Oklahoma 2024 Regular Session

Oklahoma House Bill HB2033 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	Req. No. 6128 Page 1
2	2	STATE OF OKLAHOMA
3	3
4	4	1st Session of the 59th Legislature (2023)
5	5
6	6	HOUSE BILL 2033 By: Banning
7	7
8	8
9	9
10	10
11	11
12	12	AS INTRODUCED
13	13
14	14	An Act relating to sales tax; amending 68 O.S. 2021,
15	15	Section 1352, which relates to definitions; modifying
16	16	definition; amending 68 O.S. 2021, Section 1359,
17	17	which relates to exemptions; expanding exemption to
18	18	include custom-order manufacturing; and providing an
19	19	effective date.
20	20
21	21
22	22
23	23	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
24	24	SECTION 1. AMENDATORY 68 O.S. 2021, Section 1352, is
25	25	amended to read as follows:
26	26	Section 1352. As used in the Oklahoma Sales Tax Code:
27	27	1. "Bundled transaction" means the retail sale of two or more
28	28	products, except real property and services to real property, where
29	29	the products are otherwise distinct and identifiable, and the
30	30	products are sold for one no nitemized price. A "bundled
31	31	transaction" does not include the sale of any products in which the
32	32	sales price varies, or is negotiable, based on the selection by the
33	33	purchaser of the products included in the transaction. As used in
34	34	this paragraph:
35	35	a. "distinct and identifiable products " does not include: Req. No. 6128 Page 2
36	36	(1) packaging such as containers, boxes, sacks, bags,
37	37	and bottles, or other materials such as wrapping,
38	38	labels, tags, and ins truction guides, that
39	39	accompany the retail sale of the products and are
40	40	incidental or immaterial to the retail sale
41	41	thereof, including but not limited to, grocery
42	42	sacks, shoeboxes, dry cleaning garment bags and
43	43	express delivery envelopes and boxes,
44	44	(2) a product provided free of charge with the
45	45	required purchase of another product. A product
46	46	is provided free of charge if the sales price of
47	47	the product purchased does not vary depending on
48	48	the inclusion of the product provided free of
49	49	charge, or
50	50	(3) items included in the definition of gross
51	51	receipts or sales price, pursuant to this
52	52	section,
53	53	b. "one nonitemized price " does not include a price that
54	54	is separately identified by product on binding sales
55	55	or other supporting sales -related documentation made
56	56	available to the customer in paper or electronic form
57	57	including, but not limited to an in voice, bill of
58	58	sale, receipt, contract, service agreement, lease Req. No. 6128 Page 3
59	59	agreement, periodic notice of rates and services, rate
60	60	card, or price list,
61	61	A transaction that otherwise meets the definition of a bundled
62	62	transaction shall not be considered a bundled transa ction if it is:
63	63	(1) the retail sale of tangible personal property and
64	64	a service where the tangible personal property is
65	65	essential to the use of the service, and is
66	66	provided exclusively in connection with the
67	67	service, and the true object of the transaction
68	68	is the service,
69	69	(2) the retail sale of services where one service is
70	70	provided that is essential to the use or receipt
71	71	of a second service and the first service is
72	72	provided exclusively in connection with the
73	73	second service and the true object of the
74	74	transaction is the second service,
75	75	(3) a transaction that includes taxable products and
76	76	nontaxable products and the purchase price or
77	77	sales price of the taxable products is de
78	78	minimis. For purposes of this subdivision, "de
79	79	minimis" means the seller's purchase price or
80	80	sales price of taxable products is ten percent
81	81	(10%) or less of the total purchase price or
82	82	sales price of the bundled products. Sellers Req. No. 6128 Page 4
83	83	shall use either the purchase price or the sales
84	84	price of the products to determine if the taxable
85	85	products are de minimis. Sellers may not use a
86	86	combination of the purchase price and sales price
87	87	of the products to determine if the taxable
88	88	products are de minimis. Sellers shall use t he
89	89	full term of a service contract to determine if
90	90	the taxable products are de mi nimis, or
91	91	(4) the retail sale of exempt tangible personal
92	92	property and taxable tangible personal property
93	93	where:
94	94	(a) the transaction includes food and food
95	95	ingredients, drugs, durable medical
96	96	equipment, mobility-enhancing equipment,
97	97	over-the-counter drugs, prosthetic devices
98	98	or medical supplies, and
99	99	(b) the seller's purchase price or sales price
100	100	of the taxable tangible personal property is
101	101	fifty percent (50%) or less of the tot al
102	102	purchase price or sales price of the bundled
103	103	tangible personal property. Sell ers may not
104	104	use a combination of the purchase price and
105	105	sales price of the tangible personal Req. No. 6128 Page 5
