On paper, the rule is straightforward: if a company sponsors a defined benefit pension plan or participates in a union/multiemployer pension plan in the United States, all members of that company’s controlled group of corporations (e.g., parents, subsidiaries, and affiliates connected through a common equity ownership of 80 percent or more), including foreign corporations, are jointly and severally liable for that company’s pension-related liabilities.
On June 23, 2020, the Puerto Rico Department of the Treasury (commonly known by its Spanish-language name, Departamento de Hacienda de Puerto Rico, or Hacienda) issued Circular Letter of Internal Revenue No. 20-29 (CL 20-29), which extends the due date from June 30, 2020, to December 31, 2020, for the completion of coronavirus-related distributions (CRDs) from retirement plans qualified in Puerto Rico.
Employers considering reductions in force in Puerto Rico should be aware that the rules on the taxation of severance pay in the United States and Puerto Rico are different.
On June 1, 2020, the Supreme Court of the United States issued a unanimous decision in Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, LLC, No. 18–1334, holding that the selection of the members of the Financial and Oversight Management Board for Puerto Rico did not violate the Appointments Clause of the U.S. Constitution.
On March 29, 2020, the Puerto Rico Department of the Treasury (commonly known by its Spanish name, Departamento de Hacienda de Puerto Rico, or Hacienda) issued Circular Letter of Internal Revenue No. 20-23 (CL 20-23), which extends to coronavirus-related distributions under qualified retirement plans (CRDs) essentially the same eligibility requirements, due dates, and local tax treatment that Hacienda established in Circular Letter 20-09 (CL 20-09) for distributions under qualified retirement plans related to the earthquakes that hit Puerto Rico during the beginning of the year (ERDs).
To help ease the administration of retirement plans in Puerto Rico during the coronavirus outbreak, on March 24, 2020, the Puerto Rico Department of the Treasury (commonly known by its Spanish name as Departamento de Hacienda de Puerto Rico) issued Administrative Determination No. 20-09 (AD 20-09).
Employers with Puerto Rico operations should be aware that, with some minor income tax-related twists, the emergency paid leave provisions of the recently enacted the Families First Coronavirus Response Act (FFCRA) equally apply in Puerto Rico.
In response to the earthquakes that since January 6, 2020, have shaken Puerto Rico, on February 18, 2020, the Puerto Rico Department of the Treasury (known by its Spanish name as “Hacienda”) issued Circular Letter of Internal Revenue Number 20-09 (CL 20-09) to allow Puerto Rican participants in qualified retirement plans to receive, under favorable tax terms, distributions of the money they may need to help recover from the damages they and/or their close relatives sustained as a result of the earthquakes.