Oklahoma – Business Closure Rules Take Effect

SALT Report 1865 – The Oklahoma Tax Commission announced that new rules have been enacted that allow the Commission to close businesses if they have delinquent or unpaid sales tax liabilities. Effective November 1, 2012, if a taxpayer fails within a consecutive 24-month period to file two sales tax reports or to remit sales tax due for any two months, the Oklahoma Tax Commission will give the taxpayer written notice that a third failure within that 24-month period will result in the closure of the taxpayer’s business.

The notices will either be sent by certified mail or will be hand delivered to the address shown on the taxpayer’s last sales tax return. The notice will inform the taxpayer that their business will be closed within five business days of the delivery of the business closure notice unless the taxpayer:

  • Provides proof that the sales tax and sales taxes returns have been paid and/or filed,
  • Files all delinquent sales tax returns and pays all delinquent taxes, penalties, interest, and fees,
  • Enters into an installment agreement, or
  • Files a written protest and a request for an administrative hearing

The rules clarify that the third delinquency that will trigger a business closure within a 24-month period starts with the first delinquency. The rules also explain that if a taxpayer clears a delinquency that originated during a 24-month period within that period, the 24-month period stops running, and any new delinquency that would have fallen within that 24-month period would instead start a new 24-month period.

Installment Payment Agreements

If a taxpayer has a sales tax delinquency over $500 they can request an Installment Payment Agreement for up to 12 months. If a payment plan is granted , the taxpayer will be require to make a down payment of at least 25% of the delinquency plus interest, penalties, and fees. The terms of the installment agreement require that the taxpayer file all outstanding tax returns, make timely installment payments, and pay and file sales tax and sales tax returns that come due during the term of the agreement.

Failure to pay or file tax returns during the term of the agreement may result in further action to collect the unpaid taxes or to schedule a show cause hearing. If a taxpayer has a sales tax delinquency of less than $500 and has had a request for hearing granted can also request an Installment Agreement. All requests for a hearing must be made within five business days of the delivery of the business closure order.

Waiver 

Taxpayers can request a waiver of interest and penalties if the taxpayer pays the delinquent sales tax in full prior to the Commission placing the business closure signs on the entrances of the business. The waiver request will be treated like a protest and will be scheduled for a hearing.

For Further Information:

Oklahoma Tax Commission – Rules 710:1-5-110 through 710:1-5-122