Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

Common Immigration Law Issues Impacting Today’s Businesses

Posted in Immigration, Labor & Employment

If your business employs immigrant workers in the U.S. Virgin Islands, there are a number of common immigration legal issues you need to master to ensure you are in complete compliance with the law.

The following are some of those pressing issues:

  • Form I-9 still in effect: The U.S. Customs and Immigration Service (USCIS) website still lists Form I-9, even though it actually expired on March 31, 2016. Still, businesses are required to use this form to verify that any new employees are legal residents or have the proper work documentation. Failure to produce this form could result in financial penalties.
  • No changes to H1-B visa caps: Congress has placed a limit on the number of skilled foreign workers who are allowed to work in the United States with an H1-B visa. That number remains at 65,000, even though there are more than 236,000 H1-B petitions that have already been filed for the 2017 fiscal year.
  • Unsure legal status of thousands of workers: There are some 50,000 workers who have their legal status in limbo. This is the result of a U.S. Supreme Court case that challenged executive orders authorizing the Department of Homeland Security to put off deporting specific illegal immigrants for up to three years. Presumably, those immigrants had been working and would continue to do so if provided with certain work permits while their deportation was deferred. Businesses employing individuals who had these permits might suddenly discover their employees are not actually eligible to work in the country.
  • Immigration reform bringing new competition: Research from the Partnership for a New American Economy indicates that immigrants are 50 percent more likely to start a new company than people born in the United States. Although these businesses can provide some much-needed revitalization to local economies, they also pose new competition for existing businesses.
  • Immigration reform leading to increased wages: According to the Fiscal Policy Institute, undocumented workers who achieve legal employment status will get a raise of between 5 and 10 percent. This means many employers will need to factor these raises into their projections for the coming years.
  • International relations: By bringing in more skilled and unskilled workers to the United States and its territories, there could be a so-called “brain drain” in underdeveloped countries, which could in turn impact businesses that operate internationally. Companies that have locations in these underdeveloped nations could have a more difficult time finding local workers who are able to perform their job tasks.

These are just a few examples of the many immigration-related issues facing business owners across the country, including here in the U.S. Virgin Islands. Consult an experienced immigration law attorney for further guidance on these matters.

BoltNagi is a widely respected and well-established immigration law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Virgin Islands Gross Receipts Tax Amnesty in Effect

Posted in Tax & Estate Planning

Virgin Islands Bureau of Internal Revenue Director Marvin Pickering has announced that businesses that are delinquent in paying their Virgin Islands Gross Receipts Tax can avoid penalties and interest if they pay by January 3, 2017.

The amnesty was included as Section 6 of Act No. 7930 (Bill No. 31-0448) approved by the 31st Legislature in September. An amendment offered by Senator Cliff Graham of St. Thomas established the amnesty, with the goal of encouraging businesses to pay past due taxes now, to provide the Government of the Virgin Islands desperately needed revenue. The amnesty program technically terminates on December 31, 2016, but due to that date falling on a Saturday, when the Bureau of Internal Revenue offices are closed, as well as on Monday, January 2, 2016 for the New Year’s holiday, so Director Pickering has administratively set January 3, 2016 as the date for the deadline on the amnesty program.

Director Pickering is urging taxpayers who have outstanding gross receipts tax obligations to file and pay prior to the deadline. Pickering said in a statement that “the last gross receipts tax returns that will qualify for the amnesty program is the August 2016 monthly gross receipts tax return and the annual 2015 gross receipts tax return”.

Payments for Virgin Islands Gross Receipts taxes may be made by cash, credit card (Visa or MasterCard), bank check or money orders. Pickering said “IRB has a concern about dishonored checks and so is taking this precaution to ensure that all payments accepted under the Gross Receipts Amnesty Program will be honored by the bank”.

“The amnesty will not pause IRB’s efforts to go after past-due taxes,” Pickering said.  “The Bureau will continue to contact delinquent taxpayers and attempt to obtain payments through the statutory collection methods.”


