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Voluntary Disclosure Program

Overview

The Rhode Island Division of Taxation encourages businesses and individuals who are not in compliance with Rhode Island tax laws to come forward voluntarily to pay Rhode Island taxes. The goal of the Division of Taxation is to ensure that taxpayers with a filing requirement in Rhode Island or doing business in this state are registered, collecting and paying the taxes they are obligated to pay.  Qualified taxpayers may request to pay past due taxes under this program.

Criteria/Qualified Taxpayers:

A qualified taxpayer is one who:

  1. has not been previously contacted by the Division of Taxation.
  2. was not registered for the tax type involved for the disclosure period.
  3. has not collected any taxes included in the disclosure.

Program Highlights and Benefits

  1. The taxpayer can come forward anonymously.
  2. Spreadsheets are acceptable for certain taxes (i.e. sales/use and withholding).
  3. Limited "look back" period, usually the three (3) previous years, with some exceptions. Exceptions include:
    1. the “look back” period may not apply if a taxpayer is currently registered with the Rhode Island Secretary of  State or is organized/incorporated in Rhode Island
    2. the “look back” period may not apply if a taxpayer has been living in Rhode Island
    3. the “look back” period will not apply for taxes collected (Trust Funds), but penalties may be waived.
  4. Criminal prosecution will not be pursued.
  5. Waiver of penalties:
    1. late filing penalty for corporate income taxes, withholding and personal income taxes
    2. late payment penalty for corporate income taxes, withholding and personal income taxes
    3. negligence penalty for sales & use taxes, withholding and personal income taxes

Process

In order for a qualified taxpayer to request to be considered for the voluntary disclosure program:

  1. the initial contact should be made through a letter from the taxpayer’s representative.  The letter should contain the following information:
    1. a brief general description of the taxpayer’s activities and its Rhode Island activities
    2. the terms of the voluntary disclosure the taxpayer is seeking
    3. the tax type the taxpayer is seeking to disclose
    4. the principal location (state) of the business and the state of incorporation
    5. an explanation as to the reason why filings and payments were not made prior;
  2. the Tax Division will respond with a letter outlining its position; and
  3. at that time the taxpayer can decide whether or not to disclose.

What if I do not qualify for the Voluntary Disclosure Program?

Any returns which would normally be required to be filed can still be filed with the Division of Taxation. A letter may be addressed to the Tax Administrator, with the required returns, requesting a penalty waiver. Full payment of any taxes and interest due would be required for the penalty waiver to be considered at the Tax Administratorís discretion.

Contact Information for Voluntary Disclosure Program

Peter McVay, Assistant Tax Administrator
Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908
Telephone (401) 574-8922
Fax (401)574-8917
Email: Peter.McVay@tax.ri.gov

Revised 1/28/2011