02 January 2020 Rhode Island 2020 income tax withholding tables available; new employees must submit Form RI W-4; 2019 Forms W-2 filing reminders The Rhode Island Division of Taxation has released the state income tax withholding tables for tax year 2020. Employees must require employees submit state Form RI W-4 if hired in 2020 or when making withholding tax changes in 2020. Supplemental wages are compensation paid in addition to an employee's regular wages. They include bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay and retroactive pay increases for current employees, and payments for nondeductible moving expenses. Other payments subject to the supplemental wage rules include taxable fringe benefits and expense allowances paid under a nonaccountable plan. How an employer withholds on supplemental payments depends on whether the supplemental payment is identified as a separate payment from regular wages. If supplemental wages, such as bonuses, commission, overtime pay and back pay are paid with regular wages, the income tax to be withheld must be determined as if the total were a single wage payment for the regular payroll period. However, if the supplemental wages are paid separately, the employer may add the supplemental wages to the regular wages paid to the employee for the last preceding payroll period, determine the amount to be withheld as if the aggregate amount were a single payment, subtract the tax withheld for the preceding payroll period and withhold the remaining tax from the supplemental wage payment. (2020 Rhode Island Employer's Income Tax Withholding Tables, Rhode Island Division of Taxation, December 2019.) Effective January 1, 2020, new employees, and those current employees wishing to change their state withholding are required to complete state Form RI W-4, Employee's Withholding Allowance Certificate, in addition to federal Form W-4. The employer can no longer rely on the federal Form W-4 for computing the Rhode Island withholding for employees. Employees electing additional federal withholding may also elect additional Rhode Island withholding by adjusting Form RI W-4. The Department suggests that employers also have current employees complete Form RI W-4 if the employee does not already have one on file. Note that for 2020, if an individual's annual wages exceed $231,500, their Rhode Island exemption amount will phase out to zero. The 2020 Form RI W-4 that the employer is required to keep on file is included in the 2020 employer withholding booklet and available separately here. The Division is revising withholding tax regulations to provide for the mandatory use of state Form RI W-4. Go here to view the proposed revision. Calendar year 2019 Forms W-2 and RI-W3 are due to the Divisionby January 31, 2020. Employersrequired tosubmitannual W-2 information electronically to the SSA and that havea minimum of 25 employees in the statemustfile W-2 informationwith the Division onelectronic media. Employers may submit Forms W-2 on CD-ROM, DVD or through secure File Transfer Protocol (FTP). For information and setup of secure FTP transmissions, employers should send an email to Tax.ProdControl@tax.ri.gov. All electronic submissions are required to use the SSA's EFW2 format, whether submitting on CD-ROM, DVD or through secure FTP. All files must be submitted in ASCII format. EBCDIC is no longer accepted. Specifications dated 2-1-2018 are available here.If specifications are updated for calendar year 2019 after this update, you will be able to find them here. Form RI-W3 must be filed on paper, not electronically. If your Forms W-2 information is reported on a CD-ROM or DVD, include the paper Form RI-W3 with the CD-ROM or DVD for processing. If Form W-2 information is submitted via secure FTP, a paper Form RI W-3 must be submitted separately. Forms 1099 are not required to be submitted unless there is Rhode Island withholding reflected on the form (differing from the federal requirement that Forms 1099-MISC with nonemployee compensation shown in Box 7 be filed by January 31). Forms 1099 must be submitted to the Division on paper on or before the applicable federal deadline for that form. Electronic filing is not available. Go here for more information. As we reported, recently enacted legislation (Rhode Island HB 5151A, Public Law 2019, chapter 88, article 5) makes significant amendments to Rhode Island's withholding tax law effective in 2020, including a change in the deposit frequency for income tax withholding and a reduction in the threshold that triggers the requirement to file and pay electronically. (ADV 2019-28, Rhode Island Division of Taxation; EY Payroll Newsflash Vol. 20, #177, 11-4-2019.) Effective January 1, 2020, employers that currently remit withholding tax on a quarter- monthly and daily basis will be required to instead remit on a weekly basis, with payments due each Monday for the preceding week. If Monday falls on a holiday, the payment will be due the next business day (typically Tuesday).
Form RI-941 to be revised and consolidated to encompass filing by all employers on a quarterly basis To simplify reporting, the Division will separate an employer's payment frequency from its filing frequency, to more closely align with IRS rules. All current forms of RI-941 (daily, monthly, quarterly, quarter-monthly) will be consolidated into a new Form RI-941, Withholding Tax Return, for use by all employers on a quarterly basis, with the return due on the last day of the month following each quarter. The first due date will be April 30, 2020, for first quarter 2020, regardless of when an employer's withholding tax was remitted. As of the date of this update, the new Form RI-941 has not yet been released. Once released, it should be available here. Beginning on January 1, 2020, every employer that had an average monthly withholding tax amount of $200 or more for the previous calendar year will be required to file returns and remit withholding payments electronically. If the employer fails to pay the tax by electronic means, the employer may be subject to a penalty of 5% of the withholding payment that was not filed electronically, or $500, whichever is less. The penalty may be waived for reasonable cause that was not due to negligence or willful neglect. If an employer required to file a return by electronic means fails to do so, it may be assessed a penalty of $50, unless there was reasonable cause that was not due to negligence or willful neglect. Employers that are required to file and pay electronically received a notice from the Division in November 2019 providing further clarifying details and requirements. All employers were to receive a "Withholding Account Summary" notice from the Division in December 2019, letting them know about their required due dates for payment of their taxes withheld and their return filings for the 2020 calendar year. Proposed changes to Division regulations implementing the reporting changes are available here and electronic payment here. Or matthew.cate@tax.ri.gov A list of the 2020 withholding tax filing deadlines is available here.For more information on Rhode Island withholding tax, call +1 401 574 8829 or see the Division's website.
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