rhode island tax news - Rhode Island Division of Taxation - RI.gov

RHODE ISLAND TAX NEWSPAGE 15LEGAL CORNER: RECENT STATE TAX CASESFollowing is a summary of taxrelatedcases in which finaldecisions were made after administrativehearings. By law,decisions are public information,but taxpayer informationcannot be disclosed.Sales and use taxAfter an audit by a seniorrevenue agent, the TaxDivision found that thetaxpayer had purchasedfurniture and clerical supplies,mostly from Massachusetts,but had not paidto Rhode Island the differencebetween Massachusettsand Rhode Island salestax. (At the time, the salestax rate was 5 percent inMassachusetts, 7 percent inRhode Island.)The Tax Division alsofound that the taxpayer hadconverted a residence to aplace of business but hadnot informed the utilitycompany of the change.Rhode Island does notcharge sales tax on residentialuse of utilities, but does onbusiness or commercial useof utilities.In this case, the taxpayerowed use tax on the portionof its utility usage related tothe commercial activity(because the sales tax had notbeen charged).The taxpayer requested ahearing, but chose not toappear at it. Hearing OfficerCatherine R. Warren concludedafter the hearing thatthe taxpayer owes RhodeIsland use tax, plus interestand penalty. Sullivan on October4, 2011, adopted thehearing officer’s decision andrecommendation.- Final Decision and OrderNo. 2011-18Use tax on antique carA Rhode Island state employeebought a car in NewHampshire and registered itTAX DECISIONS ONLINEhe Rhode Island Division ofT Taxation now posts AdministrativeDecisions online.“Administrative Decisions havelong been available for publicreview at Tax Division headquarters.But making them availableonline is an added convenience forpractitioners and taxpayers,"Rhode Island Tax AdministratorDavid M. Sullivan said in a recentstatement announcing the newservice. “Harnessing technologyto make more information availableonline is also in keeping withthe Rhode Island Department ofRevenue’s efforts to increasetransparency,” Sullivan said. AllAdministrative Decisions for2012 and for 2011 are now onthe Tax Division's website –listed by case number and by taxtype.No Administrative Decision hasuniversal application; each isbased on the facts and circumstancesof a particular case.Nonetheless, the decisions offerhelpful summaries of key statutesand case law as they relate toRhode Island tax matters.in New Hampshire. At issueis whether he owed use taxto Rhode Island related to thepurchase.Upon reviewing the situation,a senior revenue agentwith the Tax Division foundthat the taxpayer did notqualify as a bona fide nonresidentfor tax purposes, mainlybecause the taxpayer hadfiled Rhode Island residenttax returns, worked for theState of Rhode Island, had aRhode Island driver’s licensesince 1972, owns a house inCumberland, R.I., and votesin Rhode Island.The taxpayer agreed that heis a Rhode Island resident andpays Rhode Island taxes, butsaid he does not owe RhodeIsland use tax on the purchase.He said he bought thevehicle – an antique car – inNew Hampshire, stores itthere, insures it there, andpays an annual tax to NewHampshire on the vehicle.Warren wrote that the taxpayer,by registering the carin New Hampshire, did notpay Rhode Island tax on thecar. Under RIGL § 44-18-30,only a bona fide Rhode Islandnonresident does not have topay Rhode Island tax on vehicles.In this case, Warren wrote,the taxpayer is not exemptfrom paying Rhode Island usetax on the car even if thephysical purchase was madein New Hampshire and thevehicle is registered there.(Please turn to page 16)Tax HearingsAny taxpayer aggrieved bythe action of the Tax Divisionin determining theamount of tax, surcharge,or penalty, may makewritten request for a formalhearing.The taxpayer is first affordedan opportunity tohave a preliminary review.Should the matter not beresolved, it may then proceedto formal hearingunder the terms of thestate Administrative ProceduresAct (RIGL § 42-35-1 et seq) and Tax Divisionregulation AHP 97-01.If not satisfied with theoutcome, the taxpayermay appeal to Sixth DivisionDistrict Court (RIGL§ 8-8-24 et seq).