News reports of secret Memorandums of Understanding (MOUs) between the VI Internal Revenue Bureau (BIR) and the IRS should raise a number of questions in the minds of Virgin Islands residents. Chief among these is: How do these MOUs benefit the people of the Virgin Islands?
MOUs often exist between the IRS and state governments for the benefit of both the state government and the IRS. The MOUs allow the IRS to help the state government collect state taxes for the states and federal taxes for the federal government. That arrangement benefits the people of those states by the gathering of additional funds in the state coffers. But here in the VI, the IRS and IRB are competing for the same tax dollars and contrary to all previously established tax administration agreements, the IRS has launched what appears to be an offensive designed to strip away legitimate tax dollars from the USVIs coffers. The government of the USVI has stated publicly that the positions the IRS is taking in its attack run directly counter to the guidance the USVI government gave its EDC-related taxpayers for several years. This mid-stream change of directions coupled with the lack of information available to the public regarding these MOUs makes the VI appear to be an extremely unstable place for investment.
How exactly do these MOUs and the actions of the IRB and the IRS benefit the people of the Virgin Islands? How could making the VI appear unstable for investment and the stripping of legitimate tax dollars from the VI coffers possibly benefit the people? Furthermore, it appears that the IRB may have entered into these agreements without the review or consent of the proper authority USVI Governor Charles Turnbull. The Organic Acts provide for the basis of the Virgin Islands tax structure and the USVI statutes governing the IRB and its Director Louis Willis state that the IRB does not have the authority to enter into secret agreements, so whats going on? What has been agreed to and by whom? But more importantly, why?
Governor Turnbull should act swiftly to declare what appear to be inappropriately executed MOUs invalid and unilaterally withdraw from the ill-planned inquiries by the IRS that are driving legitimate business owners of the territory away and costing the USVI jobs and tax dollars. Governor Turnbull should instruct the IRB to handle these investigations itself, as it is authorized to do, and to deliver to the IRS any tax dollars deemed due to the IRS.
If the IRS wants the tax structure and code of the USVI changed then it must convince Congress to alter the Organic Acts. Now is the time Governor to stand-up and fight for what is right and just for the people of the Virgin Islands. In a matter of months, it will be too late.
Editor's note: We welcome and encourage readers to keep the dialogue going by responding to Source commentary. Letters should be e-mailed with name and place of residence to [email protected].