Tax Problems and Tax Resolution in Rhode Island

The following information is unique to the State of Rhode Island Division of Taxation.

• Hearings & Appeals
• Installment Agreement
• Interest Rates
• Levy
• Offer in Compromise
• Penalties
• Personal Liability
• Power of Attorney
• Tax Lien

Hearings & Appeals

If you do not agree with a notice of assessment, you have 30 days from the date of assessment to make a request in writing for a hearing. You will have a preliminary review with the Tax Division, and if not settled at that level, a formal hearing will occur with the Division of Adjudicative Services. If you are still not satisfied with the result, you may appeal the decision to the District Court. While you are not required to pay the assessment during the time of the hearing process, interest will continue to accrue on the amount ultimately owed to the state.

Requests for hearings regarding employment taxes are forwarded directly to the Board of Review.

Installment Agreement

If you are unable to pay the full balance of your tax liability, the Rhode Island Division of Taxation may agree to an installment agreement, which allows you to pay your debt over a period of time. The Compliance and Collection section will review your proposal and notify you of approval or denial. If your installment agreement is approved, you are required to make all monthly payments as agreed upon and pay all future tax returns on time. If your installment agreement is denied, or if you default on any agreement in place, collection procedures may begin and may include levy of assets or wages, filing of tax liens, license revocation, or other legal action. A lien may be recorded to secure the interest of the state, even if you have an installment agreement in place, however, the lien will not appear on the taxpayer lien list published on the Division's website.

Interest Rates

Interest Rates Any tax that has not been paid in full or any portion of unpaid tax that is not paid by the due date will have interest added a part of the tax liability. The Tax Administrator computes the interest rate yearly on January 1st by adding 2% to the prime rate that was effective on October 1st of the previous year, providing that the rate of interest shall not be less than 12% per annum.

There is an 18% interest assessed on all employment taxes.

Levy

If you have received a notice demanding payment and have refused or neglected to pay the tax within 10 days of the notice, the tax administrator may begin the process for enforced collections by levy upon all your property and rights to property. A levy includes the power of distraint and seizure, meaning the tax administrator may seize and sell the property or rights to property whether real or personal, tangible or intangible. A levy may also be made upon salary or wages. You will receive a notice 30 days prior to sale or seizure of property or freezing of assets.

A levy on salary or wages will remain in effect for 6 months from the date the levy is made or until the liability is satisfied or becomes unenforceable by reason of lapse of time.

Offer in Compromise

In cases of extreme hardship the Division of Taxation may consider an Offer in Compromise, allowing you to settle for less than the full amount of the liability. You will be required to submit detailed information including finances, assets and liabilities. If an offer is accepted you must remain compliant with all state tax codes relating to the filing of returns and the paying of taxes for 5 years from the date of the acceptance of the offer, or the offer will be considered to be in default. If the offer is defaulted the Division of Taxation may file suit or levy to collect the balance or the original amount of the liability.

Penalties

If you do not file or pay your taxes by the due date, additional penalties may be added to your liability, unless you are able to show reasonable cause as to why return was not filed or why the tax was not paid.

• Fraud: if any part of a deficiency is due to fraud, a penalty of 50% of the deficiency will be added to your tax bill.
• Negligence: if any part of a tax liability is due to negligence or intentional disregard of tax regulations, a penalty of 5% of that part of the deficiency will be added to your tax bill.
• Failure to File: if you fail to file your income tax returns or employer's withholding returns by the due date a penalty of 5% of the tax due will be added for each month that the tax remains unpaid, not to exceed 25%.
• Failure to Pay: if you fail to pay the full amount of the tax due a penalty of 0.5% will be added to the amount shown as tax for each month or fraction of a month that the liability remains unpaid, not to exceed 25%.
• Abatement of Penalties: if it can be shown that there was no negligence or no intentional disregard of the tax code you may request an abatement of penalties.

Personal Liability

Any person who is required to collect, account for and pay over taxes to the State of Rhode Island may be held personally liable for failure to submit returns and payments as required.

Power of Attorney

You have the right to be represented by a qualified representative at any time during administrative interactions with the Division of Taxation by filing Form RI-2848, Rhode Island Power of Attorney.

Tax Liens

Any amount of tax, interest charge and penalty that is imposed on any taxpayer shall constitute a lien upon the real estate of the taxpayer until collected. A lien can negatively affect your credit and prevent you from buying or selling real estate. The Division of Taxation posts a list of delinquent taxpayers who have a recorded tax lien against them, and updates the list every 30 days.

We strive to save our clients money, time and stress.  Just as there are many different tax related problems, there are many options for tax resolution.  Call us at 888-902-0778 for a free consultation. In a few minutes we will help you to better assess what options are best for your unique situation.