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Rhode Island Use Tax - What Is It?

 Finding gifts on Amazon this holiday season? Remember to pay use tax if sales tax isn't charged.

If you buy something for use or storage in Rhode Island and don’t pay Rhode Island sales tax at the time of sale, you owe the state use tax.

Use tax has been around about as long as sales tax in most states. It’s a twin sister to sales tax, created to dissuade taxpayers from crossing state lines to shop in low tax rate locales. It has gained even more relevance in recent years because it’s no longer necessary to leave Rhode Island to find a lower rate (road trip to New Hampshire or Delaware, anyone?). Rhode Island taxpayers can shop from the comfort of their own couches and avoid sales tax by shopping online at any number of businesses. Amazon.com, for example, does not collect Rhode Island sales tax.

But to pay use tax, you have to know what it is. And it turns out that a lot of people don’t.

So the Rhode Island Division of Taxation has created this self-audit notice: What’s A Use Tax? It speaks to both individuals and businesses and describes a number of scenarios in which use tax is due.

Examples of who owes the use tax

  • A dentist who purchased patient examination equipment and a television for the waiting room from out-of-state vendors who did not collect sales tax.
  • A law firm that purchased a copy machine, business cards, and office supplies from an out-of-state vendor who did not charge sales tax.
  • A building contractor who bought specialty tools from an out-of-state seller who did not charge sales tax.
  • You, if you bought any taxable product from a website, catalog, or toll-free number and didn't pay Rhode Island sales tax.

While it is challenging for states to hold individuals accountable for use tax, businesses are frequently audited for use tax compliance. So simplify sales and use tax compliance by switching to sales tax software. Learn how it works.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.