Friday, January 5, 2018

Reminder on compliance program

The Rhode Island Division of Taxation today issued a reminder to state and local government employees about Rhode Island’s Public Employee Tax Compliance Act.

Under that law, the State of Rhode Island and all political subdivisions (including cities, towns, and other entities, such as fire districts) must periodically provide a list of their employees to the Rhode Island Division of Taxation.

The Division of Taxation must use the information from each such list to determine if any of the employees may be delinquent on their Rhode Island state taxes. If so, the Division must send each such person a notice that the taxpayer may not be in compliance.

Two recent mailings


The Division of Taxation recently sent out approximately 3,600 such notices, in two separate mailings: 
  • The first notice -- in a mailing on December 13, 2017 -- says that the recipient might not be in compliance with Rhode Island state tax laws because the recipient did not file a 2016 Rhode Island personal income tax return. (The recipient is advised to file a completed and signed return -- or provide a letter of explanation.)
  • The second notice -- in a mailing on December 29, 2017 -- says that the recipient might not be in compliance with Rhode Island state tax laws because the recipient has a Rhode Island tax balance due. 

Overall, the Division mailed “tax balance due” notices to: 
  • 1,194 city/town/local employees - out of a total of 28,777 city/town/local employees reviewed  
  • 742 state employees - out of a total of 15,093 state employees reviewed
 Overall, the Division mailed “did not file return” notices to:
  • 1,152 city/town/local employees - out of a total of 28,777 city/town/local employees reviewed
  • 490 state employees - out of a total of 15,093 state employees reviewed


Details of notices


Each notice advises that if the recipient fails to take corrective action by a certain date in January 2018, the Division will begin the steps necessary to garnish wages. Each notice also shows how the recipient may obtain information about taxpayer rights and responsibilities. (In each notice, the Division of Taxation is required by law to include information about wage garnishment and about taxpayer rights. Each notice also includes information on how to contact the Division of Taxation.)

If any public employees feel that they have received one or more of these notices in error, they should contact the Division’s Collections section immediately. (See below for details.) The Division is always ready and willing to work with taxpayers and/or their advisors. In this matter, the agency has allocated extra resources to make sure that it responds as quickly as possible – and to proactively confirm the delinquency, or let the taxpayers know that they are current on their filing and payment obligations.

Projected amount owed


Overall, the notice recipients owe a projected $2,884,042 in Rhode Island state taxes in the aggregate. (The average owed is $1,490. The mean amount owed is $293.) However, for a variety of reasons, it is possible that some, or all, of the projected amount in any given notice sent by the Division may not ultimately result in an owed tax debt. For example, a person’s proposed delinquency as shown in the notice may not reflect the impact of a carryforward from a prior tax year.

Background


Legislation enacted in 2014 created the “Compliance of Public Employees With State Income Tax Act”. (The short title is the “Public Employee Tax Compliance Act”.) The Division sent out its first round of notices to delinquent public employees shortly after the legislation was enacted. As a result, the Division has collected $632,231 through October 2017.

The second round of such notices was mailed last month – following the Division’s multi-year project involving the conversion to a new agency-wide computer system.

The Public Employee Tax Compliance Act is contained in Rhode Island Public Law 2014, chapter 145, article 12, § 3, which is codified at Rhode Island General Laws § 44-69-1 et seq.

To contact the Division of Taxation’s Collections section, call (401) 574-8941 from 8:30 a.m. to 3:30 p.m. business days, or email: Tax.Collections@tax.ri.gov. The Collections section is located in the Division of Taxation office, which is at One Capitol Hill, Providence, Rhode Island, diagonally across from the Smith Street entrance of the State House.