Oklahoma Administrative Code › Title 710 - Oklahoma Tax Commission › Chapter 65 - Sales and Use Tax › Subchapter 1 - General Provisions › Section 710:65-1-2 - Definitions

Current through Vol. 41, No. 20, July 1, 2024
The following words and terms, when used in this Chapter,
				  shall have the following meaning, unless the context clearly indicates
				  otherwise:
"Business"
means any activity with the potential
				  to generate a profit even if the business actually operates at a loss. This
				  category also includes non-profit, religious and other organizations and
				  persons who are otherwise exempt when they are conducting activities for a
				  profit in competition with other businesses.
"Bundled Transaction"
means the retail sale of
				  two or more products, except real property and services to real property, where
				  the products are otherwise distinct and identifiable, and the products are sold
				  for one nonitemized price. A
"bundled transaction"
does not
				  include the sale of any products in which the sales price varies, or is
				  negotiable, based on the selection by the purchaser of the products included in
				  the transaction. As used in this paragraph:
(A)
"distinct and identifiable products"
does
				  not include:
(i) packaging such as containers, boxes, sacks, bags, and
				  bottles, or other materials such as wrapping, labels, tags, and instruction
				  guides, that accompany the retail sale of the products and are incidental or
				  immaterial to the retail sale thereof, including but not limited to, grocery
				  sacks, shoeboxes, dry cleaning garment bags and express delivery envelopes and
				  boxes;
(ii) a product provided free of charge with the required
				  purchase of another product. A product is provided free of charge if the sales
				  price of the product purchased does not vary depending on the inclusion of the
				  product provided free of charge, or
(iii) items included in the definition of gross receipts or
				  sales price, pursuant to this Section.
(B)
"one nonitemized price"
does not include a
				  price that is separately identified by product on binding sales or other
				  supporting sales-related documentation made available to the customer in paper
				  or electronic form including, but not limited to an invoice, bill of sale,
				  receipt, contract, service agreement, lease agreement, periodic notice of rates
				  and services, rate card, or price list.
(C) A transaction that otherwise meets the definition of a
bundled transaction
shall not be considered a
bundled
				  transaction
if it is:
(i) the retail sale of tangible personal property and a
				  service where the tangible personal property is essential to the use of the
				  service, and is provided exclusively in connection with the service, and the
				  true object of the transaction is the service;
(ii) the retail sale of services where one service is
				  provided that is essential to the use or receipt of a second service and the
				  first service is provided exclusively in connection with the second service and
				  the true object of the transaction is the second service;
(iii) a transaction that includes taxable products and
				  nontaxable products and the purchase price or sales price of the taxable
				  products is de minimis. For purposes of this Section, "de minimis" means the
				  seller's purchase price or sales price of taxable products is ten percent (10%)
				  or less of the total purchase price or sales price of the bundled products.
				  Sellers shall use either the purchase price or the sales price of the products
				  to determine if the taxable products are de minimis. Sellers may not use a
				  combination of the purchase price and sales price of the products to determine
				  if the taxable products are de minimis. Sellers shall use the full term of a
				  service contract to determine if the taxable products are de minimis; or
(iv) the retail sale of exempt tangible personal property and
				  taxable tangible personal property where:
(I) the transaction includes food and food ingredients,
				  drugs, durable medical equipment, mobility enhancing equipment,
				  over-the-counter drugs, prosthetic devices or medical supplies, and
(II) the seller's purchase price or sales price of the
				  taxable tangible personal property is fifty percent (50%) or less of the total
				  purchase price or sales price of the bundled tangible personal property.
				  Sellers may not use a combination of the purchase price and sales price of the
				  tangible personal property when making the fifty percent (50%) determination
				  for a transaction.
"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.
"Consideration"
means and includes, but is not
				  limited to:
(A) The price arrived at between purchaser and vendor.
(B) Any additional bona fide charges added to or included in
				  such price for preparation, fabrication, alteration, modification, finishing,
				  completion, delivery, or other services performed in respect to or labor
				  charges for work done with respect to such property prior to transfer.
(C) No deduction from gross receipts is permitted for
				  services performed or work done on behalf of the vendor prior to transfer of
				  such tangible personal property. [
See:
68 O.S. § 1352(12)]
"Delivery charges"
means charges by the seller
				  of personal property or services for preparation and delivery to a location
				  designated by the purchaser of personal property or services including, but not
				  limited to, transportation, shipping, postage, handling, crating, and packing.
