H5224

	2013 -- H 5224
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	LC00347
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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: Representative Arthur J. Corvese

	Date Introduced: January 31, 2013

	Referred To: House Finance




	It is enacted by the General Assembly as follows:

1-1	SECTION 1. Sections 44-18-7.1 and 44-18-30 of the General Laws in Chapter 44-18
1-2	entitled "Sales and Use Taxes - Liability and Computation" are hereby amended to read as
1-3	follows:
1-4	44-18-7.1. Additional definitions. -- (a) "Agreement" means the Streamlined Sales and
1-5	Use Tax Agreement.
1-6	(b) "Alcoholic Beverages" means beverages that are suitable for human consumption and
1-7	contain one-half of one percent (.5%) or more of alcohol by volume.
1-8	(c) "Bundled Transaction" is the retail sale of two or more products, except real property
1-9	and services to real property, where (1) the products are otherwise distinct and identifiable, and
1-10	(2) the products are sold for one non-itemized price. A "bundled transaction" does not include the
1-11	sale of any products in which the "sales price" varies, or is negotiable, based on the selection by
1-12	the purchaser of the products included in the transaction.
1-13	(i) "Distinct and identifiable products" does not include:
1-14	(A) Packaging -- such as containers, boxes, sacks, bags, and bottles -- or other materials -
1-15	- such as wrapping, labels, tags, and instruction guides -- that accompany the "retail sale" of the
1-16	products and are incidental or immaterial to the "retail sale" thereof. Examples of packaging that
1-17	are incidental or immaterial include grocery sacks, shoeboxes, dry cleaning garment bags and
1-18	express delivery envelopes and boxes.
2-19	(B) A product provided free of charge with the required purchase of another product. A
2-20	product is "provided free of charge" if the "sales price" of the product purchased does not vary
2-21	depending on the inclusion of the products "provided free of charge."
2-22	(C) Items included in the member state's definition of "sales price," pursuant to
2-23	Appendix C of the Agreement.
2-24	(ii) The term "one non-itemized price" does not include a price that is separately
2-25	identified by product on binding sales or other supporting sales-related documentation made
2-26	available to the customer in paper or electronic form including, but not limited to, an invoice, bill
2-27	of sale, receipt, contract, service agreement, lease agreement, periodic notice of rates and
2-28	services, rate card, or price list.
2-29	(iii) A transaction that otherwise meets the definition of a "bundled transaction" as
2-30	defined above, is not a "bundled transaction" if it is:
2-31	(A) The "retail sale" of tangible personal property and a service where the tangible
2-32	personal property is essential to the use of the service, and is provided exclusively in connection
2-33	with the service, and the true object of the transaction is the service; or
2-34	(B) The "retail sale" of services where one service is provided that is essential to the use
2-35	or receipt of a second service and the first service is provided exclusively in connection with the
2-36	second service and the true object of the transaction is the second service; or
2-37	(C) A transaction that includes taxable products and nontaxable products and the
2-38	"purchase price" or "sales price" of the taxable products is de minimis.
2-39	1. De minimis means the seller's "purchase price" or "sales price" of the taxable products
2-40	is ten percent (10%) or less of the total "purchase price" or "sales price" of the bundled products.
2-41	2. Sellers shall use either the "purchase price" or the "sales price" of the products to
2-42	determine if the taxable products are de minimis. Sellers may not use a combination of the
2-43	"purchase price" and "sales price" of the products to determine if the taxable products are de
2-44	minimis.
2-45	3. Sellers shall use the full term of a service contract to determine if the taxable products
2-46	are de minimis; or
2-47	(D) The "retail sale" of exempt tangible personal property and taxable tangible personal
2-48	property where:
2-49	1. the transaction includes "food and food ingredients", "drugs", "durable medical
2-50	equipment", "mobility enhancing equipment", "over-the-counter drugs", "prosthetic devices" (all
2-51	as defined in section 44-18-7.1) or medical supplies; and
2-52	2. where the seller's "purchase price" or "sales price" of the taxable tangible personal
2-53	property is fifty percent (50%) or less of the total "purchase price" or "sales price" of the bundled
3-1	tangible personal property. Sellers may not use a combination of the "purchase price" and "sales
3-2	price" of the tangible personal property when making the fifty percent (50%) determination for a
3-3	transaction.
3-4	(d) "Certified Automated System (CAS)" means software certified under the Agreement
3-5	to calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to
3-6	remit to the appropriate state, and maintain a record of the transaction.
3-7	(e) "Certified Service Provider (CSP)" means an agent certified under the Agreement to
3-8	perform all the seller's sales and use tax functions, other than the seller's obligation to remit tax on
3-9	its own purchases.
3-10	(f) Clothing and Related Items
3-11	(i) "Clothing" means all human wearing apparel suitable for general use.
3-12	(ii) "Clothing accessories or equipment" means incidental items worn on the person or in
3-13	conjunction with "clothing." "Clothing accessories or equipment" does not include "clothing,"
3-14	"sport or recreational equipment," or "protective equipment."
3-15	(iii) "Protective equipment" means items for human wear and designed as protection of
3-16	the wearer against injury or disease or as protections against damage or injury of other persons or
3-17	property but not suitable for general use. "Protective equipment" does not include "clothing,"
3-18	"clothing accessories or equipment," and "sport or recreational equipment."
3-19	(iv) "Sport or recreational equipment" means items designed for human use and worn in
3-20	conjunction with an athletic or recreational activity that are not suitable for general use. "Sport or
3-21	recreational equipment" does not include "clothing," "clothing accessories or equipment," and
3-22	"protective equipment."
3-23	(g) Computer and Related Items
3-24	(i) "Computer" means an electronic device that accepts information in digital or similar
3-25	form and manipulates it for a result based on a sequence of instructions.
3-26	(ii) "Computer software" means a set of coded instructions designed to cause a
3-27	"computer" or automatic data processing equipment to perform a task.
3-28	(iii) "Delivered electronically" means delivered to the purchaser by means other than
3-29	tangible storage media.
3-30	(iv) "Electronic" means relating to technology having electrical, digital, magnetic,
3-31	wireless, optical, electromagnetic, or similar capabilities.
3-32	(v) "Load and leave" means delivery to the purchaser by use of a tangible storage media
3-33	where the tangible storage media is not physically transferred to the purchaser.
4-34	(vi) "Prewritten computer software" means "computer software," including prewritten
4-35	upgrades, which is not designed and developed by the author or other creator to the specifications
4-36	of a specific purchaser. The combining of two (2) or more "prewritten computer software"
4-37	programs or prewritten portions thereof does not cause the combination to be other than
4-38	"prewritten computer software." "Prewritten computer software" includes software designed and
4-39	developed by the author or other creator to the specifications of a specific purchaser when it is
4-40	sold to a person other than the specific purchaser. Where a person modifies or enhances
4-41	"computer software" of which the person is not the author or creator, the person shall be deemed
4-42	to be the author or creator only of such person's modifications or enhancements. "Prewritten
4-43	computer software" or a prewritten portion thereof that is modified or enhanced to any degree,
4-44	where such modification or enhancement is designed and developed to the specifications of a
4-45	specific purchaser, remains "prewritten computer software;" provided, however, that where there
4-46	is a reasonable, separately stated charge or an invoice or other statement of the price given to the
4-47	purchaser for such modification or enhancement, such modification or enhancement shall not
4-48	constitute "prewritten computer software."
4-49	(h) Drugs and Related Items
4-50	(i) "Drug" means a compound, substance or preparation, and any component of a
4-51	compound, substance or preparation, other than "food and food ingredients," "dietary
4-52	supplements" or "alcoholic beverages:"
4-53	(A) Recognized in the official United States Pharmacopoeia, official Homeopathic
4-54	Pharmacopoeia of the United States, or official National Formulary, and supplement to any of
4-55	them; or
4-56	(B) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of
4-57	disease; or
4-58	(C) Intended to affect the structure or any function of the body.
4-59	"Drug" shall also include insulin and medical oxygen whether or not sold on
4-60	prescription.
