In 1636, Roger Williams after being banished from the Massachusetts Colony for his religious views, settled at the tip of Narragansett Bay, on land granted to him by the Narragansett tribe. He called the site Providence and declared it a place for religious freedom. Today the oldest surviving synagogue in North America is found in Rhode Island. Despite its name, Rhode Island is not an island, but part of mainland USA.
Rhode Island is the smallest U.S. state, but the second most densely populated (behind New Jersey), with more than 1.1-million residents.
Continuing in it's history Rhode Island was the first of the original 13 colonies to declare independence from British rule, but the last to ratify the U.S. Constitution.
The Ocean State, as it is officially nicknamed, has 400 miles of coastline, and more than 100 salt and freshwater beaches. In fact Newport is the sailing capital of the world and home to the famed Gilded Age mansions which attract nearly 800,000 visitors a year, and are certainly among the best known Rhode Island attractions.
Providence’s celebrated restaurants, award-winning theater, and vibrant arts scene is enhanced by an elaborate river-walk. Block Island’s natural beauty beckons you to unwind. Whether you choose South County’s pristine beaches, East Bay’s magnificent coastal bikeway, footsteps through history in Blackstone Valley, or shopping in Warwick, you'll experience authentic Rhode Island.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series covering sales tax issues associated with each and every state tax jurisdiction in the United States. Intuitive Accountant will be publishing "Sales Tax Tuesday" each week during 2015. Since we are publishing these articles in random, rather than alphabetical or geographical order, you will just have to tune-in every Tuesday to see if we are featuring your state.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
Sales Tax Facts
- The Rhode Island Division of Taxation administers tax revenue for the state.
- The state sales tax rate is currently 7.0%.
- Rhode Island is one of the few states with a single, statewide sales tax. No municipality can add sales tax on top of the state rate.
- Sales tax in Rhode Island is destination-based, meaning the rate is determined by the state rate of where the item is shipped to (the buyer’s location). This means sellers must know the exact current sales tax rate for every shipment they send to a purchaser.
- Rhode Island is a Streamlined Sales Tax (SST) state.
- All businesses that sell, rent or lease taxable tangible personal property at retail must register with the state and collect sales tax. Providers of taxable services must also register with the state.
- Shipping is taxable in Rhode Island.
- Clothing is exempt from sales tax with some exceptions for clothing and footwear worn exclusively for athletic/sporting activities, protective clothing and certain accessories, all of which are taxable.
- Rhode Island has no sales tax holidays.
- Operators of eating and/or drinking establishments must also collect and remit a 1% local meals and beverage tax in addition to sales tax.
- Rhode Island nexus laws specifically require out-of-state mail order and catalog sellers to pay sales tax, but only if they have a physical presence in the state.
Did you know?
- Rhode Island legislators can vote to change sales and use tax rates at any time. This makes it difficult to keep track of tax rate changes. The state’s population is also rapidly changing, which means frequent change to ZIP codes and local municipalities, complicating the job of keeping track of sales tax jurisdictions.
- In 2013, Rhode Island instituted a sales tax exemption for wine and spirits (but not beer) sold in liquor stores only. The trial period for the exemption was slated to end March 31, 2015, but has been extended to June 30, 2015.
Still on the books…
In Providence, you may NOT sell a toothbrush and toothpaste to the same customer on a Sunday. Forget it's effect on oral hygiene, that is just plain 'weird'.
Yet the spirits are off the tax tables...
Wine and spirits sold in Rhode Island liquor stores are exempt from sales tax through June 30, 2015. The trial exemption was initially scheduled to expire on March 31, 2015, but it was extended for 'additional study.'
Manual sales and use tax management, even in a state with only a single sales tax rate, is still prone to error and consumes valuable time in pass-through rather than revenue-generating activities. Avalara provides solutions for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting.
Sales tax automation via Avalara allows businesses to be fully sales tax compliant without sacrificing productivity. So if you are a store owner trying to sell toothpaste, or a local tavern that must collect beverage tax (which isn't considered sales tax), you may want to check out the various tax solutions Avalara offers.
State by State Sales Tax - Rhode Island, Robin Conner, Avalara; April 24, 2015