2012 -- S 2283

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LC00282

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO TAXATION - GROSS RECEIPTS EXEMPT FROM SALES AND USE

TAXES

     Introduced By: Senators Pichardo, Ottiano, Kettle, P Fogarty, and Pinga

     Date Introduced: February 01, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and

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

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     44-18-30. Gross receipts exempt from sales and use taxes. -- There are exempted from

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the taxes imposed by this chapter the following gross receipts:

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     (1) Sales and uses beyond constitutional power of state. - From the sale and from the

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storage, use, or other consumption in this state of tangible personal property the gross receipts

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from the sale of which, or the storage, use, or other consumption of which, this state is prohibited

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from taxing under the Constitution of the United States or under the constitution of this state.

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     (2) Newspapers.

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     (i) From the sale and from the storage, use, or other consumption in this state of any

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newspaper.

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     (ii) "Newspaper" means an unbound publication printed on newsprint, which contains

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news, editorial comment, opinions, features, advertising matter, and other matters of public

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interest.

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     (iii) "Newspaper" does not include a magazine, handbill, circular, flyer, sales catalog, or

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similar item unless the item is printed for and distributed as a part of a newspaper.

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     (3) School meals. - From the sale and from the storage, use, or other consumption in this

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state of meals served by public, private, or parochial schools, school districts, colleges,

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universities, student organizations, and parent teacher associations to the students or teachers of a

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school, college, or university whether the meals are served by the educational institutions or by a

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food service or management entity under contract to the educational institutions.

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     (4) Containers.

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     (i) From the sale and from the storage, use, or other consumption in this state of:

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      (A) Non-returnable containers, including boxes, paper bags, and wrapping materials

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which are biodegradable and all bags and wrapping materials utilized in the medical and healing

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arts, when sold without the contents to persons who place the contents in the container and sell

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the contents with the container.

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     (B) Containers when sold with the contents if the sale price of the contents is not required

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to be included in the measure of the taxes imposed by this chapter.

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     (C) Returnable containers when sold with the contents in connection with a retail sale of

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the contents or when resold for refilling.

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     (ii) As used in this subdivision, the term "returnable containers" means containers of a

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kind customarily returned by the buyer of the contents for reuse. All other containers are "non-

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returnable containers."

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     (5) (i) Charitable, educational, and religious organizations. - From the sale to as in

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defined in this section, and from the storage, use, and other consumption in this state or any other

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state of the United States of America of tangible personal property by hospitals not operated for a

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profit, "educational institutions" as defined in subdivision (18) not operated for a profit, churches,

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orphanages, and other institutions or organizations operated exclusively for religious or charitable

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purposes, interest free loan associations not operated for profit, nonprofit organized sporting

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leagues and associations and bands for boys and girls under the age of nineteen (19) years, the

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following vocational student organizations that are state chapters of national vocational students

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organizations: Distributive Education Clubs of America, (DECA); Future Business Leaders of

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America, phi beta lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers

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of America/Home Economics Related Occupations (FHA/HERD); and Vocational Industrial

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Clubs of America (VICA), organized nonprofit golden age and senior citizens clubs for men and

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women, and parent teacher associations.

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     (ii) In the case of contracts entered into with the federal government, its agencies or

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instrumentalities, this state or any other state of the United States of America, its agencies, any

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city, town, district, or other political subdivision of the states, hospitals not operated for profit,

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educational institutions not operated for profit, churches, orphanages, and other institutions or

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organizations operated exclusively for religious or charitable purposes, the contractor may

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purchase such materials and supplies (materials and/or supplies are defined as those which are

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essential to the project) that are to be utilized in the construction of the projects being performed

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under the contracts without payment of the tax.

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     (iii) The contractor shall not charge any sales or use tax to any exempt agency,

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institution, or organization but shall in that instance provide his or her suppliers with certificates

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in the form as determined by the division of taxation showing the reason for exemption; and the

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contractor's records must substantiate the claim for exemption by showing the disposition of all

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property so purchased. If any property is then used for a nonexempt purpose, the contractor must

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pay the tax on the property used.

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     (6) Gasoline. - From the sale and from the storage, use, or other consumption in this state

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of: (i) gasoline and other products taxed under chapter 36 of title 31, and (ii) fuels used for the

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propulsion of airplanes.

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     (7) Purchase for manufacturing purposes.

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     (i) From the sale and from the storage, use, or other consumption in this state of computer

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software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration,

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and water, when the property or service is purchased for the purpose of being manufactured into a

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finished product for resale, and becomes an ingredient, component, or integral part of the

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manufactured, compounded, processed, assembled, or prepared product, or if the property or

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service is consumed in the process of manufacturing for resale computer software, tangible

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personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water.

