These rules and regulations implement R.I. Gen. Laws §§ 44-30-55 and 44-30-56. Those sections outline declarations and payments of estimated tax.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44-30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws §§ 44-30-55, 44-30-56, and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

Resident and nonresident individuals, estates and trusts are required to make declarations of estimated personal income taxes and pay the proper amounts due for each taxable year if the tax can reasonably be expected to be $250 or more in excess of any credits allowable against the tax. This is true whether or not the person or estate or trust is required to file a Federal declaration and/or to make any Federal estimated payments. B. Estimated payments for individuals may be made jointly or separately (singularly) but should be made in the same filing status as the return to which they will be applied. If a joint filing is to be made, payment should be made using the Social Security Number which appears first on the tax return. C. If individual taxpayers make joint estimated payments, and/or if they have a credit from a year for which a joint filing was made, and the individual taxpayers elect to file using the married, filing separately status, the two parties must decide on how the estimates and credits are to be divided between them. 1. The taxpayers should notify the Division of Taxation of the method to be used to divide the estimated payments or credit on both tax returns filed. If the individuals do not so notify the Division, the first party to file and claim credit for the overpayment and/or estimated payments may be given the credit and estimated payments.

Waiver A. Exceptions 1. In general, the Federal exceptions under which taxpayers will not be charged for underpayment of estimated tax may be followed in relation to the underpayment of estimated Rhode Island personal income tax. 2. Taxpayers should follow the instructions to complete and submit a RI-2210 form, if necessary, and should attach it to their Rhode Island personal income tax return to make it an integral part of the filing. If a taxpayer has received a billing for the underpayment of estimated taxes, a completed RI-2210 form should be attached to the remittance portion of the billing and sent to the Division of Taxation with any required payment. 280-RICR-20-55-1 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 1 - ESTIMATED PAYMENTS (280-RICR-20-55-1) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:35:55 EST

These rules and regulations implement R.I. Gen. Laws § 44-30-57 regarding the Tax Administrator’s right to grant a reasonable extension of time to file a personal income tax return.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-57, 44-30-95(a), and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-30-57 and other applicable state laws and regulations including, but not limited to, R.I. Gen. Laws §§ 44-30-55, 44-30-56, 44-30-84, and 44-30-85.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

“Proper estimate” means a Rhode Island extension form filed by the regular due date which declares at least eighty percent (80%) of the tax due for the taxable year. B. “Reasonable cause” means a taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time. C. “Regular due date” means the fifteenth day of the fourth month following the close of a taxable year (for calendar year filers this would be April 15th). D. “Rhode Island extension,” for purposes of this regulation, means Form RI-4868 or Form RI-8736, whichever is applicable. E. “Willful neglect” means a conscious, intentional failure or reckless indifference or failure to exercise ordinary business care and prudence.

An individual, partnership or fiduciary required to file a Rhode Island income tax return may be granted an extension of time to file any return, declaration, statement, or other required document for Rhode Island income tax purposes. Pursuant to R.I. Gen. Laws § 44-30-57, as amended, no extension for filing shall exceed six (6) months, except for taxpayers outside of the United States. B. If a taxpayer (individual, fiduciary or partnership) meets all the following tests, the Rhode Island extension form RI-4868 (individual income tax returns) or RI-8736 (fiduciary income tax returns) need not be filed: 1. The taxpayer is not required to make payment with Rhode Island extension form; and 2. The taxpayer files a proper Federal extension form; and 3. The taxpayer's request for extension covers the same time period for both Rhode Island and Federal purposes. C. If the taxpayer meets the criteria above, the taxpayer must attach a copy of either the Federal form 4868 or the Federal form 7004 to the Rhode Island return when it is filed. D. If a taxpayer does not meet the test in § 2.6(B) of this Part and is required to file a Rhode Island request for extension, the taxpayer shall: 1. Prepare the Rhode Island extension form (either RI-4868 or RI-8736); and 2. Show the full amount properly estimated as Rhode Island tax for that tax year; a. Example: A taxpayer files an extension form on April 15th reporting a tax liability of $15,000 and prepayment of employer withholding tax in the amount of $12,000 and a payment with the extension of $3,000. The taxpayer files a return on the extended due date reporting a tax in the amount of $20,000. Since the amount reported on the application for extension of time to file was less than 80% of the total liability, there is no presumption of a proper estimate. The extension will be void and the addition to the tax (penalty) will be assessed unless the taxpayer can demonstrate reasonable cause. 3. File the extension form with the Rhode Island Division of Taxation on or before the due date for filing Rhode Island income tax returns; and 4. Pay the amount of Rhode Island tax due as calculated on the RI-4868 or RI-8736 form. 5. Be sure to attach a copy of the RI-4868 or RI-8736 to the Rhode Island return when it is filed.

Taxpayers outside the United States on the due date for filing will be accorded special status for extension of time for filing their Rhode Island personal income tax returns only if they have applied for and been granted the special federal extension; and further, only if the taxpayer complies with other state and federal requirements for extension. B. Taxpayers claiming the special federal extension for being outside the United States on the due date must attach all state and federal extension documents in support of their claim. C. Extensions for members of the armed services and other individuals serving in a combat zone will be allowed in accordance with the federal provisions.

The filing or granting of an extension of time to file does not extend the time for payment of tax due on the return. B. Pursuant to R.I. Gen. Laws § 44-30-84, if you do not pay the amount due by the regular due date, you will owe interest on the amount of tax due. 1. In accordance with R.I. Gen. Laws § 44-1-7, as amended, interest is assessed at 18% per annum and accrues until the date you pay the tax. Interest may not be abated. C. Pursuant to R.I. Gen. Laws § 44-30-85, you may also be assessed a late filing addition to the tax (penalty) and/or a late payment addition to the tax (penalty). 1. The late filing addition to the tax is generally 5% (.05) of the amount of tax due for each month or part of a month your return is late. 2. The late payment addition to the tax is generally ½ of 1% (.005) of the amount of tax due for each month or part of the month your payment is late.

Showing of Reasonable Cause 1. Pursuant to R.I. Gen. Laws § 44-30-85, a taxpayer who wishes to avoid the addition to the tax for failure to file a tax return or pay tax must make an affirmative showing of all facts alleged as reasonable cause for his failure to file such return or pay such tax on time in the form of a written statement containing a declaration that is made under the penalties of perjury. This statement should be filed with the tax administrator. 2. If the tax administrator determines that the delinquency was due to reasonable cause and not willful neglect, the addition to the tax will not be assessed. B. Reasonable cause will be presumed for the period of the extension of time to file with respect to any underpayment of tax if: 1. The amount of tax shown on the individual income tax return minus the amount of tax paid on or before the regular due date of the return (by virtue of the tax withheld by the employer, estimated tax payments, and any payment with an application for extension of time to file pursuant to R.I. Gen. Laws § 44-30-57) is less than or equal to twenty percent (20%) of the amount of tax shown on the individual income tax return; and 2. Any balance due shown on the individual income tax return is remitted with the return. 280-RICR-20-55-2 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 2 - EXTENSION OF TIME TO FILE (280-RICR-20-55-2) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:36:20 EST

These rules and regulations implement R.I. Gen. Laws § 44-30-18, as amended. That section outlines credits for income taxes of other states.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws § 44-1-4. The rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-30-18, as amended, and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

