2014 -- S 2482

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LC004657

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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

     Introduced By: Senator Daniel DaPonte

     Date Introduced: February 27, 2014

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 44-18-7, 44-18-7.3, 44-18-12.1 and 44-18-36.1 of the General

Laws in Chapter 44-18 entitled "Sales and Use Taxes - Liability and Computation" are hereby

amended to read as follows:

     44-18-7. Sales defined. -- "Sales" means and includes:

      (1) Any transfer of title or possession, exchange, barter, lease, or rental, conditional or

otherwise, in any manner or by any means of tangible personal property for a consideration.

"Transfer of possession", "lease", or "rental" includes transactions found by the tax administrator

to be in lieu of a transfer of title, exchange, or barter.

      (2) The producing, fabricating, processing, printing, or imprinting of tangible personal

property for a consideration for consumers who furnish either directly or indirectly the materials

used in the producing, fabricating, processing, printing, or imprinting.

      (3) The furnishing and distributing of tangible personal property for a consideration by

social, athletic, and similar clubs and fraternal organizations to their members or others.

      (4) The furnishing, preparing, or serving for consideration of food, meals, or drinks,

including any cover, minimum, entertainment, or other charge in connection therewith.

      (5) A transaction whereby the possession of tangible personal property is transferred, but

the seller retains the title as security for the payment of the price.

      (6) Any withdrawal, except a withdrawal pursuant to a transaction in foreign or interstate

commerce, of tangible personal property from the place where it is located for delivery to a point

in this state for the purpose of the transfer of title or possession, exchange, barter, lease, or rental,

conditional or otherwise, in any manner or by any means whatsoever, of the property for a

consideration.

      (7) A transfer for a consideration of the title or possession of tangible personal property,

which has been produced, fabricated, or printed to the special order of the customer, or any

publication.

      (8) The furnishing and distributing of electricity, natural gas, artificial gas, steam,

refrigeration, and water.

      (9) (i) The furnishing for consideration of intrastate, interstate and international

telecommunications service sourced in this state in accordance with subsections 44-18.1(15) and

(16) and all ancillary services, any maintenance services of telecommunication equipment other

than as provided for in subdivision 44-18-12(b)(ii). For the purposes of chapters 18 and 19 of this

title only, telecommunication service does not include service rendered using a prepaid telephone

calling arrangement.

      (ii) Notwithstanding the provisions of paragraph (i) of this subdivision, in accordance

with the Mobile Telecommunications Sourcing Act (4 U.S.C. sections 116 -- 126), subject to the

specific exemptions described in 4 U.S.C. section 116(c), and the exemptions provided in

sections 44-18-8 and 44-18-12, mobile telecommunications services that are deemed to be

provided by the customer's home service provider are subject to tax under this chapter if the

customer's place of primary use is in this state regardless of where the mobile

telecommunications services originate, terminate or pass through. Mobile telecommunications

services provided to a customer, the charges for which are billed by or for the customer's home

service provider, shall be deemed to be provided by the customer's home service provider.

      (10) The furnishing of service for transmission of messages by telegraph, cable, or radio

and the furnishing of community antenna television, subscription television, and cable television

services.

      (11) The rental of living quarters in any hotel, as defined in § 42-63.1-2, rooming house,

or tourist camp.

      (12) The transfer for consideration of prepaid telephone calling arrangements and the

recharge of prepaid telephone calling arrangements sourced to this state in accordance with

sections 44-18.1-11 and 44-18.1-15. "Prepaid telephone calling arrangement" means and includes

prepaid calling service and prepaid wireless calling service.

      (13) The sale, storage, use or other consumption of over-the-counter drugs as defined in

paragraph 44-18-7.1(h)(ii).

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      (14) The sale, storage, use or other consumption of prewritten computer software

delivered electronically or by load and leave as defined in paragraph 44-18-7.1(v).

      (15) The sale, storage, use or other consumption of medical marijuana as defined in

section 21-28.6-3.

      (16) The furnishing of services in this state as defined in section 44-18-7.3.

     44-18-7.3. Services defined. -- (a) "Services" means all activities engaged in for other

persons for a fee, retainer, commission, or other monetary charge, which activities involve the

performance of a service in this state as distinguished from selling property.

      (b) The following businesses and services performed in this state, along with the

applicable 2007 North American Industrial Classification System (NAICS) codes, are included in

the definition of services:

      (1) Taxicab and limousine services including but not limited to:

      (i) Taxicab services including taxi dispatchers (485310); and

      (ii) Limousine services (485320).

      (2) Other road transportation service including but not limited to:

      (i) Charter bus service (485510); and

      (ii) All other transit and ground passenger transportation (485999).

