82.1 F
Charlotte Amalie
Saturday, May 21, 2022
HomeNewsArchivesV.I. Officials Disappointed with New EDC Residency Regulations

V.I. Officials Disappointed with New EDC Residency Regulations

Jan. 30, 2006 — The Internal Revenue Service and the U.S Department of Treasury Monday made public the long-awaited residency requirements concerning Economic Development Commission companies. Delegate Donna Christensen said, "The only good thing we can say about this is that they are out, and the companies now know what they need to know."
She added, "This is not what we wanted or what we needed." The federal authorities did not budge much on the 183-day residency requirement. Christensen and others had advocated that an average of 122 days in the territory over three years be sufficient.
The final regulations do allow that time in the United States for medical reasons will not be applied against residency time. But here, too, Christensen has concerns. She says the medical days just cover in-patient time, and people often have to travel to the states and spend time that necessarily is not under in-patient care but is still medical.
Another section that would not penalize a person who would have to spend time away from the territory during a disaster makes no sense to Christensen. It would apply when there was a mandatory evacuation. She says, "Everyone knows that on our islands you don't evacuate, you hunker down."
As for business travel the new regulations seem to give no breaks. The document states, "The final regulations do not adopt commentators' suggestion that days spent outside of a possession for nonmedical family emergencies, charitable pursuits or business travel should count as days spent in the possession and outside the United States.
These additional exceptions would have been administratively difficult to implement and monitor. The IRS and Treasury believe that in these situations, and in medical situations not otherwise provided for in the final regulations, the 183-day rule in combination with the alternatives to that rule, as liberalized in these final regulations, provide sufficient flexibility to accommodate absences from the possession to pursue a range of activities."
The alternatives to the 183 days are that the person does not spend 90 days or more in the United States or spend more time in the United States than they did in the territory.
Gov. Charles W. Turnbull issued a press release Monday afternoon that said, "While the new regulations appear to provide some relief on the residency test under the Jobs Act, I am disappointed that the changes simply do not go far enough."
He praised the EDC program in his State of the Territory speech Monday night and mentioned his disappointment with the recent federal action.
He said, "Accordingly, we will redouble our efforts and continue to work with our Congressional supporters and the private sector to enact needed legislative changes in the Jobs Act."
Christensen also said in an interview Monday that Virgin Islanders might have to go back to the U.S. Congress to get the results they want. She said in a press release later in the day: "Our task is to go back to our friends in the House and the Senate, many of whom have been advising us to wait until Treasury's rules are completed, so we can get a resolution to this issue that is important to our economy."
The 45-page document contains final regulations for determining bona fide residency in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and U.S. Virgin Islands. The regulations are effective Jan. 31.
The document was written by J. David Varley and clarifies the effect of the American Jobs Creation Act of 2004 that was enacted on Oct. 22, 2004.
The remainder of the proposed and temporary regulations, relating to source and effectively connected income will be finalized in a forthcoming Treasury decision.
Christensen said, "I hope this is done on a timely basis. People do have to file their taxes."
V.I. advocates of the EDC program had hoped for a transition period or even the possibility of grandfathering companies in under the old rules.
However, it appears that the transition period will only cover the last months of 2004. There was also no mention of grandfathering.
The regulations do appear to offer some relief to an EDC company in its first year of existence, but it would require that the principals of the company reside in the Virgin Islands the final 183 days of the year.
To view the regulations click here.
Back Talk

Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.




Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.

STAY CONNECTED

20,771FansLike
4,716FollowersFollow

FROM FACEBOOK

Comments Box SVG iconsUsed for the like, share, comment, and reaction icons
Load more
Jan. 30, 2006 -- The Internal Revenue Service and the U.S Department of Treasury Monday made public the long-awaited residency requirements concerning Economic Development Commission companies. Delegate Donna Christensen said, "The only good thing we can say about this is that they are out, and the companies now know what they need to know."
She added, "This is not what we wanted or what we needed." The federal authorities did not budge much on the 183-day residency requirement. Christensen and others had advocated that an average of 122 days in the territory over three years be sufficient.
The final regulations do allow that time in the United States for medical reasons will not be applied against residency time. But here, too, Christensen has concerns. She says the medical days just cover in-patient time, and people often have to travel to the states and spend time that necessarily is not under in-patient care but is still medical.
Another section that would not penalize a person who would have to spend time away from the territory during a disaster makes no sense to Christensen. It would apply when there was a mandatory evacuation. She says, "Everyone knows that on our islands you don't evacuate, you hunker down."
As for business travel the new regulations seem to give no breaks. The document states, "The final regulations do not adopt commentators' suggestion that days spent outside of a possession for nonmedical family emergencies, charitable pursuits or business travel should count as days spent in the possession and outside the United States.
These additional exceptions would have been administratively difficult to implement and monitor. The IRS and Treasury believe that in these situations, and in medical situations not otherwise provided for in the final regulations, the 183-day rule in combination with the alternatives to that rule, as liberalized in these final regulations, provide sufficient flexibility to accommodate absences from the possession to pursue a range of activities."
The alternatives to the 183 days are that the person does not spend 90 days or more in the United States or spend more time in the United States than they did in the territory.
Gov. Charles W. Turnbull issued a press release Monday afternoon that said, "While the new regulations appear to provide some relief on the residency test under the Jobs Act, I am disappointed that the changes simply do not go far enough."
He praised the EDC program in his State of the Territory speech Monday night and mentioned his disappointment with the recent federal action.
He said, "Accordingly, we will redouble our efforts and continue to work with our Congressional supporters and the private sector to enact needed legislative changes in the Jobs Act."
Christensen also said in an interview Monday that Virgin Islanders might have to go back to the U.S. Congress to get the results they want. She said in a press release later in the day: "Our task is to go back to our friends in the House and the Senate, many of whom have been advising us to wait until Treasury's rules are completed, so we can get a resolution to this issue that is important to our economy."
The 45-page document contains final regulations for determining bona fide residency in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and U.S. Virgin Islands. The regulations are effective Jan. 31.
The document was written by J. David Varley and clarifies the effect of the American Jobs Creation Act of 2004 that was enacted on Oct. 22, 2004.
The remainder of the proposed and temporary regulations, relating to source and effectively connected income will be finalized in a forthcoming Treasury decision.
Christensen said, "I hope this is done on a timely basis. People do have to file their taxes."
V.I. advocates of the EDC program had hoped for a transition period or even the possibility of grandfathering companies in under the old rules.
However, it appears that the transition period will only cover the last months of 2004. There was also no mention of grandfathering.
The regulations do appear to offer some relief to an EDC company in its first year of existence, but it would require that the principals of the company reside in the Virgin Islands the final 183 days of the year.
To view the regulations click here.
Back Talk


Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.