Rhode Island 2023 Regular Session

Rhode Island House Bill H5839 Compare Versions

Only one version of the bill is available at this time.

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5	5	2023 -- H 5839
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7	7	LC002072
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9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO CORPORAT IONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE
16	16	ISLAND BUSINESS CORPORATION ACT
17	17	Introduced By: Representatives Edwards, Kazarian, Handy, Ackerman, Diaz, and
18	18	Kennedy
19	19	Date Introduced: March 01, 2023
20	20	Referred To: House Corporations
21	21	(Dept. of Revenue)
22	22
23	23	It is enacted by the General Assembly as follows:
24	24	SECTION 1. Sections 7-1.2-1310 and 7-1.2-1414 of the General Laws in Chapter 7-1.2 1
25	25	entitled "Rhode Island Business Corporation Act" are hereby amended to read as follows: 2
26	26	7-1.2-1310. Revocation of articles of incorporation. 3
27	27	(a) The articles of incorporation of a corporation may be revoked by the secretary of state 4
28	28	upon the conditions prescribed in this section when it is established that: 5
29	29	(1) The corporation procured its articles of incorporation through fraud; or 6
30	30	(2) The corporation has continued to exceed or abuse the authority conferred upon it by 7
31	31	law; or 8
32	32	(3) The corporation has failed to file its annual report within the time required by this 9
33	33	chapter, or with respect to any corporation in good corporate standing on the records of the secretary 10
34	34	of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when 11
35	35	they have become due and payable, or the secretary of state has received notice from the division 12
36	36	of taxation, in accordance with § 44-11-26.1, that the corporation has failed to pay corporate any 13
37	37	fees or taxes due to this state; or 14
38	38	(4) The corporation has failed for thirty (30) days to appoint and maintain a registered agent 15
39	39	in this state as required by this chapter; or 16
40	40	(5) The corporation has failed, after change of its registered office or registered agent, to 17
41	41	file in the office of the secretary of state a statement of the change as required by this chapter; or 18
42	42
43	43
44	44	LC002072 - Page 2 of 61
45	45	(6) The corporation has failed to file in the office of the secretary of state any amendment 1
46	46	to its articles of incorporation or any articles of merger within the time prescribed by this chapter; 2
47	47	or 3
48	48	(7) A misrepresentation has been made of any material matter in any application, report, 4
49	49	affidavit, or other document submitted by the corporation pursuant to this chapter. 5
50	50	(b) No articles of incorporation of a corporation may be revoked by the secretary of state 6
51	51	unless: 7
52	52	(1) The secretary of state gives the corporation notice thereof not less than sixty (60) days 8
53	53	prior to such revocation by regular mail addressed to the registered office of the corporation in this 9
54	54	state on file with the secretary of state’s office, which notice shall specify the basis for the 10
55	55	revocation; provided, however, that if a prior mailing addressed to the registered office of the 11
56	56	corporation in this state currently on file with the secretary of state’s office has been returned as 12
57	57	undeliverable by the United States Postal Service for any reason, or if the revocation notice is 13
58	58	returned as undeliverable by the United States Postal Service for any reason, the secretary of state 14
59	59	gives notice as follows: 15
60	60	(i) To the corporation at its principal office of record as shown in its most recent annual 16
61	61	report, and no further notice is required; or 17
62	62	(ii) In the case of a domestic corporation that has not yet filed an annual report, then to any 18
63	63	one of the incorporators listed on the articles of incorporation, and no further notice is required; 19
64	64	and 20
65	65	(2) The corporation fails prior to revocation to file the annual report or pay the fees, or file 21
66	66	the required statement of change of registered agent or registered office, or file the articles of 22
67	67	amendment or articles of merger, or correct the misrepresentation. 23
68	68	7-1.2-1414. Revocation of certificate of authority. 24
69	69	(a) The certificate of authority of a foreign corporation to transact business in this state may 25
70	70	be revoked by the secretary of state under the conditions prescribed in this section when: 26
71	71	(1) The corporation fails to file its annual report within the time required by this chapter, 27
72	72	or with respect to any corporation in good corporate standing on the records of the secretary of state 28
73	73	on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have 29
74	74	become due and payable, or the secretary of state has received notice from the division of taxation, 30
75	75	in accordance with § 44-11-26.1, that the corporation has failed to pay corporate any fees or taxes 31
76	76	due to this state; or 32
77	77	(2) The corporation fails to appoint and maintain a registered agent in this state as required 33
78	78	by this chapter; or 34
79	79
80	80
81	81	LC002072 - Page 3 of 61
82	82	(3) The corporation fails, after changing its registered office or registered agent, to file in 1
83	83	the office of the secretary of state a statement of the change as required by this chapter; or 2
84	84	(4) The corporation fails to file in the office of the secretary of state any amendment to its 3
85	85	articles of incorporation or any articles of merger within the time prescribed by this chapter; or 4
86	86	(5) A misrepresentation has been made of any material matter in any application, report, 5
87	87	affidavit, or other document submitted by the corporation pursuant to this chapter. 6
88	88	(b) No certificate of authority of a foreign corporation may be revoked by the secretary of 7
89	89	state unless the secretary of state has given the corporation notice thereof not less than sixty (60) 8
90	90	days prior to such revocation, by regular mail addressed to the registered agent of the corporation 9
91	91	in this state on file with the secretary of state’s office, which notice shall specify the basis for the 10
92	92	revocation; provided, however, that if a prior mailing addressed to the registered office of the 11
93	93	corporation in this state currently on file with the secretary of state’s office has been returned as 12
94	94	undeliverable by the United States Postal Service for any reason, or if the revocation notice is 13
95	95	returned as undeliverable by the United States Postal Service for any reason, the secretary of state 14
96	96	shall give notice as follows: 15
97	97	(1) To the corporation at its principal office of record as shown in its most recent annual 16
98	98	report, and no further notice is required; or 17
99	99	(2) In the case of a foreign corporation that has not yet filed an annual report, then to the 18
100	100	corporation at its principal office shown in its application for certificate of authority, and no further 19
101	101	notice is required. 20
102	102	SECTION 2. Section 7-16-67.1 of the General Laws in Chapter 7-16 entitled "The Rhode 21
103	103	Island Limited-Liability Company Act" is hereby amended to read as follows: 22
104	104	7-16-67.1. Revocation of articles or authority to transact business for nonpayment of 23
105	105	fee. 24
106	106	(a) The tax administrator may, after July 15 of each year, make up compile a list of all 25
107	107	limited-liability companies that have failed to pay the fee defined in § 7-16-67 any state fees and/or 26
108	108	taxes for one year after the fee state fees and/or taxes became due and payable, and the failure is 27
109	109	not the subject of a pending appeal. The tax administrator shall certify to the correctness of the list. 28
110	110	Upon receipt of the certified list, the secretary of state may initiate revocation proceedings as 29
111	111	defined in § 7-16-41. 30
112	112	(b) With respect to any information provided by the division of taxation to the secretary of 31
113	113	state state's office pursuant to this chapter, the secretary of state, together with the employees or 32
114	114	agents thereof, shall be subject to all state and federal tax confidentiality laws applying to the 33
115	115	division of taxation and the officers, agents, and employees thereof, and which restrict the 34
116	116
117	117
118	118	LC002072 - Page 4 of 61
119	119	acquisition, use, storage, dissemination, or publication of confidential taxpayer data. 1
120	120	(c) Notwithstanding the foregoing, the notice of revocation may state as the basis for 2
121	121	revocation that the taxpayer has failed to pay state fees and/or taxes to the division of taxation. 3
122	122	However, the secretary of state's office shall otherwise protect all state and federal tax information 4
123	123	in its custody as required by subsection (b) of this section and refrain from disclosing any other 5
124	124	specific tax information. 6
125	125	SECTION 3. Section 42-64.3-6 of the General Laws in Chapter 42-64.3 entitled 7
126	126	"Distressed Areas Economic Revitalization Act" is hereby amended to read as follows: 8
127	127	42-64.3-6. Business tax credits. 9
128	128	A qualified business in an enterprise zone is allowed a credit against the tax imposed 10
129	129	pursuant to chapters 11, 13 (except the taxation of tangible personal property under § 44-13-13), 11
130	130	14, and 17, and 30 of title 44: 12
131	131	(1) A credit equal to fifty percent (50%) of the total amount of wages paid to those 13
132	132	enterprise job employees comprising the five percent (5%) new jobs referenced in § 42-64.3-14
133	133	3(4)(i)(A). The wages subject to the credit shall be reduced by any direct state or federal wage 15
134	134	assistance paid to employers for the employee(s) in the taxable year. The maximum credit allowed 16
135	135	per taxable year under the provisions of this subsection shall be two thousand five hundred dollars 17
136	136	($2,500), per employee. A taxpayer who takes this business tax credit shall not be eligible for the 18
137	137	resident business owner modification pursuant to § 42-64.3-7. 19
138	138	(2) A credit equal to seventy five percent (75%) of the total amount of wages paid to those 20
139	139	enterprise job employees who are domiciliaries of an enterprise zone comprising the five percent 21
140	140	(5%) new jobs referenced in § 42-64.3-3(4)(i)(A). The wages subject to the credit shall be reduced 22
141	141	by any direct state or federal wage assistance in the taxable year. The maximum credit allowed per 23
142	142	taxable year under the provisions of this subdivision shall be five thousand dollars ($5,000) per 24
143	143	employee. A taxpayer who takes this business tax credit is not eligible for the resident business 25
144	144	owner modification. The council shall promulgate appropriate rules to certify that the enterprise 26
145	145	job employees are domiciliaries of an enterprise zone and shall advise the qualified business and 27
146	146	the tax administrator. A taxpayer taking a credit for employees pursuant to this subdivision (2) shall 28
147	147	not be entitled to a credit pursuant to subdivision (1) of this section for the employees. 29
148	148	(3) Any tax credit as provided in subdivision (1) or (2) of this section shall not reduce the 30
149	149	tax below the minimum tax. Fiscal year taxpayers must claim the tax credit in the year into which 31
150	150	the December 31st of the certification year falls. The credit shall be used to offset tax liability 32
151	151	pursuant to the provisions of either chapters 11, 13, 14, or 17, or 30 of title 44, but not more than 33
152	152	one chapter. 34
153	153
154	154
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156	156	(4) In the case of a corporation, the credit allowed under this section is only allowed against 1
157	157	the tax of that corporation included in a consolidated return that qualifies for the credit and not 2
158	158	against the tax of other corporations that may join in the filing of a consolidated tax return. 3
159	159	(5) In the case of multiple business owners, the credit provided in subdivision (1) or (2) of 4
160	160	this section is apportioned according to the ownership interests of the qualified business. 5
161	161	(6) The tax credits established pursuant to this section may be carried forward for a period 6
162	162	of three (3) years if in each of the three (3) calendar years a business which has qualified for tax 7
163	163	credits under this section: (a) does not reduce the number of its employees from the last Effective 8
164	164	Date of Certification; (b) obtains certificates of good standing from the Rhode Island division of 9
165	165	taxation, the corporations division of the Rhode Island secretary of state and the appropriate 10
166	166	municipal tax collector; (c) provides the council an affidavit stating under oath that this business 11
167	167	has not within the preceding twelve (12) months changed its legal status for the purpose of gaining 12
168	168	favorable treatment under the provisions of chapter 64.3 of this title; and (d) meets any other 13
169	169	requirements as may be established by the council in its rules and regulations. 14
170	170	(7) No new credits shall be issued on or after July 1, 2015 unless the business has received 15
171	171	certification under this chapter prior to July 1, 2015. 16
172	172	SECTION 4. Section 42-64.6-7 of the General Laws in Chapter 42-64.6 entitled "Jobs 17
173	173	Training Tax Credit Act" is hereby amended to read as follows: 18
174	174	42-64.6-7. Limitation. 19
175	175	The credit allowed pursuant to this chapter shall not reduce the liability of the employer 20
176	176	for the tax imposed by chapters 11, 13, 14, and 17 and 30 of title 44 in any year below the minimum 21
177	177	tax where a minimum tax is provided under this title. 22
178	178	SECTION 5. Sections 44-11-7.1, 44-11-26.1 and 44-11-29 of the General Laws in Chapter 23
179	179	44-11 entitled "Business Corporation Tax" are hereby amended to read as follows: 24
180	180	44-11-7.1. Limitations on assessment. 25
181	181	(a) General. Except as provided in this section, the amount of the Rhode Island corporate 26
182	182	income tax shall be assessed within three (3) years after the return was filed, whether or not the 27
183	183	return was filed on or after the prescribed date. For this purpose, a tax return filed before the due 28
184	184	date shall be considered as filed on the due date. 29
185	185	(b) Exceptions. 30
186	186	(1) The tax may be assessed at any time if: 31
187	187	(i) No return is filed. 32
188	188	(ii) A false or fraudulent return is filed with intent to avoid tax. 33
189	189	(2) Where, before the expiration of the time prescribed in this section for the assessment of 34
190	190
191	191
192	192	LC002072 - Page 6 of 61
193	193	tax, or before the time as extended, both the tax administrator and the taxpayer have consented, in 1
194	194	writing, to its assessment after that time, the tax may be assessed at any time prior to the expiration 2
195	195	of the agreed upon period. 3
196	196	(3) If a taxpayer’s deficiency is attributable to an excessive net operating loss carryback 4
197	197	allowance, it may be assessed at any time that a deficiency for the taxable year of the loss may be 5
198	198	assessed. 6
199	199	(4) An erroneous refund shall be considered to create an underpayment of tax on the date 7
200	200	made. An assessment of a deficiency arising out of an erroneous refund may be made at any time 8
201	201	within three (3) years thereafter, or at any time if it appears that any part of the refund was induced 9
202	202	by fraud or misrepresentation of a material fact. 10
203	203	(c) Notwithstanding the provisions of this section, the tax may be assessed at any time 11
204	204	within six (6) years after the return was filed if a taxpayer omits from its Rhode Island income an 12
205	205	amount properly includable therein that is in excess of twenty-five percent (25%) of the amount of 13
206	206	Rhode Island income stated in the return. For this purpose there shall not be taken into account any 14
207	207	amount that is omitted in the return if the amount is disclosed in the return, or in a statement attached 15
208	208	to the return, in a manner adequate to apprise the tax administrator of the nature and amount of the 16
209	209	item. 17
210	210	(d) The running of the period of limitations on assessment or collection of the tax or other 18
211	211	amount, or of a transferee’s liability, shall, after the mailing of a notice of deficiency, be suspended 19
212	212	for any period during which the tax administrator is prohibited from making the assessment or from 20
213	213	collecting by levy, and for sixty (60) days thereafter. 21
214	214	(e) No period of limitations specified in any other law shall apply to the assessment or 22
215	215	collection of Rhode Island corporate income tax. Under no circumstances shall the tax 23
216	216	administrator issue any notice of deficiency determination for Rhode Island business corporation 24
217	217	tax due and payable more than ten (10) years after the date upon which the return was filed or due 25
218	218	to be filed, nor shall the tax administrator commence any collection action for any business 26
219	219	corporation tax due and payable unless the collection action is commenced within ten (10) years 27
220	220	after a notice of deficiency determination became a final collectible assessment; provided however, 28
221	221	that the tax administrator may renew a statutory lien that was initially filed within the ten-year (10) 29
222	222	period for collection actions. Both of the aforementioned ten-year (10) periods are tolled for any 30
223	223	period of time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection 31
224	224	action” refers to any activity undertaken by the division of taxation to collect on any state tax 32
225	225	liabilities that are final, due, and payable under Rhode Island law. “Collection action” may include, 33
226	226	but is not limited to, any civil action involving a liability owed under chapter 11 of title 44. 34
227	227
228	228
229	229	LC002072 - Page 7 of 61
230	230	(f) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 1
231	231	attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 2
232	232	periods set forth in this section. 3
233	233	44-11-26.1. Revocation of articles or authority to transact business for nonpayment 4
234	234	of tax. 5
235	235	(a) The tax administrator may, after July 15 of each year, make up compile a list of all 6
236	236	corporations that have failed to pay the corporate tax defined in § 44-11-2 any state fees and/or 7
237	237	taxes for one year after the tax state fees and/or taxes became due and payable, and the failure is 8
238	238	not the subject of a pending appeal. The tax administrator shall certify to the correctness of the list. 9
239	239	Upon receipt of the certified list, the secretary of state may initiate revocation proceedings as 10
240	240	defined in §§ 7-1.2-1310 and 7-1.2-1414. 11
241	241	(b) With respect to any information provided by the division of taxation to the secretary of 12
242	242	state state's office pursuant to this chapter, the secretary of state, together with the employees or 13
243	243	agents thereof, shall be subject to all state and federal tax confidentiality laws applying to the 14
244	244	division of taxation and the officers, agents, and employees thereof, and which restrict the 15
245	245	acquisition, use, storage, dissemination, or publication of confidential taxpayer data. 16
246	246	(c) Notwithstanding the foregoing, the notice of revocation may state as the basis for 17
247	247	revocation that the taxpayer has failed to pay state fees and/or taxes to the division of taxation. 18
248	248	However, the secretary of state's office shall otherwise protect all state and federal tax information 19
249	249	in its custody as required by subsection (b) of this section and refrain from disclosing any other 20
250	250	specific tax information. 21
251	251	44-11-29. Notice to tax administrator of sale of assets — Tax due. 22
252	252	(a) The sale or transfer of the major part in value of the assets of a domestic corporation, 23
253	253	domestic limited liability company, domestic limited partnership, or any other domestic business 24
254	254	entity, or of the major part in value of the assets situated in this state of a foreign corporation, 25
255	255	foreign limited liability company, foreign limited partnership, or any other foreign business entity, 26
256	256	other than in the ordinary course of trade and in the regular and usual prosecution of business by 27
257	257	said corporation, limited liability company, limited partnership, or any other business entity 28
258	258	whether domestic or foreign, and the sale or transfer of the major part in value of the assets of a 29
259	259	domestic corporation, domestic limited liability company, domestic limited partnership, or any 30
260	260	other domestic corporation business entity, or of the major part in value of the assets situated in 31
261	261	this state of a foreign corporation, foreign limited liability company, foreign limited partnership, or 32
262	262	any other foreign business entity that is engaged in the business of buying, selling, leasing, renting, 33
263	263	managing, or dealing in real estate, shall be fraudulent and void as against the state unless the 34
264	264
265	265
266	266	LC002072 - Page 8 of 61
267	267	corporation, limited liability company, limited partnership, or any other business entity, whether 1
268	268	domestic or foreign, at least five (5) business days before the sale or transfer, notifies the tax 2
269	269	administrator of the proposed sale or transfer and of the price, terms, and conditions of the sale or 3
270	270	transfer and of the character and location of the assets by requesting a letter of good standing from 4
271	271	the tax division that shall be received by the tax division at least five (5) business days before the 5
272	272	sale or transfer. Whenever a corporation, limited liability company, limited partnership, or any 6
273	273	other business entity, whether domestic or foreign, makes such a sale or transfer, any and all tax 7
274	274	returns required to be filed under this title must be filed and any and all taxes imposed under this 8
275	275	title shall become due and payable at the time when the tax administrator is so notified of the sale 9
276	276	or transfer, or, if he or she is not so notified, at the time when he or she should have been notified 10
277	277	of the sale or transfer. 11
278	278	(b) This section shall not apply to sales by receivers, assignees under a voluntary 12
279	279	assignment for the benefit of creditors, trustees in bankruptcy, debtors in possession in bankruptcy, 13
280	280	or public officers acting under judicial process. 14
281	281	SECTION 6. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and 15
282	282	Use Taxes — Liability and Computation" is hereby amended to read as follows: 16
