Internal Revenue Touts Performance on Collections, Tax Refunds

Bureau of Internal Revenue officials told lawmakers on Monday that the department exceeded its collection goals and to date has issued tens of millions in income tax refunds within the current fiscal year, prompting lawmakers to ask Internal Revenue Director Marvin Pickering if he needs more money in his budget this year.

“As of June 30, total revenue collections were $521.8 million,” said Pickering, who presented his agency’s budget Monday to the Senate Finance Committee. “As of the same date last fiscal year, revenue collections were $497.5 million, for an overall increase this year of five percent.”

The bureau also exceeded its delinquent accounts collection goal – set at $40 million for fiscal year 2017 – by $3.2 million, collecting some $43.2 million in outstanding delinquent taxes from some 3,619 delinquent accounts.

Pickering said he is also working with Sen. Kurt Vialet (D-STX) to introduce legislation that would establish more than one method of accepting tax-related payments, moving the agency out of its current cash-only collection policy.

To date in the current fiscal year, the bureau has also paid out some $29.2 million in income tax refunds to 12,289 taxpayers so far in the current fiscal year, said Pickering. It has processed another 28,287 income tax refunds totaling $62.4 million, which will be paid out as soon as the funds become available.

“No 2017 income tax refunds have been paid by the government of the Virgin Islands as of today’s date,” Pickering admitted.

This does not contradict Gov. Kenneth Mapp’s comments that every other Friday, the government will make payments toward tax refunds, according to Pickering. The Department of Finance will send Internal Revenue a file requesting a specific amount and the agency will send down a file containing the requested amount, Pickering explained.

The amount, however, will vary depending on the availability of funds at a given time, he said.

This year, Internal Revenue is asking for $12.58 million, all of which will come from the general fund. The amount reflect a decrease of $412,809 – roughly 3.2 percent – compared to last year’s budget. Of that amount, some $10 million will go toward personnel and fringe benefits for 136 positions within the agency.

Pickering admitted that he requested a larger budget this year than the $12.58 million that Government House recommends. The 3.2 percent overall decline in budget impacts staffing, with 14 positions lost due to personnel and fringe benefits declining by 8.5 percent collectively compared with fiscal year 2018.

“It’s a shame that you are asking for a budget of less than before because we can certainly justify and see what you are doing,” said Sen. Jean Forde (D-STT), who praised how the agency exceeded its goals in the area of delinquent accounts.

“I can only just imagine if you had that much more resources how much more you could have collected,” said Forde.

According to Pickering, the bureau also is reviewing its task base to determine which businesses have been able to reopen after the 2017 storms, and which businesses they need to remove from their tax rolls.

“This reality is a major contributing factor in the bureau’s ability to meet its collection goals, particularly in the gross receipts category,” said Pickering.

“We’re going to try to reach as much as our resources allow,” added Pickering. “We’re re-establishing that rhythm as how often we go out in the street and that’s going to be done in short order.”

Vialet , who chairs the Senate Finance Committee, said that the agency needs to review local businesses who provided hurricane survival commodities, specifically supermarkets and gas stations, but reported decreases in sales in spite of the higher post-hurricane demand.

“I don’t see how the supermarkets reported a 17 percent decrease [in gross receipts taxes], I literally don’t,” said Vialet. “And I think we need to put them on warning that you need to resubmit, you need to redo your books because we know that it was hurricane time…Redo your books and make the sufficient payments to IRB before we have to audit you.”

The bureau is also spending roughly $1 million for professional services contracted to upgrade its tax system for tax year 2018. The upgrades will include updates and maintenance of their excise tax collection, allowing payments to be made online using credit cards. Moving the government entire tac collection apparatus to an online filing and processing system will require investing in substantial technological upgrades, said Pickering, and is not doable anytime soon.

Senators also praised Pickering and his staff for getting their offices up and running only a few days after the hurricanes. According to Pickering, the bureau’s two main offices sustained minor infrastructure damage. He is, however, requesting $700,000 to begin the migration of data onto a cloud storage service that would allow for a smoother continuity in operations from more than one bureau office.