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art.012/9/012/8/012/7/012/6/012/5/012/4/012/3/012/2/012/1

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     ARTICLE 12 AS AMENDED

RELATING TO REVENUES

     SECTION 1. Chapter 31-3-6.1 of the General Laws entitled "Registration of Vehicles" is

hereby amended by adding thereto the following section:

     31-3-6.1.1. Denial of registration- Denial of transfer of registration -- Failure to file

tax returns and/or pay taxes. -- (a) On or before October 31 in each year and at least quarterly

thereafter, the tax administrator shall furnish the division of motor vehicles, with a list of the

names, addresses and social security numbers of persons who have neglected or refused to file a

tax return(s) and/or to pay any tax administered by the tax administrator and that there is no

administrative or appellate review pending regarding such tax matter.

     (b) Thereafter, the tax administrator, at the times and in the manner mutually agreed to by

the tax administrator and the administrator of the division of motor vehicles, shall furnish to the

division of motor vehicles the names, addresses and social security numbers of those persons

whose names appear on that list but who have subsequently filed all required returns and paid all

required taxes, interest and attendant penalties in full or entered into a time payment agreement

satisfactory to the tax administrator. Upon receipt of said information, said names, addresses and

social security numbers of said persons shall be removed from the list.

     (c) The administrator of the division of motor vehicles shall not register any motor

vehicle or transfer the registration of any motor vehicle for any person whose name appears on a

list provided by the tax administrator pursuant to subsection (a) above until all state taxes, interest

and attendant penalties have been paid in full and the payment has been certified to the division

of motor vehicles by the tax administrator.

     (d) If the person thereafter files an overdue return and/or remits past taxes due or enters

into a satisfactory time payment agreement with respect to any and all returns due and taxes

payable, the tax administrator shall, within five (5) business days of the person's request, provide

the division of motor vehicles with a certificate of good standing specified in § 5-76-5. Within

five (5) business days of receiving such a certificate, the division of motor vehicles shall register

or transfer the person's registration.

     (e) If a person files an overdue return and/or remits past due taxes in order to register a

motor vehicle or transfer the registration of a motor vehicle, said late filing and/or payment shall

not be an admission of a violation of any criminal tax statute regarding late filing and/or late

payment. The tax administrator shall not refer such person to the attorney general for prosecution

based solely upon said late filing and/or payment of past due taxes.

     SECTION 2. Chapter 44-30 of the General Laws entitled "Personal Income Tax" is

hereby amended by adding thereto the following section:

     44-30-100. Lookup table to report use tax on personal income tax return. -- (a) When

reporting the amount of use tax obligation on the Rhode Island personal income return, the

taxpayer shall list either the actual amount (from books, records, and other sources), or an amount

using a lookup table established by the tax administrator.

     (b) Establishment of lookup table. (1) The tax administrator shall create the lookup table

with reference to a taxpayer's federal adjusted gross income (AGI) as listed on the Rhode Island

personal income tax return before modifications, adjustments, or other changes. To determine the

amount of use tax from the lookup table, the taxpayer shall multiply 0.0008 by the amount of the

taxpayer's federal AGI as listed on the Rhode Island personal income tax return before

modifications, adjustments, or other changes.

     (2) The AGI income ranges within the lookup table shall be adjusted by the tax

administrator by December 31 of each calendar year by the percentage, if any, by which the

Consumer Price Index for All Urban Consumers (CPI-U) as of the close of the 12-month period

ending on August 31 of that year, exceeds the CPI-U as of the close of the 12-month period

ending on August 31 of the immediately preceding year. For purposes of the annual calculation,

the tax administrator shall be free to substitute an inflation index which is substantially similar to

the CPI-U.

     (3) If a taxpayer uses the lookup table, the taxpayer shall list on the return not only the

result from the lookup table, but also the actual amount of each single purchase whose purchase

price equals or exceeds one thousand dollars ($1,000).

     (4) Instructions for the personal income tax form shall indicate that the use of the lookup

table as described in this section is, for the taxpayer, a "safe harbor" alternative to listing the

actual amount of the taxpayer's use tax obligation.

     (c) When completing and filing a Rhode Island personal income tax return, the taxpayer

shall check a box attesting to the amount of use tax listed on the return. The tax administrator

shall direct computer software providers to require the taxpayer or the taxpayer's preparer to

proactively check the box; software providers shall not program an automatically checked

attestation box.

     (d) The tax administrator shall make clear on personal income tax forms and instructions

that use tax is typically due on internet, mail-order, and catalog out-of-state purchases.

     SECTION 3. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 69

COMPLIANCE OF PUBLIC EMPLOYEES WITH STATE INCOME TAX ACT

     44-69-1. Short title. -- This chapter shall be known as the "Public Employee Tax

Compliance Act".

     44-69-2. Definitions. -- (a) "Appointing authority" means the person or group of persons

having the power by virtue of the constitution, a state statute, or lawfully delegated authority to

make appointments.

     (b) "Employee" or "state or public employee" means an elected official, appointed officer

or employee of any political subdivision of this state.

     (c) "State agency" means any office, department, board, commission or institution of the

executive, legislative, higher education or judicial branch of state government.

     (d) "Political subdivision" means any office, department, board, commission or

institution of the executive, legislative, education, or, public safety, or judicial branch of any city,

town, or school district within the state.

     44-69-3. Administration. -- (a) The department of administration and all political

subdivisions shall, not later than August 1, 2014, and August 1 of each year thereafter, provide to

the tax administrator a list of all public employees as of the preceding July 1 and such identifying

information as may be required by the tax administrator. Such list and information shall be used

by the tax administrator exclusively for the purpose of collection of income taxes due to the state

of Rhode Island.

     (b) The tax administrator shall, not later than December 1, 2014, and December 1 of each

year thereafter, notify any public employee who is not in compliance with the income tax laws of

this state. Such notification shall include:

     (1) A statement that the employee will be subject to mandatory garnishment of wages by

the state controller, unless the taxpayer is deemed by the tax administrator to be in compliance

with the income tax laws of this state;

     (2) The reasons that the taxpayer is considered to be out of compliance with the income

tax laws of this state, including a statement of the amount of any tax, penalties and interest due, or

a list of the tax years for which income tax returns have not been filed, as required by law;

     (3) An explanation of the rights of the taxpayer and the procedures which must be

followed by the taxpayer in order to come into compliance with the income tax laws of this state;

and

     (4) Such other information as may be deemed necessary by the tax administrator.

     (c) A public employee who has entered into and is abiding by a payment agreement, or

who has requested relief as an innocent spouse, which request is pending or has been granted,

shall be deemed to be in compliance with the state income tax laws for purposes of this section.

     (d) If the tax administrator notifies a public employee who is not in compliance with the

income tax laws of this state as required in this section and such public employee does not

respond to such notification or fails to come into compliance with the income tax laws of this

state after an assessment has been made final or after the Tax Administrator determines that every

reasonable effort has been made to assist the public employee to come into compliance with the

income tax laws of this state, the tax administrator shall so notify the state controller or political

subdivision, which shall commence mandatory garnishment of the public employee's wages and

shall notify the employee of the reason for such action. If a public employee, who has been

previously reported by the tax administrator to a state agency or the political subdivision as being

out of compliance, comes into compliance, the tax administrator shall immediately notify the

state controller or the political subdivision. Neither a state agency or the political subdivision nor

an appointing authority shall be held liable for any action with respect to a public employee

pursuant to the provisions of this section.

