Change in Accounting Period

Change in Accounting Period

Important Information for taxpayers who wish to claim a Change in Accounting Period for their tax return filings at the Department of Treasury of Puerto Rico.

Article 1048-1 of Regulation No. 5780 of April 3, 1998, provides that if a taxpayer wishes to change its annual accounting period and adopt a new tax year, the taxpayer must obtain the consent of the Secretary of the Treasury. Article 1048-1 (b) sets out the requirements for requesting such change:

  • Submit an application for a change of accounting period which must be filed no later than the fifteenth (15th) Day of the second month following the close of the short period. (Example: If the change is from a fiscal year to a calendar year (December 31) must be filed no later than February 15).
  • The application must include the following information:Name of taxpayer
    1. Physical and mailing address taxpayer
    2. Employer Identification Number (EIN). The number be assigned at the time of the request.
    3. Nature of business or source of income
    4. If it is a corporation or partnership, the date of incorporation or organization, and the date you started the business or commercial activity
    5. Detailed of the dates of when the books were opened and closed during the last 4 years
    6. Detailed of the dates of last 4 fiscal years as per the filed tax returned
    7. Effective date of change (the beginning of the new day / month / year period)
    8. Reasons for change, it must be a valid business reason.
    9. Establish the terms, conditions and adjustments to keep the income that otherwise would result from the change is not properly reflected.
      • The following are examples of the effects of a change that would cause revenues to be inappropriately reflected
        1. deferral of a substantial part of the income of the taxpayer, or the transfer of a substantial part of deductions from one year to another to substantially reduce the tax liability of the taxpayer;
        2. Cause deferral or similar transfer in the case of any other person as a partner or beneficiary; or
        3. create a short period in which determined a net operating loss substance.

If after evaluating the effects with a tax professional, the taxpayer determines that the change would cause no inappropriate reflection of revenues, the taxpayer shall certify this in the application.

  • If the taxpayer is represented by a third-party, complete Form 2745 (Power and Declaration of Representation). This document must be duly completed and signed by both parties.
  • The Application for Change in Accounting Period must be addressed to the Assistant Secretary for Tax Policy: Atty. Angel R. Marzán Santiago and shall be filed at the Office 620 together with the applicable fee of $500.00, as established by Regulation No. 6103 of February 25, 2000 (“Regulations”). This payment shall be made by check or money order payable to the Secretary of the Treasury.
  • Requests that do not contain all the information required for the issuance of the opinion shall be subject to an additional charge of $150.00 which must be satisfied when submitting additional information, as provided by regulation. This payment shall be made by check or money order payable to the Secretary of the Treasury.

Any questions please contact the Division of Specialized Consulting telephone number (787) 721-2020 ext. 3614.


Miguel Nicolas Moreda, CPA, CIRA

Miguel Nicolas is the founder of Porto Capital. Prior to working as a financial and restructuring advisor for small and medium-sized businesses, he worked at GFR Media Real Estate Division as Finance Manager. Before that, he worked in the Business Advisory Division at Ernst & Young US, LLP in the United States.

He is holds an undergraduate degree in accounting from the University of Puerto Rico. He also possess graduate degrees from the University of Puerto Rico School of Law and IE Business School in Spain. Miguel is a Certified Public Accountant (CPA) and a Certified Insolvency and Restructuring Advisor (CIRA).

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