information and making
public announcements to facilitate effective administration of the Local Tax and maintain
consistency in public announcements and information. Policy announcements, announcement of
changes in the Ordinance, and all correspondence relating to public relations will be handled by
City. The Department shall promptly notify City of any matter arising in the administration of
the Marijuana Tax that would require any legislative change or affect City's policy,including
any policy that relates to the amount of Local Tax collected. Nothing in this section shall
prohibit the Department from conducting its own outreach activities to increase awareness and
knowledge of local tax obligations.
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(14)Limits and Conditions. To the extent limited by applicable provisions of Article
XI of the Oregon Constitution or other governing law,and within the limits of the Oregon Tort
Claims Act applicable respectively to the Department and City,each party shall indemnify the
other for damage to life or property arising from their respective duties and obligations under this
Agreement,provided neither party shall be required to indemnify the other for any such liability
arising out of a party's own negligent or wrongful acts.
(15)Confidentiality.
(a)Confidential Information may be disclosed only to City as principal,by the
Department as its agency,for purposes of carrying out the administration of the Local Tax
imposed by City. Requests for Confidential Information shall be made by City by giving not less
than ten(10)days' notice to the Department,stating the information desired,the purposes of the
request, and the use to be made of such information. If the compilation of information is not
feasible,the Department shall so advise City.
(b)ORS 314.840(3)requires that employees and representatives of City who receive
Confidential Information must be advised in writing of the provisions of ORS 314.835 and
314.991(3),relating to the penalties for unlawful disclosure. Prior to being given access to
Confidential Information,all City employees involved in the performance of this Agreement
must review the DOR Secrecy Clause and sign the DOR Secrecy Laws Certificate(substantially
in the form of Exhibit A,attached hereto and by this reference incorporated herein)certifying the
employee understands the confidentiality laws and the penalties for violating them. Annually
thereafter,(on or before a date specified by the Department),or upon request by the Department,
such City employees must review and sign the latest versions of the Secrecy Clause and the
Secrecy Laws Certificate. All signed Secrecy Laws Certificates must be immediately emailed to
both the designated Department Authorized Representative(indicated below)and the
Department's Disclosure Office(diseiosure.office@oregon.gov). When the employee terminates
employment with City, City will forward the certificate to the Department's Disclosure Officer
indicating the employee is no longer employed by City. A listing of every person authorized to
request and receive Confidential Information identified in this Agreement will be sent to the
following designated representative:
John Galvin,Marijuana Tax Program Manager,marijuanatax.DOR@oregon.gov
(c)Upon request and pursuant to the instructions of DOR, City shall return or destroy all
copies of Confidential Information provided by DOR to City,and City shall certify in writing the
return or destruction of all such Confidential Information.
(d)The administrative rules implementing ORS 314.835 and ORS 314.840 as amended
from time to time during the term of this Agreement,shall apply to this Agreement.
(16)Term. The term of this Agreement shall be from the date it is executed by all
parties and until it is terminated by operation of law or by either party at its discretion upon at
least ninety(90)days prior written notice. Prior to the termination date specified in written
notice provided under this section or Section 17 below, City and the Department will continue to
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perform their respective duties and obligations of under this Agreement. After the termination
date,the Department will cease all collection and other activities under this Agreement,unless
prior to the termination date the Department and City agree in writing that the Department may
continue actions that are pending before the Oregon Tax Court or the Oregon Supreme Court,or
are being collected after judgment or stipulation. In addition, after the termination date the
Department will continue to remit to City any Local Taxes received by the Department,after
deduction of the Department's actual costs,until all matters pending on the date of termination
have been resolved or collected. The Department will administer the Local Tax for City for each
calendar quarter commencing after this Agreement is executed;provided,however,if this
Agreement is fully executed on or before the 15'h day of the calendar quarter,the Department
will administer the Local Tax for the quarter in which this Agreement is executed.