General 1. Credit and Limitation a. Rhode Island personal income tax law, in R.I. Gen. Laws § 44-30-18, generally provides that a resident will be allowed a credit against his/her Rhode Island personal income tax due for the taxable year for the aggregate of the net income taxes imposed on him/her for the taxable year by other states (including the District of Columbia) of the United States. In other words, any resident of Rhode Island required to report and pay personal income taxes to another state(s) would be allowed a credit on his/her Rhode Island personal income tax return. b. This credit cannot exceed the proportion of the taxpayer's Rhode Island personal income tax that the taxpayer's Rhode Island income derived from the other taxing states bears to his or her entire Rhode Island income for the same taxable year. 2. Terminology a. R.I. Gen. Laws § 44-30-6, as amended, generally provides that any term used in Rhode Island personal income tax law shall have the same meaning as when used in a comparable context in the laws of the United States relating to Federal income taxes, unless a different meaning is clearly required. B. Out of State Adjusted Gross Income 1. General a. Regardless of terminology used by the statutes of the other taxing state(s), the adjusted gross income for another state to be used in the calculation of the credit is determined in the same manner as adjusted gross income used on the taxpayer's Federal income tax return and includes computation of gross income less any adjustments that would be comparable to Federal adjustments available to the taxpayer for the same tax year. 2. Gross Income a. Out-of-state gross income is determined in the same manner as that which would be used for Federal purposes and generally include the net amounts of income that appear on the face of the other state's return or what would be comparable to the face of the Federal Income Tax Return. b. When income is first reported on a supporting schedule and a lesser or different amount is carried forward to the face of the return, the amount on the face (or comparable to the face) of the return is what is used to arrive at the adjusted gross income. C. Rhode Island Adjusted Gross Income 1. General Definition a. The Rhode Island income of a resident individual is his/her adjusted gross income for Federal income tax purposes for the tax year plus or minus any allowable modifications. 2. Zero or Negative Amounts a. A Rhode Island resident who has a zero or negative Federal adjusted gross income, after any allowable modifications, and a positive Federal income tax liability (such as would result from an alternative minimum tax) and is required to report and pay a personal income tax to another state would not be entitled to any Rhode Island out-of-state tax credit since the proper computation of the credit would result in zero or a number less than zero. D. Calculation of Out-of-State Tax Credit with More Than One State 1. General a. A taxpayer who has properly allowable credits for personal income taxes paid by him or her to more than one state shall calculate each out-of-state credit separately (including the limitations provided by law) and then total the credits. This total is then applied as credit for out-of-state taxes paid. b. Taxpayers calculating the out-of-state credit for personal income taxes for more than one state should do so using form RI 1040MU and must attach a signed copy of each out- of-state tax return for which credit is claimed. 2. Computation a. As an example of the computation of out-of-state credit for personal income taxes properly paid to more than one state, the following facts are assumed: (1) The taxpayer: (AA) is a full-year resident of Rhode Island (BB) has federal adjusted gross income of $34,469 (CC) has no modifications either increasing or decreasing federal adjusted gross income for Rhode Island purposes; and (DD) has Rhode Island personal income tax of $626. (2) Additionally, the taxpayer has adjusted gross income from State A of $15,983 on which personal income taxes of $653 were paid; and (3) Adjusted gross income from State B of $12,919 on which personal income taxes of $99 were paid. (4) Calculation of out-of-state credit for State A: Federal AGI (RIAGI) $34,469. RI Tax $626. State 'A' AGI $15,983. Percentage: State 'A' AGI/Federal AGI 0.4637 Limitation: Percentage x RI Tax 0.4637 X $626 = $291 Personal Income Tax - State 'A' $653. Out-of-State Credit - State 'A' Smallest of RI tax, limitation, or tax paid to State A $291. (5) Calculation of out-of-state credit for State B: Federal AGI (RIAGI) $34,469. RI Tax $626. State 'B' AGI $12,919. Percentage: State 'B' AGI/Federal AGI 0.3748 Limitation: Percentage x RI Tax 0.3748 X $626. = $235. Personal Income Tax - State 'B' $99. Out-of-State Credit - State 'B' Smallest of RI tax, limitation, or tax paid to State B $99. (6) In the example cited above, the out-of-state credit to be applied is $390 ($291 from State A and $99 from State B). E. Partial Year Resident with a Rhode Island Out-of-State Tax Credit 1. General a. Those taxpayers who are filing as a partial year resident and have to report and pay taxes to another state for the period of time they were (or are) residents of Rhode Island are entitled to the out-of-state tax credit. 2. Computation a. In order to compute the out-of-state credit in this case, refer to the instructions for the RI-1040NR form. F. The Tax Due and Payable from the Other State 1. The net amount of taxes as shown on the other state's return shall be comparable to the net tax after credits as shown on the Rhode Island return and/or on the Federal return. G. Recomputation of an Out-of-State Tax Credit 1. The Rhode Island taxpayer should file an amended Rhode Island return claiming an increase or decrease in the out-of-state tax credit regardless of any other applicable Rhode Island statute of limitations which would appear to limit or prevent filing of the amended Rhode Island return: a. When the other taxing state audits, corrects or changes the personal income tax return filed with that state; or b. When the other taxing state changes or corrects the tax due and payable on that state's tax return; or c. When the other taxing state notifies the Rhode Island taxpayer of a personal income tax due and payable to that state where no return had been previously filed.

General 1. A Rhode Island resident may be allowed a credit for taxes due and paid to another state. Taxpayers claiming this credit must file the RI-1040 Rhode Island resident return. B. Double Resident 1. A person may be considered a resident of this state for tax purposes even though maintaining a domicile in another state. 2. A person acquires "double residence" status when he/she is not domiciled in Rhode Island and is living in a home they maintain in this state for more than 183 days of the tax year and, therefore, meets the residency requirements of this state. 3. Rules for days within and without Rhode Island: a. In counting the number of days spent within and without Rhode Island, a day spent within Rhode Island includes any part of a day, except for a part of a day during which an individual is present solely while in transit to a destination outside Rhode Island. b. An individual claiming to be a nonresident who is not domiciled in Rhode Island but who has a permanent place of abode in this state shall have records available for examination by the Division of Taxation to substantiate the fact that such individual spent 183 days or less within Rhode Island. C. Out-of-State Tax Credit for "Double Resident" 1. A taxpayer who meets the qualifications above and is therefore a "double resident" for both Rhode Island and another state should complete computations of both states' tax liabilities (before credits) and then follow these steps to determine the out-of-state credit to be used on the Rhode Island return: a. Add together the Rhode Island tax liability (before withholding and credits) and the other state tax liability (before withholding and credits). b. Divide the Rhode Island tax liability by the total tax liability from § 3.6(C)(1)(a) of this Part above. c. Multiply the percentage from § 3.6(C)(1)(b) of this Part by the lower state's tax. The resulting amount is the limitation of the out-of-state credit. d. The actual amount of out-of-state tax credit will then be the smaller of the tax liability of the other state or the amount of credit for taxes due and paid to the other state as calculated in § 3.6(C)(1)(c) of this Part above. 2. This special treatment and calculation of out-of-state tax credit for "double residents" is only allowed if the other state also allows a similar reduction in its tax for "double residents." 3. Example: a. A person is domiciled outside Rhode Island but is living in a home maintained by him in Rhode Island for more than 183 days of the tax year and, therefore, is considered a resident for the personal income tax purposes of this state. The Rhode Island tax liability before any withholding or credits is $800 and his tax liability to State X before withholding or credits is $500. Computation of the credit to be allowed on the Rhode Island filing for out-of-state taxes due and paid is as follows: Rhode Island Tax Liability State X Tax Liability $800.00 Total Tax Liability $500.00 Rhode Island Tax Liability $1,300.00 Total Tax Liability $ 800.00 $1,300.00 = 61.5% 61.5% x $500 (the lower tax amount)= $307.50 This is the limitation on out-of-state credit. The out-of-state credit = the smaller of $307.50 (calculated above) or $500 (the tax liability to State X). In this case the actual out-of-state credit to be used by the taxpayer is $307.50. 280-RICR-20-55-3 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 3 - CREDIT FOR INCOME TAXES OF OTHER STATES (280-RICR-20-55-3) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:36:57 EST

These rules and regulations implement R.I. Gen. Laws § 44-68-1 et seq. That chapter outlines civil and criminal penalties which may be imposed on a paid tax preparer who fails to comply with due diligence requirements.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 11- 18-1, 44-1-4 and 44-68-6. The rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-68-1 et seq. and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected thereby.

“Adjusted gross income” or “AGI” means gross income minus adjustments to income as defined in 26 U.S.C. § 62; B. “Administrator” or “Tax administrator” means the tax administrator of the State of Rhode Island, and head of the Rhode Island Division of Taxation; C. “Claimant” means a homeowner or renter, sixty-five (65) years of age or older and/or disabled, who has filed a claim under R.I. Gen. Laws Chapter 44-33 and was domiciled in Rhode Island for the entire calendar year for which he or she files a claim for relief under R.I. Gen. Laws Chapter 44-33. In the case of a claim for rent constituting property taxes accrued, the claimant shall have rented property during the preceding year for which he or she files for relief under R.I. Gen. Laws Chapter 44-33. Claimant shall not mean or include any person claimed as a dependent by any taxpayer under 26 U.S.C. § 1 et seq. When two (2) individuals of a household are able to meet the qualifications for a claimant, they may determine between themselves as to who the claimant is. If they are unable to agree, the matter is referred to the tax administrator and his or her determination is final. If a homestead is occupied by two (2) or more individuals, and more than one individual is able to qualify as a claimant and some or all of the qualified individuals are not related, the individuals may determine among themselves as to who the claimant is. If they are unable to agree, the matter is referred to the tax administrator, and his or her decision is final. D. “Dependent” means any person living in the household who is either a qualifying child or a qualifying relative pursuant to the Internal Revenue Code, 26 U.S.C. § 152(a); E. “Disabled” means those persons who are receiving a social security disability benefit; F. “Division” means the Rhode Island Division of Taxation; G. “Due diligence” means the measure of prudence and care that a reasonable person exercises in the preparation of tax returns that are to be filed with the Division; H. “Dwelling unit” means a single unit providing complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation; I. “Earned income” means any and all income qualifying as earned income under 26 U.S.C. § 32; this includes, but is not limited to, wages, salaries, tips, and other taxable employee pay, net earnings from self-employment, and gross income received as a statutory employee; J. “Earned income credit” or “EIC” means the federal and state tax credit under 26 U.S.C. § 32 for certain people who work and have earned income under certain threshold amounts; K. “Homestead” means your Rhode Island dwelling, whether owned or rented, and so much of the land around it as is reasonably necessary for the use of the dwelling as a home, but not exceeding one acre. It may consist of a part of a multi-dwelling or a multi-purpose building. It may be an apartment, a houseboat, a mobile home, or a farm; L. “Household” means one or more persons occupying a dwelling unit and living as a single nonprofit housekeeping unit. Household does not mean bona fide lessees, tenants, or roomers and boarders on contract; M. “Household income” means all income, both taxable and nontaxable, received by all persons of a household in a calendar year while members of the household; N. “Preparer tax identification number” or “PTIN” means the number issued by the Internal Revenue Service (IRS) to paid preparers to use on all the returns they prepare; O. “Public assistance” means cash assistance from government assistance programs informally known as welfare assistance, and more commonly known as “temporary assistance for needy families” (TANF); P. “Return” means any tax report, return, claim for refund, or attachment to any report, return, and/or claim for refund filed with the Tax Administrator pursuant to the Rhode Island tax laws; Q. “Tax return preparer” means an individual who prepares a substantial portion of any Return for compensation. This includes preparers who sign the Return, preparers who prepare the EIC or Property Tax Relief Credit portions of the Return but do not sign the Return, or the employers of these preparers. Tax Return Preparers include individuals required to register with the Internal Revenue Service as a tax return preparer and who have a Preparer Tax Identification Number (PTIN). The following are NOT considered Tax Return Preparers: 1. Volunteer tax return preparers; or 2. Employees of a tax return preparer or employees of a commercial tax return preparation business who provide only clerical, administrative, or other similar services.

