§ 44-30-76. Employer's liability for withheld taxes - Violations - Penalties. (a)(1) Every employer required to deduct and withhold Rhode Island personal income tax is hereby made liable for the tax. In addition, any amount of Rhode Island personal income tax actually deducted and withheld shall be held to be a special fund in trust for the tax administrator. No employee shall have any right of action against his or her employer in respect to any moneys deducted and withheld from his or her wages and required to be paid over to the tax administrator in compliance or in intended compliance with this law.

(2) For purposes of this section the term "employer" includes an officer or employee of a corporation, including a dissolved corporation, or a member or employee of a partnership, if the officer, employee, or member is under a duty to deduct and withhold Rhode Island personal income tax.

(b) If the tax administrator believes that the payment to the state of the trust fund established under this section will be jeopardized by delay, neglect, or misappropriation, he or she shall thereupon notify the employer that the trust fund shall be segregated, and be kept separate and apart from all other funds and assets of the employer and shall not be commingled with any other funds or assets. The notice shall be given by either hand delivery or by registered mail, return receipt requested. Within four (4) days after the sending of the notice, all the taxes which thereafter either become collectible or are collected shall be deposited daily in any financial institution in the state defined in title 19 and the taxes shall be designated as a special fund in trust for the state and payable to the state by the employer as trustee of the fund. If an employer who has been notified to segregate such trust funds as a result of its failure to remit Rhode Island personal income taxes actually deducted and withheld fails to segregate such trust funds, or after such notice fails or refuses to deduct and withhold personal income tax from its employees, the tax administrator may institute proceedings in the superior court of this state to restrain and enjoin such employer from engaging in business in this state until such time as the employer complies with the notice to segregate trust funds.

(c) Any employer and any officer, agent, servant, or employee of any corporate employer responsible for either the collection or payment of the tax, who appropriates or converts the tax collected to his or her own use or to any use other than the payment of the tax to the extent that the money required to be collected is not available for payment on the due date as prescribed in this chapter, shall upon conviction for each offense be fined not more than one thousand dollars ($1,000), or be imprisoned for not exceeding one year, or by both such fine and imprisonment, the fine and the imprisonment to be in addition to any other penalty provided by this chapter.

(d) The provisions of subsections (b) and (c) of this section shall not be exclusive, and shall be in addition to all other remedies which the tax administrator may employ in the enforcement and collection of taxes.

History of Section. (P.L. 1971, ch. 8, art. 1, § 1; P.L. 1974, ch. 151, art. 3, § 1; P.L. 1991, ch. 44, art. 32, § 1.)