§ 44-18-7.1 - Additional definitions.
SECTION 44-18-7.1
§ 44-18-7.1 Additional definitions. –(a) "Agreement" means the Streamlined Sales and Use Tax Agreement.
(b) "Alcoholic Beverages" means beverages that are suitablefor human consumption and contain one-half of one percent (.5%) or more ofalcohol by volume.
(c) "Bundled Transaction" is the retail sale of two or moreproducts, except real property and services to real property, where (1) theproducts are otherwise distinct and identifiable, and (2) the products are soldfor one non-itemized price. A "bundled transaction" does not include the saleof any products in which the "sales price" varies, or is negotiable, based onthe selection by the purchaser of the products included in the transaction.
(i) "Distinct and identifiable products" does not include:
(A) Packaging – such as containers, boxes, sacks, bags,and bottles – or other materials – such as wrapping, labels, tags,and instruction guides – that accompany the "retail sale" of the productsand are incidental or immaterial to the "retail sale" thereof. Examples ofpackaging that are incidental or immaterial include grocery sacks, shoeboxes,dry cleaning garment bags and express delivery envelopes and boxes.
(B) A product provided free of charge with the requiredpurchase of another product. A product is "provided free of charge" if the"sales price" of the product purchased does not vary depending on the inclusionof the products "provided free of charge."
(C) Items included in the member state's definition of "salesprice," pursuant to Appendix C of the Agreement.
(ii) The term "one non-itemized price" does not include aprice that is separately identified by product on binding sales or othersupporting sales-related documentation made available to the customer in paperor electronic form including, but not limited to, an invoice, bill of sale,receipt, contract, service agreement, lease agreement, periodic notice of ratesand services, rate card, or price list.
(iii) A transaction that otherwise meets the definition of a"bundled transaction" as defined above, is not a "bundled transaction" if it is:
(A) The "retail sale" of tangible personal property and aservice where the tangible personal property is essential to the use of theservice, and is provided exclusively in connection with the service, and thetrue object of the transaction is the service; or
(B) The "retail sale" of services where one service isprovided that is essential to the use or receipt of a second service and thefirst service is provided exclusively in connection with the second service andthe true object of the transaction is the second service; or
(C) A transaction that includes taxable products andnontaxable products and the "purchase price" or "sales price" of the taxableproducts is de minimis.
1. De minimis means the seller's "purchase price" or "salesprice" of the taxable products is ten percent (10%) or less of the total"purchase price" or "sales price" of the bundled products.
2. Sellers shall use either the "purchase price" or the"sales price" of the products to determine if the taxable products are deminimis. Sellers may not use a combination of the "purchase price" and "salesprice" of the products to determine if the taxable products are de minimis.
3. Sellers shall use the full term of a service contract todetermine if the taxable products are de minimis; or
(D) The "retail sale" of exempt tangible personal propertyand taxable tangible personal property where:
1. the transaction includes "food and food ingredients","drugs", "durable medical equipment", "mobility enhancing equipment","over-the-counter drugs", "prosthetic devices" (all as defined in §44-18-7.1) or medical supplies; and
2. where the seller's "purchase price" or "sales price" ofthe taxable tangible personal property is fifty percent (50%) or less of thetotal "purchase price" or "sales price" of the bundled tangible personalproperty. Sellers may not use a combination of the "purchase price" and "salesprice" of the tangible personal property when making the fifty percent (50%)determination for a transaction.
(d) "Certified Automated System (CAS)" means softwarecertified under the Agreement to calculate the tax imposed by each jurisdictionon a transaction, determine the amount of tax to remit to the appropriatestate, and maintain a record of the transaction.
(e) "Certified Service Provider (CSP)" means an agentcertified under the Agreement to perform all the seller's sales and use taxfunctions, other than the seller's obligation to remit tax on its own purchases.
(f) Clothing and Related Items
(i) "Clothing" means all human wearing apparel suitable forgeneral use.
(ii) "Clothing accessories or equipment" means incidentalitems worn on the person or in conjunction with "clothing." "Clothingaccessories or equipment" does not include "clothing," "sport or recreationalequipment," or "protective equipment."
(iii) "Protective equipment" means items for human wear anddesigned as protection of the wearer against injury or disease or asprotections against damage or injury of other persons or property but notsuitable for general use. "Protective equipment" does not include "clothing,""clothing accessories or equipment," and "sport or recreational equipment."