4-61	(ii) "Over-the-counter-drug" means a drug that contains a label that identifies the product
4-62	as a drug as required by 21 C.F.R. section 201.66. The "over-the-counter-drug" label includes:
4-63	(A) A "Drug Facts" panel; or
4-64	(B) A statement of the "active ingredient(s)" with a list of those ingredients contained in
4-65	the compound, substance or preparation.
4-66	"Over-the-counter-drug" shall not include "grooming and hygiene products."
4-67	(iii) "Grooming and hygiene products" are soaps and cleaning solutions, shampoo,
4-68	toothpaste, mouthwash, antiperspirants, and suntan lotions and screens, regardless of whether the
5-1	items meet the definition of "over-the-counter-drugs."
5-2	(iv) "Prescription" means an order, formula or recipe issued in any form of oral, written,
5-3	electronic, or other means of transmission by a duly licensed practitioner authorized by the laws
5-4	of the member state.
5-5	(i) "Delivery charges" means charges by the seller of personal property or services for
5-6	preparation and delivery to a location designated by the purchaser of personal property or services
5-7	including, but not limited to, transportation, shipping, postage, handling, crating, and packing.
5-8	"Delivery charges" shall not include the charges for delivery of "direct mail' if the
5-9	charges are separately stated on an invoice or similar billing document given to the purchaser.
5-10	(j) "Direct mail" means printed material delivered or distributed by United States mail or
5-11	other delivery service to a mass audience or to addressees on a mailing list provided by the
5-12	purchaser or at the direction of the purchaser when the cost of the items are not billed directly to
5-13	the recipients. "Direct mail" includes tangible personal property supplied directly or indirectly by
5-14	the purchaser to the direct mail seller for inclusion in the package containing the printed material.
5-15	"Direct mail" does not include multiple items of printed material delivered to a single address.
5-16	(k) "Durable medical equipment" means equipment including repair and replacement
5-17	parts for same which:
5-18	(i) Can withstand repeated use; and
5-19	(ii) Is primarily and customarily used to serve a medical purpose; and
5-20	(iii) Generally is not useful to a person in the absence of illness or injury; and
5-21	(iv) Is not worn in or on the body.
5-22	Durable medical equipment does not include mobility enhancing equipment.
5-23	(l) Food and Related Items
5-24	(i) "Food and food ingredients" means substances, whether in liquid, concentrated, solid,
5-25	frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are
5-26	consumed for their taste or nutritional value. "Food and food ingredients" does not include
5-27	"alcoholic beverages," "tobacco," "candy," "dietary supplements" and "soft drinks."
5-28	(ii) "Prepared food" means:
5-29	(A) Food sold in a heated state or heated by the seller;
5-30	(B) Two (2) or more food ingredients mixed or combined by the seller for sale as a
5-31	single item; or
5-32	(C) Food sold with eating utensils provided by the seller, including plates, knives, forks,
5-33	spoons, glasses, cups, napkins, or straws. A plate does not include a container or packaging used
5-34	to transport the food.
6-1	"Prepared food" in (B) does not include food that is only cut, repackaged, or pasteurized
6-2	by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring
6-3	cooking by the consumer as recommended by the Food and Drug Administration in chapter 3,
6-4	part 401.11 of its Food Code so as to prevent food borne illnesses.
6-5	(iii) "Candy" means a preparation of sugar, honey, or other natural or artificial
6-6	sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the
6-7	form of bars, drops, or pieces. "Candy" shall not include any preparation containing flour and
6-8	shall require no refrigeration.
6-9	(iv) "Soft drinks" means non-alcoholic beverages that contain natural or artificial
6-10	sweeteners. "Soft drinks" do not include beverages that contain milk or milk products, soy, rice
6-11	or similar milk substitutes, or greater than fifty percent (50%) of vegetable or fruit juice by
6-12	volume.
6-13	(v) "Dietary supplement" means any product, other than "tobacco," intended to
6-14	supplement the diet that:
6-15	(A) Contains one or more of the following dietary ingredients:
6-16	1. A vitamin;
6-17	2. A mineral;
6-18	3. An herb or other botanical;
6-19	4. An amino acid;
6-20	5. A dietary substance for use by humans to supplement the diet by increasing the total
6-21	dietary intake; or
6-22	6. A concentrate, metabolite, constituent, extract, or combination of any ingredient
6-23	described in above; and
6-24	(B) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or
6-25	if not intended for ingestion in such a form, is not represented as conventional food and is not
6-26	represented for use as a sole item of a meal or of the diet; and
6-27	(C) Is required to be labeled as a dietary supplement, identifiable by the "Supplemental
6-28	Facts" box found on the label and as required pursuant to 21 C.F.R. section 101.36.
6-29	(m) "~~Food~~ Items sold through vending machines" means food, snacks, beverages or
6-30	other items dispensed from a machine or other mechanical device that accepts payment.
6-31	(n) "Hotel" means every building or other structure kept, used, maintained, advertised as
6-32	or held out to the public to be a place where living quarters are supplied for pay to transient or
6-33	permanent guests and tenants and includes a motel.
7-34	(i) "Living quarters" means sleeping rooms, sleeping or housekeeping accommodations,
7-35	or any other room or accommodation in any part of the hotel, rooming house or tourist camp
7-36	which is available for or rented out for hire in the lodging of guests.
7-37	(ii) "Rooming house" means every house, boat, vehicle, motor court or other structure
7-38	kept, used, maintained, advertised or held out to the public to be a place where living quarters are
7-39	supplied for pay to transient or permanent guests or tenants, whether in one or adjoining
7-40	buildings.
7-41	(iii) "Tourist camp" means a place where tents or tent houses, or camp cottages, or
7-42	cabins or other structures are located and offered to the public or any segment thereof for human
7-43	habitation.
7-44	(o) "Lease or rental" means any transfer of possession or control of tangible personal
7-45	property for a fixed or indeterminate term for consideration. A lease or rental may include future
7-46	options to purchase or extend. Lease or rental does not include:
7-47	(i) A transfer of possession or control of property under a security agreement or deferred
7-48	payment plan that requires the transfer of title upon completion of the required payments;
7-49	(ii) A transfer or possession or control of property under an agreement that requires the
7-50	transfer of title upon completion of required payments and payment of an option price does not
7-51	exceed the greater of one hundred dollars ($100) or one percent of the total required payments; or
7-52	(iii) Providing tangible personal property along with an operator for a fixed or
7-53	indeterminate period of time. A condition of this exclusion is that the operator is necessary for
7-54	the equipment to perform as designed. For the purpose of this subsection, an operator must do
7-55	more than maintain, inspect, or set-up the tangible personal property.
7-56	(iv) Lease or rental does include agreements covering motor vehicles and trailers where
7-57	the amount of consideration may be increased or decreased by reference to the amount realized
7-58	upon sale or disposition of the property as defined in 26 U.S.C. section 7701(h)(1).
7-59	(v) This definition shall be used for sales and use tax purposes regardless if a transaction
7-60	is characterized as a lease or rental under generally accepted accounting principles, the Internal
7-61	Revenue Code, the Uniform Commercial Code, or other provisions of federal, state or local law.
7-62	(vi) This definition will be applied only prospectively from the date of adoption and will
7-63	have no retroactive impact on existing leases or rentals. This definition shall neither impact any
7-64	existing sale-leaseback exemption or exclusions that a state may have, nor preclude a state from
7-65	adopting a sale-leaseback exemption or exclusion after the effective date of the Agreement.
7-66	(p) "Mobility enhancing equipment" means equipment including repair and replacement
7-67	parts to same, which:
8-68	(i) Is primarily and customarily used to provide or increase the ability to move from one
8-69	place to another and which is appropriate for use either in a home or a motor vehicle; and
8-70	(ii) Is not generally used by persons with normal mobility; and
8-71	(iii) Does not include any motor vehicle or equipment on a motor vehicle normally
8-72	provided by a motor vehicle manufacturer.
8-73	Mobility enhancing equipment does not include durable medical equipment.
8-74	(q) "Model 1 Seller" means a seller that has selected a CSP as its agent to perform all the
8-75	seller's sales and use tax functions, other than the seller's obligation to remit tax on its own
8-76	purchases.
8-77	(r) "Model 2 Seller" means a seller that has selected a CAS to perform part of its sales
8-78	and use tax functions, but retains responsibility for remitting the tax.
