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RI has passed Streamlined Sales Tax Legislation. What that will mean to your business is that Food will be taxed differently. There will not be any more 6 or more rule when selling donuts, bagels, muffins, etc. (Means that a customer can buy any number of these products and not be taxed). All small bags of snacks (example small bags of potato chips, corn chips etc.) Will NOT be taxed under these new regulations. Any candy that has flour in its ingredients Will Not be taxed.

There will be a new meaning of prepared foods and candy and how they are taxed. Please read the Notice below from the RI Division of Taxation, this is very important to you and your business that you know the new rules and how you will tax items in your store(s).

CLICK ON THE LINK BELOW FOR AN IMPORTANT NOTICE FROM THE RI DIVISION OF TAXATION

http://www.tax.ri.gov/streamlined/

BELOW IS ALSO INFORMATION ON THE NEW RULES AS WELL AS THE LISTS OF

NON TAXABLE AND TAXABLE ITEMS FOLLOWS BELOW

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NOTICE: CHANGES IN THE SALES AND USE TAX ACT AFFECTING

THE SALE OF FOOD AND FOOD PRODUCTS

Rhode Island SALES AND USE TAX ACT-STREAMLINED LEGISLATION
(P.L. 2006, c.246) (EFFECTIVE January 1, 2007)

Through the enactment of Public Law 2006, chapter 246, Rhode Island joined a national coalition of states in conforming the Rhode Island Sales and Use Tax Act to the provisions of the Streamlined Sales and Use Tax Agreement (SSUTA). The SSUTA was developed over the course of several years through the joint effort of over forty states participating in the Streamlined Sales and Use Tax Project. The underlying purpose of the Agreement is to simplify and modernize the administration of the sales and use tax laws of the member states in order to facilitate multi-state tax administration and compliance. The provisions of Rhode Island’s law are effective on January 1, 2007.

The new law imposes sales tax on "prepared foods," "candy", "soft drinks" and "dietary supplements." This may result in a difference in the tax treatment of some items when compared to prior law. "Food and food ingredients" remain exempt from sales tax.
Food and food ingredients

Under the amended version of R.I.G.L. 44-18-30(9), the sale of food and food ingredients purchased for human consumption are exempt from sales tax. "Food and food ingredients" are defined as substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. This term does not include tobacco, alcoholic beverages, candy, or soft drinks.

The following items are not included in the exemption for food and food ingredients.
Prepared Food

Food sold in a heated state by the seller; or
Food items that are a result of the combination of two or more food ingredients by the seller to make single item; or
Food sold with eating utensils (plates, cutlery items, glasses, cups, napkins or straws. Plates do not include containers for transport)

"Prepared Food" does NOT include the following:

Food that is only cut, repackaged, or pasteurized by the seller; or
"Eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the Food and Drug Administration…"

"Prepared Food" includes the following only when served by the seller with utensils:

Food sold in an unheated state by weight or volume as a single item

Bakery items sold as such, including but not limited to, bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pie, tarts, muffins, bars, cookies, and tortillas

Food sold by a seller that is primarily a manufacturer (NAICS Section 311), except Bakeries (Section 3118)

Candy

The exemption for food under R.I.G.L. 44-18-30(a) does not apply to "candy." "Candy" is defined as any "preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the forms of bars, drops, or pieces." The term "candy" does not include any preparation containing flour as an ingredient.

Because many products commonly categorized as candy contain flour, packaging labels must be examined to determine which items are deemed taxable candy or exempt food products. Examples of items exempt after 1-1-07 include KitKats, Twix, some licorice, Nestle Crunch, and Milky Way.

The term "candy" does not include any preparation that requires refrigeration. If an item that would otherwise be included in the definition of "candy" above requires refrigeration under health regulations, it would be deemed an exempt food product.

Candy that does not require refrigeration is taxable even if sold as such. For example, a number of candy bars that are regularly marketed at room temperature in the candy aisle may also be found in the refrigerated section of a convenience store. These products are refrigerated for customer preference rather than as directed on the label. Therefore, these items are not exempt from sales tax.

Soft drinks

"Soft drinks" are subject to sales tax. Soft drinks are defined as nonalcoholic beverages that contain natural or artificial sweeteners. The term does not include beverages that contain milk or milk products (including soy, rice, or similar milk products) or greater than 50 percent vegetable or fruit juice by volume. Again, product labels must be examined.

Frozen, or powdered soft drink mixes are not deemed to fall within the definition of "soft drink", which must be in liquid form, and are therefore exempt as foods. This new definition may change the taxability of specific products, particularly in the area of non-carbonated beverages, which were all exempt under prior law.

Examples of taxable soft drinks:

Artificially sweetened water

Teas containing sweeteners
Drinks labeled as containing 50 percent or less fruit or vegetable juice
Sports drinks (Gatorade, Powerade, etc.)
Sodas (colas, root beer, artificially sweetened diet colas, ginger ales, etc.)

