Federal Reporting Obligations for Act 60 Decree Holders

Content current as of April 2026.

You Are Still a U.S. Person

Puerto Rico bona fide residents remain U.S. persons for virtually all federal reporting purposes. Your Act 60 decree provides Puerto Rico tax benefits—it does not exempt you from federal information reporting, anti-deferral regimes, or financial account disclosure requirements.

FBAR (FinCEN Form 114)

If you have a financial interest in, or signature authority over, foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year, you must file an FBAR. This applies regardless of your Act 60 status. Filing is due April 15 with an automatic extension to October 15. Willful violations carry penalties up to the greater of $100,000 or 50% of the account balance per violation.

FATCA (Form 8938)

If your specified foreign financial assets exceed the applicable reporting threshold, you must file Form 8938 with your federal return. The thresholds vary based on filing status and whether you reside in the U.S. or abroad. Puerto Rico BFRs use the domestic thresholds.

CFC & Subpart F Income (IRC §§951–965)

If you are a U.S. shareholder of a controlled foreign corporation (CFC), Subpart F income is taxable to you currently regardless of whether it is distributed. Act 60 decree benefits do not override federal anti-deferral regimes. Business owners with foreign entities must carefully analyze whether their structures create CFC exposure.

PFIC Rules (IRC §1297)

Investments in passive foreign investment companies (PFICs) are subject to punitive federal tax treatment unless a qualifying fund election (QEF) or mark-to-market election is made. Act 60 decree holders with foreign mutual funds, hedge funds, or investment entities must evaluate PFIC classification carefully.

Form 8898

Individuals who begin or end bona fide residence in Puerto Rico must file Form 8898 with their federal return for the year of the change. Failure to file carries a $1,000 penalty.

Key Takeaway

Act 60 reduces your Puerto Rico tax burden on qualifying income. It does not reduce your federal reporting obligations. Failure to comply with FBAR, FATCA, CFC/PFIC, or Form 8898 requirements can result in severe penalties—even criminal prosecution—independent of your decree status.