(iv) "Sport or recreational equipment" means items designedfor human use and worn in conjunction with an athletic or recreational activitythat are not suitable for general use. "Sport or recreational equipment" doesnot include "clothing," "clothing accessories or equipment," and "protectiveequipment."
(g) Computer and Related Items
(i) "Computer" means an electronic device that acceptsinformation in digital or similar form and manipulates it for a result based ona sequence of instructions.
(ii) "Computer software" means a set of coded instructionsdesigned to cause a "computer" or automatic data processing equipment toperform a task.
(iii) "Delivered electronically" means delivered to thepurchaser by means other than tangible storage media.
(iv) "Electronic" means relating to technology havingelectrical, digital, magnetic, wireless, optical, electromagnetic, or similarcapabilities.
(v) "Load and leave" means delivery to the purchaser by useof a tangible storage media where the tangible storage media is not physicallytransferred to the purchaser.
(vi) "Prewritten computer software" means "computersoftware," including prewritten upgrades, which is not designed and developedby the author or other creator to the specifications of a specific purchaser.The combining of two (2) or more "prewritten computer software" programs orprewritten portions thereof does not cause the combination to be other than"prewritten computer software." "Prewritten computer software" includessoftware designed and developed by the author or other creator to thespecifications of a specific purchaser when it is sold to a person other thanthe specific purchaser. Where a person modifies or enhances "computer software"of which the person is not the author or creator, the person shall be deemed tobe the author or creator only of such person's modifications or enhancements."Prewritten computer software" or a prewritten portion thereof that is modifiedor enhanced to any degree, where such modification or enhancement is designedand developed to the specifications of a specific purchaser, remains"prewritten computer software;" provided, however, that where there is areasonable, separately stated charge or an invoice or other statement of theprice given to the purchaser for such modification or enhancement, suchmodification or enhancement shall not constitute "prewritten computer software."
(h) Drugs and Related Items
(i) "Drug" means a compound, substance or preparation, andany component of a compound, substance or preparation, other than "food andfood ingredients," "dietary supplements" or "alcoholic beverages:"
(A) Recognized in the official United States Pharmacopoeia,official Homeopathic Pharmacopoeia of the United States, or official NationalFormulary, and supplement to any of them; or
(B) Intended for use in the diagnosis, cure, mitigation,treatment, or prevention of disease; or
(C) Intended to affect the structure or any function of thebody.
"Drug" shall also include insulin and medical oxygen whetheror not sold on prescription.
(ii) "Over-the-counter-drug" means a drug that contains alabel that identifies the product as a drug as required by 21 C.F.R. §201.66. The "over-the-counter-drug" label includes:
(A) A "Drug Facts" panel; or
(B) A statement of the "active ingredient(s)" with a list ofthose ingredients contained in the compound, substance or preparation.
"Over-the-counter-drug" shall not include "grooming andhygiene products."
(iii) "Grooming and hygiene products" are soaps and cleaningsolutions, shampoo, toothpaste, mouthwash, antiperspirants, and suntan lotionsand screens, regardless of whether the items meet the definition of"over-the-counter-drugs."
(iv) "Prescription" means an order, formula or recipe issuedin any form of oral, written, electronic, or other means of transmission by aduly licensed practitioner authorized by the laws of the member state.
(i) "Delivery charges" means charges by the seller ofpersonal property or services for preparation and delivery to a locationdesignated by the purchaser of personal property or services including, but notlimited to, transportation, shipping, postage, handling, crating, and packing.
"Delivery charges" shall not include the charges for deliveryof "direct mail' if the charges are separately stated on an invoice or similarbilling document given to the purchaser.
(j) "Direct mail" means printed material delivered ordistributed by United States mail or other delivery service to a mass audienceor to addressees on a mailing list provided by the purchaser or at thedirection of the purchaser when the cost of the items are not billed directlyto the recipients. "Direct mail" includes tangible personal property supplieddirectly or indirectly by the purchaser to the direct mail seller for inclusionin the package containing the printed material. "Direct mail" does not includemultiple items of printed material delivered to a single address.
(k) "Durable medical equipment" means equipment includingrepair and replacement parts for same which:
(i) Can withstand repeated use; and
(ii) Is primarily and customarily used to serve a medicalpurpose; and
(iii) Generally is not useful to a person in the absence ofillness or injury; and
(iv) Is not worn in or on the body.
Durable medical equipment does not include mobility enhancingequipment.
(l) Food and Related Items
(i) "Food and food ingredients" means substances, whether inliquid, concentrated, solid, frozen, dried, or dehydrated form, that are soldfor ingestion or chewing by humans and are consumed for their taste ornutritional value. "Food and food ingredients" does not include "alcoholicbeverages," "tobacco," "candy," "dietary supplements" and "soft drinks."