283	283	44-18-30. Gross receipts exempt from sales and use taxes. 17
284	284	There are exempted from the taxes imposed by this chapter the following gross receipts: 18
285	285	(1) Sales and uses beyond constitutional power of state. From the sale and from the storage, 19
286	286	use, or other consumption in this state of tangible personal property the gross receipts from the sale 20
287	287	of which, or the storage, use, or other consumption of which, this state is prohibited from taxing 21
288	288	under the Constitution of the United States or under the constitution of this state. 22
289	289	(2) Newspapers. 23
290	290	(i) From the sale and from the storage, use, or other consumption in this state of any 24
291	291	newspaper. 25
292	292	(ii) “Newspaper” means an unbound publication printed on newsprint that contains news, 26
293	293	editorial comment, opinions, features, advertising matter, and other matters of public interest. 27
294	294	(iii) “Newspaper” does not include a magazine, handbill, circular, flyer, sales catalog, or 28
295	295	similar item unless the item is printed for, and distributed as, a part of a newspaper. 29
296	296	(3) School meals. From the sale and from the storage, use, or other consumption in this 30
297	297	state of meals served by public, private, or parochial schools, school districts, colleges, universities, 31
298	298	student organizations, and parent-teacher associations to the students or teachers of a school, 32
299	299	college, or university whether the meals are served by the educational institutions or by a food 33
300	300	service or management entity under contract to the educational institutions. 34
301	301
302	302
303	303	LC002072 - Page 9 of 61
304	304	(4) Containers. 1
305	305	(i) From the sale and from the storage, use, or other consumption in this state of: 2
306	306	(A) Non-returnable containers, including boxes, paper bags, and wrapping materials that 3
307	307	are biodegradable and all bags and wrapping materials utilized in the medical and healing arts, 4
308	308	when sold without the contents to persons who place the contents in the container and sell the 5
309	309	contents with the container. 6
310	310	(B) Containers when sold with the contents if the sale price of the contents is not required 7
311	311	to be included in the measure of the taxes imposed by this chapter. 8
312	312	(C) Returnable containers when sold with the contents in connection with a retail sale of 9
313	313	the contents or when resold for refilling. 10
314	314	(D) Keg and barrel containers, whether returnable or not, when sold to alcoholic beverage 11
315	315	producers who place the alcoholic beverages in the containers. 12
316	316	(ii) As used in this subdivision, the term “returnable containers” means containers of a kind 13
317	317	customarily returned by the buyer of the contents for reuse. All other containers are “non-returnable 14
318	318	containers.” 15
319	319	(5)(i) Charitable, educational, and religious organizations. From the sale to, as in defined 16
320	320	in this section, and from the storage, use, and other consumption in this state, or any other state of 17
321	321	the United States of America, of tangible personal property by hospitals not operated for a profit; 18
322	322	“educational institutions” as defined in subdivision (18) not operated for a profit; churches, 19
323	323	orphanages, and other institutions or organizations operated exclusively for religious or charitable 20
324	324	purposes; interest-free loan associations not operated for profit; nonprofit, organized sporting 21
325	325	leagues and associations and bands for boys and girls under the age of nineteen (19) years; the 22
326	326	following vocational student organizations that are state chapters of national vocational student 23
327	327	organizations: Distributive Education Clubs of America (DECA); Future Business Leaders of 24
328	328	America, Phi Beta Lambda (FBLA/PBL); Future Farmers of America (FFA); Future Homemakers 25
329	329	of America/Home Economics Related Occupations (FHA/HERD); Vocational Industrial Clubs of 26
330	330	America (VICA); organized nonprofit golden age and senior citizens clubs for men and women; 27
331	331	and parent-teacher associations; and from the sale, storage, use, and other consumption in this state, 28
332	332	of and by the Industrial Foundation of Burrillville, a Rhode Island domestic nonprofit corporation. 29
333	333	(ii) In the case of contracts entered into with the federal government, its agencies, or 30
334	334	instrumentalities, this state, or any other state of the United States of America, its agencies, any 31
335	335	city, town, district, or other political subdivision of the states; hospitals not operated for profit; 32
336	336	educational institutions not operated for profit; churches, orphanages, and other institutions or 33
337	337	organizations operated exclusively for religious or charitable purposes, the contractor may purchase 34
338	338
339	339
340	340	LC002072 - Page 10 of 61
341	341	such materials and supplies (materials and/or supplies are defined as those that are essential to the 1
342	342	project) that are to be utilized in the construction of the projects being performed under the contracts 2
343	343	without payment of the tax. 3
344	344	(iii) The contractor shall not charge any sales or use tax to any exempt agency, institution, 4
345	345	or organization but shall in that instance provide his or her suppliers with certificates in the form 5
346	346	as determined by the division of taxation showing the reason for exemption and the contractor’s 6
347	347	records must substantiate the claim for exemption by showing the disposition of all property so 7
348	348	purchased. If any property is then used for a nonexempt purpose, the contractor must pay the tax 8
349	349	on the property used. 9
350	350	(6) Gasoline. From the sale and from the storage, use, or other consumption in this state 10
351	351	of: (i) Gasoline and other products taxed under chapter 36 of title 31 and (ii) Fuels used for the 11
352	352	propulsion of airplanes. 12
353	353	(7) Purchase for manufacturing purposes. 13
354	354	(i) From the sale and from the storage, use, or other consumption in this state of computer 14
355	355	software, tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, and 15
356	356	water, when the property or service is purchased for the purpose of being manufactured into a 16
357	357	finished product for resale and becomes an ingredient, component, or integral part of the 17
358	358	manufactured, compounded, processed, assembled, or prepared product, or if the property or 18
359	359	service is consumed in the process of manufacturing for resale computer software, tangible personal 19
360	360	property, electricity, natural gas, artificial gas, steam, refrigeration, or water. 20
361	361	(ii) “Consumed” means destroyed, used up, or worn out to the degree or extent that the 21
362	362	property cannot be repaired, reconditioned, or rendered fit for further manufacturing use. 22
363	363	(iii) “Consumed” includes mere obsolescence. 23
364	364	(iv) “Manufacturing” means and includes: manufacturing, compounding, processing, 24
365	365	assembling, preparing, or producing. 25
366	366	(v) “Process of manufacturing” means and includes all production operations performed in 26
367	367	the producing or processing room, shop, or plant, insofar as the operations are a part of and 27
368	368	connected with the manufacturing for resale of tangible personal property, electricity, natural gas, 28
369	369	artificial gas, steam, refrigeration, or water and all production operations performed insofar as the 29
370	370	operations are a part of and connected with the manufacturing for resale of computer software. 30
371	371	(vi) “Process of manufacturing” does not mean or include administration operations such 31
372	372	as general office operations, accounting, collection, or sales promotion, nor does it mean or include 32
373	373	distribution operations that occur subsequent to production operations, such as handling, storing, 33
374	374	selling, and transporting the manufactured products, even though the administration and 34
375	375
376	376
377	377	LC002072 - Page 11 of 61
378	378	distribution operations are performed by, or in connection with, a manufacturing business. 1
379	379	(8) State and political subdivisions. From the sale to, and from the storage, use, or other 2
380	380	consumption by, this state, any city, town, district, or other political subdivision of this state. Every 3
381	381	redevelopment agency created pursuant to chapter 31 of title 45 is deemed to be a subdivision of 4
382	382	the municipality where it is located. 5
383	383	(9) Food and food ingredients. From the sale and storage, use, or other consumption in this 6
384	384	state of food and food ingredients as defined in § 44-18-7.1(l). 7
385	385	For the purposes of this exemption “food and food ingredients” shall not include candy, 8
386	386	soft drinks, dietary supplements, alcoholic beverages, tobacco, food sold through vending 9
387	387	machines, or prepared food, as those terms are defined in § 44-18-7.1, unless the prepared food is: 10
388	388	(i) Sold by a seller whose primary NAICS classification is manufacturing in sector 311, 11
389	389	except sub-sector 3118 (bakeries); 12
390	390	(ii) Sold in an unheated state by weight or volume as a single item; 13
391	391	(iii) Bakery items, including: bread, rolls, buns, biscuits, bagels, croissants, pastries, 14
392	392	donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas; and 15
393	393	is not sold with utensils provided by the seller, including: plates, knives, forks, spoons, 16
394	394	glasses, cups, napkins, or straws. 17
395	395	(10) Medicines, drugs, and durable medical equipment. From the sale and from the storage, 18
396	396	use, or other consumption in this state, of: 19
397	397	(i) “Drugs” as defined in § 44-18-7.1(h)(i), sold on prescriptions, medical oxygen, and 20
398	398	insulin whether or not sold on prescription. For purposes of this exemption drugs shall not include 21
399	399	over-the-counter drugs and grooming and hygiene products as defined in § 44-18-7.1(h)(iii). 22
400	400	(ii) Durable medical equipment as defined in § 44-18-7.1(k) for home use only, including, 23
401	401	but not limited to: syringe infusers, ambulatory drug delivery pumps, hospital beds, convalescent 24
402	402	chairs, and chair lifts. Supplies used in connection with syringe infusers and ambulatory drug 25
403	403	delivery pumps that are sold on prescription to individuals to be used by them to dispense or 26
404	404	administer prescription drugs, and related ancillary dressings and supplies used to dispense or 27
405	405	administer prescription drugs, shall also be exempt from tax. 28
406	406	(11) Prosthetic devices and mobility enhancing equipment. From the sale and from the 29
407	407	storage, use, or other consumption in this state, of prosthetic devices as defined in § 44-18-7.1(t), 30
408	408	sold on prescription, including, but not limited to: artificial limbs, dentures, spectacles, eyeglasses, 31
409	409	and artificial eyes; artificial hearing devices and hearing aids, whether or not sold on prescription; 32
410	410	and mobility enhancing equipment as defined in § 44-18-7.1(p), including wheelchairs, crutches, 33
411	411	and canes. 34
412	412
413	413
414	414	LC002072 - Page 12 of 61
415	415	(12) Coffins, caskets, urns, shrouds and burial garments. From the sale and from the 1
416	416	storage, use, or other consumption in this state of coffins, caskets, burial containers, urns, urn liners, 2
417	417	urn vaults, grave liners, grave vaults, burial tent setups, prayer cards, shrouds, and other burial 3
418	418	garments that are ordinarily sold by a funeral director as part of the business of funeral directing. 4
419	419	(13) Motor vehicles sold to nonresidents. 5
420	420	(i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide nonresident 6
421	421	of this state who does not register the motor vehicle in this state, whether the sale or delivery of the 7
422	422	motor vehicle is made in this state or at the place of residence of the nonresident. A motor vehicle 8
423	423	sold to a bona fide nonresident whose state of residence does not allow a like exemption to its 9
424	424	nonresidents is not exempt from the tax imposed under § 44-18-20. In that event, the bona fide 10
425	425	nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed 11
426	426	in his or her state of residence not to exceed the rate that would have been imposed under § 44-18-12
427	427	20. Notwithstanding any other provisions of law, a licensed motor vehicle dealer shall add and 13
428	428	collect the tax required under this subdivision and remit the tax to the tax administrator under the 14
429	429	provisions of chapters 18 and 19 of this title. When a Rhode Island licensed, motor vehicle dealer 15
430	430	is required to add and collect the sales and use tax on the sale of a motor vehicle to a bona fide 16
431	431	nonresident as provided in this section, the dealer in computing the tax takes into consideration the 17
432	432	law of the state of the nonresident as it relates to the trade-in of motor vehicles. 18
433	433	(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may 19
434	434	require any licensed motor vehicle dealer to keep records of sales to bona fide nonresidents as the 20
435	435	tax administrator deems reasonably necessary to substantiate the exemption provided in this 21
436	436	subdivision, including the affidavit of a licensed motor vehicle dealer that the purchaser of the 22
437	437	motor vehicle was the holder of, and had in his or her possession a valid out-of-state motor vehicle 23
438	438	registration or a valid out-of-state driver’s license. 24
439	439	(iii) Any nonresident who registers a motor vehicle in this state within ninety (90) days of 25
440	440	the date of its sale to him or her is deemed to have purchased the motor vehicle for use, storage, or 26
441	441	other consumption in this state, and is subject to, and liable for, the use tax imposed under the 27
442	442	provisions of § 44-18-20. 28
443	443	(14) Sales in public buildings by blind people. From the sale and from the storage, use, or 29
444	444	other consumption in all public buildings in this state of all products or wares by any person 30
445	445	licensed under § 40-9-11.1. 31
446	446	(15) Air and water pollution control facilities. From the sale, storage, use, or other 32
447	447	consumption in this state of tangible personal property or supplies acquired for incorporation into 33
448	448	or used and consumed in the operation of a facility, the primary purpose of which is to aid in the 34
449	449
450	450
451	451	LC002072 - Page 13 of 61
452	452	control of the pollution or contamination of the waters or air of the state, as defined in chapter 12 1
453	453	of title 46 and chapter 23 of title 23, respectively, and that has been certified as approved for that 2
454	454	purpose by the director of environmental management. The director of environmental management 3
455	455	may certify to a portion of the tangible personal property or supplies acquired for incorporation 4
456	456	into those facilities or used and consumed in the operation of those facilities to the extent that that 5
457	457	portion has as its primary purpose the control of the pollution or contamination of the waters or air 6
458	458	of this state. As used in this subdivision, “facility” means any land, facility, device, building, 7
459	459	machinery, or equipment. 8
460	460	(16) Camps. From the rental charged for living quarters, or sleeping, or housekeeping 9
461	461	accommodations at camps or retreat houses operated by religious, charitable, educational, or other 10
462	462	organizations and associations mentioned in subsection (5), or by privately owned and operated 11
463	463	summer camps for children. 12
464	464	(17) Certain institutions. From the rental charged for living or sleeping quarters in an 13
465	465	institution licensed by the state for the hospitalization, custodial, or nursing care of human beings. 14
466	466	(18) Educational institutions. From the rental charged by any educational institution for 15
467	467	living quarters, or sleeping, or housekeeping accommodations or other rooms or accommodations 16
468	468	to any student or teacher necessitated by attendance at an educational institution. “Educational 17
469	469	institution” as used in this section means an institution of learning not operated for profit that is 18
470	470	empowered to confer diplomas, educational, literary, or academic degrees; that has a regular 19
471	471	faculty, curriculum, and organized body of pupils or students in attendance throughout the usual 20
472	472	school year; that keeps and furnishes to students and others records required and accepted for 21
473	473	entrance to schools of secondary, collegiate, or graduate rank; and no part of the net earnings of 22
474	474	which inures to the benefit of any individual. 23
475	475	(19) Motor vehicle and adaptive equipment for persons with disabilities. 24
476	476	(i) From the sale of: (A) Special adaptations; (B) The component parts of the special 25
477	477	adaptations; or (C) A specially adapted motor vehicle; provided that the owner furnishes to the tax 26
478	478	administrator an affidavit of a licensed physician to the effect that the specially adapted motor 27
479	479	vehicle is necessary to transport a family member with a disability or where the vehicle has been 28
480	480	specially adapted to meet the specific needs of the person with a disability. This exemption applies 29
481	481	to not more than one motor vehicle owned and registered for personal, noncommercial use. 30
482	482	(ii) For the purpose of this subsection the term “special adaptations” includes, but is not 31
483	483	limited to: wheelchair lifts, wheelchair carriers, wheelchair ramps, wheelchair securements, hand 32
484	484	controls, steering devices, extensions, relocations, and crossovers of operator controls, power-33
485	485	assisted controls, raised tops or dropped floors, raised entry doors, or alternative signaling devices 34
486	486
487	487
488	488	LC002072 - Page 14 of 61
489	489	to auditory signals. 1
490	490	(iii) From the sale of: (a) Special adaptations, (b) The component parts of the special 2
491	491	adaptations, for a “wheelchair accessible taxicab” as defined in § 39-14-1, and/or a “wheelchair 3
492	492	accessible public motor vehicle” as defined in § 39-14.1-1. 4
493	493	(iv) For the purpose of this subdivision the exemption for a “specially adapted motor 5
494	494	vehicle” means a use tax credit not to exceed the amount of use tax that would otherwise be due on 6
495	495	the motor vehicle, exclusive of any adaptations. The use tax credit is equal to the cost of the special 7
496	496	adaptations, including installation. 8
497	497	(20) Heating fuels. From the sale and from the storage, use, or other consumption in this 9
498	498	state of every type of heating fuel. 10
499	499	(21) Electricity and gas. From the sale and from the storage, use, or other consumption in 11
500	500	this state of electricity and gas. 12
501	501	(22) Manufacturing machinery and equipment. 13
502	502	(i) From the sale and from the storage, use, or other consumption in this state of tools, dies, 14
503	503	molds, machinery, equipment (including replacement parts), and related items to the extent used in 15
504	504	an industrial plant in connection with the actual manufacture, conversion, or processing of tangible 16
505	505	personal property, or to the extent used in connection with the actual manufacture, conversion, or 17
506	506	processing of computer software as that term is utilized in industry numbers 7371, 7372, and 7373 18
507	507	in the standard industrial classification manual prepared by the Technical Committee on Industrial 19
508	508	Classification, Office of Statistical Standards, Executive Office of the President, United States 20
509	509	Bureau of the Budget, as revised from time to time, to be sold, or that machinery and equipment 21
510	510	used in the furnishing of power to an industrial manufacturing plant. For the purposes of this 22
511	511	subdivision, “industrial plant” means a factory at a fixed location primarily engaged in the 23
512	512	manufacture, conversion, or processing of tangible personal property to be sold in the regular 24
513	513	course of business; 25
514	514	(ii) Machinery and equipment and related items are not deemed to be used in connection 26
515	515	with the actual manufacture, conversion, or processing of tangible personal property, or in 27
516	516	connection with the actual manufacture, conversion, or processing of computer software as that 28
517	517	term is utilized in industry numbers 7371, 7372, and 7373 in the standard industrial classification 29
518	518	manual prepared by the Technical Committee on Industrial Classification, Office of Statistical 30
519	519	Standards, Executive Office of the President, United States Bureau of the Budget, as revised from 31
520	520	time to time, to be sold to the extent the property is used in administration or distribution operations; 32
521	521	(iii) Machinery and equipment and related items used in connection with the actual 33
522	522	manufacture, conversion, or processing of any computer software or any tangible personal property 34
523	523
524	524
525	525	LC002072 - Page 15 of 61
526	526	that is not to be sold and that would be exempt under subdivision (7) or this subdivision if purchased 1
527	527	from a vendor or machinery and equipment and related items used during any manufacturing, 2
528	528	converting, or processing function is exempt under this subdivision even if that operation, function, 3
529	529	or purpose is not an integral or essential part of a continuous production flow or manufacturing 4
530	530	process; 5
531	531	(iv) Where a portion of a group of portable or mobile machinery is used in connection with 6
532	532	the actual manufacture, conversion, or processing of computer software or tangible personal 7
533	533	property to be sold, as previously defined, that portion, if otherwise qualifying, is exempt under 8
534	534	this subdivision even though the machinery in that group is used interchangeably and not otherwise 9
535	535	identifiable as to use. 10
536	536	(23) Trade-in value of motor vehicles. From the sale and from the storage, use, or other 11
537	537	consumption in this state of so much of the purchase price paid for a new or used automobile as is 12
538	538	allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller, or of 13
539	539	the proceeds applicable only to the automobile as are received from the manufacturer of 14
540	540	automobiles for the repurchase of the automobile whether the repurchase was voluntary or not 15
541	541	towards the purchase of a new or used automobile by the buyer. For the purpose of this subdivision, 16
542	542	the word “automobile” means a private passenger automobile not used for hire and does not refer 17
543	543	to any other type of motor vehicle. 18
544	544	(24) Precious metal bullion. 19
