The sales tax rate in Rhode Island is 7 percent and most businesses starting in Rhode Island selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration. However, aside from the state’s 7 percent sales tax, there are no additional local taxes.

The sales tax permit is obtained through the Rhode Island Division of Taxation as a part of applying for the Rhode Island Business Application and Registration. In addition to sales tax registration, this form is used for hiring employees.

Just like it was stated above, Rhode Island is one of the few states with no local sales tax rates. This simply means that you will charge 7 percent sales tax to every buyer in Rhode Island. This goes for sellers who call Rhode Island their home state and sellers who live and operate their businesses in another state but have Rhode Island sales tax nexus for some reason.

In addition to the sales tax, there is also a 6 percent hotel tax on the rental of rooms in hotels, motels, or lodging houses. And if you operate an eating and/or drinking establishment in Rhode Island, you must collect the 1 percent Rhode Island meals and beverage tax.

Note that when you file and pay Rhode Island sales tax depends on two things: your assigned filing frequency and your state’s due dates. In the United States, States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Rhode Island, you will generally be required to file and remit sales tax either monthly or quarterly. All Rhode Island sales tax filers are also mandated to file annual sales tax reconciliation in January.

Rhode Island sales tax returns are generally due on the 20th or the final day of the month following the reporting period. If the Rhode Island filing due date falls on a weekend or holiday, sales tax is due the next business day. Even if the business had no sales during the reporting period, a filing is still required indicating no sales.

Steps to Obtain a Sales Tax Permit in Rhode Island

A business is expected to register for sales tax permit in Rhode Island once it has an economic nexus in the state. Economic nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory. There are a few exceptions, but almost all physical products are taxable when sold at retail in the state of Rhode Island. Nonetheless, here are steps to acquire a sales tax permit in Rhode Island.

  1. Apply And Present All Required Documents

A sales tax permit in Rhode Island can be obtained by registering with the Division of Taxation’s Online Registration Service or mailing in the BAR Form. It is advisable you submit the application via the website as it will generally be processed faster and you will receive an immediate confirmation upon submission.

Having a submission confirmation will help in the event that your application is not processed on time or in the event that it is not processed at all (which unfortunately can happen every now and again). Before you begin the process of registering with the state, make sure you have access to the following information:

  • Federal tax ID, typically called the EIN, issued by the IRS
  • Knowledge of your business entity structure
  • Business owner information
  • North American Industry Classification System (NAICS) number
  • Start date with the state of Rhode Island
  • Your estimated yearly tax liability with Rhode Island

If applying through the Rhode Island website for your sales tax permit, there is a $10 charge that must be paid at registration with a credit card. If applying via a paper application, you will need to attach a $10 check payable to the state of Rhode Island.

  1. Ask Questions When Necessary

If you are stuck or have questions, you can contact the state of Rhode Island directly. You can contact the State of Rhode Island Business Registration by calling (401) 574-8929, Monday – Friday 8:30 am to 3:30 pm.

  1. Pick Up Your Permit

You now have a permit number and are ready to collect sales tax whenever a buyer makes a purchase from your business. This sales tax is paid to the state monthly and is submitted along with the appropriate tax forms. Also note that once you receive your sales tax permit, the state expects you to display it conspicuously at your place of business and collect sales taxes on taxable sales. You must keep track of taxes collected and pay the appropriate amount of sales and use taxes to the state.

 How to File and Pay Sales Tax in Rhode Island

When it is time to file sales tax in Rhode Island, you must calculate how much sales tax you owe, file a sales tax return, and then make payment. You have two options for filing and paying your Rhode Island sales tax:

  • File online – File online at the Rhode Island Division of Taxation. You can remit your payment through their online system.
  • File by mail – You can use the Rhode Island Streamlined Sales Tax Return and file through the mail, though you must pay online if your tax liability in the previous year was $200 or more.

Conclusion

Rhode Island considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. Keep in mind, once you have an active sales tax permit in Rhode Island, you will need to begin filing sales tax returns. Your Rhode Island sales permit is renewable annually at fiscal year-end on June 30th.

Frequently Asked Questions

  1. Is There Sales Tax In Rhode Island?

Yes, there is sales tax in Rhode Island.

  1. Can I Get A Tax Refund If My Only Income Is Social Security?

As a very general rule of thumb, if your only income is from Social Security benefits, they won’t be taxable, and you don’t need to file a return. But if you have income from other sources as well, there may be taxes on the total amount.

  1. How Much Is Sales Tax In Rhode Island?

The base state sales tax rate in Rhode Island is 7 percent.

  1. What Creates Sales Tax Nexus With The State Of Rhode Island?

Generally, a business has nexus in Rhode Island when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives.

  1. How Often You Are Required To File Sales Tax In Rhode Island?

Rhode Island sales tax returns are generally due on the 20th or the final day of the month following the reporting period. If the Rhode Island filing due date falls on a weekend or holiday, sales tax is due the next business day.

