Oklahoma Issues Proposed Emergency Rule for Internet Retailers

The Oklahoma Tax Commission issued a Press Release on June 30, 2010 which provides a Proposed Draft of an Emergency Rule regarding the Notice Requirements imposed by HB 2359. See previous post regarding HB 2359 and the Notice Requirements.The proposed Emergency Rule defines the following important terms for purposes of the Notice Requirements:

  1. "Non-collecting retailer" means a retailer making sales of tangible personal property from a place of business outside of Oklahoma to be shipped to Oklahoma for use and who is not required to collect Oklahoma sales or use taxes.
  2. "Oklahoma purchaser" means a purchaser that requests goods be shipped to Oklahoma.
  3. "Online auction website" means a collection of web pages on the Internet that allows persons to display tangible personal property for sale which is purchased through a competitive process where participants place bids with the highest bidder purchasing the item when the bidding period ends.
  4. "Invoice" includes a purchase order, bill, receipt, sales slip, order form, or packing statement.
  5. "De minimis retailer" means any non-collecting retailer that made total gross sales in the prior year of less than $100,000.00 and reasonably expects sales in the current year will be less than $100,000.00.

Requirements For Notice

According to the proposed Emergency Rule, every non-collecting retailer must give notice that Oklahoma use tax is due on nonexempt purchases of tangible personal property and should be paid by the Oklahoma purchaser. The notice must be readily visible and must appear on a non-collecting retailer’s Internet website or catalog, as applicable, and on each invoice provided to the purchaser as part of the sale. If the non-collecting retailer does not provide an invoice to the purchaser, notice will be considered sufficient if the non-collecting retailer sends a confirmation e-mail containing the notice.

The notice must contain the information set forth as follows:

  1. The non-collecting retailer is not required, and does not, collect Oklahoma sales or use tax;
  2. The purchase is subject to Oklahoma use tax unless it is specifically exempt from taxation;
  3. The purchase is not exempt merely because it is made over the Internet, by catalog, or by other remote means;
  4. The State of Oklahoma requires Oklahoma purchasers to report all purchases that were not taxed and pay tax on those purchases. The tax may be reported and paid on the Oklahoma individual income tax return [Form 511] or by filing a consumer use tax return. [Form 21-1];
  5. The referenced forms and corresponding instructions are available on the Oklahoma Tax Commission website, http://www.tax.ok.gov/.

Notices for Other States?

If a retailer is required to provide a similar notice for another state in addition to Oklahoma, and the retailer provides a single notice to all purchasers with respect to items purchased for delivery into all states, the notice required in subsection (b) of this Section shall be sufficient if it contains substantially the information required in a form that is generalized to any state.
Application to Online Auction Sites

With the exception of notification on invoices, the provisions of the proposed Emergency Rule will apply to online auction websites as defined earlier.

Retailer Prohibition

A non-collecting retailer shall not advertise on its retail Internet website or retail catalog that there is no tax due on purchases made from the retailer for use in Oklahoma.

De Minimis Retailer Exception

A de minimis retailer as defined earlier is exempt from the notice requirements.

Waiting Approval by Governor

This proposed Emergency Rule will become effective when approved by the Governor.

If you need assistance in applying these requirements to your company or client, please contact me at brian.strahle@bakertilly.com.

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Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website: www.leveragestateandlocaltax.com

You can reach Brian at strahle@leveragesalt.com.

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Because state and local taxes are deceptively simple and endlessly complicated.

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