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.

Report on sale, taxation of alcoholic beverages

The Division of Taxation today posted its annual report on the sale and taxation of alcoholic beverages.

Summary of findings (dollars in millions)
	2013	2014	Difference
Gross sales of alcoholic beverages by liquor stores	$  316.5	$  358.8	+ 13.4 %
Net taxable sales of alcoholic beverages by liquor stores	$  289.9	$  136.5	-  52.9 %
Sales tax collected and remitted by liquor stores	$    20.3	$      9.6	-  52.7 %
Excise tax on sales by wholesalers to liquor stores*	$    10.1	$    15.6	+ 54.5 %
Figures are rounded and are for calendar year. * Wholesalers/distributors pay excise tax on alcoholic beverages they sell, net of inventory, to liquor stores.