Please note the below article is based on our analysis. There is currently no consensus on the specific effect of the Corona Virus on the presence test and if / which 14+ days will count towards bona fide presence. We strongly suggest you discuss the below analysis with your tax advisor and reach your own conclusions.

All emergency and major disaster declarations are made solely at the discretion of the President of the United States.

There are two types of disaster declarations provided for in the Stafford Act: emergency declarations and major disaster declarations.  Both declaration types authorize the President to provide supplemental federal disaster assistance. However, the events related to the two different types of declaration and scope and amount of assistance differ.

The Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121-5207 (the Stafford Act) §401 states in part that: “All requests for a declaration by the President that a major disaster exists shall be made by the Governor of the affected State.”  A State also includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.

The IRS Publication 570 (updated February 21, 2020) specifically states that you are considered to be present in the relevant possession [Puerto Rico] on any of the following days: “Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during a 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (‘FEMA’) notice of a federal declaration of a major disaster is issued in the Federal Register.”

Today, President Trump issued an emergency declaration for the United States. Note, that this is different from a “major distaster” and so, based on IRS Publication 570, this type of an emergency declaration does not automatically qualify for days of automatic presence.  While it is possible that in a few months the IRS may publish a notice that awards days of automatic presence, this is not guaranteed and is speculative. 

However, remember that according to IRS Publication 570, that you are considered to be present in the territory [Puerto Rico] for any day you are outside of the relevant territory [Puerto Rico] in order to receive, or to accompany any of the following family members to receive, “Qualifying Medical Treatment. 

Qualifying Medical Treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. The treatment generally involves: any period of inpatient care that requires an overnight stay in a hospital or hospice, and any period immediately before or after that inpatient care to the extent it is medically necessary; or any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services. With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. You must be able to produce this documentation within 30 days if requested by the IRS or tax administrator for the relevant possession.

Specific documentation is required for any qualifying medical treatment. Refer to page 5 of IRS Form 570 for the details on what documentation will be required by the IRS. 

Additional Details on the Process for the Declaration of a Major Disaster from FEMA

Major Disaster Declarations: The President can declare a major disaster for any natural event, including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought, or, regardless of cause, fire, flood, or explosion, that the President determines has caused damage of such severity that it is beyond the combined capabilities of state and local governments to respond.  A major disaster declaration provides a wide range of federal assistance programs for individuals and public infrastructure, including funds for both emergency and permanent work.

Requirements: The Governor of the affected State or Tribal Chief Executive of the affected Tribe must submit the request to the President through the appropriate Regional Administrator within 30 days of the occurrence of the incident.  The request must based upon a finding that the situation is beyond the capability of the State and affected local governments or Indian tribal government and that supplemental federal assistance is necessary.

Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together “PRelocate”) are law firms, and this is not legal advice. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Rico’s tax incentives, maintaining bona fide residence in Puerto Rico, and any other issues related to taxes or residency in Puerto Rico. PRelocate does not assume any responsibility for the contents of, or the consequences of using, any version of any real estate or other document templates or any spreadsheets found on our website (together, the “Materials”). Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction.