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INM in PV Checking Expats Earning Income


Ajijic

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by LUIS MELGOZA

Ask Luis

Dear Readers: On July 29th,

Immigration began the permanent enforcement practices mandated by Law. You should be aware that Immigration officers may inspect any business —including rental properties and vendor stands at the Saturday

markets— to verify that any and all foreigners who own, operate or work, in any capacity, in or at any inspected location have the proper Immigration category, with Lucrativa status; they can and will review any

and all documents necessary for the legal operation of the business or employment and that these are in full compliance with all applicable city, state and federal ordinances, statutes and laws.

If a foreigner’s Immigration status does not explicitly permit income generation activities, or if a foreign

employee is not registered with Immigration as such by that specific employer, or if the activity performed

by the foreigner is not among those previously registered by him/her with Immigration, or if any other city, state or federal violations are found, the foreigners shall be detained pending an investigation.

It is critical that if you engage in any income generating activity in Mexico or from Mexican sources —including occasionally renting out your real property or receiving payment for anything— all your permits are in order and all your legal obligations are met at all times.

If you have someone else process your Immigration renewals, activity or address changes, you must have

this person give you a copy of the official application receipt. If you are inspected and you don’t have either a valid and current Immigration document authorizing your stay and activity in Mexico or an application

control number, you will be detained because you won’t be able to prove that your application is in progress.

I have knowledge of two inspections practiced between July 29 and today. In one case, Mailboxes, Etc. at Molino de Agua —mentioned here with permission—, the business and its owners/operators had all necessary

permits and licenses in order, and they always make sure that all their legal obligations are met on time.

In the second case, a person, whose name I will not disclose, was found offering professional services from a

home-based business. This person had lived here for many years, as a tourist, and was planning to go to the border to get a new Visitor (a.k.a. Tourist) visa to replace one that expired in May. Once detained, the person was charged with practicing a profession without a license, zoning violations, operating a business without a permit, working without a permit, unlawful permanence in Mexico, tax fraud, and, because this person offered a bribe to the arresting Immigration officers, bribery of a federal officer. Other than the zoning violations and

the operation of a business without a permit, all other offenses are penalized with prison and deportation.

A license to practice any profession abroad does not give anyone permission to practice it in Mexico. The proper process must be followed, equivalencies met, and proficiency proven to apply for a license to practice in Mexico.

Engaging in any income-generating activity in Mexico or from Mexican sources —including, but not limited

to receiving payment for any services rendered, working, renting out Mexican assets, etc.— without being duly authorized by Immigration is an offense punishable by deportation. Unpaid volunteerism does not require a work permit; however, the volunteer must inform Immigration of this activity following the established process.

Permanent enforcement by Immigration is, well, permanent. Stay legal.

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I know a PR visa holder can work. I believe they must inform INM as to their employer. Sorry, I do not know the answer to mpb.

INM could catch a lot of landlords just by following web boards.. mmm make that classifieds jeje... , VRBO, etc.

Note if landlord is out of country, the tenant is to withhold I believe 25% of rent and pay to Hacienda monthly. Of course landlord needs to be registered with Hacienda.

Up until now Mexico has been extremely lenient on all these issues with expats. They did not have the resources to monitor and implement these issues but I suspect every person they hire would bring in many times their costs.

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With a residente permanente , is that alone sufficient to build and sell a house and also rent a house, or is more paper work necessary?

You still need to be registered with Hacienda and pay taxes on your rental.

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If you are not registered and/or don't pay, can they seize thew property?

Like IRS Hacienda, will ask for the back taxes and if not paid, seize the property and any other properties they need to pay the debt. Hacienda can request the landlord/property owner be expelled for violating the law.

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Like IRS Hacienda, will ask for the back taxes and if not paid, seize the property and any other properties they need to pay the debt. Hacienda can request the landlord/property owner be expelled for violating the law.

Is there evidence this seizure has happened to foreigners?

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Another few questions: If you build a casita and later decide to rent it through a rental agency, who is responsible for deducting the amount due and paying Hacienda?

Is it true that you owe money for every month it is available for rent, whether it is rented or not?

How much is due per month (in percentages)?

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I broke the law last night, commited a criminal and sexual act. She was on top in this state, I said I went to get bopped.
And though I didn't get caught, I know in my mind I commited no crime, Still by some fluke I'm here serving time, Oh No!!
It's not the crime, and it's not the thought, It's not the deed, It's if you get caught.
I got some friends who like to stay HIGH, Think of, the tax potential, if it was legal to buy. But instead the kid is forced, to bust on victimless crimes, It's the look last bust, Nickel and dime, Oh, Oh...
It's not the crime, and it's not the thought, It's not the deed, It's if you get caught.
Think of all them Profiteers, and how they got that way, Cause they sure the hell would not be there, without the payoff game that's played. Think of what we could do, if it was you that was in their shoes, You either play the game or else you lose, Bad News,
It's not who's sold, It's not who's bought, and it's not the kickbacks, It's if you get caught

It's not the crime, it's not the thought, and it's not the deed, It's if you get caught.

