Oklahoma Legislature Passes Colorado Style Tattletale Use Tax Bill

The Oklahoma legislature, fresh from passing a bill that requires marketplace vendors (such as Amazon, eBay, etc.) to either collect and remit sales taxes or send notices, has sent a new bill (Oklahoma SB 337) to the Governor’s desk that expands a “tattletale” disclosure rule that would apply to all out of state sellers who do not collect Oklahoma use tax.

“Tattletale” laws have sprung up in a number of states following Colorado’s victory in federal court for its statute (see Colorado Law Requiring Out of State Sellers to Report on Colorado Customers Who May Owe Use Tax Upheld by Tenth Circuit describing a Tenth Circuit ruling which the US Supreme Court refused to review).  In the oral arguments presented to the Supreme Court in South Dakota v. Wayfair (see Supreme Court Hears Oral Argument in Sales Tax Collection Case for more details) it was clear that the Colorado statute was the “alternative” if the Court decides to continue to require physical presence for a state to be able to force a vendor to collect sales tax.

OSL Section 1406.2 already required such vendors to notify customers of their potential Oklahoma use tax liability by February 1 of each year.  The notice had to inform the customer that they may be subject to Oklahoma use tax, as well as telling the customer the total amount of purchases for the year.  However, the new bill adds to that requirement a new provision that requires sending the same information to the state of Oklahoma by March 1. (OSL Section 1406.2.C)

If the seller has total sales of more than $100,000 in year, the Oklahoma Tax Commission may require the vendor to submit the data electronically to the OTC. (OSL Section 1406.2.D) But the bill has no de minimis level that would not require reporting by small sellers, so apparently a single sale into the state of Oklahoma would trigger the necessity to file some kind of report with the OTC.  Of course, the legislature would point out that the vendor already has the obligation under prior law to send a notice to the customer since that law also had no minimum sale amount to trigger sending notices.

However, this filing requirement now has some penalties to go with the requirement.  A failure to file the required disclosure forms with the OTC will subject the vendor to a $10 penalty for each purchaser that had to be reported under the law, unless the vendor can show reasonable cause for its failure to file the report. (OSL Section 1406.E)

The law would be effective on November 1, 2018 if signed into law by the Governor.