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     (ii) "Consumed" means destroyed, used up, or worn out to the degree or extent that the

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property cannot be repaired, reconditioned, or rendered fit for further manufacturing use.

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     (iii) "Consumed" includes mere obsolescence.

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     (iv) "Manufacturing" means and includes manufacturing, compounding, processing,

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assembling, preparing, or producing.

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     (v) "Process of manufacturing" means and includes all production operations performed

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in the producing or processing room, shop, or plant, insofar as the operations are a part of and

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connected with the manufacturing for resale of tangible personal property, electricity, natural gas,

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artificial gas, steam, refrigeration, or water and all production operations performed insofar as the

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operations are a part of and connected with the manufacturing for resale of computer software.

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     (vi) "Process of manufacturing" does not mean or include administration operations such

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as general office operations, accounting, collection, sales promotion, nor does it mean or include

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distribution operations which occur subsequent to production operations, such as handling,

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storing, selling, and transporting the manufactured products, even though the administration and

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distribution operations are performed by or in connection with a manufacturing business.

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     (8) State and political subdivisions. - From the sale to, and from the storage, use, or other

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consumption by, this state, any city, town, district, or other political subdivision of this state.

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Every redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a

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subdivision of the municipality where it is located.

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     (9) Food and food ingredients. - From the sale and storage, use, or other consumption in

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this state of food and food ingredients as defined in section 44-18-7.1(l).

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     For the purposes of this exemption "food and food ingredients" shall not include candy,

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soft drinks, dietary supplements, alcoholic beverages, tobacco, food sold through vending

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machines or prepared food (as those terms are defined in section 44-18-7.1, unless the prepared

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food is:

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     (i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311,

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except sub-sector 3118 (bakeries);

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     (ii) Sold in an unheated state by weight or volume as a single item;

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     (iii) Bakery items, including bread, rolls, buns, biscuits, bagels, croissants, pastries,

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donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and

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      is not sold with utensils provided by the seller, including plates, knives, forks, spoons,

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glasses, cups, napkins, or straws.

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     (10) Medicines, drugs and durable medical equipment. - From the sale and from the

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storage, use, or other consumption in this state, of;

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     (i) "Drugs" as defined in section 44-18-7.1(h)(i), sold on prescriptions, medical oxygen,

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and insulin whether or not sold on prescription. For purposes of this exemption drugs shall not

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include over-the-counter drugs and grooming and hygiene products as defined in section 44-18-

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7.1(h)(iii).

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     (ii) Durable medical equipment as defined in section 44-18-7.1(k) for home use only,

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including, but not limited to, syringe infusers, ambulatory drug delivery pumps, hospital beds,

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convalescent chairs, and chair lifts. Supplies used in connection with syringe infusers and

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ambulatory drug delivery pumps which are sold on prescription to individuals to be used by them

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to dispense or administer prescription drugs, and related ancillary dressings and supplies used to

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dispense or administer prescription drugs shall also be exempt from tax.

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     (11) Prosthetic devices and mobility enhancing equipment. - From the sale and from the

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storage, use, or other consumption in this state, of prosthetic devices as defined in section 44-18-

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7.1(t), sold on prescription, including but not limited to, artificial limbs, dentures, spectacles and

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eyeglasses, and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on

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prescription and mobility enhancing equipment as defined in section 44-18-7.1(p) including

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wheelchairs, crutches and canes.

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     (12) Coffins, caskets, and burial garments. - From the sale and from the storage, use, or

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other consumption in this state of coffins or caskets, and shrouds or other burial garments which

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are ordinarily sold by a funeral director as part of the business of funeral directing.

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     (13) Motor vehicles sold to nonresidents.

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     (i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide

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nonresident of this state who does not register the motor vehicle in this state, whether the sale or

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delivery of the motor vehicle is made in this state or at the place of residence of the nonresident.

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A motor vehicle sold to a bona fide nonresident whose state of residence does not allow a like

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exemption to its nonresidents is not exempt from the tax imposed under section 44-18-20. In that

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event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate

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that would be imposed in his or her state of residence not to exceed the rate that would have been

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imposed under section 44-18-20. Notwithstanding any other provisions of law, a licensed motor

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vehicle dealer shall add and collect the tax required under this subdivision and remit the tax to the

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tax administrator under the provisions of chapters 18 and 19 of this title. When a Rhode Island

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licensed motor vehicle dealer is required to add and collect the sales and use tax on the sale of a

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motor vehicle to a bona fide nonresident as provided in this section, the dealer in computing the

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tax takes into consideration the law of the state of the nonresident as it relates to the trade-in of

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motor vehicles.