106	106	property when making the fifty percent (50%)
107	107	determination for a transaction;
108	108	2. "Business" means any activity engaged in or caused to be
109	109	engaged in by any person with the object of gain, benefit, or
110	110	advantage, either direct or indirect;
111	111	3. "Commission" or "Tax Commission" means the Oklahoma Tax
112	112	Commission;
113	113	4. "Computer" means an electronic device that accepts
114	114	information in digital or similar form and manipulate s it for a
115	115	result based on a sequence of instructions;
116	116	5. "Computer software" means a set of coded instructions
117	117	designed to cause a "computer" or automatic data processing
118	118	equipment to perform a task;
119	119	6. "Consumer" or "user" means a person to whom a taxa ble sale
120	120	of tangible personal property is made or to whom a taxable service
121	121	is furnished. "Consumer" or "user" includes all contractors to whom
122	122	a taxable sale of materials, s upplies, equipment, or other tangible
123	123	personal property is made or to whom a taxa ble service is furnished
124	124	to be used or consumed in the performance of any contract;
125	125	7. "Contractor" means any person who performs any improvement
126	126	upon real property and who, as a necessary and incidental part of
127	127	performing such improvement, incorporates t angible personal property
128	128	belonging to or purchased by the person into the real property being
129	129	improved; Req. No. 6128 Page 6
130	130	8. "Drug" means a compound, substance or preparation, and any
131	131	component of a compound, substance or preparation:
132	132	a. recognized in the official United States
133	133	Pharmacopoeia, official Homeopathic Pharmacopoeia of
134	134	the United States, or official National Formulary, and
135	135	supplement to any of them,
136	136	b. intended for use in the diagno sis, cure, mitigation,
137	137	treatment, or prevention of disease, or
138	138	c. intended to affect the structure or any function of
139	139	the body;
140	140	9. "Electronic" means relating to technology having electrical,
141	141	digital, magnetic, wireless, optical, electromagnetic, or simil ar
142	142	capabilities;
143	143	10. "Established place of business " means the location at which
144	144	any person regularly engages in, conducts, or operates a business in
145	145	a continuous manner for any length of time, that is open to the
146	146	public during the hours customary to such business, in which a stock
147	147	of merchandise for resale is maintained, and which is not exempted
148	148	by law from attachment, execution, or other species of forced sale
149	149	barring any satisfaction of any delinquent tax liability accrued
150	150	under the Oklahoma Sales Tax Code;
151	151	11. "Fair authority" means: Req. No. 6128 Page 7
152	152	a. any county, municipality, school district, public
153	153	trust or any other political subdivision of this
154	154	state, or
155	155	b. any not-for-profit corporation acting pursuant to an
156	156	agency, operating or management agreement which has
157	157	been approved or authorized by the governing body of
158	158	any of the entities specified in subparagraph a of
159	159	this paragraph which conduct, operate or produce a
160	160	fair commonly understood to be a county, district or
161	161	state fair;
162	162	12. a. "Gross receipts", "gross proceeds" or "sales price"
163	163	means the total amount of consideration, including
164	164	cash, credit, property and services, for which
165	165	personal property or services are sold, leased or
166	166	rented, valued in money, whether received in money or
167	167	otherwise, without any deduction for the following:
168	168	(1) the seller's cost of the property sold,
169	169	(2) the cost of materials used, labor or service
170	170	cost,
171	171	(3) interest, losses, all costs of transportation to
172	172	the seller, all taxes imposed on the seller, and
173	173	any other expense of the seller, Req. No. 6128 Page 8
174	174	(4) charges by the seller for any services necessary
175	175	to complete the sale, other t han delivery and
176	176	installation charges,
177	177	(5) delivery charges and installation charges, unless
178	178	separately stated on the invoice, billing or
179	179	similar document given to the purchase r, and
180	180	(6) credit for any trade -in.
181	181	b. Such term shall not include:
182	182	(1) discounts, including cash, term, or coupons that
183	183	are not reimbursed by a third party that are
184	184	allowed by a seller and taken by a purchaser on a
185	185	sale,
186	186	(2) interest, financing and carrying charges from
187	187	credit extended on the sale of personal property
188	188	or services, if the amount is separately stated
189	189	on the invoice, bill of sale or similar document
190	190	given to the purchaser, and
191	191	(3) any taxes legally imposed directly on the
192	192	consumer that are separately stated on the
193	193	invoice, bill of sale or similar document given
194	194	to the purchaser.
