September may be the patriotic month when Costa Ricans celebrate their independence, but October and November are the paperwork months.
That’s because the country’s fiscal year ends Sept. 30, and those who are in business hustle during October and November to submit their tax forms to the Dirección General de Tributación, the nation’s tax agency.
This year the agency is tightening up, and the government’s need for money trumps the usual lax enforcement of previous years.
The 2011-2012 tax form and payment is not due until Dec. 15, but there are filings leading up to that date.
For example, taxpayers are supposed to make partial payments of estimated tax. The third such payment for the year is due Sept. 28. Calculations are not at all based on what might actually be owed. The amount due is figured on a formula based on previous years taxes. So a company that is showing a big loss this year still might have to make partial payments.
The problem then becomes getting the money back from Tributación, which is not known for its speed in this area.
Dec. 15 is a Saturday this year. Usually when a governmental deadline falls on a weekend, the cutoff is moved to the next workday. That may not be the case this year because the tax law specifically says payment is due two months and 15 natural days from the end of the fiscal year.
Nov. 30 is the date when taxpayers have to file the pesky D-151 on which they are supposed to list all their major income, big purchases and professional fees paid. Tributación is supposed to use this to double check the reports of the firms with which the taxpayer may have done business. This is also why there are a flurry of calls in November from other business firms seeking the cédula number of the taxpayer or of his or her firm. Taxpayers have to report payments of about $100 to professionals like lawyers, physicians and dentists. They also have to report purchases from one source in excess of 2.5 million colons and income from a single source in the same amount.
The legislature passed a law that required commercial entities to file this form several times a year. But Tributación objected, and now that law is ignored. Tax officials in the United States also are considering an annual report of major income and expenses outside the usual tax return.
Persons in certain businesses have many more forms to file. Sales tax reports are due on the 15th of every month. Certain other types of business have reports specific to their operation. Then there is the monthly report to the Caja
Costarricense de Seguro Social and the Instituto Nacional de Seguros, which handles the bulk of the on-the-job insurance.
In addition, persons and firms with employees are supposed to withhold part of the salary of high earners in anticipation of taxes.
If tax officials had their way, every transaction would be done with a credit card because they can track these better. They also take a small bite from each credit card sale in anticipation of taxes.
The tax deadline each year also coincides with the period in which employers have to pay the aguinaldo to employees.
This is one-twelfth of the money the workers have earned during the year from December through November. Basically this is a legally required Christmas bonus mandated by the legislature.
For even the smallest of businesses, the paperwork demands of the government are ample and challenging enough to require the services of a professional accountant. The business persons must remember to list the accountant on the D-151 form.
More information is available on the Tributación Web site when it is working. The site seems to have a mind of its own.
For example Wednesday night there were many broken links in the Web site, including the one to the tax calendar.
Tributación has moved to a system of electronic reporting. Taxpayers or their accountant have to download a program that calculates the various taxes and then submits the forms via the Internet. The agency has been working to eliminate the bugs and to get a solid system that does not fail at critical times.
Once the annual income tax form is filed and the taxes paid, expats can enjoy Christmas, but within a month, mid all the Yule bills, the new corporation tax has to be paid.