Attention Rhode Island businesses…for tax periods beginning January 1, 2023, larger business registrants will be required to use electronic means to file returns and remit taxes to the State of Rhode Island. Here’s what you should know.

What is a larger business registrant?

According to the RI Division of Taxation, a "larger business registrant" is defined as any person who:

• Operates as a business whose combined annual liability for all taxes administered by the Division of Taxation for the entity is or exceeds $5,000; or

• Operated as a business whose annual gross income is over $100,000 for the entity.

• This includes single member LLCs. The mandate requires both filing and paying electronically if the gross income exceeds $100,000.

How can a business determine if they have met the $100,000 requirement?

The $100,000 income threshold includes all income for a larger business registrant. The amount used to determine if a business meets the $100,000 threshold will depend on the form used to report income. A partnership or LLC will be determined based on Form RI-1065, an S Corporation will be based on Form RI-1120S and C Corporations will be based on Form RI-1120.

Do businesses have to make corporate estimated tax payments electronically?

Corporate and pass-through entity estimated tax payments are subject to electronic payment requirements as well. All estimated payments for entities meeting the definition of a larger business registrant will be required to file returns and make payments electronically beginning with tax year 2023. April 15, 2023 is the first quarterly estimated payment deadline subject to the mandate.

Are sole proprietors subject to the mandate?

They are not. The mandate excludes personal income tax, estate tax filings and payments and fiduciary income tax. The Division of Taxation does encourage taxpayers to use available electronic filing and payment methods for these tax types, especially the first quarter payment due on 4/15/2023.

What payment methods are considered electronic filings?

Businesses can submit electronic payments through:

• The Division of Taxation’s online Taxpayer Portal, found at www.taxportal.ri.gov,
• EFT / ACH withdrawal from your bank account via an authorized tax software vendor,
• Single or bulk electronic payments by third party providers, and
• An authorized credit card processor

What are the penalties if a taxpayer does not comply with the mandate?

• Those who fail to pay electronically will be subject to a penalty equal to 5% of the tax due or $500, whichever is less. This penalty applies to each payment. Multiple payments for the same tax period may each be subject to a separate penalty.
• Those who fail to file a return electronically will be subject to a penalty equal to $50.

Keep in mind you are subject to both penalties if you fail to file and pay electronically for the same filing.

Are waivers from these requirements available?

If you do not have access to a computer or have other specific circumstances preventing you from electronically paying and filing, you can request a waiver of the penalty due to reasonable cause, through RI Form ETM – Waiver – Electronic Mandate Waiver Request.

Need help? KLR can assist.