2018 MA / RI NATP Annual State Update Seminar - TWO WEEKS AWAY!!

Massachusetts / Rhode Island NATP Chapter Annual State Update Seminar - January 4th 2018

Join the Massachusetts / Rhode Island NATP Chapter on Thursday, January 4th, 2018 for our Annual State Update Seminar. This all day event will be held at a NEW LOCATION for our chapter at the Southbridge Hotel & Conference Center, Southbridge MA. Registration details are below, and are handled online directly by National NATP. A link to the registration website is listed below. Please take a look at the details on our speakers and topics provided in this great update opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities PLUS even 2 CE Credit Hours. Registration is from 7:30am to 8:30am & Education is from 8:30am to 4:30pm.

• Register online with credit card.
• For more information or to register by phone, fax or mail, use this form.
• After January 3, please register at the door with the form above.

Topics:

Connecticut State Tax update presented by Kristin A. Roberts, MBA, EA, ABD.


Roberts holds the position of Post University’s Assistant Program Manager of Accounting. Her previous position at Post University was as an Associate Faculty in Accounting. Her course specialties at the university level include Financial Accounting, Individual Taxation, and Corporate Taxation. Roberts is actively involved in her local community, volunteering on a variety of councils for the historic district of Torrington.  She is also the Treasurer of the NW CT Chamber Education Foundation, and also serves as the Education Committee Chairperson for the CT Chapter of the National Association of Tax Professionals.  She is also a current member of the CT Department of Revenue External Editorial Board. Roberts is married with grown children.  She enjoys horror movies and classic rock music. When not working, her favorite pastime is spending time with her sons or listening to her husband singing and playing his guitar.

Massachusetts State Tax Update presented by Massachusetts Department of Revenue.

Rhode Island State Tax Update presented by Rhode Island Division of Taxation.

New York State Tax Update presented by Kathryn Keane of New York NATP Chapter.

Federal Tax Update presented by Kathryn Keane of New York NATP Chapter. (2 Hours of CE Credits)

Featured Speaker - Kathryn M. Keane, EA.

Kathryn is a principal of Macanta, a small tax and related services practice located in Brooklyn, NY, serving over 850 individual clients and 50 businesses. In December 2006, Kathryn completed two three-year terms on the National Board of Directors of NATP and was twice awarded Chapter Person of the Year for 2002 and 2008 for her volunteer service to the community at large as well as to NATP. In addition to serving as an Education Committee member for NY NATP, she currently serves as Chair of the IRS Tri-Boro Practitioner Liaison Committee. Kathryn is a frequent speaker for NATP Chapters. She has also presented for VASEA, NCCPAC (Nassau-Suffolk County Chapter) and local chapters of NYSSCPA. Kathryn has a B.S. degree from Brooklyn College.

When Is Cancellation of Debt Income Not Income?

Floetta Bullock wanted to help her son and daughter-in-law purchase a truck for their small business, so she agreed to co-sign a loan with the local credit union.  However, she didn’t notice that she actually signed as the primary obligor.  Neither did her family members notice.  And, lastly, neither did the credit union since “the credit union dealt only with the…son and daughter-in-law, who made the payments on the loan.”

A year later, the truck was stolen.  The insurance proceeds were paid to the credit union (they held a collateral loan).  The son and daughter-in-law stopped making payments.  Unfortunately, the insurance proceeds came up short and there was still an outstanding loan balance of $8,164.

The credit union did not chase after anyone for the loan balance.  They wrote it off.  However, they now discovered that Mom was not just a co-signer, she was the primary obligor.  So, they issued her a 1099-C and reported cancellation of debt income for the $8,164 balance due!

Mom wasn’t about to report COD income, so she omitted it from her tax return.  The IRS, of course, didn’t miss this unreported income and they nailed Mom for tax, interest and penalties.

Mom went to Tax Court.  What hope did she have?  She signed the note; she received the tax form.  Ah, but see IRC Sec. 7491(a), which shifts the burden of proof onto the IRS when a taxpayer produces credible evidence.  So, if Mom has a valid argument, “This case is decided on the preponderance of the evidence and is not affected by the burden of proof…”

Now, consider what the Court said regarding the reason for taxing COD income [citing Friedman v. Comm., 216 F. 3d 537,545 (6th Cir., 2000)] “the discharge of a debt below the face value of the debt accords the debtor  an economic benefit equivalent to income.”

