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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
SENATE BILL 328 By: Standridge
AS INTRODUCED
An Act relating to sales tax; amending 68 O.S. 2011,
Sections 1357, as last amended by Section 1, Chapter
241, O.S.L. 2019, and 1357.6, as amended by Section
1, Chapter 458, O.S.L. 2019 (68 O.S. Supp. 2020,
Sections 1357 and 1357.6), which relate to sales tax
exemptions; providing an exemption for certain
hearing aids; modifying definition; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2011, Section 1357, as
last amended by Section 1, Chapter 241, O.S.L. 2019 (68 O.S. Supp.
2020, Section 1357), is amended to read as follows:
Section 1357. Exemptions – General. There are hereby
specifically exempted from the tax levied by the Oklahoma Sales Tax
Code:
1. Transportation of school pupils to and from elementary
schools or high school s in motor or other vehicl es;
2. Transportation of persons where the fare of each person does
not exceed One Dollar ($1.00), or local transportation of persons
within the corporate limits of a municipality except by taxicabs;
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3. Sales for resale to perso ns engaged in the business of
reselling the article s purchased, whether within or without the
state, provided that such sales to residents of this state are made
to persons to whom sales tax permits have been issued as provided in
the Oklahoma Sales Tax Co de. This exemption shall not apply to the
sales of articles made to persons 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 proper ty to peddlers, solicitor s
and other salespersons who do not have an established place of
business and a sales tax permit. The exemption provided by this
paragraph shall apply to sales of motor fuel or diesel fuel to a
Group Five vendor, but the use of su ch motor fuel or diesel f uel 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 tax 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 to the purchase of motor
fuel or diesel fuel in Oklahoma by a common carrier by rail when
such motor fuel is purchased for fueling, withi n this state, of any
locomotive or other motorized flanged wheel equipment;
4. Sales of advertising space in newspapers and periodicals;
5. Sales of programs relating to sporting and entertainment
events, and sales of advertising on billboards (including signage,
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posters, panels, marquees, or on other si milar surfaces, whether
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 I nternet,
electronic display devices, or through pub lic address or broadcast
systems. The exemption authorized by this paragraph shall be
effective for all sales made on or after January 1, 2001;
6. Sales of any advertising, other than the advertising
described by paragraph 5 of t his section, via the Inte rnet,
electronic display devices, or through the electronic media,
including radio, public address or broadcast systems, television
(whether through closed circuit broadcasting systems or otherwise),
and cable and satellite televis ion, 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 aqu atic animal life
and used for the purpose of raisin g same for marketing. This
exemption shall only be granted and extended to the purchaser when
the items are to be used and in fact are used in the raising of
animal life as set out above. Each purchaser shall certify, in
writing, on the invoice or sales ticket retained by the vendor that
the purchaser is regularly engaged in the business of raising such
animal life and that the items purchased will be used only in such
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business. The vendor shall certify to the Oklahoma Tax Commis sion
that the price of th e items has been 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 artificial gas and electricity, and
associated delivery or transmissio n services, when sold exc lusively
for residential use. Provided, this exemption shall not apply to
any sales tax levied by a city or town, or a county, or any other
jurisdiction in this state;
9. In addition to the exemptions au thorized by Section 1357.6
of this title, sales of drugs sold pursuant 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 app ly to over-the-counter drugs;
10. Transfers of tit le or possession of empty, partially
filled, or filled returnable oil and chemical drums to any person
who is not regularly engaged in the business of selling, reselling
or otherwise transferring empty, pa rtially filled, or filled
returnable oil drums;
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 consu mption which
are purchased in whole or in part with coupons issued pursuant to
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the federal food stamp program as authorized by Sections 2011
through 2029 of Title 7 of the United States Code, as to that
portion purchased with such coupons. The exemption p rovided for
such sales shall be inapplicable to suc h sales upon the effective
date of any federal law that removes the requirement of the
exemption as a condition for participation by the state in the
federal food stamp program;
13. Sales of food or food products, or any equipment or
supplies used in the preparation of the food or food products to or
by an organization which:
a. is 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 which provides and
delivers prepared meals f or 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 pursuant to the provisions of
