Oregon is one of only a few states that does not have a sales tax. In addition, the state does not impose a use tax on individual taxpayers or Oregon businesses. However, other states may attempt to levy sales tax on an Oregon business buying inventory or products in another state. To maximize the savings on Oregon business taxes, companies should be aware of typical tax exemptions. That way, an Oregon business can seek to avoid paying sales taxes to another state.
First of all, it is important to keep in mind that Oregon tax law does not provide a deduction for sales tax paid to another state. This is why it is important to try to avoid paying sales tax to other states when transacting business in those states.
Resale and Oregon Resale Certificates
A common exemption from sales tax are purchases made for resale. Because the same product will be taxed when sold at retail, states usually provide a sales tax exemption on purchases of product made for resale purpose.
If you have no physical presence or salespeople or employees in another state, the company outside of Oregon that sells you a product will generally not attempt to collect state sales tax on your purchase. Conversely, if you have an active business presence in the state of purchase, you normally do have to pay sales tax.
Regardless of your Oregon business situation, you need to avoid sales tax when you are a reseller by always presenting a resale certificate. This resale permit is a sales tax exemption form that allows you to claim an exemption on sales taxes. You can get a resale certificate from Oregon (an “Oregon Business Registry Resale Certificate) online at oregon.gov/DOR/docs/800-002fill.pdf. Use this Oregon sales tax exemption form by presenting it to the seller of the resale products in the event that seller attempts to collect sales tax from you.
Qualifying to Use the Resale Certificate
You first need to complete Oregon business registration with the Secretary of State and Department of Revenue. First, the Secretary of State is the filing agency for corporations, limited liability companies, limited partnerships and some other organizations. Visit the Oregon Secretary of State’s website at filinginoregon.com/forms/business.htm. Choose the correct form for the Oregon business entity that you wish to form. File the business and then proceed to register with the Department of Revenue. Use the business name you registered with the Secretary of State.
Note, however, that you may be able to skip the above step and go straight to the Oregon Business Registry registration system at https://secure.sos.state.or.us/ABNWeb/. By using the centralized Oregon business registration system, you can start a business plus register for Oregon business taxes. File to get an Oregon tax ID number and complete other necessary business tax filings for Oregon.
Now that you are registered, you can use your Oregon business name on the resale certificate and other documents related to sales tax and other business taxes in and outside of Oregon.
Other Sales Tax Exemptions
Other tax exemptions you may need to claim when purchasing products outside of Oregon will depend on the laws of each individual state. A common exemption from sales tax is the nonprofit exemption. Nonprofits generally do not have to pay sales taxes. Other exemptions include various manufacturing, construction and farming sales tax exemptions. Always consult with a seller outside of Oregon about the possibility of getting a tax exemption on that state’s sales taxes.
Oregon Use Taxes
Use taxes are imposed on goods bought out of state but used in Oregon. However, because Oregon has no use tax, neither individuals or Oregon businesses need to worry about Oregon use tax or related exemptions. There are no forms necessary because another state would not attempt to collect use taxes from an Oregon resident.
State of Oregon Central Business Registry