Nov. 7, 2007 — Two provisions in the Temporary Tax Relief Act of 2007 passed recently by the U.S. House of Representatives Ways and Means Committee positively impact the Virgin Islands, according to Delegate Donna M. Christensen.
The first extends what is commonly called the Rum Tax for another year. This provision returns $13.25 in taxes on a proof gallon of rum to the territory's coffers. The U.S. government collects $13.50 per proof gallon.
The rum tax generated $70.9 million in 2006. Through August of this year, the figure stands at $81 million, according to information provided Wednesday by Government House.
The second puts V.I. taxpayers on an equal footing with mainland taxpayers when it comes to a three-year statute of limitations on audits. The bill concerns people making $75,000 a year and who file their tax returns only in the Virgin Islands. Those making under $75,000 a year were already covered under a previous ruling. The bill is retroactive to 1986.
Without a statute of limitations on audits, the territory's Economic Development Commission tax-benefits program was threatened, said Gov. John deJongh Jr. when the House passed the bill last Thursday. A similar bill passed the full house, but the U.S. Senate hasn't acted on the bill, Modeste said. (See "U.S. House Bill Would Correct IRS Ruling on V.I. Taxpayers.")
"They're attempting to use another vehicle to get it enacted," Modeste said.
The bill passed 22 to 13. It still has to pass the full house and senate and get signed into law by President George W. Bush.
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