Fill and Sign the Bc Hydro Underground Declaration Form

OAC 710:65 OKLAHOMA TAX COMMISSION CHAPTER 65. SALES AND USE TAX Subchapter Section 1. General Provisions............................................................................................................710:65-1-1 3. Reports and Returns; Payments and Penalties; Records .................................................710:65-3-1 5. Audit and Assessment .....................................................................................................710:65-5-1 7. Duties and Liabilities........................................................................................................710:65-7-1 9. Permits...............................................................................................................................710:65-9-1 11. Credits and Refunds........................................................................................................710:65-11-1 13. Sales and Use Tax Exemptions......................................................................................710:65-13-1 15. Interstate Commerce.......................................................................................................710:65-15-1 17. City and County Sales Taxes (Revoked) ......................................................................710:65-17-1 18. Sourcing Pursuant to the Streamlined Sales and Use Tax Administration Act..................................................................................................710:65-18-1 19. Specific Applications and Examples .............................................................................710:65-19-1 21. Use Tax ...........................................................................................................................710:65-21-1 [Authority: 68 O.S. §§ 203, 1354(20), 1354.6, 1354.18, 1357.4, 1357.5, 1357.8, 1359.1, 1364(D), 1366, 1404.1(E), 1404.3(D), 1404.4(E), 1404.5(D), 1407, 54004, and 54005] [Source: Codified 12-30-91] OAC 710:65 OKLAHOMA TAX COMMISSION CHAPTER 65. SALES AND USE TAX SUBCHAPTER 1. GENERAL PROVISIONS Section 710:65-1-1. 710:65-1-2. 710:65-1-3. 710:65-1-4. 710:65-1-5. 710:65-1-6. 710:65-1-7. 710:65-1-8. 710:65-1-9. 710:65-1-10. 710:65-1-11. Purpose ..........................................................................................................................1 Definitions.....................................................................................................................1 Computation of sales and use taxes to be collected and remitted...............................4 Presumption of taxability..............................................................................................4 Unlawful to advertise that sales tax will be absorbed .................................................4 "Tax-included" prices.................................................................................................4 Consumer/user defined; specific applications .............................................................5 Established place of business; maintaining a place of business....................................................................................6 Gross receipts, gross proceeds, and sales price ...........................................................7 Initial use of property....................................................................................................9 Rentals and leases of tangible personal property.........................................................9 SUBCHAPTER 3. REPORTS AND RETURNS; PAYMENTS AND PENALTIES; RECORDS PART 1. GENERAL PROVISIONS Section 710:65-3-1. 710:65-3-2. 710:65-3-3. 710:65-3-4. 710:65-3-5. 710:65-3-6. 710:65-3-7. 710:65-3-8. 710:65-3-9. 710:65-3-10. Reports, payments, and penalties ...............................................................................10 Timely mailing treated as timely filing and paying...................................................12 Due date that falls on Saturday, Sunday or holiday ..................................................13 Contents of monthly sales report................................................................................13 Signing of tax returns..................................................................................................15 Verification of sales tax returns..................................................................................15 Registrants must file a return for every reporting period ..........................................15 Change in tax period...................................................................................................15 Final sales tax return when business is discontinued ................................................16 Election to participate in electronic funds transfer and electronic data interchange programs..................................................................16 PART 3. RECORDS AND RECORDKEEPING Section 710:65-3-30. 710:65-3-31. 710:65-3-32. Books and records required; presumption of taxability; burden of proof............................................................................................................16 What records constitute minimum requirement ........................................................17 Authorization to destroy records sooner i OAC 710:65 710:65-3-33. 710:65-3-34. OKLAHOMA TAX COMMISSION than would otherwise be permissible .........................................................................18 Records required to support deductions from gross receipts for purposes of calculating sales tax ..........................................................................19 Administration of electronically-claimed exemptions ..............................................19 SUBCHAPTER 5. AUDIT AND ASSESSMENT Section 710:65-5-1. 710:65-5-2. 710:65-5-3. 710:65-5-4. 710:65-5-5. Sales/use tax audits and auditors................................................................................19 Sales/use tax audits of sample periods.......................................................................20 Out-of-state tax audits (Revoked) ........................................................................20 Examination of tax return; adjustments, notices, and demands................................20 Issuance of sales/use tax assessments ........................................................................21 SUBCHAPTER 7. DUTIES AND LIABILITIES Section 710:65-7-1. 710:65-7-2. 710:65-7-3. 710:65-7-4. 710:65-7-5. 710:65-7-6. 710:65-7-7. 710:65-7-8. 710:65-7-9. 710:65-7-10. 710:65-7-11. 710:65-7-12. 710:65-7-13. 710:65-7-14. 710:65-7-15. 710:65-7-16. Taxpayer's duty to obtain sales tax return form.........................................................22 Vendor responsibility for collection of sales tax; treatment of sales tax by vendor.................................................................................22 Personal liability for sales tax due; corporate officers, partners, individuals....................................................................................................22 Sales tax responsibility and liability of trustees, receivers, executors or administrators........................................................................23 Vendor's responsibility to obtain sales tax permits (Revoked) ................................23 Vendors' relief from liability and duty to collect sales tax .......................................................................................................23 Treatment of federal luxury tax for sales/use tax purposes (Revoked)....................................................................................................24 Vendors' responsibility - sales for resale....................................................................24 Vendors' responsibility - sales to a manufacturer ......................................................24 Vendors' responsibility - sales made pursuant to direct payment permit ...........................................................................................................25 Vendors' responsibility - sales for agricultural purposes...........................................25 Vendors' responsibility - sales to persons raising animals for resale......................................................................................................................25 Vendors' responsibility - sales to contractors ............................................................26 Vendors' responsibility - sales of trailers ...................................................................27 Vendors' responsibility - sales to entities with other specific statutory exemptions............................................................................27 Vendors' reliance on erroneous information..............................................................29 ii OAC 710:65 OKLAHOMA TAX COMMISSION SUBCHAPTER 9. PERMITS Section 710:65-9-1. 