The Anatomy of an Audit-Proof File
Retention as a Defensive Strategy
Countering IRS Campaign 685: Your Proactive Stance
Frequently Asked Questions
What is the first thing an auditor looks for in an Act 60 case?
The very first thing an auditor will verify is your bona fide residency. They will demand to see your travel records, your daily calendar, and proof of your primary residence in Puerto Rico. If you cannot definitively prove you met the physical presence and tax home tests, the rest of the audit is often a formality before they move to revoke the decree.
How can I prove my business income is from Puerto Rico?
You need to provide clear evidence that the services were performed while you were in Puerto Rico. This can include contracts that specify the location of work, timesheets, project management records, and communications with clients that are dated and show your location. For export services, it is critical to show the services benefited clients outside of Puerto Rico.
Is it too late to fix my records if I haven't been keeping them well?
It is never too late to start, but it can be challenging to retroactively create records. You should immediately begin assembling what you can from bank statements, email archives, and other sources. Then, implement a rigorous record-keeping system going forward. While not ideal, a concerted effort to reconstruct and then maintain proper records is your best defensive move.
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This content is for informational purposes only and does not constitute tax, legal, or accounting advice.