Any Individual, Partnership, Joint Venture, Corporation, State, Municipal Government or Exempt Organization awarding a construction contract in Rhode Island to a Nonresident Contractor is required pursuant to R.I. Gen. Laws § 44-1-6, as last amended, to withhold 3% of the contract price to secure payment of any taxes that may be due to the State of Rhode Island in carrying out the contract.
Who is a nonresident contractor?
A nonresident contractor is one who does not maintain a regular place of business in this state. "A regular place of business" means and includes any bona fide office (other than a statutory office), factory, warehouse, or other space in this state at which the taxpayer is doing business in its own name in a regular and systematic manner, and which is continuously maintained, occupied, and used by the taxpayer in carrying on its business through its regular employees regularly in attendance. A temporary office at the site of construction shall not constitute a regular place of business.
What should the person doing business with the nonresident contactor do?
Any person doing business with a nonresident contractor shall withhold payment of an amount of three percent (3%) of the contract price until thirty (30) days after the contractor has completed the contract; upon receipt of a Certificate of No Tax Due, the person may release the 3% payment to the nonresident contractor.
What is a Certificate of No Tax Due?
A Rhode Island Certificate of No Tax Due demonstrates that a nonresident contractor has remitted all Rhode Island sales/use and withholding taxes to the Rhode Island Division of Taxation for a project.
How does a nonresident contractor request a Certificate of No Tax Due?
Please fill out the Nonresident Contractor Request for Audit form.
Once you have completed the form, please email the form, along with all requested information, as listed on the form, to Tax.Contractor@tax.ri.gov
If you are unable to electronically send the above documentation, please mail to the following address:
Rhode Island Division of Taxation
Audit & Investigation
One Capitol Hill, 3rd Floor
Providence, RI 02908
Attn: NRC Section
What if a Certificate of No Tax Due is NOT provided by the Non-Resident contractor?
If the nonresident contractor fails to submit a certificate of no tax due on the project to the person holding the funds, the 3% deposit needs to be remitted to the State of Rhode Island within thirty (30) days after the nonresident contractor has completed the project. A 3% Nonresident Contractor Deposit form should be completed and mailed, along with a check. Form
For more information:
- R.I. Gen. Laws § 44-1-6 Additional collection powers – Nonresident contractors
- R.I. Regulation 280-RICR-20-70-54 Contractors and Subcontractors
If you have any questions, contact the Audit & Investigation Unit.
Call: (401) 574-8962