SENATE FLOOR VERSION - HB1130 SFLR 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 SENATE FLOOR VERSION April 10, 2023 AS AMENDED ENGROSSED HOUSE BILL NO. 1130 By: Fetgatter of the House and Thompson (Roger) of the Senate An Act relating to sales tax; amending 68 O.S. 2021, Section 1357, as last amended by Section 1 , Chapter 512, O.S.L. 2021, which relates to sales tax exemption; stating intent; requiring exemption to be operative after certain date; amending 68 O.S. 2021, Section 1357.21, which relates to rebates for exemption and reporting requirements; terminating requirement that exemption be based upon certain formula; transferring certain requirements to the Oklahoma Broadband Office; updating statutory reference; and declaring an emergency. BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLA HOMA: SECTION 1. AMENDATORY 68 O.S. 2021, Section 1357, is amended to read as follows: Section 1357. Exemptions – General. There are hereby specif ically exempted from the tax levied by the Oklahoma Sales Tax Code: 1. Transportation of sch ool pupils to and from elementary schools or high schools in motor or other vehicles; SENATE FLOOR VERSION - HB1130 SFLR 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 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 munici pality except by taxicabs; 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 sales to residents of this state are made to persons to whom sales tax permits h ave 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 pers ons 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 by this paragraph shall apply to sales of motor 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 th e 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 con duct of its business. The sales tax shall apply to the purchase of motor fuel or diesel fuel in Oklahoma by a common carrier by r ail when such motor fuel is purchased for fueling, within this state, of any locomotive or other motorized flanged wheel equip ment; SENATE FLOOR VERSION - HB1130 SFLR 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 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, posters, panels, marquees, or on other similar surfaces, whether indoors or outdoors) or in progr ams relating to sporting and entertainment events, and sales of any advertising, to be displa yed at or in connection with a sporting event, via the Internet, electronic display devices, or through public address or broadcast systems. The exemption authori zed 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 this section, via the Internet, electronic display devices, or through the electro nic media, including radio, public address or broadcast systems, television (whether through closed circuit broadcasting systems or otherwise), and cable and satellite television, and the servicing of any advertising devices; 7. Eggs, feed, supplies, mach inery 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 marketing. This exemption shall only be gran ted and extended to the purchaser when the items are to be used and in fact are used in the r aising of animal life as set out above. Each purchaser shall certify, in SENATE FLOOR VERSION - HB1130 SFLR 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 writing, on the invoice or sales ticket retained by the vendor that the purchaser is regu larly engaged in the business of raising such animal life and that the items purchased will b e used only in such business. The vendor shall certify to the Oklahoma Tax Commission that the price of the 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 transmission services, when sold exclusively 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 authorized 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 apply to over-the-counter drugs; 10. Transfers of title or possession of empty, partially filled, or filled returnable oil and chemical drums to any person who is not regularly engaged in the business o f selling, reselling or otherwise transferring empty, partially filled, or filled returnable oil drums; SENATE FLOOR VERSION - HB1130 SFLR 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 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 bever ages; 12. Sales of food or food products for home consumption which are purchased in whole or in part with coupons issued pursuant to the federal food stamp progr am as authorized by Sections 2011 through 2029 of Title 7 of the United States Code, as to th at portion purchased with such coupons. The exemption provided for such sales shall be inapplicable to such 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 for home consumption to elderly or homebound persons as p art 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 Code, 26 SENATE FLOOR VERSION - HB1130 SFLR Page 6 (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 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; 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 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 oth er persons engaged in the same or similar business shall not be exempt under this paragraph; SENATE FLOOR VERSION - HB1130 SFLR Page 7 (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 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 t axation pursuant 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 qualifi ed 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 fu ll-time- equivalent employees, as certified by the Oklahoma Employment Security Commission, up on completion of the facility. In order to qualify for the exemption provided for by this paragraph, the cost of the items purchased by the qualified aircraft mai ntenance 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 expansion of a qualified aircraft maintenance or manufacturing facility as defined in paragraph 16 of this section . For purposes of this paragraph, sales SENATE FLOOR VERSION - HB1130 SFLR Page 8 (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 made to a contractor or subcontractor that has previously entered into a contractual relationship with a qualified aircraft maintenance or manufacturing facility f or construction or expansion of such a facility shall be considered