710:65-9-2. 710:65-9-3. 710:65-9-4. 710:65-9-5. 710:65-9-6. 710:65-9-7. 710:65-9-8. 710:65-9-9. 710:65-9-10. Obtaining a sales tax permit to do business ...............................................................29 Commission may require security from vendor ........................................................31 Change in ownership of business; new sales tax permit ...........................................31 Denial of sales tax permit to a successor; successor liability....................................32 Previously revoked or suspended sales tax permits ..................................................32 Subscription to sales tax permit list............................................................................33 Information available to the prospective purchaser of an existing business ................................................................................................33 Special event permits and reporting...........................................................................33 Administration of the Streamlined Sales and Use Tax Agreement online database............................................................................................................36 Direct payment permits (DPP) ...................................................................................36 SUBCHAPTER 11. CREDITS AND REFUNDS Section 710:65-11-1. 710:65-11-2. Sales tax credits and refunds ......................................................................................39 Sales tax deduction for bad debt.................................................................................40 SUBCHAPTER 13. SALES AND USE TAX EXEMPTIONS PART 1. ADVERTISING IN MEDIA Section 710:65-13-1. Exemption for advertising through the internet, newspapers, periodicals, billboards, and electronic broadcast media............................................41 PART 3. AGRICULTURAL TRANSACTIONS Section 710:65-13-15. "Agricultural production" defined; taxable and exempt transactions.................................................................................41 710:65-13-16. Sales and use tax exemption for salt and salt blocks sold for consumption by livestock and poultry..........................................................46 710:65-13-17. Certification required for sales tax exemption for certain agricultural transactions............................................................................46 710:65-13-18. Proof of agricultural tax exemption ...........................................................................47 710:65-13-19. Sales at or from the farm ............................................................................................48 iii OAC 710:65 OKLAHOMA TAX COMMISSION PART 5. ITEMS SUBJECT TO OTHER TAXES Section 710:65-13-30. Exemption for the sale of tangible personal property subject to other taxes................................................................................................................49 710:65-13-31. Exemption for motor vehicle leases...........................................................................50 PART 7. CHURCHES, AND CHARITABLE, CIVIC, AND SOCIAL ORGANIZATIONS AND ACTIVITIES Section 710:65-13-33. Children's homes and youth camps............................................................................50 710:65-13-34. Exemption for qualified museums (Renumbered to 710:65-13-334) ....................50 710:65-13-35. Limited exemption for organizations which sponsor and promote educational, charitable, and cultural events for disadvantaged children (Renumbered to 710:65-13-335) .....................50 710:65-13-36. Exemption for Disabled American Veterans, Department of Oklahoma, Inc. and subordinate chapters (Renumbered to 710:65-13-336) ...............................................................51 710:65-13-37. Qualifications for "Meals on Wheels" exemption (Renumbered to 710:65-13-337).......................................................................................................51 710:65-13-38. Qualifications for "Older Americans Act" exemption (Renumbered to 710:65-13-338)......................................................................................................51 710:65-13-39. Qualifications for "Collection and Distribution Organization" exemption (Renumbered to 710:65-13-339) ...........................................................51 710:65-13-40. Sales by churches; sales to churches..........................................................................51 710:65-13-41. Exemption for Council organizations or similar state supervisory organizations of Boy Scouts of America, Girl Scouts of U.S.A., and the Campfire Girls and Boys (Renumbered to 710:65-13-341).............................................................52 710:65-13-42. Qualifications for "Juvenile Rehabilitation" exemption (Renumbered to 710:65-13-342) ...........................................................52 710:65-13-43. (Revoked and Renumbered to 710:65-13-174) .....................................................52 710:65-13-44. (Revoked and Renumbered to 710:65-13-175) .....................................................52 710:65-13-45. (Renumbered to 710-65-13-55) ...............................................................................52 710:65-13-46. Exemption for organizations supported or sponsored by churches (Revoked).............................................................................52 710:65-13-47. Exemption for sales by 501(c)(3) organizations on behalf of churches ...................52 PART 9. COMPUTERS; DATA PROCESSING; TELECOMMUNICATIONS Section 710:65-13-50. Sales and use tax exemption for qualified purchasers of computers, data processing and telecommunication services iv OAC 710:65 710:65-13-51. 710:65-13-52. 710:65-13-53. 710:65-13-54. OKLAHOMA TAX COMMISSION and equipment (Revoked)..........................................................................................53 Exemption for sales of computers, data processing, telephonic and certain related equipment and services to a qualified aircraft maintenance or manufacturing facility ...................................53 Sales of computers, data processing equipment, related peripherals, and telephone, telegraph, or telecommunications service and equipment to a qualified purchaser primarily engaged in computer services and data processing or research and development.....................................................57 Limitation on credits...................................................................................................61 Exemption for sales of machinery and equipment purchased and used by persons and establishments primarily engaged in computer services and data processing..................................................................61 PART 10. COAL Section 710:65-13-55. Exemption for coal mining.........................................................................................63 710:65-13-56. Exemption for certain leases of rail transportation to haul coal................................64 PART 