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Stay tax-savvy in 2024 with our Rhode Island Sales Tax Guide, your comprehensive resource for compliance, rates, regulations, and business exemptions
Rhode Island sales tax at a glance
List of local sales tax rates in Rhode Island
As Rhode Island has no local sales taxes, the state sales tax rate of 7% applies uniformly across all cities and counties. No additional local jurisdiction sales taxes are layered on top of the base 7% state rate.
Recent tax rate changes in Rhode Island
The Rhode Island state sales tax rate has remained unchanged at 7% for over 30 years. The last rate change occurred in 1990 when the Rhode Island General Assembly increased it from 6% to the current 7% level.
In the 2023 legislative session, no bills have been proposed or discussions to alter the sales tax rate. The rate has remained relatively steady, without any changes up or down.
FAQs
How do you calculate Rhode Island sales tax?
To calculate Rhode Island sales tax, multiply the purchase price by 0.07. For example, if you purchase an item for $100, the sales tax would be $7.
What are the penalties for not paying Rhode Island sales tax?
Penalties include 10% of unpaid tax plus 12% annual interest. There may also be criminal penalties for tax evasion.
What’s the difference between destination-based and origin-based sales tax states?
Rhode Island is a destination-based sales tax state. This means the buyer's location determines the sales tax rate. In origin-based states, the rate is determined by the seller's location.
Is Rhode Island a streamlined sales tax state?
Rhode Island is a full Streamlined Sales and Use Tax Agreement (SSUTA) member.
Sales tax nexus table in Rhode Island
Physical presence
Rhode Island requires out-of-state sellers with an in-state physical presence that exceeds the slightest presence to collect and remit sales tax. This includes having inventory or employees in the state, making sales trips into the state, owning property, etc. Any physical presence likely creates a sales tax nexus.
Economic nexus
Out-of-state sellers with no physical presence in Rhode Island may still have economic nexus if they have either:
- $100,000 or more in retail sales; or
- 200 or more separate retail transactions
Nexus with marketplaces
Out-of-state sellers can create a sales tax nexus in Rhode Island by making sales that exceed $100,000 or 200 transactions through a marketplace facilitator. In this case, the marketplace facilitator collects and remits the tax instead of the seller.
FAQs
Do I need a Rhode Island seller's permit if I’m only a wholesaler?
You do not need a Rhode Island seller's permit if you are a wholesaler with no retail transactions. Retail sales and use tax only applies to retail sales transactions. Wholesalers should still register and obtain a sales tax permit but collect no taxes on wholesale sales.
Do I need a Rhode Island seller's permit if I only sell temporarily in the state?
Yes, even temporary retail sellers in Rhode Island must register, collect, and remit sales tax on all taxable retail sales made while in the state. This includes sellers at craft fairs, festivals, trade conventions, and more. Both resident and non-resident sellers must comply.
Exemptions from sales tax in Rhode Island
Some exemptions from sales and use tax in Rhode Island include:
- Food and food ingredients
- Prescription drugs and medicine
- Most clothing and footwear
- Sales to exempt organizations like charities, schools, hospitals, and government
- Gasoline
- Sales for resale or manufacturing purposes
FAQs
Are groceries taxable in Rhode Island?
Most groceries are exempt from sales tax in Rhode Island. However, prepared foods, soft drinks, candy, dietary supplements, and other grocery items are taxable.
Is clothing taxable in Rhode Island?
Clothing and footwear are generally exempt from Rhode Island sales tax. However, clothing accessories, protective equipment, sports equipment, and rentals remain taxable.
Are digital products taxable in Rhode Island?
Rhode Island taxes digital products like downloaded music, movies, books, apps, and subscription services at the standard 7% sales tax rate.
Is software-as-a-service (SaaS) taxable in Rhode Island?
Yes, software-as-a-service (SaaS) is subject to Rhode Island's 7% sales tax since it is considered a digital product.
Are services taxable in Rhode Island?
Some services like telecommunications, cable TV, hotel occupancy, fabrication services, and more are taxable in Rhode Island. Most professional services and personal services are not subject to sales tax.
Excise taxes in Rhode Island
Rhode Island charges excise taxes on items like alcohol, tobacco, gasoline, and fuel:
- Alcohol: $1.40 per gallon tax on wine, $5.40 per gallon on liquor
- Cigarettes: $4.25 per pack tax
- Motor fuel: 37 cents per gallon tax
Food and beverage tax in Rhode Island
Rhode Island has a 1% local meals and beverage tax for prepared food and drinks from restaurants, bars, hotels, and caterers. This is charged in addition to the regular sales tax.