Section 501(c)(3) of the Internal Revenue C ode, 26
U.S.C., Section 501(c)(3), and which receives federal
funding pursuant to the Older Americans Act of 1965,
as amended, for the purpose of providing nutrition
programs for the care and benefit of elderly persons;
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14. a. Sales of tangible personal pr operty 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 produ cts
to other organizations that facilitate the
distribution of such products to the needy and
such distributee organizations 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) , 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 engaged in the
same or similar business shall not be exempt under
this paragraph;
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 pursuant to the
provisions of the Internal Reven ue Code, 26 U.S.C., Sectio n
501(c)(3);
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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 basis, 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 Employment
Security Commission, upon completion of the facility. In order to
qualify for the exemption provided for by this paragraph, the c ost
of the items purchased by the qualified aircraft maintenance or
manufacturing facility shall equal or exceed the sum of Two Million
Dollars ($2,000,000.00);
17. Sales of tangible personal property con sumed or
incorporated in the construction or expans ion of a qualified
aircraft maintenance or manufacturing facility as defined in
paragraph 16 of this section. For purposes of this paragraph, sales
made to a contractor or subcontractor that has previousl y entered
into a contractual relationship with a qu alified aircraft
maintenance or manufacturing facility for construction or expansion
of such a facility shall be considered sales made to a qualified
aircraft maintenance or manufacturing facility;
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18. Sales of the following telec ommunications 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 call. 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 subscri ber that allows the
subscriber’s customers to call in to the subscriber ’s
prerecorded announcement or live service. “900
service” does not include the charge for: collection
services provided by the selle r of the
“telecommunications services” to the subscriber, or
service or product sold by the subscriber to the
subscriber’s customer. The service is typically
marketed under the name “900” service, and any
subsequent numbers designated by the Federal
Communications Commission,
c. Interstate and Internation al “private communications
service”. “Private communications service ” means a
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“telecommunications service ” that entitles the
customer to exclusive or priority use of a
communications channel or group of c hannels between or
among termination points, regard less of the manner in
which such channel or channels are connected, and
includes switching capacity, extension lines,
stations, and any other associated services that are
provided in connection with the us e 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 telecommunications
service which is:
(1) rendered by a company for private use within its
organization, or
(2) used, allocated, or distribute d by a company to
its affiliated group,
f. Regulatory assessments and charges, including charges
to fund the Oklahoma Universal Service Fund, the
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Oklahoma Lifeline Fund and the Oklahoma High Cost
Fund, and
g. Telecommunications non recurring charges, includ ing 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 manufactur ed and sold for
use in this state in the constructi on or repair of railroad tracks,
switches, sidings and turnouts;
20. Sales of aircraft and aircraft parts provided such sales
occur at a qualified aircraft maintenance facility. As used in this
paragraph, “qualified aircraft main tenance facility” means a
facility operated by an air common carrier, including one or more
component overhaul support buildings or structures in an area owned,
leased or controlled by the air common carrier, at which there were
employed at least two thous and (2,000) full-time-equivalent
employees in the preceding year as certified by the Oklahoma
Employment Security Commission and which is primarily related to the
fabrication, repair, alteration, modification, refurbishing,
maintenance, building or rebuild ing of commercial aircraf t 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 1504 of the Internal Revenue
Code, 26 U.S.C., Section 15 04. Beginning July 1, 20 12, sales of
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machinery, tools, supplies, equipment and related tangible personal
property and services used or consumed in the repair, remodeling or
maintenance of aircraft, aircraft engines, or aircraft c omponent
parts which occur at a qualified aircraft maintenance facility;
21. Sales of machinery and equipment purchased and used by
persons and establishments primarily engaged in computer services
and data processing:
a. as defined under Industrial Group Numbers 7372 and
7373 of the Standard Industrial C lassification (SIC)
Manual, latest version, which derive at least fifty
percent (50%) of their annual gross revenues from the
sale of a product or service to an out -of-state buyer
or consumer, and
b. as defined under Industrial Gro up 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.
