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Taxes / State tax rules / Rhode Island

Selling on eBay, Poshmark or Etsy from Rhode Island: sales tax and 1099-K rules

On a marketplace sale delivered to Rhode Island, a marketplace facilitator that had $100,000 of Rhode Island sales or 200 transactions in the preceding calendar year collects the 7% sales and use tax, and a marketplace seller that accepts the facilitator's collection certificate in good faith may exclude those sales from its own returns. The Rhode Island Division of Taxation documents we could fetch say nothing about a separate Rhode Island 1099-K rule.

General information, not tax advice. Check with a tax professional about your own situation.

Checked against the official pages listed below on .

Rhode Island in short

General sales tax:
Yes, 7% state rate
Marketplace facilitator law:
Yes: R.I. Gen. Laws § 44-18.2-3, since Jul 1, 2019
When a marketplace must collect:
in the immediately preceding calendar year, gross revenue from sales delivered into Rhode Island of $100,000 or more, or 200 or more separate transactions
Form 1099-K:
No state rule stated on the pages checked

Who collects the tax on a marketplace sale

A marketplace facilitator over the threshold registers and collects sales and use tax on all sales made through its marketplace to Rhode Island purchasers, whether or not the marketplace seller has a permit or would otherwise have had to collect. It must certify to its sellers that it will collect and remit.

If you sell only through marketplaces

The statute lets a marketplace seller that accepts a facilitator's collection certificate in good faith exclude sales made through the marketplace from its Rhode Island sales and use tax returns. The pages we could fetch do not separately say whether a seller with only marketplace sales must register.

Registration, resale certificates and what changes when you also sell direct have their own page: Rhode Island: seller's permit and resale certificate rules.

The law: R.I. Gen. Laws § 44-18.2-3, effective .

"remote sellers, marketplace facilitators, and referrers will be required to register with the Rhode Island Division of Taxation and collect and remit Rhode Island sales and use tax, effective July 1, 2019."
Rhode Island Division of Taxation, ADV 2019-11, New law requires remote sellers to collect and remit sales and use tax, ADV 2019-11 (May 24, 2019), first paragraph
"A marketplace seller that accepts a marketplace facilitator’s collection certificate in good faith may exclude sales made through the marketplace from the marketplace seller’s returns under chapters 18 and 19 of title 44."
State of Rhode Island General Assembly, § 44-18.2-3, Requirements for non-collecting retailers, referrers, and retail sale facilitators, R.I. Gen. Laws § 44-18.2-3(I)(ii)
"A marketplace facilitator shall collect sales and use tax on all sales made through the marketplace to purchasers in this state whether or not the marketplace seller"
State of Rhode Island General Assembly, § 44-18.2-3, Requirements for non-collecting retailers, referrers, and retail sale facilitators, R.I. Gen. Laws § 44-18.2-3(I)(i)

Sources: § 44-18.2-3, Requirements for non-collecting retailers, referrers, and retail sale facilitators; ADV 2019-11, New law requires remote sellers to collect and remit sales and use tax.

Rhode Island's sales tax

Rhode Island's sales tax is 7%, and the Division of Taxation publishes a 7% tax table for retailers.

"Sales Tax Table - 7% Sales Tax"
Rhode Island Division of Taxation, Sales Tax Table - 7% Sales Tax, Division of Taxation Sales Tax Rate Table, heading

Sources: Sales Tax Table - 7% Sales Tax.

Form 1099-K: Rhode Island and the federal test

The Division of Taxation documents we could fetch, including ADV 2019-11 and the 7% rate table, say nothing about a Rhode Island Form 1099-K requirement; the Division's HTML pages could not be read.

The federal test, for comparison: the IRS says a payment app or online marketplace must send a Form 1099-K when payments for goods or services total over $20,000 in more than 200 transactions, and adds: "However, they may send you a Form 1099-K with lower amounts and/or transactions." (Understanding your Form 1099-K, reviewed ). The Instructions for Form 1099-K count both parts for the calendar year, through each platform separately, and say the box 1a gross amount is figured without adjustments for credits, discounts, fees, refunds or shipping, so a 1099-K figure is not the same as profit. More on the federal rule in Form 1099-K for resellers.

Sources: ADV 2019-11, New law requires remote sellers to collect and remit sales and use tax.

Worked examples

Tax on a $40 marketplace sale to Providence

At 7%, a $40.00 taxable item carries $2.80 of Rhode Island sales tax, matching the Division's 7% tax table, and the facilitator collects it. Shipping is left out of this figure.

Threshold is set by the prior calendar year

The Division's advisory gives this example: a remote seller with $100,000 or more of gross revenue from sales into Rhode Island in calendar 2019, or 200 or more separate transactions, had to register and collect effective January 1, 2020. A seller with 210 Rhode Island orders in 2026 would be over the 200-transaction line for 2027.

Edge cases and details

  • Gross revenue for the $100,000 test includes tangible personal property, prewritten software delivered electronically or by load and leave, vendor-hosted prewritten software, specified digital products and taxable services delivered into Rhode Island, under § 44-18.2-3.
  • When the tax administrator audits a facilitator, it may not audit the marketplace seller for the same sales unless the facilitator seeks relief because the seller gave it incorrect information; that relief is not available between affiliates.
  • A class action may not be brought against a facilitator on behalf of buyers over sales or use tax it overcollected, under § 44-18.2-3(I)(vi).
  • ADV 2019-11 notes that sellers covered by Rhode Island's August 2017 non-collecting retailer law could still have obligations into early 2020 for January 1 through June 30, 2019.

What to do

  1. Keep each marketplace's collection certificate; the statute ties a seller's exclusion of marketplace sales to accepting it in good faith.
  2. Count your Rhode Island-delivered sales and transactions for each calendar year, since the test looks at the immediately preceding calendar year.
  3. For registration questions, the Division of Taxation's Excise & Estate Tax unit is listed in ADV 2019-11; a tax professional can also help.

Common questions

Do marketplaces collect Rhode Island sales tax?

Yes, a facilitator with $100,000 of Rhode Island sales or 200 transactions in the preceding calendar year collects the 7% tax on all sales through its marketplace to Rhode Island buyers, effective July 1, 2019.

Do I report marketplace sales on a Rhode Island return?

R.I. Gen. Laws § 44-18.2-3(I)(ii) lets a marketplace seller that accepts the facilitator's collection certificate in good faith exclude those sales from its returns.

Does Rhode Island have its own 1099-K threshold?

The Division of Taxation documents we could fetch say nothing about a Rhode Island 1099-K rule.

Related

General information, not tax advice

This page summarizes Rhode Island's own published pages and statutes as read on , and the IRS's 1099-K pages. It doesn't say what you should file, register for or pay. Rules depend on your situation and change: check with a tax professional, or with the state's revenue department.

Sources

Official pages this page is built from, with the day each was read.

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