Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Puerto Rico Entices Wealthy Americans With Chance to Avoid IRS Scrutiny
Author: Scarinci Hollenbeck, LLC
Date: March 29, 2013
Key Contacts
Back
Puerto Rico is categorized as an unincorporated territory of the United States, and this designation has facilitated its current efforts in appealing to wealthy Americans and corporations.
The small island has launched a campaign encouraging wealthy individuals to relocate to shield future income from the Internal Revenue Service without giving up their passports, according to Bloomberg News. The article notes that Puerto Rico is currently struggling to improve its economy and is attempting to do so by encouraging affluent individuals to invest their money in its economy, which may help it avoid IRS taxes. However, opponents of the campaign said the state is flirting with a dangerous concept, and one that may persuade Americans to potentially violate U.S. tax law.
“They’re walking a fine line,” John Buckley, former tax counsel for Democrats on the House Ways and Means Committee, told Bloomberg. “This would be the first time that Puerto Rico would kind of deliberately erode the U.S. tax base for individuals.”
Bloomberg reports that 10 wealthy Americans have already taken advantage of a new Puerto Rican law that enables them to avoid U.S. capital gains taxes if they sign an agreement with the island’s government. In order to participate in the agreement, U.S. individuals must pass residency tests – which requires them to spend 183 days in Puerto Rico – and make social and personal connections. Corporations are considering investing more heavily in the territory as well, namely because it is considered foreign territory for tax purposes. This allows companies that conduct operations on the island and make profits to earn and leave money in Puerto Rico without paying U.S. corporate income taxes.
As this trend begins to gain the attention of America’s more wealthy residents – such as billionaire John Paulson – Congress has noted that it will be paying closer attention to these developments.
- Practices: Tax and Trusts & Estates, Corporate Transactions & Business, International Law & Trade
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
What Is Antitrust Litigation Law?
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Author: Robert E. Levy
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.