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     (ii) The tax administrator, in addition to the provisions of sections 44-19-27 and 44-19-

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28, may require any licensed motor vehicle dealer to keep records of sales to bona fide

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nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption

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provided in this subdivision, including the affidavit of a licensed motor vehicle dealer that the

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purchaser of the motor vehicle was the holder of, and had in his or her possession a valid out of

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state motor vehicle registration or a valid out of state driver's license.

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     (iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days of

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the date of its sale to him or her is deemed to have purchased the motor vehicle for use, storage,

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or other consumption in this state, and is subject to, and liable for the use tax imposed under the

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provisions of section 44-18-20.

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     (14) Sales in public buildings by blind people. - From the sale and from the storage, use,

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or other consumption in all public buildings in this state of all products or wares by any person

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licensed under section 40-9-11.1.

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     (15) Air and water pollution control facilities. - From the sale, storage, use, or other

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consumption in this state of tangible personal property or supplies acquired for incorporation into

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or used and consumed in the operation of a facility, the primary purpose of which is to aid in the

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control of the pollution or contamination of the waters or air of the state, as defined in chapter 12

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of title 46 and chapter 25 of title 23, respectively, and which has been certified as approved for

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that purpose by the director of environmental management. The director of environmental

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management may certify to a portion of the tangible personal property or supplies acquired for

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incorporation into those facilities or used and consumed in the operation of those facilities to the

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extent that that portion has as its primary purpose the control of the pollution or contamination of

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the waters or air of this state. As used in this subdivision, "facility" means any land, facility,

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device, building, machinery, or equipment.

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     (16) Camps. - From the rental charged for living quarters, or sleeping or housekeeping

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accommodations at camps or retreat houses operated by religious, charitable, educational, or

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other organizations and associations mentioned in subdivision (5), or by privately owned and

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operated summer camps for children.

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     (17) Certain institutions. - From the rental charged for living or sleeping quarters in an

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institution licensed by the state for the hospitalization, custodial, or nursing care of human beings.

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     (18) Educational institutions. - From the rental charged by any educational institution for

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living quarters, or sleeping or housekeeping accommodations or other rooms or accommodations

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to any student or teacher necessitated by attendance at an educational institution. "Educational

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institution" as used in this section means an institution of learning not operated for profit which is

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empowered to confer diplomas, educational, literary, or academic degrees, which has a regular

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faculty, curriculum, and organized body of pupils or students in attendance throughout the usual

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school year, which keeps and furnishes to students and others records required and accepted for

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entrance to schools of secondary, collegiate, or graduate rank, no part of the net earnings of which

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inures to the benefit of any individual.

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     (19) Motor vehicle and adaptive equipment for persons with disabilities.

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     (i) From the sale of: (A) special adaptations, (B) the component parts of the special

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adaptations, or (C) a specially adapted motor vehicle; provided, that the owner furnishes to the

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tax administrator an affidavit of a licensed physician to the effect that the specially adapted motor

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vehicle is necessary to transport a family member with a disability or where the vehicle has been

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specially adapted to meet the specific needs of the person with a disability. This exemption

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applies to not more than one motor vehicle owned and registered for personal, noncommercial

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use.

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     (ii) For the purpose of this subsection the term "special adaptations" includes, but is not

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limited to: wheelchair lifts; wheelchair carriers; wheelchair ramps; wheelchair securements; hand

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controls; steering devices; extensions, relocations, and crossovers of operator controls; power-

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assisted controls; raised tops or dropped floors; raised entry doors; or alternative signaling

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devices to auditory signals.

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     (iii) From the sale of: (a) special adaptations, (b) the component parts of the special

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adaptations, for a "wheelchair accessible taxicab" as defined in section 39-14-1 and/or a

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"wheelchair accessible public motor vehicle" as defined in section 39-14.1-1.

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     (iv) For the purpose of this subdivision the exemption for a "specially adapted motor

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vehicle" means a use tax credit not to exceed the amount of use tax that would otherwise be due

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on the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the

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special adaptations, including installation.

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     (20) Heating fuels. - From the sale and from the storage, use, or other consumption in this

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state of every type of fuel used in the heating of homes and residential premises.

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     (21) Electricity and gas. - From the sale and from the storage, use, or other consumption

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in this state of electricity and gas furnished for domestic use by occupants of residential premises.

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     (22) Manufacturing machinery and equipment.

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     (i) From the sale and from the storage, use, or other consumption in this state of tools,

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dies, and molds, and machinery and equipment (including replacement parts), and related items to

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the extent used in an industrial plant in connection with the actual manufacture, conversion, or

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processing of tangible personal property, or to the extent used in connection with the actual

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manufacture, conversion or processing of computer software as that term is utilized in industry

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numbers 7371, 7372, and 7373 in the standard industrial classification manual prepared by the

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technical committee on industrial classification, office of statistical standards, executive office of

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the president, United States bureau of the budget, as revised from time to time, to be sold, or that

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machinery and equipment used in the furnishing of power to an industrial manufacturing plant.

