Rhode Island Sales and Use Tax Protest

RHODE ISLAND SALES AND USE TAX PROTEST — ADMINISTRATIVE PETITION AND HEARING REQUEST

TABLE OF CONTENTS

1. Letterhead and Addressing
2. Caption and Identifying Information
3. Introduction and Timeliness
4. Statement of Jurisdiction
5. Background — Notice of Deficiency or Refund Denial
6. Statement of Facts
7. Errors Asserted
8. Legal Argument
9. Wayfair / Economic Nexus Analysis
10. Request for Hearing and Relief
11. Reservation of Rights and Further Appeal
12. Verification
13. Signature and Service
14. Exhibit List
15. Rhode Island Practice Notes
16. Sources and References

1. LETTERHEAD AND ADDRESSING

[LAW FIRM / TAXPAYER LETTERHEAD]

Date: [__/__/____]

VIA CERTIFIED MAIL — RETURN RECEIPT REQUESTED
(Tracking No. [________________________________])

Tax Administrator
Rhode Island Division of Taxation
Attn: Hearing Officer / Office of Legal Counsel
One Capitol Hill
Providence, Rhode Island 02908-5800

Re: Protest, Petition for Hearing, and Administrative Appeal — Sales and Use Tax
Taxpayer: [TAXPAYER NAME]
RI Sales Tax Permit No.: [________________________________]
FEIN: xx-xxx[____]
Periods at Issue: [__/__/____] through [__/__/____]
Notice / Decision Letter Number: [________________________________]
Notice / Decision Mailing Date: [__/__/____]
Total Amount Asserted / Refund Denied: $[________________________________]

2. CAPTION AND IDENTIFYING INFORMATION

3. INTRODUCTION AND TIMELINESS

Pursuant to [R.I.G.L. § 44-19-17 / § 44-19-25], Petitioner [TAXPAYER NAME] ("Petitioner" or "Taxpayer") respectfully submits this written Protest and Petition for Hearing concerning the [Notice of Deficiency / Notice of Disallowance of Refund Claim] identified in Section 5 below (the "Notice"), and requests an administrative hearing before the Tax Administrator or a designated Hearing Officer of the Rhode Island Division of Taxation (the "Division").

This Protest is filed within thirty (30) days after the mailing date of the Notice. The Notice was mailed on [__/__/____], and this Protest is mailed on [__/__/____], [___] days after mailing. Certified-mail tracking is referenced above as proof of timely deposit.

4. STATEMENT OF JURISDICTION

4.1. The Tax Administrator has jurisdiction to hear this Protest pursuant to R.I.G.L. § 44-19-17 (deficiency) and/or § 44-19-25 (refund denial).

4.2. The administrative hearing is governed by the Rhode Island Administrative Procedures Act, R.I.G.L. § 42-35-1 et seq., and the Division's hearing regulations.

4.3. Petitioner expressly preserves the right to seek judicial review of any adverse final decision in the Sixth Division of the Rhode Island District Court within thirty (30) days under R.I.G.L. §§ 44-19-18 and 8-8-25, and thereafter to petition the Rhode Island Supreme Court for a writ of certiorari pursuant to R.I.G.L. § 8-8-32.

5. BACKGROUND — NOTICE OF DEFICIENCY OR REFUND DENIAL

5A. Deficiency Track (use if a Notice of Deficiency was issued)

5A.1. The Division issued the Notice of Deficiency, Letter No. [____], mailed [__/__/____], asserting sales and/or use tax deficiencies for the periods identified above.

5A.2. The Notice asserts the following adjustments (a true copy is attached as Exhibit A):

5B. Refund Track (use if a refund claim was filed and denied)

5B.1. On [__/__/____], Taxpayer timely filed a refund claim pursuant to R.I.G.L. § 44-19-25 in the amount of $[__________] for the period [__/__/____] through [__/__/____] (the "Refund Claim," attached as Exhibit A). The Refund Claim was filed within three (3) years from the fifteenth (15th) day after the close of the month for which the overpayment was made, as required by R.I.G.L. § 44-19-26.

5B.2. On [__/__/____], the Division mailed Notice of Disallowance, Letter No. [____], denying the Refund Claim in whole or in part (attached as Exhibit B).

6. STATEMENT OF FACTS

6.1. Taxpayer is engaged in the business of [describe goods or services sold] with operations in [STATE/STATES]. Taxpayer [holds / does not hold] Rhode Island Sales Tax Permit No. [____].