(17)Default and Remedies. A party shall be in default under this Agreement if it fails
to perform any of its duties and obligations under this Agreement,and fails to cure such
nonperformance within ninety(90)days after the other party provides written notice specifying
the nature of the nonperformance. If the nonperforming party does not cure its nonperformance,
or provide a satisfactory explanation to the other party of its performance under this Agreement,
the other party may terminate this Agreement immediately or at a later date specified in written
notice provided to the nonperforming party. In addition to termination of this Agreement, in the
event of default by a nonperforming party,the other party may pursue any remedies available in
law or equity,including an action for specific performance.
(18)Notices. All notices, documents,and information shall be sent as follows:
City of Tigard Oregon Department of Revenue
G, Ty AiAAjAX Lc e- Marijuana Tax Program
13/ 2s- S W NA L4 ISLI/-0 , PO Box 14630
7/6A X Or D K, 12 2.2-3 Salem,OR 97309
(19)Amendments. The provisions of this Agreement shall not be waived,altered,
modified,supplemented, or amended, in any manner whatsoever,except by written instrument
signed by both parties.
(20)Successors and Assigns. This Agreement shall be binding and inure to the benefit
of the parties,their assigns, and successors.
(21)Severability. If any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction,such holding shall not invalidate or render
unenforceable any other provision hereof.
(22)Representations. Each party represents to the other that the making and
performance of this Agreement: (a)have been duly authorized by its governing body or official,
(b)does not and will not violate any provision of any applicable law,rule,regulation,or order of
any court,regulatory commission,board or other administrative agency or any provision of any
applicable local charter or other organizational document,and(c)do not and will not result in the
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breach of,or constitute a default or require any consent under any other agreement or instrument
to which the party is bound.
(23)Governing Law,Consent to Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Oregon without regard to principles of
conflicts of law. Any claim,action,suit or proceeding(collectively"Claim")between the
Department and City regarding the enforcement or interpretation of this Agreement shall be
brought and conducted solely and exclusively within the Circuit Court of Marion County for the
State of Oregon. The parties understand and agree that any action brought to determine the
amount of Local Tax owed by a Local Taxpayer,whether brought solely by the Department or in
conjunction with City shall be brought solely in the Oregon Tax Court.
(24)Nonanproariation. The obligation of each party to perform its duties under this
Agreement is conditioned upon the party receiving funding,appropriations,limitation,allotment,
or other expenditure authority sufficient to allow the party,in the exercise of its reasonable
administrative discretion,to meet its obligations under this Agreement. Nothing in this
Agreement may be construed as permitting any violation of Article XI,sections 7 or 10 of the
Oregon Constitution or any other law limiting the activities,liabilities or monetary obligations of
each party.
(25)Survival. All rights and obligations of the parties under this Agreement will cease
upon termination of the Agreement,other than the rights and obligations arising under Sections
14, 16 and 17,and those rights and obligations that by their express terms survive termination of
this Agreement;provided,however,that termination of this Agreement will not prejudice any
rights or obligations accruing to a party prior to termination.
(26)Force Maieure. Neither party is responsible for any failure to perform or any delay
in performance of an obligation under this Agreement caused by fire,civil unrest, labor unrest,
natural causes,or war,which is beyond that party's reasonable control. Each party shall,
however, make all reasonable efforts to remove or eliminate such cause of failure to perform or
delay in performance and shall,upon the cessation of the cause,diligently pursue performance of
its obligation under this Agreement.
(27)Counterparts. This Agreement may be executed in counterparts,all of which when
taken together shall constitute one agreement,notwithstanding that all parties are not signatories
to the same counterpart. Each copy of this Agreement so executed constitutes an original.
(28)Merger. This Agreement and any exhibits constitute the entire agreement between
the parties on the subject matter hereof. There are no understandings,agreements or
presentations, oral or written,not specified herein regarding this Agreement.
Each party represents that this Agreement,when fully executed and delivered will
constitute a legal,valid and binding obligation of the party in accordance with its terms,and that
the person signing below is the authorized representative of the party with full power and
authority to bind his/her principal to this Agreement.
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Oregon Department of Revenue City:
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Name/Title. S
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Signature: Signature: ' �.
Date signed: ( f O` i Date signed: 2017
APPROVED AS TO
LE AL SU_ IC ENCY
Asst.Attor ey General
Date
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