545	545	(i) From the sale and from the storage, use, or other consumption in this state of precious 20
546	546	metal bullion, substantially equivalent to a transaction in securities or commodities. 21
547	547	(ii) For purposes of this subdivision, “precious metal bullion” means any elementary 22
548	548	precious metal that has been put through a process of smelting or refining, including, but not limited 23
549	549	to: gold, silver, platinum, rhodium, and chromium, and that is in a state or condition that its value 24
550	550	depends upon its content and not upon its form. 25
551	551	(iii) The term does not include fabricated precious metal that has been processed or 26
552	552	manufactured for some one or more specific and customary industrial, professional, or artistic uses. 27
553	553	(25) Commercial vessels. From sales made to a commercial ship, barge, or other vessel of 28
554	554	fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from the 29
555	555	repair, alteration, or conversion of the vessels, and from the sale of property purchased for the use 30
556	556	of the vessels including provisions, supplies, and material for the maintenance and/or repair of the 31
557	557	vessels. 32
558	558	(26) Commercial fishing vessels. From the sale and from the storage, use, or other 33
559	559	consumption in this state of vessels and other watercraft that are in excess of five (5) net tons and 34
560	560
561	561
562	562	LC002072 - Page 16 of 61
563	563	that are used exclusively for “commercial fishing,” as defined in this subdivision, and from the 1
564	564	repair, alteration, or conversion of those vessels and other watercraft, and from the sale of property 2
565	565	purchased for the use of those vessels and other watercraft including provisions, supplies, and 3
566	566	material for the maintenance and/or repair of the vessels and other watercraft and the boats nets, 4
567	567	cables, tackle, and other fishing equipment appurtenant to or used in connection with the 5
568	568	commercial fishing of the vessels and other watercraft. “Commercial fishing” means taking or 6
569	569	attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of it for 7
570	570	profit or by sale, barter, trade, or in commercial channels. The term does not include subsistence 8
571	571	fishing, i.e., the taking for personal use and not for sale or barter; or sport fishing; but shall include 9
572	572	vessels and other watercraft with a Rhode Island party and charter boat license issued by the 10
573	573	department of environmental management pursuant to § 20-2-27.1 that meet the following criteria: 11
574	574	(i) The operator must have a current United States Coast Guard (U.S.C.G.) license to carry 12
575	575	passengers for hire; (ii) U.S.C.G. vessel documentation in the coast wide fishery trade; (iii) 13
576	576	U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island boat 14
577	577	registration to prove Rhode Island home port status; and (iv) The vessel must be used as a 15
578	578	commercial passenger carrying fishing vessel to carry passengers for fishing. The vessel must be 16
579	579	able to demonstrate that at least fifty percent (50%) of its annual gross income derives from charters 17
580	580	or provides documentation of a minimum of one hundred (100) charter trips annually; and (v) The 18
581	581	vessel must have a valid Rhode Island party and charter boat license. The tax administrator shall 19
582	582	implement the provisions of this subdivision by promulgating rules and regulations relating thereto. 20
583	583	(27) Clothing and footwear. From the sales of articles of clothing, including footwear, 21
584	584	intended to be worn or carried on or about the human body for sales prior to October 1, 2012. 22
585	585	Effective October 1, 2012, the exemption will apply to the sales of articles of clothing, including 23
586	586	footwear, intended to be worn or carried on or about the human body up to two hundred and fifty 24
587	587	dollars ($250) of the sales price per item. For the purposes of this section, “clothing or footwear” 25
588	588	does not include clothing accessories or equipment or special clothing or footwear primarily 26
589	589	designed for athletic activity or protective use as these terms are defined in § 44-18-7.1(f). In 27
590	590	recognition of the work being performed by the streamlined sales and use tax governing board, 28
591	591	upon passage of any federal law that authorizes states to require remote sellers to collect and remit 29
592	592	sales and use taxes, this unlimited exemption will apply as it did prior to October 1, 2012. The 30
593	593	unlimited exemption on sales of clothing and footwear shall take effect on the date that the state 31
594	594	requires remote sellers to collect and remit sales and use taxes. 32
595	595	(28) Water for residential use. From the sale and from the storage, use, or other 33
596	596	consumption in this state of water furnished for domestic use by occupants of residential premises. 34
597	597
598	598
599	599	LC002072 - Page 17 of 61
600	600	(29) Bibles. [Unconstitutional; see Ahlburn v. Clark, 728 A.2d 449 (R.I. 1999); see Notes 1
601	601	to Decisions.] From the sale and from the storage, use, or other consumption in the state of any 2
602	602	canonized scriptures of any tax-exempt nonprofit religious organization including, but not limited 3
603	603	to, the Old Testament and the New Testament versions. 4
604	604	(30) Boats. 5
605	605	(i) From the sale of a boat or vessel to a bona fide nonresident of this state who does not 6
606	606	register the boat or vessel in this state or document the boat or vessel with the United States 7
607	607	government at a home port within the state, whether the sale or delivery of the boat or vessel is 8
608	608	made in this state or elsewhere; provided, that the nonresident transports the boat within thirty (30) 9
609	609	days after delivery by the seller outside the state for use thereafter solely outside the state. 10
610	610	(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may 11
611	611	require the seller of the boat or vessel to keep records of the sales to bona fide nonresidents as the 12
612	612	tax administrator deems reasonably necessary to substantiate the exemption provided in this 13
613	613	subdivision, including the affidavit of the seller that the buyer represented himself or herself to be 14
614	614	a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state. 15
615	615	(31) Youth activities equipment. From the sale, storage, use, or other consumption in this 16
616	616	state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island 17
617	617	eleemosynary organizations, for the purposes of youth activities that the organization is formed to 18
618	618	sponsor and support; and by accredited elementary and secondary schools for the purposes of the 19
619	619	schools or of organized activities of the enrolled students. 20
620	620	(32) Farm equipment. From the sale and from the storage or use of machinery and 21
621	621	equipment used directly for commercial farming and agricultural production; including, but not 22
622	622	limited to: tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors, 23
623	623	balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment, 24
624	624	greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and 25
625	625	other farming equipment, including replacement parts appurtenant to or used in connection with 26
626	626	commercial farming and tools and supplies used in the repair and maintenance of farming 27
627	627	equipment. “Commercial farming” means the keeping or boarding of five (5) or more horses or the 28
628	628	production within this state of agricultural products, including, but not limited to, field or orchard 29
629	629	crops, livestock, dairy, and poultry, or their products, where the keeping, boarding, or production 30
630	630	provides at least two thousand five hundred dollars ($2,500) in annual gross sales to the operator, 31
631	631	whether an individual, a group, a partnership, or a corporation for exemptions issued prior to July 32
632	632	1, 2002. For exemptions issued or renewed after July 1, 2002, there shall be two (2) levels. Level I 33
633	633	shall be based on proof of annual, gross sales from commercial farming of at least twenty-five 34
634	634
635	635
636	636	LC002072 - Page 18 of 61
637	637	hundred dollars ($2,500) and shall be valid for purchases subject to the exemption provided in this 1
638	638	subdivision except for motor vehicles with an excise tax value of five thousand dollars ($5,000) or 2
639	639	greater. Level II shall be based on proof of annual gross sales from commercial farming of at least 3
640	640	ten thousand dollars ($10,000) or greater and shall be valid for purchases subject to the exemption 4
641	641	provided in this subdivision including motor vehicles with an excise tax value of five thousand 5
642	642	dollars ($5,000) or greater. For the initial issuance of the exemptions, proof of the requisite amount 6
643	643	of annual gross sales from commercial farming shall be required for the prior year; for any renewal 7
644	644	of an exemption granted in accordance with this subdivision at either level I or level II, proof of 8
645	645	gross annual sales from commercial farming at the requisite amount shall be required for each of 9
646	646	the prior two (2) years. Certificates of exemption issued or renewed after July 1, 2002, shall clearly 10
647	647	indicate the level of the exemption and be valid for four (4) years after the date of issue. This 11
648	648	exemption applies even if the same equipment is used for ancillary uses, or is temporarily used for 12
649	649	a non-farming or a non-agricultural purpose, but shall not apply to motor vehicles acquired after 13
650	650	July 1, 2002, unless the vehicle is a farm vehicle as defined pursuant to § 31-1-8 and is eligible for 14
651	651	registration displaying farm plates as provided for in § 31-3-31. 15
652	652	(33) Compressed air. From the sale and from the storage, use, or other consumption in the 16
653	653	state of compressed air. 17
654	654	(34) Flags. From the sale and from the storage, consumption, or other use in this state of 18
655	655	United States, Rhode Island or POW-MIA flags. 19
656	656	(35) Motor vehicle and adaptive equipment to certain veterans. From the sale of a motor 20
657	657	vehicle and adaptive equipment to and for the use of a veteran with a service-connected loss of or 21
658	658	the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether service 22
659	659	connected or not. The motor vehicle must be purchased by and especially equipped for use by the 23
660	660	qualifying veteran. Certificate of exemption or refunds of taxes paid is granted under rules or 24
661	661	regulations that the tax administrator may prescribe. 25
662	662	(36) Textbooks. From the sale and from the storage, use, or other consumption in this state 26
663	663	of textbooks by an “educational institution,” as defined in subsection (18) of this section, and any 27
664	664	educational institution within the purview of § 16-63-9(4), and used textbooks by any purveyor. 28
665	665	(37) Tangible personal property and supplies used in on-site hazardous waste recycling, 29
666	666	reuse, or treatment. From the sale, storage, use, or other consumption in this state of tangible 30
667	667	personal property or supplies used or consumed in the operation of equipment, the exclusive 31
668	668	function of which is the recycling, reuse, or recovery of materials (other than precious metals, as 32
669	669	defined in subdivision (24)(ii) of this section) from the treatment of “hazardous wastes,” as defined 33
670	670	in § 23-19.1-4, where the “hazardous wastes” are generated in Rhode Island solely by the same 34
671	671
672	672
673	673	LC002072 - Page 19 of 61
674	674	taxpayer and where the personal property is located at, in, or adjacent to a generating facility of the 1
675	675	taxpayer in Rhode Island. The taxpayer shall procure an order from the director of the department 2
676	676	of environmental management certifying that the equipment and/or supplies as used or consumed, 3
677	677	qualify for the exemption under this subdivision. If any information relating to secret processes or 4
678	678	methods of manufacture, production, or treatment is disclosed to the department of environmental 5
679	679	management only to procure an order, and is a “trade secret” as defined in § 28-21-10(b), it is not 6
680	680	open to public inspection or publicly disclosed unless disclosure is required under chapter 21 of 7
681	681	title 28 or chapter 24.4 of title 23. 8
682	682	(38) Promotional and product literature of boat manufacturers. From the sale and from the 9
683	683	storage, use, or other consumption of promotional and product literature of boat manufacturers 10
684	684	shipped to points outside of Rhode Island that either: (i) Accompany the product that is sold; (ii) 11
685	685	Are shipped in bulk to out-of-state dealers for use in the sale of the product; or (iii) Are mailed to 12
686	686	customers at no charge. 13
687	687	(39) Food items paid for by food stamps. From the sale and from the storage, use, or other 14
688	688	consumption in this state of eligible food items payment for which is properly made to the retailer 15
689	689	in the form of U.S. government food stamps issued in accordance with the Food Stamp Act of 1977, 16
690	690	7 U.S.C. § 2011 et seq. 17
691	691	(40) Transportation charges. From the sale or hiring of motor carriers as defined in § 39-18
692	692	12-2(12) to haul goods, when the contract or hiring cost is charged by a motor freight tariff filed 19
693	693	with the Rhode Island public utilities commission on the number of miles driven or by the number 20
694	694	of hours spent on the job. 21
695	695	(41) Trade-in value of boats. From the sale and from the storage, use, or other consumption 22
696	696	in this state of so much of the purchase price paid for a new or used boat as is allocated for a trade-23
697	697	in allowance on the boat of the buyer given in trade to the seller or of the proceeds applicable only 24
698	698	to the boat as are received from an insurance claim as a result of a stolen or damaged boat, towards 25
699	699	the purchase of a new or used boat by the buyer. 26
700	700	(42) Equipment used for research and development. From the sale and from the storage, 27
701	701	use, or other consumption of equipment to the extent used for research and development purposes 28
702	702	by a qualifying firm. For the purposes of this subsection, “qualifying firm” means a business for 29
703	703	which the use of research and development equipment is an integral part of its operation and 30
704	704	“equipment” means scientific equipment, computers, software, and related items. 31
705	705	(43) Coins. From the sale and from the other consumption in this state of coins having 32
706	706	numismatic or investment value. 33
707	707	(44) Farm structure construction materials. Lumber, hardware, and other materials used in 34
708	708
709	709
710	710	LC002072 - Page 20 of 61
711	711	the new construction of farm structures, including production facilities such as, but not limited to: 1
712	712	farrowing sheds, free stall and stanchion barns, milking parlors, silos, poultry barns, laying houses, 2
713	713	fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing rooms, 3
714	714	machinery storage, seasonal farm worker housing, certified farm markets, bunker and trench silos, 4
715	715	feed storage sheds, and any other structures used in connection with commercial farming. 5
716	716	(45) Telecommunications carrier access service. Carrier access service or 6
717	717	telecommunications service when purchased by a telecommunications company from another 7
718	718	telecommunications company to facilitate the provision of telecommunications service. 8
719	719	(46) Boats or vessels brought into the state exclusively for winter storage, maintenance, 9
720	720	repair, or sale. Notwithstanding the provisions of §§ 44-18-10, 44-18-11 and 44-18-20, the tax 10
721	721	imposed by § 44-18-20 is not applicable for the period commencing on the first day of October in 11
722	722	any year up to and including the 30th day of April next succeeding with respect to the use of any 12
723	723	boat or vessel within this state exclusively for purposes of: (i) Delivery of the vessel to a facility in 13
724	724	this state for storage, including dry storage and storage in water by means of apparatus preventing 14
725	725	ice damage to the hull, maintenance, or repair; (ii) The actual process of storage, maintenance, or 15
726	726	repair of the boat or vessel; or (iii) Storage for the purpose of selling the boat or vessel. 16
727	727	(47) Jewelry display product. From the sale and from the storage, use, or other 17
728	728	consumption in this state of tangible personal property used to display any jewelry product; 18
729	729	provided that title to the jewelry display product is transferred by the jewelry manufacturer or seller 19
730	730	and that the jewelry display product is shipped out of state for use solely outside the state and is not 20
731	731	returned to the jewelry manufacturer or seller. 21
732	732	(48) Boats or vessels generally. Notwithstanding the provisions of this chapter, the tax 22
733	733	imposed by §§ 44-18-20 and 44-18-18 shall not apply with respect to the sale and to the storage, 23
734	734	use, or other consumption in this state of any new or used boat. The exemption provided for in this 24
735	735	subdivision does not apply after October 1, 1993, unless prior to October 1, 1993, the federal ten 25
736	736	percent (10%) surcharge on luxury boats is repealed. 26
737	737	(49) Banks and regulated investment companies interstate toll-free calls. Notwithstanding 27
738	738	the provisions of this chapter, the tax imposed by this chapter does not apply to the furnishing of 28
739	739	interstate and international, toll-free terminating telecommunication service that is used directly 29
740	740	and exclusively by or for the benefit of an eligible company as defined in this subdivision; provided 30
741	741	that an eligible company employs on average during the calendar year no less than five hundred 31
742	742	(500) “full-time equivalent employees” as that term is defined in § 42-64.5-2. For purposes of this 32
743	743	section, an “eligible company” means a “regulated investment company” as that term is defined in 33
744	744	the Internal Revenue Code of 1986, 26 U.S.C. § 851, or a corporation to the extent the service is 34
745	745
746	746
747	747	LC002072 - Page 21 of 61
748	748	provided, directly or indirectly, to or on behalf of a regulated investment company, an employee 1
749	749	benefit plan, a retirement plan or a pension plan, or a state-chartered bank. 2
750	750	(50) Mobile and manufactured homes generally. From the sale and from the storage, use, 3
751	751	or other consumption in this state of mobile and/or manufactured homes as defined and subject to 4
752	752	taxation pursuant to the provisions of chapter 44 of title 31. 5
753	753	(51) Manufacturing business reconstruction materials. 6
754	754	(i) From the sale and from the storage, use, or other consumption in this state of lumber, 7
755	755	hardware, and other building materials used in the reconstruction of a manufacturing business 8
756	756	facility that suffers a disaster, as defined in this subdivision, in this state. “Disaster” means any 9
757	757	occurrence, natural or otherwise, that results in the destruction of sixty percent (60%) or more of 10
758	758	an operating manufacturing business facility within this state. “Disaster” does not include any 11
759	759	damage resulting from the willful act of the owner of the manufacturing business facility. 12
760	760	(ii) Manufacturing business facility includes, but is not limited to, the structures housing 13
761	761	the production and administrative facilities. 14
762	762	(iii) In the event a manufacturer has more than one manufacturing site in this state, the sixty 15
763	763	percent (60%) provision applies to the damages suffered at that one site. 16
764	764	(iv) To the extent that the costs of the reconstruction materials are reimbursed by insurance, 17
765	765	this exemption does not apply. 18
766	766	(52) Tangible personal property and supplies used in the processing or preparation of floral 19
767	767	products and floral arrangements. From the sale, storage, use, or other consumption in this state of 20
768	768	tangible personal property or supplies purchased by florists, garden centers, or other like producers 21
769	769	or vendors of flowers, plants, floral products, and natural and artificial floral arrangements that are 22
770	770	ultimately sold with flowers, plants, floral products, and natural and artificial floral arrangements 23
771	771	or are otherwise used in the decoration, fabrication, creation, processing, or preparation of flowers, 24
772	772	plants, floral products, or natural and artificial floral arrangements, including descriptive labels, 25
773	773	stickers, and cards affixed to the flower, plant, floral product, or arrangement, artificial flowers, 26
774	774	spray materials, floral paint and tint, plant shine, flower food, insecticide, and fertilizers. 27
775	775	(53) Horse food products. From the sale and from the storage, use, or other consumption 28
776	776	in this state of horse food products purchased by a person engaged in the business of the boarding 29
777	777	of horses. 30
778	778	(54) Non-motorized recreational vehicles sold to nonresidents. 31
779	779	(i) From the sale, subsequent to June 30, 2003, of a non-motorized recreational vehicle to 32
780	780	a bona fide nonresident of this state who does not register the non-motorized recreational vehicle 33
781	781	in this state, whether the sale or delivery of the non-motorized recreational vehicle is made in this 34
782	782
783	783
784	784	LC002072 - Page 22 of 61
785	785	state or at the place of residence of the nonresident; provided that a non-motorized recreational 1
786	786	vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption to 2
787	787	its nonresidents is not exempt from the tax imposed under § 44-18-20; provided, further, that in 3
788	788	that event the bona fide nonresident pays a tax to Rhode Island on the sale at a rate equal to the rate 4
789	789	that would be imposed in his or her state of residence not to exceed the rate that would have been 5
790	790	imposed under § 44-18-20. Notwithstanding any other provisions of law, a licensed, non-motorized 6
791	791	recreational vehicle dealer shall add and collect the tax required under this subdivision and remit 7
792	792	the tax to the tax administrator under the provisions of chapters 18 and 19 of this title. Provided, 8
793	793	that when a Rhode Island licensed, non-motorized recreational vehicle dealer is required to add and 9
794	794	collect the sales and use tax on the sale of a non-motorized recreational vehicle to a bona fide 10
795	795	nonresident as provided in this section, the dealer in computing the tax takes into consideration the 11
796	796	law of the state of the nonresident as it relates to the trade-in of motor vehicles. 12