Attorney Tom Bolt is Managing Attorney and Chair of the Government Relations Practice Group at BoltNagi, a respected and well-established business law firm serving businesses and organizations throughout the U.S. Virgin Islands.

Why the US Virgin Islands Needs to Enact UCC-9 (2010)

Posted in Corporate & Financial Services


To date, all 50 states, the District of Columbia and the Commonwealth of Puerto Rico have enacted the 2010 Amendments to Article 9 of the Uniform Commercial Code (UCC). However, the U.S. Virgin Islands is still the only jurisdiction not to enact those amendments, an issue that has drawn criticism over the past several years.

The final jurisdiction to enact the amendments was Oklahoma, back in June 2015. Since then, the U.S. Virgin Islands has been the sole remaining American jurisdiction to not make the amendments official.

Article 9 of the UCC regulates secured transactions of personal property, including the granting of credit that is secured by the applicant’s personal property. Every year, there are hundreds of millions of dollars in consumer and commercial credit granted by use of secured transactions under rules specifically outlined in UCC Article 9. These rules could apply if a manufacturer finances its purchase of new equipment, a retailer applies for financing of additional inventory or if a consumer gets financing for upgrades to a home.

There are rules in the UCC-9 that govern any transaction — aside from financial leases — that involve granting credit paired with potential creditor interest in the debtor’s property. In the event that the debtor defaults on the loan, the creditor could take possession of that property and sell it to repay the debt. This is called a “security interest.” UCC Article 9 outlines who has the first rights to this collateral if there are multiple creditors competing for having their loans repaid.

Amendments to UCC9

The 2010 amendments to UCC-9 made some changes to respond to various filing issues and a number of other matters that arose since the most recent revisions in 1998. The most important update is that now there is greater guidance regarding the name of debtors that will be provided on financing statements. As a result, each state has two choices:

  • Alternative A: If the debtor has a state-issued driver’s license where the financing statement is filed, the debtor’s name as it is included on the license will be included on the financing statement in the exact same format. If the debtor does not have a license, either the debtor’s surname and first personal name or the debtor’s actual name may be used in financing.
  • Alternative B: The debtor’s name as indicated on the driver’s license, the debtor’s actual name or the debtor’s surname and first personal name are all allowed to be used on the financing statement.

These amendments make the filing system for financing statements easier to understand and more organized. By not having approved these amendments yet, the U.S. Virgin Islands is allowing this process to be more complicated than it needs to be.

For more information on UCC-9, its amendments and the potential changes that could result from them here in our territory, consult a skilled corporate planning attorney.


Attorney Tom Bolt, Managing Attorney of BoltNagi, a widely respected and established business and corporate law firm offering counsel to a wide range of clients throughout the U.S. Virgin Islands is also a Commissioner of the National Conference of Commissioners on Uniform State Laws.

The Benefits of Being a U.S. Virgin Islands Tax Exempt Company

Posted in Tax & Estate Planning

exemptFor the most part, even though the U.S. Virgin Islands is not a state, most U.S. federal laws apply in the Territory. This includes federal tax law. However, that law is not governed by the Internal Revenue Service. Instead, a separate local tax code called the “mirror system” exists, and it is administered instead by the U.S. Virgin Islands Bureau of Internal Revenue (BIR).

The U.S. Virgin Islands has had authority from Congress for more than 50 years to allow for tax-exempt companies within the territory. Here are just a few of the most significant benefits of such a structure:

  • These companies do not pay any taxes on income earned anywhere they do business (other than in the United States or U.S. Virgin Islands), except for a yearly $1,000 fee paid to the Government of the Virgin Islands.
  • The company’s stock is also not subject to any federal or territorial inheritance, gift or estate taxes, as long as the donor or decedent is a non-citizen/non-resident of the United States.
  • Capital gains earned by U.S. Virgin Islands exempt companies from the sale of any American stocks or securities are also not subject to taxation in either the United States or the Territory.

How are these companies formed?

The process of setting up a U.S. Virgin Islands exempt company is quite simple and relatively inexpensive. All it takes is a $400 incorporation fee paid to the Government of the Virgin Islands, as well as some reasonable service providers’ fees. The incorporation process typically takes only 24 to 48 hours.

