Oklahoma Adopts and Amends Regulations Affecting Various Tax Types

by Rebecca Helmes

The Oklahoma Tax Fee (OTC) printed numerous new and amended rules, efficient September 11, 2022, that implement tax laws enacted in 2021. The rules impression earnings tax, credit and incentives, gross sales and use tax, property tax, excise taxes, and administrative provisions. Among the many extra detailed rules issued are these associated to earnings tax credit for contributions to public faculty foundations or public faculty districts and a producing exemption from property tax.

Company earnings tax.

Company earnings tax charges:  Amended Okla. Admin. Code § 710:50-17-5 displays the decreased company tax charge of 4% (beforehand 6%) for taxable years starting after December 31, 2021.

Oklahoma taxable earnings adjustment for firms: Amended Okla. Admin. Code § 710:50-17-51 states that in computing Oklahoma accrued earnings tax for company earnings tax functions, taxpayers ought to divide the Oklahoma web earnings by 26 for tax years starting after December 31, 2021, and divide it by 17.667 for tax years starting after December 31, 1989, and ending earlier than January 1, 2022. Appendix A – Computation of Tax Accrual When Tax Credit Are Allowable is revoked and changed.

Curiosity on estimated tax underpayments: Amended Okla. Admin. Code § 710:50-13-8 supplies that the underpayment interval for estimated tax funds runs from the due date of a required installment to the sooner of the fifteenth day of the fourth month, or for firms, 30 days after the due date for returns established below the Interanl Income Code (beforehand, the fifteenth day of the third month) following the shut of the taxable 12 months or the date on which the required installment is paid.

Private earnings tax.

Private earnings tax charges, withholding: Amended Okla. Admin. Code §§ 710:50-3-53, 710:50-3-54, 710:90-3-10, and 710:90-3-11 replicate the adjustments to the person earnings tax charge for tax 12 months 2022, requiring earnings tax withholding from oil and gasoline royalties, together with by pass-through entities and trusts, on the highest Oklahoma marginal particular person earnings tax charge (beforehand 5%) with respect to the manufacturing of oil and gasoline within the state.

Amended Okla. Admin. Code § 710:90-1-13 additionally requires that, for pensions, annuities, and sure different deferred earnings, non-periodic funds should have tax withheld on the highest Oklahoma marginal particular person earnings tax charge (beforehand 5%). Submitting format adjustments have been made for a nonresident member withholding exemption affidavit.

Earned earnings tax credit score (EITC) calculation: Amended Okla. Admin. Code § 710:50-15-90 displays that Oklahoma’s EITC is refundable for tax years starting on or after January 1, 2022, and discusses credit score computation.

Garnishment of non-public earnings tax refunds: Amended Okla. Admin. Code §§ 710:50-11-6, 710:50-11-7, and 710:50-11-9 by means of 710:50-11-11, with reference to precedence of claims provisions, provides the OTC first precedence over all certified entities when the OTC is gathering a debt, courtroom fines and prices (beforehand, municipal courtroom fines and prices), or closing judgment.

Curiosity on company and private earnings tax refunds.

Amended Okla. Admin. Code § 710:50-9-3 supplies that for returns filed after Might 6, 2021, a taxpayer is entitled to curiosity paid on the delinquent tax funds charge if the refund will not be paid inside 45 days for electronically filed returns or inside 90 days for all different returns, in each circumstances from the later of the date a processible return is filed or is due.

Credit and incentives.

Credit score for certified employers and workers of the aerospace sector: Amended Okla. Admin. Code § 710:50-15-109 redefines “certified worker” and “certified program,” and notes that “aerospace sector,” “compensation,” “establishment,” “certified employer,” and “tuition” shall be outlined by statute.

Credit for contributions to scholarship-granting organizations, instructional enchancment grant organizations, and public faculty foundations or public faculty districts: Amended Okla. Admin. Code §§ 710:50-15-114 and 710:50-15-115 require scholarship-granting organizations and academic enchancment grant organizations to file annual studies with the OTC on or earlier than September 1 of every 12 months to take care of registration, and replace statutory references. Numerous annual report necessities for instructional enchancment grant organizations are eradicated.