sales made to a qualified aircraft maintenance or manufacturing 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 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 Internatio nal "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 subscriber's prerecorded announcement or live service . "900 service" does not include the charge for: collection services provided by the seller of the "telecommunications services" to the subscriber, or service or product sold by the subscriber to t he subscriber's customer. The service is typically SENATE FLOOR VERSION - HB1130 SFLR Page 9 (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 marketed under the name "900" service, and any subsequent numbers designated by the Federal Communications Commission, c. Interstate and International "private communications service". "Private communications service" means a "telecommunications service " that entitles the customer to exclusive o r priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associa ted 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 telecommunications service which is: SENATE FLOOR VERSION - HB1130 SFLR Page 10 (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 (1) rendered by a company for private use within its organization, or (2) used, allocated, or distributed by a company to its affiliated group, f. Regulatory assessments and charges, including charges to fund the Oklahoma Universal Service Fund, the Oklahoma Lifeline Fund and the Oklahoma High Cost Fund, and g. Telecommunications nonrecurring charges, including but not limited to the installation, connection, cha nge or initiation of telecommunications services which are not associated with a retail consu mer sale; 19. Sales of railroad track spikes manufactured and sold for use in this state in the construction or repair of railroad tracks, switches, sidings and t urnouts; 20. Sales of aircraft and aircraft parts provided such sales occur at a qualified a ircraft maintenance facility. As used in this paragraph, "qualified aircraft maintenance facility" means a facility operated by an air common carrier, including o ne 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 thousand (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 SENATE FLOOR VERSION - HB1130 SFLR Page 11 (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 fabrication, repair, alteration, modification, refurbishing, maintenance, building or rebuilding of commercial 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 1504 of the Internal Revenue Code, 26 U.S.C., Section 1504. Beginning July 1, 2012, sales of machinery, tools, supplies, equipment and r elated tangible personal property and services used or consumed in the repair, remodeling or maintenance of aircraft, aircraft engines, or aircraft component parts which occur at a qualified aircraft maintenance facility; 21. Sales of machinery and equipm ent 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 Classification (SIC) Manual, latest version, which derive at least fifty percent (50%) of their annual gross revenues from the sale of a product or se rvice 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. SENATE FLOOR VERSION - HB1130 SFLR Page 12 (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 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 informa tion as required by the Tax Commission. For purposes of determining whether annual gross revenues are derived from 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 consume r; 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 a s provided in Section 1357.6 of this title, but shall not include corrective eye glasses, con tact lenses or hearing aids; 23. Sales of tangible personal property or services to a motion 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 program that will serve as a pilot for or be a segment of an ongoing dramatic o r 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 paragraph shall apply to sales occurring on or after July 1, 1996 . In order to SENATE FLOOR VERSION - HB1130 SFLR Page 13 (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 qualify for the exempti on, the motion picture or television production company shall file any documentation and information required to be submitted pursuant to rules promulgated by the Tax Commission; 24. Sales of diesel fuel sold for consumption by commercial vessels, barges and other commercial watercraft; 25. Sales of tangible personal property or services to tax- exempt independent nonprofit biomedical research foundations that provide educational programs for Oklahoma science students and teachers and to tax-exempt independent nonprofit community blood banks headquartered in this state; 26. Effective May 6, 1992, sales of wireless telecommunications equipment to a vendor who subseq uently 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 of aircraft frame repairs and modification, aircraft interior modification, and paint, and sales of services employed in the repai r, modification and SENATE FLOOR VERSION - HB1130 SFLR Page 14 (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 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 maintenance and operation of the ship, motor vessel or barge, or b. enter into and become component 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 decedent 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 period exceeding three (3) consecutive days, b. the sale must be conducted within six (6) months of the date of death of the decedent, and c. the exemption allowed by this paragraph shall not be allowed for property that was not part of the decedent's estate; SENATE FLOOR VERSION - HB1130 SFLR Page 15 (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 31. Beginning January 1, 2004, sales of elect ricity 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, 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 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 purchaser by means 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 on -site, and permanently affixed to the real property and used for residential or commercial purposes. The exemption provided 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 