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28	28	STATE OF OKLAHOMA
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30	30	1st Session of the 58th Legislature (2021)
31	31
32	32	HOUSE BILL 1714 By: Hill
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38	38	AS INTRODUCED
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40	40	An Act relating to revenue and taxation; amending 68
41	41	O.S. 2011, Section 1359, as last amended by Section
42	42	2, Chapter 317, O.S.L. 2016 (68 O.S. Supp. 2020,
43	43	Section 1359), which relates to certain sales tax
44	44	exemptions for manufacturing enterprises; eliminating
45	45	sales tax exemption related to consumption of
46	46	tangible personal property or construction of
47	47	manufacturing facilities; repealing 68 O.S. 2 011,
48	48	Section 1359.1, which relates to refund procedures
49	49	for certain sales tax exemption; providing an
50	50	effective date; and declaring an emergency .
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56	56	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
57	57	SECTION 1. AMENDATORY 68 O.S. 2011, Section 1359, as
58	58	last amended by Section 2, Chapter 317, O.S.L. 2016 (68 O.S. Supp.
59	59	2020, Section 1359), is amended to read as follows:
60	60	Section 1359. Exemptions - Manufacturing.
61	61	There are hereby specifically exempted from the tax levied by
62	62	Section 1350 et seq. of this title:
63	63	1. Sales of goods, wares, merchandise, tangible personal
64	64	property, machinery and equipment to a manufacturer for use in a
65	65	manufacturing operation. Goods, wares, merchandise, property,
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92	92	machinery and equipment used in a nonmanufacturing activity or
93	93	process as set forth in paragraph 14 of Section 1352 of this title
94	94	shall not be eligible for the exemption provided for in this
95	95	subsection paragraph by virtue of the activity or process being
96	96	performed in conjunction with or integrated into a manufacturing
97	97	operation.
98	98	For the purposes of this paragraph, sales made to any person,
99	99	firm or entity that has entered into a contractual relationship for
100	100	the construction and improvement of manufacturing goods, wares,
101	101	merchandise, property, machinery and equipment for use in a
102	102	manufacturing operation shall be considered sales made to a
103	103	manufacturer which is defined or classified in the North American
104	104	Industry Classification System (NAICS) Manual under Industry Group
105	105	No. 324110. Such pur chase shall be evidenced by a copy of the sales
106	106	ticket or invoice to be retained by the vendor indicating that the
107	107	purchases are made for and on behalf of such manufacturer and set
108	108	out the name of such manufacturer as well as include a copy of the
109	109	Manufacturing Exemption Permit of the manufacturer. Any person who
110	110	wrongfully or erroneously certifies that purchases are being made on
111	111	behalf of such manufacturer or who otherwise violates this paragraph
112	112	shall be guilty of a misdemeanor and upon conviction there of shall
113	113	be fined an amount equal to double the amount of sales tax involved
114	114	or incarcerated for not more than sixty (60) days or both;
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141	141	2. Ethyl alcohol when sold and used for the purpose of blending
142	142	same with motor fuel on which motor fuel tax is levied by Section
143	143	500.4 of this title;
144	144	3. Sales of containers when sold to a person regularly engaged
145	145	in the business of reselling empty or filled containers or when
146	146	purchased for the purpose of packaging raw products of farm, garden,
147	147	or orchard for resale to th e consumer or processor. This exemption
148	148	shall not apply to the sale of any containers used more than once
149	149	and which are ordinarily known as returnable containers, except
150	150	returnable soft drink bottles and the cartons, crates, pallets, and
151	151	containers used to transport returnable soft drink bottles. Each
152	152	and every transfer of title or possession of such returnable
153	153	containers in this state to any person who is not regularly engaged
154	154	in the business of selling, reselling or otherwise transferring
155	155	empty or filled containers shall be taxable under this Code.
