The Bureau of Internal Revenue wants to streamline or reform the tax-clearance process businesses go through to get and renew their business licenses every year, acting IRB Director Claudette Watson-Anderson said Monday during Senate budget hearings in Frederiksted.
The bureau wants changes to "ensure that the business can renew and or obtain new licenses in a timely manner," Watson-Anderson said. "We have had numerous discussions with the Department of Licensing and Consumer Affairs on various approaches and efforts that both agencies can undertake to ensure the business community receives the highest degree of customer service we can provide."
Senate President Louis Hill asked if the clearance letters being issued really meant those businesses owed no taxes, or if it was instead a bureaucratic step that served no useful purpose. Watson-Anderson said the clearance letters did not mean all taxes were paid, at least in part because IRB issues waivers and arranges payment plans for back taxes rather than denying a clearance letter and causing businesses to be shut down.
A recent audit of IRB operations found the tax-clearance process is a major cause of delay, too.
"Down time while going through the process was really responsible for a lot of licenses being moved in a timely manner," said Tamarah Parson-Smalls, IRB chief legal counsel. Hearing this, IRB contacted the Division of Licensing and Consumer Affairs, which issues business licenses, and began conferring on how to proceed so businesses are not penalized, Parson-Smalls said.
"Particularly in these difficult economic circumstances," she said, making the licensing process smoother was important to the economy.
"We have a government bureaucracy that is hindering the process in a way that is unnecessary," Hill said, continuing to say he plans to submit legislation to either eliminate or streamline the clearance-letter process.
Tax collections are down substantially because of the recession. By the end of this fiscal year, tax collections are projected to be $590 million, Watson-Anderson said.
"Based on this trend, our collections are estimated to be 20 to 30 percent below our 2008 collections," she said.
IRB is requesting a budget of $11.2 million for 2010. That is a decline of $412,000 from the 2009 level of appropriation.