However, “The guarantor of a contingent liability generally does not recognize income upon discharge of a debt.”  “Such a discharge creates no previously untaxed accretion in assets that would result in an increase in net worth.”  See Landreth v. Comm., 50 TC 803, 812-813 (1968).  What the Court here is saying is that the loan proceeds were not paid to the guarantor, so the guarantor was not enriched (increase in net worth), therefore, there is no income attributed to the guarantor if the debt is less than fully paid.

So, the Court looked to what happened and determined that Mrs. Bullock did not intend to be the primary obligor.  She was not treated as such by the lender; they looked to the son and daughter-in-law; had no communication with Mom; and, never looked to Mom to repay the debt.  “The intent of the parties, in turn, may be reflected by their subsequent acts.”  See Monon R. R. v. Comm.,  55 TC 345, 357 (1970).  “Without an intention for petitioner (Bullock) to repay the debt, there was no bona fide primary obligation between petitioner and the credit union.”

The Court held that Mrs. Bullock was not taxable on the COD income.  The case did not mention if son and daughter-in-law were taxable (although they did not receive a    1099-C).  See Floetta Bullock V. Comm., TC Memo 2017-219 (11/6/17).

Taxpayer Pays Contractors in Cash, Does Not Issue 1099 Forms, Can This Expense Be Deducted?

ANSWER: YES, According to US Tax Court

How often have you heard it said…If a taxpayer pays someone in cash and does not issue a 1099 form, the taxpayer cannot claim an expense deduction.  Let’s take a look at a Tax Court case, Victoria L. Duket v. Comm. of Revenue, T.C. Summary 2017-84, 11/9/17,  which says otherwise, and why.

William Delaney, EA
Westwood MA

Victoria L. Duket operated a cleaning and maintenance business and reported her income and expense on Schedule C.  For tax year 2011, she claimed $59,544 in contract labor expense; for tax year 2012 the amount claimed was $3,260; she also claimed wages of $29,260.  For both years, the IRS allowed -0- deductions.

“Petitioner (Ms. Duket) hired contract laborers (piece workers) for the housekeeping jobs.  Petitioner and Mr. Huber (her significant other) worked alongside these workers.  Petitioner paid the workers in cash every two weeks.”  “Petitioner kept a contemporaneous record of her housekeeping work and payroll using calendars, which served as her bookkeeping system.”

So far, so good.  It’s not a Quickbooks system, but it is a systematic contemporaneous record.  She has documented what she did.  At the end of the year, “She issued Forms 1099-MISC…to Mr. Huber and one other individual…, but not to any of the piece workers.”

The Tax Code requires that tax deductions be documented; the burden of proof is on the taxpayer.  The case goes into considerable detail when explaining how to apply these tests and the authority for so doing.  Well worth a read (see Discussion of Burden of Proof on page 5 and subsequent).

The Court found (page 7) that the “Petitioner’s testimony at trial was honest, forthright, and credible.  We therefore rely on her testimony to resolve this substantiation issue.”  “Petitioner testified that her business used only contract labor.  She provided detailed information regarding the number of people she hired, along with estimates of time worked and amounts paid to these individuals.  She also offered into evidence Forms 1099-MISC corroborating payments to Mr. Huber and Mr. Ramariz.  On the basis of this testimony, we conclude that petitioner was entitled to deduct the full amounts of the labor costs she reported on her return for each year in issue.”

What particularly interested your Editor is that the IRS completely ignored the 1099-MISC forms which corroborated (see the Court’s language, above) most of the payment amounts deducted, and disallowed everything.  And, in an 180 degree turn-around, the Court ignored the fact that the payments were in cash and allowed full deductions for both years because the taxpayer maintained contemporaneous and credible bookkeeping records and provided them to the Court.  It, apparently, did not matter that the payments were in cash and some were not documented by issuing a 1099 form.

There are other deduction and documentation issues addressed in the case, but this one jumped out at me.

Rhode Island Division of Taxation - 2018 Estimated Tax Payment in 2017

Some tax professionals have contacted the Rhode Island Division of Taxation recently about making a 2018 estimated tax payment during 2017. (Their inquiries are the result of tax planning related to proposed federal tax changes now being weighed by Congress.) In response to these requests, the Division provides the following information.

