§ 44-3-29.1. Wholesale and retail inventory tax phase out. (a) Beginning July 1, 1999, the city council or town council of any municipality shall, by ordinance, phase out, over a ten (10) year period, the stock in trade or inventory tax of wholesalers and retailers. The rate schedule to be implemented by the cities and towns is established in this section.

(b) "Inventory", as it refers to wholesalers, "stock in trade", as it refers to wholesalers, and "wholesaler" have the same meaning as defined in § 44-3-19.

(c) "Inventory", as it refers to retailers, "stock in trade", as it refers to retailers, and "retailer" have the same meaning as defined in § 44-3-40.

(d) The rate schedule for the ten (10) year phase out of the wholesale and retail inventory tax is as follows:

Year Maximum Tax Rate

FY 1999 set by local officials

FY 2000 ninety percent (90%) of FY 1999 rate

FY 2001 eighty percent (80%) of FY 1999 rate

FY 2002 seventy percent (70%) of FY 1999 rate

FY 2003 sixty percent (60%) of FY 1999 rate

FY 2004 fifty percent (50%) of FY 1999 rate

FY 2005 forty percent (40%) of FY 1999 rate

FY 2006 thirty percent (30%) of FY 1999 rate

FY 2007 twenty percent (20%) of FY 1999 rate

FY 2008 ten percent (10%) of FY 1999 rate

FY 2009 no tax authorized

(e) In the event that a wholesaler sold inventory or stock in trade both at wholesale and at retail in the preceding calendar year, the tax assessor of the municipality shall assess on the same basis as a retailer's inventory or stock in trade as of December 31 of that year, to the extent permitted by applicable law, notwithstanding any freeze of assessed valuation or exemption permitted pursuant to § 44-5-12(c), that proportion of inventory or stock in trade of the wholesaler which are equal to the percentage of the wholesaler's total sales during the preceding calendar year that were at retail. For the purposes of this paragraph, "sales at retail" do include sales to employees of the wholesaler or to employees of its affiliates. If retail sales are less than one percent (1%) of total sales during the year, it is deemed that no sales were made at retail during the year. All sales of a wholesaler to a customer, which is an affiliated entity, are deemed to be retail sales for the purposes of this subsection if more than half of the dollar volume of the sales of the affiliated entity is made within the municipality.

(f) For purposes of this section, a wholesaler is considered affiliated with customers if it controls, or is under common control with the customers.

(g) In the event that a wholesaler or retailer subject to the inventory tax commences operations in a particular city or town after fiscal year 1999, the tax assessor for that municipality shall determine what would have been the value of the inventory as of December 1998, adjusting the inventory value to fiscal year 1999 using the changes in the consumer price index - all urban consumers (CPI-U) published by the Bureau of Labor Statistics of the United States Department of Labor. The director of the department of revenue shall annually publish an adjustment schedule.

(h) This section also applies to motor vehicle dealers, as defined in § 31-5-5.

(i) The assent of two-thirds (2/3) of the members elected to each house of the general assembly is required to repeal or amend this section.

History of Section. (P.L. 1998, ch. 31, art. 27, § 1; P.L. 2008, ch. 98, § 36; P.L. 2008, ch. 145, § 36.)