Why Hire a Law Firm for Act 60 Planning?

Content current as of April 2026. This page is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Consult qualified counsel before acting.

Act 60 Planning Is Not Just Tax Preparation

Many Act 60 applicants approach the process as a tax matter and hire only a CPA. While CPAs play an important role in tax compliance, Act 60 planning involves legal decisions that require attorney expertise—and attorney-client privilege.

Attorney-Client Privilege

This is the single most important reason to involve a law firm. When the IRS audits your Act 60 compliance—and Campaign 685 makes this increasingly likely—there is a critical difference:

• CPA communications are not privileged. The IRS can subpoena your accountant’s workpapers, emails, notes, and internal memos.
• Attorney communications are privileged. Legal advice about residency compliance, income sourcing, and entity structuring is protected from disclosure.

For decisions that carry potential criminal exposure—like whether a particular income stream is properly sourced to Puerto Rico—the privilege distinction is not academic. It is the difference between protected counsel and discoverable evidence.

Entity Structuring

Most Act 60 strategies require proper entity formation:

• Export Services (Chapter 3) companies must meet substance requirements, have genuine PR operations, and maintain compliant intercompany agreements
• Holding companies for investment assets require careful structuring to avoid IRS recharacterization
• Trust planning under Puerto Rico’s Trust Act (Ley 219-2012) involves irrevocable trust formation, trustee selection, and coordination with the Act 60 decree

Entity formation and governance are fundamentally legal activities—they require legal opinions, operating agreements, and corporate resolutions that CPAs are not licensed to prepare.

Decree Application & Negotiation

The Act 60 decree is a contract with the Government of Puerto Rico. Its terms can be negotiated, and the application process involves legal representations. An attorney can:

• Negotiate decree terms, including the effective date, specific carve-outs, and conditions
• Ensure the application accurately reflects your income sources and business activities
• Identify potential issues before DDEC (the Department of Economic Development and Commerce) reviews your file

Tax Court Representation

If a dispute with the IRS escalates, only attorneys (and a limited number of non-attorney practitioners who pass the Tax Court exam) can represent you in U.S. Tax Court. CPAs cannot. If your Act 60 compliance is challenged, you need counsel who can both advise you and advocate for you in court.

What CPAs Do Best

CPAs are essential for Act 60 compliance—specifically for:

• Annual tax return preparation (Federal Form 1040 and Puerto Rico Form 482)
• Agreed-upon procedures (AUP) for Act 52 biennial certification
• Bookkeeping and financial reporting for Chapter 3 export services companies
• FBAR and FATCA compliance filings

The ideal approach is a coordinated team: legal counsel for structuring, privilege-protected advice, and decree negotiation, plus a CPA for return preparation and financial compliance.