2023 Laws of Puerto Rico › TITLE TWENTY-NINE - Labor (§§ 1 — 3004) › PART III - Social Security (§§ 611 — 726f) › Chapter 47 - Employment Security Act (§§ 701 — 717) › § 709 - Collection of delinquent or contested taxes

(a) Interest on delinquent taxes.— If the taxes are not paid on the date on which they are due and payable as prescribed by the Secretary, the whole amount or the part thereof remaining unpaid shall, in addition to said taxes and as a part thereof, bear interest at the rate of one percent (1%) per month or any fraction thereof as of the due date and until payment is received by the Secretary of the Treasury.
Provided That, on and after January 1, 1989, taxes due and payable shall bear the preferred rate prevailing in the market on September 30 of the immediately preceding year.
At the Secretary’s discretion, the employer may be exempted from these charges after it is shown that the taxes were not paid on time due to circumstances beyond the employer’s control.
(b) Collection by constraint or suit.—
(1) If any employer defaults in any payment of contributions, interest or penalties, the amount due may in addition or alternatively to any other method of collection prescribed in this chapter or in any other act or code of Puerto Rico be collected by the constraint proceeding used for the collection of property taxes or by civil action brought in the name of the Secretary, and the employer adjudged in default shall pay the costs of such proceeding. Civil actions brought under this section to collect contributions, interest or penalties thereon from an employer shall be heard in the part of the Court of First Instance of the jurisdiction wherein the employer has his principal place of business at the earliest possible date and shall be entitled to preference upon the docket of the court over all other civil actions except petitions for judicial review under § 706 of this title.
(2) Any employing unit not a resident of Puerto Rico which exercises the privilege of having one or more individuals performing service for it within Puerto Rico, and any resident employing unit which exercises that privilege and thereafter moves from Puerto Rico, shall be deemed to have thereby appointed the Secretary of State of Puerto Rico as its agent and attorney for the acceptance of process and other notices in any civil action under this subsection. In instituting such an action against any such employing unit the Secretary shall cause all subsequent process or notice to be served on the Secretary of State and such service shall have the same scope, force and validity as if made personally upon the employing unit within Puerto Rico; Provided, That the Secretary shall forthwith send notice of the service of such process, together with any other documents required by law, by certified mail, return receipt requested, to such employing unit at its last known address and such return receipt, the Secretary’s affidavit of compliance with the provisions of this section, and a copy of the notice of service, shall be appended to the original of the process filed in the court in which such civil action is pending.
(3) The Court of First Instance shall, in the manner provided in clauses (1) and (2) of this subsection, entertain actions to collect contributions, interest or penalties thereon for which liability has accrued under the Employment Security Act of any state or of the Federal Government.
(4) No suit, including an action for a declaratory judgment shall be maintained and no writ or process shall be issued by any court which has the purpose or effect of restraining, delaying, or forestalling the collection of any contributions, interest or penalties under this chapter.
(c) Priority of claims.— Except as hereafter provided any claim on account of contributions, interest or penalties due or accrued under this chapter, shall be payable in full with priority over any other claims, including claims for other contributions or debts due to the Government of Puerto Rico. When there exist claims for contributions, interest or penalties and claims for wages against the same employer, the order of priority as between such claims and other claims shall, notwithstanding any other provisions of the laws of Puerto Rico, be as follows:
(1) Claims for wages, other than the remuneration of executive or administrative officers of corporations, up to the sum of two hundred and fifty dollars ($ 250) to each worker, earned within six (6) months of the commencement of the proceedings, or of the date of adoption of an arrangement not judicially ordered for the distribution of an employer’s assets.
(2) Claims for contributions, interest or penalties due or accrued under this chapter and §§ 201—212 of Title 11.
(3) Other claims in the order of priority provided by other provisions of law.
