Oklahoma 2024 Regular Session

Oklahoma House Bill HB1600 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	An Act
2		-	ENROLLED HOUSE
3		-	BILL NO. 1600 By: Kannady of the House
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	27	+
	28	+	STATE OF OKLAHOMA
	29	+
	30	+	2nd Session of the 59th Legislature (2024)
	31	+
	32	+	CONFERENCE COMMITTEE
	33	+	SUBSTITUTE
	34	+	FOR ENGROSSED
	35	+	HOUSE BILL NO. 1600 By: Kannady of the House
4	36
5	37		and
6	38
7		-	~~Coleman~~ of the Senate
	39	+	Montgomery of the Senate
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	45	+
	46	+	CONFERENCE COMMITTEE SUBSTITUTE
13	47
14	48		An Act relating to digital asset mining; amending 68
15	49		O.S. 2021, Section 1359, which relates to
16	50		manufacturing tax exemptions; creating an exemption
17	51		for certain purchases related to the mining of
18	52		digital assets; providing definitions; and providing
19	53		an effective date.
20	54
21	55
22	56
23	57
24		-	~~SUBJECT: Digital asset mining~~
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25	59
26	60		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
27	61		SECTION 1. AMENDATORY 68 O.S. 2021, Section 1359, is
28	62		amended to read as follows:
29		-
30	63		Section 1359. There are hereby specifically exempted from the
31	64		tax levied by Section 1350 e t seq. of this title:
32		-
33	65		1. Sales of goods, wares, merchandise, tangible personal
34	66		property, machinery and equipment to a manufacturer for use in a
35	67		manufacturing operation. Goods, ware s, merchandise, property,
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36	94		machinery and equipment used in a nonmanufacturi ng activity or
37	95		process as set forth in paragraph 14 of Section 1352 of this title
38	96		shall not be eligible for the exemption provided for in this
39	97		subsection by virtue of the activity or process being performed in
40	98		conjunction with or integrated into a manufact uring operation.
41		-
42	99		For the purposes of this paragraph, sales made to any person,
43	100		firm or entity that has entered into a contractual relationship for
44	101		the construction and improvement of manufacturing goods, wares,
45		-	merchandise, property, machinery and ~~equipment~~ for use in a ~~ENR. H. B. NO. 1600 Page 2~~
	102	+	merchandise, property, machinery and equipmen t for use in a
46	103		manufacturing operation shall be considered sales made to a
47	104		manufacturer which is defined or classified in the North American
48	105		Industry Classification System (NAICS) Ma nual under Industry Group
49	106		No. 324110. Such purchase shall be evidenced by a copy of the sales
50	107		ticket or invoice to be retained by the vendor indicating that the
51	108		purchases are made for and on behalf of such manufacturer and set
52	109		out the name of such manufac turer as well as include a copy of the
53	110		Manufacturing Exemption Permit of t he manufacturer. Any person who
54	111		wrongfully or erroneously certifies that purchases are being made on
55	112		behalf of such manufacturer or who otherwise violates this paragraph
56	113		shall be guilty of a misdemeanor and upon conviction thereof shall
57	114		be fined an amount equal to double the amount of sales tax involved
58	115		or incarcerated for not more than sixty (60) days or both;
59	116
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60	142		2. Ethyl alcohol when sold and used for the purpose of blending
61	143		same with motor fuel on which motor fuel tax is levied by Section
62	144		500.4 of this title;
63		-
64	145		3. Sales of containers when sold to a person regularly engaged
65	146		in the business of reselling empty or filled containers or when
66	147		purchased for the purpose of packaging raw produc ts of farm, garden,
67	148		or orchard for resale to the consumer or processor. T his exemption
68	149		shall not apply to the sale of any containers used more than once
69	150		and which are ordinarily known as returnable containers, except
70	151		returnable soft drink bottles and the cartons, crates, pallets, and
71	152		containers used to transport returnable soft drink bottles. Each
72	153		and every transfer of title or possession of such returnable
73	154		containers in this state to any person who is not regularly engaged
74	155		in the business of selling, res elling or otherwise transferring
75	156		empty or filled containers shall be taxab le under this Code.
