CHAPTER 65. SALES AND USE TAX

Transcription

1 CHAPTER 65. SALES AND USE TAX Subchapter 1. General Provisions : Reports and Returns; Payments and Penalties; Records : Audit and Assessment : Duties and Liabilities : Permits : Credits and Refunds : Sales and Use Tax Exemptions : Interstate Commerce : City and County Sales Taxes [REVOKED] : Sourcing Pursuant to the Streamlined Sales and Use Tax Administration Act : Specific Applications and Examples : Use Tax :65-21 [Authority: 2 O.S ; 68 O.S. 203, 1353(B), 1354(21), , , 1357(23), , , ,, , 1364(D), (E), (D), (E), (D) and (E)(3), 1407, 54004, and 54005] [Source: Codified ] 1

2 CHAPTER 65. SALES AND USE TAX SUBCHAPTER 1. GENERAL PROVISIONS : Purpose : Definitions : Computation of sales and use taxes to be collected and remitted : Presumption of taxability : Unlawful to advertise that sales tax will be absorbed : "Tax-included" prices : Consumer/user defined; specific applications : Established place of business; maintaining a place of business : Gross receipts, gross proceeds, and sales price : Initial use of property : Rentals and leases of tangible personal property SUBCHAPTER 3. REPORTS AND RETURNS; PAYMENTS AND PENALTIES; RECORDS PART 1. GENERAL PROVISIONS : Reports, payments, and penalties : Timely mailing treated as timely filing and paying : Due date that falls on Saturday, Sunday or holiday : Contents of monthly sales report : Signing of tax returns : Verification of sales tax returns : Registrants must file a return for every reporting period : Change in tax period [REVOKED] : Final sales tax return when business is discontinued : Election to participate in electronic funds transfer and electronic data interchange programs PART 3. RECORDS AND RECORDKEEPING : Books and records required; presumption of taxability; burden of proof : What records constitute minimum requirement : Authorization to destroy records sooner than would otherwise be permissible : Records required to support deductions from gross receipts for purposes of calculating sales tax : Administration of electronically-claimed exemptions SUBCHAPTER 5. AUDIT AND ASSESSMENT : Sales/use tax audits and auditors : Sales/use tax audits of sample periods : Out-of-state tax audits [REVOKED] : Examination of tax return; adjustments, notices, and demands : Issuance of sales tax assessments SUBCHAPTER 7. DUTIES AND LIABILITIES : Taxpayer's duty to obtain sales tax return form : Vendor responsibility for collection of sales tax; treatment of sales tax by vendor : Personal liability for sales tax due : Sales tax responsibility and liability of trustees, receivers, executors or administrators : Vendor's responsibility to obtain sales tax permits [REVOKED] : Vendors' or certified service providers' relief from liability and duty to collect sales tax

3 710: Treatment of federal luxury tax for sales/use tax purposes [REVOKED] : Vendors' responsibility - sales for resale : Vendor's responsibility sales for resale for export outside the United States : Vendors' responsibility - sales to a manufacturer : Vendors' responsibility - sales made pursuant to direct payment permit : Vendors' responsibility - sales for agricultural purposes : Vendors' responsibility - sales to persons raising animals for resale : Vendors' responsibility - sales to contractors : Vendors' responsibility - sales of trailers : Vendors' responsibility - sales to entities with other specific statutory exemptions : Vendors' reliance on erroneous information : Vendors responsibility sales to disabled veterans receiving compensation at the 100% rate or surviving spouses of qualified deceased disabled veterans : Vendors fine for refusal to accept sales tax exemption claims of 100% disabled veterans or surviving spouses of qualifying deceased disabled veterans : Vendor's responsibility sales to, by, or for the benefit of, neighborhood watch organizations : Vendor s responsibility sales to qualifying organizations providing services for developmentally disabled persons : Vendor s responsibility sales to qualifying organizations providing funding for the preservation of wetland or habitats for wild ducks or preservation and conservation of wild turkeys : Streamlined Sales and Use Tax Exemption Certificate : [RESERVED] : [RESERVED] : Seller's relief from certain liability : Purchaser's relief from certain liability SUBCHAPTER 9. PERMITS : Obtaining a sales tax permit to do business : Commission may require security from vendor : Change in ownership of business; new sales tax permit : Denial of sales tax permit to a successor; successor liability : Previously revoked or suspended sales tax permits : Subscription to sales tax permit list : Information available to the prospective purchaser of an existing business : Special event permits and reporting : Administration of the Streamlined Sales and Use Tax Agreement online database : Direct payment permits (DPP) SUBCHAPTER 11. CREDITS AND REFUNDS : Sales tax credits and refunds : Sales tax deduction for bad debt SUBCHAPTER 13. SALES AND USE TAX EXEMPTIONS PART 1. ADVERTISING IN MEDIA : Exemption for sales of certain types of advertising PART 3. AGRICULTURAL TRANSACTIONS : "Agricultural production" defined; taxable and exempt transactions : Sales and use tax exemption for salt and salt blocks sold for consumption by livestock and poultry [REVOKED] : Certification required for sales tax exemption for certain agricultural transactions : Proof of agricultural tax exemption : Sales at or from the farm PART 5. ITEMS SUBJECT TO OTHER TAXES

