1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 HOUSE BILL 4000 By: Fetgatter
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6 AS INTRODUCED
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7 An Act relating to digital asset mining; amending 68
7 O.S. 2021, Section 1359, which relates to exemptions
8 related to manufacturing; providing an exemption for
8 certain items related to commercial mining of digital
9 assets; providing definitions; and providing an
9 effective date.
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12 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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13 SECTION 1. AMENDATORY 68 O.S. 2021, Section 1359, is
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14 amended to read as follows:
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15 Section 1359. Exemptions – Manufacturing.
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16 There are hereby specifically exempted from the tax levied by
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17 Section 1350 et seq. of this title:
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18 1. Sales of goods, wares, merchandise, tangible personal
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19 property, machinery and equipment to a manufacturer for use in a
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20 manufacturing operation. Goods, wares, merchandise, property,
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21 machinery and equipment used in a nonmanufacturing activity or
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22 process as set forth in paragraph 14 of Section 1352 of this title
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23 shall not be eligible for the exemption provided for in this
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 1 subsection by virtue of the activity or process being performed in
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2 conjunction with or integrated into a manufacturing operation.
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3 For the purposes of this paragraph, sales made to any person,
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4 firm or entity that has entered into a contractual relationship for
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5 the construction and improvement of manufacturing goods, wares,
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6 merchandise, property, machinery and equipment for use in a
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7 manufacturing operation shall be considered sales made to a
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8 manufacturer which is defined or classified in the North American
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9 Industry Classification System (NAICS) Manual under Industry Group
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10 No. 324110. Such purchase shall be evidenced by a copy of the sales
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11 ticket or invoice to be retained by the vendor indicating that the
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12 purchases are made for and on behalf of such manufacturer and set
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13 out the name of such manufacturer as well as include a copy of the
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14 Manufacturing Exemption Permit of the manufacturer. Any person who
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15 wrongfully or erroneously certifies that purchases are being made on
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16 behalf of such manufacturer or who otherwise violates this paragraph
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17 shall be guilty of a misdemeanor and upon conviction thereof shall
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18 be fined an amount equal to double the amount of sales tax involved
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19 or incarcerated for not more than sixty (60) days or both;
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20 2. Ethyl alcohol when sold and used for the purpose of blending
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21 same with motor fuel on which motor fuel tax is levied by Section
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22 500.4 of this title;
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23 3. Sales of containers when sold to a person regularly engaged
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24 in the business of reselling empty or filled containers or when
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 1 purchased for the purpose of packaging raw products of farm, garden,
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2 or orchard for resale to the consumer or processor. This exemption
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3 shall not apply to the sale of any containers used more than once
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4 and which are ordinarily known as returnable containers, except
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5 returnable soft drink bottles and the cartons, crates, pallets, and
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6 containers used to transport returnable soft drink bottles. Each
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7 and every transfer of title or possession of such returnable
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8 containers in this state to any person who is not regularly engaged
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9 in the business of selling, reselling or otherwise transferring
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10 empty or filled containers shall be taxable under this Code.
