Rhode Island Code of Regulations
Title 280 - Department of Revenue
Chapter 20 - Division of Taxation
Subchapter 55 - Personal Income Tax
Part 4 - Tax Preparer Penalties (280-RICR-20-55-4)
Section 280-RICR-20-55-4.9 - Due Diligence Regarding Property Tax Relief Credit

Universal Citation: 280 RI Code of Rules 20 55 4.9

Current through September 18, 2024

A. It is the responsibility of the Tax Return Preparer to be knowledgeable about the law with regard to Property Tax Relief, make reasonable inquiries of the Claimant, and review supporting documentation provided by the Claimant to validate the assertions made in preparing a Return that claims Property Tax Relief Credit.

B. The purposes for a Tax Return Preparer to question the Claimant for Property Tax Relief Due Diligence analysis are:

1. To reasonably conclude that the Claimant is reporting all income that contributes to their total Household Income; and

2. To reasonably conclude that only one Claimant per Household claims the Property Tax Relief Credit.

C. Due Diligence for a Tax Return Preparer includes, but is not limited to:

1. Have reasonable knowledge or verification of the identity of the Claimant presenting the information (such as requesting a photo ID and social security card);

2. Applying a prudent man standard to the information provided by the Claimant;

3. Evaluating whether that information is complete and gathering any missing facts;

4. Determining if the information is consistent and recognizing contradictory statements;

5. Conducting a thorough, in-depth interview with each Claimant each year;

6. Asking enough questions to have reasonable knowledge the Property Tax Relief Claim is correct and complete; and

7. Documenting in the file any questions asked and the Claimant's responses.

D. To meet the Rhode Island Due Diligence requirements for Property Tax Relief Credit, a Tax Return Preparer shall:

1. Keep copies of any and all documentation provided by the Claimant that was relied upon by the Tax Return Preparer to complete the Return claiming Property Tax Relief Credit;

2. Keep a record of when and how (including from whom) the Tax Return Preparer received the information used to prepare the Return. This includes documentation of what questions were asked by the Tax Return Preparer and the Claimant's responses.
a. If a reasonable and well informed Tax Return Preparer would conclude that any information used to determine if the Claimant is eligible for Property Tax Relief Credit is incorrect, inconsistent, or incomplete, the Tax Return Preparer shall ask the Claimant additional questions as well as maintain additional records consistent with these additional questions.

b. These records may include, but are not limited to:
(1) Verification that Household Income is $30,000 or less such as bank statements, W-2 forms for any persons living in the Household, social security award letters, disability award letters, 1099-C Cancellation of Debt, unemployment benefits, worker's compensation benefits, Public Assistance, child support received, cash assistance from friends/family, gambling winnings, non-taxable military compensation, gross amounts of pensions and annuities; and

(2) Verification that Homestead is subject to property tax such as rent receipts, cancelled rent checks, proof of mortgage payments, proof of paid property tax bill, HUD Lease Form 50059 or lease agreement, and landlord's name, address, and phone number;

3. Copies of documents or records required by this section to be kept on file by a Tax Return Preparer shall be produced within seventy two (72) hours upon request by the Division for said documents or records. However, additional time may be granted based on the Tax Return Preparer's written request to the Tax Administrator.

Disclaimer: These regulations may not be the most recent version. Rhode Island may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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