     SECTION 4. Section 44-33-3 of the General Laws in Chapter 44-33 entitled "Property

Tax Relief" is hereby amended to read as follows:

     44-33-3. Definitions. -- As used in this chapter:

      (1) "Claimant" means a homeowner or renter, sixty-five (65) years of age or older,

and/or disabled, who has filed a claim under this chapter and was domiciled in this state for the

entire calendar year for which he or she files a claim for relief under this chapter. In the case of

claim for rent constituting property taxes accrued, the claimant shall have rented property during

the preceding year for which he or she files for relief under this chapter. Claimant shall not mean

or include any person claimed as a dependent by any taxpayer under the Internal Revenue Code

of the United States, 26 U.S.C. section 1 et seq. When two (2) individuals of a household are able

to meet the qualifications for a claimant, they may determine between themselves as to who the

claimant is. If they are unable to agree, the matter is referred to the tax administrator and his or

her decision is final. If a homestead is occupied by two (2) or more individuals, and more than

one individual is able to qualify as a claimant, and some or all of the qualified individuals are not

related, the individuals may determine among themselves as to who the claimant is. If they are

unable to agree, the matter is referred to the tax administrator, and his or her decision is final.

      (2) "Disabled" means those persons who are receiving a social security disability benefit.

      (3) "Gross rent" means rental paid in cash or its equivalent solely for the right of

occupancy of a homestead, exclusive of charges for any utilities, services, furniture, furnishings,

or personal property appliances furnished by the landlord as a part of the rental agreement. If the

landlord and tenant have not dealt with each other at arm's length, and the tax administrator is

satisfied that the gross rent charged was excessive, he or she may adjust the gross rent to a

reasonable amount for purposes of this chapter. "Gross rent" includes the rental of space paid to a

landlord for parking of a mobile home, or docking or mooring a houseboat, exclusive of any

charges for utilities, services, furniture, furnishings, or personal appliances furnished by the

landlord as a part of the rental. Twenty percent (20%) of the annual gross rental plus the space

rental fees paid during the year are the annual "property taxes accrued."

      (4) "Homestead" means the dwelling, whether owned or rented, and so much of the land

surrounding it, not exceeding one acre, as is reasonably necessary for use of the dwelling as a

home, and may consist of a part of the multi-dwelling or multi-purpose building and a part of the

land upon which it is built ("owned" includes a vendee in possession under a land contract and

one or more joint tenants or tenants in common). It does not include personal property such as

furniture, furnishings, or appliances, but a mobile home or a houseboat may be a homestead.

      (5) "Household" means one or more persons occupying a dwelling unit and living as a

single nonprofit housekeeping unit. "Household" shall not include bona fide lessees, tenants, or

roomers, and boarders on contract.

      (6) "Household income" means all income received by all persons of a household in a

calendar year while members of the household.

      (7) "Income" means the sum of federal adjusted gross income as defined in the Internal

Revenue Code of the United States, 26 U.S.C. section 1 et seq., and all non-taxable income

including, but not limited to, the amount of capital gains excluded from adjusted gross income,

alimony, support money, non-taxable strike benefits, cash public assistance and relief (not

including relief granted under this chapter), the gross amount of any pension or annuity

(including Railroad Retirement Act (see 45 U.S.C. section 231 et seq.) benefits, all payments

received under the federal Social Security Act, 42 U.S.C. section 301 et seq., state unemployment

insurance laws, and veterans' disability pensions (see 38 U.S.C. section 301 et seq.), non-taxable

interest received from the federal government or any of its instrumentalities, workers'

compensation, and the gross amount of "loss of time" insurance. It shall not include gifts from

nongovernmental sources, or surplus foods or other relief in kind supplied by a public or private

agency. For the purpose of this chapter, the calculation of "income" shall not include any

deductions for rental losses, business losses, capital losses, exclusion for foreign income, and any

losses received from pass-through entities.

      (8) "Property taxes accrued" means property taxes (exclusive of special assessments,

delinquent interest, and charges for service) levied on a claimant's homestead in this state in 1977

or any calendar year thereafter. If a homestead is owned by two (2) or more persons or entities as

joint tenants or tenants in common, and one or more persons or entities are not a member of

claimant's household, "property taxes accrued" is that part of property taxes levied on the

homestead which reflects the ownership percentage of the claimant and his or her household. For

purposes of this subdivision, property taxes are "levied" when the tax roll is certified by the city

or town assessor. When a homestead is sold during the calendar year of the levy, the "property

taxes accrued" for the seller and buyer is the amount of the tax levy prorated to each in the

closing agreement pertaining to the sale of the homestead or, if not provided for in the closing

agreement, the tax levy is prorated between seller and buyer based upon the delivery date of the

deed of conveyance. When a household owns and occupies two (2) or more homesteads in the

same calendar year, "property taxes accrued" is the sum of the prorated taxes attributable to the

household for each of the homesteads. If the household owns and occupies the homestead for the

part of the calendar year and rents a household for part of the calendar year, it may include both

the proration of taxes on the homestead owned and "rent constituting property taxes accrued"

with respect to the months the homestead is rented, in computing the amount of the claim. All

prorations are made on the basis of the gross tax levy after all exemptions. If a homestead is an

integral part of a larger unit such as a farm, or a multi-purpose or multi-dwelling building,

property taxes accrued is that percentage of the total property taxes accrued as the value of the

homestead is of the total value. For the purposes of this subdivision, "unit" refers to the parcel of

property covered by a single tax statement of which the homestead is a part.

      (9) "Rent constituting property taxes accrued" means twenty percent (20%) of the gross

rent actually paid in cash or its equivalent in any calendar year by a claimant and his or her

household solely for the right of occupancy of their Rhode Island homestead in the calendar year,

and which rent constitutes the basis, in the succeeding calendar year, of a claim for relief under

this chapter by the claimant, but shall not include any part of the rent paid for occupancy of

premises which are legally exempt from the payment of property taxes.

     SECTION 5. Section 44-25-1 of the General Laws in Chapter 44-25 entitled "Real Estate

Conveyance Tax" is hereby amended to read as follows:

     44-25-1. Tax imposed -- Payment -- Burden. -- (a) There is imposed, on each deed,

instrument, or writing by which any lands, tenements, or other realty sold is granted, assigned,

transferred, or conveyed to, or vested in, the purchaser or purchasers, or any other person or

persons, by his or her or their direction, when the consideration paid exceeds one hundred dollars

($100), a tax at the rate of two dollars ($2.00) two dollars and thirty cents ($2.30) for each five

hundred dollars ($500) or fractional part of it which is paid for the purchase of the property

(inclusive of the value of any lien or encumbrance remaining at the time of sale), which tax is

payable at the time of making, execution, delivery, acceptance or presenting for recording of the

instrument. In the absence of an agreement to the contrary, the tax shall be paid by the grantor.

