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STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
SENATE BILL 1300 By: Rader
AS INTRODUCED
An Act relating to sales tax; amending 68 O.S. 2021,
Section 1359, which relates to exemptions; expanding
exemption on tangible personal property consumed or
incorporated in a new facility to include certain
industries; modifying definition; updating statutory
language; updating statutory reference; and providing
an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLA HOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 135 9, is
amended to read as follows:
Section 1359. Exemptions - Manufacturing.
There are hereby specifically exempted from the tax levied by
Section 1350 et seq. of this title:
1. Sales of goods, wares, merchandise, tangible personal
property, machinery, and equipment to a manufacturer for use in a
manufacturing operation. Goods, wares, merchandise, property,
machinery, and equipment used in a nonmanufacturin g activity or
process as set forth in paragraph 14 of Section 1352 of this title
shall not be eligible for the exemption provided for in this
subsection paragraph by virtue of the activity or process being
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performed in conjunction with or integrated into a manufacturing
operation.
For the purposes of this paragraph, sales made to any person,
firm, or entity that has entered into a contractual relationship for
the construction and improvement of manufacturing goods, wares,
merchandise, property, machinery , and equipment for use in a
manufacturing operation shall be considered sales made to a
manufacturer which is defined or class ified in the North American
Industry Classification System (NAICS) Manual under Industry Group
No. 324110. Such purchase shall be evidenced by a copy of the sales
ticket or invoice to be retained by the vendor indicating tha t the
purchases are made for and on behalf of such manufacturer and set
out the name of such manufacturer as well as include a copy of the
Manufacturing Exemption Permit manufacturing exemption permit of the
manufacturer. Any person who wrongfully or erroneously certifies
that purchases are being made on behalf of s uch manufacturer or who
otherwise violates this paragraph shall be guilty of a misdemeanor
and upon conviction thereof sha ll be fined an amount equal to double
the amount of sales tax involved o r incarcerated for not more than
sixty (60) days or both;
2. Ethyl alcohol when sold and used for the purpose of blending
same with motor fuel on which motor fuel ta x is levied by Section
500.4 of this title;
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3. Sales of containers when sold to a person regular ly engaged
in the business of reselling empty or filled containers or when
purchased for the purpose of packaging raw prod ucts of farm, garden,
or orchard for resale to the cons umer or processor. This exemption
shall not apply to the sale of any co ntainers used more than once
and which are ordinarily known as returnable containers, except
returnable soft drink bottles and the cartons, crates, pallets, and
containers used to transport returnable soft drink bottles. Each
and every transfer of title or posse ssion of such returnable
containers in this state to an y person who is not regularly engaged
in the business of selling, r eselling or otherwise transferring
empty or filled cont ainers shall be taxable under this the Oklahoma
Sales Tax Code. Additionally, this exemption shall not apply to the
sale of labels or other materials delivered along with items sold
but which are not necessary or absolutely essential to the sale of
the sold merchandise;
4. Sales of or transfer s of title to or possession of any
containers, after June 30, 1987, used or to be used more than once
and which are ordinarily known as returnable containers and which do
or will contain beverages defined by paragrap hs 4 and 14 of Section
506 of Title 37 of the Oklahoma Sta tutes, or water for human
consumption and the cartons, crates, pallets, and containers used to
transport such returnable containers;
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5. Sale of tangible personal property when sold by the
manufacturer to a person who transports it to a s tate other than
Oklahoma this state for immediate and exclusive use in a state other
than Oklahoma this state. Provided, no sales at a ret ail outlet
shall qualify for the exemption under this paragraph;
6. Machinery, equipment, fuels and, chemicals, or other
materials incorporate d into and directly used or consumed in the
process of treatment to substantially reduce the volume or harmful
properties of hazardous waste at treatment facilities specifically
permitted pursuant to the Oklahoma Hazardous Waste Man agement Act
and operated at the place of waste generation, or facilities
approved by the Department of Enviro nmental Quality for the cleanu p
of a site of contamination. The term “hazardous” waste may include
low-level radioactive waste for the purp ose of this paragraph;
7. Except as otherwise provided by subsection I of Section 3658
of this title pursuant to which the exemption authorized by this
paragraph may not be claimed, sales of tangible personal property to
a qualified manufacturer, trade or service business, or distributor
to be consumed or incorporated in a new manufacturing , trade or
service business, or distribution facility or to expand an existing
manufacturing, trade or service business, or distribution facility.