797	797	(ii) The tax administrator, in addition to the provisions of §§ 44-19-27 and 44-19-28, may 13
798	798	require any licensed, non-motorized recreational vehicle dealer to keep records of sales to bona fide 14
799	799	nonresidents as the tax administrator deems reasonably necessary to substantiate the exemption 15
800	800	provided in this subdivision, including the affidavit of a licensed, non-motorized recreational 16
801	801	vehicle dealer that the purchaser of the non-motorized recreational vehicle was the holder of, and 17
802	802	had in his or her possession a valid out-of-state non-motorized recreational vehicle registration or 18
803	803	a valid out-of-state driver’s license. 19
804	804	(iii) Any nonresident who registers a non-motorized recreational vehicle in this state within 20
805	805	ninety (90) days of the date of its sale to him or her is deemed to have purchased the non-motorized 21
806	806	recreational vehicle for use, storage, or other consumption in this state, and is subject to, and liable 22
807	807	for, the use tax imposed under the provisions of § 44-18-20. 23
808	808	(iv) “Non-motorized recreational vehicle” means any portable dwelling designed and 24
809	809	constructed to be used as a temporary dwelling for travel, camping, recreational, and vacation use 25
810	810	that is eligible to be registered for highway use, including, but not limited to, “pick-up coaches” or 26
811	811	“pick-up campers,” “travel trailers,” and “tent trailers” as those terms are defined in chapter 1 of 27
812	812	title 31. 28
813	813	(55) Sprinkler and fire alarm systems in existing buildings. From the sale in this state of 29
814	814	sprinkler and fire alarm systems; emergency lighting and alarm systems; and the materials 30
815	815	necessary and attendant to the installation of those systems that are required in buildings and 31
816	816	occupancies existing therein in July 2003 in order to comply with any additional requirements for 32
817	817	such buildings arising directly from the enactment of the Comprehensive Fire Safety Act of 2003 33
818	818	and that are not required by any other provision of law or ordinance or regulation adopted pursuant 34
819	819
820	820
821	821	LC002072 - Page 23 of 61
822	822	to that act. The exemption provided in this subdivision shall expire on December 31, 2008. 1
823	823	(56) Aircraft. Notwithstanding the provisions of this chapter, the tax imposed by §§ 44-2
824	824	18-18 and 44-18-20 shall not apply with respect to the sale and to the storage, use, or other 3
825	825	consumption in this state of any new or used aircraft or aircraft parts. 4
826	826	(57) Renewable energy products. Notwithstanding any other provisions of Rhode Island 5
827	827	general laws, the following products shall also be exempt from sales tax: solar photovoltaic 6
828	828	modules or panels, or any module or panel that generates electricity from light; solar thermal 7
829	829	collectors, including, but not limited to, those manufactured with flat glass plates, extruded plastic, 8
830	830	sheet metal, and/or evacuated tubes; geothermal heat pumps, including both water-to-water and 9
831	831	water-to-air type pumps; wind turbines; towers used to mount wind turbines if specified by or sold 10
832	832	by a wind turbine manufacturer; DC to AC inverters that interconnect with utility power lines; and 11
833	833	manufactured mounting racks and ballast pans for solar collector, module, or panel installation. Not 12
834	834	to include materials that could be fabricated into such racks; monitoring and control equipment, if 13
835	835	specified or supplied by a manufacturer of solar thermal, solar photovoltaic, geothermal, or wind 14
836	836	energy systems or if required by law or regulation for such systems but not to include pumps, fans 15
837	837	or plumbing or electrical fixtures unless shipped from the manufacturer affixed to, or an integral 16
838	838	part of, another item specified on this list; and solar storage tanks that are part of a solar domestic 17
839	839	hot water system or a solar space heating system. If the tank comes with an external heat exchanger 18
840	840	it shall also be tax exempt, but a standard hot water tank is not exempt from state sales tax. 19
841	841	(58) Returned property. The amount charged for property returned by customers upon 20
842	842	rescission of the contract of sale when the entire amount exclusive of handling charges paid for the 21
843	843	property is refunded in either cash or credit, and where the property is returned within one hundred 22
844	844	twenty (120) days from the date of delivery. 23
845	845	(59) Dietary supplements. From the sale and from the storage, use, or other consumption 24
846	846	of dietary supplements as defined in § 44-18-7.1(l)(v), sold on prescriptions. 25
847	847	(60) Blood. From the sale and from the storage, use, or other consumption of human blood. 26
848	848	(61) Agricultural products for human consumption. From the sale and from the storage, 27
849	849	use, or other consumption of livestock and poultry of the kinds of products that ordinarily constitute 28
850	850	food for human consumption and of livestock of the kind the products of which ordinarily constitute 29
851	851	fibers for human use. 30
852	852	(62) Diesel emission control technology. From the sale and use of diesel retrofit 31
853	853	technology that is required by § 31-47.3-4. 32
854	854	(63) Feed for certain animals used in commercial farming. From the sale of feed for 33
855	855	animals as described in subsection (61) of this section. 34
856	856
857	857
858	858	LC002072 - Page 24 of 61
859	859	(64) Alcoholic beverages. From the sale and storage, use, or other consumption in this 1
860	860	state by a Class A licensee of alcoholic beverages, as defined in § 44-18-7.1, excluding beer and 2
861	861	malt beverages; provided, further, notwithstanding § 6-13-1 or any other general or public law to 3
862	862	the contrary, alcoholic beverages, as defined in § 44-18-7.1, shall not be subject to minimum 4
863	863	markup. 5
864	864	(65) Seeds and plants used to grow food and food ingredients. From the sale, storage, use, 6
865	865	or other consumption in this state of seeds and plants used to grow food and food ingredients as 7
866	866	defined in § 44-18-7.1(l)(i). “Seeds and plants used to grow food and food ingredients” shall not 8
867	867	include marijuana seeds or plants. 9
868	868	(66) Feminine hygiene products. From the sale and from the storage, use, or other 10
869	869	consumption of tampons, panty liners, menstrual cups, sanitary napkins, and other similar products 11
870	870	the principal use of which is feminine hygiene in connection with the menstrual cycle. 12
871	871	(67) Breast pump products. From the sale and from the storage, use, or other consumption 13
872	872	of breast pumps and breast pump collection and storage supplies when sold to individuals for home 14
873	873	use, and any repair or replacement parts for such products. “Breast pump collection and storage 15
874	874	supplies” means items of tangible personal property used in conjunction with a breast pump to 16
875	875	collect milk expressed from a human breast and to store collected milk until it is ready for 17
876	876	consumption. “Breast pump collection and storage supplies” include, but are not limited to, breast 18
877	877	shields and breast shield connectors; breast pump tubes and tubing adaptors; breast pump valves 19
878	878	and membranes; backflow protectors and backflow protector adaptors; bottles and bottle caps 20
879	879	specific to the operation of the breast pump; breast milk storage bags; and related items sold as part 21
880	880	of a breast pump kit pre-packaged by the breast pump manufacturer. “Breast pump collection and 22
881	881	storage supplies” does not include: bottles and bottle caps not specific to the operation of the breast 23
882	882	pump; breast pump travel bags and other similar carrying accessories, including ice packs, labels, 24
883	883	and other similar products, unless sold as part of a breast pump kit pre-packed by the breast pump 25
884	884	manufacturer; breast pump cleaning supplies, unless sold as part of a breast pump kit pre-packaged 26
885	885	by the breast pump manufacturer; nursing bras, bra pads, breast shells, and other similar products; 27
886	886	and creams, ointments, and other similar products that relieve breastfeeding-related symptoms or 28
887	887	conditions of the breasts or nipples. 29
888	888	(68) Trade-in value of motorcycles. From the sale and from the storage, use, or other 30
889	889	consumption in this state of so much of the purchase price paid for a new or used motorcycle as is 31
890	890	allocated for a trade-in allowance on the motorcycle of the buyer given in trade to the seller, or of 32
891	891	the proceeds applicable only to the motorcycle as are received from the manufacturer of 33
892	892	motorcycles for the repurchase of the motorcycle whether the repurchase was voluntary or not 34
893	893
894	894
895	895	LC002072 - Page 25 of 61
896	896	towards the purchase of a new or used motorcycle by the buyer. For the purpose of this subsection, 1
897	897	the word “motorcycle” means a motorcycle not used for hire and does not refer to any other type 2
898	898	of motor vehicle. 3
899	899	SECTION 7. Section 44-19-13 of the General Laws in Chapter 44-19 entitled "Sales and 4
900	900	Use Taxes — Enforcement and Collection" is hereby amended to read as follows: 5
901	901	44-19-13. Notice of determination. 6
902	902	(a) The tax administrator shall give to the retailer or to the person storing, using, or 7
903	903	consuming the tangible personal property a written notice of his or her determination. Except in the 8
904	904	case of fraud, intent to evade the provisions of this article, failure to make a return, or claim for 9
905	905	additional amount pursuant to §§ 44-19-16 — 44-19-19, every notice of a deficiency determination 10
906	906	shall be mailed within three (3) years after the fifteenth (15th) day of the calendar month following 11
907	907	the month for which the amount is proposed to be determined or within three (3) years after the 12
908	908	return is filed, whichever period expires later, unless a longer period is agreed upon by the tax 13
909	909	administrator and the taxpayer. 14
910	910	(b) Notwithstanding the provisions of subsection (a) of this section, under no circumstances 15
911	911	shall the tax administrator issue a notice of a deficiency determination for any sales or use tax 16
912	912	determined to be due and payable more than ten (10) years after the return is filed or was due to be 17
913	913	filed, nor shall the tax administrator commence any collection action for any tax that is due and 18
914	914	payable unless the collection action is commenced within ten (10) years after a notice of a 19
915	915	deficiency determination becomes a final collectible assessment; provided, however, that the tax 20
916	916	administrator may renew a statutory lien that was initially filed within the ten-year (10) period for 21
917	917	collection actions. Both of the aforementioned ten-year (10) periods are tolled for any period of 22
918	918	time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection action” 23
919	919	refers to any activity undertaken by the division of taxation to collect on any state tax liabilities that 24
920	920	are final, due, and payable under Rhode Island law. “Collection action” may include, but is not 25
921	921	limited to, any civil action involving a liability owed under chapters 18, 18.1, 18.2, and 19 of title 26
922	922	44. This section excludes any sales and use tax liabilities that are deemed trust funds as defined in 27
923	923	§ 44-19-35, as well as any meals and beverage tax liabilities that are collected pursuant to § 44-18-28
924	924	18.1, and any hotel tax liabilities that are collected pursuant to § 44-18-36.1. 29
925	925	(c) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 30
926	926	attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 31
927	927	periods set forth in this section. 32
928	928	SECTION 8. Section 44-23-9 of the General Laws in Chapter 44-23 entitled "Estate and 33
929	929	Transfer Taxes — Enforcement and Collection" is hereby amended to read as follows: 34
930	930
931	931
932	932	LC002072 - Page 26 of 61
933	933	44-23-9. Assessment and notice of estate tax — Collection powers — Lien. 1
934	934	(a) The tax imposed by § 44-22-1.1 shall be assessed upon the full and fair cash value of 2
935	935	the net estate determined by the tax administrator as provided in this chapter. Notice of the amount 3
936	936	of the tax shall be mailed to the executor, administrator, or trustee, but failure to receive the notice 4
937	937	does not excuse the nonpayment of or invalidate the tax. The tax administrator shall receive and 5
938	938	collect the assessed taxes in the same manner and with the same powers as are prescribed for and 6
939	939	given to the collectors of taxes by chapters 7 — 9 of this title. The tax shall be due and payable as 7
940	940	provided in § 44-23-16, shall be paid to the tax administrator, and shall be and remain a lien upon 8
941	941	the estate until it is paid. All executors, administrators, and trustees are personally liable for the tax 9
942	942	until it is paid. 10
943	943	(b) Notwithstanding the provisions of subsection (a) of this section, under no circumstances 11
944	944	shall the tax administrator issue any notice of deficiency determination for the amount of the estate 12
945	945	tax due more than ten (10) years after the return was filed or should have been filed, nor shall the 13
946	946	tax administrator commence any collection action for any estate tax due and payable unless the 14
947	947	collection action is commenced within ten (10) years after the date a notice of deficiency 15
948	948	determination became a final collectible assessment. “Collection action” refers to any activity 16
949	949	undertaken by the division of taxation to collect on any state tax liabilities that are final, due, and 17
950	950	payable under Rhode Island law. “Collection action” may include, but is not limited to, any civil 18
951	951	action involving a liability owed under chapters 22 and 23 of title 44. 19
952	952	(c) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 20
953	953	attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 21
954	954	periods set forth in this section. 22
955	955	SECTION 9. Sections 44-30-2.6, 44-30-83 and 44-30-102 of the General Laws in Chapter 23
956	956	44-30 entitled "Personal Income Tax" are hereby amended to read as follows: 24
957	957	44-30-2.6. Rhode Island taxable income — Rate of tax. 25
958	958	(a) “Rhode Island taxable income” means federal taxable income as determined under the 26
959	959	Internal Revenue Code, 26 U.S.C. § 1 et seq., not including the increase in the basic, standard-27
960	960	deduction amount for married couples filing joint returns as provided in the Jobs and Growth Tax 28
961	961	Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief Reconciliation Act of 29
962	962	2001 (EGTRRA), and as modified by the modifications in § 44-30-12. 30
963	963	(b) Notwithstanding the provisions of §§ 44-30-1 and 44-30-2, for tax years beginning on 31
964	964	or after January 1, 2001, a Rhode Island personal income tax is imposed upon the Rhode Island 32
965	965	taxable income of residents and nonresidents, including estates and trusts, at the rate of twenty-five 33
966	966	and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year 2002 34
967	967
968	968
969	969	LC002072 - Page 27 of 61
970	970	and thereafter of the federal income tax rates, including capital gains rates and any other special 1
971	971	rates for other types of income, except as provided in § 44-30-2.7, which were in effect immediately 2
972	972	prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); 3
973	973	provided, rate schedules shall be adjusted for inflation by the tax administrator beginning in taxable 4
974	974	year 2002 and thereafter in the manner prescribed for adjustment by the commissioner of Internal 5
975	975	Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or after January 1, 2006, a 6
976	976	taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or 7
977	977	her personal income tax liability. 8
978	978	(c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative 9
979	979	minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode Island 10
980	980	alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by 11
981	981	multiplying the federal tentative minimum tax without allowing for the increased exemptions under 12
982	982	the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal form 6251 13
983	983	Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%) for tax year 14
984	984	2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing the product 15
985	985	to the Rhode Island tax as computed otherwise under this section. The excess shall be the taxpayer’s 16
986	986	Rhode Island alternative minimum tax. 17
987	987	(1) For tax years beginning on or after January 1, 2005, and thereafter, the exemption 18
988	988	amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by 19
989	989	the tax administrator in the manner prescribed for adjustment by the commissioner of Internal 20
990	990	Revenue in 26 U.S.C. § 1(f). 21
991	991	(2) For the period January 1, 2007, through December 31, 2007, and thereafter, Rhode 22
992	992	Island taxable income shall be determined by deducting from federal adjusted gross income as 23
993	993	defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island 24
994	994	itemized-deduction amount and the Rhode Island exemption amount as determined in this section. 25
995	995	(A) Tax imposed. 26
996	996	(1) There is hereby imposed on the taxable income of married individuals filing joint 27
997	997	returns and surviving spouses a tax determined in accordance with the following table: 28
998	998	If taxable income is: The tax is: 29
999	999	Not over $53,150 3.75% of taxable income 30
1000	1000	Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150 31
1001	1001	Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500 32
1002	1002	Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850 33
1003	1003	Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700 34
1004	1004
1005	1005
1006	1006	LC002072 - Page 28 of 61
1007	1007	(2) There is hereby imposed on the taxable income of every head of household a tax 1
1008	1008	determined in accordance with the following table: 2
1009	1009	If taxable income is: The tax is: 3
1010	1010	Not over $42,650 3.75% of taxable income 4
1011	1011	Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650 5
1012	1012	Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100 6
1013	1013	Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350 7
1014	1014	Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700 8
1015	1015	(3) There is hereby imposed on the taxable income of unmarried individuals (other than 9
1016	1016	surviving spouses and heads of households) a tax determined in accordance with the following 10
1017	1017	table: 11
1018	1018	If taxable income is: The tax is: 12
1019	1019	Not over $31,850 3.75% of taxable income 13
1020	1020	Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850 14
1021	1021	Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100 15
1022	1022	Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850 16
1023	1023	Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700 17
1024	1024	(4) There is hereby imposed on the taxable income of married individuals filing separate 18
1025	1025	returns and bankruptcy estates a tax deter- mined determined in accordance with the following 19
1026	1026	table: 20
1027	1027	If taxable income is: The tax is: 21
1028	1028	Not over $26,575 3.75% of taxable income 22
1029	1029	Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575 23
1030	1030	Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250 24
1031	1031	Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925 25
1032	1032	Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850 26
1033	1033	(5) There is hereby imposed a taxable income of an estate or trust a tax determined in 27
1034	1034	accordance with the following table: 28
1035	1035	If taxable income is: The tax is: 29
1036	1036	Not over $2,150 3.75% of taxable income 30
1037	1037	Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150 31
1038	1038	Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000 32
1039	1039	Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650 33
1040	1040	Over $10,450 $737.50 plus 9.90% of the excess over $10,450 34
1041	1041
1042	1042
1043	1043	LC002072 - Page 29 of 61
1044	1044	(6) Adjustments for inflation. 1
1045	1045	The dollars amount contained in paragraph (A) shall be increased by an amount equal to: 2
1046	1046	(a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by; 3
1047	1047	(b) The cost-of-living adjustment determined under section (J) with a base year of 1993; 4
1048	1048	(c) The cost-of-living adjustment referred to in subparagraphs (a) and (b) used in making 5
1049	1049	adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall 6
1050	1050	be determined under section (J) by substituting “1994” for “1993.” 7
1051	1051	(B) Maximum capital gains rates. 8
1052	1052	(1) In general. 9
1053	1053	If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax 10
1054	1054	imposed by this section for such taxable year shall not exceed the sum of: 11
1055	1055	(a) 2.5% of the net capital gain as reported for federal income tax purposes under section 12
1056	1056	26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b). 13
1057	1057	(b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 14
1058	1058	§ 1(h)(1)(c). 15
1059	1059	(c) 6.25% of the net capital gain as reported for federal income tax purposes under 26 16
1060	1060	U.S.C. § 1(h)(1)(d). 17
1061	1061	(d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 18
1062	1062	§ 1(h)(1)(e). 19
1063	1063	(2) For tax years beginning on or after January 1, 2010, the tax imposed on net capital gain 20
1064	1064	shall be determined under subdivision 44-30-2.6(c)(2)(A). 21
1065	1065	(C) Itemized deductions. 22
1066	1066	(1) In general. 23
1067	1067	For the purposes of section (2), “itemized deductions” means the amount of federal 24
1068	1068	itemized deductions as modified by the modifications in § 44-30-12. 25
1069	1069	(2) Individuals who do not itemize their deductions. 26
1070	1070	In the case of an individual who does not elect to itemize his deductions for the taxable 27
1071	1071	year, they may elect to take a standard deduction. 28
1072	1072	(3) Basic standard deduction. 29
1073	1073	The Rhode Island standard deduction shall be allowed in accordance with the following 30
1074	1074	table: 31
1075	1075	Filing status Amount 32
1076	1076	Single $5,350 33
1077	1077	Married filing jointly or qualifying widow(er) $8,900 34
1078	1078
1079	1079
1080	1080	LC002072 - Page 30 of 61
1081	1081	Married filing separately $4,450 1
1082	1082	Head of Household $7,850 2
1083	1083	(4) Additional standard deduction for the aged and blind. 3
