1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 SENATE BILL 1438 By: Rader
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6 AS INTRODUCED
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7 An Act relating to heavy equipment rental fees;
7 defining terms; authorizing imposition of recovery
8 fee with respect to heavy equipment; requiring
8 retention of fee; specifying purpose of fee;
9 providing certain transactions exempt from fee
9 requirement; requiring submission of report;
10 prohibiting imposition of sales tax on recovery fee
10 amounts; amending 68 O.S. 2021, Section 1357, as last
11 amended by Section 1, Chapter 344, O.S.L. 2023 (68
11 O.S. Supp. 2023, Section 1357), which relates to
12 sales tax exemption; exempting recovery fees;
12 updating statutory language; providing for
13 codification; and providing an effective date.
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16 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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17 SECTION 1. NEW LAW A new section of law to be codified
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18 in the Oklahoma Statutes as Section 2807.10 of Title 68, unless
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19 there is created a duplication in numbering, reads as follows:
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20 As used in this act:
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21 1. “Heavy equipment property” includes all rental property
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22 owned or held by a rental business classified under Industry No.
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23 532412 or 532310 of the 2017 North American Industry Classification
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24 System;
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 1 2. “Primarily” means more than fifty-one percent (51%) of the
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2 annual revenue of the business is derived from the rental of
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3 personal property; and
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4 3. “Rental charge” means the charge of the rental and does not
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5 include any other costs such as pickup and delivery, fuel, or a
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6 damage waiver.
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7 SECTION 2. NEW LAW A new section of law to be codified
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8 in the Oklahoma Statutes as Section 2807.11 of Title 68, unless
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9 there is created a duplication in numbering, reads as follows:
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10 A. Except as provided in subsection B of this section, a
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11 company primarily in the business of renting heavy equipment
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12 property located in this state may include as a separate line item
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13 on the rental invoice a recovery fee of one and twenty-five
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14 hundredths percent (1.25%) on the rental charge from any item of
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15 heavy equipment property rental by a customer. The total amount of
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16 the recovery fee shall be retained by the business for the purposes
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17 of paying personal property taxes levied by all taxing jurisdictions
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18 against the heavy equipment property located in the state.
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19 B. Notwithstanding the provisions of subsection A of this
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20 section, the recovery fee provided in this section shall not apply
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21 to the rental of heavy equipment property to the federal government,
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22 any federally recognized Indian tribe, this state, or any
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23 municipality or county of this state.
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 1 C. The recovery fee shall not be subject to state or local
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2 sales tax.
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3 SECTION 3. NEW LAW A new section of law to be codified
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4 in the Oklahoma Statutes as Section 2807.12 of Title 68, unless
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5 there is created a duplication in numbering, reads as follows:
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6 Annually, on or before February 15, each rental business that
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7 collects the equipment rental recovery fee shall be required to
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8 electronically submit to the Oklahoma Tax Commission a consolidated
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9 report showing the aggregated personal property taxes paid in the
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10 state during the previous calendar year and the aggregated recovery
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11 collections in the state.
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12 SECTION 4. AMENDATORY 68 O.S. 2021, Section 1357, as
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13 last amended by Section 1, Chapter 344, O.S.L. 2023 (68 O.S. Supp.
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14 2023, Section 1357), is amended to read as follows:
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15 Section 1357. Exemptions – General.
