Rhode Island Sales Tax

Rhode Island has a reputation for being notoriously unfriendly to businesses when it comes to tax policy, but in terms of sales tax, the regulations are actually quite straightforward. You do need to take the time to learn about them, though, as you begin a new business or expand your current market area to include the state.

Rhode Island State Sales Tax Rates

In Rhode Island, there is only one sales tax rate for the entire state, and that is 7%. No local taxes are added anywhere, so you won’t have to worry about which rate to charge your customers. Rhode Island is also a member of the Streamlined Sales and Use Tax Agreement (SSUTA), which means, among other things, that the definitions for what transactions are subject to sales tax are uniform throughout the state.

Tax Nexus Requirements in Rhode Island

You don’t have to collect sales tax in Rhode Island unless you have a nexus, or a significant business presence there. Rhode Island outlines conditions that trigger nexus, including:

• Having an office or place of business in the state
• Having an employee, sales person, contractor, representative, or other agent working for you in the state
• Keeping goods in a warehouse, sample room, or another facility in the state
• Making deliveries to customers in Rhode Island using your own or a company motor vehicle
• Attending a trade show or craft fair in the state
• Advertising in the state

Rhode Island also has what’s commonly referred to as a click-through nexus law, which stipulates that having an affiliate based in the state who operates a website that sends customers to your company creates an obligation for you to collect and remit sales tax if your total gross receipts from those types of sales in the previous four quarters were more than $5,000.

Rhode Island’s economic nexus law states that any small business that performs 200 or more transactions or $100,000 or more in gross sales to Rhode Island residents must collect and remit sales tax to the state as well.

As an SSUTA member state, Rhode Island does encourage out-of-state sellers with no tax nexus in the state to voluntarily register to collect and remit sales tax on purchases made by Rhode Island customers.

What’s Taxable?

In general, most tangible personal property, as well as many services, are taxable in Rhode Island. Some notable exceptions include:

• Groceries
• Clothing and footwear
• Medical devices
• Prosthetic devices
• Newspapers
• Sales of original work by artists, composers and writers
• An assortment of items used in commercial fishing including fuel, boat engine parts, and “twine items”
• Candy containing flour

Many services are also taxable in Rhode Island, including telecommunications services, cable television services, and transportation services. Medical and janitorial services are exempt, along with some others.

Registration and Filing

You can register for a Rhode Island sales tax permit online, by mail, or in person at a Division of Taxation office location. Because Rhode Island is also a member of the SSUTA, you can register through their website as well, but you will have to register with all other member states simultaneously. If you operate in many states, or if you plan on expanding into a good number of them soon, this may make a lot of sense for you. If not, though, you can just deal directly with Rhode Island.

There is a $10 fee to register, and your permit must be renewed every year. The renewal costs $10 also, and you need to obtain a separate permit for each business location you operate in the state. You can file your sales tax returns and make payments online or through the mail, and the frequency with which you need to file will be based on the total average tax liability you incur each month.

Under Rhode Island’s system, the majority of businesses will file their returns monthly. If your average monthly tax liability for the preceding consecutive 6 months was below $200, you may file quarterly. Any time you don’t meet those criteria, however, you must return to a monthly filing schedule.

Due Dates and Penalties

Rhode Island state tax returns are due on the 20^th of the month following the close of the period in question. Even if you made no taxable sales during that period, you must file a return as long as you hold a valid Rhode Island sales tax permit.

Monthly Due Dates

Period	Due Date
January	February 20
February	March 20
March	April 20
April	May 20
May	June 20
June	July 20
July	August 20
August	September 20
September	October 20
October	November 20
November	December 20
December	January 20

Quarterly Due Dates

Period	Due Date
January – March (Q1)	April 20
April – June (Q2)	July 20
July – September (Q3)	October 20
October – December (Q4)	January 20

Late filing or payment will result in a penalty of 10% of the total tax due. Interest accrues from the original due date as well at a rate not less than 12%, and you must pay your bill in full in order to return your account to good standing.

Resources

• Rhode Island Sales Tax FAQs
• Rhode Island Sales Tax Regulations
• Sales and Use Tax – Rhode Island Division of Taxation

Rhode Island Sales Tax Software

Whether you operate your small business solely in Rhode Island, or you sell to customers in many states, you need to stay on top of state sales tax regulations to ensure you’re always in tax compliance. Each state has its own peculiarities in terms of what is considered taxable and when sellers are obligated to collect sales tax. Managing these details can be a daunting task, and it may distract you from other aspects of your business that need your attention.

Fortunately, you can take advantage of the excellent assortment of tax calculator features offered by TaxTools to remove some of those burdens so you can focus on the things you want to be focusing on. This software package tracks all of your taxable sales, ensuring that you’re charging sales tax to customers at the appropriate rates and that you always have detailed records of those sales. It also facilitates the filing and paying of your sales tax on time and accurately, and it routinely monitors state sales tax statutes for any changes that may impact you. TaxTools integrates smoothly with all eCommerce platforms, so no matter how you reach your customers, you can benefit.

So, if you’re ready to see how TaxTools can streamline your business processes and relieve some of the stress of managing sales tax in Rhode Island and elsewhere, click here to sign up for a free trial today.

Last updated August 2024