2015 -- H 6000

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LC002277

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION - SALES AND USE TAXES-LIABILITY AND COMPUTATION

     

     Introduced By: Representatives O'Brien, McKiernan, Marshall, Slater, and Corvese

     Date Introduced: March 27, 2015

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and

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Use Taxes - Liability and Computation" is hereby amended to read as follows:

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     44-18-30. Gross receipts exempt from sales and use taxes [Effective December 31,

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2014.]. –There are exempted from the taxes imposed by this chapter the following gross receipts:

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     (1) Sales and uses beyond constitutional power of state. From the sale and from the

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storage, use, or other consumption in this state of tangible personal property the gross receipts

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from the sale of which, or the storage, use, or other consumption of which, this state is prohibited

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from taxing under the Constitution of the United States or under the constitution of this state.

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     (2) Newspapers.

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     (i) From the sale and from the storage, use, or other consumption in this state of any

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newspaper.

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     (ii) "Newspaper" means an unbound publication printed on newsprint, that contains news,

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editorial comment, opinions, features, advertising matter, and other matters of public interest.

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     (iii) "Newspaper" does not include a magazine, handbill, circular, flyer, sales catalog, or

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similar item unless the item is printed for and distributed as a part of a newspaper.

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     (3) School meals. From the sale and from the storage, use, or other consumption in this

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state of meals served by public, private, or parochial schools, school districts, colleges,

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universities, student organizations, and parent-teacher associations to the students or teachers of a

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school, college, or university whether the meals are served by the educational institutions or by a

 

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food service or management entity under contract to the educational institutions.

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     (4) Containers.

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     (i) From the sale and from the storage, use, or other consumption in this state of:

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     (A) Non-returnable containers, including boxes, paper bags, and wrapping materials that

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are biodegradable and all bags and wrapping materials utilized in the medical and healing arts,

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when sold without the contents to persons who place the contents in the container and sell the

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contents with the container.

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     (B) Containers when sold with the contents if the sale price of the contents is not required

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to be included in the measure of the taxes imposed by this chapter.

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     (C) Returnable containers when sold with the contents in connection with a retail sale of

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the contents or when resold for refilling.

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     (ii) As used in this subdivision, the term "returnable containers" means containers of a

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kind customarily returned by the buyer of the contents for reuse. All other containers are "non-

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returnable containers."

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     (5)(i) Charitable, educational, and religious organizations. From the sale to, as in

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defined in this section, and from the storage, use, and other consumption in this state or any other

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state of the United States of America of tangible personal property by hospitals not operated for a

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profit; "educational institutions" as defined in subdivision (18) not operated for a profit; churches,

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orphanages, and other institutions or organizations operated exclusively for religious or charitable

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purposes; interest-free loan associations not operated for profit; nonprofit, organized sporting

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leagues and associations and bands for boys and girls under the age of nineteen (19) years; the

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following vocational student organizations that are state chapters of national vocational students

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organizations: Distributive Education Clubs of America (DECA); Future Business Leaders of

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America, Phi Beta Lambda (FBLA/PBL); Future Farmers of America (FFA); Future

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Homemakers of America/Home Economics Related Occupations (FHA/HERD); Vocational

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Industrial Clubs of America (VICA); organized nonprofit golden age and senior citizens clubs for

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men and women; and parent-teacher associations.

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     (A) Hospitals operated for a profit providing community benefit. The general assembly

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finds that the sales tax exemption granted pursuant to subsection (5)(i), above, to hospitals not

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operated for a profit is in recognition of the community benefit derived from such acute-care

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community hospitals. This community benefit includes the provision of high quality health care

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to individuals who could not otherwise afford such care, as well as providing quality, well-paying

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jobs to the community. It is further found that due to the changing economic conditions in the

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health care industry, it is becoming increasingly difficult for stand alone, not-for-profit, acute-

 

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care, community hospitals to operate successfully within the state of Rhode Island. Absent capital

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partners, such acute-care, community hospitals have been forced to seek the protection of state

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receivership proceedings. The general assembly finds it is important to the community to

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encourage the ongoing success of acute-care, community hospitals from both a health care and an

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economic perspective. Accordingly, the sales tax exemption provided in subsection(5)(i), above,

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to hospitals not operated for a profit is hereby extended to hospitals operated for a profit for a

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phased, twelve (12) year period so long as such acute-care, community hospitals continue to

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operate in accord with the licensure granted in chapters 17 and 17.14 of title 23.

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Notwithstanding, chapter 17.25 of title 23 shall continue to apply to Landmark Medical Center as

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a distressed essential community hospital.

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     On or before October 15 of each year, the qualifying hospital operated for a profit shall

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submit an annual report (“annual sales tax exemption compliance report”) to the division of

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taxation, reporting that the qualifying hospital’s license under chapters 17 and 17.14 of title 23 is

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in good standing. Upon review, the division of taxation shall issue certificates entitling the

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qualifying hospital being operated for a profit to such exemption in the calendar year following

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said report. The term “qualifying hospital” shall include any affiliated entities identified by the

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qualifying hospital in an application for conversion filed pursuant to chapter 17.14 of title 23, on

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or after January 1, 2013. Any dispute related to the division of taxation’s annual determination

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shall proceed in accord with chapter 35 of title 42.

