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Rhode Island Online Sales Tax: What Should You Know?



As you know, the online sales tax debate continues across the country as states look for ways to collect fees from internet shoppers to increase their revenue. Rhode Island’s reporting law similar to Colorado’s, which makes customers responsible for paying the taxes, is now in effect.

About Rhode Island’s Online Sales Tax Law

Non-collecting retailers making in excess of $100,000 in sales or more than 200 sales (number of transactions) within the immediately preceding calendar year, are responsible for registering, collecting and remitting sales tax, or must do all of the following:

  1. Post a website notice that lets in-state customers know their sales tax or use tax is due on certain purchases made from them, and that the state requires the customer to file a sales or use tax return.
  2. Notify the customer during checkout of the same information on the website notice.
  3. Notify the customer of the website notice, in writing, within 2 days of purchase.
  4. By January 31 of each year, send a written notice to all in-state customers with cumulative annual taxable purchases of $100 or more for the prior calendar year. The notification needs to include:
    • The name of the retailer
    • The total amount paid by the customer within the calendar year
    • Date(s) of purchase(s)
    • Dollar amount of each purchase
    • Category or type of purchase
    • Whether the purchase is exempt or not exempt from the state’s taxation code
  5. File an attestation with the Rhode Island Division of Taxation by February 15, stating that the above requirements were fulfilled.

The Rhode Island Department of Revenue also created a 10-page document of frequently asked questions for in-state consumers. In addition to answering questions about when the notices will go out, what they’ll look like and what to do, it also includes examples and a list of items eligible for sales tax or use tax.

In our opinion, the reporting requirements and related penalties ($10 per each failure to report) are egregious and particularly onerous. We suspect that most companies will simply register to collect and remit sales tax rather than engage in the reporting, which is likely to be more burdensome. And that is really what states like this are after; they’d much rather pass the collection duty on to companies than have to collect from the consumer.

Have a question? Contact Monika Miles.

Your comments are always welcome!

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.