2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART VII - Administrative Provisions, Procedures, Interests, Penalties, and Additions to Taxes (§§ 33001 — 33423) › Chapter 1061 - Deficiency Assessment and Collection (§§ 33001 — 33007) › § 33002 - Procedures in general

(a) Notice of deficiency and taxpayer resources.—
(1) Reconsideration and administrative hearing.—
(A) If, in the case of any taxpayer, the Secretary were to determine that there is a deficiency in connection with the taxes imposed by any part of this Code, the Secretary shall notify the taxpayer about such deficiency by certified mail.
(B) The taxpayer may, within thirty (30) days following the mailing date of the notice, or within the time extension granted by the Secretary for such purpose, request in writing that the Secretary reconsider such deficiency and grant an administrative hearing concerning such issue.
(C) If the taxpayer does not request a reconsideration in the manner and within the term provided herein or, if having requested the same, the notified deficiency is confirmed in whole or in part, the Secretary shall notify, by certified mail in either case, his/her final determination to the taxpayer stating the amount of the original deficiency, the interest, the penalties, and the bond, as applicable, that the taxpayer shall post if he/she wishes to resort to the Court of First Instance against such deficiency determination. Such bond shall not exceed the amount of the taxes notified, plus interest on the deficiency as computed for the term of one (1) additional year at an annual rate of ten percent (10%).
(D) It shall be required that the Secretary state the grounds for his/her final determinations with findings of fact and conclusions of law.
(E) Except in the case of a notice concerning a final determination on a deficiency in excise taxes imposed by § 31771 of this title or Chapter 7 of Subtitle B of Act No. 120 of October 31, 1994, as amended, known as the “Internal Revenue Code of 1994”, the notice concerning the final determination of the Secretary shall state the amount of the original deficiency, the interest, the penalties, and the bond to be posted by the taxpayer if he/she wishes to resort to the Court of First Instance against such deficiency determination. Such bond shall not exceed the amount of the taxes notified, plus interest on the deficiency as computed for the term of one (1) additional year at an annual rate of ten percent (10%).
(F) In the case of a notice concerning a final determination on a deficiency in excise taxes imposed by § 31771 of this title or Chapter 7 of Subtitle B of Act No. 120 of October 31, 1994, as amended, known as the “Internal Revenue Code of 1994”, the notice concerning the final determination of the Secretary shall state the amount of the deficiency and the additions to taxes to be paid by the taxpayer if he/she wishes to resort to the Court of First Instance against such deficiency determination.
(2) Lawsuit before the Court of First Instance.—
(A) If a taxpayer is not satisfied with a final determination on a deficiency notified by the Secretary in the manner provided in clause (1), the taxpayer may resort to the Court of First Instance against such determination as follows:
(i) In the case of a notice concerning a final determination on a deficiency other than a deficiency in excise taxes imposed by § 31771 of this title or Chapter 7 of Subtitle B of Act No. 120 of October 31, 1994, as amended, known as the “Internal Revenue Code of 1994”:
(I) The taxpayer may file a lawsuit in the manner established by law within a term of thirty (30) days counting from the mailing date of the notice concerning the final determination, and
a. Post a bond previously in favor of the Secretary, before him/her, and subject to his/her approval, for the amount stated in the aforementioned notice concerning a final determination, or
b. pay that portion of taxes with which he/she agrees and contest the rest in court, in which case, the bond shall not exceed the amount of taxes being contested in court, plus interest, surcharges, and any other additions to taxes on the deficiency, as computed in the manner provided in clause (1).
(II) In the case of a taxpayer who dies on or after the mailing date of the notice concerning the final determination, but before the expiration of the aforementioned thirty (30)-day term, the term for his/her heirs or legal representatives to post the bond demanded herein and to resort to the Court of First Instance shall be sixty (60) days counting from the mailing date of the notice concerning the final determination of deficiency.
