Last month we noted how hedge fund managers have been descending on Puerto Rico in the hopes of dodging Biden tax hikes, and to take advantage of tax incentives rolled out in 2012 which have lured high net-worth individuals, corporations and cryptocurrency traders alike.
If you fall under any of the above and you’re falsely claiming to be a resident of Puerto Rico, the IRS has a message for you: ‘We’re waiting for you…’
According to Bloomberg Tax, the agency has been the focus of a “sweeping” review to examine individuals who took advantages of the tax incentives. According to the report, “More than 4,000 mainland U.S. residents and firms have moved to the territory between 2012 and 2019, revealing potentially hundreds of millions of dollars in lost tax revenue to the U.S. government, according to an IRS report delivered to Congress.”
At issue are taxpayers who may have excluded income subject to U.S. tax, or failed to file and report income altogether when they moved to Puerto Rico, according to the IRS notice. The agency is also targeting those who claim to be bona fide residents of Puerto Rico but may be “erroneously reporting” U.S. income to evade taxes.
The IRS’s push is taking place as Biden’s proposed tax increases have triggered moves by America’s wealthiest from high-tax states like New York and California, while hedge funds like Izzy Englander’s Millennium Management and ExodusPoint Capital Management have moved to establish subsidiaries on the island. An ExodusPoint spokesman declined to comment, while a representative for Millennium did not respond. -Bloomberg Tax
Tax attorneys who advise HNW clients on Puerto Rican tax incentives are already reporting that they’ve received requests for information from the IRS, while more audits are expected now that the US tax filing deadline has passed.- READ MORE
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