2024 -- S 2931

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LC004536

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

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A N   A C T

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

COMPUTATION

     Introduced By: Senators DiPalma, Zurier, and Ciccone

     Date Introduced: March 28, 2024

     Referred To: Senate Finance

     (Dept. of Revenue)

It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-18-0 of the General Laws in Chapter 44-18 entitled "Sales and

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

     44-18-30B. Exemption from sales tax for sales by writers, composers, artists —

Findings.

     (a) The general assembly makes the following findings of facts:

     (1) The arts and culture are a significant asset for Rhode Island, one that generates revenue

through increased tourism and economic activity; creates jobs and economic opportunities;

revitalizes communities adding to quality of life and property values; and fosters creativity,

innovation, and entrepreneurship.

     (2) Since 1998, the establishment of arts districts, where “one-of-a-kind, limited-

production” works of art may be sold exempt from state sales tax, has resulted in an increased

presence for the arts in designated cities and towns, with benefits to those communities and to the

state.

     (3) Since the establishment of arts districts, many communities have sought legislation to

expand the program to their city or town.

     (4) There is value in expanding the arts district program statewide, providing incentives for

the sale and purchase of art. This is a unique opportunity for Rhode Island to shape history, and

gain an advantage over other states, by becoming the first-and-only state in the country to declare

a statewide sales tax exemption on art. This will strengthen Rhode Island’s identity as an arts-

friendly destination and “State of the Arts.”

     (b)(1) This section only applies to sales by writers, composers, and artists residing in and

conducting a business within the state of Rhode Island. For the purposes of this section, a “work”

means an original and creative work, whether written, composed, or executed for “one-of-a-kind,

limited production” that falls into one of the following categories:

     (i) A book or other writing;

     (ii) A play or the performance of said play;

     (iii) A musical composition or the performance of said composition;

     (iv) A painting, print, photograph, or other like picture;

     (v) A sculpture;

     (vi) Traditional and fine crafts;

     (vii) The creation of a film or the acting within the film; or

     (viii) The creation of a dance or the performance of the dance.

     (2) For the purposes of this section, a “work” includes any product generated as a result of

any of the above categories.

     (3) For the purposes of this section, a “work” does not apply to any piece or performance

created or executed for industry-oriented, commercial, or related production.

     (c)(1) This section applies to sales by any individual:

     (i) Who is a resident of, and has a principal place of business situated in, the state of Rhode

Island.

     (ii) Who is determined by the tax administrator in consultation with the Rhode Island

council on the arts, after consideration of any evidence he or she deems necessary or that is

submitted to him or her by the individual, to have written, composed, or executed, either solely or

jointly, a work or works that would fall into one of the categories listed in subsection (b)(1).

     (2) This section also applies to sales by any other gallery located in the state of Rhode

Island.

     (3) The tax administrator shall not make a determination unless:

     (i) The individual(s) concerned duly make(s) an application to the tax administrator for the

sales tax exemption that applies to the works defined in this section; and

     (ii) The individual has complied and continues to comply with any and all requests made

by the tax administrator.

     (d) Any individual to whom this section applies, and who makes an application to the tax

administrator, is entitled to a sales tax exemption for the sale of a work or works sold from the

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individual’s business located in the State of Rhode Island that would, apart from this section, be

subject to the tax rate imposed by the state of Rhode Island.

     (e) When an individual makes a request for the exemption, the tax administrator is entitled

to all books, documents, or other evidence relating to the publication, production, or creation of the

works that may be deemed necessary by the tax administrator for the purposes of the exemption.

The time period in which to provide this information is in the sole discretion of the tax administrator

and specified in the notice.

     (f) In addition to the information required in subsection (e), the tax administrator may

require the individual(s) to submit an annual, certified accounting of the numbers of works sold;

the type of work sold; and the date of the sale. Failure to file this report may, in the sole discretion

of the tax administrator, terminate the individual’s eligibility for the exemption.

     (g) Any person storing, using, or otherwise consuming in this state any work or works

deemed to be exempt from the sales tax pursuant to this section is not liable for the use tax on the

work or works.

     (h) Notwithstanding the provisions of this section, any individual to whom this section may

apply shall comply with all the administration, collection, and other provisions of chapters 18 and

19 of this title.

     (i) The certificate of exemption shall be valid for four (4) years from the date of issue. All

certificates issued prior to the effective date of this subsection shall expire four (4) years from the

effective date of this subsection.

     (4) The Rhode Island council on the arts will oversee the transition to a statewide arts

district program and work with the state tourism agencies; local chambers of commerce; and

advertising/marketing agencies to promote this program, and will coordinate its efforts with the

city and town governments. The Rhode Island council on the arts may request, and shall receive,

from any department, division, board, bureau, commission, or agency of the state any data,

assistance, and resources, including additional personnel, that will enable it to properly carry out

this program.

     (5) The tax administrator, in cooperation with the Rhode Island council on the arts, will

gather data to assess the overall impact of the statewide arts district program, and issue an annual

report, including, but not be limited to, the impact of the tax exemption on employment, tourism,

sales, and spending within the arts sector and adjacent businesses, and any other factors that

describe the impact of the program.

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     SECTION 2. 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

***

     This act would provide a four (4) year expiration period on any certificate of exemption

pursuant to this section for writers, composers and artists.

     This act would take effect upon passage.

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