To be officially incorporated, the company must have three officers and three directors. None of the directors need to be residents of the U.S. Virgin Islands. The officers must include a secretary, treasurer and president. The president must also be a director, but the secretary and treasurer are not required to serve in this role. Additionally, the secretary and president must not be the same person, and no one person may hold more than two offices.

There are also some basic requirements for businesses to meet before they are able to become exempt. They must have at least $1,000 in working capital, with no bearer shares. No U.S. citizens are allowed to own either directly or indirectly more than 10% of the stock of a U.S. Virgin Islands exempt company, whether that 10% is measured by value of the company or vote on company decisions.

Finally, U.S. Virgin Islands exempt companies must also be prepared for annual filing like any other business. However, these filing requirements are much simpler than for most organizations. No tax returns are needed, but there is a requirement for a simple franchise return, due at the end of every June.

For more information on the benefits and stipulations of forming a U.S. Virgin Islands tax-exempt company and how you might move forward with creating one, consult a skilled and knowledgeable business planning attorney.


Attorney Steven K. Hardy is Chair of the Corporate, Tax and Estate Planning Practice Group at BoltNagi, an established and widely respected corporate tax planning law firm serving clients throughout the U.S. Virgin Islands.

The Tax Benefits of Giving to a Charitable Remainder Trust

Posted in Tax & Estate Planning

charity signCharitable trusts allow you to leave behind a significant portion of your property and assets to charity. It also has the added benefit of providing you with some outstanding tax benefits.

The most common form of charitable trust is known as a charitable remainder trust. Such a trust is simple to set up. You transfer property you want to pass to the charity into the trust. Keep in mind that the charity must have tax-exempt status approved by the IRS under the U.S. Internal Revenue Code.

Then, moving forward, the charity serves as the trustee and manages or invests the property so that it produces income. Over time, the charity pays you (or a named beneficiary) a chunk of the income generated by the trust property—either for a certain number of years or for the rest of your life. Upon your death or the end of this period, all property in the trust is transferred to the charity.

Tax advantages

Although these trusts represent a generous way to give to charities, they also provide you with a number of tax advantages. These include the following:

  • Estate tax breaks: Once the trust is transferred to your charity of choice, it is no longer a part of your estate. This means that none of its assets are subject to federal estate tax. While not all estates are subject to estate tax anyway, people who are above the exemption limit could minimize or eliminate their estate tax responsibility with the use of a charitable remainder trust.
  • Income tax breaks: You are able to take a deduction from your income taxes over the course of five years for the amount of money you are donating to the charity. It can be challenging to determine exactly how much money you are able to deduct, as the value of your gift is not just the value you are donating (remember: you are able to generate income from the investments). But the break is certainly beneficial.
  • Capital gains tax: Through a charitable trust, you are able to convert appreciated money into cash without having to pay any type of capital gains tax on that money. Charities themselves do not have to pay capital gains tax, so if the charity decides to sell your property, those proceeds will stay in the tax and are not subject to taxes.

There are plenty of other advantages to charitable remainder trusts beyond simply the tax benefits. For example, the income you receive from the trust could end up being quite substantial, depending on the amount of money you put into the trust. This income could be used for a wide variety of purposes, including going right back to the charity, if desired. You do not have to be the beneficiary of this income.

To learn more about establishing a charitable remainder trust and the various benefits associated with this important estate planning tool, meet with a skilled tax planning attorney in the U.S. Virgin Islands.


Tom Bolt is Managing Attorney of BoltNagi PC,  is a respected and established estate and tax planning law firm serving individuals, families and organizations throughout the U.S. Virgin Islands.

Business Owners: You’ve Just Been Served: Now What?

Posted in Litigation

lawsuitFor any business owner, a potential lawsuit is a distraction and a hassle. If you find yourself in a situation in which you’ve been served with a lawsuit, it’s important to take action quickly to best protect you and your company.

Defending yourself from the claims made in the lawsuit could become an expensive and time-consuming process if you are not properly prepared, so taking immediate action will increase your chances of achieving the best possible outcome.

