June 14, 2001 – The Internal Revenue Service has filed a tax lien against V.I. Telephone Corp., now Innovative Telephone, seeking $1,587,930.57 in past-due federal Social Security and unemployment taxes.
Officials of Innovative Communication Corp., parent company of the former Vitelco, contest the claim. They are meeting with IRS officials over a "fundamental disagreement" as to the amount owed, Innovative spokesman Holland Redfield told the Source on Thursday.
The lien was filed June 7 at the V.I. Recorder of Deeds office. It states that Vitelco owes Social Security taxes in the amount of $1,586,537.70 from three separate tax periods totaling nine months in 2000, as well as $1,392.87 in federal unemployment taxes from the tax period ending Dec. 31, 1998.
The figures cited in the lien include penalties and interest on the actual payroll taxes owed.
"We are giving a notice that taxes (including interest and penalties) have been assessed" against Vitelco, the lien states. "We have made a demand for payment of this liability, but it remains unpaid."
According to the lien, if the taxes aren't paid, the IRS could seize property belonging to Vitelco in compensation for the full amount of taxes owed.
"There is a lien in favor of the United States on all property and rights to property belonging to this taxpayer for the amount of these taxes, and additional penalties, interest and costs that may accrue," the lien states.
Redfield said Innovative and the former Vitelco are aware of the lien "at a high management level." He said private taxpayers and businesses often have disagreements with the IRS over the amount of taxes owed.
"Tax liens like this are not uncommon," Redfield said. "The company is sitting down with the IRS and working this issue out."
Although the telephone company is contesting the amount owed in both Social Security and federal unemployment taxes, Redfield would not elaborate on what specifically is in dispute.
"All I know is that there is obviously a fundamental disagreement on what is owed, and there has to be a meeting," he said. "There has to be a process that takes place" to address the discrepancy, "and I don't think it's appropriate for me to discuss that."
The phone company's non-payment of the taxes has nothing to do with recent layoffs at Innovative St. Thomas-St. John Cable TV's Channel Two and rumors of financial difficulties among other Innovative holdings, Redfield said.
The non-payment "doesn't reflect the company's ability to pay these taxes; it reflects a fundamental disagreement on them," he said. "It should in no way be interpreted that the company does not have the money to pay the taxes."
Johnny Perez, an IRS revenue officer in San Juan, filed the lien, but he said he could not disclose any information about it. He referred all questions to a "disclosure officer" for the IRS in Washington, D.C.
A list of questions was faxed by the Source to Michelle Lamishaw, a media liaison at IRS headquarters in Washington, D.C. She had not responded as of Thursday evening.
Social Security taxes are broken down into FICA and Medicare payments. Both employers and employees are required to contribute to these taxes, which for the 2000 tax year amounted to 15.3 percent of wages.
Half is paid by the employee and half by the employer, who is responsible for transmitting both halves to the IRS. Social Security taxes are taken out of an employee's check every pay period.
According to a local financial expert, the taxes and penalties the IRS is seeking to collect from the former Vitelco represent roughly $9.8 million in taxable wages paid to phone company employees during the nine months in 2000.
Innovative Communication Corp. is owned by Jeffrey Prosser. Its holdings include the V.I. Daily News, Innovative St. Thomas-St. John Cable and St. Croix Cable, and Innovative Telephone. Separate from Innovative, Prosser also owns the Virgin Islands Community Bank.