(d) Refunds.—
(1) If any person or organization applies for a refund or credit of any amount paid as contribution, interest, or penalties under this chapter, and the Secretary determines that such amount or any portion thereof was erroneously collected, the Secretary may, in his/her discretion, grant a credit therefor and no interest shall be assessed with respect to subsequent contribution payments, or refund the amount erroneously paid without interest; Provided, That:
(A) Any refund payable from the Unemployment Fund on or after January 1, 1961, for an amount of contributions, interest or penalties erroneously collected under this chapter with respect to employment prior to such date or any credit for such amount against contributions due and payable to the Unemployment Fund on or after such date shall not exceed ninethy percent (90%) of such amount;
(B) any refund from the Unemployment Fund for an amount of contributions erroneously collected with respect to employment after December 31, 1960, and prior to January 1, 1963, from an employer subject to this chapter but not to the Federal Unemployment Tax Act, or any credit for such amount against contributions due and payable to the Unemployment Fund on or after January 1, 1961, shall not exceed ninety percent (90%) of such amount, and
(C) any refund from the Unemployment Fund for an amount of contributions erroneously collected under this chapter on wages paid with respect to employment after December 31, 1962, from an employer subject to this chapter but not to the Federal Unemployment Tax Act, or any credit for such amount against contributions due and payable to the Unemployment Fund on or after January 1, 1963, shall not exceed an amount equal to [two and seven tenths] percent (2.7%) of such wages; Provided, further That:
(i) The remaining ten percent (10%) of either of the amounts hereinabove referred to in paragraphs (A) and (B) of this clause shall be refunded from the Special Auxiliary Fund pursuant to the provisions of subsection (b) of § 711a of this title, or may be credited against further payments to the Fund;
(ii) the remainder of contributions with respect to employment after December 31, 1961, erroneously collected under this chapter from employers subject to this chapter but not to the Federal Unemployment Tax Act shall be refunded from the Special Auxiliary Fund pursuant to the provisions of subsection (b) of § 711a of this title, or may be credited against future payments to that Fund, and
(iii) any other amount erroneously collected under this chapter shall be refunded from the Special Auxiliary Fund pursuant to the provisions of subsection (b) of § 711a of this title, or may be credited against future payments to that Fund. No refund or credit shall be allowed with respect to a payment as contributions, interest or penalties unless an application therefor shall be made on or before whichever of the following dates is later:
(I) One year from the date on which such payment was made, or
(II) three (3) years from the last day of the period with respect to which such payment was made.
For a like reason and within the same period a refund may be made or a credit may be allowed by the Secretary motu proprio. If the Secretary determines that contributions on wages insured under the employment security law of any other state or of the federal government, interest thereon or penalties were erroneously paid to this Commonwealth, refund or adjustment thereof may be made without interest, irrespective of the time limits provided in this subsection, on satisfactory proof that such contributions, interest thereon or penalties have been paid to such state or to the federal government. Nothing in this chapter or in any part thereof shall be construed to authorize any refund of money due or payable under the law and regulations in effect at the time such money was paid.
(2) Notwithstanding the provisions of clause (1) of this subsection, the person or organization shall not be entitled to a refund or credit of the amount erroneously paid as contribution, interest or penalties, if the Secretary determines that:
(A) The person, organization or agent of the person or organization failed to timely or adequately respond to a request of the Employment Security Bureau for information, causing said erroneous payment, and
(B) the person, organization or agent of the person or organization has established a pattern of failing to timely and adequately respond to requests of the Employment Security Bureau for information.
(3) For purposes of clause (2) of this subsection, it is hereby provided that:
(A) It shall only apply to erroneous payments established after October 21, 2013;
(B) the person or organization shall respond for the actions or omissions of its agent;
(C) the person or organization shall not be entitled to a refund or credit of the amount erroneously paid regardless of whether such amount is recovered by the State, and
(D) “pattern of failing to timely and adequately respond” means a previous failure to respond timely or adequately to one (1) or more requests for information.
(4) In the event that any application for refund or credit is rejected, a written notice of such rejection shall be remitted to the applicant. Within thirty (30) days after the mailing of such notice to the applicant's last known address, or in the absence of such mailing, within thirty (30) days after other delivery of such notice, the applicant may appeal to the part of the Court of First Instance for the jurisdiction in which the appellant has his principal place of business.
