2023 -- H 5839
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LC002072
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S TATE OF RHODE IS LAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2023
____________
A N A C T
RELATING TO CORPORAT IONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE
ISLAND BUSINESS CORPORATION ACT
Introduced By: Representatives Edwards, Kazarian, Handy, Ackerman, Diaz, and
Kennedy
Date Introduced: March 01, 2023
Referred To: House Corporations
(Dept. of Revenue)
It is enacted by the General Assembly as follows:
SECTION 1. Sections 7-1.2-1310 and 7-1.2-1414 of the General Laws in Chapter 7-1.2 1
entitled "Rhode Island Business Corporation Act" are hereby amended to read as follows: 2
7-1.2-1310. Revocation of articles of incorporation. 3
(a) The articles of incorporation of a corporation may be revoked by the secretary of state 4
upon the conditions prescribed in this section when it is established that: 5
(1) The corporation procured its articles of incorporation through fraud; or 6
(2) The corporation has continued to exceed or abuse the authority conferred upon it by 7
law; or 8
(3) The corporation has failed to file its annual report within the time required by this 9
chapter, or with respect to any corporation in good corporate standing on the records of the secretary 10
of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when 11
they have become due and payable, or the secretary of state has received notice from the division 12
of taxation, in accordance with § 44-11-26.1, that the corporation has failed to pay corporate any 13
fees or taxes due to this state; or 14
(4) The corporation has failed for thirty (30) days to appoint and maintain a registered agent 15
in this state as required by this chapter; or 16
(5) The corporation has failed, after change of its registered office or registered agent, to 17
file in the office of the secretary of state a statement of the change as required by this chapter; or 18
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(6) The corporation has failed to file in the office of the secretary of state any amendment 1
to its articles of incorporation or any articles of merger within the time prescribed by this chapter; 2
or 3
(7) A misrepresentation has been made of any material matter in any application, report, 4
affidavit, or other document submitted by the corporation pursuant to this chapter. 5
(b) No articles of incorporation of a corporation may be revoked by the secretary of state 6
unless: 7
(1) The secretary of state gives the corporation notice thereof not less than sixty (60) days 8
prior to such revocation by regular mail addressed to the registered office of the corporation in this 9
state on file with the secretary of state’s office, which notice shall specify the basis for the 10
revocation; provided, however, that if a prior mailing addressed to the registered office of the 11
corporation in this state currently on file with the secretary of state’s office has been returned as 12
undeliverable by the United States Postal Service for any reason, or if the revocation notice is 13
returned as undeliverable by the United States Postal Service for any reason, the secretary of state 14
gives notice as follows: 15
(i) To the corporation at its principal office of record as shown in its most recent annual 16
report, and no further notice is required; or 17
(ii) In the case of a domestic corporation that has not yet filed an annual report, then to any 18
one of the incorporators listed on the articles of incorporation, and no further notice is required; 19
and 20
(2) The corporation fails prior to revocation to file the annual report or pay the fees, or file 21
the required statement of change of registered agent or registered office, or file the articles of 22
amendment or articles of merger, or correct the misrepresentation. 23
7-1.2-1414. Revocation of certificate of authority. 24
(a) The certificate of authority of a foreign corporation to transact business in this state may 25
be revoked by the secretary of state under the conditions prescribed in this section when: 26
(1) The corporation fails to file its annual report within the time required by this chapter, 27
or with respect to any corporation in good corporate standing on the records of the secretary of state 28
on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have 29
become due and payable, or the secretary of state has received notice from the division of taxation, 30
in accordance with § 44-11-26.1, that the corporation has failed to pay corporate any fees or taxes 31
due to this state; or 32
(2) The corporation fails to appoint and maintain a registered agent in this state as required 33
by this chapter; or 34
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(3) The corporation fails, after changing its registered office or registered agent, to file in 1
the office of the secretary of state a statement of the change as required by this chapter; or 2
(4) The corporation fails to file in the office of the secretary of state any amendment to its 3
articles of incorporation or any articles of merger within the time prescribed by this chapter; or 4
(5) A misrepresentation has been made of any material matter in any application, report, 5
affidavit, or other document submitted by the corporation pursuant to this chapter. 6
(b) No certificate of authority of a foreign corporation may be revoked by the secretary of 7
state unless the secretary of state has given the corporation notice thereof not less than sixty (60) 8
days prior to such revocation, by regular mail addressed to the registered agent of the corporation 9
in this state on file with the secretary of state’s office, which notice shall specify the basis for the 10
revocation; provided, however, that if a prior mailing addressed to the registered office of the 11
corporation in this state currently on file with the secretary of state’s office has been returned as 12
undeliverable by the United States Postal Service for any reason, or if the revocation notice is 13
returned as undeliverable by the United States Postal Service for any reason, the secretary of state 14
shall give notice as follows: 15
(1) To the corporation at its principal office of record as shown in its most recent annual 16
report, and no further notice is required; or 17
(2) In the case of a foreign corporation that has not yet filed an annual report, then to the 18
corporation at its principal office shown in its application for certificate of authority, and no further 19
notice is required. 20
SECTION 2. Section 7-16-67.1 of the General Laws in Chapter 7-16 entitled "The Rhode 21
Island Limited-Liability Company Act" is hereby amended to read as follows: 22
7-16-67.1. Revocation of articles or authority to transact business for nonpayment of 23
fee. 24
(a) The tax administrator may, after July 15 of each year, make up compile a list of all 25
limited-liability companies that have failed to pay the fee defined in § 7-16-67 any state fees and/or 26
taxes for one year after the fee state fees and/or taxes became due and payable, and the failure is 27
not the subject of a pending appeal. The tax administrator shall certify to the correctness of the list. 28
Upon receipt of the certified list, the secretary of state may initiate revocation proceedings as 29
defined in § 7-16-41. 30
(b) With respect to any information provided by the division of taxation to the secretary of 31
state state's office pursuant to this chapter, the secretary of state, together with the employees or 32
agents thereof, shall be subject to all state and federal tax confidentiality laws applying to the 33
division of taxation and the officers, agents, and employees thereof, and which restrict the 34
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acquisition, use, storage, dissemination, or publication of confidential taxpayer data. 1
(c) Notwithstanding the foregoing, the notice of revocation may state as the basis for 2
revocation that the taxpayer has failed to pay state fees and/or taxes to the division of taxation. 3
However, the secretary of state's office shall otherwise protect all state and federal tax information 4
in its custody as required by subsection (b) of this section and refrain from disclosing any other 5
specific tax information. 6
SECTION 3. Section 42-64.3-6 of the General Laws in Chapter 42-64.3 entitled 7
"Distressed Areas Economic Revitalization Act" is hereby amended to read as follows: 8
42-64.3-6. Business tax credits. 9
A qualified business in an enterprise zone is allowed a credit against the tax imposed 10
pursuant to chapters 11, 13 (except the taxation of tangible personal property under § 44-13-13), 11
14, and 17, and 30 of title 44: 12
(1) A credit equal to fifty percent (50%) of the total amount of wages paid to those 13
enterprise job employees comprising the five percent (5%) new jobs referenced in § 42-64.3-14
3(4)(i)(A). The wages subject to the credit shall be reduced by any direct state or federal wage 15
assistance paid to employers for the employee(s) in the taxable year. The maximum credit allowed 16
per taxable year under the provisions of this subsection shall be two thousand five hundred dollars 17
($2,500), per employee. A taxpayer who takes this business tax credit shall not be eligible for the 18
resident business owner modification pursuant to § 42-64.3-7. 19
(2) A credit equal to seventy five percent (75%) of the total amount of wages paid to those 20
enterprise job employees who are domiciliaries of an enterprise zone comprising the five percent 21
(5%) new jobs referenced in § 42-64.3-3(4)(i)(A). The wages subject to the credit shall be reduced 22
by any direct state or federal wage assistance in the taxable year. The maximum credit allowed per 23
taxable year under the provisions of this subdivision shall be five thousand dollars ($5,000) per 24
employee. A taxpayer who takes this business tax credit is not eligible for the resident business 25
owner modification. The council shall promulgate appropriate rules to certify that the enterprise 26
job employees are domiciliaries of an enterprise zone and shall advise the qualified business and 27
the tax administrator. A taxpayer taking a credit for employees pursuant to this subdivision (2) shall 28
not be entitled to a credit pursuant to subdivision (1) of this section for the employees. 29
(3) Any tax credit as provided in subdivision (1) or (2) of this section shall not reduce the 30
tax below the minimum tax. Fiscal year taxpayers must claim the tax credit in the year into which 31
the December 31st of the certification year falls. The credit shall be used to offset tax liability 32
pursuant to the provisions of either chapters 11, 13, 14, or 17, or 30 of title 44, but not more than 33
one chapter. 34
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(4) In the case of a corporation, the credit allowed under this section is only allowed against 1
the tax of that corporation included in a consolidated return that qualifies for the credit and not 2
against the tax of other corporations that may join in the filing of a consolidated tax return. 3
(5) In the case of multiple business owners, the credit provided in subdivision (1) or (2) of 4
this section is apportioned according to the ownership interests of the qualified business. 5
(6) The tax credits established pursuant to this section may be carried forward for a period 6
of three (3) years if in each of the three (3) calendar years a business which has qualified for tax 7
credits under this section: (a) does not reduce the number of its employees from the last Effective 8
Date of Certification; (b) obtains certificates of good standing from the Rhode Island division of 9
taxation, the corporations division of the Rhode Island secretary of state and the appropriate 10
municipal tax collector; (c) provides the council an affidavit stating under oath that this business 11
has not within the preceding twelve (12) months changed its legal status for the purpose of gaining 12
favorable treatment under the provisions of chapter 64.3 of this title; and (d) meets any other 13
requirements as may be established by the council in its rules and regulations. 14
(7) No new credits shall be issued on or after July 1, 2015 unless the business has received 15
certification under this chapter prior to July 1, 2015. 16
SECTION 4. Section 42-64.6-7 of the General Laws in Chapter 42-64.6 entitled "Jobs 17
Training Tax Credit Act" is hereby amended to read as follows: 18
42-64.6-7. Limitation. 19
The credit allowed pursuant to this chapter shall not reduce the liability of the employer 20
for the tax imposed by chapters 11, 13, 14, and 17 and 30 of title 44 in any year below the minimum 21
tax where a minimum tax is provided under this title. 22
SECTION 5. Sections 44-11-7.1, 44-11-26.1 and 44-11-29 of the General Laws in Chapter 23
44-11 entitled "Business Corporation Tax" are hereby amended to read as follows: 24
44-11-7.1. Limitations on assessment. 25
(a) General. Except as provided in this section, the amount of the Rhode Island corporate 26
income tax shall be assessed within three (3) years after the return was filed, whether or not the 27
return was filed on or after the prescribed date. For this purpose, a tax return filed before the due 28
date shall be considered as filed on the due date. 29
(b) Exceptions. 30
(1) The tax may be assessed at any time if: 31
(i) No return is filed. 32
(ii) A false or fraudulent return is filed with intent to avoid tax. 33
(2) Where, before the expiration of the time prescribed in this section for the assessment of 34
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tax, or before the time as extended, both the tax administrator and the taxpayer have consented, in 1
writing, to its assessment after that time, the tax may be assessed at any time prior to the expiration 2
of the agreed upon period. 3
(3) If a taxpayer’s deficiency is attributable to an excessive net operating loss carryback 4
allowance, it may be assessed at any time that a deficiency for the taxable year of the loss may be 5
assessed. 6
(4) An erroneous refund shall be considered to create an underpayment of tax on the date 7
made. An assessment of a deficiency arising out of an erroneous refund may be made at any time 8
within three (3) years thereafter, or at any time if it appears that any part of the refund was induced 9
by fraud or misrepresentation of a material fact. 10
(c) Notwithstanding the provisions of this section, the tax may be assessed at any time 11
within six (6) years after the return was filed if a taxpayer omits from its Rhode Island income an 12
amount properly includable therein that is in excess of twenty-five percent (25%) of the amount of 13
Rhode Island income stated in the return. For this purpose there shall not be taken into account any 14
amount that is omitted in the return if the amount is disclosed in the return, or in a statement attached 15
to the return, in a manner adequate to apprise the tax administrator of the nature and amount of the 16
item. 17
(d) The running of the period of limitations on assessment or collection of the tax or other 18
amount, or of a transferee’s liability, shall, after the mailing of a notice of deficiency, be suspended 19
for any period during which the tax administrator is prohibited from making the assessment or from 20
collecting by levy, and for sixty (60) days thereafter. 21
(e) No period of limitations specified in any other law shall apply to the assessment or 22
collection of Rhode Island corporate income tax. Under no circumstances shall the tax 23
administrator issue any notice of deficiency determination for Rhode Island business corporation 24
tax due and payable more than ten (10) years after the date upon which the return was filed or due 25
to be filed, nor shall the tax administrator commence any collection action for any business 26
corporation tax due and payable unless the collection action is commenced within ten (10) years 27
after a notice of deficiency determination became a final collectible assessment; provided however, 28
that the tax administrator may renew a statutory lien that was initially filed within the ten-year (10) 29
period for collection actions. Both of the aforementioned ten-year (10) periods are tolled for any 30
period of time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection 31
action” refers to any activity undertaken by the division of taxation to collect on any state tax 32
liabilities that are final, due, and payable under Rhode Island law. “Collection action” may include, 33
but is not limited to, any civil action involving a liability owed under chapter 11 of title 44. 34
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(f) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 1
attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 2
periods set forth in this section. 3
44-11-26.1. Revocation of articles or authority to transact business for nonpayment 4
of tax. 5
(a) The tax administrator may, after July 15 of each year, make up compile a list of all 6
corporations that have failed to pay the corporate tax defined in § 44-11-2 any state fees and/or 7
taxes for one year after the tax state fees and/or taxes became due and payable, and the failure is 8
not the subject of a pending appeal. The tax administrator shall certify to the correctness of the list. 9
Upon receipt of the certified list, the secretary of state may initiate revocation proceedings as 10
defined in §§ 7-1.2-1310 and 7-1.2-1414. 11
(b) With respect to any information provided by the division of taxation to the secretary of 12
state state's office pursuant to this chapter, the secretary of state, together with the employees or 13
agents thereof, shall be subject to all state and federal tax confidentiality laws applying to the 14
division of taxation and the officers, agents, and employees thereof, and which restrict the 15
acquisition, use, storage, dissemination, or publication of confidential taxpayer data. 16
(c) Notwithstanding the foregoing, the notice of revocation may state as the basis for 17
revocation that the taxpayer has failed to pay state fees and/or taxes to the division of taxation. 18
However, the secretary of state's office shall otherwise protect all state and federal tax information 19
in its custody as required by subsection (b) of this section and refrain from disclosing any other 20
specific tax information. 21
44-11-29. Notice to tax administrator of sale of assets — Tax due. 22
(a) The sale or transfer of the major part in value of the assets of a domestic corporation, 23
domestic limited liability company, domestic limited partnership, or any other domestic business 24
entity, or of the major part in value of the assets situated in this state of a foreign corporation, 25
foreign limited liability company, foreign limited partnership, or any other foreign business entity, 26
other than in the ordinary course of trade and in the regular and usual prosecution of business by 27
said corporation, limited liability company, limited partnership, or any other business entity 28
whether domestic or foreign, and the sale or transfer of the major part in value of the assets of a 29
domestic corporation, domestic limited liability company, domestic limited partnership, or any 30
other domestic corporation business entity, or of the major part in value of the assets situated in 31
this state of a foreign corporation, foreign limited liability company, foreign limited partnership, or 32
any other foreign business entity that is engaged in the business of buying, selling, leasing, renting, 33
managing, or dealing in real estate, shall be fraudulent and void as against the state unless the 34
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corporation, limited liability company, limited partnership, or any other business entity, whether 1
domestic or foreign, at least five (5) business days before the sale or transfer, notifies the tax 2
administrator of the proposed sale or transfer and of the price, terms, and conditions of the sale or 3
transfer and of the character and location of the assets by requesting a letter of good standing from 4
the tax division that shall be received by the tax division at least five (5) business days before the 5
sale or transfer. Whenever a corporation, limited liability company, limited partnership, or any 6
other business entity, whether domestic or foreign, makes such a sale or transfer, any and all tax 7
returns required to be filed under this title must be filed and any and all taxes imposed under this 8
