The Puerto Rico Treasury Department has launched a series of embargoes on local businesses that have not been remitting collected Sales and Use Tax (“IVU”, for its Spanish acronym) to the government, nor their employees’ tax retentions.
We were surprised by the large amounts of money they owed and, even more, by the familiarity of the names of some of the businesses that were submitted to the interventions. The drama of the operations has not only caused uproar, astonishment and outrage, but a general sense of relief: “Finally, they were caught.”
Who was responsible for these lapses? Or, who is an accomplice?
Curiously, some people’s astonishment and outrage comes from a different corner. They repudiate (perhaps unaware) the action because following the government intervention, these businesses will no longer have those funds — actually, “the people’s money” — to finance their business operations or for their personal enjoyment. As incredible as it may sound, they believe that the Secretary of the Treasury is “hindering the Island’s economic development” and some citizens have commented in radio that they prefer businesses to keep that money over government. Is holding this view to become complicit in the misappropriation of funds?
For years, the Puerto Rico Society of CPAs has reiterated through recommendations and legislative analysis that fiscal supervision and access to public information are necessary to strengthen the economic structure of our island, well before anyone addressed new tax revenue measures. Setting aside the issue of communication strategies, we are finally seeing action in that direction.
We want to remind our readers that an organization’s management is the one responsible for the financial statements of the company. Management is the arm responsible for setting up the computer programs and charging the IVU to clients. Management retains the employees’ payroll taxes and manages the company’s everyday business. Similarly, management is supposed to forward every month the IVU money it collects from customers and the tax amounts it retains from employee payroll to the Treasury Department.
This situation reminds us of the “late” IVU Loto receipt. What did Treasury do with that information? Why did they not do these “raids” before? How many more businesses are on the Secretary’s raids list?
Still, overseeing the collection and use of public funds is not exclusive responsibility of government agencies and professional guilds. The economic development of Puerto Rico should be all of its citizen’s concerted project. As necessary as it is for government to manage public affairs with knowledge and efficiency, it is indispensable as well for every citizen to do his or her part of the project.
Each of us must assume the obligation of, at the very least, “raise a red flag” when they are quoted a price “without IVU” because the service or product will be paid in cash, or when the sign says that the price “includes IVU” but the business provides no receipt, or when an employer does not send to the Treasury Department the payroll taxes it retains for its employees.
We cannot ignore these actions and much less perpetuate an inequality scheme, and believe that we have no role in the “situation.” The problem is shared. It is everyone’s duty to try to solve. Similar to that call to 911 when we are witnessing an assault or a fatality on the road, we can either be part of the problem or be part of the solution. When we remain silent, we become accomplices.
In our profession, ethical conduct is strictly regulated by the Puerto Rico Board of Accountancy, which is attached to the State Department. In view of that, our CPA Society is very protective and mindful of matters of ethical and professional conduct and has resources exclusively dedicated to assist in the investigation of any ethical complaints that are submitted.
Any CPA who consents and participates in attempts at tax evasion or improper disclosure of tax returns, not only violates the ethical principles of our profession and is subject to the powers of the Board, but more importantly, becomes an accomplice and infringes on their duty as a responsible citizen.
Each person and each situation is different, but it is possible to identify those who are responsible through omission as well as those who are accomplices by not speaking up in the face of wrongdoing. Therefore, you decide: Which individuals are responsible? Which are accomplices?