Rhode Island House Bill H7810

Rhode Island 2026 Regular Session

• Introduced: 2/12/26
• Refer: 2/12/26

Caption

RELATING TO TAXATION -- STATE TAX OFFICIALS

Summary

H7810 amends Rhode Island’s tax administration law to lower the interest rate charged on delinquent state tax payments. Beginning January 1, 2027, the interest rate on all delinquent taxes would be fixed at 12% per year, including trust fund taxes that are currently subject to a higher minimum rate. The bill also changes how the interest rate is determined for delinquent payments by tying it to the rate in effect when the taxpayer is notified of the delinquency. The bill further limits the Tax Administrator’s audit and collection authority. In general, audits would be limited to three years from the filing date, extended to seven years for fraud cases, and barred entirely after ten years from the original filing or required filing deadline, whichever is later. It also prohibits the administrator from requesting filings or attempting to collect liabilities for periods beyond seven years, regardless of whether an audit has begun. The bill retains a separate waiver provision for interest and penalties on certain forgiven Paycheck Protection Program loans that were taxed in 2020 and paid by a specified deadline.

Impact

This bill would amend § 44-1-7 of the Rhode Island General Laws governing state tax officials, changing both the interest rate framework for delinquent taxes and the statute-like limits on tax audits and collections. It would reduce the financial penalty on overdue tax liabilities, standardize the rate at 12% for all delinquent taxes starting in 2027, and shorten the period during which the state may audit or pursue tax liabilities. Taxpayers, especially those with older filings or long-running disputes, would gain stronger finality and reduced exposure to interest accrual and enforcement actions, while the Division of Taxation would lose some flexibility in assessing and collecting older liabilities.

Sentiment

Based on the bill text and the absence of recorded committee testimony or votes, the measure appears to be framed as taxpayer-relief legislation. Its structure suggests support for limiting long-tail tax enforcement and reducing delinquency costs, which would likely be attractive to taxpayers and businesses seeking certainty. At the same time, the bill would constrain state revenue enforcement tools, so fiscal and tax administration officials would likely view it more cautiously.

Contention

The main points of contention are likely to be the reduced delinquent-tax interest rate and the tighter audit/collection deadlines. Supporters would likely argue that the bill prevents excessive interest accumulation, provides certainty, and stops the state from pursuing very old tax periods. Opponents, likely including tax administrators and fiscal watchdogs, may argue that a fixed 12% rate and shorter lookback periods could reduce deterrence, limit recovery of unpaid taxes, and make it harder to address complex or delayed compliance issues, especially in fraud or multi-year cases.