76	157		Additionally, this exemption shall not apply to the sale of labels
77	158		or other materials delivered along with items sold but which are not
78	159		necessary or absolutely e ssential to the sale of the sold
79	160		merchandise;
80		-
81	161		4. Sales of or transfers of title to or possession of any
82	162		containers, after June 30, 1987, used or to be used more than once
83	163		and which are ordinarily known as returnable containers and which do
84	164		or will contain beverages defined by paragraphs 4 and 14 of Section
85	165		506 of Title 37 of th e Oklahoma Statutes, or water for human
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86	192		consumption and the cartons, crates, pallets, and containers used to
87	193		transport such returnable containers;
88		-
89	194		5. Sale of tangible personal prope rty when sold by the
90		-	manufacturer to a person who transports it to a state other than ~~ENR. H. B. NO. 1600 Page 3~~
	195	+	manufacturer to a person who transports it to a state other than
91	196		Oklahoma for immediate and exclusive use in a state other than
92	197		Oklahoma. Provided, no sales at a retail outlet shall qualify for
93	198		the exemption under this paragraph;
94		-
95	199		6. Machinery, equipment, fuels and chemicals or other materials
96	200		incorporated into and directly used or consumed in the process of
97	201		treatment to substantially reduce the volume or harmful properties
98	202		of hazardous waste at treatment facilities specifically permit ted
99	203		pursuant to the Oklahoma Hazardous Waste Management Act and operated
100	204		at the place of waste generation, or facilities approved by the
101	205		Department of Environmental Quality for the cleanup of a site of
102	206		contamination. The term "hazardous" waste may include low-level
103	207		radioactive waste for the purpose of this paragraph;
104		-
105	208		7. Except as otherwise provided by subsection I of Section 3658
106	209		of this title pursuant to which the exemption authorized by this
107	210		paragraph may not be claimed, sales of tangible personal prope rty to
108	211		a qualified manufacturer or distributor to be consumed or
109	212		incorporated in a new manufacturing or distribution facility or to
110	213		expand an existing manufacturing or distribution facility. For
111	214		purposes of this paragraph, sales made to a contractor or
112	215		subcontractor that has previously entered into a contractual
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113	242		relationship with a qualified manufacturer or distributor for
114	243		construction or expansion of a manufacturing or distribution
115	244		facility shall be considered sales made to a qualified manufacturer
116	245		or distributor. For the purposes of this paragraph, "qualified
117	246		manufacturer or distributor" means:
118		-
119	247		a. any manufacturing enterprise whose total cost of
120	248		construction of a new or expanded facility exceeds the
121	249		sum of Five Million Dollars ($5,000,000.00) and in
122	250		which at least one hundred (100) new full -time-
123	251		equivalent employees, as certif ied by the Oklahoma
124	252		Employment Security Commission, are added and
125	253		maintained for a period of at least thirty -six (36)
126	254		months as a direct result of the new or expanded
127	255		facility,
128		-
129	256		b. any manufacturing enterprise whose total cost of
130	257		construction of a new or ex panded facility exceeds the
131	258		sum of Ten Million Dollars ($10,000,000.00) and the
132	259		combined cost of construction material, machinery,
133	260		equipment and other tangible personal property exem pt
134	261		from sales tax under the provisions of this paragraph
135		-	exceeds the sum of Fifty Million Dollars ~~ENR. H. B. NO. 1600 Page 4~~
	262	+	exceeds the sum of Fifty Million Dollars
136	263		($50,000,000.00) and in which at least seventy -five
137	264		(75) new full-time-equivalent employees, as certified
138	265		by the Oklahoma Employment Security Commission, are
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139	292		added and maintained for a period of at least thirty -
140	293		six (36) months as a direct result of the new or
141	294		expanded facility,
142		-
143	295		c. any manufacturing enterprise whose total cost of
144	296		construction of an expanded facility exceeds the sum
145	297		of Three Hundred Million Dolla rs ($300,000,000.00) and
146	298		in which the manufacturer has and maintains an av erage
147	299		employment level of at least one thousand seven
148	300		hundred fifty (1,750) full -time-equivalent employees,
149	301		as certified by the Employment Security Commission, or
150		-
151	302		d. any enterprise primarily engaged in the general
152	303		wholesale distribution of groceries define d or
153	304		classified in the North American Industry
154	305		Classification System (NAICS) Manual under Industry
155	306		Groups No. 4244 and 4245 and which has at least
156	307		seventy-five percent (75%) of its t otal sales to in-
157	308		state customers or buyers and whose total cost of
158	309		construction of a new or expanded facility exceeds the
159	310		sum of Forty Million Dollars ($40,000,000.00) with
160	311		such construction commencing on or after July 1, 2005,
161	312		and before December 31, 2005 , and which at least fifty
162	313		new full-time-equivalent employees, as certifie d by
163	314		the Oklahoma Employment Security Commission, are added
164	315		and maintained for a period of at least thirty -six
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165	342		(36) months as a direct result of the new or expanded
166	343		facility.