1084	1084	An additional standard deduction shall be allowed for individuals age sixty-five (65) or 4
1085	1085	older or blind in the amount of $1,300 for individuals who are not married and $1,050 for 5
1086	1086	individuals who are married. 6
1087	1087	(5) Limitation on basic standard deduction in the case of certain dependents. 7
1088	1088	In the case of an individual to whom a deduction under section (E) is allowable to another 8
1089	1089	taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater of: 9
1090	1090	(a) $850; 10
1091	1091	(b) The sum of $300 and such individual’s earned income; 11
1092	1092	(6) Certain individuals not eligible for standard deduction. 12
1093	1093	In the case of: 13
1094	1094	(a) A married individual filing a separate return where either spouse itemizes deductions; 14
1095	1095	(b) Nonresident alien individual; 15
1096	1096	(c) An estate or trust; 16
1097	1097	The standard deduction shall be zero. 17
1098	1098	(7) Adjustments for inflation. 18
1099	1099	Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an amount 19
1100	1100	equal to: 20
1101	1101	(a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988, multiplied 21
1102	1102	by 22
1103	1103	(b) The cost-of-living adjustment determined under section (J) with a base year of 1988. 23
1104	1104	(D) Overall limitation on itemized deductions. 24
1105	1105	(1) General rule. 25
1106	1106	In the case of an individual whose adjusted gross income as modified by § 44-30-12 26
1107	1107	exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the 27
1108	1108	taxable year shall be reduced by the lesser of: 28
1109	1109	(a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12 29
1110	1110	over the applicable amount; or 30
1111	1111	(b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable for 31
1112	1112	such taxable year. 32
1113	1113	(2) Applicable amount. 33
1114	1114	(a) In general. 34
1115	1115
1116	1116
1117	1117	LC002072 - Page 31 of 61
1118	1118	For purposes of this section, the term “applicable amount” means $156,400 ($78,200 in the 1
1119	1119	case of a separate return by a married individual) 2
1120	1120	(b) Adjustments for inflation. 3
1121	1121	Each dollar amount contained in paragraph (a) shall be increased by an amount equal to: 4
1122	1122	(i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by 5
1123	1123	(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 6
1124	1124	(3) Phase-out of Limitation. 7
1125	1125	(a) In general. 8
1126	1126	In the case of taxable year beginning after December 31, 2005, and before January 1, 2010, 9
1127	1127	the reduction under section (1) shall be equal to the applicable fraction of the amount which would 10
1128	1128	be the amount of such reduction. 11
1129	1129	(b) Applicable fraction. 12
1130	1130	For purposes of paragraph (a), the applicable fraction shall be determined in accordance 13
1131	1131	with the following table: 14
1132	1132	For taxable years beginning in calendar year The applicable fraction is 15
1133	1133	2006 and 2007 ⅔ 16
1134	1134	2008 and 2009 ⅓ 17
1135	1135	(E) Exemption amount. 18
1136	1136	(1) In general. 19
1137	1137	Except as otherwise provided in this subsection, the term “exemption amount” means 20
1138	1138	$3,400. 21
1139	1139	(2) Exemption amount disallowed in case of certain dependents. 22
1140	1140	In the case of an individual with respect to whom a deduction under this section is allowable 23
1141	1141	to another taxpayer for the same taxable year, the exemption amount applicable to such individual 24
1142	1142	for such individual's taxable year shall be zero. 25
1143	1143	(3) Adjustments for inflation. 26
1144	1144	The dollar amount contained in paragraph (1) shall be increased by an amount equal to: 27
1145	1145	(a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by 28
1146	1146	(b) The cost-of-living adjustment determined under section (J) with a base year of 1989. 29
1147	1147	(4) Limitation. 30
1148	1148	(a) In general. 31
1149	1149	In the case of any taxpayer whose adjusted gross income as modified for the taxable year 32
1150	1150	exceeds the threshold amount shall be reduced by the applicable percentage. 33
1151	1151	(b) Applicable percentage. 34
1152	1152
1153	1153
1154	1154	LC002072 - Page 32 of 61
1155	1155	In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the 1
1156	1156	threshold amount, the exemption amount shall be reduced by two (2) percentage points for each 2
1157	1157	$2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 3
1158	1158	exceeds the threshold amount. In the case of a married individual filing a separate return, the 4
1159	1159	preceding sentence shall be applied by substituting ‘‘$1,250’’ for ‘‘$2,500.’’ In no event shall the 5
1160	1160	applicable percentage exceed one hundred percent (100%). 6
1161	1161	(c) Threshold Amount. 7
1162	1162	For the purposes of this paragraph, the term ‘‘threshold amount’’ shall be determined with 8
1163	1163	the following table: 9
1164	1164	Filing status Amount 10
1165	1165	Single $156,400 11
1166	1166	Married filing jointly of qualifying widow(er) $234,600 12
1167	1167	Married filing separately $117,300 13
1168	1168	Head of Household $195,500 14
1169	1169	(d) Adjustments for inflation. 15
1170	1170	Each dollar amount contained in paragraph (b) shall be increased by an amount equal to: 16
1171	1171	(i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by 17
1172	1172	(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 18
1173	1173	(5) Phase-out of limitation. 19
1174	1174	(a) In general. 20
1175	1175	In the case of taxable years beginning after December 31, 2005, and before January 1, 21
1176	1176	2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which 22
1177	1177	would be the amount of such reduction. 23
1178	1178	(b) Applicable fraction. 24
1179	1179	For the purposes of paragraph (a), the applicable fraction shall be determined in accordance 25
1180	1180	with the following table: 26
1181	1181	For taxable years beginning in calendar year The applicable fraction is 27
1182	1182	2006 and 2007 ⅔ 28
1183	1183	2008 and 2009 ⅓ 29
1184	1184	(F) Alternative minimum tax. 30
1185	1185	(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 31
1186	1186	subtitle) a tax equal to the excess (if any) of: 32
1187	1187	(a) The tentative minimum tax for the taxable year, over 33
1188	1188	(b) The regular tax for the taxable year. 34
1189	1189
1190	1190
1191	1191	LC002072 - Page 33 of 61
1192	1192	(2) The tentative minimum tax for the taxable year is the sum of: 1
1193	1193	(a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus 2
1194	1194	(b) 7.0 percent of so much of the taxable excess above $175,000. 3
1195	1195	(3) The amount determined under the preceding sentence shall be reduced by the alternative 4
1196	1196	minimum tax foreign tax credit for the taxable year. 5
1197	1197	(4) Taxable excess. For the purposes of this subsection the term “taxable excess” means so 6
1198	1198	much of the federal alternative minimum taxable income as modified by the modifications in § 44-7
1199	1199	30-12 as exceeds the exemption amount. 8
1200	1200	(5) In the case of a married individual filing a separate return, subparagraph (2) shall be 9
1201	1201	applied by substituting “$87,500” for $175,000 each place it appears. 10
1202	1202	(6) Exemption amount. 11
1203	1203	For purposes of this section "exemption amount" means: 12
1204	1204	Filing status Amount 13
1205	1205	Single $39,150 14
1206	1206	Married filing jointly or qualifying widow(er) $53,700 15
1207	1207	Married filing separately $26,850 16
1208	1208	Head of Household $39,150 17
1209	1209	Estate or trust $24,650 18
1210	1210	(7) Treatment of unearned income of minor children 19
1211	1211	(a) In general. 20
1212	1212	In the case of a minor child, the exemption amount for purposes of section (6) shall not 21
1213	1213	exceed the sum of: 22
1214	1214	(i) Such child's earned income, plus 23
1215	1215	(ii) $6,000. 24
1216	1216	(8) Adjustments for inflation. 25
1217	1217	The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount 26
1218	1218	equal to: 27
1219	1219	(a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied by 28
1220	1220	(b) The cost-of-living adjustment determined under section (J) with a base year of 2004. 29
1221	1221	(9) Phase-out. 30
1222	1222	(a) In general. 31
1223	1223	The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount 32
1224	1224	equal to twenty-five percent (25%) of the amount by which alternative minimum taxable income 33
1225	1225	of the taxpayer exceeds the threshold amount. 34
1226	1226
1227	1227
1228	1228	LC002072 - Page 34 of 61
1229	1229	(b) Threshold amount. 1
1230	1230	For purposes of this paragraph, the term “threshold amount” shall be determined with the 2
1231	1231	following table: 3
1232	1232	Filing status Amount 4
1233	1233	Single $123,250 5
1234	1234	Married filing jointly or qualifying widow(er) $164,350 6
1235	1235	Married filing separately $82,175 7
1236	1236	Head of Household $123,250 8
1237	1237	Estate or Trust $82,150 9
1238	1238	(c) Adjustments for inflation 10
1239	1239	Each dollar amount contained in paragraph (9) shall be increased by an amount equal to: 11
1240	1240	(i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by 12
1241	1241	(ii) The cost-of-living adjustment determined under section (J) with a base year of 2004. 13
1242	1242	(G) Other Rhode Island taxes. 14
1243	1243	(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 15
1244	1244	subtitle) a tax equal to twenty-five percent (25%) of: 16
1245	1245	(a) The Federal income tax on lump-sum distributions. 17
1246	1246	(b) The Federal income tax on parents' election to report child's interest and dividends. 18
1247	1247	(c) The recapture of Federal tax credits that were previously claimed on Rhode Island 19
1248	1248	return. 20
1249	1249	(H) Tax for children under 18 with investment income. 21
1250	1250	(1) General rule. There is hereby imposed a tax equal to twenty-five percent (25%) of: 22
1251	1251	(a) The Federal tax for children under the age of 18 with investment income. 23
1252	1252	(I) Averaging of farm income. 24
1253	1253	(1) General rule. At the election of an individual engaged in a farming business or fishing 25
1254	1254	business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of: 26
1255	1255	(a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C. § 27
1256	1256	1301]. 28
1257	1257	(J) Cost-of-living adjustment. 29
1258	1258	(1) In general. 30
1259	1259	The cost-of-living adjustment for any calendar year is the percentage (if any) by which: 31
1260	1260	(a) The CPI for the preceding calendar year exceeds 32
1261	1261	(b) The CPI for the base year. 33
1262	1262	(2) CPI for any calendar year. 34
1263	1263
1264	1264
1265	1265	LC002072 - Page 35 of 61
1266	1266	For purposes of paragraph (1), the CPI for any calendar year is the average of the consumer 1
1267	1267	price index as of the close of the twelve (12) month period ending on August 31 of such calendar 2
1268	1268	year. 3
1269	1269	(3) Consumer price index. 4
1270	1270	For purposes of paragraph (2), the term “consumer price index” means the last consumer 5
1271	1271	price index for all urban consumers published by the department of labor. For purposes of the 6
1272	1272	preceding sentence, the revision of the consumer price index that is most consistent with the 7
1273	1273	consumer price index for calendar year 1986 shall be used. 8
1274	1274	(4) Rounding. 9
1275	1275	(a) In general. 10
1276	1276	If any increase determined under paragraph (1) is not a multiple of $50, such increase shall 11
1277	1277	be rounded to the next lowest multiple of $50. 12
1278	1278	(b) In the case of a married individual filing a separate return, subparagraph (a) shall be 13
1279	1279	applied by substituting “$25” for $50 each place it appears. 14
1280	1280	(K) Credits against tax. For tax years beginning on or after January 1, 2001, a taxpayer 15
1281	1281	entitled to any of the following federal credits enacted prior to January 1, 1996, shall be entitled to 16
1282	1282	a credit against the Rhode Island tax imposed under this section: 17
1283	1283	(1) [Deleted by P.L. 2007, ch. 73, art. 7, § 5.] 18
1284	1284	(2) Child and dependent care credit; 19
1285	1285	(3) General business credits; 20
1286	1286	(4) Credit for elderly or the disabled; 21
1287	1287	(5) Credit for prior year minimum tax; 22
1288	1288	(6) Mortgage interest credit; 23
1289	1289	(7) Empowerment zone employment credit; 24
1290	1290	(8) Qualified electric vehicle credit. 25
1291	1291	(L) Credit against tax for adoption. For tax years beginning on or after January 1, 2006, 26
1292	1292	a taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode Island 27
1293	1293	tax imposed under this section if the adopted child was under the care, custody, or supervision of 28
1294	1294	the Rhode Island department of children, youth and families prior to the adoption. 29
1295	1295	(M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits 30
1296	1296	provided there shall be no deduction based on any federal credits enacted after January 1, 1996, 31
1297	1297	including the rate reduction credit provided by the federal Economic Growth and Tax 32
1298	1298	Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be 33
1299	1299	reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax 34
1300	1300
1301	1301
1302	1302	LC002072 - Page 36 of 61
1303	1303	purposes shall determine the Rhode Island amount to be recaptured in the same manner as 1
1304	1304	prescribed in this subsection. 2
1305	1305	(N) Rhode Island earned-income credit. 3
1306	1306	(1) In general. 4
1307	1307	For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-5
1308	1308	income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent 6
1309	1309	(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode 7
1310	1310	Island income tax. 8
1311	1311	For tax years beginning on or after January 1, 2015, and before January 1, 2016, a taxpayer 9
1312	1312	entitled to a federal earned-income credit shall be allowed a Rhode Island earned-income credit 10
1313	1313	equal to ten percent (10%) of the federal earned-income credit. Such credit shall not exceed the 11
1314	1314	amount of the Rhode Island income tax. 12
1315	1315	For tax years beginning on or after January 1, 2016, a taxpayer entitled to a federal earned-13
1316	1316	income credit shall be allowed a Rhode Island earned-income credit equal to twelve and one-half 14
1317	1317	percent (12.5%) of the federal earned-income credit. Such credit shall not exceed the amount of the 15
1318	1318	Rhode Island income tax. 16
1319	1319	For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal earned-17
1320	1320	income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%) 18
1321	1321	of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island 19
1322	1322	income tax. 20
1323	1323	(2) Refundable portion. 21
1324	1324	In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of this 22
1325	1325	section exceeds the amount of Rhode Island income tax, a refundable earned-income credit shall 23
1326	1326	be allowed as follows. 24
1327	1327	(i) For tax years beginning before January 1, 2015, for purposes of paragraph (2) refundable 25
1328	1328	earned-income credit means fifteen percent (15%) of the amount by which the Rhode Island earned-26
1329	1329	income credit exceeds the Rhode Island income tax. 27
1330	1330	(ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2) 28
1331	1331	refundable earned-income credit means one hundred percent (100%) of the amount by which the 29
1332	1332	Rhode Island earned-income credit exceeds the Rhode Island income tax. 30
1333	1333	(O) The tax administrator shall recalculate and submit necessary revisions to paragraphs 31
1334	1334	(A) through (J) to the general assembly no later than February 1, 2010, and every three (3) years 32
1335	1335	thereafter for inclusion in the statute. 33
1336	1336	(3) For the period January 1, 2011, through December 31, 2011, and thereafter, “Rhode 34
1337	1337
1338	1338
1339	1339	LC002072 - Page 37 of 61
1340	1340	Island taxable income” means federal adjusted gross income as determined under the Internal 1
1341	1341	Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-2
1342	1342	30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to subparagraph 3
1343	1343	44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant to subparagraph 4
1344	1344	44-30-2.6(c)(3)(C). 5
1345	1345	(A) Tax imposed. 6
1346	1346	(I) There is hereby imposed on the taxable income of married individuals filing joint 7
1347	1347	returns, qualifying widow(er), every head of household, unmarried individuals, married individua ls 8
1348	1348	filing separate returns and bankruptcy estates, a tax determined in accordance with the following 9
1349	1349	table: 10
1350	1350	RI Taxable Income RI Income Tax 11
1351	1351	Over But not over Pay + % on Excess on the amount over 12
1352	1352	$ 0 - $ 55,000 $ 0 + 3.75% $ 0 13
1353	1353	55,000 - 125,000 2,063 + 4.75% 55,000 14
1354	1354	125,000 - 5,388 + 5.99% 125,000 15
1355	1355	(II) There is hereby imposed on the taxable income of an estate or trust a tax determined in 16
1356	1356	accordance with the following table: 17
1357	1357	RI Taxable Income RI Income Tax 18
1358	1358	Over But not over Pay + % on Excess on the amount over 19
1359	1359	$ 0 - $ 2,230 $ 0 + 3.75% $ 0 20
1360	1360	2,230 - 7,022 84 + 4.75% 2,230 21
1361	1361	7,022 - 312 + 5.99% 7,022 22
1362	1362	(B) Deductions: 23
1363	1363	(I) Rhode Island Basic Standard Deduction. 24
1364	1364	Only the Rhode Island standard deduction shall be allowed in accordance with the 25
1365	1365	following table: 26
1366	1366	Filing status: Amount 27
1367	1367	Single $7,500 28
1368	1368	Married filing jointly or qualifying widow(er) $15,000 29
1369	1369	Married filing separately $7,500 30
1370	1370	Head of Household $11,250 31
1371	1371	(II) Nonresident alien individuals, estates and trusts are not eligible for standard 32
1372	1372	deductions. 33
1373	1373	(III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 34
1374	1374
1375	1375
1376	1376	LC002072 - Page 38 of 61
1377	1377	purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 1
1378	1378	dollars ($175,000), the standard deduction amount shall be reduced by the applicable percentage. 2
1379	1379	The term “applicable percentage” means twenty (20) percentage points for each five thousand 3
1380	1380	dollars ($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable 4
1381	1381	year exceeds one hundred seventy-five thousand dollars ($175,000). 5
1382	1382	(C) Exemption Amount: 6
1383	1383	(I) The term “exemption amount” means three thousand five hundred dollars ($3,500) 7
1384	1384	multiplied by the number of exemptions allowed for the taxable year for federal income tax 8
1385	1385	purposes. For tax years beginning on or after 2018, the term “exemption amount” means the same 9
1386	1386	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
1387	1387	Jobs Act (Pub. L. No. 115-97) on December 22, 2017. 11
1388	1388	(II) Exemption amount disallowed in case of certain dependents. In the case of an 12
1389	1389	individual with respect to whom a deduction under this section is allowable to another taxpayer for 13
1390	1390	the same taxable year, the exemption amount applicable to such individual for such individua l’s 14
1391	1391	taxable year shall be zero. 15
1392	1392	(III) Identifying information required. 16
1393	1393	(1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be 17
1394	1394	allowed under this section with respect to any individual unless the Taxpayer Identification Number 18
1395	1395	of such individual is included on the federal return claiming the exemption for the same tax filing 19
1396	1396	period. 20
1397	1397	(2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event 21
1398	1398	that the Taxpayer Identification Number for each individual is not required to be included on the 22
1399	1399	federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer 23
1400	1400	Identification Number must be provided on the Rhode Island tax return for the purpose of claiming 24
1401	1401	said exemption(s). 25
1402	1402	(D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 26
1403	1403	purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 27
1404	1404	dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term 28
1405	1405	“applicable percentage” means twenty (20) percentage points for each five thousand dollars 29
1406	1406	($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 30
1407	1407	exceeds one hundred seventy-five thousand dollars ($175,000). 31
1408	1408	(E) Adjustment for inflation. The dollar amount contained in subparagraphs 44-30-32
1409	1409	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
1410	1410	equal to: 34
1411	1411
1412	1412
1413	1413	LC002072 - Page 39 of 61
1414	1414	(I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-2.6(c)(3)(B) 1
1415	1415	and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000, multiplied by; 2
1416	1416	(II) The cost-of-living adjustment with a base year of 2000. 3
1417	1417	(III) For the purposes of this section, the cost-of-living adjustment for any calendar year is 4
1418	1418	the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 5
1419	1419	the consumer price index for the base year. The consumer price index for any calendar year is the 6
1420	1420	average of the consumer price index as of the close of the twelve-month (12) period ending on 7
1421	1421	August 31, of such calendar year. 8
1422	1422	(IV) For the purpose of this section the term “consumer price index” means the last 9
1423	1423	consumer price index for all urban consumers published by the department of labor. For the purpose 10
1424	1424	of this section the revision of the consumer price index that is most consistent with the consumer 11
1425	1425	price index for calendar year 1986 shall be used. 12
1426	1426	(V) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 13
1427	1427	such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 14
1428	1428	married individual filing separate return, if any increase determined under this section is not a 15
1429	1429	multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 16
1430	1430	of twenty-five dollars ($25.00). 17
1431	1431	(F) Credits against tax. 18
1432	1432	(I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on 19
1433	1433	or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be 20
1434	1434	as follows: 21
1435	1435	(a) Rhode Island earned-income credit: Credit shall be allowed for earned-income credit 22
1436	1436	pursuant to subparagraph 44-30-2.6(c)(2)(N). 23
1437	1437	(b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided 24
1438	1438	in § 44-33-1 et seq. 25
1439	1439	(c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax 26
1440	1440	credit as provided in § 44-30.3-1 et seq. 27
1441	1441	(d) Credit for income taxes of other states. Credit shall be allowed for income tax paid to 28
1442	1442	other states pursuant to § 44-30-74. 29
1443	1443	(e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax credit 30
1444	1444	as provided in § 44-33.2-1 et seq. 31
1445	1445	(f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture 32
1446	1446	production tax credit as provided in § 44-31.2-1 et seq. 33
