2012-10-04 / News

Sales tax on cab fare, pet services in effect

The Rhode Island Division of Taxation recently announced that changes to Rhode Island’s sales tax took effect earlier this week. Now, the 7 percent sales tax applies to articles of clothing and footwear that are priced at more than $250 per item. Only the increment above $250 will be taxed. For example, for a suit that costs $275, the tax rate will be applied only to $25, resulting in a tax of $1.75.

Also, the sales tax will apply to taxicabs, limousines, charter buses, and other transportation services. Interstate transportation and certain other transportation services will be exempt from the tax. Additionally, the 7 percent tax will apply to pet services, including boarding, grooming, sitting and training. Veterinary and testing laboratories services will be exempt from the tax.

“We’ve been working closely with retailers, accountants, business groups and others to get the word out about these changes,” said state Tax Administrator David M. Sullivan. “We’ve received a lot of cooperation, and we anticipate that the changes will be implemented smoothly.”

The tax changes were included in a budget bill approved and enacted in June 2012. Their effective date was postponed until Oct. 1 to allow time for implementation. As a result of the changes, some businesses will now be considered retailers under state law. They must register with the state Division of Taxation, pay the annual $10 permit fee, and file tax returns.

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