The fact has not been reported widely, but the Costa Rica tax collectors would like to hear from you.
They are not expecting a Valentine’s Day card, but they do want a form that lists expenditures and income for the last fiscal year. This is the D-151, called Declaración anual resumen de clientes, proveedores y gastos específicos.
The purpose of the form is to show where a taxpayer spent the money. The Direción General de Tributación will cross check the form with those of the person or corporations receiving the money to make sure income tax was paid.
Jorge Granados, a local accountant, said that the unusual deadline of Feb. 29 this year is because the tax agency is requiring electronic filing. In the past, the form was done on paper. Tributación simply did not have the DECLAR@7 software ready for distribution last year, so Jan. 10 the agency ruled that Feb. 28 would be the new date. Usually the form is due Nov. 30, two weeks before the fiscal year tax return is due.
Granados, who is with U.S. Tax & Accounting in Rohrmoser, said a taxpayer has these options:
• The software is free to download on the Tributación Web site.
• A free disc containing the software is available from the agency.
• Those who are challenged in using the complex software can turn to a professional. Accountants have been using various versions of the tax agency’s software for several years.
• The tax agency maintains computers for the use of citizens who may not have one or one of the correct type to run the program.
Tributación’s programs only run on a PC with a Windows XP or newer operating system.
The reporting rules are the same for the 2010-2011 fiscal year that ended Sept. 30. Taxpayers should report any professional fees, rents, interest, commissions that exceed 50,000 colons paid to one person or firm in the fiscal year, which started Oct. 1, 2010. That basically means every payment to a dentist, lawyer or accountant because the threshold is so low, just about $100.
Taxpayers also have to report any amounts they received for the same reason that exceed 50,000 colons.
For other expenses, the threshold is 2.5 million colons or about $5,000. That could be raw materials for a manufacturer or even computers if they were purchased from the same vendor. And the taxpayer must report amounts over that threshold that have been received.
Those who report the expenses can safely include the outgo on the annual tax return. Of course the form requires identification numbers and other data, which sometimes takes several days to put together.
Naturally a lot of landlords are shocked to find that their tenants have filed such reports. The realization comes when Tributación makes contact a year or so later wanting to know why the income was not reported.
Professionals in Costa Rica are notorious for not reporting income, hence the low threshold.