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I broke the law last night, commited a criminal and sexual act. She was on top in this state, I said I went to get bopped.

This post was a waste of space. Should it be moved to the "marijuana" thread?

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This post was a waste of space. Should it be moved to the "marijuana" thread?

The title of this topic is: INM in PV Checking Expats Earning Income

which is all about "Will I get caught".

Joco's past history shows he/she likes to snipe at my posts, but please, I ask people to at least think first, before automatically trying to control things. Try get with the program, maybe we could by read things twice, and think, when we don't understand. I realize that subtle messages will always evade some people, so I will be more direct to help you understand: There are a number of posts on this thread that advocate ignoring the law and ignoring the rules, and some go right to the heart of the matter: Will I get caught? - "Is there evidence this seizure has happened to foreigners?" -

The same theme keeps coming up over gringo issues, like driving illegal temporary imported cars:

Will I get caught?

The implication is that many gringos think it is all OK, as long as they don't get caught.

Valid thinking? Best to rigidly follow all rules, or is there broad leeway in reality?

Do the people who ignore the laws want to know about the possible consequences?

Do the same gringos who think it is OK for them and their friends to do illegal things, (as long as they don't get caught), also get irritated when Mexicans break the rules, like not doing a job well (undetected) in someone's home?

If the Mexican electrician or plumber doing shoddy work does not get caught, do they think it's all OK?

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Is there evidence this seizure has happened to foreigners?

I've read that property has been seized and the owners deported. I believe there are stories describing that on this website.

Another few questions: If you build a casita and later decide to rent it through a rental agency, who is responsible for deducting the amount due and paying Hacienda?

Is it true that you owe money for every month it is available for rent, whether it is rented or not?

How much is due per month (in percentages)?

The property owner is still responsible for taxes due on money he receives for his property.

What are the consequences for those who evade the fiscal obligations?
A) Anyone who generates income MUST declare to SAT and if one decides not to he faces FINES AND JAIL as per the law.
B) In the case where this is a foreigner, the DEPARTMENT OF IMMIGRATION will apply sanctions up to expulsion from the country.
C) The Secretary of Economy (Secretaria de Economia) will also apply fines.
Tax authorities in the U.S., Canada and Mexico are working together and share information. Everyday there is more cooperation between the countries due to tax treaties. It is no longer possible to own a property in one country, enjoy income from that property, and not report it in BOTH the country where the property is located, and the country where the owner lives. Failure to comply means the owner is subject to double taxation and heavy penalties when the omission to file and declare is discovered.
In the past, there was only one way to pay tax on income and that method is complicated. The owner is required to obtain a taxpayer identification number and to make monthly declarations whether a tax is due or not. To further complicate matters, in order to obtain the taxpayer identification number the foreigner who owns property and declaring income has to obtain an FM3 resident permit from the Mexican government which permits the rental of property. This system is cumbersome and may require a lengthy stay in the country and regular renewal of immigration documents. This option however permits deductions of legitimate and authorized deductions from gross income.
In February of 2010, new Mexican regulations were published which offer a simplified payment option in which the foreigner who owns property may pay the tax without obtaining an immigration document. No deductions for expenses are permitted against the tax paid in Mexico. This is however considered to be a great advance in assisting foreigners to comply with tax obligations in Mexico and the ideal way to obtain valid and legitimate receipts for the taxes paid which can be presented to tax authorities in the owner’s home country as a credit against income and to offset expenses there. This method avoids double taxation.
Owners of rental properties in Mexico can now consider both options and elect the option which will work best for their individual situation.
If you own a property in Mexico and rent it often or even only occasionally, it is advisable that you make arrangements to declare income and pay the tax. You can SLEEP EASILY KNOWING YOU HAVE COMPLIED WITH TAX LAWS!
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Great suffering succotash! YES, we should pay our taxes when they are owed. Otherwise............ :010: (we might get caught)

Maybe some knowledgeable person who's had some experience with the matter will be kind enough to weigh in with the answers to my questions about rentals.

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If I was the tax man, I would go after both rental agent and owner. Rental agent has received money and has no facturas for expenses and owner is getting income without permission to work nor filing of taxes.

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Another few questions: If you build a casita and later decide to rent it through a rental agency, who is responsible for deducting the amount due and paying Hacienda?

Is it true that you owe money for every month it is available for rent, whether it is rented or not?

How much is due per month (in percentages)?

After you register, you file regularly, even when there is no income. You don't pay a tax if no income, but still file.

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The title of this topic is: INM in PV Checking Expats Earning Income

which is all about "Will I get caught".

