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HomeMy WebLinkAbout2016-315 IGA - DOR - Marijuana Tax Collection 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 Ashland ("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. G) "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 7777588-v1 Page 1 of 14 4 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: 1 (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 3 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 j direct proportion to the number of Local Taxpayers. The total amount per Local Taxpayer billed 7777588-v1 Page 2 of 14 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/hotir * 60 hours) l 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 l: ($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 j Fee + $200 Core Systems Replacement Fee) " 2 Local Taxpayers = $947.52 in costs City of Middletown, subsequent years: ($23.76 Administrative Services Fee + i $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. 7777588-v1 Page 3 of 14 (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. (7) 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. (s) 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 7777588-v1 Page 4 of 14 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 Chanl4es. 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. 7777588-v1 Page 5 of 14 (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 ofthe 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 Cause 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 (disclosure. 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 7777588-v1 Page 6 of 14 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 15th 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 Ashland Oregon Department of Revenue Marijuana Tax Program PO Box 14630 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 Assiffns. 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 7777588-v1 Page 7of14 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) Nonappropriation. 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 Majeure. 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. 7777588-v1 Page 8 of 14 i i I Oregon Department of Revenue city: 1Ewif A vtC) or Name/Title:~,l] f,aY,K 1~~ / C.~'1~l I li l S- i Name/Title: Pr,r~~`. um ~Yt , i Y'Yl ` ~ ~ gnaWre: Signature: Sz t~ Gf~sti-d Date signed: j/- Date 8igne APPROVED AS TO AP ~v~~~ ~ AL CIENCY 14 MAL Attomay Asst. ttorney General Nt& i 50/17 Date r i i f C [ j I L to E E ~ e [ r . e I s R 5 S E C "t a f K 4 6 E t 7777588-0 I Page 9 i E I i S Oregon Department of Revenue City: Name/Title: Name/Title:.. Ja Signature: Signature: Date signed: Date signe Q AP, OVER A Y RM A !an qty ttomey Data { 7777588-v1 Page 9 EXHIBIT A DOR SECRECY CLAUSE and SECRECY LAWS CERTIFICATE This page intentionally left blank 7777588-v1 Page 10 of 14 OP R EGON DEPARTMENT SECRECY CLAUSE '4W {JF REVENUE Taxpayer information is confidential and protected by Oregon law. Only authorized persons may have access to taxpayer information, or to secure buildings where taxpayer information is handled. Oregon law requires that you sign a Secrecy Certificate Before being allo%ved access to this confidential informa- tion or secure areas. By signing the certificate, you certify that you understand the confidentiality laws and the penalties for violating them. This applies to everyone with access to taxpayer information, including: • Department of Revenue employees • Employees of other government agencies • Vendors and contractors • Business partners Penalties for. unauthorized disclosure of state tax information • Income tax*--Mass C felony; up to $125,000 fine; up to five years in-tprisonment; dismissal from state employment; no public office for five years. [ORS 314.991(2)] • Inheritance tax-Class C felony; up to $125,000 fine; Lip to five years imprisonment; dismissal from state employment, no public office for fine years. [ORS 1.1.8.990(3)] • industrial property tax-Up to $1.0,000 fine; tip to one year imprisonment. [ORS 308,990(5)1 • Timber tax-Up to $5,000 fine; dismissal from state employment. (ORS 321.686) • Employment Department-May result in dismissal from state employment, or other discipline. [ORS 657.665(6)] 1 it--s provisions al,,4i apps q to Iransieni lodging fax- (QRS 320.330); c arefit, lax (ORS 323.1403), lobvcco producfs tax (ORS 323.595), cmergertc f cotttt1rtrrticil(lolls lax (ORS 403.231)), oil and _ is productim tax (CARS 324,170), ha-Z ardotrs suhstalzces tax (ORS 453.410); arid pelroletit}i l?rchlacis to (ORS 465.124). Penalties for unauthorized disclosure, • • tax information IRC Sect. 7213-Felony; up to $5,000 fine; imprisonment of up to five years; cost of prosecution, daniages". • IRC