2024 -- S 2813 AS AMENDED

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LC004533

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

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A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE

ISLAND BUSINESS CORPORATION ACT

     

     Introduced By: Senators Britto, Tikoian, Lawson, DiPalma, LaMountain, Ciccone, and

     Date Introduced: March 22, 2024

     Referred To: Senate Finance

     (Dept. of Revenue)

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 44-11-7.1 and 44-11-29 of the General Laws in Chapter 44-11

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

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     44-11-7.1. Limitations on assessment.

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

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

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

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date shall be considered as filed on the due date.

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     (b) Exceptions.

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

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     (i) No return is filed.

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

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

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

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

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of the agreed upon period.

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

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

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assessed.

 

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

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

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

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by fraud or misrepresentation of a material fact.

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

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

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

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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

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

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item.

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

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

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

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

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

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

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

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tax due and payable more than ten (10) years after the date upon which the return was filed or due

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to be filed, nor shall the tax administrator commence any collection action for any business

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corporation tax due and payable unless the collection action is commenced within ten (10) years

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after a notice of deficiency determination became a final collectible assessment; provided however,

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that the tax administrator may renew a statutory lien that was initially filed within the ten-year (10)

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

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period of time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection

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action” refers to any activity undertaken by the division of taxation to collect on any state tax

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liabilities that are final, due, and payable under Rhode Island law. “Collection action” may include,

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but is not limited to, any civil action involving a liability owed under chapter 11 of title 44.

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

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

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periods set forth in this section.

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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of the sale or transfer.

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

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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.

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     SECTION 2. Section 44-19-13 of the General Laws in Chapter 44-19 entitled "Sales and

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

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     44-19-13. Notice of determination.

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

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

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

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

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

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

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

 

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administrator and the taxpayer.

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

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

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determined to be due and payable more than ten (10) years after the return is filed or was due to be

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filed, nor shall the tax administrator commence any collection action for any tax that is due and

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payable unless the collection action is commenced within ten (10) years after a notice of a

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deficiency determination becomes a final collectible assessment; provided, however, that the tax

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administrator may renew a statutory lien that was initially filed within the ten-year (10) period for

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

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time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection action”

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

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are final, due, and payable under Rhode Island law. “Collection action” may include, but is not

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limited to, any civil action involving a liability owed under chapters 18, 18.1, 18.2, and 19 of title

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44. This section excludes any sales and use tax liabilities that are deemed trust funds as defined in

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§ 44-19-35, as well as any meals and beverage tax liabilities that are collected pursuant to § 44-18-

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

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

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

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periods set forth in this section.

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     SECTION 3. Section 44-23-9 of the General Laws in Chapter 44-23 entitled "Estate and

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

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

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     (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

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

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

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

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

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

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

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until it is paid.

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

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

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tax due more than ten (10) years after the return was filed or should have been filed, nor shall the

 

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tax administrator commence any collection action for any estate tax due and payable unless the

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collection action is commenced within ten (10) years after the date a notice of deficiency

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determination became a final collectible assessment. “Collection action” refers to any activity

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undertaken by the division of taxation to collect on any state tax liabilities that are final, due, and

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payable under Rhode Island law. “Collection action” may include, but is not limited to, any civil

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action involving a liability owed under chapters 22 and 23 of title 44.

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

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

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periods set forth in this section.

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     SECTION 4. Section 44-30-83 of the General Laws in Chapter 44-30 entitled "Personal

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Income Tax" is hereby amended to read as follows:

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     44-30-83. Limitations on assessment.

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

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

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

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

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

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considered filed on April 15 of the succeeding calendar year.

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     (b) Exceptions.

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

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     (i) No return is filed;

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

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

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

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

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a deficiency for federal income tax purposes.

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

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

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

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

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

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

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

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

 

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

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

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

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

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made.

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

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

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

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

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

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

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

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

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shall be January 1, 1971.

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

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

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

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

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

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

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

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

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

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

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

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thereafter.

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

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

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

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income tax due or payable more than ten (10) years after the date upon which the return was filed

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or due to be filed, nor shall the tax administrator commence any collection action for any personal

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

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a notice of deficiency determination became a final collectible assessment; provided however, that

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the tax administrator can renew a statutory lien that was initially filed within the ten-year (10)

 

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

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period of time the taxpayer is in federal bankruptcy or state receivership proceedings. “Collection

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action” refers to any activity undertaken by the division of taxation to collect on any state tax

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liabilities that are final, due, and payable under Rhode Island law. “Collection action” may include,

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but is not limited to, any civil action involving a liability owed under chapter 30 of title 44. This

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section excludes any liabilities that are deemed trust funds as defined in § 44-30-76, as amended.

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

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

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periods set forth in this section.

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     SECTION 5. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- RHODE

ISLAND BUSINESS CORPORATION ACT

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     This act would make numerous technical amendments to the statutes on taxes and

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corporations, associations and partnerships.

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     This act would take effect upon passage.

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