8-79	(s) "Model 3 Seller" means a seller that has sales in at least five member states, has total
8-80	annual sales revenue of at least five hundred million dollars ($500,000,000), has a proprietary
8-81	system that calculates the amount of tax due each jurisdiction, and has entered into a performance
8-82	agreement with the member states that establishes a tax performance standard for the seller. As
8-83	used in this definition, a seller includes an affiliated group of sellers using the same proprietary
8-84	system.
8-85	(t) "Prosthetic device" means a replacement, corrective, or supportive devices including
8-86	repair and replacement parts for same worn on or in the body to:
8-87	(i) Artificially replace a missing portion of the body;
8-88	(ii) Prevent or correct physical deformity or malfunction; or
8-89	(iii) Support a weak or deformed portion of the body.
8-90	(u) "Purchaser" means a person to whom a sale of personal property is made or to whom
8-91	a service is furnished.
8-92	(v) "Purchase price" applies to the measure subject to use tax and has the same meaning
8-93	as sales price.
8-94	(w) "Seller" means a person making sales, leases, or rentals of personal property or
8-95	services.
8-96	(x) "State" means any state of the United States and the District of Columbia.
8-97	(y) "Telecommunications" tax base/exemption terms
8-98	(i) Telecommunication terms shall be defined as follows:
8-99	(A) "Ancillary services" means services that are associated with or incidental to the
8-100	provision of "telecommunications services", including, but not limited to, "detailed
8-101	telecommunications billing", "directory assistance", "vertical service", and "voice mail services".
9-102	(B) "Conference bridging service" means an "ancillary service" that links two (2) or
9-103	more participants of an audio or video conference call and may include the provision of a
9-104	telephone number. "Conference bridging service" does not include the "telecommunications
9-105	services" used to reach the conference bridge.
9-106	(C) "Detailed telecommunications billing service" means an "ancillary service" of
9-107	separately stating information pertaining to individual calls on a customer's billing statement.
9-108	(D) "Directory assistance" means an "ancillary service" of providing telephone number
9-109	information, and/or address information.
9-110	(E) "Vertical service" means an "ancillary service" that is offered in connection with one
9-111	or more "telecommunications services", which offers advanced calling features that allow
9-112	customers to identify callers and to manage multiple calls and call connections, including
9-113	"conference bridging services".
9-114	(F) "Voice mail service" means an "ancillary service" that enables the customer to store,
9-115	send or receive recorded messages. "Voice mail service" does not include any "vertical services"
9-116	that the customer may be required to have in order to utilize the "voice mail service".
9-117	(G) "Telecommunications service" means the electronic transmission, conveyance, or
9-118	routing of voice, data, audio, video, or any other information or signals to a point, or between or
9-119	among points. The term "telecommunications service" includes such transmission, conveyance,
9-120	or routing in which computer processing applications are used to act on the form, code or
9-121	protocol of the content for purposes of transmission, conveyance or routing without regard to
9-122	whether such service is referred to as voice over Internet protocol services or is classified by the
9-123	Federal Communications Commission as enhanced or value added. "Telecommunications
9-124	service" does not include:
9-125	(1) Data processing and information services that allow data to be generated, acquired,
9-126	stored, processed, or retrieved and delivered by an electronic transmission to a purchaser where
9-127	such purchaser's primary purpose for the underlying transaction is the processed data or
9-128	information;
9-129	(2) Installation or maintenance of wiring or equipment on a customer's premises;
9-130	(3) Tangible personal property;
9-131	(4) Advertising, including, but not limited to, directory advertising.
9-132	(5) Billing and collection services provided to third parties;
9-133	(6) Internet access service;
9-134	(7) Radio and television audio and video programming services, regardless of the
9-135	medium, including the furnishing of transmission, conveyance and routing of such services by the
9-136	programming service provider. Radio and television audio and video programming services shall
10-1	include, but not be limited to, cable service as defined in 47 U.S.C. section 522(6) and audio and
10-2	video programming services delivered by commercial mobile radio service providers, as defined
10-3	in 47 CFR 20.3;
10-4	(8) "Ancillary services"; or
10-5	(9) Digital products "delivered electronically", including, but not limited to, software,
10-6	music, video, reading materials or ring tones.
10-7	(H) "800 service" means a "telecommunications service" that allows a caller to dial a
10-8	toll-free number without incurring a charge for the call. The service is typically marketed under
10-9	the name "800", "855", "866", "877", and "888" toll-free calling, and any subsequent numbers
10-10	designated by the Federal Communications Commission.
10-11	(I) "900 service" means an inbound toll "telecommunications service" purchased by a
10-12	subscriber that allows the subscriber's customers to call in to the subscriber's prerecorded
10-13	announcement or live service. "900 service" does not include the charge for: collection services
10-14	provided by the seller of the "telecommunications services" to the subscriber, or service or
10-15	product sold by the subscriber to the subscriber's customer. The service is typically marketed
10-16	under the name "900 service," and any subsequent numbers designated by the Federal
10-17	Communications Commission.
10-18	(J) "Fixed wireless service" means a "telecommunications service" that provides radio
10-19	communication between fixed points.
10-20	(K) "Mobile wireless service" means a "telecommunications service" that is transmitted,
10-21	conveyed or routed regardless of the technology used, whereby the origination and/or termination
10-22	points of the transmission, conveyance or routing are not fixed, including, by way of example
10-23	only, "telecommunications services" that are provided by a commercial mobile radio service
10-24	provider.
10-25	(L) "Paging service" means a "telecommunications service" that provides transmission of
10-26	coded radio signals for the purpose of activating specific pagers; such transmissions may include
10-27	messages and/or sounds.
10-28	(M) "Prepaid calling service" means the right to access exclusively "telecommunications
10-29	services", which must be paid for in advance and which enables the origination of calls using an
10-30	access number or authorization code, whether manually or electronically dialed, and that is sold
10-31	in predetermined units or dollars of which the number declines with use in a known amount.
10-32	(N) "Prepaid wireless calling service" means a "telecommunications service" that
10-33	provides the right to utilize "mobile wireless service" as well as other non-telecommunications
10-34	services including the download of digital products "delivered electronically", content and
11-1	"ancillary services" which must be paid for in advance that is sold in predetermined units of
11-2	dollars of which the number declines with use in a known amount.
11-3	(O) "Private communications service" means a telecommunications service that entitles
11-4	the customer to exclusive or priority use of a communications channel or group of channels
11-5	between or among termination points, regardless of the manner in which such channel or
11-6	channels are connected, and includes switching capacity, extension lines, stations, and any other
11-7	associated services that are provided in connection with the use of such channel or channels.
11-8	(P) "Value-added non-voice data service" means a service that otherwise meets the
11-9	definition of "telecommunications services" in which computer processing applications are used
11-10	to act on the form, content, code, or protocol of the information or data primarily for a purpose
11-11	other than transmission, conveyance or routing.
11-12	(ii) "Modifiers of Sales Tax Base/Exemption Terms" -- the following terms can be used
11-13	to further delineate the type of "telecommunications service" to be taxed or exempted. The terms
11-14	would be used with the broader terms and subcategories delineated above.
11-15	(A) "Coin-operated telephone service" means a "telecommunications service" paid for by
11-16	inserting money into a telephone accepting direct deposits of money to operate.
11-17	(B) "International" means a "telecommunications service" that originates or terminates in
11-18	the United States and terminates or originates outside the United States, respectively. United
11-19	States includes the District of Columbia or a U.S. territory or possession.
11-20	(C) "Interstate" means a "telecommunications service" that originates in one United
11-21	States state, or a United States territory or possession, and terminates in a different United States
11-22	state or a United States territory or possession.
11-23	(D) "Intrastate" means a "telecommunications service" that originates in one United
11-24	States state or a United States territory or possession, and terminates in the same United States
11-25	state or a United States territory or possession.
11-26	(E) "Pay telephone service" means a "telecommunications service" provided through any
11-27	pay telephone.
11-28	(F) "Residential telecommunications service" means a "telecommunications service" or
11-29	"ancillary services" provided to an individual for personal use at a residential address, including
11-30	an individual dwelling unit such as an apartment. In the case of institutions where individuals
11-31	reside, such as schools or nursing homes, "telecommunications service" is considered residential
11-32	if it is provided to and paid for by an individual resident rather than the institution.