6.2. [Describe the underlying transactions, customer types (consumer vs. wholesale), exemption certificates collected, sourcing rules applied, and use-tax accruals booked.]

6.3. [Describe records maintained per R.I.G.L. § 44-19-12, including invoice files, exemption certificates (Form ST-4 / ST-5), drop-shipment documentation, and gateway/marketplace reports.]

6.4. [For remote sellers: describe annual gross receipts from RI customers and number of separate RI transactions for each calendar year at issue, with reference to summary exhibits.]

6.5. Documents supporting these facts are attached as Exhibits C through [__] and listed in Section 14.

7. ERRORS ASSERTED

Petitioner asserts that the Division erred in the following respects:

7.1. Error No. 1 — Exemption / Exclusion. The Division erroneously disallowed exemption(s) properly claimed under R.I.G.L. § 44-18-30([__]) (e.g., sales for resale, manufacturing, government, non-profit, food, drugs, clothing) supported by valid certificates on file.

7.2. Error No. 2 — Mis-sourcing. The Division erroneously sourced [transactions] to Rhode Island in violation of the destination-sourcing rules of R.I.G.L. § 44-18.1-11 (Streamlined Sales and Use Tax Agreement).

7.3. Error No. 3 — Use Tax on Non-taxable Acquisitions. The Division erroneously imposed use tax on [item] that is exempt under R.I.G.L. § 44-18-30 or already subject to tax in another jurisdiction, with credit due under R.I.G.L. § 44-18-30(28) / reciprocity provisions.

7.4. Error No. 4 — No Economic Nexus. Taxpayer did not exceed the thresholds in R.I.G.L. § 44-18.2-3 (i.e., $100,000 in gross revenue from RI sales OR 200 or more separate RI transactions) in the relevant calendar year, and therefore had no obligation to register or collect Rhode Island sales tax. See Section 9.

7.5. Error No. 5 — Marketplace Facilitator. Taxpayer's RI sales were facilitated by a registered marketplace facilitator that collected and remitted tax under R.I.G.L. § 44-18.2-3(B), making Taxpayer's collection obligation duplicative.

7.6. Error No. 6 — Statute of Limitations. The deficiency is barred in whole or in part by R.I.G.L. § 44-19-14 (assessment limitations).

7.7. Error No. 7 — Sampling Defects. The Division's stratified sample fails statistical validity standards or lacks a documented sampling methodology, rendering the projected adjustment unreliable.

7.8. Error No. 8 — Penalties. The Division erroneously imposed penalties because Taxpayer had reasonable cause and acted in good faith.

8. LEGAL ARGUMENT

8.1. Burden of Proof. Taxpayer generally bears the burden in challenging a deficiency, but the Division must establish the lawful basis of any sampling projection and must produce the underlying transactional record on request. The taxpayer's burden is satisfied by a preponderance of the evidence supporting each disputed transaction or exemption.

8.2. Strict Construction of Tax Statutes. Taxing statutes are strictly construed against the State and in favor of the taxpayer; exemption statutes are construed in the State's favor but not so as to defeat the legislative purpose. See Kargman v. Jacobs, 122 R.I. 720 (1980); Sayles Finishing Plants v. Toomey, 95 R.I. 471 (1963).

8.3. Resale and Other Exemptions. Where Taxpayer obtained a properly executed Form ST-4 / ST-5 in good faith at or near the time of sale, the certificate is prima facie evidence of exemption under R.I.G.L. § 44-18-25 and 280-RICR-20-70 et seq.

8.4. Sourcing. Streamlined sourcing rules require destination sourcing for sales of tangible personal property, with origin sourcing limited to specified transactions. The Division's contrary sourcing is reversible error.

8.5. Federal Constitutional Limits. Imposition of collection obligations on non-resident sellers is constrained by the Commerce Clause as construed in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), the Due Process Clause, and Public Law 86-272 (where applicable to income tax — note that P.L. 86-272 does not protect against sales-tax collection duties).

8.6. Penalty Abatement — Reasonable Cause. Penalties should be abated for reasonable cause under R.I.G.L. § 44-19-12.1 / § 44-1.1-2 and the standard articulated in Boyle v. United States, 469 U.S. 241 (1985).

8.7. Refund Track (if applicable). R.I.G.L. § 44-19-25 obligates the Tax Administrator to set a hearing upon timely request after disallowance, and § 44-19-26 confirms the three-year limitations period was satisfied. A refund denial is reviewable in the Sixth Division District Court under § 44-19-25 and § 8-8-25.

