TRUST worthy TREASURY DEPARTMENT ADOPTS NEW PAYMENT PLANS FOR CERTAIN OUTSTANDING TAX DEBTS

Transcription

1 TREASURY DEPARTMENT ADOPTS NEW PAYMENT PLANS FOR CERTAIN OUTSTANDING TAX DEBTS The Secretary of the Puerto Rico Treasury Department (hereinafter PRTD ) has just released Internal Revenue Circular Letter No (hereinafter the Circular Letter ) to provide Rehabilitation Payment Plans (hereinafter the Plans ) for certain taxpayers. Pursuant to Sections and of the Internal Revenue Code of Puerto Rico of 2011, as amended (hereinafter, the Code ), the Circular Letter sets forth the terms and conditions of the Plans under this new Taxpayer Rehabilitation Program. The benefits granted by the Plans are additional time to pay, and the possible waiver of penalties. The Circular Letter also explains the application process and their respective approval procedures. Additionally, the Circular Letter derogates Internal Revenue Circular Letter No and Internal Revenue Informative Bulletin No , which state the terms and procedures for payment plans under prior rules. The Plans are summarized by type and category as follows: 2017 FPV & GALINDEZ, LLC s: Does not require an evaluation of the economic capacity of the Taxpayer. The Taxpayer must commit to make monthly payments within a prescribed period until the tax liability is paid entirely, including interest and surcharges. The prescribed period will begin on the date of the Plan approval. All payments must be made by direct deposit. A down payment may be required. No guarantee of payment is required. The taxpayer must submit the following documentation by to: plandepago@hacienda.pr.gov: Application and Agreement for an Automatic Payment Plan (Form 3509 or 3510) If an Authorized Representative is appointed: Power of Attorney (Form 2745) signed and with photo ID attached Once the application has been processed, the PRTD will contact the Taxpayer for the Plan signature and to provide the down payment, if applicable.

2 s: Taxpayers must demonstrate, upon satisfaction of the PRTD, that there is no economic capacity to pay the total balance due. The Taxpayer must commit to make prescribed monthly payments within a prescribed period, until the tax debt is paid entirely, including interest and surcharges. Both monthly payments and installment periods will be determined by the Secretary and will depend of the Taxpayer s economic capacity. The prescribed period will begin on the date of the Plan approval. All payments must be made by direct deposit. A mandatory down payment will be established. A guarantee of payment may be required, which includes mortgage bond, insurance bond or a pledge. Applications will be evaluated by Collections District Officials who will authorize Plans in cases where it is warranted. The Taxpayer must submit the following documentation: (1) Application letter including the taxpayer s personal information, Tax Debt Category and bank account information (2) Statement of Financial Situation (Form 3325 or Form 3326 as applicable), with supporting documentation; (3) Last two bank statements of all bank or investment accounts in or outside of Puerto Rico; (4) Tax Debt Certifications evidencing the type and amount of tax debt that will be included in the Plan; If an authorized representative is appointed: (5) Power of Attorney (Form 2745) signed and with photo ID attached. Only plan available for Taxpayers, for which the aggregate principal of all tax debts is greater than $50,000. This applies even when, any debt if considered individually, would be eligible for an. Debts to be included Please note that the Taxpayer cannot be selective as to the debts to include in the Plans and must include all assessed tax debts that are due to the PRTD. In certain cases, the PRTD could condone partially or entirely, any fine or penalty applicable to the tax debt included in the Plans, if the Taxpayer complies in a commendable manner with its dispositions. Providers of the Government A Taxpayer who provides goods and services to the Government of Puerto Rico, and who has outstanding invoices, may request to offset the amount due against tax debts. Similarly, the PRTD can detain payments to its suppliers in order to cover, partially or completely, any balance of tax due by the Taxpayer. -2-