1447	1447	(g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of 34
1448	1448
1449	1449
1450	1450	LC002072 - Page 40 of 61
1451	1451	the federal child and dependent care credit allowable for the taxable year for federal purposes; 1
1452	1452	provided, however, such credit shall not exceed the Rhode Island tax liability. 2
1453	1453	(h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for 3
1454	1454	contributions to scholarship organizations as provided in chapter 62 of title 44. 4
1455	1455	(i) Credit for tax withheld. Wages upon which tax is required to be withheld shall be taxable 5
1456	1456	as if no withholding were required, but any amount of Rhode Island personal income tax actually 6
1457	1457	deducted and withheld in any calendar year shall be deemed to have been paid to the tax 7
1458	1458	administrator on behalf of the person from whom withheld, and the person shall be credited with 8
1459	1459	having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable 9
1460	1460	year of less than twelve (12) months, the credit shall be made under regulations of the tax 10
1461	1461	administrator. 11
1462	1462	(j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested in 12
1463	1463	RI wavemaker fellowship program as provided in § 42-64.26-1 et seq. 13
1464	1464	(k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in 14
1465	1465	§ 42-64.20-1 et seq. 15
1466	1466	(l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode 16
1467	1467	Island new qualified jobs incentive program credit as provided in § 44-48.3-1 et seq. 17
1468	1468	(m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter, 18
1469	1469	unused carryforward for such credit previously issued shall be allowed for the historic 19
1470	1470	homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already 20
1471	1471	issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits 21
1472	1472	under the historic homeownership assistance act. 22
1473	1473	(n) Musical and theatrical production tax credits: Credit shall be allowed for musical and 23
1474	1474	theatrical production tax credits as provided in chapter 31.3 of this title. 24
1475	1475	(o) Historic preservation tax credits 2013: Credit shall be allowed for historic preservation 25
1476	1476	tax credits 2013 as provided in chapter 33.6 of this title. 26
1477	1477	(2)(II) Except as provided in section 1 (I) above, no other state and or federal tax credit 27
1478	1478	shall be available to the taxpayers in computing tax liability under this chapter. 28
1479	1479	44-30-83. Limitations on assessment. 29
1480	1480	(a) General. Except as otherwise provided in this section the amount of the Rhode Island 30
1481	1481	personal income tax shall be assessed within three (3) years after the return was filed, whether or 31
1482	1482	not the return was filed on or after the prescribed date. For this purpose a tax return filed before the 32
1483	1483	due date shall be considered as filed on the due date; and a return of withholding tax for any period 33
1484	1484	ending with or within a calendar year filed before April 15 of the succeeding calendar year shall be 34
1485	1485
1486	1486
1487	1487	LC002072 - Page 41 of 61
1488	1488	considered filed on April 15 of the succeeding calendar year. 1
1489	1489	(b) Exceptions. 2
1490	1490	(1) Assessment at any time. The tax may be assessed at any time if: 3
1491	1491	(i) No return is filed; 4
1492	1492	(ii) A false or fraudulent return is filed with intent to evade tax; or 5
1493	1493	(iii) The taxpayer fails to file a report, pursuant to § 44-30-59, of a change, correction, or 6
1494	1494	amended return, increasing his or her federal taxable income as reported on his or her federal 7
1495	1495	income tax return or to report a change or correction that is treated in the same manner as if it were 8
1496	1496	a deficiency for federal income tax purposes. 9
1497	1497	(2) Extension by agreement. Where, before the expiration of the time prescribed in this 10
1498	1498	section for the assessment of tax, or before the time as extended pursuant to this section, both the 11
1499	1499	tax administrator and the taxpayer have consented in writing to its assessment after that time, the 12
1500	1500	tax may be assessed at any time prior to the expiration of the period agreed upon. 13
1501	1501	(3) Report of changed or corrected federal income. If the taxpayer shall, pursuant to § 44-14
1502	1502	30-59, file an amended return, or report a change or correction increasing his or her federal taxable 15
1503	1503	income or report a change or correction that is treated in the same manner as if it were a deficiency 16
1504	1504	for federal income tax purposes, an assessment may be made at any time prior to two (2) years after 17
1505	1505	the report or amended return was filed. This assessment of Rhode Island personal income tax shall 18
1506	1506	not exceed the amount of the increase attributable to the federal change, correction, or items 19
1507	1507	amended on the taxpayer’s amended federal income tax return. The provisions of this paragraph 20
1508	1508	shall not affect the time within which or the amount for which an assessment may otherwise be 21
1509	1509	made. 22
1510	1510	(4) Deficiency attributable to net operating loss carryback. If a taxpayer’s deficiency is 23
1511	1511	attributable to an excessive net operating loss carryback allowance, it may be assessed at any time 24
1512	1512	that a deficiency for the taxable year of the loss may be assessed. 25
1513	1513	(5) Recovery of erroneous refund. An erroneous refund shall be considered to create an 26
1514	1514	underpayment of tax on the date made. An assessment of a deficiency arising out of an erroneous 27
1515	1515	refund may be made at any time within three (3) years thereafter, or at any time if it appears that 28
1516	1516	any part of the refund was induced by fraud or misrepresentation of a material fact. 29
1517	1517	(6) Armed forces relief. For purposes of this tax, the date appearing in 26 U.S.C. § 692(a) 30
1518	1518	shall be January 1, 1971. 31
1519	1519	(c) Omission of income on return. Notwithstanding the foregoing provisions of this section, 32
1520	1520	the tax may be assessed at any time within six (6) years after the return was filed if an individual 33
1521	1521	omits from his or her Rhode Island income an amount properly includible therein which is in excess 34
1522	1522
1523	1523
1524	1524	LC002072 - Page 42 of 61
1525	1525	of twenty-five percent (25%) of the amount of Rhode Island income stated in the return. For this 1
1526	1526	purpose there shall not be taken into account any amount that is omitted in the return if the amount 2
1527	1527	is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise 3
1528	1528	the tax administrator of the nature and amount of the item. 4
1529	1529	(d) Suspension of limitation. The running of the period of limitations on assessment or 5
1530	1530	collection of tax or other amount (or of a transferee’s liability) shall, after the mailing of a notice 6
1531	1531	of deficiency, be suspended for the period during which the tax administrator is prohibited under § 7
1532	1532	44-30-81(c) from making the assessment or from collecting by levy, and for sixty (60) days 8
1533	1533	thereafter. 9
1534	1534	(e) Limitations exclusive. No period of limitations specified in any other law shall apply to 10
1535	1535	the assessment or collection of Rhode Island personal income tax. Under no circumstances shall 11
1536	1536	the tax administrator issue any notice of a deficiency determination for Rhode Island personal 12
1537	1537	income tax due or payable more than ten (10) years after the date upon which the return was filed 13
1538	1538	or due to be filed, nor shall the tax administrator commence any collection action for any personal 14
1539	1539	income tax due and payable unless the collection action is commenced within ten (10) years after 15
1540	1540	a notice of deficiency determination became a final collectible assessment; provided however, that 16
1541	1541	the tax administrator can renew a statutory lien that was initially filed within the ten-year (10) 17
1542	1542	period for collection actions. Both of the aforementioned ten-year (10) periods are tolled for any 18
1543	1543	period of time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection 19
1544	1544	action” refers to any activity undertaken by the division of taxation to collect on any state tax 20
1545	1545	liabilities that are final, due, and payable under Rhode Island law. “Collection action” may include, 21
1546	1546	but is not limited to, any civil action involving a liability owed under chapter 30 of title 44. This 22
1547	1547	section excludes any liabilities that are deemed trust funds as defined in § 44-30-76, as amended. 23
1548	1548	(f) The ten-year (10) limitation shall not apply to the renewal or continuation of the state’s 24
1549	1549	attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation 25
1550	1550	periods set forth in this section. 26
1551	1551	44-30-102. Reporting requirement for applicable entities providing minimum 27
1552	1552	essential coverage. 28
1553	1553	(a) Findings. 29
1554	1554	(1) Ensuring the health of insurance markets is a responsibility reserved for states under 30
1555	1555	the McCarran-Ferguson Act and other federal law. 31
1556	1556	(2) There is substantial evidence that being uninsured causes health problems and 32
1557	1557	unnecessary deaths. 33
1558	1558	(3) The shared responsibility payment penalty imposed by § 44-30-101(c) is necessary to 34
1559	1559
1560	1560
1561	1561	LC002072 - Page 43 of 61
1562	1562	protect the health and welfare of the state’s residents. 1
1563	1563	(4) The reporting requirement provided for in this section is necessary for the successful 2
1564	1564	implementation of the shared responsibility payment penalty imposed by § 44-30-101(c). This 3
1565	1565	requirement provides the only widespread source of third-party reporting to help taxpayers and the 4
1566	1566	tax administrator verify whether an applicable individual maintains minimum essential coverage. 5
1567	1567	There is compelling evidence that third-party reporting is crucial for ensuring compliance with tax 6
1568	1568	provisions. 7
1569	1569	(5) The shared responsibility payment penalty imposed by § 44-30-101(c), and therefore 8
1570	1570	the reporting requirement in this section, is necessary to ensure a stable and well-functioning health 9
1571	1571	insurance market. There is compelling evidence that, without an effective shared responsibility 10
1572	1572	payment penalty in place for those who go without coverage, there would be substantial instability 11
1573	1573	in health insurance markets, including higher prices and the possibility of areas without any 12
1574	1574	insurance available. 13
1575	1575	(6) The shared responsibility payment penalty imposed by § 44-30-101(c), and therefore 14
1576	1576	the reporting requirement in this section, is also necessary to foster economic stability and growth 15
1577	1577	in the state. 16
1578	1578	(7) The reporting requirement in this section has been narrowly tailored to support 17
1579	1579	compliance with the shared responsibility payment penalty imposed by § 44-30-101(c), while 18
1580	1580	imposing only an incidental burden on reporting entities. In particular, the information that must 19
1581	1581	be reported is limited to the information that must already be reported under a similar federal 20
1582	1582	reporting requirement under section 6055 of the Internal Revenue Code of 1986. In addition, this 21
1583	1583	section provides that its reporting requirement may be satisfied by providing the same information 22
1584	1584	that is currently reported under such federal requirement. 23
1585	1585	(b) Definitions. For purposes of this section: 24
1586	1586	(1) “Applicable entity” means: 25
1587	1587	(i) An employer or other sponsor of an employment-based health plan that offers 26
1588	1588	employment-based minimum essential coverage to any resident of Rhode Island. 27
1589	1589	(ii) The Rhode Island Medicaid single state agency providing Medicaid or Children’s 28
1590	1590	Health Insurance Program (CHIP) coverage. 29
1591	1591	(iii) Carriers licensed or otherwise authorized by the Rhode Island office of the health 30
1592	1592	insurance commissioner to offer health coverage providing coverage that is not described in 31
1593	1593	subsection (b)(1)(i) or (b)(1)(ii) of this section. 32
1594	1594	(2) “Minimum essential coverage” has the meaning given the term by § 44-30-101(a)(2). 33
1595	1595	(c) For purposes of administering the shared responsibility payment penalty to individua ls 34
1596	1596
1597	1597
1598	1598	LC002072 - Page 44 of 61
1599	1599	who do not maintain minimum essential coverage under § 44-30-101(b), every applicable entity 1
1600	1600	that provides minimum essential coverage to an individual during a calendar year shall, at such 2
1601	1601	time as the tax administrator may prescribe, file a form in a manner prescribed by the tax 3
1602	1602	administrator. 4
1603	1603	(d) Form and manner of return. 5
1604	1604	(1) A return, in the form as the tax administrator may prescribe, contains the following 6
1605	1605	information: 7
1606	1606	(i) The name, address, and Taxpayer Identification Number (TIN) of the primary insured 8
1607	1607	and the name and TIN of each other individual obtaining coverage under the policy; 9
1608	1608	(ii) The dates during which the individual was covered under minimum essential coverage 10
1609	1609	during the calendar year; and 11
1610	1610	(iii) Such other information as the tax administrator may require. 12
1611	1611	(2) Sufficiency of information submitted for federal reporting. Notwithstanding the 13
1612	1612	requirements of subsection (d)(1) of this section, a return shall not fail to be a return described in 14
1613	1613	this section if it includes the information contained in a return described in section 6055 of the 15
1614	1614	Internal Revenue Code of 1986, as that section is in effect and interpreted on the 15th day of 16
1615	1615	December 2017. 17
1616	1616	(3) Failure to file proper return. If an applicable entity fails to file a return or report in the 18
1617	1617	method and manner prescribed by the tax administrator, or files an incomplete or inaccurate return 19
1618	1618	or report, by the due date determined by the tax administrator for the filing of the return or report, 20
1619	1619	a penalty of twenty-five dollars ($25.00) per individual not reported to the division of taxation in 21
1620	1620	accordance with this section shall be imposed. 22
1621	1621	(e) Statements to be furnished to individuals with respect to whom information is reported. 23
1622	1622	(1) Any applicable entity providing a return under the requirements of this section shall 24
1623	1623	also provide to each individual whose name is included in the return a written statement containing 25
1624	1624	the name, address, and contact information of the person required to provide the return to the tax 26
1625	1625	administrator and the information included in the return with respect to the individuals listed 27
1626	1626	thereupon. The written statement must be provided on or before January 31 of the year following 28
1627	1627	the calendar year for which the return was required to be made or by a date as may be determined 29
1628	1628	by the tax administrator. 30
1629	1629	(2) Sufficiency of federal statement. Notwithstanding the requirements of subsection 31
1630	1630	(e)(1), the requirements of this subsection (e) may be satisfied by a written statement provided to 32
1631	1631	an individual under section 6055 of the Internal Revenue Code of 1986, as that section is in effect 33
1632	1632	and interpreted on the 15th day of December 2017. 34
1633	1633
1634	1634
1635	1635	LC002072 - Page 45 of 61
1636	1636	(f) Reporting responsibility. 1
1637	1637	(1) Coverage provided by governmental units. In the case of coverage provided by an 2
1638	1638	applicable entity that is any governmental unit or any agency or instrumentality thereof, the officer 3
1639	1639	or employee who enters into the agreement to provide the coverage (or the person appropriately 4
1640	1640	designated for purposes of this section) shall be responsible for the returns and statements required 5
1641	1641	by this section. 6
1642	1642	(2) Delegation. An applicable entity may contract with third-party service providers, 7
1643	1643	including insurance carriers, to provide the returns and statements required by this section. 8
1644	1644	SECTION 10. Section 44-31-1 of the General Laws in Chapter 44-31 entitled "Investment 9
1645	1645	Tax Credit" is hereby amended to read as follows: 10
1646	1646	44-31-1. Investment tax credit. 11
1647	1647	(a) A taxpayer shall be allowed a credit, to be computed as provided in this chapter, against 12
1648	1648	the tax imposed by chapters 11, 14, and 17, and 30 of this title. The amount of the credit shall be 13
1649	1649	two percent (2%) of the cost or other basis for federal income tax purposes of tangible personal 14
1650	1650	property and other tangible property, including buildings and structural components of buildings, 15
1651	1651	described in subsection (b) of this section, acquired, constructed, reconstructed, or erected after 16
1652	1652	December 31, 1973. Provided, that the amount of the credit shall be four percent (4%) of the: (i) 17
1653	1653	cost or other basis for federal income tax purposes of tangible personal property and other tangible 18
1654	1654	property, including buildings and structural components of buildings, described in subdivision 19
1655	1655	(b)(1) of this section, acquired, constructed, reconstructed or erected after December 31, 1993; and 20
1656	1656	(ii) qualified amounts for leased assets of tangible personal property and other tangible property 21
1657	1657	described in subdivision (b)(1) of this section, acquired, constructed, reconstructed, or erected after 22
1658	1658	January 1, 1998, and the amount of the credit shall be ten percent (10%) of the cost or other basis 23
1659	1659	for federal income tax purposes, and the qualified amounts for leased assets, of tangible personal 24
1660	1660	property and other tangible property described in subdivision (b)(3) of this section, acquired, 25
1661	1661	constructed, reconstructed, or erected after January 1, 1998, and with respect to buildings and 26
1662	1662	structural components which are acquired, constructed, reconstructed or erected after July 1, 2001, 27
1663	1663	as described in subdivision (b)(3) of this section. 28
1664	1664	(b)(1) A credit shall be allowed under this section with respect to tangible personal property 29
1665	1665	and other tangible property, including buildings and structural components of buildings, which are 30
1666	1666	depreciable pursuant to 26 U.S.C. § 167, have a useful life of four (4) years or more, are acquired 31
1667	1667	by purchase as defined in 26 U.S.C. § 179(d) or are acquired by lease as prescribed in paragraph 32
1668	1668	(3)(iv) of this subsection, have a situs in this state and are principally used by the taxpayer in the 33
1669	1669	production of goods by manufacturing, process, or assembling. The credit shall be allowable in the 34
1670	1670
1671	1671
1672	1672	LC002072 - Page 46 of 61
1673	1673	year the property is first placed in service by the taxpayer, which is the year in which, under the 1
1674	1674	taxpayer’s depreciation practice, the period for depreciation with respect to the property begins, or 2
1675	1675	the year in which the property is placed in a condition or state of readiness and availability for a 3
1676	1676	specifically assigned function, whichever is earlier. For purposes of this paragraph, 4
1677	1677	“manufacturing” means the process of working raw materials into wares suitable for use or which 5
1678	1678	gives new shapes, new quality or new combinations to matter that already has gone through some 6
1679	1679	artificial process by the use of machinery, tools, appliances, and other similar equipment. Property 7
1680	1680	used in the production of goods includes machinery, equipment, or other tangible property which 8
1681	1681	is principally used in the repair and service of other machinery, equipment, or other tangible 9
1682	1682	property used principally in the production of goods and includes all facilities used in the 10
1683	1683	production operation, including storage of material to be used in production and of the products 11
1684	1684	that are produced. 12
1685	1685	(2) Within the meaning of subdivision (1) of this subsection, the term “manufacturing” 13
1686	1686	means the activities of a “manufacturer” as defined in § 44-3-3(20)(iii) and (iv). 14
1687	1687	(3)(i) A credit shall be allowed under this section with respect to tangible personal property 15
1688	1688	and other tangible property, (excluding motor vehicles, furniture, buildings and structural 16
1689	1689	components of buildings, except as provided in this section), which are depreciable pursuant to 26 17
1690	1690	U.S.C. § 167, have a useful life of four (4) years or more, are acquired by purchase as defined in 18
1691	1691	26 U.S.C. § 179(d) or acquired by lease as prescribed in paragraph (iv) of this subdivision, have a 19
1692	1692	situs in this state and to the extent the property is used by a qualified taxpayer, as that term is 20
1693	1693	defined in paragraph (v) of this subdivision, in any of the businesses described in major groups 20 21
1694	1694	through 39, 50 and 51, 60 through 67, 73, 76, 80 through 82, 87 and 89 in the standard industrial 22
1695	1695	classification manual prepared by the technical committee on industrial classification, office of the 23
1696	1696	statistical standards, executive office of the president, United States Bureau of the Budget, as 24
1697	1697	revised from time to time (“SIC Code”) and/or any of the businesses described in the three (3) digit 25
1698	1698	SIC Code 781. 26
1699	1699	(ii) A credit shall be allowed under this section with respect to buildings and structural 27
1700	1700	components that are acquired, constructed, reconstructed, or erected after July 1, 2001, which are 28
1701	1701	depreciable pursuant to 26 U.S.C. § 167, have a useful life of four (4) years or more, are acquired 29
1702	1702	by purchase as defined in 26 U.S.C. § 179(d) or acquired by lease for a term of twenty (20) years 30
1703	1703	or more, excluding renewal periods, have a situs in this state and to the extent the property is used 31
1704	1704	by a high performance manufacturer. The term “high performance manufacturer” means a taxpayer: 32
1705	1705	(A) engaged in any of the businesses described in the major groups 28, 30, 34, to 36, and 38 of the 33
1706	1706	SIC Codes, (B) that pays its full-time equivalent employees a median annual wage above the 34
1707	1707
1708	1708
1709	1709	LC002072 - Page 47 of 61
1710	1710	average annual wage paid by all taxpayers in the state which share the same two-digit SIC Code, 1
1711	1711	unless the high performance manufacturer is the only high performance manufacturer in the state 2
1712	1712	conducting business in that two-digit SIC Code, in which case this requirement shall not apply, and 3