4 710: Exemption for the sale of tangible personal property subject to other taxes : Exemption for motor vehicle leases [REVOKED] PART 7. CHURCHES : Children's homes and youth camps : Exemption for qualified museums [RENUMBERED TO 710: ] : Limited exemption for organizations which sponsor and promote educational, charitable, and cultural events for disadvantaged children [AMENDED AND RENUMBERED TO 710: ] : Exemption for Disabled American Veterans, Department of Oklahoma, Inc. and subordinate chapters [RENUMBERED TO 710: ] : Qualifications for "Meals on Wheels" exemption [RENUMBERED TO 710: ] : Qualifications for "Older Americans Act" exemption [RENUMBERED TO 710: ] : Qualifications for "Collection and Distribution Organization" exemption [RENUMBERED TO 710: ] : Sales by churches; sales to churches : Exemption for Council organizations or similar state supervisory organizations of Boy Scouts of America, Girl Scouts of U.S.A., and the Campfire Girls and Boys [RENUMBERED TO 710: ] : Qualifications for "Juvenile Rehabilitation" exemption [RENUMBERED TO 710: ] : Exemption for tax-exempt, independent, nonprofit biomedical research foundations [AMENDED AND RENUMBERED TO 710: ] : Exemption for tax-exempt, independent, nonprofit community blood banks headquartered in this state [AMENDED AND RENUMBERED TO 710: ] : Exemption for coal mining [RENUMBERED TO 710: ] : Exemption for organizations supported or sponsored by church(es) [REVOKED] : Exemption for sales by 501(c)(3) organizations on behalf of churches PART 9. COMPUTERS; DATA PROCESSING; TELECOMMUNICATIONS : Sales and use tax exemption for qualified purchasers of computers, data processing and telecommunication services and equipment [REVOKED] : Exemption for sales of computers, data processing, telephonic and certain related equipment and services to a qualified aircraft maintenance or manufacturing facility : Sales of computers, data processing equipment, related peripherals, and telephone, telegraph, or telecommunications service and equipment to a qualified purchaser primarily engaged in computer services and data processing or research and development : Limitation on credits : Exemption for sales of machinery and equipment purchased and used by persons and establishments primarily engaged in computer services and data processing PART 10. COAL : Exemption for coal mining : Exemption for certain leases of rail transportation to haul coal PART 11. CONTAINERS : Exemption for containers PART 12. AIRCRAFT : Exemption for aircraft repair, modification and replacement parts PART 13. CONTRACTORS REFUND; CHANGE OF RATES : Refund to contractor due to change of sales tax rate PART 14. ESTATE SALES : Exemption for certain estate sales PART 15. HAZARDOUS WASTES : Exemption for purchases to reduce hazardous waste PART 16. ELECTRONIC GOODS REFITTING, REFURBISHING OR REPAIRING : Exemption for refitting, refurbishing, or repairing of consumer electronic goods PART 17. EXPORT : Sales tax exemption on sales for export PART 18. PRECIOUS METALS

