Interested in training for your team? Click here to learn more

U.S. Tax Treatment of Recipients of Puerto Rico Act 60 Tax Incentives

U.S. Tax Treatment of Recipients of Puerto Rico Act 60 Tax Incentives

A live 90-minute premium CLE/CPE video webinar with interactive Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Wednesday, September 4, 2024

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, August 9, 2024

or call 1-800-926-7926

This CLE/CPE webinar will provide tax guidance on Puerto Rico residency tax benefits and incentives for individuals and businesses and navigating applicable tax rules and IRS examination for Puerto Rico Act 60 grantees. The panel will discuss best practices to prepare for IRS audits for individuals and businesses taking advantage of U.S. tax incentives for Puerto Rico-sourced income. The panel will also discuss the favorable treatment of capital gains and dividend income and the challenges of relocating to Puerto Rico as an alternative to tax expatriation. The webinar will also detail residency requirements and outline potential caveats to U.S. taxpayers considering a relocation to Puerto Rico for tax purposes.

Description

With the enhanced congressional focus on offshore tax avoidance, the IRS is likely to step up its audit campaign for Puerto Rico Act 20 and 22 (now Act 60) grantees. Taxpayers and their advisers must identify potential audit risks and properly advise taxpayers on how to take advantage of both the Internal Revenue Code and Puerto Rico tax laws. Our panel will feature experts on both of the U.S. rules affecting bona fide residents of Puerto Rico and on preparing for the IRS audit campaign.

Generally, IRC Section 933 exempts bona fide residents of Puerto Rico from U.S. federal income tax on any Puerto Rico-source income. IRC Section 937 sets the threshold for establishing bona fide residency in Puerto Rico (and some other U.S. possessions) and contains rules for determining Puerto Rico-source income.

Puerto Rico has several tax provisions under Act 60 designed to attract investors and business owners to relocate to the island. The two key provisions were Act 20 (Export Services Act) and Act 22 (Individual Investors Act). Act 20 sets a maximum income tax rate of four percent on the net profits of any business export services from Puerto Rico to companies or individuals outside the island. Act 22 exempts from income tax all passive income derived by Act 60 grantees. When taken in combination, these provisions create tax incentives virtually unmatched by any foreign jurisdiction for tax savings without causing U.S. individuals to incur the expropriation tax.

Listen as our expert panel provides a practical guide to the tax opportunities and challenges of relocating to Puerto Rico and handling potential IRS audits.

READ MORE

Outline

  1. Overview of Puerto Rico Act 60
  2. IRC provisions specific to Puerto Rico and certain U.S. territories and possessions
    1. Section 933
    2. Section 937 special residency rules
    3. IRS notice requirements
  3. Establishing residence
  4. Determining the limits of Puerto Rico-source income
  5. Likely areas of audit and disagreement
  6. Caveats

Benefits

The panel will review these and other relevant topics:

  • The impact and focus of the IRS audit campaign for Puerto Rico Act 60 grantees
  • How Internal Revenue Code provisions and Puerto Rico local tax statutes provide a tax-favored environment for certain high net worth taxpayers
  • Specifics of Puerto Rico's Act 20 (Export Services Act) and Act 22 (Individual Investors Act) as vehicles for attracting U.S. mainland-based taxpayers to relocate to Puerto Rico
  • Timing, notice, and qualification requirements to claim tax benefits
  • Best practices to avoid or minimize the chances of being subject to IRS examination

Faculty

Armitage, J. Clark
J. Clark Armitage

Member
Caplin & Drysdale

Mr. Armitage's core practice is advising multinational corporations on transfer pricing in all contexts, from...  |  Read More

Leeds, Mark
Mark H. Leeds

Partner
Mayer Brown

Mr. Leeds focuses his practice on the tax consequences of a variety of capital markets products and strategies. He...  |  Read More

Attend on September 4

Early Discount (through 08/09/24)

See NASBA details.

Cannot Attend September 4?

Early Discount (through 08/09/24)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. CPE credit is not available on recordings. Strafford will process CLE credit for one person on each recording. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download