      (b) In the event no consideration is actually paid for the lands, tenements, or realty, the

instrument of conveyance shall contain a statement to the effect that the consideration is such that

no documentary stamps are required.

      (c) The tax administrator shall contribute to the distressed community relief program the

sum of thirty cents ($.30) per two dollars ($2.00) two dollars and thirty cents ($2.30) of the face

value of the stamps to be distributed pursuant to section 45-13-12., and to the housing resources

commission restricted receipts account the sum of thirty cents ($.30) per two dollars and thirty

cents ($2.30) of the face value of the stamps. Funds will be administered by the department of

administration, office of housing and community development, through the housing resources

commission. The state shall retain sixty cents ($.60) for state use. The balance of the tax shall be

retained by the municipality collecting the tax. Provided, however, in fiscal years 2004 and 2005,

from the proceeds of this tax, the tax administrator shall deposit as general revenues the sum of

ninety cents ($.90) per two dollars ($2.00) two dollars and thirty cents ($2.30) of the face value of

the stamps. The balance of the tax is retained by the municipality collecting the tax.

     SECTION 6. Section 42-128-2 of the General Laws in Chapter 42-128 entitled "Rhode

Island Housing Resources Act of 1998" is hereby amended to read as follows:

     42-128-2. Rhode Island housing resources agency created. -- There is created within

the executive department a housing resources agency with the following purposes, organization,

and powers:

      (1) Purposes:

      (i) To provide coherence to the housing programs of the state of Rhode Island and its

departments, agencies, commissions, corporations, and subdivisions.

      (ii) To provide for the integration and coordination of the activities of the Rhode Island

housing and mortgage finance corporation and the Rhode Island housing resources commission.

      (2) Coordinating committee -- Created -- Purposes and powers:

      (i) The coordinating committee of the housing resources agency shall be comprised of

the chairperson of the Rhode Island housing and mortgage finance corporation, the chairperson of

the Rhode Island housing resources commission, the director of the department of administration,

or the designee of the director, and the executive director of the Rhode Island housing and

mortgage finance corporation. The chairperson of the Rhode Island housing resources

commission shall be chairperson of the coordinating committee.

      (ii) The coordinating committee shall develop and shall implement, with the approval of

the Rhode Island housing and mortgage finance corporation and the Rhode Island housing

resources commission, a memorandum of agreement describing the fiscal and operational

relationship between the Rhode Island housing and mortgage finance corporation and the Rhode

Island housing resources commission and shall define which programs of federal assistance will

be applied for on behalf of the state by the Rhode Island housing and mortgage finance

corporation and the Rhode Island housing resources commission.

     (3) There is hereby established a restricted receipt account within the general fund of the

state. Funds from this account shall be used to provide for the lead hazard abatement program,

housing rental subsidy, and homeless prevention assistance and housing retention assistance.

     SECTION 7. Section 44-30-2.6 of the General Laws in Chapter 44-30 entitled "Personal

Income Tax" is hereby amended to read as follows:

     44-30-2.6. Rhode Island taxable income -- Rate of tax. -- (a) "Rhode Island taxable

income" means federal taxable income as determined under the Internal Revenue Code, 26 U.S.C.

section 1 et seq., not including the increase in the basic standard deduction amount for married

couples filing joint returns as provided in the Jobs and Growth Tax Relief Reconciliation Act of

2003 and the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), and as

modified by the modifications in section 44-30-12.

     (b) Notwithstanding the provisions of sections 44-30-1 and 44-30-2, for tax years

beginning on or after January 1, 2001, a Rhode Island personal income tax is imposed upon the

Rhode Island taxable income of residents and nonresidents, including estates and trusts, at the rate

of twenty-five and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for

tax year 2002 and thereafter of the federal income tax rates, including capital gains rates and any

other special rates for other types of income, except as provided in section 44-30-2.7, which were

in effect immediately prior to enactment of the Economic Growth and Tax Relief Reconciliation

Act of 2001 (EGTRRA); provided, rate schedules shall be adjusted for inflation by the tax

administrator beginning in taxable year 2002 and thereafter in the manner prescribed for

adjustment by the commissioner of Internal Revenue in 26 U.S.C. section 1(f). However, for tax

years beginning on or after January 1, 2006, a taxpayer may elect to use the alternative flat tax

rate provided in section 44-30-2.10 to calculate his or her personal income tax liability.

     (c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative

minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode

Island alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by

multiplying the federal tentative minimum tax without allowing for the increased exemptions

under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal

form 6251 Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%)

for tax year 2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing

the product to the Rhode Island tax as computed otherwise under this section. The excess shall be

the taxpayer's Rhode Island alternative minimum tax.

     (1) For tax years beginning on or after January 1, 2005 and thereafter the exemption

amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by

the tax administrator in the manner prescribed for adjustment by the commissioner of Internal

Revenue in 26 U.S.C. section 1(f).

     (2) For the period January 1, 2007 through December 31, 2007, and thereafter, Rhode

Island taxable income shall be determined by deducting from federal adjusted gross income as

defined in 26 U.S.C. section 62 as modified by the modifications in section 44-30-12 the Rhode

Island itemized deduction amount and the Rhode Island exemption amount as determined in this

section.

     (A) Tax imposed.

     (1) There is hereby imposed on the taxable income of married individuals filing joint

returns and surviving spouses a tax determined in accordance with the following table:

     If taxable income is: The tax is:

     Not over $53,150 3.75% of taxable income

     Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over

$53,150

     Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over

$128,500

     Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over

$195,850

     Over $349,700 $26,333.75 plus 9.90% of the excess over

$349,700

     (2) There is hereby imposed on the taxable income of every head of household a tax

determined in accordance with the following table:

     If taxable income is: The tax is:

     Not over $42,650 3.75% of taxable income

     Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over

$42,650

     Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over

$110,100

     Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over

$178,350

     Over $349,700 $27,031.75 plus 9.90% of the excess over

$349,700

     (3) There is hereby imposed on the taxable income of unmarried individuals (other than

surviving spouses and heads of households) a tax determined in accordance with the following

table:

     If taxable income is: The tax is:

     Not over $31,850 3.75% of taxable income

     Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over

$31,850

     Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over

$77,100

     Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over

$160,850

     Over $349,700 $27,849.00 plus 9.90% of the excess over

$349,700

     (4) There is hereby imposed on the taxable income of married individuals filing separate

returns and bankruptcy estates a tax determined in accordance with the following table:

     If taxable income is: The tax is:

     Not over $26,575 3.75% of taxable income

     Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575

     Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over

$64,250

     Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over

$97,925

     Over $174,850 $13,166.88 plus 9.90% of the excess over

$174,850

     (5) There is hereby imposed a taxable income of an estate or trust a tax determined in

accordance with the following table:

     If taxable income is: The tax is:

     Not over $2,150 3.75% of taxable income

     Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150

     Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000

     Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650

     Over $10,450 $737.50 plus 9.90% of the excess over $10,450

     (6) Adjustments for inflation.