title shall become due and payable at the time when the tax administrator is so notified of the sale 9
or transfer, or, if he or she is not so notified, at the time when he or she should have been notified 10
of the sale or transfer. 11
(b) This section shall not apply to sales by receivers, assignees under a voluntary 12
assignment for the benefit of creditors, trustees in bankruptcy, debtors in possession in bankruptcy, 13
or public officers acting under judicial process. 14
SECTION 6. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and 15
Use Taxes — Liability and Computation" is hereby amended to read as follows: 16
44-18-30. Gross receipts exempt from sales and use taxes. 17
There are exempted from the taxes imposed by this chapter the following gross receipts: 18
(1) Sales and uses beyond constitutional power of state. From the sale and from the storage, 19
use, or other consumption in this state of tangible personal property the gross receipts from the sale 20
of which, or the storage, use, or other consumption of which, this state is prohibited from taxing 21
under the Constitution of the United States or under the constitution of this state. 22
(2) Newspapers. 23
(i) From the sale and from the storage, use, or other consumption in this state of any 24
newspaper. 25
(ii) “Newspaper” means an unbound publication printed on newsprint that contains news, 26
editorial comment, opinions, features, advertising matter, and other matters of public interest. 27
(iii) “Newspaper” does not include a magazine, handbill, circular, flyer, sales catalog, or 28
similar item unless the item is printed for, and distributed as, a part of a newspaper. 29
(3) School meals. From the sale and from the storage, use, or other consumption in this 30
state of meals served by public, private, or parochial schools, school districts, colleges, universities, 31
student organizations, and parent-teacher associations to the students or teachers of a school, 32
college, or university whether the meals are served by the educational institutions or by a food 33
service or management entity under contract to the educational institutions. 34
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(4) Containers. 1
(i) From the sale and from the storage, use, or other consumption in this state of: 2
(A) Non-returnable containers, including boxes, paper bags, and wrapping materials that 3
are biodegradable and all bags and wrapping materials utilized in the medical and healing arts, 4
when sold without the contents to persons who place the contents in the container and sell the 5
contents with the container. 6
(B) Containers when sold with the contents if the sale price of the contents is not required 7
to be included in the measure of the taxes imposed by this chapter. 8
(C) Returnable containers when sold with the contents in connection with a retail sale of 9
the contents or when resold for refilling. 10
(D) Keg and barrel containers, whether returnable or not, when sold to alcoholic beverage 11
producers who place the alcoholic beverages in the containers. 12
(ii) As used in this subdivision, the term “returnable containers” means containers of a kind 13
customarily returned by the buyer of the contents for reuse. All other containers are “non-returnable 14
containers.” 15
(5)(i) Charitable, educational, and religious organizations. From the sale to, as in defined 16
in this section, and from the storage, use, and other consumption in this state, or any other state of 17
the United States of America, of tangible personal property by hospitals not operated for a profit; 18
“educational institutions” as defined in subdivision (18) not operated for a profit; churches, 19
orphanages, and other institutions or organizations operated exclusively for religious or charitable 20
purposes; interest-free loan associations not operated for profit; nonprofit, organized sporting 21
leagues and associations and bands for boys and girls under the age of nineteen (19) years; the 22
following vocational student organizations that are state chapters of national vocational student 23
organizations: Distributive Education Clubs of America (DECA); Future Business Leaders of 24
America, Phi Beta Lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers 25
of America/Home Economics Related Occupations (FHA/HERD); Vocational Industrial Clubs of 26
America (VICA); organized nonprofit golden age and senior citizens clubs for men and women; 27
and parent-teacher associations; and from the sale, storage, use, and other consumption in this state, 28
of and by the Industrial Foundation of Burrillville, a Rhode Island domestic nonprofit corporation. 29
(ii) In the case of contracts entered into with the federal government, its agencies, or 30
instrumentalities, this state, or any other state of the United States of America, its agencies, any 31
city, town, district, or other political subdivision of the states; hospitals not operated for profit; 32
educational institutions not operated for profit; churches, orphanages, and other institutions or 33
organizations operated exclusively for religious or charitable purposes, the contractor may purchase 34
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such materials and supplies (materials and/or supplies are defined as those that are essential to the 1
project) that are to be utilized in the construction of the projects being performed under the contracts 2
without payment of the tax. 3
(iii) The contractor shall not charge any sales or use tax to any exempt agency, institution, 4
or organization but shall in that instance provide his or her suppliers with certificates in the form 5
as determined by the division of taxation showing the reason for exemption and the contractor’s 6
records must substantiate the claim for exemption by showing the disposition of all property so 7
purchased. If any property is then used for a nonexempt purpose, the contractor must pay the tax 8
on the property used. 9
(6) Gasoline. From the sale and from the storage, use, or other consumption in this state 10
of: (i) Gasoline and other products taxed under chapter 36 of title 31 and (ii) Fuels used for the 11
propulsion of airplanes. 12
(7) Purchase for manufacturing purposes. 13
(i) From the sale and from the storage, use, or other consumption in this state of computer 14
software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, and 15
water, when the property or service is purchased for the purpose of being manufactured into a 16
finished product for resale and becomes an ingredient, component, or integral part of the 17
manufactured, compounded, processed, assembled, or prepared product, or if the property or 18
service is consumed in the process of manufacturing for resale computer software, tangible personal 19
property, electricity, natural gas, artificial gas, steam, refrigeration, or water. 20
(ii) “Consumed” means destroyed, used up, or worn out to the degree or extent that the 21
property cannot be repaired, reconditioned, or rendered fit for further manufacturing use. 22
(iii) “Consumed” includes mere obsolescence. 23
(iv) “Manufacturing” means and includes: manufacturing, compounding, processing, 24
assembling, preparing, or producing. 25
(v) “Process of manufacturing” means and includes all production operations performed in 26
the producing or processing room, shop, or plant, insofar as the operations are a part of and 27
connected with the manufacturing for resale of tangible personal property, electricity, natural gas, 28
artificial gas, steam, refrigeration, or water and all production operations performed insofar as the 29
operations are a part of and connected with the manufacturing for resale of computer software. 30
(vi) “Process of manufacturing” does not mean or include administration operations such 31
as general office operations, accounting, collection, or sales promotion, nor does it mean or include 32
distribution operations that occur subsequent to production operations, such as handling, storing, 33
selling, and transporting the manufactured products, even though the administration and 34
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distribution operations are performed by, or in connection with, a manufacturing business. 1
(8) State and political subdivisions. From the sale to, and from the storage, use, or other 2
consumption by, this state, any city, town, district, or other political subdivision of this state. Every 3
redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a subdivision of 4
the municipality where it is located. 5
(9) Food and food ingredients. From the sale and storage, use, or other consumption in this 6
state of food and food ingredients as defined in § 44-18-7.1(l). 7
For the purposes of this exemption “food and food ingredients” shall not include candy, 8
soft drinks, dietary supplements, alcoholic beverages, tobacco, food sold through vending 9
machines, or prepared food, as those terms are defined in § 44-18-7.1, unless the prepared food is: 10
(i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311, 11
except sub-sector 3118 (bakeries); 12
(ii) Sold in an unheated state by weight or volume as a single item; 13
(iii) Bakery items, including: bread, rolls, buns, biscuits, bagels, croissants, pastries, 14
donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and 15
is not sold with utensils provided by the seller, including: plates, knives, forks, spoons, 16
glasses, cups, napkins, or straws. 17
(10) Medicines, drugs, and durable medical equipment. From the sale and from the storage, 18
use, or other consumption in this state, of: 19
(i) “Drugs” as defined in § 44-18-7.1(h)(i), sold on prescriptions, medical oxygen, and 20
insulin whether or not sold on prescription. For purposes of this exemption drugs shall not include 21
over-the-counter drugs and grooming and hygiene products as defined in § 44-18-7.1(h)(iii). 22
(ii) Durable medical equipment as defined in § 44-18-7.1(k) for home use only, including, 23
but not limited to: syringe infusers, ambulatory drug delivery pumps, hospital beds, convalescent 24
chairs, and chair lifts. Supplies used in connection with syringe infusers and ambulatory drug 25
delivery pumps that are sold on prescription to individuals to be used by them to dispense or 26
administer prescription drugs, and related ancillary dressings and supplies used to dispense or 27
administer prescription drugs, shall also be exempt from tax. 28
(11) Prosthetic devices and mobility enhancing equipment. From the sale and from the 29
storage, use, or other consumption in this state, of prosthetic devices as defined in § 44-18-7.1(t), 30
sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles, eyeglasses, 31
and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on prescription; 32
and mobility enhancing equipment as defined in § 44-18-7.1(p), including wheelchairs, crutches, 33
and canes. 34
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(12) Coffins, caskets, urns, shrouds and burial garments. From the sale and from the 1
storage, use, or other consumption in this state of coffins, caskets, burial containers, urns, urn liners, 2
urn vaults, grave liners, grave vaults, burial tent setups, prayer cards, shrouds, and other burial 3
garments that are ordinarily sold by a funeral director as part of the business of funeral directing. 4
(13) Motor vehicles sold to nonresidents. 5
(i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide nonresident 6
of this state who does not register the motor vehicle in this state, whether the sale or delivery of the 7
motor vehicle is made in this state or at the place of residence of the nonresident. A motor vehicle 8
sold to a bona fide nonresident whose state of residence does not allow a like exemption to its 9
nonresidents is not exempt from the tax imposed under § 44-18-20. In that event, the bona fide 10
nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed 11
in his or her state of residence not to exceed the rate that would have been imposed under § 44-18-12
20. Notwithstanding any other provisions of law, a licensed motor vehicle dealer shall add and 13
collect the tax required under this subdivision and remit the tax to the tax administrator under the 14
provisions of chapters 18 and 19 of this title. When a Rhode Island licensed, motor vehicle dealer 15
is required to add and collect the sales and use tax on the sale of a motor vehicle to a bona fide 16
nonresident as provided in this section, the dealer in computing the tax takes into consideration the 17
law of the state of the nonresident as it relates to the trade-in of motor vehicles. 18
(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may 19
require any licensed motor vehicle dealer to keep records of sales to bona fide nonresidents as the 20
tax administrator deems reasonably necessary to substantiate the exemption provided in this 21
subdivision, including the affidavit of a licensed motor vehicle dealer that the purchaser of the 22
motor vehicle was the holder of, and had in his or her possession a valid out-of-state motor vehicle 23
registration or a valid out-of-state driver’s license. 24
(iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days of 25
the date of its sale to him or her is deemed to have purchased the motor vehicle for use, storage, or 26
other consumption in this state, and is subject to, and liable for, the use tax imposed under the 27
provisions of § 44-18-20. 28
(14) Sales in public buildings by blind people. From the sale and from the storage, use, or 29
other consumption in all public buildings in this state of all products or wares by any person 30
licensed under § 40-9-11.1. 31
(15) Air and water pollution control facilities. From the sale, storage, use, or other 32
consumption in this state of tangible personal property or supplies acquired for incorporation into 33
or used and consumed in the operation of a facility, the primary purpose of which is to aid in the 34
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control of the pollution or contamination of the waters or air of the state, as defined in chapter 12 1
of title 46 and chapter 23 of title 23, respectively, and that has been certified as approved for that 2
purpose by the director of environmental management. The director of environmental management 3
may certify to a portion of the tangible personal property or supplies acquired for incorporation 4
into those facilities or used and consumed in the operation of those facilities to the extent that that 5
portion has as its primary purpose the control of the pollution or contamination of the waters or air 6
of this state. As used in this subdivision, “facility” means any land, facility, device, building, 7
machinery, or equipment. 8
(16) Camps. From the rental charged for living quarters, or sleeping, or housekeeping 9
accommodations at camps or retreat houses operated by religious, charitable, educational, or other 10
organizations and associations mentioned in subsection (5), or by privately owned and operated 11
summer camps for children. 12
(17) Certain institutions. From the rental charged for living or sleeping quarters in an 13
institution licensed by the state for the hospitalization, custodial, or nursing care of human beings. 14
(18) Educational institutions. From the rental charged by any educational institution for 15
living quarters, or sleeping, or housekeeping accommodations or other rooms or accommodations 16
to any student or teacher necessitated by attendance at an educational institution. “Educational 17
institution” as used in this section means an institution of learning not operated for profit that is 18
empowered to confer diplomas, educational, literary, or academic degrees; that has a regular 19
faculty, curriculum, and organized body of pupils or students in attendance throughout the usual 20
school year; that keeps and furnishes to students and others records required and accepted for 21
entrance to schools of secondary, collegiate, or graduate rank; and no part of the net earnings of 22
which inures to the benefit of any individual. 23
(19) Motor vehicle and adaptive equipment for persons with disabilities. 24
(i) From the sale of: (A) Special adaptations; (B) The component parts of the special 25
adaptations; or (C) A specially adapted motor vehicle; provided that the owner furnishes to the tax 26
administrator an affidavit of a licensed physician to the effect that the specially adapted motor 27
vehicle is necessary to transport a family member with a disability or where the vehicle has been 28
specially adapted to meet the specific needs of the person with a disability. This exemption applies 29
to not more than one motor vehicle owned and registered for personal, noncommercial use. 30
(ii) For the purpose of this subsection the term “special adaptations” includes, but is not 31
limited to: wheelchair lifts, wheelchair carriers, wheelchair ramps, wheelchair securements, hand 32
controls, steering devices, extensions, relocations, and crossovers of operator controls, power-33
assisted controls, raised tops or dropped floors, raised entry doors, or alternative signaling devices 34
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to auditory signals. 1
(iii) From the sale of: (a) Special adaptations, (b) The component parts of the special 2
adaptations, for a “wheelchair accessible taxicab” as defined in § 39-14-1, and/or a “wheelchair 3
accessible public motor vehicle” as defined in § 39-14.1-1. 4
(iv) For the purpose of this subdivision the exemption for a “specially adapted motor 5
vehicle” means a use tax credit not to exceed the amount of use tax that would otherwise be due on 6
the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the special 7
adaptations, including installation. 8
(20) Heating fuels. From the sale and from the storage, use, or other consumption in this 9
state of every type of heating fuel. 10
(21) Electricity and gas. From the sale and from the storage, use, or other consumption in 11
this state of electricity and gas. 12
(22) Manufacturing machinery and equipment. 13
(i) From the sale and from the storage, use, or other consumption in this state of tools, dies, 14
molds, machinery, equipment (including replacement parts), and related items to the extent used in 15
an industrial plant in connection with the actual manufacture, conversion, or processing of tangible 16
personal property, or to the extent used in connection with the actual manufacture, conversion, or 17
processing of computer software as that term is utilized in industry numbers 7371, 7372, and 7373 18
in the standard industrial classification manual prepared by the Technical Committee on Industrial 19
Classification, Office of Statistical Standards, Executive Office of the President, United States 20
Bureau of the Budget, as revised from time to time, to be sold, or that machinery and equipment 21
used in the furnishing of power to an industrial manufacturing plant. For the purposes of this 22
subdivision, “industrial plant” means a factory at a fixed location primarily engaged in the 23
manufacture, conversion, or processing of tangible personal property to be sold in the regular 24
course of business; 25
(ii) Machinery and equipment and related items are not deemed to be used in connection 26
with the actual manufacture, conversion, or processing of tangible personal property, or in 27
connection with the actual manufacture, conversion, or processing of computer software as that 28
term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification 29
manual prepared by the Technical Committee on Industrial Classification, Office of Statistical 30
Standards, Executive Office of the President, United States Bureau of the Budget, as revised from 31
time to time, to be sold to the extent the property is used in administration or distribution operations; 32
(iii) Machinery and equipment and related items used in connection with the actual 33
manufacture, conversion, or processing of any computer software or any tangible personal property 34
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that is not to be sold and that would be exempt under subdivision (7) or this subdivision if purchased 1
from a vendor or machinery and equipment and related items used during any manufacturing, 2
converting, or processing function is exempt under this subdivision even if that operation, function, 3
or purpose is not an integral or essential part of a continuous production flow or manufacturing 4
process; 5
(iv) Where a portion of a group of portable or mobile machinery is used in connection with 6
the actual manufacture, conversion, or processing of computer software or tangible personal 7
