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art.008/4/008/3/008/2/008/1

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     ARTICLE 8 AS AMENDED

RELATING TO TAXES AND REVENUES

     SECTION 1. Purpose. The general assembly hereby finds that:

     (a) The Twin River gaming facility in the town of Lincoln, the Newport Grand gaming

facility in the town of Newport, and, once operational, the gaming facility owned by Twin River-

Tiverton in the town of Tiverton (the "Tiverton Gaming Facility," and, collectively with the other

two (2) gaming facilities, the "Gaming Facilities") are important sources of revenue for the state of

Rhode Island. Indeed, revenues generated from state-operated gaming in Rhode Island constitute

the third largest source of revenue to the state, behind only revenue generated from income taxes

and sales-and-use taxes.

     (b) In an increasingly competitive gaming market, it is imperative that action be taken to

preserve and protect the state's ability to maximize revenues at the Ffacilities, and in particular, to

expand critical, revenue-driving promotional and marketing programs through legislative

authorization and necessary amendments to contracts, previously authorized by the general

assembly, to position the promotional and marketing programs for long-term success.

     (c) Accordingly, the purpose of this act is to help enhance the revenues generated by the

Ffacilities in order to maximize the public's share of revenue generated by them for the state of

Rhode Island. It is the intent of the general assembly that this act, being necessary for the welfare

of the state and its citizens, be liberally construed so as to effectuate its purposes, including without

limitation, the Sstate's attempt to enhance the ability of the Ffacilities to generate revenue. The

inclusion of the Tiverton Gaming Facility within the scope of this act is based on the fulfilment in

2016 of the requirements of Article VI, Section 22 of the Rhode Island Constitution with respect

to that facility, namely that:

     (i) The Rhode Island secretary of state has certified that the qualified voters of the state

have approved authorizing a facility owned by Twin River-Tiverton located at the intersection of

William S. Canning Boulevard and Stafford Road in the town of Tiverton to be licensed as a pari-

mutuel facility and offer state-operated video lottery games and state-operated casino gaming, such

as table games; and

     (ii) The board of canvassers of the town of Tiverton has certified that the qualified electors

of the town of Tiverton have approved authorizing a facility owned by Twin River-Tiverton located

at the intersection of William S. Canning Boulevard and Stafford Road in the town of Tiverton to

be licensed as a pari-mutuel facility and offer state-operated video lottery games and state-operated

casino gaming, such as table games.

     SECTION 2. Section 42-61.2-7 of the General Laws in Chapter 42-61.2 entitled "Video-

Lottery Terminal" is hereby amended to read as follows:

     42-61.2-7. Division of revenue.

     (a) Notwithstanding the provisions of §42-61-15, the allocation of net, terminal income

derived from video-lottery games is as follows:

     (1) For deposit in the general fund and to the state lottery division fund for administrative

purposes: Net, terminal income not otherwise disbursed in accordance with subdivisions (a)(2) --

(a)(6) inclusive, or otherwise disbursed in accordance with subsections (g)(2) and (h)(2);

     (i) Except for the fiscal year ending June 30, 2008, nineteen one hundredths of one percent

(0.19%), up to a maximum of twenty million dollars ($20,000,000), shall be equally allocated to

the distressed communities as defined in §45-13-12 provided that no eligible community shall

receive more than twenty-five percent (25%) of that community's currently enacted municipal

budget as its share under this specific subsection. Distributions made under this specific subsection

are supplemental to all other distributions made under any portion of general laws §45-13-12. For

the fiscal year ending June 30, 2008, distributions by community shall be identical to the

distributions made in the fiscal year ending June 30, 2007, and shall be made from general

appropriations. For the fiscal year ending June 30, 2009, the total state distribution shall be the

same total amount distributed in the fiscal year ending June 30, 2008, and shall be made from

general appropriations. For the fiscal year ending June 30, 2010, the total state distribution shall be

the same total amount distributed in the fiscal year ending June 30, 2009, and shall be made from

general appropriations, provided, however, that seven hundred eighty-four thousand four hundred

fifty-eight dollars ($784,458) of the total appropriation shall be distributed equally to each

qualifying distressed community. For each of the fiscal years ending June 30, 2011, June 30, 2012,

and June 30, 2013, seven hundred eighty-four thousand four hundred fifty-eight dollars ($784,458)

of the total appropriation shall be distributed equally to each qualifying distressed community.

     (ii) Five one hundredths of one percent (0.05%), up to a maximum of five million dollars

($5,000,000), shall be appropriated to property tax relief to fully fund the provisions of §44-33-2.1.

The maximum credit defined in subdivision 44-33-9(2) shall increase to the maximum amount to

the nearest five dollar ($5.00) increment within the allocation until a maximum credit of five

hundred dollars ($500) is obtained. In no event shall the exemption in any fiscal year be less than

the prior fiscal year.

     (iii) One and twenty-two one hundredths of one percent (1.22%) to fund §44-34.1-1,

entitled "Motor Vehicle and Trailer Excise Tax Elimination Act of 1998", to the maximum amount

to the nearest two hundred fifty dollar ($250) increment within the allocation. In no event shall the

exemption in any fiscal year be less than the prior fiscal year.

     (iv) Except for the fiscal year ending June 30, 2008, ten one hundredths of one percent

(0.10%), to a maximum of ten million dollars ($10,000,000), for supplemental distribution to

communities not included in subsection (a)(1)(i) distributed proportionately on the basis of general

revenue sharing distributed for that fiscal year. For the fiscal year ending June 30, 2008,

distributions by community shall be identical to the distributions made in the fiscal year ending

June 30, 2007, and shall be made from general appropriations. For the fiscal year ending June 30,

2009, no funding shall be disbursed. For the fiscal year ending June 30, 2010, and thereafter,

funding shall be determined by appropriation.

     (2) To the licensed, video-lottery retailer:

     (a) (i) Prior to the effective date of the Newport Grand Master Contract, Newport Grand

twenty-six percent (26%), minus three hundred eighty-four thousand nine hundred ninety-six

dollars ($384,996);

     (ii) On and after the effective date of the Newport Grand Master Contract, to the licensed,

video-lottery retailer who is a party to the Newport Grand Master Contract, all sums due and

payable under said Master Contract, minus three hundred eighty-four thousand nine hundred

ninety-six dollars ($384,996).

     (iii) Effective July 1, 2013, the rate of net, terminal income payable to the licensed, video-

lottery retailer who is a party to the Newport Grand Master Contract shall increase by two and one

quarter percent (2.25%) points. The increase herein shall sunset and expire on June 30, 2015, and

the rate in effect as of June 30, 2013, shall be reinstated.

     (iv) (A) Effective July 1, 2015, the rate of net, terminal income payable to the licensed,

video-lottery retailer who is a party to the Newport Grand Master Contract shall increase over the

rate in effect as of June 30, 2013, by one and nine-tenths (1.9) percentage points. (i.e., x% plus 1.9

percentage points equals (x + 1.9)%, where "x%" is the current rate of net terminal income payable

to the licensed, video-lottery retailer who is a party to the Newport Grand Master Contract). The

dollar amount of additional net, terminal income paid to the licensed, video-lottery retailer who is

a party to the Newport Grand Master Contract with respect to any Newport Grand Marketing Year

as a result of such increase in rate shall be referred to as "Additional Newport Grand Marketing

NTI."

     (B) The excess, if any, of marketing expenditures incurred by the licensed, video-lottery

retailer who is a party to the Newport Grand Master Contract with respect to a Newport Grand

Marketing Year over one million four hundred thousand dollars ($1,400,000) shall be referred to

as the "Newport Grand Marketing Incremental Spend." Beginning with the Newport Grand

Marketing Year that starts on July 1, 2015, after the end of each Newport Grand Marketing Year,

the licensed, video-lottery retailer who is a party to the Newport Grand Master Contract shall pay

to the Division the amount, if any, by which the Additional Newport Grand Marketing NTI for such

Newport Grand Marketing Year exceeds the Newport Grand Marketing Incremental Spend for such

Newport Grand Marketing Year; provided however, that such video-lottery retailer's liability to the

Division hereunder with respect to any Newport Grand Marketing Year shall never exceed the

Additional Newport Grand Marketing NTI paid to such video-lottery retailer with respect to such

Newport Grand Marketing Year.

     The increase in subsection 2(a)(iv) shall sunset and expire on June 30, 2017 upon the

commencement of the operation of casino gaming at Twin River-Tiverton's facility located in the

town of Tiverton, and the rate in effect as of June 30, 2013 shall be reinstated.

     (b) (i) Prior to the effective date of the UTGR master contract, to the present, licensed,

video-lottery retailer at Lincoln Park, which is not a party to the UTGR, master contract, twenty-

eight and eighty-five one hundredths percent (28.85%), minus seven hundred sixty-seven thousand

six hundred eighty-seven dollars ($767,687);

     (ii) On and after the effective date of the UTGR master contract, to the licensed, video-

lottery retailer that is a party to the UTGR master contract, all sums due and payable under said

master contract minus seven hundred sixty-seven thousand six hundred eighty-seven dollars

($767,687).

