2014 -- H 8039

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LC005090

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO TAXATION - SALES AND USE TAXES - LIABILITY AND

COMPUTATION

     Introduced By: Representatives Malik, Hull, Messier, Shekarchi, and McNamara

     Date Introduced: April 09, 2014

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 44-18-18, 44-18-19 and 44-18-20 of the General Laws in Chapter

44-18 entitled "Sales and Use Taxes - Liability and Computation" are hereby amended to read as

follows:

     44-18-18. Sales tax imposed. -- A tax is imposed upon sales at retail in this state

including charges for rentals of living quarters in hotels as defined in section 42-63.1-2, rooming

houses, or tourist camps, at the rate of six percent (6%) of the gross receipts of the retailer from

the sales or rental charges; provided, that the tax imposed on charges for the rentals applies only

to the first period of not exceeding thirty (30) consecutive calendar days of each rental; provided,

further, that for the period commencing July 1, 1990, the tax rate is seven percent (7%). The tax is

paid to the tax administrator by the retailer at the time and in the manner provided. Excluded from

this tax are those living quarters in hotels, rooming houses, or tourist camps for which the

occupant has a written lease for the living quarters which lease covers a rental period of twelve

(12) months or more. In recognition of the work being performed by the Streamlined Sales and

Use Tax Governing Board, upon passage any federal law which authorizes states to require

remote sellers to collect and remit sales and use taxes, the rate imposed under section 44-18-18

shall be reduced from seven percent (7%) to six and one-half percent (6.5%). The six and one-

half percent (6.5%) rate shall take effect on the date that the state requires remote sellers to collect

and remit sale and use taxes. Provided, that effective January 1, 2015, the rate imposed by this

section shall be reduced and set at three percent (3%).

     44-18-19. Collection of sales tax by retailer. -- The retailer shall add the tax imposed by

this chapter to the sale price or charge, and when added the tax constitutes a part of the price or

charge, is a debt from the consumer or user to the retailer, and is recoverable at law in the same

manner as other debts; provided, that the amount of tax that the retailer collects from the

consumer or user is as follows:

     Amount of Sale Amount of Tax

     $0.01 to $ .08 inclusive No Tax

     .09 to .24 inclusive .01

     .25 to .41 inclusive .02

     .42 to .58 inclusive .03

     .59 to .74 inclusive .04

     .75 to .91 inclusive .05

     .92 to 1.08 inclusive .06

and where the amount of the sale is more than one dollar and eight cents ($1.08) the amount of

the tax is computed at the rate of six percent (6%); provided, that the amount of tax that the

retailer collects from the consumer or user for the period commencing July 1, 1990 is as follows:

     Amount of Sale Amount of Tax

      $ 0.01 to $ .07 inclusive No Tax

     .08 to .21 inclusive .01

     .22 to .35 inclusive .02

     .36 to .49 inclusive .03

     .50 to .64 inclusive .04

     .65 to .78 inclusive .05

     .79 to .92 inclusive .06

     .93 to 1.07 inclusive .07

and where the amount of the sale is more than one dollar and seven cents ($1.07) the amount of

the tax is computed at the rate of seven percent (7%).

Provided, that effective January 1, 2015, the amount of the tax shall be computed at the rate of

three percent (3%).

     44-18-20. Use tax imposed. -- (a) An excise tax is imposed on the storage, use, or other

consumption in this state of tangible personal property, prewritten computer software delivered

electronically or by load and leave or services as defined in section 44-18-7.3; including a motor

vehicle, a boat, an airplane, or a trailer, purchased from any retailer at the rate of six percent (6%)

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of the sale price of the property.

      (b) An excise tax is imposed on the storage, use, or other consumption in this state of a

motor vehicle, a boat, an airplane, or a trailer purchased from other than a licensed motor vehicle

dealer or other than a retailer of boats, airplanes, or trailers respectively, at the rate of six percent

(6%) of the sale price of the motor vehicle, boat, airplane, or trailer.

      (c) The word "trailer" as used in this section and in section 44-18-21 means and includes

those defined in section 31-1-5(a) -- (e) and also includes boat trailers, camping trailers, house

trailers, and mobile homes.

