Latest Administrative Decision involves withholding

The Division of Taxation has posted the latest Administrative Decision. It focuses on whether a taxpayer was a "responsible officer" and thus liable for tax, penalty, and interest.

Tax changes take effect on Friday

The Rhode Island Division of Taxation today reminded tax professionals that a number of tax changes will take effect this Friday, January 1, including:

• A reduction in the annual corporate minimum tax;
• A reduction in the annual filing charge for pass-through entities;
• A tax break for many Social Security beneficiaries; and
• An increase in the earned income credit.

Booklet of income tax withholding tables

The Rhode Island Division of Taxation has posted on its website the booklet of income tax withholding tables for tax year 2016. 

Employers use the tables to calculate how much to withhold from an employee’s pay for Rhode Island personal income tax purposes. The booklet also includes a copy of the 2016 version of Form RI W-4, "Employee’s Withholding Allowance Certificate." 

Holiday schedule

The regular hours of operation for the Rhode Island Division of Taxation, at One Capitol Hill in Providence, Rhode Island, are 8:30 a.m. to 3:30 p.m. business days, unless otherwise stated. Following is the holiday schedule:

• December 24: regular hours
• December 25: closed
• December 31: regular hours
• January 1: closed

Final regs posted on apportionment, nexus

The Division of Taxation today posted, as final, regulations involving apportionment and nexus for corporate income tax purposes. 

The regulations help to implement sweeping changes to the structure of the corporate income tax that were enacted in 2014 and that took effect for tax years beginning on or after January 1, 2015. The regulations will take effect January 12, 2016. Click here for the apportionment regulation, here for the nexus regulation.

Practitioner Alert: Double-tax benefit available through new law

Eligible Rhode Island businesses and individuals will receive a double-tax benefit for certain expenses as a result of legislation approved by Congress and signed into law by President Barack H. Obama yesterday.

Section 179 expensing

The new law permanently increases the amount that small businesses can deduct all at once in any given year for acquiring certain types of property. Because Rhode Island tax law is linked to federal tax law in this regard, the higher deduction limits will apply not only for federal tax purposes, but also for Rhode Island tax purposes. Thus, if a business claims the deduction at the federal level, the business will automatically qualify for the same deduction for Rhode Island tax purposes.

The deduction involves Section 179 of the Internal Revenue Code and is known as the "Section 179 deduction." In general, it applies to “qualifying property” – which means depreciable tangible personal property that is purchased for use in the active conduct of a trade or business. “Qualifying property” also includes off-the-shelf computer software and qualified real property.

The new federal law raises, to $500,000 from $25,000, the annual Section 179 expensing limit permanently -- for tax years beginning after December 31, 2014. The $500,000 limit applies for both federal and Rhode Island tax purposes. The phase-out limit, which was $200,000, is now $2 million for tax years beginning after December 31, 2014, for federal and Rhode Island tax purposes. 

Tuition-and-fees deduction

The federal deduction for qualified tuition and related expenses for higher education, under Internal Revenue Code section 222, is extended through 2016. (It had expired for taxable years beginning after December 31, 2014.) If someone qualifies for the deduction at the federal level, it will reduce that person’s federal adjusted gross income – and will automatically reduce the amount of income taxed by Rhode Island, thus saving that person federal and Rhode Island taxes. The maximum federal deduction is $4,000. Income limits apply.

Educator expense deduction

A federal deduction of up to $250 for certain expenses of elementary and secondary schoolteachers, under Internal Revenue Code section 62, was available for taxable years beginning prior to January 1, 2015. Under the new law, the provision is permanently extended. In general, the deduction is for books, supplies, computer equipment (including related software and services) and other equipment, and supplementary materials used by the eligible educator in the classroom. If someone qualifies for the deduction at the federal level, it will reduce that person’s federal adjusted gross income – and will automatically reduce the amount of that person’s income taxed by Rhode Island, thus saving that person in federal and Rhode Island taxes. Starting in 2016, the $250 cap will be indexed to inflation. Also, professional development expenses will be considered as eligible expenses for purposes of the deduction. 

Advisors

Businesses and individuals may wish to consult their tax advisors to review the new federal tax law to see how it applies to them, and the impact on their Rhode Island taxes. For more details, click here.

Inflation-adjusted amounts for tax year 2016

The Rhode Island Division of Taxation has set the standard deduction amounts, exemption amounts, tax bracket changes, and certain other key inflation-adjusted figures for tax years beginning on or after January 1, 2016. For details, click here.

Division of Taxation holds seminar in Newport

More than 100 tax professionals attended yesterday's "Seminar for Tax Preparers" sponsored by the Rhode Island Division of Taxation. 

The event, held at the Community College of Rhode Island campus in Newport, featured information about what's new for the coming filing season and what's new for tax year 2016. The seminar also included discussions about e-filing, tax credits, the statewide property-tax relief program (Form RI-1040H), the annual sales tax reconciliation, and other topics. The printed presentation is available online.

