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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 2894 By: Townley
COMMITTEE SUBSTITUTE
An Act relating to revenue and taxation; amending 68
O.S. 2021, Section 2397, as amended by Section 2,
Chapter 30, 1st Extraordinary Session, O.S.L. 2023
(68 O.S. Supp. 2024, Section 2397), which relates to
Oklahoma Tourism Development Act inducements;
increasing the cap on cumulative inducements per
year; extending sunset; and providing an effective
date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2397, as
amended by Section 2, Chapter 30, 1st Extraordinary Session, O.S.L.
2023 (68 O.S. Supp. 2024, Section 2397), is amended to read as
follows:
Section 2397. A. Upon receiving notification from the
Executive Director of the Oklahoma Department of Commerce that an
approved company has entered into a tourism project agreement and is
entitled to the inducements provid ed by the Oklahoma Tourism
Development Act, the Oklahoma Tax Commission shall provide the
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approved company with forms and instructions as necessary to claim
or receive or pass-through those inducements.
B. An approved company whose agreement provides that it shall
expend approved costs of more than Five Hundred Thousand Dollars
($500,000.00) for a tourism attraction project but less than One
Million Dollars ($1,000,000.00) shall be entitled to a sales tax
credit if the company certifies to the Tax Commissi on that it has
expended at least the minimum amount in approved costs, and the
Executive Director certifies that the approved company is in
compliance with the Oklahoma Tourism Development Act. The Tax
Commission shall then issue a tax credit memorandum t o the approved
company granting a sales tax credit in the amount of up to ten
percent (10%) of the approved costs, but limited to the percent of
the approved costs that will result in the project being revenue -
neutral to this state as determined by the Okl ahoma Department of
Commerce. Subsequent requests for credit for additional certified
approved costs in excess of the minimum amount for each project as
listed in this subsection but less than One Million Dollars
($1,000,000.00) shall result in a sales ta x credit in the amount of
up to ten percent (10%) of the approved costs, but limited to the
percent of the approved costs that will result in the project being
revenue-neutral to this state as determined by the Oklahoma
Department of Commerce. Sales tax c redits allowed pursuant to the
provisions of the Oklahoma Tourism Development Act shall not be
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transferable or assignable; provided that, with respect to a tourism
attraction project that is an Entertainment District, the approved
company can elect to pass -through all or a portion of the sales tax
credit to one or more Entertainment District Tenant Parties. The
approved company and the Entertainment District Tenant Party shall
jointly file a copy of the written credit pass -through agreement
with the Oklahoma Tax Commission within thirty (30) days of the
effective date of the agreement. Such filing of the agreement with
the Oklahoma Tax Commission shall perfect such agreement. The
written agreement shall contain the name, address and taxpayer
identification number of the parties to the agreement, the amount of
credit being passed-through, the month and year the credit was
originally allowed to the approved company, the month and tax year
or years for which the credit may be claimed, and a representation
by the approved company that the approved company has neither
claimed for its own behalf nor conveyed such credits to any other
Entertainment District Tenant Party. The Tax Commission shall
develop a standard form for use by an approved company and an
Entertainment District Tenant Party demonstrating eligibility for
the Entertainment District Tenant Party to utilize the sales tax
credit. The Tax Commission shall develop a system to record and
track the pass-through of the sales tax credit and certify the
ownership of the sales tax credit and may promulgate rules to permit
verification of the validity and timeliness of a sales tax credit
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claimed upon a sales tax return pursuant to this subsection but
shall not promulgate any rules which unduly restrict or hind er the
pass-through of such sales tax credit to an Entertainment District
Tenant Party.
An approved company whose agreement provides that it shall
expend approved costs in excess of One Million Dollars
($1,000,000.00) shall be entitled to a sales tax credi t if the
company certifies to the Tax Commission that it has expended at
least One Million Dollars ($1,000,000.00) in approved costs and the
Executive Director certifies that the approved company is in
compliance with the Oklahoma Tourism Development Act. The Tax
Commission shall then issue a tax credit memorandum to the approved
company granting a sales tax credit in the amount of up to twenty -
five percent (25%) of the approved costs, but limited to the percent
of the approved costs that will result in th e project being revenue-
neutral to this state as determined by the Oklahoma Department of
Commerce. The credit on all subsequent additional certified
approved costs shall be in the amount of up to twenty -five percent
(25%) of the costs, but limited to the percent of the approved costs
that will result in the project being revenue -neutral to this state
as determined by the Oklahoma Department of Commerce. For a tourism
attraction project that is an Entertainment District, an approved
company may elect to r eceive an incentive payment based on sales tax
collections of Entertainment District Tenant Parties rather than a
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sales tax credit. The incentive payment shall be in the amount of
up to twenty-five percent (25%) of the approved costs but limited to
the percent of the approved costs that will result in the project
being revenue-neutral to this state as determined by the Oklahoma
Department of Commerce; provided that, (A) in no event shall the
incentive payments exceed the increased state sales tax liability of
the approved company and the Entertainment District Tenant Parties
that is actually received by the Tax Commission, and (B) the
approved company shall be entitled to receive only ten percent (10%)
of the incentive payment amount during each calendar ye ar. The Tax
Commission shall issue an incentive payment memorandum to the
approved company granting a right to receive an incentive payment
from the Tax Commission in the amount of up to twenty -five percent
(25%) of the approved costs but limited to the p ercent of the
approved costs that will result in the project being revenue -neutral
to this state as determined by the Oklahoma Department of Commerce.