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11 Additionally, this exemption shall not apply to the sale of labels
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12 or other materials delivered along with items sold but which are not
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13 necessary or absolutely essential to the sale of the sold
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14 merchandise;
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15 4. Sales of or transfers of title to or possession of any
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16 containers, after June 30, 1987, used or to be used more than once
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17 and which are ordinarily known as returnable containers and which do
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18 or will contain beverages defined by paragraphs 4 and 14 of Section
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19 506 of Title 37 of the Oklahoma Statutes, or water for human
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20 consumption and the cartons, crates, pallets, and containers used to
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21 transport such returnable containers;
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22 5. Sale of tangible personal property when sold by the
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23 manufacturer to a person who transports it to a state other than
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24 Oklahoma for immediate and exclusive use in a state other than
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 1 Oklahoma. Provided, no sales at a retail outlet shall qualify for
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2 the exemption under this paragraph;
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3 6. Machinery, equipment, fuels and chemicals or other materials
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4 incorporated into and directly used or consumed in the process of
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5 treatment to substantially reduce the volume or harmful properties
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6 of hazardous waste at treatment facilities specifically permitted
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7 pursuant to the Oklahoma Hazardous Waste Management Act and operated
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8 at the place of waste generation, or facilities approved by the
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9 Department of Environmental Quality for the cleanup of a site of
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10 contamination. The term "hazardous" waste may include low-level
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11 radioactive waste for the purpose of this paragraph;
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12 7. Except as otherwise provided by subsection I of Section 3658
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13 of this title pursuant to which the exemption authorized by this
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14 paragraph may not be claimed, sales of tangible personal property to
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15 a qualified manufacturer or distributor to be consumed or
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16 incorporated in a new manufacturing or distribution facility or to
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17 expand an existing manufacturing or distribution facility. For
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18 purposes of this paragraph, sales made to a contractor or
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19 subcontractor that has previously entered into a contractual
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20 relationship with a qualified manufacturer or distributor for
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21 construction or expansion of a manufacturing or distribution
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22 facility shall be considered sales made to a qualified manufacturer
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23 or distributor. For the purposes of this paragraph, "qualified
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24 manufacturer or distributor" means:
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 1 a. any manufacturing enterprise whose total cost of
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2 construction of a new or expanded facility exceeds the
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3 sum of Five Million Dollars ($5,000,000.00) and in
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4 which at least one hundred (100) new full-time-
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5 equivalent employees, as certified by the Oklahoma
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6 Employment Security Commission, are added and
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7 maintained for a period of at least thirty-six (36)
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8 months as a direct result of the new or expanded
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9 facility,
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10 b. any manufacturing enterprise whose total cost of
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11 construction of a new or expanded facility exceeds the
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12 sum of Ten Million Dollars ($10,000,000.00) and the
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13 combined cost of construction material, machinery,
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14 equipment and other tangible personal property exempt
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15 from sales tax under the provisions of this paragraph
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16 exceeds the sum of Fifty Million Dollars
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17 ($50,000,000.00) and in which at least seventy-five
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18 (75) new full-time-equivalent employees, as certified
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19 by the Oklahoma Employment Security Commission, are
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20 added and maintained for a period of at least thirty-
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21 six (36) months as a direct result of the new or
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22 expanded facility,
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23 c. any manufacturing enterprise whose total cost of
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24 construction of an expanded facility exceeds the sum
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 1 of Three Hundred Million Dollars ($300,000,000.00) and
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2 in which the manufacturer has and maintains an average
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3 employment level of at least one thousand seven
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4 hundred fifty (1,750) full-time-equivalent employees,
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5 as certified by the Employment Security Commission, or
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6 d. any enterprise primarily engaged in the general
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7 wholesale distribution of groceries defined or
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8 classified in the North American Industry
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9 Classification System (NAICS) Manual under Industry
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10 Groups No. 4244 and 4245 and which has at least
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11 seventy-five percent (75%) of its total sales to in-
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12 state customers or buyers and whose total cost of
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13 construction of a new or expanded facility exceeds the
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14 sum of Forty Million Dollars ($40,000,000.00) with
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15 such construction commencing on or after July 1, 2005,
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16 and before December 31, 2005, and which at least fifty
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17 new full-time-equivalent employees, as certified by
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18 the Oklahoma Employment Security Commission, are added
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19 and maintained for a period of at least thirty-six
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20 (36) months as a direct result of the new or expanded
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21 facility.
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22 For purposes of this paragraph, the total cost of construction
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23 shall include building and construction material and engineering and
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24 architectural fees or charges directly associated with the
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 1 construction of a new or expanded facility. The total cost of
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2 construction shall not include attorney fees. For purposes of
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3 subparagraph c of this paragraph, the total cost of construction
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4 shall also include the cost of qualified depreciable property as
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5 defined in Section 2357.4 of this title and labor services performed
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6 in the construction of an expanded facility. For the purpose of
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7 subparagraph d of this paragraph, the total cost of construction
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8 shall also include the cost of all parking, security and dock
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9 structures or facilities necessary to manage, process or secure
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10 vehicles used to receive and/or distribute groceries through such a
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11 facility. The employment requirement of this paragraph can be
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12 satisfied by the employment of a portion of the required number of
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13 new full-time-equivalent employees at a manufacturing or
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14 distribution facility that is related to or supported by the new or
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15 expanded manufacturing or distribution facility as long as both
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16 facilities are owned by one person or business entity. For purposes
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17 of this section, "manufacturing facility" shall mean building and
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18 land improvements used in manufacturing as defined in Section 1352
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19 of this title and shall also mean building and land improvements
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20 used for the purpose of packing, repackaging, labeling or assembling
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21 for distribution to market, products at least seventy percent (70%)
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22 of which are made in Oklahoma by the same company but at an off-
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23 site, in-state manufacturing or distribution facility or facilities.
