Treasury waives taxes on eligible aid payments, retirement & IRA account cash-outs
Puerto Rico Treasury Secretary Francisco Parés announced the approval of provisions on qualified payments for aid that employers grant to their employees, and special Retirement Plans and Individual Retirement Accounts cash-outs, given the state of emergency caused by the COVID-19 outbreak.
He said the benefits are outlined in the documents, exempting employers from paying taxes on qualified payments for aid to help employees address the disaster declared by the governor.
Eligibile payments are those made to employees or independent contractors, due to the state of emergency related to COVID-19. The same applies to payments by a private sector employer to its nonexempt employees, who have not worked during the lockdown period, but who are offered a payment or stipend.
“These payments must meet all the requirements established in Circular Letter RI 20-08, including that they must be made during the eligible period — from Feb. 1 to April 30, 2020 — and that the total doesn’t exceed $2,000 per month and $4,000 during the period,” Parés said.
Regarding the Special Disaster Distributions established in Circular Letter RI 20-09, Parés told employers, trustees, administrators, participants and beneficiaries of qualified Retirement Plans and IRA Accounts, that any expenses incurred as a consequence of the declared emergency, including the loss of income due to the curfew, will be considered as Eligible Expenses in Circular Letter 20-23.
“A distribution that meets the requirements established in Circular Letter RI 20-09 and that is used to cover emergency-related expenses, will be considered a Special Disaster Distribution. This determination, like Circular Letter RI 20-09, applies to residents Puerto Rico’s 78 towns and must be made within the eligible period,” Parés said.