United States

Rhode Island enacts tax amnesty program

Program to conclude by Feb. 15, 2018

INSIGHT ARTICLE  | 

On Aug. 3, 2017, Rhode Island Gov. Gina Raimondo signed House Bill 5175, the state’s fiscal year 2018 budget bill. Among a number of provisions and changes to the state’s tax law was a mandate that the Rhode Island Division of Taxation (the Division) establish a tax amnesty program conducted over a 75-day period ending on Feb. 15, 2018. Thus, the amnesty will begin in December 2017. The program is generally open to eligible taxpayers owing any state tax collected by the Division, including state corporate and personal income tax as well as sales and use taxes.

Compliance with the program requires payment by the taxpayer of all taxes and interest due from the taxpayer to the state for any taxable period ending on or prior to Dec. 31, 2016. The amnesty program provides that interest on any eligible taxes paid for periods covered under the program must be computed at the rate imposed under the state’s general interest calculation, and then further reduced by 25 percent. Therefore, for example, the interest rate of 18 percent in effect for calendar year 2016 would be reduced by 4.5 percentage points, to 13.5 percent. Additionally, the tax administrator shall not seek to collect any penalties which may be applicable and shall not seek the civil or criminal prosecution of any taxpayer for the taxable period for which amnesty has been granted.

As is the case with many state amnesties, taxpayers who are under any criminal investigation or are a party to any civil or criminal proceeding, pending in any court of the United States or the state of Rhode Island, for fraud in relation to any state tax imposed by the law of the state and collected by the tax administrator are ineligible for the program. Rules and regulations for the program will be promulgated closer to the start of the amnesty period.

Takeaways

Rhode Island is the fifth state to enact tax amnesty legislation this year. Virginia enacted a state tax amnesty to occur over a 60-day period within fiscal year 2018. Ohio enacted a tax amnesty as part of their budget bill scheduled to begin on Jan. 1, 2018 and run through Feb. 15, 2018. Oklahoma enacted a tax amnesty scheduled to begin on Sept. 1, 2017, and run through Nov. 30, 2017. Additionally, Texas enacted legislation authorizing an amnesty program, and in 2015, South Carolina authorized the state department of revenue to establish an amnesty. However, neither state has developed a formal program as of the date of this article. Taxpayers considering applying for amnesty or who would like to discuss the benefits and risks of the programs should contact their state tax advisor. 

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