Rhode Island Sales Tax on Rentals
- Jun 12, 2012 | Will Frei
Rhode Island has amended the regulations for sales tax on rentals of tangible personal property, including motor vehicles. The amendments go into effect July 1, 2012.
The regulations define a lease or rental as ". . . any transfer of possession or control of tangible personal property including motor vehicles for a fixed or indeterminate term for consideration."
Taxation for Rentals Other Than Motor Vehicles
Sales tax is due on the gross "receipts or proceeds" from the rental or lease, "without any allowance for service, maintenance, insurance, property taxes, etc., whether paid by the lessor or lessee."
Each rental or lease period ". . . for which . . . a charge is made shall be considered a complete sale for the purpose of the imposition, collection and payment of sales or use tax."
Laundering or cleaning services, such as linen and towel services, do not owe tax on payments received from the customers. However, ". . . the sales or use tax is payable at the time of purchase of the property used in rendering the service."
Taxation for Motor Vehicle Rentals
In a "motor vehicle leasing transaction," the following charges are subject to sales tax:
- the cost of the lease, including "'Capitalization Cost Reductions,' such as cash down payments;"
- additional charges, "such as acquisition fees, origination fees, registration and title fees are also subject to tax under a lease;"
- motor vehicle excise taxes.
For more information, including sourcing rules for calculating sales tax on rentals, see the Division bulletin.