      (d) Notwithstanding the provisions contained in this section and in section 44-18-21

relating to the imposition of a use tax and liability for this tax on certain casual sales, no tax is

payable in any casual sale:

      (1) When the transferee or purchaser is the spouse, mother, father, brother, sister, or

child of the transferor or seller;

      (2) When the transfer or sale is made in connection with the organization, reorganization,

dissolution, or partial liquidation of a business entity; provided:

      (i) The last taxable sale, transfer, or use of the article being transferred or sold was

subjected to a tax imposed by this chapter;

      (ii) The transferee is the business entity referred to or is a stockholder, owner, member,

or partner; and

      (iii) Any gain or loss to the transferor is not recognized for income tax purposes under

the provisions of the federal income tax law and treasury regulations and rulings issued

thereunder;

      (3) When the sale or transfer is of a trailer, other than a camping trailer, of the type

ordinarily used for residential purposes and commonly known as a house trailer or as a mobile

home; or

      (4) When the transferee or purchaser is exempt under the provisions of section 44-18-30

or other general law of this state or special act of the general assembly of this state.

      (e) The term "casual" means a sale made by a person other than a retailer; provided, that

in the case of a sale of a motor vehicle, the term means a sale made by a person other than a

licensed motor vehicle dealer or an auctioneer at an auction sale. In no case is the tax imposed

under the provisions of subsections (a) and (b) of this section on the storage, use, or other

consumption in this state of a used motor vehicle less than the product obtained by multiplying

the amount of the retail dollar value at the time of purchase of the motor vehicle by the applicable

tax rate; provided, that where the amount of the sale price exceeds the amount of the retail dollar

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value, the tax is based on the sale price. The tax administrator shall use as his or her guide the

retail dollar value as shown in the current issue of any nationally recognized used vehicle guide

for appraisal purposes in this state. On request within thirty (30) days by the taxpayer after

payment of the tax, if the tax administrator determines that the retail dollar value as stated in this

subsection is inequitable or unreasonable, he or she shall, after affording the taxpayer reasonable

opportunity to be heard, re-determine the tax.

      (f) Every person making more than five (5) retail sales of tangible personal property or

prewritten computer software delivered electronically or by load and leave, or services as defined

in section 44-18-7.3 during any twelve (12) month period, including sales made in the capacity of

assignee for the benefit of creditors or receiver or trustee in bankruptcy, is considered a retailer

within the provisions of this chapter.

      (g) (1) "Casual sale" includes a sale of tangible personal property not held or used by a

seller in the course of activities for which the seller is required to hold a seller's permit or permits

or would be required to hold a seller's permit or permits if the activities were conducted in this

state; provided, that the sale is not one of a series of sales sufficient in number, scope, and

character (more than five (5) in any twelve (12) month period) to constitute an activity for which

the seller is required to hold a seller's permit or would be required to hold a seller's permit if the

activity were conducted in this state.

      (2) Casual sales also include sales made at bazaars, fairs, picnics, or similar events by

nonprofit organizations, which are organized for charitable, educational, civic, religious, social,

recreational, fraternal, or literary purposes during two (2) events not to exceed a total of six (6)

days duration each calendar year. Each event requires the issuance of a permit by the division of

taxation. Where sales are made at events by a vendor, which holds a sales tax permit and is not a

nonprofit organization, the sales are in the regular course of business and are not exempt as casual

sales.

      (h) The use tax imposed under this section for the period commencing July 1, 1990 is at

the rate of seven percent (7%). 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, effective the first (1st) day of the

first (1st) state fiscal quarter following the change, the rate imposed under section 44-18-18 shall

be reduced from seven percent (7.0%) to six and one-half percent (6.5%). The six and one- half

percent (6.5%) rate shall take effect on the date that the state requires remote sellers to collect and

remit sales and use taxes. Provided, that effective January 1, 2015, the rate imposed by this

section shall be reduced and set at three percent (3%).

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - SALES AND USE TAXES - LIABILITY AND

COMPUTATION

***

     This act would reduce the state sales tax rate and the use tax rate from seven percent (7%)

to three percent (3%) effective January 1, 2015.

     This act would take effect upon passage.

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