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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)


On June 15, 2015, Representative Jason Chaffetz (R-UT) introduced the Remote Transactions Parity Act (RTPA) of 2015 in the U.S. House of Representatives. The bill – similar to the Marketplace Fairness Act (MFA) of 2015 – pertains to sales and use taxcollection obligations for remote sellers, but the RTPA contains some differences and several additional provisions. Unlike the MFA’s $1 million small seller exception, the RTPA’s small seller exception is as follows: first year: $10 million; second year: $5 million; third year: $1 million. The exception goes away in the fourth year. Furthermore, under the RTPA sellers utilizing an electronic marketplace are not considered small sellers and are not entitled to the exception, no matter the year. Under the RTPA, sellers would not be audited by states where they don’t have a physical presence. There would be a three year statute of limitations for assessments on remote sellers. The bill would enable remote sellers to refund over-collected tax to customers. The RTPA also specifies that a state would not be authorized to impose a sales and use tax collection requirement on remote sellers until it has certified multiple software providers that are certified in all states seeking to impose authorization requirements. The RTPA would also allow customers to pursue refunds of over-collected tax from remote sellers. However, RTPA does not preempt states from imposing sales and use taxes on remote sellers that do not have physical presence under this definition. It merely authorizes states to impose sales and use tax on remote sellers without a physical presence. Under the RTPA, if a seller has nexus under existing law, including Quill v. North Dakota, then the state may still impose a sales and use tax collection requirement.  The bill is assigned to the Judiciary Committee just like the MFA.  On July 1, 2015 it was referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law. (H.R. 2775, the Remote Transactions Parity Act of 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.


Rhode Island has enacted legislation that amends the definition of "hotel." "Hotel" means any facility offering a minimum of one room for which the public may, for a consideration, obtain transient lodging accommodations. The term "hotel" includes hotels, motels, tourist homes and camps, lodging houses, and inns. It also includes houses, condominiums or other residential dwelling units, regardless of the number of rooms, which are used and/or advertised for rent or occupancy. The term "hotel" does not include schools, hospitals, sanitariums, nursing homes, and chronic care centers. As a result of the amended definition, effective July 1, 2015, certain rentals are subject to Rhode Island sales tax and the hotel tax. If a person rents a vacation home or residential dwelling in its entirety for 30 days or less, the rental is subject to 7% sales tax and 1% hotel tax. If a person rents a room in a residential dwelling for 30 days or less, the rental will be subject to 7% sales tax and 1% hotel tax. All rentals of residential dwellings, including room rentals that have a documented agreement in place prior to July 1, 2015, are not subject to tax, so long as the rental takes place during 2015. If a person or business rents a room, vacation home, or other type of residential dwelling for a period greater than 30 consecutive days or for one calendar month to the same customer, the charges are not subject to sales tax or hotel tax. Any taxpayer making taxable rentals of rooms, vacation homes, or residential dwellings is required to apply for a sales tax permit. This applies to rentals under programs such as AirBNB or VRBO.  Hotels are not affected by this change and will continue to file sales and hotel tax. (Notice 2015-4, Rhode Island Division of Taxation, July 2015)



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