Rhode Island Sales Tax Handbook

RATE OF SALES TAX:

7.00%

LOCAL & COUNTY MAXIMUM RATES:

None

What Are the Taxable Goods and Services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Rhode Island.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Rhode Island.

Prescription medication, food, fuel, and apparel are all tax-free purchases.

In Rhode Island, several services are subject to sales tax. View this table from the Rhode Island Department of Revenue website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Rhode Island are not required to collect sales tax on the sale of digital products or services.

Rhode Island, on the other hand, has one exemption to this restriction. Businesses are required to collect sales tax on pre-written computer software offered online.

How to Register for Sales Tax in Rhode Island

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

Personal identifying information (SSN, address, etc.)
Identification information for a business (EIN, address, etc.)
Type of business entity
In Rhode Island, Date started conducting business.
Business activity description

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Sales inside the state

It is simple to calculate sales tax on products sold in Rhode Island. Simply apply a flat 7.000% sales tax rate to all products, whether sold in-store or shipped across the state.

Out-of-State Purchases

Businesses in Rhode Island must only pay sales tax on out-of-state sales if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Rhode Island seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Rhode Island are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

All businesses that collect sales tax must submit monthly. If your company’s average sales tax obligation is less than $200.00 for six consecutive months, you may choose to submit quarterly instead.

Deadlines for Filing

The deadline for all Rhode Island sales tax returns is the 20th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:

Penalties for Filing Late

The state of Rhode Island imposes a late filing penalty of 10% of the tax recorded on the tax return.

The state levies delinquent taxes at a rate of at least 12% every year.