2022 -- H 7774

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LC005230

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2022

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A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS - RHODE

ISLAND BUSINESS CORPORATION ACT

     Introduced By: Representatives Edwards, Kennedy, Kazarian, and Casey

     Date Introduced: March 03, 2022

     Referred To: House Corporations

     (Dept. of Revenue)

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 7-1.2-1310 and 7-1.2-1414 of the General Laws in Chapter 7-1.2

entitled "Rhode Island Business Corporation Act" are hereby amended to read as follows:

     7-1.2-1310. Revocation of articles of incorporation.

     (a) The articles of incorporation of a corporation may be revoked by the secretary of state

upon the conditions prescribed in this section when it is established that:

     (1) The corporation procured its articles of incorporation through fraud; or

     (2) The corporation has continued to exceed or abuse the authority conferred upon it by

law; or

     (3) The corporation has failed to file its annual report within the time required by this

chapter, or with respect to any corporation in good corporate standing on the records of the secretary

of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when

they have become due and payable, or the secretary of state has received notice from the division

of taxation, in accordance with § 44-11-26.1, that the corporation has failed to pay corporate any

fees or taxes due to this state; or

     (4) The corporation has failed for thirty (30) days to appoint and maintain a registered agent

in this state as required by this chapter; or

     (5) The corporation has failed, after change of its registered office or registered agent, to

file in the office of the secretary of state a statement of the change as required by this chapter; or

     (6) The corporation has failed to file in the office of the secretary of state any amendment

to its articles of incorporation or any articles of merger within the time prescribed by this chapter;

or

     (7) A misrepresentation has been made of any material matter in any application, report,

affidavit, or other document submitted by the corporation pursuant to this chapter.

     (b) No articles of incorporation of a corporation may be revoked by the secretary of state

unless:

     (1) The secretary of state gives the corporation notice thereof not less than sixty (60) days

prior to such revocation by regular mail addressed to the registered office of the corporation in this

state on file with the secretary of state's office, which notice shall specify the basis for the

revocation; provided, however, that if a prior mailing addressed to the registered office of the

corporation in this state currently on file with the secretary of state's office has been returned as

undeliverable by the United States Postal Service for any reason, or if the revocation notice is

returned as undeliverable by the United States Postal Service for any reason, the secretary of state

gives notice as follows:

     (i) To the corporation at its principal office of record as shown in its most recent annual

report, and no further notice is required; or

     (ii) In the case of a domestic corporation that has not yet filed an annual report, then to any

one of the incorporators listed on the articles of incorporation, and no further notice is required;

and

     (2) The corporation fails prior to revocation to file the annual report or pay the fees, or file

the required statement of change of registered agent or registered office, or file the articles of

amendment or articles of merger, or correct the misrepresentation.

     7-1.2-1414. Revocation of certificate of authority.

     (a) The certificate of authority of a foreign corporation to transact business in this state may

be revoked by the secretary of state under the conditions prescribed in this section when:

     (1) The corporation fails to file its annual report within the time required by this chapter,

or with respect to any corporation in good corporate standing on the records of the secretary of state

on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have

become due and payable, or the secretary of state has received notice from the division of taxation,

in accordance with § 44-11-26.1, that the corporation has failed to pay corporate any fees or taxes

due to this state; or

     (2) The corporation fails to appoint and maintain a registered agent in this state as required

by this chapter; or

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     (3) The corporation fails, after changing its registered office or registered agent, to file in

the office of the secretary of state a statement of the change as required by this chapter; or

     (4) The corporation fails to file in the office of the secretary of state any amendment to its

articles of incorporation or any articles of merger within the time prescribed by this chapter; or

     (5) A misrepresentation has been made of any material matter in any application, report,

affidavit, or other document submitted by the corporation pursuant to this chapter.

     (b) No certificate of authority of a foreign corporation may be revoked by the secretary of

state unless the secretary of state has given the corporation notice thereof not less than sixty (60)

days prior to such revocation, by regular mail addressed to the registered agent of the corporation

in this state on file with the secretary of state's office, which notice shall specify the basis for the

revocation; provided, however, that if a prior mailing addressed to the registered office of the

corporation in this state currently on file with the secretary of state's office has been returned as

undeliverable by the United States Postal Service for any reason, or if the revocation notice is

returned as undeliverable by the United States Postal Service for any reason, the secretary of state

shall give notice as follows:

     (1) To the corporation at its principal office of record as shown in its most recent annual

report, and no further notice is required; or

     (2) In the case of a foreign corporation that has not yet filed an annual report, then to the

corporation at its principal office shown in its application for certificate of authority, and no further

notice is required.

     SECTION 2. Section 7-16-67.1 of the General Laws in Chapter 7-16 entitled "The Rhode

Island Limited-Liability Company Act" is hereby amended to read as follows:

     7-16-67.1. Revocation of articles or authority to transact business for nonpayment of

fee.

     (a) The tax administrator may, after July 15 of each year, make up compile a list of all

limited-liability companies that have failed to pay the fee defined in § 7-16-67 any state fees and/or

taxes for one year after the fee state fees and/or taxes became due and payable, and the failure is

not the subject of a pending appeal. The tax administrator shall certify to the correctness of the list.

Upon receipt of the certified list, the secretary of state may initiate revocation proceedings as

defined in § 7-16-41.

     (b) With respect to any information provided by the division of taxation to the secretary of

state state's office pursuant to this chapter, the secretary of state, together with the employees or

agents thereof, shall be subject to all state and federal tax confidentiality laws applying to the

division of taxation and the officers, agents, and employees thereof, and which restrict the

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acquisition, use, storage, dissemination, or publication of confidential taxpayer data.

     (c) Notwithstanding the foregoing, the notice of revocation may state as the basis for

revocation that the taxpayer has failed to pay state fees and/or taxes to the division of taxation.

However, the secretary of state's office shall otherwise protect all state and federal tax information

in its custody as required by subsection (b) of this section and refrain from disclosing any other

specific tax information.

     SECTION 3. Section 42-64.3-6 of the General Laws in Chapter 42-64.3 entitled

"Distressed Areas Economic Revitalization Act" is hereby amended to read as follows:

     42-64.3-6. Business tax credits.

     A qualified business in an enterprise zone is allowed a credit against the tax imposed

pursuant to chapters 11, 13 (except the taxation of tangible personal property under § 44-13-13),

14, and 17, and 30 of title 44:

     (1) A credit equal to fifty percent (50%) of the total amount of wages paid to those

enterprise job employees comprising the five percent (5%) new jobs referenced in § 42-64.3-

3(4)(i)(A). The wages subject to the credit shall be reduced by any direct state or federal wage

assistance paid to employers for the employee(s) in the taxable year. The maximum credit allowed

per taxable year under the provisions of this subsection shall be two thousand five hundred dollars

($2,500), per employee. A taxpayer who takes this business tax credit shall not be eligible for the

resident business owner modification pursuant to § 42-64.3-7.

     (2) A credit equal to seventy five percent (75%) of the total amount of wages paid to those

enterprise job employees who are domiciliaries of an enterprise zone comprising the five percent

(5%) new jobs referenced in § 42-64.3-3(4)(i)(A). The wages subject to the credit shall be reduced

by any direct state or federal wage assistance in the taxable year. The maximum credit allowed per

taxable year under the provisions of this subdivision shall be five thousand dollars ($5,000) per

employee. A taxpayer who takes this business tax credit is not eligible for the resident business

owner modification. The council shall promulgate appropriate rules to certify that the enterprise

job employees are domiciliaries of an enterprise zone and shall advise the qualified business and

the tax administrator. A taxpayer taking a credit for employees pursuant to this subdivision (2) shall

not be entitled to a credit pursuant to subdivision (1) of this section for the employees.

     (3) Any tax credit as provided in subdivision (1) or (2) of this section shall not reduce the

tax below the minimum tax. Fiscal year taxpayers must claim the tax credit in the year into which

the December 31st of the certification year falls. The credit shall be used to offset tax liability

pursuant to the provisions of either chapters 11, 13, 14, or 17, or 30 of title 44, but not more than

one chapter.

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     (4) In the case of a corporation, the credit allowed under this section is only allowed against

the tax of that corporation included in a consolidated return that qualifies for the credit and not

against the tax of other corporations that may join in the filing of a consolidated tax return.

     (5) In the case of multiple business owners, the credit provided in subdivision (1) or (2) of

this section is apportioned according to the ownership interests of the qualified business.

     (6) The tax credits established pursuant to this section may be carried forward for a period

of three (3) years if in each of the three (3) calendar years a business which has qualified for tax

credits under this section: (a) does not reduce the number of its employees from the last Effective

Date of Certification; (b) obtains certificates of good standing from the Rhode Island division of

taxation, the corporations division of the Rhode Island secretary of state and the appropriate

municipal tax collector; (c) provides the council an affidavit stating under oath that this business

has not within the preceding twelve (12) months changed its legal status for the purpose of gaining

favorable treatment under the provisions of chapter 64.3 of this title; and (d) meets any other

requirements as may be established by the council in its rules and regulations.

     (7) No new credits shall be issued on or after July 1, 2015 unless the business has received

certification under this chapter prior to July 1, 2015.

     SECTION 4. Section 42-64.6-7 of the General Laws in Chapter 42-64.6 entitled "Jobs

Training Tax Credit Act" is hereby amended to read as follows:

     42-64.6-7. Limitation.

     The credit allowed pursuant to this chapter shall not reduce the liability of the employer

for the tax imposed by chapters 11, 13, 14, and 17 and 30 of title 44 in any year below the minimum

tax where a minimum tax is provided under this title.

     SECTION 5. Section 42-64.20-9 of the General Laws in Chapter 42-64.20 entitled

"Rebuild Rhode Island Tax Credit" is hereby amended to read as follows:

     42-64.20-9. Reporting requirements.

     (a) By August 1st of each year, each applicant receiving credits under this chapter shall

report to the commerce corporation and the division of taxation the following information:

     (1) The number of total full-time employees employed at the development;

     (2) The total project cost;

     (3) The total cost of materials or products purchased from Rhode Island businesses; and

     (4) Such other reasonable information deemed necessary by the secretary of commerce.

     (b) By September 1, 2016, and each year thereafter, the commerce corporation shall report

the name, address, and amount of tax credit for each credit recipient during the previous state fiscal

year to the governor, the speaker of the house of representatives, the president of the senate, and

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the chairpersons of the house and senate finance committees, the house and senate fiscal advisors,

and the department of revenue. Such report shall include any determination regarding the potential

impact on an approved qualified development project's ability to stimulate business development;

retain and attract new business and industry to the state; create good-paying jobs for its residents;

assist with business, commercial, and industrial real estate development; and generate revenues for

necessary state and local governmental services.

     (c) By October 1, 2016, and each year thereafter, the commerce corporation shall report

the total number of approved projects, project costs, and associated amount of approved tax credits

approved during the prior fiscal year. This report shall be available to the public for inspection by

any person and shall be published by the commerce corporation on its website and by the secretary

of commerce on the executive office of commerce website.

     (d) By October 1st of each year the division of taxation shall report the name, address, and

amount of tax credit received for each credit recipient during the previous state fiscal year to the

governor, the chairpersons of the house and senate finance committees, the house and senate fiscal

advisors, and the department of labor and training. This report shall be available to the public for

inspection by any person and shall be published by the tax administrator on the tax division website.