(e) Computations.—
(1) If any employer files reports for the purpose of determining the amount of contributions due but fails to pay any part of the contributions or interest due thereon, or fails to file such reports when due, or files an incorrect or insufficient report, the Secretary may compute the contributions due on the basis of the information submitted by the employer, or on the basis of an estimate as to the amount due, and shall give written notice of such computation to said employer. Within thirty (30) days after such notice was mailed to the employer’s last known address, or otherwise delivered to him, the employer may appeal to the part of the Court of First Instance for the jurisdiction in which the employer has his principal place of business.
(2) If the Secretary determines that the collection of any contributions or interest under the provisions of this chapter will be jeopardized by delay, he may, regardless of whether or not the time prescribed by this chapter or any regulations issued hereunder for making reports and paying such contributions has expired, immediately assess such contributions, together with interest, and shall give written notice of such assessment to the employer. In such cases the right of appeal to the Court of First Instance shall be conditioned upon payment of the contributions and interest so assessed or upon giving appropriate security to the Secretary of the Treasury for the payment thereof.
(3) If an employer fails to pay the amount assessed pursuant to this section, the Secretary may file in the part of the Court of First Instance of the jurisdiction wherein the employer has his principal place of business a certificate under his official seal, stating the name of the employer, his address, the amount of the contributions and interest assessed and in default and the amount of any penalties imposed and shall file a copy of said certificate in the part of the Court of First Instance of any jurisdiction in which said employer has personal or real property; and the clerks of the respective parts shall enter upon the judgment docket of the court, through act, the name of the employer mentioned in the certificate, the amount of such contributions, interest or penalties assessed and in default, and the date such certificate is filed. When such judgment act shall have been duly recorded the amount of the assessment shall constitute a lien upon the entire interest of the employer, legal or equitable, in any property, real or personal, tangible or intangible, located in the jurisdiction where the certificate or a copy thereof was filed. To determine the priority of the lien so constituted, the same priority sequence provided in subsection (c) of this section shall be followed. No lien for contributions, interest or penalties shall be valid against one who acquires personal property by purchase from the employer in the usual course of his business, in good faith and without having legal notice of such lien. Such lien may be enforced by the marshals of the Court of First Instance or, upon notice to such court, by any officer or employee of the Bureau of Employment Security that the Director thereof may designate, against any real or personal property, in the same manner as a judgment of the Court of First Instance duly registered; Provided, That in the execution of said lien the officer or employee designated shall have the same powers and faculties conferred by law upon the marshals of the Court of First Instance, including the power to enforce writs of attachments and execution of judgments, by attaching and selling real and personal property of the judgment debtors, announcing auctions, serving the notices, and executing the deeds of conveyance, acts, certificates of return, and other documents pertinent to these proceedings, and carrying out any other activity of those carried out by the marshals of the Court of First Instance in cases of this nature. Provided, further, That any attachment of properties or execution of judgment may be made with or without seizing said property, it being sufficient therefor to notify the debtor about the property attached giving him a written list thereof and informing him that he shall not use, encumber, alienate, alter, remove or otherwise dispose of said property until the court shall order otherwise; and any such use, encumbrance, alienation, alteration, removal or other disposition of said property, in the absence of a judicial order permitting same, shall be considered as absolutely null and void. In addition to any other penalty provided by § 714 of this title, any employer who disobeys this provision may be punished for contempt.
(4) The foregoing legal remedies shall be in addition to any others already in force.
(5) Judicial proceedings brought by the Secretary under the various provisions of law shall be exempt from the payment of all kinds of dues, costs, fees, and tariffs; Provided, That the Secretary shall not be bound to give any bond whatsoever for obtaining a preventive attachment on the property of the defendant in order to secure the effectiveness or execution of the judgments; and Provided, finally, That the filing, registration, recording and dispatch of all documents relating to such judicial proceedings in the Property Registry of Puerto Rico and other government agencies shall be exempt from the payment of all kinds of tariffs.
(f) Judicial review before the Supreme Court.— The Court of First Instance’s decision in connection with the different proceedings relative to the assessment, collection and refund of contributions, shall be final unless within thirty (30) days after notice of such decision was mailed or otherwise delivered to the last known address of a party, that party institutes a proceeding for judicial review before the Supreme Court; Provided, That in such cases in which the Supreme Court determines a deficiency, the right to appeal to the Supreme Court shall be subject to total payment of the deficiency so determined within the period provided under this section for appealing before the Supreme Court. The noncompliance with this requirement shall deprive the Supreme Court of its jurisdiction.
