Summary of legislative changes

The Rhode Island Division of Taxation today posted a “Summary of Legislative Changes.” The document summarizes key tax provisions contained in the fiscal 2018 budget bill enacted last week. To view a copy, click here.

Security Summit warns about ransomware

The Security Summit -- made up of the Internal Revenue Service, state tax agencies, and the tax industry -- today warned tax professionals that ransomware attacks are on the rise worldwide as criminals in the U.S. and abroad infiltrate computer systems and hold sensitive data hostage. For more information, click here.

Annual disclosure forms

Entities that receive specific tax credits and incentives must, by law, annually disclose certain
information to the Rhode Island Division of Taxation.

The Division recently posted a Notice which explains entity reporting obligations. Some information is due on or before August 15, 2017. Other information is due on or before September 1, 2017. To view the Notice, click here.

Regulatory hearing

The Rhode Island Division of Taxation plans to hold a hearing on August 30 on a number of proposed regulatory changes. The hearing will begin at 9:30 a.m. at the Department of Administration building at One Capitol Hill in Providence, Rhode Island, diagonally across from the Smith Street entrance to the State House. The proposed changes are available on the Rhode Island Secretary of State website: http://www.sos.ri.gov/ProposedRules/.

Proposed regulatory actions
Regulation topic	Old #	Proposed action	Reason
Administrative hearing procedures	AHP 97-01	Amend	New format for regulations, updating
Administrative rules of practice	AF 90-01	Amend	New format, new name
Apportionment of franchise tax	FT 09-01	Repeal	Franchise tax law has been repealed
Bank deposits tax	BDT 95-01	Amend	New format, updating
Deadlines for filing sales tax	SU 87-32	Repeal	Merging into new regulation
Filing deadlines	N/A	Adopt	Consolidating two old regulations into one
Offers in compromise	OC 98-01	Amend	New format, updating
Personal income tax filing deadlines	PIT 98-7	Repeal	Merging into new regulation
Declaratory rulings	DR 03-01	Amend	New format, minor revisions, updating

Two new Administrative Decisions

The Rhode Island Division of Taxation has posted two new Administrative Decisions:

• Decision 2017-08 involves whether a taxpayer owes tax, interest, and penalty for tax year 2013.
• Decision 2017-09 looks at a disputed expense under the historic preservation tax credit program.

Fiduciary returns on Form RI-1041

Fiduciary returns on Form RI-1041

The Rhode Island Division of Taxation has resolved an issue involving certain fiduciary income tax returns filed on Form RI-1041 for the 2016 tax year.

For certain such returns, which showed a balance due and which were accompanied by a payment, the payments were not properly credited to the account. As a result, the Division mailed a notice to the filers, asserting that the filers owed tax, interest, and penalty.

Proactive step

When the Division of Taxation’s Front Office learned of this matter several days ago, the Division immediately responded by creating and implementing a change to its computer system. As a result:

• the affected accounts are being automatically credited with the payments that the taxpayers had previously made, covering the 2016 tax year;
• the interest, penalty, and balance due, as shown on the notices that the filers received in recent weeks, will automatically be deleted from the taxpayer’s record; and
• filers who made payments in response to the notice will receive a refund.

 In perspective

The Division of Taxation processes more than 650,000 income tax returns each year. The Division estimates that approximately 1,600 returns were affected by the matter at issue, mainly fiduciary income tax returns filed on Form RI-1041 on behalf of certain trusts and estates – in other words, only a small fraction of the total. Nevertheless, each taxpayer is important, so it is imperative that the Division provide guidance for any fiduciary or tax professional involved in this matter.

Filers of the affected returns will be able to disregard the notice they had received and need take no further action. However, if a filer receives a second notice, the filer should contact the Division (because the second notice could be a sign of an underlying issue with the return itself). 

Anyone with questions should contact the Division by email. Put “Form 1041” in the message header and send the email to:Tax.Assist@tax.ri.gov. Or call the Division at (401) 574-8829 and choose option #3. The Division will also mail a letter to each affected filer, providing a brief explanation and contact information.

Sales tax permits, coupon booklets

The Rhode Island Division of Taxation has begun mailing sales tax coupon booklets and sales tax permits.

Paper filers

Late last month, the Division began mailing sales tax coupon booklets, with new sales permits enclosed, to about 2,390 retailers who remit sales tax monthly.

At about the same time, the Division began mailing sales tax coupon booklets, with new sales permits enclosed, to about 2,890 retailers who remit sales tax quarterly, and also began mailing the following:

• 529 booklets with coupons for remitting meals-and-beverage tax monthly;
• 96 booklets with coupons for remitting meals-and-beverage tax quarterly;
• 115 booklets with coupons for remitting tax involving tires, lubricating oils, and other hard-to-dispose materials;
• 30 booklets with coupons for remitting hotel tax;
• 15 booklets with coupons for remitting prepaid wireless tax monthly; and
• 5 booklets with coupons for remitting prepaid wireless tax quarterly.

Electronic filers

Electronic filers of sales and related taxes do not receive paper coupon booklets. As a result, their sales permits must be sent separately. The Division began mailing several thousand of these permits on Friday, July 7; more will be mailed out at a later date. Most of those who hold sales permits file electronically.

Keep in mind that the Division mails sales permits to those who filed their renewal applications, paid the $10 renewal fee, and are not delinquent on their state taxes. If you have not renewed your sales permit for the year which began July 1, 2017, you may do so online or on paper. For online renewals, click here. For the paper renewal form, click here.

Cigarette dealers

Cigarette dealers that do not file electronically will receive a booklet for remitting sales tax monthly or quarterly. They will also receive a cigarette permit (assuming they renewed). The Division began mailing the coupons and permits last week.

Note: If you have not received your new sales permit, covering the year which began July 1, 2017, you may continue using the old one until the new one arrives.

New account IDs

The Division of Taxation has assigned individualized account identification numbers to retailers and other holders of sales permits. For more information about the new account ID numbers, and how they apply, click here.