New tax law takes effect on Monday

The Rhode Island Division of Taxation reminds businesses, software providers, and others that a new tax law will take effect on Monday, October 1, 2018.

That is when vendor-hosted prewritten computer software, sometimes referred to as “software as a service”, or SaaS, will become subject to Rhode Island’s 7 percent sales and use tax.

Vendors must register with the Rhode Island Division of Taxation, obtain a sales tax permit, and collect and remit the 7 percent tax. If sales/use tax is not collected on the transaction, the buyer -- 
whether a business or consumer -- must pay the 7 percent use tax. For more information, including details about registering and collecting the tax, and paying the tax, click here.

New Administrative Decision

The Rhode Island Division of Taxation has posted its latest Administrative Decision. This one looks at whether the Division should have denied a married couple's claim for personal income tax refunds. To learn more, click here.

Regulatory actions

Rather than publish two separate sets of the same regulations, the Rhode Island Division of Taxation and the Rhode Island Commerce Corporation have agreed to post just one set when it comes to certain tax credits and related incentives.

Thus, for the first three tax credit programs listed below, the Commerce Corporation is posting the substantive regulation; the Division of Taxation is, in effect, posting a one-page notice (in the form of a regulation) that simply refers to the Commerce Corporation regulation.

The regulations are being jointly promulgated by the Commerce Corporation and the Division of Taxation. The Division will hold a public hearing on the regulatory actions listed below at 1:30 p.m. on October 3, 2018, at the Division of Taxation, One Capitol Hill, Providence.

Wavemaker credit

The Division proposes to delete its regulation involving tax credits under the “Wavemaker Fellowship” program and use the Commerce Corporation’s regulation instead. Meanwhile, the Commerce Corporation is proposing to amend its regulation to include technical corrections that are intended to clarify the process to be followed by both the Commerce Corporation and the Division of Taxation as it relates to the issuance and use of the Wavemaker credits.

To view the Division’s notice of proposed rulemaking, click here.

To view the regulation that the Division of Taxation proposes to delete, along with the one-page referral notice (in the form of a regulation), click here.

To view the Commerce Corporation’s proposed regulation, click here.

Qualified Jobs Incentive Act

The Division proposes to delete its regulation involving tax credits under the “Qualified Jobs Incentive Act” program and use the Commerce Corporation’s regulation instead. Meanwhile, the Commerce Corporation’s regulation includes information on how the Division may provide for a process for the redemption of tax credits.

To view the Division’s notice of proposed rulemaking, click here.

To view the regulation that the Division of Taxation proposes to delete, along with the one-page referral notice (in the form of a regulation), click here.

To view the Commerce Corporation’s proposed regulation, click here.

Rebuild Rhode Island credit

The Division proposes to delete its regulation involving tax credits under the “Rebuild Rhode Island” tax credit program and use the Commerce Corporation’s regulation instead. Meanwhile, the Commerce Corporation’s proposed regulation includes information on when tax credit certificates can be issued.

To view the Division’s notice of proposed rulemaking, click here.

To view the regulation that the Division of Taxation proposes to delete, along with the one-page referral notice (in the form of a regulation), click here.

To view the Commerce Corporation's proposed regulation, click here.

Anchor Institution credit

By statute, the “Anchor Institution” tax credit program will no longer be available to applicants as of January 1, 2019. Therefore, the Division proposes to repeal its “Anchor Institution” regulation effective January 1, 2019.

To view the Division’s notice of proposed rulemaking, click here.

To view the regulation that the Division of Taxation proposes to delete, click here.

 This post includes only a summary of regulatory actions. Please read each regulation for details.

Prompt reporting of data theft aids clients

The Rhode Island Division of Taxation, the Internal Revenue Service, and other partners in the Security Summit remind tax professionals that they should report data theft immediately and follow an established process to help ensure that their clients are protected. To learn more, click here.

Estimated payments due Monday

The Rhode Island Division of Taxation reminds tax professionals and taxpayers that Monday is the deadline for certain payments of estimated tax. 

• The deadline normally would be September 15, but that falls on a Saturday this year, so the deadline shifts to the next business day. Thus, this year’s deadline is Monday, September 17, 2018. Click here to learn more

Recent developments

The Rhode Island Division of Taxation today posted two Advisories for tax professionals.

• ADV 2018-37 urges tax practitioners to be on guard against theft of taxpayer data from their offices 
• ADV 2018-38 reminds tax professionals about a change in tax law: Starting October 1, 2018, the sale, storage, use, or other consumption of vendor-hosted prewritten software, sometimes called “software as a service” or SaaS, will be subject to Rhode Island sales and use tax.