20 Jun New Quarterly Return of Taxes Withheld on Service Payments

The Puerto Rico Treasury Department (“PRTD”) issued Internal Revenue Circular Letter Number 19-10 (“IRCC 19-10”) on April 4, 2019 to:

• Notify the new form and describe the filing procedure for the new quarterly return and,
  Establish the minimum amount of income tax withheld that may be deposited without incurring interest and penalties along with the quarterly return.
• As mentioned on our previous Tax Letter, Act Number 257 of 2018 amended the Puerto Rico Internal Revenue Code of 2011, as amended (“PR Code”) to establish a new quarterly return filing requirement, starting on January 1, 2019, to every person required to deduct and withhold income tax at source on payments made for services rendered.

Form and filing procedure

For these purposes, the Form to be filed with the PRTD will be Form 480.6 SP-1, Quarterly Return of Tax Withheld on Payments for Services Rendered (“Quarterly Return”).  The quarterly return must be filed electronically through the Internal Revenue Integrated System (“SURI” for its Spanish acronym) on or before the last day of the month following the close of each quarter (April 30, July 31, October 31 and January 31).  To complete the filing, the withholding agent must access its SURI account, select the account “Services Rendered Withholding”, select the corresponding tax filing period and in the Section “I Want To”, click “File or amend a return” and follow the instructions provided by the system.

Please be advised the IRCC 19-10 has extended the due date for the quarter ended on March 31, 2019 until July 31, 2019 to bring the withholding agents enough time to comply with this new fiscal responsibility.  Accordingly, on or before July 31, 2019, the withholding agents must file the return for the first and second quarter of 2019. This special rule should only be applicable for this year.

Deposit of taxes withheld

Pursuant to the PR Code, the deposit of the tax withheld (10%), must be made electronically through the Internal Revenue Integrated System (SURI), not later than the fifteenth (15th) day of the month following the close of the calendar month in which the withholding was made. Any late deposit will incur in interest, surcharges and penalties.

However, and to simplify compliance with the above-mentioned provision, the PRTD has established a “Minimum Amount” rule that allows any withholding agent with a 10% withholding in an amount less than $2,500 during the quarter, to be able to complete the deposit of such taxes withheld together with the filing of the new quarterly return.  This “Minimum Amount” is determined on a quarterly basis and, if the amount of taxes withheld during the quarter and due with the return is greater than $2,500, penalties for non-deposit compliance may apply.