Rhode Island Tax Administrator R. Gary Clark provided small businesses a snapshot of new and proposed fiscal policies that could affect them at the Smaller Business Association of New England breakfast series.
At the March 16 event, held at the Providence Marriott, Clark outlined several new tax-related measures and explained the revenue they are expected to draw.
“This governor has been very interested in trying to get the state back on track with a Fiscal Fitness plan,” Clark said.
During fiscal year 2004, the tax administration adopted an automated collection system, a much-needed move, Clark said.
“Some of the tools we were working with are quite antiquated,” he said.
The Aliant system, which was put into use in December 2004, allows collectors to have instant access to all cases. Case histories and notes are kept indefinitely, all tax deficiencies are displayed on one page and supervisors can more easily monitor caseloads.
The administration also began posting the “top 100” delinquent taxpayers on its Web site.
“It’s been working very well,” Clark said, adding that other states have posted similar lists. “It’s brought in $5 million in revenue we can attribute to that.”
During the 2005 fiscal year, a new policy requires income tax withholding for non-residents who are listed on pass-through entities.
“The reason we put this in is that a lot of them don’t report their income to this state,” Clark said. The administration estimates it will collect an additional $2 million annually because of the new policy.
As of Jan. 1, people renewing professional or driving licenses and registrations had to have tax clearance from Rhode Island before a renewal is granted.
“Before they can renew, they have to be in good standing with the state tax system,” Clark said. The administration estimates it will collect $6.5 million as a result of having the tax clearance policy.
“Keep in mind this doesn’t require taxes be completely paid, just requires they be in good standing,” Clark said. Good standing could simply mean the person renewing a license has established a payment plan for state taxes. In addition to bringing in more revenue, it will allow the agency to collect taxes it had already written off as uncollectible.
A proposal regulating cigarette tax could impact small retailers, Clark said. The proposal would require retailers to pre-pay their state cigarette taxes instead of collecting the money from customers, then sending it to the government.
Small retailers have been audited and discrepancies between the amount of cigarettes they purchased and the amount of taxes they paid were found, meaning they were pocketing the tax money intended for the state, Clark said.
Requiring pre-payment of cigarette taxes could bring in an estimated $1.9 million in revenue.