Personal income tax

As a convenience for taxpayers who want to make a 2018 estimated tax payment in 2017, the Division of Taxation has posted next year’s Form RI-1040ES earlier than it normally would. The 2018 version of Form RI-1040ES, “Rhode Island Resident and Nonresident Estimated Payment Coupons,” is available on the Division’s website via the following link: https://go.usa.gov/xnnYn.

If you want to make an estimated payment for 2018 – and make it before the end of this month (in other words, before the end of 2017), fill out the April coupon in the 2018 version of Form RI-1040ES. Send the completed April 2018 coupon, along with a check or money order, to:

Rhode Island Division of Taxation
One Capitol Hill
Providence, R.I. 02908

If you prefer to make an estimated payment of Rhode Island personal income tax for 2018 online, and make it by the end of 2017, you may pay by credit card or debit card. First, see the helpful explanation at the following: http://www.tax.ri.gov/misc/creditcard.php. After that, use the Division’s credit card/debit card site: https://www.ri.gov/app/taxation/payments. Under “Personal Income Taxes,” click on “Estimate – 1040ES.” On the next page, be sure to click on “2018” as your filing year.

Trust and estate income tax

As a convenience for trusts and estates that seek to make a 2018 estimated tax payment during 2017, the Division of Taxation has posted the 2018 Form RI-1041ES, “Rhode Island Fiduciary Estimated Payment Coupons,” earlier than it normally would.

The 2018 version of Form RI-1041ES is available at http://www.tax.ri.gov/taxforms/fiduciary.php.

If a trust or estate wants to make an estimated payment for 2018 – and make it before the end of 2017, the entity should mail the completed April 2018 coupon of Form RI-1041ES, along with a check or money order, to:

Rhode Island Division of Taxation
One Capitol Hill
Providence, R.I. 02908

Composite filers

Some pass-through entities, such as partnerships, file composite income tax returns each year on Form RI-1040C, “Composite Income Tax Return.” The form is typically filed to report a nonresident owner’s share of Rhode Island source income. The entity computes the Rhode Island personal income tax and pays it on behalf of the nonresident partner/owner/shareholder/.

If such an entity wants to make an estimated payment for 2018 – and make it before the end of 2017, the entity should file the 2018 version of Form RI-1040C-ES, “Composite Income Tax Estimated Payment.” The 2018 version is available at: http://www.tax.ri.gov/taxforms/passthrough_composite.php.

Send the completed 2018 coupon, along with a check or money order, to:

Rhode Island Division of Taxation
One Capitol Hill
Providence, R.I. 02908

Neil Downing
Chief Revenue Agent
(401) 574-8115  I  Neil.Downing@tax.ri.gov

If you owe taxes, take advantage of the RI State Tax Amnesty Program from December 1, 2017, through February 15, 2018. Learn More

Rhode Island Department of Revenue
Division of Taxation
One Capitol Hill
Providence, Rhode Island 02908

Making 2018 Estimated Payments for Individual Taxpayers on MassTaxConnect

MassTaxConnect (MTC) can now accept estimated payments from individual taxpayers for 2018. The payments can only be made from the MTC login page; it is not an option if logged in to MTC. The system defaults to a 2017 payment but provides a checkbox to choose a 2018 payment instead. If making both 2017 and 2018 payments, the process would be repeated.  Click on “Make a payment” under Quick Links to get started. Please note that our systems have not been updated to process paper checks for 2018.  All 2018 payments should be made through MassTaxConnect. 

Partnership Loss Disallowed – Couldn’t Prove Basis

Mr. William Namen was a podiatrist in private practice.  He was one of six owners of RMSC, LLC

which was a surgery center that closed in 2009.  The Schedule K-1 from RMSC, LLC for the year 2009 showed a loss of $47,551 passed through to Mr. Namen.

In order to claim this loss, the partner (Mr. Namen) must be able to show his basis in the partnership.  Loss are deductible only to the extent of a taxpayer’s basis in the partnership.  The case summary states Mr. Namen “attempted to establish his basis in his interest in RMSC by testifying regarding his alleged contributions to RMSC.”  He did not provide any evidence to help show this nor any evidence to show any prior adjustments that should have taken place over the years of his ownership.

Tax Court stated Mr. Namen’s testimony was not supported by any evidence and the testimony by itself was insufficient to show basis, therefore the partnership loss was disallowed.