Eligibility for the exemption set out in this paragraph shall be
established, subject to 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 annua l gross
revenues are derived from sales to out -of-state buyers or consumers,
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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 para graph, “prosthetic
device” shall have the same meaning as provided in Section 1357.6 of
this title and shall include hearing aids purchased from an
audiologist or hearing aid dealer or fitter who is licens ed by the
state as required by law , but shall not include corrective eye
glasses, eyeglasses or contact lenses or hearing aids;
23. Sales of tangible pers onal property or services to a motion
picture or television production company to be used or consumed in
connection with an eligible production. For pu rposes of this
paragraph, “eligible production” means a documentary, special, music
video, or a televisi on commercial or televisio n program that will
serve as a pilot for or be a segment of an ongoing dram atic or
situation comedy series filmed or taped for network or national or
regional syndication or a feature -length motion picture intended for
theatrical release or for network or national or regional
syndication or broadcast. The provisions of this para graph shall
apply to sales occurring on or after Ju ly 1, 1996. In order to
qualify for the exemption, the motion picture or television
production company shall file any documentati on and information
required to be submitted pursuant to rules promulgated b y the Tax
Commission;
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24. Sales of diesel fuel sol d for consumption by commercial
vessels, barges and other commercial watercraft;
25. Sales of tangible personal property or servi ces to tax-
exempt independent nonprofit biomedical research foundations tha t
provide educational programs for Oklahoma science students and
teachers and to tax-exempt independent nonprofit community blood
banks headquartered in th is state;
26. Effective May 6, 1992, sales of wireless telecommunications
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, lea ses of rail transportation
cars to haul coal to coa l-fired plants located in this state which
generate electric power;
28. Beginning July 1, 2005, sales o f aircraft engine repairs,
modification, and replacement parts, sales of aircraft frame repairs
and modification, aircraft interior modification, and pa int, and
sales of services employed in the repair, modification and
replacement of parts of aircraft eng ines, aircraft frame and
interior repair and modification, and paint;
29. Sales of materials and sup plies 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:
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a. are loaded on the ship, motor vessel or barge and used
in the maintenance and operation of the ship, moto r
vessel or barge, or
b. enter into and become comp onent 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 of the
former residence of the deced ent by a person who is not required to
be licensed pursuant to the Transient Merchant Licensing Act, or who
is not otherwise required to obtain a sales tax permit for the sale
of such property pursuant to the provisions of Section 1364 of this
title; provided:
a. such sale or event may not be held for a pe riod
exceeding three (3) consecutive days,
b. the sale must be conducted within six (6) months of
the date of death of the deceden t, and
c. the exemption allowed by this paragraph shall not be
allowed for property that was not part of the
decedent’s estate;
31. Beginning January 1, 2004, sales of electricity and
associated delivery and transmission services , when sold exclusively
for use by an oil and gas operator for reservoir dewatering projects
and associated operations commencing on or after July 1, 20 03, in
which the initial water -to-oil ratio is greater than or equal to
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five-to-one water-to-oil, and such oil and gas development projects
have been classified by the Corporation Commission as a reservoir
dewatering unit;
32. Sales of prewritten computer software that is delivered
electronically. For purposes of this paragraph, “delivered
electronically” means delivered to the pur chaser by means other than
tangible storage media;
33. Sales of modular dw elling units when built at a production
facility and moved in whole or in parts, to be assembled on -site,
and permanently affixed to the real property and used for
residential or commercial purposes. The exemption provided by this
paragraph shall equal fo rty-five percent (45%) of the total sales
price of the modular dwelling unit. For purposes of this paragraph,
“modular dwelling unit ” means a structure th at is not subject to the
motor vehicle excise tax imposed pursuant to Section 2103 of this
title;
34. Sales of tangible personal property or services t o persons
who are residents of Oklahoma and have been honorably discharged
from active service in any br anch of the Armed Forces o f the United
States or Oklahoma National Guard and who have been certified by the
United States Department of Veterans Affairs or its successor to be
in receipt of disability compensation at the one -hundred-percent
rate and the disability shall be permanen t and have been sustained
through military action or accident or resulting from disease
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contracted while in such active servic e or the surviving spouse of
such person if the person is deceased and the spouse has not
remarried; provided, sales for the benef it of the person to a spouse
of the eligible person or to a member of the h ousehold in which the
eligible person resides and w ho is authorized to make purchases on
the person’s behalf, when such eligible person is not present at t he
