The Oregon Department of Revenue told the House Interim Committee on Revenue that it is on track to implement the oral‑nicotine products tax that the 2025 Legislature enacted. Exanne Culver of DOR described the products included (non‑combustible oral nicotine pouches, orbs, sticks and strips that do not contain tobacco) and explained the tax mechanics: a flat 65¢ per container for packages of 20 items or fewer, and 3.25¢ per item for containers with more than 20 items.

Culver said the tax is collected at the time of distribution and that licensed tobacco distributors will report and remit on modified versions of existing tobacco tax returns (Oregon 531 returns and schedules). Receipts are earmarked for the Landscape Resiliency Fund and the Community Risk Reduction Fund to support wildfire mitigation and suppression. Distributors file quarterly; unlicensed retailers holding untaxed inventory on Jan. 1 must file a one‑time unlicensed return (also an OR‑531 variant) by the April filing deadline.

DOR described three implementation tracks: information‑technology configuration and testing (back‑end and the online filing portal), updated tax forms and communications (letters, inspection handouts and a press release), and rulemaking (DOR held a rules advisory committee and a public hearing). Culver said the IT project is on schedule to go live by Dec. 31 and that finance accounting testing aims to ensure correct distribution of receipts when returns are processed; first distributions are expected in May after the April returns are filed.

Members asked about retailer coverage and compliance. Culver said approximately 3,600 tobacco retailers are licensed statewide, though retailers selling only oral‑nicotine products might not currently hold a tobacco‑retailer license and would be treated as distributors for tax purposes. DOR inspectors will perform unannounced inspections and compare invoices to stock to check whether distributors have indicated tax has been paid or will be paid. DOR also said it will retain administrative expenses under statutory authority and that the up‑front implementation costs are small relative to projected revenue.

DOR’s presentation closed with a reminder that detailed inventory reporting schedules will help the agency and taxpayers reconcile items brought into Oregon without tax paid, and that additional guidance will be provided through rulemaking and outreach to distributors and retailers.