Any resident or non-resident with Earned Income from Rhode Island who claims the Federal Earned Income Credit is eligible for Rhode Island’s EIC. B. The Rhode Island EIC is determined in accordance with R.I. Gen. Laws § 44-30- 2.6(c)(2)(N) and by using the RI Schedule EIC on the RI–1040 or RI–1040NR.

It is the responsibility of the Tax Return Preparer to be knowledgeable about the law with regard to EIC, make reasonable inquiries of the taxpayer, and review supporting documentation provided by the taxpayer to validate the assertions made in preparing a Return that claims EIC. B. The purposes for a Tax Return Preparer to question the taxpayer regarding EIC Due Diligence are: 1. To reasonably conclude that the taxpayer is reporting the proper amount of income that contributes to their total Earned Income and AGI; 2. To reasonably conclude that no other person is eligible to claim EIC or any other child-related benefits for the dependent(s) being claimed; and 3. To reasonably conclude that the dependent(s) being claimed is actually a qualifying dependent(s) for EIC purposes. C. Due Diligence for a Tax Return Preparer includes, but is not limited to: 1. Have reasonable knowledge or verification of the identity of the taxpayer presenting the information (such as requesting a photo ID and social security card); 2. Applying a prudent man standard to the information provided by the taxpayer; 3. Evaluating whether that information is complete and gathering any missing facts; 4. Determining if the information is consistent and recognizing contradictory statements; 5. Conducting a thorough, in-depth interview with each taxpayer each year that the taxpayer claims the EIC; 6. Asking enough questions to reasonably know the taxpayer’s eligibility for EIC and the amount of credit is correct and complete; and 7. Documenting in the file any questions asked and the taxpayer’s responses. D. To meet the federal and Rhode Island Due Diligence requirements regarding the EIC, a Tax Return Preparer shall: 1. Complete the Paid Preparer’s Earned Income Credit Checklist (U.S. Form 8867 for the IRS). This form must be submitted to the IRS. The Division does not require the 8867 Form to be submitted along with every EIC claim; however, a Tax Return Preparer shall have a copy of this document in his or her records for every EIC claim; 2. Complete the EIC worksheet in the U.S. Form 1040 instructions, Publication 596, Earned Income Credit, for the IRS. A Tax Return Preparer shall have a copy of this document in his or her records for every EIC claim; 3. Keep copies of any and all documentation provided by the taxpayer that was relied upon by the Tax Return Preparer to complete U.S. Form 8867 or the EIC worksheet; 4. Keep a record of when and how (including from whom) the Tax Return Preparer received the information used to prepare the Return. This includes documentation of what questions were asked by the Tax Return Preparer and the taxpayer’s responses; a. If a reasonable and well informed Tax Return Preparer would conclude that any information used to determine if the taxpayer is eligible for EIC is incorrect, inconsistent, or incomplete, the Tax Return Preparer shall ask the taxpayer additional questions, as well as maintain additional records consistent with these additional questions. b. These records may include, but are not limited to: (1) Verification of dependents such as copies of birth certificates, school records, medical records, court placement records, guardianship records, social security cards; (2) Verification of filing status such as marriage license, divorce settlement, bank statements, lease and/or mortgage agreement; (3) Verification as to whether or not the taxpayer was required to file a U.S. Form 8862 (Information to Claim Earned Income Credit After Disallowance) with the IRS; (4) For U.S. Schedule C Filers, verification of Earned Income such as a Form 1099 Misc., business license, client and/or customer lists, taxpayer prepared records or log book of income, bank statements, and any income documents other than W-2 forms; (5) Verification of deductions such as a mileage deduction log, business receipts, rent receipts, and client prepared records or log book of business expenses, and bank statements; and 5. Copies of documents or records required by this section to be kept on file by a Tax Return Preparer shall be produced within seventy two (72) hours upon request by the Division for said documents or records. However, additional time may be granted based on the Tax Return Preparer’s written request to the Tax Administrator.

Pursuant to R.I. Gen. Laws Chapter 44-33, Property Tax Relief Credit provides relief to Rhode Island taxpayers paying property tax who own or rent their homes. B. In order to qualify for Property Tax Relief Credit a Claimant shall meet all of the following conditions: 1. The Claimant shall be domiciled in Rhode Island for the entire calendar year; 2. The Claimant’s total Household Income shall have been $30,000 or less; 3. The Claimant’s Homestead shall be subject to property taxes; 4. The Claimant shall be current on all property tax or rent/lease payments due on the Homestead for all prior years and on any current installments; 5. The Claimant shall timely file Form RI–1040H by April 15 of the following year; and 6. Only one (1) property tax relief claim is allowed per household. C. Under R.I. Gen. Laws § 44-33-16, a claim for property tax relief shall exclude all taxes or rent paid with public assistance; D. The right to file a claim for Property Tax Relief does not survive a person’s death; therefore, a claim filed on behalf of a deceased person cannot be allowed. If the Claimant dies after having filed a timely claim, the amount thereof will be disbursed to another member of the Household as determined by the Tax Administrator.

It is the responsibility of the Tax Return Preparer to be knowledgeable about the law with regard to Property Tax Relief, make reasonable inquiries of the Claimant, and review supporting documentation provided by the Claimant to validate the assertions made in preparing a Return that claims Property Tax Relief Credit. B. The purposes for a Tax Return Preparer to question the Claimant for Property Tax Relief Due Diligence analysis are: 1. To reasonably conclude that the Claimant is reporting all income that contributes to their total Household Income; and 2. To reasonably conclude that only one Claimant per Household claims the Property Tax Relief Credit. C. Due Diligence for a Tax Return Preparer includes, but is not limited to: 1. Have reasonable knowledge or verification of the identity of the Claimant presenting the information (such as requesting a photo ID and social security card); 2. Applying a prudent man standard to the information provided by the Claimant; 3. Evaluating whether that information is complete and gathering any missing facts; 4. Determining if the information is consistent and recognizing contradictory statements; 5. Conducting a thorough, in-depth interview with each Claimant each year; 6. Asking enough questions to have reasonable knowledge the Property Tax Relief Claim is correct and complete; and 7. Documenting in the file any questions asked and the Claimant’s responses. D. To meet the Rhode Island Due Diligence requirements for Property Tax Relief Credit, a Tax Return Preparer shall: 1. Keep copies of any and all documentation provided by the Claimant that was relied upon by the Tax Return Preparer to complete the Return claiming Property Tax Relief Credit; 2. Keep a record of when and how (including from whom) the Tax Return Preparer received the information used to prepare the Return. This includes documentation of what questions were asked by the Tax Return Preparer and the Claimant’s responses. a. If a reasonable and well informed Tax Return Preparer would conclude that any information used to determine if the Claimant is eligible for Property Tax Relief Credit is incorrect, inconsistent, or incomplete, the Tax Return Preparer shall ask the Claimant additional questions as well as maintain additional records consistent with these additional questions. b. These records may include, but are not limited to: (1) Verification that Household Income is $30,000 or less such as bank statements, W-2 forms for any persons living in the Household, social security award letters, disability award letters, 1099-C Cancellation of Debt, unemployment benefits, worker’s compensation benefits, Public Assistance, child support received, cash assistance from friends/family, gambling winnings, non-taxable military compensation, gross amounts of pensions and annuities; and (2) Verification that Homestead is subject to property tax such as rent receipts, cancelled rent checks, proof of mortgage payments, proof of paid property tax bill, HUD Lease Form 50059 or lease agreement, and landlord’s name, address, and phone number; 3. Copies of documents or records required by this section to be kept on file by a Tax Return Preparer shall be produced within seventy two (72) hours upon request by the Division for said documents or records. However, additional time may be granted based on the Tax Return Preparer’s written request to the Tax Administrator.

Records kept under §§ 4.7 and 4.9 of this Part shall be kept for three (3) years from the later of: 1. The due date of the Return; 2. The date the Return was electronically filed; 3. For a paper Return, the date the Return was presented to the taxpayer for signature; or 4. If you are a non-signing Tax Return Preparer, the date you give the part for which you are responsible to the signing Tax Return Preparer. B. Records may be kept in either paper or electronic format, but shall be capable of being produced within seventy two (72) hours if requested by the Division. However, additional time may be granted based on the tax return preparer’s written request to the Tax Administrator. Every Tax Return Preparer shall keep a back-up of these records in a separate, secure location.

The Tax Administrator, and his or her agents, may conduct audit inspections to ensure compliance with all provisions of R.I. Gen. Laws Chapter 44-68. Audit inspections of Tax Return Preparers shall be conducted during normal business hours. B. Failure to allow such inspection(s) of records kept under §§ 4.7 and 4.9 of this Part may result in civil penalties and/or suspension or revocation of a Tax Return Preparer’s privilege to file Returns with the Division.