property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under 8
this subdivision even though the machinery in that group is used interchangeably and not otherwise 9
identifiable as to use. 10
(23) Trade-in value of motor vehicles. From the sale and from the storage, use, or other 11
consumption in this state of so much of the purchase price paid for a new or used automobile as is 12
allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of 13
the proceeds applicable only to the automobile as are received from the manufacturer of 14
automobiles for the repurchase of the automobile whether the repurchase was voluntary or not 15
towards the purchase of a new or used automobile by the buyer. For the purpose of this subdivision, 16
the word “automobile” means a private passenger automobile not used for hire and does not refer 17
to any other type of motor vehicle. 18
(24) Precious metal bullion. 19
(i) From the sale and from the storage, use, or other consumption in this state of precious 20
metal bullion, substantially equivalent to a transaction in securities or commodities. 21
(ii) For purposes of this subdivision, “precious metal bullion” means any elementary 22
precious metal that has been put through a process of smelting or refining, including, but not limited 23
to: gold, silver, platinum, rhodium, and chromium, and that is in a state or condition that its value 24
depends upon its content and not upon its form. 25
(iii) The term does not include fabricated precious metal that has been processed or 26
manufactured for some one or more specific and customary industrial, professional, or artistic uses. 27
(25) Commercial vessels. From sales made to a commercial ship, barge, or other vessel of 28
fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from the 29
repair, alteration, or conversion of the vessels, and from the sale of property purchased for the use 30
of the vessels including provisions, supplies, and material for the maintenance and/or repair of the 31
vessels. 32
(26) Commercial fishing vessels. From the sale and from the storage, use, or other 33
consumption in this state of vessels and other watercraft that are in excess of five (5) net tons and 34
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that are used exclusively for “commercial fishing,” as defined in this subdivision, and from the 1
repair, alteration, or conversion of those vessels and other watercraft, and from the sale of property 2
purchased for the use of those vessels and other watercraft including provisions, supplies, and 3
material for the maintenance and/or repair of the vessels and other watercraft and the boats nets, 4
cables, tackle, and other fishing equipment appurtenant to or used in connection with the 5
commercial fishing of the vessels and other watercraft. “Commercial fishing” means taking or 6
attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of it for 7
profit or by sale, barter, trade, or in commercial channels. The term does not include subsistence 8
fishing, i.e., the taking for personal use and not for sale or barter; or sport fishing; but shall include 9
vessels and other watercraft with a Rhode Island party and charter boat license issued by the 10
department of environmental management pursuant to § 20-2-27.1 that meet the following criteria: 11
(i) The operator must have a current United States Coast Guard (U.S.C.G.) license to carry 12
passengers for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii) 13
U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island boat 14
registration to prove Rhode Island home port status; and (iv) The vessel must be used as a 15
commercial passenger carrying fishing vessel to carry passengers for fishing. The vessel must be 16
able to demonstrate that at least fifty percent (50%) of its annual gross income derives from charters 17
or provides documentation of a minimum of one hundred (100) charter trips annually; and (v) The 18
vessel must have a valid Rhode Island party and charter boat license. The tax administrator shall 19
implement the provisions of this subdivision by promulgating rules and regulations relating thereto. 20
(27) Clothing and footwear. From the sales of articles of clothing, including footwear, 21
intended to be worn or carried on or about the human body for sales prior to October 1, 2012. 22
Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including 23
footwear, intended to be worn or carried on or about the human body up to two hundred and fifty 24
dollars ($250) of the sales price per item. For the purposes of this section, “clothing or footwear” 25
does not include clothing accessories or equipment or special clothing or footwear primarily 26
designed for athletic activity or protective use as these terms are defined in § 44-18-7.1(f). In 27
recognition of the work being performed by the streamlined sales and use tax governing board, 28
upon passage of any federal law that authorizes states to require remote sellers to collect and remit 29
sales and use taxes, this unlimited exemption will apply as it did prior to October 1, 2012. The 30
unlimited exemption on sales of clothing and footwear shall take effect on the date that the state 31
requires remote sellers to collect and remit sales and use taxes. 32
(28) Water for residential use. From the sale and from the storage, use, or other 33
consumption in this state of water furnished for domestic use by occupants of residential premises. 34
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(29) Bibles. [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see Notes 1
to Decisions.] From the sale and from the storage, use, or other consumption in the state of any 2
canonized scriptures of any tax-exempt nonprofit religious organization including, but not limited 3
to, the Old Testament and the New Testament versions. 4
(30) Boats. 5
(i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not 6
register the boat or vessel in this state or document the boat or vessel with the United States 7
government at a home port within the state, whether the sale or delivery of the boat or vessel is 8
made in this state or elsewhere; provided, that the nonresident transports the boat within thirty (30) 9
days after delivery by the seller outside the state for use thereafter solely outside the state. 10
(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may 11
require the seller of the boat or vessel to keep records of the sales to bona fide nonresidents as the 12
tax administrator deems reasonably necessary to substantiate the exemption provided in this 13
subdivision, including the affidavit of the seller that the buyer represented himself or herself to be 14
a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state. 15
(31) Youth activities equipment. From the sale, storage, use, or other consumption in this 16
state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island 17
eleemosynary organizations, for the purposes of youth activities that the organization is formed to 18
sponsor and support; and by accredited elementary and secondary schools for the purposes of the 19
schools or of organized activities of the enrolled students. 20
(32) Farm equipment. From the sale and from the storage or use of machinery and 21
equipment used directly for commercial farming and agricultural production; including, but not 22
limited to: tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors, 23
balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment, 24
greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and 25
other farming equipment, including replacement parts appurtenant to or used in connection with 26
commercial farming and tools and supplies used in the repair and maintenance of farming 27
equipment. “Commercial farming” means the keeping or boarding of five (5) or more horses or the 28
production within this state of agricultural products, including, but not limited to, field or orchard 29
crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or production 30
provides at least two thousand five hundred dollars ($2,500) in annual gross sales to the operator, 31
whether an individual, a group, a partnership, or a corporation for exemptions issued prior to July 32
1, 2002. For exemptions issued or renewed after July 1, 2002, there shall be two (2) levels. Level I 33
shall be based on proof of annual, gross sales from commercial farming of at least twenty-five 34
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hundred dollars ($2,500) and shall be valid for purchases subject to the exemption provided in this 1
subdivision except for motor vehicles with an excise tax value of five thousand dollars ($5,000) or 2
greater. Level II shall be based on proof of annual gross sales from commercial farming of at least 3
ten thousand dollars ($10,000) or greater and shall be valid for purchases subject to the exemption 4
provided in this subdivision including motor vehicles with an excise tax value of five thousand 5
dollars ($5,000) or greater. For the initial issuance of the exemptions, proof of the requisite amount 6
of annual gross sales from commercial farming shall be required for the prior year; for any renewal 7
of an exemption granted in accordance with this subdivision at either level I or level II, proof of 8
gross annual sales from commercial farming at the requisite amount shall be required for each of 9
the prior two (2) years. Certificates of exemption issued or renewed after July 1, 2002, shall clearly 10
indicate the level of the exemption and be valid for four (4) years after the date of issue. This 11
exemption applies even if the same equipment is used for ancillary uses, or is temporarily used for 12
a non-farming or a non-agricultural purpose, but shall not apply to motor vehicles acquired after 13
July 1, 2002, unless the vehicle is a farm vehicle as defined pursuant to § 31-1-8 and is eligible for 14
registration displaying farm plates as provided for in § 31-3-31. 15
(33) Compressed air. From the sale and from the storage, use, or other consumption in the 16
state of compressed air. 17
(34) Flags. From the sale and from the storage, consumption, or other use in this state of 18
United States, Rhode Island or POW-MIA flags. 19
(35) Motor vehicle and adaptive equipment to certain veterans. From the sale of a motor 20
vehicle and adaptive equipment to and for the use of a veteran with a service-connected loss of or 21
the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether service 22
connected or not. The motor vehicle must be purchased by and especially equipped for use by the 23
qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under rules or 24
regulations that the tax administrator may prescribe. 25
(36) Textbooks. From the sale and from the storage, use, or other consumption in this state 26
of textbooks by an “educational institution,” as defined in subsection (18) of this section, and any 27
educational institution within the purview of § 16-63-9(4), and used textbooks by any purveyor. 28
(37) Tangible personal property and supplies used in on-site hazardous waste recycling, 29
reuse, or treatment. From the sale, storage, use, or other consumption in this state of tangible 30
personal property or supplies used or consumed in the operation of equipment, the exclusive 31
function of which is the recycling, reuse, or recovery of materials (other than precious metals, as 32
defined in subdivision (24)(ii) of this section) from the treatment of “hazardous wastes,” as defined 33
in § 23-19.1-4, where the “hazardous wastes” are generated in Rhode Island solely by the same 34
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taxpayer and where the personal property is located at, in, or adjacent to a generating facility of the 1
taxpayer in Rhode Island. The taxpayer shall procure an order from the director of the department 2
of environmental management certifying that the equipment and/or supplies as used or consumed, 3
qualify for the exemption under this subdivision. If any information relating to secret processes or 4
methods of manufacture, production, or treatment is disclosed to the department of environmental 5
management only to procure an order, and is a “trade secret” as defined in § 28-21-10(b), it is not 6
open to public inspection or publicly disclosed unless disclosure is required under chapter 21 of 7
title 28 or chapter 24.4 of title 23. 8
(38) Promotional and product literature of boat manufacturers. From the sale and from the 9
storage, use, or other consumption of promotional and product literature of boat manufacturers 10
shipped to points outside of Rhode Island that either: (i) Accompany the product that is sold; (ii) 11
Are shipped in bulk to out-of-state dealers for use in the sale of the product; or (iii) Are mailed to 12
customers at no charge. 13
(39) Food items paid for by food stamps. From the sale and from the storage, use, or other 14
consumption in this state of eligible food items payment for which is properly made to the retailer 15
in the form of U.S. government food stamps issued in accordance with the Food Stamp Act of 1977, 16
7 U.S.C. § 2011 et seq. 17
(40) Transportation charges. From the sale or hiring of motor carriers as defined in § 39-18
12-2(12) to haul goods, when the contract or hiring cost is charged by a motor freight tariff filed 19
with the Rhode Island public utilities commission on the number of miles driven or by the number 20
of hours spent on the job. 21
(41) Trade-in value of boats. From the sale and from the storage, use, or other consumption 22
in this state of so much of the purchase price paid for a new or used boat as is allocated for a trade-23
in allowance on the boat of the buyer given in trade to the seller or of the proceeds applicable only 24
to the boat as are received from an insurance claim as a result of a stolen or damaged boat, towards 25
the purchase of a new or used boat by the buyer. 26
(42) Equipment used for research and development. From the sale and from the storage, 27
use, or other consumption of equipment to the extent used for research and development purposes 28
by a qualifying firm. For the purposes of this subsection, “qualifying firm” means a business for 29
which the use of research and development equipment is an integral part of its operation and 30
“equipment” means scientific equipment, computers, software, and related items. 31
(43) Coins. From the sale and from the other consumption in this state of coins having 32
numismatic or investment value. 33
(44) Farm structure construction materials. Lumber, hardware, and other materials used in 34
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the new construction of farm structures, including production facilities such as, but not limited to: 1
farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying houses, 2
fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing rooms, 3
machinery storage, seasonal farm worker housing, certified farm markets, bunker and trench silos, 4
feed storage sheds, and any other structures used in connection with commercial farming. 5
(45) Telecommunications carrier access service. Carrier access service or 6
telecommunications service when purchased by a telecommunications company from another 7
telecommunications company to facilitate the provision of telecommunications service. 8
(46) Boats or vessels brought into the state exclusively for winter storage, maintenance, 9
repair, or sale. Notwithstanding the provisions of §§ 44-18-10, 44-18-11 and 44-18-20, the tax 10
imposed by § 44-18-20 is not applicable for the period commencing on the first day of October in 11
any year up to and including the 30th day of April next succeeding with respect to the use of any 12
boat or vessel within this state exclusively for purposes of: (i) Delivery of the vessel to a facility in 13
this state for storage, including dry storage and storage in water by means of apparatus preventing 14
ice damage to the hull, maintenance, or repair; (ii) The actual process of storage, maintenance, or 15
repair of the boat or vessel; or (iii) Storage for the purpose of selling the boat or vessel. 16
(47) Jewelry display product. From the sale and from the storage, use, or other 17
consumption in this state of tangible personal property used to display any jewelry product; 18
provided that title to the jewelry display product is transferred by the jewelry manufacturer or seller 19
and that the jewelry display product is shipped out of state for use solely outside the state and is not 20
returned to the jewelry manufacturer or seller. 21
(48) Boats or vessels generally. Notwithstanding the provisions of this chapter, the tax 22
imposed by §§ 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the storage, 23
use, or other consumption in this state of any new or used boat. The exemption provided for in this 24
subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the federal ten 25
percent (10%) surcharge on luxury boats is repealed. 26
(49) Banks and regulated investment companies interstate toll-free calls. Notwithstanding 27
the provisions of this chapter, the tax imposed by this chapter does not apply to the furnishing of 28
interstate and international, toll-free terminating telecommunication service that is used directly 29
and exclusively by or for the benefit of an eligible company as defined in this subdivision; provided 30
that an eligible company employs on average during the calendar year no less than five hundred 31
(500) “full-time equivalent employees” as that term is defined in § 42-64.5-2. For purposes of this 32
section, an “eligible company” means a “regulated investment company” as that term is defined in 33
the Internal Revenue Code of 1986, 26 U.S.C. § 851, or a corporation to the extent the service is 34
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provided, directly or indirectly, to or on behalf of a regulated investment company, an employee 1
benefit plan, a retirement plan or a pension plan, or a state-chartered bank. 2
(50) Mobile and manufactured homes generally. From the sale and from the storage, use, 3
or other consumption in this state of mobile and/or manufactured homes as defined and subject to 4
taxation pursuant to the provisions of chapter 44 of title 31. 5
(51) Manufacturing business reconstruction materials. 6
(i) From the sale and from the storage, use, or other consumption in this state of lumber, 7
hardware, and other building materials used in the reconstruction of a manufacturing business 8
facility that suffers a disaster, as defined in this subdivision, in this state. “Disaster” means any 9
occurrence, natural or otherwise, that results in the destruction of sixty percent (60%) or more of 10
an operating manufacturing business facility within this state. “Disaster” does not include any 11
damage resulting from the willful act of the owner of the manufacturing business facility. 12
(ii) Manufacturing business facility includes, but is not limited to, the structures housing 13
the production and administrative facilities. 14
(iii) In the event a manufacturer has more than one manufacturing site in this state, the sixty 15
percent (60%) provision applies to the damages suffered at that one site. 16
(iv) To the extent that the costs of the reconstruction materials are reimbursed by insurance, 17
this exemption does not apply. 18
(52) Tangible personal property and supplies used in the processing or preparation of floral 19
products and floral arrangements. From the sale, storage, use, or other consumption in this state of 20
tangible personal property or supplies purchased by florists, garden centers, or other like producers 21
or vendors of flowers, plants, floral products, and natural and artificial floral arrangements that are 22
ultimately sold with flowers, plants, floral products, and natural and artificial floral arrangements 23
or are otherwise used in the decoration, fabrication, creation, processing, or preparation of flowers, 24
plants, floral products, or natural and artificial floral arrangements, including descriptive labels, 25
stickers, and cards affixed to the flower, plant, floral product, or arrangement, artificial flowers, 26
spray materials, floral paint and tint, plant shine, flower food, insecticide, and fertilizers. 27
(53) Horse food products. From the sale and from the storage, use, or other consumption 28
in this state of horse food products purchased by a person engaged in the business of the boarding 29
of horses. 30
(54) Non-motorized recreational vehicles sold to nonresidents. 31
(i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to 32