9. WAYFAIR / ECONOMIC NEXUS ANALYSIS

9.1. Statutory Framework. R.I.G.L. § 44-18.2-3 implements South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018) and imposes Rhode Island sales-tax registration, collection, and remittance obligations on remote sellers, marketplace facilitators, and referrers that, in the immediately preceding calendar year, had:

• (i) gross revenue from sales delivered into Rhode Island of at least $100,000; OR
• (ii) two hundred (200) or more separate transactions delivered into Rhode Island.

9.2. Application to Taxpayer. The following table sets forth Taxpayer's Rhode Island gross revenue and transaction counts on a calendar-year basis:

9.3. Conclusion. Taxpayer [did / did not] exceed either threshold in the calendar year preceding the audit year and therefore [was / was not] required to register and collect Rhode Island sales tax under R.I.G.L. § 44-18.2-3.

9.4. Marketplace Facilitator Defense. To the extent Taxpayer's RI sales were facilitated by a registered marketplace facilitator, the marketplace was the deemed retailer and bore the collection obligation under R.I.G.L. § 44-18.2-3(B) and (C). Taxpayer is not liable for tax already remitted by the marketplace.

9.5. Constitutional Limits. Even if the statutory thresholds are met, imposition of Rhode Island sales tax must satisfy Wayfair's functional considerations: a safe-harbor threshold, no retroactivity, and Streamlined Sales and Use Tax Agreement membership. Rhode Island's regime satisfies these elements only where the Division applies them prospectively and consistently with destination sourcing.

10. REQUEST FOR HEARING AND RELIEF

WHEREFORE, Petitioner respectfully requests that the Tax Administrator:

• A. Schedule an administrative hearing under R.I.G.L. § [44-19-17 / 44-19-25], with not less than thirty (30) days' written notice;
• B. Permit Petitioner to appear in person, by counsel, or by qualified representative under Form RI-2848;
• C. Allow pre-hearing exchange of exhibits and witness lists, and the issuance of subpoenas under § 42-35-9 if necessary;
• D. Vacate or reduce the deficiency / grant the refund in full;
• E. Abate all penalties for reasonable cause and good faith;
• F. Adjust interest accordingly; and
• G. Issue a written decision containing findings of fact and conclusions of law consistent with R.I.G.L. § 42-35-12.

Petitioner does [ ☐ request ☐ not request] an in-person hearing. If videoconference hearing is offered, Petitioner does [ ☐ consent ☐ not consent].

11. RESERVATION OF RIGHTS AND FURTHER APPEAL

11.1. Petitioner reserves the right to amend or supplement this Protest, to raise additional grounds, and to introduce further evidence at or before the hearing.

11.2. Petitioner expressly preserves the right to seek judicial review of any adverse final decision in the Sixth Division of the Rhode Island District Court within thirty (30) days under R.I.G.L. §§ 44-19-18 / 44-19-25 and § 8-8-25, and thereafter to petition the Rhode Island Supreme Court for a writ of certiorari pursuant to R.I.G.L. § 8-8-32.

11.3. This Protest is filed without prejudice to any defense, objection, or counter-claim, including but not limited to defenses under the United States Constitution (Commerce Clause, Due Process Clause), the Rhode Island Constitution, the Internet Tax Freedom Act, and the Streamlined Sales and Use Tax Agreement.

12. VERIFICATION

STATE OF [STATE]

COUNTY OF [COUNTY]

I, [NAME], being first duly sworn, depose and say that I am the [Petitioner / authorized officer / member of Petitioner]; that I have read the foregoing Protest and Petition for Hearing and know the contents thereof; and that the same is true to my own knowledge except as to those matters stated upon information and belief, and as to those I believe them to be true.

[________________________________]

[NAME / TITLE]

Sworn to and subscribed before me this [____] day of [_______________], 20[____].

[________________________________]

Notary Public

(My Commission Expires: [_______________])

13. SIGNATURE AND SERVICE

Date: [__/__/____]

Respectfully submitted,

[LAW FIRM NAME]

By: [________________________________]

[ATTORNEY NAME], R.I. Bar No. [####]

Counsel for Petitioner

[STREET ADDRESS]

[CITY, STATE ZIP]

Telephone: [(___) ___-____]

Email: [EMAIL]

Certificate of Service. I hereby certify that on [__/__/____] I caused a true copy of the foregoing Protest with all exhibits to be served upon the Rhode Island Division of Taxation, Office of Legal Counsel, One Capitol Hill, Providence, RI 02908, by certified mail, return receipt requested, tracking number [________________________________].

