What is Rhode Island’s franchise tax?

Rhode Island does not impose a traditional, standalone franchise tax like some other states. Instead, the state operates a business tax system that functions similarly through required annual entity-level taxes and filing obligations. 

The state imposes a minimum corporate tax of $400 for C corporations and an equivalent $400 annual charge for most LLCs and other pass-through entities, which serves the same practical purpose as a franchise tax.

Rhode Island calls these obligations the "minimum corporate tax" for corporations and "annual fee/charge" for LLCs and partnerships, rather than using the term "franchise tax."

Who must file Rhode Island’s franchise tax?

Rhode Island's entity-level tax obligations apply to most business entities conducting business in the state, with filing requirements determined by both the entity's legal structure and federal tax classification. Here’s a breakdown: 

• C corporations (domestic and foreign) - Must file Form RI-1120C and pay either 7% corporate income tax or the $400 minimum, whichever is greater
• S corporations - Must file Form RI-1120S and pay the $400 minimum; if federally taxable (built-in gains, excess passive income), must attach RI Schedule S and pay 7% on taxable amounts
• LLCs electing corporate taxation - File as corporations (RI-1120C for C-corp election, RI-1120S for S-corp election) and follow corporate tax rules
• LLCs taxed as partnerships or disregarded entities - Must file Form RI-1065 and pay the $400 annual charge
• Single-member LLCs (SMLLCs) - Required to file Form RI-1065 and pay $400 annually, even if disregarded for federal tax purposes
• Limited partnerships (LPs) and Limited liability partnerships (LLPs) - Must file Form RI-1065 and pay the $400 annual fee
• General partnerships - Must file Form RI-1065, but are exempt from the $400 annual fee

Rhode Island franchise tax filing requirements

Rhode Island's business entity filing system requires specific forms and documentation based on the entity's federal tax classification and structure. Required documentation includes:

• Federal tax returns and schedules - Copies of federal returns (1120, 1120S, 1065) and supporting schedules for income reconciliation
• Apportionment schedules - Required for multi-state businesses using Rhode Island's single sales factor apportionment
• RI Schedule S - Required for S corporations with federal-level taxable income (built-in gains, excess passive income)
• Partner/member information - K-1s and ownership details for pass-through entities

Filing fees and costs

Rhode Island's Division of Taxation has straightforward fee structures with no separate filing fees beyond the required tax amounts. 

However, business entities such as LLCs are also required to submit an annual report to the Rhode Island Secretary of State, which carries a separate $50 filing fee (due May 1 each year) in order to remain in good standing.

Due dates and deadlines

Rhode Island follows a calendar-based filing system with specific deadlines that adjust for weekends and holidays.

Annual filing deadlines:

• March 15 - Partnerships, LLCs filing Form RI-1065, and S corporations filing Form RI-1120S
• April 15 - C corporations filing Form RI-1120C
• Fiscal year entities - 15th day of the 3rd month after year-end for partnerships/S corps, 15th day of the 4th month for C corporations

Rhode Island offers filing extensions (not payment extensions) up to six months beyond the original due date. However, payment of the estimated tax due is required by the original deadline to avoid penalties. 

Tax calculation

Rhode Island's business tax calculation varies significantly based on entity type and federal tax classification, operating more like a minimum tax system than a traditional franchise tax.

For C Corporations and LLCs taxed as C corporations:

• Tax rate: 7% of Rhode Island apportioned net income
• Starting point: Federal taxable income with Rhode Island additions/subtractions
• Apportionment: Single sales factor (100% based on Rhode Island sales using market-based sourcing)
• Formula: (Federal taxable income ± RI adjustments) × Sales factor × 7% tax rate

For all other entities (S corps, LLCs, partnerships):

• Flat annual charge: $400 per year, regardless of income
• S corporations with federal taxable income: $400 minimum plus 7% on taxable amounts via Schedule S
• No apportionment calculation needed for the flat fee

Minimum tax amounts:

• C corporations: $400 minimum tax applies when calculated income tax is less than $400
• S corporations: $400 minimum tax, plus additional tax at 7% on any federally taxable income
• LLCs and partnerships: $400 annual charge (except general partnerships)
• Multi-state businesses: Single sales factor apportionment may reduce or increase liability based on Rhode Island sales percentage

How to file

Rhode Island offers multiple filing options with a strong preference for electronic submissions through the state's online RI Taxpayer Portal. You can still file paper returns, but the Department of Revenue encourages electronic filing for faster processing and immediate confirmation.

The filing process is straightforward once you understand the system requirements:

• Register or log in to the RI Taxpayer Portal and access your business account
• Select the appropriate form based on your entity type: RI-1120C for C corporations, RI-1120S for S corporations, or RI-1065 for partnerships
• Enter your basic entity information, including EIN, business address, and officer details. The portal may pre-populate fields from prior filings
• Input or import your financial data and complete Rhode Island-specific schedules and adjustments
• Calculate your tax due or annual charge using the system's built-in calculations
• Review the summary showing your tax liability and any credits or adjustments
• Submit your return electronically and make payment through the portal's integrated payment system
• Download and retain your confirmation receipt for your records

Electronic filing offers immediate confirmation, faster processing times, built-in error checking, and seamless integration with payment processing, making it the preferred method for most Rhode Island business entities.

Penalties and compliance

Filing your Rhode Island business return on time preserves your right to operate and shields you from costly penalties. Rhode Island takes compliance seriously, and consequences escalate quickly with continued non-compliance.

• Late filing penalties: Apply when missing deadlines, calculated as a percentage of tax due per month or partial month
• Late payment interest: Accrues from the original due date until full payment, compounding even with automatic extensions
• Underpayment penalties: Additional fees for insufficient payments beyond state tolerance levels
• Lost good standing: "Not in good standing" status blocks financing, state contracts, and court access in Rhode Island
• Collection actions: The Division of Taxation may pursue assessment and collection for unpaid taxes
• Ongoing minimum tax: $400 annual charge continues accruing until formal dissolution, regardless of business activity

File through the RI Taxpayer Portal before your deadline, pay the full amount due, and maintain quarterly estimates to avoid penalties, preserve good standing, and keep your focus on running the business instead of writing checks to the Division of Taxation.

Exceptions and special cases

Most corporations fall under Rhode Island's standard business tax rules, but certain entities qualify for special treatment or outright exemption. Understanding these carve-outs matters because the Division of Taxation won't apply them automatically. Tax-exempt entities include:

• 501(c)(3) and nonprofit organizations maintaining tax-exempt status
• General partnerships (must file Form RI-1065 but exempt from $400 annual fee)
• Financial institutions, subject to a separate bank excise tax
• Insurance companies that are paying insurance premium taxes rather than corporate income tax

Additional state taxes

The franchise-like minimum taxes represent just one piece of Rhode Island's tax structure. Businesses operating here also face:

• Rhode Island corporate income tax for C corporations above the $400 minimum threshold
• Personal income tax on pass-through income for individual owners
• Sales and use tax for businesses selling taxable goods or services
• Employment taxes, including unemployment insurance and temporary disability insurance

Extensions and amendments

Missed your original deadline? Rhode Island grants a six-month automatic extension, but there's a catch: you must pay the estimated tax due with your extension request. Electronic extensions are available through the RI Taxpayer Portal, with extended due dates typically falling in September or October.

Amendments work differently. If you discover an error or get a federal audit adjustment, file an amended return immediately using the same RI form as your original return. Check the "Amended" box, explain the changes concisely, and include any additional tax due plus interest to stop further penalty accrual.

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