Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Rhode Island.
February 20, 2024
Rhode Island Provides Tax Guidance for Contractors
Authored by: Katie Nguyen, CPA and Leroy Solis, MBA
Rhode Island’s Division of Taxation released a specialized tax guide for contractors doing business in the state. In general, contractors are required to pay tax as if they were consumers when purchasing all their materials, supplies, tools, and equipment, including rentals and replacement parts, when fulfilling a contract. If the contractor intends to use the supplies to perform contracting services for an additional agreed-upon price or if the contractor sells materials and supplies for resale, then the guidance provided for sales and use tax may be different. The guidance provided by the state includes various topics, such as exemptions and specific lines of work related to contractors. As of January 1, 2023, contractor business that have an annual tax liability of $5,000 or more or within gross income of $100,000 or more are required to file returns and pay tax electronically. For additional information, please see: Contractors & Rhode Island Tax: A Guide for Businesses, R.I. Div. of Taxation, 02/01/2024.
If you have questions about sales and use tax compliance obligations related to your industry, please reach out to a member of the Withum SALT Team.
February 2, 2024
Rhode Island Issues Tax Changes for Sales, Excise, Estate, and Income Tax
Authored by: Katerine Velasquez and Bonnie Susmano, JD, MBA
The Rhode Island Division of Taxation released an update regarding individual income, corporate income, sale, use, and excise tax with a retroactive effective date of January 1, 2024. The update extends a list of incentive programs and tax credits. The updates include but are not limited to the following:
- For 2024, the interest assessed on tax underpayments is 18% for trust fund taxes and 12% for all other taxes;
- For 2024, the interest paid on tax overpayments is 8.5%;
- Sales and Use Tax Form T-204R (annual reconciliation) is no longer required;
- The state’s fully refundable Earned Income Tax Credit increases to 16% of the Federal credit for tax years beginning on or after January 1, 2024.
- For additional information, please refer to R.I. Div. of Tax’n, Advisory 2024-02, 01/22/24.
If you have questions about state tax changes, please reach out to a member of the Withum SALT Team.
December 7, 2023
Rhode Island Announces the Elimination of the Annual Sales Tax Reconciliation Form
Authored by: Brandon Spinella and Jonathan Weinberg, JD, LLM, Principal
On November 10, 2023, the Rhode Island Tax Division announced businesses registered for sales tax no longer need to submit the annual sales tax reconciliation Form T-204R for tax years beginning in 2023. Additionally, taxpayers are no longer subject to a sales tax permit renewal fee. Sales tax permit holders are required to renew their permits by February 1, 2024, for the period beginning July 1, 2024, through June 30, 2025.
If you have questions about sales tax compliance, please reach out to a member of the Withum SALT Team.
July 7, 2023
Rhode Island 2024 Budget Bill Enacts Multiple Statewide Tax Adjustments
Authored by: Brandon Spinella and Bonnie Susmano, JD, MBA
On June 16, 2023, Governor McKee signed the 2024 Budget Bill, which enacts multiple changes to the state’s taxes and tax incentives. Examples of the changes enacted in the budget bill include:
- Creation of a new low-income housing tax credit
- Increasing the state’s earned income tax credit from 15% to 16% of the Federal earned income tax credit
- Creating a $50,000 tangible personal property tax exemption
For additional detail on the tax updates enacted by the Rhode Island 2024 Budget Bill, please refer to L. 2023, H5200 (c. 79).
If you have questions about how State Budget Bills affect your business, please contact a member of the Withum SALT Team.
March 25, 2022
Rhode Island 2020 PPP Loan Forgiveness Tax Payment Due
The Rhode Island Department of Taxation is reminding taxpayers who had PPP loan forgiveness in 2020 that the deadline for filing and paying taxes in relation to their PPP loan forgiveness in 2020 is March 31, 2022. Interest and penalty on the taxable portion of the forgiven PPP loan for 2020 is waived so long as the tax is paid in full on or before March 31, 2022. If payment of the tax due is not made on or before March 31, 2022, an assessment of interest and penalty will occur.
October 28, 2021
Rhode Island Issues Further PPP Loan Forgiveness Guidance
A new Rhode Island law addressed the issue of PPP loan forgiveness as it relates to the Rhode Island income tax on businesses, the bank excise tax, and the income tax on individuals. For any taxable year beginning on or after January 1, 2020, the amount of any PPP loan forgiven for federal income tax purposes to the extent that the amount of the loan forgiven exceeds $250,000 must be included in income for Rhode Island tax purposes. The new law requires the Division to waive interest and penalty on the taxable portion of each PPP loan that is forgiven during the 2020 tax year, provided that the tax on that portion is paid in full on or before March 31, 2022. The Division plans to provide further guidance to practitioners, taxpayers, and others about how to go about complying with the new law and its provisions. In regard to the PPP deductible expenses, to the extent such deductions are allowed for federal tax purposes, they are allowed for Rhode Island tax purposes.