1713	1713	(C)(I) whose expenses for training or retraining its employees exceeds two percent (2%) of its total 4
1714	1714	payroll costs, or (II) that pays its full-time equivalent employees a median annual wage equal to or 5
1715	1715	greater than one hundred twenty-five percent (125%) of the average annual wage paid in this state 6
1716	1716	by employers to employees, or (III) that pays its full-time equivalent employees classified as 7
1717	1717	production workers by the Rhode Island department of labor and training an average annual wage 8
1718	1718	above the average annual wage paid to the production workers of all taxpayers in the state which 9
1719	1719	share the same two-digit SIC Code. 10
1720	1720	(iii) To the extent allowable, the credit allowed under this section is allowed for computers, 11
1721	1721	software and telecommunications hardware used by a taxpayer even if the property has a useful life 12
1722	1722	of less than four (4) years; 13
1723	1723	(iv) The credit for property acquired by lease is based on the fair market value of the 14
1724	1724	property at the inception of the lease times the portion of the depreciable life of the property 15
1725	1725	represented by the term of the lease, excluding renewal options. The credit described in this 16
1726	1726	subdivision for high performance manufacturers that lease buildings and their structural 17
1727	1727	components for a term of twenty (20) years or more, excluding renewal periods, shall be calculated 18
1728	1728	in the same manner as for property acquired by purchase; and 19
1729	1729	(v) For purposes of this subsection, a “qualified taxpayer” means a taxpayer in any of the 20
1730	1730	businesses described in major groups 20 through 39, 50 and 51, 60 through 67, 73, 76, 80 through 21
1731	1731	82, 87 and 89 of the SIC Code, and/or any of the businesses described in the three (3) digit SIC 22
1732	1732	Code 781, and which meet the following criteria: 23
1733	1733	(A) The median annual wage paid to a qualified taxpayer’s full-time equivalent employees 24
1734	1734	must be above the average annual wage paid by all taxpayers in the state which share the same two-25
1735	1735	digit SIC Code, unless that qualified taxpayer is the only qualified taxpayer in the state conducting 26
1736	1736	business in that two-digit SIC Code, in which case this requirement does not apply; and 27
1737	1737	(B) With respect to major groups 50 and 51, 60 through 67, 73, 76, 80 through 82, 87 and 28
1738	1738	89 and/or the three (3) digit SIC Code 781(except for those qualified taxpayers whose businesses 29
1739	1739	are described in any of the four (4) digit SIC Codes 7371, 7372 and 7373) only: 30
1740	1740	(I) More than one-half (½) of its gross revenues are a result of sales to customers outside 31
1741	1741	of the state; or 32
1742	1742	(II) More than one-half (½) of its gross revenues are a result of sales to the federal 33
1743	1743	government; or 34
1744	1744
1745	1745
1746	1746	LC002072 - Page 48 of 61
1747	1747	(III) More than one-half (½) of its gross revenues are a result of a combination of sales 1
1748	1748	described in items (I) and (II) of this subparagraph. 2
1749	1749	(4) For purposes of this section, “sales to customers outside the state” means sales to 3
1750	1750	individuals, businesses and other entities, as well as divisions and/or branches of businesses and 4
1751	1751	other entities, residing or located outside of the state. The requirement of subparagraph (v)(A) of 5
1752	1752	this subdivision does not apply to any qualified taxpayer: (i) whose expenses for training or 6
1753	1753	retraining its employees exceeds two percent (2%) of these qualified taxpayer’s total payroll costs; 7
1754	1754	or (ii) whose median annual wage paid to its full-time equivalent employees is equal to or greater 8
1755	1755	than one hundred twenty-five percent (125%) of the average annual wage paid in this state by 9
1756	1756	employers to employees; or (iii), with respect to major groups 20 through 39 only, the average 10
1757	1757	annual wage paid to these qualified taxpayer’s full-time equivalent employees, classified as 11
1758	1758	production workers by the Rhode Island department of labor and training, is above the average 12
1759	1759	annual wage paid to the production workers of all these taxpayers in the state which share the same 13
1760	1760	two-digit SIC Code. At the election of a taxpayer, which is made at any time and in any manner 14
1761	1761	that may be determined by the tax administrator, the taxpayer’s ability in a particular fiscal year to 15
1762	1762	qualify as a qualified taxpayer may be based on the expenses and gross receipts of the taxpayer for 16
1763	1763	either the prior fiscal year or the immediately proceeding fiscal year rather than on the expenses 17
1764	1764	and gross receipts for that fiscal year. For purposes of this chapter, the director of the Rhode Island 18
1765	1765	human resource investment council shall certify as to legitimate training and retraining expenses in 19
1766	1766	accordance with the guidelines established in chapter 64.6 of title 42, and any rules and regulations 20
1767	1767	promulgated under this chapter. For purposes of this subsection, a “full-time equivalent employee” 21
1768	1768	means an employee who works a minimum of thirty (30) hours per week within the state or two 22
1769	1769	(2) part-time employees who together work a minimum of thirty (30) hours per week within the 23
1770	1770	state. For purposes of this subsection, the director of the Rhode Island department of labor and 24
1771	1771	training, upon receipt of an application from a qualified taxpayer, shall certify whether this 25
1772	1772	qualified taxpayer meets the requirement in subparagraph (v)(A) of this subdivision or is exempt 26
1773	1773	from this requirement because the median annual wage it pays its full-time equivalent employees 27
1774	1774	is equal to or greater than one hundred twenty-five (125%) percent of the average annual wage paid 28
1775	1775	in this state by employers to employees or, with respect to major groups 20 through 39 only, the 29
1776	1776	average annual wage paid to this qualified taxpayer’s full-time equivalent employees, classified as 30
1777	1777	production workers by the Rhode Island department of labor and training, is above the average 31
1778	1778	annual wage paid to the production workers of all these taxpayers in the state which share the same 32
1779	1779	two-digit SIC Code. The director of the Rhode Island department of labor and training shall 33
1780	1780	promulgate rules and regulations as required for the implementation of this requirement. 34
1781	1781
1782	1782
1783	1783	LC002072 - Page 49 of 61
1784	1784	(5) To the extent otherwise allowable, the credit provided by paragraphs (3)(i) and (ii) of 1
1785	1785	this subsection are also allowed for the property having a situs in Rhode Island and used, however 2
1786	1786	acquired, by a property and casualty insurance company. 3
1787	1787	(c) Subject to the provisions of subdivision (b)(3) of this section, a taxpayer is not allowed 4
1788	1788	a credit under subsection (a) of this section with respect to tangible personal property and other 5
1789	1789	tangible property, including buildings and structural components of buildings, which it leases to 6
1790	1790	any other person or corporation and is not allowed a credit under subsection (a) of this section with 7
1791	1791	respect to buildings and structural components of buildings it leases from any other person or 8
1792	1792	corporation. For the purposes of the preceding sentence, any contract or agreement to lease or rent 9
1793	1793	or for a license to use the property is considered a lease, unless a contract or agreement is treated 10
1794	1794	for federal income tax purposes as an installment purchase rather than a lease. 11
1795	1795	(d) The credit allowed under this section for any taxable year does not reduce the tax due 12
1796	1796	for the year by more than fifty percent (50%) of the tax liability that would be payable, and further 13
1797	1797	in the case of corporations, to less than the minimum tax as prescribed in § 44-11-2(e); provided, 14
1798	1798	that in the case of the credit allowed to high performance manufacturers under subdivision (b)(3) 15
1799	1799	of this section, the fifty percent (50%) limitation shall not apply. If the amount of credit allowable 16
1800	1800	under this section for any taxable year is less than the amount of credit available to the taxpayer, 17
1801	1801	any amount of credit not deductible in the taxable year may be carried over to the following year 18
1802	1802	or years (not to exceed seven (7) years) and may be deducted from the taxpayer’s tax for the year 19
1803	1803	or years. 20
1804	1804	(e) At the option of the taxpayer, air or water pollution control facilities which qualify for 21
1805	1805	elective amortization deduction may be treated as property principally used by the taxpayer in the 22
1806	1806	production of goods by manufacturing, processing, or assembling; provided, that if the property 23
1807	1807	qualifies under subsection (b) of this section, in which event, an amortization deduction is not 24
1808	1808	allowed. 25
1809	1809	(f) With respect to property which is disposed of or ceases to be in qualified use prior to 26
1810	1810	the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that 27
1811	1811	portion of the credit provided for in subsection (a) of this section, which represents the ratio which 28
1812	1812	the months of qualified use bear to the months of useful life. If property on which credit has been 29
1813	1813	taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference 30
1814	1814	between the credit taken and the credit allowed for actual use must be added back in the year of 31
1815	1815	disposition. If this property is disposed of or ceases to be in qualified use after it has been in 32
1816	1816	qualified use for more than twelve (12) consecutive years, it is not necessary to add back the credit 33
1817	1817	as provided in this subsection. A credit allowed to a qualified taxpayer is not recaptured merely 34
1818	1818
1819	1819
1820	1820	LC002072 - Page 50 of 61
1821	1821	because the taxpayer subsequently fails to retain the classification as a qualified taxpayer. The 1
1822	1822	amount of credit allowed for actual use shall be determined by multiplying the original credit by 2
1823	1823	the ratio, which the months of qualified use bear to the months of useful life. For purposes of this 3
1824	1824	subsection, “useful life of property” is the same as the taxpayer (or in the case of property acquired 4
1825	1825	by lease, the owner of the property) uses for depreciation purposes when computing his or her 5
1826	1826	federal income tax liability. Comparable rules are used in the case of property acquired by lease to 6
1827	1827	determine the amount of credit, if any, that will be recaptured if the lease terminates prematurely 7
1828	1828	or if the property covered by the lease otherwise fails to be in qualified use. 8
1829	1829	(g) The credit allowed under this section is only allowed against the tax of that corporation 9
1830	1830	included in a consolidated return that qualifies for the credit and not against the tax of other 10
1831	1831	corporations that may join in the filing of a consolidated tax return. 11
1832	1832	SECTION 11. Sections 44-32-2 and 44-32-3 of the General Laws in Chapter 44-32 entitled 12
1833	1833	"Elective Deduction for Research and Development Facilities" are hereby amended to read as 13
1834	1834	follows: 14
1835	1835	44-32-2. Credit for research and development property acquired, constructed, or 15
1836	1836	reconstructed or erected after July 1, 1994. 16
1837	1837	(a) A taxpayer shall be allowed a credit against the tax imposed by chapters 11, or 17, or 17
1838	1838	30 of this title. The amount of the credit shall be ten percent (10%) of the cost or other basis for 18
1839	1839	federal income tax purposes of tangible personal property, and other tangible property, including 19
1840	1840	buildings and structural components of buildings, described in subsection (b) of this section; 20
1841	1841	acquired, constructed or reconstructed, or erected after July 1, 1994. 21
1842	1842	(b) A credit shall be allowed under this section with respect to tangible personal property 22
1843	1843	and other tangible property, including buildings and structural components of buildings which are: 23
1844	1844	depreciable pursuant to 26 U.S.C. § 167 or recovery property with respect to which a deduction is 24
1845	1845	allowable under 26 U.S.C. § 168, have a useful life of three (3) years or more, are acquired by 25
1846	1846	purchase as defined in 26 U.S.C. § 179(d), have a situs in this state and are used principally for 26
1847	1847	purposes of research and development in the experimental or laboratory sense which shall also 27
1848	1848	include property used by property and casualty insurance companies for research and development 28
1849	1849	into methods and ways of preventing or reducing losses from fire and other perils. The credit shall 29
1850	1850	be allowable in the year the property is first placed in service by the taxpayer, which is the year in 30
1851	1851	which, under the taxpayer’s depreciation practice, the period for depreciation with respect to the 31
1852	1852	property begins, or the year in which the property is placed in a condition or state of readiness and 32
1853	1853	availability for a specifically assigned function, whichever is earlier. These purposes shall not be 33
1854	1854	deemed to include the ordinary testing or inspection of materials or products for quality control, 34
1855	1855
1856	1856
1857	1857	LC002072 - Page 51 of 61
1858	1858	efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in 1
1859	1859	connection with literary, historical or similar projects. 2
1860	1860	(c) A taxpayer shall not be allowed a credit under this section with respect to any property 3
1861	1861	described in subsections (a) and (b) of this section, if a deduction is taken for the property under § 4
1862	1862	44-32-1. 5
1863	1863	(d) A taxpayer shall not be allowed a credit under this section with respect to tangible 6
1864	1864	personal property and other tangible property, including buildings and structural components of 7
1865	1865	buildings, which it leases to any other person or corporation. For purposes of the preceding 8
1866	1866	sentence, any contract or agreement to lease or rent or for a license to use the property is considered 9
1867	1867	a lease. 10
1868	1868	(e) The credit allowed under this section for any taxable year does not reduce the tax due 11
1869	1869	for that year, in the case of corporations, to less than the minimum fixed by § 44-11-2(e). If the 12
1870	1870	amount of credit allowable under this section for any taxable year is less than the amount of credit 13
1871	1871	available to the taxpayer, any amount of credit not credited in that taxable year may be carried over 14
1872	1872	to the following year or years, up to a maximum of seven (7) years, and may be credited against 15
1873	1873	the taxpayer’s tax for the following year or years. For purposes of chapter 30 of this title, if the 16
1874	1874	credit allowed under this section for any taxable year exceeds the taxpayer’s tax for that year, the 17
1875	1875	amount of credit not credited in that taxable year may be carried over to the following year or years, 18
1876	1876	up to a maximum of seven (7) years, and may be credited against the taxpayer’s tax for the 19
1877	1877	following year or years. 20
1878	1878	(f)(1) With respect to property which is depreciable pursuant to 26 U.S.C. § 167 and which 21
1879	1879	is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit 22
1880	1880	is to be taken, the amount of the credit is that portion of the credit provided for in this section which 23
1881	1881	represents the ratio which the months of qualified use bear to the months of useful life. If property 24
1882	1882	on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its 25
1883	1883	useful life, the difference between the credit taken and the credit allowed for actual use must be 26
1884	1884	added back in the year of disposition. If the property is disposed of or ceases to be in qualified use 27
1885	1885	after it has been in qualified use for more than twelve (12) consecutive years, it is not necessary to 28
1886	1886	add back the credit as provided in this subdivision. The amount of credit allowed for actual use is 29
1887	1887	determined by multiplying the original credit by the ratio which the months of qualified use bear 30
1888	1888	to the months of useful life. For purposes of this subdivision, “useful life of property” is the same 31
1889	1889	as the taxpayer uses for depreciation purposes when computing his federal income tax liability. 32
1890	1890	(2) Except with respect to that property to which subdivision (3) of this subsection applies, 33
1891	1891	with respect to three (3) year property, as defined in 26 U.S.C. § 168(c), which is disposed of or 34
1892	1892
1893	1893
1894	1894	LC002072 - Page 52 of 61
1895	1895	ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, 1
1896	1896	the amount of the credit shall be that portion of the credit provided for in this section which 2
1897	1897	represents the ratio which the months of qualified use bear to thirty-six (36). If property on which 3
1898	1898	credit has been taken is disposed of or ceases to be in qualified use prior to the end of thirty-six 4
1899	1899	(36) months, the difference between the credit taken and the credit allowed for actual use must be 5
1900	1900	added back in the year of disposition. The amount of credit allowed for actual use is determined by 6
1901	1901	multiplying the original credit by the ratio that the months of qualified use bear to thirty-six (36). 7
1902	1902	(3) With respect to any recovery property to which 26 U.S.C. § 168 applies, which is a 8
1903	1903	building or a structural component of a building and which is disposed of or ceases to be in qualified 9
1904	1904	use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit 10
1905	1905	is that portion of the credit provided for in this section which represents the ratio which the months 11
1906	1906	of qualified use bear to the total number of months over which the taxpayer chooses to deduct the 12
1907	1907	property under 26 U.S.C. § 168. If property on which credit has been taken is disposed of or ceases 13
1908	1908	to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the 14
1909	1909	property under 26 U.S.C. § 168, the difference between the credit taken and the credit allowed for 15
1910	1910	actual use must be added back in the year of disposition. If the property is disposed of or ceases to 16
1911	1911	be in qualified use after it has been in qualified use for more than twelve (12) consecutive years, it 17
1912	1912	is not necessary to add back the credit as provided in this subdivision. The amount of credit allowed 18
1913	1913	for actual use is determined by multiplying the original credit by the ratio that the months of 19
1914	1914	qualified use bear to the total number of months over which the taxpayer chooses to deduct the 20
1915	1915	property under 26 U.S.C. § 168. 21
1916	1916	(g) No deduction for research and development facilities under § 44-32-1 shall be allowed 22
1917	1917	for research and development property for which the credit is allowed under this section. 23
1918	1918	(h) No investment tax credit under § 44-31-1 shall be allowed for research and development 24
1919	1919	property for which the credit is allowed under this section. 25
1920	1920	(i) The investment tax credit allowed by § 44-31-1 shall be taken into account before the 26
1921	1921	credit allowed under this section. 27
1922	1922	(j) The credit allowed under this section only allowed against the tax of that corporation 28
1923	1923	included in a consolidated return that qualifies for the credit and not against the tax of other 29
1924	1924	corporations that may join in the filing of a consolidated return. 30
1925	1925	(k) In the event that the taxpayer is a partnership, joint venture or small business 31
1926	1926	corporation, the credit shall be divided in the same manner as income. 32
1927	1927	44-32-3. Credit for qualified research expenses. 33
1928	1928	(a) A taxpayer shall be allowed a credit against the tax imposed by chapters 11, or 17 or 30 34
1929	1929
1930	1930
1931	1931	LC002072 - Page 53 of 61
1932	1932	of this title. The amount of the credit shall be five percent (5%)(and in the case of amounts paid or 1
1933	1933	accrued after January 1, 1998, twenty-two and one-half percent (22.5%) for the first twenty-five 2
1934	1934	thousand dollars ($25,000) worth of credit and sixteen and nine-tenths percent (16.9%) for the 3
1935	1935	amount of credit above twenty-five thousand dollars ($25,000)) of the excess, if any, of: 4
1936	1936	(1) The qualified research expenses for the taxable year, over 5
1937	1937	(2) The base period research expenses. 6
1938	1938	(b)(1) “Qualified research expenses” and “base period research expenses” have the same 7
1939	1939	meaning as defined in 26 U.S.C. § 41; provided, that the expenses have been incurred in this state 8
1940	1940	after July 1, 1994. 9
1941	1941	(2) Notwithstanding the provisions of subdivision (1) of this subsection, “qualified research 10
1942	1942	expenses” also includes amounts expended for research by property and casualty insurance 11
1943	1943	companies into methods and ways of preventing or reducing losses from fire and other perils. 12
1944	1944	(c) The credit allowed under this section for any taxable year shall not reduce the tax due 13
1945	1945	for that year by more than fifty percent (50%) of the tax liability that would be payable, and in the 14
1946	1946	case of corporations, to less than the minimum fixed by § 44-11-2(e). If the amount of credit 15
1947	1947	allowable under this section for any taxable year is less than the amount of credit available to the 16
1948	1948	taxpayer any amount of credit not credited in that taxable year may be carried over to the following 17
1949	1949	year or years, up to a maximum of seven (7) years, and may be credited against the taxpayer’s tax 18
1950	1950	for that year or years. For purposes of chapter 30 of this title, if the credit allowed under this section 19
1951	1951	for any taxable year exceeds the taxpayer’s tax for that year, the amount of credit not credited in 20
1952	1952	that taxable year may be carried over to the following year or years, up to a maximum of seven (7) 21
1953	1953	years, and may be credited against the taxpayer’s tax for that year or years. For purposes of 22
1954	1954	determining the order in which carry-overs are taken into consideration, the credit allowed by § 44-23
1955	1955	32-2 is taken into account before the credit allowed under this section. 24
1956	1956	(d) The investment tax credit allowed by § 44-31-1 shall be taken into account before the 25
1957	1957	credit allowed under this section. 26
1958	1958	(e) The credit allowed under this section shall only be allowed against the tax of that 27
