Oklahoma Administrative Code › Title 710 - Oklahoma Tax Commission › Chapter 65 - Sales and Use Tax › Subchapter 1 - General Provisions › Section 710:65-1-7 - Consumer/user defined; specific applications

Current through Vol. 41, No. 20, July 1, 2024
"Consumer"
or
"user"
means a person
				  to whom a taxable sale of tangible personal property is made or for whom a
				  taxable service is performed.
(1)
Hospitals, sanitariums, nursing homes and emergency medical care.
Hospitals and sanitariums are primarily engaged in the business of selling
				services, and for the purposes of the Sales Tax Code are considered to be the
				consumers or users of all tangible personal property and services used in the
				operation of the institution. Thus, the gross proceeds derived from sales of
				tangible personal property and certain services to such institutions are
				subject to tax. This paragraph applies to all hospitals, sanitariums and
				nursing homes, including those owned or operated by churches, fraternities,
				cooperatives, or any other organization, except those operated by the Federal
				Government, the State, or a political subdivision thereof.
(2)
Withdrawals from stock.
If
				any business purchases tangible personal property for resale, manufacturing or
				further processing and that business withdraws tangible personal property,
				either from its inventory or after such inventory has been manufactured or
				processed for its own use or consumption, that business has made a taxable sale
				and the value of the property withdrawn is taxable at its
"sales
				value"
, as defined in
OAC
710:65-1-2. The
				business withdrawing tangible personal property from inventory should include
				the
"sales value"
of such property in gross receipts or gross
				proceeds on its sales tax report for the month the property was
				withdrawn.
(3)
Contractors.
Contractors are consumers or users, and must pay
				sales tax on all taxable services and tangible personal property, including
				materials, supplies, and equipment, purchased to develop and improve real
				property. Examples of contractors subject to this paragraph are: painting
				contractors, road contractors, grading and excavating contractors, electrical
				contractors, plumbing contractors, and other persons engaged in a contractual
				arrangement to make improvements on real property. A person working for a
				salary or wage is not considered a contractor. The Sales Tax Code limits the
				ability of contractors to make purchases exempt from sales tax based on the
				exempt status of another entity to the following situations: [
See:
710:65-7-6
				and
				710:65-7-13]
(A) A contractor who has a public contract,
				or a subcontractor to that public contract, with an Oklahoma municipality,
				county, public school district, city-county library system, an institution of
				the Oklahoma System of Higher Education, a rural water district, the Grand
				River Dam Authority, the Northeast Oklahoma Public Facilities Authority, the
				Oklahoma Municipal Power Authority, the City of Tulsa-Rogers County Port
				Authority, the Broken Bow Economic Development Authority, the Muskogee
				City-County Port Authority, the Oklahoma Ordnance Works Authority, the Durant
				Industrial Authority, the Ardmore Development Authority, the Oklahoma
				Department of Veterans Affairs, the Central Oklahoma Master Conservancy
				District, Arbuckle Master Conservancy District, Fort Cobb Master Conservancy
				District, Foss Reservoir Master Conservancy District, Mountain Park Master
				Conservancy District, Waurika Lake Master Conservancy District or the Office of
				Management and Enterprise Services only when carrying out a public construction
				contract on behalf of the Oklahoma Department of Veterans Affairs and effective
				July 1, 2022, the University Hospitals Trust may make purchases of tangible
				personal property or services, which are necessary for carrying out the public
				contract, exempt from sales tax.
(B) A contractor who has entered into a
				contract with a private institution of higher education or with a private
				elementary or secondary institution, may make purchases of tangible personal
				property or services, including materials, supplies and equipment used in the
				construction of buildings owned and used by the institution for educational
				purposes exempt from sales tax.
(C)
				A contractor who has contracted with an agricultural permit holder to construct
				a facility which will be used directly in the production of any livestock,
				including facilities used in the production and storage of feed for livestock
				owned by the agricultural permit holder, may make purchases of materials,
				supplies and equipment necessary to fulfill the contract, exempt from sales
				tax.
(D) A contractor may make
				purchases of materials, supplies and equipment necessary to fulfill a contract,
				exempt from sales tax, for use on campus construction projects for the benefit
				of institutions of the Oklahoma State System of Higher Education or private
				institutions of higher education accredited by the Oklahoma State Regents for
				Higher Education. The projects must be financed by or through the use of
				nonprofit entities which are exempt from taxation pursuant to Section 501(c)(3)
				of the Internal Revenue Code.
(E) A
				contractor may make purchases of machinery, equipment, fuels, and chemicals or
				other materials, exempt from sales tax, which will be incorporated into and
				directly used or consumed in the process of treatment of hazardous waste,
				pursuant to
OAC
710:65-13-80.
				Contractors claiming exemption for purchases to be used to remediate hazardous
				wastes should obtain a letter certifying the exemption status from the Tax
				Commission by following the procedures set out in
				710:65-13-80,
				and provide a copy of the letter to vendors, pursuant to subsection (f) of that
				rule.
(F) A contractor, or a
				subcontractor to such contractor, with whom a church has duly entered into a
				construction contract may make purchases of tangible personal property or
				services exempt from sales tax which are necessary for carrying out such
				construction contract.
(G) A
				contractor, or a subcontractor to such contractor, may make purchases of
				tangible personal property which is to be
consumed or incorporated in
				the construction or expansion of a facility for a corporation organized under
				Section
				437 et
				seq. of Title 18 of the Oklahoma Statutes as a rural electric
				cooperative
exempt from sales tax.
(H) A contractor, or a subcontractor to such
				contractor, may make purchases of tangible personal property or services
				pursuant to a contractual relationship with a child care center, qualified for
				exemption pursuant 68 O.S. § 1356(69), for construction and improvement of
				buildings and other structures owned by the child care center and operated for
				educational purposes exempt from sales tax.
(I) A contractor, or a subcontractor to such
				contractor, may make purchases of tangible personal property or services exempt
				from sales tax pursuant to a contractual relationship with a manufacturer for
				the construction and improvement of manufacturing goods, wares, merchandise,
				property, machinery and equipment for use in a manufacturing operation
				classified under NAICS No. 324110 (Petroleum Refineries).