Effective Date: August 17, 2017 – register or comply with notice (through June 30, 2019); July 1, 2019 – mandatory registration
Threshold: gross revenue equal to or exceeding $100,000 or 200 or more separate transactions
Measurement Date: in the immediately preceding calendar year
Includable Transactions: Gross sales; Marketplace sales included towards the threshold for individual sellers
When You Need to Register Once You Exceed the Threshold: January 1 following the year the threshold is exceeded
On August 3, 2017, Rhode Island enacted affiliate and economic nexus with an alternative reporting requirement structure for those remote sellers that do not collect Rhode Island tax. Per the enacted legislation, the existence and/or presence of a non-collecting retailer’s, referrer’s, or retail sale facilitator’s in-state software on the devices of in-state customers constitutes physical presence in Rhode Island under Quill. Other activities that will constitute nexus in the state include:
A remote seller who satisfies the economic activity threshold has the option to collect tax or comply with the reporting requirement. The economic threshold activities are defined as:
“In-state software” is defined as “software used by in-state customers on their computers, smartphones, and other electronic and/or communication devices, including information or software such as cached files, cached software, or ‘cookies’, or other data tracking tools, that are stored on property in this state or distributed within this state, for the purpose of purchasing tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services.”
Beginning on August 17, 2017, and for each tax year thereafter, a non-collecting retailer shall either register to make sales at retail and collect and remit sales and use tax on all taxable sales into the state or:
At such time during any calendar year, or any portion thereof, that a referrer receives more than $10,000 from fees, commissions, and/or other compensation paid to it by retailers with whom it has a contract or agreement to list and/or advertise for sale tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services, the referrer shall within 30 days provide written notice to all such retailers that the retailers’ sales may be subject to this state’s sales and use tax.
Beginning January 15, 2018, and each year thereafter, a retail sale facilitator shall provide the division of taxation with:
There are exemptions for referrers and retail sale facilitators that have been provided within 90 days of the date of sale either a copy of the retailer’s Rhode Island sales tax permit or its resale certificate, or evidence of a fully completed Rhode Island or Streamlined agreement sales and use tax exemption certificate.
Any non-collecting retailer, referrer, or retail sale facilitator that fails to comply with any of the above requirements shall be subject to a penalty of $10 for each such failure, but not less than a total penalty of $10,000 per calendar year. Each instance of failing to comply with the requirements shall constitute a separate violation for purposes of calculating the penalty. (Ch. 302 (H.B. 5175), Laws 2017)
UPDATE: The Rhode Island Division of Taxation has issued helpful information regarding the notice and reporting requirements obligations for remote sellers created under this legislation. For more information, visit the Rhode Island Division of Taxation webpage.
UPDATE: On June 27, 2018, the Rhode Island Division of Taxation issued an announcement reminding remote sellers of their registration options, in light of the U.S. Supreme Court’s decision in South Dakota v. Wayfair.
UPDATE: Effective July 1, 2019, the option to comply with notice and reporting or collect is repealed. Non-collecting retailers will be considered remote sellers. See Rhode Island Enacts New Economic and Marketplace Nexus Provisions for the new provisions.