Puerto Rico’s Tax Loopholes Come Under Renewed IRS Scrutiny

Puerto Rico’s Treasury Department and the Internal Revenue Service are stepping up efforts to root out tax cheats in the U.S. territory.

In a statement issued Wednesday, Treasury Secretary Francisco Pares Alicea said that a group of IRS agents had traveled to the island to evaluate corporate and individual tax returns “to identify possible violations of tax law.”

Puerto Rico’s unique tax code allows some residents and corporations to avoid federal income tax even as they have access to low local rates. The incentives have led to a wave of high-net-worth individuals and corporations moving to the island, and raised ...