[________________________________]

[ATTORNEY NAME]

14. EXHIBIT LIST

15. RHODE ISLAND PRACTICE NOTES

• 30-day jurisdictional deadline. Both deficiency protests (§ 44-19-17) and refund-denial appeals (§ 44-19-25) require filing within 30 days of mailing. Track from the Division's mail date.
• Refund limitations. R.I.G.L. § 44-19-26 imposes a 3-year limit measured from the 15th day after the close of the month of overpayment. Plead and prove timeliness on the face of the protest.
• Wayfair thresholds. The RI economic-nexus statute (R.I.G.L. § 44-18.2) was enacted in 2019 and uses the South Dakota model: $100,000 in RI gross revenue OR 200 separate RI transactions in the immediately preceding calendar year. Either threshold triggers the obligation; both are not required.
• Marketplace facilitators. Marketplace facilitators are deemed retailers and must collect and remit on behalf of marketplace sellers. A registered facilitator's collection generally relieves the underlying seller, subject to documentation requirements.
• Exemption certificates. Properly executed Form ST-4 / ST-5 / SST exemption certificates accepted in good faith are prima facie exemption evidence under R.I.G.L. § 44-18-25. Maintain certificates for at least the open assessment period plus two years.
• Sourcing. Rhode Island is a Streamlined Sales and Use Tax Agreement member state; destination sourcing applies to most tangible personal property and digital goods. Service sourcing follows specific Streamlined rules.
• Sampling. Audit projections must rest on a documented, statistically valid sample. Demand the sampling plan in writing and reserve the right to a "stop-test" after error tolerance is met.
• Bond / pre-payment for judicial review. Sixth Division District Court review of sales-tax determinations may require bonding or partial pre-payment under § 44-19-18; verify before filing.
• Voluntary Disclosure Program. Pre-contact unfiled-period exposure should be evaluated for the RI VDP (typical 36-month look-back for sales/use; penalty waiver).
• Use tax accruals. Maintain a use-tax accrual policy for out-of-state purchases (fixed assets, drop-shipped items, software, digital goods) that the vendor did not charge tax on.
• Records retention. R.I.G.L. § 44-19-12 requires retention of records sufficient to determine tax liability for at least 3 years; recommended 4 years to cover the assessment period plus filing lag.

16. SOURCES AND REFERENCES

• R.I. Gen. Laws Ch. 44-18 (Sales and Use Taxes — Liability and Computation): https://webserver.rilegislature.gov/Statutes/TITLE44/44-18/INDEX.htm
• R.I. Gen. Laws Ch. 44-18.2 (Remote Sellers / Marketplace Facilitators): https://webserver.rilegislature.gov/Statutes/TITLE44/44-18.2/INDEX.htm
• R.I. Gen. Laws Ch. 44-19 (Sales and Use Taxes — Enforcement and Collection): https://webserver.rilegislature.gov/Statutes/TITLE44/44-19/INDEX.htm
• R.I. Gen. Laws § 44-19-25 (Refund claim — Hearing — Judicial review): https://law.justia.com/codes/rhode-island/title-44/chapter-44-19/section-44-19-25/
• R.I. Gen. Laws § 8-8-25 (Sixth Division District Court tax appeals): https://webserver.rilegislature.gov/Statutes/TITLE8/8-8/INDEX.htm
• R.I. Gen. Laws Ch. 42-35 (Administrative Procedures Act): https://webserver.rilegislature.gov/Statutes/TITLE42/42-35/INDEX.htm
• RI Division of Taxation — Sales and Excise Tax: https://tax.ri.gov/tax-sections/sales-excise
• RI Division of Taxation — Remote Sellers: https://tax.ri.gov/tax-sections/sales-excise/remote-sellers-marketplace-facilitators
• RI Division of Taxation — Administrative Decisions: https://tax.ri.gov/guidance/administrative-decisions
• RI Division of Taxation — Forms (T-204, ST-4, ST-5, RI-2848): https://tax.ri.gov/forms
• South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018)
• Kargman v. Jacobs, 122 R.I. 720 (1980)
• Sayles Finishing Plants v. Toomey, 95 R.I. 471 (1963)
• Boyle v. United States, 469 U.S. 241 (1985)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Rhode Island must review and customize this document before filing. Laws, citations, Division procedures, and Wayfair-related thresholds change frequently; verify all authorities before use.