Rhode Island: Tax Debt, Audits, Other State Tax Problems, and Solutions

Are you dealing with unpaid individual income taxes or business tax debt in Rhode Island? Are you behind on personal or business state tax returns? Do you need help with business taxes? Facing an audit? Dealing with other tax problems in this state?

Then, you need a tax pro who's experienced with the Rhode Island Division of Taxation. They have the experience you need to navigate the tax code in Little Rhody. Start your search today on TaxCure and use the filters to narrow down the results so that you only see tax pros with the exact experience you need.

Key takeaways

• Rhode Island taxes – individual income tax, corporate income tax, estate tax, sales tax, and excise taxes.
• State tax problems – unpaid taxes, unfiled returns, audits, assessments, and involuntary collections. 
• Division of Taxation relief options – installment agreements, offer in compromise, penalty relief (rare). 
• How to get help – Use TaxCure to find a tax pro who has experience in Rhode Island today.

Understanding Rhode Island Taxes: What Can You Owe?

Individuals in Rhode Island must pay the following state taxes:

• Individual income tax -- 3.75 to 5.99%
• Estate tax – applies to estates worth over $1.8 million as of 2025 (indexed to inflation)
• Property tax -- 1.3% effective rate
• State sales tax -- 7%

Businesses may need to deal with the following taxes:

• Corporate income tax -- 7% of corporate profits, paid by the corporation.
• Sales tax – must be collected from individuals by the business and remitted to the state.
• Withholding tax – Rhode Island income tax withheld from employee paychecks and remitted to the state.
• Cigarette excise tax 
• Gas excise tax
• Property tax – must be paid by businesses that own property; also, many commercial leases require the business to pay property tax.

There are a variety of different state tax returns, filing deadlines, and payment requirements that you must understand if you want to stay on top of your state tax obligations. 

Do remote sellers need to collect Rhode Island sales tax?

If you're based in another area and you make sales to customers in Rhode Island, you must collect sales tax if:

• You have more than $100,000 in sales.
• You have more than 200 transactions in the state.

You can set up an account online through the RI Division of Taxation, or if you need to register for sales tax accounts in multiple states at the same time, you can use the Streamlined Sales Tax Registration System (SSTRS)

What is the estate tax in Rhode Island?

The estate tax applies to the value of a descendant's property before any transfers are made. Estates may face this tax if they are worth $1.8 million or more as of 2025. Heirs don't directly pay the estate tax. Instead, it's applied to the estate before any assets are distributed to the estate's heirs. 

Tax Audits in Rhode Island

The state can audit any return that is filed with the Department of Taxation – generally, the state focuses on business tax returns. If you're selected, the state will send you an audit notice. Then, you'll have a preliminary meeting to talk about business activities and recordkeeping, and to outline the objectives of the audit. 

You'll provide the auditor with documents, receipts, and files that support the information reported on your tax return. Then, the auditor will compare the information you provide with the details reported on your return. If the auditor doesn't find any discrepancies, the audit will be concluded as a no-change audit, and you won't owe any additional tax or penalties. 

If the auditor makes changes to your return, they'll send a proposed assessment. You have 30 days to respond or the assessment becomes final. Then, you must pay the tax as well as any interest and penalties that have accrued, or the state can initiate the collection process. 

Rhode Island Division of Taxation: Collection Actions

If you don't pay individual or business taxes, the Rhode Island Division of Taxation has the right to assess penalties, send demands for payments, and use involuntary collection methods to collect unpaid tax. 

At first, the Division will send you a 10-day Demand for Payment. If you don't pay or respond, they'll send a Notice of Intention to Levy, which gives you 30 days to respond before they move forward with a writ of execution and a levy as explained below.

Here's what can happen if you don't pay: 