New Okla. Admin. Code § 710:50-15-115.1 outlines necessities for credit for contributions to public faculty foundations or public faculty districts made on or after January 1, 2022, together with normal provisions, software necessities, credit score calculations, further 12 months commitments, the credit score’s cap, annual report and notification necessities, and different credit score limitations. The credit score is usually 50% of the overall quantity of contributions made in the course of the taxable 12 months, as much as $1,000 for every particular person taxpayer, $2,000 for married taxpayers submitting collectively, or $100,000 for any taxpayer that may be a authorized enterprise entity, topic to sure limitations. Credit allotted by means of a pass-through entity to fairness house owners are solely restricted in quantity for the earnings tax return of a pure individual based mostly upon the limitation of the overall credit score quantity to the entity from which the credit have been allotted, and aren’t topic to the $1,000 restrict for single people or $2,000 restrict for married individuals submitting collectively. For taxpayers who make an eligible contribution and a written dedication to contribute the identical quantity for an extra 12 months, the credit score shall be 75% of the overall contribution quantity made in the course of the taxable 12 months.

Oklahoma caps the quantity of such credit it might probably present every year, and if complete credit claimed exceed the cap, the credit score shall be equal to the taxpayer’s proportionate share of the cap for the taxable 12 months. The credit score will not be refundable, not transferable, and unused credit will be carried over, so as, to every of the three subsequent taxable years. Credit earned however not allowed because of statewide caps shall be thought of suspended and approved for use within the subsequent fast tax 12 months and utilized to the subsequent 12 months’s statewide cap.

Oklahoma Movie Enhancement Rebate Program: Amended Okla. Admin. Code § 710:85-7-3 supplies that the quantity of claims prequalified and accredited for any single fiscal 12 months won’t exceed $8 million (beforehand $4 million).

Gross sales and use tax.

Move by means of of exemptions to contractors: Amended Okla. Admin. Code §§ 710:65-1-7 and 710:65-7-13 replace the listing of exempt entities that may go by means of their gross sales tax exemption to a contractor to satisfy a public contract with the exempt entity. Additions embrace a city-county library system, Arbuckle Grasp Conservancy District, Fort Cobb Grasp Conservancy District, Foss Reservoir Grasp Conservancy District, Mountain Park Grasp Conservancy District, Waurika Lake Grasp Conservancy District, or the Workplace of Administration and Enterprise Companies solely when finishing up a public development contract on behalf of the Oklahoma Division of Veterans Affairs, and efficient July 1, 2022, the College Hospitals Belief.

Aid of vendor’s legal responsibility to gather gross sales tax: Amended Okla. Admin. Code § 710:65-7-15 provides current entities exempted from gross sales tax on purchases with sure documentation to be accepted by a vendor to alleviate the seller’s gross sales tax assortment legal responsibility. Such entities embrace: tax exempt, impartial, nonprofit group blood banks headquartered in Oklahoma; tax exempt, impartial, nonprofit biomedical analysis foundations; museums not accredited by the American Alliance of Museums working on budgets of lower than $1 million; College Hospital Belief and nonprofit entity with a joint working settlement with the Belief; tax exempt organizations that assemble, transform and promote reasonably priced housing; nonprofit organizations restoring single household housing following a catastrophe; and companies engaged in logging, timber, and tree farming.

Exemption from motorized vehicle gross sales tax: Amended Okla. Admin. Code § 710:65-13-30 updates in lieu tax provisions, including that energy models (truck tractors) and trailers proportionally registered below the Worldwide Registration Plan or trailers and semitrailers registered to move cargo over Oklahoma highways are exempt from the 1.25% motorized vehicle gross sales tax.

Gross sales tax on cigarettes: Amended Okla. Admin. Code § 710:65-13-30 removes a gross sales tax exemption for gross sales of cigarettes and tobacco merchandise to a federally acknowledged Indian tribe or nation or to a licensee of such tribe or nation upon which the tax levied by Okla. Stat. 68 §§ 349 (repealed) or 426 has been paid.

Exemption for gross sales between associated entities: Amended Okla. Admin. Code § 710:65-13-201 exempts from gross sales tax transfers of tangible private property between wholly owned subsidiaries of a guardian firm and between a guardian firm and its wholly owned subsidiary.

Exemptions for qualifying 100% disabled veterans: Amended Okla. Admin. Code § 710:65-13-275 requires veterans eligible for the gross sales tax exemption to register with the veterans registry created by the Oklahoma Division of Veterans Affairs. Veterans who have been granted the exemption earlier than November 1, 2020, should register earlier than July 1, 2023 to stay certified. The gross sales tax exemption card issued to the qualifying veteran by the OTC should be offered on the time of sale in order that the seller doesn’t cost and acquire gross sales tax on the acquisition. The provisions talk about when refunds of erroneously collected gross sales tax could also be claimed.

Exemptions for nonprofits associated to reasonably priced housing, rebuilding housing after disasters: Two new guidelines define the method for nonprofit organizations to qualify for a gross sales tax exemption for gross sales of sure tangible private property or companies, after they assemble, transform, and promote reasonably priced housing below new Okla. Admin. Code § 710:65-13-368 or after they restore single household housing following a catastrophe below new Okla. Admin. Code § 710:65-13-369. The brand new rules describe normal provisions and the appliance course of. Each exemptions are restricted to eligible, correctly documented transactions, and the exemptions don’t apply to purchases by contractors performing work on the nonprofits’ behalf.

Exemption for sure non-profit, non-accredited museums: New Okla. Admin. Code § 710:65-13-370 supplies data on learn how to receive a gross sales tax exemption out there from November 1, 2021 by means of December 31, 2024, for gross sales of tangible private property or companies to museum that operates as an IRC § 501(c)(3) group and isn’t accredited by the American Alliance of Museums. Such entities should function on an annual finances of lower than $1 million. The exemption is restricted to eligible, correctly documented transactions, and doesn’t apply to purchases by contractors performing work on a non-accredited museum’s behalf.

Exemption for gross sales of business forestry service gear: New Okla. Admin. Code § 710:65-13-470 outlines the method to qualify for the gross sales tax exemption for gross sales of business forestry service gear, out there from January 1, 2022, till January 31, 2027. Exempt gear is restricted to forwarders, fellers, bunchers, observe skidders, wheeled skidders, hydraulic excavators, delimbers, soil compactors, and skid steer loaders for companies engaged in logging, timber, and tree farming.

Gross sales tax permits for scrap metallic services and junkyards: Amended Okla. Admin. Code § 710:65-19-305 describes how individuals or entities should receive a gross sales tax allow for every scrap metallic yard owned or operated by them, and for junkyards making gross sales of tangible private property in Oklahoma.

High quality Occasions Incentive Act: Amended Okla. Admin. Code §§ 710:95-21-2, 710:95-21-4, 710:95-21-6, 710:95-21-8, and 710:95-21-9 are up to date to be according to revisions to the High quality Occasions Incentive Act requiring an financial impression research as a part of the appliance, and amending sure deadlines, documentation necessities, and the OTC’s contact data. The rules present a brand new definition of “financial impression research,” and amend definitions of “incremental gross sales tax income,” state gross sales tax income,” and “distributors.”

OTC contact data: Amended Okla. Admin. Code §§ 710:65-3-1, 710:65-3-4, 710:65-9-10, 710:65-11-1, 710:65-13-33, 710:65-13-40, 710:65-13-55, 710:65-13-80, 710:65-13-122, 710:65-13-123, 710:65-13-133, 710:65-13-172, 710:65-13-174, 710:65-13-175, 710:65-13-177, 710:65-13-194, 710:65-13-210, 710:65-13-220, 710:65-13-334 by means of 710:65-13-346, 710:65-13-348, 710:65-13-350 by means of 710:65-13-355, 710:65-13-357, 710:65-13-359, 710:65-13-360, 710:65-13-362 by means of 710:65-13-367, 710:65-13-550, 710:65-13-650, and 710:65-19-116 change OTC contact data.

Property tax.

Manufacturing exemption: Amended Okla. Admin. Code § 710:10-7-2.2 modifies payroll and funding price necessities for manufacturing exemption functions. The funding prices of the development, acquisition, or growth of a producing facility should be $500,000 or extra with respect to property positioned into service throughout calendar 12 months 2022, and the funding required in subsequent calendar years shall be elevated based mostly on inflation. The OTC will publish the adjusted greenback quantity required to qualify for the exemption. New payroll necessities embrace that for any entity making use of for the exemption on or after January 1, 2023, for exempt remedy of actual or private property acquired or improved starting January 1, 2022, and for any calendar 12 months thereafter, the entity should pay new direct jobs an annualized wage that equals or exceeds the common wage requirement within the Oklahoma High quality Jobs Program Act for the 12 months wherein the true or private property was positioned in service. Equally, distribution services in search of the exemption should have wages and salaries that equal or exceed the common wage necessities within the Oklahoma High quality Jobs Program Act for the 12 months wherein the true property was positioned in service. The rules additionally amend the “facility or services” definition. Wind electrical technology services are excluded as qualifying manufacturing services for functions of this exemption or the exemption approved below the Oklahoma Structure.

Additional, the amendments specify manufacturing actual and private property exemption and qualification necessities for laptop information processing, information preparation, or data processing companies suppliers categorised below NAICS Handbook Trade No. 518210, 2017 revision. Eligible institutions should: (1) have a web improve in annualized payroll of the applicant at any facility or services in Oklahoma of at the very least $250,000, attributable to capital enhancements; (2) have a web improve of $7 million or extra in capital enhancements, whereas sustaining or growing payroll on the Oklahoma facility or services included within the software; and (3) the ability should meet necessities associated to the availability of fundamental well being advantages to sure facility workers. The true and private property exemption is on the market, with an exception, for every year wherein new, acquired, or expanded capital enhancements to the ability are made for property positioned in service not later than December 31, 2021. An institution that has utilized for and been granted an exemption for private property at any time inside 5 years earlier than November 1, 2021, might apply for exemption for objects of eligible private property to be positioned inside enhancements to actual property and such actual property and enhancements having been exempt from advert valorem taxation earlier than November 1, 2021, if such private property is positioned in service no later than December 31, 2036. No further private property of such institution positioned in service after that date will qualify for the exemption.

