SB422 HFLR Page 1 BOLD FACE denotes Committee Amendments. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 HOUSE OF REPRESENTATIVES - FLOOR VERSION STATE OF OKLAHOMA 1st Session of the 58th Legislature (2021) COMMITTEE SUBSTITUTE FOR ENGROSSED SENATE BILL NO. 422 By: Simpson of the Senate and Burns of the House COMMITTEE SUBSTITUTE An Act relating to revenue and taxation; amending 68 O.S. 2011, Section 1358.1, which relates to agricultural sales tax exemptions; requiring Oklahoma Tax Commission certain proof of exemption; providing an effective date; and declaring an emergency. BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: SECTION 1. AMENDATORY 68 O.S. 2011, Section 1358.1, is amended to read as follows: 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 SB422 HFLR Page 2 BOLD FACE denotes Committee Amendments. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 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 t ax 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 on e copy shall be given to the person listing the personal property. Upon verification that the applicant 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 manner provided by this section. SB422 HFLR Page 3 BOLD FACE denotes Committee Amendments. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 D. A person who does not otherwise qualify 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 agricultural exemption permit constituting proof of eligibility for the sales tax exemp tions authorized by Section 1358 of this title, and except as prohibited by subsection I of this section, setting forth such information as the Tax Commission may require. The application shall be certified by the applicant that the applicant is engaged i n custom farming operations or in the business of farming or ranching. If the applicant is a corporation, the application shall be certified by a legally constituted officer thereof. E. Except as provided in this subsection, for a person who is a resident of another state and who is engaged in custom farming operations in this state, the person 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 property purchased shall be used in agricultural 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 state and who owns property in this state, shall obtain proof of eligibility as provided in subsection C or D of this section. SB422 HFLR Page 4 BOLD FACE denotes Committee Amendments. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 F. If an agricultural exemption permit holder purchases tangible personal proper ty from a vendor on a regular basis, the permit holder may furnish the vendor proof of eligibility as provided for in subsections C and D of this section and the vendor may subsequently make sales of tangible personal property to the permit holder without requiring proof of eligibility for each subsequent sale. Provided, the permit holder shall notify the vendor of all purchases which are not exempt from sales tax under the provisions of Section 1358 of this title and remit the applicable amount of tax the reon. 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 exemption permit holder purchases tangible personal 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 exe mption permit holder is responsible for providing an 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 the S tate of Oklahoma. H. A purchaser who uses an agricultural exemption permit or provides proof of eligibility pursuant to subsection E of this SB422 HFLR Page 5 BOLD FACE denotes Committee Amendments. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 section to purchase, exempt from sales tax, items not authorized for exemption under Section 1358 of this title sh all be subject to a penalty in the amount of Five Hundred Dollars ($500.00). I. The Oklahoma Tax Commission shall accept any one of the following as proof of eligibility for the exemptions authorized by this section or pursuant to Section 1358 of this tit le: 1. Schedule F, or a copy of Schedule F, or any equivalent form prescribed by the Internal Revenue Service, with respect to a federal income tax return; 2. A three-year business plan form provided by the Oklahoma Tax Commission; or 3. A farm exemption tax form provided by the Oklahoma Department of Agriculture, Food, and Forestry. SECTION 2. This act shall become effective July 1, 2021. SECTION 3. It being immediately necessary for the preservation of the public peace, health or safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval. COMMITTEE REPORT BY: COMMITTEE ON AGRICULTURE AND RURAL DEVELOPMENT, dated 04/07/2021 - DO PASS, As Amended.