2013 -- H 5361

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LC00543

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION -- MOTOR VEHICLE TAX

     Introduced By: Representatives O'Brien, Almeida, Amore, Nunes, and Costantino

     Date Introduced: February 12, 2013

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-34.1-1 of the General Laws in Chapter 44-34.1 entitled "Motor

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Vehicle and Trailer Excise Tax Elimination Act of 1998" is hereby amended to read as follows:

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     44-34.1-1. Excise tax phase-out. -- (a) (1) Notwithstanding the provisions of chapter 34

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of this title or any other provisions to the contrary, the motor vehicle and trailer excise tax

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established by section 44-34-1 may be phased out. The phase-out shall apply to all motor vehicles

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and trailers, including leased vehicles.

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     (2) Lessors of vehicles that pay excise taxes directly to municipalities shall provide

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lessees, at the time of entering into the lease agreement, an estimate of annual excise taxes

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payable throughout the term of the lease. In the event the actual excise tax is less than the

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estimated excise tax, the lessor shall annually rebate to the lessee the difference between the

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actual excise tax and the estimated excise tax.

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     (b) Pursuant to the provisions of this section, all motor vehicles shall be assessed a value

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by the vehicle value commission. That value shall be assessed according to the provisions of

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section 44-34-11(c)(1) and in accordance with the terms as defined in subsection (d) of this

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section; provided, however, that the maximum taxable value percentage applicable to model year

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values as of December 31, 1997, shall continue to be applicable in future year valuations aged by

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one year in each succeeding year.

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     (c) (1) The motor vehicle excise tax phase-out shall commence with the excise tax bills

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mailed to taxpayers for the fiscal year 2000. The phase-out, beyond fiscal year 2003, shall be

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subject to annual review and appropriation by the general assembly. The tax assessors of the

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various cities and towns and fire districts shall reduce the average retail value of each vehicle

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assessed by using the prorated exemptions from the following table:

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     Local Fiscal Year State fiscal year

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     Exempt from value Local Exemption Reimbursement

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     fiscal year 1999 0 $1,500

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     fiscal year 2000 $1,500 $2,500

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     fiscal year 2001 $2,500 $3,500

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     fiscal year 2002 $3,500 $4,500

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     fiscal years 2003, 2004 and 2005 $4,500 $4,500

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     for fiscal year 2006 and $5,000 $5,000

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     for fiscal year 2007 $6,000 $6,000

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     for For fiscal years 2008, 2009 and 2010 the exemption and the state fiscal year

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reimbursement shall be increased, at a minimum, to the maximum amount to the nearest two

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hundred and fifty dollar ($250) increment within the allocation of one and twenty-two hundredths

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percent (l.22%) of net terminal income derived from video lottery games pursuant to the

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provisions of section 42-61-15, and in no event shall the exemption in any fiscal year be less than

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the prior fiscal year.

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      for For fiscal year 2011 2014 and thereafter, the exemption shall be five hundred dollars

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($500) six thousand dollars ($6,000). Cities and towns may provide an additional exemption;

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provided, however, any such additional exemption shall not be subject to reimbursement.

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     (2) The excise tax phase-out shall provide levels of assessed value reductions until the tax

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is eliminated or reduced as provided in this chapter.

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     (3) Current exemptions shall remain in effect as provided in this chapter.

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     (4) The excise tax rates and ratios of assessment shall be maintained at a level identical to

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the level in effect for fiscal year 1998 for each city, town, and fire district; provided, in the town

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of Johnston the excise tax rate and ratios of assessment shall be maintained at a level identical to

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the level in effect for fiscal year 1999 levels and the levy of a city, town, or fire district shall be

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limited to the lesser of the maximum taxable value or net assessed value for purposes of

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collecting the tax in any given year. Provided, however, for fiscal year 2011 and thereafter, the

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rates and ratios of assessment may be less than but not more than the rates described in this

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subsection (4).

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     (d) Definitions.