5 710: Exemption for sales of gold, silver, platinum, palladium or other bullion items PART 19. COUNTY, DISTRICT AND STATE FAIRS : Fairs, circuses, carnivals, and other public exhibitions; sales tax exemption for county, district and state fair authorities; purchases by contractors PART 21. FOOD STAMPS : Sales tax exemption for food stamps PART 23. GAS AND ELECTRICITY : Sales tax exemption for residential use : [RESERVED] : Exemption for sales of electricity for use in a reservoir dewatering project : Exemption for sales of electricity for use in enhanced recovery methods of oil production : Rural electric cooperatives PART 25. GOVERNMENTAL ENTITIES : Sales to and by the government; taxable and exempt transactions : Sales to U.S. government contractors; taxable and exempt transactions : Sheriff's purchases; taxable and exempt transactions : State parks PART 26. SPACE INDUSTRIES : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] PART 27. TRUST AUTHORITIES [REVOKED] : Trust authority transactions [AMENDED AND RENUMBERED TO 710: ] PART 29. MANUFACTURING : Manufacturing exemption; taxable and exempt transactions [REVOKED] : Manufacturing exemption; taxable and exempt transactions : Use of manufacturer's limited exemption certificate; guidelines to determine if exemption applies [REVOKED] : Manufactured goods transported out of Oklahoma [REVOKED] : Manufactured goods transported out of Oklahoma : Exemption for "qualified manufacturers" : Limitation on credits : Exemption for sales of tangible personal property to be consumed or incorporated in the construction or expansion of a qualified aircraft maintenance or manufacturing facility : Exemption for "qualified distributor" : Exemption for persons engaged in the extraction and manufacturing crushed stone and sand : Sales of rolling stock PART 31. MEDICINE, MEDICAL APPLIANCES, AND HEALTH CARE ENTITIES AND ACTIVITIES : Definitions : Medicines, drugs, hospitals, nursing homes, practitioners, and medical equipment and appliances, generally : Sales of prosthetic devices to individuals : Exemption for health centers, indigent health care clinics, certain community-based health care centers, and community mental health centers : Exemption for medical appliances, medical devices and other medical equipment furnished to Medicare/Medicaid program recipients : Exemption for tax-exempt, independent, nonprofit biomedical research foundations : Exemption for tax-exempt, independent, nonprofit community blood banks headquartered in this state : Exemption for certain hospitals and nursing homes : Construction projects for organizations providing end-of-life care and hospice service

6 PART 33. MOTOR FUELS : Motor fuel and other petroleum products; taxable and exempt transactions PART 35. NEWSPAPERS; PERIODICALS; PROGRAMS; MEDIA : Newspapers and periodicals; taxable and exempt transactions : Definition of radio and television broadcasting for purposes of sales tax exemption : Definition of cablecasting machinery and equipment for purposes of sales tax exemption : Definition of newspaper manufacturing for purposes of sales/use tax exemption : Exemption for sales of tangible personal property and services to a motion picture or television production company to be used or consumed in connection with an eligible production : Exemption for sales of certain types of programs PART 37. SALES FOR RESALE : Exemption on sales for resale : Sales between related entities PART 39. SCHOOLS AND HIGHER EDUCATION : Exemption for public and private schools and institutions of higher education : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : Exemption for child care facilities which provide on site universal pre-kindergarten education PART 41. [RESERVED] PART 42. DISABLED VETERANS IN RECEIPT OF COMPENSATION AT THE ONE HUNDRED PERCENT RATE : Exemption for disabled veterans in receipt of compensation at the one hundred percent rate and unremarried surviving spouses of qualifying veterans PART 43. SOCIAL, CHARITABLE, AND CIVIC ORGANIZATIONS AND ACTIVITIES : Oklahoma City National Memorial and Museum : Sales to veterans' organizations for museums and memorials : Exemption for sale of tickets to collegiate athletic championship events : Sales made in conjunction with public library construction : Exemption for qualified museums : Limited exemption for organizations which sponsor and promote educational, charitable, and cultural events for disadvantaged children : Exemption for Disabled American Veterans, Department of Oklahoma, Inc. and subordinate chapters : Qualifications for "Meals on Wheels" exemption : Qualifications for "Older Americans Act" exemption : Qualifications for "Collection and Distribution Organization" exemption : Exemptions for volunteer fire departments : Exemption for Council organizations or similar state supervisory organizations of Boy Scouts of America, Girl Scouts of U.S.A., and Camp Fire USA : Qualifications for "Juvenile Rehabilitation" exemption : Exemption for qualified youth athletic teams : Exemption for tax exempt, nonprofit organizations, which provide services during the day to homeless persons : Exemption for tax exempt organizations, which provide funding for the preservation of wetlands or habitats for wild ducks or preservation and conservation of wild turkeys : Exemption for tax exempt organizations which are a part of a network of community-based, 6

