Okla. Admin. Code § 710:65-13-201

Current through Vol. 42, No. 4, November 1, 2024

Section 710:65-13-201 - Sales between related entities

(a) Each interdepartmental transfer of tangible personal property and taxable services between various departments of a single legal entity shall not constitute a sale subject to sales tax.

(b) Except for transfers of tangible personal property between wholly owned subsidiaries of a parent company and between a parent company and its wholly owned subsidiary each transfer of tangible personal property, and taxable services between separate legal entities for use or consumption, and not for resale, shall be taxable, unless otherwise exempt by statute pursuant to a reorganization, winding up, dissolution, liquidation, or formation of a corporation, even though:

(1) The entities share common principals or ownerships and operations.

(2) The entities share the same business location.

(3) The entities file consolidated income tax returns for federal and state income purposes or one of the entities is disregarded for income tax purposes.

(4) The entities do not enjoy a profit or expense as a result of the transaction.

(c) When a transaction would be subject to sales tax if the transaction were between two separately owned and operated legal entities, the commonality of the two entities is irrelevant, and sales tax is imposed on the transaction between the two related entities.

(d)"Separate legal entities" means entities which are recognized as individual entities either in fact or at law. Taxable transfers of tangible personal property and services between separate legal entities for use or consumption, and not for resale, shall include:

(1) Transfers between individuals and partnerships.

(2) Transfers between individuals and corporations.

(3) Transfers between individuals and unincorporated associations.

(4) Transfers between partnerships and corporations.

(5) Transfers between partnerships and unincorporated associations.

(6) Transfers between partnerships.

(7) Transfers between unincorporated associations and corporations.

(8) Transfers between corporations, whether between sister corporations or parent and subsidiary corporations. [See: 68 O.S. §§ 1354, 1360]

Okla. Admin. Code § 710:65-13-201

Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 19 Ok Reg 1859, eff 6-13-02; Amended at 22 Ok Reg 1561, eff 6-11-05

Amended by Oklahoma Register, Volume 39, Issue 24, September 1, 2022, eff. 9/11/2022