Sales and Use Taxes in Oklahoma

April 13, 2006

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In Oklahoma, the sales and use tax is levied upon gross receipts derived from all sales of the following:

tangible personal property except newspapers and periodicals
utilities or other public service, except water, sewage, and refuse
transportation for hire of persons by qualified common carriers
telecommunications services that originate or terminate in Oklahoma
printing of all kinds and most printing services
service of furnishing rooms by hotels, public rooming houses, and tourist camps
service of furnishing storage by auto hotels or parking lots
food, confection, or drinks prepared by dispensers and sold for immediate consumption
advertising of all kinds
computer hardware or software
dues or fees to clubs
tickets, fees, or admission charges to recreational events
charges made for the privilege of entering or engaging in any kind of activity when no admission is charged spectators
charges made for the privilege of using items of recreational activity
rental of equipment for recreational activities
sales through vending machines
rental or lease of tangible personal property
floral items sold by persons engaged in florist or nursery business
taxable services and tangible personal property sold to contractors for developing and improving real estate
taxable services and tangible personal property sold to persons who are primarily engaged in selling their services

Sales and use tax rate. The Oklahoma sales and use tax rate is 4.5 percent. In addition, make sure you contact your local governments in Oklahoma because they are allowed to assess a local sales and use tax.

Tax-exempt items. Oklahoma has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Oklahoma sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Oklahoma, the sales tax is imposed on the consumer or user and must be paid to the vendor. Any person required to collect the sales tax is personally liable. Principal officers of corporations and managers or members of limited liability companies may be held personally liable for the sales tax owed by the corporation or limited liability company. Once the tax is added to the sales price, the tax constitutes a debt to the vendor that can be recovered in the same manner as any other debt.

Use tax. An excise (use) tax is imposed on the storage, use, or other consumption in Oklahoma of tangible personal property purchased or brought into Oklahoma. The use tax doesn't apply to tangible personal property intended for use in other states, but which is stored in Oklahoma or is retained for the purpose of fabrication, maintenance or other service.

Responsibility for collecting use tax. The use tax is imposed directly on the person storing, using, or otherwise consuming tangible personal property purchased or brought into the state. If the tax is not paid to the vendor, the user/consumer must pay the tax directly to the Tax Commission.

Obtaining tax permits in Oklahoma. In Oklahoma, vendors must obtain a permit that is valid for three years for each place of business. The first permit requires a $20 fee and an additional $10 permit fee is required for each additional place of business.

Leases. In Oklahoma, the lease or rental of tangible personal property resulting in the transfer of the title to or possession of the property is subject to the sales and use tax. A lease of tangible personal property is a series of transactions in time units defined by the agreement of the parties. Gross receipts are taxable at the rate in effect at the time the payment must be or is made.

The following discussions address additional sales and use tax issues that many small business owners face: