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Puerto Rico, how it fits in United States

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  • hobot
    Outline of jurisdiction, citizens, tax and gov t limits. Says they are exempt from Internal Revenue Code but must pay SS taxes. Do notice the comphreensive
    Message 1 of 4 , Oct 31, 2006
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      Outline of jurisdiction, citizens, tax and gov't limits.
      Says they are exempt from Internal Revenue Code but must
      pay SS taxes. Do notice the comphreensive definition of
      Untited States used in the documents concerned.
      http://www.topuertorico.org/government.shtml
    • chemelt
      In case you don t understand this, it is because Puerto Ricans ARE US citizens and US citizens ARE NOT taxed on their income earned AT HOME. However when you
      Message 2 of 4 , Nov 1, 2006
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        In case you don't understand this, it is because Puerto Ricans ARE US
        citizens and US citizens ARE NOT taxed on their income earned AT HOME.
        However when you declare you are a US citizen (filing a 1040, etc)
        and you earn income from say California, you are earning FOREIGN
        earned income which IS subject to income taxation, of course after the
        80,000.00 dollar credit you get on form 2555. Of you forgot to claim
        your foreign earned credit? Too bad, must be becuase that foreign
        earned money came from a government source which the US citzen does
        not get to take a credit for.

        Oh and if you want some evidence that this is true, try doing a FOIA
        request for system of records 49.003. This is the system of records
        pertaining to US citzens OVERSEAS examinations (assuming they did a
        sfr on you). I did one of these FOIAs and received back a copy of all
        financial statments for the year they are coming after me for (W2,
        1099s) that I allegedly submitted during my OVERSEAS examination.





        --- In tips_and_tricks@yahoogroups.com, hobot <hobot@...> wrote:
        >
        > Outline of jurisdiction, citizens, tax and gov't limits.
        > Says they are exempt from Internal Revenue Code but must
        > pay SS taxes. Do notice the comphreensive definition of
        > Untited States used in the documents concerned.
        > http://www.topuertorico.org/government.shtml
        >
      • Russell Mortland
        are you going to file any 1099OID s to counter their W-2 & 1099 s. _____ In case you don t understand this, it is because Puerto Ricans ARE US citizens and US
        Message 3 of 4 , Nov 1, 2006
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          are you going to file any 1099OID's to counter their W-2 & 1099's.

          _____


          In case you don't understand this, it is because Puerto Ricans ARE US
          citizens and US citizens ARE NOT taxed on their income earned AT HOME.
          However when you declare you are a US citizen (filing a 1040, etc)
          and you earn income from say California, you are earning FOREIGN
          earned income which IS subject to income taxation, of course after the
          80,000.00 dollar credit you get on form 2555. Of you forgot to claim
          your foreign earned credit? Too bad, must be becuase that foreign
          earned money came from a government source which the US citzen does
          not get to take a credit for.
        • eyemail@bellsouth.net
          Perhaps the Jay Treaty defines who is a citizen of the United States. *** Draft Statutory Instrument 2002 No. The Double Taxation Relief (Taxes on Income) (The
          Message 4 of 4 , Nov 1, 2006
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            Perhaps the Jay Treaty defines who is a citizen of the United States.
            ***
            Draft Statutory Instrument 2002 No.
            The Double Taxation Relief (Taxes on Income) (The United States of America) Order 2002

            © Crown Copyright 2002
            Article 1

            General scope
            4. Notwithstanding any provision of this Convention except paragraph 5 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if this Convention had not come into effect.

            Article 2

            Taxes covered
            3. The existing taxes to which this Convention shall apply are:
            (a) in the case of the United States:
            (i) the Federal income taxes imposed by the Internal Revenue Code (but excluding social security taxes); and

            Article 3

            General definitions
            (h) the term "United States" means the United States of America, and includes the states thereof and the District of Columbia; such term also includes the territorial sea thereof and the sea bed and sub-soil of the submarine areas adjacent to that territorial sea, over which the United States exercises sovereign rights in accordance with international law; the term, however, does not include Puerto Rico, the Virgin Islands, Guam or any other United States possession or territory;

            (j) the term "national" of a Contracting State, means:
            (i) in relation to the United States,
            (A) any individual possessing the citizenship of the United States; and

            (B) any legal person, partnership, association or other entity deriving its status as such from the laws in force in the United States;

            ***
            43–229 l

            1997

            UNITED STATES-PUERTO RICO POLITICAL STATUS ACT

            FIELD HEARING

            before the

            COMMITTEE ON RESOURCES

            HOUSE OF REPRESENTATIVES

            ONE HUNDRED FIFTH CONGRESS

            FIRST SESSION

            on

            H.R. 856—United States-Puerto Rico's Political Status Act

            MAYAGUEZ, PUERTO RICO, APRIL 21, 1997

            Serial No. 105–27

            Printed for the use of the Committee on Resources

            One thing is what you might want to see, and the other thing is what can be reasonable or what others are going to be willing to accept. Each Congressman and each Senator responds to their citizens in their State.

            So when you claim, for instance, that you want to have equal benefits in Federal programs and yet you are not willing to pay Federal income tax, well, you have to be aware, whether it is constitutional or not, how does that sit with the citizens of the 50 States who do have to pay Federal income taxes? That is part of the things that each Congressman and each Senator is going to weigh…
            Mr. YOUNG. I want to thank the panel.

            Carlos, do you have questions?

            Mr. ROMERO-BARCELÓ. Yes, I have a couple of questions.

            I want to ask Mr. Velasco, if the Congress today would pass a banking law, can they make it applicable for Puerto Rico without Puerto Rico's previous consent?

            Mr. VELASCO. A banking law, yes.

            Mr. ROMERO-BARCELÓ. And fair trade laws?

            Mr. VELASCO. And fair trade laws, yes.

            Just to answer your whole question, the only laws that are not applicable to Puerto Rico made by the U.S. Congress are those that are locally inapplicable because of geographic or that kind of laws and also those that do not address the compact.

            Now, what is the compact? The compact is Public Law 600, the Federal Relations Act, the Constitution of Puerto Rico. Those are the laws—and 447, of course.

            Mr. ROMERO-BARCELÓ. Can Congress pass income tax laws taxing income produced in Puerto Rico?

            Mr. VELASCO. Income tax laws?

            Mr. ROMERO-BARCELÓ. Taxing income produced in Puerto Rico. Can they not pass laws?

            Mr. VELASCO. No, they cannot.

            Mr. ROMERO-BARCELÓ. Why are they taxing the companies that are here in Puerto Rico for their income produced in Puerto Rico now, what used to be section 936? Why are those taxing the income produced here if you say they cannot?

            Mr. VELASCO. Mr. Romero, those companies that were under 936 are U.S. companies.

            Mr. ROMERO-BARCELÓ. No, they are subsidiaries.

            Mr. VELASCO. Excuse me, the subsidiaries are U.S. subsidiaries that are doing business in Puerto Rico; so, therefore, those subsidiaries, because they are citizens of the States where they were incorporated, are under the Internal Revenue Code; and that is why you can do it.

            Mr. ROMERO-BARCELÓ. But they are taxed here for the income produced in Puerto Rico.

            Mr. VELASCO. But they are taxed because they are citizens of other States, not because they are citizens of Puerto Rico.

            Mr. ROMERO-BARCELÓ. And when a Puerto Rican earns income outside of Puerto Rico, they are also taxed by the United States, right?

            Mr. VELASCO. Because that income is derived outside of Puerto Rico. But the income derived inside of Puerto Rico is not taxable under the Internal Revenue Code. And it is not taxable, first, because they are not in the Internal Revenue code; and, second, because it is part of the compact.

            Mr. ROMERO-BARCELÓ. An excise tax, they cannot impose excise taxes on Puerto Rico?

            Mr. VELASCO. Excise taxes? Puerto Rico imposes excise taxes, not the United States. The United States imposes custom duties.
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