Tax changes starting January 1

The Rhode Island Division of Taxation reminds tax professionals and others about tax changes that will apply in the new year. Some changes take effect immediately (January 1, 2020); others take effect later in the year. Among the subject areas involved:

• Health insurance mandate
• Withholding
• Unemployment insurance tax
• Temporary disability insurance tax
• Estate tax
• Interest rates
• Remote sellers
• Tax credits
• Surplus lines

To read a summary, click here.

Information for employers about withholding

The Division of Taxation has posted the new booklet of income tax withholding tables (used by employers and others to calculate how much to withhold from an employee’s pay in 2020 for Rhode Island personal income tax purposes). Click here to view.

The Division has also posted the new version of Form RI W-4, “Employee’s Withholding Allowance Certificate” (which an employee may use to adjust the amount of Rhode Island personal income tax withheld from the employee's paycheck). Click here to view.

In addition, the Division has posted the 2020 withholding tax payment calendar (which shows payment deadlines for various payment frequencies). Click here to view.

Health insurance mandate kicks in next week

All Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such "minimum essential coverage" in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now is the time to plan ahead. To learn more, click here.

Entity-level tax for pass-through entities

The Rhode Island Division of Taxation today posted answers to common questions about the entity-level tax which pass-through entities can elect to pay. To view or download the document, click here.

Publication on 1040H program

The Rhode Island Division of Taxation has posted an updated version of its publication involving the statewide property-tax relief program (Form RI-1040H).

The updated version contains no substantive changes. It includes a reference to a statute, a reference to a regulation, and a new phone number to call regarding certain e-filing matters. To learn more, click here.

Withholding; electronic funds transfer

The Rhode Island Division of Taxation has proposed amendments to a regulation involving employers' withholding (280-RICR-20-55-10) and another regulation involving electronic funds transfer (280-RICR-20-30-1).

The Division would amend both regulations to reflect changes in Rhode Island law that were enacted in July 2019. For example, the new law requires that certain employers submit withholding tax returns and payments by electronic funds transfer or other electronic filing means effective January 1, 2020. The Division also would make clarifying updates to both regulations due to the passage of time. 

The 30-day public comment period expires on January 16, 2020. For more information, click here and here.

At seminar, Division discusses health insurance mandate

The Rhode Island Division of Taxation yesterday took part in a tax preparer seminar -- and, while there, reminded preparers about Rhode Island's health insurance mandate.

The Division was among several organizations and individuals presenting at the Rhode Island Society of Certified Public Accountants' "Annual Tax Forum" held at the Providence Marriott Downtown, a hotel on Orms Street in Providence.

As part of its presentation, the Division noted that all Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such "minimum essential coverage" in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now is the time to plan ahead. To learn more, click.

Division holds seminar in Warwick

More than 120 tax preparers attended the Rhode Island Division of Taxation's "Seminar for Tax Preparers" today at the Community College of Rhode Island's Knight campus in Warwick.

The three-hour seminar looked at what's new for the coming tax-filing season, what's new in Rhode Island tax law, and what's new from a tax administration standpoint. Division officials answered preparers' questions and demonstrated online tools.

Some of the tax professionals attending the Division's seminar in Warwick today.

Health insurance mandate takes effect next month

All Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such "minimum essential coverage" in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now is the time to plan ahead. To learn more, click here.

Security plan is mandatory for tax preparers

The Rhode Island Division of Taxation, the Internal Revenue Service, and other partners in the Security Summit today remind tax professionals that federal law requires them to create and follow a written information security plan to protect their clients’ data. For details, click here.

Business identity theft

The Rhode Island Division of Taxation, the Internal Revenue Service, and other partners in the Security Summit today urged employers large and small to be alert to the growing threat of business identity theft -- and to step up cybersecurity protections. To learn more, click here. 

Use strong passwords, keep them safe, Security Summit says

The Rhode Island Division of Taxation, the Internal Revenue Service, and other partners in the Security Summit remind taxpayers that using strong passwords and keeping those passwords secure are critical steps in preventing thieves from stealing identities or money -- or using the information to file fraudulent tax returns. To learn more, click here.

Tax Administrator Neena Savage interviewed today by Channel 10's Jared Pelletier about phishing scams.

Reminder: Health coverage mandate starts next month

All Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such "minimum essential coverage" in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now is the time to plan ahead.

Most people have minimum essential coverage (through employer-sponsored health insurance, Medicaid, Medicare, TRICARE, or some other means) and will not have to pay the penalty. Rhode Island residents who don't have such coverage can enroll in new health insurance or renew their health insurance through Rhode Island's health insurance exchange -- HealthSource RI. 

For more information, including details about the current open enrollment period and about how eligible Rhode Islanders can receive financial assistance to lower the cost of health insurance, see https://healthsourceri.com/.

• HealthSource RI's open enrollment period began November 1 and ends December 31. But you must pick your plan and pay for it by December 23 in order to get coverage starting January 1, 2020.

Learn to recognize and avoid phishing emails

The Rhode Island Division of Taxation, the Internal Revenue Service, and other partners in the Security Summit today warned taxpayers to watch out for phishing scams amid the deluge of holiday email messages coming from retailers and others. To learn more, including ways to recognize and avoid the scams, click here.