Chief Revenue Agent Leo Lebeuf at Newport seminar

Arrest and seizure in tobacco tax case

A joint investigation by the Providence Police Department and the Rhode Island Division of Taxation into the illegal distribution of untaxed tobacco products has resulted in an arrest and in the seizure of more than $20,000 in U.S. currency and contraband tobacco. The Providence Police Department announced details of the case this afternoon. Click here for details.

Tax Administrator leaving for private-sector post

Rhode Island Tax Administrator David M. Sullivan is leaving for a job in the private sector. 

Sullivan, who is also Acting Director of the Department of Revenue, has been in State service for nearly 10 years and has led the Division of Taxation through a number of significant changes, including implementation of two major tax reforms and the conversion of the agency’s computer systems.

Nationally known in tax circles, Sullivan was in Washington, D.C., last week with IRS and state tax officials and tax industry representatives to launch the latest element in a multi-pronged effort to combat tax refund fraud (see photo below). Click here to view the announcement about Sullivan’s leaving for the private sector and about the State’s transition plan.

In Washington, D.C., last week was Rhode Island Tax Administrator David M. Sullivan (at lectern), with IRS Commissioner John Koskinen (far left), Connecticut Revenue Commissioner Kevin Sullivan (next to David Sullivan) and others to launch an effort to combat tax refund fraud. [Photo by Julianne Fisher Breitbeil / Internal Revenue Service]

Practitioner Alert: Annual e-file shutdown

The Rhode Island Division of Taxation reminds tax professionals that tomorrow is the annual e-file production shutdown and switchover. As a result, tomorrow is when Rhode Island will stop accepting e-filed personal and business returns for tax year 2014.

“Each year, we temporarily close our system to e-filing in order to prepare the system for the upcoming filing season, just as the Internal Revenue Service and many other jurisdictions do at this time of year,” said Rhode Island Tax Administrator David M. Sullivan. This year, the shutdown will occur on Saturday, November 21, 2015, he said.

“To ensure that all e-filed Rhode Island returns for tax year 2014 on Form RI-1040, Form RI-1120C, Form RI-1120S, and Form RI-1065 are processed in a timely manner, transmitters must abide by the schedule,” Sullivan said. “All e-filed returns for tax year 2014 will have a transmission deadline of 10:00 a.m. Eastern Time on November 21, 2015. To avoid any last-minute logjams, preparers and taxpayers should get their electronic submissions to their transmitters well in advance of the deadlines,” he said.

For e-file purposes, Rhode Island accepts only current-year returns. Thus, November 21, 2015, is 
the deadline for e-filing Rhode Island personal and business tax returns for the 2014 tax year. When the switchover is complete and the Division of Taxation reopens to e-filing in January 2016, it will be only for returns for the 2015 tax year, Sullivan noted. For more information, click here.

Seminar for preparers at CCRI

The Division of Taxation held a three-hour seminar for tax preparers yesterday at the Knight Campus of the Community College of Rhode Island (CCRI) in Warwick. More than 120 tax professionals attended. The event focused mainly on what's new for the coming filing season and what's new for tax year 2016. Speakers included Acting Director of Revenue David M. Sullivan, who is also Rhode Island's tax administrator.

The Division of Taxation will repeat the program next month, but in a different location. That session will be held at CCRI's Newport County campus on December 10 from 9:00 a.m. to noon. Seats are still available but pre-registration is required. Click here for the agenda, here for more information, and here to register.

Some of the tax professionals who attended yesterday's seminar.

Sullivan helps launch effort to protect personal tax data

Rhode Island Acting Director of Revenue David M. Sullivan joined federal and state officials and tax industry representatives today to help announce a new joint campaign aimed at encouraging more people to protect their personal and financial data online and at home.

The “Taxes. Security. Together.” campaign is designed to raise public awareness that even routine actions on the Internet and on personal communications devices can affect the safety of one's financial and tax data.

The education campaign will complement the expanded series of protections that the IRS, the states, and the tax industry are putting in place for the start of the 2016 filing season to address tax-related identity theft.

"The governments and industry are taking new steps to protect taxpayers," said Sullivan, who is also Rhode Island Tax Administrator and the immediate past president of the Federation of Tax Administrators (FTA). "To build on this even further, we are joining forces to share important information across our websites -- whether it's at the state level, in the tax industry, or at the IRS. This is an unprecedented collaborative effort for tax administration," Sullivan said.

“Identity thieves are evolving, and so must we. Everyone has a part to play,” said IRS Commissioner John Koskinen. "The IRS, the states and the tax industry are putting in place even tougher safeguards for 2016. But, we need the public’s help. We need people to join with us and take an active role in protecting their personal and financial data from thieves.”

