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Oklahoma intensifies sales tax audits


 Oklahoma is examining how businesses handle sales tax exemptions.

Sales and use tax collections in Oklahoma are likely to increase in the coming months. With the enactment of Senate Bill 1579, the Oklahoma Tax Commission is authorized to increase its audit staff in order to enhance sales and use tax, income tax, and gross receipts tax collections. As a result, the Commission is hiring approximately 50 new auditors and 10 new compliance officers. Auditor salaries, while remaining modest, are also being increased.

Through additional audits and the use of “enhanced technology,” the state expects to bring in $50 million more in annual revenue. It will certainly be welcome. Earlier this month, Oklahoma voters rejected a proposed state sales tax rate increase that would have generated much needed revenue for education.

For sales and use tax, particular emphasis is to be placed on exemptions and underreported taxes. According to Oklahoma tax practitioners, the Tax Commission is sending notices to taxpayers asking them “for proof of all exempt sales for a one-month period.” This saves resources — taxpayers do the grunt work of searching through their records — and could potentially help the agency target taxpayers with less than perfect documentation processes. It could also eventually lead to expanded audits or even tax assessments. Not least of all, it could spark dread in even the most conscientious and honest taxpayers and serve as powerful motivation for increased compliance.

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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.