The following are a few steps you should take right away after being served with a lawsuit related to your business:

Contact your attorney: All business owners should have a relationship with an experienced attorney who they can turn to in such situations. As soon as you receive notice of a lawsuit, get in touch with your business lawyer. There are going to be a number of important deadlines you must meet and other steps to take. A failure to meet these deadlines could damage your chances of successfully protecting your company, even if you believe the lawsuit lacks merit. An attorney can help you sift through your responsibilities and meet all of your deadlines.

Contact your insurance agent: Your insurance plan should cover lawsuits involving your business, which will be a significant help in removing some of the costs associated with addressing legal issues. If you do not notify your insurance provider quickly, you could lose your right to coverage, whether it’s paying for a claim or for the costs of obtaining legal defense.

Begin gathering information: Arming yourself with information and documentation is one of the best ways to ensure your success in a lawsuit. You have almost certainly had prior dealings with the party filing the claim, so find all information and records you can about your dealings with the plaintiff, gather any potential witnesses and collect written accounts of the circumstances that led to the suit and share all information with your attorney as soon as possible so that you can put together a solid plan of action.

Attempt to settle out of court: Try to resolve the dispute outside of the courtroom, if at all possible. Options include mediation, arbitration, neutral evaluation and settlement conferences. Procedures differ for each process, but all of them take significantly less time and cost significantly less money than a full-on court case. Evaluate all options available to you, and speak with your attorney about what might work best for you.

Being involved in litigation is never ideal for a business owner, but with sound preparation and taking the proper steps right away, you can protect the company you’ve worked so hard to build and grow.


Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Litigation Practice Group at BoltNagi, an established and well-respected civil litigation law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Can the U.S. Virgin Islands Avoid the Debt Problems Impacting Puerto Rico?

Posted in Government Relations

8231671430_e83d55aa51_bIf you’ve been following the news over the past nine months or more, you likely know about the serious debt crisis facing Puerto Rico—and efforts by the United States federal government to address it. This begs a natural question: could the same thing happen here in the U.S. Virgin Islands?

That was the subject of a recent lecture led by Legislature of the Virgin Islands Vice President Janette Millin Young, who says she aims to better understand Puerto Rico’s debt problems so that the Territory can avoid similar issues to that of Puerto Rico. Several other senators attended the lecture, as well.

According to economist Dr. Carlos Colon de Armas, who spoke at the event, Puerto Rico’s debt crisis stems mostly from excessive spending. He also noted that the Puerto Rico’s debt is only about 16% of its annual budget, pointing to some chronic problems with how the government spends money. In fact, he went as far as to say that Puerto Rico would not have such major problems paying back its debt if it were to reign in its spending.

After the event, Sen. Millin Young said that she and her colleagues gained a much greater understanding of the core economic and political issues leading to Puerto Rico’s current financial situation. It’s worth noting that Senator Millin Young chairs the Legislature’s important Committee on Economic Development, Agriculture and Planning.

According to Millin Young, the U.S. Virgin Islands faces similar fiscal challenges as Puerto Rico, and she believes that the Government of the Virgin Islands can learn some lessons from the woes of its sister territory.

Preventive measures

This event, which took place in mid-August, comes at a time when the Government of the Virgin Islands is looking for solutions to recent credit and tax-exempt bond downgrades from credit agencies Fitch and Moody’s. Although there are a number of reasons for these downgrades, one of the most pressing issues has been the potential for U.S. insular territories such as the U.S. Virgin Islands to restructure their debt in the future.

That’s what has happened with the July passage of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which gave Puerto Rico the ability to file for Chapter 9 “super bankruptcy.” Investors now worry that this ability will be given to other U.S. territories, making it difficult and more expensive for the Government of the Virgin Islands to issue float bonds to help cover its debt. At this time, the Territory’s projected shortfall for FY 2017 is about $110 million—significant, but a far cry from Puerto Rico that is facing a fiscal gap of $28 billion over the next five years in the absence of any policy changes.