11-33	The terms "ancillary services" and "telecommunications service" are defined as a broad
11-34	range of services. The terms "ancillary services" and "telecommunications service" are broader
12-1	than the sum of the subcategories. Definitions of subcategories of "ancillary services" and
12-2	"telecommunications service" can be used by a member state alone or in combination with other
12-3	subcategories to define a narrower tax base than the definitions of "ancillary services" and
12-4	"telecommunications service" would imply. The subcategories can also be used by a member
12-5	state to provide exemptions for certain subcategories of the more broadly defined terms.
12-6	A member state that specifically imposes tax on, or exempts from tax, local telephone or
12-7	local telecommunications service may define "local service" in any manner in accordance with
12-8	section 44-18.1-28, except as limited by other sections of this Agreement.
12-9	(z) "Tobacco" means cigarettes, cigars, chewing or pipe tobacco, or any other item that
12-10	contains tobacco.
12-11	44-18-30. Gross receipts exempt from sales and use taxes. -- There are exempted from
12-12	the taxes imposed by this chapter the following gross receipts:
12-13	(1) Sales and uses beyond constitutional power of state. - From the sale and from the
12-14	storage, use, or other consumption in this state of tangible personal property the gross receipts
12-15	from the sale of which, or the storage, use, or other consumption of which, this state is prohibited
12-16	from taxing under the Constitution of the United States or under the constitution of this state.
12-17	(2) Newspapers.
12-18	(i) From the sale and from the storage, use, or other consumption in this state of any
12-19	newspaper.
12-20	(ii) "Newspaper" means an unbound publication printed on newsprint, which contains
12-21	news, editorial comment, opinions, features, advertising matter, and other matters of public
12-22	interest.
12-23	(iii) "Newspaper" does not include a magazine, handbill, circular, flyer, sales catalog, or
12-24	similar item unless the item is printed for and distributed as a part of a newspaper.
12-25	(3) School meals. - From the sale and from the storage, use, or other consumption in this
12-26	state of meals served by public, private, or parochial schools, school districts, colleges,
12-27	universities, student organizations, and parent teacher associations to the students or teachers of a
12-28	school, college, or university whether the meals are served by the educational institutions or by a
12-29	food service or management entity under contract to the educational institutions.
12-30	(4) Containers.
12-31	(i) From the sale and from the storage, use, or other consumption in this state of:
12-32	(A) Non-returnable containers, including boxes, paper bags, and wrapping materials
12-33	which are biodegradable and all bags and wrapping materials utilized in the medical and healing
12-34	arts, when sold without the contents to persons who place the contents in the container and sell
13-1	the contents with the container.
13-2	(B) Containers when sold with the contents if the sale price of the contents is not
13-3	required to be included in the measure of the taxes imposed by this chapter.
13-4	(C) Returnable containers when sold with the contents in connection with a retail sale of
13-5	the contents or when resold for refilling.
13-6	(ii) As used in this subdivision, the term "returnable containers" means containers of a
13-7	kind customarily returned by the buyer of the contents for reuse. All other containers are "non-
13-8	returnable containers."
13-9	(5) (i) Charitable, educational, and religious organizations. - From the sale to as in
13-10	defined in this section, and from the storage, use, and other consumption in this state or any other
13-11	state of the United States of America of tangible personal property by hospitals not operated for a
13-12	profit, "educational institutions" as defined in subdivision (18) not operated for a profit, churches,
13-13	orphanages, and other institutions or organizations operated exclusively for religious or charitable
13-14	purposes, interest free loan associations not operated for profit, nonprofit organized sporting
13-15	leagues and associations and bands for boys and girls under the age of nineteen (19) years, the
13-16	following vocational student organizations that are state chapters of national vocational students
13-17	organizations: Distributive Education Clubs of America, (DECA); Future Business Leaders of
13-18	America, phi beta lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers
13-19	of America/Home Economics Related Occupations (FHA/HERD); and Vocational Industrial
13-20	Clubs of America (VICA), organized nonprofit golden age and senior citizens clubs for men and
13-21	women, and parent teacher associations.
13-22	(ii) In the case of contracts entered into with the federal government, its agencies or
13-23	instrumentalities, this state or any other state of the United States of America, its agencies, any
13-24	city, town, district, or other political subdivision of the states, hospitals not operated for profit,
13-25	educational institutions not operated for profit, churches, orphanages, and other institutions or
13-26	organizations operated exclusively for religious or charitable purposes, the contractor may
13-27	purchase such materials and supplies (materials and/or supplies are defined as those which are
13-28	essential to the project) that are to be utilized in the construction of the projects being performed
13-29	under the contracts without payment of the tax.
13-30	(iii) The contractor shall not charge any sales or use tax to any exempt agency,
13-31	institution, or organization but shall in that instance provide his or her suppliers with certificates
13-32	in the form as determined by the division of taxation showing the reason for exemption; and the
13-33	contractor's records must substantiate the claim for exemption by showing the disposition of all
13-34	property so purchased. If any property is then used for a nonexempt purpose, the contractor must
14-1	pay the tax on the property used.
14-2	(6) Gasoline. - From the sale and from the storage, use, or other consumption in this state
14-3	of: (i) gasoline and other products taxed under chapter 36 of title 31, and (ii) fuels used for the
14-4	propulsion of airplanes.
14-5	(7) Purchase for manufacturing purposes.
14-6	(i) From the sale and from the storage, use, or other consumption in this state of
14-7	computer software, tangible personal property, electricity, natural gas, artificial gas, steam,
14-8	refrigeration, and water, when the property or service is purchased for the purpose of being
14-9	manufactured into a finished product for resale, and becomes an ingredient, component, or
14-10	integral part of the manufactured, compounded, processed, assembled, or prepared product, or if
14-11	the property or service is consumed in the process of manufacturing for resale computer software,
14-12	tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water.
14-13	(ii) "Consumed" means destroyed, used up, or worn out to the degree or extent that the
14-14	property cannot be repaired, reconditioned, or rendered fit for further manufacturing use.
14-15	(iii) "Consumed" includes mere obsolescence.
14-16	(iv) "Manufacturing" means and includes manufacturing, compounding, processing,
14-17	assembling, preparing, or producing.
14-18	(v) "Process of manufacturing" means and includes all production operations performed
14-19	in the producing or processing room, shop, or plant, insofar as the operations are a part of and
14-20	connected with the manufacturing for resale of tangible personal property, electricity, natural gas,
14-21	artificial gas, steam, refrigeration, or water and all production operations performed insofar as the
14-22	operations are a part of and connected with the manufacturing for resale of computer software.
14-23	(vi) "Process of manufacturing" does not mean or include administration operations such
14-24	as general office operations, accounting, collection, sales promotion, nor does it mean or include
14-25	distribution operations which occur subsequent to production operations, such as handling,
14-26	storing, selling, and transporting the manufactured products, even though the administration and
14-27	distribution operations are performed by or in connection with a manufacturing business.
14-28	(8) State and political subdivisions. - From the sale to, and from the storage, use, or other
14-29	consumption by, this state, any city, town, district, or other political subdivision of this state.
14-30	Every redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a
14-31	subdivision of the municipality where it is located.
14-32	(9) Food and food ingredients. - From the sale and storage, use, or other consumption in
14-33	this state of food and food ingredients as defined in section 44-18-7.1(l).
15-34	For the purposes of this exemption "food and food ingredients" shall not include candy,
15-35	soft drinks, dietary supplements, alcoholic beverages, tobacco, ~~food~~ items sold through vending
15-36	machines priced at or above three dollars and fifty cents ($3.50) or prepared food (as those terms
15-37	are defined in section 44-18-7.1, unless the prepared food is:
15-38	(i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311,
15-39	except sub-sector 3118 (bakeries);
15-40	(ii) Sold in an unheated state by weight or volume as a single item;
15-41	(iii) Bakery items, including bread, rolls, buns, biscuits, bagels, croissants, pastries,
15-42	donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and
15-43	is not sold with utensils provided by the seller, including plates, knives, forks, spoons,
15-44	glasses, cups, napkins, or straws.