Holiday shoppers -- beware of ID theft

The Rhode Island Division of Taxation, the Internal Revenue Service, and other partners in the Security Summit today warned holiday shoppers to secure their computers and mobile phones in order to reduce the threat of identity theft. To learn more, click here.

Health coverage required January 1

All Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such coverage in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now is the time to plan ahead. Rhode Island residents can enroll in new health insurance or renew their coverage for 2020 with Rhode Island's health insurance exchange -- HealthSource RI. 

For more information, including details about the current open enrollment period and about how eligible Rhode Islanders can receive financial assistance to lower the cost of health insurance, see https://healthsourceri.com/.

* Open enrollment began November 1 and ends December 31. But you must pick your plan and pay for it by December 23 in order to get coverage starting January 1, 2020.

Proposed regulation

The Rhode Island Division of Taxation proposes to amend one of its regulations and will hold a public hearing on the matter December 11.

The regulation involves the tax on hard-to-dispose material and the tax on beverage containers. Because the levies increased as of July 1, 2019, the Division plans to update the regulation accordingly.

The hearing will begin at 9:30 a.m. on December 11, 2019, at the Division of Taxation, One Capitol Hill, Providence, Rhode Island. The Division is located in the Department of Administration building, which is on Smith Street diagonally across from the State House. 

To view the proposed regulation, and for more details about the hearing, click here.

Maintenance window on Sunday

The Rhode Island Division of Taxation website and email system will be unavailable on Sunday, November 17, between 7:00 p.m. and 8:30 p.m. Eastern Time, due to scheduled  maintenance. This should not impact Monday services. If you need assistance, please call (401) 574-8829.

Estate tax credit and threshold for 2020

The Rhode Island Division of Taxation today announced the Rhode Island estate tax credit amount and threshold for the estates of decedents dying on or after January 1, 2020. For details, click here.

Rhode Island's health coverage mandate

All Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such coverage in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now's the time to plan ahead.

Rhode Island residents can enroll in new health insurance or renew their coverage for 2020 with Rhode Island's health insurance exchange -- HealthSource RI. For more information, including details about the current open enrollment period and about how eligible Rhode Islanders can receive financial assistance to lower the cost of health insurance, see https://healthsourceri.com/.

• Open enrollment began November 1 and ends December 31. But you must pick your plan and pay for it by December 23 in order to get coverage starting January 1, 2020.

Inflation adjustments

The Rhode Island Division of Taxation today posted the following:

• The inflation-adjusted standard deduction amounts, exemption amount, and uniform rate schedule for the personal income tax for tax years beginning on or after January 1, 2020.
• The inflation-adjusted income tax rate schedule for estates and trusts for tax years beginning on or after January 1, 2020.
• The inflation-adjusted numbers for certain personal income tax modifications for the 2019 tax year (one involving income from Social Security, the other involving income from 401(k) plans, pensions, annuities, and some other sources).
• The maximum credit allowed for the 2019 tax year under the statewide property-tax relief program (Form RI-1040H).

To view the latest Advisory (screenshot below), click here.

Annual e-file shutdown and switchover

The Rhode Island Division of Taxation’s annual electronic filing shutdown and switchover will occur on November 16, 2019.

Individuals and businesses seeking to e-file their Rhode Island returns for tax year 2018 must do
so on or before Saturday, November 16, 2019. After that date, returns for tax year 2018 must be
filed on paper.

• Each year, the Division temporarily closes its system to e-filing in order to prepare the system for the upcoming filing season. The Internal Revenue Service, and many other states, follow the same practice. This year, the Rhode Island modernized e-file (MeF) shutdown and cutover will occur on Saturday, November 16, 2019. All transmissions must be submitted before 10:00 p.m. Eastern Time on that date.

Division holds seminar in Newport

More than 120 tax preparers attended the Rhode Island Division of Taxation's "Seminar for Tax Preparers" today at the Community College of Rhode Island's Newport County campus.

The three-hour seminar looked at what's new for the coming tax-filing season, what's new in Rhode Island tax law, and what's new from a tax administration standpoint. Division officials answered preparers' questions and demonstrated online tools.

The Division of Taxation's Leo Lebeuf met with preparers during the seminar.

Health coverage mandate; open enrollment begins

Rhode Island's health coverage mandate takes effect January 1, 2020. The mandate is a requirement that all Rhode Islanders (except those who are specifically exempt under the law) have "qualifying health coverage" beginning January 1, 2020.

Sources of "qualifying health coverage" include coverage through an employer; coverage purchased directly from a health insurance carrier; Medicare; Medicaid; or a health plan purchased through HealthSource RI, the state’s health exchange.

Failure to have coverage in 2020 may result in a Rhode Island personal income tax penalty during tax-filing season in early 2021.

HealthSource RI helps individuals, families, and small businesses shop for and enroll in affordable health coverage. It was created under the federal Affordable Care Act (sometimes referred to as Obamacare) enacted in 2010.

HealthSource RI can assist you in determining if you and your family qualify for low- or no-cost health coverage or federal financial assistance to help make your health coverage more affordable. The "Open Enrollment" period began today. During this period, you can enroll, re-enroll, or change a 2020 insurance plan through HealthSource RI.

• For more information, contact HealthSource RI online, by phone at 1-855-840-4774, in person at its Contact Center at 401 Wampanoag Trail, East Providence, R.I. 02915, or through Navigators at community events. (Note: Open enrollment ends December 31. Rhode Islanders must select and pay for a plan by December 23 in order to have coverage take effect January 1.)

Statistics of income

The Rhode Island Division of Taxation has posted on its website two Statistics of Income (SOI) reports. Both cover the personal income tax for the 2017 tax year. One focuses on residents, the other on nonresidents. (See screenshot below.)

The reports draw on figures contained in tax returns filed with the Division of Taxation. The reports do not disclose confidential taxpayer information. Rather, they provide aggregate data for a given tax type. To view these and other reports, click here.

Employer withholding tax -- changes coming

The Rhode Island Division of Taxation has posted an Advisory about changes involving employer withholding tax for the 2020 calendar year. The Advisory includes information about the following topics:

• Frequencies for submitting payments
• Filing quarterly returns
• Electronic filing/payment mandate
• Methods for remitting electronically
• Timely deposits for withheld tax

For more information, click here.

Fourth-quarter newsletter posted

The Rhode Island Division of Taxation has posted the fourth-quarter issue of its newsletter. Among the topics:

• New laws now in effect
• Seminar for tax preparers
• New chief
• "'Legal Corner" feature
• "Practitioners' Corner" feature

To view or download a copy, click here, or use the following link: https://go.usa.gov/xp34r.

Latest issue of newsletter

The Rhode Island Division of Taxation has posted the latest issue of its newsletter. Among the topics: 

• Remote seller law
• Tax-related legislation
• New chief appointed
• New statutes of limitation
• Help for local retailers from Streamlined

This issue also includes regular features, including “Practitioners’ Corner” and “Legal Corner”. To view a copy, please click here, 

Extended due date is October 15

The Division of Taxation reminds taxpayers that October 15, 2019, is the deadline for those filing on extension. For more information, click here.

Wavemaker applications now being accepted

Applications for another round of the Wavemaker Fellowship program will be accepted by the Rhode Island Commerce Corporation through November 1, 2019.

In general, the Wavemaker Fellowship program provides a financial incentive for college graduates who are pursuing a career or starting a business in Rhode Island in technology, engineering, design, or certain other key sectors. The incentive, in the form of a tax credit, is intended to help defray the cost of student loan payments. 

• For an at-a-glance summary of the program, click here. For details about how the program works, how to apply, the list of required documents to be submitted with the application, and FAQs, click here. (Note: the application must be done in one sitting, so an applicant should gather all necessary uploads ahead of time.)

Interest rates set

The Rhode Island Division of Taxation has posted the interest rates for 2020 on underpayments and overpayments. For more information, click here.

Statistics of income

The Rhode Island Division of Taxation has posted on its website two Statistics of Income (SOI) reports. Both cover the personal income tax for the 2016 tax year. One focuses on residents, the other on nonresidents. 

The reports draw on figures contained in tax returns filed with the Division of Taxation. The reports do not disclose confidential taxpayer information. Rather, they provide aggregate data for a given tax type. The website also includes corporate income tax statistical data for the 2016 tax year. To view these and other reports, click here.

Report on tax credits and incentives

The Division of Taxation has posted on its website the latest annual report on tax credits and incentives administered in conjunction with the Rhode Island Commerce Corporation.

The latest report identifies, by name, three businesses that received a combined total of approximately $1.15 million in certain state tax credits and incentives for the fiscal year that ended June 30, 2019. To view the report, click here.

Wavemaker program

Rhode Island Governor Gina M. Raimondo and the Rhode Island Commerce Corporation recently announced that the recipients of the fourth round of Wavemaker Fellowship awards have been selected.

Through a competitive review process, a total of 153 college graduates who work in the science, technology, engineering, mathematics, and design fields in Rhode Island were chosen to receive the award. The award is a tax credit intended to defray the cost of student loans for a minimum of two years. For more information, click here.

Tax changes take effect tomorrow

Several Rhode Island tax changes take effect tomorrow, October 1. For details, click here.

Administrative Decision involves sales tax

In a newly posted Administrative Decision, the issue is whether Rhode Island sales and use tax is owed on a business's sale of equipment. To view, click here.

Exemption for feminine hygiene products

Tampons and other feminine hygiene products will be exempt from Rhode Island's 7% sales and use tax starting October 1. To learn more, click here.

Sales tax exemption for urns

Urns will be exempt from Rhode Island's 7% sales and use tax starting October 1. To learn more, click here.

Streaming video, streaming music

Subscriptions to streaming video and streaming music become subject to Rhode Island's 7% sales and use tax starting a week from today, on October 1. The purchase of e-books also will be taxed. To learn more, click here.

Latest Administrative Decision

In the latest Administrative Decision, posted today, the issue is whether a taxpayer owes tax, interest, and penalty on Rhode Island source income from 2010. Details are contained in Administrative Decision 2019-05.

Estimated taxes due Monday

Don't forget that Monday, September 16, is the deadline for quarterly estimated taxes. For more information, click here and here.

Guidance for pass-through entities

The Rhode Island Division of Taxation today posted estimated-tax guidance for pass-through entities that elect to pay Rhode Island's new entity-level tax. For details, click here.

Estimated tax payments due September 16

The Rhode Island Division of Taxation reminds tax professionals, taxpayers, and others that quarterly estimated payments are due on or before September 16 this year. (Normally, the deadline is September 15.) For details, click here.

E-filing schedule this weekend

The Internal Revenue Service has announced that the modernized e-file (MeF) system will be temporarily unavailable for a time this coming weekend due to maintenance. As a result, federal and Rhode Island e-filing will be unavailable during the period.


The MeF system will be shut down from 7:00 a.m. Eastern time on Saturday, September 7, 2019, through 6:00 a.m. Eastern time on Sunday, September 8, 2019. 

The IRS will not be accepting electronically filed federal tax returns during the period. Also, the joint fed-state e-file program will be unavailable during the period. Therefore, Rhode Island returns transmitted via e-file during the period will not be transmitted to the state. Tax preparers and taxpayers should plan accordingly.

Security Summit warns of scam

The Internal Revenue Service, the Rhode Island Division of Taxation, and other Security Summit partners today warned taxpayers and tax professionals about a new IRS impersonation scam campaign.

The scam campaign is spreading nationally on email. It involves unsolicited emails from IRS impostors. The email subject line may vary, but recent examples use the phrase "Automatic Income Tax Reminder" or "Electronic Tax Return Reminder".

The emails have links that show an IRS.gov-like website with details pretending to be about the taxpayer's refund, electronic return, or tax account. The emails contain a "temporary password" or "one-time password" to "access" the files to submit the refund. But when taxpayers try to access these, it turns out to be a malicious file.

"The IRS does not send emails about your tax refund or sensitive financial information," said IRS Commissioner Chuck Rettig. "This latest scheme is yet another reminder that tax scams are a year-round business for thieves. We urge you to be on-guard at all times," he said. To learn more, click here.

E-filing

The Internal Revenue Service has announced that it will conduct its annual Labor Day outage. The modernized e-file (MeF) system will be shut down during the outage. As a result, federal and Rhode Island e-filing will be unavailable during the period.

• The temporary MeF shutdown will start at 9:00 p.m. on August 31, 2019
• The temporary MeF shutdown will end at 7:00 a.m. on September 3, 2019.

The IRS will not be accepting electronically filed federal tax returns during the period. Also, the joint fed-state e-file program will be unavailable during the period. Therefore, Rhode Island returns transmitted via e-file during the period will not be transmitted to the state. Tax preparers and taxpayers should plan accordingly.

The joint fed-state e-file program is a cooperative tax-filing effort between the IRS and most states, including Rhode Island. In general, it allows for federal and state returns to be e-filed simultaneously to the IRS. Once the returns are filed, the IRS keeps the federal portion; the state portion is passed along electronically to the applicable state.

Data theft recovery plan for tax pros

The Internal Revenue Service, the Rhode Island Division of Taxation, and other members of the Security Summit recommend that tax professionals consider creating a data theft recovery plan in advance. 

Having an action plan can save valuable time and protect your clients and yourself, according to the Security Summit. To learn more, click here.

Annual report on tax credits, incentives

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

• The latest report identifies 15 businesses that received a combined total of approximately $24.8  million in certain state tax credits and incentives for the fiscal year that ended June 30, 2019.
• Three of those recipients also received a combined total of approximately $19.6 million in other Rhode Island tax credits and incentives, the report shows.

A separate part of the report shows, in the aggregate, certain information related to projects that have requested certification under Rhode Island’s historic preservation tax credit program of 2013. To view the report, click here.

Declaratory Ruling posted

The Division of Taxation has posted its latest Declaratory Ruling.

Background

A company filed a request for a ruling on whether Rhode Island's "paint stewardship assessment" is part of the final price a customer is charged when buying architectural paint. (If it is, the assessment is subject to Rhode Island sales and use tax.)

Rhode Island has a program for the proper management of unused paint. The program includes a "paint stewardship assessment" -- an amount that's added to the purchase price of architectural paint to cover the cost of collecting, transporting, and processing post-consumer paint. (See Rhode Island General Laws § 23-24.12-2).

In general, the term "architectural paint" means paint that is used to coat buildings and homes. It means interior and exterior architectural coatings sold in containers of five gallons or less. The current paint stewardship assessment amounts in Rhode Island are based on container size. The maximum such assessment is $1.60.

Decision

The Division ruled that the assessment is part of the overall sale price upon which Rhode Island sales tax is due. Thus, the assessment is subject to Rhode Island sales and use tax. The ruling, which is limited to the facts stated, is available on the Division's website.

Recent developments

Security Summit

The Rhode Island Division of Taxation, the Internal Revenue Service, and other Security Summit partners urge tax professionals to learn the tell-tale signs that their office may have experienced a data theft that resulted in fraudulent tax returns being filed in their clients’ names. To learn more, click here.

Sales and use tax

Rhode Island is one of 24 states that are members of the Streamlined Sales and Use Tax Agreement. The agreement is intended to simplify and modernize sales and use tax administration in order to substantially reduce the burden of tax compliance.

