The Puerto Rico Department of the Treasury has announced changes to tax reporting for certain severance payments.
As a result of the Labor Transformation and Flexibility Act (Act 4-2017), adopted in 2017, certain limited payments made by an employer to an employee due to separation of employment are classified as “exempt income” under the Puerto Rico Internal Revenue Code. These are not taxable for purposes of Puerto Rico income tax, but the employer must report the payments to the employee and the Treasury Department on an official informative return. …read the full article here.