      (3) Pet care services (812910) except veterinary and testing laboratories services.

     (c)(1) "Room reseller" or "reseller" means: any person having any right, permission,

license, or other authority from or through a hotel, as defined in § 42-63.1-2, to reserve, or

arrange the transfer of occupancy of, accommodations, the reservation or transfer of which is

subject to this chapter, such that the occupant pays all or a portion of the rental and other fees to

the reseller. Room reseller or reseller shall include, but not be limited to, sellers of travel

packages as defined in this section. Notwithstanding any provision of the general or public law to

the contrary, where said reservation or transfer of occupancy is made using a room reseller, the

application of the sales and use under §§ 44-18-18 and 44-18-20, and the hotel tax under § 44-

18-36.1 shall be as follows:

     (i) The room reseller is required to register with and shall collect and pay to the tax

administrator the sales and use and hotel taxes with said taxes being calculated upon the amount

of rental and other fees paid by the occupant to the room reseller, less the amount of any rental

and other fees paid by the reseller to the hotel; and

     (ii) The hotel shall collect and pay to the tax administrator said taxes upon the amount of

rental and other fees paid to the hotel by the reseller and/or the occupant. No assessment shall be

made by the tax administrator against a hotel because of an incorrect remittance of the taxes

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under this chapter by a room reseller. No assessment shall be made by the tax administrator

against a room reseller because of an incorrect remittance of the taxes under this chapter by a

hotel. If the hotel has paid the taxes imposed under this chapter, the occupant and/or room reseller

shall reimburse the hotel for said taxes. If the reseller has paid said taxes, the occupant shall

reimburse the reseller for said taxes. Each hotel and room reseller shall add and collect from the

occupant or the room reseller the full amount of the taxes imposed on the rental and other fees.

When added to the rental and other fees, the taxes shall be a debt owed by the occupant to the

hotel or room reseller, as applicable, and shall be recoverable at law in the same manner as other

debts. The amount of the taxes collected by the hotel and/or room reseller from the occupant

under this chapter shall be stated and charged separately from the rental and other fees, and shall

be shown separately on all records thereof, whether made at the time the transfer of occupancy

occurs and made on valid evidence of the transfer, issued or used by the hotel or the room

reseller. A room reseller shall not be required to disclose to the occupant the amount of tax

charged by the hotel; provided, however, the reseller shall represent to the occupant that the

separately stated taxes charged by the reseller include taxes charged by the hotel. No person shall

operate a hotel in this state, or act as a room reseller for any hotel in the state, unless the tax

administrator has issued a permit pursuant to § 44-19-1.

     (2) "Travel package" means: a room or rooms bundled with one or more other, separate

components of travel such as air transportation, car rental or similar items, which travel package

is charged to the customer or occupant for a single retail price. When the room occupancy is

bundled for a single consideration, with other property, services, amusement charges, or any other

items, the separate sale of which would not otherwise be subject to tax under this chapter, the

entire single consideration shall be treated as rent, subject to tax under this chapter; provided,

however, that where the amount of the rental or other fees for room occupancy is stated

separately from the price of such other property, services, amusement charges, or other items, on

any sales slip, invoice, receipt, or other statement given the occupant, and such rental and other

fees are determined by the tax administrator to be reasonable in relation to the value of such other

property, services, amusement charges or other items, only such separately stated rental and other

fees will be subject to tax under this chapter, The value of the transfer of any room or rooms

bundled as part of a travel package may be determined by the tax administrator from the room

reseller's and/or hotel's books and records kept in the regular and ordinary course of business.

      (c)(d) The tax administrator is authorized to promulgate rules and regulations in

accordance with the provisions of chapter 42-35 to carry out the provisions, policies, and

purposes of this chapter.

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     44-18-12.1. "Additional measure subject to tax". -- Also included in the measure

subject to tax under this chapter is the total amount charged for the furnishing or distributing of

electricity, natural gas, artificial gas, steam, refrigeration, water, telecommunications, telegraph,

cable, and radio message service, community antenna television, subscription television, and

cable television service; provided, that the measure of tax in regard to telecommunications service

is the total consideration received for the service as defined in section 44-18-7(9); provided, that

in order to prevent multistate taxation of all telecommunications service, any taxpayer is allowed

a credit or refund of sales tax upon presenting proof that a tax has been paid to another state to

which the tax is properly due for the identical service taxed under this chapter. Furthermore,

included in the measure of tax is the total amount charged for the rental of living quarters in any

hotel, as defined in § 42-63.1-2, rooming house, or tourist camp.