11. CONTAINERS Section 710:65-13-60. Exemption for containers............................................................................................64 PART 13. CONTRACTORS REFUND; CHANGE OF RATES Section 710:65-13-70. Refund to contractor due to change of sales tax rate.................................................65 PART 14. ESTATE SALES Section 710:65-13-78. Exemption for certain estate sales..............................................................................66 PART 15. HAZARDOUS WASTES Section 710:65-13-80. Exemption for purchases to reduce hazardous waste................................................66 PART 17. EXPORT Section 710:65-13-90. Sales tax exemption on sales for export.....................................................................68 PART 19. COUNTY, DISTRICT AND STATE FAIRS Section 710:65-13-100. Fairs, circuses, carnivals, and other public exhibitions; sales tax exemption for county, district and state fair authorities; purchases by contractors .......................................................................68 v OAC 710:65 OKLAHOMA TAX COMMISSION PART 21. FOOD STAMPS Section 710:65-13-110. Sales tax exemption for food stamps .......................................................................70 PART 23. GAS AND ELECTRICITY Section 710:65-13-120. Sales tax exemption for residential use....................................................................70 710:65-13-121. (Reserved) .................................................................................................................70 710:65-13-122. Exemption for sales of electricity for use in a reservoir dewatering project.....................................................................................71 PART 25. GOVERNMENTAL ENTITIES Section 710:65-13-130. 710:65-13-131. 710:65-13-132. 710:65-13-133. Sales to and by the government; taxable and exempt transactions.........................71 Sales to U.S. government contractors; taxable and exempt transactions...............................................................................73 Sheriff's purchases; taxable and exempt transactions..............................................74 State parks .................................................................................................................74 PART 26. SPACE INDUSTRIES [RESERVED] Section 710:65-13-135. 710:65-13-136. 710:65-13-137. 710:65-13-138. 710:65-13-139. (Reserved) .................................................................................................................74 (Reserved) .................................................................................................................74 (Reserved) .................................................................................................................74 (Reserved) .................................................................................................................74 (Reserved) .................................................................................................................74 PART 27. TRUST AUTHORITIES (REVOKED) Section 710:65-13-140. Trust authority transactions (RENUMBERED TO 710:65-13-550) ....................................74 PART 29. MANUFACTURING Section 710:65-13-150. Manufacturing exemption; taxable and exempt transactions (Revoked).............74 710:65-13-150.1 Manufacturing exemption; taxable and exempt transactions.................................75 710:65-13-151. Use of manufacturer's limited exemption certificate; guidelines to determine if exemption applies (Revoked) .....................................78 710:65-13-152. Manufactured goods transported out of Oklahoma (Revoked) ............................78 710:65-13-152.1 Manufactured goods transported out of Oklahoma ................................................78 710:65-13-153. Exemption for "qualified manufacturers" .........................................................78 710:65-13-154. Limitation on credits ...............................................................................................82 710:65-13-155. Exemption for sales of tangible personal property to be consumed or incorporated in the construction or expansion of a qualified vi OAC 710:65 OKLAHOMA TAX COMMISSION aircraft maintenance or manufacturing facility......................................................82 PART 31. MEDICINE, MEDICAL APPLIANCES, AND HEALTH CARE ENTITIES AND ACTIVITIES Section 710:65-13-169. Definitions.................................................................................................................85 710:65-13-170. Medicines, drugs, hospitals, nursing homes, practitioners, and medical equipment and appliances, generally ..................................................87 710:65-13-171. Sales of prosthetic devices to individuals ................................................................88 710:65-13-172. Exemption for community health centers, migrant health centers, indigent health care clinics, and certain community-based health care centers...................................................88 710:65-13-173. Exemption for medical appliances, medical devices and other medical equipment furnished to medicare/medicaid program recipients ....................................................................................................90 710:65-13-174. Exemption for tax-exempt, independent, nonprofit biomedical research foundations..............................................................................99 710:65-13-175. Exemption for tax-exempt, independent, nonprofit community blood banks headquartered in this state .............................................100 PART 33. MOTOR FUELS Section 710:65-13-180. Motor fuel and other petroleum products; taxable and exempt transactions.............................................................................101 PART 35. NEWSPAPERS; PERIODICALS; MEDIA Section 710:65-13-190. 710:65-13-191. 710:65-13-192. 710:65-13-193. 710:65-13-194. Newspapers and periodicals; taxable and exempt transactions ............................102 Definition of radio and television broadcasting for purposes of sales tax exemption.......................................................................103 Definition of cablecasting machinery and equipment for purposes of sales tax exemption.......................................................................104 Definition of newspaper manufacturing for purposes of sales/use tax exemption ................................................................107 Exemption for sales of tangible personal property and services to a motion picture or television production company to be used or consumed in connection with an eligible production.......................................107 PART 37. SALES FOR RESALE Section 710:65-13-200. Exemption on sales for resale.................................................................................109 710:65-13-201. Sales between related entities.................................................................................109 vii OAC 710:65 OKLAHOMA TAX COMMISSION PART 39. SCHOOLS AND HIGHER EDUCATION Section 710:65-13-210. Exemption for public and private schools and institutions of higher education ..............................................................................110 PART 41. [RESERVED] PART 43. SOCIAL, CHARITABLE, AND DIVID ORGANIZATIONS AND ACTIVITIES 710:65-13-330. 710:65-13-331. 710:65-13-332. 710:65-13-333. 710:65-13-334. 710:65-13-335. 710:65-13-336. 710:65-13-337. 710:65-13-338. 710:65-13-339. 710:65-13-340. 710:65-13-341. 710:65-13-342. 