# Sales Tax



## CrazyUberdriver (Jul 12, 2015)

Can uber effectively remove their liability to pay sales tax in RI by having the driver sign an agreement to pay? Driver don't collect the money,they don't have an office in RI and they have no employees.!


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## Old Rocker (Aug 20, 2015)

Is that what they are doing? Is transportation subject to sales tax in RI?


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## CrazyUberdriver (Jul 12, 2015)

I think uber is testing their sales tax liability here in RI. In order to use the app a new agreement appeared that we drivers accept responsibility for paying sales tax. Yes it is taxable to the entity that collects the money,has an office in the state,and has employees or contractors. We as drivers have none of the above. I didn't accept and there fore I'm not able to drive. I am looking for the correct answer. I believe that they are trying to get drivers to think that they are liable. This would be like telling the IRS that someone else will be paying my income tax,it is still ultimately my responsibility.


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## CrazyUberdriver (Jul 12, 2015)

They don't follow the rules anywhere,I think its just a test to see how far they can push.


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## Old Rocker (Aug 20, 2015)

I can't answer your question beyond a sympathetic 'that sucks.'

The city of Houston charges a 2% ad valorem tax, which Uber adds to the fare and takes care of paying to the city.


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## CrazyUberdriver (Jul 12, 2015)

Well I don't really think it sucks because I don't really believe that I am responsible. State law has stipulations and I don't fit any of them as a driver. They don't want to pay the 7% and are trying to find a way around it. Maybe RI is unique in that it taxes cab fare.


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## RockinEZ (Apr 29, 2015)

No tax on services in most states. I don't know about RI. 
I do know folks talk funny in RI


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## CrazyUberdriver (Jul 12, 2015)

Now that's not very helpful.


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## Michael - Cleveland (Jan 1, 2015)

CrazyUberdriver said:


> Can uber effectively remove their liability to pay sales tax in RI by having the driver sign an agreement to pay? Driver don't collect the money,they don't have an office in RI and they have no employees.!


see: https://uberpeople.net/threads/australia-uber-rejected-ato’s-compromise-deal-in-gst-fight.40917/


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## uber_union (Aug 30, 2015)

I swiped "I Agree" only after I figured my POTENTIAL liability which is minimal. In saying that, it seems ridiculous as it seems that sales tax may have to be invoiced. In other words, it should show on a receipt that a certain part of the fee for service is subject to sales tax. As drivers we have no way to display the amount of sales tax. Furthermore, the sales tax would be on the GROSS FARE, not the amount that Uber forwards to its subcontractor, so now a driver is paying a sales tax on 20% of a fare that he/she never even collected. It's CRAZY.

Basically, it came down to swiping "Yes I agree" or not driving at all anywhere. When looking into it, I realized that they don't pay sales tax on their services in Massachusetts either, so both states are getting screwed.

Here's the bottom line. The driver has no way of collecting sales tax, it's virtually impossible. If Uber had its way the driver would be paying the sales tax on the ENTIRE ride fee including the 20% that Uber takes from the transaction before paying its sub-contractor.

-------------------------
*Regulation SU 12-151

RULE 7 SALES TAX REGISTRATION*

Any person furnishing taxicab, limousine, charter bus, and other ground passenger transportation services in this state is a retailer as provided in RIGL §44-18-15 and is required to file a Business Application and Registration form with the Tax Administrator, and to charge, collect and remit Rhode Island sales and use tax.

*TITLE 44
Taxation*
*CHAPTER 44-18
Sales and Use Taxes - Liability and Computation*
*SECTION 44-18-7.3*

*§ 44-18-7.3 Services defined. - *(a) "Services" means all activities engaged in for other persons for a fee, retainer, commission, or other monetary charge, which activities involve the performance of a service in this state as distinguished from selling property.

(b) The following businesses and services performed in this state, along with the applicable 2007 North American Industrial Classification System (NAICS) codes, are included in the definition of services:

(1) Taxicab and limousine services including but not limited to:

(i) Taxicab services including taxi dispatchers (485310); and

(ii) Limousine services (485320).