Sect. 7213A-Up to $1,000 fine; imprisonment of Lip to one year; cost of prosecution, damages"'. Damages Irian hildilde $1,001) her act, act 11171 tarries, l7tttritirv riaiiiagez;, cost of legal act iotr, allor) ieyfees. Set, Secfiou 7.431. IGLI.900-033 2-11' 7777588-v1 Page 11 of 14 Transient lodging tax ORS 324330 I Instructions Cigarette tax ORS 323.403 Please read the following lass=s. They explain the types of • Tobacco products tax ORS 323,595 information that are confidential. If you have questions during your employment or performance of ditties, ask 'Emergency communications tax ORS 403.230 your supervisor or it Disclosure officer before accessing or • Oil and gas production tax ORS 324.170 disclosing information. Hazardous substances tax ORS 453.410 After reading this information, fill out the last page and re- • Petroleum products tax ORS 4655+.124 turn it to the Department of Revenue. Keep the other pages for your records, Oregon Inheritance Tax Laws ORS 118.525 • regon Income Tax Laws ORS 314.835 (1) It shall be unlawful for the Department of Revenue or any of its officers or employees to divulge or rruike known (1) Except as otherwise specifically provided in rules ad- in any manner any particulars disclosed in any return or opted under ORS 305.193 or in other laN , it shall tl-I unlaWful supporting data required tinder this chapter. Except for for the Department of Revenue or any officer or employee of executors or beneficiaries and their authorized representa- the department to divulge or make known in any manner the fives, it shalt be unla;vful for any person or entity who has amount of income, expense, deduction, exclusion or credit or acquired information pursuant to subsections (3) and (4) any particulars set forth or disclosed in any report or return of this section to divulge or make known such information required in the administration of ORS 310.6311 to 310,70, for any purpose other than that specified in the provisions required in the administnation of any local tax pursuant to of law authorizing the use or disclosure. No subpoena or ORS 305.620, or required under a lativ imposing a tax upon or judicial order shalt be issued compelling the department, measured by net income. It shall be unlawful for any person or entity to whom information is disclosed or given by the' or its officers or employees, or persons described in subsec- department pursuant to ORS 314.840 (2) or any other prove- tiOns (3) and (4) of this section, to divulge or make known lion of state lacy to divulge or use such information for any any particulars disclosed in any such return or supporting purpose ether than that specified iu the provisions of la%v data except where the liability for inheritance taxes is to be authorizing the usc or disclosure. No sublxxna or judicial adjudicated by the Oregon Tax Court. Nothing in this sec - order shall be issued compelling the department or any of its tion shall prohibit the publication of statistics so classified officers or employees, or any person who has acquired infor- as to prevent they identification of particulars in any return mation pursuant to ORS 314.840 (2) or an), other provision of or supporting data covered by this section. state law to divulge or make known the amount of income, (2) As used in this section: expense, deduction, exclusion or credit or any particulars set forth or disclosed in any report or return except where the (a) "Officer," "employee" or "person" includes an autho- taxpayer's liability for income tax is to be adjudicated by the rized representative of the officer, employee or person, court from which such process issues. or former officer, employee or person, or an authorized repre,sentative of such former officer, employee or person. (2) As used in this section; (b) "Particulars" includes, but is not limited to, a tax- ,r rr It tt fr rr (a) Officer, employee or person includes an autho- payer's name, address, telephone number, Social Security rized representative of the officer, employee or person, or number and the amount of refund claimed by or granted any former officer, employce or person, or an authorized to a taxpayer. representative of such former officer, employee or person. (b) "Particulars" includes, but is not limited to, a tax- ORS 118.990 payer's name, address, telephone number, Social Secu- (3) Violation of ORS 118.525 is a Class C felony. If the offend- rit}r number, employer identification number or other er is an officer or employee of the state the offender shall be taxpayer identification number :end the amount of refund dismissed from office and shall be incapable of holding any claimed by or granted to a taxpayer. public office in this state for a