Virgin Islands Law Blog : Virgin Islands Lawyer & Attorney : BoltNagi Law Firm : St. Thomas, St. John, St. Croix, Water Island, US Virgin Islands

U.S. Virgin Islands Governor John P. deJongh recently appointed two BoltNagi attorneys to serve on territorial governmental boards. Managing Attorney Tom Bolt has been appointed as a member of the Interagency Council on Homelessness and Laura C. Nagi, Chair of the firm's Family Law and Children's Issues Practice Group as a member of the State Advisory Group of the Law Enforcement Planning Commission.

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The first "opportunity for solution" that you have in preparing a U.S. Virgin Islands Individual Income Tax return is that your tax preparation software doesn’t have a state module for the U.S. Virgin Islands. This is not a problem. A U.S. Virgin Islands income tax return is prepared using the same Form 1040 U.S. Individual Income Tax Return that is used throughout the United States. The major difference is the tax is paid to the U.S. Virgin Islands Treasury rather than the United States Treasury. This entry will cover some minor differences and practical tips which you may want to pass on to your tax preparer.

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Investors sometimes make investments in real estate that turn out badly.  There is an old saying in the Virgin Islands that "the man that makes a small amount of money in the Virgin Islands is one that started with a large amount of money!"  Many may blame their loss on the "real estate cycle" when actually there were mistakes that could have been avoided by better planning and analysis.

Based on over 35 years experience in real estate, I have identified several costly mistakes.  Here are a few:

Misjudged Demand. 

Developers have faced costly setbacks by assuming that customers existed without undertaking adequate market analysis.  For example, a mixed-use retail/office development designed to attact EDC businesses and upscale shoppers just when the Territory's EDC Program had a setback from additional federal regulation and upscale shoppers took it on the chin in the current economy.

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Congress failed to address pressing estate and generation-skipping transfer tax matters before it adjourned in December. Consequently, as of January 1, 2010, the provisions of 2001 federal tax legislation (the “2001 Act”) will cause the federal estate and federal generation-skipping transfer (GST) taxes to be repealed for one year, starting on January 1, 2010.    

For 2009, there was a $3.5 million exemption for each tax and a 45 percent top tax rate for each tax. Under the 2001 Act, the federal estate and GST taxes will come back into effect on Jan. 1, 2011, but with only a $1 million exemption for estate tax, a $1.1 million exemption for GST tax (indexed for inflation), and a top rate of (generally) 55 percent for each tax.

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At the beginning of 2009, employers, insurers and COBRA administrators revised their procedures and notices to implement the COBRA subsidy provided under the American Recovery and Reinvestment Act of 2009 (“ARRA”). These provisions allowed certain eligible individuals to elect COBRA coverage and pay only 35% of the COBRA premium for up to 9 months. Subject to certain exceptions, employers then collect the other 65% of the premium from the federal government through a credit claimed on the employer’s payroll tax return. This COBRA subsidy was a temporary measure that was to be available only to individuals who were involuntarily terminated from employment and were entitled to elect COBRA coverage on or prior to December 31, 2009. On December 19, 2009, President Obama signed the Department of Defense Appropriations Act, 2010, which includes an amendment extending the COBRA subsidy (the “Subsidy Amendment”).

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BoltNagi, PC is the new name for the prominent St. Thomas law and lobbying firm previously known as Tom Bolt & Associates, PC. with the addition of Ravinder S. Nagi as a shareholder in the firm.  The 20 year old law firm serves clients in all aspects of business law, including banking, corporate, real estate, tax, trusts and estate planning, labor and employment law and civil litigation.   The firm also maintains an active family law and government relations practice.

Tom Bolt, founder and Managing Partner of BoltNagi, PC, said, "We are very proud to have Ravi Nagi's name join ours.  The change reflects the overall growth of the firm - growth that's in large measure due to the outstanding contributions of Ravinder Nagi."

 

 

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In order to clarify outdated and inappropriate legal guidelines and streamline the Territory’s slow probate process, the Senate Rules and Judiciary Committee passed a bill Thursday that will adopt the Uniform Probate Code currently enacted in 19 states.

In the U.S. Virgin Islands, probate, the legal proceeding in which a court determines how an estate will be divided, can sometimes take up to 20 or 30 years.  This long and arduous process has been known to deplete estates of any monies while properties stand empty and dilapidated due to years of legal wrangling.

According to Dan Gravel, an attorney with Tom Bolt & Associates, P.C. who concentrates his practice in trusts and estates and who testified in favor of the bill, the Uniform Probate Code (UPC) “will lessen the burden on courts and on families who have to navigate the probate process.” 
 

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The Internet Corporation for Assigned Names and Numbers (ICANN) and the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) announced today that it has reached an agreement  that establishes a long-lasting framework for the technical coordination of the Internet’s domain name and addressing system (DNS). 

ICANN and NTIA executed a new Affirmation of Commitments that completes the transition of the technical management of the DNS to a multi-stakeholder, private-sector-led model. The Affirmation ensures accountability and transparency in ICANN’s decision-making with the goal of protecting the interests of global Internet users.  The Affirmation also establishes mechanisms to address the security, stability, and resiliency of the Internet DNS as well as promote competition, consumer trust, and consumer choice. 

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The Internal Revenue Service has released an internal memorandum indicating that it will give close audit scrutiny to offshore hedge funds that engage in lending activities with U.S. residents.  A number of hedge funds have relocated to the U.S. Virgin Islands to take advantage of the Territory's Economic Development Commission (EDC) Program which exempts such funds from 90% of the federal income tax liability.  Although owner of EDC beneficiary companies can similarly exempt their income from the company from federal income tax if they are Virgin Islands residents, past practice has led to the hedge funds providing loans to owners who are not Virgin Islands residents.  Hedge funds that engage in direct or indirect lending activities involving U.S. borrowers are impacted by this IRS action and should immediately review their lending practices in light of the IRS's indication that it will pursue vigorous enforcement in this area.

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