State & Local Tax Impacts of COVID-19 for Rhode Island – 2021

Information current as of November 30, 2021.

COVID-19 has changed life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor^™ or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Rhode Island

• Rhode Island extended the temporary suspension of the certification period for the qualified jobs incentive tax credit, as the delay of employees relocating to Rhode Island due to COVID-19 may result in an employer being unable to meet the certification requirement on a timely basis under the Qualified Jobs Incentive Act. The qualified jobs incentive tax credit may be taken against business corporation tax, tax on banks, public service corporation tax, tax on insurance companies, or personal income tax for creating new full-time jobs. 
  • Executive Order 20-107, as extended by Order 21-03 effective January 15, 2021, until February 11, 2021.
  • Executive Order 20-107, as extended by Order 21-10 effective January 15, 2021, until March 11, 2021.
  • Executive Order 20-107, as extended by Order 21-23 effective March 10, 2021, until April 9, 2021.
  • Executive Order 20-107, as extended by Order 21-33, effective April 8, 2021, until May 7, 2021.
• Rhode Island announced it has postponed, until May 17, the deadline to file personal income tax returns and make related payments for the 2020 tax year to follow the deadline change by the IRS. The relief is automatic, with no special forms to file. The deadline change only affects individual resident and nonresident personal income tax returns and doesn’t affect estimated payments due April 15.
  • Rhode Island Division of Taxation, News Release; March 19, 2021.
• Rhode Island extended emergency regulations on withholding for employees working remotely during the COVID-19 pandemic for individual income and corporate income tax purposes. The emergency regulations include these measures: 1) providing guidance on withholding requirements to employers who implemented work-from-home arrangements; 2) applying the regulations to employers whose employees now work from home within the state or outside the state due to the pandemic; and 3) clarifying the state won’t require employers located outside of the state to withhold Rhode Island income taxes from the wages of employees who are resident individuals and temporarily working within Rhode Island.
  • Rhode Island Division of Taxation, Emergency Regs. §§280-RICR-20-55-14.1, 280-RICR-20-55-14.2, 280-RICR-20-55-14.3 et al.; effective May 23, 2020.
  • Rhode Island Governor, Executive Order 21-70; June 18, 2021, which extends the emergency regulations until July 17, 2021.
  • Rhode Island Governor, Executive Order 21-79, July 16, 2021; and Rhode Island Division of Taxation Notice, which extends the emergency regulations until September 15, 2021.
  • Amended to revise the effective until date to September 13, 2021.
• Rhode Island issued guidance on the state taxation of unemployment compensation benefits excluded from federal income. While Rhode Islanders will be able to deduct up to $10,200 of unemployment compensation on their federal personal income tax returns under a recent federal law change, they must include that same amount as income on their Rhode Island state income tax returns. Under federal legislation, if a taxpayer received unemployment benefits in 2020 and the taxpayer’s federal adjusted gross income was less than $150,000 for 2020, the first $10,200 of the taxpayer’s unemployment benefits is excluded from income for federal tax purposes for 2020. Taxpayers who have already filed a Rhode Island personal income tax return for 2020 but didn’t include 2020 unemployment benefits as income must file an amended Rhode Island personal income tax return for 2020 and include in income, for Rhode Island purposes, the amount of 2020 unemployment benefits. Taxpayers who haven’t yet filed a Rhode Island personal income tax return for 2020 should include 2020 unemployment benefits as income for Rhode Island tax purposes, regardless of how those benefits are treated for federal tax purposes.
  • Rhode Island Division of Taxation, ADV 2021-13; March 29, 2021.
• Rhode Island expanded its acceptance of electronic signatures for tax returns during the pandemic to include five more forms, all of which are business related: Form T-71 for insurance companies; Form T-71A for surplus lines insurance brokers and licensees; Form T-72 for utilities; Form T-74 for bank excise tax returns; and Form T-86 for the bank deposits tax. The Division is allowing electronic signatures for these forms under the authority of the state’s Uniform Electronic Transactions Act. 
  • Rhode Island Division of Taxation, ADV 2021-09; March 17, 2021.
• Rhode Island issued withholding tax guidance after Massachusetts lifted its state of emergency. The Commonwealth of Massachusetts has special rules for wages or other compensation paid to employees who are working remotely due to the COVID-19 pandemic. Those Massachusetts rules are effective for the period beginning March 10, 2020, and ending 90 days after the Massachusetts governor lifts the state of emergency. Massachusetts recently issued an executive order rescinding that state’s declaration of a state of emergency effective at 12:01 a.m. on June 15, 2021. The special rules will therefore remain in effect until mid-September 2021. The Rhode Island Division of Taxation last year adopted an emergency regulation that provides withholding tax guidance for employers that have employees who are temporarily working remotely due to the pandemic. That emergency regulation remains in effect. Thus, there’s no change for employers or employees as a result of Massachusetts ending its state of emergency. 
  • Rhode Island Division of Taxation, ADV 2021-24; June 15, 2021.
• Rhode Island legislation authorizes the waiver of interest and penalties on the taxable portion of each Paycheck Protection Program (PPP) loan during tax year 2020 if paid in full on or before March 31, 2022, and it includes in the taxable income of corporations and individuals PPP loans forgiven for federal income tax purposes for taxable years beginning on or after January 1, 2020.
  • Rhode Island H.B. 6122, effective July 1, 2021.
• Rhode Island issued guidance on the income and bank excise tax treatment of PPP loan forgiveness amounts. Taxpayers should file a return excluding the increment of loan forgiveness that is taxable if they haven’t filed their tax return for tax year 2020 and the amount of their loan forgiveness for that year exceeds $250,000.  The state will waive interest and penalty on the taxable portion of each forgiven PPP loan if the tax on that portion is paid in full on or before March 31, 2022.  The guidance also includes examples and FAQs.
  • Rhode Island Division of Taxation, ADV 2021-34; September 1, 2021.
• Rhode Island issued guidance on the corporate income and individual income tax treatment of PPP loan forgiveness amounts, including: 1) the amount of PPP loan forgiveness for 2020 exceeding $250,000 must be included in income; 2) introduction of Form RI-PPP, with instructions, to report the 2020 amounts exceeding $250,000; 3) the form along with a notice and instructions will be mailed to each concerned entity, and the form is due December 15; and 4) the Division of Taxation will waive interest and penalties on the forgiven amounts if the applicable corporate income, bank excise, or personal income tax is paid in full by the due date of March 31, 2022.
  • Rhode Island Division of Taxation, Advisory 2021-39; October 20, 2021.
• Rhode Island issued information on the PPP loan forgiveness for individual income, corporate income and excise tax purposes. Legislation approved by the General Assembly and signed into law by the governor on July 6 addressed the issue of PPP loan forgiveness as it relates to the Rhode Island tax laws. Under the legislation, as enacted, if the amount of PPP loan forgiveness exceeds $250,000, the increment above $250,000 must be included in income for state tax purposes. Also, under the legislation as enacted, the Division of Taxation must waive interest and penalty on the portion of the forgiven PPP loan that is taxed in 2020 under the corporate income tax, the bank excise tax, and the personal income tax, provided that the tax on that portion is paid in full by the taxpayer on or before March 31, 2022. 
  • Rhode Island Division of Taxation, Website Release; November 1, 2021.

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