  1. What Is Use Tax In Rhode Island?

Use tax is a sales tax on purchases made outside Rhode Island for taxable items that will be used, stored, or consumed in one’s state of residence and on which no tax was collected in the state of purchase.

  1. What Goods And Services Are Subject To Sales Taxes In Rhode Island?

Goods that are subject to sales tax in Rhode Island include physical property, like furniture, home appliances, and motor vehicles. The purchase of prescription medicine, groceries, gasoline, and clothing are tax-exempt.

  1. How Do You File and Pay Sales Tax in Rhode Island

You have three options for filing and paying your Rhode Island sales tax:

  • File online
  • File by mail
  • AutoFile
  1. What Are The Current Rhode Island Sales Tax Rates?

Fortunately, Rhode Island is one of the few states with no local sales tax rates. That means that you charge 7 percent sales tax to every buyer in Rhode Island. This goes for sellers who call Rhode Island their home state and sellers who live and operate their businesses in another state but have Rhode Island sales tax nexus for some reason.

  1. Who Must File A Rhode Island Tax Return?

Every part-year individual who was a resident for a period of fewer than 12 months is required to file a Rhode Island return if he or she is required to file a federal return.

  1. What City In RI Has The Lowest Property Taxes?

Providence County has the lowest property tax in the state, collecting an average tax of $3,380.00 (1.31 percent of median home value) per year.

  1. When Are Rhode Island Sales Tax Returns Due?

The Rhode Island Division of Taxation requires all sales tax filing to be completed by the 20th day of the month following the tax period.

  1. How Do You Register To Collect Sales Tax In Rhode Island?

You can register either by mail or in person at the Division of Taxation, One Capitol Hill, Providence, RI 02908 by filing a Business Application and Registration Form along with the $10 fee. A $10 renewable fee is required each year.

  1. How Much Is Property Tax In Rhode Island?

Rhode Island has some of the highest property taxes in the nation. In fact, the state’s average effective property tax rate of 1.53 percent ranks as the 10th-highest in the country.

  1. Who Are Those Eligible For Sales Tax Nexus Rhode Island?

Rhode Island considers a seller to have sales tax nexus in the state if you have any of the following in the state:

  • An office or place of business
  • An employee, representative, contractor, agent, salesperson, etc. present in the state
  • Goods in a warehouse, sample room, storage room, etc. present in the state
  • Delivery of merchandise to customers in the state in the merchant’s own vehicle(s)
  • Attendance at a tradeshow or craft show
  • Advertising in the state
  • A 3rd party affiliate in the state
  1. How Do I Close My Rhode Island Sales Tax Account?

You must cancel your sales and use tax permit by doing the following: File your monthly or quarterly return and check the “Yes” box following the question, “Are you out of business now?” Enter the last business date in the block provided.

  1. Do You Need To Get A Sales Tax Permit In Rhode Island?

In general, you need a sales tax permit in Rhode Island if you have a physical presence or meet economic nexus requirements.

  1. How Much Is Rhode Island Income Tax?

The income tax is a progressive tax with rates ranging from 3.75 percent up to 5.99 percent.

  1. What Is Exempt From Sales Tax In Rhode Island?

The purchase of prescription medicine, groceries, gasoline, and clothing are tax-exempt.

  1. Do You Need To File A Rhode Island Sales Tax Return?

Yes, and as matter of fact, Rhode Island requires you to file a sales tax return even if you have no sales tax to report.

  1. Do I Have To File A State Tax Return In Rhode Island?

If you are a Rhode Island resident and filed a federal tax return or you are an individual and your income exceeded the federal exceptions, you are required to file a Rhode Island resident tax return using Form RI-1040.

  1. Should You Collect Sales Tax On Shipping Charges In Rhode Island?

Yes, and as a matter of fact, charges for shipping, handling, delivery, freight, and postage on taxable goods are generally taxable in Rhode Island. If the sale is tax exempt, the shipping charges are generally exempt as well.

  1. How Do You Claim The Rhode Island Property Tax Relief Credit?
  • You must be 65 years of age or older and/or disabled.
  • You must have been domiciled in Rhode Island for all of the tax year.
  • Your household income must have been $30,000 or less.
  • You had to have lived in a household or rented a home that was subject to property taxes.
  • You must be caught up and current with all property tax and rent payments due on your homestead for all previous years and the current year.
  1. What Purchases Are Exempt From The Rhode Island Sales Tax?

The items you buy must not be used in your normal course of business. For example, you can’t buy copy paper and ask for a sales tax exemption, because you are using that copy paper in your office.

  1. Is Rhode Island Tax-Friendly For Retirees?

In Rhode Island, retirement income is taxable, though the state does offer some relief measures. Social Security retirement benefits are also taxable, but only for taxpayers with income that surpasses specific limits.

  1. Is Clothing Taxed In Rhode Island?

Clothing is tax exempt, but accessories, protective clothing, and athletic clothing are taxable.