     (e) By November 1st of each year the division of taxation shall report in the aggregate the

information required under subsection 42-64.20-9(a). This report shall be available to the public

for inspection by any person and shall be published by the tax administrator on the tax division

website.

     SECTION 6. Section 42-64.21-8 of the General Laws in Chapter 42-64.21 entitled "Rhode

Island Tax Increment Financing" is hereby amended to read as follows:

     42-64.21-8. Reporting requirements.

     (a) By September 1, 2016, and each year thereafter, the commerce corporation shall report

the name, address, and incentive amount of each agreement entered into during the previous state

fiscal year to the division of taxation.

     (b) By December 1, 2016, and each year thereafter, the division of taxation commerce

corporation shall provide the governor with the sum, if any, to be appropriated to fund the program.

The governor shall submit to the general assembly printed copies of a budget including the total of

the sums, if any, as part of the governor's budget required to be appropriated for the program created

under this chapter.

     (c) By January 1, 2017, and each year thereafter, the commerce corporation shall report to

the governor, the speaker of the house, the president of the senate, the chairpersons of the house

and senate finance committees, and the house and senate fiscal advisors the address and incentive

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amount of each agreement entered into during the previous state fiscal year as well as any

determination regarding the measurable impact of each and every agreement on the retention and

expansion of existing jobs, stimulation of the creation of new jobs, attraction of new business and

industry to the state, and stimulation of growth in real estate developments and/or businesses that

are prepared to make meaningful investment and foster job creation in the state.

     SECTION 7. Section 44-1-6 of the General Laws in Chapter 44-1 entitled "State Tax

Officials" is hereby amended to read as follows:

     44-1-6. Additional collection powers -- Nonresident contractors.

     (a) Any person doing business with a nonresident contractor shall withhold payment of an

amount of three percent (3%) of the contract price until thirty (30) business days after the contractor

has completed the contract and has requested the tax administrator, in writing, to audit the records

for the particular project, a receipted copy of the request to be furnished to the person holding the

funds. The tax administrator shall, within thirty (30) business days after receipt of the request,

furnish to the nonresident contractor and to the person holding the funds either a certificate of no

tax due or a certificate of sales and use tax or income tax withheld, or both, due from the nonresident

contractor.

     (b) Upon receipt of a certificate of no tax due, the person holding the payment may pay the

nonresident contractor. Upon receipt of a certificate of taxes due, the person may pay to the

contractor out of the amount withheld the excess over the amount of taxes stated in the certificate

together with the interest and penalties assessed. If the tax administrator furnishes neither certificate

to both parties within thirty (30) business days after receipt of a written request for the making of

the audit, the person holding the payment may immediately pay the payment withheld to the

nonresident contractor under the terms of the contract free from any claims of the tax administrator

against either the person holding the payment or the nonresident contractor for payment of sales or

use taxes or income taxes withheld, or both.

     (c) In the event the tax administrator serves upon the contractor and the person holding the

payment a certificate showing the taxes due within a thirty (30) business day period, the person

holding the payment shall deposit with the tax administrator the amount stated in the certificate

which is not in excess of three percent (3%) of the contract price, taking a receipt for the amount,

and is free from any claim of the nonresident contractor for that amount or of the tax administrator

for sales and use taxes or income taxes withheld, or both, arising out of the materials, equipment,

and services used in performance of the contract of the nonresident contractor on that project.

     (d) As used in this section, "a nonresident contractor" is one who does not maintain a

regular place of business in this state. "A regular place of business" means and includes any bona

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fide office (other than a statutory office), factory, warehouse, or other space in this state at which

the taxpayer is doing business in its own name in a regular and systematic manner, and which is

continuously maintained, occupied, and used by the taxpayer in carrying on its business through its

regular employees regularly in attendance. A temporary office at the site of construction shall not

constitute a regular place of business.

     (e) Any person doing business with a nonresident contractor who fails to comply with the

provisions of this section shall be liable for payment of the amount due as determined by the tax

administrator and shall be subject to the same collection activities as a taxpayer pursuant to title

44.

     SECTION 8. Sections 44-11-7.1, 44-11-26.1 and 44-11-29 of the General Laws in Chapter

44-11 entitled "Business Corporation Tax" are hereby amended to read as follows:

     44-11-7.1. Limitations on assessment.

     (a) General. Except as provided in this section, the amount of the Rhode Island corporate

income tax shall be assessed within three (3) years after the return was filed, whether or not the

return was filed on or after the prescribed date. For this purpose, a tax return filed before the due

date shall be considered as filed on the due date. (b) Exceptions.

     (1) The tax may be assessed at any time if:

     (i) No return is filed.

     (ii) A false or fraudulent return is filed with intent to avoid tax.

     (2) Where, before the expiration of the time prescribed in this section for the assessment

of tax, or before the time as extended, both the tax administrator and the taxpayer have consented,

in writing, to its assessment after that time, the tax may be assessed at any time prior to the

expiration of the agreed upon period.

     (3) If a taxpayer's deficiency is attributable to an excessive net operating loss carryback

allowance, it may be assessed at any time that a deficiency for the taxable year of the loss may be

assessed.

     (4) An erroneous refund shall be considered to create an underpayment of tax on the date

made. An assessment of a deficiency arising out of an erroneous refund may be made at any time

within three (3) years thereafter, or at any time if it appears that any part of the refund was induced

by fraud or misrepresentation of a material fact.

     (c) Notwithstanding the provisions of this section, the tax may be assessed at any time

within six (6) years after the return was filed if a taxpayer omits from its Rhode Island income an

amount properly includable therein that is in excess of twenty-five percent (25%) of the amount of

Rhode Island income stated in the return. For this purpose there shall not be taken into account any

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amount that is omitted in the return if the amount is disclosed in the return, or in a statement attached

to the return, in a manner adequate to apprise the tax administrator of the nature and amount of the

item.

     (d) The running of the period of limitations on assessment or collection of the tax or other

amount, or of a transferee's liability, shall, after the mailing of a notice of deficiency, be suspended

for any period during which the tax administrator is prohibited from making the assessment or from

collecting by levy, and for sixty (60) days thereafter.

     (e) No period of limitations specified in any other law shall apply to the assessment or

collection of Rhode Island corporate income tax. Under no circumstances shall the tax

administrator issue any notice of deficiency determination for Rhode Island business corporation

tax due and payable more than ten (10) years after the date upon which the a complete, accurate,

and proper return was filed or due to be filed, nor shall the tax administrator commence any

collection action for any business corporation tax due and payable unless the collection action is

commenced within ten (10) years after a notice of deficiency determination became a final

collectible assessment; provided however, that the tax administrator may renew a statutory lien that

was initially filed within the ten-year (10) period for collection actions. Both of the aforementioned

ten-year (10) periods are tolled for any period of time the taxpayer is in federal bankruptcy or state

receivership proceedings. "Collection action" refers to any activity undertaken by the division of

taxation to collect on any state tax liabilities that are final, due, and payable under Rhode Island

law. "Collection action" may include, but is not limited to, any civil action involving a liability

owed under chapter 11 of title 44.

     (f) The ten-year (10) limitation shall not apply to the renewal or continuation of the state's

attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation

periods set forth in this section.

     44-11-26.1. Revocation of articles or authority to transact business for nonpayment

of tax.

     (a) The tax administrator may, after July 15 of each year, make up compile a list of all

corporations that have failed to pay the corporate tax defined in § 44-11-2 any state fees and/or

taxes for one year after the tax state fees and/or taxes became due and payable, and the failure is

not the subject of a pending appeal. The tax administrator shall certify to the correctness of the list.

Upon receipt of the certified list, the secretary of state may initiate revocation proceedings as

defined in §§ 7-1.2-1310 and 7-1.2-1414.

     (b) With respect to any information provided by the division of taxation to the secretary of

state state's office pursuant to this chapter, the secretary of state, together with the employees or

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agents thereof, shall be subject to all state and federal tax confidentiality laws applying to the

division of taxation and the officers, agents, and employees thereof, and which restrict the

acquisition, use, storage, dissemination, or publication of confidential taxpayer data.

     (c) Notwithstanding the foregoing, the notice of revocation may state as the basis for

revocation that the taxpayer has failed to pay state fees and/or taxes to the division of taxation.

However, the secretary of state's office shall otherwise protect all state and federal tax information

in its custody as required by subsection (b) of this section and refrain from disclosing any other

specific tax information.

     44-11-29. Notice to tax administrator of sale of assets -- Tax due.

     (a) The sale or transfer of the major part in value of the assets of a domestic corporation,

domestic limited liability company, domestic limited partnership, or any other domestic business

entity, or of the major part in value of the assets situated in this state of a foreign corporation,

foreign limited liability company, foreign limited partnership, or any other foreign business entity,

other than in the ordinary course of trade and in the regular and usual prosecution of business by

said corporation, limited liability company, limited partnership, or any other business entity

whether domestic or foreign, and the sale or transfer of the major part in value of the assets of a

domestic corporation, domestic limited liability company, domestic limited partnership, or any

other domestic corporation business entity, or of the major part in value of the assets situated in

this state of a foreign corporation, foreign limited liability company, foreign limited partnership, or

any other foreign business entity that is engaged in the business of buying, selling, leasing, renting,

managing, or dealing in real estate, shall be fraudulent and void as against the state unless the

corporation, limited liability company, limited partnership, or any other business entity, whether

domestic or foreign, at least five (5) business days before the sale or transfer, notifies the tax

administrator of the proposed sale or transfer and of the price, terms, and conditions of the sale or

transfer and of the character and location of the assets by requesting a letter of good standing from

the tax division that shall be received by the tax division at least five (5) business days before the

sale or transfer. Whenever a corporation, limited liability company, limited partnership, or any

other business entity, whether domestic or foreign, makes such a sale or transfer, any and all tax

returns required to be filed under this title must be filed and any and all taxes imposed under this

title shall become due and payable at the time when the tax administrator is so notified of the sale

or transfer, or, if he or she is not so notified, at the time when he or she should have been notified

of the sale or transfer.

     (b) This section shall not apply to sales by receivers, assignees under a voluntary

assignment for the benefit of creditors, trustees in bankruptcy, debtors in possession in bankruptcy,

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or public officers acting under judicial process.

     SECTION 9. Section 44-19-13 of the General Laws in Chapter 44-19 entitled "Sales and

Use Taxes - Enforcement and Collection" is hereby amended to read as follows:

     44-19-13. Notice of determination.

     (a) The tax administrator shall give to the retailer or to the person storing, using, or

consuming the tangible personal property a written notice of his or her determination. Except in the

case of fraud, intent to evade the provisions of this article, failure to make a return, or claim for

additional amount pursuant to §§ 44-19-16 -- 44-19-19, every notice of a deficiency determination

shall be mailed within three (3) years after the fifteenth (15th) day of the calendar month following

the month for which the amount is proposed to be determined or within three (3) years after the

return is filed, whichever period expires later, unless a longer period is agreed upon by the tax

administrator and the taxpayer.

