Oklahoma To Impose A Less Intrusive “Amazon” Law Merely Requiring Notification To Customers…

You probably have been hearing a lot of news about so called “Amazon” laws being enacted to increase sales/use tax collection for Internet sales. Until recently, there have been essentially two types of these “Amazon” laws. The first presumes that a retailer has nexus with a state, requiring it to collect the state’s sales tax, by virtue of having affiliates in the state linking to the retailer’s website and the retailer realizing a certain threshold of sales from such weblinks. The second, recently becoming effective in Colorado, requires retailers who do not collect the state’s sales tax to provide the customer and state taxing agency with certain informational reports setting forth the sales made by the retailer which may be subject to the state’s sales/use tax. Both of these types of “Amazon” laws have garnered significant criticism and constitutional challenges.

Oklahoma recently passed its own “Amazon” law, which is much less intrusive than the two types discussed above. Simply, Oklahoma H.B. 2359 requires retailers who do not collect sales to provide customers with notification on their website or catalog and invoices that use tax is owed and must be paid by the purchaser, unless the purchase is otherwise exempt. The notification requirement also applies to “online auction websites” (although, not required on invoices for such websites).  This law, however, is not effective until the Oklahoma Tax Commissioner enacts an administrative rule regarding the law. Pursuant to a proposed emergency administrative rule, the retailer’s notification to its customers must include the following: (i) the retailer is not required, and does not, collect Oklahoma sales or use tax, (ii) the purchase is subject to Oklahoma use tax unless it is specifically exempt from taxation, (iii) the purchase is not exempt merely because it is made over the Internet or by catalog, (iv) Oklahoma purchasers must pay use tax on all purchases that were not taxed and such purchases must be reported on either the individual’s income tax  return (Form 511) or a consumer use tax return (Form 21-1), and (v) the referenced forms and corresponding instructions are available on the Oklahoma Tax Commission website, www.tax.ok.gov/.

As Oklahoma’s “Amazon” law will be become effective upon this proposed emergency administrative rule becoming effective, remote retailers should be prepared to include such a notice on their websites, catalogs and invoices. Other states will likely enact “Amazon” laws similar to Oklahoma’s law, at least until a determination as to the validity of the other types of “Amazon” laws is resolved.