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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
SENATE BILL 1472 By: Coleman
AS INTRODUCED
An Act relating to sales tax; amending 68 O. S. 2021,
Section 1357, as amended by Section 1, Chapter 68,
O.S.L. 2021, which relates to sales tax exemptions;
providing an exemption for portion of gross receipts
or proceeds attributable to parts under specified
circumstance relating to cor e charges; defining term;
and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1357, as
amended by Section 1, Chapter 68, O.S.L. 2021, is amended to read as
follows:
Section 1357. Exemptions – General. There are hereby
specifically exempte d from the tax levied by the Oklahoma Sales Tax
Code:
1. Transportation of school pupils to and f rom elementary
schools or high schools in motor or other veh icles;
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2. Transportation of persons where the f are of each person does
not exceed One Dollar ($1. 00), or local transportation of persons
within the corporate limits of a municipality except by ta xicabs;
3. Sales for resale to persons engaged in the business of
reselling the articles purchased, whethe r within or without the
state, provided that such s ales to residents of this state are made
to persons to whom sales tax permits have been issued as provided in
the Oklahoma Sales Tax Code. This exemption shall not apply to the
sales of articles made to p ersons holding permits when such persons
purchase items for their use and which they are not regularly
engaged in the business of reselling; neither shall this exemption
apply to sales of tangible personal property to peddlers,
solicitors, and other salespersons who do not have an established
place of business and a sales tax permit . The exemption provided b y
this paragraph shall apply to sales of mot or fuel or diesel fuel to
a Group Five vendor, but the use of such motor fuel or diesel fuel
by the Group Five vendor shall not be exempt from the tax levied by
the Oklahoma Sales Tax Code . The purchase of motor fuel or diesel
fuel is exempt from sales ta x when the motor fuel is for shipment
outside this state and consumed by a common carrier by rail in the
conduct of its business. The sales tax shall apply t o the purchase
of motor fuel or diesel fuel in Oklahom a by a common carrier by rail
when such motor fuel is purchased for fueling, within this state, of
any locomotive or other motorized flanged wheel equip ment;
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4. Sales of advertising space in newspapers and periodicals;
5. Sales of programs relating to sp orting and entertainment
events, and sales of advertising on billboards (including signage,
posters, panels, marquees, or on other similar surfaces, w hether
indoors or outdoors) or in programs relating to sporting and
entertainment events, and sales of any advertising, to be displayed
at or in connection with a sporting event, via the Internet,
electronic display devices, or through public address or br oadcast
systems. The exemption authorized by this p aragraph shall be
effective for all sales made on or a fter January 1, 2001;
6. Sales of any advertising, other than the advertising
described by paragraph 5 of this section, via the Internet,
electronic display devices, or through the electronic media ,
including radio, public address or broadcast systems, te levision
(whether through closed circuit bro adcasting systems or otherwise),
and cable and satellite television, and the servicing of any
advertising devices;
7. Eggs, feed, supplies, machinery , and equipment purchased by
persons regularly engaged in the business of raising worms, fish,
any insect, or any other form of terrestrial or aquatic animal life
and used for the purpose of raising same for mark eting. This
exemption shall only be granted and ext ended to the purchaser when
the items are to be used a nd in fact are used in the raising of
animal life as set out above. Each purchaser shall certify, in
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writing, on the invoice or sales ticket retained by the vendor that
the purchaser is regularly engag ed in the business of raising such
animal life and that the items purchased will be used only in s uch
business. The vendor shall certify to the Oklahoma Tax Commission
that the price of the items has bee n reduced to grant the full
benefit of the exemption . Violation hereof by the purchaser or
vendor shall be a misdemeanor;
8. Sale of natural or arti ficial gas and electricity, and
associated delivery or transmission services, when sold exclusively
for residential use. Provided, this exemption shall not a pply to
any sales tax levied by a city or town, or a c ounty, or any other
jurisdiction in this sta te;
9. In addition to the exemptions authorized by Section 1357.6
of this title, sales of drugs sold pu rsuant to a prescription
written for the treatment of human beings by a person licensed to
prescribe the drugs, and sales of insulin and medical oxygen .
