§ 44-30-84. Interest on underpayment. (a) General.

(1) If any amount of Rhode Island personal income tax, including any amount of the tax withheld by an employer, is not paid on or before the due date, interest on the amount at the annual rate provided by § 44-1-7 shall be paid for the period from the due date to the date paid, whether or not any extension of time for payment was granted. The interest shall not be paid if its amount is less than two dollars ($2.00).

(2) Interest prescribed under this section may be waived by the tax administrator in the event the underpayment results from the state's closing of banks and credit unions in which the taxpayer's monies are deposited and the taxpayer has no other funds from which to pay his or her tax.

(b) Estimated tax. If an individual fails to file a declaration of estimated Rhode Island personal income tax as required by § 44-30-55, or to pay any installment of the tax as required by § 44-30-56, the individual shall pay interest at the annual rate provided by § 44-1-7 for the period the failure continues, until the fifteenth day of the fourth month following the close of the taxable year. The interest in respect of any unpaid installment shall be computed on the amount by which his or her actual payments and credits in respect of the tax are less than eighty percent (80%) of the installment at the time it is due. Notwithstanding the foregoing, no interest shall be payable if one of the exceptions specified in 26 U.S.C. § 6654(d)(1) or (2) would apply if the exceptions referred to the corresponding Rhode Island tax amounts and returns.

(c) Payment prior to notice of deficiency. If, prior to the mailing to the taxpayer of notice of deficiency under § 44-30-81, the tax administrator mails to the taxpayer a notice of proposed increase of tax and within thirty (30) days after the date of the notice of the proposed increase the taxpayer pays all amounts shown on the notice to be due to the tax administrator, no interest under this section on the amount so paid shall be imposed for the period after the date of the notice of proposed increase.

(d) Payment within ten (10) days after notice and demand. If notice and demand is made for payment of any amount, and the amount is paid within ten (10) days after the effective date of the notice and demand under § 44-30-81(b), interest under this section on the amount so paid shall not be imposed for the period after the date of the notice and demand.

(e) Suspension of interest on deficiencies. If a waiver of restrictions on assessment of a deficiency has been filed by the taxpayer, and if notice and demand by the tax administrator for payment of the deficiency is not made within thirty (30) days after the filing of the waiver, interest shall thereupon cease to accrue until the date of notice and demand.

(f) Interest treated as tax. Interest under this section shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as the tax, except that interest under subsection (b) of this section may be assessed without regard to the restrictions of § 44-30-81.

(g) No interest on interest. No interest shall be imposed on any interest provided in this section.

(h) Interest on civil penalties and additions to tax. Interest shall be imposed under subsection (a) of this section in respect of any assessable civil penalty or addition to tax only if the assessable penalty or addition to tax is not paid within fifteen (15) days from the effective date of notice and demand therefor under § 44-30-81(b), and in that case interest shall be imposed only for the period from the effective date of the notice and demand to the date of payment.

(i) Tax reduced by carryback. If the amount of tax for any taxable year is reduced by reason of a carryback of a net operating loss, the reduction in tax shall not affect the computation of interest under this section for the period ending with the last day of the taxable year in which the net operating loss arises.

(j) Limitation on assessment or collection. Interest prescribed under this section may be assessed or collected at any time during the period within which the tax or other amount to which the interest relates may be assessed or collected.

(k) Interest on erroneous refund. Any portion of tax or other amount which has been erroneously refunded, and which is recoverable by the tax administrator, shall bear interest at the annual rate provided by § 44-1-7 from the date of the payment of the refund.

(l) Timely deposits for withheld tax. If an entity fails to remit withheld tax at the times prescribed by the tax administrator, there may be interest assessed at the annual rate provided by § 44-1-7 for the period the failure continues, until the thirty-first day of the first month following the close of the taxable year. The interest with respect to any failed remittances shall be computed as prescribed by the tax administrator.

History of Section. (P.L. 1971, ch. 8, art. 1, § 1; P.L. 1974, ch. 78, § 1; P.L. 1981, ch. 293, § 2; P.L. 1992, ch. 388, § 10; P.L. 1994, ch. 369, § 1; P.L. 2019, ch. 88, art. 5, § 12.)