Oklahoma — Sales & Use Tax

Oklahoma imposes a state sales tax of 4.5% on the gross receipts or gross proceeds from sales of tangible personal property, natural or artificial gas, electricity, ice, steam, and other utilities (except water, sewage, and refuse), and certain taxable services, unless otherwise exempted under the Oklahoma Sales Tax Code. The state also levies a complementary use tax at the same 4.5% rate on the storage, use, or other consumption of tangible personal property purchased or brought into Oklahoma when sales tax has not been paid.

These rates do not include local (county and municipal) sales taxes, which are imposed in addition to the state rate. The combined state and local rate varies by location.

Source: 68 O.S. § 1354 (sales tax); 68 O.S. § 1402 (use tax)

Oklahoma establishes economic nexus when a remote seller has aggregate sales of products within Oklahoma or delivered to locations within Oklahoma subject to sales or use tax worth at least $100,000 during the current or preceding calendar year. Sales made through registered marketplace facilitators are excluded from this threshold. Remote sellers who meet the threshold must register with the Oklahoma Tax Commission and collect and remit sales or use tax. This economic nexus provision took effect November 1, 2019.

Source: 68 O.S. § 1392

A marketplace facilitator that had aggregate sales of products within Oklahoma subject to sales or use tax worth at least $10,000 during the immediately preceding twelve-month period must file an election with the Oklahoma Tax Commission to either collect and remit the tax or comply with notice and reporting requirements. A marketplace facilitator that does not file an election is deemed to have elected to comply with notice and reporting. A facilitator maintaining a place of business within Oklahoma must collect and remit tax. As of January 1, 2023, "product" includes tangible personal property, services, and other transactions taxable under the Oklahoma Sales Tax Code.

Source: 68 O.S. § 1392

Oklahoma sales tax applies to gross receipts from sales of tangible personal property (except newspapers and periodicals), natural or artificial gas, electricity, ice, steam, and other utilities (except water, sewage, and refuse), and intrastate, interstate, and international telecommunications services. "Tangible personal property" is defined to include electricity, water, gas, steam, and prewritten computer software. Most services are not taxable; Oklahoma does not tax professional services, personal services, or most business services unless specifically enumerated in the statute as taxable.

Source: 68 O.S. § 1354 (imposition); 68 O.S. § 1352 (definitions)

Every person desiring to engage in business in Oklahoma who qualifies as a "Group One" or "Group Three" vendor pursuant to 68 O.S. § 1363 must secure from the Oklahoma Tax Commission a written sales tax permit for a fee of $20 prior to engaging in such business. The permit is valid for three years. A separate permit for each additional place of business must be obtained for a fee of $10, also valid for three years. The permit is not assignable and is valid only for the person in whose name it is issued and for the transaction of business at the place designated.

Vendor classification

Group One vendors include persons who regularly and continuously make sales subject to taxation from an established place of business in Oklahoma. Group Three vendors include remote sellers and certain out-of-state vendors. The statutory definition in 68 O.S. § 1363 determines which sellers must obtain a permit; Group Two vendors (primarily consumers and users of tangible personal property) generally do not require a sales tax permit.

Application process

Each applicant must file an application with the Tax Commission setting forth such information as the Commission requires. The application must be signed by the owner or representative of the business, and in the case of a corporation, by a legally constituted officer. The statute requires that an individual or sole proprietor must be at least 18 years of age to obtain a sales tax permit.

Probationary permit

Upon receipt of an initial application, the Tax Commission may issue a probationary permit effective for six months that automatically renews for an additional 30 months unless the applicant receives written notification of the Commission's refusal to renew. Within 20 days of the date of written notification of refusal, the applicant may request a hearing to show cause why the permit should be renewed. Upon receipt of a request for a hearing, the Tax Commission must set the matter for hearing and give ten days' written notice of the time and place of the hearing. At the hearing, the applicant must set forth qualifications for a permit and proof of compliance with all state tax laws.