     (3) (i) To the technology providers that are not a party to the GTECH Master Contract as

set forth and referenced in PL 2003, CH. 32, seven percent (7%) of the net, terminal income of the

provider's terminals; in addition thereto, technology providers that provide premium or licensed

proprietary content or those games that have unique characteristics, such as 3D graphics; unique

math/game play features; or merchandising elements to video-lottery terminals may receive

incremental compensation, either in the form of a daily fee or as an increased percentage, if all of

the following criteria are met:

     (A) A licensed, video-lottery retailer has requested the placement of premium or licensed

proprietary content at its licensed, video-lottery facility;

     (B) The division of lottery has determined in its sole discretion that the request is likely to

increase net, terminal income or is otherwise important to preserve or enhance the competiveness

competitiveness of the licensed, video-lottery retailer;

     (C) After approval of the request by the division of lottery, the total number of premium or

licensed, proprietary-content video-lottery terminals does not exceed ten percent (10%) of the total

number of video-lottery terminals authorized at the respective licensed, video-lottery retailer; and

     (D) All incremental costs are shared between the division and the respective licensed,

video-lottery retailer based upon their proportionate allocation of net terminal income. The division

of lottery is hereby authorized to amend agreements with the licensed, video-lottery retailers, or the

technology providers, as applicable, to effect the intent herein.

     (ii) To contractors that are a party to the master contract as set forth and referenced in PL

2003, CH. 32, all sums due and payable under said master contract; and

     (iii) Notwithstanding paragraphs (i) and (ii), there shall be subtracted proportionately from

the payments to technology providers the sum of six hundred twenty-eight thousand seven hundred

thirty-seven dollars ($628,737).

     (4) (A) Until video-lottery games are no longer operated at the Newport Grand gaming

facility located in Newport, to the city of Newport one and one hundredth percent (1.01%) of net

terminal income of authorized machines at Newport Grand, except that effective November 9,

2009, until June 30, 2013, the allocation shall be one and two tenths percent (1.2%) of net terminal

income of authorized machines at Newport Grand for each week the facility operates video-lottery

games on a twenty-four-hour (24) basis for all eligible hours authorized; and

     (B) Upon commencement of the operation of video-lottery games at Twin River-Tiverton's

facility located in the town of Tiverton, to the town of Tiverton one and forty-five hundredths

percent (1.45%) of net terminal income of authorized machines at the licensed, video-lottery

retailer's facility located in the town of Tiverton, subject to subsection (g)(2); and

     (C) To the town of Lincoln, one and twenty-six hundredths percent (1.26%) of net terminal

income of authorized machines at Twin River except that:

     (i) Effective November 9, 2009, until June 30, 2013, the allocation shall be one and forty-

five hundredths percent (1.45%) of net terminal income of authorized machines at Twin River for

each week video-lottery games are offered on a twenty-four-hour (24) basis for all eligible hours

authorized; and

     (ii) Effective July 1, 2013, provided that the referendum measure authorized by PL 2011,

Ch. 151, Sec. 4, is approved statewide and in the Town of Lincoln, the allocation shall be one and

forty-five hundredths percent (1.45%) of net terminal income of authorized video-lottery terminals

at Twin River, subject to subsection (h)(2); and

     (5) To the Narragansett Indian Tribe, seventeen hundredths of one percent (0.17%) of net

terminal income of authorized machines at Lincoln Park, up to a maximum of ten million dollars

($10,000,000) per year, that shall be paid to the Narragansett Indian Tribe for the account of a

Tribal Development Fund to be used for the purpose of encouraging and promoting: home

ownership and improvement; elderly housing; adult vocational training; health and social services;

childcare; natural resource protection; and economic development consistent with state law.

Provided, however, such distribution shall terminate upon the opening of any gaming facility in

which the Narragansett Indians are entitled to any payments or other incentives; and provided,

further, any monies distributed hereunder shall not be used for, or spent on, previously contracted

debts; and

     (6) Unclaimed prizes and credits shall remit to the general fund of the state; and

     (7) Payments into the state's general fund specified in subsections (a)(1) and (a)(6) shall be

made on an estimated monthly basis. Payment shall be made on the tenth day following the close

of the month except for the last month when payment shall be on the last business day.

     (b) Notwithstanding the above, the amounts payable by the division to UTGR related to

the marketing program described in the UTGR master contract (as such may be amended from time

to time) shall be paid on a frequency agreed by the division, but no less frequently than annually.

     (c) Notwithstanding anything in this chapter 61.2 of this title to the contrary, the director

is authorized to fund the marketing program as described above in regard to in the UTGR master

contract.

     (d) Notwithstanding the above, the amounts payable by the division to the licensed, video-

lottery retailer who is a party to the Newport Grand Master Contract related to the marketing

program described in the Newport Grand Master Contract (as such may be amended from time to

time) shall be paid on a frequency agreed by the division, but no less frequently than annually.

     (e) Notwithstanding anything in this chapter 61.2 of this title to the contrary, the director

is authorized to fund the marketing program as described above in regard to in the Newport Grand

Master Contract.

     (f) Notwithstanding the provisions of §42-61-15, but subject to §42-61.2-7(h), the

allocation of net, table-game revenue derived from table games at Twin River is as follows:

     (1) For deposit into the state lottery fund for administrative purposes and then the balance

remaining into the general fund:

     (i) Sixteen percent (16%) of net, table-game revenue, except as provided in §42-61.2-

7(f)(1)(ii);

     (ii) An additional two percent (2%) of net, table-game revenue generated at Twin River

shall be allocated starting from the commencement of table games activities by such table-game

retailer and ending, with respect to such table-game retailer, on the first date that such table-game

retailer's net terminal income for a full state fiscal year is less than such table-game retailer's net

terminal income for the prior state fiscal year, at which point this additional allocation to the state

shall no longer apply to such table-game retailer.

     (2) To UTGR, net, table-game revenue not otherwise disbursed pursuant to subsection

(f)(1); provided, however, on the first date that such table-game retailer's net terminal income for a

full state fiscal year is less than such table-game retailer's net terminal income for the prior state

fiscal year, as set forth in subsection (f)(1)(ii), one percent (1%) of this net, table-game revenue

shall be allocated to the town of Lincoln for four (4), consecutive state fiscal years.

     (g) Notwithstanding the provisions of §42-61-15, the allocation of net, table-game revenue

derived from table games at the Tiverton facility owned by Twin River-Tiverton is as follows:

     (1) Subject to subsection (g)(2) of this section, one percent (1%) of net, table-game revenue

shall be allocated to the town of Tiverton;

     (2) Fifteen and one-half percent (15.5%) of net, table-game revenue shall be allocated to

the state first for deposit into the state lottery fund for administrative purposes and then the balance

remaining into the general fund; provided however, that beginning with the first state fiscal year

that a facility in the town of Tiverton owned by Twin River-Tiverton offers patrons video-lottery

games and table games for all of such state fiscal year, for that state fiscal year and each subsequent

state fiscal year that such Tiverton facility offers patrons video-lottery games and table games for

all of such state fiscal year, if the town of Tiverton has not received an aggregate of three million

dollars ($3,000,000) in the state fiscal year from net, table-game revenues and net terminal income,

combined, generated by such Tiverton facility, then the state shall make up such shortfall to the

town of Tiverton out of the state's percentage of net, table-game revenue set forth in this subsection

(g)(2) and net terminal income set forth in subsections (a)(1) and (a)(6); provided further however,

if in any state fiscal year either video-lottery games or table games are no longer offered at a facility

in the town of Tiverton owned by Twin River-Tiverton, LLC, then the state shall not be obligated

to make up the shortfall referenced in this subsection (g)(2); and

     (3) Net, table-game revenue not otherwise disbursed pursuant to subsections (g)(1) and

(g)(2) of this section shall be allocated to Twin River-Tiverton.

     (h) Notwithstanding the foregoing §42-61.2-7(f) and superseding that section effective

upon the first date that a facility in the town of Tiverton owned by Twin River-Tiverton offers

patrons video-lottery games and table games, the allocation of net, table-game revenue derived

from table games at Twin River in Lincoln shall be as follows:

     (1) Subject to subsection (h)(2), one percent (1%) of net, table-game revenue shall be

allocated to the town of Lincoln;

     (2) Fifteen and one-half percent (15.5%) of net, table-game revenue shall be allocated to

the state first for deposit into the state lottery fund for administrative purposes and then the balance

remaining into the general fund; provided however, that beginning with the first state fiscal year

that a facility in the town of Tiverton owned by Twin River-Tiverton offers patrons video-lottery

games and table games for all of such state fiscal year, for that state fiscal year and each subsequent

state fiscal year that such Tiverton facility offers patrons video-lottery games and table games for

all of such state fiscal year, if the town of Lincoln has not received an aggregate of three million

dollars ($3,000,000) in the state fiscal year from net, table-game revenues and net terminal income,

combined, generated by the Twin River facility in Lincoln, then the state shall make up such

shortfall to the town of Lincoln out of the state's percentage of net, table-game revenue set forth in

this subsection (h)(2) and net terminal income set forth in subsections (a)(1) and (a)(6); provided

further however, if in any state fiscal year either video-lottery games or table games are no longer

offered at a facility in the town of Tiverton owned by Twin River-Tiverton, LLC, then the state

shall not be obligated to make up the shortfall referenced in this subsection (h)(2); and

     (3) Net, table-game revenue not otherwise disbursed pursuant to subsections (h)(1) and

(h)(2) shall be allocated to UTGR.