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For the purposes of this subdivision, "industrial plant" means a factory at a fixed location

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primarily engaged in the manufacture, conversion, or processing of tangible personal property to

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be sold in the regular course of business;

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     (ii) Machinery and equipment and related items are not deemed to be used in connection

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with the actual manufacture, conversion, or processing of tangible personal property, or in

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connection with the actual manufacture, conversion or processing of computer software as that

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term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification

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manual prepared by the technical committee on industrial classification, office of statistical

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standards, executive office of the president, United States bureau of the budget, as revised from

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time to time, to be sold to the extent the property is used in administration or distribution

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operations;

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     (iii) Machinery and equipment and related items used in connection with the actual

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manufacture, conversion, or processing of any computer software or any tangible personal

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property which is not to be sold and which would be exempt under subdivision (7) or this

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subdivision if purchased from a vendor or machinery and equipment and related items used

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during any manufacturing, converting or processing function is exempt under this subdivision

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even if that operation, function, or purpose is not an integral or essential part of a continuous

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production flow or manufacturing process;

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     (iv) Where a portion of a group of portable or mobile machinery is used in connection

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with the actual manufacture, conversion, or processing of computer software or tangible personal

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property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under

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this subdivision even though the machinery in that group is used interchangeably and not

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otherwise identifiable as to use.

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     (23) Trade-in value of motor vehicles. - From the sale and from the storage, use, or other

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consumption in this state of so much of the purchase price paid for a new or used automobile as is

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allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of

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the proceeds applicable only to the automobile as are received from the manufacturer of

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automobiles for the repurchase of the automobile whether the repurchase was voluntary or not

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towards the purchase of a new or used automobile by the buyer. For the purpose of this

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subdivision, the word "automobile" means a private passenger automobile not used for hire and

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does not refer to any other type of motor vehicle.

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     (24) Precious metal bullion.

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     (i) From the sale and from the storage, use, or other consumption in this state of precious

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metal bullion, substantially equivalent to a transaction in securities or commodities.

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     (ii) For purposes of this subdivision, "precious metal bullion" means any elementary

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precious metal which has been put through a process of smelting or refining, including, but not

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limited to, gold, silver, platinum, rhodium, and chromium, and which is in a state or condition

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that its value depends upon its content and not upon its form.

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     (iii) The term does not include fabricated precious metal which has been processed or

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manufactured for some one or more specific and customary industrial, professional, or artistic

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uses.

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     (25) Commercial vessels. - From sales made to a commercial ship, barge, or other vessel

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of fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from

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the repair, alteration, or conversion of the vessels, and from the sale of property purchased for the

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use of the vessels including provisions, supplies, and material for the maintenance and/or repair

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of the vessels.

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     (26) Commercial fishing vessels. - From the sale and from the storage, use, or other

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consumption in this state of vessels and other water craft which are in excess of five (5) net tons

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and which are used exclusively for "commercial fishing", as defined in this subdivision, and from

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the repair, alteration, or conversion of those vessels and other watercraft, and from the sale of

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property purchased for the use of those vessels and other watercraft including provisions,

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supplies, and material for the maintenance and/or repair of the vessels and other watercraft and

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the boats nets, cables, tackle, and other fishing equipment appurtenant to or used in connection

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with the commercial fishing of the vessels and other watercraft. "Commercial fishing" means the

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taking or the attempting to take any fish, shellfish, crustacea, or bait species with the intent of

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disposing of them for profit or by sale, barter, trade, or in commercial channels. The term does

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not include subsistence fishing, i.e., the taking for personal use and not for sale or barter; or sport

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fishing; but shall include vessels and other watercraft with a Rhode Island party and charter boat

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license issued by the department of environmental management pursuant to section 20-2-27.1

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which meet the following criteria: (i) the operator must have a current U.S.C.G. license to carry

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passengers for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii)

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U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island

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boat registration to prove Rhode Island home port status; (iv) the vessel must be used as a

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commercial passenger carrying fishing vessel to carry passengers for fishing. The vessel must be

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able to demonstrate that at least fifty percent (50%) of its annual gross income derives from

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charters or provides documentation of a minimum of one hundred (100) charter trips annually; (v)

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the vessel must have a valid Rhode Island party and charter boat license. The tax administrator

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shall implement the provisions of this subdivision by promulgating rules and regulations relating

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thereto.

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     (27) Clothing and footwear. - From the sales of articles of clothing, including footwear,

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intended to be worn or carried on or about the human body. For the purposes of this section,

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"clothing or footwear" does not include clothing accessories or equipment or special clothing or

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footwear primarily designed for athletic activity or protective use as these terms are defined in

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section 44-18-7.1(f).

