ARTICLE 21 SUBSTITUTE A

Relating To TAX AMNESTY

SECTION 1. Title 44 of the General Laws entitled “Taxation” is hereby amended by adding thereto the following chapter:

CHAPTER 6.3

2006 RHODE ISLAND TAX AMNESTY ACT

44-6.3-1. Short title. -- This chapter shall be known as the "2006 Rhode Island Tax Amnesty Act".

44-6.3-2. Definitions. -- As used in this chapter, the following terms have the meaning ascribed to them in this section, except when the context clearly indicates a different meaning:

(1) "Taxable period" means any period for which a tax return is required by law to be filed with the tax administrator;

(2) "Taxpayer" means any person, corporation, or other entity subject to any tax imposed by any law of the state of Rhode Island and payable to the state of Rhode Island and collected by the tax administrator.

44-6.3-3. Establishment of tax amnesty. -- (a) The tax administrator shall establish a tax amnesty program for all taxpayers owing any tax imposed by reason of or pursuant to authorization by any law of the state of Rhode Island and collected by the tax administrator. Amnesty tax return forms shall be prepared by the tax administrator and shall provide that the taxpayer clearly specify the tax due and the taxable period for which amnesty is being sought by the taxpayer.

(b) The amnesty program shall be conducted for a seventy-five (75) day period ending on September 30, 2006. The amnesty program shall provide that, upon written application by a taxpayer and payment by the taxpayer of all taxes and interest due from the taxpayer to the state of Rhode Island for any taxable period ending prior to December 31, 2005, the tax administrator shall not seek to collect any penalties which may be applicable and shall not seek the civil or criminal prosecution of any taxpayer for the taxable period for which amnesty has been granted. Amnesty shall be granted only to those taxpayers applying for amnesty during the amnesty period who have paid the tax and interest due upon filing the amnesty tax return, or who have entered into an installment payment agreement for reasons of financial hardship and upon terms and conditions set by the tax administrator. In the case of the failure of a taxpayer to pay any installment due under the agreement, such an agreement shall cease to be effective and the balance of the amounts required to be paid thereunder shall be due immediately. Amnesty shall be granted for only the taxable period specified in the application and only if all amnesty conditions are satisfied by the taxpayer.

(c) The provisions of this section shall include a taxable period for which a bill or notice of deficiency determination has been sent to the taxpayer and a taxable period in which an audit has been completed but has not yet been billed.

(d) Amnesty shall not be granted to taxpayers who are under any criminal investigation or are a party to any civil or criminal proceeding, pending in any court of the United States or the state of Rhode Island, for fraud in relation to any state tax imposed by the law of the state and collected by the tax administrator.

44-6.3-4. Interest under tax amnesty. -- Notwithstanding any general or specific statute to the contrary, interest on any taxes paid for periods covered under the amnesty provisions of this chapter shall be computed at the rate of twelve percent (12%) annually from the due date to the time of payment.

44-6.3-5. Appropriation.—There is hereby appropriated, out of any money in the treasury not otherwise appropriated for the 2007 fiscal year, the sum of two hundred thousand dollars ($200,000) to the division of taxation to carry out the purposes of this chapter. The state controller is hereby authorized and directed to draw his or her orders upon the general treasurer for the payment of the sum or so much thereof as may be required from time to time and upon receipt by him of properly authenticated vouchers.

44-6.3-6. Implementation. -- Notwithstanding any provision of law to the contrary, the tax administrator may do all things necessary in order to provide for the timely implementation of this chapter, including but not limited to procurement of printing and other services and expenditure of appropriated funds as provided for in § 44-6.3-5.

44-6.3-7. Disposition of monies. -- (a) Except as provided in subsection (b) within, all monies collected pursuant to any tax imposed by the state of Rhode Island under the provisions of this chapter shall be accounted for separately and paid into the general fund.

(b) Monies collected for the establishment of the TDI Reserve Fund (§ 28-39-7), the Employment Security Fund (§ 28-42-18),the Employment Security Interest Fund (§ 28-42-75), the Job Development Fund (§ 28-42-83), and the Employment Security Reemployment Fund (§ 28-42-87) shall be deposited in said respective funds.

44-6.3-8. Analysis of amnesty program by tax administrator. -- The tax administrator shall provide an analysis of the amnesty program to the chairpersons of the house finance committee and senate finance committee, with copies to the members of the revenue estimating conference, by November 1, 2006. The report shall include an analysis of revenues received by tax source, distinguishing between the tax collected and interest collected for each source. In addition, the report shall further identify the amounts that are new revenues from those already included in the general revenue receivable taxes defined under generally accepted accounting principles and the state's audited financial statements. The auditor general shall include a review of this analysis as part of the activities involved in preparation of the combined annual financial report for fiscal year 2007.

44-6.3-9. Rules and Regulations. -- The tax administrator shall promulgate such rules and regulations as are necessary to implement the provisions of this chapter.

SECTION 2. Section 44-1-7 of the General Laws in Chapter 44-1 entitled “State Tax Officials” is hereby amended to read as follows:

44-1-7. Interest on delinquent payments. – (a) Whenever the full amount of any state tax or any portion or deficiency, as finally determined by the tax administrator, has not been paid on the date when it is due and payable, whether the time has been extended or not, there shall be added as part of the tax or portion or deficiency interest at the rate as determined in accordance with subsection (b) of this section, notwithstanding any general or specific statute to the contrary.

   (b) Each January 1 the tax administrator shall compute the rate of interest to be in effect for that calendar year by adding two percent (2%) to the prime rate, which was in effect on October 1 of the preceding year. In no event shall the rate of interest exceed twenty-one percent (21%) per annum nor be less than eighteen percent (18%) per annum.

   (c) "Prime rate" as used in subsection (b) of this section means the predominant prime rate quoted by commercial banks to large businesses as determined by the board of governors of the Federal Reserve System.

SECTION 3. Section 44-1-7.1 of the General Laws in Chapter 44-1 entitled “State Tax Officials” is hereby amended to read as follows:

44-1-7.1. Interest on overpayments. – (a) Each January 1 the tax administrator shall compute the rate of interest to be in effect for that calendar year by reference to the prime rate, which was in effect on October 1 of the preceding year. The term “prime rate” shall mean the predominant prime rate quoted by commercial banks to large businesses as determined by the board of governors of the Federal Reserve System.

(b) Notwithstanding any general or specific statute to the contrary, overpayments of state taxes shall bear interest at the prime rate provided as defined in § 44-1-7.1(a) from the date the tax was paid, or from the date including any extensions of the date the tax became due, whichever of the dates occurs later.

(b) (c) If any overpayment of state tax is refunded within ninety (90) days after the last date prescribed (or permitted by extension of time) for filing the return of the tax, or within ninety (90) days after the return is in fact filed, no interest shall be allowed under this section on the overpayment.

(c) (d) For the purposes of this section, if any overpayment of state tax results from a carry-back of a net operating loss, the overpayment is deemed not to have been made prior to the close of the taxable year in which the net operating loss arises.

SECTION 4. Sections 1 and 3 shall take effect as of July 1, 2006. Section 2 shall take effect as of October 1, 2006.