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Rhode Island Sales Tax 2022 for Businesses: A Complete Guide

“The statewide sales tax for businesses in Rhode Island is 7%” 

What Does The Sales Tax For Businesses In Rhode Island Mean? 

The sales tax for businesses in Rhode Island is a tax collected from customers on specified goods and paid to a regulatory body by sellers. A company owner is a seller of taxable goods or services who also serves as an agent for collecting taxes from customers. The sales tax collected is then forwarded to the appropriate tax authority.

The Rhode Island Division of Taxation is in charge of the state’s sales and use tax. The state of Rhode Island owns any sales tax received from customers, not you. It is your job to keep track of the taxes you collect to comply with state and municipal regulations. Penalties and interest charges may be imposed if this is not done.

How Much Is The Sales Tax For Businesses In Rhode Island? 

Rhode Island enacted its first sales tax in 1947, and the rate has subsequently risen to 7%. There are no local sales taxes in Rhode Island as of January 2020. The current state sales tax rate in Rhode Island (RI) is 7%. Rhode Island is one of the few states having a single sales tax that applies to the entire state. In Rhode Island, businesses selling a tangible personal property must have to register the state to start collecting the sales tax. 

Rhode Island Sales Tax Threshold Limit
7%$100,000 in annual sales or 200 separate sales transactions

Read More: Tennessee Sales Tax 2022 for Businesses: A Complete Guide

Do You Need To Collect Rhode Island Sales Tax For Your Ecommerce Business? 

Sellers having a nexus in Rhode Island must have to collect sales tax from buyers. There are basically two ways a seller can link to a state when it’s about nexus – physically or economically. Physical nexus refers to holding a tangible presence in that state where economic nexus refers to passing a state’s economic threshold for total income or total transactions. 

What Types Of Goods and Services Are Taxable Under Rhode Island Sales Tax? 

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Any tangible property such as furniture, home appliances, and automobiles are among the most frequent sorts of items that are taxable in Rhode Island. Prescription drugs, groceries, and apparel, on the other hand, are all tax-free purchases.

Taxes on Transactions

Except for prescription medications and hair care products, all tangible goods sold in Rhode Island are taxable. This means that a person selling books in the state of Rhode Island would be compelled to levy sales tax, while a person selling hair products would not.

Vendors who earn more than $100,000 in annual sales or more than 200 transactions in Rhode Island are considered to have economic nexus as of July 15, 2017. This clearly defines that the Rhode Island state requires businesses to collect sales tax and further remit them to tax authority. 

Taxes on Services

Except for prescription medications and hair care products, all tangible goods sold in Rhode Island are taxable. This means that a person selling books in the state of Rhode Island would be compelled to levy sales tax, while a person selling hair products would not.

Vendors who earn more than $100,000 in annual sales or more than 200 transactions in Rhode Island are considered to have economic nexus as of July 15, 2017. This means that the state considers certain businesses to be liable to collect sales tax from state residents.

In that situation, you may have to deal with product sales tax. In Rhode Island, tangible personal property is taxable, with a few sales tax exemptions. Exceptions include, among other things, some apparel and prescription medications.

Tax Collection

The state of Rhode Island has a sales tax that is dependent on where you go. So, whether you live in Rhode Island and do business there or live somewhere else but have a nexus there, you’d charge sales tax.

The state of Rhode Island is one of the few that does not have a local sales tax. That means you’ll levy the state’s sales tax of 7% on every customer in Rhode Island. This applies to both sellers of Rhode Island and sellers who live and operate their businesses in another state but have a sales tax nexus with Rhode Island for whatever reason.

You must apply the correct rate to all taxable sales, remit sales tax, file timely returns with the Rhode Island Division of Taxation, and keep excellent records once you’ve successfully registered to collect Rhode Island sales tax. 

Tax Filing

Because the taxes do not belong to the seller, those enrolled with the Rhode Island Division of Taxation must file them. The seller’s job is to send collected taxes from customers to tax authorities as soon as possible. 

Filing a Rhode Island sales tax report and submitting the collected taxes to the Rhode Island Division of Taxation is essentially a two-step process. A seller needs to identify the total state sales, the total amount received, and the sale location as a part of the filing process. 

How Often Do You Need To File Rhode Island Sales Tax Return? 

It’s critical to be aware of the due dates associated with the filing frequency given to your company by the Rhode Island Division of Taxation. The seller who fails to file the returns before the deadline might have to face paying for late fees or penalties. All sales tax filings must be completed by the 20th day of the month following the tax period, according to the Rhode Island Division of Taxation. 

What If You Fail To File Your Tax Return Before The Due Date? 

Failure to file your tax return by the due date may result in significant penalties and interest rates. As a result, it’s preferable to submit taxes sooner rather than later. A 10% penalty will be imposed if a return is not received by the due date. Unpaid taxes will also be subject to interest, which will be calculated at a rate of at least 12%.

If you’re thinking about acquiring a business, you should check with the Rhode Island Division of Taxation to see how far along the process is. You’ll be responsible for all outstanding Rhode Island sales and use tax liabilities once you’ve purchased the business.

We’re Here To Assist eCommerce Businesses With Rhode Island Sales Tax Concerns!

We’re committed to assisting eCommerce and online businesses with tax and accounting issues at Freecashflow.io. For tax and accounting assistance, you can rely on us. If you have any queries or issues, please do not hesitate to contact us.

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