The campaign, which will continue through the April tax deadline, was announced today at an event in Washington, D.C.,  hosted by the FTA. The effort is part of the Security Summit, a collaborative effort started in March between the states, the IRS, and the tax industry. The joint consumer campaign features several components, including a YouTube video (see screenshot below). Click here for more information about the campaign.

Rhode Island's Acting Revenue Director David M. Sullivan (second from right)

Corporate tax regs -- update

The Rhode Island Division of Taxation last week posted proposed regulations on apportionment, nexus, and mandatory unitary combined reporting. The Division has since modified the postings to change the email address for submitting public comments. To view the modified postings, click here.

Interest rates

The Rhode Island Division of Taxation has posted the interest rates that will apply for 2016 on overpayments and delinquencies. The rates are based on a formula set in statute. The rates for the 2016 calendar year are the same as those that apply for the 2015 calendar year: 18% per year on delinquent tax payments, 3.25% per year on overpayments. Click here for more information.

Corporate tax regs proposed

The Rhode Island Division of Taxation this afternoon posted: 

•       a proposed regulation on apportionment;
•       a proposed regulation on mandatory unitary combined reporting; and
•       a proposed regulation on nexus (for corporate income tax purposes). 

A public hearing on each regulation will be held on December 14, 2015, at the Rhode Island Department of Administration building, One Capitol Hill, Providence. Details about the hearing and about the submission of public comments are included in the proposed regulations as posted.

Annual e-file shutdown November 21

The Rhode Island Division of Taxation has scheduled its annual e-file shutdown for November 21, 2015. That is the deadline for e-filing Rhode Island resident and nonresident personal and business tax returns for tax year 2014.

For more details – including deadlines for transmissions and acknowledgements, and on the shutdown’s impact on fiscal-year filers – click here.

Division of Taxation observes Veterans Day

The Rhode Island Division of Taxation will be closed today -- Wednesday, November 11, 2015 -- in observance of Veterans Day. However, tax information will continue to be available on the agency's website, and the agency will continue to accept and process e-filed returns today.

The Division of Taxation will reopen for business tomorrow and will operate during its usual hours, 8:30 a.m. to 3:30 p.m.

Self-audit program update

The Rhode Island Division of Taxation last week began mailing letters to 9,600 businesses and individuals to let them know about Rhode Island's new self-audit program.

The Division also let practitioners know about the mailing in case they receive any calls or emails from clients who have questions. The self-audit program is voluntary; the letter is intended simply to get the word out and get the ball moving.

Rhode Island Tax Administrator David M. Sullivan says that the self-audit program is a great opportunity for taxpayers, especially businesses, to clear their books of a use tax liability and get a significant break in the form of a penalty waiver and interest forgiveness.

The first batch of 3,300 letters went out November 4; additional mailings are planned. But the program is not limited to those who receive letters. Practitioners may have other clients who would benefit, and the Division invites practitioners to encourage them to apply.

The program has its own webpage, which includes the program application, FAQs, and other information. To view the official kick-off announcement, click here.

Information about the self-audit program is also available by calling the Division of Taxation’s Field Audit section at (401) 574-8962 from 8:30 a.m. to 3:30 p.m. business days.

Tax credits for rehab of historic church in Providence

The Division of Taxation has posted details about the rehabilitation of the former Pilgrim Congregational Church of Providence into residential units, a project that involves Rhode Island historic preservation tax credits.

The Division of Taxation's web page on historic tax credits shows details involving all applicants that have signed a contract and paid the required fee under the state's 2013 historic preservation tax credit program.

Channel 12 reports on self-audit program

Rhode Island's new self-audit program was the focus of a report on Channel 12 last night by Channel 12's consumer reporter, Susan Hogan.

She interviewed Rhode Island Tax Administrator David M. Sullivan, who described how the program works. Channel 12 posted the interview on its website. 

To learn more about the self-audit program, which is aimed at businesses and individuals, see the Division of Taxation's website.

• For those whose applications are approved under the program, who complete their self-audit in accordance with program guidelines, and who pay the tax due, the Division of Taxation will waive penalties and forgive up to two-thirds of the interest that would otherwise be due.

Self-audit program begins

The Division of Taxation today launched a self-audit program. For those whose applications are approved, who complete their self-audit in accordance with program guidelines, and who pay the tax due, the Division of Taxation will waive penalties and forgive a portion of the interest that would otherwise be due.

“This is a great opportunity for taxpayers, especially businesses, to clear their books of a tax liability and get a significant break in the form of a penalty waiver and interest forgiveness,” said Rhode Island Tax Administrator David M. Sullivan.

The program has its own webpage, which includes the program application, FAQs, and other information.

Phase two of computer system changeover

Rhode Island Tax Administrator David M. Sullivan announced this afternoon that the Division of Taxation has successfully completed the second phase of its changeover to a new agency-wide computer system. 

Business incentive tax credits: applications online

Application materials are now online for two new Rhode Island tax credit programs that are intended to provide incentives for business and job growth.

