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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
SENATE BILL 1484 By: Murdock
AS INTRODUCED
An Act relating to sales tax exemption; amending 68
O.S. 2021, Sections 1358 and 1358.1, which relate to
the agricultural sales tax exe mption and permit;
defining term; providing exception; requiring the
Oklahoma Tax Commission to provide certain renewal
form; providing eligibility for permit renew al upon
submission of form; making it a felony to submit
false or fraudulent information; updating statutory
language; and providing an effe ctive date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1358, is
amended to read as follows:
Section 1358. Exemptions – Agriculture.
A. There are hereby specifically exempted from the tax levied
by Section 1350 et seq. of this title:
1. Sales of agricultural products produced in this state by the
producer thereof directly to the consumer or user when such articles
are sold at or from a farm and not from some other place of
business, as follows:
a. farm, orchard, or garden products, and
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b. dairy products sold by a dairy producer or farmer who
owns all the cows from which the dairy products
offered for sale are produce d;
provided, the provisions of this paragraph shall not be construed as
exempting sales by florists, nursery operators or chicken
hatcheries, or sales of dairy products by any other business except
as set out herein;
2. Livestock, including cattle, horses , mules or other domestic
or draft animals, sold by the producer by private treaty or at a
special livestock sale;
3. Sale of baby chicks, turkey poults and starter pullets used
in the commercial production of chickens, turkeys and eggs ,;
provided, that the purchaser certifies, in writing, on the copy of
the invoice or sales ticket to be retained by the vendor that the
pullets will be used primarily for egg production;
4. Sale of salt, grains, tanka ge, oyster shells, mineral
supplements, limestone , and other generally recognized animal feeds
for the following purposes and subject to the following limitations:
a. feed which is fed to poultry and livestock , including
breeding stock and wool -bearing stock, for the purpose
of producing eggs, poultry, milk or m eat for human
consumption,
b. feed purchased in Oklahoma this state for the purpose
of being fed to and which is fed by the purchaser to
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horses, mules or other domestic or draft animals used
directly in the producing and marketing of
agricultural products, and
c. any stock tonics, water purifying products, stock
sprays, disinfectants , or other such agricultural
supplies.
“Poultry” shall not be construed to include any fowl other than
domestic fowl kept and r aised for the market or production of eggs.
“Livestock” shall not be construed to include any pet animals such
as dogs, cats, birds or such other fur -bearing animals. This
exemption shall only be granted and extended where the purchaser of
feed that is to be used and in fact is used for a purpose that w ould
bring about an exemption hereunder executes an invoice or sales
ticket in duplicate on a form to be prescribed by the Oklahoma Tax
Commission. The purchaser may demand and receive a copy of the
invoice or sales ticket and the vendor shall retain a co py;
5. Sales of items to be and in fact used in the production of
agricultural products. Sale of the following items shall be subject
to the following limitations:
a. sales of agricultural fertilizer to a ny person
regularly engaged, for profit, in the bu siness of
farming or ranching,
b. sales of agricultural fertilizer to any person engaged
in the business of applying such materials on a
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contract or custom basis to land owned or leased and
operated by persons regularly engaged, for profit, in
the business of farming or ranching. In addition to
providing the vendor proof of eligibility as provided
in Section 1358.1 of this title, the purchaser shall
provide the name or names of such owner or lessee and
operator and the location of the lands on which said
the materials are to be applied to each such land,
c. sales of agricultural fertilizer, pharmaceuticals and
biologicals to persons engaged in the business of
applying such materials on a contract or custom b asis
shall not be considered to be sales to contra ctors
under this article, and said the sales shall not be
considered to be taxable sales within the meaning of
the Oklahoma Sales Tax Code. As used in this section,
“agricultural fertilizer ”, “pharmaceuticals” and
“biologicals” mean any substance sold and used for
soil enrichment or soil corrective purposes or for
promoting the growth and productivity of plants or
animals,
d. sales of agricultural seed or plants to any person
regularly engaged, for profit, in the business of
farming or ranching. This sect ion shall not be
construed as exempting from sales tax, seed which is
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packaged and sold for use in noncommercial flower and
vegetable gardens, and
e. sales of agricultural chemical pesticides to any
person regularly engaged, for profit, in the business
of farming or ranching. For the purposes of this
subparagraph, “agricultural chemical pesticides ” shall
include any substance or mixture of substances
intended for preventing, destroying, repelling or
mitigating any insect, snail, slug, rodent, bird,
nematode, fungus, weed or any other form of
terrestrial or aquatic plant or animal life or virus,
bacteria or other microorganism, except viruses,
bacteria or other microorganisms on or in living man,
or any substance or mixture of substances intended for
use as a plant regulator, defoliant or desiccant.