Side issue – The tax return in this case was one prepared by IRS as a substitute for return (SFR) based on information IRS received from third parties.  Mr. Namen argued he had filed his 2009 return shortly after November 8, 2010.  His accountant also testified that the return was filed shortly after November 8, 2010.  However, their testimonies had conflicting information.  The accountant stated he had prepared the return, delivered it to Mr. Namen for him and his wife to sign and file.  Mr. Namen testified that he and his wife signed the return and gave it back to the accountant to file.  Tax Court felt this conflicting testimony was unreliable and not credible.  As such, Tax Court determined Mr. Neman did not file a 2009 return.

Mr. Namen also argued he should not be liable for the entire late filing penalty because a second copy of his return was filed in May 2011.  Tax Court did not reduce the penalty since the penalty for late filing is 5% per month, up to a maximum of 25%.  Since a return filed in either November 2010 or May 2011 is still more than five months late, the failure to file penalty would still be the maximum of 25%.

William Namen, TC Memo 2017-24.  This case can be found by going to www.ustaxcourt.gov, clicking on Opinion Search, and entering Namen in the “Case Name Keyword” box.


This text has been shared with you courtesy of:  David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (920-496-9111).

This Charitable Contribution Deduction Was a Bit Too Much For the IRS to Allow

In March 2002, a partnership paid $2.95 million for a remainder interest in real property.  In August
2003, the partnership assigned (gifted) the remainder interest to a university (charitable contribution).  The assigned value of this transfer, i.e. the charitable contribution deduction, was slightly in excess of $33 million.  Quite a jump in value in an ownership period of approx. 17 months!  Naturally, the IRS was more than a bit curious. 
See RERI Holdings I, LLC, et. al. v. Comm., 149 T.C. 1 (7/3/17).

William Delaney, EA
Westwood, MA

Now to Form 8283, the back-up for non-cash contributions.  The date and manner of acquisition (by purchase) of the donated property was disclosed, but the space for the donor’s cost was left blank.  Gee, why would you omit that?  Perhaps because of the tenfold difference between cost and claimed fair market value (just a guess on the part of your Editor; the case is silent).  And, what happens if you omit this kind of information?  Well, as it turns out, the Courts have looked at the regulations covering substantiation of charitable contributions and determined that the requirements are directory and not mandatory.  See Reg. 1.170A-13(c)(1)(i).  OK, so the taxpayer is off the hook if he has substantially complied (a “little” omission isn’t fatal)?

Well, as it happens, one of the substantiation requirements in the regulations is that the cost basis must be disclosed.  Reg. 1.170A-13(c)(4)(ii)(E).  So, there it is and the Court opined that “…disclosure of its cost or other basis in the contributed property would have alerted R (the IRS) to a potential overvaluation of that property, omission of that information prevented the Form 8283 from achieving its intended purpose [emphasis added], the omission thus cannot be excused on the grounds of substantial compliance.”

As a result, the entire charitable deduction amount was denied (we all know that this is a simple pass or fail test).  But, that was not all…read on.

The Court determined that the fair market value of the transferred interest was $3,463,886.  That triggered the substantial valuation misstatement (if the claimed value is greater than 150% of the actual value) of Sec. 6662(e)(1)(A) and the 40% of assessed tax penalty of Sec. 6662(h)(2).  And, of course, this dumped the taxpayer into the definition of negligence and intentional disregard – see Sec. 6662(c).

The case covers 41 pages of mostly technical reading about how appraisals are determined and how different appraisers arrive at differing results.  The take on this case is quite simple.  If you intent to selectively omit information from an income tax return, be certain that you know what you are doing.  This “little” omission opened the floodgates for significant tax penalties and, essentially, knocked the taxpayer out of the box regarding an appeal of the IRS determination, since the tax return filing was not substantially complete.  The only reason that the Court computed the fair market value of the gift was to see how many penalty provisions would apply and to calculate the amount(s) of the penalties.  The taxpayer’s deduction was NOT reduced to the Court’s determination of fair market value; the taxpayer’s deduction was reduced to zero.

Don't Forget About Rhode Island Tax Amnesty

It's Not Your Refund if You Owe Tax For Another Year, That Money Belongs to the IRS

Robert Williams self-filed a 1040EZ for 2013 on which he claimed an overpayment of $711.  He was disappointed, however, since the refund never arrived.  It was credited against a balance due for 2011 [IRC Sec. 6402(a)].