July 16, 2021
Rhode Island Updates Federal Treatment of PPP Loan Forgiveness
Rhode Island enacted legislation on July 6, 2021 which provides that any forgiven loan under the Paycheck Protection Program (PPP), to the extent it exceeds $250,000, will be taxable for tax years beginning on or after January 1, 2020. Interest and penalties may be waived for the taxable portion if the tax is paid in full by March 31, 2022. The tax administrator has indicated it will release further guidance on this matter.
For additional information see L. 2021, H6122.
June 18, 2021
Rhode Island Issues Withholding Guidance after Massachusetts Lifts State of Emergency
The Rhode Island Division of Taxation has posted withholding tax guidance after Massachusetts lifted its state of emergency.The Commonwealth of Massachusetts has special rules for wages or other compensation paid to employees who are working remotely due to the coronavirus (COVID-19) pandemic. The Massachusetts special income sourcing rules for telecommuting employees are intended to minimize disruption for employers and employees during the Massachusetts COVID-19 state of emergency.These rules are similar to those of Rhode Island and have allowed for the status quo for withholding purposes despite remote working arrangements during the pandemic.Those Massachusetts rules are effective for the period beginning March 10, 2020 and ending 90 days after the Massachusetts governor lifts the state of emergency. Massachusetts recently issued an executive order rescinding that state’s declaration of a state of emergency effective at 12:01AM on June 15, 2021. The special rules will therefore remain in effect until mid-September 2021.The Rhode Island Division of Taxation last year adopted an emergency regulation that provides withholding tax guidance for employers that have employees who are temporarily working remotely due to the pandemic. That emergency regulation remains in effect. Thus, there is no change for employers or employees as a result of Massachusetts ending its state of emergency. For more information, please see Rhode Island Advisory 2021-24.
May 21, 2021
Rhode Island Amends Signature Requirements in Light of Coronavirus
As a result of the COVID-19 pandemic, the Rhode Island Division of Taxation amended its standard practice of requiring the submission of forms with their original, handwritten signatures. Originally the State had announced it would accept electronic signatures for two forms, both of which involve the sale of Rhode Island real estate by nonresident individuals or entities. On March 17, 2021, the Division expanded the program by accepting electronic signatures for five more forms, all of which are business-related. They include:Form T-71, for insurance companies; Form T-71A, for surplus lines insurance brokers and licensees; Form T-72, for utilities (public service corporation gross earnings tax returns); Form T-74, for bank excise tax returns; and Form T-86, for the bank deposits tax. The Division is allowing electronic signatures for these forms under the authority of the state’s Uniform Electronic Transactions Act.
March 23, 2021
Rhode Island Update on Extension of Filing Deadline
The Rhode Island Division of Taxation has announced that it is following the Internal Revenue Service (IRS) and extending until May 17, 2021, the deadline for individuals to file their Rhode Island personal income tax returns and make related payments for the 2020 tax year. The relief is automatic; taxpayers do not need to file any special forms or contact the Division in any way in order to qualify. (Rhode Island Advisory No. 2021-10, 03/19/2021.)
April 13, 2020
Relief for Taxpayers
The Rhode Island Governor has provided relief to taxpayers by postponing deadlines three additional months to file returns and pay balances due. No penalties and no interest will apply to those who file on or before July 15, 2020. Although the deadline for filing certain tax returns and making certain tax payments has been automatically postponed by three months, the Rhode Island Division of Taxation urges tax preparers and taxpayers to file their returns before the new deadline where possible.
Relief for Individuals, Trust, and Estates
Resident and nonresident Rhode Island personal income tax returns and any associated payments for the 2019 tax year are now due on July 15, 2020. The three-month postponement is automatic. Tax preparers and taxpayers need not take any extra steps to qualify for the relief and need not contact the Division.
Relief for Businesses
A number of business entities also will automatically qualify for the relief, as these business entities will have an extra three months to file their returns and pay any balance due, regardless of the amount due, free of late charges. The relief is automatic. The relief applies to C-corporations; 1st quarter business estimates, SMLLCs, pass-through entities and related estimated payments. Additional information can be found on the Division’s website. [Source: https://www.tax.ri.gov/Advisory/ADV_2020_11.pdf.]
April 1, 2020
Property Tax Payment
The property tax payment deadline has been extended to March 31, 2020. Property tax returns for railroad, railroad terminal, private car, freight line and equipment company property has been extended to from April 1, 2020 to April 15.
October 2019
Pass-Through Entities Electing to Pay the New Entity-Level Tax
The Rhode Island Division of Taxation issued an advisory to provide guidance for pass-through entities electing to pay the new entity-level tax for the 2019 tax year. If an electing pass-through entity has resident and nonresident owners, the entity is essentially paying the entity-level tax on behalf of its resident and nonresident owners. Partnerships, S corporations, or other pass-through entities that elect to pay the entity level tax may elect to make a September estimated payment by using Form BUS-EST and checking the “Pass-Through Entity Election” box.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
