Colorado-Style Customer Notification Requirements Spread: Oklahoma Directs Remote Sellers To Send Annual Purchase Summaries To Consumers

On May 18, 2016, Oklahoma enacted a new statute, HB 2531, patterned, in part, after the Colorado notice and reporting law that has been the subject of long-running federal court litigation in Direct Marketing Association v. Brohl, 814 F.3d 1129 (10^th Cir. 2016). (Brann & Isaacson represents the DMA in the Colorado suit.) Under the new Oklahoma law, retailers that are not required to collect Oklahoma use tax shall, by February 1 of each year, “provide to each customer to whom tangible personal property was delivered in this state a statement of the total sales made to the customer during the preceding calendar year.” The statute specifies the wording for the statement, forbids including any information that would “indicate, imply or identify the class, type, description or name of the products purchased,” and permits the statement to be provided by first-class mail, email, or other electronic communication. See HB 2531, Sec. 4. [To read the statute click here.] The law is effective November 1, 2016, so online retailers and other remote sellers would be required to deliver the first annual statements by February 1, 2017.

There are, however, no penalty provisions for non-compliance with the annual statement provision set forth in HB 2531 and no such provisions within the statutory provisions it amends. Thus, it appears that non-compliance with the annual statement provision will carry no sanction, at least by statute, at this time. It remains to be seen whether the Oklahoma Tax Commission will adopt regulations regarding the annual purchase summary requirement.

Readers may recall that Oklahoma already had a “transactional notice” requirement like Colorado’s (i.e., a notice to the customer at the time of its purchase that use tax may be due from the customer, see Okla. Stat., tit. 68, sec. 1406.1). Those provisions likewise include no penalties for non-compliance. Our last post alerted readers to Vermont’s similar new notice and reporting provisions, for which penalties will apply when the law takes effect.

Finally, remote sellers concerned about their tax status in Oklahoma may be interested to know that the new Oklahoma statute also contains a sales tax amnesty provision. See HB 2531, Sec. 5. Under the statute, a retailer not registered during the 12 months preceding the effective date of the law and who has not been contacted by the Oklahoma Tax Commission to commence an audit, will receive full amnesty for all back sales and use taxes potentially due as a seller, provided the retailer registers prior to May 1, 2017, and remains registered to collect Oklahoma sales and use tax for at least 36 months.