a bona fide nonresident of this state who does not register the non-motorized recreational vehicle 33
in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this 34
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state or at the place of residence of the nonresident; provided that a non-motorized recreational 1
vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption to 2
its nonresidents is not exempt from the tax imposed under § 44-18-20; provided, further, that in 3
that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate 4
that would be imposed in his or her state of residence not to exceed the rate that would have been 5
imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed, non-motorized 6
recreational vehicle dealer shall add and collect the tax required under this subdivision and remit 7
the tax to the tax administrator under the provisions of chapters 18 and 19 of this title. Provided, 8
that when a Rhode Island licensed, non-motorized recreational vehicle dealer is required to add and 9
collect the sales and use tax on the sale of a non-motorized recreational vehicle to a bona fide 10
nonresident as provided in this section, the dealer in computing the tax takes into consideration the 11
law of the state of the nonresident as it relates to the trade-in of motor vehicles. 12
(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may 13
require any licensed, non-motorized recreational vehicle dealer to keep records of sales to bona fide 14
nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption 15
provided in this subdivision, including the affidavit of a licensed, non-motorized recreational 16
vehicle dealer that the purchaser of the non-motorized recreational vehicle was the holder of, and 17
had in his or her possession a valid out-of-state non-motorized recreational vehicle registration or 18
a valid out-of-state driver’s license. 19
(iii) Any nonresident who registers a non-motorized recreational vehicle in this state within 20
ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-motorized 21
recreational vehicle for use, storage, or other consumption in this state, and is subject to, and liable 22
for, the use tax imposed under the provisions of § 44-18-20. 23
(iv) “Non-motorized recreational vehicle” means any portable dwelling designed and 24
constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use 25
that is eligible to be registered for highway use, including, but not limited to, “pick-up coaches” or 26
“pick-up campers,” “travel trailers,” and “tent trailers” as those terms are defined in chapter 1 of 27
title 31. 28
(55) Sprinkler and fire alarm systems in existing buildings. From the sale in this state of 29
sprinkler and fire alarm systems; emergency lighting and alarm systems; and the materials 30
necessary and attendant to the installation of those systems that are required in buildings and 31
occupancies existing therein in July 2003 in order to comply with any additional requirements for 32
such buildings arising directly from the enactment of the Comprehensive Fire Safety Act of 2003 33
and that are not required by any other provision of law or ordinance or regulation adopted pursuant 34
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to that act. The exemption provided in this subdivision shall expire on December 31, 2008. 1
(56) Aircraft. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44-2
18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or other 3
consumption in this state of any new or used aircraft or aircraft parts. 4
(57) Renewable energy products. Notwithstanding any other provisions of Rhode Island 5
general laws, the following products shall also be exempt from sales tax: solar photovoltaic 6
modules or panels, or any module or panel that generates electricity from light; solar thermal 7
collectors, including, but not limited to, those manufactured with flat glass plates, extruded plastic, 8
sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-water and 9
water-to-air type pumps; wind turbines; towers used to mount wind turbines if specified by or sold 10
by a wind turbine manufacturer; DC to AC inverters that interconnect with utility power lines; and 11
manufactured mounting racks and ballast pans for solar collector, module, or panel installation. Not 12
to include materials that could be fabricated into such racks; monitoring and control equipment, if 13
specified or supplied by a manufacturer of solar thermal, solar photovoltaic, geothermal, or wind 14
energy systems or if required by law or regulation for such systems but not to include pumps, fans 15
or plumbing or electrical fixtures unless shipped from the manufacturer affixed to, or an integral 16
part of, another item specified on this list; and solar storage tanks that are part of a solar domestic 17
hot water system or a solar space heating system. If the tank comes with an external heat exchanger 18
it shall also be tax exempt, but a standard hot water tank is not exempt from state sales tax. 19
(58) Returned property. The amount charged for property returned by customers upon 20
rescission of the contract of sale when the entire amount exclusive of handling charges paid for the 21
property is refunded in either cash or credit, and where the property is returned within one hundred 22
twenty (120) days from the date of delivery. 23
(59) Dietary supplements. From the sale and from the storage, use, or other consumption 24
of dietary supplements as defined in § 44-18-7.1(l)(v), sold on prescriptions. 25
(60) Blood. From the sale and from the storage, use, or other consumption of human blood. 26
(61) Agricultural products for human consumption. From the sale and from the storage, 27
use, or other consumption of livestock and poultry of the kinds of products that ordinarily constitute 28
food for human consumption and of livestock of the kind the products of which ordinarily constitute 29
fibers for human use. 30
(62) Diesel emission control technology. From the sale and use of diesel retrofit 31
technology that is required by § 31-47.3-4. 32
(63) Feed for certain animals used in commercial farming. From the sale of feed for 33
animals as described in subsection (61) of this section. 34
LC002072 - Page 24 of 61
(64) Alcoholic beverages. From the sale and storage, use, or other consumption in this 1
state by a Class A licensee of alcoholic beverages, as defined in § 44-18-7.1, excluding beer and 2
malt beverages; provided, further, notwithstanding § 6-13-1 or any other general or public law to 3
the contrary, alcoholic beverages, as defined in § 44-18-7.1, shall not be subject to minimum 4
markup. 5
(65) Seeds and plants used to grow food and food ingredients. From the sale, storage, use, 6
or other consumption in this state of seeds and plants used to grow food and food ingredients as 7
defined in § 44-18-7.1(l)(i). “Seeds and plants used to grow food and food ingredients” shall not 8
include marijuana seeds or plants. 9
(66) Feminine hygiene products. From the sale and from the storage, use, or other 10
consumption of tampons, panty liners, menstrual cups, sanitary napkins, and other similar products 11
the principal use of which is feminine hygiene in connection with the menstrual cycle. 12
(67) Breast pump products. From the sale and from the storage, use, or other consumption 13
of breast pumps and breast pump collection and storage supplies when sold to individuals for home 14
use, and any repair or replacement parts for such products. “Breast pump collection and storage 15
supplies” means items of tangible personal property used in conjunction with a breast pump to 16
collect milk expressed from a human breast and to store collected milk until it is ready for 17
consumption. “Breast pump collection and storage supplies” include, but are not limited to, breast 18
shields and breast shield connectors; breast pump tubes and tubing adaptors; breast pump valves 19
and membranes; backflow protectors and backflow protector adaptors; bottles and bottle caps 20
specific to the operation of the breast pump; breast milk storage bags; and related items sold as part 21
of a breast pump kit pre-packaged by the breast pump manufacturer. “Breast pump collection and 22
storage supplies” does not include: bottles and bottle caps not specific to the operation of the breast 23
pump; breast pump travel bags and other similar carrying accessories, including ice packs, labels, 24
and other similar products, unless sold as part of a breast pump kit pre-packed by the breast pump 25
manufacturer; breast pump cleaning supplies, unless sold as part of a breast pump kit pre-packaged 26
by the breast pump manufacturer; nursing bras, bra pads, breast shells, and other similar products; 27
and creams, ointments, and other similar products that relieve breastfeeding-related symptoms or 28
conditions of the breasts or nipples. 29
(68) Trade-in value of motorcycles. From the sale and from the storage, use, or other 30
consumption in this state of so much of the purchase price paid for a new or used motorcycle as is 31
allocated for a trade-in allowance on the motorcycle of the buyer given in trade to the seller, or of 32
the proceeds applicable only to the motorcycle as are received from the manufacturer of 33
motorcycles for the repurchase of the motorcycle whether the repurchase was voluntary or not 34
LC002072 - Page 25 of 61
towards the purchase of a new or used motorcycle by the buyer. For the purpose of this subsection, 1
the word “motorcycle” means a motorcycle not used for hire and does not refer to any other type 2
of motor vehicle. 3
SECTION 7. Section 44-19-13 of the General Laws in Chapter 44-19 entitled "Sales and 4
Use Taxes — Enforcement and Collection" is hereby amended to read as follows: 5
44-19-13. Notice of determination. 6
(a) The tax administrator shall give to the retailer or to the person storing, using, or 7
consuming the tangible personal property a written notice of his or her determination. Except in the 8
case of fraud, intent to evade the provisions of this article, failure to make a return, or claim for 9
additional amount pursuant to §§ 44-19-16 — 44-19-19, every notice of a deficiency determination 10
shall be mailed within three (3) years after the fifteenth (15th) day of the calendar month following 11
the month for which the amount is proposed to be determined or within three (3) years after the 12
return is filed, whichever period expires later, unless a longer period is agreed upon by the tax 13
administrator and the taxpayer. 14
(b) Notwithstanding the provisions of subsection (a) of this section, under no circumstances 15
shall the tax administrator issue a notice of a deficiency determination for any sales or use tax 16
determined to be due and payable more than ten (10) years after the return is filed or was due to be 17
filed, nor shall the tax administrator commence any collection action for any tax that is due and 18
payable unless the collection action is commenced within ten (10) years after a notice of a 19
deficiency determination becomes a final collectible assessment; provided, however, that the tax 20
administrator may renew a statutory lien that was initially filed within the ten-year (10) period for 21
collection actions. Both of the aforementioned ten-year (10) periods are tolled for any period of 22
time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection action” 23
refers to any activity undertaken by the division of taxation to collect on any state tax liabilities that 24
are final, due, and payable under Rhode Island law. “Collection action” may include, but is not 25
limited to, any civil action involving a liability owed under chapters 18, 18.1, 18.2, and 19 of title 26
44. This section excludes any sales and use tax liabilities that are deemed trust funds as defined in 27
§ 44-19-35, as well as any meals and beverage tax liabilities that are collected pursuant to § 44-18-28
18.1, and any hotel tax liabilities that are collected pursuant to § 44-18-36.1. 29
(c) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 30
attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 31
periods set forth in this section. 32
SECTION 8. Section 44-23-9 of the General Laws in Chapter 44-23 entitled "Estate and 33
Transfer Taxes — Enforcement and Collection" is hereby amended to read as follows: 34
LC002072 - Page 26 of 61
44-23-9. Assessment and notice of estate tax — Collection powers — Lien. 1
(a) The tax imposed by § 44-22-1.1 shall be assessed upon the full and fair cash value of 2
the net estate determined by the tax administrator as provided in this chapter. Notice of the amount 3
of the tax shall be mailed to the executor, administrator, or trustee, but failure to receive the notice 4
does not excuse the nonpayment of or invalidate the tax. The tax administrator shall receive and 5
collect the assessed taxes in the same manner and with the same powers as are prescribed for and 6
given to the collectors of taxes by chapters 7 — 9 of this title. The tax shall be due and payable as 7
provided in § 44-23-16, shall be paid to the tax administrator, and shall be and remain a lien upon 8
the estate until it is paid. All executors, administrators, and trustees are personally liable for the tax 9
until it is paid. 10
(b) Notwithstanding the provisions of subsection (a) of this section, under no circumstances 11
shall the tax administrator issue any notice of deficiency determination for the amount of the estate 12
tax due more than ten (10) years after the return was filed or should have been filed, nor shall the 13
tax administrator commence any collection action for any estate tax due and payable unless the 14
collection action is commenced within ten (10) years after the date a notice of deficiency 15
determination became a final collectible assessment. “Collection action” refers to any activity 16
undertaken by the division of taxation to collect on any state tax liabilities that are final, due, and 17
payable under Rhode Island law. “Collection action” may include, but is not limited to, any civil 18
action involving a liability owed under chapters 22 and 23 of title 44. 19
(c) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 20
attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 21
periods set forth in this section. 22
SECTION 9. Sections 44-30-2.6, 44-30-83 and 44-30-102 of the General Laws in Chapter 23
44-30 entitled "Personal Income Tax" are hereby amended to read as follows: 24
44-30-2.6. Rhode Island taxable income — Rate of tax. 25
(a) “Rhode Island taxable income” means federal taxable income as determined under the 26
Internal Revenue Code, 26 U.S.C. § 1 et seq., not including the increase in the basic, standard-27
deduction amount for married couples filing joint returns as provided in the Jobs and Growth Tax 28
Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief Reconciliation Act of 29
2001 (EGTRRA), and as modified by the modifications in § 44-30-12. 30
(b) Notwithstanding the provisions of §§ 44-30-1 and 44-30-2, for tax years beginning on 31
or after January 1, 2001, a Rhode Island personal income tax is imposed upon the Rhode Island 32
taxable income of residents and nonresidents, including estates and trusts, at the rate of twenty-five 33
and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year 2002 34
LC002072 - Page 27 of 61
and thereafter of the federal income tax rates, including capital gains rates and any other special 1
rates for other types of income, except as provided in § 44-30-2.7, which were in effect immediately 2
prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); 3
provided, rate schedules shall be adjusted for inflation by the tax administrator beginning in taxable 4
year 2002 and thereafter in the manner prescribed for adjustment by the commissioner of Internal 5
Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or after January 1, 2006, a 6
taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or 7
her personal income tax liability. 8
(c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative 9
minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode Island 10
alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by 11
multiplying the federal tentative minimum tax without allowing for the increased exemptions under 12
the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal form 6251 13
Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%) for tax year 14
2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing the product 15
to the Rhode Island tax as computed otherwise under this section. The excess shall be the taxpayer’s 16
Rhode Island alternative minimum tax. 17
(1) For tax years beginning on or after January 1, 2005, and thereafter, the exemption 18
amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by 19
the tax administrator in the manner prescribed for adjustment by the commissioner of Internal 20
Revenue in 26 U.S.C. § 1(f). 21
(2) For the period January 1, 2007, through December 31, 2007, and thereafter, Rhode 22
Island taxable income shall be determined by deducting from federal adjusted gross income as 23
defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island 24
itemized-deduction amount and the Rhode Island exemption amount as determined in this section. 25
(A) Tax imposed. 26
(1) There is hereby imposed on the taxable income of married individuals filing joint 27
returns and surviving spouses a tax determined in accordance with the following table: 28
If taxable income is: The tax is: 29
Not over $53,150 3.75% of taxable income 30
Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150 31
Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500 32
Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850 33
Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700 34
LC002072 - Page 28 of 61
(2) There is hereby imposed on the taxable income of every head of household a tax 1
determined in accordance with the following table: 2
If taxable income is: The tax is: 3
Not over $42,650 3.75% of taxable income 4
Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650 5
Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100 6
Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350 7
Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700 8
(3) There is hereby imposed on the taxable income of unmarried individuals (other than 9
surviving spouses and heads of households) a tax determined in accordance with the following 10
table: 11
If taxable income is: The tax is: 12
Not over $31,850 3.75% of taxable income 13
Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850 14
Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100 15
Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850 16
Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700 17
(4) There is hereby imposed on the taxable income of married individuals filing separate 18
returns and bankruptcy estates a tax deter- mined determined in accordance with the following 19
table: 20
If taxable income is: The tax is: 21
Not over $26,575 3.75% of taxable income 22
Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575 23
Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250 24
Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925 25
Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850 26
(5) There is hereby imposed a taxable income of an estate or trust a tax determined in 27
accordance with the following table: 28
If taxable income is: The tax is: 29
Not over $2,150 3.75% of taxable income 30
Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150 31
Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000 32
Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650 33
Over $10,450 $737.50 plus 9.90% of the excess over $10,450 34
LC002072 - Page 29 of 61
(6) Adjustments for inflation. 1
The dollars amount contained in paragraph (A) shall be increased by an amount equal to: 2
(a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by; 3
(b) The cost-of-living adjustment determined under section (J) with a base year of 1993; 4
(c) The cost-of-living adjustment referred to in subparagraphs (a) and (b) used in making 5
adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall 6
be determined under section (J) by substituting “1994” for “1993.” 7
(B) Maximum capital gains rates. 8
(1) In general. 9
If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax 10
imposed by this section for such taxable year shall not exceed the sum of: 11
(a) 2.5% of the net capital gain as reported for federal income tax purposes under section 12
26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b). 13
(b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 14
§ 1(h)(1)(c). 15
