2020 -- S 2645

========

LC004970

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

____________

A N   A C T

RELATING TO TAXATION - BEER AND MALT BEVERAGE EXEMPTION

     

     Introduced By: Senator Walter S. Felag

     Date Introduced: February 27, 2020

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

1

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

2

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

3

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

4

     There are exempted from the taxes imposed by this chapter the following gross receipts:

5

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

6

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

7

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

8

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

9

     (2) Newspapers.

10

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

11

newspaper.

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

 

1

service or management entity under contract to the educational institutions.

2

     (4) Containers.

3

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

4

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

5

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

6

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

7

contents with the container.

8

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

9

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

10

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

11

the contents or when resold for refilling.

12

     (D) Keg and barrel containers, whether returnable or not, when sold to alcoholic beverage

13

producers who place the alcoholic beverages in the containers.

14

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

15

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

16

containers."

17

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

18

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

19

the United States of America, of tangible personal property by hospitals not operated for a profit;

20

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

21

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

22

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

23

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

24

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

25

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

26

America, Phi Beta Lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers

27

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

28

America (VICA); organized nonprofit golden age and senior citizens clubs for men and women;

29

and parent-teacher associations; and from the sale, storage, use, and other consumption in this state,

30

of and by the Industrial Foundation of Burrillville, a Rhode Island domestic nonprofit corporation.

31

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

32

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

33

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

34

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

 

LC004970 - Page 2 of 18

1

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

2

such materials and supplies (materials and/or supplies are defined as those that are essential to the

3

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

4

without payment of the tax.

5

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

6

or organization but shall in that instance provide his or her suppliers with certificates in the form

7

as determined by the division of taxation showing the reason for exemption and the contractor's

8

records must substantiate the claim for exemption by showing the disposition of all property so

9

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

10

on the property used.

11

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

12

(i) Gasoline and other products taxed under chapter 36 of title 31 and (ii) Fuels used for the

13

propulsion of airplanes.

14

     (7) Purchase for manufacturing purposes.

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

     (iii) "Consumed" includes mere obsolescence.

25

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

26

assembling, preparing, or producing.

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

distribution operations that occur subsequent to production operations, such as handling, storing,

 

LC004970 - Page 3 of 18

1

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

2

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

3

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

4

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

5

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

6

the municipality where it is located.

7

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

8

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

9

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

10

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

11

machines, or prepared food, as those terms are defined in § 44-18-7.1, unless the prepared food is:

12

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

13

except sub-sector 3118 (bakeries);

14

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

15

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

16

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

17

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

18

glasses, cups, napkins, or straws.

19

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

20

use, or other consumption in this state, of:

21

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

22

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

23

over-the-counter drugs and grooming and hygiene products as defined in § 44-18-7.1(h)(iii).

24

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

25

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

26

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

27

delivery pumps that are sold on prescription to individuals to be used by them to dispense or

28

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

29

administer prescription drugs, shall also be exempt from tax.

30

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

31

storage, use, or other consumption in this state, of prosthetic devices as defined in § 44-18-7.1(t),

32

sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles, eyeglasses,

33

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

34

and mobility enhancing equipment as defined in § 44-18-7.1(p), including wheelchairs, crutches,

 

LC004970 - Page 4 of 18

1

and canes.

2

     (12) Coffins, caskets, urns, shrouds and burial garments. From the sale and from the

3

storage, use, or other consumption in this state of coffins, caskets, urns, shrouds, and other burial

4

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

5

     (13) Motor vehicles sold to nonresidents.

6

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

7

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

8

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

9

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

10

nonresidents is not exempt from the tax imposed under § 44-18-20. In that event, the bona fide

11

nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed

12

in his or her state of residence not to exceed the rate that would have been imposed under § 44-18-

13

20. Notwithstanding any other provisions of law, a licensed motor vehicle dealer shall add and

14

collect the tax required under this subdivision and remit the tax to the tax administrator under the

15

provisions of chapters 18 and 19 of this title. When a Rhode Island licensed, motor vehicle dealer

16

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

17

nonresident as provided in this section, the dealer in computing the tax takes into consideration the

18

law of the state of the nonresident as it relates to the trade-in of motor vehicles.

