july 23 2007

Please review the following bulletins regarding important amendments to the Sales and Use Tax, and the Federal Minimum Wage laws

[Spanish] Salario Mínimo Federal

[English] Federal minimun wage

[English] Amendments to the Sales and Use Tax

Salario Mínimo Federal

El 3 de julio de 2007 el Presidente de los Estados Unidos aprobó enmiendas a The Fair Labor Standards Act of 1938. Entre las enmiendas aprobadas se provee para aumentar el salario mínimo por hora actual de $5.15 en forma progresiva de la siguiente manera:

·   $5.85 efectivo el 24 de julio de 2007
·   $6.55 el 24 de julio de 2008
·   $7.25 el 24 de julio de 2009

La Ley también dispone que el salario por el tiempo adicional trabajado en exceso de 40 horas semanales se pague a tiempo y medio del salario regular. Las nuevas enmiendas cubren:

• Los requisitos que debe cumplir el patrono para el empleo de menores de edad.
• El salario mínimo en los casos en los cuales los empleados reciban propinas. Para estos empleados el salario mínimo por hora será de $2.13. Sin embargo si el salario por hora de las propinas más los $2.13 es menor que el salario mínimo, el patrono deberá cubrir la diferencia.
• Las penalidades por incumplimiento con la Ley.
  

Según las enmiendas aprobadas todo patrono sujeto a las disposiciones de la Ley deberá fijar en todos sus establecimientos y en un sitio visible para sus empleados un cartel o aviso explicando las disposiciones de la Ley. Para cumplir con este requisito le incluimos copia del aviso publicado por el Departamento del Trabajo Federal.

Federal minimun wage

On July 3, 2007 the President of the United States signed into law amendments to The Fair Labor Standards Act of 1938. Among the amendments is provided for progressive increases of the actual minimum wage per hour from $5.15 per hour as follow:

• $5.85 effective July 24, 2007
• $6.25 effective July 24, 2008
• $7.25 effective July 24, 2009
  

The Act also provides that the salary for overtime in excess of 40 hours per week shall be paid at least at 1½ times the regular rate of pay. The amendments cover:

• The requirements for the employment of minors.
• The minimum wage for “tipped employees”. For these employees the minimum wage per hour shall be $2.13. However, if the wage per hour of these employees plus the $2.13 is less than the minimum hourly wage, the employer must make up the difference.
• The penalties for non-compliance with the law.
  

According to the amendments all employers subject to the law are required to display in a visible place of all of their premises a poster where employees can readily see it explaining the provisions of the Act. For compliance with this requirement we enclose copy of the poster provided by the United
States Department of Labor.

Amendments to the Sales and Use Tax

House of Representatives Bill 3190, containing amendments to establish a uniform tax with a fixed rate for all Municipalities, was approved by both legislative chambers and sent for the approval of the Governor on June 29, 2007. Based on communication media, it is expected that the Governor will sign before July 29, 2007 and the amendments will become effective on August 1, 2007.

The bill establishes a 1.5% fixed rate for all the Municipalities, which are required to collect 1% of the tax and the Treasury Department will collect .5%, excluding food and foodstuff, as defined in the Internal Revenue Code. The Municipalities have discretion to establish by ordinance the collection of the tax on the food. The .5% to be collected by the Treasury Department shall be used to create the following funds: .20% for Municipal Loans for the exclusive use of the Municipalities; .20% for development of the Municipalities to be distributed based on a formula; and .1% for Municipal betterments. The Senate and the House of Representatives, through legislation, must distribute the funds for Municipal betterments. For each fund the Bill establishes the purpose, the form of distribution and administration.

Although the Bill focus on the uniformity in the imposition of the tax and requires that the Municipalities utilize the same basis and exemptions provided in the law, it is not clear the nexus and source of income rules. Thus, the rules established in the law, as well as their application must be followed, depending on the particularsituation of the business. After the bill becomes law, starting on August 1, 2007 the purchases of taxable property are subject to a uniform 7% tax, independently of the municipality involved. The merchants must be alert to informative bulletins and communications issued by the Treasury Department dealing with this .5% tax. According to the Bill, the .5% tax collected by the Treasury Department shall be deposited together with the 5.5% using the forms established for these purposes.

Based on all of the above, the necessary adjustments must be made in the system to collect and deposit on a monthly basis the 1% Municipal tax and 6% to be paid to the Treasury Department. We recommend to read the Bill and to be alert when the Bill is converted into law in order to make the necessary adjustments in your businesses and comply with the provisions of the law.