Under 68 O.S. § 1356(53) qualified neighborhood watch organizations are eligible for a sales tax exemption for the first $2,000.00 of purchases or sales for each calendar year. The statute defines "qualified neighborhood watch organization" as "an organization that is a not-for-profit corporation under the laws of the State of Oklahoma that was created to help prevent criminal activity in an area through community involvement and interaction with local law enforcement and which is one of the first two thousand organizations which makes application to the Oklahoma Tax Commission for the exemption after the effective date of this act."
Along with an application, the Association must submit its articles of incorporation, bylaws, or other form of documentation showing the incorporators' intent demonstrating that crime prevention is one of the purposes of the Association. Additionally, the Association must include documentation indicating its affiliation with local law enforcement, as well as a description of the boundaries of the area within the Association's jurisdiction. Finally, the Oklahoma Tax Commission requires the name of the person who will be responsible for keeping records of tax-exempt purchases and sales for the Association to ensure that the $2,000.00 limit is not exceeded. The exemption card will be sent to this person.
It is important to note that unincorporated associations are ineligible for the sales tax exemption. Not only should an association incorporate to qualify for the sales tax exemption, several significant benefits result from incorporation. See, 18 O.S. §865-867, and 18 O.S. §1027E.
Further instructions and an application for sales tax exempt status are available at http://www.tax.ok.gov/btforms/PktE.pdf.
Matthew L. Winton
Condominium and homeowner association lawyer