19

     (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may

20

require any licensed motor vehicle dealer to keep records of sales to bona fide nonresidents as the

21

tax administrator deems reasonably necessary to substantiate the exemption provided in this

22

subdivision, including the affidavit of a licensed motor vehicle dealer that the purchaser of the

23

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

24

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

25

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

26

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

27

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

28

provisions of § 44-18-20.

29

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

30

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

31

licensed under § 40-9-11.1.

32

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

33

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

34

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

 

LC004970 - Page 5 of 18

1

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

2

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

3

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

4

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

5

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

6

portion has as its primary purpose the control of the pollution or contamination of the waters or air

7

of this state. As used in this subdivision, "facility" means any land, facility, device, building,

8

machinery, or equipment.

9

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

10

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

11

organizations and associations mentioned in subsection (5), or by privately owned and operated

12

summer camps for children.

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

school year; that keeps and furnishes to students and others records required and accepted for

22

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

23

which inures to the benefit of any individual.

24

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

25

     (i) From the sale of: (A) Special adaptations; (B) The component parts of the special

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

assisted controls, raised tops or dropped floors, raised entry doors, or alternative signaling devices

 

LC004970 - Page 6 of 18

1

to auditory signals.

2

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

3

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

4

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

5

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

6

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

7

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

8

adaptations, including installation.

9

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

10

state of every type of heating fuel.

11

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

12

this state of electricity and gas.

13

     (22) Manufacturing machinery and equipment.

14

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

15

molds, machinery, equipment (including replacement parts), and related items to the extent used in

16

an industrial plant in connection with the actual manufacture, conversion, or processing of tangible

17

personal property, or to the extent used in connection with the actual manufacture, conversion, or

18

processing of computer software as that term is utilized in industry numbers 7371, 7372, and 7373

19

in the standard industrial classification manual prepared by the Technical Committee on Industrial

20

Classification, Office of Statistical Standards, Executive Office of the President, United States

21

Bureau of the Budget, as revised from time to time, to be sold, or that machinery and equipment

22

used in the furnishing of power to an industrial manufacturing plant. For the purposes of this

23

subdivision, "industrial plant" means a factory at a fixed location primarily engaged in the

24

manufacture, conversion, or processing of tangible personal property to be sold in the regular

25

course of business;

26

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

27

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

28

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

29

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

30

manual prepared by the Technical Committee on Industrial Classification, Office of Statistical

31

Standards, Executive Office of the President, United States Bureau of the Budget, as revised from

32

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

33

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

34

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

 

LC004970 - Page 7 of 18

1

that is not to be sold and that would be exempt under subdivision (7) or this subdivision if purchased

2

from a vendor or machinery and equipment and related items used during any manufacturing,

3

converting, or processing function is exempt under this subdivision even if that operation, function,

4

or purpose is not an integral or essential part of a continuous production flow or manufacturing

5

process;

6

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

7

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

8

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

9

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

10

identifiable as to use.

11

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

12

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

13

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

14

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

15

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

16

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

17

the word "automobile" means a private passenger automobile not used for hire and does not refer

18

to any other type of motor vehicle.

19

     (24) Precious metal bullion.

20

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

21

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

22

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

23

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

24

to: gold, silver, platinum, rhodium, and chromium, and that is in a state or condition that its value

25

depends upon its content and not upon its form.

26

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

27

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

28

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

29

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

30

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

31

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

32

vessels.