Remote sellers in Rhode Island
Remote sellers exceeding the economic nexus thresholds must register and collect Rhode Island sales tax. They must file returns based on their filing status:
- Monthly filers: Returns due by the 20th day of the following month
- Quarterly filers: Returns due by the 20th day after the quarter ends
Remote sellers can register online through the Rhode Island Taxpayer Portal.
Prepaid sales tax rates for fuel products in Rhode Island
Rhode Island has a prepayment requirement for sales tax on fuel products like gasoline. The rates depend on the specific fuel type but include both the sales and motor fuel tax.
Discretionary taxes in Rhode Island (local sales taxes)
Rhode Island allows some municipalities and districts to charge an additional local sales and use tax on sales made in their jurisdiction:
- Jamestown: 1% extra tax
- Little Compton: 1% extra tax
- Newport: 1% extra tax
- New Shoreham: 1% additional tax
- Tiverton: 1% extra tax
Collecting sales tax in Rhode Island
Let us now carefully examine and understand the detailed steps that must be followed to collect properly, account for, track, and remit Rhode Island state sales tax as a business.
How to collect sales tax in Rhode Island if you are not based in Rhode Island (Out-of-State)
Even if a business does not physically reside within the borders of Rhode Island or have any locations, offices, or warehouses inside the state, it may still be considered by the Rhode Island Division of Taxation as being "engaged in business" in Rhode Island.
There are five common scenarios under which an out-of-state entity selling products or services to Rhode Island-based customers would have to register and collect Rhode Island sales tax despite not having an in-state presence:
- Having representatives, salespeople, contractors, installers, or other workers operating in Rhode Island to serve customers, even if temporarily.
- Receiving rental income on any property - real estate, equipment, vehicles, etc. - located within Rhode Island borders.
- Owning tangible assets like equipment, vehicles, inventory, or other personal property warehoused or stored long-term in Rhode Island.
- Leasing tangible property like equipment, vehicles, etc., that reside, operate, or function in Rhode Island.
- Over $100,000 in gross sales delivered to Rhode Island customer addresses in the previous 12 months. High sales levels require tax collection even if the business has no property or people in the state.
In addition to these rules, out-of-state sellers may also have to collect and remit sales tax to Rhode Island related to trade convention display sales, prepaid mobile phone services sold to Rhode Island-based customers, and other specialized scenarios.
Out-of-state companies should register and learn all the nuances to avoid non-compliance proactively. Sellers can register for a Rhode Island permit online through the RI Division of Taxation's registration portal.
Should you collect sales tax on shipping and delivery charges in Rhode Island?
Yes, businesses selling taxable goods to customers in Rhode Island should collect sales tax on shipping and handling charges.
According to Rhode Island Division of Taxation regulations, delivery charges, including shipping and handling, are considered part of the overall sales price of an item. Therefore, unless an exemption applies, these charges are subject to the 7% state sales tax rate.
Filing and paying sales taxes in Rhode Island
Retailers making taxable sales in Rhode Island must register for a sales tax permit, collect tax from customers on those sales, file sales tax returns, and remit the tax due to the Rhode Island Division of Taxation.
Returns are filed monthly or quarterly, depending on the seller's sales tax liability. Payment of tax collected must accompany sales tax return filings. Returns and payments are due by the 20th day of the following month (for monthly filers) or the month after the end of the quarter (for quarterly filers).
Sales tax return filing schedule and due dates in Rhode Island
The Rhode Island Division of Taxation assigns a filing frequency to retailers based on their anticipated taxable sales. This schedule is either monthly or quarterly. The following due dates apply to Rhode Island sales tax returns.
Monthly:
Quarterly:
Filing penalties in Rhode Island
Retailers that fail to file their Rhode Island sales tax returns on time face substantial penalties:
- 10% penalty on the balance due for late filing
- 12% annual interest charged on unpaid balances
- $10 per day late filing penalty up to $500
Willful non-filing can result in misdemeanor charges.
When are returns due in Rhode Island?
Sales tax returns are due in Rhode Island by the 20th day of the month after the filing period ends, whether filing monthly or quarterly.
For example, for monthly filers, the due date would be April 20 if the filing period is March. For quarterly filers, if the period ends on September 30, the due date would be October 20.