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     The exemption shall be a twelve (12) year exemption and phased as follows:

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     Year 1, one hundred percent (100%) of the sales otherwise subject to sales tax shall be

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exempt.

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     Year 2, one hundred percent (100%) of the sales otherwise subject to sales tax shall be

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exempt.

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     Year 3, one hundred percent (100%) of the sales otherwise subject to sales tax shall be

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exempt.

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     Year 4, eighty-five percent (85%) of the sales otherwise subject to sales tax shall be

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exempt.

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     Year 5, eighty-five percent (85%) of the sales otherwise subject to sales tax shall be

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exempt.

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     Year 6, eighty-five percent (85%) of the sales otherwise subject to sales tax shall be

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exempt.

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     Year 7, seventy percent (70%) of the sales otherwise subject to sales tax shall be exempt.

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     Year 8, seventy percent (70%) of the sales otherwise subject to sales tax shall be exempt.

 

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     Year 9, sixty percent (60%) of the sales otherwise subject to sales tax shall be exempt.

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     Year 10, fifty percent (50%) of the sales otherwise subject to sales tax shall be exempt.

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     Year 11, thirty percent (30%) of the sales otherwise subject to sales tax shall be exempt.

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     Year 12, thirty percent (30%) of the sales otherwise subject to sales tax shall be exempt.

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     The sales tax paid by the qualifying hospital during the twelve (12) year phased

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exemption shall be designated for distribution to the host community for the qualifying hospital.

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Furthermore, a qualifying hospital shall report in writing each year to the speaker of the house of

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representatives, the president of the senate and the director of the division of taxation

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demonstrating how the monies that would have otherwise been paid in satisfaction of sales tax

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liabilities, but for the above-referenced, phased exemption, have been directly re-invested in the

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funding of the following: (1) Improving health care facilities for underserved populations in the

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state; (2) Improving health care facilities in urban areas of the state; and/or (3) Creating jobs in

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the state in the health care industry.

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     (ii) In the case of contracts entered into with the federal government, its agencies or

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instrumentalities, this state or any other state of the United States of America, its agencies, any

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city, town, district, or other political subdivision of the states; hospitals not operated for profit;

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educational institutions not operated for profit; churches, orphanages, and other institutions or

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organizations operated exclusively for religious or charitable purposes; the contractor may

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purchase such materials and supplies (materials and/or supplies are defined as those that are

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essential to the project) that are to be utilized in the construction of the projects being performed

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under the contracts without payment of the tax.

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     (iii) The contractor shall not charge any sales or use tax to any exempt agency,

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institution, or organization but shall in that instance provide his or her suppliers with certificates

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in the form as determined by the division of taxation showing the reason for exemption and the

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contractor's records must substantiate the claim for exemption by showing the disposition of all

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property so purchased. If any property is then used for a nonexempt purpose, the contractor must

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pay the tax on the property used.

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     (6) Gasoline. From the sale and from the storage, use, or other consumption in this state

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of: (i) gasoline and other products taxed under chapter 36 of title 31 and (ii) fuels used for the

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propulsion of airplanes.

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     (7) Purchase for manufacturing purposes.

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     (i) From the sale and from the storage, use, or other consumption in this state of computer

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software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration,

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and water, when the property or service is purchased for the purpose of being manufactured into a

 

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finished product for resale and becomes an ingredient, component, or integral part of the

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manufactured, compounded, processed, assembled, or prepared product, or if the property or

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service is consumed in the process of manufacturing for resale computer software, tangible

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personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water.

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     (ii) "Consumed" means destroyed, used up, or worn out to the degree or extent that the

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property cannot be repaired, reconditioned, or rendered fit for further manufacturing use.

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     (iii) "Consumed" includes mere obsolescence.

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     (iv) "Manufacturing" means and includes manufacturing, compounding, processing,

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assembling, preparing, or producing.

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     (v) "Process of manufacturing" means and includes all production operations performed

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in the producing or processing room, shop, or plant, insofar as the operations are a part of and

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connected with the manufacturing for resale of tangible personal property, electricity, natural gas,

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artificial gas, steam, refrigeration, or water and all production operations performed insofar as the

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operations are a part of and connected with the manufacturing for resale of computer software.

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     (vi) "Process of manufacturing" does not mean or include administration operations such

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as general office operations, accounting, collection or sales promotion, nor does it mean or

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include distribution operations that occur subsequent to production operations, such as handling,

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storing, selling, and transporting the manufactured products, even though the administration and

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distribution operations are performed by, or in connection with, a manufacturing business.

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     (8) State and political subdivisions. From the sale to, and from the storage, use, or other

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consumption by, this state, any city, town, district, or other political subdivision of this state.

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Every redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a

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subdivision of the municipality where it is located.

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     (9) Food and food ingredients. From the sale and storage, use, or other consumption in

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this state of food and food ingredients as defined in § 44-18-7.1(l).

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     For the purposes of this exemption "food and food ingredients" shall not include candy,

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soft drinks, dietary supplements, alcoholic beverages, tobacco, food sold through vending

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machines, or prepared food, as those terms are defined in § 44-18-7.1, unless the prepared food is:

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     (i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311,

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except sub-sector 3118 (bakeries);

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     (ii) Sold in an unheated state by weight or volume as a single item;

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     (iii) Bakery items, including bread, rolls, buns, biscuits, bagels, croissants, pastries,

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donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and is not sold with

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utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or

 

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straws.

