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
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know
For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]
Author: George McGowan
Estate Planning for Digital Assets Under New Jersey Law
As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]
Author: Marc J. Comer
The Role of Representation and Warranty Insurance in M&A Transactions
In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]
Author: George McGowan
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?
Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]
Author: George McGowan
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Author: George McGowan
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Author: George McGowan
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.