2024 -- S 2856 | |
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LC005802 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2024 | |
____________ | |
A N A C T | |
RELATING TO TAXATION -- SALES AND USE TAXES -- LIABILITY AND | |
COMPUTATION | |
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Introduced By: Senators Burke, Tikoian, and LaMountain | |
Date Introduced: March 22, 2024 | |
Referred To: Senate Finance | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Section 44-18-7.1 of the General Laws in Chapter 44-18 entitled "Sales and |
2 | Use Taxes — Liability and Computation" is hereby amended to read as follows: |
3 | 44-18-7.1. Additional definitions. |
4 | (a) “Agreement” means the streamlined sales and use tax agreement. |
5 | (b) “Alcoholic beverages” means beverages, including, without limitation, beer and malt |
6 | beverages, that are suitable for human consumption and contain one-half of one percent (.5%) or |
7 | more of alcohol by volume. |
8 | (c) “Bundled transaction” is the retail sale of two or more products, except real property |
9 | and services to real property, where (1) The products are otherwise distinct and identifiable, and |
10 | (2) The products are sold for one non-itemized price. A “bundled transaction” does not include the |
11 | sale of any products in which the “sales price” varies, or is negotiable, based on the selection by |
12 | the purchaser of the products included in the transaction. |
13 | (i) “Distinct and identifiable products” does not include: |
14 | (A) Packaging — such as containers, boxes, sacks, bags, and bottles — or other materials |
15 | — such as wrapping, labels, tags, and instruction guides — that accompany the “retail sale” of the |
16 | products and are incidental or immaterial to the “retail sale” thereof. Examples of packaging that |
17 | are incidental or immaterial include grocery sacks, shoeboxes, dry cleaning garment bags, and |
18 | express delivery envelopes and boxes. |
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1 | (B) A product provided free of charge with the required purchase of another product. A |
2 | product is “provided free of charge” if the “sales price” of the product purchased does not vary |
3 | depending on the inclusion of the products “provided free of charge.” |
4 | (C) Items included in the member state’s definition of “sales price,” pursuant to appendix |
5 | C of the agreement. |
6 | (ii) The term “one non-itemized price” does not include a price that is separately identified |
7 | by product on binding sales or other supporting sales-related documentation made available to the |
8 | customer in paper or electronic form including, but not limited to, an invoice, bill of sale, receipt, |
9 | contract, service agreement, lease agreement, periodic notice of rates and services, rate card, or |
10 | price list. |
11 | (iii) A transaction that otherwise meets the definition of a “bundled transaction” as defined |
12 | above, is not a “bundled transaction” if it is: |
13 | (A) The “retail sale” of tangible personal property and a service where the tangible personal |
14 | property is essential to the use of the service, and is provided exclusively in connection with the |
15 | service, and the true object of the transaction is the service; or |
16 | (B) The “retail sale” of services where one service is provided that is essential to the use |
17 | or receipt of a second service and the first service is provided exclusively in connection with the |
18 | second service and the true object of the transaction is the second service; or |
19 | (C) A transaction that includes taxable products and nontaxable products and the “purchase |
20 | price” or “sales price” of the taxable products is de minimis. |
21 | 1. De minimis means the seller’s “purchase price” or “sales price” of the taxable products |
22 | is ten percent (10%) or less of the total “purchase price” or “sales price” of the bundled products. |
23 | 2. Sellers shall use either the “purchase price” or the “sales price” of the products to |
24 | determine if the taxable products are de minimis. Sellers may not use a combination of the |
25 | “purchase price” and “sales price” of the products to determine if the taxable products are de |
26 | minimis. |
27 | 3. Sellers shall use the full term of a service contract to determine if the taxable products |
28 | are de minimis; or |
29 | (D) The “retail sale” of exempt tangible personal property and taxable tangible personal |
30 | property where: |
31 | 1. The transaction includes “food and food ingredients,” “drugs,” “durable medical |
32 | equipment,” “mobility enhancing equipment,” “over-the-counter drugs,” “prosthetic devices” (all |
33 | as defined in this section) or medical supplies; and |
34 | 2. Where the seller’s “purchase price” or “sales price” of the taxable tangible personal |
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1 | property is fifty percent (50%) or less of the total “purchase price” or “sales price” of the bundled |
2 | tangible personal property. Sellers may not use a combination of the “purchase price” and “sales |
3 | price” of the tangible personal property when making the fifty percent (50%) determination for a |
4 | transaction. |
5 | (d) “Certified automated system (CAS)” means software certified under the agreement to |
6 | calculate the tax imposed by each jurisdiction on a transaction, determine the amount of tax to remit |
7 | to the appropriate state, and maintain a record of the transaction. |
8 | (e) “Certified service provider (CSP)” means an agent certified under the agreement to |
9 | perform all the seller’s sales and use tax functions, other than the seller’s obligation to remit tax on |
10 | its own purchases. |
11 | (f) Clothing and related items.(i) “Clothing” means all human wearing apparel suitable for |
12 | general use. |
13 | (ii) “Clothing accessories or equipment” means incidental items worn on the person or in |
14 | conjunction with “clothing.” “Clothing accessories or equipment” does not include “clothing,” |
15 | “sport or recreational equipment,” or “protective equipment.” |
16 | (iii) “Protective equipment” means items for human wear and designed as protection of the |
17 | wearer against injury or disease or as protections against damage or injury of other persons or |
18 | property but not suitable for general use. “Protective equipment” does not include “clothing,” |
19 | “clothing accessories or equipment,” and “sport or recreational equipment.” |
20 | (iv) “Sport or recreational equipment” means items designed for human use and worn in |
21 | conjunction with an athletic or recreational activity that are not suitable for general use. “Sport or |
22 | recreational equipment” does not include “clothing,” “clothing accessories or equipment,” and |
23 | “protective equipment.” |
24 | (g) Computer and related items.(i) “Computer” means an electronic device that accepts |
25 | information in digital or similar form and manipulates it for a result based on a sequence of |
26 | instructions. |
27 | (ii) “Computer software” means a set of coded instructions designed to cause a “computer” |
28 | or automatic data processing equipment to perform a task. |
29 | (iii) “Delivered electronically” means delivered to the purchaser by means other than |
30 | tangible storage media. |
31 | (iv) “Electronic” means relating to technology having electrical, digital, magnetic, |
32 | wireless, optical, electromagnetic, or similar capabilities. |
33 | (v) “Load and leave” means delivery to the purchaser by use of a tangible storage media |
34 | where the tangible storage media is not physically transferred to the purchaser. |
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1 | (vi) “Prewritten computer software” means “computer software,” including prewritten |
2 | upgrades, that is not designed and developed by the author or other creator to the specifications of |
3 | a specific purchaser. The combining of two (2) or more “prewritten computer software” programs |
4 | or prewritten portions thereof does not cause the combination to be other than “prewritten computer |
5 | software.” “Prewritten computer software” includes software designed and developed by the |
6 | author or other creator to the specifications of a specific purchaser when it is sold to a person other |
7 | than the specific purchaser. Where a person modifies or enhances “computer software” of which |
8 | the person is not the author or creator, the person shall be deemed to be the author or creator only |
9 | of such person’s modifications or enhancements. “Prewritten computer software” or a prewritten |
10 | portion thereof that is modified or enhanced to any degree, where such modification or |
11 | enhancement is designed and developed to the specifications of a specific purchaser, remains |
12 | “prewritten computer software”; provided, however, that where there is a reasonable, separately |
13 | stated charge or an invoice or other statement of the price given to the purchaser for such |
14 | modification or enhancement, such modification or enhancement shall not constitute “prewritten |
15 | computer software.” |
16 | (vii) “Vendor-hosted prewritten computer software” means prewritten computer software |
17 | that is accessed through the internet and/or a vendor-hosted server regardless of whether the access |
18 | is permanent or temporary and regardless of whether any downloading occurs. |
19 | (h) Drugs and related items.(i) “Drug” means a compound, substance, or preparation, and |
20 | any component of a compound, substance, or preparation, other than “food and food ingredients,” |
21 | “dietary supplements” or “alcoholic beverages”: |
22 | (A) Recognized in the official United States Pharmacopoeia, official Homeopathic |
23 | Pharmacopoeia of the United States, or official National Formulary, and supplement to any of them; |
24 | or |
25 | (B) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease; |
26 | or |
27 | (C) Intended to affect the structure or any function of the body. |
28 | “Drug” shall also include insulin and medical oxygen whether or not sold on prescription. |
29 | (ii) “Over-the-counter drug” means a drug that contains a label that identifies the product |
30 | as a drug as required by 21 C.F.R. § 201.66. The “over-the-counter drug” label includes: |
31 | (A) A “Drug Facts” panel; or |
32 | (B) A statement of the “active ingredient(s)” with a list of those ingredients contained in |
33 | the compound, substance, or preparation. |
34 | “Over-the-counter drug” shall not include “grooming and hygiene products.” |
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1 | (iii) “Grooming and hygiene products” are soaps and cleaning solutions, shampoo, |
