§ 44-19-41. Materialperson — Definitions and applicability.
(a) Notwithstanding any of the provisions of chapters 18 and 19 of this title, any retailer
required to collect and remit state sales and use taxes pursuant to those chapters,
who can demonstrate to the satisfaction of the tax administrator by February 1 of
any year that for six (6) consecutive months within the most recent twelve (12) month
period the retailer is a "materialperson� as defined in this section, may elect to
report the sales on a cash basis as the consideration is received. Upon approval of
the tax administrator, the materialperson shall, with respect to sales made beginning
the succeeding July 1st through June 30th, collect the tax due on sales to any contractors,
subcontractors or repairpersons of any building material, made during the period July
1st through June 30th, at the time and to the extent that the materialperson receives
the receipts from, or consideration for, the sales from contractors, subcontractors
or repairpersons. If a materialperson receives a portion of the receipts or consideration
the materialperson shall collect the tax due on that portion at the time the portion
is received, in which case the materialperson will be required to file his or her
return and to pay the tax due in the manner provided in § 44-19-10(a)(1). The taxes imposed by chapter 18 of this title on receipts and consideration shall
be deemed not to be imposed solely for purposes of determining when a materialperson
is required to collect and pay over taxes to the tax administrator under § 44-19-10(a)(1), until the materialperson has received payment of the receipts or consideration in
money (or money's worth) from the contractor, subcontractor or repairperson. A contractor,
subcontractor or repairperson who purchases building materials from a materialperson
pursuant to this section shall, at the time the contractor, subcontractor or repairperson
pays any portion of the purchase price, pay to the materialperson the tax due on the
portion of the purchase price paid in accordance with § 44-18-19. For purposes of chapters 18 and 19 of this title, "materialpersonâ€� is defined as
those retailers of lumber who are engaged in the business primarily of selling lumber
and building materials to contractors, subcontractors, or repairpersons to be used
in the construction, erection, alteration, or repairing of a building or other structure
or in the making of any other improvements on land or the preparation of making improvements,
and whose lumber and building material sales comprise of at least fifty percent (50%)
of their total sales and who may file a notice of intention to claim a lien pursuant
to chapter 28 of title 34 for any materials sold.
(b) The provisions of subsection (a) of this section relating to the collection of tax
at the time the materialperson receives the receipts or consideration from sales applies
only to the in-house credit extended by the materialperson. In the event that a materialperson
described in subsection (a) of this section finances any portion of the receipts or
consideration from a sale described in subsection (a) of this section, including any
tax due on the sale, directly or indirectly, with any person (other than a contractor,
subcontractor or repairperson described in subsection (a) of this section), whether
by factoring, or any other means, then the materialperson shall be deemed to have
received payment of the receipts or consideration in money (or money's worth) from
the contractor, subcontractor or repairperson and shall be required to pay over tax
on those sales with the next return due, with a credit against the tax for any tax
already paid over with respect to the sale. Any amount of tax paid over in accordance
with the prior sentence shall be on account of the tax required to be collected on
the sale to which it relates and the materialperson may take a credit against any
tax paid by the contractor, subcontractor or repairperson in the future on the sale,
to ensure that tax paid over with respect to those sales does not exceed the amount
of the tax imposed on the sale as if the entire purchase price has been paid at the
time of sale.
(c) A materialperson described in subsection (a) of this section, who has not collected
the tax due on the full purchase price for a sale described in subsection (a) of this
section from a contractor, subcontractor or repairperson within one year of the date
of sale, shall be required to pay over to the tax administrator the tax due on any
balance of the full purchase price with the materialperson's return for the period
which includes the date which is one year after the date of the sale.
(d) The tax administrator may assess an additional tax due with respect to a sale described
in subsection (a) of this section within three (3) years from the date the tax is
required to be paid over to the tax administrator pursuant to this section. In the
case of a willfully false or fraudulent return with intent to evade the tax, or where
no return has been filed as prescribed by law, the tax may be assessed at any time.
(e) Every materialperson described in subsection (a) of this section shall, in addition
to those records required to be kept in compliance with chapters 18 and 19 of this
title, keep the following records with respect to each sale of building materials
described in subsection (a) of this section to a contractor, subcontractor or repairperson:
(1) the date of the sale; (2) proof that the sale meets the qualifications described
in subsection (a) of this section; (3) the amount of credit, if any, extended by the
materialperson to the contractor, subcontractor or repairperson for each sale; (4)
the terms for payment of the purchase price or repayment of any credit; and (5) the
date or dates on which the purchase price is paid or credit is repaid, in part or
whole, and the amount of each payment or repayment. Notwithstanding the provisions
of subsection (a) of this section, the records referred to in this subdivision shall
be preserved by said materialperson for a period of three (3) years from the date
the tax on each sale is paid over to the tax administrator in full; provided, however,
that the tax administrator may consent to their destruction within that period or
may require that they be kept longer.
(f) No retailer shall avail himself or herself of this section without prior written approval
of the tax administrator. The tax administrator shall grant that approval when the
administrator is satisfied that the retailer qualifies as a materialperson as defined
in subsection (a) of this section and when the retailer has submitted satisfactory
evidence that the retailer can and will maintain records, in accordance with subsection
(e) of this section, adequate to substantiate the election authorized in this section.
Any attempt on the part of any retailer to exercise this provision without prior written
approval of the tax administrator shall be deemed to be failure to pay the tax and
the retailer shall be subject to assessment for taxes on those sales plus penalties
and interest on those sales as provided for in this chapter.
(g) Notwithstanding the provision of this section, any retailer to whom this section may
apply shall comply with all the administration, collection, and other provisions of
chapters 18 and 19 of this title.