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     (28) Water for residential use. - From the sale and from the storage, use, or other

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consumption in this state of water furnished for domestic use by occupants of residential

9-33

premises.

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     (29) Bibles. - [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see

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Notes to Decisions.]From the sale and from the storage, use, or other consumption in the state of

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any canonized scriptures of any tax-exempt nonprofit religious organization including, but not

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limited to, the Old Testament and the New Testament versions.

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     (30) Boats.

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     (i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not

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register the boat or vessel in this state, or document the boat or vessel with the United States

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government at a home port within the state, whether the sale or delivery of the boat or vessel is

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made in this state or elsewhere; provided, that the nonresident transports the boat within thirty

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(30) days after delivery by the seller outside the state for use thereafter solely outside the state.

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     (ii) The tax administrator, in addition to the provisions of sections 44-19-17 and 44-19-

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28, may require the seller of the boat or vessel to keep records of the sales to bona fide

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nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption

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provided in this subdivision, including the affidavit of the seller that the buyer represented

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himself or herself to be a bona fide nonresident of this state and of the buyer that he or she is a

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nonresident of this state.

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     (31) Youth activities equipment. - From the sale, storage, use, or other consumption in

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this state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island

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eleemosynary organizations, for the purposes of youth activities which the organization is formed

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to sponsor and support; and by accredited elementary and secondary schools for the purposes of

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the schools or of organized activities of the enrolled students.

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     (32) Farm equipment. - From the sale and from the storage or use of machinery and

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equipment used directly for commercial farming and agricultural production; including, but not

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limited to, tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors,

10-58

balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment,

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greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and

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other farming equipment, including replacement parts, appurtenant to or used in connection with

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commercial farming and tools and supplies used in the repair and maintenance of farming

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equipment. "Commercial farming" means the keeping or boarding of five (5) or more horses or

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the production within this state of agricultural products, including, but not limited to, field or

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orchard crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or

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production provides at least two thousand five hundred dollars ($2,500) in annual gross sales to

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the operator, whether an individual, a group, a partnership, or a corporation for exemptions issued

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prior to July 1, 2002; for exemptions issued or renewed after July 1, 2002, there shall be two (2)

10-68

levels. Level I shall be based on proof of annual gross sales from commercial farming of at least

11-1

twenty-five hundred dollars ($2,500) and shall be valid for purchases subject to the exemption

11-2

provided in this subdivision except for motor vehicles with an excise tax value of five thousand

11-3

dollars ($5,000) or greater; Level II shall be based on proof of annual gross sales from

11-4

commercial farming of at least ten thousand dollars ($10,000) or greater and shall be valid for

11-5

purchases subject to the exemption provided in this subdivision including motor vehicles with an

11-6

excise tax value of five thousand dollars ($5,000) or greater. For the initial issuance of the

11-7

exemptions, proof of the requisite amount of annual gross sales from commercial farming shall be

11-8

required for the prior year; for any renewal of an exemption granted in accordance with this

11-9

subdivision at either Level I or Level II, proof of gross annual sales from commercial farming at

11-10

the requisite amount shall be required for each of the prior two (2) years. Certificates of

11-11

exemption issued or renewed after July 1, 2002, shall clearly indicate the level of the exemption

11-12

and be valid for four (4) years after the date of issue. This exemption applies even if the same

11-13

equipment is used for ancillary uses, or is temporarily used for a non-farming or a non-

11-14

agricultural purpose, but shall not apply to motor vehicles acquired after July 1, 2002, unless the

11-15

vehicle is a farm vehicle as defined pursuant to section 31-1-8 and is eligible for registration

11-16

displaying farm plates as provided for in section 31-3-31.

11-17

     (33) Compressed air. - From the sale and from the storage, use, or other consumption in

11-18

the state of compressed air.

11-19

     (34) Flags. - From the sale and from the storage, consumption, or other use in this state of

11-20

United States, Rhode Island or POW-MIA flags.

11-21

     (35) Motor vehicle and adaptive equipment to certain veterans. - From the sale of a motor

11-22

vehicle and adaptive equipment to and for the use of a veteran with a service-connected loss of or

11-23

the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether

11-24

service connected or not. The motor vehicle must be purchased by and especially equipped for

11-25

use by the qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under

11-26

rules or regulations that the tax administrator may prescribe.

11-27

     (36) Textbooks. - From the sale and from the storage, use, or other consumption in this

11-28

state of textbooks by an "educational institution" as defined in subdivision (18) of this section and

11-29

as well as any educational institution within the purview of section 16-63-9(4) and used textbooks

11-30

by any purveyor.