As part of the agreement, each state files a document, called a "taxability matrix", which shows how that particular state taxes various categories of products and services. The Division of Taxation recently updated its matrix so that it reflects recent changes in Rhode Island state tax law and references to recently revised regulations. To view the latest matrix, as well as Rhode Island's latest certificate of compliance in Streamlined, click here.

Summary of Legislative Changes

The Rhode Island Division of Taxation has published a summary of key tax provisions contained in the recently enacted budget bill for the 2020 fiscal year. To view a copy, click here.

Recent developments

Security Summit issues warning

The Internal Revenue Service, the Rhode Island Division of Taxation, and other members of the Security Summit today urged tax professionals to beware of the continuing threat of phishing emails, which remain the most common tactic used by cybercriminals to steal sensitive data.

The Security Summit provided a list of simple steps which can help protect against stolen data. To learn more, click here.

E-file reminder

The Internal Revenue Service has posted a reminder that the modernized e-file (MeF) system will be shut down for a system upgrade from 12:01 a.m. Eastern time on Saturday, August 3, 2019, through 11:59 a.m. Eastern time on Monday, August 5, 2019. 

As a result, during that time period, federal and Rhode Island e-filing will be unavailable.

The IRS will not be accepting electronically filed federal tax returns during that time period. Also, the joint fed-state e-file program will be unavailable during that period. Therefore, Rhode Island returns transmitted via e-file during that time period will not be transmitted to the state. Tax preparers and taxpayers should plan accordingly.

• The joint fed-state e-file program is a cooperative tax-filing effort between the IRS and most states, including Rhode Island. In general, it allows for federal and state returns to be e-filed simultaneously to the IRS. Once the returns are filed, the IRS keeps the federal portion; the state portion is passed along electronically to the applicable state. 

New webpage for remote sellers

The Rhode Island Division of Taxation has updated its website to include a page for remote sellers, marketplace facilitators, and referrers.

Under legislation approved by the Rhode Island General Assembly and signed into law by Rhode Island Governor Gina M. Raimondo on March 29, 2019, remote sellers, marketplace facilitators, and referrers are required to register with the Division of Taxation and collect and remit Rhode Island sales and use tax, effective July 1, 2019, under certain circumstances.

The new webpage describes the circumstances under which the requirements must be met. The webpage also provides links to important documents and websites. (On a separate section of the page, toward the bottom, there is information about a 2017 law involving non-collecting retailers, retail sale facilitators, and referrers.) To view the new webpage, click here.

Screenshot of Division's new webpage for remote sellers

Preparers must have written plan

The Internal Revenue Service, the Rhode Island Division of Taxation, and other members of the Security Summit remind all professional tax preparers that they are required by federal law to create and implement a written information security plan to protect their clients’ data. To learn more, click here.

Six steps to help safeguard data

The Rhode Island Division of Taxation, the Internal Revenue Service, and other members of the Security Summit urge tax preparers and other tax professionals to use six security steps to help ensure that they are fully protecting their computers and email. The steps will also help safeguard sensitive taxpayer data. To learn more, click here.

Other tobacco products (OTP)

In an Administrative Decision posted today, the issue is whether the taxpayer owes "other tobacco products" (OTP) tax -- and what, if any, sanctions should apply. To learn more, click here.

Checklist for tax preparers

The Rhode Island Division of Taxation, the Internal Revenue Service, and other members of the Security Summit call on tax professionals to take time this summer to review their computer security practices.

The Security Summit has developed a checklist that can be used by tax professionals and others to help protect sensitive taxpayer data and guard against identity theft.  To learn more, click here.

E-filing

The Internal Revenue Service has announced that the modernized e-file (MeF) system will be shut down for a system upgrade for two upcoming periods. As a result, federal and Rhode Island e-filing will be unavailable during the two periods, which are as follows:

• From July 18, 2019, at midnight Eastern time, through July 22, 2019, at 12 noon Eastern time.
• From August 3, 2019, at midnight Eastern time, through August 5, 2019, at 12 noon Eastern time.

The IRS will not be accepting electronically filed federal tax returns during those periods. Also, the joint fed-state e-file program will be unavailable during those periods. Therefore, Rhode Island returns transmitted via e-file during those periods will not be transmitted to the state. Tax preparers and taxpayers should plan accordingly. 

The joint fed-state e-file program is a cooperative tax-filing effort between the IRS and most states, including Rhode Island. In general, it allows for federal and state returns to be e-filed simultaneously to the IRS. Once the returns are filed, the IRS keeps the federal portion; the state portion is passed along electronically to the applicable state.

State tax changes now in effect

The Rhode Island Division of Taxation today posted a reminder for tax professionals and others about tax changes that are now in effect.

Some of the changes are the result of recently enacted legislation. Other changes are the result of legislation enacted in recent years. Today’s Advisory includes a brief summary of some key provisions and their effective dates. To view or download a copy, click here.

Sales tax permits

The Rhode Island Division of Taxation has begun mailing out approximately 21,500 sales tax permits to retailers. Sales tax payment coupon booklets will go out next month. For more information, click here.

Warning issued about tax-related scams

The Internal Revenue Service today urged taxpayers to watch out for new versions of two tax-related scams. One involves Social Security numbers related to tax issues. The other threatens taxpayers with a tax bill from a fictional government agency. To learn more, click here.