     The dollars amount contained in paragraph (A) shall be increased by an amount equal to:

     (a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by;

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1993;

     (c) The cost-of-living adjustment referred to in subparagraph (a) and (b) used in making

adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall

be determined under section (J) by substituting "1994" for "1993."

     (B) Maximum capital gains rates

     (1) In general

     If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax

imposed by this section for such taxable year shall not exceed the sum of:

     (a) 2.5 % of the net capital gain as reported for federal income tax purposes under section

26 U.S.C. 1(h)(1)(a) and 26 U.S.C. 1(h)(1)(b).

     (b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

1(h)(1)(c).

     (c) 6.25% of the net capital gain as reported for federal income tax purposes under 26

U.S.C. 1(h)(1)(d).

     (d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

1(h)(1)(e).

     (2) For tax years beginning on or after January 1, 2010 the tax imposed on net capital

gain shall be determined under subdivision 44-30-2.6(c)(2)(A).

     (C) Itemized deductions.

     (1) In general

     For the purposes of section (2) "itemized deductions" means the amount of federal

itemized deductions as modified by the modifications in section 44-30-12.

     (2) Individuals who do not itemize their deductions

     In the case of an individual who does not elect to itemize his deductions for the taxable

year, they may elect to take a standard deduction.

     (3) Basic standard deduction.

     The Rhode Island standard deduction shall be allowed in accordance with the following

table:

     Filing status Amount

     Single $5,350

     Married filing jointly or qualifying widow(er) $8,900

     Married filing separately $4,450

     Head of Household $7,850

      (4) Additional standard deduction for the aged and blind.

     An additional standard deduction shall be allowed for individuals age sixty-five (65) or

older or blind in the amount of $1,300 for individuals who are not married and $1,050 for

individuals who are married.

     (5) Limitation on basic standard deduction in the case of certain dependents.

     In the case of an individual to whom a deduction under section (E) is allowable to another

taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater

of:

     (a) $850;

     (b) The sum of $300 and such individual's earned income;

     (6) Certain individuals not eligible for standard deduction.

     In the case of:

     (a) A married individual filing a separate return where either spouse itemizes deductions;

     (b) Nonresident alien individual;

     (c) An estate or trust;

     The standard deduction shall be zero.

     (7) Adjustments for inflation.

     Each dollars amount contained in paragraphs (3), (4) and (5) shall be increased by an

amount equal to:

     (a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988,

multiplied by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1988.

     (D) Overall limitation on itemized deductions

     (1) General rule.

     In the case of an individual whose adjusted gross income as modified by section 44-30-12

exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the

taxable year shall be reduced by the lesser of:

     (a) Three percent (3%) of the excess of adjusted gross income as modified by section 44-

30-12 over the applicable amount; or

     (b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable

for such taxable year.

     (2) Applicable amount.

     (a) In general.

     For purposes of this section, the term "applicable amount" means $156,400 ($78,200 in

the case of a separate return by a married individual)

     (b) Adjustments for inflation.

     Each dollar amount contained in paragraph (a) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

     (3) Phase-out of Limitation.

     (a) In general.

     In the case of taxable year beginning after December 31, 2005, and before January 1,

2010, the reduction under section (1) shall be equal to the applicable fraction of the amount which

would be the amount of such reduction.

     (b) Applicable fraction.

     For purposes of paragraph (a), the applicable fraction shall be determined in accordance

with the following table:

     For taxable years beginning in The applicable fraction is

     calendar year

     2006 and 2007 2/3

     2008 and 2009 1/3

     (E) Exemption amount

     (1) In general.

     Except as otherwise provided in this subsection, the term "exemption amount" mean

$3,400.

     (2) Exemption amount disallowed in case of certain dependents.

     In the case of an individual with respect to whom a deduction under this section is

allowable to another taxpayer for the same taxable year, the exemption amount applicable to such

individual for such individual's taxable year shall be zero.

     (3) Adjustments for inflation.

     The dollar amount contained in paragraph (1) shall be increased by an amount equal to:

     (a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by

      (b) The cost-of-living adjustment determined under section (J) with a base year of 1989.

(4) Limitation.

     (a) In general.

     In the case of any taxpayer whose adjusted gross income as modified for the taxable year

exceeds the threshold amount shall be reduced by the applicable percentage.

     (b) Applicable percentage.

     In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the

threshold amount, the exemption amount shall be reduced by two (2) percentage points for each

$2,500 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year

exceeds the threshold amount. In the case of a married individual filing a separate return, the

preceding sentence shall be applied by substituting "$1,250" for "$2,500." In no event shall the

applicable percentage exceed one hundred percent (100%).

     (c) Threshold Amount.

     For the purposes of this paragraph, the term "threshold amount" shall be determined with

the following table:

     Filing status Amount

     Single $156,400

     Married filing jointly of qualifying widow(er) $234,600

     Married filing separately $117,300

     Head of Household $195,500

      (d) Adjustments for inflation.

     Each dollars amount contain in paragraph (b) shall be increased by an amount equal to:

(i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied

by

(ii) The cost-of-living adjustment determined under section (J) with a base year

of 1991.

(5) Phase-out of Limitation.

(a) In general.

In the case of taxable years beginning after December 31, 2005, and before

January 1, 2010, the reduction under section 4 shall be equal to the applicable

fraction of the amount which would be the amount of such reduction.

(b) Applicable fraction.

For the purposes of paragraph (a), the applicable fraction shall be determined in

accordance with the following table:

     For taxable years beginning in The applicable fraction is

     calendar year

     2006 and 2007 2/3

     2008 and 2009 1/3

      (F) Alternative minimum tax

     (1) General rule. - There is hereby imposed (in addition to any other tax imposed by this

subtitle) a tax equal to the excess (if any) of:

     (a) The tentative minimum tax for the taxable year, over

     (b) The regular tax for the taxable year.

     (2) The tentative minimum tax for the taxable year is the sum of:

     (a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus

     (b) 7.0 percent of so much of the taxable excess above $175,000.

     (3) The amount determined under the preceding sentence shall be reduced by the

alternative minimum tax foreign tax credit for the taxable year.

     (4) Taxable excess. - For the purposes of this subsection the term "taxable excess" means

so much of the federal alternative minimum taxable income as modified by the modifications in

section 44-30-12 as exceeds the exemption amount.

     (5) In the case of a married individual filing a separate return, subparagraph (2) shall be

applied by substituting "$87,500" for $175,000 each place it appears.

     (6) Exemption amount.

     For purposes of this section "exemption amount" means:

     Filing status Amount

     Single $39,150

     Married filing jointly or qualifying widow(er) $53,700

     Married filing separately $26,850

     Head of Household $39,150

     Estate or trust $24,650

     (7) Treatment of unearned income of minor children

     (a) In general.

     In the case of a minor child, the exemption amount for purposes of section (6) shall not

exceed the sum of:

      (i) Such child's earned income, plus

     (ii) $6,000.

     (8) Adjustments for inflation.

     The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount

equal to:

     (a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied

by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 2004.

     (9) Phase-out.

     (a) In general.