At the very least, with Puerto Rico in dire straits, it’s promising that Senator Millin Young has led a discussion on examining ways for the U.S. Virgin Islands to avoid similar problems in the years ahead.


Attorney Tom Bolt is Chair of the Government Relations Practice Group at BoltNagi, a respected and well-established corporate planning law firm serving businesses and organizations throughout the U.S. Virgin Islands.

Fitch Downgrades US Virgin Islands Gross Receipt Tax Bonds

Posted in Government Relations

Fitch, one of the top ratings firms in the United States, has become the latest to officially downgrade U.S. Virgin Islands bonds. The downgrade comes at an inopportune time for the Government of the Virgin Islands, which is in the middle of hearings by the 31st Legislature on the FY 2017 Executive Budget which has left the Mapp Administration figuring out how to use floating bonds to meet a budget shortfall that now exceeds $110 million.

The news also comes about a month after Moody’s downgraded the Territory’s matching fund bonds. With the Fitch downgrade, U.S. Virgin Islands gross receipt tax bonds are now in trouble. Both types of bonds are now at B+, sending them deeper into the level of junk bond status. In addition, the U.S. Virgin Islands general credit rating (known as the issuer default rating) has also been downgraded to B+.

These downgrades present a real problem for the Territory, as they essentially make it harder and more expensive to float bonds to help cover its debt. In fact, Commissioner of Finance Valdamier Collens says that these measures mean the government will find it nearly impossible to restructure its debt effectively.

According to Fitch, U.S. Virgin Islands bonds do benefit from the possibility that the Virgin Islands Legislature will provide a statutory lien on the revenue streams for bondholders, a measure that would improve the recovery prospects for holders if the U.S. federal government allows for the restructuring of U.S. Virgin Islands-backed debt. However, if the Legislature fails to pass such a measure, the bond ratings could be downgraded even further.

Consequences stemming from Puerto Rico’s debt crisis

For a little context, before Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), it was widely accepted that the U.S. Virgin Islands would have no way to restructure its debt. This resulted in a bond rating far above its issuer default rating.

Although PROMESA does not apply to the U.S. Virgin Islands, the passage of the law opens up the possibility that the Territory may be given the same powers as Puerto Rico sometime in the future. Because of this potential, Fitch and Moody’s have placed U.S. Virgin Islands tax bond ratings on what is known as “negative watch.”

Generally speaking, PROMESA, which was passed in July, limits Puerto Rico’s ability to offer attractive tax-exempt bonds and other incentives to the market, as investors are now faced with much more significant risk factors. This will likely lead to investors demanding higher interest rates and better returns. It appears that PROMESA is already having an impact on U.S. insular territories beyond Puerto Rico—even though the U.S. Virgin Islands debt situation has never been as bad as its Caribbean neighbor.

Business leaders and government officials throughout the U.S. Virgin Islands will be watching this situation closely in the weeks to come. If you have questions about how these developments could impact your company or your investments, be sure to consult a business planning attorney to discuss your options.


Attorney Tom Bolt is Chair of the Government Relations Practice Group at BoltNagi, a widely respected and established business and corporate law firm serving clients throughout the U.S. Virgin Islands.

Are HOA’s Required to File Tax Returns?

Posted in Real Estate, Tax & Estate Planning

Homeowners, condominium and timeshare associations (“Associations”) often make the mistake of not filing tax returns based on the belief that they are exempt from having to do so.  However, Associations are required to file tax returns like any other corporation, even if they’re not-for-profit.

Fortunately, most Associations don’t have much, if any, tax liability.  This is partially due to the fact that most Associations generally only take in funds to operate and maintain their facilities, rather than for the purposes of generating profit.

Section 528 (“528”) of the Internal Revenue Code governs the taxation of qualified Associations, and most Associations elect to be taxed under this Section for tax purposes.  528 defines Homeowners and Condominium Associations as follows:

  • Organized to provide for the acquisition, construction, management, maintenance, and care of association property;
  • At least 60% of the Association’s gross income consists of membership dues, fees, or assessments paid by the owners;
  • 90% or more of the Association’s expenditures are made for the purposes of acquisition, construction, management, maintenance, and care of Association property;
  • No part of the net earnings inures solely to the benefit of any private shareholder or individual.

