Business Corporation Tax-Corporate Nexus

Regulation Authority:

R.I. Gen. Laws Sections 44-11-1, 44-11-2, 44-11-4.1, 44-11-14 and other Sections of Chapter 44-11 of the R.I. General Laws

Purpose and Reason:

The purpose of this regulation is to implement Rhode Island General Laws (RIGL) Sections 44-11-4 and 44-11-4.1. This amendment provides guidance regarding Nexus for Business Corporation Tax. There is also a change in style and format. Regulation CT 15-02, Corporate Nexus, replaces Regulation CT 95-02, Nexus for Business Corporation Tax. The new regulation implements style and formatting changes to conform to a standardized presentation scheme. Much of the existing text from Regulation 95-02 remains unchanged, but there are several additions meant to clarify the Division of Taxation’s policies with regard to nexus. In Rule 5, definitions have been established to clarify the meaning of certain key terms. In Rules 6 and 7, general explanations of the concept of nexus and how nexus principles apply to corporations have been included for taxpayer guidance. Rule 8 was included to acknowledge the introduction of mandatory combined reporting to Rhode Island and its relationship to nexus principles. Separate rules were included to distinguish between certain protected activities that do not establish nexus with Rhode Island (Rule 9), and activities that do establish nexus (Rule 10). The Regulation implements developments in the relevant case law dating from the effective date of the prior regulation, and maintains the Division’s policy of applying nexus principles to the fullest extent permissible under federal law.