Rhode Island House Bill H5757

Rhode Island 2025 Regular Session

• Introduced: 2/26/25
• Refer: 2/26/25

Caption

Caps delinquent tax interest rate at 12%. Prohibits audits beyond 3 years from date of tax filing, 7 years for fraudulent filings, and in no event beyond 10 years from date of filing or required filing date, whichever is later.

Impact

Under the provisions of HB 5757, the authority of the tax administrator to audit taxpayers will also be limited. The bill stipulates that audits must be conducted within three years from the date of tax filing, increasing the limit to seven years for fraudulent filings and establishing an absolute maximum of ten years from the original filing or required filing date. This limitation is expected to enhance taxpayer confidence by providing a more predictable tax environment, thus reducing the stressful experience of extensive audits by state officials.

Summary

House Bill 5757, introduced in the Rhode Island General Assembly, aims to amend taxation regulations concerning delinquent tax payments. The bill proposes a cap on the interest rate for all delinquent tax payments at twelve percent (12%) per annum, effective January 1, 2026. This change intends to mitigate the financial burden on taxpayers who fail to pay their taxes on time and could significantly influence taxpayer compliance and the overall tax collection process in the state. Furthermore, the bill provides clarity by ensuring that interest will be calculated based on the rate in effect at the time of delinquency notification.

Contention

While proponents of the bill argue that it serves to protect taxpayers from excessive interest charges and prolonged audit processes, critics may raise concerns regarding the implications of the reduced audit period. There could be a perception that limiting audit timelines may hinder the state's ability to effectively enforce tax laws and detect tax evasion. This aspect could lead to debates among lawmakers and stakeholders about the balance between taxpayer rights and the responsibility of the state to ensure fair tax collection practices.