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Sales Tax Regulations

State of Rhode Island - Division of Taxation

Sales and Use Tax

Regulation SU 90-131

 

Motor Vehicles Sold to Nonresidents

Rhode Island Motor Vehicle Dealers are required to add and collect sales tax on the sale of a motor vehicle to a bona fide nonresident of this state, whose state of residence imposes a sales tax on a sale of a motor vehicle to its nonresidents.

The dealer is required to collect tax on the sale at a rate equal to the rate that would be imposed in the nonresident's state of residence. However, the rate imposed may not exceed the Rhode Island sales and use tax rate. Taxes collected by the dealer must be remitted to the Rhode Island Division of Taxation on its monthly sales and use tax return.

Dealers, when required to add and collect a tax on the sale of motor vehicles to nonresidents, shall take into consideration the law of the state of the nonresident as it relates to the trade-in of motor vehicles.

FOR EXAMPLE, if a bona fide nonresident from State X buys a $15,000 truck from a Rhode Island dealer less a $5,000 trade-in of his truck, the Rhode Island dealer must add and collect a 5% Rhode Island sales tax (the equivalent State X sales tax rate) on the net selling price of $10,000. A trade-in of the truck is allowed because State X allows for a trade-in of trucks. The Rhode Island sales tax in the amount of $500 must be shown separately on the customer's bill of sale.

When filling out the dealer's statement of sale-motor vehicle purchaser's tax return (T-336-1) for a nonresident sale (whether taxable or not), the nonresident's driver license number and expiration date must be indicated in the empty space at the top of the form.

The blue copy of the T-336-1 is to be filed with the dealer's monthly Rhode Island sales and use tax return, the second copy to be furnished to the nonresident and the third copy to be kept by the dealer.

R. GARY CLARK
TAX ADMINISTRATOR

DATE FILED: December 7, 1990

EFFECTIVE DATE: December 31, 1990