(2) Other road transportation service including but not limited to:

(i) Charter bus service (485510); and

(ii) All other transit and ground passenger transportation (485999).

(3) Pet care services (812910) except veterinary and testing laboratories services.

(c) The tax administrator is authorized to promulgate rules and regulations in accordance with the provisions of chapter 42-35 to carry out the provisions, policies, and purposes of this chapter.


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## UberDriverTaxExpert (Nov 11, 2015)

If sales tax become an issue in RI you won't loose any income OR should I say that you shouldn't loose any income. Sales taxes are charged on top of the fee you charge. If you collect it you are simply holding taxes for the government. Then you will simply remit the sales taxes you collect. One bit of advice.....don't ever collect sales tax and not remit to the government. This is considered a big no no and handled differently than income taxes. They will come down hard on you. Keep good records and hire a professional.

Why in the world would you want to prepare your own taxes? Why risk an audit? Why are you not focusing on growing your business? Taking a loss (while legal) on a schedule C will increase your chance of an audit dramatically. You better have all your i's dotted and t's crossed. You have so many great tax options like possibly depreciating your vehicle OR setting up your own retirement plan OR getting advice that will help you plan for the future. Is it really a good idea to reduce all your earnings down to nothing just to get a refund OR not pay taxes? If you have the legit deductions then OK but one day you will apply for social security and receive $200 a month instead of $3000 a month. Work hard but smart. Hire a professional that knows your industry and can guide you into the future.

Imagine if you made $75,000 as an UBER driver and you were able to reduce your income by $12,500 and put this away for your retirement (Simple IRA)? Then add in your deductions....Your income could be reduced dramatically resulting in you owing little or no taxes and you are on your way to putting possibly $500,000 away over twenty years based on the right investments etc. (no guarantee on the $500k (bear markets) but the potential is there$250,000 investment plus profits over a twenty year period). Compounding interest etc.


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## Michael - Cleveland (Jan 1, 2015)

UberDriverTaxExpert said:


> If sales tax become an issue in RI you won't loose any income OR should I say that you shouldn't loose any income. Sales taxes are charged on top of the fee you charge. If you collect it you are simply holding taxes for the government. Then you will simply remit the sales taxes you collect. One bit of advice.....don't ever collect sales tax and not remit to the government. This is considered a big no no and handled differently than income taxes. They will come down hard on you. Keep good records and hire a professional.
> 
> Why in the world would you want to prepare your own taxes? Why risk an audit? Why are you not focusing on growing your business? Taking a loss (while legal) on a schedule C will increase your chance of an audit dramatically. You better have all your i's dotted and t's crossed. You have so many great tax options like possibly depreciating your vehicle OR setting up your own retirement plan OR getting advice that will help you plan for the future. Is it really a good idea to reduce all your earnings down to nothing just to get a refund OR not pay taxes? If you have the legit deductions then OK but one day you will apply for social security and receive $200 a month instead of $3000 a month. Work hard but smart. Hire a professional that knows your industry and can guide you into the future.
> 
> Imagine if you made $75,000 as an UBER driver and you were able to reduce your income by $12,500 and put this away for your retirement (Simple IRA)? Then add in your deductions....Your income could be reduced dramatically resulting in you owing little or no taxes and you are on your way to putting possibly $500,000 away over twenty years based on the right investments etc. (no guarantee on the $500k (bear markets) but the potential is there$250,000 investment plus profits over a twenty year period). Compounding interest etc.


Uber drivers don't have to look past the four doors of their car for all of the tax deductions they need. Most drivers drive 2 miles to get paid for 1 mile. That means for every ~$0.80 in earnings, they are generating a $1.15 in deductible expense (2015 std mileage deduction @ $0.575/mi).


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## uber_union (Aug 30, 2015)

Dear Uber Driver Tax Expert,

I'm not sure if you know that Uber drivers do not collect a fee. You state *"Sales taxes are charged on top of the fee you charge."*, unfortunately this is not the case at all. Uber drivers never have collected a fee and sales taxes are not charged on top of the fee that we've never charged or collected.

I don't say this to be rude or confrontational but it seems like your post is more geared towards an advertisement rather than a post that is germane to this thread.

