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TAX SEASON 2018

New Due Date

Given the problems with the filing system of tax returns, the deadline for the filing of any return and payment that expired today, April 17, 2018, has been extended until next Friday, April 20, 2018.

 

List of Non-Profit Entities

The PRTD issued the List of Non-Profit Entities for the year 2017. It can be accessed through the following link: List of Non-Profit Entities for the year 2017

Only donations to eligible non-profit organizations are eligible for the deduction on the income tax return. In addition, certain individuals with an Act 22 Grant must make $5,000 in donations to these organizations each year.

 

Department of Treasury Notice 18-06: Payment Plan

The Puerto Rico Treasury Department (hereinafter “PRTD”), issues this communication to establish a system of payment plans for those taxpayers who cannot pay their tax liability related to their 2017 income tax return. To request the aforementioned payment plan, the taxpayer shall file the income tax return on or before Tuesday, April 17, 2018[1] or the 15th day of the fourth month following the end of the taxable year, in the case of taxpayers whose taxable year is an economic year. The payment plan option will not be available to taxpayers who file an Extension Request to File the Income Tax Return (SC 2644) for the taxable year 2017.

Also, the PRTD emphasizes the following terms and conditions when requesting such payment plan:

  • Taxpayer agrees to make monthly payments until the total amount due is paid, including applicable interest.
  • The debt must be paid in full in a period of 3 to 12 months from the approval of the payment plan.
  • The taxpayer will make the monthly payments through direct withdrawal. The PRTD will not accept any other payment method.

As a general rule, the taxpayer will not be required a guarantee or an upfront payment. However, the PRTD may require an upfront payment based on the facts and circumstances of the taxpayer.

Once the payment plan is approved:

  • The taxpayer commits to comply with the provisions of the Internal Revenue Code prospectively.
  • Any failure to comply with the payment plan or any tax responsibility may result in the PRTD imposing fines, surcharges and penalties without the need for additional notification to the taxpayer. In addition, the PRTD will terminate the agreement and proceed with the collection of the outstanding balance, fines, surcharges and penalties imposed.

Any taxpayer interested on applying for the payment plan must comply with the following:

  1. Submit a duly completed and signed applicatio
    • Individuals: Application and Automatic Payment Plan Agreement (SC 3509)
    • Business / Corporations: Automatic Payment Plan Request and Agreement (SC 3510)

The application must include:

  • Personal Information of the Taxpayer (name, social security number or employer identification number, physical and postal address, telephone number, email address and date of birth, in the case of individuals);
  • Spouse personal information, in the case of married individuals filing a joint return (name, social security number and date of birth of the spouse);
  • In the case of salaried individuals, the employer’s information (name of the employer, employer identification number, physical and postal address, telephone number and email address of the contact person in the company). In the case of married individuals filing jointly, they must include the information for each of the spouses;
  • If the Taxpayer requesting the payment plan is not an individual, the information of the owners, partners and business officials must be provided, (name, title, social security number, physical address, email address and telephone number);
  • In the part “Category of the Tax Debt Subject to the Automatic Payment Plan”, taxpayer must mark the corresponding categories related to Income Tax (options “a”, “b” or “c” of the Part II of the Model SC 3509 or of Part III of the Model SC 3510);
  • In the part “Detail of the Debt to be Included in the Payment Plan” (Part III of the Model SC 3509 or Part IV of the Model SC 3510) the taxpayer must only enter the amount of the Tax Debt in the Principal column (the tax owed according to the return). The portion corresponding to the applicable interest will be calculated and completed by the official who evaluates the request. Also, in this part you must indicate the day of the month that authorizes the direct payment of the monthly term of the payment plan; and
  • The information of the bank account from which direct withdrawals will be made of the monthly payment plan terms (name of the financial institution, address of the branch where the account is kept, type of account, route and transit number and account number).

2. Provide evidence of the filed Income Tax Return for tax year 2017

  • If the taxpayer filed his/her return electronically: copy of the Electronic Filing Confirmation Sheet. • If the taxpayer filed his/her return on paper: copy of the first page of the return duly stamped as received where the total amount of the tax owed with said return is presented. In the case of taxpayers who are individuals, they must include a copy of the document of the Exemptions to the Electronic Filing of the Individuals Income Tax Return (Form 483.2).
  • If an Authorized Representative assists the taxpayer in the process, the taxpayer must include a Power and Declaration of Representation (Form SC 2745) and include a legible copy of an identification of the taxpayer or the official in charge of the legal entity, if the taxpayer It is not an individual.

The application for the payment plan must be filed no later than Thursday, May 17, 2018. If the taxpayer’s tax year is an economic closing, the application must be filed no later than the deadline established in the Code to file the income tax return for the 2017 tax year.

The payment plan application may be filed:

  1. In person at any of the Collection District Offices

At any of the Orientation Centers

Once the PRTD processes the application, an official will contact the taxpayer or its Authorized Representative to coordinate the signing of the Agreement.

 

[1] However, as explained above, the PRTD moved the due date to Friday, April 20, 2018. No clarification was issued to explain if the payment plan will be available to those taxpayers filing up to the new due date.

About the Author

Carrion Sanchez LLC
Carrion Sanchez LLC
author

Carrión Sánchez, LLC is a highly dynamic legal firm specialized in tax and corporate matters for high-net-worth individuals and businesses within and without Puerto Rico. Contact Us at [email protected]

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