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ENGROSSED SENATE
BILL NO. 387 By: Rader of the Senate
and
Boatman of the House
An Act relating to sales tax exemption; amending 68
O.S. 2021, Section 1357, as amended by Section 1,
Chapter 206, O.S.L. 2022 (68 O.S. Su pp. 2022, Section
1357), which relates to exemptions; providing
exemption on certain purchases of services or
tangible personal property for certain nonprofit
entity; providing for refund on certain taxes paid;
updating statutory language; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1357, as
amended by Section 1, Chapter 206, O.S.L. 2022 (68 O.S. Supp. 2022,
Section 1357), is amended to read as follo ws:
Section 1357. Exemptions – General.
There are hereby specifically exempted fr om the tax levied by
the Oklahoma Sales Tax Code:
1. Transportation of school pupils to and from elementary
schools or high schools in motor or other vehicles;
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2. Transportation of persons where the fare of each person does
not exceed One Dollar ($1.00), or local transportatio n of persons
within the corporate limits of a municipality except by taxicabs;
3. Sales for resale to persons engaged in the bu siness of
reselling the articles purchased, whether within or without the
state, provided that such sales to residents of this s tate are made
to persons to whom sales tax permits have been issued as provided in
the Oklahoma Sales Tax Code. This exemption shall not apply to the
sales of articles made to persons holding permits when such persons
purchase items for their use and whic h 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 the tax levied by th e
Oklahoma Sales Tax Co de. 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 conduct
of its business. The sales tax shall apply to the purchase of motor
fuel or diesel fuel in Oklahoma by a common carrier by rail when
such motor fuel is purchased for fueling, within this state, of any
locomotive or other motorized flanged wheel equipment;
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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 programs relating to spo rting and
entertainment events, and sales of any advertising, to be displayed
at or in connection with a sporting event, via the Internet,
electronic display devices or through public address or broadcast
systems. The exemption authorized by this paragrap h 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 electronic media including
radio, public address o r 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, machinery , 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 granted and extended to the purchaser when
the items are to be used and in fact are used in the raising of
animal life as set out above. Each purchaser shall certify, in
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writing, on the invoice or sales ticket retained by the vendor that
the purchaser is regularly engaged in th e business of raising s uch
animal life and that the items purchased will be used only in such
business. The vendor shall certify to the Oklahoma Tax Co mmission
that the price of the items has been reduced to grant the full
benefit of the exemption. Viola tion hereof by the purc haser or
vendor shall be a misdemeanor;
8. Sale of natural or artificial gas and electricity, and
associated delivery or transmi ssion 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 135 7.6
of this title, sales of drugs sold pursuant to a prescription
written for the treatment of human bei ngs by a person license d 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 ch emical drums to any per son
who is not regularly engaged in the business of selling, reselling
or otherwise transferring empty, partially filled or filled
returnable oil drums;
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11. Sales of one-way utensils, paper napkins, paper cups,
disposable hot contai ners, and other one-way carry out materials to
a vendor of meals or beverages;
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 program as authorized by Sections 2011
through 2029 of Title 7 of the United States Code, as to that
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 requirem ent 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 equ ipment 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 provid es and
delivers prepared meals for home consumption to
elderly or homebound persons as part 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 R evenue Code, 26
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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 pe rsonal property or services to or
by organizations which are exempt from taxation
pursuant to the provisions o f 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 exemp t 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 other persons engaged in the
same or similar business shall not be exempt under
this paragraph.