sale, shall also be exe mpt for purposes of this paragraph. The
Oklahoma Tax Commission shall issu e a separate exemption card to a
spouse of an eligible person or to a member of the household in
which the eligible person resides who is authorized to mak e
purchases on the person ’s behalf, if requested by the eligible
person. Sales qualifying for the ex emption authorized by this
paragraph shall not exce ed Twenty-five Thousand Dollars ($25,000.00)
per year per individual while the disabled veteran is livin g. Sales
qualifying for the exemption authorized by this paragraph shall not
exceed One Thousand Dol lars ($1,000.00) per year for an unremarried
surviving spouse. Upon request of the Tax Commission, a person
asserting or claiming the exemption authorized by this paragraph
shall provide a statement, executed under oath, that the total sales
amounts for which the exemption is applicable have not exceeded
Twenty-five Thousand Dollars ($25,000.00) per year per living
disabled veteran or One Thousand Dollars ( $1,000.00) per year for an
unremarried surviving spouse. If the amount of such exempt sales
exceeds such amount, the sales tax in excess of the authori zed
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amount shall be treated as a direct sales tax liability and may be
recovered by the Tax Commission i n the same manner provided by law
for other taxes, including penalty and interest;
35. Sales of electricity to the operator, specifically
designated by the Corporation Commission, of a spacing unit or lease
from which oil is produced or attempted to be pr oduced using
enhanced recovery methods, including, but not limited to, increased
pressure in a produc ing formation through the use of water or
saltwater if the electrical usage is associated with and necessary
for the operation of equipment required to inj ect or circulate
fluids in a producing formation for the purpose of forcing oil or
petroleum into a wellbore for eventual recovery and production from
the wellhead. In order to be eligible for the sales tax exemption
authorized by this paragraph, the tota l content of oil recovered
after the use of enhanced recovery methods shall not exceed one
percent (1%) by volume. The exemption authorized by this par agraph
shall be applicable only to the state sales tax rate and shall not
be applicable to any county or municipal sales tax rate;
36. Sales of intrastate charter and tour bus transportation.
As used in this paragraph, “intrastate charter and tour bus
transportation” means the transportation of persons 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 eighteen persons, and which is ordinaril y
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used or rented to carry persons for compensation. Provided, this
exemption shall not apply to regular ly scheduled bus transport ation
for the general public;
37. Sales of vitamins, minerals and dietary supplements by a
licensed chiropractor to a person who is the patient of such
chiropractor at the physical location where the chiropractor
provides chiropractic care or services to such patient. The
provisions of this paragraph shall not be applicable to any drug,
medicine or substance for which a prescri ption by a licensed
physician is required;
38. Sales of goods, wares, merchandise, tangible personal
property, machinery and equi pment to a web search portal located in
this state which derives at least e ighty 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 NAICS code
519130 which operates websit es that use a search engine to generate
and maintain extensive databases of Internet addresses and content
in an easily searchable format;
39. Sales of tangible personal property c onsumed or
incorporated in the construction or expansion of a facility for a
corporation organized under Section 437 et seq. o f Title 18 of the
Oklahoma Statutes as a rural electric cooperative. For purposes of
this paragraph, sales made to a contractor o r subcontractor that has
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previously entered into a contractual relationship with a rural
electric cooperative for construction or expansion of a facility
shall be considered sales made to a rural electric cooperative;
40. Sales of tangible personal proper ty or services to a
business primarily engaged in the repair of consumer el ectronic
goods, including, but not limited to, cell phones, compact disc
players, personal computers, MP3 players, digital devices for the
storage and retrieval of information throu gh hard-wired or wireless
computer or Internet connections, if 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 autho rized by this paragraph directly
to retail consumers or if the devices are sold to another business
entity for sale to retail consumers;
41. On or after July 1, 2019, and prior to July 1, 2024, sales
or leases of rolling stock wh en sold or leased by the m anufacturer,
regardless of whether the purchaser is a public services corpo ration
engaged in business as a common carrier of p roperty or passengers by
railway, for use or consumption by a common carrier directly in the
rendition of public service. For pur poses of this paragraph,
“rolling stock” means locomotives, autocars and ra ilroad cars and
“sales or leases” includes railroad car maintenance and retrofitting
of railroad cars for their further use only on the railways; and
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42. Sales of gold, silver, pla tinum, palladium or other bullion
items such as coins and bars and legal te nder of any nation, which
legal tender is sold acco rding to its value as precious metal or as
an investment. As used in the paragraph, “bullion” means any
precious metal, including , but not limited 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 authorized by this paragraph shall not apply to
fabricated metals that have been processed or manufactured for
artistic use or as jewelry.