(g) Conclusiveness of determination.— Any determination or decision duly made in proceedings under subsections (b), (e) or (f) of this section which has become final shall be binding in proceedings with respect to refunds or credits under subsection (d) or (f) of this section, insofar as such determination or decision necessarily involves the issue of whether an employing unit constitutes an employer or whether service performed for, or in connection with, the business of such employing unit constitutes employment.
(h) Liability of a person to whom a commercial enterprise of business is transferred, guarantor, and contractor.—
(1) Any individual or organization, including the types of organizations described in subsections (i)—(j) of § 702 of this title, whether or not an employment unit, which acquires the organization, commercial enterprise or business from an employer, shall be liable in an amount not to exceed the reasonable value of the acquired organization, commercial enterprise or business, for any taxes, interest or penalties due or accrued and unpaid by said employer, and the amount of such obligation shall, in addition, constitute a lien against the property or capital so acquired which shall be given preference over all other liens; Provided, That the lien shall not be valid against a person who acquires from that employer or employment unit any interest in the property or capital acquired in good faith, for a price and without legal knowledge of the existing lien. The Secretary shall, upon a request made after the acquisition is completed, furnish the acquirer with a written statement indicating the amount of taxes, interest or penalties due or accrued and unpaid by any employer as of the date of such acquisition, and the amount of the obligation of the successor or the amount of the lien shall in no case exceed the amount of the obligation disclosed by such a statement. The foregoing legal measures shall be in addition to all other existing measures against the employer or the acquirer of the commercial enterprise or business.
(2) The responsibility under any bond posted or which may be posted to guarantee the performance of any kind of public or private work shall extend to cover the payment of taxes, interest and penalties due and payable under this chapter by the contractor or other person named as principal under said bond, irrespective of whether or not the bond contains a provision to this effect.
(3) Whenever an employment unit contracts with any other employment unit for the performance of any work that is part of the trade, occupation, profession or business of the former, it shall be liable for the contributions, interests, penalties and surcharges left unpaid by the employment unit thus contracted.
(i) Contributions paid in error to state.— Contributions due under this chapter with respect to wages for insured work shall, for the purpose of this section, be deemed to have been paid as of the date payment was made as contribution therefor under a state or Federal Employment Security Act if payment of such contribution is made to the Secretary of the Treasury of this Commonwealth on such terms as the Secretary finds will be fair and reasonable to all affected interests. Payments to the fund under this section shall be deemed to be contributions for the purposes of § 708 of this title.
(j) Contributions owed by institutions of higher education, hospitals or government agencies or instrumentalities.— If any institution of higher education, hospital, or government agency or instrumentality or any of its political subdivisions which, in keeping with clauses (1), (2) and (4) of § 702(i) of this title is covered or acquires coverage under the provisions of this chapter, neglects to pay the contributions, reimbursements of benefits or interest, penalties and surcharges, if any, the Secretary shall notify the Secretary of the Treasury and he may deduct the amount owed from whatever funds that are or may be available for such entity.
History —June 21, 1956, No. 74, p. 328, § 9; June 25, 1958, No. 97, p. 226, §§ 3—5; June 30, 1959, No. 104, p. 296, § 4; June 14, 1960, No. 83, p. 147, § 3; Dec. 22, 1960, No. 1, p. 1, § 10; June 8, 1962, No. 27, p. 54, § 5; June 28, 1963, No. 93, p. 271, § 3; June 6, 1967, No. 102, p. 330, §§ 12, 13; June 15, 1972, No. 16, p. 374, § 8; June 24, 1977, No. 101, p. 228, § 5; July 26, 1979, No. 4, p. 924, § 7; May 21, 1982, No. 18, p. 35, § 4; July 9, 1985, No. 95, p. 300, § 5; July 15, 1988, No. 102, p. 424, § 5; Sept. 16, 2005, No. 114, § 5, retroactive to July 1, 2005; Oct. 18, 2013, No. 120, § 3.