710:65-13-343. Oklahoma City National Memorial and Museum ................................................112 Sales to veterans' organizations for museums and memorials ..............................112 Exemption for sale of tickets to collegiate athletic championship events............113 Sales made in conjunction with public library construction .................................113 Exemption for qualified museums .........................................................................113 Limited exemption for organizations which sponsor and promote educational, charitable, and cultural events for disadvantaged children ...........................................................................................114 Exemption for Disabled American Veterans, Department of Oklahoma, Inc. and subordinate chapters .........................................................115 Qualifications for "Meals on Wheels" exemption.................................................115 Qualifications for "Older Americans Act" exemption ..........................................116 Qualifications for "Collection and Distribution Organization" exemption........................................................................................117 Exemptions for volunteer fire departments ...........................................................118 Exemption for Council organizations or similar state supervisory organizations of Boy Scouts of America, Girl Scouts of U.S.A., and the Campfire Girls and Boys........................................................................................118 Qualifications for "Juvenile Rehabilitation" exemption .......................................119 Exemption for qualified youth athletic teams........................................................120 PART 45. [RESERVED] PART 47. [RESERVED] PART 49. [RESERVED] PART 51. [RESERVED] PART 53. [RESERVED] viii OAC 710:65 OKLAHOMA TAX COMMISSION PART 55. TRUST AUTHORITIES Section 710:65-13-550. Trust authority transactions (Amended and renumbered from 710:65-13-140).......................................................................120 SUBCHAPTER 15. INTERSTATE COMMERCE Section 710:65-15-1. 710:65-15-2. Sales tax related to interstate commerce ..................................................................120 Exempt sales to ships, motor vessels, or barges being used in interstate or international commerce .................................................121 Sales by solicitation ..................................................................................................121 710:65-15-3. SUBCHAPTER 17. CITY AND COUNTY SALES TAXES [REVOKED] Section 710:65-17-1. Administration of city and county sales taxes (Revoked) ......................................122 SUBCHAPTER 18. SOURCING PURSUANT TO THE STREAMLINED SALES AND USE TAX ADMINISTRATION ACT 710:65-18-1. 710:65-18-2. 710:65-18-3. 710:65-18-4. 710:65-18-5. 710:65-18-6. 710:65-18-7. 710:65-18-8. 710:65-18-9. 710:65-18-10. Purpose ......................................................................................................................123 Definitions.................................................................................................................123 Sourcing of retail sales..............................................................................................124 Sourcing for lease or rental of tangible personal property ......................................124 Sourcing of telecommunications services................................................................125 Sourcing of sales involving direct mail....................................................................127 (Reserved) .................................................................................................................128 (Reserved) .................................................................................................................128 Effective date for taxable services which span a rate change .................................128 Effective dates of sales and use tax rate changes and of municipal boundary changes....................................................................................128 SUBCHAPTER 19. SPECIFIC APPLICATIONS AND EXAMPLES PART 1. "A" Section 710:65-19-1. 710:65-19-2. Accountants...............................................................................................................129 Advertising agencies.................................................................................................129 ix OAC 710:65 710:65-19-3. 710:65-19-4. 710:65-19-5. 710:65-19-6. 710:65-19-7. 710:65-19-8. 710:65-19-9. 710:65-19-10. 710:65-19-11. 710:65-19-12. 710:65-19-13. OKLAHOMA TAX COMMISSION Vendors of tangible personal property employed for advertising ..........................130 Alarm systems...........................................................................................................130 Sales of alcoholic beverages ...................................................................................130 Place of amusement..................................................................................................131 Animals and animal related, non-farm ....................................................................131 Animals; non-farm equipment and supplies (Revoked).........................................132 Antiques, works of art, and artists ...........................................................................132 Auctioneer.................................................................................................................132 Automotive transactions...........................................................................................133 Automobile repairers (Revoked) .............................................................................133 Automotive bodyshops (Revoked)..........................................................................133 PART 3. "B" Section 710:65-19-25. 710:65-19-26. 710:65-19-27. 710:65-19-28. 710:65-19-29. Barbers and beauticians ............................................................................................133 Bingo (Revoked) ......................................................................................................134 Blacksmiths...............................................................................................................134 Bookkeeping, service bureaus..................................................................................134 Buildings and structures ...........................................................................................134 PART 5. "C" Section 710:65-19-40. 710:65-19-41. 710:65-19-42. 710:65-19-43. 710:65-19-44. 710:65-19-45. 710:65-19-46. 710:65-19-47. 710:65-19-48. 710:65-19-49. 710:65-19-50. 710:65-19-51. 710:65-19-52. 710:65-19-53. 710:65-19-54. 710:65-19-55. 710:65-19-56. 710:65-19-57. 710:65-19-58. 710:65-19-59. Caterers......................................................................................................................135 Cemeteries and crematories......................................................................................135 Cemeteries; tombstones, markers, and other memorials.........................................135 Chamber of commerce..............................................................................................135 Sales made to or by charitable, fraternal, civic, educational societies and non-profit organizations .................................................136 Chiropodists, osteopaths and chiropractors .............................................................137 Clipping and information bureaus............................................................................137 Retailers of clothing..................................................................................................137 Tailors, clothiers, dressmakers, and milliners..........................................................137 Golf and country clubs..............................................................................................138 Coins and bullion ......................................................................................................138 Complimentary tickets, passes, dues, fees ...............................................................139 Computers and related systems; "hardware" and "software" defined..........................................................................139 