To view the application for the Rhode Island Qualified Jobs Incentive Tax Credit program, click here.

To view the application for the Rebuild Rhode Island Tax Credit program, click here.

To view the announcements involving the launch of the online applications, click here and here.

Both incentive programs, enacted in June 2015, are aimed at spurring economic growth across Rhode Island. The Rhode Island Commerce Corporation website includes additional details on these and other programs.

Rhode Island wins award for UI tax operations

Rhode Island has been recognized for running one of the nation’s best unemployment insurance (UI) tax operations. 

The Rhode Island Division of Taxation and the Rhode Island Department of Labor and Training (DLT) received a State Performance Excellence Award as the top-performing small state in UI tax operations. The award was presented at a conference last week of the National Association of State Workforce Agencies (NASWA) in Albuquerque, N.M.

DLT Assistant Director of Income Support Robert Langlais, who heads the state UI program, and Chief Revenue Agent Philip D’Ambra, head of the Division of Taxation’s Employer Tax section, accepted the NASWA award. This is the sixth straight year that Rhode Island has won in the small state category. DLT and the Employer Tax section have long collaborated on running this key area of the state UI system.

“For Rhode Island to be recognized by its peers for running high-quality UI tax operations is gratifying and I congratulate the Division of Taxation and DLT for their efforts,” Governor Gina M. Raimondo said. “My administration is committed to continuous improvement in rethinking the way we work and becoming more customer-friendly to make it easier for Rhode Islanders to do business with government.”

Computer changeover begins

The Division of Taxation's agency-wide computer system changeover began today. The Tax Division remains open, but a few service restrictions apply. (It is the second phase of a multi-year project.) To view the latest Notice, click here.

DOR issues praise for work in tobacco tax case

Rhode Island Acting Director of Revenue David M. Sullivan this afternoon praised the work of the Rhode Island Division of Taxation’s Special Investigation Unit, the Rhode Island State Police, and others for their work on a recent case involving untaxed tobacco products. To view his statement, click here.

Administrative Decision on sales of natural gas

The Division of Taxation this afternoon posted the latest Administrative Decision. It focuses on whether sales of natural gas qualified for the domestic-use exemption during the period in question.

(The General Assembly has since exempted -- from the sales and use tax -- gross receipts from the sale, and from the storage, use, or other consumption, of natural gas.)

Estate tax threshold for 2016

The Rhode Island estate tax threshold and related credit amount will remain unchanged for 2016, the Rhode Island Division of Taxation announced today.

The threshold will be $1.5 million and the related credit amount will be $64,400 for decedents dying on or after January 1, 2016. The same amounts apply for decedents dying in 2015.

Computer changeover starts next week

The Rhode Island Division of Taxation is changing over to a new agency-wide computer system – and the next phase starts a week from today.

Rhode Island Tax Administrator David M. Sullivan reminds taxpayers and tax practitioners that the changeover will take place on six consecutive business days: from Monday, October 26, 2015, through Monday, November 2, 2015. 

During that time, the Tax Division office at One Capitol Hill in Providence will remain open during its usual hours: 8:30 a.m. to 3:30 p.m. Phones will be staffed, emails answered, payments received, and returns accepted, as usual. But certain services will be limited, including issuing of letters of good standing and releasing motor vehicle license blocks, motor vehicle registration blocks, and certain liens and levies.

“We will remain open and we will continue to provide the kinds of services that are regularly used by the vast majority of taxpayers and practitioners,” said Rhode Island Tax Administrator David M. Sullivan. “However, we want to let everyone know now, in advance, that certain services used by a limited number of taxpayers and practitioners will not be available during the six-day changeover,” he said. For example, “If you’re blocked from renewing a driver’s license because you owe back taxes, you should pay the tax debt on or before this Friday, October 23,” Sullivan said. 

• For more information, call the Division of Taxation at (401) 574-8829 from 8:30 a.m. to 3:30 p.m. business days. Or see the latest Advisory.

Filing deadline reminder; acks issue resolved

Filing deadline

The Rhode Island Division of Taxation reminds taxpayers and practitioners that today is the deadline for filing Rhode Island personal income tax returns and certain other returns for tax year 2014 and for making the associated tax payments.

The Tax Division recently issued an Advisory which lists some of the returns for which the extended due date falls on October 15.

Acks issue resolved

The Division of Taxation also said today that it has resolved a computer issue that had delayed acknowledgements for a number of electronically filed returns.

“People typically e-file their federal and Rhode Island returns at the same time,” said Tax Administrator David M. Sullivan. After filing, they typically receive a short electronic message that serves as a confirmation that the return has been received. The confirmation is sometimes called an acknowledgement, or "ack."

“For the last week or so, preparers and taxpayers have received acks from the Internal Revenue Service but not from us. We don’t want preparers or taxpayers to think that this is somehow related to their computers, their software, or their providers. It is not. This issue stems from a computer-related issue on our end. We have been working in recent days to fix this and it is now resolved. As a result, the backlogged acks will soon be released, and we will also return to issuing real-time acks,” Sullivan said.

