Rev. Rul. 70-653

The purpose of this Revenue Ruling is to update and restate, under the current statute and regulations, the portion of I.T. 4043, C.B. 1951-1, 22, that is currently applicable. Other portions of I.T. 4043 have become obsolete because of the revision in State statutes.

The question presented is whether the real and personal property taxes levied under the laws of the State of Rhode Island accrue, for Federal income tax purposes on December 31 of each year. The taxpayer, a domestic corporation, computes its income under an accrual method of accounting and files its Federal income tax return on a calendar year basis. During the current taxable year the taxpayer owned both real and personal property located in Rhode Island.

Section 44-5-1 of the General Laws of Rhode Island 1956, as amended, provides as follows:

Sec. 44-5-1. Power of town electors to levy--Date of assessment of valuations.--The electors of any town qualified to vote on any proposition to impose a tax or for the expenditure of money when legally assembled, may levy a tax for the purpose authorized by law, on the ratable property of the town, either in a sum certain, or in a sum not less certain sum and not more than a certain sum. Said tax shall be apportioned upon the assessed valuations as determined by the assessors of the town as of the thirty-first day of December in each year at twelve o'clock midnight, said date being known as the date of assessment of town valuations. * * *

Section 44-5-13 of the laws, as amended, provides for the assessment to be made as follows:

Sec. 44-5-13. Assessment and apportionment according to law--Date of assessment.--The assessors shall assess all valuations and apportion any tax levy on the inhabitants of the town and the ratable property therein according to law, and the assessed valuation of such ratable property shall be made as of the date of assessment provided in section 44-5-1; * * *

Section 44-9-1 of the laws, as amended, provides for the lein to attach as follows:

Sec. 44-9-1. Tax lien on real estate.--Taxes assessed against any person in any town for either personal property or real estate shall constitute a lien on said real estate. Said lien shall arise and attach as of the date of assessment of such taxes, as defined in section 44-5-1. * * *

Section 1.461-1(a)(2) of the Income Tax Regulations provides that, under an accrual method of accounting, an expense is deductible for the taxable year in which all the events have occurred which determine the fact of the liability and the amount thereof can be determined with reasonable accuracy.

In Rhode Island, taxes assessed against the taxpayer with respect to either personal property or real estate constitute a lien which arises and attaches as of the date of assessment, and they may be collected either out of the taxpayer's real or personal assets. In Rhode Island the lien date and the assessment date are the same and represent the event which determines the liability of the taxes.

Accordingly, in the instant case, real property taxes and personal property taxes imposed by the State of Rhode Island accrue, for Federal income tax purposes, on December 31 of each year.

I.T. 4043 is hereby superseded, since the applicable portion thereof is restated under current law in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.