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c. The exemption provided by this paragraph shall include
sales of tangible personal property or taxable
services consumed or incorporated in the construction
of a facility placed in service durin g calendar year
2023. The exemption shall include sales and taxable
services to the organization and to any person,
entity, contractor, or subcontractor with whom the
organization has duly entered into a construction
contract necessary for carrying out th e contract. For
sales tax paid on purchases that would otherwise be
exempt pursuant to this subparagraph but occurred
before the effective date of this act , the Tax
Commission shall make refunds to the purchaser s in the
full amount of the sales tax paid, as documented by
the purchaser and veri fied by the Tax Commission;
15. Sales of tangible personal property or services to
children’s homes which are located on church-owned property and are
operated by organization s exempt from taxation 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 telecommun ications service
and equipment for use in a qualified aircraft maintenance or
manufacturing facility. For purposes of this paragraph, “qualified
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aircraft maintenance or manufacturing facility” means a new or
expanding facility prima rily engaged in aircraf t 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 full -time-
equivalent employees, as certified by the Oklahoma Employment
Security Commission, upon 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 maintenance or
manufacturing facility shall e qual or exceed the sum of Two Millio n
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 define d in
paragraph 16 of this section. For purposes of this pa ragraph, sales
made to a contractor or subcontractor that has previously entered
into a contractual relationship with a qualified aircraft
maintenance or manufacturing facility for 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
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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 Communic ations
Commission,
b. Interstate and International “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 the
subscriber’s customer. The service is t ypically
marketed under the na me “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 or priority use of a
communications channel or group of channels between or
among termination points, regardless of the manner in
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which such channel or channels are connected, and
includes switching capacity , extension lines, stations
and any other associated 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:
(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 nonre curring charges including but
not limited to the installation, connection, change ,
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or initiation of telecommunications se rvices which are
not associated with a retail consumer 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 turnouts;
20. Sales of aircraft and aircraft parts provided such sales
occur at a qualified aircraft maintenance facility. As used in this
paragraph, “qualified aircraft maint enance facility” means a
facility operated by an air common carrier including one 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 thousa nd (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
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 15 04. Beginning July 1, 2012, sales of
machinery, tools, supplies, equipment , and related tangible p ersonal
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;
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21. Sales of machinery and equipment 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 service to an out-of-state buyer
or consumer, and
b. as defined under Industrial Gr oup Number 7374 of the
SIC Manual, latest version, which derive at least
eighty percent (80%) of th eir annual gross revenues
from the sale of a product or service to an out-of-
state buyer or consumer.
Eligibility for the exemption set out in this paragraph shall be
established, subject to review by the Tax Commission, by annually
filing an affidavit wit h the Tax Commission stating that the
facility so qualifies and such information as required by the Tax
Commission. For purposes of determining whether annu al gross
revenues are derived from sales to out-of-state buyers or consumers,
all sales to the fede ral government shall be considered to be to an
out-of-state buyer or consumer;
22. Sales of prosthetic devices to an individual for use by
such individual. For purposes of this paragraph, “prosthetic
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device” shall have the same meaning as provided in Sec tion 1357.6 of
this title, but shall not include corrective eye glasses, contact
lenses, or hearing aids;
23. Sales of tangible personal property or service s 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 televisi on program that will
serve as a pilot for or be a segment of an ongoing dramatic or
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
qualify for the exemption, the motion picture or television
production company shall file any documentat ion 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 serv ices to tax-
exempt independent nonprofit biomedical research foundations that
provide educational p rograms for Oklahoma science students and
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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 subsequently 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 transportat ion
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 i nterior modification, and paint, and
sales of services employed in the repair, modification, and
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, mot or 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;
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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 wh o 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 d ecedent, and
c. the exemption allowed by this paragraph shall not be
allowed for property that was not part of the
decedent’s estate;
31. Beginning January 1, 2004, sales of electricity and
associated delivery and transmission services, when sold exclusiv ely
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 devel opment 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
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electronically” means delivered to t he purchaser by means other than
tangible storage media;
33. Sales of modular dwelling units whe n 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 p urposes 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:
a. persons who are residents o f Oklahoma and have been
honorably discharged from active service in any branch
of the Armed Forces of the United States or Oklahoma
National Guard and who have been certified by the
United States Department of Ve terans Affairs or its
successor to be in re ceipt 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 disea se
contracted while in such active service and registered
with the veterans registry created by the Oklahoma
Department of Veterans Affairs; provided, that if th e
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veteran received the sales tax exemption prior to
November 1, 2020, he or she shall be requir ed to
register with the vet erans registry prior to July 1,
2023, in order to remain qualified, or
b. the surviving spouse of the person in subparagraph a
of this paragraph if the person is deceased and the
spouse has not remarried and the surviving spouse of a
person who is determined by the United States
Department of Defense or any branch of the United
States military to have died while in the line of duty
if the spouse has not remarried. Sales for the
benefit of an eligible person to a spouse of the
eligible person or to a member of the household in
which the eligible per son 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 purpose s of this paragraph.