"Delivery charges"
does not include charges for the delivery of
"direct mail"
if the charges are separately-stated on an invoice
				  or similar billing document given to the purchaser.
"Gross receipts", "gross
				  proceeds",
or "sales price"
means
				  the total amount of consideration including cash, credit, property, and
				  services, for which personal property or services are sold, leased, or rented;
				  valued in money, whether received in money or otherwise, without any deduction
				  for the following:
(A)
The seller's cost of the property
				  sold;
(B)
The cost of materials used, labor, or service
				  cost;
(C)
Interest, losses, all costs of transportation to
				  the seller, all taxes imposed on the seller, and any other expense of the
				  seller;
(D)
Charges by the seller for any services necessary
				  to complete the sale, other than delivery and installation
				  charges;
(E)
Delivery charges and installation charges, unless
				  separately stated on the invoice, billing, or similar document given to the
				  purchaser; or,
(F)
Credit for any trade-in.
"Gross receipts", "gross proceeds",
or "sales price"
shall not include:
(A)
Discounts, including cash, term, or coupons that
				  are not reimbursed by a third party that are allowed by a seller and taken by a
				  purchaser on a sale;
(B)
Interest, financing, and carrying charges from
				  credit extended on the sale of personal property or services, if the amount is
				  separately stated on the invoice, bill of sale, or similar document given to
				  the purchaser; or
(C)
Any taxes legally imposed directly on the
				  consumer that are separately stated on the invoice, bill of sale, or similar
				  document given to the purchaser.
[68 O.S.§ 1352(12)]
"Gross receipts", "gross
				  proceeds",
or "sales price"
shall
				  include consideration received by the seller from third parties if:
(A)
The seller actually receives consideration from a
				  party other than the purchaser and the consideration is directly related to a
				  price reduction or discount on the sale;
(B)
The seller has an obligation to pass the price
				  reduction or discount through to the purchaser;
(C)
The amount of the consideration attributable to
				  the sale is fixed and determinable by the seller at the time of the sale of the
				  item to the
purchaser
; and
(D)
One of the following criteria is met:
(i)
The purchaser presents a coupon, certificate or
				  other documentation to the seller to claim a price reduction or discount where
				  the coupon, certificate or documentation is authorized, distributed or granted
				  by a third party with the understanding that the third party will reimburse any
				  seller to whom the coupon, certificate or documentation is
				  presented;
(ii)
The purchaser identifies himself or herself to
				  the seller as a member of a group or organization entitled to a price reduction
				  or discount; provided, a "preferred customer" card that is available to any
				  patron does not constitute membership in such a group; or
(iii)
The price reduction or discount is identified
				  as a third-party price reduction or discount on the invoice received by the
				  purchaser or on a coupon, certificate or other documentation presented by the
				  purchaser.
"Lease or rental"
means any transfer of
				  possession or control of tangible personal property for a fixed or
				  indeterminate term for consideration. A lease or rental may include future
				  options to purchase or extend.
(A)
"Lease or rental"
does not include:
(i) A transfer of possession or control of property under a
				  security agreement or deferred payment plan that requires the transfer of title
				  upon completion of the required payments;
(ii) A transfer of possession or control of property under an
				  agreement that requires the transfer of title upon completion of required
				  payments and payment of an option price does not exceed the greater of One
				  Hundred Dollars or one (1) percent of the total required payments; or
(iii) Providing tangible personal property along with an
				  operator for a fixed or indeterminate period of time. A condition of this
				  exclusion is that the operator is necessary for the equipment to perform as
				  designed. For the purpose of this unit, an operator must do more than maintain,
				  inspect, or set-up the tangible personal property.
(B)
"Lease or rental"
does include agreements
				  covering motor vehicles and trailers where the amount of consideration may be
				  increased or decreased by reference to the amount realized upon sale or
				  disposition of the property as defined by
				  26
				  U.S.C. §
										7701(h)(1).
(C) This definition shall be used for sales and use tax
				  purposes if a transaction is characterized as a lease or rental under generally
				  accepted accounting principles, the Internal Revenue Code, the Oklahoma Uniform
				  Commercial Code (12A O.S. § 1-101 et seq.), or other provisions of
				  federal, state, or local law.
"Retail sale"
means any sale, lease, or rental
				  for any purpose other than for resale, sublease, or subrent.
"Sale"
means
the transfer of either
				  title or possession of tangible personal property for a valuable consideration
				  regardless of the manner, method, instrumentality, or device by which the
				  transfer is accomplished in this state.
