1 STATE OF OKLAHOMA
2 3rd Extraordinary Session of the 58th Legislature (2022)
3 HOUSE BILL 1013 By: McCall
4
5 AS INTRODUCED
6 An Act relating to revenue and taxation; amending 68
O.S. 2021, Section 1352, which relates to
7 definitions; defining terms; exempting from sales tax
the sale of food and food ingredients; providing for
8 effect of exemption on sales or excise tax levied by
local taxing jurisdictions; prohibiting application
9 of certain increased rate to certain items as defined
by law; authorizing Oklahoma Tax Commission to
10 promulgate rules; providing for codification;
providing an effective date; and declaring an
11 emergency.
12
13 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
14 SECTION 1. AMENDATORY 68 O.S. 2021, Section 1352, is
15 amended to read as follows:
16 Section 1352. As used in the Oklahoma Sales Tax Code:
17 1. "Alcoholic beverages" means beverages that are suitable for
18 human consumption and contain one-half of one percent (0.5%) or more
19 of alcohol by volume;
20 2. "Bundled transaction" means the retail sale of two or more
21 products, except real property and services to real property, where
22 the products are otherwise distinct and identifiable, and the
23 products are sold for one nonitemized price. A "bundled
24 transaction" does not include the sale of any products in which the
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1 sales price varies, or is negotiable, based on the selection by the
2 purchaser of the products included in the transaction. As used in
3 this paragraph:
4 a. "distinct and identifiable products" does not include:
5 (1) packaging such as containers, boxes, sacks, bags,
6 and bottles, or other materials such as wrapping,
7 labels, tags, and instruction guides, that
8 accompany the retail sale of the products and are
9 incidental or immaterial to the retail sale
10 thereof, including but not limited to, grocery
11 sacks, shoeboxes, dry cleaning garment bags and
12 express delivery envelopes and boxes,
13 (2) a product provided free of charge with the
14 required purchase of another product. A product
15 is provided free of charge if the sales price of
16 the product purchased does not vary depending on
17 the inclusion of the product provided free of
18 charge, or
19 (3) items included in the definition of gross
20 receipts or sales price, pursuant to this
21 section,
22 b. "one nonitemized price" does not include a price that
23 is separately identified by product on binding sales
24 or other supporting sales-related documentation made
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1 available to the customer in paper or electronic form
2 including, but not limited to an invoice, bill of
3 sale, receipt, contract, service agreement, lease
4 agreement, periodic notice of rates and services, rate
5 card, or price list,
6 A transaction that otherwise meets the definition of a bundled
7 transaction shall not be considered a bundled transaction if it is:
8 (1) the retail sale of tangible personal property and
9 a service where the tangible personal property is
10 essential to the use of the service, and is
11 provided exclusively in connection with the
12 service, and the true object of the transaction
13 is the service,
14 (2) the retail sale of services where one service is
15 provided that is essential to the use or receipt
16 of a second service and the first service is
17 provided exclusively in connection with the
18 second service and the true object of the
19 transaction is the second service,
20 (3) a transaction that includes taxable products and
21 nontaxable products and the purchase price or
22 sales price of the taxable products is de
23 minimis. For purposes of this subdivision
24 division, "de minimis" means the seller's
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1 purchase price or sales price of taxable products
2 is ten percent (10%) or less of the total
3 purchase price or sales price of the bundled
4 products. Sellers shall use either the purchase
5 price or the sales price of the products to
6 determine if the taxable products are de minimis.
7 Sellers may not use a combination of the purchase
8 price and sales price of the products to
9 determine if the taxable products are de minimis.
10 Sellers shall use the full term of a service
11 contract to determine if the taxable products are
12 de minimis, or
13 (4) the retail sale of exempt tangible personal
14 property and taxable tangible personal property
15 where:
16 (a) the transaction includes food and food
17 ingredients, drugs, durable medical
18 equipment, mobility enhancing equipment,
19 over-the-counter drugs, prosthetic devices
20 or medical supplies, and
21 (b) the seller's purchase price or sales price
22 of the taxable tangible personal property is
23 fifty percent (50%) or less of the total
24 purchase price or sales price of the bundled
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1 tangible personal property. Sellers may not
2 use a combination of the purchase price and
3 sales price of the tangible personal
4 property when making the fifty percent (50%)
5 determination for a transaction;
6 2. 3. "Business" means any activity engaged in or caused to be
7 engaged in by any person with the object of gain, benefit, or
8 advantage, either direct or indirect;
9 3. 4. "Candy" means a preparation of sugar, honey or other
10 natural or artificial sweeteners in combination with chocolate,
11 fruits, nuts or other ingredients or flavorings in the form of bars,
12 drops or pieces. Candy shall not include any preparation containing
13 flour or requiring refrigeration;
14 5. "Commission" or "Tax Commission" means the Oklahoma Tax
15 Commission;
16 4. 6. "Computer" means an electronic device that accepts
17 information in digital or similar form and manipulates it for a
18 result based on a sequence of instructions;
19 5. 7. "Computer software" means a set of coded instructions
20 designed to cause a "computer" or automatic data processing
21 equipment to perform a task;
22 6. 8. "Consumer" or "user" means a person to whom a taxable
23 sale of tangible personal property is made or to whom a taxable
24 service is furnished. "Consumer" or "user" includes all contractors
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1 to whom a taxable sale of materials, supplies, equipment, or other
2 tangible personal property is made or to whom a taxable service is
3 furnished to be used or consumed in the performance of any contract;
4 7. 9. "Contractor" means any person who performs any
5 improvement upon real property and who, as a necessary and
6 incidental part of performing such improvement, incorporates
7 tangible personal property belonging to or purchased by the person
8 into the real property being improved;