2 | toothpaste, mouthwash, antiperspirants, and suntan lotions and screens, regardless of whether the |
3 | items meet the definition of “over-the-counter drugs.” |
4 | (iv) “Prescription” means an order, formula, or recipe issued in any form of oral, written, |
5 | electronic, or other means of transmission by a duly licensed practitioner authorized by the laws of |
6 | the member state. |
7 | (i) “Delivery charges” means charges by the seller of personal property or services for |
8 | preparation and delivery to a location designated by the purchaser of personal property or services |
9 | including, but not limited to: transportation, shipping, postage, handling, crating, and packing. |
10 | “Delivery charges” shall not include the charges for delivery of “direct mail” if the charges |
11 | are separately stated on an invoice or similar billing document given to the purchaser. |
12 | (j) “Direct mail” means printed material delivered or distributed by United States mail or |
13 | other delivery service to a mass audience or to addressees on a mailing list provided by the |
14 | purchaser or at the direction of the purchaser when the cost of the items are not billed directly to |
15 | the recipients. “Direct mail” includes tangible personal property supplied directly or indirectly by |
16 | the purchaser to the direct mail seller for inclusion in the package containing the printed material. |
17 | “Direct mail” does not include multiple items of printed material delivered to a single address. |
18 | (k) “Durable medical equipment” means equipment including repair and replacement parts |
19 | for same which: |
20 | (i) Can withstand repeated use; and |
21 | (ii) Is primarily and customarily used to serve a medical purpose; and |
22 | (iii) Generally is not useful to a person in the absence of illness or injury; and |
23 | (iv) Is not worn in or on the body. |
24 | Durable medical equipment does not include mobility enhancing equipment. |
25 | (l) Food and related items.(i) “Food and food ingredients” means substances, whether in |
26 | liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing |
27 | by humans and are consumed for their taste or nutritional value. “Food and food ingredients” does |
28 | not include “alcoholic beverages,” “tobacco,” “candy,” “dietary supplements,” and “soft drinks.” |
29 | (ii) “Prepared food” means: |
30 | (A) Food sold in a heated state or heated by the seller; |
31 | (B) Two (2) or more food ingredients mixed or combined by the seller for sale as a single |
32 | item; or |
33 | (C) Food sold with eating utensils provided by the seller, including: plates, knives, forks, |
34 | spoons, glasses, cups, napkins, or straws. A plate does not include a container or packaging used |
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1 | to transport the food. |
2 | “Prepared food” in subsection (l)(ii)(B) does not include food that is only cut, repackaged, |
3 | or pasteurized by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal |
4 | foods requiring cooking by the consumer as recommended by the Food and Drug Administration |
5 | in chapter 3, part 401.11 of its Food Code so as to prevent food borne illnesses. |
6 | (iii) “Candy” means a preparation of sugar, honey, or other natural or artificial sweeteners |
7 | in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, |
8 | drops, or pieces. “Candy” shall not include any preparation containing flour and shall require no |
9 | refrigeration. |
10 | (iv) “Soft drinks” means non-alcoholic beverages that contain natural or artificial |
11 | sweeteners. “Soft drinks” do not include beverages that contain milk or milk products, soy, rice, |
12 | or similar milk substitutes, or greater than fifty percent (50%) of vegetable or fruit juice by volume. |
13 | (v) “Dietary supplement” means any product, other than “tobacco,” intended to supplement |
14 | the diet that: |
15 | (A) Contains one or more of the following dietary ingredients: |
16 | 1. A vitamin; |
17 | 2. A mineral; |
18 | 3. An herb or other botanical; |
19 | 4. An amino acid; |
20 | 5. A dietary substance for use by humans to supplement the diet by increasing the total |
21 | dietary intake; or |
22 | 6. A concentrate, metabolite, constituent, extract, or combination of any ingredient |
23 | described above; and |
24 | (B) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or |
25 | if not intended for ingestion in such a form, is not represented as conventional food and is not |
26 | represented for use as a sole item of a meal or of the diet; and |
27 | (C) Is required to be labeled as a dietary supplement, identifiable by the “supplemental |
28 | facts” box found on the label and as required pursuant to 21 C.F.R. § 101.36. |
29 | (m) “Food sold through vending machines” means food dispensed from a machine or other |
30 | mechanical device that accepts payment. |
31 | (n) “Hotel” means every building or other structure kept, used, maintained, advertised as, |
32 | or held out to the public to be a place where living quarters are supplied for pay to transient or |
33 | permanent guests and tenants and includes a motel. |
34 | (i) “Living quarters” means sleeping rooms, sleeping or housekeeping accommodations, or |
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1 | any other room or accommodation in any part of the hotel, rooming house, or tourist camp that is |
2 | available for or rented out for hire in the lodging of guests. |
3 | (ii) “Rooming house” means every house, boat, vehicle, motor court, or other structure |
4 | kept, used, maintained, advertised, or held out to the public to be a place where living quarters are |
5 | supplied for pay to transient or permanent guests or tenants, whether in one or adjoining buildings. |
6 | (iii) “Tourist camp” means a place where tents or tent houses, or camp cottages, or cabins |
7 | or other structures are located and offered to the public or any segment thereof for human |
8 | habitation. |
9 | (o) “Lease or rental” means any transfer of possession or control of tangible personal |
10 | property for a fixed or indeterminate term for consideration. A lease or rental may include future |
11 | options to purchase or extend. Lease or rental does not include: |
12 | (i) A transfer of possession or control of property under a security agreement or deferred |
13 | payment plan that requires the transfer of title upon completion of the required payments; |
14 | (ii) A transfer of possession or control of property under an agreement that requires the |
15 | transfer of title upon completion of required payments and payment of an option price does not |
16 | exceed the greater of one hundred dollars ($100) or one percent of the total required payments; or |
17 | (iii) Providing tangible personal property along with an operator for a fixed or |
18 | indeterminate period of time. A condition of this exclusion is that the operator is necessary for the |
19 | equipment to perform as designed. For the purpose of this subsection, an operator must do more |
20 | than maintain, inspect, or set-up the tangible personal property. |
21 | (iv) Lease or rental does include agreements covering motor vehicles and trailers where the |
22 | amount of consideration may be increased or decreased by reference to the amount realized upon |
23 | sale or disposition of the property as defined in 26 U.S.C. § 7701(h)(1). |
24 | (v) This definition shall be used for sales and use tax purposes regardless if a transaction |
25 | is characterized as a lease or rental under generally accepted accounting principles, the Internal |
26 | Revenue Code, the Uniform Commercial Code, or other provisions of federal, state, or local law. |
27 | (vi) This definition will be applied only prospectively from the date of adoption and will |
28 | have no retroactive impact on existing leases or rentals. This definition shall neither impact any |
29 | existing sale-leaseback exemption or exclusions that a state may have, nor preclude a state from |
30 | adopting a sale-leaseback exemption or exclusion after the effective date of the agreement. |
31 | (p) “Mobility enhancing equipment” means equipment, including repair and replacement |
32 | parts to same, that: |
33 | (i) Is primarily and customarily used to provide or increase the ability to move from one |
34 | place to another and that is appropriate for use either in a home or a motor vehicle; and |
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1 | (ii) Is not generally used by persons with normal mobility; and |
2 | (iii) Does not include any motor vehicle or equipment on a motor vehicle normally |
3 | provided by a motor vehicle manufacturer. |
4 | Mobility enhancing equipment does not include durable medical equipment. |
5 | (q) “Model 1 Seller” means a seller that has selected a CSP as its agent to perform all the |
6 | seller’s sales and use tax functions, other than the seller’s obligation to remit tax on its own |
7 | purchases. |
8 | (r) “Model 2 Seller” means a seller that has selected a CAS to perform part of its sales and |
9 | use tax functions, but retains responsibility for remitting the tax. |
10 | (s) “Model 3 Seller” means a seller that has sales in at least five member states, has total |
11 | annual sales revenue of at least five hundred million dollars ($500,000,000), has a proprietary |
12 | system that calculates the amount of tax due each jurisdiction, and has entered into a performance |
13 | agreement with the member states that establishes a tax performance standard for the seller. As |
14 | used in this definition, a seller includes an affiliated group of sellers using the same proprietary |
15 | system. |
16 | (t) “Prosthetic device” means a replacement, corrective, or supportive device including |
17 | repair and replacement parts for same worn on or in the body to: |
18 | (i) Artificially replace a missing portion of the body; |
19 | (ii) Prevent or correct physical deformity or malfunction; or |
20 | (iii) Support a weak or deformed portion of the body. |
21 | (u) “Purchaser” means a person to whom a sale of personal property is made or to whom a |
22 | service is furnished. |
23 | (v) “Purchase price” applies to the measure subject to use tax and has the same meaning as |
24 | sales price. |
25 | (w) “Seller” means a person making sales, leases, or rentals of personal property or |
26 | services. |
27 | (x) Specified digital products.(i) “Specified digital products” means electronically |
28 | transferred: |
29 | (A) “Digital audio-visual works” which means a series of related images which, when |
30 | shown in succession, impart an impression of motion, together with accompanying sounds, if any; |
31 | (B) “Digital audio works” which means works that result from the fixation of a series of |