33

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

34

consumption in this state of vessels and other watercraft that are in excess of five (5) net tons and

 

LC004970 - Page 8 of 18

1

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

2

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

3

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

4

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

5

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

6

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

7

attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of it for

8

profit or by sale, barter, trade, or in commercial channels. The term does not include subsistence

9

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

10

vessels and other watercraft with a Rhode Island party and charter boat license issued by the

11

department of environmental management pursuant to § 20-2-27.1 that meet the following criteria:

12

(i) The operator must have a current United States Coast Guard (U.S.C.G.) license to carry

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

recognition of the work being performed by the streamlined sales and use tax governing board,

29

upon passage of any federal law that authorizes states to require remote sellers to collect and remit

30

sales and use taxes, this unlimited exemption will apply as it did prior to October 1, 2012. The

31

unlimited exemption on sales of clothing and footwear shall take effect on the date that the state

32

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

33

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

34

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

 

LC004970 - Page 9 of 18

1

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

2

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

3

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

4

to, the Old Testament and the New Testament versions.

5

     (30) Boats.

6

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

7

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

8

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

9

made in this state or elsewhere; provided, that the nonresident transports the boat within thirty (30)

10

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

11

     (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may

12

require the seller of the boat or vessel to keep records of the sales to bona fide nonresidents as the

13

tax administrator deems reasonably necessary to substantiate the exemption provided in this

14

subdivision, including the affidavit of the seller that the buyer represented himself or herself to be

15

a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state.

16

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

17

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

18

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

19

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

20

schools or of organized activities of the enrolled students.

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

whether an individual, a group, a partnership, or a corporation for exemptions issued prior to July

33

1, 2002. For exemptions issued or renewed after July 1, 2002, there shall be two (2) levels. Level I

34

shall be based on proof of annual, gross sales from commercial farming of at least twenty-five

 

LC004970 - Page 10 of 18

1

hundred dollars ($2,500) and shall be valid for purchases subject to the exemption provided in this

2

subdivision except for motor vehicles with an excise tax value of five thousand dollars ($5,000) or

3

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

4

ten thousand dollars ($10,000) or greater and shall be valid for purchases subject to the exemption

5

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

6

dollars ($5,000) or greater. For the initial issuance of the exemptions, proof of the requisite amount

7

of annual gross sales from commercial farming shall be required for the prior year; for any renewal

8

of an exemption granted in accordance with this subdivision at either level I or level II, proof of

9

gross annual sales from commercial farming at the requisite amount shall be required for each of

10

the prior two (2) years. Certificates of exemption issued or renewed after July 1, 2002, shall clearly

11

indicate the level of the exemption and be valid for four (4) years after the date of issue. This

12

exemption applies even if the same equipment is used for ancillary uses, or is temporarily used for

13

a non-farming or a non-agricultural purpose, but shall not apply to motor vehicles acquired after

14

July 1, 2002, unless the vehicle is a farm vehicle as defined pursuant to § 31-1-8 and is eligible for

15

registration displaying farm plates as provided for in § 31-3-31.

16

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

17

state of compressed air.

18

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

19

United States, Rhode Island or POW-MIA flags.

20

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

21

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

22

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

23

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

24

qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under rules or

25

regulations that the tax administrator may prescribe.

26

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

27

of textbooks by an "educational institution," as defined in subsection (18) of this section, and any

28

educational institution within the purview of § 16-63-9(4), and used textbooks by any purveyor.

29

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

30

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

31

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

32

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

33

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

34

in § 23-19.1-4, where the "hazardous wastes" are generated in Rhode Island solely by the same

 

LC004970 - Page 11 of 18

1

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

2

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

3

of environmental management certifying that the equipment and/or supplies as used or consumed,

4

qualify for the exemption under this subdivision. If any information relating to secret processes or

5

methods of manufacture, production, or treatment is disclosed to the department of environmental

6

management only to procure an order, and is a "trade secret" as defined in § 28-21-10(b), it is not

7

open to public inspection or publicly disclosed unless disclosure is required under chapter 21 of

8

title 28 or chapter 24.4 of title 23.

