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Posts from September 2006

09/30/2006

2005 W-2 & Informative Returns Program

(Republished from the Puerto Rico Treasury Department)
        
For taxable year 2005, every Employer or Withholding Agent which is required to file 5 or more Withholding Statements or Informative Returns must do so through magnetic  media.  This Program generates the files with the information   of the Withholding Statements and Reconciliation Statement of Income Tax Withheld (Forms 499R-2/W-2PR and 499R-3),  Informative Returns (Forms 480.5, 480.6A, 480.6B and 480.6C) Annual Reconciliation Statement of Income Subject to Withholding  and Nonresidents Annual Return of Income Tax Withheld at Source  (Forms 480.6B.1 and 480.30) in the format required by the Department. Also, it prints for the employee Copy B and  Copy C of the Withholding Statement and the copies for the payee  of the Informative Returns. You will have the option to electronically   transfer (through the Internet) these files or to save them  in a diskette and submit them to the Department.
       
The file generated for the Withholding Statements by this Program complies with the Social Security Administration requirements,  therefore, you will be able to transfer or copy and submit the   same to that agency.
       
This Program provides for the import of payroll data from   Excel or text format. If you can not export the payroll  data from your accounting software to create the spreadsheet  in Excel or text format, you should contact your software provider.  In general, all accounting software's provide the tools to generate    spreadsheets.  This Program can be used by every Employer  or Withholding Agent required to file
less  than 250 Withholding Statements or less than 250 Informative  Returns.
       
To use this Program you must have the Access Code   assigned by the Department. This Code is unique for each Employer or Withholding Agent. If you have not received  the Access Code, call (787) 721-2020 extension 4511 or  send a fax requesting the same to (787) 977-1337 or (787) 977-1338.
Every Representative or Tax Return  Specialist must accompany a written  authorization from the Employer in order to request an Access Code.

PR's New Tax on Goods and Services

The Government is phasing out the  existing 6.6 % excise tax  on imported goods  to make way for a 7%  sales tax effective November 15, 2006.

Through the new tax structure, items that were subject to excise tax will still be taxed but at the sales end. All covered businesses must register their operations with the Treasury Departmentcollect and file with the Department tax on  non-exempt items and services.

09/28/2006

New Corporate Online Services

Puerto Rico's  Department of State is entrusted with administering the public register of all private legal organizations in the Island.

Among its  services, the Deparment has enabled certain online services.  Two key features are online forms (in both English and Spanish) on pdf files and  to ease the filing process of corporate paperwork and a search page that enables anyone to find whether a particular name or corporation is registered.  The current link to said page is:
www.estado.gobierno.pr/formularios_Corporaciones.htm

The search page is located at: www.estado.gobierno.pr/CorpOnLine/CorpOnLine.aspx.

The online forms are simple and straighforward.  They are an excellent low cost alternative to  tailor made paperwork. These include Articles of Incorporations for regular and close corporations, professional services corporations, LLCs, register of foreign corporations, annual reports and many other forms.   

TYPES OF BUSINESS ORGANIZATIONS IN PUERTO RICO

In Puerto Rico businesses can operate under several legal arrangements.  The most common ones are sole proprietorships and corporations.

Ways of incorporating may include  regular or closed corporations, limited liability corporations (L.L.C.) and professional services corporation (P.S.C.). This last one being exclusively for businesses that provide professional services such as doctors and lawyers.

For small or  family owned businesses, closed corporations offer several advantages over a traditional corporation including legal provisions that allow shareholders to remain shielded from personal liability even though they fail to follow all corporate formalities. Also, these corporations may operate without a board of directors and a single officer may hold multiple offices.

Certain closed and professional corporations and  may elect to qualify  as individual  or 'N Corporations;  a tax treatment similar to Subchapter S corporations.

Besides corporations, businesses may organize in partnerships including limited liability partnerships (L.L.P.) and special partnerships.

Wrongful Discharge Act: What is Just Cause?

Puerto Rico's Act No. 80  provides that  employers who terminate workers for 'just cause' need not pay any severance. So, what does 'just cause' mean?

Just Cause is a relative concept which depends on the particular circumstances of a case.  In general terms, however a discharge must relate to the proper and normal operation of the business; conduct akin to: (a) a pattern of improper or disorderly conduct; (b) an attitude of not performing work adequately; (c)  repeated violations of company policies or rules  of conduct.

Single offenses will not generally suffice unless  the isolated act which gives rise to the discharge is  of a grave  nature.  The act must reveal an undesirable trait or attitude of such a  magnitude that  immediate termination is the proper and logical response.  Thus the laws does not favor discharge for a first violation, unless the conduct is of such nature that it endangers the operation of the business and the security of other people.  Examples of acts that may fall under this category are: theft, gross negligence, sabotage, assault and other acts of violence.

