A bill giving a one-time amnesty for interest and penalties on overdue gross receipts taxes in the territory was moved out of committee Wednesday in Frederiksted.
If passed into law, the proposed tax amnesty would allow businesses to pay only their overdue gross receipts taxes, forgiving the penalties and interest, so long as they pay by a date to be determined later in the process.
"There were some members of the business community clamoring for some kind of relief in these times of recession," said Sen. Michael Thurland, one of the bill’s sponsors. "I want the business community to understand this is not forever, this is just a help for right now. It is not a panacea for all the problems with gross receipts tax but it is a help."
V.I. Bureau of Internal Revenue Director Claudette Watson-Anderson testified in support of the measure, arguing it would help tax receipts for the government while at the same time helping businesses. Past amnesties raised large amounts of revenue but a pattern of regular amnesties might encourage people to try to put off paying taxes in the hope of a future amnesty, she cautioned.
An amnesty from June 2006 to May 2007 covering dates up to March 2006 “resulted in the collection of $13.6 million in taxes and the abatement of $8.6 million in penalties," she said. Another amnesty from August 2008 to February 2009 for 2007 and prior taxes netted $4.3 million and the abatement of $4.6 million.
"It is the bureau’s position the historical frequency of gross receipts amnesties has served to erode voluntary compliance because it has resulted in taxpayers’ failure to file gross receipts returns when due, in anticipation of future amnesty provisions such as this," Watson-Anderson said. "By the same token, however the bureau must avail itself of those opportunities which facilitate collections of past-due balances. We support the amnesty provisions … in the hope it allows the bureau to collect taxes that it would otherwise have to write off as uncollectible due to our inability to collect within the statutory ten-year period."
Voting for the bill were Thurland, Sens. Adlah "Foncie" Donastorg, Nereida "Nellie" O’Reilly, Neville James and Terrence "Positive" Nelson. Absent were Sens. Wayne James and Celestino White.