period of five years thereafter. ORS 314.991 (2) Violation of ORS 314.835 is a Class C felony. If the offender - • • Property Tax Laws is an officer or employee= of the state the offender shall be ORS 308.290 dismissed from office and shall be incapable of holding any public office in this state for a period of five years thereafter, (11)(a) All returns filed under the provisions cif this section and ORS 308.525 and 308.8.10 are confidential records of the Applicability to other tax progrinis Department of Revenue or the county assessor's office in The above provisions of ORS 314, concerning the confiden- which the returns are filed or of the office to which the re- tiality of returns and penalties, also apply to: turns are forwarded under paragraph (h) of this subsection. 2 i stl SLOM1 kllov. 2- 11) 7777588-v1 Page 12 of 14 ORS 308.413 or judicial order shall be issued compelling the department or any of its officers or employees, or any person who has (1) Any information furnished to the county assessor or to acquired information pursuant to ORS 321.684 (2) or any the Department of Revenue under ORS 308.411 which is other provision of state hats; to divulge or make known the obtained upon the condition that it be kept confidential shall amount of tax or any particulars set forth or disclosed in be confidential records of the office in which the information any report or return except where the taxpayex+s liability is kept, except as follows: for timber tax is to be adjudicated by the court from which (a) All information furnished to the county assessor shall be such process issues. available to the department and all information furnished to the department shall be available to the county assessor. (2) As used in this section, "officer," "e►nployce„ or "per- (b) All information furnished to the county assessor or son" includes an authorized representative of the officer, department shall be available to any reviewing authority employee or person, or any former officer, employee or per- in any subsequent appeal. son, or an authorized representative of such former officer, employee or person. (c) The department may publish statistics based on the information furnished if the statistics are so classified as to ORS 321.686 prevent the identification of die particular industrial print. Violation of ORS 321.682 is subject to a fine not exceeding (2) The Department of Revenue shall make rules governing x5,000 or, if conuttitted by an officer or employee of the state, the confidentiality of information render this section. dismissal or removal from office or employment, or both fine and dismissal or removal from office or employment. (3) Each officer or employee of the Department of Revenue or the office of the county assessor to whom disclosure or ac- Oregon Department cess of the information made confidential under subsection Employment i . (1) of this section is given, prior to beginning; employment ORS 657.665 or the performance of duties involving such disclosure, shall be advised in w-citing of the provisions of this section and (4)l he Employment Department Wray:... (i) Disclose in- ORS 308.990 (5) relating to penalties for the violation of this formation to the Department of Revenue for the purpose section, and shall as a condition of employment or perfor- of perforating its duties under ORS 293.250 or under the mance of duties execute a certificate for the department or revenue and tax lmvs of this state. The inforntation disclosed the assessor in a form prescribed by the department, stating may include the names and addresses of employers and in substance that the person has read this section and ORS employees and payroll data of employers and employees. 308.990 (5), that these sections have been explained to the The information disclosed is confidential and may not be person and that the person is aware of the penalties for vio- disclosed by the Department of Revenue in any manner that lation of this section. would identify an employing unit or employee except to the ORS 308,990 extant necessary to carry out the department's duties under ORS 293.250 or in auditing or reviewing any report or return (5) Subject to ORS 153.022, any willful violation of ORS required or permitted to be, filed tinder the revenue and tax 308.413 or of any rules adopted under ORS 308.413 is pun- laws administered by the department. The Department of ishable, upon conviction, by a fine not exceeding $10,000, Revenue may not disclose any information received to any or by imprisonment in the county jail for not more than one private collection agency or for any other purpose. If the year, or by both. information disclosed under this paragraph is not prepared for the use of the