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 December 15, 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 September 30, 2022, and before December 15, 2022
• Income tax payments due on or after September 30, 2022, and before December 15, 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 October 14, 2022
• The second installment of the balance due with the 2021 individual income tax return with an original due date of October 18, 2022

If an extension is requested for the filing of income tax returns on or before December 15, 2022, the extended due date will be June 15, 2023.

Additionally, the PRTD further extended the due date for filing the monthly sales and use tax (SUT) return for August from September 27, 2022, to October 20, 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 October 20, 2022.

The PRTD extended the due date to November 18, 2022, for the following items:

• Surety bonds that expire on or after September 19, 2022, and before November 18, 2022
• Notifications of mathematical errors and notifications of return adjustments originally due on or after September 19, 2022, and before November 18, 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 November 18, 2022, and is giving taxpayers until November 18, 2022, to renew Internal Revenue licenses that taxpayers were required to renew on or after September 19, 2022, and before November 18, 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 December 15, 2022 (October 20, 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 December 31, 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 September 27, 2022. The temporary exemption period will run from October 1, 2022, to October 31, 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 October 6, 2022, to December 31, 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 September 19, 2022, to December 31, 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.

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