Dissecting the Rhode Island Economic Nexus Sales Tax

Kelsey O'Gorman
November 24, 2020

Prior to the South Dakota v. Wayfair, Inc. decision, Rhode Island had already enacted legislation related to economic nexus and remote sellers. Effective August 17, 2017, remote sellers needed to comply with certain registration or notice requirements depending on whether the seller qualified as a “non-collecting retailer,” a “retail sale facilitator,” or a “referrer.” Depending on the status designation, sellers had to either register, collect and remit Rhode Island sales tax, or notify consumers that they may owe the tax. Following Wayfair, new legislation was put in place to better align with the outcome of the case. From July 1, 2019, remote sellers, marketplace facilitators, and referrers must register with the Rhode Island Division of Taxation and collect and remit Rhode Island sales tax. This new legislation removed the notice requirement option and made mandatory the registration option. We have highlighted the main points below.

Enforcement date:

  • August 17, 2017 – remote sellers may register or comply with notice requirement (depending on status).
  • July 1, 2019 – mandatory registration for all remote sellers, marketplace facilitators, or referrers.

Sales/transactions threshold:
$100,000 or 200 transactions.

Measurement period:
Threshold applies to the previous calendar year.

Included transactions/sales:
Retail sales of tangible personal property, taxable services or specified digital products delivered into the state.

When You Need to Register Once You Exceed the Threshold:
Next transaction.

Summary: All remote sellers are required to register, collect and remit sales and use tax to Rhode Island, if within the current or previous year the sale of tangible personal property, taxable services or specified digital products for delivery into the state exceeded $100,000 or 200 transactions.

Marketplace facilitators must collect sales and use tax on all sales made through the marketplace to purchasers in Rhode Island whether or not the marketplace seller has or is required to have a permit to make sales at retail. Additionally, marketplace facilitators must collect and remit sales and use tax if they would have been required to collect and remit sales and use tax had the sale not been made through the marketplace provider.

Remote sellers and marketplace facilitators would benefit from working with the right partner to ensure that they remain compliant with any changes to Rhode Island’s economic nexus law.

Rhode Island Sales Tax Resources: Contact our team for more information on the Rhode Island economic nexus sales tax. Also check out our interactive sales tax nexus map for real-time updates on each state.

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Author

Kelsey O'Gorman

Kelsey O’Gorman is a Regulatory Counsel at Sovos. Within Sovos’ Regulatory Analysis function, Kelsey focuses on global sales tax and VAT issues, supporting both the tax determination and reporting engines. Kelsey received her B.A. in Psychology from University at Buffalo and her J.D. from Roger Williams University School of Law. She is a member of the Massachusetts Bar.
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