Rhode Island House Bill H7171

Rhode Island 2022 Regular Session

• Introduced: 1/26/22
• Refer: 1/26/22

Caption

Business Corporation Tax

Impact

If enacted, this bill would modify the Business Corporation Tax section within the Rhode Island General Laws. It allows pass-through entities, including partnerships and S Corporations, to elect state tax payment of 5.99% for individuals and 7% for C corporations, potentially leading to improved tax management for these businesses. This shift may encourage more businesses to form as pass-through entities, as it simplifies their tax obligations while also emphasizing the state’s aim to be more business-friendly.

Summary

House Bill 7171 focuses on amending the existing taxation structure concerning business corporations in Rhode Island, particularly addressing the treatment of pass-through entities. The bill intends to allow such entities the option to elect to pay state income tax at the entity level. This change could provide greater clarity and simplicity in tax reporting for business owners and tax professionals alike, as it aims to streamline compliance with Rhode Island tax laws and regulations.

Contention

Notable points of contention surrounding H7171 may include concerns from certain legislative members regarding the implications for revenue generation if more businesses opt for pass-through status. Some lawmakers might argue that further easing taxation on businesses could limit state funding opportunities for public services. Additionally, discussions may arise about the potential discounts to large entities versus support for small businesses during this transition in taxation policy, highlighting the necessity of ensuring equitable tax structures across different business sizes.