WASHINGTON - At a time when the Internal Revenue Service (IRS) is reviewing the case, Rep. José Enrique Meléndez has to insist for the Puerto Rican government to explain whether VantageKnight - whose owner was former Governor Ricardo Rosselló Nevares' main lobbyist - has complied with the tax regulations under Law 20-2012.
Meléndez revealed that the IRS notified him on September 16 the IRS that they will examine whether VantageKnight President Manuel "Manny" Ortiz would have engaged in tax fraud by opening a subsidiary in Puerto Rico, residing on the island and enjoying the benefits of Law 20, while having his family residence in Maryland and many of his operations in Washington, D.C..
The office in charge of tax issues in Maryland had previously informed New Progressive Party (PNP) Rep. "Quiquito" Meléndez that they will evaluate the VantageKnight and Ortiz case, who was Rosselló Nevares´main lobbyist through the Puerto Rico Industrial Development Company (PRIDCO).
Meléndez asked the secretary of the Department of Economic Development and Commerce (DDEC, Spanish acronym), Manuel Laboy, to investigate whether Ortiz has complied with the requirements of the island's Law 20, which grants companies a fixed income tax rate of 4 percent on export services income. But Laboy referred the issue to the Treasury Department.
Dissatisfied with the response, Meléndez sent a new letter to Laboy on September 30 requesting him to deliver the report that VantageKnight should have filed with the DDEC as a beneficiary of a tax decree based on Law 20.
In the letter Meléndez requested Laboy to confirm a date for the audit his Department has to conduct on VantageKnight every two years, according to Article 13 Section D of the law, if the agency has not started an investigation yet.
Ortiz, who is very close to the Rosselló family and with experience in Washington, was a lobbyist for the current administration until last June. He had contracts of up to $1.6 million.
In February 2018, the DDEC itself granted Ortiz, a tax decree based on Law 20, after VantageKnight registered a subsidiary in Puerto Rico, which address is Ortiz's home in Dorado. Ortiz's family reportedly resides in Maryland.
According to Senate records, Ortiz lobbies in Washington not just for PRIDCO, but for a dozen clients.
In the September 30 letter, Meléndez said Secretary Laboy indicated that to comply with Law 20, a 'foreign' company like VantageKnight not only has to establish in Puerto Rico to provide services abroad, but it also must have a "'bona fide office or establishment located in Puerto Rico."
In his letter to Laboy, Meléndez said they had serious doubts about whether an address in a high-class neighborhood in Dorado meets that requirement.
Laboy said he will investigate whether VantageKnight meets the requirements of Law 20-2012. However, neither the media nor Rep. Meléndez -who has advocated for the cancellation of that tax decree to Ortiz's company- had details on that.
Meléndez added in his letter that it is of vital importance that U.S. Treasury Secretary Steve Mnuchin and the IRS see that the Department of Economic Development and Commerce and the Treasury, headed by Francisco Parés, are protecting the interests “of our territory as well as those of our nation.”
In August, amid the debate over VantageKnight's operations on the island, Ortiz said his company has complied with "all the requirements" under Law 20-2012, and with tax obligations in Puerto Rico and the United States.