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     (10) Medicines, drugs, and durable medical equipment. From the sale and from the

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storage, use, or other consumption in this state, of;

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     (i) "Drugs" as defined in § 44-18-7.1(h)(i), sold on prescriptions, medical oxygen, and

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insulin whether or not sold on prescription. For purposes of this exemption drugs shall not

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include over-the-counter drugs and grooming and hygiene products as defined in § 44-18-

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7.1(h)(iii).

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     (ii) Durable medical equipment as defined in § 44-18-7.1(k) for home use only,

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including, but not limited to, syringe infusers, ambulatory drug delivery pumps, hospital beds,

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convalescent chairs, and chair lifts. Supplies used in connection with syringe infusers and

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ambulatory drug delivery pumps that are sold on prescription to individuals to be used by them to

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dispense or administer prescription drugs, and related ancillary dressings and supplies used to

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dispense or administer prescription drugs, shall also be exempt from tax.

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     (11) Prosthetic devices and mobility enhancing equipment. From the sale and from the

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storage, use, or other consumption in this state, of prosthetic devices as defined in § 44-18-7.1(t),

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sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles,

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eyeglasses, and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on

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prescription; and mobility enhancing equipment as defined in § 44-18-7.1(p), including

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wheelchairs, crutches and canes.

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     (12) Coffins, caskets, and burial garments. From the sale and from the storage, use, or

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other consumption in this state of coffins or caskets, and shrouds or other burial garments that are

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ordinarily sold by a funeral director as part of the business of funeral directing.

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     (13) Motor vehicles sold to nonresidents.

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     (i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide

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nonresident of this state who does not register the motor vehicle in this state, whether the sale or

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delivery of the motor vehicle is made in this state or at the place of residence of the nonresident.

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A motor vehicle sold to a bona fide nonresident whose state of residence does not allow a like

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exemption to its nonresidents is not exempt from the tax imposed under § 44-18-20. In that event,

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the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that

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would be imposed in his or her state of residence not to exceed the rate that would have been

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imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed motor vehicle

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dealer shall add and collect the tax required under this subdivision and remit the tax to the tax

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administrator under the provisions of chapters 18 and 19 of this title. When a Rhode Island

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licensed, motor vehicle dealer is required to add and collect the sales and use tax on the sale of a

 

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motor vehicle to a bona fide nonresident as provided in this section, the dealer in computing the

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tax takes into consideration the law of the state of the nonresident as it relates to the trade-in of

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motor vehicles.

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     (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may

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require any licensed motor vehicle dealer to keep records of sales to bona fide nonresidents as the

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tax administrator deems reasonably necessary to substantiate the exemption provided in this

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subdivision, including the affidavit of a licensed motor vehicle dealer that the purchaser of the

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motor vehicle was the holder of, and had in his or her possession a valid out of state motor

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vehicle registration or a valid out of state driver's license.

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     (iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days of

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the date of its sale to him or her is deemed to have purchased the motor vehicle for use, storage,

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or other consumption in this state, and is subject to, and liable for, the use tax imposed under the

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provisions of § 44-18-20.

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     (14) Sales in public buildings by blind people. From the sale and from the storage, use, or

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other consumption in all public buildings in this state of all products or wares by any person

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licensed under § 40-9-11.1.

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     (15) Air and water pollution control facilities. From the sale, storage, use, or other

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consumption in this state of tangible personal property or supplies acquired for incorporation into

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or used and consumed in the operation of a facility, the primary purpose of which is to aid in the

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control of the pollution or contamination of the waters or air of the state, as defined in chapter 12

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of title 46 and chapter 25 of title 23, respectively, and that has been certified as approved for that

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purpose by the director of environmental management. The director of environmental

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management may certify to a portion of the tangible personal property or supplies acquired for

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incorporation into those facilities or used and consumed in the operation of those facilities to the

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extent that that portion has as its primary purpose the control of the pollution or contamination of

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the waters or air of this state. As used in this subdivision, "facility" means any land, facility,

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device, building, machinery, or equipment.

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     (16) Camps. From the rental charged for living quarters, or sleeping, or housekeeping

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accommodations at camps or retreat houses operated by religious, charitable, educational, or

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other organizations and associations mentioned in subdivision (5), or by privately owned and

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operated summer camps for children.

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     (17) Certain institutions. From the rental charged for living or sleeping quarters in an

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institution licensed by the state for the hospitalization, custodial, or nursing care of human beings.

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     (18) Educational institutions. From the rental charged by any educational institution for

 

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living quarters, or sleeping, or housekeeping accommodations or other rooms or accommodations

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to any student or teacher necessitated by attendance at an educational institution. "Educational

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institution" as used in this section means an institution of learning not operated for profit that is

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empowered to confer diplomas, educational, literary, or academic degrees; that has a regular

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faculty, curriculum, and organized body of pupils or students in attendance throughout the usual

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school year; that keeps and furnishes to students and others records required and accepted for

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entrance to schools of secondary, collegiate, or graduate rank; and no part of the net earnings of

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which inures to the benefit of any individual.

