On October 4, 2017, the Puerto Rico Department of the Treasury (the "PR Treasury") issued Administrative Determination No. 17-21 (AD 17-21) to exclude from gross income certain payments employers made to employees for disaster assistance related to Hurricane María. These payments to repair or compensate hurricane-caused damages or losses were considered “Qualified Payments.” Pursuant to AD 17-21, every employer that made Qualified Payments must submit to the PR Treasury, no later than January 31, 2018, a sworn statement including the following information:
- the name and Social Security number of each employee (and/or independent contractor) to whom a Qualified Payment was made; and
- the amount paid during the period from September 21, 2017 through December 31, 2018.
The PR Treasury indicated in AD 17-21 that subsequent guidance was to be issued indicating how the sworn statement should be submitted. To that end, on January 18, 2018, the PR Treasury issued Internal Revenue Informative Bulletin No. 18-03 (“IR IB 18-03”), notifying employers that the sworn statement to report Qualified Payments must be submitted with the PR Treasury no later than January 31, 2018 to the following email address: firstname.lastname@example.org.
IR IB 18-03 also clarifies that Qualified Payments made by employers to their employees must be indicated in Box 16 or 16A of PR Treasury form 499R-2/W-2PR (Withholding Statement), under exemption code G. Qualified Payments made to an independent contractor must be indicated in Box 20 of PR Treasury form 480.6D (Informative Return - Exempt and Excluded Income and Exempt Income Subject to Alternate Basic Tax).
Employers must determine, in accordance with AD 17-21, which payments made to its employees during the period of September 21, 2017 through December 31, 2017 are considered Qualified Payments in order to complete the Sworn Statement and properly report such payments with the PR Treasury.