Employment Department, the costs of • - • disclosing the information shall be paid by the Department of Revenue=. ORS 321.682 (6) Any person or any officer or employee of an entity to (1) Except as other`vise specifically provided by late, it shall whom information is disclosed by the Employment De- be unlawful for the Department of Revenue or any officer partntent under this section who divulges or uses the in- or employee of the department to divulge= or make known formation for any purpose other than that specified in the 3n an}' manner the amount of the tax or any particulars set provision of IaNv ter agreement authorizing the use or disclo- forth or disclosed in any report or return required to be filed strrt> may be disqualified from perfouattlztgany service under under ORS 321.045 or 3211.741 or any appraisal data collected to stake determination-,; of specially assessed value of forest- contract or disqualified from holding any appointment or land pursuant to ORS 321.201 to 321.222.It shall be unlawful employment with the state agency that engaged or em- fortarry person or entity to whom information is disclosed or ployed that person, officer or employee. The Employment given by the department pursuant to ORS 321.684 (2) or any Department may intatediately cancel or modify any infor- other provision of state lim, to divulge or use such informa_ mation sharing agreement with an entity when a person or tion for any purpose other than that specified in the provi- an officer or employee of that entity discloses confidential lions of law authorizing the use or disclosure. No subpoena information, other tluan as specified in law or agreement. 150.600.0'33 PcK 2-11} 3 7777588-v1 Page 13 of 14 SECRECY LAWS CERTIFICATE O R E G O N E P A R T M E N Required by ORS 314.840(3), ORS 118.525(6), o EVEN U E ORS 308.413(3), ORS 321.684 I have read the laws prohibiting disclosure of confidential information for the tax programs below. The laws have been explained to me. I have been furnished with a copy of the laws. I understand Oregon's disclosure laws and the penalties for violating them. lncon}e tax ORS 314.835; ORS 314.991(2) Inheritance tax ORS 118.525(1); ORS 115.990(3) Industrial property tax ORS 308.290(11); ORS 303.413; ORS 308.990(5) Forestlxand tax ORS 321.682; ORS 321.686 Employment Department tax ORS 657.665(4)(i) and (6) Transient lodging tax ORS 320.330 Cigarette tax ORS 323.403 Tobacco products tax ORS 323.595 Emergency conimtinications tax ORS 403.230 Oil and gas production tax ORS 324.170 Hazardous substances tax ORS 453.410 Petroletun products tax ORS 465.124 Federal tax laws IRC Sections 7213, 7213A, 7431 VENDORS, CONTRACTORS, BUSINESS PARTNERS PRINT your full nam-? Rusinss telephone number Pnnt full nsrms of business or organization for which you 3ra acting in an official capacity Address of bus`'nl 5s or crganuation SSN (CoUction agency emp£ayG-es only) What is the nature of your business? Dura.4on of contract or visit Revenue coMact Ama where you'll ba w<xking slgntur,o [}3t9 X REVENUE EMPLOYEES PRINT your full narne Date signature X AGENCY USE In Compliance Not in compliance 1544tC)C3-033 lflef . 2-111 A 7777588-v1 Page 14 of 14 EXHIBIT B ORDINANCE NO. i -a 1 AN ORDINANCE ESTABLISHING A TAX ON THE SALE OF MARIJUANA AND MARIJUANA-INFUSED PRODUCTS IN THE CITY OF ASHLAND AND REFERRING SAID TAX TO THE VOTERS OF ASHLAND IN THE NOVEMBER 8, 2016 GENERAL ELECTION Annotated to show deletions and additions to the code sections being modified. Deletions are bold lined f'"~ug-b and additions are bold underlined. WHEREAS, Article 2, Section 1 of the Ashland City Charter provides: Powers of the City. The City shall have all powers which the constitutions, statutes and common law of the United States and this State expressly or impliedly grant or allow municipalities, as fully as though this Charter specifically enumerated each of those powers, as well as all powers not inconsistent with the foregoing and, in addition thereto, shall possess all powers hereinafter specifically granted. All the authority thereof shall have perpetual succession. WHEREAS, the City desires to tax the retail sale of marijuana and marijuana-infused products within the City. THE PEOPLE OF THE CITY OF ASHLAND DO ORDAIN AS FOLLOWS: SECTION 1. Title 4 Revenue and Finance of the Ashland Municipal Code, "Tax on Sale of Marijuana and Marijuana Infused Products," is hereby amended as follows: Section 4.38.010 Purpose For the purposes of this Chapter, every person who sells marijuana, or marijuana-infused products under a license 1-_z-anted by the Oregon Liquor Control Commission for such purpose in the City of Ashland is exercising a taxable privilege. The purpose of this Chapter is to