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H8611
2026 -- H 8611
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LC006561
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO TAXATION -- TAXATION OF BANKS
Introduced By:
Representative Alex D. Marszalkowski
Date Introduced:
June 03, 2026
Referred To:
House Finance
It is enacted by the General Assembly as follows:
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SECTION 1. Section 44-14-14.1 of the General Laws in Chapter 44-14 entitled "Taxation
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of Banks" is hereby amended to read as follows:
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44-14-14.1. Apportionment and allocation of income for purposes of taxation.
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(a) Except as specifically provided in this chapter a banking institution whose business
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activity is taxable both within and outside of this state shall allocate and apportion its net income
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as provided in §§ 44-14-14.1 — 44-14-14.5. A financial institution organized under the laws of a
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foreign country, the Commonwealth of Puerto Rico, or a territory or possession of the United States
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whose effectively connected income (as defined under the federal Internal Revenue Code) is
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taxable both within this state and within another state, other than the state in which it is organized
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shall allocate and apportion its net income as provided in §§ 44-14-14.1 — 44-14-14.5.
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(b) All income shall be apportioned to this state by multiplying this income by the
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apportionment percentage. The apportionment percentage is determined by adding the taxpayer’s
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receipts factor (as described in § 44-14-14.3), property factor (as described in § 44-14-14.4), and
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payroll factor (as described in § 44-14-14.5) together and dividing the sum by three. If one of the
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factors is missing, the two remaining factors are added and the sum is divided by two. If two of the
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factors are missing, the remaining factor is the apportionment percentage. A factor is missing if
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both its numerator and denominator are zero, but it is not missing merely because its numerator is
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zero.
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(c) Each factor shall be computed according to the method of accounting (cash or accrual
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basis) used by the taxpayer for the taxable year.
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(d) For tax years ending prior to January 1, 2025, if the allocation and apportionment
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provisions of §§ 44-14-14.1 — 44-14-14.5 do not fairly represent the extent of the taxpayer’s
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business activity in this state, the taxpayer may petition for or the tax administrator may require, in
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respect to all or any part of the taxpayer’s business activity, if reasonable:
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(1) The exclusion of any one or more of the factors;
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(2) The inclusion of one or more additional factors which will fairly represent the
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taxpayer’s business activity in this state; or
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(3) The employment of any other method to effectuate an equitable allocation and
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apportionment of the taxpayer’s income.
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(e) For tax years beginning on or after January 1, 2025, if the allocation and apportionment
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provisions of §§ 44-14-14.1 — 44-14-14.5 or subsection (f) of this section are not reasonably
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adapted to approximate the net income derived from business carried on within the state, a banking
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institution may apply to the tax administrator, or the tax administrator may require the banking
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institution, to have its income derived from business carried on within the state determined by an
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alternative method. Such application shall be made by attaching to its duly-filed return a statement
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of the reasons why the banking institution believes that §§ 44-14-14.1 — 44-14-14.5 or subsection
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(f) of this section are not reasonably adapted to approximate its net income derived from business
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carried on within the state and a description of the method sought by it. A banking institution which
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so applies shall, upon receipt of a request therefor from the tax administrator, file with the tax
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administrator, under oath of its treasurer, a statement of such additional information as the tax
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administrator may require.
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If, after such application by the banking institution, or after the tax administrator’s own
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review, the tax administrator determines that §§ 44-14-14.1 — 44-14-14.5 or subsection (f) of this
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section are not reasonably adapted to approximate the banking institution’s net income derived
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from business carried on within the state, the tax administrator shall by reasonable methods
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determine the amount of net income derived from business activity carried on within the state. The
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amount thus determined shall be the net income taxable under § 44-14-3 or § 44-14-4 and the
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foregoing determination shall be in lieu of the determination required by §§ 44-14-14.1 — 44-14-
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14.5 or subsection (f) of this section. If an alternative method is used by the tax administrator
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hereunder, the tax administrator, in their discretion, may require similar information from such
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banking institution if it shall appear that such alternative method or §§ 44-14-14.1 — 44-14-14.5
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or subsection (f) of this section are not reasonably adapted to approximate for the applicable year
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the banking institution’s net income derived from business carried on within the state and may
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again by reasonable methods determine such income.
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(f) For tax years beginning on or after January 1, 2025, except as specifically provided in
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this chapter a banking institution whose business activity is taxable both within and outside of this
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state may elect to allocate and apportion its net income by multiplying its net income by its receipts
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factor as described in § 44-14-14.3. For purposes of an election made pursuant to this subsection
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(f), the following shall apply:
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(1) An election shall be made by filing the form prescribed by the tax administrator with
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the taxpayer’s duly-filed return. The election shall take effect in the tax year for which the taxpayer
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makes the election and shall remain in effect for all subsequent tax years; except that, after a
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minimum of five (5) subsequent tax years after the tax year for which the election is made, in the
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event of a material change of facts or law, a taxpayer may apply to the tax administrator to revoke
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the election. Such application shall be made by attaching a statement of the event of a material
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change of facts or law to the taxpayer’s duly-filed return. A banking institution which so applies
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shall, upon receipt of a request therefor from the tax administrator, file with the tax administrator,
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under oath of its treasurer, a statement of such additional information as the tax administrator may
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require.
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(2) If the receipts factor is missing, the whole of the banking institution’s net income shall
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be taxable pursuant to §§ 44-14-3 — 44-14-4. The receipts factor shall be missing if both its
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numerator and denominator are zero, but it shall not be missing merely because its numerator is
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zero.
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(3) The receipts factor shall be computed according to the method of accounting (cash or
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accrual basis) used by the taxpayer for the taxable year.
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(4) A banking institution electing apportionment under this subsection shall not claim any
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benefit pursuant to chapter 64.5 of title 42.
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SECTION 2. This act shall take effect upon passage and be effective for tax years
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beginning on or after January 1, 2025.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- TAXATION OF BANKS
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This act would amend the apportionment and allocation of income for purposes of taxation
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relating to the taxation of banks.
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This act would take effect upon passage and be effective for tax years beginning on or after
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January 1, 2025.
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