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RI Issues Guidance on Pass Through Entity E-Filing Mandate

February 23, 2024

Rhode Island pass through entities…are you up to speed on the new electronic filing mandate in the Ocean State? We have the details here.

The Rhode Island Division of Taxation has issued guidance, RI ADV 2024-10, regarding the RI Pass-Through Entity Election Tax return (RI-PTE). You will want to get set up on the RI tax portal ASAP ahead of the upcoming tax deadlines. Here’s what you should know.

What is a pass-through entity?

A pass-through entity is a business structure that reduces the effects of double taxation, (which occurs when income tax is levied once on corporate income, then again when profits are distributed as dividends to shareholders). Income or loss from a pass-through entity flows through to the individual owners and is taxed only once on the owners’ individual tax returns. Hence, these types of entities are not subject to income tax at the entity level.

Qualifying pass-through entities include…

  • S-Corporations
  • General partnerships
  • Limited partnerships
  • Limited liability partnerships
  • Trusts
  • Limited liability companies
  • Certain unincorporated sole proprietorships that are not taxed as a corporation for federal tax purposes

What is the new filing requirement in Rhode Island?

In June 2022, RI enacted a mandate requiring large businesses to use electronic means to file and remit all taxes to the State of RI for tax periods beginning on or after January 1, 2023. This includes the $400 RI minimum tax.

What is considered a “large business”?

A “large business” is defined as any business entity whose combined annual tax liabilities (all types of taxes: i.e. payroll tax, corporate tax, sales/use tax, etc.) to RI is or exceeds $5,000 or whose annual gross income is over $100,000 for the entity.

E-filing mandate

The state will penalize those who do not pay or file electronically. The penalty for failing to pay electronically is 5% of the tax due or $500, whichever is less. The penalty for failing to file a return electronically is $50.

If you are not set up on the RI portal you should do so now to ensure that you are registered in time before your March 15th /April 15th tax payments are due.

It takes up to 7-10 business days to get a PIN which is required to set up your account.

How do you request a PIN?

Email or call (401) 574-8484 to request a PIN.

Once you have your PIN you can set up your company portal account. Use this link to begin the process: RI Tax Portal.

What if I cannot e-file?

For tax year 2023 ONLY, the Division of Taxation is allowing businesses to submit the form as a paper filing (if they encounter issues e-filing). Make note that you must indicate “Hardship” on top of the paper Form RI-PTE 2023 return. By doing so, you will not be assessed the failure to electronically file penalty for tax year 2023 only. This does not waive the requirement to make payments electronically through the portal.

Questions? Contact us.

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