     The exemption amount of any taxpayer shall be reduced (but not below zero) by an

amount equal to twenty-five percent (25%) of the amount by which alternative minimum taxable

income of the taxpayer exceeds the threshold amount.

     (b) Threshold amount.

     For purposes of this paragraph, the term "threshold amount" shall be determined with the

following table:

     Filing status Amount

     Single $123,250

     Married filing jointly or qualifying widow(er) $164,350

     Married filing separately $82,175

     Head of Household $123,250

     Estate or Trust $82,150

      (c) Adjustments for inflation

     Each dollar amount contained in paragraph (9) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 2004.

     (G) Other Rhode Island taxes

     (1) General rule. - There is hereby imposed (in addition to any other tax imposed by this

subtitle) a tax equal to twenty-five percent (25%) of:

     (a) The Federal income tax on lump-sum distributions.

     (b) The Federal income tax on parents' election to report child's interest and dividends.

     (c) The recapture of Federal tax credits that were previously claimed on Rhode Island

return.

     (H) Tax for children under 18 with investment income

     (1) General rule. - There is hereby imposed a tax equal to twenty-five percent (25%) of:

     (a) The Federal tax for children under the age of 18 with investment income. (I)

Averaging of farm income

     (1) General rule. - At the election of an individual engaged in a farming business or

fishing business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of:

      (a) The Federal averaging of farm income as determined in IRC section 1301.

     (J) Cost-of-living adjustment

     (1) In general.

     The cost-of-living adjustment for any calendar year is the percentage (if any) by which:

     (a) The CPI for the preceding calendar year exceeds

     (b) The CPI for the base year.

     (2) CPI for any calendar year.

     For purposes of paragraph (1), the CPI for any calendar year is the average of the

Consumer Price Index as of the close of the twelve (12) month period ending on August 31 of

such calendar year.

     (3) Consumer Price Index

     For purposes of paragraph (2), the term "consumer price index" means the last consumer

price index for all urban consumers published by the department of labor. For purposes of the

preceding sentence, the revision of the consumer price index which is most consistent with the

consumer price index for calendar year 1986 shall be used.

     (4) Rounding.

     (a) In general.

     If any increase determined under paragraph (1) is not a multiple of $50, such increase

shall be rounded to the next lowest multiple of $50.

     (b) In the case of a married individual filing a separate return, subparagraph (a) shall be

applied by substituting "$25" for $50 each place it appears.

     (K) Credits against tax. - For tax years beginning on or after January 1, 2001, a taxpayer

entitled to any of the following federal credits enacted prior to January 1, 1996 shall be entitled to

a credit against the Rhode Island tax imposed under this section:

     (1) [Deleted by P.L. 2007, ch. 73, art. 7, section 5].

     (2) Child and dependent care credit;

     (3) General business credits;

     (4) Credit for elderly or the disabled;

     (5) Credit for prior year minimum tax;

     (6) Mortgage interest credit;

     (7) Empowerment zone employment credit;

     (8) Qualified electric vehicle credit.

     (L) Credit against tax for adoption. - For tax years beginning on or after January 1, 2006,

a taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode

Island tax imposed under this section if the adopted child was under the care, custody, or

supervision of the Rhode Island department of children, youth and families prior to the adoption.

     (M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits

provided there shall be no deduction based on any federal credits enacted after January 1, 1996,

including the rate reduction credit provided by the federal Economic Growth and Tax

Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be

reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax

purposes shall determine the Rhode Island amount to be recaptured in the same manner as

prescribed in this subsection.

     (N) Rhode Island earned income credit

      (1) In general.

     A taxpayer entitled to a federal earned income credit shall be allowed a Rhode Island

earned income credit equal to twenty-five percent (25%) ten percent (10%) of the federal earned

income credit. Such credit shall not exceed the amount of the Rhode Island income tax.

     (2) Refundable portion.

     In the event the Rhode Island earned income credit allowed under section (J) exceeds the

amount of Rhode Island income tax, a refundable earned income credit shall be allowed.

     (a) For purposes of paragraph (2) refundable earned income credit means fifteen percent

(15%) one hundred percent (100%) of the amount by which the Rhode Island earned income

credit exceeds the Rhode Island income tax.

     (O) The tax administrator shall recalculate and submit necessary revisions to paragraphs

(A) through (J) to the general assembly no later than February 1, 2010 and every three (3) years

thereafter for inclusion in the statute.

     (3) For the period January 1, 2011 through December 31, 2011, and thereafter, "Rhode

Island taxable income" means federal adjusted gross income as determined under the Internal

Revenue Code, 26 U.S.C. 1 et seq., and as modified for Rhode Island purposes pursuant to

section 44-30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to

subparagraph 44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant of

subparagraph 44-30-2.6(c)(3)(C).

     (A) Tax imposed.

     (I) There is hereby imposed on the taxable income of married individuals filing joint

returns, qualifying widow(er), every head of household, unmarried individuals, married

individuals filing separate returns and bankruptcy estates, a tax determined in accordance with the

following table:

     Over But not over Pay + Excess on the amount over

     $ 0 - $ 55,000 $ 0 + 3.75% $ 0

     55,000 - 125,000 2,063 + 4.75% 55,000

     125,000 - 5,388 + 5.99% 125,000

      (II) There is hereby imposed on the taxable income of an estate or trust a tax determined

in accordance with the following table:

     Over But not over Pay + % on Excess on the amount over

     $ 0 - $ 2,230 $ 0 + 3.75% $ 0

     2,230 - 7,022 84 + 4.75% 2,230

     7,022 - 312 + 5.99% 7,022

      (B) Deductions: (I) Rhode Island Basic Standard Deduction. Only the Rhode Island

standard deduction shall be allowed in accordance with the following table:

     Filing status: Amount

     Single $7,500

     Married filing jointly or qualifying widow(er) $15,000

     Married filing separately $7,500

     Head of Household $11,250

     (II) Nonresident alien individuals, estates and trusts are not eligible for standard

deductions.

     (III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode

Island purposes pursuant to section 44-30-12, for the taxable year exceeds one hundred seventy-

five thousand dollars ($175,000), the standard deduction amount shall be reduced by the

applicable percentage. The term "applicable percentage" means twenty (20) percentage points for

each five thousand dollars ($5,000) (or fraction thereof) by which the taxpayer's adjusted gross

income for the taxable year exceeds one hundred seventy-five thousand dollars ($175,000).

     (C) Exemption Amount:

     (I) The term "exemption amount" means three thousand five hundred dollars ($3,500)

multiplied by the number of exemptions allowed for the taxable year for federal income tax

purposes.

     (II) Exemption amount disallowed in case of certain dependents. In the case of an

individual with respect to whom a deduction under this section is allowable to another taxpayer

for the same taxable year, the exemption amount applicable to such individual for such

individual's taxable year shall be zero.

     (D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode

Island purposes pursuant to section 33-30-12, for the taxable year exceeds one hundred seventy-

five thousand dollars ($175,000), the exemption amount shall be reduced by the applicable

percentage. The term "applicable percentage" means twenty (20) percentage points for each five

thousand dollars ($5,000) (or fraction thereof) by which the taxpayer's adjusted gross income for

the taxable year exceeds one hundred seventy-five thousand dollars ($175,000).