“For those taxpayers and tax preparers who may have encountered this issue in recent days and who are still waiting for their acks, we appreciate their patience. In the meantime, they should keep on file any documentation they have related to the original transmission of their returns should that documentation be needed in the future,” he said.

Warwick seminar sold out; Newport's still available

The Division of Taxation is holding a seminar, in two locations, for paid preparers of tax returns. The seminar is free but pre-registration is required.

Seats for the first session, in Warwick, have all been taken, but seats are still available for the second session, in Newport.

To view the agenda, click here.

To register, click here.

Filing deadline tomorrow

Tomorrow is the deadline for filing Rhode Island resident and nonresident personal income tax returns for the 2014 tax year. 

The usual deadline is April 15, but some taxpayers elect to use a six-month extension, moving the deadline to October 15. Such returns must be e-filed or postmarked on or before 11:59 p.m. on Thursday, October 15, 2015. Final payments for tax year 2014 are also due tomorrow. For more information, please click here. 

Regulations posted on new tax credit programs

The Division of Taxation on October 7 posted, as final, regulations that offer details and guidance on three new tax credit and incentive programs:

• the Anchor Institution Tax Credit program;
• the Rebuild Rhode Island Tax Credit program; and
• the Rhode Island Qualified Jobs Incentive Act of 2015 program.

The programs are part of a package of credits and other incentives aimed at businesses that are prepared to invest in and foster job creation in the state.

Specifically, the programs are intended to help expand existing jobs, stimulate the creation of new jobs, attract new business and industry to the state, and stimulate growth in real estate developments. They are the result of legislation proposed by Governor Gina M. Raimondo, approved by the General Assembly, and signed into law on June 30, 2015. 

The regulations mirror those posted by the Rhode Island Commerce Corporation. The programs are administered by the Commerce Corporation.

Latest issue of newsletter just posted

The Division of Taxation today posted the latest issue of its quarterly newsletter, Rhode Island Tax News. The issue includes information on the following topics:

• Seminar for practitioners
• Computer system changeover
• Tax news in brief
• Legal Corner
• Practitioners' Corner

Computer system changeover

The second phase of the Rhode Island Division of Taxation’s changeover to a new agency-wide computer system will soon take place. The Tax Division will remain open for business while the changeover occurs, but certain services will be limited or will not be available during the changeover. For details, please click here.

Tax credits for project in Pawtucket

The Division of Taxation has posted details about the rehabilitation of a century-old mill complex on Kenyon Avenue in Pawtucket -- a project that involves Rhode Island historic preservation tax credits.

The Division of Taxation's web page on historic tax credits shows details involving all applicants that have signed a contract and paid the required fee under the state's 2013 historic preservation tax credit program.

Acks resume after temporary delay

Acknowledgements for electronically filed Rhode Island tax returns have resumed after the Division of Taxation resolved a computer issue that caused a temporary delay.

When returns are filed electronically with a tax agency, the practitioner typically receives a short electronic message that serves as a confirmation that the return has been received. The confirmation is sometimes referred to as an acknowledgement, or "ack."

A number of tax practitioners have contacted the Division of Taxation to say that they received acknowledgements from the Internal Revenue Service for the recent e-filing of federal returns, but have not yet received acknowledgements from the Division of Taxation for the recent e-filing of their Rhode Island returns.

Rhode Island Tax Administrator David M. Sullivan today explained that, due to server updates, a backlog resulted within the Division of Taxation, temporarily delaying the issuing of acknowledgements. The delay involved several thousand returns -- mainly business returns on Form RI-1120C, Form RI-1120S, and Form RI-1065 -- that were e-filed between early September 2015 and mid-September 2015. (A small number of returns on Form RI-1040 were also affected.) “But the server-update issue has now been resolved, the backlog is being reduced, and the first batch of acknowledgements has been issued,” Sullivan said.

"We are pleased to report that the problem has been resolved and that the backlog is dwindling. We also want practitioners and taxpayers to know that if their return was due by September 15 and was e-filed by September 15, but was caught up in this server-update issue, the return will still be considered as timely filed," Sullivan said.

Administrative Decisions on personal income tax

The Division of Taxation has posted two new Administrative Decisions:

• 2015-22 looks at the denial of a property-tax relief claim.
• 2015-23 involves whether a refund claim was timely filed.

Room resellers, hosting platforms

The Division of Taxation today posted Notices that describe how a new law applies to room resellers and hosting platforms.

• Notice 2015-14 is for room resellers.
• Notice 2015-15 is for hosting platforms. 

In general, the law involves the expansion of the sales and hotel taxes to hosting platforms and room resellers, now requiring them to register with the Division of Taxation and remit sales and hotel taxes to the Division.

