Many places are on spring break and school is out, and that's generally good news. But school is also out in Oklahoma too, due to a teachers strike for better pay and increased education funding. By the way the Oklahoma Legislature just gave them an annual increase of $6,000, but they are still on strike; today as I write this is 'day 6'.
In response the Oklahoma Legislature is imposing new taxes faster than they can write the legislation including new taxes on marketplace sales. One of the ways that the Legislature has decided to come up with the funds to increase teacher salaries is by taxing more sales by out-of-state sellers. Both houses of the legislature have approved this measure, it presently is awaiting the signature of Governor Mary Fallin to become law.
Sales Tax
Oklahoma House Bill 1019 offers non-collecting sellers that do a certain amount of business in the state a choice, they can either collect and remit Oklahoma sales tax, or comply with use tax notice and reporting requirements.
If signed into law this legislation would apply to remote sellers, marketplace facilitators, and referrers with at least $10,000 in aggregate sales of tangible personal property in, or delivered to any location within, Oklahoma during the immediately preceding twelve-calendar-month period. The Legislation will take effect June 1, 2018 if the Governor signs it.
The new requirements pertain to remote transactions only. Marketplace facilitators, referrers, or remote sellers with a place of business in Oklahoma must collect tax on their own sales.
This new law, similar to what many other states have been attempting to do, required notices to be given by remote marketplace facilitators and remote sellers that meet the sales threshold and opt not to collect and remit sales tax. They must post a conspicuous notice on their forums, informing potential Oklahoma purchasers that:
- Sales or use tax may be due in connection with the purchase and delivery of tangible personal property in Oklahoma
- Oklahoma requires the purchaser to file a return if use tax is due in connection with the purchase and delivery
- The notice is required by law
In addition, each purchaser must be sent a written notice at the time of sale that includes (1) a statement that sales or use tax is not being collected in connection with the purchase, (2) a statement that the purchaser may be required to remit use tax directly to the Oklahoma Tax Commission, and (3) instructions for obtaining additional information from the Commission regarding whether and how to remit use tax
Remote marketplace facilitators and sellers are also prohibited from stating that sales or use tax is not imposed on the transaction unless the transaction is exempt from sales and use tax by Oklahoma law.
Similar notice requirements apply to referrers. However, referrers must also explain that if the person to whom the purchaser is being referred does not collect sales or use tax on a subsequent purchase by the purchaser, “the person may be required to provide information to the purchaser and the Commission about the purchaser’s potential use tax liability.”
In addition, any non-collecting remote sellers and marketplace facilitators must provide each year, no later than January 31, a written report to each Oklahoma purchaser that includes the following:
- A written statement that they did not collect sales or use tax in connection with the purchaser’s transactions and that the purchaser may be required to remit use tax to the Tax Commission;
- A list, by date, indicating the type and purchase price of each product purchased or leased by the purchaser from the remote seller or marketplace facilitator and delivered to a location in Oklahoma;
- Instructions for obtaining additional information from the Commission regarding whether and how to remit use tax to the Commission;
- A statement that the remote seller or marketplace facilitator is required to submit a report to the Commission that includes the name of the purchaser and the aggregate dollar amount of the purchaser’s purchases from the remote seller or marketplace facilitator;
- and, any such additional information as the Commission may reasonably require.
All non-collecting remote sellers and marketplace facilitators must submit, no later than January 31 of each year, a written report to the Oklahoma Tax Commission.
The report must include the following information about each purchaser who was sent the above reports including (1) the purchaser’s name; (2) the purchaser’s billing address, last-known mailing address (if different), and Oklahoma delivery address; (3) the aggregate dollar amount of the purchaser’s purchases from the remote seller or marketplace facilitator; (4) the name and address of the remote seller, marketplace facilitator, or marketplace seller that made the sales to the purchaser.
And as if that wasn't enough reporting there is additional reporting required for non-collecting referrers. They must provide each remote seller to whom the referrer transferred a potential purchaser located in Oklahoma during the immediately preceding calendar year with (1) a statement that sales or use tax may be imposed by the state on the transaction; (2) a statement that the remote seller may be required to either collect and remit tax or comply with notice and reporting requirements; and (3) instructions for obtaining additional information regarding sales and use tax from the Commission.
In addition, by January 31 of each year, non-collecting referrers must send the Tax Commission a list of persons who received the above notice.
There are penalties for failure to comply, and also protections from class action litigation built into this new tax legislation. As you can see, a lot of new extra paperwork regarding sales and use tax. For more information contact the Oklahoma Tax Commission.
You may wonder why I would go into such 'detail' as it regards a Sales and Use Tax change in Oklahoma. Well, Oklahoma is by no means the only state implementing (or attempting to implement) non-collecting seller use tax reporting requirements. So, if you want more information about how similar provisions in your own state, or states with whom you do business, check out Avalara's guide at this website.
That's one reason why, even in my own state, Oklahoma, people doing business here need the guidance and assistance of sales tax professionals like Avalara, "the sales tax people".
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You can count on the fact that Oklahoma will be out to collect every penny of not only these new taxes but the existing sales and use taxes to insure they have the fiscal resources with which to pay the teachers. To do this they make use of audits, fines, and penalties as part of their enforcement actions.
It's easy to get lured into a false sense of compliance, that's why you need a sales and use tax expert like Avalara helping you integrate sales and use tax collections and reporting into your overall business framework. By providing sales tax automation solutions, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting, Avatax can give you the assurance of compliance without sacrificing productivity so that your sales tax is way less taxing than ever before.