     (E) Adjustment for inflation. - The dollar amount contained in subparagraphs 44-30-

2.6(c)(3)(A), 44-30-2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) shall be increased annually by an amount

equal to:

     (I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-

2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000,

multiplied by;

     (II) The cost-of-living adjustment with a base year of 2000.

     (III) For the purposes of this section the cost-of-living adjustment for any calendar year is

the percentage (if any) by which the consumer price index for the preceding calendar year

exceeds the consumer price index for the base year. The consumer price index for any calendar

year is the average of the consumer price index as of the close of the twelve (12) month period

ending on August 31, of such calendar year.

     (IV) For the purpose of this section the term "consumer price index" means the last

consumer price index for all urban consumers published by the department of labor. For the

purpose of this section the revision of the consumer price index which is most consistent with the

consumer price index for calendar year 1986 shall be used.

     (V) If any increase determined under this section is not a multiple of fifty dollars

($50.00), such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the

case of a married individual filing separate return, if any increase determined under this section is

not a multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower

multiple of twenty-five dollars ($25.00).

     (E) Credits against tax.

     (I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on

or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be

as follows:

     (a) Rhode Island Earned Income Credit: Credit shall be allowed for earned income credit

pursuant to subparagraph 44-30-2.6(c)(2)(N).

     (b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided

in section 44-33-1 et seq.

     (c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax

credit as provided in section 44-30.3-1 et seq.

     (d) Credit for income taxes of other states. - Credit shall be allowed for income tax paid

to other states pursuant to section 44-30-74.

     (e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax

credit as provided in section 44-33.2-1 et seq.

     (f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture

production tax credit as provided in section 44-31.2-1 et seq.

     (g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of

the federal child and dependent care credit allowable for the taxable year for federal purposes;

provided, however, such credit shall not exceed the Rhode Island tax liability.

     (h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for

contributions to scholarship organizations as provided in section 44-62 et seq.

     (i) Credit for tax withheld. - Wages upon which tax is required to be withheld shall be

taxable as if no withholding were required, but any amount of Rhode Island personal income tax

actually deducted and withheld in any calendar year shall be deemed to have been paid to the tax

administrator on behalf of the person from whom withheld, and the person shall be credited with

having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable

year of less than twelve (12) months, the credit shall be made under regulations of the tax

administrator.

     (2) Except as provided in section 1 above, no other state and federal tax credit shall be

available to the taxpayers in computing tax liability under this chapter.

     SECTION 8. Chapter 44-19 of the General Laws entitled "Sales and Use Taxes -

Enforcement and Collection" is hereby amended by adding thereto the following section:

     44-19-42. Sales suppression devices -- Definitions and applicability. -- (a) As used in

this section:

     (1) Automated sales suppression device," also known as a "zapper," means a software

program, carried on a memory stick or removable compact disc, accessed through an Internet

link, or accessed through any other means, that falsifies transaction data, transaction reports, or

any other electronic records of electronic cash registers and other point-of-sale systems.

     (2) "Electronic cash register" means a device that keeps a register or supporting

documents through the means of an electronic device or computer system designed to record

transaction data for the purpose of computing, compiling, or processing retail sales transaction

data in any manner.

     (3)"Phantom-ware" means a hidden programming option, whether preinstalled or

installed at a later time, embedded in the operating system of an electronic cash register or

hardwired into the electronic cash register that:

     (i) Can be used to create a virtual second till; or

     (ii) May eliminate or manipulate transaction records.

     (4) "Transaction data" includes items purchased by a customer, the price for each item. A

taxability determination for each item, a segregated tax amount for each of the taxed items, the

amount of cash or credit tendered, the net amount returned to the customer in change, the date

and time of the purchase, the name, address, and identification number of the vendor, and the

receipt or invoice number of the transaction.

     (5)"Transaction reports" means a report documenting, but not limited to, the sales, taxes

collected, media totals, and discount voids at an electronic cash register that is printed on cash

register tape at the end of a day or shift, or a report documenting every action at an electronic

cash register that is stored electronically.

     (b) A person shall not knowingly sell, purchase, install, transfer or possess an automated

sales suppression device or phantom-ware.

     (c) Any person who violates subdivision (b) of this section shall be guilty of a felony and,

upon conviction, shall be subject to a fine not exceeding fifty-thousand dollars ($50,000) or

imprisonment not exceeding five (5) years, or both.

     (d) In addition, a person who violates subdivision (b) of this section shall be liable to the

state for:

     (1) All taxes, interest, and penalties due as the result of the person's use of an automated

sales suppression device or phantom-ware; and

     (2) All profits associated with the person's sale of an automated sales suppression device

or phantom-ware.

     (e) An automated sales suppression device or phantom-ware and any device containing

such device or software shall be deemed contraband and shall be subject to seizure by the tax

administrator or by a law enforcement officer when directed to do so by the tax administrator.

     (f) Safe harbor. A person shall not be subject to prosecution under Rhode Island general

laws § 44-19-4 2, if by October 1, 20 14, the person:

     (1) Notifies the division of taxation of the person's possession of an automated sales

suppression device;

     (2) Provides any information requested by the division of taxation, including transaction

records, software specifications, encryption keys, passwords, and other data; and

     (3) Corrects any underreported sales tax records and fully pays the division of taxation

any amounts previously owed.

     (g) This section shall not be construed to limit the person's civil or criminal liability under

any other provision of law.

     SECTION 9. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and

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

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

the taxes imposed by this chapter the following gross receipts:

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

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

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

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

      (2) Newspapers.

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

newspaper.

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

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

interest.

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

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

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

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

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

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

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

      (4) Containers.

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

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

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

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

the contents with the container.

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

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

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

the contents or when resold for refilling.

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

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

returnable containers."

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

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

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

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

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

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

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

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

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

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

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

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

women, and parent teacher associations.

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

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

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

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

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

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

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

under the contracts without payment of the tax.

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

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

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

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

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

pay the tax on the property used.

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

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

propulsion of airplanes.

      (7) Purchase for manufacturing purposes.

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

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

refrigeration, and water, when the property or service is purchased for the purpose of being

manufactured into a finished product for resale, and becomes an ingredient, component, or

integral part of the manufactured, compounded, processed, assembled, or prepared product, or if

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

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

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

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

      (iii) "Consumed" includes mere obsolescence.

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

assembling, preparing, or producing.

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

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

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

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

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

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

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

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

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

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

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

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

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

subdivision of the municipality where it is located.

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

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

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

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

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

food is:

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

except sub-sector 3118 (bakeries);

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

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

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

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

glasses, cups, napkins, or straws.

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

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

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

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

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

7.1(h)(iii).

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

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

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

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

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

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

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

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

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

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

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

wheelchairs, crutches and canes.

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

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

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

      (13) Motor vehicles sold to nonresidents.

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

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

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

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

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

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

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

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

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

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

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

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

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

motor vehicles.