Estimated tax payments due tomorrow

The deadline is tomorrow for making third-quarter payments of estimated personal income tax. It is also the deadline for a number of other payments and filings. The Division of Taxation today issued a reminder.

Real estate conveyance tax

The Division of Taxation has posted three documents which provide guidance on how the real estate conveyance tax applies to acquired real estate companies. 

• Click here for the Notice. 
• Click here for the form. 
• Click here for the instructions.

Attorney General warns of tax scam

Rhode Island Attorney General Peter F. Kilmartin today warned consumers of a resurgence in reports of a persistent, aggressive scam involving taxes. Click here for more information.

Rhode Island and Streamlined

The Division of Taxation has posted its revised Certificate of Compliance regarding the Streamlined Sales and Use Tax Agreement. States that are members of the agreement, including Rhode Island, must re-certify each year that they are in compliance with it.

The Division of Taxation has also posted the latest version of its taxability matrix, which spells out the  tax treatment of certain items defined in the Streamlined agreement.

Tax credits for project in Newport

The Division of Taxation has posted details about the renovation of a parish house on High Street in Newport for purposes of a condominium project. The project involves Rhode Island historic preservation tax credits.

The Division of Taxation's web page on historic tax credits shows details involving all applicants that have signed a contract and paid the required fee under the state's 2013 historic preservation tax credit program.

Draft regs on apportionment, nexus

The Rhode Island Division of Taxation today posted two documents: 

• A draft regulation involving apportionment of net income for corporate income tax purposes.

• A draft regulation involving nexus for corporate income tax purposes. 

Both are exposure drafts. For details about submitting comments, please see the cover page of each document.

Historic tax credits for building rehabs

The Division of Taxation has posted details about the renovation of a building in Pawtucket that formerly served as a grammar school and as a school administration building. The project involves Rhode Island historic preservation tax credits. 

The Division of Taxation also has posted details about the rehabilitation of a former mill in Westerly. The project also involves Rhode Island historic preservation tax credits. 

The Division of Taxation's web page on historic tax credits shows details involving all applicants that have signed a contract and paid the required fee under the state's 2013 historic preservation tax credit program.

Tax credit and incentive report available online

The Division of Taxation has posted on its website the annual tax credit and incentive report, as required by Rhode Island statute.

The latest report identifies the recipients of more than $30 million in certain state tax credits and incentives for the year ended June 30, 2015. 

Some of those recipients also received more than $10 million, in the aggregate, in other tax credits and incentives in Rhode Island.

Proposed regs on tax credits for business and job growth

The Division of Taxation today posted proposed regulations that offer details and guidance on three new tax credit and incentive programs:

• the Anchor Institution Tax Credit program;
• the Rebuild Rhode Island Tax Credit program; and
• the Rhode Island Qualified Jobs Incentive Act of 2015 program.

The programs are part of a package of credits and other incentives aimed at businesses that are prepared to invest in and foster job creation in the state.

Specifically, the programs are intended to help expand existing jobs, stimulate the creation of new jobs, attract new business and industry to the state, and stimulate growth in real estate developments. They are the result of legislation proposed by Governor Gina M. Raimondo, approved by the General Assembly, and signed into law on June 30, 2015. 

The proposed regulations mirror those posted by the Rhode Island Commerce Corporation. The programs are administered by the Commerce Corporation.

(Editor's Note: The viability of the links above may depend on which web browser is used. The links tested positive using the Safari and Firefox browsers. All proposed regulations are available at the following location: http://www.sos.ri.gov/ProposedRules/)

Liquor license renewals

The Rhode Island Division of Taxation today issued a reminder for holders of liquor licenses – and their advisers – about renewal requirements, including deadlines and date changes.

Email address for Collections; Notice for smoking bars

The Rhode Island Division of Taxation has assigned the following email address for those who seek to email the agency's Collections section: tax.collections@tax.ri.gov

Also, the Division of Taxation has posted a Notice to implement recent changes in statute regarding smoking bars.

Tax changes reviewed on Channel 10

Rhode Island Tax Administrator David M. Sullivan discussed recent changes to state tax law during an interview on August 7 on Channel 10.

Sullivan talked about the changes with Channel 10 Anchor Frank Coletta during the noon broadcast's "Money Watchers: Business Lunch" segment. (A summary of the changes is available in the latest issue of the Division of Taxation's newsletter. Video of the interview was posted on Channel 10's website.)

Rhode Island Tax Administrator David M. Sullivan

Tax Administrator at tax fraud seminar in Seattle

Rhode Island Tax Administrator David M. Sullivan was invited by the National Conference of State Legislatures (NCSL) to take part in a seminar about tax refund fraud during the NCSL's 2015 Legislative Summit in Seattle on August 3. 

In conjunction with the Internal Revenue Service, the Federation of Tax Administrators, and software providers, Sullivan has been leading a national effort this year to combat tax refund fraud. New tools are being readied to fight fraud during the coming tax filing season.