15-45	(10) Medicines, drugs and durable medical equipment. - From the sale and from the
15-46	storage, use, or other consumption in this state, of;
15-47	(i) "Drugs" as defined in section 44-18-7.1(h)(i), sold on prescriptions, medical oxygen,
15-48	and insulin whether or not sold on prescription. For purposes of this exemption drugs shall not
15-49	include over-the-counter drugs and grooming and hygiene products as defined in section 44-18-
15-50	7.1(h)(iii).
15-51	(ii) Durable medical equipment as defined in section 44-18-7.1(k) for home use only,
15-52	including, but not limited to, syringe infusers, ambulatory drug delivery pumps, hospital beds,
15-53	convalescent chairs, and chair lifts. Supplies used in connection with syringe infusers and
15-54	ambulatory drug delivery pumps which are sold on prescription to individuals to be used by them
15-55	to dispense or administer prescription drugs, and related ancillary dressings and supplies used to
15-56	dispense or administer prescription drugs shall also be exempt from tax.
15-57	(11) Prosthetic devices and mobility enhancing equipment. - From the sale and from the
15-58	storage, use, or other consumption in this state, of prosthetic devices as defined in section 44-18-
15-59	7.1(t), sold on prescription, including but not limited to, artificial limbs, dentures, spectacles and
15-60	eyeglasses, and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on
15-61	prescription and mobility enhancing equipment as defined in section 44-18-7.1(p) including
15-62	wheelchairs, crutches and canes.
15-63	(12) Coffins, caskets, and burial garments. - From the sale and from the storage, use, or
15-64	other consumption in this state of coffins or caskets, and shrouds or other burial garments which
15-65	are ordinarily sold by a funeral director as part of the business of funeral directing.
15-66	(13) Motor vehicles sold to nonresidents.
15-67	(i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide
15-68	nonresident of this state who does not register the motor vehicle in this state, whether the sale or
16-1	delivery of the motor vehicle is made in this state or at the place of residence of the nonresident.
16-2	A motor vehicle sold to a bona fide nonresident whose state of residence does not allow a like
16-3	exemption to its nonresidents is not exempt from the tax imposed under section 44-18-20. In that
16-4	event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate
16-5	that would be imposed in his or her state of residence not to exceed the rate that would have been
16-6	imposed under section 44-18-20. Notwithstanding any other provisions of law, a licensed motor
16-7	vehicle dealer shall add and collect the tax required under this subdivision and remit the tax to the
16-8	tax administrator under the provisions of chapters 18 and 19 of this title. When a Rhode Island
16-9	licensed motor vehicle dealer is required to add and collect the sales and use tax on the sale of a
16-10	motor vehicle to a bona fide nonresident as provided in this section, the dealer in computing the
16-11	tax takes into consideration the law of the state of the nonresident as it relates to the trade-in of
16-12	motor vehicles.
16-13	(ii) The tax administrator, in addition to the provisions of sections 44-19-27 and 44-19-
16-14	28, may require any licensed motor vehicle dealer to keep records of sales to bona fide
16-15	nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption
16-16	provided in this subdivision, including the affidavit of a licensed motor vehicle dealer that the
16-17	purchaser of the motor vehicle was the holder of, and had in his or her possession a valid out of
16-18	state motor vehicle registration or a valid out of state driver's license.
16-19	(iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days
16-20	of the date of its sale to him or her is deemed to have purchased the motor vehicle for use,
16-21	storage, or other consumption in this state, and is subject to, and liable for the use tax imposed
16-22	under the provisions of section 44-18-20.
16-23	(14) Sales in public buildings by blind people. - From the sale and from the storage, use,
16-24	or other consumption in all public buildings in this state of all products or wares by any person
16-25	licensed under section 40-9-11.1.
16-26	(15) Air and water pollution control facilities. - From the sale, storage, use, or other
16-27	consumption in this state of tangible personal property or supplies acquired for incorporation into
16-28	or used and consumed in the operation of a facility, the primary purpose of which is to aid in the
16-29	control of the pollution or contamination of the waters or air of the state, as defined in chapter 12
16-30	of title 46 and chapter 25 of title 23, respectively, and which has been certified as approved for
16-31	that purpose by the director of environmental management. The director of environmental
16-32	management may certify to a portion of the tangible personal property or supplies acquired for
16-33	incorporation into those facilities or used and consumed in the operation of those facilities to the
16-34	extent that that portion has as its primary purpose the control of the pollution or contamination of
17-1	the waters or air of this state. As used in this subdivision, "facility" means any land, facility,
17-2	device, building, machinery, or equipment.
17-3	(16) Camps. - From the rental charged for living quarters, or sleeping or housekeeping
17-4	accommodations at camps or retreat houses operated by religious, charitable, educational, or
17-5	other organizations and associations mentioned in subdivision (5), or by privately owned and
17-6	operated summer camps for children.
17-7	(17) Certain institutions. - From the rental charged for living or sleeping quarters in an
17-8	institution licensed by the state for the hospitalization, custodial, or nursing care of human beings.
17-9	(18) Educational institutions. - From the rental charged by any educational institution for
17-10	living quarters, or sleeping or housekeeping accommodations or other rooms or accommodations
17-11	to any student or teacher necessitated by attendance at an educational institution. "Educational
17-12	institution" as used in this section means an institution of learning not operated for profit which is
17-13	empowered to confer diplomas, educational, literary, or academic degrees, which has a regular
17-14	faculty, curriculum, and organized body of pupils or students in attendance throughout the usual
17-15	school year, which keeps and furnishes to students and others records required and accepted for
17-16	entrance to schools of secondary, collegiate, or graduate rank, no part of the net earnings of which
17-17	inures to the benefit of any individual.
17-18	(19) Motor vehicle and adaptive equipment for persons with disabilities.
17-19	(i) From the sale of: (A) special adaptations, (B) the component parts of the special
17-20	adaptations, or (C) a specially adapted motor vehicle; provided, that the owner furnishes to the
17-21	tax administrator an affidavit of a licensed physician to the effect that the specially adapted motor
17-22	vehicle is necessary to transport a family member with a disability or where the vehicle has been
17-23	specially adapted to meet the specific needs of the person with a disability. This exemption
17-24	applies to not more than one motor vehicle owned and registered for personal, noncommercial
17-25	use.
17-26	(ii) For the purpose of this subsection the term "special adaptations" includes, but is not
17-27	limited to: wheelchair lifts; wheelchair carriers; wheelchair ramps; wheelchair securements; hand
17-28	controls; steering devices; extensions, relocations, and crossovers of operator controls; power-
17-29	assisted controls; raised tops or dropped floors; raised entry doors; or alternative signaling
17-30	devices to auditory signals.
17-31	(iii) From the sale of: (a) special adaptations, (b) the component parts of the special
17-32	adaptations, for a "wheelchair accessible taxicab" as defined in section 39-14-1 and/or a
17-33	"wheelchair accessible public motor vehicle" as defined in section 39-14.1-1.
18-34	(iv) For the purpose of this subdivision the exemption for a "specially adapted motor
18-35	vehicle" means a use tax credit not to exceed the amount of use tax that would otherwise be due
18-36	on the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the
18-37	special adaptations, including installation.
18-38	(20) Heating fuels. - From the sale and from the storage, use, or other consumption in
18-39	this state of every type of fuel used in the heating of homes and residential premises.
18-40	(21) Electricity and gas. - From the sale and from the storage, use, or other consumption
18-41	in this state of electricity and gas furnished for domestic use by occupants of residential premises.
18-42	(22) Manufacturing machinery and equipment.
18-43	(i) From the sale and from the storage, use, or other consumption in this state of tools,
18-44	dies, and molds, and machinery and equipment (including replacement parts), and related items to
18-45	the extent used in an industrial plant in connection with the actual manufacture, conversion, or
18-46	processing of tangible personal property, or to the extent used in connection with the actual
18-47	manufacture, conversion or processing of computer software as that term is utilized in industry
18-48	numbers 7371, 7372, and 7373 in the standard industrial classification manual prepared by the
18-49	technical committee on industrial classification, office of statistical standards, executive office of
18-50	the president, United States bureau of the budget, as revised from time to time, to be sold, or that
18-51	machinery and equipment used in the furnishing of power to an industrial manufacturing plant.
