710:65-13-347 - Exemption for specialized facilities, which provide services for physically and mentally handicapped persons

710:65-13-347. Exemption for specialized facilities, which provide services for physically and mentally handicapped persons

(a) Qualification for specialized facilities, which provide services for physically and mentally handicapped persons. Sales of tangible personal property and services are exempt from sales tax when made to an organization exempt from income taxation pursuant to the provisions of the Internal Revenue Code, 26 U.S.C., Section 501(c)(3), which assists, trains, educates, and provides housing for physically and mentally handicapped persons provided that the organization receives at least eighty-five percent (85%) of its annual budget from state or federal funds.

(b) Application process.

(1) Application. All "specialized facilities" shall file an Application/Intent to Qualify with the Commission. The Application/Intent to Qualify shall be on forms provided by the Commission and shall include, as attachments, the following information:

(A) Letter from the Internal Revenue Service (IRS) recognizing the organization as exempt from federal income taxation pursuant to 26 U.S.C. Section 501(c)(3);

(B) A written description stating the activities of the organization, as evidenced by copies of:

(i) Articles of incorporation;

(ii) By-laws;

(iii) Brochure; or

(iv) Notarized letter from the President or Chairman of the organization; AND

(C) Copy of the organization's annual budget representing that eighty-five percent (85%) of its budget is from state or federal funds.

(2) Review. Upon receipt of the Application, the Application will be reviewed by the Commission for completeness and compliance with the exemption. The applicant will be notified of any action taken regarding the Application by the Commission.

(c) Exemption limited to eligible, properly documented transactions. The exemption will be administered as a refund to the qualified organization. To receive the benefit of the exemption, the qualified organization must pay the applicable sales tax at the time of purchase to the vendor. Only sales of tangible personal property or services, purchased by the organization, invoiced to the organization, and paid for by funds or check directly from the organization will qualify for the refund described in this Section.

(d) Refund procedure. To obtain a refund under this Section, the qualified organization must file within one (1) year after the date of the sales transaction, a claim for a refund on forms provided by the Commission, along with invoices, and all receipts indicating the amount of state and local sales tax paid on sales exempt from tax under this section. Refund claims will be processed in the order of claims received by the Oklahoma Tax Commission. The sales tax qualifying for the exemption is limited to One Hundred Seventy-five Thousand Dollars ($175,000.00) each fiscal year and timely filed claims that exceed that total amount of refunds payable will be barred.

(e) Purchases by contractors. Purchases of tangible personal property or services by a contractor, as defined by 68 O.S. Section 1352, are taxable to the contractor. A contractor who performs improvements to real property for qualified organizations may not purchase the tangible personal property or services to perform the contract exempt from sales tax under the exemption provided by this Section.

Added at 23 Ok Reg 2847, eff 6-25-06

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