Puerto Rico Treasury Department Takes Action In Response To Hurricane Fiona

• Published date: 30 September 2022
• Subject Matter: Employment and HR, Tax, Retirement, Superannuation & Pensions, Employee Benefits & Compensation, Income Tax
• Law Firm: Littler Mendelson
• Author: Ms Lourdes Hern'ndez-Venegas and Alberto Tabales-Maldonado

On September 17, 2022, Puerto Rico Governor Hon. Pedro Pierluisi issued Executive Order No. OE-2022-045, declaring a state of emergency due to the passing of Hurricane Fiona through the Island. Likewise, on September 21, 2022, President Joseph Biden authorized a disaster declaration for Puerto Rico, opening up additional relief and assistance for Puerto Rico's recovery process after the devastation left by the hurricane.

In light of these actions, on September 27, 2022, the Puerto Rico Treasury Department ("PR Treasury") issued Administrative Determination No. 22-08 ("AD No. 22-08"), summarizing the fiscal administration measures for the benefit of taxpayers and authorized representatives affected by the emergency that has been generated as a result of Hurricane Fiona. A summary of the administrative measures taken by the Treasury Department follows:

Extension of Deadlines

AD No. 22-08 provides that the Department has extended the deadline to file any income tax return, or requests for extension, of individuals, corporations, conduit entities and other legal entities whose expiration date of filing, according to the Code or publication previously issued by the Secretary, is between September 30 and December 15, 2022, until December 15, 2022. Likewise, this extension will be applicable to any outstanding amount that, according to the provisions of the Code, must be paid by any due date that falls between September 30 and December 15, 2022.

Special Hardship Distributions and Loans from Qualified Retirement Plan and IRAs

The PR Treasury announced through AD 22-08 the availability for Qualified Retirement Plans and individual retirement accounts (IRAs) to issue special hardship distributions. Furthermore, the PR Treasury issued Internal Revenue Circular Letter No. 22-13 ("CC RI 22-13") to provide special rules and procedures applicable to distributions from qualified retirement plans and IRAs. The following is a summary of the most significant provisions:

• Eligible Distributions - These are payments or distributions from a qualified retirement plan under Section 1081.01 of the Puerto Rico Internal Revenue Code (PR Code) or an IRA that an Eligible Individual has requested to cover Eligible Expenses. Distributions must be made between October 6, 2022 and December 31, 2022 (the Eligible Period).

Eligible Distributions from a qualified plan are hardship distributions, which may be made through total distributions (i.e., lump-sum distributions) or partial distributions. Annuities and installment payments will not be considered Eligible...