18-52	For the purposes of this subdivision, "industrial plant" means a factory at a fixed location
18-53	primarily engaged in the manufacture, conversion, or processing of tangible personal property to
18-54	be sold in the regular course of business;
18-55	(ii) Machinery and equipment and related items are not deemed to be used in connection
18-56	with the actual manufacture, conversion, or processing of tangible personal property, or in
18-57	connection with the actual manufacture, conversion or processing of computer software as that
18-58	term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification
18-59	manual prepared by the technical committee on industrial classification, office of statistical
18-60	standards, executive office of the president, United States bureau of the budget, as revised from
18-61	time to time, to be sold to the extent the property is used in administration or distribution
18-62	operations;
18-63	(iii) Machinery and equipment and related items used in connection with the actual
18-64	manufacture, conversion, or processing of any computer software or any tangible personal
18-65	property which is not to be sold and which would be exempt under subdivision (7) or this
18-66	subdivision if purchased from a vendor or machinery and equipment and related items used
18-67	during any manufacturing, converting or processing function is exempt under this subdivision
18-68	even if that operation, function, or purpose is not an integral or essential part of a continuous
19-1	production flow or manufacturing process;
19-2	(iv) Where a portion of a group of portable or mobile machinery is used in connection
19-3	with the actual manufacture, conversion, or processing of computer software or tangible personal
19-4	property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under
19-5	this subdivision even though the machinery in that group is used interchangeably and not
19-6	otherwise identifiable as to use.
19-7	(23) Trade-in value of motor vehicles. - From the sale and from the storage, use, or other
19-8	consumption in this state of so much of the purchase price paid for a new or used automobile as is
19-9	allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of
19-10	the proceeds applicable only to the automobile as are received from the manufacturer of
19-11	automobiles for the repurchase of the automobile whether the repurchase was voluntary or not
19-12	towards the purchase of a new or used automobile by the buyer. For the purpose of this
19-13	subdivision, the word "automobile" means a private passenger automobile not used for hire and
19-14	does not refer to any other type of motor vehicle.
19-15	(24) Precious metal bullion.
19-16	(i) From the sale and from the storage, use, or other consumption in this state of precious
19-17	metal bullion, substantially equivalent to a transaction in securities or commodities.
19-18	(ii) For purposes of this subdivision, "precious metal bullion" means any elementary
19-19	precious metal which has been put through a process of smelting or refining, including, but not
19-20	limited to, gold, silver, platinum, rhodium, and chromium, and which is in a state or condition
19-21	that its value depends upon its content and not upon its form.
19-22	(iii) The term does not include fabricated precious metal which has been processed or
19-23	manufactured for some one or more specific and customary industrial, professional, or artistic
19-24	uses.
19-25	(25) Commercial vessels. - From sales made to a commercial ship, barge, or other vessel
19-26	of fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from
19-27	the repair, alteration, or conversion of the vessels, and from the sale of property purchased for the
19-28	use of the vessels including provisions, supplies, and material for the maintenance and/or repair
19-29	of the vessels.
19-30	(26) Commercial fishing vessels. - From the sale and from the storage, use, or other
19-31	consumption in this state of vessels and other water craft which are in excess of five (5) net tons
19-32	and which are used exclusively for "commercial fishing", as defined in this subdivision, and from
19-33	the repair, alteration, or conversion of those vessels and other watercraft, and from the sale of
19-34	property purchased for the use of those vessels and other watercraft including provisions,
20-1	supplies, and material for the maintenance and/or repair of the vessels and other watercraft and
20-2	the boats nets, cables, tackle, and other fishing equipment appurtenant to or used in connection
20-3	with the commercial fishing of the vessels and other watercraft. "Commercial fishing" means the
20-4	taking or the attempting to take any fish, shellfish, crustacea, or bait species with the intent of
20-5	disposing of them for profit or by sale, barter, trade, or in commercial channels. The term does
20-6	not include subsistence fishing, i.e., the taking for personal use and not for sale or barter; or sport
20-7	fishing; but shall include vessels and other watercraft with a Rhode Island party and charter boat
20-8	license issued by the department of environmental management pursuant to section 20-2-27.1
20-9	which meet the following criteria: (i) the operator must have a current U.S.C.G. license to carry
20-10	passengers for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii)
20-11	U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island
20-12	boat registration to prove Rhode Island home port status; (iv) the vessel must be used as a
20-13	commercial passenger carrying fishing vessel to carry passengers for fishing. The vessel must be
20-14	able to demonstrate that at least fifty percent (50%) of its annual gross income derives from
20-15	charters or provides documentation of a minimum of one hundred (100) charter trips annually; (v)
20-16	the vessel must have a valid Rhode Island party and charter boat license. The tax administrator
20-17	shall implement the provisions of this subdivision by promulgating rules and regulations relating
20-18	thereto.
20-19	(27) Clothing and footwear. - From the sales of articles of clothing, including footwear,
20-20	intended to be worn or carried on or about the human body for sales prior to October 1, 2012.
20-21	Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including
20-22	footwear, intended to be worn or carried on or about the human body up to two hundred and fifty
20-23	dollars ($250) of the sales price per item. For the purposes of this section, "clothing or footwear"
20-24	does not include clothing accessories or equipment or special clothing or footwear primarily
20-25	designed for athletic activity or protective use as these terms are defined in section 44-18-7.1(f).
20-26	In recognition of the work being performed by the Streamlined Sales and Use Tax Governing
20-27	Board, upon any federal law which requires remote sellers to collect and remit taxes, effective the
20-28	first (1st) day of the first (1st) state fiscal quarter following the change, this exemption will apply
20-29	as it did prior to October 1, 2012.
20-30	(28) Water for residential use. - From the sale and from the storage, use, or other
20-31	consumption in this state of water furnished for domestic use by occupants of residential
20-32	premises.
20-33	(29) Bibles. - [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see
20-34	Notes to Decisions.]From the sale and from the storage, use, or other consumption in the state of
21-1	any canonized scriptures of any tax-exempt nonprofit religious organization including, but not
21-2	limited to, the Old Testament and the New Testament versions.
21-3	(30) Boats.
21-4	(i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not
21-5	register the boat or vessel in this state, or document the boat or vessel with the United States
21-6	government at a home port within the state, whether the sale or delivery of the boat or vessel is
21-7	made in this state or elsewhere; provided, that the nonresident transports the boat within thirty
21-8	(30) days after delivery by the seller outside the state for use thereafter solely outside the state.
21-9	(ii) The tax administrator, in addition to the provisions of sections 44-19-17 and 44-19-
21-10	28, may require the seller of the boat or vessel to keep records of the sales to bona fide
21-11	nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption
21-12	provided in this subdivision, including the affidavit of the seller that the buyer represented
21-13	himself or herself to be a bona fide nonresident of this state and of the buyer that he or she is a
21-14	nonresident of this state.
21-15	(31) Youth activities equipment. - From the sale, storage, use, or other consumption in
21-16	this state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island
21-17	eleemosynary organizations, for the purposes of youth activities which the organization is formed
21-18	to sponsor and support; and by accredited elementary and secondary schools for the purposes of
21-19	the schools or of organized activities of the enrolled students.