The IRS's warning about the "tax bill" mailed from a fictional government agency is a familiar one: At least one taxpayer in Providence, Rhode Island, recently reported receiving such a letter and has contacted authorities about it. "Even though summer is here, individuals and businesses still need to be on their guard against scams," said Rhode Island Tax Administrator Neena Savage. "Criminals come up with many different ways to try, under false pretenses, to obtain your personal information, your money, or both. Be careful," she advised.

Earlier this year, she warned taxpayers about a scam from someone who calls on the phone, claiming to be from the Rhode Island Division of Taxation. “If you receive this sort of call, don’t provide any information. Write down the caller’s name and contact information, if available. Then hang up and contact the appropriate agency," she said at the time.

The IRS, the Rhode Island Division of Taxation, tax agencies from other states, and the tax community are part of the Security Summit. Partners in the Security Summit work together to combat identity theft to protect the nation’s taxpayers.

Reminder for remote sellers, others

The Rhode Island Division of Taxation reminds remote sellers, marketplace facilitators, and referrers that they must register with the Division and collect and remit Rhode Island sales and use tax effective Monday, July 1, 2019, if they meet or exceed certain thresholds involving sales. 

It is the result of a recently enacted Rhode Island law, which followed a landmark U.S. Supreme Court case known as Wayfair. One consequence of the law is that, effective Monday, July 1, 2019, some online retailers that had not been collecting and remitting Rhode Island sales and use tax on purchases made by individuals and businesses in Rhode Island will begin to do so. To learn more, click here.

Reminder: Gas tax increase Monday

Once every two years, the Rhode Island Division of Taxation is required by statute to determine whether inflation has been sufficient to increase the gasoline tax. This time around, the Division 
found sufficient inflation to result in an increase in the gasoline tax as of Monday, July 1, 2019. 

Therefore, based on statutory formula, the gasoline tax will be 34 cents per gallon effective Monday, July 1, 2019, compared with 33 cents per gallon today, an increase of one cent. To learn more, click here.

Estimated payments due Monday

The Rhode Island Division of Taxation reminds taxpayers and tax professionals that Monday, June 17, is the deadline for the second installment of estimated tax under the Rhode Island personal income tax. The normal deadline is June 15, but that falls on a weekend this year. Therefore, the deadline moves to the next business day: Monday, June 17.

Monday is also the deadline for the second installment of estimated tax for calendar-year payers of corporate tax, bank excise tax, political organization tax, composite income tax, and pass-through withholding. In addition, June 17 is the deadline for the second installment of estimated tax for payers of the bank deposits tax, insurance gross premiums tax (admitted carriers), surplus lines brokers/licensees, public service corporation tax, and estate and trust income tax. For more information, please see the Division’s website.

Inflation adjustment for gas tax

The Rhode Island Division of Taxation today posted a Notice about the biennial inflation adjustment for the gasoline tax.

The Division announced the inflation adjustment in December 2018. Today’s Notice is, in essence, an official reminder, given that the adjustment takes effect next month. To view the Notice, click here. Thank you.

Reminder for remote sellers and others

The Rhode Island Division of Taxation today issued a reminder that, under recently enacted legislation, remote sellers, marketplace facilitators, and referrers will be required to register with the Division and collect and remit Rhode Island sales and use tax, effective July 1, 2019. For more information, click here.

CCH service outage

Wolters Kluwer, which publishes CCH tax-preparation software, recently reported that it suffered a service outage, lasting from May 6, 2019, to May 9, 2019, caused by malware. Due to the outage, preparers were unable to work on returns (cloud-based software).

When preparers were able to use the software again, they filed some returns late. Among the returns and payments affected by the outage were those due the week of May 13, including some fiscal-year Rhode Island filings. Those whose returns and payments were filed late due to the outage, and who seek penalty relief, should write a brief letter of explanation to the following address:

Rhode Island Division of Taxation
Tax Assessment & Review
Attention: CCH Penalty Relief
One Capitol Hill
Providence, R.I. 02908

Annual e-file shutdown

The Internal Revenue Service has announced its annual modernized e-file (MeF) systems shutdown for Memorial Day weekend. The shutdown starts Saturday, May 25, 2019 at 9:00 p.m. Eastern time, and ends on Tuesday, May 28, 2019, at 7:00 a.m. Eastern time.

That means the IRS will not be accepting electronically filed federal tax returns during that period. It also means that the Rhode Island Division of Taxation will not be accepting e-filed Rhode Island returns during that period because the federal/state e-file program will be unavailable. 

The joint fed-state e-file program is a cooperative tax-filing effort between the IRS and most states, including Rhode Island. In general, it allows for federal and state returns to be e-filed simultaneously to the IRS. Once the returns are filed, the IRS keeps the federal portion; the state portion is passed along electronically to the applicable state.

Taxpayers warned anew about scam

Rhode Island Tax Administrator Neena Savage reminds taxpayers, businesses, and tax professionals to be on guard against a scam from someone who calls on the phone, claiming to be from the Rhode Island Division of Taxation. To learn more, click here.

DOR hails Division's investigative work

Rhode Island Director of Revenue Mark A. Furcolo praised the work of the Rhode Island Division of Taxation and others in shutting down a multi-million-dollar tax evasion scheme involving the sale of untaxed tobacco products in Massachusetts. To learn more, click here.

