The Rhode Island Division of Taxation (the "Division") recently issued a reminder to farmers that they must collect and remit sales tax on the retail sale of taxable items. All sales of tangible personal property in Rhode Island are taxable unless an exemption applies. Several of these exemptions apply to farm sales, including exemptions for the sale of fruits and vegetables. Sales of seeds and plants that are used to grow food and food ingredients are also exempt. However, the retail sale of items that are normally taxable are subject to sales tax even when sold by farms. Examples include the sale of plants, flowers, mulch, and soaps. In addition to sales tax, farms are subject to the meals and beverage tax. This tax applies to ready-to-eat meals and beverages sold at retail.
To obtain a retail sales permit, farms may register with the Division online or through a paper application. The permit is valid for one fiscal year (July 1 through June 30) and must be renewed each year.