Rhode Island: Paddleboards are Tax Exempt
- Oct 13, 2014 | Gail Cole
New and used boats are generally exempt from Rhode Island sales and use tax. However, Rhode Island sales and use tax generally applies to boats and watercraft without a hull or a hull identification number. Last time I looked, paddle boards don’t have a hull. Why then, does a newsletter recently published by the Rhode Island Division of Taxation state that paddleboards are now exempt from sales tax?
It turns out that the United States Coast Guard “considers a stand-up paddleboard to be a vessel when the paddleboard is used beyond the narrow limits of a swimming, surfing, or bathing area.” When a paddleboard is “used to travel long distances, for point-to-point travel,” it is “deemed to be a vessel.”
The sales and use tax exemption took effect on July 1, 2014. Anyone who paid sales tax on the purchase of a paddleboard in Rhode Island on or after July 1 may apply for a sales tax refund. The Division of Taxation advises taxpayers to ask the retailer for a refund: “The retailer may then claim a credit on the retailer’s sales and use tax return.”
Will the exemption apply to the sale of all paddleboards, even if they are purchased for use solely within the narrow limits of a swimming area ? It’s difficult to say. The Division of Taxation newsletter states that “in almost all cases, the sale of a paddleboard is now exempt from Rhode Island sales and use tax.”
“Almost all cases.”
Perhaps auditors will take to the water to question paddleboarders, or follow them to see where they paddle.
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