By Maria Todorova and Charles Capouet

The Rhode Island Division of Taxation ruled that a monthly or annual membership fee that allowed customers to access various benefits associated with shopping on a taxpayer’s website—including discounted shipping benefits; streaming or downloading movies and music; photo storage; and access to games and in-game content—is subject to sales and use tax. The Division reasoned that although membership fees are generally not taxable in Rhode Island, the membership fee charged by the taxpayer constituted a bundled transaction whose true object was ready access to non-taxable and taxable items. The Division also ruled that a free one-month trial subscription was not subject to sales and use tax because no consideration was paid for the transaction. Ruling Request No. 2017-01, R.I. Div. of Tax., Mar. 31, 2017.