Failure to exercise Due Diligence Regarding Earned Income Credit - Upon a determination by the Tax Administrator that a Tax Return Preparer prepared a Return(s) and failed to comply with the Due Diligence requirements imposed by § 4.7 of this Part with respect to determining eligibility for, or the amount of, the EIC allowable by the State pursuant to R.I. Gen. Laws § 44-30-2.6(c)(2)(N), the Tax Return Preparer shall pay a penalty of five hundred dollars ($500) for each such return. B. Failure to exercise Due Diligence Regarding Property Tax Relief Credit – Upon a determination by the Tax Administrator that a Tax Return Preparer prepared a Return(s) and failed to comply with the due diligence requirements imposed by § 4.9 of this Part with respect to determining eligibility for, or the amount of, the Property Tax Relief Credit allowable by the State pursuant to R.I. Gen. Laws Chapter 44-33, the Tax Return Preparer shall pay a penalty of five hundred dollars ($500) for each such return. C. Willful Intent - Upon a determination by the Tax Administrator that a Tax Return Preparer willfully prepared, assisted in preparing, or caused the preparation of a Return(s) with intent to wrongfully obtain a Property Tax Relief credit, or with the intent to evade or reduce a tax obligation, the Tax Return Preparer shall be liable for a penalty of one thousand dollars ($1,000), or five hundred dollars ($500) for each return so filed during any calendar year, whichever is greater. D. Warning - The Tax Administrator, in his or her sole discretion, may provide a warning to any Tax Return Preparer who fails to exercise Due Diligence in preparing a return(s) that negligently claim(s) EIC or Property Tax Relief Credit or who intends to wrongfully evade or reduce a tax obligation. E. Suspension or Revocation - The Tax Administrator may suspend or revoke the privilege of a Tax Return Preparer to prepare and/or file Returns with the Division upon a determination that the Tax Return Preparer has failed to comply with or violated any provision of R.I. Gen. Laws Chapter 44-68, these regulations, or any provision of any other laws relative to the preparation of tax Returns. F. Criminal Offenses - If a Tax Return Preparer has been convicted of a crime involving identity theft, fraud, or tax evasion in any court of competent jurisdiction, the Tax Administrator may, in his or her sole discretion, suspend or revoke the privilege of the Tax Return Preparer to file tax returns with the Division without analyzing whether or not the Tax Return Preparer met the Due Diligence requirements.

Any Tax Return Preparer who has previously been assessed a penalty by the Tax Administrator under R.I. Gen. Laws § 44-68-4(c), who is found by a court of competent jurisdiction to have thereafter willfully prepared, assisted in preparing, or caused a preparation of a subsequent false tax Return or claim for refund which was filed with the Division with the intent to wrongfully obtain a Property Tax Relief credit or the intent to wrongfully evade or reduce a tax obligation shall be guilty of a felony and, upon conviction, shall be subject to a fine not exceeding fifty thousand dollars ($50,000), or imprisonment not exceeding five (5) years, or both.

Any Tax Return Preparer receiving notice of the Tax Administrator’s intent to impose civil and administrative penalties, including suspension or revocation of the privilege to file Returns with the Division may request an administrative hearing on the notice of intent to suspend or revoke. B. In order to request this hearing, the Tax Return Preparer shall notify the Tax Administrator in writing within thirty (30) days from the date of the notice to suspend or revoke. The Tax Administrator shall, as soon as is practicable, set a time and place for hearing, and shall render a final decision. The administrative hearing is the Tax Return Preparer’s opportunity to present evidence regarding Due Diligence including checklists and documentation provided by the taxpayer to the Tax Return Preparer as detailed in §§ 4.7 and 4.9 of this Part. C. Pursuant to R.I. Gen Laws § 8-8-24, appeals from a final decision of the Tax Administrator shall be to the Rhode Island Sixth (6th) Division District Court within thirty (30) of the final decision. 280-RICR-20-55-4 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 4 - TAX PREPARER PENALTIES (280-RICR-20-55-4) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:37:25 EST

These rules and regulations implement R.I. Gen. Laws §§ 44-30-5, 44-30- 31, 44-30-51, and 44-30-52. Those sections outline the filing status of nonresident spouses.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44-30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws §§ 44-30-5, 44-30-31, 44-30-51, and 44-30-52, and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

R.I. Gen. Laws § 44-30-5 defines a resident of this state as: 1. One who is domiciled in this state. 2. One who is not domiciled in this state but maintains a permanent place of abode in this state and spends more than 183 days of the taxable year in this state, unless he/she is in the armed forces of the United States. B. R.I. Gen. Laws § 44-30-51 requires a Rhode Island personal income tax return to be filed by or for: 1. Every resident individual required to file a Federal income tax return. 2. Every nonresident individual having Rhode Island source income. C. R.I. Gen. Laws § 44-30-31 requires that, in part: 1. If the Federal income tax liability of a husband and wife, both of whom are nonresidents, is determined on a joint Federal return, their Rhode Island tax shall be determined on a joint Rhode Island return. 2. If either husband or wife is a resident and the other is a nonresident, separate Rhode Island taxes shall be determined on their separate Rhode Island source income, unless both elect to determine their joint Rhode Island taxes on their joint income as if both were residents. a. If separate returns are filed, Rhode Island personal income tax shall be determined as if they had filed separate Federal income tax returns.

A person who is a nonresident of Rhode Island and is in the United States military service and is stationed in Rhode Island on military orders is required to file a Rhode Island nonresident personal income tax return (RI- 1040NR) if he/she has Rhode Island source income other than his/her military wages. B. Compensation paid to a nonresident service member of the United States uniformed services for active duty military service can be claimed as a modification to reduce federal adjusted gross income for tax years 2003 and thereafter.

His/her Spouse When a Joint Federal Income Tax Has Been Filed A. Both spouses may elect to file a resident Rhode Island personal income tax return as married filing jointly on their joint income. B. If one or both of the spouses must file and pay personal income taxes in another state, then a special computation has to be made for any allowable out-of-state tax credit on the Rhode Island return. C. If either spouse claims Rhode Island as his/her legal residence, then separate Rhode Island personal income tax returns have to be filed. 1. The spouse claiming Rhode Island residency is required to file a resident Rhode Island personal income tax return (RI-1040A or RI- 1040). 2. The spouse claiming nonresident status files a Rhode Island nonresident personal income tax return (RI-1040NR) if that person had any Rhode Island source income other than military wages. a. By using the Rhode Island nonresident allocation schedule of the RI-1040NR, the portion of the Federal income tax liability to be used for Rhode Island purposes will be computed. 3. When separate Rhode Island returns are filed, the Federal married filing separate status has to be used to compute the Federal income tax liability for Rhode Island purposes. a. The Federal married filing separately requirements have to be followed as they pertain to income reporting, itemized deductions, personal exemptions and dependents. 4. Nonresident service members filing to report income earned from a separate job in Rhode Island or the income of a spouse living in Rhode Island may subtract active duty military wages as a modification decreasing Federal adjusted gross income in determining the tax due to Rhode Island. a. Residents of Rhode Island serving in the United States military on active duty, regardless of where they are stationed, are not affected by the modification in § 5.7(C)(4) of this Part above. b. Example: A nonresident member of the United States armed forces who is stationed in Rhode Island earns $50,000 in active duty military wages. She also works part-time earning $20,000 in a field that is unrelated to her military duties. The nonresident would not be taxed on the $50,000 in military wages but would report the $20,000 on the allocation. She would take a decreasing modification of her military pay and would owe tax on the remainder of the unrelated part-time earnings after being reduced by the standard deduction and any personal exemption(s). 5. Income for services performed by the service member's spouse in Rhode Island would be exempt from Rhode Island income tax only if the service member's spouse moves to Rhode Island solely to be with the service member complying with military orders sending him/her to Rhode Island. The service member and the service member's spouse must also share the same non-Rhode Island domicile. a. Other income derived from Rhode Island sources such as business income, ownership or disposition of any interest in real or tangible personal property and gambling winnings are still subject to Rhode Island income tax.

Year Resident A. This section applies when one of the spouses is a partial-year Rhode Island resident, the other spouse is a full-year Rhode Island resident, and the couple files a joint Federal income tax return. 1. For example, a couple gets married and either the husband or the wife did not live in Rhode Island for all of the months during the year prior to marriage. B. R.I. Gen. Laws §§ 44-30-31(c) and 44-30-51(b)(4) require that separate Federal liabilities be computed for Rhode Island purposes using the married filing separately status. If one spouse itemizes, then the other spouse must also itemize his/her deductions. C. The resident spouse then should file the appropriate resident return form and the partial-year resident spouse should file the appropriate partial- year resident form with special attention to proper allocations and modifications. D. The couple may elect to file a joint Rhode Island return as if both were residents of Rhode Island for the full year. If one of the spouses is required to report income to another state as a resident of that state, then R.I. Gen. Laws § 44-30-18(d) must be used in determining any allowable credit for taxes paid to that state. 280-RICR-20-55-5 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 5 - FILING STATUS OF SPOUSES – NONRESIDENT MILITARY PERSONNEL AND PARTIAL-YEAR RESIDENTS (280-RICR-20-55-5) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:38:06 EST

These rules and regulations implement R.I. Gen. Laws §§ 44-30-2 and 44-30-60. Those sections outline the rate of Rhode Island personal income tax owed and elections regarding tax payment.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws §§ 44-30-2, 44-30-60, and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

Fiscal year taxpayers are those taxpayers who, for Federal income tax purposes as well as for Rhode Island income tax purposes, have tax years other than calendar years. Fiscal year taxpayers may include estates and trusts as well as individuals.

When a taxpayer makes a fiscal year election for Federal purposes, he/she is considered to have made the election for Rhode Island income tax purposes. A Rhode Island taxpayer may not elect a Rhode Island fiscal year different from the taxpayer's Federal fiscal year; nor may the taxpayer elect a fiscal year for Federal purposes and a calendar year for Rhode Island purposes or a calendar year for Federal purposes and a fiscal year for Rhode Island purposes.

