2013 -- H 5172

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LC00208

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO TAXATION - SALES AND USE TAXES - LIABILITY AND

COMPUTATION

     Introduced By: Representatives McLaughlin, Phillips, Hull, Abney, and Ackerman

     Date Introduced: January 29, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 44-18 of the General Laws entitled "Sales and Use Taxes -

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Liability and Computation" is hereby amended by adding thereto the following section:

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     44-18-18.2. Annual Sales Tax Holiday. -- (a) A sales tax holiday on purchases made by

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individuals for personal use shall not be subject to Rhode Island sales or use taxes. The sales tax

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holiday shall occur on Presidents’ day in the month of February and on the Saturday of Labor day

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weekend of each calendar year.

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     (b) The exemption only applies to sales of tangible personal property bought for personal

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use.

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     (1) Purchases by corporations or other businesses and purchases by individuals for

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business use remain taxable. Purchases exempt from the sales tax are also exempt from use tax.

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Eligible items of tangible personal property purchased on the Rhode Island sales tax holiday

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weekend from out-of-state retailers for use in Rhode Island are exempt from the Rhode Island use

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tax.

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     (c) The following exemptions are applicable to Rhode Island sales tax holiday exemption:

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     (1) All sales of motor vehicles, motorboats, meals, telecommunications services, gas

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steam, electricity, tobacco products and of any single item whose price is in excess of twenty-five

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hundred dollars ($2,500), do not qualify for the sales tax holiday exemption and remain subject

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to tax.

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     (2) When the sale price of any single item is greater than two thousand five hundred

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dollars ($2,500), sales and/or use tax is due on the entire price charged for the item. The sale price

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is not reduced by the threshold amount.

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     (3) Where a customer is purchasing multiple items on the sales tax holiday, separate

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invoices are not required. As long as each individual item is two thousand five hundred dollars

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($2,500) or less. There is no upper limit on the tax-free amount each customer may purchase.

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     (4)(i) When several items are offered for a sale at a single price, the entire package is

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exempt if the sale price of the package is two thousand five hundred dollars ($2,500) or less. (For

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example, a computer package including a CPU, keyboard, monitor, mouse and a printer with a

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single sales price of three thousand five hundred dollars ($3,500) would not qualify for the sales

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tax holiday exemption because the single sale price of the package three thousand five hundred

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dollars ($3,500) is more than the sales tax holiday threshold amount of two thousand five hundred

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dollars ($2,500)).

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     (ii) Items that are priced separately and are to be sold as separate articles will qualify for

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the sales tax holiday exemption if the price of each article is two thousand five hundred dollars

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($2,500) or less. (For example, a customer purchases a personal computer for three thousand

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dollars ($3,000) and a computer printer for two-hundred dollars ($200), each of which is priced

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separately. The purchase of the personal computer will not qualify for the exemption because the

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sale price, three thousand dollars ($3,000), is in excess of the sales tax holiday threshold amount

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of two thousand five hundred dollars ($2,500). However, since the sale price of the computer

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printer, two-hundred dollars ($200) is less than two thousand five hundred dollars ($2,500), the

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printer would be exempt from tax.)

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     (5) If a store coupon or discount provided by a retailer or manufacturer reduces the sale

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price of the property, the discounted sale price determines whether the sale price is within the sale

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tax holiday price threshold of two thousand five hundred dollars ($2,500) or less. If a store

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coupon or discount applies to the total amount paid by a purchaser rather than to the sale price of

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a particular item and the purchaser has purchased both eligible property and taxable property, the

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seller should allocate the discount on a pro rata basis to each article sold.

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     (6) If a customer purchases an item of eligible property during the sales tax holiday, but

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later exchanges the item for an identical or similar eligible item for the same price (“an even

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exchange”), no tax is due even if the exchange is made after the sales tax holiday.

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     (7) Layaway sales do not qualify for the sales tax holiday.

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     (8) Special order items such as furniture are eligible for the sales tax holiday so long as

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they are ordered and paid for in full on the sales tax holiday and the cost of each item is two

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thousand five hundred dollars ($2,500) or less, even if the delivery is made at a later date.

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     (9) When a customer receives a raincheck because an item on sale was not available,

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property bought with the use of the raincheck will qualify for the exemption regardless of when

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the raincheck was issued if the raincheck is used on the sales tax holiday. Issuance of a raincheck

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during the sales tax holiday weekend will not qualify otherwise eligible property for the sales tax

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holiday exemption if the property is actually purchased after the sales tax holiday.

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      (10) Rentals of tangible personal property, except motor vehicles and motorboats, are

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eligible for the sales tax holiday, even if the rental period covers days before or after the holiday,

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provided payment in full is made during the sales tax holiday.

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      (11) A sale price discounted by a rebate determines whether the sale price is within the

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sale tax holiday price threshold of two thousand five hundred dollars ($2,500) or less. If a vendor

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offers a customer a cash discount upon the purchase of tangible personal property and the

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customer also receives a rebate from the manufacturer of the property after the sale, only the cash

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discount given by the retailer is excluded from the sale price for purposes of the sale tax holiday

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exemption. The amount of the manufacturer’s rebate is not deducted from the sale price.

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      (12) Internet sales are exempt if ordered and paid for on the sales tax holiday.

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      (13) Items normally sold as a single unit must continue to be sold in that manner. Such

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articles cannot be priced separately and sold as individual items in order to obtain the sales tax

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holiday exemption.

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      (14) Sales tax may only be refunded to a retail customer on returns within ninety (90)

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days of the sale.

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      (15) Customers who are erroneously charged sales tax by a vendor for an exempt

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purchase should take his/her tax paid receipt to the vendor to obtain the refund. If the vendor has

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remitted the erroneously collected tax to the division of taxation, the vendor may file an

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application for abatement of the erroneously collected tax within three (3) years upon satisfactory

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evidence that the vendor has credited or refunded the tax to the purchaser.

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      (d) All Rhode Island businesses normally making taxable sales of tangible personal

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property that are open during the sales tax holiday must participate in the sales tax holiday.

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      (e) Out-of-state retailers registered to collect Rhode Island sales and use taxes must

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participate in the sales tax holiday.

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      (f) Retailers that back-date sales occurring after the sales tax holiday or that forward-date

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sales that occurred before the sales tax holiday in order to make them appear to qualify for the

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sales tax holiday or otherwise fail to follow the rules in this chapter in order to improperly avoid

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collecting and remitting sales or use tax may be subject to the tax evasion penalties as prescribed

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by Rhode Island general laws, including a felony conviction, a fine of not more than one hundred

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thousand dollars ($100,000) or five-hundred thousand ($500,000) in the case of a corporation, or

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by imprisonment for not more than five (5) years, or both, and may be required to pay the costs of

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prosecution.

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      SECTION 2. This act shall take effect upon passage.

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LC00208

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - SALES AND USE TAXES - LIABILITY AND

COMPUTATION

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     This act would provide a sales and use tax holiday on Presidents’ day in the month of

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February and on the Saturday of Labor day weekend in each calendar year.

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     This act would take effect upon passage.

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LC00208

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