Rhode Island Taxes Software as a Service Starting October 1

Rhode Island sales tax applies to software as a service (SaaS) starting October 1, 2018. Tax applies to software accessed from the web even if it’s not downloaded.

Taxable as Saas

Rhode Island taxes several online services and products as SaaS:

  • software that includes spreadsheet, overhead presentation, and document writing programs;
  • payroll, accounting, or human resources software;
  • customer relationship management software;
  • online dating services; and
  • job search services.

Not SaaS in Rhode Island

The following are not taxed:

  • e-books;
  • digital videos; and
  • digital music products.

Collecting Tax on Saas

Vendors collect sales and use tax. The consumer must collect if the vendor does not.

The location of the end user determines the tax. Rhode Island sales tax applies if the end user is in the state.

Advisory 2018-38, Rhode Island Division of Taxation, September 4, 2018, ¶200-981

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CCHTaxGroup

All stories by: CCHTaxGroup