2026 -- H 7809

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LC004983

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2026

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A N   A C T

RELATING TO TAXATION -- STATE TAX OFFICIALS

     Introduced By: Representative Alex D. Marszalkowski

     Date Introduced: February 12, 2026

     Referred To: House Finance

     (Dept. of Revenue)

It is enacted by the General Assembly as follows:

     SECTION 1. 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) sixty (60) 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) sixty (60) 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) sixty (60) 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) sixty (60) 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

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 this

title.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- STATE TAX OFFICIALS

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     This act would extend the timeframe for the division of taxation to review nonresident

contractor cases and provide a specific penalty for noncompliance with the statute's withholding

requirements.

     This act would take effect upon passage.

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LC004983

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