Source: http://www.tax.ri.gov/declaratoryrulings/r2003-01.php
Timestamp: 2020-08-13 02:52:52
Document Index: 800965161

Matched Legal Cases: ['§ 42', '§42', '§42', '§42', '§42', '§42', '§42', '§42']

Home > Declaratory Rulings > Ruling Request 2003-01
Request for Ruling Regarding the Application of the Exemption provided by § 42-64-20(c) for Purchases of Certain Personal Property
On behalf of your clients, collectively referred to as “Company X”, you request, pursuant to the provisions of §42-35-8, Rhode Island General Laws, 1956 (as amended), a declaratory ruling as to the exemption from Rhode Island sales and use tax of building and construction materials, personal property, furniture, fixtures and equipment and replacements, additions and enhancements thereof, the legal title to, and/or contractual right to the use of which will be in the name of, Company X or an affiliate of Company X, in connection with a project to be developed on land in Rhode Island, with respect to which the Rhode Island Economic Development Corporation (“EDC”) is the landlord and Company X is the tenant.
It is in the best interest of the EDC and of the Project that legal title to the Improvements and Purchased Materials be held by Company X or its subsidiary rather than the EDC.
“ The corporation shall not be required to pay state taxes of any kind, and the corporation, its projects, property, and moneys and, except for estate, inheritance, and gift taxes, any bonds or notes issued under the provisions of this chapter and the income (including gain from sale or exchange) from these shall at all times be free from taxation of every kind by the state and by the municipalities and all political subdivision of the state . . .”
“Project’ or ‘port project’ means the acquisition, ownership, operation, construction, reconstruction, rehabilitation, improvement, development, sale, lease or other disposition of, or the provision of financing for, any real or personal property (by whomever owned) or any interests therein, including without limiting the generality of the foregoing, any port facility, recreational facility, industrial facility, airport facility, pollution control facility, utility facility, solid waste disposal facility, civil facility, residential facility, water supply facility, or any other facility, or any combination of two (2) or more of the foregoing, or any other activity undertaken by the corporation.”
Chapter 64 of Title 42 entitled “Economic Development Corporation” was enacted in 1974. Under subsection (b) of §42-64-20, EDC was granted an exemption from all state taxes except for estate, inheritance and gift taxes. R.I.G.L. §42-64-20 was amended in 1995 by adding subsection (c). That subsection allows EDC to “assign” its tax exemption granted under subsection (b) to its lessee (or sublease). In order to make such an assignment the board of directors must, by resolution, find that (1) the project is a project of the EDC under §42-64-3(20); and (2) that it is in the interest of the EDC and the project that legal title be held by the lessee (or sublease) of the EDC. This resolution was adopted by the board of directors on October 29, 2001. Section 4.2 of the Development Agreement entered into between EDC and Company X sets forth the period of the sales tax exemption as the lessor of (i) ten (10) years from the date of the effective date of the Development Agreement (November 5, 1998), or (ii) the date of termination of the Ground Lease, whether terminated by expiration, express termination or otherwise, or (iii) the date this exemption is no longer legally permitted. Section 5.4 of the Development Agreement restricts the amount of the sales tax exemption upon attainment of the required investment by Company X.
Since the Purchased Materials used in the Project as that term is defined in R.I.G.L. §42-64-3(20), supra, would be exempt if title vested in EDC, those same purchases by Company X or its affiliates would likewise be exempt under the terms of the Development Agreement.
The Purchased Materials (excluding office supplies or common office items which have a useful life of less than one year) as may be owned by Company X or its affiliates, so long as they do not include goods or inventory held for sale in the ordinary course of business constitute part of an EDC Project as set forth in §42-64-3(20) of the R.I.G.L., and as such, are exempt under §42-64-20, R.I.G.L., from Rhode Island sales and use tax to the same extent as if legal title of such Purchased Materials was in the name of the EDC, subject to the limitation set forth in Section 5.4 of the Development Agreement.
This ruling may be relied upon by Company X and its affiliates and shall remain in effect for the lessor of (i) ten (10) years from the date of the effective date of the Development Agreement (November 5, 1998), or (ii) the date of termination of the Ground Lease, whether terminated by expiration, express termination or otherwise, or (iii) the date this exemption is no longer legally permitted.