     (b) Notwithstanding the provisions of subsection (a) of this section, under no circumstances

shall the tax administrator issue a notice of a deficiency determination for any sales or use tax

determined to be due and payable more than ten (10) years after the a complete, accurate, and

proper return is filed or was due to be filed, nor shall the tax administrator commence any collection

action for any tax that is due and payable unless the collection action is commenced within ten (10)

years after a notice of a deficiency determination becomes a final collectible assessment; provided,

however, that the tax administrator may renew a statutory lien that was initially filed within the

ten-year (10) period for collection actions. Both of the aforementioned ten-year (10) periods are

tolled for any period of time the taxpayer is in federal bankruptcy or state receivership proceedings.

"Collection action" refers to any activity undertaken by the division of taxation to collect on any

state tax liabilities that are final, due, and payable under Rhode Island law. "Collection action" may

include, but is not limited to, any civil action involving a liability owed under chapters 18, 18.1,

18.2, and 19 of title 44. This section excludes any sales and use tax liabilities that are deemed trust

funds as defined in § 44-19-35, as well as any meals and beverage tax liabilities that are collected

pursuant to § 44-18-18.1, and any hotel tax liabilities that are collected pursuant to § 44-18-36.1.

     (c) The ten-year (10) limitation shall not apply to the renewal or continuation of the state's

attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation

periods set forth in this section.

     SECTION 10. Section 44-23-9 of the General Laws in Chapter 44-23 entitled "Estate and

Transfer Taxes - Enforcement and Collection" is hereby amended to read as follows:

     44-23-9. Assessment and notice of estate tax -- Collection powers -- Lien.

     (a) The tax imposed by § 44-22-1.1 shall be assessed upon the full and fair cash value of

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the net estate determined by the tax administrator as provided in this chapter. Notice of the amount

of the tax shall be mailed to the executor, administrator, or trustee, but failure to receive the notice

does not excuse the nonpayment of or invalidate the tax. The tax administrator shall receive and

collect the assessed taxes in the same manner and with the same powers as are prescribed for and

given to the collectors of taxes by chapters 7 -- 9 of this title. The tax shall be due and payable as

provided in § 44-23-16, shall be paid to the tax administrator, and shall be and remain a lien upon

the estate until it is paid. All executors, administrators, and trustees are personally liable for the tax

until it is paid.

     (b) Notwithstanding the provisions of subsection (a) of this section, under no circumstances

shall the tax administrator issue any notice of deficiency determination for the amount of the estate

tax due more than ten (10) years after the a complete, accurate, and proper return was filed or should

have been filed, nor shall the tax administrator commence any collection action for any estate tax

due and payable unless the collection action is commenced within ten (10) years after the date a

notice of deficiency determination became a final collectible assessment. "Collection action" refers

to any activity undertaken by the division of taxation to collect on any state tax liabilities that are

final, due, and payable under Rhode Island law. "Collection action" may include, but is not limited

to, any civil action involving a liability owed under chapters 22 and 23 of title 44.

     (c) The ten-year (10) limitation shall not apply to the renewal or continuation of the state's

attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation

periods set forth in this section.

     SECTION 11. Section 44-25-1 of the General Laws in Chapter 44-25 entitled "Real Estate

Conveyance Tax" is hereby amended to read as follows:

     44-25-1. Tax imposed -- Payment -- Burden. [Effective January 1, 2022.]

     (a) There is imposed, on each deed, instrument, or writing by which any lands, tenements,

or other realty sold is granted, assigned, transferred, or conveyed to, or vested in, the purchaser or

purchasers, or any other person or persons, by his, her, or their direction, or on any grant,

assignment, transfer, or conveyance or such vesting, by such persons that has the effect of making

any real estate company an acquired real estate company, when the consideration paid exceeds one

hundred dollars ($100), a tax at the rate of two dollars and thirty cents ($2.30) for each five hundred

dollars ($500), or fractional part of it, that is paid for the purchase of property or the interest in an

acquired real estate company (inclusive of the value of any lien or encumbrance remaining at the

time the sale, grant, assignment, transfer or conveyance or vesting occurs, or in the case of an

interest in an acquired real estate company, a percentage of the value of such lien or encumbrance

equivalent to the percentage interest in the acquired real estate company being granted, assigned,

LC005230 - Page 12 of 49

transferred, conveyed or vested). The tax is payable at the time of making, the execution, delivery,

acceptance or presentation for recording of any instrument affecting such transfer grant,

assignment, transfer, conveyance or vesting. In the absence of an agreement to the contrary, the tax

shall be paid by the grantor, assignor, transferor or person making the conveyance or vesting.

     (b) In addition to the tax imposed by subsection (a), there is imposed, on each deed,

instrument, or writing by which any residential real property sold is granted, assigned, transferred,

or conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his,

her, or their direction, or on any grant, assignment, transfer, or conveyance or such vesting, by such

persons that has the effect of making any real estate company an acquired real estate company,

when the consideration paid exceeds eight hundred thousand dollars ($800,000), a tax at the rate of

two dollars and thirty cents ($2.30) for each five hundred dollars ($500), or fractional part of it, of

the consideration in excess of eight hundred thousand dollars ($800,000) that is paid for the

purchase of property or the interest in an acquired real estate company (inclusive of the value of

any lien or encumbrance remaining at the time the sale, grant, assignment, transfer, or conveyance

or vesting occurs, or in the case of an interest in an acquired real estate company, a percentage of

the value of such lien or encumbrance equivalent to the percentage interest in the acquired real

estate company being granted, assigned, transferred, conveyed, or vested). The tax imposed by this

subsection shall be paid at the same time and in the same manner as the tax imposed by subsection

(a).

     (c) In the event no consideration is actually paid for the lands, tenements, or realty, the

instrument or interest in an acquired real estate company of conveyance shall contain a statement

to the effect that the consideration is such that no documentary stamps are required.

     (d) The tax shall be distributed as follows:

     (1) With respect to the tax imposed by subsection (a): the tax administrator shall contribute

to the distressed community relief program the sum of thirty cents ($.30) per two dollars and thirty

cents ($2.30) of the face value of the stamps to be distributed pursuant to § 45-13-12, and to the

housing resources commission restricted receipts account the sum of thirty cents ($.30) per two

dollars and thirty cents ($2.30) of the face value of the stamps. Funds will be administered by the

office of housing and community development, through the housing resources commission. The

state shall retain sixty cents ($.60) for state use. The balance of the tax shall be retained by the

municipality collecting the tax.

     (2) With respect to the tax imposed by subsection (b): the tax administrator shall contribute

the entire tax to the housing production fund established pursuant to § 42-128-2.1.

     (3) Notwithstanding the above, in the case of the tax on the grant, transfer, assignment or

LC005230 - Page 13 of 49

conveyance or vesting with respect to an acquired real estate company, the tax shall be collected

by the tax administrator and shall be distributed to the municipality where the real estate owned by

the acquired real estate company is located; provided, however, in the case of any such tax collected

by the tax administrator, if the acquired real estate company owns property located in more than

one municipality, the proceeds of the tax shall be allocated amongst said municipalities in the

proportion the assessed value of said real estate in each such municipality bears to the total of the

assessed values of all of the real estate owned by the acquired real estate company in Rhode Island.

Provided, however, in fiscal years 2004 and 2005, from the proceeds of this tax, the tax

administrator shall deposit as general revenues the sum of ninety cents ($.90) per two dollars and

thirty cents ($2.30) of the face value of the stamps. The balance of the tax on the purchase of

property shall be retained by the municipality collecting the tax. The balance of the tax on the

transfer with respect to an acquired real estate company, shall be collected by the tax administrator

and shall be distributed to the municipality where the property for which interest is sold is

physically located. Provided, however, that in the case of any tax collected by the tax administrator

with respect to an acquired real estate company where the acquired real estate company owns

property located in more than one municipality, the proceeds of the tax shall be allocated amongst

the municipalities in proportion that the assessed value in any such municipality bears to the

assessed values of all of the real estate owned by the acquired real estate company in Rhode Island.

     (e) For purposes of this section, the term "acquired real estate company" means a real estate

company that has undergone a change in ownership interest if (1) The change does not affect the

continuity of the operations of the company; and (2) The change, whether alone or together with

prior changes has the effect of granting, transferring, assigning, or conveying or vesting,

transferring directly or indirectly, 50% or more of the total ownership in the company within a

period of three (3) years. For purposes of the foregoing subsection (e)(2), a grant, transfer,

assignment, or conveyance or vesting, shall be deemed to have occurred within a period of three

(3) years of another grant(s), transfer(s), assignment(s), or conveyance(s) or vesting(s) if during the

period the granting, transferring, assigning, or conveying party provides the receiving party a

legally binding document granting, transferring, assigning, or conveying or vesting the realty or a

commitment or option enforceable at a future date to execute the grant, transfer, assignment, or

conveyance or vesting.

     (f) A real estate company is a corporation, limited liability company, partnership, or other

legal entity that meets any of the following:

     (1) Is primarily engaged in the business of holding, selling, or leasing real estate, where

90% or more of the ownership of the real estate is held by 35 or fewer persons and which company

LC005230 - Page 14 of 49

either (i) derives 60% or more of its annual gross receipts from the ownership or disposition of real

estate; or (ii) owns real estate the value of which comprises 90% or more of the value of the entity's

entire tangible asset holdings exclusive of tangible assets that are fairly transferrable and actively

traded on an established market; or

     (2) Ninety percent or more of the ownership interest in such entity is held by 35 or fewer

persons and the entity owns as 90% or more of the fair market value of its assets a direct or indirect

interest in a real estate company. An indirect ownership interest is an interest in an entity 90% or

more of which is held by 35 or fewer persons and the purpose of the entity is the ownership of a

real estate company.

     (g) In the case of a grant, assignment, transfer or conveyance or vesting that results in a

real estate company becoming an acquired real estate company, the grantor, assignor, transferor, or

person making the conveyance or causing the vesting, shall file or cause to be filed with the division

of taxation, at least five (5) days prior to the grant, transfer, assignment, or conveyance or vesting,

notification of the proposed grant, transfer, assignment, or conveyance or vesting, the price, terms

and conditions thereof, and the character and location of all of the real estate assets held by the real

estate company and shall remit the tax imposed and owed pursuant to subsection (a). Any such

grant, transfer, assignment, or conveyance or vesting which results in a real estate company

becoming an acquired real estate company shall be fraudulent and void as against the state unless

the entity notifies the tax administrator in writing of the grant, transfer, assignment, or conveyance

or vesting as herein required in subsection (g) and has paid the tax as required in subsection (a).

Upon the payment of the tax by the transferor, the tax administrator shall issue a certificate of the

payment of the tax which certificate shall be recordable in the land evidence records in each

municipality in which such real estate company owns real estate. Where the real estate company

has assets other than interests in real estate located in Rhode Island, the tax shall be allocated based

upon the assessed value of each parcel of property located in each municipality in the state of Rhode

Island. Delayed Effective Date.

      P.L. 2018, ch. 39, § 2, and P.L. 2018, ch. 45, § 2 enacted identical amendments to this

section.

     SECTION 12. Sections 44-30-2.6 and 44-30-83 of the General Laws in Chapter 44-30

entitled "Personal Income Tax" are hereby amended to read as follows:

     44-30-2.6. Rhode Island taxable income -- Rate of tax.

