Oklahoma Computer, Software, and SaaS Tax Guide

Prepared by Sales Tax Helper

Table of Contents

1. Introduction
2. Nexus Considerations
3. General Rules and Compliance Considerations
4. Specific Exemptions
5. Sourcing Rules
6. Audit Considerations
7. Voluntary Disclosure Agreements (VDAs)
8. Conclusion
9. References & Resources

1. Introduction

For software companies, SaaS providers, and technology firms conducting business in
Oklahoma, the state's sales and use tax rules present unique challenges. Unlike some states that treat digital products and cloud-based services uniformly, Oklahoma distinguishes between prewritten (canned) software, custom software, and various technology services based on their method of delivery and level of customization. Oklahoma's tax treatment of software and technology-related services depends on multiple factors, including whether software is delivered in tangible or electronic form, whether it is prewritten or custom, and whether services provided are classified as taxable information services or exempt professional services.

Purpose of This Guide

This guide is designed to help businesses navigate Oklahoma's sales and use tax rules related to software and technology services. It focuses on:

• Nexus Considerations: Understanding when businesses must register and collect
  Oklahoma sales tax due to physical or economic presence.
• Taxability of Software & Services: Clarifying the tax treatment of prewritten vs. custom
  software, cloud computing services, and related technology offerings.
• Sourcing Rules: Determining how and where transactions are taxed based on customer
  location and method of software delivery.
• Audit Considerations: Identifying common tax audit triggers and best practices for
  compliance.
• Voluntary Disclosure Agreements (VDAs): Explaining the process for businesses to
  rectify past noncompliance while mitigating penalties and limiting back-tax liability.

Why This Matters for Technology Companies

Oklahoma's sales tax laws impact software companies, SaaS providers, and technology firms in multiple ways:

• Sales Tax Obligations: Businesses that sell software or related services to Oklahoma
  customers may have a duty to collect and remit Oklahoma sales tax, depending on how
  the product is classified.
• Cloud Computing & SaaS Complexity: Oklahoma generally does not impose sales tax
  on cloud computing services, including SaaS, IaaS, or PaaS, but misclassification of
  transactions can lead to tax liabilities.
• Compliance Risks: Failure to correctly assess and collect sales tax can result in
  significant penalties, interest, and extended audit exposure.

This guide will walk through Oklahoma's specific sales tax rules governing software, SaaS, and
technology-related services while referencing applicable statutes, administrative rules, and
Oklahoma Tax Commission guidance. Throughout the guide, official Oklahoma Tax
Commission sources will be linked for further reference.

For a basic understanding of the differences between sales tax and use tax in Oklahoma, refer to the Oklahoma Tax Commission's Sales and Use Tax Infographic.

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