Jay R. Nanavati was quoted in a New York Times article published May 28, 2024 titled “I.R.S. Failed to Police Puerto Rico Tax Breaks, Whistle-Blower Says.” The New York Times reported that an I.R.S. insider has accused the agency of failing to police tax breaks taken in Puerto Rico.
From the article:
In theory, the tax break should be relatively easy to monitor. Does the recipient live in Puerto Rico? And were the profits on which the person wants to avoid taxes generated while the person lived in Puerto Rico?
“You’ve got high-income business owners self-identifying to the I.R.S., so that’s a nice ready-made population” for the agency to audit, said Jay Nanavati, a former federal prosecutor who is now a criminal defense lawyer at Kostelanetz, a tax-focused law firm. “I would think this would be low-hanging fruit.”
For years, there have been concerns that the tax break is easy to abuse. Tax advisers say some investors are simply claiming all of those profits are exempt — even the portion generated while living on the U.S. mainland.
Mr. Nanavati said he had fielded calls from prospective clients who were on the verge of selling their businesses, asking if they could make the profits tax-free by moving to Puerto Rico shortly before the sale.
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