Thus, to qualify under 528, an Association must be legally organized pursuant to the statute, generate most of its revenue from dues and assessments from the owners, and use that revenue to maintain its property.  In addition, 85% of the units must be used as residences.  Qualified Associations under 528 are exempt from paying taxes, otherwise assessed at a rate of 30%, on all income which consists of membership dues, fees, or assessments from the owners of the housing units.[1]

There are two common tax return forms applicable to Associations: IRS Form 1120-H and IRS Form 1120.  Which form is filed will generally depend on the status of the Association; specifically, whether or not it qualifies under 528.  If the Association meets the requirements as set forth in 528, most Associations will file Form 1120-H in order to receive the tax exemption provided therein.

If, on the other hand, the Association does not qualify under Section 528 or is filing late, the Association will need to file the applicable income tax return which is generally Form 1120, U.S. Corporate Income Tax Return.  Filing a Form 1120 can also have certain tax advantages and incentives however.  For example, non-exempt taxable income under 528 is assessed at a rate of 30%, whereas the applicable corporate tax rate can be as low as 15% when filing Form 1120.

Virgin Islands homeowners, condominium and time share associations should consult with an attorney experienced in real estate and real estate tax matters prior to filing their returns.  Critical evaluations need to be applied in order to achieve the maximum tax incentives available.


Attorney J. Nash Davis is an Associate in the Real Estate and Financial Services Practice Group of BoltNagi PC, a U.S. Virgin Islands law firm with extensive experience in real estate and tax issues which regularly advises homeowners, condominium and time share associations.       


[1] Payments from nonmembers and certain other sources of income are not exempt under Section 528 and are taxable at the rate of 30%.  See Section 528 of the I.R.C.

Incorporation and Registration in the U.S. Virgin Islands

Posted in Corporate & Financial Services

Seal_of_the_United_States_Virgin_IslandsThe U.S. Virgin Islands provides business owners with some significant tax incentives as a means of boosting its economy and encouraging businesses to open up shop in the Territory. While qualified businesses are able to reduce up to 90 percent of their personal and corporate federal income taxes, and could even receive a full exemption on local taxes such business property, excise and gross receipt taxes, there are a few basic items you should know about registration and incorporation in the U.S. Virgin Islands that all corporations must go through to be legally incorporated in the Territory.

Articles of incorporation

You must file articles of incorporation if you are to officially form a corporation in the U.S. Virgin Islands. Unlike most states, however, there is not a standard form for incorporation—so it is up to the corporations to draft this document themselves.

The three types of corporations that can be formed in the territory are:

  • Domestic corporations: These corporations are located in the Territory and do business here. They are eligible for tax incentives if they meet the qualifications put forth by the Economic Development Authority.
  • Exempt companies: These companies are not allowed to engage in any active trade in the U.S. Virgin Islands or United States. Residents of the United States or the Territory are not allowed to own 10 percent or more of the company. Such companies are exempt from income, gross receipts, license requirements and withholding taxes in the territory.

Registering as a foreign corporation

Any company that wants to conduct business in the U.S. Virgin Islands, but does not wish to incorporate, is required to file a document known as a Certificate of Appointment of Process Agent and Sworn Statement. This document must be submitted to the Territory’s Office of the Lieutenant Governor.

Additionally, the corporation is required to provide a statement of its liabilities, assets and capital stock to the lieutenant governor. The certificate filed must include a copy of the company’s Certificate of Incorporation and any amendments that have followed, along with a Certificate of Good Standing from its domestic jurisdiction. Signed consent from a registered agent is also required to show the named agent has agreed to serve in that role.

Individuals wishing to start a corporation in the U.S. Virgin Islands have a variety of options at their disposal. For more information on how to get a corporation registered and the types of benefits that are associated with becoming a corporation in the territory, consult an experienced business law attorney.


Tom Bolt is Managing Attorney at BoltNagiPC,  a widely respected and well-established corporate law firm serving clients throughout the U.S. Virgin Islands.