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

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

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

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

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

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

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

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

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

under the provisions of section 44-18-20.

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

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

licensed under section 40-9-11.1.

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

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

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

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

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

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

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

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

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

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

device, building, machinery, or equipment.

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

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

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

operated summer camps for children.

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

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

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

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

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

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

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

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

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

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

inures to the benefit of any individual.

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

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

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

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

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

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

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

use.

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

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

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

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

devices to auditory signals.

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

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

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

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

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

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

special adaptations, including installation.

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

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

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

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

      (22) Manufacturing machinery and equipment.

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

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

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

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

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

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

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

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

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

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

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

be sold in the regular course of business;

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

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

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

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

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

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

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

operations;

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

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

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

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

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

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

production flow or manufacturing process;

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

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

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

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

otherwise identifiable as to use.

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

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

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

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

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

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

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

does not refer to any other type of motor vehicle.

      (24) Precious metal bullion.

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

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

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

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

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

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

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

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

uses.

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

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

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

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

of the vessels.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

thereto.

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

intended to be worn or carried on or about the human body for sales prior to October 1, 2012.

Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including

footwear, intended to be worn or carried on or about the human body up to two hundred and fifty

dollars ($250) of the sales price per item. For the purposes of this section, "clothing or footwear"

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

designed for athletic activity or protective use as these terms are defined in section 44-18-7.1(f).

In recognition of the work being performed by the Streamlined Sales and Use Tax Governing

Board, upon passage of any federal law which authorizes states to require remote sellers to collect

and remit sales and use taxes, this unlimited exemption will apply as it did prior to October 1,

2012. The unlimited exemption on sales of clothing and footwear shall take effect on the date that

the state requires remote sellers to collect and remit sales and use taxes.

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

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

premises.

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

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

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

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

      (30) Boats.

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

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

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

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

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

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

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

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

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

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

nonresident of this state.

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

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

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

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

the schools or of organized activities of the enrolled students.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the state of compressed air.

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

of United States, Rhode Island or POW-MIA flags.

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

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

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

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

equipped for use by the qualifying veteran. Certificate of exemption or refunds of taxes paid is

granted under rules or regulations that the tax administrator may prescribe.

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

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

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

by any purveyor.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(iii) are mailed to customers at no charge.

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

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

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

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

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

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

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

the number of hours spent on the job.

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

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

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

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

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

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

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

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

business for which the use of research and development equipment is an integral part of its

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

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

numismatic or investment value.

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

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

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

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

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

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

farming.

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

telecommunications service when purchased by a telecommunications company from another

telecommunications company to facilitate the provision of telecommunications service.

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

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

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

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

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

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

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

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

vessel.

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

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

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

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

and is not returned to the jewelry manufacturer or seller.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

a state chartered bank.

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

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

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

      (51) Manufacturing business reconstruction materials.

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

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

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

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

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

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

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

the production and administrative facilities.

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

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

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

insurance, this exemption does not apply.

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

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

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

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

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

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

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

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

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

food, insecticide and fertilizers.

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

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

the boarding of horses.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

of motor vehicles.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

of title 31.

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

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

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

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

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

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

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

on December 31, 2008.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

not exempt from state sales tax.

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

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

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

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

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

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

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

blood.

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

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

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

ordinarily constitute fibers for human use.

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

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

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

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

      (64) Alcoholic beverages. - From the sale and storage, use, or other consumption in this

state by a Class A licensee of alcoholic beverages, as defined in section 44-18-7.1, excluding beer

and malt beverages from December 1, 2013 through March 31, 2015 June 30, 2015; provided,

further, notwithstanding section 6-13-1 or any other general or public law to the contrary,

alcoholic beverages, as defined in section 44-18-7.1, shall not be subject to minimum markup

from December 1, 2013 through March 31, 2015 June 30, 2015.

     SECTION 10. Section 3-10-1 of the General Laws in Chapter 3-10 entitled "Taxation of

Beverages" is hereby amended to read as follows:

     3-10-1. Manufacturing tax rates -- Exemption of religious uses. -- (a) There shall be

assessed and levied by the tax administrator on all beverages manufactured, rectified, blended, or

reduced for sale in this state a tax of three dollars and thirty cents ($3.30) three dollars ($3.00) on

every thirty-one (31) gallons, and a tax at a like rate for any other quantity or fractional part. On

any beverage manufactured, rectified, blended, or reduced for sale in this state consisting in

whole or in part of wine, whiskey, rum, gin, brandy spirits, ethyl alcohol, or other strong liquors

(as distinguished from beer or other brewery products) the tax to be assessed and levied is as

follows:

      (1) Still wines (whether fortified or not), one dollar and forty cents ($1.40) sixty cents

($.60) per gallon;

      (2) Still wines (whether fortified or not) made entirely from fruit grown in this state,

thirty cents ($.30) per gallon;

      (3) Sparkling wines (whether fortified or not), seventy five cents ($.75) per gallon;

      (4) Whiskey, rum, gin, brandy spirits, cordials, and other beverages consisting in whole

or in part of alcohol which is the product of distillation, five dollars and forty cents ($5.40) three

dollars and seventy-five cents ($3.75) per gallon, except that whiskey, rum, gin, brandy spirits,

cordials, and other beverages consisting in whole or in part of alcohol which is the product of

distillation but which contains alcohol measuring thirty (30) proof or less, one dollar and ten cents

($1.10) per gallon;

      (5) Ethyl alcohol to be used for beverage purposes, seven dollars and fifty cents ($7.50)

per gallon; and

      (6) Ethyl alcohol to be used for nonbeverage purposes, eight cents ($.08) per gallon.

      (b) Sacramental wines are not subject to any tax if sold directly to a member of the

clergy for use by the purchaser, or his or her congregation for sacramental or other religious

purposes.

      (c) A brewer who brews beer in this state which is actively and directly owned,

managed, and operated by an authorized legal entity which has owned, managed, and operated a

brewery in this state for at least twelve (12) consecutive months, shall receive a tax exemption on

the first one hundred thousand (100,000) barrels of beer that it produces and distributes in this

state in any calendar year. A barrel of beer is thirty one (31) gallons.

     SECTION 11. Section 16 of Article 9 of Chapter 144 of the 2013 Public Laws entitled

"AN ACT RELATING TO MAKING APPROPRIATIONS FOR THE SUPPORT OF THE

STATE FOR THE FISCAL YEAR ENDING JUNE 30, 2014" is hereby amended to read to as

follows:

     SECTION 16. Section 1 of this article shall take effect on January 1, 2014, and shall

apply to all assets placed in service on or after January 1, 2014. Section 2 of this article shall take

effect upon passage and shall apply to tax years beginning on or after January 1, 2014. Section 4

of this article shall take effect July 1, 2013. Section 8 of this article shall take effect on July 1,

2013 and shall expire on March 31, 2015 June 30, 2015. Section 15 of this article shall take effect

on December 1, 2013. The remainder of this article shall take effect upon passage.

     SECTION 12. Section 44-22-1.1 of the General Laws in Chapter 44-22 entitled "Estate

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

     44-22-1.1. Tax on net estate of decedent. -- (a) (1) For decedents whose death occurs on

or after January 1, 1992, but prior to January 1, 2002, a tax is imposed upon the transfer of the net

estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a

sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. section 2011.