(III) Except as otherwise provided in this subsection, the posting of the bond for the amount stated by the Secretary in the notice concerning a final determination, as well as filing a lawsuit before the Court of First Instance, both within the term provided above, shall be requirements of a jurisdictional nature, and failure to comply with such requirements shall bar the Court of First Instance from reviewing the matter.
(ii) In the case of a notice concerning a final determination of deficiency regarding the excise taxes imposed by § 31771 of this title or Chapter 7 of Subtitle B of Act No. 120 of October 30, 1994, as amended, known as the “Internal Revenue Code of 1994”:
(I) The taxpayer may file a lawsuit in the manner established by law within a term of thirty (30) days counting from the mailing date of the notice concerning the determination, insofar as he/she pays the amount of the deficiency, plus interest, surcharges, and any other additions to taxes on the deficiency thus determined within the term to file the lawsuit, except as provided further in this paragraph.
(II) Except as otherwise provided in this paragraph, the payment of the full amount of the deficiency, plus interest, surcharges, and other additions to taxes for the amount stated by the Secretary in the notice concerning the final determination, such as filing the lawsuit at the Court of First Instance, both within the term previously provided, shall be requirements of a jurisdictional nature, and failure to comply with such requirements shall bar the Court of First Instance from reviewing the matter.
(III) In the case of a taxpayer who is unable to meet the requirement to pay the deficiency and additions to taxes, or who is only able to pay part of the deficiency and additions to taxes, the Court of First Instance may order, insofar as the lawsuit involves a substantial question and subject to that which is provided further, that the lawsuit run its course until the final ruling on such lawsuit in its merits without full payment of such deficiency and additions.
(IV) In the cases described in subparagraph (III), the taxpayer shall file, together with his/her lawsuit, a sworn petition stating the reasons why he/she is unable to pay, in whole or in part, the deficiency and the additions to taxes, and the grounds he/she has to claim that the lawsuit involves a substantial question.
(V) If the court accepts the arguments presented, the court shall issue an order for the Secretary to state his/her views regarding the taxpayer’s petition.
(VI) Within thirty (30) days counting from the date of notice of the order, or in any other term set by the court, the Secretary shall submit his/her objections against such petition made by the taxpayer, after which the court shall hold a hearing and hear the parties without delving into the merits of the notified deficiency and shall issue a resolution on the taxpayer’s petition.
(VII) If the Court of First Instance determines that the taxpayer is unable to pay the deficiency and the additions thereon, or that he/she is only able to pay these in part, and that the lawsuit involves a substantial question, the court shall order, in lieu of full payment, as the case may be:
a. That the taxpayer post a bond, to the satisfaction of the Secretary, in a sufficient amount so as to answer for the deficiency and the additions to taxes for a reasonable term, or
b. that the taxpayer pay part of the deficiency and the additions to taxes, and to post a bond for the unpaid part.
(VIII) In the case of a taxpayer who proves that he/she is unable to either pay taxes or post a bond, if the lawsuit involves a substantial question, the Court of First Instance may order that the lawsuit run its course until the final resolution in its merits without any requirement for payment or for posting a bond.
(3) The taxpayer may file a lawsuit as referred to in clause (2) at the district of the Court of First Instance pertaining to his/her municipality of residence, and notwithstanding any other provisions of law on transfer of actions or site of judgment, he/she shall be entitled, by reason of convenience for the witnesses, to have his/her case judged at said district of the Court of First Instance. Notwithstanding the provisions of Act No. 328 of May 13, 1949, the subpoena shall be served pursuant to Rule 4.4 of the Rules of Civil Procedure of 2009.
