A N A C T
RELATING TO SALES AND USE TAXES -- ENFORCEMENT AND COLLECTION
It is enacted by the General Assembly as follows:
SECTION 1. Chapter 44-19 of the General Laws entitled "Sales and Use Taxes -- Enforcement and Collection" is hereby amended by adding thereto the following section:
44-19-41. Materialman -- Definitions and Application. -- (a) Notwithstanding any of the provisions of chapters 18 and 19 of this title, any retailer required to collect and remit state sales and use taxes pursuant to said chapters, who can demonstrate to the satisfaction of the tax administrator by February 1 of any year that for six (6) consecutive months within the most recent twelve (12) month period such retailer is a "materialman" as defined herein, may elect to report the sales on a cash basis as the consideration is received. Upon approval of the tax administrator, such materialman shall, with respect to sales made beginning the succeeding July 1st through June 30th, collect the tax due on sales to such contractors, subcontractors or repairmen of such building material, made during said period July 1st through June 30th, at the time and to the extent that such materialman receives the receipts from, or consideration for, such sales from contractors, subcontractors or repairmen; provided, however, that if a materialman receives a portion of such receipts or consideration such materialman shall collect the tax due on that portion at the time the portion is received, in which case the materialman will be required to file his or her return and to pay the tax due in the manner provided in section 44-19-10(a)(1). The taxes imposed by chapter 18 of this title on such receipts and consideration shall be deemed not to be imposed solely for purposes of determining when a materialman is required to collect and pay over said taxes to the tax administrator under section 44-19-10(a)(1), until such materialman has received payment of such receipts or consideration in money (or money's worth) from the contractor, subcontractor or repairman. A contractor, subcontractor or repairman who purchases building materials from a materialman pursuant to this section shall, at the time the contractor, subcontractor or repairman pays any portion of the purchase price, pay to such materialman the tax due on the portion of the purchase price so paid in accordance with section 44-18-19. For purposes of chapters 18 and 19 of title 44 "materialman" is defined as those retailers of lumber who are engaged in the business primarily of selling lumber and building materials to contractors, subcontractors, or repairmen to be used in the construction, erection, alteration, or repairing a building or other structure or in the making of any other improvements on land or the preparation thereof, and whose lumber and building material sales comprise of at least fifty percent (50%) of their total sales and who may file a notice of intention to claim a lien pursuant to chapter 28 of title 34 for said materials sold.
(b) The provisions of subsection (a) relating to the collection of tax at the time the materialman receives the receipts or consideration from such sales applies only to the in-house credit extended by the materialman. In the event that a materialman described in subsection (a) finances any portion of the receipts or consideration from a sale described in subsection (a), including any tax due thereon, directly or indirectly, with any person (other than a contractor, subcontractor or repairman described in subsection (a)), whether by factoring, or any other means, then said materialman shall be deemed to have received payment of such receipts or consideration in money (or money's worth) from such contractor, subcontractor or repairman and shall be required to pay over tax on such sales with the next return due, with a credit against such tax for any tax already paid over with respect to such sale. Any such amount of tax paid over in accordance with the prior sentence shall be on account of the tax required to be collected on the sale to which it relates and such materialman may take a credit against any tax paid by such contractor, subcontractor or repairman in the future on such sale, to ensure that tax paid over with respect to such sales does not exceed the amount of the tax imposed on such sale as if the entire purchase price has been paid at the time of sale.
(c) A materialman described in subsection (a) of this section, who has not collected the tax due on the full purchase price for a sale described in subsection (a) of this section from a contractor, subcontractor or repairman within one year of the date of sale, shall be required to pay over to the tax administrator the tax due on any balance of the full purchase price with such materialman's return for the period which includes the date which is one year after the date of such sale.
(d) The tax administrator may assess an additional tax due with respect to a sale described in subsection (a) of this section within three (3) years from the date the tax is required to be paid over to the tax administrator pursuant to this section; provided, however, that in the case of a willfully false or fraudulent return with intent to evade the tax, or where no return has been filed as prescribed by law, the tax may be assessed at any time.
(e) Every materialman described in subsection (a) of this section shall, in addition to those records required to be kept in compliance with chapters 18 and 19 of this title, keep the following records with respect to each sale of building materials described in subsection (a) of this section to a contractor, subcontractor or repairman: (1) the date of such sale; (2) proof that the sale meets the qualifications described in subsection (a); (3) the amount of credit, if any, extended by the said materialman to the contractor, subcontractor or repairman for each sale; (4) the terms for payment of the purchase price or repayment of any credit; and (5) the date or dates on which the purchase price is paid or credit is repaid, in part or whole, and the amount of each payment or repayment. Notwithstanding the provisions of subsection (a) of this section, the records referred to in this subdivision shall be preserved by said materialman for a period of three (3) years from the date the tax on each said sale is paid over to the tax administrator in full; provided, however, that the tax administrator may consent to their destruction within that period or may require that they be kept longer.
(f) No retailer shall avail himself or herself of this section without prior written approval of the tax administrator. The tax administrator shall grant that approval when the administrator is satisfied that the retailer qualifies as a materialman as defined in subsection (a) and when the retailer has submitted satisfactory evidence that the retailer can and will maintain records, in accordance with subsection (e) of this section, adequate to substantiate the election herein authorized. Any attempt on the part of any retailer to exercise this provision without prior written approval of the tax administrator shall be deemed to be failure to pay the tax and the retailer shall be subject to assessment for taxes on those sales plus penalties and interest thereon as provided for in this chapter.
(g) Notwithstanding the provision of this section, any retailer to whom this section may apply shall comply with all the administration, collection, and other provisions of chapters 18 and 19 of this title.
SECTION 2. This act shall take effect upon passage and shall apply to sales made and uses occurring on or after January 1, 2003, although made or occurring under a prior contract.