impose a tax upon the retail sale of marijuana, medieal niarriju7a~, and marijuana-infused products. Section 4.38.020 Definitions When not clearly otherwise indicated by the context, the following words and phrases as used in this chapter shall have the following meanings: A. "Director" means the Director- of Finance for the City of Ashland or his/her designee. B. "Gross Taxable Sales" means the total amount received in money, credits, property or other consideration from sales of marijuana, and marijuana-infused products that is subject to the tax imposed by this chapter. C. "Marijuana" means all parts of the plant of the Cannabis family Moraceae, whether growing or not; the resin extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant or its resin, as may be Ordinance No. Page 1 of 7 defined by Oregon Revised Statutes as they currently exist or may from time to time be amended. It does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted there from), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of T germination/.' I I Oregon Health aathorit~, jly~ C1 ` 04 ORS • • S th-e Oregon Aledi al Marijuana Act, and all poli-e- -1-nd procedures pertaining . ED."Person" means natural person, joint venture, joint stock company, partnership, ^association, club, company, corporation, business, trust, organization, or any group or combination acting as a unit, including the United States of America, the State of Oregon and any political subdivision thereof, or the manager, lessee, agent, servant, officer or employee of any of them. EE."Purchase or Sale" means the acquisition or furnishing for consideration by any person of marijuana within the City. G. 'Re pexrs-On who ha een diagnosed by aia medic- l- a ijuftnR-nmy-mitigate-th"J mpt$ms or effeet person's debilitating medieal vu, zazztz--irzrv'-zrtca~been -i3JCZC,t 14F."Retail sale" and "retail selling" means the an transfer, ofgeeds r sefv eeU'in e:xGhanga fer an~, valuable eensi n exchange, gift or barter of a marijuana item by any person to a consumer. And, does not include the transfer or exchange of goods or services between a grower or processor and a seller. 1G. "Seller" means any person who is required to be licensed or has been licensed by the Stat of Oregon Liquor Control Commission to provide marijuana or marijuana--infused products to purchasers for money, credit, property or other consideration. aH."Tax" means either the tax payable by the seller or the aggregate amount of taxes due from a seller during the period for which the seller is required to report collections under this chapter. KI."Taxpayer" means any person obligated to account to the Finance Director for taxes collected or to be. collected, or from whom a tax is due, under the terms of this chapter. Section 4.38.030 Levy of Tax A. There is hereby levied and shall be paid a tax by every seller exercising the taxable privilege of retail selling marijuana and marijuana-infused products as defined in this chapter. B. The amount of tax levied shall be established by a City round' resolution is as follows: 1) Three percent (3%) of the gross sale amount paid to the seller of marijuana and marijuana-infused products by individuals who purchase marijuana and marijuana-infused products from the seller. Section 4.38.040 Deductions The following deductions shall be allowed against sales received by the seller providing marijuana: Ordinance No. Page 2 of 7 A. Refunds of sales actually returned to any purchaser; B. Any adjustments in sales which amount to a refund to a purchaser, providing such adjustment pertains to the actual sale of marijuana or marijuana-infused products and does not include any adjustments for other services furnished by a seller. Section 4.38.050 Seller Responsible for Payment of Tax A. Every seller shall, on or before the last day of the month following the end of each calendar quarter (in the months of April, July, October and January) make a return to the Director, on forms provided by the City, specifying the total sales subject to this chapter and the amount of tax collected under this chapter. The seller may request or the Director may establish shorter reporting periods for any seller if the seller or Director deems it necessary in order to insure collection of the tax and the Director may require further information in the return relevant to payment of the tax. A return shall not be considered filed until it is actually received by the Director. B. At the time the return is filed, the full amount of the tax collected shall be remitted to the Director. Payments received by the Director for application against existing liabilities will be credited toward the period designated by the taxpayer under conditions that