Electronic Filing Mandate

Under the FY23 budget bill (House Bill 7123, Substitute A as amended) signed by the Governor, all “larger business registrants” are required to file and pay taxes electronically. 

An electronic filing mandate was already in effect for some tax types starting in 2010.   

The recent passage of House Bill 7123, Substitute A as amended, introduced R.I. Gen Laws §44-1-31.2, which expands electronic filing and payment requirements to more tax types, defines a “larger business registrant”, and takes effect for all periods beginning on or after January 1, 2023. 

A "larger business registrant" is defined as any person who:  

• Operates as a business whose combined annual liability for all taxes administered by the Division of Taxation for the entity is or exceeds $5,000; or  

• Operated as a business whose annual gross income is over $100,000 for the entity. 

For purposes of this mandate, a person includes any individual, firm, partnership, general partner of a partnership, limited liability company, registered limited liability partnership, foreign limited liability partnership, association, and corporation responsible to file and/or pay a tax liability to the State of Rhode Island. 

Yes. Beginning with tax year 2023, all estimated payments for entities meeting the definition of a larger business registrant will be required to file returns and make payments electronically. The first corporate tax estimated payment subject to the mandate would be due 04/15/2023.

No. Personal income tax, fiduciary income tax, and estate tax filings and payments are excluded from the mandate. Taxpayers are encouraged to use available electronic filing and payment methods for these tax types. 

Payments made through the Division of Taxation’s online Taxpayer Portal, payments through MeF via an authorized software vendor, single or bulk electronic payments by third party providers, payments made by EFT including ACH, and payments through an authorized credit card processor all meet the electronic mandate requirements.

The submission of a tax return through the Division of Taxation online Taxpayer Portal, the Modernized Electronic Filing (MeF) system administered by the Internal Revenue Service (IRS), a streamlined sales tax return, and bulk electronic filings by an authorized third-party provider are all filing methods that meet the electronic mandate requirements. 

There are separate penalties for failing to file a return electronically and for failing to pay electronically: 

• For failing to pay electronically, a person will be subject to a penalty equal to 5% of the tax due or $500, whichever is less. 

• For failing to file a return electronically, a person will be subject to a penalty equal to $50. 

A person would be subject to both penalties if they fail to file and pay electronically for the same filing. Please note that the penalty for the failure to pay electronically is for each payment and multiple payments for the same tax period may each be subject to a separate penalty for the violation of the mandate.  

No. If a larger business registrant’s combined annual liability for all taxes is in excess of the $5,000 threshold annually, then the registrant would be subject to the mandate. 

As an example, a business may annually pay $3,000 in Sales Tax, $1,500 in Withholding Taxes, $429 in Meals and Beverage Taxes, and the $400 Minimum Corporate Tax. Although each individual tax is not greater than the $5,000 threshold, the total of all taxes is $5,329 and is greater than the threshold. This would result in the business being subject to the mandate. In this example, the business would be required to file and pay all taxes electronically.  

 

The annual gross income of $100,000 includes all income for a larger business registrant. The amount used to determine the value used for comparison to the $100,000 threshold will depend on the form used to report income. Examples include the federal 1120 line 11 or and the federal schedule C line 1.

Taxpayers should review their filings to determine if they meet the definition of a “larger business registrant” and, if so, the taxpayer will be subject to the mandate.   



To aid taxpayers in meeting their compliance obligations, the Division of Taxation will be sending letters in December and January to taxpayers who may be subject to the mandate but are not currently filing and paying all taxes electronically. These taxpayers are identified based on their 2022 filings and payments. The notice informs taxpayers of the upcoming requirements for tax periods beginning on or after January 1, 2023. 



Taxpayers subject to the mandate will benefit greatly from registering for the Taxpayer Portal. This is done by first obtaining a PIN notice and then creating a Portal account. Taxpayers are encouraged to contact the Portal Team with any questions by email at tax.portal@tax.ri.gov, or by phone 401-574-8484 on business days from 8:30am to 3:30pm.   

With the exception of one specialized cigarette tax form used by a limited number of filers, all other Rhode Island tax forms, including the RI-PTE, can be filed either through tax preparation software or through the Division’s Taxpayer Portal.   



Payments for all taxes may be made on the Portal. 

The mandate does not require the RI-1040 to be filed electronically. The RI-1065 must be filed and paid electronically if the gross income reported on the RI-1065 is above the $100,000 threshold for tax years beginning on or after January 1, 2023, first filed in March of 2024. 

Electronic payments through software vendors are available beginning with tax year 2022. Although the mandate does not apply to these filings until tax year 2023, the Division will accept these payments for the upcoming filing season.

By preparing the RI-1065 through the business package, this return can be filed electronically through the software vendor. At the time of filing, the required $400 payment can be made through the software as well. All tax preparation software should support a pdf attachment to the RI-1065 filing to provide a copy of the Schedule C and any additional backup documentation. 

The Portal does have a Same-Day Services/Guest Payment feature available. The following screenshot shows where this feature is located on the Portal.   

 

Depending on the type of payment being made, certain information, such as a notice ID or federal AGI, will be required in order to process the payment. The Division’s Portal team is available to answer questions regarding this payment method. 



However, creating a Portal account is recommended, as larger business registrants have many filing obligations. Creating a Portal account provides much more functionality for businesses than the Same-Day Services/Guest Payment feature.  

No. The shareholders’ electronic filing mandate requirements would be determined based on their own tax filing and payments. The S corporation would be required to file and pay electronically. 

The mandate requires both filing and paying electronically. While the payment will be accepted and meet the electronic payment requirement, the paper RI-1065 would not meet the electronic filing requirement. Beginning in tax year 2023, this would result in a $50 penalty assessment for each instance of failing to file electronically.

No. For periods beginning January 1, 2023, an ACH credit payment will not qualify as both the payment and filing of a sales tax return. Beginning January 1, 2023, the Division will require a modernized sales tax return. All sales tax must be filed on this return. Please see ADV 2022-33 for more details.

Form ETM - Waiver can be used to request a waiver of this requirement if the taxpayer satisfies specific circumstances constituting good cause for waiver of the electronic transmission mandate.  



If the taxpayer has an email address and a way to access email, they may use the Taxpayer Portal Self-Service Kiosk located in the Division of Taxation’s offices to complete their Portal transactions. 

Detailed information on creating a Taxpayer Portal account and using the Portal, including videos and instructions, can be found on the Taxpayer Portal website - www.taxportal.ri.gov. Additionally, the Division has a dedicated team of specialists available to answer questions by email at tax.portal@tax.ri.gov, or by phone (401) 574-8484 on business days from 8:30am to 3:30pm.