By The Star Staff
Gov. Pedro Pierluisi Urrutia said Tuesday that in his opinion, the Department of Economic Development and Commerce (DDEC) “has been more efficient” than the federal Internal Revenue Service (IRS) in exercising control over Law 22 or Law 60, which allow tax exemptions for foreigners who move to Puerto Rico.
According to news reports, the IRS is allegedly investigating 100 tax decree recipients who receive benefits under those laws but do not live on the island.
“So we are talking about 100, in this case around 5,000 active decrees have been granted here; that is, active taxpayers who have those decrees,” the governor said in response to questions from the press. “The last time the matter was inquired about, we are talking about 2,500, because many, even though they obtained the decrees for one reason or another, left the island.”
“So the Department of Economic Development and Commerce has already canceled more than 300 decrees,” he added. “So if anything, it’s been more active than the Internal Revenue Service, but I welcome the Internal Revenue Service.”
According to the governor, the Department of Economic Development and Commerce also reviews local requirements such as permanent residence, making donations as required by law and the purchase of goods on the island.
What the Internal Revenue Service is investigating, Pierluisi said, is Section 933 of the Internal Revenue Code.
“American citizens residing in Puerto Rico do not pay federal taxes on their income in Puerto Rico,’ he said. “It is that which Section 933 of the Internal Revenue Code so provides. Now, that section applies to permanent residents in Puerto Rico, that is. Any person who is benefiting from that section to avoid paying federal taxes on their income on the island, who does not permanently reside here, is violating the law. So residing here is not just living here half the year plus one day, no. You also have to show that this is really your home. For example, if you have children, that your children go to school here, that if you work, the office where you work or the company where you work is here.”
“But the Internal Revenue Service is watching over them and if any of them moved here, [and] they obtained decrees and they really have not been residing here permanently, then they are exposed to the Internal Revenue Service taking action on the matter,” the governor said.