Concrete mixer trucks...............................................................................................140 Consigned property...................................................................................................141 Taxability of sales to contractors..............................................................................141 Contractors and subcontractors ................................................................................141 Community action agencies and other non-profit corporations..............................143 Cotton gins ................................................................................................................143 Store coupons............................................................................................................143 x OAC 710:65 OKLAHOMA TAX COMMISSION 710:65-19-60. Made-to-order and custom sales ..............................................................................143 710:65-19-61. Collections and collectibles......................................................................................144 710:65-19-62. Crates and crating companies...................................................................................144 PART 7. "D" Section 710:65-19-70. 710:65-19-71. 710:65-19-72. 710:65-19-73. 710:65-19-74. 710:65-19-75. 710:65-19-76. 710:65-19-77. Delivery charges .......................................................................................................145 Dentists, dental laboratories, and dental supply houses ..........................................145 Deposits, core charges and trade-ins........................................................................146 Directories .................................................................................................................147 Discounts...................................................................................................................147 Donations ..................................................................................................................147 Drilling contractors ...................................................................................................147 Dues and fees ............................................................................................................148 PART 9. "E" Section 710:65-19-85. 710:65-19-86. 710:65-19-87. 710:65-19-88. 710:65-19-89. (Reserved) .................................................................................................................148 Electronic data processing services..........................................................................148 Employee associations and organizations................................................................149 Employer sales to employees ...................................................................................149 Exchange or return of merchandise..........................................................................149 PART 11. "F" Section 710:65-19-100. Deliveries on federal areas .....................................................................................150 710:65-19-101. (Reserved) ...............................................................................................................150 710:65-19-102. Federal excise taxes ................................................................................................150 710:65-19-103. Finance charges.......................................................................................................150 710:65-19-104. Finance companies and other lending agencies; repossessions ............................150 710:65-19-105. Sales by banks, savings and loan associations credit unions and other financial institutions.........................................................151 710:65-19-106. Sales to banks, savings and loan associations, credit unions and other financial institutions.........................................................151 710:65-19-107. Fixtures; "materials" defined for the purpose of developing and improving real property ...........................................................152 710:65-19-108. Florists, telegraphic orders .....................................................................................152 710:65-19-109. Food; vendors of meals ..........................................................................................152 710:65-19-110. Food; eating and drinking establishments .............................................................154 710:65-19-111. Food; tips and service charges ...............................................................................154 710:65-19-112. Food; cover charges and minimum charges ..........................................................155 710:65-19-113. Food; meals served by boarding houses ................................................................155 710:65-19-114. Funeral homes.........................................................................................................155 710:65-19-115. Altering, repairing, and remodeling furs................................................................156 xi OAC 710:65 OKLAHOMA TAX COMMISSION PART 13. "G" Section 710:65-19-125. 710:65-19-126. 710:65-19-127. 710:65-19-128. 710:65-19-129. Premiums and gift...................................................................................................157 Gift certificates........................................................................................................157 Gift wrap .................................................................................................................157 (Reserved) ...............................................................................................................157 Gun clubs ................................................................................................................157 PART 15. "H" Section 710:65-19-140. Hatcheries and incubators ......................................................................................157 710:65-19-141. Herbicides not sold to farmers or custom applicators ...........................................158 710:65-19-142. Hospitals..................................................................................................................158 710:65-19-143. Hotels, motels, apartments, etc...............................................................................158 PART 17. "I" Section 710:65-19-155. Ice plants .................................................................................................................159 710:65-19-156. Internet-related services and transactions ..............................................................159 710:65-19-157. Insecticides and fungicides not sold to farmers or custom applicators ..................................................................................................161 710:65-19-158. Installation, alteration and special service charges................................................161 710:65-19-159. Installation charges .................................................................................................161 710:65-19-160. Installment and credit sales ....................................................................................161 710:65-19-161. Insurance companies...............................................................................................161 PART 19. "J" [RESERVED] PART 21. "K" [RESERVED] PART 23. "L" Section 710:65-19-190. 710:65-19-191. 710:65-19-192. 710:65-19-193. 710:65-19-194. Labels, tags, and name plates .................................................................................162 Laundry and garment bags .....................................................................................162 Lawyers...................................................................................................................162 Layaway fees ..........................................................................................................162 Lumber dealers .......................................................................................................162 PART 25. "M" Section 710:65-19-210. 