Communications problems that extend beyond a language barrier make payroll compliance challenging for U.S. employers with operations in Puerto Rico, a representative from Ultimate Software Group Inc. said May 19.
Unlike state and federal revenue departments, Puerto Rico’s Departamento de Hacienda is not staffed by professional bureaucrats, said Ernesto Castro, the government relations manager at Ultimate Software Group. Positions turn over each time a new governor is elected, he said.
“Every governor that comes in he takes the first level of bureaucrats in the tax agencies and they in turn the take the second level of friends, and they in turn, so you have no uniformity,” Castro said. “You have people that come in that may not know anything about taxes, but they were put in because they’re a friend of a friend. “As a result you don’t have continuity. You don’t have uniformity. You have total chaos.”
The problem is compounded because there is not dedicated group within the territory’s revenue department to help employers based in the United States, Castro said.
Form SC 6096, Certification of Debt, is the most common notice employers receive from Hacienda, Castro said at the annual American Payroll Association Congress in Orlando, Fla.
If an employer receives a certification of debt, the best way to handle it is to send someone to Hacienda in person with payment, Castro said.
“What we do is we usually, if our client has an operation down there, we send everything to that person to walk in to Hacienda and do it that way. Because of the communication problem that’s the best way to do it,” Castro said.
“You’ll never do it over the internet. You’ll never do it over the phone either. Mailing it to them you never know where it’s going to end up.”
To send someone in the employers place, the employer needs to grant the person power of attorney using Form SC 2745, Power and Declaration of Representation, Castro said.
Without a dedicated employer group within the agency or a change in political culture, Castro does not see the situation improving for U.S. employers.
“Really the only way to circumvent all these problems in Puerto Rico is for the tax agencies to be government bureaucrats, government, not the governor’s, to have a system like we have here,” Castro said.
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