Should you collect sales tax in Oklahoma?
Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting tangible property. However, you will collect the sales tax if you determine the nexus in Oklahoma. Nexus is the presence that may come physically or economically.
Physical nexus is typically created when your business has a store, warehouse, or any office location in Oklahoma. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds are based on revenue.
Let’s explore if your business has a Physical nexus in Oklahoma.
A physical nexus is integrated when your business is engaged in the following in Oklahoma:
- Servicing tangible personal property in Oklahoma.
- Maintaining, occupying, or using a place of business or an office in Oklahoma.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Oklahoma.
Is it constituting an Economic nexus in Oklahoma?
You must comply and register under sales tax rules if you are a remote seller (i.e., don’t have a physical presence in the state). Oklahoma business sales exceed $100,000 during the current or previous calendar year.
You may also refer to the Oklahoma Tax Commission Advisory to know more about business activities that may create an economic nexus within the state.
How can you Register for Sales tax in Oklahoma?
You need to apply online to get the sales tax permit in Oklahoma. You must register in the state even if you are a temporary seller but meet the economic nexus threshold.
The department charges you a fee of $20 plus a handling fee for every new sales tax registration.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- EIN and Social Security numbers of all officers, partners, or owners.
- Secretary of State filing number.
- Address details (physical and mailing).
- Business incorporation dates in Oklahoma.
- Contact information.
- Estimated total monthly sales
- Nature of business.
Is your product or services liable to Sales tax in Oklahoma?
Tangible Property: Sales tax in Oklahoma is imposed primarily on the retail sale of tangible personal property, e.g., furniture, giftware, toys, etc.
Services: Many services are subject to sales tax in Oklahoma except otherwise exempted. Few examples of exempted services are health center, services to private institutions of higher education etc. For more information, click here.
Digital Product: Oklahoma doesn’t charge sales tax on digital products such as software, streaming services, e-books, etc. Please see the Oklahoma Revenue Department advisory on digital transactions.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. This is non-taxable in Oklahoma as it doesn’t transfer tangible property to the customer. Please see the Oklahoma Revenue Department advisory (pg. 238) here.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, manufacturing equipment, etc. To see what exemptions are covered, please click here.
You can read further by visiting the department website to know exactly what’s included in your list of items bound to pay sales tax.
How should you collect and calculate state taxes in Oklahoma?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not in Oklahoma, as the sales tax is destination-based in Oklahoma, which means you must collect taxes on tangible property sold to buyers based in Oklahoma.
However, complexities are involved when you have a business nexus, even if it is not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Oklahoma has a base sales tax rate of 4.5%, followed by the local tax rates, which vary based on the cities and municipalities. Click here for location-wise local sales tax rates.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (4.5% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of items sold. There will be no tax applicability if shipping charges are separately stated on the invoice. However, if they are not stated separately, you need to collect the tax on the total sales price, including shipping charges. For more information, click here.
How should you file sales tax in Oklahoma?
There are multiple options available to you for reporting your sales tax.
E-file: You can e-file your return through the OKTAP filing portal.
File by Mail or In-person: Complete form STS-20002-A and mail it to the address indicated in the form or submit it in person.
Filing frequencies and due dates
You need to file the monthly sales tax due on the 20th day of the following month. However, when your sales tax collections are below $50 per month, you will get the semi-annual filing status. In that case, file your sales tax by 20th July and 20th January of the month from the end of the relevant 6-month period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official Oklahoma tax calendar, where you can see what the state says about sales tax filing due dates.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a penalty of up to 10% of sales tax due if you default in filing the sales tax by the due date. Also, interest is charged at the rate of 1.25% per month.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines (pg. 278) the Oklahoma Tax Commission issued for penalties and interest.
Sales tax holiday in Oklahoma
The Oklahoma sales tax holiday applies to items costing $100 or less. The sales tax holiday in the state is enjoyed from first Friday to Sunday in August. For detailed information, refer to the Oklahoma Taxation Department advisory here.