     SECTION 3. Except to the extent amended by this act, the terms, conditions, provisions

and definitions of Chapter 322 and 323 of the Public Laws of 2005, Chapter 16 of the Public Laws

of 2010, Chapter 151, Article 25 of the Public Laws of 2011, Chapters 289 and 290 of the Public

Laws of 2012, Chapter 145, Article 13 of the Public Laws of 2014, Chapter 141, Article 11,

Sections 16 – 22 of the Public Laws of 2015, and Chapters 005 and 006 of the Public Laws of 2016

P.L. 2005, ch. 322; P.L. 2005, ch. 323; P.L. 2010, ch. 16; P.L.2011, ch. 151, art. 25; P.L. 2012,

ch. 289; P.L. 212, ch. 290; P.L. 2014, ch. 145, art. 13; P.L. 2015, ch. 141, art. 11, §§ 16-22, and

P.L. 2016, ch. 005; and P.L. 2016, ch. 006 (in each case as the more recent law may have amended

an earlier law or laws), are hereby incorporated herein by reference and shall remain in full force

and effect.

     SECTION 4. Definitions. For the purposes of this act, the following terms shall have the

following meanings, and to the extent that such terms are otherwise defined in any provision of the

general or public laws (including, but not limited to, Chapter 16 of the public Laws of 2010 P.L.

2010, ch. 16, as amended, and Chapters 005 and 006 of the public laws of 2016 P.L. 2016, ch. 005

and P.L. 2016, ch. 006), for purposes of this act, those terms are hereby amended to read as follows:

     (a) "Division" means the division of lotteries within the department of revenue and/or any

successor as party to the UTGR Master Contract and the Newport Grand Master Contract.

     (b) "Initial Promotional Points Program" means, as to UTGR, that promotional points

program authorized in Chapter 16, Section 4(a)(ii) P.L. 2010, ch. 16, § 𝟒(𝐚)(𝐢𝐢)of Part A of the

Public Laws of 2010, as amended by, Chapter 151, Article 25, Section 8 of the Public Laws of 2011

P.L. 2011 ch. 151, art. 25 § 8 and by this act. As to Newport Grand, "Initial Points Program"

means that promotional points program authorized in Chapter 16, Section 4(a)(ii) P.L. 2010, ch.

16, § 4(a)(ii) of Part B of the Public Laws of 2010, as amended by Chapter 151, Article 25 , Section

8 of the Public Laws of 2011 P.L. 2011, ch. 151, art. 25, § 8 and by this act.

     (c) "Marketing Program" means, as to UTGR, that marketing program set forth in Chapter

16, Section 4(a)(iii) P.L. 2010, ch. 16, § 4(a)(iii) of Part A, of the Public Laws of 2010, as amended

by Chapter 151, Article 25, Section 8 of the Public Laws of 2011 P.L. 2011, ch. 151, art. 25, § 8 ,

and as amended by Chapter 145, article 13, Section 5 of the Public Laws of 2014 P.L. 2014, ch.

145, art. 13, § 5, and as amended by Chapters 005 and 006 of the Public Laws of 2016 P.L. 2016,

ch. 005 and P.L. 2016, ch. 006, and as clarified by this act. As to Newport Grand, "Marketing

Program" means that marketing program set forth in Chapter 16, Section 4(a)(iii) P.L. 2010, ch.

16, § 𝟒𝐚𝐢𝐢𝐢 of Part B of the Public Laws of 2010, as amended by Chapter 151, Article 25,

Section 8 of the Public Laws of 2011 P.L. 2011, ch. 151, art. 25 § 8, and as amended by Chapters

005 and 006 of the Public Laws of 2016 P.L. 2016, ch. 005 and P.L. 2016, ch. 006, and as clarified

by this act.

     (d) "Marketing Year" means the fiscal year of the state.

     (e) "Newport Grand", when it is referring to a legal entity, means Premier Entertainment

II. LLC and its permitted successors and assigns under the Newport Grand Master Contract.

''Newport Grand,", when it is referring to a gaming facility, means Newport Grand Slots, located

at 150 Admiral Kalbfus Road, Newport, Rhode Island, unless and until state-operated, video-lottery

games are no longer offered at such facility in Newport and state-operated, video-lottery games are

offered at a facility owned by Twin River-Tiverton located in Tiverton, Rhode Island, at which

time ''Newport Grand" shall mean such Tiverton facility.

     (f) "Newport Grand Division Percentage" means for any Mmarketing Yyear, the Division's

percentage of net terminal income derived from video lottery terminals located at the Newport

Grand facility as set forth in §42-61.2-7.

     (g) "Newport Grand Master Contract" means that certain Master Video Lottery Terminal

Contract made as of November 23, 2005, by and between the Division and Newport Grand, as

amended and/or assigned from time to time in accordance with its terms.

     (h) "Prior Marketing Year" means the prior state fiscal year.

     (i) "Promotional Points " means the promotional points issued pursuant to any free play or

other promotional program operated by the Division at a licensed, video-lottery-terminal facility

(including, without limitation, the Initial Promotional Points Program and Supplementary

Promotional Points Program as to UTGR and the Initial Promotional Points Program and

Supplementary Promotional Points Program as to Newport Grand), which may be downloaded to

a video-lottery terminal by a player. Promotional Points are provided to customers and prospective

customers for no monetary charge. Customer registration may be required.

     (j) "Promotional Points Program" means, as to UTGR, the Initial Promotional Points

Program or Supplementary Promotional Points Program applicable to UTGR, and as to Newport

Grand, the Initial Promotional Points Program or Supplementary Promotional Points Program

applicable to Newport Grand.

     (k) "Supplementary Promotional Points Program" means that promotional points program

authorized in Section 8 as to Twin River and Section 9 as to Newport Grand, of Chapters 289 and

290 of the Public Laws of 2012 P.L. 212, ch. 289 and P.L. 2012, ch.290.

     (l) "Twin River-Tiverton" means Twin River-Tiverton LLC, a Delaware Limited Liability

Company. References herein to "Twin River-Tiverton" shall include its permitted successors and

assigns.

     (m) "UTGR" has the meaning given that term in Chapter 16 of the Public Laws of 2010,

Part A, Section 2(n) P.L. 2010, ch. 16, Part A, § 2(n).

     (n) "UTGR Division Percentage" means for any Marketing Year, the Division's percentage

of net terminal income derived from video lottery terminals located at the Twin River facility as

set forth in §42-61.2-7.

     (o) "UTGR Master Contract" means that certain Master Video Lottery Terminal Contract

made as of July 18, 2005 by and between the Division, the Department of Transportation and

UTGR, as amended and/or assigned from time to time in accordance with its terms.

     SECTION 5. Authorized Procurement of Sixth Amendment to the UTGR Master Contract.

Notwithstanding any general or public law, regulation, or rule to the contrary, within ninety (90)

days of the enactment of this act, the Division is hereby expressly authorized, empowered and

directed to enter into with UTGR a Sixth Amendment to the UTGR Master Contract as described

in this section 5, to become effective April 1, 2017:

      (a) Amendment to UTGR Supplementary Promotional Points Program.

     (1) The Supplementary Promotional Points Program applicable to Twin River, which is in

addition to the Initial Promotional Points Program), shall be amended so that UTGR may distribute

to customers and prospective customers Promotional Points of up to but not more than sixteen

percent (16%) of Twin River net terminal income for the Prior Marketing Year. For avoidance of

doubt, as a result of the foregoing amendment, the approved amount of Promotional Points that

may be distributed by UTGR pursuant to the Initial and Supplementary Promotional Points

Programs, in the aggregate, may be up to but not more than twenty percent (20%) of the amount of

net terminal income of Twin River for the Prior Marketing Year, plus an additional seven hundred

fifty thousand dollars ($750,000), subject however, to subsections (a)(3) and (a)(4) below. The

terms and conditions of the Initial and Supplementary Promotional Points Programs applicable to

Twin River shall be established from time to time by the Division, and such terms and conditions

shall include, without limitation, a Sstate fiscal-year audit of the program, the cost of which audit

shall be borne by UTGR.

     (2) For the avoidance of doubt, the foregoing supersedes and replaces the provisions of the

UTGR Master Contract as established by Chapter 016, Section 4(a)(ii) P.L. 2010, ch. 016, § 4(a)(ii)

of Part A of the public laws of 2010, as amended pursuant to Chapter 151, Article 25, Section 8

P.L. 2011, ch. 151, art. 25, § 8 of the Public Laws of 2011.