Respectfully,

Uber_Union



UberDriverTaxExpert said:


> If sales tax become an issue in RI you won't loose any income OR should I say that you shouldn't loose any income. Sales taxes are charged on top of the fee you charge. If you collect it you are simply holding taxes for the government. Then you will simply remit the sales taxes you collect. One bit of advice.....don't ever collect sales tax and not remit to the government. This is considered a big no no and handled differently than income taxes. They will come down hard on you. Keep good records and hire a professional.
> 
> Why in the world would you want to prepare your own taxes? Why risk an audit? Why are you not focusing on growing your business? Taking a loss (while legal) on a schedule C will increase your chance of an audit dramatically. You better have all your i's dotted and t's crossed. You have so many great tax options like possibly depreciating your vehicle OR setting up your own retirement plan OR getting advice that will help you plan for the future. Is it really a good idea to reduce all your earnings down to nothing just to get a refund OR not pay taxes? If you have the legit deductions then OK but one day you will apply for social security and receive $200 a month instead of $3000 a month. Work hard but smart. Hire a professional that knows your industry and can guide you into the future.
> 
> Imagine if you made $75,000 as an UBER driver and you were able to reduce your income by $12,500 and put this away for your retirement (Simple IRA)? Then add in your deductions....Your income could be reduced dramatically resulting in you owing little or no taxes and you are on your way to putting possibly $500,000 away over twenty years based on the right investments etc. (no guarantee on the $500k (bear markets) but the potential is there$250,000 investment plus profits over a twenty year period). Compounding interest etc.


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## Michael - Cleveland (Jan 1, 2015)

uber_union said:


> Dear Uber Driver Tax Expert,
> 
> I'm not sure if you know that Uber drivers do not collect a fee. You state *"Sales taxes are charged on top of the fee you charge."*, unfortunately this is not the case at all. Uber drivers never have collected a fee and sales taxes are not charged on top of the fee that we've never charged or collected.
> 
> ...


I think maybe you missed the point?
All he was saying is that "_*If sales tax become an issue in RI you won't loose any income*_...".
Just as with the SRF, fee paid by the rider that does not impact the net amount you are paid in earnings from fares.


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## UberTaxPro (Oct 3, 2014)

uber_union said:


> Dear Uber Driver Tax Expert,
> 
> I'm not sure if you know that Uber drivers do not collect a fee. You state *"Sales taxes are charged on top of the fee you charge."*, unfortunately this is not the case at all. Uber drivers never have collected a fee and sales taxes are not charged on top of the fee that we've never charged or collected.
> 
> ...


Yes! UberDriverTaxExpert doesn't understand that this thread is for tax help and encouragement! Everyone here already knows that they can get professional help if needed. The more you understand about your business (taxes included) the better. Even if one does opt for professional help it's good to understand what the help is doing! We don't need scare tactics on here!


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> Yes! We don't need scare tactics on here!


LOL! Have you read any of the threads on this site?! hehe...


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## uber_union (Aug 30, 2015)

Michael - Cleveland said:


> I think maybe you missed the point?
> All he was saying is that "_*If sales tax become an issue in RI you won't loose any income*_...".
> Just as with the SRF, fee paid by the rider that does not impact the net amount you are paid in earnings from fares.


No, I don't think I missed the point at all. He actually made a misstatement saying that _*"Sales taxes are charged on top of the fee you charge." *_This could not be further from the truth.

Simply implying that Uber drivers charge a fee or a sales tax to a passenger is WRONG in every way conceivable. With that being said, again it appeared more of a self-interested advertisement on professional tax help rather than discussing the misguided policy of Uber in Rhode Island to reassign the tax liability to drivers who have no control over the financial relationship.


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## UberTaxPro (Oct 3, 2014)

uber_union said:


> No, I don't think I missed the point at all. He actually made a misstatement saying that _*"Sales taxes are charged on top of the fee you charge." *_This could not be further from the truth.
> 
> Simply implying that Uber drivers charge a fee or a sales tax to a passenger is WRONG in every way conceivable. With that being said, again it appeared more of a self-interested advertisement on professional tax help rather than discussing the misguided policy of Uber in Rhode Island to reassign the tax liability to drivers who have no control over the financial relationship.


