How to apply for a waiver of withholding for professional services?

How to apply for a waiver of withholding for professional services?

Requirements to apply for a Certificate of Total Waiver of Withholding for Retention of 7% on payments.

Any taxpayer who is engaged in an activity of Trade or Business in Puerto Rico, whose payments are subject to the withholding provided in Section 1062.03 of the Internal Revenue Code for a New Puerto Rico, 2011, as amended (Code), may request a Certificate if Total Waiver during the first three years of business service delivery.

This certificate is requested by an affidavit, addressed to the Taxpayer Service Bureau. Such statement shall be signed by the taxpayer and contain the following information:

  1. Name and tax identification number.
  2. Residential address (physical and postal)
  3. Office address or business (if applicable)
  4. Date started a business of providing services (day, month and year)
  5. Services description
  6. Indicate that the taxpayer is filing because he has started a service business
  7. Indicate that the taxpayer has not previously filed for a Certificate of Total Waiver
  8. Indicate that it has fully complied with the tax obligations, including the filing of all returns, statements, fact sheets and at present does not have any debt with the Department of Treasury.

The affidavit must include the following documents:

  1. Certification of Debt and Tax Return Filing Certification
  2. If the taxpayer has never filed return, you must submit the certification Reasons Why it is not required to file the Income Tax Return. Click here to download the Form SC 2781.
  3. If the last tax return does not appear in the Certification Tax Return Filing, the taxpayer must submit a copy of the last tax return stamped... or sworn copy if not stamped.
  4. If applicable, an executed Power of Attorney (Form 2745) authorizing the representative to seek such relief. Click here to download the Form 2745.

The application must be delivered to the Center of San Juan (Office 101) and go to the Taxpayer Service Bureau at the following address:

  • Department of Finance
    Taxpayer Service Bureau (Office 211)
    PO Box 9024140
    San Juan, PR 00902-4140

For more information related to this topic, you can download the brochure on Withholding at Source in Case of Services Rendered. Click here.

I hope this post helps you understand better how professional service retention works. If you have a question or comment, feel free to contact me to see how I can help.

 


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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