Rep. Phillips bill would lower interest rate penalties for businesses with delinquent taxes
STATE HOUSE — Rep. Robert D. Phillips (D-Dist. 51) has introduced legislation that would ease the penalties for those businesses that are behind on their tax payments.
The bill (2022-H 6658) would change the rate of interest for underpayments of tax to prime rate plus six percent. It would also limit the assessment of interest to four calendar years prior to the date on which notice of the delinquent payment is sent.
“This is a very pro-business bill, “said Representative Phillips. “Right now we’re charging penalties along with interest of 18 percent, which is the highest in the country. Interest rates have been low for years, yet this number remains exorbitantly high. This legislation would make it easy to calculate by taking whatever the prime rate is and adding six percent. This would take a tremendous burden off small businesses that may be delinquent and keep them from having to shut their doors permanently.”
The rate of interest on delinquent taxes is currently calculated by the tax administrator, which has resulted in major fluctuations ranging from 5 to 20 percent over the past 50 years. This legislation would establish a degree of consistency for businesses who may be struggling by better preparing them to pay off their delinquent taxes.
“Oftentimes these penalties are assessed because of mistakes, misclassifications or bookkeeping errors that come to light during audits,” said Representative Phillips. “And often these mistakes are not found for years, which makes those penalties all the more onerous.”
The legislation, which is cosponsored by Representatives Justine A. Caldwell (D-Dist. 30, East Greenwich, West Greenwich), Thomas E. Noret (D-Dist. 25, Coventry, West Warwick), William W. O’Brien (D-Dist. 54, North Providence), Patricia Serpa (D-Dist. 27, West Warwick, Coventry, Warwick), Bernard A. Hawkins (D-Dist. 53, Smithfield, Glocester) and Steven J. Lima (D-Dist. 49, Woonsocket), has been referred to the House Finance Committee.