Are they suggesting that the sales tax liability be paid from the driver's 75% or 80% of the fare?


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## uber_union (Aug 30, 2015)

UberTaxPro said:


> Are they suggesting that the sales tax liability be paid from the driver's 75% or 80% of the fare?


Yes, that's exactly what they are dictating. There is no suggesting from Uber. They're saying, we (Uber) will pay you and you pay the sales tax from your contracted earnings from us. They do not ever provide you with the sales tax to forward. It's to be taken out of your personal income as it's derived from working for Uber.


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## Michael - Cleveland (Jan 1, 2015)

uber_union said:


> No, I don't think I missed the point at all. He actually made a misstatement saying that _*"Sales taxes are charged on top of the fee you charge." *_This could not be further from the truth.
> 
> Simply implying that Uber drivers charge a fee or a sales tax to a passenger is WRONG in every way conceivable. With that being said, again it appeared more of a self-interested advertisement on professional tax help rather than discussing the misguided policy of Uber in Rhode Island to reassign the tax liability to drivers who have no control over the financial relationship.


He did NOT say that DRIVERS charge sales taxes - he said "*Sales taxes are charged on top of the fee you charge*"... which is 100% accurate. It is the STATE that charges sales tax - and the business (driver) is required to collect it on behalf of the state, and remit it to the state on a quarlterly basis.


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> Are they suggesting that the sales tax liability be paid from the driver's 75% or 80% of the fare?


NO:
Sales taxes are charged by the state/county/municipality.
Sales taxes are paid by the consumer.
Sales taxes are collected by the buisiness on behalf of the state/county/municipality.
Sales taxes collected are remitted to the state/county/municipality by the business on a quarterly basis.

The only[!] expesne the business has is in the collecting, reporting and remitting of the sales tax collected.


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## uber_union (Aug 30, 2015)

Michael - Cleveland said:


> He did NOT say that DRIVERS charge sales taxes - he said "*Sales taxes are charged on top of the fee you charge*"... which is 100% accurate. It is the STATE that charges sales tax - and the business (driver) is required to collect it on behalf of the state, and remit it to the state on a quarlterly basis.


Okay, this seems silly but I'll explain it a bit more clearly. The terminology _*"...fee you charge." *_implies that the driver charged a fee to a passenger in which a sales tax could be added to. This is completely incorrect as far as the driver has NO FINANCIAL TRANSACTION with any passengers. There is no charge by the driver. The driver is a contractor of Uber who charges the fees, sets the rates, and would therefore be liable to collect the tax with the collection of its fees for using its application. The drivers have zero say, duty or ability to collect a sales tax.

Now onto liability. The "business (driver) is required to collect it on behalf of the state" as you say. Explain to me how the "business (driver)" can collect a sales tax as an Uber contractor? How would that process occur? They do not transact any funds directly with passengers. Uber handles the entire transaction. It's a cashless system, so how does the "driver" forward something to the state that they have no ability to collect?


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## Michael - Cleveland (Jan 1, 2015)

uber_union said:


> Okay, this seems silly but I'll explain it a bit more clearly. The terminology _*"...fee you charge." *_implies that the driver charged a fee to a passenger in which a sales tax could be added to. This is completely incorrect as far as the driver has NO FINANCIAL TRANSACTION with any passengers.


You are 100% incorrect.
Please read your UBER PARTNER AGREEMENT.

4.1 Fare Calculation and Your Payment. *You are entitled to charge a fare* for each instance of completed Transportation Services provided to a User that are obtained via the Uber Services ("Fare"), where such Fare is calculated based upon a base fare amount plus mileage and/or time amounts, as detailed for the applicable Territory ("Fare Calculation"). *You are also entitled to charge User* for any Tolls, taxes or fees incurred during the provision of Transportation Services, and, if applicable. *You: (i) appoint Company as your limited payment collection agent* solely for the purpose of accepting the Fare, applicable Tolls and, depending on the region and/or if requested by you, applicable taxes and fees from the User on your behalf via the payment processing functionality facilitated by the Uber Services; and (ii) agree that *payment made by User to Company shall be considered the same as payment made directly by User to you.*​


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## uber_union (Aug 30, 2015)

As payment collection agent Uber agrees to collect *"...applicable taxes and fees from the User on your behalf via the payment processing functionality facilitated by the Uber Services;"
*
So now answer my questions as stated above. How does the driver collect these taxes when Uber is the "COLLECTION AGENT" and is not collecting regions applicable taxes and forwarding them for payment?