195	195	c. Such term shall include consideration received by the
196	196	seller from third parties if: Req. No. 6128 Page 9
197	197	(1) the seller actually receives consideration from a
198	198	party other than the purc haser and the
199	199	consideration is directly related to a price
200	200	reduction or discount on the sale,
201	201	(2) the seller has an obligation to pass the price
202	202	reduction or discount through to the purchaser,
203	203	(3) the amount of the consideration attributable to
204	204	the sale is fixed and determinable by the seller
205	205	at the time of the sale of the item to the
206	206	purchaser, and
207	207	(4) one of the following criteria is met:
208	208	(a) the purchaser presents a coupon, certificate
209	209	or other documentation to the seller to
210	210	claim a price reduction or di scount where
211	211	the coupon, certificate or documentation is
212	212	authorized, distributed or granted by a
213	213	third party with the understanding that the
214	214	third party will reimburse any seller to
215	215	whom the coupon, certificate or
216	216	documentation is presented,
217	217	(b) the purchaser identifies himself or herself
218	218	to the seller as a member of a group or
219	219	organization entitled to a price reduction
220	220	or discount; provided, a "preferred Req. No. 6128 Page 10
221	221	customer" card that is available to any
222	222	patron does not constitute membership in
223	223	such a group, or
224	224	(c) the price reduction or discount is
225	225	identified as a third -party price reduction
226	226	or discount on the invoice received by the
227	227	purchaser or on a coupon, certificate or
228	228	other documentation presented by the
229	229	purchaser;
230	230	13. a. "Maintaining a place of business in th is state" means
231	231	and shall be presumed to include:
232	232	(1) (a) utilizing or maintainin g in this state,
233	233	directly or by subsidiary, an office,
234	234	distribution house, sales house, warehouse,
235	235	or other physical place of business, whether
236	236	owned or operated by the vendor or any other
237	237	person, other than a common carrier acting
238	238	in its capacity as such, or
239	239	(b) having agents operating in this state,
240	240	whether the place of business or agent
241	241	is within this state temporarily or
242	242	permanently or whether the person or
243	243	agent is authorized to do business
244	244	within this state, and Req. No. 6128 Page 11
245	245	(2) the presence of any person, other t han a common
246	246	carrier acting in its capacity as such, that has
247	247	substantial nexus in this state and that:
248	248	(a) sells a similar line of products as the
249	249	vendor and does so under th e same or a
250	250	similar business name,
251	251	(b) uses trademarks, service marks or trade
252	252	names in this state that are the same
253	253	or substantially similar to those used
254	254	by the vendor,
255	255	(c) delivers, installs, assembles or
256	256	performs maintenance services for the
257	257	vendor,
258	258	(d) facilitates the vendor's delivery of
259	259	property to customers in the state by
260	260	allowing the vendor's customers to pick
261	261	up property sold by the vendor at an
262	262	office, distribution facility,
263	263	warehouse, storage place or similar
264	264	place of business maintained by the
265	265	person in this state, or
266	266	(e) conducts any other activities in this state
267	267	that are significantly associated with the Req. No. 6128 Page 12
268	268	vendor's ability to establish and maintain a
269	269	market in this state for the vendor 's sale.
270	270	b. The presumptions in divisions (1) and (2) of
271	271	subparagraph a of this paragraph may be rebutted by
272	272	demonstrating that the person 's activities in this
273	273	state are not significantly associated with the
274	274	vendor's ability to establish and maintain a market in
275	275	this state for the vendor 's sales.
276	276	c. Any ruling, agreement or contract, whether written or
277	277	oral, express or implied, between a perso n and
278	278	executive branch of this state, or any other state
279	279	agency or department, stating, agreeing or ruling that
280	280	the person is not "maintaining a place of business in
281	281	this state" or is not required to collect sales and
282	282	use tax in this state despite the pres ence of a
283	283	warehouse, distribution center or fulfillment center
284	284	in this state that is owned or operated by the vendor
285	285	or an affiliated person of the vendor shall be null
286	286	and void unless it is specifically approved by a
287	287	majority vote of each house of the Okl ahoma
288	288	Legislature;
289	289	14. "Manufacturing" means and includes the activity of
290	290	converting or conditioning tangible personal property by changing
291	291	the form, composition, or quality of character of some existing Req. No. 6128 Page 13
292	292	material or materials, including natural resources, by procedures
293	293	commonly regarded by the average person as manufacturing,
294	294	compounding, processing or assembling, into a material or materials
295	295	with a different form or use. "Manufacturing" shall also include
296	296	the manufacturing, compounding, processing or fab rication of
297	297	materials into articles of tangible personal property according to
298	298	the special order of a customer (custom-order manufacturing) by
299	299	manufacturers classified as opera ting in North American Industry
