Residents who are waiting for a Virgin Islands income tax refund check and have been told they are not being issued, need not panic, they are coming soon.
Newspapers and government offices continue to be inundated with complaints and questions about delayed tax refund checks, but the answers remain the same, frustrating ones given in July. With the profound worldwide slowdown in economic activity, the V.I. government’s tax revenues have gone down, the revenue crunch exacerbated by the territory’s uncollected real property taxes.
But the government’s obligations have not gone down. The single biggest government expense, for instance, is teacher’s salaries. So under the current severe cash crunch, the government has to juggle whether to pay teacher’s salaries or send your tax refund check this week. You will still get your tax refund check, the government says, but you will have to wait a little longer. A line of credit will shortly fill the gaps and allow resdients to receive their check.
Newly installed Finance Commissioner Angel Dawson acknowledges it’s a situation taxpayers find frustrating.
"During budget hearings last month Sen. (Sammuel) Sanes joked with me saying he liked me but he wasn’t sure he’d be willing to walk around St. Croix with me at his side," Dawson said Wednesday. But he reiterated what he said before the Senate in July,
"It’s no big secret, we’ve been saying the same thing for weeks, trying to get the message out," he said.
Most of the refund checks have been sent out, but $19 million in refunds are awaiting closure on a line of credit for operating expense.
"We are very close and expect to close on a $250 million working line of credit approve by the Legislature," he said. "Right now we are working on finalizing the details with local financial institutions, which should be, hopefully, before the end of this month."
Refund checks are not officially being held up, but payments are only being made once payroll and other immediate expenses are covered.
"It’s not a hold or a slowdown as such, but there definitely has been an impediment to the flow," he said. "We have paid $45 million to almost 18,000 taxpayers so far, and we have $19 million to go."
While the recession-induced delay is unfortunate, Dawson said there had been far worse delays in the past without the factor of the cash crunch thrown in.
"There have been years past with much more severe issues, when no tax refunds had been issued at all at this point," he said.
Meanwhile, any refund not mailed by June 1 is accruing interest and growing.
What can citizens do besides wait patiently? They can lessen or prevent this inconvenience in the future by adjusting their W4 forms to withhold the correct amount.
"When you get a refund, you’ve obviously paid too much tax," said V.I. Internal Revenue Bureau Director Claudette Watson-Anderson Wednesday. On the one hand, anyone who has exactly or very close to the correct amount withheld will not have to worry about a refund and cannot find themselves stuck waiting. On the other hand, it turns out that a great many people in the territory pay too much, and if they paid closer to the correct amount, this sort of delay would be less likely, she said.
"Because of past issues, there is a law on the books that says 10 percent of income tax receipts have to be held in reserve to pay refunds," Watson-Anderson said. "We have already exceeded that, the refunds are greater than ten percent of the receipts for income tax collected, and it is consistently more than that."
She urged everyone to correct their W4 forms to help prevent this sort of situation in the future. No matter what sort of revenue shortfall may come in the future, taxpayers cannot be made to wait for their refund if they never overpaid to begin with.