The exemption provided in this paragraph shall only be granted
and extended to the purchaser where the items are to be used and in
fact are used in the production of agricultural products;
6. Sale of farm machine ry, repair parts thereto or fuel, oil,
lubricants, and other substances used for operation and maintenance
of the farm machinery to be used directly on a farm or ranch in the
production, cultivation, planti ng, sowing, harvesting, processing,
spraying, preservation or irrigation of any livestock, poultry,
agricultural or dairy products produced from such lands. The
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exemption specified in this paragraph shall apply to such farm
machinery, repair parts or fuel , oil, lubricants, and other
substances used by persons engaged in the business of custom
production, cultivation, planting, sowing, harvesting, processing,
spraying, preservation, or irrigation of any livestock, poultry,
agricultural, or dairy products fo r farmers or ranchers. The
exemption provided for herein shall not apply to motor vehicles;
7. Sales of supplies, machinery , and equipment to persons
regularly engaged in the business of raising evergreen trees for
retail sale in which such trees are cut down on the premises by the
consumer purchasing such tree. This exemption shall only be granted
and extended when the items in fact are used in the raising of such
evergreen trees; and
8. Sales of materials, supplies , and equipment to an
agricultural permit holder or to any person with whom the permit
holder has contracted to construct facilities which are or which
will be used directly in the production of any livestock , including,
but not limited to, facilities used in the production and storage of
feed for livestock owned by the permit holder. Any person making
purchases on behalf of the agricultural permit holder shall certify,
in writing, on the copy of the invoice or sales ticket to be
retained by the vendor that the purchases are made for and on b ehalf
of such permit holder and set out the name and permit number of such
holder. Any person who wrongfully or erroneously certifies that
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purchases are for an agricultural permit holder or who otherwise
violates this subsection shall be guilty of a misde meanor and upon
conviction thereof shall be punishable by a fine of an amount equal
to double the amount of sales tax involved or imprisonment in the
county jail for not more than sixty (60) days or by both such fine
and imprisonment.
B. As used in this s ection and Section 1358.1 of this title:
1. “Agricultural products” shall include horses; and
2. “For profit agricultural production ” means what is
ordinarily considered a farming or ranching operation intended for
profit. The term refers to the raising of food crops or livestock
for sale and includes ranches, orchards, and dairies. Also included
is any feedlot operation, whether the land upon which a feedlot
operation is located is used to grow crops to fee d the livestock in
the feedlot and regardless of whether the livestock fed are owned by
persons conducting the feedlot ; and
3. “Ranching” or “ranch” shall include the business, or
facilities for the business, of raising horses.
Provided, sales of i tems at race meetings as defined in Section
200.1 of Title 3A of the Oklahoma Statutes shall not be exe mpt
pursuant to the provisions of this section and Section 1358.1 of
this title.
SECTION 2. AMENDATORY 68 O.S. 2021, Section 13 58.1, is
amended to read as follows:
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Section 1358.1. A. In order to qualify for any exemption
authorized by Section 1358 of this title, at the time of sale, the
person to whom the sale is made shall be required to furnish the
vendor proof of eligibility for the exemption as required by this
section.
B. All vendors shall honor the proof of eligibility for sales
tax exemption as authorized by this section and sales to a person
providing such proof shall be exempt from the tax levied by this
article, Section 1350 et seq. of this title.
C. The agricultural exemption permit, the size and design of
which shall be prescribed by the Oklahoma Tax Commission, shall
constitute proof of eligibility for sales tax exemptions authorized
by Section 1358 of this title. The permit shall be obtained by
listing personal property used in farming or ranching by the person
with the county assessor each year as provided by law. If the
assessor determines that the personal property is correctly listed
and assessed for ad valorem taxation and the county treasurer
certifies whether the person has delinquent accounts appearing on
the personal property tax lien docket in the county treasurer ’s
office, the assessor shall certify the assessment upon a form
prescribed by the Oklahoma Tax Commission. One copy shall be
retained by the assessor, one copy shall be forwarded to the
Oklahoma Tax Commission and one copy shall be given to the person
listing the personal property. Upon verification that the applicant
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qualifies for the exemptions authorized by Section 1358 of this
title and that the applicant has no delinquent accounts appearing on
the personal property tax lien docket in the office of the county
treasurer, a permit shall be issued as prescribed by this section.