Provided, this exemption shall not apply to over-the-counter drugs;
10. Transfers of title or posses sion of empty, partially
filled, or filled returnable o il and chemical drums to any person
who is not regularly engaged in the business of selling, resel ling,
or otherwise transferring empty, partially filled, or filled
returnable oil drums;
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11. Sales of one-way utensils, paper napkins, paper cups,
disposable hot containers, and other one-way carry out materials to
a vendor of meals or beverages;
12. Sales of food or food products for home consumption which
are purchased in whole or in part with coupons i ssued pursuant to
the federal food stamp program as aut horized by Sections 2011
through 2029 of Title 7 of th e United States Code, as to that
portion purchased with such coupons. The exemption provided for
such sales shall be inapplicable to such sales up on the effective
date of any federal law that removes t he requirement of the
exemption as a condition for par ticipation by the state in the
federal food stamp program;
13. Sales of food or food products, or any equipment or
supplies used in the preparati on of the food or food products to or
by an organization which:
a. is exempt from taxation pursuant to the pro visions of
Section 501(c)(3) of the Internal Revenue Code, 26
U.S.C., Section 501(c)(3), and which provides and
delivers prepared meals for home consumption to
elderly or homebound persons as part of a program
commonly known as “Meals on Wheels” or “Mobile Meals”,
or
b. is exempt from taxation pursu ant to the provision s of
Section 501(c)(3) of the Internal Revenue Code, 26
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U.S.C., Section 501(c)(3 ), and which receives federal
funding pursuant to the Olde r Americans Act of 1965,
as amended, for the purpose o f providing nutrition
programs for the care and benefit of elder ly persons;
14. a. Sales of tangible personal property or services to or
by organizations which are exempt from taxation
pursuant to the provisions of Section 501(c)(3) of the
Internal Revenue Code, 26 U.S.C., Section 501(c)(3),
and:
(1) are primarily involved in the collection and
distribution of food and other household products
to other organizations that facilitate the
distribution of such products to the needy and
such distributee organiza tions are exempt from
taxation pursuant to the provisions of Sec tion
501(c)(3) of the Internal Revenue Code, 26
U.S.C., Section 501(c)(3), or
(2) facilitate the distribution of such products to
the needy.
b. Sales made in the course of business for profit or
savings, competing with other persons e ngaged in the
same or similar business shall not be exempt under
this paragraph;
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15. Sales of tangible personal property or services to
children’s homes which are located on church -owned property and are
operated by organizations exempt from taxation purs uant to the
provisions of the Internal Revenue Code, 26 U.S.C., Section
501(c)(3);
16. Sales of computers, data processing equipment, related
peripherals, and telephone, telegraph or telecommunications service
and equipment for use in a qualified aircraft maintenance or
manufacturing facility. For purposes of this paragraph, “qualified
aircraft maintenance or manufacturing facility” means a new or
expanding facility primarily engaged in aircraft repair, building ,
or rebuilding whether or not on a factory ba sis, whose total cost of
construction exceeds the sum of Five Million Dollars ($5,000,000.00)
and which employs at least two hundred fifty (250) new full -time-
equivalent employees, as certified by the Oklahoma Em ployment
Security Commission, upon completio n of the facility. In order to
qualify for the exemption provided for by this paragraph, the co st
of the items purchased by the qualified aircraft maintenanc e or
manufacturing facility shall equal or exceed the sum of Two Million
Dollars ($2,000,000.00);
17. Sales of tangible personal property consumed or
incorporated in the construction or expans ion of a qualified
aircraft maintenance or manufacturing facili ty as defined in
paragraph 16 of this section . For purposes of this paragraph, sales
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made to a contractor or subcontrac tor that has previously entered
into a contractual relationship with a qu alified aircraft
maintenance or manufacturing facility for cons truction or expansion
of such a facility shall be cons idered sales made to a qualified
aircraft maintenance or manufactu ring facility;
18. Sales of the following telecommunications services:
a. Interstate and International “800 service”. “800
service” means a “telecommunications service ” that
allows a caller to dial a toll-free number without
incurring a charge for the ca ll. The service is
typically marketed under the name “800”, “855”, “866”,
“877”, and “888” toll-free calling, and any subsequent
numbers designated by the Federal Communications
Commission, or
b. Interstate and International “900 service”. “900
service” means an inbound toll “telecommunications
service” purchased by a subscriber that allows the
subscriber’s customers to call in to the su bscriber’s
prerecorded announcement or live service . “900
service” does not include the charge fo r: collection
services provided by the seller of the
“telecommunications services ” to the subscriber, or
service or product sold by the subscriber to the
subscriber’s customer. The service is typically
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marketed under the name “900” service, and any
subsequent numbers designate d by the Federal
Communications Commission,
c. Interstate and Interna tional “private communications
service”. “Private communications s ervice” means a
“telecommunications service ” that entitles the
customer to exclusive or priority u se of a
communications channel or group of channels between or
among termination points, re gardless of the manner in
which such channel or channels are connec ted, and
includes switching capacity, extension lines,
