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Sales Tax Obligations of Sellers in Oklahoma

April 13, 2006

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Oklahoma imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. In Oklahoma, a certification for resale may be made on the bill, invoice, or sales slip retained by you or by obtaining a certification letter from the purchaser containing the following information:

• the name and address of the purchaser
• the purchaser's sales tax permit number
• a statement that the purchaser is engaged in the business of reselling the articles purchased
• a statement that the articles purchased are purchased for resale
• the signature of the purchaser (or the signature of a person authorized to legally bind the purchaser)

The above certification can be made with the Multistate Certificate or the Oklahoma Exemption Certificate, or a certification that the purchaser is engaged in the business of reselling the articles purchased can be made on the bill, invoice, or sales slip retained by you, the vendor. You are relieved of liability for sales tax or the duty to collect sales tax if you, in good faith, accept from a consumer a properly completed documentation certified by the Tax Commission that the consumer is exempt from tax.

Procedure for accepting blanket certificates. As a seller you may accept a blanket certificate if your customer repeatedly purchases the same type of property or service for processing or resale. Your regular purchasers can furnish the above certification letter to you once, but your customer must then notify you of all subsequent purchases that are not for resale and remit the tax.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Oklahoma has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Oklahoma. To determine if you have physical presence, ask yourself the following:

• Do I have retail facilities, a warehouse, or any office space in Oklahoma? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter Oklahoma for purposes of taking and transmitting orders from Oklahoma? If your employee or independent contractor goes into Oklahoma to take or transmit orders, your business may have physical presence in Oklahoma. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter Oklahoma for purposes of delivering property? Frequent deliveries in Oklahoma by your trucks will give you physical presence in Oklahoma.

Sales tax "bracket system." The bracket system may be followed by sellers in computing the sales tax. The state of Oklahoma has issued brackets for tax rates ranging from 4.5 percent to 10.5 percent. The 4.5 percent state tax is computed on each dollar and/or fraction of a dollar according to the following table:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Oklahoma, it is against the law to refund or offer to refund all or any part of the amount collected, or to absorb the amount of sales tax required to be added to the sales price and collected from the purchaser. As a seller, it is also against the law for you to advertise directly or indirectly that you will absorb the sales tax that is required to be added to the sales price.

Claiming refund for excess tax payments. If merchandise is returned in exchange for another item, you may record the net difference on the sales tax report for the current month. If an item is repossessed, you can receive a credit for the unpaid portion of the account at the time of a repossession. If you have paid sales taxes through a miscomputation or misinterpretation of law, you can file a claim for refund within three years from the date of payment.

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