32 | musical, spoken, or other sounds, including ringtones; and/or |
33 | (C) “Digital books” which means works that are generally recognized in the ordinary and |
34 | usual sense as “books.” |
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1 | (ii) For purposes of the definition of “digital audio works,” “ringtones” means digitized |
2 | sound files that are downloaded onto a device and that may be used to alert the customer with |
3 | respect to a communication. |
4 | (iii) For purposes of the definition of “specified digital products,” “transferred |
5 | electronically” means obtained by the purchaser by means other than tangible storage media. |
6 | (iv) For the purposes of “specified digital products,” “end user” includes any person other |
7 | than a person who receives by contract a product “transferred electronically” for further broadcast, |
8 | rebroadcast, transmission, retransmission, licensing, relicensing, distribution, redistribution, or |
9 | exhibition of the product, in whole or in part, to another person or persons. A person who purchases |
10 | products “transferred electronically” or the code for “specified digital products” for the purpose of |
11 | giving away such products or code shall not be considered to have engaged in the distribution or |
12 | redistribution of such products or code and shall be treated as an end user. |
13 | (v) For the purposes of “specified digital products,” “permanent” means perpetual or for |
14 | an indefinite or unspecified length of time. |
15 | (y) “State” means any state of the United States and the District of Columbia. |
16 | (z) “Telecommunications” tax base/exemption terms. |
17 | (i) Telecommunication terms shall be defined as follows: |
18 | (A) “Ancillary services” means services that are associated with or incidental to the |
19 | provision of “telecommunications services,” including, but not limited to, “detailed |
20 | telecommunications billing,” “directory assistance,” “vertical service,” and “voice mail services.” |
21 | (B) “Conference bridging service” means an “ancillary service” that links two (2) or more |
22 | participants of an audio or video conference call and may include the provision of a telephone |
23 | number. “Conference bridging service” does not include the “telecommunications services” used |
24 | to reach the conference bridge. |
25 | (C) “Detailed telecommunications billing service” means an “ancillary service” of |
26 | separately stating information pertaining to individual calls on a customer’s billing statement. |
27 | (D) “Directory assistance” means an “ancillary service” of providing telephone number |
28 | information, and/or address information. |
29 | (E) “Vertical service” means an “ancillary service” that is offered in connection with one |
30 | or more “telecommunications services,” which offers advanced calling features that allow |
31 | customers to identify callers and to manage multiple calls and call connections, including |
32 | “conference bridging services.” |
33 | (F) “Voice mail service” means an “ancillary service” that enables the customer to store, |
34 | send, or receive recorded messages. “Voice mail service” does not include any “vertical services” |
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1 | that the customer may be required to have in order to utilize the “voice mail service.” |
2 | (G) “Telecommunications service” means the electronic transmission, conveyance, or |
3 | routing of voice, data, audio, video, or any other information or signals to a point, or between or |
4 | among points. The term “telecommunications service” includes such transmission, conveyance, or |
5 | routing in which computer processing applications are used to act on the form, code, or protocol of |
6 | the content for purposes of transmission, conveyance, or routing without regard to whether such |
7 | service is referred to as voice over internet protocol services or is classified by the Federal |
8 | Communications Commission as enhanced or value added. “Telecommunications service” does |
9 | not include: |
10 | (1) Data processing and information services that allow data to be generated, acquired, |
11 | stored, processed, or retrieved and delivered by an electronic transmission to a purchaser where |
12 | such purchaser’s primary purpose for the underlying transaction is the processed data or |
13 | information; |
14 | (2) Installation or maintenance of wiring or equipment on a customer’s premises; |
15 | (3) Tangible personal property; |
16 | (4) Advertising, including, but not limited to, directory advertising; |
17 | (5) Billing and collection services provided to third parties; |
18 | (6) Internet access service; |
19 | (7) Radio and television audio and video programming services, regardless of the medium, |
20 | including the furnishing of transmission, conveyance, and routing of such services by the |
21 | programming service provider. Radio and television audio and video programming services shall |
22 | include, but not be limited to, cable service as defined in 47 U.S.C. § 522(6) and audio and video |
23 | programming services delivered by commercial mobile radio service providers as defined in 47 |
24 | C.F.R. § 20.3; |
25 | (8) “Ancillary services”; or |
26 | (9) Digital products “delivered electronically,” including, but not limited to: software, |
27 | music, video, reading materials, or ring tones. |
28 | (H) “800 service” means a “telecommunications service” that allows a caller to dial a toll- |
29 | free number without incurring a charge for the call. The service is typically marketed under the |
30 | name “800,” “855,” “866,” “877,” and “888” toll-free calling, and any subsequent numbers |
31 | designated by the Federal Communications Commission. |
32 | (I) “900 service” means an inbound toll “telecommunications service” purchased by a |
33 | subscriber that allows the subscriber’s customers to call in to the subscriber’s prerecorded |
34 | announcement or live service. “900 service” does not include the charge for: collection services |
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1 | provided by the seller of the “telecommunications services” to the subscriber, or service or product |
2 | sold by the subscriber to the subscriber’s customer. The service is typically marketed under the |
3 | name “900 service,” and any subsequent numbers designated by the Federal Communications |
4 | Commission. |
5 | (J) “Fixed wireless service” means a “telecommunications service” that provides radio |
6 | communication between fixed points. |
7 | (K) “Mobile wireless service” means a “telecommunications service” that is transmitted, |
8 | conveyed, or routed regardless of the technology used, whereby the origination and/or termination |
9 | points of the transmission, conveyance, or routing are not fixed, including, by way of example only, |
10 | “telecommunications services” that are provided by a commercial mobile radio service provider. |
11 | (L) “Paging service” means a “telecommunications service” that provides transmission of |
12 | coded radio signals for the purpose of activating specific pagers; such transmissions may include |
13 | messages and/or sounds. |
14 | (M) “Prepaid calling service” means the right to access exclusively “telecommunications |
15 | services,” which must be paid for in advance and that enables the origination of calls using an |
16 | access number or authorization code, whether manually or electronically dialed, and that is sold in |
17 | predetermined units or dollars of which the number declines with use in a known amount. |
18 | (N) “Prepaid wireless calling service” means a “telecommunications service” that provides |
19 | the right to utilize “mobile wireless service,” as well as other non-telecommunications services, |
20 | including the download of digital products “delivered electronically,” content and “ancillary |
21 | services” which must be paid for in advance that is sold in predetermined units of dollars of which |
22 | the number declines with use in a known amount. |
23 | (O) “Private communications service” means a telecommunications service that entitles |
24 | the customer to exclusive or priority use of a communications channel or group of channels between |
25 | or among termination points, regardless of the manner in which such channel or channels are |
26 | connected, and includes switching capacity, extension lines, stations, and any other associated |
27 | services that are provided in connection with the use of such channel or channels. |
28 | (P) “Value-added non-voice data service” means a service that otherwise meets the |
29 | definition of “telecommunications services” in which computer processing applications are used to |
30 | act on the form, content, code, or protocol of the information or data primarily for a purpose other |
31 | than transmission, conveyance, or routing. |
32 | (ii) “Modifiers of Sales Tax Base/Exemption Terms” — the following terms can be used |
33 | to further delineate the type of “telecommunications service” to be taxed or exempted. The terms |
34 | would be used with the broader terms and subcategories delineated above. |
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1 | (A) “Coin-operated telephone service” means a “telecommunications service” paid for by |
2 | inserting money into a telephone accepting direct deposits of money to operate. |
3 | (B) “International” means a “telecommunications service” that originates or terminates in |
4 | the United States and terminates or originates outside the United States, respectively. United States |
5 | includes the District of Columbia or a U.S. territory or possession. |
6 | (C) “Interstate” means a “telecommunications service” that originates in one United States |
7 | state, or a United States territory or possession, and terminates in a different United States state or |
8 | a United States territory or possession. |
9 | (D) “Intrastate” means a “telecommunications service” that originates in one United States |
10 | state or a United States territory or possession, and terminates in the same United States state or a |
11 | United States territory or possession. |
12 | (E) “Pay telephone service” means a “telecommunications service” provided through any |
13 | pay telephone. |
14 | (F) “Residential telecommunications service” means a “telecommunications service” or |
15 | “ancillary services” provided to an individual for personal use at a residential address, including an |
16 | individual dwelling unit such as an apartment. In the case of institutions where individuals reside, |
17 | such as schools or nursing homes, “telecommunications service” is considered residential if it is |
