Uncle Sam has begun reimbursing U.S. territories for payments of the so-called Additional Child Tax Credit, but the Virgin Islands will need more time than others to make its formal claim for payment, according to officials at the V.I. Bureau of Internal Revenue.
The tax credit, established in 1997, goes to eligible income taxpayers with three or more children under the age of 17. Recognizing that the credit places a financial burden on territorial governments with mirror tax systems, the federal government recently agreed to reimburse those governments for the costs. Payments are coming for the 1998 and 1999 tax years.
"It's going to be a continuing reimbursement," said Tamarah Smalls, associate counsel for the V. I. Bureau of Internal Revenue, in response to an inquiry to acting director Louis Willis.
According to a published report out of the Pacific, the territorial government in American Samoa reported a total of 3,700 taxpayers eligible for the credits and it is expecting between $3 million and $4 million for the two-year tax period.
Smalls said the bureau does not know how much the Virgin Islands is likely to receive.
Whatever the amount, it is expected to be considerably lower than what the territory pays for another federal income tax credit – the Earned Income Credit. Recent estimates of that cost have been between $15 million and $20 million annually.
Smalls said some territories never gave the Additional Child Credit, so the money they receive from the federal government will go to the eligible taxpayers. The Virgin Islands did give the credit, so the money will go into the local treasury.
The Virgin Islands has more work to do than other territories in preparing its claim, Smalls said. "We are the only one" giving the Earned Income Credit and the Earned Income Credit is subtracted from the Additional Child Tax Credit in determining the individual taxpayer's total obligation.
That means the V. I. can't simply supply the federal government with an estimate. It must process again all the returns in 1998 and 1999 which included the credit, Smalls said. She declined to estimate how long that will take.