A fiscal year taxpayer whose tax years involve calendar periods for which there was no change in the Rhode Island personal income tax rate need only determine the proper Federal income tax liability with any appropriate Rhode Island modifications. B. A fiscal year taxpayer whose tax years involve calendar periods for which the Rhode Island personal income tax rate changed should compute the Rhode Island personal income tax in the following manner: 1. Determine the proper Federal income tax liability with any appropriate Rhode Island modifications. 2. Determine the rates for the Rhode Island personal income tax in effect during the taxpayer's fiscal year and the number of months for which the rates were in effect. 3. Calculate the fiscal period rates for each rate change: (Number of Months Rate was in Effect x Rate)/12 4. Multiply each fiscal period rate by the Federal income tax liability and add the resulting amounts to determine the proper Rhode Island personal income tax liability. 5. Fiscal year taxpayers should then show this amount as the Rhode Island tax liability on the appropriate line of the Rhode Island return and attach a schedule showing the computation details. Taxpayers should not enter any amount in the space provided for Federal tax liability on the Rhode Island Return.

Assume that a fiscal year taxpayer's filing period (7/1 to 6/30) had two Rhode Island rates. The first rate was 20% from 1/1/20XX to 12/31/20XX; the second rate was 25% from 1/1/20AB to 12/31/20AB. The Federal income tax liability was $5,000. Step #1: Fiscal period rates: 6/12 x 20% = 10.0% 6/12 x 25% = 12.5% Step #2: Tax: 10.0% x $5,000.00 = $ 500.00 12.5% x $5,000.00 = $ 625.00 RHODE ISLAND INCOME TAX = $1,125.00 280-RICR-20-55-6 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 6 - FISCAL YEAR TAXPAYERS’ METHOD OF COMPUTING RHODE ISLAND TAX (280-RICR-20-55-6) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:38:28 EST

These rules and regulations implement R.I. Gen. Laws §§ 44-30-5(c) and 44-30-19. Those sections outline the tax treatment of trust distributions.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44-30-5(c) and 44-1-4. The rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws §§ 44-30-5(c), 44-30-19, and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

"Accumulation distribution" has the meaning set out in 26 U.S. Code § 665(b), as amended. B. "Discretionary trust" means a trust where the fiduciary has a discretionary power to distribute income or to accumulate income. C. "Income" has the meaning set out in 26 U.S.C. § 643(b), as amended.

The status of a beneficiary as a "resident individual" or as a "nonresident individual" is his or her status for personal income tax purposes but determined at the close of the trust's taxable year rather than at the close of the beneficiary's taxable year. B. For those children born after the execution of the trust, children of a resident individual are deemed to be resident individuals and; likewise, children of a nonresident individual are deemed to be nonresident individuals.

If income is accumulated in a discretionary trust in any year and the trustee has a discretionary power to distribute the income or the accumulated income among a group of people, any one of whom is a resident individual, the trust is deemed to be a resident trust with regard to the accumulated income pertaining to the resident beneficiary or beneficiaries. B. If income is accumulated in a trust in any year, the trust is deemed to be a resident trust for the purposes of the accumulated income to the extent that the income is accumulated for future distribution only to a person who is a (or to persons who are) resident(s) at the close of the trust's taxable year; and is deemed to be a nonresident trust to the extent that the income is accumulated for future distribution to a person(s) who is a nonresident at the close of the trust's tax year. C. Capital gains realized and deemed retained for future distribution to the remaindermen are undistributed gains and the trust is deemed to be a resident trust in the same ratio that the interests of all resident individual remaindermen bear to the interests of all remaindermen.

Situation A: The will of a resident individual establishes a discretionary trust. During the lifetime of the wife (W), income (except capital gains) may, in the discretion of the trustee, be paid to W, the son (S), the daughter (D) or any issue of S or D, or the income may be accumulated. On W's death, the principal is to be distributed in equal shares to S and D or to the issue of either if S and/or D are not living at that time. Thus, the trustee has a discretionary power to distribute accumulated income or principal to W, S, D or to any issue of S or of D. 1. During the year all of the income except capital gains is currently paid to W. The trust realizes $1,000 of long-term capital gains and retains those gains. a. WHAT IF: W and S are Rhode Island residents and D resides in another state and is not a Rhode Island individual? b. ANSWER: Since presumptively the principal will ultimately pass in equal parts to S and D (one of whom is a resident individual and the other is not), the capital gains are therefore being accumulated one-half for a resident and one- half for a nonresident. Thus, one-half of the retained income (capital gains) is subject to Rhode Island personal income tax and a RI-1041 Form is required to be filed. The fact that W is a resident individual is immaterial concerning the capital gains because the principal will eventually go to S and D. c. WHAT IF: W resides in another state and is not a Rhode Island resident; S and D are both Rhode Island resident individuals? d. ANSWER: Since all of the capital gains are being accumulated for future distribution to persons who are Rhode Island resident individuals, the trust is therefore considered a resident trust with respect to the capital gains and a RI-1041 Form is required to be filed as it pertains to the retained income (capital gains). 2. During the year the trust receives $10,000 of income and realizes $1,000 in long term capital gains. The trustee pays $8,000 of income to W; accumulates the remaining $2,000; and makes no principal distributions. a. WHAT IF: S is a Rhode Island resident individual and W and D both reside in another state and are not Rhode Island resident individuals? b. ANSWER: Since one of the beneficiaries S (who, in the discretion of the trustee) may receive the entire accumulated income, is a resident individual, the trust is considered a resident trust with respect to the income retained. Because one of the two remaindermen is a resident individual, one- half of the capital gains retained are subject to Rhode Island personal income tax. c. WHAT IF: W is a resident of another state and S and D are both Rhode Island resident individuals? d. ANSWER: The trust is a resident trust and must report and pay Rhode Island taxes on all the retained income. B. Situation B: The will of a resident individual establishes a discretionary trust. During W's lifetime, the trustee is authorized, but not required, to pay income (except capital gains) and/or principal in its discretion among a group consisting of W, S, D, the issue of S and the issue of D. On W's death, the trust divides into two separate trusts with S receiving a life income from one with the principal passing to his issue at his death; and D receiving a life income from the other with the principal passing to her issue at her death. 1. WHAT IF: During the year the trustee distributes all income and realizes $2,000 of long term capital gains. W is a Rhode Island resident individual. S is a Rhode Island resident individual as are his minor children. D resides in another state and has two children, a son (GS) who is 22 and a Rhode Island resident individual and a daughter (GD) who resides in the other state. 2. ANSWER: Because capital gains are presumptively accumulated for future distribution, the trust is therefore a resident trust with respect to 3/4 of the capital gains. The reasoning behind this is that one half is being accumulated for the benefit of S's issue (all of whom are Rhode Island residents) and one quarter (one half of one half) are being accumulated for GS who is also a Rhode Island resident.

Distribution by a Trust A. Rhode Island Income Tax Liability 1. The Rhode Island income tax liability for the year in which an accumulation distribution is received is the greater of: a. The Rhode Island income tax liability computed based on the exclusion of the accumulated distribution from Federal taxable income. Rhode Island taxable income would then be calculated using this adjusted Federal Taxable Income, or b. The Rhode Island income tax liability computed based on the Federal taxable income including the amount of accumulation distribution less the beneficiary's allocable portion of the Rhode Island income previously included in RI taxable income of the trust. B. The Rhode Island Tax Adjustment 1. The Rhode Island tax adjustment is computed as follows: a. Based upon Federal "throw back" rules, determine the preceding years to which the accumulation distribution shall be carried; b. Recompute the Rhode Island personal income tax liability for each year including the accumulation distribution by computing the Federal income tax liability and applying the appropriate Rhode Island rate for that year; c. From the amounts determined in § 7.9(B)(1)(b) of this Part, subtract the original Rhode Island personal income tax liability for the beneficiary for each year to arrive at the difference in Rhode Island income tax attributable to the distribution (not less than zero); d. From the amounts determined in § 7.9(B)(1)(c) of this Part, subtract the Rhode Island income tax previously paid by the trust for each year applicable to the accumulation distribution (not less than zero). If all of the previously taxed income is not distributed, the amount of Rhode Island tax to be subtracted should be in the same proportion as the amount of actual distribution bears to the total accumulated income for that year. (1) If more than one beneficiary is involved, the amount of Rhode Island tax paid to be subtracted shall be that portion of the tax paid that the accumulation distribution received by the beneficiary bears to the total accumulation distribution made to all beneficiaries for that year; e. Add the amounts determined in § 7.9(B)(1)(d) of this Part above to arrive at the Rhode Island tax adjustment. C. Rhode Island Tax Credit 1. To calculate the credit allowable under R.I. Gen. Laws § 44-30- 19(a), add together the amount of Rhode Island tax paid by the trust for each applicable year as they appear in § 7.9(B)(1)(d) of this Part. D. Rhode Island Tax Payable 1. To determine the Rhode Island tax payable for the year, subtract the credit computed in § 7.9(C) of this Part from the tax payable as computed in § 7.9(B) of this Part. 2. This computation is necessary to conform with the limitation discussed in R.I. Gen. Laws § 44-30-19(b). 280-RICR-20-55-7 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 7 - TRUST DISTRIBUTIONS (280-RICR-20-55-7) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:38:52 EST

These rules and regulations implement R.I. Gen. Laws § 44-30-71.2. This section outlines the withholding of tax from lottery and pari-mutuel winnings and prizes.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-71.2, 44-30-95(a), and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-30-71.2 and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

Effective on and after July 1, 1989, amounts received from or paid on behalf of the Rhode Island Lottery as winnings and prizes are taxable under the provisions of the Rhode Island personal income tax (R.I. Gen. Laws § 44-30-1 et seq., as amended). B. Additionally, subject to provisions of this regulation, these amounts and winnings received from pari-mutuel betting licenses in Rhode Island are subject to withholding taxes similar to the Internal Revenue provisions for gambling winnings.

