IVU collections reach $94.6M in April, maintain steady pace
Sales and use tax collections remain steady during the first 10 months of the current fiscal year, a pattern Treasury Department Secretary Jesús Méndez said is the result of several measures the administration has implemented to shore up much-needed cash for the government.
In April, revenue related to the IVU, as the sales and use tax is known, reached $94.6 million, or 1.3 percent over the same month last year. The figure for the month of May on record so far, $87.3 million, is already 2.5 percent above the $85.2 million collected in the same month last year, Méndez said during a round table discussion with members of the island’s digital media corps.
“Every month of this fiscal year, with the exception of October, which was flat, we have had higher collections than we did for the same month the prior year,” said Méndez, noting there is no true explanation for the anomaly in October.
“The collections for January and March are especially important because it reflected the elimination of the payroll deduction in December and Christmas sales.”
January’s total IVU-related revenue was 4.5 percent higher than January 2010, while March was 8.1 percent, he said.
“Since December, taxpayers have had more discretionary money in their hands, as payroll deductions were eliminated and withholding rates were adjusted in January,” he said, referring to steps included in Gov. Luis Fortuño’s sweeping Tax Reform that so far has cost the government upward of $240 million in tax breaks for individuals and corporations.
While IVU collections are seemingly on the rise, Treasury is still only ringing up about half of the tax revenue that retail activity generates, so it is banking on the islandwide implementation of the IVU Loto system to boost results.
IVU Loto is a two-pronged strategy whereby businesses will have to use special point-of-sale devices that automatically report to the agency the IVU that is due. The system prints a code on the transaction receipt that automatically registers the client for weekly cash prize drawings.
“While it’s true that IVU evasion is high, this system is going to be our tool to control IVU revenue,” Méndez said. “We’re foreseeing an increase in IVU-related dollars of between 18 percent and 20 percent, or $200 million more, during next fiscal year.”
Brisk tax season
A little over a month after concluding the agency’s most active season, Treasury officials said as of May 11, more than 788,000 tax returns have already been processed, reflecting a slightly higher result than the 763,000 completed through the same date last year.
Of the current total, about half were filed electronically and early, which Méndez said has sped up processing and enabled Treasury to already pay out some $358 million in refunds associated with 440,000 tax returns.
“Electronic tax return filings is more efficient for citizens, as it eliminates mathematical mistakes, and results in faster refund processing. It is also a boon for the agency, because then we don’t fall into the public argument of why the refunds take so long to be issued,” the public servant said.
There is still an undetermined number of tax returns filed in paper form pending processing, including those requesting payment extensions, he said.
“In general, the process has been faster this year because having received so many electronic filings frees us up to move the traditional returns faster,” said Méndez, who noted that the goal is to beat the June 30 deadline the agency has to pay pending refunds without having to add interest.
Treasury Deputy Secretary Blanca Álvarez said this third year of electronic filing has been the most successful one yet.
“I think that when people saw how fast the refund was issued, they went for it,” she noted.
Meanwhile, Treasury officials confirmed that 393,000 taxpayers claimed the additional credit granted this year as part of the tax reform.
Agency still paying out federal stimulus checks
Taxpayers who are waiting for their last $400 or $800 federal stimulus check to arrive still have hope of seeing the money as Treasury is not done distributing the funds the Obama administration assigned in 2009 to jumpstart the economy.
So far, Treasury has distributed $422.8 million to working taxpayers whose salaries fell within the agency’s eligibility parameters for single and married citizens. However, an unspecified number of people who were self-employed last year or whose employers failed to submit payroll information on time and are eligible for the work credit, will likely see it soon.
“The only way we have to control how we determine who is eligible or who isn’t now is to analyze their tax return to see what their income was,” Méndez said.
News is my Business has confirmed that statement, as it has interviewed people who received the extra money after filing their taxes on April 15.