(4) Request for reduction of, exemption from, or approval of bond.—
(A) In the case of a notice concerning a final determination of a deficiency other than a deficiency in the excise taxes imposed by § 31771 of this title or Chapter 7 of Subtitle B of Act No. 120 of October 30, 1994, as amended, known as the “Internal Revenue Code of 1994”, if the taxpayer is unable to post the bond for the amount required by the Secretary, or is unable to post a bond or, if having already posted such bond for the amount required, the Secretary denied the same before the lawsuit was filed, the taxpayer may, however, file his/her lawsuit at the Court of First Instance within the term provided above, but in such cases, he/she shall file jointly with the lawsuit a request of which the Secretary shall receive notice, so that the court may reduce the amount of the bond or exempt him/her from posting the same, or approve the bond thus posted, as the case may be, stating the grounds for such action.
(B) In cases in which a taxpayer files a request for reduction, exemption, or approval of bond, the court shall issue an order so that the Secretary may state his/her views on the request.
(C) Within thirty (30) days counted from the date on which notice of the order has been served or within any other term that the court may provide, the Secretary shall submit his/her objections against the taxpayer’s request, after which the court shall hold a hearing and hear the parties without delving into the merits of the notified deficiency and issue a resolution, either upholding the bond amount required by the Secretary, or reducing such amount, or exempting the taxpayer from posting bond, or approving the bond denied by the Secretary or ordering the taxpayer to post another.
(5) Rejection of bond.—
(A) If the taxpayer has posted a bond for the amount required and before filing his/her lawsuit, the post has not been rejected, the Secretary shall have a thirty (30)-day term, counting from the date on which he/she is given notice of the lawsuit, in order to submit before the court, with notice to the taxpayer, his/her objections against the bond thus posted, and if such objections are not submitted within the aforementioned thirty (30)-day term, or within any time extension granted by the court for those purposes, it shall be understood that the bond has been approved by the Secretary.
(B) If the Secretary objects such bond, the court shall issue an order so that the taxpayer may state his/her views on the objection submitted and, at the Secretary’s request, the taxpayer shall be required to disclose information regarding his/her financial condition.
(C) Within thirty (30) days counting from the date on which notice is served concerning the order, or within any other term provided by the court, the taxpayer shall submit his/her reply to such objections, after which the court shall hold a hearing and hear the parties on the matter of the objections without delving into the merits of the deficiency and shall issue a resolution, either upholding the bond posted by the taxpayer, or demanding the taxpayer to post another in the manner and with the securities determined by the court.
(6) In all cases in which the court determines that the taxpayer shall post a bond, the same shall be submitted to the Secretary for his/her approval within a reasonable term set by the court, as dictated by the circumstances in each case, which by no means shall exceed sixty (60) days counting from the date on which the court’s resolution to set such bond becomes binding and enforceable. If the Secretary has no objection regarding the bond thus submitted within thirty (30) days, or within any time extension granted by the court for such purposes, it shall be understood that the bond has been approved by the Secretary.
(7) Grounds to table lawsuit.—
(A) It shall be sufficient grounds to table the lawsuit if the taxpayer:
(i) Does not submit his/her lawsuit together with the request as provided in clause (4) of this subsection in order for the amount of the bond to be reduced, or to be exempt from posting the same, or for the bond posted to be approved; or
(ii) does not reply to the objections of the Secretary to any bond made after the case has been filed before the court, or fails to appear to the hearing about any bond; or
(iii) fails to post any bond required by the Court within the term he/she has been granted; or
(iv) does not file his/her lawsuit before the Court of First Instance within the term established therefor; or
(v) fails otherwise to post bond within said term to resort to the court, or
(vi) fails to comply with any of the requirements imposed by this subsection so that the Court of First Instance may review the matter.
(B) In cases in which the order to shelve is dictated on the grounds that the taxpayer has failed to post any bond required by the court by virtue of a resolution, for whose review, the recourse of writ of certiorari is hereby granted, before the Court of Appeals, such order to table shall become final and binding.
(8) The decisions of the Court of First Instance on the merits in any event involving a bond, as well as its decisions reviewing or refusing to review any matter due to alleged noncompliance by the taxpayer with the requirements established in this subsection so that the Court may review the matter, cannot be appealed, but any party affected may, within ten (10) days counting from the date of notice of such decision, request a review on the matter by the Court of Appeals by writ of certiorari.