167		-
168	344		For purposes of this paragraph, the total cost of construction
169	345		shall include building and construction material and engineering and
170	346		architectural fees or charges directly associated with the
171	347		construction of a new or expanded facility. The total cost of
172	348		construction shall not include attorney fees. For purposes of
173	349		subparagraph c of th is paragraph, the total cost of construction
174	350		shall also include the cost of qualified depreciable property as
175	351		defined in Section 2357.4 of this title and labor services performed
176	352		in the construction of an expanded facility. For the purpose of
177	353		subparagraph d of this paragraph, the total cost of construction
178	354		shall also include the cost of all parking, security and dock
179	355		structures or facilities necessary to manage, process or secure
180		-	vehicles used to receive and/or distribute groceries through such a ~~ENR. H. B. NO. 1600 Page 5~~
	356	+	vehicles used to receive and/or distribute groceries through such a
181	357		facility. The employment requirement of this paragraph can be
182	358		satisfied by the employment of a portion of the required number of
183	359		new full-time-equivalent employees at a manufacturing or
184	360		distribution facility that is related to or supported by the new or
185	361		expanded manufacturing or distribution facility as long as both
186	362		facilities are owned by one person or business entity. For purposes
187	363		of this section, "manufacturing facility" shall mean buildi ng and
188	364		land improvements used in manufacturing as defined in Section 1352
189	365		of this title and shall also mean building and land improvements
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190	392		used for the purpose of packing, repackaging, labeling or assembling
191	393		for distribution to market, products at least se venty percent (70%)
192	394		of which are made in Oklahoma by the same company but at an off-
193	395		site, in-state manufacturing or distribution facility or facilities.
194	396		It shall not include a retail outlet unless the retail outlet is
195	397		operated in conjunction with and on t he same site or premises as the
196	398		manufacturing facility. Up to ten percent (10%) of the square feet
197	399		of a manufacturing or distribution facility building may be devoted
198	400		to office space used to provide clerical support for the
199	401		manufacturing operation. Such ten percent (10%) may be in a
200	402		separate building as long as it is part of t he same contiguous tract
201	403		of property on which the manufacturing or distribution facility is
202	404		located. Only sales of tangible personal property made after June
203	405		1, 1988, shall be eligi ble for the exemption provided by this
204	406		paragraph. The exemption authorize d pursuant to subparagraph d of
205	407		this paragraph shall only become effective when the governing body
206	408		of the municipality in which the enterprise is located approves a
207	409		resolution expressing the municipality's support for the
208	410		construction for such new or expan ded facility. Upon approval by
209	411		the municipality, the municipality shall forward a copy of such
210	412		resolution to the Oklahoma Tax Commission;
211		-
212	413		8. Sales of tangible personal property pur chased and used by a
213	414		licensed radio or television station in broadcasting. This
214	415		exemption shall not apply unless such machinery and equipment is
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215	442		used directly in the manufacturing process, is necessary for the
216	443		proper production of a broadcast signal or is such that the failure
217	444		of the machinery or equipment to operate would caus e broadcasting to
218	445		cease. This exemption begins with the equipment used in producing
219	446		live programming or the electronic equipment directly behind the
220	447		satellite receiving dish or ante nna, and ends with the transmission
221	448		of the broadcast signal from the broad cast antenna system. For
222	449		purposes of this paragraph, "proper production" shall include, but
223	450		not be limited to, machinery or equipment required by Federal
224	451		Communications Commission r ules and regulations;
225		-	ENR. H. B. NO. 1600 Page 6
226	452		9. Sales of tangible personal property purchased or used by a
227	453		licensed cable television operator in cablecasting. This exemption
228	454		shall not apply unless such machinery and equipment is used directly
229	455		in the manufacturing process, is n ecessary for the proper production
230	456		of a cablecast signal or is such that t he failure of the machinery
231	457		or equipment to operate would cause cablecasting to cease. This
232	458		exemption begins with the equipment used in producing local
233	459		programming or the electronic equipment behind the satellite
234	460		receiving dish, microwave tower or antenna , and ends with the
235	461		transmission of the signal from the cablecast head -end system. For
236	462		purposes of this paragraph, "proper production" shall include, but
237	463		not be limited to, machiner y or equipment required by Federal
238	464		Communications Commission rules and reg ulations;
239	465
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240	491		10. Sales of packaging materials for use in packing, shipping
241	492		or delivering tangible personal property for sale when sold to a
242	493		producer of agricultural products. This exe mption shall not apply
243	494		to the sale of any packaging material which is ordi narily known as a
244	495		returnable container;
245		-
246	496		11. Sales of any pattern used in the process of manufacturing
247	497		iron, steel or other metal castings. The exemption provided by this
248	498		paragraph shall be applicable irrespective of ownership of the
249	499		pattern provided that such pattern is used in the commercial
250	500		production of metal castings;
251		-
252	501		12. Deposits or other charges made and which are subsequently
253	502		refunded for returnable cartons, crates, pallets, and containers
254	503		used to transport cement and cement products;
255		-
256	504		13. Beginning January 1, 1998, machinery, electricity, fuels,
257	505		explosives and materials, excluding chemicals, used in the mining of
258	506		coal in this state;
259		-
260	507		14. Deposits, rent or other charges made for returnable
261	508		cartons, crates, pallets, and containers used to transport mushrooms
262	509		or mushroom products from a farm for resale to the consumer or
263	510		processor;
264		-
265	511		15. Sales of tangible personal property and services used or
266	512		consumed in all phases of the extrac tion and manufacturing of
267	513		crushed stone and sand, including but not limite d to site
268	514		preparation, dredging, overburden removal, explosive placement and
269		-	detonation, onsite material hauling and/or tra nsfer, material ENR. H. B. NO. 1600 Page 7
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	541	+	detonation, onsite material hauling and/or transfer, material
270	542		washing, screening and/or crushing, product weighing and site
271	543		reclamation; and
272		-
273	544		16. Sale, use or consumption of paper stock and other raw
274	545		materials which are manufactured into commercial printed material in
275	546		this state primarily for use and delivery outside this state. For
276	547		the purposes of this sect ion, "commercial printed material" shall
277	548		include magazines, catalogs, reta il inserts and direct mail ; and
278		-
279	549		17. Beginning on the effective date of this act and ending on
280	550		December 31, 2029, sales of machinery and equipment, including but
281	551		not limited to, serv ers and computers, racks, power distribution
282	552		units, cabling, switchgear, t ransformers, substations, software, and
283	553		network equipment, and electricity used for commercial mining of
284	554		digital assets purposes in a colocation facility.
