The Oklahoma Tax Commission published a letter regarding a company that develops and supplies a hosted web-based platform through which customers manage and track surplus property. The Commission explains that a letter is written guidance issued in response to a company’s request about its particular and potentially complex circumstances. Therefore, the letter provides a useful indication of how the Commission interprets the relevant tax rules, but businesses should not assume that the conclusion automatically applies to them.
Factual Background and the Commission's Clarifications
The company develops and provides a standardized, web-based software platform that helps government entities and other organizations manage surplus property. The platform allows users to record and manage information about surplus assets, track their status, store related documents and photographs, prepare assets for disposal or sale, and record the outcome of the disposition process.
Importantly, the company does not develop the software for individual customers. Instead, it operates and hosts a single standardized software platform available to all customers. In practice, customers receive a right to access and use the platform but do not receive ownership of the underlying software.
The Commission recalled that in Oklahoma, sales tax generally applies to gross receipts from sales of tangible personal property, certain services, and other transactions listed under the state’s Sales Tax Code. Electronically delivered prewritten computer software is specifically exempt from Oklahoma sales and use tax.
Prewritten software generally means software that is not developed specifically according to the requirements of an individual purchaser. Combining multiple prewritten software programs or components does not change their classification as prewritten software.
Applying these rules, the Commission clarified that hosted SaaS subscriptions are not subject to Oklahoma sales or use tax because customers access prewritten computer software electronically over the internet and no tangible storage medium is transferred to them.
Since the company is not making sales subject to Oklahoma sales tax under the described circumstances, it does not need to obtain an Oklahoma sales tax permit solely for selling these subscriptions. For recordkeeping purposes, the company must maintain complete books and records covering all sales and purchases, clearly distinguishing taxable from non-taxable receipts so the tax treatment can be substantiated
Conclusion
Oklahoma's clear distinction between tangible property and hosted, prewritten software offers significant regulatory clarity for SaaS providers. By deeming remotely accessed web platforms non-taxable, the state reduces administrative burdens for digital businesses while establishing transparent recordkeeping expectations for non-taxable revenue streams.
