Uber rides now taxed in Rhode Island
- Sales Tax News
- Jul 22, 2016 | Gail Cole
Charges for the transportation services provided by Uber, Lyft, and similar transportation network companies (TNC) are subject to Rhode Island sales tax (7%) as of July 1, 2016.
There’s been a bit of an ongoing battle in Rhode Island between the state and Uber and Lyft. Back in early 2015, the state accused the companies of not remitting sales tax on their intrastate services (intrastate transportation services have been taxable in Rhode Island since 2012), and in March 2015, the Rhode Island Division of Taxation confirmed that neither Lyft not Uber had applied for or obtained a sales tax license. The two companies had different responses to this accusation: Uber acknowledged it had been “holding an undisclosed amount of Rhode Island sales tax collected from local rides,” while Lyft said that since the law didn’t require it to collect the tax, it didn’t. Uber eventually remitted an undisclosed amount of back sales tax to the Division of Taxation (read more on this).
Now a new law leaves little room for uncertainty or doubt. Transportation network companies, defined as “an entity that uses a digital network to connect transportation network company riders to transportation network operators who provide prearranged rides,” must do all of the following:
- File a business application and registration form with the Division of Taxation
- Obtain a permit from the Division of Taxation to make sales at retail
- Charge, collect and remit sales and use tax to the Division of Taxation
These companies are also subject to the following tiered permit fees under HB 8044:
- Companies with fewer than 50 drivers pay $5,000 annually
- Companies with between 50 and 200 drivers pay $10,000 annually
- Companies with more than 200 drivers pay $30,000 annually
Different state, different policy
It’s interesting to note differences in state policies. For example, South Dakota allows localities to impose additional requirements than the state on transportation network companies, while Rhode Island specifically does not. Negotiating these nuances creates compliance challenges for businesses, such as Uber and Lyft, operating in multiple states.
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