The 2018 Executive Budget states, “According to the Bureau of Labor statistics, in 1939 service industries employed more people than manufacturing by a ratio of 2-to-1. Today it is around 5-1.”
This new tax could result in an additional $839.7 million for the state.
Oklahoma would not be alone in taxing services, four states tax most services, including South Dakota, Hawaii, West Virginia and New Mexico. Five states tax some services, including Colorado, Illinois, Massachusetts, Nevada and Virginia.
If this proposal passes, this could impact more than 160 different types of services including consultants, contractors, landscaping, storage services, Funeral services, chiropractors, doctors, dentists, researchers, video and graphic design services, dance studios and window cleaners.
Many companies who provide these services would need to begin collecting state taxes on their services and filing those taxes to remain compliant with the new obligations.
If the legislature decides to pass this new tax, and you own a service-based business, there are several steps to take to ensure compliance with the Oklahoma Tax Commission.
You will need to register for an Oklahoma sales tax permit online at the Taxpayer Access Point. This requires your personal identification, business identification, business entity type, date of incorporation and type of service provided. This permit costs $20 and a minimum of 5 days to process.
Next, you must determine how much sales tax to collect, which varies by location. Each quarter, the OTC provides a chart of sales tax rates. (use first link).
Tax filing frequency depends on the sales taxes collected. If it is greater than $83.34, then you must file monthly.
Taxes can be filed online at OK TAP (use second link) or by mail using form STS-20002. If you pay more than $2,500 per month, you must file online.
Failing to file on time comes with late filing penalties and late payment penalties. If paid on time, a one percent sales tax discount up to $2,500 per month is available.
We can help
Here at Polston tax, we help clients file their taxes correctly and on time. If you are feeling overwhelmed with any new tax requirements, or simply keeping compliant with existing tax laws, we are happy to help. Visit our services page and fill out the form for a free consultation, or give us a call at 844-9857.