stations, and any other associated services that are
provided in connection with the use of such channel or
channels,
d. “Value-added nonvoice data service”. “Value-added
nonvoice data service” means a service that otherwise
meets the definition of “telecommunications services”
in which computer processing applications are used to
act on the form, content, code, or protocol of the
information or data primarily for a purpose other than
transmission, conveyance, or routing,
e. Interstate and International t elecommunications
service which is:
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(1) rendered by a company for private use within its
organization, or
(2) used, allocated, or di stributed by a compa ny to
its affiliated group,
f. Regulatory assessments and charges, including charges
to fund the Oklahoma Universal Service Fund, the
Oklahoma Lifeline Fund and the Oklah oma High Cost
Fund, and
g. Telecommunications nonrecurring charg es, including but
not limited to the installation, connection, change ,
or initiation of telecommunications services which are
not associated with a retail consumer sale;
19. Sales of railroad track spikes manufactured and sold for
use in this state in the construction or repai r of railroad tracks,
switches, sidings, and turnouts;
20. Sales of aircraft and aircraft parts provide d such sales
occur at a qualified aircraft m aintenance facility. As used in this
paragraph, “qualified aircraft maintenance facil ity” means a
facility operated by an air common carrier, including one or more
component overhaul support buildings or structu res in an area owned,
leased, or controlled by the air common carr ier, at which there were
employed at least two thousand (2,000) f ull-time-equivalent
employees in the preceding year as certified by the Oklahoma
Employment Security Commission and which is primarily related to the
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fabrication, repair, alteration, modifica tion, refurbishing,
maintenance, building, or rebuilding of commer cial aircraft or
aircraft parts used in air common carriage. For purposes of this
paragraph, “air common carrier” shall also include members of an
affiliated group as defined by Section 150 4 of the Internal Revenue
Code, 26 U.S.C., Section 1504 . Beginning July 1, 2012, sale s of
machinery, tools, supplies, equipment, and related tangible personal
property and services used or consumed in the repair, remodeling , or
maintenance of aircraft, ai rcraft engines, or aircraft component
parts which occur at a qualifi ed aircraft maintenance facility;
21. Sales of machinery and equipment purchased and used by
persons and establishments p rimarily engaged in computer services
and data processing:
a. as defined under Industrial Group Numbers 7372 and
7373 of the Standard Industrial Classif ication (SIC)
Manual, latest version, which derive at least fifty
percent (50%) of their annual gross re venues from the
sale of a product or service to an out-of-state buyer
or consumer, and
b. as defined under Industrial Group Number 7374 of the
SIC Manual, latest version, which derive at least
eighty percent (80%) of their annual gross revenues
from the sale of a product or service to an out -of-
state buyer or consumer.
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Eligibility for the exemption set out in this paragraph shall be
established, subject t o review by the Tax Commission, by annually
filing an affidavit with the Tax Commission stating that the
facility so qualifies and such information as required by the Tax
Commission. For purposes of determining whether annual gross
revenues are derived fr om sales to out-of-state buyers or consumers,
all sales to the federal government shall be considered to be to an
out-of-state buyer or consumer;
22. Sales of prosthetic devices to an individual for use by
such individual. For purposes of this paragraph, “prosthetic
device” shall have the same meaning as provided in Section 1357.6 of
this title, but shall not include corrective eye glasses eyeglasses,
contact lenses, or hearing aids;
23. Sales of tangible personal property or services to a mo tion
picture or television production company to be used or consumed in
connection with an eligible production . For purposes of this
paragraph, “eligible production” means a documentary, special, music
video, or a television commercial or television progr am that will
serve as a pilot for or b e a segment of an ongoing dramatic or
situation comedy series filmed or taped for network or national or
regional syndication or a fe ature-length motion picture intended for
theatrical release or for network or nationa l or regional
syndication or broadcast . The provisions of this paragraph shall
apply to sales occurring on or after July 1, 19 96. In order to
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qualify for the exemption, the motion picture or television
production company shall file any documentation and information
required to be submitted p ursuant to rules promulgated by the Tax
Commission;
24. Sales of diesel fuel sold for co nsumption by commercial
vessels, barges and other commercial watercraft;
25. Sales of tangible personal property or services t o tax-
exempt independent nonprofit biome dical research foundations that
provide educational programs for Oklahoma science student s and
teachers and to tax-exempt independent nonprofit community blood
banks headquartered in this state;
26. Effective May 6, 1992, sales of wireless telecommunicati ons
equipment to a vendor who subsequently transfers the equipment at no
charge or for a discounted charge to a consumer as part of a
promotional package or as an inducement to commence or continue a
contract for wireless telecommunications services;
27. Effective January 1, 1991, leases of rail transportation
cars to haul coal to coal -fired plants located in this state which
generate electric power;
28. Beginning July 1, 2005, sales of aircraft engine repairs,
modification, and replacement parts, sales o f aircraft frame repairs
and modification, aircraft interior modification, and paint, and