300	300	Classification System (NAICS) Sectors 32 and 33, but does not
301	301	include such custom-order manufacturing by manufacturers classified
302	302	in other NAICS code sectors. "Manufacturing" does not include
303	303	extractive industrial activities such as mining, quarrying, logging,
304	304	and drilling for oil, gas and water, nor o il and gas field
305	305	processes, such as natural pressure reduction, mechanical
306	306	separation, heating, cooling, dehydration and compression;
307	307	15. "Manufacturing operation " means the designing,
308	308	manufacturing, compounding, processing, assembling, warehousing or
309	309	preparing of articles for sale as tangible personal property. A
310	310	manufacturing operation begins at the point where the materials
311	311	enter the manufacturing site and ends at the point where a finished
312	312	product leaves the manufacturing site. "Manufacturing operati on"
313	313	does not include administration, sales, distribution,
314	314	transportation, site construction or site maintenance. Extractive
315	315	activities and field processes shall not be deemed to be a part of a Req. No. 6128 Page 14
316	316	manufacturing operation even when performed by a person otherw ise
317	317	engaged in manufacturing;
318	318	16. "Manufacturing site" means a location where a manufacturing
319	319	operation is conducted, including a location consisting of one or
320	320	more buildings or structures in an area owned, leased or controlled
321	321	by a manufacturer;
322	322	17. "Over-the-counter drug" means a drug that contains a label
323	323	that identifies the product as a drug as required by 21 C.F.R.,
324	324	Section 201.66. The over -the-counter-drug label includes:
325	325	a. a "Drug Facts" panel, or
326	326	b. a statement of the "active ingredient(s) " with a list
327	327	of those ingredients contained in the compound,
328	328	substance or preparation;
329	329	18. "Person" means any individual, company, partnership, joint
330	330	venture, joint agreement, as sociation, mutual or otherwise, limited
331	331	liability company, corporation, estate, tr ust, business trust,
332	332	receiver or trustee appointed by any state or federal court or
333	333	otherwise, syndicate, this state, any county, city, municipality,
334	334	school district, any oth er political subdivision of the state, or
335	335	any group or combination acting as a uni t, in the plural or singular
336	336	number;
337	337	19. "Prescription" means an order, formula or recipe issued in
338	338	any form of oral, written, electronic, or other means of Req. No. 6128 Page 15
339	339	transmission by a duly licensed "practitioner" as defined in Section
340	340	1357.6 of this title;
341	341	20. "Prewritten computer software " means "computer software",
342	342	including prewritten upgrades, which is not designed and developed
343	343	by the author or other creator to the specification s of a specific
344	344	purchaser. The combining of two or more prewritten computer
345	345	software programs or prewritten portions thereof does not cause the
346	346	combination to be other than prewritten computer software.
347	347	Prewritten software includes software designed and developed by the
348	348	author or other creator to the specifications of a specific
349	349	purchaser when it is sold to a person other than the purchaser.
350	350	Where a person modifies or enhances computer software of which the
351	351	person is not the author or creator, the person shall be deemed to
352	352	be the author or creator only of such person 's modifications or
353	353	enhancements. Prewritten software or a prewritten portion thereof
354	354	that is modified or enhanced to any degree, where such modification
355	355	or enhancement is designed and develo ped to the specifications of a
356	356	specific purchaser, remains prewritten software; pr ovided, however,
357	357	that where there is a reasonable, separately stated charge or an
358	358	invoice or other statement of the price given to the purchaser for
359	359	such modification or enha ncement, such modification or enhancement
360	360	shall not constitute prewritten computer software;
361	361	21. "Repairman" means any person who performs any repair
362	362	service upon tangible personal property of the consumer, whether or Req. No. 6128 Page 16
363	363	not the repairman, as a necessary and incidental part of performing
364	364	the service, incorporates tangible personal propert y belonging to or
365	365	purchased by the repairman into the tangible personal property being
366	366	repaired;
367	367	22. "Sale" means the transfer of either title or possession of
368	368	tangible personal property for a valuable consideration regardless
369	369	of the manner, method, instr umentality, or device by which the
370	370	transfer is accomplished in this state, or other transactions as
371	371	provided by this paragraph, including but not limited to:
372	372	a. the exchange, barter, lease, or rental of tangible
373	373	personal property resulting in the transfer of the
374	374	title to or possession of the property,
375	375	b. the disposition for consumption or use in any business
376	376	or by any person of all goods, wares, merchandise, or
377	377	property which has been purchased for resale,
378	378	manufacturing, or further processing,
379	379	c. the sale, gift, exchange, or other disposition of
380	380	admission, dues, or fees to clubs, places of
