Under the present law, if an employer fails to report and pay any amount of contribution to Social Security system, such employer is liable for a civil penalty of up to 100 percent of the amount of any contributions withheld or pay $250 whichever is greater.
The Social Security system also, under current law, charges 12 percent of currently unpaid penalties and contributions owed to it by businesses and individual employers.The House of Delegates proposed two amendments to the Social Security system. The first is to lessen the 100% requirement of civil penalties to only one percent or $50, whichever is greater.The second proposed amendment is to decrease the penalty interests on all currently unpaid penalties and contributions owed to Social Security system which now stands at twelve percent to only one percent. According to a press statement from HOD, Delegate Marhence Madrangchar who chairs the HOD Committee on Judiciary & Governmental Affairs, responsible for reporting out the bill says, ‘passage of this bill is a priority for the OEK, as the current law allows the Social Security Program to impose unnecessarily excessive penalties, which does not create an environment conducive for growth and development of small businesses and other employers.These Social Security civil penalties not only applies to businesses, but also includes ordinary folks who employee domestic helpers and general household helpers within the Republic of Palau.“Sometimes the amounts of penalties and interests assessed by the Social Security program on businesses and individual employers can be a major contributing factor to a failed business establishment. This is an obstacle to our people and should be corrected, particularly at these times of economic difficulties,’ says Madrangchar.