The permit shall be renewable every three (3) years in the mann er
provided by this section, or as provided by subsection I of this
section.
D. A person who does not otherwise quali fy for a permit
pursuant to subsection C of this section, except as provided in
subsection E of this section, shall file with the Oklahoma Tax
Commission an application for an agricultur al exemption permit
constituting proof of eligibility for the sales ta x exemptions
authorized by Section 1358 of this title, setting forth such
information as the Tax Commission may require. The app lication
shall be certified by the applicant that the app licant is engaged in
custom farming operations or in the business of f arming or ranching.
If the applicant is a corporation, the application shall be
certified by a legally constituted officer there of.
The Oklahoma Tax Commission shall accept any of the f ollowing as
proof of eligibility for the exemptions authorized by thi s section
or pursuant to Section 1358 of this title .:
1. A copy of IRS Schedule F, a copy o f IRS form 1065 or a copy
of IRS form 4835, or any equivalent form prescribed by the Internal
Revenue Service, with respect to a federal income tax return;
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2. A one-page business description form provided by the
Oklahoma Tax Commission;
3. Farm Service Agency form 156EZ; or
4. Other documents at the discretion of the Oklahoma Tax
Commission that verify active agriculture production.
E. Except as provided in t his subsection, for a person who is a
resident of another state and who is engaged in custom far ming
operations in this state, the pers on shall provide the vendor proof
of residency, the name, address and telephone number of the person
engaging the custom farmer and certification on the face of the
invoice, under the penalty of perjury, that the prop erty purchased
shall be used in agricul tural production as proof of eligibility for
the sales tax exemption authorized by Section 1358 of this title.
Any person who is a resident of another state and who is engaged in
custom farming operations in this sta te and who owns property in
this state, shall obtain proof of eligibility as provided in
subsection C or D of this section.
F. If an agricultural exemption pe rmit holder purchases
tangible personal property from a vendor on a regular basis, the
permit holder may furnish the vendor proof of eli gibility as
provided for in subsections C and D of this s ection and the vendor
may subsequently make sales of tangible p ersonal property to the
permit holder without requiring proof of eligibility for each
subsequent sale. Provided, the permit holder shal l notify the
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vendor of all purchases which are not exempt from sales tax under
the provisions of Section 1358 of this ti tle and remit the
applicable amount of tax thereon. If the permit holder fails to
notify the vendor of purchases not exempt from sales tax, then
sufficient grounds shall exist for the Oklahoma Tax Commission to
cancel the agricultural exemption permit of the permit holder who so
failed to notify the vendor.
G. If an out-of-state agricultural exempti on permit holder
purchases tangible per sonal property from a vendor within this state
who is not in the business of shipping the tangible personal
property purchased, then the out-of-state agricultural exemption
permit holder is responsible for providing a n export bill of lading
or other documentation to the vendor from whom the tangible personal
property was purchased showing that the point of delivery of such
goods for use and consumption is outside this state.
H. A purchaser who uses an agricultural exe mption permit or
provides proof of elig ibility pursuant to subsection E of this
section to purchase, e xempt from sales tax, items not authorized for
exemption under Section 13 58 of this title shall be subject to a
penalty in the amount of Five Hundred Doll ars ($500.00).
I. The Tax Commission shall provide a form for the renewal of
the agricultural exempti on permit provided by this section. The
form shall include a check box next to a statement attesting that the
permit holder has continued agricultural production activities.
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Individuals that submit the ren ewal form with their signature and a
marked checkbox shall be eligible for a renewed permit. Any person
that willfully provides false or fraudulent information pursuant to
the provisions of this subsecti on, upon conviction, shall be guilty
of a felony punishable by the imposition of a fine of Two Thousand
Dollars ($2,000.00) or imprisonment for not more than two (2) years.
SECTION 3. This act shall become effective November 1, 2022.
58-2-2326 QD 1/20/2022 8:03:47 AM