Recent developments

Report on alcoholic beverages

On May 1, 2019, the Division of Taxation posted its annual report about the sales tax on alcoholic beverages.

Entity filing requirements; LLCs

The Division of Taxation recently posted a brief overview of entity filing requirements, as well as a brief summary of Rhode Island tax obligations for limited liability companies, including single-member LLCs.

Wavemaker open for applications

Rhode Island Governor Gina M. Raimondo and the Rhode Island Commerce Corporation today announced the reopening of applications for the Wavemaker Fellowship program.

The Wavemaker Fellowship is available to graduates who have incurred student loan debt during the completion of an associate degree, bachelor's degree, or graduate degree, and are pursuing careers in science, technology, engineering, mathematics, or design-related fields -- including life, natural or environmental sciences; computer, information or software technology; advanced mathematics or finance; engineering; industrial design or other commercially related design field; or medical or medical device technology in the state.

Any resident or nonresident with higher education loan debt who is employed in Rhode Island in one of the fields mentioned above is encouraged to apply. The maximum annual credit is $6,000 for graduate degree holders, $4,000 for bachelor's degree holders, and $1,000 for holders of an associate degree.To read today's announcement, click here. For more details on the program, click here.

Ruling involving sales tax

The Rhode Island Division of Taxation's latest Declaratory Ruling looks at whether certain components used in renewable energy products are exempt from Rhode Island sales and use tax. To view Declaratory Ruling 2019-02, click here.

GILTI and FDII

The Rhode Island Division of Taxation reminds tax preparers and taxpayers that, from a state tax standpoint, Rhode Island is following federal treatment for purposes of Global Intangible Low-Taxed Income (GILTI) and Foreign-Derived Intangible Income (FDII).

Those with questions may contact the Division's Corporate Income Tax unit at (401) 574-8935. The line is typically staffed from 8:30 a.m. to 3:30 p.m. business days.

Deadline is tonight for filings, payments

The Rhode Island Division of Taxation reminds tax preparers and taxpayers that the deadline is tonight for personal income tax returns and payments. It is also the deadline for some business entities. Click here for more details, including tips for last-minute filers.

Rhode Island's Free File program

Rhode Island's Free File program lets eligible taxpayers prepare and file their federal and Rhode Island personal income tax returns online at no charge. Click here for more information.

Security Summit reports progress

The Internal Revenue Service, the Rhode Island Division of Taxation, and other partners in the Security Summit have announced new results from 2018 that show progress in the fight against tax-related identity theft.

But the Security Summit also said that its efforts will continue as criminals, working online, evolve and adjust tactics. Click here to learn more.

Filing deadline

The Rhode Island Division of Taxation reminds taxpayers and tax preparers that the deadline for personal income tax returns is April 15, 2019.

That is also the filing deadline for certain business entities and others. To learn more, click here.

Newsletter now available

The Rhode Island Division of Taxation today posted the latest issue of its newsletter. Among the topics:

• The new law involving remote sellers.
• Tips for last-minute tax filers.
• The 10-day rule involving software updates.
• TDI tax refunds.
• Rhode Island’s Free File program.

Division of Taxation aided investigation

Massachusetts Attorney General Maura Healey said that the Rhode Island Department of Revenue's Division of Taxation (Special Investigation Unit) and the Rhode Island State Police were among those providing “critical assistance” in an investigation that led to the arrest of a Rhode Island man in a case involving tobacco products.

The man recently pleaded guilty and was sentenced to jail in connection with operating a multi-million-dollar tax evasion scheme through the sale of untaxed tobacco products in Massachusetts, Healey said. To learn more, click here.

Reminder about March 15 deadline

The Rhode Island Division of Taxation reminds tax professionals, business entities, and others that the deadline for filing and payments for a number of different entities is tomorrow, March 15, 2019.

For more details, please see the Division’s Advisory, posted today.

Ruling involving commercial fishermen

The Rhode Island Division of Taxation has posted its first Declaratory Ruling of 2019.

Background

A taxpayer had filed with the Division a request about how the federal Capital Construction Fund ("CCF") deduction would apply for Rhode Island personal income tax purposes.

The CCF is a special investment program administered by the National Marine Fisheries Services and the Internal Revenue Service. The program allows commercial fishermen to defer paying federal income tax on certain income they invest in a CCF account and later use to acquire, build, or rebuild fishing vessels.

Decision

In Ruling Request No. 2019-01, the Division said it will disallow CCF deductions on Rhode Island returns for tax year 2019 forward, but will continue to honor qualifying CCF deductions on Rhode Island returns taken prior to tax year 2019.

The ruling, which is limited to the facts stated, is available on the Division website.

Director of Revenue

The Rhode Island Senate on Wednesday, March 6, 2019, voted unanimously to consent to the reappointment of Mark A. Furcolo as Director of the Rhode Island Department of Revenue. The vote came after the Senate Finance Committee had recommended that the full Senate give its Advice and Consent to the nomination.

It was on October 27, 2017, that Rhode Island Governor Gina M. Raimondo announced Furcolo's original appointment to the post. Senate confirmation for that original appointment came in January 2018. Governor Raimondo proposed Furcolo for reappointment and the Senate this week voted its unanimous consent. 

