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Oklahoma remote sales tax starts November 2016


 More out-of-state vendors will have Oklahoma nexus come November 1, 2016.

Oklahoma is the latest state to jump on the remote sales tax bandwagon. The recently enacted Retail Protection Act redefines “vendor” and “maintaining a place of business in this state” and gives out-of-state retailers with no physical presence in Oklahoma a choice: either voluntarily register with the state and collect Oklahoma use tax, or notify Oklahoma customers of their obligation to remit use tax and provide an annual report of their online purchases. It takes effect November 1, 2016.

Vendor, redefined

Under the Act, a remote vendor is considered to have nexus in Oklahoma if any person (other than a common carrier) with substantial nexus in Oklahoma does any of the following:

  • Sells a similar line of products as the vendor under the same or a similar name
  • Uses trademarks, service marks, or trade names in Oklahoma that are similar or the same as the vendor’s
  • Delivers, installs, assembles or performs maintenance services for the vendor
  • Facilitates the vendor’s delivery of property to customers by allowing the vendor’s customers to pick up property sold by the vendor at an office, distribution facility, warehouse, storage place or other place maintained by the person in Oklahoma
  • Conducts any other activities in Oklahoma that are significantly associated with the vendor’s ability to establish and maintain a market in Oklahoma for the vendor’s sale.

In addition, the Act adds definitions for “marketplace provider” and “marketplace seller.” On the other hand, “persons who solicit business by distribution of catalogs or other advertising matter” are removed from the definition of vendor.

Past agreements null and void

Past agreements that free a person with a physical presence (or a physical presence via an affiliated person) from collecting and remitting Oklahoma sales and use tax are declared null and void “unless approved by a majority vote of each house of the Oklahoma legislature.”

According to the Fiscal Impact Statement, the measure will not impact state revenue in Fiscal Year 17 or 18, though it is hoped it will eventually. The state loses approximately $150 million each year from internet purchases where no sales or use tax is collected or remitted. A recent study from Civic Economics and the American Bookseller Association says, “Oklahoma is losing $45 million annually in sales tax just from Amazon.com.”

What will Amazon do?

Amazon is not currently required to collect Oklahoma sales and use tax. Once the Retail Protection Act takes effect, however, it will presumably have nexus through members of its Associates Program.

When Louisiana imposed internet sales tax on April 1, 2016, Louisiana Amazon associates were told that “due to the recent enactment of tax legislation, residents of Louisiana will no longer be eligible to participate in the program.” Louisiana joined the list of states whose residents are prohibited from being Amazon affiliates and associates, and Amazon still does not collect Louisiana sales or use tax.

It remains to be seen whether or not Amazon will take the same tactic with Oklahoma.

Read more about Oklahoma’s Retail Protection Act of 2016 here and in the text of the bill.

Learn how automated sales tax software (SaaS) faciliates sales and use tax compliance in all states.

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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.