The taxability of Rhode Island Lottery winnings and prizes and the withholding requirements applied to the Rhode Island Lottery and to pari-mutuel betting licensees in Rhode Island are applied according to the date on which the winnings and prizes are received after the effective date above. B. Winnings and prizes received means amounts received by the taxpayer on or after July 1, 1989 regardless of the date of the Lottery drawing, the date of the winner determination or the date of the pari-mutuel betting event and regardless of whether the prize or winnings are paid to the winner in installments over a period of time by the Director of Lotteries, pari-mutuel betting licensee or by a third party annuity or other contractual payor. C. Examples 1. George found a winning Rhode Island Lottery ticket he'd forgotten. Although the drawing was held eight (8) months earlier, George claimed his prize on July 15, 1989. For George's Rhode Island income tax purposes, his winnings are taxable as part of his 1989 Rhode Island income. Depending on the amount of his winnings, Rhode Island withholding may be deducted by the Lottery prior to his receipt. 2. Joan won the Rhode Island Lottery in 1987 and is receiving her winnings in a check each August over a ten year period. Beginning with the August 1989 check, Joan's winnings are taxable as part of her Rhode Island income. Depending on the amount of her winnings, Rhode Island withholding may be deducted by the Lottery or its third-party payor, prior to receipt. 3. David bet, won and received his winnings at the Rhode Island Lottery in a single check in February 1989. Because he received his winnings before July 1, 1989, they are exempt from Rhode Island personal income tax and regardless of the amount, no Rhode Island withholding was deducted by the Lottery. 4. Denise won and received a large sum from a Rhode Island casino in August 1989. Her winnings are part of her Rhode Island income (they were never exempted); however, since she received her winnings after July 1, 1989, and depending on the amount of her winnings, Rhode Island withholding may be deducted by the payor prior to receipt.

Lottery Winnings 1. Effective July 1, 1989, winnings and prizes received from the Rhode Island Lottery are taxable under the provisions of the Rhode Island personal income tax (R.I. Gen. Laws § 44-30-1 et seq., as amended) and are includable in the income of both residents and nonresidents alike. Prior to that act, these winnings and prizes were exempt under R.I. Gen. Laws § 42-61-17. B. Nonresidents 1. Winnings and prizes from the Rhode Island Lottery and pari-mutuel betting events conducted or operated by a licensee in Rhode Island are specifically set out as parts of the Rhode Island income of a nonresident individual in R.I. Gen. Laws § 44-30-32(b)(1)(iii). a. As such, a nonresident must include them as items of income and deductions from Rhode Island sources in his or her calculation of Rhode Island personal income tax due. b. Nonresidents must take these amounts of Rhode Island source income and deductions into consideration when determining if a Rhode Island nonresident income tax return is required to be filed. c. If Rhode Island income tax has been withheld from the taxpayer's winnings and prizes and if, after calculation, the taxpayer has no Rhode Island tax liability, he or she must file a Rhode Island tax return to get a refund of the taxes withheld or to have the tax overpayment credited to the following year. C. Withholding 1. Effective July 1, 1989, winnings and prizes received from the Rhode Island Lottery and from pari-mutuel betting licensees in Rhode Island are subject to withholding provisions similar to 26 C.F.R. § 31.3402(q)-1 (2018). 2. In order to receive a credit for Rhode Island taxes withheld, a taxpayer will be required to attach a copy of the W-2G to the Rhode Island tax return beginning with filings for any tax year ending on or after July 1, 1989.

Payor 1. For the purpose of this regulation, a "payor" means and includes the Director of Lotteries (R.I. Gen. Laws § 42-61-1 et seq.), a third-party annuity or other contractual payor for the Rhode Island Lottery and every Rhode Island licensee conducting or operating events upon which parimutuel betting is allowed. B. Reference to Federal Provisions 1. Whenever Federal income tax withholding and/or notification is required by 26 C.F.R. § 31.3402(q)-1 (2018), a corresponding withholding and/or notification is required for Rhode Island personal income tax purposes. 2. Additionally, provisions for remittance and reconciliation by the payor similar to those required for Federal purposes are required for Rhode Island purposes. C. Rhode Island Withholding Method and Rate 1. If Federal income tax is withheld from a payment, then the payor must withhold an amount of Rhode Island income tax equal to the amount of Federal tax withheld multiplied by the Rhode Island personal income tax withholding rate in effect on the date of the payment. D. Payor Remittance 1. Payors withholding Rhode Island income tax from winners' payments must remit the Rhode Island withholdings to the Division of Taxation at the same time as, but separate from, remittance for the payors' employees' withholdings. 2. If the payor has no employees for whom Rhode Island withholding is made, the payor will remit to the Division of Taxation on the same basis as other remittance of income taxes withheld then in effect. 280-RICR-20-55-8 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 8 - LOTTERY AND PARI-MUTUEL WINNINGS AND PRIZES (280-RICR-20-55- 8) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:39:47 EST

These rules and regulations implement R.I. Gen. Laws § 44-30-73. This section outlines the requirement for employers to file W-2 informational returns.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-30-73 and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

Who Must Electronically File Returns 1. Every employer that is required to electronically file annual W-2 information to the Social Security Administration, and having a minimum of 25 employees in the State of Rhode Island, is required to electronically file W-2 informational returns with the State. 2. Every employer that applies for or receives one or more Rhode Island tax credit(s) is required to electronically file W-2 informational returns with the State. B. Electronic Filing Procedure 1. Please refer to the "W-2 Electronic Filing Requirements" document that is available on the Division of Taxation’s website for additional information on how to electronically file W-2 documents. 2. The required format is also described in SAA Publication No. 42-007 (Specifications for Filing Forms W-2 Electronically) and any amendments or revisions thereto. 280-RICR-20-55-9 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 9 - W-2 INFORMATIONAL RETURNS (280-RICR-20-55-9) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 03/16/2020 December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:40:40 EST

These rules and regulations implement R.I. Gen. Laws §§ 44-30-71, 44-30-75, 44-30-78, and 44-30-85.1. These sections outline employers’ withholdings.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws §§ 44-30-71, 44-30-75, 44-30-78, 44-30-85.1, and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

Under the Rhode Island personal income tax system, as under the Federal system, employers are required to withhold a portion of each employee's wages and to periodically remit these funds withheld to the Division of Taxation. B. Withholding Registration and Number 1. A special registration of employers may be required for Rhode Island purposes. 2. The employer's identification number used for Rhode Island income tax is the same identification number currently issued to the employer by the Internal Revenue Service. 3. If an employer has not applied for or received a Federal employer's identification number, the employer should apply to the Division of Taxation for a special, assigned number. C. Employees' Exemptions 1. Employers must have employees complete the RI-W4 to determine each employee’s number of dependents, other personal exemptions, and additional Rhode Island withholding.

Generally, Rhode Island withholding is required to be withheld from the wages of an employee by a Rhode Island employer. B. "Rhode Island employer" means an employer maintaining an office or transacting business within this state. C. Withholding Required 1. A Rhode Island employer must withhold Rhode Island income tax from the wages of an employee if: a. The employees' wages are subject to Federal income tax withholding, and b. Any part of the wages were for services performed in Rhode Island. D. Convenience Withholding 1. An employer may withhold Rhode Island personal income tax at the request of the employee even though the employee's wages are not subject to Federal income tax withholding. 2. Additionally, employers in other states may wish to withhold Rhode Island personal income tax from wages of their Rhode Island employees as a convenience to those employees. 3. Additional information regarding convenience withholding may be requested from the Division of Taxation.

An employer shall withhold using the current Rhode Island withholding rate which is set by the Tax Administrator and apply it to the employee's wages for each payroll period. 1. A table or percentage method of withholding similar to that allowed by Federal law may be periodically provided by the Division of Taxation for the employers wishing to use such a method. B. Bonuses, Commissions and Special Situations. 1. If supplemental wages, such as bonuses, commissions, overtime pay or back pay are paid, the employer should follow the Federal method for determining the additional withholding tax. 2. The employer should apply the current Rhode Island withholding rate to the employee's additional wages for each payroll period.

Employers withholding Rhode Island personal income tax from employees' wages must electronically file and/or pay the taxes withheld to the Division of Taxation on a periodic basis in the following situations: 1. Per R.I. Gen. Laws § 44-30-71(c), electronic payment of withholding tax is required for employers who are required to withhold and remit the tax by law and the employer has ten (10) or more employees. 2. Per R.I. Gen. Laws § 44-30-85.1, electronic submission of withholding tax and tax return(s) is required for employers who withheld $200 or more per month on average for the prior calendar year. B. The following bases are those on which the employer must file and pay to the Division of Taxation: 1. Weekly: If the employer withholds $600 or more for any calendar month during the year from employees' wages, the employer must remit the taxes withheld on a weekly basis. The submission is due on the next banking day following the end of the week. The due date would generally be Monday unless Monday is a banking holiday or state holiday, in which case the due date would be Tuesday. a. The term "weekly basis" means the week that begins on Sunday and ends on Saturday. b. If there was no payroll for a given week, a payment filing is not required. c. In addition to the weekly payment filing requirement above, a reconciliation form, Form RI-941 is due on or before the last day of the month following the close of the quarter. d. Change from a weekly basis to another payment frequency may be permitted only at the beginning of a calendar year. 2. Monthly: If an employer withholds $50 or more but less than $600 for any calendar month from employees' wages, the employer must remit the taxes withheld on a monthly basis. The submission is due within twenty (20) days after the close of the month. a. If there was no payroll for a given month, a payment filing is not required. b. In addition to the monthly payment filing requirement above, a reconciliation form, Form RI-941 is due on or before the last day of the month following the close of the quarter. c. Change from a monthly return to another payment frequency may be permitted only at the beginning of a calendar year. 3. Quarterly: If an employer withholds less than $50 for any calendar month from employees' wages, the employer must report and remit taxes withheld on a quarterly basis. A form RI-941 must accompany the payment and the form and payment are due on or before the last day of the month following the close of the quarter. a. Consecutive returns for each calendar quarter accounting for all taxes withheld during the year must be filed by an employer required to report quarterly. b. Change from a quarterly return to another payment frequency will be permitted only at the beginning of a calendar year. 4. Error Correction: If an error has been made on a withholding tax return and that error results in an overpayment or underpayment of tax for that period, then the employer should make the necessary adjustment on the subsequent withholding tax report. Forms are available on the Division of Taxation's website.