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     (19) Motor vehicle and adaptive equipment for persons with disabilities.

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     (i) From the sale of: (A) Special adaptations; (B) The component parts of the special

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adaptations; or (C) A specially adapted motor vehicle; provided that the owner furnishes to the

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tax administrator an affidavit of a licensed physician to the effect that the specially adapted motor

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vehicle is necessary to transport a family member with a disability or where the vehicle has been

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specially adapted to meet the specific needs of the person with a disability. This exemption

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applies to not more than one motor vehicle owned and registered for personal, noncommercial

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use.

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     (ii) For the purpose of this subsection the term "special adaptations" includes, but is not

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limited to: wheelchair lifts, wheelchair carriers, wheelchair ramps, wheelchair securements, hand

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controls, steering devices, extensions, relocations, and crossovers of operator controls, power-

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assisted controls, raised tops or dropped floors, raised entry doors, or alternative signaling devices

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to auditory signals.

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     (iii) From the sale of: (a) special adaptations, (b) the component parts of the special

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adaptations, for a "wheelchair accessible taxicab" as defined in § 39-14-1, and/or a "wheelchair

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accessible public motor vehicle" as defined in § 39-14.1-1.

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     (iv) For the purpose of this subdivision the exemption for a "specially adapted motor

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vehicle" means a use tax credit not to exceed the amount of use tax that would otherwise be due

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on the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the

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special adaptations, including installation.

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     (20) Heating fuels. From the sale and from the storage, use, or other consumption in this

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state of every type of fuel used in the heating of homes and residential premises.

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     (21) Electricity and gas. From the sale and from the storage, use, or other consumption in

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this state of electricity and gas furnished for domestic use by occupants of residential premises.

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     (22) Manufacturing machinery and equipment.

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     (i) From the sale and from the storage, use, or other consumption in this state of tools,

 

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dies, molds, machinery, equipment (including replacement parts), and related items to the extent

2

used in an industrial plant in connection with the actual manufacture, conversion, or processing of

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tangible personal property, or to the extent used in connection with the actual manufacture,

4

conversion, or processing of computer software as that term is utilized in industry numbers 7371,

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7372, and 7373 in the standard industrial classification manual prepared by the Technical

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Committee on Industrial Classification, Office of Statistical Standards, Executive Office of the

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President, United States Bureau of the Budget, as revised from time to time, to be sold, or that

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machinery and equipment used in the furnishing of power to an industrial manufacturing plant.

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For the purposes of this subdivision, "industrial plant" means a factory at a fixed location

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primarily engaged in the manufacture, conversion, or processing of tangible personal property to

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be sold in the regular course of business;

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     (ii) Machinery and equipment and related items are not deemed to be used in connection

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with the actual manufacture, conversion, or processing of tangible personal property, or in

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connection with the actual manufacture, conversion, or processing of computer software as that

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term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification

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manual prepared by the Technical Committee on Industrial Classification, Office of Statistical

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Standards, Executive Office of the President, United States Bureau of the Budget, as revised from

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time to time, to be sold to the extent the property is used in administration or distribution

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operations;

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     (iii) Machinery and equipment and related items used in connection with the actual

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manufacture, conversion, or processing of any computer software or any tangible personal

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property that is not to be sold and that would be exempt under subdivision (7) or this subdivision

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if purchased from a vendor or machinery and equipment and related items used during any

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manufacturing, converting, or processing function is exempt under this subdivision even if that

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operation, function, or purpose is not an integral or essential part of a continuous production flow

26

or manufacturing process;

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     (iv) Where a portion of a group of portable or mobile machinery is used in connection

28

with the actual manufacture, conversion, or processing of computer software or tangible personal

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property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under

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this subdivision even though the machinery in that group is used interchangeably and not

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otherwise identifiable as to use.

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     (23) Trade-in value of motor vehicles. From the sale and from the storage, use, or other

33

consumption in this state of so much of the purchase price paid for a new or used automobile as is

34

allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of

 

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the proceeds applicable only to the automobile as are received from the manufacturer of

2

automobiles for the repurchase of the automobile whether the repurchase was voluntary or not

3

towards the purchase of a new or used automobile by the buyer. For the purpose of this

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subdivision, the word "automobile" means a private passenger automobile not used for hire and

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does not refer to any other type of motor vehicle.

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     (24) Precious metal bullion.

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     (i) From the sale and from the storage, use, or other consumption in this state of precious

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metal bullion, substantially equivalent to a transaction in securities or commodities.

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     (ii) For purposes of this subdivision, "precious metal bullion" means any elementary

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precious metal that has been put through a process of smelting or refining, including, but not

11

limited to, gold, silver, platinum, rhodium, and chromium, and that is in a state or condition that

12

its value depends upon its content and not upon its form.

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     (iii) The term does not include fabricated precious metal that has been processed or

14

manufactured for some one or more specific and customary industrial, professional, or artistic

15

uses.

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     (25) Commercial vessels. From sales made to a commercial ship, barge, or other vessel of

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fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from the

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repair, alteration, or conversion of the vessels, and from the sale of property purchased for the use

19

of the vessels including provisions, supplies, and material for the maintenance and/or repair of the

20

vessels.

