What an IRS Residency Examination Asks For

What does an IRS residency examination ask for?

An IRS examination of Puerto Rico residency usually opens with a letter and a written list of items to provide, called an information document request. The list follows the tests the residency rules themselves set out: presence, tax home, and closer connection. This guide covers the process. For what to keep, see how to document presence for an audit.

One limit up front: the IRS does not publish a standard residency request list, so no source can tell you the exact wording of yours. What the published material does show is how an examination starts, how requests are structured, and which facts the rules make relevant.

What does an examination of Puerto Rico residency look at?

Bona fide residence is the status that lets you claim Puerto Rico residency for the tax year. Publication 570 says you generally must meet three tests: the presence test, the tax home test, and the closer connection test. 26 CFR 1.937-1 sets out the same three requirements. For a walk through of each, read the three tests compared.

Presence

The presence test is met if one of the listed conditions applies. Two are the best known: at least 183 days in the possession during the year, or at least 549 days across the current and two preceding years with at least 60 days in each. Another is no more than 90 days in the United States. The regulation counts a day when you are physically present in the possession at any time during the day.

Anything that shows where you were on a given date is relevant here. Travel dates count. So does where you slept.

Tax home and significant connection

The tax home test asks whether you had a tax home outside the possession at any part of the year. Publication 570 describes the tax home as your regular or main place of business, employment, or post of duty. With no regular place of business, it is the place where you regularly live.

The regulation also lists a significant connection to the United States: a permanent home there, current voter registration in a US political subdivision, or a spouse or minor child whose principal abode is in the United States, subject to exceptions. Items that speak to these facts matter most when you rely on the fifth presence condition, no significant connection.

Closer connection

Publication 570 names factors for the closer connection test, including the location of your permanent home, where you do routine personal banking, the country of residence you designate on forms and documents, and the forms you file, such as Form W-8BEN or Form W-9. Banking, housing, and the address on your filings are all fair game.

Medical treatment days

One category has a stated production rule. If you count days of qualifying medical treatment, Publication 570 says you must prepare or obtain and maintain the documentation, and be able to produce it within 30 days if the IRS asks. The regulation lists the records: patient name and relationship, facility, physician, dates, payment receipts, and a signed physician certification.

How does an examination start?

An examination starts when the IRS contacts you, normally by mail. The published procedures are internal manuals, and they differ by unit, so read this section as a sketch of the sequence, not a promise about your case.

The Large Business and International manual, IRM 4.46.3, describes initial contact by letter, with a telephone follow-up after 14 calendar days from mailing. An appointment confirmation letter follows, with Form 4564, the information document request, attached. The manual also says the examiner confirms you have received Publication 1 and Notice 609, or provides them at the opening conference.

The international individual compliance manual, IRM 4.63.4, describes the initial mailing as including a questionnaire or Form 4564 where applicable. It also says a taxpayer with a Puerto Rico address is sent Letter 4149 and Publication 3498-A (SP).

Which procedures apply to a given taxpayer is not something these manuals settle for you. Published guidance does not address that directly. If a letter arrives, the contact number on it and your advisor are the reliable route.

What is an information document request?

An information document request is a written list of items the examiner asks you to provide. It is issued on Form 4564.

IRM 4.63.4 tells examiners to customize the initial request to the taxpayer and the facts of the case. A request for a person who moved to Puerto Rico in March will therefore not read like one for a long-established resident. The same manual gives typical response timeframes of 30 days for taxpayers with addresses in the United States and 45 days for taxpayers with foreign addresses. Treat that as a typical range. The date printed on your request is the one that governs.

The manual also describes a formal document request, which it says may be issued only after normal document request procedures have failed to produce the necessary documentation. So the first request is the ordinary step, and a firmer tool sits behind it.

What records does an information document request cover?

Because the rules set the tests, the requests tend to follow them. This is an inference from the regulation and Publication 570, not a published template. Expect items that map as follows:

• Presence: evidence of the days you were in Puerto Rico and the days you were not. Read how long to keep day count records before you decide what to discard.
• Tax home: where you worked or ran a business, and where you regularly lived.
• Significant connection: whether you kept a permanent home in the United States, your voter registration, and where a spouse or minor child lived.
• Closer connection: your housing, your routine banking, the residence you declared on filings and forms, and the forms themselves.
• Medical days: the records and physician certification listed above, producible within 30 days of a request.

Two points apply across all of these. First, the request is about the tax year in question, and the year of a move carries its own rules in the regulation, so a first partial year may be examined on different terms. See moving mid-year. Second, a record is only useful if it exists. Keeping a ledger by hand is the part many people abandon by spring. One83 builds a day ledger from your calendar so the record exists before anyone asks for it.

What if you cannot produce a record?

Respond by the date on the request, and if you need more time, ask the examiner before the date passes. Silence is the worst choice. The no-response procedures in IRM 4.46.3 describe a letter warning that the liability may be changed based on available information, or that a summons may be issued.

If a year was not documented as it happened, some of it can be rebuilt from third-party records. Read what can be rebuilt and what cannot. How much weight an examiner gives a reconstruction is unsettled in the sources used here. If your year turns on it, get advice from a licensed tax professional before you respond.

What is the takeaway?

The process is a letter, a written request, and a response date. The content tracks the three tests. What you control is whether the underlying record exists, and whether you answer on time with your advisor in the loop.

Frequently Asked Questions

Is an IRS information document request the same as an audit finding?

No. An information document request is a list of items the examiner asks you to provide. It asks questions and does not state a conclusion. The IRM describes the request as something customized to the taxpayer and the facts of the case.

How long do you have to answer an information document request?

The request states the date. IRM 4.63.4 describes typical response timeframes of 30 days for US addresses and 45 days for foreign addresses, but your own letter controls. If you need more time, ask the examiner before the date passes.

Does the IRS only ask about days spent in Puerto Rico?

No. Bona fide residence has three tests: presence, tax home, and closer connection. Publication 570 and 26 CFR 1.937-1 describe each one, so requests can reach all three.

What happens if you do not respond?

The IRM no-response procedures warn that the liability may be changed based on available information, or that a summons may be issued. That wording comes from the Large Business and International manual. Which procedures apply to a given taxpayer is something an advisor can confirm.

Do you need a professional to respond?

Nothing in the sources used here requires one. A licensed tax professional can tell you how the rules apply to your facts, and this guide does not give advice for a named situation.

One83 is a tracking tool, not tax advice. Consult a licensed tax professional about your situation.