2025 -- S 0437

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

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A N   A C T

RELATING TO TAXATION -- NON-OWNER OCCUPIED PROPERTY TAX ACT

     Introduced By: Senators Kallman, DiMario, Lauria, Mack, Valverde, Pearson, Gallo, and
Acosta

     Date Introduced: February 26, 2025

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 72

NON-OWNER OCCUPIED PROPERTY TAX ACT

     44-72-1. Short title.

     This chapter shall be known and may be cited as the "Non-Owner Occupied Property Tax

Act".

     44-72-2. Purpose.

     (a) The state funds cities and towns pursuant to chapter 13 of title 45.

     (b) There is a compelling state interest in protecting the tax base of its cities and towns.

     (c) There are numerous non-owner occupied residential properties throughout the cities

and towns of Rhode Island assessed at values over one million dollars ($1,000,000).

     (d) The existence of such properties within a city or town has an impact on the value of

real property within the cities and towns and the tax base within these cities and towns.

     (e) Non-owner occupied properties sometimes place a greater demand on essential state,

city or town services such as police and fire protection than do occupied properties comparably

assessed for real estate tax purposes.

     (f) The residents of non-owner occupied properties are not vested with a motive to maintain

such properties.

     (g) The owners of non-owner occupied properties do not always contribute a fair share of

the costs of providing the foregoing essential state, city or town services financed in part by real

estate tax revenues, which revenues are solely based on the assessed value of properties.

     (h) Some properties are deliberately left vacant by their owners in the hope that real estate

values will increase, thereby enabling the owners to sell these properties at a substantial profit

without making any of the necessary repairs or improvements to the property.

     (i) The non-owner occupation of such property whether for profit speculation, tax benefit,

or any other purposes is the making use of that property and as such, is a privilege incident to the

ownership of the property.

     (j) Owners of non-owner occupied properties must be encouraged to use the properties in

a positive manner to stop the spread of deterioration, to increase the stock of viable real estate

within a city or town, and to maintain real estate values within communities.

     (k) Owners of non-owner occupied properties must be required, through a state’s power to

tax, to pay a fair share of the cost of providing certain essential state services to protect the public

health, safety, and welfare.

     (l) For all of the reasons stated within this section, the purpose of this chapter is to impose

a statewide tax upon non-owner occupied residential property assessed at a value of eight hundred

thousand dollars ($800,000) or more.

     44-72-3. Definitions.

     The following words and phrases as used in this chapter have the following meanings:

     (1) “Administrator” means the tax administrator within the department of revenue.

     (2) “Assessed value” means the assessed value of the real estate as returned by the tax

assessor of the city or town where the property is located.

     (3) “Non-owner occupied” means that the residential property is not occupied by the owner

of the property for a majority of the privilege year. A seasonal or vacation occupancy is deemed

non-owner occupied residency for the purposes of this chapter.

     (4) “Non-owner occupied tax” means the assessment imposed upon the non-owner

occupied residential property assessed at eight hundred thousand dollars ($800,000) or more

pursuant to this chapter.

     (5) “Person” means any individual, corporation, company, association, partnership, joint

stock association, and the legal successor thereof or any other entity or group organization against

which a tax may be assessed.

     (6) “Taxable year” means July 1 through June 30.

     44-72-4. Imposition of tax.

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     The tax administrator is empowered to impose a tax upon the privilege of utilizing property

as non-owner occupied residential property within the state during any privilege year commencing

with the privilege year beginning July 1, 2025 and every tax year thereafter. The non-owner

occupied tax shall be in addition to any other taxes authorized by the general or public laws.

     44-72-5. Exemptions.

     This chapter does not supersede any applicable exemption in the general or public laws;

provided; however that, the tax administrator shall be provided with the alleged basis for that

exemption in writing and may reject said alleged exemption if the administrator deems said

exemption is not applicable.

     44-72-6. Rate of tax.

     The tax authorized by this chapter shall be measured by the assessed value of the real estate:

     (1) At the rate of four-tenths of one percent (0.4%) of the assessed value on properties

worth at least eight hundred thousand dollars ($800,000) but less than one million dollars

($1,000,000);

     (2) At the rate of one-half of one percent (0.5%) of the assessed value on properties worth

at least one million dollars ($1,000,000) but less than two million dollars ($2,000,000); and

     (3) At the rate of six-tenths of one percent (0.6%) of the assessed value on properties worth

in excess of two million dollars ($2,000,000).

     44-72-7. Returns.

     (a) The tax imposed by this chapter shall be due and payable in four (4) equal installments.

The first installment shall be paid on or before September 15 of the taxable year, the second

installment shall be paid on or before December 15 of the taxable year, the third installment shall

be paid on or before March 15 of the taxable year, and fourth installment shall be paid on or before

June 15 of the taxable year.

     (b) The tax administrator is authorized to adopt rules, pursuant to this chapter, relative to

the form of the return and the data that it shall contain for the correct computation of the imposed

tax. All returns shall be signed by the taxpayer or by its authorized representative, subject to the

pains and penalties of perjury. If a return shows an overpayment of the tax due, the tax administrator

shall refund or credit the overpayment to the taxpayer.