     44-18-36.1. Hotel tax. -- (a) There is imposed a hotel tax of five percent (5%) upon the

total consideration charged for occupancy of any space furnished by any hotel, as defined in § 42-

63.1-2, or room reseller, as defined in § 44-18-7.3(c)(1) in this state. The hotel tax is in addition

to any sales tax imposed. This hotel tax is administered and collected by the division of taxation

and unless provided to the contrary in this chapter, all the administration, collection, and other

provisions of chapters 18 and 19 of this title apply. Nothing in this chapter shall be construed to

limit the powers of the convention authority of the city of Providence established pursuant to the

provisions of chapter 84 of the public laws of 1980, except that distribution of hotel tax receipts

shall be made pursuant to chapter 63.1 of title 42 rather than chapter 84 of the public laws of

1980.

      (b) There is hereby levied and imposed, upon the total consideration charged for

occupancy of any space furnished by any hotel, as defined in § 42-63.1-2, or room reseller, as

defined in § 44-18-7.3(c)(1) in this state, in addition to all other taxes and fees now imposed by

law, a local hotel tax at a rate of one percent (1%). The local hotel tax shall be administered and

collected in accordance with subsection (a).

      (c) All sums received by the division of taxation from the local hotel tax, penalties or

forfeitures, interest, costs of suit and fines shall be distributed at least quarterly, credited and paid

by the state treasurer to the city or town where the space for occupancy that is furnished by the

hotel is located. Unless provided to the contrary in this chapter, all of the administration,

collection, and other provisions of chapters 18 and 19 of this title shall apply.

      (d) Notwithstanding the provisions of subsection (a) of this section, the city of Newport

shall have the authority to collect from hotels, as defined in § 42-63.1-2, or room reseller, as

defined in § 44-18-7.3(c)(1) located in the city of Newport the tax imposed by subsection (a) of

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this section.

      (1) Within ten (10) days of collection of the tax, the city of Newport shall distribute the

tax as provided in section 42-63.1-3. No later than the first day of March and the first day of

September in each year in which the tax is collected, the city of Newport shall submit to the

division of taxation a report of the tax collected and distributed during the six (6) month period

ending thirty (30) days prior to the reporting date.

      (2) The city of Newport shall have the same authority as the division of taxation to

recover delinquent hotel taxes pursuant to chapter 44-19, and the amount of any hotel tax, penalty

and interest imposed by the city of Newport until collected constitutes a lien on the real property

of the taxpayer. 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 requires require

remote sellers to collect and remit taxes, effective the first (1st) day of the first (1st) state fiscal

quarter following the change, the rate imposed under section 44-18-36.1(b) shall be one and one-

half percent (1.5%), effective on the same date this state requires remote sellers to collect and

remit sales and use taxes.

     SECTION 2. Section 42-63.1-2 of the General Laws in Chapter 42-63.1 entitled

"Tourism and Development" is hereby amended to read as follows:

     42-63.1-2. Definitions. -- For the purposes of this chapter:

      (1) "Consideration" means the monetary charge for the use of space devoted to transient

lodging accommodations.

      (2) "Corporation" means the Rhode Island economic development corporation.

      (3) "District" means the regional tourism districts set forth in section 42-63.1-5.

      (4) "Hotel" means any facility offering a minimum of three (3) one rooms room, or a

portion of a room, for which the public may, for a consideration, obtain transient lodging

accommodations. The term "hotel" shall include hotels, motels, bed and breakfasts (B&B's),

short-term rental units, time-shares, as defined in § 34-41-1.02(13), tourist homes, tourist camps,

lodging houses, and inns and shall exclude schools, hospitals, sanitariums, nursing homes, and

chronic care centers.

      (5) "Occupancy" means a person, firm or corporation's use of space ordinarily used for

transient lodging accommodations not to exceed thirty (30) days. Excluded from "occupancy" is

the use of space for which the occupant has a written lease for the space, which lease covers a

rental period of twelve (12) months or more as well as the right of a time-share owner, as defined

in § 34-41-1.02(19), or time-share exchange guest to use a time-share property as defined in § 34-

41-1.02(22).

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     (6) "Short-term rental units" means a residential dwelling wherein a single room or

portion thereof is available for rent or hire for less than thirty (30) days by guests.

      (6)(7) "Tax" means the hotel tax imposed by subsection 44-18-36.1(a).

     SECTION 3. This act shall take effect on July 1, 2014.

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LC004657

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION-SALES AND USE TAXES

***

     This act would require "room resellers" to collect and pay sales and use taxes and hotel

taxes to the state tax administrator. Room resellers would include sellers of travel packages.

     This act would take effect on July 1, 2014.

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LC004657

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