7 autonomous member organizations providing job training and employment services : Exemption for specialized facilities, which provide services for physically and mentally handicapped persons : Limited exemption for qualified neighborhood watch organizations : Exemption for sale of food boxes : Exemption for Daughters of the American Revolution : Exemption for Veterans of Foreign Wars, Department of Oklahoma, Inc. and subordinate posts : Exemption for YWCA or YMCA organizations : Exemption for organizations primarily engaged in providing educational services and programs concerning health-related diseases and conditions : Exemption for organizations whose purpose is to provide training and education to developmentally disabled persons : Exemption for shelters for abused, neglected, or abandoned children from birth to age eighteen : Exemption for Blue Star Mothers of America, Inc : Organizations providing funding for scholarships in the medical field : Exemption for sale of event tickets by organizations supporting general hospitals : Nonprofit foundations supporting NRA and other like organizations : Grassroots fundraising programs supporting the NRA : [RESERVED] : Exemption for Boys & Girls Clubs of America affiliates PART 45. MODULAR DWELLING UNITS : Partial exemption for modular dwelling units PART 47. [RESERVED] PART 49. [RESERVED] PART 51. SALES TAX HOLIDAY : [RESERVED] : Exemption for sales of clothing and footwear during three-day period in August : Reimbursement to municipality or county PART 53. [RESERVED] PART 55. TRUST AUTHORITIES : Trust authority transactions PART 65. WEB PORTALS : Exemption for sales of tangible personal property and services to a web search portal SUBCHAPTER 15. INTERSTATE COMMERCE : Sales related to interstate commerce : Exempt sales to ships, motor vessels, or barges being used in interstate or international commerce : Sales by solicitation SUBCHAPTER 17. CITY AND COUNTY SALES TAXES [REVOKED] : Administration of city and county sales taxes [REVOKED] SUBCHAPTER 18. SOURCING PURSUANT TO THE STREAMLINED SALES AND USE TAX ADMINISTRATION ACT : Purpose : Definitions : Sourcing of retail sales : Sourcing for lease or rental of tangible personal property : Sourcing of telecommunications services : Sourcing of sales involving direct mail : [RESERVED] : [RESERVED] : Effective date for taxable services which span a rate change

8 710: Effective dates of sales and use tax rate changes and of municipal boundary changes SUBCHAPTER 19. SPECIFIC APPLICATIONS AND EXAMPLES PART 1. "A" : Accountants : Advertising agencies : Vendors of tangible personal property employed for advertising : Alarm systems : Sales of alcoholic beverages : Place of amusement : Animals and animal related, non-farm : Animals; non-farm equipment and supplies [REVOKED] : Antiques, works of art, and artists : Auctioneer : Automotive repair : Automobile repairers [REVOKED] : Automotive bodyshops [REVOKED] PART 3. "B" : Barbers and beauticians : Bingo [REVOKED] : Blacksmiths : Bookkeeping, service bureaus : Buildings and structures PART 5. "C" : Caterers : Cemeteries and crematories : Cemeteries; tombstones, markers, and other memorials : Chamber of commerce : Sales made to or by charitable, fraternal, civic, educational societies and non-profit organizations : Chiropodists, osteopaths and chiropractors : Clipping and information bureaus : Retailers of clothing : Tailors, clothiers, dressmakers, and milliners : Golf and country clubs : Coins and bullion [REVOKED] : Complimentary tickets, passes, dues, fees : Computers and related systems; "hardware" and "software" defined : Concrete mixer trucks : Consigned property : Taxability of sales to contractors : Contractors and subcontractors : Community action agencies and other non-profit corporations : Cotton gins [REVOKED] : Store coupons : Made-to-order and custom sales : Collections and collectibles : Crates and crating companies PART 7. "D" : Delivery charges : Dentists, dental laboratories, and dental supply houses : Deposits, core charges and trade-ins : Directories : Discounts