156	156	Additionally, this exemption shall not apply to the sale of labels
157	157	or other materials delivered along with items sold but which are not
158	158	necessary or absolutely essential to the sale of the sold
159	159	merchandise;
160	160	4. Sales of or transfers of title to or possession of any
161	161	containers, after June 30, 1987, used or to be used more than once
162	162	and which are ordinarily known as returnable containers and which do
163	163	or will contain beverages defined by paragraphs 4 and 14 paragraph 5
164	164	of Section 506 1-103 of Title 37 37A of the Oklahoma Statutes, or
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191	191	water for human consumption and the cartons, crates, pallets, and
192	192	containers used to transport such returnable containers;
193	193	5. Sale of tangible personal property when sold by the
194	194	manufacturer to a person who transports it to a state other than
195	195	Oklahoma for immediate and exclusive use in a state other than
196	196	Oklahoma. Provided, no sales at a retail outlet shall qualify for
197	197	the exemption under this paragraph;
198	198	6. Machinery, equipment, fue ls and chemicals or other materials
199	199	incorporated into and directly used or consumed in the process of
200	200	treatment to substantially reduce the volume or harmful properties
201	201	of hazardous waste at treatment facilities specifically permitted
202	202	pursuant to the Oklah oma Hazardous Waste Management Act and operated
203	203	at the place of waste generation, or facilities approved by the
204	204	Department of Environmental Quality for the cleanup of a site of
205	205	contamination. The term "hazardous" waste" may include low-level
206	206	radioactive waste for the purpose of this paragraph;
207	207	7. Except as otherwise provided by subsection I of Section 3658
208	208	of this title pursuant to which the exemption authorized by this
209	209	paragraph may not be claimed, sales of tangible personal property to
210	210	a qualified manufacturer or distributor to be consumed or
211	211	incorporated in a new manufacturing or distribution facility or to
212	212	expand an existing manufacturing or distribution facility. For
213	213	purposes of this paragraph, sales made to a contractor or
214	214	subcontractor that has pre viously entered into a contractual
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241	241	relationship with a qualified manufacturer or distributor for
242	242	construction or expansion of a manufacturing or distribution
243	243	facility shall be considered sales made to a qualified manufacturer
244	244	or distributor. For the purpo ses of this paragraph, "qualified
245	245	manufacturer or distributor " means:
246	246	a. any manufacturing enterprise whose total cost of
247	247	construction of a new or expanded facility exceeds the
248	248	sum of Five Million Dollars ($5,000,000.00) and in
249	249	which at least one hundred ( 100) new full-time-
250	250	equivalent employees, as certified by the Oklahoma
251	251	Employment Security Commission, are added and
252	252	maintained for a period of at least thirty -six (36)
253	253	months as a direct result of the new or expanded
254	254	facility,
255	255	b. any manufacturing enterpri se whose total cost of
256	256	construction of a new or expanded facility exceeds the
257	257	sum of Ten Million Dollars ($10,000,000.00) and the
258	258	combined cost of construction material, machinery,
259	259	equipment and other tangible personal property exempt
260	260	from sales tax under the provisions of this paragraph
261	261	exceeds the sum of Fifty Million Dollars
262	262	($50,000,000.00) and in which at least seventy -five
263	263	(75) new full-time-equivalent employees, as certified
264	264	by the Oklahoma Employment Security Commission, are
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291	291	added and maintained for a period of at least thirty -
292	292	six (36) months as a direct result of the new or
293	293	expanded facility,
294	294	c. any manufacturing enterprise whose total cost of
295	295	construction of an expanded facility exceeds the sum
296	296	of Three Hundred Million Dollars ($300,000,000.00) and
297	297	in which the manufacturer has and maintains an average
298	298	employment level of at least one thousand seven
299	299	hundred fifty (1,750) full -time-equivalent employees,
300	300	as certified by the Employment Security Commission, or
301	301	d. any enterprise primarily engaged in the general
302	302	wholesale distribution of groceries defined or
303	303	classified in the North American Industry
304	304	Classification System (NAICS) Manual under Industry
305	305	Groups No. 4244 and 4245 and which has at least
306	306	seventy-five percent (75%) of its total sales to in -
307	307	state customers or buyers and whose total cost of
308	308	construction of a new or expanded facility exceeds the
309	309	sum of Forty Million Dollars ($40,000,000.00) with
310	310	such construction commencing on or after July 1, 2005,
311	311	and before December 31, 2005, and which at least fif ty
312	312	new full-time-equivalent employees, as certified by
313	313	the Oklahoma Employment Security Commission, are added
314	314	and maintained for a period of at least thirty -six
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341	341	(36) months as a direct result of the new or expanded
342	342	facility.
343	343	For purposes of this paragraph, the total cost of construction
344	344	shall include building and construction material and engineering and
345	345	architectural fees or charges directly associated with the
346	346	construction of a new or expanded facility. The total cost of
347	347	construction shall not include at torney fees. For purposes of
348	348	subparagraph c of this paragraph, the total cost of construction
349	349	shall also include the cost of qualified depreciable property as
350	350	defined in Section 2357.4 of this title and labor services performed
351	351	in the construction of an e xpanded facility. For the purpose of
352	352	subparagraph d of this paragraph, the total cost of construction
353	353	shall also include the cost of all parking, security and dock
354	354	structures or facilities necessary to manage, process or secure
355	355	vehicles used to receive an d/or distribute groceries through such a
356	356	facility. The employment requirement of this paragraph can be
357	357	satisfied by the employment of a portion of the required number of
358	358	new full-time-equivalent employees at a manufacturing or
359	359	distribution facility that i s related to or supported by the new or
360	360	expanded manufacturing or distribution facility as long as both
361	361	facilities are owned by one person or business entity. For purposes
362	362	of this section, "manufacturing facility " shall mean building and
363	363	land improvements used in manufacturing as defined in Section 1352
364	364	of this title and shall also mean building and land improvements
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391	391	used for the purpose of packing, repackaging, labeling or assembling
392	392	for distribution to market, products at least seventy percent (70%)
393	393	of which are made in Oklahoma by the same company but at an off -
394	394	site, in-state manufacturing or distribution facility or facilities.
