Puerto Rico issues tax guidance
Wednesday, February 6, 2019

Puerto Rico issues tax guidance

By Payroll and Entitlements Editorial Staff

Puerto Rico has issued guidance on withholding, employee retention benefits, and 2019 retirement plan limits.

Withholding guidance. Informative Bulletin No. 18-24 was issued to notify all withholding agents that, effective January 1, 2019, when processing payments for services rendered to service providers that have supplied a copy of the Partial Relief (form Model SC 2755) issued by the Department for 2019, the payer must withhold six percent, even if the document indicates that the applicable withholding is three percent. The Treasury Department is making the necessary changes to update form Model SC 2755, Certificate of Partial Relief from Withholding at the Source on Payments for Services, and will issue the updated certificates in the coming weeks, through the service provider's SURI account. Therefore, certificates already issued by the Department through SURI continue in effect, except that, if they correspond to Partial Relief, the payer must withhold six percent in lieu of the amount indicated on the document. (Internal Revenue Informative Bulletin No. 18-24, January 1, 2019.

Claims for employee retention benefits after the hurricanes.  On June 8, 2018, the Department of the Treasury issued Internal Revenue Circular Letter No. 18-11 to establish the parameters and procedures necessary for any Eligible Employer in Puerto Rico to claim the job retention benefit available for employers unable to operate due to the damages caused by Hurricanes Irma and Maria, and which continued to pay salaries to their employees despite not having resumed significant business operations. Under CC RI 18-11, and in accordance with the “ERTC Implementation Plan” between the Department and the U.S. Treasury Department, the Benefit may only be requested electronically through Monday, December 31, 2018, through the digital platform designed by the Department. However, according to the Plan, those Eligible Employers that have requested the Benefit no later than said date, and believe that have not received it as provided in CC RI 18-11, will be entitled to file a claim with the Department of the Treasury. Circular Letter No. 18-20 establishes the procedure for an Eligible Employer to file a Claim with the Department.

The Claim may only be filed through the Platform starting Tuesday, January 1, 2019 and through Thursday, February 28, 2019. The Platform is available through the Department website www.hacienda.pr.gov, under the Hacienda Virtual area, Employers and Withholding Agents section. Once the Eligible Employer files the Claim, the Department will evaluate it and issue a written determination approving or denying such Claim. (Internal Revenue Circular Letter No. 18-20. December 28, 2018.)

2019 retirement plan limits. Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011 requires, for purposes of Section 1081.01(a) of the Code, before the start of every tax year, the Secretary of the Treasury to give notice of the applicable limits under Section 401(a) of the Federal Internal Revenue Code of 1986 or any superseding provision, by regulation, circular letter or administrative determination, to be issued after the Federal Internal Revenue Service (IRS) publishes the applicable limits under said Code. On November 1, 2018, the IRS published the limits under the Federal Code for the tax year beginning January 1, 2019. Circular Letter No. 18-21 established the limits applicable to qualified retirement plans under Section 1081.01(a) of the Code for 2019. (Internal Revenue Circular Letter No. 18-21, January 1, 2019.).

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