Rhode Island: Sales Tax Handbook
What constitutes sales tax nexus in Rhode Island?
One of the more complicated aspects of Rhode Island sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Rhode Island, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Rhode Island, the vendor must register for a Rhode Island sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Rhode Island.
Sales Tax Nexus in Rhode Island
According to the law of Rhode Island, all retailers who have tax nexus can be defined in several different ways. A seller has tax nexus if they have any of the following within the state's boundaries:
Any employee, representative, salesperson, agent or contractor, deliveries of merchandise to customers in the merchant's own personal vehicles, professionally attending a trade or craft show, an office or place of business, or be considered a third party affiliate within the state.
For additional details on sales tax nexus law in Rhode Island, see the nexus information page from the Division of Taxation at http://www.tax.ri.gov/regulations/salestax/11-20.pdf
Taxation of Internet-Based Sales in Rhode Island
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Depending on the situation, Rhode Island may or may not charge sales tax on Internet-based transactions. Rhode island does have a click-through nexus: There is a presumption of nexus if a retailer enters into an agreement with a state resident, where the resident is required to, fir any sort of payment, refer any potential customers, in any way, to the seller. This is only applicable if the seller's total gross receipts from sales to customers who are Rhode Island residents that have been referred by the aforementioned website, is greater than five thousand dollars over the previous year.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Rhode Island, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Rhode Island?
The folks at the sales tax compliance company Avalara are an approved Rhode Island sales tax partner, and you can use their free Rhode Island nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Rhode Island sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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