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     (26) Commercial fishing vessels. From the sale and from the storage, use, or other

22

consumption in this state of vessels and other water craft that are in excess of five (5) net tons and

23

that are used exclusively for "commercial fishing", as defined in this subdivision, and from the

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repair, alteration, or conversion of those vessels and other watercraft, and from the sale of

25

property purchased for the use of those vessels and other watercraft including provisions,

26

supplies, and material for the maintenance and/or repair of the vessels and other watercraft and

27

the boats nets, cables, tackle, and other fishing equipment appurtenant to or used in connection

28

with the commercial fishing of the vessels and other watercraft. "Commercial fishing" means

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taking or attempting to take any fish, shellfish, crustacea, or bait species with the intent of

30

disposing of it for profit or by sale, barter, trade, or in commercial channels. The term does not

31

include subsistence fishing, i.e., the taking for personal use and not for sale or barter; or sport

32

fishing; but shall include vessels and other watercraft with a Rhode Island party and charter boat

33

license issued by the department of environmental management pursuant to § 20-2-27.1 that meet

34

the following criteria: (i) The operator must have a current U.S.C.G. license to carry passengers

 

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for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii) U.S.C.G. vessel

2

documentation as to proof of Rhode Island home port status or a Rhode Island boat registration to

3

prove Rhode Island home port status; and (iv) The vessel must be used as a commercial passenger

4

carrying fishing vessel to carry passengers for fishing. The vessel must be able to demonstrate

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that at least fifty percent (50%) of its annual gross income derives from charters or provides

6

documentation of a minimum of one hundred (100) charter trips annually; and (v) The vessel

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must have a valid Rhode Island party and charter boat license. The tax administrator shall

8

implement the provisions of this subdivision by promulgating rules and regulations relating

9

thereto.

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     (27) Clothing and footwear. From the sales of articles of clothing, including footwear,

11

intended to be worn or carried on or about the human body for sales prior to October 1, 2012.

12

Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including

13

footwear, intended to be worn or carried on or about the human body up to two hundred and fifty

14

dollars ($250) of the sales price per item. For the purposes of this section, "clothing or footwear"

15

does not include clothing accessories or equipment or special clothing or footwear primarily

16

designed for athletic activity or protective use as these terms are defined in section 44-18-7.1(f).

17

In recognition of the work being performed by the streamlined sales and use tax governing board,

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upon passage of any federal law that authorizes states to require remote sellers to collect and

19

remit sales and use taxes, this unlimited exemption will apply as it did prior to October 1, 2012.

20

The unlimited exemption on sales of clothing and footwear shall take effect on the date that the

21

state requires remote sellers to collect and remit sales and use taxes.

22

     (28) Water for residential use. From the sale and from the storage, use, or other

23

consumption in this state of water furnished for domestic use by occupants of residential

24

premises.

25

     (29) Bibles. [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see Notes

26

to Decisions.] From the sale and from the storage, use, or other consumption in the state of any

27

canonized scriptures of any tax-exempt nonprofit religious organization including, but not limited

28

to, the Old Testament and the New Testament versions.

29

     (30) Boats.

30

     (i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not

31

register the boat or vessel in this state or document the boat or vessel with the United States

32

government at a home port within the state, whether the sale or delivery of the boat or vessel is

33

made in this state or elsewhere; provided, that the nonresident transports the boat within thirty

34

(30) days after delivery by the seller outside the state for use thereafter solely outside the state.

 

LC002277 - Page 11 of 20

1

     (ii) The tax administrator, in addition to the provisions of §§ 44-19-17 and 44-19-28, may

2

require the seller of the boat or vessel to keep records of the sales to bona fide nonresidents as the

3

tax administrator deems reasonably necessary to substantiate the exemption provided in this

4

subdivision, including the affidavit of the seller that the buyer represented himself or herself to be

5

a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state.

6

     (31) Youth activities equipment. From the sale, storage, use, or other consumption in this

7

state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island

8

eleemosynary organizations, for the purposes of youth activities that the organization is formed to

9

sponsor and support; and by accredited elementary and secondary schools for the purposes of the

10

schools or of organized activities of the enrolled students.

11

     (32) Farm equipment. From the sale and from the storage or use of machinery and

12

equipment used directly for commercial farming and agricultural production; including, but not

13

limited to: tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors,

14

balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment,

15

greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and

16

other farming equipment, including replacement parts appurtenant to or used in connection with

17

commercial farming and tools and supplies used in the repair and maintenance of farming

18

equipment. "Commercial farming" means the keeping or boarding of five (5) or more horses or

19

the production within this state of agricultural products, including, but not limited to, field or

20

orchard crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or

21

production provides at least two thousand five hundred dollars ($2,500) in annual gross sales to

22

the operator, whether an individual, a group, a partnership, or a corporation for exemptions issued

23

prior to July 1, 2002. For exemptions issued or renewed after July 1, 2002, there shall be two (2)

24

levels. Level I shall be based on proof of annual, gross sales from commercial farming of at least

25

twenty-five hundred dollars ($2,500) and shall be valid for purchases subject to the exemption

26

provided in this subdivision except for motor vehicles with an excise tax value of five thousand

27

dollars ($5,000) or greater. Level II shall be based on proof of annual gross sales from

28

commercial farming of at least ten thousand dollars ($10,000) or greater and shall be valid for