381	381	amusement, or recreational or athletic events or for
382	382	the privilege of having access to or the use of
383	383	amusement, recreational, athletic or entertainment
384	384	facilities,
385	385	d. the furnishing or rendering of services taxable under
386	386	the Oklahoma Sales Tax Code, and Req. No. 6128 Page 17
387	387	e. any use of motor fuel or diesel fuel by a supplier, as
388	388	defined in Section 500.3 of this title, upon which
389	389	sales tax has not previously been paid, for purposes
390	390	other than to propel motor vehicles over the public
391	391	highways of this state. Motor fuel or diesel fuel
392	392	purchased outside the state and used for purposes
393	393	other than to propel motor vehic les over the public
394	394	highways of this state shall not constitute a sale
395	395	within the meaning of this paragraph;
396	396	23. "Sale for resale" means:
397	397	a. a sale of tangible personal property to any purchaser
398	398	who is purchasing tangible personal property for the
399	399	purpose of reselling it within the geographical limits
400	400	of the United States of America or its territories or
401	401	possessions, in the normal course of business either
402	402	in the form or condition in which it is purchased or
403	403	as an attachment to or integral part of other ta ngible
404	404	personal property,
405	405	b. a sale of tangible personal property to a purchaser
406	406	for the sole purpose of the renting or leasing, within
407	407	the geographical limits of the United States of
408	408	America or its territories or possessions, of the
409	409	tangible personal prop erty to another person by the Req. No. 6128 Page 18
410	410	purchaser, but not if incidental to the renting or
411	411	leasing of real estate,
412	412	c. a sale of tangible goods and products within this
413	413	state if, simultaneously with the sale, the vendor
414	414	issues an export bill of lading, or other
415	415	documentation that the point of delivery of such goods
416	416	for use and consumption is in a foreign country and
417	417	not within the territorial confines of the United
418	418	States. If the vendor is not in the business of
419	419	shipping the tangible goods and products that are
420	420	purchased from the vendor, the buyer or purchaser of
421	421	the tangible goods and products is responsible for
422	422	providing an export bill of lading or other
423	423	documentation to the vendor from whom the tangible
424	424	goods and products were purchased showing that the
425	425	point of delivery of such goods for use and
426	426	consumption is a foreign country and not within t he
427	427	territorial confines of the United States, or
428	428	d. a sales of any carrier access services, right of
429	429	access services, telecommunications services to be
430	430	resold, or telecommuni cations used in the subsequent
431	431	provision of, use as a component part of, or
432	432	integrated into, end-to-end telecommunications
433	433	service; Req. No. 6128 Page 19
434	434	24. "Tangible personal property " means personal property that
435	435	can be seen, weighed, measured, felt, or touched or that is i n any
436	436	other manner perceptible to the senses. "Tangible personal
437	437	property" includes electricity, water, gas, steam and prewritten
438	438	computer software. This definition shall be applicable only for
439	439	purposes of the Oklahoma Sales Tax Code;
440	440	25. "Taxpayer" means any person liable to pay a tax imposed by
441	441	the Oklahoma Sales Tax Code;
442	442	26. "Tax period" or "taxable period" means the calendar period
443	443	or the taxpayer's fiscal period for which a taxpayer has obtained a
444	444	permit from the Tax Commission to use a fiscal per iod in lieu of a
445	445	calendar period;
446	446	27. "Tax remitter" means any person required to collect,
447	447	report, or remit the tax imposed by the Oklahoma Sales Tax Code. A
448	448	tax remitter who fails, for any reason, to collect, report, or remit
449	449	the tax shall be considered a taxpayer for purposes of assessment,
450	450	collection, and enforcement of the tax imp osed by the Oklahoma Sales
451	451	Tax Code; and
452	452	28. "Vendor" means:
453	453	a. any person making sales of tangible personal property
454	454	or services in this state, the gross receipts or gross
455	455	proceeds from which are taxed by the Oklahoma Sales
456	456	Tax Code, Req. No. 6128 Page 20
457	457	b. any person maintaining a place of business in this
458	458	state and making sales of tangible personal property
459	459	or services, whether at the place of business or
460	460	elsewhere, to persons within this stat e, the gross
461	461	receipts or gross proceeds from which are taxed by the
462	462	Oklahoma Sales Tax Code,
463	463	c. any person who solicits business by employees,
464	464	independent contractors, agents, or other
465	465	representatives in this state, and thereby makes sales
466	466	to persons within this state of tangible personal
467	467	property or services, the gross receipts or gros s
468	468	proceeds from which are taxed by the Oklahoma Sales
469	469	Tax Code, or
470	470	d. any person, pursuant to an agreement with the person
471	471	with an ownership interest in or title to tangible
472	472	personal property, who has been entrusted with the
473	473	possession of any such property and has the power to
474	474	designate who is to obtain title, to physically
475	475	transfer possession of, or otherwise make sales of the
476	476	property.
