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Internet Sales Tax Legislation Moves Forward in Oklahoma

  • Mar 17, 2016 | Gail Cole

 Shop online? Oklahoma lawmakers are going after online sales tax revenue.

Update, 5.19.2016: The Retail Protection Act of 2016 has been enacted. It takes effect November 1, 2016.

Today, you pay Oklahoma sales tax if you buy something from a store located in Tulsa or Oklahoma City. If you stay in your Tulsa home and make an online purchase from Amazon, you won’t. That will change if House Bill 2531 becomes law.

The Oklahoma Retail Protection Act of 2016, approved by the House in a 51-39 vote, is now under consideration in the Senate. It seeks to expand the definition of “maintaining a place of business in this state” to presumably include the following:

  • “The presence of any person that has substantial nexus in the state and who performs specific actions that are significantly associated with the vendor’s ability to establish and maintain a market in the state for the vendor’s sales
  • Utilizing an office, distribution house, sales house, warehouse or other physical place of business in the state whether or not the property is owned by the vendor.”

Rep. Chad Caldwell (R-Enid) said the measure “levels the playing field for Oklahoma businesses that employ Oklahomans” by removing “the financial incentives for shoppers to buy outside of our state.” As an added perk, it will increase state and local sales tax revenue.

Residents are supposed to pay use tax on untaxed remote purchases, but as few as 4% actually do. According to Caldwell, the state loses approximately $300 annually in sales tax revenue from untaxed remote sales.

While the measure had enough support to pass the House, the 51-39 vote reveals a substantial amount of opposition. Democratic Rep. Scott Inman notes that “federal court precedent runs counter to Caldwell’s assessment that the measure will force out-of-state retailers to change their practices.” He’s referring to 1967 and 1992 Supreme Court decisions that uphold the need for a physical presence in a state in order for the state to impose a sales tax obligation. Although Supreme Court Justice Kennedy recently addressed the need for the court to reconsider those rulings, they do still stand.

If the Oklahoma bill is enacted, it will be one of several that challenge the status quo. Many states are fighting for the right to collect online sales tax revenue. Some, like Nevada and Washington, have successfully implemented affiliate or click-through nexus legislation; others are facing pushback. Just this week, Utah lawmakers withdrew proposed remote sales tax legislation in the face of local opposition.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.