Notice 2017-56 issued by the IRS provides relief under the physical presence test, to individuals claiming PR bona fide residency, due to the passing of Hurricanes Irma and Maria (the “Special Disaster Rule”).


Based on IRS Notice 2017-56 the days that you are out of PR during the period commencing on September 6, 2017 and ending on December 31, 2017 will be counted as days of presence in PR for purposes of the Presence Test. But, bear in mind that (i) if you are providing services from the United States on behalf of a Puerto Rico entity enjoying the benefits of Act 20-2012, said PR entity may be subject to taxes in the United States with respect to that portion of the fees attributed to the services performed while physically present in the US, (ii) fees for services performed by you while you are out of PR will constitute income from sources outside of PR subject to US income tax, and (iii) this Special Disaster Rule applies only for purposes of determining compliance with the Presence Test, thus, it is not clear if this relief would create flexibility in the interpretation of the Tax Home Test (principal place of business must be in PR) or the Closer Connection Test (you must be able to show that you have a closer connection to Puerto Rico than to the United States or any other jurisdictions) since these last two tests need to be complied with for the entire taxable year. We are available to discuss the US trade or business implications to your business due to the temporary US presence and your particular situation as it relates to the Tax Home Test and the Closer Connection Test.

Physical Presence of Certain Individuals in the Commonwealth of Puerto Rico or the United States Virgin Islands Under Section 937(a) Following Hurricane Irma or Hurricane Maria
Notice 2017-56


Comments are closed.