Enterprise private property valuation schedules: New Okla. Admin. Code § 710:10-2-6 defines “miscellaneous gear” and notes that the OTC’s Advert Valorem Division makes use of a nationwide valuation service, at present Marshall and Swift Valuation Service, to offer tables of values for private property, depreciation schedules, and trending tables for historic price of the varied industries. This regulation replaces a beforehand revoked regulation of the identical quantity, and the Oklahoma Register states that the brand new regulation removes antiquated varieties of miscellaneous gear. Amended Okla. Admin. Code § 710:10-2-1 adjustments the contact data for the OTC.

Homestead exemption: Amended Okla. Admin. Code § 710:10-1-4 updates the utmost gross family earnings to $25,000 (beforehand, $20,000) for the previous calendar 12 months for heads of households to be eligible for the extra homestead exemption, and excludes federal stimulus or reduction funds associated to the COVID-19 virus from “gross family earnings.”

Homestead exemption for disabled veterans and sure unremarried spouses: Amended Okla. Admin. Code §§ 710:10-14-4 and 710:10-16-1 specify that homestead exemption provisions associated to disabled veterans and the unremarried surviving spouses of individuals who died within the line of army obligation, and unremarried spouses of veterans killed in motion, that personal and occupy a residence on leased land owned by a municipality, city, or metropolis, is taken into account a homestead for functions of qualification for the advert valorem exemption approved below the Oklahoma Structure.

Excise taxes and charges.

Exclusion from annual merchandising machine price in lieu of gross sales tax: Amended Okla. Admin. Code § 710:25-1-2, starting November 1, 2021, excludes from the merchandising machine price and annual decal requirement gadgets that dispense tangible private property or present amusement the place cost is made solely by means of using a credit score or debit card or different digital or digital cost course of. The gross receipts related to such gross sales made out of these gadgets are topic to gross sales tax.

Excise tax on tobacco merchandise: Amended Okla. Admin. Code § 710:70-5-8 and revoked Okla. Admin. Code § 710:70-5-9, which handle studies on tobacco merchandise by individuals, retailers, shoppers, carriers, or bailees aside from these required to report and pay tax, take away all references to drop shipments of tobacco merchandise. Amended Okla. Admin. Code § 710:70-5-13 requires new bill data to be maintained by tobacco merchandise wholesalers and retailers, and adjustments the OTC’s mailing handle.

Rental tax on motor autos associated to peer-to-peer automotive sharing agreements: Amended Okla. Admin. Code §§ 710:95-4-2, 710:95-4-3, and 710:95-4-4 updates motorized vehicle rental tax provisions to offer that the rental tax is due on all rental agreements, with exceptions, even when the buyer coming into into the rental settlement is exempt from gross sales tax. The tax is collected by the rental enterprise or peer-to-peer automotive sharing program on the time of the cost of the rental settlement. Nonetheless, motorized vehicle rental tax doesn’t apply to any shared automobile upon the acquisition of which relevant taxes have been paid. The regulation amendments additionally outline “relevant taxes,” “peer-to-peer automotive sharing program,” “peer-to-peer automotive sharing program settlement,” “rental settlement,” “shared automobile,” and “shared automobile proprietor.”

Fuels and minerals taxes.

Gross manufacturing tax: Amended Okla. Admin. Code § 710:45-1-3 supplies when the OTC might authorize a decreased bond quantity associated to gross manufacturing tax.

Administrative and miscellaneous provisions.

Settlement of tax legal responsibility:  Amended Okla. Admin. Code § 710:1-5-81 updates the definition of “belief fund tax” to take away use tax and add Oklahoma gross receipts tax (AKA Blended Beverage Tax).

Shopper Compliance Initiatve Aid: Amended Okla. Admin. Code § 710:1-13-3 requires enterprise that need to obtain Shopper Compliance Initiative reduction to use on-line.

Different OTC handle adjustments: Amended Okla. Admin. Code §§ 710:1-3-70, 710:1-3-71, 710:1-3-73, 710:1-5-15, 710:1-5-16, 710:1-5-17, 710:15-2-5, 710:70-2-11, and 710:95-22-8 replace the OTC’s contact data.

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