     (3) Notwithstanding the foregoing or anything in the general or public laws to the contrary,

the amendment to the UTGR Master Contract shall provide that nothing shall prohibit UTGR, with

prior approval from the Division, from spending additional funds on the Initial and/or

Supplementary Promotional Points Programs (i.e., distributing to customers and prospective

customers Promotional Points in amounts in excess of the amounts initially-approved by the

Division with respect to the Initial and/or Supplementary Promotional Points Program), even if

such additional amounts exceed four percent (4%) of Twin River net terminal income for the Prior

Marketing Year plus seven hundred fifty thousand dollars ($750,000) in regard to the Initial

Promotional Points Program for Twin River, or exceed sixteen percent (16%) of Twin River net

terminal income for the Prior Marketing Year in regard to the Supplementary Promotional Points

Program for Twin River, or exceed twenty percent (20%) of Twin River net terminal income for

the Prior Marketing Year plus seven hundred fifty thousand dollars ($750,000) in regard to the

Twin River Initial and Supplementary Promotional Points Programs in the aggregate; provided

however, that the expense of any such additional spending on Promotional Points shall be borne by

UTGR, subject to subsection (a)(4) below.

     (4) Notwithstanding any prior public or general law, rule, regulation, or policy to the

contrary, UTGR shall remit to the Division the amount of any funds spent by UTGR in excess of

the amounts initially-approved by the Division with respect to the Initial and/or Supplementary

Promotional Points Programs – i.e., distributions to customers and prospective customers of

Promotional Points in excess of the amounts initially-approved by the Division for the Initial and/or

Supplementary Promotional Points Program, all pursuant to subsection (a)(3) above – and the

Division shall distribute such funds to the entities (including UTGR) entitled to a portion (or

percent) of net terminal income generated at Twin River pursuant to §42-61.2-7 of the Rhode Island

General Laws, paying to each such entity (including UTGR) that portion of the funds that is equal

to its portion (or percent) of net terminal income generated at Twin River as set forth in §42-61.2-

7 of the Rhode Island General Laws.

     (b) Except to the extent amended and/or clarified pursuant to subsection (a) above, the

terms, provisions and conditions of the UTGR Master Contract, including without limitation those

terms, provisions and conditions relating to the Initial Promotion Points Program, the

Supplementary Promotional Points Program and the Marketing Program, shall remain in full force

and effect. If there is a conflict between any provision of the UTGR Master Contract and this act,

the provisions of this act control.

     SECTION 6. Authorized Procurement of Sixth Amendment to the Newport Grand Master

Contract. Notwithstanding any general or public law, regulation or rule to the contrary, within

ninety (90) days of the enactment of this act, the Division is hereby expressly authorized,

empowered and directed to enter into with Newport Grand a Sixth Amendment to the Newport

Grand Master Contract as described in this section 6, to become effective April 1, 2017, except the

amendment made pursuant to subsection (b) below shall take effect pursuant to its terms:

     (a) Amendment to Newport Grand Supplementary Promotional Points Program.

     (1) The Supplementary Promotional Points Program applicable to Newport Grand, which

is in addition to the Initial Promotional Points Program, shall be amended so that Newport Grand

may distribute to customers and prospective customers Promotional Points up to but not more than

sixteen percent (16%) of Newport Grand net terminal income for the Prior Marketing Year. For

avoidance of doubt, as a result of the foregoing amendment, the approved amount of Promotional

Points that may be distributed by Newport Grand pursuant to the Initial and Supplementary

Promotional Points Programs, in the aggregate, may be up to but not more than twenty percent

(20%) of the amount of net terminal income of Newport Grand for the Prior Marketing Year, plus

an additional seven hundred fifty thousand dollars ($750,000), subject however, to subsections

(a)(3) and (a)(4) below. The terms and conditions of the Initial and Supplementary Promotional

Points Programs applicable to Newport Grand shall be established from time to time by the

Division, and such terms and conditions shall include, without limitation, a Sstate fiscal-year audit

of the program, the cost of which audit shall be borne by Newport Grand.

     (2) For the avoidance of doubt, the foregoing supersedes and replaces the provisions of the

Newport Grand Master Contract as established by Chapter 016, Section 4(a)(ii) P.L. 2010, ch. 016,

§ 4(a)(ii) of Part B of the public laws of 2010, as amended pursuant to Chapter 151, Article 25,

Section 8 of the Public Laws of 2011 P.L. 2011, ch. 151, art. 25, § 8.

     (3) Notwithstanding the foregoing or anything in the general or public laws to the contrary,

the amendment to the Newport Grand Master Contract shall provide that nothing shall prohibit

Newport Grand, with prior approval from the Division, from spending additional funds on the

Initial and/or Supplementary Promotional Points Programs (i.e., distributing to customers and

prospective customers Promotional Points in amounts in excess of the amounts initially-approved

by the Division with respect to the Initial and/or Supplementary Promotional Points Program), even

if such additional amounts exceed four percent (4%) of Newport Grand net terminal income for the

Prior Marketing Year plus seven hundred fifty thousand dollars ($750,000) in regard to the Initial

Promotional Points Program for Newport Grand, or exceed sixteen percent (16%) of Newport

Grand net terminal income for the Prior Marketing Year in regard to the Supplementary

Promotional Points Program for Newport Grand, or exceed twenty percent (20%) of Newport

Grand net terminal income for the Prior Marketing Year plus seven hundred fifty thousand dollars

($750,000) in regard to the Newport Grand Initial and Supplementary Promotional Points Programs

in the aggregate; provided however, that the expense of any such additional spending on

Promotional Points shall be borne by Newport Grand, subject to subsection (a)(4) below.

     (4) Notwithstanding any prior public or general law, rule, regulation or policy to the

contrary, Newport Grand shall remit to the Division the amount of any funds spent by Newport

Grand in excess of the amounts initially-approved by the Division with respect to the Initial and/or

Supplementary Promotional Points Programs – i.e., distributions to customers and prospective

customers of Promotional Points in excess of the amounts initially-approved by the Division for

the Initial and/or Supplementary Promotional Points Program, all pursuant to subsection (a)(3)

above – and the Division shall distribute such funds to the entities (including Newport Grand)

entitled to a portion (or percent) of net terminal income generated at Newport Grand pursuant to

§42-61.2-7 of the Rhode Island General Laws, paying to each such entity (including Newport

Grand) that portion of the funds that is equal to its portion (or percent) of net terminal income

generated at Newport Grand as set forth in §42-61.2-7 of the Rhode Island General Laws.

     (b) Amendment to conform Newport Grand Master Contract to amendment to §42-61.2-7

of the Rhode Island General Laws. The Newport Grand Master Contract shall be amended to

conform that contract to the amendments made by section 2 of this act to §42-61.2-7 of the Rhode

Island General Laws. More specifically, the Newport Grand Master Contract shall be amended

such that the last sentence of Section 3.1 of the Fourth Amendment to the Newport Grand Master

Contract (dated July 14, 2015), shall read as follows, or with the following effect: "The increase in

rate of net terminal income payable to Newport Grand provided for in this Section 3.1 shall sunset

and expire upon the commencement of the operation of casino gaming at Twin River-Tiverton's

facility located in the town of Tiverton, and the rate in effect as of June 30, 2013 shall be reinstated,

and payable to the licensed entity hosting the casino gaming at such facility."

     (c) Except to the extent amended and/or clarified pursuant to subsections (a) and (b) above,

the terms, provisions, and conditions of the Newport Grand Master Contract, including without

limitation those terms, provisions and conditions relating to the Initial Promotion Points Program,

the Supplementary Promotional Points Program and the Marketing Program, shall remain in full

force and effect. If there is a conflict between any provision of the Newport Grand Master Contract

and this act, the provisions of this act control.

     SECTION 7. Section 23-17-38.1 of the General Laws in Chapter 23-17 entitled “Licensing

of Health-Care Facilities” is hereby amended to read as follows:

     23-17-38.1. Hospitals – Licensing fee.

     (a) There is also imposed a hospital licensing fee at the rate of five and eight hundred sixty-

two thousandths percent (5.862%) upon the net patient services revenue of every hospital for the

hospital's first fiscal year ending on or after January 1, 2014, except that the license fee for all

hospitals located in Washington County, Rhode Island shall be discounted by thirty-seven percent

(37%). The discount for Washington County hospitals is subject to approval by the Secretary of the

US Department of Health and Human Services of a state plan amendment submitted by the

executive office of health and human services for the purpose of pursuing a waiver of the uniformity

requirement for the hospital license fee. This licensing fee shall be administered and collected by

the tax administrator, division of taxation within the department of revenue, and all the

administration, collection and other provisions of chapter 51 of title 44 shall apply. Every hospital

shall pay the licensing fee to the tax administrator on or before July 11, 2016 and payments shall

be made by electronic transfer of monies to the general treasurer and deposited to the general fund.

Every hospital shall, on or before June 13, 2016, make a return to the tax administrator containing

the correct computation of net patient services revenue for the hospital fiscal year ending September

30, 2014, and the licensing fee due upon that amount. All returns shall be signed by the hospital's

authorized representative, subject to the pains and penalties of perjury.

