Oregon cigarette tax bonds for licensed distributors.
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What the Oregon cigarette tax bond actually guarantees

Oregon taxes cigarettes through tax stamps. A licensed distributor buys the stamps from the Department of Revenue, affixes one to every package before it is sold in the state, and files the reconciliation reports that account for them. Under ORS 323.105, anyone who engages or seeks to engage in selling cigarettes as a distributor must apply for a distributor license, with a separate license for each place of business — and Oregon charges no fee for it. OAR 150-323-0030 spells out who that covers: every manufacturer selling in Oregon to anyone other than a licensed distributor, every importer of cigarettes for sale, anyone who buys untaxed cigarettes from a manufacturer for resale, and common carriers selling cigarettes aboard passenger equipment. Since Measure 108 took effect on January 1, 2021, little cigars count as cigarettes for this tax.

The Department of Revenue contacts you with the bond amount while it reviews your license application.

ORS 323.110 is what puts a bond in front of that license. The Department must require every licensee or applicant to deposit the security it determines, and unless the distributor uses one of the alternatives in ORS 323.120, that security is a bond executed by the distributor as principal and an Oregon-authorized surety company, payable to the State of Oregon through its Department of Revenue. It is conditioned on payment of all taxes, penalties and other obligations the distributor owes under the cigarette tax law. ORS 323.130 then lets the Department issue the license once it receives the completed application, the ORS 323.106 compliance statement and the required security. DOR's own guidance is plain: the Department contacts each applicant to determine the bond amount during review, after the application is submitted.

The amount is individual. The statute caps it at twice the estimated average monthly liability shown in your monthly reports, and lets DOR increase or decrease it within that cap as your volume changes. For distributors who buy stamps on deferred payment rather than cash, the bond also works as a credit line: under ORS 323.175 and OAR 150-323-0060, the bond equals the most you may buy on deferred terms in any one calendar month. Hit that limit, or let the bond lapse or be cancelled, and you are back to buying stamps for cash only — and ORS 323.190 lets DOR suspend deferred-payment privileges if the bond is cancelled or impaired.

The bond is continuous — DOR Form 150-105-003 says it remains in effect unless terminated as the statute provides, and one bond can cover one or more distributor licenses. The form lets a surety withdraw by written notice to DOR; ORS 323.115 requires every bond to provide that the withdrawal takes effect on the first day of the next month if DOR receives the notice by the 15th, otherwise on the first day of the second month, and the form keeps the surety liable for obligations incurred before then. It is not insurance for you: if the State collects on the bond for unpaid tax, you repay the surety. Licensed wholesalers, who buy only stamped cigarettes from licensed distributors, and retailers selling only stamped cigarettes are not the distributors ORS 323.110 bonds.

You need this bond if you're