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     (37) Tangible personal property and supplies used in on-site hazardous waste recycling,

11-32

reuse, or treatment. - From the sale, storage, use, or other consumption in this state of tangible

11-33

personal property or supplies used or consumed in the operation of equipment, the exclusive

11-34

function of which is the recycling, reuse, or recovery of materials (other than precious metals, as

12-1

defined in subdivision (24)(ii) of this section) from the treatment of "hazardous wastes", as

12-2

defined in section 23-19.1-4, where the "hazardous wastes" are generated in Rhode Island solely

12-3

by the same taxpayer and where the personal property is located at, in, or adjacent to a generating

12-4

facility of the taxpayer in Rhode Island. The taxpayer shall procure an order from the director of

12-5

the department of environmental management certifying that the equipment and/or supplies as

12-6

used, or consumed, qualify for the exemption under this subdivision. If any information relating

12-7

to secret processes or methods of manufacture, production, or treatment is disclosed to the

12-8

department of environmental management only to procure an order, and is a "trade secret" as

12-9

defined in section 28-21-10(b), it is not open to public inspection or publicly disclosed unless

12-10

disclosure is required under chapter 21 of title 28 or chapter 24.4 of title 23.

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     (38) Promotional and product literature of boat manufacturers. - From the sale and from

12-12

the storage, use, or other consumption of promotional and product literature of boat

12-13

manufacturers shipped to points outside of Rhode Island which either: (i) accompany the product

12-14

which is sold, (ii) are shipped in bulk to out of state dealers for use in the sale of the product, or

12-15

(iii) are mailed to customers at no charge.

12-16

     (39) Food items paid for by food stamps. - From the sale and from the storage, use, or

12-17

other consumption in this state of eligible food items payment for which is properly made to the

12-18

retailer in the form of U.S. government food stamps issued in accordance with the Food Stamp

12-19

Act of 1977, 7 U.S.C. section 2011 et seq.

12-20

     (40) Transportation charges. - From the sale or hiring of motor carriers as defined in

12-21

section 39-12-2(l) to haul goods, when the contract or hiring cost is charged by a motor freight

12-22

tariff filed with the Rhode Island public utilities commission on the number of miles driven or by

12-23

the number of hours spent on the job.

12-24

     (41) Trade-in value of boats. - From the sale and from the storage, use, or other

12-25

consumption in this state of so much of the purchase price paid for a new or used boat as is

12-26

allocated for a trade-in allowance on the boat of the buyer given in trade to the seller or of the

12-27

proceeds applicable only to the boat as are received from an insurance claim as a result of a stolen

12-28

or damaged boat, towards the purchase of a new or used boat by the buyer.

12-29

     (42) Equipment used for research and development. - From the sale and from the storage,

12-30

use, or other consumption of equipment to the extent used for research and development purposes

12-31

by a qualifying firm. For the purposes of this subdivision, "qualifying firm" means a business for

12-32

which the use of research and development equipment is an integral part of its operation, and

12-33

"equipment" means scientific equipment, computers, software, and related items.

13-34

     (43) Coins. - From the sale and from the other consumption in this state of coins having

13-35

numismatic or investment value.

13-36

     (44) Farm structure construction materials. - Lumber, hardware and other materials used

13-37

in the new construction of farm structures, including production facilities such as, but not limited

13-38

to, farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying

13-39

houses, fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing

13-40

rooms, machinery storage, seasonal farm worker housing, certified farm markets, bunker and

13-41

trench silos, feed storage sheds, and any other structures used in connection with commercial

13-42

farming.

13-43

     (45) Telecommunications carrier access service. - Carrier access service or

13-44

telecommunications service when purchased by a telecommunications company from another

13-45

telecommunications company to facilitate the provision of telecommunications service.

13-46

     (46) Boats or vessels brought into the state exclusively for winter storage, maintenance,

13-47

repair or sale. - Notwithstanding the provisions of sections 44-18-10, 44-18-11, 44-18-20, the tax

13-48

imposed by section 44-18-20 is not applicable for the period commencing on the first day of

13-49

October in any year to and including the 30th day of April next succeeding with respect to the use

13-50

of any boat or vessel within this state exclusively for purposes of: (i) delivery of the vessel to a

13-51

facility in this state for storage, including dry storage and storage in water by means of apparatus

13-52

preventing ice damage to the hull, maintenance, or repair; (ii) the actual process of storage,

13-53

maintenance, or repair of the boat or vessel; or (iii) storage for the purpose of selling the boat or

13-54

vessel.

13-55

     (47) Jewelry display product. - From the sale and from the storage, use, or other

13-56

consumption in this state of tangible personal property used to display any jewelry product;

13-57

provided, that title to the jewelry display product is transferred by the jewelry manufacturer or

13-58

seller and that the jewelry display product is shipped out of state for use solely outside the state

13-59

and is not returned to the jewelry manufacturer or seller.

