Business Law Articles
By: Paul Hammer, Esq.
San Juan, Puerto Rico
In the midst of Puerto Rico’s historic economic crisis, the Island’s Treasury Department, known as Hacienda, has recently employed new measures to collect overdue taxes, in particular the sales and use tax (IVU, for its Spanish acronym) applicable to retail businesses. Such measures include “preventative liens”, coupled with the shut-down of business operations, which are designed to collect full payment of any debt owed within 30 days. Several local businesses have been shut down in recent weeks for overdue sales and use taxes.
Should a business fail to pay off the entire debt within the allotted period, they face possible liquidation of all business inventory and assets. Collection of the debt may also become the responsibility of business owners in their personal capacity in some instances.
UTILIZING BANKRUPTCY TO BENEFIT YOU AND YOUR BUSINESS
One alternative available to Puerto Rico businesses and business owners faced with collection for overdue sales and use taxes is filing for bankruptcy protection. Businesses must file under Chapter 11 of the Bankruptcy Code, while most individual business owners will have to file under Chapter 13. Both Chapters provide the following key benefits:
-Ability to continue operations and avoid temporary or permanent shut-down
-Ability to avoid damaging shut-downs which hurt revenue and reputation
-Ability to protect all business and personal assets from seizure and liquidation
-Ability to remove penalties and interest from the debt owed
-Ability to present a feasible, long-term payment plan in accordance with the economic reality of you or your business
-Ability to place a stay on all collection actions, such as liens and lawsuits filed by creditors
-Ability to remove any liens placed over your assets or business assets so that operations can continue or recommence immediately
-Efficient and sophisticated federal forum and laws designed to protect good faith filers
For more information about Estrella, LLC, please visit the International Society of Primerus Law Firms.