81.7 F
Charlotte Amalie
Thursday, March 28, 2024
HomeNewsArchivesIRB Says Not Enough Cash Set Aside Causes Tax Refund Delays

IRB Says Not Enough Cash Set Aside Causes Tax Refund Delays

Tax refunds have been delayed the last several years in part because taxpayers overpay taxes more through payroll deductions than the 10 percent of tax revenues Internal Revenue Bureau sets aside for refunds each year, IRB Director Claudette Watson-Anderson said during budget hearings Friday.

Sen. Judi Buckley asked Watson-Anderson why there was not enough money set aside for returns, "so people won’t have to wait so long?"

Watson-Anderson said, "I think one of the issues is the amounts set aside are not enough to cover the amount of refunds expected to go out." While the law requires 10 percent of tax collected be set aside, "our refunds are usually more than that," she said.

IRB only processes the returns and the Finance Department ultimately cuts checks, depending on if it has enough money on hand, Watson-Anderson said. She urged V.I. residents who pay payroll taxes to adjust their W4 forms so the right amount is deducted to begin with so that refunds are smaller.

The law in question says the IRB director "shall maintain in the general ledger of the General Fund in the Treasury of the Virgin Islands an account to be designated the Reserve for Internal Revenue Tax Refunds. There shall be credited directly to such reserve account monthly not less than 10 percent of the receipts from income tax collections."

The law does not expressly forbid setting aside a larger percentage of tax receipts for refunds. Setting a larger percentage aside for refunds would exacerbate the government’s short term cash flow problems, as the funds set aside would not be available to pay other government expenses.

So far this fiscal year, IRB has processed 9,579 income tax refunds totaling $29 million, for 2012 and prior year refunds residents filed through Feb. 11, she said.

As of Aug. 16, unpaid refunds totaling $32.6 million were due to 16,484 taxpayers. Of this, $32 million is payable to 16,344 taxpayers for tax year 2012 and $665,000 is payable to 140 taxpayers for all prior years, she said.

Watson-Anderson requested a Fiscal Year 2014 budget of $10.1 million, with just more than $10 million from the General Fund and $50,000 from the Casino Revenue Fund – the same level as IRB’s FY13 funding.

Personnel costs are projected at $5.1 million, plus funds to cover reinstating full salaries after 8 percent salary cuts expired. Watson-Anderson’s budget did not specify how much that sum would be.

That covers wages and salaries for 161 positions, with 100 on St. Thomas, 59 on St. Croix and two on St. John.

Employer contributions for Medicare, Social Security and benefits consume another $2.2 million. Supplies are budgeted at $130,000. Other services and charges come to $1.4 million, primarily for lease agreements, telephone and communications charges. Some $50,000 is set aside for any necessary computer equipment upgrades.

Revenue collections for FY12 were $558 million, with $529 million of that for the General Fund and $29 million for special and other funds. Fiscal Year 2013 preliminary collections, as of the end of July, stood at $495 million, with $464 million to the General Fund.

No votes were taken during the information gathering hearing.

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.

1 COMMENT