For purposes of this paragraph, sales made to a contractor or
subcontractor that has previously entered into a contractual
relationship with a qualified manufacturer , trade or service
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business, or distributor for construction or expansion of a
manufacturing, trade or service business, or distribution facility
shall be considered sales made to a qualified manufacturer , trade or
service business, or distributor. For the purposes of this
paragraph, “qualified manufacturer or distributor” “qualified
manufacturer, trade or service business, or distributor” means:
a. any manufacturing or trade or service business
enterprise whose total cost of construction of a new
or expanded facility exceeds the sum of Five Million
Dollars ($5,000,000.00) and in w hich at least one
hundred (100) new full -time-equivalent employees, as
certified by the Oklahoma Employment Security
Commission, are added and maintained for a period of
at least thirty-six (36) months as a direct result of
the new or expanded facility,
b. any manufacturing or trade or service business
enterprise whose total cost of construction of a new
or expanded facility exceeds the sum of Ten Million
Dollars ($10,000,000.00) and the combined cost of
construction material, machinery, equipment , and other
tangible personal property exempt from sales tax under
the provisions of this paragraph exceeds the sum of
Fifty Million Dollars ($50,000,000.00) and in which at
least seventy-five (75) new full-time-equivalent
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employees, as certified by the Oklahoma Emp loyment
Security Commission, are added and maintained for a
period of at least thirty -six (36) months as a direct
result of the new or expanded facility,
c. any manufacturing or trade or service business
enterprise whose total cost of construction o f an
expanded facility exceeds the sum of Three Hundre d
Million Dollars ($300,000,000. 00) and in which the
manufacturer has and maintains an average employment
level of at least one thousand seven hundred fifty
(1,750) full-time-equivalent employees, as certified
by the Oklahoma Employment Security Commission, or
d. any enterprise primarily engaged in the general
wholesale distribution of groceries defined or
classified in the North American Industry
Classification Syste m (NAICS) Manual under Industry
Groups No. 4244 and 4245 and which has at least
seventy-five percent (75%) of its total sal es to in-
state customers or buyers and whose total cost of
construction of a new or expanded facility exceeds the
sum of Forty Million Dollars ($40,000,000.00) with
such construction commencing on or after July 1, 2005,
and before December 31, 2005, and which at least fifty
new full-time-equivalent employees, as certified by
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the Oklahoma Employment Security Commission, are added
and maintained for a period of at least thirty -six
(36) months as a direct result of the new or expanded
facility.
