WHAT IS A USE TAX?
A Use Tax is a tax on the use of tangible personal property in a state where the property has not been subject to the sales tax. Rhode Island Use Tax applies when merchandise purchased outside of Rhode Island is brought into Rhode Island. Sales and use taxes are complementary taxes and are assessed at the same rate. In Rhode Island the sales and use tax rate is 7%. The Rhode Island Use Tax is most often due when merchandise subject to the sales tax in Rhode Island is purchased from an out-of-state vendor who did not collect the Rhode Island tax and the property is subsequently used in this state. Common examples of transactions from which use tax liability may arise are mail-order catalog, out-ofstate purchases, toll-free “800” purchases and purchases made over the internet.
WHAT IS TAXABLE?
The same items that are subject to the Rhode Island Sales Tax are subject to the use tax. Some typical examples of taxable items are jewelry, computers, electronic equipment, Software as a Service and specified digital products. Clothing and footwear costing $250 or less are not taxable. Refer to RI Reg. 280-RICR-20-70-6 for more information regarding the tax on clothing and footwear. Pursuant to RIGL § 44-30-100, when reporting the amount of use tax obligation on the Rhode Island personal income return, the taxpayer shall list either the actual amount (from books, records, and other sources), or an amount using a lookup table established by the tax administrator.