477	477	SECTION 2. AMENDATORY 68 O.S. 2011, Section 1359, is
478	478	amended to read as follows:
479	479	Section 1359. Exemptions - Manufacturing. Req. No. 6128 Page 21
480	480	There are hereby specifically exempted from the tax lev ied by
481	481	Section 1350 et seq. of this title:
482	482	1. Sales of goods, wares, merchandise, tangible pers onal
483	483	property, machinery and equipment to a manufacturer for use in a
484	484	manufacturing operation. Such sales of goods, wares, merchandise,
485	485	tangible personal proper ty, machinery and equipment for use in a
486	486	manufacturing operation shall be exempt for any manufa cturer,
487	487	engaged in manufacturing as defined in Section 1352 of this title.
488	488	Goods, wares, merchandise, property, machinery and equipment used in
489	489	a nonmanufacturing activity or process as set forth in paragraph 14
490	490	of Section 1352 of this title shall not be eligible for the
491	491	exemption provided for in this subsection by virtue of the activity
492	492	or process being performed in conjunction with or integrated into a
493	493	manufacturing operation.
494	494	For the purposes of this paragraph, sales made to any person,
495	495	firm or entity that has entered into a contractual relationship for
496	496	the construction and im provement of manufacturing goods, wares,
497	497	merchandise, property, machinery and equipment for use in a
498	498	manufacturing operation shall be considered sales made to a
499	499	manufacturer which i s defined or classified in the North American
500	500	Industry Classification Syste m (NAICS) Manual under Industry Group
501	501	No. 324110. Such purchase shall be evidenced by a copy of the sales
502	502	ticket or invoice to be retained by the vendor indicating that the
503	503	purchases are made for and on behalf of such manufacturer and set Req. No. 6128 Page 22
504	504	out the name of such manufacturer as well as include a copy of the
505	505	Manufacturing Exemption Permit of th e manufacturer. Any person who
506	506	wrongfully or erroneously certifies that purchases are being m ade on
507	507	behalf of such manufacturer or who otherwise violates this paragraph
508	508	shall be guilty of a misdemeanor and upon conviction thereof shall
509	509	be fined an amount equal to double the amount of sales tax involved
510	510	or incarcerated for not more than sixty (60) days or both;
511	511	2. Ethyl alcohol when sold and used for the purpose of blend ing
512	512	same with motor fuel on which motor fuel tax is levied by Section
513	513	500.4 of this title;
514	514	3. Sales of containers when sold to a person regularly engaged
515	515	in the business of reselli ng empty or filled containers or when
516	516	purchased for the purpose of packagin g raw products of farm, garden,
517	517	or orchard for resale to the consumer or processor. Th is exemption
518	518	shall not apply to the sale of any containers used more than once
519	519	and which are ordinarily known as returnable containers, except
520	520	returnable soft drink bott les and the cartons, crates, pallets, and
521	521	containers used to transport returnable soft drink bottles. Each
522	522	and every transfer of title or possession of such returnable
523	523	containers in this state to any person who is not regularly engaged
524	524	in the business of selling, reselling or otherwise transferring
525	525	empty or filled containers shall be taxabl e under this Code.
526	526	Additionally, this exemption shall not apply to the sale of labels
527	527	or other materials delivered along with items sold but which are not Req. No. 6128 Page 23
528	528	necessary or absolutely essential to the sale of the sold
529	529	merchandise;
530	530	4. Sales of or transfers of title to or possession of any
531	531	containers, after June 30, 1987, used or to be used more than on ce
532	532	and which are ordinarily known as returnable containers and which do
533	533	or will contain beverages defined by paragraphs 4 and 14 of Section
534	534	506 of Title 37 of the Oklahoma Statutes, or water for human
535	535	consumption and the cartons, crates, pallets, and conta iners used to
536	536	transport such returnable containers;
537	537	5. Sale of tangible pe rsonal property when sold by the
538	538	manufacturer to a person who transports it to a state other than
539	539	Oklahoma for immediate and exclusive use in a state other than
540	540	Oklahoma. Provided, no sales at a retail outlet shall qualify for
541	541	the exemption under this par agraph;
542	542	6. Machinery, equipment, fuels and chemicals or other materials
543	543	incorporated into and directly used or consumed in the process of
544	544	treatment to substantially reduce the volu me or harmful properties
545	545	of hazardous waste at treatment facilities specifi cally permitted
546	546	pursuant to the Oklahoma Hazardous Waste Management Act and operated
547	547	at the place of waste generation, or facilities approved by the
548	548	Department of Environmental Qual ity for the cleanup of a site of
549	549	contamination. The term "hazardous" waste may include low-level
550	550	radioactive waste for the purpose of this paragraph; Req. No. 6128 Page 24
551	551	7. Except as otherwise provided by subsection I of Section 3658
552	552	of this title pursuant to which the exem ption authorized by this
