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The sales price of motor vehicle lease payments properly included personal property tax charged to the lessee by the lessor, for Rhode Island sales and use tax purposes.  Only taxes that are legally imposed on the consumer can be excluded from the sales price.  The property tax was legally imposed on the lessor and passed on to the lessee as a separately stated charge.  The property tax was not imposed on the lessee and therefore, the legal incidence of the tax remained on the lessor.  As the property tax was included in the sales price, the property tax was properly subject to Rhode Island sales and use tax. (Administrative Hearing Decision No. 2012-11, Rhode Island Division of Taxation, September 5, 2012)


Rhode Island has implemented statutory changes to the state’s sales and use tax regulation applicable to clothing. Effective October 1, 2012, clothing items with a sales price greater than $250 are subject to tax on the portion of the sales price that exceeds $250. Clothing items with a sales price of $250 or less will still be exempt. Clothing accessories or equipment, protective equipment, and sports or recreational equipment are still taxable. Prior to October 1, 2012, there was no threshold and all qualifying items were exempt regardless of the price. (Reg. SU 12-13, Rhode Island Division of Taxation, effective October 1, 2012)


Rhode Island Governor Lincoln Chafee has signed a budget bill establishing a tax amnesty program applicable to all state taxes collected by the Tax Administrator. The amnesty program will run from September 2, 2012 to November 15, 2012. Amnesty will apply to any taxable period ending on or prior to December 31, 2011. During the program, penalties will be waived for a taxpayer who submits an application and pays all tax and interest due or enters into an installment payment plan. Interest for periods covered by the program will be computed at the statutory interest rate less 25%. Eligible taxpayers can still apply for amnesty for taxable periods for which a bill or notice of deficiency determination has been sent and any periods in which an audit has been completed but not yet billed. Amnesty is not available to taxpayers who are under any criminal investigation or party to a pending civil or criminal proceeding for tax fraud. (Ch. 241 (H.B. 7323), Laws 2012, effective as noted)


Rhode Island’s regulation relating to mandatory electronic funds transfer (EFT) payments for sales and use tax and personal income tax withholding has been amended. Beginning January 1, 2010, any person with an average monthly sales and use tax liability of $200 or more per month for the look back period, must make payments via EFT. Any taxpayer with 10 or more employees, over the course of the look-back period, is required to make the withholding tax payments via EFT. Taxpayers who are required to make payments by EFT may request a waiver from the EFT requirement if they can show good cause. The regulation provides some reasons that would be considered good cause for a waiver. (Reg. EFT 09-01, Rhode Island Division of Taxation, effective January 1, 2010)


Rhode Island has amended it’s definition of a retailer to include a retailer who enters into an agreement with a resident, under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by link on an internet web site, or otherwise, to the seller. This presumption will only apply if the cumulative gross receipts from sales by the retailer to customers in the state who were referred by these resident solicitors are in excess of $5,000 during the preceding four quarterly periods ending on the last day of March, June, September, and December. The presumption can be rebutted by proof that the resident solicitor did not engage in any solicitation that would satisfy the U.S. Constitution during such four quarterly periods. (H.B. 5983, Laws 2009, effective as noted)



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