9 710: Donations : Drilling contractors [REVOKED] : Dues and fees PART 9. "E" : [RESERVED] : Electronic data processing services : Employee associations and organizations : Employer sales to employees : Exchange or return of merchandise PART 11. "F" : Deliveries on federal areas : [RESERVED] : Federal excise taxes : Finance charges : Finance companies and other lending agencies; repossessions : Sales by banks, savings and loan associations, credit unions and other financial institutions : Sales to banks, savings and loan associations, credit unions and other financial institutions : Fixtures; "materials" defined for the purpose of developing and improving real property : Florists, telegraphic orders : Food; vendors of meals : Food; eating and drinking establishments : Food; tips and service charges : Food; cover charges and minimum charges : Food; meals served by boarding houses : Funeral homes : Altering, repairing, and remodeling furs : Fireworks PART 13. "G" : Premiums and gifts : Gift certificates : Gift wrap : [RESERVED] : Gun clubs PART 15. "H" : Hatcheries and incubators : Herbicides not sold to farmers or custom applicators : Hospitals : Hotels, motels, apartments, etc PART 17. "I" : Ice plants : Internet-related services and transactions : Insecticides and fungicides not sold to farmers or custom applicators : Installation, alteration and special service charges : Installation charges : Installment and credit sales : Insurance companies PART 19. "J" [RESERVED] PART 21. "K" [RESERVED] PART 23. "L" : Labels, tags, and name plates : Laundry and garment bags : Lawyers : Layaway fees

10 710: Lumber dealers : Sales of lottery tickets PART 25. "M" : Vendors of machinery, tools, patterns, and similar items : Sale or rental of microfilm, slides, videotape tape recordings, records, etc : Milk and dairy processors : Military; members of armed services stationed in Oklahoma subject to sales and use taxes : Multi-level sales PART 27. "N" : Nurserymen PART 29. "O" : Oil operator transfers; "material transfer" described; examples : Fractionation tanks (frac tanks) [REVOKED] : Sale of wells and pipelines : Sales by the State of Oklahoma, state agencies, etc PART 31. "P" : Pawnbrokers : Taxability of items purchased by permit holders : Pest exterminators : Registered pharmacists and druggists : Photocopying : Commercial photographers and photographic goods and services : Physicians and optometrists : Picture-framers : Plating : Pole line construction : Printers : Printers, materials used by [REVOKED] : Printing; graphic arts production : Sales of parking privileges PART 33. "Q" [RESERVED] PART 35. "R" : Radio and television antennas and television satellite dishes : Commercial railroads and railroad spikes : [RESERVED] : Religious organizations and institutions other than churches : Research and development PART 37. "S" : Scrap metal facilities and junkyards : Secondhand stores : Vendors of seeds and fertilizer : Installation or sale of septic tanks : Tangible personal property purchased by providers of nontaxable services : Shoe repairs : Vendors of signs : [RESERVED] : Toning salons and tanning salons : Professional shoppers PART 39. " T " : Telegraph service [REVOKED] : Telephone companies, mobile telephone and telephone answering services [REVOKED] : Sales tickets, cash register receipt paper, invoice forms, etc : Transportation for hire

11 710: Services relating to telecommunications : Telecommunications services : Prepaid telephone calling cards, telephone authorization numbers, and recharges PART 41. "U" : Upholsterers and furniture repairers : Natural or artificial gas and electric utility services PART 43. "V" : Veterinarians : Volunteer fire companies [REVOKED] PART 45. "W" : Extended warranty : Watch and jewelry repair shops : Water conditioning and water softeners : Wheel balancing [REVOKED] : Wholesalers and jobbers : Storm windows, combination windows, etc : Manufacturer's original product warranty PART 47. "X" : X-ray laboratories PART 49. "Y" [RESERVED] PART 51. "Z" [RESERVED] SUBCHAPTER 21. USE TAX : Purpose : Definitions : Use tax : Use tax on out-of-state purchases : Voluntary registration by certain out-of-state retailers or vendors : Filing requirements for certain vendors registered under the Streamlined Sales and Use Tax Agreement : Retailers required to obtain a use tax permit : Reports, payments, and penalties : Out-of-state retailers or vendors not registered in Oklahoma : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : [RESERVED] : Use tax exemptions