13-60

     (48) Boats or vessels generally. - Notwithstanding the provisions of this chapter, the tax

13-61

imposed by sections 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the

13-62

storage, use, or other consumption in this state of any new or used boat. The exemption provided

13-63

for in this subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the

13-64

federal ten percent (10%) surcharge on luxury boats is repealed.

13-65

     (49) Banks and Regulated investment companies interstate toll-free calls. -

13-66

Notwithstanding the provisions of this chapter, the tax imposed by this chapter does not apply to

13-67

the furnishing of interstate and international, toll-free terminating telecommunication service that

13-68

is used directly and exclusively by or for the benefit of an eligible company as defined in this

14-1

subdivision; provided, that an eligible company employs on average during the calendar year no

14-2

less than five hundred (500) "full-time equivalent employees", as that term is defined in section

14-3

42-64.5-2. For purposes of this section, an "eligible company" means a "regulated investment

14-4

company" as that term is defined in the Internal Revenue Code of 1986, 26 U.S.C. section 1 et

14-5

seq., or a corporation to the extent the service is provided, directly or indirectly, to or on behalf of

14-6

a regulated investment company, an employee benefit plan, a retirement plan or a pension plan or

14-7

a state chartered bank.

14-8

     (50) Mobile and manufactured homes generally. - From the sale and from the storage,

14-9

use, or other consumption in this state of mobile and/or manufactured homes as defined and

14-10

subject to taxation pursuant to the provisions of chapter 44 of title 31.

14-11

     (51) Manufacturing business reconstruction materials.

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     (i) From the sale and from the storage, use or other consumption in this state of lumber,

14-13

hardware, and other building materials used in the reconstruction of a manufacturing business

14-14

facility which suffers a disaster, as defined in this subdivision, in this state. "Disaster" means any

14-15

occurrence, natural or otherwise, which results in the destruction of sixty percent (60%) or more

14-16

of an operating manufacturing business facility within this state. "Disaster" does not include any

14-17

damage resulting from the willful act of the owner of the manufacturing business facility.

14-18

     (ii) Manufacturing business facility includes, but is not limited to, the structures housing

14-19

the production and administrative facilities.

14-20

     (iii) In the event a manufacturer has more than one manufacturing site in this state, the

14-21

sixty percent (60%) provision applies to the damages suffered at that one site.

14-22

     (iv) To the extent that the costs of the reconstruction materials are reimbursed by

14-23

insurance, this exemption does not apply.

14-24

     (52) Tangible personal property and supplies used in the processing or preparation of

14-25

floral products and floral arrangements. - From the sale, storage, use, or other consumption in this

14-26

state of tangible personal property or supplies purchased by florists, garden centers, or other like

14-27

producers or vendors of flowers, plants, floral products, and natural and artificial floral

14-28

arrangements which are ultimately sold with flowers, plants, floral products, and natural and

14-29

artificial floral arrangements or are otherwise used in the decoration, fabrication, creation,

14-30

processing, or preparation of flowers, plants, floral products, or natural and artificial floral

14-31

arrangements, including descriptive labels, stickers, and cards affixed to the flower, plant, floral

14-32

product or arrangement, artificial flowers, spray materials, floral paint and tint, plant shine, flower

14-33

food, insecticide and fertilizers.

15-34

     (53) Horse food products. - From the sale and from the storage, use, or other consumption

15-35

in this state of horse food products purchased by a person engaged in the business of the boarding

15-36

of horses.

15-37

     (54) Non-motorized recreational vehicles sold to nonresidents.

15-38

     (i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to

15-39

a bona fide nonresident of this state who does not register the non-motorized recreational vehicle

15-40

in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this

15-41

state or at the place of residence of the nonresident; provided, that a non-motorized recreational

15-42

vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption

15-43

to its nonresidents is not exempt from the tax imposed under section 44-18-20; provided, further,

15-44

that in that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal

15-45

to the rate that would be imposed in his or her state of residence not to exceed the rate that would

15-46

have been imposed under section 44-18-20. Notwithstanding any other provisions of law, a

15-47

licensed non-motorized recreational vehicle dealer shall add and collect the tax required under

15-48

this subdivision and remit the tax to the tax administrator under the provisions of chapters 18 and

15-49

19 of this title. Provided, that when a Rhode Island licensed non-motorized recreational vehicle

15-50

dealer is required to add and collect the sales and use tax on the sale of a non-motorized

15-51

recreational vehicle to a bona fide nonresident as provided in this section, the dealer in computing

15-52

the tax takes into consideration the law of the state of the nonresident as it relates to the trade-in

15-53

of motor vehicles.

