The State of Rhode Island amended its sales and use tax statutes as they apply to ride sharing companies, formally called “transportation network companies,” effective July 1, 2016.
A transportation network company is an entity that uses a digital network to connect the company’s riders with the company’s operators who provide prearranged rides. Examples include traditional taxi, limousine or charter bus services, and popular mobile apps like Uber and Lyft.
All of these businesses have been included in the statutes as taxable services since 2012; however, a new law is changing that in Rhode Island.
Any transportation network company must now register to do business as a retailer operating in Rhode Island using Form BAR to obtain a sales tax permit. They must charge, collect, and remit those sales and use taxes to the Rhode Island Division of Taxation.
The new law says that these companies are subject to the jurisdiction of the Division of Public Utilities and Carriers. It sets forth permit, insurance, and other requirements, and spells out applicable fees and renewal fees, as well as penalties for violations.
The new regulation also forbids cities, towns, and other localities from imposing any charges, fees, or taxes to these service providers. However, the cities and towns may still impose excise taxes on the vehicles used to provide the services in a manner consistent with private motor vehicles.
BlumShapiro provides businesses and individuals with a wide range of multistate and local tax services, beyond the preparation of tax returns, including sales and use tax services, property and employment taxes and state tax planning.
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