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16 There are hereby specifically exempted from the tax levied by
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17 the Oklahoma Sales Tax Code:
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18 1. Transportation of school pupils to and from elementary
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19 schools or high schools in motor or other vehicles;
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20 2. Transportation of persons where the fare of each person does
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21 not exceed One Dollar ($1.00), or local transportation of persons
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22 within the corporate limits of a municipality except by taxicabs;
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23 3. Sales for resale to persons engaged in the business of
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24 reselling the articles purchased, whether within or without the
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 1 state, provided that such sales to residents of this state are made
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2 to persons to whom sales tax permits have been issued as provided in
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3 the Oklahoma Sales Tax Code. This exemption shall not apply to the
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4 sales of articles made to persons holding permits when such persons
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5 purchase items for their use and which they are not regularly
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6 engaged in the business of reselling; neither shall this exemption
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7 apply to sales of tangible personal property to peddlers, solicitors
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8 and other salespersons who do not have an established place of
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9 business and a sales tax permit. The exemption provided by this
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10 paragraph shall apply to sales of motor fuel or diesel fuel to a
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11 Group Five vendor, but the use of such motor fuel or diesel fuel by
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12 the Group Five vendor shall not be exempt from the tax levied by the
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13 Oklahoma Sales Tax Code. The purchase of motor fuel or diesel fuel
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14 is exempt from sales tax when the motor fuel is for shipment outside
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15 this state and consumed by a common carrier by rail in the conduct
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16 of its business. The sales tax shall apply to the purchase of motor
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17 fuel or diesel fuel in Oklahoma by a common carrier by rail when
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18 such motor fuel is purchased for fueling, within this state, of any
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19 locomotive or other motorized flanged wheel equipment;
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20 4. Sales of advertising space in newspapers and periodicals;
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21 5. Sales of programs relating to sporting and entertainment
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22 events, and sales of advertising on billboards (including signage,
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23 posters, panels, marquees or on other similar surfaces, whether
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24 indoors or outdoors) or in programs relating to sporting and
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 1 entertainment events, and sales of any advertising, to be displayed
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2 at or in connection with a sporting event, via the Internet,
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3 electronic display devices or through public address or broadcast
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4 systems. The exemption authorized by this paragraph shall be
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5 effective for all sales made on or after January 1, 2001;
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6 6. Sales of any advertising, other than the advertising
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7 described by paragraph 5 of this section, via the Internet,
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8 electronic display devices or through the electronic media including
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9 radio, public address or broadcast systems, television (whether
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10 through closed circuit broadcasting systems or otherwise), and cable
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11 and satellite television, and the servicing of any advertising
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12 devices;
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13 7. Eggs, feed, supplies, machinery, and equipment purchased by
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14 persons regularly engaged in the business of raising worms, fish,
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15 any insect, or any other form of terrestrial or aquatic animal life
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16 and used for the purpose of raising same for marketing. This
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17 exemption shall only be granted and extended to the purchaser when
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18 the items are to be used and in fact are used in the raising of
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19 animal life as set out above. Each purchaser shall certify, in
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20 writing, on the invoice or sales ticket retained by the vendor that
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21 the purchaser is regularly engaged in the business of raising such
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22 animal life and that the items purchased will be used only in such
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23 business. The vendor shall certify to the Oklahoma Tax Commission
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24 that the price of the items has been reduced to grant the full
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 1 benefit of the exemption. Violation hereof by the purchaser or
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2 vendor shall be a misdemeanor;
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3 8. Sale of natural or artificial gas and electricity, and
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4 associated delivery or transmission services, when sold exclusively
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5 for residential use. Provided, this exemption shall not apply to
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6 any sales tax levied by a city or town, or a county or any other
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7 jurisdiction in this state;
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8 9. In addition to the exemptions authorized by Section 1357.6
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9 of this title, sales of drugs sold pursuant to a prescription
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10 written for the treatment of human beings by a person licensed to
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11 prescribe the drugs, and sales of insulin and medical oxygen.