18 | provided to and paid for by an individual resident rather than the institution. |
19 | The terms “ancillary services” and “telecommunications service” are defined as a broad |
20 | range of services. The terms “ancillary services” and “telecommunications service” are broader |
21 | than the sum of the subcategories. Definitions of subcategories of “ancillary services” and |
22 | “telecommunications service” can be used by a member state alone or in combination with other |
23 | subcategories to define a narrower tax base than the definitions of “ancillary services” and |
24 | “telecommunications service” would imply. The subcategories can also be used by a member state |
25 | to provide exemptions for certain subcategories of the more broadly defined terms. |
26 | A member state that specifically imposes tax on, or exempts from tax, local telephone or |
27 | local telecommunications service may define “local service” in any manner in accordance with § |
28 | 44-18.1-28, except as limited by other sections of this Agreement. |
29 | (aa) “Tobacco” means cigarettes, cigars, chewing, or pipe tobacco, or any other item that |
30 | contains tobacco. |
31 | SECTION 2. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and |
32 | Use Taxes — Liability and Computation" is hereby amended to read as follows: |
33 | 44-18-30. Gross receipts exempt from sales and use taxes. |
34 | There are exempted from the taxes imposed by this chapter the following gross receipts: |
| LC005802 - Page 12 of 30 |
1 | (1) Sales and uses beyond constitutional power of state. From the sale and from the storage, |
2 | use, or other consumption in this state of tangible personal property the gross receipts from the sale |
3 | of which, or the storage, use, or other consumption of which, this state is prohibited from taxing |
4 | under the Constitution of the United States or under the constitution of this state. |
5 | (2) Newspapers. |
6 | (i) From the sale and from the storage, use, or other consumption in this state of any |
7 | newspaper. |
8 | (ii) “Newspaper” means an unbound publication printed on newsprint that contains news, |
9 | editorial comment, opinions, features, advertising matter, and other matters of public interest. |
10 | (iii) “Newspaper” does not include a magazine, handbill, circular, flyer, sales catalog, or |
11 | similar item unless the item is printed for, and distributed as, a part of a newspaper. |
12 | (3) School meals. From the sale and from the storage, use, or other consumption in this |
13 | state of meals served by public, private, or parochial schools, school districts, colleges, universities, |
14 | student organizations, and parent-teacher associations to the students or teachers of a school, |
15 | college, or university whether the meals are served by the educational institutions or by a food |
16 | service or management entity under contract to the educational institutions. |
17 | (4) Containers. |
18 | (i) From the sale and from the storage, use, or other consumption in this state of: |
19 | (A) Non-returnable containers, including boxes, paper bags, and wrapping materials that |
20 | are biodegradable and all bags and wrapping materials utilized in the medical and healing arts, |
21 | when sold without the contents to persons who place the contents in the container and sell the |
22 | contents with the container. |
23 | (B) Containers when sold with the contents if the sale price of the contents is not required |
24 | to be included in the measure of the taxes imposed by this chapter. |
25 | (C) Returnable containers when sold with the contents in connection with a retail sale of |
26 | the contents or when resold for refilling. |
27 | (D) Keg and barrel containers, whether returnable or not, when sold to alcoholic beverage |
28 | producers who place the alcoholic beverages in the containers. |
29 | (ii) As used in this subdivision, the term “returnable containers” means containers of a kind |
30 | customarily returned by the buyer of the contents for reuse. All other containers are “non-returnable |
31 | containers.” |
32 | (5)(i) Charitable, educational, and religious organizations. From the sale to, as in defined |
33 | in this section, and from the storage, use, and other consumption in this state, or any other state of |
34 | the United States of America, of tangible personal property by hospitals not operated for a profit; |
| LC005802 - Page 13 of 30 |
1 | “educational institutions” as defined in subdivision (18) not operated for a profit; churches, |
2 | orphanages, and other institutions or organizations operated exclusively for religious or charitable |
3 | purposes; interest-free loan associations not operated for profit; nonprofit, organized sporting |
4 | leagues and associations and bands for boys and girls under the age of nineteen (19) years; the |
5 | following vocational student organizations that are state chapters of national vocational student |
6 | organizations: Distributive Education Clubs of America (DECA); Future Business Leaders of |
7 | America, Phi Beta Lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers |
8 | of America/Home Economics Related Occupations (FHA/HERD); Vocational Industrial Clubs of |
9 | America (VICA); organized nonprofit golden age and senior citizens clubs for men and women; |
10 | and parent-teacher associations; and from the sale, storage, use, and other consumption in this state, |
11 | of and by the Industrial Foundation of Burrillville, a Rhode Island domestic nonprofit corporation. |
12 | (ii) In the case of contracts entered into with the federal government, its agencies, or |
13 | instrumentalities, this state, or any other state of the United States of America, its agencies, any |
14 | city, town, district, or other political subdivision of the states; hospitals not operated for profit; |
15 | educational institutions not operated for profit; churches, orphanages, and other institutions or |
16 | organizations operated exclusively for religious or charitable purposes, the contractor may purchase |
17 | such materials and supplies (materials and/or supplies are defined as those that are essential to the |
18 | project) that are to be utilized in the construction of the projects being performed under the contracts |
19 | without payment of the tax. |
20 | (iii) The contractor shall not charge any sales or use tax to any exempt agency, institution, |
21 | or organization but shall in that instance provide his or her suppliers with certificates in the form |
22 | as determined by the division of taxation showing the reason for exemption and the contractor’s |
23 | records must substantiate the claim for exemption by showing the disposition of all property so |
24 | purchased. If any property is then used for a nonexempt purpose, the contractor must pay the tax |
25 | on the property used. |
26 | (6) Gasoline. From the sale and from the storage, use, or other consumption in this state |
27 | of: (i) Gasoline and other products taxed under chapter 36 of title 31 and (ii) Fuels used for the |
28 | propulsion of airplanes. |
29 | (7) Purchase for manufacturing purposes. |
30 | (i) From the sale and from the storage, use, or other consumption in this state of computer |
31 | software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, and |
32 | water, when the property or service is purchased for the purpose of being manufactured into a |
33 | finished product for resale and becomes an ingredient, component, or integral part of the |
34 | manufactured, compounded, processed, assembled, or prepared product, or if the property or |
| LC005802 - Page 14 of 30 |
1 | service is consumed in the process of manufacturing for resale computer software, tangible personal |
2 | property, electricity, natural gas, artificial gas, steam, refrigeration, or water. |
3 | (ii) “Consumed” means destroyed, used up, or worn out to the degree or extent that the |
4 | property cannot be repaired, reconditioned, or rendered fit for further manufacturing use. |
5 | (iii) “Consumed” includes mere obsolescence. |
6 | (iv) “Manufacturing” means and includes: manufacturing, compounding, processing, |
7 | assembling, preparing, or producing. |
8 | (v) “Process of manufacturing” means and includes all production operations performed in |
9 | the producing or processing room, shop, or plant, insofar as the operations are a part of and |
10 | connected with the manufacturing for resale of tangible personal property, electricity, natural gas, |
11 | artificial gas, steam, refrigeration, or water and all production operations performed insofar as the |
12 | operations are a part of and connected with the manufacturing for resale of computer software. |
13 | (vi) “Process of manufacturing” does not mean or include administration operations such |
14 | as general office operations, accounting, collection, or sales promotion, nor does it mean or include |
15 | distribution operations that occur subsequent to production operations, such as handling, storing, |
16 | selling, and transporting the manufactured products, even though the administration and |
17 | distribution operations are performed by, or in connection with, a manufacturing business. |
18 | (8) State and political subdivisions. From the sale to, and from the storage, use, or other |
19 | consumption by, this state, any city, town, district, or other political subdivision of this state. Every |
20 | redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a subdivision of |
21 | the municipality where it is located. |
22 | (9) Food and food ingredients. From the sale and storage, use, or other consumption in this |
23 | state of food and food ingredients as defined in § 44-18-7.1(l). |
24 | For the purposes of this exemption “food and food ingredients” shall not include candy, |
25 | soft drinks, dietary supplements, alcoholic beverages, tobacco, food sold through vending |
26 | machines, or prepared food, as those terms are defined in § 44-18-7.1, unless the prepared food is: |
27 | (i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311, |
28 | except sub-sector 3118 (bakeries); |
29 | (ii) Sold in an unheated state by weight or volume as a single item; |
30 | (iii) Bakery items, including: bread, rolls, buns, biscuits, bagels, croissants, pastries, |
31 | donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and |
32 | is not sold with utensils provided by the seller, including: plates, knives, forks, spoons, |
33 | glasses, cups, napkins, or straws. |
34 | (10) Medicines, drugs, and durable medical equipment. From the sale and from the storage, |
| LC005802 - Page 15 of 30 |
1 | use, or other consumption in this state, of: |
2 | (i) “Drugs” as defined in § 44-18-7.1(h)(i), sold on prescriptions, medical oxygen, and |