William Delaney, EA
Westwood, MA

Now comes an audit of 2013 and the IRS discovers that Mr. Williams had omitted both wage income and self-employment income (but if he had reported all of that stuff he couldn’t have used the simple 1040EZ form).  As a result, there was a balance due for 2013, with which the taxpayer did not agree. Mr. Williams wanted that original $711 refund to be applied to his adjusted 2013 balance and he petitioned the Tax Court to force the IRS to do just that.  See Robert Williams v. Comm., T.C. Memo 2017-182 (9/18/17).

First, the Court determined that the IRS had the authority to take the original $711 refund and apply it to another year’s unpaid tax under Sec. 6402(a).  Furthermore, the Court noted that “On account of section 6512(b)(4), we lack jurisdiction to review respondent’s action.”

Sec. 6512(b)(4) reads:  The Tax Court shall have no jurisdiction under this subsection to restrain or review any credit or reduction made by the Secretary under section 6402. 

I guess that Mr. Williams should not have represented himself in Tax Court, pro se.

Of course, with only this single issue at stake, who could afford legal advice?  And, one must wonder, if the credit were shifted back from 2011 to 2013, that would increase the balance due for 2011.  Did Mr. Williams think that they would not try to collect it?

Taxpayer Cannot Exclude Emotional Distress Settlement from Taxable Income

William Delaney, EA
Westwood, MA

Edward Collins worked for a utility company located in New Jersey, where he “was subjected to a racially hostile work environment.”  Eventually, Collins “left work on disability leave” (depression, general anxiety disorder, hypertension, blood clots, and muscle spasms).

In a subsequent lawsuit he alleged that he had “suffered severe emotional distress and anxiety, with physical manifestations, including high blood pressure.”  Collins did not demand compensation for any physical injury or sickness.

The suit was settled and payments were described as follows:

1.  $90,000 payable to the attorneys (why does that always appear first?).
2.  $15,000 for unreimbursed medical expense.
3.  $85,000 for emotional distress.
4.  $85,000 for compensation, less withholding taxes.

On line 21 of Mr. Collin’s federal 1040 for the year he reported line 3 (emotional distress) as “other income.”

On line 36, Mr. Collins deducted the same $85,000 as reported on line 21, apparently without specifying a reason.  The IRS challenged the deduction and the matter landed in Tax Court.

Why the deduction?  In Court, Mr. Collins argued that the $85,000 payment was mischaracterized in the settlement with his former employer when “more accurately, it should have been shown as for physical injury and physical sickness…”  That would make it non-taxable, reasoned Collins.  The IRS argued that the agreement “clearly states that the disputed $85,000 was paid for emotional distress, and, even if the Settlement Term Sheet were silent, it would be clear that the payment was not for physical injuries.

The Court concluded that “An express allocation in the settlement agreement is generally binding for tax purposes providing the agreement was entered into by adversarial parties acting at arm’s length and in good faith.”  Bagley v. Comm., 105 T.C. 396, 406 (1995).  “The intent of the payer, and not the recipient, is critical in determining the validity of an express allocation in a settlement agreement.”  Guitierrez v. Comm., T.C. Memo 2011-263 (2011).

Finally, the Court looked at Lindsey v. Comm., T.C. Memo 2004-113 (2004) to see if Mr. Collins’ ailments would meet the statutory definition of an excludible illness or Injury.  In Lindsey the Court said “we classify hypertension as the type of injury or sickness that Congress intended to be encompassed within the definition of emotional distress” (Lindsey at 688).  Thus, the Court concluded that Mr. Collin’s $85,000 payment related to emotional distress and not to physical sickness.

The Court also noted that line 36 of form 1040 (where the deduction was taken) was “a computational line, not calling for the inclusion or deduction of any amount.”  While that is generally true, there have been occasional exceptions where the IRS has authorized taxpayers to make an entry which would only appear on that line (with a memo notation to the left). 

The lessons to be learned?  If it is supposed to be non-taxable, get the proper language into the agreement.  Don’t try to fix it on your income tax return.  Doesn’t work that way!
And, if you have a deduction against line 21 income, take the deduction on line 21.  Don’t try to take it elsewhere as this is a big red flag for an audit.  See Edward Collins v. Comm., T.C. Summary Opinion 2017-74 (9/11/17).

