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Course Details

Course Information
  • smart_display Format

    Live Online with Live Q&A

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Law

Date & Time
  • event Date

    Tuesday, May 13, 2025

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$347.00
CLE
CPE
ALL

This CLE/CPE course will provide persons who have taken advantage of Puerto Rico Act 60 (formerly Act 20 and 22) and their tax advisers with guidance on managing an IRS examination and audit on grantees. The panel will also discuss the favorable treatment for Puerto Rico-source income and areas of likely scrutiny that will inform the IRS audit initiative. The webinar will also detail residency requirements and outline potential caveats to U.S. taxpayers considering relocation to Puerto Rico for tax purposes.

Faculty

Mark H. Leeds
Partner
Pillsbury Winthrop Shaw Pittman LLP

Mr. Leeds focuses his practice on the tax consequences of a variety of financial products and strategies, including digital assets, private funds, exchange-traded funds, litigation finance, life settlement, banking and insurance. His experience includes both exchange-traded and over-the-counter derivative transactions, and strategies for the efficient utilization of tax attributes—such as net-operating losses. Mr. Leeds regularly works with financial institutions on developing products and the related tax reporting considerations. He also advises businesses and individuals in establishing operations and relocating to Puerto Rico and has a substantial practice in private credit transactions. Mr. Leeds is well-known for his extensive writings on capital markets tax issues.

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Rogelio Carrasquillo
Managing Shareholder
Carrasquillo Law Group, PC

Mr. Carrasquillo has been providing strategic guidance and advice to clients in a variety of complex and sophisticated legal transactions for over 20 years. He advises domestic and foreign companies, multinationals, and entrepreneurs on their business activities and investment considerations in the United States and throughout Latin America, Asia, and Europe, including in cross-border transactions.

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Description

With the enhanced focus on offshore tax avoidance, the IRS initiated an 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 Rican tax laws. Our panel will feature experts on both of the U.S. rules affecting bona fide residents of Puerto Rico and on responding to IRS audit campaigns.

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 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 exporting services from Puerto Rico to companies or individuals outside the island. Act 22 exempts from income tax all passive income derived by bona fide residents of Puerto Rico. When taken in combination, these provisions create tax incentives virtually unmatched by any foreign jurisdiction for tax savings without causing 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.

Outline

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

Benefits

The panel will review these and other relevant topics:

  • The impact and focus of the IRS audit campaign for Puerto Rico Act 20 and 22 grantees
  • How Internal Revenue Code provisions and Puerto Rico local tax statutes provide an alternative tax haven to expatriation 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 of Act 22
  • Best practices to avoid or minimize the chances of being subject to IRS examination

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Recognize potential audit risks based on the focus on IRS audit campaigns for Puerto Rico Act 20 and 22 grantees
  • Differentiate residency requirements for claiming tax benefits by relocating to Puerto Rico as opposed to foreign income exclusion
  • Discern the benefits for high net worth taxpayers of relocating to Puerto Rico as an alternative to expatriation for tax purposes
  • Identify the specific requirements to claim the four percent income tax rate for exported services under Puerto Rico's Act 22
  • Recognize potential drawbacks to relocating to Puerto Rico for tax purposes

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or professional experience at mid-level within the organization, preparing complex tax forms and schedules. Specific knowledge and understanding of international taxation, and residency rules for foreign earned income exclusion. Familiarity of Puerto Rico tax incentives for exporters and investors.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).