Rhode Island Enacts New Economic and Marketplace Nexus Provisions

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: Taxable sales

When You Need to Register Once You Exceed the Threshold: Next transaction (state doesn’t specify)

Rhode Island has enacted legislation with new economic nexus and marketplace nexus provisions. Effective July 1, 2019, remote sellers. marketplace facilitators and referrers are required to collect and remit Rhode Island sales tax on all taxable sales into the state if, in the immediately preceding calendar year, they:

  • Have gross revenue from the sale of tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, and/or have taxable services delivered into this state equal to or exceeding $100,000; or
  • Have sold tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, and/or taxable services for delivery into Rhode Island in 200 or more separate transactions.

Individuals that have chosen not to register, collect, and remit, but instead provide notices to consumers about their use tax obligation under Rhode Island’s previous legislation, should continue to meet the notice and reporting requirements of that legislation through June 30, 2019. Beginning July 1, 2019, these individuals must register to collect and remit Rhode Island sales and use tax. The Rhode Island Division of Taxation notes that these individuals may also have notice and reporting requirements to meet in early 2020 in regard to taxable transactions within the first six months of calendar year 2019.

A marketplace facilitator is required to collect sales and use tax on all sales made through the marketplace to purchasers in Rhode Island whether or not the marketplace seller has or is required to have a permit to make sales at retail, or would have been required to collect and remit sales and use tax had the sale not been made through the marketplace provider.  A marketplace facilitator must certify to its marketplace sellers that it will collect and remit sales and use tax on sales of taxable items made through the marketplace. A marketplace seller that accepts a marketplace provider’s collection certificate in good faith may exclude sales made through the marketplace from the marketplace seller’s tax returns.

The legislation includes protections for marketplace facilitators against class-action lawsuits brought against them on behalf of purchasers arising from or in any way related to an overpayment of sales or use tax collected by the marketplace facilitator, regardless of whether such action is characterized as a tax refund claim. The legislation also provides protections for marketplace facilitators in instances where failure to collect and pay the correct amount of tax was due to incorrect information provided to the marketplace facilitator by the marketplace seller. (Ch. 11 (H.B. 5278), Laws 2019; Rhode Island Tax News, April/May/June 2019, Rhode Island Division of Taxation)

Posted on April 22, 2019