     (c) The tax administrator, for good cause shown, may extend the time within which a

taxpayer is required to file a return. If the return is filed during the period of extension, no penalty

or late filing charge shall be imposed for failure to file the return at the time required by this chapter;

however, the taxpayer shall be liable for interest as prescribed in this chapter. Failure to file the

return during the period for the extension shall void the extension.

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     44-72-8. Set-off for delinquent payment of tax.

     If a taxpayer shall fail to pay a tax within thirty (30) days of its due date, the tax

administrator may request any agency of state government making payments to the taxpayer to set-

off the amount of the delinquency against any payment due the taxpayer from the agency of state

government and remit the sum to the tax administrator. Upon receipt of the set-off request from the

tax administrator, any agency of state government is authorized and empowered to set-off the

amount of the delinquency against any payment or amounts due the taxpayer. The amount of set-

off shall be credited against the tax due from the taxpayer.

     44-72-9. Tax on available information – Interest on delinquencies – Penalties –

Collection powers.

     If any taxpayer shall fail to file a return within the time required by this chapter, or shall

file an insufficient or incorrect return, or shall not pay the tax imposed by this chapter when it is

due, the tax administrator shall assess the tax upon the information as may be available, which shall

be payable upon demand and shall bear interest at the annual rate provided by § 44-1-7, from the

date when the tax should have been paid. If any part of the tax not paid is due to negligence or

intentional disregard of the provisions of this chapter, a penalty of ten percent (10%) of the amount

of the determination shall be added to the tax. The tax administrator shall collect the tax with

interest in the same manner and with the same powers as are prescribed for collection of taxes in

this title.

     44-72-10. Claims for refund - Hearing upon denial.

     (a) Any taxpayer subject to the provisions of this chapter, may file a claim for refund with

the tax administrator at any time within two (2) years after the tax has been paid. If the tax

administrator determines that the tax has been overpaid, the administrator shall make a refund with

interest from the date of overpayment.

     (b) Any taxpayer whose claim for refund has been denied may, within thirty (30) days from

the date of the mailing by the administrator of the notice of the decision, request a hearing and the

administrator shall, as soon as practicable, set a time and place for the hearing and shall notify the

taxpayer.

     44-72-11. Hearing by tax administrator on application.

     Any taxpayer aggrieved by the action of the tax administrator in determining the amount

of any tax or penalty imposed under the provisions of this chapter may apply to the tax

administrator, within thirty (30) days after the notice of the action is mailed to the taxpayer, for a

hearing relative to the tax or penalty. The tax administrator shall fix a time and place for the hearing

and shall so notify the taxpayer. Upon the hearing, the tax administrator shall correct manifest

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errors, if any, disclosed at the hearing and thereupon assess and collect the amount lawfully due

together with any penalty or interest thereon.

     44-72-12. Appeals.

     (a) In any appeal from the imposition of the tax set forth in this chapter, the tax

administrator shall find in favor of an appellant who shows that the property assessed:

     (1) Was actively occupied by the owner during the privilege year for more than six (6)

months; or

     (2) Was exempt pursuant to the general laws or public laws from the imposition of the tax

set forth in this chapter.

     (b) Appeals from administrative orders or decisions made pursuant to any provisions of

this chapter shall be to the sixth division district court pursuant to chapter 8 of title 8. The taxpayer’s

right to appeal under this section shall be expressly made conditional upon prepayment of all

surcharges, interest, and penalties unless the taxpayer moves for and is granted an exemption from

the prepayment requirement pursuant to § 8-8-26. If the court, after appeal, holds that the taxpayer

is entitled to a refund, the taxpayer shall also be paid interest on the amount at the rate provided in

§ 44-1-7.1.

     44-72-13. Taxpayer records.

     Every taxpayer shall:

     (1) Keep records as may be necessary to determine the amount of its liability under this

chapter, including, but not limited to: rental agreements, payments for rent, bank statements for

payment of residential expenses, utility bills, and any other records establishing residency or non-

residency.

     (2) Preserve those records for the period of three (3) years following the date of filing of

any return required by this chapter, or until any litigation or prosecution under this chapter is finally

determined.

     (3) Make those records available for inspection by the administrator or authorized agents,

upon demand, at reasonable times during regular business hours.

     44-72-14. Rules and regulations.

     The tax administrator is authorized to make and promulgate rules, regulations, and

procedures not inconsistent with state law and fiscal procedures as the administrator deems

necessary for the proper administration of this chapter and to carry out the provisions, policies, and

purposes of this chapter.

     44-72-15. Severability.

     If any provision of this chapter or the application of this chapter to any person or

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circumstances is held invalid, that invalidity shall not affect other provisions or applications of the

chapter that can be given effect without the invalid provision or application, and to this end the

provisions of this chapter are declared to be severable. It is declared to be the legislative intent that

this chapter would have been adopted had those provisions not been included or that person,

circumstance, or time period been expressly excluded from its coverage.

     SECTION 2. This act shall take effect on January 1, 2026.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- NON-OWNER OCCUPIED PROPERTY TAX ACT

***

     This act would impose a non-owner occupied property tax on residential properties

assessed in excess of eight hundred thousand dollars ($800,000) at variable rates dependent on

values assessed by local tax assessors.

     This act would take effect on January 1 2026.

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