On or before January 31 of each year (or at the termination of business), each employer must file a Rhode Island reconciliation return (RI W-3) for the preceding year of Rhode Island income tax withheld with all individuals and tax statements. 1. The total income tax withheld shown on the reconciliation return should equal the total payments made to the Division of Taxation for that year and should also equal the total amount of Rhode Island income tax withheld as shown on all the W-2 forms the employer furnished to its employees and submitted with the W-3 form. B. The state copy of the W-2 form(s) must accompany the reconciliation form (RI W- 3). Information concerning electronic reporting is available in the "W-2 Electronic Filing Requirements" document on the Division of Taxation's website. 10.10Forms A. The Division of Taxation does not supply Federal forms W-2 or W-4. These forms must be obtained from the Internal Revenue Service. 1. Rhode Island form W-4 is available on the Division of Taxation's website. B. Insofar as possible, forms (other than W-2 and W-4 forms) needed for compliance with the withholding provisions of Rhode Island personal income tax may be automatically mailed to employers prior to due dates. However, employers who file electronically, or are required to file electronically, will not receive withholding forms. Employers who do not receive any necessary forms should contact the Division of Taxation for any appropriate requests. C. Wage and Tax Statements (Optional W-2) 1. Compliance with Federal requirements for furnishing W-2 forms to employees will satisfy state requirements. Employers should be sure to use the six-part optional Federal form or any other form which has been previously approved by the Division of Taxation for this purpose. 280-RICR-20-55-10 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 10 - EMPLOYERS' WITHHOLDING (280-RICR-20-55-10) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:41:58 EST

These rules and regulations implement R.I. Gen. Laws § 44-30-1 et seq. This section outlines the taxation of nonresident professional athletes.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-30-1 et seq. and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

"Bonuses" includes performance bonuses received during the season, including bonuses paid for championship, playoff or "bowl" games played by a team, or for selection to all-star league or other honorary positions, and signing bonuses, unless: 1. the payment of the signing bonus is not conditional upon the signee playing any games for the team, or performing any subsequent services for the teams, or even making the team; 2. the signing bonus is payable separately from the salary and any other compensation; and 3. the signing bonus is nonrefundable. B. "Duty days" include: 1. All days during the taxable year from the beginning of the professional athletic team's official pre-season training period through the last game in which the team competes or is scheduled to compete; 2. Days that do not fall within § 11.5(B)(1) of this Part on which the team member renders services for a team (e.g., participation in instructional leagues, the "Pro Bowl" or promotional "caravans"). "Renders services" includes conducting training and rehabilitation activities, but only if conducted at the facilities of the team; and 3. Game days, practice days, days spent at team meetings, promotional caravans and preseason training camps, and days served with the team through all post-season games in which the team competes or is scheduled to compete. 4. Example 1: Player A, a member of a professional athletic team, is a nonresident of Rhode Island. Player A's contract for such team requires A to report to such team's training camp and to participate in all exhibition, regular season, and playoff games. Player A has a contract which covers seasons that occur during yr.1/yr.2 and yr.2/yr.3. Player A's contract provides that A receive $500,000 for the yr.1/yr.2 season and $600,000 for the yr.2/yr.3 season. Assuming player A receives $550,000 from such contract during taxable year 2 ($250,000 for one-half the yr.1/yr.2 season and $300,000 for one-half the yr.2/yr.3 season), the portion of such compensation received by player A for taxable year 2, attributable to Rhode Island, is determined by multiplying the compensation player A receives during the taxable year ($550,000) by a fraction, the numerator of which is the total number of duty days player A spends rendering services for the team in Rhode Island during taxable year 2 (attributable to both the yr.1/yr.2 season and the yr.2/yr.3 season) and the denominator of which is the total number of player A's duty days spent both within and without Rhode Island for the entire taxable year. 5. Example 2: Player D, a member of a professional athletic team, is a nonresident of Rhode Island. During the season, D travels to Rhode Island to participate in the annual all-star game as a representative of D's team. The number of days D spends in Rhode Island for practice, the game, meetings, etc., shall be considered to be duty days spent in Rhode Island for player D for that taxable year, as well as included within total duty days spent both within and without Rhode Island. a. Travel days that do not involve a game, practice, team meeting, promotional caravan or other similar team event are not considered duty days spent in Rhode Island, but are included in the total duty days spent both within and without Rhode Island. 6. Example 3: Assume the same facts as given in the prior example, except that player D is not participating in the all-star game and is not rendering services for D's team in any manner. Player D is instead traveling to and attending such game solely as a spectator. The number of days player D spends in Rhode Island for such game shall not be considered to be duty days spent in Rhode Island. However, such days are considered to be included within total duty days spent both within and without Rhode Island. a. Duty days for a person who joins a team between the beginning of the team's official pre-season training period and the last game in which the team competes, or is scheduled to compete, begin on the day that he or she joins the team. Duty days for a person who leaves a team during the same period end on the day that he or she leaves the team. Separate duty day calculation must be made if a person switches teams during the taxable year. b. Days on which a team member is not compensated and does not render services for the team in any manner (for example, days during which a team member is suspended without pay and prohibited from performing team services) are not treated as duty days. c. Days on which a team member voluntarily participates in an exhibition game against a farm team affiliate located in this state and does not receive compensation for participation in the exhibition game against the farm team affiliate are not treated as duty days. d. Days during which a team member is on the disabled list, and does not (a) conduct rehabilitation activities at facilities of the team or (b) otherwise render services for the team in Rhode Island, are not considered duty days spent in Rhode Island. However, days on the disability list are included in total duty days spent both within and without Rhode Island. 7. Example 4: Player B, a member of a professional athletic team, is a nonresident of Rhode Island. During the season, B is injured and is unable to render services for B's team. While B is undergoing medical treatment at a clinic, which is not a facility of the team, but is located in Rhode Island, B's team travels to Rhode Island for a game. The number of days B's team spends in Rhode Island for practice, games, meetings, etc., while B is present at such clinic, shall not be considered duty days spent in Rhode Island for player B for that taxable year, but such days are considered to be included within total duty days spent both within and without Rhode Island. 8. Example 5: Player C, a member of a professional athletic team, is a nonresident of Rhode Island. During the season, C is injured and is unable to render services for C's team. C performs rehabilitation exercises at the facilities of C's team in Rhode Island as well as at personal facilities in Rhode Island. The days C performs rehabilitation exercises in the facilities of C's team are considered duty days spent in Rhode Island for player C for that taxable year. However, days player C spends at personal facilities in Rhode Island shall not be considered duty days spent in Rhode Island for player C for that taxable year, but such days are considered to be included within total duty days spent both within and without Rhode Island. a. Days on which a team member is sent from a parent club to a farm team affiliate located in this state for rehabilitation for a period of thirty (30) days or less are not considered duty days. C. "Member of a professional athletic team" includes employees who are active players, players on the disabled list, and any other persons required to travel and who travel with and perform services on behalf of the team on a regular basis (e.g., coaches, managers, trainers, etc.). D. "Professional athletic team" includes, but is not limited to, any professional baseball, basketball, football, soccer or hockey team. E. "Total compensation for services rendered as a member of a professional athletic team" means the total compensation received during the taxable year for services rendered from the beginning of the official pre-season training period through the last game in which the team competes or is scheduled to compete during the taxable year and during the taxable year on a date which does not fall within the aforementioned period (e.g., participation in instructional leagues, the "Pro Bowl" or promotional "caravans"). Compensation includes salaries, wages, and bonuses for services performed during the year, but does not include strike benefits, severance pay, termination pay, contract or option year buy-out payments, expansion or relocation payments, or any other payments not related to services rendered for the team.

For taxable years beginning on or after January 1, 1997, the Rhode Island source income of nonresident members of professional athletic teams includes their total compensation for services rendered as team members during the taxable year, multiplied by a fraction, the numerator of which is the number of "duty days" spent within Rhode Island rendering services for the team in any manner during the taxable year, and the denominator of which is the total number of duty days spent both within and without Rhode Island during the taxable year.

This regulation is designed to apportion to Rhode Island, in a fair and equitable manner, a nonresident member of a professional athletic team's total compensation for services rendered as a member of a professional athletic team. 1. It is presumed that application of the foregoing provisions of this section will result in a fair and equitable apportionment of such compensation. 2. Where it is demonstrated that the method provided under this section does not fairly and equitably apportion such compensation, the Tax Administrator may require such member of a professional athletic team to apportion such compensation under such method as the Tax Administrator prescribes, as long as the prescribed method results in a fair and equitable apportionment. 3. A nonresident member of a professional athletic team may submit a proposal for an alternative method to apportion such compensation, where they demonstrate that the method provided under this section does not fairly and equitably apportion such compensation. a. If approved, the proposed method must be fully explained in the nonresident member of a professional athletic team's nonresident personal income tax return for Rhode Island.