sales of services employed in the repair, m odification, and
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replacement of parts of aircraft engines, aircraft frame and
interior repair and modification, and paint;
29. Sales of materials and supplies to the owner or operator of
a ship, motor vessel , or barge that is used in interstate or
international commerce if the materials and supplies:
a. are loaded on the ship, motor vessel, or barge and
used in the maintenanc e and operation of t he ship,
motor vessel, or barge, or
b. enter into and become componen t parts of the ship,
motor vessel, or barge;
30. Sales of tangible personal property made at estate sales at
which such property is offered for sale on the premises o f the
former residence of the decedent by a person who is not required to
be licensed pursuant to the Transient Merchant Licensing Ac t, or who
is not otherwise required to obtain a sales tax permit for the sale
of such property pursuant to the provisions o f Section 1364 of this
title; provided:
a. such sale or event may not be held for a perio d
exceeding three (3) consecutive days,
b. the sale must be condu cted within six (6) months of
the date of death of the dec edent, and
c. the exemption allowed by this paragraph shall not be
allowed for property that was not part of the
decedent’s estate;
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31. Beginning January 1, 2004, sales of elec tricity and
associated delivery and transmission services, when sold exclusiv ely
for use by an oil and gas operator for res ervoir dewatering proj ects
and associated operations commencing on or after July 1, 2003 , in
which the initial water -to-oil ratio is greater than or equal to
five-to-one water-to-oil, and such oil and gas devel opment projects
have been classified by the Co rporation Commission a s a reservoir
dewatering unit;
32. Sales of prewritten computer so ftware that is delivered
electronically. For purposes of this par agraph, “delivered
electronically” means delivered to the purchaser by mean s other than
tangible storage media;
33. Sales of modular dwelling units when built at a production
facility and moved in whole or in parts, to be assembled o n-site,
and permanently affixed to the real property and used for
residential or commercial purpo ses. The exemption provid ed by this
paragraph shall equal forty-five percent (45%) of the total sales
price of the modular dwelling unit. For purposes of this paragraph,
“modular dwelling unit” means a structure that is not subject to the
motor vehicle excise tax imposed pursuant to Section 2103 of th is
title;
34. Sales of tangible personal property or services to p ersons
who are residents of Oklahoma and hav e been honorably disch arged
from active service in any branch of the Armed Forces of the United
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States or Oklahoma National Guard and who have be en certified by the
United States Department of Veterans Affairs or its successor to be
in receipt of disabilit y compensation at the one-hundred-percent
rate and the disability shall be permanent and have bee n sustained
through military action or accident or resulting from disease
contracted while in such active service o r the surviving spouse of
such person if the person is deceased an d the spouse has not
remarried; provided, sales for the benefit of the pers on to a spouse
of the eligible person or to a me mber of the household in which the
eligible person resides and who is authorized to make purchases on
the person’s behalf, when such eligible person is not present at the
sale, shall also be exempt for purpos es of this paragraph . The
Oklahoma Tax Commissi on shall issue a separate exemp tion card to a
spouse of an eligible person or to a member of the household in
which the eligible pers on resides who is authorized to make
purchases on the person’s behalf, if requested by the eligible
person. Sales qualifying for the exemption authorized by this
paragraph shall not exceed Twenty-five Thousand Dollars ($25,000.00)
per year per individual while the disabled veteran is living. Sales
qualifying for the exemption a uthorized by this paragrap h shall not
exceed One Thousand Dollars ($1,000.00) p er year for an unremarried
surviving spouse. Upon request of the Tax Commission , a person
asserting or claiming the exemption authorized by this paragrap h
shall provide a state ment, executed under oath, that the total sales
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amounts for which the exemption is applicable have not exceeded
Twenty-five Thousand Dollars ($25,000.00) per y ear per living
disabled veteran or One Thousand Dollars ($1,000.00) per ye ar for an
unremarried surviving spouse. If the amount of such exempt s ales
exceeds such amount, the s ales tax in excess of the authorized
amount shall be treated as a direct sales t ax liability and may b e
recovered by the Tax Commission in the same manner provided by law
for other taxes, including penalty and interest;
35. Sales of electricity to the ope rator, specifically
designated by the Corporation Commission, of a spacing unit or lease
from which oil is produced or attempted to be produced using
enhanced recovery methods , including, but not limited to, increased
pressure in a producing formation thro ugh the use of water or
saltwater if the electrical usage is associated with and necessary
for the operation of equipment required to inject or circulate
fluids in a producing f ormation for the purpose o f forcing oil or
petroleum into a wellbore for eventu al recovery and production from
the wellhead. In order to be eligible for the s ales tax exemption
authorized by this paragraph, the total content of oil recovered
after the use of enhanced recovery meth ods shall not exceed o ne
percent (1%) by volume . The exemption authorized by this paragr aph
shall be applicable only to the state sa les tax rate and shall not
be applicable to any county or municipal sales tax rate;
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36. Sales of intrastate charter and to ur bus transportation .