29

purchases subject to the exemption provided in this subdivision including motor vehicles with an

30

excise tax value of five thousand dollars ($5,000) or greater. For the initial issuance of the

31

exemptions, proof of the requisite amount of annual gross sales from commercial farming shall be

32

required for the prior year; for any renewal of an exemption granted in accordance with this

33

subdivision at either level I or level II, proof of gross annual sales from commercial farming at

34

the requisite amount shall be required for each of the prior two (2) years. Certificates of

 

LC002277 - Page 12 of 20

1

exemption issued or renewed after July 1, 2002, shall clearly indicate the level of the exemption

2

and be valid for four (4) years after the date of issue. This exemption applies even if the same

3

equipment is used for ancillary uses, or is temporarily used for a non-farming or a non-

4

agricultural purpose, but shall not apply to motor vehicles acquired after July 1, 2002, unless the

5

vehicle is a farm vehicle as defined pursuant to § 31-1-8 and is eligible for registration displaying

6

farm plates as provided for in § 31-3-31.

7

     (33) Compressed air. From the sale and from the storage, use, or other consumption in

8

the state of compressed air.

9

     (34) Flags. From the sale and from the storage, consumption, or other use in this state of

10

United States, Rhode Island or POW-MIA flags.

11

     (35) Motor vehicle and adaptive equipment to certain veterans. From the sale of a motor

12

vehicle and adaptive equipment to and for the use of a veteran with a service-connected loss of or

13

the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether

14

service connected or not. The motor vehicle must be purchased by and especially equipped for

15

use by the qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under

16

rules or regulations that the tax administrator may prescribe.

17

     (36) Textbooks. From the sale and from the storage, use, or other consumption in this

18

state of textbooks by an "educational institution", as defined in subdivision (18) of this section,

19

and any educational institution within the purview of § 16-63-9(4), and used textbooks by any

20

purveyor.

21

     (37) Tangible personal property and supplies used in on-site hazardous waste recycling,

22

reuse, or treatment. From the sale, storage, use, or other consumption in this state of tangible

23

personal property or supplies used or consumed in the operation of equipment, the exclusive

24

function of which is the recycling, reuse, or recovery of materials (other than precious metals, as

25

defined in subdivision (24)(ii) of this section) from the treatment of "hazardous wastes", as

26

defined in § 23-19.1-4, where the "hazardous wastes" are generated in Rhode Island solely by the

27

same taxpayer and where the personal property is located at, in, or adjacent to a generating

28

facility of the taxpayer in Rhode Island. The taxpayer shall procure an order from the director of

29

the department of environmental management certifying that the equipment and/or supplies as

30

used or consumed, qualify for the exemption under this subdivision. If any information relating to

31

secret processes or methods of manufacture, production, or treatment is disclosed to the

32

department of environmental management only to procure an order, and is a "trade secret" as

33

defined in § 28-21-10(b), it is not open to public inspection or publicly disclosed unless

34

disclosure is required under chapter 21 of title 28 or chapter 24.4 of title 23.

 

LC002277 - Page 13 of 20

1

     (38) Promotional and product literature of boat manufacturers. From the sale and from

2

the storage, use, or other consumption of promotional and product literature of boat

3

manufacturers shipped to points outside of Rhode Island that either: (i) Accompany the product

4

that is sold; (ii) Are shipped in bulk to out-of-state dealers for use in the sale of the product; or

5

(iii) Are mailed to customers at no charge.

6

     (39) Food items paid for by food stamps. From the sale and from the storage, use, or

7

other consumption in this state of eligible food items payment for which is properly made to the

8

retailer in the form of U.S. government food stamps issued in accordance with the Food Stamp

9

Act of 1977, 7 U.S.C. § 2011 et seq.

10

     (40) Transportation charges. From the sale or hiring of motor carriers as defined in § 39-

11

12-2(l) to haul goods, when the contract or hiring cost is charged by a motor freight tariff filed

12

with the Rhode Island public utilities commission on the number of miles driven or by the

13

number of hours spent on the job.

14

     (41) Trade-in value of boats. From the sale and from the storage, use, or other

15

consumption in this state of so much of the purchase price paid for a new or used boat as is

16

allocated for a trade-in allowance on the boat of the buyer given in trade to the seller or of the

17

proceeds applicable only to the boat as are received from an insurance claim as a result of a stolen

18

or damaged boat, towards the purchase of a new or used boat by the buyer.

19

     (42) Equipment used for research and development. From the sale and from the storage,

20

use, or other consumption of equipment to the extent used for research and development purposes

21

by a qualifying firm. For the purposes of this subdivision, "qualifying firm" means a business for

22

which the use of research and development equipment is an integral part of its operation and

23

"equipment" means scientific equipment, computers, software, and related items.

24

     (43) Coins. From the sale and from the other consumption in this state of coins having

25

numismatic or investment value.

26

     (44) Farm structure construction materials. Lumber, hardware, and other materials used

27

in the new construction of farm structures, including production facilities such as, but not limited

28

to, farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying

29

houses, fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing

30

rooms, machinery storage, seasonal farm worker housing, certified farm markets, bunker and

31

trench silos, feed storage sheds, and any other structures used in connection with commercial

32

farming.

