Attention Amazon Sellers in Oklahoma: Your sales could soon be taxed
If you’re an out-of-state retailer that makes sales in Oklahoma through Amazon or other online marketplaces, your sales may soon be subject to Oklahoma sales tax.
Amazon already collects tax on sales of its own products in Oklahoma — it has since March 1, 2017. Yet as of this writing, it collects tax on its marketplace (or third-party) sales in only two states: Pennsylvania and Washington.
Under a new Oklahoma law (House Bill 1019), Amazon and other marketplace facilitators are required to make a choice by June 1, 2018: Either collect and remit tax on Oklahoma marketplace sales, or comply with use tax notice and reporting requirements for non-collecting sellers.
The choice applies to a marketplace facilitator’s own sales, if it doesn’t maintain a place of business in the state; and sales made through its marketplace by or on behalf of a marketplace seller that doesn’t maintain a place of business in Oklahoma.
Whatever choice is made — sales and use tax collection or use tax notification and reporting — compliance must start July 1, 2018.
Small seller exception
The law includes an exception for small sellers. Collection or reporting requirements will be imposed only on marketplace facilitators, referrers, and remote sellers with aggregate Oklahoma sales of tangible personal property of at least $10,000 in the preceding 12 calendar months.
Qualifying remote marketplace facilitators and sellers that decide not to collect and remit sales tax must comply with notice and reporting requirements starting July 1, 2018.
Remote marketplace facilitators and remote sellers have to conspicuously post a notice on all sales forums that includes the following information:
- Oklahoma sales or use tax may be due on the purchase and delivery of tangible personal property in Oklahoma
- The purchaser may be required to file a return and remit use tax if it’s due
Furthermore, each purchaser must be sent a written notice at the time of sale that includes the following information:
- A statement that sales or use tax isn’t being collected
- A statement that the purchaser may be required to remit use tax directly to the Oklahoma Tax Commission
- Instructions for obtaining additional information
Referrers must fulfill similar notice requirements, as well as inform purchasers that if the person to whom they’re being referred doesn’t collect sales or use tax, information about their potential use tax liability may be sent to both them, the purchaser, and the Oklahoma Tax Commissioner.
Non-collecting marketplace facilitators and remote sellers also have to comply with reporting requirements by no later than January 31 of each year.
Written reports to customers must include:
- A written statement that they did not collect sales or use tax on the purchaser’s transactions and that the purchaser may be required to remit use tax to the Tax Commission
- A list, by date, indicating the type and purchase price of each product purchased or leased by the purchaser from the remote seller or marketplace facilitator and delivered to a location in Oklahoma
- Instructions for obtaining additional information from the Commission regarding whether and how to remit use tax to the Commission
- A statement that the remote seller or marketplace facilitator is required to submit a report to the Commission that includes the name of the purchaser and the aggregate dollar amount of the purchaser’s purchases from the remote seller or marketplace facilitator
Written reports also have to be sent to the Oklahoma Tax Commission by January 31. These must include the following information regarding each purchaser who was sent an annual written notice:
- The purchaser’s name, billing address, last known mailing address (if different), and Oklahoma delivery address
- The aggregate dollar amount of the purchaser’s purchases from the remote seller or marketplace facilitator
- The name and address of the marketplace facilitator, marketplace seller, or remote seller that made the sales to the purchaser
Non-collecting referrers must send the Tax Commissioner a list of persons to whom they sent notices.
Penalties for non-compliance
Failure to either collect and remit tax or comply with the notice and reporting requirements brings a hefty penalty.
In addition to the normal penalties and interest imposed on non-compliant vendors, marketplace facilitators, remote sellers, and referrers that fail to either collect and remit or comply with the notice and reporting requirements will be assessed a penalty of $20,000 or 20 percent of their total Oklahoma sales during the previous 12 months, whichever is less. Separate penalties will be assessed on each violation.
Marketplace sales tax laws and use tax reporting on the rise
As states look for ways to increase remote sales tax collections, marketplace sales tax laws are becoming more common. You can learn more about them in the Avalara blog, Marketplace sales tax laws explained. Use tax notice and reporting requirements for non-collecting sellers, which are also on the rise, are explained in more depth here.
Marketplace facilitator, marketplace seller, remote seller, and referrer, defined
Confused about the difference between a marketplace facilitator, referrer, and remote seller? HB 1019 defines them all.
“Marketplace facilitator” is defined as a person that facilitates the sale at retail of tangible personal property (TPP) by listing or advertising it for sale at retail in any forum, and directly or indirectly collecting payments from purchasers and transmitting it to the seller.
“Marketplace seller” is defined as a person that has an agreement with a marketplace facilitator under which the marketplace facilitator facilitates sales for the person.
“Referrer” is defined as a person that has an agreement or arrangement with a remote or marketplace seller to:
- List or advertise the seller’s products for retail sale
- Receive a consideration from them for doing so
- Transfer (by telecommunications, internet link, or other means) a purchaser to a marketplace seller, remote seller, or affiliated person to complete a sale
A referrer does not collect a receipt from the purchaser for the sale, but could be a vendor in its own right.
“Remote seller” is defined as a person, other than a marketplace facilitator, marketplace seller, or referrer, that doesn’t maintain a place of business in Oklahoma but does make retail sales of TPP through a forum.
Want to learn more? Read more in our 2018 Sales Tax Changes Special Report
Avalara helps businesses of all sizes achieve compliance with transactional taxes, including sales and use, VAT, excise, communications, and other tax types. The company delivers comprehensive, automated, cloud-based solutions that are designed to be fast, accurate, and easy to use.
By Gail Cole, Avalara Author
Gail Cole began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts and endeavors to make complex sales tax laws more digestible for experts and laypeople alike.