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.
Table of Content
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.
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.
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.
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.