The Oklahoma Tax Commission s hall issue a separate
exemption card to a s pouse 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 exemption authorized by this
paragraph shall not exceed Twenty-five Thousand
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Dollars ($25,000.00) per year per individual while the
disabled veteran is living. Sales qualifying for the
exemption authorized by this paragr aph 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 cla iming the
exemption authorized by this paragraph shall provide a
statement, executed under oat h, that the total sales
amounts for which the exemption is applicable h ave not
exceeded Twenty-five Thousand Dollars ($25,000.00) per
year per living disabled vet eran 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 exce ss of the
authorized amount shall be treated as a direct sales
tax liability and may be rec overed by the Tax
Commission in the same manner provided by law for
other taxes including penalty and interest. The Tax
Commission shall promulgate any rules necess ary to
implement the provisions of this paragraph, which
shall include rules providing for the disclosure of
information about persons eligible for the exemption
authorized in this par agraph to the Oklahoma
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Department of Veteran’s Veterans Affairs, as
authorized in Section 205 of this title;
35. Sales of electricity to the operator, specifically
designated by the Corporation Commission, of a spacing unit or lease
from which oil is produced or attempted to be produced usin g
enhanced recovery methods including, but not limited to, increased
pressure in a producing formation through the use of water or
saltwater if the electrical usage is associated with and necessary
for the operation of equipme nt required to inject or circ ulate
fluids in a producing formatio n for the purpose of forcing oil or
petroleum into a wellbore for eventual recovery and production f rom
the wellhead. In order to be eligible for the sales tax exempti on
authorized by this p aragraph, the total content o f oil recovered
after the use of enh anced recovery methods shall not exceed one
percent (1%) by volume. The exemption authorized by thi s paragraph
shall be applicable only to the state sales tax rate and shall not
be applicable to any county or municipal sales tax rate;
36. Sales of intras tate charter and tour bus transportation.
As used in this paragraph, “intrastate charter and tour b us
transportation” means the transportation of persons from one
location in this state to another location in this state in a motor
vehicle which has been c onstructed in such a manner that it may
lawfully carry more than eighteen persons, and which is ordi narily
used or rented to carry persons for compensation. Provid ed, this
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exemption shall not apply to regularly schedule d bus transportation
for the general public;
37. Sales of vitamins, minerals, and dietary supplements by a
licensed chiropractor to a p erson who is the patient of such
chiropractor at the physical loc ation where the chiropra ctor
provides chiropractic care or services to such patient. The
provisions of this paragraph shall not be applicable to any drug,
medicine, or substance for which a prescription by a licensed
physician is required;
38. Sales of goods, wares, merchandis e, tangible personal
property, machinery, and equipment to a web sea rch 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 pu rposes of this paragraph, “web
search portal” means an establishment classified under NAICS code
519130 which operates websites that use a search engine to generate
and maintain extensive databases of Internet addresses and content
in an easily searchable format;
39. Sales of tangible p ersonal 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 electric coo perative. For purpo ses of
this paragraph, sales made to a contractor or subcontractor th at has
previously entered into a contractual relationship with a rural
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electric cooperative for cons truction or expansion of a facility
shall be considered sales made to a rural electric cooperative;
40. Sales of tangib le personal property or services to a
business primarily engaged in the repair of consumer electronic
goods including, but not limited t o, cell phones, compact disc
players, personal computers, MP3 pla yers, digital devices for the
storage and retrieval of information through hard -wired or wireless
computer or Internet connections, if the devices are sold to the
business by the original man ufacturer of such devices and the
devices are repaired, refitted or refurbished for sa le by the entity
qualifying for the exemption authorized by this parag raph directly
to retail consumers or if the devices are sold to another business
entity for sale to retail consumers;
41. On or after July 1, 2019, and prior to Ju ly 1, 2024, sales
or leases of rolling stock when sold o r leased by the manufacturer,
regardless of whether the purchaser is a public services corporation
engaged in business as a common carri er of property or passengers by
railway, for use or consumption by a common carrier directly in the
rendition of public service. For purposes of this parag raph,
“rolling stock” means locomotives, autocars, and railroad cars and
“sales or leases” includes railroad car maintenance and retrofitting
of railroad cars for th eir further use only on the railways; and
42. Sales of gold, silver, platinum, palladium , or other
bullion items such as coins and bars and legal tender of any nation,
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which legal tender is s old 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 or 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 process ed or manufactured for
artistic use or as jewelry.
SECTION 2. This act shall become effec tive November 1, 2023.
Passed the Senate the 23rd day of March, 2023.
Presiding Officer of the Senate
Passed the House of Representatives the ____ day of __________,
2023.
Presiding Officer of the House
of Representatives