21-20	(32) Farm equipment. - From the sale and from the storage or use of machinery and
21-21	equipment used directly for commercial farming and agricultural production; including, but not
21-22	limited to, tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors,
21-23	balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment,
21-24	greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and
21-25	other farming equipment, including replacement parts, appurtenant to or used in connection with
21-26	commercial farming and tools and supplies used in the repair and maintenance of farming
21-27	equipment. "Commercial farming" means the keeping or boarding of five (5) or more horses or
21-28	the production within this state of agricultural products, including, but not limited to, field or
21-29	orchard crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or
21-30	production provides at least two thousand five hundred dollars ($2,500) in annual gross sales to
21-31	the operator, whether an individual, a group, a partnership, or a corporation for exemptions issued
21-32	prior to July 1, 2002; for exemptions issued or renewed after July 1, 2002, there shall be two (2)
21-33	levels. Level I shall be based on proof of annual gross sales from commercial farming of at least
21-34	twenty-five hundred dollars ($2,500) and shall be valid for purchases subject to the exemption
22-1	provided in this subdivision except for motor vehicles with an excise tax value of five thousand
22-2	dollars ($5,000) or greater; Level II shall be based on proof of annual gross sales from
22-3	commercial farming of at least ten thousand dollars ($10,000) or greater and shall be valid for
22-4	purchases subject to the exemption provided in this subdivision including motor vehicles with an
22-5	excise tax value of five thousand dollars ($5,000) or greater. For the initial issuance of the
22-6	exemptions, proof of the requisite amount of annual gross sales from commercial farming shall be
22-7	required for the prior year; for any renewal of an exemption granted in accordance with this
22-8	subdivision at either Level I or Level II, proof of gross annual sales from commercial farming at
22-9	the requisite amount shall be required for each of the prior two (2) years. Certificates of
22-10	exemption issued or renewed after July 1, 2002, shall clearly indicate the level of the exemption
22-11	and be valid for four (4) years after the date of issue. This exemption applies even if the same
22-12	equipment is used for ancillary uses, or is temporarily used for a non-farming or a non-
22-13	agricultural purpose, but shall not apply to motor vehicles acquired after July 1, 2002, unless the
22-14	vehicle is a farm vehicle as defined pursuant to section 31-1-8 and is eligible for registration
22-15	displaying farm plates as provided for in section 31-3-31.
22-16	(33) Compressed air. - From the sale and from the storage, use, or other consumption in
22-17	the state of compressed air.
22-18	(34) Flags. - From the sale and from the storage, consumption, or other use in this state
22-19	of United States, Rhode Island or POW-MIA flags.
22-20	(35) Motor vehicle and adaptive equipment to certain veterans. - From the sale of a
22-21	motor vehicle and adaptive equipment to and for the use of a veteran with a service-connected
22-22	loss of or the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee,
22-23	whether service connected or not. The motor vehicle must be purchased by and especially
22-24	equipped for use by the qualifying veteran. Certificate of exemption or refunds of taxes paid is
22-25	granted under rules or regulations that the tax administrator may prescribe.
22-26	(36) Textbooks. - From the sale and from the storage, use, or other consumption in this
22-27	state of textbooks by an "educational institution" as defined in subdivision (18) of this section and
22-28	as well as any educational institution within the purview of section 16-63-9(4) and used textbooks
22-29	by any purveyor.
22-30	(37) Tangible personal property and supplies used in on-site hazardous waste recycling,
22-31	reuse, or treatment. - From the sale, storage, use, or other consumption in this state of tangible
22-32	personal property or supplies used or consumed in the operation of equipment, the exclusive
22-33	function of which is the recycling, reuse, or recovery of materials (other than precious metals, as
22-34	defined in subdivision (24)(ii) of this section) from the treatment of "hazardous wastes", as
23-1	defined in section 23-19.1-4, where the "hazardous wastes" are generated in Rhode Island solely
23-2	by the same taxpayer and where the personal property is located at, in, or adjacent to a generating
23-3	facility of the taxpayer in Rhode Island. The taxpayer shall procure an order from the director of
23-4	the department of environmental management certifying that the equipment and/or supplies as
23-5	used, or consumed, qualify for the exemption under this subdivision. If any information relating
23-6	to secret processes or methods of manufacture, production, or treatment is disclosed to the
23-7	department of environmental management only to procure an order, and is a "trade secret" as
23-8	defined in section 28-21-10(b), it is not open to public inspection or publicly disclosed unless
23-9	disclosure is required under chapter 21 of title 28 or chapter 24.4 of title 23.
23-10	(38) Promotional and product literature of boat manufacturers. - From the sale and from
23-11	the storage, use, or other consumption of promotional and product literature of boat
23-12	manufacturers shipped to points outside of Rhode Island which either: (i) accompany the product
23-13	which is sold, (ii) are shipped in bulk to out of state dealers for use in the sale of the product, or
23-14	(iii) are mailed to customers at no charge.
23-15	(39) Food items paid for by food stamps. - From the sale and from the storage, use, or
23-16	other consumption in this state of eligible food items payment for which is properly made to the
23-17	retailer in the form of U.S. government food stamps issued in accordance with the Food Stamp
23-18	Act of 1977, 7 U.S.C. section 2011 et seq.
23-19	(40) Transportation charges. - From the sale or hiring of motor carriers as defined in
23-20	section 39-12-2(l) to haul goods, when the contract or hiring cost is charged by a motor freight
23-21	tariff filed with the Rhode Island public utilities commission on the number of miles driven or by
23-22	the number of hours spent on the job.
23-23	(41) Trade-in value of boats. - From the sale and from the storage, use, or other
23-24	consumption in this state of so much of the purchase price paid for a new or used boat as is
23-25	allocated for a trade-in allowance on the boat of the buyer given in trade to the seller or of the
23-26	proceeds applicable only to the boat as are received from an insurance claim as a result of a stolen
23-27	or damaged boat, towards the purchase of a new or used boat by the buyer.
23-28	(42) Equipment used for research and development. - From the sale and from the
23-29	storage, use, or other consumption of equipment to the extent used for research and development
23-30	purposes by a qualifying firm. For the purposes of this subdivision, "qualifying firm" means a
23-31	business for which the use of research and development equipment is an integral part of its
23-32	operation, and "equipment" means scientific equipment, computers, software, and related items.
23-33	(43) Coins. - From the sale and from the other consumption in this state of coins having
23-34	numismatic or investment value.
24-1	(44) Farm structure construction materials. - Lumber, hardware and other materials used
24-2	in the new construction of farm structures, including production facilities such as, but not limited
24-3	to, farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying
24-4	houses, fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing
24-5	rooms, machinery storage, seasonal farm worker housing, certified farm markets, bunker and
24-6	trench silos, feed storage sheds, and any other structures used in connection with commercial
24-7	farming.
24-8	(45) Telecommunications carrier access service. - Carrier access service or
24-9	telecommunications service when purchased by a telecommunications company from another
24-10	telecommunications company to facilitate the provision of telecommunications service.
24-11	(46) Boats or vessels brought into the state exclusively for winter storage, maintenance,
24-12	repair or sale. - Notwithstanding the provisions of sections 44-18-10, 44-18-11, 44-18-20, the tax
24-13	imposed by section 44-18-20 is not applicable for the period commencing on the first day of
24-14	October in any year to and including the 30th day of April next succeeding with respect to the use
24-15	of any boat or vessel within this state exclusively for purposes of: (i) delivery of the vessel to a
24-16	facility in this state for storage, including dry storage and storage in water by means of apparatus
24-17	preventing ice damage to the hull, maintenance, or repair; (ii) the actual process of storage,
24-18	maintenance, or repair of the boat or vessel; or (iii) storage for the purpose of selling the boat or
24-19	vessel.
24-20	(47) Jewelry display product. - From the sale and from the storage, use, or other
24-21	consumption in this state of tangible personal property used to display any jewelry product;
24-22	provided, that title to the jewelry display product is transferred by the jewelry manufacturer or
24-23	seller and that the jewelry display product is shipped out of state for use solely outside the state
24-24	and is not returned to the jewelry manufacturer or seller.
24-25	(48) Boats or vessels generally. - Notwithstanding the provisions of this chapter, the tax
24-26	imposed by sections 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the
24-27	storage, use, or other consumption in this state of any new or used boat. The exemption provided
24-28	for in this subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the
24-29	federal ten percent (10%) surcharge on luxury boats is repealed.
24-30	(49) Banks and Regulated investment companies interstate toll-free calls. -
24-31	Notwithstanding the provisions of this chapter, the tax imposed by this chapter does not apply to
24-32	the furnishing of interstate and international, toll-free terminating telecommunication service that
24-33	is used directly and exclusively by or for the benefit of an eligible company as defined in this
24-34	subdivision; provided, that an eligible company employs on average during the calendar year no
25-1	less than five hundred (500) "full-time equivalent employees", as that term is defined in section
25-2	42-64.5-2. For purposes of this section, an "eligible company" means a "regulated investment
25-3	company" as that term is defined in the Internal Revenue Code of 1986, 26 U.S.C. section 1 et
25-4	seq., or a corporation to the extent the service is provided, directly or indirectly, to or on behalf of
25-5	a regulated investment company, an employee benefit plan, a retirement plan or a pension plan or
25-6	a state chartered bank.
