State & Local Tax Impacts of COVID-19 for Rhode Island – 2020

Thoughtware Alert Published: Dec 11, 2020 | Updated: May 05, 2021
SALT GOV COVID TW - 1

Information current as of December 31, 2020.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Rhode Island

  • Rhode Island extended the deadline for individual income, corporate income, trust income, property, bank excise, pass-through entity withholding, surplus lines, and premium tax payments and filings, with no penalties and interest, to July 15.
    • Rhode Island DOR Advisory 2020-11, March 27, 2020.
  • Rhode Island has further extended with full waiver of penalty and interest until July 15, 2020, the deadline for certain tax filings and payments that had a normal due date of April 15 to June 15 (this includes the first- and second-quarter estimated tax filings); including personal income tax estimate (Form RI-1040ES); business corporation tax estimate (Form BUS-EST); political organization tax estimate (Form BUS-EST); insurance gross premiums tax estimate (Form BUS-EST); surplus lines broker/licensee tax estimate (Form BUS-EST); public service corporation tax estimate (Form BUS-EST); bank excise tax estimate (Form BUS-EST); bank deposits tax return (Form T-86); bank deposits tax estimate (Form BUS-EST); pass-through entity tax estimate (Form BUS-EST); pass-through withholding estimate (Form RI-1096PT-ES); composite tax estimate (Form RI-1040C-ES); estate and trust income tax estimate (Form RI-1041ES); estate tax return and payment (Form 100 and Form 100A); extension request (Form RI-7004); business tax automatic extension request (Form BUS-EXT); composite income tax extension payment (Form RI-4868C); pass-through withholding extension payment (Form RI-4868PT); and fiduciary income tax extension payment (Form RI-8736).
    • Rhode Island DOR Advisory No. 2020-21, May 21, 2020.
  • Nexus for income and/or sales and use tax won’t be established with Rhode Island if, due to the COVID-19 pandemic, an employee who previously worked in another state is now working remotely from Rhode Island. In addition, property temporarily located in the state, such as computers and equipment, due to the pandemic won’t trigger sales and use tax nexus with Rhode Island. The performance of any services by such employees within Rhode Island won’t cause the employer to lose the protection of Public Law 86-272. Services performed during the emergency by employees who previously worked in another state but are now working remotely from Rhode Island won’t be considered to increase the numerator of their employer’s payroll factor for purposes of apportioning income. These policies are predicated on the condition that the presence of such employees and property in Rhode Island will be temporary and that they will return to a regular workstation located outside of the state after the coronavirus state of emergency has ended.
    • Rhode Island DOR Advisory 2020-24, May 28, 2020.
  • Rhode Island announced temporary relief for retailers that have fallen behind in their sales and use tax obligations due to COVID-19. The DOR will automatically issue a temporary 90-day sales permit to retailers whose sales permits won’t be renewed on July 1 for not complying with the tax payment and filing requirements. The temporary sales permit will be effective from July 1 through September 30 and is intended to let the retailer continue to do business during the 90-day period and come into compliance with the tax filing and payment requirements.
    • Rhode Island DOR Advisory 2020-28, June 11, 2020.
  • Rhode Island has extended its withholding tax guidance by an additional 60 days for employers with employees who are temporarily working remotely due to the coronavirus pandemic. The income of employees who are nonresidents temporarily working outside of Rhode Island solely due to the COVID-19 pandemic will continue to be treated as Rhode Island-source income for Rhode Island withholding tax purposes. In addition, Rhode Island won’t require employers located outside of Rhode Island to withhold Rhode Island income taxes from the wages of employees who are Rhode Island residents temporarily working within Rhode Island solely due to the COVID-19 pandemic.
    • Rhode Island Emergency Regulation 280-RICR-20-55-14, effective through November 18, 2020.
  • Rhode Island provided guidance on the personal income tax treatment of certain relief provided under the federal CARES Act. The federal economic impact payments will not be treated as income for Rhode Island personal income tax purposes, as they are treated as refundable tax credits for federal tax purposes and not a component of federal adjusted gross income. Taxpayers claiming the federal above-the-line deduction of up to $300 for qualified charitable contributions for tax years beginning in 2020 will automatically get the reduction for Rhode Island personal income tax purposes. Since the starting point for calculating a taxpayer's Rhode Island personal income tax is federal adjusted gross income, required minimum withdrawals from an IRA or retirement savings plans typically count as income for Rhode Island tax purposes. There is a limited exception under Rhode Island law for income from private sector pensions, government pensions, IRC §401(k) plans, IRC §403(b) plans, military retirement pay, annuities, and other such sources, but the limited exception does not apply to withdrawals from IRAs. 
    • Rhode Island DOR Tax News, October 1, 2020.
  • Rhode Island has extended the expiration date for income tax emergency regulations governing employees who are temporarily working remotely due to the coronavirus pandemic until January 18, 2021 (previously expiring November 18, 2020). The regulations provide that the state will continue to treat as Rhode Island-source income the income of employees who are nonresident individuals temporarily working outside of Rhode Island solely due to the COVID-19 state of emergency. Rhode Island will not require employers located outside of the state to withhold Rhode Island income taxes from the wages of employees who are resident individuals but who are temporarily working within Rhode Island solely due to the COVID-19 state of emergency.
    • Rhode Island Emergency Regulation 280-RICR-20-55-14, effective May 23, 2020, through January 18, 2021.
  • Rhode Island has temporarily suspended the certification period for the qualified jobs incentive tax credit available against business corporation tax, tax on banks, public service corporation tax, tax on insurance companies, or personal income tax for creating new full-time jobs. The delay of employees relocating to Rhode Island due to the pandemic may result in an employer being unable to meet the certification requirement on a timely basis under the Qualified Jobs Incentive Act. The running of the certification period is suspended as of March 9, 2020, through January 14, 2021, unless renewed, modified, or terminated by a subsequent executive order.
    • Governor’s Executive Order 20-107, December 16, 2020.
      • Executive Order 20-107, as extended by Order 21-23 effective March 10, 2021, until April 9, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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