Under The Dome

Call to Action!  PLEASE READ!
 
The Chamber is asking you to come to the State House this week and/or contact your legislators TODAY! 
 
Tangible Tax Exemption – Tuesday, May 9th
 
On the business-friendly side of the ledger, S.928 and S.955, Acts Relating to Taxation – Statewide Tangible Property Tax Exemption are being heard in the Senate Finance Committee Tuesday, May 9^th at the Rise (approximately 4:30 pm).  S.928 provides a tangible property assessed value exemption up to $100,000 beginning in the tax year ending December 31, 2024.  The exemption applies to both municipal and fire district assessments. Similar to the car excise tax phase-out, the state would reimburse the taxing entity for the loss in revenue.  S.955 provides tangible tax relief as well, and reimbursement to the taxing entity, but phases it in over a longer period of time.  The exemption starts at $5,000 of assessed value in the tax year ending December 31, 2024; increases to $20,000 in 2025; $50,000 in 2026; $100,000 in 2027; and $250,000 in the tax year ending December, 31, 2028. 
 
An estimated 85% of all current tangible property taxpayers would have no tax liability once the $100,000 exemption level is reached.  That means approximately 32,000 small businesses may no longer be required to file the annual tax form and to pay the tax.
 
Property taxes levied by cities and towns represent arguably the most onerous and anticompetitive tax burden imposed on businesses in Rhode Island.  Rhode Island has some of the nation’s highest property taxes in the country – 9^th highest property tax collections per capita.  Why is this important? Because, studies have shown that high commercial real estate and tangible taxes discourage investment and hinder economic development, and tangible taxes may also discourage businesses from making the capital investments needed to expand or to become more productive.
 
Please send an email to SenateFinance@rilegislature.gov before 3:00 pm Tuesday, May 9^th.  Simply tell the committee, your name, company name and location, and how the paying of the tangible tax affects your business. Thank them for considering your testimony.
 
 
Wage Theft and Independent Contractor Misclassification Felony – Thursday, May 11th
 
The Chamber does not ask you to come to the State House often, but we are asking now.  On Thursday, May 11^th at the Rise, approximately 4:30 pm in the House Lounge, the House Judiciary Committee will be taking testimony on H.5902, An Act Relating to Labor and Labor Relations – Payment of Wages.  This will likely be the only hearing on this House bill, regardless of any amendments that may come after the initial hearing Thursday.  Why does that matter?  Please read this entire article to understand the potential scope of this proposal.
 
The Attorney General has requested a change in the law to increase the criminal consequences for failing to pay employees properly and for classifying individuals as independent contractors when the government believes those individuals should be considered employees.  There are two distinct pieces to this bill – failure to pay wages properly and the misclassification of employees as independent contractors:
 
Failure to pay employees includes:
 

• Willful failure to pay wages on a regular pay day.  This will likely include any businesses paying employees on a bi-weekly basis without permission or a specific exemption from the state.
• Willful failure to pay any employee wages owed at the time of termination of employment.  Businesses are required to pay employee wages owed on the “next regular payday.”   If the business is liquidating or merging, employee wages are due within 24 hours of the separation of employment
• Willful failure to withhold union dues and pay those dues to the union
• Willful failure to pay wages owed to a deceased employee to the appropriate person/entity within 30 days of death

• Under current Rhode Island law, the ability of an individual to operate as an independent contractor (IC) is determined through the use of the US Internal Revenue Service’s common law factor analysis.  There have been numerous legal cases and agency guidance documents issued over decades to help a very diverse business environment determine who can be an IC and who must be subject to employee status.
• Factors include items such as: level of control over the person, ownership of necessary equipment, written contract existence, how job-related expenses are handled, how vacations are handled, how long the relationship has lasted, does the individual have multiple clients, does the individual have the ability to make profits or losses, etc.  There is no magic number of factors that need to be met to be considered an IC. 
• The continued use of the IRS test is extremely important as industries are unique and emerging with new technologies and services.  There is no “one size fits all” definition across industry sectors.