285		-
286	555		For purposes of this paragr aph:
287		-
288	556		a. "blockchain technology" means shared or distributed
289	557		data structures or digital ledgers governed by
290	558		consensus protocols and maintained by peer -to-peer
291	559		networks that:
292		-
293	560		(1) Store digital transactions, and
294		-
295	561		(2) Verify and secure transactions cryptographi cally,
296		-
297	562		b. "colocation facility" means a facility or facilities
298	563		located in this state and utilized in the commercial
299	564		mining of digital assets or in hosting persons engaged
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300	591		in the commercial mining of digital assets through
301	592		utilization of the facility's infr astructure,
302	593		including servers and network hardware powered by
303	594		Internet bandwidth, electricity, and other services
304	595		generally required for such mining operations.
305	596		Provided, no facility shall qualify as a "colocation
306	597		facility" unless the facility has entered into a load
307	598		reduction agreement,
308		-
309	599		c. "commercial mining of digital assets" means the
310	600		process through which blockchain technology is used to
311	601		mine digital assets at a colocation facility,
312		-
313	602		d. "digital assets" means a type of virtual currency that
314		-	utilizes blockchain technology and that: ENR. H. B. NO. 1600 Page 8
315		-
	603	+	utilizes blockchain technology and that:
316	604		(1) can be digitally traded between users, or
317		-
318	605		(2) can be converted or exchanged for legal tender,
319	606		and
320		-
321	607		e. "load reduction agreement" means an agreement between
322	608		the customer and the local electric cooperative,
323	609		municipality, electric utility, or market operator
324	610		to temporarily reduce or curtail the custo mer's use of
325	611		electric power in order to respond to inclement
326	612		weather or other adverse conditions,
327		-
328	613		f. "mine" or "mining" means the process through which
329	614		blockchain transactions are ve rified and accepted by
	615	+
	616	+	Req. No. 11087 Page 13 1
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	640	+
330	641		adding the transactions to a blockchain ledger, whi ch
331	642		involves solving complex and mathematical
332	643		cryptographic problems associated with a block
333	644		containing transaction data .
	645	+	SECTION 2. This act shall become effective N ovember 1, 2024.
334	646
335		-	SECTION 2. This act shall become effective N ovember 1, 2024.
336		-	ENR. H. B. NO. 1600 Page 9
337		-	Passed the House of Representatives the 28th day of May, 2024.
338		-
339		-
340		-
341		-
342		-	Presiding Officer of the House
343		-	of Representatives
344		-
345		-
346		-
347		-	Passed the Senate the 30th day of May, 2024.
348		-
349		-
350		-
351		-
352		-	Presiding Officer of the Senate
353		-
354		-
355		-	OFFICE OF THE GOVERNOR
356		-	Received by the Office of the Governor this ____________________
357		-	day of ___________________, 20_______, at _______ o'clock _______ M.
358		-	By: _________________________________
359		-	Approved by the Governor of the State of Oklahoma this _____ ____
360		-	day of ___________________, 20_______, at _______ o'clock _______ M.
361		-
362		-
363		-	_________________________________
364		-	Governor of the State of Oklahoma
365		-
366		-	OFFICE OF THE SECRETARY OF STATE
367		-	Received by the Office of the Secretary of S tate this __________
368		-	day of ___________________, 20_______, at _______ o'clock _______ M.
369		-	By: _________________________________
	647	+	59-2-11087 MJ 05/22/24
370	648