this title; 34. Sales of tangible personal property or services to persons who are residents of Oklahoma and have been honorably discharged from active service in any branch of the Armed Forces of the United SENATE FLOOR VERSION - HB1130 SFLR Page 16 (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 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 permanent and have been sustained through military action or accident or resulting from d isease contracted while in such active service or the surviving spouse of such person if the person is deceased and the spouse has not remarried; provided, sales for the benefit of the person to a spouse of the eligible person or to a member of the househo ld 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 purposes of this paragraph. The Oklahoma Tax Commission shall issue a se parate 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 make purchases on the person's behalf, if requested by the eligible person. Sales qualifying for the exemptio n 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 authorized by this paragraph shall not exceed One Thousand Dollars ( $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 SENATE FLOOR VERSION - HB1130 SFLR Page 17 (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 amounts for which the exemption is applicable have not exceeded Twenty-five Thousand Dollars ($25,000.00) per ye ar 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 authorized amount shall be treated as a direct sales ta x liability and may be 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 operator, specifically designated by the Corporation Commission, of a spacing unit o r 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 fo rmation through 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 formation for the purpose of forcing oil or petroleum into a wellbor e for eventual recovery and production from the wellhead. In order to be eligible for the sa les tax exemption authorized by this paragraph, the total content of oil recovered after the use of enhanced recovery methods shall not exceed one percent (1%) by volume. The exemption authorized by this paragraph shall be applicable only to the state sal es tax rate and shall not be applicable to any county or municipal sales tax rate; SENATE FLOOR VERSION - HB1130 SFLR Page 18 (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 36. Sales of intrastate charter and tour bus transportation . As used in this paragraph, "intrastate charter and tour bus transportation" means the transportation of person s 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 ordinarily used or rented to carry persons for compensati on. Provided, this exemption shall not apply to regularly scheduled bus transportation for the general public; 37. Sales of vitamins, minerals and dietary supple ments by a licensed chiropractor to a person who is the patient of such chiropractor at the p hysical location where the chiropractor provides chiropractic care or services to such patient. The provisions of this paragraph shall not be applicable to any dr ug, medicine or substance for which a prescription 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 derives 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 NAICS code 519130 which operates websites tha t use a search engine to generate SENATE FLOOR VERSION - HB1130 SFLR Page 19 (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 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 construction or expansion of a facility for a corporation organized under Section 437 et seq. of Title 18 of the Oklahoma Statutes as a rural e lectric cooperative. For purposes of this paragraph, sales made to a contractor or subcontractor that has 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 property or services to a business primarily engaged in the repair of consumer electron ic goods, including, but not limited to, cell phones, compact disc players, personal computer s, MP3 players, digital devices for the storage and retrieval of information through hard-wired or wireless computer or Internet connections, if the devices are so ld to the business by the original manufacturer of such devices and the devices are repaired, refitted or refurbished for sale by the entity qualifying for the exemption authorized by this paragraph directly to retail consumers or if the devices are sold t o another business entity for sale to retail consumers; 41. On or after July 1, 2019, and pr ior to July 1, 2024, sales or leases of rolling stock when sold or leased by the manufacturer, regardless of whether the purchaser is a public services corporation SENATE FLOOR VERSION - HB1130 SFLR Page 20 (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 engaged in business as a common carrier of property or passengers by railway, for use or con sumption by a common 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 further use only on the railways; 42. Sales of gold, silver, platinum, palladium or other bullion items such as coins and bars and legal tender of an y nation, which legal tender is sold according 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 o r condition that its value depends upon its 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 ; and 43. Subject to the other requirements of this paragraph and the requirements of Section 2 1357.21 of this act title, sale, lease, rental, storage, use or other consumption of qualifying broadband equipment by providers of Internet service or subsidiaries if the property is directly used or consumed by the provider or subsidiary in or during the distribution o f broadband Internet service. The Legislature finds that pursuant to the provisions of subsection H of Section 1357.21 of this title, the provisions of this paragraph were SENATE FLOOR VERSION - HB1130 SFLR Page 21 (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 originally made contingent upon the enactment of an incentive award formula. Notwithstanding the failure to fulfill the condition as prescribed by subsection H of Section 2 of Enrolled House Bill No. 2946 of the 1st Session of the 58th Legislature, as originally enacted, the provisions of this