Rhode Island Amends Definition of Hotel for Sales Tax and Hotel Tax Purposes

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)

Posted on August 24, 2015