3 CATEGORY UP TO $10,000 I Income Tax GREATER THAN $10,000 BUT DOES NOT EXCEED $25,000 Down payment 10% of principal PRINCIPAL BALANCE DUE GREATER THAN $25,000 BUT DOES NOT EXCEED $50,000 Down payment 20% of principal GREATER THAN $50,000 II Special Tax on Real Property (Act ). Does not include regular property taxes., but it could be argued that in certain circumstances a might apply (i.e., $50,000 threshold). III Sales and Use Tax Installment period of 12 months Down payment 10 % of principal Penalty acceptance by officers and IV Tax Withholding by Employers and Withholding Agents Installment period of 12 months Down payment 10 % of principal Penalty acceptance by officers and V Excise Tax Notes: 1 Weekly SUT electronic deposits must be made. Such deposits must account for at least 90% of the total monthly liability. If the Volume of Business exceeds $125,000, the taxpayer must maintain a fiscal terminal per location at all times. For s with a Principal Balance of $10,000 or less, this will only apply if the monthly SUT liability exceeds $2, Officers and responsible parties of the collection/submission of the tax should accept, as part of the Plans, the penalty imposed under Section in case of noncompliance with the Plans. Note that such penalty already exists and can be waived under the Plans. -3-

4 Noncompliance with Plan TRUST worthy Once a Plan is granted, the Taxpayer must commit to be in compliance with the Code dispositions, prospectively. However, in the case there is any breach with the dispositions of the Plan or any subsequent tax debt, the PRTD is allowed to take the following measures: Impose all fines and penalties established in the Code, without making any additional notice to the Taxpayer. Terminate the Plan and collect any balance due, plus any penalties or fines that had been condoned as result of the Plan. Use levy mechanisms established by the Code without any additional notice to the Taxpayer. Report the tax debt to credit agencies and the U.S. Treasury Offset Program of the federal government. In certain cases, the PRTD will begin the assessment and collection of personal penalties for failure to collect and pay taxes or tax evasion pursuant to Section of the Code. Penalties under this section, may be waived, upon discretion of the PRTD. Under such Section, a responsible party, which will be personally liable, consists of: Any chief operating officer, president, chief financial officer, chief accounting officer, controller, and any officer with a similar position, of an entity or with the obligation to collect, withhold, account for, and pay over any tax or levy established by the Code; Any person whose responsibility, duty, function or obligation in an entity or person is to collect, withhold, deposit, account for or pay over any tax or levy established by the Code, who knowingly fails to collect or truthfully account for and pay over such tax; and Any person who knowingly attempts in any manner to evade or defeat any tax imposed by any subtitle of this Code or the payment thereof. -4-

5 PLEASE CONTACT OUR TAX DEPARTMENT AT (787) OR AT or IF FURTHER ASSISTANCE OR INFORMATION IS REQUIRED ABOUT THESE MATTERS. Kenneth Rivera, Tax Partner Leví Villegas, Tax Partner Yelitza Net, Senior Tax Manager Edgardo Rosa, Tax Manager Jazmarie Rivera, Tax Manager Samira Yassin, Senior Tax Consultant Ashly Lasanta, Tax Consultant Juan Gotay, Tax Consultant Gabriel Otero, Tax Consultant Jessica Rivera, Admin. Assistant Axel Ramírez, Tax Partner Iris N. Otero, Tax Director Yelitza R. López, Senior Tax Manager Sylvia Reyes, Tax Manager Sheila Quiñones, Senior Tax Consultant Madeleine Tubéns, Tax Consultant Carlos Castro, Tax Consultant Coralys Rodríguez, Tax Consultant Eric Gotay, Tax Intern Yesenia Pitre, Admin. Assistant Interested in Other Services? - Audit / Assurance / Consulting / Information Technology" Contact Julio A. Galíndez, Managing Partner, at (787) This communication may constitute an advertisement or solicitation under the law. You may choose not to receive advertising and promotional messages from FPV & GALINDEZ, LLC at this address by forwarding this message with the title UNSUBSCRIBE to mail@fpvgalindez.com. If you do so, the sender of this message will be notified promptly. The content of this Tax Letter has been prepared by us for information purposes only. This communication is not intended as, and does not constitute tax, accounting, consulting, or legal advice. -5-