15-54

     (ii) The tax administrator, in addition to the provisions of sections 44-19-27 and 44-19-

15-55

28, may require any licensed non-motorized recreational vehicle dealer to keep records of sales to

15-56

bona fide nonresidents as the tax administrator deems reasonably necessary to substantiate the

15-57

exemption provided in this subdivision, including the affidavit of a licensed non-motorized

15-58

recreational vehicle dealer that the purchaser of the non-motorized recreational vehicle was the

15-59

holder of, and had in his or her possession a valid out-of-state non-motorized recreational vehicle

15-60

registration or a valid out-of-state driver's license.

15-61

     (iii) Any nonresident who registers a non-motorized recreational vehicle in this state

15-62

within ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-

15-63

motorized recreational vehicle for use, storage, or other consumption in this state, and is subject

15-64

to, and liable for the use tax imposed under the provisions of section 44-18-20.

15-65

     (iv) "Non-motorized recreational vehicle" means any portable dwelling designed and

15-66

constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use

15-67

which is eligible to be registered for highway use, including, but not limited to, "pick-up coaches"

15-68

or "pick-up campers," "travel trailers," and "tent trailers" as those terms are defined in chapter 1

16-1

of title 31.

16-2

     (55) Sprinkler and fire alarm systems in existing buildings. - From the sale in this state of

16-3

sprinkler and fire alarm systems, emergency lighting and alarm systems, and from the sale of the

16-4

materials necessary and attendant to the installation of those systems, that are required in

16-5

buildings and occupancies existing therein in July 2003, in order to comply with any additional

16-6

requirements for such buildings arising directly from the enactment of the Comprehensive Fire

16-7

Safety Act of 2003, and that are not required by any other provision of law or ordinance or

16-8

regulation adopted pursuant to that Act. The exemption provided in this subdivision shall expire

16-9

on December 31, 2008.

16-10

     (56) Aircraft. - Notwithstanding the provisions of this chapter, the tax imposed by

16-11

sections 44-18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or

16-12

other consumption in this state of any new or used aircraft or aircraft parts.

16-13

     (57) Renewable energy products. - Notwithstanding any other provisions of Rhode Island

16-14

general laws the following products shall also be exempt from sales tax: solar photovoltaic

16-15

modules or panels, or any module or panel that generates electricity from light; solar thermal

16-16

collectors, including, but not limited to, those manufactured with flat glass plates, extruded

16-17

plastic, sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-

16-18

water and water-to-air type pumps; wind turbines; towers used to mount wind turbines if

16-19

specified by or sold by a wind turbine manufacturer; DC to AC inverters that interconnect with

16-20

utility power lines; manufactured mounting racks and ballast pans for solar collector, module or

16-21

panel installation. Not to include materials that could be fabricated into such racks; monitoring

16-22

and control equipment, if specified or supplied by a manufacturer of solar thermal, solar

16-23

photovoltaic, geothermal, or wind energy systems or if required by law or regulation for such

16-24

systems but not to include pumps, fans or plumbing or electrical fixtures unless shipped from the

16-25

manufacturer affixed to, or an integral part of, another item specified on this list; and solar storage

16-26

tanks that are part of a solar domestic hot water system or a solar space heating system. If the tank

16-27

comes with an external heat exchanger it shall also be tax exempt, but a standard hot water tank is

16-28

not exempt from state sales tax.

16-29

     (58) Returned property. - The amount charged for property returned by customers upon

16-30

rescission of the contract of sale when the entire amount exclusive of handling charges paid for

16-31

the property is refunded in either cash or credit, and where the property is returned within one

16-32

hundred twenty (120) days from the date of delivery.

16-33

     (59) Dietary Supplements. - From the sale and from the storage, use or other

16-34

consumption of dietary supplements as defined in section 44-18-7.1(l)(v), sold on prescriptions.

17-1

     (60) Blood. - From the sale and from the storage, use or other consumption of human

17-2

blood.

17-3

     (61) Agricultural products for human consumption. - From the sale and from the storage,

17-4

use or other consumption of livestock and poultry of the kinds of products of which ordinarily

17-5

constitute food for human consumption and of livestock of the kind the products of which

17-6

ordinarily constitute fibers for human use.

17-7

     (62) Diesel emission control technology. - From the sale and use of diesel retrofit

17-8

technology that is required by section 31-47.3-4 of the general laws.

17-9

     (63) Feed for animals used in commercial farming. From the sale of feed for animals as

17-10

described in subsection 44-18-30(61).

17-11

     SECTION 2. This act shall take effect upon passage.

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LC00282

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - GROSS RECEIPTS EXEMPT FROM SALES AND USE

TAXES

***

18-1

     This act would exempt animal feed, used for animals in the production of food for human

18-2

consumption, from the sales and use tax.

18-3

     This act would take effect upon passage.

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LC00282

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