3 | insulin whether or not sold on prescription. For purposes of this exemption drugs shall not include |
4 | over-the-counter drugs and grooming and hygiene products as defined in § 44-18-7.1(h)(iii). |
5 | (ii) Durable medical equipment as defined in § 44-18-7.1(k) for home use only, including, |
6 | but not limited to: syringe infusers, ambulatory drug delivery pumps, hospital beds, convalescent |
7 | chairs, and chair lifts. Supplies used in connection with syringe infusers and ambulatory drug |
8 | delivery pumps that are sold on prescription to individuals to be used by them to dispense or |
9 | administer prescription drugs, and related ancillary dressings and supplies used to dispense or |
10 | administer prescription drugs, shall also be exempt from tax. |
11 | (11) Prosthetic devices and mobility enhancing equipment. From the sale and from the |
12 | storage, use, or other consumption in this state, of prosthetic devices as defined in § 44-18-7.1(t), |
13 | sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles, eyeglasses, |
14 | and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on prescription; |
15 | and mobility enhancing equipment as defined in § 44-18-7.1(p), including wheelchairs, crutches, |
16 | and canes. |
17 | (12) Coffins, caskets, urns, shrouds and burial garments. From the sale and from the |
18 | storage, use, or other consumption in this state of coffins, caskets, burial containers, urns, urn liners, |
19 | urn vaults, grave liners, grave vaults, burial tent setups, prayer cards, shrouds, and other burial |
20 | garments that are ordinarily sold by a funeral director as part of the business of funeral directing. |
21 | (13) Motor vehicles sold to nonresidents. |
22 | (i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide nonresident |
23 | of this state who does not register the motor vehicle in this state, whether the sale or delivery of the |
24 | motor vehicle is made in this state or at the place of residence of the nonresident. A motor vehicle |
25 | sold to a bona fide nonresident whose state of residence does not allow a like exemption to its |
26 | nonresidents is not exempt from the tax imposed under § 44-18-20. In that event, the bona fide |
27 | nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed |
28 | in his or her state of residence not to exceed the rate that would have been imposed under § 44-18- |
29 | 20. Notwithstanding any other provisions of law, a licensed motor vehicle dealer shall add and |
30 | collect the tax required under this subdivision and remit the tax to the tax administrator under the |
31 | provisions of chapters 18 and 19 of this title. When a Rhode Island licensed, motor vehicle dealer |
32 | is required to add and collect the sales and use tax on the sale of a motor vehicle to a bona fide |
33 | nonresident as provided in this section, the dealer in computing the tax takes into consideration the |
34 | law of the state of the nonresident as it relates to the trade-in of motor vehicles. |
| LC005802 - Page 16 of 30 |
1 | (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may |
2 | require any licensed motor vehicle dealer to keep records of sales to bona fide nonresidents as the |
3 | tax administrator deems reasonably necessary to substantiate the exemption provided in this |
4 | subdivision, including the affidavit of a licensed motor vehicle dealer that the purchaser of the |
5 | motor vehicle was the holder of, and had in his or her possession a valid out-of-state motor vehicle |
6 | registration or a valid out-of-state driver’s license. |
7 | (iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days of |
8 | the date of its sale to him or her is deemed to have purchased the motor vehicle for use, storage, or |
9 | other consumption in this state, and is subject to, and liable for, the use tax imposed under the |
10 | provisions of § 44-18-20. |
11 | (14) Sales in public buildings by blind people. From the sale and from the storage, use, or |
12 | other consumption in all public buildings in this state of all products or wares by any person |
13 | licensed under § 40-9-11.1. |
14 | (15) Air and water pollution control facilities. From the sale, storage, use, or other |
15 | consumption in this state of tangible personal property or supplies acquired for incorporation into |
16 | or used and consumed in the operation of a facility, the primary purpose of which is to aid in the |
17 | control of the pollution or contamination of the waters or air of the state, as defined in chapter 12 |
18 | of title 46 and chapter 23 of title 23, respectively, and that has been certified as approved for that |
19 | purpose by the director of environmental management. The director of environmental management |
20 | may certify to a portion of the tangible personal property or supplies acquired for incorporation |
21 | into those facilities or used and consumed in the operation of those facilities to the extent that that |
22 | portion has as its primary purpose the control of the pollution or contamination of the waters or air |
23 | of this state. As used in this subdivision, “facility” means any land, facility, device, building, |
24 | machinery, or equipment. |
25 | (16) Camps. From the rental charged for living quarters, or sleeping, or housekeeping |
26 | accommodations at camps or retreat houses operated by religious, charitable, educational, or other |
27 | organizations and associations mentioned in subsection (5), or by privately owned and operated |
28 | summer camps for children. |
29 | (17) Certain institutions. From the rental charged for living or sleeping quarters in an |
30 | institution licensed by the state for the hospitalization, custodial, or nursing care of human beings. |
31 | (18) Educational institutions. From the rental charged by any educational institution for |
32 | living quarters, or sleeping, or housekeeping accommodations or other rooms or accommodations |
33 | to any student or teacher necessitated by attendance at an educational institution. “Educational |
34 | institution” as used in this section means an institution of learning not operated for profit that is |
| LC005802 - Page 17 of 30 |
1 | empowered to confer diplomas, educational, literary, or academic degrees; that has a regular |
2 | faculty, curriculum, and organized body of pupils or students in attendance throughout the usual |
3 | school year; that keeps and furnishes to students and others records required and accepted for |
4 | entrance to schools of secondary, collegiate, or graduate rank; and no part of the net earnings of |
5 | which inures to the benefit of any individual. |
6 | (19) Motor vehicle and adaptive equipment for persons with disabilities. |
7 | (i) From the sale of: (A) Special adaptations; (B) The component parts of the special |
8 | adaptations; or (C) A specially adapted motor vehicle; provided that the owner furnishes to the tax |
9 | administrator an affidavit of a licensed physician to the effect that the specially adapted motor |
10 | vehicle is necessary to transport a family member with a disability or where the vehicle has been |
11 | specially adapted to meet the specific needs of the person with a disability. This exemption applies |
12 | to not more than one motor vehicle owned and registered for personal, noncommercial use. |
13 | (ii) For the purpose of this subsection the term “special adaptations” includes, but is not |
14 | limited to: wheelchair lifts, wheelchair carriers, wheelchair ramps, wheelchair securements, hand |
15 | controls, steering devices, extensions, relocations, and crossovers of operator controls, power- |
16 | assisted controls, raised tops or dropped floors, raised entry doors, or alternative signaling devices |
17 | to auditory signals. |
18 | (iii) From the sale of: (a) Special adaptations, (b) The component parts of the special |
19 | adaptations, for a “wheelchair accessible taxicab” as defined in § 39-14-1, and/or a “wheelchair |
20 | accessible public motor vehicle” as defined in § 39-14.1-1. |
21 | (iv) For the purpose of this subdivision the exemption for a “specially adapted motor |
22 | vehicle” means a use tax credit not to exceed the amount of use tax that would otherwise be due on |
23 | the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the special |
24 | adaptations, including installation. |
25 | (20) Heating fuels. From the sale and from the storage, use, or other consumption in this |
26 | state of every type of heating fuel. |
27 | (21) Electricity and gas. From the sale and from the storage, use, or other consumption in |
28 | this state of electricity and gas. |
29 | (22) Manufacturing machinery and equipment. |
30 | (i) From the sale and from the storage, use, or other consumption in this state of tools, dies, |
31 | molds, machinery, equipment (including replacement parts), and related items to the extent used in |
32 | an industrial plant in connection with the actual manufacture, conversion, or processing of tangible |
33 | personal property, or to the extent used in connection with the actual manufacture, conversion, or |
34 | processing of computer software as that term is utilized in industry numbers 7371, 7372, and 7373 |
| LC005802 - Page 18 of 30 |
1 | in the standard industrial classification manual prepared by the Technical Committee on Industrial |
2 | Classification, Office of Statistical Standards, Executive Office of the President, United States |
3 | Bureau of the Budget, as revised from time to time, to be sold, or that machinery and equipment |
4 | used in the furnishing of power to an industrial manufacturing plant. For the purposes of this |
5 | subdivision, “industrial plant” means a factory at a fixed location primarily engaged in the |
6 | manufacture, conversion, or processing of tangible personal property to be sold in the regular |
7 | course of business; |
8 | (ii) Machinery and equipment and related items are not deemed to be used in connection |
9 | with the actual manufacture, conversion, or processing of tangible personal property, or in |
10 | connection with the actual manufacture, conversion, or processing of computer software as that |
11 | term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification |
12 | manual prepared by the Technical Committee on Industrial Classification, Office of Statistical |
13 | Standards, Executive Office of the President, United States Bureau of the Budget, as revised from |
14 | time to time, to be sold to the extent the property is used in administration or distribution operations; |
15 | (iii) Machinery and equipment and related items used in connection with the actual |
16 | manufacture, conversion, or processing of any computer software or any tangible personal property |