395	395	It shall not include a retail outlet unless the retail outlet is
396	396	operated in conjunction with and on the same site or premises as the
397	397	manufacturing facility. Up to ten percent (10%) of the square feet
398	398	of a manufacturing or distribution facility building may be devoted
399	399	to office space used to provide clerical support for the
400	400	manufacturing operation. Such ten percent (10%) may be in a
401	401	separate building as long as it is part of the same contiguous tract
402	402	of property on which the manufacturing or distribution facility is
403	403	located. Only sales of tangible personal property made after June
404	404	1, 1988, shall be eligible for the exemption pr ovided by this
405	405	paragraph. The exemption authorized pursuant to subparagraph d of
406	406	this paragraph shall only become effective when the governing body
407	407	of the municipality in which the enterprise is located approves a
408	408	resolution expressing the municipality 's support for the
409	409	construction for such new or expanded facility. Upon approval by
410	410	the municipality, the municipality shall forward a copy of such
411	411	resolution to the Oklahoma Tax Commission;
412	412	8. Sales of tangible personal property purchased and used by a
413	413	licensed radio or television station in broadcasting. This
414	414	exemption shall not apply unless such machinery and equipment is
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441	441	used directly in the manufacturing process, is necessary for the
442	442	proper production of a broadcast signal or is such that the failure
443	443	of the machinery or equipment to operate would cause broadcasting to
444	444	cease. This exemption begins with the equipment used in producing
445	445	live programming or the electronic equipment directly behind the
446	446	satellite receiving dish or antenna, and ends with the t ransmission
447	447	of the broadcast signal from the broadcast antenna system. For
448	448	purposes of this paragraph, "proper production" shall include, but
449	449	not be limited to, machinery or equipment required by Federal
450	450	Communications Commission rules and regulations;
451	451	9. 8. Sales of tangible personal property purchased or used by
452	452	a licensed cable television operator in cablecasting. This
453	453	exemption shall not apply unless such machinery and equipment is
454	454	used directly in the manufacturing process, is necessary for the
455	455	proper production of a cablecast signal or is such that the failure
456	456	of the machinery or equipment to operate would cause cablecasting to
457	457	cease. This exemption begins with the equipment used in producing
458	458	local programming or the electronic equipment behind the satellite
459	459	receiving dish, microwave tower or antenna, and ends with the
460	460	transmission of the signal from the cablecast head -end system. For
461	461	purposes of this paragraph, "proper production" shall include, but
462	462	not be limited to, machinery or equipment requir ed by Federal
463	463	Communications Commission rules and regulations;
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490	490	10. 9. Sales of packaging materials for use in packing,
491	491	shipping or delivering tangible personal property for sale when sold
492	492	to a producer of agricultural products. This exemption shall not
493	493	apply to the sale of any packaging material which is ordinarily
494	494	known as a returnable container;
495	495	11. 10. Sales of any pattern used in the process of
496	496	manufacturing iron, steel or other metal castings. The exemption
497	497	provided by this paragraph shall be appli cable irrespective of
498	498	ownership of the pattern provided that such pattern is used in the
499	499	commercial production of metal castings;
500	500	12. 11. Deposits or other charges made and which are
501	501	subsequently refunded for returnable cartons, crates, pallets, and
502	502	containers used to transport cement and cement products;
503	503	13. 12. Beginning January 1, 1998, machinery, electricity,
504	504	fuels, explosives and materials, excluding chemicals, used in the
505	505	mining of coal in this state;
506	506	14. 13. Deposits, rent or other charges made fo r returnable
507	507	cartons, crates, pallets, and containers used to transport mushrooms
508	508	or mushroom products from a farm for resale to the consumer or
509	509	processor;
510	510	15. 14. Sales of tangible personal property and services used
511	511	or consumed in all phases of the extr action and manufacturing of
512	512	crushed stone and sand, including but not limited to site
513	513	preparation, dredging, overburden removal, explosive placement and
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540	540	detonation, on-site material hauling and/or transfer, material
541	541	washing, screening and/or crushing, prod uct weighing and site
542	542	reclamation; and
543	543	16. 15. Sale, use or consumption of paper stock and other raw
544	544	materials which are manufactured into commercial printed material in
545	545	this state primarily for use and delivery outside this state. For
546	546	the purposes of this section, "commercial printed material " shall
547	547	include magazines, catalogs, retail inserts and direct mail.
548	548	SECTION 2. REPEALER 68 O.S. 2011, Section 1359.1, is
549	549	hereby repealed.
550	550	SECTION 3. This act shall become effective July 1, 2021.
551	551	SECTION 4. It being immediately necessary for the preservation
552	552	of the public peace, health or safety, an emergency is hereby
553	553	declared to exist, by reason whereof this act shall take effect and
554	554	be in full force from and after its passage and approval.
555	555
556	556	58-1-5159 AQH 12/01/20

Oklahoma 2022 Regular Session

Oklahoma House Bill HB1714 Compare Versions