Rhode Island tax payment plan with the Division of Taxation

Paying Rhode Island in installments

As a taxpayer right, payment plans are listed in Rhode Island, with one condition attached. The Taxpayer Rights and Responsibilities rule gives you the right to pay outstanding tax in installments when hardship is proven. In plain terms, you show the Division of Taxation that paying all at once does not work for you.

State law calls this arrangement a time-payment agreement. The Division’s rules name neither a fixed dollar cap nor a set number of months, so the terms are settled with you. The rule also lets you choose which tax bill a payment covers, which helps when you owe taxes of more than one kind.

How much interest does Rhode Island charge on a plan?

Interest continues on any balance you have not paid, even as you pay it off in steps. On each January 1, the rate resets under section 44-1-7 of the General Laws to the prime rate plus 2%. Starting in 2023, it can never fall below 12% a year or rise above 21%.

Trust fund taxes carry a higher floor of 18% a year. A trust fund tax is money a business collects for the state from other people. Examples include sales tax from customers, plus income tax withheld from paychecks.

Why a payment agreement protects your license

Tax standing in Rhode Island affects professional and business licenses. A licensee reported as behind by the tax administrator triggers section 5-76-5: after a notice and a hearing, the licensing agency refuses to renew the license. The Division ends the block by certifying your good standing or by certifying your time-payment agreement as satisfactory.

The certificate goes out from the Division within five working days of your request. That happens after you file the overdue return and either pay or sign the agreement.

What happens when a Rhode Island tax bill goes unpaid?

The state has several tools and some of them begin quickly. The General Laws permit the following:

• If payment does not come within 30 days, the Division can ask the district court for a writ of execution. Sheriffs enforce the writ.
• A public list: people owing at least $50,000 and more than 90 days unpaid can be on the delinquent taxpayer list once a 30-day notice has passed.
• Outside collectors: for tax owed from sources outside the state, the Division can hire licensed collection agencies to pursue it

Staying off the delinquent list

The 30-day notice before publishing is your window to act. If you make a satisfactory payment arrangement during that period, the list will not include you. Only if you do not default under the agreement does your name stay off, so missing a payment puts that protection at risk.

Reach out to the Division of Taxation to ask about terms and be ready to show your income and costs. The Rhode Island Tax Portal handles guest payments when you have no account and you can pay bills there.

Settling for less and the IRS side

Under the Offers in Compromise rule, you can propose a lower amount on Form RI 656 if the debt is truly out of reach and the financial statement Form RI 433 is due within 10 days. Acceptance of your offer means you must pay it within 30 days. During the five years, filing and paying on time are required. Otherwise, the old balance can return.

A Rhode Island agreement covers state tax only. Federal debt is handled under the IRS installment rules. Owing both means two plans, two due dates to keep track of and two payments to stay current on.

Nearby states

• Connecticut
• Massachusetts
• All states