     (a) "Rhode Island taxable income" means federal taxable income as determined under the

Internal Revenue Code, 26 U.S.C. § 1 et seq., not including the increase in the basic, standard-

deduction amount for married couples filing joint returns as provided in the Jobs and Growth Tax

LC005230 - Page 15 of 49

Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief Reconciliation Act of

2001 (EGTRRA), and as modified by the modifications in § 44-30-12.

     (b) Notwithstanding the provisions of §§ 44-30-1 and 44-30-2, for tax years beginning on

or after January 1, 2001, a Rhode Island personal income tax is imposed upon the Rhode Island

taxable income of residents and nonresidents, including estates and trusts, at the rate of twenty-five

and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year 2002

and thereafter of the federal income tax rates, including capital gains rates and any other special

rates for other types of income, except as provided in § 44-30-2.7, which were in effect immediately

prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA);

provided, rate schedules shall be adjusted for inflation by the tax administrator beginning in taxable

year 2002 and thereafter in the manner prescribed for adjustment by the commissioner of Internal

Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or after January 1, 2006, a

taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or

her personal income tax liability.

     (c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative

minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode Island

alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by

multiplying the federal tentative minimum tax without allowing for the increased exemptions under

the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal form 6251

Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%) for tax year

2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing the product

to the Rhode Island tax as computed otherwise under this section. The excess shall be the taxpayer's

Rhode Island alternative minimum tax.

     (1) For tax years beginning on or after January 1, 2005, and thereafter, the exemption

amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by

the tax administrator in the manner prescribed for adjustment by the commissioner of Internal

Revenue in 26 U.S.C. § 1(f).

     (2) For the period January 1, 2007, through December 31, 2007, and thereafter, Rhode

Island taxable income shall be determined by deducting from federal adjusted gross income as

defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island

itemized-deduction amount and the Rhode Island exemption amount as determined in this section.

     (A) Tax imposed.

     (1) There is hereby imposed on the taxable income of married individuals filing joint

returns and surviving spouses a tax determined in accordance with the following table:

LC005230 - Page 16 of 49

     If taxable income is: The tax is:

Not over $53,150 3.75% of taxable income

Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150

Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500

Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850

Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700

     (2) There is hereby imposed on the taxable income of every head of household a tax

determined in accordance with the following table:

     If taxable income is: The tax is:

Not over $42,650 3.75% of taxable income

Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650

Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100

Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350

Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700

     (3) There is hereby imposed on the taxable income of unmarried individuals (other than

surviving spouses and heads of households) a tax determined in accordance with the following

table:

     If taxable income is: The tax is:

Not over $31,850 3.75% of taxable income

Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850

Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100

Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850

Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700

     (4) There is hereby imposed on the taxable income of married individuals filing separate

returns and bankruptcy estates a tax deter-mined determined in accordance with the following table:

     If taxable income is: The tax is:

Not over $26,575 3.75% of taxable income

Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575

Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250

Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925

Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850

     (5) There is hereby imposed a taxable income of an estate or trust a tax determined in

accordance with the following table:

     If taxable income is: The tax is:

LC005230 - Page 17 of 49

Not over $2,150 3.75% of taxable income

Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150

Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000

Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650

Over $10,450 $737.50 plus 9.90% of the excess over $10,450

     (6) Adjustments for inflation.

     The dollars amount contained in paragraph (A) shall be increased by an amount equal to:

     (a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by;

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1993;

     (c) The cost-of-living adjustment referred to in subparagraphs (a) and (b) used in making

adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall

be determined under section (J) by substituting "1994" for "1993."

     (B) Maximum capital gains rates.

     (1) In general.

     If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax

imposed by this section for such taxable year shall not exceed the sum of:

     (a) 2.5% of the net capital gain as reported for federal income tax purposes under section

26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b).

     (b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

§ 1(h)(1)(c).

     (c) 6.25% of the net capital gain as reported for federal income tax purposes under 26

U.S.C. § 1(h)(1)(d).

     (d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

§ 1(h)(1)(e).

     (2) For tax years beginning on or after January 1, 2010, the tax imposed on net capital gain

shall be determined under subdivision 44-30-2.6(c)(2)(A).

     (C) Itemized deductions.

     (1) In general.

     For the purposes of section (2), "itemized deductions" means the amount of federal

itemized deductions as modified by the modifications in § 44-30-12.

     (2) Individuals who do not itemize their deductions.

     In the case of an individual who does not elect to itemize his deductions for the taxable

year, they may elect to take a standard deduction.

     (3) Basic standard deduction.

LC005230 - Page 18 of 49

     The Rhode Island standard deduction shall be allowed in accordance with the following

table:

Filing status Amount

Single $5,350

Married filing jointly or qualifying widow(er) $8,900

Married filing separately $4,450

Head of Household $7,850

     (4) Additional standard deduction for the aged and blind.

     An additional standard deduction shall be allowed for individuals age sixty-five (65) or

older or blind in the amount of $1,300 for individuals who are not married and $1,050 for

individuals who are married.

     (5) Limitation on basic standard deduction in the case of certain dependents.

     In the case of an individual to whom a deduction under section (E) is allowable to another

taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater of:

     (a) $850;

     (b) The sum of $300 and such individual's earned income;

     (6) Certain individuals not eligible for standard deduction.

     In the case of:

     (a) A married individual filing a separate return where either spouse itemizes deductions;

     (b) Nonresident alien individual;

     (c) An estate or trust;

     The standard deduction shall be zero.

     (7) Adjustments for inflation.

     Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an amount

equal to:

     (a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988, multiplied

by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1988.

     (D) Overall limitation on itemized deductions.

     (1) General rule.

     In the case of an individual whose adjusted gross income as modified by § 44-30-12

exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the

taxable year shall be reduced by the lesser of:

     (a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12

LC005230 - Page 19 of 49

over the applicable amount; or

     (b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable for

such taxable year.

     (2) Applicable amount.

     (a) In general.

     For purposes of this section, the term "applicable amount" means $156,400 ($78,200 in the

case of a separate return by a married individual)

     (b) Adjustments for inflation.

     Each dollar amount contained in paragraph (a) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

     (3) Phase-out of Limitation.

     (a) In general.

     In the case of taxable year beginning after December 31, 2005, and before January 1, 2010,

the reduction under section (1) shall be equal to the applicable fraction of the amount which would

be the amount of such reduction.

     (b) Applicable fraction.

     For purposes of paragraph (a), the applicable fraction shall be determined in accordance

with the following table:

For taxable years beginning in calendar year The applicable fraction is

2006 and 2007 2/3

2008 and 2009 1/3

     (E) Exemption amount.

     (1) In general.

     Except as otherwise provided in this subsection, the term "exemption amount" means

$3,400.

     (2) Exemption amount disallowed in case of certain dependents.

     In the case of an individual with respect to whom a deduction under this section is allowable

to another taxpayer for the same taxable year, the exemption amount applicable to such individual

for such individual's taxable year shall be zero.

     (3) Adjustments for inflation.

     The dollar amount contained in paragraph (1) shall be increased by an amount equal to:

     (a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1989.

LC005230 - Page 20 of 49

     (4) Limitation.

     (a) In general.

     In the case of any taxpayer whose adjusted gross income as modified for the taxable year

exceeds the threshold amount shall be reduced by the applicable percentage.

     (b) Applicable percentage.

     In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the

threshold amount, the exemption amount shall be reduced by two (2) percentage points for each

$2,500 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year

exceeds the threshold amount. In the case of a married individual filing a separate return, the

preceding sentence shall be applied by substituting ‘‘$1,250" for ‘‘$2,500." In no event shall the

applicable percentage exceed one hundred percent (100%).

     (c) Threshold Amount.

     For the purposes of this paragraph, the term "threshold amount" shall be determined with

the following table:

Filing status Amount

Single $156,400

Married filing jointly of qualifying widow(er) $234,600

Married filing separately $117,300

Head of Household $195,500

     (d) Adjustments for inflation.

     Each dollar amount contained in paragraph (b) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

     (5) Phase-out of limitation.

     (a) In general.

     In the case of taxable years beginning after December 31, 2005, and before January 1,

2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which

would be the amount of such reduction.

     (b) Applicable fraction.

     For the purposes of paragraph (a), the applicable fraction shall be determined in accordance

with the following table:

For taxable years beginning in calendar year The applicable fraction is

2006 and 2007 2/3

2008 and 2009 1/3

LC005230 - Page 21 of 49

     (F) Alternative minimum tax.

     (1) General rule. There is hereby imposed (in addition to any other tax imposed by this

subtitle) a tax equal to the excess (if any) of:

     (a) The tentative minimum tax for the taxable year, over

     (b) The regular tax for the taxable year.

     (2) The tentative minimum tax for the taxable year is the sum of:

     (a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus

     (b) 7.0 percent of so much of the taxable excess above $175,000.

     (3) The amount determined under the preceding sentence shall be reduced by the alternative

minimum tax foreign tax credit for the taxable year.

     (4) Taxable excess. For the purposes of this subsection the term "taxable excess" means so

much of the federal alternative minimum taxable income as modified by the modifications in § 44-

30-12 as exceeds the exemption amount.

     (5) In the case of a married individual filing a separate return, subparagraph (2) shall be

applied by substituting "$87,500" for $175,000 each place it appears.

     (6) Exemption amount.

     For purposes of this section "exemption amount" means:

Filing status Amount

Single $39,150

Married filing jointly or qualifying widow(er) $53,700

Married filing separately $26,850

Head of Household $39,150

Estate or trust $24,650

     (7) Treatment of unearned income of minor children

     (a) In general.

     In the case of a minor child, the exemption amount for purposes of section (6) shall not

exceed the sum of:

     (i) Such child's earned income, plus

     (ii) $6,000.

     (8) Adjustments for inflation.

     The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount

equal to:

     (a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 2004.

LC005230 - Page 22 of 49

     (9) Phase-out.

     (a) In general.

     The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount

equal to twenty-five percent (25%) of the amount by which alternative minimum taxable income

of the taxpayer exceeds the threshold amount.

     (b) Threshold amount.

     For purposes of this paragraph, the term "threshold amount" shall be determined with the

following table:

Filing status Amount

Single $123,250

Married filing jointly or qualifying widow(er) $164,350

Married filing separately $82,175

Head of Household $123,250

Estate or Trust $82,150

     (c) Adjustments for inflation

     Each dollar amount contained in paragraph (9) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 2004.

     (G) Other Rhode Island taxes.

     (1) General rule. There is hereby imposed (in addition to any other tax imposed by this

subtitle) a tax equal to twenty-five percent (25%) of:

     (a) The Federal income tax on lump-sum distributions.

     (b) The Federal income tax on parents' election to report child's interest and dividends.

     (c) The recapture of Federal tax credits that were previously claimed on Rhode Island

return.

     (H) Tax for children under 18 with investment income.

     (1) General rule. There is hereby imposed a tax equal to twenty-five percent (25%) of:

     (a) The Federal tax for children under the age of 18 with investment income.

     (I) Averaging of farm income.

     (1) General rule. At the election of an individual engaged in a farming business or fishing

business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of:

     (a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C. §

1301].

     (J) Cost-of-living adjustment.

LC005230 - Page 23 of 49

     (1) In general.

     The cost-of-living adjustment for any calendar year is the percentage (if any) by which:

     (a) The CPI for the preceding calendar year exceeds

     (b) The CPI for the base year.

     (2) CPI for any calendar year.