9

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

10

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

11

shipped to points outside of Rhode Island that either: (i) Accompany the product that is sold; (ii)

12

Are shipped in bulk to out-of-state dealers for use in the sale of the product; or (iii) Are mailed to

13

customers at no charge.

14

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

15

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

16

in the form of U.S. government food stamps issued in accordance with the Food Stamp Act of 1977,

17

7 U.S.C. § 2011 et seq.

18

     (40) Transportation charges. From the sale or hiring of motor carriers as defined in § 39-

19

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

20

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

21

hours spent on the job.

22

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

23

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

24

in allowance on the boat of the buyer given in trade to the seller or of the proceeds applicable only

25

to the boat as are received from an insurance claim as a result of a stolen or damaged boat, towards

26

the purchase of a new or used boat by the buyer.

27

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

28

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

29

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

30

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

31

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

32

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

33

numismatic or investment value.

34

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

 

LC004970 - Page 12 of 18

1

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

2

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

3

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

4

machinery storage, seasonal farm worker housing, certified farm markets, bunker and trench silos,

5

feed storage sheds, and any other structures used in connection with commercial farming.

6

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

7

telecommunications service when purchased by a telecommunications company from another

8

telecommunications company to facilitate the provision of telecommunications service.

9

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

10

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

11

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

12

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

13

boat or vessel within this state exclusively for purposes of: (i) Delivery of the vessel to a facility in

14

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

15

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

16

repair of the boat or vessel; or (iii) Storage for the purpose of selling the boat or vessel.

17

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

18

in this state of tangible personal property used to display any jewelry product; provided that title to

19

the jewelry display product is transferred by the jewelry manufacturer or seller and that the jewelry

20

display product is shipped out of state for use solely outside the state and is not returned to the

21

jewelry manufacturer or seller.

22

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

23

imposed by §§ 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the storage,

24

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

25

subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the federal ten

26

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

27

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

28

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

29

interstate and international, toll-free terminating telecommunication service that is used directly

30

and exclusively by or for the benefit of an eligible company as defined in this subdivision; provided

31

that an eligible company employs on average during the calendar year no less than five hundred

32

(500) "full-time equivalent employees" as that term is defined in § 42-64.5-2. For purposes of this

33

section, an "eligible company" means a "regulated investment company" as that term is defined in

34

the Internal Revenue Code of 1986, 26 U.S.C. § 851, or a corporation to the extent the service is

 

LC004970 - Page 13 of 18

1

provided, directly or indirectly, to or on behalf of a regulated investment company, an employee

2

benefit plan, a retirement plan or a pension plan, or a state-chartered bank.

3

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

4

or other consumption in this state of mobile and/or manufactured homes as defined and subject to

5

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

6

     (51) Manufacturing business reconstruction materials.

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

the production and administrative facilities.

15

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

16

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

17

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

18

this exemption does not apply.

19

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

20

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

21

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

22

or vendors of flowers, plants, floral products, and natural and artificial floral arrangements that are

23

ultimately sold with flowers, plants, floral products, and natural and artificial floral arrangements

24

or are otherwise used in the decoration, fabrication, creation, processing, or preparation of flowers,

25

plants, floral products, or natural and artificial floral arrangements, including descriptive labels,

26

stickers, and cards affixed to the flower, plant, floral product, or arrangement, artificial flowers,

27

spray materials, floral paint and tint, plant shine, flower food, insecticide, and fertilizers.

28

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

29

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

30

of horses.

31

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

32

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

33

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

34

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

 

LC004970 - Page 14 of 18

1

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

2

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

3

its nonresidents is not exempt from the tax imposed under § 44-18-20; provided, further, that in

4

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

5

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

6

imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed, non-motorized

7

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

8

the tax to the tax administrator under the provisions of chapters 18 and 19 of this title. Provided,

9

that when a Rhode Island licensed, non-motorized recreational vehicle dealer is required to add and

10

collect the sales and use tax on the sale of a non-motorized recreational vehicle to a bona fide

11

nonresident as provided in this section, the dealer in computing the tax takes into consideration the

12

law of the state of the nonresident as it relates to the trade-in of motor vehicles.

