Oklahoma, often hailed as the “Sooner State” for its rich history of pioneers and land runs, is not just famous for its sweeping plains and vibrant Native American culture but also for its dynamic business landscape. Yet, mastering the complexities of Oklahoma sales tax demands a nuanced understanding of its specific regulations.
This guide breaks down everything you need to know about Oklahoma’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Oklahoma’s sales tax with confidence and ease.
Sales Tax Nexus in Oklahoma
When a business creates either a physical or economic nexus, it is required to collect sales tax in Oklahoma.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Oklahoma include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus: You could trigger a physical nexus in Oklahoma if you have affiliates, whether they operate online or in-person, who facilitate the delivery of your products to customers in the state.
- Presence at Trade Show: Sales tax must be collected at Oklahoma trade shows, even for peddlers and solicitors without a fixed business location or Oklahoma sales tax permit. Resold items are also taxable.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Beginning November 1, 2019, the threshold for economic nexus in Oklahoma is $100,000 in gross revenue in the prior 12 months.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for sales tax nexus requirements in Oklahoma.
Oklahoma Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Oklahoma.
Tangible Products
Almost all goods are taxable in Oklahoma, including:
- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Home Goods
- Feminine Hygiene Products – Oklahoma has not yet repealed the Tampon Tax and is still taxable in the state.
Diapers
The goods that are exempt from sales tax are:
- Groceries – Oklahoma has officially eliminated the state sales tax on food and groceries as of August 29, 2024. However, some items, such as prepared food, dietary supplements, alcoholic beverages, and tobacco products, will still be subject to state taxes. For a detailed breakdown of what’s exempt and what’s not, check out the comprehensive list here. Although the state sales tax has been eliminated, local taxes remain unaffected. Residents may still face higher grocery taxes in the future if counties or cities decide to increase their local sales tax rates. However, under the new law, changes will not take effect until after July 1, 2025.
- Agricultural products used for production
Services
In Oklahoma, the majority of service-based transactions, such as professional services and cleaning services, are not subject to sales tax unless they are directly related to the sale of tangible personal property (i.e., products). For example, when you buy a computer and pay extra for setup services like software installation, the entire purchase, including the service fee, is subject to sales tax since the service is necessary for completing the sale of the computer.
However, there are specific situations where certain services are taxable:
- Advertising services, unless stated that it is specifically exempt
- Admissions, dues, or fees to clubs, amusement venues, sports events, or for using facilities related to entertainment, recreation, or athletics.
- Catering services
- Computer services involving prewritten programs
- Fabrication services
- Florist services
- Hotel accommodation
- Tanning salons
- Telecommunications services sourced to Oklahoma
Software-As-A-Service (SaaS)/Digital Products
SaaS is
not taxable in the state of Oklahoma.
Digital products (i.e., ebooks, downloadable video content, mobile apps) are also
not taxable.
Shipping/Handling
Shipping and handling charges in the state of Oklahoma are not taxable if they are separately stated.
Sales Tax Permits and Licenses in Oklahoma
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Oklahoma, the next important step is getting your Oklahoma Seller’s Permit, also known as a sales tax permit.
Seller’s Permit
You can register for an Oklahoma sales tax permit online at the Oklahoma Tax Commission’s Online Taxpayer Access Point (OKTAP).
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
Registration fee
There is a fee of
$20 plus a handling fee to register for a sales tax permit.
Renewal
In Oklahoma, you must renew your sales tax permit every three years.
Resale Certificate
A
resale certificate is a document that allows businesses to buy products without paying sales tax on them, as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In Oklahoma, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
You can fill out the
Streamlined Sales and Use Tax Certificate of Exemption after you receive your sales tax permit if you would like to get
sales tax exemption for multiple states simultaneously. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The
Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. Oklahoma has been a party to this program since October 1, 2005, meaning it follows the uniform rules and definitions established by SST.
Check with the
Oklahoma Tax Commission for the most current information on Oklahoma’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in Oklahoma
Sales Tax Computation
In Oklahoma, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Use TaxHero’s Oklahoma Sales Tax Calculator to compute for sales tax.
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Pennsylvania and sells to a customer in Oklahoma City, OK, with a ZIP code of 73008. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
Oklahoma |
4.500% |
| County: |
Oklahoma |
0.000% |
| District: |
Fifth |
0.000% |
| City: |
Oklahoma |
4.125% |
| Combined Sales Tax Rate = |
8.625% |
|
Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax.
Oklahoma is a destination-based state, meaning sales tax is determined based on the seller’s location. That means for an Oklahoma-based seller, sales tax is generally based on the location of the seller when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Pennsylvania to a customer in Oklahoma City, Oklahoma, where you have nexus, you’d apply Oklahoma City’s sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in Oklahoma
The next step after collection is filing and remitting your Oklahoma sales tax returns. Filing and remittance can vary in frequency, typically monthly or semi-annually.
- Monthly Filing: Businesses with a sales tax liability of more than $500 are required to file monthly
- Semi-Annual Filing: Businesses with a sales tax liability of less than $50 are required to file annually
It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with Oklahoma sales tax regulations.
Due Dates
In Oklahoma, the due date falls on the
20th day of the following month
. For instance, sales tax collected in January is due by February 20th for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of April, and the May 20th deadline falls on a holiday or weekend, you’ll have until May 21st, the following business day, to submit.
Filing Sales Tax Returns
To file your sales tax return for Oklahoma, a few options are available:
- File online through the OKTAP website portal.
- File by mail – Use Form STS-20002-A and send it by mail to the Oklahoma Tax Commission
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales taxes on time as an incentive to process them promptly. However, Oklahoma does not offer a discount.
Sales Tax Holiday
For 2024, the planned sales tax holidays in Oklahoma are:
- Back-to-School (August 2-4, 2024) – Clothing and footwear costing $100 and less are tax-exempt.
Oklahoma Sales Tax Penalties
Like in most states, sales tax is a big part of how Oklahoma generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in Oklahoma:
- Civil penalties amounting to 25% of the total sales tax due or $50, or greater of 10% of the total sales tax due or $50;
- On the criminal side, offenses can be classified as either misdemeanors or felonies, depending on the severity and specific circumstances.
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