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CONTRACT K-1920-118: A CONTRACT BY AND BETWEEN THE CITY OF NORMAN, OKLAHOMA, AND THE OKLAHOMA TAX COMMISSION FOR THE ADMINISTRATION OF SALES TAX AND USE TAX.
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BACKGROUND: The Oklahoma Tax Commission (OTC) has served as the collection agent for municipalities throughout the state for many years.
DISCUSSION: There are obvious advantages for centralized collection of sales taxes by the State of Oklahoma, as municipal sales tax ordinances are tied in almost all cases to the items that are taxed at the state level (that is, the same things that are granted exemptions at the state level are granted exemptions at the city/county level). There are economies of scale in centralized tax collection and enforcement efforts. Having one collection agency makes it much easier for businesses to remit the taxes that are due and this singular collection point qualifies Oklahoma to participate in the national Streamlined Sales Tax Agreement, whereby on-line retailers agree to pay use tax for their sales delivered within Oklahoma. The City of Norman pays the Tax Commission for its sales and use tax administration, collection and enforcement efforts in the form of a withholding of one-half percent of the taxes collected for the City.
The proposed new Agreement is attached. This agreement increases the Sales and Use Tax rate to 4.125% effective April 1, 2020.
RECOMMENDATION: It is recommended that Contract K-1920-118 be approved.