(ii) "Prepared food" means:
(A) Food sold in a heated state or heated by the seller;
(B) Two (2) or more food ingredients mixed or combined by theseller for sale as a single item; or
(C) Food sold with eating utensils provided by the seller,including plates, knives, forks, spoons, glasses, cups, napkins, or straws. Aplate does not include a container or packaging used to transport the food.
"Prepared food" in (B) does not include food that is onlycut, repackaged, or pasteurized by the seller, and eggs, fish, meat, poultry,and foods containing these raw animal foods requiring cooking by the consumeras recommended by the Food and Drug Administration in chapter 3, part 401.11 ofits Food Code so as to prevent food borne illnesses.
(iii) "Candy" means a preparation of sugar, honey, or othernatural or artificial sweeteners in combination with chocolate, fruits, nuts orother ingredients or flavorings in the form of bars, drops, or pieces. "Candy"shall not include any preparation containing flour and shall require norefrigeration.
(iv) "Soft drinks" means non-alcoholic beverages that containnatural or artificial sweeteners. "Soft drinks" do not include beverages thatcontain milk or milk products, soy, rice or similar milk substitutes, orgreater than fifty percent (50%) of vegetable or fruit juice by volume.
(v) "Dietary supplement" means any product, other than"tobacco," intended to supplement the diet that:
(A) Contains one or more of the following dietary ingredients:
1. A vitamin;
2. A mineral;
3. An herb or other botanical;
4. An amino acid;
5. A dietary substance for use by humans to supplement thediet by increasing the total dietary intake; or
6. A concentrate, metabolite, constituent, extract, orcombination of any ingredient described in above; and
(B) Is intended for ingestion in tablet, capsule, powder,softgel, gelcap, or liquid form, or if not intended for ingestion in such aform, is not represented as conventional food and is not represented for use asa sole item of a meal or of the diet; and
(C) Is required to be labeled as a dietary supplement,identifiable by the "Supplemental Facts" box found on the label and as requiredpursuant to 21 C.F.R. § 101.36.
(m) "Food sold through vending machines" means food dispensedfrom a machine or other mechanical device that accepts payment.
(n) "Hotel" means every building or other structure kept,used, maintained, advertised as or held out to the public to be a place whereliving quarters are supplied for pay to transient or permanent guests andtenants and includes a motel.
(i) "Living quarters" means sleeping rooms, sleeping orhousekeeping accommodations, or any other room or accommodation in any part ofthe hotel, rooming house or tourist camp which is available for or rented outfor hire in the lodging of guests.
(ii) "Rooming house" means every house, boat, vehicle, motorcourt or other structure kept, used, maintained, advertised or held out to thepublic to be a place where living quarters are supplied for pay to transient orpermanent guests or tenants, whether in one or adjoining buildings.
(iii) "Tourist camp" means a place where tents or tenthouses, or camp cottages, or cabins or other structures are located and offeredto the public or any segment thereof for human habitation.
(o) "Lease or rental" means any transfer of possession orcontrol of tangible personal property for a fixed or indeterminate term forconsideration. A lease or rental may include future options to purchase orextend. Lease or rental does not include:
(i) A transfer of possession or control of property under asecurity agreement or deferred payment plan that requires the transfer of titleupon completion of the required payments;
(ii) A transfer or possession or control of property under anagreement that requires the transfer of title upon completion of requiredpayments and payment of an option price does not exceed the greater of onehundred dollars ($100) or one percent of the total required payments; or
(iii) Providing tangible personal property along with anoperator for a fixed or indeterminate period of time. A condition of thisexclusion is that the operator is necessary for the equipment to perform asdesigned. For the purpose of this subsection, an operator must do more thanmaintain, inspect, or set-up the tangible personal property.
(iv) Lease or rental does include agreements covering motorvehicles and trailers where the amount of consideration may be increased ordecreased by reference to the amount realized upon sale or disposition of theproperty as defined in 26 U.S.C. § 7701(h)(1).
(v) This definition shall be used for sales and use taxpurposes regardless if a transaction is characterized as a lease or rentalunder generally accepted accounting principles, the Internal Revenue Code, theUniform Commercial Code, or other provisions of federal, state or local law.
(vi) This definition will be applied only prospectively fromthe date of adoption and will have no retroactive impact on existing leases orrentals. This definition shall neither impact any existing sale-leasebackexemption or exclusions that a state may have, nor preclude a state fromadopting a sale-leaseback exemption or exclusion after the effective date ofthe Agreement.
