By Rebecca Helmes, Checkpoint News
The Oklahoma Tax Commission adopted amended regulations, effective July 15, 2025, related to the state’s gross production tax on oil and gas, motor fuel tax, alcoholic beverage taxes, coin-operated vending devices, and various administrative provisions.
Gross production tax
Monthly production reports
An adopted regulation (amended Okla. Admin. Code § 710:45-5-1) specifies how to report gross volume for crude oil and reclaimed oil, natural gas, and natural gas liquids.
Crude oil and reclaimed oil are reported to the nearest hundredth barrel on a per barrel measurement of 42 U.S. gallons of 231 cubic inches per gallon, computed at a temperature of 60 degrees Fahrenheit.
Natural gas is reported to the nearest thousand cubic feet (MCF) at the standard pressure base of 14.65 pounds per square inch absolute at the standard temperature base of 60 degrees Fahrenheit.
Natural gas liquids are reported to the nearest gallon.
Exemptions and exclusions: economically at-risk leases
Adopted regulations (amended Okla. Admin. Code § 710:45-9-81, Okla. Admin. Code § 710:45-9-81.1, and Okla. Admin. Code § 710:45-9-83) amend provisions related to economically at-risk leases for purposes of gross production tax. Specifically, the criteria for determining whether an operator of an economically at-risk oil lease qualifies to apply for a gross production tax exemption are amended, including adding an application requirement to submit a Percent of Proceeds (POP) statement to support ratios when MMbtu to MCF is not 1:1. Documentation requirements also are added for the net profit/loss calculation when a Joint Operating Agreement for the lease does not exist. The claimant has the burden of establishing the right to and the validity of a credit or refund, and applications can be denied when all required information is not submitted at the time of application.
The amendments also add examples of how to determine the average production volume of oil and gas for oil leases and gas leases, and add or amend definitions for calendar year, production year, and economically at-risk oil or gas lease.
Marketing cost deductions
An adopted regulation (amended Okla. Admin. Code § 710:45-9-102) adjusts requirements for qualified deductions from marketing costs. The Tax Commission can disallow the marketing cost deduction for failure to submit supporting documentation sufficient to validate the deduction at the time of application. The regulation establishes the documents that must be submitted with the refund application, and states what additional information the Tax Commission may require. The claimant has the burden of establishing the right to, and the validity of, a credit or refund.
Motor fuel tax exemption added
An adopted regulation (amended Okla. Admin. Code § 710:55-4-114) implements a new motor fuel tax exemption enacted in 2024 for motor fuel used solely and exclusively as fuel to propel motor vehicles on Oklahoma’s public roads and highways, when leased or owned and being operated for the sole benefit of ambulance districts established under the Oklahoma Constitution.
‘Mixed beverages’ definition amended
An adopted regulation (amended Okla. Admin. Code § 710:20-5-1) updates the “mixed beverages” definition for purposes of the gross receipts tax on various alcoholic beverages to reflect statutory changes. Specifically, “mixed beverages” is not beer, cider, or wine mixed with nonalcoholic ingredients including, but not limited to, water, juice, sugar, fruits, or vegetables and sold by a small brewer, brewpub, small farm winery, or winemaker, so long as the party does not also hold an on premises beer and wine, mixed beverage, caterer, public event, or special event license, if permitted by law.
Coin-operated vending devices excluded from fee
An adopted regulation (amended Okla. Admin. Code § 710:25-1-2) adds tobacco/cigarette vending machines to those devices that are not subject to the annual vending device fee.
Administrative provisions
Administrative proceedings for tax protests
Adopted regulations (new Okla. Admin. Code § 710:1-5-31.1; revoked Okla. Admin. Code § 710:1-5-31; amended Okla. Admin. Code § 710:1-5-34, Okla. Admin. Code § 710:1-5-39, and Okla. Admin. Code § 710:1-5-41) clarify the jurisdiction and authority of administrative law judges (ALJs). Specifically, ALJs have the authority to conduct hearings, examine witnesses, issue subpoenas, rule on motions and admissibility of evidence, continue or recess any hearing, control the record, make findings, conclusions, and recommendations to the Tax Commission, and any other authority that the Tax Commission specifically delegates.
The provisions also discuss the procedure for certification of evidentiary issues to the Tax Commission, including how to request certification of an issue, the reply deadline, evidentiary burden, and what occurs once the Tax Commission has made its determination. The ALJ controls the record, which must include all admitted evidence, pleadings, and other required information as set out by law. ALJs must issue findings, conclusions, and recommendations within a reasonable time to the Tax Commission for its consideration. In issuing a written order in a case, the Tax Commission has discretion to vacate, modify, remand, or affirm the ALJ’s recommendation in whole or in part.
Clarifications related to administrative review, hearings
An adopted regulation (amended Okla. Admin. Code § 710:1-5-10.1) provides that a protest is described as a formal, written challenge to a proposed tax assessment or to the denial of a claim for refund of taxes paid, and amends how to determine where to send protest letters and demands for hearing.
Procedures for partial release of tax warrant, lien
An adopted regulation (amended Okla. Admin. Code § 710:1-3-80) adds a situation in which a tax warrant or tax lien may be partially released, to include situations in which the applicant is the taxpayer named in the tax warrant and is selling a parcel encumbered by the tax lien.
Notice to state of excess proceeds from county property tax resale
An adopted regulation (new Okla. Admin. Code § 710:1-3-84) adds procedures for local governments to notify the Oklahoma Tax Commission when a county resells land for more than the taxes, penalties, interest, and cost due. The local government must provide information to the Tax Commission to determine whether a tax lien exists on the property at issue, and the Tax Commission has a specific amount of time to notify the locality of any tax warrants, regardless of whether a tax warrant has been filed.
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