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13 CHAPTER 65. SALES AND USE TAX [Authority: 68 O.S. 203] [Source: Codified ] SUBCHAPTER 1. GENERAL PROVISIONS 710: Purpose The provisions of this Chapter have been promulgated for the purpose of compliance with the Oklahoma Administrative Procedures Act, 75 O.S et seq, and to facilitate the administration, enforcement, and collection of taxes under the Oklahoma Sales and Use Tax Codes. (68 O.S et seq.; 68 O.S et seq.) 710: Definitions The following words and terms, when used in this Chapter, shall have the following meaning, unless the context clearly indicates otherwise: "Business" means any activity with the potential to generate a profit even if the business actually operates at a loss. This category also includes non-profit, religious and other organizations and persons who are otherwise exempt when they are conducting activities for a profit in competition with other businesses. "Bundled Transaction" means the retail sale of two or more products, except real property and services to real property, where the products are otherwise distinct and identifiable, and the products are sold for one nonitemized price. A "bundled transaction" does not include the sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction. As used in this paragraph: (A) "distinct and identifiable products" does not include: (i) packaging such as containers, boxes, sacks, bags, and bottles, or other materials such as wrapping, labels, tags, and instruction guides, that accompany the retail sale of the products and are incidental or immaterial to the retail sale thereof, including but not limited to, grocery sacks, shoeboxes, dry cleaning garment bags and express delivery envelopes and boxes; (ii) a product provided free of charge with the required purchase of another product. A product is provided free of charge if the sales price of the product purchased does not vary depending on the inclusion of the product provided free of charge, or (iii) items included in the definition of gross receipts or sales price, pursuant to this Section (B) "one nonitemized price" does not include a price that is separately identified by product on binding sales or other supporting sales-related documentation made available to the customer in paper or electronic form including, but not limited to an invoice, bill of sale, receipt, contract, service agreement, lease agreement, periodic notice of rates and services, rate card, or price list, (C) A transaction that otherwise meets the definition of a bundled transaction shall not be considered a bundled transaction if it is: (i) the retail sale of tangible personal property and a service where the tangible personal property is essential to the use of the service, and is provided exclusively 1

14 in connection with the service, and the true object of the transaction is the service; (ii) the retail sale of services where one service is provided that is essential to the use or receipt of a second service and the first service is provided exclusively in connection with the second service and the true object of the transaction is the second service; (iii) a transaction that includes taxable products and nontaxable products and the purchase price or sales price of the taxable products is de minimis. For purposes of this Section, "de minimis" means the seller s purchase price or sales price of taxable products is ten percent (10%) or less of the total purchase price or sales price of the bundled products. Sellers shall use either the purchase price or the sales price of the products to determine if the taxable products are de minimis. Sellers may not use a combination of the purchase price and sales price of the products to determine if the taxable products are de minimis. Sellers shall use the full term of a service contract to determine if the taxable products are de minimis; or (iv) the retail sale of exempt tangible personal property and taxable tangible personal property where: (I) the transaction includes food and food ingredients, drugs, durable medical equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic devices or medical supplies, and (II) the seller' s purchase price or sales price of the taxable tangible personal property is fifty percent (50%) or less of the total purchase price or sales price of the bundled tangible personal property. Sellers may not use a combination of the purchase price and sales price of the tangible personal property when making the fifty percent (50%) determination for a transaction. "Consumer" or "user" means a person to whom a taxable sale of tangible personal property is made or for whom a taxable service is performed. "Consideration" means and includes, but is not limited to: (A) The price arrived at between purchaser and vendor. (B) Any additional bona fide charges added to or included in such price for preparation, fabrication, alteration, modification, finishing, completion, delivery, or other services performed in respect to or labor charges for work done with respect to such property prior to transfer. (C) No deduction from gross receipts is permitted for services performed or work done on behalf of the vendor prior to transfer of such tangible personal property. [See: 68 O.S. 1352(12)] "Delivery charges" means charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and packing. "Delivery charges" does not include charges for the delivery of "direct mail" if the charges are separately-stated on an invoice or similar billing document given to the purchaser. "Gross receipts", "gross proceeds", or "sales price" means the total amount of consideration including cash, credit, property, and services, for which personal property or services are sold, leased, or rented; valued in money, whether received in money or otherwise, without any deduction for the following: (A) The seller's cost of the property sold; 2

