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Rhode Island seeks to tax Uber, Lyft

  • Jun 10, 2016 | Gail Cole

 Rhode Island seeks to clarify sales tax laws for ride-share services.

Update, 7.21.2016: Governor Gina Raimonda signed an amended version of HB 8044 into law on July 6. Under a separate measure, the services provided by transportation network companies are subject to Rhode Island sales and use tax as of July 1, 2016.

In early 2015, the Rhode Island Division of Taxation accused Uber and Lyft of not remitting sales tax on their intrastate services. Confusion and accusations ensued. Could the ride-share services be taxed the same way as taxi and cab services? Had the companies been collecting sales tax but not remitting it?

Rhode Island lawmakers extended sales tax to taxi, cab and limousine services in 2012. When the Rhode Island Division of Taxation confirmed in March 2015 that neither Lyft nor Uber had registered for a sales tax license, Uber spokesman Matthew Wing “acknowledged that the company has been holding an undisclosed amount of Rhode Island sales tax collected from local rides — but said it is a temporary arrangement and the company fully intends to remit all sales tax eventually.” A month later, Uber reportedly remitted back sales tax to the Division of Taxation, though exactly how much has not been disclosed.

The situation with Lyft is different. In response to the revelation that it hadn’t been collecting sales tax, Lyft said that it doesn’t collect Rhode Island sales tax because state law does not specifically address “peer-to-peer platforms.”


Not surprisingly, a bill now making its way through the Rhode Island Legislature seeks to clarify certain requirements for ride-share service providers such as Lyft and Uber. Bill sponsor Rep. Edwards (D) explained:

“There’s no question that these ride-sharing companies are meeting a definite need in the marketplace, and I applaud their efforts and ingenuity. I just want to make certain that they abide by regulatory rules and regulations just like everybody else. Competition is great; an unfair advantage over traditional taxi services is not.”

House Bill 8044 would establish rules and regulations for the following:

  • Background checks
  • Insurance
  • Taxes

If enacted, ride share services such as Uber and Lyft would clearly be subject to sales and use tax. As of this writing, however, a House committee has recommended the bill be held for further study.

There could be another way for Rhode Island to capture that coveted tax revenue. Earlier this week, the House Finance Committee passed the new state budget, which “included a measure to clarify state law regarding transportation network companies, such as Uber, to ensure that they are subject to state sales tax, just as taxis are” (read more about the budget proposal).

State tax laws are constantly changing in response to new situations and technologies. Sales tax software (SaaS) enables businesses to respond in kind, facilitating sales and use tax compliance in all states. Learn more.

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.