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Rhode Island State Tax Updates

For the latest news and updates on Rhode Island state and local tax

July 7, 2023

Rhode Island 2024 Budget Bill Enacts Multiple Statewide Tax Adjustments

Authored by: Brandon Spinella and Bonnie Susmano, JD, MBA

On June 16, 2023, Governor McKee signed the 2024 Budget Bill, which enacts multiple changes to the state’s taxes and tax incentives. Examples of the changes enacted in the budget bill include:

  • Creation of a new low-income housing tax credit
  • Increasing the state’s earned income tax credit from 15% to 16% of the Federal earned income tax credit
  • Creating a $50,000 tangible personal property tax exemption

For additional detail on the tax updates enacted by the Rhode Island 2024 Budget Bill, please refer to L. 2023, H5200 (c. 79).

If you have questions about how State Budget Bills affect your business, please contact a member of the Withum SALT Team.

March 25, 2022

Rhode Island 2020 PPP Loan Forgiveness Tax Payment Due

The Rhode Island Department of Taxation is reminding taxpayers who had PPP loan forgiveness in 2020 that the deadline for filing and paying taxes in relation to their PPP loan forgiveness in 2020 is March 31, 2022. Interest and penalty on the taxable portion of the forgiven PPP loan for 2020 is waived so long as the tax is paid in full on or before March 31, 2022. If payment of the tax due is not made on or before March 31, 2022, an assessment of interest and penalty will occur.

October 28, 2021

Rhode Island Issues Further PPP Loan Forgiveness Guidance

A new Rhode Island law addressed the issue of PPP loan forgiveness as it relates to the Rhode Island income tax on businesses, the bank excise tax, and the income tax on individuals. For any taxable year beginning on or after January 1, 2020, the amount of any PPP loan forgiven for federal income tax purposes to the extent that the amount of the loan forgiven exceeds $250,000 must be included in income for Rhode Island tax purposes. The new law requires the Division to waive interest and penalty on the taxable portion of each PPP loan that is forgiven during the 2020 tax year, provided that the tax on that portion is paid in full on or before March 31, 2022. The Division plans to provide further guidance to practitioners, taxpayers, and others about how to go about complying with the new law and its provisions. In regard to the PPP deductible expenses, to the extent such deductions are allowed for federal tax purposes, they are allowed for Rhode Island tax purposes.

July 16, 2021

Rhode Island Updates Federal Treatment of PPP Loan Forgiveness

Rhode Island enacted legislation on July 6, 2021 which provides that any forgiven loan under the Paycheck Protection Program (PPP), to the extent it exceeds $250,000, will be taxable for tax years beginning on or after January 1, 2020. Interest and penalties may be waived for the taxable portion if the tax is paid in full by March 31, 2022. The tax administrator has indicated it will release further guidance on this matter.

For additional information see L. 2021, H6122.

June 18, 2021

Rhode Island Issues Withholding Guidance after Massachusetts Lifts State of Emergency

The Rhode Island Division of Taxation has posted withholding tax guidance after Massachusetts lifted its state of emergency.The Commonwealth of Massachusetts has special rules for wages or other compensation paid to employees who are working remotely due to the coronavirus (COVID-19) pandemic. The Massachusetts special income sourcing rules for telecommuting employees are intended to minimize disruption for employers and employees during the Massachusetts COVID-19 state of emergency.These rules are similar to those of Rhode Island and have allowed for the status quo for withholding purposes despite remote working arrangements during the pandemic.Those Massachusetts rules are effective for the period beginning March 10, 2020 and ending 90 days after the Massachusetts governor lifts the state of emergency. Massachusetts recently issued an executive order rescinding that state’s declaration of a state of emergency effective at 12:01AM on June 15, 2021. The special rules will therefore remain in effect until mid-September 2021.The Rhode Island Division of Taxation last year adopted an emergency regulation that provides withholding tax guidance for employers that have employees who are temporarily working remotely due to the pandemic. That emergency regulation remains in effect. Thus, there is no change for employers or employees as a result of Massachusetts ending its state of emergency. For more information, please see Rhode Island Advisory 2021-24.

May 21, 2021

Rhode Island Amends Signature Requirements in Light of Coronavirus

As a result of the COVID-19 pandemic, the Rhode Island Division of Taxation amended its standard practice of requiring the submission of forms with their original, handwritten signatures. Originally the State had announced it would accept electronic signatures for two forms, both of which involve the sale of Rhode Island real estate by nonresident individuals or entities. On March 17, 2021, the Division expanded the program by accepting electronic signatures for five more forms, all of which are business-related. They include:Form T-71, for insurance companies; Form T-71A, for surplus lines insurance brokers and licensees; Form T-72, for utilities (public service corporation gross earnings tax returns); Form T-74, for bank excise tax returns; and Form T-86, for the bank deposits tax. The Division is allowing electronic signatures for these forms under the authority of the state’s Uniform Electronic Transactions Act.

March 23, 2021

Rhode Island Update on Extension of Filing Deadline

The Rhode Island Division of Taxation has announced that it is following the Internal Revenue Service (IRS) and extending until May 17, 2021, the deadline for individuals to file their Rhode Island personal income tax returns and make related payments for the 2020 tax year. The relief is automatic; taxpayers do not need to file any special forms or contact the Division in any way in order to qualify. (Rhode Island Advisory No. 2021-10, 03/19/2021.)

April 13, 2020

Relief for Taxpayers

The Rhode Island Governor has provided relief to taxpayers by postponing deadlines three additional months to file returns and pay balances due. No penalties and no interest will apply to those who file on or before July 15, 2020. Although the deadline for filing certain tax returns and making certain tax payments has been automatically postponed by three months, the Rhode Island Division of Taxation urges tax preparers and taxpayers to file their returns before the new deadline where possible.

Relief for Individuals, Trust, and Estates

Resident and nonresident Rhode Island personal income tax returns and any associated payments for the 2019 tax year are now due on July 15, 2020. The three-month postponement is automatic. Tax preparers and taxpayers need not take any extra steps to qualify for the relief and need not contact the Division.

Relief for Businesses

A number of business entities also will automatically qualify for the relief, as these business entities will have an extra three months to file their returns and pay any balance due, regardless of the amount due, free of late charges. The relief is automatic. The relief applies to C-corporations; 1st quarter business estimates, SMLLCs, pass-through entities and related estimated payments. Additional information can be found on the Division’s website. [Source: https://www.tax.ri.gov/Advisory/ADV_2020_11.pdf.]

April 1, 2020

Property Tax Payment

The property tax payment deadline has been extended to March 31, 2020. Property tax returns for railroad, railroad terminal, private car, freight line and equipment company property has been extended to from April 1, 2020 to April 15.

October 2019

Pass-Through Entities Electing to Pay the New Entity-Level Tax

The Rhode Island Division of Taxation issued an advisory to provide guidance for pass-through entities electing to pay the new entity-level tax for the 2019 tax year. If an electing pass-through entity has resident and nonresident owners, the entity is essentially paying the entity-level tax on behalf of its resident and nonresident owners. Partnerships, S corporations, or other pass-through entities that elect to pay the entity level tax may elect to make a September estimated payment by using Form BUS-EST and checking the “Pass-Through Entity Election” box.

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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.