09/27/2006

Wrongful Discharge Act: Primer

In Puerto Rico, workers not hired for a fixed period are protected by Act No. 80; a hybrid version of the doctrine of employment at will prevailing in the U.S.

As long as an employer does not incur in a specific violation of an employment law- such as discrimination - it can terminate a worker's employment and will only have to pay the statutory severance and accrued benefits. The amount of severance is  based on the employee's  years of service.  To calculate the indemity see my post titled -Increase Liability under Wrongful Discharge Act

Employers face a drastically more serious liability if discharge is done for discriminatory reasons.  While Act No. 80,  merely penalizes a wrongful discharge, Puerto Rico discriminatory statutes (and their federal counterparts) prohibit the practice and provides for the imposition of double damages against the employer. Assessment of damages may include reinstatement, double back and front pay and pain and anguish (double).

§ 185b. Indemnity for discharge without just cause—Good cause for the discharge of an employee from an establishment shall be understood to be:

a) That the worker indulges in a pattern of improper or disorderly conduct. b)The attitude of the employee of not performing his work in an efficient manner, or of doing it belatedly and negligently or in violation of the standards of quality of the product produced or handled by the establishment.

(c) The employee’s repeated violations of the reasonable rules and regulations established for the operation of the establishment, provided a written copy thereof has been opportunely furnished to the employee.

(d) Full, temporary or partial closing, of the operations of the establish­ment.

(e) Technological or reorganization changes as well as changes of style design or the nature of the product made or handled by the establishment and changes in the services rendered to the public.

(f) Reductions in employment made necessary by a reduction in the anticipated or prevailing volume of production, sales or profits at the time of the discharge.

A discharge made by the mere whim of the employer or without cause relative to the proper and normal operation of the establishment shall not be considered as a discharge for good cause. Neither shall it be considered just cause for discharging an employee, his/her collaboration or expres­sions made by him/her pertaining to his/her employer’s business before any administrative, judicial or legislative forum in Puerto Rico when said expressions are not of a defamatory character nor constitute disclosure of privileged information according to law In this last case, in addition to any other corresponding adjudication, the employee thus discharged shall have the right to have an order issued for immediate restitution in his/her employment and to be compensated for an amount equal to the salaries and benefits not received from the (late of discharge until a court orders reinstatement in his/hers employment.

Treaty of Paris 1898

Firma_tratado_paris_1898_1 Spoils of war trace the beginning of Puerto Rico’s  formal association with the  United States. In a hostile atmosphere, representatives from Spain and the United States met in Paris on October 1, 1898 to negotiate and produce a treaty that would ended  the six-month long Spanish-American war. With the signing of the Treaty of Paris in 1898, Puerto Rico was placed under American control. Here is the text of the Treaty:


The United States of America and Her Majesty the Queen Regent of Spain, in the name of her august son Don Alfonso XIII, desiring to end the state of war now existing between the two countries, have for that purpose appointed as plenipotentiaries:

The President of the United States, William R. Day, Cushman K. Davis, William P. Frye, George Gray, and Whitelaw Reid, citizens of the United States;

And Her Majesty the Queen Regent of Spain,

Don Eugenio Montero Rios, president of the senate, Don Buenaventura de Abarzuza, senator of the Kingdom and ex-minister of the Crown; Don Jose de Garnica, deputy of the Cortes and associate justice of the supreme court; Don Wenceslao Ramirez de Villa-Urrutia, envoy extraordinary and minister plenipotentiary at Brussels, and Don Rafael Cerero, general of division; Who, having assembled in Paris, and having exchanged their full powers, which were found to be in due and proper form, have, after discussion of the maters before them, agreed upon the following articles:

Article I.

Spain relinquishes all claim of sovereignty over and title to Cuba.And as the island is, upon its evacuation by Spain, to be occupied by the United States, the United States will, so long as such occupation shall last, assume and discharge the obligations that may under international law result from the fact of its occupation, for the protection of life and property.

Article II.

Spain cedes to the United States the island of Porto Rico and other islands now under Spanish sovereignty in the West Indies, and the island of Guam in the Marianas  or Ladrones.

Article III.

