PROVIDENCE – The R.I. Department of Revenue outlined Wednesday the state tax changes that have gone into effect in 2019.
The changes include increases on existing taxes, elimination of certain fees, a change to pass-through business tax payments, and the enforcement of sales and use tax on online retailers selling in Rhode Island.
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This year’s changes:
- Remote sellers, marketplace facilitators and referrers now are required to register with Rhode Island and collect and remit Rhode Island sales and use tax from online buyers effective July 1.
- In order to minimize the effects of the federal tax reform passed in 2017, Rhode Island pass-through entities and their shareholders have been given a new pathway to pay both federal and state taxes. The entities, often made up of partnerships, can choose to pay Rhode Island income tax on the business’s net income at a rate of 5.99%. This choice in turn reduces the income that is recognized by the federal government for those individuals who previously had paid the full amount of net income of the entity divided among themselves. After the individuals have paid their federal income tax on the reduced income they have received from the pass-through entity, they then adjust their taxable income for Rhode Island by adding back the income tax paid to the state by the entity (in the appropriate proportion). At that point as individuals they calculate the income tax as they had previously, based on all the income they received from the entity. Once that calculation is made the state will issue a tax credit equal to the filer’s share of the tax payment made by the pass-through entity to the state. This option is available for the tax year starting Jan. 1, 2019.
- Employers that fail to file personal income tax electronically will be charged 5% of the withheld tax as a penalty – up to $500. If an employer fails to remit personal income tax withholdings, the state may charge interest at the current annual rate, which is 18%.
- Winnings from video lottery terminals and casino gaming will have deductions and withholdings for personal income tax at the rate of 5.99%.
Fees eliminated:
- Warwick airport parking district fee, from a maximum of $250
- Motor carrier license fee of $10
- Motor carrier decal fee of $10 per vehicle
- Motor carrier temporary license fee of $10
- Gas station fee of $5
Tax increases:
- Beverage container tax increased from 4 cents to 8 cents per case
- The taxes on hard-to-dispose of materials increased
- The gas tax increased 1 cent to 34 cents per gallon. The tax is adjusted every two years to meet inflation, if necessary
The DOR also said that tax changes enacted in the fiscal year 2020 budget, including tax changes related to digital downloads, streaming music, streaming video, urns and feminine hygiene products, will be detailed later in the year, as the changes are expected to be implemented in October.
Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.
