Rev. Rul. 71-132

The State of Oregon operates liquor stores and similar activities through the Oregon Liquor Control Commission.

Section 471.705 of the Oregon Revised Statutes Annotated, as amended, provides for the creation of such commission as follows:

(1) There is created the Oregon Liquor Control Commission, consisting of three persons appointed by the Governor. * * *

The regulatory powers of the commission are set forth in Section 471.730 of the Statutes, as amended as follows:

The function, duties and powers of the commission include the following:

(1) To control the manufacture, possession, sale, purchase, transportation, importation and delivery of alcoholic liquor in accordance with the provisions of this chapter.

(2) To grant, refuse, suspend or cancel licenses and permits for the sale or manufacture of alcoholic liquor, or other licenses and permits in regard thereto, and to permit, in its discretion, the transfer of a license of any person.

(3) To collect the taxes and duties imposed by statutes relating to alcoholic liquors, and to issue, and provide for cancellation, stamps and other devices as evidence of payment of such taxes or duties.

(4) To investigate and aid in the prosecution of every violation of statutes relating to alcoholic liquors, to seize alcoholic liquor manufactured, sold, kept, imported or transported in contravention of this chapter, and apply for the confiscation thereof, whenever required by statute, and cooperate in the prosecution of offenders before any court of competent jurisdiction.

(5) To adopt such regulations as are necessary and feasible for carrying out the provisions of this chapter and to amend or repeal such regulations. When such regulations are adopted they shall have the full force and effect of law.

(6) To exercise all powers incidental, convenient or necessary to enable it to administer or carry out any of the provisions of this chapter.

(7) To control, regulate and prohibit any advertising by manufacturers, wholesalers or retailers of alcoholic liquor by the medium of newspapers, letters, billboards, radio or otherwise.

(8) To sell, license, regulate and control the use of alcohol for scientific, pharmaceutical, manufacturing, mechanical, industrial and other purposes, and to provide by regulation for the sale thereof for such uses.

Section 471.750 of the Statutes, as amended, provides for the operation of State liquor stores as follows:

The commission shall establish such stores and warehouses in such places in the state as in its judgment are required by public convenience or necessity, for the sale of spirituous liquors, wines and other alcoholic liquors containing over four percent of alcohol by weight, in sealed containers for consumption off the premises. * * *

Section 471.810 of the Statute, as amended, provides for the distribution of available moneys in the Oregon Liquor Control Commission account as follows:

(1) After the end of each quarter year, the commission shall certify the amount of money available for distribution in the Oregon Liquor Control Commission Account after withholding such money as it may deem necessary to pay its outstanding obligations. During the month immediately following the end of each quarter, the commission shall direct the State Treasurer to pay the amounts due, upon warrants drawn by the Secretary of State, as follows:

(a) Seventy percent, or the amount remaining after the distribution under subsection (2) of this section, credited to the General Fund available for general governmental purposes wherein it shall be considered as revenue during the quarter immediately preceding receipt;

(b) Twenty percent to the cities of the state in such shares as the population of each city bears to the population of the cities of the state, as determined by the State Board of Higher Education last preceding such apportionment under ORS 190.510 to 190.610; and

(c) Ten percent to counties in such shares as their respective populations bear to the total population of the state, as estimated from time to time by the State Board of Higher Education.

Held, income derived from the operation of liquor stores and similar activities by the State of Oregon through the Oregon Liquor Control Commission is not subject to Federal income tax.

G.C.M. 13745, C.B. XIII-2, 76 (1934), is hereby superseded, since the position stated therein is set forth under the current statute and regulations in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.