(p) "Mobility enhancing equipment" means equipment includingrepair and replacement parts to same, which:
(i) Is primarily and customarily used to provide or increasethe ability to move from one place to another and which is appropriate for useeither in a home or a motor vehicle; and
(ii) Is not generally used by persons with normal mobility;and
(iii) Does not include any motor vehicle or equipment on amotor vehicle normally provided by a motor vehicle manufacturer.
Mobility enhancing equipment does not include durable medicalequipment.
(q) "Model 1 Seller" means a seller that has selected a CSPas its agent to perform all the seller's sales and use tax functions, otherthan the seller's obligation to remit tax on its own purchases.
(r) "Model 2 Seller" means a seller that has selected a CASto perform part of its sales and use tax functions, but retains responsibilityfor remitting the tax.
(s) "Model 3 Seller" means a seller that has sales in atleast five member states, has total annual sales revenue of at least fivehundred million dollars ($500,000,000), has a proprietary system thatcalculates the amount of tax due each jurisdiction, and has entered into aperformance agreement with the member states that establishes a tax performancestandard for the seller. As used in this definition, a seller includes anaffiliated group of sellers using the same proprietary system.
(t) "Prosthetic device" means a replacement, corrective, orsupportive devices including repair and replacement parts for same worn on orin the body to:
(i) Artificially replace a missing portion of the body;
(ii) Prevent or correct physical deformity or malfunction; or
(iii) Support a weak or deformed portion of the body.
(u) "Purchaser" means a person to whom a sale of personalproperty is made or to whom a service is furnished.
(v) "Purchase price" applies to the measure subject to usetax and has the same meaning as sales price.
(w) "Seller" means a person making sales, leases, or rentalsof personal property or services.
(x) "State" means any state of the United States and theDistrict of Columbia.
(y) "Telecommunications" tax base/exemption terms
(i) Telecommunication terms shall be defined as follows:
(A) "Ancillary services" means services that are associatedwith or incidental to the provision of "telecommunications services",including, but not limited to, "detailed telecommunications billing","directory assistance", "vertical service", and "voice mail services".
(B) "Conference bridging service" means an "ancillaryservice" that links two (2) or more participants of an audio or videoconference call and may include the provision of a telephone number."Conference bridging service" does not include the "telecommunicationsservices" used to reach the conference bridge.
(C) "Detailed telecommunications billing service" means an"ancillary service" of separately stating information pertaining to individualcalls on a customer's billing statement.
(D) "Directory assistance" means an "ancillary service" ofproviding telephone number information, and/or address information.
(E) "Vertical service" means an "ancillary service" that isoffered in connection with one or more "telecommunications services", whichoffers advanced calling features that allow customers to identify callers andto manage multiple calls and call connections, including "conference bridgingservices".
(F) "Voice mail service" means an "ancillary service" thatenables the customer to store, send or receive recorded messages. "Voice mailservice" does not include any "vertical services" that the customer may berequired to have in order to utilize the "voice mail service".
(G) "Telecommunications service" means the electronictransmission, conveyance, or routing of voice, data, audio, video, or any otherinformation or signals to a point, or between or among points. The term"telecommunications service" includes such transmission, conveyance, or routingin which computer processing applications are used to act on the form, code orprotocol of the content for purposes of transmission, conveyance or routingwithout regard to whether such service is referred to as voice over Internetprotocol services or is classified by the Federal Communications Commission asenhanced or value added. "Telecommunications service" does not include:
(1) Data processing and information services that allow datato be generated, acquired, stored, processed, or retrieved and delivered by anelectronic transmission to a purchaser where such purchaser's primary purposefor the underlying transaction is the processed data or information;
(2) Installation or maintenance of wiring or equipment on acustomer's premises;
(3) Tangible personal property;
(4) Advertising, including, but not limited to, directoryadvertising.
(5) Billing and collection services provided to third parties;
(6) Internet access service;
(7) Radio and television audio and video programmingservices, regardless of the medium, including the furnishing of transmission,conveyance and routing of such services by the programming service provider.Radio and television audio and video programming services shall include, butnot be limited to, cable service as defined in 47 U.S.C. § 522(6) andaudio and video programming services delivered by commercial mobile radioservice providers, as defined in 47 CFR 20.3;
(8) "Ancillary services"; or
(9) Digital products "delivered electronically", including,but not limited to, software, music, video, reading materials or ring tones.
