Frequently Asked Questions About Employment Taxes
Q. What is the reason for the wage reporting changes?
A. The additional information is needed to certify eligibility for the biotechnology investment tax credit in accordance with Section 44-31-1.1 of the RI General Laws
View all FAQ's about the recent wage reporting changes
Q. I am opening a new business. Must I register with your department?
A. Only companies or individuals who have hired someone as an employee must register with this department.
Q. I am an LLC. How am I treated for Employer Tax purposes?
A. Limited Liability Companies (LLC) - LLCs are taxed for RI Employer Tax purposes according to their filing status with the IRS. Members of an LLC will be treated for RI Employer Tax purposes as partners of a partnership if the LLC qualifies as and elects to be a partnership for federal income tax purposes. An LLC may elect if it qualifies to be taxed for federal income tax purposes as a corporation, and any remuneration to members will be reportable and taxable for RI Employer Tax purposes. A single member, who is an individual, who elects to be taxed for federal income tax purposes as a sole proprietor will be treated as a sole proprietor for RI Employer Tax purposes. If the single member of an LLC or the members of an LLC partnership are corporations, any remuneration to corporate officers will be reportable and taxable for RI Employer Tax purposes.
Q. I am a sole proprietor, and my wife works for me. Do I pay taxes on her earnings?
A. No. Wives working for their husbands or husbands working for their wives are exempt under the law. Likewise minor children (under the age of 18) working for a parent are also exempt, as are parents working for their child.
Q. I received a penalty for filing my tax return late. Can I have the penalty waived?
A. The law does not grant the department discretionary power to waive penalties, so the penalty must stand.
Q. Your department administers three taxes--unemployment, temporary disability and job development. Do I pay all three taxes or is there a contribution made by the employee?
A. The employer is responsible for paying the employment security and job development taxes. Temporary disability is withheld from the employee's gross earnings.
Q. Are Employee Contributions to Benefit Plans subject to Rhode Island Employment Taxes?
A. Employee contributions to retirement plans (such as 401K plans), medical insurance or disability insurance plans and Section 125 cafeteria plans are excluded from the definition of wages under the RI Employment Security and Temporary Disability Insurance Acts. Therefore, those contributions should not be included as either total or taxable wages subject to Employment Security, Temporary Disability Insurance and Job Development Fund taxes.
Q. Who is exempt from coverage under the UI and TDI programs?
A. The law exempts certain types of workers from both UI and TDI coverage. A list of these exemptions is provided below:
Q. If I pay no wages within a quarter, must I still file a Quarterly Tax and Wage Report?
Q. How is a late payment applied to my account?
A. Whenever an employer becomes liable for overdue contributions and is assessed interest and/or penalties for one or more taxable periods and partial payment is tendered and accepted by the Director, such payment will be applied in the following order:
(1) To penalties assessed due to the late filing of reports, or the late or non-payment of E.S. contributions.
(2) To interest assessed due to the late or non-payment of E.S. contributions.
(3) To E.S. contributions outstanding.
(4) To penalties assessed due to the late filing of reports, or the late or non-payment of T.D.I. contributions.
(5) To interest assessed due to the late or non-payment of T.D.I. contributions.
(6) To T.D.I. contributions outstanding.
(7) To penalties assessed due to the late or non-payment of J.D.F. contributions.
(8) To interest assessed due to the late or non-payment of J.D.F. contributions.
(9) To J.D.F. contributions outstanding.
B. Whenever contributions, penalties and/or interest are due for more than one taxable period the earliest period will be paid in full, in the order specified in paragraph A, before monies are applied to the next earliest period.
Q. How do I make corrections to a Quarterly Tax and Wage Report already submitted?
A. You cannot make corrections to a previously filed Quarterly Tax and Wage
Report by adjusting a current Quarterly Tax and Wage Report. Call the Accounts
& Control Unit at (401)574-8700 (Option 2)
for proper instructions.
Q. Is there a limit on the number of years for which corrections can be made?
A. The prior (3) years or (12) quarters may be adjusted; no corrections are allowed beyond this period.
Q. If my business has employees working in several states, where should they be reported?
A. Wages for services performed within Rhode Island or both within and without Rhode Island are to be reported to Rhode Island if the service is localized in Rhode Island, i.e.,
1. The service is performed entirely within Rhode Island, or
2. The service is performed both within and without Rhode Island, but the service performed without Rhode Island is incidental to the individual's service within Rhode Island, for example, is temporary or transitory in nature or consists of isolated transactions.
If the service is not localized to Rhode Island or any other State, then wages for service performed within, or both within and without Rhode Island, are reported to Rhode Island if some of the service is performed Rhode Island and….