17 | that is not to be sold and that would be exempt under subdivision (7) or this subdivision if purchased |
18 | from a vendor or machinery and equipment and related items used during any manufacturing, |
19 | converting, or processing function is exempt under this subdivision even if that operation, function, |
20 | or purpose is not an integral or essential part of a continuous production flow or manufacturing |
21 | process; |
22 | (iv) Where a portion of a group of portable or mobile machinery is used in connection with |
23 | the actual manufacture, conversion, or processing of computer software or tangible personal |
24 | property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under |
25 | this subdivision even though the machinery in that group is used interchangeably and not otherwise |
26 | identifiable as to use. |
27 | (23) Trade-in value of motor vehicles. From the sale and from the storage, use, or other |
28 | consumption in this state of so much of the purchase price paid for a new or used automobile as is |
29 | allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of |
30 | the proceeds applicable only to the automobile as are received from the manufacturer of |
31 | automobiles for the repurchase of the automobile whether the repurchase was voluntary or not |
32 | towards the purchase of a new or used automobile by the buyer. For the purpose of this subdivision, |
33 | the word “automobile” means a private passenger automobile not used for hire and does not refer |
34 | to any other type of motor vehicle. |
| LC005802 - Page 19 of 30 |
1 | (24) Precious metal bullion. |
2 | (i) From the sale and from the storage, use, or other consumption in this state of precious |
3 | metal bullion, substantially equivalent to a transaction in securities or commodities. |
4 | (ii) For purposes of this subdivision, “precious metal bullion” means any elementary |
5 | precious metal that has been put through a process of smelting or refining, including, but not limited |
6 | to: gold, silver, platinum, rhodium, and chromium, and that is in a state or condition that its value |
7 | depends upon its content and not upon its form. |
8 | (iii) The term does not include fabricated precious metal that has been processed or |
9 | manufactured for some one or more specific and customary industrial, professional, or artistic uses. |
10 | (25) Commercial vessels. From sales made to a commercial ship, barge, or other vessel of |
11 | fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from the |
12 | repair, alteration, or conversion of the vessels, and from the sale of property purchased for the use |
13 | of the vessels including provisions, supplies, and material for the maintenance and/or repair of the |
14 | vessels. |
15 | (26) Commercial fishing vessels. From the sale and from the storage, use, or other |
16 | consumption in this state of vessels and other watercraft that are in excess of five (5) net tons and |
17 | that are used exclusively for “commercial fishing,” as defined in this subdivision, and from the |
18 | repair, alteration, or conversion of those vessels and other watercraft, and from the sale of property |
19 | purchased for the use of those vessels and other watercraft including provisions, supplies, and |
20 | material for the maintenance and/or repair of the vessels and other watercraft and the boats nets, |
21 | cables, tackle, and other fishing equipment appurtenant to or used in connection with the |
22 | commercial fishing of the vessels and other watercraft. “Commercial fishing” means taking or |
23 | attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of it for |
24 | profit or by sale, barter, trade, or in commercial channels. The term does not include subsistence |
25 | fishing, i.e., the taking for personal use and not for sale or barter; or sport fishing; but shall include |
26 | vessels and other watercraft with a Rhode Island party and charter boat license issued by the |
27 | department of environmental management pursuant to § 20-2-27.1 that meet the following criteria: |
28 | (i) The operator must have a current United States Coast Guard (U.S.C.G.) license to carry |
29 | passengers for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii) |
30 | U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island boat |
31 | registration to prove Rhode Island home port status; and (iv) The vessel must be used as a |
32 | commercial passenger carrying fishing vessel to carry passengers for fishing. The vessel must be |
33 | able to demonstrate that at least fifty percent (50%) of its annual gross income derives from charters |
34 | or provides documentation of a minimum of one hundred (100) charter trips annually; and (v) The |
| LC005802 - Page 20 of 30 |
1 | vessel must have a valid Rhode Island party and charter boat license. The tax administrator shall |
2 | implement the provisions of this subdivision by promulgating rules and regulations relating thereto. |
3 | (27) Clothing and footwear. From the sales of articles of clothing, including footwear, |
4 | intended to be worn or carried on or about the human body for sales prior to October 1, 2012. |
5 | Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including |
6 | footwear, intended to be worn or carried on or about the human body up to two hundred and fifty |
7 | dollars ($250) of the sales price per item. For the purposes of this section, “clothing or footwear” |
8 | does not include clothing accessories or equipment or special clothing or footwear primarily |
9 | designed for athletic activity or protective use as these terms are defined in § 44-18-7.1(f). In |
10 | recognition of the work being performed by the streamlined sales and use tax governing board, |
11 | upon passage of any federal law that authorizes states to require remote sellers to collect and remit |
12 | sales and use taxes, this unlimited exemption will apply as it did prior to October 1, 2012. The |
13 | unlimited exemption on sales of clothing and footwear shall take effect on the date that the state |
14 | requires remote sellers to collect and remit sales and use taxes. |
15 | (28) Water for residential use. From the sale and from the storage, use, or other |
16 | consumption in this state of water furnished for domestic use by occupants of residential premises. |
17 | (29) Bibles. [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see Notes |
18 | to Decisions.] From the sale and from the storage, use, or other consumption in the state of any |
19 | canonized scriptures of any tax-exempt nonprofit religious organization including, but not limited |
20 | to, the Old Testament and the New Testament versions. |
21 | (30) Boats. |
22 | (i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not |
23 | register the boat or vessel in this state or document the boat or vessel with the United States |
24 | government at a home port within the state, whether the sale or delivery of the boat or vessel is |
25 | made in this state or elsewhere; provided, that the nonresident transports the boat within thirty (30) |
26 | days after delivery by the seller outside the state for use thereafter solely outside the state. |
27 | (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may |
28 | require the seller of the boat or vessel to keep records of the sales to bona fide nonresidents as the |
29 | tax administrator deems reasonably necessary to substantiate the exemption provided in this |
30 | subdivision, including the affidavit of the seller that the buyer represented himself or herself to be |
31 | a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state. |
32 | (31) Youth activities equipment. From the sale, storage, use, or other consumption in this |
33 | state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island |
34 | eleemosynary organizations, for the purposes of youth activities that the organization is formed to |
| LC005802 - Page 21 of 30 |
1 | sponsor and support; and by accredited elementary and secondary schools for the purposes of the |
2 | schools or of organized activities of the enrolled students. |
3 | (32) Farm equipment. From the sale and from the storage or use of machinery and |
4 | equipment used directly for commercial farming and agricultural production; including, but not |
5 | limited to: tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors, |
6 | balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment, |
7 | greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and |
8 | other farming equipment, including replacement parts appurtenant to or used in connection with |
9 | commercial farming and tools and supplies used in the repair and maintenance of farming |
10 | equipment. “Commercial farming” means the keeping or boarding of five (5) or more horses or the |
11 | production within this state of agricultural products, including, but not limited to, field or orchard |
12 | crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or production |
13 | provides at least two thousand five hundred dollars ($2,500) in annual gross sales to the operator, |
14 | whether an individual, a group, a partnership, or a corporation for exemptions issued prior to July |
15 | 1, 2002. For exemptions issued or renewed after July 1, 2002, there shall be two (2) levels. Level I |
16 | shall be based on proof of annual, gross sales from commercial farming of at least twenty-five |
17 | hundred dollars ($2,500) and shall be valid for purchases subject to the exemption provided in this |
18 | subdivision except for motor vehicles with an excise tax value of five thousand dollars ($5,000) or |
19 | greater. Level II shall be based on proof of annual gross sales from commercial farming of at least |
20 | ten thousand dollars ($10,000) or greater and shall be valid for purchases subject to the exemption |
21 | provided in this subdivision including motor vehicles with an excise tax value of five thousand |
22 | dollars ($5,000) or greater. For the initial issuance of the exemptions, proof of the requisite amount |
23 | of annual gross sales from commercial farming shall be required for the prior year; for any renewal |
24 | of an exemption granted in accordance with this subdivision at either level I or level II, proof of |
25 | gross annual sales from commercial farming at the requisite amount shall be required for each of |
26 | the prior two (2) years. Certificates of exemption issued or renewed after July 1, 2002, shall clearly |
27 | indicate the level of the exemption and be valid for four (4) years after the date of issue. This |
28 | exemption applies even if the same equipment is used for ancillary uses, or is temporarily used for |
29 | a non-farming or a non-agricultural purpose, but shall not apply to motor vehicles acquired after |