Tax Administrator David Sullivan (second from right) at NCSL summit.

Latest issue of newsletter

The Division of Taxation today posted the latest edition of its newsletter, Rhode Island Tax News. It includes information on the following topics: 

• Changes in tax law
• Tax incentives to grow jobs
• The fight against refund fraud
• Average refund amounts
• A new chief of Estate Tax
• Legal Corner
• Practitioners' Corner

Administrative Decision -- use tax on truck purchase

A business was not exempt from Rhode Island use tax on its purchase of a truck. See the latest Administrative Decision for details.

Tax on short-term residential rentals - new postings

The Rhode Island Division of Taxation has posted the following items to its website:

• A revised Business Application and Registration form (BAR).
• A new form for remitting hotel tax involving short-term residential rentals
• Revised FAQs dealing with sales and hotel tax on short-term residential rentals.

The postings are to help implement recent changes in Rhode Island statute that expanded the sales tax and hotel tax to short-term rentals of residential property, including the rental of vacation homes, beach cottages, and rooms. 

Summary of Legislative Changes

The Rhode Island Department of Revenue's Division of Taxation has posted the 2015 edition of its "Summary of Legislative Changes." Click here to view.

FAQs for tax on short-term residential rentals

The Rhode Island Division of Taxation this afternoon posted FAQs regarding the recent extension of the sales and hotel tax to short-term residential rentals, including vacation homes. The document is intended as an aid to homeowners, tax practitioners, real estate professionals, and others. 

Cigarette tax notices

The Rhode Island Division of Taxation has posted two new Notices. Each involves cigarette tax changes that resulted from legislation signed into law earlier this week.

Notice number	Description	Link
Notice 2015-08	Cigarette tax / retailers	http://1.usa.gov/1FYyaFz
Notice 2015-09	Cigarette tax / wholesalers	http://1.usa.gov/1f8Urvf

Five new Notices posted

The Division of Taxation today posted five new Notices. All of them involve tax changes that resulted from legislation signed into law yesterday.

Notice Number	Description	Link
Notice 2015-03	Sales tax exemption on electricity, heating fuels, gas	http://1.usa.gov/1RSuPyA
Notice 2015-04	Tax on short-term residential rentals	http://1.usa.gov/1FRZ8yD
Notice 2015-05	Repeal of imaging surcharge	http://1.usa.gov/1ejWagk
Notice 2015-06	Repeal of outpatient surcharge	http://1.usa.gov/1ItCdQw
Notice 2015-07	Hospital license fee changes	http://1.usa.gov/1JwCmRS

Three new Administrative Decisions

The Division of Taxation has posted three decisions that were issued after recent administrative hearings:

Administrative Decision 2015-18 focuses on a cigarette dealer's license revocation.
Administrative Decision 2015-19 looks at whether a refund claim was filed on time.
Administrative Decision 2015-20 also looks at whether a refund claim was filed on time.

Estimated payments; combined reporting; sales permits

The Division of Taxation today issued an Advisory that includes information on:

• Estimated payments that are due Monday;
• Combined reporting and estimated payments;
• Sales tax permits and booklets; and
• Insurance-related tax payments.

Click here to view a copy.

Tax Administrator helps launch effort to fight refund fraud

Rhode Island Tax Administrator David M. Sullivan today joined with Internal Revenue Service Commissioner John Koskinen and tax industry representatives to announce a sweeping new collaborative effort to combat identity theft refund fraud and protect taxpayers.

The agreement includes identifying new steps to validate taxpayer and tax return information at the time of filing. The effort will increase information sharing between industry and governments. There will be standardized sharing of suspected identity fraud information and analytics from the tax industry to identify fraud schemes and locate indicators of fraud patterns.

Sullivan, in his role as president of the Federation of Tax Administrators (FTA), represented the states at the meeting, which was held in Washington, D.C. "States share the IRS’s concerns – and the industry’s concerns – about fighting refund fraud and ID theft fraud," he said. "It is a top priority for states. And I’m pleased to note that, under this agreement, a number of refund fraud detection and prevention solutions will be ready to for the starting of the coming filing season," Sullivan said. "We feel strongly that this plan is going to help everyone in the 2016 filing season -- including states, the IRS, the industry, and taxpayers," he said.

IRS Commissioner Koskinen said in a statement, "This agreement represents a new era of cooperation and collaboration among the IRS, states and the electronic tax industry that will help combat identity theft and protect taxpayers against tax refund fraud." He added, "We've made tremendous progress, and we will continue these efforts. Taxpayers filing their tax returns next filing season should have a safer and more secure experience."

The agreement announced today at the summit at IRS headquarters was the result of a months-long effort by the states, the IRS, the tax preparation software industry, and others, working behind the scenes, Sullivan said. "Rest assured that this public-private partnership will continue working long after today’s meeting is over to help ensure that we better protect our taxpayers from identity theft tax refund fraud," he said.

