AN ACT RELATING TO TAXATION -- STATE TAX OFFICIALS (Extends the timeframe for the division of taxation to review nonresident contractor cases and provide a specific penalty for noncompliance with the statute's withholding requirements.)

S2815

2026 -- S 2815
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LC004984
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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 -- STATE TAX OFFICIALS

Introduced By:
Senators Ciccone, Tikoian, and Gallo

Date Introduced:
March 04, 2026

Referred To:
Senate Finance
(Dept. of Taxation)
It is enacted by the General Assembly as follows:
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SECTION 1. Section 44-1-6 of the General Laws in Chapter 44-1 entitled "State Tax
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Officials" is hereby amended to read as follows:
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44-1-6. Additional collection powers — Nonresident contractors.
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(a) Any person doing business with a nonresident contractor shall withhold payment of an
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amount of three percent (3%) of the contract price until
thirty (30)

sixty (60)
days after the
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contractor has completed the contract and has requested the tax administrator, in writing, to audit
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the records for the particular project, a receipted copy of the request to be furnished to the person
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holding the funds. The tax administrator shall, within
thirty (30)

sixty (60)
days after receipt of the
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request, furnish to the nonresident contractor and to the person holding the funds either a certificate
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of no tax due or a certificate of sales and use tax or income tax withheld, or both, due from the
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nonresident contractor.
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(b) Upon receipt of a certificate of no tax due, the person holding the payment may pay the
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nonresident contractor.
Upon receipt of a certificate of taxes due, the person may pay to the
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contractor out of the amount withheld the excess over the amount of taxes stated in the certificate
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together with the interest and penalties assessed.
If the tax administrator furnishes neither certificate
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to both parties within
thirty (30)

sixty (60)
days after receipt of a written request for the making of
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the audit, the person holding the payment may immediately pay the payment withheld to the
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nonresident contractor under the terms of the contract free from any claims of the tax administrator
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against either the person holding the payment or the nonresident contractor for payment of sales or

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use taxes or income taxes withheld, or both.
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(c) In the event the tax administrator serves upon the contractor and the person holding the
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payment a certificate showing the taxes due within a
thirty (30)

sixty (60)
day period, the person
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holding the payment shall deposit with the tax administrator the amount stated in the certificate
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which is not in excess of three percent (3%) of the contract price, taking a receipt for the amount,
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and is free from any claim of the nonresident contractor for that amount or of the tax administrator
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for sales and use taxes or income taxes withheld, or both, arising out of the materials, equipment,
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and services used in performance of the contract of the nonresident contractor on that project.
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(d) As used in this section, “a nonresident contractor” is one who does not maintain a
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regular place of business in this state. “A regular place of business” means and includes any bona
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fide office (other than a statutory office), factory, warehouse, or other space in this state at which
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the taxpayer is doing business in its own name in a regular and systematic manner, and which is
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continuously maintained, occupied, and used by the taxpayer in carrying on its business through its
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regular employees regularly in attendance. A temporary office at the site of construction shall not
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constitute a regular place of business.
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(e) Any person doing business with a nonresident contractor who fails to comply with the
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provisions of this section shall be liable for payment of the amount due as determined by the tax
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administrator and shall be subject to the same collection activities as a taxpayer pursuant to this
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title.
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SECTION 2. This act shall take effect upon passage.
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LC004984
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LC004984 - Page 2 of 3
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- STATE TAX OFFICIALS
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This act would extend the timeframe for the division of taxation to review nonresident
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contractor cases and provide a specific penalty for noncompliance with the statute's withholding
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requirements.
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This act would take effect upon passage.
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LC004984
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LC004984 - Page 3 of 3