30 | July 1, 2002, unless the vehicle is a farm vehicle as defined pursuant to § 31-1-8 and is eligible for |
31 | registration displaying farm plates as provided for in § 31-3-31. |
32 | (33) Compressed air. From the sale and from the storage, use, or other consumption in the |
33 | state of compressed air. |
34 | (34) Flags. From the sale and from the storage, consumption, or other use in this state of |
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1 | United States, Rhode Island or POW-MIA flags. |
2 | (35) Motor vehicle and adaptive equipment to certain veterans. From the sale of a motor |
3 | vehicle and adaptive equipment to and for the use of a veteran with a service-connected loss of or |
4 | the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether service |
5 | connected or not. The motor vehicle must be purchased by and especially equipped for use by the |
6 | qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under rules or |
7 | regulations that the tax administrator may prescribe. |
8 | (36) Textbooks. From the sale and from the storage, use, or other consumption in this state |
9 | of textbooks by an “educational institution,” as defined in subsection (18) of this section, and any |
10 | educational institution within the purview of § 16-63-9(4), and used textbooks by any purveyor. |
11 | (37) Tangible personal property and supplies used in on-site hazardous waste recycling, |
12 | reuse, or treatment. From the sale, storage, use, or other consumption in this state of tangible |
13 | personal property or supplies used or consumed in the operation of equipment, the exclusive |
14 | function of which is the recycling, reuse, or recovery of materials (other than precious metals, as |
15 | defined in subdivision (24)(ii) of this section) from the treatment of “hazardous wastes,” as defined |
16 | in § 23-19.1-4, where the “hazardous wastes” are generated in Rhode Island solely by the same |
17 | taxpayer and where the personal property is located at, in, or adjacent to a generating facility of the |
18 | taxpayer in Rhode Island. The taxpayer shall procure an order from the director of the department |
19 | of environmental management certifying that the equipment and/or supplies as used or consumed, |
20 | qualify for the exemption under this subdivision. If any information relating to secret processes or |
21 | methods of manufacture, production, or treatment is disclosed to the department of environmental |
22 | management only to procure an order, and is a “trade secret” as defined in § 28-21-10(b), it is not |
23 | open to public inspection or publicly disclosed unless disclosure is required under chapter 21 of |
24 | title 28 or chapter 24.4 of title 23. |
25 | (38) Promotional and product literature of boat manufacturers. From the sale and from the |
26 | storage, use, or other consumption of promotional and product literature of boat manufacturers |
27 | shipped to points outside of Rhode Island that either: (i) Accompany the product that is sold; (ii) |
28 | Are shipped in bulk to out-of-state dealers for use in the sale of the product; or (iii) Are mailed to |
29 | customers at no charge. |
30 | (39) Food items paid for by food stamps. From the sale and from the storage, use, or other |
31 | consumption in this state of eligible food items payment for which is properly made to the retailer |
32 | in the form of U.S. government food stamps issued in accordance with the Food Stamp Act of 1977, |
33 | 7 U.S.C. § 2011 et seq. |
34 | (40) Transportation charges. From the sale or hiring of motor carriers as defined in § 39- |
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1 | 12-2(12) to haul goods, when the contract or hiring cost is charged by a motor freight tariff filed |
2 | with the Rhode Island public utilities commission on the number of miles driven or by the number |
3 | of hours spent on the job. |
4 | (41) Trade-in value of boats. From the sale and from the storage, use, or other consumption |
5 | in this state of so much of the purchase price paid for a new or used boat as is allocated for a trade- |
6 | in allowance on the boat of the buyer given in trade to the seller or of the proceeds applicable only |
7 | to the boat as are received from an insurance claim as a result of a stolen or damaged boat, towards |
8 | the purchase of a new or used boat by the buyer. |
9 | (42) Equipment used for research and development. From the sale and from the storage, |
10 | use, or other consumption of equipment to the extent used for research and development purposes |
11 | by a qualifying firm. For the purposes of this subsection, “qualifying firm” means a business for |
12 | which the use of research and development equipment is an integral part of its operation and |
13 | “equipment” means scientific equipment, computers, software, and related items. |
14 | (43) Coins. From the sale and from the other consumption in this state of coins having |
15 | numismatic or investment value. |
16 | (44) Farm structure construction materials. Lumber, hardware, and other materials used in |
17 | the new construction of farm structures, including production facilities such as, but not limited to: |
18 | farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying houses, |
19 | fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing rooms, |
20 | machinery storage, seasonal farm worker housing, certified farm markets, bunker and trench silos, |
21 | feed storage sheds, and any other structures used in connection with commercial farming. |
22 | (45) Telecommunications carrier access service. Carrier access service or |
23 | telecommunications service when purchased by a telecommunications company from another |
24 | telecommunications company to facilitate the provision of telecommunications service. |
25 | (46) Boats or vessels brought into the state exclusively for winter storage, maintenance, |
26 | repair, or sale. Notwithstanding the provisions of §§ 44-18-10, 44-18-11 and 44-18-20, the tax |
27 | imposed by § 44-18-20 is not applicable for the period commencing on the first day of October in |
28 | any year up to and including the 30th day of April next succeeding with respect to the use of any |
29 | boat or vessel within this state exclusively for purposes of: (i) Delivery of the vessel to a facility in |
30 | this state for storage, including dry storage and storage in water by means of apparatus preventing |
31 | ice damage to the hull, maintenance, or repair; (ii) The actual process of storage, maintenance, or |
32 | repair of the boat or vessel; or (iii) Storage for the purpose of selling the boat or vessel. |
33 | (47) Jewelry display product. From the sale and from the storage, use, or other |
34 | consumption in this state of tangible personal property used to display any jewelry product; |
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1 | provided that title to the jewelry display product is transferred by the jewelry manufacturer or seller |
2 | and that the jewelry display product is shipped out of state for use solely outside the state and is not |
3 | returned to the jewelry manufacturer or seller. |
4 | (48) Boats or vessels generally. Notwithstanding the provisions of this chapter, the tax |
5 | imposed by §§ 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the storage, |
6 | use, or other consumption in this state of any new or used boat. The exemption provided for in this |
7 | subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the federal ten |
8 | percent (10%) surcharge on luxury boats is repealed. |
9 | (49) Banks and regulated investment companies interstate toll-free calls. Notwithstanding |
10 | the provisions of this chapter, the tax imposed by this chapter does not apply to the furnishing of |
11 | interstate and international, toll-free terminating telecommunication service that is used directly |
12 | and exclusively by or for the benefit of an eligible company as defined in this subdivision; provided |
13 | that an eligible company employs on average during the calendar year no less than five hundred |
14 | (500) “full-time equivalent employees” as that term is defined in § 42-64.5-2. For purposes of this |
15 | section, an “eligible company” means a “regulated investment company” as that term is defined in |
16 | the Internal Revenue Code of 1986, 26 U.S.C. § 851, or a corporation to the extent the service is |
17 | provided, directly or indirectly, to or on behalf of a regulated investment company, an employee |
18 | benefit plan, a retirement plan or a pension plan, or a state-chartered bank. |
19 | (50) Mobile and manufactured homes generally. From the sale and from the storage, use, |
20 | or other consumption in this state of mobile and/or manufactured homes as defined and subject to |
21 | taxation pursuant to the provisions of chapter 44 of title 31. |
22 | (51) Manufacturing business reconstruction materials. |
23 | (i) From the sale and from the storage, use, or other consumption in this state of lumber, |
24 | hardware, and other building materials used in the reconstruction of a manufacturing business |
25 | facility that suffers a disaster, as defined in this subdivision, in this state. “Disaster” means any |
26 | occurrence, natural or otherwise, that results in the destruction of sixty percent (60%) or more of |
27 | an operating manufacturing business facility within this state. “Disaster” does not include any |
28 | damage resulting from the willful act of the owner of the manufacturing business facility. |
29 | (ii) Manufacturing business facility includes, but is not limited to, the structures housing |
30 | the production and administrative facilities. |
31 | (iii) In the event a manufacturer has more than one manufacturing site in this state, the sixty |
32 | percent (60%) provision applies to the damages suffered at that one site. |
33 | (iv) To the extent that the costs of the reconstruction materials are reimbursed by insurance, |
34 | this exemption does not apply. |
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1 | (52) Tangible personal property and supplies used in the processing or preparation of floral |
2 | products and floral arrangements. From the sale, storage, use, or other consumption in this state of |
3 | tangible personal property or supplies purchased by florists, garden centers, or other like producers |
4 | or vendors of flowers, plants, floral products, and natural and artificial floral arrangements that are |
5 | ultimately sold with flowers, plants, floral products, and natural and artificial floral arrangements |
6 | or are otherwise used in the decoration, fabrication, creation, processing, or preparation of flowers, |
