Determining Property Resold Out of State, and Methods of Determining

# (1)

(1) *Out-of-State Resale Certificate.*A wholesaler purchasing property for the purpose of resale may, at the time the purchase is made, provide the seller of the property with an out-of-state resale certificate declaring the amount of purchased property that the wholesaler will resell out of Oregon. The out-of-state resale certificate qualifies as the certification required under ORS 317A.100(1)(b)(DD). Any document provided by the wholesaler to the seller at the time of the sale may serve as an out-of-state resale certificate provided that the document contains:

(a) The wholesaler's legal name and Oregon address;

(b) The wholesaler's federal tax identification number;

(c) The date of the purchase;

(d) The total amount of purchased property;

(e) The purchase price paid by the wholesaler;

(f) The dollar amount of purchased property that the wholesaler will resell outside of Oregon; and

(g) The signature of the wholesaler, their authorized representative, or employee, certifying that the person is a wholesaler as that term is defined in ORS 317A.100(21).

# (2)

(2) *Reasonable Methods to Determine the Amount of Purchased Property Sold Out of State.* The wholesaler must determine the amount of purchased property that will be sold out of Oregon based on the facts available at the time the wholesaler purchases the property from the seller. If, at the time of purchase, the wholesaler is unable to determine the amount of the purchased property that the wholesaler will resell out of Oregon, the wholesaler may use the approximation ratio prescribed in section (3) of this rule to estimate the amount of purchased property that will be sold in Oregon and out of state.

# (3)

(3) *Approximation Ratio to Estimate Out-of-State Sales.*The approximation ratio is a fraction. The numerator is the amount of commercial activity the wholesaler realized from sales to Oregon customers in the prior year. The denominator is the amount of commercial activity the wholesaler realized from all sales during the prior year. Wholesalers located in multiple states may only include in the numerator and denominator their commercial activity realized from property delivered from their Oregon locations. Sales of property delivered from the wholesaler's locations outside of Oregon are not included in the ratio.

# (4)

(4) *Alternative Methods of Determining Out-of-State Sales.* If the wholesaler knows or reasonably should have known at the time of the wholesaler's purchase that the approximation ratio in section (3) does not fairly and accurately approximate the wholesaler's in-state and out-of-state sales, the wholesaler may not use the ratio in section (3) but may use a reasonable alternative method of approximation. The wholesaler must document the method used, including a complete explanation of the alternative method, how the method was determined, and why the approximation ratio method prescribed in section (3) of this rule is not a fair approximation of the wholesaler's sales. Once an alternative method has been used, the wholesaler must continue to use the same method, unless the alternative method is no longer a fair and accurate approximation of the in-state and out-of-state sales. All changes to the alternative method must be documented and retained in the wholesaler's records.

# (5)

(5) If the department, upon audit, determines that the wholesaler's approximation ratio under section (3) or alternative method of approximation under section (4) does not fairly and accurately reflect the wholesaler's in-state and out-of-state sales, the wholesaler must immediately discontinue use of the ratio or alternative method.

# (6)

(6) Taxpayers engaged in farming operations that sell agricultural commodities to wholesalers and brokers may also refer to OAR 150-317-1170 for additional methods of demonstrating the amount of the taxpayer's goods subsequently sold in this state compared to outside this state.