Rhode Island Code of Regulations
Title 280 - Department of Revenue
Chapter 20 - Division of Taxation
Subchapter 70 - Sales and Use Tax
Part 28 - Motor Vehicle and Non-Motorized Vehicle Taxes (280-RICR-20-70-28)
Section 280-RICR-20-70-28.7 - Motor Vehicle Trade-In Allowance

Universal Citation: 280 RI Code of Rules 20 70 28.7

Current through September 18, 2024

A. The Rhode Island sales and use tax law provides that the amount of the trade in allowance of a private passenger automobile when given in trade toward the purchase of a new or used private passenger automobile is excluded from the measure of the use tax.

B. A passenger automobile shall be deemed a motor vehicle carrying passengers other than for hire, if the Division of Motor Vehicles registers the vehicle as a private passenger automobile. Hearses and other automobiles used chiefly in connection with the conduct of funerals are not considered "automobiles for hire" and therefore qualify for the trade-in allowance.

C. Rhode Island motor vehicle dealers who are required to add and collect a tax on the sale of motor vehicles to nonresidents are allowed to take into consideration the law of the state of the nonresident as it relates to the trade-in of motor vehicles.

D. A separate or independent sale of an automobile to a third party by the purchaser of a new or used private passenger automobile from a dealer is not a trade-in even if the proceeds from the third party sale are immediately applied by the seller to the purchase of a private passenger automobile from a dealer. A sale shall be deemed a separate or independent sale if one or more of the following events occur:

1. the third party buyer of the automobile pays the seller, and not the dealer, for the automobile;

2. the dealer does not take physical possession of the automobile; or

3. title does not pass to the dealer.

E. Notwithstanding § 28.7(D) of this Part, when a taxpayer "trades-in" a private passenger automobile that is used as a capital cost reduction on the lease of a private passenger automobile, the amount of the reduction attributable to said trade-in is not subject to the tax.

F. Any dealer or salesman who willfully misstates information on a document that is required for the proper computation of the use tax on a motor vehicle is subject to the penalty provisions set forth in R.I. Gen Laws Chapters 44-18 and 44-19, et seq., of the sales and use tax law.

Disclaimer: These regulations may not be the most recent version. Rhode Island may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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