1959	1959	corporation included in a consolidated return that qualifies for the credit and not against the tax of 28
1960	1960	other corporations that may join in the filing of a consolidated return. 29
1961	1961	(f) In the event the taxpayer is a partnership, joint venture or small business corporation, 30
1962	1962	the credit is divided in the same manner as income. 31
1963	1963	SECTION 12. Section 44-39.1-2 of the General Laws in Chapter 44-39.1 entitled 32
1964	1964	"Employment Tax Credit" is hereby amended to read as follows: 33
1965	1965	44-39.1-2. Credit provisions. 34
1966	1966
1967	1967
1968	1968	LC002072 - Page 54 of 61
1969	1969	(a) The credit is not refundable but may be applied against the tax liability imposed against 1
1970	1970	a taxpayer pursuant to chapters 11, 13, 14, 15, and 17 and 30 of this title. 2
1971	1971	(b) The credit allowed under this chapter for any taxable year shall not reduce the tax due 3
1972	1972	for that year to less than one hundred dollars ($100). Any amount of credit not deductible in that 4
1973	1973	taxable year may not be carried over to the following year. This credit may not be applied against 5
1974	1974	the tax until all other credits available to this taxpayer for that taxable year have been applied. 6
1975	1975	(c) In the event that the employer is a partnership, joint venture, or small business 7
1976	1976	corporation, the credit shall be divided in the manner as income. 8
1977	1977	(d) In the event that the taxpayer is liable for taxes imposed under both chapters 14 and 15 9
1978	1978	of this title, the taxpayer must elect the tax against which it wishes to claim credit. This election 10
1979	1979	shall be made as part of the taxpayer’s filings in accordance with §§ 44-14-6 and 44-15-5. The 11
1980	1980	taxpayer may not divide the credit for any year between the two (2) tax liabilities for which it is 12
1981	1981	liable. 13
1982	1982	SECTION 13. Sections 44-46-1 and 44-46-3 of the General Laws in Chapter 44-46 entitled 14
1983	1983	"Adult Education Tax Credit" are hereby amended to read as follows: 15
1984	1984	44-46-1. Adult education tax credit. 16
1985	1985	A taxpayer who is an employer shall be allowed a credit, to be computed as provided in 17
1986	1986	this chapter, against the tax imposed by chapters 11, 13, 14, 15, and 17 and 30 of this title. The 18
1987	1987	amount of the credit shall be fifty percent (50%) of the costs incurred solely and directly for non-19
1988	1988	worksite or worksite-based adult education programs as defined in § 44-46-2. 20
1989	1989	44-46-3. Credits. 21
1990	1990	An employer shall be allowed a credit as provided in § 44-46-1 up to a maximum credit of 22
1991	1991	three hundred dollars ($300) against taxes otherwise due under provisions of chapters 11, 13, 14, 23
1992	1992	15, and 17 and 30 of this title per paid employee. The employee must remain in the employ of the 24
1993	1993	business for a minimum period of thirteen (13) consecutive weeks, and a minimum of four hundred 25
1994	1994	and fifty-five (455) hours of paid employment before the employer can become eligible for the 26
1995	1995	income credit. The credit shall not reduce the tax under chapter 11 of this title to less than one 27
1996	1996	hundred dollars ($100). The credit is not refundable. Any amount of credit not deductible in that 28
1997	1997	taxable year may not be carried over to the following year. In the event that the employer is a 29
1998	1998	partnership, joint venture or small business corporation, the credit shall be divided in the same 30
1999	1999	manner as income. This credit may not be applied against the tax until all other credits available to 31
2000	2000	this taxpayer for the taxable year have been applied. 32
2001	2001	SECTION 14. Section 44-47-1 of the General Laws in Chapter 44-47 entitled "Adult and 33
2002	2002	Child Day Care Assistance and Development Tax Credit" is hereby amended to read as follows: 34
2003	2003
2004	2004
2005	2005	LC002072 - Page 55 of 61
2006	2006	44-47-1. Tax credit. 1
2007	2007	(a) A taxpayer that pays for or provides adult or child day care services to its employees or 2
2008	2008	to the employees of its commercial tenants, or that provides real property or dedicates rental space 3
2009	2009	for child day care services, is allowed a credit, to be computed as provided in this chapter, against 4
2010	2010	the tax imposed by chapters 11 and 13, except § 44-13-13, and chapters 14, and 17, 30 of this title. 5
2011	2011	The amount of the credit shall be: 6
2012	2012	(1) Thirty percent (30%) of the total amount expended in the state of Rhode Island during 7
2013	2013	the taxable year by a taxpayer for day care services purchased to provide care for the dependent 8
2014	2014	children or dependent adult family members of the taxpayer’s employees or employees of 9
2015	2015	commercial tenants of the taxpayer during the employees’ hours of employment; 10
2016	2016	(2) Thirty percent (30%) of the total amount expended during the taxable year by a taxpayer 11
2017	2017	in the establishment and/or operation of a day care facility in the state of Rhode Island used 12
2018	2018	primarily by the dependent children of the taxpayer’s employees or employees of commercial 13
2019	2019	tenants of the taxpayer during the employees’ hours of employment; 14
2020	2020	(3) Thirty percent (30%) of the total amount expended during the taxable year by a taxpayer 15
2021	2021	in conjunction with one or more other taxpayers for the establishment and/or operation of a day 16
2022	2022	care facility in the state of Rhode Island used primarily by the dependent children of the taxpayer’s 17
2023	2023	employees or employees of commercial tenants of the taxpayer during that employee’s hours of 18
2024	2024	employment; 19
2025	2025	(4) Thirty percent (30%) of the total amount foregone in rent or lease payments related to 20
2026	2026	the dedication of rental or lease space to child day care services. The amount foregone shall be the 21
2027	2027	difference between fair market rental and actual rental. 22
2028	2028	(b) No credit shall be allowed pursuant to this chapter unless the child day care facility is 23
2029	2029	licensed pursuant to chapter 72.1 of title 42, and agrees to accept children whose child care services 24
2030	2030	are paid for in full or in part by the Rhode Island department of human services; and/or the adult 25
2031	2031	day care facility is certified by the department of elderly affairs. 26
2032	2032	SECTION 15. Section 44-57-1 of the General Laws in Chapter 44-57 entitled "Residential 27
2033	2033	Renewable Energy System Tax Credit" is hereby amended to read as follows: 28
2034	2034	44-57-1. Tax credit for principal or secondary residence. 29
2035	2035	(a) An eligible person, as defined in § 44-57-3, who shall pay all or part of the cost of an 30
2036	2036	eligible renewable energy system, as defined in § 44-57-4, which is installed in a dwelling, as 31
2037	2037	defined in § 44-57-2(13), shall be entitled to a tax credit against the tax liability imposed by chapters 32
2038	2038	chapter 11 and 30 of this title. The credit, which shall be nonrefundable, shall be computed in 33
2039	2039	accordance with § 44-57-5. 34
2040	2040
2041	2041
2042	2042	LC002072 - Page 56 of 61
2043	2043	(b) The credit shall be claimed in the tax year in which the renewable energy system is 1
2044	2044	placed into service. The credit may be claimed in the tax year the renewable energy system is 2
2045	2045	purchased if the system is placed in service by April 1 of the following tax year. 3
2046	2046	(c) Any credit not used in accordance with subsection (b) of this section shall not be carried 4
2047	2047	over to any following year or years. The tax credit shall not reduce the tax in any tax year below 5
2048	2048	the minimum tax where a minimum tax is provided by law. 6
2049	2049	(d) In the event the eligible person is a partnership, joint venture, or corporation, the credit 7
2050	2050	shall be divided in the same manner as income. 8
2051	2051	SECTION 16. Sections 44-30-19, 44-30-20, 44-30-21, 44-30-22, 44-30-23, 44-30-24, 44-9
2052	2052	30-26, 44-30-27 and 44-30-37 of the General Laws in Chapter 44-30 entitled "Personal Income 10
2053	2053	Tax" are hereby repealed. 11
2054	2054	44-30-19. Credit to trust beneficiary receiving accumulation distribution. 12
2055	2055	(a) General. A resident beneficiary of a trust whose Rhode Island income includes all or 13
2056	2056	part of an accumulation distribution by the trust, as defined in 26 U.S.C. § 665, shall be allowed a 14
2057	2057	credit against the tax otherwise due under this chapter for all or a proportionate part of any tax paid 15
2058	2058	by the trust under this chapter for any preceding taxable year which would not have been payable 16
2059	2059	if the trust had in fact made distributions to its beneficiaries at the times and in the amounts specified 17
2060	2060	in 26 U.S.C. § 666. 18
2061	2061	(b) Limitation. The credit under this section shall not reduce the tax otherwise due from 19
2062	2062	the beneficiary under this chapter to an amount less than would have been due if the accumulation 20
2063	2063	distribution or his or her part thereof were excluded from his or her Rhode Island income. 21
2064	2064	44-30-20. Tax credit for installation costs to hydroelectric power developers — 22
2065	2065	Legislative findings and declaration of policy. 23
2066	2066	(a) The general assembly recognizes and declares that because the worldwide supply of 24
2067	2067	fossil fuel and of other nonrenewable energy resources is limited, it is necessary to encourage the 25
2068	2068	utilization of renewable natural resources for the production of energy; that there are many existing 26
2069	2069	dams which could be retrofitted to generate hydroelectric power; and that a major factor inhibiting 27
2070	2070	the development of hydroelectric power generation is the presently higher capital costs for new 28
2071	2071	construction of hydro plants compared to conventional thermal systems. 29
2072	2072	(b) It is the policy of this state to support and foster the development of hydropower 30
2073	2073	generating facilities by the establishment of tax incentives for those owners of existing dams who 31
2074	2074	install hydroelectric power generation equipment. 32
2075	2075	44-30-21. Hydroelectric development tax credit — Definitions. 33
2076	2076	For purposes of this chapter: 34
2077	2077
2078	2078
2079	2079	LC002072 - Page 57 of 61
2080	2080	(1) “Existing dam” means any dam located in this state or immediately adjacent to it, the 1
2081	2081	construction of which was completed on or before May 20, 1981, and which does not require any 2
2082	2082	construction or enlargement of impoundment structures, other than repairs or reconstruction, in 3
2083	2083	connection with the installation of any small hydroelectric power project; 4
2084	2084	(2) “Hydroelectric power developer” means any person or corporation who owns or leases 5
2085	2085	an existing dam and who installs hydroelectric power generation equipment and utilizes that 6
2086	2086	equipment to generate hydroelectric power; 7
2087	2087	(3) “Installation costs” means all expenditures related to the design, construction, 8
2088	2088	installation, or repair of all facilities necessary for hydroelectric power production in this state; 9
2089	2089	(4) “Small hydroelectric power production facility” means any hydroelectric power project 10
2090	2090	which is located in this state, which uses the water power potential of an existing dam, and which 11
2091	2091	has not more than fifteen thousand (15,000) kilowatts of installed capacity. 12
2092	2092	44-30-22. Tax credit for installation costs. 13
2093	2093	(a) A hydroelectric power developer will be allowed an income tax credit for the 14
2094	2094	installation costs of a small hydroelectric power production facility. 15
2095	2095	(b) For the purposes of this section, a hydroelectric power developer shall be allowed a 16
2096	2096	non-refundable state income tax credit in the amount of ten percent (10%) of the installation costs 17
2097	2097	of a hydropower facility. This credit shall be limited to five hundred thousand dollars ($500,000) 18
2098	2098	in expenditures for a maximum income tax credit of fifty thousand dollars ($50,000). This income 19
2099	2099	tax credit shall be allowed as either a personal or a corporate income tax credit, depending on the 20
2100	2100	hydropower developer’s income tax filing status on the last day of his or her income tax filing 21
2101	2101	period; provided, that if the installation costs were incurred by a corporation, then a non-refundable 22
2102	2102	corporate income tax credit shall be allowed, and if installation costs were not incurred by a 23
2103	2103	corporation, then a non-refundable personal income tax credit shall be allowed. In no event shall 24
2104	2104	both a corporate and personal non-refundable income tax credit be allowed for installation costs at 25
2105	2105	a single dam site. 26
2106	2106	44-30-23. Extended credits. 27
2107	2107	If the allowable credit exceeds the taxes due on the developer’s income, the amount of the 28
2108	2108	claim not used as an offset against the income taxes of that taxable year may be carried forward as 29
2109	2109	a credit against subsequent income tax liability. The provision may not exceed five (5) years from 30
2110	2110	the tax year in which the first credit was applied. 31
2111	2111	44-30-24. Tax credit for art. 32
2112	2112	Upon presentation of written certification by the board of curators, an individual shall be 33
2113	2113	entitled to a tax credit. The tax credit shall be equal to ten percent (10%) of each one thousand 34
2114	2114
2115	2115
2116	2116	LC002072 - Page 58 of 61
2117	2117	dollars ($1,000) of the purchase price of the art up to a maximum purchase price of ten thousand 1
2118	2118	dollars ($10,000). Any amount of tax credit not deductible in the taxable year of certification may 2
2119	2119	not be carried over to the following year. The credit may not be applied until all other credits 3
2120	2120	available to the taxpayer for that taxable year are applied. 4
2121	2121	44-30-26. Tax credit for surviving spouse. 5
2122	2122	An individual who qualifies and files as a “surviving spouse” under the Internal Revenue 6
2123	2123	Code, applicable for the subject tax year, and who was domiciled in the state of Rhode Island for 7
2124	2124	the entire tax year and who is sixty-five (65) years of age or older and has an adjusted gross income 8
2125	2125	of less than twenty-five thousand dollars ($25,000) shall be entitled to a two percent (2%) tax credit 9
2126	2126	based on adjusted gross income, up to a maximum of five hundred dollars ($500). This credit is not 10
2127	2127	refundable, and is only available for the year in which it is claimed. 11
2128	2128	44-30-27. Farm to school income tax credit. 12
2129	2129	Upon presentation of written certification by a local education agency, an individual or 13
2130	2130	entity domiciled in the state for the entire tax year, shall be entitled to an income tax credit for the 14
2131	2131	purchase of produce grown in the state which shall be furnished or used in connection with that 15
2132	2132	individual’s or entity’s agreement to provide food, services or other products to a local education 16
2133	2133	agency. The income tax credit shall be equal to five percent (5%) of the cost of farm products grown 17
2134	2134	or produced in the state. Any amount of income tax credit not deductible in the taxable year of 18
2135	2135	certification may not be carried over to the following year. The credit may not be applied until all 19
2136	2136	other credits available to the taxpayer for that taxable year are applied. 20
2137	2137	44-30-37. Credit to trust beneficiary receiving accumulation distribution. 21
2138	2138	A nonresident beneficiary of a trust whose Rhode Island income includes all or part of an 22
2139	2139	accumulation distribution by the trust, as defined in 26 U.S.C. § 665, shall be allowed a credit 23
2140	2140	against the tax otherwise due under this chapter, computed in the same manner and subject to the 24
2141	2141	same limitation as provided by § 44-30-19 with respect to a resident beneficiary. 25
2142	2142	SECTION 17. Section 44-43-3 of the General Laws in Chapter 44-43 entitled "Tax 26
2143	2143	Incentives for Capital Investment in Small Businesses" is hereby repealed. 27
2144	2144	44-43-3. Wage credit. 28
2145	2145	(a) There shall be allocated among the entrepreneurs of a qualifying business entity (based 29
2146	2146	on the ratio of each entrepreneur’s interest in the entity to the total interest held by all entrepreneurs) 30
2147	2147	with respect to each entity on an annual basis commencing with the calendar year in which the 31
2148	2148	entity first qualified as a qualifying business entity a credit against the tax imposed by chapter 30 32
2149	2149	of this title. The credit shall be equal to three percent (3%) of the wages (as defined in 26 U.S.C. § 33
2150	2150	3121(a)) in excess of fifty thousand dollars ($50,000) paid during each calendar year to employees 34
2151	2151
2152	2152
2153	2153	LC002072 - Page 59 of 61
2154	2154	of the entity; provided, that there shall be excluded from the amount on which the credit is based 1
2155	2155	any wages: 2
2156	2156	(1) Paid to any owner of the entity; 3
2157	2157	(2) Paid more than five (5) years after the entity commenced business or five (5) years after 4
2158	2158	the purchase of the business entity by new owners, whichever occurs later; or 5
2159	2159	(3) Paid to employees who are not principally employed in Rhode Island and whose wages 6
2160	2160	are not subject to withholding pursuant to chapter 30 of this title. 7
2161	2161	(b) The credit authorized by this section shall cease in the taxable year next following after 8
2162	2162	the taxable year in which the average annual gross revenue of the business entity equals or exceeds 9
2163	2163	one million five hundred thousand dollars ($1,500,000). 10
2164	2164	SECTION 18. Chapter 7-1.2 of the General Laws entitled "Rhode Island Business 11
2165	2165	Corporation Act" is hereby amended by adding thereto the following section: 12
2166	2166	7-1.2-1805. Confirmation of state fees and taxes. 13
2167	2167	(a) Notwithstanding any other provisions of the general laws, when any section of this 14
2168	2168	chapter refers to state fees and/or taxes paid, the division of taxation is authorized to respond and 15
2169	2169	share tax information with the secretary of state's office in response to a request from that office 16
2170	2170	regarding an entity's tax status as compliant or noncompliant. 17
2171	2171	(b) If the secretary of state's office receives notice from the division of taxation that the 18
2172	2172	corporation has failed to pay any fees or taxes due to this state, the secretary of state shall initiate 19
2173	2173	revocation proceedings in accordance with the provisions of §§ 7-1.2-1310 or 7-1.2-1414. 20
2174	2174	(c) The notice of revocation may state as the basis for revocation that the taxpayer failed 21
2175	2175	to pay state fees and/or taxes to the division of taxation. However, the secretary of state's office 22
2176	2176	shall otherwise protect all state and federal tax information in its custody as required by § 44-11-23
2177	2177	26.1 and refrain from disclosing any other specific tax information. 24
2178	2178	(d) For filings remitted and recorded in accordance with any section of this chapter between 25
2179	2179	July 1, 2020 and the effective date of this section that refer to state fees and/or taxes paid, the 26
2180	2180	secretary of state's office may request from the division of taxation a determination as to whether 27
2181	2181	all state taxes and fees were paid as outlined in subsection (a) of this section. If the secretary of 28
2182	2182	state's office receives notice from the division of taxation that the corporation has failed to pay any 29
2183	2183	fees or taxes due to this state, the secretary of state shall begin revocation proceedings in accordance 30
2184	2184	with subsections (b) and (c) of this section. 31
2185	2185	SECTION 19. Chapter 7-16 of the General Laws entitled "The Rhode Island Limited-32
2186	2186	Liability Company Act" is hereby amended by adding thereto the following section: 33
2187	2187	7-16-77. Confirmation of state fees and taxes. 34
2188	2188
2189	2189
2190	2190	LC002072 - Page 60 of 61
2191	2191	(a) Notwithstanding any other provisions of the general laws, when any section of this 1
2192	2192	chapter refers to state fees and/or taxes paid, the division of taxation is authorized to respond and 2
2193	2193	share tax information with the secretary of state's office in response to a request from that office 3
2194	2194	regarding an entity's tax status as compliant or noncompliant. 4
2195	2195	(b) If the secretary of state's office receives notice from the division of taxation that the 5
2196	2196	limited-liability company has failed to pay any fees or taxes due to this state, the secretary of state 6
2197	2197	shall begin revocation proceedings in accordance with the provisions of § 7-16-41. 7
2198	2198	(c) The notice of revocation may state as the basis for revocation that the taxpayer failed 8
2199	2199	to pay state fees and/or taxes to the division of taxation. However, the secretary of state's office 9
2200	2200	shall otherwise protect all state and federal tax information in its custody as required by § 7-16-10
2201	2201	67.1 and refrain from disclosing any other specific tax information. 11
2202	2202	(d) For filings remitted and recorded in accordance with any section of this chapter between 12
2203	2203	July 1, 2020 and the effective date of this section that refer to state fees and/or taxes paid, the 13
2204	2204	secretary of state's office may request from the division of taxation a determination as to whether 14
2205	2205	all state taxes and fees were paid as outlined in subsection (a) of this section. If the secretary of 15
2206	2206	state's office receives notice from the division of taxation that the limited-liability company has 16
2207	2207	failed to pay any fees or taxes due to this state, the secretary of state shall begin revocation 17
2208	2208	proceedings in accordance with subsections (b) and (c) of this section. 18
2209	2209	SECTION 20. This act shall take effect upon passage. 19
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2211	2211	LC002072
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2213	2213
2214	2214
2215	2215	LC002072 - Page 61 of 61
2216	2216	EXPLANATION
2217	2217	BY THE LEGISLATIVE COUNCIL
2218	2218	OF
2219	2219	A N A C T
2220	2220	RELATING TO CORPORAT IONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE
2221	2221	ISLAND BUSINESS CORPORATION ACT
2222	2222	***
2223	2223	This act would make numerous technical amendments to the statutes on taxes and 1
2224	2224	corporations, associations and partnerships. 2
2225	2225	This act would take effect upon passage. 3
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2227	2227	LC002072
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2229	2229