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In Administrative Determination 22-08 (AD 22-08), the Puerto Rico Treasury Department (PRTD) has issued guidance on the tax measures put in place as a result of the state of emergency declared by the Governor of Puerto Rico because of Hurricane Fiona.
Extended due dates
The PRTD extended the due date to 15 December 2022 for the following returns and payments:
- Income tax returns or extension requests that are for individuals, corporations, pass-through entities and other legal entities and have an original due date on or after 30 September 2022 and before 15 December 2022
- Income tax payments due on or after 30 September 2022 and before 15 December 2022
- Form 481.1, Credit Return for Persons 65 or older and Compensatory Credit for Low-Income Pensions, for tax year 2021 with an original due date of 14 October 2022
- The second installment of the balance due with the 2021 individual income tax return with an original due date of 18 October 2022
- If an extension is requested for the filing of income tax returns on or before 15 December 2022, the extended due date will be 15 June 2023.
Additionally, the PRTD further extended the due date for filing the monthly sales and use tax (SUT) return for August from 27 September 2022 to 20 October 2022. The extended due date also applies to the payment of the SUT deposit due with the monthly SUT return.
Subsequently, Puerto Rico’s Municipal Finance Corporation (known as COFIM by its Spanish acronym) issued a press release stating it will follow AD 22-08, extending the due date for the filing and payment of the municipal monthly sales and use tax (SUT) return for August until 20 October 2022.
The PRTD extended the due date to 18 November 2022, for the following items:
- Surety bonds that expire on or after 19 September 2022 and before 18 November 2022
- Notifications of mathematical errors and notifications of return adjustments originally due on or after 19 September 2022 and before 18 November 2022
- Administrative procedures, such as ruling requests and changes in accounting periods or methods, that are not handled through the Unified Internal Revenue System (SURI)
In addition, the PRTD is delaying the issuance of collection notices, bank liens and other liens to 18 November 2022, and is giving taxpayers until 18 November 2022, to renew Internal Revenue licenses that taxpayers were required to renew on or after 19 September 2022, and before 18 November 2022.
The PRTD will adjust its tax information system, so that interest, surcharges and penalties will not be imposed if taxpayers file their tax returns and make their tax payments on or before 15 December 2022 (20 October 2022 for the SUT return). If penalties are imposed, the taxpayer should request the removal of the penalties through SURI.
Payment plans
Taxpayers that have been economically affected by Hurricane Fiona and cannot comply with their tax payment plan may enter into a new payment plan through SURI or by visiting the Collection Offices of the Revenue Bureau before 31 December 2022. Under the new payment plan, the taxpayer must make the first payment no later than 45 days after requesting the new plan.
Temporary SUT exemption for imports or purchases of taxable items
The PRTD established a temporary SUT exemption for imports or purchases of taxable items for resale by merchants that are resellers and have a reseller certificate as of 27 September 2022. The temporary exemption period will run from 1 October 2022 to 31 October 2022.
All merchants that are resellers and have an active reseller certificate will automatically receive through SURI a temporary exemption certificate that will allow them to import or purchase taxable items for resale during the exemption period without having to pay the SUT on those transactions. Merchants that acquire taxable items during the temporary exemption period should submit a copy of their temporary exemption certificate with Form SC 2916, Certificate of Exempt Purchases and Services Subject to the Special SUT of 4%.
Special retirement plan distributions
The PRTD will allow taxpayers to take special distributions from their retirement plans or IRA accounts from 6 October 2022 to 31 December 2022.
Qualified payments to employees or independent contractors
Because of the disaster declaration issued by the President of the United States, employers may make qualified disaster payments to their employees or independent contractors. Those payments will be excluded from gross income under Section 1031.01(b)(16) of the Puerto Rico Internal Revenue Code of 2011. Qualified payments that are made by an employer to a provider of goods and services and benefit an employee or independent contractor will also be excluded from the employee’s or independent contractor’s gross income.
Employers may make qualified payments from 19 September 2022 to 31 December 2022. During this period, employers also may grant interest-free loans to employees or independent contractors to cover expenses resulting from Hurricane Fiona. The loans will be excluded from gross income. The PRTD expects to issue further guidance on qualified payments.
Implications
The guidance issued by the PRTD does not extend to additional filing obligations with other government agencies, instrumentalities, or municipalities. Taxpayers should be on the lookout for further guidance, which may be provided under separate communications.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Puerto Rico LLC, State and Local Taxation Group, San Juan
- Rosa M. Rodríguez
- Pablo Hymovitz Cardona
- María T. Riollano
- Alberto J. Rossy
- Alexandra M. Pérez
- Carla J Diaz
- Karol I. Santiago
- Marcel Ramos
- Isabel Rivera
- Noeliz Suarez
- David Montañez
- Luz G. Rivera
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