     For purposes of paragraph (1), the CPI for any calendar year is the average of the consumer

price index as of the close of the twelve (12) month period ending on August 31 of such calendar

year.

     (3) Consumer price index.

     For purposes of paragraph (2), the term "consumer price index" means the last consumer

price index for all urban consumers published by the department of labor. For purposes of the

preceding sentence, the revision of the consumer price index that is most consistent with the

consumer price index for calendar year 1986 shall be used.

     (4) Rounding.

     (a) In general.

     If any increase determined under paragraph (1) is not a multiple of $50, such increase shall

be rounded to the next lowest multiple of $50.

     (b) In the case of a married individual filing a separate return, subparagraph (a) shall be

applied by substituting "$25" for $50 each place it appears.

     (K) Credits against tax. For tax years beginning on or after January 1, 2001, a taxpayer

entitled to any of the following federal credits enacted prior to January 1, 1996, shall be entitled to

a credit against the Rhode Island tax imposed under this section:

     (1) [Deleted by P.L. 2007, ch. 73, art. 7, § 5.]

     (2) Child and dependent care credit;

     (3) General business credits;

     (4) Credit for elderly or the disabled;

     (5) Credit for prior year minimum tax;

     (6) Mortgage interest credit;

     (7) Empowerment zone employment credit;

     (8) Qualified electric vehicle credit.

     (L) Credit against tax for adoption. For tax years beginning on or after January 1, 2006, a

taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode Island

tax imposed under this section if the adopted child was under the care, custody, or supervision of

the Rhode Island department of children, youth and families prior to the adoption.

LC005230 - Page 24 of 49

     (M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits

provided there shall be no deduction based on any federal credits enacted after January 1, 1996,

including the rate reduction credit provided by the federal Economic Growth and Tax

Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be

reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax

purposes shall determine the Rhode Island amount to be recaptured in the same manner as

prescribed in this subsection.

     (N) Rhode Island earned-income credit.

     (1) In general.

     For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent

(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode

Island income tax.

     For tax years beginning on or after January 1, 2015, and before January 1, 2016, a taxpayer

entitled to a federal earned-income credit shall be allowed a Rhode Island earned-income credit

equal to ten percent (10%) of the federal earned-income credit. Such credit shall not exceed the

amount of the Rhode Island income tax.

     For tax years beginning on or after January 1, 2016, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to twelve and one-half

percent (12.5%) of the federal earned-income credit. Such credit shall not exceed the amount of the

Rhode Island income tax.

     For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%)

of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island

income tax.

     (2) Refundable portion.

     In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of this

section exceeds the amount of Rhode Island income tax, a refundable earned-income credit shall

be allowed as follows.

     (i) For tax years beginning before January 1, 2015, for purposes of paragraph (2) refundable

earned-income credit means fifteen percent (15%) of the amount by which the Rhode Island earned-

income credit exceeds the Rhode Island income tax.

     (ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2)

refundable earned-income credit means one hundred percent (100%) of the amount by which the

LC005230 - Page 25 of 49

Rhode Island earned-income credit exceeds the Rhode Island income tax.

     (O) The tax administrator shall recalculate and submit necessary revisions to paragraphs

(A) through (J) to the general assembly no later than February 1, 2010, and every three (3) years

thereafter for inclusion in the statute.

     (3) For the period January 1, 2011, through December 31, 2011, and thereafter, "Rhode

Island taxable income" means federal adjusted gross income as determined under the Internal

Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-

30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to subparagraph

44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant to subparagraph

44-30-2.6(c)(3)(C).

     (A) Tax imposed.

     (I) There is hereby imposed on the taxable income of married individuals filing joint

returns, qualifying widow(er), every head of household, unmarried individuals, married individuals

filing separate returns and bankruptcy estates, a tax determined in accordance with the following

table:

RI Taxable Income RI Income Tax

Over But not over Pay +% on Excess on the amount over

$ 0 - $ 55,000 $ 0 + 3.75% $ 0

55,000 - 125,000 2,063 + 4.75% 55,000

125,000 - 5,388 + 5.99% 125,000

     (II) There is hereby imposed on the taxable income of an estate or trust a tax determined in

accordance with the following table:

RI Taxable Income RI Income Tax

Over But not over Pay + % on Excess on the amount over

$ 0 - $ 2,230 $ 0 + 3.75% $ 0

2,230 - 7,022 84 + 4.75% 2,230

7,022 - 312 + 5.99% 7,022

     (B) Deductions:

     (I) Rhode Island Basic Standard Deduction.

     Only the Rhode Island standard deduction shall be allowed in accordance with the

following table:

Filing status: Amount

Single $7,500

Married filing jointly or qualifying widow(er) $15,000

LC005230 - Page 26 of 49

Married filing separately $7,500

Head of Household $11,250

     (II) Nonresident alien individuals, estates and trusts are not eligible for standard

deductions.

     (III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island

purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand

dollars ($175,000), the standard deduction amount shall be reduced by the applicable percentage.

The term "applicable percentage" means twenty (20) percentage points for each five thousand

dollars ($5,000) (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable

year exceeds one hundred seventy-five thousand dollars ($175,000).

     (C) Exemption Amount:

     (I) The term "exemption amount" means three thousand five hundred dollars ($3,500)

multiplied by the number of exemptions allowed for the taxable year for federal income tax

purposes. For tax years beginning on or after 2018, the term "exemption amount" means the same

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

Jobs Act (Pub. L. No. 115-97) on December 22, 2017.

     (II) Exemption amount disallowed in case of certain dependents. In the case of an

individual with respect to whom a deduction under this section is allowable to another taxpayer for

the same taxable year, the exemption amount applicable to such individual for such individual's

taxable year shall be zero.

     (III) Identifying information required.

     (1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be

allowed under this section with respect to any individual unless the Taxpayer Identification Number

of such individual is included on the federal return claiming the exemption for the same tax filing

period.

     (2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event

that the Taxpayer Identification Number for each individual is not required to be included on the

federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer

Identification Number must be provided on the Rhode Island tax return for the purpose of claiming

said exemption(s).

     (D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island

purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand

dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term

"applicable percentage" means twenty (20) percentage points for each five thousand dollars

LC005230 - Page 27 of 49

($5,000) (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year

exceeds one hundred seventy-five thousand dollars ($175,000).

     (E) Adjustment for inflation. The dollar amount contained in subparagraphs 44-30-

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

equal to:

     (I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-2.6(c)(3)(B)

and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000, multiplied by;

     (II) The cost-of-living adjustment with a base year of 2000.

     (III) For the purposes of this section, the cost-of-living adjustment for any calendar year is

the percentage (if any) by which the consumer price index for the preceding calendar year exceeds

the consumer price index for the base year. The consumer price index for any calendar year is the

average of the consumer price index as of the close of the twelve-month (12) period ending on

August 31, of such calendar year.

     (IV) For the purpose of this section the term "consumer price index" means the last

consumer price index for all urban consumers published by the department of labor. For the purpose

of this section the revision of the consumer price index that is most consistent with the consumer

price index for calendar year 1986 shall be used.

     (V) If any increase determined under this section is not a multiple of fifty dollars ($50.00),

such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a

married individual filing separate return, if any increase determined under this section is not a

multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple

of twenty-five dollars ($25.00).

     (F) Credits against tax.

     (I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on

or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be

as follows:

     (a) Rhode Island earned-income credit: Credit shall be allowed for earned- income credit

pursuant to subparagraph 44-30-2.6(c)(2)(N).

     (b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided

in § 44-33-1 et seq.

     (c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax

credit as provided in § 44-30.3-1 et seq.

     (d) Credit for income taxes of other states. Credit shall be allowed for income tax paid to

other states pursuant to § 44-30-74.

LC005230 - Page 28 of 49

     (e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax credit

as provided in § 44-33.2-1 et seq.

     (f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture

production tax credit as provided in § 44-31.2-1 et seq.

     (g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of

the federal child and dependent care credit allowable for the taxable year for federal purposes;

provided, however, such credit shall not exceed the Rhode Island tax liability.

     (h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for

contributions to scholarship organizations as provided in chapter 62 of title 44.

     (i) Credit for tax withheld. Wages upon which tax is required to be withheld shall be taxable

as if no withholding were required, but any amount of Rhode Island personal income tax actually

deducted and withheld in any calendar year shall be deemed to have been paid to the tax

administrator on behalf of the person from whom withheld, and the person shall be credited with

having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable

year of less than twelve (12) months, the credit shall be made under regulations of the tax

administrator.

     (j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested in

RI wavemaker fellowship program as provided in § 42-64.26-1 et seq.

     (k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in

§ 42-64.20-1 et seq.

     (l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode

Island new qualified jobs incentive program credit as provided in § 44-48.3-1 et seq.

     (m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter,

unused carryforward for such credit previously issued shall be allowed for the historic

homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already

issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits

under the historic homeownership assistance act.

     (n) Musical and theatrical production tax credits: Credit shall be allowed for musical and

theatrical production tax credits as provided in chapter 31.3 of this title.

     (o) Historic preservation tax credits 2013: Credit shall be allowed for historic preservation

tax credits 2013 as provided in chapter 33.6 of this title.

     (2)(II) Except as provided in section 1 (I) above, no other state and or federal tax credit

shall be available to the taxpayers in computing tax liability under this chapter.

     44-30-83. Limitations on assessment.

LC005230 - Page 29 of 49

     (a) General. Except as otherwise provided in this section the amount of the Rhode Island

personal income tax shall be assessed within three (3) years after the return was filed, whether or

not the return was filed on or after the prescribed date. For this purpose a tax return filed before the

due date shall be considered as filed on the due date; and a return of withholding tax for any period

ending with or within a calendar year filed before April 15 of the succeeding calendar year shall be

considered filed on April 15 of the succeeding calendar year.

     (b) Exceptions.

     (1) Assessment at any time. The tax may be assessed at any time if:

     (i) No return is filed;

     (ii) A false or fraudulent return is filed with intent to evade tax; or

     (iii) The taxpayer fails to file a report, pursuant to § 44-30-59, of a change, correction, or

amended return, increasing his or her federal taxable income as reported on his or her federal

income tax return or to report a change or correction that is treated in the same manner as if it were

a deficiency for federal income tax purposes.

     (2) Extension by agreement. Where, before the expiration of the time prescribed in this

section for the assessment of tax, or before the time as extended pursuant to this section, both the

tax administrator and the taxpayer have consented in writing to its assessment after that time, the

tax may be assessed at any time prior to the expiration of the period agreed upon.

     (3) Report of changed or corrected federal income. If the taxpayer shall, pursuant to § 44-

30-59, file an amended return, or report a change or correction increasing his or her federal taxable

income or report a change or correction that is treated in the same manner as if it were a deficiency

for federal income tax purposes, an assessment may be made at any time prior to two (2) years after

the report or amended return was filed. This assessment of Rhode Island personal income tax shall

not exceed the amount of the increase attributable to the federal change, correction, or items

amended on the taxpayer's amended federal income tax return. The provisions of this paragraph

shall not affect the time within which or the amount for which an assessment may otherwise be

made.

     (4) Deficiency attributable to net operating loss carryback. If a taxpayer's deficiency is

attributable to an excessive net operating loss carryback allowance, it may be assessed at any time

that a deficiency for the taxable year of the loss may be assessed.