Bond and security requirements

The Tax Commission may require a Group Three vendor to furnish a surety bond or other security as the Commission deems necessary to secure payment of taxes before issuance of a permit for the place of business set forth in the application. The Commission is authorized to set guidelines by adoption of regulations for the issuance of sales tax permits. Pursuant to those guidelines, the Commission may refuse to issue permits to Group Three vendors (or any class of vendors within the Group Three classification) if the Commission determines it is likely the state will lose tax revenue due to the difficulty of enforcing the sales tax law.

Permit display and location changes

The permit must at all times be conspicuously displayed at the place of business for which it was issued in a position where it can be easily seen. The permit is in addition to all other permits required by Oklahoma law. If the business location changes, the permit holder must file with the Tax Commission an application for a permit to engage in or transact business at the new location. Upon issuance of the permit to the new location, no additional permit fee is due until the expiration of the three-year period.

Holders of probationary permits

Holders of a probationary permit issued under subsection B of 68 O.S. § 1364 are not permitted to present the permit to obtain a commercial license plate for their motor vehicle as provided in 47 O.S. § 1133.1.

Source: 68 O.S. § 1364 (permits to do business); 68 O.S. § 1363 (vendor classifications)

Oklahoma exempts sales for resale to persons engaged in the business of reselling the articles purchased, whether within or without the state, provided that sales to Oklahoma residents are made to persons to whom sales tax permits have been issued under the Oklahoma Sales Tax Code. The exemption does not apply when permit holders purchase items for their own use and are not regularly engaged in the business of reselling those items; nor does it apply to sales of tangible personal property to peddlers, solicitors, or other salespersons who do not have an established place of business and a sales tax permit.

Vendor relief from liability

Oklahoma law relieves vendors from liability for uncollected sales tax if the vendor obtains properly completed exemption documentation from the purchaser. The Oklahoma Tax Commission will hold the purchaser liable for the tax if it is later determined that the purchaser improperly claimed an exemption. To qualify for this relief, the vendor must obtain a fully completed exemption certificate or capture the relevant data elements within 90 days after the date of sale. If the vendor has not obtained an exemption certificate or all relevant data elements within 90 days, the vendor may, within 120 days after a request for substantiation, either prove the transaction was not subject to tax by other means or obtain a fully completed exemption certificate from the purchaser, taken in good faith.

Required documentation for resale transactions

For sales claimed as exempt for resale, Oklahoma Administrative Code Rule 710:65-7-8 requires vendors to obtain the following minimum documentation:

1. Purchaser identification — A copy of the purchaser's sales tax permit, or if unavailable, the purchaser's name, address, sales tax permit number, and expiration date. If a copy of the sales tax permit is unavailable and the information has not been previously verified, it must be verified by calling the Taxpayer Assistance Division or by reference to the sales tax permit list obtained from the Tax Commission.

1. Resale statement — A statement that the articles purchased are purchased for resale.

1. Signature — The signature of the purchaser or a person authorized to legally bind the purchaser.

1. Invoice certification — Certification on the face of the invoice, bill, sales slip, or by a separate document.

Blanket exemption certificates

Vendors may obtain a blanket exemption certificate for a purchaser with which the vendor has a recurring business relationship. A recurring business relationship exists when a period of no more than twelve months elapses between sales transactions. The Tax Commission does not require vendors or certified service providers to renew blanket certificates or update exemption certificate information when there is a recurring business relationship between the buyer and seller.

Recordkeeping requirements

Vendors must retain exemption certificates and related sales records for a minimum of three years from the date of the invoice or tax remittance, whichever is later. These records must clearly show the customer's name, address, date, transaction details, and amount.

Penalties for misuse

A purchaser who willfully or intentionally issues a resale certificate to evade the sales tax is subject to a penalty of $500 per reporting period. A purchaser who knowingly claims an exemption for personal use rather than resale is guilty of a misdemeanor, subject to a fine equal to double the amount of sales tax involved and/or incarceration for not more than 60 days, and an administrative fine of up to $500.

Source: 68 O.S. § 1357 (resale exemption); 68 O.S. § 1361 (vendor liability and relief); Okla. Admin. Code § 710:65-7-8 (documentation requirements); Oklahoma Tax Commission Publication D (vendor responsibilities)