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HB 5395

AN ACT RELATING TO MOTOR AND OTHER VEHICLES -- REGISTRATION OF VEHICLES

2025 Regular Session Introduced by Justine Caldwell and 9 co-sponsors

HB 5395 gives Rhode Island vehicle buyers a right to appeal the valuation used for sales tax, potentially lowering tax if NADA value is higher than sale price.

04/09/2025 Committee recommended measure be held for further study
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Bill Summary · HB 5395

Summary — HB 5395 (2025)

Title: AN ACT RELATING TO MOTOR AND OTHER VEHICLES -- REGISTRATION OF VEHICLES
Bill No.: HB 5395 (companion: SB 2607)
Introduced: Feb 7, 2025 (filed Mar 14, 2025)
Committee: Referred to House Finance; 04/09/2025 committee recommended measure be held for further study
Effective date: Upon passage

Purpose

HB 5395 clarifies and expands taxpayer rights related to the valuation used to calculate sales/use tax when obtaining an original or transferred motor vehicle registration in Rhode Island. It establishes an explicit appeal process for disputing the vehicle valuation that determines tax liability.

Key provisions

  • Amends R.I. Gen. Laws § 31-3-4 (Registration of Vehicles).
  • Retains existing requirement that, before issuing an original or transferred registration, a person must provide evidence that any sales or use tax due (under title 44, chapters 18 and 19) has been paid on forms and in accordance with rules approved by the tax administrator and DMV administrator. It also preserves the tax administrator’s authority to request DMV suspension or revocation of a registration for unpaid taxes (after due hearing).
  • Adds an explicit taxpayer right to dispute the valuation used to calculate the sales tax on a vehicle. The valuation may be based on the National Automotive Dealers Association (NADA) Clean Retail book value or the sales price — whichever is higher.
  • Requires the tax administrator to promulgate rules and regulations establishing the appeals process for vehicle valuation disputes.

Who is affected

  • Vehicle purchasers (new and used) registering vehicles in Rhode Island who may be assessed tax based on an agency valuation.
  • Motor vehicle dealers and sellers (valuation disputes could change reported taxable value).
  • Division of Taxation (must create and administer appeal rules and hearings).
  • Division of Motor Vehicles (continues to require proof of tax payment and respond to suspensions/revocations requested by Tax Administrator).
  • Local tax administration/staff involved in registration and tax collection.

Procedural status & timeline

  • Introduced (Feb 7, 2025), filed (Mar 14, 2025).
  • Referred to House Finance; hearing scheduled; committee on 04/09/2025 recommended the measure be held for further study.
  • If enacted, the law would take effect immediately upon passage.

Potential impacts and considerations

  • Grants taxpayers clearer procedural rights to challenge high valuations, which could reduce some assessed tax liabilities where NADA values exceed actual sale prices.
  • May increase administrative workload for the Division of Taxation and DMV to implement forms, rules, hearings, and appeals processes.
  • Financial impact on state receipts depends on appeal outcomes and frequency of disputes; the bill does not specify timelines or evidentiary standards for appeals (left to administrative rulemaking).

Compiled from official sources — confirm details with the bill’s official record.

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