Spain cedes to the   United States the archipielago known as the Phillipine Islands, and comprehending the islands lying within the following line:  A line running from west to east along or near the twentieth parallel of north latitude, and through the middle of the navigable channel of Bachi, from the one hundred and eighteenth (118th) to the one hundred and twenty-seventh (127th) degree meridian of longitude east of Greenwich, thence along the one hundred and twenty seventh (127th) degree meridian of longitude east of Greenwich to the parallel of four degrees and forty five minutes (4 [degree symbol] 45']) north latitude, thence along the parallel of four degrees and forty five minutes (4 [degree symbol] 45') north latitude to its intersection with the meridian of longitude one hundred and nineteen degrees and thirty five minutes (119 [degree symbol] 35') east of Greenwich, thence along the meridian of longitude one hundred and nineteen degrees and thirty five minutes (119 [degree symbol] 35') east of Greenwich to the parallel of latitude seven degrees and forty minutes (7 [degree symbol] 40') north, thence along the parallel of latitude of seven degrees and forty minutes (7 [degree symbol] 40') north to its intersection with the one hundred and sixteenth (116th) degree meridian of longitude east of Greenwich, thence by a direct line to the intersection of the tenth (10th) degree parallel of north latitude with the one hundred and eighteenth (118th) degree meridian of longitude east of Greenwich, and thence along the one hundred and eighteenth (118th) degree meridian of longitude east of Greenwich to the point of beginning.The United States will pay to Spain the sum of twenty million dollars ($20,000,000) within three months after the exchange of the ratifications of the present treaty.

Article IV.

The United States will, for the term of ten years from the date of the exchange of the ratifications of the present treaty, admit Spanish ships and merchandise to the ports of the Philippine Islands on the same terms as ships and merchandise of the United States.

Article V.

The United States will, upon the signature of the present treaty, send back to Spain, at its own cost, the Spanish soldiers taken as prisoners of war on the capture of Manila by the American forces.  The arms of the soldiers in question shall be restored to them.

Spain will, upon the exchange of the ratifications of the present treaty, proceed to evacuate the Philippines, as well as the island of Guam, on terms similar to those agreed upon by the Commissioners appointed to arrange for the evacuation of Porto Rico and other islands in the West Indies, under the Protocol of August 12, 1898, which is to continue in force till its provisions are completely executed.

The time within which the evacuation of the Philippine Islands and Guam shall be completed shall be fixed by the two Governments. Stands of colors, uncaptured war vessels, small arms, guns of all calibres, with their carriages and accessories, powder, ammunition, livestock, and materials and supplies of all kinds, belonging to the land and naval forces of Spain in the Philippines and Guam remain the property of Spain, pieces of heavy ornance, exclusive of field artillery, in the fortifications and coast defences shall remain in their emplacements for the term of six months, to be reckoned from the exchange of ratifications of the treaty; and the United States may, in the meantime, purchase such material from Spain, if a satisfactory agreement between the two governments on the subject shall be reached.

Article VI.

Spain will, upon the signature of the present treaty, release all prisoners of war, and all persons detained or imprisoned for political offences, in connection with the insurrections in Cuba and the
Philippines
and the war with the United States. Reciprocally, the United States will release all persons made prisoners of war by the American forces, and will undertake to obtain the release of all Spanish prisoners in the hands of the insurgents in Cuba and the Philippines.The Government of the United States will at its own cost return to Spain and the Government of Spain will at its own cost return to the
United   States
, Cuba, Porto Rico, and the Philippines,according to the situation of their respective homes, prisioners released or caused to be released by them, respectively, under this article.

Article VII.

The United States and Spain mutually relinquish all claims for indemnity, national and individual, of every kind, of either Government, or of its citizens or subjects, against the other Government, that may have arisen since the beginning of the late insurrection in Cuba and prior to the exchange of ratifications of the present treaty, including all claims for indemnity for the cost of the war.

The United States will adjudicate and settle the claims of its citizens against relinquished in this article.


Article VIII.

In conformity with the provisions of Articles I, II, and III of this treaty, Spain relinquishes in Cuba, and cedes in Porto Rico and other islands in the West Indies, in the island of Guam, and in the Philippine Archipelago, all the buildings, wharves, barracks, forts, structures, public highways and other immovable property which, in conformity with law, belong to the public domain, and as such belong to the Crown of Spain.

And it is hereby declared that the relinquishment or cession, as the case may be, to which the preceding paragraph refers, can not in any respect impair the property or rights which by law belong to the peaceful possession of property of all kinds, of provinces, municipalities, public or private establishments, ecclesiastical or civic bodies, or any other associations having legal capacity to acquire and possess property in the aforesaid territories renounced or ceded, or of private individuals, of whatsoever nationality such individuals may be.

The aforesaid relinquishment or cession, as the case may be, includes all documents exclusively referring to the sovereignty relinquished or ceded that may exist in the archives of the

Peninsula. Where any document in such archives only in part relates to said sovereignty, a copy of such part will be furnished whenever it shall be requested. Like rules shall be reciprocally observed in favor of Spain in respect of documents in the archives of the islands above referred to.