9 8. 10. "Dietary supplements" means any product, other than
10 tobacco, intended to supplement the diet that:
11 a. contains one or more of the following dietary
12 ingredients:
13 (1) a vitamin,
14 (2) a mineral,
15 (3) an herb or other botanical,
16 (4) an amino acid,
17 (5) a dietary substance to supplement the diet by
18 increasing the total dietary intake, or
19 (6) a concentrate, metabolite, constituent, extract,
20 or combination of any ingredient described in
21 divisions (1) through (5) of this subparagraph,
22 b. is intended for ingestion in tablet, capsule, powder,
23 softgel, gelcap, or liquid form, or, if not intended
24 for ingestion in such form, is not represented as
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1 conventional food and is not represented for use as a
2 sole item of a meal or of the diet, and
3 c. is required to be labeled as a dietary supplement,
4 identifiable by the label and as required pursuant to
5 Section 101.36 of Title 21 of the Code of Federal
6 Regulations;
7 11. "Drug" means a compound, substance or preparation, and any
8 component of a compound, substance or preparation:
9 a. recognized in the official United States
10 Pharmacopoeia, official Homeopathic Pharmacopoeia of
11 the United States, or official National Formulary, and
12 supplement to any of them,
13 b. intended for use in the diagnosis, cure, mitigation,
14 treatment, or prevention of disease, or
15 c. intended to affect the structure or any function of
16 the body;
17 9. 12. "Electronic" means relating to technology having
18 electrical, digital, magnetic, wireless, optical, electromagnetic,
19 or similar capabilities;
20 10. 13. "Established place of business" means the location at
21 which any person regularly engages in, conducts, or operates a
22 business in a continuous manner for any length of time, that is open
23 to the public during the hours customary to such business, in which
24 a stock of merchandise for resale is maintained, and which is not
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1 exempted by law from attachment, execution, or other species of
2 forced sale barring any satisfaction of any delinquent tax liability
3 accrued under the Oklahoma Sales Tax Code;
4 11. 14. "Fair authority" means:
5 a. any county, municipality, school district, public
6 trust or any other political subdivision of this
7 state, or
8 b. any not-for-profit corporation acting pursuant to an
9 agency, operating or management agreement which has
10 been approved or authorized by the governing body of
11 any of the entities specified in subparagraph a of
12 this paragraph which conduct, operate or produce a
13 fair commonly understood to be a county, district or
14 state fair;
15 12. 15. "Food and food ingredients" means substances, whether
16 in liquid, concentrated, solid, frozen, dried or dehydrated form,
17 that are sold for ingestion or chewing by humans and are consumed
18 for their taste or nutritional value. Food and food ingredients
19 shall include bottled water, candy, and soft drinks. Food and food
20 ingredients shall not include:
21 a. alcoholic beverages,
22 b. dietary supplements,
23 c. marijuana, usable marijuana or marijuana-infused
24 products,
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1 d. prepared food, or
2 e. tobacco;
3 16. a. "Gross receipts", "gross proceeds" or "sales price"
4 means the total amount of consideration, including
5 cash, credit, property and services, for which
6 personal property or services are sold, leased or
7 rented, valued in money, whether received in money or
8 otherwise, without any deduction for the following:
9 (1) the seller's cost of the property sold,
10 (2) the cost of materials used, labor or service
11 cost,
12 (3) interest, losses, all costs of transportation to
13 the seller, all taxes imposed on the seller, and
14 any other expense of the seller,
15 (4) charges by the seller for any services necessary
16 to complete the sale, other than delivery and
17 installation charges,
18 (5) delivery charges and installation charges, unless
19 separately stated on the invoice, billing or
20 similar document given to the purchaser, and
21 (6) credit for any trade-in.
22 b. Such term shall not include:
23 (1) discounts, including cash, term, or coupons that
24 are not reimbursed by a third party that are
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1 allowed by a seller and taken by a purchaser on a
2 sale,
3 (2) interest, financing, and carrying charges from
4 credit extended on the sale of personal property
5 or services, if the amount is separately stated
6 on the invoice, bill of sale or similar document
7 given to the purchaser, and
8 (3) any taxes legally imposed directly on the
9 consumer that are separately stated on the
10 invoice, bill of sale or similar document given
11 to the purchaser.
12 c. Such term shall include consideration received by the
13 seller from third parties if:
14 (1) the seller actually receives consideration from a
15 party other than the purchaser and the
16 consideration is directly related to a price
17 reduction or discount on the sale,
18 (2) the seller has an obligation to pass the price
19 reduction or discount through to the purchaser,
20 (3) the amount of the consideration attributable to
21 the sale is fixed and determinable by the seller
22 at the time of the sale of the item to the
23 purchaser, and
24 (4) one of the following criteria is met:
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1 (a) the purchaser presents a coupon, certificate
2 or other documentation to the seller to
3 claim a price reduction or discount where
4 the coupon, certificate or documentation is
5 authorized, distributed or granted by a
6 third party with the understanding that the
7 third party will reimburse any seller to
8 whom the coupon, certificate or
9 documentation is presented,
10 (b) the purchaser identifies himself or herself
11 to the seller as a member of a group or
12 organization entitled to a price reduction
13 or discount; provided, a "preferred
14 customer" card that is available to any
15 patron does not constitute membership in
16 such a group, or
17 (c) the price reduction or discount is
18 identified as a third-party price reduction
19 or discount on the invoice received by the
20 purchaser or on a coupon, certificate or
21 other documentation presented by the
22 purchaser;
23 13.
24
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1 17. a. "Maintaining a place of business in this state" means
2 and shall be presumed to include:
3 (1) (a) utilizing or maintaining in this state,
4 directly or by subsidiary, an office,
5 distribution house, sales house, warehouse,
6 or other physical place of business, whether
7