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24 It shall not include a retail outlet unless the retail outlet is
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 1 operated in conjunction with and on the same site or premises as the
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2 manufacturing facility. Up to ten percent (10%) of the square feet
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3 of a manufacturing or distribution facility building may be devoted
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4 to office space used to provide clerical support for the
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5 manufacturing operation. Such ten percent (10%) may be in a
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6 separate building as long as it is part of the same contiguous tract
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7 of property on which the manufacturing or distribution facility is
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8 located. Only sales of tangible personal property made after June
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9 1, 1988, shall be eligible for the exemption provided by this
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10 paragraph. The exemption authorized pursuant to subparagraph d of
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11 this paragraph shall only become effective when the governing body
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12 of the municipality in which the enterprise is located approves a
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13 resolution expressing the municipality's support for the
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14 construction for such new or expanded facility. Upon approval by
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15 the municipality, the municipality shall forward a copy of such
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16 resolution to the Oklahoma Tax Commission;
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17 8. Sales of tangible personal property purchased and used by a
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18 licensed radio or television station in broadcasting. This
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19 exemption shall not apply unless such machinery and equipment is
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20 used directly in the manufacturing process, is necessary for the
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21 proper production of a broadcast signal or is such that the failure
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22 of the machinery or equipment to operate would cause broadcasting to
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23 cease. This exemption begins with the equipment used in producing
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24 live programming or the electronic equipment directly behind the
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 1 satellite receiving dish or antenna, and ends with the transmission
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2 of the broadcast signal from the broadcast antenna system. For
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3 purposes of this paragraph, "proper production" shall include, but
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4 not be limited to, machinery or equipment required by Federal
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5 Communications Commission rules and regulations;
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6 9. Sales of tangible personal property purchased or used by a
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7 licensed cable television operator in cablecasting. This exemption
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8 shall not apply unless such machinery and equipment is used directly
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9 in the manufacturing process, is necessary for the proper production
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10 of a cablecast signal or is such that the failure of the machinery
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11 or equipment to operate would cause cablecasting to cease. This
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12 exemption begins with the equipment used in producing local
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13 programming or the electronic equipment behind the satellite
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14 receiving dish, microwave tower or antenna, and ends with the
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15 transmission of the signal from the cablecast head-end system. For
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16 purposes of this paragraph, "proper production" shall include, but
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17 not be limited to, machinery or equipment required by Federal
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18 Communications Commission rules and regulations;
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19 10. Sales of packaging materials for use in packing, shipping
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20 or delivering tangible personal property for sale when sold to a
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21 producer of agricultural products. This exemption shall not apply
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22 to the sale of any packaging material which is ordinarily known as a
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23 returnable container;
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 1 11. Sales of any pattern used in the process of manufacturing
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2 iron, steel or other metal castings. The exemption provided by this
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3 paragraph shall be applicable irrespective of ownership of the
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4 pattern provided that such pattern is used in the commercial
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5 production of metal castings;
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6 12. Deposits or other charges made and which are subsequently
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7 refunded for returnable cartons, crates, pallets, and containers
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8 used to transport cement and cement products;
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9 13. Beginning January 1, 1998, machinery, electricity, fuels,
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10 explosives and materials, excluding chemicals, used in the mining of
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11 coal in this state;
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12 14. Deposits, rent or other charges made for returnable
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13 cartons, crates, pallets, and containers used to transport mushrooms
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14 or mushroom products from a farm for resale to the consumer or
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15 processor;
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16 15. Sales of tangible personal property and services used or
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17 consumed in all phases of the extraction and manufacturing of
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18 crushed stone and sand, including but not limited to site
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19 preparation, dredging, overburden removal, explosive placement and
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