R.I. Gen. Laws § 44-18.2-2

Current through 2024 Public Law 457

Section 44-18.2-2 - Definitions

For the purposes of this chapter:

(1) "Division of taxation" means the Rhode Island department of revenue, division of taxation. The division may also be referred to in this chapter as the "division of taxation," "tax division," or "division."

(2) "In-state customer" means a person or persons who makes a purchase of tangible personal property, prewritten computer software delivered electronically or by load and leave as defined in § 44-18-7.1(g)(v), vendor-hosted prewritten computer software, specified digital products, and/or taxable services as defined under § 44-18-1 et seq. for use, storage, and/or other consumption in this state.

(3) "In-state software" means software used by in-state customers on their computers, smartphones, and other electronic and/or communication devices, including information or software such as cached files, cached software, or "cookies," or other data tracking tools, that are stored on property in this state or distributed within this state, for the purpose of purchasing tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, specified digital products, and/or taxable services.

(4) "Marketplace" means a physical or electronic place including, but not limited to, a store, booth, internet website, catalog, television or radio broadcast, or a dedicated sales software application where tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, specified digital products, and/or taxable services is/are sold or offered for sale for delivery in this state regardless of whether the tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, or specified digital products have a physical presence in the state.

(5) "Marketplace facilitator" means any person or persons that contracts or otherwise agrees with a marketplace seller to facilitate for consideration, regardless of whether deducted as fees from the transaction, the sale of the marketplace seller's products through a physical or electronic marketplace operated by the person or persons, and engages:

(a) Directly or indirectly, through one or more affiliated persons in any of the following:

(i) Transmitting or otherwise communicating the offer or acceptance between the buyer and seller;

(ii) Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and sellers together;

(iii) Providing a virtual currency that buyers are allowed or required to use to purchase products from the seller; or

(iv) Software development or research and development activities related to any of the activities described in subsection (5)(b), if such activities are directly related to a physical or electronic marketplace operated by the person or an affiliated person; and

(b) In any of the following activities with respect to the seller's products:

(i) Payment processing services;

(ii) Fulfillment or storage services;

(iii) Listing products for sale;

(iv) Setting prices;

(v) Branding sales as those of the marketplace facilitator;

(vi) Order taking;

(vii) Advertising or promotion; or

(viii) Providing customer service or accepting or assisting with returns or exchanges.

(6) "Marketplace seller" means a person, not a related party to a marketplace facilitator, who has an agreement with a marketplace facilitator and makes retail sales of tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, specified digital products, and/or taxable services through a marketplace owned, operated, or controlled by a marketplace facilitator, whether or not such person is required to register to collect and remit sales tax.

(7) "Non-collecting retailer" means any person or persons who meets at least one of the following criteria:

(A) Uses in-state software to make sales at retail of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services; or

(B) Sells, leases, or delivers in this state, or participates in any activity in this state in connection with the selling, leasing, or delivering in this state, of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services for use, storage, distribution, or consumption within this state. This includes, but shall not be limited to, any of the following acts or methods of transacting business:

(i) Engaging in, either directly or indirectly through a referrer, retail sale facilitator, or other third party, direct response marketing targeted at in-state customers. For purposes of this subsection, direct response marketing includes, but is not limited to, sending, transmitting, or broadcasting via flyers, newsletters, telephone calls, targeted electronic mail, text messages, social media messages, targeted mailings; collecting, analyzing and utilizing individual data on in-state customers; using information or software, including cached files, cached software, or "cookies," or other data tracking tools, that are stored on property in or distributed within this state; or taking any other action(s) that use persons, tangible property, intangible property, digital files or information, or software in this state in an effort to enhance the probability that the person's contacts with a potential in-state customer will result in a sale to that in-state customer;

(ii) Entering into one or more agreements under which a person or persons who has physical presence in this state refers, either directly or indirectly, potential in-state customers of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services to the non-collecting retailer for a fee, commission, or other consideration whether by an internet-based link or an internet website, or otherwise. An agreement under which a non-collecting retailer purchases advertisements from a person or persons in this state to be delivered in this state on television, radio, in print, on the internet or by any other medium in this state, shall not be considered an agreement under this subsection (ii), unless the advertisement revenue or a portion thereof paid to the person or persons in this state consists of a fee, commission, or other consideration that is based in whole or in part upon sales of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services; or

(iii) Using a retail sale facilitator to sell, lease, or deliver in this state, or participate in any activity in this state in connection with the selling, leasing, or delivering in this state, of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services for use, storage, or consumption in this state;

(C) Uses a sales process that includes listing, branding, or selling tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services for sale, soliciting, processing orders, fulfilling orders, providing customer service and/or accepting or assisting with returns or exchanges occurring in this state, regardless of whether that part of the process has been subcontracted to an affiliate or third party. The sales process for which the in-state customer is charged not more than the basic charge for shipping and handling as used in this subsection shall not include shipping via a common carrier or the United States mail;

(D) Offers its tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services for sale through one or more retail sale facilitators that has physical presence in this state;