25-7	(50) Mobile and manufactured homes generally. - From the sale and from the storage,
25-8	use, or other consumption in this state of mobile and/or manufactured homes as defined and
25-9	subject to taxation pursuant to the provisions of chapter 44 of title 31.
25-10	(51) Manufacturing business reconstruction materials.
25-11	(i) From the sale and from the storage, use or other consumption in this state of lumber,
25-12	hardware, and other building materials used in the reconstruction of a manufacturing business
25-13	facility which suffers a disaster, as defined in this subdivision, in this state. "Disaster" means any
25-14	occurrence, natural or otherwise, which results in the destruction of sixty percent (60%) or more
25-15	of an operating manufacturing business facility within this state. "Disaster" does not include any
25-16	damage resulting from the willful act of the owner of the manufacturing business facility.
25-17	(ii) Manufacturing business facility includes, but is not limited to, the structures housing
25-18	the production and administrative facilities.
25-19	(iii) In the event a manufacturer has more than one manufacturing site in this state, the
25-20	sixty percent (60%) provision applies to the damages suffered at that one site.
25-21	(iv) To the extent that the costs of the reconstruction materials are reimbursed by
25-22	insurance, this exemption does not apply.
25-23	(52) Tangible personal property and supplies used in the processing or preparation of
25-24	floral products and floral arrangements. - From the sale, storage, use, or other consumption in this
25-25	state of tangible personal property or supplies purchased by florists, garden centers, or other like
25-26	producers or vendors of flowers, plants, floral products, and natural and artificial floral
25-27	arrangements which are ultimately sold with flowers, plants, floral products, and natural and
25-28	artificial floral arrangements or are otherwise used in the decoration, fabrication, creation,
25-29	processing, or preparation of flowers, plants, floral products, or natural and artificial floral
25-30	arrangements, including descriptive labels, stickers, and cards affixed to the flower, plant, floral
25-31	product or arrangement, artificial flowers, spray materials, floral paint and tint, plant shine, flower
25-32	food, insecticide and fertilizers.
25-33	(53) Horse food products. - From the sale and from the storage, use, or other
25-34	consumption in this state of horse food products purchased by a person engaged in the business of
26-1	the boarding of horses.
26-2	(54) Non-motorized recreational vehicles sold to nonresidents.
26-3	(i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to
26-4	a bona fide nonresident of this state who does not register the non-motorized recreational vehicle
26-5	in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this
26-6	state or at the place of residence of the nonresident; provided, that a non-motorized recreational
26-7	vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption
26-8	to its nonresidents is not exempt from the tax imposed under section 44-18-20; provided, further,
26-9	that in that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal
26-10	to the rate that would be imposed in his or her state of residence not to exceed the rate that would
26-11	have been imposed under section 44-18-20. Notwithstanding any other provisions of law, a
26-12	licensed non-motorized recreational vehicle dealer shall add and collect the tax required under
26-13	this subdivision and remit the tax to the tax administrator under the provisions of chapters 18 and
26-14	19 of this title. Provided, that when a Rhode Island licensed non-motorized recreational vehicle
26-15	dealer is required to add and collect the sales and use tax on the sale of a non-motorized
26-16	recreational vehicle to a bona fide nonresident as provided in this section, the dealer in computing
26-17	the tax takes into consideration the law of the state of the nonresident as it relates to the trade-in
26-18	of motor vehicles.
26-19	(ii) The tax administrator, in addition to the provisions of sections 44-19-27 and 44-19-
26-20	28, may require any licensed non-motorized recreational vehicle dealer to keep records of sales to
26-21	bona fide nonresidents as the tax administrator deems reasonably necessary to substantiate the
26-22	exemption provided in this subdivision, including the affidavit of a licensed non-motorized
26-23	recreational vehicle dealer that the purchaser of the non-motorized recreational vehicle was the
26-24	holder of, and had in his or her possession a valid out-of-state non-motorized recreational vehicle
26-25	registration or a valid out-of-state driver's license.
26-26	(iii) Any nonresident who registers a non-motorized recreational vehicle in this state
26-27	within ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-
26-28	motorized recreational vehicle for use, storage, or other consumption in this state, and is subject
26-29	to, and liable for the use tax imposed under the provisions of section 44-18-20.
26-30	(iv) "Non-motorized recreational vehicle" means any portable dwelling designed and
26-31	constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use
26-32	which is eligible to be registered for highway use, including, but not limited to, "pick-up coaches"
26-33	or "pick-up campers," "travel trailers," and "tent trailers" as those terms are defined in chapter 1
26-34	of title 31.
27-1	(55) Sprinkler and fire alarm systems in existing buildings. - From the sale in this state of
27-2	sprinkler and fire alarm systems, emergency lighting and alarm systems, and from the sale of the
27-3	materials necessary and attendant to the installation of those systems, that are required in
27-4	buildings and occupancies existing therein in July 2003, in order to comply with any additional
27-5	requirements for such buildings arising directly from the enactment of the Comprehensive Fire
27-6	Safety Act of 2003, and that are not required by any other provision of law or ordinance or
27-7	regulation adopted pursuant to that Act. The exemption provided in this subdivision shall expire
27-8	on December 31, 2008.
27-9	(56) Aircraft. - Notwithstanding the provisions of this chapter, the tax imposed by
27-10	sections 44-18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or
27-11	other consumption in this state of any new or used aircraft or aircraft parts.
27-12	(57) Renewable energy products. - Notwithstanding any other provisions of Rhode
27-13	Island general laws the following products shall also be exempt from sales tax: solar photovoltaic
27-14	modules or panels, or any module or panel that generates electricity from light; solar thermal
27-15	collectors, including, but not limited to, those manufactured with flat glass plates, extruded
27-16	plastic, sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-
27-17	water and water-to-air type pumps; wind turbines; towers used to mount wind turbines if
27-18	specified by or sold by a wind turbine manufacturer; DC to AC inverters that interconnect with
27-19	utility power lines; manufactured mounting racks and ballast pans for solar collector, module or
27-20	panel installation. Not to include materials that could be fabricated into such racks; monitoring
27-21	and control equipment, if specified or supplied by a manufacturer of solar thermal, solar
27-22	photovoltaic, geothermal, or wind energy systems or if required by law or regulation for such
27-23	systems but not to include pumps, fans or plumbing or electrical fixtures unless shipped from the
27-24	manufacturer affixed to, or an integral part of, another item specified on this list; and solar storage
27-25	tanks that are part of a solar domestic hot water system or a solar space heating system. If the tank
27-26	comes with an external heat exchanger it shall also be tax exempt, but a standard hot water tank is
27-27	not exempt from state sales tax.
27-28	(58) Returned property. - The amount charged for property returned by customers upon
27-29	rescission of the contract of sale when the entire amount exclusive of handling charges paid for
27-30	the property is refunded in either cash or credit, and where the property is returned within one
27-31	hundred twenty (120) days from the date of delivery.
27-32	(59) Dietary Supplements. - From the sale and from the storage, use or other
27-33	consumption of dietary supplements as defined in section 44-18-7.1(l)(v), sold on prescriptions.
28-34	(60) Blood. - From the sale and from the storage, use or other consumption of human
28-35	blood.
28-36	(61) Agricultural products for human consumption. - From the sale and from the storage,
28-37	use or other consumption of livestock and poultry of the kinds of products of which ordinarily
28-38	constitute food for human consumption and of livestock of the kind the products of which
28-39	ordinarily constitute fibers for human use.
28-40	(62) Diesel emission control technology. - From the sale and use of diesel retrofit
28-41	technology that is required by section 31-47.3-4 of the general laws.
28-42	(63) Feed for certain animals used in commercial farming. - From the sale of feed for
28-43	animals as described in subsection 44-18-30(61).
28-44	(64) Items sold through vending machines. Items sold through vending machines that are
28-45	priced below three dollars and fifty cents ($3.50).
28-46	SECTION 2. This act shall take effect upon passage.

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	LC00347
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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
	***

29-1	This act would impose a sales tax on vending machine items which are sold for three
29-2	dollars and fifty cents ($3.50) or more.
29-3	This act would take effect upon passage.

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	LC00347
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H5224