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
Understanding Chattel Paper: A Key Component in Secured Transactions
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
Crypto Compliance: A Comprehensive Guide
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
SPACs Are Back, What You Need to Know
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
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.