Examples of items that are deemed exempt food products, rather than taxable soft drinks:

Unsweetened Water (regardless of carbonation)
Fruit or vegetable juices that contain more than 50 percent juice by volume
Nutritional drinks that contain soy (Ensure, Boost, etc.)
Apple cider
Beverage powders (Kool-aid, lemonade, sweetened iced tea)
Frozen fruit juice concentrates (regardless of percentage of juice, product is not in beverage form)

Dietary supplement

"Dietary supplement" means any product intended to supplement the diet required to be labeled as a dietary supplement, identifiable by the "Supplemental Facts" box found on the label and as required pursuant to Federal law.

SSTP Definition of Candy:

Candy means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. Candy does not include any preparations containing flour which require no refrigeration.

RHODE ISLAND
Taxable Grocery Items
Effective January 1, 2007

SALES TAX CHART
Tax Rate---7%
T---Taxable NT---Non-Taxable
	New items are highlighted

A	ace bandage	T
	air fresheners (household)	T
	alcohol (rubbing)	NT
	alcoholic beverages	T
	ammonia	T
	analgesics	NT
	ant traps	T
	antacids	NT
	antihistamine	NT
	aprons	NT
	arthritis rub	NT
	aspirin	NT
	auto supplies--
	--air fresheners	T
	--antifreeze	T
	--armorall/son of a gun	T
	--ashtrays, cupholders, etc.	T
	--car wash soap	T
	--car wax	T
	--chamois	T
	--de-icer (windshield/lock)	T
	--dry gas	T
	--fuel injection cleaner	T
	--funnels	T
	--gas treatment	T
	--ice scrapers	T
	--leather cleaner	T
	--motor oil	T
	--snow brushes	T
	--tire gauges	T
	--towels/rags	T
	--upholstery cleaner	T
	--vinyl cleaner	T
	--windshield washer fluid	T
	--windshield wipers	T
	aveeno bar	T
B	baby bottles--
	--glass	T
	--nipples	T
	--plastic	T
	--plastic disposable liners	T
	baby lotion	T
	baby oil	T
	baby powder--
	--medicated	NT
	--non-medicated	T
	baby wipes	T
	bags--
	--paper	T
	--plastic	T
	baking cups--
	--foil	T
	--paper	T
	baking pans (foil)	T
	balloons--
	--helium	T
	--regular	T
	band aids--
	--medicated	T
	--regular	T
	bandages (gauze)	T
	barbecue grills	T
	baskets	T
	bath--
	--bubble bath	T
	--crystals/beads	T
	--milks	T
	--oils	T
	--powders	T
	--salts	T
	--sitz	T
	--tablets	T
	batteries	T
	--batteries spec for hearing aids	NT
	ben gay	NT
	bleach	T
	bleach for skin	T
	blistex (medicated)	NT
	blood glucose monitors for home use	NT
	blood pressure machines for home use	NT
	braces--ankle, knee	T
	breath fresheners--
	--candy type	T
	--capsules	T
	--spray	T
	brooms	T
	burn lotion *no tax if med	NT*
	burn ointment	NT
	butane	T
	buttons	T
C	calamine lotion	NT
	candles--
	--regular	T
	--religious	T
	candy	T
	canes	T
	canning--
	--jars/lids	T
	--paraffin wax	T
	--preservatives	T
	cassette tapes--
	--blank	T
	--pre-recorded	T
	castor oil	NT
	chairs--
	--beach	T
	--lawn	T
	chapstick	NT
	charcoal	NT
	charcoal fluid	T
	cigarettes	T
	cigars	T
	clearasil/oxy	NT
	cleaning liquids/powders	T
	clothes hangers--
	--metal	T
	--plastic	T
	--wood	T
	clothes pins	T
	clothing	NT
	coffee--
	--coffee filters (paper)	T
	--coffee brewed	T
	--coffee unbrewed	NT
	cold/cough remedies	NT
	colognes/perfumes	T
	contacts--
	--cases	T
	--cleaner (daily)	T
	--cleaning kit (hot/cold)	T
	--disinfecting solution	T
	--enzyme tablets	T
	--saline solution	T
	--rewetting drops	T
	contraceptives	T
	cooking spray (pam)	NT
	cooking utensils	T
	cooking wine (food stampable)	NT*
	*no tax if non-alcoholic
	coolers--
	--plastic (igloo)	T
	--styrofoam	T
	cosmetics--
	--blush	T
	--cuticle remover	T
	--eyebrow pencils	T
	--eye liners	T
	--eye make-up remover	T
	--eye shadows	T
	--foundation	T
	--lipsticks	T
	--make-up remover	T
	--mascara	T
	--nail files	T
	--nail polish	T
	--nail polish remover	T
	--pressed powder	T
	--wrinkle remover/concealer	T
	costumes--
	--adult	NT
	--for children	NT
	--masks	T
	cotton balls--
	--sterile	T
	--unsterile	T
	cotton swabs--
	--sterile	T
	--unsterile	T
	cough drops--