(c) 6.25% of the net capital gain as reported for federal income tax purposes under 26 16
U.S.C. § 1(h)(1)(d). 17
(d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 18
§ 1(h)(1)(e). 19
(2) For tax years beginning on or after January 1, 2010, the tax imposed on net capital gain 20
shall be determined under subdivision 44-30-2.6(c)(2)(A). 21
(C) Itemized deductions. 22
(1) In general. 23
For the purposes of section (2), “itemized deductions” means the amount of federal 24
itemized deductions as modified by the modifications in § 44-30-12. 25
(2) Individuals who do not itemize their deductions. 26
In the case of an individual who does not elect to itemize his deductions for the taxable 27
year, they may elect to take a standard deduction. 28
(3) Basic standard deduction. 29
The Rhode Island standard deduction shall be allowed in accordance with the following 30
table: 31
Filing status Amount 32
Single $5,350 33
Married filing jointly or qualifying widow(er) $8,900 34
LC002072 - Page 30 of 61
Married filing separately $4,450 1
Head of Household $7,850 2
(4) Additional standard deduction for the aged and blind. 3
An additional standard deduction shall be allowed for individuals age sixty-five (65) or 4
older or blind in the amount of $1,300 for individuals who are not married and $1,050 for 5
individuals who are married. 6
(5) Limitation on basic standard deduction in the case of certain dependents. 7
In the case of an individual to whom a deduction under section (E) is allowable to another 8
taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater of: 9
(a) $850; 10
(b) The sum of $300 and such individual’s earned income; 11
(6) Certain individuals not eligible for standard deduction. 12
In the case of: 13
(a) A married individual filing a separate return where either spouse itemizes deductions; 14
(b) Nonresident alien individual; 15
(c) An estate or trust; 16
The standard deduction shall be zero. 17
(7) Adjustments for inflation. 18
Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an amount 19
equal to: 20
(a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988, multiplied 21
by 22
(b) The cost-of-living adjustment determined under section (J) with a base year of 1988. 23
(D) Overall limitation on itemized deductions. 24
(1) General rule. 25
In the case of an individual whose adjusted gross income as modified by § 44-30-12 26
exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the 27
taxable year shall be reduced by the lesser of: 28
(a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12 29
over the applicable amount; or 30
(b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable for 31
such taxable year. 32
(2) Applicable amount. 33
(a) In general. 34
LC002072 - Page 31 of 61
For purposes of this section, the term “applicable amount” means $156,400 ($78,200 in the 1
case of a separate return by a married individual) 2
(b) Adjustments for inflation. 3
Each dollar amount contained in paragraph (a) shall be increased by an amount equal to: 4
(i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by 5
(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 6
(3) Phase-out of Limitation. 7
(a) In general. 8
In the case of taxable year beginning after December 31, 2005, and before January 1, 2010, 9
the reduction under section (1) shall be equal to the applicable fraction of the amount which would 10
be the amount of such reduction. 11
(b) Applicable fraction. 12
For purposes of paragraph (a), the applicable fraction shall be determined in accordance 13
with the following table: 14
For taxable years beginning in calendar year The applicable fraction is 15
2006 and 2007 ⅔ 16
2008 and 2009 ⅓ 17
(E) Exemption amount. 18
(1) In general. 19
Except as otherwise provided in this subsection, the term “exemption amount” means 20
$3,400. 21
(2) Exemption amount disallowed in case of certain dependents. 22
In the case of an individual with respect to whom a deduction under this section is allowable 23
to another taxpayer for the same taxable year, the exemption amount applicable to such individual 24
for such individual's taxable year shall be zero. 25
(3) Adjustments for inflation. 26
The dollar amount contained in paragraph (1) shall be increased by an amount equal to: 27
(a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by 28
(b) The cost-of-living adjustment determined under section (J) with a base year of 1989. 29
(4) Limitation. 30
(a) In general. 31
In the case of any taxpayer whose adjusted gross income as modified for the taxable year 32
exceeds the threshold amount shall be reduced by the applicable percentage. 33
(b) Applicable percentage. 34
LC002072 - Page 32 of 61
In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the 1
threshold amount, the exemption amount shall be reduced by two (2) percentage points for each 2
$2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 3
exceeds the threshold amount. In the case of a married individual filing a separate return, the 4
preceding sentence shall be applied by substituting ‘‘$1,250’’ for ‘‘$2,500.’’ In no event shall the 5
applicable percentage exceed one hundred percent (100%). 6
(c) Threshold Amount. 7
For the purposes of this paragraph, the term ‘‘threshold amount’’ shall be determined with 8
the following table: 9
Filing status Amount 10
Single $156,400 11
Married filing jointly of qualifying widow(er) $234,600 12
Married filing separately $117,300 13
Head of Household $195,500 14
(d) Adjustments for inflation. 15
Each dollar amount contained in paragraph (b) shall be increased by an amount equal to: 16
(i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by 17
(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 18
(5) Phase-out of limitation. 19
(a) In general. 20
In the case of taxable years beginning after December 31, 2005, and before January 1, 21
2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which 22
would be the amount of such reduction. 23
(b) Applicable fraction. 24
For the purposes of paragraph (a), the applicable fraction shall be determined in accordance 25
with the following table: 26
For taxable years beginning in calendar year The applicable fraction is 27
2006 and 2007 ⅔ 28
2008 and 2009 ⅓ 29
(F) Alternative minimum tax. 30
(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 31
subtitle) a tax equal to the excess (if any) of: 32
(a) The tentative minimum tax for the taxable year, over 33
(b) The regular tax for the taxable year. 34
LC002072 - Page 33 of 61
(2) The tentative minimum tax for the taxable year is the sum of: 1
(a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus 2
(b) 7.0 percent of so much of the taxable excess above $175,000. 3
(3) The amount determined under the preceding sentence shall be reduced by the alternative 4
minimum tax foreign tax credit for the taxable year. 5
(4) Taxable excess. For the purposes of this subsection the term “taxable excess” means so 6
much of the federal alternative minimum taxable income as modified by the modifications in § 44-7
30-12 as exceeds the exemption amount. 8
(5) In the case of a married individual filing a separate return, subparagraph (2) shall be 9
applied by substituting “$87,500” for $175,000 each place it appears. 10
(6) Exemption amount. 11
For purposes of this section "exemption amount" means: 12
Filing status Amount 13
Single $39,150 14
Married filing jointly or qualifying widow(er) $53,700 15
Married filing separately $26,850 16
Head of Household $39,150 17
Estate or trust $24,650 18
(7) Treatment of unearned income of minor children 19
(a) In general. 20
In the case of a minor child, the exemption amount for purposes of section (6) shall not 21
exceed the sum of: 22
(i) Such child's earned income, plus 23
(ii) $6,000. 24
(8) Adjustments for inflation. 25
The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount 26
equal to: 27
(a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied by 28
(b) The cost-of-living adjustment determined under section (J) with a base year of 2004. 29
(9) Phase-out. 30
(a) In general. 31
The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount 32
equal to twenty-five percent (25%) of the amount by which alternative minimum taxable income 33
of the taxpayer exceeds the threshold amount. 34
LC002072 - Page 34 of 61
(b) Threshold amount. 1
For purposes of this paragraph, the term “threshold amount” shall be determined with the 2
following table: 3
Filing status Amount 4
Single $123,250 5
Married filing jointly or qualifying widow(er) $164,350 6
Married filing separately $82,175 7
Head of Household $123,250 8
Estate or Trust $82,150 9
(c) Adjustments for inflation 10
Each dollar amount contained in paragraph (9) shall be increased by an amount equal to: 11
(i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by 12
(ii) The cost-of-living adjustment determined under section (J) with a base year of 2004. 13
(G) Other Rhode Island taxes. 14
(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 15
subtitle) a tax equal to twenty-five percent (25%) of: 16
(a) The Federal income tax on lump-sum distributions. 17
(b) The Federal income tax on parents' election to report child's interest and dividends. 18
(c) The recapture of Federal tax credits that were previously claimed on Rhode Island 19
return. 20
(H) Tax for children under 18 with investment income. 21
(1) General rule. There is hereby imposed a tax equal to twenty-five percent (25%) of: 22
(a) The Federal tax for children under the age of 18 with investment income. 23
(I) Averaging of farm income. 24
(1) General rule. At the election of an individual engaged in a farming business or fishing 25
business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of: 26
(a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C. § 27
1301]. 28
(J) Cost-of-living adjustment. 29
(1) In general. 30
The cost-of-living adjustment for any calendar year is the percentage (if any) by which: 31
(a) The CPI for the preceding calendar year exceeds 32
(b) The CPI for the base year. 33
(2) CPI for any calendar year. 34
LC002072 - Page 35 of 61
For purposes of paragraph (1), the CPI for any calendar year is the average of the consumer 1
price index as of the close of the twelve (12) month period ending on August 31 of such calendar 2
year. 3
(3) Consumer price index. 4
For purposes of paragraph (2), the term “consumer price index” means the last consumer 5
price index for all urban consumers published by the department of labor. For purposes of the 6
preceding sentence, the revision of the consumer price index that is most consistent with the 7
consumer price index for calendar year 1986 shall be used. 8
(4) Rounding. 9
(a) In general. 10
If any increase determined under paragraph (1) is not a multiple of $50, such increase shall 11
be rounded to the next lowest multiple of $50. 12
(b) In the case of a married individual filing a separate return, subparagraph (a) shall be 13
applied by substituting “$25” for $50 each place it appears. 14
(K) Credits against tax. For tax years beginning on or after January 1, 2001, a taxpayer 15
entitled to any of the following federal credits enacted prior to January 1, 1996, shall be entitled to 16
a credit against the Rhode Island tax imposed under this section: 17
(1) [Deleted by P.L. 2007, ch. 73, art. 7, § 5.] 18
(2) Child and dependent care credit; 19
(3) General business credits; 20
(4) Credit for elderly or the disabled; 21
(5) Credit for prior year minimum tax; 22
(6) Mortgage interest credit; 23
(7) Empowerment zone employment credit; 24
(8) Qualified electric vehicle credit. 25
(L) Credit against tax for adoption. For tax years beginning on or after January 1, 2006, 26
a taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode Island 27
tax imposed under this section if the adopted child was under the care, custody, or supervision of 28
the Rhode Island department of children, youth and families prior to the adoption. 29
(M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits 30
provided there shall be no deduction based on any federal credits enacted after January 1, 1996, 31
including the rate reduction credit provided by the federal Economic Growth and Tax 32
Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be 33
reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax 34
LC002072 - Page 36 of 61
purposes shall determine the Rhode Island amount to be recaptured in the same manner as 1
prescribed in this subsection. 2
(N) Rhode Island earned-income credit. 3
(1) In general. 4
For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-5
income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent 6
(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode 7
Island income tax. 8
For tax years beginning on or after January 1, 2015, and before January 1, 2016, a taxpayer 9
entitled to a federal earned-income credit shall be allowed a Rhode Island earned-income credit 10
equal to ten percent (10%) of the federal earned-income credit. Such credit shall not exceed the 11
amount of the Rhode Island income tax. 12
For tax years beginning on or after January 1, 2016, a taxpayer entitled to a federal earned-13
income credit shall be allowed a Rhode Island earned-income credit equal to twelve and one-half 14
percent (12.5%) of the federal earned-income credit. Such credit shall not exceed the amount of the 15
Rhode Island income tax. 16
For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal earned-17
income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%) 18
of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island 19
income tax. 20
(2) Refundable portion. 21
In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of this 22
section exceeds the amount of Rhode Island income tax, a refundable earned-income credit shall 23
be allowed as follows. 24
(i) For tax years beginning before January 1, 2015, for purposes of paragraph (2) refundable 25
earned-income credit means fifteen percent (15%) of the amount by which the Rhode Island earned-26
income credit exceeds the Rhode Island income tax. 27
(ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2) 28
refundable earned-income credit means one hundred percent (100%) of the amount by which the 29
Rhode Island earned-income credit exceeds the Rhode Island income tax. 30
(O) The tax administrator shall recalculate and submit necessary revisions to paragraphs 31
(A) through (J) to the general assembly no later than February 1, 2010, and every three (3) years 32
thereafter for inclusion in the statute. 33
(3) For the period January 1, 2011, through December 31, 2011, and thereafter, “Rhode 34
LC002072 - Page 37 of 61
Island taxable income” means federal adjusted gross income as determined under the Internal 1
Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-2
30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to subparagraph 3
44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant to subparagraph 4
44-30-2.6(c)(3)(C). 5
(A) Tax imposed. 6
(I) There is hereby imposed on the taxable income of married individuals filing joint 7
returns, qualifying widow(er), every head of household, unmarried individuals, married individua ls 8
filing separate returns and bankruptcy estates, a tax determined in accordance with the following 9
table: 10
RI Taxable Income RI Income Tax 11
Over But not over Pay + % on Excess on the amount over 12
$ 0 - $ 55,000 $ 0 + 3.75% $ 0 13
55,000 - 125,000 2,063 + 4.75% 55,000 14
125,000 - 5,388 + 5.99% 125,000 15
(II) There is hereby imposed on the taxable income of an estate or trust a tax determined in 16
accordance with the following table: 17
RI Taxable Income RI Income Tax 18
Over But not over Pay + % on Excess on the amount over 19
$ 0 - $ 2,230 $ 0 + 3.75% $ 0 20
2,230 - 7,022 84 + 4.75% 2,230 21
7,022 - 312 + 5.99% 7,022 22
(B) Deductions: 23
(I) Rhode Island Basic Standard Deduction. 24
Only the Rhode Island standard deduction shall be allowed in accordance with the 25
following table: 26
Filing status: Amount 27
Single $7,500 28
Married filing jointly or qualifying widow(er) $15,000 29
Married filing separately $7,500 30
Head of Household $11,250 31
(II) Nonresident alien individuals, estates and trusts are not eligible for standard 32
deductions. 33
(III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 34
LC002072 - Page 38 of 61
purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 1
dollars ($175,000), the standard deduction amount shall be reduced by the applicable percentage. 2
The term “applicable percentage” means twenty (20) percentage points for each five thousand 3
dollars ($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable 4
year exceeds one hundred seventy-five thousand dollars ($175,000). 5
(C) Exemption Amount: 6
(I) The term “exemption amount” means three thousand five hundred dollars ($3,500) 7
multiplied by the number of exemptions allowed for the taxable year for federal income tax 8
purposes. For tax years beginning on or after 2018, the term “exemption amount” means the same 9
as it does in 26 U.S.C. § 151 and 26 U.S.C. § 152 just prior to the enactment of the Tax Cuts and 10
Jobs Act (Pub. L. No. 115-97) on December 22, 2017. 11
(II) Exemption amount disallowed in case of certain dependents. In the case of an 12
individual with respect to whom a deduction under this section is allowable to another taxpayer for 13
the same taxable year, the exemption amount applicable to such individual for such individua l’s 14
taxable year shall be zero. 15
(III) Identifying information required. 16
(1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be 17
allowed under this section with respect to any individual unless the Taxpayer Identification Number 18
of such individual is included on the federal return claiming the exemption for the same tax filing 19
period. 20
(2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event 21
that the Taxpayer Identification Number for each individual is not required to be included on the 22
federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer 23
Identification Number must be provided on the Rhode Island tax return for the purpose of claiming 24
said exemption(s). 25
(D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 26
purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 27
dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term 28
“applicable percentage” means twenty (20) percentage points for each five thousand dollars 29
($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 30
exceeds one hundred seventy-five thousand dollars ($175,000). 31
(E) Adjustment for inflation. The dollar amount contained in subparagraphs 44-30-32
2.6(c)(3)(A), 44-30-2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) shall be increased annually by an amount 33
equal to: 34
LC002072 - Page 39 of 61
(I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-2.6(c)(3)(B) 1
and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000, multiplied by; 2
(II) The cost-of-living adjustment with a base year of 2000. 3
(III) For the purposes of this section, the cost-of-living adjustment for any calendar year is 4
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 5
the consumer price index for the base year. The consumer price index for any calendar year is the 6
average of the consumer price index as of the close of the twelve-month (12) period ending on 7
August 31, of such calendar year. 8
(IV) For the purpose of this section the term “consumer price index” means the last 9
consumer price index for all urban consumers published by the department of labor. For the purpose 10
of this section the revision of the consumer price index that is most consistent with the consumer 11
price index for calendar year 1986 shall be used. 12
(V) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 13
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 14
married individual filing separate return, if any increase determined under this section is not a 15
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 16
of twenty-five dollars ($25.00). 17
(F) Credits against tax. 18
(I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on 19
or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be 20
as follows: 21
(a) Rhode Island earned-income credit: Credit shall be allowed for earned-income credit 22
pursuant to subparagraph 44-30-2.6(c)(2)(N). 23
(b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided 24
in § 44-33-1 et seq. 25
(c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax 26
credit as provided in § 44-30.3-1 et seq. 27
(d) Credit for income taxes of other states. Credit shall be allowed for income tax paid to 28
other states pursuant to § 44-30-74. 29
(e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax credit 30
as provided in § 44-33.2-1 et seq. 31