For purposes of this paragraph, the total cost of construction
shall include building and construction material and engineering and
architectural fees or charges directly associated with the
construction of a new or expanded facility. The total cost o f
construction shall not include attorney fees. For purposes of
subparagraph c of this paragraph, the total cost of construction
shall also include the cost of qualified depreciable property as
defined in Section 2357.4 of this title and labor service s performed
in the construction of an expanded facility. For the purpose of
subparagraph d of this paragraph, the total cost of construction
shall also include the cost of all parking, security , and dock
structures or facilities necessary to manage, process , or secure
vehicles used to receive and/or distribute groceries through such a
facility. The employment requirement of this paragraph can be
satisfied by the employment of a portion of the require d number of
new full-time-equivalent employees at a manu facturing, trade or
service business, or distribution facility that is related to or
supported by the new or expanded manufacturing , trade or service
business, or distribution facility as long as both facilities are
owned by one person or business entity. For purposes of this
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section, “manufacturing facility ” and “trade or service business
facility” shall mean building and land improvements used in
manufacturing as defined in Section 1352 of this titl e defined or
classified in the NAICS Manual under Sector Nos. 31 through 33, 42,
48-49, 54, and 56 and shall also mean building and land improvements
used for the purpose of packing, repackaging, la beling, or
assembling for distribution to market, products at least seventy
percent (70%) of which are made in Oklahoma in this state by the
same company but at an off -site, in-state manufacturing, trade or
service business, or distribution facility or facilit ies. It shall
not include a retail outlet unless the retail outlet is operated in
conjunction with and on the same site or premises as the
manufacturing or trade or service business facility. Up to ten
percent (10%) of the square feet of a manufacturing or distribution
facility building may be devoted to of fice space used to provide
clerical support for the manufacturing operation. Such ten percent
(10%) may be in a separate building as long as it is par t of the
same contiguous tract of property on whic h the manufacturing or
distribution facility is located . Only sales of tangible personal
property made after June 1, 1988, shall be e ligible for the
exemption provided by this paragraph. The exemption authorized
pursuant to subparagraph d of this paragraph shall only become
effective when the governing body of the municipality in which the
enterprise is located approves a resolution expressing the
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municipality’s support for the construction for such new or expanded
facility. Upon approval by the municipa lity, the municipality shall
forward a copy of such res olution to the Oklahoma Tax Commission;
8. Sales of tangible personal property purchased and used by a
licensed radio or television station in broadcasting. This
exemption shall not apply unless such machinery and equipment is
used directly in the manufa cturing process, is necessary for the
proper production of a broadcast signal , or is such that the failure
of the machinery or equipment to operate would cause broadcasting to
cease. This exemption beg ins with the equipment used in producing
live programming or the electronic equipment directly behind the
satellite receiving dish or antenna, and ends with the transmission
of the broadcast signal from the broadcast antenna system. For
purposes of this paragraph, “proper production” shall include, but
not be limited to, machinery or equipment required by Federal
Communications Commis sion rules and regulations;
9. Sales of tangible personal property purchased or used by a
licensed cable television operato r in cablecasting. This exemption
shall not apply unless such machinery and equipment is used directly
in the manufacturing process, is necessary for the proper production
of a cablecast signal , or is such that the failure of the machinery
or equipment to operate would cause cablecast ing to cease. This
exemption begins with the equipment used in producing local
programming or the electronic equipment behind the satellite
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receiving dish, microwave tower , or antenna, and ends with the
transmission of the sign al from the cablecast head -end system. For
purposes of this paragraph, “proper production” shall include, but
not be limited to, m achinery or equipment required by Federal
Communications Commission rules and regulations;
10. Sales of packaging materials for use in packing, shipping ,
or delivering tangible personal property for sale when sold to a
producer of agricultural products. This exemption shall not apply
to the sale of any packaging material w hich is ordinarily known as a
returnable container;
11. Sales of any pattern used in the process of manufa cturing
iron, steel, or other metal castings. The exemption provided by
this paragraph shall be applicable irrespective of ownership of the
pattern provided that such pattern is used in the commercial
production of metal castings;
12. Deposits or other c harges made and which are subsequently
refunded for returnable cartons, crates, pallets, and containers
used to transport cement and cement products;
13. Beginning January 1, 1998, machinery, electricity , fuels,
explosives, and materials, excluding chemic als, used in the mining
of coal in this state;
14. Deposits, rent, or other charges made for returnable
cartons, crates, pallets, and containers used to transport mushrooms
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or mushroom products from a farm for resal e to the consumer or
processor;
15. Sales of tangible person al property and services used or
consumed in all phases of the extraction and manufacturing of
crushed stone and sand, including but not limited to site
preparation, dredging, overbur den removal, explosive placement and
detonation, onsite material hauling and/or transfer, m aterial
washing, screening and/or crushing, product weighing , and site
reclamation; and
16. Sale, use, or consumption of paper stock and other raw
materials which are manufactured into commercial printed material in
this state primarily fo r use and delivery outside this state. For
the purposes of this section, “commercial printed material ” shall
include magazines, catalogs, retail inserts , and direct mail.
SECTION 2. This act shall become effective N ovember 1, 2024.
59-2-2471 QD 12/12/2023 5:52:09 PM