     (5) Recovery of erroneous refund. An erroneous refund shall be considered to create an

underpayment of tax on the date made. An assessment of a deficiency arising out of an erroneous

refund may be made at any time within three (3) years thereafter, or at any time if it appears that

any part of the refund was induced by fraud or misrepresentation of a material fact.

LC005230 - Page 30 of 49

     (6) Armed forces relief. For purposes of this tax, the date appearing in 26 U.S.C. § 692(a)

shall be January 1, 1971.

     (c) Omission of income on return. Notwithstanding the foregoing provisions of this section,

the tax may be assessed at any time within six (6) years after the return was filed if an individual

omits from his or her Rhode Island income an amount properly includible therein which is in excess

of twenty-five percent (25%) of the amount of Rhode Island income stated in the return. For this

purpose there shall not be taken into account any amount that is omitted in the return if the amount

is disclosed in the return, or in a statement attached to the return, in a manner adequate to apprise

the tax administrator of the nature and amount of the item.

     (d) Suspension of limitation. The running of the period of limitations on assessment or

collection of tax or other amount (or of a transferee's liability) shall, after the mailing of a notice of

deficiency, be suspended for the period during which the tax administrator is prohibited under §

44-30-81(c) from making the assessment or from collecting by levy, and for sixty (60) days

thereafter.

     (e) Limitations exclusive. No period of limitations specified in any other law shall apply to

the assessment or collection of Rhode Island personal income tax. Under no circumstances shall

the tax administrator issue any notice of a deficiency determination for Rhode Island personal

income tax due or payable more than ten (10) years after the date upon which the a complete,

accurate, and proper return was filed or due to be filed, nor shall the tax administrator commence

any collection action for any personal income tax due and payable unless the collection action is

commenced within ten (10) years after a notice of deficiency determination became a final

collectible assessment; provided however, that the tax administrator can renew a statutory lien that

was initially filed within the ten-year (10) period for collection actions. Both of the aforementioned

ten-year (10) periods are tolled for any period of time the taxpayer is in federal bankruptcy or state

receivership proceedings. "Collection action" refers to any activity undertaken by the division of

taxation to collect on any state tax liabilities that are final, due, and payable under Rhode Island

law. "Collection action" may include, but is not limited to, any civil action involving a liability

owed under chapter 30 of title 44. This section excludes any liabilities that are deemed trust funds

as defined in § 44-30-76, as amended.

     (f) The ten-year (10) limitation shall not apply to the renewal or continuation of the state's

attempt to collect a liability that became final, due, and payable within the ten-year (10) limitation

periods set forth in this section.

     SECTION 13. Section 44-31-1 of the General Laws in Chapter 44-31 entitled "Investment

Tax Credit" is hereby amended to read as follows:

LC005230 - Page 31 of 49

     44-31-1. Investment tax credit.

     (a) A taxpayer shall be allowed a credit, to be computed as provided in this chapter, against

the tax imposed by chapters 11, 14, and 17, and 30 of this title. The amount of the credit shall be

two percent (2%) of the cost or other basis for federal income tax purposes of tangible personal

property and other tangible property, including buildings and structural components of buildings,

described in subsection (b) of this section, acquired, constructed, reconstructed, or erected after

December 31, 1973. Provided, that the amount of the credit shall be four percent (4%) of the: (i)

cost or other basis for federal income tax purposes of tangible personal property and other tangible

property, including buildings and structural components of buildings, described in subdivision

(b)(1) of this section, acquired, constructed, reconstructed or erected after December 31, 1993; and

(ii) qualified amounts for leased assets of tangible personal property and other tangible property

described in subdivision (b)(1) of this section, acquired, constructed, reconstructed, or erected after

January 1, 1998, and the amount of the credit shall be ten percent (10%) of the cost or other basis

for federal income tax purposes, and the qualified amounts for leased assets, of tangible personal

property and other tangible property described in subdivision (b)(3) of this section, acquired,

constructed, reconstructed, or erected after January 1, 1998, and with respect to buildings and

structural components which are acquired, constructed, reconstructed or erected after July 1, 2001,

as described in subdivision (b)(3) of this section.

     (b)(1) A credit shall be allowed under this section with respect to tangible personal property

and other tangible property, including buildings and structural components of buildings, which are

depreciable pursuant to 26 U.S.C. § 167, have a useful life of four (4) years or more, are acquired

by purchase as defined in 26 U.S.C. § 179(d) or are acquired by lease as prescribed in paragraph

(3)(iv) of this subsection, have a situs in this state and are principally used by the taxpayer in the

production of goods by manufacturing, process, or assembling. The credit shall be allowable in the

year the property is first placed in service by the taxpayer, which is the year in which, under the

taxpayer's depreciation practice, the period for depreciation with respect to the property begins, or

the year in which the property is placed in a condition or state of readiness and availability for a

specifically assigned function, whichever is earlier. For purposes of this paragraph,

"manufacturing" means the process of working raw materials into wares suitable for use or which

gives new shapes, new quality or new combinations to matter that already has gone through some

artificial process by the use of machinery, tools, appliances, and other similar equipment. Property

used in the production of goods includes machinery, equipment, or other tangible property which

is principally used in the repair and service of other machinery, equipment, or other tangible

property used principally in the production of goods and includes all facilities used in the

LC005230 - Page 32 of 49

production operation, including storage of material to be used in production and of the products

that are produced.

     (2) Within the meaning of subdivision (1) of this subsection, the term "manufacturing"

means the activities of a "manufacturer" as defined in § 44-3-3(20)(iii) and (iv).

     (3)(i) A credit shall be allowed under this section with respect to tangible personal property

and other tangible property, (excluding motor vehicles, furniture, buildings and structural

components of buildings, except as provided in this section), which are depreciable pursuant to 26

U.S.C. § 167, have a useful life of four (4) years or more, are acquired by purchase as defined in

26 U.S.C. § 179(d) or acquired by lease as prescribed in paragraph (iv) of this subdivision, have a

situs in this state and to the extent the property is used by a qualified taxpayer, as that term is

defined in paragraph (v) of this subdivision, in any of the businesses described in major groups 20

through 39, 50 and 51, 60 through 67, 73, 76, 80 through 82, 87 and 89 in the standard industrial

classification manual prepared by the technical committee on industrial classification, office of the

statistical standards, executive office of the president, United States Bureau of the Budget, as

revised from time to time ("SIC Code") and/or any of the businesses described in the three (3) digit

SIC Code 781.

     (ii) A credit shall be allowed under this section with respect to buildings and structural

components that are acquired, constructed, reconstructed, or erected after July 1, 2001, which are

depreciable pursuant to 26 U.S.C. § 167, have a useful life of four (4) years or more, are acquired

by purchase as defined in 26 U.S.C. § 179(d) or acquired by lease for a term of twenty (20) years

or more, excluding renewal periods, have a situs in this state and to the extent the property is used

by a high performance manufacturer. The term "high performance manufacturer" means a taxpayer:

(A) engaged in any of the businesses described in the major groups 28, 30, 34, to 36, and 38 of the

SIC Codes, (B) that pays its full-time equivalent employees a median annual wage above the

average annual wage paid by all taxpayers in the state which share the same two-digit SIC Code,

unless the high performance manufacturer is the only high performance manufacturer in the state

conducting business in that two-digit SIC Code, in which case this requirement shall not apply, and

(C)(I) whose expenses for training or retraining its employees exceeds two percent (2%) of its total

payroll costs, or (II) that pays its full-time equivalent employees a median annual wage equal to or

greater than one hundred twenty-five percent (125%) of the average annual wage paid in this state

by employers to employees, or (III) that pays its full-time equivalent employees classified as

production workers by the Rhode Island department of labor and training an average annual wage

above the average annual wage paid to the production workers of all taxpayers in the state which

share the same two-digit SIC Code.

LC005230 - Page 33 of 49

     (iii) To the extent allowable, the credit allowed under this section is allowed for computers,

software and telecommunications hardware used by a taxpayer even if the property has a useful life

of less than four (4) years;

     (iv) The credit for property acquired by lease is based on the fair market value of the

property at the inception of the lease times the portion of the depreciable life of the property

represented by the term of the lease, excluding renewal options. The credit described in this

subdivision for high performance manufacturers that lease buildings and their structural

components for a term of twenty (20) years or more, excluding renewal periods, shall be calculated

in the same manner as for property acquired by purchase; and

     (v) For purposes of this subsection, a "qualified taxpayer" means a taxpayer in any of the

businesses described in major groups 20 through 39, 50 and 51, 60 through 67, 73, 76, 80 through

82, 87 and 89 of the SIC Code, and/or any of the businesses described in the three (3) digit SIC

Code 781, and which meet the following criteria:

     (A) The median annual wage paid to a qualified taxpayer's full-time equivalent employees

must be above the average annual wage paid by all taxpayers in the state which share the same two-

digit SIC Code, unless that qualified taxpayer is the only qualified taxpayer in the state conducting

business in that two-digit SIC Code, in which case this requirement does not apply; and

     (B) With respect to major groups 50 and 51, 60 through 67, 73, 76, 80 through 82, 87 and

89 and/or the three (3) digit SIC Code 781(except for those qualified taxpayers whose businesses

are described in any of the four (4) digit SIC Codes 7371, 7372 and 7373) only:

     (I) More than one-half (½) of its gross revenues are a result of sales to customers outside

of the state; or

     (II) More than one-half (½) of its gross revenues are a result of sales to the federal

government; or

     (III) More than one-half (½) of its gross revenues are a result of a combination of sales

described in items (I) and (II) of this subparagraph.

     (4) For purposes of this section, "sales to customers outside the state" means sales to

individuals, businesses and other entities, as well as divisions and/or branches of businesses and

other entities, residing or located outside of the state. The requirement of subparagraph (v)(A) of

this subdivision does not apply to any qualified taxpayer: (i) whose expenses for training or

retraining its employees exceeds two percent (2%) of these qualified taxpayer's total payroll costs;

or (ii) whose median annual wage paid to its full-time equivalent employees is equal to or greater

than one hundred twenty-five percent (125%) of the average annual wage paid in this state by

employers to employees; or (iii), with respect to major groups 20 through 39 only, the average

LC005230 - Page 34 of 49

annual wage paid to these qualified taxpayer's full-time equivalent employees, classified as

production workers by the Rhode Island department of labor and training, is above the average

annual wage paid to the production workers of all these taxpayers in the state which share the same

two-digit SIC Code. At the election of a taxpayer, which is made at any time and in any manner

that may be determined by the tax administrator, the taxpayer's ability in a particular fiscal year to

qualify as a qualified taxpayer may be based on the expenses and gross receipts of the taxpayer for

either the prior fiscal year or the immediately proceeding fiscal year rather than on the expenses

and gross receipts for that fiscal year. For purposes of this chapter, the director of the Rhode Island

human resource investment council shall certify as to legitimate training and retraining expenses in

accordance with the guidelines established in chapter 64.6 of title 42, and any rules and regulations

promulgated under this chapter. For purposes of this subsection, a "full-time equivalent employee"

means an employee who works a minimum of thirty (30) hours per week within the state or two

(2) part-time employees who together work a minimum of thirty (30) hours per week within the

state. For purposes of this subsection, the director of the Rhode Island department of labor and

training, upon receipt of an application from a qualified taxpayer, shall certify whether this

qualified taxpayer meets the requirement in subparagraph (v)(A) of this subdivision or is exempt

from this requirement because the median annual wage it pays its full-time equivalent employees

is equal to or greater than one hundred twenty-five (125%) percent of the average annual wage paid

in this state by employers to employees or, with respect to major groups 20 through 39 only, the

average annual wage paid to this qualified taxpayer's full-time equivalent employees, classified as

production workers by the Rhode Island department of labor and training, is above the average

annual wage paid to the production workers of all these taxpayers in the state which share the same

two-digit SIC Code. The director of the Rhode Island department of labor and training shall

promulgate rules and regulations as required for the implementation of this requirement.