(f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture 32
production tax credit as provided in § 44-31.2-1 et seq. 33
(g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of 34
LC002072 - Page 40 of 61
the federal child and dependent care credit allowable for the taxable year for federal purposes; 1
provided, however, such credit shall not exceed the Rhode Island tax liability. 2
(h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for 3
contributions to scholarship organizations as provided in chapter 62 of title 44. 4
(i) Credit for tax withheld. Wages upon which tax is required to be withheld shall be taxable 5
as if no withholding were required, but any amount of Rhode Island personal income tax actually 6
deducted and withheld in any calendar year shall be deemed to have been paid to the tax 7
administrator on behalf of the person from whom withheld, and the person shall be credited with 8
having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable 9
year of less than twelve (12) months, the credit shall be made under regulations of the tax 10
administrator. 11
(j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested in 12
RI wavemaker fellowship program as provided in § 42-64.26-1 et seq. 13
(k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in 14
§ 42-64.20-1 et seq. 15
(l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode 16
Island new qualified jobs incentive program credit as provided in § 44-48.3-1 et seq. 17
(m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter, 18
unused carryforward for such credit previously issued shall be allowed for the historic 19
homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already 20
issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits 21
under the historic homeownership assistance act. 22
(n) Musical and theatrical production tax credits: Credit shall be allowed for musical and 23
theatrical production tax credits as provided in chapter 31.3 of this title. 24
(o) Historic preservation tax credits 2013: Credit shall be allowed for historic preservation 25
tax credits 2013 as provided in chapter 33.6 of this title. 26
(2)(II) Except as provided in section 1 (I) above, no other state and or federal tax credit 27
shall be available to the taxpayers in computing tax liability under this chapter. 28
44-30-83. Limitations on assessment. 29
(a) General. Except as otherwise provided in this section the amount of the Rhode Island 30
personal income tax shall be assessed within three (3) years after the return was filed, whether or 31
not the return was filed on or after the prescribed date. For this purpose a tax return filed before the 32
due date shall be considered as filed on the due date; and a return of withholding tax for any period 33
ending with or within a calendar year filed before April 15 of the succeeding calendar year shall be 34
LC002072 - Page 41 of 61
considered filed on April 15 of the succeeding calendar year. 1
(b) Exceptions. 2
(1) Assessment at any time. The tax may be assessed at any time if: 3
(i) No return is filed; 4
(ii) A false or fraudulent return is filed with intent to evade tax; or 5
(iii) The taxpayer fails to file a report, pursuant to § 44-30-59, of a change, correction, or 6
amended return, increasing his or her federal taxable income as reported on his or her federal 7
income tax return or to report a change or correction that is treated in the same manner as if it were 8
a deficiency for federal income tax purposes. 9
(2) Extension by agreement. Where, before the expiration of the time prescribed in this 10
section for the assessment of tax, or before the time as extended pursuant to this section, both the 11
tax administrator and the taxpayer have consented in writing to its assessment after that time, the 12
tax may be assessed at any time prior to the expiration of the period agreed upon. 13
(3) Report of changed or corrected federal income. If the taxpayer shall, pursuant to § 44-14
30-59, file an amended return, or report a change or correction increasing his or her federal taxable 15
income or report a change or correction that is treated in the same manner as if it were a deficiency 16
for federal income tax purposes, an assessment may be made at any time prior to two (2) years after 17
the report or amended return was filed. This assessment of Rhode Island personal income tax shall 18
not exceed the amount of the increase attributable to the federal change, correction, or items 19
amended on the taxpayer’s amended federal income tax return. The provisions of this paragraph 20
shall not affect the time within which or the amount for which an assessment may otherwise be 21
made. 22
(4) Deficiency attributable to net operating loss carryback. If a taxpayer’s deficiency is 23
attributable to an excessive net operating loss carryback allowance, it may be assessed at any time 24
that a deficiency for the taxable year of the loss may be assessed. 25
(5) Recovery of erroneous refund. An erroneous refund shall be considered to create an 26
underpayment of tax on the date made. An assessment of a deficiency arising out of an erroneous 27
refund may be made at any time within three (3) years thereafter, or at any time if it appears that 28
any part of the refund was induced by fraud or misrepresentation of a material fact. 29
(6) Armed forces relief. For purposes of this tax, the date appearing in 26 U.S.C. § 692(a) 30
shall be January 1, 1971. 31
(c) Omission of income on return. Notwithstanding the foregoing provisions of this section, 32
the tax may be assessed at any time within six (6) years after the return was filed if an individual 33
omits from his or her Rhode Island income an amount properly includible therein which is in excess 34
LC002072 - Page 42 of 61
of twenty-five percent (25%) of the amount of Rhode Island income stated in the return. For this 1
purpose there shall not be taken into account any amount that is omitted in the return if the amount 2
is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise 3
the tax administrator of the nature and amount of the item. 4
(d) Suspension of limitation. The running of the period of limitations on assessment or 5
collection of tax or other amount (or of a transferee’s liability) shall, after the mailing of a notice 6
of deficiency, be suspended for the period during which the tax administrator is prohibited under § 7
44-30-81(c) from making the assessment or from collecting by levy, and for sixty (60) days 8
thereafter. 9
(e) Limitations exclusive. No period of limitations specified in any other law shall apply to 10
the assessment or collection of Rhode Island personal income tax. Under no circumstances shall 11
the tax administrator issue any notice of a deficiency determination for Rhode Island personal 12
income tax due or payable more than ten (10) years after the date upon which the return was filed 13
or due to be filed, nor shall the tax administrator commence any collection action for any personal 14
income tax due and payable unless the collection action is commenced within ten (10) years after 15
a notice of deficiency determination became a final collectible assessment; provided however, that 16
the tax administrator can renew a statutory lien that was initially filed within the ten-year (10) 17
period for collection actions. Both of the aforementioned ten-year (10) periods are tolled for any 18
period of time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection 19
action” refers to any activity undertaken by the division of taxation to collect on any state tax 20
liabilities that are final, due, and payable under Rhode Island law. “Collection action” may include, 21
but is not limited to, any civil action involving a liability owed under chapter 30 of title 44. This 22
section excludes any liabilities that are deemed trust funds as defined in § 44-30-76, as amended. 23
(f) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 24
attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 25
periods set forth in this section. 26
44-30-102. Reporting requirement for applicable entities providing minimum 27
essential coverage. 28
(a) Findings. 29
(1) Ensuring the health of insurance markets is a responsibility reserved for states under 30
the McCarran-Ferguson Act and other federal law. 31
(2) There is substantial evidence that being uninsured causes health problems and 32
unnecessary deaths. 33
(3) The shared responsibility payment penalty imposed by § 44-30-101(c) is necessary to 34
LC002072 - Page 43 of 61
protect the health and welfare of the state’s residents. 1
(4) The reporting requirement provided for in this section is necessary for the successful 2
implementation of the shared responsibility payment penalty imposed by § 44-30-101(c). This 3
requirement provides the only widespread source of third-party reporting to help taxpayers and the 4
tax administrator verify whether an applicable individual maintains minimum essential coverage. 5
There is compelling evidence that third-party reporting is crucial for ensuring compliance with tax 6
provisions. 7
(5) The shared responsibility payment penalty imposed by § 44-30-101(c), and therefore 8
the reporting requirement in this section, is necessary to ensure a stable and well-functioning health 9
insurance market. There is compelling evidence that, without an effective shared responsibility 10
payment penalty in place for those who go without coverage, there would be substantial instability 11
in health insurance markets, including higher prices and the possibility of areas without any 12
insurance available. 13
(6) The shared responsibility payment penalty imposed by § 44-30-101(c), and therefore 14
the reporting requirement in this section, is also necessary to foster economic stability and growth 15
in the state. 16
(7) The reporting requirement in this section has been narrowly tailored to support 17
compliance with the shared responsibility payment penalty imposed by § 44-30-101(c), while 18
imposing only an incidental burden on reporting entities. In particular, the information that must 19
be reported is limited to the information that must already be reported under a similar federal 20
reporting requirement under section 6055 of the Internal Revenue Code of 1986. In addition, this 21
section provides that its reporting requirement may be satisfied by providing the same information 22
that is currently reported under such federal requirement. 23
(b) Definitions. For purposes of this section: 24
(1) “Applicable entity” means: 25
(i) An employer or other sponsor of an employment-based health plan that offers 26
employment-based minimum essential coverage to any resident of Rhode Island. 27
(ii) The Rhode Island Medicaid single state agency providing Medicaid or Children’s 28
Health Insurance Program (CHIP) coverage. 29
(iii) Carriers licensed or otherwise authorized by the Rhode Island office of the health 30
insurance commissioner to offer health coverage providing coverage that is not described in 31
subsection (b)(1)(i) or (b)(1)(ii) of this section. 32
(2) “Minimum essential coverage” has the meaning given the term by § 44-30-101(a)(2). 33
(c) For purposes of administering the shared responsibility payment penalty to individua ls 34
LC002072 - Page 44 of 61
who do not maintain minimum essential coverage under § 44-30-101(b), every applicable entity 1
that provides minimum essential coverage to an individual during a calendar year shall, at such 2
time as the tax administrator may prescribe, file a form in a manner prescribed by the tax 3
administrator. 4
(d) Form and manner of return. 5
(1) A return, in the form as the tax administrator may prescribe, contains the following 6
information: 7
(i) The name, address, and Taxpayer Identification Number (TIN) of the primary insured 8
and the name and TIN of each other individual obtaining coverage under the policy; 9
(ii) The dates during which the individual was covered under minimum essential coverage 10
during the calendar year; and 11
(iii) Such other information as the tax administrator may require. 12
(2) Sufficiency of information submitted for federal reporting. Notwithstanding the 13
requirements of subsection (d)(1) of this section, a return shall not fail to be a return described in 14
this section if it includes the information contained in a return described in section 6055 of the 15
Internal Revenue Code of 1986, as that section is in effect and interpreted on the 15th day of 16
December 2017. 17
(3) Failure to file proper return. If an applicable entity fails to file a return or report in the 18
method and manner prescribed by the tax administrator, or files an incomplete or inaccurate return 19
or report, by the due date determined by the tax administrator for the filing of the return or report, 20
a penalty of twenty-five dollars ($25.00) per individual not reported to the division of taxation in 21
accordance with this section shall be imposed. 22
(e) Statements to be furnished to individuals with respect to whom information is reported. 23
(1) Any applicable entity providing a return under the requirements of this section shall 24
also provide to each individual whose name is included in the return a written statement containing 25
the name, address, and contact information of the person required to provide the return to the tax 26
administrator and the information included in the return with respect to the individuals listed 27
thereupon. The written statement must be provided on or before January 31 of the year following 28
the calendar year for which the return was required to be made or by a date as may be determined 29
by the tax administrator. 30
(2) Sufficiency of federal statement. Notwithstanding the requirements of subsection 31
(e)(1), the requirements of this subsection (e) may be satisfied by a written statement provided to 32
an individual under section 6055 of the Internal Revenue Code of 1986, as that section is in effect 33
and interpreted on the 15th day of December 2017. 34
LC002072 - Page 45 of 61
(f) Reporting responsibility. 1
(1) Coverage provided by governmental units. In the case of coverage provided by an 2
applicable entity that is any governmental unit or any agency or instrumentality thereof, the officer 3
or employee who enters into the agreement to provide the coverage (or the person appropriately 4
designated for purposes of this section) shall be responsible for the returns and statements required 5
by this section. 6
(2) Delegation. An applicable entity may contract with third-party service providers, 7
including insurance carriers, to provide the returns and statements required by this section. 8
SECTION 10. Section 44-31-1 of the General Laws in Chapter 44-31 entitled "Investment 9
Tax Credit" is hereby amended to read as follows: 10
44-31-1. Investment tax credit. 11
(a) A taxpayer shall be allowed a credit, to be computed as provided in this chapter, against 12
the tax imposed by chapters 11, 14, and 17, and 30 of this title. The amount of the credit shall be 13
two percent (2%) of the cost or other basis for federal income tax purposes of tangible personal 14
property and other tangible property, including buildings and structural components of buildings, 15
described in subsection (b) of this section, acquired, constructed, reconstructed, or erected after 16
December 31, 1973. Provided, that the amount of the credit shall be four percent (4%) of the: (i) 17
cost or other basis for federal income tax purposes of tangible personal property and other tangible 18
property, including buildings and structural components of buildings, described in subdivision 19
(b)(1) of this section, acquired, constructed, reconstructed or erected after December 31, 1993; and 20
(ii) qualified amounts for leased assets of tangible personal property and other tangible property 21
described in subdivision (b)(1) of this section, acquired, constructed, reconstructed, or erected after 22
January 1, 1998, and the amount of the credit shall be ten percent (10%) of the cost or other basis 23
for federal income tax purposes, and the qualified amounts for leased assets, of tangible personal 24
property and other tangible property described in subdivision (b)(3) of this section, acquired, 25
constructed, reconstructed, or erected after January 1, 1998, and with respect to buildings and 26
structural components which are acquired, constructed, reconstructed or erected after July 1, 2001, 27
as described in subdivision (b)(3) of this section. 28
(b)(1) A credit shall be allowed under this section with respect to tangible personal property 29
and other tangible property, including buildings and structural components of buildings, which are 30
depreciable pursuant to 26 U.S.C. § 167, have a useful life of four (4) years or more, are acquired 31
by purchase as defined in 26 U.S.C. § 179(d) or are acquired by lease as prescribed in paragraph 32
(3)(iv) of this subsection, have a situs in this state and are principally used by the taxpayer in the 33
production of goods by manufacturing, process, or assembling. The credit shall be allowable in the 34
LC002072 - Page 46 of 61
year the property is first placed in service by the taxpayer, which is the year in which, under the 1
taxpayer’s depreciation practice, the period for depreciation with respect to the property begins, or 2
the year in which the property is placed in a condition or state of readiness and availability for a 3
specifically assigned function, whichever is earlier. For purposes of this paragraph, 4
“manufacturing” means the process of working raw materials into wares suitable for use or which 5
gives new shapes, new quality or new combinations to matter that already has gone through some 6
artificial process by the use of machinery, tools, appliances, and other similar equipment. Property 7
used in the production of goods includes machinery, equipment, or other tangible property which 8
is principally used in the repair and service of other machinery, equipment, or other tangible 9
property used principally in the production of goods and includes all facilities used in the 10
production operation, including storage of material to be used in production and of the products 11
that are produced. 12
(2) Within the meaning of subdivision (1) of this subsection, the term “manufacturing” 13
means the activities of a “manufacturer” as defined in § 44-3-3(20)(iii) and (iv). 14
(3)(i) A credit shall be allowed under this section with respect to tangible personal property 15
and other tangible property, (excluding motor vehicles, furniture, buildings and structural 16
components of buildings, except as provided in this section), which are depreciable pursuant to 26 17
U.S.C. § 167, have a useful life of four (4) years or more, are acquired by purchase as defined in 18
26 U.S.C. § 179(d) or acquired by lease as prescribed in paragraph (iv) of this subdivision, have a 19
situs in this state and to the extent the property is used by a qualified taxpayer, as that term is 20
defined in paragraph (v) of this subdivision, in any of the businesses described in major groups 20 21
through 39, 50 and 51, 60 through 67, 73, 76, 80 through 82, 87 and 89 in the standard industrial 22
classification manual prepared by the technical committee on industrial classification, office of the 23
statistical standards, executive office of the president, United States Bureau of the Budget, as 24
revised from time to time (“SIC Code”) and/or any of the businesses described in the three (3) digit 25
SIC Code 781. 26
(ii) A credit shall be allowed under this section with respect to buildings and structural 27
components that are acquired, constructed, reconstructed, or erected after July 1, 2001, which are 28
depreciable pursuant to 26 U.S.C. § 167, have a useful life of four (4) years or more, are acquired 29
by purchase as defined in 26 U.S.C. § 179(d) or acquired by lease for a term of twenty (20) years 30
or more, excluding renewal periods, have a situs in this state and to the extent the property is used 31
by a high performance manufacturer. The term “high performance manufacturer” means a taxpayer: 32
(A) engaged in any of the businesses described in the major groups 28, 30, 34, to 36, and 38 of the 33
SIC Codes, (B) that pays its full-time equivalent employees a median annual wage above the 34
LC002072 - Page 47 of 61
average annual wage paid by all taxpayers in the state which share the same two-digit SIC Code, 1
unless the high performance manufacturer is the only high performance manufacturer in the state 2
conducting business in that two-digit SIC Code, in which case this requirement shall not apply, and 3
