Spring 2003-04 New incentive plan for the payment of tax debts

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Number 51
Spring 2003

New incentive plan for the payment of tax debts!

House Bill Number 3604 was filed on March 27, 2003, to establish an incentive plan for the payment of tax debts and to create a special fund. The bill authorizes the Secretary of the Treasury to adopt regulations for its implementation.

Availability

The benefits under the bill will not be available to taxpayers that have not complied with their tax filing obligations. Accordingly, taxpayers who have not reported income, have under-reported income, against whom criminal proceedings are pending, or taxpayers convicted of tax fraud, will not be entitled to new incentive. Moreover, only taxpayers in good standing with recognized tax obligations, who are current with respect to their 2002 tax liabilities, will be able to benefit from the bill's provisions.

Discounts

The incentives plan allows the Secretary to offer the following four discount options to those taxpayers who pay their debts during the period from May 1st to July 31 of 2003:

% of the total balance of the tax debt required to be paid

% of discount offered on the total balance of the debt

rate of interest applicable on the total balance of the debt to be included in the payment plan

1
2
3
4

70
50
30
25
30
15
5
5
n/a
6
8
4

The total balance of the tax debt includes principal, interest, surcharges and penalties.

Regardless of the option elected, no payment may be less than the principal amount of the tax deficiency owed.

Option 4

Option number 4 will only apply to those taxpayers that as of December 31, 2002, had a payroll discount or direct payment tax debt payment plan, and the same is up to date at the moment of requesting the discount. Nevertheless, these taxpayers may avail themselves of any of the other options. Taxpayers that do have a tax payment plan in force as of December 31, 2002, but are not current at the moment of the request, will only be able to choose options 1 to 3.

Option 1

Only option number 1 would be available to:

taxpayers that are in the process of an intervention, a Treasury Department audit, or other tax investigation,

or who have requested an administrative hearing or judicial review with regard to their tax liability,

government and non-governmental employers or withholding agents, including agencies, instrumentalities, public corporations and municipalities, with regard to debts for taxes withheld at source,

and then only if they make the election for the benefit and pay the tax during the period from May 1st to June 30, 2003.

Notices

Puerto Rico Treasury will issue notices to all taxpayers that currently have deficiencies. These can be objected no later than May 30, 2003. The bill is not clear as to the meaning and consequences of this notice and the right to object to the same. n

The incentives will not be available for tax liabilities pertaining to any taxable year, if the tax return for said year was filed after December 31, 2002; nor to tax debts pertaining to any taxable year commenced on or after January 1st, 2002.


© 2003 Goldman Antonetti