(H) "800 service" means a "telecommunications service" thatallows a caller to dial a toll-free number without incurring a charge for thecall. The service is typically marketed under the name "800", "855", "866","877", and "888" toll-free calling, and any subsequent numbers designated bythe Federal Communications Commission.
(I) "900 service" means an inbound toll "telecommunicationsservice" purchased by a subscriber that allows the subscriber's customers tocall in to the subscriber's prerecorded announcement or live service. "900service" does not include the charge for: collection services provided by theseller of the "telecommunications services" to the subscriber, or service orproduct sold by the subscriber to the subscriber's customer. The service istypically marketed under the name "900 service," and any subsequent numbersdesignated by the Federal Communications Commission.
(J) "Fixed wireless service" means a "telecommunicationsservice" that provides radio communication between fixed points.
(K) "Mobile wireless service" means a "telecommunicationsservice" that is transmitted, conveyed or routed regardless of the technologyused, whereby the origination and/or termination points of the transmission,conveyance or routing are not fixed, including, by way of example only,"telecommunications services" that are provided by a commercial mobile radioservice provider.
(L) "Paging service" means a "telecommunications service"that provides transmission of coded radio signals for the purpose of activatingspecific pagers; such transmissions may include messages and/or sounds.
(M) "Prepaid calling service" means the right to accessexclusively "telecommunications services", which must be paid for in advanceand which enables the origination of calls using an access number orauthorization code, whether manually or electronically dialed, and that is soldin predetermined units or dollars of which the number declines with use in aknown amount.
(N) "Prepaid wireless calling service" means a"telecommunications service" that provides the right to utilize "mobilewireless service" as well as other non-telecommunications services includingthe download of digital products "delivered electronically", content and"ancillary services" which must be paid for in advance that is sold inpredetermined units of dollars of which the number declines with use in a knownamount.
(O) "Private communications service" means atelecommunications service that entitles the customer to exclusive or priorityuse of a communications channel or group of channels between or amongtermination points, regardless of the manner in which such channel or channelsare connected, and includes switching capacity, extension lines, stations, andany other associated services that are provided in connection with the use ofsuch channel or channels.
(P) "Value-added non-voice data service" means a service thatotherwise meets the definition of "telecommunications services" in whichcomputer processing applications are used to act on the form, content, code, orprotocol of the information or data primarily for a purpose other thantransmission, conveyance or routing.
(ii) "Modifiers of Sales Tax Base/Exemption Terms" – thefollowing terms can be used to further delineate the type of"telecommunications service" to be taxed or exempted. The terms would be usedwith the broader terms and subcategories delineated above.
(A) "Coin-operated telephone service" means a"telecommunications service" paid for by inserting money into a telephoneaccepting direct deposits of money to operate.
(B) "International" means a "telecommunications service" thatoriginates or terminates in the United States and terminates or originatesoutside the United States, respectively. United States includes the Districtof Columbia or a U.S. territory or possession.
(C) "Interstate" means a "telecommunications service" thatoriginates in one United States state, or a United States territory orpossession, and terminates in a different United States state or a UnitedStates territory or possession.
(D) "Intrastate" means a "telecommunications service" thatoriginates in one United States state or a United States territory orpossession, and terminates in the same United States state or a United Statesterritory or possession.
(E) "Pay telephone service" means a "telecommunicationsservice" provided through any pay telephone.
(F) "Residential telecommunications service" means a"telecommunications service" or "ancillary services" provided to an individualfor personal use at a residential address, including an individual dwellingunit such as an apartment. In the case of institutions where individualsreside, such as schools or nursing homes, "telecommunications service" isconsidered residential if it is provided to and paid for by an individualresident rather than the institution.
The terms "ancillary services" and "telecommunicationsservice" are defined as a broad range of services. The terms "ancillaryservices" and "telecommunications service" are broader than the sum of thesubcategories. Definitions of subcategories of "ancillary services" and"telecommunications service" can be used by a member state alone or incombination with other subcategories to define a narrower tax base than thedefinitions of "ancillary services" and "telecommunications service" wouldimply. The subcategories can also be used by a member state to provideexemptions for certain subcategories of the more broadly defined terms.
A member state that specifically imposes tax on, or exemptsfrom tax, local telephone or local telecommunications service may define "localservice" in any manner in accordance with § 44-18.1-28, except as limitedby other sections of this Agreement.
(z) "Tobacco" means cigarettes, cigars, chewing or pipetobacco, or any other item that contains tobacco.