33

     (45) Telecommunications carrier access service. Carrier access service or

34

telecommunications service when purchased by a telecommunications company from another

 

LC002277 - Page 14 of 20

1

telecommunications company to facilitate the provision of telecommunications service.

2

     (46) Boats or vessels brought into the state exclusively for winter storage, maintenance,

3

repair or sale. Notwithstanding the provisions of §§ 44-18-10, 44-18-11 and 44-18-20, the tax

4

imposed by § 44-18-20 is not applicable for the period commencing on the first day of October in

5

any year up to and including the 30th day of April next succeeding with respect to the use of any

6

boat or vessel within this state exclusively for purposes of: (i) Delivery of the vessel to a facility

7

in this state for storage, including dry storage and storage in water by means of apparatus

8

preventing ice damage to the hull, maintenance, or repair; (ii) The actual process of storage,

9

maintenance, or repair of the boat or vessel; or (iii) Storage for the purpose of selling the boat or

10

vessel.

11

     (47) Jewelry display product. From the sale and from the storage, use, or other

12

consumption in this state of tangible personal property used to display any jewelry product;

13

provided that title to the jewelry display product is transferred by the jewelry manufacturer or

14

seller and that the jewelry display product is shipped out of state for use solely outside the state

15

and is not returned to the jewelry manufacturer or seller.

16

     (48) Boats or vessels generally. Notwithstanding the provisions of this chapter, the tax

17

imposed by §§ 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the storage,

18

use, or other consumption in this state of any new or used boat. The exemption provided for in

19

this subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the federal

20

ten percent (10%) surcharge on luxury boats is repealed.

21

     (49) Banks and regulated investment companies interstate toll-free calls.

22

Notwithstanding the provisions of this chapter, the tax imposed by this chapter does not apply to

23

the furnishing of interstate and international, toll-free terminating telecommunication service that

24

is used directly and exclusively by or for the benefit of an eligible company as defined in this

25

subdivision; provided that an eligible company employs on average during the calendar year no

26

less than five hundred (500) "full-time equivalent employees" as that term is defined in § 42-64.5-

27

2. For purposes of this section, an "eligible company" means a "regulated investment company"

28

as that term is defined in the Internal Revenue Code of 1986, 26 U.S.C. § 1 et seq., or a

29

corporation to the extent the service is provided, directly or indirectly, to or on behalf of a

30

regulated investment company, an employee benefit plan, a retirement plan or a pension plan or a

31

state-chartered bank.

32

     (50) Mobile and manufactured homes generally. From the sale and from the storage, use,

33

or other consumption in this state of mobile and/or manufactured homes as defined and subject to

34

taxation pursuant to the provisions of chapter 44 of title 31.

 

LC002277 - Page 15 of 20

1

     (51) Manufacturing business reconstruction materials.

2

     (i) From the sale and from the storage, use, or other consumption in this state of lumber,

3

hardware, and other building materials used in the reconstruction of a manufacturing business

4

facility that suffers a disaster, as defined in this subdivision, in this state. "Disaster" means any

5

occurrence, natural or otherwise, that results in the destruction of sixty percent (60%) or more of

6

an operating manufacturing business facility within this state. "Disaster" does not include any

7

damage resulting from the willful act of the owner of the manufacturing business facility.

8

     (ii) Manufacturing business facility includes, but is not limited to, the structures housing

9

the production and administrative facilities.

10

     (iii) In the event a manufacturer has more than one manufacturing site in this state, the

11

sixty percent (60%) provision applies to the damages suffered at that one site.

12

     (iv) To the extent that the costs of the reconstruction materials are reimbursed by

13

insurance, this exemption does not apply.

14

     (52) Tangible personal property and supplies used in the processing or preparation of

15

floral products and floral arrangements. From the sale, storage, use, or other consumption in this

16

state of tangible personal property or supplies purchased by florists, garden centers, or other like

17

producers or vendors of flowers, plants, floral products, and natural and artificial floral

18

arrangements that are ultimately sold with flowers, plants, floral products, and natural and

19

artificial floral arrangements or are otherwise used in the decoration, fabrication, creation,

20

processing, or preparation of flowers, plants, floral products, or natural and artificial floral

21

arrangements, including descriptive labels, stickers, and cards affixed to the flower, plant, floral

22

product, or arrangement, artificial flowers, spray materials, floral paint and tint, plant shine,

23

flower food, insecticide and fertilizers.

24

     (53) Horse food products. From the sale and from the storage, use, or other consumption

25

in this state of horse food products purchased by a person engaged in the business of the boarding

26

of horses.

27

     (54) Non-motorized recreational vehicles sold to nonresidents.

28

     (i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to

29

a bona fide nonresident of this state who does not register the non-motorized recreational vehicle

30

in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this

31

state or at the place of residence of the nonresident; provided that a non-motorized recreational

32

vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption

33

to its nonresidents is not exempt from the tax imposed under § 44-18-20; provided, further, that in

34

that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the

 

LC002277 - Page 16 of 20

1

rate that would be imposed in his or her state of residence not to exceed the rate that would have

2

been imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed, non-

3

motorized recreational vehicle dealer shall add and collect the tax required under this subdivision

4

and remit the tax to the tax administrator under the provisions of chapters 18 and 19 of this title.