(C)(I) whose expenses for training or retraining its employees exceeds two percent (2%) of its total 4
payroll costs, or (II) that pays its full-time equivalent employees a median annual wage equal to or 5
greater than one hundred twenty-five percent (125%) of the average annual wage paid in this state 6
by employers to employees, or (III) that pays its full-time equivalent employees classified as 7
production workers by the Rhode Island department of labor and training an average annual wage 8
above the average annual wage paid to the production workers of all taxpayers in the state which 9
share the same two-digit SIC Code. 10
(iii) To the extent allowable, the credit allowed under this section is allowed for computers, 11
software and telecommunications hardware used by a taxpayer even if the property has a useful life 12
of less than four (4) years; 13
(iv) The credit for property acquired by lease is based on the fair market value of the 14
property at the inception of the lease times the portion of the depreciable life of the property 15
represented by the term of the lease, excluding renewal options. The credit described in this 16
subdivision for high performance manufacturers that lease buildings and their structural 17
components for a term of twenty (20) years or more, excluding renewal periods, shall be calculated 18
in the same manner as for property acquired by purchase; and 19
(v) For purposes of this subsection, a “qualified taxpayer” means a taxpayer in any of the 20
businesses described in major groups 20 through 39, 50 and 51, 60 through 67, 73, 76, 80 through 21
82, 87 and 89 of the SIC Code, and/or any of the businesses described in the three (3) digit SIC 22
Code 781, and which meet the following criteria: 23
(A) The median annual wage paid to a qualified taxpayer’s full-time equivalent employees 24
must be above the average annual wage paid by all taxpayers in the state which share the same two-25
digit SIC Code, unless that qualified taxpayer is the only qualified taxpayer in the state conducting 26
business in that two-digit SIC Code, in which case this requirement does not apply; and 27
(B) With respect to major groups 50 and 51, 60 through 67, 73, 76, 80 through 82, 87 and 28
89 and/or the three (3) digit SIC Code 781(except for those qualified taxpayers whose businesses 29
are described in any of the four (4) digit SIC Codes 7371, 7372 and 7373) only: 30
(I) More than one-half (½) of its gross revenues are a result of sales to customers outside 31
of the state; or 32
(II) More than one-half (½) of its gross revenues are a result of sales to the federal 33
government; or 34
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(III) More than one-half (½) of its gross revenues are a result of a combination of sales 1
described in items (I) and (II) of this subparagraph. 2
(4) For purposes of this section, “sales to customers outside the state” means sales to 3
individuals, businesses and other entities, as well as divisions and/or branches of businesses and 4
other entities, residing or located outside of the state. The requirement of subparagraph (v)(A) of 5
this subdivision does not apply to any qualified taxpayer: (i) whose expenses for training or 6
retraining its employees exceeds two percent (2%) of these qualified taxpayer’s total payroll costs; 7
or (ii) whose median annual wage paid to its full-time equivalent employees is equal to or greater 8
than one hundred twenty-five percent (125%) of the average annual wage paid in this state by 9
employers to employees; or (iii), with respect to major groups 20 through 39 only, the average 10
annual wage paid to these qualified taxpayer’s full-time equivalent employees, classified as 11
production workers by the Rhode Island department of labor and training, is above the average 12
annual wage paid to the production workers of all these taxpayers in the state which share the same 13
two-digit SIC Code. At the election of a taxpayer, which is made at any time and in any manner 14
that may be determined by the tax administrator, the taxpayer’s ability in a particular fiscal year to 15
qualify as a qualified taxpayer may be based on the expenses and gross receipts of the taxpayer for 16
either the prior fiscal year or the immediately proceeding fiscal year rather than on the expenses 17
and gross receipts for that fiscal year. For purposes of this chapter, the director of the Rhode Island 18
human resource investment council shall certify as to legitimate training and retraining expenses in 19
accordance with the guidelines established in chapter 64.6 of title 42, and any rules and regulations 20
promulgated under this chapter. For purposes of this subsection, a “full-time equivalent employee” 21
means an employee who works a minimum of thirty (30) hours per week within the state or two 22
(2) part-time employees who together work a minimum of thirty (30) hours per week within the 23
state. For purposes of this subsection, the director of the Rhode Island department of labor and 24
training, upon receipt of an application from a qualified taxpayer, shall certify whether this 25
qualified taxpayer meets the requirement in subparagraph (v)(A) of this subdivision or is exempt 26
from this requirement because the median annual wage it pays its full-time equivalent employees 27
is equal to or greater than one hundred twenty-five (125%) percent of the average annual wage paid 28
in this state by employers to employees or, with respect to major groups 20 through 39 only, the 29
average annual wage paid to this qualified taxpayer’s full-time equivalent employees, classified as 30
production workers by the Rhode Island department of labor and training, is above the average 31
annual wage paid to the production workers of all these taxpayers in the state which share the same 32
two-digit SIC Code. The director of the Rhode Island department of labor and training shall 33
promulgate rules and regulations as required for the implementation of this requirement. 34
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(5) To the extent otherwise allowable, the credit provided by paragraphs (3)(i) and (ii) of 1
this subsection are also allowed for the property having a situs in Rhode Island and used, however 2
acquired, by a property and casualty insurance company. 3
(c) Subject to the provisions of subdivision (b)(3) of this section, a taxpayer is not allowed 4
a credit under subsection (a) of this section with respect to tangible personal property and other 5
tangible property, including buildings and structural components of buildings, which it leases to 6
any other person or corporation and is not allowed a credit under subsection (a) of this section with 7
respect to buildings and structural components of buildings it leases from any other person or 8
corporation. For the purposes of the preceding sentence, any contract or agreement to lease or rent 9
or for a license to use the property is considered a lease, unless a contract or agreement is treated 10
for federal income tax purposes as an installment purchase rather than a lease. 11
(d) The credit allowed under this section for any taxable year does not reduce the tax due 12
for the year by more than fifty percent (50%) of the tax liability that would be payable, and further 13
in the case of corporations, to less than the minimum tax as prescribed in § 44-11-2(e); provided, 14
that in the case of the credit allowed to high performance manufacturers under subdivision (b)(3) 15
of this section, the fifty percent (50%) limitation shall not apply. If the amount of credit allowable 16
under this section for any taxable year is less than the amount of credit available to the taxpayer, 17
any amount of credit not deductible in the taxable year may be carried over to the following year 18
or years (not to exceed seven (7) years) and may be deducted from the taxpayer’s tax for the year 19
or years. 20
(e) At the option of the taxpayer, air or water pollution control facilities which qualify for 21
elective amortization deduction may be treated as property principally used by the taxpayer in the 22
production of goods by manufacturing, processing, or assembling; provided, that if the property 23
qualifies under subsection (b) of this section, in which event, an amortization deduction is not 24
allowed. 25
(f) With respect to property which is disposed of or ceases to be in qualified use prior to 26
the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that 27
portion of the credit provided for in subsection (a) of this section, which represents the ratio which 28
the months of qualified use bear to the months of useful life. If property on which credit has been 29
taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference 30
between the credit taken and the credit allowed for actual use must be added back in the year of 31
disposition. If this property is disposed of or ceases to be in qualified use after it has been in 32
qualified use for more than twelve (12) consecutive years, it is not necessary to add back the credit 33
as provided in this subsection. A credit allowed to a qualified taxpayer is not recaptured merely 34
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because the taxpayer subsequently fails to retain the classification as a qualified taxpayer. The 1
amount of credit allowed for actual use shall be determined by multiplying the original credit by 2
the ratio, which the months of qualified use bear to the months of useful life. For purposes of this 3
subsection, “useful life of property” is the same as the taxpayer (or in the case of property acquired 4
by lease, the owner of the property) uses for depreciation purposes when computing his or her 5
federal income tax liability. Comparable rules are used in the case of property acquired by lease to 6
determine the amount of credit, if any, that will be recaptured if the lease terminates prematurely 7
or if the property covered by the lease otherwise fails to be in qualified use. 8
(g) The credit allowed under this section is only allowed against the tax of that corporation 9
included in a consolidated return that qualifies for the credit and not against the tax of other 10
corporations that may join in the filing of a consolidated tax return. 11
SECTION 11. Sections 44-32-2 and 44-32-3 of the General Laws in Chapter 44-32 entitled 12
"Elective Deduction for Research and Development Facilities" are hereby amended to read as 13
follows: 14
44-32-2. Credit for research and development property acquired, constructed, or 15
reconstructed or erected after July 1, 1994. 16
(a) A taxpayer shall be allowed a credit against the tax imposed by chapters 11, or 17, or 17
30 of this title. The amount of the credit shall be ten percent (10%) of the cost or other basis for 18
federal income tax purposes of tangible personal property, and other tangible property, including 19
buildings and structural components of buildings, described in subsection (b) of this section; 20
acquired, constructed or reconstructed, or erected after July 1, 1994. 21
(b) A credit shall be allowed under this section with respect to tangible personal property 22
and other tangible property, including buildings and structural components of buildings which are: 23
depreciable pursuant to 26 U.S.C. § 167 or recovery property with respect to which a deduction is 24
allowable under 26 U.S.C. § 168, have a useful life of three (3) years or more, are acquired by 25
purchase as defined in 26 U.S.C. § 179(d), have a situs in this state and are used principally for 26
purposes of research and development in the experimental or laboratory sense which shall also 27
include property used by property and casualty insurance companies for research and development 28
into methods and ways of preventing or reducing losses from fire and other perils. The credit shall 29
be allowable in the year the property is first placed in service by the taxpayer, which is the year in 30
which, under the taxpayer’s depreciation practice, the period for depreciation with respect to the 31
property begins, or the year in which the property is placed in a condition or state of readiness and 32
availability for a specifically assigned function, whichever is earlier. These purposes shall not be 33
deemed to include the ordinary testing or inspection of materials or products for quality control, 34
LC002072 - Page 51 of 61
efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in 1
connection with literary, historical or similar projects. 2
(c) A taxpayer shall not be allowed a credit under this section with respect to any property 3
described in subsections (a) and (b) of this section, if a deduction is taken for the property under § 4
44-32-1. 5
(d) A taxpayer shall not be allowed a credit under this section with respect to tangible 6
personal property and other tangible property, including buildings and structural components of 7
buildings, which it leases to any other person or corporation. For purposes of the preceding 8
sentence, any contract or agreement to lease or rent or for a license to use the property is considered 9
a lease. 10
(e) The credit allowed under this section for any taxable year does not reduce the tax due 11
for that year, in the case of corporations, to less than the minimum fixed by § 44-11-2(e). If the 12
amount of credit allowable under this section for any taxable year is less than the amount of credit 13
available to the taxpayer, any amount of credit not credited in that taxable year may be carried over 14
to the following year or years, up to a maximum of seven (7) years, and may be credited against 15
the taxpayer’s tax for the following year or years. For purposes of chapter 30 of this title, if the 16
credit allowed under this section for any taxable year exceeds the taxpayer’s tax for that year, the 17
amount of credit not credited in that taxable year may be carried over to the following year or years, 18
up to a maximum of seven (7) years, and may be credited against the taxpayer’s tax for the 19
following year or years. 20
(f)(1) With respect to property which is depreciable pursuant to 26 U.S.C. § 167 and which 21
is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit 22
is to be taken, the amount of the credit is that portion of the credit provided for in this section which 23
represents the ratio which the months of qualified use bear to the months of useful life. If property 24
on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its 25
useful life, the difference between the credit taken and the credit allowed for actual use must be 26
added back in the year of disposition. If the property is disposed of or ceases to be in qualified use 27
after it has been in qualified use for more than twelve (12) consecutive years, it is not necessary to 28
add back the credit as provided in this subdivision. The amount of credit allowed for actual use is 29
determined by multiplying the original credit by the ratio which the months of qualified use bear 30
to the months of useful life. For purposes of this subdivision, “useful life of property” is the same 31
as the taxpayer uses for depreciation purposes when computing his federal income tax liability. 32
(2) Except with respect to that property to which subdivision (3) of this subsection applies, 33
with respect to three (3) year property, as defined in 26 U.S.C. § 168(c), which is disposed of or 34
LC002072 - Page 52 of 61
ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, 1
the amount of the credit shall be that portion of the credit provided for in this section which 2
represents the ratio which the months of qualified use bear to thirty-six (36). If property on which 3
credit has been taken is disposed of or ceases to be in qualified use prior to the end of thirty-six 4
(36) months, the difference between the credit taken and the credit allowed for actual use must be 5
added back in the year of disposition. The amount of credit allowed for actual use is determined by 6
multiplying the original credit by the ratio that the months of qualified use bear to thirty-six (36). 7
(3) With respect to any recovery property to which 26 U.S.C. § 168 applies, which is a 8
building or a structural component of a building and which is disposed of or ceases to be in qualified 9
use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit 10
is that portion of the credit provided for in this section which represents the ratio which the months 11
of qualified use bear to the total number of months over which the taxpayer chooses to deduct the 12
property under 26 U.S.C. § 168. If property on which credit has been taken is disposed of or ceases 13
to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the 14
property under 26 U.S.C. § 168, the difference between the credit taken and the credit allowed for 15
actual use must be added back in the year of disposition. If the property is disposed of or ceases to 16
be in qualified use after it has been in qualified use for more than twelve (12) consecutive years, it 17
is not necessary to add back the credit as provided in this subdivision. The amount of credit allowed 18
for actual use is determined by multiplying the original credit by the ratio that the months of 19
qualified use bear to the total number of months over which the taxpayer chooses to deduct the 20
property under 26 U.S.C. § 168. 21
(g) No deduction for research and development facilities under § 44-32-1 shall be allowed 22
for research and development property for which the credit is allowed under this section. 23
(h) No investment tax credit under § 44-31-1 shall be allowed for research and development 24
property for which the credit is allowed under this section. 25
(i) The investment tax credit allowed by § 44-31-1 shall be taken into account before the 26
credit allowed under this section. 27
(j) The credit allowed under this section only allowed against the tax of that corporation 28
included in a consolidated return that qualifies for the credit and not against the tax of other 29
corporations that may join in the filing of a consolidated return. 30
(k) In the event that the taxpayer is a partnership, joint venture or small business 31
corporation, the credit shall be divided in the same manner as income. 32
44-32-3. Credit for qualified research expenses. 33
(a) A taxpayer shall be allowed a credit against the tax imposed by chapters 11, or 17 or 30 34
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of this title. The amount of the credit shall be five percent (5%)(and in the case of amounts paid or 1
accrued after January 1, 1998, twenty-two and one-half percent (22.5%) for the first twenty-five 2
thousand dollars ($25,000) worth of credit and sixteen and nine-tenths percent (16.9%) for the 3
amount of credit above twenty-five thousand dollars ($25,000)) of the excess, if any, of: 4
(1) The qualified research expenses for the taxable year, over 5
(2) The base period research expenses. 6
(b)(1) “Qualified research expenses” and “base period research expenses” have the same 7
meaning as defined in 26 U.S.C. § 41; provided, that the expenses have been incurred in this state 8
after July 1, 1994. 9
(2) Notwithstanding the provisions of subdivision (1) of this subsection, “qualified research 10
expenses” also includes amounts expended for research by property and casualty insurance 11
companies into methods and ways of preventing or reducing losses from fire and other perils. 12
(c) The credit allowed under this section for any taxable year shall not reduce the tax due 13
for that year by more than fifty percent (50%) of the tax liability that would be payable, and in the 14
case of corporations, to less than the minimum fixed by § 44-11-2(e). If the amount of credit 15
allowable under this section for any taxable year is less than the amount of credit available to the 16
taxpayer any amount of credit not credited in that taxable year may be carried over to the following 17
year or years, up to a maximum of seven (7) years, and may be credited against the taxpayer’s tax 18
for that year or years. For purposes of chapter 30 of this title, if the credit allowed under this section 19
for any taxable year exceeds the taxpayer’s tax for that year, the amount of credit not credited in 20
that taxable year may be carried over to the following year or years, up to a maximum of seven (7) 21
years, and may be credited against the taxpayer’s tax for that year or years. For purposes of 22
determining the order in which carry-overs are taken into consideration, the credit allowed by § 44-23
32-2 is taken into account before the credit allowed under this section. 24
(d) The investment tax credit allowed by § 44-31-1 shall be taken into account before the 25
