Rhode Island Sales Tax Exemption Certificate: Resale and Nonprofit

A Rhode Island sales tax exemption certificate is the document you give a seller so they don’t charge you the state’s 7% sales tax, and the right form depends on who you are. Businesses buying goods to resell complete a Rhode Island resale certificate and hand it to the supplier. Qualifying nonprofits take a different route entirely: they apply to the Rhode Island Division of Taxation for a formal certificate of exemption and then present that certificate to retailers.¹

Which Certificate You Need

Three common situations don’t require any certificate at all. Clothing and footwear worn on the body are exempt by statute, so sellers simply don’t charge tax on qualifying apparel. Sales to the State of Rhode Island, Rhode Island municipalities, and the federal government are also exempt, and government buyers don’t need to present a certificate to the seller.¹

For everyone else, the fork is straightforward:

Buying inventory or goods for resale? Use a Rhode Island resale certificate.
Buying for a hospital, church, school, or other qualifying charitable or religious organization? You need a certificate issued by the Division of Taxation, obtained through Form EXO-SUE.
A contractor buying materials for a project owned by an exempt entity? See the contractor section below.

Rhode Island General Laws § 44-18-30 lists the full set of exemptions, including manufacturing machinery and equipment used in the actual production of goods for sale.²

Resale Certificates for Businesses

You fill out the resale certificate yourself and give it to your supplier, who keeps it on file as proof the sale was tax-free.³ To complete it you need:

Your business name and address exactly as they appear on state records
Your Rhode Island sales tax permit number, a nine-digit ID formatted 9-9999-9999⁴
A description of the property being purchased
Confirmation that the goods are being bought for resale in the regular course of business

If you aren’t required to hold a Rhode Island permit because you don’t make taxable sales in the state (for example, you only sell wholesale or sell entirely outside Rhode Island), note that on the certificate in place of the permit number.³ The form is signed under penalties of perjury.

Blanket Versus Single-Purchase

A resale certificate can cover a single transaction or stand as a blanket certificate for an ongoing line of purchases from the same supplier. If you order from a vendor regularly, mark the form clearly as “Blanket Certificate” so both sides know it applies to future orders rather than just the one in front of you.⁵

Out-of-State Buyers and the Streamlined Form

Rhode Island retailers should not accept general exemption certificates issued by other states. They can, however, accept the Streamlined Sales and Use Tax Agreement Certificate of Exemption (the uniform multi-state form) for resale transactions.⁵³ If you’re an out-of-state business buying inventory from a Rhode Island supplier, the Streamlined form is the one to use.

Exemption Certificates for Nonprofits

Nonprofits don’t just fill out a form and hand it to a vendor. Rhode Island General Laws § 44-18-30.1 requires organizations seeking exemption to apply to the tax administrator on prescribed forms.⁶ The current form is EXO-SUE (Sales & Use Exemption for an Exempt Organization).⁷

Submit with the completed form:

A $25 nonrefundable application fee payable to the Rhode Island Division of Taxation
Your IRS determination letter showing federal tax-exempt status and your federal identification number
A copy of your articles of incorporation and bylaws
Any additional documentation the Division requests⁸

Mail everything to RI Division of Taxation, Audit & Investigation Unit, One Capitol Hill, Providence, RI 02908. Review takes several weeks, so apply well before you plan to make tax-exempt purchases. Questions can go to (401) 574-8962 or Tax.Audit@tax.ri.gov.⁸

One requirement trips organizations up: you must be current on every state tax return administered by the Division. Outstanding balances, interest, or penalties have to be cleared before the certificate issues.⁸

Contractors Working on Exempt Projects

Contractors and subcontractors are normally treated as the end consumer of materials they use on a job, so they pay sales tax at purchase. There’s a narrow exception. When the work is for the federal government, the State of Rhode Island, a Rhode Island municipality, or an organization holding a valid Rhode Island exemption certificate, the contractor can buy materials and supplies for that specific project tax-free.⁹

The exception has edges. Only materials and supplies essential to the exempt project qualify; equipment rentals and general operating purchases remain taxable even when the project is for an exempt entity.⁹ And if materials purchased tax-free for an exempt project are later diverted to a non-exempt job, the contractor owes the tax on those materials.² Keep records that trace every tax-free purchase to its final use.

Expiration and Renewal

Resale certificates don’t carry a fixed expiration date under Rhode Island law. A blanket certificate stays in effect until revoked, though sellers should periodically confirm a long-standing buyer’s permit is still active.

Nonprofit exemption certificates expire four years from the date of issuance.⁶ Renew before that date using the same EXO-SUE process.⁷ If the certificate lapses, retailers should not honor it, and anything the organization buys during a gap is taxable; the organization would owe use tax on those items.

If an Exempt Purchase Changes Purpose

Rhode Island imposes a 7% use tax on tangible personal property stored, used, or consumed in the state when sales tax wasn’t paid at purchase.¹ This is what catches a business that buys inventory for resale and then pulls items off the shelf for personal or in-house use, and it’s what catches a contractor who redirects exempt-project materials to a taxable job. Report the tax on a Consumer’s Use Tax Return filed with the Division of Taxation.

What Sellers Need to Know About Accepting Certificates

A seller who accepts a properly completed resale certificate is relieved of liability for the tax on that sale, provided there was no fraud or collusion with the buyer.⁵ If the buyer wasn’t actually eligible, the buyer owes the tax, interest, and penalties. The protection depends on the certificate being complete and the seller having no reason to suspect it’s fraudulent. A form with obvious errors or missing fields will not shield you.

Keep copies of every exemption certificate you accept for at least three years. Rhode Island law lets the tax administrator require longer retention, and destroying records before three years without written authorization is treated as evidence of negligence or intent to evade the tax.¹⁰¹¹ During an audit, the Division will ask to see those certificates. If you can’t produce one for a transaction where tax wasn’t collected, expect to be assessed the tax plus penalties.

1
RI Division of Taxation. Sales and Use Tax
2
Rhode Island General Assembly. Rhode Island Code 44-18-30 – Gross Receipts Exempt From Sales and Use Taxes
3
RI Division of Taxation. General FAQs
4
RI Division of Taxation. Rhode Island Division of Taxation Advisory 2017-18
5
Legal Information Institute. 280 RICR 20-70-41.5 – Resale Certificate
6
Rhode Island General Assembly. Rhode Island Code 44-18-30.1 – Application for Certificate of Exemption
7
RI Division of Taxation. Sales Tax Exempt Organizations
8
RI Division of Taxation. Form EXO-SUE – Application for Certificate of Exemption for an Exempt Organization
9
RI Division of Taxation. Contractors and Rhode Island Tax – A Guide for Businesses
10
Rhode Island General Assembly. Rhode Island Code 44-19-27 – Records
11
Legal Information Institute. 280 RICR 20-70-12.10 – Requirement for Record Retention