Tax & Accounting Blog

R.I. Considering Tax on Downloaded Software and Ringtones

Indirect Tax, Sales and Use Tax June 22, 2011

A new budget proposal, scheduled for a vote in the House of Representatives on Friday, would impose the state’s sales tax on digital downloads. If the proposal passes Rhode Island would join more than a dozen states that already tax digital downloads. Taxing digital downloads would raise an estimated $8.8 million a year.

The proposed budget would also impose the state’s 7 percent sales tax on over-the-counter drugs and sightseeing tours to raise a total of $17 million for the cash-strapped Ocean State. The new taxes, if approved, would go into effect Oct. 1.

Lawmakers have only two weeks to adopt a budget before the new fiscal year begins July 1.

The budget proposal is available on the Legislature’s website: http://www.rilin.state.ri.us/BillText11/HouseText11/H5894A.pdf