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.