I.R.S. Failed to Police Puerto Rico Tax Break, Whistle-Blower Says

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For the past decade, thousands of wealthy Americans have been flocking to Puerto Rico to take advantage of a tax break that can cut their tax bills to zero. For nearly as long, there have been allegations that the benefit enables multimillionaires to avoid paying what they owe when they reap big investment profits. Now, an Internal Revenue Service insider has accused the agency of failing to police the tax break. Despite a high-profile campaign announced more than three years ago to unearth possible abuse, the agency has audited barely two dozen people and has collected back taxes from none, according to a letter that an agency insider wrote this year to lawmakers and that has been reviewed by The New York Times, as well as interviews with I.R.S. officials. Senate officials have begun an investigation into the whistle-blower’s allegations about the Puerto Rican tax benefit. “It’s been three years since the I.R.S. announced its enforcement campaign on this issue,” said Senator Ron Wyden, Democrat of Oregon and chairman of the Senate Finance Committee. “It needs to pick up the pace.”