5

Provided, that when a Rhode Island licensed, non-motorized recreational vehicle dealer is

6

required to add and collect the sales and use tax on the sale of a non-motorized recreational

7

vehicle to a bona fide nonresident as provided in this section, the dealer in computing the tax

8

takes into consideration the law of the state of the nonresident as it relates to the trade-in of motor

9

vehicles.

10

     (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may

11

require any licensed, non-motorized recreational vehicle dealer to keep records of sales to bona

12

fide nonresidents as the tax administrator deems reasonably necessary to substantiate the

13

exemption provided in this subdivision, including the affidavit of a licensed, non-motorized

14

recreational vehicle dealer that the purchaser of the non-motorized recreational vehicle was the

15

holder of, and had in his or her possession a valid out-of-state non-motorized recreational vehicle

16

registration or a valid out-of-state driver's license.

17

     (iii) Any nonresident who registers a non-motorized recreational vehicle in this state

18

within ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-

19

motorized recreational vehicle for use, storage, or other consumption in this state, and is subject

20

to, and liable for, the use tax imposed under the provisions of § 44-18-20.

21

     (iv) "Non-motorized recreational vehicle" means any portable dwelling designed and

22

constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use

23

that is eligible to be registered for highway use, including, but not limited to, "pick-up coaches"

24

or "pick-up campers," "travel trailers," and "tent trailers" as those terms are defined in chapter 1

25

of title 31.

26

     (55) Sprinkler and fire alarm systems in existing buildings. From the sale in this state of

27

sprinkler and fire alarm systems; emergency lighting and alarm systems; and the materials

28

necessary and attendant to the installation of those systems that are required in buildings and

29

occupancies existing therein in July 2003 in order to comply with any additional requirements for

30

such buildings arising directly from the enactment of the Comprehensive Fire Safety Act of 2003

31

and that are not required by any other provision of law or ordinance or regulation adopted

32

pursuant to that Act. The exemption provided in this subdivision shall expire on December 31,

33

2008.

34

     (56) Aircraft. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44-

 

LC002277 - Page 17 of 20

1

18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or other

2

consumption in this state of any new or used aircraft or aircraft parts.

3

     (57) Renewable energy products. Notwithstanding any other provisions of Rhode Island

4

general laws, the following products shall also be exempt from sales tax: solar photovoltaic

5

modules or panels, or any module or panel that generates electricity from light; solar thermal

6

collectors, including, but not limited to, those manufactured with flat glass plates, extruded

7

plastic, sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-

8

water and water-to-air type pumps; wind turbines; towers used to mount wind turbines if

9

specified by or sold by a wind turbine manufacturer; DC to AC inverters that interconnect with

10

utility power lines; and manufactured mounting racks and ballast pans for solar collector, module,

11

or panel installation. Not to include materials that could be fabricated into such racks; monitoring

12

and control equipment, if specified or supplied by a manufacturer of solar thermal, solar

13

photovoltaic, geothermal, or wind energy systems or if required by law or regulation for such

14

systems but not to include pumps, fans or plumbing or electrical fixtures unless shipped from the

15

manufacturer affixed to, or an integral part of, another item specified on this list; and solar storage

16

tanks that are part of a solar domestic hot water system or a solar space heating system. If the tank

17

comes with an external heat exchanger it shall also be tax exempt, but a standard hot water tank is

18

not exempt from state sales tax.

19

     (58) Returned property. The amount charged for property returned by customers upon

20

rescission of the contract of sale when the entire amount exclusive of handling charges paid for

21

the property is refunded in either cash or credit, and where the property is returned within one

22

hundred twenty (120) days from the date of delivery.

23

     (59) Dietary Supplements. From the sale and from the storage, use, or other consumption

24

of dietary supplements as defined in § 44-18-7.1(l)(v), sold on prescriptions.

25

     (60) Blood. From the sale and from the storage, use, or other consumption of human

26

blood.

27

     (61) Agricultural products for human consumption. From the sale and from the storage,

28

use, or other consumption of livestock and poultry of the kinds of products that ordinarily

29

constitute food for human consumption and of livestock of the kind the products of which

30

ordinarily constitutes fibers for human use.

31

     (62) Diesel emission control technology. From the sale and use of diesel retrofit

32

technology that is required by § 31-47.3-4.

33

     (63) Feed for certain animals used in commercial farming. From the sale of feed for

34

animals as described in § 44-18-30(61).

 

LC002277 - Page 18 of 20

1

(64) Alcoholic beverages. From the sale and storage, use, or other consumption in this

2

state by a Class A licensee of alcoholic beverages, as defined in § 44-18-7.1, excluding beer and

3

malt beverages from December 1, 2013, through June 30, 2015; provided, further,

4

notwithstanding § 6-13-1 or any other general or public law to the contrary, alcoholic beverages,

5

as defined in § 44-18-7.1, shall not be subject to minimum markup from December 1, 2013,

6

through June 30, 2015.

7

     SECTION 2. This act shall take effect on January 1, 2016.

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LC002277

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LC002277 - Page 19 of 20

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - SALES AND USE TAXES-LIABILITY AND COMPUTATION

***

1

     This act would exempt hospitals operating for profit from sales and use taxes.

2

     This act would take effect on January 1, 2016.

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LC002277

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LC002277 - Page 20 of 20