July 8, 2004 – V.I. government lawyers in Washington, D.C., have met with tax-writing committees on Capitol Hill and tax-policy staff at the U.S. Treasury to address concerns about the territory's Economic Development Program, Lt. Gov. Vargrave Richards told more than a hundred representatives of tax-beneficiary firms Thursday on St. Croix.
"We have developed a comprehensive strategy that we have begun to implement," Richards said. And, he added, "the objective of this government is to put forth a single, strong position" on the territory's tax-incentive program.
The meeting was called to discuss the implications of the warning issued by the Internal Revenue Service last month of its intention to crack down on those claiming and those promoting unlawful avoidance of taxes.
Also present at the meeting, according to a Government House release, were officials of the territory's Economic Development Authority and Internal Revenue Bureau, as well as two lawyers from the V.I. government's Washington, D.C., law firm, Winston and Strawn.
The lawyers, Peter Hiebert and Barry Hart, "discussed issues pending in Congress and before the U.S. Treasury that have raised concerns" among EDP beneficiaries regarding residency requirements and income source issues.
Both expressed the belief that "an acceptable set of rules will be developed to provide tax certainty and fairness" — rules that will continue to sustain and promote the territory's Economic Development Program, the release stated.
Gov. Charles. W. Turnbull had announced at a press conference he held with Richards on June 30 that Richards would be meeting with federal officials in Washington to work out "clear and reasonable rules" for the program and with EDP beneficiaries this week on St. Croix. (See "V.I. to Seek 'Clear Rules' for Tax-Incentive Program".)
"The Treasury Department has indicated that it welcomes the input of the Virgin Islands as part of the rule-making process, and that is key," Richards told the gathering on Thursday. "The government of the Virgin Islands encourages and welcomes your involvement as we develop a written position on these very technical issues."
He also stated that the Economic Development Commission "has achieved significant success in recent years in attracting legitimate new business and investors to the Virgin Islands." Further, he said, that success "is reflected in the increase in tax revenues collected by the Internal Revenue Bureau, the creation of new jobs and the general increase in economic activity in the territory."
Richards also thanked the EDP companies "for their philanthropic and in-kind contributions to a host of charities," the release stated.
Echoing the message of last week's press conference, Richards said the administration believes the best way to protect and preserve the tax-incentive program "is through the development of clear and reasonable rules and regulations that will provide needed tax certainty for existing beneficiaries and potential new investors."
Hiebert said the IRS warning "does not by itself have legal effect." Rather, it indicates the position that the Treasury Department "might take in an audit situation or in a litigation situation," he said.
Treasury officials have made it clear, Hiebert said, that "ultimately these kinds of issues will be and must be resolved through the issuance of regulations. That is our task. We are committed to finding that reasonable middle ground, and we are committed absolutely to preserving, protecting and enhancing this program."
Share your reaction to this news with other Source readers. Please include headline, your name, and the city and state/country or island where you reside.
Publisher's note : Like the St. Thomas Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.