FAQs
What are the Rhode Island sales tax due dates?
The Rhode Island sales tax due dates are:
- Monthly filers: 20th of the following month
- Quarterly filers: 20th of January, April, July, October
I didn’t collect any Rhode Island sales tax during this period. Do I still need to file a return?
Yes, even if you made no taxable sales and collected no sales tax for the period, you must still complete and file a Rhode Island sales tax return showing zero sales and taxes.
Can I amend a Rhode Island sales tax return?
You can file an amended sales tax return in Rhode Island to correct errors or change figures from a previously filed return. You may need to pay additional tax plus interest and penalties on underpayments.
What is the penalty for filing and paying Rhode Island sales tax late?
The penalty for late filing or payment of Rhode Island sales tax is 10% of the balance due. Interest charges of 12% annually, compounded daily, also apply to any underpayments or late payments. The penalties and interest cannot exceed 25% of the tax due.
Audit & appeals process
The audit and appeals process in Rhode Island involves a series of steps a business must go through if the Rhode Island Division of Taxation audits them.
First, the auditor contacts the business to schedule the audit, usually via a letter. The auditor then thoroughly reviews the business's records, books, tax returns, exemption certificates, and more to determine if any sales tax was improperly paid.
If the auditor finds any underreported taxes or other discrepancies, they will issue an audit report detailing their findings and the amount owed. The business has 30 days to file a written protest and appeal the audit results. Additional documentation can be provided to contest the findings.
If the appeal is denied after providing more evidence, the business can further appeal by filing a complaint with the Rhode Island Sixth Division District Court within 30 days.
Rhode Island sales tax audit process
The Rhode Island sales tax audit process has the following key steps:
- Auditor sends initial contact letter to arrange the preliminary meeting
- Preliminary meeting is held to discuss the audit scope and timeline
- The auditor reviews records, books, returns, exemption certificates, etc.
- The auditor provides preliminary audit work papers showing findings
- Closing conference held to finalize audit results
- Notice of Assessment sent if taxes/penalties are due
- Taxpayers can file a written protest within 30 days to appeal
What to expect during the audit?
During a Rhode Island sales tax audit, taxpayers can expect:
- Professional, courteous treatment
- Questions answered throughout the process
- Guidance on tax laws and regulations
- Timely responses to additional data requests
- Transparent findings fully explained
After the audit – Appealing the results
Contesting audit findings with the auditor or filing a written appeal helps resolve discrepancies. It allows you to:
- Provide more records and evidence
- Clarify any misunderstandings
- Correct any errors identified
- Explain mitigating circumstances
- Negotiate a payment plan if needed
Sales tax registration
Here are the critical steps for registering for a sales tax permit in Rhode Island:
How to register for sales tax in Rhode Island
To register for a sales tax permit in Rhode Island, you can visit the Rhode Island Division of Taxation website and file the Business Application and Registration (BAR) form.
You'll need to provide:
- Business and contact information
- Ownership/responsibility details
- Business activities/plans
- Products sold and services provided
- Anticipated sales figures
Once registered, you must charge, collect, report, and remit Rhode Island sales taxes on taxable transactions. This is done by filing monthly or quarterly sales tax returns.
Registration requirements for online sellers in Rhode Island
Online sellers must register for a Rhode Island sales tax permit if they:
- Have over $100,000 in Rhode Island sales, or
- Have over 200 separate Rhode Island transactions
- Use a Rhode Island warehouse to store inventory
- Have Rhode Island-based affiliates
Marketplaces and platforms may also have registration requirements to collect and remit taxes on behalf of their sellers. Our ecommerce sales tax guide provides more context.
Cost of registration for a Rhode Island sales tax license
It costs $10 to obtain a Rhode Island sales tax permit. This permit must be renewed annually for $10. Wholesalers can register at no cost.
Agencies to register within Rhode Island
To register for sales and use tax permits in Rhode Island, submit the BAR form to the Rhode Island Division of Taxation. Other agencies you may need to contact:
- RI Dept. of Labor and Training for employment taxes
- IRS for federal tax obligations
More Information & Contacts
For sales tax questions and audit/appeal inquiries in Rhode Island, contact:
- Authority Name: RI Division of Taxation
- Phone number: (401) 574-8955
- Website: https://tax.ri.gov/
There you have it—a comprehensive guide on Rhode Island's sales tax regime. Need help filing taxes for your ecommerce store? Get a demo with Numeral now.