credit allowed under this section. 26
(e) The credit allowed under this section shall only be allowed against the tax of that 27
corporation included in a consolidated return that qualifies for the credit and not against the tax of 28
other corporations that may join in the filing of a consolidated return. 29
(f) In the event the taxpayer is a partnership, joint venture or small business corporation, 30
the credit is divided in the same manner as income. 31
SECTION 12. Section 44-39.1-2 of the General Laws in Chapter 44-39.1 entitled 32
"Employment Tax Credit" is hereby amended to read as follows: 33
44-39.1-2. Credit provisions. 34
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(a) The credit is not refundable but may be applied against the tax liability imposed against 1
a taxpayer pursuant to chapters 11, 13, 14, 15, and 17 and 30 of this title. 2
(b) The credit allowed under this chapter for any taxable year shall not reduce the tax due 3
for that year to less than one hundred dollars ($100). Any amount of credit not deductible in that 4
taxable year may not be carried over to the following year. This credit may not be applied against 5
the tax until all other credits available to this taxpayer for that taxable year have been applied. 6
(c) In the event that the employer is a partnership, joint venture, or small business 7
corporation, the credit shall be divided in the manner as income. 8
(d) In the event that the taxpayer is liable for taxes imposed under both chapters 14 and 15 9
of this title, the taxpayer must elect the tax against which it wishes to claim credit. This election 10
shall be made as part of the taxpayer’s filings in accordance with §§ 44-14-6 and 44-15-5. The 11
taxpayer may not divide the credit for any year between the two (2) tax liabilities for which it is 12
liable. 13
SECTION 13. Sections 44-46-1 and 44-46-3 of the General Laws in Chapter 44-46 entitled 14
"Adult Education Tax Credit" are hereby amended to read as follows: 15
44-46-1. Adult education tax credit. 16
A taxpayer who is an employer shall be allowed a credit, to be computed as provided in 17
this chapter, against the tax imposed by chapters 11, 13, 14, 15, and 17 and 30 of this title. The 18
amount of the credit shall be fifty percent (50%) of the costs incurred solely and directly for non-19
worksite or worksite-based adult education programs as defined in § 44-46-2. 20
44-46-3. Credits. 21
An employer shall be allowed a credit as provided in § 44-46-1 up to a maximum credit of 22
three hundred dollars ($300) against taxes otherwise due under provisions of chapters 11, 13, 14, 23
15, and 17 and 30 of this title per paid employee. The employee must remain in the employ of the 24
business for a minimum period of thirteen (13) consecutive weeks, and a minimum of four hundred 25
and fifty-five (455) hours of paid employment before the employer can become eligible for the 26
income credit. The credit shall not reduce the tax under chapter 11 of this title to less than one 27
hundred dollars ($100). The credit is not refundable. Any amount of credit not deductible in that 28
taxable year may not be carried over to the following year. In the event that the employer is a 29
partnership, joint venture or small business corporation, the credit shall be divided in the same 30
manner as income. This credit may not be applied against the tax until all other credits available to 31
this taxpayer for the taxable year have been applied. 32
SECTION 14. Section 44-47-1 of the General Laws in Chapter 44-47 entitled "Adult and 33
Child Day Care Assistance and Development Tax Credit" is hereby amended to read as follows: 34
LC002072 - Page 55 of 61
44-47-1. Tax credit. 1
(a) A taxpayer that pays for or provides adult or child day care services to its employees or 2
to the employees of its commercial tenants, or that provides real property or dedicates rental space 3
for child day care services, is allowed a credit, to be computed as provided in this chapter, against 4
the tax imposed by chapters 11 and 13, except § 44-13-13, and chapters 14, and 17, 30 of this title. 5
The amount of the credit shall be: 6
(1) Thirty percent (30%) of the total amount expended in the state of Rhode Island during 7
the taxable year by a taxpayer for day care services purchased to provide care for the dependent 8
children or dependent adult family members of the taxpayer’s employees or employees of 9
commercial tenants of the taxpayer during the employees’ hours of employment; 10
(2) Thirty percent (30%) of the total amount expended during the taxable year by a taxpayer 11
in the establishment and/or operation of a day care facility in the state of Rhode Island used 12
primarily by the dependent children of the taxpayer’s employees or employees of commercial 13
tenants of the taxpayer during the employees’ hours of employment; 14
(3) Thirty percent (30%) of the total amount expended during the taxable year by a taxpayer 15
in conjunction with one or more other taxpayers for the establishment and/or operation of a day 16
care facility in the state of Rhode Island used primarily by the dependent children of the taxpayer’s 17
employees or employees of commercial tenants of the taxpayer during that employee’s hours of 18
employment; 19
(4) Thirty percent (30%) of the total amount foregone in rent or lease payments related to 20
the dedication of rental or lease space to child day care services. The amount foregone shall be the 21
difference between fair market rental and actual rental. 22
(b) No credit shall be allowed pursuant to this chapter unless the child day care facility is 23
licensed pursuant to chapter 72.1 of title 42, and agrees to accept children whose child care services 24
are paid for in full or in part by the Rhode Island department of human services; and/or the adult 25
day care facility is certified by the department of elderly affairs. 26
SECTION 15. Section 44-57-1 of the General Laws in Chapter 44-57 entitled "Residential 27
Renewable Energy System Tax Credit" is hereby amended to read as follows: 28
44-57-1. Tax credit for principal or secondary residence. 29
(a) An eligible person, as defined in § 44-57-3, who shall pay all or part of the cost of an 30
eligible renewable energy system, as defined in § 44-57-4, which is installed in a dwelling, as 31
defined in § 44-57-2(13), shall be entitled to a tax credit against the tax liability imposed by chapters 32
chapter 11 and 30 of this title. The credit, which shall be nonrefundable, shall be computed in 33
accordance with § 44-57-5. 34
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(b) The credit shall be claimed in the tax year in which the renewable energy system is 1
placed into service. The credit may be claimed in the tax year the renewable energy system is 2
purchased if the system is placed in service by April 1 of the following tax year. 3
(c) Any credit not used in accordance with subsection (b) of this section shall not be carried 4
over to any following year or years. The tax credit shall not reduce the tax in any tax year below 5
the minimum tax where a minimum tax is provided by law. 6
(d) In the event the eligible person is a partnership, joint venture, or corporation, the credit 7
shall be divided in the same manner as income. 8
SECTION 16. Sections 44-30-19, 44-30-20, 44-30-21, 44-30-22, 44-30-23, 44-30-24, 44-9
30-26, 44-30-27 and 44-30-37 of the General Laws in Chapter 44-30 entitled "Personal Income 10
Tax" are hereby repealed. 11
44-30-19. Credit to trust beneficiary receiving accumulation distribution. 12
(a) General. A resident beneficiary of a trust whose Rhode Island income includes all or 13
part of an accumulation distribution by the trust, as defined in 26 U.S.C. § 665, shall be allowed a 14
credit against the tax otherwise due under this chapter for all or a proportionate part of any tax paid 15
by the trust under this chapter for any preceding taxable year which would not have been payable 16
if the trust had in fact made distributions to its beneficiaries at the times and in the amounts specified 17
in 26 U.S.C. § 666. 18
(b) Limitation. The credit under this section shall not reduce the tax otherwise due from 19
the beneficiary under this chapter to an amount less than would have been due if the accumulation 20
distribution or his or her part thereof were excluded from his or her Rhode Island income. 21
44-30-20. Tax credit for installation costs to hydroelectric power developers — 22
Legislative findings and declaration of policy. 23
(a) The general assembly recognizes and declares that because the worldwide supply of 24
fossil fuel and of other nonrenewable energy resources is limited, it is necessary to encourage the 25
utilization of renewable natural resources for the production of energy; that there are many existing 26
dams which could be retrofitted to generate hydroelectric power; and that a major factor inhibiting 27
the development of hydroelectric power generation is the presently higher capital costs for new 28
construction of hydro plants compared to conventional thermal systems. 29
(b) It is the policy of this state to support and foster the development of hydropower 30
generating facilities by the establishment of tax incentives for those owners of existing dams who 31
install hydroelectric power generation equipment. 32
44-30-21. Hydroelectric development tax credit — Definitions. 33
For purposes of this chapter: 34
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(1) “Existing dam” means any dam located in this state or immediately adjacent to it, the 1
construction of which was completed on or before May 20, 1981, and which does not require any 2
construction or enlargement of impoundment structures, other than repairs or reconstruction, in 3
connection with the installation of any small hydroelectric power project; 4
(2) “Hydroelectric power developer” means any person or corporation who owns or leases 5
an existing dam and who installs hydroelectric power generation equipment and utilizes that 6
equipment to generate hydroelectric power; 7
(3) “Installation costs” means all expenditures related to the design, construction, 8
installation, or repair of all facilities necessary for hydroelectric power production in this state; 9
(4) “Small hydroelectric power production facility” means any hydroelectric power project 10
which is located in this state, which uses the water power potential of an existing dam, and which 11
has not more than fifteen thousand (15,000) kilowatts of installed capacity. 12
44-30-22. Tax credit for installation costs. 13
(a) A hydroelectric power developer will be allowed an income tax credit for the 14
installation costs of a small hydroelectric power production facility. 15
(b) For the purposes of this section, a hydroelectric power developer shall be allowed a 16
non-refundable state income tax credit in the amount of ten percent (10%) of the installation costs 17
of a hydropower facility. This credit shall be limited to five hundred thousand dollars ($500,000) 18
in expenditures for a maximum income tax credit of fifty thousand dollars ($50,000). This income 19
tax credit shall be allowed as either a personal or a corporate income tax credit, depending on the 20
hydropower developer’s income tax filing status on the last day of his or her income tax filing 21
period; provided, that if the installation costs were incurred by a corporation, then a non-refundable 22
corporate income tax credit shall be allowed, and if installation costs were not incurred by a 23
corporation, then a non-refundable personal income tax credit shall be allowed. In no event shall 24
both a corporate and personal non-refundable income tax credit be allowed for installation costs at 25
a single dam site. 26
44-30-23. Extended credits. 27
If the allowable credit exceeds the taxes due on the developer’s income, the amount of the 28
claim not used as an offset against the income taxes of that taxable year may be carried forward as 29
a credit against subsequent income tax liability. The provision may not exceed five (5) years from 30
the tax year in which the first credit was applied. 31
44-30-24. Tax credit for art. 32
Upon presentation of written certification by the board of curators, an individual shall be 33
entitled to a tax credit. The tax credit shall be equal to ten percent (10%) of each one thousand 34
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dollars ($1,000) of the purchase price of the art up to a maximum purchase price of ten thousand 1
dollars ($10,000). Any amount of tax credit not deductible in the taxable year of certification may 2
not be carried over to the following year. The credit may not be applied until all other credits 3
available to the taxpayer for that taxable year are applied. 4
44-30-26. Tax credit for surviving spouse. 5
An individual who qualifies and files as a “surviving spouse” under the Internal Revenue 6
Code, applicable for the subject tax year, and who was domiciled in the state of Rhode Island for 7
the entire tax year and who is sixty-five (65) years of age or older and has an adjusted gross income 8
of less than twenty-five thousand dollars ($25,000) shall be entitled to a two percent (2%) tax credit 9
based on adjusted gross income, up to a maximum of five hundred dollars ($500). This credit is not 10
refundable, and is only available for the year in which it is claimed. 11
44-30-27. Farm to school income tax credit. 12
Upon presentation of written certification by a local education agency, an individual or 13
entity domiciled in the state for the entire tax year, shall be entitled to an income tax credit for the 14
purchase of produce grown in the state which shall be furnished or used in connection with that 15
individual’s or entity’s agreement to provide food, services or other products to a local education 16
agency. The income tax credit shall be equal to five percent (5%) of the cost of farm products grown 17
or produced in the state. Any amount of income tax credit not deductible in the taxable year of 18
certification may not be carried over to the following year. The credit may not be applied until all 19
other credits available to the taxpayer for that taxable year are applied. 20
44-30-37. Credit to trust beneficiary receiving accumulation distribution. 21
A nonresident beneficiary of a trust whose Rhode Island income includes all or part of an 22
accumulation distribution by the trust, as defined in 26 U.S.C. § 665, shall be allowed a credit 23
against the tax otherwise due under this chapter, computed in the same manner and subject to the 24
same limitation as provided by § 44-30-19 with respect to a resident beneficiary. 25
SECTION 17. Section 44-43-3 of the General Laws in Chapter 44-43 entitled "Tax 26
Incentives for Capital Investment in Small Businesses" is hereby repealed. 27
44-43-3. Wage credit. 28
(a) There shall be allocated among the entrepreneurs of a qualifying business entity (based 29
on the ratio of each entrepreneur’s interest in the entity to the total interest held by all entrepreneurs) 30
with respect to each entity on an annual basis commencing with the calendar year in which the 31
entity first qualified as a qualifying business entity a credit against the tax imposed by chapter 30 32
of this title. The credit shall be equal to three percent (3%) of the wages (as defined in 26 U.S.C. § 33
3121(a)) in excess of fifty thousand dollars ($50,000) paid during each calendar year to employees 34
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of the entity; provided, that there shall be excluded from the amount on which the credit is based 1
any wages: 2
(1) Paid to any owner of the entity; 3
(2) Paid more than five (5) years after the entity commenced business or five (5) years after 4
the purchase of the business entity by new owners, whichever occurs later; or 5
(3) Paid to employees who are not principally employed in Rhode Island and whose wages 6
are not subject to withholding pursuant to chapter 30 of this title. 7
(b) The credit authorized by this section shall cease in the taxable year next following after 8
the taxable year in which the average annual gross revenue of the business entity equals or exceeds 9
one million five hundred thousand dollars ($1,500,000). 10
SECTION 18. Chapter 7-1.2 of the General Laws entitled "Rhode Island Business 11
Corporation Act" is hereby amended by adding thereto the following section: 12
7-1.2-1805. Confirmation of state fees and taxes. 13
(a) Notwithstanding any other provisions of the general laws, when any section of this 14
chapter refers to state fees and/or taxes paid, the division of taxation is authorized to respond and 15
share tax information with the secretary of state's office in response to a request from that office 16
regarding an entity's tax status as compliant or noncompliant. 17
(b) If the secretary of state's office receives notice from the division of taxation that the 18
corporation has failed to pay any fees or taxes due to this state, the secretary of state shall initiate 19
revocation proceedings in accordance with the provisions of §§ 7-1.2-1310 or 7-1.2-1414. 20
(c) The notice of revocation may state as the basis for revocation that the taxpayer failed 21
to pay state fees and/or taxes to the division of taxation. However, the secretary of state's office 22
shall otherwise protect all state and federal tax information in its custody as required by § 44-11-23
26.1 and refrain from disclosing any other specific tax information. 24
(d) For filings remitted and recorded in accordance with any section of this chapter between 25
July 1, 2020 and the effective date of this section that refer to state fees and/or taxes paid, the 26
secretary of state's office may request from the division of taxation a determination as to whether 27
all state taxes and fees were paid as outlined in subsection (a) of this section. If the secretary of 28
state's office receives notice from the division of taxation that the corporation has failed to pay any 29
fees or taxes due to this state, the secretary of state shall begin revocation proceedings in accordance 30
with subsections (b) and (c) of this section. 31
SECTION 19. Chapter 7-16 of the General Laws entitled "The Rhode Island Limited-32
Liability Company Act" is hereby amended by adding thereto the following section: 33
7-16-77. Confirmation of state fees and taxes. 34
LC002072 - Page 60 of 61
(a) Notwithstanding any other provisions of the general laws, when any section of this 1
chapter refers to state fees and/or taxes paid, the division of taxation is authorized to respond and 2
share tax information with the secretary of state's office in response to a request from that office 3
regarding an entity's tax status as compliant or noncompliant. 4
(b) If the secretary of state's office receives notice from the division of taxation that the 5
limited-liability company has failed to pay any fees or taxes due to this state, the secretary of state 6
shall begin revocation proceedings in accordance with the provisions of § 7-16-41. 7
(c) The notice of revocation may state as the basis for revocation that the taxpayer failed 8
to pay state fees and/or taxes to the division of taxation. However, the secretary of state's office 9
shall otherwise protect all state and federal tax information in its custody as required by § 7-16-10
67.1 and refrain from disclosing any other specific tax information. 11
(d) For filings remitted and recorded in accordance with any section of this chapter between 12
July 1, 2020 and the effective date of this section that refer to state fees and/or taxes paid, the 13
secretary of state's office may request from the division of taxation a determination as to whether 14
all state taxes and fees were paid as outlined in subsection (a) of this section. If the secretary of 15
state's office receives notice from the division of taxation that the limited-liability company has 16
failed to pay any fees or taxes due to this state, the secretary of state shall begin revocation 17
proceedings in accordance with subsections (b) and (c) of this section. 18
SECTION 20. This act shall take effect upon passage. 19
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LC002072 - Page 61 of 61
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO CORPORAT IONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE
ISLAND BUSINESS CORPORATION ACT
***
This act would make numerous technical amendments to the statutes on taxes and 1
corporations, associations and partnerships. 2
This act would take effect upon passage. 3
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