     (5) To the extent otherwise allowable, the credit provided by paragraphs (3)(i) and (ii) of

this subsection are also allowed for the property having a situs in Rhode Island and used, however

acquired, by a property and casualty insurance company.

     (c) Subject to the provisions of subdivision (b)(3) of this section, a taxpayer is not allowed

a credit under subsection (a) of this section with respect to tangible personal property and other

tangible property, including buildings and structural components of buildings, which it leases to

any other person or corporation and is not allowed a credit under subsection (a) of this section with

respect to buildings and structural components of buildings it leases from any other person or

corporation. For the purposes of the preceding sentence, any contract or agreement to lease or rent

or for a license to use the property is considered a lease, unless a contract or agreement is treated

LC005230 - Page 35 of 49

for federal income tax purposes as an installment purchase rather than a lease.

     (d) The credit allowed under this section for any taxable year does not reduce the tax due

for the year by more than fifty percent (50%) of the tax liability that would be payable, and further

in the case of corporations, to less than the minimum tax as prescribed in § 44-11-2(e); provided,

that in the case of the credit allowed to high performance manufacturers under subdivision (b)(3)

of this section, the fifty percent (50%) limitation shall not apply. If the amount of credit allowable

under this section for any taxable year is less than the amount of credit available to the taxpayer,

any amount of credit not deductible in the taxable year may be carried over to the following year

or years (not to exceed seven (7) years) and may be deducted from the taxpayer's tax for the year

or years.

     (e) At the option of the taxpayer, air or water pollution control facilities which qualify for

elective amortization deduction may be treated as property principally used by the taxpayer in the

production of goods by manufacturing, processing, or assembling; provided, that if the property

qualifies under subsection (b) of this section, in which event, an amortization deduction is not

allowed.

     (f) With respect to property which is disposed of or ceases to be in qualified use prior to

the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that

portion of the credit provided for in subsection (a) of this section, which represents the ratio which

the months of qualified use bear to the months of useful life. If property on which credit has been

taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference

between the credit taken and the credit allowed for actual use must be added back in the year of

disposition. If this property is disposed of or ceases to be in qualified use after it has been in

qualified use for more than twelve (12) consecutive years, it is not necessary to add back the credit

as provided in this subsection. A credit allowed to a qualified taxpayer is not recaptured merely

because the taxpayer subsequently fails to retain the classification as a qualified taxpayer. The

amount of credit allowed for actual use shall be determined by multiplying the original credit by

the ratio, which the months of qualified use bear to the months of useful life. For purposes of this

subsection, "useful life of property" is the same as the taxpayer (or in the case of property acquired

by lease, the owner of the property) uses for depreciation purposes when computing his or her

federal income tax liability. Comparable rules are used in the case of property acquired by lease to

determine the amount of credit, if any, that will be recaptured if the lease terminates prematurely

or if the property covered by the lease otherwise fails to be in qualified use.

     (g) The credit allowed under this section is only allowed against the tax of that corporation

included in a consolidated return that qualifies for the credit and not against the tax of other

LC005230 - Page 36 of 49

corporations that may join in the filing of a consolidated tax return.

     SECTION 14. Sections 44-32-2 and 44-32-3 of the General Laws in Chapter 44-32 entitled

"Elective Deduction for Research and Development Facilities" are hereby amended to read as

follows:

     44-32-2. Credit for research and development property acquired, constructed, or

reconstructed or erected after July 1, 1994.

     (a) A taxpayer shall be allowed a credit against the tax imposed by chapters 11, or 17, or

30 of this title. The amount of the credit shall be ten percent (10%) of the cost or other basis for

federal income tax purposes of tangible personal property, and other tangible property, including

buildings and structural components of buildings, described in subsection (b) of this section;

acquired, constructed or reconstructed, or erected after July 1, 1994.

     (b) A credit shall be allowed under this section with respect to tangible personal property

and other tangible property, including buildings and structural components of buildings which are:

depreciable pursuant to 26 U.S.C. § 167 or recovery property with respect to which a deduction is

allowable under 26 U.S.C. § 168, have a useful life of three (3) years or more, are acquired by

purchase as defined in 26 U.S.C. § 179(d), have a situs in this state and are used principally for

purposes of research and development in the experimental or laboratory sense which shall also

include property used by property and casualty insurance companies for research and development

into methods and ways of preventing or reducing losses from fire and other perils. The credit shall

be allowable in the year the property is first placed in service by the taxpayer, which is the year in

which, under the taxpayer's depreciation practice, the period for depreciation with respect to the

property begins, or the year in which the property is placed in a condition or state of readiness and

availability for a specifically assigned function, whichever is earlier. These purposes shall not be

deemed to include the ordinary testing or inspection of materials or products for quality control,

efficiency surveys, management studies, consumer surveys, advertising, promotions, or research in

connection with literary, historical or similar projects.

     (c) A taxpayer shall not be allowed a credit under this section with respect to any property

described in subsections (a) and (b) of this section, if a deduction is taken for the property under §

44-32-1.

     (d) A taxpayer shall not be allowed a credit under this section with respect to tangible

personal property and other tangible property, including buildings and structural components of

buildings, which it leases to any other person or corporation. For purposes of the preceding

sentence, any contract or agreement to lease or rent or for a license to use the property is considered

a lease.

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     (e) The credit allowed under this section for any taxable year does not reduce the tax due

for that year, in the case of corporations, to less than the minimum fixed by § 44-11-2(e). If the

amount of credit allowable under this section for any taxable year is less than the amount of credit

available to the taxpayer, any amount of credit not credited in that taxable year may be carried over

to the following year or years, up to a maximum of seven (7) years, and may be credited against

the taxpayer's tax for the following year or years. For purposes of chapter 30 of this title, if the

credit allowed under this section for any taxable year exceeds the taxpayer's tax for that year, the

amount of credit not credited in that taxable year may be carried over to the following year or years,

up to a maximum of seven (7) years, and may be credited against the taxpayer's tax for the following

year or years.

     (f)(1) With respect to property which is depreciable pursuant to 26 U.S.C. § 167 and which

is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit

is to be taken, the amount of the credit is that portion of the credit provided for in this section which

represents the ratio which the months of qualified use bear to the months of useful life. If property

on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its

useful life, the difference between the credit taken and the credit allowed for actual use must be

added back in the year of disposition. If the property is disposed of or ceases to be in qualified use

after it has been in qualified use for more than twelve (12) consecutive years, it is not necessary to

add back the credit as provided in this subdivision. The amount of credit allowed for actual use is

determined by multiplying the original credit by the ratio which the months of qualified use bear

to the months of useful life. For purposes of this subdivision, "useful life of property" is the same

as the taxpayer uses for depreciation purposes when computing his federal income tax liability.

     (2) Except with respect to that property to which subdivision (3) of this subsection applies,

with respect to three (3) year property, as defined in 26 U.S.C. § 168(c), which is disposed of or

ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken,

the amount of the credit shall be that portion of the credit provided for in this section which

represents the ratio which the months of qualified use bear to thirty-six (36). If property on which

credit has been taken is disposed of or ceases to be in qualified use prior to the end of thirty-six

(36) months, the difference between the credit taken and the credit allowed for actual use must be

added back in the year of disposition. The amount of credit allowed for actual use is determined by

multiplying the original credit by the ratio that the months of qualified use bear to thirty-six (36).

     (3) With respect to any recovery property to which 26 U.S.C. § 168 applies, which is a

building or a structural component of a building and which is disposed of or ceases to be in qualified

use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit

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is that portion of the credit provided for in this section which represents the ratio which the months

of qualified use bear to the total number of months over which the taxpayer chooses to deduct the

property under 26 U.S.C. § 168. If property on which credit has been taken is disposed of or ceases

to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the

property under 26 U.S.C. § 168, the difference between the credit taken and the credit allowed for

actual use must be added back in the year of disposition. If the property is disposed of or ceases to

be in qualified use after it has been in qualified use for more than twelve (12) consecutive years, it

is not necessary to add back the credit as provided in this subdivision. The amount of credit allowed

for actual use is determined by multiplying the original credit by the ratio that the months of

qualified use bear to the total number of months over which the taxpayer chooses to deduct the

property under 26 U.S.C. § 168.

     (g) No deduction for research and development facilities under § 44-32-1 shall be allowed

for research and development property for which the credit is allowed under this section.

     (h) No investment tax credit under § 44-31-1 shall be allowed for research and development

property for which the credit is allowed under this section.

     (i) The investment tax credit allowed by § 44-31-1 shall be taken into account before the

credit allowed under this section.

     (j) The credit allowed under this section only allowed against the tax of that corporation

included in a consolidated return that qualifies for the credit and not against the tax of other

corporations that may join in the filing of a consolidated return.

     (k) In the event that the taxpayer is a partnership, joint venture or small business

corporation, the credit shall be divided in the same manner as income.

     44-32-3. Credit for qualified research expenses.

     (a) A taxpayer shall be allowed a credit against the tax imposed by chapters 11, or 17 or 30

of this title. The amount of the credit shall be five percent (5%)(and in the case of amounts paid or

accrued after January 1, 1998, twenty-two and one-half percent (22.5%) for the first twenty-five

thousand dollars ($25,000) worth of credit and sixteen and nine-tenths percent (16.9%) for the

amount of credit above twenty-five thousand dollars ($25,000)) of the excess, if any, of:

     (1) The qualified research expenses for the taxable year, over

     (2) The base period research expenses.

     (b)(1) "Qualified research expenses" and "base period research expenses" have the same

meaning as defined in 26 U.S.C. § 41; provided, that the expenses have been incurred in this state

after July 1, 1994.

     (2) Notwithstanding the provisions of subdivision (1) of this subsection, "qualified research

LC005230 - Page 39 of 49

expenses" also includes amounts expended for research by property and casualty insurance

companies into methods and ways of preventing or reducing losses from fire and other perils.

     (c) The credit allowed under this section for any taxable year shall not reduce the tax due

for that year by more than fifty percent (50%) of the tax liability that would be payable, and in the

case of corporations, to less than the minimum fixed by § 44-11-2(e). If the amount of credit

allowable under this section for any taxable year is less than the amount of credit available to the

taxpayer any amount of credit not credited in that taxable year may be carried over to the following

year or years, up to a maximum of seven (7) years, and may be credited against the taxpayer's tax

for that year or years. For purposes of chapter 30 of this title, if the credit allowed under this section

for any taxable year exceeds the taxpayer's tax for that year, the amount of credit not credited in

that taxable year may be carried over to the following year or years, up to a maximum of seven (7)

years, and may be credited against the taxpayer's tax for that year or years. For purposes of

determining the order in which carry-overs are taken into consideration, the credit allowed by § 44-

32-2 is taken into account before the credit allowed under this section.

