One Costa Rican woman had a rude awakening in 2012 when she tried to resign her position as secretary of a local company as allowed by Transitorio IV of Ley 9024. The Registro Nacional said she could not quit because the company owed money to the Caja Costarricense de Seguro Social, known to most as the Caja.
She immediately filed suit in the Tribunal Contencioso Administrativo, the administrative law court, for relief arguing the transitorio gave her the right to leave her office as secretary.
There were no exceptions outlined in Law 9024.
A transitorio to a law in Costa Rica is a transition element providing special rules during a limited period. Transitorio IV is the provision that allows anyone with judicial and extrajudicial authority in a company to relinquish their post. It also allows anyone with a full power of attorney to resign. One can get out now without paying any current company taxes due.
The administrative court agreed with her in ruling number 11-2014-VII. The court ordered the Registro de Personas Juridicas del Registro Nacional to immediately record her resignation.
Articles in A.M. Costa Rica on Oct. 29, Nov. 12, Feb. 17, and March 3 have covered the ins and outs of Law 9024 in depth. There are only 11 business days remaining to vacate a position in a Costa Rican company and not be liable for the company assessment tax. An individual does not need to pay the tax to bail out. This opportunity ends on March 31. There will be no others. The law will be in full force on April 1, and the Registro can start collection actions against all those in default.
The women’s court case may mean other company debts can be avoided too. The corporate veil of a company in Costa Rica protects directors and stockholders in most cases. However, there are certain debts, like ones to the Caja social security agency and Law 9024 taxes that follow an individual personally.
One expat in San José found himself in the same boat. He was given a full power of attorney in 2008 in a company in Quepos. Come to find out, the company owes Law 9024 taxes and well as money to the Caja. He wants out of the problems. He did not even know he had a full power of attorney. They can be given to someone without their consent or knowledge.
An investigation into the women’s case and looking up a current literal certification of her company at the national registry found she originally filed her resignation on May 4, 2012. She filed her court case shortly after being rejected by the national registry in the same year. She has refiled her resignation Feb. 27 to see if it will be accepted. Registro documents consulted over the weekend show it still has not been approved.
Allan Garro, of GarroLaw, in an interview, said he knew of the woman’s case and had reviewed it extensively. He said he was at a legal meeting with other lawyers last week and that one said he pasted the woman’s decree to one of his client resignations and the Registro Nacional registered the document with no problem.
However, another attorney said she had heard an appeal has been filed and all further resignations where the companies owe money to the Caja will be frozen until the case goes through the appeal process. Garro believes there is a good chance the decision will be left as is due to the short life left in the transitorio.
Expats and Ticos who find themselves in the same predicament as the foreigner who found himself liable for debts that were not his should rush to their attorney to file their resignations, too. This also must be done by the deadline of March 31. If, in fact, an appeal has been filed to the woman’s case, the Registro will freeze all similar documents until the case goes through the courts. This could take another couple of years.
Normally, all documents filed with the national registry are voided within one year of presentation if they are not recorded. Hundreds of escrituras, legal writings by notaries, are filed every business day. Many are rejected initially because they have some administrative or procedural error in them. Once declined, they are sent back to the author for fixing. There is a one-year limit to meet all the qualifications for proper registration. However, if they are frozen, they will not expire. They will remain in limbo.
The woman’s legal case is a good one. She is right. The transitory section in Law 9024 did not make any exceptions. It is also a newer law, so it should supersede older ones. She has a very good chance in winning her argument. If she does, the case could also benefit others in the same situation.
A non-official survey showed most expats still do not know much about the tax assessment law. Others do not care, even ones with liability. One expat who has lived here for over 30 years and has legal representation in many companies owing thousands of dollars in tax, said he does not think the country will do much to collect them.
The facts are that the Registro Nacional is buzzing with talk about how best to proceed for quick collection of Law 9024 taxes. The country needs the extra money.
Garland M. Baker is a 44-year resident and naturalized citizen of Costa Rica who provides multidisciplinary professional services to the international community. Reach him at email@example.com. Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica. Find the collection at http://crexpertise.info, a complimentary reprint is available at the end of each article. Copyright 2004-2013, use without permission prohibited.