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     (1) "Maximum taxable value" means the value of vehicles as prescribed by section 44-34-

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11 reduced by the percentage of assessed value applicable to model year values as determined by

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the Rhode Island vehicle value commission as of December 31, 1997, for the vehicles valued by

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the commission as of December 31, 1997. For all vehicle value types not valued by the Rhode

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Island vehicle value commission as of December 31, 1997, the maximum taxable value shall be

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the latest value determined by a local assessor from an appropriate pricing guide, multiplied by

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the ratio of assessment used by that city, town, or fire district for a particular model year as of

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December 31, 1997.

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     (2) "Net assessed value" means the motor vehicle values as determined in accordance

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with section 44-34-11 less all personal exemptions allowed by cities, towns, fire districts, and the

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state of Rhode Island exemption value as provided for in section 44-34.1-1(c)(1).

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     (e) If any provision of this chapter shall be held invalid by any court of competent

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jurisdiction, the remainder of this chapter and the applications of the provisions hereof shall not

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be effected thereby.

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     SECTION 2. Sections 44-18-18 and 44-18-20 of the General Laws in Chapter 44-18

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entitled "Sales and Use Taxes - Liability and Computation" are hereby amended to read as

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follows:

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     44-18-18. Sales tax imposed. [Effective October 1, 2012.] -- A tax is imposed upon

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sales at retail in this state including charges for rentals of living quarters in hotels as defined in

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section 42-63.1-2, rooming houses, or tourist camps, at the rate of six percent (6%) of the gross

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receipts of the retailer from the sales or rental charges; provided, that the tax imposed on charges

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for the rentals applies only to the first period of not exceeding thirty (30) consecutive calendar

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days of each rental; provided, further, that for the period commencing July 1, 1990, the tax rate is

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seven percent (7%). The tax is paid to the tax administrator by the retailer at the time and in the

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manner provided. Excluded from this tax are those living quarters in hotels, rooming houses, or

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tourist camps for which the occupant has a written lease for the living quarters which lease covers

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a rental period of twelve (12) months or more. In recognition of the work being performed by the

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Streamlined Sales and Use Tax Governing Board, upon any federal law which requires remote

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sellers to collect and remit taxes, effective the first (1st) day of the first (1st) state fiscal quarter

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following the change, the rate imposed under section 44-18-18 shall be six and one-half percent

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(6.5%). An additional one percent (1%) sales tax shall be imposed on all sailing vessels sold in

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excess of one hundred thousand dollars ($100,000).

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     44-18-20. Use tax imposed. [Effective October 1, 2012.] -- (a) An excise tax is imposed

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on the storage, use, or other consumption in this state of tangible personal property, prewritten

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computer software delivered electronically or by load and leave or services as defined in section

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44-18-7.3; including a motor vehicle, a boat, an airplane, or a trailer, purchased from any retailer

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at the rate of six percent (6%) of the sale price of the property.

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      (b) An excise tax is imposed on the storage, use, or other consumption in this state of a

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motor vehicle, a boat, an airplane, or a trailer purchased from other than a licensed motor vehicle

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dealer or other than a retailer of boats, airplanes, or trailers respectively, at the rate of six percent

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(6%) of the sale price of the motor vehicle, boat, airplane, or trailer.

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      (c) The word "trailer" as used in this section and in section 44-18-21 means and includes

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those defined in section 31-1-5(a) -- (e) and also includes boat trailers, camping trailers, house

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trailers, and mobile homes.

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      (d) Notwithstanding the provisions contained in this section and in section 44-18-21

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relating to the imposition of a use tax and liability for this tax on certain casual sales, no tax is

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payable in any casual sale:

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      (1) When the transferee or purchaser is the spouse, mother, father, brother, sister, or

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child of the transferor or seller;

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      (2) When the transfer or sale is made in connection with the organization, reorganization,

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dissolution, or partial liquidation of a business entity; provided:

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      (i) The last taxable sale, transfer, or use of the article being transferred or sold was

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subjected to a tax imposed by this chapter;

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      (ii) The transferee is the business entity referred to or is a stockholder, owner, member,

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or partner; and

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      (iii) Any gain or loss to the transferor is not recognized for income tax purposes under

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the provisions of the federal income tax law and treasury regulations and rulings issued

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thereunder;

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      (3) When the sale or transfer is of a trailer, other than a camping trailer, of the type

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ordinarily used for residential purposes and commonly known as a house trailer or as a mobile

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home; or

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      (4) When the transferee or purchaser is exempt under the provisions of section 44-18-30

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or other general law of this state or special act of the general assembly of this state.

