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Effective January 1, 2007, numerous Rhode Island sales and use tax regulations were amended to conform to the Streamlined Sales and Use Tax Agreement. These regulations include definitions relating to drugs, medical equipment, telecommunications, and clothing. Additionally, provisions applicable to delivery charges, direct mail, and exemption and resale certificates were also included. Conforming statutory amendments enacted in 2006 also became effective, and the state became a full member of the Agreement. (Rhode Island Division of Taxation, January 1, 2007)


The Rhode Island Division of Taxation is offering a Tax Amnesty Program that began July 15, 2006 and will expire on September 30, 2006. The program offers taxpayers the opportunity to clear unpaid tax obligations that were payable to the state and collected by the Tax Administrator. Unpaid penalties are waived for eligible applicants, as well as, civil or criminal charges for any taxpayer for the taxable period for which amnesty has been granted. Additionally, previously billed tax liabilities are eligible for the tax amnesty. Taxpayers who are under criminal investigation or involved in any pending criminal or civil court litigation, however, are not eligible for amnesty. Beginning October 1, 2006, the interest rate on unpaid taxes will increase to eighteen percent (18%). Taxpayers who do not apply for amnesty and are later convicted of fraud or willful intent to evade Rhode Island taxes will be subject to a $10,000 fine or one (1) year imprisonment or both. (


On June 30, 2006, Governor Donald Carcieri signed an agreement that allowed Rhode Island to file its petition to be a member of the Streamlined Sales Tax (SST) Governing Board. Effective January 1, 2007, the state will conform to the requirements of the SST Agreement. The SST conformity provisions were included in the Rhode Island budget bill (H.B. 7120), which also contained income tax and property tax provisions that are reported separately. (Tax Day #S.30, July 6, 2006)


Article 17, relating to Rhode Island omnibus tax, has been amended to allow additional time for state compliance with the Streamlined Sales and Use Tax Agreement. Originally scheduled to be completed by June 30, 2004, the statutory amendments necessary to bring the state into compliance with the Agreement are now due to be enacted by June 30, 2005. (R.I. Laws 2004, H.B. 8219; Article 17 Substitute as Amended, Section 5)


A taxpayer in the business of repairing fishing vessels was denied a refund for sales tax paid on marine paint after the issue was raised as a result of a 1999 audit. The taxpayer asserted that he was entitled to a refund because the paint was for certain jobs being used on vessels with a 50-ton carrying capacity, and those jobs could be identified, and those fishing vessels were being used for interstate commerce. However, the Hearing Officer agreed with the Division of Taxation, stating that, though the vessels were carrying cargo through interstate or international waters, they were leaving from and returning to the same port, and the fish caught were only being sold for the benefit of the owners. In addition, the paint had been held in inventory before being used, and storage is a taxable use of tangible personal property. As of June, 2002 paint was included in the list exempt supplies used on fishing vessels, but the change in law was not retroactive and the refund request period was from November 1, 1999 through June 30, 2002. (Administrative Hearing No. 2004-05, March 16, 2004)



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