710:65-19-211. Vendors of machinery, tools, patterns, and similar items.....................................163 Sale or rental of microfilm, slides, videotape, xii OAC 710:65 OKLAHOMA TAX COMMISSION tape recordings, records, etc. ..................................................................................163 710:65-19-212. Milk and dairy processors ......................................................................................163 710:65-19-213. Military; members of armed services stationed in Oklahoma subject to sales and use taxes ...........................................164 710:65-19-214. Multi-level sales......................................................................................................164 PART 27. "N" Section 710:65-19-225. Nurserymen.............................................................................................................164 PART 29. "O" Section 710:65-19-240. Oil operator transfers; "material transfer" described; examples.......................164 710:65-19-241. Fractionation tanks (frac tanks) (Revoked)...........................................................165 710:65-19-242. Sale of wells and pipelines .....................................................................................165 710:65-19-243. Sales by the State of Oklahoma, state agencies, etc..............................................166 PART 31. "P" Section 710:65-19-255. 710:65-19-256. 710:65-19-257. 710:65-19-258. 710:65-19-259. 710:65-19-260. 710:65-19-261. 710:65-19-262. 710:65-19-263. 710:65-19-264. 710:65-19-265. 710:65-19-266. 710:65-19-267. 710:65-19-268. Pawnbrokers ...........................................................................................................166 Taxability of items purchased by permit holders ..................................................166 Pest exterminators ..................................................................................................174 Registered pharmacists and druggists....................................................................174 Photocopying ..........................................................................................................174 Commercial photographers and photographic goods and services ......................174 Physicians and optometrists ...................................................................................175 Picture-framers .......................................................................................................176 Plating .....................................................................................................................176 Pole line construction .............................................................................................176 Printers ....................................................................................................................176 Printers, materials used by (Revoked) ..................................................................178 Printing; graphic arts production ..........................................................................178 Sales of parking privileges.....................................................................................178 PART 33. "Q" [RESERVED] PART 35. "R" Section 710:65-19-290. 710:65-19-291. 710:65-19-292. 710:65-19-293. 710:65-19-294. Radio and television antennas and television satellite dishes...............................178 Commercial railroads and railroad spikes ............................................................179 (Reserved) ...............................................................................................................179 Religious organizations and institutions other than churches...............................179 Research and development.....................................................................................179 xiii OAC 710:65 OKLAHOMA TAX COMMISSION PART 37. "S" Section 710:65-19-305. Scrap metal facilities and junkyards ......................................................................180 710:65-19-306. Secondhand stores ..................................................................................................180 710:65-19-307. Vendors of seeds and fertilizer...............................................................................180 710:65-19-308. Installation or sale of septic tanks ..........................................................................181 710:65-19-309. Tangible personal property purchased by providers of nontaxable services............................................................................181 710:65-19-310. Shoe repairs.............................................................................................................181 710:65-19-311. Vendors of signs .....................................................................................................181 710:65-19-312. (Reserved) ...............................................................................................................181 710:65-19-313. Toning salons and tanning salons ..........................................................................181 710:65-19-314. Professional shoppers .............................................................................................182 PART 39. "T" Section 710:65-19-325. 710:65-19-326. Telegraph service (Revoked).................................................................................182 Telephone companies, mobile telephone and telephone answering services (Revoked)..............................................................182 710:65-19-327. Sales tickets, cash register receipt paper, invoice forms, etc. ...............................182 710:65-19-328. Transportation for hire............................................................................................182 710:65-19-329. Service relating to telecommunications and telecommunications equipment..............................................................................182 710:65-19-330. Telecommunications services ................................................................................183 710:65-19-331. Prepaid telephone calling cards, telephone authorization numbers, and recharges....................................................................187 PART 41. "U" Section 710:65-19-340. 710:65-19-341. Upholsterers and furniture repairers ......................................................................187 Natural or artificial gas and electric utility services ..............................................187 PART 43. "V" Section 710:65-19-350. 710:65-19-351. Veterinarians ...........................................................................................................188 Volunteer fire companies (Revoked) ....................................................................189 PART 45. "W" Section 710:65-19-365. 710:65-19-366. 710:65-19-367. Extended warranty..................................................................................................190 Watch and jewelry repair shops .............................................................................190 Water conditioning and water softeners ................................................................190 xiv OAC 710:65 710:65-19-368. 710:65-19-369. 710:65-19-370. 710:65-19-371. OKLAHOMA TAX COMMISSION Wheel balancing (Revoked) ..................................................................................191 Wholesalers and jobbers.........................................................................................191 Storm windows; combination windows, etc..........................................................191 Manufacturer's original product warranty .............................................................191 PART 47. "X" Section 710:65-19-380. X-ray laboratories ...................................................................................................192 PART 49. "Y" [RESERVED] PART 51. "Z" [RESERVED] SUBCHAPTER 21. USE TAX Section 710:65-21-1. 