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Rhode Island Sales & Use Tax Changes October 1, 2011

Key changes to Rhode Island’s sales and use tax will take effect October 1. As of that date, Rhode Island’s 7% sales and use tax will officially apply to all of the following:

• Non-prescription drugs, also known as over-the-counter drugs;
• Pre-written computer software delivered electronically, or by “load and leave,” including applications (“apps”) for smartphones and similar devices;
• The furnishing of certain package tours and scenic and sightseeing transportation; and
• Marijuana for medical use.

Another provision involves insurance proceeds that result from the total loss or destruction of a motor vehicle. Currently, a motorist who uses the proceeds to buy an automobile will not have to pay RI sales tax on the portion of the acquisition price attributable to the insurance proceeds. Effective October 1, the sales tax will apply to the entire sales price, without an allowance for an exemption for insurance proceeds.

If your business will be required to collect the sales tax as a result of these changes, you must file the state’s business application and registration form to obtain a sales tax permit. For a copy of the form, click here: http://www.tax.ri.gov/forms/2010/BAR%20092010.pdf

If you have any questions about the new sales tax regulations, or need any assistance with forms and compliance, please give us a call.