State of Rhode Island - Division of Taxation
Ruling Request No. 98-01
Re: Request for Ruling Regarding the Application of the Exemption Provided by R.I.G.L. 45-37.1-9 for Purchases of Certain Personal Property
Request for Ruling
Pursuant to R.I.G.L. 44-35-8, you request, on behalf of your client, a corporation organized under the laws of the State of Rhode Island ("Company"), a declaratory ruling as to the exemption from Rhode Island Sales and Use Tax of the building and construction materials, personal property, furniture, fixtures and equipment (including all computer hardware and software systems) and replacements, additions and enhancements thereof, the legal title to which will be in the name of the Rhode Island Industrial Facilities Corporation ("RIIFC") or in which RIIFC will have a leasehold, license or other interest in connection with a project in Rhode Island and which will be leased (or subleased as applicable) to Company. RIIFC passed an inducement resolution with respect to the Project on May 13, 1998.
The facts set forth herein are taken from the ruling request of company dated June 26, 1998. Incorporated by reference and made a part of this ruling request is the resolution of RIIFC dated July 8, 1998 authorizing the issuance and sale of an economic development revenue bond, the inducement resolution if RIIFC to proposed industrial facilities for Company dated May 13, 1998 and an amendment thereto dated July 8, 1998
Company and RIIFC intend that RIIFC will issue a series of taxable development revenue bonds (the "Bonds"). Company plans to use bond proceeds to finance the renovation, acquisition, and equipping of Company's facilities , including building and construction materials for one or more office buildings (including all furniture, fixtures and equipment and replacements thereto), certain computer hardware and software to be purchased, leased or licensed in the RIIFC's name to support the activities located on the Premises (collectively, the "Equipment and Improvements"), which are intended to be used as a headquarters by Company, but may be used for any lawful commercial, office or industrial purpose (the "Facility") located in Rhode Island (the "Premises"), such Equipment and Improvements will be leased or subleased to Company, pursuant to a lease agreement dated on or about July 1, 1998 (the "Lease")(the Equipment and Improvements, the Facility and the Premises are collectively referred to as the "Project"); and
RIIFC will take title outright to some equipment and improvements and have a leasehold interest or license in others. It will lease or sublease the equipment and or improvements to Company.
By resolution, the Board of Directors of RIIFC has made or will make the following findings:
1. The Project is consistent with the definition of Project defined in Section 45-37.1-3 R.I.G.L.;
Declaratory Ruling Requested
The Equipment and Improvements including the replacements thereto as set forth and described under the caption "Facts" above constitute part of a RIIFC Project as set forth in Section 45-37.1-3 of the R.I.G.L. Therefor, the Equipment and Improvements thereto that will be acquired or leased and installed at the Project, the legal title to which will be in the name of RIIFC or in which RIIFC will have a leasehold or license interest, will be exempt from Rhode Island Sales and Use Tax.
Section 45-37.1-9 provides in pertinent part, as follows:
"...the corporation shall not be required to pay any taxes or assessments upon or in respect of a project, or any property or moneys of the corporation levied by a municipality or political subdivision of the state, nor shall the corporation be required to pay any state taxes of any kind and the corporation, its projects, property, and moneys and any bonds and notes issued under the provisions of this chapter, their transfer and the income therefrom, including any profit made on the sale thereof, shall at all times be free from taxation of every kind by the state..." (emphasis supplied)
The term "project" is defined in Section 45-37.1-3 as:
"Project" means any land and any buildings or other improvement, and all real and personal properties including but not limited to machinery and equipment, or any interest therein, whether or not now in existence or under construction, which shall be suitable for manufacturing, warehousing, or other commercial or industrial purpose..."(emphasis supplied)
Pursuant to R.I.G.L. 45-37.1-9, supra, RIIFC and its projects are exempt from taxation to the extent that RIIFC purchases or leases the equipment and improvements. To the extent that RIIFC purchases replacement equipment, those purchases would also be exempt from the sales and use tax. The subsequent lease of those items to Company, as part of the Project would likewise be exempt.
The equipment and improvements, including replacements thereto, acquired by title or leased to RIIFC to be installed at the Project and leased or subleased to Company will be exempt from the sales and use tax.
This ruling may be relied upon by Company and shall be valid until expressly revoked or until the applicable statutory provisions of law are amended in a manner that requires a different result or the underlying situations described above change.
R. Gary Clark
July 23, 1998