553	553	paragraph may not be claimed, sales of tangible pe rsonal property to
554	554	a qualified manufacturer or distributor to be consumed or
555	555	incorporated in a new manufacturing or distribution facility or to
556	556	expand an existing manufacturing or d istribution facility. For
557	557	purposes of this paragraph, sales made to a cont ractor or
558	558	subcontractor that has previously entered into a contractual
559	559	relationship with a qualified manufacturer or distributor for
560	560	construction or expansion of a manufacturing or distribution
561	561	facility shall be considered sales made to a qualified manufac turer
562	562	or distributor. For the purposes of this paragraph, "qualified
563	563	manufacturer or distributor" means:
564	564	a. any manufacturing enterprise whose total cost of
565	565	construction of a new o r expanded facility exceeds the
566	566	sum of Five Million Dollars ($5,000,000.00) and in
567	567	which at least one hundred (100) new full -time-
568	568	equivalent employees, as certifi ed by the Oklahoma
569	569	Employment Security Commission, are added and
570	570	maintained for a period of at least thirty-six (36)
571	571	months as a direct result of the new or expanded
572	572	facility,
573	573	b. any manufacturing enterprise whose total cost of
574	574	construction of a new or exp anded facility exceeds the Req. No. 6128 Page 25
575	575	sum of Ten Million Dollars ($10,000,000.00) and the
576	576	combined cost of construction material, machinery,
577	577	equipment and other tangible personal p roperty exempt
578	578	from sales tax under the provisions of this paragraph
579	579	exceeds the sum of Fifty Million Dollars
580	580	($50,000,000.00) and in which at least seventy -five
581	581	(75) new full-time-equivalent employees, as certified
582	582	by the Oklahoma Employment Security Comm ission, are
583	583	added and maintained for a period of at least thirty -
584	584	six (36) months as a d irect result of the new or
585	585	expanded facility,
586	586	c. any manufacturing enterprise whose total cost of
587	587	construction of an expanded facility exceeds the sum
588	588	of Three Hundred Million Dollars ($300,000,000.00) and
589	589	in which the manufacturer has and maintains an ave rage
590	590	employment level of at least one thousand seven
591	591	hundred fifty (1,750) full -time-equivalent employees,
592	592	as certified by the Employment Security Commission, or
593	593	d. any enterprise primarily engaged in the general
594	594	wholesale distribution of groceries defined or
595	595	classified in the North American Industry
596	596	Classification System (NAICS) Manual under Indus try
597	597	Groups No. 4244 and 4245 and which has at least
598	598	seventy-five percent (75%) of its total sales to in - Req. No. 6128 Page 26
599	599	state customers or buyers and whose total cost of
600	600	construction of a new or expanded facility exceeds the
601	601	sum of Forty Million Dollars ($40,000,000.00) w ith
602	602	such construction commencing on or after July 1, 2005,
603	603	and before December 31, 2005, and which at least fifty
604	604	new full-time-equivalent employees, as certified by
605	605	the Oklahoma Employment Security Commission, are added
606	606	and maintained for a period of at l east thirty-six
607	607	(36) months as a direct result of the new or expanded
608	608	facility.
609	609	For purposes of this paragraph, the total cost of construction
610	610	shall include building and construction material and engineering and
611	611	architectural fees or charges directly assoc iated with the
612	612	construction of a new or expanded facility. The total cost of
613	613	construction shall not include attorney fees. For purposes of
614	614	subparagraph c of thi s paragraph, the total cost of construction
615	615	shall also include the cost of qualified depreciab le property as
616	616	defined in Section 2357.4 of this title and labor services p erformed
617	617	in the construction of an expanded facility. For the purpose of
618	618	subparagraph d of this paragraph, the total cost of construction
619	619	shall also include the cost of all parking , security and dock
620	620	structures or facilities necessary to manage, process o r secure
621	621	vehicles used to receive and/or distribute groceries through such a
622	622	facility. The employment requirement of this paragraph can be Req. No. 6128 Page 27
623	623	satisfied by the employment of a portion of the required number of
624	624	new full-time-equivalent employees at a manufactu ring or
625	625	distribution facility that is related to or supported by the new or
626	626	expanded manufacturing or distribution facility as long as both
627	627	facilities are owned by one person or bus iness entity. For purposes
628	628	of this section, "manufacturing facility " shall mean building and
629	629	land improvements used in manufacturing as defined in Section 1352
630	630	of this title and shall also mean building and land improvements
631	631	used for the purpose of packin g, repackaging, labeling or assembling
632	632	for distribution to market, products at least seventy percent (70%)
633	633	of which are made in Oklahoma by the same company but a t an off-
634	634	site, in-state manufacturing or distribution facility or facilities.