In the aforesaid relinquishment or cession, as the case may be, are also included such rights as the Crown of Spain and its authorities possess in respect of the official archives and records, executive as well as judicial, in the islands above referred to, which relate to said islands or the rights and property of their inhabitants. Such archives and records shall be carefully preserved, and private persons shall without distinction have the right to require, in accordance with law, authenticated copies of the contracts, wills and other instruments forming part of notorial protocols or files, or which may be contained in the executive or judicial archives, be the latter in Spain or in the islands aforesaid.

Article IX.

Spanish subjects, natives of the Peninsula, residing in the territory over which Spain by the present treaty relinquishes or cedes her sovereignty, may remain in such territory or may remove therefrom, retaining in either event all their rights of property, including the right to sell or dispose of such property or of its proceeds; and they shall also have the right to carry on their industry, commerce and professions, being subject in respect thereof to such laws as are applicable to other foreigners. In case they remain in the territory they may preserve their allegiance to the Crown of Spain by making, before a court of record, within a year from the date of the exchange of ratifications of this treaty, a declaration of their decision to preserve such allegiance; in default of which declaration they shall be held to have renounced it and to have adopted the nationality of the territory in which they may reside.

The civil rights and political status of the native inhabitants of the territories hereby ceded to the United States shall be determined by the Congress.

Article X.

The inhabitants of the territories over which Spain relinquishes or cedes her sovereignty shall be secured in the free exercise of their religion.

Article XI.

The Spaniards residing in the territories over which Spain by this treaty cedes or relinquishes her sovereignty shall be subject in matters civil as well as criminal to the jurisdiction of the courts of the country wherein they reside, pursuant to the ordinary laws governing the same; and they shall have the right to appear before such courts, and to pursue the same course as citizens of the country to which the courts belong.

Article XII.

Judicial proceedings pending at the time of the exchange of ratifications of this treaty in the territories over which Spain relinquishes or cedes her sovereignty shall be determined according to the following rules:

1. Judgments rendered either in civil suits between private individuals, or in criminal matters, before the date mentioned, and with respect to which there is no recourse or right of review under the Spanish law, shall be deemed to be final, and shall be executed in due form by competent authority in the territory within which such judgments should be carried out.

2. Civil suits between private individuals which may on the date mentioned be undetermined shall be prosecuted to judgment before the court in which they may then be pending or in the court that may be substituted therefor.

3. Criminal actions pending on the date mentioned before the Supreme Court of Spain against citizens of the territory which by this treaty ceases to be Spanish shall continue under its jurisdiction until final judgment; but, such judgment having been rendered, the execution thereof shall be committed to the competent authority of the place in which the case arose.

Article XIII.

The rights of property secured by copyrights and patents acquired by Spaniards in the Island of Cuba and in Porto Rico, the Philippines and other ceded territories, at the time of the exchange of the ratifications of this treaty, shall continue to be respected. Spanish scientific, literary and artistic works, not subversive of public order in the territories in question, shall continue to be admitted free of duty into such territories, for the period of ten years, to be reckoned from the date of the exchange of the ratifications of this treaty.

Article XIV.

Spain

will have the power to establish consular officers in the ports and places of the territories, the sovereignty over which has been either relinquished or ceded by the present treaty.

Article XV.

The Government of each country will, for the term of ten years, accord to the merchant vessels of the other country the same treatment in respect of all port charges, including entrance and clearance dues, light dues, and tonnage duties, as it accords to its own merchant vessels, not engaged in the coastwise trade.

Article XVI.

It is understood that any obligations assumed in this treaty by the United States with respect to Cuba are limited to the time of its occupancy thereof; but it will upon termination of such occupancy, advise any Government established in the island to assume the same obligations.

Article XVII.

The present treaty shall be ratified by the President of the United States, by and with the advice and consent of the Senate thereof, and by Her Majesty the Queen Regent of Spain; and the ratifications shall be exchanged at Washington within six months from the date hereof, or earlier if possible.

In faith whereof, we, the respective Plenipotentiaries, have signed this treaty and have hereunto affixed our seals.

Done in duplicate at Paris, the tenth day of December, in the year of Our Lord one thousand eight hundred and ninety-eight.

[Seal] William R. Day
[Seal] Cushman K. Davis
[Seal] William P. Frye
[Seal] Geo.
Gray[Seal] Whitelaw Reid
[Seal] Eugenio Montero Rios
[Seal] B. de Abarzuza[Seal] J. de Garnica
[Seal] W. R. de Villa Urrutia
[Seal] Rafael Cerero

 

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