The bill amends Section 44-1-7 of the General Laws concerning state tax officials, specifically addressing interest rates on delinquent tax payments and limitations on audit periods. It establishes that, starting January 1, 2026, the interest rate on all delinquent tax payments, including sales and trust fund taxes, will be capped at twelve percent (12%) per annum, with no exclusions. This cap serves as both a floor and a ceiling, ensuring consistency in the application of interest rates. The interest rate applied will be based on the date of notification of delinquency rather than the original tax obligation date.

Additionally, the bill introduces new limitations on the tax administrator's authority to audit taxpayers. The audit period for ordinary tax returns is limited to three years from the date of filing, while cases involving fraud are limited to seven years from the date of filing. Under no circumstances can the tax administrator initiate or conduct an audit, investigation, or tax collection for any period exceeding ten years from the date of the original filing or required filing deadline, whichever is later. Furthermore, the tax administrator is prohibited from requesting filings or attempting to collect tax liabilities for any period exceeding seven years, regardless of whether a formal audit has been initiated. These limitations apply without exception.

The act is set to take effect on January 1, 2026, and will apply to all assessments, audits, and tax payments initiated on or after that date.

Statutes affected:
655: 44-1-7