La Pine to have state collect marijuana retailer tax

(Update: City to shift to state collection of marijuana retailer tax)

La Pine city councilors have agreed to do as many other communities have done and shift the collection of the local marijuana retailer tax to the state Department of Revenue, rather than the city doing so.

City Manager Melissa Bethel said she received agreement on the move from councilors at Wednesday night’s meeting after presenting the proposal and background for councilors to consider.

At present, the city collects the 3% tax for marijuana retailers in-house. As Bethel stated in her report to councilors, some concerns from city staff regarding the collection of the funds are:

1. The city has no capacity to know if the funds collected are accurate.
2. The funds are collected in cash, which leads a small staff to have large amounts of money in City Hall during certain periods of the month. That leads to staff having to make special trips to the bank.
3. The city currently does not have a mechanism set up to go after retailers who fail to pay the tax.
4. There is increased staff time dealing with the large payments and accounting.

The cost of having the state collect the tax on the city’s behalf is less than $1,000 a year, Bethel said.

Over the last two fiscal years, the city of La Pine has collected about $86,000 in tax revenue from marijuana retailers.

When the state collects the tax, it also will reconcile what is paid to the city with what the state is owed, to confirm the amounts are correct, Bethel said. The state also will pursue non-payers on behalf of the city.

” They will do all the enforcement. We also don’t know how much they’re paying us, ” Bethel said early Wednesday. ” We go by ‘on your honor’ so they just give us a some and that we accept because we don’t have a way of checking or reconciling. The state can reconcile that with OLCC and also with what they’re paying the state. ”

With the city council in agreement, a final intergovernmental agreement, resolution and an amending ordinance will be brought to a future council meeting for adoption, the city manager said.

The owner of one of the two marijuana dispensaries in La Pine — one across the street from City Hall — said they have no issues with the switch.

Derek Gasperini , communications manager with the Oregon Department of Revenue, told NewsChannel 21 in an email the details of what will happen when La Pine switches to state collection of the retailer tax:

” The state charges fees to administer local taxes as part of the agreement. The fees are uniform across agreements, and only seek to reimburse the state for the actual costs incurred to administer the local taxes. There is an implementation fee, and an ongoing administration fee set on a per-retailer basis by locality.

” Since DOR only seeks actual costs, the fee varies by quarter. Last quarter, it was $42.14 per retailer in each local jurisdiction.

” There are some local legal provisions that must be in place regarding penalty and interest charges in order for the state to properly administer the local program. Once the intergovernmental agreement is in place, we enforce the local tax in the same way we do the state tax, ” Gasperini said.

“Cash payments for any tax must be made in Salem. Retailers are already subject to this for the state marijuana tax, so they would just bring their local payments with their state payments, instead of having to make two trips each month.

“Retailers are able to use Revenue Online, which will automatically add the local tax to their return filing and calculate the amount owed. We will also do collection activities and filing enforcement for the city tax in concert with the state tax.

“We distribute the proceeds from the city tax quarterly with the state marijuana tax revenue distribution. In addition to the funds getting distributed, we provide the locality a quarterly report for all retailers located in their jurisdiction. As these reports contain information that is protected under state disclosure laws, we require that any city employee receiving these reports sign a secrecy certificate with DOR, ” he added.

The chief financial officer for the city of Bend, Sharon Wojda , said Bend planned to have the DOR collect the tax from the start.

“We knew from the beginning it was going to be a lot of work, ” Wojda said. “We had a lot of security and internal control concerns over all of that cash coming in, so we were working with the Department of Revenue before they even had their program finalized to have them collect that on our behalf. ”

Most, but not all local jurisdictions have the state Department of Revenue collect the tax. More information about the tax collection can be found here: https://www.oregon.gov/DOR/programs/businesses/Pages/marijuana-local-tax.aspx