  1. What Information Do You Need To Register For A Rhode Island Sales Tax Permit?
  • Personal identification info (SSN, address, etc.)
  • Business identification info (EIN, address, etc.)
  • Business entity type.
  • Date began doing business in Rhode Island.
  • Description of business activity.
  1. How Much Does It Cost To Register For A Rhode Island Sales Tax Permit?

If applying through the Rhode Island website for your sales tax permit, there is a $10 charge that must be paid at registration with a credit card. If applying via a paper application, you will need to attach a $10 check payable to the state of Rhode Island.

  1. How Often Will You File Sales Tax Returns In Rhode Island?

How often you need to file depends upon the total amount of sales tax your business collects. All Businesses that collect sales tax will file on a monthly basis. If, however, for six consecutive months your business has an average sales tax liability of less than $200.00, you may request to file quarterly instead.

  1. What Does It Mean When A Good Or Service Is Exempt From Taxation?

Tax-exempt refers to income or transactions that are free from tax at the federal, state, or local level.

  1. Does a Rhode Island Resale Certificate Expire?

Provided the buyer makes recurring purchases from the seller at least once in the previous 12 months, the certificate does not expire.

  1. How Do I Get A Tax ID Number In Rhode Island?

To obtain your Tax ID (EIN) in Rhode Island start by choosing the legal structure of the entity you wish to get a Tax ID (EIN) for. Once you have submitted your application, your EIN will be delivered to you via e-mail.

  1. Is Rhode Island A Good Place To Retire?

Sure, and some of the state’s most famous cities, like Providence, Newport, and Pawtucket, are all great places for retirement, so you won’t need to break out the map when you are explaining where you are retiring to your family.

  1. Do You Need A Sellers Permit To Sell Online In Rhode Island?

Most businesses starting in Rhode Island selling a product or offering certain services will need to register for a sales tax permit. This is commonly referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration.

  1. Are Books Taxed In Rhode Island?

In Rhode Island, certain items may be exempt from the sales tax to all consumers, not just tax-exempt purchasers. Several examples of items that exempt sales tax are printed packages, booklets, letterheads, billheads, manufacturing operations such as mining, and fuel oil and kerosene.

  1. How Long Do You Have To Live In Rhode Island To Be Considered A Resident?

A Resident is an individual that is domiciled in Rhode Island or an individual that maintains a place of abode in Rhodes Island spending at least 183 days in the state.

  1. Is Candy taxable in Rhode Island?

Yes, and this is because the new law imposes sales tax on “candy”, “soft drinks”, “dietary supplements” and “prepared foods”.

  1. Is Bottled Water Taxable In Rhode Island?

In general, tax does not apply to sales of food products for home consumption by humans when sold by food stores and supermarkets.

  1. What States Don’t Have Sales Tax?

Most states have sales tax to help generate revenue for its operations – but five states currently have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.

  1. Is It Cheap To Live In Rhode Island?

No, it is not cheap to live in Rhode Island and this is so because the cost of living in the Ocean State is higher than the national average.

  1. How Many Types Of Sales Tax Are There?

Two. Manufacturers’ Sales Tax  and Retail Sales Tax

  1. How Much Is Interest And Penalties On Taxes?

The IRS interest rate is the federal short-term rate plus 3 percent. The rate is set every three months, and interest is compounded daily. The interest rate recently has been about 5 percent.

  1. Is Rhode Island A Tax Free State?

No, and as a matter of fact, like most other states in the Northeast, Rhode Island has both a statewide income tax and sales tax.

  1. Does Rhode Island Pay Time And A Half On Sundays?

Generally, under Rhode Island law, employees who work on Sundays and holidays must be paid at least one and one-half times the normal rate of pay. Employees cannot be discharged or otherwise penalized for refusing to work on a Sunday or holiday.

  1. Does The Rhode Island Division Of Taxation Offer A Discount For Filing On Time?

As of January 2020, the Rhode Island Division of Taxation does not offer early sales tax filers a discount.

  1. Are Taxes High In Rhode Island?

Yes, and this is so because RI Has the 10th Highest Property Tax Rate in U.S.

  1. How Much Does It Cost To Register A Business In Rhode Island?

The filing fee is $10. Your business may need to obtain business licenses or professional licenses depending on its business activities. Rhode Island provides a comprehensive website of every profession and occupation that requires a license by any sole proprietorship.

  1. What Records Must I Keep To Verify The Figures On My Sales And Use Tax?

Always keep receipts, bank statements, invoices, payroll records, and any other documentary evidence that supports an item of income, deduction, or credit shown on your tax return. Please note that employment tax records must be kept for at least four years.

  1. At What Age Is Social Security No Longer Taxed?

At 65 to 67, depending on the year of your birth, you are at full retirement age and can get full Social Security retirement benefits tax-free. However, if you are still working, part of your benefits might be subject to taxation.

Joy Nwokoro