Rhode Island – Bill Enacts New Exemptions and Authorizes Remote Sales Collections

SALT Report 2733 – In the latest edition of Rhode Island tax News, the Department of Revenue discusses the sales and use tax provisions in the state’s fiscal year 2014 budget bill recently signed by Governor Lincoln Chafee.  Included in the bill is a temporarily exemption for sales of certain alcoholic beverages, expansion of the exemption for sales of art, and the requirement for sellers to collect tax on remote sales if authorized by federal legislation.

Tax Collection on Remote Sales

The new law provides that if the federal government passes any law authorizing states to require sellers to collect tax on remote sales, all sellers making remote sales in Rhode Island will be required to collect and remit tax on those sales.

The law also states that the following provisions, which are contingent upon the enactment of federal remote seller legislation, will take effect on the date that the state requires sellers to collect tax on remote sales:

  • The state sales and use tax rate will decrease from 7% to 6.5%
  • The meals and beverage tax rate will increase from 1% to 1.5%, and
  • Retail sales of clothing and footwear will be fully exempt

Alcoholic Beverage Exemption

Effective December 1, 2013 through March 31, 2015, sales and use tax will not apply to sales of alcoholic beverages by Class A licensees; such as package stores, and liquor stores.  This exemption does not apply to sales of beer and malt beverages.

Additionally, during the exemption period, alcoholic beverages sold at retail will not be subject to the State’s minimum markup.

Art Exemption

Effective December 1, 2013 the arts district program will be expanded statewide.  Because of this, an exemption will apply to sales of original works by artists, writers, and composers who reside and have a principal place of business in Rhode Island. The exemption also applies to sales by galleries located in the state. The law requires sellers to apply for approval to claim the exemption.

For Further Information

Rhode Island Department of Revenue – Rhode Island Tax News