Oklahoma Sales Tax Handbook

RATE OF SALES TAX:

4.50%

LOCAL & COUNTY MAXIMUM RATES:

7.00%

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Oklahoma.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Oklahoma.

Prescription drugs and fuel are both tax-free.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Oklahoma are not required to collect sales tax on the sale of digital products or services.

Oklahoma, however, has one exemption to this prohibition. Businesses are required to collect sales tax on pre-written computer software offered online.

How to Register for Sales Tax in Oklahoma

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

Data on personal identity (Name, address, SSN, etc.)
Identification information for a business (Name, address, EIN, etc.)
Type of business entity
Incorporation date (if applicable)
Product categories

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Retail Sales

For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.

Here’s an illustration of how this situation may look:

Mary is the owner and manager of a bookshop in Tulsa, Oklahoma. Because books are taxed in the state of Oklahoma, Mary charges a flat rate of 8.517% on all sales. This includes the 4.5% state sales tax in Oklahoma, the 0.367% county sales tax in Tulsa, and the 3.65% municipal tax in Tulsa.

Sales inside the state

Oklahoma has a sales tax scheme known as a destination-based sales tax. This implies that long-distance transactions inside Oklahoma are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.

Consider the following scenario:

Steve operates his own eBay electronics company from his home in Enid, Oklahoma. A buyer from Edmond, Oklahoma discovers Steve’s eBay website and buys a $350 set of headphones. When computing the sales tax for this item, Steve uses Oklahoma’s state tax rate of 4.5% plus Edmond’s municipal tax rate of 3.75%. The total cost is $378.88 ($28.88 sales tax) at an 8.25% total sales tax rate.

Out-of-State Purchases

Oklahoma firms must only pay sales tax on out-of-state sales if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Oklahoma seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Oklahoma are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

Semi-annual filing: If your company collects less than $83.33 in sales tax each month, you should submit returns on a semi-annual basis.
Monthly filing: If your firm collects more than $83.33 in sales tax each month, you must submit monthly returns.

Deadlines for Filing

The deadline for all Oklahoma sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is moved to the next business day. The following are the filing deadlines for this year:

Penalties for Filing Late

If the tax return is not filed within 10 days of receiving written notification from the state, Oklahoma charges a late filing penalty of 25% of the tax reported on the tax return.

Oklahoma also imposes a late payment penalty of 10% of the unpaid tax if it is not paid within the first 15 days after the due date.

For any unpaid tax or penalty, the state assesses a compounded interest rate of 15% per year or 1.25% per month or partial month.