Any "professional athletic team" as defined in § 11.5 of this Part which pays compensation to a nonresident member of a professional athletic team for services rendered to the team within Rhode Island shall be deemed to be an "employer" and is required to withhold a portion of such members' compensation attributable to "duty days" spent in Rhode Island, as defined in § 11.5 of this Part. B. Every professional athletic team whose members have played games or performed services in this state (as defined under "Duty Days") may file an annual composite Rhode Island personal income tax return on behalf of nonresident team members. 1. The composite return shall contain such information required by the Tax Administrator including the total income of each team member, the amount of income subject to tax under the apportionment formula, and the amount of tax due. 2. The team must obtain approval from the tax administrator before filing a composite return and it shall obtain written authorization on a year-to-year basis from each team member who elects to participate in the composite return. 3. The team must maintain powers of attorney from participating team members that authorize the team to represent them in the event of a protest or other appeal; the team and participating team members must agree that the team is responsible for any deficiencies, including penalties. 4. To participate in the composite return, a team member's compensation from the team must be the only source of income attributable to the state. a. The participating team members must acknowledge through their election that the composite return constitutes an irrevocable filing and that they may not file an individual income tax return in the taxing state. 5. If the team elects to file a composite return, it shall be responsible for withholding tax from the compensation of its members and remitting said tax to this state upon the filing of the composite return. 6. In filing a composite return a team member's compensation shall be subject to withholding at the highest marginal tax rate and no deductions, exemptions or exclusions shall be permitted. 7. If in the first year of filing the composite return the team has already withheld and remitted tax on a team member's compensation, the team may take a credit for the tax remitted against the initial filing under this method. C. If a team member leaves the team during the applicable year, the team remains responsible for remitting the appropriate tax and may either collect the tax paid from the team member or absorb the cost itself. 280-RICR-20-55-11 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 11 - TAXATION OF NONRESIDENT PROFESSIONAL ATHLETES (280-RICR- 20-55-11) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:51:34 EST

These rules and regulations implement R.I. Gen. Laws § 44-30-87.1. This section outlines the net operating loss limitation for Rhode Island purposes.

These rules and regulations are promulgated pursuant to R.I. Gen. Laws §§ 44- 30-95(a) and 44-1-4. These rules and regulations have been prepared in accordance with the requirements of R.I. Gen. Laws § 42-35-1 et seq. of the Rhode Island Administrative Procedures Act.

These rules and regulations shall be liberally construed so as to permit the Division of Taxation the authority to effectuate the purpose of R.I. Gen. Laws § 44-30-87.1 and other applicable state laws and regulations.

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected hereby.

R.I. Gen. Laws § 44-30-87.1 places a limitation on refunds or credits resulting from net operating loss deductions. B. Under Rhode Island law, a net operating loss deduction shall be allowed which shall be the same as the net operating loss deduction allowed under 26 U.S.C. § 172, except that: 1. any net operating loss included in determining such deduction shall be adjusted to reflect the modifications increasing and decreasing adjusted gross income required by R.I. Gen. Laws §§ 44-30-12 and 44-30-32; 2. such deduction shall not include any net operating loss sustained during any taxable year beginning in which the taxpayer was not subject to the tax imposed by this chapter; and 3. such deduction shall not exceed the deduction for the taxable year allowable under 26 U.S.C. § 172, provided, however, notwithstanding any other provision of law such deduction for a taxable year may not be carried back to any other taxable year for Rhode Island purposes but shall only be allowable on a carry forward basis for the number of succeeding taxable years allowed under 26 U.S.C. § 172. C. Examples of the three (3) exceptions/limitations noted above are as follows: 1. Any net operating loss included in determining such deduction shall be adjusted to reflect the modifications increasing and decreasing adjusted gross income as required by R.I. Gen. Laws §§ 44-30-12 and 44-30-32. Examples of the modifications would be interest on US government obligations taxable on the federal level but exempt from state taxation or interest on non Rhode Island municipal bonds exempt from federal taxation but taxable on the state level. 2. A loss sustained in a year prior to becoming a Rhode Island resident and being carried forward for federal purposes will not be allowed for Rhode Island purposes. An example of this limitation would be an instance where a Massachusetts resident sustains a net operating loss, which is carried forward for federal purposes, and in a subsequent year changes his residents to Rhode Island. Such a loss would not be allowed for Rhode Island purposes. 3. A net operating loss deduction, for Rhode Island purposes, cannot exceed the deduction for the taxable year allowable under 26 U.S.C. § 172, provided, however, notwithstanding any other provision of law such deduction for a taxable year may not be carried back to any other taxable year for Rhode Island purposes. An example of this limitation would be an instance where a Rhode Island resident sustains a net operating loss and for federal purposes the allowable deduction is utilized in full by being carried back to a prior year. For Rhode Island purposes, no deduction is allowed for net loss carry back. Further, since the Rhode Island net operating loss deduction cannot exceed the federal net operating loss carry forward in this instance, there is no Rhode Island net operating loss carry forward allowed in subsequent years. 280-RICR-20-55-12 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 12 - NET OPERATING LOSS LIMITATION (280-RICR-20-55-12) Type of Filing: Refile Capabilities Department of State _________________________________________________________________ Regulation Effective Date Original Signing Date _________________________________________________________________ Department of State Initials Department of State Date 01/04/2022 N/A December 09, 2021 E-SIGNED by Department of State on 2021-12-09 13:52:27 EST

The profit or gain realized by a writer, composer or artist derived from the publication, production or sale of a "work" shall be a modification reducing federal adjusted gross income under R.I. Gen. Laws § 44-30-1.1(c)(1), provided that the writer, composer or artist derived said profit or gain from a work while residing in the economic development zone ("zone"); and the profit or gain is received while the writer, composer or artist is a resident of the zone.

"Consumable" means capable of being consumed. B. "Consumed" means destroyed, used up, or worn out to the degree or extent that the property cannot be repaired, reconditioned, or rendered fit for future use. C. "Economic Development Zone" or "zone" means the statutory defined area designated in R.I. Gen. Laws § 44-30-1.1. D. "Limited edition" means the creation of a solitary work, conceived and produced by the artist or author under their direction, which is intended for limited reproduction, totaling no more than three hundred (300) copies, physically signed and numbered by the artist. E. "One of a kind" means the creation of a solitary work, conceived and produced by the artist or author or under their direction, not intended for multiple or mass production. F. "Work" means: 1. An original and creative work, whether written, composed, created or executed for "one-of-a-kind" or "limited edition" production, before or after the passing of this section, which falls into one (1) of the following categories: a. a book or other writing; b. a play or the performance of said play; c. a musical composition or the performance of said composition; d. a painting or other like picture; e. a sculpture; f. traditional and fine crafts; g. the creation of a film or the acting of said film; h. the creation of a dance or the performance of said dance; 2. For purposes of this section, a "work" does not apply to any piece or performance created or executed for industry-oriented, commercial or related production, to an otherwise-qualified work sold in excess of three hundred (300) signed and numbered copies, and to any piece sold through an online marketplace. a. Example 1. The hiring of a photographer to take photographs of a wedding. b. Example 2. A technical manual produced for the purpose of running industrial machines. 3. "Work" also includes any product generated as a result of any of the above categories. A work may qualify for the exemption regardless of whether it is fiction or nonfiction. 4. "Traditional and fine crafts" means art objects, either utilitarian or decorative, that are made by hand, but are not consumable. "Traditional and fine crafts" includes textile art, woodwork, baskets, jewelry, furniture, metals, ceramics, and pottery. "Traditional and fine crafts" does not include soap, candles, and other items that are traditionally intended to be consumed.

A writer, composer or artist shall be deemed to be residing in the zone if he/she: 1. is domiciled in the state, or 2. is not domiciled in the state but maintains a permanent place of abode in this state and is in the state for an aggregate of more than one-hundred eighty-three (183) days of the taxable year, and 3. meets the requirements of either §§ 13.3(A)(1) or (2) of this Part and physically occupies a place of abode within the Economic Development Zone.

Any individual seeking a modification reducing federal adjusted gross income pursuant to R.I. Gen. Laws § 44-30-1.1(c) shall file a Rhode Island personal income tax return for the year in which the modification is claimed. The individual must attach a statement to the return describing the "work," the party to whom it was sold, and the amount received for the "work". If the "work" is an item of tangible personal property for which a certificate of exemption was issued, a copy of said certificate must be attached to the individual's personal income tax return.

The tax administrator may require any individual seeking a modification pursuant to R.I. Gen. Laws § 44-30-1.1 to make available all books, accounts or other documents relating to the publication, production or sale of a work. In determining the amount of modification allowed, the tax administrator may make such apportionment of receipts and expenses as may be necessary. 280-RICR-20-55-13 TITLE 280 - DEPARTMENT OF REVENUE CHAPTER 20 - DIVISION OF TAXATION SUBCHAPTER 55 - PERSONAL INCOME TAX PART 13 - MODIFICATION OF CERTAIN INCOME OF WRITERS, COMPOSERS AND ARTISTS (280-RICR-20-55-13) Type of Filing: Amendment Agency Signature _________________________________________________________________ Agency Head Signature Agency Signing Date Department of State ____________________________ Regulation Effective Date _________________________________________________________________ Department of State Initials Department of State Date 07/30/2025 July 10, 2025 E-SIGNED by Thomas Verdi on 2025-07-10 13:23:14 EDT July 10, 2025 E-SIGNED by Department of State on 2025-07-10 14:37:55 EDT