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Fiddler González & Rodríguez, P.S.C., P.O. Box 363507, San Juan, PR 00936-3507. Our fax (787) 759-3108.
We welcome your questions and comments.
José J. Santiago
Carlos A. Padilla
Antonio L. García
The Governor has signed Act No. 15 of January 3, 2014, which shall be known as the "Get Up to Date with your Employer Responsibility Act: Incentive Plan for the Payment of Owed Contributions, Dues, Quotations, Payroll Statements and/or Premiums"
The Act applies to employers under the following statutes:
Puerto Rico Act Number 45 of April 18, 1935 (Workers Accident Compensation Act)
Puerto Rico Act 428 of May 15, 1950 (Social Security for Chauffeurs)
Puerto Rico Act 74 of June 21, 1956 (Unemployment)
Puerto Rico Act 139 of June 26, 1968 (Non-Occupational Disability Benefits Act)
This Act creates an alternative incentive plan for payment of any debt owed by employers who as of June 30, 2013, carry a debt with respect to their responsibilities under the above statutes. The incentive plan shall not apply to tax returns, dues, quotations, payroll statement and/or premiums owed corresponding to the taxable periods from July 1st 2013 onwards.
Employers who have not filed the returns for years ending on or before June 30, 2013, may file said returns and in that way may take advantage of the incentive program established by the Act, but only through full payment of the amount owed without any payment plan. However, such employers shall be eligible to relief from payment of interests, charges, penalties and administrative expenses, as applicable.
The employer that chooses to take advantage of the incentive plan will be relieved from payment of interests, charges, penalties or administrative expenses, as applicable, regarding the debts covered by the incentive plan incurred or owed for the periods, including months, ending on or before June 30, 2013. The employer may choose to pay the debt instantly in whole or in installments under a payment plan. Should the employer opt to pay through a payment plan, he must have signed (the agreement to establish an installment plan) and made the minimum payment. The installment plan must have duration no greater than four years and is subject to an initial minimum payment of the principal.
The terms of the installment plan are as follows:
a) Debts paid fully and instantly will not incur any interest.
b) For debts payable in a one-year period, the employer must make an initial payment of !0% of the debt. The remaining balance owed will be subject to a 12-month payment plan from the date the incentive plan was granted with no interest imposed.
c) For debts payable in a two-year period, the employer must make an initial payment of !0% of the debt. The remaining balance owed will be subject to a 24-month payment plan from the date the incentive plan was granted subject to a 5% annual interest rate.
d) For debts payable in a three-year period, the employer must make an initial payment of 10% of the debt. The remaining balance owed will be subject to a 36-month payment plan from the date the incentive plan was granted subject to a 7% annual interest rate.
e) For debts payable in a four-year period, the employer must make an initial payment of !0% of the debt. The remaining balance owed will be subject to a 48-month payment plan from the date the incentive plan was granted subject to a 10% annual interest rate.
The Act imposes the following terms and conditions:
a) The employer must either be up to date in the payment and filing of any contribution for the periods (including months or trimesters) beginning on July 1st, 2013 or make those payments at the time of taking advantage of the incentive plan.
b) All the debts covered by the incentive plan must be listed at the time of establishing the incentive plan. The employer must waive any objection to the assessment or notification of the debt subject to the plan.
c) Any employer who is in an intervention process, tax audit, or in an administrative hearing or judicial review may take advantage of the incentive plant and its decision will be sufficient cause to stop the investigation, administrative or judicial process regarding the debt or debts subject to the plan.
d) Those employers who are already taking advantage of a payment plan with the Department of Labor and Human Resources or the Corporation of the State Insurance Fund at the time this Act goes into effect may negotiate the pending balance of said payment plan with the Secretary or the Administrator, as the case may be, under the terms and conditions established in the incentive plan provided by this Act.
e) The payment or payment proposal under the incentive plan chosen under the Act will be voluntary and final for all purposes and will not be subject to later claims of refund, reimbursement or credit.
Employers who are not eligible to take advantage of the provisions of this Act:
a. Employers against whom a procedure of a tax nature has begun
b. Employers who have been convicted of tax fraud or whose source of income is illegal.
c. Employers whose activities or businesses can be identified as organized crime activities or having a pattern of organized crime activities.
d. Elected officials or those appointed by the Governor or confirmed by the Legislature.
Employers who choose not to take advantage of the incentive plan or who choose to participate and then violate one of the established requirements or terms will be subject to all the collection mechanisms provided in the relevant statutes, including seizures of property. In case of violation of a payment plant, the debts will be reestablished, with interest, charges, penalties and administrative expenses and additions, without any discount or release.
Within 60 days of the approval of this Act, the Secretary of Labor and Human Resources in consultation with the Treasury Secretary shall issue a circular letter or administrative determination to establish the guidelines or procedures that will rule in granting the benefits provided by this Act. The Act states that the Secretary must establish such guidelines in the most flexible manner possible, free from technical obstacles. Separately, the Administrator of the State Insurance Fund will also issue within 60 days a circular letter or administrative determination to establish the guidelines or procedures that will rule in granting the benefits provided by this Act under Act 45, which must also be done in the most flexible manner possible.
Once the circular letters have been issued, the Department of Labor and the State Insurance Fund will begin a 30 day period to provide information to the public regarding the benefits provided by the Act. After the orientation period has finished, the Incentive Plan will go into effect for a period of 100 calendar days.
The Law establishes that the Incentive Plan under the Department of Labor will be separate and independent from that of the State Insurance Fund.
The payments plans approved under this incentive plan, as well as existing plans in the Department of Labor and the State Insurance Fund may be sold to government or private institutions at a discount or premium price. The Secretary of Labor and the Administrator of the State Insurance Fund shall issue through a bulletin, circular letter or administrative determination the necessary regulations to carry out such transactions. The Department and the Fund shall protect the confidentiality of the employer's submitted information.
This law went into effect immediately after its approval. The Department of Labor and the Administrator of the State Insurance Fund have not issued yet the guidance or administrative determination required in the Act.
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