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Puerto Rico House seeks having restaurant tips calculated without sales tax

By on June 12, 2017

SAN JUAN – The Consumer affairs, Banking & Insurance Committee, chaired by Rep. Yashira Lebrón Rodríguez, evaluated Monday House Bill 1090 to prohibit any business from calculating a customer’s voluntary tip from the total price of the transaction, which includes the sales & use tax (IVU by its Spanish acronym).

DACO: Some restaurants using system that includes sales tax to determine tip

The legislation, presented by Lebrón Rodríguez, proposes that the total to be considered for tips be based on the total consumption and not include the government tax. It would force businesses to notify all customers of this on the receipt or a visible place.

In addition, it declares the Consumer Affairs Department (DACO by its Spanish acronym) as the entity in charge of overseeing compliance with this law and to impose fines for violations.

DACO Secretary Michael Pierluisi favored the bill writing. “Even though it is highly promoted that consumers pay a gratuity tip after receiving good service, we understand that the approval of this bill promotes greater transparency when making payments.”

He recommended eliminating the notification requirement on receipts and labeling because it is up to DACO to ensure compliance with this standard “without imposing additional excessive costs on businesses.” The Consumer Affairs secretary also suggested extending the period for drafting the regulation from 60 to 90 days for the agency to implement the bill or that failure to do so it fall under Regulation 7932 against unfair or deceptive advertising and marketing practices.

Attorney José Saltavella, president-elect of the Puerto Rico Restaurants Association (Asore by its Spanish acronym), recommended the notice requested in the bill with an educational campaign so both businesses and consumers become aware.

Lebrón said the bill “seeks to remedy the situation that has arisen in some businesses or restaurants that are calculating the tip including the IVU,” adding she doesn’t object to DACO’s recommendations.

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