Effective Date: July 1, 2018
Threshold: $10,000 in aggregate Oklahoma sales or comply with notice and reporting requirements
Measurement Date: Immediately preceding twelve-calendar-month period
Includable Transactions: Taxable sales
When You Need to Register Once You Exceed the Threshold: On or before July 1, 2018, and on or before June 1 of each calendar year thereafter, beginning June 1, 2019
Oklahoma has enacted legislation requiring marketplace facilitators, remote sellers and referrers to either collect and remit Oklahoma sales tax or comply with notice and reporting requirements. This is in response to recent education funding challenges and includes specific distribution rules for the additional sales and use tax revenues generated from these provisions. This is the third version of notice and reporting provisions passed by Oklahoma in efforts to encourage remote sellers, marketplace providers and referrers to register to collect the sales tax.
These provisions are effective April 10, 2018, however, the initial election is not due until July 1, 2018. By July 1, 2018, and by June 1 of each calendar year starting in 2019, a marketplace facilitator, remote seller or referrer who had at least $10,000 in aggregate Oklahoma sales in the preceding 12 month calendar period must either file an election with the Oklahoma Tax Commission (OTC) to collect and remit sales and use tax due on tangible personal property (TPP) and obtain a sales tax permit; or comply with notice and reporting requirements.
An election made on or before July 1, 2018, will be in effect for the 2018-2019 fiscal year. A remote seller, marketplace facilitator or referrer may change an election to comply with the notice and reporting requirements to an election to collect and remit tax at any time during a fiscal year by filing a new election with the OTC and obtaining a permit. The new election will be effective thirty days after the filing and will be effective for the balance of the fiscal year in which the new election was filed and for the next succeeding fiscal year. A remote seller, marketplace facilitator or a referrer who does not submit an election will be deemed to have elected to comply with the notice and reporting requirements.
A “marketplace facilitator” facilitates a sale at retail of TPP if the person or an affiliated person lists or advertises TPP 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.
“Affiliated person” means a person that, with respect to another person has a direct or indirect ownership interest of more than 5% in the other person, or is related to the other person because a third person, or group of third persons who are affiliated with each other holds a direct or indirect ownership interest of more than 5% in the related person
“Forum” means a place where sales at retail occur, whether physical or electronic.
“Remote seller” means a person, other than a marketplace facilitator, a marketplace seller or a referrer, that does not maintain a place of business in Oklahoma that makes retail sales of TPP through a forum. The term does not include an employee who in the ordinary scope of employment renders services to his employer in exchange for wages and salaries.
“Referrer” means a person, other than a person engaging in the business of printing or publishing a newspaper, that, pursuant to an agreement or arrangement with a marketplace seller or remote seller, does the following:
“Referrer” does not include a person that provides Internet advertising services and does not provide the marketplace seller’s or remote seller’s shipping terms or advertise whether a marketplace seller or remote seller collects a sales or use tax.
A remote seller or marketplace facilitator electing to comply with the notice and reporting requirements must post a conspicuous notice on its forum that informs purchasers intending to purchase TPP for delivery in Oklahoma that includes all of the following:
A remote seller or marketplace facilitator must also provide a written notice to each purchaser at the time of each sale that includes all of the following:
A referrer electing to comply with the notice and reporting requirements must post a conspicuous notice on its platform that informs purchasers intending to purchase TPP for delivery in Oklahoma that includes all of the following:
Remote sellers and marketplace facilitators who do not elect to collect and remit tax also have a reporting obligation. By January 31 each year, they must provide a written report to each purchaser required to receive the above notice during the immediately preceding calendar year that includes all of the following:
This notice must be shall be mailed by first-class mail in an envelope prominently marked with words indicating that important tax information is enclosed to the purchaser’s billing addresses, if known, or, if unknown, to the purchaser’s shipping address. If the purchaser’s billing and shipping addresses are unknown, the report shall be sent electronically to the purchaser’s last-known email address with a subject heading indicating that important tax information is being provided.
Additionally, by January 31 of each year, remote sellers and marketplace facilitators who do not elect to collect and remit tax must submit a report to the OTC. The report shall include, with respect to each purchaser required to receive the notice during the immediately preceding calendar year, the following:
A referrer that does not elect to collect and remit tax must, by January 31 of each year, provide a written notice to each remote seller to whom the referrer transferred a potential purchaser located in Oklahoma during the immediately preceding calendar year that includes all of the following:
A referrer that does not elect to collect and remit tax must, by January 31 of each year, provide a report to the OTC that includes a list of persons who received the notice required under this act.
The OTC will assess a penalty of $20,000 or 20% of total sales in Oklahoma during the previous 12 months, whichever is less, against a remote seller, a marketplace facilitator or a referrer that makes an election to comply with the notice and reporting requirements or is deemed to have made such election and fails to comply with the requirements. The penalty will be assessed separately for each violation but may only be assessed once in a calendar year. For five years after this penalty provision takes effect, the OTC can abate or reduce the penalty or interest due to hardship or good cause. (H.B. 1019, Laws 2018, Second Extraordinary Session, effective April 10, 2018)
UPDATE: In light of the South Dakota v. Wayfair decision, the Oklahoma State Tax Commission (OTC) issued guidance for remote sellers on August 31, 2018. The notice states, “Remote sellers are now required to collect and remit sales or use taxes on all orders delivered to Oklahoma, whether or not the seller has a physical presence in the state. This includes online and mail-order companies.” The state’s law requires that remote sellers that sold at least $10,000 in taxable sales into Oklahoma during the previous 12 months collect and remit tax or comply with statutory notice and reporting requirements. Oklahoma law also requires marketplace facilitators and referrers to file an election with the OTC – and either collect and remit tax or comply with notice and reporting requirements. The OTC encourages sellers who fall under any of preceding descriptions to register as soon as possible. The OTC also noted that it is in the process of simplifying its application for remote sellers. Read the full notice.
UPDATE: Oklahoma has enacted changes to its existing economic and marketplace nexus provisions. Under the newly enacted legislation, remote sellers with aggregate sales of tangible personal property in Oklahoma subject to tax of $100,000 or more during the during the preceding or current calendar year are required to collect and remit Oklahoma sales tax. Note that this is a change to the existing provisions described above that require remote sellers with taxable sales in excess of $10,000 to elect to collect tax or comply with notice and reporting provisions. For marketplace facilitators and referrers, the threshold remains at $10,000 and they still have the option to elect to collect and remit tax or comply with notice and reporting requirements. Read our updated news item for more details: Oklahoma Enacts Changes to Economic Nexus Provisions