Michael - Cleveland said:


> You are 100% incorrect.
> Please read your UBER PARTNER AGREEMENT.
> 
> 4.1 Fare Calculation and Your Payment. *You are entitled to charge a fare* for each instance of completed Transportation Services provided to a User that are obtained via the Uber Services ("Fare"), where such Fare is calculated based upon a base fare amount plus mileage and/or time amounts, as detailed for the applicable Territory ("Fare Calculation"). *You are also entitled to charge User* for any Tolls, taxes or fees incurred during the provision of Transportation Services, and, if applicable. *You: (i) appoint Company as your limited payment collection agent* solely for the purpose of accepting the Fare, applicable Tolls and, depending on the region and/or if requested by you, applicable taxes and fees from the User on your behalf via the payment processing functionality facilitated by the Uber Services; and (ii) agree that *payment made by User to Company shall be considered the same as payment made directly by User to you.*​


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## UberTaxPro (Oct 3, 2014)

Michael - Cleveland said:


> NO:
> Sales taxes are charged by the state/county/municipality.
> Sales taxes are paid by the consumer.
> Sales taxes are collected by the buisiness on behalf of the state/county/municipality.
> ...


Yes but apparently uber_union and CrazyUberdriver are telling us that in RI(I believe) neither Uber or Uber drivers are collecting sales tax. If a business fails to collect and remit required sales taxes they are liable for the $$$. If RI determines that the drivers are responsible for collecting sales tax (unlikely but possible) and not Uber, then they would have to pay the uncollected taxes and associated penalties out of their pockets. This is a legitimate concern on their part but I would guess that RI would go after Uber on this because they have more $$$. It is possible however that the drivers and/or Uber could be held liable for uncollected taxes.


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## Michael - Cleveland (Jan 1, 2015)

uber_union said:


> As payment collection agent Uber agrees to collect *"...applicable taxes and fees from the User on your behalf via the payment processing functionality facilitated by the Uber Services;"
> *
> So now answer my questions as stated above. How does the driver collect these taxes when Uber is the "COLLECTION AGENT" and is not collecting regions applicable taxes and forwarding them for payment?


IF there are any sales taxes due and Uber collects them from the conusmer on behalf of the state, Uber must either pay those collected taxes directly to the taxing authority OR to the driver (so the driver can remit them to the taxing authority).


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> Yes but apparently uber_union and CrazyUberdriver are telling us that in RI(I believe) neither Uber or Uber drivers are collecting sales tax. If a business fails to collect and remit required sales taxes they are liable for the $$$. If RI determines that the drivers are responsible for collecting sales tax (unlikely but possible) and not Uber, then they would have to pay the uncollected taxes and associated penalties out of their pockets. This is a legitimate concern on their part but I would guess that RI would go after Uber on this because they have more $$$. It is possible however that the drivers and/or Uber could be held liable for uncollected taxes.


That's because Uber claims that ride-share services arranged through a TNC are not subject to sales tax - since car/drivers are NOT taxis, NOT livery services, and NOT cars-for-hire (in Uber's opinion). IF (and it's a big IF) the state decides that TNC drivers ARE liable for collecting sales tax, it will be on Uber to find a way to collect those taxes and get them remitted to the taxing authority.


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## uber_union (Aug 30, 2015)

Michael - Cleveland said:


> IF there are any sales taxes due and Uber collects them from the conusmer on behalf of the state, Uber must either pay those collected taxes directly to the taxing authority OR to the driver (so the driver can remit them to the taxing authority).


