Relief to Bona Fide Residents of Puerto Rico and the Us Virgin Islands Following Hurricane Irma and Hurricane Maria
04 October 2017
On October 4, 2017, the Internal Revenue Service issued Notice 2017-56 (IRS N-2017-56) to provide additional guidance to residents of Puerto Rico and the US Virgin Island regarding their “bona fide residency” status for tax filings and reporting status.
On October 3, 2017, BDO Puerto Rico issued Tax Alert No. 50 (“TA-50”), to address the effects of Hurricane Maria and Hurricane Irma on the presence test for Bona Fide residency. As stated in TA-50, pursuant to Treasury Regulations addressing Bona Fide residency in a U.S. Possession, an individual is considered to be present on the possession on any day that an individual is outside the relevant possession because the individual leaves or is unable to return to the relevant possession during any 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management agency notice of a Presidential declaration of a major disaster is issued in the FEDERAL REGISTER; or a period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which the individual’s home is located.
On September 10th, 2017, a Major Disaster Declaration (DR-4336) was issued by FEMA for Puerto Rico due to the effects of Hurricane Irma and on September 20th, 2017 a Major Disaster Declaration (DR-4339) was issued by FEMA for Puerto Rico due to the effects of Hurricane Maria (hereinafter referred to as “the declarations”). It is important to note that for residency and taxation purposes the regulations do not differentiate between a mandate for Public Assistance or Individual Assistance as this pertains to FEMA procedures.
IRS N-2017-56, provides a relief to the residents of Puerto Rico and the US Virgin Island that were asked to evacuate affected areas or who were not able to return as a result of Hurricane Maria and Hurricane Irma. Such relief, extends the 14-day period to 117 days, effective beginning September 6, 2017, and ending December 31, 2017. Moreover, an individual who is outside of an impacted US territory on any day during this 117-day period will be treated as leaving or being unable to return to the relevant US territory because of Hurricane Irma and Hurricane Maria on such day.
Our BDO team can help you understand and minimize the risks associated with the temporary relocation. We are here to help you analyze your particular situation and to help you plan accordingly during these extraordinary times.