Rhode Island Offers Tax Amnesty: An Article Authored by Paul McVay from KLR - Accounting Firm Boston, Massachusetts, Providence, Rhode Island

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Rhode Island Offers Tax Amnesty

posted Jul 3, 2012 by Paul McVay

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The “Rhode Island State Tax Amnesty Program” is one of several tax law changes in the fiscal year (F/Y) 2013 Budget Bill enacted June 15, 2012. 

Tax amnesty is available to all taxpayers (individual and businesses) who are delinquent on any state taxes including personal income, corporate income, unemployment insurance or sales and use for any taxable period ending on or prior to December 31, 2011. Previously billed tax liabilities will also be eligible under the program.

The amnesty will be offered from September 2, 2012 through November 15, 2012. To apply, a tax amnesty application must be filed with the Rhode Island Division of Taxation. If accepted, all related penalties and a reduction of twenty-five percent (25%) of the applicable interest rate will be waived for any taxpayer who pays the tax and interest due with the filing of applicable tax return(s).  The applicable interest rate on late tax payments is eighteen percent (18%).  A taxpayer who can substantiate a financial hardship may enter into an installment agreement upon the terms and conditions set by the tax administrator. Amnesty applications are currently being developed and will be posted on the Rhode Island Division of Taxation website http://www.tax.ri.gov sometime in August.

Additional Tax Law Changes:

  • The sales tax law on package tour and scenic & sightseeing transportation services is repealed (effective July 1, 2012).
  • The 7% sales tax will apply to clothing and footwear with a sales price of more than $250, but the tax will be calculated only to the portion of the sales price of an individual item of clothing or footwear that exceeds $250 (effective October 1, 2012).
  • The 7% sales tax will apply to the following services – taxicab, limousine, charter bus, all other transit & ground passenger transportation, and pet care excluding veterinary and test laboratories. A vendor of such services performed in Rhode Island shall be considered a retailer and required to register with the Tax Division, obtain a sales tax, and collect and remit sales tax (effective October 1, 2012).
  • The cigarette excise tax increases from $3.46 to $3.50 per pack of twenty (20) cigarettes.  In addition, a floor tax of four (4) cents per pack will apply to each cigarette distributor and retailer holding unsold cigarettes or cigarette tax stamps as of 12:01 a.m. on July 1, 2012. Those subject to the floor tax on must file a floor tax return with the Rhode Island Division of Taxation by July 10, 2012.
  • Each licensee authorized to sell alcoholic beverages at wholesale or retail in Rhode Island must now file an annual report with the Tax Division on or before February 1.
  • A number of changes are made to the film tax credit, also known as the Motion Picture Productions Tax Credits. Also, a new law expands the film credit to include musical and theatrical productions. Credits allowed to a subchapter S corporation, partnership or a limited liability company that is taxed as a partnership can be passed through to shareholders, partners, members or owners. The credits are also transferable (effective July 1, 2012).

If you have any questions regarding these law changes, please contact Paul McVay or any member of our State and Local Tax (SALT) Services Group.