     (b)(a) There is also imposed a hospital licensing fee at the rate of five and six hundred fifty-

two thousandths percent (5.652%) upon the net patient-services revenue of every hospital for the

hospital's first fiscal year ending on or after January 1, 2015, except that the license fee for all

hospitals located in Washington County, Rhode Island shall be discounted by thirty-seven percent

(37%). The discount for Washington County hospitals is subject to approval by the Secretary of the

U.S. Department of Health and Human Services of a state plan amendment submitted by the

executive office of health and human services for the purpose of pursuing a waiver of the uniformity

requirement for the hospital license fee. This licensing fee shall be administered and collected by

the tax administrator, division of taxation within the department of revenue, and all the

administration, collection, and other provisions of chapter 51 of title 44 shall apply. Every hospital

shall pay the licensing fee to the tax administrator on or before July 10, 2017, and payments shall

be made by electronic transfer of monies to the general treasurer and deposited to the general fund.

Every hospital shall, on or before June 14, 2017, make a return to the tax administrator containing

the correct computation of net patient-services revenue for the hospital fiscal year ending

September 30, 2015, and the licensing fee due upon that amount. All returns shall be signed by the

hospital's authorized representative, subject to the pains and penalties of perjury.

     (b) There is also imposed a hospital licensing fee at the rate of five and eight hundred fifty-

six thousandths percent (5.856%) of upon the net patient-services revenue of every hospital for the

hospital's first fiscal year ending on or after January 1, 2016, except that the license fee for all

hospitals located in Washington County, Rhode Island shall be discounted by thirty-seven percent

(37%). The discount for Washington County hospitals is subject to approval by the Secretary of the

U.S. Department of Health and Human Services of a state plan amendment submitted by the

executive office of health and human services for the purpose of pursuing a waiver of the uniformity

requirement for the hospital license fee. This licensing fee shall be administered and collected by

the tax administrator, division of taxation within the department of revenue, and all the

administration, collection, and other provisions of chapter 51 of title 44 shall apply. Every hospital

shall pay the licensing fee to the tax administrator on or before July 10, 2018, and payments shall

be made by electronic transfer of monies to the general treasurer and deposited to the general fund.

Every hospital shall, on or before June 14, 2018, make a return to the tax administrator containing

the correct computation of net patient-services revenue for the hospital fiscal year ending

September 30, 2016, and the licensing fee due upon that amount. All returns shall be signed by the

hospital's authorized representative, subject to the pains and penalties of perjury.

     (c) For purposes of this section the following words and phrases have the following

meanings:

     (1) "Hospital" means the actual facilities and buildings in existence in Rhode Island,

licensed pursuant to § 23-17-1 et seq. on June 30, 2010, and thereafter any premises included on

that license, regardless of changes in licensure status pursuant to chapter 17.14 of title 23 (hospital

conversions) and §23-17-6(b) (change in effective control), that provides short-term acute inpatient

and/or outpatient care to persons who require definitive diagnosis and treatment for injury, illness,

disabilities, or pregnancy. Notwithstanding the preceding language, the negotiated Medicaid

managed care payment rates for a court-approved purchaser that acquires a hospital through

receivership, special mastership, or other similar state insolvency proceedings (which court-

approved purchaser is issued a hospital license after January 1, 2013) shall be based upon the newly

negotiated rates between the court-approved purchaser and the health plan, and such rates shall be

effective as of the date that the court-approved purchaser and the health plan execute the initial

agreement containing the newly negotiated rate. The rate-setting methodology for inpatient hospital

payments and outpatient hospital payments set for the forth in §§ 40-8-13.4(b)(1)(B)(iii) and 40-

8-13.4(b)(2), respectively, shall thereafter apply to negotiated increases for each annual twelve-

month (12) period as of July 1 following the completion of the first full year of the court-approved

purchaser's initial Medicaid managed care contract.

     (2) "Gross patient services revenue" means the gross revenue related to patient care

services.

     (3) "Net patient services revenue" means the charges related to patient care services less (i)

charges attributable to charity care; (ii) bad debt expenses; and (iii) contractual allowances.

     (d) The tax administrator shall make and promulgate any rules, regulations, and procedures

not inconsistent with state law and fiscal procedures that he or she deems necessary for the proper

administration of this section and to carry out the provisions, policy, and purposes of this section.

     (e) The licensing fee imposed by this section shall apply to hospitals as defined herein that

are duly licensed on July 1, 2016 2017, and shall be in addition to the inspection fee imposed by §

23-17-38 and to any licensing fees previously imposed in accordance with § 23-17-38.1.

     SECTION 8. Chapter 44-1 of the General Laws entitled "State Tax Officials" is hereby

amended by adding thereto the following sections:

     44-1-37. Administrative penalties and attorney's fees.

     (a) Whenever a licensee and/or a taxpayer violates any provision of title 44 or the

regulations promulgated thereunder, the tax administrator may, in accordance with the

requirements of the Aadministrative Pprocedures Aact, Cchapter 35 of Ttitle 42 of the Rhode

Island General Laws:

     (1) Revoke or suspend a license or permit issued by the division of taxation;

     (2) Levy an administrative penalty in an amount not less than one hundred ($100) nor more

than fifty thousand dollars ($50,000);

     (3) Order the violator to cease such actions; and/or

     (4) Any combination of the above penalties.

     (b) The tax administrator is hereby authorized, and may in his or her discretion, recover

the reasonable cost of legal services provided by in-house attorneys in the Ddepartment of

Rrevenue and/or the Ddivision of Ttaxation incurred in matters pertaining to administrative

hearings, court hearings, and appeals. Nothing in this section shall limit the power of the tax

administrator to retain outside legal counsel and to recover the costs of such legal counsel pursuant

to other provisions of the general laws.

     (c) Any monetary penalties assessed pursuant to this section shall be deposited in the

general fund.

     44-1-38. Jeopardy determinations.

     If the tax administrator believes that the collection of any amount of tax, interest, and/or

penalty assessed in a notice of deficiency determination will be jeopardized by a delay which that

could render a person or entity judgment proof and/or frustrate the collectability of said

determination, the tax administrator shall thereupon make a jeopardy determination of the amount

of tax required to be collected, including interest and penalties, if any. Said jeopardy determination

shall state briefly the facts upon which it is based. The amount of the tax, interest, and/or penalties

so determined shall be due and payable immediately upon the mailing by the tax administrator of

the notice of that jeopardy determination. Within thirty (30) days of the date of the mailing of the

notice of the jeopardy determination, the taxpayer may bring an action in the sixth (6th) division

district court appealing the jeopardy determination. Within twenty (20) days after the action is

commenced, the district court shall make a determination of whether or not the making of the

jeopardy assessment was reasonable under the circumstances.

     44-1-39. Information deemed state property.

     For the purpose of determining taxpayer compliance, any and all information or data

required to be generated or maintained pursuant to title 44 and/or the regulations promulgated

thereunder, shall be deemed to be the property of the State of Rhode Island.

     SECTION 9. Sections 44-11-2.2 and 44-11-29 of the General Laws in Chapter 44-11

entitled "Business Corporation Tax" are hereby amended to read as follows:

     44-11-2.2 Pass-Tthrough Entities – Definitions – Withholding – Returns.

     (a) Definitions.

     (1) "Pass-through entity" means a corporation that for the applicable tax year is treated as

an S Corporation under IRC § 1362(a) [26 U.S.C. § 1362(a)], and a general partnership, limited

partnership, limited liability partnership, trust, or limited liability company that for the applicable

tax year is not taxed as a corporation for federal tax purposes under the state's check-the-box

regulation.

     (2) "Member" means an individual who is a shareholder of an S corporation; a partner in a

general partnership, a limited partnership, or a limited liability partnership; a member of a limited

liability company; or a beneficiary of a trust;

     (3) "Nonresident" means an individual who is not a resident of or domiciled in the state, a

business entity that does not have its commercial domicile in the state, and a trust not organized in

the state.

     (b) Withholding.

     (1) A pass-through entity shall withhold income tax at the highest Rhode Island

withholding tax rate provided for individuals or nine percent (9%) seven percent (7%) for

corporations on the member's share of income of the entity which that is derived from or

attributable to sources within this state distributed to each nonresident member and pay the withheld

amount in the manner prescribed by the tax administrator. The pass-through entity shall be liable

for the payment of the tax required to be withheld under this section and shall not be liable to such

member for the amount withheld and paid over in compliance with this section. A member of a

pass-through entity that is itself a pass-through entity (a "lower-tier pass-through entity") shall be

subject to this same requirement to withhold and pay over income tax on the share of income

distributed by the lower-tier pass-through entity to each of its nonresident members. The tax

administrator shall apply tax withheld and paid over by a pass-through entity on distributions to a

lower-tier pass-through entity to the withholding required of that lower-tier pass-through entity.

     (2) A pass-through entity shall, at the time of payment made pursuant to this section, deliver

to the tax administrator a return upon a form prescribed by the tax administrator showing the total

amounts paid or credited to its nonresident members, the amount withheld in accordance with this

section, and any other information the tax administrator may require. A pass-through entity shall

furnish to its nonresident member annually, but not later than the fifteenth day of the third month

after the end of its taxable year, a record of the amount of tax withheld on behalf of such member

on a form prescribed by the tax administrator.

