By EFE
May 1, 2024, 2:28 PM EDT
San Juan – A group of 40 Puerto Rican and diaspora organizations this Wednesday urged the United States Congress to investigate the beneficiaries of the controversial Law 60 (former Law 22), which offers a tax exemption to certain investors residing on the island .
This legal regulation, known as the Individual Tax Incentives Law, offers total tax exemption for dividends, interest and capital gains to investors who settle in Puerto Rico for at least 183 days a year.
The island’s civil society denounces that these people are not contributing to the local economy and that their high purchasing power has caused an increase in housing prices, among others.
In a letter, led by the Center for Popular Democracy (CPD), the organizations ask the federal government to finally address its responsibility to supervise those American beneficiaries who are evading federal and/or state taxes.
“Congress and the federal government must act in accordance with their responsibility to execute the laws and monitor non-compliance with them. In this way, it is imperative that the questions and lack of transparency regarding Law 22 and its impact be addressed,” said Julio López Varona, co-director of CPD campaigns.
“If a person is taking advantage of these decrees and does not reside in Puerto Rico, that person not only evades taxes in Puerto Rico, but also evades federal and state taxes,” López Varona added.
The letter is the most recent action of the “Not Your Tax Haven”/”PRNoSeVende” campaign, which denounces the lack of government transparency, the economic impact and the displacement of local communities resulting from this law.
Although the campaign is mainly focused on local efforts, it also seeks to raise awareness about the issue in the US and promote specific actions such as robust oversight of beneficiaries by the Internal Revenue Service (IRS).
IRS investigations of beneficiaries of Law 22 in Puerto Rico
In 2021, the IRS announced an audit against the beneficiaries of Act 22, focused on US taxpayers who may have claimed the tax exemption without meeting the residency requirements.
As a result, these individuals may be excluding U.S. taxable income or not filing or reporting U.S. taxable income.
“Certainly, it is crucial that Law 22 be repealed. But we must be consistent, that is a local law and it is the Government of Puerto Rico’s responsibility to inform, publish, amend and repeal. We cannot try to tackle the consequences of colonialism with more colonialism,” said López Varona.
For this reason, he pointed out that they are asking the federal Congress to focus on its responsibility to supervise US beneficiaries, without intervening in local legislation.
“It must be, and will be, the people of Puerto Rico who work with the legislature to eliminate this legislation that has done so much damage to our island,” concluded López Varona.
Keep reading:
CPD and “PR No Se Vende” will appeal the IRS’s decision not to disclose information about the investigation into tax evasion of beneficiaries of Law 22
Interview: Representative Delia Ramírez closely follows the issue of foreigners who do not pay taxes under Law 22 and displacement in Puerto Rico
Puerto Rico: DDEC confirms supply of information to the IRS for investigation of foreigners with decrees under Law 22