710:65-21-2. 710:65-21-3. 710:65-21-4. 710:65-21-5. 710:65-21-6. 710:65-21-7. 710:65-21-8. 710:65-21-9. 710:65-21-10. 710:65-21-11. 710:65-21-12. 710:65-21-13. 710:65-21-14. 710:65-21-15. 710:65-21-16. 710:65-21-17. 710:65-21-18. 710:65-21-19. 710:65-21-20. Purpose ......................................................................................................................192 Definitions.................................................................................................................192 Use Tax .....................................................................................................................193 Use tax on out-of-state purchases.............................................................................193 Voluntary registration by certain out-of-state retailers or vendors .........................193 Retailers required to obtain a use tax permit ...........................................................194 Reports, payments, and penalties .............................................................................194 (Reserved) .................................................................................................................195 (Reserved) .................................................................................................................195 (Reserved) .................................................................................................................195 (Reserved) .................................................................................................................195 (Reserved) .................................................................................................................195 (Reserved) .................................................................................................................196 (Reserved) .................................................................................................................196 (Reserved) .................................................................................................................196 (Reserved) .................................................................................................................196 (Reserved) .................................................................................................................196 (Reserved) .................................................................................................................196 (Reserved) .................................................................................................................196 Use tax exemptions...................................................................................................196 xv OAC 710:65 OKLAHOMA TAX COMMISSION CHAPTER 65. SALES AND USE TAX [Authority: 68 O.S. §203] [Source: Codified 12-30-91] SUBCHAPTER 1. GENERAL PROVISIONS 710:65-1-1. Purpose The provisions of this Chapter have been promulgated for the purpose of compliance with the Oklahoma Administrative Procedures Act, 75 O.S. §§250.1 et seq, and to facilitate the administration, enforcement, and collection of taxes under the Oklahoma Sales and Use Tax Codes. (68 O.S. §§1351 et seq.; 68 O.S. §§1401 et seq.) 710:65-1-2. Definitions The following words and terms, when used in this Chapter, shall have the following meaning, unless the context clearly indicates otherwise: "Business" means any activity with the potential to generate a profit even if the business actually operates at a loss. This category also includes non-profit, religious and other organizations and persons who are otherwise exempt when they are conducting activities for a profit in competition with other businesses. "Consumer" or "user" means a person to whom a taxable sale of tangible personal property is made or for whom a taxable service is performed. "Consideration" means and includes, but is not limited to: (A) The price arrived at between purchaser and vendor. (B) Any additional bona fide charges added to or included in such price for preparation, fabrication, alteration, modification, finishing, completion, delivery, or other services performed in respect to or labor charges for work done with respect to such property prior to transfer. (C) No deduction from gross receipts is permitted for services performed or work done on behalf of the vendor prior to transfer of such tangible personal property. [See: 68 O.S. § 1352(11)] "Delivery charges" means charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and packing. "Delivery charges" does not include charges for the delivery of "direct mail" if the charges are separatelystated on an invoice or similar billing document given to the purchaser. "Gross receipts", "gross proceeds", or "sales price" means the total amount of consideration including cash, credit, property, and services, for which personal property or services are sold, leased, or rented; valued in money, whether received in money or otherwise, without any deduction for the following: (A) The seller's cost of the property sold; (B) The cost of materials used, labor, or service cost; (C) Interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, 1 OAC 710:65 OKLAHOMA TAX COMMISSION and any other expense of the seller; (D) Charges by the seller for any services necessary to complete the sale, other than delivery and installation charges; (E) Delivery charges and installation charges, unless separately stated on the invoice, billing, or similar document given to the purchaser; or, (F) The value of exempt personal property given to the purchaser where taxable and exempt personal property have been bundled together and sold by the seller as a single product or piece of merchandise. "Gross receipts", "gross proceeds", or "sales price" shall not include: (A) Discounts, including cash, term, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale; (B) Interest, financing, and carrying charges from credit extended on the sale of personal property or services, if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser; or (C) Any taxes legally imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the purchaser. [68 O.S.Supp.2003, § 1352(11)] "Lease or rental" means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease or rental may include future options to purchase or extend. (A) "Lease or rental" does not include: (i) A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments; (ii) A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of required payments and payment of an option price does not exceed the greater of One Hundred Dollars or one (1) percent of the total required payments; or (iii) Providing tangible personal property along with an operator for a fixed or indeterminate period of time. A condition of this exclusion is that the operator is necessary for the equipment to perform as designed. For the purpose of this unit, an operator must do more than maintain, inspect, or set-up the tangible personal property. (B) "Lease or rental" does include agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined by 26 U.S.C. ∋ 7701(h)(1). (C) This definition shall be used for sales and use tax purposes if a transaction is characterized as a lease or rental under generally accepted accounting principles, the Internal Revenue Code, the Oklahoma Uniform Commercial Code (12A O.S. § 1-101 et seq.), or other provisions of federal, state, or local law. "Retail sale" means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent. "Sale" means, for the purpose of this Chapter, transfer of title or possession of tangible personal property for consideration. All consideration received for the sale is included in gross receipts 2 OAC 710:65 OKLAHOMA TAX COMMISSION subject to tax. "Sale" does not include sale and leaseback. [See: 