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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
HOUSE BILL 1039 By: Rosecrants
AS INTRODUCED
An Act relating to revenue and taxation; amending 68
O.S. 2021, Sections 1357.10, 1377 and 2701, which
relate to tax exemptions for certain sales; exempting
school supplies; modifying maximum per-item
allowance; defining term; directing State Board of
Education to promulgate list; clarifying citations ;
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. 20 21, Section 1357.10, is
amended to read as follows:
Section 1357.10 A. The sale of an article of clothing or
footwear designed to be worn on or about the hum an body or any
school supplies shall be exempt from th e tax imposed by Section 1354
of Title 68 of the Oklahoma Statutes this title if:
1. The sales price of the article of clothing or footwear is
less than One Hundred Dollars ($100.00) Seventy-five Dollars
($75.00) and the price of the school supply item is less than Fifty
Dollars ($50.00); and
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2. The sale takes place during a p eriod beginning at 12:01 a.m.
on the first Friday in August and ending at 12 midnight on the
following Sunday, covering a period of three (3) days.
B. Subsection A of this section s hall not apply to:
1. Any special clothing or footwear that is primarily designed
for athletic activity or protective use and that is not normally
worn except when used for athletic activity or protect ive use for
which it is designed;
2. Accessories, inc luding jewelry, handbags, luggage,
umbrellas, wallets, watches, and simila r items carried on or about
the human body, without regard to whether worn on the body in a
manner characteristic of clothing; a nd
3. The rental of clothing or footwear.
C. The Oklahoma Tax Commission shall promulgate any necessary
rules to implement the provisions of this section.
D. For purposes of subsection A of this section, school
supplies shall include binders, calculator s, cellophane tape,
colored pencils, compasses, notebo oks, construction paper, crayons,
erasers, folders, glue stick s, liquid glue, highlighters, legal
pads, lunchboxes, markers, notebook filler paper, paste, pencils,
including mechanical pencils and penci l refills, pens, including
felt pens, ballpoint pens, fountain pens, and pen refills, poster
board, poster paper, protractors, rul ers, scissors, staplers,
staples, paints, including acrylic, tempe ra, watercolors, and oil
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paints, paintbrushes for artwork, s ketch and drawing pads, reference
maps and guides, all required textbooks on an official school book
list with a sales price of mor e than Thirty Dollars ($30.00) and
less than Fifty Dollars ($50.00) and any additional items deemed
school supplies by the State Board of Education. Each year, the
State Board of Education shall promulgate an official list of school
supplies, which will additionally be treated as tax-exempt under
this section.
SECTION 2. AMENDATORY 68 O.S. 20 21, Section 1377, is
amended to read as follows:
Section 1377. The sales tax imposed by any county or authority
authorized by law to levy a sales tax shall not be imposed upon the
sale of an article of clothing or footwear designed to be worn on or
about the human body or any school supplies in accordance with and
to the extent set forth in Section 3 1357.10 of this act title.
SECTION 3. AMENDATORY 68 O.S. 2021, Section 2701, is
amended to read as follows:
Section 2701. A. Any incorporated city or town in this state
is hereby authorized to assess, levy, and c ollect taxes for general
and special purposes of municipal govern ment as the Legislature may
levy and collect for purposes of state government, subject to the
provisions of subsection F of this section, except ad valorem
property taxes. Provided:
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1. Taxes shall be uniform upon the same class subjects, and any
tax, charge, or fee levied upon or measured by income or receipts
from the sale of products or services shall be uniform upon a ll
classes of taxpayers;
2. Motor vehicles may be taxed by the city or town only when
such vehicles are primarily used or located in suc h city or town for
a period of time longer than six (6) months of a taxable year;
3. The provisions of this section sh all not be construed to
authorize imposition of any tax upon persons, fi rms, or corporations
exempted from other taxation under the provi sions of Sections 348.1,
624 and 321 of Title 36 of the Oklahoma Statutes, by reason of
payment of taxes imposed under such sections;
4. Cooperatives and communications companies are hereby
authorized to pass on to their subscribers in the incorporated ci ty
or town involved, the amount of any special municipal fee, charge or
tax hereafter assessed or levied on or collecte d from such
cooperatives or communications companies;
5. No earnings, payroll or income taxes may be levied on
nonresidents of the citie s or towns levying such tax;
6. The governing body of any city or town shall be prohibited
from proposing taxing ordin ances more often than three times in any
calendar year, or twice in any six-month period; and
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7. Any revenues derived from a tax authori zed by this
subsection not dedicated to a limited purpose shall be deposited in
the municipal general fund.
B. A sales tax authorized in subsection A of this section may
be levied for limite d purposes specified in the ordinance levying
the tax. Such ordinance shall be submitted to the voters for
approval as provided in Section 2705 of this title. Any sales tax
levied or any change in the rate of a sales tax levied pursuant to
the provisions of this section shall become effective on the first
day of the calendar quarter following approval by the voters of the
city or town unless another effective date, which shall also be on
the first day of a calendar quarter, is specified in the ordinance
levying the sales tax or changing the rate of sales tax. Such
ordinance shall describe with specificity the projects or
expenditures for which the limited -purpose tax levy would be mad e.
The municipal governing body shall create a limited -purpose fund and
deposit therein any revenue generated by any tax levied pursuant to
this subsection. Money in the fund shall be accumulated from year
to year. The fund shall be placed in an insured interest-bearing
account and the interest which accrues on the fund sha ll be retained
in the fund. The fund shall be nonfiscal and shal l not be
considered in computing any levy when the municipality makes its
estimate to the excise board for needed appro priations. Money in
the limited-purpose tax fund shall be expended only as accumulated
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and only for the purposes specifically described in the taxing
ordinance as approved by the voters.
C. The Oklahoma Tax Commission shall give notice to all vendors
of a rate change at least sixty (60) days prior to the effective
date of the rate change. Provided, for purchases from printed
catalogs wherein the purchaser computed the tax based upon local tax
rates published in the catalog, the rate change shall not be
effective until the first day of a calendar quarter after a minimum
of one hundred twenty-days' notice to vendors. Failure to give
notice as required by this section shall delay the effective date of
the rate change to the first day of the next calendar qu arter.
D. The change in the boundary of a municipality shall be
effective, for sales and use tax purposes only, on the first day of
a calendar quarter after a minimum of sixty (60) days ' notice to
vendors.
E. If the proceeds of any sales tax levied by a municipality
pursuant to subsection B of this section are being used by the
municipality for the purpose of retiring indebtedness incurre d by
the municipality or by a public trust of which the municipality is a
beneficiary for the specific purpose for whic h the sales tax was
imposed, the sales tax shall not be repealed until s uch time as the
indebtedness is retired. However, in no event sh all the life of the
tax be extended beyond the duration approved by the voters of the
municipality. The provisions of this subsection shall apply to all
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sales tax levies imposed by a municip ality and being used by the
municipality for the purposes set for th in this subsection prior to
or after July 1, 1995.
F. The sale of an article of clothing or footwear designed to
be worn on or about the human body or any school supplies shall be
exempt from the sales tax imposed by any incorporated city or town,
in accordance with and to t he extent set forth in Section 1357.10 of
this title.
G. Any municipality that levies a dedicat ed tax pursuant to a
vote of the people for the purpose of funding publi c safety or any
other governmental purpose shall not redirect all or a portion of
the dedicated tax revenue to another purpose without a vote of the
people authorizing such action.
SECTION 4. The act shall become effective July 1, 20 23.
SECTION 5. 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 pas sage and approval.
59-1-5949 MAH 12/20/22