     (c) Notwithstanding subsection (b), a pass-through entity is not required to withhold tax

for a nonresident member if:

     (1) The member has a pro rata or distributive share of income of the pass-through entity

from doing business in, or deriving income from sources within, this Sstate of less than $1,000 per

annual accounting period;

     (2) The tax administrator has determined by regulation, ruling, or instruction that the

member's income is not subject to withholding; or

     (3) The member elects to have the tax due paid as part of a composite return filed by the

pass-through entity under subsection (d); or

     (4) The entity is a publicly traded partnership as defined by Section 7704(b) of the Internal

Revenue Code (26 U.S.C. § 7704(b)) that is treated as a partnership for the purposes of the Internal

Revenue Code and that has agreed to file an annual information return reporting the name, address,

taxpayer identification number and other information requested by the tax administrator of each

unitholder with an income in the state in excess of $500.

     (d) Composite return.

     (1) A pass-through entity may file a composite income tax return on behalf of electing

nonresident members reporting and paying income tax at the state's highest marginal rate on the

members' pro rata or distributive shares of income of the pass-through entity from doing business

in, or deriving income from sources within, this State.

     (2) A nonresident member whose only source of income within a state is from one or more

pass-through entities may elect to be included in a composite return filed pursuant to this section.

     (3) A nonresident member that has been included in a composite return may file an

individual income tax return and shall receive credit for tax paid on the member's behalf by the

pass-through entity.

     44-11-29. Notice to tax administrator of sale of assets – Tax due.

     (a) The sale or transfer of the major part in value of the assets of a domestic corporation,

domestic limited liability company, domestic limited partnership, or any other domestic business

entity, or of the major part in value of the assets situated in this state of a foreign corporation,

foreign limited liability company, foreign limited partnership, or any other foreign business entity,

other than in the ordinary course of trade and in the regular and usual prosecution of the

corporation's business by said corporation, limited liability company, limited partnership, or any

other business entity whether domestic or foreign, and the sale or transfer of the major part in value

of the assets of a domestic corporation, domestic limited liability company, domestic limited

partnership, or any other domestic corporation business entity, or of the major part in value of the

assets situated in this state of a foreign corporation, foreign limited liability company, foreign

limited partnership, or any other foreign business entity which that is engaged in the business of

buying, selling, leasing, renting, managing, or dealing in real estate, shall be fraudulent and void as

against the state unless the corporation, limited liability company, limited partnership, or any other

business entity, whether domestic or foreign, corporation shall, at least five (5) business days before

the sale or transfer, notify notifies the tax administrator of the proposed sale or transfer and of the

price, terms, and conditions of the sale or transfer and of the character and location of the assets by

requesting a letter of good standing from the tax division. Whenever a corporation, limited liability

company, limited partnership, or any other business entity, whether domestic or foreign, shall

makes such a sale or transfer, the tax imposed by this chapter any and all tax returns required to be

filed under this title must be filed and any and all taxes imposed under this title shall become due

and payable at the time when the tax administrator is so notified of the sale or transfer, or, if he or

she is not so notified, at the time when he or she should have been notified of the sale or transfer.

     (b) This section shall not apply to sales by receivers, assignees under a voluntary

assignment for the benefit of creditors, trustees in bankruptcy, debtors in possession in bankruptcy,

or public officers acting under judicial process.

     SECTION 10. 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:

     SECTION 10. Sections 44-18-7.1, 44-18-30 and 44-18-30.1 of the General Laws in

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

read as follows:

     44-18-7.1. Additional definitions.

     (a) "Agreement" means the Sstreamlined Ssales and Uuse Ttax Aagreement.

     (b) "Alcoholic Bbeverages" means beverages that are suitable for human consumption and

contain one-half of one percent (.5%) or more of alcohol by volume.

     (c) "Bundled Ttransaction" is the retail sale of two or more products, except real property

and services to real property, where (1) tThe products are otherwise distinct and identifiable, and

(2) tThe products are sold for one non-itemized price. A "bundled transaction" does not include the

sale of any products in which the "sales price" varies, or is negotiable, based on the selection by

the purchaser of the products included in the transaction.

     (i) "Distinct and identifiable products" does not include:

     (A) Packaging -- such as containers, boxes, sacks, bags, and bottles -- or other materials --

such as wrapping, labels, tags, and instruction guides -- that accompany the "retail sale" of the

products and are incidental or immaterial to the "retail sale" thereof. Examples of packaging that

are incidental or immaterial include grocery sacks, shoeboxes, dry cleaning garment bags, and

express delivery envelopes and boxes.

     (B) A product provided free of charge with the required purchase of another product. A

product is "provided free of charge" if the "sales price" of the product purchased does not vary

depending on the inclusion of the products "provided free of charge."

     (C) Items included in the member state's definition of "sales price," pursuant to Aappendix

C of the Aagreement.

     (ii) The term "one non-itemized price" does not include a price that is separately identified

by product on binding sales or other supporting sales-related documentation made available to the

customer in paper or electronic form including, but not limited to, an invoice, bill of sale, receipt,

contract, service agreement, lease agreement, periodic notice of rates and services, rate card, or

price list.

     (iii) A transaction that otherwise meets the definition of a "bundled transaction" as defined

above, is not a "bundled transaction" if it is:

     (A) The "retail sale" of tangible personal property and a service where the tangible personal

property is essential to the use of the service, and is provided exclusively in connection with the

service, and the true object of the transaction is the service; or

     (B) The "retail sale" of services where one service is provided that is essential to the use or

receipt of a second service and the first service is provided exclusively in connection with the

second service and the true object of the transaction is the second service; or

     (C) A transaction that includes taxable products and nontaxable products and the "purchase

price" or "sales price" of the taxable products is de minimis.

     1. De minimis means the seller's "purchase price" or "sales price" of the taxable products

is ten percent (10%) or less of the total "purchase price" or "sales price" of the bundled products.

     2. Sellers shall use either the "purchase price" or the "sales price" of the products to

determine if the taxable products are de minimis. Sellers may not use a combination of the

"purchase price" and "sales price" of the products to determine if the taxable products are de

minimis.

     3. Sellers shall use the full term of a service contract to determine if the taxable products

are de minimis; or

     (D) The "retail sale" of exempt tangible personal property and taxable tangible personal

property where:

     1. tThe transaction includes "food and food ingredients", "drugs", "durable medical

equipment", "mobility enhancing equipment", "over-the-counter drugs", "prosthetic devices" (all

as defined in § 44-18-7.1 this section) or medical supplies; and

     2. wWhere the seller's "purchase price" or "sales price" of the taxable tangible personal

property is fifty percent (50%) or less of the total "purchase price" or "sales price" of the bundled

tangible personal property. Sellers may not use a combination of the "purchase price" and "sales

price" of the tangible personal property when making the fifty percent (50%) determination for a

transaction.

     (d) "Certified Aautomated Ssystem (CAS)" means software certified under the

Aagreement to calculate the tax imposed by each jurisdiction on a transaction, determine the

amount of tax to remit to the appropriate state, and maintain a record of the transaction.

     (e) "Certified Sservice Pprovider (CSP)" means an agent certified under the Aagreement

to perform all the seller's sales and use tax functions, other than the seller's obligation to remit tax

on its own purchases.

     (f) Clothing and Related Items

     (i) "Clothing" means all human wearing apparel suitable for general use.

     (ii) "Clothing accessories or equipment" means incidental items worn on the person or in

conjunction with "clothing." "Clothing accessories or equipment" does not include "clothing,",

"sport or recreational equipment,", or "protective equipment."

     (iii) "Protective equipment" means items for human wear and designed as protection of the

wearer against injury or disease or as protections against damage or injury of other persons or

property but not suitable for general use. "Protective equipment" does not include "clothing,",

"clothing accessories or equipment,", and "sport or recreational equipment."

     (iv) "Sport or recreational equipment" means items designed for human use and worn in

conjunction with an athletic or recreational activity that are not suitable for general use. "Sport or

recreational equipment" does not include "clothing,", "clothing accessories or equipment,", and

"protective equipment."

     (g) Computer and Related Items

     (i) "Computer" means an electronic device that accepts information in digital or similar

form and manipulates it for a result based on a sequence of instructions.

     (ii) "Computer software" means a set of coded instructions designed to cause a "computer"

or automatic data processing equipment to perform a task.

     (iii) "Delivered electronically" means delivered to the purchaser by means other than

tangible storage media.

     (iv) "Electronic" means relating to technology having electrical, digital, magnetic, wireless,

optical, electromagnetic, or similar capabilities.

     (v) "Load and leave" means delivery to the purchaser by use of a tangible storage media

where the tangible storage media is not physically transferred to the purchaser.