1. The individual's base of operation is in Rhode Island; or
2. If there is no base of operations in Rhode Island, then the place from which the individual's service is directed or controlled is in Rhode Island; or
3. The individual's base of operations or place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in Rhode Island.
The objective is for all services performed by an individual for a single employer to be covered under one state law. If an individual's wages can not be reported to a single state under the conditions outlined above, an employer may elect to report an employee to a single state through a Reciprocal Coverage Agreement between states. For additional information, contact the Employer Tax Section (401)574-8700 (Option 2).
Q. How do I determine who is an independent contractor?
A. Factors considered in the determination of independent contractor or employee status shall be the same as those factors used by the Internal Revenue service in its code and regulations. For more information, Click here . Call the Accounts & Control Unit at (401)574-8700 (Option 2) for more specific information.
Q. What are the penalties and interest assessed if I file and or pay late?
A. Employers who fail to file quarterly tax reports and make contributions
by the due date will be assessed interest at the rate of 1-1/2% per month
and penalties of $25.00 for failure to file quarterly tax reports and 10%
for failure to make contributions to each fund.
Employers who fail to file quarterly wage information by the due date shall pay a penalty of twenty-five dollars ($25.00) for each such failure or refusal to file. An additional penalty of twenty-five dollars ($25.00) shall be assessed for each month the report is delinquent; provided, however, that the foregoing penalty shall not exceed two hundred dollars ($200.00) for any one report.
Q. Does Rhode Island allow common paymasters?
A. The State of RI for UI and TDI tax purposes does NOT recognize common paymaster (related corporations or companies reporting all payroll under one account). Although the federal government does allow common paymasters, Rhode Island Quarterly Tax and Wage Report filers must report each entity under its own number. A company may not include wages from a number of entities under one account.
Q. Does Rhode Island recognize Professional Employer Organization (PEO's) as employers?
A. The State of RI for UI and TDI tax purposes does NOT recognize a PEO as the employer of the individual working for the client company. The employee must be reported under the client company's account number.
Q. If the employer does not deduct and withhold TDI from the employees at the time wages are paid, can they deduct those TDI amounts from future earnings?
A. No. The laws is as follows
§ 28-40-4 Employer's liability for contributions not withheld. – If any employer fails to deduct the contributions of any of his or her employees at the time their wages are paid or fails to make a deduction for the contributions at the time wages are paid for the next succeeding payroll period, he or she alone will thereafter be liable for those contributions, and, for the purposes of §§ 28-39-23 – 28-39-32 and 28-40-9 – 28-40-16 those contributions are treated as employers' contributions required from him or her.
Q. Does RI accept electronic fund transfers for UI, TDI and JDF taxes?
A. Yes, but at this time only the Automated Clearinghouse Method (ACH), credit method is allowed. We accept only ONE payment for all (3), taxes and you are still required to file a Quarterly Tax and Wage Report . Click here for the EFT APPLICATION
Q. As an employee if I work for two or more employers and earn over the TDI tax base how can I apply for a refund?
A. You must file a TX-16 form. Click here for the TX-16 formQ. How can I find out what my ten-digit employer account number is?
A. Contact the Employer Registration Unit at (401) 574-8700 (Option 1)
Q. How can I get a blank Quarterly Tax and Wage Report?
A. Click here to open the TX-17 form
Q. What is the procedure for terminating my account once I no longer have any payroll?
A. You must file a TX-13 form with this office. Click here to open the form
Q. When are the Quarterly Tax and Wage Reports mailed to employers?
A. The reports are mailed approximately 4 weeks prior to the due date.
Q. Am I required to file detailed wage information electronically?
A. Employers with 25 or more employees on their payroll are required by law to submit their wage data electronically. Payroll service providers who have twenty or more clients are required to file Quarterly Tax and Wage Reports (Form TX-17) for their clients electronically. Employers using the services of a payroll company are encouraged to submit the required wage information electronically, the specifications of which are available from the Wage Record Unit. For more information on filing wage reports electronically call (401)574-8700 (Option 3).
Q. Where can I find the specifications for filing detailed wage information electronically and what types are acceptable?
A. The file specifications are in this document
Q. Can I register as an employer , and report my tax information on-line?
A. Yes, you can perform both functions online by selecting the appropriate menu item.
Q. What are my responsibilities as a domestic employer?
A. Employers of domestic workers who have paid $ 1,000 or more in total
cash wages in any calendar quarter are subject to the Employment Security
and Temporary Disability Insurance acts.
Q. Where can I find Employer Tax rules and regulations for further clarification?
A. Click here for rules and regulations - https://dlt.ri.gov/lawsrulesregs/