As soon as practicable after the end of each calendar year during
the term of the agreement, the approve d company shall file a claim
for the incentive payment with the Tax Commission, and the Tax
Commission shall be responsible for ensuring that the amount of the
incentive payment claimed does not exceed the increased state sales
tax liability of the approve d company and the Entertainment District
Tenant Parties that has been actually received by the Tax
Commission, which may include accessing the Oklahoma sales tax
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returns of the Entertainment District Tenant Parties as permitted by
this section.
The cumulative inducements provided pursuant to the Oklahoma
Tourism Development Act shall not exceed Thirty Million Dollars
($30,000,000.00) per year.
The Tax Commission shall require proof of expenditures prior to
issuing a tax credit memorandum or incentive paymen t memorandum to
the approved company which may be satisfied by a report from an
independent certified public accountant. Additional credit
memoranda or incentive memoranda may be issued as the approved
company certifies additional expenditures of approved costs.
No tax credit memorandum or incentive payment memorandum shall
be issued for any approved costs expended after the expiration of
three (3) years from the date the agreement was signed by the
Executive Director and the approved company. However, th e Executive
Director, with the advice and consent of the Tax Commission, may
authorize inducements for approved costs expended up to five (5)
years from the date the agreement was signed if the Executive
Director determines that the failure to complete the tourism
attraction project within three (3) years resulted from:
1. Unanticipated and unavoidable delay in the construction of
the tourism attraction;
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2. An original completion date for the tourism attraction, as
originally planned, which will be more t han three (3) years from the
date construction began; or
3. A change in business ownership or business structure
resulting from a merger or acquisition.
C. A sales tax credit allowed pursuant to the provisions of
this section may be used to offset a port ion of the reported state
sales tax liability of the approved company or an Entertainment
District Tenant Party, if applicable, for all sales tax reporting
periods following the issuance of the credit memorandum subject to
the following limitations:
1. Only increased state sales tax liability may be offset by
the issued credit;
2. An approved company whose agreement provides that it shall
expend approved costs in excess of One Million Dollars
($1,000,000.00) or an Entertainment District Party, if applicab le,
shall be entitled to use only ten percent (10%) of the amount of
each issued credit to offset increased state sales tax liability
during each calendar year, plus the amount of any unused credit
carried forward from a prior calendar year, and an approve d company
whose agreement provides that it shall expend approved costs of more
than the minimum amount for each project as listed in this
subsection but less than One Million Dollars ($1,000,000.00) shall
be entitled to use only twenty percent (20%) of the amount of each
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issued credit to offset increased state sales tax liability during
each calendar year, plus the amount of any unused credit carried
forward from a prior calendar year; and
3. All issued credit memoranda or incentive payment memoranda
shall expire at the end of the month following the expiration of the
agreement as provided in Section 2396 of this title.
The approved company or an Entertainment District Tenant Party,
if applicable, shall have no obligation to refund or otherwise
return any amount of this inducement to the person from whom the
sales tax was collected.
D. The Tax Commission shall promulgate rules as are necessary
for the proper administration of the Oklahoma Tourism Development
Act. The Tax Commission may also develop forms a nd instructions as
necessary for an approved company or Entertainment District Tenant
Party, if applicable, to claim or receive or pass -through the
inducements provided by the Oklahoma Tourism Development Act.
E. The Tax Commission shall have the authorit y to obtain any
information necessary from or regarding the approved company or an
Entertainment District Tenant Party, if applicable, and the
Executive Director to verify that approved companies or an
Entertainment District Tenant Party, if applicable, ha ve received
the proper amounts of inducements as authorized by the Oklahoma
Tourism Development Act. The Oklahoma Tax Commission shall demand
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the repayment of any inducements taken or received in excess of the
inducements allowed by the Oklahoma Tourism D evelopment Act.
F. No sales tax credit or incentive payment right authorized by
this section shall be granted on or after January 1, 2026 January 1,
2032. Notwithstanding the foregoing, an approved company that has
entered into a tourism attraction proje ct agreement with the
Oklahoma Department of Commerce pursuant to Section 2396 of this
title prior to January 1, 2026, January 1, 2032, shall continue to
be entitled to claim or receive any inducements authorized by this
section as contemplated by the tour ism project agreement.
G. All currently approved tourism project agreements executed
by the Oklahoma Tourism and Recreation Department are hereby
transferred to the Oklahoma Department of Commerce upon November 1,
2021.
H. On November 1, 2021, all admini strative rules promulgated by
the Oklahoma Tourism and Recreation Department regarding the
Oklahoma Tourism Development Act shall be transferred to and become
a part of the administrative rules of the Oklahoma Department of
Commerce. The Office of Adminis trative Rules in the Office of the
Secretary of State shall provide adequate notice in the Oklahoma
Register of the transferred rules and shall place the transferred
rules under the Administrative Code section of the Oklahoma
Department of Commerce. On No vember 1, 2021, any amendment, repeal,
or addition to the transferred rules shall be under the jurisdiction
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of the Oklahoma Department of Commerce, who shall have the authority
to enact rules in order to carry out the provisions of the Oklahoma
Tourism Development Act.
SECTION 2. This act shall become effective November 1, 2025.
60-1-13255 JM 03/06/25