2015 -- S 0651

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LC002078

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION - BUSINESS CORPORATION TAX

     

     Introduced By: Senators Goldin, Goodwin, Ruggerio, DaPonte, and Miller

     Date Introduced: March 11, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 44-11 of the General Laws entitled "Business Corporation Tax" is

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hereby amended by adding thereto the following section:

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     44-11-29.2. Notice to tax administrator of sale of controlling interest - Tax due. -- (a)

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The sale or transfer of a controlling interest in any entity for valuable consideration, which

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possesses, directly or indirectly, an interest in real property in this state, shall be fraudulent and

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void as against the state unless the entity shall, within five (5) days after the sale or transfer,

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notify the tax administrator of the sale or transfer and of the price, terms and conditions of the

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sale or transfer, and of the character and location of the assets of the entity. Whenever an entity

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shall make such a sale or transfer, there is imposed on the sale or transfer, payable by the entity

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selling or transferring such controlling interest, a tax at the rate set forth in § 44-25-1(a) on the

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interest in real property possessed, directly or indirectly, by such entity. Whenever an entity shall

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make such a sale or transfer, the tax imposed by this section shall become due and payable at the

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time when the tax administrator is notified, or, if he or she is not notified, at the time when he or

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she should have been notified.

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     (b) A taxable sale or transfer of a controlling interest may occur in one transaction or in a

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series of transactions. Transactions which occur within two (2) years of each other are presumed,

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unless shown to the contrary, to be a series of transactions subject to the tax.

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     (c) A taxable sale or transfer of a controlling interest may be made by one seller or

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transferor, or may be made by a group of sellers or transferors acting in concert. Sellers or

 

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transferors who are related to each other by blood or marriage are presumed, unless shown to the

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contrary, to be acting in concert.

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     (d) The tax administrator shall contribute to the distressed community relief program the

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sum as set forth in § 44-25-l(c) to be distributed pursuant to § 45-13-12 and to the housing

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resources commission restricted receipts account the sum as set forth in § 44-25-l(c). Funds will

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be administered by the department of administration, office of housing and community

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development, through the housing resources commission. The state shall retain sixty cents ($.60)

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for state use. The balance of the tax shall be remitted to the municipality in which said real estate

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is located. The tax shall be administered and collected under the provisions of this chapter.

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     (e) For the purposes of this section the term "controlling interest" means:

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     (1) In the case of a corporation, fifty percent (50%) or more of the total combined voting

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power of all classes of stock of such corporation; or

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     (2) In the case of a partnership, association, trust or other entity, fifty percent (50%) or

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more of the capital, profits or beneficial interest in such partnership, association, trust, or other

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entity.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - BUSINESS CORPORATION TAX

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     This act would provide that the tax administrator be notified of the sale or transfer of a

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controlling interest in any entity which owns real property in the state, and also imposes a transfer

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tax on the seller of such controlling interest.

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     This act would take effect upon passage.

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LC002078

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