Puerto Rico: Changes to 2018 information returns, declarations

The Puerto Rico Treasury Department (PRTD) issued Informative Bulletin 18-18 (BI RI 18-18) as guidance with respect to changes to the 2018 information returns that are due in January and February 2019. Withholding statements and information declarations for 2018 are to be filed electronically via SURI (the Spanish acronym for the “internal revenue unified system”).

Overview of changes

Changes to the information returns include the following:

Forms 499R-2/W-2PR and 499R-2c/W-2cPR – Withholding statements and corrections to withholding statements

A new box is provided to report if any payment to an employee is for:

• Services rendered by a qualified physician who has a valid tax decree under Act 14-2017 (known as the “Incentives Act for the Retention and Return of Medical Professionals”) (Option A)
• Domestic services at home, local collegial club, or local chapter of a fraternity or collegial sorority (for purposes of the Social Security Administration) (Option B)
• Any other service that PRTD requires through regulation, administrative determination or circular letter, in which case it must indicate the concept of payment of salaries (Option C)

An additional exempt salary box (Part 16B) has been added so that the employer can separately report the exempt wages for up to three different exemption codes.

• The exemption code G was modified to report exempt salaries for disaster payments declared exempt by the governor of Puerto Rico or the U.S. president.
• Two additional exemption codes (Codes H and I) were added to report exempt salaries for: (1) payments to public employees under the voluntary transition program, in accordance with the Administrative Orders 2017-05 and 2017-06 issued by the Financial Advisory Authority and Fiscal Agency of Puerto Rico; and (2) compensation or indemnization paid to an employee due to dismissal under section 1031.01 (b) (11) of the 2011 Puerto Rico tax code.

Form 480.6A – Information return – income not subject to withholding

A new box has been added for general information to report the total amount of:

• Payments made for consulting and professional services pursuant to Act 48-2013 (this box will only be used by the government)
• Expenses reimbursed to any service provider
• Deductibles, co-insurance, and co-payments that an insured person must pay to an insured health services provider (“insurer”). This box is optional for 2018, but will be required for 2019.

An option was added to the boxes for “Payments for Services Provided by Individuals” and “Services Provided by Corporations and Partnerships” (boxes 1 and 2, respectively), to verify if the amount paid included payments to health service providers.

New boxes have been added for the reporting of payments directly related to the operation of an industry or business, including:

• Insurance premium payments
• Telecommunications services payments
• Paid advertisements
• Cable or satellite internet and television services payments 
• Royalties

These boxes are optional for 2018, but will be required for 2019.

Form 480.6B – Information return – income subject to withholding

A new box has been added to include general information on reporting the total amount of:

• Payments made for consulting and professional services pursuant to Act 48-2013 (this box will only be used by the government). 
• Expenses reimbursed to any service provider.
• Deductibles, co-insurance, and co-payments that an insured person must pay to an insured health services provider (“insurer”) (this box is optional for 2018, but will be required for 2019).

An option was added in the boxes for “Payments for Services Provided by Individuals” and “Services Provided by Corporations and Partnerships” (boxes 1 and 2, respectively), to verify if the amount paid included payments to: (1) health service providers; and (2) payments for services provided by qualified physicians who have a tax decree under Act 14-2017.

Form 480.6B.1 – Annual reconciliation statements for income subject to withholding

Part III has been added and is to be completed only by brokers, agents, and other financial intermediaries that report a tax withheld and deposited by the issuer or entity that made the payment. This part is optional for 2018, but will be required for 2019.

Form 480.6C – Information return – income subject to withholding – nonresidents

A new box has been added to include general information in reporting the total amount of payments made by the government for consulting and professional services pursuant to Act 48-2013.

Form 480.30 – Annual return for income taxes withheld at source – nonresidents

Part III has been added and is to be completed only by brokers, agents and other financial intermediaries that report a tax withheld and deposited by the issuer or entity that made the payment. This part is optional for 2018, but will be required for 2019.

Form 480.6D – Information return – exempt and excluded income and exempt income subject to alternate basic tax

The box for the compensation or remuneration paid to an employee due to a dismissal has been eliminated, since these amounts will be reported in the “withholding statement” (W2-PR) as exempt salaries.

Form 480.7A – Information return – mortgage interests

A new box has been added to include the physical address of the property subject to the mortgage.

Form 480.7C – Information return – retirement plans and annuities

Box #20 has been added to include any distribution corresponding to exempt income.

Form 480.5 – Summary of the information returns

A new box has been added for reporting the total withheld penalties included in Box 6 of Form 480.7 - Information return - individual retirement account.

Form 480.7B.1 – Annual reconciliation statement for taxes withheld on individual retirement accounts and educational contribution accounts (NEW FORM)

The withholding agent must complete this form to summarize the total amount of taxes withheld by category and reported on Forms 480.7 – “Information return - individual retirement account” and Forms 480.7B – “Information return - educational contribution account.”

Form 480.7C.1 – Annual reconciliation statement for taxes withheld on retirement plan and annuities (NEW FORM)

The withholding agent must complete this form to summarize the total amount of taxes withheld by category and reported in Forms 480.7C – “Information return – retirement plans and annuities.”

This table lists the due dates for all the 2018 information returns and withholding statements:

Source: KPMG LLP

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

Rolando Lopez | +1 (787) 622-5340 | rlopez@kpmg.com

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

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