15 (B) The cost of materials used, labor, or service cost; (C) Interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller; (D) Charges by the seller for any services necessary to complete the sale, other than delivery and installation charges; (E) Delivery charges and installation charges, unless separately stated on the invoice, billing, or similar document given to the purchaser; or, (F) Credit for any trade-in. "Gross receipts", "gross proceeds", or "sales price" shall not include: (A) Discounts, including cash, term, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale; (B) Interest, financing, and carrying charges from credit extended on the sale of personal property or services, if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser; or (C) Any taxes legally imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the purchaser. [68 O.S. 1352(12)] "Gross receipts", "gross proceeds", or "sales price" shall include consideration received by the seller from third parties if: (A) The seller actually receives consideration from a party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale; (B) The seller has an obligation to pass the price reduction or discount through to the purchaser; (C) The amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchase; and (D) One of the following criteria is met: (i) The purchaser presents a coupon, certificate or other documentation to the seller to claim a price reduction or discount where the coupon, certificate or documentation is authorized, distributed or granted by a third party with the understanding that the third party will reimburse any seller to whom the coupon, certificate or documentation is presented; (ii) The purchaser identifies himself or herself to the seller as a member of a group or organization entitled to a price reduction or discount; provided, a "preferred customer" card that is available to any patron does not constitute membership in such a group; or (iii) The price reduction or discount is identified as a third-party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate or other documentation presented by the purchaser. "Lease or rental" means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease or rental may include future options to purchase or extend. (A) "Lease or rental" does not include: (i) A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments; (ii) A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of required payments and payment of an option price 3

16 does not exceed the greater of One Hundred Dollars or one (1) percent of the total required payments; or (iii) Providing tangible personal property along with an operator for a fixed or indeterminate period of time. A condition of this exclusion is that the operator is necessary for the equipment to perform as designed. For the purpose of this unit, an operator must do more than maintain, inspect, or set-up the tangible personal property. (B) "Lease or rental" does include agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined by 26 U.S.C. 7701(h)(1). (C) This definition shall be used for sales and use tax purposes if a transaction is characterized as a lease or rental under generally accepted accounting principles, the Internal Revenue Code, the Oklahoma Uniform Commercial Code (12A O.S et seq.), or other provisions of federal, state, or local law. "Retail sale" means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent. "Sale" means the transfer of either title or possession of tangible personal property for a valuable consideration regardless of the manner, method, instrumentality, or device by which the transfer is accomplished in this state. All consideration received for the sale is included in gross receipts subject to tax. (A) "Sale" does include but is not limited to: (i) The exchange, barter, lease, or rental of tangible personal property resulting in the transfer of the title to or possession of the property; (ii) The disposition for consumption or use in any business or by any person of all goods, wares, merchandise, or property which has been purchased for resale, manufacturing, or further processing; (iii) The sale, gift, exchange, or other disposition of admission, dues, or fees to clubs, places of amusement or recreational or athletic events or for the privilege of having access to or the use of amusement, recreational, athletic or entertainment facilities; (iv) The furnishing or rendering of services taxable under the Oklahoma Sales Tax Code; and (v) Any use of motor fuel or diesel fuel by a supplier, as defined in Section of this title, upon which sales tax has not previously been paid, for purposes other than to propel motor vehicles over the public highways of this state. Motor fuel or diesel fuel purchased outside the state and used for purposes other than to propel motor vehicles over the public highways of this state shall not constitute a sale within the meaning of this paragraph. (B) "Sale" does not include sale and leaseback. "Sales tax" means all applicable state, city and county sales tax. "Sales value" means: (A) In the case of a manufacturer, the sum of the manufacturer' s cost of raw materials and the proportionate share of both the cost of machinery and equipment used and the cost of items consumed in the direct process of the manufacturing of the product, all of which were purchased exempt from sales tax for use in the process of manufacturing; or (B) In the case of a person holding a mixed beverage tax permit or other permit issued in accordance with 37 O.S. 577, the total retail sales price for sales of alcoholic beverages 4