are not prejudicial to the interest of the City. A condition considered prejudicial is the imminent expiration of the statute of limitations for a period or periods. C. Non-designated payments shall be applied in the order- of the oldest liability first, with the payment credited first toward any accrued penalty, then to interest, then to the underlying tax until the payment is exhausted. Crediting of a payment toward a specific reporting period will be first applied against any accrued penalty, then to interest, then to the underlying tax. If the Director, in his or her sole discretion, determines that an alternative order of payment application would be in the best interest of the City in a particular tax or factual situation, the Director may order such a change. The Director may establish shorter reporting periods for any seller if the Director deems it necessary in order to insure collection of the tax. The Director also may require additional information in the return relevant to payment of the liability. When a shorter return period is required, penalties and interest shall be computed according to the shorter return period. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by sellers pursuant to this chapter shall be held in trust for the account of the City until payment is made to the Director. A separate trust bank account is not required in order to comply with this provision. D. Every seller required to remit the tax imposed in this chapter shall be entitled to retain five percent (5%) of all taxes due to defray the costs of bookkeeping and remittance. E. Every seller must keep and preserve in an accounting format established by the Director records of all sales made by the dispensary and such other books or accounts as may be required by the Director. Every seller must keep and preserve for a period of three (3) years all such books, invoices and other records. The Director shall have the right to inspect all such records at all reasonable times. Section 4.38.060 Penalties and Interest A. Any seller who fails to remit any portion of any tax imposed by this chapter within the time required shall pay a penalty of ten percent (10%) of the amount of the tax, in addition to the amount of the tax. Ordinance No. Page 3 of 7 B. Any seller who fails to remit any delinquent remittance on or before a period of 60 days following the date on which the remittance first became delinquent, shall pay a second delinquency penalty of ten percent (10%) of the amount of the tax in addition to the amount of the tax and the penalty first imposed. C. If the Director determines that the nonpayment of any remittance due under this chapter is due to fraud, a penalty of twenty-five percent (25%) of the amount of the tax shall be added thereto in addition to the penalties stated in subparagraphs A and B of this section. D. In addition to the penalties imposed, any seller who fails to remit any tax imposed by this chapter shall pay interest at the rate of one percent (I%) per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent Until paid. E. Every penalty imposed, and such interest as accrues under the provisions of this section, shall become a part of the tax required to be paid. F. Notwithstanding subsection AMC 4.34.020.C, all sums collected pursuant to the penalty provisions in paragraphs A and C of this section shall be distributed to the City of Ashland Central Service Fund to offset the costs of auditing and enforcement of this tax. G. Waiver of Penalties. Penalties and interest for certain late tax payments may be waived pursuant to AMC 2.28.045D. Section 4 38 070 Failure to Report and Remit Tax Determination of Tax by Director If any seller should fail to make, within the time provided in this chapter, any report of the tax required by this chapter, the Director shall proceed in such manner as deemed best to obtain facts and information on which to base the estimate of tax due. As soon as the Director shall procure such facts and information as is able to be obtained, upon which to base the assessment of any tax imposed by this chapter and payable by any seller, the Director shall proceed to determine and assess against such seller the tax, interest and penalties provided for by this chapter. In case such determination is made, the Director shall give a notice of the amount so assessed by having it served personally or by depositing it in the United States mail, postage prepaid, addressed to the seller so assessed at the last known place of address. Such seller may make an appeal of such determination as provided in section 4.34.080. If no appeal is filed, the Director's determination is final and the amount thereby is immediately due and payable. _Section 