Puerto Rico’s nonprofit sector just got some welcome news: the Department of the Treasury has introduced a new expedited process for local tax exemption certificates. If your organization already has federal 501(c)(3) status, this update could save you weeks—or even months—of waiting for local approval.

What’s Changed for Nonprofits?

As of April 4, 2025, Executive Order OE-2025-018 and Internal Revenue Circular Letter No. 25-11 have established a much faster review process for nonprofits that already hold federal tax-exempt status under Section 501(c)(3) of the U.S. Internal Revenue Code. Now, the Department of the Treasury is committed to issuing the local Certificate of Approval within 60 calendar days, provided you submit all required documents with your application.

Who Qualifies for the Expedited Process?

To take advantage of this streamlined path, your organization must:

• Hold a current IRS Determination Letter (Form 947 or 5048) confirming your 501(c)(3) status, issued within the last 180 days. If your letter is older, you’ll need an additional IRS certification (Letter 4168C).
• Have a Board of Directors with at least three members, and fewer than 50% related to the principal officer or president.
• Provide a board certification (on official letterhead, signed by an authorized director) confirming your organization provides services to Puerto Rico residents.
• Be incorporated and in good standing, with up-to-date annual reports.
• Submit a copy of your bylaws as approved by the board.
• Provide financial statements or projected income and expense statements.
• Be fully compliant with all tax filing and reporting obligations to both the Puerto Rico Department of the Treasury and the Department of State.

Why This Matters

This change means that nonprofits with federal recognition can now secure local tax exemption faster and with fewer steps. The benefits are substantial:

• Faster processing—no more long waits for local approval.
• Fiscal advantages—state tax exemption means donations are not subject to income tax, and donors can claim deductions on their returns.
• Clarity—clear, published requirements help you avoid surprises and delays.

How to Apply

• Gather all required documents before you begin.
• Submit your application through SURI, Puerto Rico’s online tax portal.
• Make sure your organization is registered and in good standing before requesting an exemption.

Next Steps for Nonprofits

• Review your documentation: Double-check that everything is current and complete.
• Consult your advisor: If you have questions about the requirements or the process, don’t hesitate to seek professional guidance.

This expedited process is designed to help nonprofits focus on their missions—serving Puerto Rico’s communities—instead of getting bogged down in paperwork.

This update is based on the latest guidance from the Puerto Rico Department of the Treasury and is intended to help local nonprofits navigate the new rules efficiently.