On Wednesday, September 9th, 2020, President Trump declared that a Major Disaster occurred in the Commonwealth of Puerto Rico and ordered Federal individual assistance for the municipalities of Aguada, Hormigueros, Mayagüez and Rincón affected by Tropical Storm Isaias from July 29th to July 31st, 2020.

Act 22 (now Act 60) grantees and other individuals seeking to qualify for bona fide residency in Puerto Rico will need to evaluate if they are eligible for the 14-day exception to the Presence Test that is activated through Regulations, when a major disaster is declared.

Individuals need to be present in Puerto Rico a minimum of 183 days during each taxable year; have their tax home in Puerto Rico and have a closer connection to Puerto Rico than to the United States or any foreign country to maintain their tax status as Puerto Rico bona fide residents.

In counting days of presence in Puerto Rico, the Internal Revenue Service has allowed for situations in which an individual's presence outside the U.S. possession (i.e. Puerto Rico) is ignored. The preambles to the Regulation anticipate that these exceptions will allow for situations in which an individual's presence outside the possession for extended periods lacks a tax-avoidance motive.

With respect to disasters, the Regulation provides that if an individual leaves, or is unable to return to, Puerto Rico during a two-week period within which an officially declared major disaster occurs in Puerto Rico, the individual will treat such days as days of presence in Puerto Rico. A thorough reading of the preambles shows that these provisions were designed to provide flexibility to individuals that are caused to leave or that are prevented from returning to Puerto Rico due to a major disaster.

The 14-day exception to the Presence Test should be available to those individuals who were caused to interrupt their presence in Puerto Rico and had to leave or were not able to return to the Island due to Tropical Storm Isaias.

Contact us for a discussion on how to meet the Presence Test and your Puerto Rico bona fide residence requirements.