USVI fighting IRS for right to tax resident

The USVI is going to court to settle a dispute between its Bureau of Internal Revenue and the IRS over a resident’s claim to residency for tax purposes.

ST THOMAS, United States Virgin Islands, Thursday December 6, 2012 – The United States Virgin Islands has appealed a District Court decision denying a Virgin Island taxpayer’s claim to residency for tax purposes.

According a statement issued by Governor John de Jongh, Jr, the US Court of Appeals for the Third Circuit came to the Virgin Islands to hold the hearing at the Ron de Lugo Federal Building on St Thomas to settle the case as to whether a taxpayer is a “bona fide resident” of the Virgin Islands under the US Internal Revenue Code before the U.S. Congress enacted the American Jobs Creation Act in 2004.

In 2005, the Virgin Islands Bureau of Internal Revenue issued notices of tax deficiency and filed suit in VI District Court against St Thomas resident Richard Vento, certain members of his family and certain of his business entities for the 2001 tax year. 

However, the IRS intervened in these cases, claiming that Mr. Vento and his family members were not bona fide VI residents for the tax year at issue and asserting that any tax deficiencies would be owed to the IRS and not the BIR. The District Court ruled for the IRS in April 2011, and the VI Government filed the present appeal.

De Jongh said, “There are fundamental principles of tax law at issue here which the government is committed to defend. These include principles which are vital to the integrity and future of our Economic Development Program.” The decision by the Third Circuit will affect scores of pending tax cases where the V.I. Bureau of Internal Revenue and the U.S. Internal Revenue Service disagree as to whether a taxpayer owes his or her tax liability to the federal government or to the territorial government. 

De Jongh also said today that his administration has intervened in a number of U.S. Tax Court cases where the applicability of the statute of limitations on an IRS tax assessment of a taxpayer claiming to be bona fide V.I. resident has been at issue.  “My administration is committed to defending our Economic Development Program and our tax revenues by ensuring that the program is governed by fair, clear and understandable rules.”  Click here to receive free news bulletins via email from Caribbean360. (View sample)