What to do if Hacienda sends you a tax deficiency notice

Hacienda defines a “deficiency” as the amount by which the tax imposed under any Subtitle of the Code exceeds the amount reported as tax by the taxpayer on their return or declaration. In plain terms: they reviewed what you filed, determined you owed more, and that difference is the deficiency. The Code empowers the Secretary to review filed returns and declarations to determine additional taxes, and to notify deficiencies or mathematical errors. Whenever an additional tax is determined, Hacienda sends a Notice and Demand for Payment of Taxes, informing you of the tax owed and detailing the additional amount of tax, interest, surcharges and penalties.

This guide applies to any taxpayer who has received a Notice and Demand for Payment of Taxes for a deficiency. It also helps to know how far back Hacienda can reach: as a general rule, the Department may determine deficiencies or assess any of the Code’s taxes within four (4) years after the return or declaration was filed. There is an exception that lengthens that window: if the taxpayer amends their return within one hundred eighty-three (183) days before the limitation period expires, Hacienda has two (2) years from receiving the amended return to assess additional taxes.

• Acting within thirty (30) days: Hacienda states that if the notice arises from a deficiency, the debtor has 30 days from the date that notice is deposited in the mail — or within any extension the Secretary grants — to request in writing a reconsideration and an administrative hearing.Verified against the official source
• That the reconsideration request be in writing: Hacienda specifies “request in writing”, not by phone.Verified against the official source
• If you are not satisfied with the final determination, filing suit in the Court of First Instance within thirty (30) days from the date the final determination notice is deposited in the mail, after posting a bond.Verified against the official source

• The Notice and Demand for Payment of Taxes you received, with the envelope if you kept it: the mailing date is what starts the 30-day clock.
• The return or declaration for the year in question, and any amended return you filed afterwards.
• The evidence supporting what you reported: withholding statements, informative returns, receipts and statements backing the income and deductions Hacienda is questioning.

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   Step 1: Find the date on the notice before anything else

   The clock does not start when you opened the envelope, but on the date the notice was deposited in the mail. That is the figure that decides how much of the thirty days you have left. Write it down and count from there, because everything else — the reconsideration, the hearing, and later the judicial route — hangs off that clock.

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   Step 2: Read what they are charging you and why

   The notice details the additional amount of tax, plus interest, surcharges and penalties. Separate them mentally: disputing the tax itself is one thing, and interest accruing over elapsed time is another. Also check whether what you are being notified of is a deficiency or a mathematical error on the return, because the Code addresses both figures and they are not the same.

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   Step 3: Request the reconsideration and administrative hearing in writing

   Within the 30 days, and in writing. Hacienda also mentions the Secretary may grant an extension, but do not count on it: what is safe is filing within the term. This is the moment to present your side with the evidence backing it, because it is the administrative stage before the determination becomes final.

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   Step 4: Consult a CPA or an attorney, especially if you intend to dispute it

   This is a tax determination with collection consequences and deadlines you cannot recover. A CPA or an attorney licensed in Puerto Rico can tell you whether your case has a basis, which evidence carries weight, and whether it is better to pay and claim afterwards or to dispute from the start. PRFácil cannot tell you that: we are not your representative and we do not know your file.

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   Step 5: If the final determination goes against you, count another 30 days

   If you are not satisfied with the final deficiency determination, Hacienda states you may go to the Court of First Instance by filing suit within thirty (30) days from the date the final determination notice is deposited in the mail, after posting a bond. That bond requirement is real and must be planned for: it is not something improvised on day 29.

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   Step 6: If you let the deadlines pass, understand what comes next

   Hacienda is direct about this: once the additional taxes are assessed and the time to appeal has expired, the Secretary may proceed with collection procedures, which include the seizure of movable and immovable property. It is not a vague threat; it is the next stage of the same process.

The request for reconsideration and an administrative hearing is filed in writing with the Department of the Treasury, following the instructions in the notice you received, which is what identifies your case. For general orientation, Hacienda maintains the “Hacienda Responde” contact center and the Office of the Taxpayer Advocate, which handles taxpayers’ problems and claims and oversees compliance with the Taxpayer Bill of Rights.

• Counting the 30 days from when you opened the envelope rather than from the mailing date, which is what Hacienda uses.
• Calling on the phone believing that requests the reconsideration, when Hacienda specifies the request is in writing.
• Setting the letter aside “to look at later” and discovering the deadline once it has expired.
• Assuming that not responding makes it go away, when what follows is a final assessment and collection procedures, seizure included.
• Reaching day 29 intending to go to court without having planned for the bond that must be posted before filing suit.
• Disputing a complicated deficiency without a CPA or attorney, in a process where missed deadlines cannot be recovered.

These are the government pages this guide is based on.

• Departamento de Hacienda de Puerto Rico

  Hacienda

  hacienda.pr.gov

• What happens if I do not meet my tax responsibility?

  Hacienda

  hacienda.pr.gov