Puerto Rico: Procedures for payments under amnesty program

Procedures for payments under amnesty program

In Puerto Rico, recently enacted Act 44-2015—known as the “Act to Promote Tax Payments Ahead of the Tax Reform”—allows taxpayers to become current with respect to their tax debts, by extending certain payment incentive plans without the imposition of interest, surcharges, and penalties.

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The Puerto Rico Treasury Secretary has issued Circular Letter 15-04 to provide details of the procedures to follow under this amnesty program.

Any taxpayer with an assessed tax debt for income taxes, estate and gift taxes, excise taxes, sales and use taxes, and withholding of income tax at source that takes advantage of any of the payment options (as set forth below) on or before June 30, 2015, will not be subject to interest, surcharges or penalties.

Incentive for dividend distributions

The law also provides incentives for taxpayers to make either actual or deemed distributions of dividends at reduced rates. In that regard, if the taxpayer makes a payment associated to these distributions before May 1, the tax rate would be 5%; if after April 30 but by June 30, then the tax rate would be 8%. The normal dividend tax rate on distributions to corporations is 10%.

Types of assessed tax debts subject to amnesty

The types of tax covered by the amnesty program are:

  • Income tax
  • Taxes under certain incentive laws
  • Estate and gift taxesExcise taxes
  • Withholding at source of income taxes
  • Sales and use taxes
  • Special tax for real estate
  • Fines, interest, surcharges and penalties on previous tax debts

Payment process under amnesty

Taxpayers seeking to pay the entirety of the tax debt per Treasury’s record may do so by only paying the principal owed at any Collector’s Office, Collection District or Amnesty Center on or before June 30, 2015.

To the extent the records show that a taxpayer has multiple debts, the procedures allow for the taxpayer to select which ones are being paid under the amnesty provisions. Those debts not selected would continue to accumulate any applicable interest, penalties, and surcharges.

Taxpayers whose tax debts are only fines, surcharges, interest, and penalties may settle the debt by paying 25% of the total outstanding balance on or before June 30, 2015.

Payments can be made under the tax amnesty program in cash, by electronic funds transfer, by certified check, by debit or credit card, by manager’s check, or by money order. Personal checks are not acceptable methods of payment under the amnesty program.

A special provision allows for unreported income related to periods commenced before December 31, 2013, to be subject to a special 20% tax if reported under amnesty.

Special circumstances

Taxpayers currently under tax examination or administrative appeals process for any of the taxes will have the ability to enter into a settlement with the corresponding Treasury officer and pay the finally agreed amount under the amnesty program—that is, without interest, surcharges or penalties.

Tax years covered

The tax amnesty provisions are generally available for tax years beginning before January 1, 2014. However, with respect to sales and use tax, the program applies to periods ending before June 30, 2014.

Concerning withholding of income tax at source, the program applies to periods ending before December 31, 2014.

Once a debt is paid under amnesty, the taxpayer may not make any future refund or adjustment claims against it.


For more information, contact a tax professional with KPMG in Puerto Rico:

Rolando Lopez | +1 (787) 622-5330 | rlopez@kpmg.com

Carlos Molina | +1 (787) 622-5311 | cmolina@kpmg.com

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