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PAGE 16RHODE ISLAND TAX NEWSLEGAL CORNER: CASES (CONTINUED FROM PAGE 15)“The issue is not the locationof the purchase of amotor vehicle but ratherwhether the purchaser . . .was a resident of Rhode Islandat the time of purchase.”Because the taxpayerin this case was a Rhode Islandresident at the time, thetaxpayer owes use tax toRhode Island, plus interestand penalty, she said, citingRIGL § 44-18-20 and otherstatutes. Sullivan on October11, 2011, adopted the hearingofficer’s decision andrecommendation.- Final Decision and OrderNo. 2011-19Historic tax creditThis complex case involvedRhode Island’s historic taxcredit under RIGL 44-22.3-4. At issue was whethercosts incurred by a relatedbusiness entity -- andmarked up to fair marketvalue in an intercompanytransaction -- were allowableas qualified rehabilitationexpense (QRE) under thelaw. If so, were there limitson how much such actualcosts can be marked up?The Tax Division arguedthat the QRE is determinedon the basis of actual costsincurred, not on fair marketvalue of the work performed.The Tax Divisionalso argued that the projectcosts for a QRE must havesome economic substance orreality. (In this case, relatedparties were involved in thework.)The taxpayer argued thatthe QRE was justified underthe law; there was no basisin law to question the transactionbecause of relatedparties; and that, anyway,the QRE in this case wasbased not on fair marketvalue but on the actual costto the taxpayer.The redacted version of theAdministration Decisionsuggests the hearing officerrecommended that themark-up be reduced, to 10percent. (It was originallyclaimed at 29 percent.)Sullivan on December 1adopted the hearing officer’sdecision and recommendation.- Final Decision and OrderNo. 2011-21Claim for refundAt issue was whether aclaim for refund for 2006,filed by a married couple,was timely filed under RIGL44-30-87.On December 22, 2010,the taxpayers filed a nonresident2006 personal incometax return. Through the return,the taxpayers sought arefund related to tax thathad been withheld on theirsales of real estate in 2006.The Tax Division said that arefund can be claimed twoyears from the date of payment,which under the statuteis deemed to be April 15following the tax year. So inthis matter, the claim wouldbe limited to two years fromApril 15, 2007. (The statutealso allows for a three-yearperiod from the point thereturn was filed -- in thiscase, December 22, 2010 --but refund would be limitedin such a situation to anypayments made within thethree-year period, and nosuch payments were made.)The wife testified that sheand her husband were bothdiagnosed with cancer in2006, were treated in 2007and 2008, and are still notcancer-free; they filed theirreturns late due to the illness,which consumed theirtime and energy and resultedin stress. The couple alsosuffered from deaths in thefamily during the time periodin question.The hearing officer ruledthat, “While both taxpayerssuffered serious health issues,there are no provisionsin the statute that providefor any exemptions from thetime limits set by statute.”And while the taxpayersargued for some human consideration,the law does notprovide for such considerationin administrative proceedings.Accordingly, therefund request was denied;Sullivan on December 16adopted the hearing officer'srecommendation.- Final Decision and OrderNo. 2011-22(see also refund case No. 2011-20 )Tax on carAt issue is whether the taxpayerowed use tax on a car.Under RIGL § 44-18-20, usetax is imposed on theRhode Island Tax News providesonly summaries of some recent taxcasedecisions, which are based onspecific facts and circumstances.Don’t rely on them for legal advice;they are merely informativeand provide general guidance.Consult your tax professional if youhave a question or problem.“storage, use, or other consumptionin this state” ofpersonal property, includingautomobiles.The taxpayer said that,when he bought the car in2008, he was a resident ofMaine, had a Maine homesteadexemption, and votesin Maine.The Tax Division arguedthat the taxpayer was not abona fide nonresident becausehe owned Rhode Islandproperty in 2008, paidfor the car with Rhode Islandchecks, and filed Rhode Islandresident returns for2000 through 2009.Only a bona fide RhodeIsland nonresident who doesnot register the vehicle instatedoes not have to payRhode Island tax on a vehicle,the hearing officerfound, ruling that the taxpayerowed use tax, interestand penalty. Sullivan on December16 adopted the recommendation.- Final Decision and OrderNo. 2011-23
A NEWSLETTER FOR TAXPAYERS AND PRACTITIONERSPAGE 17NEWSLETTER POLICYRhode Island Tax News is a newsletter from the Rhode Island Department of Revenue’s Divisionof Taxation. It is typically published each quarter. Its purpose is to provide taxpayersand tax professionals with general information regarding Rhode Island tax laws, regulationsand procedures. It is neither designed nor intended to address complex issues in detail.Nothing contained in this newsletter in any way alters or otherwise changes any provisionsof the Rhode Island General Laws, regulations of the Tax Division, or formal rulings. TheTax Division is at One Capitol Hill, Providence, RI 02908. Its website is www.tax.ri.gov.SUBSCRIBERhode Island Tax News is distributed free, by e-mail, to those who have joined our listserv. If youare not on our listserv but would like to join, send an email to Susan.Galvin@tax.ri.gov withthe word SUBSCRIBE in uppercase in the subject block.COMMENTS AND SUGGESTIONSIf you have comments or suggestions for Rhode Island Tax News, please e-mail its editor, NeilDowning: Neil.Downing@tax.ri.govBACK ISSUESBack issues of Rhode Island Tax News are archived on the Rhode Island Division of Taxationwebsite:http://www.tax.ri.gov/newsletter/index.phpContributorsThe following people associated with theTax Division contributed to this issue:Barbara BissonJames V. CambioMichael F. CanolePhil D’AmbraDonna DubeDonald W. EnglertRaymond A. FilipponeLuisa FinelliJames M. GalvinSusan M. GalvinPaul H. GuertinCharles J. LarocqueMatthew LawlorLeo LebeufBernard J. LemosGail McNameePeter McVayJacques MoreauLinda C. RiendeauDavid M. SullivanRegulatory updateThe Rhode Island Division of Taxation has taken a number of regulatory actions in recent months.For example, the Tax Division:Adopted a new rule, Regulation CT 11-15, “Combined Reporting (pro forma),” which essentiallyapplies to the 2010 and 2011 tax years;Filed Regulation SU 11-114, “Use Tax - Payment by Purchasers,” which took effect December1, 2011, and amends and supersedes an identically named regulation, SU 95-114;Filed Regulation SST 11-01, “Streamlined Sales and Use Tax Agreement,” effective December1, 2011; Filed Regulation SU 11-91, “Records Requirements”, which took effect December 1, 2011,and which amends and supersedes Regulation SU 89-91, “Records”; andFiled Regulation SU 11-20, “Registration and Collection of Sales and Use Tax by Retailers,”which took effect December 1, 2011, amends and supersedes Regulation SU 90-20, “Out-of-State Retailers – Registration,” and incorporates the contents of Regulation SU 87-21,“Collection of Tax by Retailers.”All regulations are available at the Tax Division’s website.Rhode Island Division of TaxationOne Capitol HillProvidence, R.I. 02908Phone: 401-574-8829Fax: 401-574-8917www.tax.ri.govPay tax onlineElectronic Funds Transfer (EFT)lets business taxpayers make paymentsof sales, withholding, andother taxes electronically, via theACH network. Click here formore information.
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