(E) Is related to a person that has physical presence in this state, and such related person with a physical presence in this state:

(i) Sells tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services that are the same or substantially similar to that sold by a non-collecting retailer under a business name that is the same or substantially similar to that of the non-collecting retailer;

(ii) Maintains an office, distribution facility, salesroom, warehouse, storage place, or other similar place of business in this state to facilitate the delivery of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services sold by the non-collecting retailer;

(iii) Uses, with consent or knowledge of the non-collecting retailer, trademarks, service marks, or trade names in this state that are the same or substantially similar to those used by the non-collecting retailer;

(iv) Delivers or has delivered (except for delivery by common carrier or United States mail for which the in-state customer is charged not more than the basic charge for shipping and handling), installs, or assembles tangible personal property in this state, or performs maintenance or repair services on tangible personal property in this state, which tangible personal property is sold to in-state customers by the non-collecting retailer;

(v) Facilitates the delivery of tangible personal property purchased from a non-collecting retailer but delivered in this state by allowing an in-state customer to pick up the tangible personal property at an office distribution facility, salesroom, warehouse, storage place, or other similar place of business maintained in this state; or

(vi) Shares management, business systems, business practices, computer resources, communication systems, payroll, personnel, or other such business resources and activities with the non-collecting retailer, and/or engages in intercompany transactions with the non-collecting retailer, either or both of which relate to the activities that establish or maintain the non-collecting retailer's market in this state.

(F) Any person or persons who meets at least one of the criteria in subsections (7)(A) - (7)(E) above shall be presumed to be a non-collecting retailer.

(G) The term "non-collecting retailer" will no longer apply to any entity that meets the definition of this subsection effective ninety (90) days after March 29, 2019, at which time such entity shall be classified as a "remote seller" as referenced in § 44-18-15.2.

(8) "Person" means person as defined in § 44-18-6.

(9) "Referrer" means every person who:

(A) Contracts or otherwise agrees with a retailer to list and/or advertise for sale in this state tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, and/or taxable services in any forum, including, but not limited to, a catalog or internet website;

(B) Receives a fee, commission, and/or other consideration from a retailer for the listing and/or advertisement;

(C) Transfers, via in-state software, internet link, or otherwise, an in-state customer to the retailer or the retailer's employee, affiliate, or website to complete a purchase; and

(D) Does not collect payments from the in-state customer for the transaction.

(E) A person or persons who engages in the activity set forth in all of the activities set forth in subsections (9)(A) - (9)(D) above shall be presumed to be a referrer.

(10) "Related" means:

(A) Having a relationship with the non-collecting retailer within the meaning of the internal revenue code of 1986 as amended; or

(B) Having one or more ownership relationships and a purpose of having the ownership relationship is to avoid the application of this chapter.

(11) A "retail sale" or "sale at retail" means any retail sale or sale at retail as defined in § 44-18-8.

(12) "Retail sale facilitator" means any person or persons that facilitates a sale by a retailer by engaging in the following types of activities:

(A) Using in-state software to make sales at retail of tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services; or

(B) Contracting or otherwise agreeing with a retailer to list and/or advertise for sale tangible personal property, prewritten computer software delivered electronically or by load and leave, and/or taxable services in any forum, including, but not limited to, a catalog or internet website; and

(C) Either directly or indirectly through agreements or arrangements with third parties, collecting payments from the in-state customer and transmitting those payments to a retailer. A person or persons may be a retail sale facilitator regardless of whether they deduct any fees from the transaction. The division may define in regulation circumstances under which a retail sale facilitator shall be deemed to facilitate a retail sale.

(D) A person or persons who engages in the type of activity set forth in subsection (12)(A) above or both of the types of activities set forth in subsections (12)(B) and (12)(C) above shall be presumed to be a retail sale facilitator.

(E) The term "retail sale facilitator" will no longer apply to any entity that meets the definition of this subsection effective ninety (90) days after March 29, 2019, at which time such entity shall be classified as a "marketplace facilitator" as referenced above in subsection (5) of this section.

(13) A "retailer" means retailer as defined in § 44-18-15.

(14) Specified digital products refers to the same term as defined in § 44-18-7.1(x) effective July 1, 2019.

(15) "State" means the State of Rhode Island.

(16) "Streamlined agreement" means the Streamlined Sales and Use Tax Agreement as referenced in § 44-18.1-1 et seq.

(17) "Vendor-hosted prewritten computer software" refers to the same term as defined in § 44-18-7.1(g)(vii) effective October 1, 2018.

R.I. Gen. Laws § 44-18.2-2

Amended by 2019 Pub. Laws, ch. 88,§ 5-10, eff. 10/1/2019.

Amended by 2019 Pub. Laws, ch. 12,§ 2, eff. 3/29/2019.

Amended by 2019 Pub. Laws, ch. 11,§ 2, eff. 3/29/2019.

Added by 2017 Pub. Laws, ch. 302,§ 8-18, eff. 7/1/2017.