Whenever you or your business owes money to the Virgin Islands Bureau of Internal Revenue (BIR), it is important to ensure you comply with all federal and territorial laws to avoid significant legal complications. Remember, there’s no chance that you will be able to outrun the BIR, so it is not worth trying.

The following is some sage advice having worked with the BIR over the past 30 years to keep in mind when the BIR comes to collect outstanding taxes:

• Never ignore official BIR communications: Many people think that just because mail from the BIR is automated they can avoid answering and no one will be any the wiser. This is a mistake. You cannot avoid the BIR, and if you do not respond, you could potentially face interest, fines and other penalties.
• Never file with the BIR, that you do not retain a date stamped copy:  Without fail, the BIR does not retain good records.  Often times, it is your word against theirs so it well advised that you submit all filings in person and retain a date stamped copy.  Do not depend on mailing filings.  If necessary, work with a local law firm or accountant so that they may submit same and provide you with a date stamped copy.
• Never go to BIR meetings by yourself: You should always have legal representation when you meet with the BIR. A tax attorney will look out for your rights and help you reach significantly better outcomes.
• Speak with a tax expert: Before you meet with the BIR, arrange a meeting with a tax expert who can help you prepare. This expert should provide an idea of everything the BIR will tell or ask you, how you should respond and how to avoid further complications.
• The BIR does make mistakes: If you have been keeping good track of your tax payments and believe something in the paperwork sent to you by the BIR doesn’t look right, theirs is quite often a chance a mistake was made. The BIR does make mistakes from time to time, so if you believe this is the case, work to get the mistake corrected as soon as possible.
• Due process applies to BIR proceedings: Due process is not just a word used in court—it also applies to BIR collections. For example, the BIR cannot legally take over your bank account, garnish your wages or repossess any of your property without prior written notice and without giving you an opportunity to challenge any of its claims. All collection activity must be paused if there are pending challenges to BIR claims. In some situations, you may actually take the BIR to court.
• If you owe, there are options: The BIR won’t have you sent to jail because you cannot pay—although it may seek criminal charges if you are attempting to evade taxes. If you are unable to make your payments in full, there are several strategies. A hardship suspension allows you to temporarily suspend your taxes until you are better able to pay. You could arrange a payment plan or file for bankruptcy—although this strategy is certainly not for everyone. Finally, you could attempt to come to an agreement with the BIR, depending on your situation.

For further guidance on this and other tax issues, work with a skilled tax planning attorney right away.

Tom Bolt is Chair of the BoltNagi Government Relations Practice Group.  BoltNagi is a widely respected and well-established government relations and tax planning law firm serving clients throughout the U.S. Virgin Islands.