     (d) The investment tax credit allowed by § 44-31-1 shall be taken into account before the

credit allowed under this section.

     (e) The credit allowed under this section shall only be allowed against the tax of that

corporation included in a consolidated return that qualifies for the credit and not against the tax of

other corporations that may join in the filing of a consolidated return.

     (f) In the event the taxpayer is a partnership, joint venture or small business corporation,

the credit is divided in the same manner as income.

     SECTION 15. Section 44-39.1-2 of the General Laws in Chapter 44-39.1 entitled

"Employment Tax Credit" is hereby amended to read as follows:

     44-39.1-2. Credit provisions.

     (a) The credit is not refundable but may be applied against the tax liability imposed against

a taxpayer pursuant to chapters 11, 13, 14, 15, and 17 and 30 of this title.

     (b) The credit allowed under this chapter for any taxable year shall not reduce the tax due

for that year to less than one hundred dollars ($100). Any amount of credit not deductible in that

taxable year may not be carried over to the following year. This credit may not be applied against

the tax until all other credits available to this taxpayer for that taxable year have been applied.

     (c) In the event that the employer is a partnership, joint venture, or small business

corporation, the credit shall be divided in the manner as income.

     (d) In the event that the taxpayer is liable for taxes imposed under both chapters 14 and 15

of this title, the taxpayer must elect the tax against which it wishes to claim credit. This election

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shall be made as part of the taxpayer's filings in accordance with §§ 44-14-6 and 44-15-5. The

taxpayer may not divide the credit for any year between the two (2) tax liabilities for which it is

liable.

     SECTION 16. Sections 44-46-1 and 44-46-3 of the General Laws in Chapter 44-46 entitled

"Adult Education Tax Credit" are hereby amended to read as follows:

     44-46-1. Adult education tax credit.

     A taxpayer who is an employer shall be allowed a credit, to be computed as provided in

this chapter, against the tax imposed by chapters 11, 13, 14, 15, and 17 and 30 of this title. The

amount of the credit shall be fifty percent (50%) of the costs incurred solely and directly for non-

worksite or worksite-based adult education programs as defined in § 44-46-2.

     44-46-3. Credits.

     An employer shall be allowed a credit as provided in § 44-46-1 up to a maximum credit of

three hundred dollars ($300) against taxes otherwise due under provisions of chapters 11, 13, 14,

15, and 17 and 30 of this title per paid employee. The employee must remain in the employ of the

business for a minimum period of thirteen (13) consecutive weeks, and a minimum of four hundred

and fifty-five (455) hours of paid employment before the employer can become eligible for the

income credit. The credit shall not reduce the tax under chapter 11 of this title to less than one

hundred dollars ($100). The credit is not refundable. Any amount of credit not deductible in that

taxable year may not be carried over to the following year. In the event that the employer is a

partnership, joint venture or small business corporation, the credit shall be divided in the same

manner as income. This credit may not be applied against the tax until all other credits available to

this taxpayer for the taxable year have been applied.

     SECTION 17. Section 44-47-1 of the General Laws in Chapter 44-47 entitled "Adult and

Child Day Care Assistance and Development Tax Credit" is hereby amended to read as follows:

     44-47-1. Tax credit.

     (a) A taxpayer that pays for or provides adult or child day care services to its employees or

to the employees of its commercial tenants, or that provides real property or dedicates rental space

for child day care services, is allowed a credit, to be computed as provided in this chapter, against

the tax imposed by chapters 11 and 13, except § 44-13-13, and chapters 14, and 17, 30 of this title.

The amount of the credit shall be:

     (1) Thirty percent (30%) of the total amount expended in the state of Rhode Island during

the taxable year by a taxpayer for day care services purchased to provide care for the dependent

children or dependent adult family members of the taxpayer's employees or employees of

commercial tenants of the taxpayer during the employees' hours of employment;

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     (2) Thirty percent (30%) of the total amount expended during the taxable year by a taxpayer

in the establishment and/or operation of a day care facility in the state of Rhode Island used

primarily by the dependent children of the taxpayer's employees or employees of commercial

tenants of the taxpayer during the employees' hours of employment;

     (3) Thirty percent (30%) of the total amount expended during the taxable year by a taxpayer

in conjunction with one or more other taxpayers for the establishment and/or operation of a day

care facility in the state of Rhode Island used primarily by the dependent children of the taxpayer's

employees or employees of commercial tenants of the taxpayer during that employee's hours of

employment;

     (4) Thirty percent (30%) of the total amount foregone in rent or lease payments related to

the dedication of rental or lease space to child day care services. The amount foregone shall be the

difference between fair market rental and actual rental.

     (b) No credit shall be allowed pursuant to this chapter unless the child day care facility is

licensed pursuant to chapter 72.1 of title 42, and agrees to accept children whose child care services

are paid for in full or in part by the Rhode Island department of human services; and/or the adult

day care facility is certified by the department of elderly affairs.

     SECTION 18. Section 44-48.3-13 of the General Laws in Chapter 44-48.3 entitled "Rhode

Island New Qualified Jobs Incentive Act 2015" is hereby amended to read as follows:

     44-48.3-13. Reporting requirements.

     (a) By August 1st of each year, each applicant approved for credits under this chapter shall

report to the commerce corporation and the division of taxation the following information:

     (1) The number of total jobs created;

     (2) The applicable north American industry classification survey annual system code of

each job created;

     (3) The annual salary of each job created;

     (4) The address of each new employee;

     (b) By September 1, 2016 and each year thereafter, the commerce corporation shall report

the name, address, and amount of tax credit approved for each credit recipient during the previous

state fiscal year to the governor, the speaker of the house of representatives, the president of the

senate, the chairpersons of the house and senate finance committees, the house and senate fiscal

advisors, and the department of revenue.

     (c) By October 1, 2016 and each year thereafter, the commerce corporation shall report for

the year (1) the total number of businesses awarded credits in the previous fiscal year and (2) the

name and address of each credit recipient. This report shall be available to the public for inspection

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by any person and shall be published by the chief executive of the commerce corporation on the

commerce corporation and executive office of commerce websites.

     (d) By October 1st of each year the division of taxation shall report the name, address, and

amount of tax credit received for each credit recipient during the previous state fiscal year to the

governor, the chairpersons of the house and senate finance committees, the house and senate fiscal

advisors, and the department of labor and training. This report shall be available to the public for

inspection by any person and shall be published by the tax administrator on the tax division website.

     (e) By November 1st of each year the division of taxation shall report in the aggregate the

information required under subsection 44-48.3-13(a). This report shall be available to the public

for inspection by any person and shall be published by the tax administrator on the tax division

website.

     SECTION 19. Section 44-57-1 of the General Laws in Chapter 44-57 entitled "Residential

Renewable Energy System Tax Credit" is hereby amended to read as follows:

     44-57-1. Tax credit for principal or secondary residence.

     (a) An eligible person, as defined in § 44-57-3, who shall pay all or part of the cost of an

eligible renewable energy system, as defined in § 44-57-4, which is installed in a dwelling, as

defined in § 44-57-2(13), shall be entitled to a tax credit against the tax liability imposed by chapters

chapter 11 and 30 of this title. The credit, which shall be nonrefundable, shall be computed in

accordance with § 44-57-5.

     (b) The credit shall be claimed in the tax year in which the renewable energy system is

placed into service. The credit may be claimed in the tax year the renewable energy system is

purchased if the system is placed in service by April 1 of the following tax year.

     (c) Any credit not used in accordance with subsection (b) of this section shall not be carried

over to any following year or years. The tax credit shall not reduce the tax in any tax year below

the minimum tax where a minimum tax is provided by law.

     (d) In the event the eligible person is a partnership, joint venture, or corporation, the credit

shall be divided in the same manner as income.

     SECTION 20. Sections 44-30-19, 44-30-20, 44-30-21, 44-30-22, 44-30-23, 44-30-24, 44-

30-26, 44-30-27 and 44-30-37 of the General Laws in Chapter 44-30 entitled "Personal Income

Tax" are hereby repealed.

     44-30-19. Credit to trust beneficiary receiving accumulation distribution.

     (a) General. A resident beneficiary of a trust whose Rhode Island income includes all or

part of an accumulation distribution by the trust, as defined in 26 U.S.C. § 665, shall be allowed a

credit against the tax otherwise due under this chapter for all or a proportionate part of any tax paid

LC005230 - Page 43 of 49

by the trust under this chapter for any preceding taxable year which would not have been payable

if the trust had in fact made distributions to its beneficiaries at the times and in the amounts specified

in 26 U.S.C. § 666.

     (b) Limitation. The credit under this section shall not reduce the tax otherwise due from

the beneficiary under this chapter to an amount less than would have been due if the accumulation

distribution or his or her part thereof were excluded from his or her Rhode Island income.

     44-30-20. Tax credit for installation costs to hydroelectric power developers --

Legislative findings and declaration of policy.

     (a) The general assembly recognizes and declares that because the worldwide supply of

fossil fuel and of other nonrenewable energy resources is limited, it is necessary to encourage the

utilization of renewable natural resources for the production of energy; that there are many existing

dams which could be retrofitted to generate hydroelectric power; and that a major factor inhibiting

the development of hydroelectric power generation is the presently higher capital costs for new

construction of hydro plants compared to conventional thermal systems.

     (b) It is the policy of this state to support and foster the development of hydropower

generating facilities by the establishment of tax incentives for those owners of existing dams who

install hydroelectric power generation equipment.

     44-30-21. Hydroelectric development tax credit -- Definitions.

     For purposes of this chapter:

     (1) "Existing dam" means any dam located in this state or immediately adjacent to it, the

construction of which was completed on or before May 20, 1981, and which does not require any

construction or enlargement of impoundment structures, other than repairs or reconstruction, in

connection with the installation of any small hydroelectric power project;

     (2) "Hydroelectric power developer" means any person or corporation who owns or leases

an existing dam and who installs hydroelectric power generation equipment and utilizes that

equipment to generate hydroelectric power;

     (3) "Installation costs" means all expenditures related to the design, construction,

installation, or repair of all facilities necessary for hydroelectric power production in this state;

     (4) "Small hydroelectric power production facility" means any hydroelectric power project

which is located in this state, which uses the water power potential of an existing dam, and which

has not more than fifteen thousand (15,000) kilowatts of installed capacity.

     44-30-22. Tax credit for installation costs.

     (a) A hydroelectric power developer will be allowed an income tax credit for the

installation costs of a small hydroelectric power production facility.

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     (b) For the purposes of this section, a hydroelectric power developer shall be allowed a

non-refundable state income tax credit in the amount of ten percent (10%) of the installation costs

of a hydropower facility. This credit shall be limited to five hundred thousand dollars ($500,000)

in expenditures for a maximum income tax credit of fifty thousand dollars ($50,000). This income

tax credit shall be allowed as either a personal or a corporate income tax credit, depending on the

hydropower developer's income tax filing status on the last day of his or her income tax filing

period; provided, that if the installation costs were incurred by a corporation, then a non-refundable

corporate income tax credit shall be allowed, and if installation costs were not incurred by a

corporation, then a non-refundable personal income tax credit shall be allowed. In no event shall