      (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1,

2010 a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

taxes allowed by 26 U.S.C. section 2011 as it was in effect as of January 1, 2001; provided,

however, that the tax shall be imposed only if the net taxable estate shall exceed six hundred

seventy-five thousand dollars ($675,000). Any scheduled increase in the unified credit provided

in 26 U.S.C. section 2010 in effect on January 1, 2001, or thereafter, shall not apply.

      (3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1,

2015 a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

taxes allowed by 26 U.S.C. section 2011 as it was in effect as of January 1, 2001; provided,

however, that the tax shall be imposed only if the net taxable estate shall exceed eight hundred

and fifty thousand dollars ($850,000); provided, further, beginning on January 1, 2011 and each

January 1 thereafter, until January 1, 2015, said amount shall be adjusted by the percentage of

increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the

United States Department of Labor Statistics determined as of September 30 of the prior calendar

year; said adjustment shall be compounded annually and shall be rounded up to the nearest five

dollar ($5.00) increment. Any scheduled increase in the unified credit provided in 26 U.S.C.

section 2010 in effect on January 1, 2003, or thereafter, shall not apply.

     (4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon

the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C.

Section 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island

credit shall be allowed against any tax so determined in the amount of sixty-four thousand four

hundred ($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. Section

2010 in effect on January 1, 2003, or thereafter, shall not apply; provided, further, beginning on

January 1, 2016 and each January 1 thereafter, said Rhode Island credit amount under this section

shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban

Consumers (CPI-U) as published by the United States Department of Labor Statistics determined

as of September 30 of the prior calendar year; said adjustment shall be compounded annually and

shall be rounded up to the nearest five dollar ($5.00) increment.

      (b) If the decedent's estate contains property having a tax situs not within the state, then

the tax determined by this section is reduced to an amount determined by multiplying the tax by a

fraction whose numerator is the gross estate excluding all property having a tax situs not within

the state at the decedent's death and whose denominator is the gross estate. In determining the

fraction, no deductions are considered and the gross estate is not reduced by a mortgage or other

indebtedness for which the decedent's estate is not liable.

      (c) (1) The terms "gross taxable estate", "federal gross estate" or "net taxable estate" used

in this chapter or chapter 23 of this title has the same meaning as when used in a comparable

context in the laws of the United States, unless a different meaning is clearly required by the

provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of

this title to the Internal Revenue Code or other laws of the United States means the Internal

Revenue Code of 1954, 26 U.S.C. section 1 et seq.

      (2) For decedents whose death occurs on or after January 1, 2002, the terms "gross

taxable estate" "federal gross estate" or "net taxable estate" used in this chapter or chapter 23 of

this title has the same meaning as when used in a comparable context in the laws of the United

States, unless a different meaning is clearly required by the provisions of this chapter or chapter

23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue

Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C.

section 1 et seq., as they were in effect as of January 1, 2001, unless otherwise provided.

      (d) All values are as finally determined for federal estate tax purposes.

      (e) Property has a tax situs within the state of Rhode Island:

      (1) If it is real estate or tangible personal property and has actual situs within the state of

Rhode Island; or

      (2) If it is intangible personal property and the decedent was a resident.

     SECTION 13. Sections 42-64.5-3 and 42-64.5-4 of the General Laws in Chapter 42-64.5

entitled "Jobs Development Act" are hereby amended to read as follows:

     42-64.5-3. Tax rate reduction. -- The rate of tax payable by an eligible company and

each of its eligible subsidiaries for any taxable year ending on or after July 1, 1995, on its net

income pursuant to the applicable income tax provisions of the general laws, including the

provisions of sections 44-11-2(a), 44-14-3(a), 44-14-4 and 44-17-1, or on its gross earnings

pursuant to section 44-13-4(4), shall be reduced by the amount specified in section 42-64.5-4; this

rate reduction shall be applied annually once to those eligible companies which are permitted by

law to file a consolidated state tax return or as part of a combined group and in the case of eligible

companies not permitted required by law to file as part of a combined group consolidated state

tax returns, then the rate reduction shall be applied annually to each eligible company and its

eligible subsidiaries; provided, however, except as provided in section 42-64.5-7, should any

eligible company fail to maintain in any taxable year after 1997 or, if applicable, the third taxable

year following the base employment period election set forth in section 42-64.5-5, the number of

units of new employment it reported for its 1997 tax year or, if applicable, the third taxable year

following the base employment period election set forth in section 42-64.5-5; the rate reduction

provided for in this chapter shall expire permanently.

     42-64.5-4. Reduction rate schedule. -- (a) (i) The amount of the rate reduction specified

in section 42-64.5-3 for any eligible company that is not a telecommunications company for each

taxable year ending on or after July 1, 1995, shall be based upon the aggregate amount of new

employment of the eligible company and its eligible subsidiaries for each taxable year, and shall

be determined by multiplying the numerical equivalent of one-quarter of one percent (.25%) by

the number of units of new employment for each taxable year through the taxable year ending in

1997 or, if applicable, the third taxable year following the base employment period election set

forth in section 42-64.5-5; and for each taxable year thereafter, the number of units of new

employment reported for the taxable year 1997 or, if applicable, the third taxable year following

the base employment period election set forth in section 42-64.5-5; provided, however, the

amount of each rate reduction shall in no event be greater than six percent (6%).

     (ii) For the tax years beginning on or after January 1, 2015, the amount of the rate

reduction specified in § 42-64.5-3 for any eligible company required to file and pay taxes

pursuant to § 44-11-2, shall be based upon the aggregate amount of new employment of the

eligible company and its eligible subsidiaries for each taxable year, and shall be determined by

multiplying the numerical equivalent of two tenths of one percent (.20%) by the number of units

of new employment for each taxable year through the taxable year ending in 1997 or, if

applicable, the third taxable year following the base employment period election set forth in § 42-

64.5-5; and for each taxable year thereafter, the number of units of new employment reported for

the taxable year 1997 or, if applicable, the third taxable year following the base employment

period election set forth in § 42-64.5-5; provided, however, the amount of each rate reduction

shall in no event be greater than four percent (4.0%).

      (b) The amount of the rate reduction specified in section 42-64.5-3 for any eligible

company that is a telecommunications company shall be based upon the aggregate amount of new

employment of the eligible company and its eligible subsidiaries for each taxable year and shall

be determined in the same manner as set forth in subsection (a) of this section, except that it shall

be determined by multiplying the numerical equivalent of one-hundredth of one percent (.01%)

by the number of units of new employment and the amount of each rate reduction shall in no

event be greater than one percent (1%).

      (c) Notwithstanding any of the provisions of this chapter, where an eligible

telecommunications company has one or more affiliated entities that is an eligible company, the

eligible company entitled to a rate reduction may assign its rate reduction, to be determined in the

manner as provided in subsection (b) of this section, to the eligible telecommunications company.

An entity that assigns the rate reduction shall not be eligible for the rate reduction.