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Rhode Island has issued a notice regarding legislation that imposes sales and use tax on transportation network (commonly referred to as ride sharing or ride sourcing) companies (such as Uber and Lyft), effective July 1, 2016. A "transportation network company" means an entity that uses a digital network to connect transportation network company riders to transportation network operators who provide prearranged rides. The legislation states that any transportation network company operating in Rhode Island is a retailer and must file a business application and registration form with the Division of Taxation; obtain a permit from the Division to make sales at retail, and charge, collect, and remit sales and use tax to the Division.(Notice 2016-02, Rhode Island Division of Taxation, June 30, 2016)


On February 11, 2016, the U.S. Senate approved a permanent extension of the Internet Tax Freedom Act (ITFA) that is included in H.R. 644, the Trade Facilitation and Trade Enforcement Act of 2015. The bill also establishes an end date of June 30, 2020 for the seven states that currently impose a tax on internet access: Hawaii, New Mexico, North Dakota, Ohio, South Dakota, Texas, and Wisconsin. President Obama is expected to sign the permanent extension of the ITFA into law. The House of Representatives had previously passed H.R. 235, the Permanent Internet Tax Freedom Act, on December 15, 2015.  For our previous news item on this topic, visit Internet Tax Freedom Act Extended Through October 1, 2016.


UPDATE: On February 24, 2016, President Barack Obama signed into law the permanent extension of the Internet Tax Freedom Act.


(Trade Facilitation and Trade Enforcement Act of 2015)


On December 18, 2015, President Barack Obama signed H.R. 2029 – Consolidated Appropriations Act, 2016. The Act extends the Internet Tax Freedom Act (ITFA) through October 1, 2016. Prior provisions that grandfather taxes that existed prior to October 1, 1998 are also extended through October 1, 2016. For our previous news item on this topic, see Internet Tax Freedom Act Extended Until December 11, 2015. (H.R. 2029 – Consolidated Appropriations Act, 2016)


On November 3, 2015, the Rhode Island Department of Revenue introduced a self-audit program. The self-audit program currently applies only to Rhode Island use tax, specifically consumer’s use tax. Those holding a Rhode Island sales tax permit currently cannot participate in the program. Retailers are not eligible for the program, and only non-retailers can participate. However, all taxpayers – including retailers – may eventually be eligible, and the program may be expanded to include sales tax. The Division of Taxation will make a formal announcement regarding any expansion of the program. No time limit has been announced for the self-audit program. Taxpayers will use a special form to apply for the program. If the application is approved, the Tax Division assigns a revenue agent, who mails the taxpayer a letter of confirmation as well as guidance for conducting the self-audit. If a taxpayer completes the audit in accordance with program guidelines, the results are approved, and the taxpayer pays the tax due, penalties and up to two-thirds of the interest will be waived. Interest at 6% instead of 18% per year will be assessed.  Additionally, the Tax Division will agree not to audit the taxpayer for the tax type and time period involved in the self-audit. Businesses and individuals, whether resident or nonresident, may apply for the program. Unregistered taxpayers may also qualify for the Voluntary Disclosure program which may provide more beneficial results.  For more information including the application, visit the Rhode Island Division of Taxation self-audit webpage. (Advisory 2015-20, Department of Revenue, Division of Taxation, November 3, 2015)


On September 30, 2015 the U.S. House of Representative passed H.R. 719, which includes a provision that would extend the Internet Tax Freedom Act (ITFA) through December 11, 2015. The ITFA was scheduled to expire on October 1, 2015. The bill will now go to President Obama for signature.


To see our previous news item on the ITFA, visit Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.


To see an update on this news item, visit Internet Tax Freedom Act Extended Through October 1, 2016,


(H.R. 719)



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