(9) The final judgments of the Court of First Instance dictated on the merits of the deficiency may be appealed in the manner and within the term established by law by filing the corresponding recourse of appeal with the Court of Appeals, subject to the requirement of keeping bond posted, as applicable. In cases in which the judgment of the Court of First Instance determines that there is a deficiency, it shall order the submittal of a computation of the deficiency, and such sentence shall not be deemed to be final, and the term to appeal shall not begin to count for the parties until the date the notice to the taxpayer and the Secretary of the resolution of the Court of First Instance approving the computation of the deficiency determined by such court are filed on record.
(10) No assessment shall be made of a deficiency in connection with taxes imposed by any part of this Code, nor shall any demand for payment procedure or court proceedings for collecting be started or filed, before the notice concerning a final determination referred to in clause (1) has been sent via certified mail to the taxpayer, nor until the expiration of the term granted by this part to the taxpayer to resort to the Court of First Instance against such final determination, nor, if the taxpayer has resorted to the Court of First Instance, until the judgment of the court becomes binding. Notwithstanding the provisions of § 33340(a) of this title, such appraisal or the commencement of such demand for payment procedures or court proceedings during the period in which these are prohibited, may be impeded or annulled by a court proceeding.
(b) Collection of the deficiency after resorting to the Court of First Instance.—
(1) General rule.— If the taxpayer resorts to the Court of First Instance against a final determination of a deficiency and said court passes judgment and rules itself without competence to review that matter, or, having determined that there is a deficiency, the final deficiency determined by the Secretary, or the deficiency determined by the court, as the case may be, shall be assessed once the judgment becomes binding and shall be paid by notice and demand from the Secretary. No portion of the amount determined to be a deficiency by the Secretary, but rejected as such by a binding decision of the Court of First Instance, shall be assessed or collected by demand for payment procedures or by court proceedings with or without assessment.
(2) Appeal or certiorari of the Supreme Court.—
(A) When a taxpayer requests an appeal or a writ of certiorari to the Supreme Court of the judgment from the Court of Appeals determining a deficiency, he/she shall be required to pay the full amount of the deficiency thus determined which has not been previously paid in whole or in part within the term to request the appeal or certiorari, and noncompliance with such demand to pay, except as provided further in clauses (3) and (4), shall divest the Supreme Court from competence to review the request for appeal or certiorari in its merits.
(B) If the Supreme Court resolves that the deficiency determined by the Court of Appeals or a portion thereof is nonexistent, and the taxpayer paid such deficiency in whole or in part when requesting appeal or certiorari, the Secretary shall then refund the taxpayer, chargeable to any funds available in the Public Treasury, the pertinent amount pursuant to the judgment of the Supreme Court, plus interest at an annual rate of six percent (6%) on the amount to be refunded, computed from the date of payment.
(C) If the Secretary requests appeal or certiorari on the judgment of the Court of Appeals determining that the deficiency is, in whole or in part, nonexistent, or, if having requested the appeal or certiorari, the taxpayer has not paid the deficiency in full, in any case in which the judgment of the Supreme Court favors the Secretary, the deficiency determined in appeal or certiorari, or the unpaid portion thereof, shall be assessed and shall be paid by notice and demand from the Secretary.
(3) Substantial question.—
(A) In the case of a taxpayer who requests an appeal or a certiorari for a judgment of the Court of Appeals determining a deficiency and he/she is unable to meet the requirement to pay the deficiency, or is only able to pay part of the deficiency, the Court of Appeals may order, insofar as the request for appeal or certiorari involves a substantial question and subject to that which is provided further, that the appeal or certiorari run its course until the final resolution thereon in its merits, without full payment of such deficiency.
(B) In such case, the taxpayer shall file together with his/her writ of appeal or certiorari with the Court of Appeals, a sworn petition, stating the reasons for which he/she is unable to pay the deficiency in whole or in part, and his/her grounds for claiming that the request for appeal or certiorari involves a substantial question.