17 only, calculated pursuant to OAC 710:20-5-4; or (C) In the case of sales of prepared food, the sales value of a free, reduced price, or complimentary meal is presumed to be the greater of the consideration received for the meal, if any, or the cost paid by the vendor of the food for the food items included in the free, reduced price, or complimentary meal; or (D) In the case where an inventory of goods, originally purchased exempt for resale, is being held for rental or leasing purposes, the regular rental charges which would be charged to the vendor' s best customer, if the goods are to be returned to inventory. Where the goods are not to be returned to inventory held for rental or leasing purposes, the lesser of the original purchase price of the goods, or the current market price will be presumed to be the sales value; or (E) Otherwise, "sales value" means the larger of either the vendor' s cost at the time the exempt purchase of goods was made, or the price at which it would be sold to the vendor' s best customer in the ordinary course of business. "Tangible personal property" means personal property that can be seen, weighed, measured, felt, or touched or that is in any other manner perceptible to the senses. For purposes of the Oklahoma Sales Tax Code, "tangible personal property" includes electricity, water, gas, steam and prewritten computer software. [68 O.S. 1352(24)] The term does not include real property, such as land and buildings, tangible personal property that loses its identity when it becomes an integral and inseparable part of the realty, or tangible personal property which is removable only with substantial damage to the premises. Property severed from real estate becomes tangible personal property. "Tangible personal property" does not include intangible personal property constituting mere rights of action and having no intrinsic value, such as contracts, deeds, mortgages, stocks, bonds, certificates of deposit, or uncancelled United States postage or revenue stamps sold for postage or revenue purposes. [See: 68 O.S. 1352; 68 O.S. 1354; See Also: 60 O.S. 7, 8] "Tax" means all state, applicable city and applicable county tax. "Use tax" means all applicable state and city use tax. "User" or "consumer" means a person to whom a taxable sale of tangible personal property is made or for whom a taxable service is performed. [Source: Amended at 11 Ok Reg 3521, eff ; Amended at 15 Ok Reg 2827, eff ; Amended at 21 Ok Reg 2581, eff ; Amended at 22 Ok Reg 1563, eff ; Amended at 19 Ok Reg 2070, eff ] 710: Computation of sales and use taxes to be collected and remitted (a) Determination of tax rate. To determine the amount of tax to be collected and remitted, the gross receipts or gross proceeds of each sale is to be multiplied by the applicable percentage. The applicable percentage shall equal the combination of the state and any applicable municipal and county sales tax rates. (b) Computation of tax. In computing the tax to be collected or remitted as the result of any transaction, the tax amount must be carried to the third decimal place when the tax amount is expressed in dollars. The tax must be rounded to a whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four. The vendor or direct payment permit holder may elect to compute the tax due on transactions on an item or invoice basis. [See: 68 O.S.Supp.2003, 1362(B)] 5

18 [Source: Added at 21 Ok Reg 2581, eff ] 710: Presumption of taxability (a) Sales tax. For the purpose of proper administration of the provisions of the sales and use tax laws, it is presumed that all gross receipts are subject to tax until they are shown to be tax exempt. The burden of proving that a sale of tangible personal property or enumerated service is an exempt sale is upon the vendor. (b) Use tax. For consumer use tax purposes, it is presumed that tangible personal property sold, leased or rented by any person for delivery in this state is sold, leased or rented for storage, use or other consumption in this state. The burden of proving the contrary is on the purchaser. [See: 68 O.S. 1365] [Source: Amended at 11 Ok Reg 3521, eff ] 710: Unlawful to advertise that sales tax will be absorbed Oklahoma Statutes, prohibits any retailer to advertise or hold out or state to the public or to any customer, either directly or indirectly, that the sales tax imposed under Oklahoma Statutes, will be absorbed or assumed by such retailer, or that such tax will be paid by the vendor for the consumer or user. [See: 68 O.S. 1361(D)] [Source: Amended at 11 Ok Reg 3521, eff ] 710: "Tax-included" prices (a) Certain vendors, in an effort to arrive at a sum for the tangible personal property being sold which may be conveniently handled as cash, have calculated the price of the property and collected a "tax-included" amount. In some cases the vendor has made signs, price lists, etc. on the premises advising that the prices include tax; in others no apparent mention of taxes has been made to the public. (b) Although certainly desirable from an accounting and auditing standpoint, neither the statutes nor Commission rules require a vendor to state the sale price separately from the applicable tax. 68 O.S. 1361(B) provides that sales tax shall be added to the sales price, "and when added such tax shall constitute a part of such price." Under present law, taxes collected as part of a taxincluded price, if so charged and collected, may be "backed out" of the total receipts to arrive at the amount of gross receipts or gross proceeds subject to tax. [68 O.S. 1361(B)] (c) Whether the vendor added and collected the tax or whether the vendor truly failed to collect any tax at all, is always a fact to be determined. Such factual determination must be made in light of all circumstances, documents, records and information available. No single factor will be relied on to the exclusion of other evidence. As always in tax matters, the burden of proving that the tax was added and collected is on the vendor. The vendor must keep sufficient documentary evidence, i.e. books, records, price lists, signs, to sustain this burden. [Source: Amended at 11 Ok Reg 3521, eff ; Amended at 21 Ok Reg 2581, eff ] 710: Consumer/user defined; specific applications "Consumer" or "user" means a person to whom a taxable sale of tangible personal property is made or for whom a taxable service is performed. (1) Hospitals, sanitariums, nursing homes and emergency medical care. Hospitals and 6