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Treasury embargoes 2 more restaurants for tax evation

By on December 23, 2015

The Treasury Department raided two restaurants in San Juan and Río Piedras Wednesday morning for allegedly retaining the sales-and-use tax (IVU by its Spanish acronym) and not remitted the funds to the Puerto Rico Treasury Department, sources with knowledge of the operation told Caribbean Business.

The restaurants whose properties are being seized by the Treasury are Café Puerto Rico, in Old San Juan, and the El Obrero restaurant in Río Piedras. Treasury has yet to inform the amount of money owed by the owners or operators of both businesses.

These operatives are part of the new efforts by Treasury since November to collect outstanding IVU payments. With this last raid, Treasury has impacted 24 businesses. Treasury Secretary Juan Zaragoza anticipated there are some 100 businesses with debts slated to be raid soon, unless these come forward voluntarily and get up to date with their payments to Treasury.

Vaca Brava in Old San Juan and Barranquitas, and the acclaimed José Enrique restaurant in the capital’s Santurce district, were among those closed by Treasury two weeks ago.

During a radio interview, Zaragoza said that in the case of Vaca Brava, which also has a restaurant in the central region municipality of Barranquitas, the owners had received knowledge of the impending closing by Hacienda and “jumped the gun” by filing for bankruptcy yesterday.

Regarding José Enrique, the restaurant, owned and operated by the famous chef of the same name, reportedly owes about $450,000 in debt related to sales tax remittances, income taxes and employer retentions. Hacienda also revoked the establishment’s liquor license as a result.

The government agency also closed three McDonald’s franchise restaurants in the municipalities of Caguas and Humacao that together owe about $500,000 in tax-related debt. Following the closing, the affected businesses have 30 days to pay off the tax debt, or risk foreclosure.

In late November, Hacienda closed La Patisserie restaurant in the Plaza Las Américas shopping center, in San Juan’s Hato Rey district, for not paying the sales and use tax.

The business establishment reportedly owed the agency around $800,000 at the time of the closing.

Augusto’s, a high-end restaurant in the Marriott Courtyard Hotel in the capital’s Miramar district, was also closed back then for failing to pay back the sales tax it charged customers. The tax debt of the restaurant at the time totaled $600,000, according to the agency.

“In addition to sending a clear message that we’re going to collect unpaid taxes using all the tools our Internal Revenue Code provides, [these raids] have prompted other business owners to voluntarily come to us to get up-to-date in their payments and avoid a business interruption. With these proactive actions, my team at Treasury seeks to recover the taxpayers’ respect and their trust,” Zaragoza had said.

Puerto Rico’s Internal Revenue Code states that an individual responsible for collecting, retaining and depositing the payment of any tax, is subject, at the personal level, to a penalty equal to the evaded, not remitted, not deposited or unreported tax by the responsible person or entity of that obligation.

The business seizures or closures are preventive in nature, and are conducted with the purpose of guaranteeing collection of the debt with the Commonwealth of Puerto Rico. Thirty days after notification, the seizure of property, or part of it, will be conducted, or it will be sold in a public auction as soon as possible, without further warning.

By Juan A. Hernández
Caribbean Business reporter Dennis Costa contributed to this article.

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