     (vi) "Prewritten computer software" means "computer software," including prewritten

upgrades, which that is not designed and developed by the author or other creator to the

specifications of a specific purchaser. The combining of two (2) or more "prewritten computer

software" programs or prewritten portions thereof does not cause the combination to be other than

"prewritten computer software." "Prewritten computer software" includes software designed and

developed by the author or other creator to the specifications of a specific purchaser when it is sold

to a person other than the specific purchaser. Where a person modifies or enhances "computer

software" of which the person is not the author or creator, the person shall be deemed to be the

author or creator only of such person's modifications or enhancements. "Prewritten computer

software" or a prewritten portion thereof that is modified or enhanced to any degree, where such

modification or enhancement is designed and developed to the specifications of a specific

purchaser, remains "prewritten computer software;"; provided, however, that where there is a

reasonable, separately stated charge or an invoice or other statement of the price given to the

purchaser for such modification or enhancement, such modification or enhancement shall not

constitute "prewritten computer software."

     (h) Drugs and Related Items

     (i) "Drug" means a compound, substance, or preparation, and any component of a

compound, substance, or preparation, other than "food and food ingredients," "dietary

supplements" or "alcoholic beverages:":

     (A) Recognized in the official United States Pharmacopoeia, official Homeopathic

Pharmacopoeia of the United States, or official National Formulary, and supplement to any of them;

or

     (B) Intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease;

or

     (C) Intended to affect the structure or any function of the body.

     "Drug" shall also include insulin and medical oxygen whether or not sold on prescription.

     (ii) "Over-the-counter drug" means a drug that contains a label that identifies the product

as a drug as required by 21 C.F.R. § 201.66. The "over-the-counter-drug" label includes:

     (A) A "Drug Facts" panel; or

     (B) A statement of the "active ingredient(s)" with a list of those ingredients contained in

the compound, substance, or preparation.

     "Over-the-counter-drug" shall not include "grooming and hygiene products."

     (iii) "Grooming and hygiene products" are soaps and cleaning solutions, shampoo,

toothpaste, mouthwash, antiperspirants, and suntan lotions and screens, regardless of whether the

items meet the definition of "over-the-counter-drugs."

     (iv) "Prescription" means an order, formula, or recipe issued in any form of oral, written,

electronic, or other means of transmission by a duly licensed practitioner authorized by the laws of

the member state.

     (i) "Delivery charges" means charges by the seller of personal property or services for

preparation and delivery to a location designated by the purchaser of personal property or services

including, but not limited to,: transportation, shipping, postage, handling, crating, and packing.

     "Delivery charges" shall not include the charges for delivery of "direct mail' if the charges

are separately stated on an invoice or similar billing document given to the purchaser.

     (j) "Direct mail" means printed material delivered or distributed by United States mail or

other delivery service to a mass audience or to addressees on a mailing list provided by the

purchaser or at the direction of the purchaser when the cost of the items are not billed directly to

the recipients. "Direct mail" includes tangible personal property supplied directly or indirectly by

the purchaser to the direct mail seller for inclusion in the package containing the printed material.

"Direct mail" does not include multiple items of printed material delivered to a single address.

     (k) "Durable medical equipment" means equipment including repair and replacement parts

for same which:

     (i) Can withstand repeated use; and

     (ii) Is primarily and customarily used to serve a medical purpose; and

     (iii) Generally is not useful to a person in the absence of illness or injury; and

     (iv) Is not worn in or on the body.

     Durable medical equipment does not include mobility enhancing equipment.

     (l) Food and Related Items

     (i) "Food and food ingredients" means substances, whether in liquid, concentrated, solid,

frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are

consumed for their taste or nutritional value and seeds and plants used to grow food and food

ingredients. "Food and food ingredients" does not include "alcoholic beverages,", "tobacco,",

"candy,", "dietary supplements" and, "soft drinks", or "marijuana seeds or plants."

     (ii) "Prepared food" means:

     (A) Food sold in a heated state or heated by the seller;

     (B) Two (2) or more food ingredients mixed or combined by the seller for sale as a single

item; or

     (C) Food sold with eating utensils provided by the seller, including: plates, knives, forks,

spoons, glasses, cups, napkins, or straws. A plate does not include a container or packaging used to

transport the food.

     "Prepared food" in (B) does not include food that is only cut, repackaged, or pasteurized

by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring

cooking by the consumer as recommended by the Food and Drug Administration in chapter 3, part

401.11 of its Food Code so as to prevent food borne illnesses.

     (iii) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners

in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars,

drops, or pieces. "Candy" shall not include any preparation containing flour and shall require no

refrigeration.

     (iv) "Soft drinks" means non-alcoholic beverages that contain natural or artificial

sweeteners. "Soft drinks" do not include beverages that contain milk or milk products, soy, rice, or

similar milk substitutes, or greater than fifty percent (50%) of vegetable or fruit juice by volume.

     (v) "Dietary supplement" means any product, other than "tobacco,", intended to supplement

the diet that:

     (A) Contains one or more of the following dietary ingredients:

     1. A vitamin;

     2. A mineral;

     3. An herb or other botanical;

     4. An amino acid;

     5. A dietary substance for use by humans to supplement the diet by increasing the total

dietary intake; or

     6. A concentrate, metabolite, constituent, extract, or combination of any ingredient

described in above; and

     (B) Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or

if not intended for ingestion in such a form, is not represented as conventional food and is not

represented for use as a sole item of a meal or of the diet; and

     (C) Is required to be labeled as a dietary supplement, identifiable by the "Ssupplemental

Ffacts" box found on the label and as required pursuant to 21 C.F.R. § 101.36.

     (m) "Food sold through vending machines" means food dispensed from a machine or other

mechanical device that accepts payment.

     (n) "Hotel" means every building or other structure kept, used, maintained, advertised as,

or held out to the public to be a place where living quarters are supplied for pay to transient or

permanent guests and tenants and includes a motel.

     (i) "Living quarters" means sleeping rooms, sleeping or housekeeping accommodations, or

any other room or accommodation in any part of the hotel, rooming house, or tourist camp which

that is available for or rented out for hire in the lodging of guests.

     (ii) "Rooming house" means every house, boat, vehicle, motor court, or other structure

kept, used, maintained, advertised, or held out to the public to be a place where living quarters are

supplied for pay to transient or permanent guests or tenants, whether in one or adjoining buildings.

     (iii) "Tourist camp" means a place where tents or tent houses, or camp cottages, or cabins

or other structures are located and offered to the public or any segment thereof for human

habitation.

     (o) "Lease or rental" means any transfer of possession or control of tangible personal

property for a fixed or indeterminate term for consideration. A lease or rental may include future

options to purchase or extend. Lease or rental does not include:

     (i) A transfer of possession or control of property under a security agreement or deferred

payment plan that requires the transfer of title upon completion of the required payments;

     (ii) A transfer or of possession or control of property under an agreement that requires the

transfer of title upon completion of required payments and payment of an option price does not

exceed the greater of one hundred dollars ($100) or one percent of the total required payments; or

     (iii) Providing tangible personal property along with an operator for a fixed or

indeterminate period of time. A condition of this exclusion is that the operator is necessary for the

equipment to perform as designed. For the purpose of this subsection, an operator must do more

than maintain, inspect, or set-up the tangible personal property.

     (iv) Lease or rental does include agreements covering motor vehicles and trailers where the

amount of consideration may be increased or decreased by reference to the amount realized upon

sale or disposition of the property as defined in 26 U.S.C. § 7701(h)(1).

     (v) This definition shall be used for sales and use tax purposes regardless if a transaction

is characterized as a lease or rental under generally accepted accounting principles, the Internal

Revenue Code, the Uniform Commercial Code, or other provisions of federal, state, or local law.

     (vi) This definition will be applied only prospectively from the date of adoption and will

have no retroactive impact on existing leases or rentals. This definition shall neither impact any

existing sale-leaseback exemption or exclusions that a state may have, nor preclude a state from

adopting a sale-leaseback exemption or exclusion after the effective date of the Aagreement.

     (p) "Mobility enhancing equipment" means equipment, including repair and replacement

parts to same, which that:

     (i) Is primarily and customarily used to provide or increase the ability to move from one

place to another and which that is appropriate for use either in a home or a motor vehicle; and

     (ii) Is not generally used by persons with normal mobility; and

     (iii) Does not include any motor vehicle or equipment on a motor vehicle normally

provided by a motor vehicle manufacturer.

     Mobility enhancing equipment does not include durable medical equipment.

     (q) "Model 1 Seller" means a seller that has selected a CSP as its agent to perform all the

seller's sales and use tax functions, other than the seller's obligation to remit tax on its own

purchases.

     (r) "Model 2 Seller" means a seller that has selected a CAS to perform part of its sales and

use tax functions, but retains responsibility for remitting the tax.

     (s) "Model 3 Seller" means a seller that has sales in at least five member states, has total

annual sales revenue of at least five hundred million dollars ($500,000,000), has a proprietary

system that calculates the amount of tax due each jurisdiction, and has entered into a performance

agreement with the member states that establishes a tax performance standard for the seller. As

used in this definition, a seller includes an affiliated group of sellers using the same proprietary

system.