(C) If the Court of Appeals determines that the taxpayer is unable to pay the deficiency or that he/she is only able to pay the same in part, and that the appeal involves a substantial question, the court shall order, in lieu of payment in full, as the case may be:
(i) That the request for appeal or certiorari run its course under the bond posted to resort to the Court of Appeals if the amount posted is sufficient to respond for the deficiency ultimately determined and any interest thereon; or
(ii) that the taxpayer post a new bond, to the satisfaction of the court, in an amount sufficient to respond for the deficiency and any interest thereon for a reasonable term, or
(iii) that the taxpayer pay part of the deficiency and that a bond be posted for the unpaid part in any manner provided above in subparagraphs (i) and (ii).
(D) In the case of a taxpayer that has been exempt from posting bond to contest the deficiency before the Court of First Instance and who proves that he/she is unable to pay the tax or to post the bond, if the request for appeal or certiorari involves a substantial question, the Court of Appeals shall provide that the request for appeal or certiorari run its course until the final resolution thereon in its merits, without any requirement to pay or to post bond.
(4) Other cases.—
(A) If the Court of Appeals determines that the taxpayer is able to pay the deficiency, or a part thereof, or that he/she should post a bond, the taxpayer shall then pay the deficiency or the determined part thereof, or post the bond, within a term of thirty (30) days counting from the date on which he/she is given notice of the resolution from the Court of Appeals to that effect, and the payment of the deficiency, or the determined part thereof, or the posting of the bond within such term, shall execute the request for review for all purposes of the law.
(B) If, within such thirty (30)-day term, the taxpayer fails to make a payment, or fails to post the bond required, or, if having posted a bond that was not accepted, fails to post another within the term granted by the Court of Appeals, the Supreme Court shall not be competent to review the request for appeal or certiorari in its merits and the same shall be dismissed.
(C) The resolutions of the Court of Appeals, issued under the provisions of clauses (3) or (4) of this subsection, cannot be appealed, but any party may, within ten (10) days counting from the date of notice of any of such resolutions, request a review thereof by the Supreme Court by writ of certiorari.
(c) In default of recourse.— If the taxpayer does not file a lawsuit before the Court of First Instance against a final determination of deficiency of which he/she has been given notice in the manner established in subsection (a), the deficiency shall be assessed and paid by notice and demand from the Secretary.
(d) Waiver of restrictions.— The taxpayer shall be entitled at any time, through written notice filed with the Secretary, to waiver restrictions on assessment and collection, in whole or in part, of the deficiency as established in subsection (a) of this section.
(e) Jurisdiction of the Court of First Instance to raise deficiency, additional amounts, or additions to taxes.— The Court of First Instance shall have competence to redetermine the correct amount of the deficiency, even if the amount thus redetermined is greater than the amount of the deficiency notified by the Secretary in the manner established in subsection (a) of this section, and to determine whether any additional amounts or additions to taxes should be imposed, insofar as the Secretary or his/her representative establishes a claim to that effect at any time before judgment is issued.
(f) Restricted additional deficiencies.— If the Secretary has mailed to the taxpayer a notice of a deficiency in connection with taxes, license fees, and levies provided in Parts II, III, IV, V, or VI of this subtitle, as provided in subsection (a) of this section, and the taxpayer had resorted to the Court of First Instance within the term and in the manner provided in this part, the Secretary shall not be entitled to determine any additional deficiency in connection with the same kind of taxes for which notice of deficiency was given or in connection with the same taxable year, except in case of fraud and except as provided in subsection (e) of this section (regarding the competence of the Court of First Instance to redetermine deficiencies) and § 33003(c) of this title (regarding the assessment of taxes in jeopardy).