All consideration received for
				  the sale is included in gross receipts subject to tax.
(A)
"Sale"
does include but is not limited to:
(i)
The exchange, barter, lease, or rental of
				  tangible personal property resulting in the transfer of the title to or
				  possession of the property;
(ii)
The disposition for consumption or use in any
				  business or by any person of all goods, wares, merchandise, or property which
				  has been purchased for resale, manufacturing, or further
				  processing;
(iii)
The sale, gift, exchange, or other disposition
				  of admission, dues, or fees to clubs, places of amusement or recreational or
				  athletic events or for the privilege of having access to or the use of
				  amusement, recreational, athletic or entertainment facilities;
(iv)
The furnishing or rendering of services taxable
				  under the Oklahoma Sales Tax Code; and
(v)
Any use of motor fuel or diesel fuel by a
				  supplier, as defined in Section 500.3 of this title, upon which sales tax has
				  not previously been paid, for purposes other than to propel motor vehicles over
				  the public highways of this state. Motor fuel or diesel fuel purchased outside
				  the state and used for purposes other than to propel motor vehicles over the
				  public highways of this state shall not constitute a sale within the meaning of
				  this paragraph.
(B)
"Sale"
does not include sale and leaseback.
"Sales tax" means
all applicable state, city and
				  county sales tax.
"Sales value"
means:
(A) In the case of a manufacturer, the sum of the
				  manufacturer's cost of raw materials and the proportionate share of both the
				  cost of machinery and equipment used and the cost of items consumed in the
				  direct process of the manufacturing of the product, all of which were purchased
				  exempt from sales tax for use in the process of manufacturing; or
(B) In the case of a person holding a mixed beverage tax
				  permit or other permit issued in accordance with 37A O.S. § 5-107, the
				  total retail sales price for sales of alcoholic beverages only, calculated
				  pursuant to
OAC
710:20-5-4; or
(C) In the case of sales of prepared food, the sales value of
				  a free, reduced price, or complimentary meal is presumed to be the greater of
				  the consideration received for the meal, if any, or the cost paid by the vendor
				  of the food for the food items included in the free, reduced price, or
				  complimentary meal; or
(D) In the case where an inventory of goods, originally
				  purchased exempt for resale, is being held for rental or leasing purposes, the
				  regular rental charges which would be charged to the vendor's best customer, if
				  the goods are to be returned to inventory. Where the goods are not to be
				  returned to inventory held for rental or leasing purposes, the lesser of the
				  original purchase price of the goods, or the current market price will be
				  presumed to be the sales value; or
(E) Otherwise,
"sales value"
means the larger of
				  either the vendor's cost at the time the exempt purchase of goods was made, or
				  the price at which it would be sold to the vendor's best customer in the
				  ordinary course of business.
"Tangible personal property"
means
personal property that can be seen, weighed, measured, felt, or touched
				  or that is in any other manner perceptible to the senses.
For purposes
				  of the Oklahoma Sales Tax Code,
"tangible personal
				  property"
includes electricity, water, gas, steam and
				  prewritten computer software.
[68 O.S.§ 1352(24)] The term does
				  not include real property, such as land and buildings, tangible personal
				  property that loses its identity when it becomes an integral and inseparable
				  part of the realty, or tangible personal property which is removable only with
				  substantial damage to the premises. Property severed from real estate becomes
				  tangible personal property.
"Tangible personal property"
does not
				  include intangible personal property constituting mere rights of action and
				  having no intrinsic value, such as contracts, deeds, mortgages, stocks, bonds,
				  certificates of deposit, or uncancelled United States postage or revenue stamps
				  sold for postage or revenue purposes. [
See:
68 O.S. § 1352;
				  68 O.S. § 1354; See Also: 60 O.S. §§ 7, 8]
"Tax"
means all state, applicable city and
				  applicable county tax.
"Use tax"
means all applicable state and city
				  use tax.
"User"
or
"consumer"
means a person
				  to whom a taxable sale of tangible personal property is made or for whom a
				  taxable service is performed.
Amended at 11 Ok Reg
				  3521, eff 6-26-94; Amended at 15 Ok Reg 2827, eff 6-25-98; Amended at 21 Ok Reg
				  2581, eff 6-25-04; Amended at 22 Ok Reg 1561, eff 6-11-05; Amended at 25 Ok Reg
				  2070, eff 7-1-08; Amended at 27 Ok Reg 2308, eff
				  7-11-10