635	635	It shall not include a retail outlet unless the retail outlet is
636	636	operated in conjunction w ith and on the same site or premises as the
637	637	manufacturing facility. Up to ten percent (10%) of the square feet
638	638	of a manufacturing or distribution facility building may be devoted
639	639	to office space used to provide clerical support for the
640	640	manufacturing operation. Such ten percent (10%) may be in a
641	641	separate building as long as it is part of th e same contiguous tract
642	642	of property on which the manufacturing or distribution facility is
643	643	located. Only sales of tangible personal property made after June
644	644	1, 1988, shall be eligible for the exemption provided by this
645	645	paragraph. The exemption authorized pursuant to subparagraph d of
646	646	this paragraph shall only become effective when the governing b ody Req. No. 6128 Page 28
647	647	of the municipality in which the enterprise is located approves a
648	648	resolution expressing the municipality 's support for the
649	649	construction for such new or expand ed facility. Upon approval by
650	650	the municipality, the municipality shall forward a copy of such
651	651	resolution to the Oklahoma Tax Commission;
652	652	8. Sales of tangible personal property purchased and used by a
653	653	licensed radio or television station in broadcasting. This
654	654	exemption shall not apply unless such machinery and equipment is
655	655	used directly in the ma nufacturing process, is necessary for the
656	656	proper production of a broadcast signal or is such that the failure
657	657	of the machinery or equipment to operate would cause broadcasting to
658	658	cease. This exemption begins with the equipment used in producing
659	659	live programming or the electronic equipment directly behind the
660	660	satellite receiving dish or antenna, and ends with the transmission
661	661	of the broadcast signal from the broadc ast antenna system. For
662	662	purposes of this paragraph, "proper production" shall include, but
663	663	not be limited to, machinery or equipment required by Federal
664	664	Communications Commission rules and regulations;
665	665	9. Sales of tangible personal property purchased or used by a
666	666	licensed cable television operator in cablecasting. This exemption
667	667	shall not apply unless such machinery and equipment is used directly
668	668	in the manufacturing p rocess, is necessary for the proper production
669	669	of a cablecast signal or is such that th e failure of the machinery
670	670	or equipment to operate would cause cablecasting to cease. This Req. No. 6128 Page 29
671	671	exemption begins with the equipment used in producing local
672	672	programming or the electronic equipment behind the satellite
673	673	receiving dish, microwave tower or antenna, and ends with the
674	674	transmission of the signal from the cablecast head -end system. For
675	675	purposes of this paragraph, "proper production" shall include, but
676	676	not be limited to, machinery or equipment required by Federal
677	677	Communications Commission rules and regu lations;
678	678	10. Sales of packaging materials for use in packing, shipping
679	679	or delivering tangible personal property for sale when sold to a
680	680	producer of agricultural product s. This exemption shall not apply
681	681	to the sale of any packaging material which is ordin arily known as a
682	682	returnable container;
683	683	11. Sales of any pattern used in the process of manufa cturing
684	684	iron, steel or other metal castings. The exemption provided by thi s
685	685	paragraph shall be applicable irrespective of ownership of the
686	686	pattern provided that such pattern is used in the commercial
687	687	production of metal castings;
688	688	12. Deposits or other ch arges made and which are subsequently
689	689	refunded for returnable cartons, crat es, pallets, and containers
690	690	used to transport cement and cement products;
691	691	13. Beginning January 1, 1998, machinery, electricity, fuels,
692	692	explosives and materials, excluding chemical s, used in the mining of
693	693	coal in this state; Req. No. 6128 Page 30
694	694	14. Deposits, rent or other c harges made for returnable
695	695	cartons, crates, pallets, and containers used to transport m ushrooms
696	696	or mushroom products from a farm for resal e to the consumer or
697	697	processor;
698	698	15. Sales of tangible personal property and services used or
699	699	consumed in all phases o f the extraction and manufacturing of
700	700	crushed stone and sand, including but not limited to site
701	701	preparation, dredging, overburden removal, explosive placement and
702	702	detonation, onsite material hauling and/or transfer, material
703	703	washing, screening and/or crush ing, product weighing and site
704	704	reclamation; and
705	705	16. Sale, use or consumption of paper stock and other raw
706	706	materials which are manufactured into commercial printed material in
707	707	this state primarily for use and delivery outside this state. For
708	708	the purposes of this section, "commercial printed material " shall
709	709	include magazines, catalogs, retai l inserts and direct mail.
710	710	SECTION 3. This act shall become effective Novembe r 1, 2023.
711	711
712	712	59-1-6128 MAH 12/15/22