Pursuant to the provisions of Act 257 of 2018, better known as the Tax Reform, the preparation of informative declarations is required in order to validate certain expenses for purposes of the Alternative Basic Tax (ABT). The following is a list of expenses that are required to be reported on these declarations:
Wages, commissions, and bonuses to employees (due February 1st, 2021 and should be processed by the person in charge of payroll)
Wages paid to college students (due February 1st, 2021 and should be processed by the person in charge of payroll)
Payments for services rendered in Puerto Rico
Payments for services rendered outside of Puerto Rico
Leases, rents, and charges
Insurance premiums
Telecommunication services
Internet services and cable or satellite television
Combined services (Bundles)
Advertisements
Royalties
Dues and subscriptions
Membership fees paid on behalf of employees
Special contribution for professional and consulting services pursuant to Act 48-2013
Mortgage Interest Payments
Maintenance fees
Payments for judicial or extrajudicial indemnification
Furthermore, the Puerto Rico Treasury Department added a new Form 480.7E “Informative Return – Advertising, Insurance Premiums, Telecommunication, Internet, and Cable or Satellite Television Services”. This form is required to be prepared by any person who provides any one of these services or any person who receives payments for advertising or insurance premiums during the year.
Please note that Form 480.7E was modified for the tax year 2020, to be considered as "optional" in the case of a taxpayer who chooses to file an informative return to deduct such expenses for purposes of the Alternate Basic Tax (ABT).
Another requirement is the preparation of the Form 480.6C “Informative Return – Payments to Nonresidents or for Services from Sources Outside of Puerto Rico”. This form should be used to report the total payments made during the year to any person (natural or legal) who is not a resident of Puerto Rico who is either subject or not to withholding at source, including payments for services rendered outside of Puerto Rico.
The due date of these forms is March 1st, 2021.
Please be advised that the late filing of these forms or their amendment to include an additional provider not included in the original return is be subject to a $500 penalty.
Also, please be advised that the informative declarations should be prepared and filed online through SURI, using the taxpayer's account with the Department of Treasury and through the following modules:
Withholding on Wages
499R-2/W-2PR
Withholding on Payments for Services Rendered
480.6SP - Services Rendered
480.6SP.2 - Annual Reconciliation
Withholding on Other Income
480.6A – Other Income not Subject to Withholding
480.6B – Informative Return and 480.6B1 – Annual Reconciliation
480.6D – Exempt and Included Income
480.6G – Transactions made by Electronic Means
480.7A – Mortgage Interest
480.7D – Automobile Lease Payments
480.7E – Advertising, Insurance Premiums, and Others
We encourage you to comply with these requirements as they are required for the validation of the expenses for the 2020 Alternative Minimum Tax and Alternative Basic Tax purposes, as applicable.
The preparation of these forms will include a cost of $150 for the first five informative returns, and an additional $25 for each additional informative return.
If you need assistance with the preparation of these forms, please forward us the required information on or before Monday, February 8, 2021.
Carbonell & Co., LLP is not be responsible for the preparation of forms not requested by our clients or for those for which we do not receive the required information on or before the aforementioned date.
Should you have any questions or need additional information, please do not hesitate to contact us.