Skip links

Jay Nanavati Quoted in Tax Notes: IRS Enforcement of Puerto Rico’s Act 60 Comes Into View Amid Workforce Purge

Jay Nanavati was quoted in a Tax Notes article about how IRS enforcement of Puerto Rico’s Act 60 may be impacted by recent reductions in the federal workforce.

The article, titled “IRS Enforcement of Act 60 Comes Into View Amid Workforce Purge,”examines how significant funding cuts and staff reductions at the IRS may be impacting enforcement efforts related to alleged abuses of Puerto Rico residency tax incentives. In 2021, the IRS began scrutinizing those who take advantage of Act 60, the Puerto Rico Incentives Code (previously known as Acts 20 and 22), which aims to encourage economic development in the U.S. territory and provide business tax incentives to residents.

As the article notes, only two individuals so far have faced federal criminal charges related to Act 60. As of April 9, 2025, one Miami investor faces charges as the first case to occur after the IRS commenced its Act 60 enforcement program.

The piece notes that tax controversy practitioners are seeing signs that tax promoters and other professional advisers have become the primary targets of the IRS, rather than individual taxpayers.

The article quotes Jay as saying, “The IRS is not really interested in taxpayers who took advantage of Act 60, but focusing resources on facilitators or any professionals who have given taxpayers guidance on this.”

Jay states that the reason tax promoters are in the agency’s crosshairs more frequently than individuals is because it may be more difficult for criminal prosecutors to win convictions against individual taxpayers. He adds that juries may be more sympathetic to individuals who relied on the advice of attorneys and accountants, making an advice-of-counsel defense fairly strong.

With recently reduced staff and a smaller budget at IRS, enforcement efforts may also focus on tax promoters in the name of efficiency. Jay notes, “I suspect they’re going to use these audits of individual taxpayers as a potential way to get tips on maybe other professionals that are out there advising clients in a way that the IRS thinks is contrary to the law,” Jay said.

Read the full article here.

About Jay

Jay is a criminal tax defense attorney and a fellow of both the American College of Trial Lawyers and the American College of Tax Counsel. He represents individuals and entities facing investigations and prosecutions by the IRS, the FBI, state investigative agencies, U.S. Attorney’s offices, and the Department of Justice Tax Division. Jay has defended clients against federal investigations and charges throughout the country, and he has substantial experience representing clients accused of promoting or participating in so-called tax shelters, including captive insurance programs, conservation easements, and Puerto Rico’s Act 60 (Act 20/Act 22) program. In many instances, Jay represents tax professionals facing such accusations.