The U.S. Court of Appeals for the Third Circuit will hear the V.I. government’s appeal of a District Court decision denying a V.I. taxpayer’s claim to residency for tax purposes, according to Government House.
The federal appeals court will be sitting in the Virgin Islands on Wednesday for the case and will hold the hearing at the Ron de Lugo Federal Building on St. Thomas.
At issue are the rules for determining whether a taxpayer is a “bona fide resident” of the Virgin Islands under the U.S. Internal Revenue Code before the U.S. Congress enacted the American Jobs Creation Act in 2004, Gov. John deJongh said in a statement.
In a consolidated set of cases, the V.I. Bureau of Internal Revenue issued notices of tax deficiency and filed suit in V.I. District Court in 2005 against St. Thomas resident Richard Vento, certain members of his family and certain of his business entities for the 2001 tax year. The IRS intervened in these cases, claiming Vento and his family members were not bona fide V.I. residents for the tax year at issue and that any tax deficiencies would be owed to the IRS and not the BIR.
The District Court ruled for the IRS in April 2011, and the V.I. Government filed the appeal that is now before the court.
“There are fundamental principles of tax law at issue here which the government is committed to defend,” deJongh said in a statement. “These include principles which are vital to the integrity and future of our Economic Development Program.”
The decision by the Third Circuit will affect scores of pending tax cases where the V.I. Bureau of Internal Revenue and the U.S. Internal Revenue Service disagree as to whether a taxpayer owes his or her tax liability to the federal government or to the territorial government, the statement said.
DeJongh also said Monday that his administration has intervened in a number of U.S. Tax Court cases where the applicability of the statute of limitations on an IRS tax assessment of a taxpayer claiming to be bona fide V.I. resident has been at issue.
“My administration is committed to defending our Economic Development Program and our tax revenues by ensuring that the program is governed by fair, clear and understandable rules,” deJongh said.
