How to Register for a Sales Tax Permit in Rhode Island

Most businesses starting in Rhode Island selling a product or offering certain services will need to register for a sales tax permit.  This is commonly referred to as a seller’s permit, sales tax license, sales tax number, or sales tax registration.    

The sales tax permit is obtained through the Rhode Island Division of Taxation as a part of applying for the Rhode Island Business Application and Registration.  In addition to sales tax registration, this form is used for hiring employees.

Check out the rest of this guide to determine who needs a sales tax permit, what products and services are taxable, how to register for a permit, and reporting requirements.

Also See: Guide to Starting a Business in Rhode Island

Who needs a Rhode Island sales tax permit?

A business must register for a sales tax permit in Rhode Island when:

• A business has economic nexus.  Economic nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
• Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
• Selling products and taxable services in Rhode Island (includes occasionally selling items at craft shows, fairs, seminars, shows, etc.)
• Employees (including sales representatives or agents) are working in Rhode Island
• An online business located in Rhode Island is selling taxable products to Rhode Island residents
• A remote seller meets one of the following scenarios::
  • Making total annual sales of tangible personal property to Rhode Island residents of $100,000 or more; or
  • Shipping 200 or more transactions to Rhode Island residents annually.

What products and services are taxable in Rhode Island?

Physical products

There are a few exceptions, but almost all physical products are taxable when sold at retail in the state of Rhode Island.  Common examples include:

• General merchandise like furniture, appliances, and clothing
• Titled or registered items like vehicles

Certain clothing, non-prepared food, and prescriptions are tax-exempt. A full list of Rhode Island tax exemptions is available from the Division of Taxation.

Labor, in most cases, isn’t taxable in Rhode Island.  For instance, let’s say you broke the screen of your cell phone and take it to a cell phone repair shop to have it fixed.  Sales tax should be added to the selling price of the new screen and any additional parts to fix the phone.  The labor to replace the screen isn’t taxable.  However, a business that makes furniture will indirectly have a sales tax on labor.  In this instance, let’s say this business is building a dining room table for a customer.  Through labor, the pieces of wood are shaped, sanded, and painted to build this piece of furniture.  While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table. 

Digital Products

Digital products are tax exempt in Rhode Island.

Services

Most services aren’t taxable in Rhode Island, however, there are a few exceptions, some of which include:

• Short-term lodging
• Pet grooming and boarding

How to register for a sales tax permit in Rhode Island

A sales tax permit can be obtained by registering with the Division of Taxation’s Online Registration Service or mailing in the BAR Form.

Information needed to register includes:

• Type of business entity: Sole Proprietorship, Partnership, Corporation, Limited Liability Company (LLC)
• Business name
• Federal Employer Identification Number (FEIN) with the IRS, or the owner’s Social Security Number if a sole proprietorship with no employees
• Mailing address
• Name, SSN, Title, and addresses of owners/officers/members
• Description of what products or services are being sold

Sales tax reporting

How is sales tax collected?

When a business sells a taxable product or service, the business charges the appropriate sales tax rate to the customer.  This tax is collected by the business which is then sent to the Rhode Island Division of Taxation.

How much is sales tax in Rhode Island?

The sales tax rate is 7%.  There are no additional local taxes.  In addition to the sales tax, there is also a 6% hotel tax on the rental of rooms in hotels, motels, or lodging houses.

When are Rhode Island sales tax returns due?

The Rhode Island Division of Taxation will determine a filing frequency based on the expected sales volume, which will be monthly, quarterly, or annually.  Generally, a business collecting over $200 in sales taxes each month will file monthly. 

Filings are due on the 20^th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, which would move to the next business day.

Even if the business had no sales during the reporting period, a filing is still required indicating no sales.

If you have questions about the sales tax permit, the Rhode Island Division of Taxation has a helpful FAQ page on Rhode Island Sales and Use Taxes, or they can be contacted by calling 401-574-8700.