4.38.080 Appeal Any seller aggrieved by any decision of the Director with respect to the amount of such tax, interest and penalties, if any, may appeal pursuant to the Administrative Appeals Process in AMC 2.30.020, except that the appeal shall be filed within 30 days of the serving or mailing of the determination of tax due. The hearings officer shall hear and consider any records and evidence presented bearing upon the Director's determination of amount due, and make findings affirming, reversing or modifying the determination. The findings of the hearings officer shall be final and conclusive, and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice. Ordinance No. Page 4 of 7 Section 4.38.090 Refunds A. Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once, or has been erroneously collected or received by the City under this chapter, it may be refunded as provided in subparagraph B of this section, provided a claim in writing, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the Director within one year of the date of payment. The claim shall be on forms furnished by the Director. B. The Director shall have 20 calendar days front the date of receipt of a claim to review the claim and nrake a determination in writing as to the validity of the claim. The Director shall notify the claimant in writing of the Director's determination. Such notice shall be mailed to the address provided by claimant on the claim form. In the event a claim is determined by the Director to be a valid claim, in a manner prescribed by the Director a seller may claim a refund, or take as credit against taxes collected and remitted, the amount overpaid, paid more than once or erroneously collected or received. The seller shall notify Director of claimant's choice no later than 15 days following the date Director mailed the determination. In the event claimant has not notified the Director of claimant's choice within the 15 day period and the seller is still in business, a credit gill be granted against the tax liability for the next reporting period. If the seller is no longer in business, a refund check will be mailed to claimant at the address provided in the claim form. C. No refund shall be paid under the provisions of this section unless the claimant established the right by written records showing entitlement to such refund and the Director acknowledged the validity of the claim. SECTION 4.38.100 Actions to Collect Any tax required to be paid by any seller under- the provisions of this chapter shall be deemed a debt owed by the seller to the City. Any such tax collected by a seller which has not been paid to the City shall be deemed a debt owed- by the seller to the City. Any person owing money to the City under the provisions of this chapter- shall be liable to an action brought in the name of the City of Ashland for the recovery of such amount. In lieu of filing an action for the recovery, the City of Ashland, when taxes due are more than 30 days delinquent, can submit any outstanding tax to a collection agency. So long as the City of Ashland has complied with the provisions set forth in ORS 697.105, in the event the City turns over a delinquent tax account to a collection agency, it may add to the amount owing an amount equal to the collection agency fees, not to exceed the greater of fifty doltars ($50.00) or fifty percent (50%) of the outstanding tax, penalties and interest owing. 3 i i" Section 4.38.110 Violation Infractions A. All violations of this chapter are punishable as set forth in AMC 1.08.020. It is a violation of this chapter for any seller or other person to: 1) Fail or refuse to comply as required herein; 2) Fail or refuse to furnish any return required to be made; 3) Fail or refuse to pen-nit inspection of records; 4) Fail or refuse to furnish a supplemental return or other data required by the Director; E 5) Render a false or fraudulent return or claim; or 6) Fail, refuse or neglect to remit the tax to the city by the due date. Ordinance No. Page 5 of 7 B. Violation of subsections 1, 2, 3, 4 and 6 shall be considered a Class I violation. Filing a false or fraudulent return shall be considered a Class C misdemeanor, subject to AMC 1.08. The remedies provided by this section are not exclusive and shall not prevent the City from exercising any other remedy available under the law, nor shall the provisions of this ordinance prohibit or restrict the City or other appropriate prosecutor from pursuing criminal charges under state law or City ordinance. Section 4.38.120 Confidentiality Except as otherwise required by law, it shall be unlawful for the City, any officer, employee or agent to divulge, release or make known in any manner any financial