As used in this paragraph, “intrastate charter and tour bus
transportation” means the transportation of perso ns from one
location in this state to another location in this state in a motor
vehicle which has been constructed in such a manner that it may
lawfully carry more than eightee n persons, and which is ordinarily
used or rented to carry persons for compensat ion. Provided, this
exemption shall not apply to regularly scheduled bu s transportation
for the general public;
37. Sales of vitamins, minerals , and dietary supplements by a
licensed chiropractor to a person wh o is the patient of such
chiropractor at the physical location whe re the chiropractor
provides chiropractic care or services to such patient . The
provisions of this p aragraph shall not be a pplicable to any drug,
medicine, or substance for which a prescrip tion by a licensed
physician is required;
38. Sales of goods, wares, merchandise, tangible personal
property, machinery, and equipment to a web search portal located in
this state which deri ves at least eighty percent (80% ) of its annual
gross revenue from the sale of a product or service to an out -of-
state buyer or consumer. For purposes of this paragraph, “web
search portal” means an establishment classified under N AICS code
519130 which operates websites that use a sear ch engine to generate
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and maintain extensive databases of Internet addresses and content
in an easily searchable format;
39. Sales of tangible personal property consumed or
incorporated in the constr uction or expansion of a facility for a
corporation organized under Section 437 et seq. o f Title 18 of the
Oklahoma Statutes as a rur al electric cooperativ e. For purposes of
this paragraph, sales made to a contractor or subcontra ctor that has
previously entered into a contractua l relationship with a rural
electric cooperative for construction or expansion of a facility
shall be considered sales made to a ru ral electric cooperative;
40. Sales of tangible personal property or servi ces to a
business primarily engaged in the repair of consumer electronic
goods, including, but not limited to, cell phones, compact disc
players, personal comp uters, MP3 players, di gital devices for the
storage and retrieval of information through hard -wired or wireless
computer or Internet connections, i f the devices are sold to the
business by the original manufactur er of such devices and the
devices are repaired, refitted, or refurbished for sale by the
entity qualifying for the exemption authorized by t his paragraph
directly to retail consumers or if t he devices are sold to another
business entity for sale to retail consumers;
41. On or after July 1, 2019, a nd prior to July 1, 20 24, sales
or leases of rolling stock when sold or leased by the manufacture r,
regardless of whether t he purchaser is a public services corporation
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engaged in business as a common carrier of property or passengers by
railway, for use or consumption by a com mon carrier directly in the
rendition of public service. For purposes of this paragraph,
“rolling stock” means locomotives, autocars, and railroad cars and
“sales or leases” includes railroad car maintenance and retrofitting
of railroad cars for their fur ther use only on the railways;
42. Sales of gold, silver, platinum, pallad ium, or other
bullion items such as coins and bars and legal tender of any nation,
which legal tender is sold accor ding to its value as precious metal
or as an investment. As used in the paragraph, “bullion” means any
precious metal, including, but not li mited to, gold, silver,
platinum, and palladium, that is in such a state or condition that
its value depends upon i ts precious metal content and not its form .
The exemption authori zed by this paragraph shall not apply to
fabricated metals that have been p rocessed or manufactured f or
artistic use or as je welry; and
43. Until January 2027, s ales of commercial forestry service
equipment, limited to forwarders, fe llers, bunchers, track skidders,
wheeled skidders, hydraulic excavators, delimbers, soil compacto rs
and skid steer loaders, to businesses engaged i n logging, timber,
and tree farming; and
44. That portion of the gross receipts or gross proceeds
derived from the sale of parts which constitutes core charges which
are received for the purpose of securin g a trade-in for the article
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purchased. If the ar ticle is not traded in, the tax is due on the
core charge. For purposes of this paragraph “core charge” means a
form of deposit paid when purchasing a part that is refunded when
the used part is brought for exchange.
SECTION 2. This act shall become effective November 1, 2022.
58-2-2512 QD 1/20/2022 8:03:24 AM