Commission sales tax is the tax that applies to the revenue earned through commission-based transactions. This is common in sectors where sales professionals or agents earn a percentage of the sales they facilitate, such as in automotive sales and travel bookings. The tax isn’t levied on the commission itself but rather on the total transaction value. This means if a salesperson earns a commission by selling a product or service, the applicable sales tax is calculated on the full sale price of the product or service sold, not just on the commission received.

Different states apply commission sales tax in different ways. Below, we’ll explain how Oklahoma handles this type of tax.

What’s in this article?

• What is the sales tax in Oklahoma?
  
• Is sales commission taxable in Oklahoma?
  
• What triggers sales tax obligations?
  
• What’s taxable in Oklahoma?
  
• How to register for sales tax in Oklahoma
  
• How to file and pay sales tax in Oklahoma
  
• Key dates for sales tax payments in Oklahoma
  

What is the sales tax in Oklahoma?

The state sales tax rate in Oklahoma is 4.50%. But local municipalities can also charge sales tax so the combined rate can vary. The average combined state and local sales tax rate is 8.99% as of 2024.

Is sales commission taxable in Oklahoma?

No. In Oklahoma, sales commission isn’t directly taxable, but the overall transaction in which the commission is earned is subject to sales tax. This means that if a salesperson earns a commission from selling a product or service, the sales tax is applied to the total sale price of the product or service, not the commission amount. The business that makes the sale is responsible for collecting and remitting the sales tax to the state.

What triggers sales tax obligations?

Sales tax obligations are triggered primarily when a business establishes “nexus,” a substantial connection, in a state. Here are the key factors that can establish nexus and trigger sales tax obligations:

• Physical presence: If a business has a physical location, warehouse, office, or employees in a state, it establishes nexus and has an obligation to collect and remit sales tax in that state.

• Economic nexus: If a business makes more than a certain amount in sales or conducts a certain number of transactions in a state, it might need to collect sales tax there, even if it has no physical presence.

• Affiliate nexus: If a business has affiliates such as other companies and independent contractors who sell on its behalf and create a physical presence or make direct sales within a state, this can also establish nexus.

• Click-through nexus: Some states impose obligations based on relationships with websites or entities within the state that refer customers via links on a website (a click-through arrangement). If sales exceed a certain threshold as a result of these referrals, the out-of-state seller might be required to collect sales tax.

• Marketplace nexus: States are increasingly requiring marketplace facilitators (e.g., Amazon, eBay, Etsy) to collect and remit sales tax on behalf of sellers on their platforms, shifting the tax collection burden from individual sellers to the marketplace.

What’s taxable in Oklahoma?

In Oklahoma, sales tax generally applies to the sale of tangible personal property and certain services. Here’s a breakdown.

Taxable items

• Tangible personal property: Most physical goods such as clothing, electronics, furniture, and vehicles

• Prepared food: Food sold for immediate consumption such as meals from restaurants or food trucks and fast food

• Dietary supplements: Dietary supplements (unlike prescribed medications)

• Certain services: Services including advertising, amusement and recreation, sports and entertainment events, parking services, dues or fees to clubs, and printing services

Nontaxable items

• Groceries: Food purchased for home consumption such as uncooked meat, vegetables, dairy products, and bread

• Prescription drugs: Medications prescribed by a licensed healthcare professional

• Medical equipment and supplies: Items such as wheelchairs, crutches, and bandages, if purchased with a prescription

• Some agricultural products: Products such as livestock feed, seeds, and farm machinery

• Manufacturing equipment: Equipment used directly in manufacturing processes

How to register for sales tax in Oklahoma

To register for sales tax in Oklahoma, you’ll need to obtain a Sales Tax Permit from the Oklahoma Tax Commission (OTC). Before you register, ensure your business activities require you to collect sales tax in Oklahoma. This generally applies if you have a physical presence in the state or meet the economic nexus threshold ($100,000 or more in annual sales in Oklahoma).

If eligible, you can register for a permit online, by mail, or in person. If you have multiple business locations, you need a separate permit for each location.

• Online: The most convenient way to register is through the Oklahoma Taxpayer Access Point (OkTAP). You’ll need your federal Employer Identification Number (EIN) and your business’s legal name and address, and you’ll need to pay a $20 application fee.

• In person: Visit the OTC office in Oklahoma City or Tulsa.

After registering, you’ll receive your Sales Tax Permit in the mail. Start collecting sales tax on taxable transactions from customers in Oklahoma, file sales tax returns, and remit collected tax to the OTC according to your chosen filing frequency (monthly, quarterly, or annually).

How to file and pay sales tax in Oklahoma

Here’s how to file and pay sales tax in Oklahoma.

Gather business information

• Sales Tax Permit number: The number you received after registering for sales tax in Oklahoma

• Sales records: A detailed record of your gross sales, taxable sales, and sales tax collected during the filing period (monthly, quarterly, or annually)

• Exemption certificates: Any exemption certificates accepted from customers

File taxes

• Online: The state requires businesses with over $2,500 in monthly sales tax liability to file online through OkTAP. Here’s how to do this:

  • Log in to your OkTAP account.
    
  • Select “File Sales Tax Return.”
    
  • Enter your sales data, calculate the tax owed, and make a payment online as instructed. You can pay by electronic funds transfer (EFT) or credit or debit card, and convenience fees might apply.
    

• By mail or in person: If you are not required to file online, you can file by mail by sending in Form STS-20002-A, along with a check for the amount owed, or in person by visiting an OTC office and paying by cash, check, or money order. These methods are typically reserved for businesses with lower sales volumes.

• Late filing or payment: Late filing comes with a penalty of up to 25% of the tax due and late payment can result in a penalty of up to 10% of the tax due. Late payment incurs interest on the tax due, calculated monthly.

Key dates for sales tax payments in Oklahoma

In Oklahoma, the key dates for sales tax payments depend on the filing frequency assigned to a business by the OTC. Businesses can be required to file monthly, quarterly, or annually, based on the sales volume. Here are the general guidelines for each:

• Monthly filers: Sales tax returns and payments are due on the 20th day of the month following the reporting period. For example, sales tax collected in January must be filed and paid by February 20.

• Quarterly filers: For businesses that file quarterly, the due dates are April 20 for the first quarter (January–March), July 20 for the second quarter (April–June), October 20 for the third quarter (July–September), and January 20 for the fourth quarter (October–December).

• Annual filers: For those that file annually, the sales tax return and payment are due January 20 of the following year.

If the due date falls on a weekend or a public holiday, the deadline is extended to the next business day.