(g) Exceptions to restrictions on assessment.—
(1) Assessment attributable to mathematical or transcription error.— If the taxpayer has been notified that, due to a mathematical or transcription error readily visible in the tax return or tax declaration, he/she owes taxes exceeding those declared in the tax return or tax declaration and that a tax assessment has been made or is to be made based on what would have been the right amount of taxes, were it not for the mathematical or transcription error, such notice shall not be deemed to be a notice of deficiency under subsection (a) of this section or subsection (f) above; and the taxpayer shall not be entitled to file a recourse before the Court of First Instance based on such notice, nor shall such assessment or collection be prohibited under the provisions of subsection (a) of this section. Any notices under this clause shall state the nature of the alleged error and an explanation of the same.
(2) Reduction of assessment due to mathematical or transcription error.—
(A) Request for cancellation.— Notwithstanding the provisions of § 33003(i) of this title a taxpayer may submit before the Secretary, within sixty (60) days following the date the notice is sent under clause (1), a request for a reduction in any assessment specified in said notice, and when evaluating such request, the Secretary may cancel the assessment.
(B) Collection suspended.— In the case of any assessment under clause (1), and notwithstanding clause (1), no lien or court proceedings to collect such assessment shall be imposed, started, or enforced during the term within which such assessment may be reduced under this clause.
(3) Special definitions.—
(A) Tax return.— The term “tax return” includes any tax return, statement, attachment, form, information statement or listing, as well as any amendment or supplement thereto, filed in connection with any taxes imposed by this Code.
(B) Mathematical or transcription error.— The term “mathematical or transcription error” means::
(i) An error in addition, subtraction, multiplication or division that appears in any tax return.
(ii) The incorrect use of any table included in the Code in connection with any tax return if such incorrect use is apparent from the existence of any other information in the tax return.
(iii) An entry in a tax return of an item that is inconsistent with another entry in the same item or with another item in said tax return or another return filed with the Department,
(iv) Any omission of information, whose inclusion in the tax return is required to evidence an entry in the tax return.
(v) An entry in a tax return of a deduction or credit in an amount that exceeds the statutory limit imposed under the Code if such limit is stated:
(I) As a specific amount of money, or
(II) as a percentage, proportion, or fraction if the items over which such limit applies appear in the tax return, and
(vi) the omission in the tax return of the correct account number or social security number, as defined in § 30041 of this title, when required. It shall be considered that a taxpayer has omitted the correct account number or social security number if the information submitted by the taxpayer is not consistent with the information that the Secretary obtains from the agency that issues the account number and the social security number.
(h) Time Extension for Payment of Deficiencies.— When it is proven to the satisfaction of the Secretary that the payment of a deficiency on the date established for such payment would cause undue hardship to the taxpayer, the Secretary may grant a time extension to pay such deficiency for a term not to exceed eighteen (18) months, and in exceptional cases, for an additional term not to exceed twelve (12) months. If a time extension is granted, the Secretary may require the taxpayer to post a bond for such amount, not to be greater than double the amount of the deficiency and with such guarantors as the Secretary may deem necessary to ensure the payment of the deficiency pursuant to the terms of the time extension. No time extension shall be granted if the deficiency is caused by negligence, intentional disregard of the rules and regulations, or fraud with the intent to evade taxes.
(i) Address to Notify Deficiency.—
(1) In default of notice to the Secretary under this Code of the existence of a trustee relationship, the notice concerning a deficiency in taxes imposed by any part of this Code shall suffice for purposes of this Code if the same has been sent via certified mail to the taxpayer to his/her last known address, even if such taxpayer has died or is legally disabled, or in the case of a corporation or partnership, even if the same no longer exists.
(2) In case of a notice concerning a deficiency in estate taxes, it shall suffice for purposes of this part if the same has been addressed to the decedent or any other person responsible for such taxes.
(3) The address referred to in this subsection shall be that which is used by the Department of the Treasury that incorporates barcode smart mail systems and the update of such address pursuant to the parameters established by the United States Postal Service.
History —Jan. 31, 2011, No. 1, § 6010.02, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 155.