"My thanks to IRS Commissioner Koskinen for his leadership in this process of developing a comprehensive plan that will benefit all stakeholders," Sullivan said.

Also attending today's summit were providers of tax preparation software, tax preparation firms, payroll and tax financial product processors. The FTA, which sponsored Sullivan's trip to the meeting, is an association which serves the principal tax collection agencies of the 50 states, the District of Columbia, Philadelphia, and New York City. The FTA also represents the interests of state tax administrators before federal policymakers. 

Tax Administrator David M. Sullivan at today's security summit.

See also:

• The summit's official report and findings. 
• Today's announcement by the IRS.
• IRS webpage on the summit.

Attorney General posts tips for taxpayers after IRS breach

Rhode Island Attorney General Peter F. Kilmartin has posted tips for taxpayers in the aftermath of a data breach involving the Internal Revenue Service.

He said the incident, which involves federal tax information, serves as a reminder for all Rhode Islanders to be vigilant in monitoring their credit reports and accounts. He also offered information to consumers who may have been affected by the breach.

Decisions issued on domicile, refund, amended return

The Division of Taxation today posted three decisions that were issued after recent administrative hearings.

• Administrative Decision 2015-15: whether Rhode Island was the taxpayer's domicile;
• Administrative Decision 2015-16: whether a refund claim was filed on time; and
• Administrative Decision 2015-17: failure to file an amended return.

Administrative Decision on use tax

The Division of Taxation today posted Administrative Decision 2015-14. It focuses on whether Rhode Island's use tax applies to a business's use of envelopes.

Next year's filing deadline

The Division of Taxation announced today that next year's filing deadline will be April 18, 2016, which is three days later than usual. Taxpayers and practitioners will have an extra weekend to prepare and file returns.

New chief of Estate Tax

Meaghan Kelly has been promoted to the rank of chief of the Rhode Island Division of Taxation’s
Estate Tax section.

Her appointment was announced by Rhode Island Tax Administrator David M. Sullivan.

Kelly, an attorney, formerly served as senior legal counsel for the Division of Taxation.

One-cent increase in gas tax starts July 1

The Rhode Island gasoline tax will increase by one cent starting July 1. The tax, commonly known as the “gas tax,” is currently 32 cents a gallon. Based on Division of Taxation calculations that take inflation into account as required by statute, the tax will increase by one cent, to 33 cents per gallon, effective July 1, 2015. 

It will be the first time that the gas tax will increase as a result of the new inflation indexing formula enacted in 2014. Legislation enacted on June 19, 2014, requires that the tax be adjusted every two years based on inflation. 

The adjustment to take effect July 1, 2015, represents a 3.125 percent increase in the gas tax.

The mandatory inflation adjustment for gasoline applies only to the 32-cent Rhode Island
gas excise tax; it does not apply to the 1-cent Rhode Island environmental protection regulatory
fee or to the 18.4-cent federal excise tax. (The overall tax on a gallon of gasoline in Rhode
Island is 51.4 cents, according to American Petroleum Institute figures as of April 1, 2015.)

The one-cent increase in the gas tax that takes effect July 1, 2015, also applies to diesel and
other taxable motor fuels that meet the definition of “fuels” under Rhode Island General
Laws § 31-36-1(4).

• Revenue from the tax is used for road and bridge maintenance, principal and interest payments on transportation bonds, RIPTA, and other purposes. 
• It is estimated that a one-cent increase in the gas tax will generate $4.2 million in revenue for fiscal year 2016.
• The gas tax was last increased in 2009, when it went from 30 cents to 32 cents effective July 1, 2009.
• The next time the tax is to be adjusted based on inflation is July 1, 2017.
• To view the Advisory on this subject, click here. To view the Notice, click here.

Direct debit update: Refunds deposited

Taxpayers who electronically file their Rhode Island personal income tax returns, and who have a balance due on April 15, have the option to pay that balance by arranging for a direct debit from their bank account. As a result of a computer issue that arose shortly after the April 15 filing deadline last month, the direct debit was mistakenly made twice for a small number of those taxpayers. Following is an update:

The Division of Taxation has completed the direct deposit of refunds for all affected taxpayers. “We completed the direct deposits last week,” said Rhode Island Tax Administrator David M. Sullivan. “Therefore, we are confident that all of the affected taxpayers have received their refunds by now, deposited directly into their accounts. Anyone who has not should receive theirs shortly,” he said.

The Division initiated the direct deposit transaction for some of the affected taxpayers on April 27. For the remaining 237 affected taxpayers, the agency initiated the direct deposit transaction on April 29.  “The Division determined that all of the approximately 250 affected taxpayers would receive their refunds by direct deposit, not by paper check,” Sullivan said. “Direct deposit is faster, and our aim was to get the taxpayers’ money back into their hands as quickly as possible,” he said. The entire matter was resolved less than two weeks after it occurred.