13

     (ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may

14

require any licensed, non-motorized recreational vehicle dealer to keep records of sales to bona fide

15

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

16

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

17

vehicle dealer that the purchaser of the non-motorized recreational vehicle was the holder of, and

18

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

19

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

20

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

21

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

22

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

23

for, the use tax imposed under the provisions of § 44-18-20.

24

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

25

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

26

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

27

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

28

title 31.

29

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

30

sprinkler and fire alarm systems; emergency lighting and alarm systems; and the materials

31

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

32

occupancies existing therein in July 2003 in order to comply with any additional requirements for

33

such buildings arising directly from the enactment of the Comprehensive Fire Safety Act of 2003

34

and that are not required by any other provision of law or ordinance or regulation adopted pursuant

 

LC004970 - Page 15 of 18

1

to that act. The exemption provided in this subdivision shall expire on December 31, 2008.

2

     (56) Aircraft. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44-18-

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

water-to-air type pumps; wind turbines; towers used to mount wind turbines if specified by or sold

11

by a wind turbine manufacturer; DC to AC inverters that interconnect with utility power lines; and

12

manufactured mounting racks and ballast pans for solar collector, module, or panel installation. Not

13

to include materials that could be fabricated into such racks; monitoring and control equipment, if

14

specified or supplied by a manufacturer of solar thermal, solar photovoltaic, geothermal, or wind

15

energy systems or if required by law or regulation for such systems but not to include pumps, fans

16

or plumbing or electrical fixtures unless shipped from the manufacturer affixed to, or an integral

17

part of, another item specified on this list; and solar storage tanks that are part of a solar domestic

18

hot water system or a solar space heating system. If the tank comes with an external heat exchanger

19

it shall also be tax exempt, but a standard hot water tank is not exempt from state sales tax.

20

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

21

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

22

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

23

twenty (120) days from the date of delivery.

24

     (59) Dietary supplements. From the sale and from the storage, use, or other consumption

25

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

26

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

27

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

28

use, or other consumption of livestock and poultry of the kinds of products that ordinarily constitute

29

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

30

fibers for human use.

31

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

32

that is required by § 31-47.3-4.

33

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

34

as described in subsection (61) of this section.

 

LC004970 - Page 16 of 18

1

     (64) Alcoholic beverages. From the sale and storage, use, or other consumption in this state

2

by a Class A licensee of alcoholic beverages, as defined in § 44-18-7.1, excluding including beer

3

and malt beverages; provided, further, notwithstanding § 6-13-1 or any other general or public law

4

to the contrary, alcoholic beverages, as defined in § 44-18-7.1, shall not be subject to minimum

5

markup.

6

     (65) Seeds and plants used to grow food and food ingredients. From the sale, storage, use,

7

or other consumption in this state of seeds and plants used to grow food and food ingredients as

8

defined in § 44-18-7.1(l)(i). "Seeds and plants used to grow food and food ingredients" shall not

9

include marijuana seeds or plants.

10

     (66) Feminine hygiene products. From the sale and from the storage, use, or other

11

consumption of tampons, panty liners, menstrual cups, sanitary napkins, and other similar products

12

the principal use of which is feminine hygiene in connection with the menstrual cycle.

13

     SECTION 2. This act shall take effect upon passage.

========

LC004970

========

 

LC004970 - Page 17 of 18

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - BEER AND MALT BEVERAGE EXEMPTION

***

1

     This act would exempt beer and malt beverage from sales tax.

2

     This act would take effect upon passage.

========

LC004970

========

 

LC004970 - Page 18 of 18