Oh, it's worse than that. Uber sent a notice out in October saying that drivers were liable for sales tax back dated to April I believe. Not from the point of notification. They in essence said to the contractor "the earnings we paid you going back 6 months, pay the sales tax out of those funds, even though we never itemized a sales tax re-imbursement in your pay statement"


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## UberTaxPro (Oct 3, 2014)

Michael - Cleveland said:


> IF there are any sales taxes due and Uber collects them from the consumer on behalf of the state, Uber must either pay those collected taxes directly to the taxing authority OR to the driver (so the driver can remit them to the taxing authority).


Uber should charge consumer for taxes and send them to RI without involving drivers at all. They would never reimburse driver for business taxes paid as that would infringe on the independent contractor status of the driver.


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## Michael - Cleveland (Jan 1, 2015)

uber_union said:


> Oh, it's worse than that. Uber sent a notice out in October saying that drivers were liable for sales tax back dated to April I believe. Not from the point of notification. They in essence said to the contractor "the earnings we paid you going back 6 months, pay the sales tax out of those funds, even though we never itemized a sales tax re-imbursement in your pay statement"


I'd like to see a copy of that notifiction if anyone has one to share.


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## UberTaxPro (Oct 3, 2014)

uber_union said:


> Oh, it's worse than that. Uber sent a notice out in October saying that drivers were liable for sales tax back dated to April I believe. Not from the point of notification. They in essence said to the contractor "the earnings we paid you going back 6 months, pay the sales tax out of those funds, even though we never itemized a sales tax re-imbursement in your pay statement"


wow


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> Uber should charge consumer for taxes and send them to RI without involving drivers at all. They would never reimburse driver for business taxes paid as that would infringe on the independent contractor status of the driver.


That is what they are supposed to do... but they never bothered to set up their systems to account for the possibility of sales or VAT taxes... and they are facing the same problem in Australia. But you can bet they have developers working to add the functionality to their systems as we speak - and an army of lawyers and consultants lobbying the authorities to keep TNC rides as exempt from sales taxes.


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## UberTaxPro (Oct 3, 2014)

uber_union said:


> Oh, it's worse than that. Uber sent a notice out in October saying that drivers were liable for sales tax back dated to April I believe. Not from the point of notification. They in essence said to the contractor "the earnings we paid you going back 6 months, pay the sales tax out of those funds, even though we never itemized a sales tax re-imbursement in your pay statement"


There just playing games with RI. I'd be more worried for you if you get a letter from RI


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> There just playing games with RI. I'd be more worried for you if you get a letter from RI


EXACTLY.
This is Uber's lobbying saying to RI: "We Dare You!"


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## RideshareTaxAdvisor (Nov 13, 2015)

Wow I've read through the entire thread and it seems that finally someone address the original posters questions by stating, "As payment collection agent Uber agrees to collect _*"...applicable taxes and fees from the User on your behalf via the payment processing functionality facilitated by the Uber Services;" *_I think this situation becomes a LEGAL matter and not a taxation matter. I will say, in my professional opinion, the business owner, which happens to be the Uber Driver [a.k.a. INDEPENDENT CONTRACTOR], is ULTIMATELY responsible for understanding the rules, laws and regulations of doing business in their state/jurisdiction. This is not always the case and this protection is not perfect though, and there are occasions when businesses may find themselves legally liable. UBER the company may be liable for this mishap because their system was not set up to charge a sales tax on top of the share ride fee. If enough people are affected I would suggest getting a lawyer as a group to look into this matter


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## CrazyUberdriver (Jul 12, 2015)

The State of RI is bigger than any lawyer and they will get their money from Uber,which is where it should come from. Any agreement that is given to a driver does not stand up to policies and procedures already in effect. RI as far as I can tell isn't sure exactly how to deal with Uber.They are getting input that they need now. I don't know of any other state has 7% tax on this service currently. I was told by a representative,that I should not stop driving because of this issue,they are working it out.It is my understanding that there is a 5000.00 fine per incident of not paying sale tax.Now who has that much money.


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## Southdowns (Jan 25, 2016)

Have there been any updates on the sales tax issue in RI? Once I learned about this I started to try and drive in Mass only. I don't want to deal with sales tax and it is already difficult to make enough money in RI to make driving worthwhile.


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