Puerto Rico Gov. Ricardo Rosselló, announced an agreement in principle with the United States Department of Treasury which will allow employers that were not able to operate their businesses — after Hurricanes Irma and María — to claim a credit of up to $2,400 for each employee that was paid a salary during said period.
The agreement, known as the Employee Retention Tax Credit (ERTC), will be made available to employers by filling out an electronic online form, and then the Government will disburse the funds directly through the employers’ bank accounts.
“We would like to thank the federal government for approving the implementation plan designed by our Administration to be able to provide financial support to Puerto Ricans who continue to recover from both hurricanes,” Rosselló said.
Following conversations between Puerto Rico Resident Commissioner Jenniffer González and the Puerto Rico Federal Affairs Administration with the U.S. Treasury, the Puerto Rico Department of Treasury lead the effort and designed the plan, which received approval in compliance with Section 504(d)(1)(B) of the Disaster Tax Relief and Airport and Airway Extension Act.
The federal act establishes that to receive funds from the U.S. Treasury toward the ERTC, the government of Puerto Rico must develop a plan that disburses the funds to the taxpayers in an efficient manner.
The program proposes an online electronic system for claims and disbursements of funds of the ERTC.
To be eligible, employers must have had an active business or company on Sept. 4, 2017 within the declared disaster zones of Hurricane Irma; and that had not been operational any day after Sept. 4, 2017 and before Jan. 1, 2018, as a result of the damages caused by Hurricane Irma.
This will also apply to employers who suffered the same kind of losses after Hurricane María, from Sept. 16, 2017 and before Jan. 1, 2018.
As for employees, the relief will apply to those whose main source of income were located in the disaster zones of Hurricane Irma on Sept. 4, 2017; or in the disaster zones of Hurricane María on Sept. 16, 2017. People hired after Sept. 16 are not eligible.
The eligible salaries are all for compensation of services. This includes commissions, bonuses, and the cash value of the remuneration paid in any method not paid in cash; payments to employees for vacation or sick leave.
The retroactive payments granted under any federal or local law is also a salary subject to taxation. This also includes, for the purposes of the law, the amounts paid for medical expenses, hospitalizations related to sickness, or disability due to an accident.