• Penalties – Filing income tax or withholding returns late leads to a penalty of 5% per month, up to 25% of the tax due. The penalty for paying late is .5% of the tax due, per month, up to 25%. There is also a penalty of at least $1 and up to $1000 for information forms filed late.
• Writ of Execution – If you don't pay within 30 days after the Department assesses the tax and demands payment, Rhode Island has up to three years to petition the sixth division of the district court for a writ of execution. If the tax remains unpaid at the time of the hearing, the court will issue a writ of execution. This functions like a state tax lien – it goes to the sheriff of your county and gives them the right to seize your property. 
• Property levies – Once a writ of execution has been issued, the state has the right to seize your property. They may take individual property for unpaid income taxes, such as vehicles or real estate. They may take business property for unpaid business taxes or even individual property if you're personally liable for business taxes. 
• Wage garnishments – The state may let you set up a "voluntary garnishment" where your employer takes money out of your paycheck and sends it to the Division of Taxation until you pay off your tax liability. RI may also be able to garnish your wages involuntarily if you don't pay your taxes.
• Refund offsets – The Division of Taxation will keep all of your state tax refunds and apply them to your tax liability if you don't pay. They also contract with many different cities in the state for refund offset programs. And if you owe IRS taxes but not state taxes, the IRS may be able to seize your state tax refund.
• Delinquency list – The Division of Taxation publishes a list of the most delinquent taxpayers. There's one list for individuals who owe over $50,000 and another for businesses that owe over $50,000. You must be at least 90 days behind to appear on the list.

Solutions for Rhode Island State Tax Debt

The Rhode Island Division of Taxation offers a few different options to help taxpayers who've fallen behind on their payments. It tends to be easier to get approved for payments or settlements if you're dealing with individual taxes than with business taxes. 

However, in either case, you may want to look into:

Payment Plans / Installment Agreements

Offered for those unable to pay in full. If you owe $1000 or less, you must pay 50% upfront, and then, you can spread the rest over 12 installments. If you don't meet those terms, you may still be able to get a payment plan, but the Division will require financial information and will approve your plan on a case-by-case basis. 

To apply, complete Form RI-9465. Note your name, the amount due, your down payment, proposed monthly payment, and whether you want to pay on the 15th or the 30th. If you owe over $1000 or need more than a year for payments, you also need to share a few financial details about your income and expenses, vehicles, property, debts, and other assets and liabilities.

Offer in Compromise

Rhode Island may be willing to settle your state tax debt for less than owed. To apply, file Form RI-656. You must note the amount of your offer on Form RI-656. Then, within 10 days of applying, you must submit a financial disclosure that details all of your income, expenses, assets, and debts – use Form RI-433-A for individuals or RI 433-B for businesses. The offer should reflect the most you can afford to pay, or the agency will reject it. 

If approved, you must pay the offer within 30 days. However, you have ongoing tax obligations. If you file or pay late in the next three years, the agency can rescind your offer and require you to pay that year in full. The Division of Taxation wants to know if you have received an IRS offer in compromise in the last two years – if so, you must include details. 

Penalty abatement

The Division of Taxation may waive penalties, but only in rare situations. To get penalty waivers, you typically must pay the tax and penalties in full. Then, you can request a waiver based on hardship. 

Talk with a tax professional who has experience in Rhode Island if you want to apply for penalty waivers based on death, natural disaster, or erroneous advice from the state. Although it's not guaranteed, a tax pro can help you figure out your options, how to negotiate with the Division, and your best steps forward. Unfortunately, RI doesn't offer first-time penalty abatement like the IRS.

How to Contact the Rhode Island Division of Taxation

The RI Division of Taxation has an online portal – all taxpayers can sign up and interact with the state. You can file all business tax returns through this portal, except corporate income tax returns.

You can also contact the department at:

• Main phone number

(401) 574-8829

• Address

Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908

• Assistance with personal income tax:

[email protected]
401.574.8829, option #3

• Registering for business tax accounts:

Email: [email protected]
Phone: 401.574.8938

• Compliance and collections:

Email: [email protected]
Phone: 401.574.8941

• Audits

Email: [email protected]
Phone: 401.574.8962

Why Seek Professional Help for RI Tax Problems?

A tax professional can help you navigate complex tax regulations, understand your options, and get back into compliance with the state. They can work with you to develop a customized solution for your unique tax problem – whether that's unpaid state taxes, unfiled returns, audits, or other concerns. 

Ideally, you want a tax pro who has experience with Rhode Island tax problems. They have the experience to help you navigate the problem successfully and get peace of mind. Unfortunately, when you work with a lot of the big tax relief companies, they lack state-specific experience – they may not understand which options the state offers, how to apply, or the best tactics for negotiating with the state. 

TaxCure can help you find a pro with the exact experience you need. You can narrow down the results to find someone who's experienced with Rhode Island's tax laws - you can also look for someone who has experience with your exact tax problem (for example, unpaid taxes) and the solution you want (for example, offer in compromise)

Don't wait – use TaxCure to find help with your tax problems today. Once you get a list of pros, look at their experience and reviews until you find the right fit.