Oklahoma H.B. 2335 shifts the sales tax burden from marketplace facilitators to marketplace seller’s for hotels and motels with more than 12 rooms.
The bill, effective November 1, 2023, defines a product that is taxable for marketplace facilitators to exclude hotels or motels that have an occupancy of more than 12 rooms during normal business operations.
After passing the House on March 14 and the Senate on April 19, H.B. 2335 was signed on May 19, 2023, by Republican Governor Kevin Stitt.
Oklahoma defines a marketplace facilitator as “a person that facilitates the sale at retail of a marketplace seller’s product.” Oklahoma recently updated its definition of marketplace facilitators effective January 1, 2023. This update defined a marketplace facilitator as someone who “lists or advertises products for sale at retail in any forum, and either directly or indirectly through agreements or arrangements with third parties, collects the payment from the purchaser and transmits the payment to the person selling the property (Oklahoma Tax Commission, S.B.1339)
Oklahoma defines a marketplace seller “a person that has an agreement with a marketplace facilitator pursuant to which the marketplace facilitator facilitates sales for the person.”
Another important definition in this scenario is a product, which is defined as “tangible personal property, services, or other transactions taxable under the Oklahoma Sales Tax Code, Section 1350 et seq. of this title.” Now, a hotel or motel with more than 12 rooms in the definition of a product.
In this situation, hotels, and motels with more than 12 rooms will need to pay tax as marketplace sellers. This is different from before, when the sales tax was the burden of the marketplace facilitator. For example, a Hilton hotel with more than 12 rooms would now be obligated to pay sales tax on a hotel stay as opposed to a third-party booking site, like Trivago or Kayak.
Tax professionals should take note of the change and be prepared to factor in the exemption beginning November 1, 2023.
(Oklahoma H.B. 2335, May 11, 2023; Oklahoma Sales Tax Code, Section 1350)