SECTION 2. AMENDATORY 68 O.S. 2011, Section 1357.6, as
amended by Section 1, Chapter 458, O.S.L. 2019 (68 O.S. Supp. 2020,
Section 1357.6), is amended to read as follows:
Section 1357.6. A. Effective July 1, 1992, there are h ereby
exempted from the tax levied by Section 1350 et seq. of this title
sales of drugs for the treatment of human beings, medical
appliances, medical devices and other medical equipment including
but not limited to corrective eyeglasses, contact lenses, a nd
hearing aids when administered, distributed or prescribed by a
practitioner, as defined in subsection C of this section, who is
authorized by law to administer, distribute or prescribe such items
or when purchased or leased by or on behalf of an individ ual for use
by such individual under a prescription or work o rder of a
practitioner who is authorized by law to prescribe such items and
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when the cost of such items will be reimbursed under the Medicare or
Medicaid Program.
B. There are hereby exempted fr om the tax levied by Section
1350 et seq. of this title sales of the following medical equipment
when administered, distributed or prescribed by a pra ctitioner, as
defined in subsection C of this section, who is authorized by law to
administer, distribute or prescribe such items:
1. Prosthetic devices as defined in subsection D of this
section;
2. Durable medical equipment as defined in subsection E o f this
section; and
3. Mobility-enhancing equipment as defined in subsection F of
this section.
C. The term “practitioner” means a physician, allopathic
physician, osteopathic physician, surgeon, podiatrist, chiropractor,
optometrist, pharmacist, psychol ogist, ophthalmologist, nurse
practitioner, clinical nurse specialist, audiologist or hearing aid
dealer or fitter who is licensed by the state as required by law.
D. The term “prosthetic device” means a replacement, corrective
or supportive device , including repair and replacement parts for
same, worn on or in the body to:
1. Artificially replace a missing portion of the body;
2. Prevent or correct physical deformit y or malfunction; or
3. Support a weak or deformed portion of the body.
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Provided, the term shall not include corrective eyeglasses , or
contact lenses or hearing aids.
E. The term “durable medical equipment” means equipment,
including repair and replaceme nt parts for same, which:
1. Is used in the home;
2. Can withstand repeated use;
3. Is primarily and customarily used to serve a medical
purpose;
4. Generally is not useful to a person in the absence of
illness or injury; and
5. Is not worn in or on t he body.
The term “durable medical equipment ” shall not include
“mobility-enhancing equipment” as defined in subsection F of this
section.
F. The term “mobility-enhancing equipment” means equipment,
including repair and replacement parts for same, which:
1. Is primarily and customarily used to provide or increase the
ability to move from one pl ace to another and which is appropriate
for use either in a home or a motor vehicle;
2. Is not generally used by persons with normal mobility; and
3. Does not include any motor vehicle or equipment on a motor
vehicle normally provided by a motor vehicle manufacturer.
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The term “mobility-enhancing equipment” shall not include
“durable medical equipment ” as defined in subsection E of this
section.
SECTION 3. This act shall become effective November 1, 2021.
58-1-1592 QD 1/8/2021 9:35:22 PM