information submitted or disclosed to the City under the terms of this chapter. Nothing in this section shall prohibit: A. The disclosure of the names and addresses of any person who is operating a licensed establishment from which marijuana is sold or provided; or B. The disClosLII-e of general statistics in a form which would not reveal an individual seller's financial information; or C. Presentation of evidence to the court, or other tribunal having jurisdiction in the prosecution of any criminal or civil claim by the Director or an appeal from the Director for amount due the City under this chapter; or D. The disclosure of information when such disclosure of conditionally exempt information is ordered under public records law procedures; or E. The disclosure of records related to a business' failure to report and remit the tax when ' the report or tax is in arrears for over six months or the tax exceeds five thousand dollars ($5,000). The City Council expressly finds and determines that the public interest in disclosure of such records clearly outweighs the interest in confidentiality under ORS 192501(5). Section 4.38.130 Audit of Books, Records or Persons The City, for the purpose of determining the correctness of any tax return, or for the purpose of an estimate of taxes due, may examine or may cause to be examined by an agent or representative designated by the City for that purpose, any books, papers records> or memoranda, including copies of seller's state and federal income tax return, bearing upon the matter of the seller's tax return. All books, invoices, accounts and other records shall be made available within the City limits and be open at any time during regular business hours for examination by the Director or an authorized agent of the Director. If any taxpayer refuses to voluntarily furnish any of the foregoing information when requested, the Director may immediately seek a subpoena from the Ashland Municipal Court to require that the taxpayer or a representative of the taxpayer attend a hearing or produce any such books, accounts and records for examination. Section 4.38.140 Forms and Regulations A. The Director is hereby authorized to prescribe fornis and promulgate rules and regulations to aid in the making of returns, the ascertainment, assessment and collection of said iea-l marijuana tax and in particular and without limiting the general language of this chapter, to provide for: 1) A form of report on sales and purchases to be supplied to all vendors; Ordinance No. Page 6 of 7 3 5 f f 2) The records which. sellers providing marijuana. nd.marijuaria-infused products are to keep concerning the tax imposed by this chapter. SECTION 2. Severabilit~T. The sections, subsectioiis, paragraphs and clauses of this .ordinance are severable: The livalidity of one section, subsection, paragraph, or clause shall not affect the validity of the remaining sections, subsections, paragraphs and clauses. SECTION 3. Savings. Notwithstanding any amendment/repeal; 'the City ordinances in existence at the 4me any, en.m.inal or. civil enforcement actions 'Were conunenced, shall remain valid and in full force and :effect for purposes of all cases filed of commenced durinb the tunes said pzd trance(s) or poitions thereof ,vere. operative. This section simply. clarifies the existing situation: that nothing in this Ordinance affects the validity of prosecutions commenced and nder the laws in effect at the time the matters Wee originally filed. continuedu SE.CZ`C}N 4, Codification. Provisions of. this Ordinance shall- be incorporated in the City. Code , -and'the v~ord - ordinance" may be changed to ncodetr narticletr, r+:sectionrr rrchapter+.t or ~uiotll.er word and the sections of this Ordinance may be renumbered, or re-lettered, provided however that:any Whereas clauses and. boilerplate provisions,(i,e. Sections 2-4) need not be codllied acid the.C r Recorder is authorized to'coirect any cross-references and any typographical errors. z a SECTION 5.: Pursuani to Resolution. No. 2016-f ? the Ashlatld- City Council has,referred this - Accordingly to ti1e voters for approval at the general election of November Zo 1b. Y this ordinance shall not be effective unless and until approved by the voters of the City of 3 Ashl-and and following the ofticial.acceptance of the canvas of votes. The foregoing ordinance was first read by title only in accordance with Article X, Sect on2(C) of the City Charter on the J_ day of , 201-6, and Elul r PASSED and ADOPTED this 1 day of f 2016. T Barbara M Christensen, City Recorder this day of , 2016. SIGNED mid APPROVED y r r i {sue--J.y r hn Strom erg, Mayor Revie D ed as to form: avid H. Lo man, City Attorney {ordinance No. Page 7 of 7.