William J. Conley, Jr., Chairman of the Senate Finance Committee, who rose in support of Furcolo’s reappointment on March 6, cited a number of DOR accomplishments under Furcolo, including:

• The implementation of sports betting by the Division of Lottery;
• The continuing rollout of REAL ID-compliant driver's licenses and identification cards by the Division of Motor Vehicles;
• The ramp-up of a customer call center at the Division of Taxation; and
• The establishment of a Central Collections Unit within the DOR.

In addition, “Mr. Furcolo has an impressive resume of private-sector business accomplishments and experience which serve as a solid foundation for the tasks he will confront in his service to the State” as DOR director, Conley said from the Senate Floor on March 6.

The Department of Revenue oversees the Division of Taxation, the Division of Lottery, the Division of Motor Vehicles, the Division of Municipal Finance, the Office of Revenue Analysis, and the Central Collections Unit.

Mark A. Furcolo, Director of Revenue

(Screenshot from Capitol TV)

Filing season reminders

The Rhode Island Division of Taxation today posted some filing-season reminders ahead of next month’s filing deadline for personal income tax returns.

Among the topics are the new Schedule E for personal income-tax returns, the “Where’s my tax refund?” online tool, and the tax treatment of Wavemaker program awards. To view the reminders, click here.

Quarterly newsletter now available

What’s new for the 2019 tax year

The Rhode Island Division of Taxation today posted the latest issue of Rhode Island Tax News, the quarterly newsletter for tax professionals. Among the topics:

• What’s new for the 2019 tax year
• Corporate estimated payments for 2019
• TDI tax
• Unemployment insurance tax
• Estate tax
• Interest rates
• ‘Legal Corner’
• ‘Practitioners’ Corner’
• Reminders for LLCs

 To view a copy, click here.

Division’s restructuring

The Division has posted the fourth-quarter issue of its newsletter. Topics include the following:

• The Division’s restructuring
• Promotions to key leadership posts
• Promotions to key supervisory roles
• Tax legislation enacted in 2018
• Schedule CGM
• ‘Legal Corner’
• ‘Practitioners’ Corner’

 To view a copy, click here. 

Newsletter for filing season

The Rhode Island Division of Taxation today posted a special edition of its newsletter focusing on the tax-filing season (see snapshot below). Coverage includes the following topics:

• The new Schedule E.
• The tax break on income from Social Security benefits.
• The tax break on income from 401(k) plans, pensions, annuities, and other sources.
• An increase in the property-tax relief credit (Form RI-1040H).
• The filing deadlines for individuals and entities.
• Notices from some out-of-state websites.

Tax break involving pensions, 401(k) plans

The Rhode Island Division of Taxation has posted an updated version of its guide to the personal income tax modification involving income from 401(k) plans, pensions, annuities, and other such sources.

The 27-page guide is intended as an aid to taxpayers and tax preparers during the 2019 tax-filing season, covering tax year 2018 returns. It can also be used for future tax-filing seasons. For more information, click here.

Quick access to Division regulations

Looking for the latest tax regulations from the Rhode Island Division of Taxation?

Simply click on the "Regulations" link on the Division of Taxation's home page (see highlighted portion of screenshot below). You will then be taken directly to the section of the Rhode Island Department of State website that hosts Division of Taxation regulations.

The Division of Taxation last year substantially completed a months-long effort to streamline and re-codify its regulations. The effort included modifying the format of many regulations in accordance with the new Rhode Island Code of Regulations (a uniform state code).

All Division of Taxation regulations are available for viewing on the user-friendly Department of State (Secretary of State) website. The "Regulations" link on the Division of Taxation website provides quick, one-click access to those regulations. The home page of the Division of Taxation website is at www.tax.ri.gov.

Beware of unscrupulous preparers

As tax filing season begins, the U.S. Department of Justice has warned taxpayers to beware of unscrupulous tax return preparers.

While most tax return preparers are professional and honest, some prepare returns with false information in order to improperly boost a taxpayer’s refund or reduce their liability or to increase business and preparation fees. But, under the law, taxpayers are responsible for what is reported on their returns. When the Internal Revenue Service uncovers the falsehoods, the taxpayer can face penalties and interest and, if circumstances warrant, criminal prosecution, the Justice Department said in a statement. Click here to read more.

Tax Administrator highlights Free File

Rhode Island Tax Administrator Neena Savage visited the Johnston Senior Center today to talk about the benefits of the Rhode Island Free File program, which lets eligible taxpayers prepare and file their federal and Rhode Island personal income tax returns online at no charge.

Other key speakers at the event included U.S. Rep. Jim Langevin; Johnston Mayor Joseph Polisena​; Rhode Island General Treasurer Seth Magaziner; David Macklin, representing the Computer & Communications Industry Association; Bernie McKay of the Intuit Financial Freedom Foundation; Rhode Island Lieutenant Governor Dan McKee; and Ray Gorman, Rhode Island state coordinator for the AARP Foundation Tax-Aide Program.

For details about the Rhode Island Free File program, and to see if you're eligible for the benefits, see the "Free File" section of the Rhode Island Division of Taxation's website.

Tax Administrator Neena Savage at Johnston Senior Center today.