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12 Provided, this exemption shall not apply to over-the-counter drugs;
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13 10. Transfers of title or possession of empty, partially
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14 filled, or filled returnable oil and chemical drums to any person
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15 who is not regularly engaged in the business of selling, reselling
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16 or otherwise transferring empty, partially filled or filled
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17 returnable oil drums;
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18 11. Sales of one-way utensils, paper napkins, paper cups,
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19 disposable hot containers, and other one-way carry out materials to
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20 a vendor of meals or beverages;
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21 12. Sales of food or food products for home consumption which
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22 are purchased in whole or in part with coupons issued pursuant to
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23 the federal food stamp program as authorized by Sections 2011
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24 through 2029 of Title 7 of the United States Code, as to that
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 1 portion purchased with such coupons. The exemption provided for
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2 such sales shall be inapplicable to such sales upon the effective
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3 date of any federal law that removes the requirement of the
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4 exemption as a condition for participation by the state in the
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5 federal food stamp program;
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6 13. Sales of food or food products, or any equipment or
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7 supplies used in the preparation of the food or food products to or
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8 by an organization which:
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9 a. is exempt from taxation pursuant to the provisions of
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10 Section 501(c)(3) of the Internal Revenue Code, 26
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11 U.S.C., Section 501(c)(3), and which provides and
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12 delivers prepared meals for home consumption to
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13 elderly or homebound persons as part of a program
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14 commonly known as “Meals on Wheels” or “Mobile Meals”,
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15 or
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16 b. is exempt from taxation pursuant to the provisions of
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17 Section 501(c)(3) of the Internal Revenue Code, 26
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18 U.S.C., Section 501(c)(3), and which receives federal
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19 funding pursuant to the Older Americans Act of 1965,
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20 as amended, for the purpose of providing nutrition
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21 programs for the care and benefit of elderly persons;
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22 14. a. Sales of tangible personal property or services to or
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23 by organizations which are exempt from taxation
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24 pursuant to the provisions of Section 501(c)(3) of the
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 1 Internal Revenue Code, 26 U.S.C., Section 501(c)(3),
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2 and:
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3 (1) are primarily involved in the collection and
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4 distribution of food and other household products
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5 to other organizations that facilitate the
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6 distribution of such products to the needy and
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7 such distributee organizations are exempt from
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8 taxation pursuant to the provisions of Section
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9 501(c)(3) of the Internal Revenue Code, 26
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10 U.S.C., Section 501(c)(3), or
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11 (2) facilitate the distribution of such products to
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12 the needy.
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13 b. Sales made in the course of business for profit or
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14 savings, competing with other persons engaged in the
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15 same or similar business shall not be exempt under
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16 this paragraph;
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17 15. Sales of tangible personal property or services to
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18 children’s homes which are located on church-owned property and are
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19 operated by organizations exempt from taxation pursuant to the
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20 provisions of the Internal Revenue Code, 26 U.S.C., Section
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21 501(c)(3);
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22 16. Sales of computers, data processing equipment, related
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23 peripherals, and telephone, telegraph or telecommunications service
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24 and equipment for use in a qualified aircraft maintenance or
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 1 manufacturing facility. For purposes of this paragraph, “qualified
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2 aircraft maintenance or manufacturing facility” means a new or
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3 expanding facility primarily engaged in aircraft repair, building or
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4 rebuilding whether or not on a factory basis, whose total cost of
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5 construction exceeds the sum of Five Million Dollars ($5,000,000.00)
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6 and which employs at least two hundred fifty (250) new full-time-
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7 equivalent employees, as certified by the Oklahoma Employment
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8 Security Commission, upon completion of the facility. In order to
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9 qualify for the exemption provided for by this paragraph, the cost
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10 of the items purchased by the qualified aircraft maintenance or
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11 manufacturing facility shall equal or exceed the sum of Two Million
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12 Dollars ($2,000,000.00);
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13 17. Sales of tangible personal property consumed or
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14 incorporated in the construction or expansion of a qualified
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15 aircraft maintenance or manufacturing facility as defined in
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16 paragraph 16 of this section. For purposes of this paragraph, sales
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17 made to a contractor or subcontractor that has previously entered
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18 into a contractual relationship with a qualified aircraft
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19 maintenance or manufacturing facility for construction or expansion
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20 of such a facility shall be considered sales made to a qualified
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21 aircraft maintenance or manufacturing facility;
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22 18. Sales of the following telecommunications services:
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23 a. Interstate and International “800 service”. “800
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24 service” means a “telecommunications service”
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 1 telecommunications service that allows a caller to
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2 dial a toll-free number without incurring a charge for
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3 the call. The service is typically marketed under the
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4 name “800”, “855”, “866”, “877” and “888” toll-free
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5 calling, and any subsequent numbers designated by the
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6 Federal Communications Commission,
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7 b. Interstate and International “900 service”. “900
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8 service” means an inbound toll “telecommunications
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9 service” telecommunications service purchased by a
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10 subscriber that allows the subscriber’s customers to
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11 call in to the subscriber’s prerecorded announcement
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12 or live service. “900 service” 900 service does not
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13 include the charge for: collection services provided
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14 by the seller of the “telecommunications services”
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15 telecommunications services to the subscriber, or
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16 service or product sold by the subscriber to the
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17 subscriber’s customer. The service is typically
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18 marketed under the name “900” service, and any
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19 subsequent numbers designated by the Federal
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20 Communications Commission,
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21 c. Interstate and International “private communications
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