710:65-1-11(b)] "Sales tax" means all applicable state, city and county sales tax. "Sales value" means: (A) In the case of a manufacturer, the sum of the manufacturer's cost of raw materials and the proportionate share of both the cost of machinery and equipment used and the cost of items consumed in the direct process of the manufacturing of the product, all of which were purchased exempt from sales tax for use in the process of manufacturing; or (B) In the case of a person holding a mixed beverage tax permit or other permit issued in accordance with 37 O.S. § 577, the total retail sales price for sales of alcoholic beverages only, calculated pursuant to OAC 710:20-5-4; or (C) In the case of sales of prepared food, the sales value of a free, reduced price, or complimentary meal is presumed to be the greater of the consideration received for the meal, if any, or the cost paid by the vendor of the food for the food items included in the free, reduced price, or complimentary meal; or (D) In the case where an inventory of goods, originally purchased exempt for resale, is being held for rental or leasing purposes, the regular rental charges which would be charged to the vendor's best customer, if the goods are to be returned to inventory. Where the goods are not to be returned to inventory held for rental or leasing purposes, the lesser of the original purchase price of the goods, or the current market price will be presumed to be the sales value; or (E) Otherwise, "sales value" means the larger of either the vendor's cost at the time the exempt purchase of goods was made, or the price at which it would be sold to the vendor's best customer in the ordinary course of business. "Tangible personal property" means personal property that can be seen, weighed, measured, felt, or touched or that is in any other manner perceptible to the senses. For purposes of the Oklahoma Sales Tax Code, "tangible personal property" includes electricity, water, gas, steam and prewritten computer software. [68 O.S.Supp.2003, § 1352(23)] The term does not include real property, such as land and buildings, tangible personal property that loses its identity when it becomes an integral and inseparable part of the realty, or tangible personal property which is removable only with substantial damage to the premises. Property severed from real estate becomes tangible personal property. "Tangible personal property" does not include intangible personal property constituting mere rights of action and having no intrinsic value, such as contracts, deeds, mortgages, stocks, bonds, certificates of deposit, or uncancelled United States postage or revenue stamps sold for postage or revenue purposes. [See: 68 O.S. § 1352; 68 O.S. § 1354; See Also: 60 O.S. §§ 7,8] "Tax" means all state, applicable city and applicable county tax. "Use tax" means all applicable state and city use tax. "User" or "consumer" means a person to whom a taxable sale of tangible personal property is made or for whom a taxable service is performed. [Source: Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 15 Ok Reg 2827, eff 6-25-98; Amended at 21 Ok Reg 2581, eff 6-25-04; Amended at 22 Ok Reg 1563, eff. 6-11-05] 710:65-1-3. Computation of sales and use taxes to be collected and remitted 3 OAC 710:65 OKLAHOMA TAX COMMISSION (a) Determination of tax rate. To determine the amount of tax to be collected and remitted, the gross receipts or gross proceeds of each sale is to be multiplied by the applicable percentage. The applicable percentage shall equal the combination of the state and any applicable municipal and county sales tax rates. (b) Computation of tax. In computing the tax to be collected or remitted as the result of any transaction, the tax amount must be carried to the third decimal place when the tax amount is expressed in dollars. The tax must be rounded to a whole cent using a method that rounds up to the next cent whenever the third decimal place is greater than four. The vendor or direct payment permit holder may elect to compute the tax due on transactions on an item or invoice basis. [See: 68 O.S.Supp.2003, § 1362(B)] [Source: Added at 21 Ok Reg 2581, eff 6-25-04] 710:65-1-4. Presumption of taxability (a) Sales tax. For the purpose of proper administration of the provisions of the sales and use tax laws, it is presumed that all gross receipts are subject to tax until they are shown to be tax exempt. The burden of proving that a sale of tangible personal property or enumerated service is an exempt sale is upon the vendor. (b) Use tax. For consumer use tax purposes, it is presumed that tangible personal property sold, leased or rented by any person for delivery in this state is sold, leased or rented for storage, use or other consumption in this state. The burden of proving the contrary is on the purchaser. [See: 68 O.S. §1365] [Source: Amended at 11 Ok Reg 3521, eff 6-26-94] 710:65-1-5. Unlawful to advertise that sales tax will be absorbed Oklahoma Statutes, prohibits any retailer to advertise or hold out or state to the public or to any customer, either directly or indirectly, that the sales tax imposed under Oklahoma Statutes, will be absorbed or assumed by such retailer, or that such tax will be paid by the vendor for the consumer or user. [See: 68 O.S. §1361(c)] [Source: Amended at 11 Ok Reg 3521, eff 6-26-94] 710:65-1-6. "Tax-included" prices (a) Certain vendors, in an effort to arrive at a sum for the tangible personal property being sold which may be conveniently handled as cash, have calculated the price of the property and collected a "tax-included" amount. In some cases the vendor has made signs, price lists, etc. on the premises advising that the prices include tax; in others no apparent mention of taxes has been made to the public. (b) Although certainly desirable from an accounting and auditing standpoint, neither the statutes nor Commission rules require a vendor to state the sale price separately from the applicable tax. 68 O.S. 1361(B) provides that sales tax shall be added to the sales price, "and when added such tax shall constitute a part of such price." Under present law, taxes collected as part of a tax-included price, if 4 OAC 710:65 OKLAHOMA TAX COMMISSION so charged and collected, may be "backed out" of the total receipts to arrive at the amount of gross receipts or gross proceeds subject to tax. [68 O.S. §1361(B)] (c) Whether the vendor added and collected the tax or whether the vendor truly failed to collect any tax at all, is always a fact to be determined. Such factual determination must be made in light of all circumstances, documents, records and information available. No single factor will be relied on to the exclusion of other evidence. As always in tax matters, the burden of proving that the tax was added and collected is on the vendor. The vendor must keep sufficient documentary evidence, i.e. books, records, price lists, signs, to sustain this burden. [Source: Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 21 Ok Reg 2581, eff 6-25-04] 710:65-1-7. Consumer/user defined; specific applications "Consumer" or "user" means a person to whom a taxable sale of tangible personal property is made or for whom a taxable service is performed. (1) Hospitals, sanitariums, nursing homes and emergency medical care. Hospitals and sanitariums are primarily engaged in the business of selling services, and for the purposes of the Sales Tax Code are considered to be the consumers or users of all tangible personal property and services used in the operation of the institution. Thus, the gross proceeds derived from sales of tangible personal property and certain services to such institutions are subject to tax. This paragraph applies to all hospitals, sanitariums and nursing homes, including those owned or operated by churches, fraternities, cooperatives, or any other organization, except those operated by the Federal Government, the State, or a political subdivision thereof. (2) Withdrawals from stock. If any business purchases tangible personal property for re