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Reporting Use Tax Important to City Budget

This article was archived on 4/15/2016

The City of Tulsa lives on sales and use taxes for operations. Sales tax and use tax collections provide two-thirds of the City of Tulsa's general fund. Vital services such as police and fire protection, 911 emergency dispatch, snow and ice removal from streets, pothole repair and mowing of grass in medians and parks are supported by sales and use taxes.

As Tulsans are filing their 2015 income tax returns, they should know that if they bought items online from a retailer without a presence in Oklahoma, they are required to report on their tax return and pay use tax to the State of Oklahoma. The City of Tulsa receives a portion of the use tax paid to the state.

The use tax rate is the same percentage as the sales tax rate - in Tulsa it's 8.517 percent - but it is paid on out-of-state purchases that were not taxed at the point of sale. State tax forms explain how to calculate the tax or estimate it if taxpayers don't remember what they bought online. The amount of use tax owed is entered on Line 20 of the tax forms.

The City of Tulsa Finance Department estimates that the City would have $10 million more per year in revenues if internet sales were reported appropriately. Currently 97 percent of Oklahoma taxpayers ignore the use tax, which relies on the honor system because federal law does not require online retailers to collect the tax for states, cities and counties.