7 | plants, floral products, or natural and artificial floral arrangements, including descriptive labels, |
8 | stickers, and cards affixed to the flower, plant, floral product, or arrangement, artificial flowers, |
9 | spray materials, floral paint and tint, plant shine, flower food, insecticide, and fertilizers. |
10 | (53) Horse food products. From the sale and from the storage, use, or other consumption |
11 | in this state of horse food products purchased by a person engaged in the business of the boarding |
12 | of horses. |
13 | (54) Non-motorized recreational vehicles sold to nonresidents. |
14 | (i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to |
15 | a bona fide nonresident of this state who does not register the non-motorized recreational vehicle |
16 | in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this |
17 | state or at the place of residence of the nonresident; provided that a non-motorized recreational |
18 | vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption to |
19 | its nonresidents is not exempt from the tax imposed under § 44-18-20; provided, further, that in |
20 | that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate |
21 | that would be imposed in his or her state of residence not to exceed the rate that would have been |
22 | imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed, non-motorized |
23 | recreational vehicle dealer shall add and collect the tax required under this subdivision and remit |
24 | the tax to the tax administrator under the provisions of chapters 18 and 19 of this title. Provided, |
25 | that when a Rhode Island licensed, non-motorized recreational vehicle dealer is required to add and |
26 | collect the sales and use tax on the sale of a non-motorized recreational vehicle to a bona fide |
27 | nonresident as provided in this section, the dealer in computing the tax takes into consideration the |
28 | law of the state of the nonresident as it relates to the trade-in of motor vehicles. |
29 | (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may |
30 | require any licensed, non-motorized recreational vehicle dealer to keep records of sales to bona fide |
31 | nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption |
32 | provided in this subdivision, including the affidavit of a licensed, non-motorized recreational |
33 | vehicle dealer that the purchaser of the non-motorized recreational vehicle was the holder of, and |
34 | had in his or her possession a valid out-of-state non-motorized recreational vehicle registration or |
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1 | a valid out-of-state driver’s license. |
2 | (iii) Any nonresident who registers a non-motorized recreational vehicle in this state within |
3 | ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-motorized |
4 | recreational vehicle for use, storage, or other consumption in this state, and is subject to, and liable |
5 | for, the use tax imposed under the provisions of § 44-18-20. |
6 | (iv) “Non-motorized recreational vehicle” means any portable dwelling designed and |
7 | constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use |
8 | that is eligible to be registered for highway use, including, but not limited to, “pick-up coaches” or |
9 | “pick-up campers,” “travel trailers,” and “tent trailers” as those terms are defined in chapter 1 of |
10 | title 31. |
11 | (55) Sprinkler and fire alarm systems in existing buildings. From the sale in this state of |
12 | sprinkler and fire alarm systems; emergency lighting and alarm systems; and the materials |
13 | necessary and attendant to the installation of those systems that are required in buildings and |
14 | occupancies existing therein in July 2003 in order to comply with any additional requirements for |
15 | such buildings arising directly from the enactment of the Comprehensive Fire Safety Act of 2003 |
16 | and that are not required by any other provision of law or ordinance or regulation adopted pursuant |
17 | to that act. The exemption provided in this subdivision shall expire on December 31, 2008. |
18 | (56) Aircraft. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44- |
19 | 18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or other |
20 | consumption in this state of any new or used aircraft or aircraft parts. |
21 | (57) Renewable energy products. Notwithstanding any other provisions of Rhode Island |
22 | general laws, the following products shall also be exempt from sales tax: solar photovoltaic |
23 | modules or panels, or any module or panel that generates electricity from light; solar thermal |
24 | collectors, including, but not limited to, those manufactured with flat glass plates, extruded plastic, |
25 | sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-water and |
26 | water-to-air type pumps; wind turbines; towers used to mount wind turbines if specified by or sold |
27 | by a wind turbine manufacturer; DC to AC inverters that interconnect with utility power lines; and |
28 | manufactured mounting racks and ballast pans for solar collector, module, or panel installation. Not |
29 | to include materials that could be fabricated into such racks; monitoring and control equipment, if |
30 | specified or supplied by a manufacturer of solar thermal, solar photovoltaic, geothermal, or wind |
31 | energy systems or if required by law or regulation for such systems but not to include pumps, fans |
32 | or plumbing or electrical fixtures unless shipped from the manufacturer affixed to, or an integral |
33 | part of, another item specified on this list; and solar storage tanks that are part of a solar domestic |
34 | hot water system or a solar space heating system. If the tank comes with an external heat exchanger |
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1 | it shall also be tax exempt, but a standard hot water tank is not exempt from state sales tax. |
2 | (58) Returned property. The amount charged for property returned by customers upon |
3 | rescission of the contract of sale when the entire amount exclusive of handling charges paid for the |
4 | property is refunded in either cash or credit, and where the property is returned within one hundred |
5 | twenty (120) days from the date of delivery. |
6 | (59) Dietary supplements. From the sale and from the storage, use, or other consumption |
7 | of dietary supplements as defined in § 44-18-7.1(l)(v), sold on prescriptions. |
8 | (60) Blood. From the sale and from the storage, use, or other consumption of human blood. |
9 | (61) Agricultural products for human consumption. From the sale and from the storage, |
10 | use, or other consumption of livestock and poultry of the kinds of products that ordinarily constitute |
11 | food for human consumption and of livestock of the kind the products of which ordinarily constitute |
12 | fibers for human use. |
13 | (62) Diesel emission control technology. From the sale and use of diesel retrofit |
14 | technology that is required by § 31-47.3-4. |
15 | (63) Feed for certain animals used in commercial farming. From the sale of feed for |
16 | animals as described in subsection (61) of this section. |
17 | (64) Alcoholic beverages. From the sale and storage, use, or other consumption in this |
18 | state by a Class A licensee of alcoholic beverages, as defined in § 44-18-7.1, excluding beer and |
19 | malt beverages; provided, further, notwithstanding § 6-13-1 or any other general or public law to |
20 | the contrary, alcoholic beverages, as defined in § 44-18-7.1, shall not be subject to minimum |
21 | markup. |
22 | (65) Seeds and plants used to grow food and food ingredients. From the sale, storage, use, |
23 | or other consumption in this state of seeds and plants used to grow food and food ingredients as |
24 | defined in § 44-18-7.1(l)(i). “Seeds and plants used to grow food and food ingredients” shall not |
25 | include marijuana seeds or plants. |
26 | (66) Feminine hygiene products. From the sale and from the storage, use, or other |
27 | consumption of tampons, panty liners, menstrual cups, sanitary napkins, and other similar products |
28 | the principal use of which is feminine hygiene in connection with the menstrual cycle. |
29 | (67) “Breast pump collection and storage supplies” means items of tangible personal |
30 | property used in conjunction with a breast pump to collect milk expressed from a human breast and |
31 | to store collected milk until it is ready for consumption. “Breast pump collection and storage |
32 | supplies” include, but are not limited to, breast shields and breast shield connectors; breast pump |
33 | tubes and tubing adaptors; breast pump valves and membranes; backflow protectors and backflow |
34 | protector adaptors; bottles and bottle caps specific to the operation of the breast pump; breast milk |
| LC005802 - Page 28 of 30 |
1 | storage bags; and related items sold as part of a breast pump kit pre-packaged by the breast pump |
2 | manufacturer. “Breast pump collection and storage supplies” does not include: bottles and bottle |
3 | caps not specific to the operation of the breast pump; breast pump travel bags and other similar |
4 | carrying accessories, including ice packs, labels, and other similar products, unless sold as part of |
5 | a breast pump kit pre-packed by the breast pump manufacturer; breast pump cleaning supplies, |
6 | unless sold as part of a breast pump kit pre-packaged by the breast pump manufacturer; nursing |
7 | bras, bra pads, breast shells, and other similar products; and creams, ointments, and other similar |
8 | products that relieve breastfeeding-related symptoms or conditions of the breasts or nipples. |
9 | (68) Trade-in value of motorcycles. From the sale and from the storage, use, or other |
10 | consumption in this state of so much of the purchase price paid for a new or used motorcycle as is |
11 | allocated for a trade-in allowance on the motorcycle of the buyer given in trade to the seller, or of |
12 | the proceeds applicable only to the motorcycle as are received from the manufacturer of |
13 | motorcycles for the repurchase of the motorcycle whether the repurchase was voluntary or not |
14 | towards the purchase of a new or used motorcycle by the buyer. For the purpose of this subsection, |
15 | the word “motorcycle” means a motorcycle not used for hire and does not refer to any other type |
16 | of motor vehicle. |
17 | SECTION 3. This act shall take effect upon passage. |
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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 | |
*** | |
1 | This act would exempt from the sales and use tax the sale of beer and malt beverages at |
2 | retail. |
3 | This act would take effect upon passage. |
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