     (t) "Prosthetic device" means a replacement, corrective, or supportive devices including

repair and replacement parts for same worn on or in the body to:

     (i) Artificially replace a missing portion of the body;

     (ii) Prevent or correct physical deformity or malfunction; or

     (iii) Support a weak or deformed portion of the body.

     (u) "Purchaser" means a person to whom a sale of personal property is made or to whom a

service is furnished.

     (v) "Purchase price" applies to the measure subject to use tax and has the same meaning as

sales price.

     (w) "Seller" means a person making sales, leases, or rentals of personal property or

services.

     (x) "State" means any state of the United States and the District of Columbia.

     (y) "Telecommunications" tax base/exemption terms

     (i) Telecommunication terms shall be defined as follows:

     (A) "Ancillary services" means services that are associated with or incidental to the

provision of "telecommunications services", including, but not limited to, "detailed

telecommunications billing", "directory assistance", "vertical service", and "voice mail services".

     (B) "Conference bridging service" means an "ancillary service" that links two (2) or more

participants of an audio or video conference call and may include the provision of a telephone

number. "Conference bridging service" does not include the "telecommunications services" used

to reach the conference bridge.

     (C) "Detailed telecommunications billing service" means an "ancillary service" of

separately stating information pertaining to individual calls on a customer's billing statement.

     (D) "Directory assistance" means an "ancillary service" of providing telephone number

information, and/or address information.

     (E) "Vertical service" means an "ancillary service" that is offered in connection with one

or more "telecommunications services", which offers advanced calling features that allow

customers to identify callers and to manage multiple calls and call connections, including

"conference bridging services".

     (F) "Voice mail service" means an "ancillary service" that enables the customer to store,

send, or receive recorded messages. "Voice mail service" does not include any "vertical services"

that the customer may be required to have in order to utilize the "voice mail service".

     (G) "Telecommunications service" means the electronic transmission, conveyance, or

routing of voice, data, audio, video, or any other information or signals to a point, or between or

among points. The term "telecommunications service" includes such transmission, conveyance, or

routing in which computer processing applications are used to act on the form, code, or protocol of

the content for purposes of transmission, conveyance, or routing without regard to whether such

service is referred to as voice over Iinternet protocol services or is classified by the Federal

Communications Commission as enhanced or value added. "Telecommunications service" does not

include:

     (1) Data processing and information services that allow data to be generated, acquired,

stored, processed, or retrieved and delivered by an electronic transmission to a purchaser where

such purchaser's primary purpose for the underlying transaction is the processed data or

information;

     (2) Installation or maintenance of wiring or equipment on a customer's premises;

     (3) Tangible personal property;

     (4) Advertising, including, but not limited to, directory advertising.;

     (5) Billing and collection services provided to third parties;

     (6) Internet access service;

     (7) Radio and television audio and video programming services, regardless of the medium,

including the furnishing of transmission, conveyance, and routing of such services by the

programming service provider. Radio and television audio and video programming services shall

include, but not be limited to, cable service as defined in 47 U.S.C. § 522(6) and audio and video

programming services delivered by commercial mobile radio service providers, as defined in 47

CFR 20.3;

     (8) "Ancillary services"; or

     (9) Digital products "delivered electronically", including, but not limited to,: software,

music, video, reading materials or ring tones.

     (H) "800 service" means a "telecommunications service" that allows a caller to dial a toll-

free number without incurring a charge for the call. The service is typically marketed under the

name "800", "855", "866", "877", and "888" toll-free calling, and any subsequent numbers

designated by the Federal Communications Commission.

     (I) "900 service" means an inbound toll "telecommunications service" purchased by a

subscriber that allows the subscriber's customers to call in to the subscriber's prerecorded

announcement or live service. "900 service" does not include the charge for: collection services

provided by the seller of the "telecommunications services" to the subscriber, or service or product

sold by the subscriber to the subscriber's customer. The service is typically marketed under the

name "900 service," and any subsequent numbers designated by the Federal Communications

Commission.

     (J) "Fixed wireless service" means a "telecommunications service" that provides radio

communication between fixed points.

     (K) "Mobile wireless service" means a "telecommunications service" that is transmitted,

conveyed, or routed regardless of the technology used, whereby the origination and/or termination

points of the transmission, conveyance, or routing are not fixed, including, by way of example only,

"telecommunications services" that are provided by a commercial mobile radio service provider.

     (L) "Paging service" means a "telecommunications service" that provides transmission of

coded radio signals for the purpose of activating specific pagers; such transmissions may include

messages and/or sounds.

     (M) "Prepaid calling service" means the right to access exclusively "telecommunications

services", which must be paid for in advance and which that enables the origination of calls using

an access number or authorization code, whether manually or electronically dialed, and that is sold

in predetermined units or dollars of which the number declines with use in a known amount.

     (N) "Prepaid wireless calling service" means a "telecommunications service" that provides

the right to utilize "mobile wireless service", as well as other non-telecommunications services,

including the download of digital products "delivered electronically", content and "ancillary

services" which must be paid for in advance that is sold in predetermined units of dollars of which

the number declines with use in a known amount.

     (O) "Private communications service" means a telecommunications service that entitles the

customer to exclusive or priority use of a communications channel or group of channels between

or among termination points, regardless of the manner in which such channel or channels are

connected, and includes switching capacity, extension lines, stations, and any other associated

services that are provided in connection with the use of such channel or channels.

     (P) "Value-added non-voice data service" means a service that otherwise meets the

definition of "telecommunications services" in which computer processing applications are used to

act on the form, content, code, or protocol of the information or data primarily for a purpose other

than transmission, conveyance, or routing.

     (ii) "Modifiers of Sales Tax Base/Exemption Terms" -- the following terms can be used to

further delineate the type of "telecommunications service" to be taxed or exempted. The terms

would be used with the broader terms and subcategories delineated above.

     (A) "Coin-operated telephone service" means a "telecommunications service" paid for by

inserting money into a telephone accepting direct deposits of money to operate.

     (B) "International" means a "telecommunications service" that originates or terminates in

the United States and terminates or originates outside the United States, respectively. United States

includes the District of Columbia or a U.S. territory or possession.

     (C) "Interstate" means a "telecommunications service" that originates in one United States

state, or a United States territory or possession, and terminates in a different United States state or

a United States territory or possession.

     (D) "Intrastate" means a "telecommunications service" that originates in one United States

state or a United States territory or possession, and terminates in the same United States state or a

United States territory or possession.

     (E) "Pay telephone service" means a "telecommunications service" provided through any

pay telephone.

     (F) "Residential telecommunications service" means a "telecommunications service" or

"ancillary services" provided to an individual for personal use at a residential address, including an

individual dwelling unit such as an apartment. In the case of institutions where individuals reside,

such as schools or nursing homes, "telecommunications service" is considered residential if it is

provided to and paid for by an individual resident rather than the institution.

     The terms "ancillary services" and "telecommunications service" are defined as a broad

range of services. The terms "ancillary services" and "telecommunications service" are broader

than the sum of the subcategories. Definitions of subcategories of "ancillary services" and

"telecommunications service" can be used by a member state alone or in combination with other

subcategories to define a narrower tax base than the definitions of "ancillary services" and

"telecommunications service" would imply. The subcategories can also be used by a member state

to provide exemptions for certain subcategories of the more broadly defined terms.

     A member state that specifically imposes tax on, or exempts from tax, local telephone or

local telecommunications service may define "local service" in any manner in accordance with §

44-18.1-28, except as limited by other sections of this Agreement.

     (z) "Tobacco" means cigarettes, cigars, chewing, or pipe tobacco, or any other item that

contains tobacco.

     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 that 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 that

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); Vocational Industrial Clubs of

America (VICA); organized nonprofit golden age and senior citizens clubs for men and women;

and parent-teacher associations; and from the sale, storage, use, and other consumption in this state,

of and by the Industrial Foundation of Burrillville, a Rhode Island domestic nonprofit corporation.

     (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 that 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, or sales promotion, nor does it mean or include

distribution operations that 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 § 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 § 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 § 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 § 44-18-7.1(h)(iii).

     (ii) Durable medical equipment as defined in § 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 that 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 § 44-18-7.1(t),

sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles, eyeglasses,

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

and mobility enhancing equipment as defined in § 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 that 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 § 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 § 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 §§ 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 § 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 § 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 that 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 subsection (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 that is

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

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

school year; that keeps and furnishes to students and others records required and accepted for

entrance to schools of secondary, collegiate, or graduate rank; and 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) sSpecial adaptations, (b) tThe component parts of the special

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

accessible public motor vehicle" as defined in § 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 heating fuel.

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

this state of electricity and gas.

     (22) Manufacturing machinery and equipment.

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

molds, machinery, 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

that is not to be sold and that 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 that has been put through a process of smelting or refining, including, but not limited

to,: gold, silver, platinum, rhodium, and chromium, and that 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 that 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 watercraft that are in excess of five (5)

net tons and that 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 taking or

attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of it 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 § 20-2-27.1 that 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; and (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; and (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 that 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 §§ 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 that 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 § 31-1-8 and is eligible for

registration displaying farm plates as provided for in § 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 subsection (18) of this