	--candy type	T
	--medicated	T
	--regular	T
	cups--
	--paper	T
	--plastic	T
	--styrofoam	T
D	decacak--
	--colored sugar	NT
	--edible toppings (flowers, etc.)	NT
	--gel	NT
	--icing	NT
	decorations (paper)	T
	dental floss	T
	denture products	T
	deodorants/antiperspirants	T
	depends	NT
	desenex (medicated)	NT
	detergent--
	--dish	T
	--laundry	T
	diabetic test prod (strips/tapes)	T
	diapers (plastic)	NT
	diet--
	--candy	T
	--drink mixes (liquid not powdered)	T
	--drinks (excluding coffee, tea, or that contain	T
	more than 50% pure juice)
	--food	NT
	--pills	T
	--products that replace an entire meal	NT
	dish towels (cloth)	T
	disinfectants	T
	door mats	T
	douches--
	--betadine	T
	--medicated	NT
	--regular	T
	drain openers	T
	drinks--
	--chocolate (yoo hoo) (water)	T
	--hershey chocolate drink (milk)	NT
	--nutritional (boost, ensure)	NT*
	*meal replacement no tax
	--soda	T
	--soft drinks (carbonated)	T
	--soft drinks (non-carbonated)	T
	--sports (gatorade)	T
	drink mixes--
	--cocktail mix (carbonated)	T
	--cocktail mix liquid (noncarbon)	T
	--cocktail mix package	T
	--soft drink mix (non-carbonated)	T
	dusting powder	T
E	ear plugs	T
	easter egg color/paint	T
	elastic *for clothing"	T
	epson salt--
	--garden	T
	--medicinal	NT
	extension cords	T
	extracts (food)	NT
	eye drops (visine)	NT
	eye washes	T
F	fabric softeners	T
	face--
	--acne soap	T
	--clearasil/oxy	NT
	--facial mask	T
	--noxema	T
	--sea breeze	T
	--stridex	NT
	--soap (regular/deodorant)	T
	fans	T
	fertilizer	T
	film	T
	film processing	T
	firelog (processed)	T
	first aid kits	T
	flags--
	--Missing in Action (MIA)	NT
	--Prisoner of War (POW)	NT
	--State of RI	NT
	--USA	NT
	--all others	T
	flashlights	T
	flatware	T
	flowers--
	--artificial	T
	--live	T
	fly swatters	T
	fly tape	T
	Food Products: See Notice for Details	NT
	food coloring	T
	foot/shoe--
	--athlete foot treatment	NT
	--bunion cushion/pad (non med)	T
	--bunion remover (med)	NT
	--callus cushion (non med)	T
	--callus remover (med)	NT
	--corn cushion (non med)	T
	--cornpad remover (med)	NT
	--deodorant (spray/powder)	T
	--dri foot	T
	--foot file	T
	--foot soap	T
	--foot spray (desenex)	NT
	--innersoles (for comfort)	NT
	--laces	NT
	--lifts for heels	T
	--odor eaters	T
	--powder for infections	NT
	--shoe brushes	T
	--shoe polish	T
	frothee	T
G	gardening tools	T
	gift wrapping accessories--
	--bows	T
	--boxes	T
	--tags	T
	--wrapping paper	T
	glass cleaner	T
	glasses (drinking)	T
	gloves--
	--athletic	T
	--casual	NT
	--garden/work	T
	--leather	NT
	--rubber	T
	glue	T
	greeting cards	T
	grill (bbq) scrapers	T
H	hair--
	--barrettes	T
	--bows	T
	--brushes/combs	T
	--coloring/dyes/tints	T
	--conditioners/crm rinses	T
	--home perms	T
	--mousse/gel/styling lotions	T
	--oils	T
	--sprays	T
	hair bleach (body)	T
	hair remover (body) lotion/crm/wax	T
	handkerchiefs	T
	hardware/tools	T
	headache remedies	NT
	heating pad	T
	hemorrhoid relief/treatment	NT
	hibachi	T
	hot water bottles	T
	hydrogen peroxide	NT
I	ice bags	T
	ice cream toppings--
	--jimmies	T
	--syrup	NT
	ice cubes	T
	ice pack (chemical)	T
	iced tea (if contains sweeteners taxable)	NT
	incontinence--
	--briefs	NT
	--pads	NT
	insect repellent	T
	insecticide-house/garden	T
	iodine	NT
J	juices (100% pure juice)	NT
	juice drinks (if greater than 50% juice)	NT
	juice drinks (if 50% or less juice)	T
K	kool aid powdered	NT
L	laxatives	NT
	leotards/tights	NT
	light bulbs	T
	lighter fluid	T
	lip balm--
	--medicated	NT
	--non-medicated	NT
	lotions/creams--
	--cleansing	T
	--hand/face/body	T
	--med skin lotion/cream/ointment	NT
	--moisturizing	T
	lozenges	T
	lunch bags--
	--paper	T
	--plastic	T
M	maps	T
	matches (box)	T
	medicine (non-prescription)	NT
	medi dropper	T
	medi feeder	T
	menstrual cramp relievers	NT
	mineral ice	NT
	mineral oil	NT
	mops	T
	moth balls / flakes	T
	mouse traps	T
	mouthwash--
	--antiseptic	T
	--dental rinse (plax/act)	T
	--listerine	T
	--medicated (cepacol)