Joco's past history shows he/she likes to snipe at my posts, but please, I ask people to at least think first, before automatically trying to control things. Try get with the program, maybe we could by read things twice, and think, when we don't understand. I realize that subtle messages will always evade some people, so I will be more direct to help you understand: There are a number of posts on this thread that advocate ignoring the law and ignoring the rules, and some go right to the heart of the matter: Will I get caught? - "Is there evidence this seizure has happened to foreigners?" -

The same theme keeps coming up over gringo issues, like driving illegal temporary imported cars:

Will I get caught?

The implication is that many gringos think it is all OK, as long as they don't get caught.

Valid thinking? Best to rigidly follow all rules, or is there broad leeway in reality?

Do the people who ignore the laws want to know about the possible consequences?

Do the same gringos who think it is OK for them and their friends to do illegal things, (as long as they don't get caught), also get irritated when Mexicans break the rules, like not doing a job well (undetected) in someone's home?

If the Mexican electrician or plumber doing shoddy work does not get caught, do they think it's all OK?

I wonder about the thousands of Taco Stand owners and thousand of Tienda owners and the thousands of other people in the underground economy who pay no, nada ,zip , zero taxes to anybody...., do you think they need to hear the "Don't get caught song" too.

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That's the same link I posted earlier.

Thanks for the article. It answered my questions, except one ?? which is why is there an extra tax on furnished places as opposed to unfurnished? Anyone know?

I posted this link earlier but it does not answer the amount of taxes. There are previous posts here that state that there is more rent on a furnished rental up to almost 50% of the rent.

http://www.mexconnect.com/cgi-bin/forums/gforum.cgi?post=189489;sb=post_latest_reply;so=ASC;forum_view=forum_view_collapsed;;page=unread#unread

Ajijic explains rent in this one:

http://www.chapala.com/webboard/index.php?showtopic=37508

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Joco's past history shows he/she likes to snipe at my posts, but please, I ask people to at least think first, before automatically trying to control things. Try get with the program, maybe we could by read things twice, and think, when we don't understand. I realize that subtle messages will always evade some people, so I will be more direct to help you understand: There are a number of posts on this thread that advocate ignoring the law and ignoring the rules, and some go right to the heart of the matter: Will I get caught? - "Is there evidence this seizure has happened to foreigners?" -

Quit the personal attacks and quit sending me PMs.

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We sign people up for work papers and get them registered as REPECOs or small businesses (many activities fall under this umbrella for business that do not need to give facturas) where they can do their own bimonthly tax filings without the need for an accountant and the taxes are small, $220 pesos minimum tax every two months for gross income up to $18,000 pesos. I have seen less than professional behavior from many local accountants so we try to set people up to where they do not need the services of an accountant where possible.

We have signed up seller from some of the local markets as REPECOs as it is an inexpensive way to be in compliance where you are not spending more money on accounting fees than you make.

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Gringal these might interest you if someone you know might owe taxes and or has rental property:


NEW IRS TACTIC WILL LOCATE HIDDEN FOREIGN FINANCIAL ACCOUNTS IN MEXICO
Most expats in Mexico understand that under US FATCA law the banks in Mexico will be reporting the the foreign bank accounts held by US taxpayers and green card holders to the IRS. Many have felt that their accounts with INTERCAM, MONEX and other non bank financial institutions in Mexico are safe from IRS scrutiny. Suddenly, that is no longer the case.

and for those who have not reported those foreign financial accounts will impose penalties of $10,000 or more and possibly seek criminal prosecution. Recently the IRS convicted an 89 year old lady for not reporting her foreign bank accounts.
http://us-mexicantax.blogspot.mx/2013/01/mexico-introduces-tax-amnesty-program.html

Mexico introduces tax amnesty program – U.S. businesses with pending tax disputes in Mexico should consider immediate action
Mexico introduced a comprehensive tax amnesty as part of the 2013 tax reform published in the Mexican official gazette on December 17, 2013. Under the program 80 to 100 percent of federal tax debt and related penalties incurred by companies and individuals are forgiven upon request of the taxpayers. Tax penalties for 2012 and 2013, other than penalties for failure to pay the tax, are also reduced by 60 percent
Scope of the amnesty. The tax debt that is covered by the amnesty may be due to omission of income; failure to pay federal income tax or trade import duties (cuotas compensatorias); inflationary interest and penalties regarding either the federal tax or trade import duties; and penalties due to the failure to comply with federal tax obligations other than the payment of the tax (e.g. reporting obligations).
Taxpayers, that have been under SAT audit for tax years 2009, 2010 and 2011 and where the SAT determined as a result of the audit that there had been no tax deficiency or where the taxpayer paid the tax deficiency found by the SAT, will be granted a 100 percent forgiveness of the pre-2007 tax debt.
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