Oklahoma: Farmers Markets Are No Longer Special
- Sales Tax News
- Sep 5, 2014 | Gail Cole
“Special event” is defined as an “event held on an irregular basis,” meaning “any event that does not occur on a continuous and ongoing basis, even if there is some frequency or pattern of occurrences.” It is also defined as events “held once a week or only certain weeks, events that are held every weekend or only on particular weekends, events held once a month or for only certain months, and other events that are held on a periodic basis, as well as those which occur more sporadically.”
A weekly farmers market would seem to meet that definition. However, effective September 12, registered farmers markets will not be considered special events. The code (OAC 710:65-9-8) stipulates that “’special event’ shall not include:
“[A] registered farmers market which is a designated area where farmers, growers, or producers from a defined region gather on a regularly scheduled basis to sell at retail nonpotentially hazardous farm food products and whole-shell eggs to the public.”
Promoters or organizers of special events are required to file sales tax reports and remit collected taxes, along with a list of special event vendors holding valid sales tax permits. However, only the promoters and organizers are liable for the sales tax—meaning the promoter is responsible even if a vendor doesn’t collect tax and give it to the promoter. OAC 710:65-9-8 does not delve into the sales tax obligations of vendors at farmers markets, perhaps because sales of non-prepared food and food ingredients are not subject to sales tax in Oklahoma.
Direct Payment Permits
Direct payment permit holders may “make purchases of taxable items, for use in its Oklahoma enterprises and not for resale, and defer the taxes imposed by the Oklahoma Sales and Use Tax Codes until such time as the items are first used or consumed in a taxable manner, if all requirements described in this Section are met.”
To qualify for a direct payment permit, applicants must meet many requirements, including but not limited to:
- Purchase at least $800,000 of taxable items annually, for use in Oklahoma enterprises and not for resale. Records for the purchases must be maintained.
- Be in compliance with all pertinent tax laws and rules.
- Establish reliability and accuracy of accounting methods.
- Agree to report and remit all sales and use taxes on the applicable direct payment sales or use tax return in a timely manner.
- Agree to provide a resale certificate for all items purchased for resale.
Generally, sales tax is owed on goods purchased in Oklahoma pursuant to a valid direct payment permit “at the time they are first used or consumed in a taxable manner.” Prior to September 12, 2014, sales tax is due on the removal of goods “originally purchased tax-free… from an inventory held in this State, even if the goods are intended for transfer to another state.” However, effective September 12:
“Sales made to direct payment permit holders of tangible personal property intended solely for use in other states, but which is stored in Oklahoma pending shipment to other states or which is temporarily retained in Oklahoma for the purpose of fabrication, repair, testing, alteration, maintenance, or other service are not subject to Oklahoma sales tax” (emphasis mine).
Finally, effective September 12, certain healthcare providers may qualify for a direct payment permit in Oklahoma. They must be authorized by law to administer or distribute the following items and they must be making purchases of:
- Drugs for the treatment of humans.
- Medical appliances.
- Medical devices and other medical equipment such as corrective eyeglasses and contact lenses, hearing aids and prosthetic devices.
- Mobility enhancing equipment.
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