2018 MA / RI NATP Annual State Update Seminar

Massachusetts / Rhode Island NATP Chapter Annual State Update Seminar - January 4th 2018

Join the Massachusetts / Rhode Island NATP Chapter on Thursday, January 4th, 2018 for our Annual State Update Seminar. This all day event will be held at a NEW LOCATION for our chapter at the Southbridge Hotel & Conference Center, Southbridge MA. Registration details are below, and are handled online directly by National NATP. A link to the registration website is listed below. Please take a look at the details on our speakers and topics provided in this great update opportunity including continental breakfast, snacks, lunch, vendors and great networking opportunities PLUS even 2 CE Credit Hours. Registration is from 7:30am to 8:30am & Education is from 8:30am to 4:30pm.

• Register online with credit card.
• For more information or to register by phone, fax or mail, use this form.
• After January 3, please register at the door with the form above.

Topics:

Connecticut State Tax update presented by Kristin A. Roberts, MBA, EA, ABD.


Roberts holds the position of Post University’s Assistant Program Manager of Accounting. Her previous position at Post University was as an Associate Faculty in Accounting. Her course specialties at the university level include Financial Accounting, Individual Taxation, and Corporate Taxation. Roberts is actively involved in her local community, volunteering on a variety of councils for the historic district of Torrington.  She is also the Treasurer of the NW CT Chamber Education Foundation, and also serves as the Education Committee Chairperson for the CT Chapter of the National Association of Tax Professionals.  She is also a current member of the CT Department of Revenue External Editorial Board. Roberts is married with grown children.  She enjoys horror movies and classic rock music. When not working, her favorite pastime is spending time with her sons or listening to her husband singing and playing his guitar.

Massachusetts State Tax Update presented by Massachusetts Department of Revenue.

Rhode Island State Tax Update presented by Rhode Island Division of Taxation.

New York State Tax Update presented by Kathryn Keane of New York NATP Chapter.

Federal Tax Update presented by Kathryn Keane of New York NATP Chapter. (2 Hours of CE Credits)

Featured Speaker - Kathryn M. Keane, EA.

Kathryn is a principal of Macanta, a small tax and related services practice located in Brooklyn, NY, serving over 850 individual clients and 50 businesses. In December 2006, Kathryn completed two three-year terms on the National Board of Directors of NATP and was twice awarded Chapter Person of the Year for 2002 and 2008 for her volunteer service to the community at large as well as to NATP. In addition to serving as an Education Committee member for NY NATP, she currently serves as Chair of the IRS Tri-Boro Practitioner Liaison Committee. Kathryn is a frequent speaker for NATP Chapters. She has also presented for VASEA, NCCPAC (Nassau-Suffolk County Chapter) and local chapters of NYSSCPA. Kathryn has a B.S. degree from Brooklyn College.

Rhode Island Division of Taxation Tax Amnesty Program Starts Today!

PROVIDENCE, R.I. – The Rhode Island Division of Taxation today officially opened the state’s tax amnesty program at  www.TaxAmnesty.ri.gov.

WEBSITE

On the Division’s amnesty website, www.TaxAmnesty.ri.gov, taxpayers and tax professionals will be able to find the “Tax Amnesty Return” (the amnesty application form), along with answers to frequently asked questions (FAQs), amnesty posters, and other information.

MAILING

The Division of Taxation has begun the process of mailing more than 60,000 information packets to
taxpayers who, according to Division records, have an outstanding balance. Each packet will include a “Statement of Accounts” (an account statement, a bill), an “Amnesty Bill Coupon” (a payment coupon, attached to the Statement of Accounts), a blank “Tax Amnesty Return” (the amnesty application form), and a one-page summary of the amnesty in question-and-answer format.

CALL CENTER

Those with questions may call the Division’s amnesty phone bank (a call center), at (401) 574-8650, which is staffed from 8:30 a.m. to 3:30 p.m. business days. Or email: Tax.Amnesty@tax.ri.gov.

About amnesty: Tax amnesty is a unique opportunity for you to get a fresh start. Pay what you owe in
delinquent Rhode Island state taxes – no matter the type of tax. In exchange, the Division will waive
penalties and reduce, by 25 percent, the amount of interest normally charged. Any person, corporation, or other entity that is subject to Rhode Island tax is eligible for amnesty – no matter
where that person, corporation, or other entity is located. All Rhode Island state taxes are eligible –
including personal income tax, corporate income tax, sales tax, use tax, estate tax, unemployment
insurance tax, withholding tax, and other Rhode Island state taxes.

The amnesty applies to taxes due for any taxable period ended on or before December 31, 2016. The
Division begins accepting amnesty payments, amnesty tax returns, and related paperwork on December 1, 2017. Amnesty runs through February 15, 2018.