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      (e) The term "casual" means a sale made by a person other than a retailer; provided, that

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in the case of a sale of a motor vehicle, the term means a sale made by a person other than a

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licensed motor vehicle dealer or an auctioneer at an auction sale. In no case is the tax imposed

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under the provisions of subsections (a) and (b) of this section on the storage, use, or other

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consumption in this state of a used motor vehicle less than the product obtained by multiplying

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the amount of the retail dollar value at the time of purchase of the motor vehicle by the applicable

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tax rate; provided, that where the amount of the sale price exceeds the amount of the retail dollar

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value, the tax is based on the sale price. The tax administrator shall use as his or her guide the

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retail dollar value as shown in the current issue of any nationally recognized used vehicle guide

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for appraisal purposes in this state. On request within thirty (30) days by the taxpayer after

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payment of the tax, if the tax administrator determines that the retail dollar value as stated in this

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subsection is inequitable or unreasonable, he or she shall, after affording the taxpayer reasonable

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opportunity to be heard, re-determine the tax.

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      (f) Every person making more than five (5) retail sales of tangible personal property or

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prewritten computer software delivered electronically or by load and leave, or services as defined

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in section 44-18-7.3 during any twelve (12) month period, including sales made in the capacity of

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assignee for the benefit of creditors or receiver or trustee in bankruptcy, is considered a retailer

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within the provisions of this chapter.

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      (g) (1) "Casual sale" includes a sale of tangible personal property not held or used by a

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seller in the course of activities for which the seller is required to hold a seller's permit or permits

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or would be required to hold a seller's permit or permits if the activities were conducted in this

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state; provided, that the sale is not one of a series of sales sufficient in number, scope, and

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character (more than five (5) in any twelve (12) month period) to constitute an activity for which

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the seller is required to hold a seller's permit or would be required to hold a seller's permit if the

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activity were conducted in this state.

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      (2) Casual sales also include sales made at bazaars, fairs, picnics, or similar events by

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nonprofit organizations, which are organized for charitable, educational, civic, religious, social,

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recreational, fraternal, or literary purposes during two (2) events not to exceed a total of six (6)

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days duration each calendar year. Each event requires the issuance of a permit by the division of

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taxation. Where sales are made at events by a vendor, which holds a sales tax permit and is not a

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nonprofit organization, the sales are in the regular course of business and are not exempt as casual

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sales.

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      (h) The use tax imposed under this section for the period commencing July 1, 1990 is at

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the rate of seven percent (7%). In recognition of the work being performed by the Streamlined

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Sales and Use Tax Governing Board, upon any federal law which requires remote sellers to

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collect and remit taxes, effective the first (1st) day of the first (1st) state fiscal quarter following

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the change, the rate imposed under section 44-18-18 shall be six and one-half percent (6.5%).

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     (i) An annual property tax of one percent (1%) is imposed on all sailing vessels registered

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in the state and valued in excess of one hundred thousand dollars ($100,000).

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SECTION 3. This act shall take effect on July 1, 2013.

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LC00543

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION -- MOTOR VEHICLE TAX

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     This act would increase the exemption for property tax for motor vehicles to six thousand

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dollars ($6,000) and would impose an additional one percent (1%) sales tax on sailing vessels

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sold in excess of one hundred thousand dollars ($100,000) and would impose an annual one

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percent (1%) property tax on vessels valued in excess of one hundred thousand dollars

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($100,000).

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     This act would take effect on July 1, 2013.

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LC00543

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