A. The tax does not
apply to casual sales made by a person not regularly engaged in the business of
selling tangible personal property. It is important to note, however, that the
tax applies to the sale of a motor vehicle, or trailer even though such sale is
a casual sale, and whether or not it is in fact registered or required to be
registered by the purchaser with the Registry of Motor Vehicles. Casual sales
of house trailers and mobile homes of the type ordinarily used for residential
purposes are exempt. Casual sales of all other trailers, including camping
trailers, are taxable.
B. Casual
sales include a sale of tangible personal property not held or used by a seller
in the course of activities for which the seller is required to hold a seller's
permit(s) or would be required to hold a seller's permit(s) if the activities
were conducted in this state. It is further provided such sale is not one of a
series of sales sufficient in number, scope and character (more than five (5)
in any twelve-month period) to constitute an activity for which the person is
required to hold a seller's permit or would be required to hold a seller's
permit if the activity were conducted in this state.
C. Examples of Exempt Casual Sales
1. A person selling household furniture, or
an insurance agent selling a typewriter;
2. Sales by executors, administrators,
trustees, receivers, other fiduciaries and other proper officers pursuant to a
court order except when they continue the operation of the business of selling
tangible personal property at retail;
3. Legal sales, executions, etc., under court
order or by a proper officer;
4.
Sales at bazaars, fairs, picnics or similar events by nonprofit organizations
which are organized for charitable, educational, civic, religious, social,
recreational, fraternal or literary purposes during two (2) events not to
exceed a total of six (6) days during each calendar year. Such organization
may, however, request of the tax administrator to have more than two (2) events
in a calendar year so long as those events do not exceed, in total, six (6)
days during such calendar year. Promoters of such events are required to apply
to the Tax Division for a promoter's permit which permit shall be issued
without cost to the applicant. All vendors at such events, including nonprofit
organizations, are required to have a valid permit to make sales at retail.
a. Provided, however, where sales are made at
such events by a vendor or organization holding a permit to make sales at
retail which is not a nonprofit organization organized for the purposes stated
above or by a vendor or organization which is not a nonprofit organization
organized for the purposes stated above and which is otherwise required to hold
such a permit because its selling events are in excess of the number permitted,
such sales constitutes sales in the regular course of business and are not
exempted as casual sales.
5. A transfer of a motor vehicle, or trailer
upon which the transferor has paid the tax, in connection with the
organization, reorganization, dissolution or partial liquidation of a business
entity where no gain or loss is recognized for income tax purposes;
or
6. Casual sales are exempt where
the transferee is the spouse, mother, father, brother or sister of the
transferor.
7. A bulk sale of
assets. However in the case of a retailer, the sale must occur after the retail
business for which the retailer had a permit has ceased.
D. Examples of Nonexempt Casual Sales
1. Retail sales by an auctioneer under any of
the examples of exempt sales given above;
2. Sales of motor vehicles, or trailers (see
§
37.6(C)(5) of this Part above);
3. Retail
sales by manufacturers, wholesalers, processors, and jobbers even though such
sales are infrequent and only comprise an insignificant fraction of their total
business;
4. Sales which constitute
an integral part of a business, such as the sale of repossessed fixtures, or
other property by a finance company, even though the sale of tangible personal
property is not the primary function of such business; or
5. A manufacturer who liquidates his or her
business and sells the equipment in piecemeal fashion over a period of time to
either the same or to different purchasers is regarded as a retailer within the
meaning of the Rhode Island sales and use tax law. The equipment owned
automatically becomes an inventory of goods held for sale at retail. The fact
that such equipment might have been sold in one bulk sale without being
required to charge the sales tax is beside the point. Where the facts assumed
above clearly show that more than five (5) retail sales of tangible personal
property during any twelve month period have been made, then the sales are not
casual. Therefore, under the facts the liquidating manufacturer has become,
although unwittingly, a retailer, even though he or she operates as such for a
relatively short period of time.
6.
A retailer who sells equipment that it uses in its business, such as a grocer
who sells a cash register.
