Rhode Island Budget Bill: Business and Individual Changes for 2017

Rhode Island Governor Gina Raimondo signed the State’s 2017 fiscal year budget bill on June 14, 2016. The bill includes a number of updates for both businesses and individuals. All changes are effective for tax year beginning on or after January 1, 2017 unless otherwise stated.

The bill:

• Reduces the corporate minimum tax by $50 to $400.
• Increases the earned income credit from 12.5% to 15%.
• Exempts the first $15,000 on income for retirees that have reached the age used for calculating full or unreduced social security benefits.
• Modifies the filing deadlines for C corporations, S corporations, banks, partnerships and limited liability companies to conform to the federal due dates.
• Imposes sales and use tax on transportation network companies effective July 1, 2016. “Transportation network companies” are entities that use a digital network to connect riders to transportation network operators who provide prearranged rides. Any transportation network company operating in Rhode Island will meet the definition of a retailer and is required to file a business application and registration form as well as obtaining a permit from the Tax Administrator to charge, collect, and remit Rhode Island sales and use tax.
• Imposes a hospital licensing fee effective July 1, 2016. The rate of the fee is 5.652%, except for all hospitals located in Washington County, Rhode Island, for which a discount is applied. (The discount for Washington County hospitals is subject to approval by the Secretary of the U.S. Department of Health and Human Services). Every hospital must pay the licensing fee by electronic transfer and must file a return with the Tax Administrator on or before June 14, 2017, containing the correct computation of net patient services revenue for the hospital fiscal year ending September 30, 2015, and the licensing fee due on that amount.
• Changes the application fee structure for LLP’s effective July 1, 2016. The application fee for an LLP is $150 for each LLP’s initial filing, and the annual renewal application fee is $50. Under previous law, the application or renewal application was accompanied by a fee of $100 for each partner, not exceeding $2,500 for each partnership’s initial filing or subsequent renewal application. The fee per partner has been rescinded.
• Provides an exemption for distillers, effective July 1, 2016, on the first 50,000 gallons of distilled spirits produced and distributed in Rhode Island in any calendar year. The exemption requires that the spirits be distilled in Rhode Island and the distiller is actively and directly owned, managed, and operated by an authorized legal entity that has owned, managed, and operated a distillery in Rhode Island for at least 12 consecutive months.

Should you have questions related to the new procedures, contact your Marcum tax advisor.