paragraph shall be operative on and after the effective date of this act. SECTION 2. AMENDATORY 68 O.S. 2021, Section 1357.21, is amended to read as follows: Section 1357.21 A. The exemption authorized by the provisions of paragraph 43 of Section 1357 of Title 68 of the Oklahoma Statutes this title shall be administered as a rebate. B. No claim for a rebate shall be approved unless the equipment was purchased in ord er to establish or expand broadband services in underserved or unserved areas . As used in this subsection and for purposes of the exemption authorize d by paragraph 43 of Section 1357 of Title 68 of the Oklahoma Statutes this title, "broadband", "underserved" and "unserved" shall mean those services and areas as defined in Section 139.102 of Title 17 of the Okl ahoma Statutes. C. No claim for rebate sha ll be approved unless the claimant establishes that as a result of the equipment purchase there has been net growth in the number of potential customers served in underserved or unserved areas. D. In order to qualify for rebate payments during the fiscal year beginning July 1, 2022, equipment or other items qualifying for SENATE FLOOR VERSION - HB1130 SFLR Page 22 (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 the exemption authorized b y paragraph 43 of Sec tion 1357 of Title 68 of the Oklahoma Statutes this title must be purchased and placed in service between January 1, 2022, and December 31, 2023. Claims for rebates of sales tax or use tax paid for such equipment purchased in calendar year 2022 shall be filed with the Oklahoma Tax Commission not later than September 1, 2023, and claims for rebates f or sales or use tax paid for such equipment purchased in calendar year 2023 shall be filed with the Oklah oma Tax Commission not later than September 1, 2024. All claims shall be processed by the Tax Commission not later than March 1, 2025. E. Qualifying purchases do not include supporting or ancillary functions, such as office operations, field operations, marketing, transportation, warehousing, data s torage, or similar operations that do not directly result in the distribution of broadband Internet service. Property directly used or consumed in or during the provision, creation, or production of a data proc essing service or information service, or pro perty the provider grants, sells, or leases to the customer for use within the home or establishment receiving broadband is not eligible for a rebate under this section. F. The total amount of rebates that may be paid shall not exceed Forty-two Million Dollars ($42,000,000.00) with Thirty-one Million Five Hundred Thousand Dollars ($31,500,000.00) of the tota l reserved for eligible projects serving counties having a population density of fewer than one hundred persons per square mile and Ten SENATE FLOOR VERSION - HB1130 SFLR Page 23 (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 Million Five Hundred Thousand Dollars ($10,500,000.00) of the total reserved for eligible projects serving counties havi ng a population density of one hundred or more persons per square mile. G. The amount of rebate paid to each claimant shall be computed by dividing the applicable total rebate pool amount by the dollar amount of claims timely received by the Tax Commissio n with respect to each fiscal year, and paying in full the amount of the claims submitted if the amount of claims are equal to, or less than, the total rebate pool, or a pro rata share if the total amount of claims submitted exceed the rebate pool. H. For the fiscal year beginning July 1, 2023, and all subsequent fiscal years, the total amount of rebate that may be paid shall not exceed Forty-two Million Dollars ($42,000,000.00), but the allocation of this amount shall be made using an incentive award formula as enacted into law by the Legislature after recommendation by the Rural Broadband Expansion Council. If an incentive award formula is not enacted into law as of January 1, 2023, then the sales tax exemption otherwise authorized pursuant to paragraph 43 of Section 1357 of Title 68 of the Oklahoma Statutes shall cease to be effective as law and the exemption shall not be applicable to any equipment purchase made on or after January 1, 2024. I. Claims for rebate shall be on such forms as the Oklahoma Ta x Commission may prescribe for such purpose and shall contain any SENATE FLOOR VERSION - HB1130 SFLR Page 24 (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 required information or supporting documentation the Commission requires to verify el igibility for the rebate payment. J. The Oklahoma Department of Commerce and the Rural Oklahoma Broadband Expansion Council Office shall use information provided by the Oklahoma Tax Commission to prepare a repo rt to identify the qualifying rural broadband projects completed with the equipme nt purchased together with the location of the equipment and the geographic areas served as a result of the equipment purchases, including the total number of potential new customers receiving qualifying broadband services resulting from the project. The report shall not identify any entity by name that purchased equipment. K. The report shall be filed not la ter than April 1, 2025, with respect to rebates paid for equipment p urchases made during ca lendar years 2022 and 2023. The Oklahoma Tax Commission s hall make information available as required by subsection J of this s ection as claims are completed to assi st with the timely preparation of the report. L. The report shall be filed with the Govern or, the Speaker of the Oklahoma House of Representatives a nd the President Pro Tempore of the Oklahoma State Senate and posted on the Rural Oklahoma Broadband Expansion Council Office website maintained by the Oklahoma Department of Commerce. SENATE FLOOR VERSION - HB1130 SFLR Page 25 (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 3. It being immediatel y necessary for the preservation of the public peace, health or safety, an emergency is hereb y declared to exist, by reason whereof thi s act shall take effect and be in full force from and after its passage and approval. COMMITTEE REPORT BY: COMMITTEE ON FINANCE April 10, 2023 - DO PASS AS AMENDED